Austin has its Groove: Two Interesting Perspectives on Austin Tech

Scott Francis
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Over the last 24 hours I read two perspectives on Austin that almost perfectly capture the zeitgeist of what’s going on here. 

First, there’s this piece about Austin being in the top 5 cities for tech talent, as ranked by CBRE, up from #8 last year:

Over the past few years, Austin has added more tech jobs than nearby universities could supply, requiring companies to bring in more recruits from out of state. Between 2010-2014, Austin produced 9,758 tech graduates — while the sector added 24,590 tech jobs between 2011-2015.

With so many tech jobs available, Austin continues to attract high concentrations of millennials. The younger demographic now makes up 20.2 percent of the area’s population, much higher than the national average of 14.2 percent. Since 2009, the millennial population has grown 7.5 percent, making it one of the most concentrated millennial markets.

And this perspective on Austin vs. Silicon Valley – “Why is only one of the two terrified of the tech downturn?”:

There’s been a bit of a downturn in tech this year, and my Silicon Valley friends are constantly asking how things are so they can compare notes. Fellow media organizations are reaching out to ask how Austin is faring, and to be honest, Austin has always been cautiously optimistic, never cocky, so we’re fine. More than fine.

Is the tech downturn scaring Austin as much as it is Silicon Valley? Nope. As a city, at least in the tech sector, we’re humble and know that layoffs can happen anywhere at any time, so we’re all pretty well versed on keeping our resumes up to date.

You can take issues with the rankings from CBRE, but Austin is a great place for tech talent to thrive.  You can take issues with the reasons given in the second article for why Austin seems to be less freaked out than Silicon Valley about a tech downturn.  But the overall “feel” of the two perspectives feels right to me:

  • I don’t sense a lot of panic from investors
  • I don’t sense a lot of concern on the part of entrepreneurs with regard to raising their next round. 
  • I sense a certain confidence in what is going on in Austin, and the community and ecosystem we’re building

As to why?  Personally I think a big reason is that startups in Austin don’t depend as much upon outside capital, as compared to Silicon Valley.  So if the fundraising environment gets tough, Austin companies will likely be in a position to weather the storm with cashflow, or to use positive cashflow to attract debt, investments from other sources. Lots of companies that bootstrapped to start have evolved into significant companies and employers. 

The same thing that holds Austin back, somewhat, from hitting home runs, is also the thing that may make Austin a bit more resilient when funding pulls back – and that is the fact that Austin startups *tend* to be less dependent on outside capital to grow their business (there are exceptions).  And investors tend to have fewer bets on cashflow-negative companies in their portfolio here.

Another reason that comes to mind is that investors may well have investments in other businesses that aren’t following tech’s boom-bust cycle.  Food.  Beverages.  Spirits. Keeping your drinks cold. Restaurants.

So, maybe Austin tech investors and startups are wrong, and the End is Nigh.  We got hurt pretty badly in the last tech bust, after all.  But the good news is that til then, Austinites are doing a great job building their businesses and trying to earn a return for their shareholders.

 

 

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