Starting up a new online app tech company, where to locate?

[BrianHG]

Ok, say I have enough money, 8 figures usd, and I want to create a new company which will engineer and market a new app and hardware in the realm of music and fitness.  For an idea of scale, the company will begin with around 25 full time employees plus around 25 interns.  Where should I locate in California, as all the high tech industries many third party corps I require ties with are located there.

Or, should I stay in Montreal, save a ton of money on HQ.  Though 95% of my business is English in this French province, I can still find local talented English engineers for my department heads.  Though, now, my life will have numerous flights to LA and I wont have access to the same set of board of directors which can open important doors getting good access to the right third party corps which in the long run, may make or break a true success.

Is there anywhere better in North America to locate?

[AG6QR]

I'm not an entrepreneur, but I've lived in the SF Bay area for quite a while.  I'll offer a few thoughts.

LA is the center of the media, entertainment and music industries.  There is also a lot of aerospace and related work in the area, which means there's a pool of qualified hardware/software engineers.  San Jose is the heart of Silicon Valley and the electronics and software technologies.  So I was intrigued by your statement that you'd be flying to LA, since I'd expect flights to San Francisco or San Jose to be more useful for meeting with electronics industry people.  Is it that you plan to meet customers in LA?

In the Bay Area, there's a huge pool of qualified technical professionals in software and electronics hardware.  But there's also a huge pool of employers.  That works both ways.  You can find workers, but if you don't treat them well and compensate them well, they can easily find other employers. 

The cost of living is incredible in the Bay Area.  Check out home prices on Zillow.  It's hard to find a modest house for a million dollars.  It's hard to rent an apartment for 3,000/month.  Salaries are commensurate.  Facebook's median salary is $240,000.  Office rent is expensive.  Taxes are high.

So be careful with the math.  How long do you expect your 50 workers will have to work before your company starts making enough sales to turn a profit?  It seems to me that it would be very easy for 25 employees plus 25 interns to burn through six figures of capital in less than a year.

But despite the high expenses, many companies do quite well by locating in the area, because the talent pool is great, and there are a lot of benefits to being in a place where there is so much electronics industry.  There are a lot of parts and service companies to support the electronics industry -- it's easy to get prototype boards in you hands right away, for example.  The sales reps for all the high tech test equipment will be wining and dining you, and demoing all their latest gadgets. 

Where else to consider?  Perhaps a smaller college town which has a good engineering school?  Raleigh/Durham?  Minneapolis/St. Paul?  Austin, TX?  Ithaca, NY?  Champaign, IL?  There are lots of similar places that have small concentrations of technically educated professionals.

Good luck, wherever you decide to locate!

[ez24]

As a Californian, I suggest NOT going to Calif   Just too expensive and crazy and getting worse everyday.   I hear Atlanta is a good city for tech. 

[BrianHG]

So I was intrigued by your statement that you'd be flying to LA, since I'd expect flights to San Francisco or San Jose to be more useful for meeting with electronics industry people.  Is it that you plan to meet customers in LA?

Actually, that was a mistake, I did mean in the silicon valley area, however, you now made me re-think a few things.

I am in an awkward position.  My technology is modern high tech and relies on some interconnection with Google's new Youtube subscription service, Apple Music, and other streaming services, however, once these connections are established and I have beta release versions ready, it will be more important to have connections in the music and entertainment industry as my main product is not the finished software as it's being given out for free, but, the entertainment media services which it packages.  As for salaries, I well know that my payroll alone will be approaching the 8 figure range, but, it will be worth it.

[aargee]

* cynicism * 
Do what most other tech companies do... “base” your company somewhere in the world where you can get out of paying any taxes.
Where you make your stuff is another issue....

[nctnico]

* cynicism * 
Do what most other tech companies do... “base” your company somewhere in the world where you can get out of paying any taxes.

Precisely. Locate the HQ in Amsterdam (NL) and work from there. Only the sales people need to have contacts with the music industry.

[Alex Eisenhut]

* cynicism * 
Do what most other tech companies do... “base” your company somewhere in the world where you can get out of paying any taxes.
Where you make your stuff is another issue....

In a townhouse in Lichtenstein, like Subway?

[NiHaoMike]

I have to agree that the heart of the Bay Area probably isn't a good place for a startup for the reasons listed. But maybe the outskirts are worth considering?

LA is obviously known for its bad traffic.

Austin (when I was there at least, not sure if things have changed in 4 years or so) also has bad traffic, although nowhere as bad as LA. It is unusually sensitive to the weather in that it doesn't take much rain to slow things down. Can be a factor if predictable schedules are important.

San Diego's traffic generally is better than Austin's and (strangely) is affected little by weather until conditions get really bad.

[Lord of nothing]

In Vienna (Austria  ) we are the City with the highest score for the best city in the World. 

[BrianHG]

Arrrg, apartment rental pricing in San Francisco is absurd.  To match what I have in Montreal, it's almost 10x the monthly living cost.  It is at a point where I might as well spend 1m$ on a house and sell it when I'm done.

LA apartment rental is half as much.

Office space in LA is not too bad as downtown LA is only 2.5x the price of Downtown Montreal.  San Francisco is at least 5x, but nowhere near the 10x as compared to apartment rental.

A comparable house is only 2.5-3x priced in both LA or SF compared to Montreal.

[ez24]

San Diego's traffic generally is better than Austin's and (strangely) is affected little by weather until conditions get really bad.

Check out San Diego (2nd largest city in CA).  Of course there is a weather tax and unfortunately it is high because the weather is good.  Low humidity.  Lots of tech business here.   On the news a few days ago they said LA has the worse traffic in the world (I believe so).  BUT LA has a subway system.  San Diego has a trolley system that does not serve the tech areas.  Software engineers can afford to live near their work.

[ez24]

https://www.cnbc.com/2017/07/27/tech-jobs-silicon-valley.html

[BravoV]

Just a simple question, does your business really, I mean really-really depends on the location ?

As you're Canadian by your flag, remember BlackBerry in the old days when it started against settled giants like Motorola, Ericsson or Nokia ? Although we don't discuss it's current state  , just the beginning to get the idea, or even better inspiring.

My 2 cents.

[ez24]

Just a simple question, does your business really, I mean really-really depends on the location ?

I think the US is the cruelest "free" country in the world - I just do not understand why you would not give Canadians a chance?

There is a topic on shady crowdfunding and a big San Diego company has gone out of business so there are people in San Diego looking for work if you really gotta go.  Also Qualcomm is laying off 1500 people so it might be a good time to relocate to SD.

Be prepared for the cold weather, it can get to 50F, and hot weather (sometimes it hits 90F).  You really need AC for the couple of hot days a year.  The mosquitoes can drive you nuts,  last year I had two of them (number one reason I cannot get away).

[BrianHG]

     I've been told since my product will be piggybacking on music streaming services like Apple Music, Spotify, Amazon Music, Google Music, and I'm also connected to the health & fitness industry, I should forget Montreal and head for California, though my patents passed in US & Canada and are pending in 10 additional countries, English is the first market I will enter.

     As a small startup, being in Montreal, doesn't mean I cannot create the ultimate software and hardware, it is just more of a hurdle to get through some doors, especially until I get some serious followers VS being local in the tech hub & more direct access to those who play in this landscape.

[ez24]

...and head for California

When you do, think of mass transit.  Be kind

[BrianHG]

...and head for California

When you do, think of mass transit.  Be kind

Except for business trips, I'd plan on being in cycling distance of my office (I realize my personal rent just might have doubled).  I cannot sit in a car every day.

[james_s]

It has always kind of surprised me that so many tech companies headquarter in the most absurdly expensive areas. Yeah there's a pool of qualified workers, but surely a company could open a branch in some heavily depressed region where housing is dirt cheap and lure loads of people out to wherever that is, paying a salary that affords them a very good standard of living while still being much cheaper than the current tech hubs. Some place like Detroit could just about be revitalized if a couple of established tech firms opened an office there. Plenty of people, especially younger folks are willing to relocate.

[EEVblog]

* cynicism * 
Do what most other tech companies do... “base” your company somewhere in the world where you can get out of paying any taxes.

You can't just "get out of paying taxes"
If you shuffle your money to a tax haven then :
a) it's usually not "zero tax" but "low tax"
and
b) It's hard to get your money back out of that country without paying taxes

But anyway it probably doesn't matter because a company at this will almost certainly have zero income, so zero income tax to pay.

[EEVblog]

Ok, say I have enough money, 8 figures usd, and I want to create a new company which will engineer and market a new app and hardware in the realm of music and fitness.  For an idea of scale, the company will begin with around 25 full time employees plus around 25 interns.

To me, seeing numbers like that up front sounds like you are doing it wrong, and you'll likely just piss away the money for no good reason other hiring people to meet some arbitrary quota you set up.
Hire the best people first to form a core group, then work from there as required.

[EEVblog]

Ok, say I have enough money, 8 figures usd

Is it your own money, or investors?
That makes a big difference.

[JohnnyMalaria]

Research Triangle Park, NC

The triangle is defined by three major universities, Duke, UNC and NC State, so there's a large pool of very bright and talented young things. Traffic is *easy*, the place is clean, inexpensive and very business friendly. The airport (RDU) is almost provincial, certainly nothing like JFK, PHL, LAX etc etc, but American fly daily to London and Air France fly daily to Paris. You get to bypass the horrors of domestic airspace during blizzards and other causes of hellish delays. You can't beat it if you expect to travel to Europe a lot. 7 hours compared to the eternity from the west coast and less jet lag.

[BrianHG]

Ok, say I have enough money, 8 figures usd

Is it your own money, or investors?
That makes a big difference.

Both, but, there are requirements which I must adhere to.
Because of what I need done, no matter what I do, I will need a minimum staff since a major portion of the work is directly related to man/hours just to get me off the ground, however, luckily, this bulk of employees is lower paying roles.
I'm not pissing it all out in one shot, the funds set aside needs to last years as I only expect to begin to generate revenue 5-6years in.  This is a long haul project and I've budgeted for 10 years before generating a profit.

And obviously, there is a lot I am not saying here but I've carefully weighed what I'm going and the next 10 years will be worth every bit by a land slide.

[BrianHG]

Research Triangle Park, NC

The triangle is defined by three major universities, Duke, UNC and NC State, so there's a large pool of very bright and talented young things. Traffic is *easy*, the place is clean, inexpensive and very business friendly. The airport (RDU) is almost provincial, certainly nothing like JFK, PHL, LAX etc etc, but American fly daily to London and Air France fly daily to Paris. You get to bypass the horrors of domestic airspace during blizzards and other causes of hellish delays. You can't beat it if you expect to travel to Europe a lot. 7 hours compared to the eternity from the west coast and less jet lag.

Thanks, I actually used to have a partner back in the mid 90s in Raleigh Durham North Carolina.  It is actually a really nice area and the winters were really mild, just the occasional rare heavy snowfall which would have melted away in 1-2 days at most.
(This is a little humor, but true)  I would have to import my food though, and/or open a small restaurant to my needs.  When I first invited my partner Jeff and his wife to Montreal, they freaked out at how good the food tasted...

[CopperCone]

gary, indiana