
My love letter (and goodbye?) to Austin - willow9886
https://medium.com/austin-startups/my-love-letter-and-goodbye-to-austin-601dc54a868a
======
clavalle
If you don't have an ironclad way to make money, you will not get funded in
Austin. No one in Austin cares about growth of users if those users are not
actively contributing to the bottom line. Relying on some sort of soft
advertising or vague monetization hand waving for sometime in the future will
get you absolutely nowhere. It's been like that since the first bubble burst
and maybe a little bit before.

This attitude has some serious pitfalls, no doubt. You don't hear about many
'grow users to the stratosphere and sell for obscene piles of cash before the
first hint of profit' stories here. Or 'critical mass was achieved and now we
can't help but make rivers of cash' stories (which, to be fair, are fairly
rare).

But you also don't hear about the 'we poured money into this unprofitable
thing because of an impressive growth curve and it imploded because we
couldn't find a way to turn users into money' stories here either.

Fewer headline grabbing stories, no doubt. But what you do end up with is a
whole host of solid companies that either make money from almost the beginning
or that go away quickly. Investors here want to pour gas on a fire that's
already burning (doesn't everybody?). They shy away when there is no spark in
sight.

But that doesn't mean there's not a lot of innovation happening. There
absolutely is, but just not in the 'get the users and the rest will follow'
realm of high-risk.

You're going to have to get lucky with the right investor with an appetite for
risk in a competitive area of social apps where even the most successful
companies struggle to turn a profit or show how your current user base can be
solidly monetized today.

~~~
trustfundbaby
Well the problem with something like that is that when you think about it the
Ubers and airbnb's of the world would never have made it in Austin based on
those criteria. Thats a bit of a problem for me and the city in a way, because
when people think "startup" they're thinking more about stuff like that and
less about the pragmatic "show me the money" software businesses that Austin
tends to fund ... and even at that, not very much.

~~~
clavalle
> Ubers and airbnb's

Uber and airbnb were not profitable right away but their mechanism for making
money couldn't have been clearer. Uber -- sell rides, get a cut. Airbnb --
sell places to stay, get a cut. These were not 'let's get a bunch of users and
see what happens' kind of deals.

That's exactly why Homeaway and SpareFoot got funded. Still a hard problem
building that two sided marketplace and reaching profitablity...still a risk.
But the mechanism for making money couldn't be clearer.

A better example would be Waze. Offers great value but how how do you capture
that in terms of profit for the company? Waze would probably not have been
funded. But it worked out since they were acquired. But counting on getting
acquired is a sure way /not/ to get funded in Austin. The business has to
stand alone.

------
joahspearman
Hi, Joah Spearman here. I wrote the piece. This was a personal account, my
account, on both my own journey to entrepreneurship, to Austin and to
fundraising. I tried to touch on location, race, the business, raising money
and a few other things that would help convey the position I'm in. Some people
are downplaying the role of race or geography and I'm almost certain they're
probably not Black founders or in Austin. My goal with the post was simply to
give a personal, open and honest take on my experience here. You wouldn't find
me commenting about the scene in NYC or LA from a local's perspective because
I'm not a local there nor would you see me doing a lengthy Medium post about
how gender isn't really an issue for women trying to raise VC funds. That's
not my experience. I shared mine, nothing more, nothing less. I appreciate you
all for reading and sharing your commends/feedback in the comments.

------
aelaguiz
I’m sure a lot has changed since 2014 when I last raised in Austin but in my
experience it is possible to raise money for consumer businesses in Austin.
Before we pivoted to Cratejoy we had raised a significant seed round from
almost entirely Austin investors. It’s also possible to get west coast (and
really all over the world) investors to invest in you and stay in Austin.
We’ve raised $11M, about 80% of it from non-Austin investors.

For me the secret for raising successfully in Austin was getting individuals
on board — high net worth individual investors that I established a personal
rapport with. With the exception of the Capital Factory all of the angel funds
(for me) were operating off of FOMO and social pressure more than
fundamentals. The VC scene does contain some bad actors, and I probably
wouldn’t spend a lot of time looking for institutional money in Austin. I
would get my growth funding west or east coast.

Having raised millions in both SF and in Austin I can say that it is
definitely easier in SF. However, the cost of living is so much lower (and I
would say quality of life is so much higher) in Austin that I’m glad we’re
based here. It’s also relatively easy to recruit from all over the world to
Austin, everyone has seen the continuous stream of articles rating Austin as
one of the best places in the US to live.

There’s also another great side-effect of being Austin which I didn’t notice
until we were already scaling very quickly. There’s a smaller number of
startups in Austin that are producing millions in revenue very quickly (as
compared to SF) but the enthusiast and talent pool is very large. When we
started to hit scale we had way more advocates than we ever expected. Austin
wants home-town winners and it throws its weight behind the ones that look
promising, but you have to have something to show.

My cofounder and I consider having Cratejoy based in Austin a competitive
advantage.

------
roosterjm2k2
Anyone remember the day where you just made a business, and built it over
time, and nourished it into a successful company? Where you didnt beg for
money from investors and build your entire plan around using someone else's
money? Where the best businesses came out on top, and not the best flashy idea
or happenchance encounter with a VC? I don't get why every freaking idea has
to be tied up in investors to take off, when if its a valid, profitable
business, it would build on its own, and prove itself a strong business
without needing help...

Im just tired of seeing so much tech tied up in the politics of investors...

~~~
sreitshamer
I think it's that those are the only businesses you hear about in the press.

------
6stringmerc
First and foremost I really want to acknowledge the great tone, reflective
nature, and clear chronicle of spending talent, time, and effort to build up
Localeur into a going concern. I think the piece does an excellent job
describing to an outsider the personal challenges of both tech and the
cultural considerations that come along with being a Black founder. The
apparently repetitive 'dismissiveness' from within the tech community (re:
location) is tough to read but certainly strikes a chord.

My experience with Austin as a city and with its own culture really soured me
on the place, in that I discovered the "Live Music Capital of the World!" to
be self-congratualtory hype that wasn't true (e.g. New Orleans can toast
Austin any night of the week, full stop). I've watched as 'up and coming'
cool-factor-wow stuff like SXSW lost most all of its local roots.

I saw tons and tons of well-to-do people moving into Austin, driving costs up
and creative types out. I saw a town where there's a seemingly endless glut of
up and coming talent by way of the University; a glut that depressed wages and
made companies comfortable offering no-benefit wage-slave work just to work as
a sub-contractor in a "cool" place like AMD. I saw a town that desperately
wanted to be cool and had long ago forgotten what it looks like outside of a
smart-phone screen.

My point is that I hope the best for the founder to use his experience wisely,
to look toward SV with the same skepticism that has been developed after all
those years in Austin, and be careful. Don't let reputations fool you - Austin
thinks its such a great music town, but it only takes a quick minute to
realize that Leon Bridges, St. Vincent, Justus, and a load of other up and
coming artists do their thing in Dallas/Fort Worth/Denton, not Austin. It
might not seem a clear correlative to many, but I honestly do believe support
for creative industries and taking risks on new business efforts are quite
analogous - so be wise and prioritize which matters more, coolness or success.

~~~
dj-wonk
Austin is indeed (!) the "self-proclaimed music capital of the world". They
should invite musical delegates from all other lesser cities (like New York)
to represent at the Austin Capitol.

I do love a lot about Austin -- just not the self-promotional parts.

------
skolos
It reads like a marketing piece or a resume. I could feel that there is some
important topic that the author tried to convey, but it was completely lost
for me behind list of achievements and recognitions.

~~~
nikdaheratik
Yeah, it's one of those things where there's a good story to tell, but it
needs focus and editing. But hey, Austin is alright.

------
dj-wonk
This article raises important questions and observations. I've lived in
Austin, DC, and Silicon Valley. I've met Joah (the author), and I wish him,
his company, and anyone like him good luck!

Given that VC's often move as a herd (more or less; e.g. seeking signals from
others before acting), there is a hurdle to cross. Perhaps it would be better
for Austin and companies there if VC's were a bit more numerous, diverse, and
willing to act first. By 'diverse' I mean all senses of the word; in
particular, covering more industries, models, and risk preferences.

------
arcanus
Austinite here. Interesting article.

> how can I go about doing that if I’m not being supported > by VCs in Austin?

As a three year old firm, you might be running out of runway. I don't disagree
with your statement that Austin VCs are more risk adverse than SF, but in my
experience we do have a serious funding environment that many cities would be
envious of.

Austin is not really competing with SF, but occupies a niche with a nice tech
ecosystem while simultaneously remaining affordable with a nice work-life
balance. [The affordability is rapidly eroding as the city-center grows]

~~~
wavefunction
I would disagree that Austin is all that affordable any more.

I can't comment on the venture scene here as my projects are boot-strapping
right now.

~~~
afarrell
Austin is certainly still more affordable than Boston, as someone who made the
move from the latter to the former.

~~~
wavefunction
I almost included another line that Austin is probably more affordable than
SF, NYC and Boston but I guess I would point out that Boston is likely more
affordable than London.

------
stuxnet79
Interestingly enough, this has renewed my interest to move to Austin. There
are more opportunities in the States than here (Canada) and Austin looks like
an appealing spot to relocate to.

~~~
fapjacks
Be very careful with this decision. Austin has a reputation and the name of
the city moves lovingly across the lips of starry-eyed dreamers, but I must
warn you that Austin these days is an East-Coast city in the middle of Texas.
I am from a town in Kansas that probably would have made a great sister city
to Austin in the 80s (Lawrence), and so I understand viscerally what people
love about Austin. But enough people from the east coast and Los Angeles have
diluted almost all of the things that once made Austin special. Real
Austinites do exist, and they are as cool as you have heard, but they have
moved and live outside of Austin in places like Elgin or New Braunsfels. The
city does not live up to its reputation, unlike other places (for example
Portland is as weird as you hear about and Austin doesn't hold a candle to
that weirdness). Just an opinion from a guy that's lived in a bunch of places.

~~~
pnut
As someone who spent a decade there and moved on, I second this sentiment.
Austin has a homogenous weirdness and a southern corporate consumer culture,
and its fabled affordability is a thing of the past.

~~~
big_youth
What more affordable city did you move to, if you don't mind me asking?

I visit tech cities across the US often for work and in comparison I find
Austin is incredibly affordable.

------
siegecraft
That was a really long way to go just to attack local politicians for not
giving in to Uber's (empty) threats of leaving. Their entire business model is
based on breaking the law and yet people are shocked when local governments
don't just roll over for them.

~~~
Analemma_
Seriously. I remember a time when people protested their local governments
when they gave in to corporate blackmail of the "let us do this illegal thing
or we'll take our business elsewhere" variety. And now some of them are
instead protesting when local governments _don 't_ give in. God help us.

~~~
abawany
I follow reddit Austin as well and while the sleaziness of Uber's actions is
apparent to many, they also have a lot of fans. Recently it came out that one
of the councilpersons who resisted Uber had a recall petition filed against
her by some notorious political operatives (1,2) and with that, the pro-Uber
voices seem to have died down as the identity of the operatives became known.
It was never clear if the pro voices are shills or genuine fans as traditional
taxi services have genuine issues.

1:
[https://www.reddit.com/r/Austin/comments/43fco8/can_someone_...](https://www.reddit.com/r/Austin/comments/43fco8/can_someone_set_me_straight_on_the_battle_between/)
2:
[https://www.reddit.com/r/Austin/comments/46q8z5/ann_kitchen_...](https://www.reddit.com/r/Austin/comments/46q8z5/ann_kitchen_says_people_with_austin4all_came_to/)

------
snapetom
I've said that town's reputation is a sham for years.

The reason it's hard to get funding is because there's never really been a
large VC there except for Austin Ventures, who 1) everyone saw as a Faustian
bargain 2) has been hammered by investors for the past 3-4 years 3) is now
broken up.

To make matters worse, there aren't any large enterprise customers. There's
two Fortune 500 companies - Dell and Whole Foods, and the later is not a tech
company. Sure, Apple, Google, Samsung, etc. all have _presences_ there, but
decision making is still in San Jose and New York.

------
mathattack
This may seem like a stupid question, but does your home office really need to
100% tie to your funder's office? I go to KPCB [0] and see a lot of Bay Area
companies, and quite a few that aren't. As a Bay Area local, I hear a lot
about "Put whatever you can in a place like Austin for lower costs are more
employee stability."

If the business is a good deal for investors, they won't let an Austin zip
code stand in the way.

[0] [http://www.kpcb.com/companies](http://www.kpcb.com/companies)

------
asquabventured
Why is the color of his skin so important to keep noting throughout the essay?

When you boil it down, VC's only care about one color: green. I highly doubt
skin color is the reason you aren't getting call backs or having VC's roll out
the red carpet.

~~~
untog
> When you boil it down, VC's only care about one color: green.

Do they? Do you have personal experience to suggest that VCs in Austin are
color-blind when it comes to race?

What I see is a person's personal account of living in the Austin startup
scene. They consider their race to have been a factor in that experience. Who
are any of us to turn around and say " _actually_ , you're wrong, your race
doesn't matter at all"?

~~~
angersock
_Do you have personal experience to suggest that VCs in Austin are color-blind
when it comes to race?_

Do you have personal experience to suggest that they aren't?

The personal account here seems to conflate the possible race factor and the
definite business factors that go into a pass. It's up to us, the readers, to
decide whether or not we agree with the author's analysis.

~~~
trustfundbaby
> The personal account here seems to conflate the possible race factor and the
> definite business factors that go into a pass.

I'm curious how can you actually determine that if you haven't actually ever
been passed on for being black?

> It's up to us, the readers, to decide whether or not we agree with the
> author's analysis.

Actually its not. I've never menstruated in my life, but if a woman tells me
about her experience of menstruation (as long as it matches the data), I
really _can 't_ dispute it since because I have zero context to determine
anything past cold hard fact.

And the fact is that the numbers are pretty stark when it comes to black
founders being funded by Venture capitalists ...

And no. I'm not going to provide you the data. Educate yourself a little on
the topic ;)

------
angersock
Some observations:

First, it's odd that the author claims that their ethnicity is not the point
or not an issue, and then several times says that VCs and folks are not
willing to put money on an ethnic founder. Like, pick one: either they're
racist shitheads, or it doesn't matter. I know at least one local startup CEO
here in Houston who is of color, and I've seen nothing but respect and success
for him--mostly because he's a _brilliant_ businessman.

Second, the author is grumpy that consumer plays aren't getting funding. This
could be _because consumer plays are not worth funding_ , especially in the
current wave of (finally) conservatism. It's a space filled with stillborn and
decaying unicorns.

Third, the author's project Localeur
([http://www.localeur.com/](http://www.localeur.com/)) is kinda jank. It
doesn't recognize locations outside of Austin, it seems to rely on Facebook
for signing in (which while boneheaded is unfortunately SOP in that space),
the location bar doesn't even take keyboard focus/input, the "How this works"
thing pops down a tab that covers half the screen but has no obvious hint on
how to close it...it's just not super compelling.

Fourth, the product seems to be "report on cool stuff nearby and vote on it
and get internet points"\--this, without an obvious way to pay them money.
They're in, incidentally, a niche already covered well by such little-known
startups as Yelp, Foursquare, and Google Maps. It does not take Marc Andreesen
to figure out that the space might be pretty competitive and without great
returns.

~

I'm from Houston, and we all _wish_ we lived in the magical circlejerk of
entrepreneurship and hip tech culture that everyone else seems to believe
Austin is. Yet, we still find ways of building good businesses and raising
funding if needed.

If the author can't hack it there, maybe moving to the land of even more
farcical business _is_ the answer: that said, they shouldn't blame Austin.

~~~
dang
> _the location bar doesn 't even take keyboard focus/input_

Going all the way from the OP to that petty a smackdown of the author's app is
a real stretch, and feels more like an attack than respectful conversation.
That's not in the spirit of this site.

~~~
angersock
I respectfully disagree that it is a petty smackdown: the core feature of the
app is this location-based business discovery, and _on the current production
site you cannot even enter your location in the provided input box_.

If a person is trying to build a business in a very tight space (Yelp,
Foursquare, etc.), then their product needs to be _on point_.

If it isn't, that's fine--but then they need to be honest when trying to
review why the may not be raising funding. This article (and associated
product) kinda fail in both ways, and I think my criticism is completely fair
in that light.

