
Ask HN: Why companies shy away from expanding in Midwest / Central part of US? - pravint
Majority of technology companies generally prefer to expand on either west or east coast, both of them are really expensive to live and crowded.<p>Why companies don’t prefer to expand in central part of country where everything is inexpensive?<p>One comment I have heard from people is lack of talent pool outside tech hubs, wouldn’t talent go wherever there are better opportunities?
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duxup
People will list a lot of good and legit reasons (investors are there and want
to keep tabs, talent, etc), but I think bias "sometimes" plays a part.

A while back I worked for a company that was in the networking business. We
had an office in the Twin Cities supporting some but not all products. The
company was at the "need warm bodies" stage as they looked for people to fill
some tech support roles in the valley and just couldn't get anyone. They
reluctantly recruited a few of us from the Twin Cities (they were told they
had to). It was all "oh man I hope you can handle this" / "This job usually
requires a Master of Computer Science and 8 years experience..." and so on.

Then we started doing the job. After all that build up we were shocked, by how
easy it was. It was still just tech support, and no more complex than we had
done in the past with other products. You never once would think of computer
science and that job. Just know the product, be able to communicate (funny
enough customers didn't like the guys in the valley...), and work your way
logically through problems. They were doing in the valley for +2x per person
costs (and they were less productive) absolutely convinced the jobs had to be
there....

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twunde
1) Investors and their money. It's much easier to get angel/vc money in a tech
hub. Investors either are there already or frequently travel through the tech
hub. For companies with investor money, investors generally prefer to be able
to come into the office and see everything. Most of these investors are based
near tech hubs.

2) Partnerships. If you're in a tech hub, it's easier to find companies to
partner with, even by happenstance. It's also easier to sell yourself if your
from SF, NYC, Boston than if you're from Boise, unfair as that is. Lastly,
it's easier to convince a company to acquire you if they already have an
office in that metropolitan area.

3) Talent Pool. This is really about two things: tech workers and seasoned
execs. Generally speaking the talent pool is much higher in the tech hubs. The
average engineer has been to multiple meetups, best practices have filtered
down from the FAANG alumni into the general engineering population.
Anecdotally, the people we turn down at my current job would have been
"rockstars" at my previous jobs in CT and Westchester (the NYC suburbs). Execs
are more likely to have been part of a high growth startup or at least have
exposure to tech best practices or tech in general.

Outside of tech hubs, you're really committing to hiring junior engineers and
training them, hiring consultants to fill key exec or management roles, hiring
engineers from consultation companies (many of the hires that are willing to
travel are international) and if you want truly great hires your going to be
flying in a lot of candidates and many will still decide that they don't want
to move anyway (they essentially need to decide to move away from their
family, friends and work connections and rebuild that. It's a hard decision
and many people back out late in the process)

A good technology analogy is that starting a company in a coastal tech hub, is
like being able to use AWS cloud services. It can be cheaper to build your own
data center, but being able to spin up server clusters at will and outsource
database management, etc increases a company's velocity significantly. You can
build a tech company outside of a tech hub (see ExactTarget), but it's harder
to scale up past a certain size and exiting is much harder. Getting venture
capital is harder and may be on worse terms. Finding good engineers in your
stack nearby is more difficult (anecdotally it's a frequent occurrence to find
companies using custom frameworks and/or best practices from 3-5 years ago,
including the regional "success" stories)

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lordCarbonFiber
Companies don't move because the talent won't move. As soon as you move for
"cost savings" you've already told any employee you actually want working for
you that engineering excellence isn't valued; so who's going to move for that.

The "crowded" part is the reason companies don't move inland. It really can't
be overstated how much the quality of talent drops off as you leave regional
hubs like NYC or SF. This compounds too, things may be expensive in these
cities, but the amenities, job opportunities, and networks are exponentially
better. Cost of living reductions evaporate when stacked up against lost
future earnings (percentage raises on a smaller base + no opportunity to job
hop + reduced opportunity for any potential spouse to do the same), more money
spent on transportation and housing, etc.

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mooreds
Well, I think that they are, especially as the costs of talent in the coasts
gets higher. I am focusing on established tech companies, as for new companies
there is a different set of criteria (outlined well by twunde).

For established companies, they can seek out talent pools available in major
non coastal cities and build satellite offices.

I am not familiar with all of the central USA, but I am familiar with Denver.
Denver is one of the 20 finalists for Amazon hq2, and gusto and slack opened
Denver offices. Oracle has a big presence in the Denver area, and Microsoft
and Google both have offices in Boulder (close to Denver).

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Spooky23
The old days are long gone. Most companies are pretty lean, and the prospect
of sending a key person to Minnesota just isn’t reasonsble. How are you going
to convince some hotshot to move? Remember that spouses work these days!

Plus, if you want to save money, you can send work to India, Phillipenes, etc
and plug into a network of managers and business types.

Is it short sighted and probably a bad thing in the long run for American
companies? Sure. Does that matter? Nope!

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phakding
Chicago/Atlanta doesn't count?

[https://www.google.com/amp/s/www.citylab.com/amp/article/399...](https://www.google.com/amp/s/www.citylab.com/amp/article/399623/)

