In the past couple of years, we have seen an overwhelming amount of tech companies make the move from Silicon Valley to Texas. Apple is building a second campus in the city and Facebook opened offices in Austin in 2010 and is now home to more then one thousand employees in the city. Google has just built their second Austin office downtown with its third in progress slightly east. Perhaps most notably, Elon Musk announced last year he was laying roots for many of his ventures like Tesla and SpaceX in this up-and-coming tech hotspot.
So what is it about Austin, Texas that is causing this great migration from the west coast? It may be easy to boil it all down to the lack of state income tax, but there is more than one reason big companies are thriving in Austin.
Shaping the New Silicon Valley
While Silicon Valley isn’t going anywhere, the relocation of major tech companies will take Austin from a tech savvy city to a full-blown tech hub. As companies large and small make their way over to Austin, there is an opportunity to shape the new community by learning from what others have gotten wrong.
Jim Breyer, CEO of venture capital and private equity investor Breyer Capital spoke to local media in Austin about what he thinks the next tech hub can get right this time around. He talked about how Austin has a better culture surrounding work-life balance than Silicon Valley does. A better work-life balance is known to increase worker productivity, individual mental health, and quality of life.
Breyer also acknowledged the lack of diversity when it comes to leadership in Silicon Valley. Breyer recognizes that Austin needs to focus on giving women and minorities the tools they need to become directors and leaders in this next generation of the tech world.
In addition to having no state income tax, Texas is one of six states that does not have a corporate income tax. This increase in capital funds leads to increased investment opportunities and growth for businesses and individuals alike. Companies are also taking into account the difference in operating costs between California and Texas. Although, it is easy to draw parallels between cost of operation and labor when companies are fleeing one of the most expensive states in the country.
Companies will also find it easier to attract top talent to a city like Austin which has many appealing advantages. With a median rent for a one-bedroom apartment at around $1,100 a month, Austin is an incredibly affordable city to live. The low cost of rent will also appeal to the tech employees of Silicon Valley who pay more than double that in rent. Austin is also an incredibly inclusive city that is home to live music venues, tons of hiking and parks, and great weather through most of the year.
With all these signs pointing to tech companies experiencing exponential growth in Austin, investors are more than happy to be supportive.
Austin’s thriving economy has earned accolades as one of the top cities in the nation for young entrepreneurs and startups. While higher profits and lower operating costs will lead to higher purchasing power and growth for established businesses, it also makes it easier to turn a profit with a startup business. Young entrepreneurs want to start their businesses in Austin for many of the same reasons we see large companies relocating here. Texas state law makes starting a new business a safer investment. Not having to pay a corporate income tax gives small businesses more of an opportunity to turn a profit in the early days of their company, allowing them to reinvest.
In addition to lower rent for brick-and-mortar office space, Austin startups will enjoy a lower cost for advertising as well. Austin billboards are a great way to increase visibility and get your brand out in the city. The affordability in Austin allows businesses small and large to have equal opportunities to get their company seen on a large scale. It is easy to see why young people feel empowered to start their small business in Austin, Texas.
Relocating to Austin
With all the tech companies starting to take notice of Austin, we are sure to see continued growth in the new hub of Texas. While it may never replace Silicon Valley as the tech capital of the U.S., Austin is sure to offer a diverse and inclusive environment for businesses to thrive in through the coming years.