Choosing your startup’s location

Too often I see new startups launching their products with a real-world component in a city that is not my own. That city? San Francisco, California.

Don’t get me wrong - I have nothing against the city and think it’s a great place to start a business. However, despite the abundant tech talent and investors in the area, it’s not always the right place to set up shop.

Location is critical to any business, despite becoming less critical as we’ve become an increasingly globalized world. When deciding to launch a product, especially one that people interact with physically, the founder must consider which place has the greatest need for that product. Otherwise, there’s an increased risk of failure because you may not have the biggest market to begin with.

For example, Chicago’s weather is all four seasons, and can get a large amount of snow in the winter. By contrast, San Francisco’s weather is very temperate and gets very little to no snow. Therefore, if one were to launch a company that deals with snow removal, the obvious choice will be Chicago. This may be an extreme example, but it demonstrates the need to consider the market need when launching a product.

Want to help the homeless? Go find the largest homeless population (or largest percentage of homeless). Want to make city schools better? Look for the city with many low-performing schools.

I’m slightly annoyed with the number of startups choosing SF simply for the VC money available. There are many great places outside The Valley, and any founder should seriously consider his/her options. Choose Chicago, if I might add.

This post was inspired by “Startup Location Is Still A Critical Success Factor” on Forbes.


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