Startups: Raleigh vs Boulder December 2012

Now that I’ve spent a lot of time in both Raleigh and Boulder, I find myself interested in comparing the two environments.

The biggest noticeable difference in the two environments is that doing a startup in Raleigh is still somewhat unusual – especially if you are young. If you were to bring up the fact that you’re working on a startup with a random person in the triangle, chances are that they’ll either (A) think you must be some sort prodigy and wonder how you’re actually pursuing this spectacular feat of starting a company or (B) see you as a step above fraudulent; someone that’s unemployed and probably unemployable. Someone with an unrealistic goal of doing this strange thing called a startup.

This might be a bit of an exaggeration, and maybe a bit pessimistic, but in comparison with Boulder it feels true. In Boulder, if you mention that you’re doing a startup to a random person, there’s a good chance that they’ll ask you which one is yours, and then mention that they, too, are doing a startup. They get it. They might not have read the Lean Startup or Do More Faster, but they get it.

I speculate the reason that Raleigh’s startup scene is so un-mainstream, as is the norm in most cities (I suspect Raleigh is not unusual for most cities of its size, especially cities in the southeast), is that it is a land dominated by universities and large companies. SAS is here. IBM is here. Cisco. The list of major tech corporations goes on. Then there are the pharmaceuticals. Most people here are content with working in large companies, having comfortable salaries, and never find a reason to leave this calm, protected suburban atmosphere and enter the world of startups. Most people here don’t think on the small, niche, and ever changing scale that startups must become acquainted with. They think on large, international scales, and they see themselves as single individuals on large teams inside of larger departements attempting to accomplish multinational corporate-scaled feats.

That said, the relatively few people here that are working on startups are just as close-knit as the people in Boulder – probably even closer knit. They’re geographically much more spread out – a painful trip in the car for each and every meeting – but nonetheless, socially very connected. Just like the rest of the startup communities in the world, Raleigh runs the risk of groupthink. I might even go as far as to add that the entrepreneurs here are more likely to have read the current stack of trendy books… The Lean Startup, etc. I might even argue that they’re a little better versed in the startup lingo than those in Boulder, perhaps because they feel that it’s one of their few connections to the greater, national startup ecosystem.

I also take notice that entrepreneurs in Raleigh tend to see startups as new, exciting, and a big deal. After all, this is what got me excited about them. Going back to Boulder, there is still the individual excitement, but a startup is nothing new there. It’s just what you do. Here, you’re still a bit of a rebel for quitting your job and creating your own company.

All of these comparisons considered, I think the biggest thing that Raleigh is lacking is actually transportation. Ironically, the one hinderance to Raleigh’s startup scene has nothing to do with entrepreneurship, mindset, or connections. It’s a simple public infrastructure problem of not being able to get around. Northwest downtown Raleigh and downtown Durham are emerging as the current hubs of entrepreneurship. They are up and coming. Yet, very few people actually live in them. The most central and dedicated young minds in the community are slowly beginning to move to these neighborhoods, but overall, there is little sense of community. They are not yet great places to live.

Second to transportation, funding is not surprisingly the next big differentiator. Boulder has it’s own set of venture capitalists and is quite well connected with Silicon Valley. In contrast, Raleigh has few VC’s. The ones that are here are conservative, giving money only to experienced entrepreneurs. Bootstrapping is far more common here in Raleigh. That said, it’s also much more feasible as the cost of living here is much lower. Because of the lack of funding here in Raleigh, however, the tech scene tends to be younger. Once people here start getting married and having kids, it’s all over. They get stable jobs. And because this phenomenon removes most of the older, more experienced people from the startup scene, the startup scene tends to get a much more seedy vibe.

Things are changing quickly though. In another two to five years, I have no doubt that Raleigh will be flourishing. Communities will be more centralized. Hubs will be scene as not just places to work, but also as fun places to live. Once things in Raleigh reach the point where you can walk from your apartment to your office, walk across the street to grab lunch, and walk a few blocks from home after work to discuss your company’s new direction over a beer, I think Raleigh will be competitive with Boulder as a nice place for entrepreneurs to live. And if Raleigh manages to connect itself with a few well-funded and well-known VC’s, I think it will have the potential to attract many more industry thought leaders and older, more experienced entrepreneurs.

The change in Raleigh is already beginning to happen. It’s not a matter of if, but a matter of when.