Metro cities tend to be bigger markets. They are a one-stop destination for consumers, talent, investor and everything else required. But is moving to a bigger city a necessity for startups? Do startup owners need to leave their roots and flock to a bigger city for supposedly greener pasture?
An employee from Housejoy shared the best performing cities in terms of revenue and Ahmedabad was foremost on that list. Then came Bangalore, Pune, Chennai, and Jaipur. The biggest metros Mumbai and Delhi did not even appear in the top 5 list of performers. If Infosys relocated themselves to metros, Bangalore probably would not have been what it is today. These examples show metros are in no way the clear winner. Smaller cities have its own advantages. Leveraging these advantages makes startup unique and not just another trend follower. Qriyo operates from Jaipur and let us tell you our reasons for doing so.
“I think you only need two kinds of people to create a technology hub: rich people and nerds,” says Paul Graham, the startup guru and the founder of seed funding entity, Y Combinator. Where can we find the nerds? What is their meeting place? College, of course. The city with colleges will have nerds or wannabe nerds (being a nerd is cool these days, thanks, Zuck). What about the investors? Well, you don’t need investors to live in your city.
Unlike talent, money can be electronically transferred. This new world is technologically speaking smaller than before. If you have a good idea, a usable product that is filling a void, investors generally flock in. And if your product is not good, everything is unplanned, seeking investment should be termed foolishness. A metro certainly has a slight edge but this can be easily tackled with a bit of hard word. There is no startup without hard work. Jaipur has colleges, a lot of them and with them talent too.
What Paul said is a subjective truth. It resonates with some and doesn’t with others. But then there are more reasons for us to operate from Jaipur. These reasons could be general to many other cities too.
The infrastructure cost in bigger cities has skyrocketed. The employees expect fatter paychecks. The cost of living is higher in a big city and it is hard to survive on a smaller paycheck. The situation is way better in smaller cities. Money saved is money earned which can be utilized to make cool products.
More Access To Talent
Emmanuel Justus, CEO of Employability Bridge, pointed out that there is a huge resource of qualified persons in small-town colleges, whose career interest remain untapped. “Companies have now started identifying the potential of this rich pool of human resources. It may also be noted that 70 percent of the educational institutions, except some top-rated institutions, are in tier II and III cities,”. Not just more access to talents but talent retention rate is high due to a low rate of competition.
Distance Matters And Matters More If You Are An Operations Startup
Bigger cities are big, smaller cities small. It is easier for an operations startup to start in the small city. In big cities, under big demands and heavier load and lengthy distance there is a chance of them fading out. Fading out due to overpressure and over expenditure. Then there is traffic. Whenever I hear the word Delhi, the first picture that forms in my mind is of the buses crawling and a sea of vehicles. For the record, the crawling rate is frustrating and too slow. Bigger city, bigger population, bigger and more cars and more traffic. It’s better for them to stay in a small city and test and verify and then expand.
MVP AKA Minimum Viable Product
When you can get your proof of concept at a lower resource cost it makes no sense to throw more valuable resources down the drain. Eric Ries in his book ‘lean startup’ advocates about the minimum viable product. MVP is a product with just enough features to gather validated learning about the product and its continued development. Gathering insights from an MVP is often less expensive than developing a product with more features, which increase costs and risk if the product fails, for example, due to incorrect assumptions. Small cities are perfect for the MVP playground.
The internet doesn’t discriminate, the technology doesn’t discriminate between small and big cities. The technology that is available to metros is available to smaller cities too. The small city talent (which is plenty we have discussed) can leverage it and learn and build.
Stories we have hear that validates our assumptions and thinking
“You don’t need to be in Bangalore or Delhi to develop world-class products,” said Bhat, 43, the founder of Robosoft Technologies, the company behind popular apps such as Camera Plus. “We could be in Udupi, and the rest of the world can discover and consume our products,” said Bhat, who hired local talent in the town to build the app’s technology.
“There is not only good talent available in Jaipur, but it is liveable,” says Patni, founder of CultureAlley. Investors say that entrepreneurs from small towns appear to be more charged to succeed and willing to put in the hard yards to make their startups flourish. It also helps that costs — from human resources to rentals — are lower, commutes are shorter and fewer people quit jobs.
Good for the country
Migration to bigger cities is a very big problem. Population, however, large if neatly distributed is always better. Nearly 90% of the colleagues in my previous companies in Mumbai were migrants. This is leading to the ever growing population of Mumbai, Bangalore, Delhi -NCR, Pune, Hyderabad – many of these cities find themselves incapable of handling such load. There is an urgent need to create employment opportunities in other cities as well. And startup founder staying in their hometown and building business along with growing employment should be shown thumps up. In the bigger picture, they are helping the country and should be cheered.
Starting in a small town has its benefits but it is not a bed of roses. As soon as you start the entrepreneurship walk you know the walk is going to be long. There will be brick walls. And how do you face the brick wall? The same way that Randy Pausch wanted us to when he said,’ The brick walls are there for a reason’. The brick walls are not there to keep us out. The brick walls are there to give us a chance to show how badly we want something. Because the brick walls are there to stop the people who don’t want it badly enough. They’re there to stop the other people. One challenge I see is finding senior talent might pose some difficulties as many of the senior talent (VP, GM level) have settled with their lives and fatter paychecks (hard earned) in metros. But with some extra effort, one can find them. And startups are meant to be driven by a young team. Let the youth learn and groom themselves in senior suits.
One challenge I see is finding senior talent might pose some difficulties as many of the senior talent (VP, GM level) have settled with their lives and fatter paychecks (hard earned) in metros. But with some extra effort, one can find them. And startups are meant to be driven by a young team. Let the youth learn and groom themselves in senior suits.
The initial years of any business are formative years – building technology, right business model, experimenting with marketing ideas to arrive at the right strategy does take time. Hence longer you survive, you’ll have higher chances to succeed. The burn rate would be in the direct ratio of 1:4, hence survival time will be 4 times more when you operate from smaller towns.
However, one need not restrict oneself to smaller markets. There is a difference between Headquarters and the market – headquarters are backend and can function from smaller but well-connected towns. A business aiming to grow big should definitely tap bigger markets to grow the business. In our case, we have the presence in Jaipur, Jodhpur, Delhi, and Mumbai. But our headquarters is Jaipur and not Delhi. The lines Do not go gentle into that goodnight.Rage, rage against the dying of the light by Dylan Thomas fits startups like a basketball in the hoop.