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Is Austin A Tech Center Or A Tech Colony?

There's gold in them (silicon) hills: Out-of-state companies like Facebook and Apple use Austin as a colony, but we don't seem to mind.

Almost every day we hear about out-of-town tech companies opening branch offices in Austin.  

What does that mean? Could the next Facebook, Google, or Apple start and grow in Austin? Will Austin even be the next Silicon Valley? Or are we a "tech colony," a place where global companies can find a ready supply of highly-trained tech workers who will work for less than workers in California or New York?

Salaries are lower here, even for tech specialist in high demand, and although Austin is often billed as a "lower cost of living" area, it may not seem that way to those facing high (and rising) rent, home prices, and property taxes.

In Silicon Valley, researcher and writer Vivek Wadhwa studies competitiveness as an academic discipline.  He says he’s pessimistic about the tech future of many U.S. cities and regions, but not Austin. He says Austin has done everything right and should continue to grow. More than advantages like Texas' favorable tax climate, the stream of patents spinning out of UT, or ample investment capital, he says it’s the human capital that gives Austin an advantage.  

"Every indication is that Austin is becoming a tech hub," Wadhwa says. "If you just focus on the people, focus on the diversity, I wouldn’t worry about anything except the people. It’s all people, people, people.”

In particular, Wadhwa says Austin's rich culture – its musicians, artists, festivals, and food, make it a place that can attract and hold a diverse group of people that spawn innovation.  More than 50 percent of the population in Silicon Valley is foreign-born, says Wadhwa, which he says helps create a rich entrepreneurial culture there. 

Austin Ventures is Austin's top venture capital firm, with an almost $4 billion  investment budget.  General Partner Chris Pacitti says Austin is already a "credible alternative" to Silicon Valley as a place to start and grow a business.  In some ways, he says, Austin is a better environment because it's easier to find and retain employees: "In the Valley, you have such a competitive culture, if your company has a single blip, half your employees might leave, overnight." 

Pacitti often recruits tech executives here. He says his recruiting "sweet spot" is execs with young families, who see Austin as a good place to raise their children.

Serial entrepreneur Craig Malloy moved here in 1994, from San Diego. Since then he has started and sold two companies, and is now on his third, Bloomfire. Malloy notes that computer giant Dell started and grew here, even without the tech-specialist attorneys, accountants, and PR firms that have since sprung up to service the startup ecosystem.

“There’s no reason that another company like Dell or Google or Apple or Facebook couldn’t start and be successful here in Austin,” Malloy says.  "No reason at all."

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