Why my startup is staying in the Midwest

Like a lot of tech entrepreneurs in the Midwest, I get asked a lot why my startup, ABODO, isn’t in Silicon Valley. I hear it even more after the release of reports like this one from the Kauffman Institute, which ranked the state of Wisconsin dead last of all large states in both startup activity and startup density, and second-to-last in annual rate of new entrepreneurs. Why Madison? people ask. Do you just really like the snow?

The truth is, I hate the snow. And yet I started ABODO in Madison, and I’ve kept it here, even as the company has grown from a team of three (myself and cofounders Chad Aldous and Adam Olien) to a company of 28 that just announced the results of its Series A funding round. We’re not alone, either — to hear Drive Capital’s Chris Olsen tell it, the Midwest will have more startups than Silicon Valley in five years.

The reasons ABODO has stayed in the Midwest are more complicated than the weather. And as the tech world increasingly looks for the next Silicon Valley, I thought I’d share a few of them with you.

1. It’s capital-efficient

This one’s obvious: The Midwest is cheaper than Silicon Valley, which has some of the highest rents in the country. I know what I’m talking about: ABODO is an apartment-hunting service. We track that kind of data.

When we started the company, Chad, Adam, and I were just three broke recent grads trying to find an apartment in Madison. Could we have had the idea for ABODO in any similarly-sized college town? Maybe. But there’s no way we would have been able to build this company from the ground up in a place where one-bedrooms rent for $3,900 a month. If we’d lived someplace like the Bay Area, we would have been working day jobs full time (and then some).

And as the company grew, there’s no way we would have been be able to afford anything like our current digs in downtown Madison, which were once home to Microsoft and to Madison-natives The Onion. Madison has allowed our company to be capitally-efficient from its infancy, building a larger business with significantly less capital upfront.

2. It’s a competitive advantage

Innovation is a product of need: You make the thing that you can’t find. The vast majority of tech startups are coastal, and they necessarily address the needs of the populations surrounding them. You don’t get Airbnb without expensive hotel rooms in San Francisco. You don’t get Uber unless you can’t find a cab in The Haight.

But what about Kansas City and Ann Arbor, or Milwaukee and Minneapolis? These aren’t cities in another country, by any means, but the people who live there have different needs than those on the coasts. And a startup’s ability to reach them can hinge on even the slightest differences.

When we started up, we were able to do a better job than anyone else of meeting the needs of a very particular consumer: 18-25-year-old renters in mid-size college towns. And as we expand to more (and larger) cities across the country, we’re striving to keep that intimate connection with our users. Staying in Madison — an exemplar of the kind of city that provides the basis for our product — allows us to continue to anticipate our users’ needs and concerns and keeps us aligned with our founding ethos even as we expand our reach.

(Another side-benefit: The Midwest is full of major research universities with top-notch programmers and software developers, and it turns out that not all of them feel like moving.)

3. Midwestern attitudes are healthy for startups

Midwestern values: So often they’re reduced in the popular imagination to a kind of bland, dopey politeness. But all that niceness typically hides a steely interior work-ethic, as well as a pragmatic approach to investment. Midwestern investors are revenue focused — they aren’t as impressed by high user numbers as some of their peers on the coasts. As a result, fundraising has forced us to be very clear about our goals for the company. We’ve had to set clear expectations and revenue benchmarks for ourselves.

Sound sexy? Maybe not. But meeting revenue-based goals has given us both security and an opportunity for creative risk. If you know that you can support your employees even if your next round of funding doesn’t go through, you can afford to take bigger risks that might take longer to play out.

I studied philosophy in college, and the thinkers who resonated the most with me were the Stoics. It can be hard to be a Stoic — never too high, never too low — in the tech world. Startup culture has peaks and valleys and moves in fits and starts. I like to think that ABODO’s location in the Midwest helps us keep a Stoic attitude towards our progress as a business. The road to success isn’t always straight and level, but it does always require, as Robert Collier wrote, “small efforts, repeated day in and day out.” Our team doesn’t just sit around waiting for lightning (or success) to strike. Instead, we all work together, day in and day out, regardless of the current peak or valley.

Alec Slocum is cofounder and CEO at ABODO.