It’s a simple, straightforward question for most entrepreneurs.
Where is your company based?
But for Joseph Kopser, it’s not so cut and dry.
“It’s complicated,” said Kopser, one of the founders of the transportation start-up RideScout. “I like to say we were conceived in Arlington, Virginia, born in Austin, Texas, and raised in Washington, D.C.”
“Truth is,” he added, “we don’t have just one home.”
Kopser isn’t alone. In an era when a company’s employees are as likely to be in another state as the next cubicle over, even the smallest technology upstarts are increasingly spread out across the country — a trend driven by a mix of necessity and opportunity, and one that poses a challenge for traditional economic development officials.
“There has always been this notion that, say, this is a D.C. start-up and that’s a New York start-up,” said Donna Harris, co-founder of District business incubator 1776. However, “companies are not necessarily viewing themselves that way anymore. It’s becoming more widely accepted that start-ups don’t have to choose a home city.”
In the case of RideScout, which consolidates numerous ground transportation options into one mobile app, the company’s multi-city structure is the result of where its founders chose to live, as well as an assessment of the best places to find talent and customers.
Kopser conceived the idea while trying to navigate his way around Arlington. Then, he moved to Austin. He continued tinkering with the concept with help from a friend (and eventual co-founder) back in Washington, where they also raised some private capital.
It soon became clear, Kopser said, that the engineering talent the company needed could more easily be found in Texas, even if the nation’s capital, with its extensive public transit and transportation network and getting around challenges, represented a strong target market.
“So, that’s how we became this bimodal company, where we have our engineers and myself in Austin, while the rest of the company, including our marketing and business operations, is out of D.C.,” he said.
Currently, half of the team (six people) lives and works in Washington, while the other half are in Austin. Never have all 12 employees sat in the same room, he said.
It’s a very similar setup at TrendPo, a company started by J.D. Chang three years ago in San Francisco as a fantasy politics game that has since evolved into a social media advertising platform. Last year, Chang was accepted into the Fortify Ventures Accelerator program in D.C., putting him closer to his customers, many of which are political groups and think tanks.
One year later, he was recruited by Capital Factory, a similar incubator space in Austin, where his co-founder was already living and where he believed he could more easily find the software coders he needed to keep growing his company.
“Our plan is to build up an engineering team in Austin and build up a sales force in D.C. and kind of be part of both cities,” said Chang, who still lives in San Francisco and travels constantly between the three cities. “That’s what works for us.”
Meanwhile, other early-stage technology companies are finding it easier to move around more often, relocating as needed in their search for talent, housing and funding.
Ben Levy, for example, started building EduCanon, which helps teachers embed learning and engagement tools into videos, a couple years ago while living in San Francisco. He later moved the company to Boston, where he went through a business accelerator program, and then moved back across the country to Los Angeles, where he went to college.
Not six months later, Levy, a Maryland native, and his small team returned to the East Coast, setting up shop about 45 minutes outside Washington in the town of Galesville, Md.
He’s still not certain that will be the company’s long-term home.
“We’re very much nomadic,” he said. “We always think that where we move will be a place to put down roots, and we’ve tried to do that, but if a better situation comes, we’ll relocate.”
Start-ups that are willing to hop around or spread out present a wealth of opportunity for economic development officials, who are constantly trying to recruit companies that have the potential to grow and create jobs in their communities.
However, because they may very well generate some of those jobs elsewhere as they expand — or worse, up and leave altogether — they create a number of challenges, too.
“Under the traditional economic development mind-set, you’ve got to compete, because either this city gets the jobs or that city gets the jobs,” Harris said. “This doesn’t fit very well inside that model.”
Chang, for instance, noted that he has looked into state-run venture funds and accelerator programs in both Virginia and Maryland, but shied away when it became clear that “they require you to base your headquarters in their state and have suggestions, if not very strong recommendations, on how long you should stay.”
Kopser noted that, as soon as his company started gaining traction and creating jobs, “D.C. and Austin officials started asking us those questions: ‘Wait, are you a D.C. start-up or an Austin start-up?’”
Eventually, he says, leaders in both cities started to embrace his company’s structure, with “the folks in Austin happy to stand up and take pride in what we are doing in Austin, and the folks in D.C. proud of the work we’re doing in D.C.”
Added Harris: “We can all grow start-ups, and a company can be in my city and in your city, and both of our cities can get jobs.”
Tiffany Thacker, director of business attraction and marketing for the Washington, D.C. Economic Partnership, a nonprofit, agreed that the nimble nature of technology start-ups shouldn’t be a deterrent for economic development officials.
“Start-ups are simply playing to what their needs are at the time,” she said, noting that investors and talent aren’t prevalent in every city, forcing some firms to expand, sometimes temporarily, to tap into another area’s resources. “If that happens, a city will be glad to have that company’s second office.”
Moreover, the benefits aren’t always measured solely in jobs.
David Zipper, who led the District’s office of business development and strategy for four years before leaving to join 1776, noted that some of the most promising start-ups are the ones tackling problems in fields such as health care, education and transportation — problems that exist in cities and towns across the country.
“When mayors from around the country visit 1776, you can tell that their mind initially goes straight to: ‘Okay, these are awesome companies. How do I get them to move to my city and create jobs?’” Zipper said.
“What I try to explain, and what many of them are starting to see, is that the value of these companies establishing a presence in your city, even if not moving there entirely, may not be about jobs, at least not in the near term,” he added. Instead, “it’s about the problems they can solve and improving the quality of life in your community.”