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Austin vs. Silicon Valley: Why is only one of the two terrified of the tech downturn?

(EDITORIAL) The tech downturn has many tech centers afraid, so why don’t Austin tech folks talk about it (or even care)?

Apparently the Valley is secretly in fear

There’s been a bit of a downturn in tech this year, and my Silicon Valley friends are constantly asking how things are so they can compare notes. Fellow media organizations are reaching out to ask how Austin is faring, and to be honest, Austin has always been cautiously optimistic, never cocky, so we’re fine. More than fine.

Is the tech downturn scaring Austin as much as it is Silicon Valley? Nope. As a city, at least in the tech sector, we’re humble and know that layoffs can happen anywhere at any time, so we’re all pretty well versed on keeping our resumes up to date.

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Austin has had its fair share of layoffs

To expand on that, let’s start by addressing the fact that in Austin, there is an awareness of layoffs as part of business. Sparefoot demanded headlines (locals knew it was nixing call center staff that had become outdated) but they did layoffs uniquely in that staff wasn’t blindsided and the HR team went out of their way to help everyone impacted by layofffs to get jobs, even tapping our resources and throwing their own mixers to take care of their people – that’s kind of the Austin way.

Last year, Demand Media had a round of layoffs and people thought they were pretty cold about it, meanwhile, the gaming sector has layoffs sporadically as projects expand and contract (take BattleCry layoffs for example).

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But layoffs are not the topic of much discussion here for more than a week after pink slips, because there are so many companies are coming to town, attracted by much lower operation costs (for example, Oracle will soon bring thousands of jobs here).

Austin is a tech center, but not overly reliant on the industry

Further, Austin’s tech is extremely diverse. We’re a gaming mecca, a burgeoning educational tech (EduTech) center, and because of the new(ish) Dell Medical School at UT, medical tech is now blossoming, just to name a few hotspots. Outsiders misunderstand the recent Uber and Lyft exit from Austin as a lack of innovation and use it as a punchline, and although some believe the current Austin City Council stifles innovation, ridesharing is but one small part of the startup scene here.

Makerly founder, Sarah Ware beautifully explains what makes Austin so attractive in a recent editorial, “3 reasons why you should move your startup to Austin,” which will give you even more insight into the quality of the startup scene.

While Austin is very tech-centric, the majority of the largest employers are not actually tech, which insulates the city from being overly reliant on any one industry.

Austin isn’t immune (let’s talk about money)

Finally, what is often unknown from the outside is that Austin is home to many big tech name brands, but is largely fueled by smaller brands as the Lean Startup Method is extremely popular here and having 10k employees is not most peoples’ goal (nor glorified), so there’s a cultural difference between here and Silicon Valley (I’m not saying that’s the right way to go, but many here fear being labeled as sell outs).

We are home to the most active angel investor group in the nation and Texas (led by Austin) leads in crowdfunding efforts.

You won’t see as many billion dollar investments in Austin as you will the Valley, so the dollar signs are different, and current investors are often very hands on. Although VC funding is slowing here, angel funding still reigns. That said, Texas ranks 4th in terms of VC dollars invested in the software sector, much of which is in Austin.

The takeaway

Dig through the Facebook posts of Austin tech’s movers and shakers, then compare them with the same types in the Valley. Our friends to the west are constantly digesting the fear, while Austinites are barely reacting. This town is not only durable, but diverse and humble, so no, Austinites aren’t currently in an environment of fear like other tech cities are right now.

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#AustinTech

Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

7 Comments

7 Comments

  1. Henry Robertson

    July 19, 2016 at 11:32 am

    Are you implying that Silicon Valley workers are somehow not aware that employment in the industry is volatile? I’m not aware of Valley companies “glorifying” the hiring of 10k workers. The SF Bay Area has multiple medical schools.

  2. Zz

    July 19, 2016 at 2:10 pm

    Latest venture capital figures (PWC/Moneytree q2, 2016 survey) indicate that Silicon Valley (Bay Area) based businesses had 32 times the VC financing of that for Texas. When compared to just Austin, it’s 54 times, and this is when Ausin had a good quarter, compared to last year’s quarter. This is all on top of 25 year trends indicating that Silicon Valley has taken on an ever greater portion of U.S. Venture capital.

    So, Silicon Valley, scared? Nah? Silicon Valley is rather proud of its junior partner, in handling things like domestic manufacturing that’s somewhat less expensive (I.e. Samsung San Jose designed chips manufactured at the Austin fab.).

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