Soft Landings and the Lack Thereof

Transient

One of the more perplexing problems for second and third tier tech start-up communities is the dearth of soft landing options.

I've witnessed this problem in Durham a few times over the past couple years.  Great team, good product, but can't quite get over the hump. These companies either limp along like zombies, slowly fade away, or explode in a blaze of glory with Bon Jovi playing in the background. 

Failure is the default state for start-ups, so none of this is surprising or necessarily even a bad thing.  That said, it's mouse nuts for a large tech incumbent to absorb a small, talented team based in San Francisco / Silicon Valley and to do so for a small sum that gives investors some, if not all, of their money back and maybe even puts a small chunk of change in the founders' pockets.  So what might have been a train wreck turns into an "exit" and a blog post on Techcrunch.

Even if it is remote, the mere possibility of an acquire-hire makes it somewhat less "risky" to start a company in a massive, well-connected ecosystem like San Francisco / Silicon Valley.  If the company goes sideways or can't close a round of financing, a talented team can sometimes find a buyer simply as a function of labor market supply and demand.

It is less common (based on a hunch and absolutely zero empirical research) for a start-up based in a place like Durham, NC or Omaha, NE or Oslo to experience the same kind of outcome.  When you're on opposite coasts or continents, it is challenging to build relationship depth and frequency with acquiring / hiring companies in the Valley.  

And even if your company is well-networked, it is a tough sell to get BigCo to acquire a small team 1000s of miles away from HQ if your company doesn't have an overwhelmingly compelling technology and/or product and/or income statement...in which case you wouldn't be in need of a soft landing.

This creates a number of difficult problems for second and third tier geographies: 

  • Talent is less mobile because of the acquire-hire virtuous cycle. 
  • It is harder to recruit because of the perceived "risk" of being a non-1st tier company. 
  • It is harder to manufacture (even small) exits that keep founders founding.
  • It is harder to generate press for "exits" -- even if it is small, an exit is an exit.

All of this leaves the "go big or go home" start-ups in second and third tier communities with a likely "go home" scenario that is more likely a smoking crater than a soft landing at TechBigCo.

I think that the solution to this problem is a numbers game.  Small communities need more start-ups, which will lead to many more failures but also more wins.