Location matters for startups for many reasons -- one is that different places have different values that can affect a startup's ability to attract and retain talent. And the startups with the best and most highly motivated talent win.
This comes to mind in considering high tech companies that have made the move from Silicon Valley to Texas, a state that has made explicit laws that ban most abortions, limit voting rights, and ban coronavirus mandates, noted the Washington Post.
And those legal changes have proved to be a problem for workers who moved from San Francisco to Austin. Consider Valerie Veteto, a copywriter who did freelance work for San Francisco tech companies such as Salesforce and Lyft. As the Post reported, a year ago she moved from San Francisco to Austin due to its "city's vibe, creativity, live music scene and the low cost of living."
Since then, she has decided to relocate to New York City. Not long after moving to Austin, the Texas power grid failed, which left millions without power, heat or water -- eroding her confidence in living there. The recently passed Texas laws "sealed the deal" for her to leave for the Big Apple, noted the Post.
Those who have moved there -- including companies such as Oracle and Hewlett Packard Enterprise and Tesla's CEO Elon Musk -- may be thinking along the same lines.
Here are four questions business leaders should ask themselves to help make the choice.
1. Do you agree with the values reflected in Texas's recently passed laws?
If you're from Silicon Valley and you disagree with the values reflected in these Texas laws, I think you should either make plans to move out or to stay in Texas and fight to repeal them.
Of course fighting to repeal such laws could be a futile struggle unless you can partner with other influential business leaders to boost your odds of success.
If you agree with the laws, you are likely to be happy to keep your company in Texas -- which leads to a second question.
2. Do your customers and employees agree with these laws?
If your customers and employees in Texas disagree with these laws, they may be asking themselves whether to stay with your company. Some may decide to continuing living in Texas despite their discomfort.
However, some of your customers and employees may find these laws immediately intolerable and be making urgent plans to relocate. Others may fear that these laws are the tip of the spear -- with even more such Texas laws to come.
Texas business leaders should ask their customers and employees how they feel about these laws and what they are planning to do in response.
3. If they disagree with these laws, will they cut ties with your company if you stay in Texas?
It's crucial that you count how many of your customers and employees will stick with your company if you stay there. If most of them plan to stay, the economic case for leaving is not compelling.
Even if you decide to stay, you may be able to help employees who find the Texas laws intolerable. For example, Vivek Bhaskaran, CEO of an Austin-based online survey software company, told his female employees in a Zoom call that regardless of insurance, his company would cover out-of-state abortion services, noted the Post.
Of course, if most of your customers and employees plan to cut ties with your company if you stay in Texas, then you must consider where best to relocate. Should you return to Silicon Valley or move elsewhere?
4. If you move out of Texas, will the benefits outweigh the costs?
To relocate from Texas to Silicon Valley or elsewhere is a complex choice. Business leaders must weigh intangible factors -- such as how consistent the new location will be with your company's core values and how much the new location will ease attracting and hiring top talent and winning new customers.
In addition, leaders must estimate the quantitative benefits and costs of moving. To that end, they should answer questions such as:
- How much will it cost to break local contracts -- such as leases for office space and manufacturing facilities? How much will such facilities cost in the new location?
- If you move, would you relocate your Texas based employees to the new location? If so, how much will that cost compared with providing them severance packages and hiring employees in the new location?
- How much additional revenue will your company gain by moving to the new location?
What happened in Texas makes it clear that business leaders must take action to support laws that are consistent with their corporate values.