Austin start-ups: highly efficient or just cheap?

I have lived and worked in this community for 17 years, through recessions and the most incredible boom times. One thing remains constant – we in Austin tend to “cheap-out”  when seeking the best advice and talent.

Austin’s start-up community is blessed with amazing resources. I love it here: I can ideate a technology product, assemble a team, and launch a product without having to glance beyond Austin’s city limits. Try that in St. Louis or Des Moines. Our entrepreneurial Bootstrap ethos and innovative conferences like RISE demonstrate the power of our community to build new businesses and future employers.

Anyone who lives on billable hours in Austin will likely agree, however, that it’s hard to make a buck in this town.  I spoke with a marketing consultant recently who explained he doesn’t notice the recession because he’s always struggled with finding good work in Austin, even in boom times, and that “people just don’t want to pay for good help here.”

To be sure, I am conflicted. As an avowed bootstrapper I have benefited from our low-cost support structure. I have also felt the pain of many a goose chase from well-intentioned but relatively unsophisticated Austin companies. 

I would posit that our garage culture extends too far into company maturity and our tendency to seek out “free-miums” with consultants and advisers hurts the success rate of Austin companies. Why?

I have a few theories…

1. Austin still trades on the tech boom myth that a cut-rate deal leads to windfall compensation at some future point. How many of you reading this (yes, me too) still hold millions in start-up paper? 
2. The influence of famously stingy organizations on our business culture. Those of us who’ve lived on the receiving end of Dell contracts understand this. 
3. The ratio of service providers to actual work is high. Many of us who love and choose to live in Austin trade a lucrative business environment for the privilege of living here. I recently heard one expert joke that in Austin you make money in  the “travel business” as in “traveling” to “business.”
4. Many Austin executives tend to be overly-impressed with folks from big-name companies, colleges and markets. Sure we have great engineers and designers, but when it comes to hiring the best business experts we tend to look elsewhere. Truly a shame.
5. When we have a critical problem, we do not eagerly seek out new expertise or service provides. We are still very much a do-it-yourself town.

I’m no big spender, but could this skimping reflect a lack of business savvy? Do we believe that tech companies in Silicon Valley and Alley scrimp and save when it comes to hiring the brightest bankers, lawyers, executives and advisers? Maybe now they must, but in my experience they have been too busy making money, launching products and grabbing market share to worry about negotiating hourly fees down another five bucks.

Since opportunity cost is difficult to measure we never know what we miss, and on we go, swimming in our pond, struggling against national competitors with stables of well-cared for experts, advisers and partners. 

My challenge for service providers: Don’t audition for work by doing free work, unless you are truly investing in a company and can afford the time. Estimate your marketable value  and stick with it.  If you don’t value your time, no one else will. Take pride in your expertise.

And for Austin companies still who never seem to make it to the next level? Pay experts what they’re worth. Leverage the best experts and focus on winning. And do it local – no need to look past the Great Hills Starbucks or 360Uno’s for the right person or firm. They will likely respond with more value than you ever  dreamed.

Let’s move the Austin technology community to our rightful place as influencers and innovators.