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Location Location Location: 3 tips for startups

Posted by Devin Cole  May 3, 2012 10:29 AM

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Dougan Sherwood.JPG

Dougan Sherwood

Dougan Sherwood started his own company and burned through $20K of friends and family's investment. He got burnt. He now works at Cambridge Innovation Center, located at Kendall Square, Cambridge, MA.

He sees many startups in different stages and he ponders the impact that location has. His advice for startup companies is a mixture of the conventional and the more existential.

Go where you can:

  1. Recruit the talent you need
  2. Minimize hassle and free up head space
  3. Figure out who you are!

Everyone in the startup world knows that recruiting people is of prime importance and also excruciatingly hard. A startup needs a team of people whose skills complement each other. We tend to know people like us, not people with complementary skills. A startup needs people with drive and enthusiasm, an understanding of product development and the many iterations it has to go through with feedback from potential consumers, people skills, market savvy, fundraising, legal and accounting, technology and so on.

The list is very long, which is why only a very few places on the planet have produced successful startup companies. Putting it starkly, only Silicon Valley and Boston have the critical mass of people with different skills to routinely put together successful teams. But even within those cities, you want to be where you can meet people, preferably on a daily basis. In Boston, for example, you may want to be on the Red Line, because many of the young people you want to recruit do not want to drive cars and sit in traffic.

Running a business comes with hassle. Big companies are in a position to delegate out much routine work, so that the C-suite can focus. Startup companies can run into many daily issues that require attention and that do not, strictly speaking, contribute to the business – and they do not have the financial muscle to hire secretaries. Office space needs to be leased, a decision has to be made on the length of the lease, electricity has to be on, wifi has to be purchased, bills have to be paid, furniture has to be purchased or rented, and one has to constantly adapt to growth in the number of employees. So when locating, you have to weigh cost against the amount of daily hassle. How many dollars is it worth to free up head space and minimize administrative worries?

This second point actually bleeds over into the third: if you deal with a lot of hassle you most likely turn into a company that deals with a lot of hassle. It is sort of driving with the hand brake on. Much existential worry is necessarily a part of the startup process: who are you as a company, and who will you become? You have dreams, and you can end up a big success. But since a startup company will more likely fail, anxiety is common. (One should probably argue that a failed startup has produced valuable experience, and as such it is never wasted – but it is very hard for those involved to see it that way.) Am I a failure? Have I failed my friends and family that believed in me? Did I fail the other investors? Did I fail the other members in the startup company? Did I fail my partner or my kids by spending so much time at the office? So when locating, consider also what it does to your relationships: if you choose an incubator against equity, for example, what anxiety in daily encounters might that relationship produce?

Arne Hessenbruch is a Danish expat and the founder of Boston Denmark Partnerships, where he connects Danish companies with an interest in doing business in Boston.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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