Where should a startup be based if it wants to conquer the world? Ace venture capitalist Jeremy Levine has bankrolled plenty of high-profile successes in popular hot spots such as Silicon Valley, New York and San Francisco. All the same, Levine argues that some entrepreneurs can tap into hidden strengths by setting up shop in far more obscure locations.
Back in 2006, Levine nearly invested in Build.com, an e-commerce company in Chico, Calif. (It’s about 200 miles northeast of Silicon Valley — in the heart of California’s almond growing district.) Build has gone on to do remarkably well, as I explain in this new Forbes magazine feature story, even if the home-improvement retailer operates well outside the tech sector’s usual talent and money hubs. Instead of dismissing Build’s success as a fluke, Levine has put together a thoughtful set of reasons why offbeat locales can pay off.
“There are some great advantages in building a company where no one else goes,” Levine told me. “The founders have unbounded enthusiasm; they enjoy a virtual monopoly on technical talent, and they can attract incredible loyalty from employees.” Of course, there’s a price to be paid in terms of small-town naivety and lack of resources, he acknowledges. Even so, his firm (Bessemer Venture Partners) like to spice up its portfolios with mavericks based everywhere from Tempe, Ariz., to Kitchener, Ontario.
Chico provides a fascinating example of how the startup spirit can take hold in the most unlikely places. One haven for innovators is ChicoStart, a business incubator in the city’s downtown. It provides founders with a desk, Internet connectivity and plenty of peer support for just $220 a month. Founded at the end of 2013, ChicoStart has provided homes for 32 startups so far. Five have grown big enough to be acquired or to need larger offices, says Wendy Porter, ChicoStart’s managing director.
Another proving ground for aspiring young company founders: the Center for Entrepreneurship at Chico State University. It’s run by Peter Straus, a lecturer at Chico State’s business school, who used to run a loom-making company in town. He says his mission is to teach students the basics of making a business plan, to encourage them to think on their feet and to provide them with some first-hand encounters with role models. After that, it’s time to push them out on their own.
Peter Farsai, a 2015 graduate of Chico State, now runs OutdoorAlly, a mobile-app maker that provides hunters with information about local game laws. That market tends to get no attention from big-city entrepreneurs, but it’s an area of keen interest to Farsai, who got stuck with a $900 fine a couple years ago when game wardens caught him carrying the wrong kinds of shells in the midst of a turkey hunt.
Annoyed at being busted for a regulation that he didn’t even know about, Farsai recalls, he came away from the experience muttering to himself: “There’s got to be a better way.” For $14.99, his startup’s apps alert California hunters to whatever local rules might apply on their hunts. A small grant from a Chico State entrepreneurs’ fund helped him hire the engineers needed to build Android and iPhone versions of his app.
Robert Strazzarino, who graduated from Chico State in 2006, noticed that it wasn’t easy for his alma mater to get class schedules lined up properly for many thousands of students. That problem inspired him to create College Scheduler, a web-based, automated service that’s now used by more than 150 colleges and universities. Customers range from Arizona State and the University of Wisconsin to Chico State and New Zealand’s University of Auckland.
Even Chico’s agriculture-centered economy inspires some entrepreneurs to try startups that wouldn’t be found in Silicon Valley. Chico native Arielle Danan was partway through her college studies at the University of California, Berkeley, when she took a couple months off to visit Israel. There, she learned to make almond milk. When she got back to Chico in the summer of 2012, she went to a local farmers’ market — and was dazzled by customers’ strong appetite for locally sourced food.
“I put two and two together,” Danan recalls. Someone could run a thriving business making artisanal almond milk in Chico, she realized. The opportunity was there — and she wanted to seize it. She made 30 gallons one week as a test project, and sold it all within hours at a farmers’ market. She ramped up production and got some design advice on her packaging. Settling on the brand name Beber (the Spanish verb for “drink”), she soon found that customers at health-food stores and farmers’ markets were willing to pay $6 to $7 for 16-ounce bottles.
Danan won’t disclose exact financial figures, but she says revenue in 2015 roughly quadrupled from 2014′s level. She’s got six employees working for her now, and is ringing up sales as far away as Sacramento and San Francisco. She hopes to build a San Francisco Bay Area production facility this summer.