Where are all the Austin Startups?

An Economist said yesterday that Austin will create 20,800 new jobs over the next 12 months.

That’s great, we are still creating lots of jobs. Excellent. But there does not appear to be a lot of start up activity. That is the area of the economy that I am most interested in. That’s what brought me to Austin in the first place. I can remember driving down Mopac and seeing Dr. Koop on one side, Garden.com on the other and feeling like I was at the center of something.

There is another dot.com boom going on. Some might call it a bubble. Some might call it rational exuberance. Whatever you call it, it does not seem like Austin is one of the major hubs like it was back in 1.0. Sure there are Austin start ups being formed, raising money, and being bought, but it seems like much more activity is in other cities.

If I look down the industry job board at 37 Signals – one of the de factor poster children of Web 2.0 – I don’t see any Austin companies on the list. O’Reilly ranked Austin number 7 for online startup jobs, behind San Diego, Seattle, and Washington DC, all cities I thought we would be ahead of.

So what’s the deal? Have we slipped? Moved on? Is it a good thing? What can we do about it?

8 Comments so far

  1. wae (unregistered) on August 16th, 2006 @ 5:02 pm

    Interesting post. Maybe the story goes something like this:

    Austin is a good market because it attracts smart people and UT does an adequate job of making some of ’em smarter. On top of that, Austin made a concerted economic development effort to kick-start the tech market with Sematech and the like in the 80’s … yadda yadda yadda … 20 years later we have the Dells, Samsungs, AMDs, etc who are really good at building tech infrastructure. Web 1.0 boom was an outgrowth of that talent base, to some extent.

    Now Web 2.0 comes along, and it’s more about creativity and linking information than laying silicon. There are still lots of smart people around, but where is the network that brings them together, promotes and supports their innovation? Austin’s economic development effort has shifted away from tech, towards building hotels and attracting conventions. Sure, the city continues to abate millions to the old-tier OEM’s and data centers because that’s what got us to hot-shit status, but nobody in the public sector is thinking ahead to the next wave(s) of innovation and how Austin can nurture it.

    The best place to look for Web 2.0 activity would be someplace like Austin Ventures, who is funding a systems management solution based in Austin. But AV is also dicking around with web interviewing software, which was innovative circa 1997, so perhaps the private markets don’t fully get it either.

    Or maybe that’s all horseshit and Austin’s next tech wave is burbling under the radar, poised to take off. But until this whole real estate chaos blows up in somebody’s face, most of the economic forces in this town could care less.

  2. steve odom (unregistered) on August 16th, 2006 @ 5:15 pm

    I think we are on the same page Wae. The cool thing about this wave is that it does not take all the money that 1.0 required. You can practically build a company for free. That is why I’m perplexed there are not more startups around. I’ve been to practically all the Austin on Rails meetings. Even there, I don’t get a sense of a lot of startups cooking.

    Without relying on city planners and VC’s, what else can we do to get some energy going? Or where can I go to get energized?

  3. Anony-mouse (unregistered) on August 17th, 2006 @ 12:44 am

    Web 2.0, like the dot-com boom is overblown. The problem is that it’s the web. It’s a problem because the industry has shifted over the last 10 years in such a way that now I can’t for the life of me hire a good EE that has a strong background in signal processing and could also get a DoD clearance. And, I’m a fcuking startup. Everybody wants to be a web-wonk. Useless. Where are the engineers?

    Sorry, just bitching. But, sometimes I wish the web had never happened.

  4. M1EK (unregistered) on August 17th, 2006 @ 12:22 pm

    Startups suck. There, I said it. Even the ones which sort-of succeeded just ended up making cautionary tales like the idiot Vignette chick who ended up with the huge tax bill after not exercising her options when they were above water or somesuch.

  5. steve odom (unregistered) on August 17th, 2006 @ 1:35 pm

    M1EK, It depends on what you mean by “sort-of succeeded”. Working for a startup can suck – long hours and lots of promises. But the best start ups are ones you do yourself. About something your passionate about and like doing. There’s no better job than that.

  6. M1EK (unregistered) on August 17th, 2006 @ 1:58 pm


    I’ve had enough of people who work 80 hours a week thinking their crappy little web gadget is the equivalent of curing cancer. No thanks. Work is work; your life ought to be what you’re passionate about. Wasting passion on making a couple of rich guys a few more percent richer (which is effectively all most of us ever do) is kind of stupid.

    Unless you really ARE curing cancer, in which case I take it all back.

  7. DSK (unregistered) on August 17th, 2006 @ 2:15 pm

    Steve, I mean this in the nicest possible way (really, not sarcastic):
    There are plenty of recent startups and other small tech companies in Austin, they just are not exercises in buzzword bingo like the chant-web-2.0-crowd. Look harder.

  8. wae (unregistered) on August 17th, 2006 @ 4:23 pm

    Like any other trend, Web 2.0 (or whatever) is a victim of hype and expectation. But at least this time around there are a lot fewer stock options being tossed around on the basis of having a really bitchin’ sock puppet mascot. Which is a shame, because how else is a 19-year-old web wonk supposed to afford a high-rise condo in THIS market without massively overvalued paper wealth?

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