Does Location Matter? Why Albany is Perfect for Us

Downtown Albany NY

A few weeks back Penelope Trunk wrote a really interesting article about deciding where to locate your start-up, entitled Starting a company in Silicon Valley is stupid.  Clearly from the title of the post, she isn’t one of those people that preaches that you have to be in the Valley or in NYC to run a successful start-up.  She herself moved from NYC to Madison, Wisconsin to start her new company, simply because the cost of living was low and the quality of life was high (according to studies on that sort of thing).

A couple of my favorite quotes from the article:

“The beginning of a company is slow and meandering. You have pretty much no idea what the company is or what you are doing with it, or if you even picked the right partner to do it with. During this time, it does not matter where you live. You are not hiring. You are not pitching your business because you don’t have a pitch.”

“Most of you will not be going after venture capital. You simply will not have a business idea that warrants that kind of investment. And in that case, you will be bootstrapping for a long time. And it’s a lot easier to bootstrap in a place with a low cost of living. And if you are not going to take in venture capital, then you don’t need to be where the big VCs are: New York and California”

“You don’t need your network in your backyard (which you would have automatically if you lived in Northern California), [but] you do need to be able to fly to your network frequently. The network you can build by just showing up in California or New York is unprecedented.”

All of this got me to thinking – is Albany, NY the best spot for Pure Adapt, Inc?

The answer I came up with was yes, and surprisingly our home town is actually a pretty good spot to start a company like ours.  Here’s why:

  • Our networks are here – all of us grew up in the area.  You take for granted all of the people you know in your home town.  When we fired our accountant and needed a new one, we were able to get more referrals than we could handle because we knew so many people in the area that were small business owners, either through family or friends or former internships or former jobs.  Albany also has a lot of great higher education, and between the four of us we attended the four largest schools in the area.  George and I went to RPI, Mike went to SUNY Albany, and Greg went to Siena undergrad and Union for his MBA.  The connections we made there have opened up a lot of doors for us.
  • A steady economy supported mostly by government and education – being that Albany is the capital of New York State, and that New York State is a pretty big state, there are a ton of government jobs in the area.  I don’t know one person who doesn’t have a very close friend or family member that works for New York State.  Every one of my friends who lives in the area that isn’t a part of Pure Adapt has a state job.  My father is a programmer for the NYS Health Department.  That’s just how it is around here.  In conjunction with eduction, this creates a very consistent economy that doesn’t boom or bust like the rest of the country, and that’s a good thing for a start-up like us.  With steady government jobs come all of the resulting steady jobs at hospitals and resturants and the like.  The recession has affected us here, but not nearly like it has in other parts of the country.
  • Available talent – having such a large academic community is a huge advantage for us.  You always hear people around here talk about how top students come to school here and then leave to go to the big companies in Boston and New York City and Connecticut.  From my experiences at RPI, this was definitely true.  When I was doing interviewing for internships and full-time jobs in our career center, I don’t ever remember seeing companies from Albany.  I do remember companies from pretty much everywhere else.  I can think of a handful of companies from Silicon Valley that came to RPI to recruit tech talent, but no local companies.  While this might not be a good thing for the area as a whole, it can be a very good thing for us.  There is plenty of talent at these schools that would probably prefer (or at least consider) living in Albany post-graduation if there were options available.  We plan on being that option, and we don’t think there will be all that much competition.
  • Albany is a “crossroads city” – roughly equidistant from NYC, Montreal, Boston, and Buffalo, you can get to a lot of different places in just a few hours drive.  I can hop a train and be in Penn Station in NYC in about 2.5 hours, eliminating the need to fly to get to a major networking hub. If I needed to get down there a few times a week for networking or meeting with investors, I could.
  • Albany is a pretty big city – according to Wikipedia, Albany is the 56th largest urban area in US.  As you can see from the picture, the city isn’t exactly small.  Although commonly dubbed “smallbany”, it has pretty much anything that any other US city has, short of Boston or LA or NYC.
  • Everything costs less – according to’s Cost of Living Wizard, someone making $35k in Albany would have to make $55k in San Fransisco to maintain their current standard of living because the cost of living is 55% higher, and businesses typically pay only 20.4% more for the same job to compensate for that increase in cost of living.  Simply put, our money goes further.  We can pay ourselves less, we can pay employees less, and things cost less (real estate in particular).  All of this adds up to a lot of money saved for e-commerce company that, from the perspective of our customers, could really be located anywhere so long as they ship products quickly.
  • It’s spacious here – when I lived in southern Connecticut, about 45 minutes from New York City, the population density was insane.  People routinely commuted up to an hour and a half to work just to find affordable living that wasn’t in an urban area.  In Albany, my apartment is less than a 15 minute drive from downtown Albany, but also less than 15 minutes from some amazing nature.  If you want to live on a farm and commute downtown, you can do it and have less than a 30 minute drive.  Or you can live somewhere like Lark Street that has a big city downtown feel.  This spaciousness is the reason that we got our warehouse space so cheap.  We’re not in a bad neighborhood or a long drive away, but we got space at about 1/5 of the cost of what it would be just 20 minutes away in downtown.  Personally, my commute is about 12 minutes on back roads, which doesn’t really feel like a “commute” at all.

Now, from a personal standpoint, I do want to experience and live in other places.  The few years I spent in CT were awesome.  In a few years I hope that our business gives us the freedom to do so, but in the meantime this isn’t a bad place to live.  You really can do everything except hit the beach or watch professional sporting events, but those are only a few hours away.  Aside from Albany, other cities like Schenectady, Troy, Saratoga & Lake George are just short drives away.  And yea, winter sucks here, but I try not to be one of those people who always thinks that the grass is always greener somewhere else.  There are a lot of great places to live, but we certainly lack nothing important here.  So until the company is sold or I’m removed from the day-to-day operations, I’ll be happy here.

Ultimately, Albany works great for us.  In most cases you don’t need to change your location to start a successful business, and certainly don’t have to move to New York City or Silicon Valley.

10 comments on Does Location Matter? Why Albany is Perfect for Us

  1. Adam Holland says:

    Man, you hit every nail right on the head.

    When I read “why albany is perfect..” I thought of how much I ‘hated’ being in this area. It’s winter pretty much 9 months out of the year and — I Don’t Ski! — haha

    But when I started to think about all of the reasons Albany is GREAT for me to startup my business every reason I thought of was already in your list..

    My rent is less than most people pay for property tax for God’s sakes.. Pretty much everything I need is within a 15 min radius around where I live. The highway system around here is sooo convenient (I’ve tried driving around Long Island, Boston, Atlanta, and other places – it’s horrible to say the least)..

    Albany, though I can’t wait to hit my goals and get the heck outta here in 5 years, IS the perfect place for us to startup. 🙂

    Adam Holland

  2. Adam McFarland says:

    Haha glad you agree Adam. It’s definitely tough for those of us who don’t ski 🙂

    You bring up a good point about the highways. This is one of the few areas where the highway system was over-built. With the exception of heading 87 North during rush hour, there’s almost no congestion. I can hop on the highway across the street from my apartment and get to places 20 miles away in less than 20 minutes. Very convenient. Contrast that with where I was in southern CT – a 15 mile commute would take 45 minutes on I95 because of the traffic.


  3. Dave says:

    You do have to think of one thing, the industry your business is in. For something like what you guys are doing, I can understand pretty much having any location work for you…and the lower cost of living the better (warehouse space, etc). But yes, I tend to agree with most of your points.

    One of the companies I had started while I was in college in MD, and my business partner lived in Lake Mills, WI (about 20 minutes from Madison). I can tell you first hand that there were definitely issues with the rural aspect of where he was located which would not be issues in a different area.

  4. Adam, while we’re young we need to be in some type of city, especially during startup phase. I’m going nuts being in the NYC suburbs like you grew up! There just aren’t enough young innovators to connect with.

  5. Adam McFarland says:

    I can’t speak to other areas, but with all of the high academia around here there are business incubators with startups everywhere, if that’s what you’re looking for. In particular, the RPI incubator and UAlbany Incubator are known for giving startups the support they need, both in terms of networking and other resources.

    Personally, that wasn’t something I/we were interested in, but the network and support is here if you need it. We’ve worked better utilizing the relationships we’ve developed in college to our advantage. The accounting example in the post is a good one, but another example would be connections to banks and investors. The network is very tight around here – we have a handful of connections to contacts at each VC firm and at each local bank because of all the relationships we gained by going to school around here and taking advantage of what the schools had to offer.

    Now, all of that said, the majority of my interaction with young innovators has been online, mostly via people I’ve met through this blog, and I’m fine with that. Bottom line – most of my time is spent growing my business, not networking with other business owners. You only need so much support from other people. At the end of the day, the time and effort needs to be spent more on growing your company and creating a satisfying experience for your customers. And to Dave’s point, assuming you aren’t location-dependent, I don’t think you need to be in or around a major city to do that.

  6. Adam McFarland says:

    Some more comments over at the Brazen Careerist, including some more good reasons why Albany is a good place to start a biz.

  7. nethy says:

    I neither work in Californian nor live in a start-up. So my opinion shouldn’t really count, so here it is.

    I think people saying Startups need to be in the Silicon Valley are not using the word in the same way as the people saying that that’s rubbish. The word startup (the Silicon valley kind) is a certain kind of a business that can’t really be closely defined. There’s a big sack of traits like not having an income, semi-deranged founders, venture capital, new technology, being extremely difficult to distinguish from outright scams, green tea & big hairy goals. A lot of the times they just want to sell the company rather then earn revenues, but buyers don’t like that so they pretend they don’t. lately, they tend to be software companies.

    Anyway… If you want to start that kind of a business, you might want to be near people that will give you money, be near lawyers that know how to construct deals for these weird people, accountants that get nervous when numbers have these strange little +marks beside them & are completely comfortable with all numbers representing expenses, people that will work for this kind of a company and so on. More importantly, you might want to be somewhere where people think that’s normal, no one wants to be a leper.

    Fifteen years ago, if you were going to be selling something online, you were probably that kind of a startup. You needed to figure out how to take people’s money, how to get their orders & that kind of thing. More importantly, no one really bought very much online. Amazon went years before making a profit. Software companies are much the same. They develop & develop then they launch & try to sell it. In the Web 2.0 world give it away, try to get users & raise more money.

    Startups of this kind are about technology in the Douglas Adams sense of the word: “technology is stuff that doesn’t work yet. We no longer think of chairs as technology, we just think of them as chairs. But there was a time when we hadn’t worked out how many legs chairs should have, how tall they should be, and they would often “crash” when we tried to use them.”

    I know you write software, because that’s a good way of selling stuff online. But to stretch the analogy, you’re not working out if a chair needs an extra leg. You’re saying this chair’s too hard & the back isn’t straight & the cushion keeps moving. You’re getting you hammer out & you’re making one that fits properly.

    Where would you be if you were in Silicon Valley & going to ‘Chai Latte in the park with Steve Wozniak & 5k ‘founders?’ maybe you’d be tinkering with getting you’re apps going viral rather then getting your customers their orders on time. Since the latter seems to be working out, that’s probably for the better.

  8. Adam McFarland says:

    Nethy –

    Your opinion always counts 🙂

    “More importantly, you might want to be somewhere where people think that’s normal, no one wants to be a leper.” This is a great line. I never thought about it that way, but you’re right. People flock there to start a certain type of business and they want to be around others who think that’s normal. Which can certainly be understood, but to your point the current environment out there isn’t necessarily conducive to starting a profitable business….it’s more about sucking you into doing something that attracts VC attention regardless of whether you have a business model or not. I’m all for experimentation with revenue models, but not having one is not an experiment, it’s just stupid to me.


  9. nethy says:

    Yes, stupid to an outsider. That’s why they’re all in SV, to get away from your bad mojo.

    Actually, I’d look at it more cynically. Like a big fortune telling industry. Early stage VCs will invest in products that will get lots of attention, later stage VCs & acquires will buy/invest in ‘proven’ products. Since no one is really interested in the revenue of the company at this point, it’s irrelevant. Many buyers (Google for example) have a long list of startups they bought & used their users/technology

    Whether that’s a useful complex or not is an interesting debate. But it has nothing to do with the people starting these companies. The complex generates money & needs people to start founders. The market makes that happen. We’re all Keynesians now so we have to look at things that way. Get with the times. 😉

  10. […] no secret that I think Albany, NY is a great place to build a business. But once I moved back after living in Connecticut I often felt “out of the loop” with […]

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