Ethan Parker, founder, spoke in a recent interview with a Spanish new outlet about industry disruption and modernization, solving real-world problems, and the role Texas plays in the future of tech.
Austin is the new great technological center of the United States
In recent months, the capital of the state of Texas has been chosen by giants like Tesla and Oracle as the place to locate their headquarters.
And it's not about isolated cases, since other large corporations such as Dell or Indeed have done the same by swapping California for Texas.
It is a trend that is turning the Silicon Hills area in Austin into the new Silicon Valley, the area of San Francisco, California where the headquarters of the big technology companies such as Microsoft, Google or Apple are still located today.
"Austin is in the Midwest, which also makes it attractive to companies looking for hubs that cater to both coasts," says Amber Gunst, Executive Director of the Austin Technology Council, an association of technology companies. in the city.
The city is also home to the University of Texas, one of the largest educational institutions in the United States, making it a renowned university entertainment center as well as a place where it is easy to recruit highly qualified talent.
Another important factor is that there are fewer taxes in Texas than in other parts of the United States. The Lone Star State, as it is popularly known, is one of the few that does not have state income taxes - that is, only the portion of the federal government is paid.
This is as if Andalusia, for example, eliminated its own income tax bracket as an autonomous community and its residents only had to pay that of the central government.
This absence of state income tax in Texas is compared to 13.3% in California, the highest in the country, a factor that explains why there are companies leaving the West Coast aside to go south.
There are a variety of incentive programs offered by both state and local governments. This can include property tax reductions, hiring incentives and many other options,” Gunst says of the efforts the city is making to diversify its economy and that of Texas -
A state where mining and oil and gas extraction activities represent 27.4% of its IP, according to data from the research firm IBISWorld. Texas is the largest oil producer in the United States.
Mature Sectors
Oil industry giants like ExxonMobil and Phillips 66 are based in Texas, but not all of its economy is focused on the energy sector, since other large companies from various sectors are also based there. Uncertainty also hovers over the startup ecosystem. Spanish managerial talent climbs to the top of global technology AT&T Chili's, Pizza Hut and 7-Eleven, and American Airlines.
This large presence of leading companies in mature sectors is an attraction for entrepreneurs who come to Texas to set up startups with technological content.
Texas is home to a number of multi-billion dollar industries that are ripe for disruption and modernization. While Silicon Valley tends to focus on 'pitch' investments, investments in Austin often solve real-world problems in industries like real estate, finance, healthcare, cybersecurity, and more," he says. Ethan Parker, an entrepreneur who has founded the Austin-based public relations company Treble.
Likewise, the high cost of living in the San Francisco Bay, one of the areas with the highest GDP per capita in the world, scares off entrepreneurs and motivates them to look for cheaper places. "The cost of living in San Francisco was enough to force me to move to Austin in 2012," explains Parker.
Renting a three-bedroom in downtown Austin is 27% cheaper than in San Francisco, while dinner for two at a mid-range restaurant can be up to 39% cheaper in the Texas capital, according to Numbeo, a global database of prices perceived by consumers
Rain of Venture Capital
This influx of tech giants and entrepreneurs has served to fuel the development of the venture capital financing industry in Texas.
In the last decade since I moved to Austin, the biggest change has been the volume of venture capital firms and entrepreneurs who now call Austin home. This has created a tipping point that seeks to further bolster economic activity and venture capital investment in the Austin and Central Texas ecosystem,” explains Parker, the founder of the Treble company.
In 2021, Austin saw $4.6 billion in investment in high-tech companies, an amount spread across a variety of companies founded by local entrepreneurs or people who have moved to the city, explains Amber Gunter.
What has been even more unique is the number of venture capital companies from Silicon Valley that have opened offices or moved to our city, ”says the spokesperson for the Austin Technology Council.
Austin has become a technology hub that reconciles work and private life. It's not just a labor and tax advantaged market for California, although that's still very compelling,” says Chris Shonk of the Austin Venture Association, the association of venture capital funds.
This ecosystem, explains the expert, has grown significantly to the point where almost every big tech company has an analyst or headhunter in Austin.
There is an entire ecosystem of experienced startup founders backed by venture capital funds and executives. There is a lot of talent that can be hired from the university or from other big tech companies like Google, Oracle or Dell,” says Shonk.
Varied arguments to continue fueling the growth of the new contender for the throne of global innovation.
A Democratic Holdout
The city of Austin is a Democratic island in a decidedly Republican state.
Democratic Party mayors have governed a largely progressive city continuously since 1997, thanks in part to the influence of the University of Texas and its student community.
That is one of the most similar aspects that Austin has with respect to San Francisco and California, a state in the hands of the Democrats for more than a decade.
The ideological question is one of the points of connection that Silicon Valley entrepreneurs often have with the Texas capital.
In that sense, the arrival of Californians with progressive ideas is viewed with some suspicion in other parts of the state of Texas, a deeply conservative territory that has been controlled by the Republican Party since 2000.