Our team at Treble has noticed that one of the biggest challenges of alt cities (such as Miami, Nashville, and Austin) will be balancing the rapid growth within these cities while trying to preserve the homegrown culture and affordability drawing people there in the first place. The alt cities offer a new wave of opportunity for entrepreneurs and service providers to be the “bigger fish in a smaller pond.” One of the most noticeable differences between these alt cities and Los Angeles and New York is that these new alt cities offer everything that entrepreneurs and venture capitalists want without the capital gains or income taxes.
The First Wave of Alt Cities
The first wave of alt cities, as defined by Peter Yared, are Austin, Nashville and Miami. Yared was on the earlier cusp of the movement to Austin from San Francisco where he became a resident in 2012. The potential was visible in 2006 — however, the ecosystem of big tech plus a strong early-stage venture capital ecosystem has catapulted Austin into a place that goes well beyond being the “live music capital of the world.”
- Austin has always been known to be home to live music, as well as embracing leaders in technology. It is worth a mention to also highlight the substantial potential for tech businesses to thrive, which has led industry-leaders in the tech realm to move from San Francisco to the “Live Music Capital of the World.”
- Austin has attracted many tech moguls like Elon Musk and Joe Lonsdale.
- Years down the road Austin has seen a dramatic influx of residents due to the addition of Tesla, Apple, Facebook, Google and Oracle. Economists have also noticed that with Sand Hill Road VCs moving to Austin, the growth curve continues up and to the right.
Nashville is pulling musical talent from Los Angeles and other markets, combined with a booming real estate market. Armed with professional NHL and NFL franchises, a growing entrepreneurial tech startup and a fashion ecosystem, the city seems determined to continue to align with the South’s history as a destination for talent.
- Nashville was named the “founding city of country music” and for good reason. They have a history of nurturing small-town artists to icons.
- Along with the rich history of music that attracts many people from Los Angeles, the city also attracts big record companies such as; Sony, Warner, and Universal.
Miami is also having their moment as an alt city, from tax-friendly policies and its beautiful beaches combined with a pandemic have accelerated the rise of a diverse tech and finance scene. Blackstone and Goldman Sachs, two of the world’s biggest hitters, are reportedly making the move.
- Miami is a hot spot for vibrant nightlife, but that’s not the only thing driving these billion-dollar companies to move. Like Austin, Miami has a rapidly-growing tech industry with an added influence of Finance from New York City. Billionaire Carl Ichan moved his asset-management firm to Miami, and Ken Griffin’s Citadel Group has also relocated from Wall Street to the South Florida area.
- One of the biggest reasons these billionaires are moving to Miami is because they can have larger homes and can save over $1 million in taxes by relocating to a city that doesn’t have capital gains or income tax.
Why Service Companies Will Experience a Power Shift
In hindsight, I believe my agency would have struggled to replicate itself being headquartered in San Francisco because of the closed-circle access to the influencers. In San Francisco and the widely known Silicon Valley, the executives that sit on the board at industry-leading tech companies recommend the same small group of vendors that have proven themselves over the years. This potential can range from PR agencies to legal services.
In Austin, conversely, there is an underlying culture of empowerment and entrepreneurship. Treble has found a way to successfully network with VCs all over Texas and build trust. Austin welcomed new talent with a fresh perspective. This is why I can hypothesize that service-oriented companies will be the real winners of this massive population migration.
Service companies are changing everything; from pricing to business models across law, accounting, PR and HR. When the leaders in their field are able to win in alt cities, everyone benefits with more cost-efficient offerings. Gaps in the market exist everywhere, and the combination of savvy entrepreneurs and cities that embrace them are the true leaders
Read more about the founder of Treble, Ethan Parker’s insights on the trickle-down impact on the ecosystem on Forbes.