Key Advantages to Hiring Tech Outside of Silicon Valley

07/14/2017 08:51 am ET

By Nathan Klarer

The venture-capital-funded enterprise is regarded as a fundamental mechanism by which wealth is created in the San Francisco Bay area. Within this expanding sub-economy, a unique blend of entrepreneurial gun powder and mythology has risen. In Silicon Valley, a long entrepreneurial history has provided unique development of its own subculture and views.

Many have expressed concerns about the viability of entrepreneurship outside the Valley. This concern is based upon the relative availability of resources: venture capital, technical infrastructure, mentorship, peer groups and talent. In the Valley, an abundance of resources act in concert to reduce economic risk and make entrepreneurship a rewarding activity. Outside the Valley, having fewer resources conspires against an entrepreneur.

When looking specifically at talent, perceptions of a steeper risk/reward curve make it more difficult to attract key hires. Outside the Valley, some people view joining a startup as borderline irresponsible. Inside the Valley, your future employee probably overheard people back-channeling an acquisition deal while picking up their morning latte.

For better or worse, most of my entrepreneurial journey so far has occurred in the Valley. Recently, however, I was asked to set up an office in a different part of the country, so I began examining the key advantages to hiring outside the Valley. Not only can you save 30-40 percent on salaries, but workplace populations are generally more stable and you’ll experience less turnover. Lower office costs can help you compete with a better workplace environment.

Articulating an Options Package

Used correctly, a well-articulated options plan is a key instrument in the fight for talent. The employee’s perception of the value of their options depends on a number of factors. These include the promise of your product, your standing as an entrepreneur, and the financial views of your employee. Outside the Valley, there is much less chatter about the value of so and so’s stock options. You need to build credibility in your potential stock value by finding respected partners and investors for your company. The environment won’t do the heavy lifting for you.

I know of cases where people have said, “I don’t believe in options." The correct response to this is, “Why are you interested in a startup?” Avoid these people. They may not believe in the value of what you are creating, and you need the opposite -- individuals who are motivated by your vision and the value it creates. You’ll encounter more of these low-valued responses outside the Valley than in it.

Ultimately, to value your options package, the employee needs to buy your vision.

Selling Your Vision

Your company is valued on its projected future value. As CEO and chief communicator, you need to be able to sell this vision to clients, investors and employees.

Outside the Valley, stay away from comparisons with en vogue technology companies and, instead, describe how building a technology company benefits your community. If you recruit from academic institutions, then it doesn’t hurt to invoke a little competition: “If they can do it, why can’t we?" Have a broad vision, but don’t make reference to “being the Uber for X." Be an ambassador to this new way of building companies.

 Seeking Out Arbitrage Opportunities

Above are how-to tips for recruiting. This is a "who-to" recruit tip. Markets are not perfectly efficient. The talent market, highly subject to human biases and external forces, is one of the most inefficient. Therefore, entrepreneurs should be actively seeking out arbitrage opportunities to bolster their staff.

Engineering is an obvious example (favored by private equity firms). Specifically, you might look for technologies or companies that are under-recruited, but in my opinion, engineering is easier to evaluate than other roles. Because of this, hiring tends to be more efficient. Salary savings are typically made as a function of the lower cost of living in different geographies.

Take a different, more extreme example: I know an entrepreneur who was recruiting for roles internationally. Geopolitical conditions in this country made it difficult for people to leave their homes. This company’s work-from-home job was highly desirable. The end result was saving close to 50% on salaries from their initial projection.

Most places have market conditions you can leverage to make better hiring decisions. It's up to your company to find them.

Understand the advantages and disadvantages of your environment. Listen to your potential talent to determine the best way to motivate them. Adapt your tactics to make the most out of your location. You can do this successfully and reap the rewards!

--

Nathan Klarer is the CEO and founder of Bridgecrest Medical, Inc.

This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.
CONVERSATIONS