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Secondary Tech Hubs Are On The Rise

Posted by Hannah Day on Jul 29, 2019 9:00:00 AM

In ICS insights, IT, client

Throughout 2019, technology companies and America’s economy have experienced unprecedented growth. In the past years, consumers and entrepreneurs alike have viewed New York, San Francisco, and Silicon Valley as the primary hubs of technological innovation. However, secondary cities—the ones not being much associated with being tech hubs—have also been filled with tech startups in recent years, resulting in their unexpected growth.

Why Now?

Experts have suggested that no single factor stirred the rapid rise of secondary cities. Several factors have instead contributed to this heightened momentum.

One factor is the decrease in the logistical gap between working from anywhere employees and the primary hubs like San Francisco or New York. With the growth of smartphones, email, and other technologies that connect employees, it has become much easier and quicker to collaborate over vast distances. Slack and Zoom, for example, are some of the companies that help remove difficulties in remote collaboration. Similarly, co-working communities like Industrious and WeWork have expanded their reach into cities spanning the entirety of the United States. With the innovative platforms that these companies offer, employers can now build businesses across cities without risking connection and collaboration within their teams.

Furthermore, the availability of urban consumer amenities has been widespread outside America's top-metropolitan areas. In secondary cities, local officials and city councils have dedicated themselves to both creating and marketing lifestyle amenities that top companies and workers desire. Coffee shops, gyms, and bars that match the workers' tastes have boomed everywhere in such cities. Combining this with increased connectivity and collaborative tools, secondary cities are now drawing in millennial talents to contribute largely to making the tech industry thrive.

Along with these cities' urbanization, tech companies also get to enjoy a cheaper cost of living. Due to this, founders and investors have begun seeing secondary cities as much more valuable. Companies are now placing more importance on factoring in real estate costs as they recruit and retain talent. Sooner, we'd be finding companies choose smaller, cheaper cities over large tech startup hubs.

The Lasting Impact of Amazon’s HQ2

Amazon has also changed the game further when it expanded potential options to include 20 metro areas for its new HQ2 home. Previously, Columbus and Pittsburgh would have never been considered as office prospects for tech companies. But following Amazon’s lead, other large tech companies have also scouted cities outside West Coast. As more and more top tech companies leave Seattle and the San Francisco Bay Area, founders might soon transform secondary cities as new hubs for innovation.

With the example set by Amazon, investors have now become more comfortable with scaling and growing companies in secondary cities. Two examples of which are Columbus-based Root Insurance and Pittsburgh-based Duolingo. Both of these businesses were founded outside of traditional hubs yet still performed well in the marketRoot Insurance recently garnered a billion-dollar valuation while Duolingo was valued at $700 million.

The rapid rise of secondary tech hubs has transformed cities across America, and these non-traditional tech cities are expected to continue growing. Who knows, the next big initial public offering could be from a tech company from Detroit, Pittsburgh, or another city.

If you're looking to expand your business in any of the primary or secondary tech cities, Infinity Consulting Solutions can help you fulfill your workforce needs. We will introduce you to top talents who could contribute valuable ideas to making your company grow even more.

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