Are There Tech Startups in Arizona? Yes

by francine Hardaway on December 3, 2014

Some time last week, VentureBeat published a post with the title “How Arizona (yes) Arizona is Becoming a Hotbed for Technology Startups.” It was founded by Don Pierson, who has been an entrepreneur in Arizona for more than two decades. In theory, he’d be an authority. While I’m certainly no naive cheerleader for Arizona, I posted the article to my Facebook page, tagging three close tech industry friends in Silicon Valley, all three of whom had volunteered their time to come to Arizona and headline the Arizona Entrepreneurship Conference to see for themselves.

I guess what I was trying to say to them, and to everyone else,was simply “you see, the work I have dedicated myself to for the past fifteen years, since co-founding Stealthmode Partners with Ed Nusbaum, may have begun to pay off.” The vision of Stealthmode was always that if we grew the ecosystem, we would make out okay financially ourselves.

Well, we have, but you would have thought I’d posted something about Ferguson and police. My wall lit up with rants, mostly against Phoenix, from people who absolutely can’t stand the place and can’t believe it can ever be like Silicon Valley. And some of them live here. Or did live here, and were launched during their stay.

Well, that wasn’t the point. We don’t NEED another Silicon Valley. What we need, as was finally pointed out by venture capitalist Bill Reichert, is a stronger ecosystem for innovation and startups in general. It’s not a zero sum game in which some place either is, or is not, Silicon Valley; it is a growing worldwide ecosystem that encourages innovation even in companies like Syria and Iran, where we don’t expect to find it.

Several years of traveling with Dave McClure on Geeks on a Plane have taken me to Asia, the Middle East, and South America, in addition to my own trips to India, Costa Rica, Mexico and Viet Nam. As a result of those visits, where I met entrepreneurs, judged business plans, and attended investor pitches, I came to the conclusion that entrepreneurship is everywhere and nowhere — it is a transnational phenomenon, a state of mind. The capital to scale it may be confined to some large urban centers like the Bay Area, London, New York, Singapore and DC, but the entrepreneurs are everywhere.

And at the appropriate time, the money follows. While investors used to think they didn’t have to travel, even in the good old days Arthur Rock funded a company in Santa Clara called Intel from the height of a New York office building, and when he wanted to see his investment, he had to board a plane. All the investors I know do that every day.

So there’s now a great deal of credence given to starting a company where the cost of living is cheaper than in the financial centers, and the talent is more plentiful. Many companies started up outside Silicon Valley, and many more will continue to do so. The worthy entrepreneurs get found, and the less worthy either fail or succeed at creating lifestyle businesses that don’t require venture capital.

Oh, and by the way, the truth about venture capital is that it is appropriate only for a very small number of businesses; the rest are overlooked no matter where they are. And no startup receives venture capital in a seed round. In Arizona, where there is no homegrown venture capital to speak of (although there’s lots of outside money and a growing number of local angels), we still manage to create businesses that create jobs and support people.

My own children left Arizona when they graduated from college, but when my daughter read my Facebook wall and the tone of the criticism on it, even she was moved to say “even I, who defected from Arizona yrs ago and fled to Silicon Valley, feel a need to defend the poor state from this thread of haters.”

What good is hating Arizona for what it lacks? If you don’t like it, leave, but if you stay, try to work to make it better. Oh, and if you’ve left, you’re no longer entitled to castigate us verbally. Move along, nothing to see here.


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