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Start-up success: How much does location matter?

If you apply the popular wisdom of the tech industry to the case of The Beatles, then it’s clear that the band could never have been successful. It’s simple: they came from the wrong city. In 1962, Liverpool wasn’t a major hiring centre for great bands. The musical talent and expertise to become internationally dominant just wasn't to be found in Liverpool the way it was in California, New York and London.

If you are part of a tech business that’s not located in Silicon Valley, London or Berlin, you’ll probably hear this all the time. You’ll be told that there aren’t enough great engineers, product people or digital marketers in your region, that there are no experienced tech leaders, and so on.

Perhaps you’ll start to accept this advice and act in a way that makes it come true. If you're not able to relocate your business, you'll implicitly settle for reduced ambitions and lower the expectations you have of your colleagues.

But good players know that every chess position has both strengths and weaknesses. They know that you should play the position that’s in front of you to the utmost, maximising its strengths rather than lamenting its weaknesses.

If your region doesn’t have many tech companies from which to hire then you are probably in a better position to recruit the best graduates from your local universities. So, play to that strength. And, in your area, you won't need to pay crazily enormous Silicon Valley salaries to get smart people to join your company. Those people are probably going to stay with your business for a long time and, in that period, they'll grow to become experienced.

By contrast, if you are starting a business in London or Silicon Valley, undoubtedly there is a high density of experienced talent all around you. That’s the great strength of your position. But there are weaknesses too. You are competing with the stock schemes of Google, Facebook, Uber and Apple for that talent. You are caught in an ever faster-inflating salary bubble and your staff are highly tempted to leave after six months for better compensation elsewhere.

Talent gravity-wells such as occur in these locations suck in a lot of mediocre people too, along with the real talent, to satisfy hiring demand. They'll still command whopping salaries but they won’t benefit your business. And even if you become accomplished in distinguishing the genuinely talented people, you may not be able to hire them anyway because your business is too small and unknown to look good on a CV.

In other words, just as every chess position has strengths and weaknesses, so you will have opportunities and challenges pretty much wherever your business starts out. Play to the strengths of your position.

While location is a consideration in building a great company, it’s no longer the most important one like it was prior to the Internet age, where the distance to market has fallen to zero for every business, regardless of its location.

And talented, committed people are to be found everywhere. It's how you then nurture those people that really counts. You will only find that talent in your region if you are prepared to believe that it is there in the first place. Become seduced by the assertion that there is no-talent-outside-London/The Valley, and you won't put the required effort into the search. Like so much negative advice, it becomes true at the point where we start to believe in it.

Paul McCartney and John Lennon found each other in Liverpool and they found George Harrison. Three great talents living within a few square miles of each other in Liverpool. (Ok, so they found Ringo Starr too, but even he had learned to play the drums properly by the time the band broke up).

Liverpool wasn't a recognised cultural centre for music. But, luckily, The Beatles didn't listen to the advice that they couldn't be world-class because of that. They set themselves the highest standards, strove for self-improvement, took musical risks and consequently developed very quickly as artists.

You can accelerate the acquisition of meaningful experience in your business too. Invest in your people, set high standards for self-development and the expectation that they will strive to study and learn from the best industry practice, remembering that learning from global expertise is easier and faster than it’s ever been in our entire human history.

Instil in your team a global outlook rather than a regional hang-up. Make them active local and virtual networkers. Urge them to be a little more knowledgeable and more capable today than they were yesterday. Give them the time and license to be experimental. And develop a culture that people love to work in, so that they stay and you benefit from that investment.

If your business grows to scale, you'll undoubtedly at some point need to open hiring centres in other locations to continue scaling that growth . But this is not the same as being talked out of your company's realisable ambition at the outset through recycled pre-Internet wisdoms.

And perhaps, by your actions, you’ll also help to inspire a new tech sector in your own region, your own Penny Lane or Strawberry Fields forever.

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