As you know, Red Rocket opened an office in the Raleigh-Durham area a year ago. As I was reminiscing on my life changes over the last year, I thought it would make for a good blog post for any of you looking to break into a new market, or perhaps considering a move of your own.
RALEIGH-DURHAM VS. CHICAGO, AS CITIES
- Chicago is one of the most world-class cities, with around 9MM in the metro region, and the business community largely centralized in or near downtown Chicago. The RDU area, in comparison has 2MM people in the metro market, geographically spread across very disparate cities (e.g., Raleigh, Durham, Chapel Hill, Cary, Morrisville). The RDU area lacks the identity of being one central city, and the competition between the cities that comes with that.
- The Chicago economy has a lot of challenges with Cook County and the State of Illinois near bankruptcy, with rising taxes resulting in a leaky bucket of a slowly declining population. The Raleigh-Durham area, on the otherhand, is exploding. The population is forecasted to approximately double to 3.5MM over the next 20 years, creating new tax revenues. Both Amazon and Apple are giving Raleigh a serious look for adding tens of thousands of jobs in the region, with new second headquarters locations.
- Chicago is a pretty diverse city in terms of industries served, including companies the technology, advertising, financial, retail, manufacturing, hospitality, consumer products, aerospace and other industries. The Triangle area is very deep in technology and life sciences, as their primary industries served. And, the technology here is much more B2B facing, with a much smaller B2C community.
- The pace of business is a lot faster in Chicago, with a bigger sense of urgency to move at light speed. People moving to the Triangle area, often do so to create a better lifestyle. So, a lot less late nights and rush to get things done quickly in the area. Which can be a good thing, or a bad thing, depending on your perspective.
RALEIGH-DURHAM VS. CHICAGO, AS STARTUP ECOSYSTEMS
- Chicago is a much more mature startup ecosystem, built over decades. You have seen serial entrepreneurs build one successful startup after another, and reinvesting their "winnings" from their prior companies, back into the ecosystem with their next companies, spreading equity deep and creating hundreds of millionaires in the process. Chicago has clear leadership propeling the ecosystem forward, in terms of what it wants to become in future years, and is flush with capital from investors across all stages of investment.
- The Triangle feels like Chicago about 10-15 years ago. It has all the ingredients to make for a successful startup ecosystem, with a lot of key players in town trying to take the region to the next level. But, the region is desperately short on capital, and needs more funds in town to support the local startups. And, only a handful of entrepreneurs have built unicorn scale companies, with equity largely concentrated with the founders, many of which have not reinvested their "winnings" back into the startup community. For this reason, many of the successful startups, typically sell much earlier in their growth curve, than their Chicago counterparts, and include a lot more "first timers".
- Both markets have world-class universities to lean on for talent and research innovation. Chicago with greats like Northwestern and the University of Chicago. And, the Triangle with greats like Duke, North Carolina and North Carolina State.
- Both markets are equally conservative, not wanting to make mistakes with their venture capital investments. Both markets equally unlike Silicon Valley with their "failure is a badge of honor" mindset, not afraid to swing for the fences on long shot game-changing ideas that may explode to success, or miserably flame out.
- Chicago invests about 2x the amount of venture capital into startups than the Triangle area does each year, most of which into the technology industry. Raleigh-Durham splits its investments between the technology and life sciences industry. So, that means there is about 25% of the capital going into tech startups in the Triangle area, as compared to Chicago.
- Both markets have equally warm and welcoming members of the startup ecosystem. I had no trouble meeting about 200 key influencers in town over the last year, all willing to welcome me to the market and offer whatever assistance they could. Just as easily as I could in Chicago.
MY PROFESSIONAL LIFE
- I typically like to work with growth stage B2C companies. Those basically don't exist here in any material quantity. Many of the B2C startups that have to gotten to that point, are sold beforehand. So, it is like looking for needle in the haystack for B2C. But, there is plenty of B2B here to keep me busy.
- I am loving running our newest acquisition, Restaurant Furniture Plus. I am glad I was able to find a good business, that was not in the region, that could easily be managed virtually from here. It is so much fun building another business of my own, in addition to my Red Rocket work.
MY PERSONAL LIFE
- I moved to a bigger, newer home for half the price of what I was paying in Chicago. For example, my real estate taxes dropped from $20,000 to $5,000 a year. So, I love the cost of living advantages, for largely the same nice suburban lifestyle I left behind.
- Our neighbors are all friendly and welcoming. We live in the Cary area. So, there are a lot of transplants from the north, like us. Both regions lean liberal, politically (which is an outlier within the more broadly conservative state of North Carolina). And, both regions are very diversified, ethnically and racially. The people are down to earth here, and less concerned with competing for material things.
- Because the population is growing so quickly, the schools are having a hard time keeping up with the growth, which creates overcrowded classrooms and constant redistricting as they add new schools, in many areas. But, overall, I think the education experience is actually equal or better to what we left behind, forcing the kids to compete on a bigger stage, sooner than they normally would have, with less hand holding in the process. We also like how much more diverse the schools are, more representative of the real world.
- Chicago winters were so depressing--six months of grey, cold and snow. I love the warmer climate here. Winters rarely have high temperatures below 50 degrees and the sun is always out. Which means I can workout outside year round.
- The Raleigh-Durham area is surrounded by a lot of great roadtrip opportunities with the kids--two hours from the ocean, three hours from the mountains, four hours from Charleston or Washington DC, etc. So, we are loving the close proximity to a lot more great weekend trips. Chicago was largely an island of itself, with not much to do within a few hours of the city.
CONCLUSION
- Both cities have so much to offer. Chicago a world-class city, and the Triangle a world-class lifestyle. I love both for very different reasons. And, startups can succeed in both regions, with a supporting ecosystem. I am very excited to see how Raleigh-Durham evolves in the coming decade as all the new people and companies move into the region.
- Both cities are ripe with terrificly skilled people to work with, across all needs of the community (e.g., entrepreneurs, lawyers, accountants, bankers, investors, accelerators, community leaders). So, you can't go wrong professionally or personally. I am glad we have a presence in both markets.
For future posts, please follow me on Twitter at: @georgedeeb.