Episode 33: Location
Location, location, location. It’s not just true for real estate, it’s also true for Monopoly. And, it’s a critical choice entrepreneur’s like you will need to make. In this episode you’ll meet an enterprising fellow named Elliot who managed to parlay what seemed like a non-starter of a location into paying off his mortgage with a groovy 3 day business venture, man. And it was completely legal – we think. Faced with choosing a location? Here’s a recipe. Take an array of factors into account then weigh the benefits and the costs – in that order, then make your choice. Easy, peasy. Get on main street. Think about the supply of talent and where you can attract funding. Or why not locate the BRAINS (design / R&D) in one place and the BODY in another (manufacturing & distribution)? Doug and Glenn settle into a nice spot for this conversation so, come on over and join the fun – this spot’s got a great view and plenty of room.
Transcript
Glenn Suart 0:00
Well, sure, Silicon Valley is a great place because you know there’s a lot of people there. However, lots of jurisdictions, Calgary as an example, have spent a lot of time and energy developing the talent that is still pretty world class. And because we have a, obviously a very thriving oil and gas industry here using a lot of software technology, a lot of those people have been repurposed. So, there’s many jurisdictions have done the same thing. So, you can find world class talent in certain spots.
Doug Ross 0:43
Welcome to Conversations on Startups, a podcast brought to you by Douglas Ross, author of the book, Spark Click Go: How to Bring Your Creative Business Idea to Life, and Glenn Suart, of Today’s Great Idea, a radio series featuring over 300 origin stories of businesses, brands and inventions that have changed the culture. Welcome to today’s conversation.
Doug Ross 1:07
Hey, Glenn. How ya doing?
Glenn Suart 1:08
I’m doing great, Doug, where are you today?
Doug Ross 1:11
I’m in Boston, enjoying a clear sunny day here, but extremely windy and also cold. So cold that they have closed the schools, many of the schools, which surprises me – it’s minus 10 [Celsius], maybe.
Glenn Suart 1:30
Wow.
Doug Ross 1:30
What do you think? Would they do that where you are?
Glenn Suart 1:32
Calgary is… gets very cold. And we have these chinooks that warm things up. And right now we’re at about minus 10 [Celsius] as well, but they don’t close the schools here.
Doug Ross 1:42
That’s what I remember, too.
Glenn Suart 1:43
You know, we’re good. So today, why don’t we talk about physical location as the subject?
Doug Ross 1:49
Yeah. How you choose a physical location for your business?
Glenn Suart 1:53
Very much so. And there’s a whole bunch of factors that go into it. It really depends on your audience, and who your customers are. And, it sounds so obvious, but I see too many businesses not make the right choice about location, for a variety of reasons. And, that hurts them in the end, because that’s the old adage, you know, the three most important things in business – used to be… still is for many businesses: location, location, location.
Doug Ross 2:22
Ya, you hear about that in real estate and also in the board game, Monopoly.
Glenn Suart 2:28
There you go.
Bridget 2:29
You’re listening to Conversations on Startups with Doug and Glenn. Thanks for joining us. Let’s get back to the show.
Glenn Suart 2:38
Okay, well, I got a story for ya. See if you can guess this one… about how location is important. So, there’s this guy named Elliot [Tiber]. And he operates his parents rundown motel in Bethel, New York, which is outside, in the rural area. They had 79 rooms on 15 acres. But the business was tough, and they were way behind on their mortgage. He was also though the president of the Bethel Chamber of Commerce, which of course, he often joked, you know, Bethel has no commerce, because it’s so small. But nevertheless, he tried all sorts of things to drum up business. So, because he was the President of the Chamber of Commerce, he could issue himself permits to host events. So he loved movies, so he tried to hold a film festival. That didn’t go very well. He tried to hold a music festival, but only a few kids and a nearby dairy farmer showed up. Then one day he opened a newspaper and the mayor of a town 60 miles away had just cancelled an upcoming event at virtually the last minute, and no other towns nearby were interested, and the promoters were in a jam. So Elliot, seeing an opportunity, picked up the phone, called the promoters, and figuring that maybe they could hold the event at his motel because he can issue the permit. The promoters were interested, very interested, but Elliot’s motel and the 15 acres was just too small. So, Elliot suggested that maybe the dairy farmer up the road who liked music might be interested, and he was. So, Elliot’s motel became the promoter’s base of operations as they rented out the whole place. They offered Elliot so much money he was able to pay off his parents’ mortgage. And today, the one time, three-day event held on that dairy farm in New York State is iconic, but would have never happened if Elliot hadn’t tried to promote commerce in his little town and simply made a phone call. What’s the name of the festival?
Doug Ross 4:34
Well, you didn’t give any clue about year but New York, iconic, three-day festival. I’m gonna go with Woodstock.
Glenn Suart 4:44
I think you have no choice but to go with Woodstock. I couldn’t think of anything else. 400,000 people came to the area.
Doug Ross 4:51
And it had to be big because you said he had 15 acres and that wasn’t enough.
Glenn Suart 4:55
That’s why he had… that’s why he went to the dairy farmer. The dairy farmer had his place. And they used his place for operations. But, sometimes location really is about being in the right place at the right time and having a unique circumstance[s]… pretty important to the business. And in this case, the audience was immediate. So crazy, crazy success, obviously, and all sorts of challenges… Woodstock itself. But if Elliot hadn’t made that phone call – he was the only guy who could have made this work because of the location. But I find that happens in a lot of businesses, too. We may have talked about this before, but Coronation Street, the long running soap opera from British television, which is on in Canada and in the US,
Doug Ross 4:57
Never seen an episode…
Glenn Suart 5:02
I’ve seen a couple of them… 10,000 episodes.
Doug Ross 5:45
Oh, my God.
Glenn Suart 5:45
The reason that was successful was a… Grenada television was trying to… oh, sorry, maybe it was BBC? I always get them confused. The bottom line was, it wasn’t because the show got a start because the BBC or Grenada had to spend money in northern England. They had to actually physically… as part of their regulated mandate, they had to put a production there. And, they had no idea to do anything, and they did this little pilot. And, the executives weren’t really sold on it, because it was so… sort of average. But because it actually spent money in northern England, that’s why it got (finally) greenlit, and then of course became this huge success. So sometimes there’s rules and things you don’t think about that affect your location. It’s just fascinating what goes into locations.
Doug Ross 6:36
Well, I see that in those first two examples [you gave], you’ve got the ability to get a permit for the type of business you want to have, and in that case Elliot was the permit maker as well as the permit applicant, so that helps – it’s a fairly unusual circumstance. But yeah, you need to be able to get a permit. And the second one sounds more to me like the general category of government incentives to set up a location here or there, which is very common and should be considered.
Glenn Suart 7:13
Very much so.
Doug Ross 7:13
I would say consider[ed]. There’s a… it reminds me there’s a… I think it’s Kansas City, I’m quite sure it’s Kansas City. And as you know, there’s… Kansas City is divided by a state line. So you’ve got Kansas, and you’ve got Missouri. And I heard fairly recently that these two jurisdictions battle for businesses all the time. There’s literally a street that runs – it’s the state line – and businesses will cross the street based on the latest incentive, [Wow] which is just madness if you think about it, it’s crazy. But I do think it brings up the point that with a government incentive you have to think about the short term but also longer term. So if somebody’s inducing you with a small amount of money, it may be great for year one, year two. If your intention though is to run your business longer than that, you know, you really have to factor in the… whether those upfront incentives make sense to you or not. In Elliot’s case, I loved his business. Boy, he’s a real opportunistic entrepreneur…
Glenn Suart 7:20
Absolutely.
Doug Ross 7:22
… a three day business, and he… and he pays off his mortgage.
Glenn Suart 8:27
It’s fantastic. We all wish for that kind of opportunity. And sometimes it happens, but more often…. it doesn’t. So, you have to think about what matters. I’ve done location analysis for clients. And, you know, where do you put the physical store? And in this case, you know, for example, in Calgary, we had this food store… they did some business for it, and they offered meals… prepared meals out of their storefront. And they asked me to… to do the location analysis. It was on the South side of town on the east side of the street coming into town, a major thoroughfare. And, that was the problem because people were coming in from the south to downtown, it was on the east side, but the idea behind the prepared foods was… food that you would buy to eat at nighttime, like dinnertime. And of course, you’re not really going to think about buying the food probably on the way into work in the morning. You’re thinking about [food] on the way home. They should have been on the west side of the street. But they thought they got a good deal on this place. And the other problem is this place didn’t have any parking. So even if people were coming home and wanted to turn left and get into a parking lot – there was no parking lot! So I said don’t do it. However, they of course did it. It lasted six months and it was gone. [Yeah] So, not that I’m a super expert, I’ve made mistakes myself, but sometimes it’s clear. You got to think about who your customers are and how they would use your service. Does… does parking matter to them. How long are they going to park for? These are things you have to think about when you’re choosing location.
Doug Ross 10:07
Hey podcast listeners, we’re gonna take a short break now. If you’re enjoying the show, feel free to invite your friends, remember to subscribe, and if you want to help spread the word leave us a review on Apple Podcasts or your favorite podcast app. Each episode of Conversations on Startups focuses on a single topic. If you want to comment on something you’ve heard on the podcast, or suggest a topic for us to cover in a future episode, send an email to: go@todaysgreatidea.com or douglas@sparkclickgo.com. Glenn and I appreciate you and hope you find our uncut and unrehearsed stories, perspectives, and tips helpful. Speaking of helpful stuff, let’s pick up where we left off.
Doug Ross 10:53
Absolutely agree. It’s… the general principle I’d pull out of that is just making it easy for customers… we… especially in a world full of choice. So, if you’re in a business where people have choice, they can go to another takeout establishment or they can make their own food, buy groceries, whatever else. You’ve got to make it easy. And humans are not just lazy. They can’t plan ahead, is what your example shows. So it’s the proverbial, well maybe not proverbial, but it’s… if you set up, you know, bring water to people on a really hot day at the [hike’s] trailhead or halfway up or something like that, you’re gonna sell a lot of water. It’s just hitting that need when that need is there. When people are hungry and whatnot, making it easy. Parking is another great one. I just hate difficult parking, don’t you?
Glenn Suart 11:49
Yep. Oh, just enter your license plate here. Just pay that here. It’s an extra step that irritates people. Parking is a great example. Here’s another question for you, not only for the business location [but] sometimes [location] matters for the success you might get in terms of fundraising. Everybody, if you’re in the tech business, Oh, do you go to Silicon Valley to get funding? [Do] you physically move there because that’s the place where funding is or do you stay in your own neck of the woods? Any thoughts on that?
Doug Ross 12:19
Yeah, a lot of thoughts on that. As you know, I lived in Silicon Valley – in and around Silicon Valley – for a while and worked on a software startup there and was part of a startup community [yep], got involved did a bunch of things there with Startup Weekend and worked with an incubator, tech incubator there too. So I have a lot of thoughts on it. We came from New Jersey at the time. [Yep] And New Jersey has certain established businesses, pharmaceuticals being one, med tech, there are other things there in New Jersey as well. California, and Silicon Valley is different. It was palpable. You could just feel it. That movie, I guess it’s not a movie [yeah] it’s a streaming show, Silicon Valley. And the guy, the main character, he goes in to see his doctor, he’s relatively new to the area too I think, and he’s got some sort of ailment and… and before the doctor finishes his exam, he’s whipping out some demo because he’s got a business idea in mind. And it is true that people have a very forward thinking attitude in Silicon Valley. They want to do things better. They don’t accept the status quo. It’s not old money and old businesses and things like that, that thrive. It’s a hub, it’s a cluster. And people are constantly saying, Oh, we want to be the Silicon Valley of X. Okay, that’s a good ambition. But it’s not so easy – I saw and lived – to replicate that. You just have so many factors, attitude being one, people that are used to taking risks on these cutting edge businesses, number two, so many things. It goes back to Hewlett Packard and everything else. So there’s a lot of history there. And Stanford being one of the first universities to start to out license its tech and make money from its tech, and so on. So there’s a lot of factors there. So I think it does make sense to think about that depending on the business that you are in. You mentioned investors. Also, what about talent?
Glenn Suart 14:31
Yes.
Doug Ross 14:31
Aren’t you gonna find more talent in Silicon Valley? If you’re in software, let’s say…
Glenn Suart 14:36
It depends. It comes down to understanding what it is you have as a business and where you will find the investors and where you will find the best staff. If your business is very software dependent, well sure, Silicon Valley is a great place because you know there’s a lot of people there. However, lots of jurisdictions, Calgary as an example, have spent a lot of time and energy developing the talent that is still pretty world class. And because we have a, obviously a very thriving oil and gas industry here using a lot of software technology, a lot of those people have been repurposed. So, there’s many jurisdictions have done the same thing. So, you can find world class talent in certain spots. Would I do a start up in Edmonton that’s software based? Probably not, but I would do it in Calgary, because I know I’ve got… there’s good people, talented people here.
Doug Ross 15:35
Well, and one advantage of folks in Calgary that are working in software, they may be much more affordable than the person who is in Silicon Valley and is… just the salaries have gone up so high for these folks, even with these tech layoffs that are happening now, those people are finding spots in startups, and they’re still commanding very good wages, bonuses, stock incentives, etc.
Glenn Suart 16:01
Very much so. So if you think about it, here’s a really good analogy on that one. 30/ 40 years ago, film production got done in North America in a couple of centers, mostly in Los Angeles. But with incentives from all over the place, a lot of new production centers have been created to create this burgeoning content industry. And today, you’ve got many jurisdictions in, you know, South Carolina, a few others, Chicago, [Atlanta]… Atlanta’s got a big one. Vancouver, Toronto, Montreal is a big special effects place. So, you can get stuff done everywhere because of the talent but because of the affordability, because of the incentives. Calgary’s had a major success – largest production ever… television production in Canada – is the HBO series The Last of Us. It is… they took over a year of filming here, but they filmed the entire production in Alberta, not just because of the scenery can mimic Boston and other places, but also because it had the talented crew to do stuff, as you can see on screen. So it applies in most businesses with software engineers and others. You just got to think about what’s right. On the flip side, another great story about Calgary is… a guy named Garrett created a software business here – online business – back in the early 2000s. He tried to get some investors to put money in here, but of course, it was an oil and gas town and they didn’t understand the online [business space] very much. So it was a big tough sell. He goes to California, because he knows that [the] internet’s bigger there and people understand it, finds some investors, builds it out, sells it off, and then thinks what else am I going to do? And then he and a partner created Uber. He couldn’t have created Uber in Calgary or the previous business because the investors here weren’t ready for that business. And even then, because of the density of Calgary, which is reasonably dense, but not as dense as San Francisco or New York, Uber wouldn’t have worked here as a physical business. So you go to the place where it matters.
Doug Ross 18:09
Yeah, well, no, that’s a great story and a great success. So… so there are real merits to going to these areas that are known for certain things and where the investors are likely to listen more and maybe support your business. So that’s a great point. If you step back from that, so I’m imagining Garrett, at the time, I think you said that was his name, right, Garrett?
Glenn Suart 18:32
Garrett Camp.
Doug Ross 18:33
So, Garrett Camp is creating this business and he’s got some founders, cofounders with him, I’m assuming. And isn’t that one of the biggest questions that you face as a founder, if you’ve got your cofounders already, you are going to sit there and say, Hey, guys, where are we going to locate this business? And now you’ve got maybe two people, maybe three people trying to make this decision. There’s all sorts of personal implications. How does that get resolved? And do you happen to know what happened with Garrett in this case? Did he have other cofounders at the time?
Glenn Suart 19:10
I do not. And, it’s a great question. And I think, in fact, a future episode. Because, it’s exactly that. There’s a personal dimension to making those kinds of choices that affects your family and your spouses and loved ones, or friends and stuff. Because, sometimes you do have to make that hard decision of physically moving. And, what do you do? I guess at the end of the day, when it comes to physical location, don’t treat it as an afterthought. Make sure you think about it up front. I guess that’s really what we’re saying.
Doug Ross 19:46
Yeah, I think there’s… we’ve only pointed to a few factors here. Where your customers are, being one of them. We’ve talked a little bit about the investors, where they are, the suppliers as well… suppliers of talent, or talent [ed people themselves]. Another one that I would bring up would be the ability to distribute your product or service, I think is really key. So, you know, we’ve already talked about Alberta quite a bit in this episode. [Yeah] But you know, Alberta… its [all about] energy production, and so you have to [locate] be there. And that’s where you form your business. But the key is, can you distribute from there? And there’s obviously been big questions about… about that, and Keystone pipeline coming up. It’s on, it’s off, and currently off now. So being able to distribute your product is a key thing. That cuts across all sorts of businesses. So when we’re talking about digital goods, or entertainment, things like that, you can locate your business almost anywhere, because you can distribute it through partners, through the web, lots of different sorts of things, but you need to be able to distribute that. Now, lots of companies are separating those two things, the production side of it… wherever you’re producing it, you just have to be able to distribute it. So you’ve got to ask… answer that question or get it to your customers easily no matter what it is. And then another element that I bring up would be the design element. If I’m thinking about forms of businesses, there’s an entire form of business out there which is, designed in X – California, you might say…
Glenn Suart 21:28
Yeah.
Doug Ross 21:28
… manufactured somewhere else – could be China, for example. That’s a pretty common form for a business. So when you’re thinking about your physical location, it’s Where can I do or where do I want to do the design work and get that part of it done? I can outsource and offshore potentially the… and even if it’s not offshoring and you stay within your own country… there’s a more effective place you can get the manufacturing part of it done. [all good…] So, thinking about design, maybe separating the business, the design part, the headquarters from the manufacturing, or the headquarters from the distributors, that kind of thing.
Ali 22:14
You’re listening to Conversations on Startups with Doug and Glenn, merci pour nous avoir joindre.
Glenn Suart 22:19
All good points.
Doug Ross 22:23
All right.
Glenn Suart 22:24
So what’s the summary in your mind for entrepreneurs, in terms of location?
Doug Ross 22:29
Well, you already mentioned, there’s a lot of factors and it takes some upfront thinking. You’ve got to look at both sides of the equation, not just the costs, and what is the least costly, you’ve got to really look at the benefit side of it. Does it work for my customers? Can I distribute from here? Can I get the talent that I need into that particular place? Will investors be attracted to my business if I locate in Tuktoyaktuk versus Cupertino? So yeah, I think that there’s multiple factors and you really have to prioritize which ones are the most important when you make this decision. And then the other element that we touched on in this episode was short term versus long term. Do I jump to where the latest government incentive is or do I take a longer term view and make my decision based on that? And by the way, it still might be where a certain government is willing to subsidize you, that could still make sense. [Yep] But the principle being take into account short and longer term and how that fits in with your business. Not everybody is Elliot and can create a business that pays off his his entire mortgage in three days. Wouldn’t that be nice?
Glenn Suart 23:47
Exactly.
Doug Ross 23:48
Did I miss anything?
Glenn Suart 23:50
No, I think that’s pretty good. So Location, location, location. Think about it up front. I’m Glenn Suart in Calgary.
Doug Ross 23:57
And I’m Doug Ross in Boston. We’ll see you next time.
Doug Ross 24:10
Conversations on Startups is a production of Glenn Suart and Douglas Ross. We hope you’re having fun listening but mostly that you take action on your business idea. For more inspiration visit our websites: todaysgreatidea.com and sparkclickgo.com. Another episode of Conversations on Startups will drop soon, or is already available to binge. Thanks for joining us, and remember to subscribe and invite your friends. See ya next time!
Transcribed by https://otter.ai