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Mid-sized tech hubs aren’t all created equal

Business expansion to a mid-sized community is a common corporate location strategy, but not all mid-sized communities are equal when it comes to tech.

In a recent article for the Harvard Business Review, famed business expert Richard Florida highlighted the important role talent-focused satellite offices – in mid-sized communities – now have for corporate location strategy.

Mid-sized communities aren’t going to replace big cities as the site of corporate HQs, but they do have unique competitive advantages. They can provide unique access to top tech talent pipelines, provide a better quality-of-life for employees and reduce real estate overhead. This isn’t new – we were writing about it a year ago – but COVID-19 has put location strategy back on the agenda in a big way.

However, while mid-sized communities might provide advantages, it’s important to remember that they aren’t all created equally. Our new series comparing Waterloo with tech hubs like Austin, Pittsburgh, Columbus, Salt Lake City and Detroit has made that clear – they’re all very different.

Here are four questions to help determine whether a mid-size community can deliver real advantages:

Does it have a top-notch tech school?

Talent is king in tech. If you’re expanding to a new location it’s probably to get access to brand new talent, including new graduates and experienced tech workers. As a result, evaluating whether your target communities have a top-notch tech school is really at the top of the list when evaluating a mid-sized community. Really, it’s a common feature for most tech hubs. Austin has University of Texas – Austin. Pittsburgh has Carnegie Mellon.

Waterloo Pitch: Waterloo has the University of Waterloo. This is the school that was just ranked #1 in Canada for computer science, engineering and mathematics. It has Canada’s largest engineering department, which has more students than MIT and Stanford combined. It’s one of the world’s top-40 engineering and technology universities and in the top-25 for computer science. Really, the University of Waterloo is a big part of the reason our community has the highest quality tech talent in Canada and was listed as the #1 emerging tech talent market in North America.

How close is it to a major city?

One of the reasons Florida didn’t think corporate HQs would leave big cities anytime soon is that most young talent is still attracted to the big city lifestyle. That’s true. Lots of experienced tech workers also love the culture and entertainment opportunities in a big city, even if they can’t afford to live there.

One big differentiator for mid-sized cities is proximity to big cities. For example, Austin is 260km away from Houston and 313km from Dallas – so, great for an extended stay but not commutable. Detroit is 455km from Chicago. Pittsburgh is 597km from New York City. Salt Lake City isn’t close to anything. These places are isolated and really depend on whatever they can manage in-house for arts, culture and entertainment.

Waterloo Pitch: Waterloo is just 105km from Toronto, the 4th largest city in North America. We have direct (and improving) rail connections and both communities are along Canada’s biggest superhighway. Want to pop into Toronto for a basketball game or for world-class theatre? It’ll take an hour to drive there. Want to live in the big city and commute to Waterloo? Totally possible. There’s a reason it’s called the Toronto-Waterloo Corridor – we’re connected. This means access to a much larger talent pool, as well as more customers and partners, all while offering a great quality-of-life and lower cost-of-living.

Is it that much of a cost advantage?

One of the key advantages of moving out of a big city is cost. That’s true for companies and workers. However, things like cost-of-business and cost-of-living are significant differentiators between mid-sized cities, too. For example, salaries and lease costs are lower in Pittsburgh than they are in Austin. The same costs are even lower in Detroit. It can add up, especially for scaling companies that want to extend their runway.

Waterloo Pitch: Waterloo is very competitive with American tech hubs on salary and lease costs. In fact, we beat or tie all of them. Savings are about more than just simple salaries and square footage, too. While our taxes are – in some cases –slightly higher, employee access to government-provided healthcare can also offer significant savings for companies. Locating in Waterloo means access to Canada’s excellent research and development incentives, which can help drive innovation while cutting overhead costs.

Oh, and as Insticator CEO Zack Dugow pointed out in our recent webinar, the currency exchange rate helps, too.

Does it have a reputation for driving growth and innovation?

The ultimate question: can expanding to a new location help your business grow? It’s great to get new talent, have access to a big city or cut costs, but those don’t mean anything if they aren’t helping your company achieve challenging growth targets. This is also tougher to measure and, to be honest, all of the comparisons we tend to use are communities that are good at helping companies grow and innovate (otherwise they wouldn’t be competitors!).

Waterloo Pitch: Big companies like Google, SAP, OpenText and BlackBerry aren’t here for fun. They’re here because they see significant growth advantages. The same goes for fast-growing local companies like Faire – now worth $7 billion – and ApplyBoard – now worth $4 billion – or the 500+ tech startups in our community.

They’re here because this is a place where they can grow. It might have something to do with our capacity for commercializing research – our patent rate is 11 times the national average – or access to talent. It might have something to do with our incredible support ecosystem or Canada’s incredible business immigration programs. Or, maybe it’s something unique about the way it all comes together. Regardless, we know we have lightning in a bottle here, and the continuing investment in our community from all sizes of business really confirms it.

Do you want to learn more about the unique benefit of locating in Waterloo?

We can provide in-depth comparative research and data, connections with local companies and more.