It’s no secret that Silicon Valley is a breeding ground for success. But that usually doesn’t come easy. For many entrepreneurs in the region, it often means long hours, sleepless nights and many failures.
But not everyone makes it, and the pressures that many new businesses face in the region is overwhelming, exacerbated by the social and economic woes that the valley is coping with — homelessness, skyrocketing rents and a high cost of living. So many are deciding to leave, yet the promises that the valley offer continue to keep those willing to make the sacrifice here.
“I hear my peers in tech saying they want to leave Silicon Valley, and I’ve thought about it too,” said Chuck Hattemer, cofounder of the San Jose-based real estate startup Onerent. “On the other hand, the population is still growing — albeit at a slower rate and people want to stay. People outside the Bay Area are still drawn to the valley by the thousands.”
Despite the challenges, Hattemer said many in tech are still drawn to the region though they “could go somewhere cheaper.” But they couldn’t get an opportunity to work at an “all-star” resume builder like Facebook or Google somewhere else.
“These people know the expectations and sacrifices of tech and, if they have a family, they’ve likely prepared for the challenges,” Hattemer added.
As for him, the journey wasn’t easy either.
Hattemer and his fellow students at Santa Clara University started his company in a garage — a property management service that partners with local real estate agents and renters. The company absorbed most of his time, as he worked 12 to 14 hour days, seven days a week, causing him to miss classes or focus on anything else. The experience, he said, created a lot of pressure on his relationships with his family and friends.
“It is a real big change of lifestyle,” Hattemer said. “A lot of people don’t know that going into it. So that surprises them and that leads to faster burnout.”
Living in such an expensive region causes added pressure, said Hattemer, where at one point one of his good friends decided to live out of a van so he could save money for a house and not pay rent.
“We always give him a lot of crap for living in a van, but he became the first homeowner out of all of us,” said Hattemer, chuckling.
Five years later, the 25-year-old entrepreneur’s company is still going strong with a full 12 person team, and expanded to a call center in the Philippines. Though the company has secured more than $8 million from investors, running a team is difficult in a region with a highly competitive market.
“Our employees have high expectations here and the competition is strong so you end up having to offer Google-esque benefits before you’re Google size,” he said. “We witnessed it firsthand and had to get creative to build a sustainable business.”
Hattemer said small startups often have to offer extravagant amenities to get employees to stay. Many people “job hop” to take new opportunities, putting pressure on startups to invest in expensive luxuries such as a nice San Francisco office, instead of an office in San Jose that costs “five to eight” times less. At one point Onerent was paying up to $600 a day for catered lunches for its staff, that Hattemer said didn’t “make any sense” if he wanted to expand his business.
“I don’t think the nice San Francisco office is necessarily critical to the success,” added Hattemer. “You could have an office in San Jose, but maybe take some of that extra cash that you wanted to spend on a more expensive office and put it into other employee benefits.”
Just as Hattemer decided to drop out of college to pursue his dream, Vijay Sammeta, the CEO of Civic Foundry, a technology consulting firm that “specializes in government, hospitality, and high-tech industries,” chose to become an entrepreneur in 2016 after working for the city of San Jose for more than 20 years.
His last gig as the city’s chief information officer gave him the confidence and experience to leap into the private sector with a handful of clients.
“At a certain point, I just decided to pull the trigger and go out on my own,” said Sammeta. “It’s probably the most challenging and rewarding job I’ve ever had. It’s a lot of hours, it’s a lot of weekends, it’s early mornings and late nights.”
Unlike a regular job, Sammeta said a paycheck “doesn’t show up every two weeks,” adding pressure to secure enough projects during slow periods throughout the year when certain clients may not be interested in investing in a big IT project.
“The three most important things in running your businesses is cash flow, cash flow, cash flow,” said Sammeta. “And it’s probably the thing I pay least attention to up until it’s time to pay everyone.” The 46-year-old businessman who originally was handling clients on his own, now has a support team of four other individuals.
Though maintaining the constant flow of work is both a challenge and a reward as a small business owner in a competitive region, Sammeta said staying in the region is worth it. The high concentration of money from venture capital, educated tech workers, and high-profile tech companies is “an interesting formula” he hasn’t seen replicated in a different place, despite the woes that the region now faces as a result.
“Silicon Valley has a huge concentration of both talent, money, and a tech community. That’s an interesting formula that I haven’t seen really replicated in a lot of places. Those key ingredients that make Silicon Valley such an epicenter for startups and mature tech companies is rarely found elsewhere,” Sammeta said. “I think it’s worth it. But it’s an individual choice, it’s expensive to live here. You’re going to spend hours of your life in traffic. So you’ve got to take the good with the bad.”
Contact Nadia Lopez at [email protected] or follow @n_llopez on Twitter.