Keep it Weird, Y’all

I’m digging this set with an elbow on the bar when some 20s/30s folks sporting lanyard i.d. badges ease up to me carefully. One of them, a team leader-looking type in a T-shirt bearing the company logo and “NEXT-LEVEL EVERYTHING” in a shouty font, tells me they’re with a new tech startup and just relocated to Austin. (No kidding!) They pepper me with the usual questions I get from giddy new arrivals, like what’s the best local beer? (I don’t drink), how hot does it REALLY get in summertime? (hotter than a gypsy honeymoon) and of course, why is Austin such a mecca for startups? (Uhhhhh…)

I pause over this last question as the door guy works his way through the audience carrying a pickle jar labelled “band tips.” I stuff a few bills into it and stare at my new friends until they follow my lead. The reason I don’t respond to their final question is simple: There’s no straight line to the answer. (Austin doesn’t do straight lines.) As someone who moved to Austin 40-plus years ago and an entrepreneur myself, I completely understand the allure of this place. The natural beauty, the music, the creative energy, the cool people, the vibe. But Austin’s transformation from the laidback college town and live music utopia I fell in love with, to the entrepreneurial hotbed it is today still astounds me. So I shrug and offer my tech friends some parting Mexican food recos and bid them farewell.

Stepping through the doors of the club and onto South Congress Avenue, the downtown skyline flexes, dwarfing the state capitol dome that until recently dominated the city center. To those like me who’ve been here a while, Austin’s skyline looks CGI. After all, the local population has tripled since I moved here in ‘83. And the numbers back up Austin’s buzzy status as a startup epicenter: In 2024, startups in Austin raised $4.5 billion in V.C. funding; currently, Austin is home to 25 unicorns; and the combined valuation of Austin startups has topped $128 billion.(Austin Chamber of Commerce.)

To top it off, Crowdfund Capital Advisors ranked Austin as the second-best U.S. city for startups in 2023. I may not be certain what exactly spawned these new buildings and inspired all of these entrepreneurs, but I do know the musical tour de force I just experienced plays an integral part. After all, musicians were, and are, the original entrepreneurs in Austin. Musicians are their own boss, they’re creative, innovative, non-conformist…sounds entrepreneurial, huh? Musicians not only put Austin on the map, they attracted like-minded folks who wanted to “do their own thing”--launching a startup included.

Dave Claunch, an entrepreneur several times over, founded Austin-based Liaison Creative + Marketing in 1991. Liaison began as a resource for bringing together businesses in need of freelance creative talent and freelance creative talent needing work, then grew into a full-service creative agency. Few understand the deep connection between Austin’s business climate and its creative DNA better than Dave.

He believes Austin’s deeply rooted creative culture has powered the city’s entrepreneurial rise, with its live music community leading the way. “Austin is a city of ideas with an amazing creative economy,” says Dave with infectious energy. “And the music scene is the beating heart of Austin’s creative culture. Artists, filmmakers, boutique hotels, bold new startups, you name it–in Austin’s creative economy, live music is the straw that stirs the drink.”

By all accounts, music set the stage for Austin’s current heyday. For decades, music lovers have been streaming to dozens of live music venues, tuning in to Austin City Limits (the PBS series and  the music festival), and attending South by Southwest. But several other forces were instrumental in establishing Austin’s entrepreneurial bona fides.

This Place Has Serious Charisma

In 1977, I was a 13 year old sweating out another summer in Dallas when my mom suddenly packed me up and shipped me off to spend a week with my crazy cousin Ray in Austin. I was never happy growing up in Dallas, so this was awesome news. In the 60’s and 70’s, Austin was a world apart from the steel-and-concrete cities elsewhere in Texas. This place was a free-thinking, acid-tripping, great-outdoors-loving, city-wide hug. Mom had no sooner pulled out of Uncle Ray’s driveway than I saw a whole new world through my Coke-bottle glasses. And my ambassador to this inviting, far-out world was Ray.

Ray was Austin, and Austin was Ray: charismatic, inventive, quirky, and unfailingly kind. We camped out in the hill country inside a teepee he constructed himself (he was an amazing freelance carpenter), with barely a minute passing without him describing the many ills of working for The Man. We rolled through town in his 1950s Chevy truck, blasting a Nina Simone 8-track, and catching live bands of every description, from reggae to psychedelic rock. He introduced me to his brilliant off-kilter friends, all fiercely independent entrepreneurs: a boat builder, a songwriter, an electronics inventor, and yes, a magician.

Then smack-dab in the middle of town, we cooled off in the 68-degree waters of the iconic Barton Springs swimming pool. As we relaxed on a grassy bank near the deep end, two college-age girls approached us asking if we’d like to toss a Frisbee. Then one of them asked if I wanted to be an extra in her short film. And also…these girls were topless. Profoundly, unapologetically topless. As were many, many women at the pool. Bear in mind, this was Texas in 1977. Womenfolk baring their breasts in public anywhere else in the state would probably be in jail to this day.

Right then and there, I knew Austin would be my home. And no, bare breasts were not the motivating factor. Even the 13-year-old me could sense Austin’s pervasive creative mojo and its celebration of the free spirit. These two energies feed off one another to drive a key part of Austin’s success: folks who come here want to stay–entrepreneurs included. Sadly, my maiden visit to Austin drew to an end and I was exiled back to Dallas. But I came back as soon as I could, enrolling at The University of Texas in 1983 and earning my diploma five years and several twists and turns later. It was about this timeframe that the City of Austin, along with my alma mater and other strategic partners, began planting the seeds that would yield decades of robust business growth. High-tech titans were coming to Austin, and bare breasts were not the motivating factor.

Austin Goes Big

While I was eking out a degree at UT in the 80s, the university teamed up with some visionary local and state leaders to lay the foundation for what would make Austin a mecca in microelectronics, and begin attracting new businesses in droves.

The first was Microelectronics & Computer Technology Corporation (MCC), an Austin-based consortium founded by 19 companies in 1983 to conduct research into advanced computer designs. Next came Sematech (Semiconductor Manufacturing & Technology Institute) in 1988, an Austin-headquartered research center formed by 13 semiconductor manufacturing companies. This would lay the groundwork for semiconductor giants including AMD, Intel, Motorola, Samsung, and many others to put down roots in Austin, and grant Austin the moniker, “Silicon Hills.” But the locals found that label so douchey and pretentious that it never stuck. (I shudder at the recollection.)

Lame nickname notwithstanding, these were heady times in Austin. The local population grew 26% from 1983 to 1990. And along with a semiconductor boom, A-List tech companies like Apple, Dell, IBM, and Microsoft expanded into the area. As hundreds of thousands of UT graduates like me can attest, earning a degree here in the past typically meant searching for employment anywhere but Austin. The job market here was virtually non-existent prior to the 1990s. Austin had always been a great place to live; now it was a great place to work. And boy oh boy, the work was coming in gobs.

Austin Becomes an Internet Domain

In the 1990s, two events hit Austin that extended the semiconductor boom into other technology realms, with seismic impacts on the city. The first was the 1994 addition of an Interactive Conference to the wildly successful South by Southwest Music Festival (which began in 1987 during my senior year(s) at UT). SXSW Interactive marked the explosive acceleration of software products, platforms, and services in Austin, adding a whole new economic engine to complement the semiconductor and computer manufacturing cash cows. The interactive conference began bringing hundreds of tech entrepreneurs from all over the globe to Austin each year, and per the custom, many of them relocated here.

Kathy Setzer was one such convert. In 1996, she ventured to Austin from her home in Milwaukee to attend SXSW. “There’s such a creative spark here; you can just feel it,” she muses. “The people who come here want to start something, want to create something of their own.” On her first visits to Austin, Kathy was a tech professional specializing in brand strategy and UX design and management.

She was so smitten by the creative energy of the city, she relocated shortly thereafter. Then in 2011, she flung open the doors of the Heywood Hotel. Her seven-room Michelin-rated property–born of a converted 1920s craftsman home–features thoughtfully curated Austin experiences, and the works of local artists, makers and textile designers throughout the property. “I built this business as a celebration of Austin,” says Kathy. “It’s fun helping people discover it for the first time. They just light up at the magic of this city.”

The second siren song attracting future business owners to Austin was felt in dozens of other cities, as well, but totally transformed this place: The dot-com boom. Like scores of Austinites, I made some serious coin as a freelance writer when dot-com corporate headquarters began sprouting up all over town: Appliance.com, DrKoop.com (named for former Surgeon General C. Everett Koop), Garden.com, Living.com, just to name an ill-fated few. The people, the money, startups, and the California license plates began pouring in. From 1990 to 2000, new Internet-based businesses in Austin generated a gob-smacking 125% increase in the city’s high-tech employment numbers. This marked a sea change in Austin’s high-tech scene, led by Austin’s new tech titans: software engineers. Many of whom had entrepreneurial visions and V.C. money. 

As we all know too well, the intense sugar high of the dot-com boom yielded an intense crash. Times were indeed tough around here for a good stretch. But the dot-com boom was responsible for mountains of Internet-related R&D, which laid the foundation for dozens of entrepreneurs to launch businesses in the future. And guess what else? The newcomers to Austin didn’t leave. Austin’s population did not dip after the bust. It bears repeating: folks who come here stay here–entrepreneurs included. 

Will the New Austin Kill the Old Austin?

In many ways, Justin Sherburn represents Austin’s past and its present. A multifaceted pianist and composer, as well as a forward-thinking entrepreneur, Justin relocated to Austin in 1997. Immediately, he landed steady work playing piano for the local French jazz sensation 8 ½ Souvenirs and a seven-piece tango orchestra, and later joining the indie rock group, Okkervil River. But when the pandemic hit, live gigs dried up for Justin and the entire Austin music community.

That’s when Justin’s entrepreneurial side kicked in, and he pivoted. Rocket Cinema was born, a portable drive-in movie experience, with pop-up screens, high-def projectors, and audio equipment. “The whole origin for the business was the pandemic,” Justin recalls. “People couldn’t go to the movies and wanted to gather in some way because they were losing their minds.” Justin used his van as collateral to obtain a loan that funded the entire venture, then paid the loan off within a year. “I immediately got all these gigs. Movie screenings with Austin Parks Foundation, local breweries, elementary schools, churches, you name it.”

In addition to Rocket Cinema, Justin owns and operates four music-based enterprises, ranging from a jazz ensemble that plays upscale corporate events to a group that performs live film scores. He leads both the creative and business sides of each. Despite his multiple successes in music and business, he laments that Austin’s status as the startup belle of the ball has come with a cost. “I think it's clear to everyone that Austin has seen a real cultural shift. It's definitely a harder place for artists. The growth has made it much more expensive. Some artists are adapting to that and some are moving on.”

Soaring home prices. Higher operating costs. Packed roadways, schools, and outdoor spaces. The price tag for wild success felt in Silicon Valley, Seattle, et. al., is now being paid in Austin. Can the old and new versions of Austin coexist? Justin’s adaptation to the changing local landscape with diverse enterprises offer cause for optimism, and serve as a guide for others. “I think there’s a big overlap in the Venn diagram of entrepreneurs and artists,” he explains. “The level of entrepreneurship is incredibly underestimated. And that’s what it takes to make an art career happen–here or anywhere else.”

An Overnight Sensation in Just 40 Years

As you can see, Austin doesn’t owe its thriving entrepreneurial culture or gaudy startup stats to any one factor. Sure, the prescient thinking of city leaders played a part, as did the birth of the incredibly popular Internet, the State of Texas’s business-friendly economic policies, and Austin’s remarkable aplomb at hosting enormous annual festivals. Plain old good luck played a part, as well. But none of this would’ve enabled the launch of a single business or brought one loaded-down U-Haul to this town if not for one thing: People fall in love with this place and don’t want to leave. And a big reason why is the creative, offbeat, daydreamy character of the city itself that welcomes and inspires different ways of thinking. Turns out the groovy, trippy, and far out are good for business. Cool.