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Key Takeaways
- AI and remote work have erased the two biggest reasons founders used to move to Silicon Valley or New York — access to talent and access to tools — leaving affordability, tax climate, and quality of life as the real deciding factors.
- The fastest-growing states for new business formation aren’t the traditional hubs but places like Wyoming, Oregon, Mississippi and North Dakota, signaling that entrepreneurial wealth creation is being redistributed across America in ways that reward founders willing to look past the coasts.
From movies to novels, we’ve been told that a business sprouts best in the most fertile garden. In The Social Network, Mark Zuckerberg drops out of Harvard and heads west to grow Facebook in the new tech hub of Palo Alto. The Great Gatsby finds rural North Dakota boy James Gatz moving to Long Island to build his business and reinvent himself in the process.
These may be works of fiction, but in real life the startup guide has been the same for decades. If you wanted to launch a successful business, you went where the opportunity was. In this vein, Silicon Valley became synonymous with innovation. New York dominated finance and media. Boston excelled in biotechnology, and so on.
Today, that assumption is extinct. AI, cloud computing and the adoption of remote work have changed the dynamics of starting a business. Founders no longer need to be in a major civic hub to access trained talent, sophisticated business tools or even global markets. Aspiring founders are now choosing where to build companies based on affordability, operating costs and lifestyle.
More than 548,000 new U.S. business formations took place this past June, the strongest June on record, and nearly 3.5 million through the first half of the year. But the interesting trend is where many of those businesses are launching. States like Oregon, Mississippi and North Dakota posted some of the nation’s strongest year-over-year growth, while Wyoming remains a magnet for new business formations, especially LLCs and out-of-state ventures. These hotspots underscore that entrepreneurial momentum is becoming more geographically diverse.
AI changes the economics of company building
Until just a few years ago in the pre-ChatGPT world, launching a startup usually required hiring employees or outsourcing work. Entrepreneurs needed analysts to conduct market research, programmers to develop websites, designers to create marketing materials, writers to produce content and customer service reps to serve as liaisons. Now AI allows founders, even solo or two-person ventures, to perform many tasks themselves before making their first hires.
Let’s be clear: This doesn’t replace expertise or eliminate the value of seasoned employees, but it does significantly lower the cost and complexity of going to market. This means that one of the strongest advantages of traditional startup ecosystems – access to large pools of talent and cash – is no longer essential to nurture a company through its earliest stages.
Remote work unchains employees from offices
Along with powerful AI tools, post-COVID remote work has altered another enduring business assumption: that employers and employees must share the same offices. Many founders now recruit nationally or globally, customizing their teams based on expertise rather than ZIP codes. Software developers can work in Colorado, designers in North Carolina, accountants in Texas. Meanwhile, a company’s leaders can operate somewhere else, nearly anywhere they’d like.
This flexibility gives entrepreneurs something previous generations rarely had: the freedom to choose where they want to live without impeding access to talent. Instead of asking themselves, “Where do I need to move to build my company?” founders now ask, “Where can my company give me a strategic advantage?” and “Where do I want to operate from?”
Geography still matters for different reasons
As they say in real estate, it’s still about “location, location, location.” Geography continues to matter in many ways, but not because of specialized business hubs.
Lower commercial rents reduce overhead. Business-friendly tax policies improve cash flow. Decreased housing costs benefit founders and staff alike. Shorter commutes and better access to bike lanes and outdoor recreation can improve quality of life and help prevent burnout amid the nascent years of company building.
For entrepreneurs bootstrapping a business, every dollar they can save on overhead is a dollar that can be invested in product/service development, hiring or customer acquisition. Cities don’t have an irresistible magnetic pull anymore because they’re the preeminent hub for tech, finance or anything else. Unless your vision is a location-based business like a restaurant, retail shop or amusement park, more and more founders are unshackled by a “required” location.
Build where you can thrive
Business formation data suggests that the redistribution of entrepreneurship is accelerating. Communities that historically struggled to attract startups now find themselves competing on strengths that matter to today’s entrepreneurs: affordability, broadband connectivity, favorable tax climates and a high quality (and often slower pace) of life.
Wealth creation is becoming increasingly democratized, pushing into previously overlooked parts of America with a surge in LLC formations. Today, successful companies are as likely to emerge from midsize cities, suburban communities or even rural regions as from traditional metropolitan corridors.
Entrepreneurs have always been encouraged to “Think differently.” With a leg up from AI and remote work, that mindset is extending into where they plan.
Key Takeaways
- AI and remote work have erased the two biggest reasons founders used to move to Silicon Valley or New York — access to talent and access to tools — leaving affordability, tax climate, and quality of life as the real deciding factors.
- The fastest-growing states for new business formation aren’t the traditional hubs but places like Wyoming, Oregon, Mississippi and North Dakota, signaling that entrepreneurial wealth creation is being redistributed across America in ways that reward founders willing to look past the coasts.
From movies to novels, we’ve been told that a business sprouts best in the most fertile garden. In The Social Network, Mark Zuckerberg drops out of Harvard and heads west to grow Facebook in the new tech hub of Palo Alto. The Great Gatsby finds rural North Dakota boy James Gatz moving to Long Island to build his business and reinvent himself in the process.
These may be works of fiction, but in real life the startup guide has been the same for decades. If you wanted to launch a successful business, you went where the opportunity was. In this vein, Silicon Valley became synonymous with innovation. New York dominated finance and media. Boston excelled in biotechnology, and so on.
Today, that assumption is extinct. AI, cloud computing and the adoption of remote work have changed the dynamics of starting a business. Founders no longer need to be in a major civic hub to access trained talent, sophisticated business tools or even global markets. Aspiring founders are now choosing where to build companies based on affordability, operating costs and lifestyle.