It’s 7 p.m. on a Saturday, and hipsters in heels are filling tables under a tree-covered outdoor patio. Over beer and barbecue they watch partiers in ironic tie-dyed T-shirts file past to hear live music at the indoor wine bar. The night is young, but pedicab drivers are already lining up on the corner of Sixth Street and Lamar Boulevard in Austin to take the revelers to the next spot.
“This is where all the pretty people congregate,” my pedicab driver says when I hop in. “Everyone’s always checking one another out.” We aren’t cycling away from a mobbed concert hall or a bass-thumping club but rather from the 80,000-square-foot flagship of Whole Foods Market. “I just try to keep my head down and buy my kale and Swiss chard with my new app,” the married driver continues, referring to his iPhone fitness app, which advises him on his nutritional needs.
This is the epitome of the new Austin, where, sandwiched between my California-crunchy grocery bags in the back of the pedicab, I can see cranes at work building new high-rises, high-end stores and higher-tech office spaces, constructing a place where New York’s Williamsburg meets Palo Alto in the wholesome heart of Texas.
Five years ago, Austin was far more hippie than hipster, and its tech scene—from the Trilogy office park to the legions of “Dellionaires” who became wealthy courtesy of Dell—was mostly in the suburbs. Now, thanks to the growth of the South by Southwest Interactive Festival and Texas’s favorable tax policies, the city is seeing a slew of start-ups sliding down from Silicon Valley and with them a new set of young entrepreneurs eager to set up shop downtown—where things are happening. It’s this migration, even more apparent since California’s recently imposed 51.9 percent federal-state income tax on earnings over $1 million, that has Austin rushing to keep up with its rapid influx of tech wealth.
“Austin has always been built on tech,” says Thomas Ball, a partner at Austin Ventures, the city’s largest venture capital firm, where Michael Dell’s brother, Adam, is also a partner. “Now a lot of people are leaving California because of the taxes, and recently you have a lot of liquidity events in Austin,” Ball says, referring to the spate of nine- and ten-figure IPOs there in the past year, including HomeAway and Bazaarvoice. Last year Forbes magazine named Austin America’s fastest growing city, with a 2.8 percent rate of job growth and, according to real estate services firm Jones Lang LaSalle, an 8.1 percent growth rate in high-tech jobs (contrast that with the 2.7 percent rate of high-tech job growth in Boston, home to Harvard and MIT and the birthplace of Facebook). Naval Ravikant, founder of AngelList, a Silicon Valley–based platform for start-ups to raise funding, explains Austin’s appeal: “You get all the red state fiscal benefits and the blue state cultural benefits. Most people in the tech business are libertarians,” he says, and Austin fits. “It’s socially liberal and fiscally conservative.”
Austin’s growth spurt is most apparent downtown, where the new W Austin (200 Lavaca St.; 512-542-3600; whotelaustin.com) hovers over Second Street, and farther down the block, The Austonian, a $200 million green luxury residential tower—now the city’s tallest building—sprung up with record speed.
The city’s mix of new and old becomes clearest in the techie lifestyle, one that starts early in the morning over healthy breakfast tacos and caffè americanos at the artfully distressed Juan Pelota Café, inside Mellow Johnny’s Bike Shop (400 Nueces St.; 512-473-0222; mellowjohnnys.com), before the exercise enthusiasts head out for their early morning rides—a similar routine to those in Palo Alto. Otherwise they’re at Wanderlust Live (206 E. Fourth St.; 512-502-5183; wanderlustlive.com) for yoga followed by a pit stop at Blenders and Bowls, the café located inside, where the açai bowls with hemp seeds and the psychedelic scrawls on the walls provide “good vibes and really good food.”
This morning is marathon day, and as is the case with most of Austin’s popular events, like SXSW, the place to be is in the lobby of the Four Seasons (98 Jacinto Blvd.; 512-478-4500; fourseasons.com). There, after smoothies and barbecue hash on Trio restaurant’s outdoor terrace overlooking Lady Bird Lake, hotel guests head in and out alongside athletes covered in silver foil finishers capes. They’re walking to and from the finish line on Congress Avenue, which is usually littered with food trailers and where young entrepreneurs queue at Tapas Bravas (facebook.com/tapasbravasaustin) and Turf N Surf Poboy (austinfoodcarts.com).
With 821,000 residents, the city population has swelled by 41 percent in the last decade—and the south ends of its main thoroughfares are teeming. Along with the vibrant happy hour scene on South Congress, or SoCo, there are new boîtes in SoLa (named for South Lamar) and on Rainey Street, a historic downtown side street whose quaint outdoor bars have multiplied in the last two years. West Sixth Street now offers upscale options like the Dogwood (715 W. Sixth St.; 512-531-9062; thedogwoodaustin.com), with an elegant dry-stacked-stone outdoor bar, and bracing ceviche and lettuce wraps on the menu.
The sheer number of new dining and entertainment options is part of the city’s draw. “It’s easier to recruit downtown,” says Garrett Eastham, founder of Austin start-up Compare Metrics. “The younger generation wants to live down here.” We’re on Brazos Street, a block from Congress, at Capital Factory (701 Brazos St.; capitalfactory.com), the start-up incubator founded by Trilogy alum Joshua Baer. Capital Factory hosts weekly events at which techies can find one another. Andrew Marcus, founder of MyTennisLessons.com, met one of his business partners at a Capital Factory event called “Founder Dating” in this very space. In March, Baer hosted a competition at SXSW in which entrants with winning start-up ideas get to relocate to Austin and as a prize receive free office space, moving fees and funding. (The spoils went to Meritful, a LinkedIn-like network for collegians.)
Even on a Sunday afternoon, entrepreneurs are wafting in and out of the Capital Factory kitchen, an open, Silicon Valley–style snack-packed space in between lofty rooms of open cubicles. Karen Bantuveris, founder of VolunteerSpot, in which Capital Factory invested, describes why she left the Bay Area for Austin: “It’s not a good ol’ boys’ club.” Now on the advisory board of SXSW, Bantuveris has found the Texas tech scene an easy one to access. “The Bay Area is very cutthroat,” says Eastham. “It’s less likely you’ll see an Instragram here, but I chose Austin because I didn’t want to be in a herd.”
Thanks to new start-up infrastructure like Capital Factory and now Dreamit Ventures (dreamitventures.com), as well as tech companies such as Facebook and Google moving entire divisions to Austin, the tech community here may be less a herd than an entire populace. In February the Austin Music Hall staged the second annual Austin Startup Games, in which different teams of start-ups compete in beer pong, foosball and darts tournaments. At the end of the day, a member of the winning team, a company called SpareFoot, leaned against the music hall’s balcony overlooking nouveau-Mexican restaurant La Condesa (400A W. Second St., 512-499-0300; lacondesa.com), hoisted the trophy in the air and yelled, “Tweet my picture!”—making it apparent that at least on a social scale, this city has already one-upped Silicon Valley. “When I hear people ask how you make Austin like Silicon Valley, frankly, I cringe,” says Ball, of Austin Ventures. “I don’t want Austin to be like Silicon Valley.” He then quotes the city’s slogan: “Keep Austin weird.”
Fact: Real estate services firm Jones Lang LaSalle ranks Austin, with its 50,000 tech jobs, America’s fifth-biggest tech market.
The Austin Companies
You’ve heard of Facebook, Yahoo and Google, but here’s a list of the players, all headquartered in or around Austin, whose presence helped create the Silicon Valley of the South.
Old Guard
Dell
Origins: Founded by Michael Dell in 1984.
Expertise: Personal computers.
Legacy: Though headquarters were relocated to nearby Round Rock, the Dell name is still present in the city (via brother Adam Dell, a partner at investing firm Austin Ventures). dell.com.
Trilogy
Origins: Founded by Joe Liemandt in 1989.
Expertise: Software (automotive, consumer electronics and insurance).
Legacy: The Trilogy University program, known for wooing the best and brightest college graduates to work for the company (like alum Joshua Baer, who went on to open Austin start-up incubator Capital Factory). trilogy.com.
Recent IPOs
Bazaarvoice
Origins: Founded by Brant Barton and Brett Hurt in 2005.
Expertise: Software as a Service (SaaS) social-commerce technology.
Company Quirk: Ringing a gong to mark important occasions, such as new hires or new clients. bazaarvoice.com.
HomeAway
Origins: Founded by Brian Sharples and Carl Shepherd in 2005.
Expertise: Online vacation-rental properties.
Company Quirk: Reuniting National Lampoon’s Vacation stars Chevy Chase and Beverly D’Angelo for a Super Bowl XLIV advertisement. homeaway.com.
Start-Ups
Outbox
Origins: Founded by Evan Baehr and William Davis in 2011.
Service: Delivering postal mail to tablets.
Staying Power: Baehr has held previous positions at Facebook and as a special assistant to PayPal cofounder Peter Thiel. outboxmail.com.
Volunteerspot
Origins: Founded by Karen Bantuveris in 2009.
Expertise: Hyper-local volunteer organization.
Staying Power: A former PTA mom, Bantuveris traded in bake sales for big bucks. (She raised $1.5 million in series A funding last year alone.) volunteerspot.com.
—Anthony Rotunno
