Why Madison, Wisconsin is a Model for the Next Great Tech Hubs

Why Madison, Wisconsin is a Model for the Next Great Tech Hubs

By Jeff Barrett, CEO at Status Creative
 4-minute read

Wisconsin is a Model for the Next Great Tech Hubs

In short:

  • Madison, Wisconsin is one of many non-traditional tech hubs that deserves attention from companies who are looking to establish new offices.

  • Software company Zendesk established an outpost there a few years ago, after deciding to prioritize its employee’s existing connections and ties to the city.

  • Zendesk’s success--and the proven potential for companies to both thrive in and grow non-traditional tech cities--should motivate companies to consider cities like Madison.


Do we really need to set our sights on traditional tech hubs anymore? Some companies are betting that we don’t. 

A few years ago, when software company Zendesk was contemplating building its second HQ, it considered Austin and other buzzy tech scenes, as any company would. But ultimately, it chose to create a hub in Madison, Wisconsin. 

Madison checked similar boxes to Austin in regards to talent, education and quality of life. Similar to Austin, Madison ranked highly in “best places to live” indexes and had a large public research university. (Austin has the University of Texas at Austin, and Madison has the University of Wisconsin--Madison.)  

Most importantly, some of Zendesk’s existing employees were from Madison. The metro made the most sense for the people who would be driving the HQ’s new projects, because they already knew the area and its key decision makers. Thus, it was able to get an entire city behind its effort, rather than being “just another company” in Austin. 

As of last fall, nearly 300 employees worked in Zendesk’s Madison office. It’s the company’s second-largest U.S. hub, behind San Francisco. 

 

Putting people over places

Zendesk’s people-first strategy created a deep bond between employees and the company. Belonging to a new and growing team, having ownership of a project at its ground level and seeing opportunities to grow are paramount in talent retention and attraction. 


Growing a city

Now, years after setting up shop in Madison, Zendesk is a major employer in the region with a downtown, glass-windowed building that has 360-degree views of Lake Mendota and Lake Monona. 

The locational experiment proved that tech companies can not only thrive in cities beyond Silicon Valley but also grow them, said Tiffany Apczynski, Zendesk’s VP of public policy and social impact.  

“There is no longer a need to be centered around hubs; hubs can be created anywhere,” Apczynski said. “When we create tech jobs in [non-hub] cities, we see a shift: Side industries start to crop up, nonprofits see increased participation. 

“Take San Francisco. The reason that companies like Uber, Lyft, and Instacart came about was to respond to the changing local landscape and economy of the city. Companies have a responsibility to shift how they recruit and what they think a candidate should look like or come from. There's potential for everyone to be included and to promote massive growth.”

Zendesk has expanded its presence in Madison since 2013. (credit: Instagram/zendesk) Zendesk has expanded its presence in Madison since 2013


Trust in talent

Hubs are created only out of intent and innovation. There’s no set formula for where a company should exist--talent is everywhere. Conventional wisdom tells you to build an office in hub cities because there’s a concentration of talent, but you can just as easily become a new hub in a different market. 

To participate in this shift that Apczynski describes, place a premium on finding a cultural and happiness fit for your employees rather than following trends. 


Bringing it home 

Many working-age adults leave home because they eye greater opportunities elsewhere. I did that after high school, so I understand. But as we realize our ability to create tech hubs anywhere, I forsee increased efforts to move talent back to where they have family and sentimental ties. After traveling to over 40 startup hubs across the country, I see that the common thread among successful organizations is that they are well-connected to their local ecosystems. 

Before bringing a company home, you must ensure your city is prepared to entertain your workforce. That’s not hard: There are a dozen cities in the country that are not considered hubs right now but have a research institution, plenty of high-value talent, housing costs below the national average and enough entertainment to keep millennials enthused. That’s what helped Madison grow. Madison, a college town, had always punched above its weight in entertainment. It has a thriving music scene that attracts more national acts than you’d expect, and being located on an isthmus means there is plenty of water recreation and things to do.

A job will bring you somewhere. What you can do in that city outside of the job will keep you there. 

Madison's strong recreation scene makes it a worthy tech hub. (credit: Instagram/visitmadison) Madison's strong recreation scene makes it a worthy tech hub


The snowball effect

Madison is a prime example of what happens once there is momentum behind a new tech hub: The success of the city’s existing companies attracts more companies, investment and startups. Madison’s brand-new AC Hotel, for example, is one of the more stunning rooftops in the country. VCs like Baird Capital now have a presence in Madison, and new ones like 4490 Ventures have cropped up in the city. Existing large companies like the mega-sized American Family Insurance and Trek, which generates nearly $2 billion per year, now have reason to invest more in Madison. 

Sometimes, cities need to provide the infrastructure for startups to thrive. Madison recently celebrated the opening of The Spark, an eight-story building that serves as an innovation center providing entrepreneurs with “the resources and contacts they need to be successful,” said LeeAnn Glover, real estate director for American Family. 

This includes StartingBlock, a hub for all things entrepreneurship. By housing venture capital, tech accelerators, startups, people from large companies and early-stage entrepreneurs in one space, opportunity for creative collisions accelerates. All parties are drawn to The Spark because of its potential for facilitating connections. 

The Spark is situated in Madison's Near East Side neighborhood. (credit: American Family Insurance)The Spark is situated in Madison's Near East Side neighborhood


Adjacent to The Spark is a state-of-the art music venue, The Sylvee, with luxury suites and kitchens for corporate entertaining. Glover said that the two buildings, along with bike paths and a new grocery store, are growing the surrounding neighborhood into “a hub of creativity, from art and music venues to housing and other businesses.”

And Madison is just getting started.


🌱 The bottom line

As you ponder where to grow your business, think beyond typical tech hubs. There are 30 regions in this country where you will probably get more runway (i.e. more time to test new ideas) and more one-on-one attention with resources that can help you grow (i.e. VC firms).

And if your business is already full-grown, think about bringing part of it back to your hometown. Right now, the next major growth cities are up for grabs, and it really is all about momentum. 


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