Scale VC’s Guide to Building Category-Defining Companies in Non-Tech Hubs

Scale VC’s Guide to Building Category-Defining Companies in Non-Tech Hubs

Category-defining companies aren’t restricted to Silicon Valley. In a recent episode of Category Visionaries, Brett Calhoun of Scale VC revealed how founders are building billion-dollar businesses from unexpected locations like Columbia, Missouri.

Leveraging the Local Ecosystem

When most people think of Columbia, Missouri, they don’t think of tech unicorns. But as Brett points out, “Two of the top 25 YC companies actually came out of Columbia, Missouri. So one being Zapier and the second being Equipment Share.” This success isn’t coincidental – it’s the result of strategically leveraging local advantages.

“We’ve got a great partnership with the University of Missouri and their endowment invested in us,” Brett explains. This university connection provides access to talent and resources that might be overlooked by coastal companies. The key is building relationships that can’t be easily replicated by competitors in major tech hubs.

Building Strong Teams Outside Tech Centers

The current market presents unique opportunities for founders building in secondary markets. “You have the biggest layoffs in tech over like a twelve month period ever,” Brett notes. “So a lot of those people that are laid off have gone out and started companies, or they’re joining companies.”

This talent dispersion has been particularly beneficial for companies in the Midwest, where “a lot of founders struggle to kind of find that technical founder to build product, and there’s a lot more of that now.” The key is creating an environment where this talent can thrive without the distractions of tech hub hype cycles.

Accessing Capital Strategically

Raising capital outside major tech hubs requires a different approach. Brett advises against the common mistake of rushing to market: “You don’t want to just go to market out of nowhere and just plant your flag on the ground and say, we’re raising two million bucks.”

Instead, he recommends building relationships well before you need capital: “You want to build up some momentum up to the raise to the point where people are asking you if they can invest in the company before you’re actually starting to raise.”

The Advantage of Focus

Being away from major tech hubs can actually help founders maintain better focus. As Brett observes, these founders often “have a ton of humility and tend to fly under the radar and to move away from press.” This focus on execution over publicity has proven particularly effective in building category-defining companies.

Building Different

Scale VC’s portfolio companies take a distinct approach to growth:

1. Focus obsessively on customer needs: “People who are extremely paranoid about their customers and their product and trying to get that last like 1% correct are always the best founders.”
2. Build authentic local networks: Leverage relationships with universities, local businesses, and regional investors who are often overlooked by coastal companies.
3. Maintain capital efficiency: Lower operating costs in secondary markets allow companies to be more strategic about fundraising.

The Future of Distributed Company Building

The success of companies like Zapier and Equipment Share suggests that the future of tech might be more distributed than many expect. As Brett notes about the current market: “I think it’s one of the best times ever to be an early stage investor.”

For founders building outside major tech hubs, the key is turning perceived disadvantages into strategic advantages. Whether it’s accessing overlooked talent pools, building stronger customer relationships, or maintaining better capital efficiency, success comes from embracing rather than fighting your location.

The lesson is clear: you don’t need to be in Silicon Valley to build a category-defining company. Sometimes, being away from the noise is exactly what you need to focus on what truly matters – building something customers love.