Kyle Bunch: Why Austin Has Become The Go-To Product Test Market
An explanation of what it is about this Texas hotspot that has people returning year after year.
Every March, as reliably as the Texas heat and mosquitos, they arrive in Austin: thousands of creative professionals—musicians, filmmakers, designers, developers—seeking inspiration and opportunity in the thriving SXSW community.
Ten days later, the final Sunday of “South By” passes, and stimulated professionals and hungover partiers alike wake up with a new goal: to move within Austin’s city limits.
In recent years, that flood of new residents has become a year-round phenomenon. Recent estimates project the flow of new inhabitants at 2.8% in 2013 (around 140 people per day), making Austin the fastest-growing metropolitan area in the United States.
Following the talent migration, big business is heading south as well: Apple and Samsung—who already had established presences in the city—committed billions to Austin expansion. GM, Visa and The Home Depot also made significant investments in new “innovation centers” in Austin in 2012. Recognizing the increasing—and unique—opportunities available in this market, agencies like R/GA are strategically establishing Texan outposts combining the innovation mentality typically associated with the coastal capitals of New York and San Francisco with a middle-American sensibility. As a result, Austin unemployment is down to 4.9%, the median salary is up to over $60,000, and Austin is at or near the top of virtually every ranking of best cities to start or grow a business.
The reasons why businesses and individuals come to Austin are obvious; the reasons they stay have more to do with what other cities lack—a healthy job market in a culturally vibrant city that boasts enviable weather and a progressive political climate yet is actually affordable for families. New York and San Francisco may be the two cities that birth the majority of the innovations shaping our future, but Austin has become the place where that future reaches adulthood.
Beyond the role SXSW plays—allowing creatives to gather once a year and helping both start-ups like Twitter and Foursquare and established companies like Nike, GE and Samsung introduce innovative offerings to the world—Austin has become the go-to test market for products thanks to this unique convergence of traits. New ventures from established companies like AT&T, Verizon and T-Mobile (Isis) and Daimler (Car2go) are piloting products in Austin before making their way to the rest of the country.
But this isn’t new news. Austin has been the fertile crescent for disruptive businesses for some time: from Michael Dell reinventing personal computing and Whole Foods capitalizing on changing expectations for the grocery business, to more recent examples like Alamo Drafthouse reshaping the movie theater experience.
You can chalk it up to Texas’s revolutionary history or, as luminaries like Richard Florida have noted, the unique mix of musicians, filmmakers, game developers, and creative and technology talent that have found a higher quality of life in Austin. But you can’t deny that Austin gives a Texas-sized embrace to the new and innovative. And unlike traditional technology centers, Austin is a market that bears a much closer resemblance to the rest of the country. All of which makes Austin the perfect breeding ground for the cultural and technological innovations of tomorrow.
To those who wake up enchanted by Austin this year—welcome home.
Kyle Bunch is the Group Director of Mobile & Social Platforms at R/GA and leads the company’s Austin office.