Editor’s note: Jacob McDaniel is an entrepreneur and former resident of Kansas City. This letter was penned by McDaniel in response to Zach Pettet’s op-ed on Kansas City being an underground tech hub. Opinions expressed in this commentary are the author’s alone.
While I don’t personally know a ton about FinTech, I do know a ton about the startup community in Kansas City, and why I left it multiple times.
One departure was to raise capital for a startup named AgLocal, which we vigorously tried to raise for in Kansas City, but it took a venture capitalist in San Francisco to commit before the investors in Kansas City seemed interested. Most recently, I left Kansas City because of the lack of future-tech thinking and companies willing to pay for talent — I moved to Austin, Texas.
I know that two-thirds of the companies mentioned in the [Pettet’s op-ed] couldn’t recruit developers in Kansas City because of their old technology. Within that group, current developers haven’t left their job because of status quo. There is no way 70 percent of the developers at any of these FinTech businesses could leave and get a job in any other city within FinTech, because of their outdated skill sets. I bet you could go into 20 tech companies in Kansas City and ask them why they aren’t built in Node, Rails or React and they’d give you some lame excuse like, “It won’t be around in 10 years.” But the funny thing is that the companies saying this won’t be around in five years.
C2FO is a great company! I say that not just because I know the CEO, design team, and multiple developers, but they are changing and disrupting so much. They could go to any of the more prominent tech hubs and kill it. They can recruit semi-well because of their funding.
Another discrepancy in Pettet’s op-ed is the salaries mentioned. I assume it is referring to entry-level salaries because those salaries for a senior UX designer in Kansas City are not even close to those anywhere else. I worked in Kansas City for a startup less than a year ago as a senior UX designer earning in the low six-figures. That same job would pay about $125,000 a year, plus .1 percent to.005 percent equity, vesting over three to five years in a San Francisco startup. (Been there done that, got the T-shirt). Granted, the cost of living in Kansas City is much less than San Francisco, but the actual benefits of what you’re doing in San Francisco far outweigh that of Kansas City because of equity, assuming the company flourishes.
How many companies start and fail in San Francisco versus Kansas City? Judging by investments, I’d say about 1,000 to 3,000 companies in San Francisco start and receive investment inside of a year versus perhaps one to three companies starting and receiving investment in Kansas City in three to five years.
On top of that, Kansas City companies pitch much more than those of San Francisco. Of the one to three Kansas City hypothetical companies that receive investments in that three to five-year window, maybe one gets purchased — if that. Thus, this is creating a very unsubstantial work environment in Kansas City for new employees in tech and design.
Further, how many of the companies acquired in the past 10 years in Kansas City have delivered something worthwhile back to the startup community? I’m primarily speaking in the sense of venture capital for new ideas.
With all of this said, Kansas City is a great city. I love and miss it in many ways. but unfortunately entrepreneurship and business are not on the list.