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How a Technology Start-Up Can Thrive Outside Silicon Valley

Clinton Phillips, the founder of Houston-based 2nd.MD, blogs his journey in creating a tech start-up outside its so-called “natural habitat.” In addition, he underscores how business leaders can get a better handle on reducing healthcare expenditure.

Clinton Phillips, the founder of Houston-based 2nd.MD, blogs his journey in creating a tech start-up outside its so-called “natural habitat.” In addition, he underscores how business leaders can get a better handle on reducing healthcare expenditure.

To launch 2nd.MD, Phillips moved to Houston, TX to be closer to the world’s largest concentration of specialists. The company provides face-to-face online video or phone consultations with expert medical specialists for medical second opinions. Users can book a 20-minute consultation with the 2nd.MD specialist of their choice which they select based on a keyword search through its database of 175 medical specialists.

There is nothing more exciting, or scary, than launching a startup, especially a tech startup. Within months, fortunes can be made from your laptop or destroyed by some other dude in his garage. Risking your money and career is no small decision, so you want to give your “baby” the best shot of surviving. And, that means raising it in the right environment.

How much does physical proximity to talent, venture capital and influencers matter? I chose to open my business in Houston; not exactly the Mecca of tech. Texas has major cities, but they are not even close to the incubator that is Silicon Valley. So the question for me was, should I risk trying to nurture my business to success in my own “village?”

I set out to calm my fears, or so I thought. I always knew that Apple and Google were “in the Valley.” When I discovered that my role models – Twitter, LinkedIn, and Netflix – were all located within minutes of each other, I really got nervous. I wondered if it could have been a case of newbie herd mentality, but then realized that veterans like Adobe, eBay, HP, Intel, and hundreds more industry game changers all grew up in Silicon Valley as well.

I drew courage that Groupon and Facebook didn’t start in the Valley, but Facebook did move there almost immediately and Groupon turned out to be more of a sales company than tech. This was not encouraging for my team members who all moved from places across the country to work in Texas.

As the founder and CEO of the start-up 2nd.MD, I travel a lot. So I started doing research in each city I went to. I visited the local hangouts where dealmakers rub elbows. In Texas, as you would expect, the chatter is all about oil and gas. In Miami, people talked about new nightclubs and fitness centers, and fashion and TV dominated in LA. True to its nickname, New York was a melting pot of start-up ideas. But if you spend a few hours in Red Rock Cafe in Mountain View, your head will spin listening to the multitude of tech businesses and apps being hatched, pitched and built right at the next table.

Start-ups are particularly dependent on appropriate “TIC” – talent, investment and connectivity. Silicon Valley has these in spades. But can a tech company outside that bubble make it work?

So far, the answer for 2nd.MD and potentially others is yes. How have we done it in Texas? We credit the following four factors as key to our success: the power of family support, Southern hospitality, positivity and faith.

It also helps to have a business whose edge is to help deal with the high cost of healthcare. While some companies are trying to limit the price of medical procedures for their employees or reduce benefits, greater emphasis should be spent on determining if procedures are needed in the first place. Up to 30% of healthcare costs are spent on unnecessary procedures. Providing employees with timely, direct access to top doctors and specialists for personalized second opinions can help them make more informed treatment decisions. When doctors at leading institutions give second opinions, 70% of them discover more up-to-date and appropriate treatment options. This approach is a better use of healthcare dollars and provides value to both employers and their employees.

No matter how strong the pull of a “new gold rush in California,” there are always entrepreneurs who choose to stay near family or close to where they grew up. We have been fortunate to bring on board several locals whose brainpower matches anyone in the Valley, and who also have Texan roots and a strong values-based upbringing we have grown to love. For some start-ups, the power of family support that comes from sticking close to home can be a distinct advantage.

I am South African-born and bred. My family and I have spent the last nine years living in Aspen, Colorado, and now make our home in Texas. I have visited 35 U.S. states and 35 countries. Our family delights in the beauty of other cultures, and we are even teaching our children to speak Mandarin.

Don’t let those southern accents and hospitality fool you – Texans know business. They are big on relationships, which can take time to cultivate. This may grate on a San Franciscan eager to launch in 3 days, but the value of establishing trust is huge and long lasting.

We have been blown away how people have gone out of their way to help us. They may have made money in oil, but their interests don’t stop at the rig. Investment is available, although it might be acquired differently through friends or family offices before venture capitalists.

Much of Texas has experienced job growth and good times in comparison to most of the U.S. Energy and healthcare have kept Texas surging, and a much brighter outlook on life seems to resonate. While many American cities are waiting for another depression, Texans are opening businesses, shopping, eating out – “the American dream.” This manifests itself in a general feeling of positivity. I find conversations of changing the world and a bright future much easier to have. Without hope, it’s hard to raise cash or take the leap into a startup.

Finally, forget start-up incubators and accelerators; we go to church. Ours has been a huge advocate of 2nd.MD and even signed up for our service. It has been a great source of emotional support for me and my family and a conduit to great people. The church is not interested in ownership: they see the value of our offering in human terms and cheer us on at every turn.

A meaningful church life is not exclusive to Texas, but the Valley is light in this regard. Obviously, one doesn’t join a church or synagogue for material benefit, but the social connections are a natural segue to people who can be instrumental in your success.

We have settled in Houston, where we have found talent, raised millions and made great connections. I’m convinced that other cities in Texas offer equal promise. We took a leap of faith to embark on a tech company journey that can change healthcare around the world, and we will do it all from Texas.





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