RICK WEST wouldn’t leave Fayetteville for $10 million. Literally.
In 2012, two years after he co-launched Field Agent, a market research company that pays its mobile users to act as crowdsourced secret shoppers, he got a call from some folks at a top-tier Bay-area venture capital firm he and his fellow co-founders had met with before. They were flying over Arkansas and were wondering if they could drop by. A private jet flew in; a handful of guys in suits got out.
Listen, they said, we would love to invest $8 or $10 million with you guys, but we need you to think bigger. We need you to move to the West Coast. Let’s drive this thing.
Leaving Northwest Arkansas was, and had always been, a nonstarter for Rick. He tried to explain all the benefits the area provides—the cost of living, the people, the access to Wal-Mart’s “Vendorville”—but they wouldn’t hear it. It was California or nothing.
“Not even tempted,” Rick tells me in a second-floor conference room in Field Agent’s Fayetteville digs, three years after he turned down the firm’s offer. He has the commanding presence of a man accustomed to being listened to. He is serious, but with a bit of boyish impishness in his eyes despite the silver on his temples. “We wanted to build something instead of just create a shiny object to get a lot of money. … We wanted to grow a business that was sustainable, that could be a company. We weren’t trying to grow an idea to sell.”
He compares it to college football and basketball recruiting. In his analogy, Field Agent is a highly rated high school athlete and those guys on the private jet were the venture capital (“VC,” in startup speak) equivalent of an assistant coach making an in-home visit. They came in, said all the right things, slid stuff across the table and generally just tried to make the hard sell on their program. And when the big boys—the Alabamas and Ohio States—come calling, you can’t help but listen. But that doesn’t mean they’re the right choice.
“As a kid, you have to figure out, Do I really want to play football for Alabama?” Rick explains. “Because I could play football for 20 other schools and be a star, have a total different level of stress, and I could still play on Sunday. … VC money is the exact same way.”
Likewise, where most college athletes don’t get drafted, much less make it big in the pros, most startups fail even if they get a big investment. But that doesn’t matter much to the big VC firms. If 10 percent of their investments survive, and a handful are rock stars, 90 percent of the businesses they invest in can go under and they’ll still make money.
But despite turning down West Coast money, Rick still had to look outside of Arkansas for funding. Though the culture here is changing—thanks to people like Jeff Amerine, the founder of entrepreneurial consulting firm Startup Junkie, and investing groups like Fayetteville’s Hayseed Ventures and Little Rock’s Fund for Arkansas’ Future—the state’s investors still aren’t ready to handle companies like Field Agent, he says. It’s a difference in culture more than a lack of money. In his experience, Arkansas investors still want to see tangible assets—property, products, storefronts—not ideas.
That’s one reason why, in 2013, Field Agent went with a VC firm out of the Kansas City area, a metropolis that is actively trying to set itself up as Mid-America’s startup hub. Instead of $10 million, their Series A investment—the first major round of VC funding—was only for $2.5 million, with a later follow-on investment of $2 million. Its philosophy matched what Rick wanted for his company: They were looking for long-term investments, not flashes in the pan they could drive up in value only to sell. And, perhaps best of all, no moving was required.
As a 2001 transplant, Rick has an unbiased love for Northwest Arkansas. Sure, Silicon Valley is a hub for tech companies, but he’s adamant Field Agent isn’t a tech company. It’s a “solutions” company that just happened to be one of the first to use smartphones to collect data—in this case, geo-tagged photos of and consumer reactions to product displays—instead of just pushing data (read: ad-fueled apps and games) to users’ phones. And as a company specializing in consumer research, you’d be hard-pressed to do better than Northwest Arkansas, where Wal-Mart has gathered a concentration of product suppliers unseen anywhere else.
Rick has seen statistics estimating there are somewhere between 1,200 and 1,500 companies with customer teams in Northwest Arkansas serving Wal-Mart. And that means unparalleled access to future CEOs and other C-level executives—the people with the power to make their companies Field Agent clients—as they climb their respective corporate ladders with a stint in Vendorville.
“So there is a decent chance that we are going to engage them because we do great work, we live in this ecosystem,” Rick explains. “They go back to corporate headquarters, and they’re like, I loved working with those guys. They are great. Absolutely, I would love working with them again. Can you do that living in Chicago? There might be 40 or 50 companies like that there, but you don’t have 1,200. And even if [the executives] don’t live here, they have to come here to call on Wal-Mart. So, hey, while you’re in town, why don’t we connect?”
And it’s not just Wal-Mart. Northwest Arkansas is home to Tyson, J.B. Hunt and the University of Arkansas, meaning you have access to a broad pool of highly talented and experienced workers. All that being said, there is one major talent gap crucial to startups: developers. Already a rare commodity in this state, many of Arkansas’ best software developers hear Silicon Valley’s siren call and head west.
Heck, Rick understands it. As much as he loves his adopted hometown, if he were a 25-year-old, unattached developer, he might head west to the Bay or south to Austin, live in a house with 10 other guys and make a ton of money. It’s a lifestyle romanticized across pop culture. But that doesn’t mean Arkansas doesn’t have a lure of its own.
“If I can get you past 25 or 26, if I can get you into family mode, if I can get you into what’s really important in life, no one is going to leave here,” Rick says. “They may bounce around from company to company, but they’re never going to leave.”