Parts supplier survives outside Silicon Valley
Saturday, May 8, 1999
By Liz Garone
LAGUNA HILLS -- Leaving Silicon Valley can be a risky move for an Internet-related company. But one start-up recently discovered it can also prove financially rewarding.
In February, NetBuy, the largest supplier of electronic parts sold over the Internet, picked up and left Santa Clara, taking its headquarters, operations and 30 employees 400 miles south to Laguna Hills in Orange County.
By making the move, the company saved more than 30 percent in rent and 15 to 30 percent in personnel costs, according to Jim Moriarty, vice president of marketing for NetBuy.
Employees benefited, too.
Orange County's median house price in 1998 was $253,969, compared to $418,444 in San Mateo County and $304,500 in Santa Clara County.
When Moriarty moved to Southern California, he sold his San Carlos home for $120,000 more than what he had paid for it 11 months earlier.
He used to spend his commuting hours in bumper-to-bumper traffic on Highway 101, he now jets from San Diego to Laguna Hills in 45 minutes, his car's speedometer rarely dips lower than 65 mph.
Moriarty admits that leaving the Silicon Valley also meant losing the chance for informal interaction.
"When you're not there, you have to inject yourself into people's schedules," he said.
And Jim Wittry, NetBuy's president and CEO, still spends approximately half his time in the Valley.
The company's investors don't appear too worried about NetBuy's move.
"The beauty of the Web is that you can be located anywhere and have as powerful a Web presence as if you were located in the Valley," said Alex Rosen, vice president of the Sprout Group, a venture capital firm with offices on Sand Hill Road in Menlo Park and in New York and Chicago. "Geographical location matters a lot less when compared to companies that have to make direct sales calls to software companies."
"Their (NetBuy's) customers are not necessarily in Silicon Valley," explained Rosen. "From that standpoint, NetBuy wouldn't derive as much value being in the Valley as some of my other companies do."
For Moriarty, the physical location of NetBuy shouldn't exclude it from being considered an integral part of Silicon Valley.
"Just because we moved our headquarters to Southern California does not mean we 'left' the Valley," he said. "All of these geographic factors are meaningless." <<<< Back to my Index page.