
Peak Valley? - raleighm
https://avc.com/2018/09/peak-valley/
======
justinzollars
I encourage everyone who lives in San Francisco to join YIMBY.

[http://www.sfyimby.org/](http://www.sfyimby.org/)

The fundamental problem in the Bay Area is a lack of affordable housing. This
pushes us into higher paying tech jobs, when we may prefer to start a company.
Its my dream to start a company but paying bay area rent is expensive!

This is what you can do to help:

\- Housing Costs (Our SF politicians lack focus: Think tech cafeterias and
Social Engineering vs Building Housing)

What can you do: unseat Supervisors Aaron Peskin, Jane Kim, Hilary Ronen and
Sandra Lee Fewer. This group votes against housing every chance they get.
Aaron has introduced the silly tech cafeteria legislation.

\- Demand infrastructure. We must demand it.

I do not want to lose our dynamism, so lets change SF

~~~
chroma
I used to think that this was the solution, but it's now clear to me that the
state and local governments are too incompetent to fix this problem. Over the
past decade, the bay area has gotten so much worse. The cost of living has
skyrocketed. Commutes have gotten longer. The homeless problem has become
something out of a George Romero movie. None of these show signs of improving,
and it's not due to lack of trying. The city of San Francisco spends a quarter
_billion_ dollars a year on homelessness.[1] That's $33,000 per homeless
person per year![2] The city is experiencing the greatest economic success in
its history, but it can barely keep Muni running. Imagine how bad things will
get in a downturn.

What laws do we see being passed? Plastic bag bans. Plastic straw bans.
Scooter bans. Tech company cafeteria bans. Laws that demonstrate a total lack
of knowledge of economics, incentives, or any sort of numerical analysis.

I've given up on the bay area and am preparing to move. I know the tech jobs
and community won't be as good, and I'll miss my friends, but I can no longer
stand being governed by complete nincompoops.

1\. [https://www.sfchronicle.com/bayarea/article/29-million-
incre...](https://www.sfchronicle.com/bayarea/article/29-million-increase-for-
San-Francisco-12902707.php)

2\. There are approximately 7,500 homeless in SF according to
[http://hsh.sfgov.org/wp-content/uploads/2017/06/2017-SF-
Poin...](http://hsh.sfgov.org/wp-content/uploads/2017/06/2017-SF-Point-in-
Time-Count-General-FINAL-6.21.17.pdf)

~~~
kelp
Isn't it quite an oversimplification to say that the homelessness issues in SF
are due to stupid politicians? Do other cities somehow have better smarter
politicians?

I think it's more likely that a series of cultural, historical, systemic and
environmental issues have lead to the current situation, and that our
politicians are generally average in competence and intelligence compared to
other similarly sized cities, but are dealing with some particularly
challenging issues.

Some possible factors:

Cultural: Other cities, such as NYC, house many people in large shelters, on
cots, outside of the city center. SF wants to put people in a higher standard
of living than a room full of cots, so we can only afford to house about half
the people who need it. (Much of that $250M/year we spend goes to housing
people) It's hard for the BART police to kick people out of the stations
because homeless advocacy organizations complain about abuse. So the problem
stays visibile. Places like Salt Lake City also see the Mormon church active
in improving these problems. I don't think there is any such non-govermental
organization working at such scale in SF. Generally we think it's the
goverments problem to solve, other places think it's a community problem, and
take action. We seem to tolerate people visibily using drugs, leaving needles
around. More conservative cities would not let that happen a block from city
hall.

Historical: Most of SF's services, such as shelters, needle exchange,
healthcare, etc, are downtown, this makes the problem very visible. NYC pushes
this out of Manhattan and has for years. Neighborhood groups in SF usually
protest adding a navigation center to their neghborhood. Imagine if we started
putting shelters and navigation centers in the richmond?

Systemic: This could be an essay alone. Rising housing costs, due to
downzoning, prop13, discrtionary review, etc etc, and then a job loss, and you
can't make rent, you lose your apartment. Now you're out on the street. The
city doesn't have enough shelters. And see previous mention of neghorhoods not
wanting navigation centers or shelters near them. The city actually has to go
in front of the planning comission, just like a private developer, to argue
for a new navigation center. Not only do we have a system that makes it hard
to build new high end housing, it's hard to build navgation centers, because
of all the process involved.

Environmental: California cities have a much higher rate of unsheltered
homelessness. NYC has a legal right to shelter. I do wonder if part of this
has to do with climate. If NYC had the same number of people living
unsheltered through the winter, they would have thousands of people freezing
to death. NYC has 75K people experiencing homelessness at any given time. This
creates the political will to house people.

So you're elected to the board of supervisors, or as the mayor, you have all
this history, all these factors that are making your job of reducing homeless,
very hard. What do you do? We've had many many bonds to increase funding to
provide housing for people experiencing homelessness, but the electorate
consistently votes them down. So your hands are also fairly tied with regards
to money. You're left with small incremental imrovements over many years.

I can see why you'd be fed up with San Francisco for these reasons. I just
don't think it's fair to blame it entirly on stupid politicians. All that
said, I do agree with you that I'd rather see the time spent on more pressing
issues than tech company cafeteria bans, and plastic bag bans. Part of this is
because we elect people like Aaron Peskin who seem very interested in 1.
having the ear of local small business groups, and passing protectionist laws.
2. Putting forward sensational laws that get a lot of media attention. Peskin
and his ilk operate on the emotional appeal side of politics. Things that
sound good as long as you don't think too hard about them. We'll find those
types of politicans everywhere. We have to work to expose them for what they
are.

~~~
briandear
Politicians in San Francisco don’t face partisan challengers so the rarely are
held to account for their ideas. Just like you’d never get fired buying IBM,
in San Francisco, you won’t get fired by going as far left as possible. The
two party system provides a healthy sanity check on going too extreme — there
is no such sanity check in places like San Francisco. For example, what would
happen if a Republican mayor were elected? In New York it worked out pretty
well and resulted in low crime and a strong economy; not all Republicans are
great and not all Democrats are great, but one thing I could hope we could
agree on is that all Democrat (Republican,) all the time has created a paucity
of new ideas or new approaches: it’s just more of the same: throw more money
at the status quo, grandstand about how compassionate you are and let the
limousine-liberal guilt enable existing politicians just continue to waste
money and solve nothing.

~~~
nradov
You shouldn't be down voted. Single party rule has eventually led to
stagnation and dysfunction everywhere it's been tried in the world. There's no
reason to expect that San Francisco is an exception to that rule.

~~~
lancewiggs
A true “far left” government wouldn’t tolerate high rents and homelessness.
The actions of the current regime are putting rich people’s and business’s
priorities above others. That’s right wing.

Labels in politics are used to demonise - but nothing is ever that simple.

------
joefranklinsrs
People have been proclaiming the death of silicon valley since the late 80s,
when tech IPOs peaked in 1983, and the video game crash of 1983. But then
silicon valley produced several more innovative booms - PC, internet, social,
and mobile, making the local economy 1 trillion dollars and surpassing its
cousin, LA economy. Whereas LA economy stagnated after the 90s after aerospace
and manufacturing moved out, silicon valley kept its dynamism, innovativeness,
and of course venture capital.

There are several hard-to-replicate formulas for silicon valley

1.) Money likes to stay in silicon valley: Other money is in silicon valley.
Stanford, Berkeley, and Santa Clara university. Existing networks. Beautiful
weather (26c today in san jose), low humidity. Gorgeous landscape. Great wine
and michelin restaurants. World class cuisines in American, Japanese, French,
Italian, Indian, Chinese, Vietnamese in Bay Area. Many activities to do year
round. Beaches, mountains, coastlines, deserts, and forests. Vibrant
immigrations. Good infrastructure. Close proximity to Seattle, Las Vegas,
Hawaii, and Los Angeles.

2.) Talents are already in silicon valley, and their million dollar houses are
in silicon valley. Easy to interview with various companies when they are all
near where you work and live. Safe neighborhoods. Engineers that you can meet
one another in meetups. Existing networks.

3.) California is the 5th largest economy in the world. And Silicon Valley is
the fastest growing economy within it. Lack of regulations to start a startup,
raise money, sell to other states in US, which is the largest economy in the
world and has the largest consumer market in the world - 1/3 of the world's
consuming power. the next closest consumer market that shares the same
language and culture is Japan at 1/3 of US's size. And US economy is fast
growing, whereas Japan and China are stagnating.

4.) Inherited knowledge is in Silicon Valley. How to bootstrap better. How to
invest better. How to run teams better. How to produce software better. How to
innovate faster. Everyone knows a little bit of the piece of the puzzle, and
have been practicing it for 40 years.

~~~
adventured
The most likely outcome is that Silicon Valley once again broadens
geographically, rather than dies. It has been doing that in bursts basically
since HP was founded in 1939.

The YIMBY forces are not going to succeed in fundamentally changing San
Francisco. They've been failing at that for two decades. Instead, the money
and start-ups will push further out. When people talk about Silicon Valley
today, they mean a much larger geographic area than what that would have meant
just 30 years ago. 30 years from now, the name will have grown to encompass a
far larger area.

~~~
dcposch
> They've been failing at that for two decades.

This is a defeatist attitude.

SF Yimby / SFBARF were started in 2014 and have been impressively successful
since. They played a decisive role in the latest mayoral election, and SF now
has a Yimby mayor.

Change is possible.

Apathy and disengagement from tech people and youth is v advantageous to
incumbent Nimby constituencies. Those are mostly older, mostly homeowners or
rent-control beneficiaries and therefore personally insulated from the housing
crisis. They vote reliably, and there's no reason ppl with a more inclusive
vision can't do the same!

Step 1 is letting go of cynicism. Change in fact already happening.

[https://trends.google.com/trends/explore?date=all&geo=US&q=y...](https://trends.google.com/trends/explore?date=all&geo=US&q=yimby)

------
Finbarr
My prediction is that money will keep flowing into SV companies, but the teams
will all start going remote. Shogun is fully distributed and it's incredible.
We're able to pay amazing salaries to everyone outside of the Bay Area, for
way less than we'd pay in the Bay Area. The result is happy
employees/contractors with no sense of entitlement. They're also not all
getting hounded by recruiters constantly because they don't have "San
Francisco" as their location.

It doesn't make any sense to raise investment in SV and spend it here. Your
runway will be 3x or more longer if you hire outside the Bay Area. Also, there
are smart people everywhere! There's a pervasive viewpoint in SV that the
world's smartest people all come here. It's true that there are a ton of smart
people here, but there are way more equally smart people who don't want to
deal with the crazy immigration and politics of the US, and the sky high cost
of living in SV.

~~~
yumraj
Innovation is driven when smart people interact with other smart people, and
that is the value of SV and its ecosystem.

Obviously I'm generalizing, but your (or anyone else's) remote employees may
be the smartest of the bunch or even in the world, but if they are not exposed
to outside influences and are satisfied in their own locales, they will remain
good/great loyal employees but will never (again generalizing) become
entrepreneur. Otherwise, why would you be in the SV if you could do it
remotely.

So, if this remote model keeps on evolving, then obviously it will have a
negative impact in the long run on SV ecosystem, since these smart loyal
employees remain just then and never become entrepreneurs.

However, I think this model only works till companies reach a certain size and
I do not believe that companies can scale beyond a point on a purely remote
workforce. So, overall I think SV and its ecosystem is safe.

~~~
Finbarr
I agree with your statement about innovation.

The remote workers _are_ getting exposed to outside influences by working for
SV companies and with other remote workers. In fact, I think they benefit from
exposure to a wider range of opinions than one typically encounters in SV.
They also travel a lot because being fully remote gives them a ton of
flexibility.

I think many of them _will_ try to become entrepreneurs at some point. The
challenge for people outside SV is always going to be funding. But starting
tech companies is constantly getting cheaper.

It remains to be seen whether there is a breaking point in scale for remote
teams. Zapier is now in the hundreds and it still seems to be working well for
them.

To be clear, I do think people will continue to move here to start companies
for the foreseeable future, and so SV is safe in that respect. Reputation and
momentum count for a lot. However, I'm guessing the workforces will start to
shift outside of the Bay Area.

------
pm90
I was having a conversation with a friend living in Austin about what it would
take for SF to _not_ be the center of Tech. And the answer seems to be: an
actual devastating earthquake. And even then, If it was mostly property damage
(and not human lives lost) the tech sector would probably rally and see it as
a huge opportunity to rebuild SF the way they want it rather than move away.

When I see articles like this, I wonder what it would take for other cities to
change similarly. What would it take for another city to be the finance hub
(replace NYC) or the new entertainment hub (replace LA) and I really can't
think of other cities becoming that. So I am similarly skeptical of Tech
moving out of SF anytime soon. And Fred makes a great point: Tech startups
still have an outsized impact and stellar returns that justify the
skyrocketing expenditures in the Valley. When this stops being the case is
perhaps when things would change.

~~~
humanrebar
The problem is that "tech" isn't an industry. It's a set of tools used by
other industries.

John Deere is "tech". As is Two Sigma. And Wal-Mart and UPS (logistics). See
also NYC quantitative trading firms. And East Coast biotech.

Silicon Valley tech is mostly centered around specific types of consumer
products, especially fremium and ad based internet businesses. That's not even
close to being the only kind of technology or software out there.

~~~
djrogers
> Silicon Valley tech is most a specific type of consumer tech, mostly
> focusing on fremium internet centric businesses.

Not even close to being true. There are a handful of big companies in that
area, but there are tons of others that aren’t. Enterprise startups flourish
in SV - SFDC, Workday, Palo Alto Networks, ServiceNow, Splunk... Just a
handful very successful startups that are all uber-unicorns.

~~~
nostrademons
Not to mention 23andMe, Genentech, Palantir, Apple, Cisco, Seagate, NVidia,
Lockheed Martin, etc.

I somewhat agree with the grandparent - tech _is_ a lot more than just
consumer Internet tech. And yet there's a useful distinction there - once tech
is more than about 10-15 years old, it ceases to be considered "tech", because
it either dies out or becomes big enough that it gets its own label. United
Airlines (another SF company) was some fantastic technology - _in the 1920s_.
Now, it's just an airline, because we've gotten used to the ability to fly
through the air and cross the country within a few hours.

And I'd say that Silicon Valley has an advantage in "tech" (i.e. innovations
that are < 15 years old) in that a.) it has a culture that's open to the next
new thing instead of assuming it's a threat to the natural order and b.) has a
large number of service providers that are all eager to find & support that
next new thing and c.) has a legal framework that prevents past employers from
stopping you from going off and starting the next thing.

~~~
realityking
Isn't United a Chicago company? They obviously have a major hub in San
Francisco but otherwise I don't think they have any connection to the SF Bay
Area.

~~~
nostrademons
Oh, you're right. They have a hub at SFO which also does a lot of aircraft
maintenance (Wikipedia says it's the principal Global MRO base for United),
and they're also one of the largest employers on the peninsula. But the actual
corporate headquarters is in Chicago, and supposedly the actual predecessor
airlines were founded in places as diverse as Seattle, Boise ID, Washington
DC, etc.

------
neom
3-4 years ago I used to have no trouble recruiting great engineers to move
from SF to NYC. Provided you pay well and help relocate, finding engineers who
are 5 or so years out of college from somewhere like RIT or Georgia Tech that
went straight to SF out of college and want to try a new "big city" isn't
difficult. These days, I think there are enough engineers here now you can
hire locally first.

------
projectramo
Really the question is not if or even why other places are rising up to
compete with Silicon Valley.

The question is why has SV been so uniquely successful for so long.

I know we have our favorite theories — perhaps the density theory in the
article is correct — but the debate rages on. And till we know why SV
dominated we won’t know why it stops dominating.

~~~
howard941
It's probably not just one thing but a whole suite of attributes. California's
decent social and policy infrastructure and non-compete unenforceability are
two additional elements.

Compare to the strangled startup situation in Florida where there's also a
mild weather regime and natural disaster risk, but a polar opposite in its
zero social service infrastructure/zero personal ncome tax and a full throated
enforcement of arguably unreasonable non-competes.

~~~
rayiner
What decent social and policy infrastructure? California schools are among the
worst in the country. Public transit infrastructure is sub par compared to
comparable east coast cities. On other social axes, California voters passed
Prop 8. They were responsible for the most aggressive three strikes law in the
country. Etc.

~~~
howard941
These are not uniquely Californian attributes although blazing the trail for
misadventures adopted elsewhere like Prop 8 mandates and three strikes laws
deserves some credit. Its post secondary public schools are among the best in
the country, along with off the top of my head its uniquely Californian
consumer, worker, and environmental protections.

------
AYBABTME
What's crazy to me is that clearly, the Bay area's housing problems are just a
symptom. If you have a hard time finding affordable apartments, think about
all those that have been displaced by exploding prices. Rent rose, food prices
rose, services rose. Everything is pricier. Look around the streets and it's
clear gentrification, combined with a lacking social net, has messed up a lot
of people's life. But SV startups are looking to hire people to commute and
sit in chairs, in office.

I've been working remotely for years and I make a point to respond to each
recruiter contacting me. I'm not really looking for a job, but I'm just trying
to collect data on remote work. So I try asking if the opportunity is remote.
It never is.

All y'all's Silicon Valley startups want people sitting and warming up seats
in your SV offices. The argument is always "to foster company culture", which
I guess translates to Friday evenings playing with Nerf guns. Which I guess is
more important than things like not contributing to local social problems.

The dichotomy is so weird. They want to change the world in some weirdly
contrived way. But there's no way in hell this can be done if you don't move
to SF to warm up their chairs. Too bad for the rising housing market.

Last week, a video chat startup that doesn't do remote. Seriously. Anyways...
If your company culture is held together by Nerf guns.

~~~
rightbyte
I wonder how the people working at Inn'n'Out burger in SF actually make a
profit from working there.

Maybe it is like Uber drivers. They quit after noticing that they are losing
money but the supply of new workers is so high it works out for the company
anyway.

I mean geocery stores and fast food joints etc are not that much more
expansive than the rest of the country.

A burger at McDonalds should really cost twice the national average or
something to cover the living costs for the workers. But it doesn't ... and I
suppose churn ratio is the answer?

------
drewmassey
I don't disagree that the cost of living and FAANG brain drain will likely
challenge the hegemony of Silicon Valley in the short term. What interests me
is whether software engineering companies will continue to focus on
geographical centers, or if the future is perhaps more distributed.

Obviously this doesn't work in other industries like hardware, biotech, etc.,
where physical presence is baked in to doing business.

~~~
djrogers
> FAANG brain drain

SV has been dealing with brain drain since loooong before FAANG was even a
thing. HP, Intel (remember why it’s called _silicon_ valley?), and Oracle used
to be heavyweights - and in the midst of that there was still a very very
successful startup culture.

I’ve asked founders why they start their companies here, and the reason is
almost universally ‘this is where the biggest pool of engineers I need for X
are’.

------
jondubois
The centralization of the tech industry in Silicon Valley never made any sense
to begin with.

To say that all the top talent was/is in Silicon Valley is a gross
overstatement. There has always been much more talent outside of SV than
inside SV; simply because the world is a very big place.

People who live in Silicon Valley don't have access to much more knowledge
than people who live in remote places around the world; thanks to the
internet, knowledge is decentralized.

There are only two things that people in Silicon Valley had better access to
than everyone else; 1. Venture capital and 2. Tech media coverage - These two
things helped SV to better capitalize on their innovations but now is the
point where reality starts to catch up with the hype.

------
kenneth
As an investor based in the valley, I've been thinking about this for a long
long time. I've traveled most of the world, and always made an effort to meet
the local ecosystem. For the past few years, it's been hard for me to make
investments outside of the USA (most of my portfolio is SF-based, with the
remainder sprinkled around the US).

I have been working on this for a few years, and have finally come to a thesis
around international investments.

I believe that as an investor with a SV background, the two areas of
opportunities are in Southeast Asia and Latin America, specifically. Both
regions have significant benefits over others in the world. China and the rest
of East Asia has too much of an ingrained culture. Africa is still too poor.
Europe is too traditional and doesn't embrace new things. The middle east is a
mess. Oceania is too remote and expensive. SEA and Latin America have a
rapidly developing economy and middle class (i.e. demand), with an endless
supply of cheap labor (i.e. supply). Money goes 10x as far as it does in SV.
Both regions are reasonably Westernized and receptive to innovation.

I've started making a couple investments in those regions in recent years, and
will likely shift some of the portfolio that way long term.

~~~
nradov
Could you be a little more specific about which countries in Latin America
seem promising? Some countries are on the right track, but Venezuela and
Argentina are self destructing which could cause nasty spillover effects on
their neighbors.

~~~
kenneth
I'm particularly excited about the prospects in Colombia and Mexico. Brazil
has large potential too. What works well in Colombia easily translates to the
whole Andes region (Ecuador, Peru, Chile).

Note some large startup successes in the region already. Cabify and Rappi,
(both of which I passed on and now regret) have created massively valuable
companies.

------
dmode
I have been reading about these predictions of tech moving out of SV for the
last 10 years, but the reality is that tech investment in the valley continue
to rise, with 45% of all VC investment going to SV companies in 2017. Compared
to only 1.5% to Austin, which really continues to lose its shine as a serious
tech hub.

[https://www.citylab.com/life/2018/03/the-extreme-
geographic-...](https://www.citylab.com/life/2018/03/the-extreme-geographic-
inequality-of-high-tech-venture-capital/552026/)

~~~
drb91
What’s the connection between investment money and location?

------
jackcosgrove
I believe innovation may be peaking because the Chinese young worker
population has already peaked:
[https://upload.wikimedia.org/wikipedia/commons/6/68/Populati...](https://upload.wikimedia.org/wikipedia/commons/6/68/Population_pyramid_of_China_2015.png)

India's youth population is still larger than its adult population but TFR is
down to 2.18, very near break even, and TFR has fallen by half in the past 30
years.

Without young people innovation stalls.

------
tvural
I think the decline of Silicon Valley will have much more to do with the end
of Moore's Law than any kind of social or political trend. The name is very
predictive - if there will be nothing left to do with Silicon, maybe there
will be nothing left to do in Silicon Valley, and the computer industry
generally.

------
limeho
It might be that we are heading towards the next evolution cycle.

------
api
I also think peak valley was the 'oughts. Seems like the valley has not been
producing the same number of world shattering things since then.

Part of what is driving the valley's decline is its constrained size (both by
geography and NIMBYism) coupled with its past success. The valley / bay area
is now full of mega-corps that suck up most of the top talent and inflate
wages and thus costs to levels startups and bootstrappers can't afford. There
is no space to let off the pressure because its constrained by mountains,
ocean, a fault line, and politics.

If the city were both able and willing/allowed to grow like New York, Chicago,
or Tokyo did in their heyday of growth the engine might run a lot longer but
as it stands the pressure is going to force the industry into diaspora.

Compare Shenzhen, new global HQ of the electronics industry. SV should have
grown like that, but politics would have none of it. California liberals are
anti-construction and California conservatives are anti-infrastructure.

~~~
baybal2
Another side to this, I myself have a feeling that software industry in
developed counties is becoming more and more dependent on overseas "captive
RnD centres" (yes, that's how they are called in pro manager lingo,) and more
and more work in places like the Valley is about assembling code from
knockdown kits made to spec by mule workforce abroad.

The few people from SV crowd I can speak frankly with, said "saying that will
certainly not make you more popular here."

Do people realise that these "mules" are the real heroes here who do all the
hard work on algorithmics. In a decade or so, USA based companies will
certainly begin to scratch their heads.

~~~
HillaryBriss
Very interesting. I think you may be right.

But, how can this argument be made more compelling? I mean, for example, is
there an example of a knockdown kit from abroad you might point to?

~~~
baybal2
To my own knowledge, the "to spec" outsourcing grew quite a lot. Deutsche
bank, Credit Suisse, Swiss railways, TMobile are few I knew myself when I
laboured in few outsourcing shops for few months after I got a boot from
Canada.

To my biggest surprise, when I left a minor outlet (epam) for Luxoft for a 3
month gig, I was very surprised to see the same TMobile, with the _very same
project_ , but similar specs. Lib A should do that and this, method C and D,
must pass test, E and F.

Back in 2009, the few Google Russia people I knew told that task they get from
HQ were almost like competitive coding tasks, pull record A from using hash
table index B, do that under N cycles under worst case scenario C,D, and E.
And all with near nil human contact. Nobody could've said it for sure if the
task is even physically doable. And for that particular task, they laboured
for half a year of trial and failure, after exhausting every trick from
computer science textbooks.

In the end they did make an index traversal algo that did it. What was
unsettling them was the seemed disregard for the amount of resources spent,
and no concern for "if it is really doable?," as they were getting from
supervisors the same answer all the time: "if you think it's impossible, not
you, but somebody else eventually will do it, I am 100% sure"

