
It's Settled: Silicon Valley Is Dying. So What's Next? - Libertatea
http://www.psmag.com/navigation/business-economics/legacy-economy-silicon-valley-dying-detroit-74001/
======
paulgb
I don't usually defend the Valley when articles like this come up, because as
a tech employee I like having the ability to work anywhere and the
concentration of tech in the valley is counter to that.

That said, the main arguments here are are 1. wages are too high and 2. rent
is too high.

Given that both of these are set by the market, this smacks of "nobody goes
there anymore, it's too crowded"

~~~
rkuykendall-com
"No one in New York drove. There was too much traffic."

-Fry, Futurama

------
yummyfajitas
_Newark is an instructive geography. The ambitious head to New York or San
Francisco out of tradition. For the same reason, they avoid Newark. It’s off
the map..._

That's not why people avoid Newark. Plenty of people are moving to Jersey City
and Hoboken which have the same "bridge&tunnel" stigma.

People avoid Newark due to legitimate fear of being robbed, raped or murdered.

~~~
busterarm
Newark is fine if you live in Ironbound. I lived there in Newark for 6 months
and it was the best 6 months I had in 26 years living in/around New York City.

Would live there again in a heartbeat.

Artists have moved to Newark. All of those old warehouses were converted to
lofts and sold in < 2 years.

~~~
yummyfajitas
Good to know. If I return to the US I'll take a look.

------
adwf
Seems specious to me. SV is a centre for innovation because of two major
things: Funding and Talent. So firstly, it's unlikely that any VC's are going
to move out because their personal rents are too high, while there's still the
high concentration of talented people in the area. They might branch out to
other locations, but personal choices over where to live are usually about far
more than just money. So the Funding is unlikely to relocate.

It's possible they might start encouraging businesses to move further afield
to increase their survivability, but ultimately a lot of founders will take
<$30k salary when starting a company and accept any hardship in order to
succeed. So suggesting that corporate finances at startups are suffering
because of high rent is also a shaky premise. There may be a few borderline
companies that fail "just before" they "would've made it big", but that'll be
true at any burn rate.

If anything, investors probably like high rents because it forces higher burn
rates and hence encourages startups to generate revenue or flip quickly.
Either of which is preferable to a long, drawn out investment with no end in
sight.

It's not like Detroit where a combination of cheaper manufacturing elsewhere
and a _lack of demand_ for US cars, led to necessary
relocation/offshoring/downsizing.

I can't see there ever being a lack of demand for what SV produces.
Businesses. Unless people start running out of ideas in and of themselves, I
can't see how it'll die any time soon.

~~~
michaelochurch
_So the Funding is unlikely to relocate._

I agree.

 _ultimately a lot of founders will take <$30k salary when starting a company
and accept any hardship in order to succeed. So suggesting that corporate
finances at startups are suffering because of high rent is also a shaky
premise._

Most of those people have no other options. You don't want to fund people (in
general; obviously there are outliers with 150+ IQs and fucked-up careers, I
was one and, who knows, may be one in the future) who don't have other
options. You want to fund people who could actually get the $250k hedge fund
quant jobs. They'll come down to a savings-neutral (with no children) $125k,
but not $30k. Not in the Valley.

The people who'll take $30k in the Valley are (a) rich kids with parental
sources, and (b) the truly desperate. Founders are not an exception.

 _If anything, investors probably like high rents because it forces higher
burn rates and hence encourages startups to generate revenue or flip quickly._

True, but the real reason VCs want to stay in one area (and keep their
companies there) is that the collusion among VCs would be dangerous and
possibly legally hazardous if it happened on paper instead of through a mouth-
to-mouth social network.

 _I can 't see there ever being a lack of demand for what SV produces.
Businesses._

The whole country produces businesses: restaurants, cleaning companies, indie
bookstores. Most HNers find those lines of work uninspiring-- and starting one
of those is way riskier to one's tech career than working at Google. Oh, and
those businesses tend to get crushed by big corporations (see: WalMart) and
landlords and changing trends.

So, there's no lack of businesses being generated in the US. What there is a
lack of is _inspiring_ and truly innovative businesses, but SV is no longer
producing inspiring companies, so what use is it?

~~~
ktd
>Most of those people have no other options. You don't want to fund people (in
general; obviously there are outliers with 150+ IQs and fucked-up careers, I
was one and, who knows, may be one in the future) who don't have other
options.

[http://www.paulgraham.com/marginal.html](http://www.paulgraham.com/marginal.html)

~~~
michaelochurch
I don't disagree. The problem is that the incapable and highly capable (who
both fail in typical, micromanaged, closed-allocation type environments) get
lumped together and there are fewer of the latter. The profiling (see: job-
hopper stigma) really hurts those of us who've had a lot of failures or
mistakes but have good reasons.

If you really need A+ players (not just the A- and B+ players who become
executives) this costs you. But VC-istan is just another version of the
corporate ladder and most of these VC-funded startups don't _need_ outlier
excellence, so a person like me might not be worth the trouble.

VC culture is about commoditizing founders and companies (and especially
engineers) and it has worked at creating a world in which A+ players (the
people who originally built SV because they didn't fit anywhere else) aren't
really needed.

------
bdunbar
The author may have a point about Silicon Valley driving out employees, or
deterring potential ones.

I looked into moving there, for the opportunity. I networked. I had (I flatter
myself perhaps) the right skill set for my niche.

I looked at the cost of living.

I've got kids, two dogs. For any kind of a reasonable non-sh*tty living
situation I'd double my living expenses, plus a two-hour commute.

I moved to Nashville instead.

~~~
jes5199
Sure, but one result of that is that in SV, networking is less important. You
can email your resume to a recruiter at any funded company, they'll fly you
out for an interview, nobody is expected to know anything about you other than
what they can discern in an interview. You'll get 5 to 10 thousand dollars in
relocation/sign-on bonus. And the salaries are significantly higher than in
Tennessee.

And then you can start networking.

~~~
logfromblammo
Salaries are higher in SV, but you'll have more disposable income in
Nashville, and probably a more comfortable home. Also, the local politics and
culture are different. As much as it may surprise the people who do like it,
some people don't like the way California operates.

------
VLM
Boomer fodder, all the memes are at least a decade or two out of date. The
great lakes area is not the rust belt, it rusted and blew away in my
grandfathers generation half a century ago. Innovation economy is not CRUD
apps with quirky marketing, at least not since '95\. The general idea of the
article is more or less correct. I checked the byline and its only four hours
old although it sounds much more ancient.

I am strongly biased because I don't like articles about this topic, the
vultures should stay away. Yeah, you'll all freeze in the snow, so best not
come here. Nope we don't have any money or quality of life, I advise staying
away, LOL.

Given that immense level of bias my evaluation of the style and memes of the
article might be tainted.

~~~
techsupporter
> I am strongly biased because I don't like articles about this topic, the
> vultures should stay away. Yeah, you'll all freeze in the snow, so best not
> come here. Nope we don't have any money or quality of life, I advise staying
> away, LOL.

Ah, if only that worked. Austin, Dallas, Seattle, Portland, Nashville, Kansas
City...all of their residents have said the same thing and the "vultures" keep
on coming. It's the circle of life, my friend.

------
diydsp
There's a bigger, MUCH bigger, point to be made about geography and finding
other creative people than this article, with its glib, provably inaccurate
quoting (1) can make.

The big picture is that there are always under-stated, inexpensive places
where you can get creative work done which are outside the major, known
centers (SV, NYC, LA, etc.). They are tricky to find because they don't have
metrics like insane rent, barking realtors, etc. to mark them.

For example, everyone (including me) used to laugh at Kansas City. Then I met
a world-traveling DJ who told me KC was one of the hippest places, where the
"kids" where the most into the music than anywhere else.

But beware: places that become symbolically cool and ideal attract posers. In
contrast, there are people who evaluate tons of metrics to choose where to
live and work. I suggest evaluating towns on the quality of their makerspaces
as one useful feature. Tech accelerator programs' presence is another signal.

Another town I'm hearing is great to work in is Boulder.

(1) I just googlemapsed Newark to Manhattan (mid-town). It's 17 miles, 30
minutes best case, 45 in 10:00am weekday traffic.

~~~
thedufer
> I just googlemapsed Newark to Manhattan (mid-town). It's 17 miles, 30
> minutes best case, 45 in 10:00am weekday traffic.

Its also $140/month, which is on top of the MTA fare unless you work within
walking distance of Penn Station.

------
DanielBMarkham
My best guess is that SV has jumped the shark. "Dying" is probably an
adjective too far. Microsoft is "dying". Still might have another 40 years of
profitability left in it, though, and if that's dying, dying looks pretty
good.

SV is not going to be replaced anytime soon. Rather, what's happening is that
there are a thousand small places that each will amount to about 1% of SV. In
the aggregate, that means that SV will have a smaller piece of the pie. Due to
location and network effects, though, I don't think any of that's going to be
clear for some time.

California is busy re-engineering its society. Good for them. But hell if I'll
work there, and hell if I'd try to launch a startup there. I love the folks in
SV and am terribly jealous of all the cool stuff going on. Having said that,
it's simply not worth the effort to fool around with all the obstacles in
place. And more are on the way. Sure, it's still great and awesome for those
that win the SV beauty contest, but not so much for us little fry. That's what
"jumping the shark" looks like.

------
smaili
Anyone else getting annoyed by these YAASVAs (Yet Another Anti-Silicon Valley
Article)?

~~~
michaelochurch
I get annoyed by the lack of understanding.

Most of the anti-SV crowd _want_ the VC funding and the same essential
culture. They just want to move it to another place in the country. That would
be a marginal improvement-- and massively beneficial to me as a 30-year-old
who'd be able to get in on the ground level and buy housing-- but it wouldn't
fix the underlying problem. It's like a revolution where the people revolting
want the same damn system but with themselves on top.

You can't have it both ways. Silicon Valley is defective _because of_ its
culture. If you copy the VC feudalism and the California softie NIMBYism
somewhere else, that place will become just as broken in a matter of a few
years (assuming that copy operation is successful, which it almost certainly
won't be).

~~~
logfromblammo
Not quite. What _I_ want is to be able to easily find a new job on the
strength of my skills and aptitude rather than my social connections, without
having to move my entire household. _Again_. I want to be able to work with
both younger people and older people, with managers that used to do what I do,
even if they weren't as good at it. And I want a 40-hour work week or less.

That isn't exactly a tall order. It is possible to find companies that do
treat employees like people with lives outside the office. Larger and more
dysfunctional companies apparently like to swallow them whole, digest them,
and crap out the useless cost centers. It would be nice to not have to uproot
and relocate every time that happens.

~~~
michaelochurch
I agree with everything you just said.

Do you think the existence you described is the norm in the Valley? Or
elsewhere? Or nowhere?

I guess I'm cynical, but my sense is that most people bashing the Valley are
advocating for making that same VC culture more geographically available.
Obviously, there are people like you and me who have more insight into the
problem.

~~~
logfromblammo
No, I don't. I have worked for a few companies that were good, and a few that
were bad. I very much prefer the former, but every single one of those jobs
were purchased by a bad company and subsequently piped to /dev/screw-you-buddy
.

If I were in SV, I could probably jump right into another similar job without
too much disruption. But I wasn't. Two of the three times, I had to move to a
different state of the US to even come close to what I had before. And where I
am now is mired in endemic mismanagement thanks to all the military-industrial
complex money flowing through the streets. Since companies don't seem to have
any inkling of loyalty to employees any more, I need to find my job security
in the ability to quickly find a new and similar job on short notice. That is
a poor substitute for just one company that does not have its head up its own
backside, but those seem increasingly hard to find.

~~~
michaelochurch
I hear you loud and clear. Also, I think a major factor pushing people into
the star cities is the two-career family. It's a good thing, but it tends to
push people into a small number of locations that become extremely expensive.

Now there's an argument that could go into the affordable housing debate. "If
you don't support real estate reform, you're a sexist."

I agree that good corporate cultures seem to get driven out by bad ones. It's
like a Gresham's Law.

* And where I am now is mired in endemic mismanagement thanks to all the military-industrial complex money flowing through the streets.*

Now I'm curious. What part of the country do you live in?

------
stevewilhelm
I have been in the valley for a quarter of a century. It has never been so
vibrant. Here are some links to prove the point:

[http://www.jointventure.org/images/stories/pdf/index2014.pdf](http://www.jointventure.org/images/stories/pdf/index2014.pdf)

[http://www.siliconvalley.com/sv150/ci_23055045/sv150-searcha...](http://www.siliconvalley.com/sv150/ci_23055045/sv150-searchable-
database-silicon-valley-
top-150-companies-2013?appSession=73888879390976&RecordID=&PageID=2&PrevPageID=2&cbNewPageSize=250&)

[http://www.bizjournals.com/sanjose/news/2013/12/24/the-
years...](http://www.bizjournals.com/sanjose/news/2013/12/24/the-years-
biggest-commerical-real.html?page=all)

[http://www.forbes.com/sites/joelkotkin/2013/05/06/americas-b...](http://www.forbes.com/sites/joelkotkin/2013/05/06/americas-
best-cities-for-jobs-2013/)

[http://news.stanford.edu/news/2013/march/applications-set-
re...](http://news.stanford.edu/news/2013/march/applications-set-
record-032913.html)

------
coreyw
Why is it when an article is written talking about the downfall of Silicon
Valley, or talking about other great tech oriented cities, that Chicago is
hardly ever mentioned. Chicago is the third largest city in the country with a
booming tech culture here.

~~~
techsupporter
I don't mean to sound flippant but is there any city of greater than, let's
say, 100,000 people that's located in the United States that people would not
say has "a booming tech culture?" Numerous posts on HN talk up, in
alphabetical order: Atlanta, Austin, Chicago, Dallas, Detroit (yes, really),
Fort Worth, Houston, Kansas City, Las Vegas, Nashville, Orlando, Pittsburgh,
Portland, San Antonio, Seattle, and I'm sure I missed a few.

Simply put, I'd like to know the inverse, if nothing but sheer
inquisitiveness: Let's say you either hate technology startups and want
nothing to do with them, or you love them and want to make the biggest career
mistake ever. What city do you choose?

------
placeybordeaux
I just choose not to move to SF in part due to the high prices, a high wage
doesn't mean that it compensates for it properly.

------
norswap
I wouldn't be surprised to see Detroit & co rise again, if only because of the
dirt cheap price of housing.

~~~
fidotron
I would, because the infrastructure is crumbling, the tax base to fix it is
non-existent, and the bureaucracy running the city is overbearing and corrupt.
Detroit is still in the early stages of a death spiral, and it would take
something mind bendingly huge to snap out of it.

Detroit is going to stand as the lesson to all cities in North America.

~~~
freehunter
Mind-bendingly huge like the mayor forcibly removing the elected city
officials and installing emergency city managers to cut down on the corruption
and bureaucracy? Mind-bendingly huge like the largest US city to ever
successfully declare bankruptcy ($18.5 billion in debt)?

Because that's what happened. Now we wait to see if it works.

~~~
techsupporter
> the mayor forcibly removing the elected city officials and installing
> emergency city managers

The Detroit emergency financial manager was appointed by Michigan Governor
Rick Scott against the loud and outspoken wishes of the citizens and elected
officials of the City of Detroit.

[http://www.nytimes.com/2013/03/02/us/michigan-appoints-
emerg...](http://www.nytimes.com/2013/03/02/us/michigan-appoints-emergency-
manager-for-detroit.html)

~~~
freehunter
Rick Snyder, and I'm not sure if you're trying to say something beyond what I
was saying.

 __edit - sorry, I guess I wrote mayor instead of governor. Thanks for the
correction.

------
jaimebuelta
"Silicon Valley is dying because it's too crowded."

Wait, what?

~~~
logfromblammo
Haven't you ever played Conway's Life? Cells that are surrounded die. Cells
that are isolated die. Cells that have neighbors and room to grow multiply.

~~~
jaimebuelta
Sure. But that assumes you don't have space to go. If SF is too crowded,
people will move out until it's not that much.

Calling this "dying" is a little too much in my opinion.

------
islon
It's Settled: Journalism Is Dying. So What's Next?

------
michaelochurch
I'm not sure there is a "next", at least not in the U.S. I think the Boomers
and the venture capitalists have pulled the ladder up for good.

Silicon Valley dying (and slowly) does _not_ mean that a B-list city will
replace it. I wish it were otherwise, because we have a lot of infrastructure
and a hell of a lot of talent that's still in the B-list cities. However, I
don't see much hope for most of those places. I wish I were wrong about that,
but when the spirit is crushed it takes a long time for it to come back.

Corporate America "proper" (i.e. Fortune 500s outside of banking and elite
startups) is in decline, because most corporations don't exist for any purpose
other than their own mindless growth at this point. Talented people don't give
a shit about the default corporate mission (make rich people richer) and move
through them seeking their own career goals, not caring (and why should they?)
what really happens to the firms as they go. The end result of this is
documented by the "Gervais Principle" analysis of Venkatesh Rao, and I
continued the analysis in the "Gervais / MacLeod" series on my blog.

The "big reveal" for those of us who came of age in the past 10 years is that
VC-funded "startups" are just an outgrowth, and an especially dysfunctional
one, of this uninspiring system. VC-istan isn't an alternative to corporate
serfdom. It's a newer and generally worse form of it: shittier benefits, less
investment in employees, faster firing, worse career paths, more ageism and
sexism and classism. I would actually prefer the old corporate system (with at
least _some_ investment in the employee's career) seen in larger banks and
hedge funds, but after having worked in tech (where most jobs become pointless
after a few months, thanks to constant reorgs and broken promises) for 8
years, I've had "too many" jobs and the hedge funds aren't really an option
anymore.

The big problem with the VCs is that they play _outside of_ companies in ways
that would be illegal if their interactions were more documented. They
collude. Even if you refuse to take VC funding, they can still destroy you by
funding your competition. What they really are is a social network designed
for insider trading of marginal, non-public microcaps. One of the reasons why
they prefer to fund companies in their geographic areas (and, also, why VCs
outside of the Valley and New York will never really matter) is that much of
their collusion would be legally dangerous to them if it happened in writing,
rather than informally and socially within a closed network of people they
trust.

Here's why I think the future outlook is grim. The Soviet system destroyed the
entrepreneurial spirit of several countries for generations. (The reason
Russian business is so tightly intertwined with crime is that the people who
retained that know-how were the black-marketeers.) It didn't spring back in a
year or even ten, and it wasn't without some nasty conflicts even 20+ years
after the Soviet system was formally gone.

The American corporate system, culminating in the VC-funded clusterfuck we see
every day in Valleywag, has had similar effects. Although its decline is
evident, peoples' spirits have been so thoroughly crushed that I don't see a
replacement coming for at least a generation.

