
Peak California - cobbzilla
https://medium.com/@byrnehobart/peak-california-7cf97baecaf0
======
freehunter
I don't know when Peak California will come, but I'm fairly certain it will
happen at some point, and this opinion article actually does a great job at
summarizing my opinion as to why in its very last sentence:

"Californians will end up like the landed gentry in interwar England. Lovely
houses, illustrious history, and no conceivable way to pay their bills."

Why do tech companies flock to California (LA/SF)? I often hear people credit
the great technical universities. But that can't be, because most of the
actual workers at these companies didn't go to Bay Area or even California
universities [1]. If they're willing to move from their home to California for
work, it's safe to assume they're willing to move from their home to almost
anywhere else for work. It's not due to cheap housing or even available
housing. It's not due to the great commute into work. It's not due to the low
cost of living. The only argument I hear is that tech companies move to SF/LA
because lots of tech workers are there, and lots of tech workers are there
because lots of tech companies are there.

So if there's nothing holding technology to SF/LA, when does it become a
competitive advantage to have your offices _anywhere but California_? At some
point it will. And it will be long overdue.

[1] [https://www.mercurynews.com/2018/01/17/h-1b-foreign-
citizens...](https://www.mercurynews.com/2018/01/17/h-1b-foreign-citizens-
make-up-nearly-three-quarters-of-silicon-valley-tech-workforce-report-says/)

~~~
borski
It’s really quite simple; Silicon Valley is maybe the one place in which I
have ever found nearly everyone I meet has a “pay it forward” attitude. It is
infectious, and it means that as a “no name” startup founder, you have nearly
infinite access to advice and capital, as long as you are convincing enough
and tell a good story. There is no immediate expectation of return. I spent
most of my life living in NYC, and I originally started Tinfoil in Boston (and
went to school at MIT). Both cities are “startup hubs,” but the same attitude
doesn’t exist. Boston was particularly bad about “what’s in it for me?” being
the common theme of any conversation.

The upshot is that now I volunteer my time often, and for free, to help others
who are just starting out. I cannot predict who will be the next Google, but I
enjoy helping smart founders, and I enjoy giving back in the same way I was
given to.

A few relevant essays:
[http://www.paulgraham.com/siliconvalley.html](http://www.paulgraham.com/siliconvalley.html)
[http://www.paulgraham.com/ronco.html](http://www.paulgraham.com/ronco.html)

~~~
eropple
This _categorically_ doesn't fit my experience here in Boston. The
overwhelming majority of the people I know professionally are eager to help
however they can.

I would caveat that with the note that there is rather less appreciation of
bullshitters, so startups with a lot of wank to them might have a harder time
being taken seriously. But if you're serious, and you're _nice_ , people will
absolutely fall all over themselves to do you a solid.

~~~
borski
I should add that the valley doesn’t have much of an appetite for bullshitters
either, despite what the media would have you believe. Mistakes happen,
because there’s a lot more money here, but by and large bullshitters do not
get helped or funded.

~~~
scottlocklin
Theranos, Juicero, Ubeam, Y combinator flying motorbike, Airware, Jawbone,
pretty much any "AI" or even machine learning company that isn't overtly a
consulting firm, pretty much any autonomous vehicle startup that isn't a
mapping company.... Most of the companies which have "succeeded" in the
post-2008 landscape have been pretty feeble; it's not like Uber or AirBnB are
tech companies. They're phone apps that enable people to defy taxi and hotel
laws.

FWIIW I've known Byrne for years, and was shocked when he moved to the Bay
Area.

~~~
borski
Like I said, mistakes happen. Investors in the valley are willing to take
larger risks, and by virtue of there being more money, there will be more
mistakes. There are mistakes in Boston too. I don’t know the statistics, but I
would bet it’s proportional, though perhaps not because the risk appetite is
lower.

------
dmode
Just how much ink needs to be spilled about how California and Bay Area are
doomed. I have probably read a hundred article over the last 15 years
predicting the demise of both, but in reality the exact opposite happens as
California and Bay Area economy continue to crush the rest. The gap between SF
and rest of the country when it comes to venture investment has actually grown
as the cost of living has gone up. For example, in 2018, $45bn was invested in
Bay Area startups whole only $1.5bn was invested in Austin and even less in
Denver, Utah etc. It is not even close. Weirdly, the other fast growing tech
regions are similar to California - expensive, dense, and left leaning (NYC,
Boston, Seattle).

Maybe this time the prediction will be true, but I am willing to take a large
bet against it. And this is because several things, but the primary reason is
that California continues to overindex it's policies towards people, while
other competing states overindex on business friendliness. But in the
knowledge economy, a thirivng talent market is far more relevant to a business
than some tax breaks. If you can't execute and be profitable, what's the point
of a tax break. California optimizes for people through various mechanisms -
non competes, inclusivity, diversity, environment, labor protection, safety
net etc. If a place is great for people, it is great for business.

~~~
temp1928384
CA and Bay Area will be fine, economically speaking, but at least from my
perspective we've already reached a tipping point where it's become so
expensive for your average family that it's created this strange, dystopian
atmosphere (in SF) where you have obscene wealth next to in-your-face poverty,
there are basically no kids because no one can afford to raise families here,
streets downtown are lined with human feces and used needles, $1m gets you a
small 1-bedroom fixer upper in a bad area, diversity (in profession/race/ages)
is extremely limited, and people are generally stretched/anxious due to cost
of living.

~~~
knn
Obscene wealth next to in your face poverty is nothing new, nor particularly
special about SF. I don't deny it's a big problem, but this is pretty much
what every major city wrestles with. Nor is this unique to our time period.
For example, it's well documented that in Paris through as early as the 1700's
through now, that there was an enormous amount of capital concentration right
beside extreme poverty and >40% of the population owning net nothing.
'Dystopian' is also a very dramatic language.. Where do you live in SF? If you
live in downtown or soma and only spend time there, I can see what you mean.
However if you go out to richmond or sunset for example, there are a lot more
families and children there.

~~~
0x8BADF00D
> Obscene wealth next to in your face poverty is nothing new, nor particularly
> special about SF.

It is common in developing/third world nations. Income inequality is a
hallmark of such nations. It would seem that the United States has dropped
from a first world (creditor) nation to a third world (debtor) nation. It is a
fairly recent phenomenon with very real and easily explainable reasons, which
the article states numerous times over.

~~~
closeparen
Any decent-sized US city has its share both wealth and poverty, but most are
dominated by postwar development, so the two are separated by miles of freeway
rather than feet of sidewalk.

Where inequality _seems_ worse, you are probably seeing a successful
progressive effort to prevent segregation, and vice versa. When your neighbors
and everyone you encounter in daily life are all in roughly the same economic
shape as you, that doesn't mean you're living in an egalitarian society. Quite
the opposite.

------
cantrevealname
I love seeing all the speculation here on HackerNews about why tech companies
flock to California, and especially to the Bay Area. Everyone has their own
theory: access to money, the great weather, non-competes not being
enforceable, great universities, the “pay it forward” attitude, immigrant
diversity and tolerance, "good" public transit (as compared to other parts of
the US), network effect (because the best developers, investors, and tech
companies are already there), beautiful landscapes and the ocean,
concentration of VCs, etc.

It reminds me of a similarly long discussion here on HN about why Americans
were generally thin in the 1950s but much fatter today. Again, everyone was
pretty sure of their reason, the leading theories being: fast food, food being
cheaper, rise of sedentary jobs, less physical activity due to more cars &
labor saving devices, wives now working outside and not cooking at home, big
reduction in smoking (because it keeps you thin), more sugar in foods, more
carbs in our diet, etc.

All of the theories above sound reasonable. The problem is that there is
almost no way to do controlled experiments to find the true answer. And the
true answer could be quite complex, like it was initially 38% factor A, 22%
factor B, and the C,D, & E making up the rest, but over time it's become 5%
factor A, 11% factor B, with factor D now dominating at 58%.

I'm resigned to the conclusion that we're not going to know the answer. It's a
complex interaction of millions of individual decisions and interrelated
changes over a period of decades in a way that's not reproducible.

~~~
sjapkee
Does everyone really love the California climate? It's awful. too hot, forest
fires almost every year, drought. Only deserts are worse than that.

~~~
PopeDotNinja
I love the San Francisco climate. Minus the fires, which are a recent,
suboptimal thing. It's rarely too hot or too cold for me.

------
nostromo
For all of the talk about California’s immense wealth, most people are unaware
that the state also has a higher rate of people in poverty than any other
state when you correct for local cost of living and taxes.

[https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_terr...](https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_poverty_rate)

(See the column of the Census’ supplemental poverty measure.)

~~~
ajmurmann
I'd love to see some numbers that take the origins of the homeless people into
account. Did these people become homeless in California or did they become
homeless elsewhere and then migrated to California? The mild weather and
liberal attitude make CA a lot more attractive to the homeless than many other
states.

~~~
laurencerowe
For San Francisco, 71% had housing in the city before becoming homeless, 19%
were from CA and only 10% from the rest of the USA.
[http://www.socketsite.com/archives/2016/02/san-franciscos-
ho...](http://www.socketsite.com/archives/2016/02/san-franciscos-homeless-
crisis-is-homegrown.html)

The homeless rate here is similar to that in New York, but New York has a
right to shelter so far fewer sleep on the streets than in San Francisco. It's
less that the mild weather makes CA more attractive, more that it lets CA
governments ignore the problem.

~~~
abvdasker
I had not heard these statistics before but they are very informative. I live
in New York but visit SF often for my job. Every time I visit I am shocked all
over again at the extent of the homelessness and poverty right next to obscene
levels of wealth from tech.

I always assumed New York just had fewer homeless but these statistics prove
that the CA government has instead completely and utterly failed to support
this population of people. In general, San Francisco seems like a terrible
place to live.

------
rsync
California is the United States, writ large. It's not qualitatively different,
it's just _more so_.

Or, from a slightly different standpoint, the rest of the country is
California, just 20 years behind schedule.

I have lived in many different places all over the United States, including
twice in California, where I have settled with my family, and it's very easy
to fall into a "crazy california" narrative - especially when comparing with
"sensible" places like Minnesota. But it's not true. _Right this very moment_
in Minneapolis there is a heated, polarized debate about housing affordability
and homeless services and zoning that is _indistinguishable_ from the SFBA
debate (save for the pricing numbers difference).

~~~
notacoward
I'm not so sure that California is _ahead_ of the rest of the country. The
effect of the tech industry on the Bay Area's fortunes is not _that_ unlike
the effect of the auto industry on Detroit or even the textile mills on New
England. Silicon Valley is just the latest iteration of a cycle that has
existed for a long time.

~~~
HillaryBriss
it seems like global competition is the force that ultimately damaged both
Detroit's auto industry and New England's textile mills. on the surface at
least, it seems reasonable to guess that, somehow, global competition will be
the force that ultimately dethrones Silicon Valley.

~~~
dsfyu404ed
The "you can't offshore tech" arguments of today are basically the same "you
need skilled labor to manufacture this, they can't do that in the 3rd world"
arguments of decades past.

~~~
Nasrudith
They did try to offshore tech but it failed to fully displace for various
reasons.

I'm curious were there attempts at remote industrial outsourcing in the past
that failed? I know that Ford attempted his own South American rubber
plantation that essentially ended up in literal rebellion due to being a
control freak, cultural imperialist and poor agricultural planner.

[https://en.m.wikipedia.org/wiki/Fordlândia](https://en.m.wikipedia.org/wiki/Fordlândia)

~~~
HillaryBriss
For SV's demise, I think the pattern to watch for is corporations like Toyota
or Honda.

During the decades of their ascendancy, they actually understood the US
consumer better than their Detroit counterparts and built cars the US consumer
favored. Then they built factories in the US. Yet, they remained truly
Japanese companies.

------
witcherchaos
Counterpoints

> It’s no longer the best place in the world to start a startup.

The place with most active investors with the largest investments? The place
with the biggest pool of programmers and pms and designers? The place with the
best legal system to foster entrepreneurship?

Where else in the world would you get all of this? (Not even including
beaches, attractive people, weather, food, top hospitals and universities,
diversity, optimism, etc)

And to the author. San Francisco != all of tech in California

> The gains from the existing tech industry increasingly accrue to a) passive
> investors, and b) lucky landlords.

Sure, but compare that to any other industries. Tech industry is still very
very mericratic. (Low startup capital, barrier to entry) Besides, every
company is a tech company now

> The state government is a levered bet on tech compensation.

Why would you not want to bet on the best industry going forward? The one that
eats all the other industries?

~~~
alkibiades
>>> The place with the biggest pool of programmers and pms and designers?

right but if you want a halfway decent one you have to compete with FANG and
pay 300k a year.

~~~
twblalock
There is no shortage of people in Silicon Valley willing to work at startups,
and that's why there are so many startups.

Among those people are successful FAANG employees who already made a bunch of
money and feel safe trying something new, because if it doesn't work out they
are not going to go broke and will probably end up back working at a FAANG.

------
ChuckMcM
I enjoy Silicon Valley obituaries. I've read them every time some bubble
bursts, whether it was the video game bubble, the integrated circuit bubble,
the dot-com bubble, or the social media bubble.

What the authors usually miss is that the things they call out as killing the
Bay Area (home prices, job shifting, taxation, Etc.) have been true for at
least the last 60 years. What they miss are the things that power the engine.

Those things are an at will work force, with legislative protection against
non-competes, combined with wealth sharing/creation that is unlike any other
place in the world.

There are more IPOs coming out this year, Lyft, Uber, and others. And already
the real estate folks have said "prepare for the shock of higher prices." That
is because there will likely be thousands of millionaires minted over the
course of the year. And while that wealth will be distributed unevenly, some
will be lucky, and others will not, once again there will be a refreshing of
the 'who got rich with some big event' sorts of stories and people will "know"
someone who got rich. I got to experience that when Sun went public, lots of
people I knew as co-workers were now much much wealthier than I was, they were
buying houses in Palo Alto and Saratoga and I thinking about private school
for their kids. Sometimes, or or the other of a married pair dropped out of
the workforce. And with that wealth people left the companies where they made
their money and went to other companies to grow them. Some of them got to
experience that IPO burst, two, three, and even four times.

You get groups of people who "self fund" their adventure/idea and work for
free on some new topic. That is hard to do if you don't already have
independently wealthy engineers to start with.

Think for a moment if your city was full of people in their 30's and 40's
whose lifestyle and needs was fully funded by their existing wealth. Do they
sit around and sip drinks on the porch? Not here they don't. They get together
and start building stuff. Sometimes small things, sometimes big things. And
when they do, there is no shortage of capital companies that are willing to
augment their efforts in exchange for a piece of the pie. And some times that
explodes again into another pile of wealth.

It is certainly a pretty unique place to hang out. And I expect that is part
of why it is so hard to "replicate."

~~~
fro0116
Well said. Reminds me of something I heard in some interview about what makes
the valley special that really stuck with me. It goes something along the
lines of:

"There's no other place quite like the valley for starting and scaling a
company from the ground up. No other place in the world can even come close to
the valley in terms of the sheer number and concentration of engineers,
leaders, and investors who have experienced the scaling of a company from the
ground up first hand. And those are the people you want by your side when
starting your own company, because they can apply their learnings to help your
company grow at an accelerated pace and avoid the pitfalls they encountered
along the way."

~~~
seem_2211
It's the language of the city and the region. Walk through downtown San
Francisco and you hear people talking about funding, about IPOs, about
engineering, about CAC and LTV. For better and for worse, everyone is in tech
here.

------
josephmosby
Something touched on with the piece, but not quite hammered nearly as much as
it should have been: switching costs, which have dramatically changed in the
past 10-15 years.

The initial round of California VC money came from hardware startups cashing
out. Hardware is tied to the physical realm, and thus locality is important -
if you need to buy leftover equipment or supplies, it's way easier to get them
if you're in the neighborhood as your vendor.

The next round of software startups in the 90s through early 00's had a
similar switching cost with VC funding. Though we obviously had telephones and
email, we had not fully transitioned into the "remote work" mindset that
allows teams to collaborate regardless of distance. It was challenging for VCs
to work effectively with their founders, and for founders to work effectively
with their teams - which forced teams to co-locate with founders, and founders
to co-locate with VCs.

You don't need the world's best software engineers to launch a startup - you
can launch something with sufficient complexity to start making money in
Denver, or Austin, or Chicago, or anywhere else with a reasonable supply of
engineers. And now, VCs are far more tolerant of remote founders given how
easy it is to stay in communication. If all that is true, why make things more
economically challenging than they need to be by trying to fight the economic
headwinds of California?

------
jarjoura
Oh boy, here we go again, another article proclaiming that California is too
expensive and you're better off starting your company elsewhere. California
has been expensive for a very very long time, decades. Yet, every year,
someone gets hopeful that this is it, this is some sign, tech is finally
moving on from California. When I moved to California in 2007, startups in
Austin were the next big thing. SXSW celebrated a huge number of Austin
startups, and then once they grew to a larger size, they all migrated here to
California and the scene seemed to evaporate overnight.

The problem these types of articles fail to grasp is that even with paying a
tech worker over $200 to 500k a year, that is still an amazing return on
investment. Not even considering just the FAANG companies, but all the other
ones like LinkedIn and Square, Twitter and DropBox, they're raking in billions
a year in revenue. They make so much raw cash, they have stock buybacks and
investment arms of their companies that just invest in other things.

There are other tech cities, of course, Seattle being another hub. You don't
have to pay as much for your employees and the cost of living is adjusted for
that expectation. LA and NYC have a pretty decent cluster of workers as well.
The problem is, you can find generalists, but once you start to need
specialized engineers or roles, it gets exponentially harder and you end up
creating remote offices in the Bay Area to capture that.

I'm not going to defend that it's not exhausting living here. It's hyper-
competitive and the politics of "live and let live" create pockets of very
seedy places in all the strange areas. Yet, some of the brightest people in
the world live here doing some of the most amazing things in the world. It's
super easy to find a meetup where, for example, the guest speaker invented
Rust, for free, with pizza, on a random Tuesday! Other places around the world
have to create these specialized conferences to make it worth their effort.

~~~
HillaryBriss
> that is still an amazing return on investment.

bingo. to first order it's a winner take all game. it doesn't matter how much
cash the VCs need to pay to start one of these contraptions. what matters is
that the contraption succeeds.

if the chance of success is 0.01% in SV, but it's 0.0000001% in Austin, it
doesn't matter at all if the costs are 10 times as much in SV. VCs are not
starting companies to save cash. they're starting companies to dominate an
industry. so they buy the biggest guns and it doesn't matter how much they
cost.

------
temp1928384
San Francisco is just...dystopian at this point. In-your-face poverty mingling
with obscene wealth, human feces and used needles everywhere downtown/SoMa,
decrepit 1 bedroom homes that sell for $1m, very few families/kids, and to
make things worse stores that would be open til 10pm in any other city don't
seem to stay open past 5-6 (at least in the Castro).

Edit: I thought it was weird for me as a single youngish male to "care" that
there are kids and families in a city, but you're reminded when you go to
basically any other city how much "realer" a city feels when you actually see
families (moms, dads, kids, grandparents) walking around and enjoying each
other's company and life in general.

~~~
aphextron
It always makes me chuckle to see a work of fiction set in modern San
Francisco that treats it like a normal city where normal people live. The NBC
show “About a Boy” is a perfect example [0]. It’s hilarious to see just how
out of touch most Americans are with what this city has become. San Francisco
may have been an actual city in the past, but it’s just a filthy office park
at this point.

[0]
[https://m.youtube.com/watch?v=PytVvfY3jiU](https://m.youtube.com/watch?v=PytVvfY3jiU)

~~~
eweise
A lot of SF feels the same as when I lived there in the 90's. I'm mostly
familiar with the inner richmond and sunset areas. Most of the same
restaurants and stores are still there.

------
Shebanator
I think its a good article, but I'm confused about the author's implication
that the state government is consciously choosing to depend on income and
capital gains tax revenues. California does depend on those taxes, but not by
choice: Prop 13 made it basically impossible for property tax revenues to grow
at the same rate as the economy.

I also agree with the other comments here that this author seems to think SF
== Bay Area. Much of his comments about hippies and landlords conspiring make
no sense in the rest of the bay, where it is actually relatively wealthy
homeowners conspiring to prevent growth in order to ride the surge in home
prices.

~~~
JMTQp8lwXL
A couple years after Prop 13 was enacted in 1978, the California legislature
approved of Mello-Roos Community Facilities District taxes in 1982. They exist
on top of regular property taxes (they do not replace them). While I agree
with your narrative that it's hard for California to raise property taxes
(beyond two percent per year), CFD's help bring in new property tax revenue to
ease the gap.

------
gumby
I've seen this article over and over through the years. I moved to Palo Alto
in 1984 when all the houses were under water and people told me that I'd
missed the boom. California has plenty of issues, but always muddles through
them.

California's economy is more diversified and resilient than that of, say,
Detroit. There's much more to the state than startups. Sure, eventually it
will be superseded in some way or another, but I doubt it will happen in my
lifetime.

------
ngngngng
I've had a few casual conversations about the collapse of California recently.
In my opinion, zoning laws will be the death of San Francisco. The greed of
the NIMBY's will eventually drive prices too high for anyone that didn't buy
20 years prior (i'm amazed it hasn't happened already). I've been entertaining
the idea of a state putting extreme limits on zoning laws. I'm not an economic
expert so i'm not sure what it would look like, but I can't help but compare
to Tokyo with their ballooning population and stable cost of living.

~~~
jdhn
Japan has fantastic zoning laws. Here's[0] a great blog post about it.

[0][http://urbankchoze.blogspot.com/2014/04/japanese-
zoning.html](http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html)

------
true_tuna
California is fucked because normal people can’t afford to live here anymore.
At least not in the Bay Area, LA, and San Diego. In San Francisco a favorite
pastime is to blame tech workers for “driving up rents” anyone who has taken
economics knows prices don’t work that way. Prices go up when demand exceeds
supply. We also are quite aware of WHY demand exceeds supply. 1) People keep
coming here because we keep hiring, and 2) people who already live here block
new housing construction. The objection we see in every community meeting is
“we don’t want to change the character of our city”. I assure you, driving out
your teachers, bus drivers, baristas and librarians is changing your city even
worse. It leads to congestion, increased homelessness, loss of diversity. For
every ten jobs we create we build two new houses. It’s not the people with new
jobs that suffer.

Here’s the solution. A new state law saying if a city adds a job it also has
to permit the construction of a unit of housing. Done.

I assure you if the City of Mountain View has to follow that rule, the muddy
lot next to Google campus (currently zoned for hotel) would have a ten story
apartment building in it next year. Why hasn’t it happened yet? Not allowed.
Well who doesn’t allow it? The city. Why won’t the city allow it? Residents
don’t want new housing. Why don’t residents want new housing? A mistaken
belief that blocking new housing will preserve their city. Blocking new
housing will in fact destroy our communities. We can get out of this mess, but
we have to build our way out.

~~~
avar
> Why don’t residents want new housing? A mistaken belief that blocking new
> housing will preserve their city.

It isn't a mistaken belief. If you got in early and own property in a place
like SF then rising prices are going to be adding money to your retirement
account.

Any real solution (build, build, build!) to the housing market in a place like
SF would destroy a lot of value for a lot of people. Most of those people are
middle-class, and the money they've stuffed in their bricks is their single
biggest investment.

Of course if it all comes crashing down they'll also lose, but right now
that's looking a whole lot less likely than them being able to keep riding
housing bubble gravy train.

~~~
ajmurmann
Why would it destroy value? If the area around my home develops into a booming
area, some developer will want to buy my home and build something bigger on
it. These low-rise buildings must be bought and replaced for the "build,
build, build" to happen. The only way this could backfire for some is if the
building boom starts and then the economy collapses and the boom never
returns. Now you have an old house surrounded by high rises and rent is low
because of the surplus that was built. That seems very unlikely though. To me
the bigger threat seems to be that some other place with fewer NIMBYs will
outgrow SV because of the artificial limit imposed by the NIMBYs.

~~~
avar
Sure, some property owners will luck out in the way you're describing. Their
lot will be bought out to develop a high-rise.

But it's just as likely that the lot next to them will be bought for
development, and theirs will be passed over for the foreseeable future, or
that the only reason anyone lives in their suburb is because of unreasonable
prices where people actually want to live.

Now their property value will plateau or fall as demand for housing falls due
to new development happening elsewhere.

In the long term it's likely that everyone involved will win, but many
property owners just have a 10-20 year horizon before they'd like to sell, and
might correctly foresee that a deregulated zoning policy might lead to a
growth slump in that time frame if the supply doesn't continue to be
artificially restricted.

------
nitwit005
You'd think an article about the fate of California would mention Los Angeles,
or agriculture, or anything other than the SF bay area and tech. Even the
mention of the state government is a reference to the tech industry.

~~~
Toine
California is almost as big as my own country (France) and yet when people use
the word it's a synonym for the bay area. Seems crazy from that perspective.

~~~
anonymous5133
Well yeah, if you're going to sell how great California is then of course you
are going to point to the place that basically puts California on the map in
recent years.

------
electricslpnsld
> However, the current crop of big companies will still be the big tech
> companies in 2030 and 2040.

What’s the reasoning here? Rewinding to 1999, Microsoft is the only (then) big
tech company still doing interesting things. Apple was mostly irrelevant and
on the brink of collapse, Google was an academic curiousoty, and Facebook
wouldn’t exist for another half decade. A _lot_ will change in 20 years. I
suppose Yahoo, Oracle, and IBM are still kicking and probably will for a long
while, but they are hardly forerunners at this point.

~~~
HillaryBriss
the reasoning is that everything is basically advertising/marketing and FB +
Google have that stuff locked up from here till eternity

------
dvduval
Seems this article is not about California, but the SF Bay Area. Greater Los
Angeles housing is not nearly as over priced, nor is it as dependent on the
tech sector.

------
Animats
We've had "peak San Francisco" three times since the 1980s. Late 1980s, when
the heavy industry moved out. 2001, the dot-com crash. 2008, the real estate
crash. Looks more cyclical than fundamental.

------
austincheney
Arguably, the reason why the valley was the best place for startups is due to
the density of the VC economy there and the wisdom of founders who have exited
startups there. Once other factors have provided enough competing negative
value the only thing that is left is empty consensus (trend chasers, vanity,
popularity admirers), which is healthy for marketing but is horrid for
innovation.

With those things in mind if you have no problem achieving early investment
and a healthy base of users/clients there is no reason to be in the valley (or
any high cost market).

------
rafaelc
This is interesting but he kind of jumps all over the place; it strikes me
more as a brain dump of ideas and hypotheses.

There are a few areas where he’s playing pretty fast and loose with the facts,
too. For example: NYC has way more homeless people than SF, but they aren’t as
visible because under city law, the city is required to provide shelter to all
of them. It has nothing to do with the weather, and in that sense NYC is way
nicer to its homeless than SF.

------
jelliclesfarm
There are landlords everywhere. It’s not a uniquely California problem.

London, NYC, Hong Kong are all notoriously expensive places to live. But they
are not Bay Area. I don’t get the oft repeated hatred and contempt towards
landlords.

Bay Area is better than most other places in the world..more diverse..more
philanthropic and inclusive. Things grow and flourish in the Bay Area. We want
everyone to succeed. We rise and we rise others. That has been my experience.

~~~
rcpt
It's not the landlords. It's the $30B per year in tax cuts we handout to
landowners that gives them super powers here.

And NYC far better for housing. In New York you can get an apartment in
Jackson Heights for $200k and take the F train to work.

[https://www.redfin.com/NY/Corona/112-50-Northern-
Blvd-11368/...](https://www.redfin.com/NY/Corona/112-50-Northern-
Blvd-11368/unit-6B/home/113180232)

In the Bay Area it's expensive near job centers but it's still expensive 40
miles away.

California's problem is property taxes. Tax people fairly - not based on the
time they joined the class of property owners - and our problems go away.

~~~
jelliclesfarm
But that doesn’t make sense. The reason we have prop 13 is because someone 30
years ago bought a property for a couple hundred thousand dollars and by the
time they pay off the mortgage, it’s worth a few million dollars but they are
retirees and can’t pay the property tax.

If prop 13 is repealed, older Californians should have to move out of state.
Remember..no one makes money unless they SELL the property.

However there is room for reform with : 1. Investment property 2. second homes
3. Foreign investments in CA properties 4. Inheritance of property and tax
breaks on that..5. Prop 13 repealed for commercial properties.

A retiree shouldn’t be penalized for their primary home after paying it off
for 30 something years and when they are on fixed retirement incomes.

~~~
dodobirdlord
> If prop 13 is repealed, older Californians should have to move out of state.
> Remember..no one makes money unless they SELL the property.

Ideally nobody would have to move out of the state, and ideally any solution
could be implemented gradually enough to ensure that there were cheaper
housing options available nearby to minimize disruption. Regardless, please
consider another perspective. A pair of retired people whose children have
reached adulthood and moved out __should __be discouraged from continuing to
own a 4 bedroom house in an urban area. There should be structural incentives
to encourage them to sell their property and move to a home that is more
efficient for society. Proposition 13 is a disaster for society precisely
because ensuring that older Californians do not have to move is a disaster for
society. Retired people no longer have jobs that they need to commute to, so
the average commute time goes up when they stop working but decline to move. A
younger couple with young children or perhaps planning on having children
cannot move into the house. They are kept out of what is likely a quality
school district, and will end up raising their children in less space and at a
greater distance from institutions like museums that children benefit from
visiting. Meanwhile, the government misses out on oodles and oodles of tax
revenue that the next resident would be paying because our hypothetical
retired couple doesn 't have to pay adjusted property tax until they move. Not
only does prop 13 provide no structural incentive to move, it provides a
structural incentive to not move!

Not only is the subsidy on the order of billions of dollars, it's subsidizing
something bad! It's as though the government was buying cigarettes in bulk and
handing them out to children. Ensuring that retired people don't need to
consider moving is the opposite of a good idea.

~~~
jelliclesfarm
It seems to be suggesting that older Californians need to downsize and live
small after they retire and don’t have to enjoy all the decades of working
hard to pay mortgages so that the state can gain more taxes?

How is it a subsidy? They are not subsidized as they don’t realize value and
if they realize value, it is only after they sell which means that taxes are
delivered to the state coffers anyways.

Retired people should ‘move’ away and die someplace else because the taxes are
necessary?

Why would anyone want to own property if this becomes the norm? There is no
incentive to own property usually bought on mortgages and interest rates.

~~~
dodobirdlord
> It seems to be suggesting that older Californians need to downsize and live
> small after they retire and don’t have to enjoy all the decades of working
> hard to pay mortgages so that the state can gain more taxes?

And so that scarce resources can be efficiently utilized. It is broadly agreed
among economists that the best taxes are those that encourage people making
inefficient use of scarce resources to sell them to people who will make more
efficient use of them. Generally the best way to do this is to levy a tax
proportional to the value of the scarce resource in question. This is why a
land-value tax is so strongly favored by economists. Property taxes are a tax
on the negative externality of underutilization of resources, because someone
who derives more use from the resource (close to work, close to schools, space
to raise a family) will be more willing to spend money at a specific rate to
continue owning the resource than someone who derives less use from it.

> How is it a subsidy?

They receive a tax break as long as they retain ownership of the property.
Their continued ownership of the property is being subsidized. Tax incentives
are a common method of distributing subsides. Consider the tax incentives
associated with mortgages, retirement accounts, and college education funds.

> Retired people should ‘move’ away and die someplace else because the taxes
> are necessary?

Scarce resources are scarce, and their efficient utilization should be
encouraged rather than discouraged by government policy. Markets are a crude
but effective means of determining value. If a retired couple values continued
ownership of a property as much as a younger couple looking to start a family
values that property, then they will have equal willingness to pay the
associated property tax.

> Why would anyone want to own property if this becomes the norm? There is no
> incentive to own property usually bought on mortgages and interest rates.

Are you asking why people would want to own property if property taxes
existed? Property taxes are pretty common, and unsurprisingly people continue
to own property even when subject to property taxes, because they derive more
value each year from continuing to own the property than they pay in tax. And
when that stops being the case, they sell the property.

------
malchow
Peak California is real and this is a quite good summary of it.

One redeeming aspect not well understood, though, is the role of capital.
We're temporarily in an odd age of overabundance in venture capital
(overabundance relative to investable ideas and people) but in general, and
pretty much at all times except for 1997 to 2000 and 2014 to 2018, the people
willing and able intelligently to invest in $0 revenue / 0 progress companies
with wild ideas have tended to be in just one place.

Nothing about this demands that the _companies_ stay in California. But it
means that they'll probably keep coming here to find capital being allocated
by risk-loving Ph D-holders.

I have only been in the Valley for 10 years, but even I remember, in 2009, how
fast the tourist capital vanished. And some pretty cool companies were founded
in 2009.

When the next cyclical downturn arrives, the same determined VCs are still
going to be in the same MPK and SF offices, plugging away on new ideas, while
oil kingdoms and plutocrats are going to be off cleaning money in some other,
hotter corner of the globe.

------
mlinsey
I wonder if it is actually the case that YC believes 150K is the necessary
number to operate over the course of the program. As I recall, the chain of
events was YC provided 16-20K, then Yuri Milner decided to index over all YC
companies by offering an extra 150K on a no-cap/no discount note, then it
became a lot easier for YC to just manage the investment themselves, then the
money was rolled into the main YC investment so there wouldn’t be this weird
two rounds of investment from the same investor, the latter for a TBD amount
of equity. Each decision along this step had other motivations, like DST
reaching more early stage companies or YC simplifying their investment, which
were unrelated to how much money it takes to get through the YC program, a
number which has undoubtedly gone up but probably not by 7.5X

------
shriphani
I have always what it is about places with a mediterranean climate that causes
some sort of renaissance mindset to form there - Greece (well at least a while
ago), Roman empire, Italian renaissance, Silicon Valley....

Maybe it is the air.

~~~
80386
On the East Coast, there are maybe two months out of the year when the weather
doesn't strongly disincentivize going outside. And those months aren't in
contiguous blocks - there's usually a week in January where it's nice out, and
then it's crap until one afternoon in February and a randomly selected third
of the days in March, and so on. I bet that has something to do with it -
especially since you need cities for this stuff, and cities have to care about
the weather more than suburbs, since people aren't just driving everywhere.

And, having lived in both regions, the only difference between the Northeast
and the South is that the Northeast rolls _fewer_ of these days (it still gets
way too hot in the summer in Massachusetts) - but the Northeast is where most
of the cities are, because a few hundred years ago, colder overall weather
meant 1) you couldn't develop a primarily agricultural economy the way the
cotton and tobacco belt did, but 2) you had fewer parasites and disease
carriers to worry about. (It's a little harder to build major economic centers
when half your population has hookworm, malaria, or both, which was true of
the South until the mid-20th century.)

Lee Kuan Yew called the air conditioner the most important invention of the
20th century.

~~~
Baeocystin
Having lived in Bethesda for a few years, I am convinced that a non-negligible
fraction of our governmental dysfunction comes from the collision of formal
work attire and 100% humidity swamp. Not even joking.

~~~
shriphani
I developed a mildly negative opinion of Singapore and HK when I saw their
brightest minds enter the finance industry and wear three piece suits in
sweltering weather every single day of the year.

Never again have I seen so many successful people so determined to be
uncomfortable for a majority of their workday.

------
hn_throwaway_99
Wow, I thought this writing was really superb. I read one of the author's
other linked articles, [https://medium.com/@byrnehobart/alchian-allen-and-
agglomerat...](https://medium.com/@byrnehobart/alchian-allen-and-
agglomeration-explaining-economic-inequality-and-nice-golf-courses-in-
vegas-379eae5ddc5) , and it was the first time I read a convincing argument
for the relationship between high real estate values and industry
concentration in specific urban areas in the age of globalization. Fascinating
read IMO.

------
skepticmoron1
If Bay Area and tech is a talking point. For most of the tech existence,
Silicon Valley has always been the go to place. Then, it got too expensive.
The next stop was sf and now even soma is crazy shit expensive. The natural
progression i see is to start looking at the east bay (Hayward, Oakland..).
They still are comparatively affordable. Work with the local governments where
it is a win win for both. I live in Hayward and I can’t imagine there are no
startups here. It is so close to the city.

------
beatpanda
In every article like this, I'm always looking for the author's orientation to
place. It's important to me whether they consider the Bay Area, or any other
place, an actual _home_ , with some transcendent quality besides a collection
of objectively measurable attributes. This author clearly does not.

The author is annoyed that people like him (according to him, the smart
people, the good people, the people on whom the entire society and economy
depends!) are treated with such disrespect. But how does this author treat the
people around him?

He writes about the Bay Area like he's observing it from an alien spacecraft,
as if he's entirely separate, outside of time and space. He evaluates the
various objective factors of the Bay Area solely in terms of their benefit to
him, and finds it wanting. And the author, with an unlimited ability to simply
uproot himself, darkly insinuates that he, and all the other good, smart
people like him, are going to do it, and soon.

But why should anyone care? By the author's own admission, he and his fellow
good, smart people aren't meaningfully a part of the culture or the social
fabric of the place. The author clearly has contempt for the people around him
("If you can afford Pacific Heights rents and rideshare everywhere you can
pretend you don't live here!"). He clearly has no intention of contributing to
the place. He clearly sees it as a pool of resources for extraction and
nothing else.

It's clear that the author sees it this way because if this wasn't the case,
he would be involved in some effort, any effort at all, to fix some of the
problems that he's describing. Yes, California and the Bay Area have their
problems. And our problems and our fortunes are the result of generations-long
processes. Whatever comes next will be the outcome of people digging in,
working to fix the problems, putting their shoulders to the wheel, and not
just bailing out because moving somewhere else would maximize certain values
in their personal spreadsheets.

A few people that I consider friends were doing that work before the current
round of good times. They're people who've been in San Francisco back when it
was considered frightening and dangerous, and the set of problems the city had
were completely different than the current ones. They stuck it out. They made
the city a much better place. As a result, we now have a new set of problems
to fix. The cycle repeats itself.

Right now, we don't need any more people who are just looking to extract
resources for themselves. We need people who are willing to engage, to become
part of the social fabric of this place, and to figure out what the future
looks like. So I want to enthusiastically encourage this author, everyone else
who's written a functionally identical article in the last few years, and
everyone on Hacker News who constantly complains about how much they hate San
Francisco, to get out.

If you're among that group, and you don't leave, you're actually cheating
yourself. There's likely some place in the world with which you could find the
same profound, transcendent connection that I and many others have with San
Francisco.

It's a tragic waste of a life to live in a place you hate, and that you have
neither the commitment nor the desire to make any better. It doesn't benefit
you, and it doesn't benefit the people around you whose home you hate so much.
Everyone would be so much better off if you would simply show yourself the
door, and find a place you can call home, for better or worse.

~~~
lkjdsalkjf
Note that the author lives in New York, not SF. He writes about the Bay Area
like he is observing it from a distance because he is.

------
dsfyu404ed
The most worrying part of this is that when the system described in TFA
crashes and burns and people flee they will not realize that it was the sum of
all parts that created the system that they fled and will unwittingly attempt
to enact it piece by piece wherever they relocate (see Denver, Portland,
Austin, etc. for examples).

------
freewilly1040
>>I’ve lived in the Midwest, on the Texas/Mexico border, and in New York, and
when I moved to San Francisco I was surprised to see that anti-immigrant
sentiment was quite socially-acceptable there

The author is not an immigrant as the word is commonly understood if he’s only
lived in these places.

~~~
wilg
That is obviously intentional, and (I think) an interesting perspective.

------
taivare
Aside from the homeless in Southern California a lot of young people are
living out of vans. See Vanlife on Youtube, eventually these young couples
living a Nomadic lifestyle will want to settle down and start families. Also,
a lot of middle aged people are also living out of vans.

------
AtlasBarfed
A discussion of "Peak California" without mention of freshwater?

This appears to basically be a NIMBY property values complaint by a rich
person... either someone with property or who wants property under the current
conditions.

------
bronz
maybe its silly but i think california will always attract lots of great
people because the weather everywhere else fucking sucks. i did a huge road-
trip across the US last year and the biggest lesson i drew from it was that
california is paradise compared to the rest of the country. i never traveled
as a kid, so i assumed that things were nice in other places too. seriously, i
dont understand why anyone chooses to live somewhere else. other places are
cheap but they also suck massively. and people who live in NY? its just as
expensive over there, even more restrictive gun laws (you cant even carry a
fucking taser) and the weather SUCKS. why someone would know about both places
and choose NY over CA is a mystery to me.

------
phkahler
One word for those looking to get out. Detroit.

~~~
anonymous5133
I'll take Wyoming, thanks :)

------
purplezooey
Like most Medium articles it consists of about 90% general ranting and
unsubstantiated opinion, and this one is particularly tedious.

------
codingdave
> There’s a consensus among smart people that the Bay Area is the place to be

I'd correct that to: There’s a consensus among smart people in the Bay Area,
that the Bay Area is the place to be.

Trust me, there are plenty of smart people out here that wouldn't touch the
Bay area with a 10 foot pole.

~~~
dang
No doubt. But can you please not post unsubstantive comments here?

~~~
codingdave
I'll accept that chastisement, especially respecting that this is your site.
But I do feel that the Bay Area vs. not discussions are as relevant to our
industry as ageism, or any other criteria that causes us to judge each other
unfairly. I'll seek better ways to engage in those discussions, though.

~~~
dang
Sure, I'm not saying the article is off topic. If it were, we would demote it
(or rather, it would already have been heavily flagged). The issue is simply
that when people respond with shallow dismissals, especially with a
provocative edge like "wouldn't touch region X with a ten foot pole", it leads
to lousy discussion. Worse, in a case like this, it pours fuel on regional
resentments, which unfortunately are a lot stronger than one might have hoped.

Admittedly the article set itself up for such a dismissal by making a
provocative generalization about "smart people" in the first place. But
commenters here need the discipline not to take the shallowest bait in a
piece, but respond to the parts that are actually interesting. In a way,
that's the article-scoped version of this guideline: "Please respond to the
strongest plausible interpretation of what someone says, not a weaker one
that's easier to criticize."

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
nextstep
I guess I’m not a smart person and my friend group must be full of idiots
because concensus among all of us — many of which who have lived in there — is
that the Bay Area is terrible. I would never move back. The lifestyle is very
hard, even if you make a lot of money, because the public transportation is
insufficient to cover everything you want to do in your life. And the culture
is boring and getting worse.

I can understand why Americans who have never lived in NY or a nice city
outside of the US might think it’s “really hard to find any place on planet
earth that’s nicer to live in and to work in”. But this attitude says more
about the author than anything inherent to the Bay Area.

~~~
TomVDB
> The lifestyle is very hard, even if you make a lot of money, because the
> public transportation is insufficient to cover everything you want to do in
> your life.

Public transportation is the limiting factor in determining what you want to
do in your life... even if you have a lot of money???

Once I had enough money, I bought a house 20min from work, 15min from an
excellent park for mountain biking, 25min from SJC and 45min from SFO.

All of that can be done by car much faster than public transportation ever
could.

Whether or not this is sustainable for a large population is a completely
different discussion. But your premise is flawed.

~~~
johan_larson
Yeah, I don't know why anyone would tie themselves to public transit in the US
if they had a decent job. US public transit is for people too old, too young,
or too poor to have a car, and for people commuting into very dense areas that
it is impractical (too expensive) to bring a car into.

~~~
trophycase
Owning a car is expensive and a pain in the ass, walking to the station every
morning is good for you, you can read/relax on a train whereas driving in
traffic is a nightmare.

~~~
vonmoltke
> you can read/relax on a train whereas driving in traffic is a nightmare

You have obviously never had to rely on New Jersey Transit.

------
crimsonalucard
Where to go next?

~~~
scythe
All of the usual suggestions are too small, IMO, except Seattle (4M) which is
already expensive and facing similar problems to the Bay. Austin (2M),
Raleigh-Durham (2M), Denver (3M), Portland (2.5M) are not suited to compete
with the Bay (8M). Baltimore-Washington (9M), Boston (7M), New York (20ishM)
and San Diego (3.5M) are already very expensive. Climate isn't king, but
Phoenix (4.5M) and Minneapolis (3.5M) are too uncomfortable for most people.
That leaves Chicago (9.5M), Dallas (7M), Detroit (4M), Houston (6.5M) and
Atlanta (6M), of which the first and last have a more mature tech sector,
denser urban geography and better public transit (Atlanta's transit ridership
is five times Houston's). Of the two, Chicago has much better infrastructure,
but Atlanta has much nicer weather. Both are far too small currently to pose a
threat to California's dominance, so I wouldn't expect to see any changes any
time soon.

------
kitsune_
Not a single word about climate change?

~~~
Animats
California does OK with climate change. Rising ocean levels aren't a big deal,
because the coast of California is mountainous. Even where it looks flat, like
Venice Beach, go 3 blocks inland and you're usually 20 feet up. San Francisco
has some low-lying areas near the coast, but they're small enough and valuable
enough to justify big seawalls if necessary. It's not like Florida or New
Orleans, which are barely above sea level now.

Hotter is a problem, but CA isn't going to heat up to unlivable levels, like
parts of India.

------
ajmurmann
TL;DR: California is too crowded, nobody goes there anymore.

------
tomc1985
Yet another Medium moron that lumps lots of disparate ideas (about people)
into just a handful of neatly-formed but incorrect blabs. Only in the Bay Area
would "hippies" "conspire" with landlords to keep the engineers out.

------
pkaye
I'm expecting the "tech bubble" to burst at some point. Looks at this way.
Desktop and laptop market is saturated. Phone market soon. Semiconductor
industry reaching its limits. Ad revenue will trend down as governments clamp
down on a lot of the sketchy stuff. A lot is riding on self driving cars and
machine learning. What else is new in the horizon that people really need?

~~~
mikeg8
There are going to be many, many more ways we utilize software and connected
devices to optimize existing industures (construction, healthcare, logistics
etc). Some of them will seem so obvious in retrospect, others will be
exceptionally creative and thus hard to predict. We may have reached a
saturation point for hardware (but even that will need constant replacing),
but the ways we deploy technologies out into our economy will continue moving
forward for many years to come. Tech changes, but always moves forward.

------
_Codemonkeyism
California will be Elysium [1] in 50y.

[https://en.wikipedia.org/wiki/Elysium_(film)](https://en.wikipedia.org/wiki/Elysium_\(film\))

