
Why entrepreneurs are leaving the Bay Area for their next startup - rafaelc
https://www.axios.com/entrepreneurs-leaving-bay-area-for-next-startup-9206b98e-a583-4fff-ad03-101dba301e09.html
======
gumby
This is the key part of this article (emphasis mine):

> This kind of story is often framed as a tug of war between Silicon Valley
> and the rest of the country. But Silicon Valley isn't going any where, and
> for every startup or founder who leaves the Bay Area, someone else graduates
> from Stanford or wants to move here. _This is about tech becoming a bigger
> part of the overall economy._

~~~
sanderjd
That does seem to be the crux of the article, but I find it very unsatisfying
without data. It's extremely improbable that it is _exactly_ 1 person leaving
to 1 person graduating from Stanford or wanting to come. So what is the actual
trend? This article doesn't know.

~~~
nostrademons
In the absence of housing construction & vacancies, it's probably pretty close
to 1 person leaving to 1 person arriving. The limiting factor in the Bay Area
is usually housing; if there were really a net outmigration, you'd see
vacancies and a drop in rents. If there were a large net inmigration, you'd
see new construction (which you do to some extent, but not a lot).

There's probably a mild net inflow that's accounted for by new construction,
people doubling up in houses that used to be single-family, and homelessness.
The continued rise in housing _prices_ seems to indicate a large latent
demand, i.e. many more people _want to come_ or _want to stay_ but are
discouraged because they can't get housing at reasonable prices.

~~~
marcell
I think the housing market indicates a net inflow of engineer types:

(1) There are actually still some low income people living in the Bay Area.
For example even in Mt View (home of Google), there are some low income areas.
Other cities have them too. The low income people are continuously being
displaced by higher earning engineer types. This is reflected in rising rents.

(2) It varies by city, but there is _some_ new construction. Last year, SF
issued 6 building permits per 1000 residents, while San Jose issued a little
under 3 [1]. Some other cities in the area, like Mt View, Sunnyvale, Fremont,
are fairly pro-deveopment.

[1]
[https://lh3.googleusercontent.com/-q6CqiDf9FL8/XINJI7vxJ0I/A...](https://lh3.googleusercontent.com/-q6CqiDf9FL8/XINJI7vxJ0I/AAAAAAAADCQ/vb_w_Da1CXgZHu3NJZ3RWHLI5-OJ_MzbgCK8BGAs/s512/2019-03-08.jpg)

------
justboxing
Ah, If I had a dollar for every time a post like this shows up on HN, I'd be a
millionaire. It's either this, or some personal anecdote of how some founder
took his startup to Austin, Detroit, Nashville, Seattle .. < insert
gentrifying city here > and they are kicking butt.

Last I checked, San Francisco alone accounted for 25% of the V.C Money and San
Francisco + Silicon Valley accounts for over 45% of V.C. Money.

Source: [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/)

> The Bay Area—that is, San Francisco and Silicon Valley—currently accounts
> for nearly 45 percent of total venture capital investment in the entire
> United States

and there is no tug of war.

>This kind of story is often framed as a tug of war between Silicon Valley and
the rest of the country

Write all you want, but if you are looking for funding (which most
entrepreneurs are), then San Francisco and Silicon Valley is still the place
to be at.

~~~
dmode
There was an article voted up in HN on how we are in Peak California and Bay
Area. And someone pointed out that this narrative has been going on for
decades.

~~~
r00fus
Meme: beleaguered Apple / SV

------
potatofarmer45
SV isn't the best fit for a lot of startups. It really shouldn't be the
default location for all startups especially since there are different options
that offer different things (NYC, Denver/Boulder, Austin etc).

The Bay Area has 3 things that set it apart from anywhere else and startups
that really need this have no other real choice:

Investors who are willing to invest super early

Lots of top tier engineers

An extremely optimistic culture

Investors- Our startup did fundraising on both east/west coast. Valuations,
investor quality and potential help was relatively the same, but those in the
the Bay Area were completely fine in investing in a pre-rev idea. That was,
and still is inconceivable outside. A NYC fund flatly told us they will do no
investments until we reach 50k MRR. That wasn't a requirement at SV and we got
the initial seed funding as a result.

We do something very tech heavy and quite at the forefront in our field. We
need really good engineers and most these types of specialists currently are
employed at a Google or Facebook etc. In theory they should be super expensive
and impossible to dislodge from these tech giants but what I find is that
these super smart people get bored after a few years. They know their worth
and that there will always be high paying jobs for them, but they can be
persuaded to join a startup on a lot lower salary because they get a lot of
freedom and ability to make a difference. A lot of the people that complain
about expensive demanding engineers in SV are basically a bunch of PMs or
salespeople who want a CTO to build a front end app. If you actually have
interesting tech, finding engineers at a discount is quite feasible.

The last thing is about culture. It's like the YC interview day. We spent the
entire day before and after the interview (and snuck in again the next)
because the other teams you meet- the optimism and energy is infectious. It's
the same feeling the morning of a marathon where you're worried it's too cold
and wet, but the instant you see the crowd, everything feels right.

If you're doing something that counter-intuitive, and changes existing
thinking, then culture is essential. Most startups, even in the accelerators,
are ops businesses. They utilize tech, but business not tech is their key
driver. There's nothing wrong with being that kind of startup, but if that is
the case, then the Bay Area isn't a good a fit which is what this article
says. Your customers aren't there, it's expensive, and there are other
options. But if you do have a early crazy idea that is based around a key
piece of tech, the Bay Area is still the best choice by far.

~~~
danielcampos93
V An extremely optimistic culture Except on HN where people tend to skew quite
negative. Lol

~~~
tomt2323
I assume a lot of us negative types are not Bay Area (or even CA) based.

~~~
souprock
Yep.

An optimist: I could make a start-up and become a billionaire, or at least get
$million/year at a FAANG.

A pessimist: I'd probably be sharing a studio apartment and eating dry dog
food, or maybe even homeless like so many of the people there.

You see it outside of tech too, for example in acting. The optimist sees movie
stars getting over $100,000,000 per movie, so they throw all their belongings
in a duffel bag and take the next greyhound to Hollywood. The pessimist knows
that most actors fail, with many working minimum wage or risking their health
to make NSFW movies. Another place is sports, with the optimist focused on top
players and the pessimist well-aware that most are lucky to end up as gym
teachers.

So the optimist goes to the Bay Area, gambling his life, and the pessimist
chooses a more reliable path in life.

------
linguae
On a related topic, I’m wondering what careers are like for CS researchers in
industry outside of Silicon Valley but still in the United States. My
specialties are in systems software research (e.g., operating systems,
distributed systems), machine learning, and databases. Most of the companies
that I’m familiar with that do research in these areas are Silicon Valley-
based, although there are some obvious options in Seattle (Amazon and
Microsoft are headquartered there, and Facebook and Google have offices
there). My ideal situation would be a culturally diverse area with a low-to-
moderate cost of living. I like Silicon Valley due to its amenities and
opportunities, but I could see myself starting a family within the next 3-5
years and I don’t think I’d be able to afford it in Silicon Valley unless I
give up research, hit Leetcode really hard, and apply for a FAANG software
engineering position.

~~~
tomcam
The compiler folks at Microsoft are first rate and just good people.

------
opportune
I'm heavily considering Tallinn for a tech startup -

It's easy to get residence status (IIRC basically requires a ~$60k investment
in a business you are starting) and extremely easy to start a business. You
get access to the EU labor/trade markets in a low COL city which already has a
decent sized tech and entrepreneurship presence. The government is actively
courting you and in general seems very easy to interact with and move forward
with - reducing the PM/lawyer overhead of operating a medium sized business in
other countries. And if you stay there long enough it's not overly complicated
to get EU permanent resident status.

Overall, Tallinn beats SV in almost every way except for two - developer
talent/concentration (though it's still pretty good) and local capital.

~~~
badpun
I’d worry about talent pool being too small (Estonia has a population of only
over a million people). It might not be easy to get people from outside to
relocate there, as no one else in EU (expect apparently some Finnish people)
speaks Estonian, the weather is grim and wages aren’t that enticing. That’s
probably why the government is trying very hard to attract foreign startup
investors, as otherwise Tallin is at a disadvantage vs say Warsaw.

~~~
opportune
Yes but Estonia has [https://ccdcoe.org/](https://ccdcoe.org/) as well as
numerous IT companies and startups already (most famously, Skype, now a
Microsoft office). Plus I don't think you would have any issues having an
English-speaking software development office.

Honestly Poland's far-right is a big turn off for me and if I were an
ethnically Indian/Pakistani/Turkish software engineer I wouldn't want to live
there. It also just doesn't seem like as nice of a place to live. Admittedly,
I haven't done much research in terms of what I would need to do as a non-EU
resident to get temporary residence there though. I would love for my notions
to be proven wrong.

~~~
badpun
I’ve worked with a number of Indian and Arab people in Poland. I’ve never
heard them complain, and some have settled here for good. I am sure there is
some level of latent racism here, but that’s true of any society.

Regarding tech companies, Poland has Google, Amazon and some pretty good game
studios (CDPRed). It is not an innovation hub by any means though and most
people just do regular corporate programming (frontend, backend) or maybe some
not terribly innovative startups. If you want to create something based on
existing tech, Poland will be fine, but if you want to develop new one, you
might have trouble finding the people for it (that’s true for 99.9% places in
the world though, Tallin included most likely).

As for Poland being a nice place to live - just come to Wroclaw or Krakow for
a weekend when you have a chance and see for yourself. IMO there’s very little
difference in living in Warsaw vs say London or New York. The air quality is a
worse in the winter - on the other hand, there are no drugs/drug dealers on
the streets, no homeless people (or very few), no guns/murders and no
terrorism.

Regarding the temp visa, sadly I don’t know anything about it.

~~~
opportune
Hmm, ok, maybe I'll spend a couple days in Warsaw during my trip to Tallinn
and Riga. Thanks!

~~~
YawningAngel
Warsaw isn't especially pleasant as Polish cities go.

------
jedberg
The solution to this is remote work. The main benefits of being in the valley
are access to investors/capital. This advantage mostly only applies to
executives. So have your executives in SV and have everyone else be wherever
they want to be that is cheaper and nicer for them.

~~~
johannes1234321
Depending on the amount of communication needed for being efficient. I work
10+ years in a Rendite First organisation and there are regular times where I
think "damn, discussing this over the water cooler, while running into each
other, would be more efficient" than a chat exchange or setting up a
video/phone conf. Of course on the plus side I have the uninterrupted working
hours, where nobody walks in to me and flexible hours to arrange my life and
the tendency to not fully separate private and work which easily leads to free
overtime ;)

~~~
jedberg
I actually saw an interesting solution to this. I don't remember what company
it was, but they had a designated "water cooler time" where they had a video
chat up every day that anyone could pop into and talk about whatever they
want, business or not. It gave people a chance to have those serendipitous
conversations and built team morale.

~~~
state_less
I'll second this. Turning the camera on 15min in the morning to chat about
anything: pressing issues, vacation or home life makes for good digital water
cooler time.

~~~
johannes1234321
"morning" is a relative term, when distributed over continents :)

------
basseq
What a terrible, clickbait headline.

In short (first sentence), tech start-ups are setting up shop in non-SV
locations where they can find cheaper rent and more affordable talent. This is
a good thing because it means a) physical proximity to funding sources is less
important, b) more funding sources are available, c) good talent is
everywhere, and d) the trend of tech becoming part of the general economy
(dare I say democratized?) continues.

------
dumbfoundded
As someone in the hemp business, I have a relatively unique reason. There's no
hemp (CBD, non-psychoactive) program in Oregon. You can do cannabis in
California but not CBD. I moved everything to Oregon.

It's funny that the cannabis industry in California is actually trying to slow
down any regulation allowing THC-free, hemp derived products.

~~~
moate
Did the "recent" changes to the farm bill affect this in either the short or
long term? Just curious.

~~~
dumbfoundded
Absolutely. Long term I think it's going to open up in many states.

------
gesman
California better stop punishing entrepreneurs with it's heavy tax stick
before experiencing disaster in it's tax revenues.

Exodus seems to be accelerating.

~~~
nrb
This viewpoint doesn't appear to jive with the one being portrayed
currently[1], that the exodus is only among the poor/middle-class and that the
immigration of the rich and high-earners is actually accelerating.

1: [https://www.latimes.com/politics/la-pol-sac-skelton-
income-t...](https://www.latimes.com/politics/la-pol-sac-skelton-income-tax-
california-wealthy-20190311-story.html)

~~~
stcredzero
_the exodus is only among the poor /middle-class and that the immigration of
the rich and high-earners is actually accelerating._

Is that supposed to make the groupthink better or worse? I suspect worse, as
it's reducing the viewpoint diversity, as viewpoint is affected by
socioeconomic status and livelihood.

~~~
hellllllllooo
I think the point is that tax isn't driving an exodus of
businesses/entrepreneurs as OP suggested. The opposite is true and it's
driving out lower income people. Oakland, for example, is growing like SF with
10+ tall buildings going up this year downtown to accommodate tech companies
and their employees.

------
justfor1comment
As an engineer in the Bay Area I would recommend most startups to locate
themselves outside the bay. Especially if they operate a low margins business.
Rent is expensive and so are the employee salaries over here. I have many Bay
Area startup recruiters reach out to me with rather interesting projects.
However, a quick look at Glassdoor reveals that the liquid portion of the
salaries they offer is so low that I would need to live in a trailer to work
there.

~~~
i_phish_cats
If only there were trailer parks or other cheaper housing options around here.
Fuck NIMBY's.

~~~
stcredzero
_If only there were trailer parks or other cheaper housing options around
here._

There's one in Milpitas.

~~~
chipotle_coyote
There are several large ones in Sunnyvale and San Jose, too. But even mobile
homes are expensive in Silicon Valley by the standards of most other places;
at this point, $150K would be a steal, and prices approaching $300K aren't
uncommon -- and monthly land rental fees in the park can easily be more than
the mortgage. (For instance, a listing I just pulled up on Zillow is a
reasonable-ish $155K for a 3br/2ba manufactured home in Sunnyvale, for an
estimated mortgage of just over $600 a month...and a rental fee of another
$1600 a month.)

------
nkkollaw
I wonder why entrepreneurs don't come to Poland to build their product.

Warsaw or Wroclaw in particular are vibrant, tech-oriented cities where life
is about 1/4 of SF.

If I had to bet my future on being able to building something with 1M, I would
want to get 4 months instead of 1 for the money.

Of course, SF might have better investing ecosystem, but once you got the
money development should be done in a more appropriate place to buy yourself
more time.

~~~
d136o
What are the long term prospects for freedom of expression there? [1]

As a first generation immigrant I just don't think the opportunities for
socio-economic mobility would be present for my (future) kids anywhere but in
a liberal democracy.

[1]
[https://www.theatlantic.com/magazine/archive/2018/10/poland-...](https://www.theatlantic.com/magazine/archive/2018/10/poland-
polarization/568324/)

~~~
badpun
Most statements in this piece are highly debatable or blown out of
proportions. Poland gets a lot of bad press under the new government (which
sucks IMO, but on the grounds of their mundane incompetence and stupidity -
high even for modern democracies - and not because they’re some evil
authoritarians) in part because Polish media is mostly controlled by anti-
government journalists, who put very heavy spin on reality. And these are the
people who the foreign journalists (Spiegel, NYT, Guardian etc) talk to about
situation in Poland. IMO, we’re ruled by cynical simpletons, but probably no
greater than Trump, Berlusconi, Cameron etc.

------
beager
The notion that the Bay Area contains all the wisdom about high-growth, VC-
backed success, if true, seems to me like a great opportunity for those who
have been successful at it in the Bay Area to consult for those who want to
replicate it for the rest of the country.

It may well be more lucrative for those people to stay put and startup again,
but there’s certainly a tier of people who are craving adventure and would
much more enjoy sharing their blueprint for success with Austin, Boulder,
Atlanta, SLC, Portland, on and on.

If I were a big VC firm (and sure, this might be a good reason why I’m not),
I’d be forward-deploying my analysts and recruiting a class of EIRs from the
flyover states. It’s a new flavor of alpha for VC: sourcing dealflow from the
entire US.

------
sonnyblarney
For 'big bet' things it might make a lot of sense. I can see why Uber, AirBnB,
and especially OpenAI are going to be there.

But for other, slightly niche businesses, wherein you're competing in a
vertical/horizontal that may not be specifically tech, it might make sense to
be elsewhere.

Fashion heavy, Mining & Materials, Manufacturing, Fintech, Agriculture etc. I
suggest it might be ok to be somewhere else.

As a very crude rule of thumb, if you need 'good engineers' but not 'world
class engineers' i.e. the problem space is more or less 'domain' and not
'tech' ... well you can get good engineers in a lot of places, and domain
knowledge is not inherently in the Valley.

------
auston
FB group for anyone else considering leaving:
[https://www.facebook.com/groups/373683909882919/](https://www.facebook.com/groups/373683909882919/)

I can tell you that Miami would definitely like you here, even our Mayor
cosigns:
[https://twitter.com/FrancisSuarez/status/1100425644968738822](https://twitter.com/FrancisSuarez/status/1100425644968738822)

~~~
opportune
I would love to start a business in Miami but the COL seems pretty high. I
feel like it's probably the best place in the world to start a latin america-
focused tech company (social networking, streaming, fintech, etc.) and it
seems like a great place to live. Does anybody happen to know what kind of
companies the VC's there are focused on - could see pure tech plays being
outside of their core competencies and thus unlikely to get funded.

~~~
sbilstein
I grew up there, I'm a Peruvian immigrant and just don't understand why people
think Miami is good for tech. Solid engineers just move to the Bay Area; who
wants to keep living in Miami which has such a cultural aversion to education,
a major machismo problem, and frequent flooding.

If you want to work with LATAM, hire Latinx engineers in the Bay (there are
lots of us) and hire tech people in Argentina, Mexico, Chile, and Brazil. Lots
of talented folks in all those places.

~~~
opportune
I guess the idea would be to recruit people to move to Miami since there isn't
a big tech scene there already (I think there is an Oracle office and maybe
Univision has an office?). I've only vacationed there but would gladly take my
current pay and live there over west coast. The education/machismo problems at
least shouldn't affect a business much since you are probably unlikely to run
into those hiring tech people, that's more of an out-of-work thing. One of my
best friends is from Miami and the main gripe he has is more the conspicuous
consumption (often funded by lots of debt) - again, shouldn't be much of a
problem.

But, the grass is always greener I suppose. When I've visited I stayed in
nicer places (Brickell, Miami Beach) than I could likely afford year round +
just generally engaging in more fun activities than working. I do think lots
of people like me would be more than willing to take a West-coast level salary
to live in Miami instead though, at least for a few years.

~~~
l9k
IBM also has presence in Miami and a few other places in Florida

------
crissyw
For anyone else looking to move away from the Bay Area, I'm hiring in Jakarta,
Indonesia :)

Email me at crystal@go-jek.com

[https://docs.google.com/document/d/1aWeK0dReWeufZUN11f2QMoEP...](https://docs.google.com/document/d/1aWeK0dReWeufZUN11f2QMoEP3Of5aok7295msDJGxOs/edit)

------
ssimoni
You should be close to your customers. My cofounders and I coded most of the
MVP in the bay because we all happened to be living there, but then we started
going to tradeshows and saw that most of our customers were in NYC so we moved
east.

If you are doing a startup where you are a B2B tech company that sells to
other tech companies, the bay area is great.

------
HillaryBriss
> _...one thing there is a lack of outside the Bay Area are the people who
> really know how to scale a fast-growing tech company_

This reinforces the notion that new tech startups don't really need to save
money. They need to dominate their niche. They need to scale up fast and
become the biggest player first.

~~~
xj9
there are lots of ways to start a successful business that don't involve
millions of dollars of seed money. you don't have to grow into a multinational
conglomerate to be a sustainable enterprise, you know. if you _have to huge_
for your business to make sense at all, maybe you just have a stupid idea.
statistically, it is more likely that you are wrong than that you are a zuck-
level-genius.

~~~
HillaryBriss
> there are lots of ways to start a successful business that don't involve
> millions of dollars of seed money.

not disagreeing with you, but this article seems to be about the ones that
_do_ involve millions of dollars of seed money

------
dmode
Narrative: Startups are moving out of Bay Area Reality: 2018 VC funding: Bay
Area = $45bn, Austin = $1.5bn

------
hellllllllooo
Seems reasonable but not really a lot of data points in this article to show a
real trend. It's just an option piece. Could just as easily point at a lot of
startups staying and growing in the Bay Area and write an article saying why
Bay Area is still the place to be.

------
babyslothzoo
TLDR: cost of living

But leaving for another west coast city is not going to improve things much,
housing and cost of living in Los Angeles, Seattle, Portland, etc are also
very high when compared to costs elsewhere in the USA.

The midwest and south should be aggressively courting entrepreneurs based on
cost of living alone.

~~~
analog31
We are, but nobody has discovered the silver bullet, if there even is one.
Every medium sized city dreams of being the Something Valley.

~~~
souprock
Eh, go for it?

My place began with a few people out of the local university and an angel
investor. There was organic growth and an actual profit. The exit was a
company of about 40 people being sold ($36.4 million in 2019 dollars) to a
large defense contractor. That's in Melbourne, Florida.

There are several start-ups in the area created by former employees, generally
beginning on personal funds.

This also works in Longmont, Colorado. I have a relative who did a couple
businesses starting from personal funds. One sold for millions of dollars, and
the other is ongoing with decent success.

~~~
analog31
Indeed, there are scattered start-ups everywhere. The university in my town is
a major center for biology research, and has resulted in formation of a number
of businesses, some of which have grown to respectable size. We have Epic. I
have my own side-business, but not even scalable to a level of interest for a
VC.

But still nothing at a level to suggest the tide turning away from the big
coastal cities.

------
rgrieselhuber
I highly recommend that anybody who loves SF and startup culture stay in the
Bay Area. It's best for everybody.

------
KorematsuFred
The only reason I am still in SV is because I am stuck on H1B. I think having
a better immigration system is a Red president's best bet to finally spite the
largest Blue state. You need to bring in talented engineers from world over
and let them flood boise, Reno, Austin, Sarasota and Denver. See the Silicon
Valley crumble.

~~~
dmode
H1B is not location specific. You are free to work from anywhere in the US you
find employment

~~~
KorematsuFred
It is job specific which means I can not go to Texas and take up ranching or
just freelance from Reno.

