
As Silicon Valley Gets ‘Crazy,’ Midwest Beckons Tech Investors - Apocryphon
https://www.nytimes.com/2017/11/19/technology/midwest-tech-startups.html
======
kcorbitt
I realize that the housing market isn't the _only_ thing keeping startups and
talented, ambitious people out of the Bay Area, but it's probably the biggest
one.

If the Bay Area can't get its act together and start permitting new housing in
proportion with its economic and population growth, it will go down in the
books as one of the largest and most obviously foreseeable squandered
opportunities in modern history.

~~~
conanbatt
Calfornia and San Francisco economists have made official reports saying
exactly this.

The supply elasticity of buildings in San Francisco is 0.1, which is almost
nothing. If you built 3,000 units today, rents would only go down 30U$S in
average. And the elasticity of demand is 0.7 in comparison. That means that
lower rents will attract lots more people.

San Francisco could triple its population in a few years if it could tear down
the mission to build huge appt buildings.

~~~
ghaff
>San Francisco could triple its population in a few years if it could tear
down the mission to build huge appt buildings.

Leave aside that there are lots of people in San Francisco, including the
Mission, who might not be keen on that Robert Moses-esque plan. How are all
those people going to get to their jobs--the vast bulk of which probably won't
be walking/biking distance from these huge apartment blocks?

~~~
JumpCrisscross
> _How are all those people going to get to their jobs_

If only there were a transit system designed for the masses.

~~~
ghaff
If only. But there is only a limited one in place.

My point was that you can't just plop down a bunch of large apartment/condo
towers--even if it were otherwise desirable to do so--unless you also add
infrastructure to move all those people around. Certainly it _can_ be done but
you're probably looking at a decades-long project.

~~~
conanbatt
Even if you assume that it is not possible to build infrastructure to have a
reasonably good service for the people moving it, actively turning people away
is harming them (because they would prefer bad infrastructure to whatever
option they have today).

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leggomylibro
The Midwest (you know, parts of it) has one big advantage over the West coast:
the people.

Holy cow, it's like night and day. Compare how willing people are to...not
even talk with, but just _acknowledge_ you in somewhere like SF or Seattle, to
somewhere like St. Paul or St. Louis or Detroit.

The juxtaposition is staggering. On an individual level there's like this
universal basic assumption that everyone is a person who has merit, which is
totally lacking on the West Coast. Kind of ironic, considering the political
differences. But hey, you can go somewhere your vote counts, right?

That might be a controversial opinion, but I've experienced both as a liberal
techie, and I call a spade a spade.

~~~
throwawayjava
Hm. I grew up in the midwest and I have the exact opposite opinion.

Where did you grow up? I wonder if this is that thing where we see the ugly
under-belly of our homes with a clear eye, but see new places with rose-tinted
glasses.

~~~
dan_quixote
Same. There's a facade of niceness in the Midwest that doesn't go very deep.
In a lot of more-rural areas, newcomers are viewed as outsiders and kept at
arms-length for years at a minimum. This is not to say mid-westerners are
unusually angry creatures, they're just not as benevolent as the stereotype
implies. Southern hospitality is an even more extreme version in my
experience.

~~~
ashwinaj
Totally agree. Just because someone acknowledges you, doesn't mean anything.

The phrase that gets to my nerves is "bless his/her heart", which I translate
to "I <insert long string of expletives> you, but I'm going to pretend to be
nice because I have to keep up this stupid facade that society has created"

------
pmoriarty
_" In Ohio, that $35 million is the equivalent of $70 million in the Valley in
terms of being able to hire talent and sustain operating costs"_

Low salaries are an incentive for companies to move to Ohio, but are a
disincentive for employees to move there.

~~~
conanbatt
Not adjusted to salary costs and taxes. There was an article a few months ago
talking about how adjusted for living expenses and taxes, omaha had higher
paid engineers than san francisco.

~~~
mason55
The thing that usually gets left out there is savings. If you take SF salary +
SF costs and cut everything in half then you also end up with half the money
left for savings.

The thing about saving for retirement is that you can contribute huge amounts
of absolute dollars in a high COL place and then move to a low COL place to
spend it when you retire.

~~~
conanbatt
I dont have the article at hand, but obviously the goal is highest nominal
savings, not highest nominal savings rate.

The other part thats virtually impossible to account for is quality of life.
Hard winters and big houses in Omaha vs Great weather and 1 bedroom with other
people in SF, etc.

~~~
froindt
It's best to simply look at it relative to expenses. If you want to retire in
HCOL, you could do it in the same amount of time as someone in LCOL if you
save the same % of your income. If you want to move to LCOL, estimate the
expenses there.

I don't know of strict rule of percentage or nominal dollars that works except
for using annual expenses as the measuring stick.

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danschumann
I'm deeply involved in the "beckoning" portion this article mentions. I
volunteered at a conference in Green Bay, Wisconsin hosting Steve Case on his
'Rise of the Rest' tour. It's truly needed. We're consistently ranked top for
small businesses (by %), but lowest for startups. Lots of people have little
lawn and snow care businesses, but people move away if they want to start
something larger. I think the key is to build a solid community, even if very
small. The city should pick a block and try to put as many tech companies
there as possible, giving them incentives. The higher density, the more tech
culture can catch on. Mostly people need good examples of people who have made
it or are making it. It's definitely catching on.

~~~
rm_-rf_slash
In my opinion, the problem is less about the founders and early employees as
it is about the scaling. It’s a lot easier to convince young college graduates
(as older folks will want/need much more compensation when working for a risky
startup) to join a company in hip, trendy metro areas than it is to convince
them to work in, say, Wisconsin. I suspect that is why companies that intend
to scale prefer to move to larger metro areas, even if that means going from a
more rural part of a state to a bigger city like Madison.

That being said, I have noticed quite a few specialist technical/consulting
firms popping up all over my native Upstate New York. Those firms don’t need
the armies of employees the way a Google or an Uber does, so I think that they
can offer a higher pay to cost of living ratio and attract strong talent, kind
of like Tom Cruise in The Firm, accepting a lower salary to work in Memphis
but taking home more net income than if he had gone to New York.

~~~
throwawayjava
It might help if mid-western companies paid equivalent salaries as on the
coasts.

There seems to be this attitude in the Midwest that lower CoL justifies lower
salaries, as if there's no need to compensate for lower QoL with money.

Given equal salary, hordes of people will choose Midwestern winters over SF
rent. But this attitude of "I don't have to pay you as much because land is
dirt cheap, never mind that it's on a flat prairie in -20F weather" needs to
be reversed. Especially since most of that land isn't ever appreciating, so
I'm just paying rent to the bank instead of to a landlord anyways.

Midwestern companies: don't do CoL adjustments if you aren't also willing to
do QoL adjustments.

~~~
maxsilver
> There seems to be this attitude in the Midwest that lower CoL justifies
> lower salaries, as if there's no need to compensate for lower QoL with
> money.

As a local Midwesterner, they don't do this because many people here _don 't
want to think their QoL is lower_ and some will even feign offense that you
implied their QoL is any lower than anywhere else.

Ironically, this bites them in the ass in wages.

Companies don't pay people fairly out here because they don't have to. Most of
the locals have convinced themselves that their QoL isn't any lower. Their own
employees proudly display their own below-market wages as evidence of why
their home is a great place to live, they are essentially _negotiating their
own wages downward_. It's a pure win-win for most companies, why would they
want to disrupt that process?

~~~
gamblor956
I explain it to people this way when they ask why I left the Midwest: the
Midwest is the Walmart of America. It's large, cheap, and the quality of most
aspects of life is relatively low (weather, food, social life, career growth,
etc.). But if it's all you can afford, it's a better place to be than
somewhere expensive.

------
jdlyga
I'm surprised New York doesn't get mentioned that often. It's a wonderful
place to work for software developers. Sure, the housing is expensive, but
nothing like Silicon Valley. And you're in the middle of one of the most
amazing cultural centers in the world.

------
nathan_long
I've been working remotely for more than 4 years now. I live in a nice town
far from the "tech scene", but I work with interesting (to me) tech, make good
money, and paid 1/10 the price for my house that it would go for in San
Francisco.

I don't know about companies, but developers who can pick their location might
consider "not Silicon Valley or New York".

~~~
emerged
I'm in the same boat, about 5 years in the Midwest. I have absolutely no
financial concerns in my life with what would be considered a fairly modest
senior software engineer salary. I don't even have the slightest interest to
push for raises anymore because I'm already so comfortable and happy.

------
paulsutter
Remember that if Silicon Valley is tough for investors, that probably means
it's good for entrepreneurs. Conversely, if the midwest is promising for
investors, that probably means it's tough for entrepreneurs.

Just saying.

------
coreyw
Don't forget about Chicago. There are many great universities near the Chicago
Metro area with a lot of great tech companies to choose from for a job. Cost
of living is less than the coasts and the salaries are on par or above for
cost of living in the city if you work in technology.

------
valuearb
This article has been written many times in the last 30 years. Somehow Silicon
Valley survives.

~~~
Apocryphon
The question isn't if Silicon Valley will survive. The question is if there's
a chance for new hubs to develop.

------
jonathankoren
As a native midwesterner, I've heard this for 20 years now. (Remember all the
"Silicon Prairies"?) Yeah, I'd love to be able to spend million dollars on a
home, and actually have it feel like I spent a million dollars on a home
instead, a perfectly normal home. But, there's just not that much there.

It's a chicken and egg thing. There's no reason why you couldn't do something
there, but it's harder because there's just not the critical mass of talent
and capital. Outside of Chicago[3], there's a paucity of jobs. See
Louisville[0], St Louis[1], Columbus[2]. Even the quality of jobs in Chicago
feels pretty meh compared to SF / SV, but that's just my opinion.

[0]
[https://whoishiring.io/search/38.2527/-85.7585/11?category=p...](https://whoishiring.io/search/38.2527/-85.7585/11?category=programming&location=louisville%2C+ky&type=full-
time)

[1]
[https://whoishiring.io/search/38.6270/-90.1994/12?category=p...](https://whoishiring.io/search/38.6270/-90.1994/12?category=programming&location=st+louis&type=full-
time)

[2]
[https://whoishiring.io/search/39.9612/-82.9988/11?category=p...](https://whoishiring.io/search/39.9612/-82.9988/11?category=programming&location=columbus+oh&type=full-
time)

[3]
[https://whoishiring.io/search/41.8781/-87.6298/11?category=p...](https://whoishiring.io/search/41.8781/-87.6298/11?category=programming&location=chicago&type=full-
time)

------
rconti
This is great, but I don't see how it solves the "two americas" problem.

It seems to me the places that are depressed rural areas will remain so
indefinitely. It's great if we can create more evenly-distributed jobs, but
the brain drain to the 'elite' areas will still be in effect, there will just
be more of them to go to.

FWIW, I spent a week in Columbus (at a BigCorp datacenter) and absolutely
loved the town. That said, brand new condos right in the heart of downtown are
far from cheap. Desirable areas are desirable areas no matter where they are.
I was shocked that a condo (the nicest of the nice, mind you) would be over
$1M.

I can't do the humidity, but loved the city.

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11thEarlOfMar
It's part of the impetus from YC, if I read the tea leaves right, but if there
is a UBI, I could easily see 'hacker communes' emerge where the combined
monthly stipend of the developers funds living expenses of a communal space.
They could work on their startups indefinitely, and try new ideas for years
without having to worry about food and shelter.

Depending on the stipend amount, such communes may only be affordable in lower
cost areas, including the Midwest. In large enough numbers, I could see this
become a kind of movement that brings a different kind of resurgence to the
deflated economies of the Midwestern States.

------
sputknick
What other cities not mentioned in this article should I consider moving to?
I've heard Kansas City and Nashville. I want a city smaller and cheaper than
Seattle.

~~~
noahl
I moved from Seattle to the Raleigh-Durham (North Carolina) area this summer,
and I'm very happy with it.

I'd be happy to answer any questions you might have about it.

~~~
sputknick
I might take you up on that, my wife was just looking at houses in Raleigh. IF
we want to be close to downtown, is NE, NW, or SW of downtown the best? My
wife liked the houses around Lenior St best.

------
stevenj
This seems to suggest that these investors are doing some form of value
investing in VC.

VC doesn't work like that. In order to survive (and prosper) as a VC it takes
picking and investing in Apples, Googles, Facebooks, Amazons, Airbnbs, etc.

I could be wrong, but this feels like there's too much money chasing too few
good companies.

That seems to be true even in Silicon Valley itself.

------
sulam
Seattle, Boston, New York, LA (Snapchat) — sure. I’ve never had anyone try to
recruit me to join a company in Columbus, or any of the other places mentioned
here.

I’ll believe these regions are really building a tech center when the
companies there seem to actually be looking for senior tech talent.

------
ryanx435
I made the decision a few years ago to never work in silicon valley or
california.

it costs WAY to much to live there and the social/political landscape gives
off the impression of being some kind of authoritarian dystopia falsely
touting itself as some kind of social utopia.

not really interested in all that noise.

~~~
aantix
That's too bad. Do you love to program?

I don't think people quite get how engineering centric SF/The Valley is. There
is a meetup for _everything_ and every third person you run into is an
engineer. It's truly a programmers paradise.

And no where else do you have the salary leverage that you do in SV. If you
have an amazing background with a couple of niche languages, and the right
startup comes along that needs engineers with your skillset yesterday, you can
manage a homerun salary deal.

The engineer is king in SF. I lived there for five years. And will never
regret that time.

P.S. You can still manage good deals on housing in less trendy areas.

Hire a professional relocation assistant. Monica McGee does freelance and
corporate relocation. Money well spent and she helped my wife and I land a
great deals on a couple of locations.

~~~
jordanb
I love to program and I go to lots of meetups here in Chicago, but I also have
a lot of friends who are not techies and I have conversations with people all
the time that don't revolve around apps or frameworks.

