"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 . 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.
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:
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.
FWIIW I've known Byrne for years, and was shocked when he moved to the Bay Area.
Some of these companies could never have started in Boston, because finding capital would have been impossible. It isn’t always technological advantage that wins, but UX or biz model, or any number of other things related to execution.
Outright knowing scams? I'd agree with you.
Startups with no plausible business model, a bunch of buzzwords and hopes and dreams and no clear elucidation of why anyone would become their customer? Seemingly endless fields of those in the valley.
Bullshit abounds. And YC is supposed to be the smart-and-decent money.
TBH, one of the really nice things about living around here is that if I take a meeting with a funded company they almost certainly hit at least some bar of seriousness. All successful companies? Definitely not, but there is a lot less chaff for me to filter through.
You don't have to be running a scam to be a bullshitter. But you do have to have an undeserved and unwarranted sort of presentation, and you likely don't have much cattle to go with that hat.
Clinkle is a perfect example of this.
I'm really surprised to hear that said of the city where RMS wrote GNU while living in his car. Not my experience there at all.
(And if anyone who's reading this would like to chat--well, email's in my profile. Don't be shy.)
You don't even need to give me your contributions, just your users.
basically the opposite of what I've experienced in 15 years in tech in the UK, sadly.
Always thought Douglas Adams' "horrifyingly sunny" Ursa Minor Beta was based on California.
1. California has laws surrounding non-compete, making it easier to poach from the Fairchild Semis, Hewlitt Packards, Intels, Sun Microsystems and Googles of the era.
2. It's easier to recruit out of Michigan than into it. California wisely keeps its snow in one place: Tahoe.
3. Diversity. As you point out, there's a ton of H1-B workers, and SF and LA have sizeable preexisting communities. It's just easier to be an immigrant or hyphenated-American in world class metro areas that can support a variety of ethnic and cultural clustering.
4. Public transit. Depressingly, the bay area still has better public transit than most other cities. Yes, the big companies still run coaches in the bay area, but that works in part because of density you won't see in cheaper, lower cost metros. And if you're recruiting internationally, the ability to commute to work without a drivers license or car kinda matters.
5. Access to money. There's a decent number of banks in SF's Financial district -- Wells Fargo and Charles Schwab are headquartered here. VISA is nearby in Foster City, and there's a number of VCs on Sand Hill Road you won't find in other cities.
> _It's just easier to be an immigrant or hyphenated-American in world class metro areas that can support a variety of ethnic and cultural clustering._
The fact that there aren't as many african-americans in the bay area (outside of a handful of locales), doesn't make the GP's point invalid.
I'm an immigrant in SF, and there are few places in the US where I would feel remotely as comfortable. Even being "white" (latin american of southern european ascent) I have a noticeable accent. That accent has triggered abuse by an elderly woman right after the past presidential elections in an ice cream shop in Hayes Valley, SF. And that is without going into the countless cases of "involuntary micro-agressions" ("oh, we don't mean you guys", "you're one of the good ones", etc.).
Outside of the bay area the landscape very quickly changes to white picket fences with two large pick up trucks and white crosses in the lawn, towns with multiple churches of different christian denominations. All of this within an hour of driving from SF. I wouldn't feel at home, and likely not be accepted as part of the community in places like this.
Because there are so many immigrants in the bay area, that gives exposure to the native-born citizenry making them less likely to treat immigrants like the feared "other", as well as immigrants treating other immigrants of different origin decently, for the most part. I think these points are what the GP was referring to. The problem of lack of systematic racism and unequal opportunities for african-americans are still a big problem in the US as a whole, and in the bay area as well, but that doesn't immediately affects the entirety of the immigrant population.
At any rate, you should really try exploring and getting outside of the Silicon Valley bubble if you think the rest of the U.S. is just a bunch of racists ready to shout offensive things to you.
Even in rural areas in Texas and Florida, big portions of the population are Hispanic. It's not unusual at all. In many Texas honky tonks, you'll find quite a few Hispanics. Some of the top rodeo stars are Mexican and Brazilian. In fact, most of Southwestern culture, from cuisine to music to dance to fashion, is a blend of cultural elements from Mexican, German, Czech, and Pole immigrants.
I realize now that when I said "outside of the bay area" I didn't make it clear that I was talking about California in particular. People from outside the US, and even some inside the US too, have this image of California that is a pastiche of cliches, where the Golden Gate bridge is next to Venice Beach and the Central Valley doesn't exist. I've travelled throughout many rural areas in the US and have been treated in a lovely way. I remember a recent trip where my wife and I stopped for a quick snack in a rural bar, where we struck a conversation with the people working there were lovely. At the same time, on the walls there were plenty of "american patriot" paraphernalia in the vein of "we say merry christmas here, and if that offends you fuck you". That makes it harder to feel welcomed.
Why should that make you feel unwelcome?
I'm also an immigrant, and have spent a decent amount of time in rural America, and my point of view is that it's wrong to hold Americans to a different standard than you would people from whatever country you're from. My family is from Bangladesh. If there were people going around trying to remove "Eid Mubarak" from the public discourse, there would be a total shit storm. 90% of Americans celebrate Christmas--tolerance for immigrants does not mean that people don't get to publicly celebrate their own culture, their religious traditions, etc.
You have a point. The culture I grew up in has its own share of terrible things that _I didn't even notice_ until I traveled and lived in other countries. Which is why I critique much of my own culture as much as I'll critique parts of american culture.
Having lived in other countries I not only wouldn't be able to go back (because I find some pervasive things of the culture repulsive and unlikely to change any time soon), but it has also made it easier to notice the cliched patterns of hatred towards the "other", the same things that are said of mexicans in the US are said of the polish in the UK, people from some arab countries in France, the turks in The Netherlands (although they are far more "polite" about it), etc.
> _ If there were people going around trying to remove "Eid Mubarak" from the public discourse, there would be a total shit storm. 90% of Americans celebrate Christmas--tolerance for immigrants does not mean that people don't get to publicly celebrate their own culture, their religious traditions, etc._
Sure, there are plenty of sensitive subjects that can put you in the bad side of a culture, but the "Merry Christmas" crowd is the same as "Guns, God & Country" crowd which is in many occasions the "racism doesn't exist" crowd. I used that sign as an example because it's the one I remembered the most vividly, but it wasn't the _only_ sign.
That's an odd set of examples. The countries you named are just about the least racist places on the planet. I'm sure you can hear some racist things about Bangladeshis/Pakistanis in the U.K., but nothing compared to what you'd hear about various groups in Bangladesh or Pakistan! (I’ve lived in the US 30 years, and almost all the racism I’ve ever witnessed was when other Asian people would be like “oh it’s just us Asians here, let me tell you how I really feel about [people].”)
> Sure, there are plenty of sensitive subjects that can put you in the bad side of a culture, but the "Merry Christmas" crowd is the same as "Guns, God & Country" crowd which is in many occasions the "racism doesn't exist" crowd. I used that sign as an example because it's the one I remembered the most vividly, but it wasn't the _only_ sign.
Even the "guns, god & country" crowd in the U.S. is far more welcoming and tolerant than most people in the rest of the world. In the U.S., we fight over whether English should be the official language. In France, few people question French as the official language. (And can you even imagine suggesting in France that kids should learn Arabic in schools to accommodate immigrants? But that's very common in the U.S. with Spanish.) And the French are incredibly tolerant compared to Bangladeshis. Even among the "gods, guns & country" crowd I'm more welcomed (as a brown guy with a beard) than a white American would ever be welcomed into Bangladeshi society.
Your personal experience just doesn't square up with mine.
I lived in the US for 15 years and definitely got racist comments hurled at me. More so than my time in India and Sri Lanka.
Having said that, I do agree that in general, American's are fairly welcoming and tolerant. But people in South Asia are as well!
> than a white American would ever be welcomed into Bangladeshi society.
Never been there, but I do know that white Americans would be well received in many of the South Asian cities I've lived in/visited. They may not be treated the same way a local would but they would be accommodated and welcomed.
Perhaps it isn't "hatred towards the other" but rather love for their own citizens who share a similar cultural background, upbringing, and values...especially when "the other" comes off as ungrateful and in some cases even complains that the host country isn't doing more to make them feel more at home in a place that isn't their home...
> Sure, there are plenty of sensitive subjects that can put you in the bad side of a culture, but the "Merry Christmas" crowd is the same as "Guns, God & Country" crowd which is in many occasions the "racism doesn't exist" crowd
This is a very biased view.
I make a distinction between patriotism and nationalism, which gets conflated quite often. Criticizing something is something only done when wanting the target of criticism to be better.
> especially when "the other" comes off as ungrateful and in some cases even complains that the host country isn't doing more to make them feel more at home in a place that isn't their home...
What is the appropriate level of gratefulness to be accepted? What's the threshold to be considered part of the "host" society? When can I consider the place I chosen to live in and have my friends in "home"?
> This is a very biased view.
As stated, it is biased, stereotypical and cliched. There is a group of people that inhabit the center of that Venn diagram, the size of which I do not know.
During that time, I never once encountered a person who was angry or even remotely offended that I wished them Merry Christmas.
I have however encountered numerous people who were very upset that someone once wished them happy holidays.
And “happy holidays” is a passive aggressive thing to say. 90% of Americans celebrate Christmas. When people say happy holidays, they mean merry Christmas. “Happy holidays” is a form of erasure—a refusal to acknowledge Christianity without also acknowledging other religions in the same breath.
This is a bit much. I say “happy holidays” out of respect for the fact that a lot of people I know aren’t Christian, but still enjoy that time of year for whatever reason they choose, be it other religious reasons, nostalgia for family traditions they don’t believe in religiously, or just plain consumerism being fun.
That's technically true, but it's misleading. Religion is much more important in public life in the US than in most of Europe. For example, this kind of thing wouldn't happen in most European countries: https://thecaucus.blogs.nytimes.com/2008/08/16/tonights-obam...
I say this as someone who doesn't believe that what most people describe as separation of church and state is required by the constitution btw.
>And “happy holidays” is a passive aggressive thing to say. 90% of Americans celebrate Christmas. When people say happy holidays, they mean merry Christmas. “Happy holidays” is a form of erasure—a refusal to acknowledge Christianity without also acknowledging other religions in the same breath.
Happy Holidays has existed since at least the middle of the 19th century, and has been popular since the 30s--long before people cared about recognizing other religions. Trump even said it publicly fairly often over the years.
The family members I know who have a problem with the "War on Christmas" literally think that globalists are trying to force people to stop celebrating Christmas because that's what their media tells them.
This is the stuff that people usually don't have the balls to say in the real world -- only when they're shielded by a computer screen.
For instance last night a friend of mine posted a photo on Facebook of the two of us being out for a drink.
A woman who I have worked with in the past immediately messaged me on Facebook and told me I looked fat in the photo. (I didn't, and I'm not.)
Wtf? I'm sure she never would have had the guts to say that in person.
I think a lot of the worst preachy PC behavior policing, like telling people it's insensitive to wish people a Merry Christmas, happens mostly online or in echo chambers. The majority of people live out their lives being reasonably restrained and trying to get along with other people, then on the Internet they turn into a dick.
They've never experienced said online dickery themselves, so they don't understand the context. If they happen to be the kind of person who says happy holidays, it can feel like an attack on them instead of a response to someone else.
Similarly if you walk into a restaurant and the owner has posters on the wall that all say things like "You'll never make me eat meat.", it might come across as a little hostile to you as a carnivore. Despite the fact that it's a reaction against some online troll, not you.
Also I'm absolutely certain that the reaction against the "War on Christmas" is 10,000 times larger than the actual "War on Christmas."
I had a relative tell me how nice it was to finally be able to say Merry Christmas again the Christmas after Trump was elected. Seriously? Who was stopping you? Obama said it every single year in an official White House Christmas greeting video.
For what is worth, the only places I've seen this entire "merry christmas" thing being a problem has been as a backlash against corporations trying to look more inclusive by saying happy holidays in a period where there are multiple holidays being celebrated by multiple religions, but might just be my own filter bubble.
Ironically some of the Ultra hard-line puritan sects that colonised America where violently against Christmas
Sadly, we can't run the experiment where you start wishing people Happy Hannukah and measure how that goes.
Patriotism and cosmopolitanism can be good friends.
Nationalism and cosmopolitanism, not so much.
The "American paraphernalia" as described seems to have a high level of nationalism versus patriotism, which is very uncomfortable for outsiders.
My current definitions of patriotism and nationalism:
Patriotism -- love of country that most benevolent outsiders could approve of and admire.
Nationalism -- love of country (or tribe, "nation") that most benevolent outsiders would disapprove of and could not admire.
They need improvement, but the examples we're discussing seem to uphold these definitions.
They also fit with Macron's claim that nationalism is a betrayal of patriotism. For example, using the flag to divide instead of unite. Or using love of country to pick fights, start wars and bring destruction upon all involved.
"We say Christmas here and if you don't like it, fuck you" is clearly not a patriotic statement. It debases itself, its speakers and its object. It picks a fight and intends to create division, but it has damaged itself from the start by morally degrading itself. That's nationalism, tribalism, chauvinism. It betrays patriotism because it debases the spirit of the country which it claims to love.
A widespread "pay it forward" attitude will be exceedingly difficult in such a society, it seems.
Bending over backwards to make big displays that everyone should "feel welcomed" is just the culture of the city you're used to. And lets be honest, it's all for show. That doesn't slow down any of the social interactions which make it obvious when someone is unwelcome.
Here's a recent story shared by a friend who moved from CA to TX: He took his son (who are Indians) and another bunch of kids, two were Indians and the rest white to a water park in Austin. One of the Indian kids cut the line and moved to the front of the line where my friend was. He asked him why did he do that and he should not cut the line; the Indian kid responded "We are Indians and we need to stick together". This is in the so called liberal oasis of Austin.
I doubt if this frequent in the Bay area; sure you can point to PC culture and all that but this story is a sobering reminder of how segregated Texas espcially when you have kids acting like this.
To be fair to you, the perception seems to be widespread among residents of the aforementioned mega-cities, as well as non-Americans, and is fueled by the popular media. But I would encourage you to view the idea that these parts of America are backwards and largely bigoted with the same amount of skepticism you would to anyone making sweeping claims about the supposed deficiencies of a group of "others".
But OP is asking about other major cities like Atlanta, Boston, Chicago etc. If you think those are anti immigrant racist homophobic etc hellholes, you might be stereotyping quite a bit yourself :)
Edit: I realize now that I didn't specify when I said "outside the bay area" I meant California, as in "rural america is very close geographically to metropolitan america".
Nothing left to argue about then I guess :)
Spare us the elitism.
SF has tons of problems, including epic homelessness. Other cities are trying to deal with their unique situations under their unique constraints.
And the rest of California is just as bad. LA somehow has a reputation for inclusiveness despite being home to some of the most serious racial conflicts and explosions of racial violence in the last century.
That California is somehow radically more inclusive than the rest of the country is a myth, but one they are exploiting very well.
If all you do is focus on tech its really easy to miss the massive immigrant enclaves that have formed in the Bay Area and won't be driven out so easily.
At the end of the day, the workers the tech companies are competing for do care and that's what matters.
They don't seem to particularly care about the resulting demographics and occasionally get caught with insensitive assumptions like algorithms that fail to detect dark skinned people due to bad assumptions about how light reflects but they don't like the close-mindedness of xenophobes and homophobes.
> There's more to diversity than skin color. Immigrants from other countries look for people who can speak their own language, eat the same food, worship the same gods etc, and given that the bulk of SF's immigrants (in the tech industry) come from across the Pacific, these communities are much larger in SF (33% Asian) than Atlanta (3%).
It's not that people don't mix, it's more that they define their identities by multiple tribal affiliations. And "tribal" doesn't just mean race, it means anything from Mac vs PC vs Linux, to frat houses, to financial traders, to progressive academics, to LARPers, to indie musicians, to YC applicants.
Plus the usual political camps.
There's a patchwork of scenes and monocultures which don't seem to have much to do with each other - which is a different and less permeable dynamic to just being interested in something, or working in some field.
It seems like we're all playing the same game, just with different pieces.
You wouldn’t start the next big startup in Houston, because who will leave a fat gig at the oil company? NYC is a little different because it’s historically more diverse from a business POV. SF is different because tech spans industries.
Anyways, just kind of ranting, but yeah. SV's problems in tech somehow always branch out to be everyone else's problems that are in tech, at least media and high profile twitter accounts and bloggers would have you think that, but it isn't really so.
On a different note, there are two major reasons why you might consider Asians and Jews overrepresented in SV. Jews have historically had major populations in NY, California, Florida and Massachusetts and Chicago. Similarly, Asians have historically clustered in California, NY, Seattle. Asian populations have historically been much more spread out across the US, but some of the largest populations are in California, NY and Boston. Additionally, Asians and Jews have high proportions of individuals working in STEM fields (doctors, engineers, etc) because if you're being discriminated against, in math/science you are either right or you are wrong whereas if you choose a liberal art field like english, there's much more room for teachers/professors to discriminate intentionally or not.
Just wanted to say I love this line. I've always said that in California winter is opt-in, but that's even better :)
Yes but Michigan is also not known for widespread mudslides, wildfires, and earthquakes.
While that doesn’t seem like something that _has_ to be in California, it is already here and that’s not something you can just move.
As for why other cities have a hard time competing, it’s the same thing. If CA is perceived as “where innovation happens” then people will look for jobs here. They won’t even look at e.g. Kansas City or Charlotte or wherever, even if there are open roles there.
It doesn’t have to be this way and probably won’t be in ten or twenty years. Especially after this wave of IPOs, SF will likely be unlivable for most. If companies can continue to raise enough money to pay equivalently higher salaries, then the boom can continue a while longer. Otherwise, the numbers don’t make sense.
Regarding weather .. very hard to find same easy weather elsewhere in the USA. Seattle comes close .. and that’s why it’s also impacted, just to a lesser extent.
* most people will move somewhere because of a job, not because of the weather
* most people don't want even want to move to another city in the first place.
It's not a choice. 99% MUST move somewhere or STAY somewhere because of a job. Without a job, most people can't live.
Albuquerque NM, is every bit as good (i'm told) as the bay area, with 8 times cheaper housing. there are many more examples you can find in the US that have nearly as good weather.
*Albuquerque is a mile high, so its climate is much more like Denver than like Phoenix.
What's not so great are a somewhat dysfunctional and corrupt state government, second-class health care and public schools, and a high-tech community that revolves almost entirely around defense work that requires a security clearance. Many of these would be remedied if Albuquerque somehow got a significant influx of startups.
When a scene gets hot, there's always the danger of grouthink. There is far too much groupthink here. Much of it now is even the toxic kind. "Fear is the mind-killer." However, fear is only the start, only the beachhead. Groupthink is the main body, and it's the mechanism whereby the mind-killing starts to result in real world consequences.
When a scene gets hot, and there's real money and power to be had, it also attracts the sociopaths.
You could never get an exit if you were based in Chicago or St. Louis or Montana, etc.
Seems like what you are saying is no startups in Montana ever get exits - personally I think that's because startups seeking an exit end of moving to The Bay Area because of all the factors being mentioned here.
that’s where people make carpets
It's certainly not for everyone, but more and more successful tech startups seem to be moving to that model, and many new ones are using it from the very beginning.
It's a lot easier to hire, but operate and retain that talents is VERY different.
Not sure. I moved to the Bay Area from Germany, and while the primary factor was of course the job that was offered to me, the nice weather and the really quite stunning landscape were a factor. I'm still pretty happy if I'm on a hilly street in SF and see the bay, the Golden Gate Bridge, all that jazz. And SF itself is still quite a pretty city, despite its problems.
Yes, California rent ever up and on toward morning. Yes, NIMBYs are ever up and on toward morning. Yes, all of the other "Ever Bad Stuff" the same. I don't know where my new next breaking point is, but when it's there I'll find it and I'll act on it; I'm trying really hard to get started on that now, but factors are making that difficult.
My Point: The simple fact of moving to California is not necessarily vindictive of "everyone who does this is going to move around the globe for giggles as suggested or implied". Maybe I wanted California as a destination. Maybe you wanted California as a way-station. Maybe someone born in California wants to stay here ... or move out ... and/or move back eventually.
I have a doubt regarding "You move to California, You'll move anywhere".
Seattle is too dreary, slightly too white.
Austin is way too white and you are still in Texas (state politics don’t sound like a feels good)
New York is too crowded, but in my network this is the obvious next choice: we are told stories in sf that the homelessness is better, techies are in demand and treated well, dating is better for men.
LA is where a lot of my network wants to be but companies aren’t growth oriented, we would be stuck in traffic more of our lives, which is why a lot of us left jobs in the valley. My network is primarily techies 24-32 years old, so I’d imagine “growth oriented” may mean less to us in 5-10 years.
Of course this all anecdotal but still relevant and indicative that a certain portion of people who live in California (even transplants) will not just live any where.
Expected cons: prices and homeless, artificial buildings, landscapes and often face/bodies
Unexpected pros:every one was super nice, Julio’s, cool airplanes
Unexpected cons: as a person who has always biked and walked. So cal is made for cars. To get from one part of town to another it seemed like in some cases it was just a hw cutting through a valley. Strip malls everywhere - the price you pay for so many options (consumer wise) seems to be paving over some of the most beautiful land on earth - additionally - the juxtaposition of all the luxury stores, boutique hipster shops w army of homeless is just depressing to look at. Not really California’s fault, but SD kind of just made me get down on humanity
Not at all: for me personally, California was a bit of the final destination. It's the place where you have the best chance of being at the forefront of technology. And where you have the highest chance of finding your next job if the first one doesn't work out.
When I moved away from the East Coast to the Bay Area, it was already clear that it'd be hard finding another job in my field (chip design) if my current company would go under. That company has since gone under and over the past decade, a large part of our circle of friends there now lives here.
Talk about Silicon Alleys or Silicon this or that somewhere else is nothing new. I remember such articles in the nineties.
I do think things will slow down in general because of Moore's Law being close to the end. But that's going to be a problem for everyone, not just Silicon Valley.
Yeah, diverse VLSI design is pretty much dead everywhere except California.
Every other place tends to be a monoculture dominated by one company.
If California's state government mismanages things so badly that the costs imposed by being in California exceed the network benefits things could change very quickly. Until such a day, it is likely that they will enjoy a significant advantage in producing tech stuff. Location benefits are far greater than the pundits realise, some things are nearly impossible in practice if you aren't located in a key hub for your industry.
Sure take a job in MA or NYC as an engineer, but come back in 2 years when your employer is preventing you from working or building a company.
Microsoft, at least used to, aggressively enforce non-competes. I worked on an enterprise product at Microsoft in the 2000s and left to go work at Google, but I could not work on Drive/Docs etc
1.) Massachusetts recently passed a law significantly limiting non-competes
2.) I've never been able to find specific numbers, but my experience in Massachusetts is that they're far from universal. I've only had one in my career and that one was quite narrow. (That was EMC which was one of the local employers who fought hardest against the weakening of non-competes.)
I don't like non-competes and personally think the new law should have been stronger than it was. But, historically people jumped around employers like the Route 128 computer companies all the time.
even for an exempt employee, the MA law now requires 50% salary to be paid for the period the employee can't work.
i don't know if existing agreements are enforceable or not though.
A few high profile sackings of HR directors or General Counsels might help.
Someone without the latitude to hire, fire and delegate as necessary should NOT be exempt.
Voters think they can actually stop growth by stopping housing development. It's not the housing that brings people to CA, it's the jobs, especially jobs for immigrants and jobs for people outside of CA (in the US).
That's why companies like wework and regus are becoming so popular these days. I've seen a decent amount of tech companies signing deals with these companies to basically be able to offer remote working as a work benefit.
Of course, if employees don't want to use the remote working benefit then they can still live in the bay area.
They do those things because they have to compete with everyone in general. If employees want parental leave and will choose the company that provides parental leave over the company that provides <savings from not providing parental leave> in additional salary, companies will offer parental leave regardless of what California requires. And likewise if employees preferred the additional salary over the parental leave, they would provide that in a place the law allows it, even if that isn't allowed in California. But tech employees frequently prefer the flexibility to the money (because the money is still pretty good regardless).
The exception to this is things like CARB where companies will design a car to meet California's fuel economy requirements, but then that model exists and can be purchased by anyone regardless of whether they live in California. If something has a fixed cost, the law in one place requires it, and that place is important enough to justify paying it to operate there, it gets companies to pay the cost. But that doesn't really apply to variable costs like employee benefits.
And I know my salary and benefits are abnormally good because the HQ is in the bay area. Local companies don't give as much.
I feel like I got the best draw by working for a CA company outside of CA.
You just stated the reason why the tech companies are there. Feedback loops are a real thing that happens.
As a result of all the tech companies being there, the tech VCs are there, the recruitment agencies are there, etc, etc. That’s just how this works. To see the original factors you’d need to look at the history of the region, but beyond a certain point these things become self sustaining.
Sure there are forces in the other direction, and some individuals or companies might find them compelling, but specialisation works.
I for one find it easier to change my environment than to fight my environment.
2 flaws here:
1. The majority of those h1b workers are at like tcs Wipro and Infosys, not conventional sv companies.
2. Being close to technical universities is good if it gives you a recruiting edge, even if only some of your employees come from that school.
Who do you think those companies contract out to?
It's not a straightforward question, and I don't think any answer is entirely satisfying. A couple of cents though.
1¢ - Industries like tech are a cultural phenomenon, like a music industry or art industry. You can't just decide that Warsaw will have Seattle's grunge rock scene. It just grew there as a cultural outgrowth. It can't be planted elsewhere with predictable results. The thoughts and little decisions made by people are influenced by their cultural context.
2¢ - For the best (in business terms) tech companies, currently, costs like salaries mean nothing.
Twitter and FB were Twitter and FB with 1% of their current visits and employees. The extremely profitable and businesses enabled them to hire tens of thousands of people and spend tens of billions per year. We're these people necessary to the ad part if the business that employs most of them?
I suspect that they aren't. IE, if it turned out FB could only make $40bn or $8bn pa (currently making $80bn) from their site, they would manage to produce the same fb with few compromises on a much reduced budget. This isn't BMW, where operating costs and economic output (the number of cars) are tightly related to eachother.
If google or FB want to increase profit margins, they can, easily, by a lot. They would if they needed to, but they don't. Capital markets like the idea that they are reinvesting for growth and capital markets don't have any better ideas for where to invest profits anyway.
With no incentive to cut costs, why move somewhere cheaper?
There are multiple reasond - security from layoffs or bad workplaces, job-hopping is the defacto way to raise salary, and it also keeps them having to compete for them some.
A middle of nowhere job sets off "it's a trap" alarm bells consciously or unconsciously as an isolating move.
That said there is a lot of range between "most expensive areas in California" and "cheap one company towns".
I suspect sprawling out to network edges would maximize benefits for costs similar to Palo Alto once being the cheap option.
Having great technical universities doesn't mean most workers will come from there. Obviously a majority of employees do not come from these schools. But a plurality? I wouldn't be surprised.
How it came to be is related to a variety of factors.
But it has incumbency in some things and will be impossible to compete with in some ways.
Better for regions to develop competencies in which they have some kind of advantage. Alberta makes some kind of specialized natural resources extraction tech. Makes sense!
Indian and Chinese immigrants also play a big role. Stuck on backlog these are cheap employees who are desperate for employment because their H1b is tied to they having a job. These people will work for 60 hours a week for a salary of 20.
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.
I live in Castro, but obviously like many spend a lot of time downtown for work.
Sure, there are families in the outer neighborhoods, but it's different in the sense that those are mostly families that have lived in SF for generations. Good luck trying to raise a family as a newcomer on the reported median household income for SF of ~$78k.
Definitely true, SF really is unlivable on a median income and that is a continual frustration I have.
1700s-present France is not what comes to mind when one says the words "stable and prosperous".
What does come to mind is executing a bunch of people then spending 150yr trying to figure out the best way to replace them.
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.
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.
Let me explain:
* Fallacy 1: First/third world = Creditor/Debtor
When the U.S took over, everyone started accumulating dollar assets, meaning they were creditors to the US. How did they achieve this magical feat? It's pretty easy, they just made their currencies a bit undervalued relative to the currency of the core. Nations can trash their own currencies pretty easily -- there is only a political downside, but if you can convince your countrymen to tighten their belts in exchange for being a creditor nation, then all the better, especially if you really need a reserve with which to buy foreign inputs. In other cases, they were not very democratic to begin with, so it wasn't an issue.
This is also true if you study local financial flows within a country -- a major urban area will be a debtor area and the poorer, smaller region around it will be a creditor to it, which is just another way of saying money flows out of the city and consumption goods flow into it from the land around. If you compare how much a person in a city consumes per day versus how much a person in the periphery consumes, we in the core consume quite a bit more. Restaurants, bars, custom shoes, concerts, museums -- we really live it up! How can money just flow out of a city without a printing press there? Because the periphery re-invests by purchasing assets in the core, recycling the money. So if you live in a farm or small town you will have a retirement account with stock or bonds that are claims on companies in the core -- the money you save is being sent back to the core rather than being invested in some other small town -- thus the periphery is a creditor to the core. This is true for cities as well as nations. This phenomena of net trade inflows to big cities was even true of Ancient Rome and Ancient Athens, but there it was pretty obvious that rather than having the farmers invest their money in Rome stocks, they were just taxed the loot was brought into Rome. The developed urban core is always a consumption sink while the more rural periphery tightens its belt.
This does not mean that the core is third world and the periphery is first world -- it means the opposite!
* Fallacy 2: strong currency = export power.
But you often hear people demanding both a strong currency and being an export power. And sometimes they throw in first world and net creditor to boot. Even though these good things are the opposites of each other. You have to pick and choose -- do you want to export a lot with an artificially weak currency, or import a lot with an artificially strong currency? Do you want to be a financial hub and thus a debtor or a smaller node orbiting the hub and thus a creditor? You can pick and choose what you want, but you can't have it all.
Here endeth my rant on the fallacy of Equality of All Good Things.
Except for high personal income tax, school funding, cost of living (food costs, utility costs, etc are all heavily affected by public policy), regressive consumption taxes (like the fuel tax), high sales tax, poor public transportation, and so on.
It certainly doesn't feel like California is trying to optimize for people.
Direct democracy has the Native Sons of the Golden West building thier economic wall around the state ten feet higher every election. I don't see any way out without federal intervention.
Maybe I just wasn't paying attention before, but I've read a lot about it lately, especially in the context of New York being the next Silicon Valley. I feel like this was especially true when Amazon was considering it as a location for HQ2, but even now that it's not I keep seeing NYT articles about NYC being #2 in tech (ignoring Seattle, for example) and how it's definitely gonna surpass SV at some point because it's "a so much better place to live", has "so many more creative professionals", etc. This article doesn't say it outright, but it kinda alludes to it making NYC the primary example it compares The Bay against.
Here's one that is 11 years old:
Here's one that is 14 years old:
Here's one from 24 years ago:
I'd like to see numbers by per-company and per-employee funding, adjusted for purchasing power.
That is, IMO, very dramatic.
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.
Nobody wonders at Wall Street being a center of finance after some 18th century traders met under a buttonwood tree, nobody wonders at Hollywood continuing to be a center of film and TV production, and nobody should wonder at Bay Area being a center of software development.
Somewhat incidentally this is the major theme of Tolstoy's masterpiece War and Peace
Remember, most things are hard to explain until you know the truth. That doesn't mean the truth is super complicated.
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).
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.
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.
(See the column of the Census’ supplemental poverty measure.)
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.
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.
Most commentors here have some kind of conceptual idea about what poverty is like, or see West Oakland town houses sometimes from BART, or have ideas shaped by homelessness in SF and occasional conversations with colleagues and friends - the reality is that there's a whole ton more people out there living on much less, and it's a different world entirely, especially when you see it in person.
In some ways it's probably less dangerous than people would imagine, but it's also shocking and nearly third world.
What do you class as great wealth? Scandinavian countries seem to do OK.
> 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?
right but if you want a halfway decent one you have to compete with FANG and pay 300k a year.
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.
Why do we have regular discussions on how hard hiring in SV is, then?
I work in recruiting (software salespeople), and this is by far the best market in the world for hiring in that niche. The talent you get here is significantly better than anywhere else. I make the analogy that it's like hiring for finance in London or New York. Outside of a global city, working at Goldman Sachs is impressive. However when you're hiring in NYC you can get much more granular - getting someone who's worked in the right team, on the right sort of deals etc.
There are plenty of actors in the world, but Hollywood is where entertainment deals are done. We'd laugh at someone trying to hire the worlds best Oil & Gas team in San Francisco. These are the big leagues.
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."
"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."
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?
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.
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.
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.
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.
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.
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.
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.
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.
The entire reason for why there's a problem is because the current state of affairs is awesome for some people (existing property owners) and bad for pretty much everyone else.
Saying it needs to be a state law is just setting up a different variant of the same intractable problem.
Who's going to care to lobby more when such a law is proposed state-wide in California? A bunch of property owners in SF/LA sitting on a million $ in assets, or potential future California residents who don't even live there because property prices are insane now?
The one thing that should perhaps be legislated is some up-front disclosure in employment offers of typical costs of living in the BA. Many prospective employees from elsewhere will not quickly realize that (absurd as it seems) you can't raise a family there on $200K/y.
Also people who own houses want the cost of houses to be high.
High home prices mean I can't move my family without incurring a substantial jump in property taxes (even if it's to downsize once the kids move out).
I'd also like my kids to have the option to live here without too much financial difficulty.
Houses are places to live, not investments. It's in all of our interests if they're as affordable as possible everywhere instead of pushing the equivalence of an arms race.
Prop 13 creates many artificial barriers to selling property and other market distortions, and folks not downsizing when they'd like to is one of the crazier ones.
The Bay Area has two things going for it that will make it hard to replace.
1. Non-competes are unenforceable. This means that the most talented engineers like working here because they can job hop with ease where in other locales they are locked into jobs working for lousy bosses.
2. Many of the most talented venture capitalists and seed investors like living here. They like it because it's pretty, you can escape the city in no time and be in nature and it's low density. I doubt the kind of people who live in Atherton or Woodside would pick up and move so easily to L.A or Manhattan. The Bay Area with its geographical boundaries provides a pretty good integration of ultra-rich neighborhoods with the middle class workers that make up the bulk of tech's working class.
Those places have COL problems as bad or worse than the Bay Area. At least Singapore (and to a lesser extent HK) deals with it via lots of public subsidized housing.
Tokyo rents basically haven’t moved in the last 30 years and the population has added 1.5m people. If you want to work in NYC there are many, many affordable options within 1 hours commute.