> 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.
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.
(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 . Some other cities in the area, like Mt View, Sunnyvale, Fremont, are fairly pro-deveopment.
You don't need new construction for a Facebook developer-drone to move out of the Bay Area and an entrepreneur from Kansas to move into their apartment.
So there's no reason to assume is is anywhere close to 1 entrepreneur leaving for each 1 arriving. And we're back at the original point: without any numbers who knows what is actually happening?
What's more, even small differences become big when you compound them across the total population and several years. Say the ratio is 1.02 arriving for each entrepreneur leaving. And 1,000 leave every year. After just five years you've got 40 new companies. Many cities would kill to have 40 new companies founded (relative to their baseline formation rate).
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.
> 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.
Basically SF is to startups as Nashville is to country musicians or Los Angeles is to actors.
It's also not all your 45%. You have more competitors for that investment, so you can expect a smaller slice of the pie or a reduced chance at getting some pie.
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.
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.
You could stop all development, fire every expensive person apart from some basic cheap support staff, and be wildly rich in a couple of years just from that.
> be wildly rich in a couple of years
In a couple of years you'd be a millionaire and richer than virtually anyone in the world. And in a few more you'd be a multi-millionaire and richer than virtually any American.
If you want to carry on working for 10 years to try and become a billionaire, which will almost certainly not happen, go for it.
No reason to assume I don't get something here. Learn to leave room for your own ignorance and blind spots.
600k/y doesn't make you a millionaire in a year or two, especially in SV, no matter how hard you try. And it certainly doesn't qualify you as "wildly rich".
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.
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.
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.
While you're right that talent and capital are important, it's also true that no place on the planet has more capital and software talent than SV. So you're never going to beat SV measuring only those metrics. The challenge of an entrepeneur who wants to found a startup outside of the Bay area is to pick a location that is beneficial in other ways while not sacrificing too much in terms of capital and talent. I'm not too sure about the local capital in Tallinn (not that you necessarily need to raise money locally) but I do know it has a pretty strong developer community by european standards, maybe in the top 5 in europe. And it also excels in terms of government support for entrepreneurship and, afaik, local cybersecurity talent. So it's not just a cheap place, it's a cheap place that also has basically every other thing that makes founding a software business attractive with the possible exception of capital.
Other cities I've been considering - Lisbon, Riga, , Bucharest, Berlin, Prague, Dublin. Mostly was just looking for cheap places with developers that are in the EU and not too hard to immigrate to. Prague in particular seems like a pretty big nexus for EU developers and it's pretty inexpensive. There's undoubtedly many other cities that fit well in this category, I just haven't heard of them. But Tallinn punches above its weight in terms of software presence and it's basically the easiest to immigrate to so I focused on that pretty early on in terms of good places to found an EU-based company.
There was a decent overview of entrepreneur passport options on here the other week.
This one was left off the list for some reason (I have a pal who uses this visa, though he's in Ukraine a lot of the time):
Thanks for those links, super helpful, didn't know so many countries offered startup-specific visas. In that google doc spreadsheet it's missing some important investor visas (the startup visa for Estonia looks cool but since the investor visa has such low capital requirements, without digging deeper, it still looks like a better deal). And do you know the name of the program you are referencing with Wroclaw? Does Poland have some special program where you can sponsor Ukrainians' work visas there?
Just curious, what about Lisbon is so attractive to you? I know Spanish and can read most basic Portuguese but still was mostly ruling out Portugal due to what I perceived as too-small tech and entrepreneurial communities. Spain and Portugal seem like great places to work on an MVP with a couple other cofounders but I had kind of ruled them out for a place to really launch.
There's a host more investor visas of various kinds and "if you feel like it" visas. If you're a US national, you can basically stay in most EU countries if you want to. Each one will be a little different, but ultimately you have to work pretty hard to get tossed out of the EU. Some of these visa regimes are informal, like "OK, you seem like a nice guy and you're not going to go on the dole here." This is the kind of info that you WON'T get from concierge residency guys like NomadDude -he's trying to steer people towards things which he actually provides.
Lisbon: I like the food, climate and architecture better than Poland, and I have more friends who live there. Pretty simple, really: people on the ground trumps any information you're going to get on the internets. The projects on my horizons are all fairly high skill (ph.d. in math), low head count projects, and it's a lot easier to convince high skill people to move to Lisbon than Wroclaw or Lviv. There's also a decent nomadconsultant scene which has interesting social aspects. If I needed head count for a Bay Area type startup, I'd probably go straight to Ukraine, as I got people with top connections there. It's a beautiful country, and lots of the talent wants to stay there.
It practically never snows in SV.
What friends of mine are doing is "nearmote" everybody still in a one or two our distance, so you can meet up on relatively short notice and can schedule regular team meetings, but also have benefits of remote.
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.
It's funny that the cannabis industry in California is actually trying to slow down any regulation allowing THC-free, hemp derived products.
Exodus seems to be accelerating.
Fewer people to pay for California's absurd public sector pensions and expensive government services -> higher taxes on the people remaining.
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.
No need for this kind of comment on here.
Yes. I agree with you. I was backing up what nrb was saying and that gesman was wrong. One effect is reduced diversity.
"hellllllooo 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."
Which would sound pretty awful and condescending in context. (I imagined the voice of Miss Martian saying this.) However, that's your username, not a part of your comment.
There's one in Milpitas.
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.
I'd love to see a startup culture of note form in places like Warsaw, but it's unrealistic to expect cost of living alone to bring brand-new startups there.
Looking at places like Austin and Utah (Silicon Slopes), the local scene developed first- now more outside money is coming now that the 'existence proof' that it can be done well in these places has been established.
I think the necessary (but not completely sufficient) ingredients are lots of young CS grads who would like to stick in the area and a strong local entrepreneurial business culture. That will eventually create the base for successful startups and hopefully get a couple unicornish companies to blaze the trail.
The answer is that immigration is very difficult. I couldn't find any freelancer or entrepreneur visas for Poland, so it looks like it would be impossible for me to relocate there and work on my own startup.
I'm making it even more difficult for myself, because I would prefer to build a small sustainable business where I don't take any traditional investment or go through an accelerator. I also want to have a fully remote team, so I have no need for a physical office or local employees.
Thailand seems to be the best option for now, and it's not through any government program. I'm actually employed by an agency called Iglu , so I have a business visa and work permit. However, I don't have a boss, and I find all of my own freelancing contracts. My startup also hires Iglu for development services, even though I'm the sole developer, so I am technically working for Iglu while building my own product.
I think it's a really great setup, and it makes everything very easy, stable, and legal. But I would really like to find some similar opportunities in other countries.
I started one and it takes 5 minutes from a government website.
After that you can stay anywhere in Europe for 6mo./year without a visa, which includes Poland.
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.
Left-wing causes include smearing Poland because of its supposedly right-wing government (some Poles don't agree it's right-wing, actually).
As for your link: what are LGBT rights? It's unconstitutional to treat any citizen differently than the next in any western country, so there is nothing to whine about. LGBT rights are LGBT privileges, and Poland has rightfully decided to not let PC trump common sense. Sorry!
The Bay Area is popular because that is where the VCs are.
but, does that extra time result in success? I mean, if it takes 4 times as long, then doing a better job of building a higher quality product is probably a losing strategy.
- talent pool
(recent anti-LGBT sentiment, anti-refugee/migrant sentiment, anti-EU sentiment and general right/nationalist movement uptick)
OP is Pole (from his profile), and some Poles who left the country are bitter about their own country and campaign against it.
Did you post this to start a flamewar, because you love campaigning against your own country, or just to spread misinformation?
This comment should be flagged.
> because you love campaigning against your own country
Democracy works best when discussion is open.
The USA's president has been saying a lot of questionable things, but I don't see anyone fleeing SF..?
I'm just amazed at how much misinformation and exaggeration one can decide to spread.
Those were original discussion goal posts. Criticizing Trump or democrats based on facts is neither "campaigning against own country" neither misinformation.
> The USA's president has been saying a lot of questionable things, but I don't see anyone fleeing SF..?
There is more of this:
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.
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.
I can tell you that Miami would definitely like you here, even our Mayor cosigns: https://twitter.com/FrancisSuarez/status/1100425644968738822
Note: what you see in the pictures are not built yet
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.
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.
Companies are getting funded & acquired. Engineers are building cool things and meeting regularly. Plus there are plenty of LatAm HQs here.
You should come back & visit, I’d be glad to show you around and introduce you to the people building real companies.
I’m also happy to connect you, just drop me a line.
Great except for all the hurricanes, sweltering heat and high humidity, and cultural wasteland.
Not that SF has much culture compared to world-class cities like NYC, London, Berlin, or Amsterdam, and Silicon Valley is even worse.
California also has earthquakes, so maybe it evens out.
Developer pay relative to the greater population and cost of living is also really good compared to a lot of places.
Email me at firstname.lastname@example.org
If you are doing a startup where you are a B2B tech company that sells to other tech companies, the bay area is great.
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.
not disagreeing with you, but this article seems to be about the ones that do involve millions of dollars of seed money
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.
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.
But still nothing at a level to suggest the tide turning away from the big coastal cities.
Do you expect founders and investors to ignore the cost of living reality in Nowheresville just cause?
But Even at half or 1/3 the salary, you'd still come out ahead in many areas across the country, if you have a family of 4. In SF, it's not just the extreme housing costs, but also the 3K-4K/month day care costs (if you can get it), and all the other COL.
You've discounted the value of that house.
You forgot that the house might be on more than an acre of land, with a stream and some forest.
Your comparison isn't equivalent at all. Add some land, and suddenly you aren't coming out ahead. You can't even pay your bills.
I know some companies do this, but I can't imagine it's a practice that will continue once remote work becomes the norm as it makes little sense.
To an investor it does.
Human history is filled with stories of seeking cheaper labor.
Have you not been following the anxiety over offshoring? Why did all that manufacturing go to China?
Cities in America used to be the centers of manufacturing and then it moved to rural areas. If you research it you might find like I did that cost of living was cheaper in rural areas. And a lot of businesses decided moving to and building a new factory in a rural area, which happens infrequently, and hiring more people who worked for less was cheaper over the long run.
SF is one data point, but folks who were already priced out there are in Seattle and Portland, etc., pricing out others who have to go somewhere.
Maybe the first generation of workers will make bank due to lack of capable workers, but others will join the trend of moving, rural populations of folks capable of this work will grow and work for less.
I don’t have concrete numbers around how soon or how many people will move, because I can’t predict the future, but the general pattern has happened over and over in just 150 yrs.
And the parallels to ancient empires conquering a new land and enslaving the people to grow the wealth of the king or whatever mean the idea goes back further. It only got wrapped in our contemporary language of economics in the last 150-200 years.
Software development is also unique in that it's one of the few roles that works really well remotely. I'd say most developers are even more productive remote than in the office due to the need to sustain mental focus in a way that's difficult with a lot of distractions.
But the future is not going to be something like hundreds of thousands a year in a town where average of cost of living is like $30-$40k.
It’s quite possible I am being too cynical. But people spend all day carefully measuring what we should make to insure the balance isn’t too tilted in our favor. I doubt they’re going to miss what seems like an obvious reality to me.
Most companies would stop hiring remote if they had to pay SF salaries - that's just the fact.
I bet the drinks in SF cost more so they actually do add more value there. You're talking about on-premise work and I'm talking about remote work. If you have a great dev that starts working remote in NY then moves to Kentucky would you give them a pay cut? Of course not, they'd still be super valuable to the company and you'd want to retain them.
I will admit you have a point with the NY>Kentucky example. In that situation, the company may pay them the same, but if the company hires two equally talented devs, one in NY and one in Mexico, there will absolutely be a difference in their pay. If the dev in mexico moves to the US, their salary also goes up accordingly.
This is precisely why technology companies cluster in hubs - not just SV but Austin, Denver/Boulder, Seattle, etc. and aren't more or less evenly distributed.
That aside, salary is determined by supply and demand, not solely by value-added. Value-added is a factor in labour demand, but it can be totally swamped by other factors.
I guess it's not commonly known but SF by population count is only 10% tech. The other 90% is mostly anti-tech. There's even protests against more tech moving into the city and the occassional attempt at anti-tech regulation (no bus laws, no free lunch laws, etc). i think they succeeded with the no bus laws: I know at least one startup that was shut down for providing bus service for workers.