I am not in the bay area, in fact I've never even been to the West Coast. So I am going to ask what may seem like a stupid question to some of you.
I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? It's a successful company with a great product - that I'm sure many people would like to work for. They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? And they could pull a mini-Amazon and get some sweet tax breaks to boot. Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere?
Moving offices is really disruptive to people's lives, and causes a huge amount of turnover in your workforce. A brief excerpt from Peopleware[1]:
"The typical person being moved today is part of a two-career family. The other half of that equation is probably not being moved, so the corporate move comes down hard on the couple’s relationship at a very delicate point. It brings intolerable stress to bear on the accommodation they’re both striving to achieve to allow two full-fledged careers. That’s hitting below the belt. Modern couples won’t put up with it and they won’t forgive it. The company move might have been possible in the 1950s and 1960s. Today it is folly."
They also cite a case study of a major project at Bell Labs which was moved from New Jersey to Illinois. The authors interviewed the former manager of that project:
"I asked him what he saw as his main successes and failures as boss. “Forget the successes,” he said. “The failure was that move. You can’t believe what it cost us in turnover.” He went on to give some figures. The immediately calculable cost of the move was the number of people who quit before relocation day. Expressed as a percentage of those moved, this initial turnover was greater than the French losses in the trenches of World War I."
(FWIW, that's just one of many insights from that book - I highly recommend it.)
A move strategy could be as simple as, opening up an office in a cheaper location:
1. New teams are created at the new location.
2. New hires on existing teams are placed at the new location, with exceptions if teams have a strong need to be in the same place.
3. Make it clear that you'll help people relocate to the new office if they choose to--some people will take you up on it.
Eventually, the original office will shrink and remaining staff can be allowed to work remotely (which should be a big part of a culture anyway, IMO).
Turnover is already high at tech companies, but in this case your turnover facilitates the move--as people leave at the old location you replace them at the new one. There will still likely be some turnover caused by even the slow move, but that turnover already exist with any move--even the move to south SF will probably cause some turnover because the location is just less convenient for some people.
There're network effects between teams in a big company just like there're network effects between startups in a big city.
As others have mentioned, the big tech companies are all actively doing this. Nevertheless, it's not really taking. I know 3 people who moved from Google's NYC office (the 2nd largest) to Mountain View because all the top-priority projects were in Mountain View. As a general rule of thumb, you want to be where the executives are, and the executives are going to be at headquarters because a.) that's where their home is and b.) that's where all their most productive people are.
There's a steady conveyor belt where young single folks move from satellite offices to headquarters when they want to advance their career and then older folks move to satellite offices when they have kids, to be with their families or enjoy a better quality of life. This is healthy in the sense of maximizing happiness for everyone, but it means that the most ambitious, highest priority projects and most talented people are going to cluster at headquarters.
(As a side note, I feel like not enough people understand that the cost-of-living in SF is an effect of the wealth that's been brought into the area by the tech industry, and isn't just a random fluctuation. If some other metro area suddenly had a large concentration of successful companies that paid high wages, the cost of living would go up there too, until COL-adjusted salaries equalized peoples' preferences for living there.)
A side not to your side note, I think you’re only half right. zoning and nimby-ism are largely creating artificial scarcity in terms of housing supply. SF cost of living gets squeezed on the supply side and demand side. If some other metro area got hit with high demand, presumably it would not have the issue creating supply that SF faces, and thus overall COL wouldn’t be as high.
This is an excellent summary of the situation, and reflects on my own career path. I moved from Austin to SF cuz I'm not-married and thus can keep my COL reasonably low while working on high impact, high visibility and frankly, high fun projects. But, its not a lifestyle I would want to keep when I will get married and have kids... a less demanding job + lower COL seems incredibly reasonable to me.
Any examples of a big company actually doing a gradual move this way? It doesn't seem like it would work.
Satellite offices are tough to do right. It's very hard to build trust between individuals at the different offices without regular face-to-face contact. In the absence of this, you end up with negative relationships between teams at different sites: "The team in Springfield doesn't care about quality" vs. "Those Shelbyville engineers are always dragging their feet and never launch anything". Communication bandwidth between sites is also much more limited - you need to minimize how much a team at site A needs to communicate with teams at site B to get their job done.
Another issue is how to get the satellite office going from a cold start. Do you re-assign projects that are already being worked on in your existing office? Most of those employees aren't going to move, and they're going to be upset that their project was yanked away from them. You've also set the project up for failure because everyone on the new team has to ramp up on the necessary domain knowledge from scratch. So you think "Ok, I'll leave existing projects at the current office and start new efforts at the new office." Now you have an office exclusively working on things that were deemed to be either too low-value or too risky to work on before - not a recipe for success.
Leadership is another major issue. If your senior leadership moves to the new office, they're going to be constantly flying to the larger original office to supervise things there. More realistically, they're going to stay in place, because their time is better spent at the bigger office. This creates problems as leaders move up the ranks at the satellite office, because eventually they hit a point where their career stalls unless they move to the "head office". Teams at the "head office" are at a permanent advantage in project selection, etc. due to proximity to senior leadership.
In short, it's not as easy as your list makes it sound, and it's particularly difficult to grow a satellite office to a similar scale as the original office.
Almost every successful medium- or large-sized company has done this. As they grow, they open new offices, which they seed with existing staff who are willing to either permanently or temporarily relocate. Most of the time those offices have specific areas of focus, at least when they're starting out. That way they minimize cross-geographic dependencies. To pick a totally non-random example, Stripe has followed this model. It's evident when one looks at their job listings: https://stripe.com/jobs/search
By growing any one of their regional offices, they could move their headquarters. Toyota recently did this over the course of several years. They announced the relocation in 2014, but didn't officially move the HQ until 2016. The planning and execution spanned years before and after that timeframe as well.
A sizable portion of that 25% were people who decided to retire (early), but yeah...it was massively expensive. They also offered very, very generous moving packages to everyone who did relocate along with early retirement packages for those who stayed.
Yeah, I specifically meant the "grow a new satellite office into a new HQ" transition. I know companies open satellite offices all the time, but moving your HQ to one of them is much less common.
Lots in the financial industry over the last 3 years in London, due to Brexit. Soft moves by letting one office shrink due to natural decline from people moving on and not rehiring in that office, but in another elsewhere.
Bay Area companies are actively trying to do this. Stripe's Remote HQ is an example, but so are the emerging second HQs in Seattle. But the fact remains that there is a huge glut of talent in the Bay Area, and if you want to recruit from the FB/Apple/GOOG HQs, you need a strong Bay Area presence.
South SF is far less accessible than Stripe's current location in Townsend St (Soma, SF).
I'm curious to see how many people leave because of this move. Tech workers in SF tend to live in Soma or the surrounding neighborhoods (FiDi, Mission, Dogpatch), which means for a worker without a car, their commute was previously a short bike, Muni, or Uber Pool, whereas to get to SSF they'll be looking at this (to get to a BART station), a BART ride, and probably a shuttle at the far end, because Oyster Point isn't near transit.
I worked for a company that moved its HQ (due to an acquisition) to Brisbane -- slightly closer than South SF -- and ended up buying a car to commute, because the walk + BART + shuttle combination took so long.
This. The major reason why I live in SOMA, and put up with all the significant downsides of that neighborhood, is because it means my commute is very short. It also means I have significant job and networking opportunities within a 30 minute _walk_ from home.
When I was last looking for a new role, I didn't even consider anything outside of SF.
I mulled over this for a while and figured that I should be grateful.
This whole situation appears to be lifting IT salaries all over the world. I'm currently in the middle of switching jobs and found that I sneer at positions that pay less than ~$50k (in Poland at that) or don't offer fully remote work.
Polska! I am Polish (3rd gen removed) and was recently in Krakow for a work/fun trip and fantasized about moving there for a year or so and working remote for a while to learn the language and explore the country. Could keep my Bay Area salary as long as kept US hours for conference calls etc. We hire remote IT as well- lmk if you're interested in connecting!
Hey! I'm in Krakow, personally I'm React/C# guy, buy have couple Java friends that would love to work fully remotely. Can give you my contact www if ur willing to network
I remember when Stripe emailed me as a job candidate. At the time, I was sitting in the bar directly behind their office, and basically replied that they (one of the Collison brothers) could come right now and have a beer with me. (I was sitting in the Rose and Crown, and they were in the office behind the Wine Room on the same block.) *
> why wouldn't established companies like Stripe just ... off to another city entirely?
Because the employees they want to hire live and work in Silicon Valley. There's a lot of advantages to the area: Good weather, good cultural actives, good jobs...
Keep in mind that companies loose people when they move within the same geographic area. (For example, someone commuting over the Golden Gate bridge might decide to leave because now the commute is much longer.)
* By the time I screened with them, I had a job offer in hand that I really wanted. (This was long before Stripe became successful.) I lived a few blocks away, so I asked to screen in person, and then decided to take the job with the other company. I don't even know if they would have hired me!
This specifically. I think that for a lot of tech workers the valley is a great security blanket. They know if their current gig falls through there will be another one waiting just around the corner. No need to uproot and move. It's actually sort of strange on the surface. There are a lot of engineers in the valley who move around to various companies fairly frequently which looks on paper like they don't have a lot of stability, but in reality the sheer number of available jobs is providing that stability, even if their longevity of employment with any one company does not.
I'm sorry you're getting blasted for your opinion, especially since it's one I share.
I LIKE seasons. I LIKE snow. I LIKE watching leaves fall in the autumn and rebirth in the spring. I LIKE sweaterweather falls and, cold winters, and hot summers.
San Francisco's climate has "mild," going for it. It seems to be permanently pants and tee shirt weather (but don't forget your jacket). The summers (sept/oct) are nice, but limited for what you expect in California. It's frequently windy when the sun is shining, and the fog is constantly sitting nearby, threateningly.
The best you can say is SF's weather is different, but I certainly do not understand the hype.
I also enjoy the seasons, especially as a way to subconciously tick off the years, but I also understand the appeal of SF.
SF's weather is a steady climate without much variance, where it typically only rains two weeks of the year. No freezing temperatures, no heat waves, just a cool climate that doesn't have much variance.
South Bay is similar, but warmer and almost perpetually sunny throughout the year too.
Depends on personality, but compare it to other climates where for parts of the year you can't comfortably go outside. Northeast you get snowed in regularly, 40 straight days of darkness and rain in northwest, 90+ days of 100 (ish) degree weather here in Austin.
Yeah, this is my definition of good weather: I want to be able to go ride my bike outside without being cold and miserable (wet!) or uncomfortably hot. Even the best of clothes only go so far with the former and there's not much you can do about the latter besides drink a lot of water.
I grew up in the South, and worked in the Bay Area for 9 years, 7 in SF. Summers is SF are most assuredly not brutal.
Most of the microclimates in the Bay Area are disgustingly peaceful, but as the parent notes, there is a distinct lack of seasons (there's approximately two: dry summers, wet "winters") and real weather (I greatly missed thunderstorms when I was there).
Brutal is a bit overstated, but it can be very chilly (especially in the foggy areas) compared to what people expect of summer. You often need to wear or carry along warm clothing even in July.
A lot of sweaters get sold at Fisherman's Wharf during summer months to people caught unaware.
We lived in the Sunset district which was manageable but later moved to Mill Valley and the summers were _very_ brutal, to me. A couple other office mates lived in San Rafael and I distinctly remember everyone complaining about the heat and sweating.
We all eventually bought air conditioners for our bedrooms just so we could sleep comfortably at night.
But brutal is all a relative term. Someone growing up in the south with no access to AC would not call it brutal while I and my other office mates who were used to AC were "dying" without it
Sorry, I know. It's a very spoiled statement. I mean they're just unexpected in SF (especially the western side of the City).
It tends to be cold, wet, damp, foggy and bone chilling early morning. Not like Winters/Summers in Chicago brutal, but definitely the time I struggle with most (as a new yorker who clearly has to weather acclimated here, I know it sounds ridiculous)
Based on the prices people are willing to pay to live there, it’s obviously highly desirable among those who are on the higher end of the wealth distribution.
Boeing moved, many companies based in NYC moved out of the city in the 80s, 90s. It’s not extremely hard, but it is disruptive. When the exodus happens it’ll start as a trickle and by the time people take notice half the cos will have reduced occupancy.
After certain stage it’s more about managing growth than about R&D, so you can find most of the talent you need in alternate markets.
In all fairness, significant HQ moves often have a major cut in headcount as a well-understood side effect if not an actual motivation.
But, yes, companies can and have moved their HQs a lot more than ten miles. It's probably harder in an industry and at a time when more people figure a job with a given company is pretty ephemeral though.
Maybe but I think people will figure out the talent deserts have more oases than people think. There are more options for talent than just SV. Remember much of the US talent in SV come from other parts of the country. Many would stay local if given the opp to stay local. So instead of drawing talent to SV, SV could seek the talent in those markets (where talent is growing).
Maybe people in the abstract would, but at the level of individual people and companies talent isn’t fungible. If Stripe were to lose 100 senior engineers in a move to Salt Lake City, but could pick up 110 new ones at 90% of the price, it’s not obvious that would be a net win.
One perspective is that the exchange permanently hamstrings the company. You spent let's say 3 years on average, training those engineers to be the best people in the world at solving Stripe's problems, but now they're gone with (unless you're gonna do double payroll for a while) only an arms-length handoff to the new staff. That's 300 person-years of training, gone forever. Arguably even worse, it propagates upwards; there will be some number of valuable, important projects which can no longer get done because the needed expertise was lost.
Well, one option is to keep key people who don’t want to move remote and then through turnover replace them with new talent just as if the company had stayed. It’s not like key engs stay forever.
Oh I agree with all that. I don't live in SV/SF myself and have no real interest in doing so. But so many people have the attitude that you can't have a tech career if you don't live in SV that it would probably be difficult for an existing company to move out of the area without losing a lot of people (or at least letting them work remote).
It is not about an oasis, it is about top of the funnel. To hire 1 eng, you have to interview 5-10, and have to phone screen 20-30, and have have hacker rank tested 100-200. Now scale that to a 1000 person eng team
Thing is that top of the funnel is not composed of majority local people. Many are people who relocated and many are people who are not local now but if hired the company would move them. If they can move them to SF they can also move them to another major tech oriented city.
That may be true but plenty of companies around the world that are nowhere near California somehow manage to hire technical talent. The Bay area has a higher density than many places but there's more competition for hiring too.
I feel like Boeing has far more of a monopoly on hiring the kind of talent they need than Stripe. They also seem like a place that has more "lifers".
Stripe engineers can just say "no thanks" and go work for SF company n+1 down the road. Does Boeing have competition in the same city that could reasonably hire Boeing knowledge workers? Honest question.
> many companies based in NYC moved out of the city in the 80s, 90s.
This is the story of most American cities in the 80s and 90s, thankfully it has had some reversal this century, and I'm not sure it should be seen as a template or justification for present or future actions.
While the reasons may be different now, the process of relocating is going to be similar. Some staff will like it, some will resign, some will go with reservations, etc. and, with today’s communications this will be even easier.
1. San Francisco is really nice. It's 87 degrees today at the end of October. There is good food, decent public transportation, culture, ocean, forests, etc. It doesn't snow here or get blistering hot, so productivity is very steady year round.
2. Because San Francisco is very nice (perhaps) and we have good schools around here. A lot of hires come from UCB, Stanford, UCLA, USC, and other UCs. Those account for several of the top engineering schools in the country/world.
3. Silicon Valley has hit an inflection point where we're now the best place in the world to find TOP talent in tech. It's not a great place for mid and junior level talent, but if you need top talent for an opportunity that is high growth and high per employee leverage, there is no place better in the world.
Ultimately, the main issue is that everything is too nice and worked too well so the cost of living has sky rocketed. And that is driving out everyone that isn't a top tier talent (engineering and opts). It's really sad, to be honest, I love San Francisco and Silicon Valley, and I wish we could find a way to solve the living cost issue and continue to grow as a hub for innovation.
SF has always been expensive. When I moved here, my grandfather who was an actuary for an insurance company (i.e. walking financial database) told me that back in the 1930s, they had to pay 2-3x salary for people based there due to the high cost of living. If you read old issues of the SF Chronicle, you'll find the same story repeated across generations.
The only time SF was every really cheap was during the 70s into the late 80s, which was due to a combination of white flight, the Loma Prieta earthquake, and the AIDS plague depopulating the city. Apart from that anomaly, it has been super pricey ever since the Gold Rush.
And the Bay Area as a whole wasn't cheap in the late 80s. (SF may have been cheaper because, as you suggest, upper middle class people weren't rushing to move to SF or most other cities in that period.) But I turned down recruiting from the Bay Area during that period in part because the cost of living was too high relative to where I lived on the East Coast.
> Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere?
the long term root is that there is a huge productivity advantage to clusters of workers. (or, at least many people believe so) Around here, if you strike up a random conversation in public, it's very likely you will do so with someone who does something relevant to what you do, and this is good for getting new ideas and really good for getting new contacts. Right now? there's a huge concentration of programming know-how in silicon valley and san francisco, and building that sort of cluster somewhere else would be really difficult. (I think Los Angeles has a similar situation, only with the movie industry.)
I literally found someone to buy my company at a (non-industry) party. (I mean, I did a bad job of it, I was drinking too much and complaining loudly about how much it sucks to run a company and how I had fucked up like three really good chances to sell the thing and generally being a downer, which is rude, I think, at a party, but also not how you maximize the value of the company you sell. Still, I got an impactful amount of money, and more importantly, I got someone else to run the damn thing so I could go get a job that paid without dumping my existing customers.) I've solved technical problems in similar sorts of ways; it's completely normal to go hang out with friends and actually solve problems over drinks or pizza or whatever. (which yes, is a culture some people hate, and I totally understand that, but some of us like it, and like it or not, it's certainly effective.)
Another bigger microeconomic factor that people who don't live here don't understand is that California laws and cultural norms are set up to privilege people who have been here longer. If you bought a place here in '08? Silicon valley isn't very expensive at all; our property taxes are largely fixed based on what we paid for the place when we bought it. This is kinda true (but to a much lessor extent) for rents; I know a lot of people paying under 2/3rds what they'd pay in rent if they moved in today, even without rent control. with rent control, paying under 1/3rd what they'd pay if they moved in today is not uncommon. This means that the sticker shock you get from the outside looking in isn't actually what most of the people who have lived here long term are paying.
Thanks for the insight, again I fully admit that I don't know the details of the housing/jobs market over there so it was really interesting to hear your perspective. I think the movie industry example is an interesting connection to make. For the last few years Atlanta has overtaken LA as the top producer of feature films in the country, largely due to crazy huge tax incentives for movie studios, and has earned the nickname "Y'allywood" or the hollywood of the south.
Maybe a big city elsewhere in the country will ever go "all-in" like Atlanta did and try to become the "Silicon Valley of the [South, Midwest, Rocky Mountains, etc.]"? I guess a place like Austin, TX could arguable lay claim to this title already, but their tech industry seems to be "home grown" because of the history of computing at UT and with Texas Instruments, NASA, Dell, etc. historically having strong roots in Texas.
But I wonder if a city could ever follow the model of Atlanta and try to build a "new Silicon Valley" from scratch with aggressive policies that lure companies/employees from existing tech hubs?
>the last few years Atlanta has overtaken LA as the top producer of feature films in the country
I've worked in the film business a bit. I'd say it's more like colonization than relocation. Atlanta is a place for filming at low costs, most of pre/post production and the organizational aspects still happens in Los Angeles. Most of the talent is still in LA and flies out to Atlanta for a few weeks. They're saving a buck on shooting, paying a bit for local work (mostly infrastructure stuff) but they aren't really generating value for the city.
The issue with any other city becoming the "SV of the XX" in my opinion comes down to VC and business culture. I think California created something unique when it came to powering ventures and crazy ideas, whereas other parts of the country tend to be more risk averse. Whenever I see new initiatives to draw startups to new cities, the common thread is low amounts of seed money with draconian term sheets from people with very little experience and no network effects to speak of.
Adding onto this point, I think one thing to recognize about the future of LA as a big media hub is the fact that tons of popular Youtubers and other independent content creators will relocate to Los Angeles due to the agglomeration of talent that exists there.
This is much more similar to how things work with SF/SV in the context of startups.
I think there's a big social component, too. I personally would pay rather extra to live here in silicon valley - extra even net additional earnings, just because I fit in ways I don't fit anywhere else I've been. (I mean, I'm not claiming that silicon valley is more inclusive than other places; a lot of people say the opposite and I have seen some evidence corroborating that view. I'm just saying, for me, for who I am, I feel like I fit here; I feel like I'm treated better here because of who I am than I am treated anywhere else. I suppose you could say that I feel like I have 'privilege' here in ways that I don't feel like I do in, say, the place where I spent most of my childhood.)
(because of the things I described above about how california privileges long term residents, I actually don't pay much more here than I would in any other place of similar density, and net earnings, I'm way better off financially here than anywhere else because I have that granfathered housing deal. (of course, my housing here is a lot less flexible.) Nobody else in the world will pay what silicon valley will pay when you have my skills and no degree. But in theory I would pay a premium to live here.)
Before I die, I want to try living in New York, partly 'cause I really enjoy the car-free lifestyle, but also 'cause I think that it's good to sometimes go to a place where you don't fit in as well, where you interact with people who have dramatically different worldviews about what constitutes an interesting problem. But for me, someone who fit in really badly where he grew up? Finding a place where I fit in was supremely important, even if I don't think it's great to spend the entire rest of my life in that place. Just having that experience of fitting in is transformative, I think.
My guess is that actor/entertainer types have similar feelings about LA; I mean, I think there's a lot of stories about that; about young theatre types running off to LA to find themselves (which I assumed meant "find people who value you") I mean, people talk about shared values; and it's not about voting the same way, mostly, or anything like that, at least for me, as it is about finding the same sorts of problems interesting. I mean, acting and entertaining is a deep sort of thing. I certainly don't understand much of it, but I can at least see that there's a lot there to understand, and if that's your bag, it seems like going and living near other people who also find that sort of thing could be important.
Agree with this. At my company, top brass is basically a cabal of baby boomer LGBT+ scientists who moved here in the 1990s/early 2000s to escape living in the closet in small minded bible belt towns. I'm not LGBT but it's pretty inspiring every day to work alongside them.
When I first started I happened to sit near our top QA exec and over the years as I got to know him he was telling me how in the 1980s his team at MD Anderson used to smuggle blood across the border from Mexico in briefcases before the FDA finally bowed to building pressure and got around to mandating screening for antibodies and accepting INDs.
Side topic, I've been in the bay area for a while but struggled to meet people, did you just go to random meetups? ie. how do I build a network here, I'm a transplant for context.
Start small- work on being more friendly with everyone - your yoga instructors, people in classes with you, your grocery guy, wherever you interact with people in the world. Fead How to Win Friends and Influence people and follow the instructions. It's dated and cheesy but really works. Work outward from your coworkers and say yes when people invite you to hang out outside of work. Reciprocate and invite them to do stuff as well. If you're dating anyone, make friends with their friends and their friend's partners. It can be a slow burn but slowly builds and suddenly the whole world is your friend- people you don't know yet are just friends who don't know they are your friend yet.
source: I don't really "network" or go to meetups but never had to job hunt, ever- just keep getting referred and pulled upward by people who are better than me and bring me along to work under them
Oh- one other great tip- pick a hobby you like and join some clubs. SF running, Dolphin Swim club, crossfit and triathlon clubs are networking (and, to be frank, dating) hotspots. GL!
I think you can do a lot worse than random meetups. I have enjoyed the toastmasters debate club[1] though I haven't been going lately. I think work friends are good sources of friends, too. I mean, work friends are work friends, and that's a different thing, but once you leave that job, there's nothing wrong with sending a few texts, and heck, work friends can be a lot of fun even when they are still work friends.
Back in the day, the Hacker Dojo was really great for meeting people. I personally think it's not nearly as good as it was (social stuff, I think, isn't going to be as good during boom times. a lot of the interesting people are just too busy and/or schmoozing less randomly, and we're in a boom time, so the hacker dojo looks like a regular co-working space rather than the coolness it was in the late aughts.) - I mean, I think it's still pretty neat, and still a good place to meet people, just not as good as it was.
A lot of it takes time; I mean, I've been here, more or less, since the late '90s. And a lot of it is just asking. After you leave a job, pick one of your work friends, send them an email and see if they wanna get drinks or something. Like, my experience is that it's okay to be a little weird. just make sure you go away when people tell you to go away. I mean, I know one guy who was my roommate and business partner like fifteen years ago, who is a super introvert. Maybe once a month I send him a text and see if he wants to get pizza. Maybe twice a year he responds in the affirmative.
doing projects with people is... super expensive, but in my life, doing a project/business with someone has been a little like how combat is in the stories, like you have gone through heck with that person and so you will forever have a connection.
>But I wonder if a city could ever follow the model of Atlanta and try to build a "new Silicon Valley" from scratch with aggressive policies that lure companies/employees from existing tech hubs?
It's totally possible. I think the problem right now is that for profitable tech companies, right now engineers are still super cheap (like most of big tech makes rather more than 500K per employee, and pays less than $250K.) - from that perspective, it doesn't really make sense to try to save money on employees... the opposite, really. If they have to pay another $100K/head 'cause the cost of living is so high, that's a smaller bite than anything that might disturb the massive profit. (this is also the root of the argument that we should unionize, even though we make silly money compared to most other workers. Facebook captures a lot more of the surplus value created by labor, say, than Walmart does, even if by any other reasonable standard, we are treated so much better than a walmart floor associate. I mean, I'm not arguing for or against unionization, I'm just saying that's why some people want to unionize even though we already are better off than nearly any other class of worker.)
The other thing to think about is Detroit. Detroit was totally one of these cluster cities; it was the place to be if you were working with cars in a period when there was a lot of innovation to be had in cars. And then the industry changed (or rather, innovation slowed a lot... like, there just wasn't that much more you could do with cars; just small incremental improvements) - automobile manufacturing scattered to the wind and Detroit is kind of a husk.
Will that happen to the software industry? will innovations start being small and predictable? will the P/E of Facebook drop to match the P/E of Ford? I mean, silicon valley has already been through one of these changes; silicon valley is called silicon valley 'cause they used to make the silicon here, and they've really successfully switched to writing software.
I mean, I'm personally long silicon valley (and while I think it's overvalued now, I think it's a good long term bet) - I think it will turn out more like New York than like Detroit, but... who knows?
> But I wonder if a city could ever follow the model of Atlanta and try to build a "new Silicon Valley" from scratch with aggressive policies that lure companies/employees from existing tech hubs?
You might be surprised by how many "Silicon X" places there are. Most of them are trying to lure companies. Only a few - like Atlanta - seem to understand that they need educational and financial infrastructure first.
I think educational infrastructure is almost a trailing indicator... Silicon Valley is special 'cause it prizes the sort of education required to do this sort of work. Especially when I first came here in the '90s, it was amazing - going from the place I grew up, where reading in public felt like it was risking physical violence (well, that's not really fair, I was 17) - to silicon valley, where that sort of thing was the sort of thing to do.
Bear in mind that Silicon Valley sprung up, by sheer coincidence, in a place with two world-class universities close enough to loathe one another's sports teams.
Primary and secondary schools may well be training indicators.
Maybe... but can you get world-class universities without a culture that values education? I mean, I guess it's one of those chicken and egg things, as a world class university both requires and attracts people who value education.
But, I mean, could you greenfield start a world class university in a place where people see reading in public as something to be ridiculed? would that be easier than bootstrapping a major tech company in some low cost of living area?
> I literally found someone to buy my company at a (non-industry) party. (I mean, I did a bad job of it, I was drinking too much and complaining loudly about how much it sucks to run a company and how I had fucked up like three really good chances to sell the thing and generally being a downer, which is rude, I think, at a party, but also not how you maximize the value of the company you sell. Still, I got an impactful amount of money, and more importantly, I got someone else to run the damn thing so I could go get a job that paid without dumping my existing customers.) I've solved technical problems in similar sorts of ways; it's completely normal to go hang out with friends and actually solve problems over drinks or pizza or whatever. (which yes, is a culture some people hate, and I totally understand that, but some of us like it, and like it or not, it's certainly effective.)
I love your story, I thank you for sharing it and your candor because this sounds exactly like something I would do and feel sheepish about afterwards. They way you describe this happening I can feel in my soul reenacting the exact same scenario. Well done!
Me too! I always have the feeling while in the bay that "the grass is greener on the other side". As in I think I don't want to talk about tech all day everyday, and only be surrounded by other engineers.
Then I go visit the "other side", and man do I miss conversations around the newest framework, or latest VC investment bust. It's very much a love hate relationship; which I have no plans on leaving.
> I know a lot of people paying under 2/3rds what they'd pay in rent if they moved in today, even without rent control.
Wouldn't this mean that landlords are effectively leaving money on the table? If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it?
>Wouldn't this mean that landlords are effectively leaving money on the table?
Yes.
>If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it?
I was talking with a guy who I work with who is a landlord on the side, and he seemed to have this real labor-theory-of-value sense of fairness, like he says he jacks up rent every time his taxes or insurance or what have you goes up, but it sounds like he's like 5 years behind market (which is a huge amount)
And this is super common in California, small-time landlords, if the tenant is not causing issues, tend to raise rents rather less than market.
I think some of it is that the vast majority of your ROI, in California, comes from property appreciation, (while in many other markets, as far as I can tell, you usually get a lot more cashflow; all the places I looked at in cleveland or in new mexico would be positive cashflow out the gate; all the places I've looked at buying in California only become positive cashflow once rents go up rather a lot) - so I guess maybe some landlords feel that if they don't jack up rents too much on easy tenants, they won't have to do as much work, and as most of their income is actually appreciation on the property which happens either way, they don't see giving up some of the rent as that big of a deal?
I can tell you that if you rent from a professional property management company, your rents will go up way faster, but they are also way more responsive when it comes to fixing things, and there is a strong feeling that if the rents haven't gone up on you in a while, you want to deal with any problems yourself; you don't want to call the landlord, which is evidence in favor of the "landlords avoiding work" theory.
The thing that this theory doesn't explain is that a lot of these landlords seem to be below market by a lot more than what a property management firm would charge. (I think. around here property management companies charge more than usual and usually have really big fees for replacing a moved-out tenant)
> And this is super common in California, small-time landlords, if the tenant is not causing issues, tend to raise rents rather less than market.
A landlord is renting out a long lived expensive asset. Small time landlords I've talked to all mention that you make money on tenants that pay their rent and don't cause issues. Bad tenants easily cost you more than it would to just leave the unit empty. A tenet can easily do $100k worth of damage in less than a year.
> A tenet can easily do $100k worth of damage in less than a year.
A whole lot of the housing stock in silicon valley (and it seems most of what is owned by this type of landlord) is essentially teardowns; stuff built more than 50 years ago to working-class standards. the structure itself represents the right to 'remodel' into something someone willing to pay a million bucks for a house might actually want to live in; and by 'remodel' I mean to leave the 'minimum legal structure' standing (I think paul graham made some joke about it on twitter some time ago, with a photo of a remodel that had one interior wall standing and the rest demolished. The joke was thought to be problematic, if I remember, for some reason I don't remember.)
I mean, sure, if the landlord wants to keep renting out a shack built in the '60s, the wrong tenant can make that quite expensive, but it would be difficult for the tenant to devalue the market value of the asset by 100K.
I suppose that might be another part of it; there certainly is some demand for these older units at market rates, but certainly for people willing to pay full freight, the nicer units go first.
- That effectively means those employees tied to the old location have to quit or be let go. Stripe isn't a public company, so that causes major issues for those with options who suddenly need to exercise into an expensive illiquid holding. For those w/o vested options in a company as successful as Stripe, you're leaving a lot of money on the table. What are the odds you find another Stripe with options deep in the money?
- If your spouse is working in SF, if you move, now they have to quit their job and look for another one. If your spouse works in a non-public tech startup, see point 1.
- Moving isn't easy in the US if you own a home - the taxes, fees, expenses, commissions, etc alone will cost you ~8 or 9% of your sale. If you have 20% down you just lost half your equity. Easier of course if you have more equity in the home, but still -- fees/etc are a total loss to you.
- If the company re-locates you, they might cover some of the home change expenses, but those are often capped. It becomes quite expensive to the company to re-lo folks with homes (see above)
- Changing homes (and thus school districts) is a big issue for employees with children. Many school districts are not guaranteed by home ownership / lease, but rather by tenure in the district. You end up buying/leasing an expensive property in a new area and busing your child to a far off, possibly much less performant, school.
- I totally agree with SF being epensive, but for other cities, moving to suburbs isn't that much less expensive for young workers. Now you suddenly have to buy a car, pay for gas, pay tolls, registrations, etc. Also, for those early career w/o children, being in a one-company-town suburb is a career-killer. There isnt an ecosystem and it becomes harder to switch jobs. I had an employer move their office from Manhattan to suburban Connecticut with the argument that is was less expensive (yes, less expensive for the company -- but absolutely not less expensive for the employee)
> I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely?
To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area.
I don't mean that as a slight either - I think if you're spending a good portion of your life on something, you might as well do it in a place you enjoy spending time in!
> To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area.
At my firm, the founders wish they could go back to NYC or east coast in a heartbeat, but tied to Bay Area due to funding connections and employee pool. I work a lot with Europe so I'd love to be on the east coast as well.
More and more companies are choosing to do this when they are created. But Stripe has, I believe, over a thousand employees. Expecting them to relocate far away (p.e. another state) is simply ridiculous (I believe the one example of a company doing something like this would be Zappos, when they relocated to Las Vegas). You'd just lose too many people. Now, opening another office somewhere else to keep expanding, a lot of companies do.
A corollary to this well reasoned question would be: has Silicon Valley area peaked in terms of startup creation? On the one hand, you've got the talent there, attracted because the big tech is concentrated in the area; on the other hand, the living costs makes a ramen-profitable startup in SV way more expensive than a non-SV one.
How should I look at this issue from the perspective of an outsider? Should I join the crowd or run in the opposite direction?
Actually, SF has increased its lead over other regions in startup creation over the last few years. See VC dollars invested and you will see how much of that is concentrated in SF
I don't have data to back this up, except anecdotal, but I think spending a few years in SF, NY, or Seattle can boost your market value by a factor of 3-4. So it could still be worth it in the long run.
It's just my personal perspective, but... I'm still in awe of SV. I simply feel that the time to be there has passed, and I'm late to the party.
So where's the party now? It's happening somewhere. Someone is building the next big thing and none of us know yet. The eternal struggle of trying to predict the future.
Is Stripe's move a bad move? I guess that the execs are driven by the same fear of missing out what the future holds.
SV still feels like a party to me. Sure, it’s not 2000 any more, and property prices are high, but there is still a lot of capital and talent sloshing about. Just staying at a top paying big co for 5 years or so, starting as a senior dev, can set you up with a lot of money
If you create a walled ecosystem within a communist country that straight up bans other competing non Chinese products, you might think that this party is in Shenzhen.
Some employees would be afraid to live in a non-California state where non-compete agreements can be enforced. Even if Stripe eschewed them, their next employer might not.
I can’t picture a single tech company I would be attached to enough to follow through any geographic move, unless I were a founder of that company. There are plenty of opportunities in the ocean for the average software engineer and company loyalty rightfully doesn’t exist.
California has too much going for it for engineers to abandon it over a company that can’t event afford to keep an office open there, and I’m saying that as an outsider, I much prefer the east coast or Colorado.
> I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely?
People have mentioned the dual-income problem, but even without that, people have friends, and schools, and communities, and lives that they've built up where they live. When I moved cross country, it took two years after we arrived to develop our first close friends, and probably five years before we felt that we were as connected to our new home as we were to the one we left.
Moving across town doesn't disrupt these connections and communities for your employees, but moving across the state or country does.
The tech sector as a whole is in a period of massive expansion. It is basically assumed that any well-run tech company needs to be perpetually hiring anybody sufficiently qualified for the endless business opportunities that lie just on the horizon, and there's a small number of expensive cities where it is prudent to do so.
Some day the business climate will cool and the realm of new tech growth won't seem as limitless. When this time comes, big profitable tech companies will continue their drive for bigger profits, and they will turn to cutting costs rather than driving new growth.
When cutting costs comes to tech, plenty of established companies will decide it's time to head off to a smaller city with lower rent and lower wages - or atleast some of them will, and eventually wages and rent in silicon valley will start heading downwards from its current place in the heavens.
This is not the only other option. Imagine telling an engineer, hey I'll pay you $500k a year in Atlanta, Miami, Philadelphia, Chicago, or Boston? Rent is immediately cut in half and some states have no income taxes. Their disposable income essentially triples.
I wouldn't take it; I'd quit and go work somewhere else in the Bay Area. I have enough roots here in California that do a lot more for my quality of life than an extra two bedrooms in my house would. (And a boat? What a maintenance nightmare that would be! If I owned one, I'd pay someone to get rid of it.)
If you are still lying $500k, what’s the point of that move ? Also, network effect doesn’t change. I will never move out of SV/SF as I know I can walk down the street and get another $500k job
> If you are still lying $500k, what’s the point of that move ?
I think you mistyped here. The point of the move is that $500k in San Francisco vs $500k in any other city in the US (except New York) result in substantially different qualities of life. $500k a year income in Miami can get you a mortgage on a 3 bedroom house and a boat.
In SF, you get a mortgage on a 1 bedroom apartment.
The company wouldn't move if it still had to pay 500K.
500K in SF gets you a smaller place and plenty of discretionary income. Companies in other places can often give you a house, but not match the discretionary income.
Pay your engineers 500k in a medium cost of living city and you will have the best employee retention of any company once they get used to their quality of life.
SF is expensive, agreed, but it is not so expensive that you need to pull 500k/year to get a mortgage. That income is enough to mortgage a 2.5M home — well above SF’s median home price— with no downpayment
I tend to think of it this way: "can I get the same or better compensation if I lost this job after the move?" If the answer is no then I'm probably not moving.
Also, there are reasons why people would prefer the bay area over Denver for non cost related stuff. (And vice versa)
There are many people who work in tech who highly value location and quality of life. I've lived in the Midwest, the South, and now Seattle. If you enjoy the outdoors, hiking, skiing/riding, sailing, mountain biking, kayaking, etc., but you want to earn strong compensation with the security of having many employment options there are relatively few good options.
There are other chicken and egg dynamics such as a large city is likely top have a large airport with lots of direct flights which is helpful for business and leisure travel.
Employers, especially startups and growth companies, want to hire top talent (and poach top talent from similar firms). That means they want to be located where there is a baseline of other similar firms.
Remote work is slowly changing that dynamic but the gravity of the city is strong.
> They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work?
Nobody wants to take a huge paycut regardless of house prices - there are lots of other things in the world you can use money for (including saving for retirement, if you're practical) that aren't particularly regionally inflated.
The people who've been at successful companies for longest also tend to have been pretty well compensated overall, so ownership of something nearby isn't always so out of reach for them. So your most important contributors are the least motivated for this move. Doesn't seem like a good recipe.
In most companies people who are in positions to make this decision have houses in the Bay Area and have a good life set up. They are not keen to upset all of that.
They can't move their HQ at this point for reasons others have mentioned.
It does seem like they are taking a balanced strategy, however. I remember a story a few months ago about how their latest team is all-remote. They might have better incentives to open more offices in lower-cost locales after going public (see Uber's new Dallas plans for example).
I'm going to predict that even the move to South San Francisco will be highly disruptive and will result in major turnover. If you live in the city and are taking public transit, a move to South San Francisco is going to be extremely painful. If you own or on rent control, its probably time to start looking for a new job.
The employees are a self-selected population for the area.
The employees that work for a company have already decided that is where they want to live and work.
They could just open an additional office in a more "reasonable" place, say somewhere with lower taxes, lower cost of living, shitty weather and fewer qualified employees...
Also, I've often wondered if locating a company in somewhere with a nosebleed cost of living like SF is a way to exclude employees that are not young, single and/or without families to distract them. SF is great for single people.
One issue is when the people who relocated with you start to leave. If you need 500 engineers you might be able to get them to move to a mid-tier city with you but when you start needing to replace those engineers it’s going to be tougher.
I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? It's a successful company with a great product - that I'm sure many people would like to work for. They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? And they could pull a mini-Amazon and get some sweet tax breaks to boot. Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere?