It's very worth remembering that the abundance of Silicon Valley is fragile, and temporary. But I think many articles surmising that the peak is now have the timescale wrong.
I'd compare Silicon Valley to Detroit with a century time lag. The American automotive industry started in the 1890s, just like the Internet industry started in the 1990s. Like the Internet, it built off a constellation of related technologies that had been under development for 30-40 years. The automobile industry was built on the iron mines in Duluth, coal mines in Appalachia, petroleum industry in Ohio, steelworks in Pennsylvania, and Great Lakes transportation infrastructure that had been setup throughout the 19th century. The Internet was built on software from Boston; microcomputers from Albuquerque, Austin, and Houston; an OS from Redmond; semiconductors from Oregon; and so on.
In 1910, the population of Detroit was 465,000. It had nearly doubled from 285,000 in the previous decade, fueled both by international migrants looking for then-high wages and Black migration fleeing persecution in the rest of the U.S. (sound familiar?). The auto industry was well established, with Model-T production in its heyday. Supplier networks were already starting to grow up around the big-3 automakers.
But Detroit's population didn't peak until 1950, at quadruple its 1910 population. In between, Detroit would be key to winning two World Wars, and the automobile would fundamentally reshape society. Most of the growth happened between 1932-1960, and only after key government & societal infrastructure changed to be built around the automobile rather than the automobile serving as a luxury novelty for Gilded Age technorati.
Eventually Silicon Valley will end up like Detroit, with abandoned 4-over-1 condo complexes and empty office parks where the software industry once stood. But we've got a while to go. We haven't had our war yet, and the basic infrastructure of society - transportation, legal, military, government, etc - is still based on pre-electronic conceptions.
does not sound like SV today. You're also missing the main reason, superior products from Japan and Germany. We don't really see that as of now. China and EU have a handful of competitive companies.
It's not that SV is union workers but that union workers have a higher labor cost. Kind of goes to why GM started Saturn in TN and why Saturn cars where cheap in the late 80s, no unions thus cheaper labor.
SV labor is expensive compared to other markets (see below). I have worked in SV and elsewhere and mostly elsewhere is 1/2 the pay as SV and without the things like free lunch / coffee bar / shuttle service.
SV doesn't need unions because the turnover rate is so high that the companies are basically providing what unions would negotiate just to compete (free lunch / coffee bar / shuttle service). It's still a buyers market from the employee standpoint.
I do think SV is not quite at the inflection point just yet, but it is moving in that direction.
The irony in this is actually that the cost of labor is high because the cost of living is high. The cost of living is high because of the NIMBY folks preventing multiunit housing. If the ballon collapses those NIMBY folks would see their precious house values decline.
Finally as to superior products most Japanese and German cars sold in the US are still built in the US, just not Detroit because of.... Wait for it.... Union Workers.
Every major tech company is grappling with the balance between their leadership and employee base right now. It may not look exactly like the UAW in Detroit, but that tension definitely echos into our time. It's quite a bit different than 5-10 years ago.
Ford and GM date from 1903 and 1908, respectively. Chrysler from 1925. There were plenty of other car makers (Packard, Studebaker, Duesenberg, AMC, Hudson, etc.), but most of them were started in the 1910s-1920s and then went defunct in the 1950s. There are plenty of other Silicon Valley tech companies (Stripe, AirBnB, Uber, Lyft, Dropbox, Coinbase, Roblox, etc.), and many of them are just starting their growth curve.
* They stopped building manufacturing plants in detroit itself and built them further afield to cut labor and land costs.
That is an antonym of the Silicon Valley situation - they tried numerous times to outsource and move to cheaper locations and failed. The closest to success were San Fransico and Palo Alto which effectively just sprawled the area that is effectively Silicon Valley outside the prior bounds. The attempts to go far afield failed and the physical manufacturing wasn't where the money was located resulting in a minor shake up.
There is a historical resemblance superficially in the first point but the second two are outright foils as every little highly publicized kerfluffle for what is effectively a relatively fringe cause like say not taking DoD contracts is nothing compared to a work stop or a gain of union claim to control.
Come to think of it the employee stock share benefits are a sort of weird foil to a union - not even trying for control or working conditions but giving some token stake to sufficiently valued workers. Not a replacement by any means but it is an ironic undermining of a company vs worker mentality.
> Eventually Silicon Valley will end up like Detroit, with abandoned 4-over-1 condo complexes and empty office parks where the software industry once stood.
This implies that there's a glut of housing that's been created to home Silicon Valley technologists, which couldn't be further from the truth.
There is absolutely zero chance of a housing glut in California. The regulatory environment is so violently opposed to housing that the vast majority of people who live there could never afford to move. When the end comes, I think it is more likely to be because some thing finally tips such that people leave the area and (because houses are priced at the margins) prices begin to actually drop. Once that happens there could easily be a rush for the exits, as nobody wants to be upside down on a $2 million loan.
That scenario has happened repeatedly - 91-94, 01-02, 08-11, and now from 2018-present. It usually plays out as a ~10-25% drop in housing prices over a few years as the market exhausts itself, followed by a resurgence as wages & demand starts catching up again.
The way I think a glut could arise is when a tipping point is reached and pro-housing renters outnumber NIMBY owners on city councils. This has happened already in Mountain View (which was notoriously anti-development until a group of young pro-housing Googlers packed the city council and voted out all the NIMBYs in 2014, and now green-lights nearly any housing development), Sunnyvale, Redwood City, and San Mateo, and may make its way down to San Jose and up the rest of the peninsula. At present a lot of Bay Area communities are starting to look more like Paris: dense ~4 story apartment buildings, public squares, outdoor dining on pedestrian thoroughfares, etc.
> Eventually Silicon Valley will end up like Detroit, with abandoned 4-over-1 condo complexes and empty office parks where the software industry once stood.
I'm certain this will never happen simply due to the superiority of California's climate.
It's possible that in 30 years the climate in Detroit will be better than the climate in Northern California. Wildfires and drought could be the new norm.
California's climate has been wildfires and drought for millennia, and will continue for the foreseeable future. See the scrub oak (chaparro) plant as an example of an organism native to the area responding to evolutionary pressures of drought and wildfires:
I am in tech and can live and work anywhere. I am staying in Bay Area because of climate/geography until taxes are too high to bear (very near that point now)
Taxes are lower in both those places (source: I moved from Brisbane AU to Austin TX). The idea that the US (and CA in particular) is a low tax place to live is a really successful urban myth.
I would try Auckland before you buy. It's cold compared to all your other places.
I'm certain there are many pleasant and warm places the globe over that are poor and isolated. People go where the jobs are. Nice weather is secondary. If we all start working in VR and location becomes irrelevant, then all bets are off. But why even have cities then?
Nice weather really isn't secondary. It's the entire reason Southern California is what it is. Anywhere the weather's nice, people flock. If location becomes irrelevant, that will just make people flock even faster. Everywhere the weather sucks, ask around and you'll find the cheap place people go all the time for vacation, and wish they could live, if they could but afford it. For Atlanta where I live, it's nearby Destin, or Savannah. Nice weather is a primary determinant of where people choose to retire. It pumps land values up 10x or more.
I'll turn your argument around and say that the only truly location-dependent industries are extraction based. Everything else moves where the people are. And people will pay through the nose to live where it's nice.
Well, yeah, prior to Covid, Andalusia in Spain was a favorite tourist destination. It really is lovely sitting at 10pm with a sangria in hand on a historic staircase of a palace and watching the nightlife milling around.
But all this flocking is temporary. People do not move there to start businesses. (They do to Gibraltar, but that is a tax haven.) They just enjoy they stay, spend some money on recreation and fly back to gloomy-but-rich Amsterdam, London or Hamburg.
> I'll turn your argument around and say that the only truly location-dependent industries are extraction based. Everything else moves where the people are.
I don't think I would call the transportation industry (as in: ports, trains, planes, and related infrastructure) "extraction based". But that is an example of something very clearly location-dependent.
In Europe, much of the economic growth is concentrated in the countries with colder weather, while the pleasant weather countries (France, Spain, Italy etc.) struggle with high unemployment and economic stagnation.
"Nice weather implies good economy" does not seem to pass even the basic correlation test.
Maybe it doesn't imply good economy, but it at least implies desirability for people to live in. Retiree Florida doesn't have a booming economy but it certainly has a steady influx of people moving to there for the environment.
> Eventually Silicon Valley will end up like Detroit, with abandoned 4-over-1 condo complexes and empty office parks where the software industry once stood.
What if the secular demand for living in Silicon Valley is higher than Detroit? What if Detroit was desirable due to the economics and infrastructure constraints of that time, but what if people like the other aspects, such as location and weather,of living somewhere?
Not that it’s not possible for that to change either, but my point is different pieces of land may be more or less desirable than others outside of economic conditions.
Detroit was once one of America's finest cities, basically the embodiment of the American dream. Once the economy that floated all that ended, it ended too.
My point is what if that was due to the inertia of the eastern US having more population, being close to necessary waterways for transportation, and certain natural resource stores.
We have the internet and cheap transportation now, so people (with resources) can more easily move to where they want to live.
I can conceive a future where even if tech were somehow displaced, then other people with money would come to silicon valley, simply because they want to and they're not tied to another location, like richer people may have been during Detroit's heyday.
I relocated to Colorado a decade ago, swallowing the cost of living salary decreases, but I'm coming out better in terms of quality of life. If California, for a split second, achieved even close to the affordability for quality of life as CO, I would move back.
I haven't lived in Silicon Valley, but I've visited enough times to know the weather is a hell of a lot better than Detroit. Its access to natural beauty like the ocean and mountains is also considerably better.
If Detroit and San Francisco were equivelant cities (culturally, cost of living, etc.) I can't see why anyone would pick Detroit.
that's not quite a fair comparison. Greece is a bunch of islands with rough terrain in much of the mainland.
A better comparison to southern California would be the Iberian peninsula. Spain and Portugal have pleasant weather and are well connected to the industrial heart of Europe.
Many want to live in these countries but most can't make a living there.
I've been to Greece and I think there are parts of Greece that I'd like to live in. Probably not practical if you need to work, but for retirement it seems like it could be very nice.
> Eventually Silicon Valley will end up like Detroit, with abandoned 4-over-1 condo complexes and empty office parks where the software industry once stood.
This happened to Detroit because jobs were literally the only reason to live there. The Bay Area has amazing weather, unbelievable scenery, world-class recreation, and tons of music and culture. If the jobs of today leave, the jobs of tomorrow will replace them simply because the area itself is one of the best in the country. Detroit is a flatland nowhere in frozen tundra flyover state. "A bunch of lakes" is only going to keep an extremely small subset of people interested.
My job is the main reason I live in San Francisco. In my opinion Colorado is much more beautiful, Boulder has a lot of the advantages of living in a big city but also so many fewer disadvantages. Personally I’m not a big fan of the kind of nature of the bay area has to offer. I grew up in the Northeast and the southeast, and I miss the huge deciduous trees and the fall-time colors. The Bay Area is pretty, but doesn’t hold a candle to the beauty of Michigan or Colorado or Tahoe in my opinion. Obviously different people have different preferences, but for every person who believes the bay area is the perfect place to live regardless of their career, there’s at least another person who doesn’t particularly like it and has their own idea of a perfect place to live.
For what its worth, I'm not from the US but I have travelled a fair bit round the US and Colorado and Boulder were some of the few places that really appealed to me.
I meant living in Tahoe. I’ve done the weekend trip from SF a few times and with the long drive, the traffic (everyone has the same idea), the cost of hotel, trying to fit everything in a couple days, etc, I find it more stressful to take a weekend trip there than I find it enjoyable. Living there would be great but calling it a perk of living in San Francisco is a bit of a stretch for me. If your criteria for a good place to live is having a beautiful place within a 4 hour drive, then a lot of the USA is included in that. I want to live in the nice, beautiful, low-stress place.
But again, it seems to be a very personal preference. Maybe for some people having the ability to drive 4 hours to get somewhere amazing is a good balance to the things they love about living in San Francisco. I don’t consider it close enough to be a factor in my opinion of SF though.
Edit: I’m not trying to get into an argument about how amazing or horrible the Bay Area is. I’m just saying that some people find it amazing but other people actually would prefer to live in (the suburbs of) Detroit or elsewhere. I have no idea the percent of people in each group, but I don’t think we should take for a given than if all big industry leaves the Bay Area, that it will still be as popular as it is today. Not everyone loves it that much.
>I want to live in the nice, beautiful, low-stress place
As long as whatever you consider nice is the same as whatever every other similarly paid white collar worker with a spouse and 1.75 kids considers nice you will never be able to get that. Those places always will be overprices and high stress.
Look at how Boston area money has shit up Cape Cod, southern Maine and NH. NYC money has shit up all of Long Island, large parts of PA, upstate and VT. CA money has shit up Colorado so bad that CO money shits all over Utah. Chicago money shits all over Wisconsin.
What you're really trying to get away from is the secondary effects of people like you (and me, and most everyone on HN). You're trying to get away from a service and tourism economy where everyone else is (somewhat rightfully) out to screw you for every dollar you're worth. Unless you have radically different tastes in what you want this will never be possible because all the other people of the same means will gravitate toward the same places.
>You're trying to get away from a service and tourism economy where everyone else is (somewhat rightfully) out to screw you for every dollar you're worth.
I wouldn't characterize this as someone trying to "screw" someone. It's just a consequence of demand outstripping supply, and hence the way society allocates the resources in low supply is by who can pay the highest prices.
If anyone comes up with a better way to allocate scarce resources, I'd love to know.
I do it maybe a dozen times a year. Most of the younger bay area people I know go at minimum once or twice every winter. It is definitely one of the perks of living here along with all the other cool nature.
Because flying to CO or somewhere like that for skiing is even more of a pain the arse than driving to Tahoe.
Tahoe is a nightmare of traffic, terrible winter-weather drivers and crowds. 20 years ago it used to be a decent getaway for the weekend. Now, not so much -- it's basically a guarantee that you're going to spend a full day driving to/from there, and gods help you if you leave friday afternoon and try to drive back on sunday -- everyone, their dog and grandma included, are going to be doing the same exact thing.
Once or twice a year is not implying accessible -- it's implying that it's inaccessible. It's somewhere that people do want to go, but the effort required to do so limits most. If it wasn't worth going, people wouldn't be trying to go every winter, and if it was reasonably easy to get to, perhaps people would go more than once or twice a winter.
That's the wonder of tiny percentages of huge numbers -- they're still big numbers!
If only .01% of 35,000,000 people go to Tahoe every week, that's still 3500 people a week that are visiting. Thats a lot of cars on the road, a lot of people waiting in lines, a lot of hotel rooms and vacation rentals taken up. I made up these numbers of course, but the point is with a state like California, even a tiny fraction of the population visiting at any given time, it's still an overwhelming number of people to deal with. And its not even just Californians that go to Tahoe -- plenty of folks from other states visit, and plenty of international visitors too.
So back to
> Nobody goes there anymore, it's too crowded
Yep, practically speaking, a tiny fraction of people that can go to Tahoe at any time actually go -- a rounding error -- 'nobody'. But it's still too damned crowded because Tahoe can't handle the rounding error anymore.
People that live in a place like Salt Lake City can hit the slopes a dozen times in 2 weeks without taking a day off of work. I know people that work at tech companies in Park City, about 3 miles from The Canyons resort. They can literally go skiing during their lunch break.
> The Bay Area has amazing weather, unbelievable scenery, world-class recreation, and tons of music and culture. If the jobs of today leave, the jobs of tomorrow will replace them simply because the area itself is one of the best in the country.
That's not necessarily true. Maybe the jobs go and never return, but the recreational desirability leads it more in the direction of an Aspen: more of a place for recreation than business.
Yeah, it's like if LA was to lose the entertainment industry, the Mediterranean climate alone ensures it a highly desirable place to live. And both SF and LA are major ports.
I agree regarding music & culture. Detroit used to have awesome music, e.g. Motown Records in its heyday, and even when in decline, it was considered one of the birthplaces of techno.
Unbelievable scenery and world-class recreation have nothing to do with being a "city with a large population." In fact, the presence of a large population center usually makes these things worse.
High living costs and living conditions will have the starving artists that make these things you consume flock somewhere else or never move out to the Bay in the first place. Consequently the next generation of these artists won't be coming out of the bay, ironically you'll start to see more culture and art come out of places like Detroit.
I think you're conflating avant-garde with world class.
Take restaurants for example - super easy to start a new inventive restaurant in Detroit (low rent, low labor costs, etc.), but it's nearly impossible to make a $500/head prix-fixe work there (and that is, for better of worse, the type of food that causes people to flock now-a-days). Even Portland sees most of it's 'starving artist' chefs decamp to NY / SF / LA once they gain a national brand.
You're ignoring over half of Silicon Valley's history in your narrative, including the population boom that gave the region its name and the vast majority of its growth.
Silicon Valley has been getting transplants since the 60s. The region has grown around 15-20% in the last 20 years. From 1960 to 1980 region roughly tripled its population. There's a reason why prop 13 came about in the 70s.
I'm not saying it will always be a tech mecca. But ignoring a majority of its history with tech just so you can compare it to Detroit seems disingenuous.
> There's a reason why prop 13 came about in the 70s.
Because vengeful homeowners wanted a "revolt" to punish the government for taxing them. It wasn't because of home prices, 1978 Prop 8 would have solved that, they wanted revenge. It's greed and hate right down to the roots.
Silicon Valley's been getting transplants since the 1860s. There's plenty of waves of immigrants before tech - the Gold Rush, Okies in the 1930s, WW2 GIs, the defense boom around Lockheed (which brought my father-in-law to the area; my wife is a Bay Area native), desktop software, and then finally the Internet. Just as Detroit had waves of migration from the 1700s - fur trading, Great Lakes trade, iron manufacturing, and then finally automobiles.
I'm specifically picking Detroit from ~1895-1970 vs. Silicon Valley from ~1995-future because there's a similar dynamic at root. A single globally-relevant industry that's remaking society, and everybody pouring in to capitalize on this. Given similar root causes, it seems likely that their futures will be similar as well.
SF's population has been fairly stable since the 50's. And it didn't really take part in the tech scene until the 00's. The population of SF isn't going anywhere. If tech transplants move out, there's plenty of people that will want to move back. They won't be as rich though so prices will probably drop a bit.
There's a big difference between Detroit and SF (or California in general).
Weatherwise it's one of the best places to live in the USA. The smoke issue is new but it's unlikely to be this bad most years. Detroit is unfriendly a much greater portion of the year
It's likely the craziness in the Bay will subside but I would be extremely shocked if it began to resemble Ddetroit. Some of the more remote suburbs that haven't historically been places people would commute from might fare badly though.
Or to use a popular phrasing: Economists have accurately predicted 5 of the last 3 recessions.
On the way up, it always looks like last year was peak. Then this year does even better. Continue for decades until one year, suddenly, the music stops.
Detroit is flipping miserable to live in and the Bay Area has a natural air conditioner in the Pacific Ocean. Why do people keep overlooking this? I lived in a boom and bust steel and auto town in the midwest, people left because the only thing keeping us there was a paycheck and family. The Bay has much more to offer than Detroit. Not even comparable.
But that doesn't mean you're gonna have a great economy forever.
That means property will be expensive forever, because there will always be rich people looking to move or retire there, but will that turn into innovative or well-paying jobs for people?
It actually does because in Detroit the only reason to be there no longer exists in a meaningful capacity whereas The Bay Area will for the foreseeable future.
There are a LOT of rich towns full of money in Europe - where this sort of thing has been going on for a LOT longer than the 100 years or so of California-in-the-US history - where the rich folks live that don't feature booming innovation economies.
When even the current crop of tech workers get priced out of California by the continual influx of wealthy folks seeking out the climate you won't see SF turn into Detroit, but it's not gonna be the SF of the nineties->now.
The San Francisco Bay is one of the largest natural harbors in the world. The tech industry might become like Detroit, the cities themselves will be fine purely because of logistical importance alone.
I disagree. I think we need to put the paddle to the metal and take this baby for a spin. I do think the analogy needs a tune up. Web browsers are not the "automobiles of the information superhighway" because while they let you go forward or go back, they don't let you turn left or right. So clearly, web browsers must be the trains of the industrial revolution, riding on the coast-to-coast rail network which was built in Dot Com Boom and Bust fashion [1]. So I think Silicon Valley will chug along for many years to come. Of course, there's a chance this gravy train could be derailed. Owning all of the train stations has something to do with Monopoly. I'm running out of steam... need more analogies and puns to shovel into the furnace..
I'd compare Silicon Valley to Detroit with a century time lag. The American automotive industry started in the 1890s, just like the Internet industry started in the 1990s. Like the Internet, it built off a constellation of related technologies that had been under development for 30-40 years. The automobile industry was built on the iron mines in Duluth, coal mines in Appalachia, petroleum industry in Ohio, steelworks in Pennsylvania, and Great Lakes transportation infrastructure that had been setup throughout the 19th century. The Internet was built on software from Boston; microcomputers from Albuquerque, Austin, and Houston; an OS from Redmond; semiconductors from Oregon; and so on.
In 1910, the population of Detroit was 465,000. It had nearly doubled from 285,000 in the previous decade, fueled both by international migrants looking for then-high wages and Black migration fleeing persecution in the rest of the U.S. (sound familiar?). The auto industry was well established, with Model-T production in its heyday. Supplier networks were already starting to grow up around the big-3 automakers.
But Detroit's population didn't peak until 1950, at quadruple its 1910 population. In between, Detroit would be key to winning two World Wars, and the automobile would fundamentally reshape society. Most of the growth happened between 1932-1960, and only after key government & societal infrastructure changed to be built around the automobile rather than the automobile serving as a luxury novelty for Gilded Age technorati.
Eventually Silicon Valley will end up like Detroit, with abandoned 4-over-1 condo complexes and empty office parks where the software industry once stood. But we've got a while to go. We haven't had our war yet, and the basic infrastructure of society - transportation, legal, military, government, etc - is still based on pre-electronic conceptions.