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The market always corrects itself. San Francisco's high prices will continue to create an exodus of young talent which should help support a second Silicon Val

• raldi 11y ago
  > The market always corrects itself. "In the long run, we're all dead." -Keynes It took generations for a second Motor City to emerge outside of Detroit. New York is still the unchallenged capital of the finance and fashion worlds. There's no "Second Hollywood" in the United States. There's a Reno and an Atlantic City, but neither holds a candle to Las Vegas. What makes you so certain tech will have an exodus from San Francisco between now and the year of your retirement?
  • nugget 11y ago
    It's hard for two kids in a garage to start a new car company or a new investment bank. Much easier for them to start the next big tech company.
  • Encosia 11y ago
    > There's no "Second Hollywood" in the United States. Look into what's been going on in Georgia for the past few years. Not a replacement for Hollywood yet, but it's a good example of how quickly alternatives can take off due almost entirely to geographic differences in the cost of doing business.
    • jacobolus 11y ago
      Where by “geographic differences in the cost of doing business” you mean “desperate politicians in a race to the bottom competing over who can waive the most taxes”. http://www.georgia.org/industries/entertainment/production-incentives/ http://www.georgia.org/industries/entertainment/production-i...
      • echelon 11y ago
        My rent for a two bedroom apartment in Inman Park is $700. The costs of doing business in Atlanta are significantly less than other regions.
    • SomeCallMeTim 11y ago
      Georgia has had a presence at the Game Developers' Conference every year for as long back as I can remember. They've been wooing game developers with basically free money and other bonuses. And while they likely have convinced a few companies (they like to showcase a half dozen or so), it's not like it even was a measurable blip on the growth of game companies in Silicon Valley.
      • Encosia 11y ago
        That's interesting, but we (as far as I know) weren't talking about game development, but about TV/movie production. Most people don't realize it, but many recent high-budget movies were filmed in Georgia, e.g. Fast Five, Vacation, Ant-Man, all three Hunger Games movies, one of the recent X-Men movies, Flight, etc. After 2008, there was an abundance of empty warehouse space here available at deep discounts, not far from the highest volume airport in the world. As the economy rebounded, momentum in that industry seems to have remained even though there aren't many empty/cheap warehouses here anymore. A few developers are even working on purpose-built movie studios around town now. It has been interesting to watch, and certainly could parallel what could happen in the bay area if an exodus to somewhere like Austin began in earnest.
        • arcanus 11y ago
          > It has been interesting to watch, and certainly could > parallel what could happen in the bay area if an exodus to > somewhere like Austin began in earnest. Tech Austinite here -- given the rate prices of food, housing, etc. are spiking here, I'm presently more inclined to see ATX as catching up to SF prices and acting as an SXSF than remaining a low-cost alternative. Don't generally disagree with your thesis, but at least for tech I don't think the game is zero sum, and the market is expanding fast enough to support multiple tech hubs.
          • Encosia 11y ago
            Definitely. Austin was just the first example that came to mind, but I think you're right that spreading out to several regional hubs is also likely (and preferable, IMO).
    • rhino369 11y ago
      The "second hollywood" is Vancouver. I know it's not in the USA, but it's where a lot of TV is shot.
      • gkanapathy 11y ago
        There's where it's shot, and there's where it is run from.
  • echelon 11y ago
    > There's no "Second Hollywood" in the United States. It's right here in Atlanta. It's been a decade and a half in the making, and the pace and scale of it increases with every passing year.
    • someear 11y ago
      If the "second hollywood" is in fact in Atlanta, I think you're validating the original point (i.e. there is no second hollywood). Being second miles and miles behind the leader doesn't actually mean you're close to winning, or even competing.
    • GFK_of_xmaspast 11y ago
      According to wikipedia, as a whole $617M was spent in Georgia in 2013 on production; this compares disfavorably with Louisiana ($674M), British Columbia ($778M), and New York State (1880M). Wiki doesn't even bother to list California. (https://en.wikipedia.org/wiki/Film_industry_in_Georgia_%28U.S._state%29 https://en.wikipedia.org/wiki/Film_industry_in_Georgia_%28U....)
      • echelon 11y ago
        That list doesn't include all the new studios being built: Pinewood: http://m.pinewoodgroup.com/our-studios/usa/pinewood-atlanta-studios http://m.pinewoodgroup.com/our-studios/usa/pinewood-atlanta-... Third Rail: http://clatl.com/freshloaf/archives/2015/04/07/film-and-tv-studio-to-anchor-former-doraville-gm-plant-site http://clatl.com/freshloaf/archives/2015/04/07/film-and-tv-s... Tyler Perry's new facility: http://m.clatl.com/freshloaf/archives/2015/06/29/tyler-perrys-fort-mcpherson-studio-dreams-to-become-a-reality http://m.clatl.com/freshloaf/archives/2015/06/29/tyler-perry... This is just three of about ten studio facilities being built in the area. I believe three of the Marvel films have been filmed in Atlanta. These have been recent enough not to be in that list. I know this is anecdotal, but if you were living in Atlanta you'd get a sense of how much growth is occurring in our film industry.
  • cft 11y ago
    San Francisco is the second Hollywood. The new media capital.
    • raldi 11y ago
      And it only took, what, 90 years?
• gorkemyurt 11y ago
  Its kind of too late for that.. I expect record number companies to IPO in the next two years; uber, dropbox, airbnb, pinterest, stripe, lyft... A lot of people are going to be really liquid and will be looking to buy property.
  • nugget 11y ago
    No doubt, but as the gap between prices in SF and everywhere else widens, it will become much more appealing for them to move and enjoy a higher quality of life elsewhere.
• muzz 11y ago
  It's been 34 years since 1981, how much longer until the correction?
• rhino369 11y ago
  You'll probably see less profitable industries get out of dodge before tech companies do. Tech companies have more money, labor costs are less important to the bottom line, and young tech workers can and do spending way too much on rent.
• lsc 11y ago
  > It was interesting to hear Yelp call out high developer salaries on their last earnings call. Companies are starting to invest in satellite offices and this will have long term consequences. That's the thing... Technical people are still cheap. Really cheap, compared to the jobs where your asset is "knowing people" - our salaries haven't been increasing with the cost of living around here, unlike the real-estate agent example below. Look at what you pay a body shop for developer time. A lot of that goes to the body shop; the people who's main asset is the "relationship" with management. Heck, at 3%, become a real-estate agent. sell three or four houses around here a year, and you'll make more than your average developer or sysadmin. Yeah, wake me up when we make more than recruiters. Until then, I'm going to ignore all this noise about technical people being expensive, because it's obvious bullshit. All that said, while I don't think the cost of us is a problem for companies, the high cost of living is a problem for us. As a technical person, the bay area only really makes sense if you are the best of the best (or have those "relationship contacts" and can get real money) - for the rest of us, it mostly only makes sense if you have a deep emotional connection to the place and/or have a rent-controlled space. (In the south bay, if you own, live with family, or have a landlord who doesn't jack up rents with market... there's no actual rent control in the south bay, though I know a few people paying vastly below-market rents because they've been renting from the same person for a decade or more, and that person is being cool. There's serious rent control in San Francisco proper.) This... is probably why companies are opening up branch offices; there are many good people who just won't move here because the cost, but that's because we aren't expensive enough, not because we're too expensive.
  • hibikir 11y ago
    The advantage of the bay area is your improved chances of networking. If you are well connected enough as it is, chances are you'll do better elsewhere, maybe even doing remote work for bay area companies. There's people here that could pay for a 4 bedroom house in full every year if then wanted to, just by abusing that pay differential. So why would we move there, if we can get paid pretty much the same with a much cheaper cost of living? The extra connections are not worth going from 1K a month mortgages to 4-5K.
• frozenport 11y ago
  >>The market always corrects itself. Its not a free market, there are regulations.
• ChuckMcM 11y ago
  I thought it was fascinating how many accuracies in that article played out, makes me wish I had bought some houses for $129,000 in San Francisco in the 80's :-). But perhaps more interesting is the salary question, because there is so much resistance to raising salaries it pulls companies out of the Bay Area. (which has been true since I started here in the 80's) I am not sure what the opposite of a bubble is (not enough increases relative to the market) but as far as I can tell the whole country is in one of those. At some point someone is going to just say "Screw it, staff for effectiveness even it it doubles our HR cost." and if that entity successfully captures the top performers it will seriously outperform all of its competitors in the market and light off a wage war which was what happened in the late 70's and 90's in the Bay Area.