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> I think it's a real problem that venture capital is highly concentrated in just a few places. My impression is that technical communities strongly benefit fr
by DoofusOfDeath 8y ago
> I think it's a real problem that venture capital is highly concentrated in just a few places.
My impression is that technical communities strongly benefit from getting many techies into a small geographic area.
If we take that as a starting assumption, then I'm not sure there's anything amiss about VC funding being concentrated in those specific geographies.
- ng12 8y agoBecause it's a massive waste of money. How much of that VC funding is disappearing due to high COL and high CODB?
- DoofusOfDeath 8y agoI guess the question then is whether or not the marginal costs outweigh the marginal benefits. I have no clue what the answer to that is.
- esturk 8y agoIt's not a waste if they get better returns. In comparison, you're not going to attract many people to the Midwest when no one wants to go there, which in turn yield lower returns.
- ng12 8y agoThe VCs are acting rationally but it's still an inefficiency. Theoretically if a significant number of tech people chose to gather in a low-COL Midwest city you could stretch VC dollars much further while still undercutting SF/NYC.
- dnadler 8y ago> if a significant number of tech people chose to gather in a low-COL Midwest city Honestly, the cost of living would probably go up...
- ng12 8y agoBut probably not anywhere near SF/NYC. More space and fewer competing industries.
- zjaffee 8y agoCharlotte NC and Houston TX have had a similar if not higher population growth rate compared to major west cost and north east cities, where their housing prices have remained below the national average. The reason why cities where tech locates in are so expensive is the lack of low cost new housing which comes from the fact that all land prices in a reasonable commutable distance are already very high. While it's bad for the environment, greenfield sprawl is the only true success we've seen in constructing affordable housing.
- dnadler 8y ago> where their housing prices have remained below the national average But are they higher than they were before the population grew? That's the important metric here, and would speak to whether home building kept up with the population growth. Also, cost of living is not only about housing.
- zjaffee 8y agoExcept cost of living in major tech cities is usually skewed higher because of housing in particular, things like groceries are generally only a small impact. Net land values are absolutely higher than they once were, farm/ranching fields now have housing on them. And while prices are higher than before the population grew, the prices have remained affordable for those earning the median income the entire time since the agglomeration effects of this growth has caused wages to rise.
- fuzzybeard 8y agoThe problem of course being that the "brain capital" in those areas doesn't compare to Boston, which has more universities in a small area than anywhere else.
- hpkuarg 8y agoI can't remember where I read it first, but: "Startups are an inefficiency imposed on the transfer of wealth from VCs to landlords."
- corpMaverick 8y agoThis. The real winners in tech are those who own a bunch of houses in the right places.
- acjohnson55 8y agoSo much for the Internet, eh?
- zjaffee 8y agoI'd argue that it goes beyond tech, but all post industrial industries and ventures benefit from concentrations of talent and other agglomeration effects far more than they do from cheap land and quick availability of raw resources that industrial economies favored. It's a shame, because if this ultimately ends up being true, even more of our economy than it already has will concentrate in fewer and fewer very expensive cities.