4 ms·

There's a reason you get superstar hubs, instead of companies and employees equalizing to somewhere else as soon as one metro gets a bit more expensive. Network

There's a reason you get superstar hubs, instead of companies and employees equalizing to somewhere else as soon as one metro gets a bit more expensive. Network/ecosystem effects are a real thing. Google already has some dev offices in cheaper areas, like Pittsburgh, where office space is cheaper and the salaries they pay slightly lower. And yet, they still choose to double their headcount in NYC. Just saying, "well I guess Google is just being irrational for no reason" would be simplistic, childish thinking. Google doesn't choose sites or increase headcount on a whim. They're going to do it because there are real advantages to the major tech hubs. Educated guess, as someone who works at Google now and used to work at Amazon: it's easier to attract people to major tech hubs, because they offer more career stability in the form of having lots of other tech companies around. Being in Kansas City making a Google salary might sound great, until you realize that if you lost that job for some reason, there's nothing around in the same tier. Also, the kind of person who wants to live in a cheaper city, with a big house for their family, is also the kind of person who's going to be reluctant to move from wherever they currently live anyway. That demographic is going to be hard to convince.

jshaqaw 8y ago
There is another aspect of this which some younger people miss. A hub city means a dual professional couple can both find long term career paths in the same place. That’s much harder to do in a non-hub city. Top talent tends to marry top talent as per assortive mating.
- fierro 8y ago
  endless list of reasons hub cities are good for business; people want to live and work there. especially young people as you said, couple's can more likely both find jobs, even if they work in vastly different sectors talent pool is larger many other businesses (potential customers) are there
wnevets 8y ago
> Google already has some dev offices in cheaper areas, like Pittsburgh, where office space is cheaper and the salaries they pay slightly lower. And yet, they still choose to double their headcount in NYC. Location, Location, Location. Yes it's cheaper to live and run a business in Kansas but then you're in Kansas.
- rsj_hn 8y ago
  I don't want to tell you what the right trade offs are between, say, living in Phoenix or Dallas or Charleston and living in NY or SF. But at some point people want to start families and buy a house and that starts to take precedence over being in a cool area. The only issue is jobs -- can they work remote, can they find a local employer, can they work for themselves? So there is a huge demand for higher paying jobs in lower cost areas compared to the demand for higher paying jobs in higher cost areas. You personally may think it unbearable to live in Scottsdale, AZ or Minneapolis, MN, but most people find it pleasant enough and will pull the trigger as soon as they can find a job that pays even 2/3 of what they are earning in SF or NY. Another data point is the taxes. This might be also interesting (pdf warning): https://www.edelman.com/sites/g/files/aatuss191/files/2019-02/2019_Edelman_Trust_Barometer_Special_Report_California.pdf?utm_source=website&utm_medium=special_report_california&utm_campaign=downloads https://www.edelman.com/sites/g/files/aatuss191/files/2019-0...
  - wnevets 8y ago
    >So there is a huge demand for higher paying jobs in lower cost areas compared to the demand for higher paying jobs in higher cost areas NYC is the most populated and density populated city in the country, which is just another way of saying its the city with the highest demand. If most people rather work and live in Scottsdale than that would be the most populated and density populated city in the country.
    - rsj_hn 8y ago
      By that logic, a city like Detroit, with 600K is 50 times more in demand than a city like Malibu, which only has 12K people.
      - wnevets 8y ago
        Why is that hard to believe? More people may say they want to Malibu than Detroit but until they do it doesn't matter. I would love to have a Tesla but dreams don't count as demand.
rsj_hn 8y ago
Honestly, I think you are not capturing the trade offs here correctly. There is some value to being in a hub, but not infinite value. For example a start up gains a lot more benefit from being in Silicon Valley than a company with 10,000 developers. The startup needs access to VCs, and it needs to hire superstar programmers. Once a company reaches critical mass, it doesn't need access to VCs, and isn't able to hire superstar programmers at scale, so the quality of the average employee declines compared to what you see in startups. Now you start talking more about repeatable, workman-like code rather than brilliant groundbreaking code. You can still do the latter in a research center that you can keep in the hub and move a lot of the other code to the periphery, which will be most of your employees. After all, we are talking about HQ2 here. At the same time, you have housing markets that are so insane that the majority of your developers will not be able to buy a house, which means they are going to leave you or demand really high wages -- wages that a company with 20K devs can't afford. This is the inexorable logic of the market. Suppose we are not talking about people but some other scarce resource. Very expensive leather. You put that into the exotic cars but when you need to produce in high volume, you look for cheaper substitutes in order to help scale your operations. Everyone likes to think they are rockstar developers, but your typical AMZN HQ2 employee is not a rockstar, they are probably just a decent programmer (Not that there's anything wrong with that :P ). It just doesn't make sense to put HQ2 into a place where you have to pay 200K to win over the marginal employee.
- TulliusCicero 8y ago
  > For example a start up gains a lot more benefit from being in Silicon Valley than a company with 10,000 developers. No, I'd say they have about equal value. Consider, Google has tens of thousands of tech workers in the bay area. How many other metros could they feasibly relocate their HQ to? Even if you assume that only, say, a third of their employees decline to relocate with them, you're possibly looking at ~10,000 job openings you'd need to staff up on within a year or two to not be absolutely crippling. > You can still do the latter in a research center that you can keep in the hub and move a lot of the other code to the periphery, which will be most of your employees. This completely glosses over how companies work. Google doesn't have two tiers of software engineer types, where one gets more exciting stuff and better pay/benefits, while the other languishes on boring things with mediocre pay. Trying to split up the company that way, "we'll just hire crappier engineers in [cheap place] now and treat them worse because they're dumber" would be a total disaster. > you have housing markets that are so insane that the majority of your developers will not be able to buy a house, which means they are going to leave you or demand really high wages -- wages that a company with 20K devs can't afford. While this is absolutely a problem, and I applaud efforts to increase affordability either in the areas where tech HQ's already are, or by distributing more offices elsewhere, you're missing the obvious fact that these major tech companies already do this, and it already works. Yes, some people leave. The strongest, and probably most valuable employees largely don't, because they make enough to offset the increased cost of housing: a T6 at Google may make 400-500k/year.

jshaqaw 8y ago

There is another aspect of this which some younger people miss. A hub city means a dual professional couple can both find long term career paths in the same place. That’s much harder to do in a non-hub city. Top talent tends to marry top talent as per assortive mating.

fierro 8y ago
endless list of reasons hub cities are good for business; people want to live and work there. especially young people as you said, couple's can more likely both find jobs, even if they work in vastly different sectors talent pool is larger many other businesses (potential customers) are there

wnevets 8y ago

> Google already has some dev offices in cheaper areas, like Pittsburgh, where office space is cheaper and the salaries they pay slightly lower. And yet, they still choose to double their headcount in NYC. Location, Location, Location. Yes it's cheaper to live and run a business in Kansas but then you're in Kansas.

rsj_hn 8y ago
I don't want to tell you what the right trade offs are between, say, living in Phoenix or Dallas or Charleston and living in NY or SF. But at some point people want to start families and buy a house and that starts to take precedence over being in a cool area. The only issue is jobs -- can they work remote, can they find a local employer, can they work for themselves? So there is a huge demand for higher paying jobs in lower cost areas compared to the demand for higher paying jobs in higher cost areas. You personally may think it unbearable to live in Scottsdale, AZ or Minneapolis, MN, but most people find it pleasant enough and will pull the trigger as soon as they can find a job that pays even 2/3 of what they are earning in SF or NY. Another data point is the taxes. This might be also interesting (pdf warning): https://www.edelman.com/sites/g/files/aatuss191/files/2019-02/2019_Edelman_Trust_Barometer_Special_Report_California.pdf?utm_source=website&utm_medium=special_report_california&utm_campaign=downloads https://www.edelman.com/sites/g/files/aatuss191/files/2019-0...
- wnevets 8y ago
  >So there is a huge demand for higher paying jobs in lower cost areas compared to the demand for higher paying jobs in higher cost areas NYC is the most populated and density populated city in the country, which is just another way of saying its the city with the highest demand. If most people rather work and live in Scottsdale than that would be the most populated and density populated city in the country.
  - rsj_hn 8y ago
    By that logic, a city like Detroit, with 600K is 50 times more in demand than a city like Malibu, which only has 12K people.
    - wnevets 8y ago
      Why is that hard to believe? More people may say they want to Malibu than Detroit but until they do it doesn't matter. I would love to have a Tesla but dreams don't count as demand.

rsj_hn 8y ago

Honestly, I think you are not capturing the trade offs here correctly. There is some value to being in a hub, but not infinite value. For example a start up gains a lot more benefit from being in Silicon Valley than a company with 10,000 developers. The startup needs access to VCs, and it needs to hire superstar programmers. Once a company reaches critical mass, it doesn't need access to VCs, and isn't able to hire superstar programmers at scale, so the quality of the average employee declines compared to what you see in startups. Now you start talking more about repeatable, workman-like code rather than brilliant groundbreaking code. You can still do the latter in a research center that you can keep in the hub and move a lot of the other code to the periphery, which will be most of your employees. After all, we are talking about HQ2 here. At the same time, you have housing markets that are so insane that the majority of your developers will not be able to buy a house, which means they are going to leave you or demand really high wages -- wages that a company with 20K devs can't afford. This is the inexorable logic of the market. Suppose we are not talking about people but some other scarce resource. Very expensive leather. You put that into the exotic cars but when you need to produce in high volume, you look for cheaper substitutes in order to help scale your operations. Everyone likes to think they are rockstar developers, but your typical AMZN HQ2 employee is not a rockstar, they are probably just a decent programmer (Not that there's anything wrong with that :P ). It just doesn't make sense to put HQ2 into a place where you have to pay 200K to win over the marginal employee.

TulliusCicero 8y ago
> For example a start up gains a lot more benefit from being in Silicon Valley than a company with 10,000 developers. No, I'd say they have about equal value. Consider, Google has tens of thousands of tech workers in the bay area. How many other metros could they feasibly relocate their HQ to? Even if you assume that only, say, a third of their employees decline to relocate with them, you're possibly looking at ~10,000 job openings you'd need to staff up on within a year or two to not be absolutely crippling. > You can still do the latter in a research center that you can keep in the hub and move a lot of the other code to the periphery, which will be most of your employees. This completely glosses over how companies work. Google doesn't have two tiers of software engineer types, where one gets more exciting stuff and better pay/benefits, while the other languishes on boring things with mediocre pay. Trying to split up the company that way, "we'll just hire crappier engineers in [cheap place] now and treat them worse because they're dumber" would be a total disaster. > you have housing markets that are so insane that the majority of your developers will not be able to buy a house, which means they are going to leave you or demand really high wages -- wages that a company with 20K devs can't afford. While this is absolutely a problem, and I applaud efforts to increase affordability either in the areas where tech HQ's already are, or by distributing more offices elsewhere, you're missing the obvious fact that these major tech companies already do this, and it already works. Yes, some people leave. The strongest, and probably most valuable employees largely don't, because they make enough to offset the increased cost of housing: a T6 at Google may make 400-500k/year.