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“A company like Facebook and others are expanding because they are running out of talent in Silicon Valley and San Francisco,” said Paul Leonard, a managing con

“A company like Facebook and others are expanding because they are running out of talent in Silicon Valley and San Francisco,” said Paul Leonard, a managing consultant at CoStar. Honest question... is that really true? It reads like hyperbole or certainly an over simplification.

fred_is_fred 7y ago
I guess they looked at a map and picked the most expensive US city they could find then?
nradov 7y ago
Talent is a myth. https://www.newyorker.com/magazine/2002/07/22/the-talent-myth https://www.newyorker.com/magazine/2002/07/22/the-talent-myt... Labor costs are high and growing in the SF Bay Area but there are many other areas that would work just fine for a tech company HQ.
- coolio2657 7y ago
  While the article you reference is quite good, if I do say so, as it points out many aspects of how people 'exude' superiority more than they actually are 'superior', or 'more talented' than others, straight up saying that "Talent is a myth" is none-sense. Your view should be more nuanced.
kcorbitt 7y ago
Facebook already pays its median employee $240k (https://www.sfchronicle.com/business/networth/article/Yes-median-pay-at-Facebook-really-is-about-12870786.php?psid=c7FIe https://www.sfchronicle.com/business/networth/article/Yes-me...). You can assume that at those salaries, they've already hired a large percentage of the Bay Area software engineers who meet their bar and are willing to work at Facebook. So if they want to hire another, say, 5k engineers, they either have to somehow convince 5k people to move to the Bay Area or expand in satellite offices. Word on the street from local recruiters is that you can still get new grads to move to the Bay Area (for a few years at least), but it has become nearly impossible to get senior talent to move in because of cost of living and quality of life issues. So depending on the type of engineer they're looking for, yes, they may be effectively forced to expand in other locations.
- blakesterz 7y ago
  I can believe that, but NYC is just as bad, maybe even worse, isn't it? Seems like "out of the frying pan into the fire".
  - kcorbitt 7y ago
    Software engineer salaries are fairly comparable between NYC and the Bay Area, although most quantitative sources I've seen have NYC coming in slightly lower. But NYC could have a large number of engineers who (1) are willing to work for Facebook (2) for $240k but (3) are unwilling to leave NYC. Expanding their NYC office will allow Facebook to hire more of those engineers without lowering their hiring bar or further fragmenting campuses.
  - ghaff 7y ago
    At a minimum, NYC is just very different from SF and the South Bay. Leaving aside costs and salaries, which are both probably a bit higher in the Bay Area, the environments overall are just a lot different. Lots of people who love the access to nature, the climate, etc. in the Bay Area would never move to NYC. And lots of people who consider anyplace that's not Manhattan to be a provincial hick town would never move to the Bay Area.
    - tombert 7y ago
      > Lots of people who love the access to nature, the climate, etc. in the Bay Area would never move to NYC. And lots of people who consider anyplace that's not Manhattan to be a provincial hick town would never move to the Bay Area I'm closer to the second camp (though I live in Brooklyn). Something a lot of people don't seem to realize is that there are a lot of very smart people working on trading apps for big banks on Wall Street that absolutely hate it. High Frequency Trading apps require a ton of programming talent, but a lot of the engineers who work on this stuff really dislike the bank atmosphere. When I worked at Jet.com, I had several coworkers who were substantially smarter than me, who actually took a paycut to work for Jet, simply because they hated the bank environment so much. I think some of the tech companies know this fact, and feel that they can probably poach some of this talent by offering competitive salaries while having a more interesting atmosphere. EDIT: DISCLAIMER I work for one of these "primarily California companies expanding stuff to NYC".
dba7dba 7y ago
I've seen more than a few posts at here where candidate for jobs in Silicon Valley is given an offer but turns it down because they don't want to move to Silicon Valley/San Francisco for various reasons.
- RhodesianHunter 7y ago
  Various reasons usually boiling down to an obscene cost of living. For most of the other major cities in the US (excluding maybe NYC, Boston, Seattle, DC) a salary doubling wouldn't make you whole for a move to the Bay Area.
  - mikeash 7y ago
    DC here. Any time I’m distressed about the cost of living, I just look at the Bay Area. As far as I can tell, housing is at least 3-4x more expensive. Even on a senior engineer’s pay, your choices come down to something tiny or something that requires a very painful commute.
    - d1zzy 7y ago
      I wouldn't go that far... or maybe it depends on what you define as "tiny". For a place to rent you can find 2500 sqft higher end apartments relatively close to work for 3000-3500 a month. The total income of a senior engineer when you factor in the stock compensation (and not just the base salary) should more than cover for that. On top of it, many other things cost the same across the country (ex. gadgets) while your salary is much higher than other places. Now if by "cost of living" you mean that you must _own_ a single family home, then things definitely start looking a lot more grim. But I think it's unfair to make that as some sort of basic requirement for moving somewhere, it's a very American attitude to begin with.
      - mikeash 7y ago
        It’s a basic requirement for me to move somewhere. I don’t much care if that’s fair or not.
thorwasdfasdf 7y ago
They can certainly find more talent in the bay area, if they were willing to pay even more. In SV and SF, half the paycheck goes to the GOv and the other half goes to real estate. If you want to cut labor costs, Simply find a city with a lower cost of labor. There's plenty to choose from: Austin, Dallas, Houston, Chicago, etc. All of these places sport roughly 100K salaries for senior devs. They could hire all the engineers they wanted. And of course, there's always the final (least palatable) option: Improve your highering process. It's pretty ridiculous when half the employees of your own company wouldn't hire the other half.
- pat2man 7y ago
  Not if the engineers don't want to live there...
  - coolio2657 7y ago
    Which, in all likelihood, is the primary reason why Silicon Valley does not want to move out of Silicon Valley.
  - thatonedevguy85 7y ago
    There's plenty of engineers that already live in those cities though?
- i_am_proteus 7y ago
  California's tax code contributes to housing illiquidity in the SF Bay Area. A dev who bought a home eight years ago has a substantially different net income after housing and taxes from a similar dev who would be moving to the area. So there's some merit to the idea that SV/SF have a fixed number of developers for whom salaries in the $150k-250k range are excellent, and another pool of "new arrivals" for whom that salary is decent/good, but results in a substantially lower quality of life. Further raising salaries distorts the real estate market even more. Since SV/SF/California seems uninterested in the political moves necessary to improve the housing supply (sensibly, as these market changes would negatively impact the voters who have bought into the current system) the natural result is to move to other geographic markets for talent.
walshemj 7y ago
I suspect the availability of better public transport allowing a commute from 50/60 miles on the train which in turn allows you to buy a nicer bigger property.
- betterunix2 7y ago
  I suspect that most of the young tech and finance workers in NYC live in Manhattan, Brooklyn, Queens (LIC in particular), Jersey City, and Hoboken -- all of which are expensive and right in the center of the metropolitan region. I am sure some recent college graduates are commuting from the suburbs but for the most part suburban life attracts people who are more established in their careers (and who are not planning to stay out late enough that the late night LIRR/MNR/NJT schedules are a consideration).
  - walshemj 7y ago
    I was thinking couples in there late 20's who might want to start a family - I suspect that FANG employees median age is creeping up
opportune 7y ago
I think big tech companies are so large that they've realized that if they keep pumping $200k-$500k/yr employees into the bay area (that weren't there before): 1. Housing prices will continue to increase since the supply is not changing yet demand (and ability to pay at current prices) is increasing 2.1 Gentrification happens and existing bay area natives get more adversarial to tech companies 2.2 Existing employees experience a decrease in QOL if comp packages remain the same 3. Tech companies keep having to increase TC packages to keep their employees' abilities to purchase homes Also by expanding into other large markets tech companies can hire people who have lots of ties to an area and don't want to move. This has an added benefit of perhaps not having to offer as much TC since these markets might be less competitive.
- novok 7y ago
  NYC TC is fairly close to SF TC.
  - i_am_proteus 7y ago
    However: 1) Software (&c.) is not the dominant industry, so rising salaries in software does not have an outsized effect on the real estate market. 2) The NYC housing market, unhealthy as it is, is healthier than the SF Bay Area's. NYC is somewhat less geographically constrained and, importantly, has excellent public transit infrastructure for long-distance commutes from lower-cost outer suburbs.
    - novok 7y ago
      So it's even better, not considering the bad career effects of not being at HQ?
  - opportune 7y ago
    The NYC housing market is larger and healthier so an increase in X employees there will have less of an impact than an increase of X employees in SV
president 7y ago
They are not running out of talent but they are running out of starry-eyed tech dreamers and people that can be exploited of their passion. The SF Bay area tech scene is fizzling out and the excitement is long gone. Also, this is a chance for top tech execs and their friends to capitalize on the real estate speculation game as they reinforce the new talent pipeline to NYC.
- ryacko 7y ago
  Disney owns a city in Florida (Reedy Creek Improvement District), Scientology owns a city in Florida (Clearwater)... I would assume that the best real estate speculation would be to buy land with higher margins.
- bobthepanda 7y ago
  The time to buy and speculate in NYC was 20-30 years ago. You can speculate now, but the metro area is so large that even a large company building a regional office there would be a drop in the labor market.

fred_is_fred 7y ago

I guess they looked at a map and picked the most expensive US city they could find then?

nradov 7y ago

Talent is a myth. https://www.newyorker.com/magazine/2002/07/22/the-talent-myth https://www.newyorker.com/magazine/2002/07/22/the-talent-myt... Labor costs are high and growing in the SF Bay Area but there are many other areas that would work just fine for a tech company HQ.

coolio2657 7y ago
While the article you reference is quite good, if I do say so, as it points out many aspects of how people 'exude' superiority more than they actually are 'superior', or 'more talented' than others, straight up saying that "Talent is a myth" is none-sense. Your view should be more nuanced.

kcorbitt 7y ago

Facebook already pays its median employee $240k (https://www.sfchronicle.com/business/networth/article/Yes-median-pay-at-Facebook-really-is-about-12870786.php?psid=c7FIe https://www.sfchronicle.com/business/networth/article/Yes-me...). You can assume that at those salaries, they've already hired a large percentage of the Bay Area software engineers who meet their bar and are willing to work at Facebook. So if they want to hire another, say, 5k engineers, they either have to somehow convince 5k people to move to the Bay Area or expand in satellite offices. Word on the street from local recruiters is that you can still get new grads to move to the Bay Area (for a few years at least), but it has become nearly impossible to get senior talent to move in because of cost of living and quality of life issues. So depending on the type of engineer they're looking for, yes, they may be effectively forced to expand in other locations.

blakesterz 7y ago
I can believe that, but NYC is just as bad, maybe even worse, isn't it? Seems like "out of the frying pan into the fire".
- kcorbitt 7y ago
  Software engineer salaries are fairly comparable between NYC and the Bay Area, although most quantitative sources I've seen have NYC coming in slightly lower. But NYC could have a large number of engineers who (1) are willing to work for Facebook (2) for $240k but (3) are unwilling to leave NYC. Expanding their NYC office will allow Facebook to hire more of those engineers without lowering their hiring bar or further fragmenting campuses.
- ghaff 7y ago
  At a minimum, NYC is just very different from SF and the South Bay. Leaving aside costs and salaries, which are both probably a bit higher in the Bay Area, the environments overall are just a lot different. Lots of people who love the access to nature, the climate, etc. in the Bay Area would never move to NYC. And lots of people who consider anyplace that's not Manhattan to be a provincial hick town would never move to the Bay Area.
  - tombert 7y ago
    > Lots of people who love the access to nature, the climate, etc. in the Bay Area would never move to NYC. And lots of people who consider anyplace that's not Manhattan to be a provincial hick town would never move to the Bay Area I'm closer to the second camp (though I live in Brooklyn). Something a lot of people don't seem to realize is that there are a lot of very smart people working on trading apps for big banks on Wall Street that absolutely hate it. High Frequency Trading apps require a ton of programming talent, but a lot of the engineers who work on this stuff really dislike the bank atmosphere. When I worked at Jet.com, I had several coworkers who were substantially smarter than me, who actually took a paycut to work for Jet, simply because they hated the bank environment so much. I think some of the tech companies know this fact, and feel that they can probably poach some of this talent by offering competitive salaries while having a more interesting atmosphere. EDIT: DISCLAIMER I work for one of these "primarily California companies expanding stuff to NYC".

dba7dba 7y ago

I've seen more than a few posts at here where candidate for jobs in Silicon Valley is given an offer but turns it down because they don't want to move to Silicon Valley/San Francisco for various reasons.

RhodesianHunter 7y ago
Various reasons usually boiling down to an obscene cost of living. For most of the other major cities in the US (excluding maybe NYC, Boston, Seattle, DC) a salary doubling wouldn't make you whole for a move to the Bay Area.
- mikeash 7y ago
  DC here. Any time I’m distressed about the cost of living, I just look at the Bay Area. As far as I can tell, housing is at least 3-4x more expensive. Even on a senior engineer’s pay, your choices come down to something tiny or something that requires a very painful commute.
  - d1zzy 7y ago
    I wouldn't go that far... or maybe it depends on what you define as "tiny". For a place to rent you can find 2500 sqft higher end apartments relatively close to work for 3000-3500 a month. The total income of a senior engineer when you factor in the stock compensation (and not just the base salary) should more than cover for that. On top of it, many other things cost the same across the country (ex. gadgets) while your salary is much higher than other places. Now if by "cost of living" you mean that you must _own_ a single family home, then things definitely start looking a lot more grim. But I think it's unfair to make that as some sort of basic requirement for moving somewhere, it's a very American attitude to begin with.
    - mikeash 7y ago
      It’s a basic requirement for me to move somewhere. I don’t much care if that’s fair or not.

thorwasdfasdf 7y ago

They can certainly find more talent in the bay area, if they were willing to pay even more. In SV and SF, half the paycheck goes to the GOv and the other half goes to real estate. If you want to cut labor costs, Simply find a city with a lower cost of labor. There's plenty to choose from: Austin, Dallas, Houston, Chicago, etc. All of these places sport roughly 100K salaries for senior devs. They could hire all the engineers they wanted. And of course, there's always the final (least palatable) option: Improve your highering process. It's pretty ridiculous when half the employees of your own company wouldn't hire the other half.

pat2man 7y ago
Not if the engineers don't want to live there...
- coolio2657 7y ago
  Which, in all likelihood, is the primary reason why Silicon Valley does not want to move out of Silicon Valley.
- thatonedevguy85 7y ago
  There's plenty of engineers that already live in those cities though?
i_am_proteus 7y ago
California's tax code contributes to housing illiquidity in the SF Bay Area. A dev who bought a home eight years ago has a substantially different net income after housing and taxes from a similar dev who would be moving to the area. So there's some merit to the idea that SV/SF have a fixed number of developers for whom salaries in the $150k-250k range are excellent, and another pool of "new arrivals" for whom that salary is decent/good, but results in a substantially lower quality of life. Further raising salaries distorts the real estate market even more. Since SV/SF/California seems uninterested in the political moves necessary to improve the housing supply (sensibly, as these market changes would negatively impact the voters who have bought into the current system) the natural result is to move to other geographic markets for talent.

walshemj 7y ago

I suspect the availability of better public transport allowing a commute from 50/60 miles on the train which in turn allows you to buy a nicer bigger property.

betterunix2 7y ago
I suspect that most of the young tech and finance workers in NYC live in Manhattan, Brooklyn, Queens (LIC in particular), Jersey City, and Hoboken -- all of which are expensive and right in the center of the metropolitan region. I am sure some recent college graduates are commuting from the suburbs but for the most part suburban life attracts people who are more established in their careers (and who are not planning to stay out late enough that the late night LIRR/MNR/NJT schedules are a consideration).
- walshemj 7y ago
  I was thinking couples in there late 20's who might want to start a family - I suspect that FANG employees median age is creeping up

opportune 7y ago

I think big tech companies are so large that they've realized that if they keep pumping $200k-$500k/yr employees into the bay area (that weren't there before): 1. Housing prices will continue to increase since the supply is not changing yet demand (and ability to pay at current prices) is increasing 2.1 Gentrification happens and existing bay area natives get more adversarial to tech companies 2.2 Existing employees experience a decrease in QOL if comp packages remain the same 3. Tech companies keep having to increase TC packages to keep their employees' abilities to purchase homes Also by expanding into other large markets tech companies can hire people who have lots of ties to an area and don't want to move. This has an added benefit of perhaps not having to offer as much TC since these markets might be less competitive.

novok 7y ago
NYC TC is fairly close to SF TC.
- i_am_proteus 7y ago
  However: 1) Software (&c.) is not the dominant industry, so rising salaries in software does not have an outsized effect on the real estate market. 2) The NYC housing market, unhealthy as it is, is healthier than the SF Bay Area's. NYC is somewhat less geographically constrained and, importantly, has excellent public transit infrastructure for long-distance commutes from lower-cost outer suburbs.
  - novok 7y ago
    So it's even better, not considering the bad career effects of not being at HQ?
- opportune 7y ago
  The NYC housing market is larger and healthier so an increase in X employees there will have less of an impact than an increase of X employees in SV

president 7y ago

They are not running out of talent but they are running out of starry-eyed tech dreamers and people that can be exploited of their passion. The SF Bay area tech scene is fizzling out and the excitement is long gone. Also, this is a chance for top tech execs and their friends to capitalize on the real estate speculation game as they reinforce the new talent pipeline to NYC.

ryacko 7y ago
Disney owns a city in Florida (Reedy Creek Improvement District), Scientology owns a city in Florida (Clearwater)... I would assume that the best real estate speculation would be to buy land with higher margins.
bobthepanda 7y ago
The time to buy and speculate in NYC was 20-30 years ago. You can speculate now, but the metro area is so large that even a large company building a regional office there would be a drop in the labor market.