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The United States has over nine million square kilometers of land area. Why is the most portable industry in the world (software) being held hostage by a few sq

The United States has over nine million square kilometers of land area. Why is the most portable industry in the world (software) being held hostage by a few square kilometers along the coast of northern California?

gumby 7y ago
This topic has been discussed endlessly over the last 40 years (both by local social scientists and people trying to reproduce Silicon Valley elsewhere). The short answer is “it’s a just so story commingling schools, openness, military boom...”. One thing to notice is that plenty of industries have followed this pattern until they became mature (cars, breakfast cereals, aircraft to some degree). And you see this in software: the pressure discussed is at the frothy end of the market.
- iso-8859-1 7y ago
  I couldn't parse: > it’s a just so story commingling Explanations: In science and philosophy, a just-so story is an unverifiable narrative explanation for a cultural practice, a biological trait, or behavior of humans or other animals. The pejorative nature of the expression is an implicit criticism that reminds the hearer of the essentially fictional and unprovable nature of such an explanation. com·min·gle: mix; blend
  - noneeeed 7y ago
    Thank you. I couldn't parse that comment at all. This is where a few quotation marks (or hyphenation) help, so either just-so-story, or "just so story".
  - edwinyzh 7y ago
    I thought it's just me as a non-native English speaker
- dreamcompiler 7y ago
  I know some of the answers but at what point does the cost of doing business in the Bay Area outweigh the benefits? Keep in mind when Silicon Valley began they were actually fabbing silicon. That doesn't happen in SV today (AFAIK). It's mostly software now, and software is much more portable than silicon.
  - rficcaglia 7y ago
    It happens but on a very small scale. Very niche fabs for stuff that isn’t at mass market scale.
  - gumby 7y ago
    Clearly the cost outweighs the benefits for run-of-the-mill software and hardware, as the majority of the world's code is written outside the valley, and most low end hardware is designed outside it as well. Also it's not worth it where the valley is behind the curve (e.g. engines are designed in different centers of excellence). Even for venture-backed (intended-to-be) high-growth companies, the Bay Area is only about 50% of all US venture capital investment. And there has been some spread: in my professional lifetime the "Valley" has grown to encompass SF and parts of the East Bay. When I first started working here people lived in SF and commuted to tech jobs in MP and points south. But some products are just so high margin (iPhones, Internet search, USB-powered vape tubes) that it's cheaper overall to be here and take advantage of the affordances available.
- Ericson2314 7y ago
  The very short answer is social graphs are dense enough. Land use is important even if you have tons of land like the US.
CyberFonic 7y ago
Good question! Remote work is a viable option. Some "remote first" companies have been very successful. And ... there are lots of talented people who do not live in SF. Perhaps it is the founders and VCs that are clinging to the status-quo.
resonantjacket5 7y ago
It's to minimize distance. Aka factories minimize distance between inputs, other factories, and customers. So Coca Cola builds multiple factories because buying water locally and shipping the finished bottle 10 miles is cheaper than shipping it 1000 miles. For car factories there are some costs for traveling in between factories so most of them are still clustered in certain states, but the factories can be spread out. Plus, once a city has too many factories increasing wages, the next company that comes along will build their new factory elsewhere. Tech offices have effectively zero distance to customer cost (at least within the USA, you might build another place for say the eu) So the main costs to minimize are input costs (employees) and costs between offices (coordination). Unfortunately the "cost" between offices is relatively high. Unlike multiple factories, aka ship the plastic bottle from one factory and the plastic cap from another factor to the main bottler factory, multiple offices require coordination with one another. Or to put it in tech words, it's not easily parallelizable. The more offices spread out in multiple cities you have, the more meetings you need to coordinate between each city. And the cost between offices is essentially "time" the most precious resource for a tech firm, which cannot really be removed. And so tech firms pay the higher col rather than spreading out into other cities; well until the col really increases too much.
- JDiculous 7y ago
  You're ignoring the whole remote work thing enabled by the internet and tools like Hangouts/Skype/Slack. There's no for software engineers to be in the same physical office.

gumby 7y ago

This topic has been discussed endlessly over the last 40 years (both by local social scientists and people trying to reproduce Silicon Valley elsewhere). The short answer is “it’s a just so story commingling schools, openness, military boom...”. One thing to notice is that plenty of industries have followed this pattern until they became mature (cars, breakfast cereals, aircraft to some degree). And you see this in software: the pressure discussed is at the frothy end of the market.

iso-8859-1 7y ago
I couldn't parse: > it’s a just so story commingling Explanations: In science and philosophy, a just-so story is an unverifiable narrative explanation for a cultural practice, a biological trait, or behavior of humans or other animals. The pejorative nature of the expression is an implicit criticism that reminds the hearer of the essentially fictional and unprovable nature of such an explanation. com·min·gle: mix; blend
- noneeeed 7y ago
  Thank you. I couldn't parse that comment at all. This is where a few quotation marks (or hyphenation) help, so either just-so-story, or "just so story".
- edwinyzh 7y ago
  I thought it's just me as a non-native English speaker
dreamcompiler 7y ago
I know some of the answers but at what point does the cost of doing business in the Bay Area outweigh the benefits? Keep in mind when Silicon Valley began they were actually fabbing silicon. That doesn't happen in SV today (AFAIK). It's mostly software now, and software is much more portable than silicon.
- rficcaglia 7y ago
  It happens but on a very small scale. Very niche fabs for stuff that isn’t at mass market scale.
- gumby 7y ago
  Clearly the cost outweighs the benefits for run-of-the-mill software and hardware, as the majority of the world's code is written outside the valley, and most low end hardware is designed outside it as well. Also it's not worth it where the valley is behind the curve (e.g. engines are designed in different centers of excellence). Even for venture-backed (intended-to-be) high-growth companies, the Bay Area is only about 50% of all US venture capital investment. And there has been some spread: in my professional lifetime the "Valley" has grown to encompass SF and parts of the East Bay. When I first started working here people lived in SF and commuted to tech jobs in MP and points south. But some products are just so high margin (iPhones, Internet search, USB-powered vape tubes) that it's cheaper overall to be here and take advantage of the affordances available.
Ericson2314 7y ago
The very short answer is social graphs are dense enough. Land use is important even if you have tons of land like the US.

CyberFonic 7y ago

Good question! Remote work is a viable option. Some "remote first" companies have been very successful. And ... there are lots of talented people who do not live in SF. Perhaps it is the founders and VCs that are clinging to the status-quo.

resonantjacket5 7y ago

It's to minimize distance. Aka factories minimize distance between inputs, other factories, and customers. So Coca Cola builds multiple factories because buying water locally and shipping the finished bottle 10 miles is cheaper than shipping it 1000 miles. For car factories there are some costs for traveling in between factories so most of them are still clustered in certain states, but the factories can be spread out. Plus, once a city has too many factories increasing wages, the next company that comes along will build their new factory elsewhere. Tech offices have effectively zero distance to customer cost (at least within the USA, you might build another place for say the eu) So the main costs to minimize are input costs (employees) and costs between offices (coordination). Unfortunately the "cost" between offices is relatively high. Unlike multiple factories, aka ship the plastic bottle from one factory and the plastic cap from another factor to the main bottler factory, multiple offices require coordination with one another. Or to put it in tech words, it's not easily parallelizable. The more offices spread out in multiple cities you have, the more meetings you need to coordinate between each city. And the cost between offices is essentially "time" the most precious resource for a tech firm, which cannot really be removed. And so tech firms pay the higher col rather than spreading out into other cities; well until the col really increases too much.

JDiculous 7y ago
You're ignoring the whole remote work thing enabled by the internet and tools like Hangouts/Skype/Slack. There's no for software engineers to be in the same physical office.