12 ms·

I am not in the bay area, in fact I've never even been to the West Coast. So I am going to ask what may seem like a stupid question to some of you. I mean this

by dawg- 7y ago

I am not in the bay area, in fact I've never even been to the West Coast. So I am going to ask what may seem like a stupid question to some of you. I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? It's a successful company with a great product - that I'm sure many people would like to work for. They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? And they could pull a mini-Amazon and get some sweet tax breaks to boot. Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere?

kasey_junk 7y ago
Stripe has offices in lots of places. But they also have their existing employees in San Francisco. Fucking off to another city is functionally equivalent to laying off half the company.
- mc32 7y ago
  Boeing moved, many companies based in NYC moved out of the city in the 80s, 90s. It’s not extremely hard, but it is disruptive. When the exodus happens it’ll start as a trickle and by the time people take notice half the cos will have reduced occupancy. After certain stage it’s more about managing growth than about R&D, so you can find most of the talent you need in alternate markets.
  - ghaff 7y ago
    In all fairness, significant HQ moves often have a major cut in headcount as a well-understood side effect if not an actual motivation. But, yes, companies can and have moved their HQs a lot more than ten miles. It's probably harder in an industry and at a time when more people figure a job with a given company is pretty ephemeral though.
    - mc32 7y ago
      Maybe but I think people will figure out the talent deserts have more oases than people think. There are more options for talent than just SV. Remember much of the US talent in SV come from other parts of the country. Many would stay local if given the opp to stay local. So instead of drawing talent to SV, SV could seek the talent in those markets (where talent is growing).
      - ghaff 7y ago
        Oh I agree with all that. I don't live in SV/SF myself and have no real interest in doing so. But so many people have the attitude that you can't have a tech career if you don't live in SV that it would probably be difficult for an existing company to move out of the area without losing a lot of people (or at least letting them work remote).
      - SpicyLemonZest 7y ago
        Maybe people in the abstract would, but at the level of individual people and companies talent isn’t fungible. If Stripe were to lose 100 senior engineers in a move to Salt Lake City, but could pick up 110 new ones at 90% of the price, it’s not obvious that would be a net win.
        mc32 7y ago
        Not in that year, but long term it can be a win (obviously depending on their goals).
        SpicyLemonZest 7y ago
        One perspective is that the exchange permanently hamstrings the company. You spent let's say 3 years on average, training those engineers to be the best people in the world at solving Stripe's problems, but now they're gone with (unless you're gonna do double payroll for a while) only an arms-length handoff to the new staff. That's 300 person-years of training, gone forever. Arguably even worse, it propagates upwards; there will be some number of valuable, important projects which can no longer get done because the needed expertise was lost.
  - goobynight 7y ago
    I feel like Boeing has far more of a monopoly on hiring the kind of talent they need than Stripe. They also seem like a place that has more "lifers". Stripe engineers can just say "no thanks" and go work for SF company n+1 down the road. Does Boeing have competition in the same city that could reasonably hire Boeing knowledge workers? Honest question.
    - spaceandshit 7y ago
      There are a few in the Puget Sound such as Blue Origin, Collins Aerospace, SpaceX and some other smaller ones. Your point is valid though.
  - balls187 7y ago
    Boeing moved their Corporate HQ, specifically the executive team. Their BU headquarters remained in the same locations.
  - asveikau 7y ago
    > many companies based in NYC moved out of the city in the 80s, 90s. This is the story of most American cities in the 80s and 90s, thankfully it has had some reversal this century, and I'm not sure it should be seen as a template or justification for present or future actions.
    - mc32 7y ago
      While the reasons may be different now, the process of relocating is going to be similar. Some staff will like it, some will resign, some will go with reservations, etc. and, with today’s communications this will be even easier.
  - rodgerd 7y ago
    Boeing's move seems to be working well for them.
- chrisdhoover 7y ago
  Something companies will do to reset their salaries.
manuelflara 7y ago
More and more companies are choosing to do this when they are created. But Stripe has, I believe, over a thousand employees. Expecting them to relocate far away (p.e. another state) is simply ridiculous (I believe the one example of a company doing something like this would be Zappos, when they relocated to Las Vegas). You'd just lose too many people. Now, opening another office somewhere else to keep expanding, a lot of companies do.
- dawg- 7y ago
  Thanks! I didn't consider this before posting
wgerard 7y ago
> I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area. I don't mean that as a slight either - I think if you're spending a good portion of your life on something, you might as well do it in a place you enjoy spending time in!
- randycupertino 7y ago
  > To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area. At my firm, the founders wish they could go back to NYC or east coast in a heartbeat, but tied to Bay Area due to funding connections and employee pool. I work a lot with Europe so I'd love to be on the east coast as well.
ohduran 7y ago
A corollary to this well reasoned question would be: has Silicon Valley area peaked in terms of startup creation? On the one hand, you've got the talent there, attracted because the big tech is concentrated in the area; on the other hand, the living costs makes a ramen-profitable startup in SV way more expensive than a non-SV one. How should I look at this issue from the perspective of an outsider? Should I join the crowd or run in the opposite direction?
- titanomachy 7y ago
  I don't have data to back this up, except anecdotal, but I think spending a few years in SF, NY, or Seattle can boost your market value by a factor of 3-4. So it could still be worth it in the long run.
  - ohduran 7y ago
    It's just my personal perspective, but... I'm still in awe of SV. I simply feel that the time to be there has passed, and I'm late to the party. So where's the party now? It's happening somewhere. Someone is building the next big thing and none of us know yet. The eternal struggle of trying to predict the future. Is Stripe's move a bad move? I guess that the execs are driven by the same fear of missing out what the future holds.
    - skyyler 7y ago
      >So where's the party now? Shenzhen.
      - neivin 7y ago
        If you create a walled ecosystem within a communist country that straight up bans other competing non Chinese products, you might think that this party is in Shenzhen.
    - opportune 7y ago
      SV still feels like a party to me. Sure, it’s not 2000 any more, and property prices are high, but there is still a lot of capital and talent sloshing about. Just staying at a top paying big co for 5 years or so, starting as a senior dev, can set you up with a lot of money
mason55 7y ago
One issue is when the people who relocated with you start to leave. If you need 500 engineers you might be able to get them to move to a mid-tier city with you but when you start needing to replace those engineers it’s going to be tougher.
mavelikara 7y ago
In most companies people who are in positions to make this decision have houses in the Bay Area and have a good life set up. They are not keen to upset all of that.
mbesto 7y ago
> bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? Stripe is not hiring "mid-level" employees. Or at the very least that is not the type of people they are compensating to run critical roles. Good luck telling a Senior Staff Engineer who makes $500k (plus probably a couple of million in RSUs) that they have to move to Albuquerque, NM. The other reality is that people take jobs knowing that there are other jobs available if they themselves decide to "fuck right off". TL;DR - Network effects exists in the physical world. Too many talented people live in the bay area for "quality of life".
- friedman23 7y ago
  > Albuquerque, NM This is not the only other option. Imagine telling an engineer, hey I'll pay you $500k a year in Atlanta, Miami, Philadelphia, Chicago, or Boston? Rent is immediately cut in half and some states have no income taxes. Their disposable income essentially triples.
  - dmode 7y ago
    If you are still lying $500k, what’s the point of that move ? Also, network effect doesn’t change. I will never move out of SV/SF as I know I can walk down the street and get another $500k job
    - friedman23 7y ago
      > If you are still lying $500k, what’s the point of that move ? I think you mistyped here. The point of the move is that $500k in San Francisco vs $500k in any other city in the US (except New York) result in substantially different qualities of life. $500k a year income in Miami can get you a mortgage on a 3 bedroom house and a boat. In SF, you get a mortgage on a 1 bedroom apartment.
      - ProfessorLayton 7y ago
        SF is expensive, agreed, but it is not so expensive that you need to pull 500k/year to get a mortgage. That income is enough to mortgage a 2.5M home — well above SF’s median home price— with no downpayment
gwbas1c 7y ago
I remember when Stripe emailed me as a job candidate. At the time, I was sitting in the bar directly behind their office, and basically replied that they (one of the Collison brothers) could come right now and have a beer with me. (I was sitting in the Rose and Crown, and they were in the office behind the Wine Room on the same block.) * > why wouldn't established companies like Stripe just ... off to another city entirely? Because the employees they want to hire live and work in Silicon Valley. There's a lot of advantages to the area: Good weather, good cultural actives, good jobs... Keep in mind that companies loose people when they move within the same geographic area. (For example, someone commuting over the Golden Gate bridge might decide to leave because now the commute is much longer.) * By the time I screened with them, I had a job offer in hand that I really wanted. (This was long before Stripe became successful.) I lived a few blocks away, so I asked to screen in person, and then decided to take the job with the other company. I don't even know if they would have hired me!
- friedman23 7y ago
  > Good weather The weather in San Francisco is overrated, it's always cold and windy and there are never any seasons.
  - nickv 7y ago
    Except its going to be 84 and sunny today. Summers are brutal but the rest of the year is pretty nice.
    - driverdan 7y ago
      > Summers are brutal Summers in the bay area are not even remotely brutal.
      - llampx 7y ago
        Maybe brutal in the sense of cold and foggy when people expect it to be sunny and warm.
      - 7y ago
TuringNYC 7y ago
So many reasons: - That effectively means those employees tied to the old location have to quit or be let go. Stripe isn't a public company, so that causes major issues for those with options who suddenly need to exercise into an expensive illiquid holding. For those w/o vested options in a company as successful as Stripe, you're leaving a lot of money on the table. What are the odds you find another Stripe with options deep in the money? - If your spouse is working in SF, if you move, now they have to quit their job and look for another one. If your spouse works in a non-public tech startup, see point 1. - Moving isn't easy in the US if you own a home - the taxes, fees, expenses, commissions, etc alone will cost you ~8 or 9% of your sale. If you have 20% down you just lost half your equity. Easier of course if you have more equity in the home, but still -- fees/etc are a total loss to you. - If the company re-locates you, they might cover some of the home change expenses, but those are often capped. It becomes quite expensive to the company to re-lo folks with homes (see above) - Changing homes (and thus school districts) is a big issue for employees with children. Many school districts are not guaranteed by home ownership / lease, but rather by tenure in the district. You end up buying/leasing an expensive property in a new area and busing your child to a far off, possibly much less performant, school. - I totally agree with SF being epensive, but for other cities, moving to suburbs isn't that much less expensive for young workers. Now you suddenly have to buy a car, pay for gas, pay tolls, registrations, etc. Also, for those early career w/o children, being in a one-company-town suburb is a career-killer. There isnt an ecosystem and it becomes harder to switch jobs. I had an employer move their office from Manhattan to suburban Connecticut with the argument that is was less expensive (yes, less expensive for the company -- but absolutely not less expensive for the employee)
- neivin 7y ago
  You're assuming that people actually own homes in the bay area. Good one.
  - product50 7y ago
    There are other points the OP raised as well. If you disagree, provide a counter argument to all points vs. selectively paraphrasing to your benefit.
jseliger 7y ago
Spillover effects. https://en.wikipedia.org/wiki/Spillover_(economics) https://en.wikipedia.org/wiki/Spillover_(economics) Large metro areas are much more productive because people can learn from each other.
lsc 7y ago
> Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere? the long term root is that there is a huge productivity advantage to clusters of workers. (or, at least many people believe so) Around here, if you strike up a random conversation in public, it's very likely you will do so with someone who does something relevant to what you do, and this is good for getting new ideas and really good for getting new contacts. Right now? there's a huge concentration of programming know-how in silicon valley and san francisco, and building that sort of cluster somewhere else would be really difficult. (I think Los Angeles has a similar situation, only with the movie industry.) I literally found someone to buy my company at a (non-industry) party. (I mean, I did a bad job of it, I was drinking too much and complaining loudly about how much it sucks to run a company and how I had fucked up like three really good chances to sell the thing and generally being a downer, which is rude, I think, at a party, but also not how you maximize the value of the company you sell. Still, I got an impactful amount of money, and more importantly, I got someone else to run the damn thing so I could go get a job that paid without dumping my existing customers.) I've solved technical problems in similar sorts of ways; it's completely normal to go hang out with friends and actually solve problems over drinks or pizza or whatever. (which yes, is a culture some people hate, and I totally understand that, but some of us like it, and like it or not, it's certainly effective.) Another bigger microeconomic factor that people who don't live here don't understand is that California laws and cultural norms are set up to privilege people who have been here longer. If you bought a place here in '08? Silicon valley isn't very expensive at all; our property taxes are largely fixed based on what we paid for the place when we bought it. This is kinda true (but to a much lessor extent) for rents; I know a lot of people paying under 2/3rds what they'd pay in rent if they moved in today, even without rent control. with rent control, paying under 1/3rd what they'd pay if they moved in today is not uncommon. This means that the sticker shock you get from the outside looking in isn't actually what most of the people who have lived here long term are paying.
- dawg- 7y ago
  Thanks for the insight, again I fully admit that I don't know the details of the housing/jobs market over there so it was really interesting to hear your perspective. I think the movie industry example is an interesting connection to make. For the last few years Atlanta has overtaken LA as the top producer of feature films in the country, largely due to crazy huge tax incentives for movie studios, and has earned the nickname "Y'allywood" or the hollywood of the south. Maybe a big city elsewhere in the country will ever go "all-in" like Atlanta did and try to become the "Silicon Valley of the [South, Midwest, Rocky Mountains, etc.]"? I guess a place like Austin, TX could arguable lay claim to this title already, but their tech industry seems to be "home grown" because of the history of computing at UT and with Texas Instruments, NASA, Dell, etc. historically having strong roots in Texas. But I wonder if a city could ever follow the model of Atlanta and try to build a "new Silicon Valley" from scratch with aggressive policies that lure companies/employees from existing tech hubs?
dfelix 7y ago
To be fair, South San Francisco is not a region within San Francisco, but an entirely separate (yet adjacent) city.
ww520 7y ago
At least in regarding to move to somewhere out of state, CA has one advantage: CALIFORNIA CODES, LABOR CODE SECTION 2870-2872 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=2870 https://leginfo.legislature.ca.gov/faces/codes_displaySectio...
alexhutcheson 7y ago
Moving offices is really disruptive to people's lives, and causes a huge amount of turnover in your workforce. A brief excerpt from Peopleware[1]: "The typical person being moved today is part of a two-career family. The other half of that equation is probably not being moved, so the corporate move comes down hard on the couple’s relationship at a very delicate point. It brings intolerable stress to bear on the accommodation they’re both striving to achieve to allow two full-fledged careers. That’s hitting below the belt. Modern couples won’t put up with it and they won’t forgive it. The company move might have been possible in the 1950s and 1960s. Today it is folly." They also cite a case study of a major project at Bell Labs which was moved from New Jersey to Illinois. The authors interviewed the former manager of that project: "I asked him what he saw as his main successes and failures as boss. “Forget the successes,” he said. “The failure was that move. You can’t believe what it cost us in turnover.” He went on to give some figures. The immediately calculable cost of the move was the number of people who quit before relocation day. Expressed as a percentage of those moved, this initial turnover was greater than the French losses in the trenches of World War I." (FWIW, that's just one of many insights from that book - I highly recommend it.) [1] https://amazon.com/dp/B00DY5A8X2/ https://amazon.com/dp/B00DY5A8X2/
- Tade0 7y ago
  Isn't South San Francisco just 10 miles from San Francisco? For some cities this would equate to moving to another part of the same city.
  - myelin 7y ago
    South SF is far less accessible than Stripe's current location in Townsend St (Soma, SF). I'm curious to see how many people leave because of this move. Tech workers in SF tend to live in Soma or the surrounding neighborhoods (FiDi, Mission, Dogpatch), which means for a worker without a car, their commute was previously a short bike, Muni, or Uber Pool, whereas to get to SSF they'll be looking at this (to get to a BART station), a BART ride, and probably a shuttle at the far end, because Oyster Point isn't near transit. I worked for a company that moved its HQ (due to an acquisition) to Brisbane -- slightly closer than South SF -- and ended up buying a car to commute, because the walk + BART + shuttle combination took so long.
rb808 7y ago
Stripe is just opening a NYC office. https://stripe.com/blog/nyc-office https://stripe.com/blog/nyc-office Of course NYC has its own housing problems, but they're cheaper than the valley.
goobynight 7y ago
Your assumption that people would want to move is one I would have made until I saw the reality. You can barely get people to move to Denver while keeping an SF salary.
- bradlys 7y ago
  I tend to think of it this way: "can I get the same or better compensation if I lost this job after the move?" If the answer is no then I'm probably not moving. Also, there are reasons why people would prefer the bay area over Denver for non cost related stuff. (And vice versa)
semiotagonal 7y ago
Some employees would be afraid to live in a non-California state where non-compete agreements can be enforced. Even if Stripe eschewed them, their next employer might not.
- ilikehurdles 7y ago
  I can’t picture a single tech company I would be attached to enough to follow through any geographic move, unless I were a founder of that company. There are plenty of opportunities in the ocean for the average software engineer and company loyalty rightfully doesn’t exist. California has too much going for it for engineers to abandon it over a company that can’t event afford to keep an office open there, and I’m saying that as an outsider, I much prefer the east coast or Colorado.
- vineyardmike 7y ago
  This is a concern I'd have, and a major point of tension in my job search.
charlesju 7y ago
1. San Francisco is really nice. It's 87 degrees today at the end of October. There is good food, decent public transportation, culture, ocean, forests, etc. It doesn't snow here or get blistering hot, so productivity is very steady year round. 2. Because San Francisco is very nice (perhaps) and we have good schools around here. A lot of hires come from UCB, Stanford, UCLA, USC, and other UCs. Those account for several of the top engineering schools in the country/world. 3. Silicon Valley has hit an inflection point where we're now the best place in the world to find TOP talent in tech. It's not a great place for mid and junior level talent, but if you need top talent for an opportunity that is high growth and high per employee leverage, there is no place better in the world. Ultimately, the main issue is that everything is too nice and worked too well so the cost of living has sky rocketed. And that is driving out everyone that isn't a top tier talent (engineering and opts). It's really sad, to be honest, I love San Francisco and Silicon Valley, and I wish we could find a way to solve the living cost issue and continue to grow as a hub for innovation.
- rpmcmurdo 7y ago
  SF has always been expensive. When I moved here, my grandfather who was an actuary for an insurance company (i.e. walking financial database) told me that back in the 1930s, they had to pay 2-3x salary for people based there due to the high cost of living. If you read old issues of the SF Chronicle, you'll find the same story repeated across generations. The only time SF was every really cheap was during the 70s into the late 80s, which was due to a combination of white flight, the Loma Prieta earthquake, and the AIDS plague depopulating the city. Apart from that anomaly, it has been super pricey ever since the Gold Rush.
  - ghaff 7y ago
    And the Bay Area as a whole wasn't cheap in the late 80s. (SF may have been cheaper because, as you suggest, upper middle class people weren't rushing to move to SF or most other cities in that period.) But I turned down recruiting from the Bay Area during that period in part because the cost of living was too high relative to where I lived on the East Coast.
- 7y ago
chrisdhoover 7y ago
Companies are. Whole industries have left Frisco. The void was replaced by tech but tech too will leave.
thorwasdfasdf 7y ago
this is a great question, I've always wondered it myself as well.
wtvanhest 7y ago
I'm going to predict that even the move to South San Francisco will be highly disruptive and will result in major turnover. If you live in the city and are taking public transit, a move to South San Francisco is going to be extremely painful. If you own or on rent control, its probably time to start looking for a new job.
thruhiker 7y ago
There are many people who work in tech who highly value location and quality of life. I've lived in the Midwest, the South, and now Seattle. If you enjoy the outdoors, hiking, skiing/riding, sailing, mountain biking, kayaking, etc., but you want to earn strong compensation with the security of having many employment options there are relatively few good options. There are other chicken and egg dynamics such as a large city is likely top have a large airport with lots of direct flights which is helpful for business and leisure travel. Employers, especially startups and growth companies, want to hire top talent (and poach top talent from similar firms). That means they want to be located where there is a baseline of other similar firms. Remote work is slowly changing that dynamic but the gravity of the city is strong.
majormajor 7y ago
> They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? Nobody wants to take a huge paycut regardless of house prices - there are lots of other things in the world you can use money for (including saving for retirement, if you're practical) that aren't particularly regionally inflated. The people who've been at successful companies for longest also tend to have been pretty well compensated overall, so ownership of something nearby isn't always so out of reach for them. So your most important contributors are the least motivated for this move. Doesn't seem like a good recipe.
secabeen 7y ago
> I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? People have mentioned the dual-income problem, but even without that, people have friends, and schools, and communities, and lives that they've built up where they live. When I moved cross country, it took two years after we arrived to develop our first close friends, and probably five years before we felt that we were as connected to our new home as we were to the one we left. Moving across town doesn't disrupt these connections and communities for your employees, but moving across the state or country does.
deleted 7y ago
[deleted]
reaperducer 7y ago
People in tech used to accept being relocated as part of the job. From what I read on HN, that doesn't seem to be the case anymore. It was common to joke in the 80's that IBM stands for "I've Been Moved."
- rodgerd 7y ago
  Yeah, and IBM in the 80s and 90s was a paragon of success.
  - reaperducer 7y ago
    Yeah, singlehandedly transforming the computer industry. So terrible. https://en.wikipedia.org/wiki/IBM_Personal_Computer https://en.wikipedia.org/wiki/IBM_Personal_Computer
manigandham 7y ago
1) They raised money from VCs which demand companies be close by. It's hard to leave when you're growing fast. 2) It's cultural and political signaling which is required in the SV atmosphere.
jeffFrom18F 7y ago
They can't move their HQ at this point for reasons others have mentioned. It does seem like they are taking a balanced strategy, however. I remember a story a few months ago about how their latest team is all-remote. They might have better incentives to open more offices in lower-cost locales after going public (see Uber's new Dallas plans for example).
m463 7y ago
it's simple. The employees are a self-selected population for the area. The employees that work for a company have already decided that is where they want to live and work. They could just open an additional office in a more "reasonable" place, say somewhere with lower taxes, lower cost of living, shitty weather and fewer qualified employees... Also, I've often wondered if locating a company in somewhere with a nosebleed cost of living like SF is a way to exclude employees that are not young, single and/or without families to distract them. SF is great for single people.
helen___keller 7y ago
The tech sector as a whole is in a period of massive expansion. It is basically assumed that any well-run tech company needs to be perpetually hiring anybody sufficiently qualified for the endless business opportunities that lie just on the horizon, and there's a small number of expensive cities where it is prudent to do so. Some day the business climate will cool and the realm of new tech growth won't seem as limitless. When this time comes, big profitable tech companies will continue their drive for bigger profits, and they will turn to cutting costs rather than driving new growth. When cutting costs comes to tech, plenty of established companies will decide it's time to head off to a smaller city with lower rent and lower wages - or atleast some of them will, and eventually wages and rent in silicon valley will start heading downwards from its current place in the heavens.

by dawg- 7y ago

kasey_junk 7y ago

Stripe has offices in lots of places. But they also have their existing employees in San Francisco. Fucking off to another city is functionally equivalent to laying off half the company.

mc32 7y ago
Boeing moved, many companies based in NYC moved out of the city in the 80s, 90s. It’s not extremely hard, but it is disruptive. When the exodus happens it’ll start as a trickle and by the time people take notice half the cos will have reduced occupancy. After certain stage it’s more about managing growth than about R&D, so you can find most of the talent you need in alternate markets.
- ghaff 7y ago
  In all fairness, significant HQ moves often have a major cut in headcount as a well-understood side effect if not an actual motivation. But, yes, companies can and have moved their HQs a lot more than ten miles. It's probably harder in an industry and at a time when more people figure a job with a given company is pretty ephemeral though.
  - mc32 7y ago
    Maybe but I think people will figure out the talent deserts have more oases than people think. There are more options for talent than just SV. Remember much of the US talent in SV come from other parts of the country. Many would stay local if given the opp to stay local. So instead of drawing talent to SV, SV could seek the talent in those markets (where talent is growing).
    - ghaff 7y ago
      Oh I agree with all that. I don't live in SV/SF myself and have no real interest in doing so. But so many people have the attitude that you can't have a tech career if you don't live in SV that it would probably be difficult for an existing company to move out of the area without losing a lot of people (or at least letting them work remote).
    - SpicyLemonZest 7y ago
      Maybe people in the abstract would, but at the level of individual people and companies talent isn’t fungible. If Stripe were to lose 100 senior engineers in a move to Salt Lake City, but could pick up 110 new ones at 90% of the price, it’s not obvious that would be a net win.
      - mc32 7y ago
        Not in that year, but long term it can be a win (obviously depending on their goals).
        SpicyLemonZest 7y ago
        One perspective is that the exchange permanently hamstrings the company. You spent let's say 3 years on average, training those engineers to be the best people in the world at solving Stripe's problems, but now they're gone with (unless you're gonna do double payroll for a while) only an arms-length handoff to the new staff. That's 300 person-years of training, gone forever. Arguably even worse, it propagates upwards; there will be some number of valuable, important projects which can no longer get done because the needed expertise was lost.
- goobynight 7y ago
  I feel like Boeing has far more of a monopoly on hiring the kind of talent they need than Stripe. They also seem like a place that has more "lifers". Stripe engineers can just say "no thanks" and go work for SF company n+1 down the road. Does Boeing have competition in the same city that could reasonably hire Boeing knowledge workers? Honest question.
  - spaceandshit 7y ago
    There are a few in the Puget Sound such as Blue Origin, Collins Aerospace, SpaceX and some other smaller ones. Your point is valid though.
- balls187 7y ago
  Boeing moved their Corporate HQ, specifically the executive team. Their BU headquarters remained in the same locations.
- asveikau 7y ago
  > many companies based in NYC moved out of the city in the 80s, 90s. This is the story of most American cities in the 80s and 90s, thankfully it has had some reversal this century, and I'm not sure it should be seen as a template or justification for present or future actions.
  - mc32 7y ago
    While the reasons may be different now, the process of relocating is going to be similar. Some staff will like it, some will resign, some will go with reservations, etc. and, with today’s communications this will be even easier.
- rodgerd 7y ago
  Boeing's move seems to be working well for them.
chrisdhoover 7y ago
Something companies will do to reset their salaries.

manuelflara 7y ago

More and more companies are choosing to do this when they are created. But Stripe has, I believe, over a thousand employees. Expecting them to relocate far away (p.e. another state) is simply ridiculous (I believe the one example of a company doing something like this would be Zappos, when they relocated to Las Vegas). You'd just lose too many people. Now, opening another office somewhere else to keep expanding, a lot of companies do.

dawg- 7y ago
Thanks! I didn't consider this before posting

wgerard 7y ago

> I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area. I don't mean that as a slight either - I think if you're spending a good portion of your life on something, you might as well do it in a place you enjoy spending time in!

randycupertino 7y ago
> To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area. At my firm, the founders wish they could go back to NYC or east coast in a heartbeat, but tied to Bay Area due to funding connections and employee pool. I work a lot with Europe so I'd love to be on the east coast as well.

ohduran 7y ago

A corollary to this well reasoned question would be: has Silicon Valley area peaked in terms of startup creation? On the one hand, you've got the talent there, attracted because the big tech is concentrated in the area; on the other hand, the living costs makes a ramen-profitable startup in SV way more expensive than a non-SV one. How should I look at this issue from the perspective of an outsider? Should I join the crowd or run in the opposite direction?

titanomachy 7y ago
I don't have data to back this up, except anecdotal, but I think spending a few years in SF, NY, or Seattle can boost your market value by a factor of 3-4. So it could still be worth it in the long run.
- ohduran 7y ago
  It's just my personal perspective, but... I'm still in awe of SV. I simply feel that the time to be there has passed, and I'm late to the party. So where's the party now? It's happening somewhere. Someone is building the next big thing and none of us know yet. The eternal struggle of trying to predict the future. Is Stripe's move a bad move? I guess that the execs are driven by the same fear of missing out what the future holds.
  - skyyler 7y ago
    >So where's the party now? Shenzhen.
    - neivin 7y ago
      If you create a walled ecosystem within a communist country that straight up bans other competing non Chinese products, you might think that this party is in Shenzhen.
  - opportune 7y ago
    SV still feels like a party to me. Sure, it’s not 2000 any more, and property prices are high, but there is still a lot of capital and talent sloshing about. Just staying at a top paying big co for 5 years or so, starting as a senior dev, can set you up with a lot of money

mason55 7y ago

One issue is when the people who relocated with you start to leave. If you need 500 engineers you might be able to get them to move to a mid-tier city with you but when you start needing to replace those engineers it’s going to be tougher.

mavelikara 7y ago

In most companies people who are in positions to make this decision have houses in the Bay Area and have a good life set up. They are not keen to upset all of that.

mbesto 7y ago

> bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? Stripe is not hiring "mid-level" employees. Or at the very least that is not the type of people they are compensating to run critical roles. Good luck telling a Senior Staff Engineer who makes $500k (plus probably a couple of million in RSUs) that they have to move to Albuquerque, NM. The other reality is that people take jobs knowing that there are other jobs available if they themselves decide to "fuck right off". TL;DR - Network effects exists in the physical world. Too many talented people live in the bay area for "quality of life".

friedman23 7y ago
> Albuquerque, NM This is not the only other option. Imagine telling an engineer, hey I'll pay you $500k a year in Atlanta, Miami, Philadelphia, Chicago, or Boston? Rent is immediately cut in half and some states have no income taxes. Their disposable income essentially triples.
- dmode 7y ago
  If you are still lying $500k, what’s the point of that move ? Also, network effect doesn’t change. I will never move out of SV/SF as I know I can walk down the street and get another $500k job
  - friedman23 7y ago
    > If you are still lying $500k, what’s the point of that move ? I think you mistyped here. The point of the move is that $500k in San Francisco vs $500k in any other city in the US (except New York) result in substantially different qualities of life. $500k a year income in Miami can get you a mortgage on a 3 bedroom house and a boat. In SF, you get a mortgage on a 1 bedroom apartment.
    - ProfessorLayton 7y ago
      SF is expensive, agreed, but it is not so expensive that you need to pull 500k/year to get a mortgage. That income is enough to mortgage a 2.5M home — well above SF’s median home price— with no downpayment

gwbas1c 7y ago

I remember when Stripe emailed me as a job candidate. At the time, I was sitting in the bar directly behind their office, and basically replied that they (one of the Collison brothers) could come right now and have a beer with me. (I was sitting in the Rose and Crown, and they were in the office behind the Wine Room on the same block.) * > why wouldn't established companies like Stripe just ... off to another city entirely? Because the employees they want to hire live and work in Silicon Valley. There's a lot of advantages to the area: Good weather, good cultural actives, good jobs... Keep in mind that companies loose people when they move within the same geographic area. (For example, someone commuting over the Golden Gate bridge might decide to leave because now the commute is much longer.) * By the time I screened with them, I had a job offer in hand that I really wanted. (This was long before Stripe became successful.) I lived a few blocks away, so I asked to screen in person, and then decided to take the job with the other company. I don't even know if they would have hired me!

friedman23 7y ago
> Good weather The weather in San Francisco is overrated, it's always cold and windy and there are never any seasons.
- nickv 7y ago
  Except its going to be 84 and sunny today. Summers are brutal but the rest of the year is pretty nice.
  - driverdan 7y ago
    > Summers are brutal Summers in the bay area are not even remotely brutal.
    - llampx 7y ago
      Maybe brutal in the sense of cold and foggy when people expect it to be sunny and warm.
    - 7y ago

TuringNYC 7y ago

So many reasons: - That effectively means those employees tied to the old location have to quit or be let go. Stripe isn't a public company, so that causes major issues for those with options who suddenly need to exercise into an expensive illiquid holding. For those w/o vested options in a company as successful as Stripe, you're leaving a lot of money on the table. What are the odds you find another Stripe with options deep in the money? - If your spouse is working in SF, if you move, now they have to quit their job and look for another one. If your spouse works in a non-public tech startup, see point 1. - Moving isn't easy in the US if you own a home - the taxes, fees, expenses, commissions, etc alone will cost you ~8 or 9% of your sale. If you have 20% down you just lost half your equity. Easier of course if you have more equity in the home, but still -- fees/etc are a total loss to you. - If the company re-locates you, they might cover some of the home change expenses, but those are often capped. It becomes quite expensive to the company to re-lo folks with homes (see above) - Changing homes (and thus school districts) is a big issue for employees with children. Many school districts are not guaranteed by home ownership / lease, but rather by tenure in the district. You end up buying/leasing an expensive property in a new area and busing your child to a far off, possibly much less performant, school. - I totally agree with SF being epensive, but for other cities, moving to suburbs isn't that much less expensive for young workers. Now you suddenly have to buy a car, pay for gas, pay tolls, registrations, etc. Also, for those early career w/o children, being in a one-company-town suburb is a career-killer. There isnt an ecosystem and it becomes harder to switch jobs. I had an employer move their office from Manhattan to suburban Connecticut with the argument that is was less expensive (yes, less expensive for the company -- but absolutely not less expensive for the employee)

neivin 7y ago
You're assuming that people actually own homes in the bay area. Good one.
- product50 7y ago
  There are other points the OP raised as well. If you disagree, provide a counter argument to all points vs. selectively paraphrasing to your benefit.

jseliger 7y ago

Spillover effects. https://en.wikipedia.org/wiki/Spillover_(economics) https://en.wikipedia.org/wiki/Spillover_(economics) Large metro areas are much more productive because people can learn from each other.

lsc 7y ago

> Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere? the long term root is that there is a huge productivity advantage to clusters of workers. (or, at least many people believe so) Around here, if you strike up a random conversation in public, it's very likely you will do so with someone who does something relevant to what you do, and this is good for getting new ideas and really good for getting new contacts. Right now? there's a huge concentration of programming know-how in silicon valley and san francisco, and building that sort of cluster somewhere else would be really difficult. (I think Los Angeles has a similar situation, only with the movie industry.) I literally found someone to buy my company at a (non-industry) party. (I mean, I did a bad job of it, I was drinking too much and complaining loudly about how much it sucks to run a company and how I had fucked up like three really good chances to sell the thing and generally being a downer, which is rude, I think, at a party, but also not how you maximize the value of the company you sell. Still, I got an impactful amount of money, and more importantly, I got someone else to run the damn thing so I could go get a job that paid without dumping my existing customers.) I've solved technical problems in similar sorts of ways; it's completely normal to go hang out with friends and actually solve problems over drinks or pizza or whatever. (which yes, is a culture some people hate, and I totally understand that, but some of us like it, and like it or not, it's certainly effective.) Another bigger microeconomic factor that people who don't live here don't understand is that California laws and cultural norms are set up to privilege people who have been here longer. If you bought a place here in '08? Silicon valley isn't very expensive at all; our property taxes are largely fixed based on what we paid for the place when we bought it. This is kinda true (but to a much lessor extent) for rents; I know a lot of people paying under 2/3rds what they'd pay in rent if they moved in today, even without rent control. with rent control, paying under 1/3rd what they'd pay if they moved in today is not uncommon. This means that the sticker shock you get from the outside looking in isn't actually what most of the people who have lived here long term are paying.

dawg- 7y ago
Thanks for the insight, again I fully admit that I don't know the details of the housing/jobs market over there so it was really interesting to hear your perspective. I think the movie industry example is an interesting connection to make. For the last few years Atlanta has overtaken LA as the top producer of feature films in the country, largely due to crazy huge tax incentives for movie studios, and has earned the nickname "Y'allywood" or the hollywood of the south. Maybe a big city elsewhere in the country will ever go "all-in" like Atlanta did and try to become the "Silicon Valley of the [South, Midwest, Rocky Mountains, etc.]"? I guess a place like Austin, TX could arguable lay claim to this title already, but their tech industry seems to be "home grown" because of the history of computing at UT and with Texas Instruments, NASA, Dell, etc. historically having strong roots in Texas. But I wonder if a city could ever follow the model of Atlanta and try to build a "new Silicon Valley" from scratch with aggressive policies that lure companies/employees from existing tech hubs?

dfelix 7y ago

To be fair, South San Francisco is not a region within San Francisco, but an entirely separate (yet adjacent) city.

ww520 7y ago

At least in regarding to move to somewhere out of state, CA has one advantage: CALIFORNIA CODES, LABOR CODE SECTION 2870-2872 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=2870 https://leginfo.legislature.ca.gov/faces/codes_displaySectio...

alexhutcheson 7y ago

Moving offices is really disruptive to people's lives, and causes a huge amount of turnover in your workforce. A brief excerpt from Peopleware[1]: "The typical person being moved today is part of a two-career family. The other half of that equation is probably not being moved, so the corporate move comes down hard on the couple’s relationship at a very delicate point. It brings intolerable stress to bear on the accommodation they’re both striving to achieve to allow two full-fledged careers. That’s hitting below the belt. Modern couples won’t put up with it and they won’t forgive it. The company move might have been possible in the 1950s and 1960s. Today it is folly." They also cite a case study of a major project at Bell Labs which was moved from New Jersey to Illinois. The authors interviewed the former manager of that project: "I asked him what he saw as his main successes and failures as boss. “Forget the successes,” he said. “The failure was that move. You can’t believe what it cost us in turnover.” He went on to give some figures. The immediately calculable cost of the move was the number of people who quit before relocation day. Expressed as a percentage of those moved, this initial turnover was greater than the French losses in the trenches of World War I." (FWIW, that's just one of many insights from that book - I highly recommend it.) [1] https://amazon.com/dp/B00DY5A8X2/ https://amazon.com/dp/B00DY5A8X2/

Tade0 7y ago
Isn't South San Francisco just 10 miles from San Francisco? For some cities this would equate to moving to another part of the same city.
- myelin 7y ago
  South SF is far less accessible than Stripe's current location in Townsend St (Soma, SF). I'm curious to see how many people leave because of this move. Tech workers in SF tend to live in Soma or the surrounding neighborhoods (FiDi, Mission, Dogpatch), which means for a worker without a car, their commute was previously a short bike, Muni, or Uber Pool, whereas to get to SSF they'll be looking at this (to get to a BART station), a BART ride, and probably a shuttle at the far end, because Oyster Point isn't near transit. I worked for a company that moved its HQ (due to an acquisition) to Brisbane -- slightly closer than South SF -- and ended up buying a car to commute, because the walk + BART + shuttle combination took so long.

rb808 7y ago

Stripe is just opening a NYC office. https://stripe.com/blog/nyc-office https://stripe.com/blog/nyc-office Of course NYC has its own housing problems, but they're cheaper than the valley.

goobynight 7y ago

Your assumption that people would want to move is one I would have made until I saw the reality. You can barely get people to move to Denver while keeping an SF salary.

bradlys 7y ago
I tend to think of it this way: "can I get the same or better compensation if I lost this job after the move?" If the answer is no then I'm probably not moving. Also, there are reasons why people would prefer the bay area over Denver for non cost related stuff. (And vice versa)

semiotagonal 7y ago

Some employees would be afraid to live in a non-California state where non-compete agreements can be enforced. Even if Stripe eschewed them, their next employer might not.

ilikehurdles 7y ago
I can’t picture a single tech company I would be attached to enough to follow through any geographic move, unless I were a founder of that company. There are plenty of opportunities in the ocean for the average software engineer and company loyalty rightfully doesn’t exist. California has too much going for it for engineers to abandon it over a company that can’t event afford to keep an office open there, and I’m saying that as an outsider, I much prefer the east coast or Colorado.
vineyardmike 7y ago
This is a concern I'd have, and a major point of tension in my job search.

charlesju 7y ago

1. San Francisco is really nice. It's 87 degrees today at the end of October. There is good food, decent public transportation, culture, ocean, forests, etc. It doesn't snow here or get blistering hot, so productivity is very steady year round. 2. Because San Francisco is very nice (perhaps) and we have good schools around here. A lot of hires come from UCB, Stanford, UCLA, USC, and other UCs. Those account for several of the top engineering schools in the country/world. 3. Silicon Valley has hit an inflection point where we're now the best place in the world to find TOP talent in tech. It's not a great place for mid and junior level talent, but if you need top talent for an opportunity that is high growth and high per employee leverage, there is no place better in the world. Ultimately, the main issue is that everything is too nice and worked too well so the cost of living has sky rocketed. And that is driving out everyone that isn't a top tier talent (engineering and opts). It's really sad, to be honest, I love San Francisco and Silicon Valley, and I wish we could find a way to solve the living cost issue and continue to grow as a hub for innovation.

rpmcmurdo 7y ago
SF has always been expensive. When I moved here, my grandfather who was an actuary for an insurance company (i.e. walking financial database) told me that back in the 1930s, they had to pay 2-3x salary for people based there due to the high cost of living. If you read old issues of the SF Chronicle, you'll find the same story repeated across generations. The only time SF was every really cheap was during the 70s into the late 80s, which was due to a combination of white flight, the Loma Prieta earthquake, and the AIDS plague depopulating the city. Apart from that anomaly, it has been super pricey ever since the Gold Rush.
- ghaff 7y ago
  And the Bay Area as a whole wasn't cheap in the late 80s. (SF may have been cheaper because, as you suggest, upper middle class people weren't rushing to move to SF or most other cities in that period.) But I turned down recruiting from the Bay Area during that period in part because the cost of living was too high relative to where I lived on the East Coast.
7y ago

chrisdhoover 7y ago

Companies are. Whole industries have left Frisco. The void was replaced by tech but tech too will leave.

thorwasdfasdf 7y ago

this is a great question, I've always wondered it myself as well.

wtvanhest 7y ago

I'm going to predict that even the move to South San Francisco will be highly disruptive and will result in major turnover. If you live in the city and are taking public transit, a move to South San Francisco is going to be extremely painful. If you own or on rent control, its probably time to start looking for a new job.

thruhiker 7y ago

There are many people who work in tech who highly value location and quality of life. I've lived in the Midwest, the South, and now Seattle. If you enjoy the outdoors, hiking, skiing/riding, sailing, mountain biking, kayaking, etc., but you want to earn strong compensation with the security of having many employment options there are relatively few good options. There are other chicken and egg dynamics such as a large city is likely top have a large airport with lots of direct flights which is helpful for business and leisure travel. Employers, especially startups and growth companies, want to hire top talent (and poach top talent from similar firms). That means they want to be located where there is a baseline of other similar firms. Remote work is slowly changing that dynamic but the gravity of the city is strong.

majormajor 7y ago

> They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? Nobody wants to take a huge paycut regardless of house prices - there are lots of other things in the world you can use money for (including saving for retirement, if you're practical) that aren't particularly regionally inflated. The people who've been at successful companies for longest also tend to have been pretty well compensated overall, so ownership of something nearby isn't always so out of reach for them. So your most important contributors are the least motivated for this move. Doesn't seem like a good recipe.

secabeen 7y ago

> I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? People have mentioned the dual-income problem, but even without that, people have friends, and schools, and communities, and lives that they've built up where they live. When I moved cross country, it took two years after we arrived to develop our first close friends, and probably five years before we felt that we were as connected to our new home as we were to the one we left. Moving across town doesn't disrupt these connections and communities for your employees, but moving across the state or country does.

deleted 7y ago

[deleted]

reaperducer 7y ago

People in tech used to accept being relocated as part of the job. From what I read on HN, that doesn't seem to be the case anymore. It was common to joke in the 80's that IBM stands for "I've Been Moved."

rodgerd 7y ago
Yeah, and IBM in the 80s and 90s was a paragon of success.
- reaperducer 7y ago
  Yeah, singlehandedly transforming the computer industry. So terrible. https://en.wikipedia.org/wiki/IBM_Personal_Computer https://en.wikipedia.org/wiki/IBM_Personal_Computer

manigandham 7y ago

1) They raised money from VCs which demand companies be close by. It's hard to leave when you're growing fast. 2) It's cultural and political signaling which is required in the SV atmosphere.

jeffFrom18F 7y ago

They can't move their HQ at this point for reasons others have mentioned. It does seem like they are taking a balanced strategy, however. I remember a story a few months ago about how their latest team is all-remote. They might have better incentives to open more offices in lower-cost locales after going public (see Uber's new Dallas plans for example).

m463 7y ago

it's simple. The employees are a self-selected population for the area. The employees that work for a company have already decided that is where they want to live and work. They could just open an additional office in a more "reasonable" place, say somewhere with lower taxes, lower cost of living, shitty weather and fewer qualified employees... Also, I've often wondered if locating a company in somewhere with a nosebleed cost of living like SF is a way to exclude employees that are not young, single and/or without families to distract them. SF is great for single people.

helen___keller 7y ago

The tech sector as a whole is in a period of massive expansion. It is basically assumed that any well-run tech company needs to be perpetually hiring anybody sufficiently qualified for the endless business opportunities that lie just on the horizon, and there's a small number of expensive cities where it is prudent to do so. Some day the business climate will cool and the realm of new tech growth won't seem as limitless. When this time comes, big profitable tech companies will continue their drive for bigger profits, and they will turn to cutting costs rather than driving new growth. When cutting costs comes to tech, plenty of established companies will decide it's time to head off to a smaller city with lower rent and lower wages - or atleast some of them will, and eventually wages and rent in silicon valley will start heading downwards from its current place in the heavens.