6 ms·

> 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

by 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?
- lsc 7y ago
  >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? It's totally possible. I think the problem right now is that for profitable tech companies, right now engineers are still super cheap (like most of big tech makes rather more than 500K per employee, and pays less than $250K.) - from that perspective, it doesn't really make sense to try to save money on employees... the opposite, really. If they have to pay another $100K/head 'cause the cost of living is so high, that's a smaller bite than anything that might disturb the massive profit. (this is also the root of the argument that we should unionize, even though we make silly money compared to most other workers. Facebook captures a lot more of the surplus value created by labor, say, than Walmart does, even if by any other reasonable standard, we are treated so much better than a walmart floor associate. I mean, I'm not arguing for or against unionization, I'm just saying that's why some people want to unionize even though we already are better off than nearly any other class of worker.) The other thing to think about is Detroit. Detroit was totally one of these cluster cities; it was the place to be if you were working with cars in a period when there was a lot of innovation to be had in cars. And then the industry changed (or rather, innovation slowed a lot... like, there just wasn't that much more you could do with cars; just small incremental improvements) - automobile manufacturing scattered to the wind and Detroit is kind of a husk. Will that happen to the software industry? will innovations start being small and predictable? will the P/E of Facebook drop to match the P/E of Ford? I mean, silicon valley has already been through one of these changes; silicon valley is called silicon valley 'cause they used to make the silicon here, and they've really successfully switched to writing software. I mean, I'm personally long silicon valley (and while I think it's overvalued now, I think it's a good long term bet) - I think it will turn out more like New York than like Detroit, but... who knows?
- Kalium 7y ago
  > 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? You might be surprised by how many "Silicon X" places there are. Most of them are trying to lure companies. Only a few - like Atlanta - seem to understand that they need educational and financial infrastructure first.
afjl 7y ago
> 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. Wouldn't this mean that landlords are effectively leaving money on the table? If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it?
- lsc 7y ago
  >Wouldn't this mean that landlords are effectively leaving money on the table? Yes. >If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it? I was talking with a guy who I work with who is a landlord on the side, and he seemed to have this real labor-theory-of-value sense of fairness, like he says he jacks up rent every time his taxes or insurance or what have you goes up, but it sounds like he's like 5 years behind market (which is a huge amount) And this is super common in California, small-time landlords, if the tenant is not causing issues, tend to raise rents rather less than market. I think some of it is that the vast majority of your ROI, in California, comes from property appreciation, (while in many other markets, as far as I can tell, you usually get a lot more cashflow; all the places I looked at in cleveland or in new mexico would be positive cashflow out the gate; all the places I've looked at buying in California only become positive cashflow once rents go up rather a lot) - so I guess maybe some landlords feel that if they don't jack up rents too much on easy tenants, they won't have to do as much work, and as most of their income is actually appreciation on the property which happens either way, they don't see giving up some of the rent as that big of a deal? I can tell you that if you rent from a professional property management company, your rents will go up way faster, but they are also way more responsive when it comes to fixing things, and there is a strong feeling that if the rents haven't gone up on you in a while, you want to deal with any problems yourself; you don't want to call the landlord, which is evidence in favor of the "landlords avoiding work" theory. The thing that this theory doesn't explain is that a lot of these landlords seem to be below market by a lot more than what a property management firm would charge. (I think. around here property management companies charge more than usual and usually have really big fees for replacing a moved-out tenant)
  - Gibbon1 7y ago
randycupertino 7y ago
> 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.) I love your story, I thank you for sharing it and your candor because this sounds exactly like something I would do and feel sheepish about afterwards. They way you describe this happening I can feel in my soul reenacting the exact same scenario. Well done!
- my_usernam3 7y ago
  Me too! I always have the feeling while in the bay that "the grass is greener on the other side". As in I think I don't want to talk about tech all day everyday, and only be surrounded by other engineers. Then I go visit the "other side", and man do I miss conversations around the newest framework, or latest VC investment bust. It's very much a love hate relationship; which I have no plans on leaving.

by lsc 7y ago

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?

lsc 7y ago
>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? It's totally possible. I think the problem right now is that for profitable tech companies, right now engineers are still super cheap (like most of big tech makes rather more than 500K per employee, and pays less than $250K.) - from that perspective, it doesn't really make sense to try to save money on employees... the opposite, really. If they have to pay another $100K/head 'cause the cost of living is so high, that's a smaller bite than anything that might disturb the massive profit. (this is also the root of the argument that we should unionize, even though we make silly money compared to most other workers. Facebook captures a lot more of the surplus value created by labor, say, than Walmart does, even if by any other reasonable standard, we are treated so much better than a walmart floor associate. I mean, I'm not arguing for or against unionization, I'm just saying that's why some people want to unionize even though we already are better off than nearly any other class of worker.) The other thing to think about is Detroit. Detroit was totally one of these cluster cities; it was the place to be if you were working with cars in a period when there was a lot of innovation to be had in cars. And then the industry changed (or rather, innovation slowed a lot... like, there just wasn't that much more you could do with cars; just small incremental improvements) - automobile manufacturing scattered to the wind and Detroit is kind of a husk. Will that happen to the software industry? will innovations start being small and predictable? will the P/E of Facebook drop to match the P/E of Ford? I mean, silicon valley has already been through one of these changes; silicon valley is called silicon valley 'cause they used to make the silicon here, and they've really successfully switched to writing software. I mean, I'm personally long silicon valley (and while I think it's overvalued now, I think it's a good long term bet) - I think it will turn out more like New York than like Detroit, but... who knows?
Kalium 7y ago
> 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? You might be surprised by how many "Silicon X" places there are. Most of them are trying to lure companies. Only a few - like Atlanta - seem to understand that they need educational and financial infrastructure first.

afjl 7y ago

> 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. Wouldn't this mean that landlords are effectively leaving money on the table? If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it?

lsc 7y ago
>Wouldn't this mean that landlords are effectively leaving money on the table? Yes. >If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it? I was talking with a guy who I work with who is a landlord on the side, and he seemed to have this real labor-theory-of-value sense of fairness, like he says he jacks up rent every time his taxes or insurance or what have you goes up, but it sounds like he's like 5 years behind market (which is a huge amount) And this is super common in California, small-time landlords, if the tenant is not causing issues, tend to raise rents rather less than market. I think some of it is that the vast majority of your ROI, in California, comes from property appreciation, (while in many other markets, as far as I can tell, you usually get a lot more cashflow; all the places I looked at in cleveland or in new mexico would be positive cashflow out the gate; all the places I've looked at buying in California only become positive cashflow once rents go up rather a lot) - so I guess maybe some landlords feel that if they don't jack up rents too much on easy tenants, they won't have to do as much work, and as most of their income is actually appreciation on the property which happens either way, they don't see giving up some of the rent as that big of a deal? I can tell you that if you rent from a professional property management company, your rents will go up way faster, but they are also way more responsive when it comes to fixing things, and there is a strong feeling that if the rents haven't gone up on you in a while, you want to deal with any problems yourself; you don't want to call the landlord, which is evidence in favor of the "landlords avoiding work" theory. The thing that this theory doesn't explain is that a lot of these landlords seem to be below market by a lot more than what a property management firm would charge. (I think. around here property management companies charge more than usual and usually have really big fees for replacing a moved-out tenant)
- Gibbon1 7y ago

randycupertino 7y ago

> 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.) I love your story, I thank you for sharing it and your candor because this sounds exactly like something I would do and feel sheepish about afterwards. They way you describe this happening I can feel in my soul reenacting the exact same scenario. Well done!

my_usernam3 7y ago
Me too! I always have the feeling while in the bay that "the grass is greener on the other side". As in I think I don't want to talk about tech all day everyday, and only be surrounded by other engineers. Then I go visit the "other side", and man do I miss conversations around the newest framework, or latest VC investment bust. It's very much a love hate relationship; which I have no plans on leaving.