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Post mortem for San Francisco, 5 why's. Tech firms are "abandoning" San Francisco. Why? The costs are not worth the benefits. Why? The benefits off attractin
by djha-skin 3y ago
Post mortem for San Francisco, 5 why's.
Tech firms are "abandoning" San Francisco. Why?
The costs are not worth the benefits. Why?
The benefits off attracting investor money have decreased while costs have steadily increased as San Francisco continued to legislate ways of capitalizing on them. Why?
(To pick apart the investor half of that sentence)
Investors must no longer than
See the benefit of San Francisco. Why?
This is the real question. Tech companies simply follow the money. Investors believed in San Francisco, so tech companies followed suit. Something must have changed the outlook of Angel investors in San Francisco.
Maybe the interest rate combined with San Francisco's high costs, together with lingering remote-centric investor workflows, have caused investors to seek a new center for tech and investment that isn't so costly. After all, more of their wealth is being captured by the fed than it used to, and they now can't afford to keep both the fed and the local San Francisco authorities in money. San Francisco's ordinances were written with low interest rate and cheap investor money in mind. Maybe a city with cheaper housing and friendlier board will now get a turn.
I believe that city might be Austin. Texas has always had a good story around cheap housing, and the tech scene is picking up there by several accounts.
San Francisco had momentum, and people wanted to be there because everyone else was there. The pandemic caused a reset. Now investors will converge on a new city, and the decision of which one will now be based on merit instead of momentum.
- armitron 3y agoAustin will be ruined if this continues, property taxes are through the roof due to assessments that make no sense whatsoever and locals are moving out in droves.
- pclmulqdq 3y agoThis is what happened with SF and LA in their respective boom times. There's no reason to believe Austin will be an exception. In fact, prop 13 may have seemed like a rational response to the fact that property values were going up at breakneck speed and forcing locals out.
- bombcar 3y agoProp 13 at least gave the locals the option of sticking it out and staying put. Having it not apply to commercial/industrial real estate would solve many of the issues.
- nostrademons 3y agoAustin isn't exactly a poster child for affordability these days - $1-2M houses are common there, and don't get you much more than in SF or on the Peninsula. The advantage of Austin is that the suburbs still have reasonably affordable homes (< $500K), while in the Bay Area you're looking at $1M+ even out to the Tri-Valley area. But high housing prices follow money, for pretty basic supply & demand reasons. If a place starts getting widespread prosperity housing prices will eventually catch up.
- scoofy 3y agoAustin has high property taxes, which forces growth. You don’t have the same Prop 13 dynamic where people have no reason to sell. People who suddenly find themselves on property worth millions of dollars will need to sell or redevelop, which helps the housing market function properly in the long run.
- twelve40 3y ago> caused investors to seek a new center why do they have to necessarily seek a center at all? Post-Covid, we've met our investors once or twice at a conference in Vegas, everything else was email and zoom. Not being a part of the daily grind like the employees, we really don't care where investors reside anymore.
- djha-skin 3y agoInvestors don't care about where you reside, but where other investors are.
- twelve40 3y agoI don't know much about that, but according to your hypothetical, people who have to put up several or more million dollars of their own money to raise a fund will move to Austin to save ~$500k on housing? to be close to other investors who are eager to save a buck or two in Austin?