Peak Valley?
avc.com
avc.com
The fundamental problem in the Bay Area is a lack of affordable housing. This pushes us into higher paying tech jobs, when we may prefer to start a company. Its my dream to start a company but paying bay area rent is expensive!
This is what you can do to help:
- Housing Costs (Our SF politicians lack focus: Think tech cafeterias and Social Engineering vs Building Housing)
What can you do: unseat Supervisors Aaron Peskin, Jane Kim, Hilary Ronen and Sandra Lee Fewer. This group votes against housing every chance they get. Aaron has introduced the silly tech cafeteria legislation.
- Demand infrastructure. We must demand it.
I do not want to lose our dynamism, so lets change SF
What laws do we see being passed? Plastic bag bans. Plastic straw bans. Scooter bans. Tech company cafeteria bans. Laws that demonstrate a total lack of knowledge of economics, incentives, or any sort of numerical analysis.
I've given up on the bay area and am preparing to move. I know the tech jobs and community won't be as good, and I'll miss my friends, but I can no longer stand being governed by complete nincompoops.
1. https://www.sfchronicle.com/bayarea/article/29-million-incre...
2. There are approximately 7,500 homeless in SF according to http://hsh.sfgov.org/wp-content/uploads/2017/06/2017-SF-Poin...
It's driven by ML using Meetup, Eventbrite, and a bunch of other data sources. And always open to feedback. Feel free to drop me a note. :)
Don't forget NIMBY residents. Just down the street from me is a building that used to be a church. The church wanted to start providing services and shelter for homeless LGBTQ teens. The neighbors threw a shitfit, the shelter never happened, the church closed and moved, and now the building is a dentist's office.
That's fine, I'm not interested in #notalldevelopment reasoning because my point was not to ascribe all of the behavior to NIMBYs. I was only countering the idea that "politicians, amirite?" is the problem.
i guess i don't have any more hard evidence at hand than what you present here, but my gut feeling is totally the opposite on this. i think there are a lot of people in SF (in the SF bay area in general or the city in particular) who would get behind this sort of program in principle, but who would be scared to be close to the implementation of such a program.
i think this particular flavor of NIMBYism (overblown fears about e.g. safety and/or property values) is more prevalent in the burbs, and especially the more affluent suburbs, but i'm sure you get some of it in the more affluent neighborhoods and gentrified pockets of other neighborhoods in SF and oakland too.
You don't know anybody in city government, then.
> Over the past decade, the bay area has gotten so much worse. The cost of living has skyrocketed.
I'm not saying that the housing costs aren't crazy (I paid 2900 for a 600sqft studio in SOMA in 2013), but 10 years a go was an extremely low point.
Why does San Francisco have more homeless than Houston despite Houston being far bigger? We could argue housing costs, however many homeless in San Francisco aren’t even from the area, they gravitate there, in my opinion, because of permissive policies. San Francisco’s homeless problem is among the worst in the country, with Portland and Seattle quickly closing the gap. Less “progressive” places seem to have a much lower level of homelessness. Camping on sidewalks, shooting up, and shitting in doorways is rarely tolerated in most other places in the country, yet at least we’re working to stop plastic straws!
It might seem that San Francisco is more apt to arrest smugglers of plastic straws long before they arrest those shooting up in public and tossing their needles on the sidewalk. You are more likely to get fined for a polluting car than you would for smashing the windows of that same car.
One factor is weather.
Is it strange to anyone else that the more you spend on the homeless, the more homeless you seem to get?
The Shirky Principle:
"Institutions will try to preserve the problem to which they are the solution"
And a few thoughts on that and homelessness in specific.
https://streetlifesolutions.blogspot.com/2018/07/the-shirky-...
Good public administration isn't cheap, and excellent public administration is expensive. The benefits are enormous, of course.
There's another key element: government officials are also required to open their personal finances to public inspection. This goes a long way to rein in corruption and graft.
Compensation does matter, but it's not the be-all-end-all.
The net result is the same as if the government paid mechanics or doctors substandard wages: Some good talent would join out of civic duty, but the overall effect would be to lower the quality of workers relative to the private sector.
I think it's more likely that a series of cultural, historical, systemic and environmental issues have lead to the current situation, and that our politicians are generally average in competence and intelligence compared to other similarly sized cities, but are dealing with some particularly challenging issues.
Some possible factors:
Cultural: Other cities, such as NYC, house many people in large shelters, on cots, outside of the city center. SF wants to put people in a higher standard of living than a room full of cots, so we can only afford to house about half the people who need it. (Much of that $250M/year we spend goes to housing people) It's hard for the BART police to kick people out of the stations because homeless advocacy organizations complain about abuse. So the problem stays visibile. Places like Salt Lake City also see the Mormon church active in improving these problems. I don't think there is any such non-govermental organization working at such scale in SF. Generally we think it's the goverments problem to solve, other places think it's a community problem, and take action. We seem to tolerate people visibily using drugs, leaving needles around. More conservative cities would not let that happen a block from city hall.
Historical: Most of SF's services, such as shelters, needle exchange, healthcare, etc, are downtown, this makes the problem very visible. NYC pushes this out of Manhattan and has for years. Neighborhood groups in SF usually protest adding a navigation center to their neghborhood. Imagine if we started putting shelters and navigation centers in the richmond?
Systemic: This could be an essay alone. Rising housing costs, due to downzoning, prop13, discrtionary review, etc etc, and then a job loss, and you can't make rent, you lose your apartment. Now you're out on the street. The city doesn't have enough shelters. And see previous mention of neghorhoods not wanting navigation centers or shelters near them. The city actually has to go in front of the planning comission, just like a private developer, to argue for a new navigation center. Not only do we have a system that makes it hard to build new high end housing, it's hard to build navgation centers, because of all the process involved.
Environmental: California cities have a much higher rate of unsheltered homelessness. NYC has a legal right to shelter. I do wonder if part of this has to do with climate. If NYC had the same number of people living unsheltered through the winter, they would have thousands of people freezing to death. NYC has 75K people experiencing homelessness at any given time. This creates the political will to house people.
So you're elected to the board of supervisors, or as the mayor, you have all this history, all these factors that are making your job of reducing homeless, very hard. What do you do? We've had many many bonds to increase funding to provide housing for people experiencing homelessness, but the electorate consistently votes them down. So your hands are also fairly tied with regards to money. You're left with small incremental imrovements over many years.
I can see why you'd be fed up with San Francisco for these reasons. I just don't think it's fair to blame it entirly on stupid politicians. All that said, I do agree with you that I'd rather see the time spent on more pressing issues than tech company cafeteria bans, and plastic bag bans. Part of this is because we elect people like Aaron Peskin who seem very interested in 1. having the ear of local small business groups, and passing protectionist laws. 2. Putting forward sensational laws that get a lot of media attention. Peskin and his ilk operate on the emotional appeal side of politics. Things that sound good as long as you don't think too hard about them. We'll find those types of politicans everywhere. We have to work to expose them for what they are.
There's the boondoggle that has been the Central Subway, which has gone overbudget by 3x (over $1 billion) and taken a decade longer than planned. Muni's own projections put the increase in ridership at less than 1%, since the area is already served by busses.
There's the ineffective school system, which puts students of all levels in the same classes and prevents bright students from taking algebra before high school.[1] Anyone who can afford it sends their kids to private school.
The city budget has increased from $6.4 billion in 2010 to over $11 billion this year.[2] In that same time, the population of SF has gone from 805,000 to 864,000. That's a 72% increase in budget for a 7% increase in population.
$11 billion, and at least once a week I'm stepping around used needles or human feces. Could it be any more obvious that the city government is utterly dysfunctional?
1. https://www.kqed.org/news/10610214/san-francisco-middle-scho...
2. https://www.sfchronicle.com/bayarea/article/SF-s-budget-soar...
Read this sentence a few times and then tell me again how your politicians aren’t stupid or evil.
"The Navigation Center, which opened in March 2015, is a successful program designed to shelter San Francisco’s highly vulnerable and long-term homeless residents who are often fearful of accessing traditional shelter and services. Navigation Centers provide these otherwise unsheltered San Franciscans room and board while case managers work to connect them to income, public benefits, health services, shelter, and housing. Navigation Centers are different from traditional shelters in that they have few barriers to entry and intensive case management. Unlike traditional shelters, people with partners, pets and possessions are welcome at Navigation Centers. The purpose of a Navigation Center is to offer a respite from life on the street and to support people in changing their lives by making lasting social service and housing connections."
[0]: http://hsh.sfgov.org/services/emergencyshelter/navigation-ce...
Labels in politics are used to demonise - but nothing is ever that simple.
I'm not disagreeing with your comment, just adding on to it. You are 100% right that homelessness is a complex issue with lots of causes. But I think it's also fair to say at the end of the day that SF is completely failing at fixing the problem - both for the safety of the homeless people and for the safety of other citizens. It's a public health crisis in my opinion when you look at the basic numbers.
Here's some numbers:
San Francisco population: 884,363 (2017/Wikipedia)
San Francisco unsheltered population (conservative): 6,600 (7,499 SF self-reported homeless count * 88.2% HUD estimated unsheltered rate)
Unsheltered population rate (conservative): ~0.75% of residents (my calculation) - nearly 1 in 100!
Compare that with London, another city also experiencing a homelessness epidemic due to explosively rising housing costs:
London population: 8,825,000 (2017/Wikipedia)
London unsheltered population: 1,137 (homeless.org.uk)
Unsheltered rate: ~0.01% of residents (my calculation)
So obviously homelessness rates in SF are absurdly high. In fact, there are more unsheltered homeless people in SF than the entire country of England:
San Francisco unsheltered population: 6,600 (2017)
England unsheltered population: 4,751 (2017)
I'm not saying they are equivalent situations, but somehow a country with a population greater than the state of California manages to have fewer homeless people than one relatively tiny city in California.
And people say things like NYC has a much higher homeless population of 76,501, but according to HUD, only 5.1% of NYC homeless are unsheltered. In SF, the unsheltered rate according to HUD is almost 90% - nearly the worst in the country. That means NYC actually has fewer unshelted people than SF on the streets despite a much larger population.
I'm not saying these numbers are perfect, but it gives us an idea of the scale of the problem. Politicians may or may not be smart, but at the end of the day they are doing a terrible job of fixing this issue in a meaningful way. Someone needs to step up and treat this like the public health crisis that it is, even if that means bringing in more federal resources or changing the strategy significantly.
On a related note, I feel the same thing holds true for LA and Southern California's car traffic problem.
This will be true after you move too.
This is a disingenuous way to represent spending. Much of the spending goes to keeping people off the streets, to shelters, and to medical care.
If you spent a money and everybody but 1 person got off the street, would you say that they spent a quarter billion dollars on 1 homeless person? No.
We got into this affordability situation by passing a series of laws at the state and local levels, over many years. We're never going to be as cheap as Akron OH, but we can slow the price growth, and maybe reduce it some by making it easier, and cheaper to build, by changing state and local laws to allow that.
Finally, local politicians are actually quite accessible, so your voice can be heard. And groups like SF YIMBY help to amplify that voice. Fundamentally, most politicians do what they think will get them votes, so it helps to find a group of like minded individuals.
> As a result of these landlord reactions, rent-controlled buildings saw a 15 percent decline in the number of renter residents, and a 25 percent decline in those living in the rent-controlled units, compared to 1994 levels. In other words, rent control had a counterproductive effect.
Fewer residents mean less supply of housing, meaning higher prices overall. Rent control effectively subsidizes current tenants with money from future tenants.
1. https://www.bloomberg.com/view/articles/2018-01-18/yup-rent-...
2. https://www.citylab.com/equity/2018/01/rent-control-a-reckon...
Right now the market is bifurcated into the lucky ones who have absurdly cheap housing and the unlucky ones that have absurdly expensive housing. Without rent control, the equilibrium state would be something in between.
It incentivizes tenants with artificial low rent to stay beyond what were needed. People with low rent hang on to the units even when they have bought houses (I actually know people doing it).
It decentivizes landlords to keep the buildings as rentals. It decentivizes investors to add more housing supplies.
Rent control hurts affordable housing because it incentivizes over-consumption of affordable housing. Without rent control, average rents would rise, but it would be easier to find apartments at the low end of the market.
So, there’d have to be a massive increase in housing to exceed the demand (probably millions of people wanting to move there).
I mean, I’m all for giving it a try, but I think people’s expectations are way too high.
Thats the opposite of inelastic.
Inelastic means that as one side increases, the other side does not respond much. Food, for example, has inelastic demand in the US. If food prices get cut in half, people aren't going to eat twice as much.
But even if housing demand is elastic, thats a good thing, not a bad thing. That means that if we build lots of houses, then there are lots and lots of people out there who could benefit from moving here. These people want to move here, but are unable to do so right now. We could help them so much by giving people the opportunity to move to a place, that is apparently so amazing that lots of people want to come here.
Same goes for housing. And in San Francisco in particular. Unless supply meets demand (which it won’t for a very long time), prices will be pegged upward. I can’t see prices falling unless demand decreases, although I’m as hopeful as you.
That means that if supply drops, then price goes way up.
Now think about the reverse direction. IE, if supply for gasoline goes up, what happens to the price? prices goes way down.
Inelasticity of demand means that price will change a lot, if supply changes. Supply goes up, prices goes way down. Supply goes down, price goes way up.
If housing has inelastic demand, that means that if we build a small amount of housing, then price would go down a lot immediately.
People talk a lot about the idea of "pent up demand". "Pent up demand" is the idea that if price changes, then a bunch of people will move to SF to immediately live in those new homes. That is an example of elastic supply.
Inelastic would be the idea that nobody at all would move to SF to live in those houses if we built them, and they would just sit empty.
https://www.quora.com/What-is-the-meaning-of-perfectly-inela...
Here is a quote from one of the answers in the quora question that you posted, saying exactly what I stated:
" If demand for a good is perfectly elastic in regards to price, the smallest change in price will change the amount demanded by an infinite value - if the price goes down a single cent, demand will grow to infinity (assuming a normal good whose demand is inversely correlated to price). If demand for a good is perfectly inelastic in regards to price, it means that no matter how the price changes, the demand will stay the same (if the price goes for 1 dollar to 1 million, the demand is the same)."
IE, perfectly inelastic demand means that no matter how much supply/price changes, then demand doesn't change. If supply goes up, Nobody buys any more houses (because its inelastic). And price crashes.
Inelastic demand applies to both the case of supply going up (therefore price goes down), and the case of supply going down (therefore prices going up).
So if supply goes down, prices go way way up, and if supply goes up, then prices go way way down.
Or in other words, if there is not enough of so
Long term interest rates have been pretty stagnant recently even as the Fed has been raising the short term rate steadily, but they've only just begun winding down their QE assets so if there isn't a recession in the next few years we should see house prices ease off.
density is the answer though, demand will always be there and is harder to control
The real reason is that there are too many tech companies that refuse to build equivalent headquarters in other cities. It's concentrating the wealth of companies that gather money from around the world in a tiny area, and that by definition will create inflation.
If Google, Facebook, etc, created equivalent headquarters in Kansas City, in Cleveland, etc (as in, they have equal say as the main HQ and just as good projects), then I believe the wealth could be spread over the entire country or globe, and everyone would benefit.
People NEED to move away from Silicon Valley. Having so many rich, tech workers living in a small area is toxic, just like Wall Street and Manhattan is toxic.
Once the pressure of adding thousands of 6 figure engineers coming to the Bay Area recedes, then housing will fall to a more rational level.
I've been living the in Bay Area since the dot com boom. Housing prices were always high, but never this toxic, until frankly the FANG stocks started breaking out in around 2011/2012. You can see this in the stock market as well. When these global internet companies started consolidating their power and consequently their wealth, it created a mass migration to the Bay Area of tech workers who were paid well above the average, and caused massive inflation.
You want to start a company? Go somewhere else. Be a part of the solution, not part of the problem.
http://www.assessor.saccounty.net/LowerMyTaxes/BaseYearValue...
If you're leaving the Bay Area, you're going to a far less expensive property, plus a dozen or so counties accept transfers of Jarvis-Gann protections anyway. But the tax hit is the crippling factor.
Its a big country. Its a big state.
[edit]: Anybody care to explain (or speculate) why this is being downvoted?
Prop 13 was not created in a vacuum, it exists to solve a very real problem. And don’t forget, the young people that mostly don’t feel this problem don’t vote nearly as much as the older people for whom this problem is most keenly evident.
It is nativist homeowners that oppose new building because it reduces home appreciation and brings traffic and ethnically different people to the neighborhood / city.
What if those pesky younger people did vote? What if they outvoted all of these older NextDoor-Angry people?
It will remove the immoral handout landlords have gotten themselves in the name of the residents facing unexpected increase in property taxes.
If you're wealthy and can afford to pay a market rate property tax, then you pay it.
If the point is simply to raise income for the state, that’s an interesting discussion that we can chat about. But the topic is housing availability and I don’t see how this proposal would affect that with real means testing. People who can afford it won’t move and landlords will simply pass the costs on to renters.
Furthermore, landlords shouldn't be able to raise rent faster than their property taxes go up.
https://www.bls.gov/regions/west/news-release/2018/pdf/consu...
This document interestingly shows that motor vehicles have been getting cheaper in the bay area, even before adjusting for inflation.
That's cause wages of other workers go up, because the supply of workers dwindles if wages don't keep up with housing costs (people wouldn't work here if they weren't payed enough to afford to live within say an hour and a half of work).
Sure, if tech workers stopped living there then there would not be as significant a problem, because housing prices would have to fall.
On one hand, spreading work around the country/world is good, on the other hand there are real productivity gains by having people in physical proximity, as we can see from the fact that cities are the most productive parts of the world.
Also, one would think it is pretty clear that there is a correlation between SF's "culture" (like permissiveness about drug use) and the amount of excrement and needles on the streets.
pfarnsworth is spot on. Either pay the market rate, or move somewhere cheaper. This is primarily the fault of large tech employers who refuse to relocate jobs elsewhere. They are causing the housing inflation with their deep pockets for worker salaries.
Edit: toomuchtodo brings up a good point. I was thinking more in terms of a higher pay after adjusting for cost of living (e.g. being payed the same amount as an engineer in SF while living in Cleveland). Otherwise it seems like I would be taking both a pay cut and a cost of living cut.
Bay Area tech salaries are already the highest in the nation; you could make the pitch to an employer, but I think you'd be hard pressed to get a higher salary for living in the midwest (considering the much lower cost of living). Midwest workers (tech workers anywhere outside of the Bay Area really) would be thrilled to get SFBA salaries where they live.
> Menlo Park, Calif.-based Facebook is negotiating to lease more than 200,000 square feet in a recently constructed office tower at 151 N. Franklin St. in the Loop, according to sources.
> Meanwhile, sources said, Google plans to add more than 100,000 square feet of office space in the city’s Fulton Market district, where the company already has a large Midwest headquarters.
> The new Facebook space alone would be large enough to accommodate more than 1,000 employees.
[1] http://www.chicagotribune.com/business/columnists/ori/ct-biz...
Not just the lower cost of living. Being compensated for living through winters is a novel idea, but if you're thinking about the soft factors that don't directly involve salary and cost of living, not having to deal with the bay area commutes is pretty strong compensation in and of itself.
Having to take a pay cut and live through a season you get to ignore in CA could be kind of a bummer for some people. Getting as much as 20% of your waking life back in time spent not commuting can be a pretty strong compensation for it, though.
edit: please do comment in addition to downvoting, if you see a problem with the logic here
Yes, I am sure that this is what the home owners who own multi-million dollar properties would want. Either leave or drive up their housing prices.
But another solution is to vote for new laws that would increase their taxes (an thus incentive them to sell), or vote for laws that would drive down the price of their investment.
The renters in the city are slowly but surely increasing in voting power, as less and less people are able to afford owning property, until we are soon able to outvote the rich property owners. And when that happens we can pass laws that will reduce prices, raise taxes on the rich property owners, and ruin their investments.
But who cares about them as long as current renters get to take their homes? /s
They will still have a house to live in.
If instead it is an "investment", well that's the risk of investing. Nobody is forcing them to sell.
It is actually literally the opposite. It is that other people want to have a right to build stuff on property that they own, and the other home owner wants to force people not to do thie, in order to protect their investment.
How about people are instead allowed to build things on property that they own and nobody forces them to do otherwise?
The problem is that Silicon Valley is awash in money.
We want society to be more wealthy, and the tech industry has been a huge creator of wealth. The other thing about the tech industry is it's fairly unique in how widely it distributes that wealth. What other industry gives stock options to low-level employees? Sure tech founders get a disproportionate share, but look at a different industry, and it would be rare to see any ownership extended beyond higher level employees, but in tech, stock compensation is ubiquitous.
(this may be due to a labor shortage, and yes you can point at things like Amazon's warehouse workers as a counter example)
The trouble is now we have quickly raising housing costs, and a large portion of the population who's quite wealthy, living next to many who are not doing nearly as well. Crime and general unhappiness are not necessarily linked to poverty; it's highly linked to inequality. This is likely why we have so much property crime in San Francisco. Income inequality. When you see the person next to you is doing much better, you get mad.
Frame this so it's not about limiting wealth creation, but about limiting income inequality.
Same thing with wealth creation. Too much wealth creation is the problem, the same way having too many users is the problem. It's a good problem. It's a problem you're delighted to have. But it is a problem, and one you have to solve.
Disclaimer: I have very little idea how to get SF to scale. I don't even live there.
Ask the citizens of Portland why they are so angry at Californians moving into the area. It's because a small number of Californians are moving into the area, and they are considerably richer than Portlandians, so they drive up the housing prices for everyone. The exact same phenomenon is happening right now there, and Seattle where rents and house prices are skyrocketing because of wealth.
I'm genuinely interested in which companies offer stock options to their cleaning staff, security staff and receptionists.
We can agree to disagree.
I just hope that the people that really believe in the merits of San Francisco, believes in its future and does not want to leave will work with me to make it more affordable for everyone.
Look at the stock market of FANGs since Jan 2011. Google has gone up 8x including splits. Amazon is up 11x. Facebook is up 6x since IPO. Netflix is up 15x. Apple is up 28x (including 7:1 split). Even legacy companies like eBay are up 7x. Microsoft is up 6x. There are a lot of regular employees who are extremely wealthy of the last several years. They are driving up the prices everywhere for housing. There is an insatiable amount of inordinantly rich tech workers that are ruining it for everyone. I'm one of them as well. So are you.
If you really want to do the right thing, go to the Midwest like Kansas City, with a good university and great fiber infrastructure. Or go to Detroit. But you won't because similar to NIMBYs, you're a "Not for my Startup" mentality thinks you need to be in SF to become a billionaire. Then you're part of the problem.
What would you do if you had "the start-up dream", move as you prescribe to the parent comment or stay and "be part of the problem"?
Ya’ll need to start acting like a major city rather than stamping your collective feet while shouting “I won’t grow up!”
And if you refuse either Sacramento or Washington DC should force the issue for the good of the state and country respectively.
Almost the entire country is filled with places to live in detached houses on significant fractions of an acre (or more). The NIMBYs can sell to developers for huge amounts of money and move to any one of them.
Ok now, joking aside (though the 2 examples I mentioned are 100% true, they opposed a late-night bus because it would cause noise + somehow degrade road quality. Who can reason with old-bitter people with too much time on their hands?).
The issue I am seeing with them selling to developers for huge amounts of money, is that the developers will want to make that that amount of money++ back. Current zoning laws limit the height of buildings, so... their only option is to only build small insanely overpriced condos and grant permissions only to super-upscale businesses, that only rich or rich-young-tech people can afford and want. Perhaps the market will correct that in time, but powerful people as aways will fight for that to not happen.
I feel we need more relaxed zoning laws, let people build bigger and higher.
Bingo. If there is currently a detached house of 1500 sq ft that can be torn down and in its place can be put up a six story building apartments totaling 8000 sq ft of livable space, there’s plenty of room for profit for the prior homeowner, the developer, and also for the new units to be more affordable than what was there before. Increasing the supply is a win-win-win.
As I said, if necessary—-and it looks like it is—-higher levels of governments should step in to prevent local, narrow minded, parochial interests from killing the goose that lays golden eggs.
This is an "easy" fix in theory: gut the previous system and just build anew. The problem is, that would be such an enormous undertaking (b/c you have to divert sewage during the whole process, etc) that the city is effectively forced to apply what amounts to band-aid fixes in its place.
It's definitely not win-win if that shadow falls on your beloved back yard, ruining your legal cannabis plot. Or if you live in the top floor of the five-story building that was built prior and your view will now be of the six-story building.
NIMBY works ("works") because most people put their own specific self interest before community when the former is threatened. They do this pretty reliably, and on the individual level it's usually pretty rational.
(Also, I might have reasons other than economics to keep my 1500 sq ft house from being torn down.)
The answer, as mentioned, is go to a higher level of government where there are even more people to outvote Mr. “But Muh Views”.
In the case of CA there’s seven million people in the Bay Area and 33 million in the rest of the state that would benefit from continued growth there and don’t care at all about shaded backyards in Palo Alto. That sounds like a referendum waiting to happen to me.
That would come up against the same forces that fuel NIMBY-ism, i.e. the relative political clout of home owners and the power of the story that it's my back yard today, but it's gonna be YOUR back yard in the next shadow.
There are several hard-to-replicate formulas for silicon valley
1.) Money likes to stay in silicon valley: Other money is in silicon valley. Stanford, Berkeley, and Santa Clara university. Existing networks. Beautiful weather (26c today in san jose), low humidity. Gorgeous landscape. Great wine and michelin restaurants. World class cuisines in American, Japanese, French, Italian, Indian, Chinese, Vietnamese in Bay Area. Many activities to do year round. Beaches, mountains, coastlines, deserts, and forests. Vibrant immigrations. Good infrastructure. Close proximity to Seattle, Las Vegas, Hawaii, and Los Angeles.
2.) Talents are already in silicon valley, and their million dollar houses are in silicon valley. Easy to interview with various companies when they are all near where you work and live. Safe neighborhoods. Engineers that you can meet one another in meetups. Existing networks.
3.) California is the 5th largest economy in the world. And Silicon Valley is the fastest growing economy within it. Lack of regulations to start a startup, raise money, sell to other states in US, which is the largest economy in the world and has the largest consumer market in the world - 1/3 of the world's consuming power. the next closest consumer market that shares the same language and culture is Japan at 1/3 of US's size. And US economy is fast growing, whereas Japan and China are stagnating.
4.) Inherited knowledge is in Silicon Valley. How to bootstrap better. How to invest better. How to run teams better. How to produce software better. How to innovate faster. Everyone knows a little bit of the piece of the puzzle, and have been practicing it for 40 years.
The YIMBY forces are not going to succeed in fundamentally changing San Francisco. They've been failing at that for two decades. Instead, the money and start-ups will push further out. When people talk about Silicon Valley today, they mean a much larger geographic area than what that would have meant just 30 years ago. 30 years from now, the name will have grown to encompass a far larger area.
This is a defeatist attitude.
SF Yimby / SFBARF were started in 2014 and have been impressively successful since. They played a decisive role in the latest mayoral election, and SF now has a Yimby mayor.
Change is possible.
Apathy and disengagement from tech people and youth is v advantageous to incumbent Nimby constituencies. Those are mostly older, mostly homeowners or rent-control beneficiaries and therefore personally insulated from the housing crisis. They vote reliably, and there's no reason ppl with a more inclusive vision can't do the same!
Step 1 is letting go of cynicism. Change in fact already happening.
https://trends.google.com/trends/explore?date=all&geo=US&q=y...
I... What?
Otherwise great comment.
China is already the hardware capital of the world. If they play their cards right, they could make a big dent in software as well. It’s a huge market, speaking the same language on the same currency.
That’s exactly why YC wants to enter China.
But people are suspicious of fast wealth. Usually synonymous with bubble. And Silicon Valley have already had one.
It doesn't make any sense to raise investment in SV and spend it here. Your runway will be 3x or more longer if you hire outside the Bay Area. Also, there are smart people everywhere! There's a pervasive viewpoint in SV that the world's smartest people all come here. It's true that there are a ton of smart people here, but there are way more equally smart people who don't want to deal with the crazy immigration and politics of the US, and the sky high cost of living in SV.
Obviously I'm generalizing, but your (or anyone else's) remote employees may be the smartest of the bunch or even in the world, but if they are not exposed to outside influences and are satisfied in their own locales, they will remain good/great loyal employees but will never (again generalizing) become entrepreneur. Otherwise, why would you be in the SV if you could do it remotely.
So, if this remote model keeps on evolving, then obviously it will have a negative impact in the long run on SV ecosystem, since these smart loyal employees remain just then and never become entrepreneurs.
However, I think this model only works till companies reach a certain size and I do not believe that companies can scale beyond a point on a purely remote workforce. So, overall I think SV and its ecosystem is safe.
The remote workers are getting exposed to outside influences by working for SV companies and with other remote workers. In fact, I think they benefit from exposure to a wider range of opinions than one typically encounters in SV. They also travel a lot because being fully remote gives them a ton of flexibility.
I think many of them will try to become entrepreneurs at some point. The challenge for people outside SV is always going to be funding. But starting tech companies is constantly getting cheaper.
It remains to be seen whether there is a breaking point in scale for remote teams. Zapier is now in the hundreds and it still seems to be working well for them.
To be clear, I do think people will continue to move here to start companies for the foreseeable future, and so SV is safe in that respect. Reputation and momentum count for a lot. However, I'm guessing the workforces will start to shift outside of the Bay Area.
My experience of innovation is that it tends to be a singular affair. Not a result of group hangouts and all day brainstorming meetings but the result of a single unreasonable person who is seized by an idea that's either not obvious or - more commonly - something other people were aware of but didn't rate much.
I don't see why you'd need physical proximity to innovate in that way. Unless by innovation you're referring to product development generally.
The 3x runway outside SV is undoubtedly true, but I wonder how VCs feel about that. My understanding is that VCs typically want to give you no more than 18-24 months of runway. Are they cool with startups raising money and then enjoying a 4-6 year runway with remote workers?
Most SV workers can't afford a house. How would we account for that?
Some VCs seem to be cool about it. I guess it depends on who you have as investors.
I don't get what you mean. No sense of entitlement to, say, a fair share of the money flowing through your company?
Do the founders also live in a cheaper place or do they get SF money in return for "dealing with" Silicon Valley?
If you can extend the runway for your seed money this way, can you do it forever while still being an SF/SV company? Won't this eventually create huge differences in pay?
If I am tired of my India Remote salary and want a Singapore Remote salary, wouldn't it actually be in your own self-interest to give it to me without my actually moving to Singapore?
I don't disagree with your premise, but it sounds a bit like you're trying more for cheap labor than for building the best team you can regardless of geography. Sorry if I'm misinterpreting that.
We pay everyone exceptionally well - way higher than they would normally make in their home countries. Even at low-mid Bay Area levels. Just not near the top end of Bay Area salaries. There's no huge disparity in the pay for anyone. See my comment history for who is hiring posts with salaries included.
The founders live in SV and earn less than most of the workers actually. I think longer term we're going to just move away - we have no ties here at this point and we're just throwing money down the drain.
Are they really so common that candidates expect them, or is it just a Google-et-al thing? Serious question, I know a lot of tech folks in SF and I don't hear about the comical "perks" except from Google and Facebook people working in the Valley.
> See my comment history for who is hiring posts with salaries included.
Done. So out of curiosity do you attempt to pay the same actual salary regardless of the candidate's location?
FWIW I don't live in the US, and I work remotely, and have done for many years. I work with people in Europe, the US and Asia. It always seemed to me you'd be better off setting pay regardless of location, but as soon as I contemplate the details of it (taxes, possible perverse incentives) at anything more than an early-stage startup, my head hurts.
Best of luck with your company!
The entitlement part really goes beyond the free lunches. That was just an example. It’s hard to articulate succinctly. Another example is having to tread carefully to avoid people quitting on a whim because there are so many options. So people get pandered to all the time even when it’s not in anyone’s best interest.
Thanks for sharing your perspective!
When I see articles like this, I wonder what it would take for other cities to change similarly. What would it take for another city to be the finance hub (replace NYC) or the new entertainment hub (replace LA) and I really can't think of other cities becoming that. So I am similarly skeptical of Tech moving out of SF anytime soon. And Fred makes a great point: Tech startups still have an outsized impact and stellar returns that justify the skyrocketing expenditures in the Valley. When this stops being the case is perhaps when things would change.
John Deere is "tech". As is Two Sigma. And Wal-Mart and UPS (logistics). See also NYC quantitative trading firms. And East Coast biotech.
Silicon Valley tech is mostly centered around specific types of consumer products, especially fremium and ad based internet businesses. That's not even close to being the only kind of technology or software out there.
Freemium and ad based businesses are actually just a tiny fraction of the tech companies operating out of the SF Bay Area. You just dont hear about the other ones because they're not as shiny, new, or have ridiculous risk/reward profiles.
But doesn't that suggest that tech is found everywhere, not just in the Valley, but we simply don't hear about it?
Not even close to being true. There are a handful of big companies in that area, but there are tons of others that aren’t. Enterprise startups flourish in SV - SFDC, Workday, Palo Alto Networks, ServiceNow, Splunk... Just a handful very successful startups that are all uber-unicorns.
I somewhat agree with the grandparent - tech is a lot more than just consumer Internet tech. And yet there's a useful distinction there - once tech is more than about 10-15 years old, it ceases to be considered "tech", because it either dies out or becomes big enough that it gets its own label. United Airlines (another SF company) was some fantastic technology - in the 1920s. Now, it's just an airline, because we've gotten used to the ability to fly through the air and cross the country within a few hours.
And I'd say that Silicon Valley has an advantage in "tech" (i.e. innovations that are < 15 years old) in that a.) it has a culture that's open to the next new thing instead of assuming it's a threat to the natural order and b.) has a large number of service providers that are all eager to find & support that next new thing and c.) has a legal framework that prevents past employers from stopping you from going off and starting the next thing.
In my experience the set of tools used by different industries isn't the same. I moved to SF because I wanted to do web development using modern tools like React and Node as opposed to Angular 1 and Java servers.
And the actual silicon businesses. Intel, AMD, Nvidia, Cypress, Broadcom Limited, Marvell, Xilinx, ...
Oh goodness I would love to be a fly on the wall during the debates trying to come to a consensus on this
It really depends on where you're at in your life. As a young unmarried person with no debts and family, it wasn't hard to justify moving to the valley; I wanted to learn a lot and diversify my skills and work with really smart people who get things done. The learning aspect was a greater pull than the financial one precisely because I didn't have other costs (childcare, mortgage etc.) that would blow up enormously with moving to the Valley.
Is it even possible to get a 1 million+ a year offer from these companies?
People don't work for "charity," especially in a high cost-of-living area, so the choice between FANG and others is a no-brainer when it means the difference between having roommates and not living in a converted living room -- or commuting two hours a day and living downtown.
This means that the FANG companies' applicant pools become highly competitive, allowing them to be very selective about hiring the best talent.
Similar dynamics happen with universities (Ivy League vs others), VC investors/accelerators (YC vs others), immigration (US vs others), and many other societal gateways.
Sure, there are always outliers and exceptions (and they are, by definition, outliers and exceptions), so I'm speaking in the broadly general case.
There’s good chances that even Jeff Dean would fail some interviews because “he’s not a good culture fit”.
I work with a number of Xooglers and they don’t seem to be laying golden eggs every morning.
"Clumping
Along with interesting problems, what good hackers like is other good hackers. Great hackers tend to clump together-- sometimes spectacularly so, as at Xerox Parc. So you won't attract good hackers in linear proportion to how good an environment you create for them. The tendency to clump means it's more like the square of the environment. So it's winner take all. At any given time, there are only about ten or twenty places where hackers most want to work, and if you aren't one of them, you won't just have fewer great hackers, you'll have zero."
The essay then goes to lengths about Google. Jeff Dean has enough clout that he can just skip the interview process and get immediately hired by any company he wants. I even have friends who have pulled this off who aren't even nearly as capable as Jeff Dean.
https://www.newyorker.com/magazine/2002/07/22/the-talent-myt...
The question is why has SV been so uniquely successful for so long.
I know we have our favorite theories — perhaps the density theory in the article is correct — but the debate rages on. And till we know why SV dominated we won’t know why it stops dominating.
I can easily head over to a friends company for lunch and learn about what they are working on. Or invite a former co-worker to our office for lunch to try to recruit them. All of this is maybe 15 minutes travel time in SF. I don't know how to quantify the value of this, but I don't see it being replicated anywhere else.
And then combine that with a very open culture, where people are happy to share details about what they are working on, it really helps to accelerate learning. I lived in Seattle from 1999 to 2009, and did not experience the same open culture there. Maybe it's improved since, but I was amazed at how much people would share when I moved to SF.
Compare to the strangled startup situation in Florida where there's also a mild weather regime and natural disaster risk, but a polar opposite in its zero social service infrastructure/zero personal ncome tax and a full throated enforcement of arguably unreasonable non-competes.
true. OTOH, California makes up for it by tossing its own, homegrown student population under the bus. this state is perfectly happy to encourage and help SV companies import workers from every other school system on earth.
https://www.npr.org/2018/08/28/642795284/california-becomes-...
One of the reasons I don't really have any desire to move to the Bay (unless the right role comes along which changes the math) is the abundance of geological risks, but this doesn't even remotely register for most people who move to the area. I'm willing to make a trade for worse weather (DC) if it means much more certainty with regards to whether the ground will move less violently... but I'm the rare case who assigns that much weight to this particular risk.
Two of my favorite cities on the west coast (Seattle and San Diego) still lose out to DC for this very reason.
Earthquakes seem easier; it's mostly a matter of good building design.
[1] https://www.sacbee.com/news/state/california/fires/article21...
I've been working remotely for years and I make a point to respond to each recruiter contacting me. I'm not really looking for a job, but I'm just trying to collect data on remote work. So I try asking if the opportunity is remote. It never is.
All y'all's Silicon Valley startups want people sitting and warming up seats in your SV offices. The argument is always "to foster company culture", which I guess translates to Friday evenings playing with Nerf guns. Which I guess is more important than things like not contributing to local social problems.
The dichotomy is so weird. They want to change the world in some weirdly contrived way. But there's no way in hell this can be done if you don't move to SF to warm up their chairs. Too bad for the rising housing market.
Last week, a video chat startup that doesn't do remote. Seriously. Anyways... If your company culture is held together by Nerf guns.
Maybe it is like Uber drivers. They quit after noticing that they are losing money but the supply of new workers is so high it works out for the company anyway.
I mean geocery stores and fast food joints etc are not that much more expansive than the rest of the country.
A burger at McDonalds should really cost twice the national average or something to cover the living costs for the workers. But it doesn't ... and I suppose churn ratio is the answer?
Obviously this doesn't work in other industries like hardware, biotech, etc., where physical presence is baked in to doing business.
SV has been dealing with brain drain since loooong before FAANG was even a thing. HP, Intel (remember why it’s called silicon valley?), and Oracle used to be heavyweights - and in the midst of that there was still a very very successful startup culture.
I’ve asked founders why they start their companies here, and the reason is almost universally ‘this is where the biggest pool of engineers I need for X are’.
For better or worse, remote and in-person are not yet interchangeable experiences. The technology to enable the same depth of engagement has not yet been developed (and VR/AR won't solve it either). I ran a distributed team across three sites (all onsite) for few years and when you really wanted to talk things through, you'd hop on an airplane.
To say that all the top talent was/is in Silicon Valley is a gross overstatement. There has always been much more talent outside of SV than inside SV; simply because the world is a very big place.
People who live in Silicon Valley don't have access to much more knowledge than people who live in remote places around the world; thanks to the internet, knowledge is decentralized.
There are only two things that people in Silicon Valley had better access to than everyone else; 1. Venture capital and 2. Tech media coverage - These two things helped SV to better capitalize on their innovations but now is the point where reality starts to catch up with the hype.
I have been working on this for a few years, and have finally come to a thesis around international investments.
I believe that as an investor with a SV background, the two areas of opportunities are in Southeast Asia and Latin America, specifically. Both regions have significant benefits over others in the world. China and the rest of East Asia has too much of an ingrained culture. Africa is still too poor. Europe is too traditional and doesn't embrace new things. The middle east is a mess. Oceania is too remote and expensive. SEA and Latin America have a rapidly developing economy and middle class (i.e. demand), with an endless supply of cheap labor (i.e. supply). Money goes 10x as far as it does in SV. Both regions are reasonably Westernized and receptive to innovation.
I've started making a couple investments in those regions in recent years, and will likely shift some of the portfolio that way long term.
Note some large startup successes in the region already. Cabify and Rappi, (both of which I passed on and now regret) have created massively valuable companies.
https://www.citylab.com/life/2018/03/the-extreme-geographic-...
India's youth population is still larger than its adult population but TFR is down to 2.18, very near break even, and TFR has fallen by half in the past 30 years.
Without young people innovation stalls.
Part of what is driving the valley's decline is its constrained size (both by geography and NIMBYism) coupled with its past success. The valley / bay area is now full of mega-corps that suck up most of the top talent and inflate wages and thus costs to levels startups and bootstrappers can't afford. There is no space to let off the pressure because its constrained by mountains, ocean, a fault line, and politics.
If the city were both able and willing/allowed to grow like New York, Chicago, or Tokyo did in their heyday of growth the engine might run a lot longer but as it stands the pressure is going to force the industry into diaspora.
Compare Shenzhen, new global HQ of the electronics industry. SV should have grown like that, but politics would have none of it. California liberals are anti-construction and California conservatives are anti-infrastructure.
I doubt we know what the next technology cycle that's going to spur the next boom in SV is, but it's going to happen. Otherwise, it's impolite and barely relevant to bring politics into it.
The web started at CERN in Switzerland. Mosaic came out of UIUC, as did Apache. Early web successes came from all over - Amazon from Seattle, Geocities from LA, ViaWeb and Akamai from Boston, WikiWikiWeb from Portland, Yahoo and EBay from Silicon Valley. Many of the most prominent Web 2.0 companies - FaceBook, Reddit, DropBox, and YCombinator - all started in Boston and later moved to San Francisco. Flickr was in Vancouver, LiveJournal in Seattle, and del.icio.us in NYC. A number of Silicon Valley companies didn't actually start in Silicon Valley - they started elsewhere and moved there early on.
Silicon Valley ended up co-opting them because of two factors: capital and engineering talent. Unlike in most places, it's possible to make a market in venture capital in Silicon Valley - you can setup meetings with a hundred firms all down the peninsula and have them bid against each other. That means that if you do have a good idea, you can get hundreds of millions of dollars to grow it, and then spend that money hiring people who actually know what they're doing and have done it before. If all that fails, you can either acquire companies that have an actual good idea, or be acquired by a company with capital and an ability to execute.
Silicon Valley has never really been a great place to start a company, unless you just happen to live here and have a job at one of the previous tech giants. It was, and remains, a great place to scale a company. None of the factors that led to its dominance in the last few technology waves have really changed, except possibly more restrictive U.S. immigration policy and a greater chance that the next big idea comes from outside the U.S.
Thing is, the money in SV, will pick up on whatever that is and jump in quick.
There is whatever comes next, could be gestating anywhere. And there is SV participating. Given the potential, unless whatever comes next is very seriously misaligned with SV potential, acting on it will basically be a boom for SV.
As a competetor, SV works within a huge economy with vast talent and resources available.
The next thing does not have to originate in SV for it's impact to be felt in SV.
The high cost does put pressure on companies though. Most startups quickly branch out of the Bay Area for their Sales and Services. The economics of founding (premium for access to capital and talent that isn’t risk-averse) is different than mature companies (premium on margins).
The few people from SV crowd I can speak frankly with, said "saying that will certainly not make you more popular here."
Do people realise that these "mules" are the real heroes here who do all the hard work on algorithmics. In a decade or so, USA based companies will certainly begin to scratch their heads.
But, how can this argument be made more compelling? I mean, for example, is there an example of a knockdown kit from abroad you might point to?
To my biggest surprise, when I left a minor outlet (epam) for Luxoft for a 3 month gig, I was very surprised to see the same TMobile, with the very same project, but similar specs. Lib A should do that and this, method C and D, must pass test, E and F.
Back in 2009, the few Google Russia people I knew told that task they get from HQ were almost like competitive coding tasks, pull record A from using hash table index B, do that under N cycles under worst case scenario C,D, and E. And all with near nil human contact. Nobody could've said it for sure if the task is even physically doable. And for that particular task, they laboured for half a year of trial and failure, after exhausting every trick from computer science textbooks.
In the end they did make an index traversal algo that did it. What was unsettling them was the seemed disregard for the amount of resources spent, and no concern for "if it is really doable?," as they were getting from supervisors the same answer all the time: "if you think it's impossible, not you, but somebody else eventually will do it, I am 100% sure"
Note: https://qz.com/india/1152683/indian-it-layoffs-in-2017-top-5...