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Comment by nostrademons | Hacker News Reader

Short answer: yes, it's location.

Slightly longer answer: It almost always pays to go to the center of your field. You get paid less at a relatively small company in Portland because they get paid less. Firms in Silicon Valley focus on eliminating whole industries; when they succeed at that, they capture basically all the value that the incumbents in that industry had. That gives them large quantities of cash, and since there are so many other companies in the region competing for the same talent pool, a lot of that cash goes to employees.

BTW, $80-100K/year is quite low in Silicon Valley. That might be a starting salary at Microsoft for someone fresh out of school.

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Although the other side of the coin is that Silicon Valley has much higher living costs. Does this make a big difference? Do people in Silicon Valley have significantly higher qualities of life, or is there an argument for staying away from the expensive hubs?

I grew up on the East Coast, but I love Silicon Valley. Not necessarily as much as I loved NYC, but they're very different.

Silicon Valley has really, really nice weather, almost to the point of monotony. It rained something like 3 times last summer, and the rest of the time it was 75-85 degrees without being too humid. There's a lot of asian cuisine available, and some of the best restaurants (of many varieties) in the world to the North in Napa. Nature is extremely accessible, and some of the best skiing in the US is a relatively short drive (the Rockies are much, much better than the Appalachians). It's a day-tripper's heaven.

As for downsides, Houses tend to be smaller, and even those are absurdly expensive. Rents in the better parts are just a cut below low-end NYC rents. The atmosphere could be described as "Irrational Exuberance" or more commonly as an echo chamber, which can be great encouragement if you're trying to do something crazy, but it can also severely weaken your BS filter if you're not careful. Silicon Valley itself is better-than-average suburban sprawl, but it's still suburban sprawl. The public transit system is lackluster compared to NYC, but it is an option, at least. Access to a car is generally necessary (ZipCar might work, though).

There are a bunch of other upsides and downsides, but those are the impressions off the top of my head from having lived there a bit less than a year. Overall, I really like it.

It is about 15 hours to the Rockies. Did you mean the Sierra Nevada mountains?

Sorry, you're right, I was lumping the two together. Convenient and cheap flights to the Rockies, though. :-)

It makes a difference, but the added living costs rarely eat up all the additional salary you make. You have to figure them into your financial calculations, but you'll usually end up ahead in terms of the net amount of money you can bank in a given amount of time.

Concur. I moved to Sunnyvale from Cincinnati, OH. My salary in 2005 (prior to taking a pay cut when co-founding a startup) was $67k. My current salary is $120k. While the cost of living is higher, my net after all is said and done (savings, stock, retirement, etc) is significantly higher.

I moved from Silicon Valley to Indiana, and went from making over 70k to making 40k. I will tell you that the standard of living is not THAT much higher in silicon valley than the middle-of-nowhere, midwest, where I live now. It is not $35-40k a year more expensive by any stretch of the imagination, all lifestyle considerations (quality of apartment, vehicle, etc.) being equal.

It is not a dollar-for-dollar match when you move to Silicon Valley. The pay disparity between living in SV and not living in SV is disproportionate to the cost of living. (In no way do I intend that to sound negative.)

But then when you move away, you were legitimately making more at your last job.

Live in Midwest: Job 1: Make 65,000. Job 2: Make 70,000.

Live in the Valley: Job 1: Make 120,000. Move to Midwest. Job 2: Probably keep making 120,000.

Or get the best of both worlds and telecommute. My last two jobs have had higher salaries than average in my city because the jobs were based on the coasts.

Firms in Silicon Valley focus on eliminating whole industries; when they succeed at that, they capture basically all the value that the incumbents in that industry had.

I'm genuinely curious:

What whole industries have been eliminated? Also what value do you refer to? Are you saying that all profit that used to go to industry X now goes to a silicon valley company?

"Commoditized" is probably a better word than "eliminated", but the point is that a large percentage of people who used to do something one way now do it another. For example:

Independent bookstores. Catalog retailers. Much of general retail. Antique & collectible shops. Classified ads. Yellow pages. Newspapers & magazines. Books. The music cartel. Travel agents. Realtors and education are probably next.

And yes, all (or most) of the profit that used to go to those industries now goes to Amazon/EBay/Craigslist/Google/Apple/Kayak etc.

craigslist and newspapers

amazon and local booksellers or borders

netflix and blockbuster

google and {altavista, yahoo (on their way), excite, ask, infoseek, inktomi}

oracle and a long list of competitors

Palm and paper planners Apple and low to mid level print shops Apple and CDs Netflix and DVD/Bluray (in progress...) Amazon Kindle and paper books

This would be a fun list to really spend some time on

You can find a nice table of disruptive tech in the new intro to the revised edition of Innovator's Dilemma.

I wouldn't say they capture all the value, they return a huge chunk of it to customers, often through lower prices. But, I agree that shrinking a $20B market to a $2B market where you control $1B in revenues at much lower costs allows you to pay employees well.

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