They pay well because demand for engineers is high. Cost of living is high because engineers have bought all the stock in the area.
You've got the order backwards.
You've got the order backwards.
Do they pay their teams in Canada, India, China, etc. as much as SV? No.
An engineering team in the same timezone whose members have a similar general context for how they approach work will be able to do all of that more easily.
In my mind, that explains much of the difference.
Of course, there are fully-remote teams and companies that work hard to overcome some of those obstacles, but it seems to be non-trivial to do so successfully.