I also think peak valley was the 'oughts. Seems like the valley has not been producing the same number of world shattering things since then.
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.
It can take 7-10 years for a great company to emerge. In Apple’s case it took 30 years to bring out the iPhone. (Yes they had some success in the interim, but their true breakout was slower coming)
My point is that it’s premature to say “Nothing great has happened from recent companies.” It takes a longer time horizon.
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).
Another side to this, I myself have a feeling that software industry in developed counties is becoming more and more dependent on overseas "captive RnD centres" (yes, that's how they are called in pro manager lingo,) and more and more work in places like the Valley is about assembling code from knockdown kits made to spec by mule workforce abroad.
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.
To my own knowledge, the "to spec" outsourcing grew quite a lot. Deutsche bank, Credit Suisse, Swiss railways, TMobile are few I knew myself when I laboured in few outsourcing shops for few months after I got a boot from Canada.
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"
Look, I know there's a recency bias to life, but the 00's were nothing compared to the 90's, and that was probably nothing compared to the 70's.
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 wasn't, and yet Silicon Valley was the region that got rich off of it, and ended up with its name associated with 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.
it's probably still going to be someplace where there's a large concentration of money. it's also probably going to be in a mild climate, because those people with loads of money to invest don't want to live in the arctic. so, perhaps not SV directly, but i bet it will look similar.
Politics unfortunately tends to have a direct and majority effect on things like urban development, so it's hard to avoid mentioning in a complete/non-ommissive discussion.
Really the question is not if or even why other places are rising up to compete with Silicon Valley.
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.
Nice weather. At a personal level, every other place trades off the year round nice weather for something worse, and I’d bet that that factors into most individual calculations even if the company doesn’t explicitly consider it.
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.
It seems like the wildfire risk in much of California might even outweigh the earthquake risk? By one estimate [1] 15% of homes in California are in high or extreme risk areas.
Earthquakes seem easier; it's mostly a matter of good building design.
I'd wager that you're as likely to die during a major earthquake while living in one of those west coast cities as you are from a terrorist attack in DC or at the hands of the massive police apparatus there. That is, quite unlikely.
Well, this is subjective. Not all of us enjoy being confused as to whether it’s August or January. It is incredibly depressing to see no season change year round. This is a major reason I’ll never buy property around here.
But there is season change, it's just less pronounced with no blizzards and ice storms. You have to get much closer to the equator to find a place without seasons.
It's probably not just one thing but a whole suite of attributes. California's decent social and policy infrastructure and non-compete unenforceability are two additional elements.
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.
What decent social and policy infrastructure? California schools are among the worst in the country. Public transit infrastructure is sub par compared to comparable east coast cities. On other social axes, California voters passed Prop 8. They were responsible for the most aggressive three strikes law in the country. Etc.
These are not uniquely Californian attributes although blazing the trail for misadventures adopted elsewhere like Prop 8 mandates and three strikes laws deserves some credit.
Its post secondary public schools are among the best in the country, along with off the top of my head its uniquely Californian consumer, worker, and environmental protections.
> California schools are among the worst in the country.
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.
Part of it is likely density of companies, talent, funding, advisors, etc. The whole ecosystem for starting a technology focused compnay is right in your backyard. In my case, I live in SOMA, and was recently looking for a new job. I talked to 20+ companies, all of them within a 30 minute walk of where I live.
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.
I don't disagree that the cost of living and FAANG brain drain will likely challenge the hegemony of Silicon Valley in the short term. What interests me is whether software engineering companies will continue to focus on geographical centers, or if the future is perhaps more distributed.
Obviously this doesn't work in other industries like hardware, biotech, etc., where physical presence is baked in to doing business.
A winning model is raising in SV and spending elsewhere, but this requires distribution inside the company.
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.
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’.
I was having a conversation with a friend living in Austin about what it would take for SF to not be the center of Tech. And the answer seems to be: an actual devastating earthquake. And even then, If it was mostly property damage (and not human lives lost) the tech sector would probably rally and see it as a huge opportunity to rebuild SF the way they want it rather than move away.
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.
The problem is that "tech" isn't an industry. It's a set of tools used by other industries.
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.
> Silicon Valley tech is most a specific type of consumer tech, mostly focusing on fremium internet centric businesses.
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.
The point wasn't to typecast SV as much as broaden what counts as tech. Defense contractors make lasers mounted on jets. It's absolutely "tech" and not something we wonder about being exclusive to Northern CA.
Not to mention 23andMe, Genentech, Palantir, Apple, Cisco, Seagate, NVidia, Lockheed Martin, etc.
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.
Isn't United a Chicago company? They obviously have a major hub in San Francisco but otherwise I don't think they have any connection to the SF Bay Area.
Oh, you're right. They have a hub at SFO which also does a lot of aircraft maintenance (Wikipedia says it's the principal Global MRO base for United), and they're also one of the largest employers on the peninsula. But the actual corporate headquarters is in Chicago, and supposedly the actual predecessor airlines were founded in places as diverse as Seattle, Boise ID, Washington DC, etc.
South SF is the second largest hub for biotechnology and pharma in the US (if not the world) behind Boston metro, Oakland is the sixth largest (IIRC) port in the US, and the San Jose area is an important hub for high value add manufacturing (aerospace, defense, robotics, medical devices, etc). I've even heard it claimed that after the fall of Detroit, San Jose metro became the top manufacturing region in the western hemisphere by total revenue (although I don't know how to evaluate that). Just a little south and you've got a rapidly growing agtech hub thats been around for decades too.
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.
Most of that technology requires a significantly different skill set than what people generally mean when they say "tech" so I'm not sure if it really makes sense to group them together for this purpose.
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.
That is the dirty little secret of “silicon roundabout” or even worse “silicon beach” in the UK. There’s no actual tech there, just various tech-enabled ad and marketing firms.
I think this obsessive desire to have to have the best, or biggest, or most of everything is a problem. While the ROI is good there are cities that bring a more balanced plate to the table compared to the valley's extremely high barrier to entry and risk distribution. It's hard to scale a startup in California, even if the talent pool is there.
Tech is moving out of silicon valley. Tech hubs in other cities are sprouting up like weeds. And quite frankly there are people that simply don't want to live there. I know a number of people that moved away. I personally wouldn't even consider moving there unless the pay was 1 million+ a year. The shine of SV is dimishing rapidly.
I have a friend who works at a FAANG company with a total comp of around $200K a year in a non technical role (managerial). There is no way that I would move to the west coast from the metropolitan area where I live for that amount.
Personally 400k is substantially more than I make now but it would be an instant "no". A million, now I could endure the culture of sv, save enough in a few years and run like hell to somewhere better.
I feel the same way. Just to get a job with them (FANG) you have to jump through tons of hoops and study programming questions for months. Then after all that if your lucky you get to move to the bay area and rent a studio for $3k+ with a commute.
Is it even possible to get a 1 million+ a year offer from these companies?
The distribution is Pareto-like -- FANG compensation is at a 2-5x multipler compared to the modal Silicon Valley tech company. Coding talent at FANG relative to others almost certainly also follows a similar multiplier, given the market dynamics at work.
Talent concentrates, especially when incentivized by much higher compensation. One recent HN trending article even attributed wage competition with FANG as a cause of startup stagnation in the Valley.
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.
I had a rebuttal in mind but I wasn't going to write it today until later when I unexpectedly wandered upon a section from one of pg's essays while showing them to a friend who was interested in startups:
"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.
Not really, unless there is something exceptional about the person. 400-500k is the general total compensation for most fully promoted engineers at FANG. (E.g. L5 at Google).
> I personally wouldn't even consider moving there unless the pay was 1 million+ a year
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.
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
Sorry but I disagree that affordable housing is the problem. Housing is a symptom of the problem, just like how inflation in the Bay Area is rampant over everything. Day care costs are exorbitant. Groceries, gas prices, inflation is across the board because well paid tech workers are driving up the costs. Even costs to get work done on your house or property has doubled in 6 years.
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.
I think the problem is that a lot of those cities are not ones people want to live in. On the other hand, SF has amazing weather, culture, decent public transportation (at least compared to many other cities), permissive drug laws, relatively open work culture (e.g. dress code, work from home, perks), a progressive culture, etc.
Which is precisely why it's expensive to live in the Bay Area. It's hugely in demand. And the YIMBY folks don't have the ability to claw back some of the property rights of existing property owners to upzone.
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.
If I were going to take a job in, for example, the midwest, I would expect a higher salary in order to compensate for the lower quality of life during the winter. Wouldn't that then defeat the purpose of moving a company somewhere cheaper in order to pay people less?
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.
You're making an assumption that there aren't others who would take the job without requiring a bump in pay to compensate for winters (quite a contingent of tech workers already in Chicago, for example). There are already large cohorts of tech professionals who take a pay cut (not saying they should, but they do) for the ability to work remote. I would be remiss if I didn't mention that Google and Facebook are expanding rapidly in the downtown Chicago area. [1]
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.
> 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).
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
There's more to quality of life than just temperature. After 4 years in the Valley, I will certainly take Chicago winter over anything in SV, even with a reasonable pay cut.
Well it's a combination of tech companies liking the bay area location and the supply of any kind of real estate being artificially limited by NIMBYs. We can "solve" this be either reducing demand or increasing supply. To me decreasing demand seems like a terrible solution. You want people to live in your city. It's insane! Something happened a few decades ago where we started seeing cities as "completed" and any change from that state is seen as bad and"loss of character". Cities are changing, living things. If we prevent the change the city dies.
The more reasonable solution that is being acted on is to raise the issue up to the level of the state government where the representative of those impacted by the issue but unable to vote in the relevant local elections can pass laws restricting the ability of local governments to obstruct development.
> Either pay the market rate, or move somewhere cheaper.
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.
Well, if they are living in their house, I am not sure why it would matter if the value of it goes down.
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?
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.
>Day care costs are exorbitant. Groceries, gas prices, inflation is across the board because well paid tech workers are driving up the costs. Even costs to get work done on your house or property has doubled in 6 years.
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).
I think you are correct to some degree. With the housing market being essentially an additional equity program I don't really see how anyone will be able to convince people to take a huge loss, or give up future gains, so there can be affordable housing.
Housing in the Bay Area (and California) is going to continue to get worse due to Prop 13. It destroys liquidity in the housing market. Elderly people can’t downsize since their taxes would rise dramatically, thus the abundance of retired couples in multi-bedroom houses and young families in apartments. People with multiple homes are incentivized to rent and never sell since they are receiving a government subsidy through below market tax rates. Until Prop 13 is dealt with California will continue to be the leader in inequality with a landed gentry extracting more than their share from the state. The density of tech only exacerbates the problem in the Bay Area, but it is a California problem.
I'm not familiar with the YIMBY stance on Prop 13, but as an advocacy group that endorses local measures, you could join and promote propositions that would eliminate 13 - and have a real effect as our voter guide is sent to tens of thousands of bay area residents.
I generally approve of Yimbi, but eliminating prop 13 is not something they have the influence or the scale to accomplish on their own, or even to lead in a credible way - not even close. California is very large, and prop13 is very popular with a majority of the state’s population. It would take a landslide political change at the state level to revert it, and an alliance of diverse political interests unlike anything that exists in California today (to my knowledge).
You’re right of course. I just think reverting prop13 is important enough, and difficult enough, to warrant creating or joining an organization solely dedicated to that one issue. I feel like pro-housing Californians tend to tuck it into a tactical bullet point, instead of appreciating it for the root cause that it is.
Until you have an alternative to people on fixed income being forced to move from the homes they own because they literally were priced out of the neighborhood, I will defend Prop 13 with words, money and actions. You will never convince me or people like me that it’s okay that my family buying a house in the neighborhood should by itself force our neighbors to have their costs go up. Not only do I not want that, you’d find it also wouldn’t lead to very good relationships.
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.
They have plenty of other reasons to support it. The people that don’t support it for the most part are the large scale landlords who are happy with the run up in rents.
Large scale landlords actually want to invest in more property. E.g. the apartment building I reside in was built only a few years ago by a publicly traded REIT.
It is nativist homeowners that oppose new building because it reduces home appreciation and brings traffic and ethnically different people to the neighborhood / city.
It seems like gp’s proposal is to eliminate Prop 13 literally so that people will be forced to move out or that the threat of being forced to move out will cause them to man the barricades and demand more housing to lower property values (good luck with that).
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.
What’s that going to do? People with market rate rents will see them go up x% and people in rent controlled apartments will simply get more pressure to move so the landlord can convert the unit to market rate.
Sure I vote. “Pesky” younger people are welcome to vote for repealing Prop 13 if that’s what they want. I won’t, at least not if it has the effects described here.
I agree with you, but I'd also like to point out that property tax per se is a political decision that was made at some point. Lots of places do just fine with no recurring property tax whatsoever.
[edit]: Anybody care to explain (or speculate) why this is being downvoted?
By the way, Prop 13 was a response to what was happening as a result of property values dramatically rising. It was an effect, not the cause, so repealing it isn’t likely to reverse the increase in property values.
The lack of indexing of capital gains taxation is a far bigger factor. As it is, a would-be seller faces losing * over a third* of the paper profit above 250K, and the cost basis doesn't reflect inflation.
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.
> You want to start a company? Go somewhere else. Be a part of the solution, not part of the problem.
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.
You blame home owners and Prop 13 for causing skyrocketing house prices, meanwhile homeowners and Prop 13 have always been here for decades with not too much inflation. Meanwhile, tech in SF has been a recent phenomenon, and correlates perfectly to when housing prices started going crazy. In 2007/2008 I was renting a 1 bedroom apartment in SF for $1700/month. High, but not toxic. Now that same one has doubled. I've been here 20+ years and I've never seen the housing market like I have in the last 7 years.
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.
The Bay Area is 7 million people. That’s not even top ten in the US, never mind the world. It is no way, shape, or form full.
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.
I live in SF and face daily the eldritch horror abominations NIMBY's brought upon this world. It's getting increasingly hard trying to keep my sanity. Their nextdoor incantations against a 24 hour bus schedule because it will degrade road quality (true story). The little leaflets they put in my mail inviting me to join their cthonian ceremonies of opposing and punishing a neighbor's hybris. The heretic wanted to remodel his parking space, but construction will raise up dust which their kids will breath while playing outside (true story). Trying to reason with them is impossible, it only results in madness..
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.
> 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.
What about parking, traffic, water, sewers, electricity usage, etc? You are now putting 6x the amount strain on the public infrastructure in that single area. Building more buildings is the naive, first order solution.
Sure upgrading infrastructure is possible but the costs are huge. It's subject the same inflation as everything else, plus city worker unions have a lot of political power. Once a sewer line reaches capacity we can't do a minor increase; the whole thing has to be ripped out and replaced which is tremendously disruptive.
A real-world example to support your comment that my civil engineer buddy recently told me: in Columbus, one of the main streets past Ohio State University into downtown is completely at sewage/rain water capacity. Decades ago when the street in question (High St) was being built, the only buildinga along it were single/multi-family homes. Now there are large student dorms and apartment complexes. During intense thunderstorms, the gutters along the street which feed the sewage system reach capacity and the whole street floods. And I mean floods.
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.
Yeah but if you live in a detached house that will no longer get any sun in its backyard when the six-story building goes up, you too are most likely going to be down at City Hall or wherever one goes, fighting against this one six-story building, even if you're a well-known advocate for taller buildings. Because it's My Back Yard, right?
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.)
There’s no reason the guy with the cannabis plot shouldn’t be outvoted by all the people that will benefit from the new building. The issue there is some combination of a collective action problem and what amounts to corruption.
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.
I agree the cannabis-plot guy could (maybe should) get out-voted, but I'm pretty skeptical it could happen by doing a ballot proposition.
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.
I moved away from the bay area, because housing is the problem. Or at least housing + transit. The reason labor is expensive is because housing is expensive, which is totally unsurprising because everyone's cost to live there is high.
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.
Groceries are actually one of the things which have not been getting more expensive over time. The national calculated inflation rate is such that $100 in 1983 is equivalent in purchasing power to $253.02 in 2018. In the bay area, "food at home" (in linked document) is found to cost 252% what it did in 1982-84.
Surprised this comment is getting downvoted, because it is dead-right. The core "problem" is that the Bay Area has experienced a gold rush unlike any other in human history, and it's happened so quickly that some things can't keep up. Yes, there are regulatory problems that have compounded this, but those problems are just tangential and I doubt fixing them would do a ton to completely alleviate housing affordability.
The problem is that Silicon Valley is awash in money.
I think the issues with the comment is the implication that the wealth creation is the problem. That framing leads to solutions that tend towards reducing the wealth creation. That seems a bit like cutting off our nose to spite our face.
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.
Massive wealth creation in a very small geography creates inflation. I don't see how this is controversial in any way.
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.
By concentrating all of the wealth creation in the Bay Area itself, isn't that also a form of income inequality? As opposed if companies spread themselves geographically, thus distributing the wealth generated and the beneficiaries? There ought to be income equality both in the Bay Area and outside of it.
When you create a website, and it gets users, that's what you want, right? But now your massive number of users become a problem. You need to scale to handle the number of users.
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.
The number of users is not the problem, the lack of scaling to support them is the problem. Scaling sf would be easy - just approve housing development projects faster.
Housing is only one part of the problem. Infrastructure and public services also have to be scaled up when population increases. Otherwise you end up with third-world type cities.
The first company I worked for in Silicon Valley during the dot com boom gave stock options to their receptionist, and after IPO she had enough money to quit and buy a vineyard.
Why would removing rent control increase the supply of affordable housing? Honest question. Presumably a lot of people depend on it in order to live in SF itself.
Economists agree that rent control hurts cities as much as dentists agree that sugared gum hurts teeth.[1] The main problem with rent control is what it incentivizes. Landlords have less incentive to maintain or improve their properties and more incentive to get tenants out so they can rent to new tenants at market rates. From CityLab's summary of the economic analysis of SF's rent control law:[2]
> 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.
Because of people like me that have ancient rent-controlled apartments in SF that would leave them if the rent went up. I have many friends in the same situation; we're not enjoying SF like we did in our 20s and 30s, but the rent is too cheap to move.
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.
Rent control depresses housing supply. It subsidies current tenants with future tenants' increased cost. The high housing cost people complaining about is the cumulating cost of decades of rent control.
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.
Imagine that you're a young couple in a 1 BR apartment in SF that you're paying $1500/month controlled rent on. You wish to move to a 3 BR apartment, so that you can have enough room to start a family, and thereby free up the 1 BR apartment you're living in. Because you're married, and your career is starting to develop, your budget has increased to allow you to spend $2500, maybe $3000 on rent. Unfortunately, market rent costs much, much more than that, so you're stuck in your cheaper $1500 apartment, even though you can theoretically afford to pay more.
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.
My local YIMBY group had significant disagreements on it, so it decided to stay out of the issue. Instead, it is keeping with the focus of saying "yes" to housing in planning committees to counter the loud minority of "no"s.
I used to think that this was the solution, but it's now clear to me that the state and local governments are too incompetent to fix this problem. Over the past decade, the bay area has gotten so much worse. The cost of living has skyrocketed. Commutes have gotten longer. The homeless problem has become something out of a George Romero movie. None of these show signs of improving, and it's not due to lack of trying. The city of San Francisco spends a quarter billion dollars a year on homelessness.[1] That's $33,000 per homeless person per year![2] The city is experiencing the greatest economic success in its history, but it can barely keep Muni running. Imagine how bad things will get in a downturn.
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.
Isn't it quite an oversimplification to say that the homelessness issues in SF are due to stupid politicians? Do other cities somehow have better smarter politicians?
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 f...
In case anybody else had never heard of Navigation Centers, here[0] you are:
"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."
I'm always trying to quantify things because when I walk around SF, the homeless problem seems insanely bad but my pro-SF friends say things like "homeless has actually been stable or slightly improving for years and you are being unfair to SF's complex situation". But on the other had, I was walking around the Embarcadero last week at a very fancy conference hotel and the situation on the street was deplorable.
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.
I used homelessness as a salient example of something that the SF government is doing a terrible job of fixing, but there are plenty of other examples.
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?
Politicians in San Francisco don’t face partisan challengers so the rarely are held to account for their ideas. Just like you’d never get fired buying IBM, in San Francisco, you won’t get fired by going as far left as possible. The two party system provides a healthy sanity check on going too extreme — there is no such sanity check in places like San Francisco. For example, what would happen if a Republican mayor were elected? In New York it worked out pretty well and resulted in low crime and a strong economy; not all Republicans are great and not all Democrats are great, but one thing I could hope we could agree on is that all Democrat (Republican,) all the time has created a paucity of new ideas or new approaches: it’s just more of the same: throw more money at the status quo, grandstand about how compassionate you are and let the limousine-liberal guilt enable existing politicians just continue to waste money and solve nothing.
You shouldn't be down voted. Single party rule has eventually led to stagnation and dysfunction everywhere it's been tried in the world. There's no reason to expect that San Francisco is an exception to that rule.
A true “far left” government wouldn’t tolerate high rents and homelessness. The actions of the current regime are putting rich people’s and business’s priorities above others. That’s right wing.
Labels in politics are used to demonise - but nothing is ever that simple.
This seems to work well for Sinagpore. Competent people actually want to work in government.
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.
If your system relies on people going against their incentives, it's going to produce substandard outcomes. While some tech workers did decide to take pay cuts to work at USDS & 18F, most didn't. I considered both, but then I realized that best case I'd make 1/2 as much as my current compensation. On top of that I'd be fixing or replacing legacy code, not developing skills that would be useful elsewhere. I have a sense of civic duty, but it doesn't go that far. I'm sure the same is true for many others.
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.
Compensation isn't the sole motivator. Government work tends to be less stressful, more secure, and more fulfilling for a lot of people. Seems like there's a new article on HN every other day about work-life balance - you're not really going to find threats to work-life balance coming from up the hierarchy in government engineering work.
Compensation does matter, but it's not the be-all-end-all.
I just moved from San Francisco to Nashville, TN last week. For me, it was a combination of the cost of living and lack of family in the area. I'll always miss San Francisco, but our rent has halved, our square footage has doubled, and I no longer pay state income taxes. I'm still doing interesting work (remotely) for the same company, so I can't complain!
but it's now clear to me that the state and local governments are too incompetent to fix this problem.
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.
NIMBYism is a real problem in the bay area, but it doesn't sound like this one case was caused by NIMBYism. The people who would want to nix such a shelter would probably want it nixed whether it was in their proverbial "backyard" or not.
> The people who would want to nix such a shelter would probably want it nixed whether it was in their proverbial "backyard" or not
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.
>but it doesn't sound like this one case was caused by NIMBYism
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 dunno if the system is broken to be honest - and I don't think it's incompetence that's the problem here. I don't believe a lot of people in City Government honestly care about fixing the problem.
Is it strange to anyone else that the more you spend on the homeless, the more homeless you seem to get?
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.
I'd like to add that the Bay Area affordability problem is not some unsolvable situation that we have to just be resigned to accept. But it does require getting involved somehow. If you have a decent paying job, the easiest way is to start donating to organizations like SF YIMBY, and / or political campains of pro YIMBY candidates. People such as Sonja Trauss, Christine Johnson, who are both running for SF D6. David Chiu and Scott Wiener have had a great track record in the State Assembly and State Senate.
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.
I truly do not know what motivates Peskin and Kim. Really. Is Kim an old time socialist (Maoist?) I don't know, but I know she and Paskin (a "preservationist anti build guy" do more harm than good to the majority of renters in this city. I'm hopeful Breed will turn things around, but the BoS seem to be more interested in peripheral pet projects than focusing on thigs which affect the great majority where it matters: housing, crime and strategy (with quality of life a few rungs down --jobs are not the issue).
I’ve read a bunch of the literature on the topic, and I’m unconvinced that supply can bring about a price drop. Housing is inelastic and will climb to the top of what the people in the area can afford, given demand.
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.
there are a couple other things to throw into the mix, housing doesnt just appear if we will it, you have to make it cheaper to build in the first place, and have some type of land value tax to encourage density.
density is the answer though, demand will always be there and is harder to control
An increase in long term interest rates will also bring house prices down. That won't make an 80% mortgage more affordable, but it'll make saving for a 20% deposit easier (and will make houses cheaper for people who pay a larger fraction in cash.)
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.
> Housing is inelastic and will climb to the top of what the people in the area can afford, given demand.
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.
What? Let me give you an example. Gasoline has inelastic demand. If the supply of gasoline drops such that it’s below the amount demanded, then the price will rise to the maximum amount that people are able (not just willing) to pay, because there are few realistic alternatives for most people.
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.
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.
sure, it may take some time, that doesn't mean we shouldn't start. It will take a lot of time and effort to reverse global warming, but it still must be done and as soon as possible. Same for replenishing the housing supply.
3-4 years ago I used to have no trouble recruiting great engineers to move from SF to NYC. Provided you pay well and help relocate, finding engineers who are 5 or so years out of college from somewhere like RIT or Georgia Tech that went straight to SF out of college and want to try a new "big city" isn't difficult. These days, I think there are enough engineers here now you can hire locally first.
I have been reading about these predictions of tech moving out of SV for the last 10 years, but the reality is that tech investment in the valley continue to rise, with 45% of all VC investment going to SV companies in 2017. Compared to only 1.5% to Austin, which really continues to lose its shine as a serious tech hub.
People have been proclaiming the death of silicon valley since the late 80s, when tech IPOs peaked in 1983, and the video game crash of 1983. But then silicon valley produced several more innovative booms - PC, internet, social, and mobile, making the local economy 1 trillion dollars and surpassing its cousin, LA economy. Whereas LA economy stagnated after the 90s after aerospace and manufacturing moved out, silicon valley kept its dynamism, innovativeness, and of course venture capital.
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 most likely outcome is that Silicon Valley once again broadens geographically, rather than dies. It has been doing that in bursts basically since HP was founded in 1939.
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.
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.
China is definitely not stagnating. In fact some parts of China may have started to eat SV lunch.
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.
Chinese tech is thriving but the overall economy is showing alarming signs of a massive slowdown and possible recession. Too much central planning, banks with bad balance sheets, and over extending into huge foreign infrastructure projects are placing an incredible amount of stress on the Chinese economy.
My prediction is that money will keep flowing into SV companies, but the teams will all start going remote. Shogun is fully distributed and it's incredible. We're able to pay amazing salaries to everyone outside of the Bay Area, for way less than we'd pay in the Bay Area. The result is happy employees/contractors with no sense of entitlement. They're also not all getting hounded by recruiters constantly because they don't have "San Francisco" as their location.
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.
Innovation is driven when smart people interact with other smart people, and that is the value of SV and its ecosystem.
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 result is happy employees/contractors with no sense of entitlement.
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.
I can see how you would come to that (incorrect) conclusion. No sense of entitlement to free lunches, plush offices, massages, and other perks that are common in SV. In return, no expectation of being tied to the office or working crazy hours.
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.
> entitlement to free lunches, plush offices, massages
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.
We pay more based on experience and value brought to the team. Location doesn’t really factor into it. People tell us what they want (and we also publicize a range) and then we try to find something that works (typically it’s more than what people ask for).
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.
How do you fairly determine salaries for remote workers? Does it take into account their location? Also, does it account for the fact that SV workers (if they can afford a house) may be able to net six-figure appreciation (at least during certain periods)?
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?
We don't really take into account location. We advertise a range, then ask people what they want. Typically we're able to come in at or above what people want. The main factors are experience and the value that an individual can add to the team.
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.
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.
I think the decline of Silicon Valley will have much more to do with the end of Moore's Law than any kind of social or political trend. The name is very predictive - if there will be nothing left to do with Silicon, maybe there will be nothing left to do in Silicon Valley, and the computer industry generally.
What's crazy to me is that clearly, the Bay area's housing problems are just a symptom. If you have a hard time finding affordable apartments, think about all those that have been displaced by exploding prices. Rent rose, food prices rose, services rose. Everything is pricier. Look around the streets and it's clear gentrification, combined with a lacking social net, has messed up a lot of people's life. But SV startups are looking to hire people to commute and sit in chairs, in office.
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.
I wonder how the people working at Inn'n'Out burger in SF actually make a profit from working there.
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?
The centralization of the tech industry in Silicon Valley never made any sense to begin with.
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.
As an investor based in the valley, I've been thinking about this for a long long time. I've traveled most of the world, and always made an effort to meet the local ecosystem. For the past few years, it's been hard for me to make investments outside of the USA (most of my portfolio is SF-based, with the remainder sprinkled around the US).
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.
Could you be a little more specific about which countries in Latin America seem promising? Some countries are on the right track, but Venezuela and Argentina are self destructing which could cause nasty spillover effects on their neighbors.
I'm particularly excited about the prospects in Colombia and Mexico. Brazil has large potential too. What works well in Colombia easily translates to the whole Andes region (Ecuador, Peru, Chile).
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.
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[ 4.8 ms ] story [ 206 ms ] threadPart 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.
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...
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 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.
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...
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.
https://www.npr.org/2018/08/28/642795284/california-becomes-...
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.
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.
Obviously this doesn't work in other industries like hardware, biotech, etc., where physical presence is baked in to doing business.
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.
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’.
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.
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.
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?
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
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.
https://www.newyorker.com/magazine/2002/07/22/the-talent-myt...
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.
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.
http://www.sfyimby.org/
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
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.
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?
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.
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).
Its a big country. Its a big state.
http://www.assessor.saccounty.net/LowerMyTaxes/BaseYearValue...
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.
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.
It will remove the immoral handout landlords have gotten themselves in the name of the residents facing unexpected increase in property taxes.
What if those pesky younger people did vote? What if they outvoted all of these older NextDoor-Angry people?
Furthermore, landlords shouldn't be able to raise rent faster than their property taxes go up.
[edit]: Anybody care to explain (or speculate) why this is being downvoted?
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.
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.
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.
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.
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.
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.
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.
I'm genuinely interested in which companies offer stock options to their cleaning staff, security staff and receptionists.
> 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.
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...
This will be true after you move too.
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 f...
"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...
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.
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...
Labels in politics are used to demonise - but nothing is ever that simple.
Read this sentence a few times and then tell me again how your politicians aren’t stupid or evil.
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.
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.
Compensation does matter, but it's not the be-all-end-all.
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.
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.
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.
You don't know anybody in city government, then.
On a related note, I feel the same thing holds true for LA and Southern California's car traffic problem.
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-...
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.
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.
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.
density is the answer though, demand will always be there and is harder to control
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.
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
https://www.citylab.com/life/2018/03/the-extreme-geographic-...
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.
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!
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.
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.
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?
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.