HP and Oracle don’t exactly represent the heart of Silicon Valley today and what makes it special/unique. I actually think zombie corporations like Oracle, companies that haven’t innovated in decades and instead rely on an army of sales people to sell legacy software, are somewhat the antithesis of Silicon Valley which is really about real technological innovation and disruption at it’s core. I know there are lots of exceptions to this somewhat idyllic version of Silicon Valley but at the same time, you can’t really argue that there is a place in the US (or the rest of the world for that matter) that produces more technological advancements than Silicon Valley. I’m not a believer in American Exceptionalism — just stating facts. This is a long winded way of saying who cares if those companies leave, the Bay Area is probably better off.
Sure HP and Oracle are not "sexy" but they do employee massive numbers of tech folks. The impact will be noticed. They hire people who later move to the "sexy" companies a few years into their career.
I partially agree. However, Elon Musk has personally moved to Texas, and he's begun moving some operations of his companies there as well, like SpaceX and Tesla. And those are certainly disruptors.
You're underestimating just how toxic California's political climate has become towards business. Democrats see them as bottomless pits of money to be abused and extorted, while giving them nothing back in return. Some companies are still willing to put up with it, but many, both companies and individuals, are getting out. Already, California has a net immigration deficit. The only reason California's population isn't shrinking is due to its local birth rate.
The political climate in California is astonishingly toxic and disconnected from the realities of the market. I for one cannot wait to leave this place for greener pastures. California's answer to everything is raise taxes. And everyone cheers. And nothing gets fixed.
SpaceX moving specifically to Brownsville, which is the point closest to the equator in the USA other than Florida. The spaceport will be closer to the equator than Kennedy Space Center.
The damage to CA's economy won't come from the has-beens leaving, but the never-will-be's that never happen.
It's hard to have a ramen startup when your garage costs a million dollars.
SF has been operating on the "Get Big Quick" financial injection model for a while now, so it probably won't stop those types of companies. But we shouldn't pretend that there's been a good environment for the idyllic startup in at least 20 years in the Bay Area.
> I actually think zombie corporations like Oracle, companies that haven’t innovated in decades and instead rely on an army of sales people to sell legacy software.
Those army of sales people are probably now selling you the latest and greatest in vendor lock-in on behalf of AWS [0] and GCP [1]. There is no escaping the sales army :)
To be fair, here's the complete list of companies in the known universe that don't try to avoid taxes or regulation:
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There's a cost of moving. California's taxes and regulations are bad, bad enough to force many out, but not all. If things continue on their present course, even Google and Amazon, who personally like the political climate there, will have to start looking elsewhere.
Some folks in my network are ex-Oracle and my understanding is that the company is run by the CFO and a huge group of MBAs. Any company where the bean counters are at the helm are optimizing for things like quarterly earnings, tax savings like you said, etc. This is the stage where they milk whatever they can out of a dying cash cow. There’s nothing interesting to me about this flavor of capitalism and I don’t think it’s something America should be proud of producing. Conversely, technology innovation and the entire ecosystem in Silicon Valley is really special and almost irreplicable.
Note: I have nothing against MBAs, I just don’t think it’s appropriate for them to have the loudest voice at a non-financial institution. They serve a critical role but it’s a supporting one and not suitable to leadership / company direction.
A large company like that fertilizes the employment landscape - they hire in large numbers, conduct university recruiting, file H1B paperwork, bring Canadian students and accommodate their co-op schedules, pay relocation, etc. Rarely an expense that a small or medium startup is willing to undertake.
I remember seeing a recruiting report for Yahoo! when I worked there a decade and a half ago. Recruiting kept track of employees' previous work history as well as longevity of such employees within Yahoo! Turns out the top feeder company for them (easy to recruit people, and those recruits tend to linger on) was Oracle.
My understanding is that California has pretty good laws for allowing employees to move on to other companies (specifically, I think non-competes are illegal there).
It'll be really interesting to see if the fertilization still works as well in a state like Texas that's ok with things like non-competes, etc, being used to limit employee mobility.
"HP and Oracle don’t exactly represent the heart of Silicon Valley today and what makes it special/unique. I actually think zombie corporations like Oracle,"
This sentiment is problematic. Oracle has 130 000 employees and $40B in revenue. That's massive.
They are a tech company, not a media company like FB.
They are a lynchpin, just because 'we don't like them' doesn't make them 'not' that.
It's like Burning Man: everyone has their view on 'what it is' but really they mean to say 'what it ought to be'. What it is ... is more objective.
Oracle and companies like them are a huge part of what the SV is, full stop.
It's 'mostly' bad for SV to be losing Oracle.
The 'Bay Exit' story is probably overblown, but it's also very real, and less to do with 'leavers' than the fact it's just easier to do things elsewhere in the first place, at least for some kind of companies.
I agree with everyone's sentiment that Oracle and HP are dinosaurs lead by people in the finance department, but I also agree with yours. These companies are also canaries. We've crossed the tax and bureaucracy threshold that companies are willing to deal with.
I predict that it will continue to be a slow transition until a tax friendly state with a decent tech hub joins California, Montana, North Dakota, and Oklahoma in banning non-competes. If that ever happens, California is in deeper trouble.
Yeah literally nothing about Oracle is useful or innovative. It’s like the WalMart of tech companies; just kind of exists and has rested on its laurels for a decade+.
Kind of a strange analogy. Walmart provides immense value to millions of people. They've developed an infrastructure that delivers cheap products to areas that otherwise would have few other options.
Oracle is the antithesis of Walmart. They provide insanely expensive options to corporations who are already locked in to their products.
One of the saddest days was when Oracle bought Sun and effectively killed all their open source projects overnight, like OpenOffice and MySQL. Yes, those things are still technically around, but they're not getting any serious development, and all the core developers of those projects have forked them into new open source projects.
I don't think Oracle is a innovation focused company but its a bit naive to think they are just resting on laurels. They bring in nearly 40 billion a year in revenue and this year tried to buy tiktok. It's not like people are twiddling their thumbs over there just because the software they make is typically used by enterprise companies in unsexy ways.
Oracle has been a good steward of MySQL. I thought it was over when they acquired Sun, but the performance and features have really improved since then.
Oracle is one of the most hated companies on HN, and for years, I assumed that it's a backwards corporate behemoth. Of course, as I work with startups and not huge enterprises, I have actual experience only with Postgresq, MySQL and MongoDB, and not Oracle, but that video about anthropomorphisizing Larry Ellison is so funny.
However, I started going through CMU intro to databases course (btw, it's amazing) and one advanced database feature or optimization after another, I hear "only MSSQL or Oracle do that". Which strated me thinking: is Oracle really that stupid and backwards? Or is it just folklore?
It may have more to do with cost structure. FAANGs have a willingness to pay much higher salaries, even if they could've hired for less than half the cost elsewhere so it makes more sense for them to be in the bay area, especially since those are super high margin businesses. YOu'll notice that Amazon, a business where margins are important is notably absent from the bay area.
I noticed this as well: the 'exodus' is comprised (so far) of companies which haven't innovated in a long time.
At least according to the linked article, three companies so far have moved to Texas. The word 'exodus' seems to be doing a lot of heavy lifting.
The bigger 'exodus' might be the glut of folks who temporarily moved away from the Bay Area at the start of the pandemic and have made those moves permanent. I don't have hard data to back up whether that would qualify as an exodus (and not sure what number is required for that classification either - just that it's greater than three), other than anecdotal evidence and personally knowing a few folks who moved back to their hometowns permanently from that area.
This general topic seems to come back into focus on a regular basis on HN (last time, 1 week ago). People have been leaving SV in numbers for the 30 years I've been here, always citing traffic & cost of housing as the primary reasons. Though this time, you could add decriminalization of petty crime. Nonetheless, the population growth remains net positive.
The fundamental design of the Internet was to be robust against various forms of damage to the network. I see Silicon Valley as a similar type of system. It is not difficult to look back 40 years and see how at each inflection point, The Valley's constituent technologies, and the companies they spawned, led the rest of the world and scaled The Valley up.
- In the 1980s, Silicon Valley's Intel lost it's dominance in DRAM production to Japan. The economic impact was dire, and yet
- In the early 1990s, networking and workstations emerged from the likes of SUN and Cisco. They carried through until global competition stole their wind, and it was on to
- The late 90s and the .COM boom. And what a boom it was, Amazon, Google, followed by another death knell for myriad .COM corpses. Promptly engendering
- The 2000s birth of social media. MySpace faltered, then LinkedIn, then Facebook, then Twitter, came up and are still going strong on the foundation of
- 2010s open source platforms. Still mind-blowing: At one point WhatsApp had 40 software engineers and 400,000,000 users. At 3 years old.
I've heard about the exodus from California, usually citing so many thousands or 10s of thousands of people leaving. But looking a the net population changes, Santa Clara County is down 5,000 from 2018-2019. Alameda, San Mateo, San Francisco are all up.
Silicon Valley is a system that regenerates from one generation to the next, and so far, always bigger and more influential than the last.
Since cities thrive based on network effects, my question is: did everyone in past exoduses move to the same location? If not, is that not a good reason to believe this time will be different?
Smart, ambitious people tend to congregate, and capital follows. If during past exoduses, people moved to random places, I can see why SV remained the primary magnet. But, this time everyone seems to be moving to Seattle and Austin (based on my anecdotal experience of ~20 SV startups that have moved to Austin in the past 6 months).
Other things that make this time different: remote work being generally acceptable & higher state income tax
Of course, "every time is different", but eventually SV will fall. The question is just when and what the right conditions are.
CA still has the advantage of no noncompetes. It's fairly standard for Texas companies to require an enforceable noncompete. These companies are sort of like mules -- born from perhaps many fertile companies, but produce no offspring.
Back then a software engineer at a well-known big company would make around $30-50k (not inflation adjusted). Combined with 1993's interest rates (~7%) $300k was quite steep.
Today the same engineer at a FAANG would make about $300k. Houses are about $2M and interest rates are about 2%, so relatively speaking things are cheaper. However, unlike in 1993, today's salaries are unlikely to grow by 10x over the next 30 years while the mortgage is paid off!
I wonder if Detroit's economy was more fragile because everything built on a handful of enormous corporations. I don't think there was much of a scene of small, innovative companies that didn't depend on the enormous corporations to be in business. Silicon Valley is full of start ups that can be successful on their own. What's really at the heart of SV is the system that makes startups. That's the universities, VCs and incubators.
All it takes is for some other area to reach some critical mass, to gain a reputation for tech and reach a certain tech size. Once that happens, all that pent up CA move out demand will start prevail.
"Population Shrinks in California, Still Most Populous State" — NBC Los Angeles, May 2, 2020 [0]
> California had a population of 39.78 million as of January [2020], the state Department of Finance said, down from its previous report of 39.96 million residents in July [2019].
That's the most recent 6 month period we have reported numbers for, and occurred in the 2nd half of 2019. For the full year in 2019, population was still slightly up overall.
HP Enterprise and Oracle did not move because Texas is "more tech friendly." Instead they moved because HPE and Oracle are no longer primarily tech companies. While they do substantial technical work, most of that will remain in SV.
It's sort of the mirror of Apple, which also has a substantial presence in Austin (finance, etc) but is headquartered in SV because it is primarily a tech company.
I call it the "COVID come to Jesus moment". I remember for the last year or two. The murmurs here, twitter and reddit has been "Why don't these companies understand that their work can all be remote", "why does X company insist on having on-site employees". Meanwhile on the other side of the spectrum you had the higher ups all murmuring "well if we let people work from home, then our company will be doomed".
Then COVID hit and we had no other option. Everyone went WFH and tech CEO's realized a few weeks/months in that no, their org isn't imploding, it's actually doing pretty damn well.
Now all these tech CEO's are starting to look around and wonder, if my companies productivity didn't drop off a cliff, why should I be paying for this super expensive office space?
Tech CEO's were told this lie that WFH will lead to a catastrophe in their company, all these office closures and moves seem to be a reflection of leadership calling the bluff on this.
Letting senior dev who knows the org chart work from home is very different than onboarding junior employees.
I've seen seniors go completely async (timezones barely compatibles) and periodically you'd see an email from them detailing what they are working on, what they are blocked on and outlining the next steps.
You knew they were doing something simply by looking at the pull requests they sent and the comments they left on the PRs they were reviewing. But try that with a new hire and I guarantee it won't go well.
WFH when everyone is forced to do it is different than WFH when you decide freely to do it and your competitor doesn't. These companies are fighting market share battles and are willing to pay millions or billions if the scale is large enough for an edge on competition.
I continue to believe when this is over, not much changes in terms of remote work v. in person. Supplemental/support orgs might go WFH but the innovation engines will be in person and close to the c-suite.
Also brings the question of what's actually moving. Are any of the workers/jobs moving or is this just the corporate address? My suspicion is that the company is really moving to remote-first and changing it's mail and tax address.
I think this is over played because the articles get views. First the Bay was in trouble because everyone is going to work from Tahoe and Iowa. Then tech companies continued to lease new office space so we've got to have a different doomsday.
Are the headquarters staff for these three companies vital to the Bay area economy? I'm not too worried.
The more interesting question is which city will have the largest crop of unicorns in the next business cycle. If those companies go remote or hit their hyper growth phase in non-Bay cities there will be something to talk about.
"Fleeing California" articles are evergreen on HN. I can never tell if there's anything new, or if it's just people voting up the usual nothingburger, presumably to express displeasure with California culture or governmental policies.
They’re evergreen anywhere you find people who low-key wish they could live in CA but can’t. It’s weird; just enjoy your state and do the best to make it better.
Truly don’t get why people who don’t live in CA have so many opinions about it. Most states have problems on par with their economic power and population size; not much more too it than that but “hurr liberal policies are gonna ruin the whole country!” get the low-hanging clickbait (RevContent, etc.)
Feels like someone is pulling the strings here. Same thing happened a year or so ago with numerous articles about how robots and self-driving trucks were going to take all the blue collar jobs.
I wonder if the people fleeing California will end up voting for the same bad policies that are the reason they had to leave in the first place. That is, do they connect the bad policies to the bad outcomes, or will they still favor the bad policies?
There is one major area for tech people where Texas may prove a nasty surprise to employees: non-compete agreements. For large employers this may be a bonus though as they can keep wages low by stifling competition. Texas does limit non-compete agreements to some degree, but it seems they can still be a serious problem.
Is there any evidence that the people moving are responsible for the bad policies? Something tells me the NIMBYs that bought their homes decades ago and pay $3.50 in annual property taxes aren't going anywhere.
High taxes, high cost of living, and bad policies were the primary reasons I left CA. Property tax assessment was 1/6th of fair market value (thank you prop 13). Still decided to leave. Got a house almost 3x the size for the same price, and no homeless tents everywhere is a nice bonus.
I guess you're implying that old people are the reason for high housing prices in SV. Respectfully, what are the bad policies my parents are responsible for, besides pioneering the technology that makes you want to live in SV? And buying a house for 85k in a nice neighborhood in order to do so, without forseeing that Facebook and friends were going to move in and make their house unaffordable were it not for the protections you're mocking?
I bought my Sunnyvale CA house in 1991. I pay $6,000 in property tax. The tax goes up 2%/year. I do not pay $3.50 in taxes. You are, quite frankly, a liar.
The median property tax paid by homeowners in NY State -- a state with no "Prop 13" is $5,865 (according to facts I just googled).
What, exactly, am I getting away with? How will increasing property taxes in a state with the highest income and sales tax solve the housing crisis?
They need to build more housing, and more dense housing.
I live in CA about 8 months/year, and spend the Feb-May in Tel Aviv. We're actively looking to move our U.S. home to Nashville, TN.
Well looking at voting records of Nevada, Arizona, Texas and Colorado, I’d say say yes. Those moving into those states are bringing their politics with them.
For me a very frustrating thing was trying to figure out where my tax money went in California. Roads suck. Public education sucks. Tent cities everywhere. Then COVID-19 hit and you could tell, early on, that it was going to be mismanaged, similar to our tax money. So glad I bailed back in May. No Texas for me. Arkansas instead!
I think the last new tax I voted for was in 2004. Back when I was 25 and didn’t fully understand how terribly mismanaged the funds were.
The California budget is public information. Proposition 13 means you as a new arrival were subsidizing property owners who were there before you, and the broken initiative process means that there's billions from the general fund tied up to pay bonds for pet projects of swindlers who are clever enough to put their projects on the ballot instead of trying to get them past the legislature.
Alternatively, the influx of tech money greatly increases the cost of property in Texas. In turn, senior residents start to no longer be able to afford to keep up their property taxes. Eventually a proposition appears on the ballot to limit the growth of property taxes...
At least the front page might stop constantly having posts ranting about Californian cities. Reading about Texas not being liberal enough instead will be a refreshing change of pace.
Lots of nimby policies (Prop 13, blocking new construction) significantly raises housing costs for everyone, I suspect this isn't a small part of why many people leave.
I'm not quite sure. I didn't enjoy the wild fires this year, that becoming normal would push me out of the bay area. The only other major complaint I have is the high cost of living. Sure, there are a lot of policy issues there. But that's purely financial, and financially staying in the bay area makes the most sense for me.
The LA mayor is telling people to not walk outside because of covid. If thats not absurd big liberal govt policy idk what is. Who would want to live somewhere where the govt thinks they can do that. Your rights as a person dont vanish in a crisis.
dannyincolor - He issued an order. Its not an ask. This isnt a where you live thing, this is a govt overstepping their bounds thing. Id have no problem with asking.
> I wonder if the people fleeing California will end up voting for the same bad policies that are the reason they had to leave in the first place. That is, do they connect the bad policies to the bad outcomes, or will they still favor the bad policies?
They are leaving because of high prices caused by factors that are just as present in cities in Texas.
They're bringing their money and jobs with them, so they'll bring some of those higher prices too.
It's supply and demand, not liberal or conservative policies.
Texas conservative suburb-dwellers don't want higher density housing either. They especially don't want lower income folks near them! Look at how litle public transit exists, because such things would let the poor people get closer to their little burb.
Why are so many people falling for this "hey, look, we have lower prices, therefore we have better policies" talking point? Been there, done that. Lower prices are because I wouldn't pay as much to live there, that's not higher desirability.
California has its own slew of historical policies which have dramatically decreased housing supply. A guy in san francisco was denied a permit to convert his laundromat into apartments because the city planners determined it would cast a partial shadow on a nearby playground for god's sake. That was after he had to shell out $$$ to determine that his laundromat was not a historical site.
In Palo Alto, not a single new house was built in the 1970s.
>It's supply and demand, not liberal or conservative policies.
Do you not understand policies influence supply and demand? What do you think happens to supply after zoning laws and rent control are passed?
They will probably favor them in the beginning but I think a lot of that comes from the SF bay area echo chamber. Getting exposure to different cultures will probably average things out more politically leading to greater acceptance and diversity of thought.
Many of those people and companies are coming to Austin. Austin is already awash with leftist values and California transplants. The people moving here can probably stay in an echo chamber here as well.
It is worth noting that the Bay Area is impressively diverse already, especially when considering how remarkably not-diverse cities were not that long ago. Cities like San Leandro went from 99.3% white in the 60s to having no racial majority today.
I'd argue that one should step out of their tech bubble and experience the awesome cultures that already exist within the Bay.
could you give me like an eli5 explanation of what specific policies you are referring to? I ask this as a left leaning person living in a right leaning state. So from where I sit, I see some of the dumb things my right leaning politicians do but I would love to understand what specific policies people think are some of Califoria's dumbest.
This is a possibility, since an average Californian is far to the left of an average Texan and if we randomly picked few million Californians and transported them to Texas it would have indeed moved the voter base to the left. However, I've seen reports on the new voters in Texas voting to the right of the native Texans (e.g. from Ted Cruz's campaign, might not be a good source for HN, but there is no evidence of the opposite) and since majority of these are from California it could be that California expats in Texas are far to the right of the average Texan. It could be that more conservatives than liberals are escaping California or it could be that liberals prefer to move to other states (like Washington?) or a combination of the two.
I am a libertarian and I have felt pretty miserable living in California. Some other people telling what I can or can not do for greater good and then forcing those things down my throat is what made my life miserable.
The last straw off camels back was San Jose banning gas powered stoves. WTF really ? Lucky for me I was under contract for a new house before that. Now I have the house and its prices have gone up suddenly. I feel sorry for sods who will end up buying my house for 5% premium for the pleasure of owning a gas stove, the sort of thing that is kind of free almost everywhere else. Good luck saving the planet with these antics.
I left downtown SF in 2018 for Nashville and couldn't be happier. I am fiscally conservative/libertarian so definitely did not align with the bay area politics and echo chamber. The last three years in Nashville have been some of my happiest, but also the most financially successful of my life. Just purchased a home here in Nashville that would be unobtanium in California.
I made this point about not voting for the same policies that caused people to leave California in the Oracle exodus story and got downvoted to death.
I'd imagine the owners will, but who knows about the employees. Liberalization in general is happening through the government schools. Pull the kids out, teach them at home or put them in a private school you trust.
“Liberalization” is a massive generalization and I don’t see what connection you’re making between public school curricula and reasons someone might move out of Silicon Valley. It seems a bit silly to do so.
Besides high housing demand and concentrated wealth, what contributed to the way Silicon Valley is today that has anything to do with public schooling?
> the cost of housing is one-third of Bay Area prices and the absence of a state personal income tax amounts to a 13.3% raise for top earners.
This point always makes me laugh because anyone who lives in affluent TX neighborhoods knows your property tax is _enormous_ and usually makes up for a majority of state income tax you save. They still need to pay for roads and schools, right?
Which is great. A high property tax keeps the price of housing down (what people will pay for a house is cost per month, basically mortgage plus property tax), makes people want to have new housing built so that housing prices don't go up, and promotes a general attitude of anti-NIMBYism. Just the opposite of California with its low property tax and very aristocratic prop 13 problem.
I totally agree and I think property taxes are way more fair and equitable for a society than income taxes. Usually we tax behaviors we want to curb. Income taxes disincentivize people from earning more, whereas property taxes are a consumption tax. In my mind this makes way more sense, and there's good data to suggest property taxes are the best/most efficient way to gain needed revenue for a city but do the least "damage" to economic prosperity
Somehow my hometown suburbs, and where the rest of my family still lives, still found plenty of motivation for NIMBYism and desiring property value appreciation.
You're confusing "you can grow outward with single-family-homes near indefinitely" with "we want more apartment buildings near our precious houses!" You still get a lot of the same problems, you've just changed the complexion of the traffic problems...
> A high property tax keeps the price of housing down
Have you seen Austin prices recently, it's getting pretty hectic in "core" Austin.
> promotes a general attitude of anti-NIMBYism
This isn't entirely true. In the recent election there was a public transit bill in Austin which would raise prop taxes by 4% I think. Even though it passed there was a hefty amount of opposition to supporting it, and generally anything that deals with raising prop taxes.
Also in my local neighborhood (north central austin) there is plenty of nimbyism regarding planned multifamily construction.
True about keeping housing prices down. Also the money you pay goes to schools and infrastructure. Instead of going towards a big mortgage and interests.
The property tax being double is still cheaper when the housing costs are 1/3 though, right?
I guess if you Prop 13'd your way into a low assessment, then the math doesn't quite work that way, but for someone who bought a Bay Area house recently, then moved to Texas, the net difference is still a tax reduction.
Austin property taxes are 1.8%. SF property taxes are 0.65%.
For it to breakeven, just on property tax, Austin property taxes on a house 1/3 the cost of an SF house would have to be 3*0.65 or 1.95%.
So people in Austin effectively pay less or the same on property tax than people in San Francisco.
I might add, house prices in Austin/Dallas/Houston are often less than 1/3rd the price of houses in the Bay Area for comparable quality. In Austin, median housing price is $365K, and the average sq footage of a house in Austin is about 70% larger than one in SF.
True, the property tax rates are higher in TX. But since house prices are much less, in absolute terms you pay less property tax than CA. Combine this with 0% income tax, your tax load is a lot less in TX than CA.
There appears to be no problem here: California is still the same sunny beautiful state and its now hopefully going to become slightly more affordable to a different class of people. At the same time, Texas gets an opportunity to get more "averaged" giving more opportunities for the popular vote and electoral college to be correlated.
Well texas has less taxes and regulations, so they are making the opening gambit of the traditional rat race. The question is whether and how California responds.
Prop 13 is one of the few reasons many could consider staying in California, vs having to pay property taxes on the bubble prices here. Property taxes do go up at what amounts to reasonable inflation numbers.
The most compelling argument I’ve heard in favor of continuing prop 13, from a good policy perspective is that it lets people stay in their homes. But couldn’t we achieve the same thing by means testing property taxes?
As it is now, the tax rate is set basically based on how long you’ve owned your property. I could be making $$$ and pay very very little. While my neighbor who bought more recently but earns less pays more. This seems deeply unfair to me.
Prop 13 also creates a very volatile tax base for local governments, contributing to the frequent budget issues we see in CA.
Means testing property taxes might make them more volatile than in states that don’t do that, but I can’t imagine it’s worse than the current situation.
Additional prop 13 sets up incentives so homeowners at all income levels are discouraged from selling and moving. And discouraged from allowing more housing supply because they only benefit from increasing housing costs. Taxes that go up with home value tend to blunt some of the benefit of that increasing value.
prop13 growth is capped below inflation. It also has the effect of causing funding shortfalls which have had the direct result of things like California's public schools being ranked 37/50, deteriorating public works, etc.
The single best thing California could do for Californians would be to sunset prop13 protections.
What do you think happens in most other states with normal property taxes? Do you think people just continuously get pushed out of their homes because of local taxes?
It's pretty rare even in extremely high property tax counties like Cook and DuPage here in Illinois.
Readit News
You're underestimating just how toxic California's political climate has become towards business. Democrats see them as bottomless pits of money to be abused and extorted, while giving them nothing back in return. Some companies are still willing to put up with it, but many, both companies and individuals, are getting out. Already, California has a net immigration deficit. The only reason California's population isn't shrinking is due to its local birth rate.
People getting excited for Texas seems a bit silly! Real tech hub but... this is Oracle. C'mon.
It's hard to have a ramen startup when your garage costs a million dollars.
SF has been operating on the "Get Big Quick" financial injection model for a while now, so it probably won't stop those types of companies. But we shouldn't pretend that there's been a good environment for the idyllic startup in at least 20 years in the Bay Area.
Those army of sales people are probably now selling you the latest and greatest in vendor lock-in on behalf of AWS [0] and GCP [1]. There is no escaping the sales army :)
[0] https://www.crn.com/news/cloud/aws-takes-aim-at-oracle-by-hi...
[1] https://www.bizjournals.com/sanjose/news/2019/04/09/google-c...
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There's a cost of moving. California's taxes and regulations are bad, bad enough to force many out, but not all. If things continue on their present course, even Google and Amazon, who personally like the political climate there, will have to start looking elsewhere.
Note: I have nothing against MBAs, I just don’t think it’s appropriate for them to have the loudest voice at a non-financial institution. They serve a critical role but it’s a supporting one and not suitable to leadership / company direction.
Which is why continental Europe has so many fast-growing tech companies.
I remember seeing a recruiting report for Yahoo! when I worked there a decade and a half ago. Recruiting kept track of employees' previous work history as well as longevity of such employees within Yahoo! Turns out the top feeder company for them (easy to recruit people, and those recruits tend to linger on) was Oracle.
It'll be really interesting to see if the fertilization still works as well in a state like Texas that's ok with things like non-competes, etc, being used to limit employee mobility.
This sentiment is problematic. Oracle has 130 000 employees and $40B in revenue. That's massive.
They are a tech company, not a media company like FB.
They are a lynchpin, just because 'we don't like them' doesn't make them 'not' that.
It's like Burning Man: everyone has their view on 'what it is' but really they mean to say 'what it ought to be'. What it is ... is more objective.
Oracle and companies like them are a huge part of what the SV is, full stop.
It's 'mostly' bad for SV to be losing Oracle.
The 'Bay Exit' story is probably overblown, but it's also very real, and less to do with 'leavers' than the fact it's just easier to do things elsewhere in the first place, at least for some kind of companies.
I predict that it will continue to be a slow transition until a tax friendly state with a decent tech hub joins California, Montana, North Dakota, and Oklahoma in banning non-competes. If that ever happens, California is in deeper trouble.
Oracle is the antithesis of Walmart. They provide insanely expensive options to corporations who are already locked in to their products.
One of the saddest days was when Oracle bought Sun and effectively killed all their open source projects overnight, like OpenOffice and MySQL. Yes, those things are still technically around, but they're not getting any serious development, and all the core developers of those projects have forked them into new open source projects.
However, I started going through CMU intro to databases course (btw, it's amazing) and one advanced database feature or optimization after another, I hear "only MSSQL or Oracle do that". Which strated me thinking: is Oracle really that stupid and backwards? Or is it just folklore?
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Boston would say otherwise.
Tesla’s leaving? Good riddance to Musk.
HP and Oracle are leaving? Good riddance to zombie tech companies! <- You are here
Uber is leaving? Well they’re slave drivers anyway, good riddance.
...
At least according to the linked article, three companies so far have moved to Texas. The word 'exodus' seems to be doing a lot of heavy lifting.
The bigger 'exodus' might be the glut of folks who temporarily moved away from the Bay Area at the start of the pandemic and have made those moves permanent. I don't have hard data to back up whether that would qualify as an exodus (and not sure what number is required for that classification either - just that it's greater than three), other than anecdotal evidence and personally knowing a few folks who moved back to their hometowns permanently from that area.
The fundamental design of the Internet was to be robust against various forms of damage to the network. I see Silicon Valley as a similar type of system. It is not difficult to look back 40 years and see how at each inflection point, The Valley's constituent technologies, and the companies they spawned, led the rest of the world and scaled The Valley up.
- In the 1980s, Silicon Valley's Intel lost it's dominance in DRAM production to Japan. The economic impact was dire, and yet
- In the early 1990s, networking and workstations emerged from the likes of SUN and Cisco. They carried through until global competition stole their wind, and it was on to
- The late 90s and the .COM boom. And what a boom it was, Amazon, Google, followed by another death knell for myriad .COM corpses. Promptly engendering
- The 2000s birth of social media. MySpace faltered, then LinkedIn, then Facebook, then Twitter, came up and are still going strong on the foundation of
- 2010s open source platforms. Still mind-blowing: At one point WhatsApp had 40 software engineers and 400,000,000 users. At 3 years old.
I've heard about the exodus from California, usually citing so many thousands or 10s of thousands of people leaving. But looking a the net population changes, Santa Clara County is down 5,000 from 2018-2019. Alameda, San Mateo, San Francisco are all up.
Silicon Valley is a system that regenerates from one generation to the next, and so far, always bigger and more influential than the last.
Prominent local superstars included Dell, Nortel and Enron (As well as numerous companies who fared better, admittedly)...
https://www.nytimes.com/1997/11/30/business/a-new-breed-of-w...
Smart, ambitious people tend to congregate, and capital follows. If during past exoduses, people moved to random places, I can see why SV remained the primary magnet. But, this time everyone seems to be moving to Seattle and Austin (based on my anecdotal experience of ~20 SV startups that have moved to Austin in the past 6 months).
Other things that make this time different: remote work being generally acceptable & higher state income tax
Of course, "every time is different", but eventually SV will fall. The question is just when and what the right conditions are.
Though back then you could get a house in Cupertino for 300k?
It’s now $3M.
This has some effect and makes living here to start a company higher risk.
Today the same engineer at a FAANG would make about $300k. Houses are about $2M and interest rates are about 2%, so relatively speaking things are cheaper. However, unlike in 1993, today's salaries are unlikely to grow by 10x over the next 30 years while the mortgage is paid off!
In 2019, California had negative population growth.
> California had a population of 39.78 million as of January [2020], the state Department of Finance said, down from its previous report of 39.96 million residents in July [2019].
That's the most recent 6 month period we have reported numbers for, and occurred in the 2nd half of 2019. For the full year in 2019, population was still slightly up overall.
[0] https://www.nbclosangeles.com/news/population-shrinks-in-cal....
HP Enterprise and Oracle did not move because Texas is "more tech friendly." Instead they moved because HPE and Oracle are no longer primarily tech companies. While they do substantial technical work, most of that will remain in SV.
It's sort of the mirror of Apple, which also has a substantial presence in Austin (finance, etc) but is headquartered in SV because it is primarily a tech company.
Then COVID hit and we had no other option. Everyone went WFH and tech CEO's realized a few weeks/months in that no, their org isn't imploding, it's actually doing pretty damn well.
Now all these tech CEO's are starting to look around and wonder, if my companies productivity didn't drop off a cliff, why should I be paying for this super expensive office space?
Tech CEO's were told this lie that WFH will lead to a catastrophe in their company, all these office closures and moves seem to be a reflection of leadership calling the bluff on this.
I've seen seniors go completely async (timezones barely compatibles) and periodically you'd see an email from them detailing what they are working on, what they are blocked on and outlining the next steps.
You knew they were doing something simply by looking at the pull requests they sent and the comments they left on the PRs they were reviewing. But try that with a new hire and I guarantee it won't go well.
I continue to believe when this is over, not much changes in terms of remote work v. in person. Supplemental/support orgs might go WFH but the innovation engines will be in person and close to the c-suite.
Are the headquarters staff for these three companies vital to the Bay area economy? I'm not too worried.
The more interesting question is which city will have the largest crop of unicorns in the next business cycle. If those companies go remote or hit their hyper growth phase in non-Bay cities there will be something to talk about.
Truly don’t get why people who don’t live in CA have so many opinions about it. Most states have problems on par with their economic power and population size; not much more too it than that but “hurr liberal policies are gonna ruin the whole country!” get the low-hanging clickbait (RevContent, etc.)
There is one major area for tech people where Texas may prove a nasty surprise to employees: non-compete agreements. For large employers this may be a bonus though as they can keep wages low by stifling competition. Texas does limit non-compete agreements to some degree, but it seems they can still be a serious problem.
The median property tax paid by homeowners in NY State -- a state with no "Prop 13" is $5,865 (according to facts I just googled).
What, exactly, am I getting away with? How will increasing property taxes in a state with the highest income and sales tax solve the housing crisis?
They need to build more housing, and more dense housing.
I live in CA about 8 months/year, and spend the Feb-May in Tel Aviv. We're actively looking to move our U.S. home to Nashville, TN.
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I think the last new tax I voted for was in 2004. Back when I was 25 and didn’t fully understand how terribly mismanaged the funds were.
This keeps prices reasonable, and gives people somewhere to live.
And the escapades with legislators fleeing the state in order to block legislation makes for hilarity.
https://fortune.com/2020/12/03/los-angeles-new-lockdown-rule...
dannyincolor - He issued an order. Its not an ask. This isnt a where you live thing, this is a govt overstepping their bounds thing. Id have no problem with asking.
They are leaving because of high prices caused by factors that are just as present in cities in Texas.
They're bringing their money and jobs with them, so they'll bring some of those higher prices too.
It's supply and demand, not liberal or conservative policies.
Texas conservative suburb-dwellers don't want higher density housing either. They especially don't want lower income folks near them! Look at how litle public transit exists, because such things would let the poor people get closer to their little burb.
Why are so many people falling for this "hey, look, we have lower prices, therefore we have better policies" talking point? Been there, done that. Lower prices are because I wouldn't pay as much to live there, that's not higher desirability.
In Palo Alto, not a single new house was built in the 1970s.
>It's supply and demand, not liberal or conservative policies.
Do you not understand policies influence supply and demand? What do you think happens to supply after zoning laws and rent control are passed?
I'd argue that one should step out of their tech bubble and experience the awesome cultures that already exist within the Bay.
The obvious low hanging bad-policy fruit in California is Prop 13 though.
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If this is how to fail at policy making, more places should try failing.
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The last straw off camels back was San Jose banning gas powered stoves. WTF really ? Lucky for me I was under contract for a new house before that. Now I have the house and its prices have gone up suddenly. I feel sorry for sods who will end up buying my house for 5% premium for the pleasure of owning a gas stove, the sort of thing that is kind of free almost everywhere else. Good luck saving the planet with these antics.
I made this point about not voting for the same policies that caused people to leave California in the Oracle exodus story and got downvoted to death.
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Besides high housing demand and concentrated wealth, what contributed to the way Silicon Valley is today that has anything to do with public schooling?
This point always makes me laugh because anyone who lives in affluent TX neighborhoods knows your property tax is _enormous_ and usually makes up for a majority of state income tax you save. They still need to pay for roads and schools, right?
You're confusing "you can grow outward with single-family-homes near indefinitely" with "we want more apartment buildings near our precious houses!" You still get a lot of the same problems, you've just changed the complexion of the traffic problems...
Have you seen Austin prices recently, it's getting pretty hectic in "core" Austin.
> promotes a general attitude of anti-NIMBYism
This isn't entirely true. In the recent election there was a public transit bill in Austin which would raise prop taxes by 4% I think. Even though it passed there was a hefty amount of opposition to supporting it, and generally anything that deals with raising prop taxes.
Also in my local neighborhood (north central austin) there is plenty of nimbyism regarding planned multifamily construction.
I guess if you Prop 13'd your way into a low assessment, then the math doesn't quite work that way, but for someone who bought a Bay Area house recently, then moved to Texas, the net difference is still a tax reduction.
Austin property taxes are 1.8%. SF property taxes are 0.65%.
For it to breakeven, just on property tax, Austin property taxes on a house 1/3 the cost of an SF house would have to be 3*0.65 or 1.95%.
So people in Austin effectively pay less or the same on property tax than people in San Francisco.
I might add, house prices in Austin/Dallas/Houston are often less than 1/3rd the price of houses in the Bay Area for comparable quality. In Austin, median housing price is $365K, and the average sq footage of a house in Austin is about 70% larger than one in SF.
And we do, with far less taxes. $57.38 billion in revenue for TX at 29M population, $100 billion in revenue for CA at 39.5 million population.
It's $1979 per person in TX, and $2531 in CA. Or about 75%.
Property tax bill on a $2.7m house in SF is ~$32,400/yr, and the property tax bill on a $1.5m house in Austin would be around ~$33,000/yr.
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But if it instead helps wake up California to actually rezone, densify, remove prop 13, and improve social services, that could be quite good.
But there is no race since Texas hasn't made any changes to accommodate these companies
As it is now, the tax rate is set basically based on how long you’ve owned your property. I could be making $$$ and pay very very little. While my neighbor who bought more recently but earns less pays more. This seems deeply unfair to me.
Prop 13 also creates a very volatile tax base for local governments, contributing to the frequent budget issues we see in CA.
Means testing property taxes might make them more volatile than in states that don’t do that, but I can’t imagine it’s worse than the current situation.
Additional prop 13 sets up incentives so homeowners at all income levels are discouraged from selling and moving. And discouraged from allowing more housing supply because they only benefit from increasing housing costs. Taxes that go up with home value tend to blunt some of the benefit of that increasing value.
The single best thing California could do for Californians would be to sunset prop13 protections.
It's pretty rare even in extremely high property tax counties like Cook and DuPage here in Illinois.
How is that terrible? That's the best thing that could happen.