Because the real commodity being sold with the apartments and offices isn't net access or even land. It's proximity to rich people. It's not an open market economy; it's a feudal system in which you need to stick close to your patrons.
A successful startup isn't going to be in the cities you mentioned because you have to convince people that they find the non-work related amenities they've gone to SF, Seattle, NYC, etc to find. Or go full remote, which has its own set of challenges (though I'd posit a full remote company really isn't in any one city so it doesn't really matter where the founders live).
We're located in Cebu, Philippines, the 2nd biggest city in the country, and our CEO spends a good deal of time in Manila, the capital, because decision makers want to meet someone. Starting there, would have been easier for many of the above mentioned aspects.
Other than the public transit, all of the above are available in any number of towns and cities in the U.S.
A half a century ago maybe you had to go to NYC to hear great live music and eat Cambodian food, find specialty ingredients, or get access to off-beat books. But that's not the case any longer. I just googled and apparently there are Cambodian restaurants in Des Moines, Iowa. The internet can get you all the ingredients, music, and books you'll want.
Honestly, I think the coastal cities just have better marketing and more hipster appeal.
I'm just saying the "no culture in the flyover states" meme is long overdue for an update.
There are many good reasons the bay area is the hub of tech development. It all started with proximity to two very good computer science schools; Stanford and UC Berkeley. At this point, there are more tech-savvy investors here than anywhere else.
Ongoing development of technology is an iterative process and by necessity, must be a productive one to get to market more quickly. The VCs and the talent pool are here in the bay area. If a startup wants to get to market quickly, that startup will need money and talent, both of which are people issues.
It would also explain clustering in other areas (finance in NYC, Oil and gas in Houston etc).
Do you have any links or references exploring that idea in greater detail?
Wealth is basically self-concentrating. Our political systems tend to end up with a few capital (and often Capitol) cities where the spoils from the plundering, both metaphorical and literal, end up.
The original article does present some interesting and relevant examples of countervailing forces at work as well, and is insightful. But the elephant in the room, as always, is that returns to capital and rent extraction are the primary drivers of wealth, and that the winners tend to keep winning and vice versa.
But even if things seem "really obvious" and we can tell "just by looking at the facts", I feel better if someone has looked at the data and shown that to be the case.
We aren't living in the feudal era, and a lot of people like to think that the reason people move to the cities is because of (for instance) bars and restaurants, museums and the opera, high-paying jobs and so on.
This proximity to wealth may be a symptom of some third factor or it may be the driving factor.
That's why I appreciate it when smart, hard-working people take their time to figure it out for me.
Museums, opera, symphony, most theater, etc. are kept alive by the philanthropy of the local rich.
High salaries are paid by rich VCs looking for return, or companies with more cash than they know how to handle commissioning prestige projects. (How many people at Google actually work on revenue generation? That doesn't happen at Joe's Computers in Nowheresville).
Concentrated wealth is the reason cities can have these things.
I do, however, also agree with your counter-point to the previous comment.
How do you define wealth concentration, for example? If your definition is flawed, you can throw out the entire model.
And these would actually be rent seeking activities? Is that the idea?
I was just contrasting two different types of reasons for why people cluster in those cities.
Type I, the optimistic theory
Information is more efficient and trust is better when people meet in person. Industries need to co-ordinate trust and information flow through lots of people, so they have to be in the same place. They produce a lot of value, which produces wealth and increases productivity. That wealth pays for all these great things.
This causes a happy cycle of smart and educated people being attracted to the "good" things in life coming to the cities, and providing labor for the companies and so on.
Type II, the pessimistic theory
In order to get industries going (tech startups, new Oil and gas company etc) you need capital, and the capital exists in these enormous clusters. So the people who want to fund the industry has to go to these clusters of existing capital and convince them to invest them. The returns from the success of the industry go back to the same place and so on.
The existence of the bars, restaurants and museums are compatible with both, but only have causal power in the first type of theory.
Sometimes resources are grasslands with plentiful wild animals that you can spear and eat. Sometimes it's gems or petroleum buried underneath the rocks. And yes, resources are things like museums or pretty views or available five star restaurant meals. But the dynamic throughout human history is reasonably understandable, you can observe the same basic concept in a Petri dish.
The biggest resource of all in modern society is financial wealth. So people go to places that have it. Unlike the grassland, where new arrivals quickly deplete the available resource, in this modern scenario the result tends to be the creation of more wealth, and the cycle reinforces itself.
If prices of drinks are going up naturally because people are making more money, "rent" for real estate is going up, etc. that is not "rent-seeking".
[1]http://www.mercerrestaurantgroup.com/how-to-open-a-restauran...
The Bay Area plus NYC metro area are 8.5% of the total US population so yes they are a significantly larger chunk of GDP and wealth. But, they are large enough that the differences are smaller than you might think.
Plundering, seriously? Isn't HN supposed to be a community of entrepreneurs?
To further complicate matters, both behaviours can be exhibited by the same person.
Places like Albany, NY were regional banking centers as recently as 30 years ago. In Albany's case, that was an artifact of the city's role as a transportation hub for canals and railroads.
As the role of banking has changed and the market has consolidated from a highly distributed model, its harder and harder to do business outside of large areas. If you're a midsize business, it's hard to get lines of credit simply because nobody wants to travel to talk to you.
Even within large organizations like government and Fortune 50 companies, consolidation drives centralization. Big places used to have regional administrative services (HR, Finance, etc). You could make a career working in some regional field office.
Now, centralized functions mean that you work at HQ, a regional center, or you're a task worker in the provinces.
The walled City of London, a separate sovereign maritime nation situated within London is another historic example...
https://www.ft.com/content/7c8f24fa-3aa5-11e4-bd08-00144feab...
You can code and create a product anywhere; you can meet VCs by flying into SFO (VCs might fly to you if you are extremely successful already).
Individual capital is very liquid, but the herd is not. Consider San Francisco: it has capital because of tech, because of the need for electronics & power for running a port, because of the trade in the Bay, because of the gold miners in 1849. That capital hasn't moved significantly to (say) Bakersfield.
You have to be a lot more specific. There is an immense number of rich people in Los Angeles and it has historically had a mediocre tech scene for example (especially compared to SF, but it also lags Seattle and NY currently).
It's proximity to large numbers of very specific rich people.
For anything else I may want to do (concerts, sports games, plays, comedy), there are dozens of world class options within a ten minute cab drive / 30 minutes on public transportation.
It's gotten to the point, where if there's a band I want to see, but they're in the suburbs, I'll just wait til they're back in the city.
I grew up and went to college two different small beach towns. There wasn't much of anything to do besides drink. If you wanted culture, you'd have to get in your car and drive at least an hour.
I have no desire to live outside of a big city, unless it is in the middle of nowhere, but in that case, I will still have a home in a city.
My guess is a lot of other people feel the same way.
Everywhere has culture. You just didn't like the one you were in.
In tiny towns, the culture looks more like running around in the woods, country music, 4-H club, and church potlucks. That's a culture, even if you don't like it. And, besides, in the internet age there are plenty of farmers' daughters that get really into oil painting or Korean TV or opera. Producing great culture is harder without a local community, but it's not like there's no access to culture in small towns. They're binge watching Iron Fist just like all the other geeks.
In other words, people want access to socially-dominant individuals. It's probably some sort of backwards instinct that doesn't serve us very well these days, given that for each of the top 100 people in anything, there are a million people who want that "access", and obviously only an infinitestimal fraction of them are going to get it—and living closer to those top 100 people (or even going to events they hold) won't really increase their chances of doing so, any more than living in the capitol city of a monarchy means you'll get to meet the monarch.
It just stands to reason that the more oeople you have in an area, the greater the diversity and intensity of interests, which we call cultyre. My hometown definitely doesnt have a Bat'leth martial arts class, but you can find it in a big city. Thats why you get such an influx of artsy types to places like NYC because no one ia into their art where they are from
It's quite possible to square traditional urbanism's affection for multiculturalism and an affection for artistic and culinary excellence, but it takes some nuanced language to express why those aren't in conflict.
Embracing cultural elitism while denying it linguistically doesn't really help make the argument.
First, let's be clear with our terms here. "Multiculturalism" is a heavily loaded term. Despite its Judeo-Christian heritage I would argue that the United States does not operate as a multicultural nation-state. Rather, it is more of a ethnically diverse unicultural society in that the population to a broad degree does share a common language, certain American beliefs and values, and have a unique optimistic view of the future that I've found rare in my travels...the so-called "melting-pot". A good example of a multicultural state is Iraq where multiculturalism is clearly established in policy at the federal level as the Kurds, Shia, and Sunni live in an uneasy alliance, separate into ethnic ghetto-states/territories with relatively little inter-mixing, and have vastly different agendas for the future of their country (Kurds wanting to create their own state, etc.)
After rethinking it, I believe that population density is only correlated to the amount of culture, not the cause of it. Cities like Taos, Santa Fe, and Santa Cruz have a high degree of appreciation for the arts despite being outside dense, metro city centers. I believe that openness and tolerance to unfamiliar ideas is the driver behind culture. It is also a necessary requirement for diverse urban centers, which is why you find a large amount of culture there, including the small town cultures that emigrants bring with them.
The easiest way for me to put it is this: No matter how small where you come from is or no matter how esoteric your interests are, there is some sort of meetup for all the things in a LA or NYC.
For your kind of things. In NYC, it's harder to find great snowboarding clubs, demolition derbies, Baptist churches, bass fishing, tacos, and BBQ places. I've been to a mule rodeo before. Haven't heard of something like that in LA.
Not all of those things are my bag of chips, but they're all "culture". Some "culture" either requires less population density or hasn't found a foothold in the coastal mega-cities for whatever reason.
Harder to find than where? A number of the things you mention are limited simply by geography (snowboarding, bass fishing, etc.) I'd wager that you'll also find a decent amount of taco and bbq places compared, to say, Utica. There appears to be a number of Baptist churches in NYC according to google.
When I talk about LA, I'm speaking more generally about the county and its surrounding areas...There are mule rodeos around a half day's drive from LA. You are right that some culture typically requires lower population density, but you usually find some form of it in mega-cities due to emigration.
But the best way to live differs from culture to culture -- and I'm not convinced that the rural South has the same kind of ideal as the North, which means I came on too strong earlier. What does the Celtic or Celticized world's high culture look like...?
Point taken that you like small town culture, though.
I don't especially. I appreciate it. And I appreciate urban culture. I just find the "everyone knows cities are better" meme is really inaccurate.
It's weirdly dismissive of other cultures as well, which is weird considering how much urban centers want to value diversity. People will read 30 page New Yorker pieces about Botswana or listen to an hour or pan flute music before way before they'll take time to acknowledge that there's culture in Tennessee that's worthwhile, even if it's not their cup of tea (which should be obvious because Nashville, but not everyone's as well-heeled as they think they are).
Having lived in small towns, big cities, and desert planets.
People are "savage" because they like different things to you such as country music? If so, you're an incredibly narrow minded and shitty person. If not, please elaborate.
Different cultures have different norms of human perfection, and pursue different things; this fits Spengler's (the real one's) idea that a culture has a core proposition. Within a civilization, high culture is a culture's full expression of itself; it seeks out and engages with the contradictory or self-defeating parts of its values, and tries to advance the culture's understanding of what perfection is and how it can be attained. (What the postmodernists call deconstruction, and Gardiner called "high parody," is a fundamental part of this process.) Low culture is mindless entertainment; it doesn't try to shape its consumers in any positive way, and certainly doesn't advance the society's understanding of its ideals. Middlebrow/bourgeois culture tries to be high culture and fails -- but typically fails intentionally. (To be at the forefront of understanding is prestigious but uncomfortable, and the middle class wants prestige but not discomfort.) Mass culture is typically low, since low culture sells, but can rise to middle or high. Low culture, and occasionally middlebrow or mass culture, can produce things that high culture finds interesting and takes up -- and high culture can similarly cross-fertilize downwards. See Popular Culture in Early Modern Europe for some very interesting discussion of this, which was more common then than it is today.
"Culture" historically means "high culture": the thrust towards self-improvement, plus the continued refinement of what exactly you're trying to self-improve towards. This sounds uniquely Western (especially modern Western -- "Faustian" in Spengler's terminology), but you see the same process in other parts of the world, especially in East Asia.
The catch is that you can't engage in high culture without access to high culture -- so perhaps it's unreasonable of me to condemn poor rural areas for not participating in it. Or perhaps not? It's not just mass culture that the Internet makes available.
Regardless, it's high culture -- or at least middlebrow culture, which is regrettably easy to mistake for it -- that reverend_gonzo was lamenting lack of access to.
That whole discourse assumes things about actualized humanity that cannot be taken as granted. Who's to say that earning a simple living, caring for a family well, and being virtuous isn't perfect in itself? Who's to say that seeking pleasure and avoiding pain isn't a form of perfection? Who's to say that the human perfection isn't a distraction from the commands of a perfect deity?
> The catch is that you can't engage in high culture without access to high culture
That presumes that "high culture" can't be simple, commonly available, or digitally transmitted. It also presumes a one-size-fits-everyone kind of culture and not a more atomized, long-tail description of how cultures are formed, evolved, and maintained.
In more concrete terminology, why should large orchestral pieces be high musical culture? Maybe perfection is really about inclusion, peace, and affection. In that case, a receptive crowd, a guy with a guitar, and some lively tunes is all you need. Or even just a good playlist.
And that's why I push back against all the "life is clearly better in mega-cities" attitude. It's a zero-sum game to only evaluate culture in relative terms. I don't think we're doomed to live in a world the poorest and least connected wallow in cultural poverty and the wealthiest and best connected are privileged with cultural riches. I think life is simpler and better than that.
I'd say that the high-low-middle-mass divide is universal, but the goals that a given high culture aims for are different from civilization to civilization. This includes West European (including New England) versus Celtic (more or less including the South, descended mostly from the Anglo-Scottish Borderers and the West Country).
In the particular areas you're asking about, though, I see contradictions. Being virtuous doesn't have much of a history of being compatible with seeking pleasure and avoiding pain; but being virtuous is a form of human perfection, in fact the one that Aristotle would endorse most readily, and I fail to see how following God becomes easier if you're less able to follow Him. As for earning a simple living, well, look at the website you're on and its long history of destroying the ability to earn them...
On the second point, though, I feel misrepresented. I explicitly said that "it's not just mass culture that the Internet makes available" -- although if you don't share the goals of a given high culture, there's no point in participating it. What does a Celtic high culture look like? Such a culture definitely existed in the Middle Ages, especially in Ireland, but it's been on ice for centuries...
In music, an orchestra can just plain produce sounds that a guy with a guitar can't. There's also more of a filtering effect, which tends to weed out junk... but bigger and/or more formal music don't always mean better music. Music theory can become a burden, and the pentatonic scale is extremely expressive for something that has half the notes of twelve-tone scales; the Irish session is a different sort of thing from a Western quartet or band, with a different set of objectives. And music is something it's good to participate in, which is something in the guy with guitar's favor.
Still, whatever a Celtic (or Quaker? or who knows what else) high culture might look like, there's not much participation in it in the US countryside, certainly not in any organized and visible form (although a lot of cultural activity of all sorts is on the Web these days). I feel like Western high culture leaves a few things out, but I'd rather be around someone else's culture than around cultural passivity -- although Western culture has a horrible case of the middlebrows here in the US. (Has it always? I wouldn't rule it out.)
But if you want to specifically say that life isn't better in the mega-cities: I like urban living, especially walking to work. Of course, that gets challenging and expensive even in the mega-cities; the US needs more walkable areas, more narrow streets, and more trains, subways, and commuter rail. Rents low enough to raise families in the cities wouldn't hurt, either...
I was listing various philosophical ideals, not optimizing humanity myself.
> I'd rather be around someone else's culture than around cultural passivity
You say that, but much (most?) cultural optimization has a religious component. The countryside in America is very culturally active, especially on Sunday mornings. And the "cultural ideal" of Protestants necessarily requires accessibility and even imperfection.
Taken to an extreme, but still an American example, there are the Amish. Their cultural ideal is, more or less, rural simplicity. To the extent that they need to iterate or collectively think about their culture, they do. They just don't need patronage to achieve their more straightforward cultural goals.
So to circle back to my original point, can we say they are uncultured? Or lacking or failing at "high culture"? I don't think that's accurate or fair. At least not objectively.
I think the broad adoption of mobile gaming and the Millennial adoption rate on video games and the successor generation (whatever we are calling them now) basically being raised on them will break down the reliance on physically proximate entertainment for enough of a subset of these generations that businesses will have to adapt to remote more than they already are.
Plenty of people are going to be satisfied with what is available through technology, rather than just what they can commute to. This is on top of being able to do work remotely, its the value in being entertained remotely that truly separates them from the city centralization problem.
On top of the fact that many people are different than you (in fact the 100s of millions who live in cities) are not satisfied just playing video games all day long.
And alcohol can be coexisted with more easily than hard drugs can. "Meth: Not Even Once" is no exaggeration, but no one in the West except recovering alcoholics has that slogan for drinking.
That means you still care.
I'll show myself out.
The main problem with Chicago is it lacks an anchor industry. Is it the best place to be for finance? No, that's NYC. Is it healthcare? Boston, Baltimore, Cleveland or Rochester. Energy? Houston. Technology? SF. Entertainment? LA or NYC. Politics? DC.
What exactly is Chicago good at? They have Wilco, so that's cool.
There are a massive number of other companies headquartered here, like Boening, CNA, Kraft Foods, Walgreens, State Farm.
While NYC might be known for its comedy, it recruits directly from Second City in Chicago, and the numerous small comedy clubs and schools here feed into Second City. It has its own caliber of theatre it puts out as well, regardless of whether it matches NYC on notoriety.
Lastly, while having the benefits of a large city, Chicago also does not have the stupidly high rents of NYC or SF. It is a very livable city, even for those on modest incomes. Public transportation is excellent (though not as good as NYC).
And if you are doing well enough to have a six-figure salary, you can live very well here as opposed to how you would live even on an cost-of-living adjusted salary in SF and NYC.
The primary downside to this city is the weather. In my opinion, the secondary downside is how far it is from outdoor activities, but, then again, you can easily fly elsewhere via O'Hare/Midway.
I grew up and lived in Chicago for most of my adult life. I moved to the Bay Area in 2013. My main reasons were weather, crime, and jobs.
For some people, living with gray skies half the year with not-infrequent temperatures below zero or above 100 takes its toll. Also, the violent crime rate has gone through the roof in recent years, even in generally good neighborhoods.
On the jobs front, I'm in marketing and a more technical marketer at that. The job options in Chicago were largely unappealing, but more importantly was the major difference in culture. There are obviously exceptions, but Chicago seems to have a much more "conservative" corporate culture on the average. This means less competitive pay, 2 weeks of PTO, 2 weeks paternity (if that), stricter 8 or 9am start times, less free on-premise food, fewer perks overall, less competitive benefits, etc. Again, you can find exceptions, and large tech companies tend to have offices there as it is a hub (particularly for media companies like Google). But on the balance, due to the extreme concentration out here, it seems many Bay Area companies are forced to up their game and be much more in favor of the employee with regards to comp, perks, culture and benefits if they want to be competitive with the local giants.
I get very sad when I think about the cost of housing out here, but TBH, I'm not sure I could go back. Whenever I get off the return flight from a trip home and step out the doors at SFO, all of the color, sunshine etc. makes things look like technicolor compared to the ugly red brick, gray skies and black slush of Chicago.
Don't get me wrong--it will always have a place in my heart and I dearly love many things there. But depending on your priorities, in some cases there is no competition if you can afford enough to make it manageable.
This is a weird expectation. Why does a city have to be "the best" at something? Seattle isn't the best place for software but I'd still choose it over SF any day. Chicago has plenty of industry.
The whole situation is dumb, overall I'd avoid living in CT for a ton of reasons. CT had a lot of industry going for it (Stanley Tools in New Britain, for example, and Hartford was the center of the gun industry 100 years ago) but those of course moved overseas. The insurance industry provided a safety net so it didn't go the way of the rust belt but, late capitalism y'know, so that was just a band-aid that's being slowly ripped off. This is happening everywhere but the systematic denial isn't as ingrained as in CT, it's weird.
Also, not too many people aspire to be in insurance. I don't think you can put it on the same level as finance, arts, software, fashion, film, etc.
Do people aspire to work in health, energy or finance, or even software aside from the money? If so, what difference does it make?
Aerospace/Defense: Boeing
Agribusiness/Foodservice: ADM, Mondelez, McDonald's, US Foods, Ingredion
Communications: Anixter, Motorola, TDS
Energy: Exelon
Finance: Discover, JLL
Healthcare: Walgreens, AbbVie, Abbott, Baxter, Baxalta
Industrial/Manufacturing/B2B: ITW, CDW, Navistar, Grainger, Univar, Tenneco, LKQ, Dover, Packaging Corp., Essendant
Insurance: State Farm, Allstate, Old Republic, AJG
Publishing: RR Donnelley
Retail: Sears
Transport: United
If you intend to create technology for supporting businesses in those sectors, having a Chicago office would not be a bad idea. SV unicorns tend not to even want to solve problems like how to more efficiently route a single gigantic monolithic I-beam from the foundry to a building site without destroying buildings, bridges, and roads along the way. It isn't sexy, and doesn't attract money or eager and idealistic employees.
As far as entertainment goes, it's no accident that a huge number of comedians get their start in Chicago.
Chicago has tons of anchor industries, the real problem is that they don't translate well to the unicorn strategy of most start-ups.
https://en.wikipedia.org/wiki/Economy_of_Chicago
>Chicago and its suburbs, which together comprise the Chicago Metropolitan Area, is home to 29 Fortune 500 companies and is a transportation and distribution center. Manufacturing, printing, publishing, insurance and food processing also play major roles in the city's economy. The total economic output of Chicago in GMP totaled US$547B in 2012[1] making Chicago the 21st largest economy in the world[2] just surpassing the total economic output of Switzerland.
>The city houses one of the Federal Reserve Banks, established in 1914. There is also the Federal Home Loan Bank of Chicago. The largest banks in the Chicago region (by % of deposits) are: JPMorgan Chase, Bank of America (through its acquisition of LaSalle Bank), BMO Harris Bank (a BMO subsidiary), and Northern Trust. The largest banks headquartered in Chicago are: Northern Trust, Chase, BMO Harris Bank, Wintrust Financial, and First Midwest Bank. Many financial institutions are in the Loop.
>Chicago has five major financial exchanges, including the Chicago Stock Exchange (CHX), the Chicago Board Options Exchange (CBOE), the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT), and NYSE Arca. While the city of Chicago houses most of the major brokerage firms, many insurance companies are in the city or suburbs, such as Allstate Corporation.
I have family in Rochester and it isn't known, at least to me, for healthcare in particular. The biggest Rochester companies are Xerox and Kodak neither of which are healthcare companies.
Geography.
Chicago's the primary water connection between the Great Lakes (which communicate with the Hudson and St. Lawrence Rivers) and the Mississippi River; that's the historic origin of its central role in commodities trading.
Corruption.
It's a lot harder for a company to hire top tech talent if they're in Miami / Des Moines, because the Bay Area has a much higher concentration of tech workers. Convincing people to move is hard, especially so for more experienced tech workers who have a life/family somewhere. You need to be getting an insane deal for it to be worth abandoning your friends and family/forcing your partner to find a new job (and I've yet to see tech companies trying to compete on comp vs SF/SV outside of them). Can't run off middle-road new grads alone (Edit: Good point below that top grad talent wants to hit the big cities too).
We're talking about tech workers though. I don't know about you, but my whole life as a tech worker, I've gotten up at the crack of dawn, worked all day, come home late at night exhausted and passed out sleeping until the next day. I don't even know what city I live in because I NEVER SEE IT. Culture? Nightlife? What the hell are they? It doesn't make sense that tech workers would care about these things because we never get to take advantage of them.
Not all tech workers are 12-hour-a-day workaholics.
Why are you killing yourself at work?
...no, I'm not honestly asking that, but those are the questions I'd expect to fend off.
I've literally never run into anything of the sort in my life, and I'm making a six figure salary.
But then again, HN is a startup crowd. Things might be different when you're obligated to keep flapping or die(1).
Because a tech worker can easily create $300-500+K per year in economic value for the company. Taking home 1/3 of that value seems perfectly reasonable.
Nothing in the above says anything about hours-in-seat.
What if most startups only need "good" developers to develop their mostly CRUD apps and don't need "the best" developers?
But the dream, and the reason all the coastal co's are in it, is to be the next Google or Facebook, or Twitter or Snapchat.
You could say an app to get people to come over to your house won't change the world, but people think hey maybe it will grow, or we'll just pivot, and wind up with the next Flickr or Slack, and that's certainly good enough.
Sure, but that just means that they and their competitors have already grown to the point where the market is saturated, and any further growth they are experiencing is because the market is growing or to the detriment to their competitors. They probably already had an exponential growth period, although it could have been short-lived if the market is small (and if the market is really small, may not have looked like exponential growth at all, and may have just looked like becoming profitable and leveling out).
You're right that not all niches will attract VC funded competitors, but I think the number niches that meet that criteria are actually very small, in this industry. There's always someone that thinks they can disrupt it somehow, or market it better to show people the market is actually much bigger than it appears. Keep in mind, the VC funded competitor doesn't have to succeed in it's task of taking over or changing the market to have extremely detrimental effects on companies that aren't working with the same paradigm.
Having a market large enough to support a few small companies but not large enough to warrant VC funded competitors that stays that way seems a rarity.
So, either the next Facebook or lifestyle. Of course, real world is not perfect so there's space for medium-sized businesses, but they're not an economic optimum (they're leaving money on the table either way).
There are some exceptions, but most any successful technology product needs at least a few great technical leaders, if only to say no to net-negative ideas, provide mentoring to those who need it, and to make strategic technical decisions (architecture, tech stack, technical hiring strategy, etc.).
There are highly competent people in both the lower 90% of the top 10 schools as well as in non-top tier schools
And as for competence, there's an order or two difference between a developer that can add some more CRUD to a service and one that can say no to doing the exact same thing when it is a net negative to the system and/or organization. It's one of those things that sounds simple, but it takes a lot to even know which technical battles are the top priority.
But of course that definition is useless to a VC fueled, exponentially growing trainwreck/unicorn that wants to hire hundreds or thousands of "engineers".
We're on the smaller side in SF, and I'm having a terrible time finding good ops people.
The University of Texas at Dallas, established explicitly for this reason, is probably the reason why Dallas is a tech hub.
Why is it that Austin is a tech hub (UT) but Houston is not (U of H, Rice)?
One theory: it is not the school, but the kinds of jobs people get after. Austinites went to work for Dell, and Houstonians went to work for Exxon.
[0] https://thebridgebk.com/engineering-hub-downtown-brooklyn/
What made UTD different was that it was founded by the same people who founded the largest technology company in the area, and they specifically founded it in order to do something about the low number of STEM graduates in the Dallas area. The TI founders went out of their way to engineer a STEM culture in a city that didn't have one just to grow some more talent for their company.
From Wikipedia [0]:
> Qualified personnel required by TI were not readily available in the Dallas-Fort Worth area because the region's universities did not provide enough graduates with advanced training in engineering and physical sciences. TI was forced to recruit talent from other states during its expansion and the founders observed in 1959 that "To grow industrially, the region must grow academically; it must provide the intellectual atmosphere, which will allow it to compete in the new industries dependent on highly trained and creative minds".[12] To compensate for this shortage they established the Graduate Research Center of the Southwest in 1961. The institute initially was housed in the Fondren Science Library at Southern Methodist University. Land for the center was acquired by Jonsson, McDermott, and Green in Richardson in 1962 and the first facility, the Laboratory of Earth and Planetary Science (later named the Founders Building), opened on the grounds of the present-day UTD campus in 1964. The Graduate Research Center of the Southwest was renamed the Southwest Center for Advanced Studies (SCAS) in 1967 and in 1969 the founders transferred the land and assets of SCAS to the State of Texas. On June 13, 1969 Governor Preston Smith signed the bill adding the institution to the University of Texas System and creating the University of Texas at Dallas.
[0] https://en.wikipedia.org/wiki/University_of_Texas_at_Dallas
While this is a laudable project and it works in some places, many rural citys are very conservative and against anything new the youth might be interested in.
So why haven't I moved? Frankly I'm scared that I can't cut it elsewhere. My job is secure and pays very well for the area (as a single person I make about 160% of the median family income). I could move and work remotely for the same amount which would result in a drastic decrease in quality of life, or try to get another job that I'm probably not qualified for. I've been trying to figure it out for the better part of a decade now.
This basically describes the prevailing attitude in Minneapolis. Minneapolis is super cheap and has all the fancy cocktail bars you will ever need.
That's somewhat different today but it's really a very recent change.
Could be issues with our sourcing, perhaps, but it seems surprisingly difficult.
(PM me if you'd like to be a counter-example)
Startups are built on young talent. Young people are obsessed with living in "the big city" and to hear them tell it, living in a suburb and driving a car is about the worst thing imaginable.
So if you want young talent, you better set up shop in SF.
Motor vehicle accidents are the largest cause of death for people in the US under the age of 24 so it is, arguably, the worst thing imaginable ;)
And the lengths to which this insanity will go is that (e.g.) Google workers will live in SF and commute into SV. Talk about turning the "live in the suburbs, work in the city" paradigm on its head!
The false American dream of the oversized house, piles of kids, and picket fence just isn't appealing anymore to a growing population of young people. Life is too short to spend your prime someplace boring.
I detest noise, grime, and crowds. I like having lots and lots of space all to myself. I worked in the city once; I got sick to death of hobos on the streets shouting at me and demanding I give them money (and then having to listen to them calling me a liar when I say I don't carry cash, which is 100% true), and I got sick to death of working in a tall building where the elevators would break down all the time. Working in the city also had me constantly on edge and worrying that I was going to get gang-raped, and I'm glad I don't have to deal with that anymore.
It's not just me, either. Most of the people I went to college with and still keep in touch with now have houses in the suburbs, and those who don't have houses per se live in two-story suburban apartment complexes. I only know one guy who lives in a more urbanized area (and even then, he's in a mixed-use master-planned development in a suburb), and that's only because he's legally blind and can't drive. A good way to make him angry is to say "you're so lucky you don't have to deal with the hassle of driving"; he will remind people at the top of his lungs that he would love to drive everywhere if he had fully-functional retinas.
My friends and I are the kind of people who make fun of hipsters and mock people who are pro-homeopathy, anti-vaccine, anti-GMO, anti-gluten, vegan, Bernie bros, etc. Trust me when I say that an urban lifestyle isn't for us.
I think there are a lot more culturally conservative young people than you think. Not conservative in the political sense ("liberal but not leftist" and "Clinton Democrats" apply to me and most of my friends), but conservative in the sense that they want to live a traditional lifestyle.
Live fast, die young, make bank; that's the counter culture philosophy. A slow death as we watch our homes devalue in the burbs worked for our parents, but there's a growing wave of nihilism attracted to the other life urban living offers.
"Bros & Brittanys" is, at 32%, by far and above the largest group and described as "enthusiastic consumers".
I'd imagine many other "Lone Wolves" (a group I consider myself part of) enjoy the peace and quiet of a suburban environment; I don't like being surrounded by people. I enjoy living an atomized life where most of my social interaction is online.
I've actually met some New Traditionalists, too... actually, my legally-blind friend I mentioned before is one of the only people from college I know who's an outspoken political conservative, and his wife is even more conservative than he is. Every Sunday, his wife drives him to church in his rural hometown, and they spend the day with his family. Since he got married, he's only become more and more of an extreme religious conservative.
There is also some more evidence showing that younger Millennials are more conservative than a lot of people think: https://www.ketchum.com/pt-br/news/break-ranks-among-millenn...
And to be honest, I don't think the urban hipster Millennials are any different from Gen-Xers who identified as slackers and Baby Boomers who joined the hippie movement. As they get older, the majority of them are going to walk away from their countercultures and return to more traditional lives.
If you believe in Strauss-Howe generational theory, then once the current Crisis runs its course, Millennials are going to have the same role in the new status quo that the GI Generation had in the 1950s.
Either way Im sure I'll be dead by some preventable disease not covered by "new traditional" health insurance long before it becomes an issue. [0]https://en.wikipedia.org/wiki/Demography_of_the_United_State... [1]https://en.wikipedia.org/wiki/Marriage_in_the_United_States#...
A lot may also be attributed to getting older and wanting to slow down, start a family, etc. Just ask any parent how much they enjoy SF's school lottery, or inability to let their kids play unsupervised outside for safety reasons, or lack of a back yard.
Having lived in a city most of my life, lived somewhere in walking distance of Mountain View, and now live somewhere in the Peninsula that I need to drive from if I want to get anywhere of note, there are definitely tradeoffs. It isn't always black and white. I miss the walkability, but I also love some of the other features of being more removed from the congestion and city centers.
Some of the burden is on you to prove what has failed so far. If it is possible to build a successful large scale startup in Amarillo, why hasn't it happened?
I'll point out the theory of agglomerative clustering also includes the contrary point: a city that is great at something tends to exclude other activities, for any given amount of population. A city like Amarillo, which plays a role in the oil industry, is less likely to be great at software, because it plays a role in the oil industry. It's population would have to grow before it could be good at both.
Also, if two 20-somethings build a successful startup in Amarillo, they may want to move to San Francisco as soon as they have money. The "this startup can be anywhere" argument works both ways: yes it could be Amarillo, but if it can be anywhere then it doesn't need to stay in Amarillo.
And the startup can also move to Poland, or Romania, or India. If you believe the startup can be anywhere, then you basically believe that a startup would only be in Amarillo by random chance. If there are 100,000 great cities in the world, and all of them equally good for a software startup, then the chance of a startup being in Amarillo is 1 in 100,000.
But in fact, there are good reasons why startups tend to cluster into certain cities. You should read "Why tiny Stockholm has the most stunning startup ecosystem since Tel Aviv" :
https://pando.com/2012/11/20/why-tiny-stockholm-has-the-most...
The Dept. Of Energy, Southwest Airlines, Texas Instruments, and Principal Financial Group need not apply.
In the UK, there are tech jobs all over the country. But there are probably more in London than everywhere else combined, especially if you're looking for the start-up unicorn types. I lived in a smaller city for a while after university, but there were very few jobs to choose from that interested me.
I moved to London for one job in particular at the time, but also safe in the knowledge that it would be easy to find another job. I've had 4 different jobs in London since then, and it's never been very hard for me to find something else that's suitable and interesting for me.
The same holds true for most of my friends from university - many of the moved to London because it was the most obvious option for finding a tech job. So it has a further concentrating effect, that people are more likely to know others who are working in the capital city than elsewhere in the country.
If I was seeking a new job and open to moving anywhere in the country, I could find one somewhere outside of London. But if I was already living in another city, it might be harder to find a job without moving. It might not be quite the same in US, where there are a number of cities around the country that are a similar size to London, but in the UK there are maybe only 2-4 other cities that are large enough to have a wide selection of jobs in one industry, and none besides London with a population of over 1 million.
Pretty much it is a networking effect issue. The same reason why you are posting this on hackernews instead of reddit. Physical proximity matters a lot, even when work is digital.
Is it possible that perhaps there may be reasons for people to choose such an obviously irrational thing? What do they think they're getting out of it?
Many companies have found that they benefit significantly from physically proximate workers. There are distinct benefits to putting people in offices in person. On top of that, having many such companies in one place is beneficial to the specialist worker. It mitigates risks of unemployment, and enables workers to take greater risks.
Myself, I've done what you suggest. I took a job in a cheap place. It was great in some ways, and terrible in others. When I decided I was done with the job, I had to leave that city. There just weren't many options for me there. I understand why a businessperson would like it - you get more leverage over cheaper employees - but it's not the best choice for me.
https://www.youtube.com/watch?v=lyHgMNuftL0
Zoho's CEO feels that good software products can be developed not only in silicon valley or even big cities like Chennai and Bangalore, it can be developed in non-descript towns like Tenkasi too.
I think with more accessibility to digital media, and expansion of skills through internet education, skills can be diffused across geography, atleast in our field.
It's concentrated _because_ it doesn't have to be at certain places. Your post office that had to be close to you is now run by a couple of thousand people at Google.
"Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines?"
Again, without being to annoying, why does it have to be in Dallas? It doesn't, so it mostly isn't.
Actually, the answer is that Dallas is already a tech hub.
I'm not saying that Dallas (or any other city) can't have some, even quite successful, startups. Just that you can't really compete being say "the third to fifth best choice for startups". At that point you're competing with too(!) many different cities. You have to be the obvious choice in a few, preferably large, categories; capture a lot of local talent (which is harder in the US), and most likely both.
Why?
Executives and managers are the priests and offices are their temples. Amen.
okay but how do you run a city like San Francisco once all of the service industry workers get priced out? Do you start paying people 6 figures to clerk a convenience store?
I agree in general, and I think it's likely that the future of growth is in sprawling inland metro areas like Dallas-Fort Worth, Kansas City-Overland Park, and Minneapolis-St. Paul.
Well, in the case of Dallas, this is largely going to depend on whether or not the Texas state legislature can ever get their heads out of their asses. If SB6 passes, expect Texas's economy to crater.
On the other hand, I'm not sure if your exact list of cities is feasible. Amarillo is too small to really become a hub for anything in the near future (it would take a dedicated effort, like how Bugsy Siegel transformed Las Vegas). And Miami is limited in its ability to sprawl because it's on a coast. Des Moines is a distinct possibility, though.
The suburbs have room to sprawl out forever. The city centers can become high-rent places for the rich, and everyone else can live in the suburbs and exurbs. Furthermore, the inner ring suburbs can become "edge cities" where businesses prefer to locate themselves (this is already how Dallas is laid out) so people from both the exurbs and the city center can have short commutes.
> Talented people already move from one coast to the other, so they could as well move to any other place.
Freedom of speech and expression will suffer as long as all Western world's social media is controlled by a few city blocks in SF.
Software technology ecosystems could certainly succeed in other places if one could bootstrap them in the first place; the clustering (and self-reinforcing network) effects mean that people gravitate to where the action is already happening. Getting started in a new location is challenging, so only those willing to shoulder additional risk (beyond the often-high risk of starting and running a startup) are going to try.
This cities work because there is a high concentration of wealth, talent and resources for them to produce big wins over and over.
Google and Facebook couldn't have been this successful anywhere else.
Pg had a nice article on how other places can become sv like hubs.
I think some part of the network effect of big tech hubs is the option value. If you're in the Bay Area you can have the best of both worlds - stay in one place as long as you want for your personal life/family, and still have the possibility of working at any of thousands of the best companies of all sizes and switching between them if you need to.
Hipsters, microbreweries, and fancy lattes will continue to spread I am sure!
https://www.nytimes.com/2017/03/18/world/europe/berlin-rent-...
Because face to face is high bandwidth. You can have everyone work from home but it will reduce your ability to collaborate effectively. Teams worry about being in separate buildings or even just split across floors because the friction introduced reduces impromptu face to face conversations significantly.
Now, if you're asking why an entire company can't move, that's because the talent pool is where it is and many engineers will not be willing to relocate. Moving is disruptive and for married couples where both work at different locations, it may be effectively impossible.
Yet many companies don't allow remote working to their own employees, even though all contractors (including freelancers) are doing it mostly remotely.
But any-town, USA has nothing else to offer them in terms of entertainment, arts, food. I live in the 77th largest city in the US and this place is dead.
All of the big software houses compete for the same engineers, and they're all paying their incremental new engineers +/- 10% the same total comp across the experience spectrum.
I would agree with pascalxus, the big tech companies aren't price sensitive.
That doesn't mean the average engineer can easily finagle a drastically out-of-band salary, but the bands are already exceptionally high and grow faster than inflation in the aggregate.
There is less risk in moving to a place with more options when the current one falls through.
I also say to the main point of the articles: rents have a lot of room to grow under the current logic. City centers simply get voided of average earning people and replaced by high earning ones. As soon as they are the average earners, even more wealthy people move in. Also with the rents, salaries go up, so people have the possibility to pay for their accommodation again. While in Berlin you could easily live with 40.000 Dollar/year, you'll probably have to add another 60.000 so people are at least somehow able to move to work for your new shiny SV company.