Or the costs are driving potential founders out of founding. If you double your monthly costs, you double the amount you need to save in order to have enough runway to "two guys in a basement" your way into enough traction for funding. Plus you need more funding for getting enough roadway for employees and an actual business.

Maybe I'm far more mobile than others, but I'm really surprised that there isn't a wave of people trying to poach childless engineers into moving 1-4 hours out of SF to set up shop. Reno, in particular - it's 4 hours out, has actually reasonable real estate prices, and no state income tax. Maybe getting funding requires the VCs to make the trip to your office, and you're not able to just have your leadership make the trip out to SF?

If that was viable, people would move to Tracy or Stockton or Davis which are nearer to SF than Reno and cheaper. That's not how things work though.

But why isn't it viable? I don't understand.

VC's like their investments nearby and very few people would choose to live in those cities, in particular childless engineers.

It's the same reason Twitter, even though they threatened to move their office from SF to Brisbane several years ago, absolutely would never have followed through with it. Too many of their employees would have quit immediately, and we're talking about a town that's 20 minutes away, let alone 2 hours.

Too add to that, repeat founders often live in the area where they start their companies. Also, if you want to poach away a top talent in a niche area, chances are they are unlikely to move far from where they are currently leaving. Example, easier for Tesla to poach from Apple vs. GM to poach from Apple

Once you have a social circle is hard to move. Not many People are open to completely uprooting to an area where they have zero friends or family

Nevada is too different, the combination of non-enforceable non-competes and the nice weather can be duplicated elsewhere in CA easiest, and this is happening. If your state has big corporate HQs forget about getting non-enforceable non-competes.

No one is forcing you as a company to make employees sign a non-compete, enforceable or otherwise. I've generally lived in states where non-competes are enforceable and I've signed exactly one.

I think they're speaking from the perspective of founders who, until they start the company, do have day jobs somewhere. In California, there's no issue, but in other states with enforceable non-competes, that can be a pretty big hinderance to starting the company.

It's not about you or a company, once the market tolerates non-competes, employers will use them for any sort of a knowledge-based position. People will shift jobs less, wages will lower, followed by other economic effects of slightly lower wages.

Wouldn't CA companies/employees not get pushed to sign unenforceable non-competes (because they're in CA, so it doesn't help the employer any, so they don't push for it in contracts)? So if you're poaching from CA anyhow...

It's the employees' choice, take a lifetime of lower earnings or not, everything else being the same.

I find normally its the childless engineers who don't want to move out the city, because that's where the fun is at. I think that's why this isn't happening.

The article already addressed this. Real estate has no impact, since Palo Alto, which is equally expensive, has seen dramatic increase in funding. The trend is really random. Tomorrow Uber will raise $5bn and will all come up with a different explanation

I'm no local, but isn't it much easier to get to Palo Alto from places with lower rent than to SF?

Not really- you have to drive or live along a single train line (with no places with rent significantly lower than SF, really)

Or the hour+ commute. The opportunity cost of not only that much time 5 days a week, but the tiredness, delays, and other hassles that are involved, are just something you avoid if you have the leverage.

But that hypothesis doesn't let the author post a click-bait title/article!