Complaining about dev teams moving to texas is like complaining about goods being manufactured in China. It's a net positive for the whole world, plus competition will improve the Vally and SF just as much as it improves individual companies and products.
As to the latter criterion: consider the symbolism of Aricebo collapsing in an uncontrolled fashion on the same day a Chinese spacecraft departed te moon (and a Japanese one prepared to deliver its second sample of an extraterrestrial sample). When the Bush administration restricted stem cell research, China and Singapore picked up the slack. Etc.
In this case exporting technical work to states like Texas not only may open up opportunities for more people to do technical work but can help them as oil related revenues decline.
The world is not zero sum and to me exporting a job to China, India, Romania or Texas as are equivalently positive.
He’ll do you object to Apple building a chip development team in San Diego?
Though, I personally don't think these companies moving to Texas matters that much, but if there was a mass migration it could certainly shake things up in ways that some may appreciate and some dislike.
Oracle, HPE, and (not moving, but might as well add) IBM have long made their money with legal and financial shenanigans anyways, they are exactly what we should call zombie companies.
It's a much different type of employee than you'd have at somewhere like Netflix or Google, though.
Plus his rockets are there, so that's a perk.
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.
I'm willing and even happy to pay taxes for commensurate benefits. I don't really feel like I get that in CA. It's like an extremely inefficient engine.
Ironically there is one way in which the tax benefits are ABSURDLY generous - unemployment. When I saw how much that returned I was staggered. Perhaps I'm in an income sweet spot, but when I calculated it, it was far more assistance than I would have expected from a non-French government.
I'm aware of course that state tax sits on top of Federal tax, but when you factor into the equation what responsibilities are Federal and not state, it looks astonishingly poorly distributed.
I'm not really sure how the high cost of living is anything other than a milestone around the area's neck. I've lived in v-high COL areas, but that has always gone hand in hand with extreme density, which could easily be viewed at as a simple tax for the provision of world-class services. Somehow I'm out here in suburbia paying Megacity rates.
Really? It's almost the end of 2020 and California hasn't passed a single tax increase. Let's look at 2020 ballot measures:
* Requires commercial and industrial properties to be taxed based on market value and dedicates revenue? REJECTED
Source: https://ballotpedia.org/California_2020_ballot_propositions
And legislation?
* AB 2088 - Wealth Tax? REJECTED
* AB 1253 - Tax rate increase on taxpayers making over $1M? REJECTED
* AB 398 - Headcount tax on businesses with 500+ employees? REJECTED
Source: https://blog.armaninollp.com/tax/2020/09/08/ca-legislative-s...
FWIW, Democrats have held a supermajority (>= 2/3) in both the House and Senate all year long.
Prop 19 involves both additional exemptions and limitations on existing exemptions from full-value assessment, but is projected on balance to be a net increase, and is definitely an increase for some taxpayers, and it passed. So, while I agree with your general point, this claim is technically overstated.
I realize that not everyone in California votes and thinks the same. Those leaving the state might not be reflective of the voting patterns of the state as a whole but doubt this migration out of California is impactless on the places those leaving go to.
People just never learn the fundamentals of economics and how those decisions lead to economic hardship for so many, that's the real problem.
Maybe. Or they know if they buy today and make it hard to build, they can go somewhere new with a big pile of money later. They got theirs, and they don't care about the others.
In actually, it's a big and heterogeneous group of people. I expect some never learned, as you say. Some are jerks, as I described. Some just don't think deeply enough about their policy choices, and some think there are post-Econ 101 reasons why the Econ 101 dynamics (while important) aren't what dominate.
And of course there are some of us Californians, staying and leaving, who do think it should be easier to build.
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.
Word.
Peter Thiel had something to say about this - basically, he said that so much of the VC money that a start up would raise would go to rent that it no longer makes sense to start a company in the Bay Area.
And those garages in Austin, Nashville, Charlotte, Railegh-Durham, and basically every where else are starting to look very attractive to savvy start up founders. Especially under the WFH circumstances bc of covid.
The resource metric that really counts is talent. That probably means there will be more of NorCal, BosWash, Texas, and Rust Belt all getting involved and contributing whenever there is a truly significant effort.
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.
Yes, but they care about cost. And the reason that everything is so expensive in California is regulation and taxes. Acting like these are separate things is not a valid assumption.
The North Coast (Eureka, Crescent City) and Central Valley (Chico, Fresno, Modesto, Bakersfield) are under the same regulatory and tax regime as the rest of California. How expensive is Eureka? Houses average $300K [1]. Restaurant meals are about $10-12. [2][3] How expensive is Bakersfield? Houses are about $250K [4], meals are about $11 [5]. In other words, they're not much different from the rest of America.
I think that much of the contemporary political narrative gets the causality wrong. The Bay Area and LA are expensive because they are home to global monopolies that funnel cash from all over the world into a small region. There's not much land available in these metros, there's a lot of money floating around, there are a lot of people who want to move in to get a piece of this money, and so they bid up the prices of scarce goods. Regulation comes later, to curb the power imbalances from having corporations with more resources than many nation-states, and taxes come so that the state can get a piece of the huge cash flows coming in.
But the primary driver of cost-of-living is being the sink for the disposable income of 7B consumers. Eureka's primary industry is timber, and Bakersfield's is oil. Both of these are commodity markets where the money goes elsewhere in the value chain. Not so with tech and entertainment.
[1] https://www.zillow.com/homes/Eureka,-CA_rb/
[2] http://www.brickandfirebistro.com/menu-.html
[3] https://www.humboldtsmokehouse.com/menu
[4] https://www.zillow.com/homes/Bakersfield,-CA_rb/
[5] https://www.yelp.com/menu/locale-farm-to-table-eatery-bakers...
You know what they don't have, insane zoning restrictions that prevent housing. For example, the Houston MSA, which has almost no zoning restrictions is within 90% of the population (and 80% population density) of the Bay Area 9 county MSA with an average house price of... $249K at 2,000 sq ft.
And there's a reason I left Bakersfield and moved to Austin. It's because PG&E energy prices are benchmarked at Bay Area temperatures, and they have progressive pricing. Because I had a server rack in a garage in super hot (110+ F) summers, I was paying over $600 a month in energy bills in a tiny 1000 sq foot house in a ghetto. If I had lived in a 4 bedroom house, I would have paid less in energy.
And just on a secondary, personal note. Houses in Houston are way, way nicer than houses in San Jose, Oakland, San Francisco etc. This is one of those things where I know that people have just not experienced living in other places when I hear quality arguments around housing, food, or amenities.
It's just not that nice in San Francisco. Seriously. The food is just downright bad in quality and variety compared to even Austin, much less Houston. The housing stock is dreadful. Service is slow. The quality of things in Houston is better than the Bay Area, irrespective of cost.
My sister lives in Houston (well, Sugarland technically), so I'm well acquainted with the metro area. It's a very different lifestyle. The housing stock in the Bay Area is uniquely terrible - most of it is 3BR Eichlers that were mass-produced in the 60s. But people don't spend all that much time indoors. Pre-COVID, my wife and I were out every weekend to museums, hiking, the beach, picnics, restaurants, etc. There are 4 parks within walking distance of my home, 2 commercial downtowns, then the mountains are 5 minutes away, the beach 20, SF 30, SJC 30, the Bay 5, etc. And the weather cooperates - it's a consistent 70 and sunny for 8 months out of the year. Meanwhile, my sister's place is 50% larger for a quarter of the price - but it better be, because it's 100 degrees with sweltering humidity for 8 months out of the year. They need to take a highway onramp to get anywhere. They have no friends, because everyone they meet is so far away. Downtown Houston is a little different (my sister went to Rice, Rice Village is pretty nice), but also a completely different story in terms of housing prices - you start seeing million dollar homes once you get to the downtown areas of Houston.
Different strokes for different folks. We could've purchased my sister's house for cash at the time they bought it. I floated the idea by my wife, and she was like "But then we'd have to live in Houston!"
Headquartered in Seattle, Washington. Not California.
My tax burden has certainly lowered since moving from CA to WA, kinda miss the weather though.
This isn't true at all. The effect of taxes compound just like anything else. E.g. if Warren Buffet had originally incorporated Berkshire as a Bermuda-based reinsurer, he'd be worth over $400 billion today. If he didn't structure it as an insurer at all he'd only be worth $20 billion.
Tax savings compound at whatever the long-term ROE of the corporate entity. Therefore tax arbitrage is most important for hyper growth companies.
Nobody is saying they don’t have any upside, but as always it’s the opportunity cost that kills you.
Point taken about diminishing marginal returns. But you can see that even taking that into account, the impact of lax tax planning for shareholders is humongous. (Plus many startups are in winner-take-all markets, and effectively have increasing returns to scale.)
The opportunity cost is real. Tax arbitrage will take some amount of bandwidth. But it often takes much less effort to raise cash by minimizing taxes than it does to raise additional equity funding. The former can mostly be done by the CFO in the background, whereas the latter requires the attention of the founders.
Further it assumes your capital constrained, which might apply to some fast growing business but if your the magical unicorn of a profitable fast growing growing company then capital is the easiest problem to solve. Worst case you might trade a little extra equity, but again that’s linear dilution often based on growth at the current rate.
PS: If your growing 10% per month it takes 6 years to go from 1 million per year in revenue to 1 billion per year in revenue. It’s very fast, but hardly instantaneous. Keeping that up for 12 years means 1 trillion in revenue per year which is extremely rare. Growth will slow eventually, and when it does there are a huge number of things to optimize.
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.
It takes MBAs to do this sort of work, and while it isn't for me, I don't think it's the worst business model out there.
My friends have only recently graduated from their MBAs. Will be interesting to see if their networks help.
Which is why continental Europe has so many fast-growing tech companies.
I might add, the size of the Austin gigafactory is larger than the size of all Tesla factories in the world combined [1].
I will leave you to do the math if Tesla leaving CA isn't a possibility.
[1] https://electrek.co/2020/07/30/tesla-gigafactory-texas-crazy...
If you look at the planning documents you'll see that the planned footprint for the texas factory is probably a similar size to the plans for the rest of their "giga" factories. https://electrek.co/wp-content/uploads/sites/3/2020/09/Tesla...
These are manufacturing jobs. It is not exactly like California has a better environment for that than Texas.
Numbers from the National Association of Manufacturers:
California: $316.7b manufacturing output, 10.67% of state product, 7.72% of employment. [1]
Texas: $230.45b manufacturing output, 12.98% of state product, 7.04% of employment. [2]
So really, it doesn't seem like one state is particularly better than the other for manufacturing by the numbers.
1: https://www.nam.org/state-manufacturing-data/2019-california...
2: https://www.nam.org/state-manufacturing-data/2019-texas-manu...
And Wall Street was great in New York until they moved to Florida, North Carolina, and Hawaii... and Oil headquarters were huge in California until they moved to Texas... and Big Auto was big in Michigan until they moved to the South and on and on.
What is so mind-boggling about all these people not seeing the trends is acting like what is is what has to be. There's no divine right for these companies to remain in California. It has a terrible business climate. Were it not for oil, agriculture, and defense in parts of CA the Bay Area loathes, there would be very little actual "stuff" produced in California. Software has no geographic attachment to the land like ag or oil, so there's no reason they have to be forced to the Central Valley. They can just leave.
Also a lot of bigger, tech friendly cities -- Dallas, Austin, and Houston is poised to overtake Chicago as the 3rd largest city in the US within a decade or two.
Kanasas may be similar in terms of taxes and political climate (unions) but all its really got going for it is empty space. Ditto for much of the rest of the Midwest.
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.
What happened to good infrastructure, education, safety, health care, raise the federal minimum wage etc?
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.
[0]https://money.com/walmart-stores-closing-small-towns
[1]https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...
[2]https://www.macrotrends.net/stocks/charts/WMT/walmart/net-in...
A lot of small businesses are bad. Bad hours, bad selection of products, bad customer service, bad prices.
They’re often held up in some idyllic form, but it’s clear from the behavior of their own customers that Walmart provides these customers more value.
The local grocery store is the worst excuse for a grocery store I've ever seen. There are only a handful of fresh vegetable options, including $1/lb bananas and $5/head iceberg lettuce. Everything is overpriced and there are very few healthy food options. Apparently a lot of people due to transportation limitations can ONLY shop at this store (or Dollar General), which is expensive and mostly has unhealthy options. There are talks of a Walmart coming in, and I have no doubt it would be a huge quality of life improvements for folks in the town.
It’s not very good for employees if your small business customers don’t like you and as a result you have to close.
A local car dealership may be great for its employees by ripping off customers and generally being a terrible experience, but I won’t have much sympathy when direct to consumer sales come and wipe them out.
Small businesses need to offer something of value to customers that’s real and differentiated as opposed to a narrative of their own self interest. In short - they have to be competitive. There’s no reason they can’t do this while also being good to employees.
A lot of the complaints I see come across as sour grapes and trying to legislate their existence rather than just being better and caring about what customers want.
At its best capitalism is a force for aligning value and interests between provider and customer. On net this leads to more efficient distribution and better outcomes for the most people.
At its worst it’s rent seeking and leveraging local power over people without choice. Small businesses often fall on that side of the spectrum to me.
It just so happens that in business, much of that inefficiency is the number of employees required per unit of economic activity. Ultimately all employees are an unwanted cost to the consumer. Small businesses have fewer options to avoid that cost, so they account for more employment.
I remember reading articles 10-15 years ago about how the minute someone scanned an item at the cash register, Walmart's inventory systems, which knew what product was on what shelf and in what quantity, would automatically order refills from the supplier.
They have always been highly innovative and tech savvy when it comes to the supply chain, at least for physical retail.
I wish this were the case, but anyone thats tried to do online grocery shopping at walmart knows that a lot of stuff shows out of stock, but is actually there in real life.
Forgot about that and Walmart is an easy target for a lot of things :)
Innovation in process engineering and operations isn't really discussed much here, but it's almost assuredly had a much greater impact on keeping inflation at bay (helping the median American's salary stretch a little farther) than anything Amazon has ever done.
I would be more in the mood to praise Oracle for this development, had they not shown how far they could go to hurt Java's community/ecosystem just to squeeze a penny out of it.
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?
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.
...
(Reducing a complex ecosystem to a pithy statement usually reveals more of your own personal projection, rather than positively contribute to conversations.)
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.