The world as novelty to Silicon Valley

posted by Jeff | Thursday, March 8, 2018, 11:24 PM | comments: 0

I read with amusement New York Times piece about a tour of Silicon Valley folks traveling around the Midwest and finding it was cheaper and ripe with opportunity in terms of real estate and talent. It's amusing because everything about the Internet is rooted in the idea that there is no geography, and the barrier to entry is less expensive than ever. So why is there this whole system of venture capital and throwing money at founders who throw free snacks and dry cleaning at their people in the most expensive real estate market ever? (That was rhetorical, but the answer is because people are more interested in unicorn fortune making exit events than they are sustainable businesses.)

I finally got to visit the valley in November, when I went with part of my team to do a hackathon at Intuit headquarters. We drove around parts of Menlo Park, Palo Alto and Mountain View. It's a nice area. It reminds me of the Seattle suburbs and maybe the suburbs of Columbus, Ohio. It's staggering though that you'll pay more than $1,800 per square foot for a house in Palo Alto. For reference, that's 15 times what you'll pay here in the burbs of Orlando, for a house that wasn't built 50 years ago. If you're a software developer, your salary will only be about 35% higher in the valley versus here, so draw whatever quality of life conclusions you want.

Still, there's this inefficient system of venture capitalists putting money into things that mostly fail, and mostly have no lasting impact on the world. It strikes me as wasteful. I've worked for two product-oriented startups, and one was funded by related businesses, the second is completely bootstrapped. More importantly, the second is a completely distributed company, so there's no real estate to fund and the talent can live quite literally anywhere. Do you want to pay 35% more for your engineers than you would elsewhere? Hire them in the valley. Heck, interns apparently get paid $80k there.

I've said it before, but the percentage of technology work that takes place in the valley versus the rest of the world is relatively small. Assuming for a minute that you really need top tier talent to do some kind of really hard work, why do they need to live there? I worked for a big "classic" technology company in Seattle, and that was about the ceiling for my tolerance in housing expense.

I admit, there's a certain vibe about places where a bunch of technologically inclined people live and work. I felt it in Redmond and even on the far east side where I lived. But from a purely economic standpoint, it's expensive with little gain if you're a company setting up shop. Of the almost-five years I've lived in Orange County, Florida, four of those years I worked remotely. The last year has been with a brilliant startup, with great people in five states, and before that a Tampa-based company that is overflowing with really excellent, smart people located all over the country. Both are growing, sustainable businesses. And hey, we even have beard-wearing, single-speed bike riding, IPA-drinking hipsters here!

Location is something you say three times when you're opening a retail business, but if it's a technology company, meh, it shouldn't matter.


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