Silicon Valley Isn't the Only Town in the Game

UPDATE: 03/05/16 This WSJ article says SV is experiencing loss of residents.

It has long seemed ridiculous to me that infotech is so over-concentrated in Silicon Valley - San Francisco. Those areas have gone from outrageously expensive to insanely expensive. Terrible places, even for elite tech workers, to try to afford to raise a family. And lots of drawbacks for employers--high rents, high salaries, job-hopping. I know, I know, there are the crucial benefits of concentration and proximity to venture capital. Still.

So I was heartened by this NPR report, featuring an ex-SVer, saying similar things:

"[Jerry Davis'] advice for young people: Forget the Bay Area.

'You spend a whole lot of your time on freeways. It's expensive, it's annoying. The weather is beautiful, but basically the Bay Area has turned into Los Angeles,' Davis says. 'All the things that people hate about LA are now true of the Bay Area.' "

And the home prices are worse. The median price in Silicon Valley now tops $1 million. In Detroit, it's $38,000.

That's appealing to Aaron Mason, a 36-year-old San Franciscan. "Having a yard, having a garden, starting a family, those kinds of things," says Mason, imagining a possible move to Michigan.

Davis praises Detroit as an alternative. Myself, I like Minneapolis-St. Paul and Bloomington, IN. But most important is for the idea of other locations for infotech innovation to take hold.

Google Bus System

Google is running its own bus system. Very interesting stuff. Of course most companies would never even think of doing this, but if they did, fleetingly, entertain the suggestion, they would instantly dismiss it as having nothing to do with their core competency. Google's ceaseless innovation mindset, not confined to products, but extending to process and culture, reminds me of Wal-Mart and Toyota.

As much as it is a generous fringe benefit or an environmental gesture, the shuttle program is a competitive weapon in Silicon Valley’s recruiting wars.

A secondary advantage a Google has is the "Disney effect" of providing a pleasant, upscale, "people like us" ridership, thereby mitigating one hidden objection to mass transit. No risk of having gun-toting, anti-social co-riders.

When I was at Otis Elevator 20 years ago (1988), it hadn't been so long since full-time working mothers had become a totally mainstream phenomenon. Child-care was a big issue. I remember at some kind of employee HR meeting, someone noted that it would be really convenient to have on-site child care. HR, in a somewhat typically condescending way, responded by first agreeing, in a pseudo-empathetic way, that yes, that would be nice; but, "you know, we're just not in the child-care business", so it can't be done. Within 5 years, on-site day-care started to become somewhat common. Not run by the employers, but by co-located out-sourcers.

EXCERPT:

In Silicon Valley, a region known for some of the worst traffic in the nation, Google, the Internet search engine giant and online advertising behemoth, has turned itself into Google, the mass transit operator. Its aim is to make commuting painless for its pampered workers — and keep attracting new recruits in a notoriously competitive market for top engineering talent.

And Google can get a couple of extra hours of work out of employees who would otherwise be behind the wheel of a car.

The company now ferries about 1,200 employees to and from Google daily — nearly one-fourth of its local work force — aboard 32 shuttle buses equipped with comfortable leather seats and wireless Internet access.
...
As much as it is a generous fringe benefit or an environmental gesture, the shuttle program is a competitive weapon in Silicon Valley’s recruiting wars.

Building distributed tech hubs to drive economic prosperity

Devolution of infotech in the US away from Silicon Valley/San Francisco is a topic I've been sporadically obsessed with for a while. So absurdly ironic that the industry which makes things virtual has such a strong value on physical centralization. This article covers the issue, hoping that Covid-driven remote work arrangements break the cycle. I sure hope so...though I do remember a similar sentiment at the dawn of the internet, but perhaps we weren't ready then. 

So many benefits to geographical diversification:

• Ability of employees to live where they want--both in a different part of the metro from the office, and different metro entirely (or not in a metro per se).
• Diffusion of entrepreneurship, wealth and concommitant benefits to other parts of the country--some of which really could use it.
• Optimization of the labor market, both for employees and employers
• Savings to employers on the high cost of office space. Savings to employees on 
• Savings of time can benefit employees and employers. As a 10+ year full-time-telecommuter, that was my rough philosophy--I get half the time saved, employer gets half the time saved. 
• Nuances, such as the fact that (salaried, mostly) employees can adjust working hours to match their personal productiivty. Even for jobs that have core hours, you can decide whether to "stay late" to finish a backlog, or come back to it when you get a second wind at 10:00pm.

Choking on California

For years I've bemoaned the fact that that the IT industry is so concentrated in Silicon Valley. Always surprised at the irony--the very industry that makes "virtual" possible is so stubbornly invested in physical co-location, despite extremely high costs to that arrangement. Happy to see another writer making this point.

Groupon Follow-Up

Going out on a limb a little bit...I'll predict that 3 years from now, Groupon will rue the day they turned down Google's $5-6 billion offer. 

ACSOI, mentioned nearly 50 times in the document, showed that Groupon made $82 million in the first quarter of the year. But ACSOI left out the hundreds of millions of dollars associated with marketing the service, acquiring other businesses, and bringing in new subscribers. So it left out very real costs of growth—not one-off investments or unusual charges, but expenditures core to the company's expanding business.

Investors noticed—and howled. The Wall Street Journal termed the filing "magic." Tech blogs declared the company a sham. Many commentators hearkened back to the worst days of the late-1990s tech bubble, when out-of-nowhere dot-coms with cloudy revenue streams got billions from IPO-hungry investors. Forbes pointed to one especially salient piece of commentary from 1998. "Certain internet CFOs are pushing investors to look at EBITDAM," Silicon Valley investor Bill Gurley wrote. "The 'M' represents marketing, and is an attempt to get Wall Street to ignore what has become the single biggest expenditure for internet startups. This only makes sense if you truly believe that marketing costs will one day go away, which should be considered unlikely. Perhaps we should make it easier and skip straight to EBE (earnings before expenses)."

Silicon Valley Overrated and Certainly Overpriced

Finally!

Some Startups Choosing LA over SV

Los Angeles is really not the alternative location I had in mind when I wished for more startup activity outside of Silicon Valley!