Could another city lure Silicon Valley away from where it is now?

1772 · December 17th, 2011, 12:27 AM

Here's a crazy thought, but it stuck on me.

If a east/south coast city with very deep pockets (I know, they dont but hear me out) would want to move Silicon Valley to their city; would this be possible?

Say Miami or Houston all of a sudden offered the top 200 SV companies new HQ's, half their taxes and a shiny new and great technological university next to it to get new talent; would they fall for it?

Or are they mentally stuck to the Bay Area forever?

What do you think?

mhays · December 17th, 2011, 05:45 AM

No, for a bunch of reasons. Moving would wreak havoc on every company, even if everyone went along with it. Many if not the large majority of every company's staff would stay in San Francisco, in part because their homes would be underwater. Companies would still have to pay their current leases and/or own their current offices, with values dropping insanely overnight, and cheap leases available for anyone wanting to move. The labor market in SF would be phenomenal. It would be impossible to create the right university programs overnight, and to create the right synergies in anything short of many years. The fatal flaws are everywhere, just a few listed here. It's inconceivable that any city could create the facilities for that many companies in a short period.

A city that plays its cards right and invests a billion or two might enter the second tier. Or a second tier city could move to 2a or even 1b. Even then it would be tough. The competition is always fierce.

Suburbanist · December 19th, 2011, 01:44 AM

Certain things are harder to move out, though it would be feasible to create secondary centers.

By the way, in the 1970s many expected a center for the the nascent IT industry to be established in Connecticut or Rhode Island - close to many universities in the area, business-friendly small states, the allure of being not far from New York etc.

The true remarkable story is how the massive investment in universities in the UC system, plus the private ones (USC, Stanford etc.), plus an environment seen as less aristocratic than the Northeast and more business friendly than the Midwest created Silicon Valley where it currently was.

I wished, though (just that, I personal wish), Silicon Valley had been established in the middle of the Rockies, booming a city like gambling did to Las Vegas. It would be cool to have all that activity around, say, Phoenix or Idaho Falls or Denver.

Zach759 · December 19th, 2011, 07:13 AM

^ Colorado Springs

***desertpunk*** · December 19th, 2011, 07:17 AM

Dublin has lured some of these firms in. But only for tax evasion purposes.

***earthJoker*** · December 21st, 2011, 10:03 PM

Quote:

Originally Posted by desertpunk

Dublin has lured some of these firms in. But only for tax evasion purposes.

Is there really a lot of R&D going on there? I thought it's mostly administration there.

Restless · December 21st, 2011, 11:44 PM

Quote:

Originally Posted by earthJoker

Is there really a lot of R&D going on there? I thought it's mostly administration there.

Intel have one of their fabs near Dublin, but there's not much else in the way of hardware companies. The software companies are registered in Dublin for tax purposes, but the R&D hubs are mostly in the UK or elsewhere in Europe.

And if you look at software/hardware/wireless/semiconductor research, Beijing Zhongguancun Science Park has about 1500+ technology R&D centres alone. I'd say it is 2nd only to the Valley in terms of the R&D being conducted there.

Zach759 · December 19th, 2011, 07:22 AM

I saw that on 60 minutes. They'd have Headquarters there but no actual heads of companies or other workers for that matter.

Restless · December 19th, 2011, 10:31 AM

There are just too many advantages to being in Silicon Valley, because it has a large cluster of:

1. Venture Capital firms with long experience of the technology sector
2. Very large hardware/software companies
3. Very small hardware/software companies
4. A world-class university where everyone aspires to start their own company
5. Lots of rich individual angel investors with experience
6. A very large internal market of these companies.

Talbot · December 20th, 2011, 06:46 AM

I have always heard Austin, atleast here in Texas, referred to and wanting to be the next Silicon Valley. While that would be cool for the State of Texas, I don't believe Silicon Valley will be "moving" any time soon.

mhays · December 20th, 2011, 07:25 AM

Lots of "next Silicon Valleys" out there. They're (we're) trying to keep/get good second tier status.

Seattle is another. Boston is another.

PS, Amazon is growing at a phenomenal pace on the edge of Downtown Seattle, sucking up a couple million more square feet in recent years. Microsoft has a payroll that must be in the $4 billion range per year locally in salary alone, rivaling the local Boeing payroll. That's solid second tier.

bennyboo · December 20th, 2011, 07:35 AM

seattles and portlands tech companies id say have the best examples of possible new silicon valleys. portlands already has a nicknamed area called silicon forest. also i am seeing lots of tech companies moving into seattle; mostly google and facebook.

Restless · December 20th, 2011, 10:30 AM

I can see Beijing Zhongguancun becoming a genuine rival/partner to Silicon Valley one day.

Even today, it's the only other place in the world where there are multi-billion dollar technology companies being created on a regular basis.
Particularly as China is still only midway through the technology adoption cycle.

sweet-d · December 20th, 2011, 09:35 PM

Like other people I also think Seattle, Portland, and maybe Austin. But Seattle could definetly lure more start ups it has so many pluses to it. Now as for Austin it could also lure start ups considering Texas has no state income tax, cheaper property prices, and the university of texas.

mongozx · December 21st, 2011, 04:59 AM

Quote:

Originally Posted by 1772

Here's a crazy thought, but it stuck on me.

If a east/south coast city with very deep pockets (I know, they dont but hear me out) would want to move Silicon Valley to their city; would this be possible?

Say Miami or Houston all of a sudden offered the top 200 SV companies new HQ's, half their taxes and a shiny new and great technological university next to it to get new talent; would they fall for it?

Or are they mentally stuck to the Bay Area forever?

What do you think?

If these top 200 SV companies cared about paying less taxes and cheap this and cheap that they would have all moved to Bismarck, Wyoming decades ago. The reasons they pay top dollar to keep a Silicon Valley address is because of the unique synergy between entrepreneurs, money and talent you can't find anywhere else. Tech companies want to be where the action is to maintain that innovative edge.

1772 · December 21st, 2011, 11:20 PM

Great getting the discussion going!

pesto · December 22nd, 2011, 06:51 PM

Some interesting points.

First, the likely scenario is that many cities will develop small to medium sized tech communities. They can really be anywhere meeting a few minimum criteria.

Silicon Valley already has thinned out for manufacturing and basic programming; this can be done much more cheaply in India, China, etc. Conversely, India and China are way down the list of possible places to do cutting-edge research or administration, for reasons that vary but include a culture of following rules, lax protection of IP, government intervention and bullying, etc. (this is all more than adequately documented in the press and internet and is well understood by local IT people).

SV has no unusual advantages. But it's a perferctly pleasant place where you can live in beautiful suburbs, with exellent schools and big city amenities nearby; the weather is mild; and the laws are protective of IP, financing and entrepreneurship. Great for having an administrative HQ and a few senior technical, financial and marketing people. Other cities are fine too, but why would everyone just uproot and move?

Taxes are not very material since only a tiny percentage of total activities are in California. The bulk of the work is done in low-tax or tax holiday jurisdictions. Cost of doing business IS material, which is why basic stuff goes to Texas or leaves the country.

So the question for other cities is why would they all uproot and move somewhere else? And why would it be just one other place rather than to several cities?

mhays · December 23rd, 2011, 06:03 PM

Sometimes, cheap power is the #1 key. That's why server farms and wheat farms coexist in the Columbia River basin. I think it's also related to Portland's chip industry.

As for picking up and moving, it's hard to imagine that on a large scale at the leadership level. Startups can generally relocate far more easily, and often head for SF to be closer to capital and talent. Some might even try for the low-expense thing, but aside from call centers etc. (arguably "tech") there hasn't been a ton of success in most tech sectors with that approach...

The better route appears to be to have a company start in your city, fertilized by availability of talent. Talent depends on being a desirable place to recruit, and having local universities with good programs. Austin lucked out with Dell, and Seattle lucked out with Microsoft and Amazon. Boston too though the companies I'm thinking of are older-generation and I'm forgetting newer ones. Plus, all the good Tier 2s have long lists of additional tech companies, most of which are home grown, generally with strength nodes....being Tier 2 probably involves being #1 in a few subcategories. Also, Tier 2s might have strong satellite offices of firms based elsewhere.

December 19th, 2011, 01:44 AM	#3
Suburbanist SPQR Join Date: Dec 2009 Posts: 15,002 Likes (Received): 1163	Certain things are harder to move out, though it would be feasible to create secondary centers. By the way, in the 1970s many expected a center for the the nascent IT industry to be established in Connecticut or Rhode Island - close to many universities in the area, business-friendly small states, the allure of being not far from New York etc. The true remarkable story is how the massive investment in universities in the UC system, plus the private ones (USC, Stanford etc.), plus an environment seen as less aristocratic than the Northeast and more business friendly than the Midwest created Silicon Valley where it currently was. I wished, though (just that, I personal wish), Silicon Valley had been established in the middle of the Rockies, booming a city like gambling did to Las Vegas. It would be cool to have all that activity around, say, Phoenix or Idaho Falls or Denver. __________________ Dream of the year: a city without streets.

December 19th, 2011, 07:17 AM	#5
*desertpunk* Whiskey Tango Foxtrot Join Date: Oct 2009 Location: ELP ~ ABQ Posts: 30,152 Likes (Received): 1844	Dublin has lured some of these firms in. But only for tax evasion purposes. __________________ We are floating in space...

December 22nd, 2011, 06:51 PM	#17
pesto Registered User Join Date: Jun 2009 Posts: 3,265 Likes (Received): 30	Some interesting points. First, the likely scenario is that many cities will develop small to medium sized tech communities. They can really be anywhere meeting a few minimum criteria. Silicon Valley already has thinned out for manufacturing and basic programming; this can be done much more cheaply in India, China, etc. Conversely, India and China are way down the list of possible places to do cutting-edge research or administration, for reasons that vary but include a culture of following rules, lax protection of IP, government intervention and bullying, etc. (this is all more than adequately documented in the press and internet and is well understood by local IT people). SV has no unusual advantages. But it's a perferctly pleasant place where you can live in beautiful suburbs, with exellent schools and big city amenities nearby; the weather is mild; and the laws are protective of IP, financing and entrepreneurship. Great for having an administrative HQ and a few senior technical, financial and marketing people. Other cities are fine too, but why would everyone just uproot and move? Taxes are not very material since only a tiny percentage of total activities are in California. The bulk of the work is done in low-tax or tax holiday jurisdictions. Cost of doing business IS material, which is why basic stuff goes to Texas or leaves the country. So the question for other cities is why would they all uproot and move somewhere else? And why would it be just one other place rather than to several cities? Last edited by pesto; December 22nd, 2011 at 08:06 PM.

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December 17th, 2011, 12:27 AM	#1
1772 Registered User Join Date: Aug 2009 Posts: 2,236 Likes (Received): 36	Could another city lure Silicon Valley away from where it is now? Here's a crazy thought, but it stuck on me. If a east/south coast city with very deep pockets (I know, they dont but hear me out) would want to move Silicon Valley to their city; would this be possible? Say Miami or Houston all of a sudden offered the top 200 SV companies new HQ's, half their taxes and a shiny new and great technological university next to it to get new talent; would they fall for it? Or are they mentally stuck to the Bay Area forever? What do you think?

December 17th, 2011, 05:45 AM	#2
mhays Journeyman Join Date: Sep 2002 Location: Seattle Posts: 8,470 Likes (Received): 125	No, for a bunch of reasons. Moving would wreak havoc on every company, even if everyone went along with it. Many if not the large majority of every company's staff would stay in San Francisco, in part because their homes would be underwater. Companies would still have to pay their current leases and/or own their current offices, with values dropping insanely overnight, and cheap leases available for anyone wanting to move. The labor market in SF would be phenomenal. It would be impossible to create the right university programs overnight, and to create the right synergies in anything short of many years. The fatal flaws are everywhere, just a few listed here. It's inconceivable that any city could create the facilities for that many companies in a short period. A city that plays its cards right and invests a billion or two might enter the second tier. Or a second tier city could move to 2a or even 1b. Even then it would be tough. The competition is always fierce.

December 19th, 2011, 07:13 AM	#4
Zach759 Who? Join Date: May 2010 Location: Chicago Posts: 640 Likes (Received): 3	^ Colorado Springs

December 19th, 2011, 07:22 AM	#8
Zach759 Who? Join Date: May 2010 Location: Chicago Posts: 640 Likes (Received): 3	I saw that on 60 minutes. They'd have Headquarters there but no actual heads of companies or other workers for that matter.

December 19th, 2011, 10:31 AM	#9
Restless Registered User Join Date: Oct 2009 Location: London Posts: 1,872 Likes (Received): 32	There are just too many advantages to being in Silicon Valley, because it has a large cluster of: 1. Venture Capital firms with long experience of the technology sector 2. Very large hardware/software companies 3. Very small hardware/software companies 4. A world-class university where everyone aspires to start their own company 5. Lots of rich individual angel investors with experience 6. A very large internal market of these companies.

December 20th, 2011, 06:46 AM	#10
Talbot 3rd Coast Join Date: Jul 2004 Location: Houston Posts: 1,127 Likes (Received): 2	I have always heard Austin, atleast here in Texas, referred to and wanting to be the next Silicon Valley. While that would be cool for the State of Texas, I don't believe Silicon Valley will be "moving" any time soon.

December 20th, 2011, 07:25 AM	#11
mhays Journeyman Join Date: Sep 2002 Location: Seattle Posts: 8,470 Likes (Received): 125	Lots of "next Silicon Valleys" out there. They're (we're) trying to keep/get good second tier status. Seattle is another. Boston is another. PS, Amazon is growing at a phenomenal pace on the edge of Downtown Seattle, sucking up a couple million more square feet in recent years. Microsoft has a payroll that must be in the $4 billion range per year locally in salary alone, rivaling the local Boeing payroll. That's solid second tier.

December 20th, 2011, 07:35 AM	#12
bennyboo Registered User Join Date: Jun 2010 Location: seattle Posts: 487 Likes (Received): 6	seattles and portlands tech companies id say have the best examples of possible new silicon valleys. portlands already has a nicknamed area called silicon forest. also i am seeing lots of tech companies moving into seattle; mostly google and facebook.

December 20th, 2011, 10:30 AM	#13
Restless Registered User Join Date: Oct 2009 Location: London Posts: 1,872 Likes (Received): 32	I can see Beijing Zhongguancun becoming a genuine rival/partner to Silicon Valley one day. Even today, it's the only other place in the world where there are multi-billion dollar technology companies being created on a regular basis. Particularly as China is still only midway through the technology adoption cycle.

December 20th, 2011, 09:35 PM	#14
sweet-d Registered User Join Date: Jul 2010 Location: Wolfwood Posts: 1,414 Likes (Received): 17	Like other people I also think Seattle, Portland, and maybe Austin. But Seattle could definetly lure more start ups it has so many pluses to it. Now as for Austin it could also lure start ups considering Texas has no state income tax, cheaper property prices, and the university of texas.

December 21st, 2011, 11:20 PM	#16
1772 Registered User Join Date: Aug 2009 Posts: 2,236 Likes (Received): 36	Great getting the discussion going!

December 23rd, 2011, 06:03 PM	#18
mhays Journeyman Join Date: Sep 2002 Location: Seattle Posts: 8,470 Likes (Received): 125	Sometimes, cheap power is the #1 key. That's why server farms and wheat farms coexist in the Columbia River basin. I think it's also related to Portland's chip industry. As for picking up and moving, it's hard to imagine that on a large scale at the leadership level. Startups can generally relocate far more easily, and often head for SF to be closer to capital and talent. Some might even try for the low-expense thing, but aside from call centers etc. (arguably "tech") there hasn't been a ton of success in most tech sectors with that approach... The better route appears to be to have a company start in your city, fertilized by availability of talent. Talent depends on being a desirable place to recruit, and having local universities with good programs. Austin lucked out with Dell, and Seattle lucked out with Microsoft and Amazon. Boston too though the companies I'm thinking of are older-generation and I'm forgetting newer ones. Plus, all the good Tier 2s have long lists of additional tech companies, most of which are home grown, generally with strength nodes....being Tier 2 probably involves being #1 in a few subcategories. Also, Tier 2s might have strong satellite offices of firms based elsewhere.