THE BROAD VIEW

Tech workers can't leave the Bay Area fast enough

The pandemic has offered them a chance at residing and working from towns where life feels easier.

    Published Fri, Jan 15, 2021 · 09:50 PM

    San Francisco

    THE Bay Area struck a hard bargain with its tech workers. Rent was astronomical. Taxes were high. Your neighbours did not like you. If you lived in San Francisco, you might have commuted an hour south to your job at Apple or Google or Facebook. Or if your office was in the city, maybe it was in a neighbourhood with too much street crime, open drug use and US$5 coffees.

    But it was worth it. Living in the epicentre of a boom that was changing the world was what mattered. The city gave its workers a choice of interesting jobs and a chance at the brass ring.

    That is, until the pandemic. Remote work offered a chance at residing for a few months in towns where life felt easier. Tech workers and their bosses realised they might not need all the perks and after-work schmooze events. But maybe they needed elbow room and a yard for the new puppy. A place to put the Peloton. A top public school. They fled. They fled to tropical beach towns. They fled to more affordable places like Georgia. They fled to states without income taxes such as Texas and Florida.

    That is where the story of the Bay Area's latest tech era is ending for a growing crowd of tech workers and their companies. They have suddenly movable jobs and money in the bank - money that will go plenty further somewhere else. But where?

    Ah, the normal life

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    The biggest tech companies are not going anywhere, and tech stocks are still soaring. Apple's flying-saucer-shaped campus is not going to zoom away. Google is still absorbing ever more office space in San Jose and San Francisco. New founders are still coming to town.

    But the migration from the Bay Area appears real. Residential rents in San Francisco are down 27 per cent from a year ago, and the office vacancy rate has spiked to 16.7 per cent - a number not seen in a decade.

    Though prices had dropped only slightly, real estate marketplace Zillow reported more homes for sale in San Francisco than a year ago. For more than a month last year, 90 per cent of the searches involving San Francisco on moveBuddha were for people moving out. Twitter, Yelp, Airbnb and Dropbox have tried to sublease some of their San Francisco office space. Pinterest, which has one of the most iconic offices in town, paid US$90 million to break a lease for a site where it planned to expand. And companies like Twitter and Facebook have announced "work from home forever" plans.

    "Moving into a US$1.3 million house that we saw only on video for 20 minutes and said yes," wrote Mike Rothermel, a designer at Cisco who moved from the Bay Area to Boulder, Colorado, with his wife last summer. "It's a mansion compared to SF for the same money."

    Wait, no income tax?

    "We're selling our house and moving out of SF. Where should we go and why?" Justin Kan, a serial entrepreneur who co-founded Twitch, asked on Twitter in August.

    Joe Lonsdale, a co-founder of software company Palantir, which moved from Silicon Valley to Denver, wrote back: "Come to Austin with us. Growing tech ecosystem and Texas is the best place to make a stand together for a free society." Also: no state income taxes.

    Austin, population one million and the Texas city most would say is closest in spirit to the Bay Area, has long had a healthy tech industry. Computer giant Dell is based nearby. The University of Texas is one of the top public colleges in the country. And the music scene is eclectic and creative.

    Now, the local tech industry is rapidly expanding. Apple is opening a US$1 billion, 54ha campus. Alphabet, Amazon and Facebook have all either expanded their footprints in Austin or have plans to. Elon Musk, the Tesla founder and one of the two richest men in the world, said he had moved to Texas. Startup investor money is arriving, too - the investors at 8VC and Breyer Capital opened Austin offices last year.

    Some of the favourite gurus of tech workers are already there, like Tim Ferriss, life-hacker, who left for Austin in 2017, and Ryan Holiday, whose writing about stoicism is influential among the startup set.

    Sahin Boydas, the founder of a remote-work startup who had lived in San Francisco and its suburbs over the last decade, saw all of that. "You start to feel stupid," said Mr Boydas, who is 37. "I can understand the 1% rich people, the very top investors and entrepreneurs, they can be happy there." So he and his family moved to Austin. For the same price as their three-bedroom apartment in Cupertino, they have a five-bedroom home on an acre of land. For the first time, Mr Boydas has outdoor space. He just acquired two rabbits for his children. Sure, it is (very) hot, but he is ready for it.

    And it's not just the cost of rent that is lower - the water bill is lower; the trash bill is lower; the cost of a family dinner at a restaurant has fallen significantly. Boydas said he hadn't even known about the taxes. "I run payroll for myself, and when I saw zero, I called the accountant like there's an error - there's no tax line here," he said. "And they were like, 'Yeah there's no tax.'"

    Nevermind the mosquitoes

    "Ok guys hear me out, what if we move Silicon Valley to Miami," tweeted Delian Asparouhov, a principal at Founders Fund, which invests in startups.

    The mayor of Miami wrote back last month: "How can I help?" Now, there is a very vocal Miami faction - led by a few venture capital influencers - trying to tweet the city's startup world into existence.

    The San Francisco exodus means the talent and money of newly remote tech workers are up for grabs. And it is not just the mayor of Miami trying to lure them in.

    Topeka, Kansas, started Choose Topeka, which will reimburse new workers US$10,000 for the first year of rent or US$15,000 if they buy a home. Tulsa, Oklahoma, will pay you US$10,000 to move there. The nation of Estonia has a new residency programme just for digital nomads.

    A programme in Savannah, Georgia - Innovation & Entrepreneurship at the Savannah Economic Development Authority - will reimburse remote workers US$2,000 for the move there, and the city has created various social activities to introduce the newcomers to one another and to locals.

    Startup investor Keyan Karimi, 29, took Savannah's invitation to move there (though he did not ask for the reimbursement). He started looking at Zillow and studying the Southern cities he had ignored. He likes old houses and wants to fix one up. Savannah has a lot of those. So just a few months after leaving his US$4,000-a-month one-bedroom in San Francisco, he is working with the local business development group to put together a maritime innovation centre in Savannah to invest in and guide shipping and logistics startups. He bought one of those old houses.

    Savannah has one of the largest ports in the country. "No one knows that," Mr Karimi said. "I figure we can do something with that." The only downside is mosquitoes, he said. "I get eaten alive."

    The gang's all here now

    "People always get pissed at me when they hear birds in my Zoom," said Ed Zaydelman, a longtime leader in San Francisco's Burning Man community (and former New York City club promoter), who is forming an entrepreneur community in Costa Rica. "And I say, 'Come join.' "

    If San Francisco of the 2010s proved anything, it is the power of proximity. Entrepreneurs could find a dozen startup pitch competitions every week within walking distance. If they left a big tech company, there were startups eager to hire, and if a startup failed, there was always another.

    But the expats still find one another. Not long ago, Nikil Viswanathan - who co-founded blockchain startup Alchemy and recently fled San Francisco - stumbled on a cluster at a party. The conversation revolved around the lower cost of living. "One of the SF guys was like: 'I just had a burrito for US$6. It was amazing.'" The last burrito he had in San Francisco cost US$15. NYTIMES

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