How to Find Tomorrow's Silicon Valleys
By Nick Fouriezos
I had only recently moved back to my home state of Georgia this year when I met them: the Silicon Valley transplants. The three of them were an unlikely trio of former tech workers who had moved from Berkeley, California, to Atlanta after their startup was acquired. They brought with them a desire to build an intentional community here . . . where the tea is sweeter, the land is cheaper and the internet connections are about as good as anywhere. They weren’t alone in their thinking: New cities are emerging as tech hubs, a process hastened by the pandemic. Globally too, commerce capitals are shifting, with China losing some of its dominance and Africa rising. Join us on this trip through tech’s changing contours.
the new US talent hubs
Miami Vice: Just three years ago, I was in a Miami nursing home watching the city’s Mayor Francis Xavier Suarez promise the world this wasn’t just a “glitzy fun-and-sun, low tax city.” Point taken: Miami has emerged as the tech-attracting hub Suarez envisioned. Amid the pandemic, the city drew its highest-ever venture funding in 2020. It also saw the largest year-on-year increase of 15.4% in software and IT workers in the nation for the 12 months ending in February, according to LinkedIn data. The city has touted its willingness to bend over backwards for businesses, along with Florida’s lack of a state income tax. When venture capitalist Delian Asparouhov tweeted “ok guys hear me out, what if we move Silicon Valley to Miami” in December, Suarez all but responded by asking how high he could jump. He has since talked with Elon Musk, Jack Dorsey and Peter Thiel, among others, while promising to hire the city’s first dedicated technology officer to show CEOs who are tired of California that they can find love in sunny Florida too. Read More on OZY
The Texas Innovation Triangle: Texas was cooking even before the pandemic. Houston, Dallas and Austin all ranked among the metros that saw the largest net annual increases in millennial residents between 2012 and 2017. According to the LinkedIn data, Houston and Dallas-Fort Worth saw the second and third-biggest gains among software and IT workers during the pandemic, growing 10.4% and 8.6%, respectively. Like Florida, the Lone Star State has no state income tax. Big oil has attracted a strong engineering base, and capital flows freely in Texas. If it were a nation, it would be the world’s ninth-largest economy by GDP — making it perhaps the only state outside New York that can compete with California for deep investor pockets. It got a big publicity boost when Musk moved to Austin while also shifting investments by SpaceX and Tesla to Texas. To solidify its gains though, Texas may need to ban noncompete clauses that stifle innovation and overcome a history of failure when it comes to translating tech talent into a vibrant venture capital scene.
Philadelphia: The home of the cheesesteak has traditionally had a working class feel with a professorial upper class — an “eds and meds” town due to its many colleges and hospitals (38 percent of the city workforce was employed in just those two industries in 2016). Its strength in these sectors is now attracting a surge in biotech startups. Health care innovators made up 15% of startup accelerator Y Combinator 2020 winter batch (second-most of any category) and 12% of its upcoming 2021 class (fourth). Philadelphia’s lower cost of living compared to would-be Silicon Valley competitors such as Boston and Washington D.C. gives it an advantage in drawing young talent. The city saw an 8.1% increase in software and IT workers between March 2020 and February 2021. And health tech is likely to grow amid the fear of future pandemics looming and a rapidly aging American population. So might Philadelphia’s stock.
Atlanta: Atlanta is a crossroads of delicious weirdness, hosting annual “Furry” and Dragon Con cosplay conventions, where high-powered lawyers rub elbows with sound healers during alpaca yoga classes in downtown bamboo forests (seriously). It is also a true melting pot, a majority Black city whose suburbs are filled with Asian and African immigrant communities. Atlanta saw a 2.9% increase in software and IT talent during the pandemic. The “City Too Busy to Hate” has fostered its image as an oasis of drama-free profits since the Civil Rights Movement, when Gov. Carl Sanders quietly desegregated the capitol even as George Wallace was giving his infamous “Segregation now. Segregation tomorrow. Segregation forever” speech in neighboring Alabama. As recently as 2016, then-Gov. Nathan Deal refused to sign a religious liberty bill opposed by major Atlanta corporations while helping Georgia become the Hollywood of the South. But recent Georgia leaders, from Gov. Brian Kemp to ex-Sen. Kelly Loeffler, have been more willing to alienate business leaders, passing widely criticized voting restrictions that could jeopardize Atlanta’s potential as a hub for young tech workers.
Wildcards. The nonprofit One America Works released an April survey saying 47% of tech workers moved in the last year. Relocating workers won’t just settle in major cities; the appeal of affordable locales and proximity to family could cast them widely. For years, venture capitalists like Ross Baird, whose Village Capital is backed by AOL cofounder Steve Case, have toured the country showcasing talent across Middle America. Vermont investors have attracted entrepreneurs with Shark Tank-like ski events, while an African-American couple in Cincinnati launched a $50 million venture fund for underrepresented founders in July. Initiatives like the “Cultivation Corridor” in Des Moines and financial incentive programs from Tulsa and Topeka to Tucson and Savannah are creating new competition for talent.
famous Silicon Valley departures
Larry Ellison. The Oracle co-founder moved to the Hawaiian island of Lanai — which makes sense, given that he bought the island for $300 million. Ellison, 76, made the move just days after Musk confirmed his move to Texas, and just as the computer software company he cofounded shifted its headquarters to Austin in December. Ellison, whose net worth hovers around $90 billion, owns 98 percent of Lanai, home to more than 3,000 people. It’s a rocky lunar landscape called the Garden of the Gods with two Four Seasons resorts — so lavish that Bill Gates got married at the 17th hole of one of the island’s golf courses, although Ellison will hope his relocation faces a better fate than Gates’ marriage.
Drew Houston. The Dropbox CEO and billionaire, 38, dropped a bombshell in November when he announced he had bought a house in Austin. The news came a month after the company announced it would allow longterm remote work policies for most employees. Yet unlike other leaders, his business won’t relocate to a specific locale: instead, it will create “dropbox studios” — smaller workspaces where employees will be able to come together for collaborative work, starting with cities it already has a presence in from San Francisco and Seattle to Dublin and Austin.
TJ Miller. The Denver-born Manhattan comedian, 39, never left the Bay, per se. But his fan-favorite character Erlich Bachman, a perpetually high and arrogant entrepreneur, prematurely exited the HBO comedy Silicon Valley after its fourth season in 2017. Erlich’s final scene? An opium den in Tibet, where he has gotten so spectacularly high that a friend pays an innkeeper to put Erlich up for five years. Miller’s abrupt departure from the show, which shortly saw him move from Los Angeles to New York, was no less dramatic. In a series of scathing interviews, Miller ridiculed directors for writing a reduced part for him, which he rejected, saying his exit “felt like a breakup.” Later reports suggested Miller showed up drunk and high on set, and he was later accused of sexual assault during his college years and making a false bomb threat on an Amtrak train in 2018.
The Palantir Bros. The data analytics company, whose biggest client is Big Government, announced it was relocating to Denver in August. The move wasn’t completely surprising: Cofounder Peter Thiel, a libertarian who supported former President Donald Trump and previously founded PayPal, has been criticizing San Francisco as far back as 2013. Thiel has become more political in recent years, moving to the Los Angeles area in 2018 while joining other noted conservatives including Dave Rubin, Bill Whittle and, until recently, Ben Shapiro (who left Burbank for Florida last year). His cofounder, Joe Lonsdale, who grew up in Fremont and attended Stanford, penned a Wall Street Journal editorial explaining his 2020 move to Austin saying that California had “fallen into disrepair” due to “bad policies.” Meanwhile, Palantir CEO Alex Karp, a self-described socialist who made $1.1 billion when the company went public in September, was reportedly working from a barn in New Hampshire.
emerging global players
The City of Love. With a tech workforce that increasingly wants to eschew the 80-hour work week for a better quality of life, perhaps nobody better knows how to enjoy the finer things than the French. That was part of the attraction for Rand Hindi, who relocated his A.I. voice technology company, Snips, to Paris from Silicon Valley. He then watched it grow from three employees in 2013 to 50 before being sold for $37.5 million to voice-activated speaker company Sonos in November 2019. That year was also the first time more than half of respondents to KPMG’s annual global Technology Industry Innovation Survey no longer believed Silicon Valley would be the technology center of the world in four years. Paris has benefited from Emmanual Macron’s aggressive courtship of tech entrepreneurs and investments. The French president introduced a program in 2017 that fast-tracked residence visas for tech entrepreneurs and their families. The city’s approach has led to some recent wins, including Paris-based car rental startup Virtuo raising $96 million on Thursday and A.I. insurtech company Shift Technology receiving a $1 billion valuation earlier in May. Read More on OZY.
Africa’s Supply Chain: China became the “world’s factory” thanks to its young, affordable workforce and loose state regulations. But those advantages have stalled amid economic maturation, a Trump-led trade war that saw Chinese exports drop by $25 billion and new skepticism amid the COVID-19 pandemic that emerged from that country. Africa is now charging ahead: Its 54 countries include seven of the world’s top 10 fastest-growing economies. Ethiopia, Uganda and Ivory Coast are leading the way. And after historically importing 99% of its vaccines, Africa is now planning steps to manufacture 60% of them in Africa to reduce its dependence on other nations when the next pandemic strikes.
Silicon Valley South: Several San Francisco tech workers headed across the border to Mexico during the pandemic. It was one of the few nations whose borders were open to Americans … and many liked what they saw. Remote Silicon Valley expats created hacker homes: Michael Houck, a former Airbnb and Uber product manager, put $21,000 down in rent for a Tulum home for 18 startup entrepreneurs named The Launch House. Within months, the house had produced nine products, including a positive-commenting Twitter bot, newsletter tools and a discovery platform for OnlyFans accounts. And the pandemic has also turbocharged a trend that was already beginning to take root. More and more Silicon Valley firms are setting up offices and research hubs in Mexico to attract bright global talent at lower costs without needing to worry about the struggle to get them employee visas in the U.S. Read More on OZY.
the shadow of the valley
Diversifying the Talent. New Silicon Valleys have the opportunity to avoid some of the region’s worst ailments, such as lack of diversity. Its Hispanic and Asian populations are significant, but Census data shows a number of Bay area counties with less than 3% Black residents. Some Midwest cities have made an extra effort to bring in new founders. One Lending Tree study found that Cincinnati had the highest percentage of Black-owned businesses in operation for more than six years and making more than $500,000 in annual revenue in 2019, and its Chamber of Commerce has pioneered an acquisition strategy that markets million-dollar companies to then hand over the reins to CEOs of color. Read More on OZY.
Housing the Homeless. The pandemic forced Silicon Valley to recognize its mounting housing problem (Santa Clara County, home to Google and Apple, put up hundreds in hotels and convention halls). But homelessness has been rising for years, with San Jose’s numbers up 42 percent in the two years leading into 2020. Other tech hubs may see similar surges if inequality similarly spikes. As Nashville saw a sudden population boom, the city partnered with nonprofits to build tiny homes and track progress toward an ambitious goal of eradicating chronic homelessness in Nashville by 2025 (it’s had mixed results, with homeless numbers increasing in 2020). In Austin, Mayor Steve Adler had advocated a more humane approach of not disturbing homeless camps … but residents voted in May to reinstate a ban on the encampments and criminalize panhandling.
A Better Workplace. Just as TV supposedly killed the radio star, Silicon Valley might be killing a healthy work-life balance. That was even before the pandemic thrust us all into the work-from-home limbo. The San Francisco tech scene has adopted a work culture that replaces a personal life with foosball tables, endless buffets and 16-hour workdays. That’s in part due to the monoculture of its interests. But as other cities like Miami, Atlanta and Austin emerge, their proximity to residents with more eclectic interests (both in their hobbies and their careers) could keep them from adopting that live to work mentality.