I mean this in as polite a way as possible, but why wouldn't established companies like Stripe just fuck off to another city entirely? It's a successful company with a great product - that I'm sure many people would like to work for. They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work? And they could pull a mini-Amazon and get some sweet tax breaks to boot. Is there some hidden reason that companies like this insist on staying in the same area despite the many potential advantages of looking elsewhere?

"The typical person being moved today is part of a two-career family. The other half of that equation is probably not being moved, so the corporate move comes down hard on the couple’s relationship at a very delicate point. It brings intolerable stress to bear on the accommodation they’re both striving to achieve to allow two full-fledged careers. That’s hitting below the belt. Modern couples won’t put up with it and they won’t forgive it. The company move might have been possible in the 1950s and 1960s. Today it is folly."

They also cite a case study of a major project at Bell Labs which was moved from New Jersey to Illinois. The authors interviewed the former manager of that project:

"I asked him what he saw as his main successes and failures as boss. “Forget the successes,” he said. “The failure was that move. You can’t believe what it cost us in turnover.” He went on to give some figures. The immediately calculable cost of the move was the number of people who quit before relocation day. Expressed as a percentage of those moved, this initial turnover was greater than the French losses in the trenches of World War I."

(FWIW, that's just one of many insights from that book - I highly recommend it.)

[1] https://amazon.com/dp/B00DY5A8X2/

A move strategy could be as simple as, opening up an office in a cheaper location:

1. New teams are created at the new location.

2. New hires on existing teams are placed at the new location, with exceptions if teams have a strong need to be in the same place.

3. Make it clear that you'll help people relocate to the new office if they choose to--some people will take you up on it.

Eventually, the original office will shrink and remaining staff can be allowed to work remotely (which should be a big part of a culture anyway, IMO).

Turnover is already high at tech companies, but in this case your turnover facilitates the move--as people leave at the old location you replace them at the new one. There will still likely be some turnover caused by even the slow move, but that turnover already exist with any move--even the move to south SF will probably cause some turnover because the location is just less convenient for some people.

As others have mentioned, the big tech companies are all actively doing this. Nevertheless, it's not really taking. I know 3 people who moved from Google's NYC office (the 2nd largest) to Mountain View because all the top-priority projects were in Mountain View. As a general rule of thumb, you want to be where the executives are, and the executives are going to be at headquarters because a.) that's where their home is and b.) that's where all their most productive people are.

There's a steady conveyor belt where young single folks move from satellite offices to headquarters when they want to advance their career and then older folks move to satellite offices when they have kids, to be with their families or enjoy a better quality of life. This is healthy in the sense of maximizing happiness for everyone, but it means that the most ambitious, highest priority projects and most talented people are going to cluster at headquarters.

(As a side note, I feel like not enough people understand that the cost-of-living in SF is an effect of the wealth that's been brought into the area by the tech industry, and isn't just a random fluctuation. If some other metro area suddenly had a large concentration of successful companies that paid high wages, the cost of living would go up there too, until COL-adjusted salaries equalized peoples' preferences for living there.)

Satellite offices are tough to do right. It's very hard to build trust between individuals at the different offices without regular face-to-face contact. In the absence of this, you end up with negative relationships between teams at different sites: "The team in Springfield doesn't care about quality" vs. "Those Shelbyville engineers are always dragging their feet and never launch anything". Communication bandwidth between sites is also much more limited - you need to minimize how much a team at site A needs to communicate with teams at site B to get their job done.

Another issue is how to get the satellite office going from a cold start. Do you re-assign projects that are already being worked on in your existing office? Most of those employees aren't going to move, and they're going to be upset that their project was yanked away from them. You've also set the project up for failure because everyone on the new team has to ramp up on the necessary domain knowledge from scratch. So you think "Ok, I'll leave existing projects at the current office and start new efforts at the new office." Now you have an office exclusively working on things that were deemed to be either too low-value or too risky to work on before - not a recipe for success.

Leadership is another major issue. If your senior leadership moves to the new office, they're going to be constantly flying to the larger original office to supervise things there. More realistically, they're going to stay in place, because their time is better spent at the bigger office. This creates problems as leaders move up the ranks at the satellite office, because eventually they hit a point where their career stalls unless they move to the "head office". Teams at the "head office" are at a permanent advantage in project selection, etc. due to proximity to senior leadership.

In short, it's not as easy as your list makes it sound, and it's particularly difficult to grow a satellite office to a similar scale as the original office.

By growing any one of their regional offices, they could move their headquarters. Toyota recently did this over the course of several years. They announced the relocation in 2014, but didn't officially move the HQ until 2016. The planning and execution spanned years before and after that timeframe as well.

Or a required move.

For some cities this would equate to moving to another part of the same city.

I'm curious to see how many people leave because of this move. Tech workers in SF tend to live in Soma or the surrounding neighborhoods (FiDi, Mission, Dogpatch), which means for a worker without a car, their commute was previously a short bike, Muni, or Uber Pool, whereas to get to SSF they'll be looking at this (to get to a BART station), a BART ride, and probably a shuttle at the far end, because Oyster Point isn't near transit.

I worked for a company that moved its HQ (due to an acquisition) to Brisbane -- slightly closer than South SF -- and ended up buying a car to commute, because the walk + BART + shuttle combination took so long.

When I was last looking for a new role, I didn't even consider anything outside of SF.

This whole situation appears to be lifting IT salaries all over the world. I'm currently in the middle of switching jobs and found that I sneer at positions that pay less than ~$50k (in Poland at that) or don't offer fully remote work.

So, I guess, thank you?

If you want to reach me try:

hand at wringing.it

My GitHub handle is the same as my HN handle.

> why wouldn't established companies like Stripe just ... off to another city entirely?

Because the employees they want to hire live and work in Silicon Valley. There's a lot of advantages to the area: Good weather, good cultural actives, good jobs...

Keep in mind that companies loose people when they move within the same geographic area. (For example, someone commuting over the Golden Gate bridge might decide to leave because now the commute is much longer.)

* By the time I screened with them, I had a job offer in hand that I really wanted. (This was long before Stripe became successful.) I lived a few blocks away, so I asked to screen in person, and then decided to take the job with the other company. I don't even know if they would have hired me!

This specifically. I think that for a lot of tech workers the valley is a great security blanket. They know if their current gig falls through there will be another one waiting just around the corner. No need to uproot and move. It's actually sort of strange on the surface. There are a lot of engineers in the valley who move around to various companies fairly frequently which looks on paper like they don't have a lot of stability, but in reality the sheer number of available jobs is providing that stability, even if their longevity of employment with any one company does not.

The weather in San Francisco is overrated, it's always cold and windy and there are never any seasons.

I LIKE seasons. I LIKE snow. I LIKE watching leaves fall in the autumn and rebirth in the spring. I LIKE sweaterweather falls and, cold winters, and hot summers.

San Francisco's climate has "mild," going for it. It seems to be permanently pants and tee shirt weather (but don't forget your jacket). The summers (sept/oct) are nice, but limited for what you expect in California. It's frequently windy when the sun is shining, and the fog is constantly sitting nearby, threateningly.

The best you can say is SF's weather is different, but I certainly do not understand the hype.

SF's weather is a steady climate without much variance, where it typically only rains two weeks of the year. No freezing temperatures, no heat waves, just a cool climate that doesn't have much variance.

South Bay is similar, but warmer and almost perpetually sunny throughout the year too.

Probably grass is always greener type thing.

1. Places where during certain times of year, sitting on a bench for a few hours will cause you to die from exposure to the elements.

2. Other places where you can sit on a bench all day on any day of the year and walk away from it.

The Bay area is definitely in category 2 and that is a nice thing.

Most of the microclimates in the Bay Area are disgustingly peaceful, but as the parent notes, there is a distinct lack of seasons (there's approximately two: dry summers, wet "winters") and real weather (I greatly missed thunderstorms when I was there).

A lot of sweaters get sold at Fisherman's Wharf during summer months to people caught unaware.

Local weather is something you experience every day, not something you travel to. Same goes for snow and tahoe.

We lived in the Sunset district which was manageable but later moved to Mill Valley and the summers were _very_ brutal, to me. A couple other office mates lived in San Rafael and I distinctly remember everyone complaining about the heat and sweating.

We all eventually bought air conditioners for our bedrooms just so we could sleep comfortably at night.

But brutal is all a relative term. Someone growing up in the south with no access to AC would not call it brutal while I and my other office mates who were used to AC were "dying" without it

Summers in the bay area are not even remotely brutal.

It tends to be cold, wet, damp, foggy and bone chilling early morning. Not like Winters/Summers in Chicago brutal, but definitely the time I struggle with most (as a new yorker who clearly has to weather acclimated here, I know it sounds ridiculous)

Fucking off to another city is functionally equivalent to laying off half the company.

After certain stage it’s more about managing growth than about R&D, so you can find most of the talent you need in alternate markets.

But, yes, companies can and have moved their HQs a lot more than ten miles. It's probably harder in an industry and at a time when more people figure a job with a given company is pretty ephemeral though.

Stripe engineers can just say "no thanks" and go work for SF company n+1 down the road. Does Boeing have competition in the same city that could reasonably hire Boeing knowledge workers? Honest question.

This is the story of most American cities in the 80s and 90s, thankfully it has had some reversal this century, and I'm not sure it should be seen as a template or justification for present or future actions.

the long term root is that there is a huge productivity advantage to clusters of workers. (or, at least many people believe so) Around here, if you strike up a random conversation in public, it's very likely you will do so with someone who does something relevant to what you do, and this is good for getting new ideas and really good for getting new contacts. Right now? there's a huge concentration of programming know-how in silicon valley and san francisco, and building that sort of cluster somewhere else would be really difficult. (I think Los Angeles has a similar situation, only with the movie industry.)

I literally found someone to buy my company at a (non-industry) party. (I mean, I did a bad job of it, I was drinking too much and complaining loudly about how much it sucks to run a company and how I had fucked up like three really good chances to sell the thing and generally being a downer, which is rude, I think, at a party, but also not how you maximize the value of the company you sell. Still, I got an impactful amount of money, and more importantly, I got someone else to run the damn thing so I could go get a job that paid without dumping my existing customers.) I've solved technical problems in similar sorts of ways; it's completely normal to go hang out with friends and actually solve problems over drinks or pizza or whatever. (which yes, is a culture some people hate, and I totally understand that, but some of us like it, and like it or not, it's certainly effective.)

Another bigger microeconomic factor that people who don't live here don't understand is that California laws and cultural norms are set up to privilege people who have been here longer. If you bought a place here in '08? Silicon valley isn't very expensive at all; our property taxes are largely fixed based on what we paid for the place when we bought it. This is kinda true (but to a much lessor extent) for rents; I know a lot of people paying under 2/3rds what they'd pay in rent if they moved in today, even without rent control. with rent control, paying under 1/3rd what they'd pay if they moved in today is not uncommon. This means that the sticker shock you get from the outside looking in isn't actually what most of the people who have lived here long term are paying.

Maybe a big city elsewhere in the country will ever go "all-in" like Atlanta did and try to become the "Silicon Valley of the [South, Midwest, Rocky Mountains, etc.]"? I guess a place like Austin, TX could arguable lay claim to this title already, but their tech industry seems to be "home grown" because of the history of computing at UT and with Texas Instruments, NASA, Dell, etc. historically having strong roots in Texas.

But I wonder if a city could ever follow the model of Atlanta and try to build a "new Silicon Valley" from scratch with aggressive policies that lure companies/employees from existing tech hubs?

I've worked in the film business a bit. I'd say it's more like colonization than relocation. Atlanta is a place for filming at low costs, most of pre/post production and the organizational aspects still happens in Los Angeles. Most of the talent is still in LA and flies out to Atlanta for a few weeks. They're saving a buck on shooting, paying a bit for local work (mostly infrastructure stuff) but they aren't really generating value for the city.

The issue with any other city becoming the "SV of the XX" in my opinion comes down to VC and business culture. I think California created something unique when it came to powering ventures and crazy ideas, whereas other parts of the country tend to be more risk averse. Whenever I see new initiatives to draw startups to new cities, the common thread is low amounts of seed money with draconian term sheets from people with very little experience and no network effects to speak of.

This is much more similar to how things work with SF/SV in the context of startups.

(because of the things I described above about how california privileges long term residents, I actually don't pay much more here than I would in any other place of similar density, and net earnings, I'm way better off financially here than anywhere else because I have that granfathered housing deal. (of course, my housing here is a lot less flexible.) Nobody else in the world will pay what silicon valley will pay when you have my skills and no degree. But in theory I would pay a premium to live here.)

Before I die, I want to try living in New York, partly 'cause I really enjoy the car-free lifestyle, but also 'cause I think that it's good to sometimes go to a place where you don't fit in as well, where you interact with people who have dramatically different worldviews about what constitutes an interesting problem. But for me, someone who fit in really badly where he grew up? Finding a place where I fit in was supremely important, even if I don't think it's great to spend the entire rest of my life in that place. Just having that experience of fitting in is transformative, I think.

My guess is that actor/entertainer types have similar feelings about LA; I mean, I think there's a lot of stories about that; about young theatre types running off to LA to find themselves (which I assumed meant "find people who value you") I mean, people talk about shared values; and it's not about voting the same way, mostly, or anything like that, at least for me, as it is about finding the same sorts of problems interesting. I mean, acting and entertaining is a deep sort of thing. I certainly don't understand much of it, but I can at least see that there's a lot there to understand, and if that's your bag, it seems like going and living near other people who also find that sort of thing could be important.

Agree with this. At my company, top brass is basically a cabal of baby boomer LGBT+ scientists who moved here in the 1990s/early 2000s to escape living in the closet in small minded bible belt towns. I'm not LGBT but it's pretty inspiring every day to work alongside them.

When I first started I happened to sit near our top QA exec and over the years as I got to know him he was telling me how in the 1980s his team at MD Anderson used to smuggle blood across the border from Mexico in briefcases before the FDA finally bowed to building pressure and got around to mandating screening for antibodies and accepting INDs.

Oh- one other great tip- pick a hobby you like and join some clubs. SF running, Dolphin Swim club, crossfit and triathlon clubs are networking (and, to be frank, dating) hotspots. GL!

Back in the day, the Hacker Dojo was really great for meeting people. I personally think it's not nearly as good as it was (social stuff, I think, isn't going to be as good during boom times. a lot of the interesting people are just too busy and/or schmoozing less randomly, and we're in a boom time, so the hacker dojo looks like a regular co-working space rather than the coolness it was in the late aughts.) - I mean, I think it's still pretty neat, and still a good place to meet people, just not as good as it was.

A lot of it takes time; I mean, I've been here, more or less, since the late '90s. And a lot of it is just asking. After you leave a job, pick one of your work friends, send them an email and see if they wanna get drinks or something. Like, my experience is that it's okay to be a little weird. just make sure you go away when people tell you to go away. I mean, I know one guy who was my roommate and business partner like fifteen years ago, who is a super introvert. Maybe once a month I send him a text and see if he wants to get pizza. Maybe twice a year he responds in the affirmative.

doing projects with people is... super expensive, but in my life, doing a project/business with someone has been a little like how combat is in the stories, like you have gone through heck with that person and so you will forever have a connection.

[1]https://www.meetup.com/Agile-Articulators-Toastmasters-Club/

It's totally possible. I think the problem right now is that for profitable tech companies, right now engineers are still super cheap (like most of big tech makes rather more than 500K per employee, and pays less than $250K.) - from that perspective, it doesn't really make sense to try to save money on employees... the opposite, really. If they have to pay another $100K/head 'cause the cost of living is so high, that's a smaller bite than anything that might disturb the massive profit. (this is also the root of the argument that we should unionize, even though we make silly money compared to most other workers. Facebook captures a lot more of the surplus value created by labor, say, than Walmart does, even if by any other reasonable standard, we are treated so much better than a walmart floor associate. I mean, I'm not arguing for or against unionization, I'm just saying that's why some people want to unionize even though we already are better off than nearly any other class of worker.)

The other thing to think about is Detroit. Detroit was totally one of these cluster cities; it was the place to be if you were working with cars in a period when there was a lot of innovation to be had in cars. And then the industry changed (or rather, innovation slowed a lot... like, there just wasn't that much more you could do with cars; just small incremental improvements) - automobile manufacturing scattered to the wind and Detroit is kind of a husk.

Will that happen to the software industry? will innovations start being small and predictable? will the P/E of Facebook drop to match the P/E of Ford? I mean, silicon valley has already been through one of these changes; silicon valley is called silicon valley 'cause they used to make the silicon here, and they've really successfully switched to writing software.

I mean, I'm personally long silicon valley (and while I think it's overvalued now, I think it's a good long term bet) - I think it will turn out more like New York than like Detroit, but... who knows?

You might be surprised by how many "Silicon X" places there are. Most of them are trying to lure companies. Only a few - like Atlanta - seem to understand that they need educational and financial infrastructure first.

Primary and secondary schools may well be training indicators.

But, I mean, could you greenfield start a world class university in a place where people see reading in public as something to be ridiculed? would that be easier than bootstrapping a major tech company in some low cost of living area?

I love your story, I thank you for sharing it and your candor because this sounds exactly like something I would do and feel sheepish about afterwards. They way you describe this happening I can feel in my soul reenacting the exact same scenario. Well done!

Then I go visit the "other side", and man do I miss conversations around the newest framework, or latest VC investment bust. It's very much a love hate relationship; which I have no plans on leaving.

Wouldn't this mean that landlords are effectively leaving money on the table? If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it?

Yes.

>If it's not rent controlled, couldn't they just jack up the rent whenever they felt like it?

I was talking with a guy who I work with who is a landlord on the side, and he seemed to have this real labor-theory-of-value sense of fairness, like he says he jacks up rent every time his taxes or insurance or what have you goes up, but it sounds like he's like 5 years behind market (which is a huge amount)

And this is super common in California, small-time landlords, if the tenant is not causing issues, tend to raise rents rather less than market.

I think some of it is that the vast majority of your ROI, in California, comes from property appreciation, (while in many other markets, as far as I can tell, you usually get a lot more cashflow; all the places I looked at in cleveland or in new mexico would be positive cashflow out the gate; all the places I've looked at buying in California only become positive cashflow once rents go up rather a lot) - so I guess maybe some landlords feel that if they don't jack up rents too much on easy tenants, they won't have to do as much work, and as most of their income is actually appreciation on the property which happens either way, they don't see giving up some of the rent as that big of a deal?

I can tell you that if you rent from a professional property management company, your rents will go up way faster, but they are also way more responsive when it comes to fixing things, and there is a strong feeling that if the rents haven't gone up on you in a while, you want to deal with any problems yourself; you don't want to call the landlord, which is evidence in favor of the "landlords avoiding work" theory.

The thing that this theory doesn't explain is that a lot of these landlords seem to be below market by a lot more than what a property management firm would charge. (I think. around here property management companies charge more than usual and usually have really big fees for replacing a moved-out tenant)

A landlord is renting out a long lived expensive asset. Small time landlords I've talked to all mention that you make money on tenants that pay their rent and don't cause issues. Bad tenants easily cost you more than it would to just leave the unit empty. A tenet can easily do $100k worth of damage in less than a year.

A whole lot of the housing stock in silicon valley (and it seems most of what is owned by this type of landlord) is essentially teardowns; stuff built more than 50 years ago to working-class standards. the structure itself represents the right to 'remodel' into something someone willing to pay a million bucks for a house might actually want to live in; and by 'remodel' I mean to leave the 'minimum legal structure' standing (I think paul graham made some joke about it on twitter some time ago, with a photo of a remodel that had one interior wall standing and the rest demolished. The joke was thought to be problematic, if I remember, for some reason I don't remember.)

I mean, sure, if the landlord wants to keep renting out a shack built in the '60s, the wrong tenant can make that quite expensive, but it would be difficult for the tenant to devalue the market value of the asset by 100K.

I suppose that might be another part of it; there certainly is some demand for these older units at market rates, but certainly for people willing to pay full freight, the nicer units go first.

2. Because San Francisco is very nice (perhaps) and we have good schools around here. A lot of hires come from UCB, Stanford, UCLA, USC, and other UCs. Those account for several of the top engineering schools in the country/world.

3. Silicon Valley has hit an inflection point where we're now the best place in the world to find TOP talent in tech. It's not a great place for mid and junior level talent, but if you need top talent for an opportunity that is high growth and high per employee leverage, there is no place better in the world.

Ultimately, the main issue is that everything is too nice and worked too well so the cost of living has sky rocketed. And that is driving out everyone that isn't a top tier talent (engineering and opts). It's really sad, to be honest, I love San Francisco and Silicon Valley, and I wish we could find a way to solve the living cost issue and continue to grow as a hub for innovation.

The only time SF was every really cheap was during the 70s into the late 80s, which was due to a combination of white flight, the Loma Prieta earthquake, and the AIDS plague depopulating the city. Apart from that anomaly, it has been super pricey ever since the Gold Rush.

Nope

- That effectively means those employees tied to the old location have to quit or be let go. Stripe isn't a public company, so that causes major issues for those with options who suddenly need to exercise into an expensive illiquid holding. For those w/o vested options in a company as successful as Stripe, you're leaving a lot of money on the table. What are the odds you find another Stripe with options deep in the money?

- If your spouse is working in SF, if you move, now they have to quit their job and look for another one. If your spouse works in a non-public tech startup, see point 1.

- Moving isn't easy in the US if you own a home - the taxes, fees, expenses, commissions, etc alone will cost you ~8 or 9% of your sale. If you have 20% down you just lost half your equity. Easier of course if you have more equity in the home, but still -- fees/etc are a total loss to you.

- If the company re-locates you, they might cover some of the home change expenses, but those are often capped. It becomes quite expensive to the company to re-lo folks with homes (see above)

- Changing homes (and thus school districts) is a big issue for employees with children. Many school districts are not guaranteed by home ownership / lease, but rather by tenure in the district. You end up buying/leasing an expensive property in a new area and busing your child to a far off, possibly much less performant, school.

- I totally agree with SF being epensive, but for other cities, moving to suburbs isn't that much less expensive for young workers. Now you suddenly have to buy a car, pay for gas, pay tolls, registrations, etc. Also, for those early career w/o children, being in a one-company-town suburb is a career-killer. There isnt an ecosystem and it becomes harder to switch jobs. I had an employer move their office from Manhattan to suburban Connecticut with the argument that is was less expensive (yes, less expensive for the company -- but absolutely not less expensive for the employee)

To be totally blunt, I also suspect a large part of it is that the founders would like to be in the bay area.

I don't mean that as a slight either - I think if you're spending a good portion of your life on something, you might as well do it in a place you enjoy spending time in!

At my firm, the founders wish they could go back to NYC or east coast in a heartbeat, but tied to Bay Area due to funding connections and employee pool. I work a lot with Europe so I'd love to be on the east coast as well.

How should I look at this issue from the perspective of an outsider? Should I join the crowd or run in the opposite direction?

So where's the party now? It's happening somewhere. Someone is building the next big thing and none of us know yet. The eternal struggle of trying to predict the future.

Is Stripe's move a bad move? I guess that the execs are driven by the same fear of missing out what the future holds.

Shenzhen.

CALIFORNIA CODES, LABOR CODE SECTION 2870-2872

https://leginfo.legislature.ca.gov/faces/codes_displaySectio...

California has too much going for it for engineers to abandon it over a company that can’t event afford to keep an office open there, and I’m saying that as an outsider, I much prefer the east coast or Colorado.

People have mentioned the dual-income problem, but even without that, people have friends, and schools, and communities, and lives that they've built up where they live. When I moved cross country, it took two years after we arrived to develop our first close friends, and probably five years before we felt that we were as connected to our new home as we were to the one we left.

Moving across town doesn't disrupt these connections and communities for your employees, but moving across the state or country does.

https://stripe.com/blog/nyc-office

Of course NYC has its own housing problems, but they're cheaper than the valley.

Stripe is not hiring "mid-level" employees. Or at the very least that is not the type of people they are compensating to run critical roles.

Good luck telling a Senior Staff Engineer who makes $500k (plus probably a couple of million in RSUs) that they have to move to Albuquerque, NM.

The other reality is that people take jobs knowing that there are other jobs available if they themselves decide to "fuck right off".

TL;DR - Network effects exists in the physical world. Too many talented people live in the bay area for "quality of life".

This is not the only other option. Imagine telling an engineer, hey I'll pay you $500k a year in Atlanta, Miami, Philadelphia, Chicago, or Boston? Rent is immediately cut in half and some states have no income taxes. Their disposable income essentially triples.

I think you mistyped here. The point of the move is that $500k in San Francisco vs $500k in any other city in the US (except New York) result in substantially different qualities of life. $500k a year income in Miami can get you a mortgage on a 3 bedroom house and a boat.

In SF, you get a mortgage on a 1 bedroom apartment.

500K in SF gets you a smaller place and plenty of discretionary income. Companies in other places can often give you a house, but not match the discretionary income.

Pay your engineers 500k in a medium cost of living city and you will have the best employee retention of any company once they get used to their quality of life.

LOCATION LOCATION LOCATION!

This. Those salaries are basically correlative to cost living * demand for resources.

You can barely get people to move to Denver while keeping an SF salary.

Also, there are reasons why people would prefer the bay area over Denver for non cost related stuff. (And vice versa)

Some day the business climate will cool and the realm of new tech growth won't seem as limitless. When this time comes, big profitable tech companies will continue their drive for bigger profits, and they will turn to cutting costs rather than driving new growth.

When cutting costs comes to tech, plenty of established companies will decide it's time to head off to a smaller city with lower rent and lower wages - or atleast some of them will, and eventually wages and rent in silicon valley will start heading downwards from its current place in the heavens.

There are other chicken and egg dynamics such as a large city is likely top have a large airport with lots of direct flights which is helpful for business and leisure travel.

Employers, especially startups and growth companies, want to hire top talent (and poach top talent from similar firms). That means they want to be located where there is a baseline of other similar firms.

Remote work is slowly changing that dynamic but the gravity of the city is strong.

Nobody wants to take a huge paycut regardless of house prices - there are lots of other things in the world you can use money for (including saving for retirement, if you're practical) that aren't particularly regionally inflated.

The people who've been at successful companies for longest also tend to have been pretty well compensated overall, so ownership of something nearby isn't always so out of reach for them. So your most important contributors are the least motivated for this move. Doesn't seem like a good recipe.

It does seem like they are taking a balanced strategy, however. I remember a story a few months ago about how their latest team is all-remote. They might have better incentives to open more offices in lower-cost locales after going public (see Uber's new Dallas plans for example).

Large metro areas are much more productive because people can learn from each other.

It was common to joke in the 80's that IBM stands for "I've Been Moved."

https://en.wikipedia.org/wiki/IBM_Personal_Computer

The employees are a self-selected population for the area.

The employees that work for a company have already decided that is where they want to live and work.

They could just open an additional office in a more "reasonable" place, say somewhere with lower taxes, lower cost of living, shitty weather and fewer qualified employees...

Also, I've often wondered if locating a company in somewhere with a nosebleed cost of living like SF is a way to exclude employees that are not young, single and/or without families to distract them. SF is great for single people.

2) It's cultural and political signaling which is required in the SV atmosphere.

He is now trying to make office space even more restricted, and his allies are working to reduce office space alternatively by raising the fees on office construction. https://www.sfchronicle.com/business/article/SF-Mayor-SoMa-n... https://www.bizjournals.com/sanfrancisco/news/2019/10/22/sf-... (More about John Elberling: http://sfbamo.com/news/tenants-in-todco-property-allege-abus...)

San Francisco prevents office space from being abundant and cheap, and therefore the office jobs are being moved to counties with even worse jobs-housing balance, turning San Francisco into a bedroom community for (the richer individuals working in) the peninsula.

That's a rather uncharitable characterization. SF is just trying to tie jobs to adequate housing construction. We already have way too few houses, especially low-income housing.[1] Which is what makes Stripe's move here particularly low integrity: they'll have all the housing impact on SF without paying any of the corporate taxes.

From your own source: "A separate economic feasibility study from the City's Office of Economic and Workforce Development found that a range of office projects are 'currently infeasible,' even without a city fee increase. The study did contend that an improvement in market conditions could make a modest fee increase viable."

[1] https://hoodline.com/2019/10/report-sf-adding-equal-numbers-...

And also making the assumption that only people who work in San Fransisco will live in San Fransisco? Because those Stripe employees who live in SF right now are likely not going to change their apartments. They'll continue living where they are, except now SF now longer benefits from the taxes that Stripe would otherwise have paid.

The fact that companies can open up offices somewhere else shouldn't be very surprising, and it shouldn't be shocking that people will choose to live where they already live unless their commute gets too long and they can afford to move.

I just don't see what you expect SF leadership to do about this that doesn't fit into the two categories I mentioned, other than give up.

Lower the cost of building housing. Streamline permits, zoning, and environmental review. Publicly commit, in other words, to driving down housing prices over a decade. (Note: not land prices! That’s the compromise.) This makes it cheaper to...

Build enough shelters for the transient homeless population. Now that they’re a stable problem, we can focus on the gritty bits.

Fund mental-health intervention for the permanently homeless so afflicted. And there has to be an element of coercion. Leaving the mentally ill to waste on the street isn’t compassion, it’s dereliction.

Fund drug-addiction intervention for the permanently homeless so afflicted. Carrot is clean places to use, seek counselling and get preventative medical care. Stick has to be arresting (and preferably transferring to clinics, not prisons) public users of hard, illicit drugs.

With the above in place, encampments can be humanely cleared and/or relocated. It also lets law enforcement tackle the minority of the homeless who are threatening, violent or thieving, a minority that creates most of the problems for other San Franciscans.

(Oh, and regional transit co-operation. If you make it easier for people to get around the Bay Area, they don’t have to stack up on each other. Why is the Caltrain a single trunk? Where is the network of every-fifteen-minutes ferries? Why is the BART so loud and expensive?)

How are we going to fund mental health interventions and housing cost reductions if businesses refuse to pay taxes and housing costs keep going up? How are we going to expand on transit and cut transit costs if transit revenues are bad and high housing prices result in land values so high that the state can't buy land up to expand transit infrastructure?

I'd love to see that stuff, but it's been necessary for decades and isn't happening. We can't blame it all on NIMBYs, and getting rid of them won't make it suddenly happen.

Some of this is due to other state-wide and city problems, like taxpayers being unwilling to approve funding for transit and other measures, but that's not the only problem either.

I work in a different city where I live. But pay ~20% municipal tax (not US) that pays for infra etc that I use.

Here municipal tax income is ridiculously higher than the corporate tax for municipalities. But the reason is that a corporation does not require healthcare, the person who lives in a municipality does and receives it from their own municipality etc.

I’m a San Francisco native. I’ve learned to be uncharitable when it comes to the Board of Supervisors. They are masters of saying one thing and doing another.

Increasing the fees on office space is going to make even more projects infeasible, which would lead to fewer offices being constructed. Which, in their minds, will justify the fees. For the longest time, the self-styled “anti-corporate” faction in San Francisco politics have said that the cap on office space construction that Elberling helped to pass back in 1986 is not a real burden because so few offices have been built that the cap has rarely been the limiting factor.

Limiting offices in San Francisco isn’t even going to help with the jobs-housing imbalance. As we see here, the limited office supply in San Francisco is driving companies to move to other Bay Area cities that don’t pretend to care about the jobs-housing imbalance.

The workers still need somewhere to live, and many of them will live in San Francisco. But instead of using our extensive investment in transit to downtown San Francisco, they will use the more limited transit and freeways going to the outskirts of South City.

Enough with this every-county-for-itself race to the bottom. If the San Francisco supervisors were serious about the jobs-housing balance, they would not be making offices harder to build in San Francisco. They would be ceding local control of land use to a regional authority, in exchange for the rest of the Bay Area counties ceding their control, too, so that we could build an integrated and equitable region. Solve the jobs-housing imbalance for the whole region by building a lot more homes. https://cayimby.org

And they've ended up with an endless number of one off, inefficient policies to try to address the problem this has created without addressing the actual cause of the problem.

If that was the case wouldn't a tax by number of employees be what to push through?

I’ve worked, for instance, in two or three offices that were right as the OSHA limits for bathrooms per capita (I’m still pretty sure Amazon was in violation). These are not pleasant working environments.

As someone who lives in the area, I like the fact that both BART & Caltrain cross-over right around the airport (I commute to Palo Alto and SF downtown). The addition of a Milbrae to South SF shuttle would cover both options with a single pickup (& even the folks who drive there to take BART to SF).

The Oyster pt marina is connected out of only Alameda & Oakland, but that does beat trying to get to either bridges in general particularly the 8:10 AM ferry out of Oakland / 5:10 out of Oyster pt.

And it is not just 101 northbound for this, taking 280 through 380 isn't too bad either - the traffic jam pretty much starts northbound at Sneath lane.

I'd say that this puts Stripe in a better location for commutes, though far away from all the other offices.

That said, South SF definitely seems like trading a worse commute for anyone in SF or the South Bay who rely on Muni/BART/Caltrain (presumably the majority of current and future Stripe employees) for improved commute options from parts of the East Bay (ferry) & the Peninsula (driving). This seems like a bet on a future tech flight from SF proper (to the Peninsula and East Bay). As someone hitting the point where I'm thinking about where I'd like to raise kids, this doesn't seem like a terribly bad bet to make, particularly as I see places I wouldn't have considered living at 24 evolve towards what I originally preferred about city life.

I only apply for jobs which I can ferry to and it'll definitely enable employees at Stripe live in more affordable locations.

I'm surprised to hear that you didn't support Prop C. I've visited SF and was horrified by the homeless problem there, particularly in the face of huge inequality. Didn't you want to do something about that?

This sentence made me think - I wonder how expensive it would be for a startup to run a private boat commuting service. Google has their buses, but obviously they have near-limitless resources.

What specifically are these options?

People don't talk about this very much. But it seems extremely unfair that Stripe/Square pay way more tax than Saleforce in terms of ratio to their revenues. (I don't recall the numbers. Anyone?)

Jack Dorsey tried to raise this point multiple times. But people just kept screaming that he didn't care about homeless :S

JFC, it's not because of a lack of money that SF has a problem with homeless people, and it's not that more money would make the problem magically go away.

However, when people talk about homelessness being such a big problem in SF, I think a lot of what they are talking about is the subset of homeless people who are "violently mentally ill". That's something that I saw a lot more of in SF than in cities in the Mid West. By "violently mentally ill" I mean things like:

- Yelling at pedestrians that they are the incarnation of Satan and were going to use their demonic powers to strike them down.

- Using racial slurs for minorities that walked past.

- Purposely invading people's personal space.

I don't know why this would be a greater problem, or a more visible problem, with the homeless in SF compared to other places. Maybe in the Mid West it is difficult for people who are too mentally ill to survive the winter. Maybe other cities use anti-vagrancy laws to round them up.

Coordination at the federal level could even out geographical imbalances in services and also prevent all services from having to be delivered in the few places where it’s most expensive to do so. Doing all the free housing in the most expensive market is crazy.

Poverty and homelessness are near all-time lows in the US right now, comparable to Canada. You wouldn't know that by looking at the streets of San Francisco (or Los Angeles for that matter).

At a national level homelessness has declined dramatically since 2000. While San Francisco's problem has only kept getting worse. The US as a whole isn't seeing the homelessness problems that San Francisco is.

While San Francisco was doing nothing, the US implemented the Housing First program under the Bush Administration. That policy was continued and amplified by the Obama Administration, to extraordinary results: homelessness declined through the great recession, rather than skyrocketing as would have been predicted (especially coming out of a housing bust).

Unsheltered homelessness is down 20% since 2007. Total homelessness is down by 15% since 2007.

https://www.hud.gov/sites/dfiles/Main/images/hudno.18-147.jp...

2010 > Obama builds on Bush success to help the homeless

https://www.csmonitor.com/Commentary/the-monitors-view/2010/...

2013 > The federal Department of Housing and Urban Development reported that the number of the chronically homeless declined by 30% between 2005 and 2007. You might have expected the numbers to spike again when the financial crisis hit but no. Since 2007, the number of chronic homeless has dropped another 19%.

https://www.cnn.com/2013/04/29/opinion/frum-less-homelessnes...

2008 > On a cold January morning in 2001, Mel Martinez, who was then the new secretary of housing and urban development, was headed to his office in his limo when he saw some homeless people huddled on the vents of the steam tunnels that heat federal buildings. "Somebody ought to do something for them," Martinez said he told himself. "And it dawned on me at that moment that it was me." So began the Bush administration's radical, liberal — and successful — national campaign against chronic homelessness.

https://www.mcclatchydc.com/news/politics-government/article...

2013 > The Astonishing Decline of Homelessness in America

https://www.theatlantic.com/business/archive/2013/08/the-ast...

Texas still just buys their homeless bus tickets to California. When I ask homeless people in LA where they are from, Texas is the #1 response. The LA Times just ran an article this week about people who to come LA seeking stardom and are homeless within a few weeks because they didn't bring enough money to pay rent because they thought they'd be a rich megastar within a few days.

It's truly fucked up for LA and SF to get blamed for having a homeless problem when most of the homeless in CA aren't even locals.

What you're portraying is a myth.

Along the i5 from Seattle to San Diego the encampments have been growing. There are a few places where it goes away but mostly because of individual city efforts to do something. Source - been driving the route very actively last 5 years.

> And homeless are everywhere.

Maybe a $3k per month "small single apartment" contributes to "homeless are everywhere."

Of course, there are a lot more homeless people in SF than the very conspicuously unwell people I mentioned. There are also probably larger scale effects that together contribute to high rents, high income inequality, drug abuse, lack of medical care, etc. But there’s a lot more to say than that SF’s homeless problem is because rent is too high.

I can certainly imagine a 'homeless pipeline' where the children of the parents who get priced out of housing end up doing drugs on the street, but I also know about bussing the homeless and homeless moving to SF because they don't want to deal with a serious winter.

According to Wikipedia: As of 2014, the city is believed to have approximately 7,000 homeless residents. As of 2015, approximately 71% of the city's homeless had housing in the city before becoming homeless, while the remaining 29% came from outside of San Francisco

But I wonder why homeless people don't move to another city. If I'd be in their situation (living in a city where I can not afford to rent a house and live a normal life) I'd go to another city where with a regular job I can afford a normal life and just build my life there.

Sorry if it's a stupid question.

Because there are few cities in the country that are as accommodating to the homeless as SF. And I'm not talking about weather, I'm talking about services, aid, lack of police harassment, etc.

If you're homeless it's certainly the best place in the country to live.

In my experience, the serial startup execs mostly don't live in the city. In the 90s, I knew several who also had an apartment near the office, but that's much less common now that the sort of place they'd want is going for $8K/mo.

People are leaving sv and housing prices are the reason. It's going to lead to brain drain. Why bother with that congested hell hole when you can live anywhere else and cut your cost of living by 50 percent. Your average founder is 30 and they are not into partying. Sv is for 20 year olds

I wouldn't believe that a CEO of a company that has raised $40 million is leaving because his wife needs a roommate to make rent. His wife should probably live with him if she needs to save money.

Fwiw, housing prices (rents) have barely budged in much of the Bay Area for the past 4 years. If the exodus hasn't already happened, I doubt it will.

[1] https://www.sfgate.com/business/article/SF-Citi-video-plugs-...

Jack has been vocal about wanting to pay tax by revenue (or whatever way) to the city. The point that he objects is that Square pays tax more than Saleforce, when Saleforce's revenue is way way more than Square's.

This is an example of US political debate.

Everyone immediately accuses the person of being evil (i.e. not wanting to pay tax and of hating homeless). But nobody actually answers why it makes sense for Square to pay more tax than Saleforce.

Square has the one office in SF, so essentially all of its gross proceeds arise from that office and are subject to the tax.

Salesforce has offices everywhere and a substantial amount of its revenues come from the work of employees outside of San Francisco. This revenue should not be subject to the SF gross revenues tax (and it would be illegal for SF to tax such income).

The question boils down to this: is the disparity in taxes reasonable given the SF-based gross proceeds generated by Square and Salesforce?

EDIT: corrected username

https://sftreasurer.org/business/taxes-fees/gross-receipts-t...

This is just....staggeringly stupid. It just penalizes low margin businesses, for no reason. How can anyone possibly think this is a good idea?

You might want to ask sf.citi, the SF tech industry lobbying group who came up with it in 2012. Here's a video of Jack Dorsey campaigning for the gross receipts tax as CEO of Square.[1]

The argument then, of course, was that we shouldn't tax early stage pre-revenue tech companies based on their payroll because it increases their burn rate. Better to wait until they generate revenue and tax that. Help support the growth of new companies so they can bring in more tax revenue in the long run. Or so the argument went.

Now that they're making money and it's time to pay up, of course, they've changed their tune. Suddenly they've discovered that the system they lobbied for and got is "unfair" and they still shouldn't pay taxes.

[1] https://www.sfgate.com/business/article/SF-Citi-video-plugs-...

Most businesses aim for net income. Most startups don't even try, even if they've raised hundreds of millions of dollars and occupy fancy offices. (It's also very easy for IP-based businesses to shift where income is generated.)

And that's the basic reasoning behind SF's gross proceeds tax. It's a uniquely SV tax that only works because so many unicorns built their house of cards out of claiming revenue for things no other business would claim as revenue.

Yes, it would be great if we could have some kind of Generally Accepted Accounting Practices that would specify what counts as net income and what doesn't.

Why would you want to tax a startup that isn't making any money? The whole point of government taxation is to generate revenue from profitable business activity occurring there. Taxing businesses that aren't even making money is ridiculous.

And sure, you can shift where profits are generated. But you can also just not be in SF. Which is exactly what's happening.

It would be great next time if you can mention the whole reason around. unfairness.

Here's the tweet: https://twitter.com/jack/status/1053312151136362496

Do you think that's fair?

abalone's comment that "they've changed their tune. ... and they still shouldn't pay taxes" could simply be hyperbolic, depending on how charitable people are in their interpretation (e.g. "shouldn't pay [the full amount of] taxes").

I think the main thrust of abalone's comment stands: the CEO of Square pushed for a tax that many think is absurd (e.g. darawk), and now that Square has grown and the tax is unfavorable for them, Square wants to change the tax that it seems to have lobbied for (and presumably thought was fair back then) -- that makes Square seem opportunistic [and not having the community's best interest in mind when the CEO lobbied for the tax]. At least, I think that is abalone's implication.

Jack wanted companies to pay more tax to the city. He helped lobby it.

But this part where Saleforce pays less tax than Square is absurd. So, he's against it.

I don't really see any problem with this line of thinking.

To give the exact number, Square pays 20m, and Saleforce pays 10m. But Saleforce is 2-10x bigger than Square. No matter how you cut it. It's not fair.

I want people to pay more income tax as well (to fund other initiatives). But would I want to pay tax MORE than anybody else? Probably not. Does that make me a hypocrite? Hell no.

It just feels like people are being obtuse at this point :S

Uh, no. Jack has specifically and consistently lobbied against paying taxes (see: previous link). In 2011 he threatened to threatened to move Twitter to neighboring Brisbane unless he got the now infamous mid market tax break.[1] Exactly what Stripe just did. He greatly exaggerates the impact of a hypothetical $10M extra towards fighting homelessness on a $26B company with $3B in revenues.

The best response to this “fairness” line was from Marc Benioff himself, who said to Jack, ok, tell us how much you or Square or Twitter has given towards addressing homelessness in any other form. Crickets from Jack. He really doesn’t like paying taxes or giving.

[1] https://www.sfexaminer.com/news/square-ceo-jack-dorseys-tax-...

Even Benioff merely said ~$10m was nothing to Square. He implied it didn't matter that it wasn't fair because the amount was so little. Like Wut?

Because Square doesn't help homeless much (I don't really know how much compared to Saleforce and other companies), so we make a law for a smaller company to pay tax more than a bigger company? We can simply disregard fairness? Really?

Also, Jack explicitly said that he has no problem paying taxes to the city; he wants to pay tax fairly when considering peer companies. We just gonna need to agree to disagree on whether jack is willing to pay tax.

Maybe -- just maybe -- people understand your point but are bringing up something else that they think is relevant.

> Yet you still doesn't give a straight answer how it is fair that Saleforce pays less tax than Square. I don't blame you. Nobody has answered that question.

I don't think people are saying that the tax situation is fair. Rather, I believe the claim is that Square's CEO is likely not exclusively focused on the unfairness of the situation when he is complaining about the tax situation, but complains about tax in general. I think abalone wouldn't be giving Jack grief (or at least much less), if Jack did not lobby for that tax earlier.

To spell this out further with an extreme example, imagine a recent college grad who's super smart and has the attention of the world. He says "It's crazy that recent college grads are saddled with student loans. Instead, we should soak the rich and heavily tax everyone making $1 million or more." People agree, and the tax is instituted. A few years pass, and after his college debt is forgiven, this recent college grad is doing really well and finds himself making $2 million a year. At this point, he says "It's crazy that higher income workers pay such a high percentage of their income relative to others -- everyone should pay the same percentage." To which people respond "but then we can't forgive student debt with the reduced tax revenue," and yet the recent college grad persists. Do you see the problem with the behavior of the recent college grad?

It might be that the grad sincerely held his conflicting positions when he proclaimed them, but it's also possible that he was always advocating for what was advantageous to himself. Given the short time period (and that the grad makes no offer of accepting his college debt back), people generally guess that he using a sense of fairness to advance his own interests.

Again, I'm not very familiar with the situation, but it seems that the current tax is not a good one, and the CEO of a payments company could have foreseen that it would not be good for his company once his sales got rolling. Why didn't Jack advocate for some other tax scheme earlier, such as one that is based on net income?

I don’t think anybody thinks that either the gross receipts tax (with different rates depending on industry) or the payroll tax (which included stock exercise in payroll) were good ideas. They are inferior alternatives to property taxes (which are capped and distorted by Proposition 13) and income taxes (which RTC 17041.5 prohibits local governments from raising).

“Alex Tourk, spokesman for sf.citi, a tech business group, said San Francisco needs to consider changes to its business taxes. The city is currently reviewing the tax system, which brings in a total of $1 billion annually. But those taxes could climb higher under the revised system.

“Unfortunately, Stripe choosing to leave town is not an anomaly,” he said. “The membership of sf.citi would prefer a more holistic strategy per the mayor’s suggestion that we work together as a collective business community to fix the gross receipts tax once and for all and establish a fair and equitable tax system that we can all rely on.”

Chris Thornberg, founder of Beacon Economics, said businesses leaving San Francisco has more to do with real estate costs and high wages than taxes.

“Taxes don’t have a lot of impact on business decisions. It’s something that has been exaggerated for years,” Thornberg said. Stripe is staying in the Bay Area, so its departure isn’t a blow to the region, he said.”

Said nobody involved with any big business. Amazon in New York, Apple’s avoidance of repatriating cash, etc. Taxes have a massive impact on business decisions all of the time.

This kind of ignorant thinking is what destroyed the yacht manufacturing industry in the US. “Oh, what difference can a small tax make? Whoops, doesn’t matter because I’m a politician and I’m immune to consequences.”

But they do business where they need/want to do business, regardless of the tax situation. Complaining about taxes is just an attempt at leverage to get tax rebates/concessions/exemptions/etc or to structure the final holding company in a way that artificially shields profits so the executives can pay themselves larger salaries and bonuses.

Source: I was a former tax/legal advisor for a number of multinational companies. Out of a few hundred tax structurings, I can count on one hand the number of times that tax rate differentials affected material operational decisions.