Tech

Covid-19 Pandemic Lucens A tight grip on Silicon Valley’s tech industry

For most of the last decade, the San Francisco Bay Area has been tense to absorb the tremendous growth of the tech sector. As the number of high-paying engineers increased, housing costs soared, traffic jams increased, and homeless tents spread across the streets of the city.

Currently, a small but prominent roster of tech companies and investors is doing something about it: leaving.

The latest immigrant in the region is the database giant Oracle. Co., Ltd.

ORCL 1.90%

Decades of Silicon Valley fixtures last year signed a 20-year contract to name the San Francisco Giants stadium, Oracle Park. A $ 180 billion tech giant said Friday that it had relocated its headquarters from Redwood City, California to Austin.

Oracle has implemented a more flexible remote work policy, but said it wouldn’t move staff and provided some details. This follows the announcement by Hewlett Packard Enterprise earlier this month. Co., Ltd.

HPE -1.07%

, Another business technology company deeply rooted in Silicon Valley, has relocated its headquarters to Houston, as well as similar relocations by many well-known venture capitalists announced in recent months.Elon Musk, who lived in Los Angeles for a long time and commute to Tesla Of a corporation

An operation near San Francisco said he had moved to Texas last week. And he criticized state policy as restrictive, reflecting the arguments of many leaving the Bay Area.

These attention-grabbing departures have sparked some soul quest in Silicon Valley, somewhat shining the region’s reputation as a capital of unparalleled technology. For a variety of reasons, many movements seem to have been triggered by the Covid-19 pandemic, which reshaped the concept of where and how we work. Businesses, investors and employees are generally moving to warmer places with lower taxes and living expenses. ..

Keith Labois, a San Francisco-based venture capitalist moving to Miami, said he was dissatisfied with the diminished quality of life problem.


Photo:

David Paul Morris / Bloomberg News

“Covid basically encouraged people to work remotely and experiment in other places of residence,” said Keith Labois, a well-known San Francisco-based venture capitalist migrating to Miami. It was.

Republican Labois, who often conflicts with policies enacted by San Francisco’s liberal government, said he was dissatisfied with reducing quality of life issues such as homelessness and the relatively high taxes of the state. I realized that I could work well from a distance.

“It became clear that there was a better place to live,” he said.

Despite the move, Silicon Valley’s position in global technology remains unmatched. Five of the eight most valuable US companies are based in the region. Major employers like Facebook Co., Ltd.

And Google’s parent alphabet Co., Ltd.

Even during the pandemic, we have added office space to the area. And the Bay Area continues to create major new companies that attract investors.Oracle’s announcement week, delivery company doordash Co., Ltd.

And home sharing company Airbnb Co., Ltd.

The valuation soared and was released.

This year’s venture capital funding continues to be directed to Bay Area start-ups at disproportionate levels, despite pandemics making face-to-face investor talks rare.

Depart from Silicon Valley

When the office reopens, many investors and executives say they expect the region to continue to excel because of the high value of proximity, even when many workers are remote. I will.

Patrick Eggen, co-founder of venture capital firm Counterpart Ventures, says his location in San Francisco’s South Park district is critical to success and after a pandemic.

“All my business is relationship-oriented. Meeting in person is the artery of its existence,” he said. “It gives me the advantage of being here.”

Even if the Bay Area’s dominance diminishes, “talents, businesses and capital are most concentrated,” he said. “The cluster is still here.”

That clustering is believed to be the main reason Silicon Valley dominates. Large companies grow with each other, engineers leave established companies to create their own startups, and rivals are constantly poaching each other. Investors often say they are a more comfortable financing company in their backyard.

Still, as the tech sector shifts from a niche to the dominant industry in the United States, the region is struggling to catch up and increasing discomfort.

Between 2005 and 2019, jobs in the five counties that make up the majority of the Bay Area increased by 29%, adding 674,000 jobs, according to the California Employment Development Department. Still, according to the US Census Bureau, construction permits were issued for just 211,000 units. Planners say the ratio of new jobs to new housing units should be about 1.5: 1.

As a result, home prices and living costs have skyrocketed, resulting in even higher costs for paying employees.

Long before the pandemic, tech companies began adding offices in locations such as Seattle, Nashville, and Austin. Salesforce.com Inc, where the Salesforce Tower headquarters dominates the San Francisco skyline. Has recently given the same name to buildings in Indianapolis, New York, and Chicago. Stripe Inc, a financial technology company that hired engineers to work remotely before the pandemic. This year, it offered $ 20,000 to employees to move to other locations and accept reduced salaries depending on the location.

“The valley has a finite amount of space that needs to grow and grow,” said Box CEO Aaron Levie. Co., Ltd.

A cloud company based in Redwood City, California.

Six years ago, Levie opened a small office in Austin. Today, it’s the largest box outside Silicon Valley and has hundreds of employees. Given the growing size of the technology sector, he said, “attracting as much talent as possible” is needed.

Austin is a popular destination due to its significant technical workforce, low housing costs, and no state taxes on income and capital gains.Apple Co., Ltd.

Last year, Tesla announced that it would add a large new facility to the area, and Tesla is building a second US factory there.

Austin Mayor Steve Adler said in an interview that many tech companies come in without being in court. He said he was unaware of Oracle’s plans until Friday, when the company announced it. “When we start building critical mass, it feels like more and more people are interested,” he said.

Write to Eliot Brown (eliot.brown@wsj.com) and Aaron Tilley (aaron.tilley@wsj.com)

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Covid-19 Pandemic Lucens A tight grip on Silicon Valley’s tech industry

Source link Covid-19 Pandemic Lucens A tight grip on Silicon Valley’s tech industry

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