The Covid-19 pandemic frees Silicon Valley’s tight grip on the tech industry

Now there’s a small but prominent list of tech companies and investors doing something about it: leaving.

The region’s newest immigrant is Oracle Corp., a database giant, a Silicon Valley game for decades that signed a 20-year agreement last year to put its name on the San Francisco Giants stadium, Oracle Park. The $ 180 billion tech giant said Friday that it has changed its headquarters location to Austin from Redwood City, Calif.

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Oracle provided few details, saying it operated more flexible remote working policies but would not move staff. It follows an announcement earlier this month by Hewlett Packard Enterprise Co., another Silicon Valley-based business technology company, that it is moving its headquarters to Houston – as well as similar moves by several well-known venture capitalists and published in recent months. Elon Musk, who had long lived in Los Angeles and commuted to Tesla Inc.’s operations, said. near San Francisco, last week that he had moved to Texas. And he criticized state policies as restrictive – echoing the arguments of many Bay Area leavers.

These high-profile departures are causing some soul-searching in Silicon Valley – taking some away from the area’s reputation as the unparalleled tech capital. Although reasons vary, the Covid-19 pandemic seems to have triggered many moves that have reshaped ideas of where and how we work, and companies, investors and employees generally are moving to places that warmer, with lower taxes and living costs. .

“Covid basically encouraged people to work remotely and experiment with other places to live,” said Keith Rabois, a well-known San Francisco venture capitalist who is moving to Miami.

Mr. Rabois, a Republican who often contradicts policies enacted by the San Francisco liberal government, said he was frustrated with declining quality of life issues such as homelessness and relatively high state taxes, among other issues, and realized he could do his job job well remotely.

“It became clear that there are much better places to live,” he said.

Despite the moves, Silicon Valley’s place in global technology remains unrivaled. Five of the eight most valuable US companies are based in the region. Big employers like Facebook Inc. and Google parent Alphabet Inc. has added office space in the region even during the pandemic. And the Bay Area has continued to churn out big new companies that captivate investors. The announcement week of Oracle, the distribution company DoorDash Inc., went by. and home-sharing company Airbnb Inc. public with high valuations.

Venture capital funding this year has continued to go to Bay Area startup businesses at disproportionate levels, although the pandemic has made personal meetings with investors there uncommon.

Once offices reopen, even if a large chunk of employees remain isolated, many investors and executives say the value of proximity is so high that they expect the region’s prominence to continue.

Patrick Eggen, co-founder of venture capital firm Counterpart Ventures, says his company’s location in San Francisco’s South Park neighborhood has been crucial to its success – and will be after the pandemic.

“My whole business is relationship focused. Personal meetings are the artery of that existence, “he said.” It gives me an advantage to be here. “

Even if the dominance of the Bay Area is reduced, “you still have the highest concentration of talent, companies and capital,” “The cluster is still here.”

That clustering is considered a major reason for Silicon Valley’s dominance. Big companies grow apart, with engineers leaving established companies to create their own start-ups, and competitors constantly poaching each other. Investors often say they are more comfortable financing companies in their backyard.

Still, as the technology sector has gone from recess to dominant American industry, the region has struggled to keep pace, leading to growing discomfort.

Between 2005 and 2019, employment in the five counties that make up the Bay Area grew 29%, adding 674,000 jobs, according to the California Department of Employment Development. And yet, only 211,000 units were granted building permits, according to the US Census Bureau. Planners say the ratio of new jobs to new housing units should be around 1.5 to one.

The result has been high housing prices and living costs, which in turn fuels even higher costs for paying workers.

Long before the pandemic, tech companies began adding offices in places like Seattle, Nashville and Austin. In recent years, Inc., whose headquarters at Salesforce Tower dominate the San Francisco skyline, has given the same name to buildings in Indianapolis, New York and Chicago. This year, financial technology company Stripe Inc., which had been hiring engineers to work remotely before the pandemic, offered $ 20,000 for workers to move elsewhere – and receive a lower salary based on location.

“There is limited space in the Valley, and we need to scale up and continue to expand,” said Aaron Levie, CEO of Box Inc., a cloud company from Redwood City, California.

Six years ago, Mr. Levie opened a small office in Austin. Now, this is Box’s largest outside Silicon Valley, with hundreds of employees. Given the growing size of the technology sector, he said, it will need to “attract talent wherever it can.”

With a significant technology workforce, coupled with lower housing costs and no state taxes on income or capital gains, Austin has been a popular destination. Apple Inc. said. last year it added a major new facility in the area, and Tesla is building its second US factory there.

Austin Mayor Steve Adler said in an interview that many of the tech companies come without having their court. He said he wasn’t aware of Oracle’s plan until Friday, when the company announced it. “As you begin to build critical mass, it feels like more and more people are expressing interest,” he said.

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