I live in “Silicon Valley” halfway between San Francisco and San Jose. I moved to the Bay Area in 2002 and have loved it ever since. My first impression was that “everyone here loves technology like I do!” and that has stuck with me for 2 decades. However, I see a trend now that is absolutely an existential crisis for the area hosting the highest concentration of tech workers in the world.
The formula was simple:
Stanford and UC Berkeley (Cal) + Sand Hill Road = Startups.
A few startups do well and start hiring people. If they are big enough, they re-create the atmosphere of Stanford University in the office and call it a “campus”. (e.g. Apple, Google, Oracle, etc) They hire top notch chefs to cook free food and give amazing benefits if you just stay in the office and keep working. (e.g. massages, onsite dry cleaning, etc)
The serendipity of meeting people in the hallways and at lunch counters was thought of as the whole reason we come to the office. I remember walking the halls of Marketo looking for people working late at night just so I could help them. The office was where we worked. We defined our headquarters in real concrete terms.
Seemingly overnight, everyone went home. In hindsight, that year was insane. Offices liquidating everything including desks, plants, paintings, and more. People refurnished their homes and upgrading their office setup. The whole world turned upside down. All of our assumptions were tossed out the window. No longer could I walk the halls; there were no halls!
Questions started popping up: How do we collaborate? How do we meet? How long will this last? It was a weird time.
Zoom, Figma, Miro
Zoom existed before Covid and we used it of course. It was a normal part of working in an international company. However, it wasn’t until Covid that Zoom emerged as the most important single technology in the world. The zoom meeting became the ONLY meeting. As the year dragged on, we got used to Zoom and started to think how life might be different. Figma and Miro provided ways to work together digitally.
The Great Exodus
Once it was clear that you had to stay in your house and every bar and club were closed, living in a city became somewhat meaningless. Why should you be stuck in an expensive, tiny apartment with roommates when you could live in Tulsa like royalty for the same money? If we are all going to be zooming together, then all you need is a laptop and a good internet connection. I even considered moving north to the Canadian wilderness.
The offices in the area had become totally empty. You could see through the windows to empty floors in every office building. Houses and apartments started to be empty too. Most of the designers on my team moved to more economically friendly locations.
The 2023 Recession
Now we enter the worst part of the situation. Inflation is up and growth stocks are no longer the darlings of Wall Street. This means that companies are going to have cut costs. Suddenly, we have a new formula.
Working remote with Zoom + English is the most used language in the world + ubiquitous internet access + cost cutting = Stop hiring expensive local talent.
For the same reason that people moved away from the cities, companies are opening up offices in low cost centers in Europe, China, and Middle East. I myself am hiring junior designers in Tel Aviv for 60% of the cost of a US designer. Prague designers have the potential to be even less. Why would you hire local in the US if you can get good talent elsewhere?
If there is no office, then who cares where they live? Why not hire 3x as many people for the same cost as a US worker.
The problem with the Bay Area is now really about the globe. It’s not flat. We are all the way on one end of the world and Europe is in the middle. If your engineering is in the far east, you would need to stay up late. If it’s in India, you literally have a 12.5 hour difference. If you have people spread all over the world, there is literally no time of day when everyone is awake.
When I am working with a Tel Aviv designer, it looks approximately like this:
This means I have been waking up at 6am for my first meetings. If all of the engineers and product managers are east of me, then I am literally living in the worst time zone imaginable.
So where should I live?
If I was on the east cost, I could start at 9am, but it only 3 hours better. The best place to be is actually in the literal middle. You then have access to most people in the world. Europe is now the new “center of the business universe” not because of where the actual people work or where the business actually is set up, but because it is the middle geographically.
Funny enough, it is the reason I moved to San Mateo. It is in the “center” of the Bay Area and accessible by everyone here. Little good that does me when my coworkers are on the other side of the planet.
I think that US workers are making a horrible mistake. After Covid, many people are insisting on working from home. This is a nice “perk” they say. Unfortunately, by insisting on working from home, they are likely going to be replaced by cheaper workers in other countries. There is no longer a benefit to hiring the US (especially Silicon Valley) tech worker. They are more expensive AND they are living in the worst possible time zone.
Silicon Valley is screwed unless everyone insists on being in the office and stop zooming. Sadly, I think you can’t put the toothpaste back in the tube. I think we have opened the door to remote workers and they are doing well at a lower cost.
- Silicon Valley offices will remain empty and eventually be turned into housing for the poor. The population will decline every year for the next 20 years.
- Companies will continue to hire global teams
- These cities (Prague, Dublin, Tel Aviv, etc) will have wages and employment go up dramatically and spur serious economic growth. This may increase happiness on a broader level as economic benefits are spread around and not concentrated in one area.
- Unemployment of tech workers will start to rise and force more people to move abroad or to cheaper areas.
- American tech brain drain may become a real issue in a few years
Covid changed the world and we don’t even realize how far those changes will ripple. I think they will have worldwide impact for decades.