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SAN FRANCISCO — The Bay Area struck a hard bargain with its tech workers.
Rent was astronomical. Taxes were high. Your neighbors didn’t like you. If you lived in San Francisco, you might have commuted an hour south to your job at Apple or Google or Facebook. Or if your office was in the city, maybe it was in a neighborhood with too much street crime, open drug use and $5 coffees.
But it was worth it. Living in the epicenter of a boom that was changing the world was what mattered. The city gave its workers a choice of interesting jobs and a chance at the brass ring.
That is, until the pandemic. Remote work offered a chance at residing for a few months in towns where life felt easier. Tech workers and their bosses realized they might not need all the perks and after-work schmooze events. But maybe they needed elbow room and a yard for the new puppy. A place to put the Peloton. A top public school.
They fled. They fled to tropical beach towns. They fled to more affordable places like Georgia. They fled to states without income taxes like Texas and Florida.
That’s where the story of the Bay Area’s latest tech era is ending for a growing crowd of tech workers and their companies. They have suddenly movable jobs and money in the bank — money that will go plenty further somewhere else.
But where? The No. 1 pick for people leaving San Francisco is Austin, Texas, with other winners including Seattle, New York and Chicago, according to moveBuddha, a site that compiles data on moving. Some cities have even set up recruiting programs to lure them to new homes. Miami’s mayor has even been inviting tech people to move there in his Twitter posts.
I talked to more than two dozen tech executives and workers who have left San Francisco for other parts of the country over the last year, like a young entrepreneur who moved home to Georgia and another who has created a community in Puerto Rico. Here are some of their stories.
Ah, the normal life
“I miss San Francisco. I miss the life I had there,” said John Gardner, 35, the founder and chief executive of Kickoff, a remote personal training start-up, who packed his things into storage and left in a camper van to wander America. “But right now it’s just like: What else can God and the world and government come up with to make the place less livable?”
A couple of months later, Mr. Gardner wrote: “Greetings from sunny Miami Beach! This is about the 40th place I’ve set up a temporary headquarters for Kickoff.”
Remote personal training happens to coincide well with remote life, but he said his start-up’s growth this past year was also due to his leaving the tech bubble and immersing himself in more normal communities, a few days at a time.
The biggest tech companies aren’t going anywhere, and tech stocks are still soaring. Apple’s flying-saucer-shaped campus is not going to zoom away. Google is still absorbing ever more office space in San Jose and San Francisco. New founders are still coming to town.
But the migration from the Bay Area appears real. Residential rents in San Francisco are down 27 percent from a year ago, and the office vacancy rate has spiked to 16.7 percent, a number not seen in a decade.
Though prices had dropped only slightly, Zillow reported more homes for sale in San Francisco than a year ago. For more than month last year, 90 percent of the searches involving San Francisco on moveBuddha were for people moving out.
Twitter, Yelp, Airbnb and Dropbox have tried to sublease some of their San Francisco office space. Pinterest, which has one of the most iconic offices in town, paid $90 million to break a lease for a site where it planned to expand. And companies like Twitter and Facebook have announced “work from home forever” plans.
“Moving into a $1.3 million house that we saw only on video for 20 minutes and said yes,” wrote Mike Rothermel, a designer at Cisco who moved from the Bay Area to Boulder, Colo., with his wife last summer. “It’s a mansion compared to SF for the same money.”
The amount of room they have felt surreal after various Bay Area apartments. He told me they have so much counter space, they can keep appliances like the food processor in the kitchen itself.
And then the people around them — neighbors — started doing something strange. They brought cinnamons rolls and handwritten welcome notes.
Wait, no income tax?
“We’re selling our house and moving out of SF. Where should we go and why?” Justin Kan, a serial entrepreneur who co-founded Twitch, asked on Twitter in August.
Joe Lonsdale, a co-founder of the software company Palantir, which moved from Silicon Valley to Denver, wrote back: “Come to Austin with us. Growing tech ecosystem and Texas is the best place to make a stand together for a free society.”
Also: no state income taxes.
Austin, population one million and the Texas city most would say is closest in spirit to the Bay Area, has long had a healthy tech industry. The computer giant Dell is based nearby. The University of Texas is one of the top public colleges in the country. And the music scene is eclectic and creative.
Now the local tech industry is rapidly expanding. Apple is opening a $1 billion, 133-acre campus. Alphabet, Amazon and Facebook have all either expanded their footprints in Austin or have plans to. Elon Musk, the Tesla founder and one of the two richest men in the world, said he had moved to Texas. Start-up investor money is arriving, too: The investors at 8VC and Breyer Capital opened Austin offices last year.
Some of the favorite gurus of tech workers are already there, like Tim Ferriss, life-hacker, who left for Austin in 2017, and Ryan Holiday, whose writing about stoicism is influential among the start-up set.
Sahin Boydas, the founder of a remote-work start-up who had lived in San Francisco and its suburbs over the last decade, saw all of that. He looked at his wife and two young children, working and learning from home while crammed into a Cupertino rental that had seen better days. Much of the late summer, the air was full of smoke from wildfires. For days, electricity would go in and out at his house.
“You start to feel stupid,” said Mr. Boydas, who is 37. “I can understand the 1 percent rich people, the very top investors and entrepreneurs, they can be happy there.”
So he and his family moved to Austin. For the same price as their three-bedroom apartment in Cupertino, they have a five-bedroom home on an acre of land. For the first time, Mr. Boydas has outdoor space. He just acquired two rabbits for his children. Sure, it’s (very) hot, but he’s ready for it.
“We’re going to get a cat and a dog,” he said. “We could never do that before.”
And it’s not just the cost of rent that is lower — the water bill is lower; the trash bill is lower; the cost of a family dinner at a restaurant has fallen significantly. Mr. Boydas said he hadn’t even known about the taxes.
“I run payroll for myself, and when I saw zero, I called the accountant like there’s an error — there’s no tax line here,” he said. “And they were like, ‘Yeah there’s no tax.’”
“Ok guys hear me out, what if we move Silicon Valley to Miami,” tweeted Delian Asparouhov, a principal at Founders Fund, which invests in start-ups.
The mayor of Miami wrote back last month: “How can I help?”
Now there is a very vocal Miami faction, led by a few venture capital influencers, trying to tweet the city’s start-up world into existence.
The San Francisco exodus means the talent and money of newly remote tech workers are up for grabs. And it’s not just the mayor of Miami trying to lure them in.
Topeka, Kan., started Choose Topeka, which will reimburse new workers $10,000 for the first year of rent or $15,000 if they buy a home. Tulsa, Okla. will pay you $10,000 to move there. The nation of Estonia has a new residency program just for digital nomads.
A program in Savannah, Ga., will reimburse remote workers $2,000 for the move there, and the city has created various social activities to introduce the newcomers to one another and to locals.
“We try to make the transition easy,” said Jennifer Bonnett, vice president of Innovation & Entrepreneurship at the Savannah Economic Development Authority, whose program started in June.
Keyan Karimi, 29 and a start-up investor, took Savannah’s invitation to move there (though he didn’t ask for the reimbursement).
Seeing the inequality of billionaires in San Francisco’s wealthy Pacific Heights neighborhood and the homeless camps down the hill ground on him. So Mr. Karimi went home to his parents house in Atlanta to ride out some of the pandemic. Then he detected something strange. The city he thought was boring had gotten pretty interesting. Or maybe he had just never noticed before.
“I had no idea how much was going on here. I was sort of myopic,” he said, pausing and correcting himself: “No, I was arrogant.”
Mr. Karimi started looking at Zillow and studying the Southern cities he had ignored. He likes old houses and wants to fix one up. Savannah has a lot of those. So just a few months after leaving his $4,000-a-month one-bedroom in San Francisco, he’s working with the local business development group to put together a maritime innovation center in Savannah to invest in and guide shipping and logistics start-ups. He bought one of those old houses.
Savannah has one of the largest ports in the country. “No one knows that,” Mr. Karimi said. “I figure we can do something with that.”
The only downside is mosquitoes, he said. “I get eaten alive.”
There are 33,000 members in the Facebook group Leaving California and 51,000 in its sister group, Life After California. People post pictures of moving trucks and links to Zillow listings in new cities.
The founder of both groups, Terry Gilliam, is planning to take members on a house-hunting road trip through eastern Tennessee this spring with stops in popular post-S.F. destinations. One tour will be Chattanooga, Knoxville and Johnson City.
“When people decide to leave San Francisco, they usually don’t know where they want to go, they just want to go,” Mr. Gilliam said.
Mr. Gilliam, who met his wife when they worked at a Bay Area Chili’s restaurant, said she wouldn’t let the family move yet. And so the Pied Piper of the California-bashing Facebook community is still in Fremont, on the eastern end of Silicon Valley.
The gang’s all … here now
“People always get pissed at me when they hear birds in my Zoom,” said Ed Zaydelman, a longtime leader in San Francisco’s Burning Man community (and former New York City club promoter), who is forming an entrepreneur community in Costa Rica. “And I say, ‘Come join.’”
If San Francisco of the 2010s proved anything, it’s the power of proximity. Entrepreneurs could find a dozen start-up pitch competitions every week within walking distance. If they left a big tech company, there were start-ups eager to hire, and if a start-up failed, there was always another.
They could live jammed into a rambling Victorian with fellow nerds who — thanks to the popularity of polyamory — were having a lot of sex. More money was made faster in the Bay Area by fewer people than at any other time in American history.
No one leaving the city is arguing that a culture of innovation is going to spring up over Zoom. So some are trying to recreate it. They are getting into property development, building luxury tiny-home compounds and taking over big, funky houses in old resort towns.
“All these people want to do is this live-on-the-land stuff, but it’s not as easy as people think,” Mr. Zaydelman said.
He calls his new development company Nookleo, and he is building five tiny-home communities for remote workers. The little houses cost between $30,000 and 40,000. Each compound has four to six homes, a small organic farm, a yoga deck, a swimming pool and a kitchen clubhouse. Two clusters are already underway in Costa Rica, with Mexico and Portugal next.
In Puerto Rico, Gillian Morris, the founder of the travel app Hitlist, is also recruiting. Her San Francisco breaking point came after her roommate was attacked on their street, and she did a sort of gut check of herself over whether the street scenes and feeling of danger were worth the high rent. She moved to San Juan in 2019, even though it also has a crime problem. But now she lives in a huge house in the middle of the city.
“I have 12 people leaving San Francisco over the next three months to join a co-living community I set up,” she said. “It’s amazing here.”
And for the Baja-leaning, there is Bear Kittay, a co-founder of Good Money, an online banking platform. Now Mr. Kittay, another longtime fixture of the Burning Man festival turned developer, is building a property for the new digital nomads.
“The things that make this city ill are not within my control to change,” he said of San Francisco. “A lot of people are choosing to go to places where there’s opportunity, and maybe it’s a place that is more conservative and there can be an integration of dialogue. Or a place where they can live closer to nature. That’s what we’re doing.”
Nikil Viswanathan, who co-founded the blockchain start-up Alchemy, recently fled San Francisco. He said that there was no reason anymore for him or his colleagues to be there, and that he had always wanted to live on the beach. So now he does, in San Diego.
But the expats still find one another. Not long ago, he stumbled on a cluster at a party.
“I knew it was an S.F. crew because when I walked in because they had the full dual monitor with the ergonomic keyboard on a standing desk,” Mr. Viswanathan said, adding that conversation revolved around the lower cost of living. “One of the S.F. guys was like: ‘I just had a burrito for $6. It was amazing.’”
The last burrito he had in San Francisco cost $15.
They won’t necessarily be missed
Longtime Bay Area residents may well say good riddance to people like Mr. Viswanathan. People who distrusted the young newcomers from the start will say this change is a good thing. Hasn’t this steep growth in wealth and population in a tiny geography always seemed unsustainable?
These tech workers came like a whirlwind. Virtually every community from San Jose in the south to Marin County in the north has fought the rise of new housing for the arrivals of the last decade. Maybe spreading the tech talent around America is smart.
Locals have also seen this play before. Moving trucks come to take a generation of tech ambition away, and a few years later moving trucks return with new dreamers and new ambitions.
After the dot-com bust in 2001, there were fallow years before the latest, long-lasting boom — just as there were fallow years after the PC industry consolidated a decade earlier. That led to the dot-com boom. It is the circle of life in the Bay Area.
And those who are staying are digging in. “When 12 friends left, it felt like powerlessness,” said Diana Helmuth, a 32-year-old writer and marketer in Oakland. “Like these forces were too big. The forces of the world felt too big.”
Now, though, she is hardening toward those who say life is better somewhere else and were in town only for a job. “I say, ‘Great, goodbye, have a great time somewhere else.’”
Source: The NY Times
Keyword: They Can’t Leave the Bay Area Fast Enough