[7Figures2Commas]

> But my question: where is the evidence that tech companies are not able to be profitable with their high payroll costs?

You could look at the growing number of layoffs at post-seed stage companies[1].

Or you could look at startups that voluntarily publish financial information. Take, for example, this one[2], which, as of June, was spending $525,000/month on payroll (equating to an all-in cost of $146,000/year per employee) when it had less than $300,000 of monthly bookings revenue.

A lot (perhaps the majority) of venture-backed Bay Area startups are entirely dependent on investor money to sustain their workforces at their current sizes. Even some of the tech companies in the area that have gone public aren't profitable. FireEye and Marketo are two that come to mind.

Everybody has been trading profitability for growth, and that's a game most will eventually lose.

[1] https://news.ycombinator.com/item?id=10517445

[2] https://news.ycombinator.com/item?id=10049808

[charlesdm]

He said tech companies, not startups.

For tech companies, it doesn't really matter. They have unlimited money (relative to the cost of an employee). For startups, it does.

[7Figures2Commas]

1. Since when did "tech company" come to mean "non-startup"? Lots of startups are by definition technology companies.

2. Many people in the Bay Area are employed by angel and venture-backed startups, so how does it make sense to ignore them? If and when there's a significant downturn that results in the unsustainable startup herd being culled, not all startup employees are going to find six-figure replacement jobs at companies like Google and Facebook. People who lived through the first .com bust know how fast the job market can dry up for a large subset of employees.

3. It is absolutely not true that the Bay Area's unprofitable publicly-traded tech companies have "unlimited money" relative to anything. Review their SEC filings and you can determine how much money they have down to the dollar. You should not be surprised when those that struggle to reach profitability sooner or later take cost-cutting action, which may include layoffs and adjustments to employee compensation. Twitter just did this. Even profitable tech companies, like IBM and HP, have laid off significant numbers of employees. Bottom line: when push comes to shove and the shit hits the fan, companies tend to use large knives, not scalpels.

[sawthat]

Of course, but there is no evidence that operating in Tulsa would prevent that.

[sawthat]

I worked in Colorado after the .com crash, the tech industry was devastated there, Bay Area companies that had opened offices in the area reconsolidated back in the Bay Area, rather than take advantage of lower payroll costs in Denver. It sounds good on paper to move out of the area, in practice it hadn't happened yet.