[moate]

The solution is equal parts "more remote work" and "you don't need to be based in the Valley to be a tech company, so go make your physical location somewhere that people can afford". It's this whole chicken vs. egg of "The valley attracts talent so we should be where the talent is".

[esonderegger]

I spent a lot of time asking myself the question "would this company be successful if it had been started in St Louis?". On the one hand, they could offer an incredible salary to cost of living ratio. However, when I thought about my coworkers, a good number of them had spouses/significant others who worked for Facebook/Apple/Google. Also, there was a lot of value in knowing that if this company went belly-up, there would always be another company nearby to work for.

At least in this case, the decision to be located in the valley was rational at the individual level, even if it may be irrational collectively.

I think Seattle, Boston, LA, and NYC also have critical masses of talent that make them acceptable for starting a tech company, but unfortunately those places aren't really affordable either. The decrease in proximity to talent and capital probably isn't worth the marginal savings in cost of living.

If anyone is going to break the chicken vs. egg cycle and set up shop somewhere truly affordable, I think it will have to be one of the big companies, opening up a satellite office and offering employees the ability to choose where they want to work. They're all so profitable that they don't seem to mind the money that's going to Bay Area landowners. I wonder how expensive things will have to get before they start to get creative.

[jarcane]

The Valley attracts talent only because that’s where all the startup jobs are. If you don’t want to work in startups, or if startups would branch out and stop glomming on to single locations, this would equalize more.

[nostrademons]

It's really more the established tech companies that draw the talent out here. In this generation, that's Google/Apple/Facebook; before that, SGI/Tandem/Sun/Cisco/Oracle/Yahoo; before that, HP/IBM/Ampex/Shockley/Lockheed/Stanford. They're the ones with generous relocation packages, a national brand name, and the ability to give an attractive offer to anyone in the world.

The startup ecosystem feeds off of that and California's outlawing of noncompetes. Employees get bored at working at a big company and have an idea for some way to employ the technology they've learned towards another industry. There's ample angel investors & VC floating around because of the profitability of previous companies. Oftentimes they have a spouse at one of the big companies who can continue to provide stability & health insurance.

The list of famous companies out here that can trace their ancestry back to one of [Shockley, Ampex, Stanford, IBM, HP] includes Fairchild, Intel, AMD, NVidia, Kleiner Perkins, Sequoia Capital, Atari, Dolby, Oracle, Salesforce, Memorex, Seagate, Apple, General Magic, Radius, Claris, E-Bay, StumbleUpon, Uber, Danger, Android, Nest, Be, NeXT, SGI, Cisco, Sun, Tandem, Siri, Yahoo, Google, Odeo, Twitter, Square, YCombinator, Netgear, Netscape, LoudCloud, Ning, a16z, Instagram, Whatsapp, Paypal, Slide, Yelp, Palantir, YouTube, LinkedIn, and likely many others. That's using a definition of "trace their ancestry back" as "a founder previously was an employee of or student at one of the other organizations in the set." Pretty much the only major Silicon Valley companies that are not included are the various YC companies (Reddit, AirBnB, Dropbox, Stripe, etc.) and Facebook, all of which would be if you extend the definition of "ancestry" to include "seed funder was in the set". (YC is in the set via Stanford => Yahoo => YC, Facebook's first investor was Peter Thiel, who got his BA and JD from Stanford.)

[moate]

Right, it becomes a self-fulfilling prophecy. It's a group of rational individuals making creating a collectively irrational choice.