[JumpCrisscross]

> Can someone explain to me why California would believe Sam Altman plans to stay in California?

The simple answer is unless developing LLMs becomes commoditised, the best place in the world to do it is in San Francisco. You don't take your manufacturing business out of Shenzhen without very good reason.

[terminalshort]

Seems a little easier than that, though, because there are no supply chains involved (other than for the data centers, but those are already not in SF). Why else would the CA government be worried?

[standardUser]

There's books written about the Bay Area and the factors that make (or made) it uniquely suited for developing new technologies. There's even college courses about it. Some of it's surely provincial fluff, but it's undeniable that California has been an essential incubator for a whole series of world-changing, fortune-making technologies.

[terminalshort]

I don't want to downplay the network effects here, but it's in CA entirely by coincidence. SV is in CA because William Shockley's family is there, which is why he founded Shockley Semiconductor there. It could have been somewhere else. The 2nd largest tech hub is in Seattle. It's there because that's were Bill Gates is from. Is SF the best place to start a startup if you want in office talent in 2025. 100% yes, but that has nothing to do with the Bay Area and everything to do with accidents of history.

[JumpCrisscross]

> that has nothing to do with the Bay Area and everything to do with accidents of history

I think you’re wrong. But that’s irrelevant. The fact that it exists now is what gives it staying power. One of the surest bets I’ve seen in seed and Series A investing is when a market has one or two competitors in a cluster and the rest outside. The insiders win. Always. It’s the easiest bulldozing strategy that exists.

[csomar]

> I think you’re wrong. But that’s irrelevant.

It's on you to prove the parent wrong and you provided nothing to explain why the Bay Area is special beyond history/staying power.

[JumpCrisscross]

> It's on you to prove the parent wrong and you provided nothing to explain why the Bay Area is special beyond history/staying power

I’m literally saying it’s irrelevant due to incumbency effects. If someone is doing something AI outside the Bay Area, a decent business is to copy and outraise them.

[CPLX]

It goes back way way further than that. The special mix of government funded technology, ruthless entrepreneurship, and social engineering predates Shockley by almost 100 years.

Start by figuring out who Leland Stanford is and how he got rich. Read the book ‘Palo Alto’ if you’re looking for a good starting point.

[vlovich123]

Yeah it’s quite bold to suggest that Shockley would have done the same thing outside the environment of the Bay Area rather than that someone other than Shockley would have done what he did in California if he wasn’t there or that even if he did it outside California that people inside California still industrialize it. It’s a very individualistic view of progress which is uniquely American and unlikely to capture how stuff happens given that multiple discoveries often happen simultaneously by people working on the problem (eg calculus and Newton vs Leibniz).

The truth is the Bay Area has structural reasons why SV happened and why the same thing has failed to replicate to any significant degree outside the Bay Area.

[bix6]

Just borrowed thanks for the rec!

[ac29]

Yep, I would highly recommend reading the Secret History of Silicon Valley for those that are interested: https://steveblank.com/secret-history/

[shuckles]

Shockley Semi was founded 16 years after Hewlett Packard, so you have to keep reaching backwards.

[Hansenq]

Not entirely by coincidence. Yes Shockley was from CA, but as late as the 1980, two places were competing to be the center: Boston's Route 128 ("America's Technology Highway") or Silicon Valley.

Silicon Valley won out because the CA constitution explicitly prohibits non-competes (which MA allows), leading to more rapid innovation. Very likely the infamous Traitorous Eight who left Shockley Semiconductor to found Fairchild could not have done that if noncompetes could be enforced.

[fragmede]

Non-competes are one aspect, absolutely. However that's can't be the whole story because that applies to all of California and it's a decently sized state, with a lot of other areas. Any part of the southern California basin, San Diego, and Sacramento. If we include smaller areas (because silicon valley was once just apple orchards, that list gets longer.

[okdood64]

> There's books written

Which?

[booi]

except developing AI is very much a knowledge exercise with very little dependency on location.

You don't move your manufacturing business out of Shenzhen because the entire hard supply chain from mining, refining, manufacturing, test, ship and trade are all there. You can't move a refinery that easily much less the entire supply chain.

[brokencode]

Sure, but most of the country’s AI talent is concentrated there. Not to mention venture capital.

What’s the advantage of moving? Maybe lower taxes and a cheaper rent.

That seems like a small price to pay compared to the hundreds of billions they’re putting into data centers.

[alfalfasprout]

They're concentrated there because they've been asked to concentrate there. That can change on a dime.

It's not like data centers are mainly in SF.

[hamdingers]

You've got it backwards.

Well paid engineers congregate in California because it's a nice place to live if you can afford it.

Therefore if you want to hire the best engineers, and want an in-office work culture, you need to go to California.

[terminalshort]

Well paid engineers congregate in CA because that's where the companies that hire well paid engineers congregate, and they (mostly) want those well paid engineers to come to the office every couple of days. I don't know how you could get the causality so completely backwards on this.

[AdamN]

Depends on the type of engineer - NYC for fintech is also a top spot, Boston for robotics, etc...

[ozozozd]

Anecdotal evidence: I moved to CA twice as an engineer.

Once to get my masters after college. Stayed for 13 years. Left during COVID.

Second time to raise kids.

Our reasons include weather, intellectual atmosphere, safety (in many regards), schools, and job opportunities.

The geo area sandwiched between Berkeley and Stanford is only rivaled by Boston. You think Stanford and Berkeley are in the Bay because they’re told to?

And I would also question: what’s the point of living in US if you’re not in California? Once you decide to not live in CA, a bunch of other countries rank better than other US states. Such as Canada, Australia, New Zealand.

If I were to not live in CA, even the imperial units would quickly become annoying.

[FajitaNachos]

How many other places, inside and outside the U.S., have you lived?

[vessenes]

I think you're wrong. The concentration is for a host of reasons. Witness the large number of cities and countries that have tried to create a local Silicon Valley competitor unsuccessfully over the last 25 years.

The data centers I think prove this point, and disprove yours -- huge spend has gone into data centers, but places like Wenatchee remain stubbornly not Silicon Valley.

Intel has not made Portland into SV. Austin, while a tech hub and one of the US supply chain centers for hardware, is multiple orders of magnitude less productive than SV for tech startups. Productive as in numbers of unicorns, total value creation, however you want to spin it.

[shuckles]

> That can change on a dime.

People tried very hard to change it between 2020-2023 and utterly failed.

[bchasknga]

Cries in the number of "next Silicon Valley" in the last 30 years.

[fragmede]

Silicon Alley, Beach, Hills, Slopes, Forest, Prairie, Bayou, Desert, Roundabout, Docks, Glen, Fen, Cape, Oasis... and that's not the complete list!

[yellow_postit]

The Texas Stock Exchange launches next year and I predict we will see a lot of tech try to move to launch there given txse claim to have lower compliance and less esg needs.

[JumpCrisscross]

> Texas Stock Exchange launches next year

The TXSE was launched by an energy magnate [1] and "is financed by institutional investors including Charles Schwab, Fortress, BlackRock, and Citadel Securities" [2]. It's a direct response to the NASDAQ and NYSE putting their feet down on carbon emissions.

Nothing about its structure requires a company be incorporated in Texas much less based there [3]--those restrictions would go against the reason it was founded.

[1] https://en.wikipedia.org/wiki/Kelcy_Warren

[2] https://en.wikipedia.org/wiki/Texas_Stock_Exchange

[3] https://www.hunton.com/insights/legal/a-comparative-analysis...

[everfrustrated]

I learned recently that Nasdaq imposes DEI on companies as a requirement of listing.

[kasey_junk]

The 5th circuit struck those rules down last year.

[nradov]

I doubt it. The state where a company is incorporated or has its headquarters located doesn't impact where it can list shares. There are several foreign companies with no significant US operations which are listed on US stock markets just to gain access to capital.

[kasey_junk]

Not to mention that the actual trading will happen in New Jersey

[seanhunter]

You know that Nasdaq isn't in Silicon Valley right? Lots of companies are based in the valley, listed in either CA or Delaware and go on to list in NYC now. There's no compelling reason for them to move to Texas.

As for the compliance thing it remains to be seen, but generally companies in low-compliance jurisdictions trade at a "fraud discount" to compensate investors for the likelihood of untoward shenanigans that would be prevented by that compliance.

[fragmede]

Stock exchange aside, being able to build buildings without getting held of years or even decades for an endangered tree frog, and also employees being able to afford housing are kind of important to companies. Texas has its downsides, for sure, but it would be silly to pretend there aren't other reasons for companies to move there that have nothing to do with the new stock exchange.

[afavour]

It’s frauds all the way down

[vessenes]

downvoted -- this is a low quality comment, and worse, it's uninformed. Texas may be lower reg than NASDAQ at launch, and it may compete for business that way, and consumers may or may not like this and may or may not benefit from it.

However, post Sarbox US is vastly more regulated than the markets that "built" Silicon Valley, and there are many costs to corporations, founders and employees of that heavier regulation -- including a radically less friendly public capital market for companies worth hundreds of millions of dollars.

[BobaFloutist]

That still doesn't explain the value of Sam Altman's pinky promise.

[JumpCrisscross]

> doesn't explain the value of Sam Altman's pinky promise

The MOU [1] requires OpenAI "provide at least 21 days’ prior written notice to the Attorney General before consenting to: (a) a change of control of the PBC; (b) any change to the PBC mission as set out in the PBC Delaware charter; (c) any amendment to the PBC Delaware charter that would remove the NFP’s sole right, as holder of the Class N shares, to appoint PBC directors or otherwise reduces in any material respect the rights of the Class N shares; or (d) the relocation of the headquarters of the NFP or PBC outside of California" [1].

The meat appears to be in the agreements by OpenAI to not change its ownership and control structure. California's real leverage would be in re-opening this dispute, though ¶ 22 seems to water down that power somewhat. (Maybe go after the donors?)

[1] https://oag.ca.gov/system/files/attachments/press-docs/Final... ¶ 19

[wubrr]

The location you're physically sitting in doesn't really matter. Saying 'san francisco cause san francisco' is also kinda boring and meaningless.

[JumpCrisscross]

> location you're physically sitting in doesn't really matter

Of course it does.

The benefits of proximity to business clusters [1] is well researched [2]. There is no evidence remote work has dampened that tendency; if anything, as evidenced by AI, the effect seems to have increased.

[1] https://en.wikipedia.org/wiki/Business_cluster#Cluster_effec...

[2] https://www.isc.hbs.edu/competitiveness-economic-development...

[wubrr]

You're linking to pre-covid studies, that mention some types of benefits (for specific reasons like logistics benefits for businesses relying on physical materials/goos, or physical access to people for the purposes of networking), for some kinds of industries, and also mention that these benefits are not seen for some industries.

> Sometimes cluster strategies still do not produce enough of a positive impact to be justified in certain industries.

Let's take a step back and look at the fundamentals of a tech company who's employees are remote - what are the specific benefits of having a San Francisco office?

[JumpCrisscross]

> linking to pre-covid studies

I'm linking to studies summarising a century of work. There is no evidence Covid changed this.

Exhibit A for Covid having not changed this is the continuing supremacy of Silicon Valley (tech), Shenzhen (manufacturing) and New York (finance) as industrial clusters that others have tried to replicate (everyone, America and Miami, respectively) and failed.

> Let's take a step back and look at the fundamentals of a tech company who's employees are remote - what are the specific benefits of having a San Francisco office?

Proximity to investors. Proximity to customers. Proximity to a skilled employee pool. Proxomity to acquirers. (A lot of deals happen at cocktail parties and ski trips.)

By the way, I'm not arguing anyone needs an office. Just people physically and and proximate to the cluster.

[wubrr]

> Exhibit A for Covid having not changed this is the continuing supremacy of Silicon Valley (tech)

You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?

> Shenzhen (manufacturing)

..or you mean how US manufacturing 'clusters' almost completely disappeared/replaced by Chinese ones?

> Proximity to investors. Proximity to customers. Proximity to a skilled employee pool. Proxomity to acquirers.

Right, cause you have to physically pet every investor on the head to fundraise, your remote employees must be in san fran cause network latency interferes with their windows remote desktop workflow, and, for some reason, you have to be physically close to your customers when you're selling your web-only llm wrapper saas.

[SR2Z]

> You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?

DeepSeek R1 is an amazing feat. It's not at the same level as other large frontier models from American companies, just close enough to make them sweat.

> ..or you mean how US manufacturing 'clusters' almost completely disappeared/replaced by Chinese ones?

The value of goods manufactured in the US has never been higher. US manufacturing focuses on goods at the top of the value chain: jetliners, cars, semiconductors, medical scanners, and other advanced electronics. These tend to cluster in a few places - for example, Long Beach is a hub of space and avionics manufacturing, Texas has the "Silicon Prarie," and Boeing in Everett is one of the major employers in the region. Manufacturing has disappeared as a share of GDP, but that's not because we make less stuff.

> Right, cause you have to physically pet every investor on the head to fundraise, your remote employees must be in san fran cause network latency interferes with their windows remote desktop workflow, and, for some reason, you have to be physically close to your customers when you're selling your web-only llm wrapper saas.

You sound sarcastic, but YES. You do generally have to physically be present to make deals. It is obviously theoretically possible to run a world-leading software company fully remote. Despite that, most of them are in-person at least a few days a week. If you want to take advantage of SV's easy VC money, you absolutely have to be present.

Companies are not purely about the numbers. A lot of business is imprecise and heavily dependent on things like just plain LIKING the people you're in bed with, and unfortunately there is no substitute for being in the same room as someone to make a decision like that.

[uvaursi]

> You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?

Link?

[vessenes]

This is the opposite of true. It's actively wrong. Location is almost everything; people move to financial and tech centers for a reason -- it matters where you are and who you know.

[wubrr]

nah

also, where you are and who you know are very different things

[JumpCrisscross]

> where you are and who you know are very different things

Different but related. Getting a purposeful introduction involves a lot more friction than being invited to someone's home for dinner with their colleagues and contacts.

[wubrr]

You seem to assume dinner parties and in-person social engineering is the key to success.

I guess I have a different opinion - the tech, the product, the efficiency is the key to success.

[Jackpillar]

This is so funny to imply that you (living in East Jesus, Texas) have a better or similar opportunity to me (living in SF) in making more relationships and connections to AI related companies, engineers, investors, customers, acquirers, scientists, etc.

[wubrr]

I live a lot further from SF than Texas, yet I've been working fully remote for SF tech companies (among others) for 10+ years.

If I need to meet someone in person, I make a trip (~few times a year)

It's true that I can't brownnose/service random tech talking heads in person on a daily basis tho, which is what I assume you mean by 'relationships and connections' lmao

[Jackpillar]

Okay so what you're doing is contradicting the objective advantages/benefits of living near the epicenter of a specific industry with a purely anecdotal example of 10+ years experience in jobs from said epicenter, with the expendable income to travel (domestic/international) for in-person meetings, then defining networking to a disingenuously generalization because it reinforces your opinion.

What if I were to tell you that you can make meaningful relationships and connections w/o "brown nosing/servicing" and its easier to do so in the center of a specific industry?