The advent of the Coronavirus pandemic has changed many things, perhaps even things that seemed almost inevitable. The virus has even crippled Silicon Valley, the area around San Francisco renowned for hosting the headquarters of the world’s largest tech companies: with the possibility of working from home, many workers have left, and now may never return. Recent estimates suggest that as many as 89,000 people have already left the city of San Francisco to move to smaller, cheaper cities that can better meet their needs. This is not only a direct consequence of the virus, but also of the perceived “degradation of public safety” that accompanies it, said former San Francisco Mayor Mark Farrell.
Axios suggests that Miami and Austin are examples of smaller cities that are among the new destinations for tech entrepreneurs. Closer to California, Austin in particular has felt the influx of workforce that is more than six times greater than Miami in the State of Florida. Tech is actually at home here: Dell Technologies was founded in the city, and Apple and Facebook also have a significant presence. While there has been no substantial increase in the number of new startups established in these centres so far, some venture capital firms such as Founders Fund and Andreessen Horowitz have already established new offices there. Even Elon Musk, now the second richest man in the world, has recently moved to Texas with his Tesla Inc. And in the suburbs of Austin he is building a factory where he claims will need 10,000 workers by 2022. “I think we’ll see some reduction in the influence of Silicon Valley”, he said.
The mayors of these cities are naturally seizing the opportunity, taking action on social media and introducing specific packages, such as the $7 billion package that Austin Mayor Steve Adler has bookmarked for transport. The issue of workers and companies leaving the Bay Area actually applies to the whole of California, which has recently introduced stricter rules against companies such as Uber and DoorDash.
I think we’ll see some reduction in the influence of Silicon Valley
Nevertheless, Axios notes that tech companies will not necessarily have an easier time elsewhere: In Austin, for example, a referendum in 2016 had prevented private transport companies such as Uber and Lyft from using their own internal checking systems on drivers, while local regulations required the use of fingerprints. The result: companies announced that they would close their offices and leave the city.
“What I take issue with is our leaders—people of means—abandoning our community when it needs us most”, recently tweeted Jeff Lawson, CEO of Twilio, a San Francisco-based cloud communications platform. “Reaping the benefits of Silicon Valley’s talent, tech incubators, mentors, professional network and culture until they no longer need it”.
It is perhaps too early to know precisely to what extent the abandonment of Silicon Valley is an irreversible process, or simply a partial loss of polish. The debate on the subject remains open. Indeed, the larger companies, such as Google and Facebook, do not seem to intend to move for the time being. Beyond all this, however, the region appears to be losing at least some of its attraction to the tech industry, while new and diverse local digital ecosystems are likely to continue to grow in a host of other cities, potentially representing a new option for those wanting to work in the American digital world.