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Silicon Valley’s housing prices are driving away top-earning engineers

By Patrick following x   2018 Apr 10, 4:13pm 344 views   5 comments   watch   sfw   quote     share    


http://observer.com/2018/02/google-facebook-engineers-cannot-afford-silicon-valley-houses/

“Startups that decide to keep all their employees physically in one office in the Bay Area by default become vehicles that transfer cash from venture capitalists to Bay Area landlords,” Chris Nicholson, co-founder and CEO of Skymind, an open-source artificial intelligence startup, told the paper. ...

That cost eventually translates into pressure on startup founders. For early-stage startups that rely on venture capital dollars, rising payroll spending means a lower chance to survive the brutal startup game.

“Eighty percent of startups never make it,” Nicholson told Observer. “Startups need time to find a profitable business model before they burn out the VC money. It takes anywhere from three years to infinity. When a startup compensates employees with an enormous salary package, that shortens its time to find a profitable model.”
1   pkennedy   ignore (0)   2018 Apr 10, 4:47pm   ↑ like (1)   ↓ dislike (1)   quote        

It's great for venture capitalists, it forces startup hands to sell more of the company to obtain more money. That is what they want.

Venture capitalists want to know if you're onto something in about 3-4 years or not. They aren't interested in you being able to skimp by, making ends meet and growing by 30% a year after 3 years, they want a facebook, uber, or linkedin possible payout. They're there to toss money at 50 ideas in hopes of getting 1 good one. At the end of 4 years, they want to firesale or close down anything that isn't doing that.

The cost of payroll to get that top talent, and talent that's constantly rubbing against other top talent is worth it. You simply don't get that anywhere else, and if you want to be able to build and scale, you need everyone on the same page, doing the same things, producing the same way. That's not possible in other parts of the world, if it was, we would see tech success all over the place, but in general, it's coming out of the bay area.

Not only that, all the venture capitalist are already there, the banks, accounting firms and support companies are all there, and more often than not, their customer base is there as well (especially with a b2b type of company).
2   Heraclitusstudent   ignore (1)   2018 Apr 10, 5:11pm   ↑ like (2)   ↓ dislike (0)   quote        

pkennedy says
The cost of payroll to get that top talent, and talent that's constantly rubbing against other top talent is worth it. You simply don't get that anywhere else, and if you want to be able to build and scale, you need everyone on the same page, doing the same things, producing the same way. That's not possible in other parts of the world, if it was, we would see tech success all over the place, but in general, it's coming out of the bay area.

Top talent is... what? some young engineers out of school with no track record? Really different in SV than anywhere else?
Btw FB was not founded in the Bay Area.
3   pkennedy   ignore (0)   2018 Apr 10, 6:22pm   ↑ like (0)   ↓ dislike (0)   quote        

It's a team that's had several jobs with companies in the area who all have similar setups, similar styles, similar training, similar culture, etc.

Venture capitalists tell you to move to the bay area before they give you money. I've worked at a few that moved from elsewhere to get the funding.
4   mell   ignore (1)   2018 Apr 10, 7:18pm   ↑ like (1)   ↓ dislike (0)   quote        

I see mature companies mostly leaving the bay area and many start-ups now coming from other areas. Make no mistake, there's a ton of tech jobs in the bay area but many start-ups will fold. I think we're at a blow-off top here, wrt housing and startups. The high costs, housing and corrupt politics certainly don't help. They started cracking down on licenses too. I don't see much upside from here left. If you are close to an IPO do it now or better have a profitable company in a year or two. On the upside I think house prices and rents are starting to come down.
5   lostand confused   ignore (0)   2018 Apr 10, 8:42pm   ↑ like (0)   ↓ dislike (0)   quote        

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