Despite our repeated reminders that the multiple woes—especially housing prices, traffic gridlock, and long commutes—of tech companies’ building large staffs in the San Francisco/San Jose area, nearly all of these mainly-software organizations continue to ignore the logic of setting up new operations in other cities in the U.S. And these other cities would love to have them locate their operations in their respective cities. This phenomenon, coupled with the September 13 opening of the vaunted Cornell Tech in New York City, is so noticeable that Bloomberg Businessweek went to considerable effort to prepare a pictogram for its September 11 issue that includes about 300 metro areas (but they do not appear to be the 300 most populous cities in the U.S.) is so detailed that they couldn’t include it in their online version and an article apparently so basic that they couldn’t include it in their print version. On the horizontal (“good stuff”)axis it combined nine positive ways: rates of college education, science and engineering majors, top universities, headquarters of big tech companies, venture capital investment, share of jobs in computer-systems design and related services, broadband subscription rates, independent coffee shops (huh??),and commutes by bike/public transportation/on foot. On the vertical (“bad stuff”) axis it combined three negative ways: high home prices, lots of income inequality, and long drive times. It weighted these 12 ways equally (what else could they do?) and plotted a scattergram with city names as labels. In the upper lefthand corner (high on both good stuff and bad stuff) is the San Francisco/San Jose area (Silicon Valley), which is in the biggest “quadrant” (the quadrants are quite unequal in area) called “Both the good and the bad of Silicon Valley”. The upper righthand quadrant is “Unequal and expensive, but not techie”, the lower lefthand quadrant is “Tech without the downsides”, and the lower righthand quadrant is “ Least like the Bay Area”. The authors highlighted Boston (not surprisingly, due to its many good universities and Route 128 tech companies), Boulder, Co (high percent of households with broadband access), and Ithaca, NY (low housing cost). Ithaca??!! Well, it’s home of Cornell University which, together with partner Israel’s Technion, created Cornell Tech, and it’s the most techie of the Ivy League. (It’s also our home town, with nice summers, but awful winters … especially compared with Silicon Valley.)
Skyrocketing house prices and apartment rents, long and slow commutes, overcrowded schools, etc. not only dramatically diminish peoples’ quality of life but can choke off economic growth in places like Silicon Valley. (And Silicon Valley is not unique; e.g., Boston has a similar problem.) What can be done about it? We need to think bigger, in terms of geography. Every sizable city or cluster of nearby cities has some form of LOCAL regional economic development authority. But those authorities are sub-optimizing. We believe that what is needed is a nationwide advisory council AND a change in thinking by large companies. Germany is a good example of what is possible. We can understand to some extent the economies of scale of microchip manufacturers for examples, but it especially baffles us that technology giants like Facebook, Google, Oracle, eBay, and LinkedIn, which are principally software companies, insist on building mega-campuses in Silicon Valley. Seems to us that—using their own technology and realizing that software can be written anyplace—they could do large portions in regional centers. Even Apple, who farms out much of their manufacturing to Chinese companies like Foxconn, very likely would benefit if their employees spent more time working and less time commuting to their new giant building (which will almost certainly exacerbate the already horrendous traffic jams in that area).
There are lots of other attractive cities in western states with a critical mass of local services and attractions that would welcome an influx of well-paid, well-educated employees: for example, Austin, TX; Denver, CO; Seattle, WA; Portland, OR, Los Angeles, CA; San Diego, CA; Sacramento, CA; and Phoenix, AZ. Similarly for eastern states.