Elon Musk Headed To Texas, More Millionaires And Companies To Follow
(CNN/CBSDFW) -- Silicon Valley has been the epicenter of the tech industry for decades, starting in 1938 when Bill Hewlett and David Packard started tinkering in a Palo Alto garage.
But that may be changing. Perhaps the most striking evidence of that: A descendant of the company they founded, Hewlett Packard Enterprise, will move its headquarters to Texas. On Friday, another longtime Silicon Valley stalwart, Oracle, announced plans to join them, saying it will relocate its headquarters to Austin.
A string of high profile tech investors and executives are leaving San Francisco, too: Last week, Elon Musk said he has moved to Texas after selling his Bel Air homes earlier this year. He also mentioned the fact that there's no state income tax as a selling point for his move to the Lone Star state.
Musk's 18% stake in Tesla is worth billions.
Such moves are to be expected during the pandemic, when people are working from home anyway. Several tech firms have said they'll give employees the option to permanently work from home even after the pandemic ends.
But the relocation of corporate headquarters, company founders and big-name VC investors points to a corporate diaspora of the tech industry — and what some have called a "tech exodus" from the Bay Area.
Some who have already left San Francisco complained of mismanagement of the city and state. Though it's not clear what exactly they're referring to, California has implemented COVID-19 related restrictions that some in tech — particularly Musk — were critical of (though others in the industry took the opposite tack). Florida and Texas, by comparison, have applied somewhat less stringent restrictions.
Silicon Valley also has notoriously high real estate prices. And California has a high personal income tax rate, while Florida and Texas have none.
Where are they going?
A tech company decamping to Texas, and especially to Austin, is hardly groundbreaking. The tech hub, nicknamed "Silicon Hills," is already home to industry leaders including Advanced Micro Devices, Dell and others.
As of November, 39 companies -- in tech and other industries had relocated to Austin so far this year, according to data from the Austin Chamber of Commerce. Among those are 8VC, the venture capital firm run by Palantir co-founder Joe Londonsdale. Tesla is also building a 4 million square foot facility just outside Austin that's expected to create 5,000 jobs, the Chamber's records show.
"We talk about ourselves as the Human Capital," said Laura Huffman, president and CEO of the Austin Chamber, citing the diverse and highly educated population of the region as one reason companies seek to relocate there. She noted that 47% of the city's working population has a bachelor's degree, thanks to the 25 colleges and universities in the area.
"I also would not underestimate the importance of quality of life," Huffman said. "There are a lot of things about this community — it's got a great local flavor, a great music scene, it's an outdoors city. That's where people want to be. I think 2020 has taught us all that we have more choice when it comes to where we live."
Miami Mayor Francis Suarez has also jumped on the opportunity to attract more leading firms to the area.
When Delian Asparouhov, a principal at Peter Thiel's Founders Fund and co-founder at Varda Space Industries, tweeted earlier this month: "Ok guys hear me out, what if we move Silicon Valley to Miami[?]," Suarez quickly responded: "How can I help?"
On Monday, Suarez is hosting a virtual roundtable discussion on how to foster the city's growing tech scene.
"If you are interested in growing Miami's reputation as an international tech/startup hub and making Miami the city of the future, we want to hear from you," Suarez said on Twitter. "Let's work together to enhance innovation and catalyze entrepreneurship."
At least one tech leader was way ahead of the curve on ditching Silicon Valley for the opposite coast — Reddit Co-founder Alexis Ohanian tweeted earlier this month that he moved from San Francisco to Florida several years ago. (Serena Williams, then his fiancee and now his wife, had lived there for years).
"People [were] shocked," Ohanian said. "'But how will you do business from South Florida?' Three years later, my business life [is] doing pretty well ... and [now there are] headlines every time another Silicon Valley exec leaves for Miami."
Goldman Sachs, based in New York, is also reportedly looking at moving some operations to Miami.
Update: Earlier reporting from CNN that e-cigarette maker Juul Labs moved its corporate office from the Bay Area to Austin last year was not correct. Juul reached out to CBS 11 and told us that in fact, Juul headquarters moved from San Francisco to Washington, D.C. earlier this year and that they just have offices in Austin.
Who is leaving?
Here is a rundown of some of the big names in tech who have announced plans to leave the Bay Area for Texas in 2020:
- Hewlett Packard Enterprises: The company announced plans to relocate its headquarters from San Jose to Texas earlier this month. Houston is already its largest employment hub, and the company is constructing a new campus in the city.
- Oracle: Oracle is moving its headquarters from Redwood City, California, to Austin, though it plans to maintain a presence in California. "We believe these moves best position Oracle for growth and provide our personnel with more flexibility about where and how they work," spokesperson Deborah Hellinger told CNN Business.
- Elon Musk: The Tesla CEO revealed his move from California to Texas during The Wall Street Journal's CEO Council annual summit last week. He previously suggested on Twitter that he would move Tesla's headquarters to Texas — that hasn't happened yet, but the company is developing a large facility outside Austin.
- 8VC: Londonsdale's VC firm is moving its headquarters from Silicon Valley to Austin. "It's just become really obvious that there are a lot of places to build around the country, not just Silicon Valley, due to cost of living, talent and all sorts of other things, culture and what not," Lonsdale told the Austin American Statesman last month.
- Drew Houston: The Dropbox CEO has purchased a home in Austin and plans to make it his permanent residence, according to a report from The Information last month.
- FileTrail: The formerly San Jose-based firm, which makes records management software for law firms, moved to Austin in April.
- DZS Inc.: The telecommunications equipment firm said in March it would move its headquarters from Oakland, California, to Plano, Texas, and create a new "engineering center of excellence" in the city.
- QuestionPro: This online survey software firm announced its move from the Bay Area to Austin in January.
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