My wife and I have lived in San Francisco for over 3 years. But we’re moving to Austin.

I see better opportunities there for building startups. Even for building software products, SF is quickly losing its advantage in a world of remote and hybrid work.

Also, SF has not-so-subtly become less safe, nudging us to leave quicker than we expected.

As innovation moves to atoms and not only bits, SF is losing its competitive advantage

The Bay Area has for decades cultivated more innovation than any other. Arguably more so than any other region since WW2. From HP to Intel, Apple to Google, Facebook to Uber and Airbnb, the rise of information technologies have called this part of the world home.

But now, my friends quip “Google is where you go to retire”. FANG companies are where people go to maximize comp. People move to the Bay, if at all, in search of higher salaries.

The large rise in Bay Area GDP and corresponding income growth has two effects worth pointing out. It makes the Bay more appealing for people looking for high paying, secure jobs *and* it is less appealing for entrepreneurs seeking to extend their pre-revenue or pre-funding runway. 

SF (and the broader Bay Area) has become beholden to its success as the software capital of the world.

SF is disrupting itself. As remote (or at least hybrid) work becomes more compelling, there’s less need to be in the Bay Area for tech workers. Indeed, many big tech companies will require a smaller or no office footprint as tech work increasingly happens in the cloud, not the office.

Breakthroughs in technologies outside of computing, the internet and AI need to happen to continue to drive prosperity. More founders need to get excited about hard tech or hard problems like decarbonizing our economy. Yet the Bay is mostly igniting its vast reserves of VC dry powder to double down on increasingly incremental innovation in SaaS, internet and fintech startups.

“The marketing trick California pulled off to situate consumer internet as the highest form of technology, as if Tencent and Facebook are the surest signs that we live a technologically-accelerating civilization.”
— Dan Wang

The Bay Area exodus is accelerated by SF rapidly becoming less safe and livable.

Having talked to some friends before I leave, there’s very few reasons they are staying in SF.

Most people I know who are staying have either bought property here or are looking to. Many, even if staying in SF, are enjoying extended remote work for months or even years in places like Hawaii, Australia or Taiwan where pandemic life is relatively normal. 

But some of my friends, like 50,000+ other people, have decided to leave SF since the pandemic started.

SF folks are mostly leaving for other parts of the Bay, but more concerning is that Bay Area residents are also leaving for other parts of the US. 111,350 Bay Area residents packed up and left in 2020. 

The picture looks even more grim because this data only counts post code changes within the US, which does not count those leaving the country.

Despite what the media or Twitter would tell you, Austin is actually not even in the top 15 of destinations, with only 239 inbound from SF. There are lots of people moving to Austin (more on that below), but not from SF. 

Worse, this is exacerbating an already worrying trend. Bay Area domestic migration has been falling since 2012 at quite an alarming rate. Net international migration has also been falling since 2017, and 2020 (and likely the next couple of years) will look much worse because of COVID. 

Why are Americans leaving the Bay Area in droves? Of course housing affordability is very expensive here even after the pandemic knocked 20% - 30% off rents in SF. 

But there’s another issue that in SF, we increasingly think of as part of normal life.

Safety. 

18 months ago, my wife and I were burgled whilst we were sleeping in our third floor apartment. Our building has been broken into twice since then.

Almost all of my friends have had some kind of property theft, or seen daylight robbery in the last year. It’s no longer surprising to hear about a friend’s garage being broken into, catalytic converter stolen, car window smash and grab, or gunshots outside apartments. Par for the course now sadly.

Pre-pandemic, SF already claimed the highest rate of property crime for larger US cities but has a low rate of arrests. It’s not gotten better. Burglaries are up over 60% in early 2021 vs 2020, and it’s forcing businesses to shutter and some residents to adopt a siege mentality to protect their homes.

In other words, it’s no longer safe.

My wife and I decided to stay in our apartment for 18 months after being burgled. After I left my Uber job at the time, we thought SF was still the place for building startups and being connected to the tech ecosystem here. But the recent spike in property crime has fast-tracked our search for a new home. 

Enter Austin, Texas.

Austin is primed to be a leading city for US innovation in the 21st century 

Let’s start with the ample and more affordable land. Construction is everywhere, to an extent I’ve never seen in a western city. 

Advanced manufacturing and hard tech companies have been moving in. 

Tesla is building their biggest Gigafactory to date in Austin, on 2000 acres. That’s twice the size of Golden Gate Park or 1500 football fields! Model 3, Y, Cybertruck and Semi EVs will be built there. Musk is doubling down on Austin, with SpaceX also setting up a manufacturing facility for Starlink there.

Apple builds their current generation Mac Pro from their Austin plant. They are also in the process of building a new $1 billion campus there, their biggest outside of Cupertino.

Samsung produces 14nm chips at its Austin plant, and in 2015, was the world’s first semiconductor fabrication plant (fab) to do so at that small die size. They are also in discussions to build a $10 billion world-leading 3nm fab there.

There’s tailwinds from COVID and trade tensions favoring national manufacturing resilience. In a world where the US and other developed countries look to enhance their advanced manufacturing capacity, Austin looks set to benefit. 

"Austin will be the biggest boomtown that the US has seen in 50 years".

— Elon Musk

Austin also has a young, skilled and fast growing workforce. 

The median age is 33; the population has doubled every 20 years or so since 1950; it is attracting more people per 10,000 people than any other large US metro area. 

Net migration per 10,000 population in the 50 largest metros, 2010-2019

Surprisingly, California only represents 8% of domestic migration to Austin, with Texas representing more than 50%. Apprehensive Austinites say “don’t California my Texas”, but this might be more of a compelling narrative rather than fact. 

Speaking of narratives that surprised me, here’s two about Texas that I did not expect. 

Texas, the national capital of oil and gas, actually produced more renewable energy (sans hydro) than any other state. Texas is one of the windiest states in the US, and generates by far the most wind energy, about 3x the next state. 

It also is likely to overtake California as the top generator of utility-scale solar and possibly stationary batteries in the coming years, despite lacking incentives for solar or wind production. Easier permitting, more interest from developers in Texas, and cheaper land and labor are accelerating the state’s renewables push. 

Texas, known for open carry laws, actually has a comparable rate of gun homicides vs California. I had preconceived notions of more gun-related murders in the Lone Star state, but I was wrong. 

During 2010-2019, the rate was 3.88 per 100,000 people for Texas. California did not fare much better with 3.47 gun homicides per 100,000 people. The US rate overall was a touch higher than Texas at 3.96.

At the city level, property crime is lower in Austin compared to SF, and so too is murder and robbery.

Thank you SF, hello Austin

SF has helped me grow a ton in the last 3+ years. I worked with driven and humble people at Uber Eats, started and pivoted from my social learning startup, and I am now exploring climate tech while bootstrapping another startup.

Austin is a great place for the next chapter!

If you’re interested in climate tech (DER or carbon utilization in particular) or are also in Austin, let’s connect on Twitter or LinkedIn. I’m also happy to hear differing thoughts that you may have on this post.