Why startups are leaving Silicon Valley | The Economist
The Economist
2019-02-27
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The future of Silicon Valley is The Economist's cover story this week. Why are people leaving, and startups going elsewhere?
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For decades Silicon Valley has been where you go if you want to make it big in technology but these days entrepreneurs
are starting to look elsewhere. Our cover this week is peaked Valley. Silicon Valley is home to three of the five most
valuable companies in the world - Apple, Alphabet which is Google's parent, and Facebook. But that's starting to change.
Its relative importance is starting to decline as other hubs become more attractive. More people are now leaving the area than arriving. Venture capital investors are spending a larger
proportion of their investments on companies outside the valley than they used to, and some big names are leaving - moving to other tech hubs such as Portland, Los Angeles, or Austin Texas.
So why is this happening? Well, a big factor is cost. According to
one entrepreneur it costs about four times as much to run a start-up in Silicon Valley than it does in most other American cities. But the Valley's peak may also indicate that innovation is becoming more difficult in general. It's getting harder to compete in the
shadow of the tech giants - they hoover up all the talent and they can afford to pay people more than startups can. The median salary at Facebook is now $240,000 dollars.
Another worry is anti-immigrant sentiment and tighter visa restrictions, which makes it harder for smart people to go where the opportunities are. In America more than half of the leading tech companies were founded by immigrants or the children of immigrants. Silicon Valley isn't going anywhere and if it's relative decline heralded the rise of a thriving web of rival tech hubs that would be good news. Unfortunately the valleys peak looks more like a warning that innovation everywhere is becoming more difficult.
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Click here to subscribe to The Economist on YouTube: https://econ.st/2xvTKdy
For decades Silicon Valley has been where you go if you want to make it big in technology but these days entrepreneurs
are starting to look elsewhere. Our cover this week is peaked Valley. Silicon Valley is home to three of the five most
valuable companies in the world - Apple, Alphabet which is Google's parent, and Facebook. But that's starting to change.
Its relative importance is starting to decline as other hubs become more attractive. More people are now leaving the area than arriving. Venture capital investors are spending a larger
proportion of their investments on companies outside the valley than they used to, and some big names are leaving - moving to other tech hubs such as Portland, Los Angeles, or Austin Texas.
So why is this happening? Well, a big factor is cost. According to
one entrepreneur it costs about four times as much to run a start-up in Silicon Valley than it does in most other American cities. But the Valley's peak may also indicate that innovation is becoming more difficult in general. It's getting harder to compete in the
shadow of the tech giants - they hoover up all the talent and they can afford to pay people more than startups can. The median salary at Facebook is now $240,000 dollars.
Another worry is anti-immigrant sentiment and tighter visa restrictions, which makes it harder for smart people to go where the opportunities are. In America more than half of the leading tech companies were founded by immigrants or the children of immigrants. Silicon Valley isn't going anywhere and if it's relative decline heralded the rise of a thriving web of rival tech hubs that would be good news. Unfortunately the valleys peak looks more like a warning that innovation everywhere is becoming more difficult.
Daily Watch: mind-stretching short films throughout the working week.
For more from Economist Films visit: https://econ.st/2MFURxs
Check out The Economist’s full video catalogue: http://econ.st/20IehQk
Like The Economist on Facebook: https://econ.st/2ML6TFY
Follow The Economist on Twitter: https://econ.st/2ML6Ud0
Follow us on Instagram: https://econ.st/2ML6PWK
Follow us on Medium: https://econ.st/2ML6Wl8
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