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Startups Pitch Tech Hubs Far from Silicon Valley

Quote:

By Shayndi Raice
Updated March 8, 2020 11:31 am ET

Five metropolitan areas—Boston, San Diego, San Francisco, Seattle and San Jose, Calif.—accounted for 90% of all U.S. high-tech job growth between 2005 and 2017, according to a recent study led by Rob Atkinson of the Information Technology and Innovation Foundation and Mark Muro of the Brookings Institution.

States between the coasts have long touted their low cost of living or quality of life to attract talent away from more-populous peers. The new crop of entrepreneurs is bringing relocation services, tech training and investor dollars to accomplish similar goals . . . .

The West Coast has held or has been a few percentage points shy of a majority share of U.S. venture-capital investment for the past several years. Its most recent average deal flow was a whopping $17.1 billion . . . .

Many economists say getting tech workers to settle outside the major hubs won’t be easy. They cite “agglomeration”—when companies and talent cluster in a few places—which allows for ideas to spread more quickly and for companies to have a larger recruitment pool . . . .

Traditional economic theory holds that as business costs rise in one place, companies move to cheaper and less crowded alternatives. But companies aren’t leaving because in today’s economy, talent is the most sought-after asset—and tech hubs have the largest pool . . . .

https://uniim1.shutterfly.com/ng/ser...696944/enhance

https://www.wsj.com/articles/startup...=hp_lead_pos10

Interesting, I wonder how they define "innovation sector"? My sense is that technology-related jobs are only growing as a percentage of the workforce in most major markets.

I'm surprised to see an absolute decline in Chicago, especially when we are ranked highly for corporate relocations and have been one of the biggest recipients of FAANG growth between the coasts. Chicago's job numbers are stagnant overall, but usually this is explained as tech or "innovation sector" growth balanced out by manufacturing decline. The pharma cluster in the northern suburbs admittedly took a hit with the loss of Takeda, but is that considered "innovation sector"?

Likewise I'm also surprised to see Austin as having only minimal gains.

Here's an update. I was surprised at the poor showing of Austin which is, in the popular mind, an upcoming tech hub. Now it's doing better (and Chicago shows some growth--table 2):

https://i1.wp.com/www.brookings.edu/...2C9999px&ssl=1

https://i2.wp.com/www.brookings.edu/...2C9999px&ssl=1

https://i1.wp.com/www.brookings.edu/...2C9999px&ssl=1
All data and the updated report: https://www.brookings.edu/research/t...concentrating/

San Diego surprised me positively, Austin negatively.

In terms of hierarchy, I think we have a clear picture that SF/Bay is still #1, and Seattle is likely #2, punch-for-punch.

Austin is always talked about as being such a tech based city, but the reality is different. It's also one of the most hyped cities in the country so this probably helps the ''tech'' image to be more than it actually is.

Actually, 54,000 "digital services" jobs in a metro with 2.2 million (Austin), comes out to be .245 percent of the total area population employed in that sector. Only San Jose, San Francisco, and Seattle have a higher percentage of their respective populations employed in "digital services". San Jose is the clear winner with almost triple that rate. SF and Seattle are about double that rate per person. You need to factor in that Austin is a much smaller metro overall than these other players with large numbers like DFW or Los Angeles. Also, I don't think the "digital services" job category includes semi-conductor manufacturing and even some hardware manufacturing, which accounts for an additional 15,000 to 20,000 Austin jobs. Samsung, AMD, Freescale, and several smaller specialty chip manufacturers have a big presence in Austin. Dell and Apple still do some manufacturing here.