Does the tech industry ruin cities?

[DCReid]

Originally Posted by wwmiv

Although I agree with the grander premise, I do think the final two sentences are wrong and ignore that Austin has had a tech presence longer than Seattle and before Microsoft ever existed.

1957: Austin Are Economic Development Foundation (local group dedicated to luring manufacturers of electronics and scientific equipment)
1962: Tracor
1967: IBM
1969: Texas Instruments
1974: Motorola
1977: UT’s IC2 Institute
1982: Microelectronics and Computer Consortium
1984: Dell

And I’m not so sorry, but Austin has plenty of “supertalls” beyond the above. Tesla and Elon Musk, for instance, or Samsung’s single largest plant anywhere. IBM, for instance, houses most of their design work in Austin.

Compare these dates to Seattle:

Seattle’s presence in recruiting computing tech started in 1962 at the World Fair, Microsoft was founded in Albuquerque in 1975, and most contemporary accounts describe Seattle as “emerging” as a tech center when they relocated in 1979. Biographies largely describe this as being for familial reasons, and leas for business and recruitment purposes. Austin had long established itself as a tech hub before Seattle ever got off the ground.

While you are probably right about Austin compared to Seattle, Seattle has the HQ of the two largest tech companies and tens of thousands of their employees, which gives it the bigger impact. What you say could be similar to Phoenix, but perhaps on a smaller historical scale with Phoenix. Phoenix had large Motorola semiconductor plants (I think it had 20K in 3-4 plants in the early 1980s) as well as Intel and now TSMC and other tech companies, but not the HQs of them or any of the biggest, most influential ones. So, I don't think many would compare the tech impact of Phoenix to a place like Seattle.

Thinking about Nashville, I don't understand why it is so expensive compared to other cities in the South, like Atlanta, Charlotte, or even Louisville. But I do recall that a few of its suburbs are among the highest income areas in the nation (I think its Franklin), and that also surprised me. I would think the high housing costs would deter businesses relocating but it apparently has not.

[homebucket]

Originally Posted by wwmiv

Although I agree with the grander premise, I do think the final two sentences are wrong and ignore that Austin has had a tech presence longer than Seattle and before Microsoft ever existed.

1957: Austin Area Economic Development Foundation (local group dedicated to luring manufacturers of electronics and scientific equipment)
1962: Tracor
1967: IBM
1969: Texas Instruments
1974: Motorola
1977: UT’s IC2 Institute
1982: Microelectronics and Computer Consortium
1984: Dell

Interesting history! Didn't realize Austin's tech scene originated earlier than Seattle's. I'm actually not sure when the Bay Area's tech scene started growing, but I suspect it's also somewhere more recently in the 70s-80s. At least, that's when Apple started. Then you have even more recent stuff like Google, Meta, etc.

Originally Posted by wwmiv

And I’m not so sorry, but Austin has plenty of “supertalls” beyond the above. Tesla and Elon Musk, for instance, or Samsung’s single largest plant anywhere. IBM, for instance, houses most of their design work in Austin.

But how many of those companies are still based in Austin and are still relevant? Most of them seem to be located elsewhere? Maybe Dell? I still wouldn't consider any of those companies to be true "supertalls" in the same class as Amazon, Apple, Microsoft, Google, Meta, Nvidia.

Also, even though Tesla technically moved their HQ (so their execs could save on taxes so not exactly the flex you think it is), Austin isn't where it was created, and everyone knows the brains of the operations (ie the engineering) are still based in Palo Alto. In short, I don't think anyone views Tesla as an actual Austin based tech company.

[ATXboom]

Originally Posted by homebucket

Interesting history! Didn't realize Austin's tech scene originated earlier than Seattle's. I'm actually not sure when the Bay Area's tech scene started growing, but I suspect it's also somewhere more recently in the 70s-80s. At least, that's when Apple started. Then you have even more recent stuff like Google, Meta, etc.



But how many of those companies are still based in Austin and are still relevant? Most of them seem to be located elsewhere? Maybe Dell? I still wouldn't consider any of those companies to be true "supertalls" in the same class as Amazon, Apple, Microsoft, Google, Meta, Nvidia.

Also, even though Tesla technically moved their HQ (so their execs could save on taxes so not exactly the flex you think it is), Austin isn't where it was created, and everyone knows the brains of the operations (ie the engineering) are still based in Palo Alto. In short, I don't think anyone views Tesla as an actual Austin based tech company.

All the super talks have significant presence in Austin. Usually their 2nd largest employee / office presence outside of HQ.

[mhays]

Originally Posted by JManc

https://www.aboutamazon.com/workplace/corporate-offices

Nashville is basically a 3rd HQ.

We're talking scale here. As large as the Nashville operation is getting, it's small compared to HQ1 or even HQ1b (Downtown Bellevue).

[JManc]

^ had no idea there was another HQ in Bellevue as well.

Originally Posted by ATXboom

All the super talks have significant presence in Austin. Usually their 2nd largest employee / office presence outside of HQ.

Tech firms love Austin because they can pay their employees there less than if they were in the Bay Area. At least that's how Meta rolled.

[mhays]

Seattle also has engineering offices for basically every software or internet company, and is often the #2 or #3 location. Meta and Google in particular employ several thousand each, each with campuses in greater downtown and further campuses in Bellevue and Redmond. Those two alone have probably 30-40 buidings.

But it's wealth where Seattle really stands out. First, software companies average six-figure pay. Second, when two local companies go from zero to five trillion in valuation over a short period, the wealth in the local area can be immense*. At one point the two richest people in the world had offices just down the street on the north side of Downtown. Donations in the hundreds of millions have become almost commonplace.

*Just Amazon and Microsoft represent well over 20% of the entire US' market cap (publicly-traded companies), and 5% of the world's.

JManc, Bellevue is just an extension of the main HQ really. I like to call it HQ1b. They've shifted their local growth there, and have millions of square feet.

[wwmiv]

Originally Posted by JManc

^ had no idea there was another HQ in Bellevue as well.



Tech firms love Austin because they can pay their employees there less than if they were in the Bay Area. At least that's how Meta rolled.

Yes, but does the fact that they make less mean anything negative? In fact, part of the Austin sell to these companies was that not only does the employer save money by paying less (and having a better tax set-up because of what state you're in), but also because the employee's money goes further in Austin than it does in California (and still does, even if the gap has closed a bit). Tech firms love Austin for a lot of reasons, including that the can pay their employees less and have their employees have a better lifestyle, too. You all talk about the "pay gap" as being something negative, when in fact it is a substantive positive for all parties. Just because they happen to be paid less does not automatically make them "B level" employees or whatever -- that has to do with what work you're actually doing.

[wwmiv]

Originally Posted by homebucket

Interesting history! Didn't realize Austin's tech scene originated earlier than Seattle's. I'm actually not sure when the Bay Area's tech scene started growing, but I suspect it's also somewhere more recently in the 70s-80s. At least, that's when Apple started. Then you have even more recent stuff like Google, Meta, etc.

San Francisco is the bell of the ball and Austin was the first love. Things don't work out because they are too different, and he's a bit of a weirdo. Seattle is who she marries after he dumps Albuquerque, but then years later she cheats on Seattle with Austin. They get divorced and after that she dates a bunch of random dudes (Rochester, Portland, Raleigh, Boston, New York, Dallas, Denver, D.C., etc.) because she has no idea what her type is. She's currently flirting with Nashville. That's tech.

1912: electronic vacuum tubes research
1917: public address systems and moving coil loudspeakers
1926: electronic television
1927: single-dial tuners
1930s: precision glass-forming machinery
1938: Hewlett-Packard
1940s: Stanford incubator
1944: audio and video tape recorders begin manufacturing in San Carlos
1947: Invention of the transistor at Bell
1948: Varian
1955: Shockley Transistor
1957-58: Integrated circuits / Robert Noyce / Fairchild Semiconductor

It was the events between 1947 and 1958 in San Francisco that led Austin to seriously pursue the industry.

[jbermingham123]

Originally Posted by homebucket

I'm actually not sure when the Bay Area's tech scene started growing, but I suspect it's also somewhere more recently in the 70s-80s. At least, that's when Apple started. Then you have even more recent stuff like Google, Meta, etc.

Bay area tech scene has really deep origins there, starting in the early 30s, with the construction of Moffett Naval Air Station (now part of NASA Ames research center).

Silcon Valley formed from the unique confluence of 3 factors: Stanford, Military spending, and most importantly, a unique California law which legally undermined noncompete clauses, allowing experts from the east coast to safely leave their companies like AT&T, IBM, DEC, etc and start competing companies.

It really got kicked off when Lockheed (based in LA) set up a manufacturing center up there during WW2, and subsequently led the development of nuclear missiles there (with nearby Berkeley and Lawrence Livermore Laboratory, as well as the newly formed NASA). These missiles required advanced guidance systems, and when William Shockley et al (of AT&T) discovered transistors, he quickly discovered that the highest demand for them was in California, which conveniently also would not enforce any non-competes he had with Bell Labs.

His Shockley Semiconductor Laboratory brought a powerful set of minds together, who then all defected from SSL to form the legendary Fairchild Semiconductor, which developed the first efficient process for producing integrated circuits, and had basically a monopoly on them. Fairchild built all the ICs for all the US's minuteman missiles, as well as every human spaceflight program from Mercury-Apollo.

In the late 60s, Gordon Moore and Robert Noyce left Fairchild to form Integrated Electronics (Intel), which was intended to specialize in ICs specifically for computers.

Rest is history

[JManc]

^ My mom's brother and cousin were working in Sunnyvale/ Mountain View back in the 60's and 70's in something tech related with the government.

Originally Posted by wwmiv

Yes, but does the fact that they make less mean anything negative? In fact, part of the Austin sell to these companies was that not only does the employer save money by paying less (and having a better tax set-up because of what state you're in), but also because the employee's money goes further in Austin than it does in California (and still does, even if the gap has closed a bit). Tech firms love Austin for a lot of reasons, including that the can pay their employees less and have their employees have a better lifestyle, too. You all talk about the "pay gap" as being something negative, when in fact it is a substantive positive for all parties. Just because they happen to be paid less does not automatically make them "B level" employees or whatever -- that has to do with what work you're actually doing.

I didn't say it was negative and in fact, I tried to get transferred from the Bay Area to Meta's office in DT Austin where we already had several team members. What I spent in housing and flying back and forth between TX and CA every weak, I would have come way ahead in ATX anyway. I just know that these companies base their salaries on location with the Bay Area, NYC or Seattle being more $$.

@mhays, yes we had several higher ups in our department out of the Seattle office. One guy on our team was about to be transferred there before the layoffs.

[wwmiv]

Originally Posted by jbermingham123

Bay area tech scene has really deep origins there, starting in the early 30s, with the construction of Moffett Naval Air Station (now part of NASA Ames research center).

Silcon Valley formed from the unique confluence of 3 factors: Stanford, Military spending, and most importantly, a unique California law which legally undermined noncompete clauses, allowing experts from the east coast to safely leave their companies like AT&T, IBM, DEC, etc and start competing companies.

It really got kicked off when Lockheed (based in LA) set up a manufacturing center up there during WW2, and subsequently led the development of nuclear missiles there (with nearby Berkeley and Lawrence Livermore Laboratory, as well as the newly formed NASA). These missiles required advanced guidance systems, and when William Shockley et al (of AT&T) discovered transistors, he quickly discovered that the highest demand for them was in California, which conveniently also would not enforce any non-competes he had with Bell Labs.

His Shockley Semiconductor Laboratory brought a powerful set of minds together, who then all defected from SSL to form the legendary Fairchild Semiconductor, which developed the first efficient process for producing integrated circuits, and had basically a monopoly on them. Fairchild built all the ICs for all the US's minuteman missiles, as well as every human spaceflight program from Mercury-Apollo.

In the late 60s, Gordon Moore and Robert Noyce left Fairchild to form Integrated Electronics (Intel), which was intended to specialize in ICs specifically for computers.

Rest is history

I totally forgot about this one. Great additional details!

Second Point: a great case study on why non-compete clauses actually undermine economic productivity. They should be largely be removed from our legal landscape.

[wwmiv]

Originally Posted by JManc

^ My mom's brother and cousin were working in Sunnyvale/ Mountain View back in the 60's and 70's in something tech related with the government.



I didn't say it was negative and in fact, I tried to get transferred from the Bay Area to Meta's office in DT Austin where we already had several team members. What I spent in housing and flying back and forth between TX and CA every weak, I would have come way ahead in ATX anyway. I just know that these companies base their salaries on location with the Bay Area, NYC or Seattle being more $$.

@mhays, yes we had several higher ups in our department out of the Seattle office. One guy on our team was about to be transferred there before the layoffs.

We would have loved to have you.

[jbermingham123]

Originally Posted by wwmiv

Second Point: a great case study on why non-compete clauses actually undermine economic productivity. They should be largely be removed from our legal landscape.

Funny you mention that:

https://www.ftc.gov/news-events/news...ng-noncompetes

This just happened about a month ago!

[wwmiv]

Originally Posted by jbermingham123

Funny you mention that:

https://www.ftc.gov/news-events/news...ng-noncompetes

This just happened about a month ago!

I had zero idea. That's absolutely amazing.

[craigs]

Originally Posted by Crawford

SF was really expensive before techworld tho. It was a very expensive American city in 1980. The others are smaller tech havens that also have a ton of in-migration unrelated to tech, increasing unaffordability.

The Bay Area was expensive by the early 1970s when my family first moved there. It was always desirable in terms of climate, amenities, and job opportunities, and in that time particularly it had cultural cachet.

Originally Posted by Chef

It creates something like the resource curse in developing countries. It generates a lot of economic activity but the results of it are so unbalanced that it tends to stifle non-tech industries. The resource curse is largely because of what large amounts of resource exports do to exchange rates whereas tech's issues come from the fact that its money distorts local real estate markets which then crowds out non tech workers and industries.

In my 20+ years of experience working in downtown San Francisco, this is exactly what happened. In the 1990s SF's Financial District was about banks, finance, law firms, architecture firms, accounting firms, etc. But by the late 2010s, traditional downtown industries got driven out because building owners could get more rent from tech--until they couldn't. And after they couldn't, the other industries didn't want to come back. So downtown SF has sky-high vacancy rates.

Originally Posted by JManc

^ My mom's brother and cousin were working in Sunnyvale/ Mountain View back in the 60's and 70's in something tech related with the government.

My Dad worked at a Stanford-affiliated tech research institute starting in 1974. He would gather with his coworkers and their families and we met people from all over the world in those days.

[iheartthed]

Originally Posted by mhays

We're talking scale here. As large as the Nashville operation is getting, it's small compared to HQ1 or even HQ1b (Downtown Bellevue).

I think NYC has the third largest Amazon worker headcount behind Seattle and DC/HQ2.

[iheartthed]

IMO, the thing that has truly set the Bay Area apart is the venture capital model and ecosystem. Although there's historically been a large concentration of engineering and electronics companies in the Bay Area, there have also been large, successful electronics companies elsewhere (IBM, AOL, Bell Labs to name a few).

[jmecklenborg]

Nashville only has a tech foothold because it was home to the company that distributed books to Barnes & Noble, Borders, etc. back in the 1990s. It used to be called Ingram Book, now it's Ingram Content Group: https://www.ingramcontent.com/.

Jeff Bezos established a relationship with the Ingram family in the late 1990s which saw Amazon piggy-back on their infrastructure. He also asked the family to invest $10 million in Amazon, which they did not.

But anyway, if grandpa Ingram hadn't moved the family business from Minnesota to Tennessee in the 1950s (he was an early investor or maybe a founder of 3M), there would be no tech stuff in Nashville.

No, there is not something special in the water of the Cumberland River. By the absolute unlikeliest of circumstances, Nashville is now a minor tech city, whereas places that used to actually build computers are not.

For example, what was once a very large company called Cincinnati Milacron used to build computers in Ohio: https://microship.com/cincinnati-milacron-george/. The "George" business computer ended because Japanese competition forced Milacron to double-down on its core businesses.

[mhays]

My understanding is that Amazon's Nashville offices are primarily about managing and developing logistics and operations--which might have led them there vs. a traditional tech center. There's a lot of tech in logistics and operations, of course, like automation and any nature of internally-facing coordination systems.

[DCReid]

Originally Posted by jmecklenborg

Nashville only has a tech foothold because it was home to the company that distributed books to Barnes & Noble, Borders, etc. back in the 1990s. It used to be called Ingram Book, now it's Ingram Content Group: https://www.ingramcontent.com/.

Jeff Bezos established a relationship with the Ingram family in the late 1990s which saw Amazon piggy-back on their infrastructure. He also asked the family to invest $10 million in Amazon, which they did not.

But anyway, if grandpa Ingram hadn't moved the family business from Minnesota to Tennessee in the 1950s (he was an early investor or maybe a founder of 3M), there would be no tech stuff in Nashville.

No, there is not something special in the water of the Cumberland River. By the absolute unlikeliest of circumstances, Nashville is now a minor tech city, whereas places that used to actually build computers are not.

For example, what was once a very large company called Cincinnati Milacron used to build computers in Ohio: https://microship.com/cincinnati-milacron-george/. The "George" business computer ended because Japanese competition forced Milacron to double-down on its core businesses.

Or did Nashville become a tech foothold because of all of the health care companies established in the region? I read that it is home to about 500 health care companies including HCA.