Venture: Silicon Valley No Longer The Premier Tech Hub
When most people think of Northern California, they generally think of Silicon Valley, the vibrant region known for its temperate weather, organic foods, and numerous tech companies that are established there. The prominence of tech companies established in Silicon Valley such as Cisco and Google have led to positive effects like rising employment rates in the region and negative effects such as rising housing prices and apartment rent.
The establishment of Silicon Valley as the center of the technological world over the past few decades have led to other cities in the U.S. and around the world to raise up the competition in seeing which city will be the next premier tech hub in the future. American cities such as Seattle, Portland, and Austin are joined by international cities such as Berlin, Paris, and Shanghai as the cities that are now popular choices for many people worldwide who are working in the tech industry yet aren’t content with choosing only Silicon Valley to work and live in.
During TechCrunch’s Disrupt SF 2018 event last month, prominent VCs Megan Quinn of Spark Capital, Sarah Tavel of Benchmark Capital, and Aileen Lee of Cowboy Ventures agreed that Silicon Valley is currently facing a “gravitational shift” when it comes to exploring some of the trends in the startup investing ecosystem. Quinn said that when Spark Capital was making a growth-stage investment in the past, she told the founders to open up a second office in a city that has a university, Lee mentioned that a company can consider opening a second office if the company has grown larger since Silicon Valley is an expensive region to live in, and Tavel also recognized that individuals are finding Silicon Valley to be very competitive (and expensive too), especially if their competition includes Facebook and Twitter.
At the same Disrupt SF 2018 event, J.D. Vance, the managing partner at Revolution’s Rise of the Rest Fund and author of ‘Hillbilly Elegy’, had brought up that being an entrepreneur in San Francisco can be a difficult task compared to being an entrepreneur in a booming tech city such as Columbus Ohio. Aligning with Vance’s views is his partner at Revolution, the company’s CEO Steve Case, and Case stated that startup founders from cities like Pittsburgh, Detroit, and Portland are opting to retain their companies in the cities they were founded in, in which he said “it’s watching where the talent flows” when talking about the decisions of the companies not moving to Silicon Valley.
A study from the Bay Area Council has shown that 46 percent of Silicon Valley residents are planning to move out of the region due to factors such as homelessness, traffic, and housing prices that lead them wanting to move out. In the study, out of the 461 respondents, 24 percent of them want to move within California whereas 61 percent of the respondents preferred moving out of California, a direct result of the influence the tech industry has had on the livelihoods of many long-time residents of Silicon Valley, especially residents who are not working in or being involved in the tech industry.
A study conducted by Glassdoor shows that roles that relate to software engineering are booming in various fields of industry like retail and finance since many employers are looking to implement mobile data and automation into the services for its consumers. Among the top five cities that are favored by millennials who are working or are interested in working in the tech industry are Los Angeles, Raleigh, Chicago, New York, and Austin, and those cities are giving Silicon Valley some much-needed competition as the top innovation hotspot for the American tech industry.
Europe is gaining strength as a powerful continental force in the tech industry as startups in cities such as London, Paris, Stockholm and Berlin is aiming to make an impact on the global tech ecosystem. One particular example would be in Berlin where it has gained a new reputation as “Europe’s Silicon Valley” as not only it is known for its outstanding nightlife, prominent cuisine, and underrated music scene, but it also boasts a low cost of living compared to other European (and Asian and American) cities and that Germany’s liberal visa system allows foreign startup employees to live comfortably, especially since Berlin is voted as the seventh best international city for startups.
China has also emerged as the United States’ most prominent rival in the tech industry as the expanding power of China’s technological sector has prompted the Trump Administration to publish a 35-page report that criticized China for its “economic aggression”. The “economic aggression” that was mentioned in the report referenced to alleged violation of U.S. intellectual property and technology comes at a critical time in the competition between the tech giants of Silicon Valley and the emerging Chinese tech power when three of the four most valuable startups in the world are Chinese, with Ant Financial leading the way at $150 billion, and that the Chinese government has approved the construction of 168 tech zones.
Silicon Valley remains an attractive region to work and live due to its status as the location where technological innovation became encouraged in mainstream society and where some of the best inventions of the world such as social media platforms and smartphones had their ideas developed. Prominent figures in Silicon Valley such as startup founders, corporate executives, political leaders, and venture capitalists should be aware that other cities (and countries) are enhancing their technological strength every day and that the competition is now shrinking due to more talented employees choosing to work in a location they desired besides Silicon Valley and also that more cities are enhancing their own reputations as in the tech world.