Techsodus: Has California lost its charm?

Recently billionaires Elon Musk and Larry Ellison announced their decisions to leave the golden state of California as did HPE. For decades, California has been the global headquarters for technology, but is that now changing? Some have already called it “Techsodus”.

In 1953 when William Shockley left New Jersey’s Bell Labs (now owned by Nokia) for California’s Silicon Valley, he spawned a revolution that has lasted till this very day. Whenever you read that a company is headquartered in Menlo Park, Palo Alto, Cupertino, Sunnyvale, Santa Clara, Redwood City or Mountain View, it’s all Silicon Valley.

California’s economy has been in the range of $3 trillion, a figure which India recently is catching up to 70+ years after Independence. It is home to companies with a market capitalization in the range of trillions and boasts of the best tech brains of the world with amazing innovations.

The first billionaire to have a problem with Silicon Valley was “Paypal Mafia” don Peter Thiel whose Palantir had a high-profile IPO recently. But he still stayed in California, choosing to move to Los Angeles proper. Palantir moved to Denver Colorado. Then there’s Amazon which is headquartered in Seattle. Jeff Bezos has many homes but his most high-profile is the one in Washington DC.

Trouble in paradise started with Musk. He had a high profile spat with the California government when he wanted to keep his Tesla factory open during one of the Covid lockdown regulations. He declared “Give people back their goddamn freedom” and used the term “Fascist”. Musk has also repeatedly quoted high taxes and regulations as being cumbersome. He put up his seven California homes for sale and headed for Texas. SpaceX is already based out of Texas, but Tesla and the Boring Company may follow.

Bill Hewlett and David Packard started the famous Hewlett-Packard in a Silicon Valley garage in 1939. That split into HP Inc and HPE (the E standing for Enterprise). Well HPE is also now headed for Houston in Texas. In a blog post, Antonio Neri, President & CEO said…

“Houston has long been our largest U.S. employment hub, and construction has been underway since the beginning of the year on a new, state-of-the-art campus in the area. Houston is also an attractive market for us to recruit and retain talent, and a great place to do business. The most diverse city in America and the fourth largest, Houston provides the opportunity over time to draw more diverse talent into our ranks – a key priority for HPE as we work to be unconditionally inclusive.”

After that came another high-profile announcement by Larry Ellison. Oracle too is headed to Texas while Ellison is relocating to Hawaii saying this will work in the new age of collaboration. Ellison said he would use “the power of Zoom” to work from Lanai, an island he bought for $500 million some time back.

There has been a lot of activity around Covid. Macy's shut down its tech centre in San Francisco. Financial Services giant Charles Schwab was also in the same city and moved to Texas. Dropbox CEO Drew Houston was one of the first to buy a house in Austin Texas.

There has been a homelessness problem in California and they have tents and public pooping on the streets. Many middle class citizens have already fled California over safety and other issues like drug addicts among the homeless. Californian politicians have increasingly talked of higher regulations and taxes related to businesses and inheritance. This has not gone down well with tech moguls and some have decided to quit the golden state.

But the trillion dollar question people are asking is whether Techsodus is a temporary blip for Silicon Valley or will it only get worse in 2021 and beyond.