America’s technological capital, Silicon Valley, has had a significant influence on the world’s economy, stock market, and culture. The Bay area is also home to three of the world’s five most valuable companies. Tech giants such as Alphabet (Google’s parent), Apple, Facebook, and various start-up companies all claim Silicon Valley as their birthplace. However, these days’ entrepreneurs are looking elsewhere for a place to call home. It is significant that the valley is starting to decline as other hubs are becoming more attractive. More people are leaving the area than arriving. Venture capital investors are spending substantial proportions of their investments on companies outside the Valley than before, and some big names are leaving. They are moving to other tech hubs such as Portland, Los Angeles, and Austin, Texas.
Why is this happening? A major factor is cost. According to one entrepreneur, it costs about four times as much to run a start-up in Silicon Valley as it does in most other American cities. But, the valley’s peak may also indicate that innovation is becoming more difficult in general. It is becoming harder to compete under the shadows of tech giants. They hoover up all the talent and they can afford to pay people much more than start-ups can. Most of the employees of Alphabet, Facebook, and other tech giants are high-paid. The median salary in Facebook is now 240,000 USD (about 270,000,000 KRW) and around 200,000 USD (about 225,000,000 KRW) in Alphabet. Another worry is anti-immigrant sentiment and tighter visa restrictions. A lot of Americans are worried about immigration, and Donald Trump, the president of America, is determined to act on their behalf. Despite lobbying from the tech giants, the Trump administration has made it much harder for foreign workers to receive their visas. Willingly or not, students who come to America end up returning to their home country after they earn their degrees. This 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 their offspring.
There are probably a few dozen cities that are just as promising as San Francisco to start a new tech start-up today. Instead of building more affordable housing and planning infrastructure reforms to ease congestion, San Franciscan politicians are discussing the legislation of abolishing corporate cafeterias in order to force techies to eat lunch out. In such situation, as each new growing tech hub offers more opportunities for people who decide to move on from their current job, the outflow from Silicon Valley is accelerated.
Silicon Valley will not disappear and it is highly unlikely that it will be completely replaced. However, it is becoming less critical for start-up companies to launch and develop there. A few predict that the Valley will become a symbolic idea rather than a place. Similar to Wall Street, it represents the whole industry rather than a specific place.
If Silicon Valley’s relative decline has heralded the rise of a thriving web of rival tech hubs, it would be great news. Unfortunately, the Valley’s peak seems to be a warning that innovation in other locales is becoming more difficult.