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Could High Bay-Area Prices Make Sacramento the Next Big Startup Hub? 190

waderoush (1271548) writes "Don't laugh. As the cost of housing spirals out of control on the San Francisco peninsula, neighboring metro regions like Sacramento are beginning to look more attractive to startup founders who prefer a Northern California lifestyle but haven't worked in the Silicon Valley gold mines long enough to become 1-percenters. Today Xconomy presents Part 1 of a two-part look at innovation in the Sacramento-Davis corridor and efforts to make the region more welcoming to high-tech entrepreneurs. In Sacramento's favor, there's a talented workforce fueled by a top-20 university (UC Davis), space for expansion, proximity to the ski mountains at Tahoe, and a far lower cost of living — the average house in Sacramento is selling for $237,000, compared to $909,000 in San Francisco. The downsides include a shortage of local investment dollars and a lower density of startups, meaning there's less opportunity for serendipitous collaboration. But locals say recent efforts to boost the local high-tech economy are working. 'I really feel like we are in a renaissance area,' says Eric Ullrich, co-founder of Hacker Lab, a Midtown Sacramento co-working space."
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Could High Bay-Area Prices Make Sacramento the Next Big Startup Hub?

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  • gee so weird (Score:4, Insightful)

    by TheCarp ( 96830 ) <sjc@@@carpanet...net> on Thursday May 15, 2014 @02:43PM (#47011179) Homepage

    Its almost as if... economic prosperity in one area driving up prices eventually reaches a point where it encourages new business to move elswhere. You would almost expect to see similar effects where young professionals on entry level salaries get appartments in poor neighborhoods. Has anyone else ever heard of a process by which young professionals competing for lower income housing drive up the prices and price out those with less money?

    Nah.... if that ever happened someone would have noticed and made up a word for it already.

  • by pspahn ( 1175617 ) on Thursday May 15, 2014 @02:50PM (#47011261)

    If you look at the Denver area, you'll quickly see that it's not so much of a community being able to make themselves a high-tech hub, it's more about some high tech people being able to open some high-tech businesses in an area not known for being high-tech ... and succeeding.

    The peripherals matter. Denver has a robust economy thanks to a large number of federal jobs. I'm not saying Denver is a "tech-hub" (well, any more than Sacramento would become a "tech-hub") but there are definitely a healthy amount of tech companies here, both small and large. We have plenty of stuff for the young employees (all the outdoors you could want, great looking women, active night life). I don't think Sacramento can compare when you look at these peripherals. Sure, it will compare favorably to Stockton or Fresno, but simply because it's a couple hours from Silicon Valley doesn't make it prime for a tech boom. You've got to want to attract young smart people, and I'm sorry, but nobody graduates and decides they're moving to Sacramento.

  • by Karmashock ( 2415832 ) on Thursday May 15, 2014 @02:53PM (#47011279)

    Already its a very hot start up location... the venture capital firms are active there... Its probably better then Silicon Valley at this point if you're just starting out. Its cheaper, it has a similar opportunities, and the state government isn't on a massive tax hiking binge.

    For example, they're trying to jack up property taxes in California without going through proper procedure. The voters don't want it... but the government is ramming it through anyway.

  • by Anonymous Coward on Thursday May 15, 2014 @02:55PM (#47011305)

    When I was younger, the Bay and SV appealed to me. Plenty to do every weekend, great weather, lots of like-minded people, plenty of night-life. Now that I am older, I have zero desire to live in the Bay/SV... traffic sucks, prices are crazy, I want a less hectic area to raise my children in, etc.

    Sacramento could easily become a tech-hub for an older crowd of startup types.

  • by Billly Gates ( 198444 ) on Thursday May 15, 2014 @02:58PM (#47011345) Journal

    California is not very employer friendly and has strict over time laws not to mention outrageously high taxes and rents.

    It does not make business sense to start there.

    Detroit, Austin, Kansas City, and even Fargo have universities, other tech companies. I dream of starting a business but I do not have 1 million dollars a year to pay for a tiny crappy office in San Fransisco. If I did get shareholders I am sure they do not appreciate all their savings going to pay rent rather than for product development. Not to mention your employers could leave in a hearts notice with Google and Apple offering 6 figures on the fly.

    I know I sound conservative right now but when you start out no OT, taxes, friendly business laws, can mean you make it or die at the end of the year.

  • by Anonymous Coward on Thursday May 15, 2014 @03:04PM (#47011397)

    Because once you leave Austin you're back in Texas

  • by daninaustin ( 985354 ) on Thursday May 15, 2014 @03:16PM (#47011505)
    California govt & regulations suck.
  • by oatworm ( 969674 ) on Thursday May 15, 2014 @03:26PM (#47011595) Homepage
    Speaking as a Reno resident (It's Sacramento, only with hookers and blackjack!), I don't like Sacramento's chances, and it's not because I think Reno's chances are any better. Part of the problem is that there won't be a "next Bay Area" - not just one, anyway. The Bay Area's preeminence in the tech industry was kind of a fluke, which resulted from a combination of various factors (strong academic interest from Stanford and Cal, defense industries sprouting up in the area, good weather, and so on). These days, the tech industry is decentralizing, which is why you have "tech corridors" in places like Raleigh-Durham, Austin, Salt Lake City (Symantec is based there), Las Vegas (Zappos), Seattle, Portland (thanks, cheap hydroelectric power!), Los Angeles ("Silicon Beach" - I remember when Venice was a ghetto), Boston... and these are just the places in this country.

    The other part of the problem is that Sacramento's biggest claims to fame at this point are that it's the state capital of California (*shrug*) and it's kind of close to the Bay Area (so is Vallejo, Vacaville and Antioch). The climate is miserable (think Texas weather, only with a little less humidity, no hurricanes and without the weird bugs), the neighborhoods are extremely hit-and-miss, the culture is getting better but is still more or less non-existent, California's tax and business codes are pretty obnoxious, the physical infrastructure in Sacramento isn't quite Stockton bad but there's definitely room for improvement... yeah. Sacramento's not bad, but it's not good, either.

    Don't get me wrong, I think Sacramento will get some startups to set up shop there. Some of them will probably succeed. I don't think they're going to take over the world out there, though. Venture capitalists would rather go to Denver, Seattle, Portland or Las Vegas than Sacramento, and if you're going by plane, you're not saving that much time by going to Sacramento over either of those other places.
  • Why California? (Score:5, Insightful)

    by bradley13 ( 1118935 ) on Thursday May 15, 2014 @04:04PM (#47012009) Homepage

    Why put a new business in California? I've been there on business a number of times, and I just don't see it.

    The climate is nice enough, but boring. No decent seasons, but I suppose it counts as a plus for some folks.

    On the minus side, the politics are leftist, leading to socialist-style government regulations that are downright hostile to business. The legal climate tends to lawyers looking to sue companies for trivial violations of those regulations, like people working through their lunch break.

    On the personal front, holier-than-thou environmentalism is widespread, which is hard to take given that their state has huge monocultures [shutterstock.com], puts rice farms in the desert, and pumps water from Arizona to keep the lawns in LA green.

    It's pretty much the last place I would want to live, and I imagine there are plenty of other techies who would agree...

  • by Karmashock ( 2415832 ) on Friday May 16, 2014 @07:35AM (#47016187)

    Yeah but you're in california which is not a great place to start or run a company these days. There is a huge outflow of companies from California right now. And many companies that decided to try in california anyway ultimately went out of business due to labor issues, tax issues, and environmental issues.

    Look, its a very pretty state. But if I wanted to start a company... a business somewhere... Why would I set up in california? The taxes are high, the regulations are high, the PPP is not favorable... again, very pretty state... but what does that have to do with starting a business. And I'll point out that the prettiness of the state has nothing to do with the state government... california just "is" pretty.

    I wouldn't want to start up in Hawaii either and Hawaii is a lot nicer then California for climate.

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