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United States IT

Is There a Mass Exodus of Former Silicon Valley Tech Companies From Austin, Texas? (mysanantonio.com) 228

Posted by EditorDavid from the leave-Austin-weird dept.
"Over the years, Austin has seen a huge migration of tech companies moving to the city, from billionaire owners of Twitter (X) to the largest search engine in the world," according to a local news site in Texas.

"But many startups are now choosing to leave the capital city they once flocked to because of the rising cost of living, low funding, and lack of diversity, according to TechCrunch. " On Thursday, December 7, the cloud computing company VMWare announced it was laying off 577 employees in Austin as part of a nationwide job reduction to cut costs, according to the Austin American-Statesman. TechCrunch is reporting that startup founders, like Techstars Managing Director Amos Schwartzfarb, are announcing their decisions to leave Austin's "lackluster" startup scene... In 2022, Meta abandoned plans to move into the biggest skyscraper in Austin, and Google froze plans to move into 35 floors of a different downtown building, despite paying rent to the developer, according to the Washington Post...

In January, CEO Don Ward of Laundris, a B2B enterprise industrial software platform, announced he would be relocating his company to Tulsa because it reminded him "of where Austin was 10 years ago in terms of the tech ecosystem being built," according to Tulsa World. Last month, startup unicorn Cart, an e-commerce business, announced it was moving its headquarters back to Houston after relocating to Austin in late 2021, according to TechCrunch.
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Is There a Mass Exodus of Former Silicon Valley Tech Companies From Austin, Texas? More

Is There a Mass Exodus of Former Silicon Valley Tech Companies From Austin, Texas?

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  • At least they temporarily had a studio in Austin, and now have moved back to SV if not mistaken. At least it's what I got from their recent youtube channel

  • The Times They Are A-Changing (Score:5, Interesting)

    by Petersko ( 564140 ) on Sunday December 10, 2023 @08:00PM (#64071795)

    Geographical location is losing it's appeal. While lots of tech companies still work towards colocation as the norm, those that have embraced remote work should have exactly one guiding principle - go where the cost burden is lowest.

    Seek the lowest taxes, abandon owning "towers" and campuses in favor of a small handful of meeting rooms with whiteboards, and don't worry about branding property.

    Under that paradigm, lots of cities and building owners are... screwed.

    • Geographical location is not losing its appeal for workers though, especially younger people want to live in places where there are things to do, other people to meet. I'm sure there are some who want to "get back to the land" but cities can have plenty to offer in terms of quality of life too.

      • Re: (Score:2, Troll)

        by bhcompy ( 1877290 )
        Suburbs appeared because of this. The workers want decent homes they can afford, decent schools to send their kids to, and a reliable future for those kids. If you're going to have to make sacrifices and overpay for somewhere, is it going to be for NorCal or Austin? I sure as hell know what I would pick, and it isn't the place run by a death cult looking forward to the rapture
        • > I sure as hell know what I would pick, and it isn't the place run by a death cult looking forward to the rapture Yeah, that's ambiguous

          • Re: (Score:2)

            by tlhIngan ( 30335 )

            > I sure as hell know what I would pick, and it isn't the place run by a death cult looking forward to the rapture Yeah, that's ambiguous

            Or how about the one whose AG is suing to get an injunction because a woman wants an abortion on a non-viable fetus with genetic disorder who probably will not make it beyond 3-4 days of life after birth, and where carrying it term endangers said woman? Said AG even went as far as to tell any doctor who even thinks about doing it to save her life will be sent to jail.

            Th

    • Re:The Times They Are A-Changing (Score:5, Interesting)

      by Anonymous Coward on Sunday December 10, 2023 @08:21PM (#64071847)
      I saw this coming, and it's going to get worse. Texas attracts businesses with promises of "low taxes" and "business friendly" government.

      But people who fall for that sales pitch find out that it comes with a hefty price -- shitty schools, shitty roads, and a government controlled by retarded rednecks.

      • Re: (Score:2)

        by jhoegl ( 638955 )
        that is likely true, but companies like VMWare, which was just purchased by Broadcom, a company known for acquiring good companies and then shitting on them, is literally increasing their licensing fees 120%, reducing staff, and will probably remove a lot of old knowledge workers because broadcom is more a venture capitalist company than an actual tech company.

        They have been buying companies, rasing prices, removing good workers for years, only to resell the company after all value has been extracted in

        • Sublet to whom? Most commercial leases are around 5 years. Corporate real estate has already had record numbers of lessees not renewing and it will continue for the next couple years. It's not that they're not smart enough to pull out, they just haven't had an opportunity yet.

      • This is exactly what I experienced moving to California. But while I wouldn't call them rednecks, they're still pretty fucking retarded. Rednecks are at least entertaining.

      • Re: (Score:2)

        by AmiMoJo ( 196126 )

        Not too mention extreme weather, including 40C heat, and an unstable electricity supply.

      • Re: (Score:2)

        by mjwx ( 966435 )

        I saw this coming, and it's going to get worse. Texas attracts businesses with promises of "low taxes" and "business friendly" government.

        But people who fall for that sales pitch find out that it comes with a hefty price -- shitty schools, shitty roads, and a government controlled by retarded rednecks.

        Yep, even though Texan cities tend to be decent (rural Texas really drags down the average), the batshit insane Texas government is putting a lot of companies off.

        The problem with trying to steal companies off other states using low taxes and low costs as a bribe are two fold. 1. low costs can't be sustained unless you're seriously subsidising them, as a place becomes popular it's inevitable that costs will rise, property values go up, more infrastructure is required which adds to higher costs, this lead

      • Re:The Times They Are A-Changing (Score:4, Insightful)

        by brunes69 ( 86786 ) <slashdot@keirstead . o rg> on Monday December 11, 2023 @08:43AM (#64072921)

        I have only ever visited Austin, but have done so many times. The roads there seem top notch to me.

        The reality is roads in any southern state are going to be fantastic compared to those in the northeast due to the lack of winter.

        • Re: (Score:2)

          by quenda ( 644621 )

          fantastic compared to those in the northeast due to the lack of winter.

          What were all those Texas ice storms I saw on the news? Blackouts, snow cover, and people freezing to death.
          I'm Australian so no more expert than a Californian, but what qualifies as winter over there?

          • Re: (Score:2, Informative)

            by cayenne8 ( 626475 )

            What were all those Texas ice storms I saw on the news? Blackouts, snow cover, and people freezing to death.

            It was a very RARE occurrence that happened one year....geez, they're fixing things, it isn't like this is something that happens every year.

      • The problem with Texas for corporations is that it's not a cheaper place to live for their employees any more, so they won't get a break on salaries like they used to.

        When I lived there over 20 years ago it was still a bargain — houses were cheaper to buy, rents were much lower (like literally one third what they would be here in California) and so people would work for a lower salary. But now the property values have risen so the rents and property taxes are just as bad as in California, so that's no

      • Yeah if the employees are miserable due to quality of life - I mean.. at this point in time, I know very few LGBTQIA+ folks who would willingly relocate to Texas and I have to think the states record for diversity and equity and inclusion would not really impress BIPOC either ..

        So if your company is trying to attract the best talent and values diversity, Texas is maybe not a great choice?

        I would quit my job on the spot if told I had to relocate to TX.

    • Except we are learning that remote work fails when it comes to creativity; collaboration; and spontaneity. Trying to whiteboard a solution across three continents and a dozen time zones is a failure. Small teams of people working closely and in person utterly thrash the remote model to bits.
      • This is the lie that energy vampire distractions tote.

      • Re: (Score:2)

        by groebke ( 313135 )

        I do it all day every work day across 2-3 continents. One has to be organized and focused. And not prone to whinging.

      • "Trying to whiteboard a solution across three continents and a dozen time zones is a failure."

        People were already doing that when working in an office. Why would that be any harder in general when working form home.

        Remember, the common element in all of your failed relationships is you.

      • Re: (Score:2)

        by Khyber ( 864651 )

        "Except we are learning that remote work fails when it comes to creativity; collaboration; and spontaneity."

        Furries manage to do creative and collaborative and spontaneous work daily, why are the rest of you such failures?

    • I think what will happen is those tech firms that moved to Texas will move to other metro regions like Dallas-Fort Worth, San Antonio and Houston. In short, it won't be concentrated around Austin anymore.

      • Nope. The whole value prop for Austin was to be in a startup hub. It was the best option in TX. Every goddamn city wants to be San Francisco, but none of them ever try to figure out why companies still flock to a high tax, expensive area. They hire accountants and pencil pushers to calculate how they're going to build the Next Big Startup Hub. And they all fail to pan out.

  • Diversity is not a contributor to success and McKinsey had to largely fabricate a study for political purposes.

    • Re:Diversity is a cult (Score:4, Informative)

      by quonset ( 4839537 ) on Sunday December 10, 2023 @09:36PM (#64071991)

      Diversity is not a contributor to success and McKinsey had to largely fabricate a study for political purposes.

      Huh. And to think McKinsey has been reporting on the benefits of diversity [mckinsey.com] since 2015. Apparently McKinsey is able to time travel to produce their reports.

      Either that or they keep producing reports [mckinsey.com] which find the same thing over and over [mckinsey.com]: companies who have a more diverse workforce are more profitable and successful overall than their less diverse peers.

      Then again, it's not as if other studies [nbs.net] show the same thing, or that more recent study results also say the same thing [forbes.com]. If you don't like those studies, maybe try one from Gartner: [gartner.com]

      Through 2022, 75% of organizations with frontline decision-making teams reflecting a diverse and inclusive culture will exceed their financial targets. And gender-diverse and inclusive teams outperformed gender-homogeneous, less inclusive teams by 50%, on average.

      But who knows. Maybe McKinsey did pull something out of their ass eight years ago and just now put it into words for us to read.

    • Re: (Score:2, Insightful)

      by bhcompy ( 1877290 )
      It's laughable to think that McKinsey cares about anything but the almighty dollar. They were probably the ones that suggested IBM to the Nazis

    • Re: (Score:3)

      by mkwan ( 2589113 )

      Commercial purposes. McKinsey has a very profitable business advising on DEI strategies.

  • Too Fucking Hot. (Score:4, Funny)

    by zenlessyank ( 748553 ) on Sunday December 10, 2023 @08:13PM (#64071825)

    A couple of years of Texas summers will send the weak packing. It's as simple as that.

  • And the cool ones are moving to OK?

  • Who would have guessed SV turncoats.... (Score:5, Interesting)

    by Somervillain ( 4719341 ) on Sunday December 10, 2023 @08:52PM (#64071897)
    ...would abandon their next home? These are companies who built their company with Silicon Valley talent pool, services, and infrastructure, got fed up for one reason or another...move to what they view as greener pastures...who would have guessed they'd be likely to abandon their next home? Similar to how the more divorces a person has, the less time they stay in a single marriage.

    There's more to life than living expenses and taxes. Elon Musk may not be bright enough to realize this...same with many of these other companies...then they move to a red state, realize they're not saving as much money as they thought they would and they're missing out on the many good things about Silicon Valley. OK, you're not in the Valley, your tax bill is lower...but who would have guessed that you've moved from one of the most expensive real estate markets to just another expensive real estate market with faster growth and things are expensive there too!!...now you have to deal with Republican governors and the Texas talent pool. Austin has a great talent pool...but nothing compared to SV.

    Plus now with the stupid war on abortion, anyone with working ovaries under 35 wants to get the fuck out of dodge. So yeah, you lure in engineers with a good job and they relocate a few years after they get married. Plus you have to deal with the mess that is the Texas educational system.

    No matter how "business-friendly" Texas wants to portray themselves, outlawing abortion is VERY alienating, especially for young people...liberal and conservative. Even if the guys don't care, their wives do...and then wait until they have teenage daughters and an unplanned pregnancy can hit their family. Texas built up a great upstart competitor to SV with Austin...then shot themselves in the foot with abortion bans. Also, their constant revisionist educational battles are a huge issue.

    If you want to appeal to the middle class, you dont have to go mega-progressive...but you can't be idiotic with abortion and education. I can picture a lot of people starting out in Austin, enjoying the BBQ...then realizing eventually, the shit in the news matters. Their wives have to contend with the fact that abortion is essentially banned. They have to contend with the circus that is the Texas educational system. Austin may be cheaper than SV...but not enough to make up for that nonsense for most families. I am sure many families had a fun adventure, but once the novelty wore off, it sunk in that they're in the middle of Texas and Texas' problems are now their problems. Elon Musk no doubt sends his kids to private schools and can easily afford to shuttle his mistresses to states with reasonable abortion laws...so he has no skin the game, but for his employees?...a lot are simply not going to like living in Texas. Some will LOVE it! Many will absolutely hate it.

    Don't get me wrong, I'm a masshole. We're not talking about my home.. I've been to SF and SV and they're nice places, not for me...but not the hellscape right-wingers portray them as. However, it's foolish to think that a "cool" city with a good tech scene can go toe-to-toe with the very best tech city in all of history. I love my city...but I begrudgingly admit, we can't compete with SV. Our talent pool can't match theirs, despite being near MIT. All the subtle tech services are lacking....financing is lacking...networking opportunities are lacking.

    • Re: (Score:2, Informative)

      by Baby Duck ( 176251 )
      You're forgetting the shaky Texas power grid.

    • Re:Who would have guessed SV turncoats.... (Score:5, Insightful)

      by Firethorn ( 177587 ) on Sunday December 10, 2023 @11:58PM (#64072201) Homepage Journal

      This reminds me that I'd said for years that actually being able or banning abortion would be a "dog catches car" moment for the republican party. As long as RvW stood, they could be as pro-life as they wanted to catch the rabid-prolifers, their money and their votes.

      But now that they've caught the car, they're finding out that most of their voters are actually semi-pro choice.

      What I mean by this is that, in my opinion, pro-life and pro-choice is actually a spectrum. You have loud ranters on either side, but most people are actually in the middle.

      So you can actually have two people - a republican who describes themselves as pro-life, and a democrat that says they're pro-choice. But when you start proposing actual rules, well, the republican would support so many exceptions like incest, rape, health, too young, too old, can't afford, and more while the democrat would support so many "minor restrictions" like partial birth, too far along, no real good reason, don't treat abortion like birth control, etc... That they end up in the same spot.

      That's what the republicans are seeing right now - that most of their supporters actually WANT abortion legal and is why despite electing a bunch of extreme pro-lifers, conservative states are having abortion protections put into their constitutions.

    • Re: (Score:2, Interesting)

      by HanzoSpam ( 713251 )

      Given that according to the article, the companies mentioned leaving Austin were destined for other locations in Texas such as Houston, or other conservative states such as Oklahoma, I am skeptical of your conclusion.

      Perhaps they find Austin too progressive.

  • Texas is not a good state for women (Score:5, Informative)

    by Anonymous Coward on Sunday December 10, 2023 @09:02PM (#64071923)
    I'm guessing that it is not easy to recruit women of child-bearing age to move to Texas, with its restrictive and onerous laws regarding the termination of pregnancies. Just this week, a woman obtained approval from a judge for termination of a pregnancy where the fetus has a fatal problem and the mother is at risk of becoming infertile. But the Texas AG, Ken Paxton, appealed the decision and contacted the hospitals where the woman's ob-gyn has privileges, threatening prosecution of everyone if the procedure was performed. Texas (and other red states) aim to control women's bodily autonomy, which may be an important factor in limiting companies moving to Texas and in the exodus of those companies from Texas.

  • There are always companies moving into an urban area while other companies are moving out. So to make any definitive statements you get to get the statistics of how many companies and employees are moving in and how many companies and employees are moving out.

  • The people are nice and all, but after a long day at work I don't want to engage in discussions of the Bible at the corner bar, or while playing tennis. Maybe its changed since 1991, but I doubt it. At every opportunity everyone in this town seemed intensely interested in engaging in a religious discussion -- like it was some perverse dystopian society where you lost time on your life if you didn't bring it up first.

  • Austin has nowhere near the road infrastructure to handle all the incoming population. A 20 mile radius around downtown is completely packed with cars for much of the day. Everything anyone liked about the city has been wiped out by this influx of people and tech money.

  • University educated, wealthy, upper middle class software engineers are probably not all that enthusiastic about raising their teenage daughters in A Handmaid's Tale. They likely aren't super enthused about Ted Cruz being their Senator and an economy and ecosystem where fossil fuel companies are allowed to run wild. Combine that with the cost of living in Austin starting to rival the west coast, chasing pretty much everyone else out of Austin and stripping it of its culture and there's not a lot of reason

    • Well they'd better stay out of a left wing university then, else they'll be in the middle east as they seem all to be supporting Hamas these days. Guess again.

    • Re: (Score:2, Funny)

      by kaatochacha ( 651922 )
      That's ok. Their daughter will probably declare herself a man, to the delight of it's parents, and no problem there.

  • In January, CEO Don Ward of Laundris, a B2B enterprise industrial software platform, announced he would be relocating his company to Tulsa because it reminded him "of where Austin was 10 years ago in terms of the tech ecosystem being built," according to Tulsa World.

    In other words, the whole point is that there is no magic location for tech.

    That Austin isn't (or isn't staying) "the new SV" is only surprising to people who didn't get the point in the first place.

  • They brought the same problems they were trying to avoid with them. News flash if they all go to the same place again there will be a repeat of the problem because they themselves are the cause of the high costs and whatever else they do to a location.

    • This sounds like both the Sundance episode of South Park and the Fred Armisen "hipsters come to Springfield" episode of The Simpsons.

      Robert Redford: This is perfect. Why didn't we think of it sooner? This town still has some charm left, not the mess we turned Park City into.

      Phyllis: Forgive me for being observant, but, won't we just end up doing the same thing to this town?

      Robert Redford: Yes. And the town after, and the town after that. Like termites, we will move this film festival from town to town until

  • Go home. You'll be happier, we'll be happier. It's really a win-win for everyone. First person to find a way to get Texas back to around 17 million people is my hero.

  • For them most part, nobody leaves a profitable area because of "lack of diversity". Sure they have their DEI manager make that statement to attempt to sound "modern", but the real reason is just plain $$$.

  • Is this just the latest buzzword to use as an excuse for a business making a change they fear will be unpopular?

    I haven't spent a lot of time in Austin, but I was down there just a few years ago on a business trip, and the area felt pretty darn diverse to me. The hotel I stayed in was even hiring people from so many different parts of the world, they had a policy of each employee having their country of origin on their badge, just below their name.

    Austin drew a large crowd of artsy types, whether it was mus

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