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Why is the tech industry in the SF Bay Area?


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·Nov 3, 2024

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Is there a specific reason, or was there specific events that occurred which has created this strength or grip that the Bay Area has when it comes to technology? I don't think it is a path dependent history. In other words, I don't think that Silicon Valley is Silicon Valley because a set of magic events happened in Silicon Valley at a particular place in a particular time. Rather, I think it's driven by geography. Believe it or not, geography is destiny.

Every major industry in the United States dominates a particular town, and the United States is the dominant empire of our age. So how does this capitalist empire divide up its cities? That's the question. The finance industry dominates New York. Yes, there are many other industries in New York, but New York is uniquely the financial capital of the United States, which is the capital of the world.

So if New York were to stop being the financial capital of the United States, it would be extremely felt within New York. The rest of the New York industries would collapse because everything you see there—from art and media to advertising, fashion, etc.—all of these require a healthy financial industry. So in New York, finance dominates, and finance is New York, and New York is finance.

So New York is taken. You cannot move the tech industry to New York. I know people are trying, but it just disappears. There are too many other things to do. There are too many distractions, and you'll always be number two. It's taken. Hollywood is older than the tech industry. So by the time the tech industry came along, Hollywood was already taken.

Los Angeles was taken. Los Angeles is dominated by Hollywood, and it is a cultural capital of the United States. It is where all the media and the memes are produced, so it is taken as well. Too bad, because it's a great piece of land. So you can't stick the tech industry in Hollywood; it would disappear into the greater mass of Hollywood, and tech would be second-class citizens. The whole town caters towards Hollywood, so it wouldn't cater towards the needs of tech, just like New York caters to finance.

It would not cater to the needs of the nerds in tech. The tech industry, when it was first being formed, you could argue, was fairly mobile. There were many choices. So you could basically set up shop anywhere. You could set up shop in Seattle, you could set up shop in Portland, you could set up shop in Texas, you could set up shop in San Diego, you could set up shop in San Francisco, you could set up shop in Miami, you could set up shop in Chicago, you could set up shop in Boston.

Why Silicon Valley? You could argue that's because of universities and colleges and talent, but that's not true. The university college talent capital of the United States is actually in Boston. It's Massachusetts; Harvard is there, MIT is there. There are a number of universities there. The Ivy League is all up in the Northeast. It's only in the recent few decades that the talent has migrated west towards Berkeley, Stanford, and Caltech.

You could argue that it's because of government support and spending—all the money that the government sank into semiconductors in the Bay Area—but that begs a question: why were the semiconductor companies in the Bay Area? I don't think it's as simple as government spending. San Diego is a huge beneficiary of government spending, and the government spending tends to go where the talent is. It's not usually the other way around.

There are places like Los Alamos that never developed any significant tech talent after the Manhattan Project. There's also plenty of government spending and plenty of money in Texas—in Houston, in Dallas, in Austin—but you don't see the tech capital of the United States going there. So again, why San Francisco?

I argue it's because of the nature of the workforce. The tech workforce, like them or not, these are the most wealthy and most creative individuals on the planet. They can earn from anywhere. Even though remote work is a more recent thing, nobody has been able to do remote work at all in the past. And to the extent that they ever have, it was because of tech.

So the tech people are the only ones who be able to do remote...

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