Techies are apparently leaving Silicon Valley. The pandemic has sparked what some describe as an “exodus” of tech companies, employees, and investors who are relocating to Austin, Miami, Reno, Madison, and other metros for a myriad of reasons.
But what about Seattle, another massive west coast tech hub and home to industry giants such as Microsoft and Amazon?
New employee migration data from LinkedIn shows that Seattle still added 2.2 tech workers for every one worker that left, from March to October of this year. That’s just slightly below the 2.5 number recorded last year.
The “inflow-outflow ratio” data, provided to GeekWire from LinkedIn and first reported on by Alex Kantrowitz’s Big Technology newsletter, is sourced from LinkedIn members who have indicated city-to-city movement on their profile.
The Bay Area saw the biggest year-over-year percentage drop for the ratio nationwide, falling 35% from 1.48 to 0.96. New York City has the second-biggest drop, dipping 20% from 1.08 to 0.86.
Additional data from LinkedIn shows that many Bay Area transplants are actually relocating to Seattle. The number of people moving from the Bay Area to Seattle increased 28% year-over-year from March to October.
Keith Rabois, a longtime Silicon Valley venture capitalist who just moved to Miami, said he’s seen the same trend anecdotally.
“As far as I can tell, a reasonable fraction of people I know professionally or socially that have left the Bay Area have also migrated to Seattle,” Rabois said on a recent This Week in Startups podcast with Jason Calacanis.
Jennifer Stojkovic, executive director of the tech advocacy group sf.citi, told GeekWire in July that she expected some Bay Area tech companies and workers to move to the Seattle area, which offers many similar amenities but a relatively lower cost of living.
Debate over the so-called exodus
GeekWire reported earlier this month on Tanium, the $9 billion cybersecurity company that relocated its headquarters from the Bay Area to the Seattle region. Tanium CEO Orion Hindawi described California as having a “real governance issue.”
Other California tech giants including Oracle and Hewlett Packard Enterprise recently announced plans to relocate their headquarters to Texas, while company leaders such as Tesla CEO Elon Musk and Dropbox CEO Drew Houston are also reportedly moving to the Lone Star State. Meanwhile, newly-public data analytics software company Palantir moved its HQ from Palo Alto to Denver earlier this year.
“The engineering elite of Silicon Valley may know more than most about building software. But they do not know more about how society should be organized or what justice requires,” Palantir CEO Alex Karp wrote in the company’s IPO documents. “… Our company was founded in Silicon Valley. But we seem to share fewer and fewer of the technology sector’s values and commitments.”
The mayor of Miami is now tweeting about Bitcoin. We are likely now hours away from him fully taking over Silicon Valley. This guy is good.
— Aaron Levie (@levie) December 24, 2020
But even as companies like Tanium say goodbye and well known Valley folks such as Rabois and fellow VC investor Joe Lonsdale voice their misgivings about the business climate in California, CNBC tech editorial director Matt Rosoff wrote last week that “San Francisco isn’t going anywhere.”
“Tech companies and workers flocked to the Bay Area when the economy was booming, despite these problems.,” Rosoff wrote, citing San Francisco’s homeless problem and power outages. “There’s no reason to think these same problems will keep them away when the economy booms again.”
Margaret O’Mara, a history professor at the University of Washington, struck a similar tone in a New York Times column today titled “Is Silicon Valley Over? Not So Fast.”
“Silicon Valley always roared back, each time greater than the last,” O’Mara wrote, adding that the region’s more pressing threat actually comes not from other U.S. cities but the “globalization of tech investment” and Chinese superstars like Alibaba and ByteDance.
Richard Florida, a distinguished urbanist and professor at the University of Toronto, told GeekWire that he does not expect U.S. tech hubs to decentralize in any significant way.
“San Francisco and Seattle will be just fine,” he said in July. “I do not see a massive relocation of large corporations or startups anywhere outside of the handful of superstar metros that have dominated this for the better part of two decades.”
This will surprise no one, but it really doesn’t matter if VCs change cities. The real question is about entrepreneurs AND key functional executives (always a limiter for other markets). Money always travels.
— Bill Gurley (@bgurley) December 29, 2020
Massive network effect for functional executive to be in Bay Area. You can always take startup risks because there is always another job if it doesn’t work. Moving away has no such insurance.
— Bill Gurley (@bgurley) December 29, 2020
So what does all this mean for Seattle?
Kantrowitz said he thought Seattle may be “on its way to becoming the new tech capital of the U.S.,” but a LinkedIn economist told him that tech talent will return to hubs such as the Bay Area when offices reopen.
Seattle is also certainly dealing with similar problems to San Francisco, including homelessness, rising housing costs, and a debate over how to tax big businesses.
Yes AND we have a lot of work to do to not mess this up. Hearing particularly from a lot of founders here that they are fed up with Seattle public spaces & concerned about capital gains tax. They are not anti-tax per se but doing the math on a big exit and looking at TX and FL. https://t.co/ZLcxKxFjU8
— Heather Redman (@heatherredman) December 28, 2020
But its tech ecosystem continues to blossom, particularly this year. Hometown giants Amazon and Microsoft have seen their stock prices soar during the pandemic as millions rely on their products and services.
Both companies continue to hire in the region; Microsoft has more than 1,800 open positions, while Amazon has more than 7,500. Amazon is placing thousands of jobs near Seattle in Bellevue, Wash., announcing in September that it will hire an additional 10,000 people in Washington state’s fifth biggest city and plans to employ 25,000 there eventually — the same amount it expects to hire in Northern Virginia, or its “HQ2.”
Google also keeps expanding its footprint in the region, scooping up various land plots and buildings in Kirkland, Wash. Fellow tech giant Facebook in August paid $367 million to buy REI’s brand new headquarters complex in Bellevue after the outdoor retailer decided to shift to a less centralized headquarters approach.
Meanwhile, as the pandemic accelerates adoption of digital technology, the spotlight is shining brighter on the robust business-to-business technology ecosystem in the Seattle region amid the ongoing economic and health crisis.
Startups that sell to other businesses make up more than half of the GeekWire 200 list, our ranking of top privately-held Pacific Northwest technology companies, and 70% of the top 20.
Earlier this year, Seattle’s startup scene jumped three spots moved into the top 10 of Startup Genome’s annual global startup ecosystem rankings. The list ranks cities based on seven “success factors”: performance, funding, market reach, talent, connectedness, knowledge, and infrastructure.
Startups in Seattle are also raising gobs of money, providing fuel to help early-stage companies grow. Venture capital investors sunk $1.1 billion across 65 deals during the third quarter, according to GeekWire’s tally, derived from our running list of Pacific Northwest startup investments. Funding totals from July and August eclipsed last year’s levels.
The investment activity follows a strong first half of 2020 for Seattle and the broader Pacific Northwest startup ecosystem.
Taken together, Seattle’s tech scene is larger than ever and showing no signs of slowing growth or experiencing any sort of “exodus” — in fact, as the data shows, perhaps just the opposite.