The Decline of Investment in San Francisco Startups • Hacker News Board

Re: The Decline of Investment in San Francisco Startups

#261

Post by lisa_henderson » Fri, Jul 21, 2017, 5:23 PM UTC

This article misses what seems like the most obvious explanation, which is that the USA economy has recovered from the Great Recession. We had a stretch from 2009 to 2014 when it was difficult to find any normal investment that paid better than 1% or 2% a year. Seeking yield, money poured into startups, because they seemed like the only thing that might be able to offer better than 20% returns (assuming a basket of startups, most of which fail and some of which return 100x).

Since 2015, the economy has returned to almost normal, so the need to invest in software startups is reduced. And this would most likely effect San Francisco the most, since it had received the most investment during the era 2009-2014.

Now that the economy is almost back to normal, there are a lot of areas in the economy that offer possible returns. The need to focus on software startups is diminished.

Re: The Decline of Investment in San Francisco Startups

#262

Post by bitcrusher » Fri, Jul 21, 2017, 5:25 PM UTC

NotQuantum wrote: post #213

colbyh wrote: post #29

Earlier quoted context omitted.

Those places are all just as, if not more, expensive than SF and come with their own challenges as well. The school systems in the peninsula are fantastic though, and for most families that trade-off alone is probably worth it.

Menlo Park and Palo Alto, sure. But MTV, Sunnyvale and San Jose are still pretty cheap. (relatively)

Excuse me, but I believe you are very much mistaken. Those places are as much or MORE expensive than most places on the peninsula... In fact, the reality is that prices have almost normalized across all of the cities from SF to Los Gatos.

It is becoming increasingly hostile to any new arrivals as the barrier of entry is skyrocketing to the point of being out of reach even for "rich" people.

Re: The Decline of Investment in San Francisco Startups

#263

Post by dsfyu404ed » Fri, Jul 21, 2017, 5:25 PM UTC

History repeats itself. The coal industry extracted resources from the land in West Virginia until it was forced by resource depletion and regulation to scale back. The tech industry is just extracting wealth from society instead of the land and what's left is scarred, poisoned and will go on to cause problems downriver. The SF is starting to look less attractive and operations are slowly spinning up as needed at adjacent mining sites. Eventually there will be noting left to mine and the mining towns will be destitute and states downstream (Like Colorado and Oregon for example) will have polluted water to deal with.

Internalize the profits. Externalize everything else. It never changes.

Re: The Decline of Investment in San Francisco Startups

#264

Post by kec » Fri, Jul 21, 2017, 5:27 PM UTC

vedanta wrote: post #243

kec wrote: post #234

Earlier quoted context omitted.

How does any of that help when the real issue is the distorting effect of prop 13 on the market? Insane housing prices are being driven by an illiquid market, adding more housing isn't going to change that.

Prop 13 affects all of CA, you don't see prices in LA going up 100% in 3-5 years like you do in most south bay cities.

LA hasn't seen anything like the VC / tech boom that the bay area is currently in. Prop 13 reduces liquidity, but that doesn't automatically have an outsized effect on prices. It's only when a market is illiquid and there's a huge spike in demand that you see ridiculously negative effects like this.

Re: The Decline of Investment in San Francisco Startups

#265

Post by wbl » Fri, Jul 21, 2017, 5:27 PM UTC

randomdata wrote: post #94

pcwalton wrote: post #62

Earlier quoted context omitted.

The simple fact is that there are a lot of people who need to live in the Bay Area. Wishing people would just leave is what the NIMBY organizations have been trying for decades. It doesn't work, and it inflicts undue hardship on everyone who wasn't one of the lucky ones who bought in early. The only thing that does work is confronting the fact that a lot of people need to live here and encouraging housing supply to m…

The economic need will, of course, compensate for higher housing costs by providing higher compensation, which ultimately makes housing costs a moot issue for anyone providing value to the local economy. As someone from outside of the region, what reasons necessitate that a lot of people be in the Bay Area that is beyond the economic need?

Why shouldn't we build more to promote clustering?

Re: The Decline of Investment in San Francisco Startups

#266

Post by randomdata » Fri, Jul 21, 2017, 5:28 PM UTC

Hydraulix989 wrote: post #114

randomdata wrote: post #94

Earlier quoted context omitted.

The economic need will, of course, compensate for higher housing costs by providing higher compensation, which ultimately makes housing costs a moot issue for anyone providing value to the local economy. As someone from outside of the region, what reasons necessitate that a lot of people be in the Bay Area that is beyond the economic need?

Compensation isn't nearly as elastic as housing prices though. Not only that, the demand side for housing is also the supply side for the job market, so prices are squeezed on both sides.

> Compensation isn't nearly as elastic as housing prices though.

Because there is usually room to give. If people were on the brink of actually having to leave due to rising costs, incomes would lose their inelasticity pretty quickly, insofar as the need for labour is required. There is always superfluous work that is useful at a low price, but fine to give up completely if costs grow too high.

> Not only that, the demand side for housing is also the supply side for the job market, so prices are squeezed on both sides.

Squeezing is necessary to a point. After all, the economy eventually seeks equilibrium. It has been the case – at least before housing costs grew out of control – that one could make a fortune by moving to the Bay Area, where average incomes are significantly higher than most of the rest of the country. Now the costs are rising to close the gap with lower-income areas.

If someone in a low-cost area has a gross income of $30,000, and expenses of $25,000, then someone in a high-cost area with a gross income of $150,000 can take on expenses of $145,000 without being any worse off. While housing isn't the only cost one has, it is usually among the largest (with taxes being the other major expense). Having $145k to spend on expenses each year can go a long way.

Re: The Decline of Investment in San Francisco Startups

#267

Post by readams » Fri, Jul 21, 2017, 5:31 PM UTC

epicureanideal wrote: post #193

vedanta wrote: post #42

Earlier quoted context omitted.

There are also YIMBY orgs almost everywhere. The south bay YIMBY twitter account has updates on what you can do as well. From following the YIMBY movement ( http://www.slate.com/articles/business/metropolis/2017/06/yi... ) it's hard to not take the YIMBY position. More needs to be built, but we can have ~10% BMR requirements as ways of increasing diversity in a neighborhood and preserving some local control/culture.…

BMR is a scam in my opinion. It just prevents wages rising as they would naturally need to if housing became increasingly unaffordable to the point that workers can't even commute in. It recruits people into a program of lucky allocation rather than working for more. Busy or I'd write more. Look how rent control turned out.

Be definition there's always a shortage of BMR housing (otherwise it wouldn't be below market rate). BMR doesn't remotely solve the problem.

Re: The Decline of Investment in San Francisco Startups

#268

Post by ghostbrainalpha » Fri, Jul 21, 2017, 5:36 PM UTC

dsfyu404ed wrote: post #263

History repeats itself. The coal industry extracted resources from the land in West Virginia until it was forced by resource depletion and regulation to scale back. The tech industry is just extracting wealth from society instead of the land and what's left is scarred, poisoned and will go on to cause problems downriver. The SF is starting to look less attractive and operations are slowly spinning up as needed at adj…

Dude... you might have a good point in there somewhere. But that analogy is making me hate you.

Re: The Decline of Investment in San Francisco Startups

#269

Post by readams » Fri, Jul 21, 2017, 5:36 PM UTC

_delirium wrote: post #45

stale2002 wrote: post #30

Earlier quoted context omitted.

Correct. And the best way to fix Bart overcrowding is to build apartments near where people work so they don't HAVE to commute.

Can BART overcrowding be addressed in part by improving BART itself? It'd be one thing if it were already moving such large numbers of people that it'd be infeasible to expect higher capacity, but its current ridership isn't even all that high. The Chicago "L", for example, has a similar number of track-miles (though more stations), but moves twice as many people on an average day. How is BART moving half as many and…

BART is run in a hilariously inefficient way and most of its budget is wasted.

Re: The Decline of Investment in San Francisco Startups

#270

Post by sulam » Fri, Jul 21, 2017, 5:37 PM UTC

amyjess wrote: post #162

sulam wrote: post #125

Earlier quoted context omitted.

Even then you need to be able to hire engineers. It's no accident that the companies located in that vast swathe hire a lot of remote employees.

Alternately, you can do what TI did and grow your own. When Texas Instruments decided to establish their headquarters in Richardson, TX, they faced a shortage of talent as Richardson hadn't really been built out yet. So the founders of TI (Cecil H. Green, Eugene McDermott, and J. Erik Jonsson) started their own university with an explicit focus on STEM subjects. Eventually, they gave control of the university to the…

That would be awesome! There's so much of middle America that would probably retrain in a red hot second if they knew there was a job at the end of the path.