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"Plus, the bay area is very expensive, it attracts engineers who are more likely to jump to the next hot startup, its hard to find good office space, etc."I disagree completely. Engineers here are no more likely to jump ship than anywhere else - the difference is that in some geographies you can keep people tied to you via lack of opportunities (i.e., "so... who exactly in town is hiring?"), but with mobility so prevalent these days, even that won't hold a skilled engineer for long.
And from my own experience - I was the first one on the ground setting up a satellite office for a company not based in SF. I found a great office space in 2 days.
> "This makes bumfuck Ohio[1] a better place if retaining talent is important."
As an engineer in SF, I simply have no interest in living in bumfuck Ohio. You'd have to pay me considerably more than even SF levels of salary for me to make that sacrifice.
There are many places that may attract tech talent that isn't SF or the Valley - but they are all major metropolises, because they contain the lifestyle that the typically young-ish technology folk are looking for. In the current climate there is no reason for anyone to hole up in a backwater and not live life while they build their startup.
> "Turnover means critical knowledge is walking out the door."
Fully agreed. So who is more likely to stick around: someone who is getting paid a (very high) SF salary, meaningful equity, all the perks you can throw at them, interesting work, a city full of people who get technology, sunny weather, mild temperatures... or bumfuck Ohio, where salaries are severely depressed, and the community of hackers is small, and the people who surround simply don't get it?
> "Bumfuck Ohio may not have the cool meet ups that SV has"
Read: There are few opportunities to network. Meetups are a core part of what makes SV tick, not just between VCs and those hungry for funding, but between engineers. They are an incredibly powerful recruiting tool and exposure to new tech and new products.
> "People are focused on venture capital, not building profitable businesses."
Have you been to SF or SV? Have you actually met the startup folk around here?