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San Francisco Bubble

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Re: San Francisco Bubble

#291

Post by shostack »

pyrrhotech wrote: post #130

Can we stop the whole "engineers make a lot of money" spiel? Most engineers make between 120 - 160k in SF, where the median household income is 104k. They don't make more than product managers, project managers or even many BART operators. See http://www.mercurynews.com/salaries/bay-area if you don't believe me. Sure, they make a bit more than average, but if that's the standard of "a lot of money", you have a totall…

Yeah, this is kind of aggravating. I'm not an engineer, but I know many, and anyone who thinks they are all just living the high life is crazy. With the cost of living they are no doubt faring better than many traditional working class folks, or service industry folks, but let's be real--they aren't just idle rich bathing in tubs of caviar.

In fact, while they might be able to purchase a home still, it often times will be quite a bit smaller, more run down, and in a worse neighborhood due to the sheer cost of buying one. And often times they are only buying out of desperation because they don't want to be forced out of the area entirely due to rents beyond their control.

Re: San Francisco Bubble

#292

Post by Animats »

josh2600 wrote: post #76
mbesto wrote: post #62

This is why the free market is so great. 1. Everything too expensive? Good, don't live here, eventually enough people will leave to drive all of the costs back to other market norms. 2. Dumb startups? Good, they will fail, people won't be able to afford to live here and they'll leave. 3. People are spoiled? Uber is cheaper and more convenient in some cases than taking the local transportation. When people stop taking…

Part of the fallacy of this is the implication that you need "good" engineers for most startups. I think, frankly, that many startups need a website with a google form + some excel sheets to get started and if the thing takes off they can hire someone who can use google to bang on stackoverflow. Very few things require genuinely novel pieces of code to work. Yes, lots of value can be captured using code, but you coul…

"Soylent" is a good example. They regularly post about their elaborate IT infrastructure. Based on their sales volume, they do about two transactions a minute. One shared server could handle their transaction load. They could get a low-end hosting account from Hostgator, use one of the six shopping cart programs Hostgator supports, and lay off most of their computer staff.

(Soylent doesn't even make the stuff. That's outsourced to Jasper Products in Joplin, MO.[1])

[1] http://www.jasperproducts.com

Re: San Francisco Bubble

#293

Post by restalis »

deathcakes wrote: post #177
mbesto wrote: post #62

This is why the free market is so great. 1. Everything too expensive? Good, don't live here, eventually enough people will leave to drive all of the costs back to other market norms. 2. Dumb startups? Good, they will fail, people won't be able to afford to live here and they'll leave. 3. People are spoiled? Uber is cheaper and more convenient in some cases than taking the local transportation. When people stop taking…

1) Sure, eventually. 2) Sure, eventually. 3) Sure because you are so averse to being taxed that you will deliberately destroy your own potential to get to work rather than acknowledge the idea that this could be a shared problem solveable by shared funds. 4) Sure, eventually. So your argument is that this is really bad at the moment, but over an unspecified amount of time, 'the market' will sort it out. No worries. N…

I think he was putting it more as a natural state of things. It's not "really bad", it's how things are ought to be. Yes, think about things, consider things for your life, plan out, et cetera. He does that and he is content (although I'm not sure how much he's actually considering in his daily thought sessions, as I've encountered more ignorant content people than thoughtful content ones).

Re: San Francisco Bubble

#294

Post by rictic »

pc86 wrote: post #218
ChuckMcM wrote: post #195

Earlier quoted context omitted.

Ok, as a perennial voice for free markets I agree with your observations, but not your point. Having lived through it I see the damage it is doing to individuals who will take years to recover. Too many engineers today, perhaps like sports players, take a big salary, project it across 30 years and then say "Wow I've got millions headed my way, do I really need to bag my lunch?" I've watched as they became both broke…

I agree with everything you said but I think you're underestimating the importance of fighting lifestyle inflation at all costs. It's incredibly hard to justify a six-figure burn rate under any circumstances, even in San Francisco. If you've got a job making multiples of the median household income in the US, it's incredibly irresponsible to live in a manner that wouldn't support a pretty major pay cut at any point.

Yep. The hedonic treadmill* is real. There are things worth paying for, and there are things whose net effect is only to make it more expensive for you to be happy. It's very much worth it to be deliberate in what luxuries you allow into your life, as once they've been there for a while you'll no longer derive any pleasure from them, but you'll miss them dearly if you were to give them up.

* https://en.wikipedia.org/wiki/Hedonic_treadmill

Re: San Francisco Bubble

#295

Post by shostack »

csomar wrote: post #108

We have been hearing and reading similarly titled articles for the last couple years. This, however, is the most stupid one in my opinion. What the author describe is a lavish (according to him) standard of living, judged startups to be dumb by their name/description (but they got investor money). He concludes that we are in a bubble. Here are the metrics that matter: * Are current startups generating enough money to…

I think you forgot another important metric:

* Are the startups that are hiring taking up enough of the talent compared to large established companies with billions in the bank such that if there were a bubble, and it were to pop, it would actually make an impact on the hiring environment.

I'd love to see some hard data on the % of people employed by the "startup ecosystem" vs. large established giants like Google, FB, Apple, Adobe, MS, Amazon, etc. These companies have MASSIVE hiring needs and will likely continue to for some time. Should interest rates cause lots of startups to die, I have a hard time believing it would result in a similar situation to the last dotcom bust. Salaries might be depressed for a while, but these giants would still be fighting each other to swoop up the talent.

I'd seriously love to see some hard data on how much of an economic impact it would have in the Bay Area housing market and the public markets in general if all of the funded startups were to go poof overnight. My current bet is "not much in the scope of things."

Re: San Francisco Bubble

#296

Post by hawleyal »

mbesto wrote: post #62

This is why the free market is so great. 1. Everything too expensive? Good, don't live here, eventually enough people will leave to drive all of the costs back to other market norms. 2. Dumb startups? Good, they will fail, people won't be able to afford to live here and they'll leave. 3. People are spoiled? Uber is cheaper and more convenient in some cases than taking the local transportation. When people stop taking…

Don't get offended. People are free to speak with their mouths.

Re: San Francisco Bubble

#297

Post by restalis »

sampo wrote: post #164
mbesto wrote: post #62

This is why the free market is so great. 1. Everything too expensive? Good, don't live here, eventually enough people will leave to drive all of the costs back to other market norms. 2. Dumb startups? Good, they will fail, people won't be able to afford to live here and they'll leave. 3. People are spoiled? Uber is cheaper and more convenient in some cases than taking the local transportation. When people stop taking…

> This is why the free market is so great. I don't disagree with the points you made. But there is nothing free market about the housing market in San Francisco.

"But there is nothing free market about the housing market in San Francisco."

How so? There is a supply (although limited), and there is a demand. The landlords are interested to maximize their profits, but can not ask more than the market can bear.

Re: San Francisco Bubble

#298

Post by shostack »

hugs wrote: post #198
ruok0101 wrote: post #162

So its a bubble. What do you do about it? Move?

That's what I did in early summer of 2008. I moved away from Mountain View because everything felt over-priced and unsustainable. So I voted with my feet. Hello from Chicago. :-)

Typing this from MV right now having moved from Chicago in 2013. Really wishing I'd moved out here in summer of 2008 as it would likely mean I'd be able to afford much more home than I can right now.

Re: San Francisco Bubble

#299

Post by sandworm101 »

mbesto wrote: post #62

This is why the free market is so great. 1. Everything too expensive? Good, don't live here, eventually enough people will leave to drive all of the costs back to other market norms. 2. Dumb startups? Good, they will fail, people won't be able to afford to live here and they'll leave. 3. People are spoiled? Uber is cheaper and more convenient in some cases than taking the local transportation. When people stop taking…

>> Speak with your wallets, not with your mouths.

Careful. Money=speech is a touchy subject. It implies that those with less money are somehow less important. That may be true from a libertarian absolute free market standpoint, but cities are not liberated markets. They are nests of overlapping interests and entrenched power brokers. Not everyone is free to move at the drop of a hat, nor should we expect them to bounce around chasing their market niche. We should respect that people want to live in community year after year without being forced out, or in, due to market fluctuations. There is value in establishing roots in a community beyond the financial.

Re: San Francisco Bubble

#300

Post by delphinius81 »

ChuckMcM wrote: post #195
mbesto wrote: post #62

This is why the free market is so great. 1. Everything too expensive? Good, don't live here, eventually enough people will leave to drive all of the costs back to other market norms. 2. Dumb startups? Good, they will fail, people won't be able to afford to live here and they'll leave. 3. People are spoiled? Uber is cheaper and more convenient in some cases than taking the local transportation. When people stop taking…

Ok, as a perennial voice for free markets I agree with your observations, but not your point. Having lived through it I see the damage it is doing to individuals who will take years to recover. Too many engineers today, perhaps like sports players, take a big salary, project it across 30 years and then say "Wow I've got millions headed my way, do I really need to bag my lunch?" I've watched as they became both broke…

I totally agree with this. Tech waves can come and go so quickly that you could be obsolete before you even finish building something with the popular tech stack from last month (ok, a bit of hyperbole, but it sometimes feels like new things replace the last new thing before you even know why you would need the thing in the first place).

Not only do you need to try and save as much as possible (which is really hard if you are not single and able to live with roommates), you need to be constantly learning.

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