Has Austin Peaked?

Downtown Austin, 2022 (American Statesman)

Within the past five years major companies such as Oracle, HP, Tesla, and Wells Fargo have moved from the Bay Area to Austin, Texas. There are signs, however, that Austin may have peaked. [bold added]

Nearly five years after Austin, Texas, became a darling of the tech industry, luring companies out of California with the promise of lower taxes and a better quality of life, the city is now bleeding tech talent that is flowing back to the coasts.

A new report from venture-capital firm SignalFire shows that in 2024 Big Tech employment declined 1.6% in Austin, and startup employment fell 4.9%. Tech employment in Dallas and Houston also declined, along with cities like Denver and Toronto. Tech employment grew, on the other hand, in New York and San Francisco.

It is a shift from five years ago, when Texas seemed like a growing Sunbelt beacon for tech, luring companies like Tesla, Hewlett Packard Enterprise and Oracle from California, and inspiring a number of remote tech workers and startups to follow them. But many of those companies have since laid off workers and Oracle actually relocated from Texas to Nashville, Tenn.

“I think that promise was never realized,” said Asher Bantock, SignalFire’s head of research. “This idea that it would become a new startup hub didn’t materialize.”

Return-to-office requirements combined with the burgeoning artificial-intelligence industry centralizing in Silicon Valley drew workers back West, while Austin’s fluctuating living costs and outdated infrastructure left new transplants frustrated, Bantock said.

It's too soon to say that one data point marks the beginning of a trend reversal. California's high taxes, regulatory regime, and housing costs haven't changed and for many businesses more than offset the benefits of staying. The large public companies aren't coming back, and it's a safe bet the ones that do remain in California have contingency plans to move if business conditions get worse.

Because California politicians don't feel compelled to change, I predict we'll see more departures from California in the next decade.

Giants v. Guardians: Unexpectedly Pleasant

There's no substitute for travel if one wants to get a full sense of a place. In this case I'm not talking about visiting another country or another State, but just spending time in the maligned City by the Bay.

It was a perfect day to take in our one Giants game of the season. Highway 101 North from the Peninsula was moderately busy at noon, a sign of returning commerce, but still not up to the levels of 2019.

We pulled into Oracle Park's Lot A, a quarter-mile south of the stadium. The Mission Bay district, formerly the land of railyards and industrial warehouses, has been transformed with residential highrises. The UCSF Medical Center at Mission Bay opened in 2015 and the $1.4 billion Chase Center, home of the Golden State Warriors, opened in 2019.

McCovey Cove behind right field and the O'Doul Bridge

There was nary a homeless person or drug dealer in sight as we walked with hordes of fans over the draw bridge and to the south gate, both of which were named after baseball legend Lefty O'Doul. Except for areas under construction, the sidewalks were pristine and wide. Perhaps by coincidence there were friendly patrol officers all around Oracle Park

We got to our seats at the bottom of the first inning, and the Giants were already trailing the Cleveland Guardians by a score of 4-0. The Giants looked lifeless; by the bottom of the 7th, with a score of 5-2 and taking into account the Giants' month-long lack of hitting, we talked about leaving after the 8th. But to everyone's surprise

Wednesday, the Guardians led the entire way until the eighth when their lead evaporated with one swing of J.D. Davis’ bat. His three-run homer tied it and San Francisco went on to win 6-5 in the 10th on LaMonte Wade Jr.’s late-afternoon heroics, a sacrifice fly to left with no outs.

The Giants won on a walk-off sacrifice fly, an unexpected outcome just three innings ago.

In fact the whole pleasant experience today was unexpected. Maybe next year we'll sign up for two games.

Fair Weather + Shirt

The Giants (46-43) are 13 games behind the Dodgers(59-30), yet the bleachers were filling rapidly an hour before game time. It could be the dedication of Giants fans, or the perfect weather (69 degrees, sunny), but the likeliest motivator was the free aloha shirts given to the first 20,000 to enter Oracle Park.

Someone close to me suggested that I could leave after obtaining the colorful garment. No sirree, if I left now these would be the most expensive aloha shirts in the closet at $100+.

Besides, I'm not just a fair-weather fan. Admittedly, the weather is pretty nice...

Update: the Giants won 2-1 on a balk in the 8th inning:

Former Giants reliever Jandel Gustave balked home Wilmer Flores with the go-ahead run and San Francisco held off Milwaukee 2-1...Crew chief Bruce Dreckman said plate umpire Pat Hobert noticed a “start and stop” by Gustave in his motion, terming it a “textbook balk.”

Giants vs. Dodgers Game 5: Good But Not Great

A checked swing ends the season (USAToday)

Everyone knew that the Giants-Dodgers season-long rivalry had to come down to the deciding game of the 5-game series.

As contests go, it was good, but not great, and not because the result let down this home town fan: the Dodgers won 2-1. They will go on to face the Atlanta Braves for the National League Championship, the winner going to the World Series.

IMHO, a "good" game is close throughout, thereby heightening the suspense of each pitch. Moreover, both teams should play well and not lose the game because of a fielding mistake, e.g., a dropped fly ball with the bases loaded. (Actually this time the lone error by the Dodger's third baseman in the bottom of the 9th inning raised the excitement because it increased the Giants' chances of winning or tying the game.)

A great game should have a number of spectacular fielding or base-running plays. Home runs can aid the enjoyment, but not for me are the 9-8 bashfests where the pitchers can't do anything right. The game ended, not with a spectacular play at home plate, but just the opposite of excitement: a checked swing that was ruled strike three by the first-base umpire.

It was a desultory end to an unexpectedly glorious season.

We are spoiled by a culture that bombards us with narratives every day; life is often not that exciting, and the results often disappoint.

Tesla Departs

The exodus of talented people and first-class companies from California continues.

Headline: Tesla to Move Headquarters From California to Texas, Elon Musk Says

Tesla is following in the footsteps of companies including Hewlett Packard Enterprise Co. —a descendant of what Bill Hewlett and Dave Packard started in a Palo Alto, Calif., garage—and Oracle Corp. , which moved their corporate headquarters to Texas earlier in the Covid-19 pandemic.

Tech companies were among the earliest to send employees home at the start of the pandemic, and a number of prominent players in the industry have allowed their employees to work remotely on a permanent basis. That shift has prompted many Silicon Valley employees and startup CEOs to relocate to other parts of the country for cheaper housing, less traffic and a better quality of living.

Mr. Musk nodded to some of those challenges, saying of the Bay Area, “It’s tough for people to afford houses, and a lot of people have to come in from far away.”

Comments:

1) Moving the corporate headquarters of a large public company is expensive because of the legal and financial complexity and goes beyond the obvious cost of relocating highly-paid staff and acquiring real estate. That Oracle, HP, and Tesla have chosen to bite the bullet, IMHO, says more about the undesirability of California than the appeal of Texas.

2) Losing an innovative company is an especially severe blow, because its new ventures usually originate close to the headquarters and stay there during the startup phase. Furthermore, because of its roadblocks to business, California is very unlikely to be considered as a location for expansion.

3) The future economic effects of losing a corporate headquarters are huge. Legal, accounting, banking, consulting, human resources, electronic data processing, and other services will all be purchased in Texas instead of California. Taxable "intangible" income (interest, dividends, royalties, licenses) attributable to the corporation will no longer be taxed by California.

4) Silicon Valley may still be the place to start a business because of the cross-fertilization of tech and venture capital know-how, but the examples of Tesla, HP, and Oracle show that the business should move out of California as soon as practicable.

5) Despite the devastation of its dining, travel, agriculture, retail and other high-touch industries, California has weathered the coronavirus' storm well, IMHO, because of the presence of high-market-cap companies in the Bay Area. The loss of Tesla alone is not fatal, but cracks have appeared in the foundation, I fear the collapse will be sudden, and I hope I'm wrong.

Another Pleasant Afternoon

We had such a good time at the Giants outing earlier this month that I couldn't pass up the promotion for today's contest against the Padres. The Giants are only 1½ games ahead of the Dodgers for the National League West title, so every game counts.

The view from left field wasn't as good as the one near home plate. On the other hand the tickets were 80% cheaper.

The Giants were losing 4-0, at the end of 5 innings, so I took a stroll around Oracle Park.

The Coke bottle and glove had lost some of their shininess over the years.

Inside the Coke bottle are slides that kids 14 years and younger can ride, ending with a slide into a "home plate."

9/16/21: the view from the LF bleachers

The glove is 501 yards from the batter's box, and no one has ever hit a home run that far at Oracle Park, much less into the glove.

In the sunlit stands fans were partaking of liquid refreshment, chatting pleasantly with their seatmates, and giving the action on the field half their attention. Families wandered around the food kiosks, cogitating about whether to spring for the overpriced comestibles.

2004: at least you could say you watched Barry Bonds

I got away cheap with a $10 hot dog, and a $7 diet Coke.

The view from the left field bleachers is pretty good, especially if one is a fan of Giants outfielder #33 Darin Ruf, who has a .277 batting average, 15 home runs, and 41 runs batted in.

Darin Ruf has a way to go, however, before he makes people forget the player who wore #25 in left field.

The teams traded a few scores, but the Giants weren't making headway. I continued the slow, 3-inning circumnavigation around the stadium.

The kayakers in McCovey Cove were enjoying the afternoon, though there wouldn't be any "splash home runs" hit their way.

The Giants caused a brief flurry of excitement in the 9th inning, but the tying run never got to the plate. San Francisco lost 7-4 and now holds a 1 game lead over the Dodgers, who didn't play today.

The Giants' loss just made the final 15 games more suspenseful, and we will follow them closely....on television. We can handle only so many pleasant afternoons.

A Pleasant Afternoon

On this pitch Darin Ruf broke a 1-1 tie in the 8th with a double that scored Kris Bryant from 2nd base.

When one goes on a trip and doesn't know when one will go back to that destination, caution and credit-card limits are thrown to the wind.

And so it was that on our only Giants game of the season we sat behind home plate in the best seats that I had ever purchased for a major league baseball game. (My grand uncle Freddie had closer seats for the Triple-A Islanders back in the 1960's, but that was the only thing better then than now.)

My helmet had "SF", not "NY" (Bon Appetit)

The afternoon was warm, not hot, at Oracle Park with only a slight breeze. There was no need to don the sweaters that we always carry to San Francisco even during the summer.

Marking another first, I bought a $20 helmet nachos, a gross-looking but good-tasting mixture of nachos, cheese, guacamole, ground beef, sour cream, and jalapeño peppers ladled into a plastic bowl in the shape of a full-size SF batting helmet.

Did I mention that dietary restrictions were suspended as well?

The Milwaukee Brewers had won the first three games of the four-game series, dropping the Giants to second place in the NL West; the Giants needed the win to keep up with the Dodgers. Augmenting the tension, the game was a tight 1-1 pitching duel through seven innings. The Giants went ahead 2-1 on a double by Darin Ruf in the bottom of the 8th, and Thairo Estrada followed with a three-run homer to seal the deal.

The Brewers didn't go down quietly in the 9th, as a long ball down the right field line was initially ruled a two-run home run, then corrected to a foul ball. Adding to the crowds' pleasure, Brewer's manager Craig Counsell was ejected for protesting the call. After that, the Brewers were done.

A thrilling 5-1 Giants victory (the game was closer than the score indicated) and a pleasant afternoon in the San Francisco sun--it's rare that an experience exceeds high expectations. I'll start saving up for next year's game....

Giants: Hope They Snap Out of It

Maybe the lucky hat will help.

The San Francisco Giants are on a four-game losing streak. More significantly, they fell out of first place in the National League West for the first time in three months to the rival LA Dodgers.

We are going to see them play the Brewers today at Oracle Park. This will be the first and probably only game we'll attend this year.

Hope we'll see them snap out of it.

California: Number One No Longer

Steve Breen/San Diego Union-Tribune

All the signs were there, now it's confirmed: California is not the best place to start a business. [bold added]

Washington, Texas and Florida are the best states to launch a technology startup, beating California’s Silicon Valley, according to a new index that ranks the vitality of national and global innovation hubs...

The Draper Innovation Index grades U.S. states and countries world-wide based on a range of local factors that its developers say support a healthy startup ecosystem. They include regulatory, economic, investment and workforce trends, along with less common indicators, such as openness to cryptocurrencies. Sources of data include the World Bank, the United Nations, the Nasdaq Stock Market and dozens of other private- and public-sector organizations.

The grades are then distilled into three broad categories, each with a separate rank. They include trust and transparency in local governments, the potential for development opportunities, and an overall rank based on the balance of all factors combined.

China, for instance, ranks second for emerging opportunities, but drops to 51 for government quality, according to the index. Its overall rank is 13. The U.S. tops the rankings in all three categories...

Although California scores high for its thriving tech sector, the state’s overall grade is weighed down by red tape, high taxes and other state regulations, [venture capitalist Tim] Draper said.

For decades Silicon Valley companies have expanded in other States for the reasons cited above--lower taxes, regulations, and labor costs--but the dam started to break when venerable California enterprises like Hewlett-Packard and Oracle undertook the costly process of moving their headquarters.

There is no credible challenge to the progressive politics that have caused talent and wealth to flee, so look for California's downward slide to continue.

Larry Ellison: Aloha and Mahalo

Dr. David Argus, cancer specialist, discusses Lanai
health initiatives with Larry Ellison (Star Advertiser)

Go east, young man (or go west, old man); the destination doesn't seem to matter to skilled youngsters or wealthy oldsters as long as they're moving out from California.

Yesterday we noted how Oracle is moving its Redwood Shores headquarters--a two-mile walk from our house using the Bay Trail--to Texas. Meanwhile, its billionaire founder, Larry Ellison, has departed for Lanai, the island he bought eight years ago.

“Following Friday’s announcement ... I’ve received a number of inquiries about whether or not I will be moving to Texas,” Ellison wrote. “The answer is no. I’ve moved to the state of Hawaii and I’ll be using the power of Zoom to work from the island of Lanai,” he added, signing off the email with a “Mahalo.”

Hawaii also attracts Mainlanders who don't have the wherewithal to buy their own island. Bay Area residents who are able to work remotely are leaving for Hawaii: [bold added]

[35 y.o. founder of kWh Analytics Richard] Matsui is part of a wave of Bay Area residents landing on the Aloha State’s shores to take advantage of new pandemic-related remote work policies. While some are relocating permanently, others have made the trans-Pacific hop for three- to six-month sojourns where they rise before dawn, wrap up work by midafternoon and hit the beach or hiking trail by 4 p.m. Matsui is now participating in a collaborative effort among the state, nonprofit organizations and businesses that incentivizes remote workers to set up shop in the archipelago.

Hawaii’s appeal for Bay Area transplants with the financial means to move and jobs that allow it goes far beyond sun and surf. Of all 50 states, it has the lowest death rate due to the coronavirus and the third-lowest infection rate. While many popular international destinations are closed to U.S. travelers, Hawaii’s tropical climate and unique culture remains accessible. Additionally, the pandemic crippled Hawaii’s tourism industry, the state’s No. 1 private employer, leaving many accommodations typically booked out months in advance open for longer stays.

“We’ve noticed a significant increase in applicants for long-term rentals that are intending to work remotely,” said Andreea Grigore, senior vice president of property management at Elite Pacific and co-founder of the Hawaii Legal Short-Term Rental Alliance. “While a majority of our long-term rentals continue to support local Hawaii families, there is a growing percentage of our higher-end rentals that are being leased by families from the Bay Area.”

After watching Mainland transplants over a lifetime, my general observation is that they don't stick around unless they have family and friends already in Hawaii. If they arrive as a couple, one or both eventually get Island fever and leave.

It's also tough if they don't have a job lined up. The devastation wrought upon Hawaii's tourist industry has produced an unemployment rate of 15%, double that of California.

IMHO, the California-to-Hawaii migration isn't and won't be a widespread phenomenon.

Oracle: Not Going to Take it Any More

In the latest blow to the Bay Area economy, Oracle is moving its headquarters from Redwood Shores to Austin.

Oracle HQ at Redwood Shores, 2004

2017: Buildings added, plus marine craft.

Oracle joins numerous Bay Area companies that have moved their headquarters to Texas in recent years or months, including Charles Schwab, McKesson and Hewlett Packard Enterprise.

Other companies, including Apple and Dropbox, are keeping their Silicon Valley headquarters, but expanding their presence in Texas...

Oracle occupies 3.5 million square feet of Silicon Valley office space, concentrated in its Redwood Shores complex, Santa Clara and San Jose. The company has listed 263,000 square feet for lease at Redwood Shores and 449,810 square feet for lease in Santa Clara, according to marketing materials.

Its name is on the Giants’ ballpark in San Francisco, a deal that runs through 2039.

The company opened its Austin campus in 2018 and said it would eventually house 10,000 employees there. It leases 1.3 million square feet in the Texas city, according to real estate data firm CoStar. Oracle has 135,000 total employees and a market capitalization of $182.5 billion...

[Chris Thornberg of Beacon Economics] said the “preposterous degrees of regulation and controls,” coupled with the lack of affordable housing could be reasons. And the pandemic has only worsened the economic outlook, with state-level regulations constantly moving goalposts.

Oracle founder Larry Ellison is one of those colorful billionaires who likes to make waves, figuratively and literally, by competing in the America's Cup, building a distinctive glass corporate headquarters, and buying the island of Lanai. Now he's moving his company headquarters, which is not a decision to be made lightly given all the personnel, financial, and legal agreements that have to be broken, initiated, and renegotiated.

Oracle is the largest company yet to move out of California. Its market capitalization of $182 billion makes it the 13th most valuable company in the Bay Area and the 34th most valuable in the country (see table below).

With the tax base eroding and environmentalists and socialists tightening their grip, look for California's taxes and "preposterous" regulations only to increase. There's an excellent chance that Oracle will not be the last of the top-15 Bay Area companies to leave, and I hope I'm wrong.

California: Marshes and Wildfowl Over the People

For decades environmentalists have regarded the Environmental Protection Agency as their bailiwick. Where the law was ambiguous, sympathetic EPA staffers, especially under Democrats, often gave environmentalists what they wanted through regulations, rulings, and interpretations.

President Trump has reversed some of these regulations and Executive Orders that he believes were not in keeping with the original laws passed by Congress. The latest skirmish is over the Clean Water Act: [bold added]

Andrew Wheeler (NPR photo)

At issue is the reach of the Clean Water Act and, more precisely, what waterways should be regulated. While for years it was unclear whether the nation’s small tributaries warranted protection by the federal government, President Barack Obama sought to remove the ambiguity by ordering the EPA in 2015 to safeguard all bodies of water that feed larger rivers and lakes.

Andrew Wheeler, the current EPA administrator, claimed the law amounted to government overreach that left landowners at the mercy of “distant unelected bureaucrats.”

The new rule maintains federal jurisdiction over navigable waters and their tributaries, Wheeler said, but removes ponds and sloughs unconnected to larger bodies of water from EPA jurisdiction.

The environmental groups, co-represented by the Cotchett, Pitre & McCarthy law firm of Burlingame, claim the Trump administration’s decision to repeal the rule opens up thousands of miles of streams and wetlands throughout the country to development, including pipeline construction.

In the Bay Area that specifically re-opens the question of developing the Cargill salt ponds:

Homes on the Cargill site would be only a few
miles from Oracle and Facebook.

The salt ponds have been owned since 1978 by Cargill Inc., which withdrew a proposal to build 12,000 homes on the flats in 2012 in the face of intense community opposition. Environmental groups would like to see wetlands restored there.

“We’re not going to stand by while Cargill uses the Trump administration’s eagerness to gut our environmental laws for its own economic advantage,” said Megan Fluke, executive director of the Committee for Green Foothills. “The salt ponds are part of the bay. Development here would not only destroy restorable natural resources, it would put homes and businesses in the path of sea-level rise, on an earthquake liquefaction site and next to heavy industry.”

What the environmentalists are really thinking, but not saying, is that thousands of homes, including the entire cities of Foster City and Redwood Shores, don't meet their criteria and would never be approved today. If they really prioritized alleviating the housing shortage and eliminating carbon emissions from thousands of cars, they would welcome building where the jobs are. Judging by their actions and not their fine words about "climate change" and "inequality" they really don't.

President Trump may be impulsive, a bully, uncouth, obnoxious, and any number of other bad things. But he has exposed the progressive left as elitists who choose marshes and wildfowl over people. Hey, I don't mind; restricting the supply keeps my house price up.

Strolling the Bay Trail

Redwood Shores homes butt up to the edge of the protected area. Oracle is on the right.

After the rains subsided, we walked the Foster City section of the San Francisco Bay Trail. It was only a two-mile stretch, but given our age and conditioning, it was enough to meet the daily exercise goal on our Apple Watch.

We've been jogging, biking, and walking the Bay Trail for decades. Thanks to environmental restrictions, the marshes look nearly the same as they did 30 years ago.

Someday, I imagine, the hundreds of thousands of people whom we make sit in cars, buses, and trains for hours each day will prevail and we Peninsulans will have to live with more housing being built. We will have to give up our beautiful swamp wetlands and bubbly home prices.

Until that day, however, we will stroll the Bay Trail.

Cloudless Day in Redwood Shores

Oracle HQ at Redwood Shores, 2004

2017: Buildings added, plus marine craft.

The Oracle headquarters in Redwood Shores has changed a bit over the past decade. (The site was home to Marine World/Africa USA through 1986; your humble blogger retrospectively appreciates the lions' roars that floated up to Foster City at sunset).

The glass cylinders were ostentatious for their time but now are in tune with the trophy HQ's of Apple, Facebook, and Google. However, none of the latter have an America's Cup yacht parked in a lagoon right outside.

Oracle's market capitalization has risen to $206 billion from about $60 billion a decade ago, so Mr. Ellison is entitled to indulge a few outside interests.

Oracle looked like it was going to be left behind in a new world of social media and mobile devices but has more than regained its footing in the cloud.

Feet on the Ground

(Image from Business Insider)

As his company moves into the cloud, billionaire Oracle founder Larry Ellison has accelerated his investments on the ground.

In 2012 he bought 98% of the island of Lanai. Not being content with owning the two Four Seasons hotels that came with the $300 million purchase, Mr. Ellison bought the 10-room Hotel Lanai in 2014 and now owns every hotel room on the island.

In 2015 he paid $71.6 million for Palo Alto's 86-room Epiphany Hotel.

Earlier this month "Oracle Corp. has purchased the 476-room Marriott Hotel in San Mateo for $132 million, in part to use for training its direct-sales staff."

These property purchases may seem staggeringly large, but they constitute only one percent (1%) of Larry Ellison's estimated $50 billion fortune.

Let me tell you about the very rich. They are different from you and me.
                                                                               --F. Scott Fitzgerald

Larry's World

Oracle Team USA's comeback from an 8-1 deficit to capture the America's Cup was another feather in the cap for Larry Ellison, the richest and oldest member of the Bay Area billionaires' club. Over the past 35 years Oracle Corporation, which Ellison founded, has brushed aside and absorbed former high-fliers like Siebel Systems, PeopleSoft, and Sun Microsystems.

Last year he acquired most of the Island of Lanai and is transforming it into a laboratory for eco-friendly ways to live.

Oracle Team USA's come-from-behind victory was historic not only in the history of yachting but of all sports. For Larry Ellison it's just another chapter in a unique bio that includes both curfew violations for flying his Gulfstream over San Jose residences and a promise to donate most of his estate to charity. At the still-vigorous age of 69, Larry Ellison doesn't appear to be done yet. © 2013 Stephen Yuen

Along the Bike Path

Redwood Shores Oracle HQ: as seen from Foster City

The synthetic turf soccer field was completed in September

This pond is a favorite with water skiers., but not after a dry summer.

We Believe What Billionaires Say

Hulopoe Beach, Lanai (McClatchy photo)

Three months after his purchase of Lanai from Castle & Cooke / Dole Food was revealed, Oracle billionaire Larry Ellison discloses a few of his plans:

Based on his remarks in a CNBC interview at Oracle OpenWorld, Ellison sees the 141-square-mile island as a “laboratory for experimenting with more environmentally sound ways of living,” per AP, and “hopes to convert sea water into fresh water” — a currently limited commodity. “He also wants more electric cars on the island” — where most roads require four-wheel-drive, visitors rent pricey Jeeps and locals tend to prefer big pickups — and “hopes to increase its fruit exports to Japan and other markets.”

If he wanted to do research on electric cars and desalination, Larry Ellison could have done it in the Bay Area (near Oracle headquarters) without spending a half a billion dollars for a Hawaiian island.

Building a large-scale environmental laboratory may be part of the plans for Lanai, but there has to be more to it than that. And he'll be able to do fruit exports better than Dole? Please.