[ad_1]
AUSTIN, Texas – The Texas capital has long been a technology pioneer, starting with IBM and Texas Instruments in the 1960s. In 1984 a University of Texas student at Austin named Michael Dell started his personal computer company that would become one of the world’s largest computer manufacturers. However, the rise of social media and cell phones has centered on Silicon Valley, cementing the west coast as the largest technology hub in the world.
Now Austin is striving to win the next tech era.
A year after the pandemic canceled its signature technology and arts conference, SXSW, the city has gone from a harbinger of crisis to one of its biggest winners, according to local businesses and economic data.
Austin has regained 97% of the jobs lost as of spring 2020, according to the Austin Chamber of Commerce. Seasonally adjusted unemployment was 4.6% in May, after a pandemic high of around 12% in April 2020. The relocation of companies created 12,421 new jobs last year, a record high. The housing market is one of the hottest in the country, and demand is growing from non-state arrivals. Studies show there was no California exodus to Texas, but Austin has benefited from company expansions and technology migrations.
When Austin won, the Bay Area lost. LinkedIn user data shows Austin had the highest net tech inflow of any major U.S. city from May 2020 to April 2021, adding 217 people per 10,000 users. The Bay Area saw the largest decline, losing 80 technicians for every 10,000 users.
“I didn’t think it could have grown any faster. And then it kind of worked, ”said Joshua Baer, CEO of Austin technology incubator Capital Factory. “COVID-19 broke a dam that held back thousands of even more people who were considering moving but were being held back from their jobs or other commitments.”
“There have been some big winners and some big losers in COVID migration, and Austin was the biggest winner,” he said.
Capital Factory works with about 120 new startups each year, more than 20% of which are founded by ex-Californians, a percentage that is growing, Baer said.
As in the Bay Area, tech giants are changing the cityscape of Austin. Google has rented a giant, sail-shaped tower on the banks of the Colorado River, designed by the same architect as the Salesforce Tower in San Francisco. Apple is building a second campus in North Austin. After sparring with Alameda County’s health officials during the pandemic, Tesla announced its next gigafactory east of Austin with 5,000 workers and growing rapidly.
Google is expanding in Austin by renting a new tower, but is also investing more than $ 1 billion in California real estate this year.
Ilana Panich-Linsman / Special on The Chronicle
California tech veterans thrive in Austin. Tinder co-founder Whitney Wolfe Herd moved to Austin from Southern California in 2014 and launched the female-centric dating app Bumble, which went public in February and is now valued at $ 6.8 billion.
One of the biggest relocations of the pandemic came in December when Oracle moved its headquarters from Redwood City to a new campus in Austin from Silicon Valley after 44 years in the Bay Area. After a year of deserted streets and quiet offices in San Francisco and Silicon Valley, this was seen as yet another sign of the region’s dwindling technology dominance.
“Anyone who doesn’t believe this recent exit poses no threat to the California economy is a business denier,” Jim Wunderman, CEO of the Bay Area Council, a group of companies, said in a December statement. “California has deliberately ignored our dire business climate for too long, despite our incredible success and prosperity.”
While downtown San Francisco hopes to relax, Austin is celebrating again. About half of office workers have returned to buildings managed by security firm Kastle Systems, compared to about a fifth in San Francisco, filling bars and grills. At the beginning of summer, there was live music booming and young residents driving around on scooters – another California import from startups like Lime and Bird.
Austin is also dangling tax incentives to attract growth. Companies like Tesla, Apple, and Samsung have packages from the city and Travis County valued at up to tens of millions of dollars in property and wage tax refunds. In contrast, the Bay Area rarely offers tax breaks on large projects and often adds fees to fund nearby transportation and affordable housing.
Veronica Briseño, Austin economic development director, said the deals are structured to encourage companies to provide benefits to the community. The city is offering more incentive points for companies adopting policies such as paid sick leave and working with minority and female-owned providers. Briseño also noted that the city has fewer incentive agreements compared to other cities in Texas.
The town council that does business doesn’t “just offer something to every business. They want to make sure the company embraces our community values, ”she said.
Despite all of Austin’s victories, few believe it will dwarf Silicon Valley. “It’s not a zero-sum game, at least not for us,” said Bear. “Silicon Valley won’t go away either.”
California’s economy defied the doomsday scenarios at the start of the pandemic. A projected budget deficit of $ 54 billion in May 2020 has turned into a surplus of $ 75.7 billion, with an additional $ 27 billion to be spent in federal aid.
A key part of it was the tech industry boom, which resulted in Silicon Valley’s largest tech giants reaching $ 1 trillion in market cap. Blockbuster stock market offers from Airbnb and DoorDash from San Francisco also made the treasury swell.
During the pandemic, Oracle moved its headquarters from Redwood City to Austin after 44 years in the Bay Area.
Ilana Panich-Linsman / Special on The Chronicle
As tech giants Google and Apple expand with new locations in Austin, they’re also investing more on the west coast. Google plans to invest $ 1 billion in California real estate this year, and Apple signed the largest lease in the Bay Area of the pandemic with an expansion in Sunnyvale in May.
As investors hunt for the next unicorn, Austin lagged seven other regions in venture capital operations in 2020. Transactional activity was $ 2.3 billion, according to PitchBook, a research firm, compared to the Bay Area’s top spot of $ 61.5 billion and Los Angeles’ $ 19.3 billion.
But Austin is becoming more appealing to someone trying to start a new business, said Ryan Broderick, one of DoorDash’s early executives. In 2018 he left the Bay Area for Austin and co-founded the real estate startup Darwin Homes, which focuses on single-family homes. The move made geographic sense as the company wanted to focus on cheaper housing markets.
In 2018, hiring employees in Austin was challenging.
“In the beginning it wasn’t like the Bay Area, to be completely honest. But I think that’s changing quickly now. ”He said. “There are more talents moving every day.”
The widespread adoption of remote work has also allowed Darwin to recruit on a wider scale. About a third of the company’s 60 employees work in Austin while the rest are remote.
In the past six months, about 10 of Broderick’s former DoorDash colleagues have also moved to Austin. The lack of a state income tax is a plus, but the vibrant startup culture is also a big draw, Broderick said.
The advantage of being near venture capital firms in Silicon Valley is also waning, he said.
Construction cranes signal change on the horizon for the Austin skyline.
Ilana Panich-Linsman / Special on The Chronicle
“Almost all of our capital comes from the Bay Area. We just tapped into our network. They didn’t care where we started our business or where we were, ”he said.
“I can imagine it would have been a little more difficult if you had started a business two years ago in Austin with no network, but now I don’t see that as a problem at all,” he said. “I think a lot of business is done here by companies on the west coast.”
Broderick had previously refused to leave California because he believed it would limit his options.
“I always thought there was a compromise for my career. And I was never ready to do that, so I was bound to the Bay Area, ”he said. “I don’t feel that these compromises exist now. And that’s the greatest thing that unlocks these other places. I can still pursue the same career path. And I don’t have to be bound by the Bay Area. That changed the bill. And I think Austin is the # 1 beneficiary of these kinds of changes.
“I wouldn’t say anyone will replace the Bay Area,” he said. “I think you will see more and more success stories from new cities.”
Roland Li is a contributor to the San Francisco Chronicle. Email: roland.li@sfchronicle.com Twitter: @rolandlisf
[ad_2]
