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Could High Bay-Area Prices Make Sacramento the Next Big Startup Hub?
waderoush (1271548) writes "Don't laugh. As the cost of housing spirals out of control on the San Francisco peninsula, neighboring metro regions like Sacramento are beginning to look more attractive to startup founders who prefer a Northern California lifestyle but haven't worked in the Silicon Valley gold mines long enough to become 1-percenters. Today Xconomy presents Part 1 of a two-part look at innovation in the Sacramento-Davis corridor and efforts to make the region more welcoming to high-tech entrepreneurs. In Sacramento's favor, there's a talented workforce fueled by a top-20 university (UC Davis), space for expansion, proximity to the ski mountains at Tahoe, and a far lower cost of living — the average house in Sacramento is selling for $237,000, compared to $909,000 in San Francisco. The downsides include a shortage of local investment dollars and a lower density of startups, meaning there's less opportunity for serendipitous collaboration. But locals say recent efforts to boost the local high-tech economy are working. 'I really feel like we are in a renaissance area,' says Eric Ullrich, co-founder of Hacker Lab, a Midtown Sacramento co-working space."
Choose Detroit, It's hip here, happening, it's now and Wow! plus it has all the violence that SF has except instead of targeting tech, we are equal opportunity violence targeting!
Plus houses are only $1000!
Do not look at laser with remaining good eye.
Are there any actual cases of a community engaging in this top down "we're gonna make ourselves a high tech hub" endeavor and actually succeeding? It's usually crappy places that will not succeed, no matter how hard they try.
And you'll have pretty much the same result. The Valley is successful because its a self-fulfilling prophesey.
1. Startups go to the valley to because there's a ton of successful ex-startups and they want to be the next one
2. Investors go to the valley because there are a ton of successful ex-startups and they hope to jump into the next one.
3. Startups become successful (in part) because they have a large amount of available investment capital
Rinse and repeat. Unless startups start getting amazingly big without deep pocket books, or the valley becomes just so unworkable that they can't sustain the costs (still a decade away assuming no dramatic bubble popping incidents I'd say) people will continue to gravitate there and be successful. There will always be startups in every non-trivially sized city, but unless they can garner big bankrolls for growth and talent aquisition, its hard to see penetrating into the market largely enough to be 'huge successes' like their valley counterparts seem to.
Bye!
Its almost as if... economic prosperity in one area driving up prices eventually reaches a point where it encourages new business to move elswhere. You would almost expect to see similar effects where young professionals on entry level salaries get appartments in poor neighborhoods. Has anyone else ever heard of a process by which young professionals competing for lower income housing drive up the prices and price out those with less money?
Nah.... if that ever happened someone would have noticed and made up a word for it already.
"I opened my eyes, and everything went dark again"
I repeat, this is not a dig. A gut-reaction for me is Sacramento lacks the attraction of the Bay Area, which is heavy on coast (and cooler coastal weather) and year-round greenery, and which is pre-stocked with cultural diversions. But most of the tech industry happens in Silicon Valley which, frankly, doesn't have those either.
The downsides include a shortage of local investment dollars and a lower density of startups
...and that it is hot as balls there. It really is not a pleasant place to live as far as weather goes. That won't help to attract people.
Already its a very hot start up location... the venture capital firms are active there... Its probably better then Silicon Valley at this point if you're just starting out. Its cheaper, it has a similar opportunities, and the state government isn't on a massive tax hiking binge.
For example, they're trying to jack up property taxes in California without going through proper procedure. The voters don't want it... but the government is ramming it through anyway.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
in California. Which means outrageous tax-rates, high fuel prices, etc. The houses might be cheaper (my wife and I noticed some nice ones on a recent visit, and I was surprised by the affordability of the house pricing), but all of the other "cost of living" factors make it not much more attractive then established bases in California.
Full of over-entitled punks talking shit in an incestuous echo chamber. I lived there for a few months not so long ago as part of a system roll-out job. Shopkeepers, bar staff and cab drivers said they were constantly being abused and condescended to by them. Its gotten really really bad.
When the property bubble pops there, it will be sweet.
Davis is an agricultural school (a good one at that). Sacramento itself is a tough sell. It is a state capital that descended on a region of cowboy wannabes.
Have you BEEN to Sacramento?
California is not very employer friendly and has strict over time laws not to mention outrageously high taxes and rents.
It does not make business sense to start there.
Detroit, Austin, Kansas City, and even Fargo have universities, other tech companies. I dream of starting a business but I do not have 1 million dollars a year to pay for a tiny crappy office in San Fransisco. If I did get shareholders I am sure they do not appreciate all their savings going to pay rent rather than for product development. Not to mention your employers could leave in a hearts notice with Google and Apple offering 6 figures on the fly.
I know I sound conservative right now but when you start out no OT, taxes, friendly business laws, can mean you make it or die at the end of the year.
http://saveie6.com/
As someone who founded an edtech startup in Sacramento, I can say Sacramento is a great place to live without the high cost associated with living in the bay area. This lower cost of living translated into a better investment for our finical backers.
We are one of the most diverse cities in the entire world. We have some of the best produce in the world along with a lot of very good restaurants. We have more trees per capita then any other city in North America. We have one of the best bike trails in the world.
Why not Murfeesboro, TN? Let's pick something outside of the ungodly expensive California. Then again, I'm sure a sleepy town turned tech hub would start raising its prices anyway.
After living in SF for 10 years as an Independent Contractor, I realized that paying $3,100/month rent (house in the Presidio etc) was keeping me from doing anything productive other than working night and day on client projects or hunting for more projects when the work was done, I'd have ideas for apps and the like, but I'd be lucky to get two weeks into something only to get sucked into a project for a month or three, by which time, I'd be lucky to have another week or two to pick it up again, and by then had already forgotten where I was at and lost all momentum.
So I said fuck it, have been living out of a monthly hotel room billed as a "efficiency studio" (it has a full bath and kitchen), first in Sac and now in Fairfield, paying only $1,000/month including utils and housekeeping and have been making excellent progress creating some underlying frameworks and services that will be powering my app ideas. Yes, I still have to take clients and put down my personal projects, but now I take smaller projects for weeks at a time, not months at a a time and now my ambitions are really starting to come together, with my first round of OSS frameworks and services in reach. And while some people have looked down on me as trash for living out of a hotel instead of renting a house or apartment, fuck them. It's my life, ambition and goals, not theirs. Once I'm done, I plan on leaving the Bay Area, and hope to expat from the US and legally renounce my citizenship since I no longer view this as a Free Country under a Government that recognizes it's own Constitution, hence the desire to be as unencumbered as possible.
Seriously, Texas, home of cowboy hats, Tex-Mex and Rick Perry... Why? Three major reasons..
1. LOW (as in Zero) income tax and low corporate tax rates.
2. RIGHT to WORK state.
3. Generally a state and local government that stays out of your way as much as possible.
So why NOT Texas?
1. You don't like Tex-Mex, cowboy boots, Rick Perry, or something else about Texas for purely subjective reasons OR you've never been here and have arbitrarily decided you don't like Tex-Mex, Cowboy hats, Rick Perry or something else for no real reason.
2. It's too hot in the summer for you.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
But? Nice try, Sac real estate developers. There's no $800/Sq Ft. lease in your future.
"Flyin' in just a sweet place,
Never been known to fail..."
California govt & regulations suck.
Sacramento and the rest of the Central Valley has been trying this forever. It didn't happen during the first bubble, it likely won't happen this time around. The Delta and Valley regions may as well be flyover country as far as techs are concerned. It's almost as easy to hop on a plane and be in Austin, Boulder, Portland, SLC, or any other regional tech hub than it is to drive around in CA.
I grew up in Merced and have seen this same story too many times in the past... 80s, 90s, 00s, 10s... This conversation is a good predictor for bursting bubbles, though. ;)
-Chris
Sacramento isn't in Northern California. Well, okay, geographically speaking it is in the Northern half of the state. But I refuse to acknowledge Sac as part of NorCal in all the ways that actually matter.
People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
3. The cities are islands in a sea of rural nothingness. Seriously, if you make your home in (e.g.) Austin, just try to commute somewhere else. San Antonio is a stretch (1.5-3 hours each way, depending on which sides of the city you are commuting to), and Houston and Dallas are out. Every other town is too small and too isolated to attract tech industry jobs.
This means that when a major tech industry in your chosen metro area craters, it takes YEARS for the economy to recover, and there's no other option available except for you to move. So if you move to the area seeking fame and fortune, remember to keep a deep nest egg, and don't expect to put down any deep roots.
Believe me, my family moved to Austin to follow the growing tech industry in 1983, and they ditched the place in the late 90s because they were tired of dealing with the boom-bust cycle. Since they moved, Austin crashed yet-again (Dell + Dot Com Bubble at the same time). The place has finally recovered and looks attractive again, but it will only be a short matter of time before another crash hits. So keep your nest egg close, and your roots shallow folks!
Man is the animal that laughs.
And occasionally whores for Karma.
Remember when there was computer hardware? Companies like Sun and Silicon Graphics and a bunch of little Motorola 680x0 workstation companies?
Yeah, that boom had ended when I moved here in the early 90s, but there was still enough interesting culture and good weather to justify moving out from the east coast, even though the Internet meant you really could work from anywhere in the world you wanted. I caught the tail end of the housing slump (which meant my house in NJ made a good down-payment on a condo out here.)
Then all the dot-com silliness happened.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Why put a new business in California? I've been there on business a number of times, and I just don't see it.
The climate is nice enough, but boring. No decent seasons, but I suppose it counts as a plus for some folks.
On the minus side, the politics are leftist, leading to socialist-style government regulations that are downright hostile to business. The legal climate tends to lawyers looking to sue companies for trivial violations of those regulations, like people working through their lunch break.
On the personal front, holier-than-thou environmentalism is widespread, which is hard to take given that their state has huge monocultures, puts rice farms in the desert, and pumps water from Arizona to keep the lawns in LA green.
It's pretty much the last place I would want to live, and I imagine there are plenty of other techies who would agree...
Enjoy life! This is not a dress rehearsal.
Tech innovation hubs are centered around bleeding edge academic institutions because start-ups need academics to consult for them. Sacramento does not offer this.
There are a lot of people in the Bay Area who already have commutes that hopelessly suck. Sacramento's just a bit farther away from San Francisco than places like Brentwood are from San Jose - it's 90 miles, which Google Maps says is about 1.5 hours in current traffic (though about 5 hours at rush hour.) And look at the surrounding communities - Roseville (big HP campus there and SF banks), Folsom (Intel), Rancho Cordoba (insurance and health care companies along freeway), Elk Grove (Apple), and bunches of other Silicon Valley companies that have large branch offices because it was close enough to Silicon Valley and the land was cheap enough to build data centers.
There have been some cultural changes out in that area as well since the time I was visiting occasional customers out there. Until Starbucks got to town, there was a local conspiracy not to sell any coffee strong enough to wake up a state bureaucrat. Other than one Lebanese restaurant, you simply couldn't get espresso, and the coffee at state office buildings was watery swill that's about like what McDonald's gets while they're washing their coffee pots. The stuff at gas stations near the freeway wasn't thick enough to burn.
It's not uncommon for some kinds of startups to move to the Lake Tahoe area when they're about to make some money, so that they get Nevada's near-zero taxes instead of getting hit with California taxes. You can still drive down to civilization if you need to see people, and if you were originally Easterners instead of native Californians the idea of snow isn't scary.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Because anytime an article headline starts with the word 'could' the answer is no. If the answer was yes the journalist would have had enough of a story to make a statement.
"XML is like violence. If it doesn't solve your problem, use more." - Anonymous Coward
Yeah, the valley isn't the city. But here in Mountain View, there are usually about 25 cuisines of restaurants on our 4 blocks of downtown restaurant zone, and you can find a few more in Palo Alto or Sunnyvale, plus a lot more range of Indian and Korean farther down El Camino. We don't have much in the way of nightclubs, but there's plenty of choices of music jams around. I do have one friend who was living in San Jose and decided there wasn't enough social life down there (i.e. chances to meet women), so he moved up to the city and found that the women in the bars in his new neighborhood were also there to meet women, but eventually got to know somebody from his musician circles.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
If the company does development, the employee's could live just about anywhere. It is called telecommuting. Problem solved.
"There are no gods, no devils, no angels, no heaven or hell. There is only our natural world. Religion is but myth and
Until last year, I had been an IT director for a publicly traded tech (non-IT) company in Sacramento for several years. The talent pool is pretty dry. Anyone under 30 with any ability quickly realizes they can make 3x the salary in the Bay Area, and I lost several managers to big non-IT companies - Tesla, Genentech, etc. who offered huge salary increases I couldn't hope to complete with, plus relocation costs. I was constantly looking at candidates with no certs, no degree, no experience, and worst of all, no skill.
I'm now down the Central Valley a bit, and it's even worse. There's no synergy with the Bay Area east of the Altamont. You'd think the demand for IT talent would mean salaries would go up to match the demand, but no. With unemployment still insanely high, salaries for most non-IT positions are pretty awful, and collectively, HR seems to think this means IT salaries should be equally miserable. It's a terrible place to be an IT worker because of salary, and a terrible place to be an IT manager because you're stuck with candidates willing to work for that salary.
Clearly they've never been to or spent much time in, Sacramento. One of te dreariest most boringest cities EVER. Makes San Jose look like Amsterdam.
Shoes for Industry. Shoes for the Dead.
(26 C vs. 39 C)
There's other things besides hipness to consider when moving.
Mission: To provide products that consume time and energy as entertainingly as permitted by the laws of thermodynamics.
Sac has a terrible reputation in California. It's always been the laughingstock of the area; like a bigger Fresno or Merced. I stayed for a few days a few years ago, and was *frequently* asked by locals, "why are you *here*?".
Oakland, on the other hand is 1/2 the price of SF and a 20 minute subway ride away.
On the minus side, the politics are leftist, leading to socialist-style government regulations that are downright hostile to business. The legal climate tends to lawyers looking to sue companies for trivial violations of those regulations, like people working through their lunch break.
California has the largest economy in the US and has for quite some time - can you tell me wtf you mean by "hostile to business"?
http://en.wikipedia.org/wiki/L...
If you don't want to live there, fine, but your whining says more about you and less about CA.
Make sure everyone's vote counts: Verified Voting
Fact: There are very few "traditional" tech companies around Sacramento.
Fact: The pones that are there, know that and they consistently offer ~50-60% of Bay Area wages. They only want to hire recent college grads, not experienced people.
Fact: I recently left and won't be heading back. Besides, there are lots more good looking women here in the Bay Area. :)
Concur. Research Triangle Park worked out quite well during the dot-com era. Housing prices varied greatly depending on where you wanted to live, traffic was (generally) fine. At one point the Raleigh-Durham airport was the fastest growing in the country.
Bark less. Wag more.
Why re-settle in CA at all? One of the fastest growing tech hubs in the US is actually Austin. The city and its people have the rampant liberal, progressive philosophies of the valley plus added benefit of the low tax conservative policies dear to Texas. What's not to like?
Cost of living is very good as in low but not depressed. We have over 700 independently owned and operated restaurants in the MSA. UofL who's Entrepreneur MBA program is a consistent winner of numerous business plan competitions. GE First Build - https://firstbuild.com/ is a 20K sq' maker space. The male to female ratio is 100:109. The male population is 330,002, and the female population is 360,170. The average household income in Louisville is $39,908, median household income is $48,895 and houses $104,900 Median listing price, $128,725 Median sale price. There is a vibrant healthy startup community. http://startuplouisville.com/ There are two excellent startup accelerators: Velocity Indiana velocityindiana.org and XlerateHealth http://www.xleratehealth.com./ I could write a book, but I am biased. I came here 34 years ago to go to school for one year, still here, raised a family and have no plans on leaving any time soon. We have they Kentucky Derby the first Saturday of May every year. We have the URBAN BOURBON TRAIL. We have NULU and we have Portland. If you are looking for a place to make your $19B app, to be the next Mark Cuban, or to be the real hot next Aaron Marshall, then come to Louisville. Oh, yeah, Over, developed right here in the Butchertown neighborhood just won global competition: ‘number one startup of the world'. http://insiderlouisville.com/s... Eat Your Heart Out Silicon Valley!
While Sacramento's metropolitan area is certainly bigger, the city of Fresno now has a greater population.
Silly point though, as pretty much all of the Central Valley is frequently shit upon by the rest of the state.
Nevada County..Grass Valley, Nevada City..
Reasonable housing prices
GREAT quality of life!
60 miles from Sacramento
California's education now ranks lower than Texas.
Gee, throwing money into unionized teacher pensions doesn't educate kids? Who'd have thunk it?
Better winters? You ever have to drive in the Tule fog that settles into the valley around December and doesn't lift until March? When its bad, you can't see the lines on the road directly in front of you. You are right about summers, though. Totally brutal.
I couldn't help laughing at the article.
No one in the Bay Area wants to live in Sacramento. Not many people in Sacramento want to live in Sacramento.
1) In SF, you're 4 miles from the beach, at the most. In San Jose, while the salt marsh at the south end of the San Francisco Bay is not quite a beach, you're only 35 miles away from Santa Cruz.
2) The South Bay is still overloaded with large industrial buildings and is still cheap to run a tech business in.
3) When the economy crashes again and tech TANKS like it does, guess where there is critical mass to still have a job? Silicon Valley.
No one wants to shovel snow and ice from their driveway unless they're enjoying a weekend ski trip at Lake Tahoe or Mammoth.
However, if owning a house is so damned important to you, then sure, it's too expensive in Silicon Valley. Buy a house in Oakland instead. Just a few miles across the Bay from San Francisco... and commute like everyone else.
Oh wait.. I forgot... California sucks. You won't like it here.
How many years have I been hearing this? The South Bay was too expensive. Everyone was moving to Vegas, or Austin, or Massachusetts. They moved all right - to the only place outside Manhattan that was more expensive. Like real estate prices you have to believe it can't go on forever, but it can go on a lot longer than you expected.
HP tried this during the tech (real estate and traffic) boom of the mid 1980's. Moved a whole bunch of R&D and operations to Roseville and other environs near Sacto. Pretty much for the same reasons.
A failed experiment.
The SF/Silicon Valley area occasionally succeeds because of pure critical mass, it's density of top research universities, tech talent, and crazy people with more money than sense. Very few other "corridors" continue to put that much money into crazy people's ventures.
Summers are only brutal if you are used to San Francisco weather. There are much worse places available.
I try to think ahead, and I see some big problems with sea level rise in the future. I would not buy that real estate, YMMV.
They feared that it could be used to suppress protest or support unpopular rule.
Why are you picking a random town? That doesn't seem to be close to good weather, other tech companies, or start up capital. I'm sure there's a good school or two nearby, but there's clearly a higher concentration of tech focused school in northern California than near Nashville.
If you're choosing a location simply based off of cost of living, you might as well start wishing for a pony. Every major metro region in the country has a tech area, or even a booming technology sector, but that's very different from being a "startup hub."
why I used to call it Suck-ramento.
- Zav - Imagine a Beowulf cluster of insensitive clods...
Business in the Bay Area is like trying to shove 10 pounds of shit int a 5 pound bag, and the investors who are driving this don't care about its impact on housing, on traffic, etc. and that most of the people who live here don't benefit at all from their efforts. I am hoping that companies start leaving the Bay Area in droves, even as politicians of either party bend over and spread for the billionaires, fuck 'em all. I no longer accept the notion that high tech is good for this area even despite its history. I would love to see public opinion turn against Silicon Valley and the Universities that made it possible, especially Stanford, and the rich kids who are venture capitalists, send them packing to Austin or Huston, Give Texas a taste of its own medicine.
I'll stick with Upstate NY.
I've lived in the Sacramento area for 25 years, and I think this would be a GREAT idea!
Another big plus; Sacramento itself has no nearby major fault lines. When large-ish earthquakes hit the Bay area, we get a mild shaking, without (so far!) any damage. In the 1989 Loma Prieta quake, it sloshed a little bit of water out of the jacuzzi, but no damage.
Weather: our winters are chilly and rainy - usually. This year it got fairly cold, and got very little rain. (California is mostly desert....). Summers are hot and bone-dry. About half of the evenings. we do get a "delta breeze", oceanic winds through the Golden Gate and right up the Sacramento River. Daytime highs in the high 90's/low 100s with nighttime temps in the high 60's/low 70's are not unusual.
Our "rush hour" lasts about an hour, where SF or LA have "rush hours" of 4-5 hours in the morning and 3-4 hours in the evening.
We already have a fairly large high-tech workforce; Intel in Folsom, HP in Roseville.
Plus, when Silicon Valley moves to Sacramento, I'll be able to sell my house at a huge profit and retire!
Come on down!