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Founding Fathers of Silicon Valley Give Up on California, Move to Texas

Founding Fathers of Silicon Valley Give Up on California, Move to Texas 1

This is becoming an all-too-familiar refrain. XYZ Company pulls up stakes in California and expands or moves to Texas or Tennessee. But even for the arrogant California commissars in Sacramento, who have seen more than 13,000 companies leave on their watch in the last few years, this one has got to hurt.

It’s got to be a public relations gut punch for California Governor Gavin Newsom, who’s done little to retain all the companies bailing out of Silicon Valley because it’s too expensive to conduct business there.

The headquarters for one of the Founding Fathers of the Silicon Valley is pulling up stakes and leaving the Golden State.

Bill Packard and Dave Hewlett’s legacy company, Hewlett-Packard, is packing up “the garage” and moving to Texas.

The garage is so revered that it’s listed on the state and national registered historical places.

Hewlett Packard Enterprise, split off from the hardware portion of the company in 2015, is moving its HQ to Houston.

But HPE’s move is particularly notable because Hewlett-Packard was one of the original Silicon Valley success stories, founded by partners Bill Hewlett and Dave Packard in a garage in Palo Alto 1939. In 2015, that company split into HPE and hardware maker HP Inc., which is not moving.

But even that company is reducing its footprint in California, consolidating its Bay Area sites to San Jose.

Texas Governor Greg Abbott was only too happy to ballyhoo the move.

The company reported $7.21 billion in earnings in the fourth quarter, which now will not replenish California’s tax stockpiles. No one is being fired in this move.

The pandemic is giving companies a good reason to get out of the California gulag.

CNBC reports that there are more virtual employees. Companies don’t want the expensive overhead.

The coronavirus pandemic has given a number of tech companies and prominent Silicon Valley figures an excuse to exit California. Without many needing to go into an office every day, many are questioning the high cost of living and the state’s hefty taxes amid a broader shift to remote work.

The pandemic also means that employees can live nearly anywhere. Affordable housing considerations for employees will become less of an issue.

Senator Ted Cruz is on the welcome committee.

“Great news for #Texas! Today @HPE announced plans to relocate its global HQ to the Lone Star State. … This move will also help to create new job opportunities for Texans.”

The Left-leaning employees may vote out the conservative in the next election, though, as Texas is being overrun with Silicon Valley ‘fugees.

CNBC says several companies have recently left.

Data analytics software company Palantir Technologies moved its headquarters to Denver, Colorado from Palo Alto, California, earlier this year. The company’s co-founder Joe Lonsdale followed suit, and announced last month he was moving the headquarters of 8VC, his venture firm, from San Francisco to Austin, Texas.

Dropbox CEO Drew Houston has also reportedly decided to move to Austin. Dropbox said in October it will stop asking employees to come into its offices and instead make remote work the standard practice. For employees who need to meet or work together in person, the company is setting up “Dropbox Studios” in San Francisco, Seattle, Austin and Dublin when it’s safe to do so.

Some companies are also allowing employees more flexibility with where they work, while retaining office space.

Twitter and Square are letting employees work from home “forever,” while Microsoft said workers will have more flexibility to work from home. Facebook CEO Mark Zuckerberg predicted in May that 50% of employees will be working remotely within the next decade.

In the last decade, well more than 13,000 companies have moved out of California. The South Star Communities newspaper reported that “1,800 relocation or “disinvestment events” occurred in 2016, the most recent year available, setting a record yearly high going back to 2008. About 13,000 companies left the state during that nine-year period. Of the 1,800 events, 299 of those departures landed in Texas.”

And the moves are understandable because California has utter “contempt for business,” according to Joseph Vranich, a corporate relocation expert. Vranich’s company Spectrum, a huge presence in Orange County, just moved it’s HQ out of California.

“Departures are understandable when year after year CEOs nationwide surveyed by Chief Executive Magazine have declared California the worst state in which to do business,” said Vranich, a corporate relocation expert who jokes that he loves California’s weather, but not its business climate. Until recently, Spectrum and Vranich were based in Irvine, Calif. …

Hostility toward businesses, high utility and labor costs, punitive regulations and worrisome housing affordability for employees are among California’s other negatives, Vranich said. …

“Signs are that California politicians’ contempt for business will persist,” he said.

A study of the companies moving out of the state found that according to numbers in 2016, 275,000 jobs and $76.7 billion in capital funds “were diverted” out of California.

The study was called “It’s Time for Companies to Leave California’s Toxic Business Climate.”

While HP takes a huge chunk of its business to Texas, California can keep the garage.

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