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Silicon Valley Moved—Why Investors Went East

The 20th century has seen several creative epochs—times and places where movements flourished as geniuses gathered to work toward the same goals. The left bank of the Seine was host to such an epoch in the twenties. The Haight Ashbury district of San Francisco was another in the sixties.

Creative epochs aren’t limited to art and literature, though. What about Edison and Tesla’s electrical battles in upstate New York? The Manhattan Project under the football stadium at the University of Chicago? Revolutions in technology, mathematics and science happen in exactly the same way.

 

These places and the people that reside in them have shaped western thought. The cultural and scientific innovations they created are forever engrained in global consciousness. Almost everything we do today pays homage, be it wittingly or not, to the work that has gone before us.

 

What’s interesting about epochs is the way they spread. These technical and cultural revolutions begin with tiny flashpoints—small areas where luminaries gather. The fire never dims in these early areas, but it does grow and expand until it’s impossible to choose a single key area anymore.

 

By their very nature, epochs don’t last forever. Movements born in garages, coffee shops and laboratories soon attract wider interest and eventually become mainstream.

A City Built on Silicon

The tech boom in Silicon Valley may eventually be remembered as one of the greatest epochs of all time. The brightest technological and entrepreneurial minds in the world gathered around San Francisco to realize the unharnessed potential of the Internet. The innovations they produced are now so common and fundamental that we struggle to comprehend life without them.

 

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For two decades now, Silicon Valley has been a mecca for people with good ideas. San Francisco has become one of the youngest cities in America as recent college grads have gathered there in droves. Top-tier influencers like Steve Jobs and Elon Musk have dictated the course of international business from their offices in Northern California. The Bay Area has been virtually the only destination for ambitious graduates and entrepreneurs for decades.

 

But that’s changing.

The Movement Spreads

“I love the Bay Area, and I never expected or wanted to leave,” says Andy Jenks, a serial entrepreneur and partner at a successful venture investment firm. “For 17 years of ups and downs, it’s been home…[But] I believe strongly enough in the power of the Midwest to transform American venture investing that I’ve pulled up my roots and made a move no one ever thought I’d make.”

 

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Jenks recently started Drive Capitol, his new investment firm, in Columbus Ohio. He’s one of many young innovators who, as demonstrated by the map below, are choosing to leave Silicon Valley and take their businesses and families to other growing tech markets farther east.

 

Top Tech Cities Map
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“In the Midwest I see and meet entrepreneurs solving real-world problems that they are passionate about,” he says. “That’s how great companies get built, and that mentality is why I am here, ultimately.”

 

Cities like Salt Lake City, Boulder, Dallas and Cleveland have been increasingly attracting the companies that used to be exclusively interested in the Bay Area. The reasons behind the shift are complex, but the movement is real. Industry experts predict that in 20 years, 90 percent of the marketing cap in technology will be built outside of Silicon Valley.

Heading Out East

It takes a special sort of place to foster innovation. The Bay Area is ideal because of its excellent infrastructure. San Francisco is a pleasant place to live. Schools are good and crime is low. The legislature carefully protects intellectual property, allowing entrepreneurs to feel confident in their ability to monetize their ideas.

 

The University of San Francisco on the peninsula, UC Berkeley in Oakland and other large universities in the area provide a steady stream of tech talent. Finally, Silicon Valley has a twenty-year head start on other communities and a powerful reputation associated with it.

 

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The Bay Area’s position appears almost unassailable, but the same factors which made it a tech giant are also causing problems. San Francisco is crowded with innovators. The market is far from saturated, but it’s difficult to stand out. The sheer press of people makes daily realities like the commute to work a tricky ordeal. The fiercely competitive atmosphere leads to high burnout rates, as well.

 

“In the Bay Area, there’s been such enormous growth and opportunity that it’s created some challenges for happiness,” says Paul D’Arcy, Senior Vice President at Indeed.com.

 

“Job searchers are always balancing opportunity and happiness. As people think about what the right fit for them is, housing, traffic and quality of life are really important factors.”

 

Here’s where newer tech centers like Dallas and Minneapolis have a major advantage. They offer a more relaxed lifestyle without compromising workforce quality or civic infrastructure. There’s still a certain novelty attached to the tech industry in these areas. Businesses can grow naturally without battling every day for air and sunlight.

The Future of Tech In America

When you drop a pebble in a pond, ripples spread. It’s foolish to try and restrict the movement of the water. The efforts of the Silicon Valley tech pioneers dropped a figurative pebble, and the movement has remained remarkably concentrated until now. However, the inevitable outward expansion is beginning.

 

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Tech will become less locally concentrated in the future. Cloud-based platforms mean companies don’t need to worry so much about where they place their headquarters. Today, all you need to start a company is a fast Internet connection and supportive group of investors—and by no means are those resources limited to the Bay Area.

Silicon Valley will be relevant as long as there are tech jobs in America, but it’s no longer the only game in town.

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