A Blog by Jonathan Low

 

Aug 19, 2016

If You Want To Start A Company, Don't Come To Silicon Valley: Google Co-Founder Sergey Brin

At right is Steve Jobs' parents' house in Palo Alto. Apple was started in that garage.

Such activity on property like that is no longer legally acceptable accessory use, though no one is likely to turn you in (unless they are itching to buy it, tear it down and flip it).

Google Co-founder Sergey Brin now says Silicon Valley is too expensive for starting businesses. It's better for financing and scaling them. Think Wall Street with palm trees and Birkenstocks. JL

Jillian D'Onfro reports in Business Insider and Henry Grabar reports in Slate:

During the boom cycles, the costs — real estate, salaries — the expectations people and employees have ... it can be hard to make a scrappy initial business that's self-sustaining. Silicon Valley is good for scaling that opportunity. It's good for providing more capital and allowing more risk once you've started to gain some traction. "My husband and I paid $6,200 a month to share a house with another couple." She’s corporate counsel at ServiceNow. Her husband works for Peter Thiel’s software company Palantir.
Business Insider If you're itching to start a company out of a garage, then you shouldn't pick up and move to Silicon Valley, according to Google cofounder Sergey Brin.
It's easier to start a company outside the Valley than in it, he said onstage at the Global Entrepreneurship Summit.
"I know that sort of contradicts what everyone here has been saying," he said with a laugh.
Google got started at Stanford University, where the conference is taking place. But he argues that the Valley can be very expensive.
"During the boom cycles, the expectations around the costs — real estate, salaries — the expectations people and employees have ... it can be hard to make a scrappy initial business that's self-sustaining," he said. "Whereas in other parts of the world you might have an easier time for that."
What Silicon Valley is better for, he says, is that second step, once you've already started to gain some traction.
Silicon Valley "is good for scaling that opportunity," he said. "It's good for providing more capital and allowing more risk."

Slate The story of Palo Alto Planning Commissioner Kate Downing, who announced her resignation in an open letter on Wednesday, is a parable for the failures of the affordable housing movement in this country.

Downing had served for nearly two years as one of the seven members of Palo Alto’s Planning and Transportation Commission, which advises the town’s City Council on development, transportation, zoning, variances, permits, and special projects. She co-founded Palo Alto Forward, a resident group that has advocated that the council address the housing shortage in the increasingly unaffordable Bay Area suburb, which is home to Stanford University and has a population of 66,000. And in July, she announced that her family would be leaving the city for Santa Cruz.
 
“After many years of trying to make it work in Palo Alto, my husband and I cannot see a way to stay in Palo Alto and raise a family here,” she wrote. She and her husband paid $6,200 a month to share a house with another couple. “If we wanted to buy the same home and share it with children and not roommates, it would cost $2.7M and our monthly payment would be $12,177 a month in mortgage, taxes, and insurance.”Added up, that would be $146,000 a year ... for 30 years.

Downing isn’t a public employee; she’s a corporate counsel at ServiceNow, an IT company in Santa Clara. Her husband works for Peter Thiel’s software company Palantir. What’s happening to them now long ago happened to the city’s workforce: Less than 10 percent of city employees live in Palo Alto.
Her departure doesn’t just show what’s wrong with urban housing policy. It shows how it gets worse. Restrictive housing policies are expensive, and advocates can’t afford to fight forever.
The changes that Downing suggested were fairly modest, and included “allowing two floors of housing instead of one in mixed use developments, enforcing minimum density requirements so that developers build apartments instead of penthouses, legalizing duplexes, easing restrictions on granny units, leveraging the residential parking permit program to experiment with housing for people who don’t want or need two cars, and allowing single-use areas like the Stanford shopping center to add housing on top of shops (or offices).”
The City Council ignored her and her peers.
Palo Alto is exceptional. Not many cities offer starting firefighters $85,000 a year or have third-grade teachers who commute two hours each way.
But many jurisdictions regulate their own housing stock, and their rules are crafted by residents who have their life savings invested in keeping housing expensive. Here’s how Emily Badger put it on Wednesday in the Washington Post:
You may effectively live your life within, say, San Francisco or Washington, D.C., going to school there, working there, dropping your children at day care there, spending your money and your waking time there. But if, at the end of the day, you go sleep somewhere else, you are invisible to the process of how we decide what's right for that city.

We’re only a few decades removed from a time when the American city drafted residency requirements to force employees to live within city limits, shoring up its tax base. Today, the opposite problem exists: Workers, whether in wealthy, job-rich suburbs of Detroit, New York, or San Francisco, are often disenfranchised in their place of employment.
High cost of living, as a political issue, is straight out of The Phantom Tollbooth: The worse it gets, the fewer people will fight it. That’s how the movement to expand the housing stock dies. People like Kate Downing realize they’d go broke fighting the status quo, and they leave.

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