Reply to What is stopping NoVA from reaching SV level prices?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Anybody who asks this question hasn't lived in SV and fundamentally doesn't understand the unique mix of economic conditions that have resulted in what it is today.  No city is even a close 2nd.[/quote]

OP here, I grew up in Palo Alto and Went to JLS, Gunn High. I saw my parent's shitbox go from 600k to 2.5 million in real time. [/quote]

Small world!  I grew up in MP, moved away for school then returned for a 15 year career in venture capital.  I’m looking at relocating my family to DC now, hence my presence here.

Silicon Valley operates on a “gold rush” mentality.  Every year 10s of thousands of mostly young people move here because they have a chance to “strike it rich” that doesn’t exist anywhere else in the world at this scale.  I have a dozen acquaintances who moved here within the last 5 years essentially penniless and are today worth several hundred million dollars, some no doubt on their way to the billions.  Stories like theirs keep hope alive in the minds of the masses.  Where else does that exist?  Nowhere.  Seattle gained traction as a tax haven for early Facebook execs  around 2009 and then other companies followed.  Amazon provides a broad base of employment in Seattle but their stock isn’t a gold rush of the same magnitude.

People here work 24/7 with faux social lives that are really just professional networking events on steroids.  Surreal and inhuman lives that wouldn’t be tolerated anywhere else.  Why do you think the homeless crisis will never be solved?  Partly because nobody really treats this as a place to live any more.  It’s just the largest mining camp in the history of the world.

There are other structural reasons why prices became elevated - proposition 13 is probably the most impactful, without which 80% of my neighbors would have sold and moved by now.  There are also extreme limits on density.  You could easily build 100k new condo units south of SF to SJ but municipalities prevent it (for now).  By contrast, from what I’ve seen the DC area lives to build up.

I’m bullish on tech (and personally heavily invested in tech) so unlike others I won’t predict a tech crash or down turn.  Unfortunately I think SV will become a victim of its own success and devour itself from the inside.  Just in the past year I’ve noticed attitudes about raising a family here start to shift.  It’s too ambitious, too cutthroat, too lacking in humanity.  If you’ve been here awhile you likely know the family of a teen suicide.  Families in my network have started to move elsewhere - north to Santa Rosa, east to Tahoe, Dallas, Wyoming, or in my case DC.

So I’m confident that the underlying conditions that have created SV are unlikely to occur in any other major tech hub, least of all in DC.  But apart from the self interest of some real estate appreciation, trust me you wouldn’t really want them to.
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How many strike it rich do you think? What is the common denominator?  So many founders seem to come from UMC, didn’t realize worker bees were still having huge paydays — thought VC was better about mopping up IPO riches...[/quote]

It depends what you mean by rich, but many more than people realize.  If rich is 30m+ then at least many hundreds per year perhaps a thousand.  If you lowered it to 10m+ then several thousand at least.  I don’t mean net worth, I mean liquidity events per year.  This is why the notoriously optimistic California budget is a few billion in surplus; ~11% of all that money flows to the State.

VC has captured a smaller % of profits over time as the value has shifted from financial capital to human capital, which benefits founders and employees.  The most successful VCs I know are from mostly UMC backgrounds but most founders are relatively poor including many first generation immigrants.[/quote]

So about 2% of people moving there make it big?[/quote]

I don't know, could be.  I am from there and I don't know anyone who made it really big. I know a few people who did very well, one probably eventually will make it big as one of the earlier employees, another is still struggling and his founded company can fold.  I also observed lots of startups go belly up, so not every person investing their energy and time to work at a seemingly successful company got to cash out.  Many people also work regular jobs at what used to be hot companies but are now just large corporations or old time corporations, which are many, and make decent salaries but will never be truly rich, they can afford their modest homes in hot districts, retire and send kids to college, but that's about it.[/quote]

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