Will we ever escape Silicon Valley?

Searching for America’s next great tech hub

Austin. Miami. Denver. Each has cultivated a thriving tech scene and plenty of buzz. Miami has become a destination for the crypto community, and Austin has Elon Musk (and, obviously, Grimes). But new reports indicate that the tech hubs of yore still dominate the industry.

It’s unlikely that any city will ever overtake the Bay Area. When it comes to the concentration of technology investment, employment and innovation, Silicon Valley has everyone beat.

• Between 2015 and 2019, the areas surrounding San Francisco and San Jose accounted for 20% of new technology jobs in the U.S. Seattle added 7% of those new jobs. The pandemic changed the calculus a bit, but not much. Tech employment growth in San Francisco and Seattle slowed to 2.9% from 4.9% in 2020, and in San Jose, growth plummeted from 5.3% to 1.9%. But job growth in so-called rising star cities like Miami and Denver also slowed.
• According to Bloomberg data, San Francisco and San Jose also rake in the lion’s share of venture capital investment, capturing 36% of overall investment in the U.S. last year. For a quick comparison, in 2021 San Francisco attracted $90 billion in VC funding; Austin brought in $5 billion and Miami $4.6 billion.
• As this March 8 Brookings Institution report (worth reading in full) notes: “The pandemic years have raised the promise of tech decentralization through remote work and new siting decisions. However, the continued dominance of tech’s long-standing hubs ensures that the ‘rise of the rest’ won’t happen easily, or by itself. The nation, states, and regions themselves will need to help it along.”

We’ve seen the hype around the search for the next Silicon Valley fizzle before. I covered downtown Las Vegas for the Las Vegas Review-Journal in 2012 when Tony Hsieh, the late CEO of Zappos, committed $350 million to turning downtown Las Vegas into a thriving tech startup scene.

• He relocated the company’s headquarters to downtown and launched the Downtown Project, which kickstarted a tiny tech hub in a spot that used to have seedy motels and a few cool bars. But after an initial blitz of investment and hype, the startup scene floundered.
• And it’s easy to see why: Las Vegas offers cheap housing and no state income tax, but it lacks nearby technology-focused universities and research institutions. That makes it difficult to attract talent. The absence of venture capital was also an issue. It turned out that remaking Sin City, which is already controlled by the hospitality and gaming industries, into a tech hub in the desert just wasn’t an easy sell.

So which city will be the next “tech hub”? By one measure, it might be in the Pacific Northwest. Seattle is the destination of choice for college kids post-graduation, according to a new Axios poll. New York, Los Angeles, Denver and Boston round out the list.

• San Francisco wasn’t even in the Top 5, which indicates that what was once a north star for young idealistic tech workers has lost some of its appeal.
• Seattle’s technology jobs, cool culture and moderate weather make it appealing for a new generation of workers.

But still, even among the college students looking to move to Seattle after college, only 12% want to find careers in tech. The gravitational pull of the Bay Area for tech workers remains unmatched.

— Caitlin McGarry (email | twitter)

Housekeeping

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