More techies are leaving Silicon Valley than are arriving. This trend applies to several tech cities including San Francisco, Los Angeles and San Diego, which all experience net out-migration. With few apartments renting for less than $2,100 per month and almost no homes for sale under $700,000, housing is becoming too pricey for many workers in even in well-paying corporate tech jobs or well-funded startups (Fannin, 2017). But where are tech workers going? Data shows that Seattle, Portland, Phoenix, most of Florida, Austin and Dallas experience net in-migration (Beall, 2017). Because of the rise in real estate prices, people are moving away from expensive cities in the Bay area to places with active job markets and more affordable costs of living. Silicon Valley’s loss in population is these cities’ gain. For example, Seattle’s Eastside is home to many tech companies and is the fastest rising housing market on the West Coast, but housing prices in Seattle are still less than half the cost of the Bay Area. There is also a growing trend of tech workers who work from home remotely to avoid the high costs of living in the Bay Area (Beall, 2017).
The housing crisis is not the only reason Silicon Valley is losing status as the world’s innovation capital. There is also the visa issue, which causes the Valley’s finest tech talent to return to home countries like China and India. On top of that, Europe is dethroning Silicon Valley. In a lot of respects, Europe is a better place for startups than the Valley. It is crucial to understand that Europe is not a large monolithic block, but rather a collection of small countries with their own strengths and weaknesses. To illustrate this, take a look at Germany, where different cities have their own local expertise; Berlin focuses on IoT and FinTech, Dortmund on Logistics and Karlsruhe on AI (Maack, 2017). The Benelux region, the Nordics and the Baltic countries generate as much as eight percent of GDP from information technology and Facebook, Microsoft, Amazon and Google are eager to acquire European tech companies (Hughes, 2017). European tech companies often start in small countries with a focus on the domestic market, before expanding abroad. The founder of Blendle, an online news platform, explains that by starting in the Netherlands he was able to perfect his product and business model, before expanding to other countries. Another benefit of the European startup scene is the free movement of people and the opportunities to relocate. This means that tech workers can easily position themselves to leverage funding opportunities and low costs of doing business. Also, European startups can take advantage of the institutional support coming from the European Union and governments. Over the last couple of years a number of Tech City and Digital Hub initiatives have been launched to support the local startup ecosystem (Hughes, 2017).
Amsterdam is Europe’s powerhouse for AI, nanotechnology, FinTech, VR, energy efficiency and startup culture. The Dutch capital specializes in electric vehicles, aiming to ban gas and diesel cars by 2025. It is home to over 578 international IT companies. Amsterdam is famous for having Europe’s fastest broadband speeds, it is ranked fourth globally in app invention and development, and it is the gateway to Europe and beyond thanks to its well-connected transport links via land, water and air (Iamsterdam, 2017). World-leading data-centres like AMS-IX, Equinix and AM4 are located at the Amsterdam Science Park, which is dubbed as the world’s largest internet hub. Besides the presence of Silicon Valley companies like Google, Uber and Cisco, the city is also home to successful homegrown companies like TomTom, Booking.com and WeTransfer, and startups valued over one-billion dollars, like Adyen (Iamsterdam, 2017). The city also has an impressive investment funding landscape. Amsterdam-based startups received funding of €194m in 2016. Whereas the Valley experiences a housing crisis, Amsterdam is known for its healthy work-life balance and village-like atmosphere.
Like Kevin Rose said, it is a myth that tech startups and tech workers need to relocate themselves to Silicon Valley in order to become successful. Take advantage of Europe’s sustainable growth, long-term vision and homegrown tech talent pool.
Sources:
Beall, G., 2017. Techies are leaving San Francisco, but where are they going?.
https://thenextweb.com/contributors/2017/10/03/techies-leaving-san-francisco-going/#.tnw_ihfd5Huj
Fannin, R., 2017. Silicon Valley Is Hotter Than Ever But Risks Losing Status Due To Sky-High Prices.
https://www.forbes.com/sites/rebeccafannin/2017/07/21/silicon-valley-is-hotter-than-ever-but-risks-losing-status-due-to-sky-high-prices/#7f74a4fb1b8a
Hughes, M., 2017. Europe isn’t the new Silicon Valley. It’s better.
https://thenextweb.com/eu/2017/05/22/europe-isnt-the-new-silicon-valley-its-better/#.tnw_xT7rIaRw
Iamsterdam, 2017. How Amsterdam is becoming the new Silicon Valley.
https://www.iamsterdam.com/en/business/news-and-insights/news/2017/how-amsterdam-is-becoming-the-new-silicon-valley
Maack, M. M., 2017. How Europe’s biggest economy is uniting its tech hubs to dethrone Silicon Valley.
http://www.businessinsider.com/europe-overtake-silicon-valley-2017-6?international=true&r=US&IR=T
Hey Dewi! I wonder how Amsterdam stacks up to Eindhoven (which I always understood to be the Netherlands’ equivalent to Silicon Valley), or even Rotterdam (the harbour, and all that comes with it)? In my – admittedly rather ignorant – opinion, both of those are more ‘techy’ than Amsterdam – and a news site with the name of ‘iamsterdam’ might just be a tiny little bit biased, perhaps? 😛
Hi Roy! Thanks for sharing your thoughts. I partially agree with you. The blog explains that there are many ‘Valleys’. Refer to the previous example of Germany, where different cities have their own local expertise; Berlin focuses on IoT and FinTech, Dortmund on Logistics and Karlsruhe on AI. This also applies to the Netherlands, where Amsterdam, Rotterdam and Eindhoven all have their own strengths and weaknesses. Just like Europe is not a large monolithic block, but rather a collection of small countries with their own strengths and weaknesses. Unfortunately, I was not able to cover all of them in one blog. I chose to elaborate on the Dutch capital, since Amsterdam is often the only Dutch city present in rankings for the most high-tech cities in the world (e.g. Fortune, Business Insider). Eindhoven’s High Tech Campus is indeed the biggest brainport of the country when it comes to the chemical industry, the machine industry and the transport equipment industry. On the other hand, Amsterdam is known for its thriving startup ecosystem. Last year, Amsterdam received 76% of the Netherlands’ total startup funding. The conclusion stays the same: it’s a myth that tech startups and tech workers need to relocate themselves to Silicon Valley in order to become successful. On another note, this blog only focuses on the US and Europe, whereas Asia is overtaking both the US and Europe in innovation centers ?
Ah, thank you, that makes sense, yes. You are nicely informed, which I appreciate. 🙂
I actually didn’t know about this thriving startup ecosystem of Amsterdam, for one. Could you perhaps expand upon Asia (or, east Asia, I imagine)? For if one looks at patents, or upgrades and improvements of specific technologies – artificial intelligence, for example – Asia has indeed overtaken the rest of the world, to my knowledge. But… Those are by and large exportable products, so to say?
On the other hand, concepts such as a smart city with a smart grid, the internet of things, and so on, aren’t exportable. They are either integrated wholes with many different actors, applications, and more, working together, or they are more akin to services instead of products. Neither of those are truly exportable – well, they are in the sense that the Netherlands can export its knowhow regarding waterworks, dikes, and so on, but you can see the difference. I do not think – but, I do not know – Asia is leading in this as well, is it?
Do you think such a distinction can be made? Or am I simply wrong in this assessment?
Hi Dewi! Thank you for your interesting post! I have been to Silicon Valley myself and it was very impressive to see all these tech companies at one place. I’d love to see more companies moving or starting in Europe so we get easier access. Do you think that Silicon Valley will entirely lose it’s status as innovation capital? If yes, do you think this will be in the near future or are you talking about long term developments?
Hey Dewi,
Very interesting post! It’s not every day someone calls my country a “monolithic block” and my hometown “not suitable for start ups”. And you have a point! I agree our visa policies are not the most welcoming of knowledge migrants are actually mostly based on chance. And yes – rent is expensive in San Francisco itself but keep in mind that there are affordable areas around SF (http://www.mcguire.com/blog/2017/06/affordable-neighborhoods-outside-sf/).
I think it’s amazing that tech communities are popping up all over the world in Europe with London, Amsterdam, Berlin, Krakow, Edinburgh, etc. The Silicon Valley is certainly not the only place to pursue a career in tech or to grow a start-up. But I don’t think you should write it off right away. Silicon Valley was created from an unbelievable amount of investment in academic research and venture capital. In fact the valley was actually technically started by Stanford University. It also has that high-risk, counter-cultural culture that allows tech and new ideas to thrive. These things I would imagine are not so easy to duplicate. Similar to financial capitals like New York and London, I find it hard to believe those hubs are easy to duplicate.
And 😉 I think you need mountains for Amsterdam to be considered a valley of any kind
https://www.wired.com/2015/05/why-silicon-valley-will-continue-to-rule/