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Photo illustration: Sarah Grillo/Axios. Smith Collection/Gado via Getty Images

Silicon Valley may be a "state of mind," but it's also very much a real enclave in Northern California. Now, a growing faction of the tech industry is boycotting it.

Why it matters: The Bay Area is facing for the first time the prospect of losing its crown as the top destination for tech workers and startups — which could have an economic impact on the region and force it to reckon with its local issues.

While the pandemic’s arrival sent tech workers to toil from home just as the Bay Area’s housing crisis and mounting quality of life problems bubbled over, some are taking the opportunity to move to cities that better suit their lifestyles.

  • As many as an estimated 89,000 households have left San Francisco.
  • "The majority of people I've spoken with ... are doing it not because of COVID-19 directly but because of the resulting degradation of public safety," says venture capitalist and former San Francisco mayor Mark Farrell.
  • City Hall’s tech relationship has also drastically changed. While then-mayor Ed Lee brokered a payroll tax break for Twitter and others in 2011 to keep their jobs in the city, today that move is deeply despised by officials who don’t believe the industry is paying its fair share.

Recently a small-but-vocal group of investors, workers, and entrepreneurs like Keith Rabois and Joe Lonsdale have been loudly advertising their exits from the Bay Area and other high-priced cities like New York, and encouraging others to follow suit.

  • Miami and Austin are being praised as the new tech hotspots. While it hasn't caused a bump in startup funding in those cities, according to Pitchbook data, investors from influential firms like Founders Fund and Andreessen Horowitz have set up shop there.
  • And those cities are not missing the opportunity. Miami Mayor Francis Suarez has been waving his city’s flag on Twitter to court potential residents.
  • Austin Mayor Steve Adler touted his city’s growth and passage of a $7 billion package for transformational transportation during a recent conversation with Suarez and San Francisco Mayor London Breed.

Between the lines: Those who never wanted to live in San Francisco (or the greater Bay Area) are finally getting the permission not to.

The debate is equally (and perhaps even more) a referendum on the state of California.

  • “If California decides to up their income tax a bit more, people are going to start flying like crazy,” says Drive Capital managing partner Mark Kvamme, a Silicon Valley native who set up shop in Ohio nearly a decade ago.
  • The tech industry also took the passage of A.B. 5, a law that imposed stricter requirements for classifying workers as contractors, as yet another attack on business and tech companies like Uber and DoorDash.
  • Further, some have been unhappy with the state restrictions during the pandemic and its slow roll-out of COVID-19 vaccines. As of this week, California is lagging behind nearly all states in vaccinations.
  • Some prominent VCs are even taking part in an effort to recall California Gov. Gavin Newsom.
  • Nevertheless, Austin has already shown it's willing to push back on tech, as evidenced by its year-long showdown with Uber and Lyft over fingerprinting. Miami is also likely to get scrutiny over how it ensures that its diverse communities do not get trampled over.

Yes, but: “What I take issue with is our leaders — people of means — abandoning our community when it needs us most," Twilio CEO Jeff Lawson recently tweeted. "Reaping the benefits of Silicon Valley’s talent, tech incubators, mentors, professional network and culture until they no longer need it.”

The bottom line: The region’s grip on the industry will likely loosen as a myriad of other cities’ local ecosystems continue to grow into their own and provide more options for those who want to work in technology.

Go deeper

Jan 27, 2021 - Economy & Business

Telework's tax mess

Illustration: Annelise Capossela/Axios

As teleworkers flit from city to city, they're creating a huge tax mess.

Why it matters: Our tax laws aren't built for telecommuting, and this new way of working could have dire implications for city and state budgets.

Dan Primack, author of Pro Rata
Jan 27, 2021 - Economy & Business

Venture capitalist Chamath Palihapitiya eyes run for California governor

Illustration: Eniola Odetunde/Axios

The new king of SPACs has his eyes on a different title: Governor of California.

Driving the news: Chamath Palihapitiya is very seriously considering a run for gov, if incumbent Gov. Gavin Newsom succumbs to a burgeoning recall effort.

Jan 27, 2021 - Technology

Tech companies gobble up office space

Facebook leased a whopping 730,000 square feet in Manhattan's iconic Farley building in 2020. Photo: Ben Hider/Getty Images

The pandemic-induced shift to remote work has pushed Corporate America to rethink the need for office space.

By the numbers: The signing of new leases and the renewals of existing leases fell 36% in 2020, compared with 2019, according to a new report from the commercial real estate firm CBRE, shared exclusively with Axios.