Over the past handful of months, accelerated by the long-tail effects of the pandemic, a core set of emerging hubs have emerged as fresh players in the domestic tech and venture ecosystems. According to a recent Upwork survey this past October, more than 23 million US-based workers plan to move due to work from home flexibility by the end of Q4 2020.
As the country’s entrepreneurial power continues to disperse outside of historically dominant cities like San Francisco, New York, and Los Angeles, remote knowledge workers will continue to shift en masse to smaller hubs driven by four key factors: tax-friendly climates, balanced lifestyles, grant programs, and affordable housing. Our team sat down to analyze the top tech hubs that have sprung up as ideal destinations for this monumental shift in the future of work.
Keith Rabois of Founders Fund is just one of a number of high-profile VC’s that have shifted their homebase from Silicon Valley to Miami, specifically due to California’s cost of living and governance issues, while publicly advocating for others to do the same. Miami’s emerging tech scene not only offers improved weather and quality of life, but is massively appealing due to Florida’s lack of a state income tax. Additionally, the city’s multicultural background offers a rare mix of entrepreneurial talent that spans Central and South America and Europe.
Among other Miami transplants include Shervin Pishevar, RXBAR Co-Founder Peter Rahal, Backend Capital’s Lucy Guo, Alpaca Ventures GP David Goldberg, and Upstream CEO Alex Taub. Notably, Miami Mayor Francis Suarez has been incredibly vocal about backing the emerging tech ecosystem, engaging with leaders in the space and publicly voicing his support for new measures to attract talent. Suarez has made his commitment to the sector clear across socials, frequently engaging in dialogue on Twitter and Clubhouse, among other outlets.
Austin continues to emerge as one of the leading cities in tech development outside of Silicon Valley, and in a similar fashion to Miami, the migration is driven by higher quality of life and highly appealing tax structures. In addition, affordable housing remains a major factor for remote workers fleeing high-cost housing in San Francisco and New York. Lower operating costs for startups across the board reinforce Austin’s position as an in-demand city for tech firms. Dropbox CEO Drew Houston, Palantir Co-Founder Joe Londsale, and Tim Ferris, among others, have all recently shifted their families and work HQ’s to the area.
Over the past decade, Denver has increasingly positioned itself as a growing tech hub, even outside of startup migration. Amazon, Apple, Netflix, and Facebook all retain headquarters in the Denver area. In early 2020, Amazon announced Denver Tech Hub, launching 400 new jobs in software, engineering, advertising, and cloud computing in the city. As of last year, the area’s average salary hit an all-time high of $102,557 with year-over-year growth of 6.5 percent, an impressive figure given Denver’s relatively new entrance to the entrepreneurial scene.
In addition to lower cost of living, specifically relative to San Francisco and neighboring Silicon Valley, a distinct higher quality of life has increasingly drawn remote workers to San Diego in recent months and years. Leading sectors within the city include border security and commerce, autonomous and smart city vehicle interoperability, package delivery, and public safety, among others. The area’s tech roots are notably improved by the presence of Qualcomm and other large tech firms that have drastically increased the median salary of the city’s population.
Though Dallas has been historically lauded for the presence of corporate giants like Bank of America and American Airlines, its startup scene is developing rapidly. According to a recent Forbes report, the lower cost of living and higher job creation rates are incredibly compelling to remote workers fleeing high cost cities on the coasts. Notably, according to the same report, more than 134,000 tech jobs were rolled out in the city over the past four quarters alone.
The Atlanta tech ecosystem has flourished over the past handful of years, specifically due to existing talent pools from institutes in Georgia Tech, Emory University, and Morehouse College. The abundance of talent, low cost of labor, and existing tax structures make Atlant’s tech scene increasingly compelling for remote workers. In addition, the city’s diverse culture offers a distinct difference from monoculture-esque climates in Silicon Valley and entrenched tech hubs.
Raleigh belongs to the well-known research triangle in North Carolina with tight proximity to leading tech universities in the form of the University of North Carolina at Chapel Hill and Duke. Apart from world-class research and tech institutes, Raleigh already hosts several established tech companies in LuLu, Citrix ShareFile, and Cree Inc. Among other sectors, healthtech and biotech remain the area’s leading verticals drawing increased funding and national attention.
Nashville’s recent prominence directly aligns with Amazon’s impending Operations Center of Excellence announced back in November, which will draw over 5,000 new jobs. Major office openings in the area include Lyft, PostMates, Eventbrite, IQTalent, KeepTruckin, and Eargo, among a host of younger startups. While the city has been traditionally associated with finance and hedge fund activity, Nashville is increasingly recognized due to its wealth of talent and innovation across health care, artificial intelligence and defense-related tech.
As the Silicon Valley exodus continues to unfold over the next few quarters, we’re keeping an eye on three specific cities that have begun to emerge as appealing destinations despite not yet retaining a fully fledged startup ecosystem. At the top of this cohort is Columbus, Ohio. Despite traditionally retaining a reputation as an industrial and manufacturing hub, the city is quickly becoming a peak destination for e-commerce and retail related innovation and investment.
Coming in second in this cohort is New Orleans, which has consistently impressed in its ability to attract talent over recent years, dubbed as a ‘low cost, high culture’ hub. Finally, while Raleigh retains more of an entrenched startup scene, Charlotte, North Carolina, offers many of the same talent and lifestyle upgrades while also enjoying the vocal support of the governor and local officials regarding increased investment in the ecosystem.
At Conduit, we connect the world’s best operator-investors and founders building the next generation of startups around the world.
As we scale our platform, understanding key market shifts across verticals will become increasingly vital. Our team will be digging deeper into emerging trends and first movers in the coming weeks, which you can find here.