Theme: Economic restructuring
Subject Article: "Uber gutted Carnegie Mellon’s top robotics lab to build self-driving cars: A 'partnership' based on poaching."
Other Links: 1. "Pittsburgh And Migration Mesofacts."
3. "The Power of Eds and Meds: Urban Universities Investing in Neighborhood Revitalizationand Innovation Districts."
4. "The Economic Geography of Tech Talent."
5. "It’s Not the People You Know. It’s Where You Are."
6. "From Metal to Minds: Economic Restructuring in the Rust Belt."
7. "Knowledge Spillovers from Research Universities: Evidence from Endowment Value Shocks."
Postscript: For the blog post title, I'm openly ripping off Enrico Moretti's book, "The New Geography of Jobs." The economic geography Moretti describes is in decline. More technically, it is converging, "Soaring housing costs forces talent to flee Silicon Valley." The jobs that once clustered in just a few winning places are diffusing around the country. The same industry cycle that took down manufacturing:
But what about the original question—whether it's possible to build a technology platform company outside Silicon Valley. A platform company builds technology used by other technology companies, from the iPhone that runs other applications to the Facebook login we use to access other websites, compounding each employee's leverage. This is why Facebook's market value exceeds $20 million per employee.
These companies don't have to worry about expenses much. As my first mentor in Silicon Valley, Kirill Sheynkman, once explained to me at a French restaurant, the point in an innovation economy isn't to spend less, it's to make more. And for a platform company, the value of being close to the technology companies that build on your platform is priceless.
But as our industry matures, the pressure will be on profits, not just revenues. And few high-tech companies get as much leverage as Facebook from each employee. Even a platform company like Twitter is worth about four times less per employee than Facebook. With less equity to burn, Twitter has had to be the pacesetter in raising San Francisco engineering salaries, which is why its stock is now under so much earnings pressure. Only the techiest of tech companies—and only their tech people—don't feel the pinch.
Not only is it possible to build a technology platform company outside of Silicon Valley; the financial bottom line demands it. So eroded Detroit's competitive advantage in the automobile industry. So eroded Pittsburgh's competitive advantage in the steel industry. What's next? Read "From Metal to Minds: Economic Restructuring in the Rust Belt."