The End of the Bay Area Monoculture

By Daniel Tenreiro

Thursday, June 10, 2021

 

In 2018, Google withdrew from Proj­ect Maven, an artificial-intelligence partnership with the Pentagon, after 4,000 employees signed a petition in opposition to the program. The move was a stark display of corporate America’s transformation since the end of the Cold War. In the globalized, digital economy, Google counts at least as many foreigners as it does Americans among its share­holders, employees, and customers. What’s good for America might have been good for mid-century automakers, but it appears to have little bearing on what’s good for 21st-century tech giants.

 

Yet while corporations have shed their national allegiances, their local allegiances have intensified. Silicon Valley is more than a metonym — it is a 47-square-mile agglomeration of the best engineers, investors, and companies in the industry. Until recently, it was nearly impossible to start a high-tech business anywhere else. While Google may not list patriotism among its corporate values, the company is inextricably linked to the Bay Area. Its culture, as well as that of its peers, emanates from the parochial concerns of its employees — trained at elite American universities and weaned on an increas­ingly shrill U.S. media.

 

Which means that the nation’s fate still influences that of its tech companies, whether those companies like it or not. And post-pandemic migration trends appear likely to dilute the tech industry’s political monoculture, as workers and businesses, free from the shackles of the office, flee high-cost, high-crime locales for sunnier pastures. During the COVID-19 lockdown, net exits from San Francisco totaled 38,000, up from 5,200 in the year prior. In a survey conducted by CEO Magazine, California ranked as the least business-friendly state in the nation. While the state has long been unfriendly to business, the difference now is that 44 percent of CEOs indicated increased willingness to relocate their businesses.

 

Among tech luminaries, Texas and Florida have been the choice destinations, with state and local officials competing to lure investors and firms. While the emergence of new tech hubs won’t alter the politics of Big Tech overnight, competing enclaves in cities such as Austin and Miami point to a less homogeneous tech industry. If — as Elon Musk argued when announcing his move to Texas — the Bay Area has “too much influence on the world,” the so-called Techxodus appears likely to create a healthier balance of power.

 

Google’s politics — on display in its posture toward the military, its content moderation on YouTube, and its political contributions, among other areas — stems from a business model hyper-focused on employee buy-in. In his book on the company, Wired magazine editor Stephen Levy quotes a former employee’s description of Google as “corporation as housewife,” noting that “Google cooks for you, picks up and delivers your dry cleaning, takes care of your lube jobs, washes your car, gives you massages, organizes your work-outs.” Google sees its culture as “a continuation of the campus life that many Googlers [have] only recently left,” says Levy.

 

The “bring your whole self to work” approach all but necessitates ideological uniformity. Because Google, Facebook, and their peers offer employees a home, cultural cohesion is top of mind. Just ask James Damore, the Google employee fired in 2017 for sharing a memo questioning the company’s diversity efforts. Critics saw Damore’s dismissal as a shocking display of corporate groupthink, but for Google, the groupthink is the point.

 

This approach to corporate culture was pioneered by HP Enterprises. As Stanford University professor Steve Blank put it to Bloomberg, “they weren’t the largest employer in the Valley but they set the ethical, moral and cultural values in the Valley for decades and others tried to emulate them.” It is fitting, then, that HP was among the first companies to relocate from California to Texas during the pandemic.

 

Indeed, the Golden State has made every effort to provide its companies justification to pick up and move. Just as COVID-19 demonstrated the feasibility of remote work, San Francisco district attorney Chesa Boudin abolished cash bail and stopped prosecuting virtually all nonviolent crimes. With burglaries up 60 percent, state legislators went to work on a wealth tax, as if to dare residents to leave. And they did: Oracle, Elon Musk, and numerous other businesses and individuals joined HP in Texas, judging that the benefits of California no longer justified highest-in-the-nation taxes and onerous regulations. Others, such as venture-capital investors Keith Rabois and Shervin Pishevar, chose Miami for their new residences, bringing with them equal amounts of money and hype.

 

And the cultures emerging in these new hubs are qualitatively different from that of Silicon Valley. In Texas, the influx of businesses is already cutting against progressive politics. Tech entrepreneurs in the longtime hippie enclave of Austin recently committed considerable funds to the successful passage of Proposition B, which banned homeless encampments from the city. The legislative effort sent a clear message that, despite its Democratic leadership, Austin would not follow in San Francisco’s footsteps.

 

In Miami, Mayor Francis Suarez turned his Twitter account into a hype machine, attracting many of the Bay Area’s most prominent venture capitalists. While some saw the effort as nothing more than a passing fad, the enthusiastic crowds at recent Miami Tech Week events suggest the newcomers have real staying power. Rabois, the city’s most vocal booster, claims to have invested in four Miami businesses this year. By focusing specifically on cryptocurrency and blockchain companies, Miami’s entrepreneurial ecosystem differs markedly from that of the consumer-Internet-focused Bay Area.

 

The erosion of the Bay Area’s monopoly on tech provides an alternative for technologists turned off by the stifling culture of the Valley. Just as important, it is likely to undermine California’s influence in national politics. As Peter Robinson pointed out in a recent issue of NR, since the 1970s, California’s public-employee unions have served as a captive constituency for Democratic politicians, who have in turn rewarded them with ample funding. A 1988 amendment to the state constitution committed around 40 percent of the state’s annual budget to public schools, fueling what Robinson called a “perpetual motion machine” in which the unions receiving public funds donated to Democratic campaigns and built the public-pension fund CalPERS into a behemoth.

 

The wealth generated by Silicon Valley turned California’s unions into national power brokers with influence extending far beyond the state. CalPERS deployed its $350 billion in assets to spearhead “socially responsible” asset management, divesting from tobacco, private prisons, and other industries unpopular with progressives. With the help of Wall Street’s new crop of “stakeholder capitalists,” California’s pension fund routinely pressures corporate management on environmental and social issues.

 

As red states draw more businesses and residents, they can take a page from California’s book. Florida and Texas have among the largest public-pension plans in the nation, collectively commanding roughly $270 billion in assets. Law­makers should start with bans on environmental, social, and governance require­ments in public-pension plans, while pushing pension managers to engage in shareholder activism that eschews environmental and diversity targets in favor of good old-fashioned shareholder returns.

 

Elsewhere, targeted legislation can curb the political clout of large digital platforms. Florida governor Ron DeSantis’s recent bill barring social-media platforms from banning state politicians is a case in point. While the bill will face considerable legal hurdles, it demonstrates how red states can gradually tilt the scales toward a less monolithic tech sector.

 

Ironically, that effort may be funded by Google’s own employees. After initially attempting to bring workers back to the office, the company announced that 20 percent of its workforce would be allowed to work remotely. Apple has faced similar pushback from employees who relocated during the pandemic.

 

Over the past year, the Bay Area foisted its local culture onto the nation, de-platforming a sitting president and censoring debate of contentious public-health issues. While Big Tech’s insular culture has not disappeared, it faces challenges that will reverberate so long as Silicon Valley’s economic heft continues to erode.