Silicon Finale: Migrating Tech Workers & The End of Hubs ?
The Rookie VC #21
Hi all, welcome to another edition of The Rookie VC.
Since COVID broke out almost a year ago, remote work gave rise to innumerous discussions about decentralization of big population hubs. The new normal, as we like to call it, sent intense waves of migration among the tech workforce.
In this article, I try to understand where the pieces are moving, and what do the newly formed landscapes look like in Europe and (you guessed it) France. Along the way, I made friends with the great team at Avizio, who were smart enough to launch an offer targeting those who are looking to move away from the city of lights. Big kudos to Edith, Aurelle and Max for showing me out of the dark with some data !
Let’s get right into it.
With COVID being on top of everyone’s mind today, we tend to point to it as the root cause for every big shift in remote work and changing geographies. The truth is that the “tech migration” trend started long before that. The stage to pack out of Silicon Valley was long set by a number of influential figures of business and political spheres. Peter Thiel ( PayPal cofounder and renowed TVC ) was one of the trailblazers. Back in 2004, Peter invested $30m in a data analytics company called Palantir, whose founder Alex Karp recently moved headquarters to Denver in the context of the pandemic. In 2018, Peter himself moved to LA, making his personal contribution to the emerging trend of Silicon Valley emigration.
Perhaps the most iconic announcement was Jack Dorsey’s plan to move to Africa to explore various opportunities related to Twitter: the local social media scene and the ecosystem in the broader sense. It made even more sense if you look at one of his interests: cryptocurrency and all things decentralized. He deems both have a bright future in Africa where institutional distrust has hampered decades of growth and progress.
Another noteworthy example came from the provocative twitter pen of Keith Rabois earlier in december this year. The original tweet said: “probably easier to raise a VC round in Miami than in California”, and the thread followed with him moving and his adaptation: some bold hot takes on how life is so much better down there through December and January.
Quick selection :
One interesting pattern is that influential personas are constantly caught in cross-fire with californian politicians, denouncing the complacency and disconnectedness of the political class. In May, Elon Musk’s Tesla sued Alameda County over the shuttering of one of its facilities and clashed with local officials on Twitter. Since then, things have de-escalated but Tesla still went ahead with plans of relocating part of its operation to Texas and opening its fifth Gigafactory - Opening date expected in May of this year.
In my opinion, these examples illustrate a growing antagonization of both elites and that anyone from each camp is forced to pick sides, at least at local and state level. In this regard, Miami Mayor Suarez’s approach is case in point. After only two years of being officially present on the platform, the first miami-born mayor (!) accidentally stumbled upon an opportunity for an all-out lobbying campaign on December 4th when up-and-coming investor Delian Asparouhov tweeted this:
The reply is one for the books: “how can I help?”, often cited as the cliché investor catchphrase when talking to founders. While it’s unclear if the shape of the message was intentional, the fond meaning definitely resonated with the “Silicon Agora” bustling and vibing every day on Twitter and Clubhouse.
What does it tell us ? After all the turmoil and controversy, all they needed was a reaching hand and a hint to a clever “grass is greener” play. Among the most impactful ideas, my favorites are:
Selective & clever social media interactions - When the shockwave hit, the mayor and his team were clever enough to calmly sift through all mentions and quickly eyeball which community members were most engaging to the topic of migrating SV to Miami, publicly responding in positive and actionable terms
#CafecitoTalks - For somebody that has confessed seeing social media as a toxic place before the pandemic, Suarez definitely has the level of intuition it takes to bring Twitter to the real world and vice-versa in a clever way. That is what he did with #CafecitoTalks, where he would basically sit down one-on-one with founders, investors and other figures recently coming to the city and offer them a casual cross-promote opportunity
Staffing a 5-person team dedicated to the topic -The mayor has quickly ramped up the operation and staffed a team dedicated to fielding incoming calls and directing founders and investors looking to set up shop in the city, effectively translating the first order effects of the PR campaign into real-world support
Going head to head with the rival - During a Clubhouse session moderated and attended by well-respected SV figures, Suarez went to confront San Francisco and Austin mayors and play them to “who’s got the best hub” pitch competition, an unimaginable feat for Europe’s politicians and their more guarded attitude on social media
While this episode was funny and lighthearted, there is two obvious follow-up questions worth digging into:
Does Miami have any solid tailwinds and / or characteristics for building a tech hub ?
Does the available data tell the same story than the echo chamber on Twitter does ?
What does Miami and Florida have going for themselves ?
Strong state and federal investment in technical education - The US Navy and NASA have historically invested in technical training in areas like aerospace engineering, cybersecurity staff training for the Department of Defense, up-and-coming and diverse engineering talent pools such as Florida Atlantic University, Florida International University, Miami-Dade College
Favorable tax environment - Miami-Dade county has no local personal and corporate income tax and the state of Florida has a pretty low corporate tax rate of 5.5% (vs. 8.9% in CA) with so many exemptions that 99% of companies are said to pay no state income tax. Cherry on cake: the state of Florida also has no personal income tax
Great weather - It’s true that Miami enjoys 70°F (20°C) winters and 250 sunny days per year, just short of SF’s 259, and that this adds up to the rest of positive tailwinds and political voluntarism. But the expansion of the city will have to grapple with (i) strong hurricane seasons and the restrictive construction rules that come with it (ii) rising property insurance up a cumulated 100% as insurers reevaluate
Low crime and drug use - While SF still hasn’t found a viable way to deal with open drug use and associated crime rates at an all-time high, Miami enjoys the lowest crime rate since the 1960s, going from a worldwide crime capital to a much calmer premise. Needless to say this favors imigration from highly skilled workers & families, who will always favor a safer environment
Here’s a few things worth mentioning to balance out the case for Miami:
Suarez’s method is relevant because it has great inspiration. During his tenure, late SF Mayor Ed Lee did all he could to lobby Silicon Valley companies to move some of their operations further north, notably by being very vocal and rebuilding the entire business tax system of the city. Some may say it’s just another cycle
Miami has one big drawback: it’s climate fragile. Besides barriers to construction and expansion, the city has increasingly hot summers and more violent and frequent hurricane seasons. Hence, it’s a little unfair and unrealistic to be pointing fingers at Californian wildfires and praising the quality of life in South Florida
A huge part of the discussion about techies shying away from the established hubs like Silicon Valley happened over the first lockdown. With Facebook and Twitter announcing in May that they would let most of their workforce toil away from home, either for the next ten years or simply forever. Most GAFAM companies then followed suit.
As fast as the disease and the stay-at-home orders spread, the startup and tech community was even faster to laud the quick shift to remote work, keen to show others that embracing a remote-first culture was a sign of elevated status and excellence. Asynchronous work was already a trending topic, as exemplified by the growing popularity of issue-based communication tools. Alan, the french all-digital health insurance, openly described how they implemented a no-meetings culture using GitHub issues instead of emails and synchronous chats.
Although the topic of remote work occupied a significant space even before COVID, the fully distributed cultures or full-company relocation remained under the label of “taboo”. - Courtesy of COVID it became a possible, hell, even hyped conversation overnight.
Clever founders started tapping into emerging pools of talent, such as the bustling tech talent community of Nigeria, to build fully remote engineering teams. For instance, Domm Holland at Fast bombarded his Twitter audience with constant messaging about hiring around the world and offering the Fast Flex culture for remote working. Known for his intense personality, Domm proven that the best remote talent comes at a price for relentless signaling and a very organized and consistent online presence.
If you only look on the surface, it’s pretty clear that the headlines installed a narrative that placed Florida and Texas ahead in the great tectonics. I easily got tricked into it by my own echo chamber of 1500+ Twitter follows composed of >60% SV types.
Thankfully, LinkedIn ended up publishing very interesting figures by way of exclusivity to tech reporter Alex Kantrowitz at Big Technology. When looking at various data touted across articles, it’s easy to be tempted to look at absolute numbers and think that Florida and Texas got the most of this migration.
If you look at it proportionally and do the math on a simple inflow to outflow of workers ratio though, the narrative is actually pretty different. LinkedIn’s data shows that midwestern cities such as Madison saw a +75% increase in the inflow of techies. Besides the migration, other cities like Cleveland and Minneapolis actually slowed the “churn” of their tech workers. Last but not least, Austin is actually gaining tech workers at a lower rate than the prior year, caveating the “booming tech city” narrative.
Here’s the exclusive infographic Alex K. shared from the team at LinkedIn that crunched the data :
Without having experienced or extensively researched it, it’s actually pretty difficult to pin down what these previously considered as “Tier 2” cities have going for themselves, besides the lower cost of living and better quality of life.
One notable thing is that folks will still cater to cities rather than more rural areas, where internet speeds lag behind the national average around roughly 40 megabits per second - which by the way is still unimaginably fast for most rural areas in France. Some of them still can’t get past 10 megabits per second without using wireless antennas and LoRaWAN type of technology.
Quite naturally, Alex’s article for Big Technology sparked my curiosity for US vs. France comparisons, a frequent pattern in my writing. I tried several approaches and went through all stages of hope and grief :
Putting out a typeform on Dec 23rd. This one is pretty self-explanatory. It got a grand total of 10 full responses after I fixed the answers and logical pathways several times. An epic no-go.
Writing to Alex K. and reaching out to the teams at LinkedIn. I overestimated the power of hustle, but taking the half court shot felt mandatory. The impact of tech migrations in France and Europe did not seem to justify giving into the outreach. No luck.
Reaching out to headhunters and people I knew had moved. Definitely the least holistic and exhaustive approach, but the only arrow left in the quiver. I was lucky enough to be referred to Avizio, one of the rare headhunting firms to have productized leaving Paris or any major city to move elsewhere. Although the sample is admittedly quite small, the data was helpful
To readers that have advanced data analysis skills, there are platforms such as Coresignal that sell millions of scraped profiles from LinkedIn, which I think could be a great source of insight granted you know how to crunch the data. That’s all for the “bouteille à la mer”.
Let’s look at what Avizio’s data is telling us:
The intention to move is skewed towards the younger age groups → 44% of clients surveyed are under 5 years of experience, and 21% are under 3 years of experience
Moving out of Paris is associated with big salary expectations → A majority of surveyed clients expect a bump equal or greater than +20% as a compensation for any limiting criteria for the move
Again, the data is quite reliant on the clients and projects taken on by Avizio, but Nantes surpassed bigger cities such as Lyon (😔), Bordeaux or Toulouse. Nantes, quite notably with the presence of Centrale and several other schools, seems to retain and attract good technical talent. Besides having brought teams from well-funded and recognized companies such as Doctolib and Iziwork, but also seed-stage companies like Helios.do, the green neobank, I’m actually unsure of the secondary reasons for the attractiveness of Nantes
Depending on your job title, the network you will tap into to look for a new job, hone your skills, challenge your ideas, learn is very different and can be quite concentrated
As a purely empirical observation, the Avizio team told me salespeople are (surprisingly ?) those who embrace leaving major hubs the most. On the contrary, product jobs adapt just as well to remote work but tend to form networks focused on Paris and surrounding areas - Partly because product jobs tend to be seen as “elite generalist” jobs where parisian business school types would excel.
Other strategic roles like CFO or Finance Lead type of roles also tend to stay in Paris, as they are perceived as potentially prone to interaction with a network of partners (in particular investors) whose geographic tropism remains in Paris despite the successive confinements
Another topic I was happy to riff about with the team at Avizio is how companies choose to go about their employer brand narratives :
Radical: some companies embrace the remote-first organisational principles without making a specific case out of the “primary” city in which it was founded or part of the team is based. This style relies on aggressively promoting remote-by-design or remote-since founding and leverage their opinionated narrative as a filter
Soft: other non-parisian companies will focus their efforts on heavily promoting their office-first culture, striving to attract candidates based on their cultures’ premise, leveraging their investors’ brand as an umbrella, being consistently vocal about their culture on social media and building a narrative around their culture
Contrary to one might think, many CEOs, People executives and headhunters are pretty reluctant about bringing forth their non-parisian founding as a key employer brand argument. For most of them, it’s barely something that they would mention as icing on the cake.
Tethering a company’s employer brand to a specific city is seen by many founders as a dependency they would rather not have. Rather, more companies focus on building strong brands, block by block.
When attempting to attract talent to a secondary hub, recruiters are faced with several objections:
Leaving Paris will negatively impact my career ambition. According to the team at Avizio, a significant portion of potential candidates for their Escape programme tend to see the move as a tradeoff between quality of life versus ambition. The recruiters’ job is therefore to provide tangible arguments against the belief and show to the candidate a path in which their progression looks comparable or even better than what they could have hoped for staying in Paris.
My salary will be capped lower. This stems from the belief that tech companies outside of the main hub will always try to take advantage of a lower cost of life to lowball candidates into accepting lower salaries. While this has often been true, founders and people executive are starting to realize that decorrelating compensation policies from location gives them leverage in attracting exceptional candidates
I spend most of my time trying to gather data to make informed decisions about investments, so it was a bit of an embarrassment to me not to be able to pull much data to look at the phenomenon in France.
A good story is worth not a thousand, but a few good graphs. I reached out to Twitter and my friends to try and catch a few words from the exiles and dig into their motivations.
I specifically chose two very different profiles:
Romain is a founding partner of French VC firm Caphorn Invest, who reacted to one of my bouteille à la mer tweets about the trend earlier in December. He lives in Marseille.
Camille is one of my good friends and is a Senior Account Manager at Doctolib, where she helps with the massive rollout of teleconsultation to doctors. She now lives in Nantes.
Romain Vidal - Partner at VC firm Caphorn Invest
Romain has always been a traveler. As his dad was an expatriate for most of his childhood, he was familiar with the feeling of settling in another place, another country. When he had his first child, he decided that he didn’t want to found a family in Paris and that the conditions for family living didn’t meet his standards.
This is how he decided to move somewhere in between Lyon and the Saint Exupery airport, where he would catch a train to Paris ever so often. In the beginning, he would commute every day to Paris to be physically present with his team. Over time, his rhythm started to be more sporadic and switched to 2 to 3 days a week in the office.
He then grew frustrated with the general atmosphere in Lyon and looked into moving into Marseille upon an opportunity to move in a family apartment in the city center that had gone vacant. He had his fair share of doubts at the time, but was reassured to see that some districts of the city had changed a lot from the years he used to visit his family in the city 20 years ago. He says Marseille is a much more diverse city in his opinion when compared to Lyon or Bordeaux. As a matter of fact, I would personally agree that Lyon, and especially the sixième arrondissement where I live, isn’t especially diverse, both ethically and economically.
Moving to Marseille didn’t especially affect Romain for all things related to work. He says he’s successfully brought his team to “build around” what was seen at the time as a constraint. Thanks to the new paradigm of remote working, everybody finished to ease into accepting a boss working remotely as a completely normal feat. Among the things Romain misses is the “call-free” zone that 3-hour train commutes represented for him. Various sollicitations have eaten away at this protected time, as is often the case for busy partners at VC firms under constant exposure to their portfolio company’s and prospective founders demands.
Besides his personal choices, I went on to ask Romain if he had encountered tough situations linked to remote work in his tenure as a VC. He dealt with a pre-COVID situation where a prospective founder planned on recruiting in Annecy, only to be faced by a veto from a potential co-investor in the company, which led to the management adding an extra few months to an already tough hunt for C-level talent.
Romain says he believes in the idea that a significant portion of the money saved on fixed costs as a consequence of switching your team to remote should be reinjected in intensifying culture building.
I asked what the main mental roadblock in the founder's mind could be according to him, and trust and control issues seemed to be front and center. He says he regrets that some founders lack the courage to drive change and would rather put strict control ahead of trust as a building block of culture. It’s never easy, even if you do have a plan, going out and risking a potential mutiny and hamper your company’s trajectory. Quite logically, it’s in my opinion a revelator of the potential cultural flaws in a cruel way, and they’re terribly difficult to fix as you walk.
Camille Rossi - Senior Telehealth Consultant at Doctolib
Camille’s story is obviously a lot different from Romain’s. A recent graduate, Camille started her career interning with Doctolib’s Inside Sales team in Paris, and was then placed in the Telehealth team where she was promoted to Senior Telehealth Consultant. The team has seen tremendous growth over the last year due to the successive lockdowns.
She emphasized how close-knit her team atmosphere had been, and how this has been key in her well-being at work. The decision of the company to move part their telehealth team to Nantes, though bold, was considered by the employees specifically because it encapsulated an entire team. As a collective bargain, Camille says it was really a group decision to move forward with saying “yes”.
Camille says the friendship she had made over the years at Doctolib helped her compensate for the distance she would put with her other groups of friends. Carried by the COVID context, she considered the decision because many barriers had been removed. Moving out of Paris didn’t seem too much of a stretch given the tough living conditions both lockdowns and other restrictions imposed.
At the same time, moving into a new city during or shortly after a lockdown isn’t without challenges. Moving to Nantes with colleagues certainly helped lay the groundwork for a healthy social life outside of the office.
My personal experience was a little bit different, as I moved to join an existing team that has always been based in Lyon and has eased into remote working during the last year. I want to mention how good and intense the onboarding was despite happening mostly on Zoom, with great emphasis put on walking me through all the details of existing VC investments and associated trajectories, theses the private equity team had been working on, anecdotes of working through €200m of investments over 10 years.
Many companies neglect the importance of great storytelling when onboarding an employee, they tend to forget that new employees buy into so much more than a job posting. They buy into a complex story that illustrates value and helps them build a sense of purpose, which is where they tend to put the monetary exchange for working time in the background and display ownership in their role.
Distributed or remote-first teams converge and cement around excellent storytellers that maintain culture by over-communicating their values and commitments to their employees and obsessively conveying the mission of the companies at every turn of the journey.
I hope you liked this issue, I’ll definitely try to pick up my writing pace which has crumbled lately !
Don’t hesitate to reach out at firstname.lastname@example.org with remarks and ideas ! :)