Why are startups leaving Silicon Valley? | CNBC Explains


So your investor just signed a check
for $500,000 for your startup. What’s next? Time to calculate your runway.
The time that you can sustain your business idea without
bringing in a dime of income. So where should
you set up shop? Well let’s see there is Silicon Valley,
the epicenter of the tech universe right? Sure, you can take the money, hire your team,
get a cool but affordable co-working space and let’s say that gives you six months until you
need to knock on the door asking for more money. But wait, what if I take my
startup here to Singapore? I could extend that
runway to nine months. Costs are not as high
as San Francisco’s. And that gives me a little more
breathing room to make my idea profitable. Wait a minute.
What about a place like Bali? Now I’ve got like at
least two years. And a beach, and
yoga, and monkeys. But how can I build my business
on a random island in Indonesia? Simple, your developer is
in the Philippines, your designer’s in Germany and
your salesperson is in Canada. You’ve all got laptops and
Dropbox and Skype and Slack. The world is
going global. Some people are building their
businesses from their laptops in co-working spaces like this
where costs are just much cheaper. But there’s just
one catch. No shoes
allowed. Rent a desk in a co-working
space in San Francisco? That’ll cost about
$500 per month. You want to rent
a desk in Bali? That’ll cost you around
$200 per month. Your morning cup of
coffee in San Francisco? $5. And your morning
coconut in Bali, $1.50. Not to mention
the commute. The average commute time for someone in
San Francisco is nearly one hour a day. Compare that to a motorbike
ride here, easily about 10 minutes. Let’s take a look at two
entrepreneurs proving this shift. MQ Wong and Tony Xang got their
PhDs from Stanford and then started a drone camera robotics company
and they didn’t stay in California. They moved to Beijing, while their startup Zero Zero Robotics also now has an office in San Francisco its headquarters are in Beijing, with
more offices in Shenzhen and Hangzhou. The drone they developed is still
sold and marketed around the world, and they even just signed
a deal to sell at Apple stores. A few years ago they would have probably stayed
in Silicon Valley to launch their company. Not today. San Francisco’s housing costs have
been skyrocketing since the tech boom. Meanwhile President Trump’s causing
uncertainty over immigration and the H-1B visa which Silicon Valley is hugely dependent
on to bring top talent from overseas and now successful startups
are rising around the globe. The number of international
unicorns are increasing rapidly. Just a few years ago only 30 percent
were located outside the U.S. By 2014, it was
37 percent. In 2015, it went
up to 53 percent. And last year it
stood at 58 percent. In fact, half of the top 10 unicorns are
outside the U.S., they’re in China. But hold up, there’s still a number of reasons people
will argue that Silicon Valley is supreme. You can’t replicate Hollywood
overnight, if at all. For one there’s
the culture. Silicon Valley’s innovative spirit is what
makes it successful and somewhat ironically it’s the ‘OK to fail’ attitude
that attracts risk takers. Also talent. If you want to work with people
in person it’s a lot harder to find serial entrepreneurs or user acquisition leads
with a lot of experience on remote islands. The majority of global venture funding is
still happening in Silicon Valley but there was a 28 percent drop in total funding in
the valley in 2016, compared to the previous year. Some may still argue, location, location,
location, but times are changing. With the rise of global digital nomads,
well, it’s a working man’s paradise.

, , , , , , , , , , , , , , , , , , , , , , , ,

Post navigation

100 thoughts on “Why are startups leaving Silicon Valley? | CNBC Explains

  1. how come no one has mentioned about the startups opening in Hong kong? or the tech boom in the greater bay area in Hong Kong-Zhuhai-Shenzhen-Macau-Guangzhou?

  2. Wait till the next MEGAQUAKE hits and fills that valley full of hot ash n shit!!   Move where its cheap and safe…duhhh.

  3. 80% of Silicon Valley is in the San Jose Metro area. Yes San Jose Metro (Santa Clara county) CNBC needs to get their head out of their ass.
    I believe San Jose surpassed San Francisco in population over 20 years ago and is now the 3rd largest city in the west.
    More patents come out of the San Jose office than any place in the US . Why do these National networks continue to push this false narrative that SF is Silicon Valley..it just is not.

  4. it is much cheaper in Ukraine. strong middle developer 2500-3000 usd. lunch 5 usd, but IT investments=0,00…

  5. Apparently America 1st means America 1st to nosedive. America became the greatest in the world not because Americans were the greatest but because it attracted the greatest people.

  6. Hey, my suggestion for a topic will be: What Jobs will be leaving us in 2030? Kinda feature trends and facts to back the lost or shift in jobs .

  7. Hey, my suggestion for a topic will be: What Jobs will be leaving us in 2030? Kinda feature trends and facts to back the lost or shift in jobs .

  8. Hi, sir ! I watch your all videos and I find them useful. Can you do video about how , where to find investors for startups , how to fundraise for startups, nonprofits and for small projects? Thanks

  9. the Question should be what is going on in this world Right now .
    Prepare yourself on an EMP attack, take a map from you City make plan.
    Cause when it has happend. it is like 1900…no Money, no Communication, No GPS.No electricity
    When Nothing will happen ,if it happens you are prepared.

  10. This is dangerous. From a long term strategic economic view point every aspects and constituent scomponents of any business, especially a key critical strategic business and industry, must be located within a short communication and transportation distance in terms of long term strategic transport costs and manpower security for maintaining business secrets and industrial secrets and intellectual secrets and rights. Russia knows this only too well.

  11. So the number of “unicorns” outside the U.S. increased in percentage from 2003 to 2016, yet there is some type of correlation to Trump’s H1B visa potential changes. All the meanwhile Trump didn’t win the election until November of 2016. That’s quite the correlation you made there CNBC 🤔

  12. Same concept, why don't you just go home instead of going to China or Bali? Your table is free and much more comfortable. This is just a waste of my time. Such a dumb idea!

  13. Why would you compare the cost of a cup of coffee to coconut milk? That is a stupid comparison. How much is coffee in Bali– THAT is what they should have reported.

  14. Yeah, sure, TRUMP is the reason California's economy is flagging on all fronts, not because of any state-endorsed policies… good grief.

    EDIT: "They'll still come to Silicon Valley for the CULTURE!"

    HAHAHAHAHAHAHAHA

  15. i live in silicon valley and want to work remote, can someone please give a me a list of companies that allow you to work remote???

  16. Why can't one just build stuff in their garage as Henry Ford, Walt Disney, Steve Jobs and Steve Wozniak did? Do you really need to fly to Bali or rent desk for $500/month in SF in order to sell stuff people need?

  17. The actions being taken by these big tech companies against the American people are treasonous and must be treated that way. There is no other way to look at their crimes. The employees of these companies are going to lose their livelihoods if they don't re-think their participation…they are just as guilty.

  18. yeah ….the hipster liberal feminist sjw gay culture of San Francisco that's driving the city into drug epidemics and literal shit .

  19. Sorry, America needs to think of itself…. all the businesses leaving and taking their jobs with them to other places… don't get me wrong… Bali, Beijing, and Singapore all look beautiful…. but America needs jobs….. so I'm glad Trump is getting more strict on immigration and cracking down on illegals. I hope he cracks down on Democrat politicians to build more houses and lower housing costs.

  20. This dude is spouting fantasy. The state of California is awash in debt, homeless in tent cities and human waste on the streets. Go to a red state and prosper or a blue state and die by taxation.

  21. ahh The wonderful perks of going global, for the upper class few with the wealth to travel, outsource workforce, evade taxes while preaching about state sponsored social programs!
    most people despise the idea of globalism, because it enables the wealthy to cheat the systems and make it nearly impossible for the poorer majority to compete.

    Too full off of themselves to see how damaging and elitist this crap is

  22. In kerala india 0.25 dollar for coconut juice,
    2500 sq feet office cost 40000 rs = 650 dollars approximately per month.
    Lavish food 4 times cost 10 dollar.

  23. The liberal NIMBY attitude is killing San Francisco. You cannot do anything in San Francisco without someone trying to get you to pay up to “help the community”

  24. Nickel and Dime it, till you grow Large, then invest more in revenue, start small & grow Large like everything else, the only difference is that in Silicon Valley there is, like minded people meaning more growth and productivity in particular startups, if those that aren’t successful either went broke or had the wrong like minded management and leaders, My opinion

  25. Dude Germany is labeled as France on the map 1:07. Even CNBC has to take geography class…you've got to be kidding me…

  26. Trump took office in 2017. The shift started happening between 14&15. The shift is not happening because of Trump's policies. This is the sort of stuff that makes people call you fake news. Like that is just blatantly and obviously wrong.

  27. I hate to say this but it is time to slow Silicon Valley until they correct the issues that exists when it comes to housing, homelessness and out of control costs. The greed and lack of planning in the area is making it almost unbearable to live in the area.

  28. ok bud. you went from talking about silicon valley to demonstrating commute in san francisco. let’s not get too carried away with such subjective reporting now.

  29. A lot of people forget that Silicon Valley is not the only technology center in the US. Austin, Raleigh, Virginia……so many more.

  30. Digital nomads choose bali because they need to comfort their self, enjoy and refreshing environmental., so they don’t get stressed while do their jobs.., bali offer nature and culture interest and also bali is cheaper compare to western country and internet access is good..,
    So it’s not just about the coconut., you can’t forcing someone to stay in some place for a long time but that they don’t feel comfort even if those place cheaper or more develop, hard to forcing someone to out from their comfort zone

  31. Come in India in Gujarat or Hyderabad, you feel like millionaire with that money. You can do all things in fraction of cost.

  32. I left because I was doing 99% of the work and not receiving proper compensation. I can manage myself. I don't need assistance.

  33. Watch singapore and bali are going to raise their prices on rent of office spaces, plus the cost to fly there now that this video is out

  34. Why all technology have to be in California? Why not move to the other 49 states and you have plenty of opportunities to create a business in the area? Here in Ohio several tech companies are growing especially a solar panel manufacturing company.

  35. Why come to America with its make America white again, when you can go to other countries that actually want business.

  36. Stupid to compare . If anything. You wanna save money.
    Move to a regular town with low cost of living . Wtf is this guy talking about

  37. What we have in the US for the last forty years or so, is the godless left admonishing good hard working people with shame politics and racial division, regardless of race. All absolutists use this tool in the beginning. As with all cancers, it begins slowly and little by little, the values of the majority are eroded away, all the time being subsidized by the very people being subjugated by the forces of nihilistic evil that is the left (or the true far right). Use the morality of the people against them, even though the very entity that is attempting to subvert a given country or political system has none of those inherent values within its own people or organization. Stahlin and Hitler knew this well. Make people feel bad about their own hard work and the blessings that come with said work and right life decisions. Most importantly and always, accuse anyone loudly and vehemently as racist, fascist, or misogynist, or ethnicist, etc. that have the audacity to point out the hypocrisy that the Emperor has no clothes and to the very things that the leftists are actually doing in reality. "Say it loud and long enough and it will be accepted as the truth (Adolf Hilter, Mein Kampf)", even though it can factually be proven false. Or "DO AS I SAY, NOT AS I DO" which should be the left and Democrats new motto. Another way of saying this is: "Accuse others of the sins ye do!"

    A classic example is using Christian morality against itself. The leftist/fascist ( there is no real endstate difference in the long run) always use this kind of statement, to wit: " As a good Christian, you should be more tolerant of,( take your pick, atheists, Wiccans, Mexicans, Latinos, blacks, whites, women, Asians, Catholics, LGBTQRSTUVWXYZ, etc."), even though that person making this statement has NOTHING in common spiritually with you, nor shares any of the moral values of Christianity, and truly deep down hates you and wishes to destroy you. Remember, leftist thought and socialist doctrine prohibit the belief in a higher power/creator and that nothing done in this life has real consequences and is nihilistically subjective. Not do they believe in private property rights (unless it is THEIR PROPERTY IN QUESTION). "What is mine is mine and what is yours is negotiable", in their minds. Using a given demographics' own moral code against them is an old trick of the Communists before the 1917 revolution and has been used again and again in order to weaken and eventually destroy a given society or government. Divide and conquer is their mantra.

    This tolerance of the majority is, as well as turning the proverbial cheek, to these godless scum and moral reprobates are reaching an end. The more the left compresses the spring of the majority (by that majority I mean the working and middle-class period), the worse the eventual outcome will be for the left, IMO.

    The average American (regardless of ethnic background, race or gender) is sick and tired so-called identity politics as well as being told what to think and how to express his or herself and we are doubly tired of financing our own financial and economic serfdom through ridiculous wealth dispersion taxation and methods brought on us by the wealthy, feudally minded elitist oligarchs in various federal, state and local governments. California, Illinois, and New York readily come to mind here. The working class and middle class have effectively been paying for their own slavery and the allowance of immoral, anti-US citizen-based laws to be passed for the last 50 years. Luckily, I am hopeful that we all have truly started to wake up to this fact and may yet prevail as a citizen-based, self-actualized and personally responsible country again, but there may and possibly will be, very dark days ahead, and if the left crashes the dollar, possibly civil war and insurrection (which I might add, the right would win). I hope to God this doesn't come to fruition.

    The hypocrisy of all of this situation is that the left are truly the ones responsible for the majority (but not all) of the horrible things happening in the country for the last 40 years, through their own legislative and political efforts. They have effectively destroyed the family in many states and have replaced said family with a dependence on governmental institutions, knowing that the family is the basic political unit of any government. They, the left, were the ones that toted the idea of having fewer children in the US for years and yet they bring in and subsidize illegal invaders as a brand "new voting bucket" to offset the very population decline they themselves propagated. So much for a fair and balanced population. It is said that if it were not for illegals the US would be a 0% population growth. Diversity in the real leftist camp is not a strength, but a divisionary tool for civic destruction as we are seeing. It is only more apparent in the "Left Coast", but is a disease that has pervaded the entire western world.

  38. Can build startup anywhere literally use a free Starbucks or capital one cafe free no rent free internet outsource everything

  39. Lot's of bad advice.in this video! If you're struggling to stay afloat for 6 months, then you did a terrible job at raising money. Outsourcing and moving to a cheaper location, won't help. China and other Asian countries are the worst place to be for any kind of innovation. There's a reason why China and India have yet to innovate anything of significance.

  40. Ok good human… World should develop together… American already feed up to immigration…. America already rich and develop now they need to protect their own identity…

  41. Uptin, can I become your personal assistant? At least, just accompanying you to the airport during each travel would be enough for me. You travel too much

Leave a Reply

Your email address will not be published. Required fields are marked *