Tesla, Oracle, Hewlett Packard, Palantir: Why US tech companies are leaving Silicon Valley

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Way here:

passer-by in front of the skyline of San Francisco

Photo: Jeff Chiu / AP

Every now and then you have to look again.

The circular Apple UFO, which landed for five billion dollars, is still in Cupertino, California.

As before, Google's headquarters are in Mountain View, and Facebook's headquarters a little further down the bay in Menlo Park - and the corporations are continuing to invest in large campus and urban development projects.

Silicon Valley is the global center of economic power, more than ever after the surge in digitization caused by the Corona crisis.

And at the same time, the same digitization gives the impression that this unique cluster of tech talents and venture capital is suddenly drained, as a physical location is no longer needed.

Three reports about the departure of the greats from Silicon Valley in December alone reinforce this impression.

Tesla boss

Elon Musk

(49) moves to Austin, Texas.

Oracle wants to anchor its new headquarters there - while

Larry Ellison

(76), who founded the software company in Santa Clara in 1977, prefers to run it from his private Hawaiian island in the future.

Hewlett Packard Enterprises even goes back to a garage tinkering in the Palo Alto in 1939, and is now looking unnostalgically for a new place to stay in the Houston area.

Already in September Palantir Technologies, to date the most controversial company in Silicon Valley, deleted at least the last part of the nickname and moved to Denver.

"Intolerance and monoculture"

The motives are different: Palantir boss

Alex Karp

(53)

explicitly justified

the move as a rejection of the "increasing intolerance and monoculture" in the liberal-minded Valley.

His mentor

Peter Thiel

(53) said goodbye to Los Angeles two years ago with an angry speech about "an extreme train of narrow-mindedness".

Tesla and SpaceX boss Elon Musk had also repeatedly clashed with California politics, whether it was about labor law, taxes or health protection.

Because of the corona-related closure of the Tesla factory in Fremont in May, he had already threatened to withdraw the headquarters.

It will stay in Silicon Valley for now.

Musk justifies his private move to Texas quite practically with the attention he has to devote to the electric truck factory under construction in Austin and at the same time to the rocket base of his second company, SpaceX, in south Texas.

It goes without saying that Musk can now personally save considerable taxes.

For Hewlett Packard, too, the next step is obvious: Most jobs are already located in Houston.

At the same time, the group sees the move as an answer to "the new future of the world of work" by optimizing its need for office space.

It is expected that this will result in lower costs in the long term.

At the same time, the company assured that the locations in Silicon Valley would by no means be given up - as was the case with Oracle, which wants to keep its complex of several glass office towers in Redwood Shores on the Bay of San Francisco.

The software company was only cryptic about the reasons for going to Texas.

This is "the best position for growth", also in order to "give our employees more flexibility to decide where and how they work".

Rents are falling - but remain astronomically high

The trend towards home offices is also changing the presence of companies that stay in Silicon Valley.

Google goes particularly far in releasing office presence - and sees it as a long-term model.

For the duration of the corona pandemic, the strengths of companies between San Francisco and San José are already greatly reduced.

Tens of thousands have used the switch to teleworking to save themselves the horrific costs of living in the Valley and at the same time to escape the narrowness.

In addition, some remote states such as Oklahoma or Vermont still lured them with bonuses and settlement aid for the Corona residence.

Large parts of the workforce are already scattered in all directions, which makes it easier for companies to decide to leave.

The declining demand is reflected in the rental prices.

Since February, average apartment rents in San Francisco and some neighboring communities have fallen by 10 percent or more, and in Cupertino by 15 percent, according to the online real estate exchange Zillow.

But they are still by far the highest in the country, in San Francisco or Palo Alto a medium two-room apartment costs more than 4,300 dollars a month.

And at the same time real estate purchases have increased significantly, more in Silicon Valley than anywhere else. It doesn't look like an economic crisis area.

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