Last week, during my weekly one-on-one with Jordan (a young sales rep), he asked me about a momentous life decision.
“Should I move back to the Bay Area or move to Denver?” Jordan moved back home after COVID-19 struck and was weighing his options about where to move to next.
My response: Don’t move to Denver if you care about your career.
His question was less about Denver and more about properly evaluating opportunity costs. Denver’s cost of living is astronomically lower than San Francisco’s. Plus, COVID-19 has rendered locations obsolete. You no longer need to be in the Bay Area because the virus has democratized access to tech jobs. Right?
Wrong!
The permanent shift to Remote Work is the most overhyped thing since Bitcoin.
Sure, COVID has caused more people to work remotely than ever before. But, central locations where people can meet in-person and collaborate will never vanish. I was on a call with a VP at Salesforce last week and he could not wait to get the hell out of his house.
According to Paul Graham, “One of the biggest things lost in remote work is chance meetings.”
Similarly, Steve Jobs designed Pixar’s Headquarters to drive spontaneous conversations. In Walter Isaacson’s book, Jobs says “There’s a temptation in our networked age to think that ideas can be developed by email and iChat. That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, and soon you’re cooking up all sorts of ideas.”
This type of thinking is not exclusive to Y-Combinator and Apple. Serendipity has birthed countless groundbreaking companies in the Bay Area. Like the chance encounter that led to the first major investment in Facebook. Zuck and his crew were kickin’ it in the mean streets of Palo Alto when they ran into Sean Parker, who introduced them to Peter Thiel. He invested $500,000 in the social network. Facebook is now valued at $700 billion.
Additionally, 80% of all public SaaS companies are headquartered in the Bay Area. COVID has been a boon for these businesses. Have you seen the recent valuations of Zoom, Okta, Crowdstrike, and Twilio? Where do you think most of the executives at these companies live? Chances are they will propel the next wave of hypergrowth SaaS companies right here in the Bay Area. Don’t believe me?
Georg Kurtz was at McAfee before he founded CrowdStrike. Todd McKinnon led development at Salesforce before he founded Okta. Eric Yuan was the VP of Engineering at Cisco before starting Zoom. This is the power of being in the Bay Area. If San Francisco is the Lebron James of tech, Denver is Brian Scalabrine.
I told Jordan that Denver is more expensive than the Bay Area if he properly factors in the opportunity cost of not living in a city that would give him 10,000x the opportunities.
This brings me to Short-term vs. Long-term thinking.
I wish someone would’ve hammered this into my brain when I was younger. When you’re in your early 20’s, your biggest asset is time. You have lots of it and can leverage the power of compounding to achieve your wildest dreams. This is why you should strictly optimize for the long-term.
“If you’re going to invent, it means you’re going to experiment, so you have to think long-term.”
Jeff Bezos
Long-term compounding gives you the most leverage when it’s applied to things like investing and learning, not penny-pinching. Choosing to move to Denver instead of the Bay Area is optimizing for the cost of living which is the textbook definition of short-term thinking. Now, if Jordan had a family to support, I would be more empathetic to his contemplation of Denver over San Francisco. But, he didn’t. Call me an elitist, but if you want to have a wildly successful career in tech, saving $500 or $1000 a month on rent won’t mean shit in the long run. Especially, if the opportunity cost eradicates those savings which in Jordan’s case it would.
One of the best examples of long-term thinking can be found by studying business mogul Dhirubhai Ambani.
He had a habit of visiting the Taj hotel for a cup of tea in the evenings. But, his friends refused to join him. They thought the tea there was overpriced. After all, he was paying close to $50 for a cup of tea (at that time), whereas they would get the same tea down the road for $5. Was he out of his mind? $45 a day can add up. When they asked him about his crazy habit, he said: “I’m paying five bucks for the tea and another 45 bucks because the Taj gives me the opportunity to connect with the city’s most influential people.”
I know what you’re thinking. The world has changed. Twitter allows me to connect with anyone, anywhere in the world. I don’t need to pay for overpriced tea to have access to the most influential people. Sure. But, if you’re interested in building a successful career in tech, nothing comes close to sitting down for a cup of coffee with another founder, or VP even if you have to sit on a patio and wear facemasks. Don’t feel bad for paying a premium to access the best opportunities in the world.
Lastly, it’s in our nature to overreact. Unexpected changes to our lives lead us to believe that the world will never be the same.
When I was living in Los Angeles, I remember the night Trump sealed his victory over Hillary. I was at a birthday party, which started to feel like a funeral when two of my girlfriends started bawling their eyes out. One of my buddies said he was going to liquidate his stocks because we were headed for an epic crash. After all, Trump was unstable, and the markets hated nothing more than instability. On top of that, people all over the internet were threatening to pack up their stuff and move to Canada.
I see our reaction to COVID through the same lens. People are overreacting to the long-term changes caused by it. Has it shifted work culture to a hybrid model where you can work from anywhere? Yes. And, that’s great. If anything, It’s made humanity more resilient, and to bet against human ingenuity is foolish. We’ve solved harder problems in the past, and we will solve COVID.
Do you think people are just going to Netflix and chill and order DoorDash for the rest of their lives? That would be a sad existence. Most people I know love nothing more than spending their hard-earned dollars on experiences. And, I’m not talking about VR.
There’s too much money on the line for us to not figure this out. My fiancé and I just pushed our wedding to next year, which means we also pushed our honeymoon. No one is going to settle for Zoom weddings or staycation honeymoons. Even if that’s the only reason we solve COVID, we will either come up with a cure or beat this virus when everyone understands the ROI of masks.
When we do, the streets of SoMa will be bustling again with Patagonia vests, AllBirds, and audiobooks streaming at 2X speed.
Don’t move to Denver.
- If you’re early in your career and want to take advantage of the best opportunities in tech, there’s no place like the Bay Area. Take advantage of the same serendipity that introduced Mark Zuckerberg to Peter Thiel.
- The fastest-growing SaaS companies are here. Executives at these companies will start the next wave of hypergrowth companies just like when Todd McKinnon left Salesforce to start Okta.
- Don’t be a short-term thinker. Pay the premium to access the best opportunities in the world. You won’t be thinking about the $1000 a month you could’ve saved if you had just played it safe in your 20’s. As the saying goes, “you’re the average of the five people you spend the most time with.” The quality of talent in the Bay Area will be the forcing mechanism you need to reach your full potential.
- Lastly, overreacting can have serious consequences. 18% of all Fidelity account owners dumped all of their stock between February and May. They thought the world was going to end and missed one of the most epic stock markets rebounds in history. Don’t do that.
We will beat COVID. And, when we do, a chance meeting in San Francisco can lead to the biggest opportunity of your career.
“The permanent shift to Remote Work is overhyped. The Bay Area is not losing its crown because of COVID.”
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