“Gone to Austin”
Austin has been winning the “lists” game for a long time now. A top place to live, to visit, to work, and to start up a business — even to retire. I moved to Austin, however, at a time when it wasn’t cool, to say the least. Before it started showing up on “the lists” that we all know and love. That’s not to say that Austin wasn’t growing, it was. It just didn’t have the cachet that it has now.
In 1994, if you were moving to Austin, you got the inevitable questions:
- “isn’t it all dust and tumbleweeds?”
- “going to hang out with the cowboys?”
- “are you going to get boots and a hat?”
- “isn’t it in the middle of nowhere?”
- “are there any tech jobs down there?”
And of course all of that was silly. Except, I do have cowboy boots… my only regret is that I didn’t start wearing them sooner. If you’re skeptical, or just thinking about boots, ask me about them, I have thoughts!
Is this really new?
The trend of people and businesses relocating to Austin is nothing new, per se. A net migration of about 145 people per day has seen Austin doubling every 20 years. This article from the Austin Chamber is mind-blowing — more than 70% of the growth of Austin MSA population is from migration, rather than natural increase from births! And over the years, companies have relocated to Austin. In fact, my first job was at Trilogy Software in 1994, a company that had recently moved its headquarters from Palo Alto to Austin*. It was about cost of living and rent then, and it looks like a lot of it is about those things now.
Working from home is nothing new either. It has been trending upward for some time now, with even very established companies like IBM and Dell advocating for their employees to work from home. Certainly many software development shops have advocated for either work from home or work-from-anywhere lifestyles.
What’s Different?
But Working from Home in 2020 is different. COVID has accelerated work from home dramatically — sometimes by choice, sometimes by mandates from governments or employers. We’re living all day in Slack, email, text messages, FaceTime calls and Zoom. I don’t have to cite research about how it is different, but just 2 years ago something like 2% of our working population was working from home, but my how things havechanged. A study by Stanford economist Nicholas Bloom shows how radically the economy has been impacted by COVID as of the end of June:
We see an incredible 42 percent of the U.S. labor force now working from home full-time. About another 33 percent are not working — a testament to the savage impact of the lockdown recession. And the remaining 26 percent — mostly essential service workers — are working on their business premises.
The sales of laptops and PCs grew dramatically, and the sales of desks and chairs are certainly seeing a bumper year. Unfortunately, almost any business that can’t be performed by working from home has really suffered in 2020, as noted by the high percentage of not working adults in June. That percentage has come down considerably, but the unemployment rate is still very high.
And 2020 is different for Austin as well. Those of us who have been here for awhile are wondering if the fact that so many people are being forced to work from home is just accelerating trends like moving to Austin. Are these firms effectively saying “well, we’re stuck working from home anyway, why not move our Headquarters while we’re at it?” In my own neighborhood I’m meeting new couples and families walking their puppies (while I’m walking mine) — and most of them have moved from somewhere to Austin, or after living in Austin for < 2 years, have found a home in our area.
That story is playing out all over Austin. And I have to say, I love our old neighbors, great people, great friends. The new neighbors are great too! I don’t know them as well but excited to have some fresh blood the next time we’re able to have a neighborhood gathering (which may still be a year out).
Already Home to Big Tech, But it Feels different this time
Austin is already home to Apple’s second biggest campus in the world. And to a significant portion of Amazon’s employment (considering both its own operations and Whole Foods operations are here). Google is building it’s own building downtown (I have to say I’m excited to see the sail-shaped building completed!), Facebook appears to be on that path as well. Oracle already had a significant presence in Austin, and Elon Musk had interests in Austin with Space X as well as a new Tesla factory being built here. Maybe these are just trends that accelerated a bit due to timing. Or perhaps these firms are reacting to perceived policy failure in California, or to real or perceived taxation benefits.
But these recent announcements from Tesla and Oracle felt different. Oracle’s felt more about giving employees a choice about where to work… Tesla’s more about where Elon Musk is personally spending all of his time (between SpaceX and Tesla’s new Austin factory). But it also felt like a signal that bigger things are afoot…
“Oracle is implementing a more flexible employee work location policy and has changed its Corporate Headquarters from Redwood City, California to Austin, Texas. We believe these moves best position Oracle for growth and provide our personnel with more flexibility about where and how they work,” a spokesperson confirmed to CNBC.
To be fair to Oracle, they’ve laid the groundwork for this move in previous years by securing a campus along the Colorado River near Downtown Austin. There’s plenty of room to expand. I think the news felt more impactful coming on the heels of HPE’s announced move of its headquarters to Houston.
As far back as May, local journalists were trumpeting Austin’s draw to California companies due to “California’s poor handling of stay-at-home order”. Another article asserts a tremendous increase in corporate relocations and expansions to Texas in general.
Adriana Cruz, executive director of Economic Development and Tourism for Gov. Greg Abbott’s office, said the office has 196 active relocation or expansion projects in its pipeline right now.
196 relocation or expansion projects is… a lot. Journalists and pundits are predicting more.
“These high-profile moves create precedent and raise the comfort for other companies to do likewise,” said John Boyd, principal at site selection consultant The Boyd Co. in New Jersey. “Everyone seems to be getting the message — except California lawmakers.”
Choose Austin
But, I don’t think it is all about tax breaks or business climate, as the Governor would have believe. I think it is about something more: about atmosphere, about talent, and about shaping an “it” city. It’s about culture. It is also natural for your hometown to take you a little bit for granted.
I think it is a Rorschach test. What do you value in your HQ? What does your team value in their HQ? In the city where you work? Do the culture, the music, the food, and the people of Austin appeal to you?**
If you want to build a company that is a core part of the fabric of Austin — you can do that here. If you value being part of the community — you can do that here. If you want your company to change the trajectory of corporate philanthropy, or sports, or environment — you can do that here.
The economic shocks of the ’80s and the tech bubble popping in 2001 taught Austin’s leaders — and people — to diversify the economy. I think it is a good thing that you find companies like WholeFoods, Yeti, and Kendra Scott here. Like Vital Farms, Tito’s, and Everlywell. And manufacturing, too: NXP, Applied Materials, Samsung, Flex, etc.
In short, I think these firms are choosing Austin because of what it is, and because of what it could be. And I just hope that they are all willing to invest a little bit in Austin to help us all get to that future Austin together.
So what does a firm that “chooses Austin” look like? Alamo Drafthouse is a great example of what I like to call “keeping it weird in Austin” — They just renovated an historic school building for their headquarters!
The schoolhouse was built in 1911, and the Austin-based movie theater chain purchased the property in 2019 from Austin Independent School District. Last year it completed a $5 million restoration of the property, at 3908 Avenue B in the Hyde Park Neighborhood, with local firm Weiss Architecture in order to preserve the integrity of the old building.
And this:
Alamo Drafthouse, owned by Tim and Karrie League, submitted a bid several years ago to purchase the building. In its proposal, the company said it planned to restore the property, plus create a community center and affordable housing.
That’s community. And that is very much a part of Austin. I welcome all of these firms to Austin, because I believe the growth in population is coming with or without them — and I think they will bring great job opportunities to many Austinites, and we as a city will benefit. I do hope that they will learn to appreciate Austin as much as we do, and to help us preserve much of what makes it special, while building what makes it new.
Let’s all think about Austin as we want it to be 20 years from now, and start investing in that future now!
POST NOTES
This is a repost from my new series (Turning Coffee into Process Automation). Please check it out, subscribe, and get one post approximately every week on Process, Automation, Apple, Austin, Food…
* In my first job, at Trilogy, we had to become top notch at recruiting from college campuses to convince people to leave the coasts to come to Austin. We brought them down for Friday interview marathons, then we’d go out to dinner and downtown for the nightlife. Then over the weekend they might have a ski boat experience, or go canoeing, or play golf or Ultimate Frisbee. We had to convince them that there was more to Austin than the job. But it is much easier now, to convince people to move to Austin. Nobody goes to these lengths anymore — it isn’t necessary!
** A not-so-quick aside about Amazon: When Amazon chose not to put HQ2 in Austin, some viewed that as a set-back for Austin. But then Apple announced expanding their operations in Austin. And now in 2020 we have confirmation that it was not a setback for Austin at all.
My thoughts at the time Amazon announced that Austin would not be the location of its new HQ2:
I maintained all along that if Amazon chose Austin it wouldn’t be for the incentives, though surely Amazon could have picked Austin and negotiated some incentives. That if Amazon was going to choose Austin it would be for other reasons — culture, work-life balance, their ability to make an impact and partnership with Austin to effect positive change that benefits both Amazon and Austin.
And if, instead, Amazon valued transportation hubs and tax incentives, other municipalities would benefit. And I think that’s the calculus for everyone looking at Austin. The political support isn’t there to turn Austin upside down for each new company. But, if you want to build a company that is a core part of the fabric of Austin — you can do that here. If you value being part of the community — you can do that here. If you want your company to change the trajectory of corporate philanthropy, or sports, or environment — you can do that here.
