Why the new normal after COVID-19 could have tycoons and startups fleeing tech hubs like Silicon Valley

Image by Alex Hu from Pixabay

  • As workers embrace working from home on an unprecedented scale, the dominance of metropolitan tech hubs like Silicon Valley face their biggest challenge.
  • Able to work from anywhere, co-founder of insurance platform Open, Jason Wilby, expects tech companies and startups will increasingly decentralise.
  • Having set up offices on the Sunshine Coast and New Zealand’s Queenstown, Wilby says a trend towards regional offices and remote workers may be accelerated by the COVID-19 pandemic.
  • Visit Business Insider Australia’s homepage for more stories.

The absolute dominance of Silicon Valley might face its biggest challenge yet staring down the barrel of a brave new world of tech.

As virus fears sent the Valley’s billionaire founders into doomsday mode, many were quick to trade the tech bubble for greener pastures, jumping on their private jets en-route to New Zealand.

While some have picked Waiheke Island near Auckland, known as the “Hamptons of New Zealand”, others have gone further afield in the land of the long white cloud.

Tantalus Winery, Waiheke Island. Photo by mona Masoumi on Unsplash

Speaking from Queenstown on the South Island, Jason Wilby has been in prime position to witness their flood into town.

“Right now I’m sitting with a view of the airport. All of the 737s stopped landing about six weeks ago but I can’t believe how many private jets are still coming in. Half of Silicon Valley seems to be flying into their boltholes and bunkers – it’s quite bizarre,” the co-founder of insurance platform Open told Business Insider Australia.

Peter Thiel has got a house up on the hill over my shoulder. I think Bezos has a place around here as well. It really is a long list of the who’s who.”

It’s unsurprising given the immense resources each has at their disposal they have opted for a country that boasts some of the cleanest air and water in the world over a US state as well-known for its wildfires and for its droughts.

But – ecology aside – there are places one would rather be and then there are places one can reliably find work. Those in the tech sector with big ambitions have for years had little choice but migrate to hubs like San Francisco, London, Tel Aviv and increasingly second-tier cities like Sydney and Vancouver.

Those established hubs have successfully traded on the magnitude of the companies headquartered there to attract some of the brightest talent in the world. However, if there’s any sector that should be able to optimise remote working, surely it’s the companies who invented the software and hardware that makes the thing itself possible.

“These hubs are predicated on the false idea that if you want to earn good money you have to live in those tier-one cities and you have to trade off a lifestyle for a career,” Wilby said.

It was something Wilby, who also founded Huddle Insurance, had in mind when establishing Open, deciding to buck the trend by opening its second office on the Sunshine Coast as an alternative to Sydney.

Sunshine Coast, Queensland. Image by John Jung from Pixabay

“Everyone is competing for the best talent and trying to attract bright minds and high performing teams, but we wanted to challenge the idea you have to be in a tier-one city to do that,” he said.

“We’re just an hour from a major city in Brisbane where you have a load of skilled and experienced professionals and graduates. We’ve got a team of 20 who can love where they live and love what they do without giving up something major.”

Looking back, he says it was the right decision joining other startups and entrepreneurs up north.

“We have people who have relocated to the Sunshine Coast, not just to work with us, but from all over the world. We regularly meet software engineers from the US and all over,” he said.

“When we hold events we might get 50 talented individuals attend as opposed to the 100 we may have got elsewhere but they’re very much of the same calibre and pretty diverse.”

It was a testament that the strategy was working, with the Open team managing to be split across its different offices and being “more productive than ever” during the current COVID-19 shutdown.

With Wilby calling the shots from Queenstown for the moment, he can see it becoming an increasingly attractive proposition for startups and tech companies in a post-COVID-age.

“In Queenstown, you can bump into engineers from Facebook and Google, entrepreneurs based down here making all kinds of businesses, people from Singularity – great talent is always attracted to great destinations,” he said.

While giants like Google are hardly going to forfeit the billions they’ve spent on refitting factories and aeroplane hangers, smaller companies and startups could be less inclined to try to compete on digs.

Google’s new LA office is a restored World War II-era hangar that once held the famed Spruce Goose plane. Google Images by Connie Zhou

Instead by decentralising, they can compete on location and offer regional towns and cities an opportunity to diversify, with Queenstown a prime example. With tourism responsible for more than half the local economy, a pandemic like COVID-19 has effectively knee-capped local industry. But, if it can continue to attract new industries, a town like Queenstown can thrive in any weather.

For tech workers themselves it offers an opportunity to get away from living in some of the most artificially expensive places on earth. With sky-high cost of living and population density driving residents out of cities like New York and San Francisco prior to the outbreak, the current crisis may further accelerate the trend. Silicon Valley, for example, is already seeing it take effect.

In an ultra-urbanised Australia, it could be a way to ease the strain placed on major cities by increasing employment opportunities outside. with much of the population confined to just a few major cities, it could be a resolution.

“I think the resolution is an economic one but also a social one. It’s a reality in Sydney that you have people who think they have no choice but to save and save so they can one day buy a one-bedroom apartment. But they can work from wherever they fancy and have a beach house or a farm or a pool or whatever it is,” Wilby said.

“I’m not saying we’re going to see a mass exodus from the cities but I do think we’re going to see more people choosing to live and work somewhere they love.”

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