Is California setup for a brain drain?

Texas Governor

Last week I got to meet Texas Governor Rick Perry (that’s a photo of him pointing to a picture on his office wall). The first thing he told me, after saying “I just Tweeted you” is “when are you going to move to Texas?”

Two years ago I would have laughed because California was definitely the best place to do a technology business. This year, though, it’s a little tougher to laugh at that suggestion.

Here’s why:

1. My two brother-in-laws, both engineers, are laid off and looking for work. If they found work in Texas, they’d move in a heartbeat.
2. Housing prices in Silicon Valley remain ridiculous. Yeah, on my street in Half Moon Bay there’s lots of houses for sale, but prices remain far higher than they are in Texas and other places in the world and over the hill in Palo Alto prices haven’t dropped at all.
3. The pull of VC money over on Sand Hill Road is dropping fast. Last night when I visited SmugMug’s offices CEO Don MacAskill told me he just hired some people with decades of experience and said “I never expected to be able to hire such talent.” If the stars of Silicon Valley are on the street looking for work, imagine what it’s like for regular everyday engineers.

But that’s just my stories. For California as a whole I’m sensing that the whole state is primed for a major brain drain.

Why? Our state is bankrupt. What was the response? Lay off a bunch of teachers. Our education system is already in the toilet, but this will make it worse. Other states, like Texas, that aren’t bankrupt and aren’t laying off teachers, are looking more and more attractive to parents. It’s that, or spend 10s of thousands on private schools.

There’s a general feeling that crime is getting worse. That’s part a PR problem due to four Oakland police officers getting killed last week, but how will we solve those problems if we don’t have any money to hire more cops, build more prisons, etc, etc? Callers to KGO radio yesterday made it sound like the crime problem is getting worse. Rubbed into the wound is the fact that as a state we’ve decided to stop spending money on education and I predict we’ll see the problem get even worse as uneducated kids hit the job market and find no one is willing to hire them. The crime rate is about to head up big time because of this.

Finally, entrepreneurs are figuring out that they can start companies elsewhere and do just fine. A month ago I visited Tatango up in Bellingham Washington. If you can start a startup in Bellingham you can start it anywhere. I have to admit that the small town life of Bellingham has many advantages for a startup. For one, your employees are going to be more loyal. For two, they will need less pay because housing costs 1/7th to 1/12th what it does in Palo Alto. For three, the whole community is vested in helping you out (they are the only tech startup in town).

In California’s defense, it’s still going to be hard for someone like me to leave because of the ecosystem that exists here, the weather, and generally the ability to ask anyone on the street what their Twitter address is and get back more than just a blank look, but the Texas Governor made it clear he was going to come after California’s entrepreneurs and what he’s offering workers and entrepreneurs is more and more attractive every day.

Is this a problem for California? Are we about to see a major brain drain? If we don’t fix the education problem and the economy doesn’t improve here soon to keep geeks from looking elsewhere, I’d say yes. I’m off to look at moving company stats. They are usually the first place to see evidence of a brain drain as people move out of state.

Are you seeing any evidence yet? Got family/friends/coworkers who’ve moved out of state?