Mid-tier cities give a lot of bang for your buck -- Salt Lake, Phoenix, the midwestern midsized cities (Cleveland, St. Louis, Indianapolis, Kansas City, Pittsburgh), Atlanta, etc. Even Portland compared to other coastal options.
And even in some of the "very expensive" housing markets, you can still find homes that are affordable relative to income within 40 minutes of downtown areas. Chicago and Boston both come to mind.
The primary differences, as far as I can tell, are that:
1) Niche senior positions are harder to find in cheaper cities (think "deep hard tech expertise"). For example, nearly all of the major corporate research labs in CS (MSR, Google Brain, Google Research, IBM Research, Oracle Labs, ...) are in or around expensive CoL areas. On the startup side, "hard tech" startups are very often more capital-intensive so are even more attracted to geographic VC bubbles.
2) Moving up within BigCos is sometimes more difficult if you're in a satellite office.
One thing that seems strange to me as an outsider is how all your tech startups and companies are clustering in areas with very high cost of living. I don't know much about the US since I'm European but I do keep track of stuff around here on HN.
I can understand it from employee point of view - large city - big job market and naturally those places are also more desirable. But if you're going down the startup route you're already going to sacrifice things for a potentially big payout down the road (assuming you have stocks - right ?) which is why I would have no problem relocating to a cheaper/less desirable area in order to lower the operational costs and increase the chance of success.
Maybe I'm thinking about it wrong but unless you are doing B2B or direct sales location shouldn't matter more than having funds to stay operational/becoming profitable ?
One explanation I can come up with is that if you are looking for investors instead of profitability it makes sense to be closer to them - but at the same time that kind of feels like perverting incentives.
I was under the impression that the costs differences can be huge (2x) between regions - maybe that's not the case ?
You might be surprised if you don't require living in a highly walkable downtown core. In many places, such as Eastern Massachusetts, the jobs are pretty distributed around the area; it's only fairly recently that tech jobs have started to be located in the city at all. And you get an hour outside of Boston and there's quite a bit of housing in the $300-$400K range in many towns. That's not Midwest cheap but it's not $1.5M for a teardown either.
Of course, Cambridge and many areas of Boston proper are quite expensive (as are some of the tonier suburbs like Concord).
Silicon Valley is a bit unusual in that you can't really escape from high prices, in spite of being suburban sprawl, because of the geographical constraints.
Other cities with much better cost of living are gaining reputation in tech / start-ups and attracting talent (or just keeping the talent that went to school there).
There are a lot of places in the United States that are well between "middle of nowhere" and current high housing cost markets like San Francisco and NYC.
Technology wise I have heard of decent activity (including in a few of these cities some startup ventures) in places like Austin, the North Carolina research triangle, Miami, Boulder, Phoenix, Portland, Boston, etc. (Internationally, I'm sure there's some other markets people can add.) I have heard of housing costs creeping up in a few of these locations, but as far as I know, most of these still have pretty affordable housing compared to the Silicon Valley as a whole currently. Yes, the culture varies considerably between all these cities, but none of them I would describe as "middle of nowhere".
Not your OP and not answering your question directly, but the aforementioned "tech-to-housing cost" ratio isn't so straightforward for finding out where to work. For the record, your parent seems to have thrown out Houston anecdotally. AFAIK it doesn't have a tech scene much different than would be expected from a metro area of ~6M people but it's super cheap to live in as cities go.
The 'cheap' big cities (sticking to the US, those in the middle of the country: Chicago et Houston in particular) have just enough tech to show up on the hypothetical chart and are cheap enough to place well. But IMO, even as a U of Illinois alum and massive fan of Chicago, the tech density isn't such that you would be able to find particularly interesting work, especially compared to the Bay. That said, surely there enough startups that need app/web developers to pay your rent in those relatively inexpensive areas if that's your thing.
The cities that interest me are those with a high density of tech at a lower cost: Austin, Portland, Raleigh, etc. The Bay housing cost is trickling down there too; there are so many people making _so much_ in the Bay that still can't afford to stay that when they start moving to these places they can really affect the smaller markets. Austin has had a crazy housing boom in the last ~15 years, but it would take a _lot_ more people moving to Chicago to move the needle there.
You still face issues with inequality squashing culture, like in Austin, which has a strong history of art and music and is so much cheaper than the Bay but so much more expensive than the areas around it. Bigger cities can generally support the diversity of people needed to maintain a viable culture if they aren't 7x7 miles and surrounded by water on three sides like San Francisco is. In other words, you could move out of the Bay to one of these places and live happily for a few years before you find these same problems following you to your new home.
This is a bit of an exploration but I think about leaving the Bay daily as my wife and I get more serious about starting a family. We talk about this often, and to each family, it's the most important thing in their lives. SV is really in for a wake-up call as it sheds talent that can't afford to stay.
I grew up in the Bay Area and got a feel for the tech sector up there. People always throw around the "network" argument out there for why they decided to move up. Truth is you can get just as much networking in if you move to an emerging tech hub along with positioning yourself better by more easily establishing yourself/buying cheaper property. I'm looking at you Portland, San Diego, and Denver.
There are many cities in the US that are relatively inexpensive, but I'll name a few that I've experienced:
Atlanta, GA:
Good tech community. It's home of Georgia Tech and while it's no Silicon Valley, it is the home of a few startups, StartupRiot, and other startup-related activities. The weather is warmer than most places, but it still has seasons. You can find a place to rent pretty cheap here and the city is large enough to have some of the amenities you're looking for, including a million or so singles in the dating pool.
Charleston, SC:
Probably not quite as cheap as Atlanta, but it is beautiful and still quite cheap. Smaller in size, but not "middle of nowhere" small. Plus, there's the beach.
Florida:
Someone mentioned Miami, but if you seek warm weather and reasonable cost of living, Tampa, Orlando and other cities in Florida are great. The down side is that I don't think there is much startup activity, the upside is I've heard it's great for singles and there is beach, beach, theme parks, beach and probably a few other things to do in between hurricanes.
Athens, GA:
Smaller city, but a college town. See jboggan's comment.
These cities have the companies where people want to work at. They also pay handsomely. Seattle, for instance, is expensive, sure - but a grad a couple years after college can be making $200K easy in Seattle vs maybe just north of $100K in a place like OKC for a more senior role.
I would recommend techies go work at one of these big tech companies, at least for several years and save up for your future. Then move to the Midwest if your goal is to live in a suburb in a several thousand square foot home.
Startups and tech companies should pick a few midwestern or NE cities and open offices there.
Imagine if Cleveland Ohio was a tech hub and "cool" by any vague stretch that a western city is, housing there is practically free by west coast standards.
Any small city with computers, honestly. There are tens of thousands of senior developers, architects, programmer analysts etc that are making $100k or $125k or more in cities you've never heard of with a cost of living that is a small fraction of Silicon Valley. Yes, you're going to find a lot of .Net and Java work, but there's more cutting edge stuff as well (and plenty of the .Net and Java developers I know love talking about Vue or React or anything else tech).
But you need to be okay living in a city nobody's ever heard of, working for a company nobody's ever heard of, and not changing the world. But honestly 99.9% of the people working 80 hour weeks in VC funded start-ups writing the next big CRUD app aren't going to change the world either, and they're paying $3500/mo to rent a 1-bedroom while people in these small cities are paying $1k/mo for a 2-bedroom mortgage a 10 minute commute from their office.
Well, this assumes that the x %ile in smaller markets is interchangeable with the x %ile in the more expensive ones like SF, Seattle, NYC, Boston. But I know lots of people from cities like St. Louis who live in these much bigger tech cities because if you’re in the higher range in comp. for your years of experience, it’s just a much better deal being in the more expensive city. So I would guess that in these smaller cities, you will miss a lot of the top 10-20% developers
Some cities are really nice places to live with unique resources of their own. In Pittsburgh, for instance, there are fewer interesting software jobs but a beautiful city with a lot of exciting non-technical things going on, a healthy ecosystem around Carnegie Mellon, and very nice 1-BR apartments in the best, most central and walkable parts of town for $800/month. Not everything needs to circulate around the moonshot opportunities of the VC ecosystem.
Of all the "cites" you named Chicago is the most affordable and an actual city. Te big difference is the tech scene isn't nuts like in SV, Austin, etc the money is a lot smaller and the expectations are a lot higher -companies that don't make money aren't funded very long. That said Chicago is ranked the #9 city in North America and # 19 in the world for Startups and as I said compared to other startups in other cities our startups tend to make money. Having been in IT in some capacity for the last 35 years I'd say the IT scene in Chicago is strange and lagging behind other cities for reasons I just can't understand but if I was 24 and from a small town looking for city life Chicago is where I'd want to be- NYC is a close second and it would be number one if the housing was cheaper.
Having moved from one non-top-tier US city to another, look for an area that has a lot of tech activity spread across multiple industries. If there are a few startups in the area then that is better as well.
If there is a large downturn in the technology space, a place like Silicon Valley is going to see more of an impact. Multiple industries like tech, insurance, banking, biology/medicine, etc. in an area will help if there is a downturn in the economy for a specific industry.
I think Sacramento might be sub-optimal. I'll throw out a couple other tech cities that have a much, much, much lower cost of living, but still exciting developments. I think you can get to these places faster, and then develop skills or make some money or even attend college. (I'd actually recommend college first. I know it is fashionable to hate on college right now, but the overwhelming evidence is that it is still a good thing)
==Kansas City
Probably the heart of Silicon Prairie right now, it has amazing areas like the Kansas City Startup Village where hackers live together in houses next door to each other powered with Google Fiber. (Need help with something in iOS? Walk a house down and ask the guys in the other place. That type of thing) Not only is it a great city with great BBQ, beer and history, but it the biggest emerging tech scene in the Midwest. This includes, but isn't limited to http://eyeverify.com/http://www.gethandprint.com/ etc etc etc
==Lincoln, Nebraska
Home of the University of Nebraska, it is an emerging tech center with new accelerators and venture capital firms in its sister city like http://dundeeventurecapital.com/ (Omaha is an hour away by car) and other avenues for funding like http://www.investnebraska.com/ and the http://www.nebraskaangels.org/. The fastest growing private company in Nebraska is http://www.hudl.com/, which started as a 3-person startup, but now has 3 offices in two cities. Similarly, the university is in the process of launching Innovation Campus which almost doubles the land area of its campus and includes maker spaces, business accelerators, and more.
There seems to be no evidence that startups are significantly growing anywhere outside of the already well-known tech cities. And the main reason is because most of the talent that really wants to work in cutting-edge tech takes the initiative and relocates there to be with all the other people that really want to work in tech (barring some people who are taking care of sick or aging relatives, etc.) I'm not saying another city couldn't eventually displace SV, but it would require a huge shift in network effects.
Also, the cost of living argument is mostly nonsense. For large tech companies, even with spending $6,000 a month on an apartment, you still have a lot more left over after California taxes than the best tech employers in the Midwest or Southeast. When your total comp is 3x what you would make in an "affordable" city, does it really matter that rent is 1/3 of your income?
Atlanta is sufficiently cosmopolitan and citylike, yet considerably cheaper than almost any other metro area in the US with a significant technology sector. This means you get both (comparative) affordability and the benefits of being in an IT-savvy city. Sure, it's pretty ass-backward compared to, say, the Valley or NYC, but it's highly functional as an urban technology space. Don't underestimate it.
That alone can be a huge advantage to a startup, especially those going the bootstrap route who are not nearly as dependent on the systemic VC ecosystem but highly dependent on being close to other technology companies and/or corporate customers.
It's also a major telecom hub. That's why I stay here.
And even in some of the "very expensive" housing markets, you can still find homes that are affordable relative to income within 40 minutes of downtown areas. Chicago and Boston both come to mind.
The primary differences, as far as I can tell, are that:
1) Niche senior positions are harder to find in cheaper cities (think "deep hard tech expertise"). For example, nearly all of the major corporate research labs in CS (MSR, Google Brain, Google Research, IBM Research, Oracle Labs, ...) are in or around expensive CoL areas. On the startup side, "hard tech" startups are very often more capital-intensive so are even more attracted to geographic VC bubbles.
2) Moving up within BigCos is sometimes more difficult if you're in a satellite office.
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