Palantir Technologies Moves to Colorado
In August 2020, Palantir Technologies relocated from Palo Alto to Denver, Colorado. The move to Colorado may be more than a physical move alone. The company, which has deep ties to the US government, has signaled a move from the universal philosophy common in Silicon Valley. Specifically, Palantir management stated it would not work with China. Instead, the company plans to focus on serving the US and its allies.
Colorado also has a cost of living advantage over California. In Palo Alto, the median house price is more than $3 million, according to Zillow. In contrast, Zillow reports that Denver, CO homes have an average price under $500,000.
In Q3 2020, Palantir generated more than $700 million in the first nine months of 2020. For more insight on the company’s financials, see our article: Palantir Technologies Grow Revenue and Losses in Q3.
Oracle Moves Away From California
Oracle’s move away from California is much more significant. A smaller company like Palantir has the flexibility to make relatively fast moves. With more than 100,000 employees, Oracle’s decision to move away from California may signal the rest of the state’s technology titans.
In December 2020, Oracle announced that it was moving its headquarters from Redwood City, California, to Austin, Texas. The move attracted political interest from Texas Governor Greg Abbott, who stated on Twitter:
BREAKING: Oracle just announced they have moved their Headquarters to Austin. Texas is truly the land of business, jobs, and opportunity. We will continue to attract the very best.
Citing a need for flexibility, Oracle will allow employees to work where they desire: at one of the offices or elsewhere. Taxes and the cost of living may be part of the story as well. According to the MIT Living Wage Calculator, a family of two working adults and two children would need to earn a minimum annual income of $62,667 before taxes to achieve a living wage in Austin, Texas. In contrast, the same figure for San Mateo Country is $103,208. Oracle’s California headquarters is located in San Mateo County in Redwood City.
Hewlett Packard Enterprise Is Leaving, Too
While Oracle’s departure is significant, HPE’s move is even more dramatic. HP has been one of the world’s most long-lived technology companies. In Fiscal 2019, the company reported a $29 billion net revenue and served 90% of the Fortune Global 500. In contrast, HP Inc., which produces personal computing products, is planning to stay in California.
In 2015, HP separated into two companies: HPE, which focuses on the needs of large companies, and HP Inc., which makes products for consumers.
The California Cost of Living Challenge
In the future, movement away from California is likely to accelerate. The state’s cost of living challenges are unlikely to change in the near term. The problem is so severe that some in the technology industry have taken steps to address its economic challenges. Last year, Marc Benioff, the billionaire CEO of Salesforce, attributed California’s income inequality problems to Silicon Valley.
New York State May Be Next
Besides California, other higher-cost jurisdictions may start to lose companies and talented professionals due to the pandemic. Investment bank Goldman Sachs is looking at moving some of its staff to Florida. Likewise, with $41 billion under management, Elliott Management Corp is planning to move to Florida. Elliot Management has 100 employees, according to LinkedIn.
COVID-19 is a crucial driver for companies moving away from states with a higher cost of living. With millions of professionals working from home for months on end, the conventional wisdom requiring in-person office work has started to crumble. The trend has already started to hurt New York’s office building owners. A New York Times report found that more than half of companies surveyed will return to the offices by July 2021. By that date, employees and managers will have worked remotely for more than a year. That’s more than enough time to develop new habits, equip home offices, and raise questions about the value of long commutes.
About the Author
Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.