Ohio becomes the first state to accept bitcoin for tax payments

Starting Monday, businesses in Ohio will be able to pay their taxes in bitcoin — making the state that’s high in the middle and round on both ends the first in the nation to accept cryptocurrency officially. Companies who want to take part in the program simply need to go to OhioCrypto.com and register to pay […]

Starting Monday, businesses in Ohio will be able to pay their taxes in bitcoin — making the state that’s high in the middle and round on both ends the first in the nation to accept cryptocurrency officially.

Companies who want to take part in the program simply need to go to OhioCrypto.com and register to pay whatever taxes their corporate hearts desire in crypto. It could be anything from cigarette sales taxes to employee withholding taxes, according to a report in The Wall Street Journal, which first noted the initiative.

The brain child of current Ohio state treasurer, Josh Mandel, the bitcoin program is intended to be a signal of the state’s broader ambitions to remake itself in a more tech-friendly image.

Already, Ohio has something of a technology hub forming in Columbus, Ohio, home to one of the largest venture capital funds in the midwest, Drive Capital . And Cleveland (the city once called “the mistake on the lake”) is trying to remake itself in cryptocurrency’s image with a new drive to rebrand the city as “Blockland”.

Whether anyone will look to take advantage of Ohio’s newfound embrace of digital currencies is debatable.

The cryptocurrency market is currently in the kind of free-fall (or collapse, or implosion, or conflagration, or all-consuming dumpster fire) that’s usually reserved for tulips in Holland in February 1637.

Other states around the country in the southeast, southwest and midwest also considered accepting bitcoin for taxes, but those initiatives in places like Arizona, Georgia, and Illinois never got past state legislatures.

The state is working with the cryptocurrency payment startup BitPay to handle its payments, which will convert the bitcoin to dollars.

 

The great Amazon swindle

Amazon has confirmed that it will open two massive new offices in New York City and Crystal City, Va., to complement its already massive headquarters in Seattle. And the verdict on the company’s decision is disgust. Amazon played everyone involved in the process: the governments that pandered to it and the media that covered it […]

Amazon has confirmed that it will open two massive new offices in New York City and Crystal City, Va., to complement its already massive headquarters in Seattle. And the verdict on the company’s decision is disgust.

Amazon played everyone involved in the process: the governments that pandered to it and the media that covered it (including us). Now it looks like the residents of these communities that will have to live with their new corporate neighbor are going to be left to pay for it.

In its search for a new office location or two, Amazon perverted the standard request-for-proposal process designed to provide transparency into how governments spend money on big projects. Either by design or happenstance, Amazon shat all over the process and the inherent transparency by which civic decisions are made.

That Amazon felt comfortable enough to flip the script and instead have cities bid for the largesse of a corporation was galling enough. The fact that cities across America actually did the company’s bidding was proof of just how feckless, toothless, and seemingly powerless government at every level in this country has become.

There couldn’t be a more perfect analogy for the return of the corporation as the central organizing principle in American life. And there couldn’t be a more perfect corporation to embody this than Amazon. City governments swooned, falling over themselves to offer even larger and more absurd concessions to Jeff Bezos’s behemoth.

The city of Stonecrest, Ga., offered to rename the town and make Jeff Bezos its permanent mayor should the company select it as the site for the new office “HQ2.” Birmingham, Ala., plastered fake Amazon boxes across the city and created a marketing campaign called “Bring A to B” to woo the “everything store.” Albany, N.Y.’s take was so pathos-inducing that it was eviscerated by The Onion.

There was some hope, early in the process, that Amazon would indeed settle on some location in the American heartland and serve as another catalyst for growth for regions that are beginning to climb out of the economic holes dug in the financial crisis of a decade ago.

Perhaps one of the Midwestern metropolises that are already seeing a resurgence would enjoy an even bigger jolt from Amazon bestowing 50,000 new jobs on a region that could use it.

Columbus, Ohio, has a burgeoning technology scene and is enjoying incredible growth. Denver and Boulder, Colo., are also reaping the fruit of a technology and startup renaissance in the state. Indeed, across the country hope sprung eternal that Bezos and Amazon would bring a torrent of job opportunities and investment to places that could be rejuvenated to make America great again.

Unfortunately it was all just a year of wishful, wistful, magical thinking.

There’s no doubt that Amazon, with its $797.6 billion market capitalization, is the unnecessary winner in all of this. Cities opened their books to the company to prove their viability as a second home for the retailing giant. In return, Amazon got reams of data on urban and exurban centers that it could use to develop the next wave of its white collar office space, and over $2 billion worth of tax breaks from the cities that it would eventually call home for its new offices. 

The big swindle?

New York City, which is offering up the bulk of the new tax incentives to Amazon, will be spending roughly $1.5 billion for the privilege of having Amazon strain its already overtaxed infrastructure with 25,000 new employees. Those tax breaks will cover things like the construction of a helipad for the new offices so executives won’t have to worry about the failing city subway system.

The city is giving Amazon its refundable tax credit through New York State’s Excelsior Program. That up-to-$1.2 billion grant was calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years and amounts to $48,000 per employee Amazon brings in.

New York also gave an additional cash grant from the Empire State Development Corp. of $325 million based on the square footage of buildings occupied over the next decade. The incentives are set to roll out over the 10-year timeframe based on the incremental jobs Amazon creates each year and as it reaches building occupancy targets.

The carrot that Amazon has dangled in front of New York (and Long Island City more specifically) is more than 25,000 full-time jobs and a $2.5 billion in investment from Amazon in 4 million square feet of office space (which could expand up to 8 million). Amazon estimates that tax revenue will bring in $10 billion over the next 20 years through investment and job creation with the jobs expected to pay out an average wage of $150,000.

With all of this, the devil is in the details. The company says New York is spending $48,000 in incentives for employees that will make $150,000 on average, while the median salary for an Amazon employee in 2017 was $28,446 (excluding Jeff Bezos who took in $1,681,840).

Advocates who follow the commercial development space aren’t so sure. “We are suspicious of the way the whole incentives news has been issued today,” said Greg LeRoy, executive director of the development subsidy watchdog group, GoodJobsFirst. “It’s very odd that the company itself put in the information itself. It looks to us that Amazon is trying to cook the cost-benefit books.”

LeRoy says that by checking the numbers that Amazon says New York will be spending, the total is closer to $61,000 per job, not $48,000. Then Amazon rushes out with the $150,000 average salary, but the numbers aren’t comparable. The tax bill on a $150,000 salary for the state of New York is roughly 31 percent. “They’re going to pay whatever the state rate is, which won’t begin to offset the $61,000,” says LeRoy. “If the deal succeeds, there’s going to be new public sector costs. And if Amazon isn’t paying its fair share then everyone else gets stuck with paying higher taxes or getting lousier services or a little bit of both.”

There’s another problem with the deal that Amazon struck in New York, according to LeRoy. Through the agreement, Amazon has said it will build some new infrastructure around Long Island City through something called a Payment In Lieu Of Tax program. That’s when a portion of Amazon’s property taxes are funneled directly into projects that are located in the Long Island City community. In its announcement, the company said that it would donate space on its campus for a tech startup incubator and for use by artists and industrial businesses, and that it will donate a site for a new primary or intermediary public school. The company will also invest in infrastructure improvements and new green spaces — all paid for by the PILOT program.

LeRoy calls it another subsidy.

As housing prices climb in Queens for rentals, cooperatives and condominiums, the neighborhood’s existing residents will likely be unable to afford the higher property prices. They’ll be moved out and essentially Amazon will be paying for infrastructure upgrades likely to be enjoyed solely by the company’s employees — again, at the expense of the broader tax base.

“Instead of going to development fund of the city instead it will go back to the PILOT district, diverting money to a small part of the city,” says LeRoy. “[Amazon is] getting more than $2 billion of subsidies for white collar workers to be part of the 2 percent.”

However, Amazon’s new offices will undoubtedly create new wealth for the cities that they settle in. An article in The Denver Post described how Seattle’s coffers had been enriched by becoming the epicenter of all things Amazon.

Amazon estimates its direct spending boosted Seattle’s economy by $38 billion from 2010 to 2016. Hotels are thriving thanks to visits by friends and family of Amazon workers, as well as by Amazon employees from elsewhere. The Downtown Seattle Association estimates $5 billion in construction activity was underway during the summer, with more than 30,000 residential units in the works.

If Amazon’s figures are correct, then New York City, and the Washington metropolitan area, are set to receive a windfall (with Nashville, Tenn., also looking to make out pretty well in the deal).

It’s all about transparency

The question is less about whether Amazon’s decision to site its satellite offices in certain cities will be a boon to those cities. Instead, it’s whether the residents who already live there should be able to have a say in whether or not Amazon can come in and reshape their cities in radical ways.

It’s this lack of transparency, as much as anything else that had commentators concerned, and local residents up in arms.

In fact, legislators in New York are already trying to find ways to have some say in the decision-making process, even, apparently after the fact.

In its defense Amazon and the officials who approved its deal have said that there would be no way to manage the process effectively if it went through normal channels. That’s the argument of autocrats and executives who want to move fast and break things, but the results of those policies are clear. When human lives and livelihood is at stake, perhaps it’s not the time to try and break things — especially in New York where everyone can tell you that everything is almost always already broken.

The tragedy for many citizens (who didn’t get a voice in the process), is that they understand something it seems their local politicians did not: Amazon would have likely come anyway.

Perhaps not in the same numbers, but certainly there would be no way for a company whose ambitions exceed almost every possible limit, to not have a significant presence in America’s media and political capitols.

There’s no better, or more succinct expression of Jeff Bezos’ goals with Amazon than this description of the company’s ambitions from The Nation. 

To think of Amazon as a retailer, though, is to profoundly misjudge the scope of what its founder and chief executive, Jeff Bezos, has set out to do. It’s not simply that Amazon does so much more than sell stuff—that it also produces hit television shows and movies; publishes books; designs digital devices; underwrites loans; delivers restaurant orders; sells a growing share of the Web’s advertising; manages the data of US intelligence agencies; operates the world’s largest streaming video-game platform; manufactures a growing array of products, from blouses to batteries; and is even venturing into health care.

Instead, it’s that Bezos has designed his company for a far more radical goal than merely dominating markets; he’s built Amazon to replace them. His vision is for Amazon to become the underlying infrastructure that commerce runs on.

Indeed, Amazon is pretty transparent about what its aims are. And its business units are beginning to rival those of its Chinese counterparts — although they’re far more beholden to the state.

What might have been

There’s an Earth 2 version of this current situation where Amazon actually didn’t engage in a cynical inversion of normal government practices. One where the company actually scoured the country and looked for places to put a slew of reasonably sized offices staffed with some of the best and the brightest. Or chose two or three (or four) locations around the country from which to consolidate its position as America’s engine of commercial activity.

The results may have been still more power and influence for Bezos. But it could have been done with the input of the community that it would be impacting. And the choice could have been made publicly, with comment and input from all corners in an openly transparent process. Typically, that’s how government requests for proposal work.

How to get to the polls for free at the 2018 midterm elections

In case you haven’t heard, polls will open Tuesday morning across the U.S. for the 2018 midterm elections. It’s a big deal, so go vote. And this year, there are more free ways to get to the polls than ever before thanks to a variety of non-partisan “get the vote out” campaigns from ride-hailing, bike-sharing […]

In case you haven’t heard, polls will open Tuesday morning across the U.S. for the 2018 midterm elections. It’s a big deal, so go vote.

And this year, there are more free ways to get to the polls than ever before thanks to a variety of non-partisan “get the vote out” campaigns from ride-hailing, bike-sharing and scooter companies.

Here’s a handy list.

By bike

Motivate, one of the largest bike-share operators in North America, has launched an Election Day campaign to give people in nine urban areas access to free bikes for the day.

Motivate operates Citi Bike in New York & Jersey City; Divvy in Chicago; Bluebikes in the Boston metro area; Capital Bikeshare in Washington, D.C.; Nice Ride Minnesota in Minneapolis; Ford GoBike in the San Francisco Bay Area); BIKETOWN in Portland, Oregon; and CoGo in Columbus, Ohio.

Riders across almost every Motivate system can use the code BIKETOVOTE in their local bike-share app to access a free day pass. In Chicago, Divvy riders must use the code VOTE18 to access the free day pass.

Portland has a vote-by-mail system. But BIKETOWN riders can use the code BIKE2VOTE to access 30 minutes of free ride time on November 6.

Lime is also offering free access to its fleet of electric bikes on Election Day. Users just need to enter the code LIME2VOTE18 to unlock any of its shared bikes or electric bikes.

Los Angeles’ bike-share program, Metro Bike Share, will also offer free rides on November 6. Use the promo code 1162018 at any kiosk to get your free 30-minute ride. The promo code is good for one Single Ride. Rides are $1.75 per 30 minutes thereafter.

By car

Depending how far you are from the polls, these ride-hailing offers could be free. At least one way.

Uber is giving $10 off a single ride to the polls on Election Day on the most affordable Uber option available in your city (Express POOL, POOL or UberX, in that order). To access, open the app and then tap menu > payment > add promo code. Enter the promo code VOTE2018. Users should then request their ride using Uber’s polling place locator, right in the Uber app.

Uber’s promotional offer is not available for rides from polling locations and is not available at all in Michigan, Puerto Rico or other U.S. territories.

Lyft is working with Vote.org, Nonprofit Vote, TurboVote and other organizations to distribute codes to those who need them. The ride-hailing company is offering 50 percent off rides and free rides in underserved communities.

To claim your 50 percent off promo code, click on this link and then enter your ZIP code. You’ll see the promo code in your app on Election Day. Promo codes are valid for 50 percent off any standard ride to a polling location on Election Day, up to $5.

By public transit

A number of transit agencies in some of the country’s largest cities are offering free rides, including Houston, Dallas, Tampa and San Antonio. This year, the Los Angeles Metro system, which serves more than 1.3 million passengers daily, is joining in.

LA metro transit is offering free bus and train rides on Election Day. LADOT, Long Beach Transit, Baldwin Park Transit, Pasadena Transit and Santa Clarita Transit in the Los Angeles area are among those offering free rides. Paratransit customers will also receive free rides to and from their polling place.

By scooter

Lime is offering free access to its fleet of electric scooters on November 6. Users enter the same code, LIME2VOTE18, to unlock any of its scooters, or its shared and electric bikes. The free rides to and from your polling location last up to 30 minutes and are available in more than 100 cities across the U.S.

Skip Scooters, which operates in San Francisco, Portland and Washington, D.C., is offering $5 rides to the polls.

more 2018 US Midterm Election coverage

The next big restaurant chain may not own any kitchens

If investors at some of the biggest technology companies are right, the next big restaurant chain could have no kitchens of its own. These venture capitalists think the same forces that have transformed transportation, media, retail and logistics will also work their way through prepared food businesses. The Battle Is For The Customer Interface Investors […]

If investors at some of the biggest technology companies are right, the next big restaurant chain could have no kitchens of its own.

These venture capitalists think the same forces that have transformed transportation, media, retail and logistics will also work their way through prepared food businesses.

Investors are pouring millions into the creation of a network of shared kitchens, storage facilities, and pickup counters that established chains and new food entrepreneurs can access to cut down on overhead and quickly spin up new concepts in fast food and casual dining.

Powering all of this is a food delivery market that could grow from $35 billion to a $365 billion industry by 2030, according to a report from UBS’s research group, the “Evidence Lab”.

“We’ve had conversations with the biggest and fastest growing restaurant brands in the country and even some of the casual brands,” said Jim Collins, a serial entrepreneur, restauranteur, and the chief executive of the food-service startup, Kitchen United. “In every board room for every major restaurant brand in the country… the number one conversation surrounds the topic of how are we going to address [off-premise diners].”

Collins’ company just raised $10 million in a funding round led by GV, the investment arm of Google parent company, Alphabet. But Alphabet’s investment team is far from the only group investing in the restaurant infrastructure as a service business.

Perhaps the best capitalized company focusing on distributed kitchens is CloudKitchens, one of two subsidiaries owned by the holding company City Storage Solutions.

Cloud Kitchens and its sister company Cloud Retail are the two arms of the new venture from Uber co-founder and former chief executive, Travis Kalanick, which was formed with a $150 million investment.

As we reported at the time, Travis announced that he would be starting a new fund with the riches he made from Uber shares sold in its most recent major secondary round. Kalanick said his 10100, or “ten one hundred”, fund would be geared toward “large-scale job creation,” with investments in real estate, e-commerce, and “emerging innovation in India and China.”

If anyone is aware of the massive market potential for leveraging on-demand services, it’s Kalanick. Especially since he was one of the architects of the infrastructure that has made it possible.

Other deep pocketed companies have also stepped into the fray. Late last year Acre Venture Partners, the investment arm formed by The Campbell Soup Co., participated in a $13 million investment for Pilotworks, another distributed kitchen operator based in Brooklyn.

Meanwhile, Kitchen United has been busy putting together a deep bench of executive talent culled from some of the largest and most successful American fast food restaurant chains.

Former Taco Bell Chief Development Officer, Meredith Sandland, joined the company earlier this year as its chief operating officer, while former McDonald’s executive Atul Sood, who oversaw the burger giant’s relationship with online delivery services, has come aboard as Kitchen United’s Chief Business Officer.

The millions of dollars spicing up this new business model investors are serving up could be considered the second iteration of a food startup wave.

An earlier generation of prepared food startups crashed and burned while trying to spin up just this type of vision with investments in their own infrastructure. New York celebrity chef David Chang, the owner and creator of the city’s famous Momofuku restaurants (and Milk Bar, and Ma Peche), was an investor in Maple, a new delivery-only food startup that raised $25 million before it was shut down and its technology was absorbed into the European, delivery service, Deliveroo.

Ando, which Chang founded, was another attempt at creating a business with a single storefront for takeout and a massive reliance on delivery services to do the heavy lifting of entering new neighborhoods and markets. That company wound up getting acquired by UberEats after raising $7 million in venture funding.

Those losses are slight compared to the woes of investors in companies like Munchery, ($125.4 million) Sprig, ($56.7 million) and SpoonRocket ($13 million). Sprig and Spoonrocket are now defunct, and Munchery had to pull back from markets in Los Angeles, New York, and Seattle as it fights for survival. The company also reportedly was looking at recapitalizing earlier in the year at a greatly reduced valuation.

What gives companies like Kitchen United, Pilotworks and Cloud Kitchens hope is that they’re not required to actually create the next big successful concept in fast food or casual dining. They just have to enable it.

Kitchen United just opened a 12,000 square foot facility in Pasadena for just that purpose — and has plans to open more locations in West Los Angeles; Jersey City, N.J.; Atlanta; Columbus, Ohio; Phoenix; Seattle and Denver. Its competitor, Pilotworks, already has operations in Brooklyn, Chicago, Dallas, and Providence, R.I.

While the two companies have similar visions, they’re currently pursuing different initial customers. Pilotworks has pitched itself as a recipe for success for new food entrepreneurs. Kitchen United, by comparison is giving successful local, regional, and national brands a way to expand their footprint without investing in real estate.

“One of the directions that the company was thinking of going was toward the restaurant industry and the second was in the food service entrepreneurial sector,” said Collins. “Would it be a company that served restaurants with their expansions? Now, we’re in deep discussions with all kinds of restaurants.”

Smaller national fast food chains like Chick-Fil-A or Shake Shack, or fast casual chains like Dennys and Shoney’s could be customers, said Collins. So could local companies that are trying to expand their regional footprint. Los Angeles’ famous Canter’s Deli is a Kitchen United customer (and an early adopter of a number of new restaurant innovations) and so is The Lost Cuban Kitchen, an Iowa-based Cuban restaurant that’s expanding to Los Angeles.

Kitchen United is looking to create kitchen centers that can house between 10-20 restaurants in converted warehouses, big box retail and light industrial locations.

Using demographic data and “demand mapping” for specific cuisines, Kitchen United said that it can provide optimal locations and site the right restaurant to meet consumer demand. The company is also pitching labor management, menu management and delivery tools to help streamline the process of getting a new location up and running.

“In all of the facilities, all of the restaurants have their own four-walled space,” says Collins. “There’s shared infrastructure outside of that.”

Some of that infrastructure is taking food deliveries and an ability to serve as a central hub for local supplier, according to Collins. “One of the things that we’re going to be launching relatively soon here in Pasadena, is actually in-service days where local supplier and purveyors can come in and meet with seven restaurants at once.”

It’s also possible that restaurants in the Kitchen United spaces could take advantage of restaurant technologies being developed by one of the startup’s sister companies through Cali Group, a holding company for a number of different e-sports, retail, and food technology startups.

The Pasadena-based kitchen company was founded by Harry Tsao, an investor in food technology (and a part owner of the Golden State Warriors and the Los Angeles Football Club) through his fund Avista Investments; and John Miller, a serial entrepreneur who founded the Cali Group.

In fact, Kitchen United operates as a Cali Group portfolio company alongside Miso Robotics, the developer of the burger flipping robot, Flippy; Caliburger, an In-n-Out clone first developed by Miller in Shanghai and brought back to the U.S.; and FunWall, a display technology for online gaming in retail settings.

“Kitchen United’s data-driven approach to flexible kitchen spaces unlocks critical value for national, regional, and local restaurant chains looking to expand into new markets,” said Adam Ghobarah, general partner at GV, and a new director on the Kitchen United board. “The founding team’s experience in scaling — in addition to diverse exposure to national chains, regional brands, regional franchises, and small upstart eateries — puts Kitchen United in a strong position to accelerate food innovation.”

GV’s Ghobarah actually sees the investment of a piece with other bets that Alphabet’s venture capital arm has made around the food industry.

The firm is a backer of the fully automated hamburger preparation company, Creator, which has raised roughly $28 million to develop its hamburger making robot (if Securities and Exchange Commission filings can be believed). And it has backed the containerized farming startup, Bowery Farming, with a $20 million investment.

Ghobarah sees an entirely new food distribution ecosystem built up around facilities where Bowery’s farms are colocated with Kitchen United’s restaurants to reduce logistical hurdles and create new hubs.

“As urban farming like Bowery scales up… that becomes more and more realistic,” Ghobarah said. “The other thing that really stands out when you have flexible locations … all of the thousands of people who want to own a restaurant now have access. It’s not really all regional chains and national chains… With a satellite location like this… [a restaurant]… can break even at one third of the order volume.”

 

May Mobility puts autonomous shuttles on the streets of Columbus, Ohio

This December a set of autonomous vehicles will start roaming the streets of Columbus, Ohio in an effort to turn this bustling midwestern community into the first smart city. The project, which is part of the Smart Columbus and DriveOhio initiatives, is the first step in launching a fully autonomous shuttle route in the city. […]

This December a set of autonomous vehicles will start roaming the streets of Columbus, Ohio in an effort to turn this bustling midwestern community into the first smart city. The project, which is part of the Smart Columbus and DriveOhio initiatives, is the first step in launching a fully autonomous shuttle route in the city.

“We’re proud to have the first self-driving shuttle in Ohio being tested on the streets of Columbus,” said Mayor Andrew J. Ginther. “This pilot will shape future uses of this emerging technology in Columbus and the nation. Residents win when we add more mobility options to our transportation ecosystem – making it easier to get to work, school or local attractions.”

Michigan-based May Mobility provided the shuttles and the team is training the autonomous vehicles to navigate Columbus streets. May Mobility already launched their vehicles in Detroit and this is the second full implementation of the tech.

The six-seater electric shuttles will follow a 3 mile route through downtown Columbus and the vehicles will start picking up passengers on December 1. Rides are free. May Mobility has already performed over 10,000 successful trips in Detroit. In Columbus the shuttles will drive the Scioto Mile loop, a scenic route through the city and by the Ohio River. A large digital display will show system information and there will be a single operator to oversee the trip and take control in case of emergency.

Founder Edwin Olson is a robotics professor at the University of Michigan and his team won the original DARPA challenge in 2007.

“Cities are seeking cost-effective transportation services that will improve congestion in urban cores, and self-driving shuttles can offer a huge relief,” he said. “As we work toward a future where people can drive less and live more, we’re thrilled to be working with partners from Columbus to provide a new transportation experience that will make traveling through Columbus safe, reliable and personal.”

Columbus won the $40 million Smart City Challenge in June 2016 to test and implement smart city tech.

VCs say Silicon Valley isn’t the gold mine it used to be

In the days leading up to TechCrunch Disrupt SF 2018, The Economist published the cover story, ‘Why Startups Are Leaving Silicon Valley.’ The author outlined reasons why the Valley has “peaked.” Venture capital investors are deploying capital outside the Bay Area more than ever before. High-profile entrepreneurs and investors, Peter Thiel, for example, have left. Rising […]

In the days leading up to TechCrunch Disrupt SF 2018, The Economist published the cover story, ‘Why Startups Are Leaving Silicon Valley.’

The author outlined reasons why the Valley has “peaked.” Venture capital investors are deploying capital outside the Bay Area more than ever before. High-profile entrepreneurs and investors, Peter Thiel, for example, have left. Rising rents are making it impossible for new blood to make a living, let alone build businesses. And according to a recent survey, 46 percent of Bay Area residents want to get the hell out, an increase from 34 percent two years ago.

Needless to say, the future of Silicon Valley was top of mind on stage at Disrupt.

“It’s hard to make a difference in San Francisco as a single entrepreneur,” said J.D. Vance, the author of ‘Hillbilly Elegy’ and a managing partner at Revolution’s Rise of the Rest Fund, which backs seed-stage companies based outside Silicon Valley. “It’s not as a hard to make a difference as a successful entrepreneur in Columbus, Ohio.”

In conversation with Vance, Revolution CEO Steve Case said he’s noticed a “mega-trend” emerging. Founders from cities like Pittsburgh, Detroit or Portland are opting to stay in their hometowns instead of moving to U.S. innovation hubs like San Francisco.

“The sense that you have to be here or you can’t play is going to start diminishing.”

“We are seeing the beginnings of a slowing of what has been a brain drain the last 20 years,” Case said. “It’s not just watching where the capital flows, it’s watching where the talent flows. And the sense that you have to be here or you can’t play is going to start diminishing.”

Farewell, San Francisco

“It’s too expensive to live here,” said Aileen Lee, the founder of seed-stage VC firm Cowboy Ventures, amid a conversation with leading venture capitalists Spark Capital general partner Megan Quinn and Benchmark general partner Sarah Tavel .

“I know that there are a lot of people in the Bay Area that are trying to work on that problem and I hope that they are successful,” Lee added. “It’s an amazing place to live and we’ve made it really challenging for people to live here and not worry about making ends meet.”

One of Cowboy’s portfolio companies opted to relocate from Silicon Valley to Colorado when it came time to scale their business. That kind of move would’ve historically been seen as a failure. Today, it may be a sign of strong business acumen.

Quinn said that of all 28 of Spark’s growth-stage portfolio companies, Raleigh, North Carolina-based Pendo has the easiest time recruiting folks locally and from the Bay Area.

She advises her Bay Area-based late-stage companies to open a second office outside of the Valley where lower-cost talent is available.

“We often say go to [flySFO.com], draw a three-hour circle around San Francisco where they have direct flights, find a city that has a university and open up a second office as quickly as possible,” Quinn said.

Still, all three firms invest in a lot of companies based in San Francisco. Of Benchmark’s 10 most recent investments, for example, eight were based in SF, according to Crunchbase.

“I used to believe really strongly if you wanted to build a multi-billion dollar company you had to be based here,” Tavel said. “I’ve stopped giving that soap speech.”

Underestimated talent

A lot of Bay Area VCs have been blind to the droves of tech talent located outside the region. Believe it or not, there are great engineers in America’s small- and medium-sized markets too.

At Disrupt, Backstage Capital founder Arlan Hamilton announced the firm would launch an accelerator to further amplify companies led by underestimated founders. The program will have cohorts based in four cities; San Francisco was noticeably absent from that list.

Instead, the firm, which invests in underrepresented founders and recently raised a $36 million fund, will work with companies in Philadelphia, Los Angeles, London and one more city, which will be determined by a public vote. Aniyia Williams, the founder of Tinsel and Black & Brown Founders, will spearhead the Philadelphia effort.

“For us, it’s about closing that wealth gap to address inequity in tech,” Williams said. “There needs to be more active participation from everyone.”

Hamilton added that for her, the tech talent in LA and London is undeniable.

“There is a lot of money and a lot of investors … it reminds me of three years ago in Silicon Valley,” Hamilton said.

Silicon Valley vs. China

Silicon Valley’s demise may not be just as a result of increased costs of living or investors overlooking talent in other geographies. It may be because of heightened competition abroad.

Doug Leone, an early- and growth-stage investor at Sequoia Capital, said at Disrupt that he’s noticed a very different work ethic in China.

Chinese entrepreneurs, he explained, are more ruthless than their American counterparts and they’re putting in a whole lot more hours.

“I’ve had dinner in China until after 10 p.m. and people go to work after 10 p.m.,” Leone recalled.

“We don’t see that in the U.S. I’m not saying the U.S. founders oughta do that but those are the differences. They are similar in character. They are similar in dreams. They are similar in how they want to change the world. They are ultra-driven … The Chinese founders have a half other gear because I think they are a little more desperate.”

Much of this, however, has been said before and still, somehow, Silicon Valley remained the place to be for investors and startup entrepreneurs.

The reality is, those engaged in tech culture are always anxiously awaiting for the bubble to pop, the market to crash and for “peak Valley” to finally arrive.

Maybe, just maybe, Silicon Valley is forever.

Here’s more of our coverage of Disrupt 2018.

VCs say Silicon Valley isn’t the gold mine it used to be

In the days leading up to TechCrunch Disrupt SF 2018, The Economist published the cover story, ‘Why Startups Are Leaving Silicon Valley.’ The author outlined reasons why the Valley has “peaked.” Venture capital investors are deploying capital outside the Bay Area more than ever before. High-profile entrepreneurs and investors, Peter Thiel, for example, have left. Rising […]

In the days leading up to TechCrunch Disrupt SF 2018, The Economist published the cover story, ‘Why Startups Are Leaving Silicon Valley.’

The author outlined reasons why the Valley has “peaked.” Venture capital investors are deploying capital outside the Bay Area more than ever before. High-profile entrepreneurs and investors, Peter Thiel, for example, have left. Rising rents are making it impossible for new blood to make a living, let alone build businesses. And according to a recent survey, 46 percent of Bay Area residents want to get the hell out, an increase from 34 percent two years ago.

Needless to say, the future of Silicon Valley was top of mind on stage at Disrupt.

“It’s hard to make a difference in San Francisco as a single entrepreneur,” said J.D. Vance, the author of ‘Hillbilly Elegy’ and a managing partner at Revolution’s Rise of the Rest Fund, which backs seed-stage companies based outside Silicon Valley. “It’s not as a hard to make a difference as a successful entrepreneur in Columbus, Ohio.”

In conversation with Vance, Revolution CEO Steve Case said he’s noticed a “mega-trend” emerging. Founders from cities like Pittsburgh, Detroit or Portland are opting to stay in their hometowns instead of moving to U.S. innovation hubs like San Francisco.

“The sense that you have to be here or you can’t play is going to start diminishing.”

“We are seeing the beginnings of a slowing of what has been a brain drain the last 20 years,” Case said. “It’s not just watching where the capital flows, it’s watching where the talent flows. And the sense that you have to be here or you can’t play is going to start diminishing.”

Farewell, San Francisco

“It’s too expensive to live here,” said Aileen Lee, the founder of seed-stage VC firm Cowboy Ventures, amid a conversation with leading venture capitalists Spark Capital general partner Megan Quinn and Benchmark general partner Sarah Tavel .

“I know that there are a lot of people in the Bay Area that are trying to work on that problem and I hope that they are successful,” Lee added. “It’s an amazing place to live and we’ve made it really challenging for people to live here and not worry about making ends meet.”

One of Cowboy’s portfolio companies opted to relocate from Silicon Valley to Colorado when it came time to scale their business. That kind of move would’ve historically been seen as a failure. Today, it may be a sign of strong business acumen.

Quinn said that of all 28 of Spark’s growth-stage portfolio companies, Raleigh, North Carolina-based Pendo has the easiest time recruiting folks locally and from the Bay Area.

She advises her Bay Area-based late-stage companies to open a second office outside of the Valley where lower-cost talent is available.

“We often say go to [flySFO.com], draw a three-hour circle around San Francisco where they have direct flights, find a city that has a university and open up a second office as quickly as possible,” Quinn said.

Still, all three firms invest in a lot of companies based in San Francisco. Of Benchmark’s 10 most recent investments, for example, eight were based in SF, according to Crunchbase.

“I used to believe really strongly if you wanted to build a multi-billion dollar company you had to be based here,” Tavel said. “I’ve stopped giving that soap speech.”

Underestimated talent

A lot of Bay Area VCs have been blind to the droves of tech talent located outside the region. Believe it or not, there are great engineers in America’s small- and medium-sized markets too.

At Disrupt, Backstage Capital founder Arlan Hamilton announced the firm would launch an accelerator to further amplify companies led by underestimated founders. The program will have cohorts based in four cities; San Francisco was noticeably absent from that list.

Instead, the firm, which invests in underrepresented founders and recently raised a $36 million fund, will work with companies in Philadelphia, Los Angeles, London and one more city, which will be determined by a public vote. Aniyia Williams, the founder of Tinsel and Black & Brown Founders, will spearhead the Philadelphia effort.

“For us, it’s about closing that wealth gap to address inequity in tech,” Williams said. “There needs to be more active participation from everyone.”

Hamilton added that for her, the tech talent in LA and London is undeniable.

“There is a lot of money and a lot of investors … it reminds me of three years ago in Silicon Valley,” Hamilton said.

Silicon Valley vs. China

Silicon Valley’s demise may not be just as a result of increased costs of living or investors overlooking talent in other geographies. It may be because of heightened competition abroad.

Doug Leone, an early- and growth-stage investor at Sequoia Capital, said at Disrupt that he’s noticed a very different work ethic in China.

Chinese entrepreneurs, he explained, are more ruthless than their American counterparts and they’re putting in a whole lot more hours.

“I’ve had dinner in China until after 10 p.m. and people go to work after 10 p.m.,” Leone recalled.

“We don’t see that in the U.S. I’m not saying the U.S. founders oughta do that but those are the differences. They are similar in character. They are similar in dreams. They are similar in how they want to change the world. They are ultra-driven … The Chinese founders have a half other gear because I think they are a little more desperate.”

Much of this, however, has been said before and still, somehow, Silicon Valley remained the place to be for investors and startup entrepreneurs.

The reality is, those engaged in tech culture are always anxiously awaiting for the bubble to pop, the market to crash and for “peak Valley” to finally arrive.

Maybe, just maybe, Silicon Valley is forever.

Here’s more of our coverage of Disrupt 2018.