Some Things I Learned In Silicon Valley

One of Google's self-driving cars.
One of Google’s self-driving cars.
Last week I attended something called the State Internet Policy Conference. The Conference, hosted by Apple, Facebook, Google, and Yahoo, featured tours of Facebook’s and Google’s headquarters and panel discussions on a host of topics. It was an informative conference and I was glad I was able to attend.

I thought I’d pass on a few things I learned.

1) Overall, California is not very business friendly, but the talent pool tech companies draw from is enormous. California’s personal and corporate income taxes are among the highest in the nation. So why do these companies stay there? The Left Coast still has several things in it’s favor, most notably local talent. The sheer volume of programmers in the area is enormous. Also, California’s laws on non-compete agreements greatly favor employees and independent contractors. This encourages job hopping and even striking out on your own should you come up with a good idea.

2) Policymakers better get used to turmoil because disruptive technologies aren’t going to end any time soon. If you thought Uber and AirBnB were the end of the turmoil caused by new technologies, think again. Autonomous vehicles are coming – fast. Drones to deliver small packages to your home or business are not far behind. There are plenty of other cool gadets being developed in labs across the Valley. Some of these will turn someone’s world upside down. Legislators will be faced with clashes between current law and technologies seeking to uproot the established order for the foreseeable future.

3) Tech companies spend a lot of money regularly upgrading equipment. Old models of taxation don’t fit these companies well. Here in Georgia, we give tax breaks for certain types of manufacturing and farming equipment. Tech companies regularly spend millions on computer equipment but receive no tax breaks on these purchases. Additionally, manufacturers and certain agriculture entities do not pay state sales tax on the electricity they consume. Data centers are not exempt from the tax on power, which costs them a lot of money and make Georgia less attractive when a tech company is looking to expand. It might be time to revisit how we tax tech companies. A few changes could enhance our state’s attractiveness to the tech industry.

Georgia is seen as an attractive place for tech companies. Google Fiber is moving into metro Atlanta, most of the major tech players have a presence here and are looking to grow, there are a number of data centers here, and we have a thriving gaming industry. One Google manager said to me (not knowing I was a Georgia Tech alum), “whatever you can do to keep Georgia Tech a top engineering school, do it.” Midtown’s Technology Square is a hotbed of high-tech activity. We’ve got a lot going for us here in Georgia and as long as we’re willing to adjust our policies to meet changing technological times, our tech sector should continue to grow and provide good paying jobs for our citizens.

13 comments

  1. saltycracker says:

    Reads like they were shopping for tax breaks rather than education on navigating the tech world of programs that help us run a more efficient and cross check in government.
    Which comes first ?

  2. gcp says:

    One thing business and politicians have in common; they both love tax breaks.

    Also it’s time to dump those silly GATE cards.

  3. Three Jack says:

    Buzz,

    Georgia under GOP leadership passed an extremely tight non-compete law that favors employers significantly over employees. The Supreme Court overturned it. So what do GOPers do, put forth one of those constitutional questions on a ballot that most folks cannot comprehend due to the lawyerization of the question. It of course passed so we are now under one of the most restrictive non-compete laws in the country – https://www.herbertsparks.com/georgia-overhauls-its-non-compete-agreements/

    Now that it is an amendment to the GA Constitution, not sure how you can reform but it definitely needs to happen. Bad idea at the time, even worse now that it is a law.

    • Dave Bearse says:

      “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?”

      It’s not incomprehensible. It’s the GaGOP’s idea of good business.

      • Dave Bearse says:

        Serves me right fro not reading all comments before making my own. The delete feature that I sought to use didn’t work for me.

  4. George Chidi says:

    The non-compete contract law in California is more friendly to the workforce than in Georgia because the legislature — at the prodding of AT&T and large tech employers — put an amendment on the ballot in 2010 to change the blue line reading of employment contracts.

    The ballot question read “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?”

    In essence, the amendment allowed judges to decide how to enforce an otherwise-unenforceable employment contract, while in California (and other states that care about working people more than business owners), the law requires an unenforceable employment contract to be nullified in its entirety.

    No senior high-performing technologist who ever plans to open a business in his or her field will choose a job in Georgia over one in California, simply because they could be shut out of the market for years by contract law.

    Thank you, (former) Rep. Levitas, for this bit of stupidity.

    • Three Jack says:

      Thanks George for adding clarity to my post. The wording of the amendment (as usual) was misleading thus resulting in a positive vote for those seeking to make employees permanent property of their current employer.

    • Charlie says:

      The thing that was so maddening/insulting about the campaign to pass this amendment was twofold:

      1) The supporters main talking point was “All the states have this but California. We don’t want to be like California, do we?” – when talking about fostering companies dependent on intellectual property.

      2) The people of Georgia bought that talking point.

  5. ATLguy says:

    @Buzz:

    You say in one place: “the talent pool tech companies draw from is enormous”
    and in another place: “we need tax credits/cuts to draw tech companies”

    Looks like you learned about as much from your trip as Coach Paul Johnson has all these years on the subject of hiring quality defensive coordinators (as opposed to guys who got fired by Auburn and UVa).

    California has a booming tech sector DESPITE not being one of the “best states to do business” because they have tons of tech talent with skills that only a tiny percentage of Georgia workers possess. And your response to that is still more tax cuts and credits instead of trying to emulate what California did to produce all that tech talent?

    1. The University of California is 10 institutions, all with STEM research programs that are better than anything in Georgia (especially in the “E” part of STEM) apart from Georgia Tech, and some of them (i.e. UCLA and Cal-Berkeley) are just as good as Tech.

    2. Cal State University is dozens of institutions (seriously) that produce over half the state’s bachelor’s and master’s degrees in STEM, including nearly half of the “E” part.

    But wait. There’s more. Can’t more be done to produce the sort of top tech talent that would go to a UCLA or Fresno State (or for our example, Georgia Tech or KSU) from our K-12 system? More rigorous, competitive programs? Relying on people barely capable of scraping together enough nickels to start charter schools isn’t going to get it done, especially if you are talking about having a network of high schools that can offer the level of STEM instruction that you see at a lot of the better STEM-focused high schools around the country … high schools that pretty much offer college (if not research university) level instruction. Magnet schools and magnet programs in urban and suburban areas is how the states that produce a lot of top STEM students (or actually top students in any area) … figuring out a way to get those in Georgia (that won’t provoke segregation lawsuits) will get us a lot further than lowering tax rates on data centers that are pretty much going to be built in metro Atlanta regardless no matter how much you tax them (why is another story for another day).

    Reagan conservatism was great, but had California been governed according to Reagan conservatism in the years when Reagan and George Deukmejian weren’t governor, Silicon Valley likely would have been founded in New Jersey. Texas? More of the same. Conservatives took over that state AFTER that state built much better research universities and public schools than southern states typically have, with George W. Bush, Rick Perry and Greg Abbott being able to pretend that all those tech companies are located in that state because of low taxes and regulations.

    • Raleigh says:

      I think the rise of Silicon Valley had more to do with Stanford University and the Stanford industrial Park coupled with the return home of William Shockley from New Jersey than anything California state government ever had anything to do with it. That area had High Tech roots going back to the turn of the 20th century. Tying it to anything Democrats OR Republicans ever did is just plain wrong.

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