A curious thing happened to me backstage at the 2021 SaaStr Annual in September, in the Green Room for speakers and other VIPs.  I had lunch with a group of investors I’d known for years, that didn’t even really know each other.

They’d all moved … to Austin.  With their families.  The entire table.  In fact, I was the only one still in the Bay Area at the table.  And I had no idea.  I had no idea they’d moved.

These weren’t NFT’ers, or crypto kings.  These were longer-time SaaS investors and execs.  Gone to Austin.

Personally, I both love Miami (we’ve done SaaStr meetups there for years) AND want the SF Bay Area to thrive.  We’ve done SaaStr and SaaStr Annual in the SF Bay Area for 8 years.  The CEOs of the leading SaaS companies are mostly all still here.

And yet …

It does seem the third wave of exodus is still to come.  It’s taxes … folks realizing they don’t have to pay 13.3% or more to California, especially on capital gains, if they move.  That they can move — every SaaS company is now distributed.  That they can fundraise over Zoom.  And really, it’s the fact that while I still bump into so many folks on the streets of Palo Alto (if not SF anymore), which is great … it’s not the same.  The density is gone.

And the more folks I talk to, the more I realize the third wave is still to come.  Some folks left in March and April 2020 … as soon as they could!  Others took some time to plan, realize tech was all digital now, and moved 6-12-15 months into Covid.

But there’s another group that stayed in the SF Bay Area because … stuff was here.  Kids.  Schools.  Sports.  A few folks on their team.   Auren Hoffman of Safegraph did a great post on how after Covid actually the number of folks on his management team went up in the SF Bay Area at first … but then declined.  And then he was the only one left.

It also doesn’t much seem like folks graduating from Stanford and Berkeley much care if they stay.  Many seem to want to go to L.A.  It’s warmer.  It’s got beach life.

So I’m still long on the SF Bay Area, at least, still hoping.  We still have 2 offices here.  Say Hi if you are in downtown Palo Alto and see me!!  Most VCs have stayed, most SaaS companies are still HQ’d here.  And most of the companies I’ve invested in, the CEOs are still here (not all, but still most).  It’s just the third wave of migration … it’s still to come.  As those ties fray, those kids graduate, those sports wind down, those leases end … folks with deeper ties are looking to leave in 2022, 2023, 2024.

That third wave is still to come.  How big will it be?  We’ll see.

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