Why some tech workers leaving Silicon Valley are changing jobs

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Tech companies in smaller cities are starting to see an uptick in applications from candidates living in San Francisco and New York — areas that have long had a grip on tech talent.

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Deepinder Singh, founder of a Bloomington, Minn.-based startup, had never bothered trying to recruit Silicon Valley tech workers. They were too expensive and didn't want to move. In seven years, he had never gotten an applicant from a large tech company.

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But since May, more than a dozen people on both coasts have applied for jobs with his company, 75F Inc., which makes internet-connected, energy-saving HVAC control systems. One résumé came from Facebook Inc.; another came from Twitter Inc. The 130-employee firm just hired an engineer from Sonos Inc.

He has seen the reverse — employees leaving for Google and Tesla — but, he said, "We've never actually seen this."

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For years, high-talent tech workers have been drawn to Silicon Valley, willing to put up with exorbitant housing prices and long commutes to benefit from the skill and experience of their colleagues, and the largess of employers and investors. The result, a culture of entrepreneurialism and inspiration, has been hard to match elsewhere.

But the remote-work era ushered in by the coronavirus pandemic is upending not only where tech workers want to live and how much money they can make, but also what kinds of opportunities they are willing to consider.

Executives at tech startups including Jane LLC in Lehi, Utah; World View Enterprises Inc. in Tucson, Ariz.; Starkey Hearing Technologies in Eden Prairie, Minn., and Zebra in Austin, Texas, say they are seeing an increase in applicants from San Francisco and, in some cases, New York.

Since May, the nonprofit One America Works has launched four virtual fairs for employers based in Indianapolis, Pittsburgh and Columbus, Ohio. Of more than 3,800 job seekers, around 25% were from California and another 9% were from New York.

It goes both ways: Tech giants are recruiting employees from smaller tech companies in places like Boise, Idaho. Yet even if only a small percentage of big-tech employees leave their current jobs and fan out across the U.S., economists say, the talent dispersal could meaningfully affect businesses, their home cities and even the flow of venture-capital funding.

"These companies are on a hiring spree," said Guy Berger, principal economist at LinkedIn. Covid-19 "has really given entrepreneurship and these small enterprises a kick in the butt to really ramp up," he said, citing the sudden shift in the kinds of goods and services customers are now demanding.

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Mr. Singh, the 75F founder, believes employees from Silicon Valley startups tend to have a broad set of skills. He said they don't generally need as much management and can be game to work crazy hours to launch a product. He said some people in the Midwest weren't as exposed to that kind of workplace culture, and a mix could be a good thing.

But one concern weighs on him as he considers interviewing candidates from Facebook and Twitter: "I don't even know what kind of salaries they're going to be paid or are thinking of."

Podium Corp., an 800-person Utah startup, also in Lehi, has hired six senior-level people from San Francisco-based companies including Lyft Inc. and Microsoft Corp.-owned GitHub Inc. in the past six months, and considered at least 600 Bay Area applicants in that time. That is two to three times the volume of typical years. Not all of Podium's new hires plan to relocate to Utah.

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Philip Luedtke was working as a GitHub vice president when he and his wife decided they wanted to leave the Bay Area for either Utah or Washington — most likely keeping his job. Then he received a call from Podium.

"This opportunity popped up," he said, "to really build and do something new and be in a different culture and environment." He added, "It pushed us over the edge in terms of where we wanted to relocate."

Mr. Luedtke's offer included what he describes as a substantial equity package. While it isn't uncommon for startups to lure employees away from larger companies through the potential for growth and wealth, those startups typically haven't been hundreds of miles away.

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If a startup can go to a venture-capital firm and say it recruited multiple engineers from top-tier Silicon Valley companies, it is more likely to get funding, said economist Ross DeVol, who runs Heartland Forward, a nonprofit focused on economic renewal. Not only do these employees bring enhanced technical skills, they also understand networking and might eventually build their own businesses, leading to increased jobs in their new hometowns.

"Even though the numbers may not be substantial — and I think they will be — but just a small percentage of this entrepreneurial talent can make a huge difference," he said.

As for why they are willing to take a chance on less-established employers, Mr. DeVol points to employees' increased interest in mission-driven companies and the belief they can have a bigger impact in less densely populated regions.

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AppHarvest, a Lexington, Ky.-based startup that builds energy-efficient indoor farms, recently hired two high-level employees from the Bay Area and another from New York City. Marcella Butler, its new chief people officer, was previously a director at Google and was chief people officer at Impossible Foods until September of last year.

Before she took the job with AppHarvest, Ms. Butler was in late-stage hiring talks with two Bay Area tech companies. While weighing her options, she recalled a friend's description of Silicon Valley's "culture of scarcity." Even though it is one of the world's richest areas, "there's never enough time, never enough equity, never enough," she remembered him saying.

In July, she got rid of her electric car, listed her Menlo Park, Calif., home and moved east. While Ms. Butler's compensation includes more equity than the other jobs she was considering, her base salary represents a reduction of more than $100,000.

"It might appear that my net pay is less, but my buying power and quality of life is unparalleled. It is not even a question," she said. "There is a richness to life that I did not find there."

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