Austin has been growing at a remarkable rate for more than a decade.
The 2020 census reported a population of 961,855, up from 790,491 in 2010, making Austin the fourth largest city in Texas and 11th largest in the nation. The metro area has more than two million people.
In addition to people drawn to the lifestyle, geography and opportunities of Austin, high-tech companies have planted electronic roots in the heart of Texas, including Apple, Texas Instruments, eBay and many more. The area is known as Silicon Hills.
The Texas Public Policy Foundation teamed with the Lincoln Network and REX to hold a discussion Oct. 12 on why Austin’s technology industry is booming, and what is luring people and companies to the capital city during a night of conversation, cocktails and networking.
Garrett Johnson, executive director of the Lincoln Network, served as moderator. He said Lincoln, based in San Francisco, seeks to serve as a bridge between the tech industry and policymakers in Washington, D.C.
Panelists included Stacy Hock, a Texas Public Policy Foundation board member, engineer, philanthropist, public policy activist and private investor, Geoff Lewis, a former partner at Founders Fund and founder and managing partner of Bedrock and Jack Ryan, a former partner at Goldman Sachs who then taught in an Illinois high school, and is co-founder and CEO of REX.
Texas Public Policy Foundation CEO Kevin Roberts introduced the event.
Johnson noted he was not a Texan, and had recently left California after a decade and moved to Florida. It seems like it's a competition right now between Florida and Texas, he said.
“Those are your two options if you want to escape wherever you are and enjoy the liberty and freedom that those states have to offer,” Johnson said. “How many people here think that the move out of places like California or New York is real, that there is a real migration happening caused in part by COVID-19?"
The audience indicated it believed this trend will continue for some time.
“I think it's important for us to unpack that and understand why Texas is really becoming something that everyone is fascinated about and trying to understand what's going on,” Johnson said.
Ryan explained why he chose to live and work in Austin.
“I think the reason that Austin, Texas, will continue to grow is not because of COVID-19. I think it's because of freedom and culture,” he said. “I think independent of COVID-19, you would see a great migration to Austin. I think for any city that's trying to become great like Austin it is because of freedom and culture."
Ryan said his business, residential real estate brokerage, lacks both.
“In the U.S. it costs about 5% to 6% to sell a home? But in the United Kingdom, it's about 1 to 2%,” he said. “Why would it be in the U.S. in a free country that it cost two to three times as much to sell a home as it does in most developed countries in the U.S.? Does that strike you as peculiar? That would be the case. And why is it always the same, whether you live in Austin or Detroit or San Francisco or New York? It's always the same fee.”
Other prices have dropped markedly in recent years, Ryan said.
“When the economy went into a 15% decline during COVID-19, the price of everything dropped,” he said. “Except for one thing. Guess which one? Residential real estate fees, isn't that weird no matter the situation. The fee is 5 to 6%. It shows there's a lack of freedom. When the fire sounds like it's set by a government entity, in this case, it's a trade group called the National Association of Realtors.”
Ryan said bad things happen without a culture of hard work and freedom, mentioning Detroit, when people try to sell a home to move into a better school district for their kids, but struggle to pay the high fee imposed.
Lewis was asked what motivated his move from California to Texas?
“I moved to Silicon Valley in 2010, and San Francisco was really not the center of Silicon Valley at that point,” he said. “The tech industry was really still centered down in the South Bay and in areas that looked a lot like suburban Houston. And around the time I sold my startup and joined Founders Fund and began investing in 2012. There was this massive migration of entrepreneurial energy to the city of San Francisco.
“And this real belief among technologists that are living in San Francisco is really akin to living in sort of Renaissance Florence, something like that," he added. "You actually would hear people talking of San Francisco like this. “Instead of these incredible sort of frescoes like they had in Florence and paintings and beautiful, beautiful statues, you have cocktail bars in San Francisco and sort of public car parks for the homeless people to live in and things like some of these things along the way that seemed maybe not quite the same as parts in the Renaissance, but nonetheless you had the tech industry sort of continuing to continuing to believe this."
He said commercial real estate rents in San Francisco was out of control.
“You have landlords in San Francisco, capturing the majority of venture capital dollars starting in 2017,” Lewis said. “In 2017 to 2020, the majority of venture capital dollars invested in the San Francisco Bay Area actually went to commercial real estate landlords. Anyone who was in the commercial real estate business who had exposure to San Francisco probably did really well.”
Lewis at first moved to Hawaii, in part because he is a surfer, but he said it turned out to be “even more crazy socialist.” Many investors are relocating to South Florida, but more and more young people are choosing Texas, he said.
“And as a technology investor, I want to be around very young, low status people have crazy ideas," he added. "Everyone laughs because they're super nerdy and that they aren't connected and they're outsiders. And those outsiders are increasingly coming to Texas. California does not feel like the frontier for them anymore.”
There are challenges such as a housing shortage, which drives up costs, along with other infrastructure concerns.
Lewis said Austin Mayor Steve Adler is “not a great ambassador for everything the city has to offer.” Other mayors, like Miami’s Francis Suarez, are more willing to work with businesses and help their cities grow, he said.
Hock, whose family has deep roots in Texas, was asked what the Lone Star State gets right while other states miss the boat.
“I can't take any credit for the great systemic structure that Texas has to offer and the moment that it's having right now. But it's really fun to be a part of it and to see it come to fruition,” she said. “My family does go way back. There are parts of it that help settle parts of East Texas. There are parts of it that showed up in Galveston with no background.
“Texas has long meant freedom and opportunity, and it's had a real comfort with risk," she added. "It's had no sense of entitlement. It's a very much a rugged kind of individual individualism where you help each other out, but you also understand that nothing is guaranteed. “That has woven into the culture in a way that I think we all take for granted. But when we moved back from New York, I was so grateful for all of the progress that I had continued to see.”
She said Texas was forced to diversity after the collapse of the oil and gas industry in the 1980s. Property taxes aren’t ideal, but they are not oppressive, either, she argued.
“You think of Texas and you think low taxes, very predictable taxes, very streamlined," Hock said. "My friends are shocked to learn you don't have to file anything with the state of Texas regarding your income. I'm thinking of all the time that we're all saving on that. We have work to do. Obviously, we have some, I always call them Achilles heels. And I spend more of my time thinking about Texas's Achilles heels or a low-hanging fruit and what we need to improve, property taxes among those.
"We tend not to get overly bureaucratic in the weeds with how people live their lives. We tend to believe in property rights," she added. "For the most part, if you buy property, you can do with it what you want. “That instills itself in business, that allows people to be creative, to dream big and to pursue it. It also takes low regulatory environment, which is very closely related."
Some people tell Hock they plan to work in Texas but retire in California. Hock said she thinks they will change their mind and plant permanent roots.
Ryan said he and his wife Amanda opened a boarding school for children who lost their parents and found little bureaucratic resistance to their plans, a refreshing surprise.
“In California that makes things worse,” Ryan said. “The culture of Texas is very inviting.”