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Yesterday marked the three-year anniversary since VentureBeat and Jolie O’Dell’s focus group of one correlated expensive toast to the decline of San Francisco.

The O’Dell discourse came with jagged edges, damning the tech industry for a cycle that goes something like this:

  1. Someone creates a business for consumers with too much money and pretensions of superior taste. It might be a physical good, like toast; it might be a service.
  2. Tech folks, being one of the largest demographics in the city with ample disposable income, patronize, promote, and even invest in said business.
  3. Aforementioned business prospers and grows its profile.
  4. People both within and outside the tech community are inspired to create more bourgie euro lotto online businesses that cater to the bored and overprivileged, peppering their descriptions with buzzwords like “organic” and “fair trade” and “artisanal.”
  5. San Francisco becomes saturated with overpriced crap that is comparable in quality to less overpriced crap.
  6. Middle class and working class families and individuals in the community find themselves priced out of goods and services. Small businesses in those sectors languish.

And it all started with a stop at The Mill for a single piece of toast with butter and jam for four bucks.

Before probing the issue at hand, first things first. Is The Mill still serving pricey toast?
.Toast Menu-Tech IndustryYes.

As you can see on The Mill’s toast menu – right, toast menu – a slice with butter, strawberry jam and salt sets you back six bucks. I guess they don’t have salt shakers on the table to add your own salt. Regardless, we can conclude that The Mill’s business model still enjoys a decent margins on toast.

As for the bigger question, I don’t believe expensive toast has ruined Silicon Valley. I say Silicon Valley because I don’t live in San Francisco and can’t speak for City dwellers. Still, when it comes to cost of living, I think it’s fair to wrap San Francisco into the larger land mass called Silicon Valley.

Riffing on Robin Williams in “Good Morning Vietnam”: “What’s the living like in Silicon Valley? It’s expensive. No, make that damn expensive.”

I moved to Silicon Valley in 1981. My friends told me I was crazy, that there would be nada left from my paycheck after taking care of the essentials and weekend bar tabs. I shared a two-bedroom apartment on the fringes of Palo Alto. Butting up against East Palo Alto reduced what was still an outrageous price at the time, $440 a month. But the combination of weather, liberal politics, restaurants, commerce, mountains, diversity, ocean, sports teams and Haight Ashbury qualified Silicon Valley as utopia. Keep in mind that was before the IBM personal computer set in motion the tech uprising that we see today.
.Haight_Ashbury_Tech industryHere’s the point.

Silicon Valley was expensive in 1981. It’s expensive today. It’s going to be expensive tomorrow.

This is what happens to desirable places.

And make no mistake, it’s still a desirable place.

Just last week came the news that Silicon Valley now employs 746,100 in the tech industry, exceeding the record set during the dot-com heyday by 21,000 jobs.Record Number of Tech Jobs graphFurther proof of desirability can be found in the parade of mostly 20-somethings from around the world who march into Silicon Valley each year on a quest to change the world and make money (not necessarily in that order). For the record, most of these arrivals choose to make toast at home, which according to my back-of-the-envelope math brings the cost down to 20 or 40 cents per slice depending on how long you amortize the toaster and whether you choose branded or generic jelly.

Are there pretentious people in Silicon Valley — as O’Dell puts it — who will joyfully overpay for goods and services to show off their “superior taste”? No question, but one man’s pretentiousness is another man’s lifestyle. As far as I know, Louis Vuitton luggage finds buyers in places other than Silicon Valley.

Suitcases-Tech Industry

Still, the O’Dell treatise serves as a reminder that we don’t want Silicon Valley to devolve into the land of “haves” and “have nots.”

I suppose it’s my optimistic nature that I see signs that counter the disturbing data points.

A startup called Landed helps teachers and others break into the housing market. It connects buyers to investors who help with the down payment in exchange for sharing in the house’s future appreciation in value.

Closer to home, one of our friends moved from Mexico to Silicon Valley some time ago. On the strength of his work ethic and an infectious personality that wins over people and plants alike, he built a successful landscaping business that provides a lifestyle for him and his wife that wasn’t possible in Mexico (his words).

Consider the mind of the millennial who places greater emphasis on contributing to the society as a life goal:Life-Goals
As millennials continue to take over the workplace, they’ll ask more from their companies — including those in Silicon Valley.

Again, these examples by themselves don’t constitute a path to an advanced society. Instead, they’re signs of an undercurrent course-correcting Silicon Valley.

It’s in everyone’s best interest, both companies and individuals, to help make Silicon Valley a better place for everyone. That’s how we point Silicon Valley in the right direction, not by regulating the toast industry.

My wife Heather has always had this viewpoint.

She’ll see an elderly woman walking with a bag of groceries and stops to give her a ride. She donates her time and artwork to a variety of causes.

Truth be told, I’ve been riding her coattails with the rationale that we’re one and the same, so if she’s out there in the world doing good, it’s like I’m doing good too.

Deep down, I know this logic is flawed.

Saying it publicly serves as motivation to change.

Sidenote: If you enjoyed this post, you might check out “10 Charts From the Silicon Valley Index That Caught My Attention.”

 


Comments

  • Michael Young

    Great post on hugely important topic. It brings to mind Enrico Moretti’s book The New Geography of Jobs. Moretti, like Richard Florida, makes the case that place matters, and the more a place is desirable, the more desirable it becomes based on what economists call “cumulative causation.” There are no easy answers to inequality, but that doesn’t mean we shouldn’t work toward it.

    Reply
    • Lou Hoffman

      Good hearing from you Michael and thanks for taking the time to weigh in. I hadn’t heard the term “cumulative causation” before but I just might have to borrow it the next time I revisit the topic. Ironically, the NYT ran a story today that makes the case that the spillover from the Bay Area is benefiting cities like Phoenix. It seems fair to say that the unique alchemy of Silicon Valley accentuates desirability.

      Reply
  • Steve Farnsworth

    It is true that Silicon Valley has always been expensive, at least since I moved here from So Cal in the mid 1980s, but I think that it is more so now. While prices were high, at least the Bay Area was home to greater economic diversity. One example of how this shift has damaged the Bay Area is the exodus of artists. Artists flourished in San Francisco for decades and gave the City so much beauty and textured until the rents became too high. Unable to make ends meet with their humble incomes many moved to Oakland…until rents there pushed them out. We have done a horrible job investing our tech wealth to nurture the culture and communities that arguable made the Bay Area great. Instead that disposable income has been used to buy $4 toast and rent land yachts for Burning Man. Culturally speaking, We’ve paved paradise and put up a parking lot. With a pink hotel, a boutique, and a swingin’ hot spot. And $4 toast.

    Reply
    • Lou Hoffman

      I read that one of the projected benefits from self-driven cars will be freeing up parking lots. which currently take up roughly 25% of a city’s land, for other uses. Perhaps there’s a Joni Mitchell sequel in the offing in which we “unpave paradise.”

      Reply

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