Mogul Migration
Among the most notable people taking part in the Exodus from California are the tech and finance elite. More and more high-profile business leaders are losing their patience with California’s anti-business regulatory morass, sky-high tax rate, and unreasonable cost of living.
In 2017, entrepreneur and author Tim Ferriss left Silicon Valley for Texas. Ferriss cited the closed-mindedness of the Bay Area as one of his reasons for leaving, telling Business Insider that “if you don’t conform to what Silicon Valley views as the established set of credos and beliefs for a hyperliberal, you do get attacked.” He also explained on Reddit that “I’m as socially liberal as you get, and I find it nauseating how many topics or dissenting opinions are simply out-of-bounds in Silicon Valley. These days, people with real jobs (unlike me) are risking their careers to even challenge collective delusions in SF.”
Other tech magnates followed Ferriss’s lead. Ron Suber, a FinTech investor and former executive at Wells Fargo Securities and Bear Stearns, left California in 2020; he relocated to Boulder, Colorado. While Suber said part of his reason for moving was to be closer to his adult daughter, he also highlighted California’s high taxes: “My tax guy yelled at me because I had to pay so much in taxes…Income taxes are only…5% in Colorado, so for each $1 million in passive annual income the delta becomes very real.” The marginal tax rate for highest earners in California is 13.3%.
Elon Musk moved to Texas in 2020. Musk then moved Tesla’s headquarters to Texas in December 2021. Explaining his decision, Musk said: “If a team has been winning for too long, they do tend to get a little complacent, a little entitled and then they don’t win the championship anymore. California has been winning for a long time, and I think they’re taking that for granted a little bit.” Musk has previously been outspoken in his criticism of the “gradual creep of regulations and bureaucracy” in the Golden State.
Joe Lonsdale also left California. Lonsdale co-founded Palantir, a software company that specializes in data analytics, in 2003. Originally based in Silicon Valley, Palantir relocated to Denver in 2020. Lonsdale shares Musk’s view that California’s golden days are behind it.
“Texas is a lot like going to California 40 to 50 years ago,” Lonsdale said. “[Texas is] very welcoming, it’s a dynamic economy, it’s affordable…When you try to hire someone in California you pay them $250,000 a year to come there and they feel poor…You pay them that here [in Texas] and they are living really well.” Lonsdale and his company Palantir were previously located in San Francisco, where the cost of living is 91 percent higher than the national average.
Keith Rabois, an investor in Stripe and former executive at Square, Paypal, LinkedIn and Yelp, left California for Miami. A Bay Area resident for 20 years, Rabois told Fortune that “I think San Francisco is just so massively improperly run and managed that it’s impossible to stay here.”
Of course, for every mogul that leaves, there are hundreds more working Californians who have said farewell to California. From July 2020 to July 2022, California’s resident population declined by more than a half-million people. On January 3, 2023, U-Haul released its 2022 data, reporting that Texas, Florida, and South Carolina are the three top “growth” (or inbound migration) states; California ranked last at 50th.
California’s emigration trends should be a serious wake up call for state and local officials. But rather than asking why individuals, families, and companies are leaving the state in droves, Sacramento is doubling down on laws that destroy opportunity, like AB5 (forcing freelance and independent contractors to become corporate employees) and AB 257 (creating a government panel to set wages and work rules for fast food franchises).
The question is: How long will California’s elected leaders ignore the California Exodus and the entrepreneurs who have warned them that California has lost its luster?
Sheridan Swanson is a research associate with the California Policy Center.