The man is brutal, but brutally honest:
Outspoken venture capitalist Peter Thiel has trouble finding many people who agree with him in the Bay Area these days, but at a speech Thursday at the Economic Club of New York, Thiel may finally have found common ground with the average San Franciscan by railing against skyrocketing rents.
When asked about the future of the tech industry, Thiel speculated that the lure of Silicon Valley may no longer be enough to overcome the pain of punishing housing costs.
“At what point is this a feature and what point is this a bug?” asked Thiel, admitting that “it’s a feature if [...] everyone has to be where everyone is, where all the ideas are, where the capital is” and thus creating an enormous network.
Thiel also asked, “At some point does it just get so expensive that it doesn’t quite work, that you have to very quickly make money just to pay the rents?”
The venture capitalist complained that most of the money he invests in new companies these days goes not into product development but instead “to landlords, to commercial real estate.” He even referred to Silicon Valley landlords as “urban slumlords.”
Correct, that's called "agglomeration effects" which is what drives rental values.
His options are:
1. Relocate somewhere cheaper. Rents will be lower in the middle of nowhere, but he will find it more difficult to do business there. Over time, Peter Thiel city should grow and mature, making it easier to do business but the rents will go up to match. So that doesn't solve his problem.
2. If you can't beat 'em, join 'em. If he first buys up the land on which to build Peter Thiel City, he wins on both sides of the equation.
3. Fight the system and campaign to shift taxes from output, employment and profits (and in his case, capital gains) onto land values.
Debate Magazine
