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San Francisco real estate going to collapse: Angel investor Calacanis
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All the comments and stories posted to Hacker News that reference this video.You can get an idea from my stored procedure inventory below. This was a perfect way to rollout this mvp without having to spend several hundred hours building the web-based infrastructure to do same thing.EXEC dbo.InsertNews
'Remote Work Success Story Going to Collapse San Francisco Commercial Real Estate',
'https://youtu.be/nTg5cw1YeAs?t=290',
'Economic',
'video'
EXEC dbo.UpdateTitle 1,'HVAC Can Spread Coronavirus'
EXEC dbo.UpdateMediaID 694,'article'
EXEC dbo.UpdateCategory 489,'crime'
EXEC dbo.UpdateLink 529,'https://wset.com/news/coronavirus/hobby-lobby-closes-all-sto...
EXEC dbo.DeleteNews 647
EXEC dbo.Pin 695
EXEC dbo.UnPin 591
⬐ hn_throwaway_99One of the things that I think rarely gets mentioned WRT remote work, especially when the "you can hire workers anywhere in the world" platitudes get bandied about.While distance may not matter as much, time zone absolutely does. I think many companies have finally realized that for software teams outsourcing to Indian and East Asia, with a colocated team in the US, is horribly inefficient. As a sometimes dev manager I refuse to manage people where one of us has to be online from 10-midnight or some nonsense like that to get a teeny window of overlap.
⬐ redisman⬐ LarryMade2There are also advantages. Given that you hire independent people who don’t need to be micromanaged. Spreading your dev ops team across time zones makes sure someone is almost always doing their normal daily work when something needs attention. It also creates a two-shifts structure that is pretty good as long as you set up some short-form knowledge transfer at the end of day. We just post a short end of day standup post in slack⬐ cwzwarichYou can usually find a way to make it work with any pair of timezones (e.g. North America and Europe, North America and Asia), but when you throw in a third distant timezone it becomes a huge pain.At Mozilla, we had people working on the same project in North America, Western Europe, and Australasia. The meetings alternated between inconveniencing Europe / Australasia, but the additional latency of having all 3 timezones involved in decisions really slowed things down.
⬐ jointpdfI worked on a ~3 month remote project with people in timezones +6 and +12 hours ahead, which is arguably the worst configuration of timezones. Yet, we indeed found a way to make it work (and in fact I have some fond memories, though I doubt it was sustainable). The worst part was the project manager insisting on daily 7am standup calls (spoiler alert: I was not actually standing for these absurd calls).⬐ hn_throwaway_99Yes, I agree, you can "make it work", but not without a real negative cost to efficiency and employee morale. I don't know anyone that doesn't hate that "super early or super late" time span, and it just sucks for everyone. Over time I think many of your best employees will just refuse to work those kinds of hours indefinitely if they have other options.I specifically contrast that to when I worked with some excellent devs in Brazil who were only a couple hours off and the whole project and relationship was fantastic.
This is a short term prediction - it will be interesting to see how remote work plays out over time.I had done it a few years back and it is very disconnecting, that human interaction is important. Remote staff might be fine for a few months, but those remote people may be without local community - being a nerd in rural parts, I don't relate as much to this community as I would in a more nerd populated area. I think a lot of the dynamics of the bay area is there is a lot of competitive dynamics at play not just in your company but peers in your community,
I can see where on both sides (management/staff) it can add additional stress with lack of immediate one-to-one interaction and increased distance monitoring/recording.
⬐ dheera⬐ dhuk_2018After remote working for a while I feel like I do miss having an office and people to talk to. At the same time I enjoy having access to my fridge and furniture at home, zero commute time, and being able to be super focused with no people distractions. I think something like 3 days a week in the office + 2 days at home would be an awesome balance post-virus.⬐ Jugurtha⬐ RetricWe were ramping up our remote work as a team for the last year and experimenting because we figured we'd have to at some point, so better learn how. Of course, each individual worked from home from time to time but we shifted the focus to doing it all a once. We experimented goin the whole week, then first day of the week as a transition after the weekend.We did that to expose shortcomings: what are we unknowingly relying on physical presence to communicate? This forced us to write better and institutionalize knowledge.
We also did that because our CTO was unavailable for contribution for a year, could only read emails without attachments, could not answer, and couldn't visit web pages. We shifted everything to GitLab so he could receive issues and conversations in text emails.
We also did that in case money would run out and we were forced to close down the office to save on rent, and in case we wanted to hire people in other geographic locations. We didn't want to hire before having revenues from the platform and needing people to implement features actual people are requesting. Keeps the team small.
We also did that to allow people to test our internal ML platform to allow people to collaborate on data projects and train/deploy models remotely using standard laptops to run jobs on beefy machines. In other words dog fooding our platform.
⬐ zaksinghWas your CTO in prison? Very intrigued by this⬐ JugurthaNot prison, but unavailable technically. Former CTO/co-founder quit and we stepped up to maintain the company as COO and CTO and spent the year shipping to customers (we build custom enterprise applications with ML capability from data acquisition to "the javascript") while building a team that could survive if something happened to us, from how to pay taxes to how to write issues and develop product and think about the business, to how to hire and fire. After a year, new CTO was unavailable. We then started to build our ML platform and did our best to keep him informed so he could hit the ground running when he comes back, which is in a week. Woop woop!⬐ dheera> unavailable technicallyThis sounds like a good reason to hire a new CTO. If the CTO was working on full-time on something that isn't technical, their job and title should change.
⬐ JugurthaNo. The CTO wasn't working full time on something that is not technical. He was unavailable but not replaceable. He couldn't write code but knows what's going on, and I don't want to pollute the core team. I filled in to ensure we're fine product wise and business wise. We've seen it through and will continue to do so now he's one week away.We're both technical but I concentrated on freeing him and the CEO from everything that I could do so they could focus on the things I can't do.
It makes a huge difference where you’re living while doing remote work. Living just outside the reasonable commute range of a major city, but close enough to get there outside of rush hour is IMO a great compromise.⬐ save_ferrisThis is my dream scenario. I couldn’t fathom having to fight horrendous traffic for 2 hours every day, but I’d be fine to do it once a week/on an altered schedule that avoids rush hour.Can't help but wonder, is this going to be like offshoring, where we thought it was a good idea, but it only works for some tasks and companies? Will we go through a phase of globalization of hiring (for remote) then pull back into onsite?⬐ nabla9The assumption that economies of agglomeration just don't exist because it's possible to increase remote work seems like wishful thinking.Hopefully increased remote work eases the diseconomies of agglomeration in expensive areas like SF.
⬐ goldcd⬐ dgellowI think that makes sense. Always seemed strange that you wouldn't want to break the strange-hold on "setting up your company where the talent/expense" is. I'd have thought a decent model for something leaving incubation would be to almost build a campus/kibbutz somewhere nice and cheap. You're leaving education, we'll give you a nice house, a salary that leaves you better off once rent deducted - and base yourself somewhere nice. For starting out, gives you an opportunity to build up some cash. For the employer your staff are less likely to quit on you. For wherever you choose to base the company, you're providing infrastructure, young/educated tax-payers etc. Plus as people do eventually leave, they're reasonably likely to remain in the area to start their own startup.⬐ dragonwriter> Always seemed strange that you wouldn't want to break the strange-hold on "setting up your company where the talent/expense" isPlaces that are economically successful cities aren't just talent centers. They have access to freshwater supplies, natural trade routes, and established infrastructure, not just local but the connections to trade, energy, etc. networks. And in many cases of in-demand locations, have climate and/or natural physical recreation sites that people want to be near.
Replacing these things or doing without them adds cost.
⬐ nabla9That's the common sense reasoning before you start studying urban economics.The idea that you just hire good people, then place them somewhere chap but nice separated from others kills all the subtle agglomeration effects.
⬐ SpicyLemonZestMany companies do break that strangle-hold, deciding that saving money is more important than finding good talent. It's a perfectly reasonable and very common business model. There are niches that generate $5m per year and require exactly 5 talented engineers but have no use for more; if you find one, you can just settle yourself into it and there's no reason to locate yourself based on talent availability. There are even niches where it just doesn't matter whether any of your engineers are talented.You don't hear very much about those companies on most discussion forums because they're not very exciting.
> it's interesting what you say about talent, you know, it can be found anywhere. [...] they didn't realize that they could literally find talent anywhere around the world and hire people in ways that they never even thought they could prior to covid 19.Sorry, but that exchange is complete bullshit. Nobody in 2020 believes that talents only exist in SF. Any successful company in SF has other offices around the world, so they know as a fact that talents can be found elsewhere and know how much that costs. Remote work is well known since decades by companies, they definitely knew that was a thing and decided (for the majority) to not do it while being aware that was an option.
If that's the case, that you are managing a company or HR team and didn't know that was an option, I'm sorry, but you're completely clueless and shouldn't be the one allocating/managing resources.
⬐ olivermarksCalcanis is framing this as a victory for globalization: create a global rat race to employ people all over the world in their homes, pay them less money and have them eat the costs of eating, heating etc. Many businesses already attempt to operate in this way, with massive outsourcing of just about everything. These same companies are often heavily financialized and some are zombie companies today in the current economic reality. The reality is that it takes a huge effort to get a good collaborative team of people to work together well on multiple levels. It takes even more effort to keep morale and momentum up. It only takes a few poisonous office politics players to wreck the above. You have to have a strong core and clear direction and that is much harder if remote participants have never physically met. I do think silicon valley is going to take a big economic hit for the next ten years but reinvention is synonymous with the area so it will be interesting to see what emerges next...⬐ SQL2219To be clear - he specifically says collapse will come to commercial real estate, he also mentions 10-20% reduction in rentals/homes.⬐ dheera⬐ nemothekidI'm in the bay area, just moved to a new apartment, and got 6 weeks free on my rental. That's effectively about a 11.5% reduction.⬐ tomashertus⬐ hoaieThat was normal even before the “apocalypse”.The rental market in Beverly Hills has already deceased 15-20%. The number of people moving out of luxury condos like 10000 Santa Monica Blvd seems extreme (30-40 available units).⬐ NonEUCitizenHow much are those condos? Thanks.I think it's clear to see that corporate real estate is going through a paradigm shift. Before this crisis, I remember Stripe was having a lot of trouble finding a big enough space in SF before deciding to move to South SF. What if Stripe just didn't have a big office and expected most of their base to work from home?What isn't clear to me is what happens to residential real estate. Sure, some of us, who would prefer to live in suburbs out where it's cheaper, or maybe in comitted relationships with kids would prefer that. But I don't think the the group of people who are maybe single, or prefer the recreational aspect of living around people in a city would go away. There's a balance which isn't immediately clear to me. If more people exit the city, does this effectively reverse a lot of the gentrification we are seeing and sharply stop growth? Or if it goes the other way does the city become more exclusive for those who want to live there?
⬐ Consultant32452⬐ samfisher83I can add an anecdata to your suggestion. I work at a fortune 500 financial company. Our CEO recently had a town hall and discussed having a total 180 about remote work. He had been against it and didn't believe it could work. Being forced into it caused him to see the proverbial light. They stopped plans to open another office in NY and would be aggressively embracing more remote work regardless of covid.⬐ tinyhouseThere will always be places that are safer, more fun, better schools, etc. Proximity to work opportunities is only one factor. Also, commercial real estate can shift to co-working spaces which will have higher demand as more companies move remote (many people prefer that than working from home, esp if it's a short commute and paid by their company). I think the biggest impact would be on the suburbs as families would have more flexibility in picking where to live. We'll likely see some price drops but as he mentioned I don't think we will see dramatic price drops. Not to mention that most companies still plan to go back to the office when things reopen. Might be too early to make predictions about remote work.⬐ nemothekidIt would be funny if WeWork comes out ahead after all this.Its still going to be expensive. Maybe a 1000sqft house in the hood will be 800k instead of 1.2 mil.⬐ generalpassPeople and businesses may well choose to move out of the city for quality of life reasons, but the other claims he makes seem weak due to some assumptions he seems to be making:People in occupations that could work remotely have not been looking for remote work positions.
Increase in demand for remote workers will not increase price paid to remote workers.
⬐ sna1lKeep in mind a lot of people are associating remote work with "remote work during a global pandemic."⬐ lharriesInteresting point about why does being a contractor vs employee have to be binary? Couldn't there be a third option for gig workers where employees have flexible hours with progressive benefits e.g. pension + sick days after working a certain amount⬐ nikiviI would love for this to happen as it's quite a shame really how most companies still require you to move to US to work despite being a tech company.So much talent is not even considered due to archaic immigration laws of US.
⬐ ganstyles⬐ purplezooeyGiven the time zone difficulties and inefficiencies it brings, I wouldn't consider hiring anyone outside of the time zones that span the Americas. Totally okay hiring someone in Brazil or Peru or whatever, but not France or Eastern Europe especially. Which sucks for me because I recently tried to hire some amazing ML engineers in Paris laid off because of covid and couldn't get them to budge on moving to my companies time zone.⬐ rjsw⬐ VWWHFSfQMaybe look for people nearer the Alps, being able to ski before work is good.USA imports more tech workers than every other country combined⬐ influxIt’s miserable trying to schedule meetings between Europe and the US/Pacific time zone. Even if every is remote, being in the same time zone is everything.⬐ ganstylesEven just east coast versus west coast kind of sucks and leads to inefficiency if product teams are spread across those timezones. I've done some work with west coast Europe, it's bad, 8am meetings so I can catch them at 4pm, yuck. I imagine any further than that would be horribly inefficient. We're moving to teams being able to work anywhere within +/- 1 hour of time zone.⬐ jmvoodooLatin America solves this nicely. I've done a significant amount of work with teams in central and south America. It has been fantastic.I also relocated to Puerto Rico myself at the end of March. The rise of remote work and the tax benefits here make it too good to pass up.
Not going to collapse. The factors that drove it up, lack of willpower to build anything, growth in workforce, not being Texas, are staying.⬐ naveen99I have been saying real estate is not going to do well long term even before the plague. Absolutely no reason for real estate to represent > 60% of wealth in the future. Breathing the same air as someone else usually a liability, only rarely worth the risk. Once people start doing remote relationships only meeting for procreation, real estate will go to zero. Yes this might take a while, and I am not waiting for it... but it’s going to happen.⬐ jmvoodoo⬐ ryanmarshSo, people are going to raise children over zoom? And do so without a roof over their head?Remote work certainly seems possible, and that would cause a change in real estate prices in many areas.
But claiming that real estate as a whole will suddenly be worthless on any timeline seems a bit far fetched.
⬐ naveen99⬐ dragonwriterI didn’t say suddenly.Like I said, procreation requires proximity... raising children is procreation.
Location isn't important just for procreation. There are reasons that certain places are more attractive to live than others other than that (climate, accessibility for trade goods, proximity to natural physical recreation venues, etc.) Shifts in technology may change exactly what locations are more attractive, but they won't change that some locations are more attractive and that land in attractive locations is scarce.⬐ naveen99Agree. But there will definitely be a lot of losers in the locations that lose value...So does this solve the housing crisis?⬐ fosk⬐ lisperIt’s a drug crisis.⬐ ldiracdeltaNot when supply is constrained by mountains and political policy and the price is set by a pair of married engineers buying a house..⬐ asahMarried, childless engineers, with a couple of success startups...My wife and I live in the SF Bay area and we own our primary residence. I would love to see real estate prices collapse. Why? Because we would like to do a lateral move (i.e. sell our house and buy a different one in our area for about the same price) but right now it's too expensive. The price of both our house and the one we'd want to move to have both doubled since we bought ten years ago. If we moved today we would have to pay capital gains tax and our annual property tax would nearly double. If housing prices collapsed and went back to where they were when we bought we could make the move essentially for free.That's the insidious thing about rising housing prices. In order to cash in on your gains you have to actually sell your house. But then you still have to live somewhere.
⬐ LordFastYou just hit the nail on the head for why recessions and economic setbacks are a healthy part of a functioning society. It helps clear out some of the old for some of the new, and helps equalize some opportunities for some people.⬐ GoodJokes⬐ berberousThat has to be one of the most privileged sheltered viewpoints I have ever encountered. Recessions might help people like the top level commenter here, but they absolutely devastate those less privilaged. They also aren't necessary and are just a function of Capitalism rewarding those that already have power.You should double check the rules, and this is a pain in the ass and potentially problematic given that it will be harder to find a tenant during a pandemic, but if you rent for four years you should be able to do a 1031 exchange and avoid cap gains. You move out, and rent your existing home for at least 2 years, then do a 1031 for the new house, then rent that one for at least 2 years. If the old and new property are rented for at least 2 years, i believe there is a safe harbor that deems them investment properties for purposes of a 1031 exchange.You still have the problem of much higher property taxes due to prop 13 though.
⬐ lisper⬐ GoodJokesAppreciate the suggestion, but becoming a landlord is an investment decision, and like all investment decisions it comes with risks and opportunity costs. It's an orthogonal issue to the fact that moving is actually more expensive when real estate prices rise even if you are already an owner."I want bad things to happen so I can make some money."⬐ JPKabReally really feel for you buddy.Your house has doubled in value and now if you sell it you have to pay capital gains tax before you can buy an equally overpriced house in San Francisco.
I mean in terms of suffering you're right there with the business owners who don't know how they're going to pay their rent or their employees. oh wait no you have a completely first world problem and don't seem to be self aware about it. Or you are just humble bragging.
The completely obvious thing that you could do instead would be to move to a different area after selling the house or do this crazy thing and rent. But really I empathize with your incredible wealth. Really sorry it happened to you.
⬐ moreorless⬐ kemiller"Your house has doubled in value and now if you sell it you have to pay capital gains tax before you can buy an equally overpriced house in San Francisco."That is a maybe. If op bought another "qualifying" property, he will not have to pay capital gains.
⬐ lisper⬐ dangThat's only true for rental properties, not your primary residence.And yes, these are all nice problems to have. But even nice problems to have are still problems.
Please don't be an asshole HN. You may not owe Bay Area homeowners better, but you owe this community better if you're posting here.FYI you would not have to pay cap gains on your primary residence. But yes, I feel the same way. I’m stuck in a starter house because I couldn’t easily get back in the market.⬐ foobiekrI thought the capital gains exclusion ended at 500k? Because if a house in SF doubled in value, the gain is likely more than that.⬐ lisperYes, exactly right. We have considerably more than $500k in gains. It's a nice problem to have, but it's still a problem.