California: Leading the Way to Death of Innovation

FILE - In this March 14, 2017, file photo, Jowan Osterlund from Biohax Sweden, holds a small microchip implant, similar to those implanted into workers at the Epicenter digital innovation business center during a party at the co-working space in central Stockholm. Three Square Market in River Falls, Wis., is partnering with Sweden's BioHax International, offering to microchip its employees, enabling them to open doors, log onto their computers and purchase break room snacks with a simple swipe of the hand. More than 50 employees are voluntarily getting implants Aug. 1 at what the company is calling a "chip party" at its River Falls headquarters. (AP Photo/James Brooks, File)

California leads the way… to the death of innovation.

First, Alex Karp moved his Palantir headquarters to Colorado Springs, then Elon Musk chose to open his new plant in Austin; now the people who fund innovation are doing the California Adios.

“Silicon Valley is losing another tech heavyweight: Keith Rabois, prolific startup investor, early exec at powerhouses such as Square, LinkedIn, Yelp, and PayPal, and longtime Bay Area resident. He tells me he is ‘moving imminently.’ “

Rabois is setting up shop in Miami, adding to Florida’s pandemic boom. According to the Daily Mail UK,

“The 2020 Miami Report released this summer states that an average of 950 people move to Florida every day and a majority come from high-taxed areas like New York, Boston, California and Chicago, according to the New York Times.”

So my question is, if you have nobody to create the tech, and nobody to fund the tech, what are you left with?

Not much. California’s unfriendly business climate is legend, and the once-sacred cow of Silicon Valley is no longer worshipped. California Legislature’s passing of AB5, the so-called gig workers law proved this. The law was supposed to target misclassification and force Uber and Lyft to make its independent contractor drivers into employees. Instead, it decimated 300 professions and reduced or destroyed the income for 4.5 million independent contractors, freelancers, and non-app based gig workers.

California leads the way… to poverty.

Uber and Lyft received a stay with the voter-approved Prop 22, which allows app drivers to stay independent contractors. But the law that precipitated this backlash still restricts over 300 independent professions and over 4 million professionals. It is also a stranglehold on the franchise industry, and several groups are using the gains from Prop 22 to mount a lawsuit. The International Franchise Association, Dunkin Donuts Independent Franchise Owners Association, Supercuts Franchisee Association, and the Asian American Hotel Owners Association are seeking relief from this poorly crafted law.

How do you destroy a law? Brick-by-brick, my citizens… brick-by-brick; and franchisors represent a lot of bricks.

” ‘AB 5’s misapplication of the ‘ABC test’ to franchising is destructive for franchised brands and fails to understand the most basic aspects of the franchised business model,’ International Franchise Association President and CEO Robert Cresanti said in a statement. ‘To lawfully and successfully maintain consistency and uniformity at its independently owned franchise locations, federal law mandates that a brand is required to set standards that apply to the operations of all individual owners, which ensures the quality and consistency that consumers expect.’

“ ‘As a federal judge recently said, applying the ABC test to the franchise business model would “eviscerate franchising,” ’ Cresanti continued. ‘Our suit will help these California businesses operate with clear rules and regulations that ensure they can continue to grow, hire workers, and give back to their communities.’

But in the meantime, innovators in tech, fashion, music, and the small businesses that support them are fleeing California in droves. Joe Lonsdale, a venture capitalist who helped launch Palantir and other companies said,

“I love California, but I had to leave. I grew up in Fremont, attended Stanford, and have spent most of my adult life in the San Francisco Bay Area, founding technology companies like Palantir and Addepar and investing in many others. In 2011 I founded 8VC, a venture-capital firm that today manages more than $3.6 billion in committed capital. Few top venture capitalists consider living anywhere other than California and a handful of global financial centers, but I am moving myself and dozens of my 8VC colleagues to a new land of opportunity: Texas.

“The harsh truth is that California has fallen into disrepair. Bad policies discourage business and innovation, stifle opportunity and make life in major cities ugly and unpleasant.”

Another technology professional penned his op-ed in the Orange County Register with this warning:

“The fallout from AB5 is just the tip of the iceberg of California’s decades of accumulated statist trends. Given the state’s notoriously high taxes, heavy regulations, and endless sea of bureaucratic red tape, one tech executive went so far as to declare, ‘It’s easier to do business in Cuba than San Francisco.’ The exodus of companies and people from California shows no signs of stopping. Prominent names including podcaster Joe Rogan as well as investor Peter Thiel have left California for Texas in hopes of finding economic freedom as well as freedom of thought in ideas.”

He is right: people go where they can find freedom: Economic freedom primarily, but that encompasses freedom to work as you choose, freedom to innovate, freedom to enjoy the fruit of your labor, and freedom to dream big. California no longer supports this. Hell, it’s downright hostile to it—and politicians and illegal aliens are not going to keep the state running; so, what happens to your 5th largest economy when you have pushed out or destroyed the very people that fueled your economic engines?

Politicians need taxes to pay their salaries, and they need taxpayers to fund their leftist government boondoggles to the homeless and illegal aliens. With your revenue generators and tax base fleeing, what will you have left?

California leads the way… to Third World status.

So, look for the next BIG thing to come from Colorado Springs, Austin, maybe even Miami.

California has ceased to be a player, and its days are numbered.