No, Cleveland Can’t Be the Next Silicon Valley

Slate’s Matthew Yglesias recently wrote a piece about how, given Silicon Valley’s woes, a “move” to Cleveland would make a ton of sense. (Read the full article here.) While I disagree with Yglesias on a number of political issues, I found this article to be creative, entertaining, and in some ways eminently logical. I’m also entirely unconvinced it could work.

Yglesias accurately describes the growing tension and borderline cultural civil war going on in the Bay Area. The tech sector is one of the few bright spots in an otherwise moribund economy. The city’s “old money” (folks from firms like Google and Yahoo) is now supplemented by “new money” in the form of recent IPO beneficiaries: workers from Facebook, Twitter, and LinkedIn. These highly-educated, young professionals are flooding the city’s real estate market with demand.

Which would be fine if they, you know, had a place to live. But San Francisco’s municipal government stresses a philosophy of “sustainable development”, which prioritizes aesthetics and environmental concerns at the expense of capacity and viable infrastructure. Whereas in most cities the market would react by adding additional housing capacity, SF prevents this from happening. As a result, the tech employees simply bid their way into existing apartments, driving up the costs and driving out residents who aren’t sitting on six figures’ worth of pre-IPO stock. This, of course, creates huge animosity between the city’s middle and lower classes and the tech money.

So, Yglesias says, move the tech giants to Cleveland! The city has a major international airport, a branch of the Federal Reserve, and a ton of unfilled commercial and residential real estate. (A point that he doesn’t mention is that Ohio also has several top universities and thus would give these companies a good pool of talent to recruit from.) Let the Bay keep the VC firms, but move the big guys to the North Coast.

For some context: I was born and raised in suburban Cleveland and have spent my entire professional career working for two major tech companies (LinkedIn and Yahoo). While I live in New York City, much of my family and several of my best friends still reside in Cleveland. I am a die-hard Cavs, Indians, and Browns fan.

In other words, I would desperately like for this to happen. But there are some major obstacles that are, in my opinion, unlikely to change in the near future.

First, while Cleveland has abundant cheap property, the city is anything but business-friendly. Cleveland isn’t a hard luck story; while globalization hasn’t been kind to it, most of its woes have been self-inflicted. It’s one of the toughest major cities to open a business in, and even big companies with government relations departments have struggled to operate there. For example, a few years back Progressive Insurance tried to locate its global headquarters downtown. Rather than greet them with open arms, local pols gave them a lengthy list of conditions. Progressive moved to the suburbs.

Unfortunately, no one in Cleveland seems to realize this. There’s been no major push for reform; it’s no easier to operate a business now than it was six years ago.

Second, the weather in Cleveland sucks. This might seem like a trivial issue, except that it’s not. The fate of companies like Yahoo doesn’t lay in the hands of advertising hacks like me (we’re replaceable); it’s determined by the engineers. And, understandably, most top computer engineers don’t want to live in the extreme cold. Cleveland is a miserable place to live between October and March. Indians games have been postponed for snow…in April!

Finally, the city lacks crucial infrastructure for businesses. It’s one of the most crime-ridden cities in America. Unlike my current residency of New York, I wouldn’t think about walking alone at night in most areas of downtown. Cops are a rare sight; dark, unpopulated alleys abound. You can argue that an influx of new money would change this, but if I’m an executive at Apple, am I going to spend hundreds of millions of dollars and thousands of hours to relocate, and just hope for the best? Not a chance.

I admire Yglesias for going out on a limb with this post, and want nothing more than my hometown to regain its status as an economic power. Alas, Yglesias’ other far-fetched prediction of a LeBron James return is far likelier.

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3 thoughts on “No, Cleveland Can’t Be the Next Silicon Valley

  1. I’m guessing you have not been back to Cleveland or when you have you spend most of your time in the suburbs because downtown Cleveland has become quite lively over the last few years. Apartment occupancy is hovering around 98% and more and more buildings are being redeveloped to meet the demand for housing. Cleveland is far from perfect but to suggest you cannot walk around most parts of downtown at night because it isn’t safe is a foolish statement from someone that hasn’t lived in Ohio for 6 years and never actually lived in the city. That statement reeks of the typical suburbanite mindset that only ventures into the city for sporting events.

    1. Thanks for the comment, Matt. While your point about 98% occupancy was a surprise to me, after a bit of research it looks like you’re correct. Appreciate you pointing this out.

      Contrary to what you assume, though, I’ve actually spent a good amount of time downtown. I make it home no less than 4-5 times a year, and always spend time in the city. Contrary to what you imply, I have no sense of “suburban superiority”; I want Cleveland to thrive, as many of my best friends’ and family members’ lives would be bettered if this happened.

      And I think you miss the point here. While the occupancy figure may be surprisingly (and pleasantly) high, that doesn’t contradict my argument in any way. Is Cleveland a good place to do business? No. The politicians see businesses as something to fill their coffers with, and that’s it. Is the weather (which attracts engineers) tolerable? For me, sure, but for most folks, no.

      Is the city safe? Google “top crime cities” and try and find a list that doesn’t place Cleveland in the top 50. (Hint: you won’t be able to find one.) I’ve been downtown for dinners, weddings, random nights out at the bar, and, yes, sporting events, and my anecdotal experiences reflect what the statistics bear out.

      The city really has done a poor job of managing things. The “build it (with taxpayer money) and they will come” mentality hasn’t worked. Cleveland won’t turn around given the current state of affairs. That’s not to say I think it’s impossible, but rather, very unlikely.

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