'It's Gotten Dramatically Harder' – Peter Thiel Explains Why It's So Hard To Move An Office Or Headquarters From L.A. To Places Like Florida

Peter Thiel recently opened up on The Joe Rogan Experience about the challenges of moving businesses from places like Los Angeles to other popular relocation hubs such as Miami and Austin. While the pandemic made relocation more feasible for many, the situation seems to have shifted dramatically in just a few years.

Pandemic-Era Exodus

During the early days of COVID-19, a wave of companies and individuals left high-tax, high-cost states like California and New York. Thiel was among them, purchasing a property in Miami in September 2020. “It's probably up 100% since I bought it,” he shared. For Thiel, that investment worked out well, but he acknowledged that the environment for such moves has drastically changed since then.

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Rogan, who relocated to Austin in 2020, reflected on the challenges of uprooting his business. "It was very difficult for me and I had a bunch of people working for me that were willing to pack up and leave. You’re taking your whole business," he said.

The Cost of Relocating Today

Thiel pointed out that moving is far harder and more expensive than during the pandemic. Real estate prices in popular destinations like Miami and Austin have soared, doubling since 2020. Mortgage rates have also spiked, going from around 3% to over 6.5%.

According to Thiel, the cost of purchasing a home has increased fourfold in recent years. This makes the decision much more difficult for companies considering moving because it involves paying more for office space and employee housing.

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Some industries are more flexible than others when it comes to relocating. Traditionally centered in New York, the finance industry has seen firms successfully move to Florida. He noted that private equity funds and banks can decentralize more easily and Miami's rise as a financial hub during the pandemic is a testament to this shift.

However, tech companies face a more formidable challenge. Silicon Valley remains deeply interconnected, making relocation more difficult. Thiel likened it to Detroit’s auto sector in the past, which was a complex web that maintained its power until poor management led to its dissolution.

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California's Grip on Tech

Thiel and Rogan also talked about California's dominance in the tech world. While things like cryptocurrency allowed for some flexibility, the rise of AI has brought tech back to being more centralized in places like the San Francisco Bay Area. Thiel quipped that if crypto is libertarian, then AI is communist, stressing the centralized structure of AI companies.

Despite California's high taxes and cost of living, its network effect continues to anchor the tech industry there. 

While both Thiel and Rogan believe relocation is possible, the hurdles are higher than ever. Thiel hopes that continued migration out of California will eventually pressure the state to address its issues, but he's not holding his breath.

Rogan said, "They know you don't want to leave. I didn't want to leave California, it's great."

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