Extensive literature documents the benefits of the mix of these various factors—
“agglomeration” economics—and how challenging it is to manufacture these
ecosystems.
106
Some locations are difficult to arbitrage because functional substitutes do
not exist or alternatives are simply not quite the same.
A related point is that private benefits can also be at stake in these location
decisions, particularly when there is physical presence involved. Founders and corporate
executives are likely not indifferent regarding the decision to spend significant time in
thriving, metropolitan cities with world-class amenities versus other locations that may
have cost efficiencies.
107
Location choices implicate the vision that founders and
executives may have for not only the company’s brand, but also for their own lifestyles,
“personal brands,” status, and values.
108
Salesforce CEO-founder Marc Benioff built the
“Salesforce Tower,” dramatically altering the San Francisco skyline, and invested heavily
in the community, including by giving millions of dollars and his personal support to an
initiative to raise taxes on corporations in the city to fund homeless programs.
109
He
remarked: “San Francisco is amazing. We have these incredible companies and
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
106
See, e.g., Rodrigues and Schleicher (2012) (discussing how “location decisions are valuable because of
the ‘agglomeration’ benefits they provide”); Porter (2018) (explaining that “[b]eing a part of a cluster
allows companies to operate more productively in sourcing inputs; accessing information, technology, and
needed institutions; coordinating with related companies; and measuring and motivating improvement”);
Ibrahim (2010), p 717 (“Silicon Valley’s success has led other regions to attempt their own high-tech
transformations, yet most imitators have failed.”).
107
See Florida and Mellander (2016), p 32 (describing the preferences of tech executives, workers, and
venture capitalists to be in urban environments). These patterns give rise to other social issues such as
concerning the connection between inequality and geography. See, e.g., Florida (2014).
108
See Goshen and Hamdani (2016) (discussing entrepreneurs’ pursuit of private benefits and idiosyncratic
vision); see also Bratton and McCahery (1997), p 234 (“Family, community, and cultural ties also may
make movement an undesirable response to dissatisfaction with public goods, taxes, or regulation.”).
109
Levy A (2019), Salesforce’s Marc Benioff unplugged for two weeks, and had a revelation that could
change the tech industry, CNBC, https://www.cnbc.com/2018/12/30/salesforce-marc-benioff-talks-tech-
ethics-time-magazine-and-vacation.html.