John Chambers says his start-ups are skipping over Silicon Valley

The ongoing exodus of Silicon Valley is a warning sign of the state’s future, former Cisco CEO John Chambers told CNBC on Thursday.

“We’re in trouble. We’re an aspirational state. It’s not a good state to do business,” said Chambers, who founded JC2 Ventures, in an interview with Squawk Alley. “A lot of companies are considering leaving, and worse, none of my startups are considering coming to California.”

“If California isn’t careful, they’ll lose their leadership and the jobs that it creates,” he added.

Founders, executives and technical staff of all ranks, normally based in Silicon Valley, left the area in an exodus triggered by the Covid-19 pandemic. Since they don’t go to an office every day, people are looking for cheaper rents, more space, and lower taxes.

Among them are Tesla and SpaceX CEO Elon Musk, who confirmed last year that he moved to Texas even though his companies continue to have their main operations in California. Joe Lonsdale, co-founder of Palantir, also announced a move from the Bay Area to Austin, Texas.

Some companies are also jumping in, either by relocating their headquarters or by allowing employees to continue working remotely long after the pandemic has ended. Oracle, one of the older Silicon Valley success stories, moved its headquarters from Redwood City, California to Austin, Texas. Hewlett Packard Enterprise announced that it will move its headquarters from San Jose, California to Houston, Texas. Data analytics software company Palantir Technologies moved its headquarters from Palo Alto, California to Denver, Colorado.

Hordes of founders and investors, including Keith Rabois, recently moved to Miami, in part due to Mayor Francis Suarez’s huge Twitter push.

The Silicon Valley exodus could bode well for other states in the United States to step into the riches, Chambers said.

“Does this opportunity create opportunities for Texas, North Carolina, Ohio, my home state of West Virginia? Definitely,” he said. “You need to create the right environment for startups, and we’ve learned that with the pandemic, you can put your resources anywhere.”

Subscribe to CNBC on YouTube.

Comments are closed.