Elon Musk, formerly of California, is now a Texan. The second richest man on earth pulled up stakes as part of the billionaire exodus from California. In a recent Wall Street Journal interview, the Tesla CEO ripped California for driving out wealthy taxpayers. California, he complained, is like a sports team that “has been winning for a long time.” The state has taken innovators for granted, but now in their “forest of redwoods” the “little trees can’t grow.”
For now, Musk will keep the Tesla plant and his SpaceX operation in California. Musk, however is not optimistic: “So there used to be over a dozen car plants in California. And California used to be the center of aerospace manufacturing.” Musk noted that his companies were the last “still doing significant manufacturing” in the state.
Reeling from the 2020 coronavirus pandemic, California can ill afford to also lose companies like Hewlett Packard. That tech giant disclosed that it was leaving California for Texas. Piling on was Palantir Technologies, a major venture capital source, which is also heading for the friendlier business climate in Texas.
Texas is an economic developer’s dream-come-true. It supports the world’s 9th largest economy. It has no corporate income nor personal income taxes. The Lone Star State has a star cast of highly skilled workers, quick access to global markets with a robust infrastructure unimpeded by unpredictable regulations.
That business-friendly climate, according to Texas governor Greg Abbott, has meant a “tidal wave” of companies moving their headquarters to his state. The wave may have been accelerated in part to the coronavirus pandemic that has shut most of California down, but some companies like tech leader Oracle and real estate giant CBRE had plans to move to Houston and Dallas already under way.
Said Abbott: “I have been on the phone on a weekly basis with CEOs across the country…We’re working across the board because the times of COVID has exposed…that you don’t have to be in Manhattan, for example, to be involved in the trading business or the investment business.”
While the pandemic has increasingly shown how widespread remote work is here to stay, Texas has additional attractions: “Cost of business means a lot. No income tax means a lot, but also the freedom to operate without the heavy hand of regulation means a lot,” said the governor.
Governor Abbott was especially pleased to welcome Elon Musk, who moved his personal home from California to Texas. Tesla has chosen a site near Austin to build its next U.S. factor. SpaceX also has a growing rocket launch facility along the Texas Gulf Coast at Boca Chica.
Said the governor, “Elon is elated to be here.” Musk and the governor “talk on a virtually weekly basis.”
Finally, Musk, a former PhD candidate who dropped out of the program, doesn’t put much stock in higher academic credentials. To the chagrin of business school leaders everywhere, Musk told a Wall Street Journal conference group: “I think there might be too many MBAs running companies. There should be more focus on the product itself, less time on board meetings, less time on financials.”
The key, according to Musk is for bosses to spend time on the front lines instead of cloistering in conference rooms.