1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

California, the place where the big ones reside ?

Discussion in 'BlackHat Lounge' started by SH-M, Dec 26, 2014.

  1. SH-M

    SH-M Jr. VIP Jr. VIP

    Joined:
    Sep 13, 2013
    Messages:
    442
    Likes Received:
    224
    Dear BlackHat community,

    I want to know your insights regarding the fact that most of the famous companies such as: Google, Facebook, Apple, Ebay, PayPal etc. have their headquarters located in California.

    Is there something special in the state of California that attracts these companies ? Tax purposes ? Any location strategy ?

    I've always been thinking of this. What are your thoughts on it ?
     
  2. kingroomx

    kingroomx Junior Member

    Joined:
    Jun 26, 2012
    Messages:
    106
    Likes Received:
    30
    Interesting topic.

    I'd like to find out about this also especially about the great Silicon Valley.
     
  3. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

    Joined:
    Oct 23, 2014
    Messages:
    754
    Likes Received:
    1,734
    The people that created Apple were from California, and the people that founded google went to university in California. Ebay founder had been living in California since the 1990's.
     
  4. goodtimes

    goodtimes Power Member

    Joined:
    Jan 25, 2009
    Messages:
    548
    Likes Received:
    573
    Most of the companies are not legally incorporated in California. California has terrible business tax laws. Google and many other Fortune 500 companies are legally incorparated in Delaware since its a tax haven for corporations:
    https://investor.google.com/corporate/certificate-of-incorporation.html

    Operationally Google and the other major tech companies are all located in Silicon Valley because that's where the tech hub is. This attracts all the best talent in the industry, the infrastructure and investor money needed to launch tech companies.

    Silicon Valley has a culture of innovativion in technology, a community of tech geeks and all the resources needed to run a tech startup or a massive tech corporation like Google or Apple. Try to launch a tech startup in rural Alabama and just see how far you get.

    Also many tech startups are launched with the sole purpose of selling out to one of the tech giants. The startup team gets a huge payday and the acquiring company gets into a new niche or acquires a new technology. YouTube and AdMob were both small start ups that were eventually acquired by by Google.
     
    • Thanks Thanks x 2
  5. SH-M

    SH-M Jr. VIP Jr. VIP

    Joined:
    Sep 13, 2013
    Messages:
    442
    Likes Received:
    224
    Hmm quite interesting connection. The rest of the companies could have just.. 'joined the bandwagon' of California maybe.

    I used to think that there is something regarding taxes... some ease or something similar... but then, why doesn't Microsoft have its headquarters in California, rather in Washington.

    However, I still believe that there is much more than the aforementioned facts in this case. It's quite interesting.
     
  6. SH-M

    SH-M Jr. VIP Jr. VIP

    Joined:
    Sep 13, 2013
    Messages:
    442
    Likes Received:
    224
    Interesting points. As I mentioned at first, it could also be a strategical location thing... the reasons you mentioned for being located in Silicon Valley.

    Since the tax case is cleared off, something that I didn't now (for these companies being legally incorporated in Delaware), now the location strategy remains, mainly for resources (human, economic etc.)
     
  7. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

    Joined:
    Oct 23, 2014
    Messages:
    754
    Likes Received:
    1,734
    Is the technology they buy even worth it most of the time? Facebook spent $4 billion on whatsapp, it seems like developing a rival service would be a fraction of the price.
     
  8. infoasian

    infoasian Supreme Member

    Joined:
    May 12, 2011
    Messages:
    1,374
    Likes Received:
    428
    Occupation:
    retired
    Location:
    Singapore
    Silicon Valley is where it all started, let's call it the Bollywood of computers.
     
  9. Paranoid Android

    Paranoid Android Jr. VIP Jr. VIP

    Joined:
    Jun 20, 2010
    Messages:
    1,720
    Likes Received:
    2,432
    Gender:
    Male
    Occupation:
    Pantie Thief
    Location:
    Native America
    Weather is good, people are awesome, food is awesome, just the kind of atmosphere that this sort of companies need.

    And then theres the silicon valley. When you need silicon to make those new computer chips, you don't need to look far.
     
  10. rabbitking

    rabbitking Elite Member

    Joined:
    Sep 24, 2013
    Messages:
    1,712
    Likes Received:
    3,580
    Developing the technology is easy. I know some people here who could do that, but marketing it to that
    scale and branding it is where the cost comes in.
     
    • Thanks Thanks x 1
  11. redrubies

    redrubies Supreme Member

    Joined:
    Jan 17, 2011
    Messages:
    1,425
    Likes Received:
    2,590
    Location:
    USA
    OP, Silicon Valley has been the center of technology since the early 1900's.
     
  12. Grizzy

    Grizzy Senior Member

    Joined:
    Nov 11, 2008
    Messages:
    919
    Likes Received:
    1,001
    They paid $4 billion cash, but a whopping $12 billion in Facebook shares and $3 billion in restricted stock. So the price tag actually set them back about $19 billion... To put that into perspective, FB paid nearly the equivalent of the entire market cap of Sony for what is basically a revenueless messaging app. :eek:

    But with 450 million users and the potential to maybe double that in the years to come, it's more of a strategic move. Mark can now sink his claws into hundreds of millions of users and eventually expose them to FB's very refined ad platform. If they can start to generate high-margin dollars from those users (they've already proven that they can make money off of mobile) and at the same time keep whatsapp out of the hands of Google or Microsoft it could prove to be a good move.

    It was a totally crazy valuation and acquisition, but I like it. It's a bold maneuver. I've said this before, but IMO Mark Zuckerberg is the most effective CEO alive. I would have trust in him if I were a shareholder.
     
    • Thanks Thanks x 1
  13. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

    Joined:
    Oct 23, 2014
    Messages:
    754
    Likes Received:
    1,734
    It just shows that FB is not a good company if they are going to waste so much money on something that will not bring good enough revenue. Within 10-15 years Mark will be in a federal prison for defrauding investors.
     
  14. themillenium

    themillenium Newbie

    Joined:
    Dec 4, 2014
    Messages:
    15
    Likes Received:
    9
    Economies of scale perhaps?
     
  15. eyesofconfuse

    eyesofconfuse Registered Member

    Joined:
    Nov 16, 2011
    Messages:
    73
    Likes Received:
    19
    Most companies are there for financial purposes, what good is an idea without the funds to follow through with all of those ideas. Gotta spend money to make money.

    On a personal level, I couldn't live in L.A. went there for a few days. It was cool and all, but the driving/traffic was just plain awful. Then I couldn't stand the entitlement I felt from people more than I usually would.

    Another thing why Cali attracts people I have to imagine, it's a place to spend your money when you have enough. Literally everything and anything can be bought there.
     
  16. Trepanated

    Trepanated Supreme Member

    Joined:
    Sep 18, 2010
    Messages:
    1,395
    Likes Received:
    5,381
    I think it was a more subtle strategy than customer acquisition. I saw it as a customer retention acquisition. FB were starting to fall out of favour with some of their demographic and were starting to lose users.

    A lot of those users were moving across to other, more singularly focussed platforms and FB made the wise move of buying those platforms (both Whatsapp and Instagram).

    So although people are migrating away from FB, they are now migrating to other platforms that FB now own, so are still in the FB ecosystem

    Whatsapp is definitely not 'revenueless' either - they are pushing half a billion users and charge $1 per year after the first year. There are very few social networks that get revenue from subscriptions and Whatsapp appear to have cracked that. Of course, with the barrier to entry being so low, it remains to be seen how many of their users 'stay & pay' and how many migrate to other, free platforms.

    And what makes you say that?

    Just look at their Instagram acquisition - that turned out to be spectacular.

    They bought it for $1 Billion less than 3 years ago and it has just hit a valuation of $35 Billion.

    When the news of the Instagram valuation broke, Facebook's stock hit a record high - exactly how is that defrauding their investors?
     
    • Thanks Thanks x 1
  17. Grizzy

    Grizzy Senior Member

    Joined:
    Nov 11, 2008
    Messages:
    919
    Likes Received:
    1,001
    The year preceding the acquisition they were estimated to only have generated $20 million in revenue. That's might as well be nothing if your talking about a $19 billion valuation.

    Prior to their acquisition, whatsapp was experimenting with different ways to generate revenue, and I believe that's how this idea of an annual subscription came to be. Apparently since FB has taken over they've been operating at a loss as they've scaled back efforts to make money and instead have directed their efforts into growing the user base. True monetization may be years down the road, but it'll be massive when it finally happens.
     
  18. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

    Joined:
    Oct 23, 2014
    Messages:
    754
    Likes Received:
    1,734
    Because they are hyping up the value, FB doesn't have much assets and doesn't have much income that a company with a market cap similar needs to have to be a good investment.
     
  19. netcelal

    netcelal Senior Member

    Joined:
    Jul 12, 2009
    Messages:
    953
    Likes Received:
    376
    Location:
    7/24 Internet
    I think Silicon Valley and the never-ending Sunshine are enough to stay
     
  20. Trepanated

    Trepanated Supreme Member

    Joined:
    Sep 18, 2010
    Messages:
    1,395
    Likes Received:
    5,381
    Care to explain how they are 'hyping up the value'?

    And what income does a company with their market capitalization need to be a good investment?

    As far as assets, they have over a billion of them. In their space the users are the assets and they are the company who have the most users.