Hundreds of leading tech companies have left Silicon Valley’s sunny climate to embrace Texas’s minimal state intervention in taxes and regulations. A new corporate exodus?

“I’ve heard that starting a company in California is nearly impossible. So I have a message for the people there: come and check out Texas.” These were the words spoken on the radio to millions of listeners in 2013 by the former governor of the state, Rick Perry, as part of a campaign to attract startups and entrepreneurs from the West Coast. Just a year later, the automaker Toyota announced the move of its U.S. headquarters to the Lone Star State. Since then, hundreds of companies from various industries—but primarily tech—have followed suit, drawn by the low state interference in taxes and regulations. Oracle, HP, 8VC, Dropbox, Elon Musk’s entire corporate empire, and the latest to make the move just a few days ago: Meta.

The sunny climate of Silicon Valley and its labor market have attracted engineers for decades, making the region the undisputed epicenter of the tech industry. But that’s been changing in recent years. That prosperity also brought with it a strained housing market, high tax rates, and strict regulations that have hampered the progress of many companies and made doing business in the Bay Area a challenge. So some of them didn’t take long to look for alternatives.

Of the roughly 300 companies that moved to Texas between 2015 and last year, more than half came from California. Today, there are already 55 Fortune 500 companies headquartered in Texas—the highest number in any state—making it a true economic powerhouse. So much so that, if it were a country, Texas would have the eighth-largest economy in the world, surpassing Italy or Canada. Greg Abbott, who succeeded Perry as governor in 2015, calls the state “the economic giant of the United States.”

Texas prides itself on an image of independence and barrier-free freedom, a place where people can play their cards and the government barely interferes in business affairs. Under Republican leadership, the state aims to establish itself as the new corporate mecca, and in 2023, it signed the largest property tax cut in state history. “In Texas, we cut red tape and protect industry from job-killing restrictions and unnecessary regulations that can stifle innovation elsewhere,” Abbott said. The goal was to get professionals to come to Texas and realize there was more to it than just desert and cowboys.

The result has been that more and more companies are announcing plans to move from Democratic states to more economically favorable jurisdictions. Between 2019 and 2022, California lost nearly $80 billion in tax revenue, while Texas gained $31 billion. In the past 10 years, its economy has grown at an average rate of 3% annually, compared to about 2.3% for the U.S. as a whole.

But Texas’s increasingly conservative stance has also played a major role, as moderate politicians have been displaced in favor of more extreme candidates. The state banned abortion in nearly all cases in 2022 and has also taken a conservative stance on LGBT and transgender issues, as well as a hard line on progressive topics, reflecting the party’s national shift under Trump’s leadership.

That shift is also mirrored in the direction of tech companies—not just Elon Musk’s extensive list, but also Meta and Mark Zuckerberg. The parent company of Facebook and Instagram has announced that it will fully move its Trust and Safety teams (those responsible for enforcing moderation, hate speech, and misinformation policies) to Texas. The decision, according to the CEO, “will help remove the concern that employees are excessively censoring content.”

Texas is one of two U.S. states (along with Florida) with a law that prohibits content moderation on social networks. In 2021, following the January 6 Capitol insurrection, the state passed a law that essentially prevents platforms from removing posts based on users’ political opinions and requires them to provide individual explanations when modifying such content. The state government justifies it with the First Amendment and freedom of expression.

And that’s what led the world’s richest man to move all his company headquarters to Texas before Meta did, in an unprecedented corporate migration. The exodus began when Tesla moved its headquarters from Palo Alto, California, to Austin in 2021. That same year, before buying and renaming Twitter, he was already fantasizing about a “kind of Texas utopia along the Colorado River.” In the northern part of the state, he transformed the quiet life of a rural town of 12,000 called Bastrop into the stronghold of his business empire. There, Starlink, which manufactures internet satellites, has a 150,000-square-meter plant just fifteen minutes from the historic center. The Boring Company, his tunnel-building firm, has a research and development center in the area. And according to plans, the social network X will soon begin construction of its headquarters there too.

His ambition doesn’t end there. He has now begun using his power, influence, and capital to build his own city. “The SpaceX headquarters will officially be in the city of Starbase,” Musk proclaimed. In southern Texas, in Cameron County, near Brownsville, he has already taken steps for Starbase to become an official municipality, with a zip code and even its own city hall. In that time, more than 3,400 employees and contractors have put down roots in the area, while SpaceX is gradually equipping it with the amenities of an exclusive, personalized city for newcomers (schools, hospitals, etc.). Not only do Texas Republicans thank him, but so does the newly elected president, who praises him for turning his back on California Democrats. “For God’s sake, please don’t let Texas become California,” Musk pleads.

This strategic move is driven by multiple motives. On one hand, it’s his way of rebelling against laws that don’t align with his vision, such as those that prohibit schools from informing parents about changes in their children’s sexual orientation or gender identity. On the other, it’s driven by purely business reasons. Texas offers fertile ground for business, and Musk has found tax incentives and a government eager to open its doors wide for him. “It’s a win-win. This used to be just farmland, and now we have two French restaurants downtown,” said Becki Womble, president of the Bastrop Chamber of Commerce. “Suddenly, it was like, ‘Voilà, Elon has arrived!’”

But the notable increase in employment rates and GDP growth in Texas also hides a darker side, according to some residents, who argue that the state’s low-tax, minimal-intervention policy has left many locals behind. The areas where Elon Musk has established his projects are no longer what they used to be; he has transformed both the landscape and daily routines. Locals feel the signs of city “Muskification” in the form of rising housing prices and concerns about the environment, particularly regarding water resources near SpaceX facilities.

And now a common thought is beginning to take shape in the most humble communities—that Texas’s growth is coming at the expense of low-wage workers. But what can you say to the richest man in the world, now the president’s right-hand man?

Teknautas – is a technology and science section of the Spanish digital newspaper El Confidencial. It focuses on in-depth reporting, analysis, and news related to innovation, emerging technologies, cybersecurity, digital culture, and scientific developments. Known for its investigative approach, Teknautas often explores the social, political, and economic impact of tech trends in Spain and globally.

El Confidencial is a Spanish digital newspaper known for its investigative journalism and in-depth reporting on politics, economics, and current affairs. Founded in 2001, it operates exclusively online and has gained a reputation for its independence, transparency, and critical stance toward both public institutions and private sectors. El Confidencial is widely read by professionals, decision-makers, and readers seeking comprehensive, data-driven journalism in Spain.