1 00:00:00,720 --> 00:00:03,179 This story starts with a bedsheet. 2 00:00:03,180 --> 00:00:04,679 It was probably white. 3 00:00:04,680 --> 00:00:05,819 I don't know. 4 00:00:05,820 --> 00:00:06,820 Aren't most? 5 00:00:06,900 --> 00:00:08,939 Maybe queen or king sized. 6 00:00:08,940 --> 00:00:09,869 It's unclear. 7 00:00:09,870 --> 00:00:10,890 Yeah, it was probably mine. 8 00:00:12,330 --> 00:00:13,349 [laughter] No, I had to sleep on a 9 00:00:13,350 --> 00:00:14,969 twin bed, so it was probably bigger. 10 00:00:14,970 --> 00:00:16,469 This is Matt Mathias. 11 00:00:16,470 --> 00:00:18,389 You might recognize that last name. 12 00:00:18,390 --> 00:00:19,319 His dad was Vic. 13 00:00:19,320 --> 00:00:21,179 Matthias. As in Vic Matthias 14 00:00:21,180 --> 00:00:23,069 Shores, which used to be called 15 00:00:23,070 --> 00:00:24,869 Auditorium Shores. 16 00:00:24,870 --> 00:00:26,309 Matt's dad was the head of the 17 00:00:26,310 --> 00:00:28,019 Austin Chamber of Commerce starting 18 00:00:28,020 --> 00:00:29,639 in the late 1950s. 19 00:00:29,640 --> 00:00:32,219 He was a well-liked guy and 20 00:00:32,220 --> 00:00:33,629 an innovator in the city. 21 00:00:33,630 --> 00:00:35,309 Vic ended up running the chamber for 22 00:00:35,310 --> 00:00:37,559 nearly 30 years, and back 23 00:00:37,560 --> 00:00:39,869 in the early 1970s, 24 00:00:39,870 --> 00:00:41,339 he was trying to make Austin a 25 00:00:41,340 --> 00:00:43,379 destination, a place where people 26 00:00:43,380 --> 00:00:45,059 didn't just come to go to college 27 00:00:45,060 --> 00:00:47,189 and then leave for a job in another 28 00:00:47,190 --> 00:00:49,049 city, but a place where they 29 00:00:49,050 --> 00:00:51,599 stayed and started families. 30 00:00:51,600 --> 00:00:53,549 My dad always said our most valuable 31 00:00:53,550 --> 00:00:55,439 asset is our kids, and we're 32 00:00:55,440 --> 00:00:56,939 educating them on a great public 33 00:00:56,940 --> 00:00:58,079 school system here. 34 00:00:58,080 --> 00:00:59,129 They're going to the University of 35 00:00:59,130 --> 00:01:00,839 Texas or one of the other colleges 36 00:01:00,840 --> 00:01:02,909 in town, and then 37 00:01:02,910 --> 00:01:04,589 they get out and they can sell shoes 38 00:01:04,590 --> 00:01:05,939 at JCPenney's. 39 00:01:05,940 --> 00:01:07,409 They can go to work for the state or 40 00:01:07,410 --> 00:01:09,359 the university, or they can join 41 00:01:09,360 --> 00:01:10,979 the military and maybe end up at 42 00:01:10,980 --> 00:01:12,419 Bergstrom, because — So it was 43 00:01:12,420 --> 00:01:13,829 really a government town. 44 00:01:13,830 --> 00:01:15,419 As the head of the chamber, Vic 45 00:01:15,420 --> 00:01:17,249 started recruiting companies to move 46 00:01:17,250 --> 00:01:19,049 here, companies that could employ 47 00:01:19,050 --> 00:01:20,609 people getting out of U.T. 48 00:01:20,610 --> 00:01:22,349 or nearby schools. 49 00:01:22,350 --> 00:01:23,669 And one of these first companies was 50 00:01:23,670 --> 00:01:25,499 Texas Instruments. 51 00:01:25,500 --> 00:01:27,389 Now, I'm not entirely sure what they 52 00:01:27,390 --> 00:01:29,369 made back in the seventies, 53 00:01:29,370 --> 00:01:31,199 but I'm definitely sure I owned 54 00:01:31,200 --> 00:01:33,209 one of those scientific calculators. 55 00:01:33,210 --> 00:01:34,859 From the Learning Center of Texas 56 00:01:34,860 --> 00:01:36,799 Instruments, innovators in 57 00:01:36,800 --> 00:01:38,879 the personal electronics. 58 00:01:38,880 --> 00:01:40,439 To get Texas Instruments to move to 59 00:01:40,440 --> 00:01:42,449 Austin, they needed a place to put 60 00:01:42,450 --> 00:01:43,679 their office. 61 00:01:43,680 --> 00:01:45,809 Vic was eyeing a piece of land in 62 00:01:45,810 --> 00:01:47,339 northeast Austin, but ... 63 00:01:47,340 --> 00:01:50,099 Word leaked out and a reporter 64 00:01:50,100 --> 00:01:51,989 reported that Texas Instruments 65 00:01:51,990 --> 00:01:53,699 was looking at buying a tract on 66 00:01:53,700 --> 00:01:55,079 I-35 North. 67 00:01:55,080 --> 00:01:57,359 After that article, the seller, 68 00:01:57,360 --> 00:01:59,309 who was a farmer, doubled his 69 00:01:59,310 --> 00:02:00,310 price. 70 00:02:01,220 --> 00:02:03,259 And Texas Instruments said 71 00:02:03,260 --> 00:02:04,699 we're not going to do that. 72 00:02:04,700 --> 00:02:06,469 So Vic went looking for another 73 00:02:06,470 --> 00:02:06,949 spot. 74 00:02:06,950 --> 00:02:08,599 So my dad got on the phone, started 75 00:02:08,600 --> 00:02:10,279 making calls about other sites, and 76 00:02:10,280 --> 00:02:11,839 he said, "I've got another site for 77 00:02:11,840 --> 00:02:12,799 you. 78 00:02:12,800 --> 00:02:14,629 It's on 183." And 79 00:02:14,630 --> 00:02:16,219 they said, "You know, we don't have 80 00:02:16,220 --> 00:02:17,299 time to really come down there. 81 00:02:17,300 --> 00:02:19,069 Look at it. How can we how can we 82 00:02:19,070 --> 00:02:19,459 see it?" 83 00:02:19,460 --> 00:02:21,229 Vic sent the maps of this new place 84 00:02:21,230 --> 00:02:23,029 he had in mind, just north of the 85 00:02:23,030 --> 00:02:24,049 Arboretum. 86 00:02:24,050 --> 00:02:25,969 But the Texas Instruments executives 87 00:02:25,970 --> 00:02:27,769 weren't going to buy a piece of land 88 00:02:27,770 --> 00:02:29,179 sight unseen. 89 00:02:29,180 --> 00:02:30,739 They said, "Well, we're going to fly 90 00:02:30,740 --> 00:02:31,789 down and look, but we don't have 91 00:02:31,790 --> 00:02:33,079 time to land before our board 92 00:02:33,080 --> 00:02:33,529 meeting." 93 00:02:33,530 --> 00:02:34,879 So Vic and another guy at the 94 00:02:34,880 --> 00:02:36,949 chamber grabbed a bedsheet. 95 00:02:36,950 --> 00:02:38,659 And they went out on one corner of 96 00:02:38,660 --> 00:02:40,279 the property and stood there and 97 00:02:40,280 --> 00:02:41,479 waved the sheet. 98 00:02:41,480 --> 00:02:43,459 And he said the jet got low 99 00:02:43,460 --> 00:02:45,439 and came over and flew by 100 00:02:45,440 --> 00:02:46,729 them. And then they got in the car 101 00:02:46,730 --> 00:02:48,079 and ran to the next corner and they 102 00:02:48,080 --> 00:02:50,029 waved the sheet, and the jet came 103 00:02:50,030 --> 00:02:51,769 back by in about 5 minutes and did a 104 00:02:51,770 --> 00:02:53,449 circle, and they did this to show 105 00:02:53,450 --> 00:02:54,409 them the four corners of the 106 00:02:54,410 --> 00:02:56,209 property by waving a bed sheet. 107 00:02:56,210 --> 00:02:57,679 Two guys running around with a 108 00:02:57,680 --> 00:02:59,509 bedsheet. A true act of 109 00:02:59,510 --> 00:03:01,639 desperation to close a deal, 110 00:03:01,640 --> 00:03:04,339 to get a company to move to Austin. 111 00:03:04,340 --> 00:03:06,379 And he said about 3 hours later, 112 00:03:06,380 --> 00:03:07,939 he gets a call from Texas 113 00:03:07,940 --> 00:03:09,889 Instruments, and Dallas said, 114 00:03:09,890 --> 00:03:10,890 "We'll take it." [laughter] 115 00:03:14,720 --> 00:03:16,639 If you wave a bedsheet, they will 116 00:03:16,640 --> 00:03:17,640 come. 117 00:03:20,100 --> 00:03:21,509 I'm Audrey McGlinchey. 118 00:03:21,510 --> 00:03:23,519 This is Growth Machine: How Austin 119 00:03:23,520 --> 00:03:25,529 Engineered Its Housing Market. 120 00:03:25,530 --> 00:03:27,089 Episode five. 121 00:03:27,090 --> 00:03:29,039 Welcome to Silicon Gulch. 122 00:03:33,420 --> 00:03:34,439 I think it's hard for a lot of 123 00:03:34,440 --> 00:03:36,089 people who got to Austin in the last 124 00:03:36,090 --> 00:03:38,609 20 years or so to really understand 125 00:03:38,610 --> 00:03:40,529 how much Austin has changed, 126 00:03:40,530 --> 00:03:42,509 how different this place was 127 00:03:42,510 --> 00:03:45,209 just a few decades earlier. 128 00:03:45,210 --> 00:03:46,829 Former Austin Mayor Leigh Cook 129 00:03:46,830 --> 00:03:49,049 arrived in Austin as an officer 130 00:03:49,050 --> 00:03:50,129 in the Air Force. 131 00:03:50,130 --> 00:03:51,839 His first assignment coming back 132 00:03:51,840 --> 00:03:53,039 from the Vietnam War. 133 00:03:53,040 --> 00:03:54,599 When I first went to work for the 134 00:03:54,600 --> 00:03:56,429 Air Force, my base 135 00:03:56,430 --> 00:03:58,439 salary was $399 a month 136 00:03:58,440 --> 00:03:59,609 and I thought I was rich. 137 00:03:59,610 --> 00:04:01,289 Cook was thinking of his future. 138 00:04:01,290 --> 00:04:03,119 And initially, he saw limited 139 00:04:03,120 --> 00:04:04,919 prospects in Austin. 140 00:04:04,920 --> 00:04:06,779 Most of the people that lived and 141 00:04:06,780 --> 00:04:08,909 worked in Austin and Austin 142 00:04:08,910 --> 00:04:11,579 Metro in 1970 143 00:04:11,580 --> 00:04:14,909 were government and education 144 00:04:14,910 --> 00:04:15,989 and service. 145 00:04:15,990 --> 00:04:17,789 But because of Vic Mathias' bed 146 00:04:17,790 --> 00:04:20,309 sheet shenanigans, Texas Instruments 147 00:04:20,310 --> 00:04:22,469 had opened a branch in Austin, 148 00:04:22,470 --> 00:04:24,449 and Cook took a job there and 149 00:04:24,450 --> 00:04:25,799 made a life. 150 00:04:25,800 --> 00:04:27,509 A decade later, Cook would succeed 151 00:04:27,510 --> 00:04:29,429 Vic Mathias as head of the Chamber 152 00:04:29,430 --> 00:04:30,599 of Commerce. 153 00:04:30,600 --> 00:04:32,459 And by 1988, 154 00:04:32,460 --> 00:04:33,879 he was mayor of the city. 155 00:04:33,880 --> 00:04:35,819 And I had the honor to 156 00:04:35,820 --> 00:04:37,589 serve the citizens of Austin from 157 00:04:37,590 --> 00:04:40,290 1988 to 1991. 158 00:04:43,680 --> 00:04:44,909 Cook's ability to leave the Air 159 00:04:44,910 --> 00:04:46,769 Force and find a job here, to 160 00:04:46,770 --> 00:04:48,569 start a career, that's just one 161 00:04:48,570 --> 00:04:50,459 example of what Vic was trying 162 00:04:50,460 --> 00:04:51,659 to build. 163 00:04:51,660 --> 00:04:52,799 He wasn't really thinking about 164 00:04:52,800 --> 00:04:54,899 fancy brunch spots, upscale 165 00:04:54,900 --> 00:04:57,869 hotels, million dollar houses. 166 00:04:57,870 --> 00:04:59,609 Those came later. 167 00:04:59,610 --> 00:05:01,229 Vick was just trying to keep people 168 00:05:01,230 --> 00:05:03,179 here and give people a reason 169 00:05:03,180 --> 00:05:04,349 to come. 170 00:05:04,350 --> 00:05:05,849 He helped push for one of Austin's 171 00:05:05,850 --> 00:05:07,829 first big festivals, Aqua 172 00:05:07,830 --> 00:05:09,989 Fest. He helped clean up Town Lake. 173 00:05:09,990 --> 00:05:12,089 Now, Lady Bird Lake, maybe 174 00:05:12,090 --> 00:05:13,859 more importantly, he helped drive a 175 00:05:13,860 --> 00:05:15,959 dramatic change in Austin's business 176 00:05:15,960 --> 00:05:17,189 landscape. 177 00:05:17,190 --> 00:05:19,169 And to be clear, it was no 178 00:05:19,170 --> 00:05:20,170 accident. 179 00:05:25,110 --> 00:05:26,219 For this episode, I'm going to be 180 00:05:26,220 --> 00:05:28,469 joined by KUT's Jimmy Moss. 181 00:05:28,470 --> 00:05:30,719 He's also a native Austin. 182 00:05:30,720 --> 00:05:31,409 Hey, Jimmy. 183 00:05:31,410 --> 00:05:32,189 Hi, Audrey. 184 00:05:32,190 --> 00:05:33,749 So you grew up in Austin in the 185 00:05:33,750 --> 00:05:34,649 1980s. 186 00:05:34,650 --> 00:05:36,539 And tell me, what was it like? 187 00:05:36,540 --> 00:05:38,729 It was a simpler time. 188 00:05:38,730 --> 00:05:40,409 That's a dumb thing to say, but it 189 00:05:40,410 --> 00:05:41,999 really was. It was a simpler place. 190 00:05:42,000 --> 00:05:44,039 Like, you either came here because 191 00:05:44,040 --> 00:05:45,689 you were going to go to school. 192 00:05:45,690 --> 00:05:47,459 You came here because your parents 193 00:05:47,460 --> 00:05:48,629 were stationed at Bergstrom Air 194 00:05:48,630 --> 00:05:50,609 Force Base. That is why I 195 00:05:50,610 --> 00:05:51,989 call Austin home. 196 00:05:51,990 --> 00:05:53,639 Or you were going to work for the 197 00:05:53,640 --> 00:05:55,379 state government in some capacity, 198 00:05:55,380 --> 00:05:57,269 either passing legislation at the 199 00:05:57,270 --> 00:05:59,489 Capitol or doing some of the, 200 00:05:59,490 --> 00:06:00,899 working in the bureaucracy in some 201 00:06:00,900 --> 00:06:01,859 way or another. 202 00:06:01,860 --> 00:06:03,119 But that was it. Like, those were 203 00:06:03,120 --> 00:06:04,829 the main three reasons to come to 204 00:06:04,830 --> 00:06:06,629 town. You might have also been lured 205 00:06:06,630 --> 00:06:09,359 by, if you were a musician 206 00:06:09,360 --> 00:06:11,219 in your early years, this 207 00:06:11,220 --> 00:06:12,809 was your stopover on your way to 208 00:06:12,810 --> 00:06:14,279 Nashville or something like that. 209 00:06:14,280 --> 00:06:16,289 But there wasn't a lot going on, 210 00:06:16,290 --> 00:06:17,489 and that had been the case for 211 00:06:17,490 --> 00:06:19,499 several years prior, even for 212 00:06:19,500 --> 00:06:21,239 a few generations before me. 213 00:06:21,240 --> 00:06:22,319 Starting around the fifties and 214 00:06:22,320 --> 00:06:24,359 sixties, some people in Austin get 215 00:06:24,360 --> 00:06:25,529 together and they're trying to 216 00:06:25,530 --> 00:06:26,909 figure out how do we make this a 217 00:06:26,910 --> 00:06:28,979 place where people who want 218 00:06:28,980 --> 00:06:30,329 to can stay? 219 00:06:30,330 --> 00:06:32,189 How do we create jobs for people 220 00:06:32,190 --> 00:06:33,419 and careers? 221 00:06:33,420 --> 00:06:35,549 And it was early visionaries, guys 222 00:06:35,550 --> 00:06:37,439 like Vic Mathias, they began to 223 00:06:37,440 --> 00:06:39,299 wonder, "What should Austin 224 00:06:39,300 --> 00:06:41,369 be? What should be the staple 225 00:06:41,370 --> 00:06:43,499 of Austin's economy?" And they kind 226 00:06:43,500 --> 00:06:45,284 of centered around technology fairly 227 00:06:46,530 --> 00:06:48,779 early in this process. 228 00:06:48,780 --> 00:06:49,769 They started promoting it as 229 00:06:49,770 --> 00:06:51,599 industry without smokestacks in 230 00:06:51,600 --> 00:06:52,709 the 1950s. 231 00:06:52,710 --> 00:06:54,509 Andrew Busch is a historian who 232 00:06:54,510 --> 00:06:56,099 studies cities and he actually wrote 233 00:06:56,100 --> 00:06:58,139 a whole book about Austin. 234 00:06:58,140 --> 00:06:59,369 Bring in an industry but make it 235 00:06:59,370 --> 00:07:00,149 clean. 236 00:07:00,150 --> 00:07:01,679 Use the quality of life and the 237 00:07:01,680 --> 00:07:03,539 natural beauty of Austin to sort 238 00:07:03,540 --> 00:07:04,799 of sell it to these knowledge 239 00:07:04,800 --> 00:07:05,489 workers. 240 00:07:05,490 --> 00:07:06,689 And these knowledge workers start 241 00:07:06,690 --> 00:07:09,539 coming, slowly, in the 1950s. 242 00:07:09,540 --> 00:07:10,478 That's when Trade Core, an 243 00:07:10,479 --> 00:07:12,299 Electronics company opens 244 00:07:12,300 --> 00:07:13,239 here in Austin. 245 00:07:13,240 --> 00:07:15,029 That's an offshoot of a research 246 00:07:15,030 --> 00:07:16,619 project at the University of Texas, 247 00:07:16,620 --> 00:07:18,449 which opened in East Austin. 248 00:07:18,450 --> 00:07:19,499 As far as I can tell, they worked 249 00:07:19,500 --> 00:07:21,359 on, quote, electronics. 250 00:07:21,360 --> 00:07:22,529 Not really sure what that meant, but 251 00:07:22,530 --> 00:07:24,119 they had big contracts with the U.S. 252 00:07:24,120 --> 00:07:25,049 military. 253 00:07:25,050 --> 00:07:27,269 Electronics was a big umbrella 254 00:07:27,270 --> 00:07:29,189 that a lot of things fit under 255 00:07:29,190 --> 00:07:30,839 back in the fifties and sixties. 256 00:07:32,190 --> 00:07:33,389 Electronics ... yeah, military 257 00:07:33,390 --> 00:07:35,159 planes, it's all the same. 258 00:07:35,160 --> 00:07:37,529 Then in 1967, Austin 259 00:07:37,530 --> 00:07:38,699 lands a big one. 260 00:07:40,499 --> 00:07:41,139 Transistors ... 261 00:07:41,140 --> 00:07:43,289 IBM opens a branch in what is now 262 00:07:43,290 --> 00:07:44,368 North Austin. 263 00:07:44,369 --> 00:07:45,900 ... the result of intensive search, 264 00:07:47,550 --> 00:07:49,709 and at IBM research 265 00:07:49,710 --> 00:07:50,969 has continued. 266 00:07:50,970 --> 00:07:52,679 And Andrew says that's when things 267 00:07:52,680 --> 00:07:54,269 start taking off. 268 00:07:54,270 --> 00:07:56,219 Sort of an academic truism when 269 00:07:56,220 --> 00:07:57,539 it comes to high tech is that 270 00:07:57,540 --> 00:07:58,540 companies pick other companies, 271 00:07:59,370 --> 00:08:00,389 right? That there's this sort of 272 00:08:00,390 --> 00:08:02,219 locational advantage 273 00:08:02,220 --> 00:08:04,049 to being around other 274 00:08:04,050 --> 00:08:05,279 companies and other knowledge 275 00:08:05,280 --> 00:08:06,149 workers. 276 00:08:06,150 --> 00:08:08,099 By the mid 1970s, Motorola and 277 00:08:08,100 --> 00:08:09,959 then Advanced Micro Devices 278 00:08:09,960 --> 00:08:12,119 or AMD, opened offices in the city. 279 00:08:12,120 --> 00:08:14,069 These companies employed thousands 280 00:08:14,070 --> 00:08:15,599 of people, and these people were 281 00:08:15,600 --> 00:08:17,669 moving here for those jobs. 282 00:08:17,670 --> 00:08:19,949 Between 1960 and 1980, 283 00:08:19,950 --> 00:08:21,569 Austin's population more than 284 00:08:21,570 --> 00:08:24,479 doubled to almost 350,000 285 00:08:24,480 --> 00:08:25,349 people. 286 00:08:25,350 --> 00:08:26,729 Austin's still relatively small 287 00:08:26,730 --> 00:08:28,679 then. Toledo, Ohio, is 288 00:08:28,680 --> 00:08:30,299 bigger than Austin at the time. 289 00:08:30,300 --> 00:08:31,349 And a lot of these companies are 290 00:08:31,350 --> 00:08:33,869 putting their offices along 183, 291 00:08:33,870 --> 00:08:35,609 the highway that runs from southeast 292 00:08:35,610 --> 00:08:37,739 Austin to the city's northwest. 293 00:08:37,740 --> 00:08:39,058 At some point, this stretch of 294 00:08:39,059 --> 00:08:41,548 roadway gets a new name, 295 00:08:41,549 --> 00:08:43,979 at least in old newspaper articles. 296 00:08:43,980 --> 00:08:45,419 You know what they called it? 297 00:08:45,420 --> 00:08:47,039 Silicon Gulch. 298 00:08:47,040 --> 00:08:49,289 Welcome to Silicon Gulch. 299 00:08:56,270 --> 00:08:58,519 Around this time, America's economic 300 00:08:58,520 --> 00:09:01,159 domination was being threatened, 301 00:09:01,160 --> 00:09:03,469 threatened by Japan, in a fight 302 00:09:03,470 --> 00:09:04,805 over computers. 303 00:09:06,429 --> 00:09:07,708 Supercomputers. 304 00:09:08,840 --> 00:09:10,999 The Japanese want to get there first 305 00:09:11,000 --> 00:09:12,889 and fast so that they can 306 00:09:12,890 --> 00:09:14,179 gain a good chunk of the market 307 00:09:14,180 --> 00:09:15,589 before IBM wakes up. 308 00:09:15,590 --> 00:09:16,939 Japan's trying to build a fifth 309 00:09:16,940 --> 00:09:18,469 generation computer. 310 00:09:18,470 --> 00:09:20,329 I have no idea what that is. 311 00:09:20,330 --> 00:09:22,369 But like Jimmy said, it's a 312 00:09:22,370 --> 00:09:23,569 supercomputer. 313 00:09:23,570 --> 00:09:25,249 And the U.S. decides it's going to 314 00:09:25,250 --> 00:09:26,659 try to beat Japan. 315 00:09:26,660 --> 00:09:28,489 It's going to build its own 316 00:09:28,490 --> 00:09:30,259 supercomputer first. 317 00:09:30,260 --> 00:09:32,089 So all these tech companies come 318 00:09:32,090 --> 00:09:34,189 together to form a coalition. 319 00:09:34,190 --> 00:09:35,839 They call it a consortium, and it's 320 00:09:35,840 --> 00:09:37,009 going to be called the 321 00:09:37,010 --> 00:09:39,109 Microelectronics Computer 322 00:09:39,110 --> 00:09:41,119 and Technology Corporation. 323 00:09:41,120 --> 00:09:42,199 Really rolls off the tongue. 324 00:09:42,200 --> 00:09:43,459 Really does. 325 00:09:43,460 --> 00:09:44,629 M.C.C. 326 00:09:44,630 --> 00:09:45,469 for short. 327 00:09:45,470 --> 00:09:47,299 And this guy was going to lead it. 328 00:09:47,300 --> 00:09:49,019 Admiral Bobby R. 329 00:09:49,020 --> 00:09:49,849 Inman, U.S. 330 00:09:49,850 --> 00:09:50,990 Navy, retired. 331 00:09:53,780 --> 00:09:55,009 So let's just talk for a little 332 00:09:55,010 --> 00:09:55,609 while. 333 00:09:55,610 --> 00:09:56,950 Inman wasn't really a computer guy, 334 00:09:56,951 --> 00:09:58,159 he was a defense guy. 335 00:09:58,160 --> 00:09:59,839 He was the deputy director of the 336 00:09:59,840 --> 00:10:01,549 National Security Agency in the late 337 00:10:01,550 --> 00:10:03,949 1970s and then the CIA 338 00:10:03,950 --> 00:10:05,299 in the early eighties. 339 00:10:05,300 --> 00:10:06,619 Anyway, Inman is going to head up 340 00:10:06,620 --> 00:10:08,539 this big electronics research 341 00:10:08,540 --> 00:10:10,519 center, and 342 00:10:10,520 --> 00:10:12,259 he needs a place to put it. 343 00:10:12,260 --> 00:10:13,789 How are you going to do that? 344 00:10:13,790 --> 00:10:16,399 Let's do a public site selection. 345 00:10:16,400 --> 00:10:18,139 Yeah. So they were going to go to 346 00:10:18,140 --> 00:10:20,179 all these cities and have 347 00:10:20,180 --> 00:10:21,409 these cities, you know, basically 348 00:10:21,410 --> 00:10:23,779 pitch themselves to him. 349 00:10:23,780 --> 00:10:25,399 So Chicago, tell us why we should 350 00:10:25,400 --> 00:10:27,289 move here. Pittsburgh, what you got 351 00:10:27,290 --> 00:10:27,989 going on? 352 00:10:27,990 --> 00:10:28,909 Philadelphia. 353 00:10:28,910 --> 00:10:29,959 Baltimore. 354 00:10:29,960 --> 00:10:30,919 Tucson? 355 00:10:30,920 --> 00:10:31,939 How 'bout Phoenix? 356 00:10:31,940 --> 00:10:33,019 San Antonio? 357 00:10:33,020 --> 00:10:35,779 Dallas? Maybe Austin. 358 00:10:35,780 --> 00:10:36,780 And all these place basically have 359 00:10:37,790 --> 00:10:39,409 to make a presentation. 360 00:10:39,410 --> 00:10:40,699 Here's why you should pick us. 361 00:10:40,700 --> 00:10:41,449 Pick us. 362 00:10:41,450 --> 00:10:43,459 What were the criteria that 363 00:10:43,460 --> 00:10:44,659 they had to meet? 364 00:10:44,660 --> 00:10:45,829 Cost of living. 365 00:10:45,830 --> 00:10:47,449 Quality of life. 366 00:10:47,450 --> 00:10:48,450 Business climate. 367 00:10:48,950 --> 00:10:49,950 Tax climate. 368 00:10:50,600 --> 00:10:52,789 Eventually, they announced five 369 00:10:52,790 --> 00:10:53,929 finalists. 370 00:10:53,930 --> 00:10:56,449 San Diego, Phoenix, 371 00:10:56,450 --> 00:10:58,459 Austin, Atlanta 372 00:10:58,460 --> 00:11:00,439 and the Research Triangle. 373 00:11:00,440 --> 00:11:02,599 One of the CEOs 374 00:11:02,600 --> 00:11:04,759 had been stationed in Phoenix, 375 00:11:04,760 --> 00:11:06,859 hated it, and they persuaded 376 00:11:06,860 --> 00:11:08,959 his colleagues to drop Phoenix. 377 00:11:08,960 --> 00:11:10,759 So it turned out to be just the 378 00:11:10,760 --> 00:11:11,329 four. 379 00:11:11,330 --> 00:11:13,579 Okay, so four finalists. 380 00:11:13,580 --> 00:11:14,569 Sorry, Phoenix. 381 00:11:14,570 --> 00:11:16,729 So Inman and the other guys go 382 00:11:16,730 --> 00:11:18,439 again and they visit these cities 383 00:11:18,440 --> 00:11:20,509 and they're being wined and dined. 384 00:11:20,510 --> 00:11:23,209 And these cities are saying why MCC 385 00:11:23,210 --> 00:11:25,099 should move there. 386 00:11:25,100 --> 00:11:26,100 Flew into Austin. 387 00:11:26,960 --> 00:11:27,960 We began 388 00:11:29,060 --> 00:11:30,060 with breakfast 389 00:11:31,250 --> 00:11:34,309 in the atrium of the LBJ Library 390 00:11:34,310 --> 00:11:35,989 hosted by Mrs. Johnson. 391 00:11:35,990 --> 00:11:37,469 That's Lady Bird Johnson. 392 00:11:37,470 --> 00:11:39,739 And with the 393 00:11:39,740 --> 00:11:41,599 governor, his chief of staff 394 00:11:41,600 --> 00:11:44,089 by Powers, John Watson, 395 00:11:44,090 --> 00:11:45,949 the local real estate guy, 396 00:11:45,950 --> 00:11:48,079 heads of major banks, 397 00:11:48,080 --> 00:11:50,389 academic systems. 398 00:11:50,390 --> 00:11:52,579 What did they serve for breakfast? 399 00:11:52,580 --> 00:11:53,809 Quail. 400 00:11:53,810 --> 00:11:56,179 So while eating their quail, 401 00:11:56,180 --> 00:11:57,439 they got a presentation about 402 00:11:57,440 --> 00:11:57,949 Austin. 403 00:11:57,950 --> 00:11:59,779 They did a lot of, little bit of 404 00:11:59,780 --> 00:12:01,759 song and dance about quality 405 00:12:01,760 --> 00:12:03,829 of life and all the things 406 00:12:03,830 --> 00:12:05,149 to do. 407 00:12:05,150 --> 00:12:06,979 Barton Springs 408 00:12:06,980 --> 00:12:08,569 played a big role. 409 00:12:08,570 --> 00:12:10,399 There was some other stuff, 410 00:12:10,400 --> 00:12:10,849 too. 411 00:12:10,850 --> 00:12:14,029 Ross Perot quietly 412 00:12:14,030 --> 00:12:16,129 said, "If you select 413 00:12:16,130 --> 00:12:18,169 Austin I'll loan you 414 00:12:18,170 --> 00:12:19,999 a Lear 35 for two 415 00:12:20,000 --> 00:12:20,629 years." 416 00:12:20,630 --> 00:12:22,189 To be clear, that's Dallas 417 00:12:22,190 --> 00:12:24,169 billionaire Ross Perot, who offered 418 00:12:24,170 --> 00:12:25,644 to let them use his pane. 419 00:12:25,645 --> 00:12:26,749 When the selection committee 420 00:12:26,750 --> 00:12:28,039 eventually voted ... 421 00:12:28,040 --> 00:12:30,139 It was ultimately unanimous 422 00:12:30,140 --> 00:12:30,979 for Austin. 423 00:12:30,980 --> 00:12:31,768 The announcement that MCC will 424 00:12:31,769 --> 00:12:33,619 locate here is not 425 00:12:33,620 --> 00:12:34,969 only a victory for the city of 426 00:12:34,970 --> 00:12:37,219 Austin, but for the state as well, 427 00:12:37,220 --> 00:12:39,409 as Texas beat out three other states 428 00:12:39,410 --> 00:12:41,249 to be host to the new company. 429 00:12:41,250 --> 00:12:43,189 Oh, the university 430 00:12:43,190 --> 00:12:45,169 was the ultimate key. 431 00:12:45,170 --> 00:12:47,569 So MCC is coming to Austin. 432 00:12:47,570 --> 00:12:49,279 One of the new joint ventures is 433 00:12:49,280 --> 00:12:51,109 Microelectronics and Computer 434 00:12:51,110 --> 00:12:51,898 Technology Corporation. 435 00:12:51,899 --> 00:12:54,139 MCC for short. 436 00:12:54,140 --> 00:12:55,639 Based in Austin, Texas. 437 00:12:55,640 --> 00:12:57,589 And so that's the turn of the wheel. 438 00:12:57,590 --> 00:12:59,389 Laura Huffman was head of the Austin 439 00:12:59,390 --> 00:13:01,519 Chamber of Commerce until last year. 440 00:13:01,520 --> 00:13:03,439 Landing that in Austin 441 00:13:03,440 --> 00:13:06,199 was the first big turn of a wheel 442 00:13:06,200 --> 00:13:08,119 that allowed us to become a 443 00:13:08,120 --> 00:13:09,949 flourishing, advanced 444 00:13:09,950 --> 00:13:11,779 manufacturing technology 445 00:13:11,780 --> 00:13:13,159 idea economy. 446 00:13:13,160 --> 00:13:14,073 As Andrew Bush said earlier, 447 00:13:14,074 --> 00:13:15,949 companies beget 448 00:13:15,950 --> 00:13:17,119 companies. 449 00:13:17,120 --> 00:13:18,349 They all want to be part of the 450 00:13:18,350 --> 00:13:20,629 party. When MCC moved to Austin, 451 00:13:20,630 --> 00:13:21,949 it brought all the companies that 452 00:13:21,950 --> 00:13:23,389 were part of the consortium. 453 00:13:23,390 --> 00:13:25,219 3M, Microsoft, Boeing, 454 00:13:25,220 --> 00:13:26,179 G.E. 455 00:13:26,180 --> 00:13:28,009 But those companies 456 00:13:28,010 --> 00:13:29,689 brought in their own workers to do 457 00:13:29,690 --> 00:13:31,489 their own projects based on the 458 00:13:31,490 --> 00:13:32,929 research they did at MCC. 459 00:13:32,930 --> 00:13:34,249 It was also around this time that a 460 00:13:34,250 --> 00:13:36,379 freshman at UT started a small 461 00:13:36,380 --> 00:13:38,179 business making computers in his 462 00:13:38,180 --> 00:13:39,139 dorm room. 463 00:13:39,140 --> 00:13:41,119 That guy was Michael Dell. 464 00:13:41,120 --> 00:13:43,039 But we'll put a pin in that for now. 465 00:13:43,040 --> 00:13:44,659 Meanwhile, the tech companies keep 466 00:13:44,660 --> 00:13:45,169 on coming. 467 00:13:45,170 --> 00:13:47,179 In 1988, Semtech, another 468 00:13:47,180 --> 00:13:49,039 high tech research center, opened 469 00:13:49,040 --> 00:13:50,449 in southeast Austin. 470 00:13:50,450 --> 00:13:52,339 Austin's economy has just received 471 00:13:52,340 --> 00:13:53,719 a giant boost. 472 00:13:53,720 --> 00:13:55,699 Sematech, an electronics research 473 00:13:55,700 --> 00:13:57,709 consortium, has picked our city 474 00:13:57,710 --> 00:13:59,929 as the site for their corporation. 475 00:13:59,930 --> 00:14:01,849 So just to be clear, what are 476 00:14:01,850 --> 00:14:03,349 all these companies that are moving 477 00:14:03,350 --> 00:14:05,171 to Austin making? 478 00:14:05,172 --> 00:14:06,678 Chips, baby! 479 00:14:06,679 --> 00:14:07,669 We're a chip town! 480 00:14:07,670 --> 00:14:08,929 Yeah, we hit the lotto with this 481 00:14:08,930 --> 00:14:09,999 chip maker. 482 00:14:10,000 --> 00:14:11,599 It's the thing that basically makes 483 00:14:11,600 --> 00:14:12,709 computers go. 484 00:14:12,710 --> 00:14:14,209 The secret of turning sand to 485 00:14:14,210 --> 00:14:16,159 silicon crystal, then to those 486 00:14:16,160 --> 00:14:18,229 incredible electronic miniatures 487 00:14:18,230 --> 00:14:20,629 called chips is available to 488 00:14:20,630 --> 00:14:21,679 anyone today. 489 00:14:24,850 --> 00:14:26,199 All you need are the best 490 00:14:26,200 --> 00:14:27,309 engineering brains. 491 00:14:27,310 --> 00:14:28,779 That's right. 492 00:14:28,780 --> 00:14:30,339 With just a few months of training 493 00:14:30,340 --> 00:14:32,469 at Austin Community College or 494 00:14:32,470 --> 00:14:34,389 technical school programs, you, 495 00:14:34,390 --> 00:14:36,579 too, can be part of the exciting 496 00:14:36,580 --> 00:14:38,949 and ever growing electronics 497 00:14:38,950 --> 00:14:39,909 industry. 498 00:14:39,910 --> 00:14:41,679 It seemed like "fab" plants were 499 00:14:41,680 --> 00:14:43,389 opening everywhere. 500 00:14:43,390 --> 00:14:45,009 And if you're not up with the lingo 501 00:14:45,010 --> 00:14:47,769 that's short for fabrication plants. 502 00:14:47,770 --> 00:14:49,179 Just some of the industry jargon 503 00:14:49,180 --> 00:14:50,949 that Austinites were regularly 504 00:14:50,950 --> 00:14:52,479 seeing in want ads. 505 00:14:52,480 --> 00:14:53,480 Like microchips. 506 00:14:54,940 --> 00:14:55,867 Well, microprocessors. 507 00:14:55,868 --> 00:14:57,129 Clean rooms, those desk-less places 508 00:14:57,130 --> 00:14:57,939 where chips are made. 509 00:14:57,940 --> 00:14:59,799 The atmosphere in there 510 00:14:59,800 --> 00:15:01,809 is more sterile than an operating 511 00:15:01,810 --> 00:15:02,079 chamber. 512 00:15:02,080 --> 00:15:03,879 And of course, the wafer. 513 00:15:03,880 --> 00:15:05,219 What is that exactly? 514 00:15:05,220 --> 00:15:07,329 I still don't know, but 515 00:15:07,330 --> 00:15:08,409 I know it's important. 516 00:15:08,410 --> 00:15:10,749 A single wafer highly yields 517 00:15:10,750 --> 00:15:11,769 100 chips. 518 00:15:11,770 --> 00:15:13,329 And all these years later, chips are 519 00:15:13,330 --> 00:15:15,309 still a big part of Austin's 520 00:15:15,310 --> 00:15:16,149 tech industry. 521 00:15:16,150 --> 00:15:18,369 Right. Nearly 40% of the equipment 522 00:15:18,370 --> 00:15:20,259 used to make semiconductors in the 523 00:15:20,260 --> 00:15:22,119 world is manufactured 524 00:15:22,120 --> 00:15:23,949 in Austin at Applied Materials and 525 00:15:23,950 --> 00:15:25,149 its suppliers. 526 00:15:25,150 --> 00:15:26,799 Samsung has expanded their "fab" 527 00:15:26,800 --> 00:15:29,109 plant footprint in the Austin area 528 00:15:29,110 --> 00:15:30,249 in the suburb of Taylor. 529 00:15:30,250 --> 00:15:32,169 And while AMD and Intel no 530 00:15:32,170 --> 00:15:33,669 longer make chips here, 531 00:15:33,670 --> 00:15:35,649 semiconductors are still a big 532 00:15:35,650 --> 00:15:36,289 deal. 533 00:15:36,290 --> 00:15:38,409 Yeah, more than 60,000 Texans 534 00:15:38,410 --> 00:15:40,659 work in advanced chip manufacturing. 535 00:15:40,660 --> 00:15:43,269 Most of those in the Austin area. 536 00:15:43,270 --> 00:15:44,829 There's a multiplier effect that you 537 00:15:44,830 --> 00:15:46,359 can estimate somewhere between three 538 00:15:46,360 --> 00:15:47,949 and five times that number of 539 00:15:47,950 --> 00:15:48,879 workers. 540 00:15:48,880 --> 00:15:50,559 Their business is directly supported 541 00:15:50,560 --> 00:15:53,349 by chip designers and manufacturers. 542 00:15:53,350 --> 00:15:54,969 And there's one other little company 543 00:15:54,970 --> 00:15:56,619 during the nineties that is making 544 00:15:56,620 --> 00:15:57,939 stuff here, too. 545 00:15:57,940 --> 00:15:59,559 You're not, by any chance computer 546 00:15:59,560 --> 00:16:01,149 shopping, are you? 547 00:16:01,150 --> 00:16:02,769 Mhm, if I can get some help. 548 00:16:02,770 --> 00:16:04,269 Well, right now, you can get a 549 00:16:04,270 --> 00:16:06,309 complete Dell system with an Intel 550 00:16:06,310 --> 00:16:08,139 Pentium 3 processor, plus 551 00:16:08,140 --> 00:16:11,379 all of this, for just 799. 552 00:16:11,380 --> 00:16:12,328 Oh, yeah. 553 00:16:12,329 --> 00:16:13,329 Dell. 554 00:16:13,690 --> 00:16:15,129 Dude, you're getting a Dell. 555 00:16:15,130 --> 00:16:16,151 Dude, you're getting a Dell. 556 00:16:16,152 --> 00:16:17,979 Dude, we're getting another 557 00:16:17,980 --> 00:16:18,980 Dell. 558 00:16:19,631 --> 00:16:19,631 Sweet. 559 00:16:19,632 --> 00:16:21,129 When you want your perfect PC, it's 560 00:16:21,130 --> 00:16:22,130 easy as Dell. Dell PCs ... 561 00:16:22,270 --> 00:16:23,919 Dell starts making one of the first 562 00:16:23,920 --> 00:16:26,139 affordable personal computers, 563 00:16:26,140 --> 00:16:27,999 and selling them over the phone and 564 00:16:28,000 --> 00:16:30,009 eventually on the Internet. 565 00:16:30,010 --> 00:16:31,239 This is when the Internet is 566 00:16:31,240 --> 00:16:32,919 starting to become a thing, and the 567 00:16:32,920 --> 00:16:35,049 tech economy is changing around 568 00:16:35,050 --> 00:16:35,319 it. 569 00:16:35,320 --> 00:16:36,519 A lot of people in the country 570 00:16:36,520 --> 00:16:38,379 recognize that this was a really big 571 00:16:38,380 --> 00:16:40,239 opportunity to move from 572 00:16:40,240 --> 00:16:42,369 whatever your economy was based on 573 00:16:42,370 --> 00:16:44,229 to more of a technology 574 00:16:44,230 --> 00:16:45,699 idea economy. 575 00:16:45,700 --> 00:16:47,919 And Texas and Austin 576 00:16:47,920 --> 00:16:49,269 were all over that. 577 00:16:49,270 --> 00:16:51,489 So this is where we went from making 578 00:16:51,490 --> 00:16:53,889 things, like making chips, to 579 00:16:53,890 --> 00:16:54,890 "ideas-ing" things. 580 00:16:55,866 --> 00:16:56,709 "Ideas-ing." 581 00:16:56,710 --> 00:16:58,149 Right on. 582 00:16:58,150 --> 00:17:00,279 In the late nineties, Austin became 583 00:17:00,280 --> 00:17:02,559 part of the dot.com economy. 584 00:17:02,560 --> 00:17:03,969 Like we mentioned in the last 585 00:17:03,970 --> 00:17:06,039 episode, this was more about making 586 00:17:06,040 --> 00:17:08,979 websites, you know, pets.com. 587 00:17:08,980 --> 00:17:10,509 This is also around the time this 588 00:17:10,510 --> 00:17:12,249 guy comes to power. 589 00:17:12,250 --> 00:17:13,630 Where's the bumper sticker. 590 00:17:14,829 --> 00:17:15,759 [background laughter] I usually have a bumper 591 00:17:15,760 --> 00:17:17,108 sticker around where I can do that. 592 00:17:17,109 --> 00:17:19,659 No, my name's Kirk Watson. 593 00:17:19,660 --> 00:17:21,729 I'm the newly elected 594 00:17:21,730 --> 00:17:22,959 mayor of Austin, Texas. 595 00:17:22,960 --> 00:17:25,059 Again, Mayor Kirk Watson. 596 00:17:25,060 --> 00:17:26,529 He was elected for the first time in 597 00:17:26,530 --> 00:17:28,358 1997, and 598 00:17:28,359 --> 00:17:29,469 that's when he started preaching a 599 00:17:29,470 --> 00:17:31,599 move back to downtown. 600 00:17:31,600 --> 00:17:33,459 But this time, a digital 601 00:17:33,460 --> 00:17:34,329 downtown. 602 00:17:34,330 --> 00:17:36,039 I ran saying we were going to get 603 00:17:36,040 --> 00:17:37,959 away from the old traditional 604 00:17:37,960 --> 00:17:39,519 folks downtown of banking and 605 00:17:39,520 --> 00:17:41,169 lawyers and real estate. 606 00:17:41,170 --> 00:17:43,119 We were trying to entice 607 00:17:43,120 --> 00:17:44,859 the new technology firms. 608 00:17:44,860 --> 00:17:46,239 This was part of his smart growth 609 00:17:46,240 --> 00:17:47,889 strategy that we talked about in the 610 00:17:47,890 --> 00:17:48,819 last episode. 611 00:17:48,820 --> 00:17:51,069 One of these companies was Computer 612 00:17:51,070 --> 00:17:52,959 Sciences Corporation, 613 00:17:52,960 --> 00:17:54,789 another really catchy name. 614 00:17:54,790 --> 00:17:56,349 They went by CSC. 615 00:17:56,350 --> 00:17:57,639 Computer Sciences Corp. 616 00:17:57,640 --> 00:17:59,499 announced that it was going to 617 00:17:59,500 --> 00:18:01,389 build a headquarters 618 00:18:01,390 --> 00:18:03,639 out over the aquifer, 619 00:18:03,640 --> 00:18:05,559 and we didn't want them to 620 00:18:05,560 --> 00:18:06,879 build on the aquifer. 621 00:18:06,880 --> 00:18:08,259 Instead, what we wanted was we 622 00:18:08,260 --> 00:18:10,359 wanted them to build in downtown. 623 00:18:10,360 --> 00:18:11,799 In previous episodes, we talked 624 00:18:11,800 --> 00:18:13,449 about the aquifer, about a big 625 00:18:13,450 --> 00:18:14,979 environmental fight to protect 626 00:18:14,980 --> 00:18:16,869 Barton springs from pollution by 627 00:18:16,870 --> 00:18:18,579 making it a lot harder to build in 628 00:18:18,580 --> 00:18:19,779 southwest Austin. 629 00:18:19,780 --> 00:18:21,849 But CSC, this California tech 630 00:18:21,850 --> 00:18:23,799 company, wanted a campus. 631 00:18:23,800 --> 00:18:25,269 They wanted a bunch of land so they 632 00:18:25,270 --> 00:18:27,159 could build a tech campus like 633 00:18:27,160 --> 00:18:29,229 we think of today, a gym, park, 634 00:18:29,230 --> 00:18:30,939 restaurants, all that their 635 00:18:30,940 --> 00:18:32,169 employees could walk, too. 636 00:18:32,170 --> 00:18:33,969 So Watson said, "Well, why don't you 637 00:18:33,970 --> 00:18:34,959 come downtown?" 638 00:18:34,960 --> 00:18:37,419 And just across the street, 639 00:18:37,420 --> 00:18:39,249 you'll have a beautiful 640 00:18:39,250 --> 00:18:41,409 lake, you'll have a hike-and-bike 641 00:18:41,410 --> 00:18:42,219 trail. 642 00:18:42,220 --> 00:18:43,629 And just on the other side of that 643 00:18:43,630 --> 00:18:45,939 lake, you're going to have 644 00:18:45,940 --> 00:18:47,349 a beautiful park. 645 00:18:47,350 --> 00:18:48,699 So your people will have that 646 00:18:48,700 --> 00:18:49,419 campus. 647 00:18:49,420 --> 00:18:50,829 The company ended up building two 648 00:18:50,830 --> 00:18:52,089 offices downtown. 649 00:18:52,090 --> 00:18:54,189 Those tan buildings that flank city 650 00:18:54,190 --> 00:18:55,689 hall on Cesar Chavez. 651 00:18:55,690 --> 00:18:57,789 That's all actually city owned land. 652 00:18:57,790 --> 00:18:59,709 And Watson's plan to get CSC to move 653 00:18:59,710 --> 00:19:01,689 downtown paid off in more ways 654 00:19:01,690 --> 00:19:02,199 than one. 655 00:19:02,200 --> 00:19:04,149 What we did was, 656 00:19:04,150 --> 00:19:05,979 we said, "We'll give you a 657 00:19:05,980 --> 00:19:06,999 99 year lease. 658 00:19:07,000 --> 00:19:08,409 The city is going to continue to own 659 00:19:08,410 --> 00:19:09,519 the land. 660 00:19:09,520 --> 00:19:11,379 And by prepaying that 661 00:19:11,380 --> 00:19:13,419 lease, it provided 662 00:19:13,420 --> 00:19:16,059 the city money 663 00:19:16,060 --> 00:19:18,579 that was then pushed into 664 00:19:18,580 --> 00:19:19,749 the new city hall. 665 00:19:19,750 --> 00:19:21,729 So this tech company from California 666 00:19:21,730 --> 00:19:24,089 basically built City Hall. 667 00:19:24,090 --> 00:19:25,499 Now, if that isn't a metaphor for 668 00:19:25,500 --> 00:19:27,419 how politics works, I 669 00:19:27,420 --> 00:19:28,420 don't know what is. 670 00:19:30,470 --> 00:19:31,789 Several other software companies 671 00:19:31,790 --> 00:19:34,429 planned to follow CSC downtown, 672 00:19:34,430 --> 00:19:36,319 but chips were still Austin's true 673 00:19:36,320 --> 00:19:36,889 love. 674 00:19:36,890 --> 00:19:38,989 Intel ,the chip manufacturer 675 00:19:38,990 --> 00:19:40,669 at the time, decided it would set up 676 00:19:40,670 --> 00:19:41,689 shop downtown. 677 00:19:41,690 --> 00:19:42,979 Another high tech tenant could be 678 00:19:42,980 --> 00:19:44,929 moving into our digital downtown. 679 00:19:44,930 --> 00:19:46,219 The city approved an incentive 680 00:19:46,220 --> 00:19:48,169 package to move Intel, 681 00:19:48,170 --> 00:19:49,919 the big chipmaker, downtown. 682 00:19:49,920 --> 00:19:51,889 But this was the early 2000s 683 00:19:51,890 --> 00:19:53,869 and the economy wasn't 684 00:19:53,870 --> 00:19:54,709 looking so hot. 685 00:19:54,710 --> 00:19:56,719 The fragile technology stocks, even 686 00:19:56,720 --> 00:19:58,759 harder hit the Nasdaq index 687 00:19:58,760 --> 00:20:01,909 in free fall, down nearly 10%. 688 00:20:01,910 --> 00:20:03,739 It lost a quarter of its value in 689 00:20:03,740 --> 00:20:05,239 just one week. 690 00:20:05,240 --> 00:20:07,219 The Intel news was short lived. 691 00:20:07,220 --> 00:20:09,139 In 2001, the company canceled 692 00:20:09,140 --> 00:20:10,969 plans to move downtown and 693 00:20:10,970 --> 00:20:12,199 stopped construction on their 694 00:20:12,200 --> 00:20:13,339 office. 695 00:20:13,340 --> 00:20:14,719 The building, which was supposed to 696 00:20:14,720 --> 00:20:16,759 reach ten stories tall, 697 00:20:16,760 --> 00:20:18,889 was abandoned at just a six story 698 00:20:18,890 --> 00:20:20,779 frame, and the steel 699 00:20:20,780 --> 00:20:22,729 skeleton in the middle of downtown 700 00:20:22,730 --> 00:20:25,789 Austin seemed like a warning. 701 00:20:25,790 --> 00:20:27,589 Would the tech economy Austin had so 702 00:20:27,590 --> 00:20:29,449 earnestly coveted survive 703 00:20:29,450 --> 00:20:30,450 the economic bust? 704 00:20:32,120 --> 00:20:33,319 Big cliffhanger. 705 00:20:33,320 --> 00:20:35,869 I mean, come on, y'all. 706 00:20:35,870 --> 00:20:37,459 More after the break. 707 00:20:49,650 --> 00:20:51,539 So ideas technology 708 00:20:51,540 --> 00:20:53,489 had come to Austin, and it was 709 00:20:53,490 --> 00:20:55,619 coming downtown. 710 00:20:55,620 --> 00:20:57,269 This was the age of smart growth. 711 00:20:57,270 --> 00:20:58,289 You might remember that from a 712 00:20:58,290 --> 00:20:59,969 previous episode. 713 00:20:59,970 --> 00:21:02,099 And what we were calling "digital 714 00:21:02,100 --> 00:21:02,759 downtown." 715 00:21:02,760 --> 00:21:04,289 ... to our digital downtown, the 716 00:21:04,290 --> 00:21:04,619 city ... 717 00:21:04,620 --> 00:21:06,449 But as every boom, comes a bust. 718 00:21:06,450 --> 00:21:08,489 So a recession hit in the early 719 00:21:08,490 --> 00:21:10,559 2000s and companies 720 00:21:10,560 --> 00:21:12,359 were backing out, literally 721 00:21:12,360 --> 00:21:14,129 abandoning their buildings midway 722 00:21:14,130 --> 00:21:15,299 through construction. 723 00:21:15,300 --> 00:21:17,189 But as rocky as this economy was, 724 00:21:17,190 --> 00:21:19,349 and it got pretty bad, 725 00:21:19,350 --> 00:21:21,389 money had already started flowing 726 00:21:21,390 --> 00:21:22,649 into Austin. 727 00:21:22,650 --> 00:21:24,689 In the form of venture capital. 728 00:21:24,690 --> 00:21:26,669 Basically, rich people investing 729 00:21:26,670 --> 00:21:28,739 in small businesses, startups. 730 00:21:28,740 --> 00:21:30,659 David Gibson is part of I.C. 731 00:21:30,660 --> 00:21:31,469 Squared. 732 00:21:31,470 --> 00:21:33,449 It's like this economic think 733 00:21:33,450 --> 00:21:34,889 tank at UT. 734 00:21:34,890 --> 00:21:36,749 The Austin Technology Incubator in 735 00:21:36,750 --> 00:21:37,750 1989, and 736 00:21:38,580 --> 00:21:41,309 the Texas Capital Network in 1989, 737 00:21:41,310 --> 00:21:43,049 and the capital network was tapping 738 00:21:43,050 --> 00:21:44,339 into wealthy Texans 739 00:21:45,390 --> 00:21:47,279 who are used to real estate and oil 740 00:21:47,280 --> 00:21:49,199 and gas financing and say, "you 741 00:21:49,200 --> 00:21:50,099 all take a look at these 742 00:21:50,100 --> 00:21:52,049 technologies." And some of them 743 00:21:52,050 --> 00:21:53,399 were fairly successful. 744 00:21:53,400 --> 00:21:55,199 Yeah. Remember Dell? 745 00:21:55,200 --> 00:21:57,149 Bobby Inman, the guy who brought MCC 746 00:21:57,150 --> 00:21:59,339 to Austin, was an early investor. 747 00:21:59,340 --> 00:22:01,529 And it fundamentally 748 00:22:01,530 --> 00:22:02,530 changed the Inman family's 749 00:22:03,870 --> 00:22:05,519 financial status. 750 00:22:05,520 --> 00:22:07,232 Dell was cracking right along and 751 00:22:08,400 --> 00:22:09,989 doing great on the stock market and 752 00:22:09,990 --> 00:22:11,999 making a lot of billionaires. 753 00:22:12,000 --> 00:22:13,919 So the money's here, but where 754 00:22:13,920 --> 00:22:15,179 are the ideas? 755 00:22:15,180 --> 00:22:17,189 You might have heard of a tiny 756 00:22:17,190 --> 00:22:18,749 music festival started in the 757 00:22:18,750 --> 00:22:19,469 eighties. 758 00:22:19,470 --> 00:22:21,179 You can see all sorts of stuff at 759 00:22:21,180 --> 00:22:22,949 the South by Southwest multimedia 760 00:22:22,950 --> 00:22:23,579 Festival ... 761 00:22:23,580 --> 00:22:24,869 By the mid-nineties, South By 762 00:22:24,870 --> 00:22:27,029 Southwest was no longer just 763 00:22:27,030 --> 00:22:28,409 a music festival. 764 00:22:28,410 --> 00:22:30,749 It was now kind of like the MCC 765 00:22:30,750 --> 00:22:32,009 for ideas. 766 00:22:32,010 --> 00:22:34,109 The whole gamut of high technology 767 00:22:34,110 --> 00:22:34,889 will be there. 768 00:22:34,890 --> 00:22:35,699 So this is pretty cutting edge 769 00:22:35,700 --> 00:22:35,999 stuff. 770 00:22:36,000 --> 00:22:37,919 It's the wobbly edge of the cutting 771 00:22:37,920 --> 00:22:38,249 edge. [background laughter] 772 00:22:38,250 --> 00:22:39,809 I'm talking about South by 773 00:22:39,810 --> 00:22:41,639 Interactive, the tech part of 774 00:22:41,640 --> 00:22:43,499 this annual festival, where 775 00:22:43,500 --> 00:22:45,269 all these tech people fled the city 776 00:22:45,270 --> 00:22:47,669 to meet each other and share 777 00:22:47,670 --> 00:22:49,019 ideas. 778 00:22:49,020 --> 00:22:50,969 And sometimes they even made 779 00:22:50,970 --> 00:22:51,869 big announcements. 780 00:22:51,870 --> 00:22:53,459 For some reason, we can't find any 781 00:22:53,460 --> 00:22:55,289 video evidence of this on the 782 00:22:55,290 --> 00:22:57,119 Internet. But Twitter blows up 783 00:22:57,120 --> 00:22:59,879 at South by Southwest in 2007. 784 00:22:59,880 --> 00:23:01,709 But I guess it's called Ex now. 785 00:23:01,710 --> 00:23:02,730 We'll see if it catches on. 786 00:23:04,610 --> 00:23:06,199 An existing tech base. 787 00:23:06,200 --> 00:23:08,059 A skilled workforce, things 788 00:23:08,060 --> 00:23:09,786 to do outside all year round, money, 789 00:23:10,790 --> 00:23:13,549 and south by as a kind of megaphone, 790 00:23:13,550 --> 00:23:15,619 It all combined to make Austin more 791 00:23:15,620 --> 00:23:17,269 than just an option. 792 00:23:17,270 --> 00:23:18,769 It was like a must have. 793 00:23:18,770 --> 00:23:20,689 Austin is is now a city 794 00:23:20,690 --> 00:23:22,459 that every major employer that's 795 00:23:22,460 --> 00:23:24,499 going to have a relocation comes 796 00:23:24,500 --> 00:23:25,729 to see. Period. 797 00:23:25,730 --> 00:23:27,169 This is Matt Mathias again. 798 00:23:27,170 --> 00:23:28,879 Everybody has to have Austin on the 799 00:23:28,880 --> 00:23:29,419 list. 800 00:23:29,420 --> 00:23:31,489 Remember, companies beget 801 00:23:31,490 --> 00:23:32,239 companies. 802 00:23:32,240 --> 00:23:34,009 Google started leasing office space 803 00:23:34,010 --> 00:23:36,829 in a building downtown in 2007. 804 00:23:36,830 --> 00:23:39,349 Facebook opened an office in 2010, 805 00:23:39,350 --> 00:23:41,629 Dropbox in 2013. 806 00:23:41,630 --> 00:23:43,219 Apple's basically expanding its 807 00:23:43,220 --> 00:23:44,959 presence what feels like every 808 00:23:44,960 --> 00:23:46,279 couple of years. 809 00:23:46,280 --> 00:23:47,089 Indeed. 810 00:23:47,090 --> 00:23:47,959 Atlassian. 811 00:23:47,960 --> 00:23:48,739 Amazon. 812 00:23:48,740 --> 00:23:49,309 Oracle. 813 00:23:49,310 --> 00:23:50,188 Adobe. 814 00:23:50,189 --> 00:23:51,189 NXP. 815 00:23:51,290 --> 00:23:52,069 Microsoft. 816 00:23:52,070 --> 00:23:52,969 Silicon Labs. 817 00:23:52,970 --> 00:23:53,839 Salesforce. 818 00:23:53,840 --> 00:23:54,499 Cisco. 819 00:23:54,500 --> 00:23:55,519 PayPal. 820 00:23:55,520 --> 00:23:57,409 And in some cases, like U.T. 821 00:23:57,410 --> 00:23:58,410 and the state did with the MCC, 822 00:23:59,420 --> 00:24:01,789 governments are offering incentives, 823 00:24:01,790 --> 00:24:03,379 taxpayer money to get these 824 00:24:03,380 --> 00:24:05,269 companies to move here or in 825 00:24:05,270 --> 00:24:06,739 some cases stay here. 826 00:24:06,740 --> 00:24:08,179 Think of economic development as 827 00:24:08,180 --> 00:24:10,219 sort of a toolbox and incentives 828 00:24:10,220 --> 00:24:11,719 is one of those tools. 829 00:24:11,720 --> 00:24:13,308 This is Laura Hoffman again. 830 00:24:13,309 --> 00:24:14,779 It is not needed every single time, 831 00:24:14,780 --> 00:24:16,969 certainly, but when it's needed, 832 00:24:16,970 --> 00:24:18,709 it is typically because you are in a 833 00:24:18,710 --> 00:24:20,719 national competition and 834 00:24:20,720 --> 00:24:21,720 you got to play to win. 835 00:24:26,730 --> 00:24:28,259 I think here is where we need to 836 00:24:28,260 --> 00:24:30,929 explain the name of this podcast: 837 00:24:30,930 --> 00:24:31,930 Growth machine. 838 00:24:34,680 --> 00:24:36,149 The term comes from a paper written 839 00:24:36,150 --> 00:24:39,449 by the sociologist in the 1970s. 840 00:24:39,450 --> 00:24:40,979 He says the growth machine 841 00:24:42,300 --> 00:24:43,949 is a collection of people who push 842 00:24:43,950 --> 00:24:45,809 for a city or place to keep 843 00:24:45,810 --> 00:24:47,879 growing and growing, to keep 844 00:24:47,880 --> 00:24:50,309 attracting businesses and people 845 00:24:50,310 --> 00:24:52,079 and businesses that attract people. 846 00:24:52,080 --> 00:24:53,309 The machine is usually made up of 847 00:24:53,310 --> 00:24:55,199 politicians, real estate and 848 00:24:55,200 --> 00:24:57,119 business professionals, even 849 00:24:57,120 --> 00:24:58,499 journalists. 850 00:24:58,500 --> 00:25:00,419 These people, this sociologist, 851 00:25:00,420 --> 00:25:02,579 argues, all benefit from 852 00:25:02,580 --> 00:25:03,569 this growth. 853 00:25:03,570 --> 00:25:05,399 So growth is good for car 854 00:25:05,400 --> 00:25:07,079 dealerships because people are 855 00:25:07,080 --> 00:25:08,099 moving here and they need to buy 856 00:25:08,100 --> 00:25:10,059 cars. Growth is good for developers. 857 00:25:10,060 --> 00:25:11,639 It's good for landowners because 858 00:25:11,640 --> 00:25:13,919 real estate values increase. 859 00:25:13,920 --> 00:25:15,539 This is Andrew Busch again. 860 00:25:15,540 --> 00:25:17,429 It's good for cities because it 861 00:25:17,430 --> 00:25:19,299 increases tax revenue. 862 00:25:19,300 --> 00:25:20,300 So it's sort of this all. this everybody kind 863 00:25:21,360 --> 00:25:22,430 of on board and everybodym 864 00:25:24,300 --> 00:25:25,589 and the false premise of it is, is 865 00:25:25,590 --> 00:25:27,179 that it's good for everybody. 866 00:25:27,180 --> 00:25:28,439 But there comes a time when the 867 00:25:28,440 --> 00:25:30,329 growth machine starts powering 868 00:25:30,330 --> 00:25:32,009 itself, when people don't need to 869 00:25:32,010 --> 00:25:33,989 rip a sheet off their bed, 870 00:25:33,990 --> 00:25:35,429 wave it around a piece of vacant 871 00:25:35,430 --> 00:25:37,529 land, some rich guy flies 872 00:25:37,530 --> 00:25:39,029 his plane overhead. 873 00:25:39,030 --> 00:25:40,889 No need to sell this place. 874 00:25:40,890 --> 00:25:42,899 No need to watch your kids leave. 875 00:25:42,900 --> 00:25:44,369 The place sells itself. 876 00:25:48,510 --> 00:25:49,709 None of my brothers and sisters, we 877 00:25:49,710 --> 00:25:50,669 didn't think we would be able to stay 878 00:25:50,670 --> 00:25:52,589 in Austin, because unless you wanted 879 00:25:52,590 --> 00:25:54,209 to work in government or teach or do 880 00:25:54,210 --> 00:25:55,919 something like that, you know, it 881 00:25:55,920 --> 00:25:57,899 wasn't a big enough economy for 882 00:25:57,900 --> 00:25:59,009 a lot of different kind of career 883 00:25:59,010 --> 00:25:59,669 choices. 884 00:25:59,670 --> 00:26:01,109 Laura Huffman grew up here. 885 00:26:01,110 --> 00:26:02,879 But now, there are more economic 886 00:26:02,880 --> 00:26:04,349 opportunities for people, but 887 00:26:04,350 --> 00:26:06,419 there's also truly, 888 00:26:06,420 --> 00:26:08,039 truly significant affordability 889 00:26:08,040 --> 00:26:10,109 issues. So I think that 890 00:26:10,110 --> 00:26:11,729 one of the biggest challenges we 891 00:26:11,730 --> 00:26:13,679 have ahead of us is, you 892 00:26:13,680 --> 00:26:15,419 know, what are those things that we 893 00:26:15,420 --> 00:26:17,369 can do now 894 00:26:17,370 --> 00:26:19,649 to secure Austin's future 895 00:26:19,650 --> 00:26:21,119 with a really strong eye towards 896 00:26:21,120 --> 00:26:22,259 affordability? 897 00:26:22,260 --> 00:26:23,549 When we started this episode in the 898 00:26:23,550 --> 00:26:25,439 late '60s, you could buy a house in 899 00:26:25,440 --> 00:26:29,279 Austin for less than $20,000. 900 00:26:29,280 --> 00:26:30,719 That's incredible. 901 00:26:30,720 --> 00:26:32,639 That's about 125,000 902 00:26:32,640 --> 00:26:34,169 in today's money. 903 00:26:34,170 --> 00:26:35,819 Now, the median sales price of a 904 00:26:35,820 --> 00:26:37,879 home in Austin is over half 905 00:26:37,880 --> 00:26:38,789 a million. 906 00:26:38,790 --> 00:26:40,739 This price progression was not 907 00:26:40,740 --> 00:26:42,749 linear. We held steady for a very 908 00:26:42,750 --> 00:26:44,009 long time. 909 00:26:44,010 --> 00:26:45,479 The average price for a home was 910 00:26:45,480 --> 00:26:47,069 under 100,000 well into the 911 00:26:47,070 --> 00:26:47,909 nineties. 912 00:26:47,910 --> 00:26:49,559 But even then, it was still 913 00:26:49,560 --> 00:26:50,369 affordable. 914 00:26:50,370 --> 00:26:52,529 Oh, my clients were, 915 00:26:52,530 --> 00:26:54,179 you know, people who worked for the 916 00:26:54,180 --> 00:26:56,172 city. People worked for the state. 917 00:26:56,173 --> 00:26:57,929 Socar Chatmon-Thomas bought a home 918 00:26:57,930 --> 00:26:59,759 in South Austin with her husband in 919 00:26:59,760 --> 00:27:01,589 the mid-nineties, for less than 920 00:27:01,590 --> 00:27:03,089 $100,000. 921 00:27:03,090 --> 00:27:04,649 She started working as a realtor in 922 00:27:04,650 --> 00:27:06,269 Austin in 1995. 923 00:27:06,270 --> 00:27:08,069 Back then, her clients were ... 924 00:27:08,070 --> 00:27:10,559 People who worked for Motorola, 925 00:27:10,560 --> 00:27:11,489 Dell. 926 00:27:11,490 --> 00:27:14,339 Applied Materials, AMD. 927 00:27:14,340 --> 00:27:15,719 Schoolteachers. 928 00:27:15,720 --> 00:27:17,099 Schoolteachers. 929 00:27:17,100 --> 00:27:18,839 That's right. Teachers could afford 930 00:27:18,840 --> 00:27:20,309 houses in Austin. 931 00:27:20,310 --> 00:27:22,799 Oh, my God. Condos were almost 932 00:27:22,800 --> 00:27:25,229 being given away, like $50,000 933 00:27:25,230 --> 00:27:26,999 for two bedroom condos. 934 00:27:27,000 --> 00:27:28,919 Most houses 935 00:27:28,920 --> 00:27:31,259 were less than $100,000. 936 00:27:31,260 --> 00:27:34,079 To say that out loud, 937 00:27:34,080 --> 00:27:36,279 it just doesn't seem real. 938 00:27:36,280 --> 00:27:37,739 But I lived it. 939 00:27:37,740 --> 00:27:38,969 I sold it. 940 00:27:38,970 --> 00:27:40,109 There was, of course, the Great 941 00:27:40,110 --> 00:27:42,059 Recession in 2008, but Austin 942 00:27:42,060 --> 00:27:43,829 fared pretty well. 943 00:27:43,830 --> 00:27:45,959 And when would you say 944 00:27:45,960 --> 00:27:47,819 the pace or sort of 945 00:27:47,820 --> 00:27:50,129 the increase in price 946 00:27:50,130 --> 00:27:51,329 starting from when you started 947 00:27:51,330 --> 00:27:52,919 working in the mid-nineties to now? 948 00:27:52,920 --> 00:27:54,809 When did it just really take 949 00:27:54,810 --> 00:27:55,810 off? 950 00:27:57,070 --> 00:27:58,150 It took off 951 00:27:59,350 --> 00:28:00,429 in around 2013, 952 00:28:02,980 --> 00:28:04,269 14. 953 00:28:04,270 --> 00:28:06,219 Between 2013 and now, the 954 00:28:06,220 --> 00:28:07,659 median sales price of a home in 955 00:28:07,660 --> 00:28:09,069 Austin more than doubled. 956 00:28:09,070 --> 00:28:10,629 That's a big deal. 957 00:28:10,630 --> 00:28:12,159 That didn't happen the decade before 958 00:28:12,160 --> 00:28:13,449 or the decade before that. 959 00:28:13,450 --> 00:28:15,429 And the reason is really pretty 960 00:28:15,430 --> 00:28:17,619 simple. Suddenly, lots more people 961 00:28:17,620 --> 00:28:19,239 wanted to move here and we didn't 962 00:28:19,240 --> 00:28:21,069 really have enough houses for all of 963 00:28:21,070 --> 00:28:23,469 them. Simple supply and demand. 964 00:28:23,470 --> 00:28:24,759 And a lot of people moving in were 965 00:28:24,760 --> 00:28:26,529 able to pay a fortune, or at least 966 00:28:26,530 --> 00:28:28,509 what seemed like a fortune to us, 967 00:28:28,510 --> 00:28:30,489 to get their spot in this town. 968 00:28:30,490 --> 00:28:32,709 You mean I can get this house 969 00:28:32,710 --> 00:28:34,899 in Avery Ranch for, 970 00:28:34,900 --> 00:28:36,999 like, 325? 971 00:28:37,000 --> 00:28:38,409 Okay, I'll get two. 972 00:28:38,410 --> 00:28:40,569 And the pandemic threw gasoline on 973 00:28:40,570 --> 00:28:41,679 all of this. 974 00:28:41,680 --> 00:28:43,299 The median price of a home just hit 975 00:28:43,300 --> 00:28:44,079 a brand new record. 976 00:28:44,080 --> 00:28:46,517 Now $425,000. 977 00:28:47,619 --> 00:28:48,619 Now $624,000, that's 978 00:28:50,380 --> 00:28:51,489 the median price. 979 00:28:51,490 --> 00:28:53,559 And yes, maybe we can blame 980 00:28:53,560 --> 00:28:55,389 Californians here, at least 981 00:28:55,390 --> 00:28:56,319 just a little bit. 982 00:28:56,320 --> 00:28:58,569 I had people, 983 00:28:58,570 --> 00:29:00,189 I'm representing the seller, and 984 00:29:00,190 --> 00:29:02,049 they're bidding over 985 00:29:02,050 --> 00:29:04,449 $150,000 986 00:29:04,450 --> 00:29:06,549 more than the house is listed 987 00:29:06,550 --> 00:29:08,709 for. And they work for 988 00:29:08,710 --> 00:29:09,909 a tech company. 989 00:29:09,910 --> 00:29:12,519 So it was working for a tech company 990 00:29:12,520 --> 00:29:14,363 as well as coming from California 991 00:29:14,364 --> 00:29:16,809 married together that 992 00:29:16,810 --> 00:29:18,699 they gave them the money, because 993 00:29:18,700 --> 00:29:20,439 when they looked at the real estate 994 00:29:20,440 --> 00:29:22,269 market in Austin, they were like, 995 00:29:22,270 --> 00:29:24,099 "Oh my God, this 996 00:29:24,100 --> 00:29:25,029 is good. 997 00:29:25,030 --> 00:29:26,709 You mean, all you have to pay is 998 00:29:26,710 --> 00:29:27,609 850. 999 00:29:27,610 --> 00:29:30,189 All we have to pay is a million. 1000 00:29:30,190 --> 00:29:31,363 That's awesome." 1001 00:29:32,540 --> 00:29:33,339 And Im like, "Oh," [laughter] 1002 00:29:33,340 --> 00:29:34,969 "That's awesome for California 1003 00:29:34,970 --> 00:29:36,759 money. But Texas money is not the 1004 00:29:36,760 --> 00:29:37,659 same." 1005 00:29:37,660 --> 00:29:39,699 Suddenly, many people working 1006 00:29:39,700 --> 00:29:41,859 in tech could work remotely, 1007 00:29:41,860 --> 00:29:44,319 and they all moved to Austin. 1008 00:29:44,320 --> 00:29:45,849 Okay, so not all of them, but 1009 00:29:45,850 --> 00:29:47,949 roughly 28,000 1010 00:29:47,950 --> 00:29:50,049 remote workers moved to Austin 1011 00:29:50,050 --> 00:29:51,459 during the pandemic. 1012 00:29:51,460 --> 00:29:53,049 That's according to a New York Times 1013 00:29:53,050 --> 00:29:54,969 analysis of census data. 1014 00:29:54,970 --> 00:29:56,649 Cities like L.A., New York and 1015 00:29:56,650 --> 00:29:58,449 Chicago all lost remote workers 1016 00:29:58,450 --> 00:29:59,829 during this time. 1017 00:29:59,830 --> 00:30:01,839 Austin had the largest 1018 00:30:01,840 --> 00:30:04,389 influx of digital nomads 1019 00:30:04,390 --> 00:30:05,499 of any big U.S. 1020 00:30:05,500 --> 00:30:06,069 city. 1021 00:30:06,070 --> 00:30:07,809 Austin's growth machine had done 1022 00:30:07,810 --> 00:30:10,419 such a good job marketing this city, 1023 00:30:10,420 --> 00:30:12,279 waving a bedsheet, serving 1024 00:30:12,280 --> 00:30:14,919 quail, throwing money around. 1025 00:30:14,920 --> 00:30:16,719 Goodbye, Silicon Gulch. 1026 00:30:16,720 --> 00:30:18,789 Welcome to Silicon Hills. 1027 00:30:21,770 --> 00:30:23,089 We're almost up to the present day 1028 00:30:23,090 --> 00:30:24,859 now. But there was one more thing 1029 00:30:24,860 --> 00:30:26,839 that happened that's kind of a big 1030 00:30:26,840 --> 00:30:29,239 deal. It was back in 2020. 1031 00:30:29,240 --> 00:30:30,349 Yeah, it was a fun story. 1032 00:30:30,350 --> 00:30:32,659 I mean, literally, I was snow skiing 1033 00:30:32,660 --> 00:30:34,669 in Colorado and I got a call about 1034 00:30:34,670 --> 00:30:36,619 9:00. I was literally putting on my 1035 00:30:36,620 --> 00:30:37,639 ski pants. 1036 00:30:37,640 --> 00:30:39,529 Once again, Matt Mathias, son 1037 00:30:39,530 --> 00:30:40,759 of Vic Mathias. 1038 00:30:40,760 --> 00:30:42,109 This call was from a friend whose 1039 00:30:42,110 --> 00:30:43,969 wife, Karen, works for a big 1040 00:30:43,970 --> 00:30:46,219 company that was considering moving 1041 00:30:46,220 --> 00:30:47,269 to Texas. 1042 00:30:47,270 --> 00:30:49,099 And they've looked at four sites 1043 00:30:49,100 --> 00:30:50,179 that the Governor's economic 1044 00:30:50,180 --> 00:30:51,919 development office presented to 1045 00:30:51,920 --> 00:30:53,450 them. They don't like any of them. 1046 00:30:54,800 --> 00:30:56,869 They didn't really enjoy Dallas, 1047 00:30:56,870 --> 00:30:58,099 but they love Austin. 1048 00:30:58,100 --> 00:30:58,969 But they're going to get on the 1049 00:30:58,970 --> 00:31:00,529 plane and go to Charlotte later 1050 00:31:00,530 --> 00:31:02,419 today, unless you know of something. 1051 00:31:02,420 --> 00:31:04,219 You see, Matt works in commercial 1052 00:31:04,220 --> 00:31:05,179 real estate now. 1053 00:31:05,180 --> 00:31:06,799 And I said, "Well, tell me the 1054 00:31:06,800 --> 00:31:08,359 requirements." And so he got Karen 1055 00:31:08,360 --> 00:31:10,579 to send me a screenshot 1056 00:31:10,580 --> 00:31:11,239 on my phone. 1057 00:31:11,240 --> 00:31:12,859 It needed to be close to a major 1058 00:31:12,860 --> 00:31:14,689 airport over a thousand 1059 00:31:14,690 --> 00:31:15,409 acres. 1060 00:31:15,410 --> 00:31:16,759 And I'm looking there and I'm 1061 00:31:16,760 --> 00:31:18,619 calling back. And I said, "Tell him 1062 00:31:18,620 --> 00:31:19,639 not get on that plane. 1063 00:31:19,640 --> 00:31:21,799 I know exactly where their site is. 1064 00:31:21,800 --> 00:31:22,849 Just hang on." 1065 00:31:22,850 --> 00:31:24,229 So he called a friend that worked 1066 00:31:24,230 --> 00:31:26,089 with a concrete mining company 1067 00:31:26,090 --> 00:31:27,769 that had some land just outside of 1068 00:31:27,770 --> 00:31:28,369 Austin. 1069 00:31:28,370 --> 00:31:29,869 And so he sent me some images. 1070 00:31:29,870 --> 00:31:32,569 I sent 'em to Karen and 1071 00:31:32,570 --> 00:31:33,769 they went and drove around the 1072 00:31:33,770 --> 00:31:34,789 property. 1073 00:31:34,790 --> 00:31:35,790 I went skiing, 1074 00:31:36,860 --> 00:31:39,079 and about 3:00 1075 00:31:39,080 --> 00:31:40,399 that afternoon I got a call from 1076 00:31:40,400 --> 00:31:42,259 Karen said, "Elon says 1077 00:31:42,260 --> 00:31:43,849 that's it. Let's get it under 1078 00:31:43,850 --> 00:31:44,629 contract." 1079 00:31:44,630 --> 00:31:46,819 No bed sheets required. 1080 00:31:46,820 --> 00:31:48,107 No bed sheets on this one, no. 1081 00:31:54,550 --> 00:31:57,039 Cut to October 7th, 2021. 1082 00:31:57,040 --> 00:31:58,329 I'm excited to announce that we are 1083 00:31:58,330 --> 00:31:59,919 moving our headquarters to Austin, 1084 00:31:59,920 --> 00:32:00,920 Texas. 1085 00:32:03,330 --> 00:32:04,829 When Tesla came, there was this 1086 00:32:04,830 --> 00:32:07,559 frenzy from all over the nation. 1087 00:32:07,560 --> 00:32:09,509 Buyers came in trying to buy up 1088 00:32:09,510 --> 00:32:11,339 land speculatively, 1089 00:32:11,340 --> 00:32:13,259 and all the rates for all 1090 00:32:13,260 --> 00:32:14,579 the product types increased, 1091 00:32:14,580 --> 00:32:16,349 including housing. 1092 00:32:16,350 --> 00:32:17,909 Housing was dramatically affected 1093 00:32:17,910 --> 00:32:20,039 after the Tesla announcement. 1094 00:32:21,810 --> 00:32:23,999 Around the middle of 2022, Austin's 1095 00:32:24,000 --> 00:32:25,739 housing market peaked. 1096 00:32:25,740 --> 00:32:27,149 In May of that year, the median 1097 00:32:27,150 --> 00:32:32,129 price of a home hit $667,000. 1098 00:32:32,130 --> 00:32:33,779 Obviously, this isn't because of 1099 00:32:33,780 --> 00:32:35,969 Tesla. Prices were already rising 1100 00:32:35,970 --> 00:32:38,369 fast before Elon Musk got here. 1101 00:32:38,370 --> 00:32:39,959 But it's the sum of all of this 1102 00:32:39,960 --> 00:32:41,879 growth. All of these companies, 1103 00:32:41,880 --> 00:32:42,779 all the hype ... 1104 00:32:42,780 --> 00:32:44,279 combined with a system that for a 1105 00:32:44,280 --> 00:32:46,139 long time has made it really 1106 00:32:46,140 --> 00:32:48,659 hard to build new housing in Austin. 1107 00:32:48,660 --> 00:32:50,699 That adds up to a housing 1108 00:32:50,700 --> 00:32:51,700 crisis. 1109 00:32:56,030 --> 00:32:57,139 Thanks so much, Jimmy. 1110 00:32:57,140 --> 00:32:58,580 It's been a pleasure, Audrey. 1111 00:33:08,530 --> 00:33:10,269 About a week ago, I went to meet one 1112 00:33:10,270 --> 00:33:12,099 of the tens of thousands of 1113 00:33:12,100 --> 00:33:13,899 remote workers that moved to Austin 1114 00:33:13,900 --> 00:33:15,279 during the pandemic. 1115 00:33:15,280 --> 00:33:17,238 I am 1116 00:33:17,239 --> 00:33:19,329 Luis David Osta Lugo. I immigrated 1117 00:33:19,330 --> 00:33:20,859 to the US when I was ten years old, 1118 00:33:20,860 --> 00:33:22,989 from Venezuela, and 1119 00:33:22,990 --> 00:33:24,819 I went to the University of Texas at 1120 00:33:24,820 --> 00:33:26,349 Dallas to study computer science. 1121 00:33:26,350 --> 00:33:28,179 And then I moved in 1122 00:33:28,180 --> 00:33:29,565 here with my partner who studied at 1123 00:33:29,566 --> 00:33:31,599 UT after graduating. 1124 00:33:31,600 --> 00:33:33,999 Luis moved here in late 2020. 1125 00:33:34,000 --> 00:33:36,129 And the only city that ever 1126 00:33:36,130 --> 00:33:38,079 felt like home, 1127 00:33:38,080 --> 00:33:39,819 I guess in a sappy way, after moving 1128 00:33:39,820 --> 00:33:41,329 from Venezuela, was Austin. 1129 00:33:41,330 --> 00:33:43,419 It was the place where I felt like 1130 00:33:43,420 --> 00:33:44,589 I had the most community. 1131 00:33:44,590 --> 00:33:45,999 The people were good, the culture 1132 00:33:46,000 --> 00:33:47,229 was good. I felt like people cared 1133 00:33:47,230 --> 00:33:48,369 about the place. 1134 00:33:48,370 --> 00:33:49,959 And so this is the natural place 1135 00:33:49,960 --> 00:33:51,069 where we wanted to stay. 1136 00:33:51,070 --> 00:33:53,199 Luis is a software engineer and 1137 00:33:53,200 --> 00:33:54,789 no, he didn't move here from 1138 00:33:54,790 --> 00:33:55,689 California. 1139 00:33:55,690 --> 00:33:57,549 He came from Dallas, but his 1140 00:33:57,550 --> 00:33:59,529 company is based in New York, 1141 00:33:59,530 --> 00:34:01,419 so he makes New York money. 1142 00:34:01,420 --> 00:34:02,949 You mentioned to me over the phone, 1143 00:34:02,950 --> 00:34:04,779 you make a pretty good income. 1144 00:34:04,780 --> 00:34:06,279 Remind me what that income is. 1145 00:34:06,280 --> 00:34:08,678 That is $215,000 1146 00:34:08,679 --> 00:34:09,069 a year. 1147 00:34:09,070 --> 00:34:10,779 That's about two and a half times 1148 00:34:10,780 --> 00:34:12,849 the median salary in Austin. 1149 00:34:12,850 --> 00:34:14,439 And you're, like, relatively fresh 1150 00:34:14,440 --> 00:34:15,399 out of college. 1151 00:34:15,400 --> 00:34:16,149 Yes. 1152 00:34:16,150 --> 00:34:18,069 Luis is doing well for himself, but 1153 00:34:18,070 --> 00:34:19,928 he also sometimes sends money home 1154 00:34:19,929 --> 00:34:21,609 to his parents in Houston. 1155 00:34:21,610 --> 00:34:23,499 We were poor in Venezuela and we 1156 00:34:23,500 --> 00:34:24,279 immigrated here. 1157 00:34:24,280 --> 00:34:25,750 Immigration is expensive. 1158 00:34:26,949 --> 00:34:28,599 They have no retirement. 1159 00:34:28,600 --> 00:34:29,769 Like that means literally have no 1160 00:34:29,770 --> 00:34:30,579 retirement funds. 1161 00:34:30,580 --> 00:34:32,439 And also my parents 1162 00:34:32,440 --> 00:34:34,329 both have very serious 1163 00:34:34,330 --> 00:34:36,339 health issues, which 1164 00:34:36,340 --> 00:34:37,678 means that I'm also their medical, 1165 00:34:37,679 --> 00:34:38,679 just like, you know, 1166 00:34:40,150 --> 00:34:41,979 they don't have anything to fall 1167 00:34:41,980 --> 00:34:42,939 back on. 1168 00:34:42,940 --> 00:34:44,408 Luis is in this interesting 1169 00:34:44,409 --> 00:34:45,279 position. 1170 00:34:45,280 --> 00:34:47,499 He came from little money and now, 1171 00:34:47,500 --> 00:34:49,479 at 23 years old, he earns 1172 00:34:49,480 --> 00:34:50,799 a good salary. 1173 00:34:50,800 --> 00:34:52,899 I was curious how he felt about 1174 00:34:52,900 --> 00:34:53,529 this. 1175 00:34:53,530 --> 00:34:55,569 Do you feel like any sort of 1176 00:34:55,570 --> 00:34:57,159 guilt of like, "I'm one of the 1177 00:34:57,160 --> 00:34:58,160 people moving in 1178 00:34:59,800 --> 00:35:01,089 and increasing the demand for 1179 00:35:01,090 --> 00:35:02,439 housing in Austin and potentially 1180 00:35:02,440 --> 00:35:04,239 the prices in Austin?" 1181 00:35:04,240 --> 00:35:06,180 I mean, in general, as someone, 1182 00:35:06,181 --> 00:35:08,199 like, I do feel, in 1183 00:35:08,200 --> 00:35:10,299 general, just a low level amount 1184 00:35:10,300 --> 00:35:12,219 of guilt over having, 1185 00:35:12,220 --> 00:35:13,989 quote unquote succeeded and achieved 1186 00:35:13,990 --> 00:35:15,725 a very- because it's sort of random 1187 00:35:15,726 --> 00:35:16,726 to a certain extent, how 1188 00:35:17,860 --> 00:35:18,879 your life turns out. Like there is 1189 00:35:18,880 --> 00:35:20,517 nothing in, like, the reason, for 1190 00:35:20,518 --> 00:35:22,149 instance, techworkers are able to 1191 00:35:22,150 --> 00:35:24,249 make such a high salary is because, 1192 00:35:24,250 --> 00:35:25,959 for various historical reasons, we 1193 00:35:25,960 --> 00:35:27,789 have more leverage, power over our 1194 00:35:27,790 --> 00:35:29,439 employers than most workers do. 1195 00:35:29,440 --> 00:35:31,359 That's nothing inherent so like. 1196 00:35:31,360 --> 00:35:32,439 That's just random. Like there's 1197 00:35:32,440 --> 00:35:34,869 nothing that makes me somehow 1198 00:35:34,870 --> 00:35:36,939 more valuable 1199 00:35:36,940 --> 00:35:38,799 than my, even just other 1200 00:35:38,800 --> 00:35:39,969 friends who are like civil engineers. 1201 00:35:39,970 --> 00:35:41,469 Like other engineers don't have that 1202 00:35:41,470 --> 00:35:42,579 kind of leverage or that kind of 1203 00:35:42,580 --> 00:35:43,059 power. 1204 00:35:43,060 --> 00:35:45,279 As we're talking, a train rattles by 1205 00:35:45,280 --> 00:35:46,239 his apartment. 1206 00:35:46,240 --> 00:35:47,259 Oh, that's the train. 1207 00:35:47,260 --> 00:35:49,299 Luis rents a two bedroom apartment 1208 00:35:49,300 --> 00:35:50,799 with his girlfriend downtown. 1209 00:35:50,800 --> 00:35:52,719 They pay a little over 3000 1210 00:35:52,720 --> 00:35:53,769 a month. 1211 00:35:53,770 --> 00:35:55,419 This is in the C home district where 1212 00:35:55,420 --> 00:35:57,999 the city's old power plant was. 1213 00:35:58,000 --> 00:35:59,829 Kirk Watson, both as mayor in 1214 00:35:59,830 --> 00:36:01,929 the nineties and then as a lawyer 20 1215 00:36:01,930 --> 00:36:03,939 years later, actually worked on 1216 00:36:03,940 --> 00:36:05,169 this development. 1217 00:36:05,170 --> 00:36:07,149 You see, it's all connected. 1218 00:36:07,150 --> 00:36:08,409 Talk to me about why you decided to 1219 00:36:08,410 --> 00:36:09,099 live here. 1220 00:36:09,100 --> 00:36:10,719 We got the train-side discount, 1221 00:36:10,720 --> 00:36:12,129 which I appreciated. 1222 00:36:12,130 --> 00:36:13,989 I have known about C 1223 00:36:13,990 --> 00:36:15,759 home for a while now. 1224 00:36:15,760 --> 00:36:18,039 Back when, back in my university 1225 00:36:18,040 --> 00:36:19,040 days when I was broke, I, 1226 00:36:21,490 --> 00:36:22,869 and this is the kind of thing that I 1227 00:36:22,870 --> 00:36:24,399 think a lot of folks who come, who 1228 00:36:24,400 --> 00:36:25,869 are like, or have that sort of 1229 00:36:25,870 --> 00:36:27,339 ambitions to achieve the American 1230 00:36:27,340 --> 00:36:28,689 dream. They're always like, "Oh, one 1231 00:36:28,690 --> 00:36:29,859 day I'll live in the nice tower," or 1232 00:36:29,860 --> 00:36:30,639 whatever. 1233 00:36:30,640 --> 00:36:32,556 And I think they C 1234 00:36:32,557 --> 00:36:34,029 home district was one of the areas, 1235 00:36:34,030 --> 00:36:35,559 it's like, "Oh man, that's one 1236 00:36:35,560 --> 00:36:36,879 places where, like, the fancy people 1237 00:36:36,880 --> 00:36:37,329 live." 1238 00:36:37,330 --> 00:36:38,799 Luis and his girlfriend moved into 1239 00:36:38,800 --> 00:36:40,419 this apartment after their rent in 1240 00:36:40,420 --> 00:36:42,459 Travis Heights nearly doubled during 1241 00:36:42,460 --> 00:36:43,359 the pandemic. 1242 00:36:43,360 --> 00:36:44,829 And I was just like, "One day I'm 1243 00:36:44,830 --> 00:36:45,909 going to save enough money, we're 1244 00:36:45,910 --> 00:36:47,149 going to do whatever it takes to go 1245 00:36:47,150 --> 00:36:48,969 to live in C home," because it's 1246 00:36:48,970 --> 00:36:50,799 the kind of place that reminds me 1247 00:36:50,800 --> 00:36:52,659 a bit, not fully, but a bit of 1248 00:36:52,660 --> 00:36:53,649 what it was like to live, when I 1249 00:36:53,650 --> 00:36:54,625 lived in Venezuela, where it's like, 1250 00:36:54,626 --> 00:36:56,319 oh, there's a local bakery to get 1251 00:36:56,320 --> 00:36:57,759 fresh bread. The grocery store is 1252 00:36:57,760 --> 00:36:59,139 about four minutes, you know. 1253 00:36:59,140 --> 00:37:00,459 Me and my buddies, we can go play 1254 00:37:00,460 --> 00:37:02,409 soccer in a nearby field, you know. 1255 00:37:02,410 --> 00:37:03,759 It reminds me of what it was like to 1256 00:37:03,760 --> 00:37:04,809 live in a very sort of, like, 1257 00:37:04,810 --> 00:37:06,759 integrated community. 1258 00:37:06,760 --> 00:37:07,869 If you can afford it. 1259 00:37:09,140 --> 00:37:10,969 Luis says most of his friends 1260 00:37:10,970 --> 00:37:11,989 can't. 1261 00:37:11,990 --> 00:37:13,309 When they get together, they talk 1262 00:37:13,310 --> 00:37:15,259 about their housing situations. 1263 00:37:15,260 --> 00:37:17,179 Like I would say, 90% of folks 1264 00:37:17,180 --> 00:37:19,249 my age are having an 1265 00:37:19,250 --> 00:37:21,289 incredible amount of stress related 1266 00:37:21,290 --> 00:37:22,069 to housing, Right? 1267 00:37:22,070 --> 00:37:24,049 Like, for instance, I still, even 1268 00:37:24,050 --> 00:37:25,399 making crazy amounts of money, I 1269 00:37:25,400 --> 00:37:27,289 have stress dreams about a 1270 00:37:27,290 --> 00:37:29,269 repeat of 2020 to 2022, because 1271 00:37:29,270 --> 00:37:31,309 if housing doubles again, that's 1272 00:37:31,310 --> 00:37:32,089 checkmate for me. 1273 00:37:32,090 --> 00:37:33,349 I'm not buying a home in Austin. 1274 00:37:33,350 --> 00:37:35,029 That's not happening ever. 1275 00:37:35,030 --> 00:37:36,979 Unless Austin makes some pretty 1276 00:37:36,980 --> 00:37:38,389 massive changes about the way it's 1277 00:37:38,390 --> 00:37:39,769 operating on many levels. 1278 00:37:39,770 --> 00:37:40,669 Right? 1279 00:37:40,670 --> 00:37:41,869 The only people are going to be able 1280 00:37:41,870 --> 00:37:44,119 to afford housing are people who 1281 00:37:44,120 --> 00:37:45,979 bought in the early 2000s or 1282 00:37:45,980 --> 00:37:48,109 who come from generational wealth. 1283 00:37:48,110 --> 00:37:49,110 And that's going to it. 1284 00:37:52,130 --> 00:37:53,029 We'll talk about some of those 1285 00:37:53,030 --> 00:37:54,889 changes, maybe massive, 1286 00:37:54,890 --> 00:37:56,929 maybe not, on the next episode 1287 00:37:56,930 --> 00:37:58,789 of Growth Machine: How Austin 1288 00:37:58,790 --> 00:38:00,280 engineered its housing market. 1289 00:38:02,540 --> 00:38:03,919 Growth machine is a production of 1290 00:38:03,920 --> 00:38:06,079 KUT and KUTX studios 1291 00:38:06,080 --> 00:38:07,279 in Austin. 1292 00:38:07,280 --> 00:38:09,139 It's produced by me, Jimmy Moss, 1293 00:38:09,140 --> 00:38:11,119 Mose Buchele, Marisa Charpentier, 1294 00:38:11,120 --> 00:38:13,579 Nathan Bernier, and Matt Largey. 1295 00:38:13,580 --> 00:38:14,659 Production help from Heather 1296 00:38:14,660 --> 00:38:15,499 Stewart. 1297 00:38:15,500 --> 00:38:17,179 Technical help from Jake Perlman and 1298 00:38:17,180 --> 00:38:18,499 Renee Chavez. 1299 00:38:18,500 --> 00:38:20,179 Stephanie Federico is our digital 1300 00:38:20,180 --> 00:38:20,989 editor. 1301 00:38:20,990 --> 00:38:22,639 Special thanks to the Austin History 1302 00:38:22,640 --> 00:38:24,889 Center and KVUE for archival 1303 00:38:24,890 --> 00:38:26,779 sound in this episode. 1304 00:38:26,780 --> 00:38:27,780 There's more at 1305 00:38:29,060 --> 00:38:30,319 Kut.org/GrowthMachine. 1306 00:38:30,320 --> 00:38:31,849 I'm Audrey McGlinchey. 1307 00:38:31,850 --> 00:38:32,850 Thanks for listening.