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[VOIPoTim]

Moving HQ from TX to CA?? I must have missed that post somewhere......

I suppose you have a good reason for it, but I don't see the logic in moving a business to where the operational costs (property,taxes,wages,etc.) are much higher than in Texas. Actually, more businesses are moving out of CA to states like TX where the costs are much lower along with a more favorable operating environment.

I suppose one can conclude to expect a price increase in the near future to cover the higher operating costs you are going to incur in CA......

There are quite a few reasons, but we only expect a minimal increase in costs...nothing significant enough to impact pricing. It's all depends on perspective though.

Both CA and TX have pros and cons, but overall I can't come up with a business case to stay in Houston.

Many things are more expensive in CA, but there are a lot of areas were Houston increases costs significantly for us as well.

The biggest thing that's impacted the dynamics of it in the last year would be the economy in general. CA has been hit very hard while Houston is still going pretty strong. So the job market and real estate come into play. Right now in CA, I can get office space at about 75% of the cost I can in Houston. The unemployment rate in CA is 11.2% while it's only 6.9% in Houston.

While thee are bad for the economy in general, the higher unemployment and crashing real estate are both great if you have lots of cash to invest.

We can hire in CA right now for the same price we can in Houston while having more candidates to choose from since more are unemployed and be better positioned location wise so relocations aren't as necessary. On the real estate side, and get real estate for cheaper and potentially make a huge return on it by holding long-term.

We have several hundred employees here in Houston at HostGator and have run into major issues hiring. For one thing, hiring for some of the higher end technical positrons is virtually impossible. While we can get a ton of $10/our CS reps, hiring for Linux Sys Admin positions, etc is very hard. With HostGator, we are spending a ton of money on relocations and having to pay high salaries in order to persuade someone to move here from CA, NY, FL, etc. Most people we try to hire for those positions simply flat out refuse to move here, but will happily work for much less in FL for us.

While the tax situation in CA is bad, TX is worse in a lot of areas. TX has no income tax so that seems huge, real estate is cheap so that seems huge. If you look at the whole picture through, TX has one of the highest property taxes in the country and some of the highest energy costs. Beyond that, TX has a ton of little hidden taxes. For example, they made a ton of changes to the franchise tax right after we moved here and by being in TX and doing buiness with another company in TX, sales tax comes into play whereas if it's all online, it's a little different.

Again, I'm not saying Houston doesn't have it's pros too, but it's all perspective.

[tritch]

There are quite a few reasons, but we only expect a minimal increase in costs...nothing significant enough to impact pricing. It's all depends on perspective though.

Both CA and TX have pros and cons, but overall I can't come up with a business case to stay in Houston.

Tim,

You make some pretty compelling points for the move.

Given the current economic condition (and its huge budget shortfall) in CA, I foresee more tax revenue coming from somewhere which is most likely going to come from businesses not residents. Yes, talent wise you got a huge pool of unemployed IT workers to hire from, but this is likely only to be temporary situation. At first, they will hire on at lower wages then later ask for higher salaries, more benefits or leave for a higher paying job down the road when economic conditions improve.

One thing is certain, if your operating expenses do increase by moving to CA (which I believe they eventually will), I foresee the increased costs being passed on to your customers.

Of course this is all just my opinion, so hopefully you have considered all your options and made the right decision to move.

The best of luck.....