ELI5: Why do so many tech companies move to such expensive areas like in Cali? Do you really need a fancy office to build apps or Facebook? Why not be located somewhere cheaper cost of living.

It’s called a Business cluster. See the Silicon Valley case for example. Hollywood would be another example. Lots of businesses within the same industry settle in a geographic concentration. This makes it attractive for startups or venture capitalists to locate themselves there as well.

With much companies on a relatively dense area, it’s attractive for people who are searching jobs in this specific field to move there.

These clusters are often connected with universities, service providers, etc. specified on the given industry, which makes business relationships and stuff like that incredibly easier due to regional proximity and some kind of symbiosis between them.

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