Former Cisco CEO John Chambers says his start-ups are skipping over Silicon Valley

The ongoing exodus of Silicon Valley is a warning sign for the future of the state, former Cisco CEO John Chambers told CNBC on Thursday.

“We’re in trouble. We’re a state that is taking an entitlement approach, it’s not a good state to do business,” Chambers, who founded JC2 Ventures, said in a “Squawk Alley” interview. “You’re seeing many companies thinking about leaving and, even worse, none of my start-ups are thinking about coming to California.”

“If California isn’t careful, they’re going to lose their leadership and the jobs created with it,” he added.

Founders, executives and tech employees of all ranks, who are normally based in Silicon Valley, have been moving out of the area in an exodus sparked by the Covid-19 pandemic. Since they’re not going into an office every day, people are in search of cheaper rent, more space and lower taxes.

Among them is Tesla and SpaceX chief Elon Musk, who confirmed last year that he moved to Texas, though his companies still maintain their major operations in CaliforniaPalantir co-founder Joe Lonsdale also announced a move from the Bay Area to Austin, Texas. 

Some companies are also getting on board, either shifting their headquarters or allowing employees to continue working remotely long after the pandemic ends. Oracle, one of Silicon Valley’s older success stories, changed its corporate headquarters from Redwood City, California to Austin, Texas. Hewlett Packard Enterprise announced it will relocate its headquarters from San Jose, California, to Houston, Texas. Data analytics software company Palantir Technologies also moved its headquarters to Denver, Colorado from Palo Alto, California.

Hordes of founders and investors, including Keith Rabois, have also recently relocated to Miami, partly due to Mayor Francis Suarez’s big Twitter push.

The Silicon Valley exodus could bode well for other states across the United States that can get in on the wealth, Chambers said.

“Does this opportunity create opportunities for Texas, North Carolina, Ohio, my home state of West Virginia? Absolutely,” he said. “You have to create the right environment for start-ups and we’ve learned that, with the pandemic, you can put your resources anywhere.”

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