Dave Lee & Tesla Owners Club of Austin: Why Tesla Is Betting on Austin

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In his latest YouTube video, Dave Lee interviewed Tesla Owners Club of Austin members Matt Holm, president, and Anuarbek Imanbaev, vice president. Lee’s channel is his outlet for sharing his real-time thoughts on investing and noted in his disclaimer that all of his content is for discussion and illustrative purposes only. With that said, I’ll add my own disclaimer into the mix: I am a $TSLA shareholder as well — with just a few shares. I believe in Tesla and Elon Musk and support them with what I can. But nothing I write here is a suggestion or advice.

That aside, grab rabbit hole diving gear, and let’s dive.

Real Estate, Covid, Silicon Hills

Both Matt and Anuarbek work in real estate, and Austin is one of the hottest real estate markets in the country. Elon Musk has even tweeted about the housing issue in Austin. Tesla is hiring for 10,000 positions in Austin, and this is putting some extra pressure on housing needs there.

In the interview, Dave wanted to know how Austin has changed in the past couple of years and how Tesla is making an impact. Matt spoke about the reputation of being “Silicon Hills” but said that he would describe Austin in the past as being more customer service and support-focused than technology. Within the past couple of years, Matt said that Austin was creating roughly 6 million square feet of office space for tech and that he is starting to see engineering teams and C-suite execs coming in.

“The Zeitgeist shift has been transformative from Oracle, and there’s a number of other names I think that’ll be coming soon that have yet to announce that are in the pipeline. And they’re bringing the whole team, and so Tesla sort of adds fuel to the fire,” said Matt.

Apple is building second million square feet and Google is building a 35-story tower in downtown Austin for all software engineer teams.

“What we’re seeing is a robust increase and I wouldn’t even go back six months. I’d go back to the middle of January. We have seen a 30%-40% increase in home values across Austin in an extremely short period of time,” Matt said.

Matt believes that a lot of notices were sent out at Tesla as we moved from the fourth quarter of 2020 into the first quarter of 2021 that basically informed employees that when they returned to the office from Covid, the office would be in Austin. His relo business went from 10–15% of his business to over 50%, with the bulk being from Silicon Valley. “Elon and the Musk industries are the icing on top — cherry on top at this point, I think,” Matt said.

Anuarbek also touched upon this part of the topic, noting that he thought Covid was the major inflection point. “Pre-covid Austin was a growing market like what Matt was saying. There’s a lot of tech light … Google has a presence, Apple — a lot of the major tech companies — but they were kind of like secondary roles like HR and all that. But after Covid, I think we’ve definitely seen a massive inflection point. I think the tip of the spear is definitely what Elon and Tesla is bringing to Austin.”

Austin’s Shift from a Small Hip City to the New Center of Tech

Dave asked a question that many are probably wondering as well. He wanted to know what the shift was that moved Austin from being a small hip city to the center of tech, what the tipping point was. Both Matt and Anuarbek shared their thoughts.

“I think it comes to quality of life, cost of real estate really up until now. I know Elon internally asked quite a few people within Tesla and his companies if you had to choose one place you could go to anywhere in the country to move, pick it. And Austin apparently won by a landslide as far as quality of life, cost of living. We have a vibrant city. We got a great music scene. We have a great art scene. We have a great tech hub here already that sort of created an infrastructure that now can kind of blossom and come to full fruition.”

He also noted that Covid showed that many of us can do our jobs from anywhere. He mentioned that the size of Austin is appealing — big enough to have al kinds of attractions and things to do but not overwhelmingly large. He noted that the LA metro area has 15 million people while Austin has about 2 million. He said it sort of had the feel of a small town, and noted that he had one person comment, “Austin’s a really cool neighborhood.” Anuarbek spoke of the balance between a blueberry in the middle of a red tomato soup (referring to politics and culture).

“Texas as a state is amazingly business-friendly and the vibe in Austin is kind of similar to what people experience in LA or the Bay Area. So I think that’s what draws. It’s the livability. It is an amazing place to live, but why does Elon care to move most of Musk industries to Texas? I think it’s because of the friendly business environment.”

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Austin’s Housing Shortage

Dave wanted to know more about the housing shortage Elon tweeted about and Matt shared his thoughts. “Last year, I believe new construction was about 37,000 houses, but we had about 200 people a day relocating here, so we were basically about a half to a third of what we actually needed. That’s assuming we have some type of moment within Austin. Anecdotally I’ll tell you, my clients in Austin that are selling are usually moving up, moving down, moving across. They’re not moving out of the area because they want to move somewhere else. It’s very atypical to get a client selling and going, ‘I’m going to San Francisco or LA or New York.’ It just doesn’t really happen here very often.”

Matt explained that this creates a closed system, and then Covid came. Suddenly, people were deciding that they wanted a second office or a pool and they wanted to do it right then. Then, in January of this year, a lot of announcements came through bringing around tens of thousands of jobs. Matt noted that these announcements were probably announced internally before they were publicly and this brought the flood of people moving to Austin.

Much more is in the video. You can watch the full interview here.