More on California Business Climate
"California is like France," he said. "I try not to hire here, and I certainly would not launch a company here. But the wine is good."
Now when Vector invests in a California company, the firm methodically asks: Which jobs must remain here? Most go elsewhere.
When Vector recently acquired a 140-employee technology outfit based in Sunnyvale, Calif., it sent nearly all jobs out of state. Developers, including some Ph.D.s went to St. Louis, where income taxes and living expenses are lower. Vector is hiring actively there from Washington University's graduate pools. Back-office jobs went to Asia. Only 10 people from the firm stayed in California.
"California is facing French-like entitlement systems that will only become more expensive," says Mehta. He's worried about ever increasing tax burdens on high-earners (like his engineers) and businesses. This is a clear factor when hiring senior talent. "These people are trying hard not to be based out of California. They hope to get seriously rich on equity, and are concerned about what will happen to California's tax code in the future," says Mehta.