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Bay Area Start-Ups Find Low-Cost Outposts in Arizona

Three years ago, Kate Rogers was caught in the Bay Area struggle. She paid the astronomical rents. She did the crushing commute. She lived the frustration of always thinking about money even though she was a well-paid professional in the booming technology industry.

And then, just like that, the stress went away. All she had to do was move to Arizona.

As start-ups across San Francisco and the Silicon Valley try to contend with high salaries and housing costs, many are expanding to lower-cost cities in the West and employing more people like Ms. Rogers. For Phoenix, which is about a 90-minute flight from San Francisco, the Bay Area’s loss is its gain.

Housing is much cheaper. The median home price in the Phoenix metropolitan area is $221,000, according to Zillow. In San Francisco, it is $812,000.

The Bay Area has never been especially cheap, and tech companies have a long history of moving their more expensive and labor-intensive functions to second-tier cities where land and labor are less expensive. Intel, the semiconductor giant, was founded in the Silicon Valley in 1968, and by 1979, it had manufacturing facilities outside Portland, Ore., and Phoenix.

But as the latest exodus gathers steam, these outlying cities hope some of the higher-paying engineering jobs will start moving as well.

“We don’t want to be San Francisco’s back office — we need more creators here,” said Scott Salkin, a founder and the chief executive of Allbound, which is based in Phoenix, makes sales software and has offices down the hall from Gainsight’s.

Image courtesy of Scott Salkin, left, and Kyle Burnett, founders of Allbound, in their Phoenix offices.CreditCaitlin O’Hara for The New York Times

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