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Noah Smith

How Texas Can Become the Next Silicon Valley

The state should ban noncompete employment clauses that stifle innovation and limit available talent for tech companies.

Tesla Inc.’s new factory in Austin could be the tip of the iceberg for Texas. 

Tesla Inc.’s new factory in Austin could be the tip of the iceberg for Texas. 

Photographer: Bloomberg

Texas is making another bid to become America’s technology hub. It will be an uphill battle, to put it mildly. But one seemingly small policy tweak could give the state a big boost in its quest to lure the tech industry: banning the enforcement of noncompete agreements.

 In the 1970s, Austin established itself as a technology cluster but never attained the heights of Silicon Valley or Seattle. To do that, a city needs a critical mass of talented engineers, big employers and venture capital. Now, the urban dysfunction of the San Francisco Bay Area and a desire for lower taxes have prompted some tech companies and investors to move from the Bay to Austin. Elon Musk’s companies, Tesla and SpaceX, are probably the most notable big companies making new investments in the area, and Musk himself has moved to Texas. Oracle and a smattering of venture capitalists, are also making the move.