This is so sad for those of us who love California...California's government is the problem. The state is business-hostile. It is merit-hostile. It has the highest tax rates and returns less in services to its average citizens. Massive pension abuses are not dealt with.
Worst of all, the state's crazy regulation structure creates uncertainty, cost, and risk in doing business here. The system is chilling to investment and innovation. This is true for businesses of all types, from technology companies to basic franchises.
Many businesses founded elsewhere now try to avoid for as long as possible doing business in California. Meanwhile, I have watched company after company leave the state. And, as you might imagine, it is much harder to get businesses back than to keep them from leaving.
I'm lucky enough to work for one of the very few entrepreneurial efforts that's doing so well it still works in California, despite the government's best efforts to prevent it. But there aren't many software startups like this one, and California is going to pay for this foray into brain-dead liberalism. It's not hard to see that the startups are going to go elsewhere – and with them will go the best engine for economic growth that the world has ever seen. A few years from now, the name “Silicon Valley” may refer instead to someplace in Montana, Nevada, or some other business-friendly state. Or worse, in some other country.