California Spotlight #15

The headlines are lying to you.

Mar 07, 2025

The headlines are lying to you.

If you read the news, you’d think California is either a utopia of innovation or an economic dumpster fire. But neither is the full story. The truth?

We’re in a transition period. The economic winds are shifting, but not in the way you think. And in every major transition, there are winners and losers.

The question is: Which side will you be on?

1. The Death of "Easy Money"—What It Means for You

For the past decade, California founders had it easy (even if it didn’t feel like it).

Investors were throwing cash at anything with a pitch deck.
Startups could burn money endlessly with no consequences.
Everyone from Uber to DoorDash was losing billions—and still growing.

But now? The era of easy money is over.

VC funding in California dropped 42% in the past year.
Banks are tightening lending standards.
Investors are demanding profitability over growth.

What does this mean for your business? If you’re waiting for funding to save you, you’re already losing. The businesses that win in 2025 will be the ones that can generate real, sustainable revenue—without outside capital.

2. The Real Estate Crisis No One is Talking About

Everyone knows California real estate is expensive. That’s not new. But what’s happening right now is different:

Commercial real estate is collapsing. Office space vacancies in San Francisco are at a record-breaking 35%.
Retail landlords are panicking. Small businesses are breaking leases, negotiating lower rent, or shutting down entirely.
Flex spaces and ghost kitchens are thriving. The businesses that are winning aren’t locked into traditional leases—they’re leveraging short-term, scalable spaces.

How can you use this to your advantage?

Negotiate your lease. If you’re paying pre-2022 rates, you’re probably overpaying. Landlords are desperate—use it.
Consider alternative spaces. Could your business operate from a co-working space, ghost kitchen, or warehouse instead of an office?
Think outside California. Some founders are renting warehouse spaces in Nevada or Arizona for fulfillment while keeping their HQ in California.

The businesses that adapt to this shift will have lower costs and higher margins. The ones that don’t? They’ll bleed out.

3. The Quiet Revolt Against Big Tech (And What It Means for Small Businesses)

For years, California’s economy has been dominated by big tech. But in 2025, small businesses are fighting back—and winning.

Here’s what’s happening:

Founders are ditching Google and Meta ads and focusing on organic growth (word-of-mouth, partnerships, community marketing).
Employees are quitting big tech to start their own businesses—and taking their expertise with them.
Consumers are actively choosing small, local brands over faceless corporations.

This isn’t just a trend—it’s a power shift. And if you know how to take advantage of it, it’s your biggest opportunity.

How to Win in the Anti-Big Tech Era:

✅ Double down on brand, not ads. Big tech companies can outspend you, but they can’t out-authentic you. The brands that build a loyal, niche audience will win.
✅ Leverage the “ex-tech” talent wave. More ex-Google, ex-Tesla, and ex-Apple employees are looking for meaningful work. Can you hire them? Partner with them?
✅ Own your distribution. Email lists, private communities, and direct relationships with customers will be worth more than any ad strategy.

Action Step of the Week

Question every expense. If you’re running a business in California in 2025, you can’t afford to operate on autopilot. This week, review your biggest three expenses and ask: “Would I still pay for this if I was starting from scratch today?” If the answer is no, cut it or renegotiate.

What’s the biggest challenge you’re facing as a founder right now? Reply and let me know—I might feature it in the next edition.

— James