Tax-Motivated Relocation Folly

James Courier (NFX founder) believes that life decisions should be viewed through the lens of network effects rather than just financial benefits like tax savings. Moving away from valuable networks like San Francisco's tech scene purely for tax reasons is considered foolish because the connections and opportunities lost far outweigh the tax savings.

Key Points:

• Moving solely for tax benefits is considered foolish

  • "Moving for taxes when someone tells me they do that I think they're stupid" - Sam Parr
  • "That decision and actually several other decisions they make are probably also stupid" - Shaan Puri
  • You might save 13% on taxes but "make 13x less money" on that same decision

• Life should be viewed through network effects

  • Every decision either joins or leaves a network
  • Examples of networks include:
    • College alumni networks (like Duke leading to Wall Street/finance)
    • Geographic networks (San Francisco tech scene, Hollywood)
    • Skill-based networks (marketing connects you with other marketers)
    • Language networks (English opens opportunities globally)
    • Family networks (prioritizing family connections)

• Network decisions compound and influence future opportunities

  • Initial network decisions heavily influence subsequent decisions
  • Opting out of networks (like leaving San Francisco) means losing connectivity to the "white hot center" of that network

• Personal example of network tradeoffs

  • Sam moved for family reasons, not taxes
  • "If family weren't a thing" he would live in SF or nearby "in a heartbeat"
  • Shaan moved 45 minutes outside SF, reducing "serendipitous meetings" but maintaining family benefits
  • Solution: maintain connections through regular visits rather than completely disconnecting

• Even small connections to valuable networks matter

  • Keeping "one line connected to the white hot center of the network" is valuable
  • Isolation can be "great for creativity" but terrible for opportunities