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Can't Take It With You

Updated: Jul 20, 2023

This may surprise a lot of you who know me, but I’m going to miss JP Morgan this year.


In a surprise about-face, it was decided a couple of weeks ago that the 40th Annual J.P. Morgan Healthcare Conference will now be fully virtual after organizers of the enormously popular biotech conference decided to pull the plug on a live event at the Westin St. Francis in San Francisco over concerns about the Omicron variant and a growing chorus of drugmakers opting out.


When it's an in-person event, it's characterized by overflowing banquet halls, crowded conference rooms and wall-to-wall meetings. How crowded? It extends far beyond the walls of the St. Francis-- a few years ago, I saw four people-- all in Patagonia vests, of course-- fight over a dining table that was for sale on the second floor of the Union Square Macy’s where they wanted to hold their meeting.


Perhaps even more significant than the crowding, though, is that the entire city of San Francisco, from hotels to restaurants to bars to caterers to virtually any type of event venue, over the last ten years has caught on to the opportunity to fleece the biotech industry by overcharging.


I mean, let's be honest. Even pre-pandemic, J.P. Morgan was approaching a breaking point in San Francisco from a cost perspective. It’s one thing to fork over $2,500 a night for a hotel room (at a hotel that requires a four-night minimum stay during the conference), but when hotels are charging $300 just to sit at a two-top lobby table for a meeting, that’s an issue, especially against the backdrop of homelessness in and around Union Square. I went to one of those meetings in 2020 and walked right past a tweaker taking a dump at the bus stop directly in front of the Geary Street entrance to the St. Francis.


Nobody else seemed to notice, so maybe JP Morgan really will eventually come back to The City. But I doubt it.

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Before it was JP Morgan, it was the H&Q, and I first attended it back in the ‘90's, so I suppose I’m a little nostalgic. But enough is enough. …And that’s saying a lot for a person in my position.


In January, 2020, I still had an office at 555 California Street, and I loaned out our conference rooms to various biotech glitterati. One of them had never returned a single call of mine for two years until I asked if he’d like a room during the conference; he replied to my email in less than two minutes.


And the parties…! Over the last several years, I have seen more ice buckets of Krug, chocolate fountains, ice sculptures and giant tins of Beluga caviar at JP Morgan than I’ve experienced in the whole rest of my life. At the 2020 conference, I attended the Wilson Sonsini bash at the San Francisco Museum of Modern Art with one of the most amazing biotech brains I’ve ever known, and that was how our working relationship began. The parties were both amazing fun and highly productive.


But the price gouging, the total lack of available space and the extravagance of those parties have lent the conference a deserved snob factor. For too many attendees, it became all about being seen. Me, included.


That’s a dire problem for the heathcare industry, definitely more so than CES (or Burning Man) is for the consumer technology industry, which has the good sense to leave San Francisco for their conference.


Why? Because politicians will eventually blame biotech snobs’ penchant for $2,500 hotel rooms for the high cost of researching and developing new medicines. It’s a bad look, and the industry owes its patients, shareholders and employees a more fiscally responsible way to network and generate partnership.

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I’m going to bet that JP Morgan leaves San Francisco for good. It’s not a difficult bet to understand; leaving San Francisco—and the entire state of California-- is an undeniable trend. Between early 2018 and June 2021, 272 companies moved headquarters to other states, according to the Hoover Institution of Stanford University.


Some of those companies are pretty notable, too. We’ve all heard about Tesla and Joe Rogan moving to Texas, but how about Oracle, Charles Schwab, Hewlett Packard Enterprise, Mitsubishi Motors, Toyota, Dole, Palantir, VF Corp (that owns North Face, Vans and Timberland), Bechtel and Nestle?


According to the Hoover Institution’s August report, 74 companies moved their headquarters out of California in the first six months of 2021. That exceeded the total number of moves in 2020, and the number was likely undercounted because not all relocations were public, especially for smaller companies.


"The data presented here show that headquarter relocations are accelerating substantially, with no sign of reversing course, reflecting a California business environment that ranks near the bottom of all U.S. states in many dimensions, including taxes, regulations, litigation costs, labor costs, energy and utility costs, and employee cost of living," the report said.


The Hoover Institution's study identified "high tax rates, punitive regulations, high labor costs, high utility and energy costs, and declining quality of life" as reasons for companies leaving the state which, of course, sounds like all the reasons JP Morgan will leave the Westin St. Francis. Nostalgia is the only reason to stay.


You’ll never see a hearse with a luggage rack. Sorry, San Francisco, you can’t take it with you.





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