A startup AI company is moving out of the state of California to the more business-friendly Texas.
Cognigy, which creates AI agents for customer service, announced they are relocating their headquarters from San Francisco to Plano and bringing their 50 employees with them. Their goal is to soon grow to a workforce of 100. Cognigy CEO Philipp Heltewig referred to the Dallas area as an "emerging tech hub."
The AI company works with customers like Adidas, Frontier Airlines and Mercedes-Benz. The startup says that more than 1,000 brands worldwide rely on its AI agents.
David Dunmoyer, campaign manager for Better Tech for Tomorrow at the Texas Public Policy Foundation, said Cognigy's move to North Texas is one of many examples of companies big and small relocating out of California to the Lone Star State.
"California is known as the tech state where they move fast and break things, but more recently, we've seen the Legislature in California that's moving fast and breaking things with innovation," Dunmoyer said.
California lacks educational opportunities for skilled workers and is more focused on reaching DEI quotas. On the other hand, Texas is thriving with their pro-business environment.
"Texas is providing economic and workforce incentives for folks to call Texas home with these companies," said Dunmoyer.
Another reason AI companies are looking to operate outside of California is because of their mass blackouts due to energy shortages and their push for non-reliable energy sources. Texas becomes more attractive because it has robust and resilient energy powering data centers.
"It's really a combination of regulatory certainty in Texas and the fact that we're investing in energy and data centers to power these next-gen AI companies," Dunmoyer added.
Earlier this year, President Trump announced a $500 billion dollar Stargate infrastructure project that will include data centers being built in Texas. This will increase the use of AI in the United States and be a major boost for the Texas economy. It will also help the U.S. in the AI race with China.
Dunmoyer said there's also a race between California and Texas to be the country's AI leader.
"Their executives have made it clear that humanity is a threat to innovation," Dunmoyer said of California leaders. "They tend to do this at odds with the odds that make Texas exceptional, so on top of that fact that we're beating California in energy and investment, the values that are animating the companies that are coming here, that is so crucial to maintaining long-term dominance."
Cognigy follows a trend of even big-name and well-known U.S. companies like Tesla and Realtor.com who have landed in Texas after previously having their headquarters on the west coast.