Hil Davis, the CEO of Digital Brands Group, has bluntly declared that “doing business in the state of California sucks” as his company completes a 1,300-mile relocation to Texas.
Davis, a California businessman, delivered the frank assessment to Fox News Digital as his apparel and e-commerce company finalized its headquarters move to Round Rock, just north of Austin. The company has leased roughly 70,000 square feet of warehouse and office space as it expands its collegiate sports apparel business.
The sprawling Texas facility costs roughly the same as the company’s former space in Vernon, California, about five miles south of Los Angeles, Davis noted. But the operating environment proved far more favorable in Texas.
Davis pointed to California’s high cost of living, long employee commutes and the rising cost of doing business, including defending against lawsuits. “You start to add all those things up,” he said. “It doesn’t work. It doesn’t make sense. It’s too hard.”
The Round Rock Chamber announced the relocation with Davis expressing enthusiasm about the move. “We are thankful to move to Texas, a business-friendly state, from California,” he said in the chamber’s announcement. “We believe the operating environment and cost of business is significantly better, while also creating a higher quality of life and lower cost of living for employees. We are excited to build our corporate headquarters in Round Rock, especially as we move into our next phase of growth.”
Jordan Robinson, president and CEO of the Round Rock Chamber, welcomed the company. “We are thrilled to welcome Digital Brands Group to Round Rock and to witness yet another innovative company choosing our city for long-term growth and success,” Robinson said. “Their decision to relocate their HQ here underscores Texas’ reputation as a prime destination for tech-enabled, forward-thinking businesses and further strengthens our community’s diverse economic landscape.”
Digital Brands Group will begin operations in 47,611 square feet, expanding to 70,300 square feet after 12 months. The company anticipates employing more than 30 people initially, with substantial job growth expected following the first year.
Round Rock offered Davis a different equation with lower operating costs, a central shipping location for a company serving universities across the country and access to Austin’s creative workforce. He said permitting for the new facility also moved quickly.
Employees now face their own choice. Some are eager to follow the company to Texas, Davis said. Others have deep roots in California and may stay behind. Digital Brands Group will keep some production operations in Los Angeles after moving its headquarters to Texas.
The relocation comes as California wrestles with a much bigger question about whether the state’s costs, taxes and regulations are driving away the businesses and wealthy residents it relies on. That debate has intensified around a proposed one-time tax of up to 5% on Californians worth more than $1 billion.
California is already seeing taxpayers and their income move elsewhere. Los Angeles County led the nation in taxpayer losses in the latest IRS data, with a net 17,496 tax filers leaving for other states and taking nearly $1.9 billion in income with them. The losses extended beyond Los Angeles, with Orange County recording a net loss of 11,618 tax filers, followed by San Diego County with 9,401, Riverside County with 8,968 and San Bernardino County with 8,462.
Davis does not predict a sudden stampede out of California. He expects a slow drip. “I don’t know if there’ll be, like, an explosion,” he said. “I just think it’ll be a constant leak.”
California still has powerful anchors. Silicon Valley remains a magnet for technology talent and capital, while Los Angeles has a deep bench of creative workers. Davis acknowledged those industry “centers of gravity” are difficult to replicate elsewhere.
Digital Brands Group has already made its choice. And as California debates how to tax its wealthiest residents, Davis says the real story is still unfolding, one company at a time.