What’s With Everyone Moving Offices to San Fran?

[Warning: there is a heck a lot of TechCrunch citing in this post. I didn’t mean to do that, they just talk about the things I think about. Explains their popularity.]

Everyone seems to be talking about different angles of this. I’ve had this post on my Drafts list for a few weeks, and in my head for even longer. I’m glad life has been too crazy for me to blog, because a few more voices have popped up in the meantime.

Levo League, a recent NYC-based startup to empower working women, recently started up a new office out that way. They got $7 million in funding, and immediately moved to one of the  most expensive places in the country to hire talent.

That news actually made me sad, because I love what Levo is trying to do, and I think they could do equal if not greater good headquartered somewhere else. If only because they would be bringing their opportunities to a city ripe for new ventures instead of over-saturated with them.

There’s this recent TechCrunch CrunchWeek on why the burn-rate of startups is so high in Silicon Valley. Spoiler alert: it has something to do with startups offering massages and huge spacious gorgeous offices with free crap in order to attract talent.

Because all the other startups are doing it, so if they don’t have the same perks as everyone else, people won’t want to work for them.

The other aspect they bring up: over-hiring. Hiring to fix problems eventually, as Kyle Russell points out, creates a different sort of problem once they’ve done their job.

Now you’re running out of money and have all of these employees and you don’t know what to do with them. So you just shed a few.

Or they leave because they’ve lost faith in your ability to actually do things because all you do is sell to investors.

At TechCrunch’s Disrupt, Peter Thiel said: “Silicon Valley is going to be the center of the US economy for the next 10-20 years.”

I sure hope not.

Go ahead and check out the income inequality in San Fran, and how the middle class is disappearing at an even faster rate than, well, almost anywhere else.

I’m not trying to hate on the city. I root for their football team by marriage (when they’re not playing my black/burgundy-and-gold teams), and I know quite a few wonderful people who call it home. Cities are like humans: no one is perfect.

What I am trying to do is open the eyes of people who seem to view the startup culture at large and Silicon Valley in particular through the same adoration-filled glasses that caused Backstreet Boys fans to so vehemently hate N*Sync, and vice versa.

Y Combinator’s own Jessica Livingston points out how the prestige of being a startup founder has created “wannabe entrepreneurs.” (She probably learned this from Y Combinator’s foray into encouraging people to apply even if they just wanted to be a founder but didn’t have an idea; a.k.a. people who were attracted to the limelight.)

You know what. That’s a whole other post. Back to the topic at hand.

The burn rate isn’t exclusive to the West Coast. A couple of my links are from startups founded in and/or located in cities in other parts of the country.

But Silicon Valley is our idol. We look up to them. All things startup and entrepreneurial are only valid if they compare adequately to the West Coast locale.

So when startups in Silicon Valley start stretching beyond their means and focusing on frills rather than real actual products and services that change peoples’ lives in whatever manner, we follow suit.

The biggest complaint I hear from non-Silicon-Valley cities is the lack of investor gumption. Combined with the lack of depth in successful startups to learn from, we have a cycle here.

Because no other city is perceived as having the same amount of ingenuity as Silicon Valley, investors focus their moolah on the people in Silicon Valley. Which means people outside of Silicon Valley who are on the brink of changing the world end up folding their companies because they just couldn’t get their MVP off the ground without outside help.

There are countless examples of innovation and growth in other cities in the US.

I could keep going, but you know — you know how to DuckDuckGo stuff yourself.

I’m hoping the American spirit comes through here for us all. We’re all individualistic and scheiße. We’re original and we forge our own trail and take the path less traveled and no I am not going to do the same thing as everyone else, I’m going to be independent and innovative.

If that system holds true, then we could be gearing up for a “reverse gold rush.”

What I can’t figure out is, if everyone knows that talent is cheaper almost everywhere else in the country, and it’s cheaper to live and rent office space almost everywhere else, why are people still flocking to the hallowed golden hills of Silicon Valley?

Because it’s the cool place to be? Because investment dollars are far more than triple in SF versus almost everywhere else in the country? Because even though your food and your house cost more, you don’t have to take a second mortgage out on your house to fund your world-changing dream because you have an established community who will stand by you and give you advice and money?

Ah. It’s a cycle.

Silicon Valley has an overabundance of money. So they will continue to fund companies in Silicon Valley, thereby keeping the money in….well, you can figure that out.

I don’t fault Levo League for starting up an office in San Francisco. It may make the most sense for them because they are trying to reach working women, so now they have hubs in highly populated cities on both coasts.

But it hit me as I was noticing other companies who had moved offices to San Fran, and some of those moves hadn’t worked out so hot. So why do people keep doing it?

Well, their investors might make them do it. (And let’s be real: Levo’s investors probably had a say in their move, too.) Or maybe they just really want to be one of the cool kids. Or maybe, they just really need funding and mentors and they know that’s the most foolproof way to get it.

That whole “cycle” thing. You know the funny thing about cycles? They are started because a Big Dog got there first. You know the funny thing about the startup mentality? It involves thinking that “the way things are” isn’t the best they could be, and seeks to change what we perceive as our best option.

Side note: these guys over on Forbes say what I’m trying to say way better than I said it in their piece, “Why Creating The Next Silicon Valley … Is The Wrong Goal.”

“What exactly are you trying to say?”

At the heart of it?

People are human. Humans are sharp or simple, driven or complacent, inspiring or insipid. And humans are everywhere.

There is more money in Silicon Valley. But there is not more grit or determination or perspiration in just one city than in the rest of this country or world.

Share the love.


3 thoughts on “What’s With Everyone Moving Offices to San Fran?

  1. I live in SF and a recruiter from a startup that recently opened here, told me they came here because it’s where the talent is. They have an office in Austin, but even then they couldn’t get the employees they wanted. I moved here a couple of years ago because there just wasn’t enough opportunity in tech in L.A. despite it’s burgeoning “Silicon Beach.” I’m not sure what’s next for SF and tech, it is quite expensive to live here and I don’t think this whole system is sustainable. But, I’m no economist/city planner. 🙂

    • Thanks for adding that! I can’t argue with the cycle we have going on with most opportunities and talent being in San Fran. I just wish we could change it. Some people are actively working to “share the love,” like the guys over at Drive Capital. But I’m probably also just a tad jealous of the glamor of the west coast. I’d live there if I could! (Mostly for the sunshine, and Yellowstone and Yosemite.) This does lead into the subject of remote employees, though. Automattic, Treehouse, Salesforce.com, Hireology…a lot of big name companies are figuring out that supporting and looking for remote employees allows you to get the best talent, regardless of where your HQ is located. That’s a whole ‘nother post though!

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