The holiday part of our trip to San Francisco just ended. My wife flew back to Istanbul over the weekend and I’m sticking around to meet with our US startups.
I reached out to our Northern California startups yesterday to arrange our meetings. Of the 13 startups I emailed, 10 of them are based in San Francisco. Of the other 3, one is in Palo Alto, one in San Mateo, and one in Oakland. The number of startups based in San Francisco is a reflection of how startups’ center of gravity has shifted from the Peninsula (Palo Alto and its surroundings) to the city. The last time I was here was over two years ago and there was a much greater balance between startups locating in the city and those residing in the Peninsula. I think that the main factor behind startups moving to the city is that, as their competition for talent has increased, they’ve responded to the demands of their young workforce that prefers to live in an urban area with a lot to do than the less lively suburbs.
As interesting as the fact that 10 of our 13 startups are located in San Francisco is the fact that we’re going to be meeting with the other 3 in the city as well. Although they’re not located there, they’re traveling to the city for other business meetings so we agreed to meet in the city.
Whether you’re a Northern California startup based in the city or not, it seems like you’re going to be spending a lot of time in the city. It’s where business gets done. The result is that real estate costs have skyrocketed. We’re therefore seeing some departures from the city. These will likely balance San Francisco’s dominance in the coming years.