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I think the advantage of a massive skilled labor pool and investors within walking distance is a nearly insurmountable advantage. For a small company, I'd say

I think the advantage of a massive skilled labor pool and investors within walking distance is a nearly insurmountable advantage. For a small company, I'd say the time/cost of hiring a few good engineers is way more than a few months rent. You'll certainly pay a respectable headhunter quite a bit.

mooreds 11y ago
Hmm... Eventually the massively skilled labor pool will cost so much that the advantage will disappear. Good point about the investors, though. We'll see. Perhaps it really will be an exogenous event which will halt the San Francisco craziness.
s73v3r 11y ago
Most decent sized to large cities in North America have a large skilled labor pool.
mattzito 11y ago
It's a lot more complicated than that - there's a massive skilled labor pool, but at any given time, a huge percentage of them are gainfully employed and not currently looking. Many of the really amazing labor pool members are recognized as being amazing and are compensated and rewarded in such a way that it will be difficult to draw them away. Then those that are looking are being courted by every other company. The converse can be true - it can be much easier to get very high quality talent somewhere that there is not a massive labor pool. You'll attract the people who don't want to live in SF or NYC, or want a certain lifestyle, or to be close to where they went to college, etc. etc. I'm not saying that starting a company not in SF is inherently better, but that "insurmountable advantage" is also one of the biggest disadvantages about SF. Your mileage may vary.
untog 11y ago
It both helps and hurts - just yesterday Yelp admitted that the "Unicorn bubble" was hurting their profits: http://recode.net/2015/07/29/yelp-admits-the-unicorn-bubble-is-hurting-its-profits/ http://recode.net/2015/07/29/yelp-admits-the-unicorn-bubble-... For some reason it has only occurred to them now that hiring for offices in cities other than San Francisco might help them get talented developers.
- jonbishop 11y ago
  "A Yelp spokesperson told Re/code that to combat the hiring problems it has plans to hire people in other offices across the country." They're not opening up new offices, they're looking to hire where they already have offices like New York and Phoenix.
- pgspaintbrush 11y ago
  Unfortunately all of Yelp's other offices (other than Hamburg) are exclusively sales offices (i.e. no engineering)
deleted 11y ago
[deleted]
chrismarlow9 11y ago
I think San Francisco is better for medium sized companies looking to IPO... I think you should get a base level somewhere much cheaper.
briandear 11y ago
I never understood why investors need to be 'close.' I also don't understand why most startups need an office. Basecamp is entirely remote with an office just for show. They only use it a few times a year. Unless you build hardware, an office is unnecessary. A dumb waste of money, especially early in a startup's life. I do some side work for a major international medical lab and their entire Dev team is remote -- and this is enterprise. I am not sure some flower delivery app that aggregates social sharing metrics using Go really needs to have an office. As far as 'access to talent,' that's a bulkshit metric as well. Remote workers can be anywhere. You can even hire foreign workers without needing visas. Most engineers aren't living in San Fran except for their jobs. Making $140k per year is the San Fran equivalent of minimum wage, especially if you have a family. Compare that cost of living to any other place in the country and San Fran engineers actually don't get paid very well at all. Add California taxes into it and I'm just not getting the attraction. I live in the South of France in a big house that costs me $800 per month. I am about a 10 min walk from the TGV station that can take me to Paris in just over 2 hours. My kids are in French pre-k, I have top notch medical insurance that costs $139 per month to cover the whole family beyond the government insurance and I don't have to worry about my wife getting harassed by urine soaked homeless people at BART stations. I can't speak for all engineers but given that there is an entire word outside of San Franscisco, I can see zero advantage to living there. Talent is there because they have to be. I'm sure a huge percentage would rather be working from a beach in Thailand or Tulum. As far as investors, who cares? If you have a product people want to buy, investors will come to you. It's a myth that proximity matters. There were investors long before Silicon Valley startups were a thing. Plenty of billion dollar companies founded everywhere else. At this point, San Fran and the valley are prestige locations as opposed to offering any competitive advantages.
- Johnny555 11y ago
  We've tried and found that remote engineers are less effective, they miss out a lot from group whiteboard discussions, overhearing office chatter "Hey bill, service XX crashed again because of YY (and Mike overhears and says "Oh yeah, I saw YY in service ZZ too and fixed it"), and just general team cohesiveness. In theory we could hire more people for less salary if we had a remote workforce, but we're still a small company (less than 100 people) and it's a lot harder to manage a 100 person geographically spread out engineering team than a 50 person local team). Paying the San Francisco premium for salaries (and rent and everything else) is less than the cost to build and manage a distributed team. As we grow, that will likely change as we'll be able to have specialized teams and open satellite offices, but for now hiring in the Bay Area makes the most sense. We could likely build an accomplished team in any major metropolitan area, but since our investors and board members are here (as are the other companies they invest in and manage), it makes sense to have the company here. (not entirely our choice, when someone invests millions of dollars into a company, they want to be close to it)

mooreds 11y ago

Hmm... Eventually the massively skilled labor pool will cost so much that the advantage will disappear. Good point about the investors, though. We'll see. Perhaps it really will be an exogenous event which will halt the San Francisco craziness.

s73v3r 11y ago

Most decent sized to large cities in North America have a large skilled labor pool.

mattzito 11y ago

It's a lot more complicated than that - there's a massive skilled labor pool, but at any given time, a huge percentage of them are gainfully employed and not currently looking. Many of the really amazing labor pool members are recognized as being amazing and are compensated and rewarded in such a way that it will be difficult to draw them away. Then those that are looking are being courted by every other company. The converse can be true - it can be much easier to get very high quality talent somewhere that there is not a massive labor pool. You'll attract the people who don't want to live in SF or NYC, or want a certain lifestyle, or to be close to where they went to college, etc. etc. I'm not saying that starting a company not in SF is inherently better, but that "insurmountable advantage" is also one of the biggest disadvantages about SF. Your mileage may vary.

untog 11y ago

It both helps and hurts - just yesterday Yelp admitted that the "Unicorn bubble" was hurting their profits: http://recode.net/2015/07/29/yelp-admits-the-unicorn-bubble-is-hurting-its-profits/ http://recode.net/2015/07/29/yelp-admits-the-unicorn-bubble-... For some reason it has only occurred to them now that hiring for offices in cities other than San Francisco might help them get talented developers.

jonbishop 11y ago
"A Yelp spokesperson told Re/code that to combat the hiring problems it has plans to hire people in other offices across the country." They're not opening up new offices, they're looking to hire where they already have offices like New York and Phoenix.
pgspaintbrush 11y ago
Unfortunately all of Yelp's other offices (other than Hamburg) are exclusively sales offices (i.e. no engineering)

deleted 11y ago

[deleted]

chrismarlow9 11y ago

I think San Francisco is better for medium sized companies looking to IPO... I think you should get a base level somewhere much cheaper.

briandear 11y ago

I never understood why investors need to be 'close.' I also don't understand why most startups need an office. Basecamp is entirely remote with an office just for show. They only use it a few times a year. Unless you build hardware, an office is unnecessary. A dumb waste of money, especially early in a startup's life. I do some side work for a major international medical lab and their entire Dev team is remote -- and this is enterprise. I am not sure some flower delivery app that aggregates social sharing metrics using Go really needs to have an office. As far as 'access to talent,' that's a bulkshit metric as well. Remote workers can be anywhere. You can even hire foreign workers without needing visas. Most engineers aren't living in San Fran except for their jobs. Making $140k per year is the San Fran equivalent of minimum wage, especially if you have a family. Compare that cost of living to any other place in the country and San Fran engineers actually don't get paid very well at all. Add California taxes into it and I'm just not getting the attraction. I live in the South of France in a big house that costs me $800 per month. I am about a 10 min walk from the TGV station that can take me to Paris in just over 2 hours. My kids are in French pre-k, I have top notch medical insurance that costs $139 per month to cover the whole family beyond the government insurance and I don't have to worry about my wife getting harassed by urine soaked homeless people at BART stations. I can't speak for all engineers but given that there is an entire word outside of San Franscisco, I can see zero advantage to living there. Talent is there because they have to be. I'm sure a huge percentage would rather be working from a beach in Thailand or Tulum. As far as investors, who cares? If you have a product people want to buy, investors will come to you. It's a myth that proximity matters. There were investors long before Silicon Valley startups were a thing. Plenty of billion dollar companies founded everywhere else. At this point, San Fran and the valley are prestige locations as opposed to offering any competitive advantages.

Johnny555 11y ago
We've tried and found that remote engineers are less effective, they miss out a lot from group whiteboard discussions, overhearing office chatter "Hey bill, service XX crashed again because of YY (and Mike overhears and says "Oh yeah, I saw YY in service ZZ too and fixed it"), and just general team cohesiveness. In theory we could hire more people for less salary if we had a remote workforce, but we're still a small company (less than 100 people) and it's a lot harder to manage a 100 person geographically spread out engineering team than a 50 person local team). Paying the San Francisco premium for salaries (and rent and everything else) is less than the cost to build and manage a distributed team. As we grow, that will likely change as we'll be able to have specialized teams and open satellite offices, but for now hiring in the Bay Area makes the most sense. We could likely build an accomplished team in any major metropolitan area, but since our investors and board members are here (as are the other companies they invest in and manage), it makes sense to have the company here. (not entirely our choice, when someone invests millions of dollars into a company, they want to be close to it)