In the Battle for San Francisco, Entrepreneurs Are Finally Winning
By Sarah Lacy
On January 18, 2012
A year ago I wrote a scathing piece about a bizarre disconnect happening in San Francisco. Our economic sector was being boosted by high-tech companies that were — for the first time in decades– choosing to headquarter themselves in San Francisco and not the suburbs.
This was all the more important because we weren’t in an economic period like the 1990s when the whole economy was roaring. Much of the country was locked in recession and double-digit unemployment. Yet, thanks to startups, in San Francisco there was a war for startup talent. It was a problem any city in America would kill to have.
And yet, the city’s politics couldn’t have been more anti-startup. Everyone from thriving coffee carts to Zynga and Twitter were feeling the irascible wrath of progressives and neighborhood rabble rousers who seemed to think a self-made successful company creating jobs should be punished, not applauded. I didn’t have a lot of hope that things would ever change.
And yet, somehow, in the last year, things have turned around dramatically. The City jumped into action on payroll tax issues, spurred in large part by TechCrunch’s coverage of the issue. (Although there’s much more work to be done on that front.) And despite cries of “corporate welfare,” Ed Lee won the Mayor’s race on a platform of “I-helped-Twitter-stay-in-town.” There’s a new consortium of tech leaders called sfCITI, trying to help Lee keep San Francisco startup-and-tech friendly, lead by uber-angel Ron Conway and the amazing Heather Harde, TechCrunch’s former CEO. (Ron’s firm SV Angel is an investor in PandoDaily.)
This is good not just for San Francisco, but for startups. SPUR– San Francisco Planning + Urban Research Association — put out a report this month that explains why urban density– more ideas happening in tighter spaces– leads to more innovation. It’s the same thinking behind Tony Hsieh’s ambitious $300 million plan to remake downtown Las Vegas. (Disclosure: Hsieh is an investor in PandoDaily.)
And that’s historically been a challenge for the Valley. From the report:
“The Bay Area faces a major challenge: Work is spread out, often not near transit and declining in density. SPUR and others have referred to this pattern as ‘job sprawl’ and argued that its consequences are dire.” Such consequences include: More cars on the road and higher greenhouse gas emissions, facilitating residential sprawl, raises job access issues for low-income families without cars, it encourages short-sighted urban planning that prizes big parking lots over top-of-the-line transit systems.”
The report explains that more innovation occurs in places where people are mixing among one another and live-work-play locations are overlapping. This is certainly a reason why the large tech headquarters of the 1990s built whole mini-cities with volleyball courts, gyms, convenience stores and cafeterias. The more your needs could be met at work, the less of a reason to leave.
The report applauds companies like Twitter, Oracle, Zynga and Square that are leveraging the existing restaurants and retailers of San Francisco rather than building their own silo in a suburb. Most notably, Salesforce’s new San Francisco campus opted to rent ground level space to restaurants, rather than operate a proprietary cafeteria.
It may seem obvious, but in a city like San Francisco it has to be stated: Entrepreneurs staying in the city is undoubtably a good thing. Retail and restaurants thrive. Property values rise. More jobs are created.
But it’s even more than that. Entrepreneurs don’t accept the status quo. Not just in their own company– in the world around them. Consider schools. There’s a big baby boom going on with founders in San Francisco, and appropriately, more founders and VCs are getting involved in remaking education so they don’t have to flee to the suburbs for better education alternatives.
Bleacher Report’s Brian Grey is on the board of San Francisco Friends School, Twitter co-founder Biz Stone is investing in Alta Vista School a science and technology focused school. Both are located in the Mission District, one of the dodgier parts of San Francisco, and also the neighborhood PandoDaily calls home. Jeremy Liew of Lightspeed Venture Partners is also helping build Presidio Knolls School, a progressive Mandarin-immersion elementary school smack dab in the middle of the city at Mission and 10th.
You can argue that all the things in that above graph only benefit the more-well-off. That may limit how positive the ripple-effects are, but it doesn’t make them a negative.
If entrepreneurs stay in San Francisco, so do high paying jobs. That helps put more people in the comparatively well-off category. I guarantee you if San Francisco doesn’t want to be home to hundreds of millionaires, surrounding cities will gladly welcome them with better schools, infrastructure and tax-friendly policies. And they will move. And that helps no one. According to SPUR, the Bay Area has been steadily losing jobs or staying flat in nearly all industries except high-tech.
It’s too early for victory dancing here. San Francisco still has massive problems from a startup’s point-of-view that need to be addressed: Chief among them, a permanent fix to those payroll tax issues. But it’s nice to see the city no longer biting the hand that’s creating all of its jobs.
If we could develop Zynga, Yelp, Twitter and thousands of other startups with a hostile political attitude towards startups, think of what this city could create with the local government behind great entrepreneurs?
Sarah Lacy is the founder and editor-in-chief of PandoDaily.
She is an award winning journalist and author of two critically acclaimed books, "Once You're Lucky, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0" (Gotham Books, May 2008) and "Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos" (Wiley, February 2011).
She has been covering technology news for over 15 years, most recently as a senior editor for TechCrunch.
