Chic geeks give San Francisco a new tech groove
By Peter Henderson
SAN FRANCISCO (Reuters) - The YouTube video, featuring a young blonde sitting in a strikingly modern San Francisco home, offers a telling insight into the attitudes that are shifting the geography of the Bay Area technology scene.
"Who has a party in Palo Alto?" she asks the camera, in a dig at the suburban capital of Silicon Valley that helped make the two-minute comedy, "Shit Silicon Valley Says," a Web hit. For many of the twentysomething engineers and other professionals who play a central role in the latest Internet boom, the question is purely rhetorical.
More than ever, technology entrepreneurs, and their investors and employees, are choosing the urban charms of San Francisco over the sprawl of neighboring Silicon Valley. In the South of Market district, the nexus of the city's tech industry, rents are soaring and latte lines are lengthening - conjuring memories of the dot-com bubble of the late 1990s.
Late last year the city had 34,000 tech jobs, topping the high set at the peak of the dot-com boom in 2001, according to a Jones Lang LaSalle analysis of California Employment Development Department data. Twitter, Salesforce.com, Zynga, Yelp and other sizable Internet companies now call the city home.
Half or more of graduates of the tech incubator Y Combinator, a widely watched Silicon Valley institution, now move to San Francisco, founder Paul Graham said by email. Four years ago, he said, the city lacked the seriousness of purpose that infuses Silicon Valley. "I'm suspicious when startups choose SF," he wrote at the time. "Things have changed," he declared recently.
"This is really where the center of gravity is," agreed Y Combinator graduate Dan Siroker. He worked for Google in Mountain View but started his own business, a company that lets businesses test versions of websites, called Optimizely, in San Francisco. And the profitable company just got a round of venture funding.
That's not to say that Silicon Valley, which extends roughly 40 miles south of the city to San Jose and includes towns such as Palo Alto, Menlo Park and Cupertino, is no longer central to the tech scene.
San Francisco captured 20 percent of all venture capital funding in the last quarter of last year, its best showing ever, according to a report by Pricewaterhouse Coopers and the National Venture Capital Association based on Thomson Reuters data. Silicon Valley accounted for a strong 27 percent of all VC investment in the same period. Continued...