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by ClassAndBurn 1863 days ago
I'm so excited for the possibility of rental prices coming down enough to support the artists and quirky businesses that used to be around.

The city's consolidation into tech forced out a lot of the vibrancy that made San Francisco unique. Those people are still residents. It's just they've been unable to afford the space to enact some of the things they used to.

7 comments

SF didn't have a lot of tech until very recently, when they were forced out of the valley by the real gentrifying force, homeowners that won't let anyone build more homes in case it causes traffic.

These are also the people making SF expensive. It's not just artists, it's their own children who can't live there, one reason SF has fewer families with children than any other city IIRC.

As for quirky businesses, that's DRs and licensing.

https://sf.eater.com/2021/4/22/22397615/matcha-n-more-ice-cr...

Is there a good article that describes how / why / when the startup scene moved from the South Bay to San Francisco?

I'm not too familiar with the startup scene before 2010. But from what I know, it was mostly established in its current form before the Dot Com boom.

It seems like HP, Cisco, Intel, Apple, Oracle, Sun, Adobe, Intuit, & Yahoo! where part of one movement.

eBay, PayPal, Google, Facebook & Netflix obviously added to that.

But now all the newer companies are coming from SF - SalesForce, Twitter, Uber, Lyft, AirBNB, Yelp, Splunk, Dropbox, Square, Instagram (originally), Slack, StichFix, Postmates, Instacart, GitHub, Robinhood, Coinbase, etc.

The only recent, pretty big startups in the South Bay I can think of are LinkedIn and Quora. YouTube - from San Bruno - is kind of in the middle. The rest are subsidiaries.

I mean, the OG companies like Apple and Google and Facebook are so big that they dwarf the rest of the startups in the Bay by themselves. So in a sense, the Silicon Valley still feels like the Peninsula. But the startup scene definitely seems to have shifted.

> the OG companies like Apple and Google and Facebook

History time. It's kind of amusing to see these companies referred to as OG, when there were many generations of Silicon Valley startups before them. The real OG was probably Hewlett-Packard, founded in Palo Alto in 1939. Another key company was Shockley Semiconductor, founded in Mountain View in 1956. Eight key employees left Shockley in 1957 and formed Fairchild Semiconductor, gaining the name the "Traitorous Eight". Fairchild led to over 126 startups, sometimes called the Fairchildren, including AMD, Altera, LSI Logic, National Semiconductor, and SanDisk.

Two of the Traitorous Eight, Gordon Moore and Robert Noyce, left Fairchild in 1968, founding Intel in Mountain View. Later key Silicon Valley companies were Oracle (1977), Sun Microsystems (1982), and Cisco (1984). Although Apple started in 1976, it wasn't a dominant company until years later. Google (1998) and Facebook (2004) are relative newcomers.

Information on Fairchild's influence: https://computerhistory.org/blog/fairchild-and-the-fairchild...

Thanks! This is super cool!

Question - when did the VC model really come into play? Were the Fairchildren like AMD VC funded?

A lot of others have mentioned that space plays a role in this a lot. Companies needed fabricators and data centers, which took up space, so it was too expensive to be in the city.

Is this really all there was to it? Back in these times - there was White Flight from the cities, right? Did most people (even college grads) prefer to work in the suburbs then? Was this even a factor at all?

If you're asking why Silicon Valley is in California at all, the answer is that the state bans all non-compete agreements and won't enforce ones made in other states. This is probably why it's not in Cambridge, though it doesn't explain anything more specific than that.
Don't forget the importance of Shockley's mom being in Palo Alto. His stated reason for moving to the west coast was to be closer to her. Given that pretty much all the "silicon" companies in Silicon Valley are descendants of Shockley Semiconductor, that chance occurrence is probably enough to explain it.
I honestly think non-competes are overstated. I've worked in MA most of my life, once signed one, and it was very specific. I now work for a company that even lets me contribute to competing open source projects. Do all non-CA companies let you do that? I'm aware of one or two consulting firms that have very draconian non-compete clauses but not sure it's very common and MA, specifically, defanged them a while ago.

Personally, I think it was more of a conservative East Coast mentality vs. an anything is possible West Coast Mentality.

Stephen Levy's Hackers is probably a good start (but skip the Stallman The Last Hacker part).

Companies generally preferred to be located in the suburbs because it was generally cheaper. But employees (notably including execs) also preferred to live there. Manufacturing facilities had absolutely been in cities in the past. Teradyne was in Boston. Gillette was in Boston. There are big pharma facilities in Kendall Square today. So it was at least in part access to workers that moved companies out of cities.
Silicon Valley happened because of proximity to Stanford University and Moffett Field and the copious amounts of government / military funding and contracts that came through them (DARPA, etc).

This is a very basic fact of the history of SV that many in the VC scene are reluctant to acknowledge.

You would enjoy the documentary 'Something Ventured'. http://www.somethingventuredthemovie.com/
Apple wasn't terribly interesting until maybe the mid-2000s. OK they were interesting in the Apple religion sense but it really took some combination of OS X, the 4G iPod, and eventually the iPhone taking off to put them in their current category. One could argue that Apple wasn't "a force to be reckoned with" until the late 2000s.
They were pretty good before the 90s when they invented the personal computer, there was just a "beleaguered" era.
They were an interesting hobbyist thing early-on. Although there were also the S-100 bus systems, etc. I actually used Apple IIs at work in the early 80s and then an Apple III. But they were somewhat of a sideshow until the mid/late 2000s.
Even though it's not headquartered in Silicon Valley, IBM's Cottle road site belongs in the early history as well. They invented the hard drive in Building 025...
A seemingly significant part of it is because the young talent wants to live in SF and not commute 1+ hours to an office park in the South Bay. I think SF also offered incentives for tech companies to set up shop in the city in the 2009-2012 time range... https://www.wired.com/story/no-more-deals-san-francisco-cons...
It also generally became trendy for that demographic to live in (certain) cities after they graduate. My company set up an office in the Seaport (partially) for that reason because our main location an hour west of Boston was a deal-killer for some people.
That's certainly true. A career in tech became widely popular and trendy for millenials and now zoomers (I believe CS is now the most popular undergraduate major across US colleges?). Basically once people realized you can make more money in tech than on Wall St, a percentage of new grads who would have moved to NYC diverted for SF.
>I believe CS is now the most popular undergraduate major across US colleges

I saw that in one Google search and it seems incredibly unlikely. This seems much more probable (even if you assign some of the engineering degrees to CS):

https://www.niche.com/blog/the-most-popular-college-majors/

It was largely driven by Millenials, who wanted to work in cities whether they're founding or working for a startup. YCombinator (itself based in Mountain View) found that most of their startups preferred to locate in SF, oftentimes many of them in one building. At one point there was the "YScraper", the Crystal Tower building in North Beach that was home to Justin.TV (parent of Twitch/SocialCam/Cruise), Xobni, Weebly, and Scribd.

Also your list of South Bay startups is pretty incomplete - there's also WhatsApp (Mountain View), Box (Redwood City), Coursera (Mountain View), Khan Academy (Mountain View), Tesla (Palo Alto, with manufacturing in Fremont), the Signal Foundation (Mountain View), RobinHood (headquarters is Menlo Park, not SF), Zoom (San Jose), GoFundMe (Redwood City), Carbon3D (Redwood City), WealthFront (Palo Alto), Impossible Foods (Redwood City), Roblox (San Mateo), and GoPro (San Mateo). I do agree that the center of gravity of the valley moved northwards in the 2010s though. Prior to then, it was debatable whether SF was even really part of the valley, while since then it's been a major tech hotspot.

Short answer: early Silicon Valley needed space for fabricators, the dotcom era needed space for data centers, then around 2010ish there were enough cloud providers and internet connections you could start a company anywhere but you already had plenty of talent in the bay and San Francisco is fun.

Long answer could be a phd thesis but “people needed lots of space until they didnt” kind of suffices.

I've seen several commentators blame AWS! Before AWS, startups needed to budget for web servers and similar hardware, and a place to put them. That meant bigger offices with more floor space, plus power and similar services. Once AWS came (2007) startups could be anywhere, with the city tending to be more attractive to younger folk.
Very few people were putting them directly in their offices, and they certainly weren't buying bigger spaces to fit them. Datacenters are the natural home for this stuff and the price was never exorborant if you're not insisting on a tier 1 facility.
Imagine it is 2003 and you are doing a startup. You aren't deploying anything yet. You need a source code control server, a bug tracker, build servers, testing systems (so many versions of Windows), developer workstations, a file server, and various other bits of infrastructure (plus backups). This easily results in multiple systems per developer. Internet connectivity was slow and expensive which is why this kind of stuff was in the office, not at a colo. So your office needed proportionally more space per person.
Not a good theory. Before AWS startups would colocate. On premise was rare.
You did still want on premise at the beginning, while going through the earlier phases of startup development. For example you need source code control, build servers, bug tracking, test setups, file servers, as well as developer workstations.
Not a significant space issue at the beginning. Still not a good theory.
Quite simply crime rates in SF came down around 2010. It was high in the 90s but even then the first dot com boom had some startups in SF and some in SV. Notably Salesforce. But by the second Web 2.0 boom (as it was called) SF was a very attractive place for young workers.

The earliest SV companies wanted to be physically located near Stanford and Moffett for the govt subsidies/contracts. Still happens (read The Entrepreneurial State) but physical location is not as important in the internet age.

Frankly I would not give this Sf.citi lobbyist piece much credence. “Migration” could simply be a temporary effect of the pandemic. We may very well see young people come rushing back into SF for the same reasons as before.

And crime? You wouldn’t know it from HN threads but SF violent crime is again at all time lows.[1]

[1] https://www.macrotrends.net/cities/us/ca/san-francisco/crime...

I thought the move into SF was actually caused by a specific tax incentive around 2010, but don't remember the details.
Robinhood was in in Menlo Park / Palo Alto.

Here's a list of startups in Palo Alto: https://angel.co/location/palo-alto

Here's a list of startups in Menlo Park: https://angel.co/location/menlo-park

I'm sure if you have crunchbase pro you'd be able to do more analysis. But Silicon Valley is still pumping out a lot of startups, and high-tech firms.

Zoom is based in downtown San Jose.
They were over by Great America for a long, long time. Eric was used to Milpitas @ Cisco.
A lot of people forget that many now "elite" cities weren't that popular until relatively recently. Boston was losing population until well into the 90s and there was basically no tech left there by then.

When I graduated from grad school in the mid-80s, I don't think a single one of my classmates who got a job in Massachusetts lived in the city proper.

Yeah, living in cities was unpopular until about 2000 for a good reason - they were full of crime. Surprisingly it turns out giving the entire country lead poisoning was a bad idea.

https://www.motherjones.com/environment/2016/02/lead-exposur...

Younger people then moved back in (causing superficial gentrification) because they couldn't live in the actual richer areas because those had all blocked new housing (actual gentrification.)

> Younger people then moved back in (causing superficial gentrification) because they couldn't live in the actual richer areas because those had all blocked new housing (actual gentrification.)

You're overlooking the qualitative motives for (somewhat incorrect) purely financial aspects. Younger people continued to move to denser parts of cities for at least a solid decade after in-city rents surpassed suburban ones. A large demographic group got married and started having kids much later than previous ones (this part traces pretty well back to economic factors, though!) so was looking for very different things in housing. As those factors started to change, they started following similar suburbanization patterns, and WFH accelerated that dramatically.

"Friends" is probably the clearest pop culture recording of this, showing the draw of living in the city for single 20-somethings in the 90s, and then the eventual appeal of the burbs for the later married w/ kids stage. Even in the 90s part of it, none of them were there because NYC was the cheap option.

Manhattan was something of an outlier. Even in not so great in a lot of ways 1980s Manhattan, a lot of people moved to "the city." This was especially true in finance. (Contra my comment about classmates not living in Boston proper, many lived in Manhattan proper. Of course, one difference is that the jobs were actually in Manhattan. )

But NYC has always had a singular appeal. And there was long a certain snobbery(?) about living in Manhattan specifically.

If we drop NYC we lose the easy TV show example, but I would still maintain that nobody young was moving to places like Midtown Atlanta or downtown Austin in the early 2000s just because they were priced out of the suburbs. Places were already "pay for the privilege of living somewhere denser and walkable" by that point.
Is this lead poisoning theory really any more proven than say, the access to birth control idea?

Young people tend to be economic migrants and the pockets of mass economic growth start in cities. They're also single and relatively poor so they live in multi-tennant housing near the downtowns where they work. As they get older, richer and more numerous (i.e. married w/ kids) they move out of the core. Cycle repeats with rising prices if growth is still there, or you hollow out the city and only the poorest remain. SF could stay like it is, or become a west-coast steel town, but it's unlikely to return to what it once was.

>the pockets of mass economic growth start in cities

It's varies over time. With SV-style tech that hasn't been the case until quite recently. And, in the Bay Area, arguably the nexus of jobs is still in the South Bay. And this sort of situation is true for many other areas as well.

It was not (or that was only some of it.) The same crime rise and fall happened worldwide - this is addressed in the article.

Continues to happen too. The parts of the world with the most terrorism like Iraq/Yemen also most recently had leaded gas.

Cities are full of crime again today. Is it a problem with lead? Or is it a larger condition of cities in the Americas?
> Cities are full of crime again today.

That doesn't seem to actually be the case, but crime statistics is a notoriously tricky area.

It is actually up a lot in 2020-2021 including murders and other “real” crimes.

There of course is also an effect where people think all of Portland is on fire because they saw a protest on TV once. But also Portland has had twice as much gun violence this year than all of 2020, which seems like a problem someone should do something about.

Most American cities are way, way below early 1990s violent crime levels, San Francisco included. SF had three times more homicides in 1993 than in 2019.
You saw around a 30% increase in homicide rates in large cities last year, and that increase began suddenly at the beginning of June. No environmental cause like exposure to lead can cause that.

The Mother Jones article referenced above is arguing that the most effective thing that can be done to combat crime is lead abatement, I think that argument has taken a fatal hit. Some cities are in fact seeing homicide rates close to or even above the 1990s rates, that happened suddenly and it happened after leaded gasoline had been banned for 45 years.

You can't explain the massive increase in homicide in large cities in 2020 using environmental factors like lead, the cause has to be cultural or political.

It went up a lot in 2020, quite possibly as a reaction to unemployment and especially not having anything else to do.

But yes, before that it was limited to a few hotspots like St Louis which still had environmental lead problems. Meanwhile DC in 1990 was more dangerous than the Iraq War.

At the time there were a lot more tech companies out along Routes 128 and 495. This is still true today, but now the balance has shifted to Boston and Camberville.
Yeah, all the minicomputer companies (which is where most of us went to work after school). I'd have actually considered living in Cambridge at the time but it would have been something like a 45 minute (reverse) commute whereas I had about a 5 minute commute until I bought a house.

Depending upon how you characterize tech, there's still a lot in the northern and western suburbs, especially if you include the defense contractors. But, yes, there's now a lot in Cambridge and the Seaport, especially, as well as all the biotech/pharma in and near Kendall Square.

> they were forced out of the valley by the real gentrifying force, homeowners that won't let anyone build more homes in case it causes traffic

Protip: Anti-housing activists will never tell you their real motivations: https://belonging.berkeley.edu/sites/default/files/blacks_ch...

Some of it is immigration too: if you come from Paris or Berlin, you’re not going to want to move to Mountain View, given how ridiculously boring the peninsula is.
After growing up in central London, Silicon Valley was awesome. No more waiting for the bus, just drive everywhere, parking is easy, everywhere is safe. If you live in downtown Mountain View or Sunnyvale you can walk down the street to pubs and restaurants. Why live in SF with constant crime, begging and no parking, and a giant commute to Apple or Google?
If your employer's in South Bay you might as well live there. It's easier to commute to fun than commute to work.
San Carlos disagrees. Plenty of Europeans love this place.
And perhaps that new construction will reduce the market value of their homes, which they don't have to pay property taxes on and therefore regard as a substantial store of value.
Millions of people eat McDonald's hamburgers every day and we all understand why that drives the price of hamburgers down, not up. Demand doesn't make prices go up all on its own. The problem isn't demand; it's supply. The lack of supply is a policy choice -- emphasis on choice*; it's not a natural law -- and you've located the blame 90 degrees to its actual cause: existing homeowners* who benefit by restricting that supply.

People should be mad, but not at 22-year-olds coming from around the country looking for work. They should be mad at the millionaire rentiers who tell those kids when they show up that it's illegal for anybody to build them housing.

Tech didn't out price the people, nimby politics did. Average home owners in San Francisco have been owners for about 14 years. [1] Any new development basically hits a brick wall unless it's on a radioactive dump or ultra expensive downtown. You all remember the famous laundromat saga, those were not tech workers preventing new housing, the locals were. [2]

Anti gentrification policies almost always end up displacing the populations they are meant to protect. You don't want new apartments in a specific area because it may bring in newer crowds? Well guess what, those crowds will come any way, and now they can out price the people who live there.

Rent control is another problem, because long time residents won't move. And with no new inventory, the prices for pretty much any apartment that enters the market goes sky high. It's not the tech workers who displace the locals, they are anyway hunting for apartments in a different price range from the locals. It's the locals now just budgeting higher portions of their income towards rent and displacing other locals. This is exactly what happened in Berlin. [3]

And last but not the least, I think despite the nostalgia and how we remember SF differently from what it is now, yes there were quirky businesses all around. But there were only specific parts of the city that had them and quite frankly a lot of them just used to be replaced by newer businesses every couple of years. But what happened at some point was too much bureaucracy, red tape and politics crept into the cost of starting a business that now you have to sink almost a quarter of a million dollars before you can even start an ice cream shop. [4] It was partly the "locals" who created these problems.

[1] https://journal.firsttuesday.us/california-homeowners-are-st... [2] https://www.bizjournals.com/sanfrancisco/news/2018/08/21/san... [3] https://www.bloomberg.com/opinion/articles/2021-03-02/berlin... [4] https://www.sfchronicle.com/local/heatherknight/article/S-F-...

The laundromat saga happened largely because the owner of the laundromat was a jerk. You may think politics shouldn't work like that, that they rules should be based on the law and not who you are, but in San Francisco, that isn't how it works. I'm not defending it, but the laundromat was very much an example of a guy from Marin being a total jerk and then throwing a tantrum when he didn't get what he wanted.
> The laundromat saga happened largely because the owner of the laundromat was a jerk.

What should he have done differently that would have made the process work? Is it perhaps possible that his plans might have worked had he presented them with kindness, centered his words in compassion, and experienced a genuine blooming of human empathy? Greeted Calle 14 and Arguello with sympathy and real emotional engagement, acknowledging the legitimacy and validity of their concerns and pain, before refusing to donate?

Or was he a jerk because he didn't want to play ball with an unwritten shadow system that exists to make arbitrary and extrajudicial demands, and no amount of framing or emotional performance was going to make him into less of one? Can you help me understand?

I read the articles about Robert Tillman (e.g. https://missionlocal.org/2019/04/historic-mission-district-l...), and apparently the only thing he did that made him a “total jerk” was making a proposal to produce a necessity of life in a city with a desperate shortage, following all the zoning procedures to the tee, and refusing to concede to extortionary demands from politicians and other self-appointed gatekeepers.

By the way I never saw a “tantrum” from him; he followed the law methodically and for that he was ridiculed by the press as a deviant (“kamikaze” according to Joe Eskanazi https://missionlocal.org/2018/06/the-strange-and-terrible-sa...). He publicly shared his research (e.g. https://groups.google.com/g/sfbarentersfed/c/mHT2l4zDyKg/m/X...) and I think would have wanted his project to be an example to others of how to make the rule of law the norm in San Francisco, but that was not the agenda of the politicians and the press.

I get that people (such as Supervisor Hillary Ronen, gatekeeper Erick Arguello, and so-called “Progressive” journalist Tim Redmond) are upset about people profiting off the housing shortage. But if they are upset about a landowner making ~$130k per unit for investing in alleviating the shortage, they should be livid over every single homeowner in the neighborhood who sells a house for $2 million and makes more profit per unit without increasing the housing supply at all. That they asymmetrically target housing producers while remaining silent to idle speculators gives a perverse disincentive against creating housing and reveals a NIMBY preference by these so-called “Progressives”. In the end I think their advocacy does more harm than good in San Francisco even when it is in the name of capturing some value for the poor.

If he had not been a jerk, his project would simply have quietly failed. As it so happens, people reward non-jerk failure with a “that sucks, man” and a jerk failure with “haha!”. And that’s fine but both of those are both failures.

But the jerks succeed some of the time.

Rents are already rapidly going back up since their lows late last year, so don't hold your breath.
there's been a few new "below market rate" apartment and condos being built. Most all condo developments have BMR units but some of the new ones are 100% BMR
This is something that really bothers me - all those billions of dollars of tech money and you cannot find a way to house and support artists. New York billionaires have always found a way to support artistic endeavors. Case in point - Bloomberg, he personally donated a lot.
Funny you say that because when I lived in New York a few years ago gentrification and high rents was the top complaint among residents (mainly around the time Brooklyn started getting unaffordable), and people would point to San Francisco as a city which had a lot of money but could still keep its artsy/counterculture roots intact.
I think folks on either coast don't understand the nuances each city faces unless they live there. Whatever remains of SF working artists will say the city has long sold out its counterculture roots.

New York is possible for artists because of public transit.

Artists don't live in Manhattan, they live in the outskirts, or once were the "outskirts", and commute to where is needed because the MTA works (for the most part).

The Bay Area's transit system is a mess (too many different agencies with inconvenient transfers between lines) so affordable, yet accessible neighborhoods beyond Oakland/San Leandro/Richmond are nil.

How many billions of dollars of tech money, in your opinion, is enough to find a way to house and support people in a city where planning is fundamentally structured around finding ways to not house people?
In California you can get whatever crazy thing you want passed with O($10M). I bet $1B could get even Prop 13 overturned which would solve the housing disaster overnight.
2020's Prop 19 to reform property taxes just a bit had about $20 million behind it, and it didn't even land on the ballot.

SF would need to gut its entire permitting system. Today, it can't even make small and incremental improvements: https://www.sfchronicle.com/local/heatherknight/article/Is-p...

> 2020's Prop 19 to reform property taxes just a bit had about $20 million behind it, and it didn't even land on the ballot.

Correction: in 2020, Proposition 19 (which limited Proposition 13/58 property tax breaks for parent-child transfers to only farms and owner-occupied “family homes”) did pass 51%-49%, whereas Proposition 15 (which would have eliminated Proposition 13 tax breaks for commercial property) was on the ballot but failed 48%-52%.

$20m and $1b is a significant difference.
You're absolutely right. That is a significant difference.

My point was that O($10m) isn't even enough to reliably land something on the ballot, much less get whatever crazy thing you want passed.

This of course being distinct from undoing Prop 13.

You'd need to end or severely restrict local zoning.

Everyone loves the idea of cheaper housing for people in theory.

Once they realize it means their own property value won't appreciate as quickly, or may even decrease and then suddenly they are against it. And they will vote out any officials that support it.

There needs to be state or federal intervention. And that doesn't seem likely at any time in the near future.

Zoning laws aren't laws of physics. Our tax policy is a huge incentive for the current zoning.
> all those billions of dollars of tech money and you cannot find a way to house and support artists.

Our problem is never that we don't have enough wealth, it's always that it's concentrated among a small percentage of the population, and a much larger percentage gets starved out entirely.

> New York billionaires have always found a way to support artistic endeavors. Case in point - Bloomberg, he personally donated a lot.

If we have to depend on the charity of billionaires, we've already lost the war.

Concentrated wealth sponsors high culture. There is extremely limited political will for public funding, and distributed personal spending decisions give you mass culture. You are not getting painters without people who spend tens of thousands on paintings. You are not getting the theater or the symphony or the opera without a class of attendees who write checks for hundreds of times more than a ticket is worth.
I could not agree more!
Because SF billionaires are selfish tourists. On the other hand, NYC has a long history of patronage and wealthy donors that contribute to making their city better.
Thankfully SF has people like Mark Zuckerberg, and is appreciative of his donation of a large amount of money to the city's hospital in order to improve life in the city.

Right?

That's what I was referring to. SF has the highest density of billionaires, but apparently they lack taste.
Lol. A billionaire doesn't give money to $causeOfTheDay - they're "selfish" assholes. They do give money - they're informed they can't buy forgiveness or they should have given more or the patronage is paternalistic and heaven forbid if the billionaire is a white male American.

May as well keep your money and let those fend for themselves.

Much better art created when people do it for the passion.. on their own time.. with their own resources.. after they've worked an 8 hour day.

Whingers are going to complain anyway - no point in affording them the time and resources to do it more.

All the great eras of any city were gritty. You can't have that with a generation of SodaSopans.