[strlen]

Historically this isn't true. There's a much less flashy reason for why so many startups are flocking to SF -- there isn't much space available at reasonable prices in Palo Alto or Mountain View that that's suitable for startups. If office space in Palo Alto or Mountain View was not desirable, the prices would crash.

This isn't new either: there were plenty of SF startups during the old dot-com boom as well. I'd also predict that if there is a further growth of tech startups we'll see startups spread to other areas now considered "less desirable" -- in dot-com days there were plenty of companies in Santa Clara, Milpitas, Downtown San Jose, Fremont, and even exurbs like Pleasanton. When the boom ended, CA-237 was locally called the "dot com graveyard".

[spartango]

While you're right about office space becoming wildly expensive in Palo Alto and Mountain View, I'm unconvinced the data supports the idea that cheap office space is the driver of growth to the city.

As you mention there is plenty of cheap and large offices as you go south along the peninsula, but startups seem to consistently choose more expensive SOMA offices over these. Only startups that need a warehouse or other specialized facilities start their search in the south bay.

I think the reality is that its a combination of factors driving people to SF, from 'cool factor'/perception to quality of life issues (employee proximity) to 'cheaper-than-palo-alto' benchmarking.

By the way, if you're reading this thread and looking for office space, the south bay is a perfectly good place to look. Yes, it's not as glamorous, but it's both functional, frugal, and actually quite nice. The graveyard doesn't consist of dumpy factories, but pleasantly maintained offices with good facilities. You can even live nearby, as long as calm neighborhood is an acceptable condition for you.

[strlen]

I wouldn't call places south of Mountain View and Palo Alto 'Peninsula'. San Mateo is an often overlooked option (not as cheap as SOMA, afaik) but in a way it means a commute both for folks coming from Cupertino/Sunnyvale/Palo Alto/Mountain View and for folks coming from the city.

I would say significant amount of startups would still prefer Mountain View to SOMA, but they'd probably prefer SOMA to Santa Clara or San Jose.

There are many positives you've described to places further South, but there are also issues: fewer other startups, less third places in walking distances, being rather far from any kind of public transportation. In terms of employees it's somewhat of a balancing act: there are older employees with family in South Bay, more infrastructure folks (ex-Google and VMW folks, as well as various infra startups), and there are also younger employees, front-end developers, designers, and people with finance/consulting who live in SF. It would be more far more difficult for SF set to commute to, e.g., an office park in Santa Clara than for folks in South Bay to commute to SOMA (fairly easy trip by either car or Caltrain).

That said, Peninsula is exactly what its name implies, and SF is at very end (with hills in between). There will be greater pressure for startups to go further South again, as well as East (if Berkeley/Oakland adopt more startup friendly laws), elsewhere in SF (already happening), and so on.