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Landlords are trying not to rent to startups in San Francisco

42floors.com

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Re: Landlords are trying not to rent to startups in San Francisco

#71

Post by ChrisBland »

nostromo wrote: post #60
rdl wrote: post #2

Obvious arbitrage possibility is obvious, and being exploited by new companies (WeWork for $10b valuation) themselves -- if you're better at evaluating startups than big dumb landlords, you can profit here. And there isn't a shortage of capital to play this game.

WeWork is selling risk reduction for cash. Should there be a downturn in tech, WeWork will be left holding the bag.

I'm working out of WeWork (Chicago office) and I think the SF WeWork is much different from most of their other locations. While there are a few venture backed startups here, most of the companies tend to be small businesses or single person companies that were previously at places like Regis or working out of Starbucks. For example some companies here: [model agency, recruiting agency, marketing firms, lawyers, accountants, payroll servicing company, a sunglass maker, stock traders] So while a downturn in Tech would hurt them in some of their locations, at the others I don't think the pain would be as bad. We were hoping there would be more tech companies here and were surprised at the number of non-tech firms. FWIW we really enjoy it and have grown now to our third office as we add people. Thats the real value here, month to month leases so we can scale up or down as our team evolves.

Re: Landlords are trying not to rent to startups in San Francisco

#73

Post by nostrademons »

ssalazar wrote: post #47
nostrademons wrote: post #33

Earlier quoted context omitted.

Tell them that facilities are obsolete and if they don't want to become an obsolete dinosaur, they should jump on the remote-working trend before it eats the world. Then show them your Slack channel, git commit log, and issue tracker to introduce them to the new world. Some will probably leave, but then, they're dinosaurs anyway, and why would you want an investor who just doesn't get it?

> Tell them that facilities are obsolete and if they don't want to become an obsolete dinosaur, they should jump on the remote-working trend before it eats the world. And then what data do you show them to back up that grandiose proclamation?

My comment is intended to be semi-ironic, a commentary on how the tech industry works by instilling FOMO (fear of missing out) in people who are deathly afraid that somewhere, someone is doing things better or more efficiently than they are.

But to answer your question - you don't show them data. You show them social proof. Show them the tools - GitHub, Slack, Google Docs, videoconferencing - and people using them, and the companies that have made it work, like GitHub, Automattic, Google, Cisco, etc. The whole point is to create an emotional reaction, not a rational one.

Re: Landlords are trying not to rent to startups in San Francisco

#74

Post by briandear »

meatysnapper wrote: post #13
mooreds wrote: post #7

Or, consider starting a company outside of San Francisco. Not just outside of SoMA, actually outside of San Francisco. (I know, I know, blasphemy.) Eventually the price of real estate and labor will be so high that the relative disadvantages of other locations will not matter.

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.

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.

Re: Landlords are trying not to rent to startups in San Francisco

#75

Post by Crito »

LandoCalrissian wrote: post #28
astazangasta wrote: post #14

Earlier quoted context omitted.

Eventually we might consider that rent is just outright theft, we're not actually paying for value, landlords are parasites who suck surplus value from the economy, etc.

Then don't rent an office? I really don't know what you think the alternative would be. I assume the value comes from not having to work by a flaming barrel down by the river.

Although astazangasta is complaining about rent, he doesn't actually want to buy land either. He thinks he is entitled to free land.

Re: Landlords are trying not to rent to startups in San Francisco

#76

Post by bradleyjg »

nostrademons wrote: post #27
ChuckMcM wrote: post #10

Earlier quoted context omitted.

Agreed, many landlords seem to feel like the trouble is a mere few months away, although often any attempt at getting them to discuss how they arrived at that conclusion gets something like "I just know it." So one wonders about the whole "wisdom of the crowds" or "herd" in this case, and whether or not they can sense something that isn't showing up in other indicators. I've been looking but other than the extensivel…

A lot of this may come from the belief that the economy is only being propped up by the easy money policies of the Fed, and that the Fed is going to start tightening rapidly in the fall. There's a sense that once the tightening starts, everyone will run for the exits at once, and we'll have another 2008 situation but worse.

I don't think there is anything, including yesterday's fed statement, to suggest rapid tightening. Smart money is currently on a .25 pt increase in either September or December, with September slightly more likely.

That's less because the numbers (measured inflation and unemployment) actually call for an increase and more to just remind markets that: rates won't stay at zero forever and non-zero rates aren't the end of the world.

Re: Landlords are trying not to rent to startups in San Francisco

#77

Post by Touche »

ssalazar wrote: post #47
nostrademons wrote: post #33

Earlier quoted context omitted.

Tell them that facilities are obsolete and if they don't want to become an obsolete dinosaur, they should jump on the remote-working trend before it eats the world. Then show them your Slack channel, git commit log, and issue tracker to introduce them to the new world. Some will probably leave, but then, they're dinosaurs anyway, and why would you want an investor who just doesn't get it?

> Tell them that facilities are obsolete and if they don't want to become an obsolete dinosaur, they should jump on the remote-working trend before it eats the world. And then what data do you show them to back up that grandiose proclamation?

An expense chart.

Re: Landlords are trying not to rent to startups in San Francisco

#78

Post by Epenthesis »

dataker wrote: post #39

While in SV, I couldn't understand the hate towards East Bay: it's fairly priced, close to the 'hub' and not as violent as otherwise portrayed. Could anyone elaborate?

I always thought a BIG benefit of SoMa is the fact that you can draw employees from East Bay and South Bay (as well as SF itself).

On the other hand, a, say, San Mateo -> Oakland commute is pretty much untenable.

Re: Landlords are trying not to rent to startups in San Francisco

#79

Post by Domenic_S »

Obi_Juan_Kenobi wrote: post #58
dataker wrote: post #39

While in SV, I couldn't understand the hate towards East Bay: it's fairly priced, close to the 'hub' and not as violent as otherwise portrayed. Could anyone elaborate?

East Bay is great. Oakland is starting to look like a decent city. Doesn't mean there aren't real disadvantages, but it's something most people/startups should at least consider.

the East Bay is way bigger than Oakland/Berkeley. Walnut Creek, Pleasant Hill, the Lamorinda area, Danville, Pleasanton -- all very nice, safe towns with good bart access. No startups there though.

Re: Landlords are trying not to rent to startups in San Francisco

#80

Post by Domenic_S »

mbillie1 wrote: post #68
lkrubner wrote: post #59

There are already several comments on this Hacker News thread where people suggest things like remote work. Others suggest moving to less expensive cities. Someone mentioned Tennessee. "mooreds" made the suggestion "consider starting a company outside of San Francisco". But such comments ignore (are in denial? are in defiance?) what is actually happening, which is described in the 3rd sentence of the linked article:…

All fair points, but remote work also has increased massively ( http://fortune.com/2015/02/12/lessons-learned-from-3-compani... ). It is interesting to consider that well-paid remote workers, free to live where they choose, may also be choosing to live in these bigger cities. I'm fully remote and I live in a city, albeit a relative small one (SLC), when I could easily pay a ~$300/mo mortgage for a small rural house i…

> ~$300/mo mortgage for a small rural house in the middle of nowhere

How's the internet access out there?

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