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Landlords are trying not to rent to startups in San Francisco

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

#161

Post by thaumasiotes »

rdl wrote: post #44
jmonegro wrote: post #24

Earlier quoted context omitted.

WeWork might not be in the best position if most of their clients are venture-backed startups and they all go away within a few years.

Worst case, they go out of business if all the other startups go out of business. It's leverage. When you have ~unbounded upside and capped downside, lever the fuck up. (And yes, this is how you get ants.)

> When you have ~unbounded upside and capped downside, lever the fuck up.

I don't get it. Imagine I start a business offering the following opportunity: you pay me $100, I give you a fair coin, and you flip it as many times as you like. If there was no tails, I pay you $1 for every heads you flipped.

Your upside in patronizing my business is unbounded. Your losses are capped at however much you decide to invest. How much leverage is it appropriate for you to invest with?

Now, this isn't a case of capped downside in the sense of "you can lose at most $50, no matter how much you invest", but I doubt that's what you were talking about? Certainly that sort of situation is unlikely to come up in any context.

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

#162

Post by setpatchaddress »

s73v3r wrote: post #145
Johnny555 wrote: post #88

Earlier quoted context omitted.

We've tried and found that remote engineers are less effective, they miss out a lot from group whiteboard discussions, overhearing office chatter "Hey bill, service XX crashed again because of YY (and Mike overhears and says "Oh yeah, I saw YY in service ZZ too and fixed it"), and just general team cohesiveness. In theory we could hire more people for less salary if we had a remote workforce, but we're still a small…

"overhearing office chatter " I honestly do not believe for one second that this is a thing, or that it's a significant thing.

This is definitely a thing that happens. Some teams also do a lot of work in hallway conversations, and this sort of accidental interaction is critical. I witness this all the time.

I would much prefer that my company let me work remotely. The Bay Area is full, seriously, and I'd be happy to work from many other places.

But denying reality doesn't help.

I think there are potential technical solutions to this problem (VR office at home), but I suspect it'll take legislation (aimed at getting vehicles off the road) to make remote work a real thing that a lot of people do every day.

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

#163

Post by aliston »

marincounty wrote: post #119
nostrademons wrote: post #55

Earlier quoted context omitted.

Well, if the Fed doesn't tighten, they're at a pretty high risk of introducing serious inflation into the economy. The high commercial rents are a form of inflation; so are the wages of tech workers, and people being priced out of the Bay Area. So far, this is local to a few industries and metropolitan areas, but if the Fed doesn't act you could see it start showing up in nationwide statistics. That said, I'm not ent…

"Well, if the Fed doesn't tighten, they're at a pretty high risk of introducing serious inflation into the economy." I doubt this will take place. If anything, I think we will see deflation? These low interest rates have provided gambling money to the 1 percenter's. (I don't want argue--just the way I see it.) There's a part of me that want to cash in on these low interest rates(part owner in a home in the Bay Area--…

Couldn't agree more. There is no inflation nationally, and we are nowhere near full employment. The only reason to raise rates is to curb asset inflation among the 1%.

The problem is that the American middle class needed the bailout that went to the banks and raising interest rates will hurt an already down and out main st. Frankly, we should have just given a massive tax rebate to the middle class. Of course, it's politically infeasible, but they would have actually spent the money in the real economy rather than using it to drive up asset prices.

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

#164

Post by elsewhen »

ZanyProgrammer wrote: post #127
jwilliams wrote: post #91

Earlier quoted context omitted.

Yup. This is a huge advantage to SoMa. I even hear hesitations around FiDi as it's not easily accessible by Caltrain (let alone Oakland). The Central Subway and new Transbay Terminal might alter this. That said, I don't think the new Transbay will directly link with BART -- will still be a walk, which is a bit of a shame.

Of course the FiDi is accessible by Caltrain-just get off at Momtgomery or Embarcadero. New stereotype of SF tech workers- lazy and class privileged!

i think you are confusing Caltrain and BART. Caltrain doesn't stop at Montgomery or Embarcadero, BART does.

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

#165

Post by samstave »

superuser2 wrote: post #109
ww520 wrote: post #104

Earlier quoted context omitted.

It's not that the bust is coming soon. Startups are notoriously bad tenants as a class, whose life cycle is too short. Signing long lease with them just doesn't make sense. By definition a startup is an experiment to build products and a business in a short amount of time, with one to two years of funding in most cases. 9 out of 10 these experiments fail, so 9 out 10 startup tenants will move out after a short time.…

Even if it doesn't fail and turns into a unicorn, its space needs will rapidly increase and it will still want to move on to bigger and better offices. The entire point of a startup is to not stay its current size - either it will grow wildly or disappear altogether. If you can comfortably occupy the same amount of space for 2+ years, you're not a startup, you're a small business.

I picture Ron Conways game of life as a view of office space use in SF :)

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

#166

Post by ectoplasm »

lkrubner wrote: post #38
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…

As James Surowiecki makes clear in his book "The Wisdom Of Crowds", the wisdom is only apparent in situations where the people are not able to talk to each other. But real estate agents are able to talk to each other. In Surowiecki's telling, if you get a room full of people to write down a guess about how many jelly beans are in a jar, the average of all the guesses will be surprisingly accurate. But if the people a…

What happens if nobody yells their guesses and people only talk to one other person at a time? That's more like what happens with real estate agents.

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

#167

Post by aliston »

s73v3r wrote: post #139
jerrac wrote: post #123

Earlier quoted context omitted.

I wish people would do that. I know when I see jobs that interest me, they're almost always in SF or NYC. Neither location is somewhere I'd flourish. Seriously, what is the actual appeal of SF? I just don't see it.

Huge tech community, almost perfect weather (it's not San Diego, but it's close), fairly liberal politics, diverse culture (means tons of interesting and fun cultural activities, and lots of interesting places to eat that you don't get somewhere that isn't a larger city). You may not agree with or value those things, but a lot of tech people do.

San Francisco weather is not even remotely close to San Diego... It's significantly colder, foggier and windier, particularly in the summer. The high/low in June/July/August is comparable to December/January/February in San Diego.

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

#169

Post by [deleted] »

_delirium wrote: post #94
nostrademons wrote: post #55

Earlier quoted context omitted.

Well, if the Fed doesn't tighten, they're at a pretty high risk of introducing serious inflation into the economy. The high commercial rents are a form of inflation; so are the wages of tech workers, and people being priced out of the Bay Area. So far, this is local to a few industries and metropolitan areas, but if the Fed doesn't act you could see it start showing up in nationwide statistics. That said, I'm not ent…

On a nationwide scale, the oil-price crash is adding some offsetting economic slowdown (since the U.S. is a huge oil producer) which I think significantly reduces inflation risk. The previously booming energy sector is stalling and moving towards a contraction: reducing investments, laying off employees, etc. SF rents are going up, but Houston rents are going down. The overall engineering employment market is also ge…

[deleted]

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

#170

Post by mooreds »

pkulak wrote: post #146
austenallred wrote: post #128

Earlier quoted context omitted.

They have 7 people in SF and 45 in Utah

That's how you do it. Rent a tiny space in SF for your token SF people, then open offices in Portland, Boulder, Austin, etc. You're still an SF company, but your runway is twice as long as everyone else's.

This strategy needs a name. Maybe "The SF funding tentacle"?
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