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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

#181

Post by owyn »

compostor42 wrote: post #96
briandear wrote: post #74

Earlier quoted context omitted.

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…

>Making $140k per year is the San Fran equivalent of minimum wage Is this really true? Seems far-fetched. Isn't that $20-30k higher than the Google base starting salary?

Well, let's do some calculations...

Assume you're making 140k, after 10% retirement contribution and CA taxes leaves about $6400 per month net. With the average 1 bd apartment at $3200 now that's half your take home wage. Leaving $3200 per month is $800 / week. Or $20.00 an hour at 40 hours. Given typical start-up hours and not even counting the typical food/internet/car expenses. So, if you want to look at it as an all-in after expenses, yeah, even that kind of salary can feel like minimum wage. The economics of minimum wage here in SF are a LOT worse...

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

#182

Post by mahyarm »

Turing_Machine wrote: post #131
Johnny555 wrote: post #113

Earlier quoted context omitted.

Google, a very large company with nearly unlimited technical resources, continues to bus workers 40 miles down the peninsula every day because they want workers to stay on-site. Google, of all companies, could afford as much office space in SF as they need, yet they still choose to only have a relatively small satellite office there. The experience of large companies that have large remote workforces and FOSS project…

Hmm... it could be argued that Google's repeated failures in the social networking space are compelling evidence that it's one of the least likely companies to succeed with remote workers.

Facebook is pretty much identical to google in it's ship workers to HQ practices.

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

#183

Post by YokoZar »

AlexeyMK wrote: post #158

One solution that is not being discussed is for VCs to offer office space for start-ups. VCs have longer time-horizons (a typical VC fund will be spent over 5 or so years) and appear more stable to landlords. In addition, one of the toughest problems for VCs as I understand is dealflow - when it comes to a super-competitive round, Andreessen or Sequoia will often push other VC firms out of the round by throwing their…

It's a good idea, and I know it's been done at least once before. For instance, the youweb incubator operates this way.

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

#184

Post by structural »

pmorici wrote: post #95
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.

My bet is that Baltimore is poised to become a big tech hub. There was a ton of money spent in the tech sector after 2001 and that is tapering off now and you have a bunch of engineers with 10 years experience and the low cost of living in Baltimore which makes for a lot of opportunity to try things. The city also has a very Art oriented quirky culture like SF had before it priced out all the creative people and a lo…

Baltimore is still relatively expensive and is (locally) still widely regarded as a dangerous city that most people don't want to go to, quirky or not. There's a reason that most of the tech jobs in the general area are around the DC suburbs (and pushing further out each year).

There's still incredible problems with getting good engineers to come to the general area as well: Baltimore/DC has SF-level cost of living but not nearly the amenities of the Bay Area. The weather here sucks most of the time, the general culture leans suit & tie, the traffic is just as bad if not worse, you don't have the redwoods/beaches/outdoor things nearby that many engineers tend to value. Moreover, there's still a major stigma against working remotely out here that hurts many East Coast businesses when looking for software folks.

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

#185

Post by flashman »

AlexeyMK wrote: post #158

One solution that is not being discussed is for VCs to offer office space for start-ups. VCs have longer time-horizons (a typical VC fund will be spent over 5 or so years) and appear more stable to landlords. In addition, one of the toughest problems for VCs as I understand is dealflow - when it comes to a super-competitive round, Andreessen or Sequoia will often push other VC firms out of the round by throwing their…

How likely is a startup to trade points for office space? As in, a different class of VC which backs the company not with cash but with a location.

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

#186

Post by jt2190 »

AlexeyMK wrote: post #158

One solution that is not being discussed is for VCs to offer office space for start-ups. VCs have longer time-horizons (a typical VC fund will be spent over 5 or so years) and appear more stable to landlords. In addition, one of the toughest problems for VCs as I understand is dealflow - when it comes to a super-competitive round, Andreessen or Sequoia will often push other VC firms out of the round by throwing their…

Wouldn't this distort the VC's portfolio? Institutional investors give VCs their money to put into high-risk, high-reward investments, not real estate leases. How would they justify this?

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

#187

Post by Mikushi »

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.

>The entire point of a startup is to not stay its current size

Growth for the sake of growth?

I would actually think that this is pretty far away from what startups are about.

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

#188

Post by austenallred »

Mikushi wrote: post #187
superuser2 wrote: post #109

Earlier quoted context omitted.

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.

>The entire point of a startup is to not stay its current size Growth for the sake of growth? I would actually think that this is pretty far away from what startups are about.

"A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth." - pg

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

#189

Post by inerte »

ectoplasm wrote: post #166
lkrubner wrote: post #38

Earlier quoted context omitted.

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.

Not quite, because there are trade publications, conventions, forums, linkedin groups, etc... You have the 1:1 but also the broadcast

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

#190

Post by akshatpradhan »

AlexeyMK wrote: post #158

One solution that is not being discussed is for VCs to offer office space for start-ups. VCs have longer time-horizons (a typical VC fund will be spent over 5 or so years) and appear more stable to landlords. In addition, one of the toughest problems for VCs as I understand is dealflow - when it comes to a super-competitive round, Andreessen or Sequoia will often push other VC firms out of the round by throwing their…

Don't mean to derail from topic. What's value of an average seed round in SF right now?
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