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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

#271

Post by TheSpiceIsLife »

andreyf wrote: post #223
jt2190 wrote: post #186

Earlier quoted context omitted.

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?

Institutional investors give VC's money part of which their investees then put into real estate leases anyway. Cutting out the hassle for the startup that should be focusing on product seems efficient in more than one way.

And the institutional investors likely also have a sizeable commercial real estate portfolio, so it's just a bunch of money going around in circles. I think the general term for this is 'the economy'. We probably group similar assets in to 'industries' because certain schools of thought believe this generates more economic activity, also for convenient accounting.

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

#272

Post by brc »

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?

The comment says 'especially with a family'

Sure, a single guy can rent a single room and walk everywhere. Add in wife and kids and you need three rooms, a car, somewhere to park it. Schooling, activities, shoes and clothes, stuff...suddenly 140k isn't looking too flash anymore.

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

#273

Post by lmm »

TheSpiceIsLife wrote: post #271
andreyf wrote: post #223

Earlier quoted context omitted.

Institutional investors give VC's money part of which their investees then put into real estate leases anyway. Cutting out the hassle for the startup that should be focusing on product seems efficient in more than one way.

And the institutional investors likely also have a sizeable commercial real estate portfolio, so it's just a bunch of money going around in circles. I think the general term for this is 'the economy'. We probably group similar assets in to 'industries' because certain schools of thought believe this generates more economic activity, also for convenient accounting.

> We probably group similar assets in to 'industries' because certain schools of thought believe this generates more economic activity, also for convenient accounting.

Accounting is much easier than it used to be, so we can afford to be a bit more inconvenient. Maybe it's time for a vertically integrated startup service provider. Don't VCs already do things like arrange legal services for their portfolio companies?

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

#274

Post by lmm »

SpaceManNabs wrote: post #192
s73v3r wrote: post #139

Earlier quoted context omitted.

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.

You don't think similar proportions of people in other fields would also like diverse culture?

Nope. Tech workers trend more liberal, more well-travelled and so on (I'm sure you can find negative ways to frame the differences as well). The cultural differences are real.

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

#275

Post by lmm »

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.

Tax asset appreciation like regular income. The tax burden should fall on those most able to bear it, and should fall as equitably as possible. The current approach encourages people to accumulate assets and rent them out rather than producing things others want to consume.

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

#276

Post by Shinchy »

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 pretty common for a VC to give a start-up a corner of their office space here in London. There are a few in my office, seems crazy it's not more common place in SF.

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

#277

Post by keithpeter »

novaleaf wrote: post #99
fredkbloggs wrote: post #3

This is a great analysis and the argument makes perfect sense in every respect. The only thing I find dubious is the idea that the bust is 2-4 years out. I think if you polled most SF commercial landlords, they would tell you that they expect most of their startup tenants to start having difficulty paying the rent in no more than 18 months. It would be interesting to see some actual data on this. After all, there's n…

Based on the title, I expected this to be an article ranting about how someone thought their startup was being discriminated against. Surprised that was, dare I say, "fair and balanced".

The company that produced the post needs to understand the actual reasoning behind the local market for their business to be successful so no room for ranting I'd imagine.

What interested me was the way that in this discussion, each of the separate reasons for the landlords being reluctant to rent to start-ups has been discussed separately - analysis - where what the landlords are doing is making a synthesis.

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

#278

Post by dctoedt »

DannoHung wrote: post #193
mooreds wrote: post #170

Earlier quoted context omitted.

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

The East Texas Shuffle

Austin is considered Central Texas.

(East Texas is famous, or notorious, as where patent trolls like to file their lawsuits.)

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

#279

Post by JabavuAdams »

s73v3r wrote: post #151
stephengillie wrote: post #25

Earlier quoted context omitted.

If all of your employees are remote, what do you show your investors, partners, board members, and creditors when they want a tour of your facility? How do you show them that you've got smart people working on hard problems? For some (bad?) startups, this is an even more valuable function of engineers than engineering.

Why do we care about the bad startups?

Because most startups are bad startups. If you're working for a startup, you're probably working for a bad startup.

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

#280

Post by dylanjermiah »

urda wrote: post #216

Here's a crazy thought: Maybe it's time to consider another location for startups. San Francisco is reaching it's limits, and let's be honest technology can really launch from anywhere. Let's get some other cities moving, San Francisco has enough.

Has already been tried countless times, and all have failed so far.
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