The Shifting Sands Of Sand Hill

For as long as I’ve paid attention, Sand Hill Road has been synonymous with venture capital. But that is changing. As the epicenter of the technology renaissance age has shifted, or expanded, from Palo Alto and its environs to San Francisco and other pockets of the peninsula, the monopolistic high ground of venture capital real estate that top venture firms call home base has started to diffuse, as well.

I see two trends motivated by two related realities. The realities are the desire to be closer to the entrepreneurs and the correlating acknowledgment that most of a partner’s time is spent with founders and, therefore, any location convenient to the 280 or 101 is sufficient for the Monday partners’ meetings and pitches that the partners typically attend.

On the trend side, there’s a growing tendency of firms to open a San Francisco “office.” In the early days, all of two years ago, these were shared spaces or barely more than apartment-sized units populated by young associates living in the city, and occasionally partners who needed somewhere to meet other than The Creamery.

Now firms aplenty have flocked to set up space in trendy, and pleasant, South Park; nine according to a recent Re/Code story. Norwest, Shasta and KPCB have offices so close together that when I visited one I was auto-logged into another’s Wi-Fi system, which apparently use the same password as their Sand Hill base.

Of course, there have always been firms in San Francisco, like Index, which only has offices in SF, but this is a clear acceleration.

The second trend is the movement off Sand Hill entirely. This, too, has happened in the past; Venrock moved to a campus off the Foothill Expressway in Palo Alto. Matrix moved to downtown Palo Alto, one street over from University. When I asked one of my friends at Matrix how he liked the move he said it was “great” because, “now I’m hanging out with entrepreneurs instead of other VCs.”

This trend has also been accelerating more recently, and meaningfully so. And location doesn’t seem to matter much as long as there’s nearby highway access. Benchmark moved into a nondescript office in Woodside next to The Village Pub that’s barely noticeable from the outside except, for their name painted on two parking spaces. Canvas Ventures, and precedent Morgenthaler, moved into a space in Portola Valley that’s exactly one exit farther down the 280 than Sand Hill. And I recently drove by a shiny new USVP sign on El Camino in Menlo Park, which a senior partner told me they’ll be moving into soon.

New firms, like Formation 8 (San Francisco) and Social Plus Capital (Palo Alto) have ignored Sand Hill entirely when they opened their fancy new digs.

Of course, no trend lacks a counter; A16Z went for big digs on the top of the hill when it launched not that long ago, NEA moved up and across the street from Quadrus to the Rosewood complex and Greylock moved from the hinterlands to Sand Hill Central.

Sand Hill isn’t going away, but the sands are certainly shifting to a broad array of locations, either going where the entrepreneurs are, or going where their brethren aren’t, knowing that they’ll be leaving the office to find the best deals anyway, or that those entrepreneurs who find value in them will happily come to call.