San Francisco has long been hailed the home of the tech startup — the place to be for entrepreneurs looking to lay the foundation for the next big thing. As a mobile app platform with high aspirations, we joined the mix, sharing an area code for four years with the lauded engineers of Silicon Valley and inserting ourselves into the supposed center of the tech world.
It seemed like the best possible move. And for a while, it was.
In Silicon Valley, you rub elbows with enormous talent and inspiration seems to grow on trees. But after a while, the glamour of San Francisco can outweigh its benefits. The high cost of living, extreme recruiting competition and lengthy commutes take their toll on companies regardless of their success. VC-backed companies with irresponsible hiring practices scorch the land for the rest, cultivating an environment where getting ahead means pouring money into areas with little return on investment.
At Bizness Apps — ranked one of the fastest-growing companies in America by Inc. two years in a row — we’ve experienced the flip side of the Bay Area allure. Our rapid momentum was eventually slowed by San Francisco’s saturation, which prevented us from securing the A-players we needed to continue trending upward. Plus, the thought of signing a five- or 10-year lease was less than ideal. As TechCrunch reported, “In January, office rents in San Francisco eclipsed those of New York to become the most expensive in the country.”
The cons stacking up, we made the tough decision. This spring, Bizness Apps will leave the holy grail of tech behind and relocate to San Diego, which could be the tech haven of tomorrow. Here’s why you should, too.
The cost of living is out of control
It’s no joke. San Francisco is expensive. The average two-bedroom apartment hovers around $4,200 per month, making it hard to justify living here unless you’re raking in hundreds of thousands per year. In contrast, you would need around $4,900 in San Diego to maintain the same standard of living you get with $8,100 in San Francisco.
From an employer’s perspective, reducing your employees’ cost of living essentially equates to giving them a 30-50 percent raise. Let’s face it, it’s hard to pay the salaries San Francisco demands. We faced this across all roles, and recognized that relocating meant we’d get more on the dollar and give our employees a much higher quality of life at the same salary.
Be a big fish in a small pond
San Francisco sees the world’s best in terms of tech talent, so it’s easy to assume that if you want the best, this is where you should be. In reality, the recruiting war has never been bleaker. Here you’re competing with not just the biggest names in tech, but in the world. Google, Uber, Twitter, Zenefits, Apple and hundreds of other “unicorns” have more than enough leverage to swoop in on talent before startups even hear the echo of a name.
It’s rare to find the perfect solution without making sacrifices along the way.
Startups need tech talent on all sides: engineering, sales, customer success, business development, marketing, etc. To identify and welcome that talent aboard, you can’t be a small or even medium fry. On the flip side, bringing your San Francisco size to an area like San Diego means instant growth. Suddenly, you’re a big fish, capable of recruiting the best of the best for a lower price tag.
As a bootstrapped company, attracting talent proved difficult because we’re not funded by a major VC. We found this odd, because running a profitable, growing business in San Francisco without VC backing is a rare achievement, to say the least. Regardless, being funded by bigshot partners like Sequoia and Accell is attractive to top candidates. By moving, we can focus on continuing to build out sustainable operations and bring on people who will help us do that, venture or no venture.
Moving can instantly increase your runway
It doesn’t take long for San Francisco’s boom to eat profits. While it makes sense to have somewhat of a presence in Silicon Valley, your entire business doesn’t need to call it home. Additionally, with the global marketplace in the Internet age, location matters less than ever. San Diego and other tech contenders offer more room for expansion without crippling the business or putting employees in a desperate housing market. There we can regain our focus on profitability, high margins and successful hiring.
Tech is up and coming elsewhere
New cultural and technological influencers are rarely capable of breaking ground in San Francisco, which rests atop the tech pyramid of America. The up-and-coming have up and left, creating new startup scenes elsewhere. That’s not to say San Francisco isn’t a great place to be — but if you want to be more than a needle in a haystack, there are better places.
San Diego ticks the boxes for tech startups. Its growing tech scene allows entrepreneurship to blossom. Companies like Bizness Apps that are ahead of the curve can gain ground more easily, becoming influencers and trending upward rather than treading water. (If you need more convincing that San Diego makes economic and business sense, check out the Voice of San Diego and Startup San Diego for some more compelling info.)
Become one of the best places to work
It’s tough to keep up with the perks of San Francisco giants. For example, look at Dropbox’s employee package, as quoted by David Tvaltchrelidze:
- Free breakfast, lunch and dinner daily from our famed Tuck Shop, plus tons of snacks and beverages
- Really flexible hours
- Eighteen days of paid vacation and eleven paid holidays, all the sick time you need, and generous parental leave policies
- In-office gym with laundry service and fitness classes, plus reimbursement for other gym and health programs
- Office located just steps from the 4th and King Caltrain. Use a free Caltrain Go Pass, transit benefits, or our very own free Dropbox shuttle service within San Francisco
- 401(k), with company matching
- 100% of health insurance premiums paid for employees
- Benefits to help you save time, like on-site haircuts, subsidized massages, and free credit for cleaning services
- Join the band. Complete music studio equipped with drums, piano, amplifiers, etc.
- Weekly company happy hour
- Board Game nights, ping pong, console gaming rooms, DDR (yep, a real machine), StarCraft, pool, and more
Crazy, right? We provide some of those perks, but certainly not all of them. Now imagine you moved to a city where businesses can’t afford to offer everything under the sun. You have the chance to become highly desirable in contrast. We want to become one of the top employers in San Diego. By moving, we’ll create a work environment that stands out with greater ease and lower costs.
Your startup isn’t the only one feeling the heat
The Silicon Valley Competitiveness and Innovation Project found that more than 7,600 Silicon Valley residents left the region for other U.S. cities. These results also show that in just a year, home prices increased 13 percent and rent prices 12 percent. Additionally, SVCIP’s report found that the average Silicon Valley commuter lost 67 hours in traffic congestion in 2014, up 13.6 percent since 2010.
Are there any downsides?
Well, business decisions always involve risk. It’s rare to find the perfect solution without making sacrifices along the way. And there are those who believe that if you’re in tech, you need the Valley. We don’t think so.
Yes, you’ll have fewer candidates from which to choose. Moving a company takes a lot of work, so you’ll lose some employees in the process, too. But at the end of the day, wouldn’t you rather root your company where you’ll gain more attention, attract better talent and have a new edge over the competition? Moving can help accomplish this, taking your startup from the shadows to the spotlight.
Moving from San Francisco creates a lasting competitive advantage
Business is all about competitive advantage, so lower-cost locations with less competition could be precisely the formula your company needs to grow. We’re confident this move will facilitate faster expansion than we ever saw in San Francisco. The mobile industry is booming, and San Diego is the new frontier where we’ll lay the foundation for our future.