Kunal Gupta and Joe Ahearn, New Yorkers in 2018, began working on a startup called Withfriends. The idea was to help small businesses build revenue through subscription boxes, where customers would pay a monthly fee for merchandise like vegetables, flowers or shirts.
Once they decided the startup was legit, the two headed for San Francisco. This weekend, when Ahearn finds a place to live and Gupta moves into the Mission District, they won’t be the only newcomers. They’re part of a trend, according to more than two dozen people we interviewed, including real estate brokers, property managers, tech investors, tech workers and others with their finger on the pulse of the local tech scene.
There are predictions aplenty on how the ascent of remote work will ultimately change the local scene, now that tech workers can avoid the city’s high rents by toiling remotely. However, despite a year and a half of news about a tech exodus — and with it, the narrative that San Francisco has become unappealing for the tech industry — interviewees said that, as California reopens, young tech workers, especially those in startups, are coming to San Francisco.
“You don’t lose the deep roots of Bay Area innovation overnight,” said Danielle Lazier, who’s a been selling real estate in San Francisco since 2002. “Young people are coming back or want to be here and, anecdotally, that’s what I hear about rentals.”
Gupta, in fact, won’t be alone in the city or in his Mission District abode. He’s moving in with four other founders or co-founders of new startups.
The reasons for relocating to San Francisco are not all that different from those that have been drawing tech aspirants since the late 1990s. They range from the general, more universal appeal of San Francisco to more tech-specific rationales, such as the wealth of venture capitalists here and a network of tech workers to engage with, particularly for those creating a startup.
“You wake up, go to work, dream about it. Wake up, go to work, dream about it. It’s not work. It’s who we are. I don’t know many other places where you can be what you do in the way that we are besides San Francisco,” said 22-year-old Mina Mortchev, who is launching a travel start-up after graduating from Duke University in the spring.
Changes In Real Estate
Real estate agent Mia Baldini said she saw an uptick in tenant applications once California’s June 15 reopening was revealed.
She had two residential tenant applications from tech workers in hand when she picked up my phone call in early July. A real estate agent at Baldini Property Management, which oversees nearly 200 units mostly in San Francisco, she got only one or two applications a month earlier in the pandemic. Now she gets three to five a week.
Among them, a good portion work in tech, and most are younger, she said; perhaps too young to remember the tech meltdown of 2001. Maybe 70 to 80 percent are working for well-established companies, and the rest are with startups.
“I think [the reopening] definitely jump-started something in people’s minds, like, ‘Hey, there’s an end date in sight; things are going to start going back to normal soon,’” Baldini said.
Younger people in particular are drawn to urban spaces by jobs and a desire to socialize and experience urban life, said many of those interviewed. There were two classes of college graduates during the pandemic, many of whom have waited to move out. Often, younger residents are more willing to pay the city’s exorbitant rents to live in a small place, given that they usually haven’t started a family yet.
“If you’ve been somewhere for a while, you’re sort of done hanging out,” said Ahearn, one of the cofounders at Withfriends. “Not all people are like that, but a lot of people build up their network and know more people than they know what to do with. They don’t need to be able to go out to a bar on a whim or go get a coffee with somebody. They’ve had enough coffees.”
Jamie Comer, a real estate broker at Kindred SF Homes, said that since the end of May she’s heard plenty of discussion in her circles about folks in their 20s to mid-30s planning to move in around August and September. Of them, around 60 percent work in tech, 15 percent in financial services and 15 percent in humanities, the latter often writers hoping to work in tech. So, she expects “a really big boom” of younger people moving in by mid-spring 2022.
“What happens is, Jeffrey, Patty and Shelly come out here, then Victor, Ashley and Kate come later; companies and cultures will develop, where there’s enough people and enough work that there’s the boom,” Comer said. “And then, there’s the echo boom. The echo boom is frequently even bigger than the initial one.”
Interest is brewing
Over the last year and a half, foot traffic at Atlas Cafe, where owner Bill Stone estimated that around half of his customers work in tech, averaged roughly half of what it was before the pandemic. But at the end of June, it was back up to 75 percent, with an uptick since the reopening, Stone said.
At Haus Coffee and the Sightglass Coffee shop in the Mission, where workers also estimated that half of their customers work in tech, baristas saw similar returns toward normal levels.
Mike Luangrath, a longtime barista at Haus Coffee, said that business dropped to around 30 percent of what it was prior to the pandemic. But it rebounded after June 15, and increased to around 50 percent of normal by late June. Jocelyn, a barista at Sightglass Coffee, said the number of customers increased from around 200 a day in early June to around 300 at the end of the month.
“It seems like more people have moved into the city, and it seems like those tech people that have left in the pandemic are moving back as well,” Luangrath said.
An Ideal Place For Startup Culture
For Mortchev and her startup chief marketing officer Carmela Guaglianone, also 22 and a recent graduate from Duke University, moving to the Mission went along with expediting the creation of the Pathbreaker, a platform that allows people to map and share their travels. They hope in the future, people can choose their paths using filters such as “solo woman traveler” or “LGBTQ+ traveler.”
Making it become a reality is a day-in, day-out pursuit. There’s nothing, Mortchev said, that she believes in more.
And in San Francisco, she’s surrounded by like-minded entrepreneurs.
Here, there’s serendipity aplenty in a dense 7-mile-by-7-mile space, where it’s normal to bump into other founders as well as the investors and the venture capitalists who fund projects.
“We talk to anyone we meet; they say, ‘What’s up?’ We talk about Pathbreaker,” Guaglianone said. “It’s not just in San Francisco, but the difference in San Francisco is that people seem to have kind of a better foundational understanding by proxy as to what the process means or what being in a startup means and how that process works and how investments are structured and how your work schedule is going to go.”
Guaglianone noted that, of their graduating class of more than 1,000, she knew very few who were in startups, likely due to the pandemic. But those who are have moved to San Francisco, she said. She’s heard little among her peers about the city’s highly publicized lack of appeal compared to other tech hubs.
Capri Wheaton, the 19-year-old CEO and cofounder of the startup Thryft, has seen interest among her peers and startup founders in moving to San Francisco.
“A lot of my friends, and other young people and startups that I know and really look up to and have a great time with, are also going to be in San Francisco,” said Wheaton, who’s moving into the Mission with Gupta, one of the tech founders from New York.
A passion for sustainable fashion pulled her off of her path toward law school at UC Berkeley. She returned to her home in Newburg, a suburb near Portland, Ore., when classes went online. Come July last year, she decided to pursue her startup full time.
She attended and graduated from the startup incubator Y Combinator early this year. When the original startup idea proved logistically infeasible, she pivoted to helping microbusinesses turn their Instagram page into a website in under a minute, starting with the secondhand clothing market.
On March 30, she put out a call online for a hackerspace in San Francisco to save money and received much interest from other startup founders, she said.
“The reason why San Francisco was appealing to me is, all of my friends are there,” she said. “And, a lot of the companies that were in the Y-combinator batch before me or in my batch or in this summer ’21 batch that’s coming up, they’re all living in San Francisco or moving to San Francisco right now.”
Here, the vast majority of conversations are tech-oriented and, at their new home, they’ll be able to bounce ideas off each other, she said. She knows of at least one other hacker home with multiple startup founders a 15-minute walk away.
“I think everyone’s craving social connection after the pandemic, so I think that makes sense as to why a lot of people are moving to the city around friends,” she said.
The Mission, she added, seemed like an ideal more affordable place than, say, Noe Valley or Hayes Valley.
So, when it comes to the sun supposedly setting on this city, she isn’t seeing it.
Younger startup founders moving into hackerspaces is something that Comer, the real-estate broker, has seen for a long time.
“You can’t really invent and learn in a vacuum,” Comer said, echoing other interviewees. “You actually have to sort of be in the same space and have small conversations and answer small questions, or observe what other people are doing in order to continue to actually master a craft and also stay at the forefront of invention.”
Gupta, Wheaton’s roommate, said that if anything, he expects the exodus to open up room for early stage startups to move in.
“The more tech exodus there is, the better outcomes are for startups, assuming that the tech exodus is people who are not at the startup stage but at a later stage — people who don’t need to live in the city anymore,” he said. “If later stage people leave and early stage people come in, that’s good for startups.”
Local appeal in a remote world
Being able to meet in person is exactly why Wheaton relocated from Newburg, Oregon, down to Sunnyvale in February.
She wanted to be closer to her cofounder, Sam Yang. He’d drive from Cupertino every day so they could work in person, and though they were doing separate things, it was really helpful working in the same space, she said.
“With Zoom calls and phone calls you’d think it’d be easy to do remote work, but there are still lags in communication,” she said. “You can’t really walk over to someone’s room or walk to their house and brainstorm on something, so you need to schedule in actual time to brainstorm. It just ends up being not the most effective way to work.”
Steve Hoffman, the CEO and chairman of the incubator Founders Space and the author of three books on startups, said he’s been seeing young tech workers move into the Bay Area and long pushed back against the idea that remote work will replace in-person work for startups.
“You won’t have that same degree of bonding and connectedness with remote work in almost every case that you will when people are together in the same physical space,” he said.
He added that relationships developed online tend to be more transactional, whereas those in-person are deeper and more meaningful — relationships where peers will go further for one another.
“When I’m in China, they won’t do business that requires any sort of trust without multiple meetings at the dinner table,” he said. “It’s all about relationships and meeting people in person, and if you can’t do that, good luck getting done with real business in China.”
That’s true in most cultures, and absolutely the case in the Bay Area, he said.
Interactions are richer too, he added, as people pick up facial cues and gestures they may not notice over Zoom. Even small talk, he said, tends to be shallower over Zoom than it is in-person.
“Remote connections are more two-dimensional; there’s this barrier in between you because you’re not physically present with all your senses,” he said. “I firmly believe that, as animals who have evolved for hundreds of thousands of years, the human species, this intimacy of human interaction is something that is essential to our ability to trust and relate to other people and form really deep connections in groups.”
For example, he said, if someone were to ask him for a connection with a person in tech, those who would come to mind would “almost invariably” be those he spent time with in person rather than met online, even if the time spent with each was the same.
Entrepreneur-turned-investor Santiago Corredoira Jack, a former San Francisco resident who moved to London in May to join the telecommunications services company VEON, said he expects the spread of remote work to help temper the pull of San Francisco to tech workers compared to other viable new tech hubs, such as Austin, Texas, or Miami, Florida. But he still sees the city retaining its allure.
Beyond the restaurants, parks, different cultures and all else, it’s the entry door of Asia in the U.S. and one of the main doors of Latin America, as well as the nation’s premier urban tech hub, Corredoira Jack said. And, it’s uniquely dense — unable to grow further due to being on a peninsula, whereas it’s easy to get lost in cities like London, he added.
“There’s no other city in the world that is so global, being so intimate,” he said.