Opinionator

Op-Ed: Why we moved our startup from San Francisco to Berkeley (and why more will follow)

By Alex Gourley

Alex Gourley is the co-founder and CEO of BitGym, which transforms an ordinary cardio machine into beautiful trails, inspiring classes, and fun multiplayer fitness activities. (Learn more at www.bitgym.com)

We recently moved our four-person software startup from the Mission district of San Francisco to downtown Berkeley. It’s been a fantastic change and, upon further reflection, I believe there are three mains reasons many will follow us.

Economics

Software startups require less investment capital to start than ever. Thanks to mature open source projects and turnkey cloud services, the time and expertise needed to launch most startups is falling dramatically.

This means that fewer companies seek capital early in their lifecycle. Founders are more likely to attempt to bootstrap, and, even if they do want to raise capital, the institutional investors demand more pre-funding traction than ever. The path to startup success now begins with frugality.

The most significant overhead is the founders’ cost of living. San Francisco already had high rents in 2010 and they’ve gone up an incredible 50% in the three years since. In short, San Francisco property values are toxic for early-stage companies, and, as I will address next, the city fails to make up for it in other ways.

Culture and environment

San Francisco is an amazing, diverse city. It is unquestionably cool, and its nightlife and culture are commonly credited with the influx of tech workers and tech startups. But if you look at what startup founders and early employees actually do with their leisure time, it’s mostly cramming into a café while searching for an elusive power outlet, drinking good coffee, drinking good beer, reading a good book, or going on a nice hike. Arguably Berkeley loses on the coffee and the beer, but it’s close, and Berkeley creams San Francisco at the rest. More and more people are looking to flee the city, and their East Bay friends are continuing to ask why they don’t just move already.

Labor pool

Finally, San Francisco has a large tech worker labor pool — not just in the city proper, but from transit and highways that bring in workers from all over the Bay Area. However transit flows both ways; Berkeley has a reasonable commute from the East Bay and most of San Francisco. Thumbing through the most recent labor statistics, I calculate the functional labor pool of software engineers of an office in downtown Berkeley is still two-thirds the size of the labor pool for an office in SOMA. And because of the (relatively) lower housing prices and nerd-friendly amenities, many potential workers would be open to relocating here.

If you think you’re going to be the next Twitter, the larger labor pool of SF or the South Bay may actually matter, but that’s a good problem to have, and your early team will be too busy counting stock options to object to an office move.

Moving to Berkeley has been one of the best decisions we’ve made here at BitGym, and my discussions with colleagues in the industry inform me that the trend will continue. Sure it will take years, but the conditions are right. Before long, a successful “anchor” company will emerge, creating a hotspot as well as spinning off newly minted millionaires. These folks will finance and found more companies, and the process will repeat. And it’s already begun.

Berkeleyside welcomes submissions of op-ed articles. We ask that we are given first refusal to publish. Topics should be Berkeley-related and local authors are preferred. Please email submissions to us. Berkeleyside will publish op-ed pieces at its discretion.

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  • visafraud

    “punch a time clock, sit at your desk, one entry-level PC per developer, no perks at all, forced into a union”
    You really think this equates with “being treated like crap”? Oh wow….I’m sorry but this is extreme entitlement. A lot of workers (including in tech and yes, including developers) do not have even this much. Wait for the day when even your job is outsourced to the countries where people are much cheaper than you, do not need to have benefits and are willing to work until 11pm, in true slave labor conditions/lo labor laws/no enforcement of these (or replaced by younger, more “flexible” h1b worker). Some Americans still fail to the the writing on the wall…

    By the way, have you experienced Bay area after the first dotcom crush? (speaking of “being treated like crap”).One day, you’ll wish you had the Union and a desk to sit at, trust me.

  • LVLHeaded

    Yeah! All these jobs are awful! I want to go back to the recession!

  • LVLHeaded

    Can you say “ad hominem”?