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We Moved Our Startup from San Francisco to Berkeley – and Lots More Will Follow

| September 17, 2013
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The UC Berkeley campus as viewed from the marina area. (Studio H/Flickr)

The UC Berkeley campus as viewed from the marina area. (Studio H/Flickr)

Commentary first published Sept. 16, 2013, by Berkeleyside.

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)

By Alex Gourley

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 main 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 percent 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 to 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 for 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 San Francisco 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.


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Category: Economy, Tech

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  • Berkeley Rez

    And then you drive home and rent prices up through the roof till the rest of us can no longer afford to live in the beautiful place you just described. Please keep your gentrification on the other side of the Bay. We’ve seen what you and your cohorts have done to SF and it is not pretty. A city no longer for the middle class. A city that has become a play ground for the newly minted millionaire. A city that has lost it’s diversity, it’s flavor, what made it special. Please, stay over there or better yet, stay down in the Valley. Please don’t destroy our city like you have to SF. Please don’t come here and offer 25% over the asking price for homes so that a regular person can no longer bid with any hopes of winning. Please don’t come here and force rents to the astronomical levels that SF sees, $3,500.00/month for a one bedroom. Please… Just go away.

    • Bishop George Berkeley

      Umm, that ship sailed decades ago. Time to come out of your 70s induced coma.

      Bitgym: please succeed wildly and then pay berkeley’s crazy tax rates.

  • Patsypol

    Welcome Bitgym! You are just the sort of exciting business Berkeley is hoping to gather..a business with new ideas for the 21st century and one that will keep our well educated workforce in town. Despite the grumpy folks who fight change, you are Berkeley’s future and I applaud you conviction to join our city’s business community