Start-up Pulse is moving to the new heartbeat of Silicon Valley.
The news aggregation app, created by a brainy duo of Stanford grads, rocketed into popularity. So founders Akshay Kothari, 26, and Ankit Gupta, 25, did what any company does today and moved Pulse to technology's latest party: San Francisco. Besides, most of its employees were already here.
"It's a very strong pull right now," says CEO Kothari of the move from Palo Alto. "San Francisco has definitely become the center of activity — it's definitely become the hotbed of a lot of exciting start-ups."
The City by the Bay is fast becoming the new silicon club. Its growing appeal as tech's nexus is powered by affordable office leases relative to the old Valley, favorable business taxes, and the allure of a major city.
Young designers and software engineers also prefer the urban landscape, so companies are flocking to San Francisco to recruit top talent. Big and small tech companies are setting up headquarters here — Twitter, Zynga, Pinterest and Pulse, among them.
"This is where the action is for younger people. The heat is in social, mobile, design and software," says Aileen Lee, a partner at venture-capital powerhouse Kleiner Perkins Caufield & Byers. Her firm and Benchmark Capital recently opened offices here.
Since Hewlett-Packard was hatched in a Palo Alto garage in 1939, Silicon Valley has been centered in or around the Peninsula and South Bay, some 40 miles south. San Francisco was usually the province of creative types in design.
"Everyone said the exact same thing about Palo Alto five years ago: It had Stanford, affordable prices and all the (tech) talent," says Julia Hartz, co-founder of online-ticketing service Eventbrite, which has stayed here since it was founded in 2006. "The entire picture is flipped."
What remains constant is that "start-ups want to be around start-ups," says Hartz, whose company employs 200 here.
Today, however, there is a new wave of tech firms set up in lofts and apartments near coffee shops and bars as workplaces and products alike become more social. These spaces, often industrial-looking, with brick walls and steel-beamed high ceilings, are usually left in an open floor plan with shared long wooden tables in lines, topped with giant Macs.
San Francisco boasts the highest tech-jobs growth rate in the nation, according to real estate services firm CBRE. Current growth is about double the rate of the next two fastest-growing markets of New York City and Silicon Valley, a boost that's lifted the city's tech jobs to more than 36,600, or 13% higher than the dot-com peak in 2001, according to CBRE.
Venture-capital funding for San Francisco companies in the second quarter shot up 41% to $991 million from a year ago, according to a PricewaterhouseCoopers/National Venture Capital Association MoneyTree report released Friday. That comes as funding of companies was lower across major Silicon Valley cities Mountain View, Menlo Park, Santa Clara, San Jose and San Mateo.
San Francisco officials say many firms have announced expansions or moves to the city in the past two years, including: Amazon.com; LinkedIn; Yelp; Salesforce.com; Riverbed; Airbnb; Yammer; Tagged; Zoosk; One Kings Lane; Macys.com; Pac-12 Enterprises; Zendesk; Kabam; Funzio; 6waves; StumbleUpon; and Pinterest.