Tech's center of gravity shifts north to San Francisco

Fast-growing tech firms are shunning Silicon Valley for San Francisco to help them attract new talent

By Cameron Scott, IDG News Service |  Software, Silicon Valley, startups

"When you're a young engineer and all the companies you're interested in are in the Valley, then you're going to work in the Valley. But suddenly if some of them start to have outposts in the city, then those become more attractive employers than the companies that aren't in the city," said Wendell.

"There's kind of a tipping point," he said.

"Our downtown San Francisco campus gives us a recruiting edge when attracting top talent," said Monika Fahlbusch, senior vice president of global employee success at Salesforce.com, which has been in the city since it was founded in 1999, and which purchased 14 acres of land here two years ago to build a new headquarters.

The current influx of tech firms began slowly just before the financial collapse of 2008. Google, for example, rented a new office in the city's bustling Financial District that July. In a statement at the time, a Google spokeswoman cited employees' desire to avoid a long commute.

The trend took off in earnest when two things happened at once: Real estate prices fell in the wake of the financial crisis, and Twitter and Zynga gained prominence in San Francisco. They were able to expand here in part because of the softer real estate market. And their presence drove other companies to cluster around them.

"With Twitter and Zynga there, it's now believed possible to build a larger company in San Francisco," Josh Elman, a principal at Greylock Partners, said in an email interview.

Twitter announced last spring that it would expand into a hulking office space in the mid-Market district, a formerly troubled neighborhood across Market Street from City Hall that now seems headed for rejuvenation. In a highly public effort, Twitter negotiated tax incentives from the city, which was endeavoring to revitalize an area with more than its share of empty storefronts.

Later in 2011, Zynga outgrew its offices in sleepy Potrero Hill and moved into a massive headquarters at the southern edge of the South of Market district. Zynga at first leased part of the building, then, after its December 2011 IPO (initial public offering), bought the building.

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