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How Startups are Succeeding from Scratch in San Francisco

If Star Trek ends up being right about the future of the human race, it might turn out to be how San Francisco has become the capital city of our species as it starts to explore the galaxy. Name your innovative company of the last 25 years (besides SpaceX, but they’re close) and chances are it began or soon saw itself established in the San Francisco area. Coupled with the region’s real world role as a leader for the more progressive aspects of humanity, it’s not farfetched to think it will continue to play a central role in world affairs and beyond for centuries to come.

Of course, being the center of the known universe doesn’t come cheap. San Francisco of the early-21st century is one of the most expensive and competitive urban cores on the planet. Those who wish to set up shop in the future shadow of Starfleet Headquarters can expect to pay a premium for the privilege to exist in that space. Concepts like money might be outdated by the time Captain Picard takes command, but for now, capitalism is alive and well in this solar system.

Okay, no more Star Trek references. The focus here is how — despite the high costs and competitiveness associated with starting a business in San Francisco — startups continue to set up shop in Silicon Valley every year. According to AngelList, there are just shy of 30,000 startups in San Francisco as of March 2017. Based on the 400-strong sample revealed by opening the platform’s page list until it stopped showing results, the majority of these companies are only between one to four years in the game.

Most investors would rightly balk at the idea of a startup under their wings spending so much just on the basics of doing business, even with the unrivaled network and talent pool available in San Francisco. And yet, the startups keep popping up. How do they do it? Here’s how:

Alternative Workspace Solutions

Let’s be clear here, when we’re talking about the high costs of operating in San Francisco, we’re talking about the high property values. This, in turn, means high rents for business space – at least for startups willing to sink that much into an office location. Increasingly, startups in San Francisco are turning to services such as those offered at www.bayareaoffices.com that allow for co-working environments, per-hour meeting rooms with coffee and the internet, and virtual office options for mailing address access. This allows for cost-effective workspace in one of the most expensive cities on the planet. Considering most startups these days almost exclusively exist in the cloud, it’s a doable arrangement for most companies starting from scratch in Silicon Valley.

BYOD/BYOC/ETC.

In what one would think is a self-sabotaging pattern if it weren’t for the billions continuing to be made every year, Silicon Valley has taken a room’s worth of computing power circa 1975 and transferred it into today’s pocket-sized smartphone. The short of it is enough hardware to run a startup with what most folks can bring to the office – their own laptops, tablets, and phones. Despite the inherent security risks, “Bring Your Own Device” has become a staple of successfully building a startup from scratch in San Francisco. It enables a venture to hit the ground running on fumes if the mixed metaphor is allowed. Employees might think it a sign of red flag austerity, but the first year or so of BYOD is often followed by hooking those loyal workers up with company gear – at least it ought to follow this pattern. Not only does it rightly reflect the success achieved, but boosts business security.

Hire Out Often

Perhaps the single dirtiest secret of Silicon Valley besides continuing to pretend free services are actually free is its dependence on professionals from around the world to keep itself running. No, not in that they find great talent and import it into San Francisco. Rather, savvy startups utilize the cost-effective benefits of hiring freelancers answering the call through online classifieds. These remote workers are stationed wherever there’s an internet connection. It means fewer payroll expenses and less liability, which is the holy grail as far as keeping tech startup costs down goes.

When it comes to the capital of technology, few cities beat San Francisco. This makes it a consistently attractive location for startups to set up shop, but it also means an incredibly expensive and competitive environment. Starts manage to succeed nonetheless, boldly going where no venture has gone before (sorry, couldn’t resist.)