SAN FRANCISCO, CA — Mayor Steve Adler of Austin and Mayor Francis Suarez of Miami joined tech CEOs, venture capitalists, and real estate experts to share insights about changes to the tech industry and tech-focused cities at sf.citi’s event, The Tech Migration: Reshaping the Industry.
The Future Could Lead to More Tech Offices in More U.S. Cities
One of the first points raised was that tech’s concentration in the San Francisco Bay Area was declining even before the COVID-19 pandemic. “The Bay Area as the dominant tech cluster was ending prior to COVID,” said Guy Berger, Principal Economist at LinkedIn. What has changed as a result of the pandemic is that far fewer people—particularly tech workers—are moving into San Francisco. Drawing from LinkedIn data, Berger explained, “The flow from places that used to ship a lot of tech workers to the Bay Area, like Chicago and Philadelphia, has declined a lot.”
“I do think it’s notable that San Francisco quietly lost two of the most valuable pre-public tech companies in both Stripe and Coinbase over the last two years,” said Kim-Mai Cutler, Partner at San Francisco-based venture capital firm Initialized Capital. (Stripe moved its headquarters just outside of San Francisco to South San Francisco, while Coinbase announced it will no longer have a central headquarters nine months after adopting a remote-first policy.) “That reflects some sensitivity to local tax structures inside versus outside of the city, and policymakers do have to be mindful about that,” she said.
Another side effect of the pandemic is the accelerated shift toward hybrid work models, which Initialized Capital reported on in January, sharing that 73 percent of founders plan to move away from headquarters and towards a decentralized or hub and spoke model. Justin Bedecarre, CEO of commercial real estate startup Raise, believes this will result in “more offices in total” with “startups co-located in major cities.” Nonetheless, he also predicts that San Francisco’s office market—a backbone of the local economy—will be at 80 to 90 percent of pre-pandemic capacity within two years.
Shared Tech Success Across Leading and Rising Tech Cities
Tech leaders agreed that San Francisco’s tech ecosystem will continue to grow, even as other cities like Austin and Miami will see their tech economies expand as well. “Silicon Valley will very likely continue to be the U.S.’s tech hub for years to come,” said Anthemos Georgiades, CEO of Zumper. “And yet other hubs like Miami and Austin will absolutely attract some of its talent away for new adventures. It’s totally possible to hold both these positions. And the spread of the Silicon Valley mindset into a diaspora across the U.S. is a great thing for innovation in this country.”
To this point, Mayor Adler explained that the number of Austin’s high-tech employers grew by 6.8 percent in 2020. Mayor Suarez, meanwhile, credits tech’s shift away from central headquarters with the rapid rise of Miami’s tech scene. “I think the way forward is much more decentralized. COVID has proved that, and that’s also one of the reasons why Miami emerged so quickly,” he said.
Of course, thriving tech ecosystems don’t happen overnight. Citing industry trends and analysis, Bedecarre said, “In order to create a true tech hub, you need to have at least three companies valued at $10 billion or more.” New York City only recently reached that point, suggesting other cities have a long way to go in achieving what San Francisco and Silicon Valley have built over the last few decades.
Equity Opportunities and Challenges of Remote Work
One of the obvious upsides to the pandemic-induced spike in remote work is increased recognition of the importance of flexibility. For parents, this is particularly important. Cutler said, “Post-pandemic, the default acceptance of being remote is going to be that much higher than it was pre-pandemic.”
Georgiades highlighted how more flexible work styles also provide new pathways for “partner equity, balancing roles and relationships, and empowering women to have it all.” He added, “It’s an amazing way for men to help if you’re able to live more flexibly and to be at home more.”
At the same time, Cutler noted that companies adopting a hybrid model in which employees have the option to either work remotely or come into the office are at greater risk of “introducing biases between face time employees and people who are remote.” This is certainly one of the challenges companies will have to address as they pioneer alternative work models after the pandemic.
sf.citi is San Francisco’s tech trade association developed to empower the San Francisco technology community to have a voice in local tech policy decisions and collaborate with leaders in government on solving local issues. Founded in 2012, we are committed to building cross-sector conversation between the City’s tech, nonprofit, and political communities. We drive innovative policy solutions and develop social impact partnerships to address longstanding issues facing San Francisco.