From Aubear1 in Bay Area attracts top talent and money (theFrontSteps):
Check out the percentage of VC funding that this region received during Q1 ’08 versus other parts of the country:
I can’t think of a more compelling piece of information that paints the picture of how this region continues to create both real jobs & wealth during the current economic downturn. You can go back to the previous quarters as well to see that the “Silicon Valley” region has consistently won a significant piece of the funding awarded. In my opinion, this is one of the key elements that continues to drive the local real estate market (and the US economy). This region is at the “tip of the spear” in terms of “creative destruction” and stands unique among most top tier global cities. The SF Magazine gives great recent examples of this as does the recent book, “Who’s Your City” (creativeclass.com/whos_your_city).
Thanks for letting us all in on this information bit of information….
This is not surprising. Sand Hill Rd is to the Bay Area what Wall St. is to NY. Not exactly eqivalents, but closer than any other area of the world can claim (i.e. VC money (us) v. IB money (them)).
This is also why the start-up culture will always flourish in this area as well. This is where the VCs want to live and they want their investments close-by to nourish, handhold, mentor, etc. Even start-ups that from other areas of the country end up needing to move to a place like this to thrive. Prime example is Sirna. Look it up. Floundered in CO for years, moved to SF, acquired by Merck shortly thereafter for mucho dinero. Just one example of many that I can think of. (and their IP isn’t even that great…)
My friend is 28 and pulled down $800,000 last year in VC. Not bad at all. He wants to buy a place at The St. Regis. A nice 1 or 2 bedroom. Sounds good to me!
“Creative destruction” is right. But let’s be careful. The creative destruction is the creative destruction of value. Other than the ‘advertising model’ where the service gives away everything for free in exchange for your privacy data to sell to advertisers (i.e. facebook), or it just gives away everything for free and takes in VC money to keep itself running (i.e. twitter) in exchange for a false valuation based on the “number of users of the service” — never mind the user base can be very fickle and will depart in a heart beat — I haven’t found too many significant start-up ideas that have legs to stand on (and my job is to find them, analyze them, and tell our execs if they are interesting to us).
That said, it doesn’t mean the advertising model is not attractive (Google did it); but there are privacy risks as we know in the long run.
It also doesn’t mean these start-ups with no legs do not have a future — they often get acquired for cash, enabling their employees to have a good liquidity event (our jargon for cashing out). However, the acquirer runs the risk of integration, key people leaving, and the fact that often the acquired technology/services fail to live up to its promise (look at eBay’s purchase of Skype), and the new purchased business significantly under performs the acquirer business’ metrics (like dragging down its operating margin — very bad for a publicly traded company).
So, while the VC infusion is great for the bay area economy and housing, and I’d rather live in a place where smart and inventive people congregate, I have to say I am not yet too impressed with many of the start-ups in web 2.0 and tech that I feel are built on the proverbial house of cards. Yet some bio sciences / alternative energy ones are pretty good.
And alex – I’d be curious how long you will find ‘twitter’ to be useful because it took me only two days to realize I don’t want to use it…
anon8mizer,
Twitter so far, to me, is totally useless. But I’m playing around with it to see if something clicks. I can’t see how it can benefit a real estate professional except for providing deets on houses seen or offers written, etc. But even then, it’s so limited. I think it’s fun for kids to tweet each other, but not sure how it can benefit a professional business person.
But I do have some other ideas for you and your VCs.
I also have lots of ideas in need of VC money. They are not tech related, or advertising based.
This is a big Biotech and Medicine hub as well, so hopefully that VC money is spreading to somethings with more legs.
Chuckle on the choice of words…
There is hope. If you check the MoneyTree report, and get the investment stat “by category”, you’ll see that bio-science was the #1 category for investment. That’s actually good for the bay area as well — more diversification.
Somebody asked Steve Jobs about 5 years ago, if he had to do it all over again, where would he look for new opportunities. His answer was not tech — it was “biotech”
@Alex – yeah. My feeling on Twitter exactly. It’s one of the flash in the pan things that a few in the Silicon Valley Echo Chamber found fun to use, and thus proclaimed it to be the next big thing. Twitter uses the # of registered users as a metrics to show their success, and I just wonder how many of these user accounts actually saw real activities within the past 30 days. And how many of these ‘real activities’ go beyond trivial twits like
“Taking my dog for a walk, and he’s pooping in neighbor’s front lawn!”
“Me too!”
So be careful with all the snake charmers out there raising money for the latest greatest ‘creative value destruction’ ideas.
Let’s create a search engine for social networking sites. I’ll head it up. VC?
Can we do a survey of how old people are here, and how much they made in 2007, and how much they think they’ll make in 2008 and whether you plan to buy or rent?? I think this will be quite informative.
I’ll go first.
38.
2007: $610,000
2008 $500,000-$700,000
I plan to buy. B/c rents are going up like crazy, and life is too short to be a 40 year old renter!!
wanker.
i’m not a VC, but i deal mostly with start-ups and small businesses in the area and will tell you that we have an extremely diverse local economy. there does seem to be an inordinate amount of activity in the “on-line ad space” or some kind of small app “that works with facebook, but don’t forget about things like import/export, wine & consumer products. firms such as vinfolio & crushpad are creating some very cool new business models around wine while others such as bare escentuals, timbuk2 and newcomer, blurb.com, deliver compelling consumer products. the perfect storm of the following elements makes this area unique in my opinion:
– a lot of smart/educated/creative folks
– a business culture that thrives on risk
– plenty of funding
– an international gateway city
– it’s a flat out beautiful & cool place to live
Ooh, I love surveys! Let’s see….I made a gazillion dollars last year, and will probably make a bazillion this year. I haven’t decided yet. Of course I plan to rent, because prices are going nowhere but down! Has anyone seen these numbers?
http://thefrontsteps.com/2008/06/11/stats-numbers-single-family-homes-may-2007-versus-may-2008/
Wow! Median price is down in 8 out of 10 districts. And what about the D7 median: down 23% in just one year alone! Have Marina prices really dropped that far? Sure would hate to be a homeowner right about now.
Hey, how about another survey: 1) how much value has your home lost this year? 2) how much do you expect it will lose next year? I’ll go first: none, and none.
[Editor’s note: Glad to see a new name, and opinion. For a second there, I have to admit I thought you were just another “40yr Old Renter” rant (nothing wrong with them) under another name. Alas, you appear to be here for the first time. Welcome!]