Twitter IPO Makes San Francisco the Sexy New Face of Silicon Valley

In case you haven’t noticed, Silicon Valley has been pulling up some of its roots and moving north.

With a now publicly traded Twitter as the brash emcee, San Francisco is gradually stealing some of the spotlight from the other end of the bay, and is becoming the sexy new face of the world’s most fabled bastion of all-things-tech. Google (GOOG) Glass and Apple’s (AAPL) spaceship aside, much of the tech action these days is within a real bird’s tweet of Market Street. With Twitter’s blockbuster IPO last week, an increasingly amorphous Silicon Valley is getting all urban on us, shifting its stance from a suburban sprawl of boring business parks to a boho-chic groove in the City by the Bay.

“This doesn’t mean there’s a weak economy or a lack of financing in the South Bay, but the center of gravity of Silicon Valley is increasingly in the north,” says Mike Sullivan, a partner and startup specialist with Pillsbury Law. “Things are hot in the valley, but they’re red-hot in San Francisco.”

How red? While the South Bay claimed 221,400 high-tech jobs in August, compared with its upstart cousin to the north with 106,800 positions, San Francisco and neighboring counties of Marin and San Mateo have been adding workers at a sizzling rate, growing an annual average of 9.4 percent the past three years while the San Jose area showed a rise of 3.6 percent.

Rahul Mewawalla, senior adviser for innovation to Mayor Ed Lee, says San Francisco in particular is witnessing “staggering growth” in its stable of tech and social-networking startups. It’s a trend his boss has championed by providing tax breaks to young tech firms like Twitter to not only keep them from leaving town but also to encourage them to put down roots in traditionally seamier areas of the city like Twitter’s adopted Mid-Market home.

“We have companies like Pinterest, Square, Uber and Airbnb that in coming years could also go public or be acquired

by larger companies,” he says, adding that the city now boasts more than 1,800 startups and tech firms, which drew more than a billion dollars in venture capital funding in the first three months of this year.

And that, Mewawalla says, is helping redefine the borders of Silicon Valley.

“I think Silicon Valley now truly starts in San Francisco and goes all the way to San Jose,” he says, betraying a geographical bias that some who live and work in what traditionally has been known as “the Valley” might take offense at. But not Carl Guardino, the ever-diplomatic president and CEO of Silicon Valley Leadership Group.

He says that of his 391 member companies, “well over 100 are either headquartered or have a strong physical presence in San Francisco. We’re regional, so we have no parochial views. Remember what Bill Hewlett said over 25 years ago: When asked how he defined Silicon Valley, he said ‘from Sonoma to Monterey.’

“Twitter and other social media companies are growing right now in San Francisco, but it’s not a question of one area succeeding at the expense of the other,” Guardino says. “We view the innovation economy as taking place all the way from Market Street in San Jose to Market Street in San Francisco, and every community in between.”

Maybe the valley’s boundaries don’t even matter. Mark Glaser with PBS’s online magazine MediaShift, points out that while “locals like to define the Valley as being in the South Bay, people outside this area and overseas think of San Francisco and Silicon Valley as synonymous. But then they also think Microsoft and Amazon are headquartered here, too.”

Regardless, Glaser says, “the Twitter IPO will make people believe San Francisco is part of Silicon Valley more than ever before.”

And that line-blurring will continue, says Enrico Moretti, economics professor at UC Berkeley and author of “The New Geography of Jobs.”

Moretti says the expansion of the traditional Silicon Valley of Palo Alto and points south is due to several factors, including the trend among younger tech workers to want to live, work and play in vibrant urban centers. Plus, he says, all those big white buses shuttling commuting techies up and down 101 and Interstate 280 means “more and more people living in the valley and working in the city or vice versa. So these two labor markets south and north are increasingly intertwined.”

Fellow professor Mark Cannice over at the University of San Francisco School of Management sees the Twitter IPO as the most dramatic sign yet that the city that took flight with the Gold Rush prospectors will keep trying to connect with its inner geek.

“This move to the north,” says Cannice, “represents a natural geographical extension of what we historically considered ‘the Valley.’ I don’t think it’s a temporary phenomenon by any means, because San Francisco is now attracting innovators from around the world. They know they have to be here to share and to gain access to all the complementary resources of this growing ecosystem.”

Throw in the East Bay, where Oakland recently ranked No. 11 on a list of the most attractive American cities for tech startups, and it looks increasingly as if the entire region is being swallowed alive by “the Valley.”

As Cannice says, “we might as well start calling it ‘Silicon Bay Area.’ ”

Contact Patrick May at 408-920-5689 or follow him at Twitter.com/patmaymerc.

San Jose Mercury News (CA)

(c)2013 the San Jose Mercury News (San Jose, Calif.)

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