The startup scene in San Francisco in this latest cycle is starting to develop layers, as new up-and-coming companies are building off the successes of larger startups like Twitter. This NY Times article gave great examples of companies leasing space in the Twitter building at 795 Folsom or close to it, if for nothing else than to catch some of their positive mojo, but more so to be a part of a community.
A few companies have been able to set up meetings and build relationships with top executives. Startups are increasingly having opening parties, meetups and neighborhood drinkups at their offices. One of the top reasons more startups are moving to San Francisco is many of the young executives live here and enjoy the city.
Cheers to Klout, which helps marketers reach influential people on Twitter; Storify, a service for building online articles out of media like Twitter posts, Liquid Traffic, an online marketing company, and Huddle, which makes workplace collaboration software in cloud computing, for taking the initiative and recognizing the trends.
Here is the full NY Times Article: Start-Ups Follow Twitter, and Become Neighbors
When Joe Fernandez, a tech entrepreneur, moved his start-up here last spring, a big goal, he said, was “to be best friends with the Twitter guys.” His theory was that by hanging around with executives at one of the hottest tech companies today, some of the magic could rub off.
And so he snagged an office at 795 Folsom, Twitter’s headquarters in the SoMa neighborhood. There, he has been stalking executives on — where else? — Twitter, to see who is to visit Twitter’s offices. When he finds out, he pounces and “hijacks the meeting,” he said, by asking them to swing by his company, Klout.
By doing that, he has met Robert Scoble, the influential technology blogger, and Steve Rubel, director of insights for the digital division of Edelman, the big public relations firm, and has spotted Kanye West in the lobby on his way to Twitter.
Through elevator and lobby run-ins, he has also forged a close enough relationship with Twitter’s chief executive, Dick Costolo, that Mr. Costolo is helping Klout raise venture capital. “Now I have his cellphone, and I text him,” Mr. Fernandez said.
Mr. Fernandez is not the only Silicon Valley entrepreneur trying to follow Twitter — literally. Although the beige-and-brown office building at 795 Folsom doesn’t have a gym, a cafeteria, decent iPhone reception or a particularly attractive facade, tech start-ups are jostling to rent offices there. Like middle schoolers drawn to the popular kid’s table in the lunchroom, they are hoping that proximity to Twitter will lead to chance encounters in the elevator, partnerships or an acquisition — or simply that some of Twitter’s fairy dust will land on them.
Twitter moved into the sixth floor late last year, and expanded to the third floor in May. Among the start-ups that have moved in since are Klout, which helps marketers reach influential people on Twitter; Storify, a service for building online articles out of media like Twitter posts; and Liquid Traffic, an online marketing company. All say a top requirement in renting office space was to be near Twitter, which has attracted 175 million users in just a few years.
Several real estate firms that rent space in the building say they have noticed the Twitter allure.
“Our brokers have received a lot of calls about tenants just wanting to be close to Twitter, if not in the building, then nearby in another building, since they’re the new hot company,” said Victoria Burkheimer, vice president of acquisitions at Westcore Properties, which owns 795 Folsom.
Mr. Fernandez and other Twitter admirers see the irony in their desire for personal interactions with Twitter executives when their business is focused on building virtual relationships. “Even though it’s all about tech and the Internet, the real magic of Silicon Valley comes from people being in the same space,” said Burt Herman, co-founder of Storify.
And they may be on to something, said Mark Muro, a senior fellow at the Brookings Institution who studies the business effects of innovation clusters. Research shows that physical proximity — as close as working in the same building — leads to increased knowledge, productivity, income and employment, he said.
The phenomenon has been observed before — in the songwriting business, at Manhattan’s Brill Building, for instance, and in science, at Los Alamos National Laboratory in New Mexico. But the draw to be near the cool kid in Silicon Valley may reflect the particular alchemy of business success here — a mysterious combination of timing, luck and the fickle preferences of users. And it may have particular resonance for fast-growing tech start-ups, Mr. Muro said.
“For certain early-stage insights and design matters in a very fast-moving, hot industry, the proximity, even at the room level and the elevator level, is important,” he said.
Mr. Fernandez said he sees a definite payoff, even in more mundane matters. For example, he frequently hops in the elevator to visit Twitter to ask technical questions about the company’s changes to its tools for software developers. “I think the person at the front desk thinks I work there,” he said.
Andy McLoughlin, co-founder of Huddle, which makes workplace collaboration software and moved to the building in July, said, “It’s certainly something that adds to the credibility of the address when you have people coming to see you, and you can say it’s the Twitter building.”
And the Twitter effect means he gets to meet other start-ups that have moved nearby. “The buzz of the area is palpable,” he said.
Roxy Rosen, founder of Liquid Traffic, said her company had been in the building only since September, so had not yet had interactions with Twitter. But, she said, since every company she works with uses Twitter for marketing, as Twitter rolls out tools for businesses, she hopes to have contact. “It’s more likely to happen here,” she said, adding: “It’s a very energetic spot. It makes you feel charged up when you walk in.”
Another lucky office building, 165 University Avenue in Palo Alto, was the early home to tech triumphs like Google, when it employed just six people, PayPal and Logitech. Other start-ups flocked there, too, seeking a little of the sparkle. And demand has increased for office space near Microsoft, Oracle and Facebook, local real estate companies say.
The SoMa neighborhood (SoMa is a contraction of South of Market) has also attracted other hot Web start-ups, including Yelp, Eventbrite and Zynga, the online game maker that just leased a huge building nearby. In the last year, the vacancy rate for big buildings in the area has decreased to 21 percent from 26 percent, and average rent has increased to $32 from $29 a square foot, according to the CAC Group, a commercial real estate firm.
Asked whether Westcore had raised rent to take advantage of the Twitter effect, Ms. Burkheimer laughed and said, “No comment.”
Still, just as the popular middle schooler moves on to high school, hot start-ups turn into big companies. With 300 employees and a rapid pace of hiring, Twitter will outgrow its 62,000 square feet around next spring, Mr. Costolo predicted, and the company will either need to take over new space in the building or move elsewhere.
Mr. Fernandez said he was ready. “We’ve moved past just Twitter; we’re on Facebook now,” he said. “We need to establish our own identity. Right now we feel like we’re in Twitter’s basement like their kid cousin, so it’ll be good.”
Biz Stone, Twitter’s co-founder, said he could understand why the younger start-ups would want to be physically close to his.
“We spent more money than we probably should have as a start-up to make everything feel as cool and pretty as we could, so people wake up in the morning and want to come to work,” Mr. Stone said. “I’m not surprised other companies want to take advantage of all the mojo we put into the place. I would do the same thing.”