Redefining co-working #blogbus
Currently there are around 100 companies based at Rocketspace. Founder Duncan Logan claims that it is the largest of the 30 or so co-working space in San Francisco and he likens the appeal of co-working as "office-as-a-service". The companies housed here are growing so quickly they have no time to buy server hardware or manage their own client software. Similarly they have no time to buy a chair and desk.
A prerequisite for joining Rocketspace is that you can't be completely wet behind the ears. You need seed funding before you can get through the doors. According to Logan, that means the companies here focused on delivering their first products. "Companies behave differently prior to funding. They are all about white-boarding and playing with ideas. After funding you actually have to deliver on the funding you promised investors," says Logan.
"That's why we've never had a problem with companies saying they had their ideas stolen here. They have their niche area and are so focused on delivering it they don't have time or the need to copy anyone in here." Most companies sit out in the open, not worried about privacy.
"It's all about speed here. These companies don't have a sales team, they don't need one. They build a product that they can put on an existing platform like Facebook and instantly reach millions of users."
The emergence of mega environments like Twitter, Facebook, Google Play and App Store has changed the investment strategies here in the Bay Area.
"In the old days, you had to raise $5 million in your first round and then it takes 18 months to build your first product. Now most companies only need to raise $500k and have it ready in 12 weeks and it can be put directly into Apple's application store. When they are in such a short iteration cycle, having an office is an overhead."
cooler than cool
San Francisco, which has for a long time played second fiddle to Silicon Valley, is now the hottest place in IT. Downturn is crawling with Gen Y programmers in their baggie jeans and cool t-shirts. Their billion dollar ideas attract swatches of VCs and major enterprises who want to feed off the energy. Consequently real estate prices in San Francisco doubled in 18 months.
One way to characterise the difference between start-ups in San Francisco and the Valley is the focus of attention: in the north they are more focussed on user experiences, and in towards San Jose in the south, more focussed on chip fabrication and databases.
the funding culture
A place like Rocketspace - and it is not unique - marries real estate and financial services. "Because we have a strong symbiotic relationship with the VC community many of our tenants are actually referred here by their first VC. We also have excellent view of deal flow."
Despite stories about San Francisco being awash with ready money, gaining access to investors is not so straightforward. You can't just call them up and claim to have the best idea since the iPhone. You need to network, network and network before a VC will take your call. The flipside is that the VC has to review hundreds and hundreds of pitches, in detail, before they find the golden nugget. And when they have, they don't want to lose it and have to return to prospecting. Consequently, the start-ups with really good ideas are very much in demand, and can lead potential investors in a merry waltz.
But VC money is not the only offers swarming the Bay Area and Valley. Many large companies - from automotive to retail to electronics - are on the hunt for the next big thing. Rather than rely on the slow R&D cycle, they can leap forward by identifying the talent or ideas among the upstarts and either licensing it or acquire it. This ability to get start-ups in front of multinationals is another selling point of incubators and accelerators.
According to Logan, "60% of companies we introduce to corporates go on to do a deal or get bought.
It is hard to avoid bumping into CEOs and founders in these parts. Logan estimates that out of a 1000 LinkedIn members in the Bay Area, 300 will list themselves as "Founders" of something. The next closest is Seattle. In London it's about 42 per 1000.
By clustering, you get self improvement. Those that flock to the area from the four corners of the globe in search of their dreams, rapidly move from "unconscious incompetence" to "conscious incompetence", when you realise just how bright and savvy you need to be to survive and prosper here.
But many of these founders are shy folk. "If you left tech founders on their own, they would go an sit in a dark corner on their own, so they sometimes need a bit of opening up." The are dozens of networking events on every week in San Francisco - and they have all manner of formats from meet-ups to fireside chats with veterans.
Rocketspace has its own weekly dinner. "We invite 10 founders to dinner and they have to bring a guest each. The quality of the guest decides if they get to come to next dinner. One guest was MC Hammer," adds Logan.