The AI ​​boom is drawing tech entrepreneurs back to San Francisco

The AI ​​boom is drawing tech entrepreneurs back to San Francisco

Bend, Ore. Doug Fulop and Jesse Fischer had an idyllic life. The couple moved there last year, working remotely in a 2,400-square-foot home surrounded by trees, with easy access to skiing, mountain biking and breweries. It was an upgrade from their former apartment in San Francisco, where a stranger once broke into Mr. Fulop’s house after it didn’t lock properly.

But the pair of tech entrepreneurs is now moving back to the Bay Area, inspired by a major development: the boom in artificial intelligence.

Mr. Fulop and Ms. Fischer are both startups using AI technology and are looking for co-founders. He tried making it work in Bend, but after an eight-hour drive to San Francisco for hackathons, networking events and meetings, he decided to move back when his lease expired in August.

“The AI ​​boom has brought energy back to the Gulf that was lost during Covid,” said Mr. Fulop, 34.

The couple are part of a growing group of boomerang entrepreneurs who see opportunity in San Francisco’s presumed demise. The tech industry is more than a year into its worst recession in a decade, with layoffs and vacant offices galore. The pandemic also prompted a wave of migration to places with lower taxes, fewer Covid restrictions, safer roads and more space. And tech workers have been one of the most vocal groups to criticize the city for worsening problems with drugs, housing and crime.

But such a boom is almost always followed by another boom. And with the latest wave of AI technology – known as generative AI, which produces text, images and video in response to prompts – there’s a lot at stake that you could lose.

investors have already announced According to startup-tracker PitchBook, $10.7 billion in funding went to generative AI start-ups within the first three months of this year, thirteen times more than a year earlier. Thousands of tech workers recently fired by big tech companies are now eager to join the next big thing. On top of that, much of AI technology is open source, meaning companies share their work and allow anyone to build on it, which encourages a sense of community.

“Hacker houses”, where people build start-ups, are springing up in San Francisco’s Hayes Valley neighborhood, known as “Cerebral Valley” because it is the center of the AI ​​scene. And every night someone is hosting a tech-focused hackathon, meet-up, or demo.

In March, days after leading start-up OpenAI unveiled a new version of its AI technology, “emergency hackathonOrganized by a pair of entrepreneurs, the 200-participant event attracted nearly the same number of people as the waiting list. That same month, a hastily organized networking event was organized on Twitter by Clément Delangue, chief executive of AI start-up Hugging Face. Attract Over 5,000 people and two alpacas at San Francisco’s Exploratorium museum, it’s been nicknamed the “Woodstock of AI”

Madison Taylor, who runs operations for Hugging Faces and organizes the event with Mr. DeLong, said its communal vibe mirrored Woodstock. “Building Peace, Love, Cool AI,” she said.

Taken together, the activity is enough to draw back people like Ms. Fischer, who is starting a company that uses AI in the hospitality industry. She and Mr. Fulop became involved in the 350-person techno scene in Bend, but they missed the inspiration, hustle and connections in San Francisco.

“There’s nowhere else like the Bay,” Ms. Fischer, 32, said.

Jen Yip, who has been organizing events for tech workers for the past six years, said the San Francisco tech scene that had been quiet during the pandemic began to change last year in tandem with the AI ​​boom. At nightly hackathons and demo days, she’s seen people meet their co-founders, secure investments, win over clients and network with potential hires.

“I’ve seen people come to a program with an idea they want to test and present it to 30 different people over the course of one night,” she said.

Ms Yip, 42, runs a secretive group of 800 people focused on AI and robotics called the Society of Artificers. Its monthly events have become a hot ticket affair, often selling out within an hour. “People definitely try to crash,” she said.

His other speaker series, Founders You Should Know, featured leaders from AI companies speaking to an audience of mostly engineers looking for their next gig. Ms Yip said there were more than 2,000 applicants for 120 places at the last event.

bernardo acituno Moved his company Stack AI to San Francisco in January to be part of startup accelerator Y Combinator. He and his co-founders had planned to base the company in New York after the three-month program ended, but decided to stay in San Francisco. The community of fellow entrepreneurs, investors and tech talent was very valuable, he said.

“If we move out, it will be very difficult to resettle in another city,” said Mr. Acetuno, 27. “Everything you’re looking for is already here.”

After several years of operating remotely, Y Combinator has begun encouraging start-ups in its program to move to San Francisco. The company said that out of the recent batch of 270 start-ups, 86 per cent participated locally.

“Hayes Valley really became Cerebral Valley this year,” Y Combinator chief executive Gary Tan said at a demonstration day in April.

The AI ​​boom is also attracting founders of other types of tech companies. Brex, a financial technology start-up, declared itself “remote first” at the start of the pandemic, closing its 250-person office in the SOMA neighborhood of San Francisco. The company’s founders, Henrique Dubgras and Pedro Franceschi, left for Los Angeles.

But when generative AI started working last year, Dubugras, 27, was eager to see how Breaux could adopt the technology. He quickly realized he was missing the coffee, the casual conversation and the community he had around AI in San Francisco, he said.

In May, Mr. Dubugras moved to Palo Alto, California, and began working out of a new, minimalist office a few blocks away from Breaux’s old office. San Francisco’s high office vacancy rate meant the company paid a quarter of what it paid in rent before the pandemic.

Sitting under a neon sign reading “Growth Mindset” in Breaux’s office, Dubugras said he has been on a regular schedule of coffee meetings with people working on AI since his return. He holds a Stanford Ph.D. student to tutor him on the subject.

“Knowledge is concentrated on the bleeding edge,” he said.

Mr. Fulop and Ms. Fischer said they would miss their life in Bend, where they could ski or mountain bike on their lunch breaks. But getting two start-ups off the ground requires an intense mix of urgency and focus.

In the Bay Area, Ms. Fischer participates in multi-day events where people stay up all night working on their projects. And Mr. Fulop meets engineers and investors he knows every time he passes a coffee shop. They are considering living in suburbs like Palo Alto and Woodside, which have easy access to nature, in addition to San Francisco.

“I’m willing to sacrifice the wonderful tranquility of this place to be around that ambition, driven, knowing there are so many awesome people to work with that I might bump into,” Mr Fulop said. Living in Bend, he said, “honestly just felt like early retirement.”

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