Whew, what a week.
At least half a dozen startups filed plans to go public last week, including two of the U.S.’ largest and most highly valued private companies: Asana, the workplace productivity app led by Facebook co-founder Dustin Moskovitz; and Palantir, the secretive data-mining company led by CEO Alex Karp.
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The rush of S-1 filings made landfall as hundreds of deadly and destructive fires raged around California and turned the Bay Area into a smoky hellscape.
Notably, embedded in Palantir’s going-public filing was a missive from Karp that set Silicon Valley’s tongues wagging. “The engineering elite of Silicon Valley may know more than most about building software. But they do not know more about how society should be organized or what justice requires,” Karp said as Palantir announced that it has officially moved its headquarters from Palo Alto, California, to Denver.
“Our company was founded in Silicon Valley,” Karp wrote. “But we seem to share fewer and fewer of the technology sector’s values and commitments.”
His ambivalence toward California precedes the current disasters, but between the pandemic, wildfires, the threat of rolling electricity blackouts, a housing crisis that’s been only slightly dampened by the downturn, and a sudden shift to remote work, others are also wondering aloud whether Silicon Valley’s heyday has passed.
“What is California’s fundamental trouble?” The New York Times opinion columnist Farhad Manjoo asked. “Neither socialism nor Trumpian neglect and incompetence, but something more elemental to life in the Golden State: A refusal by many Californians to live sustainably and inclusively, to give up a little bit of their own convenience for the collective good.”
Angel investor Balaji Srinivasan declared that “San Francisco as the de facto capital of tech is done.”
San Francisco as the de facto capital of tech is done. That time and place is over. There’s no point in moving there for tech, the businesses are shut down and people aren’t meeting up.
It’s all internet now, for a while. And relocation to towns and cities around the world.
— balajis.com (@balajis) August 27, 2020
An unexpected (or maybe not) contrarian view: Venture capitalist Marc Andreessen, in a rare speaking appearance at Y Combinator’s Demo Day, reportedly encouraged startup founders to set up their headquarters in the Bay Area, though it’s not clear what his reasoning was.
His reasons may be similar to those of SaaStr CEO Jason Lemkin, who argued that the flight from the Bay Area is only temporary: “The VCs and CEOs and VPs are still here,” he wrote. “This is the most important point. We’re all running distributed teams now, and likely [will] now be forever. The work world has changed forever, at least in tech. But every top Bay Area unicorn and decacorn CEO from our recent digital events is still here. … None of them are leaving. Some VCs may be in Tahoe now, for now. But no one is selling their house in Palo Alto. Not really.”
Lemkin’s view is supported by the numbers, at least: A Crunchbase News analysis late last year found that funding for San Francisco tech startups is rising, not only in terms of dollars, but also as a share of the overall pie.
What do you think? If you’re an investor, how heavily do you weigh proximity to Silicon Valley when making a funding decision? If you’re a company founder, how critical is a Bay Area presence to your company’s success? Share your thoughts with me at email@example.com.
Our top stories last week
Among our readers’ favorite Crunchbase News stories last week:
- Y Combinator’s Summer 2020 batch of startups pitched at its virtual Demo Day last week, marking the first class of YC companies that have gone through the program completely virtually, from interview to the pitch fest. Reporters Christine Hall and Sophia Kunthara tuned into Demo Day and noticed several recurring themes among the 197 companies who pitched: Property tech, or proptech, was popular, as were various “Shopify for X” concepts. Read the rest of their takeaways here.
- Agtech startups are raking in billions of dollars in funding, Hall found when she recently took a closer look at the burgeoning sector. VCs have invested $4 billion in startups in the agtech space in each of the last two years, her analysis of Crunchbase data found, and with $2.6 billion already given out as of earlier this month, 2020 looks like it could top those totals. Among the companies operating in the space: A platform that helps farmers match supply with demand; a company that creates microbial nitrogen technology to boost crop yields; and companies that are creating plant-based pesticides.
What I’m reading
- Facebook turned Moskovitz into the world’s youngest self-made billionaire at the time, but he’s taken a notably different approach to building Asana than the “move fast and break things” ethos that defined the social network’s early days. At Asana, founded in 2008, “the goal was to be fast, but fast in the long run, not fast in the short run,” Moskovitz told Forbes. Now that the $1.5 billion workplace productivity app is set to go public via a direct listing on the New York Stock Exchange in coming months, “we’re getting to reap the rewards that we sowed,” he said. [The Anti-Facebook: 12 Years In, Facebook Cofounder Dustin Moskovitz’s Slow-Burn Second Act Asana Finally Has Its Moment | Forbes]
- Lake Tahoe has long been a beloved Northern California getaway spot. Now the pandemic is spurring more Bay Area residents to snap up homes in the mountains. The average Tahoe area home price has jumped 26 percent year over year to $1.3 million. Local real estate agents say the newcomers are typically wealthy tech workers from the Bay Area. “You are not even going to compete if you don’t have all cash. It is like the Bay Area prior to COVID,” said a former mayor and longtime resident of the small town of Truckee. [Tahoe’s new Gold Rush: Bay Area residents fleeing virus push up home prices | San Francisco Chronicle]
On a lighter note …
Every year or so, Crunchbase News senior reporter Joanna Glasner takes a closer look at startup naming trends to spot the latest fads among company monikers. This year, she found that startups are being christened with decidedly less weird names than their peers from the past. For a fun read on the latest startup naming trends, head over here.
Illustration: Dom Guzman