InBerkeley

Lance this was my #1 question about Berkeley, after “Why is there no blog just about Berkeley?” We’ve solved that question, now maybe we should be using this blog to help provide the right answer for this question.

I think maybe you and Dvorak have hit on part of the mission for InBerkeley.com.

I am a tech guy working (hard!) in Berkeley on new stuff. It would be great if I could start up here in Berkeley. I don’t know what’s in the way, but I don’t run into the kinds of people in Androgeno’s as I used to at Drager’s and Robert’s (in Menlo Park and Woodside, respectively).

You don’t see a lot of great tech companies these days in Cambridge.

For that matter, not so much in Silicon Valley either.

Anyway I’m rambling, but thanks for the thoughtful post!

My general impression is that the issue is with access to facilities. You can start a small business around the downtown core, but once you get past a certain size there just aren’t too many high-quality buildings that a company can grow into. At that point your options are generally Emeryville, SOMA, or the Valley. So if your goal is to go big, you might as well start in one of those places and avoid the move.

I also think there are a lot of small 1, 2, or 3-person companies out here who are perfectly content to stay that size and don’t want to take VC money and get too big (present company included There’s a pretty healthy indy vibe around Berkeley especially around software. I’m always bumping into East Bay folks at tech gathering and most work for themselves or as part of small teams.

I’ve seen a lot of really small shops start up in Berkeley but quickly move to SF or the Valley as soon as they are looking for office space and more people. We chose our office space in SF because it could attract talent from the Valley, SF, the East Bay, and Marin, whereas when we were in Berkeley trying to recruit it was more difficult to sell the longer commute to non-Berkeley-oids. In a previous company, we moved our office from Mountain View to SF in order to attract more talent from SF and Berkeley/Oakland and were able to keep the people based on the penninsula.

Bayer’s not a “major tech company?”

Major tech companies encompass more than electronics-oriented organizations.

–rj

Ok, let’s see. Last I checked (the list might have changed) there’s IBM, Yahoo, Ericson, Bayer, and BP. Possibly others. Every one of those has (or had until recently) an R&D lab in town, attracted here by Cal. Bayer, of course, has manufacturing. There are several “Internet startups” and small businesses. In years past, we had Lucid Inc. HQ. Of course, I realize that none of these examples quite conform to what Dvorak means. I take him to be asking why we don’t have something like Google HQ.

Ramin is right that, beyond a certain size, local firms scoot over to Emeryville (or Oakland, or Richmond or Albany, or the City, or the Valley). Better rents and larger office stock. Look at Fremont, or E. Palo Alto, or Mtn. View, or San Jose or around there to find the places where large swaths of farmland (or marshland) were paved over to make office parks. Or head over the hills.

Another factor that comes into play is that the EECS researchers at Cal are, indeed, very good and very influential over the years – so much so that their “reach” is not much confined to Berkeley. They are plenty engaged with offices around the Bay Area (and the world, for that matter).

Another factor is that the grad students at Cal are, of course, mostly not Berkeley natives and mostly have no strong incentive to settle here. Ties elsewhere, the high cost of decent houses here, and so forth mean that our transient student population is likely to remain quite transient.

Another factor, if your plan is to manufacture something, is that compared to other parts of the Bay Area we are not especially well suited for shipping and receiving.

Another factor, if your plan involves plunking down a lot of employees and capital equipment (especially of the sort that needs power) is that our light industrial areas are prone to flooding and our power grid is not terrific. Oh, and the sewage system and water supply are sketchy. And there’s that pesky Hayward fault to consider. Did I mention the price/performance of nearby housing stock compared to other parts of the Bay Area? Or the crime maps?

Another factor is that compared to years past fewer people are, these days, are even trying to build big high-tech companies of the sort that mostly have just offices (e.g., big software firms). On the one hand VC flows are down and on the other hand there’s a stronger VC emphasis on building lean and mean with an eye towards an acquisition. That is to say, I think we should be quite cautious before spending or changing city regs to try to attract future businesses that won’t exist.

Dvorak’s other points – the roads are terrible, vacant storefronts, etc. Well, our commercial rents are too high and there are some indications that the City payroll is bloated. The tax base is also, as far as I can tell, harmed by the state’s decision to impose vacancy decontrol, by excessive development (leading to empty units), and by the foreclosure crisis (leading to empty houses). We have incredibly poor intra-city public transportation thanks to relying on AC Transit. We have an effete elite who limit their discretionary spending to a very narrow set of options and who don’t invest much getting new small businesses going in town. We have a kind of commercial property oligarchy who, mysteriously, hold commercial rental rates way too high in spite of all the vacancies. We have a University that begrudgingly pays less than its fair share for City services and that keeps increasing the size of the transient and increasingly cloistered student population. We have a large pseudo-progressive contingent of blow-hards that create huge distractions and basically reinforce (through “resistance”) an irrationally pro-developer power clique in City Hall. We have a racially and class divided culture that neglects obvious opportunities to invest in business development in the poorer sections of the flats. We make stupid deals like Bayer so that our major imports are chemicals and reagents and our major exports, pills and profits. We spend too much water on attractive front lawns and not enough on local food production. We fancy ourselves exporters of cultural products – and still are to a degree – but we chase lower-income artists out of town. We are effectively class and race segregated.

There is political and socio-economic and race gridlock in this town and fixing the economy around here is going to require breaking the gridlock along all those axes. I’m not sure I can see how it can happen. There’s no will for it, especially among the elite. The problem manifestations aren’t bad enough. Yet.

-t

I’ve thought about this a lot. It’s a big, tough, important question. I’m not sure the answer but am convinced that the answer can’t be pawned off on city politics. I think you have to go to the core of the university.

There is simply something about the ethos and culture of UC Berkeley that has historically been less conducive to spinning off companies than Stanford. Actually, I think this is a better statement: There is something about the culture at Stanford that is especially conducive to spinning off companies. Because I don’t see MIT or CMU, both with top tier CS programs, doing a whole lot better than Berkeley in regards to startups. Stanford seems to be the exception.

Google, Yahoo, Excite, Sun, HP, PayPal — is it even close, in modern times? Let’s look at just search engines: Cal had Inktomi, CMU had Lycos. Not even in the top three! Harvard does have Facebook and Microsoft — neither incubated with even a thousand miles of campus; founders of those companies had to move to the West Coast.

I am reading John Batelle’s The Search. The stuff around Stanford is fascinating. At one point they were regularly consuming half of Stanford’s network bandwidth. There was a constant stream of complaints to campus tech security about their spiders. They were voraciously consuming hardware intended for other departments. This never became a Big Deal on campus, though there was one or two heated emails from the network security officer, which were deal with.

One of them, I think Larry, describes talking to his adviser about being torn over finishing his PhD. The advice was instant: You can always come back and finish, but how long will this opportunity be around?

I’d be curious how all this would have played out at Berkeley. I honestly don’t know. I do know we used to scoff, as undergrads, at their very generous policies around dropping late classes and so forth. But being liberal in this regard has served Stanford very well, not just in terms of track record but, I would venture, in terms of endowment — these successful entrepreneurs become donors. Berkeley for many years didn’t bother to think nearly so much about donors because state funds used to cover a much higher percentage of costs.

PS “they”=Google founders

Thomas, come on. A little branch recruiting office is not the same as being 1> started right out of the university and 2> choosing to situation and keep headquarters very nearby as so many Stanford companies have done.

Rent? Pricey in Silicon Valley, esp Palo Alto, Mountain View and Sunnyvale where these companies tend to flock. If cheap rent were a determining factor Caliornia wouldn’t even be in the game.

Non native student population: Twice as many international students as %age of Stanford student body http://www.stanford.edu/about/facts/undergraduate.html http://www.berkeley.edu/news/media/releases/2008/01/22_ucues1.shtml

“we are not especially well suited for shipping and receiving” we are far closer to the largest regional port, the Port of Oakland, than Stanford, and closer to the rail ties you need to ship out East (which come through Oakland).

“vacant storefronts… our commercial rents are too high” a tautology — storefronts are empty, the asking rents are too high from an efficient markets standpoint. But why is demand too low to support higher rents?

Bayer HealthCare said Wednesday that it will spend more than $100 million over the next four years to modernize a biotech manufacturing plant that employs 1,400 people in Berkeley, thanks to a $10 million incentive package crafted in record time by East Bay elected officials.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/16/BU4C19O5U2.DTL#ixzz0Rs2H87P6

This is an interesting question. I’m not one to weigh in on the overall business climate (others have already done so), but I’m curious about what Berkeley is doing instead of attracting VC-funded high-tech firms.

Could it be that the general climate around Berkeley is less business-focused and more society-focused? UC Berkeley has certainly produced plenty of (free) things for the high-tech industry, including UNIX. Are there more successful non-profits in Berkeley than Palo Alto?

Great point, Anca. I’m certain there’s much more social entrepreneurship in Berkeley than in Palo Alto and the rest of the Valley put together. Must be something in the water.

@Anca and
@Lance Knobel:

Anca, you wrote:

“Could it be that the general climate around Berkeley is less business-focused and more society-focused? UC Berkeley has certainly produced plenty of (free) things for the high-tech industry, including UNIX.”

That’s a fairly big misunderstanding of history.

-t

@Lance Knobel
I don’t think there’s any question about Berkeley having better water than Palo Alto And I think Berkeley has more breweries than Palo Alto.

I think there are a few reasons:

* We lack good office space that a company can grow into. Once a company in Berkeley reaches about 30 employees, people who are looking for their next office find few options here. The University takes a lot of the office space downtown, and — for better and for worse — there aren’t a lot of “campus-like” office parks. There’s a lot of room between 25 people and Google, but not a lot of room in Berkeley.
* Berkeley politics are somewhat scary to business people, even liberal ones. For example, a few years ago Berkeley debated imposing a tax on organizations employing more than X number of people, where the tax could only have applied to three businesses. Things like that seem rather arbitrary, and they therefore have a chilling effect on the business climate.
* Paul Graham has a wonderful essay here — http://www.paulgraham.com/cities.html — on what different cities “say to you.” About Berkeley, he says, “I’d always imagined Berkeley would be the ideal place [for start-ups] — that it would basically be Cambridge with good weather. But when I finally tried living there a couple years ago, it turned out not to be. The message Berkeley sends is: you should live better. Life in Berkeley is very civilized. It’s probably the place in America where someone from Northern Europe would feel most at home. But it’s not humming with ambition.” There’s some truth to that. Or perhaps, per @anca and @lance’s comments, it’s more correct to say that it hums with a different form of ambition.

I, for one, would love to be able to work in Berkeley, but I haven’t seen much indication that the city is interested in attracting the kind of companies I tend to work for. *Sigh* — Emeryville, then.