Mountain View, an area that was largely agricultural through the '60s, and is named for its views of the Santa Cruz mountains, is now known as a utopia of start-ups. Aside from being home to the Googleplex, Mountain View also has a pedestrian-friendly downtown, and is the first city in the country to be provided with free wireless (thank you, Google). It's home to Y Combinator, Loopt, and Mint.com.
If money's a big issue, but you need space, check out the East Bay. It's lesser known as a start-up hub, but, hey, why not start a trend and still be just a quick train ride away from San Francisco?
"In Oakland, it's interesting. You have less start-up activity, but there are neighborhoods where you have these brick-and-timber buildings near Jack London square. You see the small agencies, and creative firms. That's always been a good area for emerging companies," Bernier says. Forbes magazine once ranked Oakland the eighth-best place to start a business in the United States.
Pandora started in Oakland, and though the city has taken plenty of criticism lately for being dangerous enough at the street level to damage business, the city has carved out a niche for digital arts and design media, said Theo Oliphant, the executive director of the mayor's Office of Public-Private Partnerships.
"There's been some success there in terms of start-ups lately," Oliphant says. "The types of businesses that tend to thrive in Oakland that we see most often have success, are increasingly in the digital arts and digital media space, more of a tech-savvy digital community."
Just north of Oakland, Emeryville is just across the bay from San Francisco, and, though a smaller community, has had notable start-ups originate there, such as Pixar, Leap Frog, Companiesandme, and the biotech firm Chiron. Stretching from Emeryville north to Berkeley and up through Marin County, non-traditional work-spaces are becoming more popular, and the costs of renting both a home and commercial space are far less than they would be in San Francisco proper.
Tan recommends Berkeley for "foodie hackers who don't mind being far" from Silicon Valley. With UC-Berkeley in town, he suggests that finding smart, cheap labor is also a plus.
"There was a while where everyone was trying to be in soma and wherever else other companies were, but now they're realizing its not so much the legend of the location, but the strength of the business," Oliphant says.
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Locating a Bay Area Start-up: Know The Stakes
The 2010 Silicon Valley Index, an annual study by Joint Venture: Silicon Valley Network, a local non-profit, found a significant rise in vacant commercial real estate in the area last year, up 33 percent. And the number of small companies is steadily increasing.
Don't let the numbers mislead you, though. Sure, the Bay Area is start-up friendly, but in general, office-space rentals are still expensive. Commerical real estate company CB Richard Ellis puts them at $27 to $33 per square foot. That alone explains why so many small companies and tech start-ups are run out of homes in the Bay Area. The start-up logic goes: if you're going to be paying some of the most expensive rent in the country, why not get the absolute most out of it? For bootstrapping and lean start-ups, it's just part of the game.
Just look at 10-person start-up AirBnB.com, began two years ago as an online space marketplace ("we rent anything from a couch to a castle," co-founder Brian Chesky tells Inc.com). The company has grown so quickly from its SoMa household that Chesky gave up his bedroom to a couple co-workers who needed an extra desk. Officially homeless, Chesky has pledged to use AirBnB to find lodgings for a year.
If you'd rather expand into an office space than couchsurfing, and you've identified the important bits of your company's culture a community could nourish, as well as the logistic necessities, it's time to get hunting for real estate.
"It gets to the point when you need to have meetings and you're using your kitchen table, it gets awkward," Bernier says. "If you are meeting with customers, or taking on employees, and want to work in the same place, the home office starts to break down."
When searching for office space, consult local business bureaus and small business associations to find out what sort of incentives, tax credits, or cash wage subsidies might be available if your business moves to the area or hires local talent.
For instance, along the peninsula, Tan notes that there's great community-based incentives to not be based around a highway or strip-mall. While Northern California certainly isn't free of suburban sprawl, Caltrain stops are appropriately placed in neighborhood hubs, not along the highway.
In the East Bay, hiring tax credits can give businesses a significant boost, Oliphant explains.
"Because much of Oakland is designated as an enterprise zone under the department of Housing and Urban Development, it authorizes businesses located here to get tax credits for many of their employees," he says. There are also employer subsidies, which can be throught of more like cash-wage subsidies, for hiring residents of Oakland.
And property in Oakland is both more readily available and far less expensive than commercial space in San Francisco or the South Bay. Why not just stay in Oakland? Well, there are times it might be willing to pay more for a location that might not even be ideal to your corporate culture or personality.
"The advice I would give is that it is about the visibility you have with your business," Bernier says. "If you are growing, and have that visibility, now is a great time to lock in a deal for a long-term lease."
As far as the lease is concenered, have a lawyer review it, and plan on committing to one or two years. Once you've found the location, start thinking about broadband.
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Locating a Bay Area Start-up: Additional Resources
Rofo.com, a small-business and small commercial space search and listings site.
East Bay Small Business Development Center which does business consulting and business plan development assistance.
San Francisco's Small Business Administration provides a local start-up toolkit and plenty of other resources.
The City and County of San Francisco's Office of Small Business puts out bulletins and has resources on how to start a business in the city.
Oakland Metropolitan Chamber of Commerce, a membership organization that promotes commerce and industry.
Garry Tan's Google map of Bay Area start-up hot spots.
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