I admire these people who are willing to live in a 10-person dorm room while setting up their business, but the fact three "Hacker Hostels" have sprung up feels like a symptom of SF & SV being so over-hyped and incorrectly positioned as the only place innovation will occur with less friction. Am I wrong or just missing something?
What real significant tangible benefit are these people getting that compels them to live like this and pay a relatively high cost for the privilege? $1,200/month or less gets you your own private room in a shared apartment in NYC, Boston, or just about anywhere else.
It's really hard to know what the real benefit of SF & SV without being here.
Why do people go to clubs to dance? You can do it anywhere even at home, by yourself. But it's just more fun to do with other people who love to dance too.
I go to cafes here and it's not unusual to see people coding, discussing startups, practicing their pitch. Almost everybody I know is building something. Not working for a big company is like a badge of honor.
Nobody is claiming that the Bay Area is the only place for innovation but it is where most innovation happen.
> Why do people go to clubs to dance? You can do it anywhere even at home, by yourself. But it's just more fun to do with other people who love to dance too.
That's honestly the most compelling argument I've heard for SF/SV.
As someone who lived in the Bay area and moved away, I can affirm to that. There is a vibe in the Bay area that you don't get in other places. I sort of felt it in a few areas of Manhattan (near NYU and DUMBO). But outside of these parts, I don't feel it. I moved out of NYC ... I'm less than an hour away. The scene feels DEAD.
That said, I'm not planning on moving to SF/SV any time soon. I'm a bit older now ... getting ready to nest, buy a house, etc. I have friends who have bought starter homes in the Bay for the price of mansions in other parts of the US. I might be making a mistake but that's my plan too.
I can't see how you would be making a mistake. To each their own. I love the Bay not just for the business environment, but for the cultural environment, which is just about as unique as the entrepreneurial environment.
I feel confident that I could meet dozens of new cool and interesting people a month if I wanted to. I don't know if I would click as much with people in other locales (not even NYC - too neurotic for me).
Those are shit clubs. Seriously - there are way better places to pick people up than some loud annoying uncomfortable expensive nightclub. Good clubs are about music and dancing.
The article really misrepresents Chez JJ. We have a professional cleaner come in every week and we cover food, including an organic vegetable subscription box from Farm Fresh. We're not like frat boys -- this is our home and we choose to let people in.
I didn't necessarily think that it's dirty (although the article implies that it's untidy). I had no idea food was thrown in apart from the occasional cooked meal. If food is included, am I going to be meeting > 2,000 calories a day (or whatever the recommended is)? From the Airbnb listing it looks like only breakfast is included, not every meal like your comment suggests.
My original point really wasn't about cleanliness or food, but about the true, measurable value that SF/SV brings. I don't know why people are compelled to travel from (for example) Toronto to live in a single dorm room with nine strangers, some or all of whom may snore. I imagine the people who stay will likely have their freedoms greatly restricted, even down to their choice of sleep schedule. I can only imagine the alternative would result in people disturbing each others' sleep.
The whole "gotta be in SV/SF" mentality seems to be a product of massive amounts of hype that's driving these people to live in such relatively poor conditions for a relatively high amount. I just don't understand why people are acting like this.
hahahah, I wish I could afford to feed every guest for every meal, but we haven't reached that level of success yet. For now, only breakfast and the Farm Fresh veges are available.
Quiet hours start after 10 PM or as soon as people start heading to bed. We do occasionally have snorers, and provide ear plugs. Everyone seems to do well on multiple sleep schedules so long as late movement towards bed is sufficiently quiet.
We choose our locations based on easy access to public transportation and easy access to hacker circles. The prices are higher because the demand is higher. There are community houses everywhere, and I occasionally see rooms for rent in East Palo Alto community houses. There are many around, and it isn't just for hype. It's very expensive to live here and it gets easier when living in groups.
Regardless, this is an interesting phenomenon and I wonder whether the luster of SF and SV will continue or correct. The fact there's a market for bunk beds in a 10-person room is intriguing.
I'm not entirely convinced of the merits of this 10-person dorm for twice the cost of a room on Craigslist in the same neighborhood, but my skepticism (a deep, penetrating British skepticism!) is for something I've not tried.
It's not twice the cost of rooms on craigslist in the same neighborhood. Those require a lease, a deposit, setting up and paying for utilities etc. etc. etc.
If you want to compare it to something, compare it to airbnb listings - and this is perfectly in line with market rates. Typical rooms cost $80-120+ if you want your own room. A shared room at $40 makes a lot of sense - if you are ok with those living conditions.
The article gave the impression that some people live there for months ("others settle in for months"). Even so, there are rooms available for <$600 in that neighborhood on CL. The deposit isn't an expense and utilities etc aren't going to be another $600/month unless something sketchy is going on.
I did a quick search on Airbnb for private rooms in the Castro neighborhood (which is where their SF location is) that don't exceed $40/night and there are 34 results. [1] This "hacker hostel" isn't in line with market rates if they're putting 10 people in each room.
For reasons I cannot fathom, if I bump the max price for the above search up to $45, only eight listings are returned.
>> $1,200/month or less gets you your own private room in a shared apartment in NYC, Boston
In much of the US, $1,200/mo will buy you a house (or rent one). $1,200/mo is a fairly high rent for a 1-bedroom in much of the US; a private room in a shared apartment would obviously be correspondingly less.
$1,200/month goes a long way in the bay area, too, if you have any idea what you're doing at all.
As a graduate student at Berkeley, I had my own room in an apartment with a roof deck and uninterrupted bay view for $400/mo on a month-to-month lease in a great neighborhood. This was 6 years ago, but the same guy was still subletting the same rooms for the same price, when last I spoke to him.
When I moved to the peninsula to work at Apple, I had a small house with a yard and fruit trees in the nice part of Menlo Park on a month-to-month lease for $1000/mo. This was 4 years ago, but similar deals can definitely still be found (the same house was rented for $1300/mo recently).
Up to a year ago, my wife and I shared a lovely house with 1.5 acres in Palo Alto for $1800/mo, though we did need to sign a lease for that one.
When I travel back to the bay area now, I get an airbnb-type room in Palo Alto, and don't typically pay more than $800/mo short-term. A lot of things are listed at higher rates, but you can often negotiate pretty successfully. It certainly doesn't hurt to ask.
The ridiculous rents that you hear about in the bay area are partially due to a genuine real estate crunch, but they are largely also due to people having too much money and not enough sense. Paying $1200/mo for a dorm is nuts, no matter what city it's in.
Absolutely. My friend was living in a studio on Hamilton Street in downtown Palo Alto for $1000/mo earlier this year. Additionally there are places in Sunnyvale that you can rent for a good deal which will let you shell out the $100/mo for access to Hacker Dojo which would only be a 15 minute drive away.
Having lived in SV all my life, these "Hacker Hostels" just seem like a way for the operators to exploit those who flock to their services, who just don't know any better.
In fact, if someone is paying $1,200 a month for a dorm, then that tells you something about the kind of employee or co-founder they would be.
No problem if they stay there for a couple weeks, up to a month, while getting situated or doing a bunch of meetings, but living there for months shows lack of judgement. You can get a hotel in Santa Clara- rack rate- for $50, and a nice one at that.
You could get a room for that amount, but you get it without the community, free breakfast, or instant friend group. Most people who stay at ChezJJ are only here for a short amount of time, like a few days, a few weeks or a few monts. It's incredibly difficult to find a room to rent for less than 6 months, and normally renters want a 12 month lease. It's too much of a hassel.
This is true, However you do miss out the on the people. I would guess something like this provides much more support for the participants than a simple 1 bedroom. I feel that being surrounded by like minded people working towards a familiar goal is far more valuable than an apartment.
I'd love it if a (decent) study were done comparing the success rates of an entrepreneur in a start up hub, compared with those in areas without a start-up scene. I wonder if there really is a measurable difference that backs the hype.
Well, no, because if we're talking about an internet startup, location is significantly less important. The nature of acting requires a physical presence in a particular location (i.e. the stage), but an internet-based startup has no such requirement. I can just as easily create a company in Amsterdam as I could from SF.
One of the major benefits that's routinely touted is access to VC/angel. Something that most people forget is that the odds of getting such investment are relatively small and most start-ups thrive without it.
The fact is if you are building a consumer startup & you want to get big, you're going to need funding unless you want to charge people & curb your growth.
If you want to increase your likelihood to get funding, you have to be here in the Bay Area.
The odds of getting VC are low -- only 1 in 400 pitches result in funding. [1] Of course, this number doesn't include the number of people who were rejected before they even had a chance to pitch a VC.
I'm not sure why charging people is considered to be a shocking idea. A business is supposed to charge people, or find another way to make money, such as smothering eyeballs with advertising. I'd rather have a profitable company that has positive cash flow and a sustainable growth rate than a "big" company with a ton of freeloaders and external investment.
If you're going to cite Twitter and Facebook as an example, the odds of you creating a similar company are akin to finding Willy Wonka's golden ticket.
VC just isn't available or necessary in the vast majority of cases, negating the need to be in the Bay Area. Bear in mind that VCs are all over the place, from Boston to New York to London. The benefit you cited elsewhere that it's fun to be in the Bay Area is, however, the most compelling.
The only true blue benefit I can see to even being in the US is access to better payment solutions, and possibly a culture that better supports brazen entrepreneurialism.
"I'm not sure why charging people is considered to be a shocking idea."
A few thoughts. One obviously is taking the social proof of what others are doing and copying it.
The other is that "if you don't have anything good to say, don't say anything at all". So having revenue of $0 is better than having revenue of $15000 (2nd number arbitrary just trying to illustrate that by showing a number you are likely to be judged differently then if you never charged at all and can point to eyeballs or signups and have the focus on that).
"If you're going to cite Twitter and Facebook as an example, the odds of you creating a similar company are akin to finding Willy Wonka's golden ticket."
Most people I know doing startups especially in the Bay Area want that golden ticket. Odds are very low but that's what people aspire for.
Taking it to basketball analogy.
There are millions of basketball players out there and all of them aspire to one day play in the NBA. Chances are slim since there are only about 450 players in the NBA in a given season.
"The odds of getting VC are low -- only 1 in 400 pitches result in funding"
But you are pitching more than 1 VC.
Rose said "VCs invest in roughly 1 out of 400 companies who pitch them." and it's obvious he means "an individual VC".
Most importantly (something I try to point out with respect to dating as well or anything where success is essentially "1") you are looking for 1 person/firm to believe in you.
You're right. People should be clearer when touting the benefits of SV. It's really about VC-backed startups that require venture capital (VC's are notoriously adverse to funding faraway startups) and that require access to talent that's willing and able to work 70+ hour weeks face to face with other hackers and entrepreneurs.
There are exceptions, but that's the general model and people have made billions with it so arguing against it is an uphill battle.
From the summary, it doesn't seem to imply geographic location is necessary for founders of start-ups, but more employees. It may even be becoming less necessary as companies are increasingly able to have a distributed, virtual workforce. Some of the most interesting businesses have employees that have never met -- Automattic is one that readily comes to mind.
It does look like an interesting book though and I'll grab a copy.
What the summary - and the book - is saying is that living in 'innovation hubs' is good not only for programmers, scientists and the like, but also for 'ordinary folks' who provide services to those people working directly in 'innovation'.
I've thought about this argument before, and I realized that it just doesn't make sense. It's probably the most delusional way to describe building a business.
Lest we forget, the old way of charging for something still works. In fact, with the internet, it's extremely easy to reach a huge international audience. Customers don't give one shit where you live.
If you are trying to get a lot of big investors for your social platform that has to explode, sure, SF/SV is probably the absolute best for that, but you can start a business anywhere.
If all utilities are included it is a bit more of a deal if you ask me. That and weekly cleaning and counting the living space as a hacker space (of which membership could cost you a hundred+ a month).
I don't think it's a symptom of hype in the Valley. (The high rents in general, sure. But not the hacker hostels.) As others mentioned, the whole point of being in the Valley in the first place is to be around other people doing similar things, because it's more fun that way.
But if you just step off a plane at SFO and walk around, you're not guaranteed to find people doing startups, especially if you don't know which coffee shops they frequent. Speaking from experience, staying at somewhere like Chez JJ means an instant connection to a community of smart and similarly-inclined people. It really is great for folks new to the Valley ("on the bottom rung"), and I think the article got at least that point correct.
The thing about AirBnB is that these are not supposed to be permanent residences. Yes, $1,200/month can get you a private room in a house with other people but AirBnB is for travelers who are going to a new location they haven't been to before, or are just passing through.
It's very hard to find housing if you're going to be somewhere for just a few months, so AirBnB is there for those short stays and it's better and cheaper than a hotel, and a good way to meet people in the area.
You shouldn't really compare it with finding a place for good because that's not what it's for. I live in the area and have tried to find a short stay for a previous 3 month internship. It's very hard, and I had the luxury of being able to stay with my parents while I looked as I grew up within driving distance. However, I would imagine doing that from a distance would be next to impossible.
I concur. I am currently staying at the Mountain View house while doing a summer internship at a startup. It is difficult to find short-term housing on craigslist or other rental sites as most landlords are looking for long-term leases. Luckily, I was able to stay with friends while looking for housing and was fortunate to find an open spot at Chez JJ. Though $1000/month can seem pricey, for the location (biking distance to my office, grocery stores, YC, and HackerDojo) and community of hackers and entrepreneurs, you would be hard pressed to find a more ideal housing arrangement.
The peer effect of seeing a lot of other people working hard around you. I definitely benefit from proximity to other hard-working people. Particularly when you're embarking down the vague, ill-defined path of launching an idea ... it can help a lot to know that you're not the only one.
"What real significant tangible benefit are these people getting that compels them to live like this and pay a relatively high cost for the privilege?"
There is a significant "plan b" by doing that that you have to consider as well as a benefit over being somewhere else because of the concentration of like minded people. Many who will go on to achieve success.
You are around others who are doing things and you are making connections. If your thing doesn't work, you know people who now know you and you can get involved with them if your idea doesn't work out if they feel you have talent. (And vice versa). That's a huge benefit.
Are we sure it's really $1,200/month? Monthly rates may be a lot lower - if the renter agrees to a longer term lease. Nightly rates are a lot more because the hostel managers have to manage capacity more aggressively.
The article just mentioned it's $40/night - that's not too bad considering no long term lease is involved.
I absolutely believe it's worth it. In fact, I predict the hostels will increase their price as they become more popular (they should send a thank you note to the NYT).
I sorry, I made a mistake. The monthly rate isn't $1,200 but $1,100.
I'm not sure it is worth it and cramming 10 people in a room for $40/night feels exploitative, particularly as there are many options nearby that cost less and come with a private room. [1]
They're making a decent amount of cash from this and they're shrewd business people if they're able to rent out a single, sparse room for somewhere between $11,000 to $12,000 per month, just by positioning it as for hackers! I have a lot of respect for their marketing and business savvy!
> $1,200/month or less gets you your own private room in a shared apartment in NYC, Boston, or just about anywhere else.
$1400/month gets a one-bed apartment in Mountain View. I used to pay $700/mo for a private room and bathroom in a 2 bed apartment in Mountain View. Those prices seem over hyped.
What real significant tangible benefit are these people getting that compels them to live like this and pay a relatively high cost for the privilege? $1,200/month or less gets you your own private room in a shared apartment in NYC, Boston, or just about anywhere else.