Mithrl is part of a wave of startups returning to San Francisco and working in person four or more days a week.
Courtesy of: Mithrl
When Noah Jackson started looking for a new software engineering job in early 2024, he knew he was looking for one quality in his next employer: office culture.
Jackson, 27, has spent almost his entire professional career in the post-Covid world of remote work. While many tech companies ended up bringing their employees back on a hybrid basis, others got rid of their leases altogether. For Jackson, except for the first nine months of his first real job, he worked from his home in San Francisco or in his company’s offices, which tended to be mostly empty.
“Coming out of school, I forgot how work is actually a part of life and not just a box to check,” said Jackson, who previously worked at an enterprise software company . “Being fully remote, I feel like it’s like a thing you have to do.”
In May, Jackson got his wish by accepting a job at Tako, a visualization search engine startup that requires employees to come to the office four days a week. Tako is part of a growing group of tech startups in San Francisco that are trying to return to the pre-Covid days, when startups prided themselves on their digs and limited their use of Zoom.
“We’re not trying to build a culture that works for everyone,” said Alex Rosenberg, CEO of Tako, who launched the company earlier this year. “We’re just trying to make it work for Tako.”
The recruiting success enjoyed by Tako and his peers speaks to a growing weariness of remote work, particularly in San Francisco, where housing conditions are often cramped and a high concentration of ambitious young techies are eager to mingle. The changing landscape also coincides with a boom in artificial intelligence that began after OpenAI launched ChatGPT in late 2022. It’s one of the few areas where venture capital firms are showing an appetite for risk.
Rosenberg says he sees a much more competitive real estate market in San Francisco as emerging companies fight for office space contracts after a long period of high vacancy rates.
“When you’re trying to invent something new, it’s very difficult to do it over Zoom,” said Rosenberg, whose business is run out of a coworking space in San Francisco’s Pacific Heights neighborhood. a few kilometers from the downtown business districts.
Tako is looking for a larger space, preferably in the Hayes Valley neighborhood, a hub of generative AI startups, or in downtown Jackson Square.
Noah Jackson, 27, and his colleagues at Tako, a San Francisco startup that works in person four days a week.
Courtesy of: Tako
Overall, San Francisco’s office market remains tepid, with the vacancy rate climbing to 34.9% in the third quarter from 29.4% a year ago, according to data from Cushman and Wakefield. However, AI startups OpenAI and Sierra AI accounted for two of the largest leases of the period, and the company said “artificial intelligence companies will continue to be a driving force in the San Francisco market, fueling significant venture capital financing and leasing activities.”
According to Liz Hart, president of North America leasing at a commercial real estate company Newmarktechnology accounted for 72% of all office leasing in San Francisco in 2023 and 58% in the third quarter of this year.
Since the start of 2023, 62% of AI leases signed in the city have been for sublease space, Hart said, an indication of how the market has adapted since the pandemic. Rather than leasing entire floors to individual companies, more offices are now divided to serve multiple startups, she said.
“A screaming agreement”
Yet office rents in the city are at their lowest level since 2016, according to Newmark data.
“If you talk to entrepreneurs who are just starting to scale, they’ll probably take a little more space than they think they need and get a screaming deal,” said Hart, who joined the company a year ago. is almost 20 years old. .
How quickly the market as a whole rebounds depends largely on decisions made by San Francisco’s big tenants like Sales force And Google. While Amazonheadquartered in Seattle, recently announced a five-day requirement in office, most of its technology competitors have yet to implement such requirements.
Zach Tratar managed to snag an ideal space for his business Embra last year through hard work. When his broker messaged him about a promising location, Tratar showed up 90 minutes later, beating out another potential tenant on site, which is near Salesforce Tower.
“I immediately thought, ‘Cool, I’ll take it. Send me the documents right away,’” said Tratar, whose company is building an AI operating system. He estimates the office probably would have cost his company twice as much before the pandemic.
Tratar said his plan from the start was for employees to come into the office four days a week, with Wednesdays reserved for remote work.
“There’s a magic to in-person teams,” Tratar said. “When something goes well, it adds energy to the system and people get excited.”
The AI renaissance has familiar qualities for Bay Area veterans. The app economy that followed the iPhone’s launch in 2007 sparked a wave of investment and a flood of new companies in San Francisco and Silicon Valley. There was also the rise of social networks and, before that, the Internet bubble.
“We’ve seen tremendous growth in this category, but we’re just at the beginning,” Hart said of the current state of AI.
However, in today’s world, companies must earn their employees’ travel to the office, Hart said, because of how the pandemic has dramatically changed expectations.
Startups need to think about access to public transportation while also catering to people who drive. There is also the advantage of being close to restaurants and cafes.
Start-up Mithrl moved into its offices on Market Street in San Francisco in July and is working five days a week.
Courtesy of: Mithrl
AI startup Mithrl offers its employees commuter benefits and free meals, CEO Vivek Adarsh said. Mithrl moved into an office on Market Street in San Francisco in July.
Adarsh launched the company with his co-founder last year after completing his graduate studies at the University of California, Santa Barbara. The couple moved to San Francisco for the talent core and because they believe in the city’s future, Adarsh said.
“There’s a lot of enthusiasm and energy,” Adarsh said. “People take more risks in the city.”
A few miles away in the Mission District, robotics startup Medra has been operating five days a week since launching in 2022. CEO Michelle Lee said that when she speaks with her peers, many tell her they are considering a move to individual work, but it’s difficult to convince employees who prefer the status quo to move away from hybrid.
Work culture expert Y-Vonne Hutchinson said that when companies make drastic changes like that, “you erode trust.”
Hutchison is CEO of Superessence, whose AI tool allows companies to assess their culture. She said physical offices provide benefits to younger employees seeking mentorship, growth and career opportunities.
There is a limit. Many people have moved during the pandemic, and employers have started catering to those who want to live entirely remotely. Staying in the office for four or five days, especially in a city as expensive as San Francisco, is especially difficult for parents, people with disabilities and those who have long commutes.
“You significantly narrow your recruiting pool when you do it in person,” Hutchinson said.
Lee recognizes the challenge and knows she is limited in her ability to hire talent elsewhere in the country. But she said being in person ultimately helped with recruiting.
In November 2023, Lee visited the Hacker News website and saw a post from a senior engineer who said he was specifically looking to work for companies with an in-person culture. Lee looked at her qualifications and said she was shocked. She called the post a “green flag” and immediately contacted the post.
Within a month, the prospect had joined Medra.
“It would have been very difficult for us as a company to hire someone like this because we are a small startup,” Lee said. “But part of that is because there are some really amazing engineers who are specifically looking for people in person through this collaboration.”
