A history lesson on startup geography, inspired by this post by Michael Arrington:
The South Bay / Peninsula / San Francisco tango is a long tradition in the tech industry. Silicon Valley famously started in downton Palo Alto, with the famed HP garage (which I’ve walked past many times).
During the chip-dominated era (there’s a reason we call it Silicon Valley), the South Bay reigned supreme. Intel, Cisco, and their brethren all hang out in the South Bay.
Once software became a bigger deal, Palo Alto and its proximity to Stanford (along with virtual suburbs Mountain View and Menlo Park) took over as the place for startups to get their start. Think everyone from Google to Facebook.
Yet during the dot com boom, San Francisco had its share of adherents, especially among media companies, which thrive on young creatives that don’t need to worry about raising kids.
It certainly seems like San Francisco is the center of things these days–every company founded by twentysomethings seem to want to move to the city, but that’s a reflection of the number of consumer/youth-oriented companies being started. I haven’t heard of any chip manufacturers relocating their fabs to the Marina. And the current flavor of the month, Pinterest, is firmly ensconced in, where else, Palo Alto.
In the end, there are people who like and hate San Francisco, just as there are people who like and hate Palo Alto. And then there are the people who need the cheap land in the South Bay.