Life was idyllic for Doug Fulop and Jessie Fischer in Bend, Oregon. The couple moved there last year, working remotely in a 2,400-square-foot house surrounded by trees, with easy access to skiing, mountain biking and breweries. It was an upgrade from their former apartments in San Francisco, where a stranger once entered Mr. Fulop’s home after his lock didn’t fit properly.
But a pair of tech entrepreneurs are now on their way back to the Bay Area, fueled by a key development: the artificial intelligence boom.
Mr. Fulop and Ms. Fischer are both startup companies that use AI technology and are looking for co-founders. They tried to make it work in Bend, but after too many eight-hour drives to San Francisco for hackathons, networking events and meetings, they decided to move when their lease was up in August.
“The boom in artificial intelligence has given the bay energy that was lost during Covid,” said Mr Fulop, 34.
The couple is part of a growing group of boomerang entrepreneurs who see opportunity in San Francisco’s predicted demise. The tech industry has had more than a year worst decline in ten yearswith dismissal aa excess of empty offices. The pandemic has also sparked a wave of migration to places with lower taxes, fewer Covid restrictions, safer streets and more space. And the tech workers were among the loudest groups to criticize the city for its worsening drug, housing and crime problems.
But such crashes are almost always followed by another boom. And thanks to the latest wave of AI technology – known as generative AIwhich creates text, images and video in response to prompts – the stakes are too high to miss.
Investors already do he announced $10.7 billion in funding for generative AI startups in the first three months of this year, a 13-fold increase over the previous year, according to PitchBook, which tracks startups. Recently, tens of thousands of technical workers big tech companies are laying off now they want to join the next big thing. In addition, there is a large part of AI technology open sourcemeaning that companies share their work and allow anyone to build on it, which fosters a sense of community.
San Francisco’s Hayes Valley neighborhood, known as “Cerebral Valley” because it’s the center of the artificial intelligence scene, is home to “hacker houses” where people found startups. And every night someone is hosting a tech-focused hackathon, meetup, or demo.
In March, days after prominent startup OpenAI unveiled a new version of its AI technology, “emergency hackathon” organized by a pair of entrepreneurs attracted 200 participants, almost as many were on the waiting list. That same month, Clement Delangue, CEO of artificial intelligence startup Hugging Face, hastily organized a networking event via Twitter, attracted more than 5,000 people and two alpacas to the Exploratorium Museum in San Francisco, earning it the nickname “Woodstock of AI”
Madisen Taylor, who manages operations for Hugging Face and organized the event alongside Mr. Delangue, said its community atmosphere mirrored that of Woodstock. “Peace, love, building great AI,” she said.
Taken together, this activity is enough to draw back people like Ms. Fischer, who is starting a company using AI in the hospitality industry. She and Mr. Fulop were involved in the 350-strong tech scene in Bend, but lacked the inspiration, hustle and connections of San Francisco.
“It doesn’t exist anywhere else like in the bay,” Ms. Fischer, 32, said.
Jen Yip, who has been organizing events for tech workers for the past six years, said what was a quiet tech scene in San Francisco during the pandemic began to change last year along with the artificial intelligence boom. At overnight hackathons and demo days, she watched people meet their co-founders, secure investments, acquire customers and connect with potential employees.
“I’ve seen people come to an event with an idea they want to test and pitch to 30 different people in one night,” she said.
Ms Yip, 42, heads a secretive group of 800 people focused on AI and robotics called the Society of Artificers. Its monthly events have become a hot ticket, often selling out within an hour. “People are definitely trying to crash,” she said.
Her next speaker series, Founders You Should Know, features AI company leaders speaking to an audience of mostly engineers looking for their next gig. The last event had more than 2,000 applicants for 120 places, Ms Yip said.
Bernardo Aceituno in January, he moved his company Stack AI to San Francisco to become part of the startup accelerator Y Combinator. He and his co-founders planned to start a company in New York after the three-month program ended, but decided to stay in San Francisco. The community of fellow entrepreneurs, investors and tech talent they found was too valuable, he said.
“If we move away, it will be very difficult to recreate in any other city,” said Mr. Aceituno, 27. “Whatever you’re looking for, it’s already here.”
After operating remotely for several years, Y Combinator began encouraging startups in its program to relocate to San Francisco. Of the recent batch of 270 start-ups, 86 percent participated locally, the company said.
“Hayes Valley really became Cerebral Valley this year,” said Garry Tan, Y Combinator’s managing director, at a demo day in April.
The AI boom is also luring back founders of other kinds of tech companies. Brex, a financial technology startup, declared itself a “remote first” at the start of the pandemic, closing its 250-person office in San Francisco’s SoMa neighborhood. The founders of the company, Henrique Dubugras and Pedro Franceschi, left for Los Angeles.
But when generative artificial intelligence took off last year, Mr Dubugras, 27, was eager to see how Brex might embrace the technology. He quickly realized he missed the coffee, casual conversation and community around AI in San Francisco, he said.
In May, Mr. Dubugras moved to Palo Alto, Calif., and began working in a new, shortened office a few blocks from the old Brex. High office vacancy rates in San Francisco meant the company was paying a quarter of what it was paying in rent before the pandemic.
Sitting under a neon sign in Brex’s office that read “Growth Mindset”, Mr Dubugras said he had a regular schedule of coffee meetings with people working on AI since his return. He hired a Stanford Ph.D. student to tutor him on the given topic.
“Knowledge is concentrated at the bleeding edges,” he said.
Mr. Fulop and Ms. Fischer said they would miss life in Bend, where they could ski or mountain bike on their lunch breaks. But getting two start-ups off the ground requires an intense mix of urgency and focus.
In the Bay Area, Ms. Fischer participates in multi-day events where people stay up all night working on their projects. And Mr. Fulop runs into engineers and investors he knows every time he walks by the coffee shop. They consider living in suburbs like Palo Alto and Woodside that have easy access to nature, in addition to San Francisco.
“I’m willing to sacrifice the wonderful serenity of this place to be around to be inspired because I know there are a lot of wonderful people to run into,” Mr Fulop said. Living in Bend, he added, “it honestly felt like an early retirement.”