New York isn't the next Silicon Valley, and San Francisco isn't the new Manhattan

By Sarah Lacy , written on January 9, 2013

From The News Desk

Honestly, you'd think the most intelligent species on earth would have more imagination...

We called Renren the "Facebook of China" although it's nowhere near that. Everyone hoped that the actual Facebook was either "the new Google" or "the new Netscape." Nearly every city on the planet has argued why it'll be "the next Silicon Valley." And now every app developer wants to be the next five guys who sell a photo app for $1 billion, a la "the next Instagram."

The problem is none of these analogies really make any sense, beyond a blogger's need for a snappy headline or an entrepreneurs need for an elevator pitch. As I've detailed at length elsewhere, Facebook couldn't be the new Google, because what made Google so special was its revolutionary business model and what that cash allowed it to do to other markets. Facebook couldn't be the new Netscape -- in terms of ushering in a new era of liquidity -- because the underlying market conditions and the way it financed itself in the private markets couldn't be more different from an 18-month-old issue that ushered in an entire new wave of technology. And no one can be the next Silicon Valley, unless they have a time machine. You can't even come close, unless we're going to have this conversation again in another 40 or 50 years. And only then, if everything goes well.

By the same logic, just as we have to stop saying New York could be the next Silicon Valley, we've got to stop insisting San Francisco -- or anywhere in the Bay Area -- become the next Manhattan. It is a totally different geographic area with a different culture, political landscape, population mix, and history. For better or worse whatever San Francisco does evolve into will just be the next step for San Francisco.

We started a recent round of this, in part, with Farhad Manjoo's widely read and controversial post telling San Francisco to get over itself. It's a sentiment I couldn't agree with more by the way. This is a city that constantly shoots itself in the foot. It's a city that doesn't want to be too big or too great. It's a city that is infused with too much hipster cred for it's own good. If San Francisco were to become too clean, prosperous, rich, or have too good of public amenities, it would be like SXSW or Burning Man to many of its residents. "It's so over, man...."

As much as capitalists like me may hate it, this is woven into the texture of our city in deep threads we can't possibly pull out, the way New York will always be an inherently capitalist, trader culture thanks to its early roots. You may convince a handful of New Yorkers that working for no money at a startup is cool, but the vast majority of New York will always live and breathe the Wall Street ethos in some way or another. Indeed, that diversity is an advantage that Mayor Michael Bloomberg has touted that makes the city's tech scene different.

Some of the San Francisco hippy-ness dovetails in strange ways with the Silicon Valley ethos -- which is hopelessly infused with modest Midwestern values, as best articulated in this 1983 Esquire article about Robert Noyce. (Yes, I link to this all the time. One day, you'll cave and go read it, and then you'll thank me.)

But in many ways, it's at odds. The Valley celebrates growth, the new replacing the old, and self-made men. It is all about meritocracy, yes, but the flip side of meritocracy is the responsibility to make it yourself. To sink or swim. In general, San Francisco supports capitalists until they've made it, and then it turns on them. It is a highly protectionist city that coddles its residents by legislating whether there can be chain stores in neighborhoods, whether you can buy a sugary soft drink in a government building or whether you should be able to get a toy in your kids Happy Meal. (The answers to all three are nooooooooo!)

Called "banfrancisco" for a reason, it's a city that's constantly wagging its fingers at residents telling them SF knows better.

Even if you could somehow -- by an act of God -- be able to change San Francisco's willingness to tear down Victorian row houses and build high-rises, nothing about this place would ever be Manhattan.

To Ken Layne's massive credit, he gets that. But in a well-written piece on the Awl, he argues that San Francisco is instead the Brooklyn to a yet-to-be-built Manhattan. Presumably, one which would be built in the South Bay.

GAH! That makes even less cultural sense! 

He argues that because the biggest tech companies are down in the South Bay, that should be the center of commerce. What he misses is that's mostly because of history. You have to look at where the momentum is, particularly, when it comes to an economy that is governed by companies that start small and grow very large, very quickly.

By far the bulk of the activity in the last eight years or so has happened in San Francisco. Facebook's location on the Peninsula has been an outlier. The rest of the large companies are old Valley names like Intel, Cisco, Yahoo, and even wonkier names you wouldn't recognize.

This shift to the North is precisely what's caused the handwringing over whether we should embrace our inner Manhattan. As the city government works to keep companies like Salesforce and Twitter and Zynga in "the city" -- for the first time in Valley history -- no one knows where on earth the employees are going to live. We're already north of 90 percent occupancy.

Meanwhile, take a look at those companies in the Peninsula and South Bay. They aren't located in high-rises either. They are large, sprawling campuses with their own parks and gyms and car washes and convenience stores. They are in no way hubs of any budding urban ecosystem. They are self-contained, gated (via scannable badges) fiefdoms that have more in common with old coal mining towns of yore than the headquarters of say, Conde Nast or a Wall Street mega-bank.

Layne notes, as part of his argument, this difference saying that there's no room for Apple's massive spaceship-like campus in San Francisco. Would there be in Manhattan? Or Tokyo? Or most high-density cities?

Compare these campuses to Twitter and Salesforce's attempts to make the City of San Francisco part of their campus. The work/life culture of the South Bay -- while it may be geographically bigger and sport more jobs -- is hopelessly un-urban because each campus is essentially it's own suburb by design.

Again, Layne knows how quiet, un-urban and strip mall-y the South Bay is. But somehow he thinks that's been forced on the South Bay -- a place that's seen endless riches flow through it over the past booms and busts of the Valley. If the South Bay wanted to become more urban, it's had every financial incentive. Woodside residents are as fiercely defensive of their mix of BMWs and rusty pick up trucks as San Franciscans are of their row houses. There is a reason corporate cultures of massive multi-billion dollar companies with endless resources were constructed the way they were. It wasn't because of limitations or an accident. It was the way the founders wanted it. I couldn't think of a place less likely to turn into the next Manhattan, even if I accepted that was an achievable thing.

As a homeowner and a business owner in San Francisco, I'm as frustrated with the city's unwillingness to adapt as anyone. But should we get past this impasse, I'd hope that the city's leaders would have enough imagination to craft a newer, better, more modern San Francisco. Because trying to make anything out here a Manhattan is as silly as New York thinking it'll be the next Silicon Valley.

[Graphic by Hallie Bateman. Image sourced from idleformat]