Mithrl is part of a wave of startups returning to San Francisco and working in person four or more days a week.
With kind permission: Mithrl
When Noah Jackson began searching for a new job as a software engineer in early 2024, he knew there was one quality he wanted from 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 eventually brought employees back on a hybrid basis, others eliminated their leases entirely. For Jackson, all but the first nine months of his first real job involved working from his home in San Francisco or his company's office, which was mostly empty.
“When I left school, I overlooked how much work is truly a part of life and not just a box to check off,” said Jackson, who previously worked at an enterprise software company. “Being completely remote, it feels like you have to do something.”
In May, Jackson got his wish and took a job at Tako, a visualization search engine startup that requires employees to come into the office four days a week. Tako is among a growing group of early-stage tech companies in San Francisco that are trying to return to the pre-Covid days, when startups prided themselves on their digs and limited their use zoom.
“We’re not trying to build a culture that works for everyone,” said Tako CEO Alex Rosenberg, who founded the company earlier this year. “We’re just trying to make it work for Tako.”
The recruiting success of Tako and his colleagues is a testament to the increasing fatigue of remote work, particularly in San Francisco, where living conditions are often cramped and a high concentration of young, ambitious techies like to congregate. The changing landscape also coincides with an artificial intelligence boom that began after OpenAI launched ChatGPT in late 2022. It is one of the few areas where venture capital firms show a willingness to take risks.
Rosenberg says he sees a much more competitive real estate market in San Francisco as emerging companies compete for offers for office space after a prolonged period of high vacancy rates.
“If you're trying to invent something new, it's really difficult to do over Zoom,” said Rosenberg, whose company is run out of a coworking space in San Francisco's Pacific Heights neighborhood, a few miles from downtown business districts.
Tako was looking for a larger space, preferably in the Hayes Valley neighborhood, a hub for 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.
Politeness: Correct
Overall, San Francisco's office market remains subdued, with the vacancy rate rising to 34.9% in the third quarter from 29.4% a year ago, according to Cushman & Wakefield. However, AI startups OpenAI and Sierra AI were two of the largest leases during the period, and the company said: “Artificial intelligence companies will continue to be a driving force in the San Francisco market, driving significant VC funding and leasing activity.” “
The tech sector accounted for 72% of all office leasing in San Francisco in 2023 and 58% by the third quarter of this year, according to Liz Hart, North America president of leasing at commercial real estate firm Newmark.
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 adjusted since the pandemic. Instead of renting out entire floors to individual companies, more offices are now being split up to serve multiple startups, she said.
“Screaming deal”
Still, office rents across the city are at their lowest level since 2016, according to Newmark data.
“If you talk to entrepreneurs who are just starting to expand, they're probably taking up a little more space than they know they need and getting a great deal for it,” said Hart, who joined the company nearly 20 years ago is .
How quickly the broader market recovers depends largely on the decisions of major tenants in San Francisco Salesforce And Google. While AmazonThe Seattle-headquartered company recently announced a five-day office requirement, while most of its tech competitors have not yet implemented these regulations.
Zach Tratar was able to land an ideal space for his company Embra last year through sheer hustle. When his agent informed him of a promising location, Tratar showed up 90 minutes later and was on site ahead of another potential tenant, located at Salesforce Tower.
“I immediately thought, 'Cool, I'll take it. Send me the documents immediately,'” said Tratar, whose company is developing an AI operating system. He estimates that 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 to the office four days a week, with Wednesdays reserved for remote work.
“There’s something magical about face-to-face teams,” Tratar said. “When something goes well, it energizes the system and people are excited.”
The AI renaissance has familiar characteristics for Bay Area veterans. The app economy that followed the introduction of the iPhone in 2007 sparked a wave of investment and a flood of new companies in San Francisco and Silicon Valley. Added to this was the boom in social networks and before that the internet bubble.
“We’ve seen tremendous growth in the category, but we’re just getting started,” Hart said of the current state of AI.
However, in today's world, companies have to earn their employees' trips to the office, Hart said, because the pandemic has dramatically changed expectations.
Startups need to pay attention to access to public transportation while also catering to people who drive. It is also an advantage to be close to restaurants and cafes.
The startup Mithrl moved into its Market Street office in San Francisco in July and is in the office five days a week.
With kind permission: Mithrl
AI startup Mithrl offers commuter benefits and free meals to its employees, said CEO Vivek Adarsh. Mithrl moved into an office on Market Street in San Francisco in July.
Adarsh founded 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 because of its talent core and because they believed in the city's future, Adarsh said.
“There is a lot of enthusiasm and energy,” Adarsh said. “People are taking more risks for the city.”
A few miles away, in the Mission District, robotics startup Medra has been in person five days a week since its founding in 2022. CEO Michelle Lee said when she talks to her colleagues, many tell her they are thinking about switching to hybrid work. The move away from hybrid work is a hard sell for employees who prefer the status quo.
Y-Vonne Hutchinson, a workplace culture expert, said when companies make such drastic changes, “you undermine trust.”
Hutchison is CEO of Superessence, whose AI tool enables companies to assess their cultures. She said physical offices offer benefits for younger employees who may be looking for mentorship, growth and career opportunities.
There are limitations. Many people have moved during the pandemic, and employers have begun to cater to those who want to live in complete isolation. Being in the office for four or five days, especially in a city as expensive as San Francisco, is particularly hard on parents, people with disabilities and those with long commutes.
“You significantly reduce your hiring pool when you work in person,” Hutchinson said.
Lee recognizes the challenge and knows their ability to attract talent from other parts of the country is limited. But she said the personal contact ultimately helped with recruitment.
In November 2023, Lee visited the website Hacker News and saw a post from a senior engineer who said he was specifically looking to work for companies with personal cultures. Lee looked at his qualifications and said she was shocked. She called the post a “green flag” and spoke out immediately.
Within a month, the prospect had joined Medra.
“It would have been so difficult for us as a company to hire someone like this because we are a small startup,” Lee said. “But part of it is that because of this collaboration, there are some really great engineers who are specifically sought out in person.”
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