Hardest job in tech? Getting tech startups to move to Sacramento
Cynthia Carrillo knows the numbers.
30: The number of meetings she might do in a month with startups and venture capitalists.
3: The average number of times she has to talk to someone to persuade them to visit Sacramento.
200: The number of companies she’d like to persuade over 10 years to relocate from the San Francisco Bay Area to California’s capital.
And 6, the number that shows how much further she has to go. That’s the number of San Francisco and Silicon Valley tech firms that have made the move. Carrillo is the Bay Area regional director of the Greater Sacramento Economic Council. At any other point in time, an attempt to get techies to build companies in a sleepy city better known as a pit stop on the way to Tahoe than a tech hub may have seemed like a joke. But as the Bay Area’s cost of living soars, leading to an exodus of workers seeking a more affordable quality of life, Carrillo’s nonprofit says now is the time to strike.
“More than 200,000 people leave the Bay Area every year,” said Barry Broome, head of the economic council. “We need to catch it. Even if only 10 percent of those people come to Sacramento, it changes our economy.”
For more than 20 years, the Bay Area has been a tractor beam for some of Sacramento’s brightest graduates. Fresh out of UC Davis or Cal State Sacramento, engineers made a beeline for Mountain View and Menlo Park, homes to Google and Facebook, respectively. Seeking funding, startup founders headed for Sand Hill Road. Even those who stay feel the draw of the Bay Area: Last year, 119,000 people in Sacramento got their W-2 from the Bay Area.
For those in the Bay Area, Sacramento — just 80 miles up Interstate 80 — is seen as a quiet government town surrounded by cow pastures. Sacramentans used to wear that as a badge of pride. Who wanted to be in San Francisco with its housing crisis and tremendous wealth disparity, anyway?
Then, in 2008, the financial crisis devastated Sacramento’s economy.
“And it awakened the idea,” said Broome, “that the status quo isn’t something that’s going to take us further.”
Carrillo sees herself as an educator (“Let me tell you about Sacramento”) and a salesperson (“Have you thought about it?”). Her work is part of a greater effort to keep companies and their workers in California by creating a “mega-region” that stretches from Sacramento to San Jose. She lives in Mountain View and ventures as far as Oakland and Berkeley to update venture capital firms on everything Sacramento has to offer.
There’s some math on her side: A San Francisco software engineer could get a 50 percent salary cut moving to Sacramento and still have 20 percent more disposable income. And if an engineer wanted to visit friends, pitch Silicon Valley investors or attend a hackathon in the Bay Area, it could be done on a single Tesla battery charge.
For venture capitalists, Carrillo sells them on the ways their portfolio companies will benefit by moving to Sacramento instead of other tech hubs such as Seattle, Denver or Austin, Texas. They’d be only a car ride away from their investments. Their companies would be able to stretch their finances by as much as 50 percent, thanks to lower costs. And the council, which is funded by both the private and public sectors, would roll out the red carpet, helping new companies find talent and office space and network with local startups and investors.
“A big part of startup success is how long you can survive,” said Manan Mehta, a general partner at Unshackled Ventures, a Palo Alto venture capital firm that started working with the economic council six months ago. “If a company is based somewhere that’s more affordable, it gives them staying power.”
None of Unshackled’s portfolio companies have moved to Sacramento. But at least 50 percent of them based in the Bay Area have considered leaving the region because of the high cost of living and the even higher cost of retaining talent, Mehta said.
A survey conducted this year by the Bay Area Council found that 40 percent of respondents are considering leaving the Bay Area in the next few years because of its high cost of living. Among millennials, that number is 46 percent.
“What used to cost you $100,000 to hire an engineer with three years of experience might now cost you $160,000,” said Garrett Larsson, a former Silicon Valley entrepreneur and current co-founder and chief executive of Rhombus Systems, an unmanned aerial systems startup with offices in Sacramento and Oakland. “The prices just keep going up, and sometimes you only get an engineer for two years before they go to Google or Facebook.”
Winning over a venture capital firm is all about showing them the right data, Carrillo said. But winning over the tech workers themselves? That’s all emotion.
“When our investors first suggested Sacramento, I said hell no,” said Sheri Atwood, founder of SupportPay, a child support payment startup that was founded in Silicon Valley and moved to Sacramento this year.
The reason it takes Carrillo as many as four tries to even get a startup founder to take an all-expensespaid day trip to Sacramento is because people have such low expectations of it.
Compared with the Bay Area, with its world-renowned startups and incubators, the vibrancy of the Mission and Castro districts, its history as a civil rights trailblazer, its esteemed culinary scene and its proximity to cultural institutions, beaches and hilly hiking trails, Sacramento may appear a bit plain.
“If you bring up Sacramento, people’s noses crinkle up. It doesn’t give them the same emotional lift as when you say Seattle,” Broome said. “It’s all emotional, and that’s what kills us.”
So, once Carrillo has done the data-based legwork to persuade people in the Bay Area to at least go and see Sacramento, Broome and the rest of the economic council take over. They create a custom itinerary intended to make Sacramento feel like it’s really not so different from San Francisco.