The life of Doug Fulop and Jessie Fischer in Bend, Oregon was idyllic. The couple moved there last year and work remotely in a 2,500-square-foot home surrounded by trees with easy access to skiing, mountain biking, and breweries. It was a modernization of their previous homes in San Francisco, where a stranger once entered Mr. Fulop’s home after his lock was not properly bolted.
But now the two tech entrepreneurs are heading back to the Bay Area, fueled by a pivotal development: the boom in artificial intelligence.
Mr. Fulop and Ms. Fischer are both startup companies using 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 return after their lease expired in August.
“The AI boom has put the energy back on the bay that was lost during Covid,” said Mr Fulop, 34.
The pair are part of a growing group of boomerang entrepreneurs who see an opportunity in San Francisco’s predicted demise. The tech industry has been in its worst slump in a decade for more than a year, with layoffs and a spate of empty offices. The pandemic also triggered a wave of migration to places with lower taxes, fewer Covid restrictions, safer roads and more space. And tech workers were among the most vocal groups criticizing the city for its mounting drug, housing and crime problems.
But such busts are almost always followed by another boom. And with the latest wave of AI technology — known as generative AI, which produces text, images, and video in response to prompts — the stakes are too much to miss.
According to PitchBook, which tracks startups, investors have already announced $10.7 billion in funding for generative AI startups in the first three months of this year, tripling from last year. Tens of thousands of tech workers recently laid off by big tech companies are now eager to join the next big thing. Additionally, much of the AI technology is open source, meaning companies are sharing their work and allowing everyone to build on it, fostering a sense of community.
“Hacker houses,” where people create startups, are springing up in San Francisco’s Hayes Valley neighborhood, known as “Cerebral Valley” because it’s at the center of the AI scene. And every night someone hosts a hackathon, meetup, or demo focused on the technology.
In March, just days after well-known start-up OpenAI unveiled a new version of its AI technology, an “emergency hackathon” organized by two entrepreneurs attracted 200 participants, almost as many were on the waiting list. That same month, a networking event hastily organized via Twitter by Clement Delangue, CEO of AI startup Hugging Face, drew more than 5,000 people and two alpacas to the Exploratorium museum in San Francisco, earning it the nickname “Woodstock of AI” brought in.
Madisen Taylor, who runs Hugging Face’s operations and co-organized the event with Mr Delangue, said the community atmosphere mirrored that of Woodstock. “Peace, love, build cool AI,” she said.
Overall, the activity is enough to draw people out like Ms. Fischer, who is starting a business using AI in hospitality. She and Mr. Fulop engaged in Bend’s 350-strong tech scene, but missed the inspiration, buzz and connections of San Francisco.
“There’s just nowhere else but the bay,” said Ms Fischer, 32.
Jen Yip, who has organized events for tech workers for the past six years, said San Francisco’s tech scene, which had been dormant during the pandemic, began to change over the past year amid the AI boom. At nightly hackathons and demo days, she watched people meet their co-founders, secure investments, acquire clients, and connect with potential hires.
“I’ve seen people come to an event with an idea they wanted to test and pitch it to 30 different people over the course of one night,” she said.
Ms Yip, 42, heads a secretive group of 800 people focused on AI and robotics called the Society of Artificers. The monthly events are hugely popular and often sell out within an hour. “People are definitely trying to fall,” she said.
In her other speaker series, Founders You Should Know, executives from AI companies speak to an audience made up mostly of engineers looking for their next job. At the last event, more than 2,000 applicants applied for 120 spots, Ms. Yip said.
Bernardo olive moved his company Stack AI to San Francisco in January to become part of startup accelerator Y Combinator. He and his co-founders had planned to start the company in New York after the end of the three-month program, but chose to remain 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 another city,” said 27-year-old Aceituno. “Whatever you seek, it is already here.”
After working remotely for several years, Y Combinator has begun encouraging startups in its program to relocate to San Francisco. According to the company, 86 percent of the last 270 start-ups participated locally.
“Hayes Valley really became Cerebral Valley this year,” Y Combinator CEO Garry Tan said at a demo day in April.
The AI boom is also attracting founders of other technology companies. Brex, a financial technology startup, declared itself “remote first” at the start of the pandemic and closed its 250-person office in San Francisco’s SoMa neighborhood. Company founders Henrique Dubugras and Pedro Franceschi moved to Los Angeles.
But when generative AI took off last year, Mr. Dubugras, 27, was excited to see how Brex might adopt the technology. He quickly realized he was missing out on the coffee, the casual conversations, and the AI community in San Francisco, he said.
In May, Mr. Dubugras moved to Palo Alto, California and began work in a new, reduced office a few blocks from Brex’s old office. Due to the high office vacancy rate in San Francisco, 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’s had regular coffee meetings with people who work on AI since his return. He hired a Stanford graduate student. student who teaches him about the subject.
“Knowledge is focused on the cutting edge,” he said.
Mr Fulop and Ms Fischer said they would miss their lives in Bend, where they could go skiing or mountain biking on their lunch breaks. But getting two startups off the ground takes an intense mix of urgency and focus.
In the Bay Area, Ms. Fischer attends multi-day events that keep people up all night working on their projects. And every time Mr. Fulop walks by a coffee shop, he meets engineers and investors he knows. Besides San Francisco, they are considering living in suburbs like Palo Alto and Woodside that have easy access to the great outdoors.
“I am willing to sacrifice the amazing stillness of this place to achieve this ambition, to be inspired and to know that there are a lot of great people to work with and meet,” said Mr. Fulop . Living in Bend, he added, “just honestly felt like early retirement.”
