INNOVATION ECONOMY
Bay Area provides a glimpse of the future
By Scott Kirsner Globe Correspondent,October 28, 2012, 12:00 a.m.
Pinterest, with 75 employees, is growing so fast it can barely keep up.Jakub Mosur for Boston Globe/Globe Freelance
SAN FRANCISCO — Having beaten my checked bag to the luggage carousel, I fired up my iPhone and did something illegal. Using an app called SideCar, I summoned a complete stranger to come pick me up from the airport.
Earlier in October, a California regulatory agency ordered SideCar to cease connecting passengers with ordinary drivers looking to make a few extra bucks by playing chauffeur. The company ignored the order, and the day before my arrival raised $10 million from Google's venture capital arm and another investment firm. It took 18 minutes for my driver, Eddie, to show up at the airport. I hopped into his black Acura sedan, and we sped north toward the city.
I was in town for about 36 hours, and I wanted to get a sense for where the action was in the Bay Area, at a moment when Apple is the world's most valuable company and employees are leaving once-hot Facebook to find the next big thing. Of course, the Bay Area is also the ecosystem to which Boston regularly compares itself, and which exerts a magnetic attraction for many young entrepreneurs educated here. Here's what transpired.
WEDNESDAY, 9:30 p.m.
My SideCar drops me in Glen Park, the hilly neighborhood where I once lived. The app suggests a "donation" of $30 for the ride, which I can adjust up or down as I see fit. I give Eddie $30, figuring I still saved a few bucks over a taxi.
I'm meeting another complete stranger, Dylan, who has agreed to rent me a room in his house for $110 a night. I used the website Airbnb.com to find Dylan's listing. The San Francisco start-up was founded to help turn ordinary people into innkeepers, and last week it raised $117 million, in addition to $120 million raised earlier. Dylan told me he teaches physical education at a public school, and the suite in which I was staying, with its own private bathroom and outdoor patio, had once been his master bedroom. Airbnb tacked a $31 service fee onto my two-night reservation.
Like SideCar, Airbnb is one of the companies trying to establish a new "sharing economy" using resources that people own but hadn't previously used to generate income. But there are questions about its legality, too: anyone renting rooms by the night in San Francisco is supposed to have a bed-and-breakfast permit. I don't care: The bed is comfy and the water pressure strong.
THURSDAY, 10 a.m.
After 4½ years at Facebook, Don Faul left in June to join Pinterest, a San Francisco company that operates one of the hotter new social networking sites. Pinterest allows users to create an online pinboard, posting pictures of places where they might want to vacation, for instance, or desserts they might want to serve at their next party. As with Facebook, you can connect with friends, celebrities, or people whose taste you admire to see what they're "pinning."
The site has attracted users faster than Facebook or YouTube did: Earlier this year, it crossed the 20 million user mark. In many ways, says Faul, the company's head of operations, Pinterest is growing so fast it can barely keep up. For now, the company has 75 employees stationed at rows of simple tables in a high-ceilinged space with exposed ductwork and paper lanterns hanging down. But next door, it is renovating a much larger office that will be able to accommodate hundreds of additional employees.
Like many Web-based companies, Pinterest is trying to figure out how to best translate its product to mobile phones and tablets, while increasing the amount of time users spend on its website, Faul says. What the company isn't doing is talking about how it will make money. "We're thinking about it, but it's not our primary focus right now," Faul says.
THURSDAY, 11:15 a.m.
Running late for a meeting at AngelList, I hustle through the lobby of a luxe residential building across from AT&T Park, the home of the San Francisco Giants. When I arrive, founder Naval Ravikant tells me that as commercial rents in San Francisco have risen, many landlords are finding it more profitable to put start-ups, rather than individuals, into apartments.
Ravikant started AngelList to help connect entrepreneurs with prospective investors. Now, about 5,000 wealthy investors and 90,000 start-ups maintain profiles on the site, and AngelList wants to simplify the rest of the investing process.
A new feature, AngelList Docs, puts investment paperwork online, complete with electronic signatures, "reducing a company's financing to a checklist process," Ravikant says.
As for the current craze of "seed-stage investing," handing small start-ups a few hundred thousand dollars to see if they might be able to design the next Pinterest, Ravikant acknowledges that "it has gotten really frothy," with valuations of fledgling companies rising into the stratosphere.
But "angels" investing their own money can presumably afford to lose it, he says: "In the worst case, what's happening is a voluntary transfer of money from rich to poor, from old to young."
THURSDAY, 12:45 p.m.
Celeb sighting: While I'm eating lunch at the Samovar Tea Room with entrepreneur Daniel Raffel, Evan Williams walks in and sits down at the next table over. Williams, cocreator of Twitter, is at work on a new publishing site called Medium, where creators will collaborate on articles or collections of photos. It's expected to launch early next year.
THURSDAY, 3 p.m.
I meet Paul Graham for coffee at Coupa Café, a popular hangout among entrepreneurs located just off the main drag of Palo Alto. Before we go in, Graham spots someone across the street who is carrying a prototype of a motorized skateboard called a Boosted Board.
The creators of the Boosted Board participated in Graham's three-month accelerator program for entrepreneurs, Y Combinator. Graham mentions they've recently raised more than $400,000 from customers eager to be the first on their block to own a Boosted Board, with its six-mile range and 20 mile-per-hour top speed.
More than 80 start-up teams participated in the most recent Y Combinator program over the summer; only 2 percent of the companies that apply get in. (By contrast, the acceptance rate at Harvard, where Graham earned a doctorate in computer science, is 5.9 percent.) Y Combinator makes a small investment in each company in exchange for between 2 and 10 percent of its stock.
Already, the program has spawned companies like Airbnb and Dropbox, a popular file-sharing service.
Graham says his goal for Y Combinator is simple: "To fund a lot of the good start-ups."
THURSDAY, 4:30 p.m.
My last stop of the day is at the Googleplex — Google's headquarters, in Mountain View. I sit across the table from Steve Lee, a director of Google X, the company's secretive research-and-development division. The company has disclosed only two projects that the division is working on: a car capable of driving itself and Google Glass, a postage stamp-size digital display attached to an eyeglass frame.
Lee gives me a chance to put on Google Glass for a few minutes and use it to snap pictures, read text messages, and get directions to a destination. Lee patiently explains that I can interact with the display by speaking commands, touching the arm of the eyeglass frame, or moving my head. It's confusing at first, but I know I'd get comfortable with it given more time.
And I am sure I would like to have the world around me annotated, with background briefings on people I encounter and historical tidbits about buildings I pass.
Will it become normal for all of us to flit back and forth between the people we're talking to and the screens of our head-mounted displays? Will it be legal to drive while wearing Google Glass? Is that why Google is working on a self-driving vehicle?
I'm mulling over those questions as I head north on Route 101, the main highway that links Silicon Valley to San Francisco. I feel like I'm living in the past, gripping the wheel of a non-autonomous Mazda, surveying the road ahead while wearing old-fashioned, non-digital eyeglasses.
What Silicon Valley does better than any other place — fueled by entrepreneurs, engineers, and investors' money — is simulate possible futures. Most of them never come to pass. But enough do to keep the simulation machine humming.
Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.