Salesforce.com stays put in SF

Marc Benioff is the CEO of Salesforce.com and in this interview with the Wall Street Journal he pretty much nails exactly how I feel about location for high-tech firms.  Despite higher costs in terms of office space, employee living expenses, and density of traffic, he’s decided to keep Salesforce.com in San Francisco rather than relocating to Silicon Valley.  I suspect if he was on this side of the continent, here in Toronto where I live, he would have made the same decision for the same reasons.  He mentioned the concentration of highly educated people and the wealth in number and variety of restaurants but I would add a broader, and more difficult to measure, metric.  A heterogeneous culture should be a desirable characteristic for high-tech firms when they are seeking locations because of its unmatched potential to ultimately reflect the market they intend to serve with their products.  What better way to create something for a wide cross-section of society than by employing people who reflect it?

So why do companies locate far from centers of action?  It probably makes sense for some types of businesses because of the cost of property and they feel there is nothing really compelling about the city from a business point of view.  Meaning that the level of  doubt about the ability to attract and maintain qualified staff is considered low, and a dearth of local amenities is not seen as important.  And to my earlier point, perhaps the product produced is meant for only a narrow slice of society. Therefore those variables are not factored in.  But for high-tech firms that need to cover a wide swath of society with their products, and that rely upon the energy, vitality, and flexibility of youth, it makes sense to locate where those people are and where they prefer to be.  You can’t beat SF and Toronto for that.

Benioff’s decision confirmed for me ideas that have been presented by people like Richard Florida of The Martin Prosperity Institute. In this article about the knowledge in cities he cites data showing various cities in North America and, basically, what they are good at.  While San Jose shows up (logically) as an engineering and IT place, Toronto (as well as Chicago, Los Angeles, and Miami ) show up as enterprising places.  Meaning that they have high knowledge of:  sales and marketing, economics and accounting, customer and personal service, and information technology and telecommunications.  In other words, they are broader and more diverse and have in place a solid infrastructure to support all aspects of the knowledge economy.  San Francisco was not mentioned in Florida’s blog post but it might be in the report he speaks to.  Anyway, SF is much smaller but very similar to Toronto in many cultural ways.  The decision to keep his company in the city doesn’t surprise me and I think it’s a great one.   Benioff needs to keep growing his culture and that culture is fed by the environment of the city. As he says in the interview, “I honestly think it’s so much better. I worked in Silicon Valley for 13 years. There are no restaurants, there is no shopping, there is no energy.”

Yes, exactly.

About Peter Armaly
I get jazzed by automation, big data, and blockchain tech. Business, technology, and fitness are things I understand. Scotch, wine, food, and fiction are things I appreciate.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: