It always struck me as odd that a culture so interested in the internet and data and disrupting existing cash flows would itself dictate a system in which so, so much cash flows from VCs to paychecks to landowners in one single metro.
Yeah, but AFAIK there isn't huge overlap between the VC funds and the landowners, unless there's some hidden corporate structure of which I am unaware.
It would be quite silly (and clever) for VC LPs to start buying up residential properties, knowing that their funding rounds go right into payroll and then right into SFBA rents and back into their pockets. :D
I don't think it's directly this malicious. I think it's more just a blindspot. If you're a 40-something partner at a major VC firm, who bought his home in Palo Alto in 2005, then the "cost of living" is largely invisible to you. Sure you may have a sizable chunk of home equity locked up, but that's not a monthly cash flow issue.
Intellectually you know that being located in the Bay Area is a major burden to the ramen-eating startup founders that you fund. But it's a lot easier to rationalize that away with justifications around "cross-pollination of ideas" and being in the "intangible benefits of being an innovation center". Certainly a lot easier when you're not worried about making rent on your 400 square foot studio.
YC actually considered this (jokingly I think, but maybe not?). They realized that many of their startups were living in just a couple of high rises in San Francisco.
