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Opinion and Insight

Why Doing Business in San Francisco Is Worth Every Penny

staging.lbbonline.com, 2 years ago

Creative is king in the Bay Area and beyond, believes Heat’s President John Elder

Why Doing Business in San Francisco Is Worth Every Penny

When I moved to San Francisco from Rhode Island many years ago, the first thing I heard about the city wasn’t its cosmopolitan atmosphere or its eclectic citizens, but its price tag. For years everyone has been reporting on how San Francisco has become one of the most – if not the most – expensive city in America. Frankly, its true. San Francisco is one of the most expensive cities in the United States.

You know the old adage, “You get what you pay for?” That applies tenfold in San Francisco. There are always rumblings of the bubble bursting, but sitting on your hands until that happens will get you nowhere. Tech has moved in firmly, but creative is still king. The beauty of all this, as agency owners, is that we can use our access to technology to infuse our creative ideas and put together creative work that is more integrated, more seamless than anywhere else. If you don’t use what you have to your advantage, it won’t do you any good.

San Francisco is the home to some of the best, most dynamic advertising in the world, but agencies are being affected by more than the real estate issues of San Francisco. In the past few years retaining talent has been one of the biggest challenges in our industry. We are competing with Google, Facebook, and Apple who hire advertising creatives to fill design studios within their walls. We are fighting against their name on a resume, financial benefits, health care, bringing your pets to work or bigger 401k matches for the best talent across the globe. On the other end of the tech spectrum, many start-up tech companies can promise their employees future riches with options. Unfortunately, many agencies don’t have the financial luxuries of startups. 

So what should you do when trying to retain talent? Don’t be the cobbler’s children. Start with a clear brand position and tell everyone who will listen. Be consistent with employees, prospects, vendors and your mother-in-law. Is your agency the king of digital? Focus on that. Does your creative turn out visually stunning print ads? Hire for that team. At Heat, we focused everything around our belief in ‘The Power of Surprise’ and we leveraged that for our people and in our company culture. Whether it’s having a marching band come in on a random Tuesday afternoon or hiring a singer to start off an important meeting by singing the National Anthem, surprise is something our people live every day.

Our creatives do some of the best work of their career here and within the same breath the founders will know your name. Sounds better than being a number at Apple.

But back to the real estate issue. How can emerging ad agencies continue to grow and compete in a market where the average price for a one-bedroom apartment in the city was $3,500 in September? Welcome to the perils of running a business. It’s harder than ever to attract talent from other markets. For your growing business, having a space issue is a good problem to have. If you can continue to provide your employees with a safe and welcoming place to work, that is half the battle. We were fortunate to move from our original location at Pier 33 (at the ferry jump-off for Alcatraz) to our current home in Levi’s Plaza during the recession of 2008. San Francisco is so small (the city is only about 7x7 miles) that space is at a premium. It definitely drives up operating costs and property taxes, but it allows businesses to live anywhere. 

Twenty years ago, most agencies were within a few square blocks. Today, you can open an agency in the Presidio, SOMA, North Beach, Dogpatch, or the Financial District and still be a viable business. Tech companies aren’t looking for the same types of spaces as advertising companies and frankly most agencies won’t add 500 people to their rosters in two-years like Zenefits or Credit Karma

So if you are thinking about taking your advertising to San Francisco, don’t focus on the cost. Your focus should be on getting here. It may be expensive, but it is completely worth it. It’s not dirty like Los Angeles and isn’t holding a grudge against the world like New York. We have great food, outstanding entertainment, and a view that would make a crotchety grandmother cry. Creative leads in San Francisco. We don’t care where you came from and we don’t need names on your resume to get you in the door. You won’t be just a cog on the wheel.


John Elder is President at Heat