Reddit CEO resigns: Why didn't Reddit want to move to Daly City?

Reddit's CEO Quit When the Company Wouldn't Move to Daly City. Wait, What's Daly City?

Reddit's CEO Quit When the Company Wouldn't Move to Daly City. Wait, What's Daly City?

Moneybox
A blog about business and economics.
Nov. 14 2014 6:20 PM

What Is Daly City, and Why Didn't Reddit Want to Move There?

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Daly City: Not Reddit’s bag.

Photo by Justin Sullivan/Getty Images

Will Oremus Will Oremus

Will Oremus is Slate’s senior technology writer. Email him at will.oremus@slate.com or follow him on Twitter.

Reddit’s chief executive, Yishan Wong, resigned this week in a move that surprised the company, its investors, and pretty much everyone else. The reasons for his departure, as he explains in this Quora post, had to do in part with stress and burnout. But the proximate cause was a dispute over office space: Wong wanted to move the company’s headquarters from the heart of San Francisco’s trendy SoMa district to Daly City, and his colleagues apparently rebelled.

All of which left non–Bay Area residents wondering: What is Daly City, and why would one want to move a company there? (Actually, a lot of Bay Area residents are probably wondering why one would want to move a company there, too.)

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Let me stipulate what follows is an unfair characterization in many ways. But the simplest metaphor I can offer to those unfamiliar with the region is that, for the type of ambitious young tech and media mavens that compose Reddit’s workforce, Daly City amounts to the Bay Area’s equivalent of purgatory. No one really aspires to end up there; many already there are in a state of limbo between being able to afford to move to San Francisco or one of the tonier peninsula suburbs and being priced out of the metro area altogether.  

Both geographically and spiritually, Daly City, occupies the middle ground between San Francisco—the tech world’s City Upon a Hill—and Colma, which is literally a giant graveyard. In Colma, aka the City of the Dead, the deceased are reputed to outnumber the living by a ratio of 1,000 to one. The town motto: “It’s great to be alive in Colma.”

It may not be great to be alive in Daly City, but it’s better than the alternative. A dense yet sprawling fogland of postage-stamp single-family houses and anonymous high-rise office parks, it’s the closest you can get to “the City” without paying San Francisco’s otherworldly real-estate prices. The cookie-cutter Doelger homes* of its Westlake neighborhood inspired folk singer Malvina Reynolds’ protest song “Little Boxes,” which became a hit for Pete Seeger in 1963:

Little boxes on the hillside /
Little boxes made of ticky tacky /
All the same.
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This is not to say that Daly City is without its charms, especially as a place to settle down and raise a family. It’s genuinely diverse and a regional hub for several large Asian-American communities. There is good food to be found if you have a car and know where to look. The views when you crest a hilltop may not be as postcard-perfect as those of San Francisco, but they can be unexpectedly breath-stopping in their own right. The endless fog can be strangely calming, if it doesn’t drive you mad. And for a suburb, it’s relatively well-served by highways and public transit, with BART, Caltrain, the 280, and the 101 all snaking through its valleys on their way from San Francisco to Silicon Valley proper.

But that’s exactly how most techies view Daly City—as drive-through country. It claims few cultural attractions and scant entertainment options, beyond the monolithic Westlake and Serramonte malls and a semidefunct convention center called the Cow Palace that plays periodic host to rodeos and gun shows. Its principal private employers include Target, McDonald’s, and Walgreens.

And, unlike the suburbs further down the peninsula, it lacks a quaint town center with restaurants and coffee shops. Despite its clumsy attempts at “transit-oriented development,” it’s utterly unwalkable. In case you don’t believe me, here is Daly City’s idea of a pedestrian-friendly plaza.

Contrast that with the location of Reddit’s current headquarters, at 520 3rd St. in San Francisco, and you can start to see why a faction of the company’s employees may have been aghast at the prospect of a move. Its office building, which it shares with Wired magazine, is among the more desirable addresses in what has become the hottest neighborhood in the world for tech startups.

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The neighbors include Yelp, Square, and Dropbox. Across the street is the famous South Park playground where Jack Dorsey claims to have hatched the idea for Twitter. The San Francisco Giants play baseball a few blocks away. A move from there to Daly City is loosely comparable to a New York City fashion designer moving from Chelsea to Yonkers.

But it isn’t merely pride and snobbery that would make Reddit employees loath to pick up stakes for a San Mateo County office park. SoMa is easily accessible by foot and by transit from San Francisco, Oakland, and Berkeley, where the majority of them presumably dwell. Daly City, for most, would require a lengthy, traffic-snarled commute—probably by car, or at best by park-and-ride. Many who do not own a car today would feel compelled to buy one, but finding a place to park it in San Francisco is the stuff of nightmares. A single parking spot there costs more per month than a one-bedroom apartment in most of the country.

Did I mention Wong planned to prohibit Reddit employees from working remotely?

So, to return to the second half of the original question: Why would Yishan Wong want to move Reddit to Daly City? Well, the rent is much cheaper, and no doubt the company could get a much larger office space there than it could in San Francisco, Palo Alto, or elsewhere in the Bay Area. If Reddit is outgrowing its current space and can’t afford anything large enough in a desirable location, Daly City could start to seem like an acceptable middle ground—especially if you already have your own car and garage.

The broader context for the Reddit office-space flap is that the latest tech boom has sent San Francisco real-estate prices spiraling beyond reason. The median one-bedroom apartment in SoMa now fetches $3,359 a month. And prime office spaces are pushing toward an almost unfathomable $100 per square foot.

At those rates, it isn’t just the working class and the middle class that are being priced out. It isn’t just family-owned businesses. What the Reddit story reveals is that wealthy tech startups have pushed San Francisco real-estate prices so high that almost nobody can afford a large office space there—not even a wealthy tech startup.

*Correction, Nov. 15, 2014, 1:20 a.m.: This article originally misidentified the uniform houses of Daly City’s Westlake district as Eichlers. The developer was Henry Doelger, not Joseph Eichler.