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Against the tide: Startup incubator Y Combinator is back in person, saying SF is still where the action is

Y Combinator CEO & Partner Michael Seibel speaks onstage during TechCrunch Disrupt San Francisco 2019 at Moscone Convention Center on October 02, 2019 in San Francisco, California. | Kimberly White/Getty Images for TechCrunch

Y Combinator, one of Silicon Valley’s most prominent startup incubators, is bucking a trend in the tech industry: It’s telling the 400 or so companies it will incubate this summer that they should show up for the program in person.

After two years of hosting its program on Zoom, Y Combinator’s “Summer 22” batch of company founders will gather together at a Sonoma retreat to kick things off, then attend weekly in-person meetings and dinners in San Francisco and other cities, and end with a big bash in San Francisco. The startups, which hail from countries around around the world, are encouraged to come to the Bay Area for the duration of the program.

The incubator’s decision, which was announced earlier in June, comes after large tech companies including Lyft, Pinterest, Dropbox and Airbnb announced that their employees will never have to regularly return to the office. And the tech giants that want employees back together, such as Google and Apple, are having a very hard time actually getting employees to do it.

Y Combinator wants the benefits that in-person collaboration and brainstorming bring to young tech firms. “If all you’re doing is cranking out widgets, then sure, do it in your PJs from your living room,” said Nick Alexander, a three-time Y Combinator founder and early-stage investor. “But if you’re actually trying to build something new and innovative, being co-located with your team is a massive advantage.”

Proponents of in-person teamwork point to research showing that remote work during Covid decreased collaboration between Microsoft departments by 25%, causing the company to “become less interconnected and more siloed.” 

Early-stage startup founders say that the fast-paced, unstructured nature of startup work also greatly benefits from the “serendipitous” nature of in-person work.

“When you’re early you benefit from having very tight feedback loops,” said Grant Lee, CEO of Gamma, a software startup with a dozen employees who have been working in person in San Francisco since early 2021. “If you’re trying to do it remote, the feedback cycle takes several days versus if you’re in person, you can jam through several ideas in an afternoon and speed things up a lot.” 

Merge, a San Francisco-based startup that offers human resources software, said its employees have worked in-person throughout most of the pandemic and appreciate the social connections they make. 

“Everyone we talked to, especially at the beginning of Covid, was like, ‘Oh thank God you are in person, we can’t wait to come in’,” said CEO Gil Feig. “Overall it was definitely big for people’s mental health. They would tell us, ‘I’m noticeably happier being here, I’m not just stuck in my apartment.’ ”

Other startups have developed a more tailored approach, like many larger firms, based on their size and industry. San Francisco-based Keeper Tax’s 30 employees come to the office twice a week normally and every day during tax season. In the summer the entire office works remotely for a month. One-on-one meetings are in-person while bigger meetings are conducted remotely.

It’s not just the tiny startups that see the benefits of in-person teamwork. Notion, a multi-billion-dollar breakout success in the software as a service space (SaaS), states in its job listings that it plans to resume in-person work and asks job candidates whether they are willing to do so. 

Often it is new college grads, sick of remote learning, that are clamoring for the camaraderie that in-office work engenders. Hacker houses, where young 20-somethings starting companies cram into dorm-like quarters, are starting to make a comeback in San Francisco.

After years of isolation and sometimes working from locations far from San Francisco, tech workers are again seeing the value in being in a tech hub to network and exchange ideas.

“We’re also seeing a lot more interest in San Francisco,” Y Combinator investor Michael Seibel said in the incubator’s June YouTube announcement, adding, facetiously, “That’s a dirty word; I’m not sure if I’m allowed to say the term ‘San Francisco’ because we all know the tech world doesn’t exist here anymore, right?”

Another Y Combinator investor, Dalton Caldwell, added that many of those who loudly proclaimed the death of San Francisco have been quietly moving back.

“People are going back to the big centers because they’re getting bored and lonely and feel kind of over it…people want to be where the action is,” he said.

Kevin Truong contributed additional reporting for this story.