San Francisco’s ‘brain valley’ booming in ChatGPT and generative AI

  • Due to pandemic-era shutdowns, San Francisco became something of a ghost town for two years.
  • As people left and worked remotely, some wondered if San Francisco was dead as a tech hub.
  • Now, a race to succeed in the burgeoning generative AI space is bringing founders back in droves.

San Francisco’s tech scene is back.

After the pandemic effectively shut down the city for more than two years, the sentiment is moving away from proclamations of the demise of a once great city and back to the good old days, when it was the destination of those trying to reshape the technological worldview.

All over town, the founders are planting their flags, dreaming of riding the wave of a new technology that is said to be a sea change similar to the iPhone: generative artificial intelligence. Amber Yang, an early-stage investor at Bloomberg Beta, recently tweeted that startups in this field were flocking to San Francisco’s Hayes Valley neighborhood, which the founders renamed “Cerebral Valley.” The tweet was made a bit jokingly, but Yang added that the nascent field of generative AI was advancing so quickly that teams felt it was necessary to be together in a hub to keep pace.

Generative AI takes training data – for example, a large collection of written texts – and teaches itself to produce unique works. In the first five days of its release, more than 1 million people tried out ChatGPT, an AI chatbot that can answer questions with human answers, according to Sam Altman, CEO of OpenAI, the company behind ChatGPT. Microsoft invests $10 billion in OpenAI, Semafor reported. It plans to integrate ChatGPT into its Bing search engine and Azure cloud offerings, according to to information.

To be sure, ChatGPT has limitations. He may know how to form human sentences, but he cannot discern whether they are correct.

Still, the underlying generative AI technology is impressive, and startup founders see a lot of potential. Twenty-two percent of generative AI companies are based in the greater San Francisco Bay Area, and 55% of capital invested in the space lands there, said James Currier, partner at the investment firm in NFX startup, citing an analysis. of a database that the company is compiling. Other smaller hotspots for generative AI include the New York metro area and Israel.

The “crazy hackers” are here

Víctor Perez and Diego Rodríguez knew San Francisco was the perfect place for generative AI when they moved there several months ago to build Krea. Their startup, in the city’s Hayes Valley neighborhood, creates models for high-quality imaging and asset management services.

Hailing from Spain, the duo first landed in Miami last year, where they developed generative image models. There, they said they noticed that most of the “crazy hackers” they encountered were from San Francisco.

After trying New York for several weeks, the generative AI boom accelerated. People started telling them to head west. Dave Fontenot, who founded a 12-week Founder’s Residency Program in San Francisco called HF0, told them it would be “irresponsible” not to work on generative AI in San Francisco, Perez said.

Photo of a bare apartment with a desk and scattered objects.

The house where the founders of Krea work.

Thomas Maxwell/Insider

Perez and Rodríguez originally planned to stay briefly, but when they started meeting people around San Francisco working on generative technology – including people working on artificial intelligence at Meta and OpenAI – they knew they had to stay. They said they felt the excitement and motivation of the developers to build something new.

Photo of a bare apartment in San Francisco.

Before the pandemic, these types of bare houses for startup founders were common.

Thomas Maxwell/Insider

Perez said the sense of urgency to work on building better AI models comes from how generative AI is improving with more data. Models must be trained using real data created by humans – the more images an AI model sees of a fish, the better it produces its own image of a fish, for example.

“We feel an urgency,” Perez said. “But it’s not because other people can create a better model than us today. It’s creating the best models of tomorrow.”

Image of a desktop computer displaying KREA's imaging software.

Krea develops high-quality image templates, such as one that can generate Studio Ghibli movie-style images.

Thomas Maxwell/Insider

Another founder who recently landed in San Francisco, Nicholas Locascio, is working on Booth AI, which targets e-commerce with a tool that generates professional product photos without the user having to pay for an expensive photo shoot. Technology clients upload an image of a product – say, a coffee cup – then Booth AI can place it in a lifestyle scene that makes it appealing on e-commerce pages.

Along with its co-founders, Ian Baldwin and Mitra Morgan, Locascio was recently accepted into the popular Y Combinator accelerator program in Silicon Valley.

“This is a technology that a lot of traditional programming thinking just doesn’t work for,” Locascio said. “Nobody knows the best way to do anything right now. It’s a complete gold rush.”

Photo of co-founders Nicholas Locascio and Ian Baldwin.

Ian Baldwin and Nicholas Locascio, two of Booth AI’s co-founders.

Nicholas Locascio

“No skeptics yet”

Although the founders are convinced that generative AI will change the world, they are still trying to figure out exactly how it will play out.

“There are no skeptics yet, so this is a unique moment,” said NFX partner Currier. “But entrepreneurs need to understand that because Big Tech companies aren’t sitting.”

To the point of Currier, Google issued a “red code” in recent weeks to address the threat of generative AI products to enterprise search and other key services, The New York Times reported in December.

That’s why it’s essential that future developers of AI startups work together to get ahead while they can and share ideas with each other – the same way they did at the start of the sharing economy, the co-founder of Uber Travis Kalanick and Airbnb CEO Brian Chesky frequently dined together and leave with ideas on how to improve their businessesaccording to Amazon’s biography “The Everything Store”.

“The lunch and the parties happening in the Bay Area are going to have a substantial impact” on who finds the strategies to win, Currier said, adding, “So being in one place is important.”

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