San Francisco's startup culture begins with a crash, then a boom

Boudin Bakery faced many trials from its Gold Rush-era incorporation to modern successes, but the most explosive moment arrived on Jan. 29, 1913.

During routine deliveries, one of the San Francisco bakery’s two horse-drawn buggies crossed into the path of a streetcar, and the very first Muni accident in history. The Chronicle covered the ensuing mayhem:

“With the air brakes out of order, the car bounded down the hill and ... overtook and demolished the bakery wagon owned by the Boudin Bakery, and driven by John Brat,” the newspaper reported. “Brat jumped with the impact and was only slightly injured. But one of the two horses attached to the rig was fatally hurt and shot by Corporal L.C. Clark of the Richmond Police Station, who was on the scene at the time of the accident.”

Boudin shook off the setback, received a $500 settlement from the city (including $30 for “lost bread” and $120 for the horse) and used it to help build a sourdough empire that now includes more than 30 California locations.

San Francisco’s startup culture was forged more than a century and a half before Twitter, Uber and Salesforce coded their way onto the local scene. But even though the makers of things in the 19th century had little in common with today’s tech pioneers and their heads in the cloud, it’s easy to imagine both groups sharing an (Anchor Steam) beer and getting along. Enough disruptive products have been made here to argue convincingly that innovation has always been a city tradition.

Companies that got their start here include a diverse array of clothiers, publishers, banks and technology pioneers. And this being San Francisco, few of them found success without a dramatic, inspiring or offbeat story to tell along the way.

The startups founded in the 19th century deserve special honor. Companies including Wells Fargo, Bank of America, Levi Strauss & Co., Hills Brothers Coffee, Boudin and The Chronicle itself survived the double whammy of the 1906 earthquake and the Great Depression, emerging from both events stronger than before.

A previous Our San Francisco chapter honored the smarts and drive of Bank of America founder A.P. Giannini; hours after the 1906 earthquake, Giannini (then running Bank of Italy) drove bank records and money out of the burning city in a horse-drawn cart covered with produce, then rallied bankers to get back in business and lead the rebirth of San Francisco.

The Ghirardelli Chocolate Co. may have technically been less vital to San Francisco’s resurrection, but the founders treated their business no less seriously in the days after the great quake. While city leaders were predicting the streetcars and electric lighting would take weeks or months to come back — City Hall itself would remain in rubble for years — the flow of chocolate was restored in less than two weeks.

“To Grocers and Confectioners,” Ghirardelli announced in a quarter-page Chronicle advertisement that ran four days after the April 18, 1906, earthquake hit. “Our stock is uninjured and perfectly sound. We can supply you with our Chocolates and Cocoas by calling at our warehouse. We will resume manufacturing operations within Ten Days.”

Along with the earthquake, fire and difficult rebuild, entrepreneurs had to wrangle with corrupt City Hall leaders. Many businesses folded. Most that persevered fought through setbacks.

But few had more near-death experiences than Anchor Steam, the San Francisco brewery that also survived a 1930s brewery-destroying fire, Prohibition, the Great Depression and the retirement of several early “irreplaceable” brewmasters. At least two Chronicle stories prematurely announced the brewery’s demise.

“The taps are running dry today on a full-flavored amber souvenir of San Francisco’s past,” The Chronicle reported in 1959. “There won’t be a drop of steam beer in Northern California after a few more days.”

Anchor Steam rallied, and behind new brewer Fritz Maytag helped usher in a new age of microbreweries.

Innovation, often when naysayers have predicted failure, is a common theme among San Francisco’s startups. Rather than follow existing models, the city’s mantra is often to come up with good ideas and have faith that the economics will work themselves out later.

That seemed to be the plan with Zoetrope Studios and the Bay Area film revolution of the 1960s and 1970s, when Francis Ford Coppola, George Lucas and others created an ecosystem that could operate independent of Hollywood.

Publishing was another startup genre that benefited from San Francisco’s maverick approach. William Randolph Hearst and Chronicle owners Charles and M.H. de Young showed this kind of bravado in the 1800s. Since the 1960s, magazines including Rolling Stone, Wired and McSweeney’s have proved the mainstream wrong — often starting as independents and succeeding with a swashbuckling spirit.

There may be no better example than Mother Jones, referred to by The Chronicle at its 1976 launch as “the bastard daughter of Ramparts,” and given little chance to survive. Named after a labor activist who lived to be nearly 100, the magazine continues to thrive in the digital age, still headquartered in San Francisco, with a similar formula of breaking news and pointed analysis.

“I can’t think of a worse name for a magazine,” Herb Caen wrote of Mother Jones in 1976. “But I thought Literary Digest and Colliers would flop too.”

Mother Jones and the Gap have little in common; it’s easy to imagine the former investigating the latter. But there’s a DNA of independence that seems to run through many San Francisco startups.

When Don and Doris Fisher opened their first “Western boutique way out on Ocean Avenue” in 1969, the Gap founders shocked The Chronicle society-page writers by announcing both female and male models would arrive for the opening-night party.

“The Gap only sells two things,” a bewildered Chronicle reported. “Levis of all shapes and sizes, and phonograph records.”

(The Gap later absorbed Banana Republic, itself a Bay Area renegade. Co-founded in 1978 by former Chronicle employees Mel and Patricia Ziegler, the clothier for years had local teens dressed in safari wear — and ubiquitous animal-themed Banana Republic T-shirts.)

Folgers Coffee came from the city. So did Coldwell Banker, Gymboree, Dolby Labs, Cisco Systems and SKYY Spirits. But some of the best San Francisco startups are the ones that seemed doomed from the beginning.

The first Cost Plus Imports advertisement in The Chronicle, in 1959, showcased the importer’s reliably random array of goods; among the items on sale included simple slat tables with a mahogany finish, cremation urns and two different “oriental string instruments.” (The store remains strikingly unchanged today — in more than 250 locations throughout the U.S.)

Good Vibrations didn’t get as big as Uber, but we’re still proud to claim it as our own. Did anyone think that little vibrator shop that opened in the Mission District in 1977 would outlast Pan Am and Radio Shack?

The latest crop of startups have more venture capital, but often seem to have a little less soul. The current group of moneymakers didn’t have to fight to rebuild their business after an earthquake or great fire. There’s no bakery-wagon-accident moment for the Squares and Twitters and Lyfts.

But look closer, and the commonalities start to appear. Marc Benioff was a student selling software to his teachers before he became the CEO of Salesforce. Yelp was reportedly conceived when software engineer Jeremy Stoppleman got sick and had trouble finding a doctor.

Perhaps most important of all, when the companies got huge, they didn’t leave. Two more San Francisco startups, to add to the hundreds that have blazed trails since the horse and buggy days.

Chronicle librarian Bill Van Niekerken contributed to the research of this chapter.

Peter Hartlaub is The San Francisco Chronicle’s pop culture critic. E-mail: phartlaub@sfchronicle.com Twitter: @PeterHartlaub