It's odd. All these businesses are fighting over a small amount of talent. Why not just have a remote office in San Francisco and focus development elsewhere in the country?
This happens a lot with agencies, where they locate their sales, marketing, even designers in say New York or London, meanwhile the bulk of the company is elsewhere - in locations with high unemployment and lots of developers.
In those areas you might have 20, 30, maybe 40 developers all applying for a single position.
Because the valuations you would get headquartered in Silicon Valley seem to be far higher than you would get elsewhere.
I've built up a (profitable) tech startup in Canada in the last few years, and get valuations in the range of 20 times earnings or 2 times revenue. Respectable compared to the S&P 500, but laughable compared to what seems to be the norm in the valley (or at least what seems to be the norm based on what I read here)
Not that i'm complaining, i love canada, but something to consider.
Why have your developers in San Francisco? Because software devs want to work around other software devs. It's an exciting town to be in if you work in software, and lots of developers want to move out here. It's hard to say the same for towns with high unemployment like Cleveland or Detroit.
...locations with high unemployment and lots of developers
Do such places still exist? Even with high unemployment numbers, I don't see many unemployed developers right now. A lot of the work in other areas is a little boring and Enterprisey (.NET, Java, C++) but there are still jobs in such areas and a shortage of people.
This happens a lot with agencies, where they locate their sales, marketing, even designers in say New York or London, meanwhile the bulk of the company is elsewhere - in locations with high unemployment and lots of developers.
In those areas you might have 20, 30, maybe 40 developers all applying for a single position.