Pittsburgh AI startup Abridge is choosing San Francisco for expansion because it’s growing too fast for its home region to keep up, according to its CEO.
The announcement that the unicorn would build a hub in San Francisco and hire hundreds to staff it sent shudders through the Pittsburgh ecosystem. Local stakeholders, who know Pittsburgh’s prestigious academic talent pipeline and robust workforce development programs have helped grow several other notable startups, question why the AI medical transcription service would need to look elsewhere.
It’s because of the company’s “hypergrowth,” or when a firm has a high annual growth rate and doubles its revenues in less than two years, said cofounder and CEO Shiv Rao. Abridge already has a New York office, too, and it needs to spread its reach even further to keep hiring top talent — and stay connected with the various other regional hospitals it serves.
“We just can’t hire fast enough,” Rao told Technical.ly.
Over the past seven years, Abridge has raised more than $460 million, according to PitchBook, and made a notable footprint on Pittsburgh’s healthtech scene. Stakeholders wonder why it can’t just continue to grow here. After all, language learning juggernaut Duolingo, for example, has insisted it’ll never move to San Francisco, though it does have other offices around the world.
Abridge’s move, which became public last week as reported by the Pittsburgh Business Times, is a wakeup call for the region, according to Sean Luther, executive director at InnovatePGH.
“Relationships like Abridge’s with the Pittsburgh Life Sciences Alliance or recent visits from the county executive to companies like Duolingo and Aurora demonstrate the power of [building deep connections],” Luther said. “But relationship capital alone is not enough.”
To reach the next level as a real hub for startups, he said, Pittsburgh needs to take steps to improve talent retention and further access to later-stage VC capital.
‘I live in Pittsburgh’: A move to SF doesn’t have to be a snub
Abridge burst onto the scene in 2018, with an idea TechCrunch called “SoundCloud plus RapGenius for medicine.” The company helps physicians breeze through clinical paperwork using AI.
It raised a $5 million seed round led by Union Square Ventures in 2019 and has skyrocketed ever since. This February, Abridge raised a $250 million Series D, a move that brought its valuation to $2.5 billion.
Abridge does plan to keep its HQ in Pittsburgh, Rao said, adding that he plans to continue as a practicing cardiologist at UPMC.
“I live in Pittsburgh,” Rao said, “and I have a personal interest in seeing our office there continue to be full of energy.”
“I have a personal interest in seeing our office [in Pittsburgh] continue to be full of energy.”
Shiv Rao, Abridge CEO and cofounder
The startup will, however, need to do a lot of San Francisco hiring to build up the new space. Abridge plans to hire “hundreds” of people this year, he said. The company is “hiring into different hubs based on what we need,” and since the Pittsburgh HQ is already well-established, it will be “putting a lot of effort into growing our other hubs.”
Plans call for concentrating different types of teams in the various office locations, though that’s still a work in progress, Rao said.
He denied that Abridge Chief Technology Officer Zachary Lipton — a CMU professor and 2024 Technical.ly RealLIST Connector — would be moving to San Francisco, as reported in the Pittsburgh Business Times story breaking news of the expansion. Both men plan to maintain a Pittsburgh presence, according to Rao.
“We’re a company that will always have a home in Pittsburgh and we’re a committed part of Pittsburgh’s health and technology ecosystem,” Rao said. “That’s partly because of the founding DNA, and that’s partly through our deep collaborations with local health systems and with Carnegie Mellon and none of that is going to change anytime soon.”
Lipton did not immediately respond to a request for comment.
The hiring, workforce development and VC problems
While Carnegie Mellon University and the University of Pittsburgh can be great sources for talent, finding employees in those pools requires time, persistence and dedication to hiring locally, said Jessi Mazzoni, director of operations at local security company Gray Swan AI and the former program manager at Innovation Works.
“I think the problem is not necessarily, from what I’ve seen, a lack of specific types of skills,” Mazzoni said, “but rather just a generally much smaller talent pool as compared to cities with multi-million person populations.”
Posting open positions on job boards and showing up at career fairs isn’t enough, she said. Companies have to be much more targeted if they want to connect with the right departments, faculty and administrators that will lead them to the right applicants, and that can be difficult for startups when each institution is so large.
What could help? If university career services departments were to “recruit” local businesses on behalf of their students, making the introductions first rather than relying on companies to recruit their talent, that would be “very helpful” for startups and reduce hiring barriers, per Mazzoni.
Local economic development groups, trade groups and government agencies can make an impact by directly reaching out to startups to offer their services.
“If founders are not already deeply embedded in Pittsburgh’s local startup ecosystem, it’s not apparent just how many types of services exist to support local business growth,” Mazzoni said. “Extending a hand and speaking directly with local companies to offer support should be the first objective of these organizations.”
Workforce development struggles often hit high-growth startups like Abridge because they’re competing with major tech companies for top-tier technical talent, according to Luther from InnovatePGH.
Pittsburgh struggles not only to retain highly specialized graduates but also to get the local, late-stage funding necessary for growth. For high-growth companies like Abridge, where to site an office is about access to talent and brand recognition among potential customers, per Luther.
That’s why big companies leave Pittsburgh all the time, he said, adding that their impact doesn’t necessarily leave with them.
“We cannot afford to take for granted the investments being made by Aurora, Duolingo, Abridge and others any more than we can PNC or Alcoa,” Luther said, referencing two companies with a both a strong local and national presence.
PNC was founded in Pittsburgh in the 1800s and still employs about 60,000 locals, and is still the region’s largest bank. Industrial corporation Alcoa, also founded more than a century ago, moved its HQ back to Pittsburgh in 2017. The company is the eighth largest producer of aluminum in the world, and it’s worth nearly $9 billion.
How can Duolingo skip Silicon Valley, then?
Educational language platform Duolingo, founded in 2011 in East Liberty and now worth $14.75 billion, has committed to remaining centered there, despite having offices in New York, Seattle, Detroit, Beijing and Berlin.
“There’s always going to be challenges hiring in Pittsburgh,” Jocelyn Lai, Duolingo’s global head of talent brand, told Technical.ly. The city isn’t necessarily top of mind for young tech workers looking “to make it,” she said.
However, hiring emerging talent like Gen Z hasn’t been hard, partly because Duolingo spun out of Carnegie Mellon University and has maintained a close relationship ever since, according to Lai.
“Pittsburgh is a pretty egoless city compared to other places.”
Jocelyn Lai, Duolingo’s global head of talent brand
She’s also found that young potential hires are attracted to the company’s mission, an increasingly important factor in deciding where to work. “It’s not like you have to give up becoming a great software engineer or becoming a great product designer just to do good,” Lai said.
When it comes to attracting leadership positions or more senior hires, the pandemic has played a role in Pittsburgh’s appeal, Lai said, as she’s noticed a shift in what these workers value when choosing a place to live and work. More experienced workers choose Pittsburgh because of its low cost of living, good public school system and the potential to have a backyard, something that can be hard to come by in New York or San Francisco.
In fact, the region’s status (or lack thereof) acts as a “natural filter” for ego, per Lai.
“You can’t really have an ego and be willing to move to a tier-two city,” Lai said. “Of course, ego will exist anywhere, but for the most part Pittsburgh is a pretty egoless city compared to other places.”
Duolingo will always be headquartered there because moving to a place like San Francisco would make the company less unique, Lai said.
“Every company has to make a decision that’s right for them,” Lai said. “We have decided that what we value is the specialness of Pittsburgh.”
Companies:
Duolingo / Abridge
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