Any time I see stories of how crazy the situation surrounding the SF housing market is, I compare it to my own city (Amarillo, TX), which has the opposite situation. A much smaller population over a larger area with plenty of land to sprawl into means that the population density (and average rent) is much lower. My 1 bedroom apartment is ~650/mo, and my impression is that that situation would be a laughable offer in any larger city.
The only issue? Amarillo is pretty far away from the other larger cities. In the plains, we talk of distances between cities based on the number of hours it would take to drive that distance. Six to Dallas/Fort Worth, six to Denver, four to Oklahoma City, ten to Houston. Combined with the lower population, not much of an urban culture makes it out here. I don't mind, though, and because of the low cost of living and the Internet bringing the world to me, the low cost of living makes up for it. I'm not working with a startup nor on any products of my own at the moment, but should I start, I don't think I'd relocate unless a very compelling offer came my way.