It's not that it's too small an area yet, it's that higher density building is being hamstrung, which prevents housing from meeting demand. If I recall correctly, for every new housing unit that's been created over the last (I think 10) years, 9 jobs were added. It's incredibly low density for such a high priced area, with many tiny, single story ranch-style houses, but a sizable contingent of very noisy residents fight tooth and nail against increasing the density.

In San Mateo, for example, there's a law on the books that prevents any new buildings above 55 feet, as well as any building with a floor area greater than 3x the land it sits in, which condemns the area to an average density of 3 stories or less, even in downtown, where there are some existing 150 foot+ buildings. That law is sunsetting in 2020, but there are already citizen groups agitating vigorously to get a renewal on the ballot, even as the current council was elected on a platform of more building. This would tie the hands of the council and prevent them from doing what they were elected to do.

In the case of the Bay Area, it's the case of building commercially zoned areas without residential units which can bear the capacity of the available jobs. Palo Alto is the poster child for having many more jobs than residential units.

Salaries are low at VC-backed firms. Huge salaries are from companies with a lot of revenue.