Far from the palm trees of Miami or the taco trucks of Austin, Catalin Voss is based between a cannabis club and a pawn shop. in the heart of the Mission District.
Voss rents a nondescript office building in one of San Francisco's most vibrant neighborhoods as a base of operations for Ello, a company he co-founded in 2020 that uses voice recognition technology, powered by artificial intelligence, to help struggling students. to develop their reading skills. The office is located within walking distance of his apartment in Noe Valley and just steps from some of the best taquerias and cocktail bars in the city. And those are just some of the advantages he mentioned when explaining why he is based in San Francisco.
Screw the fatal loop.
Voss is part of a sizable cohort of San Francisco loyalists, old and new, who say they are baffled by the “all is lost” narrative propagated by conservative media hosts and, more recently, a vocal contingent of tech leaders that includes billionaire entrepreneurs turned entrepreneurs. agitator Elon Musk.
Detractors describe San Francisco as a city in decline; in Musk's words, “an abandoned city.” Zombie apocalypse” – ruined by liberal policies that allowed street crime and illicit drug use to fester. In a November debate with Gov. Gavin Newsom, Republican presidential hopeful and Florida Gov. Ron DeSantis invoked the city's notoriety several times, at one point displaying a “scat map” of human feces littering the streets. from San Francisco.
Voss, on the other hand, says San Francisco remains the ideal city for innovation and opportunity in the tech industry.
“There's no better place to do it than SF,” Voss said, sitting in a small conference room in Ello's apartment-style office, around the corner from OpenAI's headquarters.
“If you want to be the best in the world in finance, you move to New York. If you want to be the best in the world at acting, you move to Los Angeles. “If you want to be the best in the world at technology, you move to San Francisco,” said Voss, originally from Germany.
San Francisco loyalists say the city remains a vibrant hub for tech startups, talent and funding.
(Luis Sinco/Los Angeles Times)
Several tech leaders interviewed (some have spent decades in Silicon Valley, others are newcomers to the region) argue that San Francisco and the broader Bay Area remain a thriving powerhouse of talent, institutional knowledge and abundant venture capital. They say emerging tech hubs (think Nashville, Miami, Austin) really can't compare.
Instead, they argue, going through cycles of booms and busts is simply a natural part of the rhythms of San Francisco. And while they acknowledge the economic impact of the COVID-19 pandemic as technology companies switched from downtown offices to remote work, they see the next boom ahead in the industry being built around artificial intelligence.
“It feels like this really optimistic and exciting time,” said Angela Hoover, who recently moved her AI search chatbot company, Andi, from Miami to San Francisco. “People want to be in San Francisco and the people on my team who live here are falling in love with the city.”
The move from the East Coast to the West Coast has been like “rocket fuel” for Andi, Hoover said. He has found a host of leaders in the AI field willing to provide feedback and collaborate on ideas.
Some key data also challenge the depiction of a region in full decline. Last year, the Bay Area maintained its top national ranking for venture capital investment, followed by Boston and New York, according to an October report from Ernst and Young, driven in part by investments in artificial intelligence.
And while California as a whole has lost about 37,200 people since July 2022, according to the state Department of Finance, San Francisco and other Bay Area counties saw a net gain of thousands of residents. And prohibitive housing prices in San Francisco have fallen over the past year, a trend that is expected to continue into 2024.
“I have seen over the past six months a spirit of optimism gradually return,” said Homa Bahrami, a senior lecturer at UC Berkeley's Haas School of Business. “Every day we hear about another layoff, another layoff, another layoff. But at the same time, you also see how this new company was formed, this new company was acquired, and venture money was invested in this space.”
Bahrami attributes the Bay Area's importance in the tech industry to its tangible resources, including education, mentorship and funding, which make it “difficult for other places to emulate.”
The region's many elite schools, including Berkeley and Stanford, nurture the next generation of startups and executives. Dozens of retired CEOs are available to mentor younger leaders, and venture capital funding is easier to access than in many of the newer tech hubs.
“The Bay Area is a global ecosystem,” Bahrami said. “It's not just an American ecosystem.”
Still, Bahrami urged caution in reading too much into the early signs of the next “boom.”
“I would use the word 'paradox,'” Bahrami said. “I think we are in a kind of transition of the world from the pandemic era to the post-pandemic era. But we’re not there yet.”
And Bahrami noted that “dark clouds” still loom, including inflation, geopolitical challenges and the difficulties San Francisco faces in revitalizing its post-pandemic downtown.
The office vacancy rate in San Francisco now exceeds 30%, according to the city's chief economist, Ted Egan. Workers are coming into the office at just 43% of pre-COVID levels, and that's bad news for restaurants and retail.
“Before the pandemic, the city center was a fairly rich ecosystem. But at the center of all this were the people who came to work in the offices,” Egan said. “Until that is restored, it will be difficult to restart a positive dynamic midfielder in the center.”
Even San Francisco advocates acknowledge that the pandemic exodus has been a blow. In recent years, tech giants had taken over long stretches of downtown, raising shiny new towers that employed thousands of workers who needed places to eat, drink, shop and live.
After COVID hit and tech companies allowed people to work from home, it was only a matter of time before “home” became another city and then another state, with cheaper rents, fewer people camping homeless and less property crime. Many tech leaders did the same, realizing they could raise money and run a business in states with lower tax rates.
It's not that Voss doesn't see any problems. It's just that he believes San Francisco is thriving despite them.
“I perceive it as background noise,” he said.
Voss said Ello employs about 35 people and has satellite offices in New York and Nairobi. The company recently raised $15 million in Series A funding, and Voss said he convinced a well-known machine learning engineer to move to San Francisco from China.
“If you're that person who is so ambitious and wants to be the best in the world at what you do, I don't think you wouldn't give San Francisco a second look because of what Fox News says.” Voss said.
Russell Hancock, president and CEO of the Joint Venture Silicon Valley think tank, agreed, saying most people in the tech world disagree with the narrative that San Francisco has somehow lost its appeal.
“San Francisco is vibrant. “It’s a magnificent city,” Hancock said. “There's a reason it has appeal. And part of the appeal, let us never forget, is that it is something quirky, eccentric and progressive.”
Hancock doesn't see other cities becoming tech hubs as a bad thing, arguing that the changing dynamics could relieve pressure on Bay Area infrastructure and moderate housing prices.
But as artificial intelligence takes hold, San Francisco has an “advantage” over other regions, Hancock said.
“That's how Silicon Valley works,” he said. “These things come in waves. And this seems to be the next wave. And it seems to be real.”
A big part of San Francisco's enduring appeal to tech is that it's in the city's DNA to be a “tolerant place,” added Peter Leyden, a Bay Area entrepreneur and, most recently, founder of Reinvent Futures, a company that helps bring together major companies. Leaders in artificial intelligence.
In Silicon Valley, Leyden said, it's practically a requirement to fail with one company to gain access to the capital and credentials needed to succeed with another. While the right-wing and libertarian “crypto team” fled to red states during the pandemic, she said, the old guard stayed put, confident that San Francisco would rise again.
“The thing is, every place has its problems, and so do we, but the narrative that exists is just wrong,” Leyden said. “Because there really is nothing like San Francisco.”
