A brief dispatch from the nation’s capital. With Covid culture finally defeated in all but the most agoraphobic, mentally ill corners of the internet, the geography of tech has undeniably begun to change. Ground floor, while coastal alternatives like Austin are holding steady, the secluded mountain retreats and tropical beach towns of 2021’s remote work alternate dimension have rapidly emptied (Tulum in shambles, poolside Google “product managers” hit hardest). So where is everyone going?
Well, at least in terms of the story we’re all telling ourselves, New York City is the clear winner. Everyone has some sloppy “the energy here hits different” tale from America’s center of the universe (myself included (get me drunk and we can talk)). Anecdotally, I know founders are moving there, and building. But the data is a little more ambiguous: while New York rents have absolutely reached insane new heights on account of demand, which implies growth, we’re still blind when it comes to the real population; most of the numbers we’re looking at are from 2022, and they all track a population decline. More recently, cell phone data indicated foot traffic was up in Manhattan, but only to something like 70 percent of what it was in 2019. Bad? I mean it’s not great, but by comparison it’s looking like a golden age. Back on West Coast Best Coast Standard Time, foot traffic in San Francisco’s previously packed downtown hovers at around 30 percent of its pre-pandemic bustle.
Which brings us to the fascinating question of the city’s alleged “RETVRN.”
The industry’s small class of too-online “techno utopian” shitposters have made quite a bit of noise about the great San Francisco resurgence of 2023, almost entirely based on the dominance of AI, which basically only exists in the Bay Area. And honestly? Maybe that’s enough. Are we looking at a California comeback? After all, Bloomberg reports, “the number of millionaires in the Golden State has surged at a time lower income residents are leaving,” which does sound great (to people who consider The Hunger Games a ‘feel good’ movie). But what does the rest of the data look like?
First, some good news: while Covid crashed San Francisco’s population to its lowest point since 2010, obliterating a decade of growth, most people moved to nearby suburbs, and the Bay Area has basically recovered — or at least in terms of population. But for people who actually mean “San Francisco” when they say “San Francisco,” I regret to inform you the stories of our thriving technology capital have been greatly exaggerated.
Not only is the city’s population nowhere near recovered, large swaths of the tech hub are rapidly deteriorating. From the collapse of local retail to a commercial real estate apocalypse, the city’s downtown increasingly looks dead beyond recovery. Some highlights: a $1.2B mixed use project — the city’s only post-Covid skyscraper project — just suspended construction “until markets normalize” (SF Chronicle). “In San Francisco’s financial district,” reports FT, “some office towers have changed hands in recent months for a quarter of the price they were marketed at three years ago. WeWork defaulted on a $240mn loan for its tower on 600 California Street in April. Elsewhere downtown, Elon Musk’s Twitter stopped paying its rent in November, forcing its landlord to default on a $400M loan.” A few blocks down, the owner of the Hilton Hotel in Union Square is defaulting on a $725M loan from JPMorgan. Sorry, I know it’s a lot. If you need a map of all the real estate in crisis, the Chronicle has you covered.
Following the city’s historic exodus, San Francisco faces a projected $728M deficit as it confronts falling tax revenue and rising crime. This strikes me as a fairly obvious disaster. What are we RETVRNing to, exactly?
One of my more techno-utopian friends insists population is a “normie” metric, and there’s certainly some truth to that; in accordance with the industry power law, quality trumps quantity. It doesn’t matter how many people are in your city, it only matters that they’re working on the most important companies. Then, along the dimension of real, breakthrough technology, young engineers tend not to care about crime, or schools, or functioning local infrastructure. The kids want to build a robot god, and the baby robot gods are all in San Francisco. If less people in the city also means, for once, a dip in the cost of rent, maybe this is fertile ground for something more to happen. A movement, if you will. But my sense is any local movement in technology will look (best case) more like Burning Man than a robust business ecosystem, which, while extremely awesome, is a very different thing than what the memes have promised.
Anyway, a little more from our capital before we carry on to the industry news:
Culture. Last week, the CA Public Utilities Commission (CPUC) approved a full self-driving taxi rollout in San Francisco. The decision to allow self-driving cars — an actual miracle technology — to carry on operating following a years-long successful experiment on the city streets was immediately met with calls for violence. One of my favorite: an anti-tech journalist named Paris Marx. Then, the president of the city’s Board of Supervisors, mob boss Aaron Peskin, lied about the data, and vowed the CPUC’s ruling was “only the beginning”
At the state level, the hearing for California AB 316, which would require heavy-duty autonomous trucks to keep a “safety operator” in the vehicle (in other words: a driver), has been set for August 21st (ca.gov).
Finally, a little fun and flirty local color: a couple days ago, the Chronicle reported on the case of an area woman, with a history of prior arrests, who stole a “single bottle of Prosecco” from San Francisco’s Mad Max Whole Foods before attacking a police officer. The case, we’re told, “highlights the city’s complex public safety challenges and a legal system that officials and experts say must grapple with those stealing to survive, in contrast to organized criminals looking to profit.” “Shoplifting” vital foodstuff, the woman’s lawyer said of the Champagne-like Italian luxury good, “is a crime of desperation and poverty.”
NOTABLE INDUSTRY TRENDS
We love an escalating trade war (when our guy does it). Last week, President Biden issued an executive order banning investment in Chinese semiconductor development, and quantum computing. Private equity and venture firms will also have to disclose some of their investments. This follows roughly fifty years of bi-partisan encouragement from our government to invest in China, in US thinking has been something like: trade will lead to stronger international ties, and China will westernize. Also $$$.
Anyway, the Chinese government tapped the resources, stole everything it wasn’t freely given, and built an authoritarian war machine (oops). (Wall Street Journal)
Bad robot. Yesterday, tech accelerationist and beloved hacker George Hotz debated the nation’s foremost doomer Eliezer Yudkowski on AI safety. (X)
Social media, the mind killer? Sorry, folks, it looks like you’ll have to keep blaming mental problems on your parents for now. Picking up where I left off in Bombshell, my piece on the “Facebook whistleblower” who wasn’t, a major University of Oxford study has concluded there is “no evidence" Facebook has caused "widespread psychological harm.” To date, this is the largest independent scientific study on the topic. (TechXplore)
Note: I am truly not dogmatic on the subject, and suspect, just like the rest of you, social media is rotting our society. But that suspicion comes from a place of feeling, and instinct. We need data. Otherwise, what are we even talking about?
Some men (liberal governors) just want to watch the world burn (ban nuclear). Illinois’ Governor Pritzker vetoed a bill that would have lifted a state moratorium on the construction of new nuclear power plants. The bill had broad, bi-partisan political support, once again calling into focus the extremely damaging impact a small minority of unhinged zealots have been able to exert on our entire politics. (NBC Chicago)
Attempting transparency, judge for Google antitrust case describes the difficulty of not investing in Google, on account of he’s invested in several large cap funds, which include Alphabet in their respective baskets. This has been framed by one of the dumber writers covering the industry as smoking gun proof of monopoly “guilt.” The judge has no direct investment in Alphabet. (@mattewstoller)
In a promising 180-degree turn for the Democratic Party on the topic of “free speech,” Biden administration comes out forcefully on side of social media companies, urging “the US Supreme Court to strike down key parts of Florida and Texas laws that would sharply restrict the editorial discretion of the largest social media platforms.” In other words, he supports their right to freely censor. We look forward to hearing his thoughts on their right to platform “misinformation” and “hate speech,” which have mostly been defined these past few years as “right wing people saying things.” (Bloomberg)
SBF returns to jail after judge revokes bail (CoinDesk). The former crypto king leaked his ex-partner / girlfriend’s (?) diary to the New York Times. Presumably, this was in an attempt to make her look insane. Prosecutors argued the move constituted witness intimidation, which is frowned upon. SBF will remain in prison through the duration of his trial (damn).
Apple’s suit against three former employees for revealing trade secrets to startup Rivos can move forward, judge says (Bloomberg)
I’m counting this as industry news simply on account of I would not have had to watch it did the iPhone not exist: brother, did you catch presidential candidate Vivek Ramaswamy rapping 8 Mile at the Iowa State Fair? Democracy. We are willing to finally admit it was a huge mistake, yes?
“Panicked” professors are “flooding” “professional conferences” to “prevent ChatGPT chaos” this fall, says the Washington Post. To the question of how any of this could possibly matter, answers are few. We leave our reader to contemplate the question in peace.
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