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X's San Francisco headquarters

Phoenix.com Technology News: On August 26, Beijing time, the long-term cooperative relationship between the city of San Francisco and X (formerly Twitter) is about to end, but city government officials are not sad at all.

In the coming weeks, X boss Elon Musk will close the company's headquarters in a run-down neighborhood in downtown San Francisco and move the last of its employees south to offices in Palo Alto and San Jose. The new headquarters will be in Texas.

However, San Francisco city officials do not regret the departure of X. Compared with Twitter, which was attracted to San Francisco through tax credit incentives more than ten years ago, X has changed a lot. At that time, San Francisco introduced Twitter to a backward neighborhood called "Mid-Market" near City Hall to help build an emerging technology center. However, the epidemic and the large-scale layoffs carried out by Musk after acquiring Twitter in 2022 have made this headquarters "dead in name only."

"I share the view of most San Franciscans, which is 'well gone.'"said David Chiu, the San Francisco city attorney who sits on the city's Board of Supervisors and supported the 2012 tax breaks that brought Twitter to Midmarket.

Twitter once symbolized San Francisco's status as a startup capital, but San Francisco's cool response to X's departure suggests officials are now less willing to cater to companies considering relocation. Musk has previously publicly criticized San Francisco's rigid tax policies and liberal politics.

The former hot commodity

Twitter was founded in San Francisco in 2006. In 2011, it threatened to leave its hometown and move to Brisbane, a small city on the southern border of the city, because Brisbane has no payroll tax.

At the time, then-San Francisco Mayor Ed Lee, responding to the lingering effects of the recession and nearly 10% unemployment, proposed a so-called Twitter tax break. It would eliminate a 1.5% payroll tax on new employees at certain mid-market companies. In turn, those companies would create jobs and bring vitality to a neighborhood plagued by crime, vacancy and homelessness.

Twitter's headcount ballooned from a few hundred to a few thousand after it moved into its new headquarters at 1355 Market St. The spacious first floor became home to an upscale bar and restaurant where people could eat antelope, elk and pig ears.

By 2017, 59 new companies had opened offices nearby, including ride-hailing app Uber, payments company Square and software company Zendesk. Several luxury apartment buildings went up. The boom helped expand the city budget but also led to a surge in housing prices.

Many tech companies also offer free food, which has led to employees not spending as much at local businesses in San Francisco as city leaders would like.The Twitter tax break ended in 2019, and was viewed as a mixed blessing by politicians.

Then the pandemic hit. Twitter's offices were deserted and traffic dried up. Jack Dorsey, Twitter's co-founder and CEO at the time, announced that employees could work from home forever.

Enough with Musk

Musk bought Twitter for $44 billion in October 2022 and soon initiated massive layoffs. Last year, he renamed the company and put up a giant "X" sign on the roof that flashed at night, disturbing neighbors and getting him in trouble with city government.

“It’s like a zombie version of the old Twitter, and I think a lot of people feel like: put this bird out of its misery,” said Yao Yue, a software engineer who worked at Twitter for 12 years before being fired after Musk bought the company.

Musk

Musk, who has clashed with state regulators over stay-at-home orders during the pandemic and has become increasingly embroiled in right-wing politics, recently expressed his displeasure with San Francisco. In July, he posted online that he was trapped in his company's garage "because a group of people were on the street doing drugs and wouldn't leave!"

Last month, Musk announced that he would move X's headquarters to Austin, Texas, after California passed a law prohibiting school districts from requiring teachers to notify parents when their children change their gender identity. He also blamed the decision in part on San Francisco's gross receipts tax, which taxes transactions that occur outside the city's borders.

He said the tax unfairly penalizes businesses that process payments, the very service he wanted X to provide. “X cannot stay in San Francisco and will fail if it launches a payments service here,” he wrote in a July post.

No retention

San Francisco Mayor London Breed, who said she met with Musk once a few months ago and has texted with him, said she made no offers to X to stay but wants to maintain good relations with all CEOs in her city.

“I’m not begging anybody,” Breed said, “but I made it clear that my goal is to make sure the business is successful.”

She said she thoughtMusk's political agenda forced him out of San Francisco, but did not elaborate on this.

Now, the “Mid-Market” neighborhood where X is located looks better than it did at the height of the pandemic, but its office vacancy rate is 46%, 10 percentage points higher than the city’s overall rate. Uber and Square have moved out, and Zendesk has retained a small office but has a larger one downtown. X’s lobby is empty, and most of the businesses in the building are closed.

Ted Egan, chief economist for the City of San Francisco, said:X's business has shrunk so much that its departure will have little impact on city finances.

“In many ways, they’ve already left,” he said.

As of press time, Musk and X have not yet commented. (Author/Xiao Yu)

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