Twitter’s last day in San Francisco

The Twitter Tax Break was wildly controversial; locals didn’t want the city to gentrify downtown with a bunch of techies with fleece vests and iPods. But at first, it worked. Once Twitter got its big light-up sign installed on its shiny new headquarters, more tech companies moved in nearby: Square, Uber, Zendesk, Dolby. Construction cranes started arriving. An empty lot across the street turned into a glass tower; others went up, too, full of housing for the kind of people who expect WiFi to be included in their utility bill. And the restaurants! The neighborhood grew thick with the kinds of places that boast seasonal menus and ambitious cocktail programs — AQ, Alta, Oro, Bon Marché, Dirty Water, Fénix, Cadence, Corridor, Volta, Kaya, The Perennial. It was a time.

Even better, the tax deal required Twitter to contribute money, staff, and expertise to benefit the community. In 2014 alone, the company pledged nearly $1 million in purchases, grants, and donations to neighborhood groups, including a local center for low-income women and children and an arts program for disadvantaged youth. The Bay Area Video Coalition, a longtime hub for media makers in the Bay Area, received more than $130,000 in cash and in-kind donations from Twitter between 2014 and 2021 — including 25 Apple laptops that the organization gave to kids for remote schooling during the pandemic. “They were great community partners,” says Paula Smith Arrigoni, the group’s executive director. “They made the grant process easy, and they trusted our expertise.”

But the good times were short-lived. By 2019, all those restaurants I mentioned had closed. Some of them didn’t even last a year. Part of it was the neighborhood: Then, as now, restaurateurs complained about homeless people and drug-related crime. But mostly they griped about an unexpected problem. All the techies who worked at places like Twitter and Uber and Dolby didn’t go out to eat in the neighborhood. Instead, they sat at their desks and enjoyed all the free food their companies served up in-house. They might work in the Tenderloin, but they ate their tenderloin at work.

The techies who worked at Twitter didn’t go out to eat. Instead, they sat at their desks and enjoyed all the free food their companies served up in-house.

“A lot of people, us included, missed our projections regarding how much foot traffic these offices would bring,” one restaurant owner explained at the time. “Our likely clientele are staying in their offices and getting really high-quality food that’s free.” SF’s Eater reported that the cafeterias in Square, Dolby, Uber, and Twitter served 10,000 people every day. That’s a lot of people not going out for lunch.

So the Twitter Tax Break turned out to be a whiff. In 2019, Egan wrote a report for the city that looked at what happened. Over the six years the payroll-tax exemption was in effect, he found, the city gave up $70.1 million in tax revenue. But even though it lost money, it succeeded, at least briefly, in attracting hundreds of new businesses to Market Street. “The neighborhood grew faster than the surrounding city as a whole,” Egan says. “It was a neighborhood that really didn’t have any economy at all, and then sort of did have one.”

But those days are over. And we can’t blame the city’s doom loop entirely on COVID. Even before the pandemic struck, the Twitter boom had already gone bust. Dolby’s headquarters is still on Market, but Square moved to Oakland in 2020. Uber decamped to the shiny new Mission Bay neighborhood. And now Twitter, the original migrant, is X-ing out as well. The tech companies may have moved to the inner city, but they never actually inhabited it. Instead, they holed up inside shiny glass fortresses, enjoying their sushi and their kombucha on tap, while the neighborhood continued to crumble around them.

The local officials who wooed X to Market Street have responded to the company’s departure like a scorned lover. In August, the county supervisor who cosponsored the Twitter Tax Break told The New York Times that his attitude about being jilted by Musk was “good riddance.”

But the city’s mistake was to assume that it was in an actual relationship with Twitter. In reality, it paid for what is known in the sex trade as a “girlfriend experience.” It was transactional, and when the transaction ended, the girlfriend moved on.

I keep remembering a work trip I took to San Francisco in 1999, a few years before I moved here. Glitzy restaurants were opening in the once sketchy South Park to serve all the newly arrived web workers. It seemed like every old industrial building was stuffed with CD-ROM startups; everyone had an expensive light-up sign with a fancy logo. Sony had even opened what was essentially a reinvention of the shopping mall. It was called the Metreon, and it featured the country’s first Microsoft store, a video arcade, movie theaters, and high-end restaurants. It was designed to be a neon-drenched symbol of the dot-com era, a mecca of high-tech fun.

Like the Twitter boom on Market Street, the Metreon’s techie glamour didn’t last long. By 2006, Sony had sold it to a mall developer. Today it’s mostly a Target. It was part of the never-ending cycle of tech booms and busts. Things were great! Then they weren’t. Then they were again! And now they aren’t.

So what’s to be done about Market Street? It’s not all bleak, to be sure. A big new Ikea has set up shop, complete with a nice food hall. The city is working on streetside improvements, like trees and plazas. Mayor London Breed, facing a tough reelection fight amid concerns about retail crime and homelessness, is betting big on street festivals. But those approaches don’t exactly seem sufficient to escape San Francisco’s persistent doom loop.

I asked Breed’s press representative how the mayor is thinking about X’s departure, and the rep sent me a list of “what we’re excited about.” Social media? Never heard of it. Have you met our new savior, artificial intelligence? AI companies, the rep told me, have leased 4 million square feet of commercial real estate in the city. And 21 of America’s top 50 AI companies are based in San Francisco. “Our focus remains on working with and supporting the many businesses that call San Francisco home,” the statement reads.

It’s a revealing response. If the history of tech busts teaches us anything, it’s that you can’t build a stable city on such an inherently shaky industry. It’s not entirely San Francisco’s fault; California’s screwed-up governance forces the city to chase booms. Taxes on homeowners are capped in weird ways, putting severe constraints on the state’s budget. So taxes on local businesses are to cities in the 21st century what gold and silver mines were to the 19th. The only solution is for the state to revamp its tax code so businesses don’t have to shoulder the entire tax burden.

But economics is only part of the problem. In San Francisco, chasing after tech and its booms is also a kind of addiction. Railroads, shipping, banks, dot-coms, search giants, social media, AI — whenever a boom goes bust, as it has with Twitter, the city goes looking for new tech, like a junkie looking for a fix. When gold puts you on the map, you never stop craving the rush.

Adam Rogers is a senior correspondent at Business Insider.