Is San Francisco in a “doom loop” or a “boom loop”?
Jul 1, 2024

Is San Francisco in a “doom loop” or a “boom loop”?

Heather Knight, who covers San Francisco for The New York Times, says that while the city cleans up its reputation and waits for the tech industry to revitalize its economy, residents are optimistic.

Several cities across the country are still trying to recover after the COVID-19 pandemic changed how and where many of us work, leaving big holes in downtown office districts.

San Francisco, once teeming with tech workers, is no exception. But few cities have suffered the sustained reputational damage that San Francisco has.

Marketplace’s Lily Jamali recently visited the city and stopped at Crane Cove Park, a new development filled with families hanging out at the beach, to meet with Heather Knight, The New York Times’ San Francisco bureau chief. Knight, who has covered the city for more than two decades, offered her take on San Francisco’s image problem, economic situation and tech culture. 

The following is an edited transcript of their conversation.

Heather Knight: I think some of it is over the top and unfair. It lacks some nuance. We do have really big problems — homelessness, a drug crisis, lack of housing. But I mean, as you can see where we’re walking, there’s a lot of good too. Beautiful parks, businesses are starting to come back. We have kind of moderated politically. And so I think people are feeling more optimistic than they were a couple of years ago.

Lily Jamali: When I was covering San Francisco about a decade ago, I was covering the tech community, and there was so much tension in San Francisco between — I’ll call them the old-timers here — and the tech community. This was when there were shuttle buses taking tech workers who wanted to live in the city down to Silicon Valley, to companies like Google and Apple and all those other places. That was such a fraught time between people who worked in tech and the people who had long called this place home.

(Daisy Palacios/Marketplace)

Knight: Yes, I think a lot of that stemmed from the huge spike in housing prices and people got pushed out. The middle class definitely got pushed out during that time, which is really unfortunate. Just look at the school district and how hard they struggle to find teachers who can live anywhere near the city. But I think that some of that tension has simmered down a little bit. And actually, there’s a new vehicle that has become the symbol of the tech community — the Waymo vehicles, which are driverless cars. They still kind of shock me every time I see them.

Jamali: They’re everywhere when you’re here.

Knight: They’re a lot more prevalent than they used to be. You just see these cars going around that look exactly like cars, but there’s no driver. Sometimes there’s no human at all.

Jamali: When I think back on where the city was a decade ago, there was this sense that tech leaders were not civically engaged enough in the city of San Francisco. What was that about?

Knight: I think the city was used to people in other industries really donating a lot of money and time to make San Francisco better. And then the tech titans came along, and I think a lot of people saw them as just bringing in all these really high-paid workers that were taking over apartment buildings and making it really expensive to rent and then not giving much back in return. They would have their lunches and dinners in the offices rather than patronize small businesses. It was very insulated and didn’t seem like they were engaged politically or in terms of community service, volunteering, things like that.

Jamali: Now, there are tech leaders, certainly a certain ilk of tech personality, some would say are too engaged.

Knight: Yeah, careful what you wish for, right?

Jamali: What’s that been like?

Knight: It’s really gone the other way. Some people now say that the tech leaders are too engaged, especially when it comes to money that they give to campaigns of people and causes they support. For example, I just did a big profile a couple of months ago on Garry Tan, the CEO of Y Combinator. He actually works very close to where we are now, and he is running a very successful incubator for startups to come through. He trains them and really encourages them to live in San Francisco. He says if you want to be successful and have access to venture capitalists, you’ve got to be here in the city. But he has gotten involved politically. He’s one of those guys that people either love him or hate him, and he really concentrates on the public schools, public safety and the police department and then building more housing.

(Daisy Palacios/Marketplace)

Jamali: Well, when we spoke with Garry Tan, his message was very clear that San Francisco is back, even though there’s all these issues, and he’s contributing a lot of money into the city’s political milieu to try to get things the way he wants them to be. He does want people to see San Francisco as a thriving tech community, the place you’ve got to be if you are an AI startup or really any kind of tech company trying to get started. And I wonder how much traction you think that’s gotten.

Knight: Yeah, he calls it the “boom loop.” He rejects the phrase the “doom loop” that’s really caught on in San Francisco, which is this theory that San Francisco is going to lose more and more property tax money and business money, and then its services will get even worse, which will push out homeowners and business leaders even more, and it’s a cycle that just spells doom. But locals are pretty sick of hearing about that theory, and he’s turned it on his head and says he doesn’t agree with it. He thinks we’re headed for a boom loop, where the opposite cycle happens.

Jamali: Is tech fueling the city’s economy today in the way that some tech leaders would hope people think it is?

Knight: Well, the city is really struggling. We can’t have rose-colored glasses about this — 35% of our office space downtown is vacant. The city government is anticipating a budget gap of $800 million over the next two years, which is just a huge portion of our budget. So, things are not great. And so, I think tech somewhat and AI especially are considered our great hope, but it’s kind of to be seen about how much money they actually add back.

Jamali: It just feels like such a stunning turnaround from where we were five years ago, before the pandemic. That was really the inflection point here.

Knight: I think city leaders have really realized don’t put all your eggs in one basket. If you rely on one industry and then something happens out of your control, like a worldwide pandemic that sends all that industry home to work on their laptops on Zoom, and then they’re not coming down to their offices anymore, they’re not spending money at lunches and bars and going out at night, and then your whole basis for tax money as well as money into the economy just disappears. That’s not very smart. So, San Francisco Mayor London Breed is trying to figure out how to make downtown more diverse in terms of what it offers. She wants more entertainment, more hotels, more restaurants, not just tons of office space, a Walgreens and a Starbucks on every corner. She wants it to be more vibrant, so that if one industry goes up in smoke, the whole downtown isn’t left behind.

Jamali: Right. I mean, the tech industry has not gone up in smoke. It’s just that it feels like the way workers work now has just changed so dramatically.

Knight: Yeah. And some big companies like Google and Meta are having their workers come back at least a couple days a week, but a lot aren’t. And so, when you walk downtown, it’s decently lively Tuesday, Wednesday, Thursday, but Fridays are totally dead. And that used to be the big going out night. People would come to work and then do happy hours and all go out to eat or whatever. And that’s just completely disappeared. So, people who run bars and restaurants downtown are like, “Where did everybody go?”

Jamali: Well, I don’t have any other questions, but I do want to just say it’s funny being back in San Francisco — I live in Los Angeles now — but on a, on a day like this, you can’t help but smile. It’s just so gorgeous.

Knight: Yeah. We’re looking out at the beautiful blue bay, not a cloud in the sky. There’s a gentle breeze. It’s not all doom loops.

Jamali: It is a little chilly for my taste. But it always is.

Knight: Well, you live in L.A.

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The team

Daisy Palacios Senior Producer
Daniel Shin Producer
Jesús Alvarado Associate Producer
Rosie Hughes Assistant Producer