AI Could Save San Francisco, But at What Cost?

By: Lauren Fokas | Published: Sep 25, 2023

San Francisco was at one time the home of the tech revolution. Companies such as X, formerly known as Twitter, Apple, Lyft, Amazon, and dozens more set up their offices in the Golden Gate City. 

But in a post-pandemic world, the sky-high cost of living in the city pushed residents and even companies to abandon northern California. Now, with a new tech boom on the horizon, everyone is wondering if San Francisco will become the meeting place once again. 

Why is San Francisco Struggling?

For years, San Francisco was the tech hub, with huge companies such as Microsoft and Amazon, as well as dozens of smaller operations working out of the city’s many office buildings. 


Source: Justin Sullivan/Getty Images

But when tech employees started working from home during the global pandemic, these companies ditched their office buildings and realized they could save a whole lot of money without them. 


Techies Fled from San Francisco

Because tech employees could then work from anywhere, thousands abandoned the Golden City with their laptops to settle by the beach, in the mountains, or anywhere where the lower cost of living offered them a better life. 


Source: ZDNet

Today, San Francisco is in real trouble. The extreme wealth divide, empty office buildings, and an increasingly problematic homeless population has made the city less appealing than it once was. 

Is AI Coming to San Francisco?

But it seems like the city could come back from this mass exodus with the boom of the AI business. Last month, 200 techies, government officials, and academics met at the Reinvent Futures event at Shack15 in the San Francisco Ferry Building to discuss the dangers and promises AI holds. 


Source: Shack15/Yelp

At the new co-working space, C.C. Gong, an entrepreneur and supporter of San Fran’s startup community announced to the crowd, “San Francisco is reclaiming its throne and the white-hot center of gravity. Miami is dead and Austin is dead. San Francisco is back!”

“The AI Renaissance Had Already Started in San Francisco”

It’s important to note that there are already dozens of AI startups and companies working and living in San Francisco. In fact, half of all AI startups currently work out of the city. 


Source: TedxTeen

Dave Fontenot, owner of AI company HFO, moved his startup to San Francisco after a visit from NYC, as the people living in the Golden City were way ahead of anywhere else in the country when it came to AI development. 

“Hacker Houses” Are All Over San Francisco: What Are They?

Fontenot famously runs a hacker house known as a “monastery for hackers” just blocks from San Fran’s famous “Painted Ladies,” and he’s not the only one. 

Source: Justin Sullivan/Getty Images

Hacker houses have popped up all over the city; instead of renting office buildings, many AI companies are renting large houses where the staff works, plays, and sometimes lives. And while it seems to be a great system for the new AI employees, hacker houses may decrease the potential positives of the AI boom in San Fran. 


The Dangers of AI

At the Reinvent Futures event last month, people were both excited about AI’s move to SF, as well as concerned with the potential dangers the industry poses for the city. 

Source: Andrea Verdelli/Getty Images

While there are certainly many potential issues to be aware of, the main cause for concern is that by working on AI development, the industry will actually eliminate the need for thousands, if not hundreds of thousands, of jobs in the city and around the world. 


How AI Will Affect San Francisco

In addition to the general problems AI creates, having the AI tech boom take place in the Golden City will absolutely have a direct effect on the city’s economy, and it might not be for the best. 

Source: Horacio Villalobos - Corbis/Corbis/Getty Images

San Francisco is trying to get back on its feet, and although AI companies will bring money to the city, it might not be as much as the city needs. AI companies are small, and many of their employees can work from home, so the Financial District offices may remain empty, which will negatively affect the economy and ensure that downtown SF stays a ghost town. 


AI Boom Compares to the Dot-Com Bubble

Many researchers are comparing the AI technological boom to the Dot-Com bubble from the late 1990s into the early 2000s. 

Source: ETMoney

During that time, thousands of companies failed within just a few years of opening their doors, and the billions of dollars in the industry caused huge market crashes that affected the entire country. In other words, the AI boom may not be the economic savior people want to believe it will be. 


San Francisco: A Boom and Bust City

Colin Yasukochi, executive director of the Tech Insights Center at CBRE in SF explained, “We have always been a boom-and-bust city. Maybe this will be the next boom. It’s hot right now but it’s not going to cure the problems in the office market; it will take some time.”

Source: Justin Sullivan/Getty Images

Just because San Francisco is seeing an influx of AI companies within city limits, it doesn’t necessarily mean this boom is going to “save” the city. Though residents of SF are hopeful that AI may just help the city get back on its feet, at least for the time being.