'A stab in the back.' How Elon Musk's decision to move X from San Francisco is stirring mixed emotions

SAN FRANCISCO — When Elon Musk took implicit Twitter successful 2022, it marked a caller epoch for the struggling San Francisco company.

As the woody neared completion, Musk, the eccentric entrepreneur known for starring Tesla and SpaceX, tweeted, “Entering Twitter HQ — fto that descend in!” with a video of him carrying a achromatic descend into Twitter’s San Francisco office.

Two years later, the concern is moving out.

Twitter, present known arsenic X, is expected to adjacent its San Francisco office this month, leaving down the Mid-Market vicinity it has called location since 2012. The institution is reportedly moving its headquarters to Austin, Texas, but plans to relocate its San Francisco employees to San José and Palo Alto, wherever it has already listed occupation openings.

The departure is different stroke to a metropolis that has been buffeted by high-profile concern departures and that erstwhile held up Twitter arsenic a cardinal portion of its revival. Downtown San Francisco’s vacancy rates person ballooned arsenic tech companies slashed their existent property expenses and halted bureau enlargement plans arsenic the pandemic has relented.

Confronted with a falloff successful ft traffic, large retailers specified arsenic Nordstrom and Anthropologie besides shut their stores amid heightened concerns astir crime, theft, vandalism, cause usage and homelessness.

X is the second-largest tenant successful the Mid-Market neighborhood, leasing 457,793 quadrate feet, according to CoStar, which tracks existent property trends. Vacancy rates successful Mid-Market are astatine their highest successful decades astatine 62%, according to CBRE.

A idiosyncratic removes letters from the Twitter motion that was posted connected the exterior of the institution office past twelvemonth aft it was rebranded arsenic X.

(Justin Sullivan / Getty Images)

“It’s conscionable symbolic of the nonaccomplishment of this medication and the elected people successful the metropolis failing to support our streets harmless and clean, to making definite that we are focused connected keeping businesses present and jobs here,” said mayoral campaigner Daniel Lurie, laminitis and erstwhile CEO of nonprofit Tipping Point Community and an heir to the Levi Strauss & Co. fortune.

Mayor London Breed was not disposable for comment, a spokesperson said.

Some existent and erstwhile metropolis officials person downplayed the fallout from X’s move, arguing that earlier monolithic layoffs astatine the institution and the emergence of distant enactment person softened the interaction of the company’s departure.

Others are directing their ire astatine X, noting that the institution benefited from fiscal incentives provided by the metropolis wherever it was born.

“Most of the metropolis and astir of the vicinity instrumentality it arsenic a stab successful the back,” said Ludovic Racinet, co-owner of the Function, a drama nine down the thoroughfare from X. “The metropolis has done truthful overmuch for Twitter, present X.”

Representatives of X did not respond to requests for comment.

‘We are portion of San Francisco’

Twitter made its online debut successful 2006, operating retired of an bureau connected South Park Avenue. While moving astatine podcasting institution Odeo, Twitter’s co-founder Jack Dorsey hatched the thought for a short-messaging service wherever radical would beryllium capable to stock updates with their friends.

The thought took off, rising successful popularity aft the founders unveiled the work astatine South by Southwest successful 2007. Attracting celebrities, politicians, journalists and adjacent astronauts, Twitter evolved into a societal media powerhouse and a planetary online megaphone.

As Twitter grew successful San Francisco, its founders searched for much abstraction to location its expanding workforce. Eyeing a imaginable determination to Brisbane, Calif., Twitter decided to enactment successful the metropolis aft San Francisco officials approved a impermanent payroll taxation break successful 2011 that could prevention the institution millions of dollars. City officials wanted to revitalize the country adjacent the Tenderloin, a gritty vicinity deed hard by the homelessness crisis.

“It was the mediate of the planetary fiscal crisis,” said Ted Egan, main economist for the metropolis and region of San Francisco. “Decision-makers didn’t privation to thrust a institution similar that retired of town.”

It worked. The taxation interruption lured Twitter into moving to Market Square, an 11-story Art Deco building, successful 2012. Leaving down a overmuch smaller bureau astatine 795 Folsom St., the caller office allowed the institution to adhd thousands of caller workers.

The caller digs included perks and amenities that had go portion of the tech culture: an outdoor extortion deck, a crippled room, a workout room, cafeteria and plentifulness of bird-themed decor.

“San Francisco’s unsocial creativity and inventiveness is simply a portion of Twitter’s DNA, and we consciousness similar we are portion of San Francisco,” the company said successful 2011.

The tax break expired successful 2019, but it remains controversial. It exempted Twitter, Zendesk and different companies located successful definite Mid-Market buildings from San Francisco’s 1.5% payroll taxation for immoderate employees they added. The payroll taxation included stock-based compensation, which could deter startups similar Twitter that were astir to spell nationalist from staying successful the city. From 2011 to 2017, San Francisco mislaid retired connected $70 cardinal successful taxation revenue. On mean annually, astir 9 businesses took vantage of the taxation break, according to a 2019 investigation by Egan.

The influx of tech concern had a downside. As much tech workers moved into the area, the outgo of lodging besides increased, making the metropolis little affordable.

Jane Kim, who was connected San Francisco’s Board of Supervisors astatine the time, said she believes the taxation interruption accomplished its goal.

“Twitter astatine the clip was considered a large anchor tenant,” she said. “It was new, but I deliberation radical felt similar it was going determination and determination was this excitement astir bringing each these young workers to a corridor.”

The logo for Twitter appears supra a trading station connected the level of the New York Stock Exchange 3 years ago.

(Richard Drew / Associated Press)

After Musk takeover, relations sour

But the emotion betwixt the metropolis and the societal media institution didn’t last.

Twitter grappled with respective challenges passim the years including contention for advertisement dollars from bigger tech companies specified arsenic Facebook and Google, stalling idiosyncratic maturation and disapproval that the societal web wasn’t releasing caller features rapidly enough. The institution besides went done galore main enforcement officers, which included Twitter’s co-founders Dorsey and Evan Williams.

A pivotal turning constituent came successful 2022 erstwhile Musk offered to bargain Twitter for $44 billion. After helium tried to backmost retired of the purchase, Twitter sued the billionaire to unit him to spell done with the merger agreement.

Worker morale reached a debased nether the caller authorities that demanded a “hardcore culture.” Musk told the BBC past twelvemonth helium slashed much than 6,000 jobs astatine the company, reducing astir 80% of the workforce (Twitter said it had much than 7,500 employees successful 2021).

Laid-off workers sued the institution implicit allegations Musk refused to wage severance, violated labour laws and targeted older workers, women and radical with disabilities successful the occupation cuts.

Twitter reinstated users who had antecedently been banned connected the societal media platform, including erstwhile President Trump, who was kicked disconnected aft his rhetoric and societal media posts were blamed for inciting unit astatine the U.S. Capitol connected Jan. 6, 2021.

Musk was besides accused of breaking metropolis rules aft an worker posted a photograph of a pistillate sleeping connected the bureau level successful a sleeping bag. Last year, Twitter was renamed X and aboriginal installed a giant flashing sign atop the headquarters, disrupting the slumber of adjacent residents.

David Chiu, erstwhile president of San Francisco’s Board of Supervisors, said X hasn’t been a “good neighbor.”

“Elon Musk has allowed antisemitism, racism, homophobia, transphobia to flood the level and successful a mode that is antithetical to the values of San Francisco,” said Chiu, the metropolis lawyer of San Francisco. “Since Elon’s takeover, Twitter has go specified a hollow ammunition of itself that I uncertainty galore volition announcement its existent departure.”

Musk began signaling X’s exit this summer, archetypal by announcing Hawthorne-based SpaceX would determination to Texas, which helium said was due to the fact that helium objected to a California authorities instrumentality that prohibits mandating teachers notify families astir pupil sex individuality changes. He aboriginal said X’s San Francisco office would determination to Austin, adding that helium “had capable of dodging gangs of convulsive cause addicts conscionable to get successful and retired of the building.”

The institution is readying to adjacent its office successful San Francisco connected Friday, Fortune reported past month. In a unit memo, archetypal reported by the New York Times, CEO Linda Yaccarino wrote that the determination was the “right 1 for our institution successful the agelong term.”

San Francisco’s Office of Economic & Workforce Development said the metropolis remains a “prime determination for immoderate institution funny successful filling their place” owed to its workforce, civilization and attraction of tech innovators.

“We bash not person immoderate accusation astir businesses taking X’s spot successful that building, but we can’t hold to assistance foster the adjacent question of start-ups and to spot however they turn and alteration the satellite from San Francisco, the AI superior of the World,” the bureau said successful a statement.

There are inactive remnants of Twitter’s past progressive relation successful its community. Around the country from its office was Twitter NeighborNest, a learning center that provided entree to exertion for the stateless and low-income families. It was portion of a 2015 concern with nonprofit Compass Family Services. It excessively was a unfortunate of the societal media company’s cuts.

The halfway closed during the tallness of the pandemic but was expected to reopen successful 2023, Abbey Leonard, main improvement serviceman astatine Compass Family Services, said successful an email. But past Musk purchased Twitter, changing the trajectory of the institution and upending programs to amended the surrounding community.

“At that constituent each anticipation of reopening the Nest was gone,” she said. “The full squad that ran each societal work was fired instantly and determination wasn’t adjacent anyone near to archer america it was over.”

Before Musk’s takeover, Leonard described Twitter arsenic a large partner. Workers volunteered with nonprofits and the institution adjacent hosted a large vacation party, filled with food, amusement and gifts, for their clients. Since Musk took over, connection with the tech institution evaporated. “It’s a precise large shift,” she said.

On Tuesday, the signage connected NeighborNest’s erstwhile bureau remained, but acheronian blinds were drawn up successful a vacant abstraction wrong and determination were scratches connected its beforehand solid door. The country astir X was dotted with restaurants and eateries that person unopen down and respective for-rent signs successful the Market, a marketplace and nutrient hallway located wrong the bureau building.

The fallout for tiny businesses

“Generally successful downtown San Francisco, astir restaurants are highly babelike upon the daytime colonisation of bureau workers, truthful erstwhile you person a concern wherever determination aren’t that galore there, it’s hard for these retail businesses to marque a spell of it,” said Colin Yasukochi, enforcement manager of CBRE Tech Insights Center.

Perry Dann Pancho, an adjunct manager astatine Poké Bar, an eatery wrong the Market, said income are down 20% to 30% from a twelvemonth ago.

“Before [the pandemic], each the radical from extracurricular the Twitter building, they devour here,” Pancho said. “Right now, nary one.”

Cristian Torres, co-owner of CTKempanadas, said helium delivered much than 300 empanadas to X’s San Francisco bureau Tuesday. That day, Torres said X was giving distant items similar pillows and covering and helium scored a T-shirt with Twitter’s vertebrate logo connected it. He said 20% of his concern comes from X oregon its employees.

“It’s bittersweet to spot them go,” Torres said, adding helium hopes to inactive merchantability empanadas to X employees adjacent aft they determination to San José. “I told them I volition present implicit there.”