Perhaps the biggest round of applause during mayor Ed Lee’s Tech Town Hall this week came when he mentioned San Francisco’s unemployment numbers. In January of 2011, 9.6 percent of city residents were out of work. Less than two years later, the number has dropped to 6.9 percent.
It’s an eye-popping statistic in an era defined by economic hardship. It’s also one that makes sense, according to Lee, because of efforts the city has taken to become the “innovation capital of the world.” The mayor talked about those efforts at the kickoff event for “sf.citi,” what he described as a kind of “digital chamber of commerce” for San Francisco.
Even the sometimes-jaded crowd of startup and tech veterans who RSVP’d to hear Lee talk at the Autodesk Gallery event had a hard time doing anything but applaud as the mayor rifled off the promising stats and initiatives offered by city government. For instance, there are now over 300 cleantech companies in the city, as well as more than 10 biotech companies, Lee said. The city’s “mid-market” area is booming, with Dolby Stereo planting its headquarters on the 1200 block of Market, Square placing its HQ on 11th and Market, as well as Twitter, Zoosk, Yammer, Zendesk and others also setting up shop.
What’s made this concentration of innovative companies possible? The mayor says it’s because of the tax changes he’s implemented and is seeking. It’s been no secret that, in an effort to keep Twitter in the city, Lee offered a payroll tax exemption that many other companies are now grabbing as well. It’s all part of more “business friendly” policies that Lee says he and city government are attempting to push through. One of those is “Measure E.” The November ballot initiative would gradually change policy in the city so that companies aren’t taxed according to their growing payroll (largely considered a drag on hiring) but rather by total revenue a company generates. Many say this would help all the rapidly growing startups in the city. “We want to tax you more in a way that invests in your success,” Lee said.
All the happy talk about new initiatives didn’t stop there though. The big announcement of the day was actually a new “TechSF workforce training initiative” that could add 2,500 new high tech jobs to the city in the next five years. The program relies on an $8 million federal grant to help veterans returning from Iraq and Afghanistan, many of whom have the skills needed to succeed in the high tech economy, but not the money for expensive classes. Lee said that many vets can’t afford to go to a big school like Cal or Stanford so they go to SF State or city college, where much of the money will be concentrated. “The first class of the TechSF Academy is currently 80 students taking courses in mobile app development, networking, multimedia design (game development, web design, content creation, and video production), and tech support,“ Lee said. The program also partners with groups from the city’s economically downtrodden Bayview/Hunters Point District.
Lee said his philosophy on business and government is driving all of this. He says too many cities keep the two separate when they shouldn’t and they are struggling as a result. For instance, San Francisco has mounds of data on MUNI schedules, taxis, parking and dozens of other things that it never knew what to do with. By making that information available to entrepreneurs with business plans, the city is “melding” businesses and government in order to create “efficiencies” that didn’t exist before. “I got our whole automobile division to start thinking about they could start doing car sharing within city government first,” Lee said. “Nobody wanted to share their cars at that point. Stupid, wasteful government stuff.” He said there are now dozens of companies such as Uber that are taking advantage of data to bring cars to the people that want them as opposed to where a dispatcher wants them to go.
So does all this mean that San Francisco is now the “Innovation Capital of the Wolrd.” I’m not sold on it, even though the data and trends say the city could be on its way. There are still troubling problems that Lee didn’t really have an answer for, such as the high cost of rent for new arrivals. He said initiatives that might help tenants come in at more affordable rent levels are “under review,” but wouldn’t be specific. He said a solution might be to create even smaller housing for the new arrivals, but that didn’t meet with much enthusiasm. Regardless, there’s really no arguing with that unemployment data. The city is at the very least a lot better off than it was even two years ago, but whether or not it’s going to be the world’s innovation capital remains to be seen.