Elon Musk has announced that X, previously known as Twitter, will soon be leaving its San Francisco headquarters for Texas. Musk cited challenges with California’s tax and regulatory landscape, claiming that “it is impossible to operate in San Francisco if you’re processing payments.” His discontent with the city’s policies has been evident for years, but recent legislative changes supporting LGBTQ+ students may have accelerated his decision to move X—and possibly SpaceX—to Texas.
End of an Era in Mid-Market
The departure of X marks the end of a significant chapter for San Francisco. The company’s once-bustling headquarters in Mid-Market is now mostly empty, with remaining employees relocating to Palo Alto and San Jose. X’s move signifies a shift from its early days in San Francisco, when it was at the heart of a tech boom in a neighborhood that was struggling with crime and vacancies.
Despite the historical ties, San Francisco officials are taking the news in stride. David Chiu, the city’s attorney, reflected the general sentiment: “I share the perspective that most San Franciscans have, which is good riddance.” This indifference highlights a broader shift in the city’s attitude toward tech companies.
A Decade of Tech Boom and Gentrification
Twitter, founded in San Francisco in 2006, was a key player in transforming the city’s tech scene. By 2011, facing a potential move to Brisbane due to payroll taxes, Twitter prompted then-Mayor Ed Lee to offer a tax break. The “Twitter tax break” aimed to revitalize Mid-Market by waiving payroll taxes for companies like Twitter that moved into the area.
The influx of Twitter and other tech firms led to a surge in local businesses and luxury housing, but it also drove up living costs. The area saw a dramatic economic shift, with tech giants like Uber and Square setting up nearby. However, the benefits of the tax break were mixed; while it created jobs, it also led to gentrification and rising housing prices, affecting long-time residents.
Pandemic and the Musk Era
The pandemic dealt a severe blow to office culture, accelerating the trend of remote work. Twitter, under CEO Jack Dorsey, allowed employees to work from home indefinitely, leading to vacant offices and a drop in local foot traffic. Musk’s acquisition of Twitter in 2022 marked another turning point. He cut jobs, rebranded the company as X, and installed a large “X” sign on the building, causing friction with local residents and city authorities.
Former Twitter employees, like Yao Yue, voiced relief at the move. “It’s like a zombie version of the old Twitter. Just put this bird out of its misery,” Yue said, reflecting the sentiment that X’s departure is a natural conclusion to its San Francisco chapter.
Musk’s decision to leave also appears influenced by political disagreements. He has criticized California’s pandemic policies and expressed frustration with the city’s gross receipts tax, which he argues penalizes businesses like X that handle payments. His claim that X “could not remain in SF and launch payments” underscores his dissatisfaction with the city’s regulatory environment.
San Francisco’s Future Post-X
Mayor London Breed has made it clear that the city will not make special efforts to keep companies like X. “I’m not going to beg anybody,” she said, focusing instead on supporting the success of businesses that choose to stay.
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Mid-Market, while still facing high office vacancy rates, is showing signs of recovery. San Francisco’s chief economist, Ted Egan, noted that X’s impact on the city’s economy had already diminished. “In many respects, they were already gone,” he said.
