When Elon Musk took over Twitter in 2022, it marked a new era for the struggling San Francisco company.
As the deal neared completion, Mr. Musk, the eccentric entrepreneur known for leading Tesla and SpaceX, tweeted, “Walking into Twitter HQ — let’s figure it out!” along with a video of him rolling a white sink into Twitter’s San Francisco offices.
Two years later, the business was closed.
Twitter, now known as X, is set to close its San Francisco headquarters this month, leaving behind the Mid-Market neighborhood it’s called home since 2012. The company is reportedly relocating to Texas, but plans to move its San Francisco employees there as well, and has already posted job listings in San Jose and Palo Alto.
The departure is another blow for a city that has seen high-profile business departures and once counted Twitter as a key part of its recovery. Vacancy rates in downtown San Francisco have ballooned as tech companies cut real estate costs and halted office expansion plans during the pandemic.
Major retailers such as Nordstrom and Anthropologie are also facing declining foot traffic amid growing concerns about crime, theft, vandalism and drug use.
X is the second-largest tenant in the Mid-Market area, leasing 457,793 square feet, according to CoStar, which tracks real estate trends. Vacancy rates in the mid-market are at 62%, the highest in decades, according to CBRE.
“This is emblematic of the failure of this administration and the city’s elected class to focus on keeping our streets safe and clean and making sure we keep the businesses and jobs here,” said mayoral candidate and founder Daniel Lurie, former CEO of the nonprofit Tipping Point Communities and heir to Levi Strauss & Co. Luck.
Mayor London Breed could not be reached for comment, a spokeswoman said.
Some current and former city officials have downplayed the impact of Company X’s relocation, arguing that previous major layoffs at the company and increased remote work have softened the impact of Company X’s departure.
Others have directed their anger at Company X, pointing out that the company benefited from financial incentives provided by the city in which it was founded.
“A large part of the city and a large part of the neighborhood see this as retaliation,” said Ludovic Racine, co-owner of Function, a comedy club down the street from X. “The city has given so much to Twitter, and now it’s X.”
A representative for X did not respond to a request for comment.
“We’re part of San Francisco.”
Twitter made its online debut in 2006, operating out of an office on South Park Avenue. Twitter co-founder Jack Dorsey came up with the idea for a place where people could share updates with friends while working at podcasting company Odeo.
The idea took off and grew in popularity after the founders unveiled the service at South by Southwest in 2007. Attracting celebrities, politicians, journalists and even astronauts, Twitter has evolved into a social media powerhouse and a global online megaphone.
As Twitter grew in San Francisco, its founders looked for more space to accommodate its expanding workforce. The company looked at a possible relocation to Brisbane, California, and decided to remain in the city after San Francisco city officials approved temporary jobs that would save the company millions of dollars in 2011. City officials wanted to revitalize the area near the Tenderloin, a rundown neighborhood hit hard by the homelessness crisis.
“This was during the height of the global financial crisis,” said Ted Egan, chief economist for the City and County of San Francisco. “Decision makers didn’t want to drive those companies out of town.”
It worked: Tax incentives allowed Twitter to move into Market Square, an 11-story Art Deco building, in 2012. Leaving behind much smaller offices at 795 Folsom Street, the new headquarters allowed the company to add thousands of new employees.
The new digs included perks and amenities that have become part of the tech culture, including an outdoor rooftop deck, game rooms, workout rooms, a cafeteria and bird-themed décor.
“San Francisco’s unique creativity and ingenuity is part of Twitter’s DNA, and we feel part of San Francisco,” they said in 2011.
The program expired in 2019 but remains controversial. It allowed Twitter, Zendesk, and other companies based in certain mid-market buildings to exempt themselves from San Francisco’s 1.5% payroll tax if they added employees. The payroll tax includes stock-based compensation and could discourage startups like Twitter from staying in the city as they prepare to go public. Between 2011 and 2017, San Francisco lost $70 million in tax revenue. An average of about nine companies took advantage of the tax breaks per year, according to a 2019 analysis by Egan.
The influx of tech investment has had a downside: As more tech workers move to the area, home prices have also risen, making the city less affordable.
Jane Kim, who was a member of San Francisco’s Board of Supervisors at the time, said she believed the tax cuts achieved their purpose.
“At the time, Twitter was seen as a major anchor tenant,” she says. “It was something new, but people felt like they were going somewhere else, and I think there was an excitement about bringing all these young workers down the hall.”
Relationship worsens after Musk’s acquisition
But the love affair between the city and the social media company didn’t last long.
Twitter has dealt with several challenges over the years, including competing for advertising dollars with big tech companies like Facebook and Google, stagnant user growth, and criticism that the social network isn’t releasing new features fast enough. The company has also gone through a number of chief executives, including Twitter co-founders Dorsey Williams and Evan Williams.
A pivotal turning point came in 2022 when Musk was acquired by Twitter for $44 billion. When he tried to back out of the deal, Twitter forced him to go ahead with the merger deal.
Worker morale has hit an all-time low under the new structure, which demands “employee control.” Musk said the company cut more than 6,000 jobs last year, cutting about 80% of its workforce. (Twitter said it had more than 7,500 employees in 2021.)
The company fired employees after Musk allegedly refused to pay severance pay, violated labor laws and targeted older workers, women and people with disabilities.
Twitter has reinstated users who had previously been banned from the social media platform, including a former user who was banned in January after being criticized for his rhetoric and social media posts.
Musk was also accused of violating city rules after a female employee slept in a sleeping bag on the floor of his office, and last year Twitter installed and subsequently installed a sleeping bag on the roof of its headquarters, disrupting the sleep of nearby residents.
David Chiu, a former chairman of the San Francisco Board of Supervisors, said X had not been a “good neighbor.”
“Elon Musk allowed anti-Semitism, racism, homophobia and transphobia to flood the platform in a way that is antithetical to San Francisco’s values,” San Francisco City Attorney Chiu said in a statement. “Twitter has become so tarnished since Elon’s takeover that not many people will notice the actual departure.”
Musk began hinting at SpaceX’s departure this summer when he announced that Hawthorne-based SpaceX would move to Austin. He said the reason was because SpaceX opposed a law that would prohibit teachers from requiring students to inform families about changes in gender identity. He then said SpaceX’s San Francisco headquarters would also move to Austin, adding that “just getting in and out of the building was enough to avoid a violent group of drug addicts.”
It was reported last month that the company planned to close its San Francisco headquarters on Friday. In a staff memo first reported by The New York Times, CEO Linda Yaccarino wrote that the decision was “the right one for our company in the long term.”
San Francisco’s Department of Economic and Workforce Development said the city remains a “prime location for companies interested in filling positions” due to its concentration of workforce, culture and tech innovators.
“While we don’t have any information about which company will replace Company X in that building, we can’t wait to support the next wave of startups and see how they grow and change the world from San Francisco’s capital of the world,” the office said in a statement.
There are still vestiges of Twitter’s active role in the community: Around the corner from its headquarters was Twitter NeighborNest, which provided technology access to homeless and low-income families. It was part of a 2015 partnership with the nonprofit Compass Family Services, another casualty of the social media company’s cutbacks.
Abby Leonard, chief development officer at Compass Family Services, said in an email that the center closed at the height of the pandemic but plans to reopen in 2023. But Musk’s purchase of Twitter has changed the company’s trajectory, upgrading its programs to improve the communities around it.
“At that point, any hope of reopening Nest was gone,” she said. “The entire team that had all of their social responsibility was summarily fired, and there was no one left to even tell them it was over.”
Before Musk’s acquisition, Leonard described Twitter as a great partner. Employees volunteered with nonprofits, and the company once hosted lavish holiday parties filled with food, entertainment and gifts for customers. Since Musk took over, that communication with the tech company has disappeared. “That’s a really big change,” she said.
The sign at Neighbor Nest’s old offices remained on Tuesday, but dark blinds were drawn over the vacant space inside and the glass doors at the front were scratched. The area around X is dotted with closed restaurants and eateries, and the Market, a marketplace and food hall inside the office building, had several signs for rent.
Impact on small and medium-sized businesses
“In general, in downtown San Francisco, most restaurants rely heavily on the daytime office worker population, so when there aren’t many people there, it’s hard for those retail businesses to survive,” he says.
Perry Dan-Pancho, assistant manager at the market’s Poke Bar eatery, said sales are down 20 to 30 percent compared to a year ago.
“Before (the pandemic) happened, everybody outside the Twitter building would eat here,” Pancho said. “Now there’s nobody there.”
Cristian Torres, co-owner of CT Kempanadas, said he delivered more than 300 empanadas to X’s San Francisco offices on Tuesday. That day, Torres said X was giving away items such as pillows and clothing, and he won a T-shirt with Twitter’s bird logo. He said 20 percent of his business comes from X or its employees.
“I’m sad to see them go,” Torres said, adding that he hopes to continue selling empanadas to Company X’s employees after they relocate to San Jose. “I told them I’d deliver there.”
