Business
What doom loop? With AI, a 'spirit of optimism' returns to San Francisco start-ups
Far from the palm trees of Miami or Austin’s taco trucks, Catalin Voss has headquartered his literacy start-up between a cannabis club and pawn shop in the heart of the Mission District.
Voss rents a nondescript office building in one of San Francisco’s most vibrant neighborhoods as a home base for Ello, a company he co-founded in 2020 that uses speech recognition technology, powered by artificial intelligence, to help struggling students develop their reading skills. The office is within walking distance of his Noe Valley apartment and only steps away from some of the city’s best taquerias and cocktail bars. And those are just a few of the perks he recited in explaining why he is headquartered in San Francisco.
Doom loop be damned.
Voss is part of a sizable cohort of San Francisco loyalists — old and new — who say they are flummoxed by the “all is lost” narrative propagated by conservative media hosts and more recently a vocal contingent of tech leaders that includes billionaire entrepreneur-turned-agitator Elon Musk.
The naysayers depict San Francisco as a city in decline — in Musk’s words, “a derelict zombie apocalypse” — ruined by liberal policies that allowed street crime and illicit drug use to fester. In a November debate with Gov. Gavin Newsom, GOP presidential hopeful and Florida Gov. Ron DeSantis invoked the city’s notoriety multiple times, at one point holding up a “poop map” of human feces soiling San Francisco streets.
Voss, in contrast, says San Francisco is still the “it” city for innovation and opportunity in the tech industry.
“There’s no better place to do it than S.F.,” Voss said, seated in a small conference room in Ello’s apartment-style office, just around the corner from OpenAI’s headquarters.
“If you want to be the world’s best at finance, you move to New York. If you want to be the world’s best at acting, you move to L.A. If you want to be the world’s best at tech, you move to San Francisco,” said Voss, a native of Germany.
San Francisco loyalists say the city remains a vibrant hub for technology start-ups, talent and funding.
(Luis Sinco / Los Angeles Times)
Several tech leaders interviewed — some have spent decades in Silicon Valley, others are newcomers to the region — argue San Francisco and the Bay Area more broadly remain a thriving nerve center of talent, institutional knowledge and bountiful venture capital. They say emerging tech hubs — think Nashville, Miami, Austin — can’t really compare.
Instead, they argue, cycling through booms and busts is just a natural part of San Francisco’s rhythms. And while they acknowledge the economic hit the COVID-19 pandemic wrought as tech companies traded downtown offices for remote work, they see the next boom ahead in the industry building around artificial intelligence.
“It does feel like this really optimistic and exciting moment in time,” said Angela Hoover, who recently relocated her AI search chatbot company, Andi, from Miami to San Francisco. “People are wanting to be in San Francisco, and the folks that are on my team who live here are falling in love with the city.”
The move from East Coast to West Coast has been like “rocket fuel” for Andi, Hoover said. She’s found an abundance of leaders in the AI field eager to provide feedback and collaborate on ideas.
Some key data points also defy the depiction of a region in the throes of decline. The Bay Area last year maintained its top national ranking for venture capital investment, followed by Boston and New York, according to an October report by Ernst and Young, buoyed in part by investments in artificial intelligence.
And while California as a whole has lost roughly 37,200 people since July 2022, according to the state Department of Finance, San Francisco and other Bay Area counties recorded a net gain of thousands of residents. And San Francisco’s prohibitive housing prices have dropped over the last year, a trend that is expected to continue in 2024.
“I have seen in the last six months, a gradual — a gradual — spirit of optimism come back,” said Homa Bahrami, a senior lecturer at UC Berkeley’s Haas School of Business. “Every day you hear about yet another layoff, yet another layoff, yet another layoff. But at the same time you also see this new start-up got formed, this new start-up got acquired, venture money went into this space.”
Bahrami credits the Bay Area’s stature in the tech industry to its tangible resources, including education, mentorship and financing, which make it “difficult for other places to emulate.”
The region’s many elite schools, including Berkeley and Stanford, feed the next generation of start-ups and executives. Scores of retired CEOs are readily available to mentor younger leaders, and venture capital funding is easier to access than in many of the newer tech hubs.
“The Bay Area is a global ecosystem,” Bahrami said. “It’s not just an American ecosystem.”
Still, Bahrami urged caution in reading too much into early signs of the next “boom.”
“I would use the word ‘paradox,’” Bahrami said. “I think we’re just sort of transitioning from the pandemic-era world to the post-pandemic era. But we haven’t quite got there yet.”
And Bahrami noted that “dark clouds” are still looming, including inflation, geopolitical challenges and the struggles San Francisco faces in revitalizing its post-pandemic downtown.
San Francisco’s office vacancy rate now tops 30%, according to the city’s chief economist, Ted Egan. Workers are coming into the office at only 43% of pre-COVID levels, and that’s bad news for restaurants and retail.
“Downtown before the pandemic was a pretty rich ecosystem. But at the core of it was people coming to work in offices,” Egan said. “Until you get that back, it’s going to be hard to restart a positive dynamic flywheel downtown.”
Even San Francisco’s defenders acknowledge the pandemic exodus has been a blow. In recent years, tech giants had taken over lengthy stretches of the downtown core, raising gleaming new towers that employed thousands of workers who needed places to eat and drink and shop and live.
After COVID hit and tech companies allowed people to work from home, it was only a matter of time before “home” became another city and then another state, with cheaper rents, fewer homeless camps and less property crime. Many tech leaders followed suit, realizing they could raise money and run a business from states with lower tax rates.
It’s not that Voss doesn’t see any problems. It’s that he thinks San Francisco is thriving despite them.
“I perceive it as noise in the background,” he said.
Voss said Ello employs about 35 people, with satellite offices in New York and Nairobi. The company recently raised $15 million in Series A funding, and Voss said he persuaded a well-known machine-learning engineer to move to San Francisco from China.
“If you are that person who is that ambitious and wants to be the best in the world at the thing you do, I don’t think you’re not going to give San Francisco a second look because of what Fox News says,” Voss said.
Russell Hancock, president and chief executive of the think tank Joint Venture Silicon Valley, agreed, saying most people in the tech world disagree with the narrative that San Francisco has somehow lost its allure.
“San Francisco is vibrant. It’s a magnificent city,” Hancock said. “There’s a reason it has appeal. And part of the appeal, let’s never forget, is it’s kind of quirky and kooky and progressive.”
Hancock doesn’t see other cities developing into tech centers as a bad thing, arguing that the shifting dynamics could relieve pressure on the Bay Area’s infrastructure and temper the housing prices.
But as artificial intelligence takes hold, San Francisco has a “leg up” on other regions, Hancock said.
“That’s how Silicon Valley goes,” he said. “These things come in waves. And this appears to be the next wave. And it appears to be real.”
A big part of San Francisco’s enduring appeal for tech is that it’s in the city’s DNA to be a “tolerant place,” added Peter Leyden, a Bay Area entrepreneur and, most recently, the founder of Reinvent Futures, a company that helps convene top leaders in artificial intelligence.
In Silicon Valley, Leyden said, it’s pretty much a requirement to fail with one company to get access to the capital and credentials needed to gain success with another. While the right-wing and libertarian “crypto crew” fled for red states during the pandemic, he said, the old guard stayed put, confident that San Francisco would rise again.
“The point is every place has its issues, and we do, too, but the narrative that’s out there is just wrong,” Leyden said. “Because there really is nothing like San Francisco.”
Business
California-based company recalls thousands of cases of salad dressing over ‘foreign objects’
A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”
The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.
Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.
None of the 42 locations where the product was sold were in California.
Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.
“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”
The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.
The company recalled the following types of salad dressing:
- Creamy Poblano Avocado Ranch Dressing and Dip
- Ventura Caesar Dressing
- Pepper Mill Regal Caesar Dressing
- Pepper Mill Creamy Caesar Dressing
- Caesar Dressing served at Costco Service Deli
- Caesar Dressing served at Costco Food Court
- Hidden Valley, Buttermilk Ranch
Business
They graduated from Stanford. Due to AI, they can’t find a job
A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.
The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.
When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.
Top tech companies just don’t need as many fresh graduates.
“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”
While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.
Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.
“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”
The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.
Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.
“The industry for programmers is getting very oversaturated,” Akgul said.
The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.
Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.
It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.
In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.
Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.
Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.
A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.
“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”
To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.
Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.
Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.
Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.
As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.
“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”
After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.
Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.
“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”
Business
Disney+ to be part of a streaming bundle in Middle East
Walt Disney Co. is expanding its presence in the Middle East, inking a deal with Saudi media conglomerate MBC Group and UAE firm Anghami to form a streaming bundle.
The bundle will allow customers in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE to access a trio of streaming services — Disney+; MBC Group’s Shahid, which carries Arabic originals, live sports and events; and Anghami’s OSN+, which carries Arabic productions as well as Hollywood content.
The trio bundle costs AED89.99 per month, which is the price of two of the streaming services.
“This deal reflects a shared ambition between Disney+, Shahid and the MBC Group to shape the future of entertainment in the Middle East, a region that is seeing dynamic growth in the sector,” Karl Holmes, senior vice president and general manager of Disney+ EMEA, said in a statement.
Disney has already indicated it plans to grow in the Middle East.
Earlier this year, the company announced it would be building a new theme park in Abu Dhabi in partnership with local firm Miral, which would provide the capital, construction resources and operational oversight. Under the terms of the agreement, Disney would oversee the parks’ design, license its intellectual property and provide “operational expertise,” as well as collect a royalty.
Disney executives said at the time that the decision to build in the Middle East was a way to reach new audiences who were too far from the company’s current hubs in the U.S., Europe and Asia.
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