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 farmers were already struggling. Then came the Iran war
Shortly after the Iran war started four weeks ago, farming executive Bikram Hundal was beside himself.
The vice president of operations at Sequoia Nut Co. had shipped 15 containers of almonds, walnuts and pistachios from the Port of Long Beach, and he wasn’t exactly sure where they were on the high seas.
Their destination was Dubai’s Port of Jebel Ali, a major trading hub, but the jets, missiles and rockets crisscrossing Middle Eastern skies had diverted one ship to the Netherlands and another to Algeria.
Finally, the remainder of the 300 tons of California nuts worth $1.7 million was offloaded at the Port of Fujairah, also in the United Arab Emirates but on the Gulf of Oman, a bit farther from the fighting.
Now, shipping costs to the region have tripled to $7,500 per container, and Hundal is uncertain when the Tulare County company will get its money.
“They will be slow in paying for those goods, and they told us whatever goods were sold already to them [that] have not shipped, please do not ship those,” he said. “That will impact our cash flow. We have to pay the growers for them.”
Since the start of the war, the average price of a gallon of diesel in California has hit $7.26. Fertilizer prices have risen too.
As the war unfolds in Iran, farmers like Hundal are being whiplashed by forces beyond their control, including the cutting off of key export markets and a sharp rise in the cost of doing business.
The war has driven up the price of diesel that fuels trucks and farm and ranch equipment, as well as fertilizers critical for increasing crop yields — leading to fears that if the conflict goes on much longer it could push up prices at the market.
The average price of a gallon of diesel in California has hit $7.26, up more than $2 compared with a month ago. Diesel that powers tractors and other non-road vehicles and engines is typically almost $1 cheaper as it is exempt from certain taxes.
Tara Gallegos, a spokesperson for Gov. Gavin Newsom, blamed the farm economy difficulties on President Trump’s “recklessness” in starting the war.
“California farmers are getting hit twice with higher fertilizer costs and higher fuel costs. Every American will wind up paying for that at the grocery store because these commodities are priced globally,” she said.
Trump has made conflicting statements about the rise in fuel prices, contending that it is a “small price to pay” to pursue his war aims of knocking out Iran, but also saying he wants to wrap up hostilities quickly.
Even before the war, California’s farmers were struggling due to the disruption caused last year by Trump’s tariffs, which hit farmers hard as trading partners responded with their own duties.
California is the largest agricultural state in the nation as measured by the value of its crops, which topped $60 billion for the first time in 2024 — and it was hit with corresponding big losses last year.
The value of the top 13 state agricultural products exported to China — including almonds, pistachios and dairy — fell in aggregate by 64%, or $1 billion, in 2025, according to a recent UC Davis estimate.
Faith Parum, an economist at the American Farm Bureau Federation, said the rise in fertilizer and diesel prices follows last year’s tariff-related trade disruption and several years of natural disasters, including droughts and freezes.
“How do we make sure that we keep farmers in business? Because it is a matter of national security and food security,” she said.
Parum noted that farmers who plant crops such as corn, soy, rice and cotton have experienced nationwide losses of $90 billion since 2023.
Key ingredients for some fertilizers come from the oil-and-gas-rich Middle East, where the war has unsettled markets and supply chains.
Already there are reports that some fertilizers are up by a third or more in price. The rise is taking place in California and across the U.S. even though the country produces the majority of its nitrogen-based fertilizers, which are critical to improving crop yields.
The fertilizers are typically applied by U.S. farmers either as liquid nitrogen, liquid ammonia or as pellets of urea, which is the most common nitrogen-based fertilizer in the world, said Veronica Nigh, chief economist at the Fertilizer Institute.
While the vast majority of liquid nitrogen and ammonia is domestically produced, the U.S. imports about half of its urea, making it susceptible to the Middle East supply shock.
All nitrogen fertilizers are derived from ammonia, which is made using natural gas — with half of all exportable urea supplies coming from the oil-and-gas rich Mideast, where it has to pass through the disputed Strait of Hormuz, she said.
Prices are up worldwide, with fertilizer plants closing in Bangladesh, raising the specter of an urea shortage. That could lead to food shortages first in less wealthy countries, while U.S. consumers might see higher food prices unless the war winds down quickly, Nigh said.
Food prices rose sharply after Russia invaded Ukraine in 2022, but that was largely due to the countries being major grain exporters.
“This is different than anything we’ve experienced before, in that it is not occurring in a single market, and that it is something that is a critical input to growers around the world,” she said.
Sunrise over some of the 14,000 acres of walnut and almond orchards of Sequoia Nut Company and Custom Almonds.
The war is hitting Midwest farmers just as they enter the planting season for crops such as wheat, corn and soybean, and need to apply vast quantities of fertilizer.
California grows those crops too, but the big money is in nuts, produce and other “specialty” crops, leading to a constant demand for fertilizer. “You have price and purchase exposure throughout the year,” Nigh said.
Sal Parra Jr., who helps run his family’s 1,500-acre farm in Fresno County and is operations director at the more than 10,000-acre Bowles Farming Co. in adjacent Merced County, is the kind of farmer Nigh is talking about.
The two farms plant a large variety of crops, including nuts, corn, wheat, cotton, alfalfa and fruits and vegetables — all needing a variety of fertilizers and other nutrients.
The rise in costs are bad enough, but now there are fears that a key liquid fertilizer, UAN-32 — which contains three forms of nitrogen, including liquid urea — could be in short supply.
“We actually have taken the initiative at Bowles to fill as much storage as we have available with fertilizer to try to lessen the blow,” he said, noting his family farm doesn’t have the capacity to store much fertilizer.
There are techniques to stretch supplies by more efficiently applying fertilizer, Parra noted, such as by administering soil treatments, though they are costly.
In addition to rising fuel costs, farmers in the Central Valley say they are stockpiling fertilizer and looking for otherways to fertilize their crops.
“I think that a year like this, where you see fertilizer prices moving the way they’re moving, it may justify using other methodologies,” he said. “I’m going to get very creative with with our fertilizer programs.”
At the same time, he said, the farms are having to absorb higher costs for diesel, which runs pumps, tractors and big rigs carrying crops to market.
Much of what the farms sell is on contract with prices already set, which means those costs will have to be absorbed for now, said Parra, who worries many state crops could see lower sales as prices eventually rise in markets.
“A lot of what we grow are beautiful watermelons, or carrots or tomatoes, and depending on what the price is, people may or may not buy it,” he said.
The economic shocks caused nationwide by extreme weather events, the disruption of export markets and now the war have prompted the industry, including California growers, to seek federal assistance.
A driver hauls almonds in a tractor trailer to the scales to be weighed at Sequoia Nut Company and Custom Almonds in Tulare, Calif, on Thursday.
Trump’s massive tax-cut-and-spending bill last year increased payments to farmers. In December, Trump approved $12 billion in emergency assistance, including $1 billion for the kind of produce, nuts and other specialty crops grown in California.
And just last week, the administration issued an emergency fuel waiver to allow continuing nationwide sales of E15 — a gasoline blended with 15% ethanol, nearly all of which is produced from corn grown by U.S. farmers.
“That is very helpful,” Parum said.
Typically, sales of the gas are restricted during the summer due to the volatility of ethanol and its contribution to smog, but the Farm Bureau maintains that new studies show the blend is non-polluting.
Other relief being sought includes dropping long-standing duties on countries that export fertilizer products to the U.S., such as Morocco, a supplier of phosphates.
The war also is disrupting key markets for growers like Sequoia.
While the Middle East isn’t as large an export market for California farmers and ranchers as Canada, the European Union or Mexico; the United Arab Emirates ranks in the top 10 as the nuts, strawberries and other products exported there are distributed across the region.
Eric Andrade and Bikram Hundal, Vice President of Operations at Sequoia Nut Company and Custom Almonds discuss quality control in the company offices in Tulare, Calif., on Thursday.
Along with almonds and pistachios, walnuts are a staple of the Mideastern diet — and those grown by California farmers are considered the “gold standard,” said Robert Verloop, chief executive of the California Walnut Board and Commission.
The war struck right it the middle of the holiest month on the Islamic calendar, Ramadan, which began Feb. 17 and ended March 19, when consumption is higher.
About 70,000 tons of walnuts were on their way or about to be shipped to the region in the period leading up to and including Ramadan. That accounts for roughly 10% of California’s production, expected to hit $1 billion this year.
Some ships were temporarily diverted to ports in China, India and Europe until new customers are located. Many shipments are now being canceled before being loaded on ships, creating a backlog, Verloop said.
Harpal Singh, left, an employee at Sequoia Nut Company and Custom Almonds, loads almonds into bulk bags.
The war also has closed Mideastern markets as residents fearful of rocket attacks stay home. That has been a factor in reducing consumption, forcing some nuts to be sold elsewhere at discounted prices, he said.
Also, an expected wave of orders that typically follows Ramadan has not materialized, hurting California farmers who might not be able to make up the losses, he said.
“Life is not the same, and it’s not business as usual,” Verloop said. “There an expression in the industry. If you don’t eat it in February, you don’t need twice as much in March.”
Business
Living comfortably costs the most in these Californian cities
In California’s spendy cities, living comfortably costs more than almost anywhere else.
From the Bay Area to Orange County, living well requires incomes north of $150,000 in the pricier places, according to a recent study. A family with two kids needs more than $400,000 per year in some spots.
The study, conducted by financial technology company SmartAsset, analyzed 100 of the largest cities in the country.
San José ranked as the second-most expensive city, where a single adult must make nearly $160,000 and a family of four needs over $400,000 to live comfortably, the study found. Orange County cities — Irvine, Anaheim and Santa Ana — followed closely behind.
New York City topped the list, with a salary for comfortable living at about $900 higher than in San José.
Los Angeles ranked 16th on the list, where a single adult must make $120,307 to live comfortably. A family of four should bring in just over $280,000 annually.
San Diego and Chula Vista tied for seventh place, with a $136,781 salary for a single adult. San Francisco came in ninth, followed by Fremont and Oakland, which tied for 10th.
Santa Clarita, Long Beach, Riverside and Sacramento also made the top 20 list.
The study measured comfortable living using the 50/30/20 rule, in which half of a household’s post-tax income should go to needs, 30% to wants and 20% to savings.
The company used the MIT living wage calculator to determine cost of living by region for single adults and families of four.
A family of four faces the toughest living costs in the Bay Area, taking up four of the top five cities with the highest salaries needed to live comfortably.
San Francisco topped that list, with income for two parents projected at $407,597. Projected income in San José was slightly lower at $402,771, followed by Fremont and Oakland.
The study’s findings are in line with existing research that paints a grim picture of the statewide housing crisis, said Carolina Reid, an associate professor of city and regional planning at UC Berkeley.
“California is one of the more expensive places to live, and that definitely is true when we’re talking about families who are juggling multiple competing demands on their incomes,” Reid said.
Housing costs, groceries and gas prices — all considered necessities in the study — have skyrocketed nationwide, while wages have largely remained stagnant.
California housing costs are about double the national average. The state has struggled to keep up with demand, largely due to the lingering impacts of decades-long missteps in housing policies, said Paavo Monkkonen, a professor in urban planning at UCLA.
“It’s a problem that we created very slowly over a long period of time,” Monkkonen said.
The expected salary needed to live comfortably was significantly higher than the median household income for some California cities.
The difference is especially stark in Santa Ana, where the median salary is $95,118 — over $56,000 less than the projected salary needed to live comfortably in the city for a single adult.
Los Angeles had a $38,000 gap between the city’s median household income of $82,263 and the projected salary.
Cost of living is often hard to measure given the variability in how households choose to spend their money, Reid said. Housing is also the primary driver for living costs, which Monkkonen said is difficult to measure given the market’s unpredictability.
“People are living here somehow, right?” he said. “If you just look at the incomes and rents separately, you don’t really get a picture of how people are doing it…they’re spending a lot of their incomes on rents, but they’re also doubling up.”
Business
How the landmark verdict against Meta and YouTube could hit their businesses
A Los Angeles jury dealt a blow to social media giants Meta and YouTube this week when it found that the platforms were negligent for designing addictive features that harmed the mental health of a California woman.
Both companies plan to appeal, but the ruling has ignited uncertainty around the tech companies’ future and sparked questions about the potential fallout.
The seven-week trial kicked off in February, featuring testimony from Meta and YouTube executives.
Kaley G.M., a 20-year-old Chico, Calif., woman, sued the platforms in 2023, alleging that using social media at a young age led to her mental health problems such as body dysmorphia and depression. She also sued TikTok and Santa Monica-based Snap and those companies settled ahead of the trial.
Lawyers representing the woman argued that the platforms hook in young users with features such as infinite scrolling, autoplaying videos and beauty filters.
People use social media to keep up with their friends and family, but teens can also feel inadequate, sad or anxious when they compare themselves to a curated version of other people’s lives online. They’re also spending a lot of time watching a seemingly endless amount of short videos.
A jury determined that Meta was 70% responsible for Kaley’s harms and YouTube was 30% responsible. They awarded her a total of $6 million. The ruling came shortly after a New Mexico jury found Meta liable for $375 million in damages after the state Atty. Gen. Raúl Torrez alleged the platform’s features enabled predators and pedophiles to exploit children.
“These verdicts mark an unsurprising breaking point. Negative sentiment toward social media has been building for years, and now it’s finally boiled over,” said Mike Proulx, a director at Forrester, a market research company.
How have the companies reacted to the verdict?
Meta and Google, which owns YouTube, said they disagreed with the ruling and plan to appeal.
“This case misunderstands YouTube, which is a responsibly built streaming platform, not a social media site,” said Jose Castañeda, a Google spokesman, in a statement.
Meta spokesman Andy Stone posted the company’s statement on social media site X.
“Teen mental health is profoundly complex and cannot be linked to a single app. We will continue to defend ourselves vigorously as every case is different, and we remain confident in our record of protecting teens online,” the statement said.
Tech companies have been responding to mental health concerns, rolling out new parental controls so parents can keep track of their children’s screen time and moderating harmful content. Instagram and YouTube have versions of their apps meant for young people.
Some child advocacy groups and lawmakers, though, say these changes aren’t enough.
The ruling could affect how much money YouTube’s parent company, Alphabet, and Meta earn as they spend more on legal battles. While they make billions of dollars from advertising, investors are wary about higher expenses. The companies are already spending billions of dollars on artificial intelligence and developing new hardware such as smartglasses.
On Thursday, Meta’s stock fell more than 7% to $549 per share. Alphabet saw its share price drop more than 2% to roughly $280.
In 2025, Meta’s annual revenue grew 22% from the previous year to $200.97 billion.
Last year, YouTube’s annual revenue surpassed more than $60 billion. Both Google and Meta have been laying off workers as they spend more on AI.
The ongoing backlash hasn’t stopped tech companies from growing their users.
A majority of U.S. teens use YouTube, TikTok, Instagram and Snapchat, according to a 2025 Pew Research Center survey. More than 3.5 billion people use one of Meta’s products, which include Instagram and Facebook.
Social media has continued to change over the years as companies double down on short videos and AI chatbots.
Mental health concerns have only heightened as AI chatbots that respond to questions and generate content become more popular. Families have sued OpenAI, Character.AI and Google after their loved ones who used chatbots killed themselves.
Some analysts remain skeptical that Meta and YouTube would make drastic changes to their products because they’ve weathered crises before.
“Neither Meta nor YouTube is going to do anything different until a court orders them to, or there’s a significant drop in user or advertiser use,” said Max Willens, Principal Analyst at eMarketer.
Other analysts said legal risks could also affect how tech companies develop new AI-powered products and features.
“It’s likely that tech firms will now face increased scrutiny over the design of their platforms, which should drive more thoughtful inclusion of features that foster healthier interactions and safeguard mental health,” said Andrew Frank, an analyst with Gartner for Marketing Leaders.
At the very least, the verdicts serve as a “dire warning about how we handle the next wave of technology,” Proulx said.
“If we’re still struggling to put effective guardrails around social media after nearly two decades, we’re far from prepared for the growing harms of AI, which is moving faster, scaling wider, and embedding itself far deeper into people’s lives,” he said.
Times staff writer Sonja Sharp contributed to this report.
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