Elon Musk’s X leaves San Francisco; city officials say ‘good luck’

SAN FRANCISCO – San Francisco’s long relationship with X is nearly over, and city officials are far from heartbroken.

Elon Musk will close the headquarters of his social media company in a downtown neighborhood in the coming weeks and move its last employees south to offices in Palo Alto and San Jose, California. The new headquarters will be set up in Texas.

But city officials don’t regret the departure. X bears little resemblance to the company that San Francisco lured with a tax break more than a decade ago, when it was Twitter, to help anchor a budding tech hub in a downtrodden neighborhood near City Hall known as Mid-Market. The Covid-19 pandemic and Musk’s acquisition of the company in 2022 and subsequent dismantling of its workforce reduced the headquarters to a ghost town.

“I share the view that most San Franciscans have, which is that it’s better not to do it,” said City Attorney David Chiu, who as a member of the city’s board of supervisors backed the tax break that brought Twitter into the mid-market in 2012.

Twitter once symbolized San Francisco’s status as a startup capital, but the city’s lackluster response to the move (amid Musk’s public posts about San Francisco’s inflexible tax policies and liberal politics) shows that officials are now less willing to accommodate companies considering a move.

Musk and X did not respond to requests for comment.

Twitter was founded in San Francisco in 2006. In 2011, it threatened to leave its hometown for tiny Brisbane, just across the southern border from the city, which would not charge payroll taxes.

San Francisco Mayor Ed Lee, struggling with the lingering effects of a recession and a near-10% unemployment rate, proposed a tax break for Twitter. The deal would eliminate the 1.5% payroll tax levied on new hires at certain mid-market companies. Those companies, in turn, would create jobs and liven up a neighborhood struggling with crime, vacancies and homelessness.

After Twitter moved into its new headquarters at 1355 Market Street, its workforce grew from a few hundred to a few thousand people. The cavernous ground floor became home to upmarket bars and restaurants, where people could eat antelope, elk and pig ears.

By 2017, 59 new companies had set up shop nearby, including Uber, Square and Zendesk. Several luxury apartment buildings were built. The boom helped expand the city’s budget, but also contributed to skyrocketing housing costs.

Many of the tech companies also offered free food, so workers didn’t spend as much at local businesses as city leaders had hoped. Twitter’s tax break ended in 2019, and politicians viewed its success as mixed.

Then the pandemic hit. Offices emptied and foot traffic dropped. Jack Dorsey, Twitter’s co-founder and its chief executive at the time, announced that employees could work from home forever.

In October 2022, Musk bought Twitter for $44 billion (S$57 billion) and promptly cut jobs. Last year, he changed the company’s name and put a giant “X” sign on the roof that flashed at night, disturbing neighbors and getting him into trouble with the city.

“It’s like a zombie version of the old Twitter, and I think what a lot of people are feeling is: We just need to put this bird out of its misery,” said software engineer Yao Yue, who worked at Twitter for 12 years and was fired after Musk’s acquisition.

Musk, who clashed with state regulators over stay-at-home orders during the pandemic and has become increasingly involved in right-wing politics, recently indicated he was bitter toward San Francisco. In July, he posted online that he had been trapped in the company garage “because a gang was doing drugs in the street and wouldn’t move.”