Is San Francisco back?

Hi, it’s Sarah in San Francisco. After being hit hard by the pandemic, and then the tech downturn, the city is showing signs of life. But fi [View in browser]( [Bloomberg]( Hi, it’s Sarah in San Francisco. After being hit hard by the pandemic, and then the tech downturn, the city is showing signs of life. But first... Today’s must-reads: • Apple has made major progress on no-prick blood [glucose tracking for its watch](, a potential boon for  diabetics • Tesla announced its “global engineering headquarters” [in Palo Alto]( • The Supreme Court is struggling with social media’s [role in terrorism]( The comeback Earlier this month, I walked into a dinner given for venture capitalists at the Hotel Zetta in San Francisco and quickly fell into some interesting conversations. But as the minutes stretched on and no one on the guest list I’d seen appeared, I realized my mistake: I was indeed at a dinner with venture capitalists, just not the one I’d been invited to. I excused myself and wandered down the hall to the other private dinner — again, wrong one. Third try, and I found the correct event, full of enterprise startup CEOs and VCs from Andreessen Horowitz, the firm that backed them. Three tech dinners crammed into one hotel near the city’s South of Market neighborhood at the same time can only mean one thing: San Francisco is back — at least in some industries. “The death of San Francisco has been exaggerated,” said George Fraser, chief executive officer of Fivetran Inc., a data integration company, who moved across the Bay to Oakland during the pandemic. From his vantage point, “Things are most of the way back in both places.” San Francisco was hit badly during the pandemic, as tech employees retreated to remote work in cheaper locations. Since then, the city’s hollowed-out downtown has been [slow to recover](, battered by technology industry layoffs. Still, walk through San Francisco’s other neighborhoods today and many are lively, even busy. Near my apartment, lines spill down the sidewalk outside of Swan Oyster Depot and Bob’s Donuts. Some of the dark-windowed buses that ferry tech workers to and from Silicon Valley are cruising along Van Ness Avenue again. Coffee shops are full of young men — mostly men — tapping away on keyboards, to the point where it can be hard to find a seat. I floated the theory of a San Francisco resurgence to the other guests at my VC dinner; not everyone was convinced. Databricks Inc. CEO Ali Ghodsi said many parts of South of Market, or SoMa, still felt lonely. Occupancy of office buildings, of which there are many in SoMa, sits at 45% in San Francisco according to swipe-card entry data from security firm Kastle Systems LLC. That’s significantly lower than in cities like Houston (60%) or Austin (65%). Startup activity is also below what it once was. Entrepreneurs founded 204 venture-backed businesses in San Francisco, Oakland or Fremont, last year, according to PitchBook data. That’s down from 1,083 in 2020 — a drop of about 80%. The data isn’t perfect because it captures only those businesses that sought funding, not the ones still bootstrapping, but it’s a jarring indicator. Looked at another way, though, it’s still 204 startups. And compared with anywhere else, that’s a lot. Many of the biggest funding rounds for artificial intelligence and other buzzy companies are happening in the Bay Area. Even during the downturn, San Francisco, a city of 815,000, is a place that feels like everyone knows somebody working at a new company, batting around new ideas and building new things. Miami, population 439,000, and Austin, population 964,000, saw similar percentage drops in startup formation. But because their startup numbers were small to begin with, the buzz shrank to a murmur. Entrepreneurs founded 40 new startups in Austin last year, down from 159 two years ago; in Miami, it was 36 last year, down from 167. In San Francisco, “The energy here is frankly incredible especially for founders and people excited about tech’s potential to solve various pain points in industries,” said Shomik Ghosh, a partner at Boldstart Ventures. A few months ago, after spending a year in Los Angeles, Ghosh moved back to the Bay Area and has no regrets. Social media is full of similar stories of San Franciscans who departed but were lured back. One user with the Reddit handle GhostofKyle described leaving the city during the pandemic for Philadelphia and then Florida before returning: “Any time I'm having an even remotely bad day I just remember I could be in Florida (and how Florida made me feel), and my day just gets instantly better.” —[Sarah McBride](mailto:smcbride24@bloomberg.net) The big story “I’m sorry but I prefer not to continue this conversation.” Microsoft’s new Bing AI [ended a chat]( when asked how it felt about being a search engine. The chatbot, now in testing, is being tweaked following inappropriate interactions. Get fully charged The rally in Chinese artificial intelligence stocks is cooling after reports that authorities are [banning ChatGPT](. Nvidia’s stock jumped in late trading after giving a bullish revenue outlook for the current quarter, suggesting that a [push into artificial intelligence processors]( is buoying the company. Fruit company Dole said it was recently [hit with ransomware](, the latest company to be targeted in a series of high-profile cyberattacks. Sudden wealth sent John McAfee soaring and then spiraling. Listen to the latest episode of Bloomberg’s [Foundering podcast]( about the troubled security software pioneer. More from Bloomberg Listen: [Foundering: The John McAfee Story]( is a new six-part podcast series retracing the life, the myths and the self-destruction of a Silicon Valley icon. Subscribe for free on [Apple](, [Spotify]( or wherever you get your podcasts. 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