Twitter CEO Jack Dorsey said the company will build support for a more remote workforce as San Francisco 'is not serving us any longer'

Katie CanalesFeb 11, 2020, 21:38 IST

Eric Risberg/AP/Jose Luis Magana/AP/Business InsiderJack Dorsey said in an earnings call last week that the social media giant should build a company that's "not entirely dependent on San Francisco."

The CEO and co-founder of Twitter said in an earnings call last week that the company will focus on supporting a distributed workforce since "our concentration in San Francisco is not serving us any longer."
San Francisco will remain the company's HQ and retain the majority of employees for the time being, but Twitter will seek to hire outside the Bay Area as a rise in remote work grows in popularity.
Twitter chose the city's Mid-Market area for its HQ in 2012 after city officials proposed a tax break as an incentive to keep job opportunities created by the social media giant within city limits and to fortify a deteriorating Mid-Market district.
Dorsey's comment regarding tech talent recruitment outside of the Bay comes as office space in San Francisco grows increasingly competitive and expensive and as a city measure proposes limiting the yearly amount of new office development.
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On an earnings call Thursday, Twitter cofounder and CEO Jack Dorsey said the company was seeking to hire globally since the company's concentration in its hometown of San Francisco "is not serving us any longer."

The social media giant initially set up shop in San Francisco's SOMA district in 2006 before moving into its current Mid-Market headquarters location in 2012. San Francisco will continue serving as the nucleus of the company's workforce.

"San Francisco will be where the majority of our employees will be based for the foreseeable future," a Twitter spokesperson told Business Insider in an email. But now, Twitter will be building support to employ remote talent outside of the Bay as well.

"I don't fear any slowness as we work to distribute our workforce now, and I do think we have to build a company that's not entirely dependent on San Francisco," Dorsey said on the call last Thursday.

The comment comes eight months after the expiration of the Twitter tax break, an incentive crafted by city officials in 2011 to keep Twitter and its job opportunities within city limits, specifically in San Francisco's Mid-Market district. But it didn't rejuvenate the area as lawmakers had hoped it would. And the area's retail market even took a hit, due in part to employee cafeterias inside tech offices that kept would-be customers inside instead of patronizing local restaurants and businesses.

The tax break saved Twitter, and other companies in Mid-Market, millions in the past decade, and some critics see Dorsey's statement as typical of the transient tech industry's lack of integration into the San Francisco community.

"I'm not surprised that they essentially benefited from a very generous tax policy by city government, only to turn around and say San Francisco is not a priority for us," former San Francisco supervisor and tax break opponent David Campos told BuzzFeed News' Alex Kantrowitz.

But San Francisco also has a series of notorious problems that make it increasingly difficult for companies to grow within city limits.

See Twitter CEO Jack Dorsey said the company will build support for a more remote workforce as San Francisco 'is not serving us any longer' >>

One is the city's high rent and home prices, exacerbated over the years by stringent zoning and building regulations, limited housing stock, and a bloated workforce, among other factors.

That presents a problem for companies when recruiting tech talent.

Source: Business Insider

But San Francisco has one of the most crowded and expensive office markets in the US.

Office space is limited and competitive, especially as fast-growing big tech companies have filed in within the last decade.

Before Twitter moved its San Francisco headquarters to the city's Mid-Market district in 2012, tech companies were concentrated farther south in the heart of Silicon Valley.

But in 2013, Square, where Dorsey is also CEO, moved into an office a block away from Twitter's headquarters. Square shares the same building with ride-sharing behemoth Uber, which moved in in 2014 and is also the city's most valuable startup. Many more followed suit in Mid-Market and other parts of the city center as well, like Salesforce, which is now San Francisco's largest private employer.

On top of that, a measure dubbed Proposition E is currently in the works that aims to offset housing demand by making new office development contingent upon the amount of affordable housing produced each year. If the city fails to approve its yearly quota for affordable housing, then the amount of new office space will be capped at a similar level.

Source: The San Francisco Chronicle

Dorsey also cited a need to accommodate tech talent that values remote work, a trend in the software industry overall.

Thanks to faster internet connections, updated telecommunication capabilities, and cloud products, companies can hire outside of the Bay Area.

"There's incredible talent around the world and we have to be able to work in a way that supports them as employees regardless of where they live, especially when they want to build careers in their own communities," a Twitter spokesperson told Business Insider in an email.

At the same time, the tech talent pool is established in the region and there are benefits to having a physical office location, like in-person interactions with coworkers and higher-ups.

Twitter also isn't the only tech company that's looking outward for growth.

Some San Francisco company veterans are looking outside the Bay Area for a new headquarters location altogether. The payments company Stripe, valued at $9 billion, recently announced that it would pull its headquarters out of its San Francisco SOMA location in the second half of 2021 and move further south. It moved from Palo Alto to San Francisco in 2012 and will be one of the city's largest corporate departures.

Stripe cited a lack of office space as the main reason for the move. Jay Cheng, public policy director at the San Francisco Chamber of Commerce, told the San Francisco Chronicle that Stripe's removal from the city was only the beginning. He pointed to the potential new limitations on office development as a contributing factor to companies not wanting to stay.

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Twitter CEO Jack Dorsey said the company will build support for a more remote workforce as San Francisco 'is not serving us any longer'

One is the city's high rent and home prices, exacerbated over the years by stringent zoning and building regulations, limited housing stock, and a bloated workforce, among other factors.

But San Francisco has one of the most crowded and expensive office markets in the US.

Dorsey also cited a need to accommodate tech talent that values remote work, a trend in the software industry overall.

Twitter also isn't the only tech company that's looking outward for growth.