In any balanced, rational world, the City of Oakland would comprise Silicon Valley’s northern boundary. Oakland is right in the geographic center of the Bay Area. Of the entire nine-county region Oakland has the best network of freeways, rail lines, shipping ports, bridges, public transit, and every sort of infrastructure. Access to U.C. Berkeley is a top draw for tech companies, as Stanford was in the early days of Silicon Valley.
As Silicon Valley was expanding during the 1980s and 1990s through today, it pushed northward and eastward to encompass Fremont and Milpitas and the South Bay, and obviously, San Francisco. As a result, these areas are thriving under the AI boom. The Bay Area contributes over 40% of California’s personal income tax revenue, even though only 19% of Californians live here. Economically, San Francisco, San Jose, Mountain View, Palo Alto, Santa Clara, Sunnyvale, Cupertino and Menlo Park have benefited enormously from high tech money.
Not so Oakland. We have no big corporate anchors, like Nvidia, Google or Apple, to provide a tax base as well as the pool of skilled employees needed to push tech to the next level.
It’s true that Oakland does attract the occasional startup in solar energy, biotech, logistics software, tech financing and design. Companies such as Fivetran, Marqeta, Everlaw, LaunchDarkly, Mynd and VSCO have been Oakland success stories. But mostly startups come here due to our lower rents, and few remain once they reach a "Big Tech" scale. Among those who have completely or mostly bailed on Oakland are Pandora, Block (formerly Square), Bandcamp, GAF Energy, and ThredUp. Some Oakland startups move to low-tax states, like Florida and Texas. Others move to San Francisco once they start being successful; often Oakland’s crime rate and dirty street conditions motivate them to leave town. This motivation is often prompted by the companies’ employees themselves, who do not want to live or work in downtown Oakland. And who can blame them?
As for the current AI boom, Oakland is not benefiting from it. The reasons for this are the crime, filth and bad reputation I referred to above, but also because of Oakland’s very specific and business-phobic obsession with “equity.” The city’s Equity Statement for the Development of AI, released in late 2024, imposes the same progressive standards on AI companies as Oakland imposes upon itself in all of its operations, starting with “reductions in disparities.” I have written often about this neurotic fixation by Oakland officials, and how it distorts the normal functioning of institutions. It’s fine to establish equal starting points for all citizens, but you cannot demand or legislate equal outcomes, because not all individuals are equal in talent or motivation. It has been the failure to appreciate this truth that has placed Oakland last among Bay Area cities in so many ways (or first among them in many negative ways). When this unachievable goal—the elimination of all disparities—is accomplished by racial mandates, affirmative action, and other “equal opportunity” practices, corporations think twice about entering Oakland’s highly-charged political climate, where the city demands co-authority alongside ownership and senior management, leading to friction with local electeds and activists who demand racial preferences as compensation for what they perceive as decades of racism.
Why should an employer compromise her business chances in order to satisfy the demands of a puny woke potentate like Carroll Fife? This is related to a final reason why tech companies don’t want to do business here: Oakland’s bizarre ideological resistance to corporations. Activists and woke politicians believe that too much tech success will rob Oakland of its “soul” and gentrify it. They like the little bars and clubs, the art studios and tattoo parlors, the ethnic restaurants, the neighborhoods (like Temescal) that are so gritty and charming. So do I, a lot. But not so much that I don’t welcome tech companies and their tax dollars.
This technophobia is reflected throughout Oakland government, and believe me, it has had, and continues to have, a super-negative impact. Corporate leaders are well aware of it, which is why they want nothing to do with Oakland. Our perennial budget problems, including those of OUSD and OPD, can be traced directly to the city’s irrational resentment of business. Let me ask you, in all honesty, if you owned an AI startup, would you relocate to Oakland? If it was the only place you could afford, would you stay here when your business started making money?
Steve Heimoff