San Francisco
San Francisco is a cautionary tale in positive feedback loops—a 47-square-mile peninsula where every success intensifies conditions for failure. The city that incubated the sharing economy couldn't house its service workers. The venture capital that funded Airbnb made housing unaffordable for everyone not funded by venture capital. Path dependence locked in this dysfunction: Proposition 13 (1978) froze property taxes, zoning codes calcified, and the city optimized for existing homeowners rather than future growth.
The biological parallel is the California sea lion colony at Pier 39. After the 1989 earthquake, sea lions occupied boat docks intended for humans. Attempts to remove them failed; the colony grew to 1,700 at peak. Eventually, SF declared them a tourist attraction. Tech followed the same pattern: what began as startups in SOMA warehouses became an invasive population reshaping every neighborhood. The difference is sea lions are now protected; displaced San Franciscans are not.
But 2025 marked a phase transition. AI companies leased 2.5 million square feet—over 80% of new leases. Sierra AI took 257,000 square feet; Nvidia opened its first SF office. Year-over-year office vacancy fell 3 points to 33.5%, the biggest decline since 2011. The source-sink dynamics are reversing: tech workers returning are driving rents up 6% (nation's highest growth), but AI is creating jobs faster than remote work destroyed them.
The elephant seal offers another lesson: these massive mammals nearly went extinct, then rebounded from 20 individuals to 250,000 through aggressive protection. SF's AI boom feels similar—recovery from near-death. But the city remains split: trophy buildings filled with AI companies versus everything else lingering in vacancy. Return-to-office rates stuck at 45% of pre-pandemic. The sea lions and elephant seals coexist along California's coast; whether old SF and AI SF can coexist remains uncertain.
San Francisco is a consolidated city-county—the only such entity in California—meaning it has no county government above it. This gives SF unusual autonomy but also unusual isolation: there's no regional authority to coordinate housing, transit, or homelessness response with neighboring cities that export their problems to SF.
Key Facts
Power Dynamics
Mayor appoints department heads; 11-member Board of Supervisors sets policy; ballot initiatives can override both; city attorney independently elected
Tech industry lobbying shapes business taxes and regulations; nonprofit industrial complex depends on homelessness funding (perverse incentives to perpetuate crisis); public employee unions control staffing costs (SF pays highest government salaries in US); progressive activists dominate low-turnout elections
- Ballot initiatives (anyone with $300K can qualify)
- Board of Supervisors (hyperlocal NIMBYism)
- Planning Commission (environmental review delays)
- Neighborhood associations
- Tech companies (tax base)
- Nonprofit service providers (homelessness contracts)
- SFMTA/transit unions
- Real estate developers (housing supply)
Failure Modes of San Francisco
- 1906 earthquake - destroyed 80% of city, required complete rebuilding
- 2000 dot-com bust - tech employment halved, office vacancy spiked
- 2020 COVID exodus - 6.7% population drop, 35% office vacancy
- Housing production (3,000/year) far below demand (10,000/year)
- Office vacancy (35%) devastating downtown tax base
- Homelessness crisis (8,000+ unhoused) concentrated in small area
Permanent office vacancy + continued population loss + retail collapse = downtown death spiral
Biological Parallel
In 1989, sea lions began occupying Pier 39's boat docks uninvited. Attempts to remove them failed; the colony grew to 1,700 at peak. Eventually, SF declared them a protected attraction. Tech industry followed the same colonization pattern: startups occupied SOMA warehouses, then expanded into the Mission, then everywhere, displacing previous occupants who couldn't compete for space. Both represent invasive populations that authorities eventually stopped resisting.