There is no tech bubble in San Francisco. Now what do we do?

Editor’s note: This is the final installment of “The Nexus.” The Examiner has enjoyed publishing the column and wishes Seung Lee well in his future endeavors.

Since my first column, I felt every piece I wrote at the San Francisco Examiner naturally gravitated toward one unasked question: Is there a tech bubble? Considering this is my last column, I can finally share my personal answer:

No, there is no tech bubble here. Sorry to the bubble believers.

The state of the union of Silicon Valley is as strong as ever, despite the obscene valuations, the revolting white-maleness of the industry and the seeming slowdown of innovations. Scandals and shake-ups regularly delivered the industry many black eyes, but these are mere dents to the overall economy. The big companies are growing and venture capital is flowing.

Unlike the dot-com bubble which popped in 2001, there are foundational blocks that hold Silicon Valley stable. For the fledgling startups, there are incubators galore, like Y Combinator. For seed-stage startups, venture capital firms like Andreessen Horowitz and Kleiner Perkins dole out capital with more prudence compared to the free-wheeling days of the 1990s.

Billions of dollars in venture capital continues to flow into startups that hope to grow into a unicorn of its own. From the outside, this looks like greenhorn Marina bros signing million-dollar checks that get flushed down a sinkhole.

But in reality, the opposite is happening. In the first quarter of 2017, investors poured $16.5 billion into 1,797 venture-backed startups, according to VentureBeat. At the same time in 2016, investors gave out $18.7 billion to 2,366 venture-backed startups. “Discipline” and “caution” are the hottest buzzwords in venture capital at the moment.

Facebook, Amazon, Google, Apple and Microsoft — dubbed the “Frightful Five” by New York Times columnist Farhad Manjoo — remain as strong as ever as they all race for the next disruptive technology from self-driving cars to artificial intelligence. I have no doubt they won’t reach their end goals and hold more intimate roles in our personal lives. The Frightful Five collectively spent $60 billion in research, just $7 billion short of what the federal government spent in 2015.

Unlike the dot-com bubble, all these companies are turning a killer profit in recent quarters. With decades of industrial experience and innovation, software breakthroughs, like cloud computing, are getting cheaper and easier to manage. Even if unethical companies like Theranos or just plain comedy shows like Juicero go under by the dozens, it won’t sink the whole ship.

So, no bubble (maybe a correction, though?). I’m sure this is disappointing to some of you. When people ask me about the tech bubble, which often is the first question non-tech people ask when talking tech, I see what they are really asking is, can we go back to the old San Francisco? Rent was cheaper, The City was emptier and the people were livelier then. It seems some hope that once the bubble pops, the water inside will burst free and wash The City clean back to the 1990s.

That cleansing is not coming, but one does not need a full-blown market recession to fix things in San Francisco. The City can take action with good confidence that tech is here to stay in San Francisco.

Even with articles pointing to startups moving locations to other cities like Austin, Denver or Seattle, San Francisco provides intractable advantages. Both Stanford and Berkeley are aggressively providing resources and a talent pipeline unmatched anywhere in the United States. Facebook, Google and most recently Apple have firmly implanted its roots in the South Bay with its newfangled corporate campuses. Companies want to be clustered around these institutions.

With this in mind, San Francisco (and really all cities in the balkanized Bay Area) should tax high-earning tech companies — or at least not provide tax breaks to companies like Twitter. As with us, companies should pay a San Francisco premium that goes to support homeless services and affordable housing.

Of course, we always circle back to housing. Yes, in case you were curious, I do want more development. This ongoing tech tide will not stop and inaction will solve nothing. But I also want The City to consider more incentives for Section 8 landlords and tenants, and more housing density bonus programs to encourage affordable housing construction; support teacher-only housing and allow more in-law units, to name a few.

These tough issues don’t need black-and-white solutions. San Francisco is a big, beautiful city that can support a whole of lot of gray — much like our morning fog.


Yes, this is my last column. I’m grateful to the Examiner for giving me this opportunity. Whether you agreed or disagreed with me, I always tried to hit hard at the powers that be and bring light and defend the regular folks — which sometimes included tech workers.

I just hope I didn’t make you feel like I wasted your time. Hope we stay in touch when I am at the Mercury-News. Thanks for reading.

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