When it comes to ensuring the multibillion-dollar AI industry succeeds in their respective cities, San Francisco and San Jose are taking starkly different approaches to attracting companies.
Big hitters in artificial intelligence such as OpenAI and Anthropic chose San Francisco and its downtown office space as their home without much persuasion. Plenty of AI startups have followed suit, taking space in the Mission District, Hayes Valley, or elsewhere across the city to be closer to what is generally considered the epicenter of the industry.
San Francisco Mayor London Breed has publicly cheered these companies on, including at the APEC conference last year. But her administration has avoided catering directly to the burgeoning AI industry, instead directing incentives toward businesses overall.
San Jose hasn’t had as easy a time attracting AI — especially software developers — although it’s the home to hardware companies like Nvidia, whose chips provide the processing that powers AI. So Mayor Matt Mahan is taking a more direct approach than San Francisco’s, intervening to promote downtown spaces that lure startups to the heart of Silicon Valley.
Last year he unveiled a plan to work with real estate developers and other companies on the creation of AI incubators to house fledgling firms. The city has a signed memorandum of understanding with Plug and Play, a company that operates existing “business accelerators” around the world, including in nearby Sunnyvale. And it’s in exploratory talks for other potential facilities, as well as forging links with San Jose State University and other nearby colleges.
“The mayor’s office is really doing a good job trying to catalyze the AI ecosystem in downtown,” said Ted McMahon, the chief investment officer at Bayview Development, which focuses on Silicon Valley real estate developments.
San Francisco’s approach is more behind the scenes, whether it’s a politician showing up at a hackathon or opening the right doors at City Hall.
“San Francisco is famous for our private sector innovation, but not so much when it comes to innovation in the public sector,” conceded City Attorney David Chiu last month.
Chiu, a former supervisor, may not seem an obvious bridge between the AI community and City Hall. But his background running a tech-focused public relations firm before winning public office fostered an enduring interest in the topic. He has popped up on the city’s AI map, including as a judge at AccelerateSF, an AI-focused collective that hosts hackathons and events around the city.
Though it’s outside Chiu’s job description, the city’s top attorney has been trying to get officials to think about using AI to improve constituent services. Some examples: Chatbots could provide answers to zoning questions or translate website copy into any language.
“I’m trying to facilitate folks on the outside and those within government who should be focused on this in their day jobs,” including the Mayor’s Office of Innovation and the city’s Committee on Information Technology, Chiu said.
Anthony Jancso, one of AccelerateSF’s founders, also wants to see innovative technology developed organically in San Francisco that might then be used at the city level. Jancso said he has been in touch with staff from Breed’s Office of Innovation to build bridges.
“San Francisco has everything to become the global capital of public sector innovation,” he said.
The mayor is signaling her openness. Events like AccelerateSF’s hackathons “are emblematic of the energy and excitement around AI in San Francisco right now,” said her spokesman Jeff Cretan. He said the city’s Office of Innovation is even looking into putting on its own hackathon, “for people to present solutions in areas that we can integrate quickly to benefit residents.”
San Jose is similarly interested in how to use AI in government: Mahan hopes to weave AI technology into city operations such as fixing potholes and cutting down on traffic fatalities. But the city is also putting more formal effort into nurturing a local AI scene than San Francisco.
Part of that plan includes the deal with Plug and Play to launch a San Jose AI incubator. The city benefits from early exposure to cutting-edge technology, while startups have the chance to get their products in front of established Silicon Valley companies such as Nvidia, IBM and Adobe.
“Startups have fundamental tech, like in AI, and we can connect them with corporates for funding,” said the accelerator’s chief revenue officer, Michael Olmstead. He spoke animatedly at the company’s Sunnyvale location during one of Plug and Play’s networking days late last year.
Olmstead said he hopes the partnership with the mayor’s office and his firm’s connections will draw AI startups to the area with the promise of connections and funding from established companies looking to increase their foothold in AI.
Another real estate developer, Urban Community, run by former eBay executive Gary Dillabough, is also working with the mayor’s office.
Along with setting up a potential AI incubator space in downtown San Jose, Dillabough said in an email that he envisions workforce development programs developed in conjunction with San Jose State University and local community colleges.
San Jose State University is interested in collaborating on an AI incubator in downtown San Jose, university spokesperson Robin McElhatton said in an email, “but it is too early in the process to provide any details.”
Dillabough said multiple spaces in San Jose could fit the bill. He said he hoped to get the first group of startups installed early this year and build out offices over time.
Other accelerators are also hoping to work with the mayor’s office, including Silicon Valley Advantage. The firm has funding from the Taiwanese and other international governments to coach fledgling companies in fields like biotech and AI to become profitable enterprises.
That group’s CEO, Gloria Maceiko, said she has spoken to the mayor’s office, which invited them to set up a location in downtown San Jose next quarter. The company is based in Oakland but has Silicon Valley ties. She said there is no settled real estate partner as of yet but added: “We intended to literally duplicate how we work now.”
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