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Is San Francisco the Best Place to Start an AI Company?

Along with OpenAI, San Francisco is home to Scale AI, valued at $7.3 billion, though the company cut its workforce earlier this year, and Anthropic and Dialpad, which have each raised hundreds of millions of dollars.

The Golden Gate Bridge with San Francisco behind it.
(TNS) — Artificial intelligence is poised to upend society and technology, transform art, music and creative fields and potentially replace or eliminate the need for millions of human workers.

And, if the big crowd that crammed into the Palace Hotel on Monday in downtown San Francisco for a high-profile AI conference is any indication, the city's beleaguered economy could benefit immensely from the potential revolution.

Hundreds of attendees crowded into an ornate ballroom to hear some of the luminaries in the AI world at the invite-only conference organized by Goldman Sachs and Ron Conway, founder of the venture capital firm SV Angel.

"I think S.F. is by far the best place to start an AI company," said OpenAI President Greg Brockman, whose San Francisco company created the ubiquitous ChatGPT chatbot. "But it could be 10x or 100x better."

The city is seen as succeeding "despite rather than because of its policies," including failings around homelessness and questions about whether it is pro-business, he said.

"It is possible to make it truly the best place imaginable" for AI, Brockman said.

Along with OpenAI, San Francisco is home to Scale AI, valued at $7.3 billion, though the company cut 20% of its workforce earlier this year, and Anthropic and Dialpad, which have each raised hundreds of millions of dollars.

At the conference, Mayor London Breed hailed the industry and city's resilience, declaring San Francisco as "the AI capital of the world," set to rise like a phoenix, and compared it to the Gold Rush.

"We have some of the most extraordinary and innovative investors. We have the incredible talent," she said. "We have all the creative minds that are coming together."

She said it was also time to reimagine downtown San Francisco to promote more innovation and more diverse uses, even speculating about putting a soccer field near Moscone Center. (There have been no official plans to do so.)

"I'm looking forward to making sure that we have a very close relationship," she told the room of hundreds of business leaders. "Don't let others tell you what San Francisco is. Learn from your own experiences"

Ron Conway, the influential venture capitalist and political power broker, who co-organized the conference, said he remains bullish about the region remaining the tech capital of the world.

"The Bay Area and San Francisco will only become more important to technology. I would not want to be the mayor of New York today. Because AI is going to create more jobs in this country than have ever been created before. And you're sitting in the epicenter of all these founders," he said in an interview.

Some economists aren't sure that San Francisco will see a jobs boom due to AI. In one measure of job listings by ZipRecruiter, San Francisco's share of AI jobs fell between 2020 and 2022.

The city recovered from previous crises, like the 2000s dot-com collapse and 2008 recession, he noted.

"We need to do a whole bunch of things in parallel. We need to get fentanyl off the streets. We need to clean up the streets, we need to make more advancements in homelessness. While we fill downtown. And we've done this before, we just need to do it again," he said.

Conway also expressed confidence that workers will come back to the office and realize they've missed out because of remote work, which has badly hurt San Francisco's office market. Nearly a third of the city's space is available for lease or sublease and more vacancies are expected as leases expire.

"Once people get back together, they love it. They forget about serendipity. They forget about the companionship and camaraderie, he said.

AI faces many uncertainties, including a lack of clarity around potential government regulations, and numerous ethics, privacy and safety concerns. Earlier this month, Vice President Kamala Harris met with top AI leaders and said in a statement that the technology has "potential to dramatically increase threats to safety and security, infringe civil rights and privacy, and erode public trust and faith in democracy."

Sam Altman, CEO of OpenAI, testified in Congress last week that he supports government regulations.

Bill Gates, the billionaire Microsoft co-founder, said during the conference's keynote that he believes an AI personal assistant, or agent, will automate the basics of Internet use and make some of the dominant companies redundant.

"You'll never go to a search site again," he said. "You'll never go to Amazon again. Everything will be mediated through your agent."

He doesn't believe one single company will dominate AI, and there's an equal chance that a startup or a big tech company creates the most popular digital assistant.

Gates also said that media coverage hasn't focused as much on the positive applications of AI, such as creating a "personal tutor for every student in Africa."

"We're going to make that a reality," he said.

© 2023 the San Francisco Chronicle. Distributed by Tribune Content Agency, LLC.