California may be losing some of its luster as America’s default home for tech startups. That is if Kraken Exchange’s decision to shut its San Francisco headquarters in early April is anything to go by. This development comes shortly after Coinbase closed shop to become a fully remote service.
The specific nature of Kraken’s decision to shut down is the cause for worry. Coinbase merely referenced the need to go remote without citing any problem with the city. Kraken’s decision plays into popular culture debates about crime rates on the West Coast.
The Reasoning behind the Decision
Kraken Co-founder and CEO, Jesse Powell, released a statement announcing that the company was closing its San Francisco headquarters. He blamed “numerous attacks, harassment incidents and robberies on employees” commuting to and from the workplace.
In a nutshell, the statement claimed that San Francisco was not safe, forcing the CEO to act in the best interests of his employees. Powell was blunt in his criticism of the city, personally blaming the District Attorney’s catch-and-release program for the spike in crime. He went so far as to accuse the DA of “protecting criminals.”
Richie Greenberg, a Frisco community activist and notable critic of the DA posted the statement on Twitter. It attracted numerous responses on either side of the debate. Powell is adamant that crime in the city is underreported because it is so “commonplace.”
Netizens seemed to confirm the deterioration in living conditions. Some even claimed to use an app called “Snap Crap” that alerts residents of human waste around the city. The residents can avoid these areas and get to work without smelly shoes.
The tech boom has also contributed to ridiculous rent prices. This situation is dire in areas neighboring Silicon Valley where the average rent prices are beyond low-income residents. The homelessness rate is a net effect of the rent crisis.
Coinbase also closed its headquarters in 2022. It attributed its decision to its commitment to a decentralized workplace that does not need headquarters in a specific location. Nonetheless, one would be reasonable to speculate that safety issues may have influenced the decision. Binance is a notable remote global exchange, and Coinbase may indeed have had pure intentions when closing its physical headquarters.
Broader Political Debates
Powell’s view on the city’s crime rate is not isolated. He has a libertarian streak in his socio-political views on Twitter. Notably, Powell opposed Canada’s response to the Freedom Convoy trucker protest. The protest polarized the American political landscape, and opposition was a view held mostly by right-wingers.
Crime has long been a political hot potato in the U.S. Former President Donald Trump was outspoken in his criticism of liberal states and cities for being soft on crime. He took exception with Portland for what he considered a tame approach to Oregon’s social unrest in 2020.
California is also facing a historical homelessness crisis. Many attribute this problem to the rising crime rates in the major cities. San Francisco has seen a higher crime rate in the past couple of years, and there may be some basis for the criticism.
Taxes are also a sticking point for many companies. In 2021, Tesla announced a shift of its headquarters from California to Austin, Texas. This move was partly because the red state offered much better tax policies for corporations.
US Senator Ted Cruz was quick to latch on to the news. He has also welcomed crypto investors to the lone star state praising lower taxes and regulations.
For now, Kraken will not open another physical headquarters in the USA. It fully intends to follow the remote-first model. This development is one of the enduring legacies of the post-pandemic work-life where companies like Zoom have made the workplace more flexible.
Is the California Shine Fading?
The combination of events is not ideal for California’s position as the tech powerhouse in America. Notably, the presence of tech behemoths like Google and Facebook in the state is enough to neutralize the companies moving out. Nonetheless, issues like crime are things the authorities can tackle and speak to the living conditions in the bay area. It will be fascinating to see how the District Attorney or mayor will respond. San Francisco’s authorities have their work cut out.
- kanchanara-5ixVD22x22o-unsplash: Photo by Kanchanara on Unsplash