$1 billion AI company abandons San Francisco for Bay Area Peninsula

SAN FRANCISCO (KGO) -- It's the industry that's supposed to help revive San Francisco, with the major players in artificial intelligence moving downtown.

But on Monday, Replit, an AI company valued at over $1 billion, announced it was leaving the city.

Despite the relocation, Replit says it's not going far.

They're simply moving down the peninsula to Foster City.

"Just one company is not a trend. That's what I'm saying," said Ahmed Banafa.

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Banafa is a tech expert at San Jose State University.

He says the move doesn't change the fact that San Francisco remains the undisputed AI capital -- not just here in the Bay Area, but around the world.

It's not clear how many employees Replit has, but Banafa says he'd be worried if bigger companies like OpenAI decided to leave.

"They call them anchor companies where everyone is around them. But if you have companies that are just starting or companies that are new in the field, we have thousands of AI companies," Banafa said.

That view was also shared by Jim Wunderman, the president and CEO of the Bay Area Council.

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Wunderman says, given that the Bay Area's economy functions largely as one unit, San Francisco will still benefit from Replit being nearby.

"The fact that a company is in San Francisco itself, or in Silicon Valley, or in San Jose, or in San Mateo County right in the middle of it all, each has its own distinct advantages. But the location of the company benefits those outside that area," Wunderman said.

But leaving San Francisco is only part of the story, according to the company's CEO, who laid out his reasoning in a thread on X.

Saying in part:

"The 'why' we're leaving is boring, sad and predictable (crime, dysfunction, etc), so instead let me tell you why we chose Foster City."

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The rest of his post describes what he finds attractive about the Peninsula city.

Namely, its safe environment, ideal location and high standard of living.

Foster City leaders say they're happy to receive, all in the hopes that more companies may choose to follow in Replit's footsteps.

"We are a prime location for offices, and we have that tech hub, biotech hub, all of that comingling with the beautiful residential and recreational amenities the city has to provide," said Marlene Subhashini, Foster City's assistant city manager.

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