Building a Better Tech Boom

It sounded like a great idea in theory. But in practice, Imira’s ambition kept running up against all-too-familiar walls. The culturally homogenous world of venture capital funding in San Francisco and Silicon Valley made funding his business concept, and breaking through demographic barriers, an uphill battle.

"The idea was centered around the African-American consumer, and that’s not a consumer that most companies in the Valley are choosing to understand very well and go after," he says. "Just being able to get to the point where people would listen and not immediately say ‘it’s going to be a small business,’ or ‘that sounds like a lifestyle business, that’s not a tech company,’ was a struggle."

Imira cobbled together $48,000 from college friends and a friend’s mom—all black women—and started Mayvenn in 2012 with co-founder Taylor Wang. Based in his hometown, the company now boasts more than 40 employees, a customer base of over 50,000 stylists, eight-figure revenue annually, and high-profile investors, including tennis superstar Serena Williams.

Imira chalked up the challenge to culture: he was entering a new world and was unfamiliar with the language, while the tech world lacked a critical mass of people that understood his background, experiences, and viewpoint. Four years later, Imira believes the industry has made some strides in terms of diversity, but may be poised for a potentially larger shift. Tech is making a big move to Oakland, one of the most diverse cities in the country.

While the city has its share of homegrown tech firms, as well as companies that have already moved in from across the Bay, the pace of startup growth is expected to pick up significantly over the next few years. Uber’s high-profile new office in the burgeoning Uptown neighborhood is expected to open in 2017, a renovation of a beautiful Beaux Arts building formerly owned by Sears.

Many investors, city officials, and residents already see the influx of thousands of employees of the e-hailing behemoth as a catalyst for a new chapter of urban development. Picking up on that momentum, institutional developers are investing in scores of new projects, and new coworking spaces are making space for more entrepreneurs. Even the proposed design of the Uber building will be symbolic of this new era. According to architects at Assembly Design, the structure, taking cues from Oakland’s industrial and economic past, will have different historical eras assigned to every floor, such as the boom in automobile plants in the 1920s, serving as a timeline of local industry. Uber, as well as other technology firms, may be the stars in the story of the current decade.

In a city that is already facing rapid gentrification and some of the fastest growing real estate prices in the country (Zillow says all the hottest neighborhoods in the Bay Area are in Oakland), the Uber move makes many nervous that the city’s diverse, working class roots will be further diluted by tech bros and rapidly rising real estate prices (the city, the birthplace of the Black Panthers and home to generations of black celebrities and leaders, lost a quarter of its African American residents between 2000 and 2010).

But others see the tech influx as an opportunity to develop the city in a smart and sustainable way. Oakland Mayor Libby Schaaf calls it "techquity," a vision for fair, community-focused change, or as she wrote to Uber executives, "fostering our local technology sector’s growth so it leads to shared prosperity." But perhaps it can also be an exchange. If Oakland can figure out a way to incentivize and steer smarter growth, can the tech industry take advantage of a diverse community to help diversify its own ranks?

"People generally see gentrification as this big economic force that’s scary and hard to combat, and I don’t think anybody is under the illusion that Oakland can do it 100 percent right, or be the first city to figure it out," says B Byrne, co-founder of Clef, an Oakland startup developing secure, two-factor authentication login technology. "But I do think there’s an effort to take this opportunity and do better than anyone has done before. It’s not that San Francisco fucked up and we’re going to do it right. It’s that it’s a hard thing to do, and we should learn from them and try to do it better."

Can the tech industry take advantage of a diverse community to help diversify its own ranks?

While Uber’s office and related developments have generated headlines, tech established a beachhead across the Bay long ago. The Chamber of Commerce’s 2015 Tech Trends Report listed 400-plus companies employing 5,600 workers in 2014, with 4 to 10 percent annual growth in the sector over the last five years. Pandora, one of the biggest tech firms in the city, has been here since 2000. Van Jones’s progressive YesWeCode community coding program for minority education opened in 2014. Kapor Capital, the progressive VC wing of the Kapor Center for Social Impact, just launched Project Include to support female and minority entrepreneurs and, on June 21, opened the Kapor Center at 2148 Broadway, a space for collaborations and conferences they hope becomes a community center for tech. Even local celeb MC Hammer has gotten involved, becoming a successful early investor in Airbnb and speaking at local tech conferences. "Oakland has always been the city with the courage and the strength to stand up to the status quo," he said at Vator Splash Oakland, a major tech conference, in May 2014.

According to Marisa Raya, a tech industry specialist for the Economic & Workforce Development Department of the city of Oakland, "tech is already part of the fabric of the city, not a foreign object." It’s also a key part of future development. Roughly 20,000 tech workers already live in the city, with most commuting elsewhere in the Bay Area (one in five of the employees who will work at the new Uber building already live in town, a figure that will rise to one in four when the building opens, according to the company). While Oakland’s tech sector (roughly 3 percent of total jobs) is still a fraction of the size of San Francisco’s (8 percent of jobs overall), the potential spillover effect on the larger economy is huge. A much cited study by UC Berkeley Professor Enrico Moretti suggests each tech job creates five other jobs (the chamber’s data says the average tech salary is more than $100,000). But if quick growth leads to constraints on housing, the community loses out on the opportunity for new employment.

"Oakland’s biggest value is around diversity," Raya says. "We want the tech sector here, but made up of our current residents. How does it grow without subtracting from what makes Oakland important?"

Locals, as well as many Oakland tech companies, share a concern about the iconoclastic city losing its character and edge. Byrne co-founded Clef in 2013 after graduating from college in Los Angeles, initially setting his sights on San Francisco. But he found himself spending more time in Oakland, where he eventually decided to base the company.

"I think the tech industry has colonized San Francisco," he says, "which has affected the cost of living, housing, and the makeup of people in the city. I would go to bars in San Francisco, and people would ask me who I raised money from, or what my valuation was. I mean, I’m excited about what I’m doing, but don’t want to talk about it every moment."

Oakland may be adjacent to, as opposed to at the center of, the tech universe, but for Byrne and his colleagues, that’s a massive advantage. There’s a scrappier, more community-oriented culture in Oakland. Being away from industry hype, he says, forces them to develop things that impact people in the real world.

The city’s also developed a tech scene with character, says Byrne, one that discusses issues of displacement and housing affordability. Many people are trying to figure out how to responsibly build businesses here that aren’t "ruining what made the city so great for so long." But an influx of new firms and employees may make that a lot more challenging.

"At first, when people asked me about Clef and I told them where we were located, they’d say, ‘why Oakland?’" he says. "Now, when I say Oakland, they’ll say, ‘yeah, it’s really cool now.’ I’ll always respond and say, ‘It’s always been cool, now it’s just getting a lot whiter’."

According to Daniel Scovill, founder of the local architecture and interior design firm Arcsine, which specializes in restaurant and bar design, the city really began changing after the downturn in 2008.

"My friend uses the phrase ‘escape velocity’," he says. "At this point, there’s no turning back on growth in Oakland, even in another downturn."

Being away from industry hype forces them to develop things that impact people in the real world.

One can chart the city’s growth with Arcsine’s changing clientele. When the company was founded in 2003, most of its work was in the East Bay, designing new destination restaurants in towns such as Walnut Creek or Livermore. There wasn’t much action in Oakland until the recession hit and caused people to rethink their budgets; it jumpstarted a new way of thinking, according to Scovill, and sparked an entrepreneurial, bootstrapping mentality. Creatives flooded across the Bay from San Francisco seeking lower rents—joining an artistic community so large it’s often referred to as the biggest per capita in the country—and small businesses soon followed. Restaurateurs began hiring firms such as Arcsine to build out trendy new dining spots, while the redevelopment of the Fox Theater, which opened in 2009, created a nexus for activity in Uptown.

"There was a spirit of wanting to do things locally, due in part to the downturn, that really created a coming of age in the city," says Scovill. "It dusted off parts of the city that we may have not been looking at previously. Suddenly, there’s all these people with a lot of creativity ready to do something special."

More restaurants and galleries have followed since, growing the celebrated cultural scene and  turning the city into a foodie and art destination, one that’s become increasingly attractive to tech workers.

A forthcoming development, 1911 Telegraph Avenue, which happens to be across the street from both the Fox Theater and the future Uber building, offers a snapshot of development in Oakland, and a symbol of the multiple directions the city seems to be headed all at once. A flashy 520,000-square-foot mixed-use project on the last city-owned downtown plot, designed with facades that reflect the city’s Art Deco heritage, it’s Oakland’s first new high-rise in a decade. Set to open in 2019, it’ll be developed by San Diego-based OliverMcMillan and Oakland’s Strategic Urban Development Alliance. The mix of retail, residential (330 units, including 50 affordable), and a hotel has generated excitement, and will revitalize a vacant, city-owned lot that was once part of a teeming retail corridor. Shonda Scott, a developer with OliverMcMillan and longtime Oakland resident, sees it as a sea change.

"In the last couple of years, there wasn’t much work at all going on in Oakland," she says. "Now there are many multi-million-dollar projects bringing retail and affordable housing to the city."

They may have developers making a lot of money, but there are also plenty of employees making $40,000 to $70,000, salaries that some don’t culturally associate with the tech industry.

All this growth has made community developers and affordable housing advocates scramble to keep up. According to the Association of Bay Area Governments, rents in the region increased by 34 percent between 2010 and 2014, and a report by the National Low-Income Housing Coalition, "Out of Reach", found that a worker in Oakland making the local minimum wage ($12.25) would have to effectively work three full-time jobs to afford a modest one-bedroom apartment.

"We’ve been here about 40 years working on affordable housing, and have seen a lot of different leaders and developments," says Jason Vargas, Director of Real Estate Development at East Bay Asian Local Development Corporation, a nonprofit community housing organization. "This is something totally different."

Outsiders began seeing Oakland as a gem four or five years ago, he says, viewing the stock of older buildings with larger floor plates and lower rents as ideal spots for tech firms, accelerators, or coworking hubs looking to grow or relocate. It makes sense for the city to welcome the tech world with open arms, Vargas says, despite grappling with the issues of sustainable housing and jobs. Over the last few years, as developing affordable housing has become more difficult, EBALDC has made it a point to work with companies on developments and partnerships that bring in community assets, such as healthcare or education, in the hope of adding value to under-resourced neighborhoods, and to encourage local input (San Franciscans often complained that rapid development didn’t factor in their voices). But the housing market has entered a new reality.

"We’ve seen rents go through the roof over the last four to five years," he says, especially in the Merritt, Rockridge, and Temescal neighborhoods. As median rent has shot up to $2,300 a month for a one-bedroom apartment, a 14 percent jump in a single year, the city is also rapidly shedding affordable options. According to a Trulia report, between April 2015 and April 2016, the city lost roughly 20 percent of its affordably-priced housing as landlords raised rents on older building stock. The problem is so acute, the city council felt compelled to pass a 90-day moratorium on rent hikes in early April.

The city is prioritizing affordable housing, according to Raya, and is looking to quickly adopt new policies over the next few months. Mayor Schaaf issued an extensive plan in March calling for the creation of 17,000 new affordable housing units and the protection of another 17,000. She says they’re also exploring how to engage the tech industry, though it’s difficult to structure policies that single out a certain type of employer.

"Even in Silicon Valley, companies will say the cost of housing is one of their biggest issues," says Raya. "They may have developers making a lot of money, but there are also plenty of employees making $40,000 to $70,000, salaries that some don’t culturally associate with the tech industry. But it’s an open question how these firms will be engaged with creating more workforce housing."

According to Dr. Miriam Zuk, director of the Center for Community Innovation at Berkeley, tech employees are already moving to Oakland—the types of changes seen in San Francisco, aptly summarized in a recent Atlantic article called "San Francisco's Diversity Numbers Are Looking More and More Like a Tech Company's," are already underway—but there isn’t enough policy in place to blunt the effects of rapid development.

"Nobody wanted to develop in Oakland, and all we could get was affordable housing," she says. "Now that’s changed. Market-rate housing developers are already here, and city policy is attracting even more developers."

While the city claims it does more than most cities for housing, it’s still losing more units of affordable housing than it has gained. Zuk believes the city needs to shift its outlook to match the reality of what’s happening. Right now, tens of thousands are on waiting lists for new subsidized housing developments, and thousands are on the list for Section 8 housing vouchers. Often, coverage of technology firms and real estate talks about the top section of the real estate market, but the supply of low-end housing in Oakland is what’s really taking the hit.

"While tech sector jobs are high-income, there’s also a service sector that supports them," says Zuk. "Look at the commute data; people are commuting two or three hours to get to their jobs, because there’s no place nearby they can afford to live."

With San Francisco standing as a cautionary tale across the Bay, and Oakland looking quite appealing to many fleeing sky-high rents, how do Mayor Schaaf and the tech industry realize "techquity"? According to a recent report from SPUR, a local urban research nonprofit, Oakland is at a crossroads, and while it could greatly benefit from the tech boom, the city needs to create comprehensive policies and a vision for smart growth to make sure gains are shared by everyone.

"It’s not tech versus Oakland," says Raya. "We’re still evolving how we can incentivize and insist on different things from different companies, but we want to encourage business relationships."

On the housing front, many advocate more investment in affordable and workforce housing. EBALDC has seen success using a private equity fund, the Housing Acquisition Fund, to acquire 85 units in Oakland and stabilize the rents, and plan to acquire even more existing housing. Perhaps a larger one, funded by tech companies, could add more moderate and affordable housing. That way community groups can go in before the private developers and buy and fix up units before the rents go up.

Zuk says one of the most valuable things tech can give cities is more tech. Oakland, like many municipalities, lacks great data about housing activity on the private market. Tech companies could be good neighbors and help develop better data collection and display capacities.

This is Oakland; there’s no shortage of young people, no shortage of brilliance. But there is a shortage of resources, access, and information.

"At the very basic level, why aren’t we getting some of their tech savviness to solve some of these problems?" she says. "There’s so much knowledge and capacity in Silicon Valley. Why don’t they make these much better data systems for cities and improve the data we have? The way many companies traditionally frame concepts of equity is all about employee volunteering, or offering up conference rooms for community events. There’s volunteering, and then there’s more substantive things. Let’s invest in housing. Let’s fund local groups. It’s more controversial, and expensive, but I think it’s more in line with making sure they’re good neighbors."

In many cases, the city will need to use soft power to influence change. The Uber deal is a perfect example of the limits of the government’s power. The multinational company’s $124-million purchase of the Sears property generated $1 million in linkage fees, which will be reinvested in affordable housing, but that’s a legal requirement, and since the property wasn’t city-owned, there isn’t much more Oakland can officially do to influence a company that will be one of its largest employers not involved in government or healthcare. But Mayor Schaaf made unofficial overtures to the company, introducing them to nonprofits and industry groups around the city, and convincing them to use a local roaster, Red Bay Coffee, as a supplier for the employee cafe. It’s small, but symbolic of the types of collaborations the mayor’s office wants to engage in.

"Our approach is more business-oriented," says Raya. "We can help you find talent that you’re not accessing, help you with your supply chain, and connect you to local entrepreneurs."

Raya believes the city can also take advantage of a growing arts and culture scene and make diversity a selling point; increasing diversity in tech is "critical to the sustainable growth" of the local sector. The city has supported the growing number of tech training boot camps, including many for women, people of color, and others underrepresented in the industry. Oakland is a federal TechHire community, and can act as a broker between local and regional companies and underrepresented tech talent. The city also has a tradition of diverse hiring and funding; that includes Kapor Capital, which focuses on double-bottom-line investments (businesses measured by both financial performance and social impact).

"It’s not just about pushing for a local hire," she says. "Can you hire someone from a non-traditional background who took a non-traditional path into the tech world?"

Many in the industry are taking matters into their own hands. The Kapor Center announced a Founders’ Pledge earlier this year that requires any startup receiving funding to commit to a series of pro-diversity measures. According to Cedric Brown, the Chief of Community Engagement for the Kapor Center, the city’s "blossoming" tech scene can present a model of corporate responsibility and community engagement, and can place a different premium on local entrepreneurs.

In February, a group of local companies including Clef held the first Tech EQuity Week, dedicated to fostering a more inclusive tech ecosystem, which included a Hacking Housing event. One of the organizers, Qeyno Labs, a for-profit social enterprise, has been engaged in the issue for years, having organized hackathons for minority youth since 2014, when they held their first black male achievement hackathon.

Having another laundry pickup app may be nice, but it’s not the kind of social impact we’re looking for.

"Tech companies can come and invest in the hackathons, but they want to fix diversity numbers now," says Kelley Nayo Jahi, Chief Operating Officer of Qeyno. "The kids at the hackathons may be too far down the pipeline. We need them to widen their scope and get more involved helping get these kids ready. This is Oakland; there’s no shortage of young people, no shortage of brilliance. But there is a shortage of resources, access, and information."

Byrne and the team at Clef believe closer industry collaboration can start laying the groundwork for more responsible development. The TechEquity collaborative already has an executive director, and is starting to get commitments from Oakland companies to share data on hiring practices, create internships and job placement opportunities, and increase transparency about how everyone operates (interested parties can even join the conversation on Slack). Clef placed its employee handbook on GitHub, a site coders use to share their work, to help up-and-coming startups create better diversity policies.

"We can all predict that more and more of this industry is going to come to the Bay," Byrne says. "It’s a big economic opportunity for the city, so how can we all work together to make it more responsible?"

Imira has seen the tech world diversify since he started Mayvenn, as more people of color break down barriers. It’s more a drop in the bucket than the widespread expansion of opportunity and education needed to bring real representation to the tech world. But like many of his peers in Oakland, he feels his city, a place that values diversity, history, and its people, can be more than a new source of affordable office space. Oakland can be a launch pad for a more representative, and even relevant, generation of tech entrepreneurs.

Brown has the same hope. "We just want a tech sector that looks like America, that looks like the United States," he says. "We’ll benefit from people who bring their life experiences to people who help people. Having another laundry pickup app may be nice, but it’s not the kind of social impact we’re looking for."

Editor: Adrian Glick Kudler
Photographer: Patricia Chang