If approved, Google’s big plans for a new high-tech Mountain View campus would have effectively blocked LinkedIn’s plans for expansion.
Instead, Google was only awarded 515,000 of the 2.2 million square feet of development rights for the North Bayshore area to be allocated last night, less than a quarter of the potential which the company had requested, while LinkedIn was awarded 1.4 million square feet (only 200,000 less than requested).
And now, it’s Google’s plans for expansion which have been cut short and left up in the air.
Will LinkedIn be moving from their building on Howard in SF to this new facility once it is built?
Linkedin HQ is Sunnyvale/MTV. I think it’s mainly engineering/product in the south bay, and sales and other business functions in SF. They won’t be leaving SF.
They haven’t even moved in yet, lol
This may be an opportunity for Oakland and south Bay cities to make a deal to get some of the space built which Google needs in their locales.
But is there any residential component in these plans? Mt. View has an even more severe shortage of housing than SF and the Bayshore area is right on the path of least resistance to creating more apartments and condos.
No, housing won’t be built in North Bay shore because of fears that residents’ cats might destroy the burrowing owl population.
Housing is back on the table: “Most recently, a new city council opted to open up the area to housing— changing the land-use calculus for Google by reserving two of its project sites for possible housing, depending on the outcome of a study.”
David – Fur – real? You had me going then I realized that there are already plenty of residences on the bay side of 101.
The Mountain View Voice has some great gems:
* Siegel and member Laura Macias said the housing would introduce dogs and cats to prey on sensitive species at Shoreline, including the rare burrowing owl, which lives in holes dug by ground squirrels.
* “One thousand units of single-occupancy rooms, that’s not a community, that’s dorms,” said council member Ronit Bryant. “It’s done a lot in China. Huge factories, huge apartment blocks, I don’t think everyone lives happily ever after.”
* “Housing by companies went out with the mining towns,” said member Jac Siegel. “That just went away a long time ago. This is not a university. People need to grow up and they need to go out” of where they work.
wait, burrowing owl isn’t even a threatened species (namelink)? sheesh.
I would like to see these South Bay Silicon valley companies, like Google, Apple, etc. be required to build new housing, both market rate AND affordable each and every time they expand or build their own campuses.
It should become a law thru Planning Codes to make this happen. They have the money to do it.
I was under the impression that what you propose is exactly what the silicon valley towns want least, because housing costs them money for services, while office campuses use fewer services. If it were to become a law, it seems that it would have to be a state law which overrides them.
I hear what you’re saying but keep in mind that Google and Apple, as two examples are VERY rich. They could easily allocate $4-5 billion dollars for construction and public services for this housing.
This would barely dent their cash reserves and serve to support the communities they are located in.
Again, though, this would need to be a state law. No way that the Silicon Valley towns would ever go for this, for fears of killing the golden goose.
Actually, I don’t think so. Remember these big tech giants NEED to stay in Silicon valley for their own success: near to 1000’s of other tech companies: cross culture sharing, employee base, adjacent to Stanford University.
I guess in my mind, it would be amazing if these companies would dig deep into their moral compasses and OFFER to build housing and pay to support the services. How about also: “Create some good”.
Futurist, I can agree with you there, but again, I don’t think the problem would be with the companies. The problem is that the towns wouldn’t allow the development, even if it were 100% financed and offered by the companies.
Why? That’s just as crappy as rent control. Forcing arbitrary companies (because “they can afford it”) to subsidize the poor to live in an expensive area they couldn’t otherwise afford, because we can’t dare raise taxes to do that. If the taxpayers won’t raise taxes then it’s asinine to vote to spend Other People’s Money to pay for it.
That’s exactly the kind of thing that if I were Google, would make me want to invest more in Pittsburgh (CMU is great), Boston area, L.A., etc. rather than help the cheapskate cities of the bay “solve” their housing problem for them.
Disagree completely. And I’m not saying make it all housing for the “poor” ( your words”. Build a lot of market rate housing for a lot of their tech workers, near the campuses with village type retail/food/shopping along with new Bart stations.
Nothing at all wrong with “encouraging” these super wealthy companies to give back some to the planet.
I’m specifically opposed to the subsidized housing you alluded to, not the market rate, but in general why force Google to get into the landlord business? That’s not what they’re good at. Let Mountain View find suitable developers and grant them the necessary permits to develop the needed housing (market rate I hope, unless the city is paying the subsidies with taxpayer approval). Nobody wants to live in a company town where their employer owns everything.
Anyway, I’m confused on why Google needs to be coerced to “give back” least of all to a wealthy suburb who isn’t any more entitled to Google’s money than they are. If MV wants they are free to either buy GOOG stock, or fund and develop their own publicly-owned search engine, then they can make money the same way Google does!
i like having the google, linked in, apple, etc employees in the city. they help drive tax revenue and are generally smarter and take good care of the neighborhoods. increasing the tax rev, IQ of the city and cleanliness are all good things.
Update: just been reading my latest issue of Architectural Record, reviewing the new Facebook campus by Frank Gehry: As Facebook expands with their second campus, they plan to add employee housing to the mix.
It’s not about a “company town” attitude, but rather giving some employees who want to live in the South Bay near work the opportunity. Plus it reduces the long commute to SF for some, reduces the luxury buses on our streets, etc.
This is a good thing.
And why wouldn’t these companies do this already if they could? It’s a win win for them- their payroll is directly fed back to them via rents. Housing shortages are due to city planning ineptness and NIMBY fears of height, wanting everything to be low slung, like Wal Marts everywhere.
Bank of America building is about 1,500,000 sq ft . Maybe Ed Lee should quit playing basketball and offer Google a chance to buy and occupy that. All their employees already live within biking distance….
Nobody wants to be inside that piece of sh!t.
Wait, when was 555 Cal relegated to P.O.S. status?
I’ve thought it was fugly since the day I moved to S.F. 24 years ago – but I agree, P.O.S. is a bit harsh.
Well, both descriptions are more than harsh. They are mid-guided and without merit.
The BofA building is probably one of only 3-5 truly iconic, modern buildings on our skyline; bold, powerful, dark shape against the sky, impeccably detailed, designed by the classic modern SOM of yesterday. I’m glad it’s part of our downtown.
It’s exceptionally fugly from Potrero Hill. It’s gorgeous up close though, and viewing from it’s most narrow edge.
@ Futurist – and that’s why I’ve disliked it from the start. There are few more beautiful images than standing in the Marin Headlands, looking across the Golden Gate Bridge at the City – it’s a gleaming city of white… except for the dark bulky shard looming over the City like some monolith from “2001”.
And as amply discussed in another thread, every person is entitled to their opinion on a building as much as they are on favored or disfavored art, music, or sports.
Of course you can have your opinion. Just never take any comments very seriously when they use the word “fugly”. Easy to type, not much substance.
And besides, I think the BofA building is a beautiful, dark solid, imposing building seen against the (largely) light colored skyline. Contrast can be a nice relief.
I’m sure I’m not alone in preferring to work in an urban highrise with a bunch of lunch and public transportation options versus in a low-rise suburban office park.
55 floors with 100+ corner offices on each floor? That’s gotta appeal to their ego. Plus it is the only office building SF that big.
I think Google would be a good fit in Mission Bay…. They want to use their big-computer internet-skills to cure aging. If anyone could make it happen it is them. http://www.calicolabs.com/
Not if Bjarke has anything to say about it!
Oakland near BART would make a lot of sense for a campus. Easy commute from SF and the East Bay. A vertical campus in SF makes sense as well, but there’s probably not the space under Prop M.
“Google Tower” would be a slightly less embarrassing name for the city than “Salesforce Tower.”
No way Google expands in SF in a significant way. They could have taken the Salesforce building if they wanted. SF ain’t where it is happening in the Bay Area.
Is the BofA tower empty or something? I see a lot of vacancy signs in the old financial district but mostly on older building. Is high-rise construction stopped north of Market in the old financial district. It seems sort of desolate and dying.
“SF ain’t where it is happening in the Bay Area”
What is “it” that you’re referring to? Because there’s certainly more construction (housing and office) in SF than in other areas. Google is already planning a third Seattle area campus (in the Ballard neighborhood, whispers of enough space for an additional 2-3000 employees), and I suspect this might cause them to up the size on that.
“Easy commute” – ha, tell that to the people who ride BART every day. Heck, just to the people who rode it in today, and don’t know how they’re getting home tonight because of a track break. (commute shut down due to a track break – just when did we become a third-world city?)
For San Franciscans, one is going against traffic if driving and in the less crowded direction if taking BART. Much faster than commuting to MV.
SF to peninsula is not a reverse commute. if you think so, you arent driving it. Tracffic from peninsula into SF in the morning and out of SF in evening is not as bad as the so called “reverse commmute”
What are you suggesting? That SF-to-Oakland is a longer commute than SF-to-Mountain View? Really?
BART ain’t what it use to be. Most of their trains are older than the people riding the trains. We can thank the MTC/ BATA for that – overspending $6 billion on one faulty bridge. Money that could otherwise have bought 800 new BART cars, 2000 new Muni buses, and electrified Caltrain without raising taxes or fares a penny.
Of course – useless Attorney General Kamala Harris has issued exactly Zero criminal convictions against the MTC/BATA mafia…
Salesforce is for sale, so maybe Salesforce Tower will become available.
Hadn’t heard that. Interesting. Wonder how the Salesforce lawyers structured the lease agreement for the tower. Are there outs and if so what – sale of the company?
The way new owners are today if they are not local they could well move a large chunk of staff out of SF.
lol, clearly you don’t know much about the type of folks that Salesforce employs.
The most likely suitors are Oracle and Microsoft, both companies that have been longing for additional space in SF (and both of which have aqui-hired thousands in SF over the past five years). Expect the same to happen here – it’s possible that they may restructure leasing deals, but they won’t move people out en masse.
lol, clearly you don’t know much about big companies and how replaceable individual engineers/marketers/salespeople are to companies like microsoft and oracle.
When they say jump, most will say “to where” or “what’s my severance”
lol, which is why tech companies are fleeing expensive SF and Silicon Valley. Dudes, it’s an employee’s market out there right now for the types of folks that work at Salesforce.
Well Zynga just chopped off 20% of their valuable employees. And Salesforce loses even more money than Zynga. It’d be a rare takeover of a money pit where there isn’t fat to trim.
Salesforce loses money in the same way that Amazon loses money – investment in expansion. No one doubts that Salesforce could immediately swing to profit if short term profits somehow became more important than long term growth. The market clearly understands this, and values Salesforce at $50 billion + (and Zynga, which is not in the same situation, is valued at only $2.5 billion).
brutus is totally right. The market rewards them more for growin market share and expansion than for profit. Cutting expansion and costs to turn a profit would be easy but would cause a massive stock drop and market cap drop
If Oracle and Microsoft are so anxious for space in SF why have they not leased space here already?
Microsoft said it wasn’t interested in acquiring Salesforce, per CNBC.
Charles Schwab’s international trading desk (office on Fremont St.) is moving to Texas. It will be laying off the SF workers.
They have, just through the purchase of other companies. Microsoft and Oracle both have significant space in SF already (Microsoft has had significant space for almost a decade now, first through their Avenue A/Razorfish purchase, later through Yammer, etc).
Microsoft is interested, apparently, as is one other company.
Microsoft has ~250,000 square feet in SF already, about half through Yammer and half through other space (several floors in the Bank of America building). I’m not sure of the total square footage that Oracle has, but it’s like in the small six digit range. They have several floors in a couple different FiDi buildings, along with some space in SOMA that was originally leased to BlueKai (a company they bought last year).
Salesforce Tower maybe?
Is that a hill in the middle of the picture? And, if so, is it a real hill (as opposed to a landfill hill)?
It’s landfill. That and Shoreline are property that used to be a dump.
Does anyone else sense the irony here? One of the reasons housing in North Bayshore is back on the agenda is because Google’s own employee’s have been agitating for more (affordable) housing and helped elect the new members of council who are more pro-housing. One to many lunch and learns for those Millennials and next thing you know Google corporate better start looking beyond Mt View for its long term real estate needs….
We’re losing money for growth is/was the story of every dot com company. And the market buys that story right up until it doesn’t.
well most of those companies didnt have good revenue. Salesforce and many other unprofitable companies ahve tons of revenue and are not in danger of failing.
Or the company scales back on growth and ramps up profit. See Google, Facebook, and every other large internet company. This idea that Salesforce, on track for $5 billion in revenue this year and a known leader in their category (including the high prices that go along with that), is somehow the same as “random other company that happens to do something on the internet” is patently ludicrous.
Google and Facebook were both profitable at IPO.
And there’s a graveyard full of companies that bought customers with money losing deals. How much of that $5B recorded as revenue was actually collected? Even HP got snookered by Autonomy’s enterprise software accounting
Salesforce has been public for more than ten years, not sure why you’re discussing IPOs?
Because you compared a company that 16 years out, 10 years public, is still is losing money to two companies that had profitable and growing businesses much earlier on. Facebook’s barely over 10 years old and Google was less then that when it IPO’ed. Hard to say what goes on pre-IPO because the financial data isn’t usually public or reliable.
There’s one tech model of spending money to develop a product which is then popular and profitable. Running at an operating loss after a decade and at that revenue scale is something else entirely.
Amazon is 20 times as large by revenue and unprofitable nearly every quarter. Different business models are different. The comparison that I made to Google and Facebook was to show how ridiculous it was to compare companies that happen to be grouped as “tech” companies by the media (or “dot com” companies as you called them. Salesforce is to Zynga as a banana is to a wombat.
Hardly!
Zynga completely played the lose money to expand the business game. They just lost at it. The paid out handsomely to Facebook for prime digital real estate on peoples pages and had many if not most of their users paying little to nothing. But when they stopped paying for access to customers and tried to ramp up monitization they faltered and failed.
Enterprise software has been rife with companies bulking up revenue by offering lax payment plans and bundling in service and support work at a loss. Maybe those customers you lost money to acquire are sticky and will pay off in the future or maybe since you got them to switch to your platform by offering far out payments and providing engineering and training to integrate your platform, when the next big thing comes along with the same offer of cheap/free migration and training they’ll dump you before the bulk of the payments are due and go with the next big thing.
i dont think anon really understands business or the market, so somewhat useless arguing with him
Spot on, Brutus. All these “tech” haters have no idea what they are talking about.
at least he didn’t say pets.com or tulips
Ahhh how ignorance is bliss…
The revenue/user/eyeball growth at all costs game has played out over and over again.
This little anecdote is topical not just to this discussion, but more poignantly because one of the player is now vying for leadership of the free world:
“In the spring of 1999, Lucent Technology’s star executive Carly Fiorina pulled off yet another coup—or so it appeared. A tiny start-up called PathNet agreed to buy huge amounts of fiber-optic gear from Lucent, a deal worth at least $440 million and potentially as much as $2.1 billion. The agreement Fiorina negotiated “potentially represents the single largest fiber supply agreement to a network operator in the U.S,” according to a triumphant press release.
While it was unclear how a tiny company like PathNet, with barely 100 employees and all of $1.6 million in annual revenue, could swing such as massive purchase, Wall Street didn’t seem to care about such details. The day following the announcement Lucent’s stock jumped 3%.”
“In the giant PathNet deal that Fiorina oversaw, Lucent agreed to fund more than 100% of the company’s equipment purchases, meaning the small company would get both Lucent gear at no money down and extra cash to boot.”
But surely this must have caused a harsh blowback to those involved serving as a cautionary tale to anyone pulling these shenanigans in the future?
“HP gave her $65 million worth of restricted stock to compensate her for the Lucent stock and options she was leaving behind.
Fiorina likes to point out that she left $20 million on the table. Of course, that’s using her numbers and assuming she would have cashed out her Lucent stock and options at once. If she had held onto the stock and options instead of selling them, that $85 million would have evaporated.”
Wow, so she cashed out and left someone else holding the bag, Just like Mark Pincus cashed out right before the collapse, just like the Autonomy founder made out. Funny how those peddling the growth is all that matters story seem to sell out at just the right time.
If you have some evidence that something similar is happening with Salesforce, I’m sure that everyone here would love to see it. Also, lots of reporters. And investment bankers.
Otherwise, you’re just tossing around baseless speculation and conspiracy theories.
In all of these cases, the market was buying the story right up until it didn’t. And in particular with Autonomy, HP undoubtedly had armies of lawyers, consultants and investment bankers looking through things with a much higher level of access then you could get from publicly available documents. But they still didn’t know that anything was wrong until after the deal went through. So you need to be a bit sanguine about what you can actually “know” based on public information. (And even with inside information, many workers in the above companies were sandbagged just as much as outsiders)
But 16 year out, still losing money and billions in deferred revenue warrants suspicion and clearly puts it in inauspicious company not in a class with the Google, Facebook and Apples of the world.
C”mon now. Salesforce is a consistent money machine. Two years ago it had $3B in revenue and lost $270mm. Last year it had $4B in revenue and lost $232mm. In the most recent year it had $5B in revenue and lost $262mm.
Compare that to any bum on the street. The bum made $800 million more than Salesforce over the last three years. No problems there . . .
no appreciable amount of tech employees moved to SF in the mid 2000s and on either, right “anon” (t**s**r)?
No, plenty of tech employees have moved to SF since 2000.
And this is relevant because…….
The entire airline industry has a net loss over its existence.
As I mentioned before, anon, if you have evidence that Salesforce is engaging in Autonomy-style fraud, please share. The simple fact that net profit hasn’t been reported is not evidence of something like that.
“The entire airline industry has a net loss over its existence.”
Yes and a number of airlines have shuttered or gone bankrupt.
People still buy telecom equipment, play computer games and use enterprise software. One company collapsing doesn’t make a market go away but things just didn’t work out well for investors or employees in those specific cases.
“No one doubts that Salesforce could immediately swing to profit if short term profits somehow became more important than long term growth. The market clearly understands this, and values Salesforce at $50 billion ”
The issue really is your false certainty that a switch could be flipped to turn losses into profits and that a market valuation at a point in time is a validation of a business model. Both of which I have demonstrated are not always true.
And the examples provided have shown that the failure to “turn the switch” and monetize previously profitless growth can range from overestimating how sticky users would be after initial acquisition (Zynga), to wildly aggressive but legal pursuit of revenue growth in spite of downstream consequences (Lucent) to alleged complicated and hard to discover fraud (Autonomy). And if you want to dispense with the alleged and look at a case where people were actually convicted and jailed you can throw in Critical Path.
“Those who cannot remember the past are condemned to repeat it”
actually, you’re arguing market valuation and other people are staying on revenue. and yes, slowing down acquisitions while continuing the same revenue streams would yield more profit.
Umm.. No
“The market rewards them more for growin market share and expansion than for profit. Cutting expansion and costs to turn a profit would be easy but would cause a massive stock drop and market cap drop”
“The market clearly understands this, and values Salesforce at $50 billion ””
yes, and other people stayed on the subject of revenue. as I said.
“The issue really is your false certainty that a switch could be flipped to turn losses into profits and that a market valuation at a point in time is a validation of a business model. Both of which I have demonstrated are not always true.”
How have you demonstrated this? You’ve talked about companies that never had large amounts of revenue and companies that engaged in fraud.
^apologies, I left out “companies that were not growing revenue quickly” from the list above.
Zynga was nipping at $1B in revenue with forecasts to grow to $1.5B. You might have to go to some historical archive to sort out what Lucent’s revenue was for the telecom division. But the single example I quoted above was $440M in revenue with potential to go to $2.1B. A quick google doesn’t get me Autonomy’s revenue, but I do see it reported that they claimed $170M in profit so they obviously had revenue in the hundreds of millions. (Both profit and revenue numbers were later dramatically restated by HP)
So yes, all of my examples had revenues.
And this:
“Fiorina made it known that Wall Street would generously reward companies that emphasized and delivered robust revenue growth. ”
pretty clearly shows that the whole point of these aggressive games was to display revenue growth to boost the short term stock price.
I said “large revenues” – ie in the 4-5 billion + range. A fifteen year plan of growing revenues 20-30% annually is a bit different than the extreme outliers that you keep bringing up.
I’d be very suspicious of Salesforce if they came forward with a single contract that accounted for a third of their revenue or if they were incredibly tied to one partner. As it is, I think the worst case scenario is that they’re simply like Sun – a company that created a huge new ecosystem or set of ecosystems, only to never really be able to profit from it because of killer competition. That’s a valid concern, but not one that reduces their current value all that much because Salesforce’s competitors are the likely buyers at this point (and place a lot of value in not having to compete with them).
Leaning on Google a little harder tells me that Lucent had $38B in revenue during that time period.
But fundamentally I’d draw a distinction at a much much lower revenue level. The traditional tech model would expect losses during product development when revenue is small to non-existent. Then the red ink turns to black as the product ships at scale.
A product that loses money even at large scale and is selling Wall St a revenue growth story is something else. Profitless growth might one day be channeled into profits or it might not.
And as far as markets are concerned, markets are far from being perfectly rational, but even a rational market is providing an expectation value not an actual value.
One oilfield might have a 50% chance of having $100M of oil and a 50% of having nothing. Another might have $50M of oil with near certainty. Both could rationally have a market value of $50M. And some behavioral economics would suggest that those drawn to the higher risk/higher reward would discount the downside risk and push up the market value of the riskier proposition.
Your assumption is that Salesforce is one “product”. Again, like Amazon, Salesforce has many products that are profitable, but has made the decision to plow money into new products instead of taking profits on one product.
You still have yet to provide a reason as to why/how Salesforce is similar to these other companies.
Zynga, Lucent, Autonomy all had many products.
As it’s a possibility that losses are due to development of product that will later prove profitable. But that’s no sure thing nor is it a sure that that that is the cause of their loses, look at their SG&A expenses. And other tech companies manage to create new products whilw being profitable. Apple notable has revolutionized whole industries while turning a profit.
And Amazon has revolutionized whole industries while not turning a profit. As I’ve said numerous times – different business models are different.
Not too long ago, I heard that Google was eyeing a whole building (one of those huge industrial buildings on 3rd) in Dogpatch, but the deal never materialized. I’d not be surprised if they took this setback by amping up more real estate deals in the city.