Original subtitles

Brown: 2,500 years ago,

a Greek poet named Heraclitus said

no man steps into the same river twice.

And one might even say

no one visits San Francisco twice

because it's changing.

Pelosi: Do you think it's changing for the better?

- You know, that's like saying,

"Is getting older for the better?"

It's inevitable.

[intro to Village People's "San Francisco"]

Pelosi: This is San Francisco,

the golden gate to America.

This paradise, born of the gold rush,

is my hometown.

It's the place where

all my childhood memories still live.

But you don't have to be from here

to know that San Francisco is a pretty special place,

and not just because of its unique beauty

but because of its long tradition

of embracing nonconformity.

- ♪ It's a city known for its freedom ♪

- ♪ Freedom ♪

- ♪ Cycles shining bright ♪

[tinny drumbeat]

Pelosi: San Francisco

has always attracted special people--

mavericks and bohemians--

and it's always had a rebellious streak.

In the 1920s,

it even passed its own laws against Prohibition.

[jazzy music]

In the 1950s, it was home to the beat generation

of Kerouac, Ginsberg, and Ferlinghetti.

In the 1960s, of course,

it gave birth to the hippies and flower power.

And in the '70s,

it was the champion of the gay rights movement.

And it's that sort of freedom and spirit of antimaterialism

that we think of when we think of San Francisco.

But now...

- [screams]

[rumbling and crackling]

Pelosi: Now people are saying

that that San Francisco that we know and cherish

may be doomed.

- It's the end of the world!

[screams] It's the end of the world!

Pelosi: No, it's not the earthquakes,

but it is tearing the city apart.

This is an invasion--

the IT invasion.

- Where do they come from? - I don't know.

Pelosi: It's the techies.

male announcer: They come from another world,

bringing a new dimension in terror.

Pelosi: And they're coming from everywhere.

- You're in danger! Flee!

Pelosi: And it may be too late to stop them.

- Can't you see?

They're here already!

You're next!

[dramatic musical flourish]

[laid-back music]

Pelosi: Good old San Francisco,

the counterculture capital of the world,

is in the middle of a pretty drastic makeover.

Like many great cities around the world,

San Francisco's being forced to reinvent itself.

Everywhere you look, you see cranes

building luxury high-rise apartments.

And in neighborhoods all over town,

the shells of the old houses

are hiding new expanded and retrofitted palaces.

These are the homes for a new generation

who've been transforming this town into a power city.

But as the march of progress pushes forward,

the question is,

will some be left behind?

[upbeat techno music]

San Francisco is now

the world's leading tech paradise.

Thousands of tech firms call this place home,

but many of the locals

accuse the new generation flocking to the city

of being oblivious to the culture they're displacing.

San Francisco 2.0 is full of tech bros,

hipsters,

yoga yuppies,

$6 cupcakes,

organic juice shops,

and freshly minted millionaires

who all work for these new Silicon start-ups.

And where do all these start-up companies come from?

Well, many of them come out of incubators.

Like nursery greenhouses or mushroom basements,

tech incubators are trying to grow start-ups

in buildings all over town.

Hertzog: An incubator is a term

for any kind of program or space

which accepts start-up companies and helps them--

helps facilitate their growth.

We've got about 75 different companies

working in this one space.

And they apply to us.

It's an invitation-only space.

So the entire space is a shared workspace.

Rather than work in isolation,

the teams can pool together resources,

make as many serendipitous opportunities

possible that we can.

Pelosi: How did you end up in San Francisco?

Hertzog: Okay, so one of the reasons why I moved here

and why people are sort of flocking here--

and the way I kind of think about it,

it's almost like a digital gold rush.

I kept reading company after company being acquired,

and at the end of the news article, it would say,

"San Francisco, California, San Francisco, California."

So after reading about ten of those,

you essentially say, "Okay, something's going on here.

"Something's happening here,

and I got to get myself there to see it for myself."

And I bought a one-way plane ticket out.

And the first week, I managed to become

the first employee at Runway Incubator.

Pelosi: The new media

is literally pushing out old media.

Yahoo has taken over three full floors

of the "Chronicle" building--

the town's largest daily newspaper since 1865.

So what's it like to be young

working here in San Francisco?

Fortet: First of all,

there's no old people and kids in San Francisco,

especially in the center.

That shifts your mind.

That means that you're in a-- like, in a young bubble,

and this young bubble is a place

where everyone is doing something,

and everyone is doing something extraordinary.

It's like everything-- every action I take every day

can be improved through an app

or through a new service or experience,

and everyone in San Francisco is trying to think about that.

I sit in a chair; how can I improve that experience?

I order a pizza; how can I improve that experience?

I order a soda; how I improve that experience?

Pelosi: In the new digital gold rush,

the shining lure is workplace perks.

The tech companies have engaged

in something like a perk war,

with each firm having its own array

of happy-making enticements to bring

the best and the brightest into their fold.

Mattingly: San Francisco, Silicon Valley

is really changing work environments

around the world for the rest to follow.

Pelosi: How come everything in Silicon Valley

feels like my five-year-old's fantasy?

Mattingly: It is. Because it is.

Pelosi: Don't you have jobs to do?

What are you doing playing with Legos?

Mattingly: We have a games room,

a massage room here.

Around the corner, we have a music room.

Houston: We've always had a jam room of some sort.

Our first office had drums in the corner.

Looked kind of like that.

Pelosi: And it's not just food and toys.

- If you need something for your computer--

Pelosi: Need a new component or software for your computer?

- Need your badge.

Pelosi: Just push a button.

- There you go.

Pelosi: It's free.

Mattingly: Everything here is free.

It's part of the deal, part of the benefits deal,

from food to drinks to gyms to everything you see here.

And everything is provided to make your work-life balance

good and enjoyable.

Pelosi: What do you see when you look around the room?

Mattingly: Just happy people.

Loving--love being-- working here.

Just happy people.

This is the future, without a doubt.

It's the future, and then some.

[upbeat music]

[jittery string music]

Sahu: San Francisco is gonna be the place

that'll save America

and eventually the world,

because we would create the next jobs,

and we would create the next way people are more productive

than where they are right now.

And San Francisco presently

is the richest place in the world,

bar none.

And--and--and we have about 1/4 of the world's

construction right now happening in this city.

Pelosi: No way.

Sahu: What we are seeing here is the early stages

of the phenomenon that we have seen

all the way from the Roman Empire,

where we would become the center of the world.

Pelosi: A steady stream of young people

with Facebook and Twitter dreams

continue to swarm into this center of the world,

hoping to get planted in an incubator

and, with a little bit of luck,

might end up like this guy--

a multimillionaire

who developed a start-up from scratch.

How did you get rich?

How did I get rich?

We sold a social network called Bebo in 2008.

We sold it to AOL for $850 million.

Didn't fare well at AOL.

Um...

bought it back a year ago for $1 million.

And now we're redeveloping it here at Monkey Inferno

to relaunch it.

Pelosi: How come if I've never heard of your company--

There are all these millionaires

walking around here that got rich

off some of these companies I've never heard of.

- Yeah, I mean, I am in Silicon Valley,

and I still meet people every day

that I've never heard of their company.

Pelosi: So why don't you just sit on a beach somewhere?

Why are you still working?

Birch: Because it's so boring. I like projects.

I like having-- setting myself a goal

and seeing if I can reach that goal.

So we started a club, a private members club,

called The Battery in San Francisco.

And we opened the club primarily because

we thought, "There's an opportunity.

"No reason this couldn't create

"a really interesting kind of

social environment for San Francisco."

Pelosi: So with luxuries

like invited membership-only clubs

that provide exclusive opportunities

to socialize and network...

[bell rings]

The tech set is extending their paradise

beyond the walls of the workplace

and into the fabric of San Francisco life itself.

But why San Francisco?

How did all the tech bros end up here?

Well, it all started down in Silicon Valley.

People were coming from all around the world

to work there,

but no one really wanted to live there.

So the tech companies

started chauffeuring their young talent

on these luxury buses

to and from where they really wanted to live:

in San Francisco.

After seeing the dark double-decker buses everywhere,

it didn't take long

for the wise leaders of the great city

to wake up and smell the money.

So Mayor Ed Lee and his advisers devised a plan

to entice the tech companies to relocate to the city.

By offering tax breaks

to any firm that would move its headquarters

into a region around the Tenderloin--

a district known for its homeless and destitute--

the city lured in the tech giants,

creating the second gold rush for San Francisco

and opening the golden gate

for the techies to build their playground.

Lee: We've got 1,979 tech companies.

I mean, we went from 9.5% unemployment rate

to 5.2% in less than two years.

So that's 42,500 new jobs.

[crowd murmuring indistinctly]

Pelosi: One of the chief architects

of the so-called Twitter tax break--

as it came to be known--

was billionaire investor Ron Conway.

Known as the Tech Godfather,

his investments almost single-handedly

turned companies like Google and Facebook

into corporate giants.

- Not me single-handedly, not at all; it's--

Pelosi: But you're the money guy.

You're the guy that gets all these dot--

all these start-ups-- you're starting up--

you're the guy who's starting up all the start-ups.

- Well, I'm funding a few of them,

some of the ones that got big.

Twitter and Square are huge companies.

Pinterest is going to be a huge, huge company.

Pelosi: But you're the mastermind behind this.

You're the consigliere that got the mayor

to roll out the red carpet to the tech companies.

- Well, the mayor-- the mayor--

I didn't have to convince the mayor of anything.

Ed--Ed Lee has a lot of common sense.

It's Ed Lee who did this.

It's not Ron Conway.

Pelosi: San Francisco is booming.

I barely recognize my hometown now.

Conway: It's called progress.

That's called progress,

and when you bring in these tech companies who innovate,

the by-product is, the entire community

is gonna make progress.

Now, we-- we do create problems.

San Francisco is only six square miles, and--

and that's why we have an affordability--

a housing affordability issue

that we have to deal with, but--

but we are dealing with it.

Pelosi: So there's trouble in paradise.

They call it "a housing affordability crisis,"

which is the politically correct way of saying

that you have so many well-paid techies

moving into this small little peninsula

that if you don't have

a billionaire venture capitalist backing you,

you can't afford to live here.

Van de Mark: The price of this property,

if I hadn't touched it,

has gone up more than 50% in three years.

So if I had not touched it,

I could turn around today and sell it

for probably 1.65, 1.7.

With this completed,

this remodel done, it's arguably worth 2.6.

It could even be worth 3.

So this house should rent, when it's finally completed--

and it'll only be about 1,400 square feet.

But it'll rent for about $10,000 a month.

Big, huge television recessed in the wall here.

Subwoofer in the floor.

Speakers in the ceiling.

Electronic shades for the windows.

Hit a button. Bzzzz!

This is the boom cycle of this city,

which is a city that has a history of booms

and then lulls.

Not really busts but booms and lulls.

And so we've got a boom.

We've got a bona fide boom.

It's the internet 2.0 or 3.0

or social networking, whatever you want to call it.

But it's super exciting.

[soft string music]

Pelosi: And now that the traditionally

desirable neighborhoods are full or unaffordable,

the well-heeled hipsters are taking over

the formerly less desirable areas.

The infusion of new money

is pushing the lower income residents out.

Hill: I live in the Hunters Point area.

I'm being evicted

out of my home that I've been in for 27 years.

I've grown up in this home.

Hunters Point is not much of a good area,

but it's home to everybody

that's been there for so long.

And all these companies coming in

and taking over our area, it's a little difficult,

'cause we have nowhere to go.

Where do we go?

Where do we stand

as a people in our own neighborhood

where we're getting pushed out of

because of these large billion-dollar tech companies?

Pelosi: As this drama plays out,

a new kind of segregation

between rich and poor is emerging.

Hill: So this is where they're taking all the projects down

and building new apartment buildings for other people.

And basically-- this is basically the before.

They haven't tore it down yet, but they're getting ready to.

And this is the after now, which is...

we look like we're in Beverly Hills somewhere now.

Like, it's crazy.

They're moving all the--

you know, the rich white people in,

and it's taking everybody out of they homes.

And I'm pretty sure they're not gonna make it available

for people like us to live over here,

so it's kind of like throwing it in our face.

Kind of like, "Ha, we're building this building here,

and you can't stay here 'cause you can't afford it,"

all in our face.

Pelosi: Look, there's Candlestick Park.

Isn't that going away too?

Hill: Yeah, I don't know how long it's gonna be there for.

They're--they're planning on tearing it down right now,

because the Niners have moved to Santa Clara,

into the tech valley.

So now since the tech companies came in

and moved it out and moved it over there

by where they want it to be at,

you know, it's for them now.

Like, that's-- their Niners is theirs now.

It's not even ours anymore.

And we're gonna miss everything about the stadium.

They're taking something from us that's very important.

Pelosi: I don't think that the tech companies

stole the 49ers.

I think that the 49ers went where the money is.

Hill: They did. Indeed, they did.

All of it is about money.

All of it. That's all it is.

They don't care about nobody else.

They don't.

They took our history from us.

Pelosi: Of course,

not all history is worth saving.

[soft string music]

This decaying steel yard in the district called Dogpatch

is an eyesore.

And it's being torn down

and replaced by a development project

that does have some affordable housing.

But this is fast becoming a neighborhood

those new lower- and middle-income residents

will not be able to afford.

[upbeat music]

To cater to all the new money moving in,

premium cocktail bars, artisan foodie restaurants,

and upscale boutiques are popping up

and pricing the locals out of their own community.

[upbeat music]

Talbot: You know, a city is a fragile thing.

It's sort of a fragile alliance,

a fragile pact that people make with each other

to live together,

people from all different walks of life.

That's what makes a great city.

If the current trends continue,

where the wealth gap is exploding at a--

at a much quicker rate than any other city in America,

then the artists and the writers,

the musicians,

the people who made this city

the kind of attractive magnet that it is,

that--they're-- that's all gonna go away.

San Francisco will become a bland, monotonous,

tech-oriented city.

Pelosi: This sweeping away of diversity

is happening all over town

but can be felt most acutely in the Mission district,

where the tech invasion is uprooting immigrant culture

that's been here for decades.

Hernandez: The heart and soul of San Francisco

is being actually ripped out of the city.

You have teachers. You have policemen.

You have firemen. You have janitors.

You--the working class of San Francisco

is being pushed out.

Landlords are really, really greedy.

You know, they want more money.

They want to cash in on this boom

of technology and all the money that's coming in.

There's a place on Valencia Street

that charges 56 bucks for a hamburger.

[laughs]

Pelosi: So who buys a $56 burger?

Hernandez: It's not us.

It's all the techies that come here.

So most of this whole block, families were living there.

Families were living there, families, families.

Right now, you would have this block filled with children

playing out in the street.

There ain't no children right now playing.

You know, if you're gonna live here,

you got to be part of this community.

Most of the people who moved in, they don't say hello.

They don't talk to you.

And I talk to all of them.

You know, I always--

I make them say hello in the morning.

I say, "Good morning," or I say, "Buenos días,"

you know, just to kind of break that ice.

And then the other thing is our murals.

I mean, we have some beautiful murals

here in the neighborhood.

Some of these businesses that have moved here

have either painted over

or removed some of our murals.

A lot of the murals are cause related.

People think they're just murals,

but if you look at, for example, this mural,

you have Cesar Chavez on there.

You know, you have Martin Luther King--

people who have contributed

to the betterment of the human race.

Pelosi: San Francisco's murals

have always reflected

the struggles in the community.

And the pain they feel today is visible on the city's walls.

- There's my favorite one right here.

You do know we were also almost evicted, right?

But, you know, we fought it.

Well, one day, my mom--

you know, she doesn't know English well.

So she, like, showed me this letter.

And, you know, I was reading through it,

and I didn't understand it.

But from the gist that I picked out of it is that,

"Hey, you know, one year from now--from today,

"you know, pack your things and go.

"Here's a-- here's a nice check,

"you know, for you to, like, you know,

find a new place somewhere."

Pelosi: So how much were you offered to find a new place?

- Oh. [scoffs]

He offered me, like, less than 2 grand,

which doesn't cover even, like, moving expenses.

You know, it's barely enough to, like,

even find a place in San Francisco

or, like, even, like, in the areas around it.

It was garbage money, right?

Pelosi: So you were offered $2,000 to leave your home?

- Yeah, he kind of, like, gift-wrapped it too,

like he was doing me a favor, you know?

That's pretty much how all these businessmen see it.

You know, it's like, you know,

"I didn't cause a problem, but I can,

you know, somehow profit from it."

Not, "How I can help--

not how I can help the situation,"

but, "How can I benefit myself from it?"

You know, people came here in droves,

just, you know, expressing their own ideas.

You know, for free!

Crazy, right? You know?

Sharing your art, sharing your expression for no money,

just for the love of it.

The city is being taken over

by the one thing I always thought the city hated,

and that is-- and that is just money.

And that's what these guys are trying to do.

They're trying to, like, take that away.

They're trying to say, "Okay, how can we make money, period?"

You know, I was always fascinated by,

you know, the business angle of San Francisco

and, like, the art angle of San Francisco

and how they always kind of, like, clash.

You know, it's kind of like--

you know, it's kind of like a paradox, right?

But they, like, fit so well,

like yin and yang; it's beautiful.

But now it's like-- it's more, like, unbalanced.

It's--it's become probably one of the most expensive cities

in the whole freaking world.

A city where it just revolved around arts

and just the beauty of imperfection

is being lost to--to money!

[crowd chanting indistinctly]

McElroy: The gap between the rich and the poor

is growing at a very unprecedented rate,

not necessarily because the poor are getting poorer

but because the rich are getting richer.

And we are in an eviction epidemic right now.

These are the three types of no-fault evictions

that are used to displace tenants

for no fault of their own.

Pelosi: What is an Ellis Act eviction?

McElroy: An Ellis Act eviction is when a landlord

decides to exit the rental market,

and what they do is,

they speculate on a building, buy it.

Often within the first year of ownership,

they give the tenants--

who are often rent control tenants--

Ellis Act notices.

And that means that they have to vacate.

It's very hard to fight an Ellis Act eviction.

It's unfortunately legal.

It's a state law that supersedes

any city law or ordinance.

Ellis Act evictions are up 175% over the last year.

No-fault evictions in general are up 115%

over the last year alone.

These huge corporations that are tech corporations

are basically just selling San Francisco

to their employees as an added benefit or perk.

So, you know, you can work in Mountain View or Palo Alto

and get to live in this cool, hip city.

And of course, landlords are taking advantage

of the money that tech is bringing into the city

to evict longtime residents for no fault of their own

to create housing that people much more affluent can afford.

We're seeing this happen again and again

with these people who are very vulnerable,

who are very reliant on their neighbors

and communities that they've built

throughout their lifetime being forced out

and basically just put into the street.

Agnos: I, as a former mayor of San Francisco,

could not afford to live in my house

that I bought in 1972.

It's too expensive,

if I were to try to buy it today.

And so it is with every house here.

Look at the young people. Look at the coffee shops.

Look at all--it's changed

and, with it, the nature of the population,

because we aren't building any alternatives

for people who have traditionally

had an opportunity to live

in what was affordable housing.

And we want to keep a place in the city

for the people who can't afford

$4,200 for a two-bedroom place

or $5 million condominiums.

Pelosi: The space invaders of San Francisco 2.0

are not only usurping housing,

but, in their quest to put up mega-story tech towers,

developers are taking over San Francisco institutions

like the Flower Mart.

The Flower Mart has been

a cornerstone of the flower industry,

supplying the whole of the West Coast

for over a century.

Agnos: This is the San Francisco Flower Mart.

It is one of five in the country.

It's the second largest in the country.

It's been here, the origins, for over 100 years

and in this particular city block

which it encompasses for 56 years.

There is no other place like this in all of San Francisco.

And it's important that it be here,

because it's part of the transportation hub

that's necessary for the flowers to come here

for the wholesalers, the retailers,

and all of these small businesses.

The developers want to demolish all of this,

create high-rise office parks.

Pelosi: Who do you think is responsible

for the changes taking place here?

- I don't think it's the tech companies

that are doing it.

I think it's the developers that are

reaching out to the tech companies

that see an opportunity here.

They get with the tech companies,

and the tech companies go, "Yeah,

this would be a great location."

Agnos: Developers see an opportunity here

to make billions of dollars

at the expense of the heart and soul of this city.

Pelosi: The developers will build

their 1 1/2 million-square-foot tech campus.

The flower vendors will have to relocate for a few years

during the construction.

And if they survive, they can move

into the ground floor of this new high-rise.

So much for flower power.

But at least they have a chance to remain in business.

In the battle for the heart and soul of San Francisco,

other small businesses haven't been so lucky.

- The vice president and leasing agent for this building

came down here and told me my rent was going to triple.

When we first started working down--

When I first started working down here in 1987, 1988,

there were literally tumbleweeds in this part of town.

There was nothing down here.

You couldn't get a cup of coffee.

We were a primary source of income

for quite a few artists, including Randy right there,

who's picking his artwork up now

and, at this point, has no place else to sell it.

The people getting hurt are artists, small-business people,

people who can't program or write code.

You know, San Francisco is rapidly becoming a tech town

and a tourist town.

There's no-- There's nothing in-between.

There aren't jobs

for the rest of the people who don't have--

who don't work in either of those two industries.

Tech--tech has money.

Tech pushes people around.

And when they say, "We want buildings

and we want this,"

they get what they want.

[somber music]

♪ ♪

Kamiya: It's not about saying, "Oh,

"these wealthy young white guys are coming in,

and they are the problem."

The problem is capitalism

and that we live in a market-driven economy.

[somber music]

♪ ♪

Now, there's a whole nother element to the techies

that has to be thrown into this,

which is the cultural one,

which is people complaining,

"They're not real San Franciscans.

"They don't-- they don't understand.

This is a town of renegades and mavericks."

You know, the techies have gotten beaten up a lot

because they're not giving back to the community.

Pelosi: Do you think the tech companies

are giving back enough to the city?

- No, the tech companies

aren't even coming close to giving back enough.

And I think they're very vulnerable to attacks,

and they need to wake up to that reality.

It's not good enough to say,

"We create jobs and generate revenue,"

though they create jobs and generate revenue.

They have to find a--a--a way to be responsible

for the world outside their doors.

- I am very concerned

with what happens to all of these young geniuses

who are part of all these start-ups,

and obviously,

more than 90% of the start-ups never go anywhere.

At some point, the angel investors

and all the people who provided the start-up money will be gone.

And all these young people,

all of whom are talented, gifted, and what have you,

will be at a loss, but they'll be in our city.

Will they become the next group of people

we really have to look out for?

I am really concerned about that.

Pelosi: Why should anyone care about

what's happening in San Francisco?

- San Francisco is a microcosm

for what is happening not only in the United States

but all over the world.

San Francisco is London.

It is Vancouver.

It is Manhattan.

It is places that are

increasingly desirable to live in

that are becoming gated communities.

I think that ultimately,

there is a very fundamental question

that we all have to face.

We have a tradition of helping one another,

but as we separate by income and by place,

as we segregate geographically

according to our pocketbooks and wallets,

as we lose contact across classes with each other,

the question is,

can we maintain a sense

of being one people?

I'm worried about a-- a city that is becoming

uniformly wealthy

and out of reach and out of touch.

- And that is the--

the anomalous character of this new internet culture.

And it is creating winners and losers

and exacerbating the gap

between the rich and the poor

and the middle class.

And that is a big political problem,

and that's not gonna be solved

just in San Francisco

or even primarily in San Francisco.

It's gonna challenge the country

to make the kind of rules that will help

cushion the untoward side effects

and create a more egalitarian society.

[somber music]

Pelosi: So now the question is,

what's the government's role in all of this?

This is turning into a conversation

that goes deep into the nature of capitalism.

[somber music]

♪ ♪

Tech companies say they don't have to play

by the government's rules

because they're not a part of any industry.

They're only creating apps

that bring people together and help them share.

In fact, they call it the sharing economy,

which kind of sounds like a bohemian '60s hippie concept.

Reich: Well, the expression

"the sharing economy" sounds wonderful.

I mean, who doesn't want to share?

I mean, I-- I think it's delightful

to conceive of people sharing their cars

and their homes and everything else,

but look more closely.

You're taking more and more

real estate off the rental market.

That means you've got fewer and fewer places

for middle-class and working-class people to rent

or potentially to buy.

And that means unless you have

a lot of new housing being created--

and you don't have that in San Francisco--

Airbnb is actually making it harder rather than easier

for the middle class and the poor.

Pelosi: Airbnb and the other big names

in the sharing economy

are multibillion-dollar corporations

that have small businesses crying foul.

Bhakta: Obviously, I am not a big fan of Airbnb.

I am biased, as I do help run a hotel.

They get a lot of tax breaks that we don't get.

They don't--you know,

they don't have to function as a normal hotel.

They don't pay the proper taxes that they have to,

and that hurts our business.

If Airbnb wants to act like it's a proper business,

then one of the things they should do

is pay their taxes and feed into the community,

feed into San Francisco.

So I'm trying to run a hotel,

and they are stealing money out of my pocket.

No one is saying they shouldn't be able to rent it out, right?

As long as they abide by the same legal codes

that we have to

and the same building inspections that we have to

and the same taxes that we have to.

Pelosi: Okay, Sean, you're the smartest techie I know.

So just explain it to me.

How come we can't get the tech companies to play by the rules?

Gourley: Well, you can,

but we hardly have any regulations,

and we can effectively, at the moment, do as we wish.

So we live in a world where

we--we--we actively kind of move away

from things that are regulated,

that have government influence.

And in many ways, when we can't get the systems to work,

we create Uber; we create Airbnb.

Because, you know, "To hell with the taxi union.

"To hell with the hotel lobby.

We'll just make our own system."

And it's on an iPhone, and so, you know,

"We can run faster than you,

so we don't need to deal with your regulatory structures."

So it's a world where we make products

that sometimes circumvent regulation,

either by just being so far ahead

or by just, you know, changing the rules of the game.

Pelosi: Though the gears of government do move slowly,

the San Francisco Board of Supervisors

did take action and called a hearing

to discuss legislation

that would regulate home sharing.

And what happened here will have profound implications

on the way America does business.

- Airbnb is headquartered here.

And they are fighting like heck

to make sure that San Francisco doesn't regulate them

so they can send a message to Seattle and Los Angeles

and New York and Chicago

that if they can do it in San Francisco,

they can do it anywhere.

Pelosi: It's a legislative battle

that pits neighbor against neighbor,

those who can no longer afford to live in their homes

without sharing them...

- Home sharing enables my wife and myself

and so many like us to afford our homes in today's economy

and not have to leave this city.

Pelosi: And those who are concerned

about home sharing's impact on affordable housing.

woman: Look at the numbers.

It's pretty horrible.

5,000 units a day available online.

Pelosi: These hearings produced a new law

that requires Airbnb to begin to pay hotel taxes,

but housing activists pushed

for even tougher legislation to go on the ballot,

and Airbnb spent $8 million to defeat the proposal

that would have put tougher regulations on home sharing.

Now the concerns are shifting

to the other players in the sharing economy,

like the unregulated car services.

Gourley: We love technology,

so it was like, if anyone else came along

and said, "I'm gonna create a new taxi service,"

the union would've been like, "You can't do that.

"You know, they're not allowed. There's all sorts--

"You should probably have regulation.

"What do you say?

"You want drivers that have never been tested?

And you don't want insurance?"

And--like-- like, "No, you can't.

That's not a good idea."

But as soon as you hold up

and say, "It's on an iPhone,"

everyone's like, "What?

"It's on an iPhone? That's amazing!

"We should absolutely have this!

"That's awesome!

"What else can you do on an iPhone?

This stuff is amazing."

And--and so there's this kind of--

Like, you wrap yourself in the cloak of technology,

and you can get away with so much stuff.

- What happens to widening inequality?

What happens to job security?

I mean, everybody who becomes a more of a contingent worker,

more of a precarious worker, whether you're an Uber driver

or you are an Airbnb proprietor,

your source of income is that less certain.

A freelance economy can be a very cruel economy.

It can be a form of social Darwinism.

You know?

Survival of the fittest.

Pelosi: A visit to the Tenderloin district

reveals the new Darwinian reality.

As innovation eliminates jobs,

it's pushing older college-educated workers

out of the workforce

and into the food lines and soup kitchens,

like Allen here,

who used to work at a securities firm.

How'd you go from working

at a securities firm to being homeless?

- Well, it was a recession.

There--no one was hiring.

I went through my unemployment benefits.

Then I cashed out my 401(k).

And then I started working temp jobs.

I know other people that are in my position

that are college-educated

that have lost everything.

Pelosi: In this land of young entrepreneurs,

you have to adapt or die.

And Allen is a dinosaur.

[lock clicks]

- So this is where I live.

This is what it's like during the day,

so I have to leave a light on all the time.

The only time I will be in this room all day

is if it's raining heavily outside.

I leave after breakfast and don't come back till sundown.

So basically, the only thing I do in here is sleep

or read at night or watch TV.

That's it.

Pelosi: Are you looking for work?

Zebrowski: On Monster, LinkedIn, any other website,

I have never gotten a response for work.

Never hear a word.

I'm 61, I've got two college degrees,

I've got about 30 years' experience

working in the corporate world,

and nobody wants somebody like me.

I'm--I'm on the tail end of my work life.

I'm about to retire,

so nobody wants to hire somebody like me.

I don't live in your world anymore.

Things--things are completely different.

What you take for granted

doesn't exist in my world anymore.

I mean, for over 20 years,

I was able to have a one-bedroom apartment

in San Francisco by myself in a nice area.

And now I'm living in a place like that,

in an SRO, in one of the worst parts of town.

I think we're rapidly becoming something like Venezuela,

where--where there's a very small ultra-rich class

and everybody else is poor

and the middle class is shrinking.

I think the American dream is a load of crap.

There is no American dream.

It's a nightmare for most people.

Pelosi: Now, there have always been homeless in San Francisco.

We can't blame the techies for that.

They're the obvious scapegoat

in a much more complicated conversation

about affordable housing and gentrification.

Still, as innovation moves in,

with it comes a new generation of homeless--

those who have been pushed out of San Francisco 2.0.

This is the dark side of progress.

- ♪ I left my heart ♪

♪ In San Francisco ♪

Pelosi: As my beloved hometown adjusts to the growing pains

from all this new development,

the questions remain.

Who gets to live in the city?

Will ordinary people still feel like they belong here?

Or will it become a town

only for those who can buy their way in?

This is not simply an economic question.

It's also a spiritual one.

What is the price of change?

And what will the growing divide between rich and poor

do to the fabric of America?

As income inequality

becomes something of a national epidemic,

we need to find solutions

that will keep our country together.

And if any city can solve these problems,

I'm hoping that this progressive town

will lead the way

and not leave its heart and soul behind.

[dreamy music]

♪ ♪