is it credible to believe the u.s. economy can speed up eventually and get back to full employment, which is around 4 or 5% unemployment rate. in my mind, there are five factors are would like to throw out for you that i think are really driving a lot of what is going on, and i think these are five factors you will be hearing a lot about, and they are what is pushing the economy back to full employment, and it requires you to stretch your imagination to see this. the real estate industry, what is different about today's economy and the past gunman and and home-building is depressed. -- and the past? home building is the press.

-- depressed. we have been under building for several years. when you under build you help clean up the glut of housing that is out there. the inflated conditions in real estate our history. almost everywhere you look, housing is affordable as it ever was, and number three, the job market for young people is beginning to stir. if you asked who suffered the most, the younger you are, the fewer people in your age group are working. on the margin, it is young people who are starting to see some signs of life in the job market, and you are seeing employment ratios by age group. there are a lot of folks who got

out of college, could not get a job, get married, and if you do not have a job, you are probably going to godawful lot of decisions. that is a big impact on home decisions. the demand for housing is beginning to change, and this is why you are starting to see new signs of life. there is the second team. we economists, when we are asked to figure out what is going on, our natural instinct sphene -- in sync is to focus on what is going on in the business sector. we are shareholders. we invest in projects the produce revenue far into the future, so i have always been condition when you are trying to figure out what is going to

happen in the economy, look to what is going on in the business sector. when you look, it is quite spectacular, and you see that in this picture fan. it is more than 10% of gdp, and this is a trend that has been developing for a while. this is partly a story of what the business community is doing to reestablish its health and partly what nation the economies are doing. what is important about this picture and going forward, and now is when trouble and now builds, used to see the warning signs showing up. good when we are too optimistic and wrong, things start getting squeezed, but what you can see is not only a arlin -- our

profits not getting squeezed, margins are widening. businesses have a powerful incentive to start focusing on the future. think about growth, because when you are facing record margins, it tells you there is an incentive to grow. i think this is an important reason for young people looking for jobs you may notice the business sector has gone from a defensive strategy to a more offensive strategy, and that is the key parts of what is beginning to drive our cycle, and for those of you complaining companies are just sitting on cash and not spending and now, a software belies those claims. a lot of technology, which is why the area is benefiting. initially our focus is on technology and trying to become

more efficient. if you look at capital spending, what is telling you is businesses have strong incentives to be thinking about the future and focusing on expansion, and they are actually doing it. there is a third driver in this cycle. people are starting to notice more thaan more. we are coming to the conclusion that americans do not make anything anymore. is all going to china. you can see all kinds of trends common and and unemployment is beginning to turn around, and the following things are going on. when we go through tough times, people get focused, and they reinvent themselves. that is what is going on now. no. 2, and the auto industry has gotten its legacy cause behind

it. there is a new out of detroit. it is a lot more upbeat. it is still a very depressed level, which tells you this industry had a lot of upside. good if you let the value of the dollar, it is more attractive to locate operations in this country than in a very long term, so to me, this is great to be a new story you hear. it is not going to be the same generator of jobs and it was in the past. it is a much more of efficient, high end sector, and i think manufacturing will be an important part of what is coming in the coming decade, whereas in the past decade we have been struggling with relocating house were to take the vantage of low cost of production. fourth, what is going on in the energy sector is unbelievable.

there is a virtual revolution. the way the economists discusses this, when you discover new sources of energy, the price tells you everything. the price of natural gas compared to oil is about $15 a barrel. oil is $107 a barrel. that tells you there is a powerful incentives to find out how we are using energy. it is the reason natural gas is making inroads into electricity, the reason they are bringing some of their shortfall to natural gas, and when you have a powerful incentive, the price of

the same thing costs a lot less you know that is creating tremendous incentive to figure out, and i do not doubt there is going to be a lot of activity. you would have a hard time understanding why is there so much buzz in north dakota, where even cows have jobs? anergy, there is a lot going on common and and it is creating a lot of activity. finally, when the central bank has the ability to drive short- term interest rates below long- term interest rates, they are teaching the incentives for taking risks, and they are having to do this because in the wake of the financial crisis, everybody has lost their

nerve, and our confidence in the future has changed, so it requires so little bit of nudging to get people to invest in the future, and that is what we are beginning to see, and you cannot dismiss the power of monetary policy actions, and the federal reserve has made it really clear what their goal is. their mandate is maximum employment subject to keeping inflation down, so as i think of what is ahead of us, i imagine we are slowly getting back on our feet. we have a very slow record of doing this, and those who believe this is a new normal, frankly, there is no history to this, and that is why i am optimistic. we are going to see more signs of optimism. one quick note about this.

we all know california is struggling, but what i think is interesting is you are starting to see things moving. employment growth. employment growth is outpacing the national economy, so there is something happening here. even though we still have a lot of damage from the real-estate market, california is a very diverse economy, and you're beginning to see new signs of life, and for those wondering what about us, as i look at the national economy, i see lots of signs of life coming back into the economy, but i think what we are seeing is more signs of

lifting california, so i am going to leave it at that, and i think we have a fairly good year ahead of us. thank you very much. [applause] >> thank you, jim. that was a great message not only for business leaders but our elected leaders around the room, so it sounds like there is a good reason to be optimistic, but we have to stay focused. as we look to the future, we do not have to look further than the technology industry to see what is driving san francisco's knowledge economy. goo mayor lee wants to make san

francisco the technology capital of the world. as a result, not only did twitter the site tuesday in san francisco, a company acquired of market square property and is in the process of turning it into 1.2 million square feet of renovated office space that will include over 100,000 square feet of retail. someday soon up to 10,000 people could be working in markets where -- market square or the plan residences within a two- block area, so a payroll tax exemption can truly revitalize the entire area. if you have any questions involving technology, we have

some cards. write down your questions, and remember, you can tweet with us. our moderator this morning has spent her career discovering great entrepreneurs in tech hot spots all over the planet. lacey wrote the definitive spoke not on the web 2.0 movement and released her latest book last month. it is a great boat. formerly, lacy was a staff writer for business week, a senior editor of tech crunch, and now she is the founder, ceo, and editor in chief. please foreign-made and welcoming to the stage our moderator, and sara lee lacy,

and her panel of tech visionaries. welcome. goo[applause] >> i was just telling the mayor, and i first moved re when i was a 22-year-old aspiring writer, and the first time i saw san francisco, i decided i was never leaving, and i did not leave. this morning i woke up in the 100-year-old victorian my husband and i own where we have been urban pioneers, trying to pull that part of the mission into the light. my nanny was late. my husband was rushing to the terminal rather than taking a

high-speed train. it was very obvious to me why it is so hard to live in san francisco, but there is one reason i can never leave the city. it is because i write about startups and technology, and although i spent 40 weeks traveling the world, san francisco is still ground zero for all tech innovation in the world, and more importantly, the money that goes into tech innovation, so it is high time the mayor's office, the chamber, the parts of san francisco that affect our day to day life are in fighting technology to come in and solve the problems, and that is one reason i got about 7:00 a.m. to come here and talk to you because i really believe

in what the mayor is doing, and the other folks do, su. the tech community was really instrument co, and now sf city has been formed. ron conway has galvanized the tech community to help make these san francisco's worked together. he is one of the most famous angel investors in silicon valley. he was called one of the most influential people and rain 14 and the list of dealmakers. we also have katie and jacob stanton.

katie joint witter -- joined twitter last summer. it is pretty important, because 70% of all tweets come from outside the united states. she was appointed by president obama to serve as his director of participation. casey went to my college, so it is a bizarre coincidence. we also have the chief operating officer of sales force. i encourage you to learn more about these guys here regard i want to get right into the meat of the conversation, so let's talk about why san francisco is so important for sales force, because you are one of the first

companies that refuse to move to the peninsula. >> we have been a san francisco company since our founding. i have been out the company for 10 years, and san francisco has been a huge differentiator. it is not only a start-ups, but is all of the talent. it is a huge differential to create the products and differentiation. the talent continues to be the reason we are so excited about growing in the city, why we have well over 5000 employees, and why that is going to continue to be a great opportunity in the

long term. >> twitter was the vague touch point, the face on this whole story. it was an empty threat twitter was going to move, or were you thinking about it? why why or why did you not? and no laxatives of 5-year-old company, and the creativity and inventiveness of san franciscans has been molded into the fabric of twitter, and it was important to molten a city that has held us to build a talent, and one of our core values is how do we gildas business -- how do we build a business and makes us proud? what we found was when i started a year-and-a-half ago we had maybe 150 employees. today we have 800 employees.

we are growing super fast. it is a fast-growing company, and we are bursting at the scene, and it is important to work to find a way we can stay in the city and really grow the business. >> empty threats? >> no. >> i have noticed i am getting on the freeway much less. how much do you commute verses in the late 1990's? >> in the late 1990's, i lived on the peninsula. gooi came to the city may be onr two days a week. i have moved to san francisco,

and it is the reverse. i commute one or two days a week, so it has been a complete flip-flop in migration of tech companies to send from cisco -- to san francisco. five years ago, 75% of our portfolio was located on the peninsula. today 50% of our companies are on the peninsula, and 50% are for san francisco, and that is growing. by the end of this year and i would predict 60% of our portfolio will be in san francisco, so all of these companies are migrating here because you want to develop in an urban area. >> talk about why an urban area is so important.

follow up on that you're a good -- on about. >> entrepreneurs are trying to solve real-life problems, so you have a company like foreswear that is founded in new york city. good jack dorsey, the founder of twitter was solving a problem that was an urban problem that has spread to the world. >> they attract the risk seekers and creative entrepreneurs, so it is a

magical combustion of ideas, and i would ask the ability to get these done. >> every generation has its major technology, so right now we are seeing three major trends. we were a startup 12 years ago, so we have made 21 acquisitions. 17 have had some major presence in san francisco, and they have all been about cloud computing and even the client.

-- cloud. >> another factor worth noting i see them taking engineers from san francisco to the valley. that is an issue we cannot ignore. the data we are getting is staggering. some of those start-ups are the star companies. over 80% of their employees work and live in san francisco. that is not the case for a lot of other companies we know the names of, and we need to address

those issues. we are working to adjust this. if you could sum up the goal, what affect you? in a couple of years, is there a way we track whether this has been successful or not in real metrics? >> the tech community got involved in ed lee's campaign. he kept twitter in san francisco. when we looked at his opponent, that was even scarier. we got badly elected. i do not know if everyone saw the mc hammer and brian wilson video. a lot of people came out for

adlai. two days after the election i was not allowed to communicate with the mayor because of the committee we had it up but i had dinner with at least after the election. we talked about, wait a minute, how do we keep the momentum with the tech community? i said, it was at that dinner we said, let's start an organization that all the tech companies joined and rally around making san francisco a better place. our first initiative is all about jobs. san francisco has a jobs board called hire sf. a lot of the tech companies did not know that. i did not know that. we have a majority sf city member companies which represent 90% of the tech population in san francisco. there are posting all their new jobs on hire sf. we're using the existing infrastructure.

we want to get more companies in san francisco to hire san franciscans. and so we're going to develop initiatives around that. there is a big mismatch in the qualifications of those who are not employed in san francisco versus the jobs the tech community wants to hire and we will job that -- bridge that with job training. we have a plan around that. we think employment will solve a lot of the social ills in san francisco. we're focused on jobs. later this year, sf city will dip its toe in policy initiatives. we're watching closely the proposals that will be coming out of the mayor's office around tax reform. twitter stays in san francisco. it was not a bluff. i am the one who ran to city hall and said, it are going to lose this company if you do not do something. that is how i started the

friendship with adlai. i did not know this person at all. -- that is how i started the friendship with ed lee. >> it was surreal for me, maybe you guys to when we were looking at the slides and a survey earlier this morning and it was showing that homelessness and jobs and the economy were the biggest concern. what you were worried about. we live in a reality where we cannot hire people fast enough. i am doubling my company's staff next month. i have had to hire outside of san francisco because i cannot find the people here quickly enough and i have a tiny company compared to the two of you. i want to get your thoughts as a company representative. do you think the asaph city -- sf city approach will work? >> we have 3000 employees. we are suffering from hiring

fatigue. steve mentioned 37,000 tech jobs. we can clearly go to 5000 and beyond that. there's no reason while -- why salesforce.com could not have 10,000. we do feel like an anomaly. i think that with san francisco -- what san francisco needs to think about, we talk about startups. if salesforce gets bigger, what are the obstacles to do that? a lot of things that we were talking about our basic quality of life challenges. that become more relevant to a larger company once that -- you look at our demographics changing. the demographics were much closer to the st