March 26 (Bloomberg) -- A month after being named San Francisco’s interim mayor, Ed Lee was ushered into a small conference room at Twitter Inc. headquarters, his first visit to a technology company. The social networking startup, which had about 400 employees and was planning to add at least 2,000 more, was considering leaving the city, its executives said.
Lee, who’d never held political office before being promoted from city manager, looked at Dick Costolo, Twitter’s chief executive officer, Ali Rowghani, then the chief financial officer and Jack Dorsey, its chairman. They told Lee that while they wanted to stay in San Francisco, a city tax based on the size of the company’s payroll would erode Twitter’s growth, so they’d found space in a nearby community.
“So I said, ‘Wait a minute, let me put together something,’” Lee, 60, said in an interview. Within two months, San Francisco had exempted Twitter from the payroll tax and made the same offer to other companies willing to locate in Central Market, a downtown area plagued by crime and empty storefronts.
Since Lee took office, technology jobs in the city have surged 50 percent to 42,326, while the number of tech companies has jumped 20 percent to 1,826, according to state data through the second quarter of 2012 analyzed by Colin Yasukochi, director of research and analysis at brokerage CBRE Group Inc. in San Francisco.
The mayor’s support for Twitter -- a company now said to be valued at about $9 billion -- helped forge an alliance with technology investor Ron Conway, the founder of San Francisco-based SV Angel, who’s become a policy adviser and political backer for Lee.
“Ever since the first day that we saved Twitter from leaving the city, it was because the employees told me what they wanted,” Lee told about 150 employees of SquareTrade Inc. gathered in the company cafeteria during one of his weekly “Tech Tuesday” visits to the city’s firms.
“My job is to create the conditions upon which companies start here, they grow here and then they stay here,” Lee told the workers, whose company offers warranties for consumer electronics. Many bring up the same issues -- asking for more bicycle lanes, on-time public transportation and a reduction in homelessness, Lee said.
“He has done an excellent job of highlighting the value of high tech, not just to job creation, but more broadly to the city’s economy,” Colin Crowell, Twitter’s vice president of global public policy, said in an interview.
San Francisco, with a population of about 826,000, has a median household income of $72,947, compared with the U.S. average of $52,762, according to Census Bureau data.
Lee was in his sixth year as city administrator, overseeing the government’s day-to-day operations including managing contracts and city property, when then-Mayor Gavin Newsom was elected California’s lieutenant governor and endorsed him to serve the remaining year of Newsom’s term.
“Ed is a bureaucrat, never ran for office, was a professional city manager in a variety of departments,” said Jim Lazarus, senior vice president of the San Francisco Chamber of Commerce, who served as chief of staff to former San Francisco Mayor Frank Jordan.
“He had a wealth of experience as a result, probably more than any other mayor in terms of how things run, where the bodies are buried, from day one,” Lazarus said.
Lee joined the city in 1989 as an investigator of whistle-blower allegations. Under Mayor Willie Brown, he advanced to head the purchasing office and later the public works department. Newsom named him city administrator in 2005.
San Francisco’s Board of Supervisors, the equivalent of a city council, agreed to appoint Lee as interim mayor, the first Chinese-American in the city’s top office. Some board members planned to run for the job themselves. He pledged not to seek a full term in the 2011 mayoral election and to return to being city administrator.
Lee’s appointment and stolid persona drew a sharp contrast with the flashy personality of Newsom, best known for making San Francisco the first U.S. city to allow same-sex marriage ceremonies in his first term as mayor.
“Stylistically, they’re very different,” Chris Daly, a former San Francisco supervisor who opposed naming Lee interim mayor, said in an interview. Newsom was “more kind of Type A, dashing, charismatic. Ed Lee has embraced as a politician a ‘competent bureaucrat’ kind of mystique.”
Jeff Adachi, San Francisco’s public defender, who ran against Lee in the 2011 mayoral election, said the city has other issues Lee hasn’t resolved.
“He has been successful in opening new markets in San Francisco, including technology,” Adachi said in a telephone interview. “Many of the deep-rooted problems in city government - for example, rising health care costs for city employees --are still there and have not yet been addressed.”
Others say the focus on drawing affluent technology workers to San Francisco is driving up rents and home prices, forcing residents of limited means out of the city.
“There are some outcomes of the mayor’s courting of the tech industry that have been detrimental to the lower- and middle-income folks in the city, in particular renters,” said Sara Shortt, executive director of the Housing Rights Committee of San Francisco, a tenants’ rights group.
In April 2011, two months after his Twitter meeting, Lee invited about 40 technology executives representing companies including Zynga Inc. and Yelp Inc. to City Hall to discuss policy changes.
The executives asked Lee to eliminate a tax on stock options, which hurt companies preparing to go public, and to make the payroll tax-exemption permanent.
Lee “wants to get things done, which for somebody in government is these days unusual,” said Conway, whose firm invests in 40 to 50 early-stage startup companies annually from a $30 million fund.
Conway said he was impressed with how Lee helped win approval for the payroll and stock-option tax issues, and wanted him to run for a full term that November. Lee’s promise to others not to run “was a huge moral dilemma for him,” Conway said.
“I got a massive amount of pushback,” Conway said, recalling a meeting in Lee’s office that July when he tried to persuade him to run. “That meeting did not end well. He kind of said, ‘I’m not going to think about it.’”
As interim mayor, Lee said, he’d improved the pension system, found a new police chief and bridged a $385 million budget gap.
“I was done, no more,” Lee said. “I’m going back to my city administrator job, and then I got convinced by others to run for mayor.”
The change of heart came July 25, 2011, as Lee stood outside the White House, his name missing from a list of invited guests for a ceremony honoring the San Francisco Giants for their victory in the 2010 World Series.
Senator Dianne Feinstein, a California Democrat and former San Francisco mayor, finding him waiting to be cleared by security, joined Lee.
“In those less than 10 or 12 minutes, she says ‘So what are you thinking about? This is July, the election is in November. You’ve done a pretty good job. Why aren’t you thinking about a run?’” Lee recalled.
“She tore into me and wouldn’t let me go and kind of gave all the reasons as to why I should consider running,” Lee said. On Aug. 8, three months before the election, he announced his candidacy.
The move irked some other candidates including Supervisor David Chiu, who had supported Lee for interim mayor.
“You told me that you had looked at yourself in the mirror, you didn’t have the fire in the belly, you didn’t want to run,” Chiu said to Lee at a candidates debate. “What’s changed in your mind over the last couple of weeks?”
He reconsidered, Lee replied to Chiu, because he was hopeful “that this city can succeed in the things that it wants to do.”
In his first election bid since running for senior class president in high school, Lee appeared in a campaign video set to MC Hammer’s “2 Legit 2 Quit.” The video featured Twitter co-founder Biz Stone; Marissa Mayer, now CEO of Yahoo! Inc.; Giants pitcher Brian Wilson; and Brown. It was paid for by San Franciscans for Jobs and Good Government, an independent expenditure committee set up by Conway, who contributed $51,000 and loaned it $100,000, according to San Francisco Ethics Commission records.
That November, Lee defeated 15 candidates by collecting 60 percent of the ballots under a system known as ranked-choice voting, winning a full four-year term.
Conway gave $10,000 more to a separate campaign for Proposition E, Lee’s proposal to phase out the payroll levy and replace it with a gross-receipts tax. It passed with 71 percent of the vote.
Lee said Conway “advises me on what the thoughts are going on in the technology business world, who the latest contributors are in terms of contributing to the economy, who are the hot tech companies.”
Born in 1952 in Seattle to Chinese immigrants, Edwin Lee was one of six children. His mother was a seamstress. His father, a cook, died when Lee was 15.
“So we pretty much had to work our way out of everything,” Lee said. “I felt very strongly that having a good education would be my way out.”
Lee graduated in 1974 from Bowdoin College in Brunswick, Maine, where he studied government, Chinese and Russian, with plans to become a Sino-Soviet diplomat. He graduated from the University of California, Berkeley’s law school in 1978.
“Over the years, Ed has changed remarkably little,” David Louie, 61, Hawaii’s attorney general and Lee’s law school roommate and tennis partner, said in an interview.
“He has a quick wit, he’s a very friendly guy, and he’s a very intelligent, very easygoing fellow,” Louie said. “Not high-maintenance at all.”
Lee liked to stay up late at night in intense political discussions and “was always very, very focused on helping out the poor, low-income Chinese immigrant population,” Louie recalled.
Lee met his wife, Anita, in 1974 in Hong Kong, while on a yearlong fellowship after college to study the Communist Youth League in China. She was assigned to improve his Mandarin and he was assigned to improve her English, he said.
Anita is retired after working as a small-business accountant. They have two daughters who live in New York. Brianna, 27, is a production editor for the Council on Foreign Relations and Tania, 30, is a technology manager at the International Rescue Committee.
Lee, an avid golfer, is “someone who doesn’t necessarily relish going to events every night,” Jim Ross, a San Francisco-based political consultant who managed Newsom’s 2003 campaign for mayor, said in an interview.
“He doesn’t glad-hand, he doesn’t try to persuade and try to get you to like him,” Ross said. He “doesn’t come off as much like a politician.”
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