🚀 AI Summer in San Francisco: Billions Flowing, Layoffs & New Power Hubs

A greeting straight from San Francisco!

I’m writing these lines from Mission Bay, where I’m meeting with tech entrepreneurs, founders, and former classmates. Here, in the very heart of the AI boom, the contrasts are striking: billion-dollar financings, expanding office footprints – and at the same time, layoffs.

💰 Databricks Breaks the $100 Billion Barrier

A term sheet valuing the company at over $100 billion – Databricks has set the new benchmark for private AI valuations. With the IPO pipeline stalled, mega-rounds are becoming the substitute stage for capital markets. At the same time, M&A is moving into sharper focus – sending a clear signal to competitors: scale first.

🤖 The Rise of the Agent Economy

Cognition secures $500 million for its code agent Devin. What was hype yesterday is becoming industrially scalable today: agents that can understand, write, and optimize code. Anthropic, meanwhile, is shutting out SPVs in its oversubscribed $5 billion round – putting quality ahead of sheer capital volume.

🏙️ Mission Bay Becomes the AI Capital

OpenAI is negotiating a fourth waterfront building – and San Francisco rents are shooting back up to pre-pandemic levels. Building teams here comes at a price: limited space, rising housing costs, and employer brands under stress. Waymo, by contrast, is doubling down on safety and community engagement – a deliberate counter-model to the “move fast” mantra.

⚖️ Efficiency Over Headcount

Even as AI revenues break records, Cisco has announced more than 200 layoffs in Milpitas and San Francisco. The new narrative: yes to productivity, selective when it comes to workforce expansion. At the same time, startups like Horizon3.ai are professionalizing their structures – with new CFO hires signaling maturity and meeting investor expectations.

🔄 Consolidation & New Stacks

From IBM–HashiCorp to Meta’s acquisition of WaveForms: 2025 is shaping up to be a vintage year for M&A, leaving its mark on the Valley. Particularly noteworthy: audio is becoming a strategic building block for AI agents, content tools, and wearables.

📌 Key Takeaways of the Week

• Databricks sets a new benchmark with a valuation north of $100 billion.

• Cognition & Anthropic show the agent economy is becoming real – and more selective.

• OpenAI & SF real estate: Mission Bay is emerging as the new hotspot.

• Cisco layoffs highlight the efficiency mode despite soaring AI revenues.

• M&A & audio AI: consolidation and new stacks are shaping the agenda.

  
  

📚 Sources

• Reuters (19.08.2025): Databricks eyes over $100 billion valuation

• Wall Street Journal (14.08.2025): Cognition Cinches About $500 Million

• SFGATE (20.08.2025): Cisco layoffs in Bay Area

• Business Insider (18.08.2025): Anthropic limits SPVs

• San Francisco Chronicle (07.08.2025): OpenAI expands in Mission Bay

• Axios (13.08.2025): Rents spike amid AI hiring

• Vanity Fair (20.08.2025): Waymo’s Tekedra Mawakana

• CFO Dive (20.08.2025): Horizon3.ai hires CFO

• CRN (20.08.2025): Top 10 Tech M&A 2025

• TechCrunch (08.08.2025): Meta acquires WaveForms

  
  

✅ Conclusion

San Francisco is back as a global AI pace-setter – with all the opportunities and contradictions that entails. For companies, this means: secure space, teams, and partnerships now – while keeping costs, employer branding, and regulation firmly in view.

👉 Which of these developments should we dive deeper into in the next newsletter?

👉 And if you’re on the ground yourself – send us photos from Mission Bay, Oracle Park, or SoMa. We’d be happy to feature them in the next edition.