I was really wondering why you never moved to silicon valley, where homegtown geeks became national heroes. MBAs and politicians came to find the second gold rush. The money gushed, and people paid $1,000 for a bottle of aged balsamic vinegar, or $150 for a "Bubbly Burger" – with champagne – at a Palo Alto diner.
I just can't see you fitting in with the hollywood crowd Bill...unless you're Jewish like Craig.
>>August 23, 2002
Not long ago, Silicon Valley found itself at the center of the world, a job-and money-making machine extraordinaire fueled by the popularity of the Internet and technological innovation.
Valley chief executives made magazine covers. Hometown geeks became national heroes. MBAs and politicians came to find the second gold rush. The money gushed, and people paid $1,000 for a bottle of aged balsamic vinegar, or $150 for a "Bubbly Burger" – with champagne – at a Palo Alto diner.
Those days are a distant memory now. Silicon Valley lost its strut two years ago, and then some of its bearings last year. Now the valley is questioning its very identity, as the financial pounding continues.
Worse, even the love is gone.
"There's some resentment toward the technology industry for fueling the stock market mania of the late 1990s," said Arthur Asa Berger, a professor of pop culture at San Francisco State University. "A lot of people feel the collapse of the dot-coms led to the collapse of the economy. It was a contagion."
Some would argue that point, but there's no arguing that the market value of the Nasdaq, which is chock-full of valley companies, has dropped by $4.5 trillion from its peak in March 2000. The reversal of fortune here can be seen in block after block of office buildings, empty and transparent, with big, indiscreet signs slapped on them: "AVAILABLE."
As the doldrums continue, the valley's can-do identity is shaken. Business delegations that once came from countries all over the world, to admire and take notes on the Silicon Valley miracle, don't come knocking. An unemployed former marketing manager says he is giving up his job search because looking for work brings the same result as not looking for work – no work.
Even the billboards are different. They used to sell to people who knew what "synthesizable verilog" meant – and wanted one. Now billboards hawk the ordinary – movies, water, dandruff shampoo.
Here and afar, belief in the tech capital of the world has been dented.
"It's almost like being addicted to something and suffering a withdrawal," said Renee Tahamessebi, 40, a party planner in San Jose. She has seen her big party work – those half-million-dollar affairs for 1,500 – disappear. She now makes a living doing events for a mere several hundred people on a limited budget. "The fears of the unknown begin to play on you. You almost feel like a failure, but it's out of my control."
For all the downsized egos and diminished confidence, many people still feel optimistic about the valley's prospects. Call it the long view, call it denial. But many are not ready to give up the Silicon Valley dream.
"This is an episode, not an identity crisis," said Stephen Levy, director of the Center for Continuing Study of the California Economy, a Palo Alto research organization.
In fact, part of the valley's history is that the world likes to predict its imminent demise. "I've been reading obituaries of Silicon Valley for 20 years," said Joel Kotkin, a senior research fellow at Pepperdine University and the Milken Institute in Southern California. "I have faith in it reinventing itself."
But the question is, how, and when?
One recent Wednesday, Patti Wilson held a party for her online job networking group, which has mushroomed from 20 to 1,250 people in a year. A career counselor and founder of the Career Company in Los Gatos, Wilson started the group for people to cope after the Bay Area job market "went away."
Wilson sees Silicon Valley's health directly tied to the nation's. "If we're sick, the country is not going to get well. The vibrant life force of the economy is technology."
But it's not only the products that tech companies are having trouble selling. It will take a long time before the public again buys the Silicon Valley story. The image of the tech entrepreneur as a cultural hero does not ring true. And although the national spotlight is on business scandals elsewhere, Silicon Valley suffers by association.
After all, the dot-com companies began here. And Silicon Valley sold technology to the troubled telecommunications industry. The chip industry is gasping, too.
When the mighty fall, as Silicon Valley has done, it's natural for others to take pleasure from it. "There's a sense that people think, 'You guys got what you deserved,' " said Michael Perkins, author of "The Internet Bubble."
There are still remnants of the good times everywhere. A woman speeding down Highway 101 in a black Porsche convertible. A crowd chatting over lunch at the swank Left Bank in Menlo Park. (But they aren't ordering the 12-ounce New York steak for $23.75.)
Even some of those who have taken a personal battering don't feel bowed. Nine months ago, Christine Cory of San Jose was laid off from her job doing software quality assurance tests for the wireless industry. She has been actively looking for work for three months, living off a home equity loan.
"Jobs are a problem now and you're not going to buy a BMW after getting stock options, but we still have cultural diversity and brains here. I think technology is here to stay," she said.
Or, as John Neece, retired construction union leader, says, "Some of the glitter has worn off, but the substance is still there."
Perhaps the valley's biggest folly was to believe its Midas touch – the prosperity of the so-called "New Economy" – would last forever. That belief in tech was so strong that many people held on to their company stocks when others saw danger. To sell would have been heresy.
Financial advisers such as Kelly Trevethan, executive director of the Trevethan Group at CIBC Oppenheimer in San Francisco, would beg executives at tech companies such as Cisco or Yahoo to diversify their stock holdings. "Why should we sell?" they would ask Trevethan.
"We had to explain that nothing goes straight up," he said. "People now have been faced with the reality." Recently, he called all his clients to see how they were holding up given the rocky market.
It was an idiosyncratic Bay Area brew, the desire to make money mixed with idealism, the dream of retiring at 30 interlocking with the dream of changing the world. The 1960s counter-culture was evoked. On Highway 101, Excite put up a huge billboard "Are you eXperienced?" referring to the Jimi Hendrix hit of 1967. At luncheons, Cisco showed a home film on how its technology was helping Third World villages.
Even during the good old days in Silicon Valley, it was not a paradise for many. The influx of money boosted the cost of housing, making the region too expensive for many poor, working-class and some middle-class people. Some are glad the ride is over. Still, even some outside the technology industry enjoyed rubbing up to the Silicon Valley aura.
"Everyone talked to me and I felt proud to be part of it," said Brooke Baggett, 27, an acupuncturist and massage therapist, shopping at the Goodwill Boutique in Menlo Park.
Now, what people share is the pain, not the excitement.
At 10 a.m. one day last week, Tyree Scoggins has soft and smooth R&B playing in the background of the hair shop he owns, the Rare Touch in Campbell. He splits his attention between two customers, an older woman ready for her hair rinse and a teen-ager getting a perm. Scoggins says he averages four or five customers a day. During the boom, he saw 10 to 15.
"Women would come in and talk about the stock market and all kinds of issues and forget that I am a man," he recalled.
But the talk in his shop now is not so lighthearted.
"Black women have to have their hair done, and we will sacrifice for that," said Esther Hill, 40, of East Palo Alto as she waited her turn in the salon chair. But since she lost her job two months ago, she's had to cut back on her $85 hair appointments. And there are no more manicures, no more pedicures.
Few admit their pride has been broken. Not many question the choices they've made, the education they have sought or the careers they have picked.
But Nick Rafati has. Out of work for a year, the 50-year-old project manager and network engineer was so bitter one recent day he carted hundreds of his books on topics such as data communications and packet searching to his brother-in-law's back yard near Truckee. After digging a hole 5 feet deep and 5 feet wide, Rafati dumped his books and set them on fire.
The books, Rafati says, symbolized everything wrong with the tech industry – the cycles are too fast, experience is discounted. His education and training are rapidly becoming obsolete as he remains unemployed, he believes. "I was ready to burn my degrees and certificates," he said.
Rafati, a Dublin resident, now splits his time teaching computer skills at a nearby elementary school and giving drivers' education instruction to high school students. If he does not find work in a month, he will leave, he says.
Maybe he'll go to Australia, maybe Iran. He doesn't know. Silicon Valley, he says, "is an illusion. Sorry."
For every person disillusioned, however, there seem to be two more who are looking for the next new thing. When George Zachary, a general partner at the venture capital firm Mohr, Davidow Ventures, meets with friends and fellow investors, they ask each other "What's the hot new area?"
Perhaps Silicon Valley's current "bottoming process" will lead to a reassessment of its narcissism.
"It may take time for people to realize that the sun doesn't revolve around Silicon Valley," said Jim Collins, author of "Good to Great" and co-author of "Built to Last." "Silicon Valley is no more or less important than it was five years ago."
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