Prosperity's
Shadow. Poll finds residents embrace, condemn hectic pace of life
A hard look at Silicon Valley's
boom. It confirms what many feel --all this money doesn't go very far
BY MICHELLE QUINN AND JENNIFER
LAFLEUR
Mercury News Staff Writers
The San Jose Mercury News
The whole world knows it: Silicon
Valley is generating
astonishing amounts of money.
But how much? And in the end, how well-off are we?
The reality is that in many
ways, the valley is out of
whack economically compared
with the rest of the nation,
riding a boom filled with paradoxes.
Consider:
Employees of just 15 Silicon
Valley companies are
sitting on a combined $43 billion
of potential wealth in unexercised
stock options-- $16 billion
of which they can reap immediately -- an
analysis commissioned by the
Mercury News found.
According to one of the most
aggressive estimates,
65,000 Santa Clara County households
-- roughly 1 in 9 -- are worth more
than $1 million, not including
the value of their homes.
There are at least 13 billionaire
residents in the
valley, worth about $45
billion combined, and several
hundred worth $25 million
or more.
"There's no place else like
(Silicon Valley) in the
world," says Morgan White,
a Menlo Park investment counselor to the
moneyed. "You've got the biggest
wealth creation machine man has ever
seen."
And yet:
Only 29 percent of Santa Clara
County's households can
afford the median-priced home,
far below the national rate of 55
percent. And two out of five
county households would need to stretch
beyond advisable limits to
rent the average two-bedroom
apartment.
"Middle class" takes on
new meaning here -- 183,525
households, nearly a third
of the county's total, have incomes
between $75,000 and $150,000,
while just 15 percent fall into that bracket
nationally. Yet only 59 percent
of county households own their homes,
one of the lowest ownership
rates in the nation. And Santa Clara
County ranks first nationally
in average household debt.
So out of sync is the county
that a four-person family
can earn $53,100 a year and
be considered
low income by federal housing
officials.
Perhaps most startling: Although
many people here earn
exceptionally high pay compared
with the
rest of the country, most aren't
particularly wealthy.
Look at the net wealth of Santa
Clara County
households -- their assets
minus their debts -- and the
distribution closely mirrors
the nation's as a
whole, according to Mercury
News analysis of data from
Claritas Inc., a major market
research
firm.
"Just because you're in a high
income area doesn't mean
you are in a wealthy area,"
says Ken
Inman, an economist and Claritas'
senior director of
strategic resources.
Measuring wealth and how it
is dispersed within a
community is tricky and widely
debated. But
while economists and others
ponder who is getting rich
in Silicon Valley, one thing
is clear:
Everyone shares the high costs
-- and high expectations.
From Gilroy garlic fields to
Palo Alto parks, Silicon
Valley is filled with people
who are barely
keeping up, financially or
emotionally.
"I live paycheck to paycheck,"
says Jorge Zavala, 37, a
San Jose single dad of two
young
children. Zavala makes between
$40,000 and $55,000 a
year at his job at an engineering
consulting
firm.
Nationally, he ranks just above
the median income, but
here two-thirds of the households
are doing
better, and Zavala, a degreed
mechanical engineer,
can't afford his own place.
He shares a San
Jose apartment with two others.
"I've given up on
saving money at all or investing
in the 401(k),"
he says.
For others, including those
in the heart of high tech,
even good pay doesn't buy peace
of mind.
"I always thought that making
over $100,000 meant that
you wouldn't have to worry
about
anything," says Randy Wigginton
of San Jose, 39, a
married software consultant
with two
children. "I thought you'd
light cigars with $100
bills. I found out it allows
you to go to the
grocery store."
In an occasional series beginning
August 15, 1999, the
Mercury News will examine how
the
explosive economy has altered
life in Santa Clara
Valley, transforming it into
a place where money
simply matters more, both for
those who have plenty and
for those who don't.
There are definite fruits of
prosperity. More jobs draw
many to the region. In fact,
133,700 more
people were working in Santa
Clara County in June 1999
than in June 1994, according
to the state
Employment Development Department.
Silicon Valley also reaps higher
pay. Annaul wages are
$18,000 higher on average than
nationally.
And there are other benefits
as well: low unemployment,
bulging city coffers and more
business
for restaurants, car dealerships
and flower shops.
But as ironic as it may seem,
there's a price to the
prosperity. The boom is pushing
up costs and
fueling anxieties. It's creating
a treadmill existence
for many, with more families
here having two
workers than the nation overall.
And it's raising
concerns that the valley is
becoming a place where
only the top tier can live
comfortably.
"Every young person I know in
this valley is
thinking about moving," says
Sofi Frankowski, 30,
a former teacher at Fremont
High School in
Sunnyvale. She's among them;
she recently started
teaching in Raleigh, N.C.,
a move she made to get
closer to family but also to
be able to afford a nice
apartment.
"In the last four years, there
is this increasing sense
of money, money, money," she
says. "It's like
someone plopped Wall Street
in the middle of
Silicon Valley."
Instant millionaires
No one knows exactly how much
money has been
made since the double-barreled
boom -- the bull
stock market coupled with Internet
mania --
launched Silicon Valley's latest
growth surge in 1994.
Certainly, incredible fortunes
have been minted, often
quickly.
Margaret Whitman, eBay's 43-year-old
chief executive,
became a paper billionaire
after 14 months
on the job, a gain of $2.35
million per day.
At least 1,000 local Cisco employees
-- about 1 in 10
of the company's local workers
-- are
millionaires from company stock.
In dozens of other high-tech
companies, thousands have
cashed in lucrative stock options.
Entrepreneurs have scored by
launching companies and
then selling them at huge gains.
True, some of these riches are
dipping with the stock
market and could shrink if
workers change
jobs, leaving before their
paper wealth turns real. But
enough people have struck gold
here to keep
alive the notion that this
is the place to go to get rich.
Some of those outside technology
have tapped into the
wellspring, too, by investing
in the sector
or serving it. One is Guy Redington,
a cashier at a
Safeway in Menlo Park. Redington,
who lives
in Redwood City, doubled his
net worth in two years --
reaping enough for his son's
college
education -- by daily tracking
stock tips on 35 Web
sites and occasionally chatting
with his savvy
Sand Hill Road customers.
All around the valley, residents
fortunate enough to
own homes have seen their property
values
increase dramatically.
Certainly many people feel better
off. In a fall 1998
Mercury News survey of 900
Santa Clara
County likely voters, most
of them longtime homeowners
with high incomes, 60 percent
said they
felt they were sharing in the
wealth here.
And certainly many are spending
liberally, including on
items that make their lives
easier or more
pleasurable. According to Claritas'
latest survey,
Santa Clara County is first
in the nation for
annual spending for home furnishings
($1,328) per
household, No. 3 for travel
($3,552) and No.
5 for dining out ($3,722).
Many jobs command the highest
pay in the country,
helping to propel Santa Clara
County's median
household income (all money
coming into a household) to
about 70 percent above the
nationwide
median. Think of the median
this way: If you were to
line up all the households
by income, the
household in the middle would
be the median.
Recent estimates peg the county's
median household
income at between $60,000 and
$70,000,
third in the country, slightly
trailing two New York
City suburban areas in a national
ranking,
according to Claritas.
And Santa Clara County boasts
a disproportionately
large number of households
with income at or
above $100,000. Nationally,
about 1 in 10 households
make more than $100,000; here
nearly 3 in
10 do.
But take a look at wealth --
defined as assets minus
debts -- and most Santa Clara
County
households are no different
from the rest of the country.
Santa Clara County ranked very
high, at No. 3 out of
328 regions around the country,
in median
household income last year,
Claritas says. When it
comes to median household wealth,
however, it
fell to No. 26. In other words,
when it comes to
building financial security,
most people here are
no better, and no worse, off
than people elsewhere.
It's just at the top, with wealth
above $250,000, that
Silicon Valley is distinctive,
with 23 percent
of households at that level
compared with 17 percent
nationally, according to Claritas.
Boom or bust?
But what do these figures really mean for all residents?
Experts disagree on whether
the boom is all that it's
cracked up to be for the community
as a whole.
Yes, the doors of opportunity
have opened wide for
thousands, with work for computer
programmers and house painters alike.
People have chances to improve
their incomes. And they spend as
well, boosting business for
both chain stores and corner shops.
"It's quite remarkable," says
Steve Cochrane, an
economist who specializes in
California for Regional Financial
Associates, an economic forecasting
and consulting firm in
Pennsylvania. "All that wealth
doesn't sit. Much of it gets reinvested into the
(local) economy."
Some economists believe wealth
is shared unusually
broadly in Silicon Valley,
perhaps even more so than Claritas figures
suggest, especially given the
recent runup in real estate values.
"The divide is really whether
you own a house," says
Steven Levy, director of the
Center for the Continuing Study of the
California Economy in Palo
Alto. "Those people are more broadly
ahead than those who
own stock. For every struggling teacher, you
have another one with $200,000
equity in their house."
But for those who don't have
that equity, the boom has
backfired. The hot economy
has lured fortune seekers, creating demand
that pushes up costs and drains
the pocketbook. Housing costs stand
out, but other expenses, including
gasoline and restaurant
meals, are high, too. Overall,
Silicon Valley's cost of living is the highest
in the country, 37 percent
above the national average, according to RFA.
That burden forces some to make
wrenching choices -- a
house vs. a child, for example.
To meet their high bills, many
people slog through tiring
commutes and endure long work hours.
"There's the tension: The economy
is doing so well . .
. but how do individual households
manage their balance sheets?"
Cochrane says.
For some it's beyond balancing.
"People at the lower end are
not benefiting," says
Chris Benner, research associate
with Working
Partnerships USA, a non-profit
organization with
ties to organized labor. "There
are a lot of jobs that
don't pay enough to live here."
For awhile the notion's been
out there: The new
economy, epitomized by Silicon
Valley, is different.
But in at least one important
way, it's not. As in the
nation as a whole, the rising
economic tide is lifting
the yachts of the rich faster
and further here than the
rowboats of the middle class
or poor.
One indicator: While the median
income for the
lowest 20 percent of households
increased just 5
percent from 1991-92 to 1996-97,
according to
U.S. Census Bureau data, median
income for the
top 20 percent increased 32
percent.
Another sign: The growth in
average income in
Santa Clara County is outpacing
the growth in
median income. This means the
very wealthy are
pulling up the average.
Some see Silicon Valley's economic
conundrum as
an issue of mismatched skills
or too-low pay for
people who deserve more. Others
blame not wages
shortage that predates this
boom.
"There is no conceivable way
that supply could meet
demand," says Frank Lockfeld,
director of
the county's Center for Urban
Analysis.
And it may get worse. The Association
of Bay Area
Governments projects a housing
shortage of
more than 16,000 units by 2020.
"Unless you provide
workers a place to stay, you
won't keep
them," says Chin Ming Yang,
principal planner with ABAG.
Among the most vulnerable are
workers with no hope of
scoring at technology's wheel
of fortune.
Cabinetmakers, auto repair
shops and others in the big
service sector do benefit from
more
business brought on by the
boom. But they don't have a
chance for the huge gains tech
workers
can get from stock options.
For some workers, it's worse.
When adjusted for
inflation, hourly wages actually
dropped from
1995 to 1998 for local workers
in construction,
printing and publishing and
a handful of other
industries, according
to the California Economic
Development Department.
The bottom line: For many, increases
in costs are
outstripping their pay. That
hits renters especially
hard. From 1993 to 1997, rent
in Santa Clara County
increased 29 percent after
adjusting for
inflation. Over the same period,
household income grew
just 11 percent.
So mismatched are income and
costs here that as of
December 1998, two out of five
Santa Clara
County households couldn't
easily afford the average
$1,503 rent for a two-bedroom,
two-bath
apartment. Among the jobs that
typically don't pay
enough are pharmacy technicians,
tax
preparers, dietitians, elementary
school teachers and
insurance underwriters. A department
store
sales clerk would have to work
more than 112 hours per
week, every week, to afford
that rent,
using the standard that rent
shouldn't consume more
than one-third of one's gross
income.
Home ownership can be even tougher.
Nationally, the
1998 median home price of $130,600
was
about three times the median
household income. But
Santa Clara residents, even
with their high
income, have a tougher trek
to nab a home. Here
median-priced homes -- $364,740
in 1998 -- are
more than five times the median
income.
Teresa Jackson, an accountant
earning between $30,000
and $40,000, confronts wealth
every day
as she processes tax forms
for customers making
hundreds of thousands a year.
"I've gone to college, I have
a career and this is
where I am," she says.
Jackson, 29, lives with three
daughters in a
two-bedroom apartment in South
San Jose. In Silicon
Valley, her salary qualifies
her for one of two homes
being built in Campbell this
year by Habitat
for Humanity, the international
organization that acts
like a low-cost lender by building
homes that
sell at cost.
Others leave. Teachers, city
administrators and police
officers -- the stalwarts of
typical
communities -- increasingly
are fleeing Silicon Valley
for more affordable locales
such as Tracy,
Modesto and Stockton, if not
farther afield. Some keep
their jobs but take on exhausting
commutes.
Rafael Rojas, 28, a Fremont
High School teacher,
doesn't want to leave the area
where he grew
up. To supplement his mid-$30,000s
income, he works
part time for companies trying
to crack
their security. He can get
$200 for four hours of
sleuthing, but his heart is
in teaching.
"If this was San Jose 20 years
ago, I could get a loan
for a house," he laments.
Silicon Valley's poor
Meanwhile, the poor, while benefiting
somewhat from the
labor shortage, struggle just
to survive.
By national standards, Santa
Clara County doesn't have
many indigent. According to
census
figures, 9 percent of the county's
population was poor
in 1995, up from 7 percent
in 1989 and
compared to nearly 14 percent
nationally. Poverty is
defined nationally as an income
of about
$16,000 for a family of four.
But again, these income statistics
don't reflect the
added burden of living in one
of the nation's
costliest areas. Measures of
wealth do, and
considerably more county households
(34 percent)
have wealth less than $25,000
than those having
$250,000 or more (23 percent).
With 28,000 county families
awaiting federal rental
assistance, more and more are
driven to sleep
in cars and garages or on a
friend's living-room floor.
Often, parents work multiple
jobs but still can't
scrape together the nearly
$3,000 upfront payment
often needed to secure a one-bedroom
apartment.
Scott Morris worked full time
at $12-an-hour
construction jobs. Yet he and
his wife, Sara, and
their four children could not
afford to rent a home
until a community program helped
land them in
rental housing in San Jose.
"With a family of six, I would
need to make at least
$25 (an hour)," Morris says.
In fact, 41 percent of the people
served by the Second
Harvest Food Bank have at least
one family
member who works, according
to the organization's 1996
survey of 707 adults. The food
clearinghouse serves more than
100,000 people in Santa
Clara and San Mateo counties.
A question often put to people like Morris: Why not move?
It's a stark choice many people
resent facing. "I was
raised here," Morris says.
"Why should I have to leave?"
"This is becoming the valley
of the broken heart," says
Barbara Zahner, executive director
of
Sacred Heart Community Service,
a San Jose non-profit
organization that provides
food, clothing
and education. "I don't know
if there's ever been such
a sense of hopelessness about
housing."
A common refrain of the experts
is that without
policies to encourage more
affordable housing, the
squeeze will continue to drive
some people away, taking
a toll on everybody left behind.
"We're not going to be able
to clean our office
buildings, educate our children
or patrol our streets
if this continues," says Chris
Block, housing director
for Catholic Charities.
But others will come, even as
the larger community
weighs the costs and benefits
of the boom.
They will come for Silicon
Valley's energy and
challenges. And yes, for the
chance to get rich.
"It's exciting. I love it,"
says attorney Nita
Itchhaporia, 34, of Palo Alto.
But when they arrive,
newcomers may well discover
not only that they don't
get rich quick but that the
valley's money
mania takes over their lives.
"The materialistic
drive," says Itchhaporia, "is
tiring at times."
That may well be a price of
prosperity -- and one worth
paying, says Frederick Furlong,
an
economist with the U.S. Federal
Reserve, San Francisco.
Few would argue, he says, "that
it
would have been better to have
had the high-tech
revolution centered somewhere
else."
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For
high-tech veterans, balance still a struggle
BY ALAN GATHRIGHT
Mercury News Staff Writer
The San Jose Mercury News
The Prouty family is a long-term
case study in the
battle to balance work and
home in this fast-paced place.
``By Work Obsessed,'' the Mercury
News' groundbreaking
survey of valley life published
in early 1985, profiled Bill and
Karen Prouty's struggle to
run their mom-and-pop start-up from their
West San Jose home as they
tried to snatch more quality time with
their 18-month-old son, William
Thomas.
Fifteen years later, things
have changed dramatically
for the valley veterans. Or
have they?
The older and wiser couple are
still striving to walk
that tightrope. And Bill, ever
the technophile, still has faith that the
valley's gadgetry will ensure
their ultimate victory in the lifestyle-vs.-work contest.
When clients for their home-grown
software debugging
firm shifted to in-house testing,
the Proutys shut their business in
1987. Bill nimbly jumped back
into the corporate world at Sun
Microsystems Inc., where he
oversees internal information technology programs.
At 59, he's still crazy about
cutting-edge technology,
leaping at chances to participate
in experimental projects. He's also heading
Sun's internal Y2K war room,
where he'll be commanding 100 Sun troops
worldwide on New Year's Eve,
while his wife of 17 years will be
``without a date'' at their
Santa Cruz condo.
The 26-year valley veteran's
optimism is hot-wired. He loudly echoes the
roughly 70 percent of residents
surveyed by the Mercury News who say
they enjoy living in a place
that is changing the world and who believe high tech
has created more opportunities
than problems.
``One of these days, you'll
be able to leave work -- or wherever
you are -- and send a fax from
your computer or Palm
Pilot and turn on your oven
to bake a roast and
start the heater in your home,''
he said. ``Those types
of devices will change the
valley and the world.
And all of that technology
is being built right here.''
But Karen, 46, is more conflicted about the valley's mixed blessings.
She lovingly jokes about her
husband's relentless work
devotion, including a major
project last year
that required him to be on
call nearly 24 hours a day
for a year.
``He'd be married to Sun Microsystems
if it were
allowed,'' Karen cracks. ``I've
always understood
that his work comes first.
It's not a problem. When I
demand his attention, he will
give it to me.''
Flexibility in marital matters
is key to survival here,
she said. ``Otherwise, it's
very easy to go insane.''
But she's not complaining.
``God bless Sun Microsystems!
The stock has split three
times in three years,'' said
Karen, who
works part-time in pharmaceutical
sales. She took
several years off when their
son was younger to
volunteer at William's school
and as a Republican Party
activist.
Valley life has been rewarding
financially. They've
cashed in on stock-sharing
plans and real estate
investments, and now split
their time between a
four-bedroom West San Jose
condo and their Santa
Cruz hideaway near the yacht
harbor, where they flee
the rat race on a 30-foot sailboat.
``When you're out on the water
. . . there's no cell
phones, no pagers, all the
technology that invades
my life on a regular basis,''
said Karen. ``That's the
one place where you can totally
get away from it
all.''
William, a 16-year-old high
school student, is
``constantly'' surfing the
Net to chat with friends and
research homework, his mother
said. But he dreams of
becoming a criminal attorney
-- not a dot-com
tycoon.
The family has stayed united
by trying to morph work
hours and home life. The couple
rise at 4:30
a.m., and Bill heads out by
5:15 a.m., in time to reach
Sun's European and Pacific
Rim outposts.
He's homeward bound by 5 p.m.
Except during their son's wrestling
season, Karen said,
``We have dinner together at
home every
night.'' But Bill often goes
back online for
post-dinner work.
Karen, too, embraces technology:
She surfs the Net
about eight hours a week, e-mailing
far-flung
friends and shopping for nautical
antiques on eBay and
books at Amazon.com. But, like
62 percent of
those surveyed, she agrees
overcrowding -- spurred by
the tech boom -- has made this
a bad area to live.
The Redwood City native
said the high-tech boom's
fallout has ``ruined the valley''
as a place to live.
``I remember the hills with
no houses. . . . We haven't
done our planning properly,
and it's sad,'' she
said. ``(Interstate) 880 is
a parking lot. . . . I see
more housing and industrial
complexes going up on
both sides of the freeway.
And I think, `How many
people are going to be on this
road?' ''
As for reaching out to the greater
community, the
Proutys try to make a difference
by adopting a needy
family every Christmas, providing
a holiday feast and
presents. But Karen said she
doesn't feel at
home in their old West San
Jose neighborhood. While
new, predominantly Asian immigrant
families
helped boost their property
values, she said, the new
families often don't speak
English and don't
seem interested in participating
in her holiday
block-decoration campaigns.
But she's only been able to
meet a few neighbors in
their condo complex because
``people come and
go. It's really difficult,
because I grew up in a
neighborhood where you knew
everyone. That's gone
now.''
Both Karen and Bill look forward
to the day they can
spend all their week in Santa
Cruz. But Karen
isn't holding her breath for
her husband to retire.
Still rooting for high tech,
Bill believes that much of
the same technology that spurred
Silicon Valley's
growth could check its sprawl.
``Nomadic computing,''
he said, will someday enable
him to
``commute'' to work via a wireless
palm computer from
his favorite cafe overlooking
the Santa Cruz harbor.
``I believe that nomadic computing
will allow us to
move away from the valley while
keeping our same jobs,'' he said.
One
family's solution: Move. Minnesota viewed as tranquil refuge compared with
fevered valley
BY ALAN GATHRIGHT
Mercury News Staff Writer
For Diana Li, Silicon Valley
has been the best of
worlds -- and the worst.
When she and her husband moved
here with their two
children from Wisconsin in
1993, the Taiwan-born couple were awed by
the bountiful Chinese business
and social communities.
In a valley rich in Chinese
venture capital and
start-ups, the gregarious Li
rose swiftly as a well-connected publicist and a top
bilingual moderator for Asian
technology conferences. Her husband, Wei Hsu,
was a successful high-performance
computer architect with a
major valley company.
Cost to homelife
But the dark side of the valley's go-go gold rush took its toll.
With her 14-hour days and international
business
travel, and her husband's seven-day
workweeks, their time for each
other and their teen son and
daughter kept shrinking. Li, 42, grew weary of
astronomical housing costs,
angry drivers on jammed freeways, and
the lack of neighborliness
in her Cupertino cul-de-sac.
And she began fearing for her
husband's health and her family's
happiness after seeing four
young Chinese entrepreneurs die
in their early 40s in a matter
of years.
``In Silicon Valley, too many
opportunities flash in front of
your eyes. You just blindly
grab them up,'' Li said with a mock
growl. ``I'm sorry. I'm not
that good at saying no.''
The solution: The couple is
choosing self-exile from
the valley of temptations,
to the frozen north of
Minnesota. There, Hsu will
have a tenured professorship
and their family will -- they
hope -- have
more quality time and ties
with their neighborhood.
It was a tough call. Hsu turned
down three job offers
-- with lucrative stock options
-- and took a
significant pay cut in academia;
Li knows she's leaving
the career fast-lane and a
supportive
Chinese-American community.
But what they'll gain is worth more than money, she said.
``Home is where your heart is,''
said Li, public
relations director for AsiaWired.com,
a Santa
Clara-based global Internet
hub providing financial
news, market research and online
services to
Chinese business people across
Asia.
``There's no free lunch. Out
of 10 start-ups, less than
two will be financially successful.
There's a lot
of things you have to sacrifice:
your family, your
kids, your health, your time,''
she said. ``I think it
is more important to spend
time with our family.''
Hsu voiced frustration with
the valley's disdain for
those devoted to family life,
mirroring the 77
percent of respondents to the
Mercury News poll who
believe there's too much emphasis
on making
money.
``The problem in the valley
is . . . they (the
high-tech industry) don't really
value that people want to
live a balanced life. People
are only focusing on their
(work) goals, becoming successful
and rich and
famous,'' he said. ``If you
want to have a family life,
people think you are not competitive.''
Friends can't believe it
The choice has shocked Chinese-American
friends, who
couldn't conceive of leaving
the valley. And
some are skeptical that they've
seen the last of Li,
who will remain here while
her children finish the
school year as her husband
starts his computer science
professorship at the University
of Minnesota.
"Are you sure she's leaving?
I really have my
doubts,'' said Echo Tsai, 43,
chief executive officer at
HiQ Computer in Sunnyvale.
``We made a bet for lunch
that she's not leaving at all.
``I think her lifestyle fits
in the Bay Area much
better than Minnesota. She
has a special talent. This is
the area where she can really
exercise her skills.''
Misgivings about move
Li admits she's torn.
``This is the best, most supportive
Chinese community
in the whole world,'' she said.
``For Chinese
engineers, this is the only
place you won't really hit
a glass ceiling. It's a multicultural
environment.
So a lot of company owners,
they are not mainstream
people. They were foreign-born
or they have
this open mind to accept people
who have language and
cultural barriers, but who
also have top-notch
ideas and the technological
ability to promote them.''
For Li, who immigrated to the
United States in 1980 to
attend graduate school in the
Midwest, coming to Silicon
Valley was oddly like returning
home. In the Wisconsin
university town where they
last lived, there were 10 families
of Chinese heritage -- nomads
from Malaysia, Hong Kong,
Beijing -- whose array of dialects
made English their only
common language.
``When I first came to Silicon
Valley, it surprised me
because I could go to the bank
and do shopping without
ever speaking English. I could
speak Chinese on stage (at
business conferences),'' she
said.
Warm and energetic, the former
journalist and English
teacher thrived in the valley,
starting at a San Jose center for
deprived immigrant youth and
gravitating into the
Taiwanese business community.
In a way, Li and Hsu were casualties
of their own
success. When Li wasn't moderating
conferences
and toiling for AsiaWired,
she was volunteering for the
American Cancer Society or
fundraising for
Taiwanese earthquake relief.
``She's always trying to do
100 things at once,'' Tsai
said. ``I'm one of those people
who's always
telling her she needs to slow
down.''
Li saw something had to give.
In the Midwest, there was time
to relax by gardening
with friends, to chitchat over
coffee. In
Cupertino, she got into speed-gardening
to squeeze
flower-planting or hedge-trimming
into her hectic
schedule.
``I screamed to myself -- ahhhhh!
-- I have to do this
in 40 minutes. Today was garbage
pickup day.
In the morning before work,
I picked up six bags of
leaves in 15 minutes,'' she
said.
It took Li and Hsu seven years
in the Bay Area before
they took a long-postponed
day-trip to Sausalito.
No time for himself
Shackled to work, Hsu felt envious
that at least his
wife was making friends through
business
socializing. His guitar sat
in the closet so long he
forgot how to play. His only
diversion was playing
chess online.
Hsu grew disillusioned with
the valley's near-sighted,
time-to-market obsession.
``People are endlessly chasing
the trend of the new
technology,'' he said, like
greyhounds racing
around a track after a mechanical
rabbit. ``If the dog
really catches the bait, what
does it get? By then
what the customer has demanded
has already changed,
because the technology world
changes so fast.
``I want to spend more time
thinking about a longer
vision. What will happen a
few years from now.''
So, Li and Hsu are returning
to the Midwest, where the
winters are colder, but the
living is hopefully slower.
``We would like to retain our
serenity and be together
and appreciate each other in
a `normal' marriage,'' she said.
Li won't say she can stay away forever.
``We might come back,'' she
said, but first, ``I gotta
try snowmobile.''
©1999 Mercury Center. The
information you receive
online from Mercury Center
is protected by the
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States. The copyright laws
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retransmitting,
or repurposing of any copyright-protected
material.
Minnesota's
talented techs can't resist the lure of Silicon Valley
Eric Wieffering
The Minneapolis Star-Tribune
Sunday, August 20, 2000
After five years helping companies
in Minnesota
figure out the Internet, Charles
Wilson had no shortage of job offers.
Demand for his talents had
catapulted him, at age
33, to a six-figure salary
and the top job at a
Minneapolis consulting firm.
But a year ago, Wilson faced
a more fundamental
choice: stay on his safe and
prominent perch in Minnesota's fledgling
Internet community, or join
the people striking
out for Silicon Valley, where
hundreds of
companies promised to change
the world and make their founders, employees
and investors rich.
Wilson chose to go, and today
he is vice
president of marketing and
employee No. 8 at Pivia, an Internet start-up in
Cupertino, Calif., a city whose
most prominent landmarks are the rolling
green peaks of the Santa Cruz
range that forms its backdrop and the world
headquarters of Apple Computer
Inc., where a giant banner of
co-founder Steve Wozniak flutters
in the late afternoon breeze.
"Silicon Valley is Mecca for
all high-techintelligence," Wilson said.
"I guess I wanted to see how
I would stack up."
Wilson isn't the only Minnesotan
trying to make
a mark on the West Coast. Between
1990 and 1998, the Twin Cities exported
more people to Silicon Valley,
San Francisco and Seattle
than it imported from those
high-tech hubs, according to analysis of
Internal Revenue Service records
by the Star Tribune and McClatchy Co.
While the actual number -- an
average of 233 per
year -- represents a trickle
more than a flood, some of the state's
business, academic and political
leaders say the departure of smart
people and smart money could
have a long-term negative impact on the
state's economy. That's why
on Sept. 20, the University of Minnesota
will sponsor a day-long symposium
on what the state can do to create new
technology jobs and keep technology
professionals from leaving.
No matter what Minnesota does,
however, it will
have a hard time competing
with Northern California, which has become
breeding ground for companies
that are reshaping the economy.
The closing of some dot-coms
and massive layoffs
at others appear to have done
little to stem the westward tide, which is
driving the cost of living
out there sky high. In San Francisco, rents for a studio apartment
begin at $1,000; in June, the
median price of a home rose 30 percent from a
year ago, topping $500,000
in both Silicon Valley and San Francisco.
To be sure, not every Minnesotan
is trekking west. Beth Temple, a California native
and former marketing director
for Big Charts Inc., turned down offers in San Francisco
after that company was bought
by MarketWatch.com. The cost of housing and the
traffic congestion, as well
as the belief that there was plenty of Internet
consulting work for her in
the Twin Cities, made the decision to stay an easy one, Temple said.
But Wilson, sipping a $2 bottle
of Calistoga spring water at Buck's, a well-known watering hole for the
area's venture
capitalists and entrepreneurs,
can easily recite the names of other Minnesotans who've moved west
in the past 12 to 18 months.
In addition to himself, two
of Pivia's 20 other employees are from the Twin Cities, and the company's
main financial backer
is a Minneapolis native. Another
of Wilson's friends, Amy Vener, works for the San
Francisco software company
Personify Inc. That firm's CEO, vice president
of operations, and head of
product marketing are recent Minnesota emigres.
"It's almost spooky," Wilson said. "There always seems to be a Minnesota connection."
It was just such a connection that got Wilson to Silicon Valley in the first place.
In Minnesota, Wilson had done
work for Dan Buettner, a Minnesota native best known for cycling across
Africa in 1993.
In 1998, Buettner recruited
Wilson to be marketing czar for Classroom Connect, a Foster
City, Calif., firm that develops
Web-based curriculum and teaching aides.
Leaving has risks
The decision to leave Minnesota
carried some risk. The state had been Wilson's home since 1984, the year
he arrived from
Louisiana to study classical
languages at Carleton College. There, Wilson's exposure to
technology consisted of trying
to get his Macintosh to print ancient Greek
characters.
Wilson planned to pursue the
same career as his father, who was a college professor. But the younger
Wilson dropped out of graduate
school after less than a semester, sold his Vespa motor scooter and
returned to the Twin Cities
in early 1989, hiring himself out to local
public relations firms, where
he often found himself working with emerging technology companies.
By 1994, Wilson had formed his
own marketing and
Web design firm, Culture Shock,
with offices above Kincaid's restaurant in
Bloomington. Wilson's employees
and project consultants included
many who would
later start companies, including
Eric Freeberg, who co-founded the
Minneapolis Web design firm
B-Swing Inc., and
Victor Tong, who founded TalentSoft
Inc., a
Richfield electronic-commerce
software company. J.J. Allaire, who founded
and took Allaire Corp. public
in 1999, sublet space from Wilson.
Employees worked through the
night, fueled by
food and beer from the restaurant,
building Web sites for the likes of
American Express and Polaris.
'On a mission'
"They were on a mission, with
Charles holding
court," said Joanne Henry,
a public relations executive who befriended
Wilson in the early 1990s.
When not sketching
out visions and diagrams on
whiteboards, Wilson
could usually be found in the
computer closet, trying to restore the
company's Internet connection.
Wilson sold Culture Shock two
years later to a
larger competitor. Later, he
led the interactive division at
Martin/Williams, a Minneapolis
ad agency. A year later he
jumped to the Minneapolis design
firm Yamamoto
Moss, where he helped launch
and became president of AisleFive, a
consulting firm later renamed
Aveus.
Miranda Moss, a principal in
the firm, says she
took an instant liking to the
excitable Wilson. While he lacked some of the
organizational and detail skills
of a more
experienced manager, he could
sketch out in
simple but vivid terms how
the Internet was changing business and how
Yamamoto Moss could capitalize
on the opportunity.
"The first time I interviewed
him I thought, 'He
knows everybody and he's so
much smarter than I am," Moss said.
For Wilson, leaving Minnesota
meant leaving that
network and going to a place
where he'd be one of hundreds, if not
thousands, working for technology
start-ups.
Leaving AisleFive after a little
more than a
year also added to his reputation,
in some circles, as being fickle, a
characterization Henry disputes.
"The energy, excitement and
chaos of a start-up
is what he loves," she said.
"It's also what drives the people he most
wants to work with, and Charles
is definitely not someone who likes to work alone."
Wilson's wife, Tracy, had worked
in public
relations for Minnesota Educational
Computer Co. and a Minneapolis agency
before venturing off on her
own. She agreed to a change of scenery on one condition: that
they'd return to Minnesota
when it was time to start a family.
After a weekend of shopping
for a place to live,
the Wilsons swallowed hard
and signed a lease for a two-bedroom bungalow in
Palo Alto, with a small rock
garden in
the backyard. The cost: $2,500
per month, or 2?
times what they paid for a
larger two-bedroom duplex in Minneapolis' Linden
Hills.
Though Wilson says he has no
regrets about
making the move, it hasn't
been all smooth sailing. Pivia is his second job
in Silicon Valley, and the
April plunge in
Internet stocks means start-ups
like Pivia face
a far less certain future than
they did a year ago.
Wilson's first job, the reason
he went to
Silicon Valley, turned out
to be less than he or Classroom Connect had
hoped for. He left after less
than six months.
"It wasn't a good fit," said CEO Judith Hamilton.
Wilson says Classroom Connect's
business was
more about education than technology,
and the six-year-old company already
had more than 100 employees
by the time he'd arrived.
"I wanted to be closer to the
Internet space, and I missed being in a room
with three or four great people
and a great idea," Wilson said.
Pivia more closely fits that
bill. The company
is officially in "stealth"
mode, which means Wilson, garrulous by nature,
can't talk in detail about
what Pivia's software
will do. He will confirm that
it allows Internet
users to store their personal
information, such as passwords, bookmarks and
account information, on the
Web and access it from any Internet connection.
Learned the differences
Wilson learned about Pivia through
a job posting
on craigslist, a San Francisco-based
online version of a neighborhood
kiosk, and introduced himself,
via e-mail, to
the company's president. He
started work in
November, and as the company's
eighth employee got to experience firsthand
the differences between a Minnesota
start-up and a Silicon Valley
start-up.
Consider the employer-employee
dynamic. In
Silicon Valley, start-ups ladle
out options to all employees, which isn't
necessarily the case in Minnesota.
Wilson, for
example, had no options in
Aveus, even though he
was its president.
The demand for workers in Silicon
Valley also
has changed the balance of
power. In the Valley, the reality is that it's
often the prospective worker
who is interviewing
the company. With every employee
owning a piece
of the company, the very notion
of "employee" itself is almost a misnomer.
"The thing you have to recognize
is that your
employees are really your angel
investors," Wilson said. "You have to treat
them differently, as people
who are trying to
make the most of their investment."
That, in part, helps create
an ethos where long
hours are expected of everyone.
Wilson's own days typically
begin with a 5:45
a.m. hike with his wife through
the foothills near their home. He's at
Pivia's offices by 9:30 or
10 most mornings, and
often doesn't leave until 8
p.m. After dinner
it's another 90 minutes answering
e-mail and tying up loose ends.
Wilson admits that he probably
worked as many
hours in Minnesota, but that
the stakes weren't as high. The proximity to
so many competitors and the
venture
capitalists who back start-ups,
as well as the
formal and informal networking
and gossip between employees, financiers,
and executives create a more
frenzied
atmosphere, he said.
Business plans, strategic initiatives
and
marketing efforts are reviewed
and adjusted frequently in response to the
actions of competitors or the
perception of investors.
With consumer-related Internet
stocks now out of
favor, for example, Wilson
is trying to position Pivia's technology as an
important tool for Web sites
and device
makers, rather than a membership-based
site or service.
Like the dense, cotton-puff
fog that cascades
across the San Francisco peninsula
on most summer afternoons, the collapse
of Internet stocks in April
has brought a chill to Silicon Valley.
Some shut down
Some companies have been forced
to shut down,
and for those still operating,
money has gotten tighter. According to
outplacement firm Challenger,
Gray & Christmas
of Chicago, more than 7,500
dot-com workers have
been laid off nationwide this
year, almost 2,200 of them in July alone.
By late June, the strain of
launching a start-up
in a much more volatile market
shows on Wilson. The morning hikes have
helped shed some of the weight
gained when
he first arrived in California,
and a rare
weekend away, to Big Sur, has
left the fair-skinned Wilson with sunburn
smudges on his forehead and
cheeks. But they can't
disguise the effects of many
late nights at Pivia's office.
His voice is raspy, his eyes
bleary. His foot
bounces on the rail of his
chair when he speaks, and his gaze is fixed on a
spot on the floor.
In Silicon Valley, few companies
have an idea
all to themselves. Pivia is
no exception. A few miles away, in San Jose,
fusionOne already has launched
and it seems to
do the things Pivia is promising
to do. In early
April, before investors became
a lot more wary about pouring money into
start-ups, fusionOne raised
$50 million from big-name investors.
Pivia has raised just $5.5 million.
Whether it can raise more will depend in
equal parts on how well it's
engineered and how well it's marketed.
And that's Wilson's job. As
the product release
date approaches he is trying
to settle on a story line that helps Pivia
rise above the clutter of other
start-ups trying to do the same.
A lot riding
Personally, Wilson has a lot
riding on how well
he does. He won't disclose
his salary, except to say it's more than he made
at Aveus, or the number of
Pivia stock
options he holds. But as the
eighth employee and
a senior level executive, it
could be in the tens of thousands.
Wilson insists he didn't leave
Minnesota to make
a fortune, and the and the
odds of striking it rich have gotten much
slimmer in recent months.
"What they tell you in high
school and college
is true," he said. "Most businesses
still fail, and most Internet
businesses are perilous enterprises."
© Copyright 2000 Star Tribune.
All rights reserved.
More
than Dough Makes them Go. Being where the action is. Cooler and better-paying
jobs. No snow.
Eric Wieffering
Minneapolis Star-Tribune
Sunday, August 20, 2000
Ask any Minnesotan why they've
moved to San
Francisco or Silicon Valley
in recent months and their responses are likely
to include any or all of the
above.
Amy Vener, a wiry, intense 28-year-old,
moved to
San Francisco in March and
is an account consultant at Personify, a
start-up that helps retailers
analyze and improve
traffic and sales on their
Web sites.
Vener had never lived or worked
anywhere other
than Minnesota and was interested
in a change of scenery.
"I imagine someday wanting to
return to
Minnesota," she said, "but
right now there's no company doing the kinds of
things we're doing here."
Ditto for Hugh Alley, a laid-back
24-year-old
who waits in the Casual Carpool
line at the Bay Bridge every morning to
hitch a ride to his job in
San Francisco.
After spending most of his life
in Minnesota,
Alley knew two things when
he graduated from college: that he wanted to
work in technology and that
he wanted to live someplace else.
"At the time, the Twin Cities
was not cutting
edge," said Alley, who works
in business development for Organic Inc., one
of the largest and best-known
Internet consulting firms.
Most insist that money was not the main reason they moved, but it's a factor.
Salaries are higher, and everyone
gets stock
options. Alley, who studied
English literature, has received three raises
in less than a year and now
earns "slightly more
than twice" his age. He joined
Organic about six
months before it went public,
and his options are now worth about $30,000.
Vener, a philosophy major, boosted
her pay by 30
percent when she joined Personify,
bringing her salary closer to $100,000.
She also received a few thousand
options in the company, which intends to go public.
Yet Vener and Alley are sensitive
to the perception that everyone in Silicon Valley
is either wealthy or expecting
to join those ranks.
A higher cost of living, particularly
for housing, eats into the higher salary.
Vener and her partner, who
are sharing a one-bedroom flat with two other people, expect to
pay up to $2,300 a month for
their own one-bedroom apartment, more than three times what they paid for
a
two-bedroom duplex in St. Paul.
Adding to the uncertainty has
been the collapse of many electronic commerce stocks, and the fact that
most Internet
companies, including Organic
and Personify, continue to lose money.
"People sit around and talk
about rental prices in San Francisco," Alley said. "They get really worried
that the landlord
will raise the rent and kick
them out. They don't feel like they have complete job security."
Vener, for one, has learned
firsthand that there's no sure thing in the Internet world. She had many
more stock
options when she worked for
On Hand Network, a Twin Cities Internet start-up that went out of
business despite $13 million
in backing from financier George Soros.
"Nothing is for certain," Vener
said. "Nothing is for free."
"Nothing is for certain," Vener said. "Nothing is for free."