@LARGE
By Scott Kirsner SAN JOSE, Calif. - The Internet bubble popped a lot more loudly out here. And the bubble is still in the process of deflating, collapsing in on itself. But one crucial way the collective psyche in Silicon Valley is different from Boston is that people out here are confident that once all the hot air has dissipated, they're still going to have a healthy innovation economy. In Boston, people seem to have concluded that the start-up revolution has stopped cold. ``The reality is, the bubble was most pronounced in Silicon Valley,'' says Richard Owen, chief executive of AvantGo, a Hayward, Calif., company that makes software for hand-held computers. ``We had the greatest number of stupid ideas and bad investments out here. But it's also worth remembering that the greatest number of real, die-hard success stories are out here in the Valley. And those companies aren't going anywhere.'' The atmosphere in the Valley is crazy right now. There's a very clear sense that one era is ending and another is beginning. Excite@Home is laying off 250 workers, while Cisco Systems is building a new 683-acre campus that could eventually employ as many as 20,000 people. Unproven start-ups are fretting over whether they'll be able to raise a second round of venture capital, and venture capitalists are scrambling to figure out which of their companies are salvageable and which ought to be shuttered. And new business ideas are still being pitched over breakfast, lunch, dinner, and drinks. Oh, and you may have heard about the slight shortage of kilowatt hours out here, too. The power crisis seems much more dramatic from afar. Over the course of three weeks spent in the Bay Area, I've been deprived of juice just once, for about an hour. And no one I've spoken with has spent much more time in the dark, either. A friend who works at iPrint.com in Redwood City had her power go out the same day I did, for about two hours. "So we went to lunch," she told me. "And the servers weren't affected." People have become inured to hearing about the Stage III Power Emergency on television and on the radio every day. It means that power reserves are dangerously low, and rolling blackouts could start at any moment. "Right now, it's just a temporary fixation for people," says Jennifer Fonstad, a managing director at the venture capital firm Draper Fisher Jurvetson in Redwood City. "It's something to talk about, like, `What did the Nasdaq do Today?' or `What's Greenspan going to say?' But if it's not solved in a few weeks, it'll get to be pretty worrisome." It's curious to watch new complexes and campuses being built in the midst of the power crisis. Developers and planners in California are accustomed to having to think about water issues, but they hadn't previously had to consider the impact of a new manufacturing plant or corporate headquarters on the power grid. "Until recently, the whole notion of not enough [power] supply was never discussed," says Ann Draper, the planning director for Santa Clara County. "There was never an issue before. But with deregulation, it obviously has changed the picture with regard to power." Draper says that the Valley is also continuing to wrestle with issues like affordable housing and traffic. An initiative approved by voters last November will raise the sales tax by half a percent to help fund an extension of BART, or Bay Area Rapid Transit, all the way from San Francisco to San Jose. That'll be a great improvement, since rush hours here are excruciating -- but remarkably civil, by Boston standards. Layoffs continue to be part of the landscape here, but like Stage III Power Emergencies, they've faded from the foreground of peoples' consciousness. "Everybody I know who has been laid off takes a vacation," says James Currier, CEO of Emode.com, an Internet company that moved to San Francisco from Boston last summer. "They go to Jackson Hole, they go camping, they go to Paraguay for four months. Most of them are 27, and all they've known is dot-com mania. But no one else seems to be panicking, so they're not, either." Instead, they're biding their time until they enlist in their next crusade. Many will join another start-up, and some will go to work for more stable employers. Currier says that when they're ready to return to work, they don't have to go begging. "In the last two months, everyone I've tried to hire has had between four and eight other job opportunities," he says. Currier won't have to raise more money for Emode until later this year or early 2002, he says. But he and other entrepreneurs dread the prospect of seeking follow-on funding in the current environment. "The entrepreneurs who got funded a year ago and are trying to go back to the well are looking tired, and the process is grinding them up," says Mike Cassidy, a founder of the search site Direct Hit. Last year, after selling Direct Hit to Ask Jeeves, Cassidy moved from the Boston area to Menlo Park, Calif., where he now invests in and advises start-up companies. "Funding is very difficult to get right now," Cassidy says. But he says that hasn't dissuaded the most determined, experience entrepreneurs from starting companies: "I still see tons of new ideas, but they're just not getting funded the same way they were in 1999." Venture capitalist Fonstad says she's concentrating more on the nuts-and-bolts technologies of the Internet these days: storage area networks, database acceleration, caching, optical networking. Fonstad, who grew up in Wayland and worked for Cambridge's SensAble Technologies before moving west, says: "In general, one of the big differences that I've seen is that there is an infrastructure that supports risk-taking out here, particularly when it is two folks and a prototype. There's a willingness to take risks on new ideas that is very pervasive out here." As for the future, Owen at AvantGo predicts that "the Valley will continue on upward. It has done that for 20 years, using venture capital to fund innovative companies that grow incredibly fast." But Owen says the "myth of the lottery winner" - the idea that secretaries and warehouse workers and entry-level programmers could all become instant millionaires when they their employers went public - needs to be punctured, along with the bubble. "A lot of people think somehow it'll still happen," Owen says. "The dream of becoming a millionaire overnight is dying a lot more slowly than I thought it would." The myth of the lottery winner really only became prominent in the Valley's psychology over the last five years. But like the traffic on Highway 101, it may never go away. You're invited The Globe is holding a panel discussion on Wednesday at 7 p.m. that will address the future of technology in the home. Will the new wave of non-PC information appliances catch on? How will speedier broadband access change the way people entertain themselves, get information, and shop? What kind of technology will people use to connect multiple computers and information appliances in their homes, and will it require a full-time administrator just to keep the network up and running? If you're interested in attending, please visit www.evite.com/kirsner@att.net/janroundtable for more details and to RSVP. Space is limited. Scott Kirsner is a Boston freelance writer and a contributing editor at Wired and Fast Company magazines.
Pessimists on the right, optimists on the left
