"The Valley? Oh, Yuck"

There's a whole new digi-culture in San Francisco, and it hates Mountain View

Backflip Inc.'s lanky CEO, Tim Hickman, looks like he stepped out of a Gap ad in his turtleneck sweater and his short, blond hair of a shade rarely seen in nature. One of his favorite expressions is "No wa-ay." The 29-year-old is a veteran of such Silicon Valley companies as Netscape Communications (AOL) and infrastructure software outfit Tibco Inc. (TIBX), but when he started his own Web bookmarking company, the idea of leasing some boring cubicle farm in the Valley was like, no wa-ay. Most Valley towns "just suck," he tells me. "Restaurants are packed with people wearing name badges. There's no history or culture and nothing to do."

Ouch. Much of the planet thinks of Silicon Valley as a homogeneous, sunny patch of the West where everyone is infuriatingly happy, rich, and wired. Nations send delegations to try to get the recipe for the Valley's magic dust. But there's an awful lot of hissing and dissing here in our boiling cauldron of capitalism lately. Two distinct digital cultures have emerged and are sniping. Meanwhile, others say tech excesses are ruining life in both city and valley.

For several decades now, the southern San Francisco peninsula--the Valley proper--has been exploding with entrepreneurs, immigrants, new companies, and sterile office parks. But the recent dot-com phenom has attracted a new breed of creative folks, including content developers and online retailers, to what was once a nerdy engineering party.

As a group, the newcomers are younger and trendier. They're adamant about living in San Francisco and have sparked a renaissance in San Francisco's south of Market--SoMa to locals. A former haven for light industry, warehouses, and homeless people, SoMa now has an estimated 500 dot-com companies--and attitude to burn. "Down south it feels like capitalism unbound," says Brian Backus, CEO of UBUBU Inc., which allows Web users to create three-dimensional browser interfaces. "San Franciscans greatly value other things besides material success," says Backus, who has both a Harvard MBA and a degree in film.

The city's dot-commers prowl the streets at all hours, cell phones set on stun, packing the restaurants, bars, and music clubs. As I learned at Backflip, a cool office ambiance is crucial. Backflip gives staffers money to buy antique lunchboxes on eBay to decorate the lobby. UBUBU has the fun, funky look of a college dorm run amok, complete with what Backus calls its Ally McBeal unisex restroom featuring a spinning disco ball.

Valley culture, to the contrary, is mostly an unapologetic, nose to the grindstone, egalitarian nerdfest. Travel with me to downtown Mountain View and the offices of almost two year-old Freeworks.com Inc., which offers practical but ungroovy payroll and small business services. The carpet may be filthy, but at least the space is cheap, explains CEO David Stubenvoll. He gives me an office tour in the hushed, droll tones of a golf announcer. "We found one secret of creating more space is buying smaller desks," he says. In a jam-packed room, several workers look up from their keyboards with the squinting mistrust of cargo ship stowaways unsure if they're about to be fed or beaten. "Dave, no offense," I attempt to say politely, "but this place is a dump."

He laughs. "For a CEO to spend an hour on office design instead of a Power Point presentation that has a chance of getting you millions of dollars in capital is just wrong," he says passionately. Don't you need cool digs to get great people, I counter. Freeworks Vice-President Tapan Bhat rolls his eyes. "People in San Francisco are all into looking cool and `doing' the Internet," he says with contempt, making quotation mark rabbit ears with his fingers.

Sure, traffic grows ever more insufferable in the Valley and housing prices routinely scare off job candidates. But Valley loyalists see themselves as the real inventors of the future who have time for two things: work and their families. They wear free shirts from conferences and khakis in the full vibrant spectrum from beige to light brown. Their spouses are constantly reminding them to please remove their security name badges and not take cell-phone calls in church. I ask San Jose (Calif.) resident Stubenvoll if he wouldn't rather live in beautiful San Francisco? "I've got three kids," he says shrugging. "Where are you going to park the minivan?"

Backlash. According to Joel Kotkin, author of a new book called The New Geography: How the Digital Revolution is Reshaping the American Landscape, it was once thought cities would sink into musty decline as clean, shiny tech parks that he dubs "Nerdistans" led the New Economy onward. But in many areas, the reverse is happening: San Francisco, Manhattan, Seattle, Austin, and Santa Monica are all among urban areas now stealing young workers away from established tech zones. Dan Hart, CEO of Echo Networks, located his online music startup halfway between San Francisco and San Jose in hopes of drawing from both cultures. But he moved it to SoMa when he realized after a few months that all 20 of his employees lived in the city. "The biggest reason to move is the kind of people you can attract," he says.

Some Nerdistan outfits are trying to perk up the soulless burbs. Cisco Systems Inc., for example, has a proposal for a huge office campus in southern San Jose right now that is billed as a virtual city, complete with a Main Street, shops, and parks. Environmentalists say it will wreak havoc in the Valley's last big parcel of open space. Separately, even some traditionally pro-development Valley towns are starting to keep dot-coms from moving into traditional downtown retail spaces and wrecking the "village" atmostpheres. Intel Corp. is among another faction of Valley companies looking to join instead of compete with the dot-commers in San Francisco by opening "satellite" offices.

In San Francisco the irony is there's actually a backlash against techies, because they've so radically bid up the cost of living and clogged the streets with traffic. Activists occupied a south of Market company called Bigstep.com recently to protest displacement of artists and others, and a ballot initiative aims to limit new office growth. City anti-growth activist Sue Hestor says she is terrified of the "Silicon Valley-ization" of San Francisco. Tell that to all those Silicon Valley wannabes elsewhere, I suspect, and you'll hear an incredulous "No wa-ay."

Before it's here, it's on the Bloomberg Terminal.