San Francisco, San Jose in Cultural Battle for Young Technology Workers.(Knight Ridder/Tribune Business News)

Knight Ridder/Tribune Business News; 10/16/2000; Brien

Oct. 16–Stephanie’s sleek black outfit hugs her buffed, party-ready body. All around her on the strobe-lit dance floor, pulsating dot-commers inside this South of Market club gyrate to thudding techno music. Robesky, a senior e-commerce manager for Sega.com, gives me a “can-we-talk” look: “I only lived in Cupertino for three to four months. Netscape was just 10 minutes away. But it was soooo boooring,” she says, giving her stylishly cropped short black hair an impatient shake. “I’m only 24.”

The implication is obvious. Who in their right mind except a suburbanized geek would stick around Silicon Valley?

I’m not sure when it happened — when the once-humble Internet colony-by-the-Bay got attitude. But ask a San Francisco dot-commer or start-up executive about which region now rules the Net, and Silicon Valley gets no respect.

“Silicon Valley was really cool about 20 years ago. Now, it’s stodgy,” proclaims Lynn MacConnell, chief technology officer for Sega.com, the company hosting this product launch bash. “I’m pulling all the brainpower out of Silicon Valley. I’m surprised they can’t hear the sucking sound.”

Just a tad brash? MacConnell isn’t alone.

“San Francisco is seen as the epicenter of the Internet revolution,” announces Marie Jones, director of economic development for San Francisco Partnership, a nonprofit digital media and biotech industry group. Epicenter of the Internet revolution?

Jones continues: “Silicon Valley has the nerdy, entrepreneurial stereotype, whereas San Francisco has the cultural population, the 20-something folks who are the creative minds of the digital revolution.”

Repeat all this to Valley natives and they erupt into laughter.

“We’re the center of the world,” chortles former San Jose mayor Tom McEnery. “San Francisco is closer to a well-manicured caboose.”

Actually, high tech’s center of gravity is shifting in multiple directions, as Internet outposts global, national and nearby lure away venture capital, startups and talent. At a time when industry recruiters estimate that half of their clients’ jobs are going unfilled, the growth of alternative tech hubs such as Austin, Seattle and even Miami is intensifying the already brutal talent war. And given its proximity to Silicon Valley, San Francisco tops the list of places willing, eager and able to steal away smart, young talent.

The operative word is young. The 20- and 30-something crowd in what is generally considered the more creative end of the industry — digital and interactive media — want to work-live-and-play in a place where power breakfasts don’t mean Buck’s in Woodside and an evening out isn’t at the Shoreline. Leave the vast, dull plains of Silicon Valley, they say, to the hardware and software folk — the multitudes of engineers and programmers who toil for stalwarts Cisco and Intel and Hewlett Packard.

The message is clear: While it still may be technology’s Mecca, Silicon Valley no longer can behave like a demanding diva.

Of course, the Valley still is launching its fair share of digital media dot-coms, broadly defined as businesses that receive the majority of their revenue from Internet-related software, e-commerce activities, Web site or content development. But in five short years, the City’s Internet community has mushroomed from a handful of start-ups to an internationally recognized digital media industry. South of Market’s streets, cafes and after-hours clubs are clogged with the Stephanies who have flocked to the City in pursuit of a lifestyle where employers see multiple body piercings and electric red hair as indications of, if not requisites for creativity. (This invasion has sparked a native uprising, culminating in a November ballot proposition that would restrict the further “dot-comming” of San Francisco neighborhoods and real estate.) At the same time, more and more start-ups and even established Silicon Valley firms are following these dot-commers and setting up shop in San Francisco.

The City has become a powerful recruiting tool. “Digital media has become a signature phenomenon of San Francisco,” says recruiter Toffee Real of Eastridge Infotech. “We’re having a tough time [recruiting] in San Francisco, but its even tougher for Internet dot-coms in Silicon Valley.”

Once upon a time, about six years ago, San Francisco was viewed by the Valley’s geeks as a kind of upscale servant’s quarters (i.e., back office) for the bankers, lawyers and other uninteresting professionals who serviced their needs. Then “Multimedia Gulch” sprouted somewhere near the intersection of 2nd & Bryant streets, quickly morphing into Web Central for e-commerce consumer, business and interactive media plays. By Silicon Valley standards, this was lightweight stuff, not the sort of paradigm-shifting technology that would motivate hardcore nerds to uproot and head for the fog.

“San Francisco has developed a niche for multimedia, the application of art and high tech fusing together,” says Ruben Barrales, CEO of Joint Venture: Silicon Valley Network, a nonprofit think tank. Barrales praises the City for incubating a “whole new [technology] cluster.”

“Niche!” squawks an outraged Jim Gonzales, executive director of the San Francisco-based Information Technology Coalition. “You can’t call this a little cottage industry! We’re an economic engine that resembles a power generator at the Hoover Dam. We’re not a niche.”

It’s not as if San Francisco is igniting a mass migration up 101. But since 1995, San Francisco’s dot-com community has ballooned from a work force of 5,000 to an estimated 42,000. These dot-com firms employ another 43,000 workers outside the city. (There are no precise statistics for the Valley’s digital media workforce but its total of all high tech workers is about 500,000, compared with the City’s total of 55,000, according to industry figures.)

The City’s digital media now is a not-so-shabby $6 billion dollar industry. “That’s billions, not millions,” stresses Gonzales. When it comes to venture capital, San Francisco gets an impressive wad, according to a just-released report by Joint Venture: Silicon Valley, titled “Internet Cluster Analysis 2000.” In the first half of this year, Multimedia Gulch companies won slightly less than a third as much as all of Silicon Valley — $3.2 billion compared to the Valley’s $9.7 billion.

True, some of the City’s pioneering dot-coms, fed up with skyrocketing housing prices and traffic, have fled the entire region or at least relocated their back office operations, especially after April’s sobering stock market dive. But as fast as they’re moving out, scores of other ventures are snapping up their overpriced leases.

Consider 34-year-old Craig Dubitsky, cofounder of MasterKey, the online moving site recently renamed MarchFirst. In January, two days after winning funding from their San Francisco venture capitalist Hummer Winblad, Dubitsky and his partner flew out from the East Coast to select a location for their startup. They were shopping not just for office space, but a corporate culture.

Silicon Valley seemed the logical choice … until they paid a visit. “At the risk of sounding, ah, cruel, it didn’t have any level of charm,” says Dubitsky, who still shudders at the thought of being “embedded in an industrial park” with those “boxster parking spaces.” The entrepreneurs sped back up 101. Dubitsky waxes poetic about the space they found at 2nd and Howard in the City. “It had exposed brick, high ceilings, was close to public transportation and you can walk to any kind of ethnic food in any direction.” The location helped them recruit cosmopolitan East Coasters, who recruiters say want the City life.

Best of all, the entrepreneurs couldn’t be accused of frivolously burning through VC cash. “The price was comparable to Silicon Valley,” Dubitsky stresses. “Everything was expensive.”

Headhunter Jim Schneider has watched the explosion from his perch on the 14th floor of an office building near Pac Bell Park. “As I look down 2nd Street, there are about 400 dot-coms in the five to six blocks on the right and left,” says Schneider, who describes South of Market as a “cult haven for dot-coms” employing five key types of techies: Java programmers and developers, Web designers and architects, project managers that can take Web start-ups from soup to nuts, network builders and Web database wizards.

According to a recent San Francisco Partnership survey, “Digital Industry 2000,” of over 1,000 city firms, 64 percent answered “Yes” when asked if San Francisco is “the epicenter” of the digital media industry. This statistic helps explain a new trend: Silicon Valley companies, including Intel, are opening City satellite offices to woo talent living not just in San Francisco, but also the North and East bays. “Clients are saying, ‘We’re willing to have a satellite office in San Francisco to get at the interactive creative people,’ ” says recruiter Stacie Blair with The Pacific Firm, which conducts searches for technical, creative, business development and marketing personnel. Two years ago, only about 20 percent of her clients were in the City; now it’s 90 percent.

Internet start-ups in the Valley increasingly worry that they’re at a strategic disadvantage in the escalating war for cutting-edge Web innovators who view living in the Valley as a premature death. Says Blair, “I just met with Octopus [based in Palo Alto] and their human resources people said, ‘I hope our geography won’t be an issue.’ ”

Location was an issue for Gobosh Inc., an Internet hardware and software consulting firm headquartered in San Jose. “You’d say, ‘Here’s your great salary and stock options, but you’ll have to spend an hour-and-a-half in the car each way,’ ” recalls CEO Bill Ames. After failing to recruit key hires because of Gobosh’s base in the Valley’s deep south, Ames took a tip from competitors and opened a satellite office. Several months later, its South of Market operation has grown from 3,000 to 9,000 square feet.

Another San Jose startup, Ten Square, has similar battle scars. Steven Bustin, senior vice present of media services, spent months unsuccessfully trying to convince interactive media ad and sales reps to get in their cars and commute south. The interactive point-of-sales broadcasting company now hopes to get its City satellite office up and running by December 1. Predicts Bustin, “If the job market remains tight, San Francisco will become an even bigger digital media competitor, as well as Oakland and Emeryville.”

NV Club, San Francisco, Thursday night, 7 p.m.

With City dot-commers giving Silicon Valley such a bad rap, it was time for me to go hang at ground zero and scope out the City scene myself.

“These are bondage pants and a bullet belt.”

Off to the side of the NV Club dance floor, software engineer Tony Davis is giving me a lesson in punk rock casual, a fashion look which begins with Davis’ “liberty spike” hairdo — neatly sculpted spikes reminiscent of a liberated Conehead. Davis’ body is encased in black, a few chains and, of course, his bondage belt. “You have to have one in case some girl wants to chain herself to you.” So far, no takers.

Stephanie invited me to tag along to this South of Market club for one of the City’s famed dot-com launch parties, with their free food, booze and dancing, although she warned that since the stock dive, the days of three or four weekly launch extravaganzas have waned. “It was fun while it lasted,” she sighs, noting that galas now are more stripped-down affairs. I scan the bar and buffet tables at this Sega.com party. “How does this one rank?” Robesky checks out the food, then sizes up the bar’s selection of alcohol. She nods approval, “Not bad.”

She starts networking, so I cruise the room and end up chatting with Mr. Bondage, who lives in Oakland and commutes to MacroMedia in San Francisco. Tony Davis boasts that he’s turned down repeated offers from San Jose-based Adobe Systems. “What would it take for you to consider living and working in Silicon Valley?” I ask. He gives his bondage chain a cocky twirl. “$210,000 — that’s 30 percent more than I’m making. Give me enough money and I’ll tolerate the boredom.”

I circle back to Robesky’s 20- and 30-something pals, who tell me that when recruiters call, they don’t even consider out-of-City offers. “The Valley’s okay for someone who wants to buy a house and a dog,” explains 31-year-old Natalie Hansen, a Web developer and Santa Clara native who’s hooked on the City’s lifestyle. (She owns both a Noe Valley house and a dog.) “Here it’s all about diversity and individuality,” she schools me. “Silicon Valley guys went to fraternities and never left their circles. They’re very safe and average.” She spits out “average” like a sip of rancid latte. Hansen’s remarks prompt a discussion about Valley men who, they agree, lack punk magnetism. Hansen sums up their sentiment: “Guys in the Valley have dockers and polo shirts. It just doesn’t cut it.”

The party’s still going strong three hours later, when San Francisco’s very own Willie Brown strides through the crowd with the bravado of a launch party veteran — which he is. Da Mayor slaps Sega executives on the back like long-lost contributors. When I ask about his City’s impressive Internet success, Brown puffs out his chest and smiles like the devil. He begins modestly. “The folks escaping Silicon Valley have found their way to San Francisco just the way I did when I escaped Texas.”

O’Brien: “What do you think of the Valley lifestyle?”

Brown: “The Valley is for people who need rehab.”

O’Brien: “The night life?”

Brown: “Nonexistent!”

O’Brien: “Restaurants?”

Brown: “Nonexistent.”

When I tell San Jose Mayor Ron Gonzales what his City counterpart has said, Gonzales fires back, “The mayor needs to get out of that foggy city and come down and enjoy the sun. San Jose is the capital of Silicon Valley.”

San Jose’s former mayor joined in the Brown-bashing. “Willie Brown knows as much about Silicon Valley as he does about Outer Mongolia,” snorts Tom McEnery, who points out that Brown rarely graces Silicon Valley with an appearance — except for political outings.

Downtown San Jose, Sunday morning

After my night at the NV Club, I figured I should check out San Jose from a Gen X-er point-of-view. My first call was to my niece, Rachel Garb, a 31-year-old executive producer for Ten Square, the San Jose Internet start-up.

Since 1991, I’ve watched Rachel wrestle with where to live. San Francisco was her first choice. But she didn’t want to reverse-commute to the Valley, so she rented an apartment in Los Gatos, which she loved. The vibrant downtown bars, cafes, music spots and shops are alive with young techies.

Two years ago, she almost moved to the City. But the salaries weren’t competitive with South Bay offers, which meant Rachel couldn’t afford her dream — a spacious one-bedroom apartment without roommates. Then, she saw an ad for a new condo development in downtown San Jose, around the corner from the Tech Museum and other symbols of San Jose’s renaissance, including the San Jose Repertory Theatre and late-night music clubs in the SoFa district.

“I was bowled over. It had all the amenities I wanted, and there was lots to do. Movies, coffee shops, museums and parks — right in the immediate area,” Rachel recalls. She snapped it up a few days later, gambling that the planned renewal of the downtown would attract more young singles like herself — the kind of growth that would make her $266,000 condo a shrewd investment. A year-and-a half later, the condo’s estimated value is $330,000. And, Garb has an unheard-of Valley commute: a 10-minute walk to the office. When City friends visit, her comfortable lifestyle sparks a smidge of jealousy. “They’re surprised about how nice downtown San Jose is compared to what it used to be” she says.

On the morning that I visited Rachel with my husband and daughter, the smell of Gyros is wafting over Park Avenue, where stalls for 350 culturally diverse artists have replaced cars for the annual Tapestry Arts Festival. Rachel steers us through the middle-aged family crowd to the crafts booths. “These are mostly suburban folks. Downtown San Jose isn’t a real city yet,” she observes, noting that on Saturdays and Sundays, the weekday workers have disappeared and streets are relatively quiet.

Okay, maybe San Jose is a work in progress. So what if there’s no wild launch-party scene. Compared to the City’s pallid dot-com set, the Valley’s Gen X- and Y-ers have embraced a downright healthy lifestyle. Amy Armock, an art director at Yahoo!, is the original Valley action girl. Married, 31, with no kids, she’s a San Jose State grad who lives in Campbell and likes to play hard. On any given evening or weekend, you’ll find Armock either mountain biking, surfing or sea kayaking. She loves spending an afternoon wandering through Valley art galleries and museums — an art scene that didn’t exist just a few years ago. For a night on the town, she heads to either Los Gatos or San Jose. “There is a scene in downtown San Jose, and Los Gatos is a hotbed on weekends,” she insists. “It’s all in your attitude.” Armock’s husband, who works at an Internet start-up, nixes any thoughts of a San Francisco move. She sums up his objections: “He says there are too many people, it’s too expensive and some places are dirty.”

And while those grungy City dot-commers are working on margaritas, Valleyites like Jody Nicewonger, a sales rep with Western Multiplex, are getting exercise. Two nights a week the Milpitas resident plays softball — Team Cisco includes many of his former colleagues. Or he takes in a San Jose Sharks or Saber Cats game. “One of the big activities here are sporting events,” says Nicewonger, who heads to First Street in downtown San Jose for post-game bar hopping and dancing at Polly Esther’s and the Voodoo Lounge.

Is he one of those dull polo shirt and Docksider guys? He says yes, adding, “I’d prefer Hawaiian shirts and shorts, but I have to have a more professional attitude.” Nicewonger offers this bit of advice to those uppity San Francisco women: “They need to be more receptive to conversation. Sometimes, they’re a little stuck up.”

Despite such glowing testimonials, all is not well for the Valley in its war for talent. Rachel should be a poster person for the new San Jose. But she still feels the City’s pull. “Every time I go to San Francisco, my heart sinks a little. There are so many people out and about.”

Rachel is growing frustrated because downtown San Jose is metamorphosing at a bureaucrat’s pace and there still are relatively few cool shops and clubs. Mayor Gonzales contends his city’s rejuvenation is on track, but it’s not fast enough for Rachel. As we walk around, she points to empty storefronts and says, “You’d think with all the people with money to spend, there wouldn’t be boarded up streets in downtown San Jose — but there are.”

To spur faster development, she helped form the San Jose Downtown Residents Association. However, Rachel worries that a change in Redevelopment Agency directors has delayed progress. “I’m used to Silicon Valley speed,” admits the Web producer.

If Rachel ultimately moves to San Francisco or another big city, it’s a defeat for those who are trying to hold onto the Valley’s competitive work force.

“We think the Valley has reached a turning point,” says Praveen Maden, the A.T. Kearney consultant who helped prepare the Joint Venture study. “We’re not saying Silicon Valley will start shrinking. The question is how much will it grow?”

While San Francisco also suffers from traffic and skyrocketing housing prices, headhunters say the City beats the Valley on several quality-of-life issues: It’s so compact that some people bike to work; there’s a good public transit network and a comparatively larger inventory of rental units.

For the Valley to better compete, the Joint Venture study warns that only fast, aggressive action — not simply more money and talk — will break the gridlock. Joint Venture’s Barrales adds that the Valley must bring its towns to life with the mix of housing, office, shops and entertainment projects — and short commutes — that are a recipe for good living. The goal is to hold on to the Rachels — and win back those who’ve moved away because of housing prices, job opportunities … or mixed marriages.

Mike Syiek is the rare Valley man who moved from downtown San Jose to the City under strenuous protest. His options were bleak: Get married to a diehard San Franciscan or refuse to move and stay single in San Jose.

“There’s nothing really culturally distinct about San Francisco,” says Syiek, a world traveler, who now is a technology recruiter with Eastridge Infotech. He finds the bay “beautiful” but he’s not a sailor and, after the bay, he says “there’s nothing much to look at.”

On the other hand, Syiek compares San Jose to another of his favorite metropolises — Los Angeles. “It’s a definite California culture with a Latin influence,” he says, getting a bit misty-eyed as talks about the laid-back charms of his former home. “Its got wide, open roads and people who soup up their cars.”

Yes, Mike Syiek is bucking all trends. He’s a geek who left his heart in … San Jose.

YOUTH CULTURE SPLITS TWO WAYS DEPENDING ON WHERE YOU ARE:

NIGHT IN THE CITY

status: single, a few years out of college

what they wear: designer grunge

where they network: over lattes at Circadia or another cool SoMa cafe, at flashy launch parties and 3 a.m. dancing at the Elbo Room

how they live: overpriced flats with multiple roommates, near mass transit

what they want: to own the favored post-IPO toy — the BMW Z3 two-seater convertible

attitude: City dot-commers disdain what passes for Valley fun. Softball games? Girls’ nights out painting pottery at the ceramics shop? “We don’t know what those people do!” says a 30-year-old web designer, hastily adding, “Don’t quote me. I still have friends there.”

DAY IN THE VALLEY

status: married (or married to their computers)

what they wear: polo shirts

where they network: over Il Fornaio lunches, the Malibu Grand Prix race track and SoFa dance clubs on Friday nights

how they live: suburban tract houses, trips to Fry’s, mowing lawns and starting families

what they want: to own the favored post-IPO toy — the BMW Z3 two-seater convertible

attitude: geeks who program through the night confess they’re baffled by the City’s much-hyped scene. “Not everyone understands what to do with the city,” confides one Valley tech superstar who requested anonymity. “After the wharf and the water, what’s there to do?”

INTERNET MAGNETS: A new report by Joint Venture: Silicon Valley Network found an increasing number of specialized “Internet clusters,” focused around key technologies, developing not just in the United States, but globally. While Silicon Valley still is the key hub incubating innovation across all high-tech sectors, researchers warn its continued dominance is not guaranteed as competing regions grow.

CITY, NICKNAME, SPECIALTY

Atlanta, Capital of the New South, Telecom and wireless

Austin/Dallas, Silicon Hills, Business-to-business exchanges, enabling technologies

Boston, Route 128, Spans all segments

Chicago, Silicon City, B-to-B leveraging the city’s industrial expertise

Los Angeles, Digital Coast, Content services and alternative media

Miami, Silicon Beach, Hub for firms targeting Latin American countries

New York, Silicon Alley, Financial services and new media

North Carolina, Silicon Triangle, Broadband infrastructure and applications

San Francisco, Multimedia Gulch, Digital media, business-to consumer

Seattle, Silicon Forest, Software and e-tailing

Washington, D.C., Silicon Dominion, Telecom and wireless

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