March 2002

Now that Silicon Valley's stock no longer rides so high, we can say what we always thought: it is not all it's cracked up to be. Despite press hype, immigration, and an extraordinary infusion of venture capital during the boom, Silicon Valley never made it as a world city.

To be sure, San Francisco, the city at the northern end of Silicon Valley, is picture-postcard pretty. The restaurants are exceptional. Within easy reach of the city, there is hiking in Marin, skiing in the Sierra Nevada, sailing in the Bay. The area has, in Berkeley and Stanford, two world-class universities. It is the leading centre for the world's newest industries, software and biotechnology.

Nor does anyone deny that Silicon Valley is an amazing commercial success story. The region is home to blue-chip corporations such as Intel, Oracle and Hewlett-Packard; and to the densest concentration of venture-funded startups in the US.

Until recently, this business miracle was enough to sustain Silicon Valley's reputation as one of the world's leading business centres. A typical example of the hype: for Frank Quattrone, the CSFB banker behind some of the most lucrative and controversial public offerings of the boom years, Silicon Valley was "God's own country."

Rubbish. And now I, and Silicon Valley's formerly muzzled critics, can say so without being told: oh, you just don't get it. Strip off the gloss of transient boomtime wealth, and Silicon Valley is revealed: geographically, culturally, socially flawed. It may be a fine place to work all hours getting rich, but has less to offer to those rediscovering their lives after the internet bubble.

For a start, Silicon Valley itself is a featureless jumble of suburban office parks and mini-malls, sandwiched between two freeways. There are some pleasant districts up in the hills, but even they are irredeemably suburban. I know several people for whom the prospect of leisure time in the Valley is so appalling that they keep two apartments: a crashpad close to their workplace, and an apartment up in San Francisco for weekends.

Ah, yes, San Francisco. The blandness of Silicon Valley would not be such an issue if San Francisco was a true metropolis; if there was a West End to compensate for working in Slough. But San Francisco is a dysfunctional city, and here is why.

It is ungovernable. The city of cute cable cars has abandoned large swathes of the city centre to 5,000 vagrants, mostly alcoholics, drug abusers and the mentally ill. Homeless advocates, taking San Francisco's famed tolerance to ridiculous extremes, defend their lifestyle choice. The mayor, Willie Brown, has given up. Imagine New York, before Rudy Giuliani took office, except more corrupt and lethargic.

Supposedly cosmopolitan, San Francisco is in fact a collection of separatist ghettos. Mexicans live in the Mission, Gays live in the Castro, Chinese out in Sunset, and transient yuppies in the Marina; and they avoid eachother as much as possible.

The city is entirely lacking in glamour. The old money is inbred, and the new money is too geeky. The pretty people are in Los Angeles or Miami; the intellectuals are in New York; and the carpetbaggers left as quickly as they came. San Francisco's Clift must be the only Ian Schrager hotel where visitors pitch up with their tradeshow tote bags.

Culturally, the city is still eating out on its reputation as home to Beat writers such as Allen Ginsburg. That was nearly fifty years ago now. In the meantime, San Francisco has produced Danielle Steel, and that is about it. Of the wilder writers I know, most have moved down to Los Angeles, which is warmer and cheaper and, believe it or not, culturally far more vibrant.

The Ballet is world-class, I am told, but there is something cringing about San Francisco's pride in stuffy European arts, as if it were still a raw frontier town hankering after the latest fashions from Paris.

Well, what about the alternative scene? The Yo-Yo man, a 300-pound mound of a man who dazzles with yo-yos. Where else, a San Francisco booster asked, would someone feel so free to express themselves? A typical San Francisco misconception. Personal discovery is rarely interesting and, in most normal cities, robustly ignored.

None of that would matter if one could be guaranteed a good dinner-party conversation now and again. But few people entertain. Guests are notoriously slack, calling up to say they are stuck at work, or leaving at 9.30pm because they have an early start.

And conversation tends to the bland. What passes as witty in London or New York is more likely to meet the reaction: that guy was interesting. Only in San Francisco could interesting be a term of disparagement.

The main reason: San Francisco is not a metropolis on the scale of London or New York. San Francisco city is home to fewer than 1m people; and the 5m people in the Bay Area, as a whole are dispersed. And many inhabitants are unsure whether they actually want to be a grown-up city one day: local politics is dominated by neighbourhood groups which oppose new building.

Oh, yes, and the weather isn't that great. People think California, balmy. And Silicon Valley does have a nicely Mediterranean climate. But evenings in San Francisco, which is closer to the icy ocean, are uniformly chilly; you can never sit out in the evening; and summer days in the city are too often fogbound and miserable.

So why does this matter? Well, now that instant wealth has evaporated, Silicon Valley has to compete on new criteria: transport, environment, entertainment, as well as business infrastructure.

During the boom, the region attracted thousands of highly-educated professionals from the East Coast of the US, and from Europe. And many of them are leaving because they are used to the buzz, wit, and bustle of a big city, and they are bored. San Francisco never quite achieved critical mass.

And those who will be left? The anti-social geeks, and the obsessives for whom the dream of changing the world is compensation for the lack of metropolitan amenities. The people who made Silicon Valley, in other words. As for me, Silicon Valley remains the place to build a new business, but I won't pretend any more I love the place.

Earlier Management Today columns

Feb 2002: Downward mobility

Jan 2002: Rash predictions for 2002

Dec 2001: Keeping the talent in its place

Nov 2001: Sales people are not like you and me
Oct 2001: Europe: did anything happen?
Sep 2001: It is all about timing
Aug 2001: Stop calling me a visionary
Jul 2001: Not so much a recession as an extended vacation
Jun 2001: Fucked company
May 2001: The mighty are fallen
Apr 2001: Wireless, finally, I believe
Mar 2001: Lessons from the last time round
Feb 2001: Silicon Valley comes down to earth
Jan 2001: Enterprise software, fashionable again
Dec 2000: Jaded, saved by DivX
Nov 2000: Reality, distorted
Oct 2000: Maybe there is no new new thing
Sep 2000: The tricks of raising venture capital

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