As blind faith in the infallibility of high-tech companies falters, the era of unrestrained growth in the Valley may be over.
The deception began with the absence of smokestacks. There were squat vents on the roofs of high-technology companies instead of the steel mills' black-belching pipes to the sky. There was no smoke. Sure, once in a while the people who lived around the plants would smell something like bleach or ammonia, and occasionally they would see oddly colored steam. But generally, the residents of Santa Clara County didn't worry. After all, it wasn't as if they were living next door to Hooker Chemicals.
Besides, there was this feeling that the low cement-and-glass buildings were sheltering a technological and economic revolution. People kept hearing about talking calculators and companies that were taking on IBM. They saw the Mercedes and the Ferraris and the new houses being built in the hills. Their kids played with little Apple computers at school. Their neighbors went to work dressed like students and worked out at corporate swimming pools and gyms. Even the entrepreneurs rolled up their sleeves, loosened their ties, and expected everyone to call them by their first names. Steven Jobs, just a kid, one of the founders of Apple Computer Inc., made the cover of Time magazine. The whole country was swept up in this high-technology entrepreneurial movement, and the heart of it was right in their own backyard, among the tract houses and the Spanish-style shopping malls in the 1,351.9-square-mile valley located 47 miles south of San Francisco that had become known as Silicon Valley.
The cities in the Valley -- Palo Alto, Sunnyvale, Santa Clara, and San Jose, for instance -- decided that they liked this high technology. They zoned more land for industrial development. They built new sewers and roads. They supplied the power, the water, the direct labor force, and the bright young engineering graduates from Stanford, Berkeley, San Jose State, and the University of Santa Clara.
The entrepreneurs used these resources to build the densest concentration of fast-growing, highly profitable technology companies in the world. They thought of Silicon Valley as not only the geographical but the spiritual center of high technology. It was where Lee De Forest perfected the vacuum tube and William Hewlett and David Packard first set up shop in Packard's garage. William Shockley started Shockley Transistor Corp. in Palo Alto, and Shockley alumni begat Fairchild Semiconductor and at least 40 other companies. The Valley nurtured a $40 billion industry, and it became the home of its stars -- Bob Noyce (Intel), Jimmy Treybig (Tandem Computers), Jerry Sanders (Advanced Micro Devices), Nolan Bushnell (Atari), and Ken Oshman (Rolm).
The newcomers, and there were many, liked the weather, the ocean, the nearness of San Francisco. But above all, they thrived on the faith held by bankers, public relations firms, venture capitalists, suppliers, and even their neighbors, that things happened in Silicon Valley, that this was where people made it. "There's a sense of being pioneers here," says Mark Leslie, president and one of the founders of start-up Synapse Computers Corp. "I view myself as the kind of guy who would have been living in Detroit in 1910. The future depends on high technology, and we are spearcheading it."
It is difficult to say just when the unquestioning optimism and enthusiasm ended, when people began to suspect that the growth had been too fast, that technological wonders and millionaires in shirt-sleeves weren't going to solve the Valley's problems, and, in fact, created some of their own.
While the entrepreneurs focused on growth and squeezing more bits on chips, a dairy became a computer graphics company, an onion field the site of a mainframe manufacturer. Since 1950, 85,000 acres of fruits, nuts, berries, and vegetables have become shopping malls, parking lots, electronics companies, and condominiums. As the freeways filled with cars, the hills grew hazy behind the smog, and the driving time of some six-mile commutes lengthened to 45 minutes. In September 1979 the classified advertising section of the San Jose Mercury News swelled to 93 pages, and not all of the jobs could be filled. Young engineers from Ann Arbor and Madison began turning down job offers in the industry's heartland. Toxic chemicals were found in public drinking water. Employees stole chips and circuit designs and sold them on a high-technology black market. Some of the stolen goods and processes even made their way to the Soviet Union.
There were stories in the local papers about the traffic, the cost of houses, and the theft of chips, but, at first, many were dismissed as the hysterics of the press. The problems just didn't seem that serious. Surely, the entrepreneurs reasoned, a little traffic was a small sacrifice for the jobs, the new improved pacemakers, and the computers that didn't fail. They could solve the problems with car pools and sabbaticals and better chips. But car pools and sabbaticals weren't solutions. They just helped the companies cope. The same characteristics that enabled the entrepreneurs to build companies -- optimism, singlemindedness, a focus on the future, faith in American technology -- kept them from turning their considerable problem-solving skills to what was really happening to the Valley that for many had been so supportive.
Rafael Rodriguez had always wanted to live in California. As a kid growing up in New York City in the '60s, he had heard about the Beach Boys, surfing, tanned easygoing people, the low crime rate. Soon after completing his studies at Pratt Institute in electrical engineering, he flew out to the West Coast to interview for jobs. In New York City he knew of only three or four companies that were actively seeking young engineers. In California he saw jobs advertised on billboards. After interviewing with corporations up and down the coast, Rodriguez accepted an offer from Watkins-Johnson Co. in San Jose for an engineering position that paid $26,500 a year.
