Waking the Giant

The Silicon Valley tech economy has always been an intricate, bigger-than-life ballet. Creative giants dance with technical geniuses and make the impossible possible. Visionary financiers and high-stakes gamblers move in perfect concert. None succeed without the others, and when it all works together, the result can be breathtaking.

That's how it was three times before, most recently in the enchanted early months of 2000, when the tech-heavy NASDAQ index peaked at 5048, choice billboards along the Highway 101 tech corridor were renting for $80,000 a month, and San Jose's Cisco Systems briefly reigned as the most valuable company in the world. The ballet looked more like a frenetic break dance that year as valley companies held 95 initial public offerings.

Then the music stopped. The NASDAQ today is about one-third of its peak value. Tech-corridor billboards now rent for $30,000 less than they did. Even mighty Cisco is struggling, and valley companies managed only 10 IPOs in 2002. Valley commute times are down, but only for the people still employed, and it's hard to spin that into a positive. The choreography of the boom became the chaos of a bust in the years since it all crashed. The Silicon Valley wasn't the only place that felt the impact; it also reverberated in the tech centers around the country that had stepped to the valley's tune.

Today, three years after the fall, there are glimmers of hope in Silicon Valley. Not only has the place proved its resilience time and time again, but it also is still home to many true believers. In this special issue, we touch on new technologies that could turn things around and focus on the people in whose hands the future rests--the innovators and entrepreneurs who give birth to ideas, the funding "angels" who provide the seed money, and the venture capitalists who provide the truly huge bucks. We start off, however, with a look at the place itself, the shrunken Silicon Valley, and the survivors struggling through the toughest stretch in tech industry history. For the most part, we found them dusting themselves off and ready to dance once more, waiting only for the music to start again. --Martin J. Smith

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