Where Normal Seems Kind of Strange

Even if you're a skeptic by nature, it wasn't hard to catch a nasty case of dot-com fever, which raged through Silicon Valley not long ago.

"Here's what you see from the inside," Po Bronson wrote in "The Nudist on the

Late Shift," his 1999 account of the valley's then-go-go culture. "We may be on the verge of the biggest growth explosion yet. . . . If this industry is driven by ideas, the fundamentals have never been better. The next five years will be the Valley's greatest boom of innovation to date."

I couldn't help but recall such heady predictions after reading Deborah Michel's story on one vestige of the valley's glory days: the fancy new Four Seasons hotel that has opened in notoriously down-at-the-heel East Palo Alto, just across the 101 Freeway from an IKEA ("So Long, Whiskey Gulch," page 20).

It is something of a strange location--as odd, in its own way, as one of those classic L.A. juxtapositions that I cherish: the mini-mall in which half the signs are in Spanish and half are in Korean, the La Brea Avenue yeshiva that's a few doors down from a barbecue joint called the Pig.

Industries that rise and fall in a flash create their own incongruities, of course: You drive to work in your Porsche in the morning; the repossessor tows it from the office parking lot in the afternoon. You were a paper millionaire last month; now you're an unemployed sap.

"Everybody lost their senses," says George Wells, who came to the U.S. from Scotland in 1960, went on to run several valley semiconductor makers and still sits on the board of QLogic Corp. "Things were just hyped to the high heavens."

The valley's comeuppance was painful--as dizzying, really, as its ascent. Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, notes that Santa Clara County suffered more severe job loss during the dot-com bust than Detroit did during the worst of the auto industry's collapse.

Slowly, though, the valley has climbed its way back to a more comfortable, if not exactly exultant, position. Levy says that wages, stock options and corporate revenues are, for the most part, strong. Restaurants are filling up again; traffic congestion is an issue once more. The hardest-hit area remains the labor market, which has recovered only about 20,000 of the 200,000 jobs shed between the end of 2000 and the middle of last year.

"There's certainly a recognition of human frailty," Levy says, "that the last few years were a payoff for all of the exuberance."

Wells, whose forthcoming memoir, "The American Dream in a Kilt," recounts his time as a valley CEO, welcomes the more sober atmosphere--a return to valuing companies by how much profit they turn, not how much cash they burn. "The madness was bad," he says. Now "there's a sense that we're back to normalcy."

Given all that the valley has gone through, that must be a very strange feeling indeed.

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