My friend Luigi called recently, asking me to dinner. For a variety of reasons, the first date fell through, and then I totally forgot the next time, standing him up. Luigi is gracious, however, and we tried one more time. He really wanted to talk to me. Luigi is an Italian engineer who came to Silicon Valley many years ago, worked hard to start and build a company, then sold out to enjoy his success. He lives in a rich community in a fine home, and has another home in Europe. Luigi is a very smart and very interesting fellow, and he had something quite specific on his mind. What could it be?

In Silicon Valley, pretty much all people think about is technology and business, so I assumed Luigi had one topic or the other in mind. Either way, there was probably a deal involved. He had an investment opportunity for me, or maybe a new company. There was some deal on Luigi's mind that he wanted to discuss with me.

Wrong.

Luigi wanted to talk about materialism. "I go to parties in my neighborhood and all everyone talks about is money," he said. "I have neighbors who are venture capitalists. They already have more money than they can ever spend, yet they work constantly for that next dollar. What kind of life is this? How did we get this way? Is it like this everywhere in America or just here? What is wrong with us?"

Of course, I was embarrassed. Just like the neighbor VCs, I was thinking only about money, while Luigi was thinking about quality of life. I am as guilty as the people he mentioned. Somehow, I had fallen so easily into this trap of reading the business section first, of going back to work after dinner, of thinking too much about the next great technical opportunity and not enough about, well, anything else. "How did we get this way?" Luigi had asked. It was a good question, and I hope this column presents at least part of the answer.

For one thing, it doesn't have strictly to do with money. In the high tech enclaves of Seattle, Silicon Valley, Texas and Utah, it is much more important to be smart than to be rich. Knowledge literally is power, while money is, well, just money.

"Having money is great, but this industry is driven by success. Society in the Valley is connected through technology, not money," said Judy Estrin, Chief Technical Officer of Cisco Systems.

The grayest of high tech's gray heads agrees. "We learned long ago that knowledge was more important than a corporate title," said Intel founder Gordon Moore. "It was important to put the power in the organization where the knowledge was, so that's what we tried to do."

Knowledge is something these newly rich people understand better than they do the money that knowledge helped them earn. That's because they have spent a lifetime seeking education and experience, but may have only lately stumbled over a pile of dollars following a company IPO or buyout. "We were the kids from the A/V club in school, the dweebs and nerds, but now we have the power," explains Christine Comaford, head of Artemis Ventures, a San Francisco venture capital firm.

Having power, in this case, means several things. It means staying near the source of knowledge — the source of power — which means Silicon Valley or Seattle, or wherever the technology lives that everyone wants to exploit. These people have a passion for technology, and making a lot of money doesn't change that. They continue to be driven. Being part of the game requires staying connected. Pull out, and you lose your connectivity. It isn't enough to talk on the phone or communicate over the Internet. These people have to be physically in the same place, bumping into each other at lunch and doing deals. And having power also means ignoring the money, a very '90s thing.

"Having money has made my life a bit more comfortable," said Estrin. "I fly first class, have fulltime childcare and don't have to budget much. That's it."

"There were stories back in the 1980s of conspicuous consumption," recalls Ann Winblad, general partner at Hummer-Winblad Venture Partners in San Francisco. Hummer-Winblad is one of the most successful venture capital firms anywhere. "There was the Eagle Computer guy who died in his Ferrari on the day of his IPO, and the Phoenix Technology founder who backed Broadway shows. But that was a long time ago. Today everything moves too fast. If you take time to buy a boat, you lose your place. It's an industry on steroids. We have a hive of worker bees. But where is all this money? It doesn't show. In part that's because a lot of it is not liquid. It's tied-up in one company's stock."

It is also money that can go away as quickly as it appeared. "What if it all goes away? I count on that," says Jerry Fiddler, a lanky academic who is cofounder and chairman of Windriver Systems, a maker of operating system software for embedded systems. Windriver is the Microsoft of code that runs on your car's engine computer, for example, or in some piece of medical equipment. "History shows that lots of people lose it, so learning to count on assets is a big mistake. I live in a better house, but it is four blocks from my old house. I drive a better car, but not that much better. For the most part, having money has only complicated my life."

Like nearly every other rich person in this story, Jerry Fiddler didn't start his company to get rich. "I was at Lawrence Berkeley Laboratory and getting tired of government work. My background was in music — I was trained as a composer — and musicians like to play for the biggest audience they can find. Well, at LBL, my stuff was being used by three people — it was a very small audience. Then Reagan was elected, and it became clear there would be no more peacetime research at LBL, so I left. I wanted to have more personal freedom and I wanted to do some computer music, which back then you had to do by first building the computer. So I started a consulting business that would allow me to get some gear. But somehow I never did any computer music. Instead, I built a company."

This is key: They build companies, not fortunes. Besides, money comes and it goes — especially high tech money that is generally associated with equity in a company that has just gone public. Some high net worth individuals aren't really worth as much as they think. Their wealth is temporary. Unfortunately, they sometimes forget that. Plot the ups and downs of any of these fortunes and it looks like a roller coaster. Steve Jobs, for example, has gone in 25 years from zero to $600 million during the best days at Apple, almost back to zero during his worst days at NeXT Computer, then to more than $1 billion at the Pixar IPO.

When they buy houses, the high tech founders seem to go for substance, but not extravagance, which doesn't fit the typical lifestyle. And there just aren't that many great houses available. "There is no real estate left to buy without leaving the Valley, and nobody can risk doing that," says Winblad. "So there will be no big estates."

This trend away from really big houses extends to Seattle, too, where Bill Gates is the alpha male. Nobody can have a house bigger than Bill's.

In high technology, having a high net worth typically doesn't mean having a high income. The money is usually hard to get to, and frequently, it just goes away. It's not anything that careful people come to count on. So the fixation is on building companies and not being poor, rather than on building empires and being rich.

This part can't be emphasized enough. Most high tech wealth has very humble beginnings. It's rare for a high tech millionaire to come from a wealthy background. Usually, these are the first people in their family to have any money to speak of. And the companies, themselves, often are started with nothing more than a credit card. Ann Winblad started a software company in Minnesota in the early 1980s and used food stamps to help fund it.

"I held three jobs in college," she says. "I practiced crying spontaneously so I could get a loan from the bank to buy our first computers. I used food stamps to feed the programmers." It must have worked, because Winblad eventually sold that first software company and moved to California with $6 million. "I earned enough money to leave. I learned that winter is optional. When I was growing up, talk about money in my family was all about making ends meet. Well, I don't ever have to "make ends meet." I can either work or play, and everything in between just happens. It's a whole different lifestyle than making ends meet. I think of my five nieces and nephews. If they need something, I can just write a check. There was nobody around who could write a check for me."

What it means to most successful high tech people is their parents won't end up in a home. They can write a check for their kid's braces. They can take the whole family to Hawaii for Christmas. All this seems extravagant to normal people, but it is not how real rich people live. For a lot of people, this is a once in a lifetime situation. Some people are just banking it. It's amazing how much money there is. If people were doing it for the money, half of the software industry would be retired. They are still in it because the race isn't over.

And having made their money, most of these people don't give much of it away. Maybe it's because they are young. Maybe it's because they just don't have the time to decide between one cause or another. Or maybe it's the Libertarian ethic that underlies much of high technology. The effect is that there is not much of a philanthropic tradition, though that is likely to change as the rich get older and broaden their view.

"This is unique," says Ann Winblad. "Here we have a generation of wealthy people who earned their money by themselves doing what they wanted to do. They are a generation of broken type As, creating companies from scratch with nothing to start from. It's hard to break that spell."

They don't spend their money and they don't give it away. Their wealth is typically tied-up in equities they can't easily sell. So how do these people express their success? By doing it all over again. These people don't have hobbies. They don't read books or paint or travel. They do this. They have nothing else to do. There is no way out.