SPENCER MICHELS: A few months ago Barry Parr quit his job designing Web sites at a high-tech firm in Northern California. Now he's unemployed, living in Silicon Valley, and not very worried about his future.
BARRY PARR, Job Seeker: Companies are expanding. 3 Com has a huge campus; Sun just built an enormous campus; Cisco is buying a huge amount of space in San Jose; and so the bit companies are expanding quickly and smaller companies are kind of moving in to fill up the spaces that they've left behind.
SPENCER MICHELS: Parr has every reason to be optimistic. Silicon Valley--that 50-mile-long stretch of real estate south of San Francisco, home to 7,000 electronic and software firms--is in the midst of a production and employment boom that places it in the forefront of the U.S. economy. The Department of Commerce recently reported that Santa Clara County, where Silicon Valley is located, now leads the nation in exports, outpacing New York and Detroit. Exports have grown 81 percent in three years and make up 5 percent of the U.S. total. Today, high-tech accounts for 45 percent of U.S. industrial growth. Even the economic crisis in Asia has hardly been felt here yet, though it is being carefully watched. At Cisco Systems--where they make devices to connect computers with each other and with the Internet, in other words networking, Chief Executive Officer John Chambers says the valley is riding high.
JOHN CHAMBERS, CEO, Cisco: I think you're in what I would like to refer to as the Network Technology Revolution. It will have every bit as much impact on our country and the changes in society as the Industrial Revenue of almost 100 years ago.
SPENCER MICHELS: A major leader in this overheated Silicon Valley economy has been Intel, designer and maker of microprocessors or chips, the brains of a computer. Every year, those chips have gotten more powerful, and the rest of the valley has produced software that can take advantage of that power. Abram Miller is director of business development for Intel.
AVRAM MILLER, Vice President, Intel: I think that the technology of Silicon Valley, the technologies of Intel, which are semiconductor technologies, are really the fuel for the 21st century. We're really in the very beginning stages of learning how to apply this type of technology to the economies worldwide.
SPENCER MICHELS: Cisco's CEO points to his firm as an example of how innovation and brain power--playing off the power of semiconductors--have led to incredible growth, high paying jobs, and a worldwide impact.
JOHN CHAMBERS: We were a company with only $70 million in sales just seven years ago, and today we are at $6.5 billion in sales. Approximately half of that is exported outside of our country. If you look at the economic impact on our employees, the average salary here at Cisco is $70,000. We give stock options to everybody in our company, and the average employee who's been with us for over a year has an appreciation in there and exercise stock options of over $150,000.
BARRY PARR: I've got a meeting over in Palo Alto at 10--
SPENCER MICHELS: With those kinds of rewards possible, Barry Parr enjoys looking for a new job. He has posted his resume on the Internet and has had what he calls a remarkable response, though, as yet, no job.
BARRY PARR: There are about--oh, I don't know--about a dozen Web sites online where you can actually for a job. For example, if I want to look at this vice president of the marketing job, I can click here and there's a description and an E-mail address that I could actually send my resume to.
SPENCER MICHELS: It even lists the salary there, doesn't it?
BARRY PARR: Yes. The salary range on this one is $100,000 to $125,000 a year plus a bonus.
SPENCER MICHELS: Is that high or low?
BARRY PARR: I'd consider that job.
SPENCER MICHELS: You'd consider that job.
SPENCER MICHELS: The need for top personnel is so acute in Silicon Valley that this firm, Netscape, has posted signs in its hallways and has promised rewards for its employees who bring in key workers. Netscape is an Internet software maker which didn't exist three years ago but now employs 2300 people.
SPOKESMAN IN MEETING: It appears that by hook or crook we were within 3 to 5 percent of the--
SPENCER MICHELS: Netscape is locked in a monumental battle with much larger Microsoft over Internet browsers. The company was co-founded by 23-year-old computer scientist Marc Andreesson who is now 26 and looking for new employees.
MARC ANDREESSON, Netscape Co-Founder: Netscape needs to find smarter, more and more smart people. We increasingly need to go look at acquiring other companies in order to get those people.
SPENCER MICHELS: Are you saying that you would acquire a whole other company, even though you don't care about their product, just to get access to their personnel?
MARC ANDREESSON: Absolutely. Yes. Recruiting is our biggest challenge, and it's the biggest challenge of most of the companies in the valley. So if you want them to leave their startup where they've got stock options to come to work for you, you probably have to buy their company.
SPENCER MICHELS: Pluris is one of those startups, housed in a nondescript Silicon Valley building. It's a three-month-old company and not yet the object of a takeover. Inside, nine employees are working on a software idea to speed up Internet connections by several thousand times using a device called a router. For every Cisco and Netscape that graduates from startup to established company there's a new flock of starts poised to expand.
VADIM ANTONOV, Pluris: There is no such thing as a genius in one area.
SPENCER MICHELS: Vadim Antonov funded Pluris after emigrating to Silicon Valley from Russia. He was told he'd never find financing for his idea, but eventually Gill Cogan, a venture capitalist with Weiss, Peck & Greer, helped arrange $3 million in capitalization.
GILL COGAN, Venture Capitalist: What you're seeing with Pluris is at the very high end o the risk spectrum because it's a startup; they're just beginning to grow; they don't have any management in place yet--they have a very good, strong group of technical people--and so the risk for a company such as this is quite high; however, one of the things that the venture groups bring, in addition to the capital, is the management and the ability to recruit additional people. And so, over time, that risk, if we all do our parts, gets reduced.
SPENCER MICHELS: Thirty-two-year-old Antonov embodies the optimistic spirit of the valley. He calls himself a citizen of the People's Anarchy of the Internet, and he says the Internet is driving the demand for computers, software, and telecommunications.
SPENCER MICHELS: You came from Russia. Did you know about Silicon Valley before you came here?
VADIM ANTONOV: Yes, of course. Everybody knows, at least everybody who knows anything about computers. It probably is the best place in the planet. It's the best climate; the best food; and the most interesting people.
SPENCER MICHELS: And what about for the work you want to do?
VADIM ANTONOV: For any serious computer person going to Silicon Valley is like going to Mecca for a Muslim. It's like the place where you have to be.
SPENCER MICHELS: The question is: Can Silicon Valley maintain that kind of atmosphere? Until 40 years ago, the Santa Clara Valley--as it was called--was sparsely populated and agriculturally based. The surrounding hills were rural, with an occasional estate here and there. The economy consisted mainly of orchards--prunes and apricots. Today there's hardly an orchard to be found. This one will soon be gone. The fruit trees have been replaced with homes, apartments, and condos, which are usually sold before they're built. Home prices jumped 14 percent from a year ago and now average more than $315,000. The area's new millionaires have bid up prices as well for extravagant executive houses that dot the hillside surrounding the valley.
BARRY PARR: The prices are scary and the process is scary as well. I mean, that, you know, a house will go on the market, and you've got make an instant decision about whether or not you want to buy it and how much you want to spend for it. I mean, it's more like an auction atmosphere than it is like, you know, any other kind of market.
SPENCER MICHELS: Whether the boom that is causing those high prices will last and for ho long is what the gurus of this valley and their investors must calculate. Plus, they must cope with the gyrating stock market and, more recently, ailing Asian economies. Continuing problems there could eventually cut into Silicon Valley exports. The giant chip maker, Intel, had sales of $21 billion last year and profits of $5 billion. But in the last quarter those figures were lower than anticipated, causing stock prices to fall. More recently, Intel's stock fluctuated wildly, like the rest of the stock market. Nevertheless, Intel's Abram Miller points to the company's growth of nearly 20 percent a year as evidence of the boom continuing.
AVRAM MILLER: I don't see an end to this boom. I think that first of all because we're inventors, we're working with raw material, it's like, you know, it was like the discovery of electricity and the use of electricity, or oil, or, you know, gas, or anything. We have a fundamental thing, but like nothing else that's ever existed, fundamental demand for Silicon technology, for microprocessors, is virtually insatiable.
SPENCER MICHELS: But Netscape's Marc Andreesson isn't so sure.
MARC ANDREESSON: I think we do wonder if and when the current boom, which has been sort of far in excess of anyone's expectations, will at least taper off a bit.
SPENCER MICHELS: Andreesson says that today's chips may be powerful enough for most uses, thereby slowing down demand for microprocessors. He also is worried that the bubble could burst as venture capitalists back too many startups.
MARC ANDREESSON: There's a very limited number of good ideas coming out every year, and then there's a very limited number of really skilled managers who are capable of building companies, so your typical venture capitalist these days is having trouble finding enough good deals to put money into.
SPENCER MICHELS: But it's the optimists who point to the fact that every week 11 new companies join the thousands already here that want to take part in this new industrial revolution.