New York times
MENLO PARK, Calif. — Wealth is here if you know where to find it.
Fabulous home theaters are tucked into the basements of plain suburban houses. Bespoke jeans that start at $1,200 can be detected only by a tiny red logo on the button. The hand-painted Italian bicycles that flash across Silicon Valley on Saturday mornings have become the new Ferrari — and only the cognoscenti could imagine that they cost more than $20,000.
Even at Facebook, ground zero for the nouveau tech riche, peer pressure dictates that consumption be kept on the down low.
“The message here is, ‘Keep shipping product,’ ” said a Facebook executive who requested anonymity while discussing internal matters. “If someone buys a fancy car and posts a picture of it, they get ridiculed and berated.”
The company disclosed on Thursday that on the eve of its stock market debut it was inviting employees to a hackathon, or marathon programming session, bringing new meaning to the term overnight millionaire. The event is more likely to be fueled by Red Bull than Dom Pérignon.
Make no mistake. In this, Silicon Valley’s gilded age, money is chasing money. Lucrative salaries and stock options are dangled to recruit or hold onto engineers. The shares of established companies like Apple have soared. And Facebook itself has turned to Wall Street for a vast infusion of fresh funds.
But here in one of the richest corners of the country, the tech elite display an ambivalent, sometimes contradictory approach to wealth. Money, as one scholar of the Valley described it, is treated as a measuring stick, gauging the power of the companies that entrepreneurs have built, rather than a thing to display.
“They use it as a way of keeping score — how disruptive can you be in reordering the market,” said Ted Zoller, a senior fellow at the Ewing Marion Kauffman Foundation and a scholar of entrepreneurship.
Money, of course, still matters deeply to this crowd. “It is a means to do more, to make more money and ultimately build more,” Mr. Zoller said.
The one money matter that most Internet millionaires talk about openly is what start-ups they are investing in next. Expect many more such investments from Facebook executives. Indeed, that might be where the biggest chunk of their new wealth will go.
Off the corporate campuses and out of public view, it seems, there is little anxiety about spending. Friends of Facebook employees say that they have talked about buying houses, of course, but also planes — a seaplane even — and works by popular artists like Banksy, whose pieces can sell for hundreds of thousands of dollars. Just do not expect them to post about any of that on their Facebook pages.
To understand the contradictions of moneymaking in the Valley, it is instructive to look at another landmark public offering: Google in the summer of 2004. Just before it went public, a senior manager holding a baseball bat lectured a roomful of Google employees: Anyone who dared show up to work in a flashy sports car would soon find its windows shattered. The story is part of Valley lore. But it is also well known that the company’s three top executives have a collection of eight private jets, parked in a NASA hangar.
Some tech celebrities, of course, are known for being flashy. Both Lawrence J. Ellison, chief executive of Oracle, and Sean Parker, an early Facebook executive, have storied, lavish lifestyles. But there are many more who stick with the conceit of understatement. Jack Dorsey, a co-founder of Twitter, favors $1,200 bespoke jeans from a designer called 3x1, with the subtle button logo. And Sheryl Sandberg, Facebook’s chief operating officer, is building a house in exclusive Menlo Park — much of it underground, hidden from view.
Mark Zuckerberg, Facebook’s chief executive, sets the tone at the company with his trademark rumpled hoodies that display no obvious brand name. He spent $7 million on a large but nondescript home in Palo Alto, a suburb so expensive that even a small, no-frills house easily goes for $1.5 million these days.
In a letter to would-be shareholders when the company filed to go public, Mr. Zuckerberg summed up his corporate philosophy this way: “Simply put, we don’t build services to make money; we make money to build better services.”
Although he has not articulated it with an office memo or a baseball bat, it is understood, say Facebook employees and their friends, that Mr. Zuckerberg would find it uncool for one of his underlings to drive a Lamborghini to the office.
“It’s almost an unspoken rule: spend your money, but do it privately,” said one person who knows Mr. Zuckerberg and others at Facebook socially but did not want to be named before the offering.
Andrew Rachleff, a former venture capitalist turned wealth manager, estimates that the Facebook offering will create somewhere around 1,000 millionaires, most of whom will make something in the $2 million to $5 million range. Much of the money he has gathered so far for his company, called Wealthfront, is from young techies at firms like Google, LinkedIn and Facebook, which ahead of its public offering has allowed employees to sell shares on secondary markets.
Mr. Rachleff’s aim is to reach out to that Valley demographic — young, good at math, uncomfortable with professional money managers — and make their money grow. He has already run into one glitch: “They all hate that word, ‘wealth.’ If there was one thing I’d change, it would be our name.” (The company’s previous name, Ka-ching, as in the sound of an old-fashioned cash register, seems to have been just as ill-chosen.)
The two counties that make up Silicon Valley have some of the highest concentrations of wealth in the country, and the share of wealthy households is growing, according to the census. Nearly 14 percent of all households in Santa Clara and San Mateo Counties earn more than $200,000 a year, just below the 16 percent of households in Manhattan.
Still, one of the parlor games here is the effort by many to distinguish themselves from the much maligned coterie of bankers and other members of the 1 percent in places like New York and Boston. Wingtips and silk ties are rare. Cycling and kite-boarding are preferred over golf.
Bill Gurley, a venture capitalist in Menlo Park, tells what happened when he began working as a Wall Street analyst in Manhattan in 1993, fresh out of business school. A colleague turned his tie over to check the label. “My first day at work,” Mr. Gurley recalled, “I was told to replace all my ties with Hermès and never to wear brown shoes again.”
He did not heed the advice. Nor did he last long on Wall Street. He is a partner now at Benchmark Capital, which recently profited handsomely from Facebook’s $1 billion acquisition of Instagram.