Homeless on $50,000 a Year in Luxuriant Silicon Valley
By EVELYN NIEVES
SAN
JOSE, Calif., Feb. 15 -- It is long past
midnight as the No. 22 bus lumbers down the spine
of Silicon Valley carrying
12 passengers with nowhere
to go.
The bus rolls past $1 million,
three-bedroom ranches
on quarter-acre lots, driveways
where Range Rovers
are the second car, towns
where millionaires are
minted every day. The passengers
keep their eyes shut,
or on the floor.
They have two hours to catch
a bumpy nap before the
No. 22, the only bus in
the valley that runs 24 hours a
day, finishes its 26-mile
circuit from here to Menlo
Park and back. Then they
must get off and wait 10 or 15
minutes before they can
climb aboard again, using their
$3 all-day pass for another
two-hour run on the bus
known these days, these
hours, as "the rolling hotel."
Most of them work full time.
One is a cashier at a toy
store. Another works at
a box factory. Another says he
juggles three part-time
jobs. But in the dot-com land of
milk and honey, where the
median family income,
$82,000, is the highest
in the nation (and an average of
63 people hit the millionaire
mark every day), nontech
jobs just do not pay the
rent.
With all the new money floating
around, the most
expensive housing market
in the country and the densest
concentration of investment
capital in the world, there
is no other place in the
country that offers a starker
example of the growing gap
between the rich and poor.
Stock option millionaires
bid on houses as though they
were buying Van Goghs. A
four-bedroom contemporary
in Palo Alto, for example,
that was priced at $2.2
million sold for $3.2 million,
while a one-bedroom
cottage listed at $495,000
sold for $750,000.
At the same time, more and
more working people are
becoming homeless: 34 percent
of the estimated
20,000, homeless people
in Santa Clara County in 1999
had full-time jobs, up from
25 percent in 1995. And
those figures fail to count
the growing number of
families doubled up in single
apartments, or paying
$400 a month to live in
a garage or to sleep on a
stranger's living-room floor.
And it is not just the minimum-wage
earner who is
scrambling to survive here.
More teachers, police
officers, firefighters,
commissioned salespeople -- all
people who make more than
$50,000 a year and would
be comfortably middle-class
in many other places --
are seeking the services
of area homeless shelters.
In Silicon Valley, "poor"
means a family of four
scraping by on $53,100 a
year or an individual earning
less than $37,200, federal
housing officials say. No
wonder, then, that even
some high-tech workers, those
in the entry-level jobs,
end up on the church soup lines.
"Over the last five years,
we have seen a sharp
increase in the number of
families and working poor
who become homeless almost
exclusively due to the
outrageous cost of housing
in Silicon Valley," said Jan
Bernstein, a spokeswoman
for InnVision, a nonprofit
group here that provides
300 shelter beds and serves
850 meals a day to the needy.
"More than half the people
staying in the shelter are
employed," Ms. Bernstein,
said. "They lose their
housing first, then try
to hang onto their job."
At the richest time in the
richest region in the richest
nation in the world, less
than 30 percent of the
households here can afford
to buy a house.
The median price for a house
in Silicon Valley,
$410,000, is more than twice
that for the rest of the
country. Renting is increasingly
out of range for the
average worker as well.
Two out of five valley
residents cannot afford
to rent the average
two-bedroom apartment, which
is about $1,700.
Even studios in inferior
neighborhoods cost more than
1,000 a month, and that
does not include the three
months' rent landlords typically
ask to secure an
apartment.
With waiting time for subsidized
housing up to several
years, the situation will
only get worse, housing
officials say. Indeed, the
housing burden is the main
reason why more people are
leaving Silicon Valley
these days than arriving,
according to the state's
Department of Finance.
For people who are not rich
in Silicon Valley, getting
sick or laid off or losing
a second income means
catastrophe. Tammy Morales,
a $15-an-hour dental
assistant with two teenagers
and a 6-month-old,
discovered that when she
and her husband separated
two months ago. The rent
on her two-bedroom
apartment in Campbell, a
suburb bordering San Jose, is
$1,425, impossible to manage
on her salary, with her
family's needs.
Five days after she missed
paying her rent, she
received an eviction notice.
"I've always worked and have
never asked for help,"
said Ms. Morales, who had
her first child when she
was 15. "But I never thought
I wouldn't be able to
afford to live where I've
lived all my life."
The apartment hunting is
not going well. Weeks tick on,
and all she has found for
the $1,100 a month she can
barely afford is a one-bedroom
walk-up in a falling
down building in south San
Jose, the neighborhood she
knew growing up as the bad
side of town.
"It's getting ridiculous,"
Ms. Morales said. "My friend's
father has a house for rent
here. He was asking $1,800,
and he is getting calls
from people offering twice that
much, without even seeing
it."
Ms. Morales received a one-time
$700 check last
month from the Sacred Heart
Community Service in San
Jose, which offers emergency
housing assistance,
meals, job training, counseling,
clothes and other
services to help those who
are homeless or on the
verge. More and more, the
Sacred Heart Community
Service helps clients who
come from the ranks of
people who would be doing
fine in another part of the
country, said Barbara Zahner,
the executive director.
"People are earning more
than they did 10 years ago,"
Ms. Zahner said, "but they're
spending 80 percent of
their income on housing.
Food becomes a discretionary
item. We call them the invisible
working poor. Their
jobs are not likely to have
stock options."
Poor immigrants who have
long made San Jose a portal
to the American dream have
fared the worst. Many of
the valley's landscapers,
construction workers and
fast-food workers are homeless,
according to advocacy
organizations that help
them. Or, they live in such
terrible conditions -- 26
men to a house, each paying
$400, for example -- that
they are arguably as bad off
as if they were homeless.
"Here, most people are in
service-related jobs --
McDonald's, gardening and
that kind of thing," said the
Rev. Steven P. Brown, the
pastor of Our Lady Star of
the Sea Catholic Church
in Alviso, a small community
near here.
"They're probably some of
the hardest-working people
I've seen," Mr. Brown said.
"But many with two or
three jobs are barely making
it." So, in many cases, he
said, immigrant families
share houses.
Maria Perez, 34, is one of
the lucky ones. She came
here nine years ago from
rural Mexico thinking she and
her husband, a landscaper,
would make lots of money
and live in a house with
a yard, as she saw on
American television. Instead,
for almost eight years,
until she became pregnant
with her second child, she
and her husband lived in
rooms in other people's
apartments. A year and a
half ago, when she gave birth,
they moved into an $1,100-a-month
two-bedroom
apartment, a bargain by
valley standards.
"I say to my husband, you
and me are very lucky," said
Ms. Perez, who learned English
at Sacred Heart
Community Service. Now she
is a full-time day care
assistant at Sacred Heart,
making $300 a week. "I pay
half of it to the baby sitter,"
she said. "Sometimes my
daughter says, 'Mommy, it's
not fair. How come people
here have cute houses and
we don't? How come other
people have cars and we
don't?' I say, 'Because we are
poor and they are rich,
and that's the way it is here.' "
It is hard not to notice
the Ferraris and Mercedeses all
over the valley these days,
and the columned mansions
with swimming pools that
take up virtually whole
backyards. The homeless
passengers waiting at 2 a.m.
the other day for the No.
22 bus spent a good deal of
time chatting all about
the haves shoving their wealth in
the faces of the have-nots.
"This is where all the millionaires
and billionaires
live," said a 63-year-old
woman in a cowboy hat who
called herself Cowboy Luna.
"I don't understand how
they can't help the people
who can't afford the rent. The
people who are on this bus
can't afford the rent."
She turned to a sad-looking
young man carrying a
backpack. He had been laid
off from his job, Cowboy
Luna whispered. To him,
she said: "Right, the people
on this bus just can't afford
the rent in this crazy place?"
He nodded. "And some of us," he said, "never will."
------------------------------
February 20, 2000
Whatever Happened to the Class of '93?
By LESLIE KAUFMAN
PALO
ALTO, Calif. -- In the fall of 1995, two
years after graduating from Stanford University,
Diane Barrum received a
call from her sophomore
roommate, Srinija Srinivasan,
asking her to join a
company recently founded
by two other young Stanford
alumni, Jerry Yang and David
Filo. The deal was this:
In exchange for 18-hour
days, grinding away in
overcrowded conditions,
Barrum would get in early on
a hot phenomenon called
the Internet. But Barrum,
happily employed by a biotechnology
company based
in Seattle, said, "I just
was not ready to take the risk."
Barrum, as it happens,
turned down the chance
to be employee No. 30 at
Yahoo, the wildly
successful Internet
portal, or gateway,
which has a current
market value of about
$82 billion. Now she is
back in Palo Alto and,
after a hiatus of traveling
and joblessness, has
recently joined an
Internet start-up, too.
"Of
course, I wish I'd taken
it," she said of the Yahoo
job. "One can only
imagine what I'd be
worth."
Such tales of quick
riches and missed
opportunities can be
heard in many places
these days, among
people of all ages. But
probably nowhere else
was the swift,
unexpected divergence of
fortunes thrown into such
stark relief as among Barrum
and her peers in the
Stanford undergraduate class
of 1993, who burst on the
scene just as the World
Wide Web was coming into its
own.
Of course, only a small percentage
of recent college
graduates have become Internet
millionaires. But there
are enough from elite universities,
like Harvard, MIT
and Stanford, that they
are influential far beyond their
numbers. A look at a sampling
from this one Stanford
class -- among the earliest
to have so many success
stories -- makes this phenomenon
clear.
The university says it does
not track the wealth of its
alumni, but school officials
acknowledge that many in
the class of '93 have become
wealthy unusually early. It
includes five of the six
founders of the Internet portal
Excite (now Excite(at)Home);
three founders of the
online retailer of sporting
goods, FogDog; one of the
first employees of Yahoo;
a pioneer of Trilogy
Software; and a top executive
with LinkShare. Many of
these 20-somethings are
now worth tens of millions of
dollars, if not more. When
the class gathered in 1998, it
donated $163,000, then the
largest class gift for a
five-year reunion -- only
to be surpassed last year by
the Internet-rich class
of '94.
In part, these technology
Wunderkinder strike a chord
with their peers because
they have achieved the dual
aspirations that have defined
Generation X: being
passionate about work and
free from authority. But their
existence has also raised
the whole generation's visions
of early wealth and, for
some, served as a nagging
reminder of what might have
been.
"This generation has
made its money so
young that it is almost
unnatural," said Alan
Wolfe, a sociologist
who heads the Center
for Religion and
American Public Life
at Boston College.
"Whether you are
repelled by these young
millionaires or
attracted by them, they
cannot be ignored. In
that sense they are icons
for their peers."
Stanford, in the heart of
Silicon Valley, has turned out a
disproportionately large
number of Web superstars.
With top-rated programs
in science and engineering --
and almost 9 out of 10 undergraduates
taking at least
one computer course -- the
palm-lined, mission-style
campus in Palo Alto has
been ground zero for the
high-technology boom.
The members of the class
of '93, like Srinivasan and
Barrum, have seen their
fates spun wildly apart by the
Internet -- not so much
because of any particular
differences in cleverness
or ambition, but because
some of them happened to
be very well placed as the
transformation began.
Jim Hennessey, the school's
provost and former dean of
the engineering school,
noted that 1993 was "right on
the cusp of the Internet
explosion." Like others on the
Stanford faculty, he is
acutely aware that the success of
the Internet has ushered
in a new era of student life.
On its statistical face,
the Stanford class of 1993 was
almost indistinguishable
from its predecessors. It was
split roughly 50-50 between
men and women; about 7
percent of the class were
African-American; 17 percent
were Asian-American. Students'
majors were not
particularly skewed toward
technology. Of the 1,730
degrees conferred, 6.6 percent
were in engineering, 10
percent were in economics
and 16.7 percent in biology
or human biology.
But the more forward-looking
graduates were ideally
positioned for the Internet
economy. Not only had they
been exposed to many new
technologies -- e-mail was
nearly universal among Stanford
undergraduates by
1992, as were experimental
high-speed
telecommunications lines
-- but they also were entering
the working world well before
the Internet sector was
swamped with start-ups.
Rich alumni are nothing new
for the university that
graduated William Hewlett
and David Packard (class
of '34), the founders of
one of Silicon Valley's first
high-technology businesses.
But not so long ago,
Stanford graduates expected
success to take time.
Herrant Katchadourian, a
sociologist, is tracking an
earlier Stanford class,
from 1981. In his book, "The
Cream of the Crop," graduates
at their 10-year reunion
reported widespread contentment
with their salaries,
which averaged $54,000,
roughly $18,000 above the
average then for college
graduates. Many said proudly
they expected to earn as
much as $1 million a year -- 10
to 15 years down the road.
Perhaps when he revisits
them next year at their
20-year anniversary for a new
book, he will not find them
so sanguine.
But the Internet has
given the class of '93
and its successors a far
different timetable --
and even greater
ambitions. Consider
Krista Rollins, 27, a
1993 graduate who is
now vice president for
communications at
Trilogy Software,
based in Austin, Texas.
She once thought that
her biggest career
concerns would be
salary, title and the
number of people she
managed, but her idea of
success has changed. "It used
to be much more about the
long term," she said. "Now it
is about how to become very
successful in the next
three or four years." By
her mid-30s, or 40 at the latest,
Rollins hopes to be "very
financially independent" --
that is, rich enough to
quit.
The Stanford faculty has
noted the changing culture with
mixed emotions. James Montoya,
vice provost for
student affairs, has sensed
the acceleration in the
student life cycle since
the early '90s, as
undergraduates have moved
to "Internet time."
"It used to be 'I'll get
out of school and travel and see
the world before I settle
down,"' he said. "But what I
hear now is 'This is the
time to join a start-up, before I
get old and have responsibilities,
like a family."'
Needless to say, not every
member of the class of '93
shares this computer-industry
intensity about striking it
rich. According to a class
survey for the five-year
reunion, some 12 percent
called high technology
(separate from engineering)
their field of endeavor -- a
big proportion, compared
with most universities. But
plenty of other graduates
were still in medical training
or had begun other careers,
while some were taking
time off to raise children.
Still, the existence of such
sharply divergent paths
has made young graduates feel
like players in some sort
of modern lottery.
THE PROGRAMMER: A Physics
Major Makes
Good
Graham F. Spencer came to
Stanford in 1989 with the
intention of becoming a
physics major, but he was
drawn more to computers.
After finishing school, he
formed a company with five
college friends to build a
software navigator for the
newly emerging Web.
Spencer, whose major was
computer science, is now
acknowledged as the programming
genius behind the
portal known as Excite.
In the lean first years,
he worked 80-hour weeks,
getting by on beans and
rice. But before the company's
initial public offering
in 1997, Spencer netted 600,000
shares of Excite stock;
his stake would be worth $64
million at the time that
the company merged with At
Home in January 1999.
"Do I deserve the money I
have? I struggle with that a
lot," the soft-spoken Spencer
said. "On some level, I'd
like to believe I have certain
skills that have made me
successful. But how can
being a little more competent
at computer science make
you so much richer?"
He describes himself as "anti-ostentatious,"
saying he
does not go in for "three
cars a year and champagne."
He and his fiancee own a
cozy new home in Palo Alto.
In this money-flooded valley,
of course, plain-vanilla
dwellings can run $1 million,
but this is no gizmo-filled
palace; it is cramped enough
that the dining table
occupies part of the living
room.
His great indulgence has
been travel -- weekend trips
to Vail, Colo., to snowboard,
or to Hawaii to surf.
Recently, he and his fiancee
took a two-week trip to
Italy, often staying in
$500-a-night rooms on the Amalfi
coast. He also works at
home whenever he feels like it,
padding around the house
in his stocking feet and
keeping his Siamese cat
company.
Despite his low-key
lifestyle, Spencer
acknowledges that
money has altered his
relationships with
peers. He met his
fiancee at Excite and
said it made a
difference to both of
them that she had her
own substantial stock
holdings and had
"earned" her right to
partake of the lush life.
By contrast, after his hometown
newspaper in
Columbia, S.C., splashed
his net worth across the front
page last year, high school
friends, he said, started
treating him "like some
sort of billionaire, which I am
definitely not."
Spencer plans to retire by
the age of 40; in the
meantime, he wants to get
a better sense of how to live
without organizing all his
time around work. "I hope I
get more comfortable with
spending money," he said
wistfully. "The problem
is that the only people I know
well who have this kind
of money are like me -- they
just got it. None of us
knows what we want to do with it
yet."
It is almost as if Spencer
is waiting around for
legitimacy. He has sold
less than 5 percent of his stock
and still puts in long hours
at Excite as a kind of
superprogrammer. While he
says he is "basically a
volunteer" -- meaning that
he does not have to work if
he does not want to -- he
says he feels inextricably tied
to the long-term success
of the company.
"I deliberately try not to
keep score on my own net
worth, because that is gross
at some level," he said. "I
want to feel that we've
built something sustainable,
something great."
THE E-RETAILER: Lots of Money But No Dates
At 27, Robert Chea, founder
of FogDog, does not look
a day over 19 but has the
poise of a 50-year-old chief
executive. As the son of
Cambodian immigrants who
struggled to put him through
school, Chea felt he had to
be rich. "I'd be disappointed
in myself," he said, "if I
did not make a lot of money."
But even as a sophomore
in college, Chea wanted
more than a fat bank account.
He wanted autonomy.
Then, he remembers, his concept
of success came from
an AT&T commercial.
The advertisement, which aimed
to showcase the liberating
power of the company's
digital technologies, showed
futuristic scenes of people
receiving faxes in huts
on tropical islands. "That was
my measure of success,"
he said, "to be at a level
where I had enough free
time to sit on the beach, but
was still connected to the
rest of the world."
The path to controlling his
destiny almost eluded him.
He arrived at Stanford in
1989, interested in
philosophy and archaeology.
But his mother nudged him
toward electrical engineering.
Upon graduating, he
applied to law school, thinking
that he would pursue a
career as a patent lawyer.
But through a classmate's
father, Chea got caught
up in showing sporting-goods
makers how to use the Internet
and eventually formed
the company that would become
FogDog.
Chea, by his own accounting,
has worked terrifically
long hours seven days a
week for five years. But the
results are clear. Last
fall, FogDog moved its
headquarters from a nondescript,
cramped office park
outside San Jose, , to a
glorious, light-filled loft near
Redwood City, complete with
stainless-steel fixtures
and blond wood desks. It
is the sort of office that
Heather Locklear, the "Melrose
Place" diva, would
inhabit if she ever signed
up to do a sitcom about being
chief executive of an Internet
start-up. Chea owns 1.15
million shares of FogDog,
which went public in
December. The shares are
now worth $10.25 apiece,
making his stake worth $11.8
million.
There have been personal
costs. In his five-year class
reunion book, for example,
Chea said only half-jokingly
that he had not had a date
in five years. "It's by choice
dammit," he wrote. At a
recent birthday party, his
friend Andy Chen, FogDog's
co-founder, felt so bad for
Chea that he invited all
70 employees to write down
names of date possibilities
in the form of a classified
ad, letting Chea choose
three.
Chea no longer has any desire
to live on a tropical
island and talk to his officemates
-- essentially his
whole social universe --
by phone. And he has less
desire to absent himself
from the technology culture that
so enthralls him. "I can't
imagine what it would be
like," he said, "to be a
lawyer and hear about the
Internet all the time and
not get to participate in it."
THE NONCONFORMIST: Looking
Beyond The
Internet Life
While the potential of the
Internet economy has dazzled
many graduates, it has left
a distinct minority of the
1993 class feeling nonplused
-- and left out.
In another time, San
Francisco might have
seemed like a slice of
paradise to Elaine
Romanelli, a music
major who prides
herself on spontaneity
and artistic aspirations.
But the Bay Area
landscape has changed
greatly since the 1970s,
when Stanford was a
center of radical student
protest and San Francisco a
mecca of counterculture.
Romanelli misses being part
of a generation that
followed its heart, regardless
of money. She has tried
hard to hold on and recreate
a bit of that spirit. Her
work life since college
has included being a co-founder
of a business that provided
"haikus on demand" (two
for a dollar) and quitting
a respectable job in marketing
to try her hand at professional
singing. She lives in a
dilapidated Victorian house
in the grittier South End of
San Francisco and frequents
a local cafe that is a
sympathetic home to creative
types.
Still, as a Stanford graduate
living in San Francisco,
she has not been able to
avoid the Web rat race. "The
Internet is a pervasive
presence here," she said. "Many,
many jobs are Web-based,
and e-commerce just sort of
permeates everything."
Romanelli is a petite woman
with delicate features, and
her eyes flash when she
is asked about the Stanford
stars of the moment. She
is far from worshipful. "The
thing that gets to me,"
she said, "is that the people
getting wealthy are young,
single boys." In previous
generations, she said, real
wealth could take decades to
accumulate, but her peers
"don't have coping tools" for
the vast sums they are now
able to spend.
"They are getting rich and
spending their money on
'supersoakers"' -- as exceedingly
expensive toys like
Jaguars and automated houses
are known in the
parlance of Silicon Valley.
"They don't have a sense of
philanthropy or giving back
to the community -- or any
community outside of work."
The expansion of the Web
leaves Romanelli cold, even
a little indignant. "A society
of people who write to
each other solely by computer
is not my idea of utopia,"
she said. She has watched
friends and classmates
devote themselves to Internet
start-ups, and she
believes their lives are
too narrow.
"There is an insane amount
of money, but also an insane
amount of work. It is like
slave labor." The computer,
she said, "was supposed
to facilitate life; out here, it
has worked the other way
around."
THE WEB EDITOR: Feeling Fulfilled
In Love of
Work
Despite the financial gulf
that separates Srinivasan,
who joined Yahoo, and Barrum,
who did not, they
remain comfortable friends.
There is no animosity or
visible jealousy, just a
tacit acceptance of changed
circumstances. For a dinner
of take-out Indian,
Srinivasan pays and Barrum
picks it up.
It helps that, like many
other young Stanford
millionaires, Srinivasan,
who had an interdisciplinary
major called symbolic systems,
eschews aggressive
displays of wealth. She
lives in a loft-style duplex in
one of the least fancy areas
of Palo Alto, among
graduate students and Internet
worker bees. She dresses
in print skirts with matching
pastel T-shirts, a low-cost
uniform of working women
everywhere.
When she and Barrum, who
majored in human biology,
spread out on the tan sofas
in her living room to chat,
they talk about family (both
are close to their parents),
about friends from college
and about eventually
juggling careers with children
(both are single). When
it comes to money, both
acknowledge they are more
than a little stunned at
the turns of fate. "Don't get me
wrong -- Srinija has worked
very hard and I always
knew she would be successful
at something," Barrum
said. "But I never thought
she'd be a big deal at a
company at age 28, and she
did not either."
Srinivasan, who as the fifth
employee at Yahoo is
probably worth tens of millions
(she will not say),
concedes that her sudden
wealth has taken her by
surprise.
"I've worked hard and I don't
think I am dumb and I am
deeply passionate about
my work," she said. "But in no
way has my effort been proportionately
rewarded.
Emotionally, that is something
you have to come to
terms with."
She considers herself successful,
not because of what
she is worth, she said,
but because she loves what she
does. As vice president
and editor in chief of Yahoo,
she leads a team that sorts
the ever-expanding
constellation of Web sites
into categories that will
make sense to subscribers.
When tough calls arise at
work -- like whether messianic
Jews should be listed
under Judaism or Christianity
-- she has stomachaches
that keep her awake at night.
"I honestly spend my days
in ways that I feel are
engaging, compelling and
fulfilling and rewarding," she
said.
Barrum nods at her friend's
words. "When I was living
away from Palo Alto, I felt
there was all this
excitement going on here
and all these young people
having a real effect on
so many companies," she said. "I
felt I was missing out.
I came back not for the money,
but for the excitement."
Still, she adds that living
life in the Internet center, it is
difficult to be 28 and not
yet a success without
occasionally feeling uneasy.
"You can't deny that
knowing people who have
gotten wealthy changes your
perspective on some things,"
Barrum said. "I feel like I
am falling behind in the
race to buy a house, a race to
achieve monetary goals."
Will she have another shot
at Internet riches? "Yahoo is
not going to slip into the
ocean," she said, "but it is not
going to make a lot of millionaires
anymore."