By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
But the real envy-generator, at least among savvy Austinites, would be the knowledge that Hess was one of the first 40 employees of Vignette Corp. The almost unbelievably high-flying Internet software startup has made millionaires of him and hundreds of his co-workers. Vignette, a developer of software that runs corporate Web sites, had a steep slide in share values from a high of nearly $300 earlier this year. But who cares? The stocks are still trading at many times the $19 each was worth when the company went public in March 1999. Considering the two stock splits and the pennies-a-share options for early-stage employees, it's enough to make him worth seven figures at minimum.
"I consider myself comfortably well-off," Hess says of finances. He's got an address in the tony Brown Building lofts downtown, an ability to indulge his penchant for purple everything -- he says a salesman in the Saks in San Francisco's Union Square has standing orders to set aside every violet-hued garment that comes in -- and an easy insouciance with which he wears his six hoop earrings and beard (not purple) among the hip Manuel's crowd. Those make forceful arguments for his prosperity. But money, as Hess -- and everyone else getting filthy rich in the giddy gold rush of Austin's tech boom -- maintains, isn't what it's really all about.
The fact is, Hess is sitting where everybody in Texas or almost anyplace else would like to be. He's working with leading-edge technology in a city that resides in the top five of a half dozen published best-of lists. He is also a gracious gentleman, willing to let a reporter pick up the check for lunch without a fuss. If not for the eggplant locks, just dyed at the city's trendy Fringe Salon, Hess would be a poster boy for the everyman Internet millionaire -- not a business visionary like Michael Dell, nor a prescient programmer like Vignette founder Ross Garber.
No, Hess is just a kid who grew up in Chicago and Philadelphia and got a bachelor's in computer science from Penn State, a school known more for football dynasties than high tech. His career started at Intel in Phoenix. In 1989 he joined Oracle Corp., now the world's second-largest software company behind Microsoft, and began job-hopping through several other startups and established companies. While working for a Campbell, California, startup in the early 1990s, he began coming to Austin regularly on business. He liked what he saw.
"You work hard, you play hard," Hess says, nodding so that his hoops jingle gently. "Sixteen-hour days doing a new build, and go out and party on Sixth Street at night." In February 1997 he solidified his Austin connection by becoming Vignette's West Coast interface between customers and software developers. Last September he left Aptos, a famously beautiful community between Monterey Bay and the Santa Cruz Mountains, to become field technical director at Vignette's headquarters on South Mopac Expressway.
He knew almost immediately it was a good move. His first night in town, he and his Vignette colleagues went out for a late dinner at Sullivan's, a downtown steak house redolent of cigars, starched shirts and overheated expense accounts. The next night it was Miguel's, a dining/drinking/dancing establishment, just a few blocks down Colorado from his new loft. Next night: Stubbs Bar-B-Q, an Austin establishment renowned for good music, cold beer and brisket smoked for 16 hours. On his third morning in Austin, Hess recalls thinking, "This is great. This is a life."
The Austin metropolitan area is a life for 1.17 million people these days, many of whom are dazzled by the changes wrought on the city as a result of the technology boom. Electronic message boards are clogged with virulent posts proclaiming the city the new promised land, the old wasteland and almost every shade in between. They moan about the bad traffic and worse public transit, the rising rents and the mushrooming Dell Computer. "Hate Austin and hate Capital Metro let Dell have the freakin place, hate Dell too," vents one 36-year-old business manager. A Dell employee counters, "Dell will make me RICH so don't blame My company! You just need a new job!"
There's no denying one thing: Austin is now a high-tech town. Angelou Economic Advisors, an Austin research firm, says technology is the region's largest employer, accounting for a fifth of the 625,000 jobs. Those 125,000 technology industry employees work at more than 2,000 companies. Eight of those firms, in addition to Vignette, went public last year, and the rest absorbed some $740 million in venture capital. The city's job growth rate of 5.3 percent placed it well ahead of any other major Texas city, and among the top five nationally. "Austin is the envy of communities worldwide who now visit the city and study its success," trumpets the 2000-2001 report on the city by Angelou, which, by the way, counts Dell Computer among its clients.
So Austin's gone to Dell, in a big way. That can raise concerns from advocates of economic diversity, and last month's NASDAQ volatility underscored those qualms. While the tech markets and Dell stock have stabilized, Michael Dell himself had $1.25 billion in value drained from his holdings. Austin naysayers have only to point to Houston's reliance on the oil industry in the roaring '70s and the resulting multiyear crash of the Bayou City's economic base.
Jon Roberts, a partner in the economic research firm with former Chamber of Commerce executive Angelos Angelou, stands behind the description of Dell Computer as a public citizen with few, if any, flaws. Arguments that the city is becoming overly dependent on Dell, or on technology in general, are misguided, he says. Roberts, who moved to Austin from Seattle, points to the presence of more than 100,000 Boeing workers in the Washington city, which is otherwise comparable to Austin. "This is not a one-company town," he says. "We have an employment of 631,000 people, and Dell is only at 20-some-odd-thousand. So you're looking at well under 10 percent."
Roberts also points to the way the Austin technology community is composed of four distinct parts: computer manufacturers like Dell, semiconductor companies like Samsung and Advanced Micro Devices, Internet software companies such as Vignette, and the dot-com Internet commerce companies, including Garden.com, an on-line landscaping supply retailer, and Living.com, which peddles home furnishings over the Web. These industries, especially semiconductor equipment suppliers, may be subject to downturns. But the four big Austin tech industries tend to follow different cycles, he says. "People who worry about Dell's influence may be exaggerating a little bit."
Local tech veterans such as Gene Lowenthal say there's no doubting that in the last few years the changes wrought by the technology boom have been phenomenal. "There's an old saying that perception lags reality," notes Lowenthal, a high-tech venture capitalist with Sanchez Capital Partners in Austin. He talks about how venture investors are only beginning to catch on to the idea that Austin has investment opportunities, but the comment echoes when he talks about how the tech boom has changed Austin. "It was a small-town feeling," says Lowenthal, his words breaking up as he talks to a reporter from his car through a cell phone over Austin's crowded airways. "Now, it doesn't have that feeling."
Tech goes back a long way in Austin, however, even further than Lowenthal, who founded MRI Systems in 1967. The first technology company in Austin, Tracor, was started way back in 1955 by, among others, a University of Texas professor named Frank McBee. Tracor went public in 1964 and became Austin's first Fortune 500 company in 1984, the same year a UT dropout named Michael Dell started a firm then called PCs Limited. McBee, who ran Tracor during some of its most successful years, died earlier this year. His passing in some sense marked the end of Austin's years as a technological teenager and ascent into full adult geek-hood. And if McBee and Tracor were midwives at the birth of a new high-tech hub, Michael Dell and the astonishing corporate juggernaut he founded in a Jester Center dorm room are the princes of its postadolescence.
You'd never know Dell Computer Corp. is actually based in suburban Round Rock, an exit or two north of Austin. The Texas capital's children's museum is called the Dell Discovery Center, and its Jewish population meets at the Dell Jewish Community Center Campus. The distinctive name and logo dominate countless events, such as the Juvenile Diabetes Foundation walkathon and the annual Trail of Lights holiday display in Zilker Park. It doesn't stop at the city limits either; Nolan Ryan's brand-new Round Rock Express minor league baseball team plays in the Dell Diamond.
Some Austinites feel the Dell imprimatur is decorating a sufficient number of local edifices. Cindy Carroccio is founder of the Austin Zoo, a center for wildlife rescued from unsuitable homes. The funky, homegrown operation recently went nonprofit and almost immediately got a $20,000 gift from out of the blue to help build a lion cage. The donors were a thirtysomething Dell employee and his wife, a retired teacher who now is a volunteer at the zoo and is also expressing interest in doing the leopards' quarters as well. "I'd like to have her cloned," Carroccio confides. But despite her luck with Dellionaires, Carroccio is shy of approaching Dell -- the company or the man himself. "They've done a whole lot for the community, but I would like this to be everyone's zoo," Carroccio says. "I don't think it needs any one person's name on it."
Outside the city Dell Computer is known for making reasonably priced, high-quality computers -- and for the Dellionaires. These are Dell employees, numbering in the hundreds and perhaps thousands, who have become millionaires from shares of Dell stock acquired through options, discounted purchases and outright gifts from the company. They include people such as Lee Walker, Mort Topfer and Tom Meredith, former Dell senior executives. They are now so wealthy they have retired -- often while still in their thirties -- and in some instances followed Michael Dell's lead and set up their own charitable foundations to distribute their gains. Those and other Dell exes watched the stock price, adjusted for splits, rise some 88,000 percent in the last decade.
Unlike Vignette, whose market valuation is based primarily on wishful thinking, Dell's wealth-building has been backed by matching business success. Vignette, for instance, posted a paltry $89 million in 1999 sales while losing a nonpaltry $42.5 million. Meanwhile, its peak market valuation topped $12 billion. Vignette has 1,100 employees and an impressive client list including Citicorp, Land's End and Hoover's Inc., a local Austin Internet information service. Its StoryServer software is generally acknowledged as one of the best for managing information on complex Web sites. But its stock value clearly doesn't make sense. Dell is something else completely.
Dell's sales last year grew more than a third, to $25.3 billion, enough to rank it 56th on the latest Fortune 500, between GTE and United Technologies. It knocked Houston-based Compaq Computer Corp. from its longtime position as the largest PC maker in the United States. Dell is a Web-selling pioneer, generating $35 million daily -- nearly half its revenues -- from customers who shop for computers via Dell.com. The stock market, not surprisingly, valued Dell north of $130 billion. Locally, Dell's 22,000 workers make it Central Texas's largest employer, ahead of perennial leader Motorola. Another 10,000 or so people work at companies serving Dell and its workers -- components suppliers, restaurant employees and the like. Last year, according to Angelou Economic Advisors, Dell built 1.5 million square feet of commercial buildings in the area, equal to a fifth of the city's stock of downtown space. Even more incredible, in one stretch of several years in the mid-1990s, Angelou says, Dell accounted for $1 out of every $10 in regional building permits.
Dilum Chandrasoma is not a builder, he's a car salesman. His lot at Team Motorsports on North Lamar is packed with three dozen or so high-dollar vehicles, ranging from Rolls-Royces and Dodge Vipers to BMWs and Ferraris. Business, Chandrasoma reports, has been good, if a little odd. "It's amazing," he says. "We're getting guys 20 to 25 years old walking in here and buying $40,000 cars. We've sold Ferraris and Lamborghinis to people walking in here with cutoff shorts. You'd never see that five or ten years ago."
Along with doctors and lawyers, people who have done well in the tech stock boom make up virtually all his clients nowadays. "We've had a lot of Vignette guys," Chandrasoma says. "Most of them like the sports cars." Hot movers include two-seater Porsche Boxsters, at $40,000 and up, the $75,000 mid-engined Acura NSX and six-figure Ferrari Testarossas. Dell clients are more numerous, and their tastes are different when it comes to the rolling stock. "They're a little bit more conservative than your Internet people," says the car salesman. Many of the biggest spenders are not techies at all, but stockbrokers prospering in the market. "Right now we're trying to find a 2000 Bentley for a stockbroker," he says. "Those are up in the $200,000 range."
Car lots aren't the only beneficiaries of high-tech hedonism. It's hard to find a successful real estate agent, for instance, who doesn't boast of having sold a home in the hills to a Dell executive or a twentysomething Internet entrepreneur. On a more prosaic level, all Austin homeowners are looking at 20 percent increases in the appraised value of their homes for property tax purposes in 2000, simply because of appreciating home values.
The increasing price of just about everything in Austin is one of the major concerns of those watching the way the tech boom is changing the city. "Austin used to be such an affordable place to live," recalls Peter Zandan. He came here to attend UT in 1977 and stayed to found a market research company, Intelliquest, which he took public and sold in 1997. Now he has a new startup, Zilliant, doing Internet pricing research, and is also a venture capitalist. But he still yearns for the old, inexpensive days.
"If you just wanted to be a student or a musician or a writer or an artist, you could make ends meet," Zandan says. "Housing, food, getting around, it was all relatively inexpensive, and that's what most people were doing: making ends meet. Now, if you're a struggling artist, it's a difficult town to survive in because things have gotten very expensive."
Expensive, of course, is a relative term. The largest component of living expenses, housing, has indeed risen sharply. JBGoodwin Company, an Austin real estate broker, reports that the median price of a home there in 1999 was $129,000, up 7.5 percent from the previous year. By comparison, however, the percentage increase was slightly higher for home prices in Houston and Dallas, the company reports. As for Silicon Valley -- forget it. The median home price in the Bay Area was nearly three times Austin's, and had risen a whopping 12 percent. All told, Austin home prices were about 3 percent lower than the national average.
Perhaps of more concern than the rising price of things in Austin is the fact that the rising tide of the tech boom isn't lifting all boats. "Everyone is not benefiting from the economic prosperity in Austin," Zandan frets. Indeed, a 1998 study by Intelliquest found that while 42 percent of white Austinites were very satisfied with the city, just 28 percent of Hispanics were that pleased, and only 12 percent of blacks were very satisfied. Part of the reason for that dissatisfaction, Zandan believes, is that minority communities are having to cope with the costs, without getting the benefit of the bucks.
Bagpipe music floats on the spring breeze cooling the first annual job fair sponsored by the River City Youth Foundation, a nonprofit community organization housed in an abandoned former neighborhood association clubhouse in the Dove Springs area on Austin's southeast side. The bagpiper is local -- well, he says he is only visiting from "78704," shorthand for the bohemian area of Central Austin south of the Colorado River with that zip code. He is among a couple dozen local business people, professionals and merchants joining representatives from the police and fire departments, a lawyer, some journalists, a natural food multilevel marketer and others who have come to see if they can get kids in this poor neighborhood to think about careers. Only one of the booths houses a technology company, Trilogy Software Inc., a privately owned e-commerce software company. It has sent a trio of its fresh-faced young employees along with their laptop computers to see if the burglar bars and peeling paint of Dove Springs' residences hide nascent programming talent.
"What's all this?" 13-year-old Jeffrey Allen says as he spots the sleek black IBM Thinkpads resting on Trilogy's table. Jeffrey, a pudgy kid with steel glasses and a torn T-shirt, is carrying a plastic tote bag loaded with candy, calendars and other gimmes from the career fair booths. The idea that these computers may be part of the potential loot clearly flits through his mind. Then one of the Trilogians at the booth, a recent Carnegie-Mellon grad named Stephanie, offers him one of their actual handouts, a plastic zippered case that looks like something a sewing kit might come in. Jeffrey slips it into his bag with a pout. But he sits down at a computer when Stephanie beckons him.
"This is a programming language called LOGO," Stephanie tells him, displaying an almost entirely blank screen on one of the laptops. "What would you like to do? Make a circle?" Jeffrey appears more interested in escaping to a more promising booth -- the City of Austin firefighters, for example, are letting kids try on their boots and yellow fire-retardant coats -- but he manages to stay for a few minutes of demonstration while Stephanie plumbs him for interest in computers. He nods in answer to questions about whether he is interested in computers, but shakes his head when asked if he knows much about them. Later, when he signs up to register for an RCYF-sponsored camping trip, he puts down "policeman" in the box for career choice. Stephanie responds to the news of her lost recruit philosophically: "I guess we'll have to survive somehow."
Here, you might say, is where the much-celebrated digital divide rears up. It is as obvious as the Balcones Escarpment running through West Austin, which is said to mark the exact separation of the Gulf Coast littoral from the Rocky Mountain uplands. And Mona Gonzales, the cheerfully dedicated woman who founded RCYF 17 years ago and still runs it, is less sanguine than Stephanie about the prospects. She enjoys the sponsorship of Trilogy, but she's not kidding herself about the chances of anybody from her constituency joining the ranks of Trilogians.
"Trilogy is pretty demanding about its educational requirements," Gonzales notes. Indeed, one Trilogian in attendance sported a Cornell sweatshirt, and another graduated from Duke, in addition to Stephanie's Carnegie-Mellon degree. "If our students are going to compete for high-tech jobs, they must be prepared. And when you've got kids who have high absenteeism and don't get good grades, they're not going to compete."
That's interesting talk coming from someone on the front lines of trying to raise kids from rough neighborhoods -- Gonzales's current term of approval is "at-promise youths" -- and get them into the mainstream. The digital divide ascribes the difference between rich programmers and poor burger-flippers, flat-fixers and systems engineers, to the lack of computers and Internet access in schools, libraries and homes.
That's not the whole story, or even much of it, according to those who live on the digital divide. Take Sandra Elizondo, RCYF's coordinator of life skills. "This neighborhood," she says, shaking her head over what she considers low turnout at the job fair. "Motivation is a problem." Computers, however, aren't a problem, at least at the RCYF. The center's computer lab is stocked with eight pearl-gray computers courtesy of the Dell Foundation. The machines get heavy use from the after-school crowd, Elizondo reports. "A lot of them know a lot more than I do about computers," she says. "Some of them even know how to do their own Web pages."
But placing Internet-connected computers into libraries, community centers and schools, while promoted as a potent remedy for the digital divide in a U.S. Commerce Department report, gets little respect from those on the frontiers. "Now, we need to get computers into their homes," says Elizondo. "That's the real digital divide."
Computers in Dove Springs' public places often do little to help those who would get the most use from them. Phyllis Mendoza, a librarian at the nearby Southeast Austin Community Branch Library, says they are wired to the Web, but they lack some basic computing offerings. "Kids come asking if we have a computer to type a school paper on," she says. "We don't. We have a typewriter, and we just got that." Mendoza is hoping to get some computers donated from Dell, but until then, it's Liquid Paper and typewriter ribbons instead of Microsoft Word and laser printers for Dove Springs schoolkids.
Internet access as a solution for the digitally divided is pooh-poohed as a solution by even Ana Sisnett, who was named one of the most powerful Texans in high tech by a business magazine. Sisnett, a soft-spoken Panamanian native, serves as head of Austin Free-Net, a nonprofit group that provides free computers and Internet access to Austin public sites. The problem is not the skin color or the ethnic background of the digitally divided, Sisnett says. "It's not about black and Latino people not having access to computers," she says. "It's about poor people not having access to computers. It's just a rearticulation of old issues, like racism, sexism and classism."
Talking to people like these, you get the impression that they think the digital divide is something a bunch of rich, white, well-educated techies cooked up to explain away their outsize share of the wealth. Talking to a well-educated registered professional engineer like Dr. Sterling Lands, pastor of the Greater Calvary Missionary Church in East Austin, that impression is resolved into a certainty, at least in his view.
"It's a euphemism that covers up a bigger problem," says Lands. He describes the whole idea of a digital divide as something dreamed up by people who know nothing about the communities they claim to be describing. "Who in the hell cares about computers in the library?" he asks. "It just makes them feel good," he says. "Then they go back and shake each others' hands." What companies like Dell should do, if they want to help, he says, is provide jobs for people who lack technical skills, not donate computers to public-access sites.
Community leaders and activists in East Austin, itself a euphemism for minorities and poor people, describe West Austin -- the flip side of that euphemism -- as out of touch. But they don't describe much of an effort to inform the techies of reality. Sisnett, for example, didn't attend the much-touted 360.00 Summit, an opulent gathering of hundreds of local venture capitalists, entrepreneurs and other members of the technology industry that took place in the spring. Its avowed intention was to boost social equity and include "all citizens in the economic success of our region," she explains. "The focus for a gathering like that was not to have nonprofit groups."
There were, however, numerous nonprofits at the 360.00 Summit, which was otherwise distinguished by having Zandan and another local entrepreneur ride mountain bikes onto a stage and invite the audience to pelt them with thousands of Wiffle Balls. One of those on hand was Paula Fracasso, executive director of a new organization called the Austin Entrepreneurs Foundation.
Fracasso, at 31 a veteran of Austin fund-raising and community improvement organizations, is heading up an experiment in corporate philanthropy. Wally Bock, CEO of Dazel Corp., which was sold to Hewlett-Packard, began AEF as a way to tap the nascent equity value in startup ventures. Instead of making cash contributions, young technology companies are urged to donate shares of their companies. That stock is generally worth little to begin with; some of her 31 member companies' shares are valued at as little as a dime. Fracasso says the idea is that when the companies go public, the shares could be worth millions. Her largest stock donor has given the foundation 50,000 shares. "The potential for the size of this foundation," Fracasso enthuses, "is limitless."
That's on the upside, of course. The downside potential is extensive as well. There's a good chance many or even all of the companies in her portfolio will never amount to anything. Only one, Silicon Laboratories, has gone public, and Securities and Exchange Commission insider trading rules prevent Fracasso from selling her shares for a year.
Still, she says it's not all about the money. AEF wants to tap the entrepreneurial creativity and energy of these famously hardworking and innovative entrepreneurs, and apply their ideas and risk-taking attitude to social works. Those entrepreneurs' risk orientation doesn't mean letting go of their wealth entirely, however. Though AEF has the shares, the donors will get to decide how the money will be spent, if it ever is. Fracasso hopes to have money to give out in six months to a year, depending on the results of her negotiations with the SEC for an exception to the insider trading rules. When that happens, there's no telling where the donors will decide to spend it, although education and infrastructure (read: roads) will probably get a hard look.
Her vision for how AEF will help Austin, says Fracasso, is rooted in the memories she has built up since moving there as a girl in 1976. Looking ahead 50 years, she says, "If you can still swim in Barton Creek and see the capitol from Bluebonnet Hill -- and we're producing world-class companies -- that's the bare minimum of what we want to achieve."
Relatively few of the techies, of course, are taking much time from their pursuit of mammon to take dips in Barton Springs. And even for those who got here early, worked hard, stayed late and seemed to have everything going for them, there's no guarantee of vast wealth. Harry Pape arrived from Wichita in 1989, intending to become a policeman. But he quickly was seduced by the computer business and started working at a small company called ABM Data Systems that sold to the security industry. Then came a string of startups in hardware, software and, finally, the Internet. Pape has worked with or for more than a half dozen total.
What he's got to show for it are some mostly worthless stock options, memories of companies that had everything going for them except that indefinable something that makes them work and a few enemies. "I'm not a quiet man," admits the highly direct 32-year-old. "I tend to cause friction."
His nearest thing to a home run was a stint with a startup called iChat, later known as Acuity, a pioneer in the Internet instant messaging field. Pape was the ninth employee hired at iChat. Acuity made a lot of people rich when it was purchased last year by Quintus, a software company in Fremont, California. Pape, however, had already become crosswise with the senior management and quit, just as the company crossed the significant 100-employee threshold.
Pape may be mercurial, but he's got plenty of drive. He's working as a marketing consultant to yet another startup, plus kicking around some ideas for his own company. "I'm looking for seed money," he confides. Good candidates for investors might be some of his old colleagues. A friend from the old days at ABM Data Systems called the other day, Pape relates. The pal had just bought a vintage Mercedes 600 convertible, a massive car more closely associated with heads of state than private individuals -- and so rare and highly prized that its sales price can't even be guessed at. "I drive the same Altima I've had for seven years," says Pape. "Let's just say my track record is not stellar," he allows. "I'm hoping the trend may be shifting."
Oddest of all, those doing the best from the Austin tech gold rush may not be doing themselves any good. Sometimes even those who have what it takes, and have taken what the tech boom has to offer, wind up in worse shape. A condition known as sudden wealth syndrome is casting a pall over their good fortune. David W. Cramer, Ph.D., an Austin therapist and former president of the Capital-Area Psychological Association, says he has seen several patients for whom sudden riches has meant emotional torment.
"The struggles I've seen have been people compulsively buying big-ticket items," Cramer explains. "They'll be buying a new truck one week, a boat the next week and a house the next." For the majority of the population, to whom a new vehicle isn't necessarily cause for distress, Cramer adds that the problem seems to result from the difficulties of toting around all this loot. "The more money you have, the more encumbrance you have," he says.
Another issue is the sudden shock to the system created by the ability to buy anything. "All of a sudden, the limits are removed," he says. "That can bring a lot of fear." At the very least, it's a major adjustment, for which psychologists have a catch-all term, adjustment disorder. It refers to the process and problems of becoming accustomed to anything from the breakup of a marriage to the gaining of several thousand liquid stock options. Perhaps more to the point, sudden wealth changes people, and not necessarily the ones getting the wealth. "It becomes difficult to really relax and feel comfortable around people," Cramer says. "You never know when envy is going to spring up." The recently rich often get their feelings hurt when new friends turn out to be interested only in obtaining a loan. Even old friendships frequently fail to survive the pressure cooker of profound prosperity.
Of course, it's easy to make fun of unimaginably wealthy people who find their riches make them miserable. Cramer says it's no joke. "Most people accommodate pretty well to it," he allows. "But there are going to be a few people that if they already have some cracks, this will bring it out. Some people slip into suicide, or at least ideation about it."
There's some question about how Austin itself will handle its new wealth as a city, or even if it will hang onto it. "Absolutely, it's precarious," the veteran Lowenthal says of the current gold rush. If the stock market falls and stays down, the options used by startup firms to compensate employees will become worth less than they cost the workers, he notes. That could happen even at Dell. Every new employee gets options on 100 shares, says Dell spokesman Niesha Frank. But those options are exercisable at the price when the employee is hired.
As long as Dell's price goes up, those options become more valuable, in some cases more valuable than the $7.50 hourly starting wages on Dell's assembly line. If the stock goes down? "We don't speculate on that," says Frank.
As for the eggplant-tinted Nate Hess, the only ideation he's doing, as he mops up lunch at Manuel's, is about who he'll meet at Miguel's after work. In general, he's still upbeat about his chances for surviving the Austin tech boom unscathed. "The work's good, the life's good," he says, smiling through his beard and shrugging his purple-clad shoulders. "Sometimes there's nothing left to do but live happily ever after."