Reporter JONATHAN HOLMES

70,000 runners – and joggers – and walkers – take part in San Francisco’s annual Bay to Breakers fun run.P.A. SYSTEM: the largest race in the world is San Francisco’s Bay to Breakers
"I said, young man, what do you want to be? I said, young man, you can make real your dreams. But you’ve got to know this one thing…"

And they are, overwhelmingly, young men and young women – well educated, awesomely well-paid, racing towards tomorrow through the capital of cyberspace.

VALERIE BRITT: I think we’re going to look back and say it’s just an extraordinary, exciting, fantastic period. People have just an immense opportunity to do what they wanna do, to go with what excites them

JANITOR’S MARCH:ARE WE READY TO STRIKE? DAMN RIGHT…

But 40 kilometers down highway 101, in the heart of Silicon Valley - the richest, most inventive conurbation on the planet - a different scene, a different attitude, a different language.

LETITIA [marching]: Si se puede! Si se puede! Viene .. con esperanza…

SUB TITLES: YOU COME HERE FULL OF HOPES, BUT IT’S A DIFFERENT REALITY WHEN YOU GET HERE.…realidad aqui, verdad?

In their headlong rush towards a half-imagined future, the dot.com denizens of San Francisco Bay have come upon an unexpected roadblock.

The people who clean their offices, teach their children, police their neighborhoods and take away their garbage are being left too far behind. Without them, even a Valley of Dreams can’t function.

In cyberland, it’s known simply as The Valley. In two decades, it’s gone from chips and mainframes to pc’s and VC’s, b-to-c’s and b-to-b’s. From Boston and Bangalore, from Texas and Taipei, the cybernauts converge to join the start-ups, hoping they haven’t missed the wave.

Nimish Mehta has already caught a big one. Stock options from his previous job at Larry Ellison’s Oracle Corp have netted him something like eighty million US dollars.

NIMISH: Ok, are we ready to go?

He’s hoping that Impresse dot com will make him a lot, lot more.

MEHTA: Last week we trained up the printers and some of the buyers for Chase, Merrill, Metlife and Earl Palmer Brown all in one shot. And the team really…this was awesome teamwork.
From a standing start a year ago, Impresse has 200 full-time staff, and its CEO is just back from a sales drive in Europe.

MEHTA: Oh we did demos in French and in German, with the real product, and we showed them side by side with the English version, and that really plays well. People like that a lot. So I’m expecting there’ll be very good write ups on Impresse over at Dusseldorf, which is great.

The relentless optimism is part of the culture of the Valley. The competition for talented staff is as ferocious as ever.

MEHTA: There are so many start-ups and there’s such choice for them, that they want this one to be successful, so they want assurance that the company is headed down the right direction – they want to be led. Fundamentally they wanna feel good that this company will succeed and not the one next door.

NIMISH: When you click on the calendar icon they’ll pop up that window.

Impresse is a classic business-to-business web start up. It’s a net-based intermediary between publishers and printers.

WOMAN: That looks like a bug and should probably be fixed…Its system, Nimish claims, will dramatically cut the cost of all the glossy literature, from annual reports to sales brochures, that big companies churn out each year – a 25 billion dollar market.
How’re ya doin David.Good, we got our first customeR. A buyer, Genus systems, that’s all we know

Of course, everyone at Impresse has stock options – you can’t get a receptionist in the Valley without them. But the NASDAQ is down, and Impresse has already had to postpone its public offering. Still, Nimish Mehta insists that he isn’t concerned about deserters.

NIMISH: There are some people who join start-ups only to make money, the whole conception is “I’ll join a start-up and 6 months later I’ll be worth ten million dollars and retire someplace.” Frankly I don’t want those people in the company, it’s fine, they can leave, because the people you want are the ones that – in addition to wanting to be rich, there’s nothing wrong with that – but also want to have fun, to create an environment that’s fun to work in.so you can get like-minded people who share the same passion and have a great time disrupting the world.

All very well for the boss, some of his employees might say. He’s sitting pretty. He bought his first house in the Valley thirteen years ago..

NIMISH:We moved into a small home with actually money that my wife had saved that I actually did not know about. we put together a down payment on the house. And then, you know, then the stock options hit.

In the last few years, dot.com squillionaires have pushed house prices in the Valley into the stratosphere – and not only for the grand mansions that line the leafy lanes of Woodside and Atherton.

PAM HAMMER: This house is listed for eight ninety nine…
That’s eight hundred and ninety nine thousand American dollars – or one and a half million of ours – for a three bedroom bungalow, forty years old, that would look ordinary in any Australian suburb.

Pam Hammer has grown used to the shock that newcomers feel when they see how little their money can buy.

Kim Limbick is a software engineer, recently arrived from New Zealand via London, to join a Valley start-up. American wife Lynne is a product manager with another internet firm. Between them they earn around four hundred and fifty thousand a year. And yet…

KIM: We can’t afford, just on our wages both of us working full time, I don’t thinkwe can’t afford the mortgage payments. If we can somehow get some money for a bigger down-payment, and maybe look at the numbers. This is really pushing the limits for what we can afford.

It’s the iron law of supply and demand. Between the earthquake-prone mountains and the Bay, suitable land is scarce. For every six new high tech jobs created in the Valley, only one new house gets built.

Once-empty freeways are now clogged, as people commute for hours from fifty miles away, where the houses are still – just – affordable.

And the biggest homeless shelter in San Jose offers refuge to the most unlikely clients

A MUM: We have to give him some breathing room. OK…Among the families that Elmo of Sesame Street has come to comfort, with a hug and a barrowful of goodies, are the Houda kids.

DAD:What did you get, Hayley?

Their father Richard is a former Navy Seal, a building project manager who makes around a hundred and forty thousand dollars a year. But when they hear he has six children, no landlord in Silicon Valley will rent Richard a house. Why risk crayons on the wallpaper, when single engineers working 20 hours a week will happily pay the same sky-high rent?
MAURY KENDALL (EMERGENCY HOUSING TRUST):Those with wealth have cornered the market on a commodity – which is housing – driving the costs up for them is one thing – their incomes have risen astronomically, they can afford to keep up with skyrocketing costs, those of us at the other end of the spectrum cannot keep up. The poverty line for a family of four is 56,000 dollars. That kind of salary anywhere else in the rest of America would put you on easy street. Here it’s often enough money to earn you entrance into the homeless shelter.

Which is why the schools in this most prosperous corner of America are facing a crisis. In a couple of weeks’ time, when the school year ends, four of San Martin Elementary School’s best teachers will be leaving.

GERALD TRAYNOR (PRINCIPAL, SAN MARTIN/GWINN SCHOOL): They came to me and they said “Jerry, we just cant make it any more.” Some of them have been living in hovels, some of them living in apartments, the housing costs are just out of control and these are good hard-working people and they just can’t make it.

As it happens 2 of the 4 are taking special maths lessons for slow learners this afternoon. Monique Tarzian and her colleague Debbie Jones have both been teaching at San Martin’s for nine years – each earns around $70,000 a year.

Now both have had enough of one room apartments at crazy rents – but buying a house in the Valley just isn’t an option.
MONIQUE TARZIAN:When I started looking for loans and I’d call “Can I, you know, can I get a loan?” they’d ask what our occupations were and when I told them teacher, they’d laugh and they’d say, “Do you have another job? Because you won’t be able to get a loan to afford anything here!”

JONES: Oh and it’s too bad cos the kids are the ones who’ll be suffering

DEBBIE: We got our classes down to 20, but when you don’t have the teachers to a staff those rooms, does 20 to 1 make a lot of difference?

NIMISH: My children go to a local school here a private school and they have a very difficult time recruiting because of housing prices…

If there’s one thing that affects everyone in the Valley, rich or poor, it’s a teacher shortage.

Nimish Mehta had asked me home to meet some of the giants of the Valley’s expatriate Indian community – the most startlingly successful group of immigrants, perhaps, in America.

For people who really want to teach, I mean they don’t want to do anything else, at the same time they are under pressure….

Chandra Shekra, for example, sold his data housing company, Exodus, for fifteen billion dollars not so long ago.Satish Gupta’s company makes semi-conductors.

Naren Gupta invented the integrated systems that go into embedded chips – and is worth billions too.

But what everyone wanted to talk about was schools.

CHANDRA:How about if I help you guys network the whole school? – Oh, by the way, let’s also talk about computers for everyone

All of these men have poured funds into schools in the Valley – and into the technical colleges that gave them their start back home in India.

But networking the classrooms doesn’t solve the problem of paying the teachers

MARION: You’re not gonna buy clothes for the kids or food for the kids on a computer.Our police, nurses, teachers, who have had wage increases which in the past would have been respectable and yet they cannot afford to buy a home and at the lower end do not make it possible for people to rent a home.

To janitor Leticia Tovar, a teacher’s or nurse’s salary would look like riches.

It’s 2.30 on a Sunday afternoon, and she’s just finishing a shift that started at six this morning. The Oracle Corp’s training center must look spick and span for Monday morning.
No chance for her kids to cool off in the fountains in San Jose’s central square – as usual, she’s been too busy to take them.

As well as her Sunday shift, she works as a janitor four nights a week, from six in the evening till three in the morning. In the daytime she cleans houses as well. Even then, she can’t afford the four hundred dollars a week she pays in rent for a 2-bedroom apartment in the poorest part of town.

LETICIA: Tengo que rentar un cuarto…I have to rent out one room and use only the other because……por que so yo no rento cuarto…If I didn’t rent out a room, I couldn’t live here.Because everything I earned from my janitor’s job at night would got to paying the rent...pagar la renta entonces con que..So how would I pay for food, for shoes for the kids, for the necessities?I couldn’t do it.…no podia

So Leticia, her two younger sons and her daughter, who’s away in Mexico just now, all share a small double bed.

Leticia is expecting three more strangers to move into the spare room next week, to replace the three who’ve just left.
LETICIA:It’s difficult because you have to share everything with people you don’t know

Normally, four adults and four children share the cramped kitchen and the one small bathroom. Leticia’s oldest son, Aldo, sleeps on the living room couch.

LETICIA: Todos es muy arriba…Everything gets more and more expensive and we’re getting nowhere. We’ll soon be on the street because our pay is too low and prices for everything are going up…subre todo. Por esos que…That’s why we’re getting ready to strike,and we won’t give up….adalante

The janitors’ three-year contract expires in a week – and in their campaign for a dramatic pay rise, the union is targeting the high profile firms in the Valley.

But companies like Hewlett Packard don’t employ the janitors directly. They contract cleaning companies to do the job – and those companies tell the union that if they pay higher wages, they’ll lose their contracts to rival, non-union firms.CHANT: Are you ready to strike

MARION [CHANTING]: DAMN RIGHT! That is the heart of the problem. There has to be an ownership here - the client companies hold the key to a solution to a lot of these problems with low-income workers, they have to take responsibility, they are the ones who are making the money, they are in the high rise buildings, they’re in the new economy, and yet they want to wash their hands and say, “Well, she doesn’t work for me, she lives in a garage, not my problem”

The fact is, there’s a culture clash here – and it has nothing to do with Latinos versus Anglos.

It’s a clash between the quaint old notion of worker solidarity – and the Valley’s passionate belief in self-enrichment.

SATISH GUPTA:I would thoroughly oppose the increase in pay. I would say why don’t we pay them in stock? I’d rather have my janitor be worried about security of my building rather than be worried about his pay going home in the evening.
Stock options are not what they need, they need houses to rent, they need a bedroom, they need to have medical care. Let’s talk about real dollars for folks who are living dollar to dollar and pay check to paycheck.We have to have a measure of equity here.

NATSOT: So how do you make money on this? The way we make money in this thing is we share with them advertising and merchandising revenue

Almost every evening, somewhere in San Francisco, a venture capitalist is throwing a lavish party to publicize its new investments.

NATSOT: The buyer doesn’t pay anything, and we facilitate the trade…

And every evening, in downtown San Jose, Leticia Tovar earns 14 dollars an hour.

MAURY KENDALL:The growing disparity of wealth that is happening in the Valley leads the rest of America, and America leads the rest of the world, and these problems are going to start happening increasingly around the world, and everyone better watch us for solutions that we can come up with.

The Valley’s entrepreneurs have started to take the housing shortage seriously. There are schemes to make low interest loans available, especially for teachers, and for the vital newcomers the talent-hungry valley still needs.

NATSOT: I’ve been recruiting a lot for engineers, biz-dev, marketing, I’ve also placed upper-level executives…

But the valley knows perfectly well that as long as life south of the border is wretched, there’ll be no shortage of janitors here. Almost no matter how little they are paid. It’s the future that matters to Lititia Tovar.

LETICIA: Es muy difficil…Life in Mexico is very hard. That’s why so may people come hereI mean, two of my kids are now in high schooland the other two are in elementary school…en la primaria. Por esos…It’s hard here, but I keep going for their sake…por ejos

NIMISH: of all the countries I know, I don’t know any country that offers the amount of opportunity, and the ability to assimilate as the US does. Everyone of these folks has an opportunity more so here than anywhere else.

If you don't make it, your children will. It's been the hard creed of the american migrant for a hundred and fifty years - and it applies with full force in the valley today. And if you're a battler, or a loser, or behind in the race, there's always the No 22.From San Jose to Palo Alto, the bus shuttles back and forth all night long.The driver calls it Motel 22. At four bucks a ticket, it's the cheapest night's sleep in the Valley of Dreams.

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