— Silicon Valley, the mother lode of the high tech business, has another gold strike under way.
Some of the hottest new names in video games and online services are expected to go public for astronomical prices. And that means a lot of suddenly wealthy people are in the market for a new car with a pricey name or a new home.
There is no housing crisis in Silicon Valley.
“You're having homes sell over list price,” said Ken DeLeon, a real estate broker with Keller-Williams. “But not only over — sometimes several hundred thousand over."
Who are these people getting rich — or hoping to — in the middle of an economic downturn?
Recent Stanford grads such as David Millman are turning down multiple job offers from big tech companies to build their own startups.
"You want to strike while the iron is hot,” he said. “Because you know the Valley economy is good right now, that's sort of your chance to work on these exciting projects."
Dylan Smith, 25, and his boyhood friend Aaron Levie, 26, are two of them. In 2005 they opened a company called Box which allows companies to share and store files from cell phones, iPads and Androids. Dallas Mavericks owner Mark Cuban was an early investor.
In the last nine months, Smith and Levie have almost doubled their work force, and they're now up to 6 million users. And they're moving to a new building three times as large.
"We wanted to be right in the center of Silicon Valley where there's much more talent, much more capital, much more access to resources," said Levie. “And I think this is the place to do that."
They expect to more than triple their revenue every year for the foreseeable future.
“I would say the biggest temptation is probably to try to do too much,” said Smith. “Although we are growing very quickly, we really need to focus on what's going to drive the most value for the business.”
It does seem that every corner of Silicon Valley has an office park fully occupied by hot, high- tech companies. Of course it was that way back in the 1990s — and then the bubble burst. Could that happen again?
Tim Draper is a leading Valley financier. It could happen again, he says, but this time conditions are different. The whole world is the marketplace.
“You can start a business anywhere, and it will spread around the world fairly quickly,” he said. “Because we now have 3 billion users of cell phones and 2 billion users on the Internet.”
Dylan and Aaron aren't thinking of going broke; they’re having too much fun growing their company. They must be doing something right. Big money experts say they could get $600 million for Box right now. But it's not for sale.