MARC ANDREESSEN knows a thing or two about Silicon Valley’s penchant for status symbols and its braggadocio. As a venture capitalist and serial entrepreneur, he has helped turn more than a few minnows into high-tech giants. As an investor, he serves these days on the boards of Facebook and Hewlett-Packard, among others. Along with avoiding such cardinal sins as going public too soon and being too eager to cash out, Mr Andreessen is adamant that his charges must refrain, at all cost, from pouring huge sums into glamorous new headquarters.
Silicon Valley did not invent the edifice complex. The compulsion to build monuments to a ruler’s power and prestige has existed since history began. But flush with cash and with interest rates near zero, the Valley’s leading lights are now competing with each other over who can build the most lavish digs, to feed their corporate egos as well as to attract and retain talent.
Despite Mr Andreessen’s forebodings, Facebook’s new West Campus in Menlo Park features a nine-acre (36,000 square metre) rooftop picnic area and a tunnel under the adjacent expressway to connect it to the firm’s existing headquarters. When 2,800 employees move in this summer, it is expected to be the world’s largest open-plan office.
On February 27th Google sought planning permission for an even grander campus than its existing Googleplex in Mountain View. The 230,000 square metre site will be covered by light, canopy-like structures (pictured) that can be rearranged to meet changing requirements.
Apple’s new doughnut-shaped, four-storey headquarters, resembling nothing so much as an alien spacecraft lurking eerily among a forest of 6,000 freshly planted trees, is under construction in Cupertino. This “mother ship”, the costs of which are rumoured to have escalated beyond $5 billion, will be two-thirds the size of the Pentagon and capable of housing more than 12,000 people when it opens next year.
There has not been such a flurry of edifice-building in the Valley since the glory days of the dotcom boom in the late 1990s. Firms like Sun Microsystems, Silicon Graphics, Excite and Borland Software built vainglorious corporate complexes just before the tech bubble burst. By coincidence, the tech-heavy NASDAQ composite index this week hit 5,000 for the first time since March 2000, when it peaked at 5,048. By October 2002 it had fallen to 1,114, and many a glass palace in Silicon Valley stood empty as a result.
As in every boom, the bulls say this time is different. At the height of the dotcom frenzy, NASDAQ companies’ shares were trading at 50 times earnings. Now they are at a more realistic 18 times (see Buttonwood). Google, Apple and Facebook are highly profitable and look likely to remain so. Still, a New Yorker looking up at the Pan Am, Chrysler and General Motors buildings might recall, wistfully, that the same must once have been said of those fallen titans, too.
