The long read: Corey Pein took his half-baked startup idea to Americas hottest billionaire factory and found a wasteland of techie hustlers and con men
The most desirable career of the 21st century, with numerous advantages over other fast-growing occupations such as hospice carer and rickshaw driver, is being a billionaire. Prior to the incorporation of US Steel in 1901, the world didnt have a single billion-dollar company, much less a billion-dollar individual. Today, more people than ever are becoming billionaires 2,000 and counting have made the great leap upward, according to the global wealth team at Forbes. And the USs hottest billionaire factory is located in the most hyped yet least understood swath of suburban sprawl in the world: Silicon Valley.
Despite what you may have heard, hard work in your chosen trade is absolutely the stupidest way to join the billionaires club. In Silicon Valley, the worlds most brilliant MBAs and IT professionals discovered a shortcutto fabulous riches. Ambitious Ivy Leaguers who once flocked to Wall Street are now packing up and heading west. The Valleys startup founders, investors, equity-holding executives and fee-taking middlemen have thrived above all. Inspired by their success, my idea was to move to Silicon Valley, pitch a startup and become obscenely rich. I left home with some homemade business cards showing my new emailaddress, firstname.lastname@example.org, and a bunchof half-baked ideas.
The first thing I needed was a place to stay. The best deal I could find on short notice was a place I called Hacker Condo. Like most Bay Area newcomers, I was relying on the short-term apartment rental app Airbnb. At $85 (59) per night, the place cost less than the marketaverage, but was still more than I could afford.On the upside, it was in what the real estate hucksters called SoMa a trendy San Francisco neighbourhood well suited to my journalistic and entrepreneurial purposes. Once a low-rent manufacturing district, the south of Market Street area had become the go-to place for startups seeking industrial-chic open-plan offices, although the poor and homeless had not yet been fully purged.
The ad for Hacker Condo stated an express preferencefor techies: We would like to welcome motivated and serious entrepreneurs who are looking to expand their network, it said. Perfect. The best part: No bunk beds. I told the hosts that I was an embryo-stage startup founder and author. The hosts didnt own the place. I looked it up: the mortgage was held by some European guy who seemed to spend most of his time surfing at a resort and dabbled in the tech business as a hobby. The legal status of this rental arrangement was, lets say, unclear.
I rang the buzzer for a unit labelled TENANT. A man answered right away. He had been waiting. After a moment, the door opened, and I met my new roommate, a gangly Kiwi. We took the elevator three floors up and entered a silent, beige-carpeted hallway. Our unit was No 16. The first thing I noticed inside was a small mountain of mens shoes. Hacker Condo was modern and more spacious than seemed possible from the outside. The unit was spread over three floors. The furniture consisted of a picnic bench and a sectional sofa spanning the width of the living room. I counted five other short-term tenants. The Kiwi told me that soon, some Norwegian guys a whole startup team would be moving in. We calculated that Hacker Condo would soon have three more guests than it had beds.
Whats the key situation? I asked.
Theres one key, the Kiwi said.
One key? I said. For everybody?
There were more tricks to learn, as a consequence of the possibly illicit nature of this type of rental arrangement and the evident stinginess of our Airbnb hosts. The Condo Hackers never came in through the front door. It was too conspicuous. I followed the Kiwi down to the ground-floor garage, then outside to the rear of the building. He showed me how to slide my hand along a grate to locate the tiny combination safe that contained the exterior door key. It was best to do this when no one was looking.
I knew not to spend too much time getting to know my flatmates, for we were all rootless high-tech transients, our relationships temporary, our status revocable.
The room I had booked was available for only two weeks. As soon as I connected to the wifi network, Iwould need to start looking for another place. My room had five beds in it. Ithought I had paid for a private space. I double-checked. The listing clearly stated no bunk beds, but down in the fine print I finally found the words shared room.
Two weeks was not enough time to find an apartment in San Francisco. Not on my budget. Rents were higher than in New York or London. One-beds were running at about $3,000 per month; studios, about $2,500; shares, $1,500; and illegal crap shares, $1,000. It was the same deal across the bay to the east in Oakland and Berkeley, as well as to the south in the Silicon suburbs of Redwood City, Palo Alto and Mountain View. Whatever I might save in rent by living on the periphery I would lose in transportation costs and time.
These hacker houses were the products of disruptive innovation in the urban property market. The city was once riddled with small apartments and single-family homes that sheltered trifling handfuls of obsolete labourers and their unproductive children, often for decades at a stretch. But the tech boom let such so-called family homes reach their full potential as investment properties. Some hacker houses were attached to startup investment incubators or shared workspaces. Others amounted to little more than flimsy bunks in a windowless room. A number of trend-savvy investors purchased or leased dozens of residential properties around the Bay Area to rent out in this fashion.
Although I envied them from my dark and squalid quarters, the San Francisco long-timers who lived in rent-controlled apartments were in situations nearly asprecarious as my own. I met a musician who lived in a$600 rent-controlled apartment in the Mission. WhenImet her, she was terrified that her landlord would evict her and sell the building so that it could be rented out at six times the price to white techie colonisers such as myself.
With landlords eager to cash in, formal evictions had increased 55% in five years. More often, though, landlords simply bullied their tenants into packing up. Tenants are getting evicted for having cups in their cupboards. The landlords say its clutter. Theyll say anything. Eventually the tenants just give up, a lawyer for a tenants rights organisation told me. His employer, the Eviction Defense Collaborative, was itself getting evicted from its offices so that the landlord could rent the space to a tech startup.
My earnings potential had plummeted when I stopped writing software and started writing for newspapers. I now looked with envy at the techies, the winners, the pioneers. They had ideas. They had momentum. Most important, they had money. Why not me?
I wasnt just changing careers and jumping on the learn to code bandwagon. I was being steadily indoctrinated in a specious ideology. As proud as I was of having learned new skills, I didnt understand that the only way to turn those skills into a livelihood was to embrace the economy of the digital world, where giant corporations wrote the rules.
My idea was to pitch a tech startup and get obscenely rich while writing a book about how to pitch a tech startup and get obscenely rich the Silicon Valley way.
To save money, I took to cooking my own meals most of the time. This was when I discovered that it was much easier to launch a tech startup if you could afford to always have food delivered and never had to deal with mundane chores such as doing laundry, washing dishes or buying groceries. As one Twitter wag observed, San Franciscos tech culture is focused on solving one problem: what is my mother no longer doing for me?
I never felt older nor crankier than when watching these digital natives stumble through the daily rituals of adulthood. One of the kids, an overachieving Ivy Leaguer whose Google internship demanded an advanced understanding of high-level mathematics, was completely baffled when it came to using a simple rice cooker. I explained the process: put in rice, add water, press the button labelled cook. He grew increasingly flustered, and I suspected he wanted me to make the rice for him. He managed to saut a boneless, skinless chicken breast, but only by following the instructions on the package to the letter.
How did it turn out? I asked.
Its terrible. Bland, he said. Im full, thats allthatmatters. I dont care how it tastes.
When I first heard about Soylent, the startup selling a gooey meal replacement beverage powder with a determinedly neutral flavour, I wondered what sort of miserable insensates would choose to subsist on such glop. Now I knew.
It may have been better for everyone when the overpaid nerds stayed home. Theyre importing children to destroy the culture, one bar owner told me.