Twitter flotation: what do superstars of tech do with riches? Carry on creating 2.0 out of 5 based on 2 votes.

Far from wallowing in their wealth, startup founders who've made their fortune can't shake off the drive to keep working

Leave it to Justin Timberlake to utter the most important phrase in The Social Network, a film that charted the tumultuous rise of the Facebook founders. It was about money. "A million dollars isn't cool," he quipped in his role as Napster founder and early Facebook backer Sean Parker. "You know what's cool?"

The answer was of course: "A billion."

In 2010, Mark Zuckerberg joined the billionaires' club as a result of the Facebook IPO, the latest in a line of hardcore geek entrepreneurs who had come to Silicon Valley to chase dreams of changing the world with lines of software code.

The same rapid elevation of wealth happened in 2004 to Google founders Sergey Brin and Larry Page, and will happen again to Ev Williams, one of the co-founders of Twitter who has a 12% stake in the company and is almost guaranteed to become a paper billionaire when the seven-year old microblogging service goes public. Other top shareholders include co-founder Jack Dorsey, whose 4.9% stake could be worth $470m, and CEO Dick Costolo, whose shares could be valued at $150m when Twitter is listed on the Nasdaq.

Companies typically float on the stock market so they have more money to grow and the windfall for early shareholders is always a nice bonus. So what do the Valley's geek engineers do with their new, often eye-watering wealth?

The answer is a little different from, say, the investment banking and hedge-fund superstars in London and New York, characterised by silk ties and tailored suits, champagne on yachts, country clubs and TED-conference hopping.

It's true that on the day of Facebook's IPO, at least a couple of sports cars were seen driving out of the company's car park with new stickers still fresh on their windshields. Yet on the whole, the Valley's "millionerds" tend not to flaunt or even play with their wealth as they might in other parts of the world. They'd rather spend their money building more technology. While London's wealthy bankers head to exclusive nightclubs, Silicon Valley's tech titans sit in at demo days for the startup incubator Y Combinator, watching young entrepreneurs take the stage to talk about the next billion-dollar idea and picking their next investment. They'll trade suits for sandals and shorts, charity work for startup board seats, opera tickets for 24-hour hackathons.

"You can only buy so many shiny objects," says Scott Hassan, one of the first software engineers at Google who became a multi-millionaire when the internet giant went public in 2004. "The majority of the people at these companies are engineers and the engineering mentality is all about building stuff. In the grand scheme of things, a fancy car is actually quite cheap. Houses? You need only one or two. After you buy one, you may buy another for your mum, and then you think, 'Is this it? Is this all there is?' And then your mind turns to, 'How can I make a difference?'"

Hassan argues that because so many startup founders in Silicon Valley are engineers at heart, they simply can't shake off the drive to keep building something even after they've made enough money to retire.

He says he attended plenty of parties after the Google IPO, but the general atmosphere became anticlimactic. Partly this was because there had been an inevitability to Google going public. It was something that all companies in Silicon Valley did even though, arguably, Google didn't truly need the extra investment at that point. It had revenue and (unlike Twitter today) was profitable. The result was increased liquidity and more wealth. Facebook's IPO was expected to create 1,000 millionaires out of its staff of 3,000 and that event alone drove house prices up by double-digit percentages in the certain parts of the Valley.

Yet many of the newly minted went on to start new companies too. Facebook's early backer Peter Thiel incubates companies through his Founders Fund. After Google, Hassan started a robotics incubator called Willow Garage, hosting engineers who specialised in making telepresence robots. These devices are essentially Skype on wheels; you can drive them around an office from any location to talk to others, so that someone who lives on a mountain can still virtually attend meetings in the city.

Hassan used his Google windfall to fund some of the robotics startups that were part of Willow Garage, and started his own telepresence robotics company, Suitable Technologies in Santa Clara, funded almost entirely from his own pocket.

"You start building companies as a way to make something that really affects the world," Hassan says. While investment bankers typically make money by taking a cut, the prevailing mentality among successful startup founders here is to build something from nothing. "It's a very different concept and a different type of person who wants to do that."

Part of this also boils down to the very blurred lines between work and play in Silicon Valley. Startup founders who come here to grow their companies find that meetings can be held at all hours of the day, night and weekends. Software engineers can easily work 80 hours a week to finish a project at Facebook or Apple, and do so as a badge of honour. One startup that was recently incubated by YCombinator is based in a house in the Los Altos hills, its founders sharing a king-sized bed and programmers crashing on the couch while they code through the night. The gadget they're making could change the face of computing and one of the first customers of their early prototypes is none other than Steve Wozniak, the billionaire who co-founded Apple with Steve Jobs nearly 40 years ago. Woz, like many others, would rather tinker on new technology than flat out retire.

Technology here is work and play, quite literally in the DNA for some people whose parents and grandparents have worked in venture capital or at one of the early semiconductor foundries.

So goes the Silicon Valley bubble, where startups vie to get funding from the top five venture capital firms, have connections to the founders of internet giants such as Facebook, Google or eBay, or come from top incubators such as Y Combinator or 500 Startups. The region touts itself as a meritocracy where the smartest engineers rise to the top, but building relationships with key people like the recipients to previous IPOs is also vital for success.

"Sure, there's going to be some more car sales," says Hassan of the Twitter IPO. "But that'll be tiny compared to the amount of money that's going to be distributed, creating jobs, and creating more companies."

Parmy Olson is a technology writer for Forbes magazine in San Francisco. She is the author of We Are Anonymous (Little Brown, 2012) © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds



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