Once upon a time in Silicon Valley ... Okay, this year was no fairy tale, but there's plenty of tech to celebrate.
Here's what we learned while searching for Cool Companies this annus horribilis. No. 1: It was a very, very bad year to be a company masseur. No. 2: Retro--as in profits--is back. (It's the new black, if you will.) No. 3: Cash bars are de rigueur. In years past we've learned slightly more cosmic things. But the startup environment these days teeters somewhere between post-apocalyptic shock and hopeful desperation, making it a particularly, well, poignant time to search for cool.
Here's a typical--and true--scenario: In early spring a chirpy young flak calls from a hot San Francisco "relationship marketing" company (don't ask), relentlessly pitching her employer. A few days later she calls back. Is she following up? Not quite. She's now pitching her husband's company--in the three-day interim she has been pink-slipped.
Press releases, too, reflect the increasing desperation of these lean times. One proudly trumpets CommerceRoute, "a box that converts any form of data to any other form of data and then does what you tell it to do." (But can it chop and dice too?)
Beneath the devastation, however, cool lives. Take Genoa, a chip company whose product was thought by some to defy laws of physics. Or Atheros, which is refining a new wireless standard that could rock the industry.
Though this is without a doubt the toughest year for techies since FORTUNE launched its list in 1993, choosing what's cool has essentially remained unchanged. Yes, we've opened the field to people, products, and trends. Yes, we took a more sober and measured approach to our list. Still, we followed the same procedure: We polled the smartest people we know and combed through hundreds of startups. And in the end, as always, choosing what's cool comes down to pornography. As in: Defining it is nearly impossible. But you know it when you see it.
--Lee Clifford
Survivors
Cool is usually all about the upstart; this year sticking around is what really counts. So we assembled some Valley icons to toast their success. (Many remember the pre-PC days--take that, Gen Y!) For the record, no one was voted off our island (though we sensed a Transmeta-Microsoft alliance brewing).
1. Michael Christman
Age: 43
Title: CEO, OPTS Events
Valley Starmaker: In orchestrating some of the most prestigious events around, Christman has become a soothsayer. "Companies quit going out in public when things go down," he says. "I can see when a sector is about to slide."
2. Carol Bartz
Age: 52
Title: CEO, Autodesk
Island Tactics:
o Surround yourself with good people.
o Develop a business plan and execute it quickly.
o Track evolving trends.
3. David Ditzel
Age: 44
Title: Founder, Transmeta
Best Luxury Item: The co-creator of the Crusoe chip says the Toshiba Crusoe-based Libretto notebook is the only item he'd need on a desert isle. (Well, it beats an immunity headdress!)
4. David Nagel
Age: 56
Title: CTO, AT&T
Scientist or Farmer?: Mention Apple to this 29-year Valley vet, and he talks about his apple tree farm--"It's become a second career"--not Steve Jobs' company, where he worked as a senior VP.
5. Stuart Wolff
Age: 38
Title: CEO, Homestore.com
The Newest Castaway: A dot-com survivor is really rare on FORTUNE's island. How did Wolff do it? He credits his competitive streak and perseverance. "I'm an evolutionist, not a revolutionist."
6. Gordon Bell
Age: 66
Title: Senior researcher, Microsoft
Old Business Models Live!: People told Bell that his 1991 book High-Tech Ventures: The Guide to Entrepreneurial Success needed to be revised for the dot-com era. "I said, 'Just wait.' "
7. Dan'l Lewin
Age: 47
Title: Vice President, .NET Business Development, Microsoft
Smart Moves: Lewin knows how to forge an alliance--he worked with Jobs at Apple before moving to Microsoft. "Work for a profitable company and learn how it makes money."
8. Enzo Torresi
Age: 56
Title: Partner, myQube
This VC Gets It: "I always ask a CEO, 'What keeps you up at night?' Having been a CEO, I know the answers: the competition (never say you have none) and cash (never say you have a lot)."
9. Heidi Roizen
Age: 43
Title: Managing director, Softbank Venture Capital
A True Survivor Story: Valley native Roizen was rushed to the hospital the night of our photo shoot for an appendectomy. ("Everyone said, 'You look too healthy to be here'--must have been the makeup!") Roizen is known for her sense of humor, killer parties, and sharp business skills.
10. Ariel Poler
Age: 34
Title: Chairman, Topica
Class of '99 Rocks!: Topica sounds suspiciously '99 (it supplies tools to companies to create e-newsletters), but it continues to thrive. Once takeover bait, Topica is now looking to buy others.
11. Tom "TJ" Jermoluk
Age: 44
Title: Partner, Kleiner Perkins Caufield & Byers
Survival Secrets:
o Don't make your plans thinking last year was an aberration.
o Startups should be five- to ten-year investments.
o Remember, money is cheap; it's value added that matters.
12. Alfred Chuang
Age: 39
Title: Co-founder, BEA Systems
It's Revenues, Stupid: This 15-year Valley vet helped found BEA Systems. Now his e-business software company is rocking. Revenues soared 67% last quarter.
13. Steve Perlman Age: 40 Title: Founder, Rearden Steel Technologies Check the Water: With his new company in stealth mode, this Apple veteran and WebTV founder is honing his survival skills. "The guy who delivers water told us that someone had cased him to ask what we are doing. He stayed mum. Now we know who to buy water from."
Facts About Our 13 Survivors
312 Years in technology
230 Years in Silicon Valley
43 Board of director memberships, current
96 Board of director memberships, lifetime