The place for good business karma

Silicon Valley prides itself on being a meritocracy. But how did it get that reputation?

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Kai Ryssdal: On University Avenue in Palo Alto, Calif., about as close to the heart of Silicon Valley as it's possible to get, there's a little two-story building not far from the train station. It's got a vegan cafe on the first floor. Otherwise, it's not all that remarkable. But for high tech entrepreneurs, 165 University is legendary. Some of the biggest and fastest-growing companies in the world got their start right there. Some of the corporate tenants have had such good luck, they call it the Karma building.

With Silicon Valley starting to come back from the Great Recession, we sent Marketplace's Steve Henn to find out how good the Karma really is.


Sound of Steve Henn climbing stairs

Steve Henn: This little building was the birthplace of entire industries. The first portable computers were invented here, some of the first smart phones were designed here, and upstairs, a couple of the biggest tech success stories in histories got their start.

Jack Abraham: There are a long list of companies that used to be here -- everyone from Google, this was Google's first office, to PayPal.

That's Jack Abraham, cramped into his little office with six programmers and his dog -

Woman: Milo stay here. Milo...

Abraham runs a tech start-up named Milo. It lets you search local stores to find out what's in stock right now. For Abraham and other techies, this little office is kinda like sacred ground.

Abraham: We have a pirate flag hanging over the main war column, is what we call it. My desk is where Sergey Brin once sat, who is the co-founder of Google.

To get his office Abraham had to launch a charm offensive. The owners are an Iranian family, and they own Medallion Carpet just down the street.

Abraham: So I had to go down there, and I brought in some baklava, because it was the Persian New Year, they are Persian. And they seemed to really like that, and they loved the business that Milo.com was in.

Abraham got his lease.

Saeed Amidi: But in return, we have an option to invest in them.

Saeed Amidi is one of the owners of the Karma building. Years ago, his family started accepting equity from promising start-ups in exchange for a discounts on rent. The family invested on the ground floor of PayPal, and Google and a couple others. They went from owning this little rug shop to becoming almost accidental venture capitalists.

In fact, Facebook wanted a five-year lease in the Karma building, and the family said no. That mistake cost them a fortune. But still the Amidis are now worth millions -- all because they were in the right place at the right time.

Amidi: Why, they say in real estate "location, location, location" is because of the people who pass by there every day. The people who make the location special.

Now Saeed Amidi's trying to bottle University Avenue's magic and transport it to a 175,000-square-foot building two towns over.

...Here in Sunnyvale. This huge space is called Plug & Play, and it comes loaded. It offers high-speed data connections. Lawyers and bankers are right here in the building. It has auditoriums, a cafeteria and outdoor balconies. Music pumps through the lobby and venture capitalists roam the halls.

Saeed Amidi says he gets such a rush from this place, he stopped going to his old office.

Amidi: You have incredible number of smart, innovative people. They are all building their dreams. Their energy is transferred to me.

That energy is a powerful draw in a recession. Sunnyvale has lots of empty offices. But more than 200 start-ups have leased room at Plug & Play. And Saeed Amidi's invested in many of them. He's hoping for another Google, maybe two.

But Judy Estrin, author of "Closing the Innovation Gap," says recreating University Avenue's magic might not be so simple. She says the whole culture of Silicon Valley has changed.

Judy Estrin: The entrepreneurs tend to be more focused on how much money they can make out of a start-up, as opposed to being captured by the passion of a problem they want to solve.

Estrin's says often in the "new" Silicon Valley the start-ups themselves are the products. And selling these companies is the payoff.

Estrin: There is more of a focus on, what I call, "trading and flipping" than "building and creating."

What's missing, she says, are long-term bets on big new ideas or technologies that could change the way we live.

In Silicon Valley, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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