As symbols of Austin’s high-tech bust go, the unfinished building abandoned by the Intel Corporation is a logical and popular choice, and it’s easy to see why. Construction of the $124 million project on the western edge of downtown was halted by the world’s largest semiconductor manufacturer in February. Now the spotless, skeletal six-story concrete hulk—surrounded by chain link and barbed wire—lends itself flawlessly to metaphor, serving as indisputable proof to the Wall Street Journal, Fortune, and just about everyone else that Austin’s boom has been mothballed. As a joke, the Austin American-Statesman invited four designers to suggest alternative uses for the site. The best idea was christened Casa des Cartas (House of Cards), described by its creators as affordable housing “for downsized dot-com executives [that] represents the tenuous nature of the high-tech industry at this time.”

But there is a better symbol of the tenuous nature of Austin’s high-tech adventure a mile or two to the east, near the intersection of Interstate 35 and Sixth Street, on the way to the city’s flashy new airport. It’s the neon-lined clock with wildly spinning hands that adorns the headquarters of Aperian, a medium-sized high-tech firm. Aperian is just over a year old. Its communications director describes the business as “a professional services and systems integration company,” which means that it tells other companies what kinds of computers they need to buy and what kind of Internet operations they should have. The souped-up clock, salvaged from the previous occupant, a Tex-Mex restaurant called Don Limon’s, is inscribed with the words “Internet Time.” It was supposed to illustrate the point that no one was moving forward faster than Aperian. But soon after Aperian went into business—at about the same time tech stocks collapsed on the NASDAQ in the spring of 2000—the meaning of Internet Time changed. In March 2001, for example, Aperian cut its workforce by 20 percent, and its stockholders probably started paying more attention to the boilerplate disclaimer in its corporate literature: “The statements made by Aperian may be forward-looking in nature. Actual results may differ materially from those projected in forward-looking statements.” By early May its stock had fallen from a 52-week high of $50.25 to $1.21. But the hands on its clock are still spinning, serving as a dizzying reminder of just how quickly and just how crazily everything went to hell.

Denial is the hallmark of most good times, especially those good times that involve making lots of money. Denial ruled in Houston in the late seventies, when everyone knew that the price of a barrel of oil could never possibly decline; denial ruled in Dallas in the early eighties, when everyone knew that growth would continue and borrowers would never go broke; and denial has ruled in Austin since the mid-nineties, when the high-tech boom brought the New Economy to town and promised to rewrite all the old rules except one: that money would never change Austin. People in Dallas and Houston lost their heads over their booms and therefore deserved the economic catastrophe that followed. But such a fall was inconceivable in Austin, because Austin had the right values. Unlike Houston or Dallas, it had never been graspy or materialistic (in the real estate boom of 1985, one of the richest guys in town was worth a mere $10 million, and he still wore Birkenstocks). It valued its own culture (Willie, et al.) and took great pride in its ecosensitivity (i.e. the sanctity of Barton Springs).

As times got better and better—1997, 1998—Austin’s virtue was validated. It seemed to transcend Texas, suddenly having more in common with tech centers like Silicon Valley, Seattle, and the suburbs ringing Boston’s Route 128, places where a much younger generation was remaking the future at breakneck speed. American Airlines’ “Nerd Bird,” the morning nonstop between Austin and San Jose, looked a lot more critical than any Southwest run. New businesses with names like,, and were poised to export the Austin ethos—hipness, nature, health—on a global scale. One reason Michael Dell, the founder of the world’s largest PC maker, easily bested musty politicians, professors, and developers to become the embodiment of the new Austin was that he understood restraint: Yes, he was spectacularly rich, and yes, he had hired Charles Gwathmey to build his private kingdom on a hill—but you could hardly see Dell’s place from the road. It was possible, by assembling the evidence just so, to assume that nothing like Austin’s boom had ever happened before. The capital of Texas was going to host a good-taste-good-works boom, and it would last forever.

Everything about this boom looked new and different. The city was overrun with savvy new lawyers, bankers, and investors, while the value of companies like Dell, Motorola, and Advanced Micro Devices exploded (Dell’s stock price increased 8,000 percent from 1995 to 2000). IBM paid an unprecedented sum—$743 million—for a small, homegrown software company called Tivoli. “At the time,” says one of Tivoli’s investors, “that was a ‘holy shit’ amount of money.” The glamour play was on the Internet, where a new crowd of young venture capitalists and even younger technicians was going to discover new applications—though no one was quite sure what they might be. The dot-coms, recalls John Thornton, a general partner in the venture capital firm Austin Ventures, “were building something that was plus or minus unique.” What appeared to be unique was that investors could reap millions of dollars, or hundreds of millions, by funding businesses that existed solely in the ether. No one needed a store from which to sell goods anymore, and no one needed to waste money on overhead. All anyone needed was a clever marketing campaign that would steer hungry consumers to cool retail Web sites.

That kind of thinking bred new job titles, a new employment philosophy, and a new language. A person who once made a living writing copy for an ad agency could now earn significantly more, for instance, by performing the same function as an “information architect” for a Web-based retailer. Software companies lured potential executives with $10,000 signing bonuses and enticed high school kids with the promise that, if they worked hard to get the company to the IPO stage—toward “a successful lucrative exit” or a “successful liquidation event”—they wouldn’t have to worry about paying for college. Forget medicine or law or even screenwriting; the future lay in toiling around the clock for a company like KD1 (“KD” stood for “Knowledge Discovery”), which sold software that showed retailers that customers who bought duct tape could be induced, simultaneously, to buy light bulbs. KD1 had revenues of under $5 million and sold for $126 million, making some of its employees incomprehensibly rich. The things they bought—Land Rovers, Armani jackets, a supersize Craftsman “bungalow” with copper rain gutters and a home theater—had been luxuries just a few years back, but the Austin boom had transformed luxuries into essentials. “You don’t understand the difference between $10 million and $100 million,” an exasperated dot-com executive who had made a successful lucrative exit explained to me. “It’s jets.”

Inevitably, a new Austin emerged. It was a little more like Manhattan, with people clothed entirely in black sipping drinks at Trulucks and people living in lofts that had once been warrens in the Bureau of Vital Statistics building downtown. At Susan Dell’s couture salon, the cut, fabric, and price of the clothes and the store’s spare, luxe decor telegraphed Madison Avenue. In other ways, Austin became more like Los Angeles, or more particularly, Hollywood: the monumental traffic jams, the designer mansions blanketing the hills, the parleys with venture capitalists that resembled movie-pitch meetings (“Five words: Cat litter over the Internet”). Seattle’s influence was also detectable: Just as grateful minions in Redmond genuflected before Bill Gates, Austin had the Cult of Dell. The story of his early success—how he had created his computer business in his room at Jester dormitory at the University of Texas—was endlessly repeated. It was rumored that, from his aerie in the hills, he took a different car and a different route to work each day. It was rumored that his children had their own nannies, their own bodyguards for play dates, and their own monkeys for pets. As one local put it: “Every time Dell farted there was something in the paper about it.”

Showy money arrived, the kind that historically had been more common to Dallas and Houston. It was no longer rude to stop by a relatively modest Windsor Road home and offer the owner $1.5 million to sell, or to knock on the door of a relatively modest home in Hemphill Park and offer the owner $200 a square foot and raise the price to $225 when he balked. The scale of this new real estate boom dwarfed its 1985 predecessor. “In 1990 there were very few places worth a million dollars,” one realtor told me dryly, “except maybe the Governor’s Mansion and the Capitol.” Slackers, needless to say, were priced out of town.

Austin found that its vaunted social conscience had changed too. The wealthiest people worried about the effects of “affluenza” on children more familiar with Turks and Caicos than the east side of town. One little girl was repeatedly asked the square footage of her house on her first day at a new school on the west side; no wonder Westlake High’s counseling program was bigger than its chemistry department.

And then, seemingly overnight, the best virtual intentions were exposed as just that. It happened around the time a local nonprofit with the Web site invited tech workers to use their stock options to make donations to good causes. The money was good the minute the options matured, but for many donors that day never came.

Of course, no one takes stock during good times, not in the metaphorical sense anyway. But after the NASDAQ crashed from 5,049 to 3,164 in the spring of 2000, the mood in Austin became a lot more contemplative. Then the news got worse: In succession, the city’s most glamorous e-businesses collapsed (in 1999 sold at $45 a share. Within a year the stock price was $2.75). Subsequently, more local darlings faded. Vignette, whose value had peaked at nearly $25 billion in 2000, reported a market capitalization of a measly $2 billion. Trilogy fired one third of its workforce. Dell, the great engine of Austin’s growth that had once seemed infallible, stumbled. In February the company laid off 1,700 workers; in May it announced that it would let go of 4,000 more., which wowed the world with its hip Super Bowl commercial, vaporized. All of a sudden, headlines like “Silicon Labs’ Profits Shrivel” were commonplace in the Statesman. Then, the real estate market dominoed: A record number of million-dollar homes squatted on the market, while in the high-tech corridor north and west of town, one million square feet of office space would be available for lease over the next quarter. The number of used Porsches for sale at Roger Beasley’s dealership ascended. It came as something of a shock that the virtual world, created with other people’s money, had the power to put real people out of work. The temper of these particular times may explain why John Thornton, whose firm, Austin Ventures, invested in portions of so many local start-ups, today wears a game face that reflects the proper mix of humility, confidence, and cautious optimism. Thornton is a small, boyish man who favors khakis and hip eyeglasses; he came to Austin Ventures right after earning his Stanford MBA in 1991. When he talks, he lounges in his chair and kicks off his loafers in a not entirely convincing show of ease. (This makes sense—Austin Ventures’ portfolio has taken a beating, but the company just raised $1.5 billion in venture capital, a significant portion of which is headed for wireless companies in . . . Dallas. “To us, Dallas feels a lot like Austin in 1995,” he says.) Clearly, Thornton has been doing some thinking. Venture capital firms, he admits, invested in “lots of things that shouldn’t have seen the light of day.” One of the lessons learned by the community, he says, “is that, by and large, there’s no such thing as a new business model.” Companies like,, and were “dumb ideas.” Directing consumers to Web sites turned out to be just as expensive—if not more so—than driving them to real stores. Divested of its gold dust, much of Austin’s boom was revealed to be much ado about shopping. Thornton believes it is time to return to the serious work of computer hardware and software. “We are infrastructure people,” Thornton says. “And Austin is an infrastructure town.”

This sadder but wiser rhetoric would be eerily familiar to any Dallas banker who’d lost faith in the handshake deal, or any Houston oilman who could no longer maintain that entrepreneurship made his city world-class. If Tolstoy had been covering the Austin boom, he would have written that all happy times are happy in their own way, but all corrections are the same.

In the spring of 2001, for instance, diversification, the great panacea, was in the air. Thornton personally invested in a new Japanese restaurant called Kenichi. So too was rationalization: When Merrill Lynch projected a real estate correction for Austin’s suburbs, the story in the Austin Business Journal noted that “local market watchers say the projected decline in occupancy rates might be good for Austin.” Though the article never explained why, a consensus arose that the bust in general might be Good for Austin. Hence, the For Sale signs sprouting in front of McMansions heralded less traffic and more realistic home prices. Environmentalists would worry less about development in Barton Springs’ watershed. Solvent companies that paid salaries and benefits took on new cachet too: It became possible to hire a twenty-year-old without promising him a new car or that he could take his puppy to work. Employers focused on “trimming the burn rate” at which they went through cash. “Now the emphasis is on revenue,” says Paula Fracasso, the executive director of the Austin Entrepreneurs Foundation.

The emphasis was also on retrenchment. Suddenly the idea that “Old Austin just got bypassed” by the boom became a point of pride, while the newcomers who had built it were recast as despoilers. It was noted how many of the authors of the boom had, in fact, been outsiders: Michael Dell came from Houston, Thornton from Wichita, Kansas; many of the bankers and lawyers had come from Silicon Valley. Texspresso, a homegrown coffee shop losing the inevitable battle with Starbucks, issued a moral challenge. “Austin!” its sandwich board demanded. “Why do you support Seattle?”

It was time to return to the values that had made Austin Austin. Schoolchildren decorated the fence around the barren site of a proposed Target store at Sixth and Lamar with pictures of Willie Nelson and Eeyore’s Birthday Party. Reformed dot-commers talked about the joys of family and friends. “For those who prefer overachieving to overworking, the @Hand environment supports a proper balance of work and life,” that company’s recruitment materials stressed. A former chief technical officer of began concentrating on his hobby: putting on magic shows.

Recently I had a drink with a boy wonder of the boom, one of those guys who’d relished the one-hundred-hour workweek, who’d built and lost the zillion-dollar company, who’d held on to enough goodwill to launch a new venture. Still, he was questioning his past and rearranging his priorities. “People got caught in this tide and got carried away,” he asserted. “It seemed real at the time.” Then his ringing cell phone interrupted his discourse. He studied the number on his LCD screen, took the call, and listened intently. I’d assumed he was lining up another deal, but times had changed. This was the new old Austin, and he was maximizing his social life. “It’s pretty low stakes,” he finally said to the caller. “We’re more interested in drinking than in playing poker.”