The Other Tech Bubble

The Other Tech Bubble

How tech companies became detached from urban life and its problems—even when the city is their home. 

February 19, 2016

This article appears in the Winter 2016 issue of The American Prospect magazineSubscribe here.

Just off the freeway 40 miles south of San Francisco, in the bedroom suburb of Cupertino, earth-chewing bulldozers and swooping construction cranes are busily at work on Apple’s colossal new campus, slated to open in late 2016. When it’s done, it will be unlike anything Silicon Valley has seen before. Rather than a scattering of nondescript office-park buildings, the campus consists of one enormous circular structure, an information-age Pentagon that will house up to 13,000 Apple employees in one place. Designed by superstar architect Norman Foster, the four-story ring of gleaming curved glass will be as sleek as an iPhone and look, as late CEO Steve Jobs put it, “a little like a spaceship landed.”

While building big, Apple also is building green. Parking lots have been sunk underground. Lush landscaping will cover 80 percent of the site on completion. In a nostalgic hat-tip to Jobs’s California childhood, when the Valley was filled with fruit farms, the thousands of trees to be planted will include small apricot orchards. But the single structure and extensive grounds also provide Apple with something it cares about even more than apricot trees: isolation. Internal planning documents have stated this quite pointedly, observing that the great spaceship will provide Apple with “the security and privacy required for the invention of new products by eliminating any public access through the site.”

Zoom up about 700 miles north to Seattle, and find another tech headquarters that seems quite different. Amazon and its founder and CEO Jeff Bezos have chosen to be in the city, not the suburbs, from nearly the start. After a number of years in a repurposed military hospital in the southern part of Seattle, the online retailer began in 2007 to take over buildings in Seattle’s South Lake Union built on spec by another tech titan (turned real-estate mogul), Microsoft co-founder Paul Allen.

Amazon’s neighborhood is right at the city’s geographic center, sandwiched between its two freeways, crossed by other major arterials, and gazed down upon by two of the city’s most populous neighborhoods, Capitol Hill and Queen Anne Hill. Instead of verdant suburban landscaping, Amazon has the city streets. Instead of in-house gourmet food courts and fitness centers, it has the neighborhood. Thousands of jeans-and-khaki-clad Amazon employees flood the area throughout the day, their company badges dangling from their belts. South Lake Union restaurant servers call them “badgers.” In the eight years since Bezos and company moved in, South Lake Union has turned into Amazonia, and Amazon has become impossible for Seattleites to ignore.

But look a little closer, and Amazon and Apple aren’t all that different. As Amazon has grown, the famously unflashy company has started to build things in South Lake Union that are as monumental and futuristic as Apple’s infinite loop, including a set of spectacular “biospheres” now under construction that will be at the center of a new urban campus with more than three million square feet of office space. Slated to open in 2017, the giant domes of glass and steel promise the same security and privacy as Apple’s Cupertino retreat. They are in the city, but not of the city.

More and more tech companies are now like Amazon: urban by birth or by choice. Between 2004 and 2013, technology jobs in San Francisco grew by 109 percent while growing only 15 percent in Santa Clara County—the heart of Silicon Valley. In New York City, tech jobs grew 33 percent between 2010 and 2014, more than four times the rate of the city’s job growth as a whole. Major tech players like Twitter have made cities their home from the start. Others are moving back in, like Expedia in Seattle and Autodesk in Boston. Even those that have stayed in the suburbs, like Facebook and Google, have built headquarters designed to be private cities in miniature, encouraging casual interactions and sociability with volleyball courts and video arcades, custom eateries and coffee shops.

Wherever they go, large tech companies tend to build in the same way. They create workplaces as full-immersion experiences: places where employees can find all the things they need without straying too far from their desks. In a hotly competitive marketplace for tech talent, companies recruit and retain with built environments designed to encourage loyalty and love for the firm. “Work hard,” Amazon’s motto goes. “Have fun. Make history.”

What’s the result? There are hives of innovation in buildings and campuses that are literally sealed off from the public, even when they are located in the heart of the city. There are armies of bright, politically engaged, socially conscious techies working in and leading companies that can remain oddly disconnected from civic life.

AP Photo/Paul Sakuma

Oracle's headquarters in Redwood City, California.  

This separation from the life of the city has ripple effects. Amazon’s influx of workers burdens an already strapped and crowded Seattle public transit system, but there’s little evidence the company is doing much to shore up that system. In San Francisco, Google runs more than 100 private buses down the freeways to bring more than 6,000 employees to work each day. Another solution might have been to improve the Bay Area’s fragmented mass transit system, but this is not one of the moon shots the audacious and deep-pocketed company has decided to make. Twitter got a big tax break for locating in a gritty San Francisco neighborhood, but its employees contribute little to the surrounding community. Even the construction of Apple’s new campus has required the rerouting of streets and prompts hurrying drivers to zoom through quiet residential enclaves to avoid bottlenecks.

Similarly, the apps of the Web 2.0 economy, by creating a protective layer between their users and the messiness and inconveniences of urban life, create additional political flash points. Ballots bristle with initiatives to curb poster children of the sharing economy like Airbnb. Taxi drivers from London to Lille to Los Angeles battle Uber and Lyft. The continued importance of proximity in an Internet-saturated, smartphone-toting world means home prices that spiral out of the reach of nearly everyone.

A reflexive response to all these changes has been to blame tech companies and their workers for all these social ills. Yet the onslaught of apps and the influx of tech people and wealth have had a huge impact on communities large and small because public infrastructure—from roads and transit to schools and housing—already was so fragile, and so full of holes. Angst about tech also tends to overstate the impact of the sharing economy, whose drivers, delivery people, and TaskRabbits are only a very small fraction of the contingent, part-time workforce.

The current tech blame game tends to ignore not only the longer political history of cities, but also the history of the tech industry itself. To understand why companies like Apple and Amazon have little engagement in civic life—unlike many other companies that play an active civic role—we need to dig deeper. When we do that, we find an industry with a century-old habit of building self-contained offices and laboratories deliberately set apart from the messiness and distractions of city life. This isolation has arguably been a factor in the roaring success of some tech companies. But their disengagement from the civic arena is increasingly hard to defend in an era when the tech industry has come to the city, or the city has come to tech—and the two depend uneasily on each other.


"LAWNS, FLOWERS, AND TREES are good to look upon. Light and airy offices are pleasant to work in. An atmosphere created by wholesome natural conditions is conducive to cheery dispositions, and cheery dispositions are conducive to top-notch work.” This is what Architectural Record had to say in the summer of 1914 about what arguably was America’s first high-tech campus, a General Electric research facility seven miles outside of downtown Cleveland called Nela Park. Dubbed “The University of Light” by GE executives, the one-year-old facility was a far cry from the drab and smoky structures that housed most of the nation’s industry at the turn of the 20th century.

With elegant brick buildings surrounded by rolling hills and manicured lawns, Nela Park had the look of a grand English manor and the amenities of a country club. In between hours at work in the lab and the engineering room, workers could play a round of golf or a game of tennis. They could kick back in comfortably furnished game rooms (one for men, one for women). They could visit the on-site doctor’s office if they got sick. An adjacent “Nela Camp” offered sports-filled weeklong retreats for top salesmen and clients. The firm took the full-immersion idea of the blue-collar company town and recast it for an educated, white-collar workforce.

The result of this extravagant outlay was a PR-worthy showcase. The smart people and fancy facilities of Nela Park regularly starred in national ad campaigns. Its Christmas light show became an annual ritual for generations of Cleveland families. But it also reflected deeply rooted cultural ideas, brought across the Atlantic from much older monastic and academic enclaves and blended with particularly American notions of propertied individual freedom.

After all, America is the place that invented the college “campus”—the grand name affixed to the lawn outside Princeton’s Nassau Hall in the 18th century. In a similar vein, Ben Franklin insisted that his University of Pennsylvania be located far enough away from Philadelphia to afford it “a Garden, Orchard, Meadow, and a Field or two.” Founding Fathers and 19th-century transcendentalist philosophers alike propounded the notion that Americans’ deep thinking could occur only in peaceful, pastoral environments.

At the other end of the spectrum were the real and imagined perils of the 19th-century city. Noxious with smells and smoke, filled with immigrants, crime, and cheap amusements, cities endangered the life of the mind. Fear and hope were then joined together in a highly profitable real-estate proposition. Outside Anglo-American industrial cities, from Manchester to Minneapolis, developers built leafy suburban enclaves that allowed people with education and money to take refuge from all the urban chaos.

By the time Nela Park rolled around, belief in the virtues of the countryside had paired with a mania for maximizing workplace efficiency and productivity. Management crowed that the new facility had allowed their scientists and engineers to shave half an hour off the workday. But Nela was also an exercise in team-building. “By locating the home office departments off by themselves,” one corporate history recounted, “they would develop an individuality and morale of their own.”

Just like generations of techies to come, the builders of Nela vowed that their campus was about something more than business as usual. Placards hung throughout the campus bore an inspirational quote from one of its executives: “I had rather make men than money.”


FAST FORWARD THREE DECADES. Remarkably similar ideas propelled the development of another iconic and influential campus, Bell Laboratories, which moved from crowded Manhattan quarters in 1942 to the bucolic central New Jersey suburb of Murray Hill. Conveniently close to the homes of its leading executives, but painfully remote for nearly everyone else who worked there, Bell Labs’ suburban facility provided its employees with airy lunchrooms and sunny lounges.

That splendid isolation—along with the extraordinary resources the AT&T monopsony was able to lavish on its researchers—yielded brilliant results. Within a decade of the move, Bell Labs had produced the transistor and reinforced the image that the suburbs were the place for engineering-intensive industry to be. By 1962, the whole operation moved into a midcentury analogue to Apple’s silver spaceship: a stunning glass-encased showplace designed by Eero Saarinen in Holmdel, New Jersey, whose sprawling and sleekly modern design aimed to maximize interaction and collaboration.

AP Photo/Ted S. Warren

In this January 29, 2015, photo, Seattle's South Lake Union neighborhood is shown dotted with construction cranes and new buildings as viewed from the top of the Space Needle. moved its headquarters to South Lake Union in 2011. 

Of course, by that point, the suburbs were becoming the place where most everyone wanted to live and work. Giant corporations like General Motors joined AT&T in building elaborate suburban showplaces for industrial research. Companies of all sizes and temperaments became part of the suburban exodus of the 1950s and 1960s, lured by cheap land and a cornucopia of tax breaks.

The same things enticed residential developers to plow up thousands of suburban acres and build millions of homes for families, rich and not-so-rich. Yet the booming postwar suburbs were not only a magnet but also a means of escape, separation, and segregation. Through means legal and extralegal, developers, governments, and homeowners kept out most African Americans and people of color.

All this happened amid a huge boom time for tech, thanks in large part to the Cold War military-industrial complex. Along with turning little start-ups into million-dollar companies, public spending remade American economic geography, funneling resources, production, and an army of white-shirted and crew-cut engineers to defense hubs on the West Coast and in the Sunbelt.

The military further encouraged suburbanization of its contractors because of civil defense anxieties. Brochures given to prospective contractors asked, “Is Your Plant a Target?” and noted the military’s preference for working with “dispersed” industry—dispersed in suburban areas at a safe distance from the central cities considered to be ground zero for Soviet missile attack. What’s more, the top-secret nature of a lot of this government work demanded isolation and privacy, far away from the prying eyes of curious passersby.

Even companies that didn’t rely as heavily on defense work found urban life impractical. Crowded with people and filled with aging commercial real estate, cities became increasingly challenging places to build the high technologies of the computer age. The noise and vibrations of Lower Manhattan had disturbed Bell Labs’ experiments with delicate instrumentation before its move to Murray Hill. The first digital computer maker, Univac, started up in a ramshackle storefront in downtown Philadelphia that grew so hot when the room-sized behemoth was running that engineers had to strip down to their underwear. In the suburbs, companies could find the large floor plans and air conditioning they needed, not to mention real-estate prices that suited young companies with shoestring budgets.

AP Photo/Mark Lennihan

A building, right, covering an entire city block in the Chelsea neighborhood of New York is home to Google's New York offices, Friday, December 3, 2010. 

OF COURSE, NOT EVERY SUBURB became a high-tech hub. The one that became the capital of them all—and the aesthetic and cultural model for suburban tech everywhere—grew 30 miles south of San Francisco in a fertile valley known prior to the 1950s mostly for its prodigious fruit harvests and its middling but remarkably wealthy private university.

By the time Silicon Valley got its snappy nickname in 1971, Stanford had turned into a research powerhouse and built a research park of its own, as the region became a showcase for a particularly Californian high-tech style.

Over at Hewlett Packard, founded by two Stanford graduates in 1939, executives traded corner offices for cubicles, everyone wore shirtsleeves, and managers and employees ate lunch together al fresco and played horseshoes on the lawn out back. By the early 1960s, national newspapers were talking about the “luxury trend in plant design” emerging in Northern California, where “glass and greenery dominate.”

A decade later at Xerox PARC, the engineers who would be instrumental in developing the personal computer and office networking held meetings in beanbag chairs and pulled all-nighters playing video games. Ten years after that, East Coast reporters descending on Silicon Valley to chronicle the personal-computer boom raved about the perfect climate but decried the relentlessly beige, low-rise architecture and “the opaque veil of pink-brown smog” that hung over it all.

The dot-com boom of the late 1990s magnified Silicon Valley’s problems of too little housing, too many cars, and too few options for people without millions in the bank. But little was done to reorient the industry, and a new generation of tech companies built grand suburban campuses of their own.

Enterprise software giant Oracle erected a cluster of gleaming blue-glass towers ringing huge fountains that, in an echo of Nela Park, became extravagantly lit up at night. In Seattle, Microsoft engulfed the small suburban community of Redmond, creating a sprawling campus of low-rise buildings interspersed with soccer fields and parking lots. Then Google took over a Silicon Valley campus built near a former garbage dump to create the mother of all tech paradises, the Googleplex, where the company provides free food, massage rooms, and bathrooms with heated toilet seats.

As the tech industry globalized in the 1990s and 2000s, the suburban, high-amenity tech campus went global as well. Builders created luxury “IT parks” on the far outskirts of cities in India and China, distributing glossy brochures to prospective tenants that showed techies playing soccer and lounging on the grass. Life in a suburban tech park, declared one, was “a unique lifestyle statement.”

Technological needs no longer demanded such spacious quarters. Employee demographics were changing, as more young techies preferred to live in the urban neighborhoods of San Francisco, Boston, Bangalore, or Austin rather than out in the suburbs, near work. But tech’s commitment to the self-contained, total-immersion campus remained.

This was partly from habit. But it also was because it yielded results. Having everything and everyone in one place meant that employees worked more closely together and worked longer hours (why leave for dinner if you have free food?). It helped retain talented workers in a market notorious for frequent job-hopping.

And—just like Nela Park’s manorial estate—it was a terrific PR tactic. It sent a message that these were different kinds of companies. They were places where people worked hard, and played hard. They weren’t evil, old-style corporations. They were passionate, happy, and building the future.


THEN THINGS STARTED TO CHANGE. As computers shrank from desktops to smartphones, technology companies started to migrate to denser urban settings. The real-estate costs that had kept tech out of high-cost, crowded places no longer mattered so much. Companies building apps did not need as much space as ones that build computers. Server rooms moved to the cloud. Fast coffee-shop Wi-Fi replaced hardwired networks. The cost of starting up fell from millions of dollars to only a few thousands. What’s more, in a white-hot tech market with a shortage of top engineering talent, being in a cool neighborhood helped with recruitment and retention.

So starting around the turn of this century, tech began to come back to the cities it had left six decades earlier. Even companies that retained their suburban headquarters opened engineering and design offices in city neighborhoods, and redesigned their campuses to look less like parks and more like the Main Streets of a very hip, very cosmopolitan small town.

The pattern of exodus and repatriation came full circle when Google moved into a block-long building in Chelsea—just half a mile up the West Side from the building that Bell Labs had abandoned six decades before. Right about the same time, the iconic Saarinen-designed Bell Labs facility in Holmdel closed down. After a fruitless search for a new marquee tenant, the company (reconfigured as Alcatel-Lucent) has now embarked on a project to urbanize the abandoned suburban masterpiece into a mixed-use “town center” called Bell Works: “a rich and diverse community of forward-looking companies in a space that blurs the line between work and play, past and future, imagination and reality.”

City of Cupertino

A rendering of Apple's new spaceship-like corporate headquarters in Cupertino, California. 

Cities have gotten undeniable boosts from the arrival of tech. Municipal coffers have swelled as new companies and well-paid techies clamor to get into hot neighborhoods. San Francisco closed out 2014 with a $22 million surplus; in Seattle, 25 percent of sales-tax receipts currently come from construction. Even more, the millennial demographic employed by these kinds of companies has created strong market demand for the walkable, transit-oriented development beloved by urban planners since Jane Jacobs first wrote about the pleasures of “the sidewalk ballet.” Yes, some of these tech employees are young and transient, and not very engaged in civic life. But not everyone in tech is a 25-year-old brogrammer. There are singles and couples and families who are putting down roots: patronizing local businesses, volunteering in the community, sending their children to neighborhood schools.

THE SOFTWARE DESIGNER ERIC RAYMOND famously created the metaphor “the cathedral and the bazaar” to contrast the closed, cathedral-like worlds of proprietary software with the free, iterative open-source world. We can also use this as a way to think about tech and the city.

On the one hand, nowhere but in a dense, diverse city can you get the serendipitous encounters and mingling of people and ideas that you get in urban places. From ancient Mesopotamia to the modern Bay Area, the places where innovation grew were nearly always hubs of regional, national, imperial, or global trade and communication networks. This is the idea of the city as grand bazaar, a mixing bowl of people and cultures and influences that fuel creativity and ingenuity.

But while you need chaos and serendipity for new ideas to be generated, you also need some cloistering and hard work to bring them into the world. So from the School of Athens to the modern university, institutions and places have been created that allow solitude and the cloistering of like-minded people. They are, in effect, cathedrals.

Over more than 100 years, American high-tech companies have chosen to be cathedrals rather than bazaars. Propelled by technological needs, practicality, and a deeply rooted set of ideas about how environments shape productivity, technology decamped to self-contained, suburban places. They built their own cathedrals; they rejected the bazaar.

The technology now has changed, and demographic preferences have changed, but the ideology hasn’t—yet.

The way to get there is to have a clearer-eyed understanding of what sorts of workplaces foster innovation and creativity. Tech executives firmly believe the campus model works because they look at their competitors and their predecessors. But what they don’t take into account is the many reasons that Bell Labs and Hewlett Packard and Microsoft and others ended up in the suburbs in the first place. Some of those reasons simply don’t exist anymore. The design principles behind both suburban and urban tech campuses—open work spaces, keeping people on one floor, all the amenities you need in one place—are so strongly held by so many tech executives because they believe that their predecessors succeeded as a result of inhabiting these kinds of spaces. The historical evidence simply doesn’t bear this out.

When it comes to the innovative process, the longer history indicates that you need the cathedral and the bazaar. It demands population densities and ways to make connections across diverse sets of people. One reason for the success of Silicon Valley (even though it is a suburb) is that it has consistently drawn so many people with different skill sets into a geographically concentrated area. And yes, innovation also requires places to think, experiment, and take risks. But these places don’t have to be protective bubbles.

There are ways both of these things can happen in American cities, if urban leaders and techies are willing to meet one another in the middle. The apps of the on-demand economy are not responsible for San Francisco’s housing shortages or the long wait for the bus in Seattle. They have made these problems more visible. Cities and their taxpayers have to recognize that the only true fix will be filling the deep holes in public infrastructure that tech apps have exploited so successfully.

But by the same token, tech companies need to break out of their heads-down, it’s-all-about-the-technology attitude that has kept them from being more active and productive urban citizens. The firms of Silicon Valley are no longer obscure little clusters operating off to the side of the American economy. They are now some of the richest and most powerful companies in the world, with billions of people using their products on a daily basis. They need to come out of their cathedrals and into the streets.