SUN, SAND & SILICON

The software engineers at Alias/Wavefront have it pretty good.

It’s not just the handsome salaries, flexible hours and casual, footwear-optional dress code--perks like that are now all but standard in the industry.

These engineers, who develop special effects software for the film industry, enjoy something far more unique: a physical setting that puts even the loveliest parts of Silicon Valley to shame.

For some, the commute to work is an eight-minute downhill bike ride from a hillside canyon home; for others, it’s a roller-blade trip on quiet, tree-lined streets. No traffic. No smog.

Many spend their lunch breaks surfing, windsurfing or jogging on a beach that’s just two blocks away. Or they can grab a bite in a thriving, yet uncrowded, downtown area, with its plethora of cafes, restaurants, shops, bars and movie theaters.

Welcome to Santa Barbara, Southern California’s newest high-tech mecca. The unparalleled Mediterranean setting and upscale mix of urban and rustic lifestyles that has attracted movie stars and celebrities for decades is now luring software and telecommunications companies by the dozens--and they’re helping to revitalize the area’s economy.

Exactly how much the industry has grown in Santa Barbara and the adjacent communities of Carpinteria and Goleta is hard to pin down. But the number of software firms here has gone from 95 to 134 since 1994, according to figures from the state’s Economic Development Department, and the eight largest software companies alone have doubled employment over that same period.

“Basically, it is exploding,” said Michael Ditmore, who heads the Systems and Software Consortium, a nonprofit industry group formed to promote and support the area’s high-tech industry. Nearly 70 high-tech companies have joined the group since it was founded in July 1995.

Those figures don’t even include telecommunications companies. Networking giant Cisco Systems, for example, has a local group that has grown from 16 to more than 50 employees in the last two years and is expected to continue growing at a rate of 40% a year.

Much of the industry’s growth, moreover, is in small, hard-to-track companies with five to 50 employees, said UC Santa Barbara economist Mark Schniepp, whose Economic Forecast Project tracks the local economy.

“When you go out to lunch in Silicon Valley, you can’t help but hear high-tech conversations,” says Mark Sylvester, a veritable graybeard of the local high-tech scene who co-founded Wavefront--later acquired by Silicon Graphics Inc. and merged with Alias Research--here in 1984. “There is a buzz that goes with that, and we are starting to get that here.”

The thriving high-tech industry is finally beginning to replace some of the approximately 7,600 defense- and electronics-related jobs the area lost in the late 1980s and early 1990s. The job losses had a huge ripple effect on everything from the real estate market to the retail sector, Schniepp said.

The area is still about 4,000 high-paying jobs short of its pre-recession levels, Schniepp added, but unemployment in the county has dropped from nearly 8% in 1992 to less than 6% at the end of 1996.

Although the technology boom is not welcomed by everyone in this slow-growth mecca, and some firms complain of expansion plans needlessly delayed, most expect the industry’s expansion to continue.

It’s no secret what draws companies to this somewhat secluded outpost.

“Why do people come here?” Sylvester said. “A CEO comes here to spend the weekend and decides to move.”

Digital Media International, a maker of CD-ROMs for the consumer market that moved here from Pennsylvania in 1994, is in many ways typical of the high-tech immigrants.

“We wanted to be close to Hollywood writers and talent,” said Marco Pinter, president of the 10-employee company. Pinter expects the company to double in size as soon as it secures funding from one of the area’s growing number of “business angels”--wealthy individuals with investment capital who help fund local start-ups.

Pinter, who had done graduate work at UC Santa Barbara, chose the area for its lifestyle. Being here has made it easier to attract and retain employees who want to live in a nice place, he said--and recruiting is now among the paramount challenges facing almost all software companies.

The local high-tech industry has always drawn on talent coming out of UC Santa Barbara. And its expansion is now making it easier to attract qualified staff from outside the area as well.

“It reaches a critical mass, and there is enough of a work pool so people don’t think there is a risk in taking a job here,” said Andre Durand, who heads Durand Communications, a 30-employee company that develops “communityware,” or software that makes it easier for people to share work over the Internet.

Although the Internet-driven technology boom is clearly at the root of Santa Barbara’s high-tech success, some local initiatives have helped too.

Last year, the Systems Software Consortium contracted with GTE and AT&T; to bring high-speed communications to the area, making it easier for local companies to connect with far-away customers.

The group also bids on large contracts on behalf of several of its members, said John Illgen, a consortium founder and chairman of Illgen Simulation Technology Inc., a company that employs more than 30 engineers and scientists in Goleta.

And the consortium, along with another group, the Santa Barbara Region Economic Community Project, has helped convince government officials and the community at large of the benefits that high-tech can bring the area: high-paying, nonpolluting jobs and an educated population to boost the local economic and cultural life.

“Santa Barbara has not always been the most business-friendly place, because of a strong emphasis on slow growth,” said Bob Knight, chairman of the Economic Community Project. “But a lot of that has been diffused.”

Knight’s group was formed by local businesses to promote the software, telecommunications and medical technology industries. It now includes members of government and educational institutions.

In 1993, the city itself recognized that those three industries were the city’s best chance of replacing the jobs that had been lost since the late ‘80s. Government officials have since tried to help local companies with infrastructure, better permit-approval processes and flexible zoning regulations.

City officials, for example, have fast-tracked building permits for the downtown offices of Software.com, a maker of electronic mail software that has grown to 65 employees since it was founded here three years ago.

Some executives say local governments still aren’t doing enough.

With 350 employees, Carpinteria-based QAD Inc. is the area’s largest software maker. The company is lobbying city officials to rezone a 33-acre agricultural parcel to allow a big campus expansion.

If the approval isn’t forthcoming, said Karl Lopker, the company’s CEO, QAD will be forced to expand elsewhere.

Mark Ozur, the CEO of Digital Sound Corp., has a more optimistic outlook. The publicly traded company, with revenue in excess of $20 million, develops voicemail software for companies such as GTE and Pacific Bell. It has grown 30% in the last two years, Ozur said, and the company’s headquarters house 160 employees on the bluffs overlooking the Pacific Ocean.

“Carpinteria has an opportunity to have a huge software industry by the turn of the century,” Ozur said. “Nurtured, these companies could give back a lot to the community.”

No matter what happens in Carpinteria, the total growth of the high-tech industry in the area--a 25-mile sliver of land bounded by mountains on one side and the ocean on the other--will inevitably be limited by lack of space. It will never be Silicon Valley.

“Silicon beach, maybe,” joked Davis.

But those who are already here are relishing their good fortune.

Take John Wilczak, who moved his 35-employee company, MetaTools Inc., from Santa Monica to Carpinteria in August 1994. MetaTools went public in December 1995 and now employs about 120 people locally.

“We looked at Santa Barbara and said, ‘What a great place to live and what a great place to help set up an industry around information technology,’ ” CEO Wilczak said.

Busy building a cabin for family outings and company meetings on 100 acres that overlook the ocean just north of town, he has only one regret.

“I just wish we had moved here 10 years sooner,” he said.