By Jackson West

TEN YEARS AGO , SoMa was still primarily a warehouse district, home to small industry, empty buildings, and the city's club scene. The low cost of commercial space and accessibility to the freeway and public transportation began to attract small companies just beginning to cash in on the New Economy, as former president Bill Clinton gushingly hyped it. After the dot-bomb dropped, the area continued to grow, sprouting a stadium and towers of condos; commercial vacancies rose, rents fell, and once again, tech companies started moving to South Park.

But with these hopefuls, there's also humility. You're probably not going to see the kind of lavish spending that characterized the first boom, as when a charlatan used five million dollars in venture capital to book the Who for his fake dot-com's launch party. As the new companies make their mark on the mainstream, they're careful not to be so easily seduced by investor money.

Technorati (665 Third St., Suite 207, www.technorati.com), a search index for blogs, was one of the first of the new start-ups to move into the neighborhood in late 2004, according to community manager Niall Kennedy. Its interior reveals a jumble of salvaged office furniture, shared rooms, and engineers hunched over laptops.

Technorati's CEO and founder, David Sifry, a veteran of the boom and bust, recalls where he made a wrong turn. Having started out as an organizer of the Bay Area Linux Users Group in 1994, he cofounded Linuxcare with two friends in 1998. Eighteen months later, the company was growing exponentially, having amassed $70 million in venture capital. "Growing from 3 employees to 480 is insane," he lamented, noting the increased overhead, bad hiring decisions, and poisonous office politics such growth often entails. While Linuxcare is still around, Sifry has moved on.

With Technorati, he's holding the reins more tightly. A modest stable of 30 employees maintains the company's index of nearly 19 million blogs from around the world, for which it provides "real-time" searches on everything from knitting to politics.

Sifry wrote the original code for indexing blogs in late 2002 simply because he wanted to keep track of what people in the blog world were saying about him. Eventually, he realized the tool could allow for more group discussion between bloggers. By July 2003 America Online had come knocking, and venture capitalists followed in early 2004. But Sifry turned them away, saying, "Venture money is not always the best solution."

A short walk from Technorati are the offices of Six Apart (548 Fourth St., www.sixapart.com), which produces blog software like Movable Type and LiveJournal and runs a paid hosting service, TypePad. Like Technorati, the start-up developed tools for in-house use that proved popular enough to garner demand from other bloggers. Though its offices, decorated with Herman Miller furniture, are more posh than its neighbor's, it should be duly noted that unlike many dot-coms of the previous generation, Six Apart developed a steady revenue stream (from software licenses and subscriptions) before accepting investment capital.

Movable Type's product manager, Jay Allen, also a boom veteran, thinks VC money and hype get in the way of quality products and sustainable growth. "The crazy influx of cash brought a crazy influx of people wanting to capitalize," he admitted.

Six Apart has planned its growth cautiously. As it acquired LiveJournal, founded by Brad Fitzpatrick in 1999, it made sure not to cannibalize the user base by forcing unwelcome changes on the product. As a result, the user base has grown by more than 50 percent.

Aside from affordable leases, another great reason for tech companies to move back to SoMa is that many of the buildings are already equipped for a high-tech environment. Philip Kaplan moved his company, AdBrite (25 Stillman, second floor, www.adbrite.com), into the former home of a failed Internet service provider earlier this year. The building came equipped with thousands of phone lines that had served the old modem bank and unused fiber-optic backbone to connect to the Internet – all for $1.25 a square foot. "Internet 1.0 came in, made everything perfect, and then left," joked Kaplan, who originally developed AdBrite's technology for his previous project, Fucked Company – the harbinger of the tech industry's rapid decline.

Having moved from his apartment-office in New York City, Kaplan said he preferred SoMa's urban environs to his business's former Bay Area location, in Mountain View.

Entrepreneurs and investors today would be well served to read Kaplan's book, 150 Short Stories about Internet Companies, a compilation of dot-com histories detailed on Fucked Company. Internet 2.0's new model is: Stay small, independent, and passionate.

Jackson West's first job in the Bay Area was around the corner from South Park. Trade dot-bomb tales of woe with him at jacksonwest@jacksonwest.com.