The Baby Billionaires of Silicon Valley

Did someone order a lap dance?" It's after midnight at the sleek Redwood Room club in San Francisco, and a towering transvestite in a slinky red dress and black feathered hat is coyly propositioning a table of nervous young dudes. Nearby, a bachelorette party of hotties in microminis strut into the club. The bride-to-be wears a veil stitched with glow-in-the-dark condoms. One of her friends appears to be wielding a large dildo. Another simulates a blow job on a guy in a giant king's chair in the lobby.

Such displays would be seen by most guys as some kind of opportunity. But the richest guys in the bar cower together at their table like Weird Science geeks at the high school prom. The wilder the scene gets, the more oblivious they become. When no one takes the tranny up on her offer, she swishes her extra-large gloved hand in the air and fades dejectedly back into the crowd. The guys reach in unison for their drinks. "I can't spend any money on transvestites tonight," one deadpans. "My venture capitalist wouldn't be happy."

As the rising sons of Silicon Valley, this crew has billions to blow. Each of them is sparking an online phenomenon that's radically transforming our culture and industry. The slight, redheaded twenty-two-year-old in ratty jeans and zebra-striped Adidas sandals is Mark Zuckerberg, founder of Facebook, the social-networking site valued at as much as $2 billion. Nursing a drink across from him is Blake "Microsoft Killer" Ross, a sweaty twenty-one-year-old with a pubescent mustache and stiff, maroon buttoned-up shirt; Ross hatched Firefox, the alternative Web browser that's been downloaded 200 million times around the world and earned him the title of "the next Bill Gates."

As the waitress brings another round, Seth Sternberg, the menschy, curly-haired twenty-seven-year-old founder of Meebo, the instant-messaging sensation, reports that Chad Hurley, co-founder of YouTube, the viral-video powerhouse that would soon sell to Google for $1.65 billion, is hoping to swing by — if he can break away from his wife and kids. "Chad has a family now," Sternberg quips, slicing his hand against his throat. "Once that happens, you're out of the group."

Every so often, an unexpected pop-cultural youthquake spawns its power clique, and that's what's happening in California this endless summer of silicon love. As the YouTube buyout in October signified, Silicon Valley is on fire again. Giddy venture capitalists have already broken a five-year record by pumping $13.4 billion into startups. Ron Conway, the legendary investor known as the Godfather of Silicon Valley, describes the party mood as "borderline euphoria." And the scrappy prodigies at this bar are the main reason. "Through these entrepreneurs," says Conway, "you can see the future."