He managed to convince a Los Angeles company to bring the Web north, but there was a hitch: He had to sign up 10 customers. "I cold-called 100 businesses," MacFarlane says.

MacFarlane's software messaging firm has since exploded into a $5 billion company that recently announced a merger with Silicon Valley's Phone.com. And now, the greater Santa Barbara region -- aka Silicon Beach -- is home to an estimated 600 technology or dot-com companies, including Expertcity.com, Commission Junction, Somera Communications, QAD Inc. and Bertelsmann Ventures. Once known primarily as a beachside enclave of wealthy retirees and Hollywood expatriates, Santa Barbara has forged a new identity as a dot-com destination.

Communities across the country have made similar transformations, seizing on digital opportunities to pump juice into the local economy. And while the emergence of these new economy hubs has led to countless new jobs, changes have brought challenges not all residents have embraced.

Technology now represents Santa Barbara's third-largest industry, behind agriculture and tourism, while tech jobs represent about a quarter of all new jobs, says Gary Kravetz, CEO of NCC Executive Search in Santa Barbara. About half of those jobs didn't exist three years ago, he adds.

And Jeff Carmody, a partner at Santa Barbara's Agility Capital, which serves as a bank for VC-backed companies, estimates that tech employees represent at least 10 percent of the area's workforce. Over the past two years, he says, the list of companies he tracks has grown fivefold.

For years, homegrown or locally educated kids fled to other areas to make a living, since the city's main economic mainstay -- tourism -- didn't provide enough professional job opportunities. But suddenly, bright young guns from the University of California at Santa Barbara are sticking around after graduation, and techies from all over the world are settling in this region of roughly 200,000.

"From the beginning, I picked where I wanted to live, then did what I wanted to do. That's why we're here," MacFarlane says.

You would think the old guard would welcome this change. But the infusion of Web start-ups -- and the accompanying new economy culture -- has shaken up the revered status quo. "A certain portion of the population here doesn't want to ever see any change," says Bill Watkins, director of UC-Santa Barbara's Economic Forecast Project.

After all, Santa Barbara is a parochial place, where decade-long residents still get cast as newcomers. Some are apprehensive of the changes the young blood will continue to bring. Plus, Santa Barbara has deep environmentalist roots, maintaining some of the toughest no-growth urban planning policies in California.