Capitola-by-the-Sea started in the 1860s as a resort town, a place for people from "over the hill" in San Jose to escape the heat. In the 1920s, it took on a Mediterranean feel, sprouting bungalows and stucco shacks reminiscent of those found in Italian fishing villages. But the Mediterranean doesn't have surf like Capitola's. That’s why world-renowned surfboard and wetsuit manufacturer O'Neill is headquartered here, and why marine environmental causes are big. And why even residents like Stephen Hanecak, chef at the Paradise Beach Grille, learn to balance their time between hard work and play. "Four or five days a week," he says, "I’m out there first thing with my surfboard, trying to start my day by catching some waves."