(FORTUNE Magazine) – Rarely does anyone think of San Jose as a major burg. But last year this once sleepy agricultural community now at the heart of Silicon Valley hit the big time. It passed northern neighbor San Francisco to become America's 11th- largest city (population: 765,000). After a tough election decided by a silicon-chip-thin margin of 1,000 votes, San Jose also has a new mayor, a former Peace Corps executive named Susan Hammer, 52. Unlike her counterparts in smaller, better-known East Coast towns, such as Boston and Washington, Hammer doesn't face a crisis of renewal. Her challenge is to manage a bubbling melting pot -- one of four residents is now Hispanic and one in six is Asian. During six years on the city council, Hammer made her mark by pushing for children's rights and helping to revitalize San Jose's aging downtown. If she finds a way to contain its hothouse expansion without stifling job growth, Her Honor could rise as swiftly as fellow Democrat Dianne Feinstein, the former mayor of San Francisco, who barely missed becoming California's governor in November.