Silicon City

by Cary McClelland

  It would truly disrupt how our society works. It can reduce traffic congestion. You look at the highway, if you take a picture, I think 92 percent of it is empty and only 8 percent is filled by cars, because humans are bad drivers and need all this safety distance between them. With a self-driving car, you could drive much more efficiently, faster and closer together with a lower accident rate. You don’t need parking. Look out of the window, a big part of the city is parking lots. You waste all this real estate in the best locations storing stuff that rusts. You can change urban architecture. It allows elderly people to participate in life because, when they can’t drive anymore, they get cut off from their friends.

  So, that vision for self-driving cars is great, but the part that’s really hard and, honestly, isn’t solved yet by any of the players, is to make it really robust and reliable. The big metric there is miles per incident: how many miles do you drive before there is an incident? This number is surprisingly good for human driving. There is an accident, like a fender bender, if I read the statistics correctly, every 165,000 miles driven. That is a really high bar for a self-driving car to clear—because you would only trust the system if it is better than a human. I actually left the project because it didn’t happen quickly enough for me.

  So I founded a start-up. Start-ups are a creative and very impactful way in which you can build something cool efficiently and quickly. The speed and the creativity in which they can execute, just do things without a hundred meetings.

  All I want to do is build beautiful things—systems that work beautifully, that are very nicely engineered, efficient, that don’t waste resources, and that do something better than it was done before: cool systems that bring us further as a society, that help do something in the real world.

  COCO CONN

  She has a sprightly way about her. As if everything can be discovered again for the first time. An artist who wandered the world, she stumbled into San Francisco in the 1970s and made it her home. She was part of an early community of counterculture figures, futurists, and psychedelics who revolutionized Bay Area culture and transformed the tech industry. They moved it beyond calculators, scientific instruments, and aerospace and gave it purpose, vision, and global (perhaps galactic) scope. In short, they injected technology with a sense of inspiration and values, with its own religion. Today, Coco is an artist and educator who continues to preach the gospel of those early days.

  San Francisco seemed to have a different spirit. It seemed wilder and more courageous than L.A. They had talent, but we had irreverence—which is more important, right?

  It was a very heady time. So many new ideas. And everyone was sharing and comparing. I remember seeing the first black letters on a white screen—the fact that the screen wasn’t green—it was like, “Whoa, you can do that?” People were developing a new language, so every new word was so exciting. Some of the best ideas in science fiction, whether it was True Names or books from the early 1900s, became explosive. And of course there was everything happening in the culture, in politics and technology—the space program. Technology was somehow going to bring us together and allow us a chance to talk, so we can work things out instead of kill each other. All these simplistic ideas drove that mad rush. It was like being in the eye of a hurricane: you can’t feel the impact.

  I fell into a large group at the Burning Man. They were on fire—their abandon. I just fell madly in love. And I became famous for collecting crazy nerds. The wackier, the better.

  John Draper, “Captain Crunch,” he’d whistle and simulate these phone signals. He could stand in a phone booth and whistle his way through all these phone systems, go loop the world, and then call the phone booth next to him. He was frequency, sound, modulation.

  The Shulgins, Anna and Sasha. Molecule by molecule, these two people tried out hundreds of combinations of drugs that never got released. “Sasha makes something new, we try it, we go to bed, we make love. In the morning, we have a big bowl of soup and talk about it.” But you go to Brazil, and an Indian in a jungle is having similar visions. Drinking ayahuasca is like plugging into the umbilical cord of the planet. Realms that we don’t know how to navigate until people experiment, try.

  John Perry Barlow. He was such a cowboy—so cool and fun—you couldn’t resist that. He founded the Electronic Frontier Foundation, with John Gilmore and Mitch Kapor, because he didn’t want the government to run away with this new technology. He thought technology should be free. He was never afraid of speaking the truth or confronting “givens.”

  We would throw parties and bring these incredible people together: filmmakers, computer graphics people, politicians, musicians, hackers. People you wouldn’t otherwise meet in your life, people you’d never see together in the same place if it weren’t for him. He was an amazing bridge between cultures. And the psychedelic side was really important to John. People need to be awakened. They need that chaos factor.

  Tim Leary would come. I would drag him off to events, and we’d sing in the car and laugh. His exuberance for wanting to adapt technology was so infectious. He loved technology. I think he genuinely knew that there was something thrilling, something new. He wanted to be part of it, and he wanted to know all about it.

  I called him one day, I said, “Tim, my friend has a machine, and you put little sensors on your temples and it measures your alpha, beta, theta levels of your brain, and you can control what’s on the screen.”

  He goes, “I wanna try it.”

  So I ran, picked him up, brought him to my house, and he spent quite some time with playing with what we could make show up on the screen. My friend looked at me and said, “I’ve shown this to a lot of people. Tim has really more control over the levels of his brain than anybody I’ve ever seen.”

  They were a wild group of people. People with talent. People who knew that the simplest solutions could solve the biggest problems. That there was collective wisdom, ancient cultures, primordial connections, music, so much to learn from. They knew that money doesn’t drive everything.

  TIM DRAPER

  The office of his venture capital firm is one block from El Camino Real—the road that used to connect the Missions during the Spanish colonization of California and now snakes down the tech corridor from San Francisco to San Jose. The walls are covered with huge murals of superheroes—Batman, Superman, Wonder Woman—frozen in action poses.

  My grandfather was the first venture capitalist in Silicon Valley. My dad moved here, joined him, and became one of the pioneers of the business. So I grew up here when El Camino was a dirt road. Downtown Menlo Park had about five stores total.

  I’ve watched this whole metropolis build around Silicon Valley, and tried to get to the heart of what makes this ecosystem work. I’ve been the Johnny Appleseed of venture capital—spreading the seeds of this valley everywhere I go. You need angel investors who work together to fund start-ups. You need one big company from your region, some entrepreneur that’s built something, and you got to promote the heck out of that. You need a good technical university nearby, maybe a good business school too. You need a series of events where great entrepreneurs come and speak and everybody else gathers, because it’s inspirational for everybody else. You need the lawyers to simplify the system so it just moves like a machine. Then you need the press to start writing about these companies as though they are heroes.

  Exporting this vision wasn’t easy—you really had to sort of be a pioneer with arrows on your back. New York, L.A., Pittsburgh, Chicago, Utah, Denver, Alaska. Each new place, we had to fight it out with some lawyer. Or the press didn’t really want to write about it. Or the bankers, accountants, headhunters, they weren’t in the ecosystem yet, so we needed to gather them together. Normally, we’d hold a big event, bring them all together, make sure they were all talking to each other, and let them know that we were in business.

  We were even the first Silicon Valley firm to invest internationally. It felt like we were going into the Great Beyond. Might as wel
l have been going to Mars.

  I went to China, and I remember talking to the minister of economics. He said, “You must invest in our country.”

  I said, “Why should I? There’s a guy that I ran into that built a $90 million chocolate company here, and you nationalized it. You took it from him.”

  He said, “What would you suggest?”

  I said, “Well, you’ve got to make sure that anyone that does invest early makes a lot of money, so they can go tell their friends. Then they’ll all come, they’ll all invest in China.”

  We invested in a bunch of Chinese businesses, sharing with them the insights of all of these interesting US companies they could learn from: Badoo, a search engine; Focus Media is like their Clear Channel; and ePay, their PayPal.

  Companies have a natural life. They have a natural way of growing, and if you mess with that too much, it changes everything. If an entrepreneur gets too much money, they feel like they can spend their way out of all of their problems, instead of getting creative. Businesses have to ride a few waves. They have to be built through cycles, endless cycles. They have to figure out the model, know who their customers are, and know that if they put in a dollar they get out five. When that happens, it’s time to raise a lot of money.

  It’s instinctive for me. You have to see what it is in the entrepreneur that matters, and you have to see what’s going on in technology that matters. We meet with young entrepreneurs, it’s all about their enthusiasm. Because that’s the kind of thing that will take them through the whole process. It’s something they can’t fake. You ask them why they are doing it, it spills out—“It’s so exciting, all of those other people are doing it wrong, we’ve got a great avenue, and we know exactly what we’re going to do!” If they say they’re doing it for the money, that’s not enough, because money will just come and go, come and go.

  I’ve seen start-ups change an industry and challenge huge companies. We saw Tesla change the auto industry, Skype changed the long-distance carriers, and Hotmail changed the post office. Huge things are happening out there, over the last forty-five to fifty years. So much improvement, thanks to the private sector.

  I always describe these entrepreneurs as heroes. Heroes are our past, the people we look back on and say they did great things. But superheroes are our future—whether they are industrialists, leaders of societies, or revolutionaries. They are focused on the future. We need to find some superheroes.

  COLIN RULE

  He grew up in Amarillo, Texas, and studied conflict resolution in Boston. Silicon Valley was the farthest place from where he thought he’d end up. He is a Quaker, and has the affable optimism of someone who believes consensus can be reached with anyone, anywhere: “We all have a little God inside of us, and if my little part of God and your little part of God can see each other, we can work it out.” He spent the first half of his career working on peace-building projects around the world. Then, suddenly, he was recruited by eBay, relocated west, and his whole life changed. He is now the CEO of a leading dispute-resolution company in tech. He works with major corporations and local governments alike. We met after he gave a talk about moving the American court system online.

  eBay was a very hot company. It was kind of like the Facebook of the time. So they flew me out here. I was going to consult for four or five days.

  I was just wide-eyed about Silicon Valley! They talked about “Nerdvana”! I did my four or five days, answered questions best I could, gave them an invoice, and then flew home. I thought, Wow, that was pretty cool. That was fun.

  About a month later they called me. They were asking interview questions, “People like you, and they think that you know what we need to know.” They made me an offer. I looked at it, and I was like, I guess I work for eBay now.

  They just came on strong. “We’re going to move you out here. We’re going to set you up with a Realtor.” They wanted me out immediately, and then my family could follow a month later. Very whirlwind. I know a lot of people that this has happened to. When they say they want you, how can you not?

  I was a more senior person. But I have seen people that get pulled straight out of school, young people. They get an apartment right next to the campus. There’s posters for a movie tonight at nine p.m. The restaurants are open for breakfast, lunch, and dinner. Really their whole life, their whole sense of identity becomes intertwined with the company.

  Rapid wealth to people in their youth can be profoundly disorienting. Silicon Valley, you’re almost like a lottery winner. It happens so fortuitously and quickly that you can’t really interpret it. And then a lot of people impose their narratives upon you. You become obsessed with replicating it to prove that it wasn’t a fluke.

  Some people get very, very panicky and emotional. It doesn’t have to be massive success, Zuckerberg success. But still they feel like, Look, I came here, and I started this company. I made a lot of money. So clearly the way I see the world is the correct way to see the world. Some of them, in reaction, become very . . . aggressive about it.

  And that was shocking to me, as someone who had done the Peace Corps in Africa, just the myopia of some of the people here. I wanted to shake some of those people up, or at least grab them by the collars and say, “Really?”

  eBay had what we called the leaky bathtub. When I first showed up, there were so many buyers pouring into the bathtub, it was just growing, growing, growing. They were expanding to new countries. But the drain was bad: they were losing people who had bad experiences.

  When somebody has a bad experience, they leave and you never hear about it. They don’t tell you. You can email them all you want. They are gone. They are never going to come back, and that’s terrifying to these MBAs. They pay a lot of money to acquire these customers.

  For me, resolving a dispute was a self-evident good. But for them it was, like, “Let’s just pay them all off.”

  What I proved with the numbers was, if somebody has a problem and you address that problem—even if they don’t win, regardless of outcome—they are much more loyal to you than the people that never had a dispute in the first place. And we pulled it off. We did 60 million disputes a year, and I was there for eight years. That’s hundreds and hundreds of millions of resolutions.

  There were 250 million users at eBay, and there were lots of different kinds of disputes. Sometimes the bidder would win, but they wouldn’t pay. Sometimes a thirteen-year-old bids a million dollars on a Ferrari, and the seller goes, “Great, a million dollars,” but there’s no way that kid is ever going to pay.

  We had reputation disputes, slander-libel type of disputes. We had intellectual-property disputes where somebody would list an item and somebody else would come and steal their description and steal their photos and then list another item, saying, “Oh, I have that item too.”

  Somebody in China would start to sell knock-off drills that were black and yellow. Sometimes they would say they are Black & Decker, obviously that’s a clear violation. But other times they would say “cordless drill” in the same typeface. We called those “verified rights owner disputes.”

  Somebody was selling used underwear. “I’m the homecoming king” or “I’m captain of the football team and I wore this underwear when we won the big game,” and the underwear would sell for $350.

  We had someone who sold communion wafers that they got from Pope John Paul in St. Peter’s. They got in line, took communion, and pocketed the wafers. They kept them for six, seven years. Then Pope John Paul passed away, and they put these wafers on eBay. Obviously, for Catholics, that’s huge. Once the wafers are blessed, that is the flesh of Christ. So if you take it, you have to eat it. Pocketing it is sacrilege.

  We had another one where somebody was selling a bathtub. It was the bathtub that the guy who killed Martin Luther King stood on in the motel room to shoot. We heard that and said, “Take it down. Immediately take it down. That’s offensive. That’s a hate object.” It turns out the National Civil Rights Museum was selling it.
Somebody had donated that bathtub to them, but they were going to sell it to get money to fund the museum. Now, we had to decide. You can’t set a policy for items based on who is selling it: If the Klan is selling the bathtub, that’s wrong. If the National Civil Rights Museum is selling the bathtub, that’s okay. That’s not a policy that works.

  We essentially had to build a civil justice system. A lot of people at eBay were these young guys, they start these websites in their twenties, and they are total libertarians. “I’m not going to censor anybody. Everybody can say whatever they want.” Obviously, if you’re a teenager, you’re like, “These old people with their rules! I’m going to create a total open marketplace of ideas.” Then, you see the practical effect of this. And you start to build some rules.

  But it turns out, eBay was a time. The internet was new and nobody knew how to buy anything. Macy’s wasn’t online. Walmart wasn’t online. So eBay solved that problem. You could go to eBay, type in some weird thing, and it would come up.

  People ask, “What killed eBay?” All these stores got online, Amazon scaled, and Google killed eBay. Now, if you want to go buy a Beanie Baby, you go to Google and you type in Beanie Baby and there are fifty places to buy it.

  Google is a time, and Google has done a good job of reinventing itself to stay relevant. Facebook has done the same thing. But think about AOL, CompuServe, Friendster . . . Who knows, something new can always come up. It’s creative destruction. It’s Schumpeter.‡ That’s what the Valley is all about. Go invent the next thing. Disrupt.

  When I started my company in Boston, it was so hard. There’s a cultural conservatism in the Northeast. Funders are like, “I don’t really get it. Why don’t you go prove that you’re a sure thing and then come back to me?”