Valley of Genius: The Uncensored History of Silicon Valley (As Told by the Hackers, Founders, and Freaks Who Made It Boom)

by Adam Fisher

  Lee Felsenstein: The Apple booth had a projection color display. No one else had that. And that projector said it all: “You guys can play around with your little alphanumeric terminals and so forth. We got color graphics on the base product!” And a lot of people got interested in that. Their booth was crowded.

  Steve Wozniak: That, bringing color to the world: You’re not in Kansas anymore! That’s why we chose a six-color logo. We were the ones that rocked color, because nobody would have ever expected color on an affordable computer, much less the graphics that we had. We even had pixels so you could almost have photographs on the screen. No, it was so far ahead of its time that everybody else was going to have to sit back and figure out ways to do it.

  Trip Hawkins: It had a bunch of innovative features. It had the bitmapped graphics. It had the color. It had a really crappy little speaker and it could make a few beeping noises. That was about it. But a lot of machines didn’t even do that.

  Andy Hertzfeld: I could tell right away there was something magical about it. Part of it, I guess, was the look of the case.

  Al Miller: I remember Jobs standing up at a Homebrew meeting holding the very first plastic case. Somehow that symbolized an advancement—a move into the mainstream.

  Trip Hawkins: It looked fabulous compared to all the other junk. I mean if you’d asked a bunch of women at that time, said, “Okay, which of these would you tolerate having at your house?” they would say the Apple II. And they would look at all the other and go, “That stuff is really hideously ugly.” It was all this sort of geeky hard-core-looking stuff, and then the Apple II was this beautiful thing.

  Andy Hertzfeld: At that point all the other ones were rectangular metal boxes that looked like they were industrial equipment. The message was “Oh, that means it’s not for people.” They were for manufacturing or business or something, but they didn’t give off an inviting feeling, whereas the Apple II looked beautiful. It kind of looked like a futuristic typewriter.

  Trip Hawkins: Oddly enough, Steve made a mistake there. Because he had a choice between a character-generator ROM chip that did a traditional upper- and lowercase characters set, and he went instead for one that was all uppercase, either regular or inverse—or flashing inverse, you could do that too. So our first-generation word processors looked like hell.

  Alan Kay: But Apple was starting to get interesting. Not because there was anything interesting about the Apple II. The thing that was really interesting was the spreadsheet.

  Steve Wozniak: VisiCalc was the killer app.

  Alan Kay: We had almost invented the spreadsheet at Xerox PARC, but none of us were businesslike enough. All of us when we saw the spreadsheet, we thought it was just the best damn thing, just fabulous.

  Charles Simonyi: My jaw dropped. Wow! Here is this primitive machine and it’s doing something we were just dreaming of, just kind of hinting at. This is big! If you can do this with this machine, imagine what could you do on a more serious machine—like the Alto or the machines that were coming.

  Chuck Thacker: VisiCalc was a thing that was useful to businesspeople, and a lot of them. And did increase the productivity of people who did who use that kind of tool—enormously.

  Butler Lampson: It was a success of the Apple II and VisiCalc that created the whole personal computer industry, really.

  Steve Wozniak: The Apple II was the only one of those computers, the three of them that existed, that had enough memory to run VisiCalc. So they had to write it for this computer only. Everybody else had to go back to the drawing board and make computers that could add floppy disks and more memory. So that was a big leap for us. It was an accident, too; we hadn’t really thought about how we were going to make sure that we were well ahead of the competition. We just lucked out.

  Andy Hertzfeld: By the fall of ’79, VisiCalc was making Apple sales triple every month.

  Trip Hawkins: VisiCalc was the number one driver. Word processing was the number two driver. And that was a pretty potent one-two punch.

  John Markoff: The Apple II was about getting out of the hobbyist ghetto and making personal computing accessible to the broader world. At its peak the Apple II was sold through Macy’s—and a lot of the big marketing push early was educational, in the sense that this was an intellectual activity that you could give to your kids.

  Clive Thompson: The Apple II was the first time that computers went really mass market. It was this moment when those great big huge room-scale computers suddenly shrunk down and got into the hands of teenagers. And the moment anything gets put in the hands of teenagers, it becomes part of mass culture. That’s a trip-wire moment. That’s what happened to the car in the fifties and sixties, it was the computer in the late seventies and eighties—and the Apple II was the vanguard machine.

  Steve Jobs: The Apple II went on to sell maybe ten million units over its lifetime. It was the first really successful personal computer—by a mile.

  Towel Designers

  Atari’s high-strung prima donnas

  At about the same time that Woz realized that the new low-cost microprocessors would make his dream of a personal computer a reality, Alcorn and the others up in Atari’s product development group realized that they could use the same chips to power a new kind of machine—a home video-game console with a slot on top in which one could plug in game cartridges. The Atari VCS (later to be renamed the Atari 2600) brought the excitement of the arcade to America’s living rooms and established a new economic model for Silicon Valley. The VCS was a platform and the cartridges—software, in essence—were a predictable revenue stream. Atari, after more than a few brushes with bankruptcy, had invented a golden goose—but there wasn’t enough money to build it. Nolan Bushnell knew he had to sell.

  Nolan Bushnell: We’d been on this ride that was almost vertical, and I just knew that if you just keep pushing all your chips out in the middle, at some point you’re going to lose your stack. And you’re not just gambling with your own future, you’re gambling with the future of all the people that are working for you. The number of times that I didn’t have the cash on Wednesday for payroll on Friday! I can remember one time I had nine uncashed paychecks personally. We had been running the company with tricks and mirrors from a cash standpoint—and it was very clear that the launch of the VCS was going to consume a massive amount of capital. I think I was tired.

  Al Alcorn: We actually had a prospectus for a public offering. But the market went bad, so we couldn’t do that and then we had to look for a buyer.

  Nolan Bushnell: And then Manny Girard from Warner said that the chairman, Steve Ross, had been with his kids to Disneyland and played Atari games for a full afternoon. He came and kind of kicked the tires and looked around a little bit and said, “We’ll send the jet.” I’d never been on a private jet before. I climbed up into this G2 and they said, “We hope you don’t mind but we are going to have to stop in Sun Valley and pick up another guest.” Clint Eastwood! So all of a sudden we’re feeling like really big shits. There were four of us on the team and after we land in New York we get picked up by a limousine and swept off to the Waldorf Towers: not just the Waldorf, the Waldorf Towers! It was a nine-room suite that had a pool table and a grand piano. Our normal fare was Holiday Inn. They were clearly warming us up. The next day we go up to meet Steve Ross to sort of negotiate and we came to a handshake agreement in form and structure of the deal by probably four or five o’clock that afternoon.

  Al Alcorn: Warner concluded the deal in November 1976. The VCS was already under development, underway.

  Chris Caen: This was the very beginning of the whole synergy between Hollywood and Silicon Valley.

  Al Alcorn: So we sell the company for $30 million to Warner and we thought we were the richest guys in the world.

  Nolan Bushnell: My personal payday was about $16 million, which was considered to be a lot at that time.

  Al Alcorn: When I sobered up about a month later I bought a Shelby Cobra. And I bought a house after tha
t—and an airplane. So that was my splurging. Nolan goes off and buys himself a Learjet, starts a charter operation.

  Nolan Bushnell: Corporate air transport: We leased jets. That was Nolan living larger than life and getting a little ahead of himself. It turns out that you cannot run a private jet economically. And getting two jets doesn’t help at all.

  Al Alcorn: Because I was a pilot and I love to fly, I would fly Nolan and the guys back to Grass Valley quite often.

  Ron Milner: Atari’s secret think tank in the mountains.

  Al Alcorn: I go there every week.

  Alan Kay: Atari had a group of inventors up in Grass Valley that had been involved in the original machines. They were kind of tinkerers.

  Ron Milner: Their operation down in the Bay Area was so busy with production and making the stuff work that they didn’t have time to develop the next new thing.

  Al Alcorn: My title was VP of research and development. That’s what was actually on my business card. Well, I wasn’t that: There was no R&D per se—it was advanced product design.

  The tinkerers in Grass Valley were developing the VCS; the initials stood for “Video Computer System.” From an engineering perspective the VCS was a personal computer much like the Apple II—it was even powered by an almost identical microprocessor. But Atari marketed it as a home video game console for the masses.

  Al Miller: The VCS was introduced in the fall of ’77, and it was very well received.

  David Crane: The VCS was actually designed so that they could sell one console and then sell a Tank cartridge and a Pong cartridge. Twice as many sales, right? So the hardware was designed to play those two games. And if it could do any other games? “Great! We can sell more cartridges.” So that was the push: “Let’s see if we do more arcade games on this home hardware.”

  Larry Kaplan: I saw their ad in the Mercury News and applied for the job. I was among a hundred applicants. They later told me they hired me because I had purchased an Altair. I started in August of 1976. I joined Atari so I could play Breakout for free.

  Bob Whitehead: I was the second programmer hired at Atari. And then Alan Miller and Dave Crane came on my heels, just behind me. We were all brought on to program games for this new programmable cartridge-based system.

  David Crane: Myself, Al Miller, Bob Whitehead, and Larry Kaplan, we generally worked together on our projects.

  Bob Whitehead: We weren’t the only guys being hired to program these things. What seemed to happen was just a group of us began to separate ourselves, professionally. It seems like a few of us just had a better knack for doing games. We became fast friends.

  David Crane: Larry Kaplan made Air-Sea Battle, which showed that it could do more than just Tank and Pong. Air-Sea Battle had two little howitzer-like guns at the bottom, one player, two player. They had fighter jets and things flying over and you would shoot missiles at them, and there was a lot of action going on in the game—far more action than the designers of the VCS had originally expected. Al Miller did a game called Surround, which was originally an arcade game from Atari. Bob Whitehead went off the other direction and did an original title: a baseball game where you actually batted and pitched and all that kind of stuff. I did Canyon Bomber and Depth Charge, which were ported over from the Atari arcade games. The arcade versions cost like $4,000 each, and I put them both into a VCS cartridge that you could buy for $19 and play on your little $200 machine.

  Al Alcorn: They were a huge hit. Warner got there at the right time.

  Larry Kaplan: Within a year the company had enough money that they put in a sauna in the engineering section. We were spoiled, and we worked the hours we wanted to work, on any schedule, and a game was finished when we said it was finished.

  Al Alcorn: We moved to a brand-new facility out in Sunnyvale next to Lockheed. Clearly the money was helping to pay for it. At first it was the same Atari.

  Bob Whitehead: Atari began to change when Warner brought on Ray Kassar as CEO. Ray Kassar came from Ralph Lauren.

  Al Alcorn: He has never been on the West Coast, didn’t understand consumer products, electronic products, didn’t understand games or anything like that—but he was a businessman.

  Ray Kassar: When I arrived there on the first day I was dressed in a business suit and tie and I met Nolan Bushnell. He had a T-shirt on. The T-shirt said: I LOVE TO FUCK. That was my introduction to Atari.

  Al Alcorn: Ray had an executive parking spot for his chauffeur-driven Rolls-Royce. He had a helicopter landing pad. He had an executive dining room so the executives did not have to rub shoulders with the unwashed. It was a term they liked to use: “the great unwashed.” He was really tone-deaf to what was going on around him.

  Al Miller: I was at one of the very first meetings that Ray had with the entire group. There were probably eighty to a hundred technologists in the room and somebody asked him, “Well, what kind of experience do you have dealing with creative people?” Because, you know, we were creating entertainment. And he said, “Oh, I’ve had a lot of experience dealing with creative people. I’ve worked with towel designers my entire career.” And I don’t know about the other people, but I was just flabbergasted when he said that, because it showed he was entirely clueless about the industry and what we were doing.

  Alan Kay: Ray was a great guy and a very good businessman, but his former experience in computing was that he was an expert in Egyptian cotton.

  Ray Kassar: I had not played video games before.

  David Crane: Marketing circulated a memo: a single sheet of the sales of game cartridges for the previous year by percentage. It said number one was baseball or whatever and it did 22 percent of sales. And then number two was this and the percentage, and the percentage all the way down. And basically what the memo said was, “Here’s what’s selling, this is what’s hot. Do more like that.” They had no idea what it took to make a video game, what the effort was, and how you actually enticed people to play it and make it interesting, all those things. They just wanted more: more like the top of the sales chart than the bottom.

  Al Alcorn: Miller, Crane, Whitehead, Kaplan—those guys could in three months design a video game cartridge that would generate ten to twenty million dollars in sales.

  Bob Whitehead: The four of us began to look up the numbers and we found out just the four of us were responsible for in excess of $200 million in sales, just our games. That was after a year and a half or so of sales.

  David Crane: Since we went out to lunch together and tended to look at these things together, we totaled up the sales of all the games that we did. And that was interesting, because about 60 percent of the total sales from the previous year were games that the four of us did. Twenty percent of the revenues from the previous year were people who had left Atari, just to go off and do other things. And of the thirty people left, they accounted for about 20 percent of the revenue.

  Al Miller: And so I researched the music and the book publishing industries to develop a contract that I thought would be fair for my situation at Atari. And I submitted it to my management, saying this is the kind of relationship I want. I want recognition for my work and I proposed something like a 2 or 3 percent commission royalty, which was pretty low relative to the music and the book publishing industry. And I started having discussions with my management and then it bopped up to senior management, Ray.

  David Crane: We went into Ray Kassar’s office and we told them all about it.

  Al Alcorn: They said, “Well, come on, give us a piece.” They didn’t want a lot, just five cents a cartridge.

  David Crane: We said, “Look, obviously there’s something that we have that is marketable, that makes value.”

  Clive Thompson: One of the things that are so interesting about those early games is how they wrestled with the great geopolitical anxieties of the times: not just global thermonuclear war, but also the idea that society was robotizing. Space Invaders was about these gibbering creatures from the id. You had games that literally made the
subtext, text—like Missile Command. Games were responding to these floating senses of technological threat that were in the air. There is really something dreamlike about them. They were the poetry of the age.

  Al Miller: We were doing creative efforts much like book authors. In that era it was single-person work. We did all the music. We did all the art. We did all the programming. We did virtually all of the conceptual design as well.

  Chris Caen: You got to remember that back then you had one software programmer per product. It’s not like the world now, where you have hundreds of programmers working on a decade-long plan to deliver a single software experience.

  Howard Warshaw: Programming created this new phenomenon: the intellectual blue-collar workers that are as smart or smarter than the managers who are working with them. Ray and his staff weren’t prepared to deal with this.

  Al Alcorn: Ray’s attitude was that the engineers were a bunch of high-strung prima donnas.

  David Crane: And he said, “Well, you know this is a corporate product. It’s an engineering product. There are hundreds of employees at Atari. And if that guy over there didn’t do his job we wouldn’t have sold $60 million. If that guy over there didn’t do his job we wouldn’t have sold $60 million. In fact if the guy on the assembly line hadn’t put them together we wouldn’t have made $60 million on the games. So you are actually no more important than the guy on the assembly line who puts them together.” That was the end of that meeting. And in fact we were walked out by a senior vice president who just kind of chuckled at the way that meeting went and said, “Well, guys, it’s been nice knowing you.” Because he knew that we’d be gone soon.

  Chris Caen: The idea that people would leave Atari to go start their own software company was baffling to the powers that be. It would have been like leaving Ford to start Edsel—why would anyone do that?