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

by Adam Fisher

  Michael Malone: They brought in Meg Whitman.

  Chris Agarpao: Pierre hired her to take it to the next level, and kind of stepped down from his position.

  Brad Handler: Pierre gets credit for being able to say, “I’m not the guy to do the next step,” and that’s very hard for a founder to do. Jeff also had to give up some operational control to the new CEO.

  Jeff Skoll: Neither Pierre nor I ever dreamed about being a captain of industry in Silicon Valley. We both believed in the company, but we both recognized we didn’t have the experience at that time to maximize what eBay would be for the world.

  Michael Malone: They got out of the way fast, almost too fast. There are stories of Meg saying, “Pierre, don’t you care what I’m doing here?” And Pierre saying, “No, I trust you,” and walking away.

  Chris Agarpao: That’s when it all changed. The next level was a more corporate, bigger phase.

  Brad Handler: I was a lawyer. My job was to be the first real grown-up, I was the first person who ever said, “No, you can’t do that,” to anything. And so the very first week I was there I created a system to work with people who owned the intellectual property to goods that were being sold illegally, as well as to work with law enforcement for goods that had been stolen.

  Steve Westly: eBay has this stunning idea: that they will enable you to sell anything to anyone. But there’s these wild downsides, like, one Saturday I get a call from our engineering department saying the FBI is calling and they want to know why we have an operational rocket launcher for sale.

  Brad Handler: The kidney, the virginity: That kind of stuff was all in the press. They were all just publicity-seeking pains in the butt, as far as I could tell.

  Steve Westly: And I’d say, “Well, I’m terribly sorry, sir or madam, but we get ten thousand items posted every minute and we have strict standards and any time there’s something inappropriate, we take it down.”

  Brad Handler: eBay would have been crushed if they didn’t take the regulations seriously. The businesspeople and the technology people at eBay believed that the center of the universe was Silicon Valley: I’m not sure they could find Washington, DC, on a map! But we eventually got everybody on board with the fact that “being on the internet” is not the answer to why you don’t comply with the laws of any particular jurisdiction.

  Jeff Skoll: In the original peer-driven laissez-faire libertarian version of the site, we relied a lot on users to identify things for us that were problems. So if it’s illegal, and you let us know about it, we’ll take it down. If it’s some sort of fake item or whatever, we’ll take it down. But the law at the time—before 1996—was that if you meddle and go in and take down an item of your own accord, you are going to get sued if you miss a similar item. So we stayed away from that big-time.

  Brad Handler: The backbone of eBay’s defense against liability, as well as the backbone of every online community, is the notice-and-take-down regime established by the Digital Millennium Copyright Act. The DMCA established the rules of the road on how copyright was to be enforced online, and what we were able to get in there was this notion that as long as you take it down, you won’t be held liable. That’s a big deal, because without that, it would have been hard for eBay to prosper.

  Pete Helme: And at some point in ’98, around the time Meg Whitman started, we surpassed Visa and MasterCard for the number of transactions per second, which was a turning point for us. That was pretty cool, but on the other hand it’s like, “Oh, we have to deal with this…”

  Maynard Webb: They had so much success that for like a quarter or two they didn’t let any new users sign on, because they couldn’t handle the volume while they retooled.

  Brad Handler: At the same time, we’re trying to go public…

  Jim Griffith: It was 1998 and the internet bubble was still really big, but it kind of went into temporary suspension while the bottom fell out of the Asian currency market. All the scheduled IPOs for that spring and summer were canceled.

  Steve Westly: And people said, “It’s a bad market, you can’t go out, you’re in the online auction business and no one knows what the hell that is.”

  Jim Griffith: Goldman Sachs had scheduled the IPO for October of ’98.

  Steve Westly: We’re there with literally the most serious people from Goldman Sachs, and they’re saying like, “How big do you think the Beanie Baby playing-card sports-card trading-card industry is? One hundred million? Two hundred?” And that’s when I jumped up and said, “Well, you know we now have a thousand categories and we have an average eleven hundred items per category and we have a sell-through rate of X, and we’re adding categories at this rate, and by the way, we’re going into more geographic areas, and so we think this is a multi-billion-dollar company,” and we were able to convince the people from Goldman Sachs that we might be on to something.

  Jim Griffith: We were going to be the first tech IPO after the Asian currency market fiasco and there was a lot of speculation: Is this going to be good or bad?

  Brad Handler: There was a long wait before the first trade. It was more than an hour after the market opened, and when the first trade came across the tape I think it was somewhere in the fifties. We all realized that our lives had all irrevocably changed. In that instant everyone in that room was probably worth more than their parents had ever made in their lifetimes.

  Chris Agarpao: We had a big party. There was a conga line through the building! We could fit the whole company on one floor back then.

  Jim Griffith: It was a great IPO, and that was an interesting summer, it really was.

  Maynard Webb: I get my first call from eBay in 1999, in the June-ish time frame. And this isn’t well known, but they had had a history of problems on their site.

  Jeff Skoll: This goes back to some of Pierre’s early choices to build on shareware: shareware software, shareware compilers, shareware databases. He did this because in part for costs, and in part because it was easy to find people that could help build stuff into shareware. But it didn’t scale. When you have so many simultaneous users, bad things would happen. Either the whole system would go down, or you would have conflicts between the databases. When we didn’t have any competition it was a nightmare, but it didn’t kill the company. But when people started to know about the company it was a nightmare and it could have killed the company.

  Maynard Webb: It was fits and starts all the way, and then they had this big catastrophic outage on June 10 of 1999.

  Steve Westly: I was used to this, because I’d have to be handling marketing, and the press would start calling and asking when the site would come back up, and I’d talk to engineering and we’d say, “Fifteen minutes,” or “Forty-five minutes,” but that day there was an outage to the extent where engineering for the first time ever said, “We don’t know.” I said, “What do you mean, you don’t know?” This was a bad one.

  Pete Helme: It made the whole site unusable, and nothing worked, and people had to scramble, all the engineering teams got together, and Meg was there, rallying the troops: “How do we figure this out?”

  Jeff Skoll: Part of the problem was that the only person that knew how the system worked was Mike Wilson. Pierre had worked with him before at The Well. And Mike worked his tail off: He was in the office seven days a week. And Mike for the first time in three years took a vacation. He went off to the Caribbean somewhere and he was sort of out of touch for a week, and that was the week the system went down. Pierre had long since lost track of what was going on, Meg didn’t have a clue—that’s not her background—and neither did the other engineers in Mike’s group. The holy grail was held by Mike, so nobody really understood what was wrong.

  Maynard Webb: The stock tanked, Meg spent the night there, and it was really bad. People were wondering whether they could keep this thing alive.

  Jeff Skoll: We called in folks from SUN and Oracle and IBM and other consultants, and they worked nonstop for days.

  Mary Lou Song: Meg brou
ght in cots and toothbrushes and people didn’t go home and were dying for sleep and we couldn’t figure out what was going on. We were all scared, it was like, “What the heck?” There were TV crews in the parking lot. It was all hands on deck, and it felt like we were just trying to save ourselves from who knows what.

  Pierre Omidyar: It was front-page news. We had CNN satellite trucks in the parking lot. It was big, big. It was, “The world is watching, this company is gone. It’s going away.”

  Mary Lou Song: We started a telephone tree. Everybody who wasn’t an engineer was calling customers and making sure they were okay.

  Steve Westly: I just told people the truth: The site had grown too quickly, we did not know when it was going to be back up, and we were doing everything humanly possible to deal with it.

  Jeff Skoll: There was a moment, about four or five days into it, when the technical team said, “We don’t think that we can bring this up.” And everyone just sat in silence for about twenty minutes. If you have a mind-set where you are always looking for a black swan no matter how good the news has been, then you are always afraid of that black swan. Well, that was our black swan. It was, “Yes, the company is dead,” and we’re all in shock, but then a new breath of life came in. Right around then a junior Oracle programmer said, “I’ve just found something, I wonder if this could be it?” It was a line of code that was just off. And sure enough, that was the problem, and after we made the patch, the system started to come back up, gradually.

  Pete Helme: It took us a day or two to figure out how to get everything rebooted and get the backups in place and all that.

  Jeff Skoll: Now Mike was still away, and he had heard that there were problems and he was on his way back, but by the time he made his way back, Meg had called Maynard, and then that was the end of Mike’s tenure.

  Maynard Webb: Data corruption is a horrible thing; we don’t need to go into all these fields of what went wrong, but what became clear is there needed to be a different path, and I was one of the people she reached out to.

  Mary Lou Song: And then I think it happened again another month later.

  Maynard Webb: And I was like, “I can fix this.” Meg just reeled me in.

  Pierre Omidyar: Meg really woke up to the fact that infrastructure and technology was critical and just really built that organization out.

  Jeff Skoll: We struggled with the old system a little while more, while Maynard built a new system to take its place, and that was that.

  Chris Agarpao: So Maynard was just awesome. He was like the scientist of all the technology back then, and he knew how to run it.

  Maynard Webb: It was a crazy time, a time of very much worry at eBay because everybody thought the whole thing was just going to die and this wonderful dream that had been created was not going to be realized.

  Pete Helme: I don’t think anybody had an idea what to do in these early days of the internet and we were one of the fastest-growing companies, but Maynard knew what to do, or had a better idea than we did, for sure.

  Maynard Webb: And Meg had promised, based on the June outage, that we would do a free listing day, which meant we took the fees away, and everybody would go crazy for twenty-four hours, and our site traffic would double or triple in volume—which is not necessarily a recipe for greatness when you’ve had scale issues.

  Pete Helme: We ended up spending a lot more money on more machines and more hardware and more networking and stuff like that, yes. We had a room dedicated to monitoring all the systems. It looked like an air traffic control room, with all the monitors on the wall and stuff like that.

  Maynard Webb: And so, nine days after I officially started was our free listing day, we were like Scotty from Star Trek—you know: “Captain Kirk! Captain! She’s going to blow!” But it worked, and the marketing folks were so relieved that they started coming in banging drums, thanking us.

  Jeff Skoll: If there is an unsung hero, it’s Maynard. He saved the company.

  Michael Malone: And they just kept growing and growing.

  Steve Westly: The stock split twenty-four to one from the initial IPO. It turned out to be a thousand-to-one return on the venture investment. Still one of the biggest in history.

  Michael Malone: The next time I saw a company grow that fast it was Google.

  The Shape of the Internet

  A problem of great googolplexity

  As the nascent web was taking off two graduate students at Stanford—Larry Page and Sergey Brin—watched from the sidelines. They weren’t interested in using the internet to buy and sell stuff, or to read and publish stories, or even to score Grateful Dead tickets. They had a better idea: They would use it to get their doctorates. For Page and Brin aspired to be doctors of computer science, and the world wide web was the field’s unstudied frontier. Yet studying the web was easier said than done. They would have to first capture it—download the web in its entirety—before the PhD-minting process could begin. In 1996 the web was still small enough that downloading its entirety to a stack of hard drives in a dorm room was possible, but just barely. They had to limit themselves to collecting the links and tossing the actual content of the web pages themselves. Yet that limitation didn’t matter much, because Page and Brin weren’t interested in the web’s content, but rather its shape. And to two aspiring computer scientists the shape of the web looked like an equation—with approximately four hundred million variables and three billion terms. The equation proved solvable, but again, just barely. It spat out a number corresponding to each web page, sorting them like so many cards. When Page and Brin looked at the order that their equation had forced onto the web, they were surprised to find that they had inadvertently solved the hardest problem in computer science. They had made the internet logical, useful—searchable.

  Heather Cairns: Larry and Sergey were PhD students at Stanford. That’s where I met them. They were both young to be in a PhD program. I think they graduated high school a few years early.

  Scott Hassan: Normally what happens to a first-year is that you get there and then a month later you take these things called qualifier exams, or “the quals,” right? At the time there were like ten exams that you had to take, and most people fail three or four of them. Then for the ones you fail, you have to take those courses in order to bone up on that knowledge. And so that takes a couple of years. Then you start working on the PhD in year two or three. Well, supposedly Sergey was the first kid to pass all of them. He passed every single one of them, perfectly! And so the computer science department didn’t really know what to do with him, and so he just played around.

  David Cheriton: Back in 1994 or ’95 I remember Sergey was Rollerblading in the Computer Science building—Rollerblading around the fourth floor with some of my graduate students.

  Scott Hassan: So Sergey and I are good friends and we would go around picking locks and things like that. We could open any door in the whole entire place!

  Heather Cairns: Sergey would come into my office with bad paintings because he knew I had a history in art and ask me what I thought. They were abstracts. He’d just kind of have a black blob on a brown background. He was probably trying to imitate Rothko or something, I’m not sure. I told him to keep his day job, but you’ve got to admire the spirit. Sergey was sort of a showboat, definitely an extroverted kid.

  Scott Hassan: Then the next year, Larry comes as a first-year PhD student, and Larry is very different.

  Heather Cairns: Larry’s an introvert.

  Scott Hassan: I don’t think he passed all his qual exams like Sergey did, but Larry’s very driven, right?

  Larry Page: I was interested in working on automating cars when I was a PhD student in 1995. I had about ten different ideas of things I wanted to do.

  Heather Cairns: Building a space tether to propel people into space was also an ambition.

  Terry Winograd: So, the basic idea of the space tether was you put a rock out in space, in orbit, swinging around the Earth with a string all the way down to
the ground, and then it’s an elevator. You can just climb up the string like Jack and the Beanstalk, right?

  Heather Cairns: Yes, the space tether. In those days they were still talking about it. I never thought it was serious but apparently it was.

  Terry Winograd: They had this desire to be quirky. They were Burning Man before Burning Man. They just enjoyed speculating. “Oh, could we build a space tether? What would it take to build a space tether?”

  Sergey Brin: I was chatting with Larry a lot. We got along pretty well.

  Terry Winograd: Sergey and Larry were looking for projects they wanted to do. And so they got connected into the Digital Libraries Project because they were interested in that.

  Scott Hassan: I was full-time at Stanford as a “research assistant,” but really I was just a programmer. I was in a little, tiny little cubbyhole and working on the first parts of the Digital Libraries Project.

  Terry Winograd: This was the era when online information was things like Lexis/Nexis, science journals, and medical journals: big institutions that had important information that was siloed. If you wanted to look up something in one of those information sources, you paid them, you got their application, and you went to it. As the internet became more widespread, it became obvious you wanted something that was able to deal with information from a number of these sources, so you weren’t stuck with only one.

  Sergey Brin: I was interested in data mining, which means analyzing large amounts of data, discovering patterns and trends. At the same time, Larry started downloading the web, which turns out to be the most interesting data you can possibly mine.

  Larry Page: I had one of those dreams when I was twenty-three. When I suddenly woke up, I was thinking, What if we could download the whole web, and just keep the links and…

  Scott Hassan:… surf the web backward! Mainly because it seemed interesting. You can say, “Oh, I’m on this page, what pages point to me?” Right? So Larry wanted a way to then go backward to see who was linking to whom. He wants to surf the whole net backward.