ALSO BY MARGARET O’MARA
Pivotal Tuesdays: Four Elections That Shaped the Twentieth Century
Cities of Knowledge: Cold War Science and the Search for the Next Silicon Valley
PENGUIN PRESS
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Copyright © 2019 by Margaret O’Mara
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Photograph credits appear on this page.
LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA
Names: O’Mara, Margaret Pugh, 1970– author.
Title: The Code : Silicon Valley and the remaking of America / Margaret O’Mara.
Description: New York : Penguin Press, 2019. | Includes bibliographical references and index.
Identifiers: LCCN 2019003295 (print) | LCCN 2019006563 (ebook) | ISBN 9780399562198 (ebook) | ISBN 9780399562181 (print)
Subjects: LCSH: Santa Clara Valley (Santa Clara County, Calif.)—Economic conditions. | Business enterprises—California—Santa Clara Valley (Santa Clara County)
Classification: LCC HC107.C22 (ebook) | LCC HC107.C22 S33973 2019 (print) | DDC 338.709794/73—dc23
LC record available at https://lccn.loc.gov/2019003295
Cover design: Christopher Brian King
Cover images: (top row) Steve Jobs, Andy Freeberg / Getty Images; Mark Zuckerberg, Rick Friedman / Getty Images; Bill Gates, PA Images / Getty Images; Sergey Brin, Justin Sullivan / Getty Images; (bottom row) Jeff Bezos, Ted Soqui / Getty Images; John Doerr, Ann E. Yow-Dyson / Getty Images; Andy Grove, courtesy of Intel Corp.; Frederick Terman, provided by the Stanford University Libraries
Version_1
To Jeff
Want to know why I carry this tape recorder? It’s to tape things. I’m an idea man, Chuck, all right? I’ve got ideas all day long, I can’t control them, it’s like, they come charging in, I can’t even fight ’em off if I wanted to.
Night Shift (1982)1
On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.
JOHN PERRY BARLOW,
“A Declaration of the Independence of Cyberspace,” 19962
The machine that is everywhere hailed as the very incarnation of the new had revealed itself to be not so new after all, but a series of skins, layer on layer, winding around the messy, evolving idea of the computing machine.
ELLEN ULLMAN,
Life in Code, 19983
CONTENTS
Also by Margaret O’Mara
Title Page
Copyright
Dedication
Epigraph
List of Abbreviations
Introduction: The American Revolution
ACT ONE: START UP
Arrivals
Chapter 1: Endless Frontier
Chapter 2: Golden State
Chapter 3: Shoot the Moon
Chapter 4: Networked
Chapter 5: The Money Men
Arrivals
Chapter 6: Boom and Bust
ACT TWO: PRODUCT LAUNCH
Arrivals
Chapter 7: The Olympics of Capitalism
Chapter 8: Power to the People
Chapter 9: The Personal Machine
Chapter 10: Homebrewed
Chapter 11: Unforgettable
Chapter 12: Risky Business
ACT THREE: GO PUBLIC
Arrivals
Chapter 13: Storytellers
Chapter 14: California Dreaming
Chapter 15: Made in Japan
Chapter 16: Big Brother
Chapter 17: War Games
Chapter 18: Built on Sand
ACT FOUR: CHANGE THE WORLD
Arrivals
Chapter 19: Information Means Empowerment
Chapter 20: Suits in the Valley
Chapter 21: Magna Carta
Chapter 22: Don’t Be Evil
Arrivals
Chapter 23: The Internet Is You
Chapter 24: Software Eats the World
Chapter 25: Masters of the Universe
Departure: Into the Driverless Car
Photographs
Acknowledgments
Note on Sources
Notes
Image Credits
Index
About the Author
LIST OF ABBREVIATIONS
ACM: Association for Computing Machinery
AEA: American Electronics Association
AI: Artificial intelligence
AMD: Advanced Micro Devices
ARD: American Research and Development
ARM: Advanced reduced-instruction-set microprocessor
ARPA: Advanced Research Projects Agency, Department of Defense, renamed DARPA
AWS: Amazon Web Services
BBS: Bulletin Board Services
CDA: Communications Decency Act of 1996
CPSR: Computer Professionals for Social Responsibility
CPU: Central processing unit
EDS: Electronic Data Systems
EFF: Electronic Frontier Foundation
EIT: Enterprise Integration Technologies
ENIAC: Electronic Numerical Integrator and Computer
ERISA: Employee Retirement Income Security Act of 1974
FASB: Financial Accounting Standards Board
FCC: Federal Communications Commission
FTC: Federal Trade Commission
GUI: Graphical user interface
HTML: Hypertext markup language
IC: Integrated circuit
IPO: Initial public offering
MIS: Management information systems
MITI: Ministry of International Trade and Industry (of Japan)
NACA: National Advisory Committee for Aeronautics, later superseded by NASA
NASA: National Aeronautics and Space Administration
NASD: National Association of Securities Dealers
NDEA: National Defense Education Act
NII: National Information Infrastructure
NSF: National Science Foundation
NVCA: National Venture Capital Association
OS: Operating system
OSRD: U.S. Office of Scientific Research and Development
PARC: Palo Alto Research Center, Xerox Corporation
PCC: People’s Computer Company
PDP: Programmed Data Processor, a minicomputer family produced by Digital
PET: Personal Electronic Transactor, a microcomputer produced by Commodore
PFF: Progress and Freedom Foundation
R&D: Research and development
RAM: Random access memory
RMI: Regis McKenna, Inc.
ROM: Read-only memory
SAGE: Semi-Automatic Ground Environment
SBIC: Small Business Investment Company
SCI: Strategic Computing Initiative
SDI: Strategic Defense Initiative
SEC: Securities and Exchange Commission
SIA: Semiconductor Industry Association
SLAC: Stanford Linear Accelerator Center, later SLAC Nationa
l Accelerator Laboratory
SRI: Stanford Research Institute, later SRI International
TCP/IP: Transmission Control Protocol / Internet Protocol
TVI: Technology Venture Investors
VC: Venture capital investor
VLSI: Very large-scale integration
WELL: Whole Earth ’Lectronic Link
WEMA: Western Electronics Manufacturers Association, later AEA
INTRODUCTION
The American Revolution
Three billion smartphones. Two billion social media users. Two trillion-dollar companies. San Francisco’s tallest skyscraper, Seattle’s biggest employer, the four most expensive corporate campuses on the planet. The richest people in the history of humanity.
The benchmarks attained by America’s largest technology companies in the twilight years of the twenty-first century’s second decade boggle the imagination. Added together, the valuations of tech’s so-called Big Five—Apple, Amazon, Facebook, Google/Alphabet, and Microsoft—total more than the entire economy of the United Kingdom. Tech moguls are buying storied old-media brands, starting transformative philanthropies, and quite literally shooting the moon. After decades of professed diffidence toward high politics, the elegant lines of code hacked out in West Coast cubicles have seeped into the political system’s every corner, sowing political division as effectively as they target online advertising.1
Few people had heard of “Silicon Valley” and the electronics firms that clustered there when a trade-paper journalist decided to give it that snappy nickname in early 1971. America’s centers of manufacturing, of finance, of politics were three thousand miles distant on the opposite coast. Boston outranked Northern California in money raised, markets ruled, and media attention attracted.
Even ten years later, when personal computers mushroomed on office desks and boy-wonder entrepreneurs with last names like Jobs and Gates seized the public imagination, the Valley itself remained off to the side of the main action. An ochre haze of smog hung over its tidy bedroom suburbs when the wind didn’t blow right, its dun-colored office buildings were impossible to tell apart, and you were out of luck if you tried to order dinner in a restaurant past 8:30 p.m. One horrified British visitor called it “the land of polyester hobbitry.”2
Keeping the hobbits but losing some of the sleepiness, the Valley and its sister technopolis of Seattle soared to staggering heights in the dot-com 1990s—“the largest single legal creation of wealth we’ve witnessed on the planet,” quipped venture capitalist John Doerr—only to plummet to earth as the new millennium dawned with a massive, NASDAQ-pummeling pop, leaving the carcasses of once-shining Internet companies strewn across the landscape. Magazine cover stories declared the end of the mania, grim-faced analysts switched their “buy” ratings to “sell,” and Wall Street attention shifted back to the more predictable rhythms of blue-chip stalwarts. The rocketing rise of Amazon felt like a fever dream, Apple had run out of product ideas, Microsoft had been ordered to split itself in two, and Google was a garage operation whose leaders seemed more interested in going to Burning Man than turning a profit.3
How quickly things change. Fast-forward to the present, and Silicon Valley is no longer merely a place in Northern California. It is a global network, a business sensibility, a cultural shorthand, a political hack. Hundreds of places around the world have rebranded themselves Silicon Deserts, Forests, Roundabouts, Steppes, and Wadis as they seek to capture some of the original’s magic. Its rhythms dictate how every other industry works; alter how humans communicate, learn, and collectively mobilize; upend power structures and reinforce many others. As one made-in-the-Valley billionaire, Marc Andreessen, put it a few years back, “software is eating the world.”4
This book is about how we got to that world eaten by software. It’s the seven-decade-long tale of how one verdant little valley in California cracked the code for business success, repeatedly defying premature obituaries to spawn one generation of tech after another, becoming a place that so many others around the world have tried and failed to replicate. It also is a history of modern America: of political fracture and collective action, of extraordinary opportunity and suffocating prejudice, of shuttered factories and surging trading floors, of the marble halls of Washington and the concrete canyons of Wall Street. For these, as you shall see, were among the many things that made Silicon Valley possible, and that were remade by Silicon Valley in return.
* * *
—
From the first moment that Silicon Valley burst into the public consciousness, it was awash in revolutionary, anti-establishment metaphors. “Start your own revolution—with a personal computer,” read an ad for the new Personal Computing magazine in 1978. “The personal computer represents the last chance for that relic of the American Revolution, our continent’s major contribution to human civilization—the entrepreneur,” proclaimed the tech industry newsletter InfoWorld in 1980.
Four years later, as they prepared to announce the new Macintosh computer to the public, Apple executives focused on marketing messages that emphasized “the radical, revolutionary nature of the product.” One result was one of the most famous pieces of television advertising in history, the jaw-dropping spot broadcast into millions of American living rooms during the 1984 Super Bowl, when a lithe young woman ran through a droning audience, hurled a hammer at a Big Brother–like image projected on a blue screen, and shattered it.5
The barely veiled punch at IBM, Apple’s chief rival, reflected a broader anti-establishment streak in this techie rhetoric that went beyond marketing plans and ad slogans. “Mistrust Authority—Promote Decentralization,” read one plank of the “hacker ethic” journalist Steven Levy used in 1984 to describe the remarkable new subculture of hardware and software geeks who had helped make the computer personal. “Authority” meant Big Blue, big business, and big government.
It was the perfect message for the times. After more than ten years of unrelentingly dismal business news—plant shutdowns, blue-collar jobs vanishing overseas, fumbling corporate leaders, and the pummeling of American brands by foreign competitors—high-tech companies presented a bright, promising contrast. Instead of exhausted middle managers and embittered hard hats, there were flashy executives like James “Jimmy T” Treybig of Tandem Computers, who threw weekly beer parties for his staff and held alfresco press briefings beside the company swimming pool. There were CEOs like Jerry Sanders of Advanced Micro Devices (AMD), who bought a Rolls Royce one week and a top-of-the-line Mercedes the next. And of course there were Steve Jobs of Apple and Bill Gates of Microsoft, who came to exemplify a new sort of corporate leader: young, nonconformist, and astoundingly rich.
Then there was the man who gave his name to the era, Ronald Reagan, crusader against big government, defender of deregulated markets, standard-bearer of what he called “the decade of the entrepreneur.” For the Great Communicator, no place or industry better exemplified American free enterprise at work than Silicon Valley, and he was particularly enthusiastic about extolling its virtues to foreign audiences.
During his historic visit to the Soviet Union in the spring of 1988—the first appearance of an American president there in fourteen years and a stunning move for a leader who had referred to the USSR as an “evil empire” only a few years earlier—Reagan stood before an audience of 600 computer science students at Moscow State University and rhapsodized about the glories of the American-made microchip. These miracles of high technology, the president told the crowd as a giant statue of Vladimir Lenin loomed behind his podium, were the finest expression of what American-style democracy made possible. Freedom of thought and information allowed the surge of innovation that produced the computer chip and the PC. No one better demonstrated the virtues of American free enterprise—particularly the low-tax, low-regulation variety beloved by Reagan—than the high-tech entrepreneurs (“no older than you,” he reminded the students) who started out ti
nkering in suburban garages and ended up leading hugely successful computer companies.
The next revolution, Reagan explained that day in Moscow, would be technological. “Its effects are peaceful, but they will fundamentally alter our world, shatter old assumptions, and reshape our lives.” And leading the way would be the young technologists who had worked up the courage “to put forth an idea, scoffed at by the experts, and watch it catch fire among the people.”6
Many of the men and women who had been at the ground floor of what they called the “personal computing movement” were children of the sixties counterculture, whose leftist politics were as far from Reagan’s conservatism as you could get. Yet here was one place where the hippies and the Gipper could agree: the computer revolution had a free-market soul.7
The revolutionary metaphors weren’t new, of course. Since the age of Franklin and Hamilton, American inventors and their political and corporate patrons had made bold (and prophetic) claims about how new technology would change the world. From Horatio Alger to Andrew Carnegie to Henry Ford, politicians and journalists lifted up the figure of the ingenious, bootstrapping entrepreneur as an example and inspiration of what Americans could and should do. Only in America could you rise from rags to riches. Only in America could you be judged on your own merits, not your pedigree. In this telling, Silicon Valley seemed just like the latest and greatest example of the American Revolution in action.
* * *
—
Ronald Reagan was right. The high-tech revolution was an only-in-America story. And he and so many others were right to laud people like Jobs and Gates and Hewlett and Packard as entrepreneurial heroes. Silicon Valley could never have come to be without the presence of visionary, audacious business leaders. Reagan and his conservative allies also were right when they argued that overly regulated markets and nationalized industries could present big hurdles to entrepreneurial innovation—many of the globe’s would-be Silicon Valleys attest to that.
The Code Page 1
