The Code
Page 25
The big hits still hadn’t improved the long odds of striking it rich in high tech, but a newly conspicuous consumption had made the gulf between the winners and the losers far more visible. Now everyone seemed like a miniature Jerry Sanders, cashing in stock options to buy outrageous sports cars. Overworked engineers stepped out to pick up their morning newspaper, saw the Ferraris and DeLoreans filling their neighbors’ driveways, and doubled down on their resolve to work even harder. Technologists mumbled about being “burned out by thirty,” but simultaneously held the not-so-secret hope that they’d have earned enough to retire by then.24
The workforce changed in other ways. The rapid growth of the tech industry and its frenetic search for skilled engineers, occurring at the same moment that corporate offices in all kinds of industries were at last opening up to women, meant that there were more female faces in the Valley than there had been in the decade before.
Technical women who had been part of the industry for decades, like Ann Hardy, worked their way up to the executive suite. Newer arrivals found opportunity in a newly consumer-facing industry that no longer demanded a technical background in order to gain entry. Enlarged marketing and PR operations became the most likely places to find a woman in an executive role. One of those early stars was Jean Richardson, a very early Apple hire who soon rose to lead marketing operations—an immensely powerful position in a company whose product was its brand, its story. Regis McKenna might have become a father figure to Steve Jobs, but he and his team reported to Richardson. There had been nearly no women at Apple when she arrived; within a few years her team was mostly female.25
Regis McKenna Inc., or RMI, became another important first stop for women who sought to make their careers in the Valley. Ellen Lapham was one of them, having been lured out from the East Coast to Stanford’s business school in 1975 by the early buzz around microcomputers. “I saw the microworld as young, open-minded, entrepreneurial. It had a missionary spirit,” she said. “The micro revolution was also a cultural revolution.” With MBA in hand, Lapham landed at McKenna’s shop, then jumped to Apple. By 1981, Lapham had cashed in her Apple stock and become CEO of a start-up selling Apple-powered music synthesizers. Jennifer Jones joined RMI about the same time Lapham left it. She, too, spent nearly all her time on Apple. “The ’80s were the best,” said Jones. “It put the firm on the map.” Another member of the team, Andrea “Andy” Cunningham, started her own high-powered PR shop by the middle of the 1980s. Taking a page from Regis McKenna Himself, Cunningham’s business card simply said “Andy.”26
This was not to say things were easy. RMI executives regularly pulled 80- and 90-hour weeks and felt that they didn’t always get the credit they deserved. Regis was a one-name celebrity in the Valley; they weren’t. At one company event, the firm had T-shirts made up for the entire team that read “I Am Regis McKenna.” It was typical Valley team-building schtick. For a group of professionals who were trying to be taken seriously on their own terms, however, it hit a little too close to home. On top of it all was the dismissive regard with which many technical types in the Valley treated marketing and the people who performed it, something reflected in the disparaging nickname that trailed the powerhouse women of RMI for years: the “Regettes.”
For both technical and non-technical women, life in the Valley required a thick skin, tenacity, and a willingness to work absurdly hard. Few had glittering MIT and Stanford engineering degrees, or Harvard MBAs. They had to learn the business on the job. “You plot your own course, you work like heck, you improve yourself,” said Jean Richardson, who after seven years running marketing at Apple left to do the same thing at Microsoft. “Anything’s possible, if you’re willing to put out a hundred and fifty percent. And you must love your job.”27
A hotly competitive market and endless working hours meant that companies piled on the amenities to keep employees happy during their labors. Employee discontent could mean losing top talent to competitors or, heaven forbid, workers succumbing to the siren call of labor organizers and forming a union. Freshly paved jogging paths encircled Intel’s San Jose campus. HP offered free coffee and donuts every morning. ROLM proudly branded itself “A Great Place to Work.” Across the Valley, volleyball courts filled in the afternoon with young employees taking breaks from long days staring at computer screens.28
Lines between professional and personal lives blurred as each twelve-hour workday passed, and tech firms became legendary—and celebrated—for social events that were extravagant expressions of how much cash they now had on hand. Gone were the wholesome cookouts of HP’s early days, when Bill Hewlett and Dave Packard donned aprons to do the burger-flipping themselves. Now, company social events were closer to the “Business is fun!” ethos of Atari, with an emphasis on beer kegs and the occasional recreational spliff. The youthful energy and casual extravagance reminded employees that they were special people, working in a special place.
JIMMY T’S POOL PARTY
Few places epitomized the Valley’s new zeitgeist at the start of the 1980s more than Tandem Computers, one of the era’s enormous success stories. Like Apple, Tandem had close ties to earlier Valley generations.
The man behind Tandem came from Burt McMurtry’s prolifically entrepreneurial Rice Mafia. James “Jimmy T” Treybig had a career that reflected the connections still binding Texas and the Valley: after Rice, there was a short stint as a salesman at Texas Instruments, a Stanford MBA, then over to Hewlett Packard to market its minicomputers. Treybig blazed a spectacularly successful path through HP, eagerly soaking in the wandering-around managerial wisdom of Bill Hewlett. He then decamped to Kleiner Perkins to start sniffing around for ways to start his own company. By 1974, he’d found it: a new and better kind of mini, a “fail-safe computer” with a built-in backup system so it never stopped running.
Recruiting three of his former HP colleagues and persuading Eugene Kleiner and Tom Perkins to invest, Treybig started Tandem. For corporate clients like banks, who couldn’t afford to have their electronic databases go on the fritz, the machine was the answer to their prayers, and Treybig’s machine became a giant hit. Going public in 1977, Tandem ultimately became a massive win for Kleiner Perkins, and one of the two “early birds” giving Valley VCs hope that the Seventies slump would one day be over. (The second was the Burt McMurtry–backed ROLM.)
By the early 1980s, Tandem had become one of the fastest-growing companies in America. The way it grew drew nearly as much attention as the products it sold. Flashy and Texas-sized, Jimmy T believed in both working and playing hard. He insisted on taking a month’s vacation every year and maintained a not-so-secret life as a ham radio operator. His public persona was as far as you could get from the low-key Hewlett and Packard, but he was determined to build as loyal and open a company culture as the one he’d seen at HP—and the perks he offered his workers became nearly as famous as the computers he made.
Everyone at Tandem got stock options, of course. But they also got six-week sabbaticals every four years, and company-paid vacations with their spouses. Headquarters had a swimming pool that was open all day and into the evening. The volleyball court had a locker room and showers. No one wore name tags. No one punched a time clock. Most legendary of all were the beer busts Tandem held every Friday night after work, which not only drew in thousands of employees but made Tandem’s Cupertino offices a destination for others in the Valley who wanted to network and get a couple of free drinks.
“This ‘people-oriented’ management style emphasizes complete informality, peer pressure, and open communications,” reported BusinessWeek in a glowing July 1980 profile that was illustrated with a photo of a smiling Jimmy T beside the company pool. The keys to Tandem’s success, remarked an executive, were “our attitude that people are responsible adults and our willingness to spend money to keep people happy.” There of course was hard work expected in exchange for all these goodies. “Because Tandem’s growth demands high pr
oductivity, there simply is no room here for people who cannot be depended upon,” said another. “Tandem is a society in which everybody is important.”29
Even if some gimlet-eyed competitiveness peeked out from beneath the happy-hour vibe, the overall picture presented was one of a capitalist utopia far removed from the grim economic realities of nearly everywhere else. Flip a few pages ahead in the same issue of BusinessWeek, beyond the peppy “Information Processing” section that told of the high-tech miracle workers of the computer industry, and you’d find a relentless sludge of dire news about plant closings, striking workers, and fearsomely efficient Japanese cars. The contrast couldn’t have been clearer.
There was also a stark contrast when it came to the press treatment of Route 128. To be sure, there were plenty of upbeat stories about the men and machines of Boston to be found in the pages of national magazines and newspapers. And there was plenty of good economic news: after a recessionary dip at the decade’s very start, the region’s tech industry roared ahead thanks to the magic combination of minicomputer revenue and prime defense contracts. By 1982, well over 200,000 people were employed in tech in Massachusetts, more than in the Valley. Led by the troika of Digital, Data General, and Wang, total sales revenues approached $20 billion.30
Yet the way reporters wrote about Boston’s tech ecosystem rarely reached the heights of bubbly effervescence that characterized so much of the coverage of the early-’80s Valley. Even referring to Boston’s tech boom as “the Massachusetts Miracle” made it a triumph-over-the-odds story of a Rust Belt state that clawed its way out of crisis. It was a take that glossed over the region’s longer, uniquely entrepreneurial history: of MIT and Harvard as the 800-pound gorillas of the federal science complex, of Boston as the original high-tech start-up capital, of Doriot as the first venture capitalist, of Digital and many other companies with roots in that extraordinary moment of electronics innovation buzzing outward from Cambridge in the decade after World War II. Reporters missed the point that the “Miracle” wasn’t a comeback story. It was a regional tech industry that started out far ahead of the pack, and never stopped running.
Missing, too, were the personality-driven cover stories and lifestyle pieces. Route 128 lacked both Jimmy T and the pool parties. Instead, it had buttoned-down Ken Olsen and bow-tied An Wang, sober-minded engineers of an older generation. It had old-school defense contractors like Raytheon. Whether in The New York Times or BusinessWeek or Time, the stories written about Boston’s tech titans rarely deviated from the bland industry standard for CEO profile in any sort of industry—admiring, deferential, not a lot of color. Boston entrepreneurs had built colossal, hugely influential tech companies. They employed tens of thousands. They made comparably innovative products. After all, Tandem was just another minicomputer maker, following in their wake.
They just didn’t make for as good a story. And they weren’t in California: the land of sunshine, land of celebrities and mavericks, land of America’s future.
WORLD-CHANGERS
The seeds of Silicon Valley legend already had been sown prior to Steve Jobs’s press tours and Jimmy T’s beer busts. The legend had percolated through media coverage since the 1950s, of voyages to sun-drenched patios and late-night hackathons, of tales of Jerry Sanders’s cars and Bob Noyce’s airplanes, of odes to venture capital’s “Olympics of capitalism” and the chipmakers’ “high technology jelly beans.” Those stories, too, were products of masterful PR, from the unflagging boosterism of Fred Terman to the artful networking of Regis McKenna. Like all enduring legends, they had power because they were rooted in truth.
Silicon Valley was marvelously entrepreneurial, a unique ecosystem that encouraged risk-taking and self-reinvention. It had produced stunning technological innovations in remarkably short periods of time, including the stunningly fast evolution of the personal computer from DIY prototype to mass consumer product in less than five years. It was a different way of doing business, one that proclaimed that you could make money and change the world at the same time. “To many,” observed The New York Times, the new tech companies “embody the magic combination of progress without penalty, economic growth without upheaval—the very seeds of the industries of the future.”31
At the same time, the Valley was less of a mold-breaking domain of mavericks than the press coverage made it seem. The business culture of the Valley had been forged in a Cold War world of crew cuts and missile tests, where audacity was rewarded in engineering, but really nowhere else. It bloomed as a meritocracy of closely-bonded men with advanced degrees, where nearly all women were wives and secretaries. The Valley had added on a layer of countercultural flair thanks to the microcomputer generation, yet the conservatism remained.
The people providing the money and the managerial “adult supervision” were products of that earlier generation as well, their sensibilities shaped by an era when electronics meant hardware (not software), when markets were other companies (not a diverse range of consumers), when corporate executives were white and male. And the Valley could talk about changing the world all it wanted, but it now had become a domain dedicated to the pursuit of money. The dreamers and do-gooders of the micro generation—the Lee Felsensteins, the Liza Loops—had largely fallen out of the picture. The new leaders of personal computing were much like the chipmakers that came before: passionately technical, ferociously competitive.
The Valley was uniquely suited to push the boundaries of the technologically possible. It was not able, or willing, to change the world.
* * *
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Time magazine named the personal computer “Machine of the Year” for 1982, only after first considering Steve Jobs for the honor. The switch irked the publicity-hungry young mogul, and the whole package made him utterly furious at Mike Moritz, whose editor (who usually wrote about rock stars) had heavily revised Moritz’s piece on Jobs into a gossipy celebrity profile. The cover package obliquely acknowledged Jobs’s grievance, but pushed against the Great Man narrative that he and McKenna had been selling since 1977. “It would have been possible to single out as Man of the Year one of the engineers or entrepreneurs who masterminded this technological revolution,” noted Time, “but no one person has clearly dominated those turbulent events.”32
Because a few other things had been happening on the way.
CHAPTER 15
Made in Japan
The boxy rectangle of blue aluminum weighed fourteen ounces, a little more once you put the tape inside. Add foam-eared headphones, sleek controls to play and rewind and stop, and a stubby orange button to press pause if you bumped into someone and wanted to have a conversation. The Sony Walkman was made for being on the go, for taking your music with you in a way more portable and personal than ever before. Unveiled in 1979, just as fitness-crazed members of the Me Generation surged onto jogging paths and laced up their roller skates, the Walkman became a consumer electronics phenomenon. It sold in the hundreds of millions despite its $200 price, becoming the iconic accessory for the upwardly mobile 1980s. NASA sent a specially outfitted Walkman into space. Britain’s Princess Diana owned a gold-plated model. Sony’s print ads announced: “There’s a revolution in the streets.”1
As the nation’s sidewalks bristled with plugged-in music lovers, American electronics executives started losing sleep. The Japanese economic miracle had already upended Detroit’s auto industry, pushed aside Pittsburgh’s steelmakers, and hacked away at market share for RCA televisions and Whirlpool refrigerators. Using modern manufacturing methods and a great deal of automation, Japan made things at lower cost without sacrificing quality. Its workforce was famously loyal and hard-working; their productivity outpaced the Americans two to one. Hondas trawled suburban highways, sushi restaurants sprouted on big-city corners, and bookstore shelves heaved with titles describing how Japan was doing everything better. U.S. high-tech companies appeared to be the only ones who’d escaped the battering, but there we
re worrying signs of a coming storm. The Walkman was one of them.
The reasons for Japan’s success were many, but one was its manufacturers’ ability to smartly adapt and improve on existing innovations and business practices. Sony’s portable stereo was no exception. Silicon Valley wasn’t in the music business, but the Walkman was the grandchild of technologies that had grown there: the transistorized miniaturization of Intel, the magnetic-tape technology of Ampex, the synthesizers that created the sound of ’80s pop. Yet the actual microchips inside the Sony Walkman weren’t made in the U.S.A. They were made in Japan. So were the microchips that powered other Japanese products, from televisions to home stereos to newfangled things called VCRs. And they were powering an increasing number of American-made products as well.
Japanese chips were like Toyotas: cheaper, functional, abundant. And Silicon Valley’s chipmakers were scared to death.
JAPAN AS NUMBER ONE
Jerry Sanders was one of those who worried. Outwardly, everything looked fine. The stock price of AMD, his eleven-year-old company, was soaring. The company had sold $225 million worth of product in 1980, about $75 million more than Apple, that darling of Wall Street. The semiconductor industry had grown its customer base by more than ten times since the start of the 1970s, and the market’s future seemed limitless. “Semiconductor processing technology is today’s crude oil,” Sanders liked to say, “and the people who control the crude oil will control the electronics industry.”2