At long last, Dave Barram had someone to read his position papers. What’s more, he now was being asked by Gore himself to beef up the campaign’s broad-brush technology policy. Barram, in turn, invited John Sculley, Mitch Kapor, and others to chime in. Kapor took politicians’ bold promises with a grain of salt, but he sensed that this was just the kind of thing that could shake the political and business worlds out of their Internet slumber. “It’s psychological,” he told a reporter. “If people believe there is genuine national leadership, they will be prepared to move.”27
By September, a Silicon Valley that was usually quiet about its politics loudly declared its loyalty. Young, Sculley, and thirty other tech executives gave a public endorsement of the Democratic ticket. “I am still a Republican,” Sculley said, “but I am voting for Bill Clinton because I don’t believe America’s industries can survive four more years of President Bush.” The ghosts of the chip wars loomed large in John Young’s mind as he made the endorsement. All his work in Washington hadn’t resulted in much policy change. Clinton “understands business and technology and the need for a highly skilled workforce,” said Young. Added Xerox chief Paul Allaire, “Bill Clinton has indicated his willingness” to work with high-tech business in fighting overseas competition. “Bush has not.”28
The endorsements rocked the tightly-knit industry. Dave Packard, still the gray eminence of the Silicon Valley Republicans, released a testy letter in response that chided his old friends for being “caught in the updraft of Bill Clinton’s hot air balloon.” Packard then rallied a second group of tech executives who signed a letter in support of George Bush. But by the time that letter came out in mid-October, it was clear to political insiders on both sides that the Democrats were going to win.29
While both endorsements came too late to sway the basic electoral math, the 1992 campaign became a watershed moment for both industry and party. Silicon Valley was no longer a business-sector sideshow, but a power player. And the Democrats were in its corner. Clinton’s campaign theme song had been “Don’t Stop Thinking About Tomorrow.” Silicon Valley was tomorrow—both in the products it made and in how it ran its companies—and his endorsers reinforced the message that Clinton was not, in the words of one aide, “a traditional tax-and-spend Democrat.”30
GEEKS-IN-CHIEF
The Clinton win thrust some of his biggest tech supporters into the political spotlight. Amid Beltway buzz about whether they might be up for Cabinet jobs, Sculley and Young both won coveted invitations to the president-elect’s Little Rock economic summit in mid-December 1992. Cerebral, breezy, and telegenic, Sculley long had enjoyed making big-think statements about tech and the future. He relished the opportunity to play policy wonk on a big stage. “The biggest change in this decade is going to be the reorganization of work itself,” he told the assembled luminaries. “In this new economy, the strategic resources are no longer just the ones that come out of the ground, like oil and wheat and coal, but they are ideas and information that come out of our mind.”31
One month later, Sculley found himself sitting at the right hand of Hillary Clinton at the new President’s first State of the Union address. Sitting on her left was another former Republican, Fed chief Alan Greenspan. The choice spoke volumes about the new economic order and the Clintons’ aspirations to reinvent the business-government relationship: Silicon Valley on one side, Wall Street on the other, and an extraordinarily powerful First Lady in between.
Only days after John Sculley enjoyed the best seat in the house at the 1993 State of the Union, Clinton and Gore flew west to bask in Silicon Valley midwinter sunshine and engage in some heady talk about high technology. First came dinner at a bistro in the tiny and tony suburb of Los Gatos with a close group of their top tech supporters. Regis McKenna sat next to Clinton; Dave Barram sat next to Gore. The new president sipped on caffeine-free Diet Coke as his vice president “waxed poetic about the ‘gestalt’ of gigabits.” Emerging from the restaurant nearly three hours later, Clinton and Gore were greeted by a buoyant crowd of more than a thousand locals who’d been waiting throughout the chilly evening. They proceeded to shake hands and coo over babies well into the night. Los Gatos had never seen anything like it.32
The main event came the next day. “The policy wonks met the computer nerds,” wrote one local reporter, “and neither side blinked.” The two leaders sailed into the headquarters of Silicon Graphics for a televised town hall meeting emceed by CEO Ed McCracken. Soft-spoken and buttoned-down, with a boyish flop of blond hair, McCracken was another recovering Republican as well as a HP veteran who’d been inspired by Dave Packard’s model of entrepreneur-statesmanship. Silicon Graphics had continued its run as one of the Valley’s highest Wall Street flyers, and the eye-popping special effects it created for Hollywood blockbusters made it significantly more glamorous than its beige-box-producing Valley peers. SGI made cool technology that ordinary people could see. McCracken felt it was a good time for this kind of engagement. “As a company approaches a billion dollars in sales,” he reflected, “it ought to play some visible role in the community.”33
After a demonstration of remote video chat (Gore wielded the mouse, Clinton looked on in gee-whiz amazement), the two leaders unveiled the federal technology initiative that included things so many Silicon Valley executives had been dreaming about for years: $17 billion of investment in new technological research, more Sematech-like alliances, a permanent corporate R&D tax credit, fiber-optic information infrastructure, and more. After all the political debates and reports and commissions of the past decade, the Democrats had come back to where they started a decade before. It appeared that high tech was getting a national industrial policy.34
Dave Barram spun the proposal to waiting reporters. “We’ve had industrial policy since the Civil War. We built railroads, canals, we had land grant colleges,” he explained. “The government and private sector have always had a relationship—here’s what we think is most effective.” Not everyone in the Valley agreed. Flashy and splashy Cypress Semiconductor CEO T. J. Rodgers—an ardent libertarian and one of those who fiercely denounced the Noyce-led chipmakers as “crybabies” in the 1980s—scoffed at the Clintonistas’ earnestness. “I’m adamantly opposed to picking winners and losers,” he said. But to the engineers in the room that day in Silicon Graphics, Clinton’s charm and Gore’s tech smarts won them over. “I’d just like to say, I didn’t vote for you,” one employee ruefully admitted to the new president during the question-and-answer period, to laughter around the room. “I wish I had.”35
THE TECHNOLOGY CZAR
Despite the hype and hope on display at Silicon Graphics that afternoon, and the tech luminaries now in the White House orbit, Gore’s job as high-tech point man was harder than it seemed. For one thing, the expansive size of his overall policy portfolio kept staff resources somewhat limited. The vice president’s policy A-team busied themselves with marquee issues like trade, the environment, and the massive “Reinventing Government” initiative, Gore’s ambitious charge to streamline and modernize government bureaucracy. For another, the Clinton team had a staggeringly ambitious agenda that included financial stimulus and deficit reduction, health care reform, welfare reform, and free trade. In the Old Executive Office Building, policy “war rooms” sprouted like mushrooms after a spring rain.
Tech issues remained difficult for ordinary people—and non-technical policy people—to grasp in 1993. Everyone in the Clinton White House had an e-mail account (Clinton sent the first presidential e-mail with great fanfare that March), but only the most dedicated geeks used it to communicate with people outside the building, much less in other cities or countries. The network principles of the web were baffling even to some of the most senior people in the Clinton Administration, including Wall Street multimillionaire Robert Rubin, the man responsible for the nation’s economic policy. “I remember the first time I showed Bob Rubin a web browser,” said White House tech policy advis
or Tom Kalil. “He asked me, ‘Who owns this?’” No one, Kalil replied. The financier couldn’t believe it.36
Thus, the Information Superhighway plan that the Clinton-Gore team developed in consultation with industry leaders didn’t attract all that much attention from D.C. insiders. Now titled the National Information Infrastructure, or NII, its September 1993 rollout got largely drowned out by press coverage of the administration’s health care reform legislation. Significantly, Clinton appointees from the Department of Commerce—not the FCC—led the policy effort, despite the fact that it was, at its core, about regulating telecommunications. Clinton’s Commerce Secretary was Ron Brown, powerful political fixer and former Democratic Party chair, and one of the more prominent people to hold this Cabinet spot since Herbert Hoover way back in the days of Harding and Coolidge. Placing the NII in Commerce’s bailiwick signaled that the Information Superhighway was an economic policy with technology, and high-tech industries, right at the center.37
“Information means empowerment—and employment,” declared the report. NII would overcome “the constraints of geography and economic status, and give all Americans a fair opportunity to go as far as their talents and ambitions will take them.” Bold language aside, however, the initiative was not going to be another government-funded moon shot. It wasn’t even going to be another interstate highway program. The private sector was going to build, own, and operate it. The government’s chief role was to regulate—and that involved a considerable amount of up-front deregulation, knocking down the barriers that long had divided telecom and television and tech as separate markets.38
The business-first approach of Gore’s proposal delighted the telecommunications and cable-television industries, and alarmed tech’s left wing. Within a matter of weeks, sixty interest groups announced they were forming a coalition to fight for an information superhighway free of big-business influence. Those arrayed against the White House included anti-SDI warriors Computer Professionals for Social Responsibility, who now received a healthy chunk of their funding from the EFF. A corporate-run information superhighway, CPSR warned, could be a cyberpunk novel come to life. “It doesn’t take a novelist’s imagination to recognize the rapid concentration of power and the potential danger in the merging of major corporations in the computer, cable, television, publishing, radio, consumer electronics, film, and other industries.” No central authority should dictate what could or could not happen on the Internet; its self-policing chaos was part of what made it so powerful. “Life in cyberspace seems to be shaping up exactly like Thomas Jefferson would have wanted,” wrote Mitch Kapor, “founded on the primacy of individual liberty and a commitment to pluralism, diversity, and community.” The politicians shouldn’t mess it up.39
But an even thornier issue was brewing as 1993 rolled into 1994—one that went right to the heart of the privacy questions that had brought about the EFF in the first place. As more data zinged around the Internet and illegal hacks rose, the intelligence community had developed a new, impenetrable encryption technology called the Clipper Chip. This kind of crypto-privacy was what computer makers long had been hungering for, as it allowed them to offer a higher degree of security to tech-wary users, but it came with a catch. The feds intended to keep the keys to the Clipper, allowing them to unlock any piece of software or hardware that carried it. The bad guys couldn’t snoop on what people did online. But the government could.
The prospect of this untrammeled federal eavesdropping power sent Silicon Valley’s free-speech crusaders over the edge. Under no circumstances should there be a back door where a third-party power could get into people’s information, even “if Mother Teresa and the pope were the two agencies” holding the Clipper Chip keys, said a CPSR spokesman. The large tech companies hated it as well. Sticking a piece of U.S. government spyware on their products would damage their ability to sell to consumers at home and seriously hamper their ability to build markets abroad. Why would a Chinese company buy Microsoft Office if they knew that it would mean the CIA could see every spreadsheet or e-mail?40
The Vice President hedged. The plan was not “set in concrete,” Gore assured his tech-industry friends in February 1994, as the Clipper Chip controversy swamped the information infrastructure discussion. Furious intelligence officials pushed back against a wavering White House, warning darkly that national security would be compromised, but the anti-Clipper forces ultimately won the day. Yes, there’d be encryption, decreed the Clinton team. But it wouldn’t have to be one single standard, and the third party with the unscrambling keys didn’t have to be the government. “Clipper is dead,” rejoiced EFF executive director Jerry Berman. Gore had made “a big step, both for privacy and security.”41
The Clipper Chip may have gone nowhere, but disagreements about law enforcement’s ability to snoop into the digital world remained a sore point between the Valley and D.C. into the next millennium, intensifying with the advent of mobile devices that could potentially record a person’s every move. Some of Al Gore’s early fans never quite got over the fact that the Vice President had been associated with the dreaded chip in the first place. “That was when it became clear, that Gore’s sympathies were more with the national-security state than with cyberspace,” sighed John Perry Barlow. “Al Gore is a Deadhead; he’s also an authoritarian.”42
* * *
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During the first four years of the 1990s—when 97 percent of Americans had no connection to the Internet, and when going online involved the whir of a dial-up connection and a text-only interface—policymakers and advocates shaped critical ground rules for the online universe to come. Perhaps as important as what Washington policymakers did is what they did not do: place the network under centralized control, either of the federal government or via a private monopsony, like a wired version of Ma Bell.
Instead, the Internet stayed true to its academic roots, as a decentralized, networked world where no one was in control. The telecoms couldn’t ration, the spooks couldn’t spy; instead, Mitch Kapor’s small-scale, independent, Jeffersonian vision could bloom. After a century of everything getting bigger—government, business, systems of social organization—the small and the networked had won. The Vietnam generation that had questioned the notion of progress, looked for the soul in the machine, and made the computer personal now was in charge, and the commercial Internet was their marvelous legacy.
CHAPTER 20
Suits in the Valley
You knew Wall Street was visiting when you saw the black town cars. They rolled all over Silicon Valley in those dizzying days of the late 1990s, when the NASDAQ couldn’t stop climbing and everyone was scrambling to get a piece of the action. If a town car was in the parking lot, it was a sign that the East Coast money guys had come courting, hoping for the chance to underwrite another dot-com IPO. They were doubly hard not to notice once they got inside, blaring beacons in $3,000 suits and silk ties amid a California-casual sea of T-shirts and cargo shorts. Over time, the visitors started to clue into the dress code. On the second trip, they ditched the tie. On the third, they switched to a sport coat and khakis. The bankers in their town cars never went so far as to adopt the full Silicon Valley uniform, but they tried.
The extraordinary Internet run-up of the last years of the twentieth century, outpacing even the most bullish of predictions, shone the spotlight onto Silicon Valley like never before. The Valley completed its metamorphosis from place to idea, shorthand for a technology industry whose products had altered nearly every aspect of how the world worked, learned, and played. The 1990s left the Lamborghini-driving-and-Chablis-swilling wealth creation of the 1980s in the dust. In the PC-happy summer of 1983, the NASDAQ crested at a little over 300. In March 2000, it surpassed 5,000. During the eight years Bill Clinton was president, the tech-heavy composite grew by nearly 600 percent.1
But the avalanche of shareholder value was just one measure of how the online era changed the American economy. So
ftware vapor floated atop a very tangible hardware infrastructure: millions of miles of copper wires and broadband connections and routers and servers that flowed into offices and schools and homes. Old-economy corporations spent billions retrofitting their operations for the online age. The business of buying and selling—to consumers, to other businesses—migrated online. From the presidential bully pulpit to Capitol Hill committee rooms, Washington, D.C., steered public investment to accelerate the Internet’s spread. Free-trade fever spread across the globe, opening giant labor markets to American tech companies and swelling the customer bases for their products.
The cumulative investment made the American economy roar. GDP grew for ten consecutive years—the largest peacetime boom in U.S. history. The Internet allowed transactions to happen in milliseconds, erasing time zones and language barriers and making the Valley into the command-and-control center for a global network of commerce. The distinctive business culture of Valley companies, which had been slowly percolating into the public consciousness since the early days of the microchip, went from object of curiosity to a model to emulate. Business innovation meant taking the ties off, beefing up the software engineering staff, and building a volleyball court out back.
And it all happened mind-blowingly fast. The New York Times’ technology reporter John Markoff filed his very first story about the World Wide Web in early December 1993. “In the next four years,” he remembered, “I was run over by a Mack truck.” The Internet became the story of the decade, the world-changer to close out the twentieth century and open the twenty-first. Scribes like Markoff—a Palo Alto native who had been living in and writing about the Valley since the Homebrew era—saw their bylines move from the back of the business section to the front pages as they tried to simultaneously explain the technological underpinnings of this brave new world and document its astounding ascent. Technology was the newest hot subject in the magazine trade, spawning a glossy flock of Bay Area–centric monthlies like Wired, Red Herring, and The Industry Standard. The tech economy and its kingpins were the subjects of no fewer than thirty-four cover stories in Time and Newsweek between 1994 and 1999.2
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