and The First $20 Million is always the Hardest
so I figured this article by him is a keeper. My last reference to Po
on FoRK was the "we believe in the interconnectedness of all things"
last year. Wow, was it that long ago? My, how time flies. My favorite
line from the article below:
> The lesson here is an ironic one: physical proximity is more important than
> ever, even in the very industry that is inventing the communications
> technologies that are supposed to make physical proximity irrelevant.
Also, the following reminded me of something Rohit would do: the most
expensive food possible combined with the least expensive eating
> The meat served was some superpremium shanks from a cow fed only
> corn and raised poolside, an elite cow that summered on the Cape and
> wintered in Vail. But the slabs of this delicious cow princess were served
> on flimsy paper plates, with 49-cents-per-100-count plastic knives and
> weensy cake forks.
And, words of wisdom from Novell CEO Eric Schmidt:
> "I've been around long enough now to give advice, and the advice I give is:
> Find a way to make a difference, and the rest will follow - personal
> success, promotions, financial gain."
And, another reminder of the Life of Rohit [it can now be said that
Rohit does more in the VOID than most people do their whole lives]:
> "Yes, people complain. The constant friction is an occupational hazard to
> the job. But I would be unhappy if people weren't whining. I want them to
> want more. You look around Silicon Valley, it's not too obvious that people
> are happy. They're incredibly stressed. Why is that? It's not because they
> work for me. They're stressed because they're naturally stressed. They're
> high achievers. The kind of mild dissatisfaction with what you have is a
> key prerequisite to success in this business."
Weensy cake FoRKs. Heh. I hope Bronson writes more. I love his
writing style. The full foward follows...
Resent-Date: Tue, 12 May 1998 15:14:56 -0700 (PDT)
Subject: Report from Ground Zero: Silicon Valley
[I thought that this article by Po Bronson from Wired 6.01 was wonderful.
It's forwarded here with his permission, MIME markup removed but otherwise
unedited. Po's Web site is
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Date: Tue, 12 May 1998 17:02:09 EDT
From: Po Bronson <PoBronson@aol.com>
F E A T U R E | Wired Magazine, Issue 6.01 - January 1998
Is The Revolution Over?
Report from Ground Zero: Silicon Valley
By Po Bronson
Let me tell you what Silicon Valley is like: the mountain edges of the
valley rise up like the lip of one great big copper-bottomed frying pan of
overpriced RevereWare, and on the high heat of burning money everything and
everyone in there melts into one boiling, spattering, frenetic stew. Boston
is like a nicely arranged four-food-group meal on your Sunday china, and
Seattle is a huge hunk of Microsoft barbecue with a few thawed peas rolling
off the paper plate, but Silicon Valley, California, is not just a stew,
it's a stew that never comes off the gas heat. The juices meld, and the
histories intertwine, and it's spiced up with high achievers from every
nook of the world. Heat waffles off the ground, distorting it all into an
earth-tone prism. Entangled superexpressways pass over industrial megaparks
and shady 3BR/2BA ranch-style homes and provide occasional vistas of
scorched tan acreage protected as natural habitat for scrappy,
trash-can-scrounging coyotes. The tallest landmarks are power towers and
phone poles. The real work is done in silence, sitting in cubicles, staring
at screens. Everyone is attempting to make things that have not existed
before. And though we could argue till dawn about the utility or
significance of what they're creating, I believe that to create and risk
failing is the essence of feeling alive - that in that moment of creation
they shake off their anonymity and feel relevant to the sweep of the world.
Don't think for a second that this stew can be recreated by throwing
together some engineers, VCs, headhunters, and electronics stores, then
drowning it all in money. Silicon Valley is special. Yes, the universities
are excellent. Yes, California's labor laws let employees jump to new firms
almost at will. Yes, the weather attracts big brains from cold climates,
though most people who come here for the weather work so hard they rarely
get to see the sunshine.
What those oft-cited "Silicon Valley advantage" theories don't convey is
how evolved this place has become, just from being on the high heat for 50
years. The competition has bred electronics stores the size of eight
football fields, and electronics stores open all night, and electronics
stores where you can do your laundry while shopping. There are VCs who
invest only in video chips, and VCs who funnel only foreign money, and VCs
who write books, and VCs who are professors of sociology. There are
headhunters who handle only Cobol programmers from Singapore, and
headhunters who specialize in luring toy-company executives, and, I've
recently learned, a headhunting firm that helps other headhunting firms
hunt for headhunters. It's bizarre here. Programmers are represented by
agents, and manual writers have three-book backlogs, and one of the
fastest-growing companies writes software that is being sold to other
software firms to help them manage their tech support - let me repeat that
in case you didn't get the full implication: there are so many software
firms that just selling them software can make you one of the
fastest-growing software firms. It seems impossible mathematically, but
it's not, and the reason is that high tech companies are quick on the
uptake with anything that makes them more efficient, which they'd better
be, because this market is scary-competitive.
Meander with me into the Valley. Let us be passed around like a piece of
gossip for a month and see who we meet. Let us risk the unreliability of
what we're told in order to understand why people distrust us. Let's stick
with it until we have a picture of what is really going on there now.
Be warned: if your imprint of Silicon Valley was soldered together in the
'80s, it's time to upgrade.
"One word: Adrenaline!" is the entire copy of an advertisement in the
Stanford Daily recruiting engineers to a firm in Silicon Valley.
At a party I meet a young guy with an urban lumberjack look going, most
notably a week's growth of stubble. His employer, PowerAgent, burned up
US$25 million in cash and shut its doors and laid off all 60 employees.
He's been hanging around the house for "almost three weeks - well, 15 days"
he clarifies, and he's starting to lose self-respect for being such a slob.
This morning he went to the unemployment office at the Federal Building,
which was so empty that only two out of the 15 teller windows were open -
he got the picture and turned around. He figures he'll take a job next
week. That's how he said it - not that he would start interviewing, and not
that he would get an offer, but that he would take one - as if job offers
were weeklies stuffed into news racks on street corners, and all you had to
do was pick one up on the way to the cafe. It occurs to me that maybe he's
already had job offers.
"Oh, sure," he confirms, chuckling a bit self-consciously, knowing darn
well how lucky he is to be living here at this time. He's a business-school
graduate with a whole six months' experience in marketing. That his
experience was with a firm that burned $25 million in venture money and
never made it to market hasn't seemed to hurt his marketability.
We get talking about how a firm shuts down, and a venture capitalist joins
the conversation, and he tells me about the Cubicle Guy.
"Not cubicles," the Cubicle Guy insists, when I sit down in his office.
The Cubicle Guy traffics in used partitions. He buys them dirt cheap from
companies going under or moving and resells them to new companies, or
growing ones. He profits from the churn. His business is booming. He wears
a beeper because at any time he might be needed somewhere on the Peninsula
to make a bid.
"I'm not the only guy reselling panel systems. It's like ambulance chasing;
the first lawyer on the scene gets the business. I watch the newspaper for
layoffs. I watch stock prices for drops - anyone who might soon downsize. I
talk to Realtors." So there is not only one Cubicle Guy in Silicon Valley,
there is tooth-and-nail competition among several. That's how evolved it's
The Cubicle Guy is one of the quirkier parts of the institutionalized
revolution, the support system that makes risk-taking feel so unrisky. In
order to challenge the status quo, you don't have to be so headstrong
anymore, you don't have to be a rebel. You just have to have an idea. But
you'd better act on your idea fast, because the same trends that made your
idea pop into your head are making that same idea pop into competitors'
heads. So there's a whole network of services, like the Cubicle Guy, to get
you up to speed quickly. If I could co-opt a heuristic for the ease of
starting a company here, it's "plug-and-play."
"I know this lawyer," the Cubicle Guy says. "He's an associate at this
firm. All they have to do to generate the legal documents for a start-up is
run this single macro, which inserts the company name in all the
appropriate places. Hit a button, out prints your company, sign on the
dotted line." I've heard that story so many times it's become like an urban
The Cubicle Guy takes me to his warehouse in Sunnyvale - 11,000 square
feet, which isn't very big, considering the size of his merchandise. "It's
no trouble to move product once you've got it," he explains. The cubicles
are cleaned here, then moved out.
A lot of the cubicles come back with gouge marks, graffiti, and slits
between the cloth covering and the wallboard where secrets were hidden.
Flyers and memos are still stapled in. These artifacts are pinned to one
wall of the Cubicle Guy's warehouse, a private museum of Silicon Valley
microsabotage. There are photos of girlfriends, laminated Far Side
cartoons, positive job evaluations, worthless stock-option contracts, a
six-point reminder list of "Why I Work So Hard."
The phone on his hip rings, and the Cubicle Guy goes to work. "Are the
panels 60 inches tall, or 72? Uh-huh. Brown as in oatmeal, or brown as in
manila? OK, do me a favor. Look at one of the T-joints where three panels
connect - is the connector piece more like a T, or are the three pegs equal
in length? Uh-huh. That's probably Versys brand ... ." He puts his hand over
the phone. I give him a nod, and let him go back to work.
It's the last morning of summer, a Sunday, at the first annual SandHill
Challenge, a soapbox-derby competition being held to raise funds to combat
teenage drunk driving. About 50 vehicles are waiting to race, two at a
time, down the gentle quarter-mile grade. One vehicle is designed like a
breadbox, another as a missile. Someone in a Super Dave Osborne racing
getup, complete with motorcycle helmet, is going to roll down the course on
a high-back, swivel-tilt office chair. It's Disney-movie fun. I'm half
expecting to see a young Kurt Russell.
This event was dreamed up by Jamis MacNiven, the owner of Buck's restaurant
in Woodside, which is the breakfast place for top-tier high tech insiders,
so most of the contestants are from that clique - venture capitalists, law
firms, banks, and a few of the companies they finance. The contest is a
nice metaphor for the pseudo-accessibility of the IPO market: officially,
it's open to absolutely anybody who is willing to raise $1,000 minimum, but
you have to be the kind of moneybags with a house in Woodside who drinks
his coffee at Buck's to even know the event was going on.
You could spend a year at business school and not encounter so much
wheeling and dealing. There are two teams with very similar designs, built
on supersized skateboards. One has four skateboard trucks underneath; the
other rides on a series of Rollerblade wheels. The latter team is a
spin-off of the former. Says one driver, "We had a fight over the design,
and rather than resolving it, we went our own way."
A lawyer is going around at the last minute donating money to several teams
whose vehicles look fast: a go-cart with bicycle wheels, an aerodynamic
teardrop covered in fiberglass, et cetera. "I'm taking the Microsoft
strategy today," he says, sliding his checkbook into his Dockers. "I want
to be a part of the winning car. In order for that to be true, the first
conclusion was straightforward: don't design my own car. Instead, buy my
way in." He laughs with menace.
The race begins with a 50-foot running takeoff, like a bobsled launch.
After that, it's just gravity power. Perhaps applying their business acumen
rather than physics, everyone seems to agree that the fastest takeoff - the
best early push - will determine the winner. At the last minute, two teams
merge so that the go-cart with bicycle wheels can be launched by a very
athletic VC who, I learn, was a competitive decathlete two years ago. Even
when they're having fun on a Sunday morning, competition is in these guys'
All the vehicles are required to have brakes, but nobody's using them. A
sharkmobile goes by. A Mars Sojourner screeches halfway down the track,
then stalls - one of the wheels locked up. Super Dave Osborne attempts to
steer with ski poles, but at his first plant he thrusts himself into a spin
and careens into the shrubbery. The event raises more than $100,000.
The lawyer who was writing checks says, "This is a very, very
characteristic moment for Silicon Valley. We've taken a lot of flak for not
being political enough, for not being benefactors to social causes. But you
can trick us into donating money just by making it competitive. It's gotta
be a challenge. I remember when Larry Ellison wanted to give some money, I
can't remember to whom. He couldn't just give the money. He challenged a
world-class triathlete to a bar-dipping contest, and Larry did something
like 63 bar dips, which is almost inhuman, about like doing 500 push-ups."
On the whole, philanthropy seems sort of redundant - they're already giving
70-hour weeks to the creation of new technology meant to empower the world.
That's not enough? That said, one's job is still put to the old-fashioned
halo test - you've got to be bettering society, or what's the point? But
not everyone can be designing the Mac and liberating electrons. So a few
tricks to passing the test have evolved over time. The first is the
libertarian view: you believe that the vigorous pursuit of self-interest
leads to the most efficient allocation of resources, which ensures
continued development. The second is related but far more twisted. It's the
workaholic value system: nothing good comes easy, so if it's a terrific
challenge, it must be good. By this self-referential logic, any project
that is totally consuming is worthwhile. The corollary to this is, if
you're not sure your work contributes, then work harder at it and soon it
will. It follows that perhaps one of the reasons people are working so hard
here is that they're not really sure how their little piece of the jigsaw
puzzle fits in to the big picture of a better society. "Will society be any
worse off," they ask themselves, "if this CGI script goes unwritten?" "I
predict that this event will be very, very big next year," another
competitor suggests. "There'll be a couple hundred entries. It'll raise
over a million dollars. I'm sure of it. It has all the right ingredients to
motivate people." He ticks them off on his fingers. "Competition. Gadgetry.
Fun. An uncontroversial, good cause. In that order."
Edgar threatened to change everything. Edgar demanded that everything be
100 percent computerized. To the employees of R. R. Donnelley Financial in
Palo Alto, the imminent entree of Edgar was Major League Baseball
realignment, NAFTA, and a Martian invasion all rolled into one. At the
water cooler and over the urinals, Edgar was all anyone talked about.
Edgar was the Securities and Exchange Commission's Electronic Data
Gathering, Analysis, and Retrieval filing system, which went online two
years ago. Before that time, Silicon Valley lawyers and underwriters and
issuers met at the plush offices of R. R. Donnelley, where they could make
last-minute changes in their S1s and 10Qs before they were printed out and
bound up in black tape and thrown on the red-eye flight to New York for a
filing the next morning at the offices of the SEC. With Edgar up and
running, anyone with a computer could file. The issuers had no reason to
keep coming to the R. R. Donnelley office.
But they kept coming anyway.
"They needed neutral turf for their negotiations," explains Reggie Ammons,
the man who holds their hands through the process. A decade in California
hasn't softened any of the accent Reggie developed growing up in Onley,
Texas, 135 miles northwest of Dallas. His accent is three parts
chaw-chewing, shit-kicking old boy, one part grandfather-in-the-rocker
storyteller, and two parts "yeaus masstuh" obligingness. This oral cocktail
connotes authenticity and history; just filling out SEC forms with him, you
feel like you're doing something grand. He's an upwardly mobile,
supereducated bassackward swamp fella with manners so thick they stick to
your teeth just talking to him. He's Bill Clinton in all the good ways, 20
years younger and plopped right down here in Silicon Valley.
As Reg tells it, the lawyers want the prospectus to be a very conservative
document to avoid unfulfilled expectations, while the underwriters want the
prospectus to market the shares. With the liability for a mistake enormous,
their arguments over the precise language gets quite intense. Neither side
wants to meet at the other's offices - that would give the host an upper
hand (this is probably something they've read in The Art of War). So every
day they fill the drafting rooms and telephone rooms in this single-story,
mock-Spanish building on California Avenue, where Reg takes care of them.
They pace the hallways, chewing the ends of pens. There is a billiards
table and a big-screen television and showers, and for those too weak or
too frazzled to pull the customary all-nighter in what is normally a
two-day process, there is a foldout bed.
At around 12:30 every afternoon, these people get nervous. They've got to
get their 10K or their S4 or their 13G into the SEC before 5:30 East Coast
time, which is in less than two hours, so Reg Ammons gives a polite rap on
the conference room door and says, "That's it, boys, you're done or you'll
miss the deadline." The deadline's crucial, because there are very specific
windows of opportunity in which underwriters want to make their offerings -
you can't do an IPO in the week the employment figure comes out, or a day
the Fed is meeting, or before the end of a quarter - and so sometimes if
you miss the deadline you have to postpone the deal until another week or
another month, and then anything could happen.
Edgar was supposed to make all this obsolete, but in fact the opposite has
occurred, because no law firm or underwriter wants to take the transmittal
risk of making sure the filing is coded exactly the way the SEC wants it.
So a very crazy thing happens around two o'clock every day, as all these
fire-breathing lawyers and these steam-snorting venture capitalists gather
around the computers where the email is going out, and they cross their
fingers and sweat and try to make jokes, hoping that the damn electronic
file gets properly pinged across the country. They watch that monitor like
it's a 49ers game in overtime.
The lesson here is an ironic one: physical proximity is more important than
ever, even in the very industry that is inventing the communications
technologies that are supposed to make physical proximity irrelevant.
You can't offer 75 percent of your company for 25 percent of ours when our
company's been around for six years and you haven't even incorporated yours
yet! That's not the way it's done!" - overheard dialog at an Indian buffet
in Mountain View
I went for a drive around Mountain View with one of the city planners who
has been responsible, over the last five years, for meeting the needs of
the economic boom, fueled by the hardware and software firms headquartered
here:Sun Microsystems, U.S. Robotics, Silicon Graphics, and Netscape.
Barney Burke is a cuddly, devoted guy who gets a proud, patriotic flush
across his face every time we turn the corner and come across another
dirt-and-girder development he's had a hand in. City planners take their
cue from the local industry - they're not afraid to take risks, as they did
in turning the hog farms and junkyards and dump sites in the North Bayshore
area, east of Highway 101, into 3 million square feet of premium office
park. Another thing they have in common with the software business is
last-minute, down-to-the-wire construction - invitations are already
printed and mailed for the new library gala opening, which is 10 days away,
but as we drive by the building, workers are still pouring cement over the
As we get on an expressway, Barney spots a small vineyard he hasn't noticed
before. "That won't last long," he says, salivating. When Barney gets back
to the office, he'll look up the owners and make sure they aren't in the
dark about how valuable their land has become.
Barney shows me one of the last working farms in Mountain View. Remarkably,
this farm is located directly behind the Netscape headquarters, which has
scarfed up every available office space it can buy or build. Barney points
his finger at some of the tilt-up buildings nearby, tsk-tsking their
single-story density. "That one won't last. That one, sure to go. This one
According to Barney, Silicon Valley is the epicenter of the new economy,
and the epicenter of Silicon Valley - the place where it is all really
happening - is here, the Land of Netscape.
It wasn't very impressive, this epicenter of the epicenter. It's not like
being on Broadway in Manhattan, looking up at the Trinitron. I could be
outside any office park in the country. It's so anonymous it hurts.
Some Japanese tourists are taking each other's picture in front of
Netscape's sign, trying to get a fountain in the background.
Barry and I get to talking about the expensive costs of doing business here
versus the benefit, primarily the proximity to smart people. I mention to
Barney that I have an appointment to interview Eric Schmidt, the recently
named CEO of network giant Novell, because I had heard he spends four days
a week in Silicon Valley even though his company is headquartered in Utah,
which not too long ago was prophesied to have more hard-working talent than
here. Rather than picking up the train of discussion, Barney goes, "Oh
yeah, Eric Schmidt. Me and Eric and some other friends went to college
together at Cal." Barney tells me a story of how the old friends flew in
from the Midwest for a party Schmidt held last year, and how Schmidt had
graciously sent a limo to the airport to bring them straight to the party.
"He's that kind of guy, will go out of his way for an old friend."
We get out of the car and walk 100 yards south. A noisy Caterpillar backhoe
is digging up a train track that crosses the road east-west. To the west is
the main railway running up the Peninsula. To the east is Moffett Field.
Eighteen-foot links of the railway are being lifted on forklifts into the
bed of a dump truck. Dust is flying.
"This used to go by the nickname 'the missile track.' When the Navy wanted
to get something into Moffett Field that was too big to fit on a truck -
say, a missile - they would load it onto this rail line and scoot it into
Moffett. We're digging it up to make room for development. It's really the
last vestige of the defense-budget economy, which used to dominate Mountain
As we walk along the track, Barney explains how when he first started work
for the city, 10 years ago, he would go into Printer's Ink bookstore, and
the graffiti on the bathroom walls said, "Bombs Away - Give me Star Wars
pay!" Moffett Field was to Mountain View as Stanford University was to Palo
Alto - the big institution that drove everything. Mountain View was
traditionally the dorm for all the single aerospace engineers who worked at
I think a lot of what has reshaped Silicon Valley during the past five
years has been the end of the Cold War. The defense cuts of the early '90s
led to a recession in counties, such as this one, which were dependent on
defense money. Barney Burke on those bad years: "Oh yeah, we got a little
nervous around here. We felt it. There were even layoffs in the city
planning office." As high tech weaned off the military gravy train, there
were quite a few indus-try layoffs five years ago, and those layoffs killed
the last vestiges of the ideal that employees should have a loyalty to
their company. Now, workers are careful about looking out for themselves,
wary of revolutionary language being just a management ploy to squeeze more
work hours out of employees.
But there's still a loyalty. I believe that Silicon Valley workers have a
muscular faith in their industry, a deep optimism that they will be able to
continue to find work for many more years. They have a loyalty to the whole
process. Their need to see the altruism in their efforts is supplied by
implicit deduction rather than explicit hype: The industry is good; I work
in the industry; therefore, I am good. This halo-by-association, or the Big
Umbrella method, reinforces industry loyalty. So your company may burn its
cash, or it may get beat to market, or it may even lay you off with only a
week's severance because the CFO discovers that some goof in the accounting
department booked returnable-wholesale shipments as fully sold, but you
don't worry, because there are other companies to hire you. There will
always be other companies to hire you.
It's very hard to discern the extent to which people care about money.
These are high achievers; they want to succeed, they want to win. For the
highest achievers, money is an incidental by-product, a side effect - they
get it whether they're motivated by it or not. It's as if Rogaine
hair-growing cream, once it got into your system, also made your dick
bigger. Who could tell why guys would be rubbing it in?
I'll say this: money has less nuance in Silicon Valley than elsewhere.
Everyone feels they deserve it every bit as much as the next guy. They all
want to hit a walloping home run into the upper deck and then never have to
think about money again, which is to say that the desired state is to not
care about money, but to get there may require some caring.
That said, money doesn't impress. It's too ubiquitous to dazzle. And there
are too many ways here to make a lucky bundle and never have really
deserved it. Driving a Ferrari doesn't impress anybody but the
heavy-on-the-eye-shadow secretaries perched on the barstools at the Friday
evening Black Angus happy hour.
The way to stand out is to make something that has a big impact on the
course of technology. That's the dream. But there aren't that many slots
available in the Hall of Fame, so the ordinary, everyday superachiever - a
guy who's stood out his whole life, at least until he got here - often
festers with confusion about his purpose.
There's a lot of money, sure. In the last few years, every mom and pop has
woken up to the fact that a broad market index fund averaging a 12 percent
return since 1961 is a better place to sock away their savings than in a
money market account paying 3 percent, so institutional investors - who
earn their keep by outdoing the stock market - are throwing money into
higher-risk/higher-return scenarios, such as venture funds earmarked for
Silicon Valley start-ups.
This leads to more money being tastelessly spent than at any other time in
history. But the tastelessness is not an indicator of poor taste - it's an
indicator of how little the money really matters to the spender. If you
didn't care a lick who wins the Sunday football games, but there's an
office pool and you get a free betting card and you just willy-nilly check
off the teams with cool mascots, does that indicate you have poor judgment?
It just says you don't care.
Common, then, was this barbecue the other day at this Italian marbled manor
- the owner had finally gotten around to hosting an open house for his
friends. The meat served was some superpremium shanks from a cow fed only
corn and raised poolside, an elite cow that summered on the Cape and
wintered in Vail. But the slabs of this delicious cow princess were served
on flimsy paper plates, with 49-cents-per-100-count plastic knives and
weensy cake forks. When I had wrangled down my fill of meat, I went for a
walk around the compound with a friend, and it was hard not to notice that
the only furniture downstairs was a single black leather couch and a
17-inch TV propped up on a milk crate. The owner had moved in two years
ago, and the decor of his home just wasn't as interesting to him as
creating the next generation of animation tools. He was going to spend his
money on what he found tasteful, or not spend it at all.
I sat down on the couch beside this woman who had a look on her face like
she was ready to go home. I admired her watch, a two-tone silver-and-gold
Tag Heuer wristwatch I'd seen advertised in financial magazines. I believe
that they cost around $2,000. When she turned to me, I realized she'd had a
"Oh, screw this watch," she slurred. "I saved my company's butt last year.
I should have been given a bonus of at least twenty, thirty thousand
dollars. Instead, I got a small raise and they tried to placate me with
this watch." Her firm hoped she would wear the watch with pride. Instead,
she wears it to remind her to never trust her firm.
So there's the Rogaine thing: Does she want the money, or does she want the
"If it weren't for the weather here," she says, "I'd go back to Michigan."
Under all our desks are two boxes. One for colored paper, one for white
paper. I was here late last night, and the janitor came through with one
huge tub on wheels. He threw both my boxes into the same tub. When I asked
him why, he said the paper goes out to a sorter, to whom it's no use to
presort. He figured we are given two boxes because we need to think we're
doing the right thing, whether it's useful or not." - email from a friend
SOUTH OF MARKET
The full force of the Microsoft PR hurricane had begun. Full-page spreads
in the Examiner's Sunday pink pages. Half-minute radio spots on Live 105.
Billboards on the sides of Muni buses. Everywhere I went, advertisements
beckoned me to put some gusto in my weekend by taking a suggestion off
Microsoft's entertainment-listing Web site, Sidewalk. These were no
ordinary advertisements; they were the carefully polished result of
Microsoft spending $700 a day on copywriters and $1,200 a day on art
directors and $2,000 a day on test-marketing concepts until the socially
awkward behemoth from Redmond looked truly cool. Enigmatic and nuanced and
deep. They were good, these ads. Very good.
I got the call the next day. It was a PR person. The counterattack had
begun. She begged me to come visit the offices of an authentic, locally
grown, by-the-bootstraps entertainment guide to San Francisco. A couple
dozen employees in an earthquake-retrofitted warehouse with all five
fingers on the real vibe of this buzzing city - employees still hung over
from their voyages into last night's clubs, employees still hoarse from
speaking up at their neighborhood political club. Who doesn't want to root
for the little guy? Oh, this PR woman hooked me, hooked me good, because
the question of whether Microsoft can do culture is a topic that never
tires me. I hear gossip from Redmond about how Michael Kinsley is awkwardly
out of place there - how, when he walks around campus, he doesn't know what
to do with his hands - slip them in his pockets, let them swing at his
sides, what? She gave me a time slot and an address and at three that
afternoon I went to take a look.
Here's what I found at CitySearch, this so-called little guy: Its investors
include Goldman Sachs, AT&T, Compaq, and various newspaper conglomerates.
They have strategic partnerships with Silicon Graphics, Borland, and
Informix. They have offices (and accompanying sites) in more than 20
Getting rooted in the community used to be like making fine wine: it took a
certain period of fermentation, followed by years of aging. But CitySearch
has formulated this process down to a few fast months, in what they
describe as a SWAT-team approach. They aggressively hire local people to
ring the doorbells of local merchants, convincing them to pay for a Web
site in CitySearch's megalopolis. They can manufacture a grassroots
presence according to well-honed timetables and sales quotas. When the site
in Salt Lake City had success testing out radio spots featuring satisfied
merchants, that type of advertising went national. This office's general
manager, Scott Garell, spent his last four years learning brand marketing
at Clorox, and he's applied every bit of his smarts here. I don't want to
give a cynical impression of what they do - they aren't faking a
"community" pose in the slightest, it's just that they've amazingly applied
McDonald's franchise science to the high tech garage start-up. When I asked
Garell what worries him so much that it keeps him up at night, he
responded, "Funny you should ask that, because for a national sales meeting
next week in Pasadena, I'm supposed to be moderating a panel on the topic
of 'What Keeps You Up at Night?'"
Even motivational strategies for "fostering a passionate office culture"
are tested in each city, and summary reports are written and sent up the
chain of command, and then the most successful methods are implemented on a
national basis. Thus, each office's democratically voted "overachiever of
the month" is awarded with extra stock options, because that seemed to work
better than an "employee of the month" getting a ski weekend. If a
skull-and-crossbones flag tested well, every office would be flying one.
That scene in Barton Fink keeps coming to mind, where Jack Lipnick, the
studio boss, chastises Fink, "You think you're the only writer who can give
me that Barton Fink feeling? I got 20 writers under contract that I can ask
for a Fink-type thing from."
So that's Silicon Valley today. We don't need no stinking revolutionaries -
we've got hordes of Generation-Xers hooked on options churning out a
revolution-type thing. We don't need you to stay up at night worrying about
your business. We've convened a panel of expert worriers to handle that for
"Best Buy Furniture" - decoy sign on Industrial Light & Magic's building in
San Rafael. The sign keeps job seekers away.
On January 11, 1996, Dave Samuel had the idea. Putting music up on the Net
was a natural idea for him - in junior high he had started spinning records
at parties, and by high school he had three guys working parties for him.
There was a lot of good music that people had forgotten about, music the
Net could bring back. He talked about it with Steve Levis, a housemate who
had come to Oracle with him from MIT, where they'd been fraternity
brothers. They'd been at Oracle less than a year, and already felt
stagnated. Four days later they decided to do it.
His stepbrother in Illinois, Bryant Levin, got on a plane that very weekend
and moved in to their house atop the hill in San Carlos. Six people already
lived there, but the basement was available for work space. With $50,000
these three young dreamers had saved, by June they released TheDJPlayer, an
application built on the RealAudio engine. No sooner had they posted the
application on their site than they got press in Billboard and the Los
Angeles Times. Their company, TheDJ.com, hadn't made a dime in revenue, and
their site had only about 100 listeners at any one time, but that was
enough for the software industry to come calling.
In July, the first call came. Sitting in the basement of the dorm on the
hill, Dave picked up the phone. The man introduced himself, from a company
we would all recognize. We're excited about your project. We'd like to
invite you to fly up to our headquarters and meet with us. We'd like to
discuss a 'relationship.' The pulse starts racing when you hear that, and
the brain goes kind of fuzzy. "Relationship" - what does that mean?
Dave and Bryant flew up for the day. They sat down in a room with several
people. Two men peppered them with questions, seeing who they were, making
sure they were for real. Dave describes this moment with clarity: "Then one
of the executives nodded to the other, and then they turned to the
associates in the room and said, 'You all are going to have to get out of
here.' When they'd left, the two men shut the door and brought out a
nondisclosure agreement." We're interested in acquiring your company. There
was no talk of price yet, but they agreed to continue conversations. Dave
and Bryant flew home.
That night, their house on the hill rocked. Friends came over and the party
went deep into the night. They shook their heads in amazement and laughed.
Not that long ago, Dave and Steve had been seniors at MIT, and Dave, who
had grown up in Maine, was interested in Oracle's recruiting junket to the
Bay Area mostly because he wanted an all-expenses-paid weekend in the
sunshine. The sun hooked him, the whole Valley hooked him, so he told
himself he would put in a year developing support apps for Oracle while he
looked for a chance to do his own thing. It's the sort of thing every kid
coming out of college tells himself - I am not just a peon in a cubicle for
some corporate machine, I am me, I am somebody. You tell yourself that, but
who really knows?
Before they could relax, the next call came. I'd like to come by and meet
with you. At the meeting which ensued, We'd like to fly you down for the
The third and the fourth offerers got on a plane themselves. By the minor
variable of who flies to see who, TheDJ.com was moving up in status, fast.
One bid was an exchange of stock with a public company. Another was an
exchange of stock for a private company. The third was a souped-up,
option-laden employment agreement. It was hard to tell what each deal was
worth, but by any measure it seemed a heck of a lot for what had been four
months of hard work.
They knew that at some point their listening software had to converge with
operating-system software or browsers - at some point, they have to sell
the company. But they started to have doubts that now was the time. They
really hadn't proved what they wanted to prove. "We hadn't stood up" is how
Samuel puts it. Modem speeds were too slow for quality sound, and the
programming was improving with listener feedback. If they'd achieved this
much in half a year, how much more might they achieve in another year? And
then there was the principle to fight for: telecommunications reform had
just made it legal for radio station conglomerates to own several stations
in the same market, which was going to mean less variety on the radio. What
they were doing was important; they were building an audience for music
that didn't have a chance against Mariah Carey.
So they did what is increasingly difficult to do these days - they turned
down the offers.
An angel stepped forward. He was a board member on one of the bidding
companies. He bought them six months and an office, and in that time Samuel
shopped for a second round. It wasn't as easy as it should have been. Even
though TheDJ.com had entertained acquisition offers, venture capitalists
were nervous of Web-content sites whose main revenue was advertising.
On a warm Friday night in October, TheDJ.com's crew celebrated the closing
of their second round of financing with a small party at their office,
which I attended. They rolled out their new logo and slogan:
Revolutionizing Radio on the Internet. I asked Jim Van Huysse, who is
responsible for picking all 60 channels of music, whether their slogan
should be read with the meaning, "revolutionizing radio, using the
Internet" or "revolutionizing Internet radio" - the latter implies a much
smaller target. "It's meant to be taken however you want to take it," he
said earnestly, suggesting that the slogan is a hedge. They'd like to
revolutionize the whole shebang, but they've got to stay focused on finding
the next 10,000 listeners.
I loved their idealism; I don't hear it much anymore. The crucial
difference between them and the other start-ups I follow is youth - they
haven't been here five years. They say they want to see their idea to its
end, but I'm curious how long they can hold out.
By the Ping-Pong table I met Chris Anderson, the fearless president of
Imagine Publishing, which puts out MacAddict magazine and PC Gamer.
Anderson gave TheDJ.com its second round. "As a publisher of magazines, I
live on advertising-generated profits," he said, taking a swipe at VCs.
By the keg I met a venture capitalist who turned these guys down but wants
to stay friendly. I asked him what he's funded instead. He told me about an
Internet start-up that has designed software that extracts resume data from
the monstrous resume Web sites. That seems to me the definitive start-up
for these times: it's a very good solution to a very specific problem that
didn't even exist a year ago. It's inordinately peculiar - can you really
make money just extracting data off resume sites? Sure you can. Who would
have thought the Cubicle Guy would be doing so well?
I asked Dave Samuel what keeps him up at night. He said it's hiring
employee Number Five. "It's been four of us, roommates, for the last year.
Now we're using a headhunter and interviewing strangers. The chemistry's
crucial. It's got to be the right person."
Less than a week later, they not only found the right person, but they
acquired his company. Josh Felser had been working on Internet radio as
well, with some features Dave liked. TheDJ.com bought Josh's company,
RadioCo, and the two men now share an office. "I learned a little from the
companies that had been trying to buy us," Dave Samuel said. This
25-year-old CEO has already got wise to how it works. "Buy them before
they've really stood up."
So there you go. Eat or be eaten. Even the little guys, the very little
guys who are doing something very cool and important the
four-guys-in-a-garage start-ups - are playing the acquisition game.
B., a 34-year-old somewhat restless project leader at a company he doesn't
want me to name, has been thinking about his plan now for three months.
He's been waking up in the middle of the night, his mind playing through
scenarios. During meetings at work, listening to executives drone on, he
finds himself doodling out diagrams on Post-its. Driving home, he lists the
pros and cons of whether to put the plan into action.
B. is not thinking of another start-up. B. has been planning to murder one
of the asshole programmers on his team.
"It'll look like an accident. Every year, five people in the Bay Area die
on train tracks. He'll just be another statistic. I can't stand working
with him anymore."
He takes me to the Holly Street Caltrain depot in San Carlos, where the act
would take place. The area's under construction, without a boarding
platform, but there's no fence or guardrail. "I take him out for Mexican
food across the street. He has a few Dos Equis, his blood alcohol will make
it look like an accident. The sun goes down at 7:45 - right over those
mountains, and the glare blocks the view of the passengers. We'll be
standing at the north end of the depot. The southbound train comes in here
at about 25 miles an hour. When it's halfway past us, a little push, he
goes down ..." B. still can't quite figure out how best to push a guy and
reliably make him budge. The programmer weighs 180 pounds. To me, B.'s
fighting weight appears to be about 155.
"One hundred sixty," he says. When my eyebrows go up he adds, "After a
burrito, with a belly full of beer."
I think this situation needs a little deconstruction. First, B. will never,
ever touch his programmer. It's just fun for him to think about; the
planning relieves some of his tension.
In college B. was an avowed communist and wrote his honors thesis on how
teamwork was the ideal expression of man's nature. His hero was Ernest
Borgnine, and to this day B. will recite scenes from movies where Borgnine
sacrificed his life for the team - the throw-yourself-on-the-grenade
signature plot device. So precious does B. hold team dynamics that when his
stubborn programmer refuses to even attempt the work B. gives him, B.'s
fuse blows. However, being a good manager, he can't vent at the office.
Thus, the murder plot as a psychological release.
The other thing to consider here is that just a year ago, the company he
doesn't want me to name bought B.'s Internet game-tool start-up, earning
him a couple million and making him a manager. That ain't an upper-deck
home run, but for a mere game tool, that's is as good as it gets. So B. is
accustomed to the free-wheeling environment of a start-up, and he's such a
high achiever that ordinary office politics are intolerable.
So this is what you get in the Valley: incredibly successful people,
complaining all the way to the bank. Honeymoons are short.
Noah Ames (not his real name) is another one. He's CEO of a telephony
software firm near here with 35 employees. By his own description, what
he's been through deserves a movie, or at least a book - "I'm a seasoned
veteran of the software wars. Boy, could I tell you some stories from the
trenches." He's exhausted, though, and needs to get out. In another year,
he figures, his company will be worth $6 million, but he can't wait another
year - he's been at this too long - "I've spent too much of my damn life
tethered to my company." He'd take any offer over a million dollars and
Here's the kicker: Noah Ames, old man, is 28. He founded the company in
late 1995 - so long ago it's hard to remember.
The big-picture future - the postrevolutionary future - isn't much on
people's minds. Everyone's got a filing due next week, or a development
milestone, or quarter-end sales quotas to worry about. There's a great
sense that now is the time they will tell their grandchildren about, that
today's fever may be the opportunity of a lifetime. Just about everyone's
working on Internet hardware or software, with very little attention to
what else might be worth inventing. Most people have a blueprint for what
they'll be doing a year from now - they can read it to me off their
business plans - but nobody has any idea what they'll be doing five years
Noah Ames's telephony software might revolutionize the phone call, but
having a revolutionary mind-set about it just seems sort of silly. "The
phone call will be revolutionized whether I'm a part of it or not," he
explains. "There are dozens of Internet telephony firms. Nobody's the lone
soldier anymore. I've got a friend who's 24, and he's at his fourth
start-up. How many revolutions can you join? It's like Monty Python's Life
of Brian: you can't keep straight the People's Front of Judea from the
Judean People's Front."
They're slimy, but I like to feel part of the deal flow," said a friend,
when I asked her why she lets headhunters take her to breakfast, though
she's not looking for a job.
Eric Schmidt, the recently hired CEO of Novell, speaks eloquently,
passionately, persuasively. When I don't pick up his train of thought fast
enough, he asks aloud the next relevant question himself, then answers it,
which leads to another self-asked question, and so on. His parenthetical
remarks can last a minute, and there are parenthetical remarks inside
parenthetical remarks, but he never fails to come back to the open
parentheses and close them off. In this sense, speaking with him is calming
- like when you pull a travel bag out of your closet and find an old
favorite sweater you thought was lost. His voice has the smooth assuredness
of a wee-early morning BBC broadcaster. This seasoned technology officer
from Sun Microsystems frequently calls himself a "freshman CEO," and he
will mention how he asks lots of people for advice, but to the extent that
one of the first orders of CEO is to be the front man for your company to
the press, he doesn't need any schooling.
Network technology is clearly where a lot of the most important innovations
will come from in the next five years, and Novell is the company that
invented corporate networking. But Novell, based in Provo, Utah, got
distracted from its core business by acquiring Borland and WordPerfect,
deals that led to large writedowns.
When Schmidt took the job, he made it clear that he would not leave the
Valley. Though he feels he gets the best of both worlds by having staff
both in Utah and here, as CEO he needs to be here. It's where the deals are
cut. It's where the trade press is. It's where the conflict occurs - and he
needs to expose himself to the conflict, to not get isolated. Toward that
end, he has broken ground on a new Novell headquarters in San Jose, which
will consolidate 1,000 employees currently scattered around the Valley.
It's another echo of that proximity thing - physical proximity for people
is important, even in the company that invented corporate networks.
Eric Schmidt has got them back on track. Part of his method has been to
give the stable, dedicated corporate culture in Provo, a fresh breath of
Silicon Valley's aggressive, risk-taking style.
"At one of my first meetings at Novell, the topic was future
operating-system technology, and a key engineering executive stood up to
ask, 'Do I have permission to be passionate?' I thought he was joking - I
honestly laughed. I thought he was being funny. They need to know it's OK."
He moved on to the next thought - "What is the right corporate culture? It
has to be a good place to work, but not necessarily a nice place to work. A
good place to work is where dreams get fulfilled and interesting things go
on. 'Nice' can be a cover-up for a lack of passion. At Novell, people are
almost too polite.
"I have to give everyone a reason to believe. Why is Novell relevant? When
people feel that they are relevant, that their work matters, they will do
Schmidt is adamant that the revolutionary mind-set is still very much
present in Silicon Valley. "Why do I work for this industry? It's because I
believe that a small number of people can change the world through
technology. That belief is incredibly seductive.
"Why do people who have more personal and business and financial success
than is even conceivable keep working so hard? Any rational analysis would
say it's time to retire, give your money away. It's because they're driven
to change the world. That shared belief is what drives our passion. It's
what drives me. On any given day, I feel I have failed if I haven't made
progress along one of those initiatives."
"I've been around long enough now to give advice, and the advice I give is:
Find a way to make a difference, and the rest will follow - personal
success, promotions, financial gain."
I told him some of the stories that I'd been hearing, stories of
disappointment and frustration, stories of people seemingly unable to enjoy
their success, stories of people who didn't seem to be on the
change-the-world bandwagon. What did he make of those?
He had a very interesting answer, one that suggested as CEO he would
harness discontent as yet another motivation to make good things happen.
"Yes, people complain. The constant friction is an occupational hazard to
the job. But I would be unhappy if people weren't whining. I want them to
want more. You look around Silicon Valley, it's not too obvious that people
are happy. They're incredibly stressed. Why is that? It's not because they
work for me. They're stressed because they're naturally stressed. They're
high achievers. The kind of mild dissatisfaction with what you have is a
key prerequisite to success in this business."
He believes the beauty of this industry is the paradigm changes that sweep
through it every five years, giving people a whole new reason to get
excited. It happened to him. "I had been at Sun for 10 years. I was bored.
It had got stagnant. Then I got interested in Mosaic technology, the
Internet happened, and I got all excited again, so much so that I almost
jumped to any number of start-ups. In other industries, that doesn't
happen. In other industries, you get one sweeping change a lifetime."
Schmidt's analysis of the ideal corporate culture seems to fit Silicon
Valley just fine: it's a good place to work, but not a nice place to work.
"The Valley has a model," Schmidt says. "It's the total-dedication model.
You can't go halfway. It's binary."
I play soccer with a Peruvian I'll call Luis. He's just your basic office
computer guy. He programs in C++, he does tech support. He's never invented
anything in particular, but the work has been steady. The last two years he
has been providing 24-hour, on-call tech support for an HMO corporate sales
Six weeks ago, Luis made an offer above the asking price on a two-flat
neotraditional near Stafford Park. Price: around $550,000, and he'll have
to make a monthly mortgage payment of $3,845. His sister, brother, and
parents will live upstairs, but the elders are on SSI, his sister assembles
burritos at a taqueria, and his younger brother - who arrived only three
months ago - hauls office furniture. Their combined incomes won't cover the
property tax payments. When Luis told me what he'd done, I was amazed - it
seemed such a vote of confidence in this economy, in these high times, and
from such an unlikely person. Peru is a dysfunctional country, crippled by
corruption, and I would think Luis would know too well how easy it is for
things to spiral the wrong way.
I helped the family move in. The brother ordered a pizza, and with Luis as
interpreter I learned the story of his father, an adorable old potato of a
guy. It turned out that he was a lawyer who handled some money for the
rebel communist Shining Path - 18 years ago. Without quite realizing the
enormity of what he had done, his father suddenly was one of the most
wanted men in Peru, and he hid in the Amazon jungle for a year with the
I turned to Luis. "That's just amazing. In one generation, from your
father, a communist revolutionary, to you joining the computer revolution."
Luis's moon-pie face wrinkled up, and his eyebrows pinched. "What is this
"You know, the way computers are changing the world."
I explained how there used to be this ethos through Silicon Valley that
everyone was on a mission to transform our society, not just with personal
computers - the ultimate populist tool - but by creating decentralized
models for the workplace and new religions based on self-enlightenment
rather than church scriptures. We wanted to shake up the world. Ten, 15
years ago people felt this call to arms. I told him about the
skull-and-crossbones flag flown over Apple during the development of the
This provoked a burst of laughter from Luis, and then he just had to
translate for his father and brother, and they laughed too, and then Luis
ran out to tell his wife and mother, who didn't laugh so hard, until Luis
made me repeat what I'd said, which he interpreted for the women, who stood
there politely with their hands behind their backs, in matching
rooster-print aprons. And then they laughed on cue, knowing what was
expected of them.
A week later, after one of our soccer games, Luis shocked me with his
latest news. "I quit my job. I'm going freelance."
"But you just bought your house!"
He nodded his head with full agreement, relishing the delicious
improbability of it. "I know, I know, it sounds crazy."
"Why! You don't have any cash reserves. You just used them all on your down
"I'll find work."
I really couldn't believe it. I pressed him again. "Why?"
He shrugged. "If I don't use the extra bedroom in our flat as an office, my
cousin will move in. My wife and I need our own flat. So it was quit my job
or have a baby."
I thought about this, and couldn't help laughing. "But how will you find
work?" He'd been insulated inside the HMO for two years, his contacts were
few. "How will people know to hire you?"
"Oh, the word will get out," he said with complete confidence, his head
bobbing like a jack-in-the-box, and that was that.
When I hunt for an anecdote about how good it's gotten in Silicon Valley
lately, Luis stands out more than any story about absurd wealth ("my other
car is a plane"), because absurd wealth has already happened - you went
public, you made your $20 million, now what? Also, I think it's pretty easy
to have faith in the far-off future, pretty easy to work at some research
lab and believe that in 2010 cars will fly and computers will be wearable,
because the research scientist has got a steady paycheck coming in each
month. What's hardest is to have faith in the near future, to believe in
the next 18 months, or, in Luis's case, the next 30 days.
As a soccer player, Luis is a midfielder. He isn't particularly athletic
and doesn't hustle. But he has vision. When the ball comes to him, he has
the ability to glance up at the field and instantly know what is about to
happen - how the seemingly random 22-player array will look in a moment's
time. He will kick the ball to a spot behind the defense, or into an open
channel, where a teammate runs onto it. Luis can read the near future.
If it was a testimony to economic faith that Luis was willing to buy the
house, how much more of a testimony was it that he was willing to entrust
his mortgage payment to the vague notion that the people network would take
care of him, that "the word will get out"? But that's how business is found
these days, in the smoothly working chaos of Silicon Valley: it's still
important who you know, but the right person to know is never more than a
few phone calls away. It's three degrees of separation. Everybody knows
somebody who knows somebody, and, indeed, "the word gets out."
The question remains, when I look at the Valley to the south: am I looking
at another "steel city" Pittsburgh, the ground zero of an industry that is
supplying a valuable technology to the whole world? Or am I looking at the
future of the world itself - as the rest of the world adopts the technology
being created in the Valley, will the rest of the world also adopt the
Valley's work habits and campus parks and organizing principles? Is the
start-up and the IPO and the "total-dedication model" not just a way to
foster new technology faster, but a blueprint for redesigning all our
industrial-paradigm institutions - schools, cities, nation-states? And is
it possible, just possible, that if I get any more high-minded than I
already am in this paragraph, my brain will explode?
Make no mistake: Silicon Valley is what it is because of its smallness. The
fact that everybody knows everybody is essential. This can't be reproduced
nationwide. Sure, more people are coming here all the time, but those
who've been here for awhile have bigger Rolodexes. They have the advantage.
I had a Realtor down in Santa Clara show me a three-bedroom ranch home
"priced to move" at half a million.
"Who can afford to buy a house now?" I exclaimed.
Then she told me how housing prices were going up $1,000 a week this past
year, with no end in sight.
She said, "At that rate, who can afford not to buy a house now?"
That's a pretty good embodiment of Silicon Valley overall. It's evolved so
much in the last five years that it seems pretty damn intimidating to get
in this late in the game. But at the rapid rate it's evolving, can you
afford not to get in?
Po Bronson (email@example.com) wrote The First $20 Million Is Always the
Hardest: A Silicon Valley Novel, excerpted in Wired 5.03.
Copyright =A9 1993-98 Wired Magazine Group Inc. All rights reserved.
Compilation Copyright =A9 1994-98 Wired Digital Inc. All rights reserved.
It's like talking about the weather in Minnesota. I literally have
conversations about Microsoft with everybody, every day, all the time.
It is omnipresent.
-- Po Bronson, in