The Code Read online

  ALSO BY MARGARET O’MARA

  Pivotal Tuesdays: Four Elections That Shaped the Twentieth Century

  Cities of Knowledge: Cold War Science and the Search for the Next Silicon Valley

  PENGUIN PRESS

  An imprint of Penguin Random House LLC

  penguinrandomhouse.com

  Copyright © 2019 by Margaret O’Mara

  Penguin supports copyright. Copyright fuels creativity, encourages diverse voices, promotes free speech, and creates a vibrant culture. Thank you for buying an authorized edition of this book and for complying with copyright laws by not reproducing, scanning, or distributing any part of it in any form without permission. You are supporting writers and allowing Penguin to continue to publish books for every reader.

  Photograph credits appear on this page.

  LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA

  Names: O’Mara, Margaret Pugh, 1970– author.

  Title: The Code : Silicon Valley and the remaking of America / Margaret O’Mara.

  Description: New York : Penguin Press, 2019. | Includes bibliographical references and index.

  Identifiers: LCCN 2019003295 (print) | LCCN 2019006563 (ebook) | ISBN 9780399562198 (ebook) | ISBN 9780399562181 (print)

  Subjects: LCSH: Santa Clara Valley (Santa Clara County, Calif.)—Economic conditions. | Business enterprises—California—Santa Clara Valley (Santa Clara County)

  Classification: LCC HC107.C22 (ebook) | LCC HC107.C22 S33973 2019 (print) | DDC 338.709794/73—dc23

  LC record available at https://lccn.loc.gov/2019003295

  Cover design: Christopher Brian King

  Cover images: (top row) Steve Jobs, Andy Freeberg / Getty Images; Mark Zuckerberg, Rick Friedman / Getty Images; Bill Gates, PA Images / Getty Images; Sergey Brin, Justin Sullivan / Getty Images; (bottom row) Jeff Bezos, Ted Soqui / Getty Images; John Doerr, Ann E. Yow-Dyson / Getty Images; Andy Grove, courtesy of Intel Corp.; Frederick Terman, provided by the Stanford University Libraries

  Version_1

  To Jeff

  Want to know why I carry this tape recorder? It’s to tape things. I’m an idea man, Chuck, all right? I’ve got ideas all day long, I can’t control them, it’s like, they come charging in, I can’t even fight ’em off if I wanted to.

  Night Shift (1982)1

  On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.

  JOHN PERRY BARLOW,

  “A Declaration of the Independence of Cyberspace,” 19962

  The machine that is everywhere hailed as the very incarnation of the new had revealed itself to be not so new after all, but a series of skins, layer on layer, winding around the messy, evolving idea of the computing machine.

  ELLEN ULLMAN,

  Life in Code, 19983

  CONTENTS

  Also by Margaret O’Mara

  Title Page

  Copyright

  Dedication

  Epigraph

  List of Abbreviations

  Introduction: The American Revolution

  ACT ONE: START UP

  Arrivals

  Chapter 1: Endless Frontier

  Chapter 2: Golden State

  Chapter 3: Shoot the Moon

  Chapter 4: Networked

  Chapter 5: The Money Men

  Arrivals

  Chapter 6: Boom and Bust

  ACT TWO: PRODUCT LAUNCH

  Arrivals

  Chapter 7: The Olympics of Capitalism

  Chapter 8: Power to the People

  Chapter 9: The Personal Machine

  Chapter 10: Homebrewed

  Chapter 11: Unforgettable

  Chapter 12: Risky Business

  ACT THREE: GO PUBLIC

  Arrivals

  Chapter 13: Storytellers

  Chapter 14: California Dreaming

  Chapter 15: Made in Japan

  Chapter 16: Big Brother

  Chapter 17: War Games

  Chapter 18: Built on Sand

  ACT FOUR: CHANGE THE WORLD

  Arrivals

  Chapter 19: Information Means Empowerment

  Chapter 20: Suits in the Valley

  Chapter 21: Magna Carta

  Chapter 22: Don’t Be Evil

  Arrivals

  Chapter 23: The Internet Is You

  Chapter 24: Software Eats the World

  Chapter 25: Masters of the Universe

  Departure: Into the Driverless Car

  Photographs

  Acknowledgments

  Note on Sources

  Notes

  Image Credits

  Index

  About the Author

  LIST OF ABBREVIATIONS

  ACM: Association for Computing Machinery

  AEA: American Electronics Association

  AI: Artificial intelligence

  AMD: Advanced Micro Devices

  ARD: American Research and Development

  ARM: Advanced reduced-instruction-set microprocessor

  ARPA: Advanced Research Projects Agency, Department of Defense, renamed DARPA

  AWS: Amazon Web Services

  BBS: Bulletin Board Services

  CDA: Communications Decency Act of 1996

  CPSR: Computer Professionals for Social Responsibility

  CPU: Central processing unit

  EDS: Electronic Data Systems

  EFF: Electronic Frontier Foundation

  EIT: Enterprise Integration Technologies

  ENIAC: Electronic Numerical Integrator and Computer

  ERISA: Employee Retirement Income Security Act of 1974

  FASB: Financial Accounting Standards Board

  FCC: Federal Communications Commission

  FTC: Federal Trade Commission

  GUI: Graphical user interface

  HTML: Hypertext markup language

  IC: Integrated circuit

  IPO: Initial public offering

  MIS: Management information systems

  MITI: Ministry of International Trade and Industry (of Japan)

  NACA: National Advisory Committee for Aeronautics, later superseded by NASA

  NASA: National Aeronautics and Space Administration

  NASD: National Association of Securities Dealers

  NDEA: National Defense Education Act

  NII: National Information Infrastructure

  NSF: National Science Foundation

  NVCA: National Venture Capital Association

  OS: Operating system

  OSRD: U.S. Office of Scientific Research and Development

  PARC: Palo Alto Research Center, Xerox Corporation

  PCC: People’s Computer Company

  PDP: Programmed Data Processor, a minicomputer family produced by Digital

  PET: Personal Electronic Transactor, a microcomputer produced by Commodore

  PFF: Progress and Freedom Foundation

  R&D: Research and development

  RAM: Random access memory

  RMI: Regis McKenna, Inc.

  ROM: Read-only memory

  SAGE: Semi-Automatic Ground Environment

  SBIC: Small Business Investment Company

  SCI: Strategic Computing Initiative

  SDI: Strategic Defense Initiative

  SEC: Securities and Exchange Commission

  SIA: Semiconductor Industry Association

  SLAC: Stanford Linear Accelerator Center, later SLAC Nationa
l Accelerator Laboratory

  SRI: Stanford Research Institute, later SRI International

  TCP/IP: Transmission Control Protocol / Internet Protocol

  TVI: Technology Venture Investors

  VC: Venture capital investor

  VLSI: Very large-scale integration

  WELL: Whole Earth ’Lectronic Link

  WEMA: Western Electronics Manufacturers Association, later AEA

  INTRODUCTION

  The American Revolution

  Three billion smartphones. Two billion social media users. Two trillion-dollar companies. San Francisco’s tallest skyscraper, Seattle’s biggest employer, the four most expensive corporate campuses on the planet. The richest people in the history of humanity.

  The benchmarks attained by America’s largest technology companies in the twilight years of the twenty-first century’s second decade boggle the imagination. Added together, the valuations of tech’s so-called Big Five—Apple, Amazon, Facebook, Google/Alphabet, and Microsoft—total more than the entire economy of the United Kingdom. Tech moguls are buying storied old-media brands, starting transformative philanthropies, and quite literally shooting the moon. After decades of professed diffidence toward high politics, the elegant lines of code hacked out in West Coast cubicles have seeped into the political system’s every corner, sowing political division as effectively as they target online advertising.1

  Few people had heard of “Silicon Valley” and the electronics firms that clustered there when a trade-paper journalist decided to give it that snappy nickname in early 1971. America’s centers of manufacturing, of finance, of politics were three thousand miles distant on the opposite coast. Boston outranked Northern California in money raised, markets ruled, and media attention attracted.

  Even ten years later, when personal computers mushroomed on office desks and boy-wonder entrepreneurs with last names like Jobs and Gates seized the public imagination, the Valley itself remained off to the side of the main action. An ochre haze of smog hung over its tidy bedroom suburbs when the wind didn’t blow right, its dun-colored office buildings were impossible to tell apart, and you were out of luck if you tried to order dinner in a restaurant past 8:30 p.m. One horrified British visitor called it “the land of polyester hobbitry.”2

  Keeping the hobbits but losing some of the sleepiness, the Valley and its sister technopolis of Seattle soared to staggering heights in the dot-com 1990s—“the largest single legal creation of wealth we’ve witnessed on the planet,” quipped venture capitalist John Doerr—only to plummet to earth as the new millennium dawned with a massive, NASDAQ-pummeling pop, leaving the carcasses of once-shining Internet companies strewn across the landscape. Magazine cover stories declared the end of the mania, grim-faced analysts switched their “buy” ratings to “sell,” and Wall Street attention shifted back to the more predictable rhythms of blue-chip stalwarts. The rocketing rise of Amazon felt like a fever dream, Apple had run out of product ideas, Microsoft had been ordered to split itself in two, and Google was a garage operation whose leaders seemed more interested in going to Burning Man than turning a profit.3

  How quickly things change. Fast-forward to the present, and Silicon Valley is no longer merely a place in Northern California. It is a global network, a business sensibility, a cultural shorthand, a political hack. Hundreds of places around the world have rebranded themselves Silicon Deserts, Forests, Roundabouts, Steppes, and Wadis as they seek to capture some of the original’s magic. Its rhythms dictate how every other industry works; alter how humans communicate, learn, and collectively mobilize; upend power structures and reinforce many others. As one made-in-the-Valley billionaire, Marc Andreessen, put it a few years back, “software is eating the world.”4

  This book is about how we got to that world eaten by software. It’s the seven-decade-long tale of how one verdant little valley in California cracked the code for business success, repeatedly defying premature obituaries to spawn one generation of tech after another, becoming a place that so many others around the world have tried and failed to replicate. It also is a history of modern America: of political fracture and collective action, of extraordinary opportunity and suffocating prejudice, of shuttered factories and surging trading floors, of the marble halls of Washington and the concrete canyons of Wall Street. For these, as you shall see, were among the many things that made Silicon Valley possible, and that were remade by Silicon Valley in return.

  * * *

  —

  From the first moment that Silicon Valley burst into the public consciousness, it was awash in revolutionary, anti-establishment metaphors. “Start your own revolution—with a personal computer,” read an ad for the new Personal Computing magazine in 1978. “The personal computer represents the last chance for that relic of the American Revolution, our continent’s major contribution to human civilization—the entrepreneur,” proclaimed the tech industry newsletter InfoWorld in 1980.

  Four years later, as they prepared to announce the new Macintosh computer to the public, Apple executives focused on marketing messages that emphasized “the radical, revolutionary nature of the product.” One result was one of the most famous pieces of television advertising in history, the jaw-dropping spot broadcast into millions of American living rooms during the 1984 Super Bowl, when a lithe young woman ran through a droning audience, hurled a hammer at a Big Brother–like image projected on a blue screen, and shattered it.5

  The barely veiled punch at IBM, Apple’s chief rival, reflected a broader anti-establishment streak in this techie rhetoric that went beyond marketing plans and ad slogans. “Mistrust Authority—Promote Decentralization,” read one plank of the “hacker ethic” journalist Steven Levy used in 1984 to describe the remarkable new subculture of hardware and software geeks who had helped make the computer personal. “Authority” meant Big Blue, big business, and big government.

  It was the perfect message for the times. After more than ten years of unrelentingly dismal business news—plant shutdowns, blue-collar jobs vanishing overseas, fumbling corporate leaders, and the pummeling of American brands by foreign competitors—high-tech companies presented a bright, promising contrast. Instead of exhausted middle managers and embittered hard hats, there were flashy executives like James “Jimmy T” Treybig of Tandem Computers, who threw weekly beer parties for his staff and held alfresco press briefings beside the company swimming pool. There were CEOs like Jerry Sanders of Advanced Micro Devices (AMD), who bought a Rolls Royce one week and a top-of-the-line Mercedes the next. And of course there were Steve Jobs of Apple and Bill Gates of Microsoft, who came to exemplify a new sort of corporate leader: young, nonconformist, and astoundingly rich.

  Then there was the man who gave his name to the era, Ronald Reagan, crusader against big government, defender of deregulated markets, standard-bearer of what he called “the decade of the entrepreneur.” For the Great Communicator, no place or industry better exemplified American free enterprise at work than Silicon Valley, and he was particularly enthusiastic about extolling its virtues to foreign audiences.

  During his historic visit to the Soviet Union in the spring of 1988—the first appearance of an American president there in fourteen years and a stunning move for a leader who had referred to the USSR as an “evil empire” only a few years earlier—Reagan stood before an audience of 600 computer science students at Moscow State University and rhapsodized about the glories of the American-made microchip. These miracles of high technology, the president told the crowd as a giant statue of Vladimir Lenin loomed behind his podium, were the finest expression of what American-style democracy made possible. Freedom of thought and information allowed the surge of innovation that produced the computer chip and the PC. No one better demonstrated the virtues of American free enterprise—particularly the low-tax, low-regulation variety beloved by Reagan—than the high-tech entrepreneurs (“no older than you,” he reminded the students) who started out ti
nkering in suburban garages and ended up leading hugely successful computer companies.

  The next revolution, Reagan explained that day in Moscow, would be technological. “Its effects are peaceful, but they will fundamentally alter our world, shatter old assumptions, and reshape our lives.” And leading the way would be the young technologists who had worked up the courage “to put forth an idea, scoffed at by the experts, and watch it catch fire among the people.”6

  Many of the men and women who had been at the ground floor of what they called the “personal computing movement” were children of the sixties counterculture, whose leftist politics were as far from Reagan’s conservatism as you could get. Yet here was one place where the hippies and the Gipper could agree: the computer revolution had a free-market soul.7

  The revolutionary metaphors weren’t new, of course. Since the age of Franklin and Hamilton, American inventors and their political and corporate patrons had made bold (and prophetic) claims about how new technology would change the world. From Horatio Alger to Andrew Carnegie to Henry Ford, politicians and journalists lifted up the figure of the ingenious, bootstrapping entrepreneur as an example and inspiration of what Americans could and should do. Only in America could you rise from rags to riches. Only in America could you be judged on your own merits, not your pedigree. In this telling, Silicon Valley seemed just like the latest and greatest example of the American Revolution in action.

  * * *

  —

  Ronald Reagan was right. The high-tech revolution was an only-in-America story. And he and so many others were right to laud people like Jobs and Gates and Hewlett and Packard as entrepreneurial heroes. Silicon Valley could never have come to be without the presence of visionary, audacious business leaders. Reagan and his conservative allies also were right when they argued that overly regulated markets and nationalized industries could present big hurdles to entrepreneurial innovation—many of the globe’s would-be Silicon Valleys attest to that.