Valley of the Gods

by Alexandra Wolfe

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  Contents

  Dedication

  Epigraph

  Author’s Note

  Prologue

  1. Asperger’s Chic

  2. The Gluten-Free Open Marriage

  3. Hippy-Dippy Coding Communes

  4. The Never-Ending School

  5. The All-Meat Lunch

  6. Alpha Girls and Beta Boys

  7. The Immortals

  8. Five Minutes of Fame

  9. The New New Money

  10. When Do You Beg Forgiveness and When Do You Ask for Permission?

  11. Is This Really Right?

  12. We Will Be God

  Conclusion

  Acknowledgments

  About Alexandra Wolfe

  For Mom, Dad, and Tommy

  The cabin was so cosy with its little doors and windows—

  A little chimney on it like a funny little hat;

  A little flower-garden for the bees who wanted honey—

  Now whoever, ever saw a sweeter little house than that.

  Dixie Willson, Honey Bear

  Author’s Note

  I first met Peter Thiel, the cofounder of PayPal, managing partner of Founders Fund, and first investor in Facebook, in New York at a salon at his house in 2006. He had invited a number of friends to give presentations about religion, technology, and real estate. Over the next months and years, the tech investor and I became friends, and he introduced me to the world of Silicon Valley mania. During that time, he had all sorts of ideas that most people thought were outlandish, such as building islands with libertarian principles out in the ocean, funding longevity research, and, more recently, financing a program to encourage students to drop out of college and start companies in Silicon Valley.

  All of his ideas went against political correctness. He was a contrarian and attracted equally unique friends. Through Thiel, I discovered a whole new world of often-wacky people and ideas that didn’t seem to subscribe to any set principles or social awareness.

  His anti-university program ended up being the one that took hold in the mind of the public. Perhaps it hit at an inflection point when Americans were fed up with paying off student debt, or they couldn’t find jobs after the 2007 to 2009 recession despite having degrees, but Thiel’s “20 Under 20” program to grant twenty students under age twenty $100,000 to “stop out” of school started a new conversation about education.

  The first year’s fellows ended up being part of my window into Silicon Valley’s elite and underbelly. Through their eyes, I saw a lifestyle entirely different from the East Coast’s hierarchy. Through Thiel’s perspective, I saw a curiosity, intelligence, and counterintuitive idealism that kept me coming back to the Bay Area more and more. This book is an attempt to capture some of the culture that attracted both me and the fellows to a place that has disrupted not only the way America does business, but also how people live their lives. In Silicon Valley, gone are the straitjacketed paths of the East Coast elite; in their place are a series of open-ended questions about which industries will be disrupted next, and which cultural configurations will supplant Old Society. Even more than a testing ground for start-ups, Silicon Valley, to me, is a larger laboratory of cultural experimentation, where the only thing that’s impossible is to predict.

  Prologue

  It’s six o’clock on a Thursday night in San Mateo County, California, at a relatively new (2009), fashionable California Craftsman–style hotel called the Rosewood Sand Hill. Out on the deck, which overlooks a bottom-lit Olympic-size pool skirted in fuchsias, huddles of lithe blondes in bright sundresses and billowy blouses perch on rancho-style woven ottomans near tablefuls of tech entrepreneurs outfitted in the techno-fabulous uniform of tight T-shirt, jeans, and tailored blazer. They’re lounging under heat lamps, eating spiced popcorn and oak-grilled sliders with bottles of Sancerre wine.

  This evening, however, the young blondes have competition. Every Thursday night is what regulars call Cougar Night. The cougars are women over thirty, or forty—or who dares guess—on the prowl for just the sort of delicious mortals they see spread out before them right here: one tableful after another of young techies, all of them male, most of them single, half of them innocent of a woman’s wiles—and so many of them billionaires, centimillionaires, and decamillionaires that they would make any similar assembly of investment bankers and hedge fund managers cringe from the humility of inferiority and old age.

  What the women, both the young and the Botoxed, have their eyes on are young pioneers who struck it rich early on when a vast, virgin terrain called the Internet started to spread across the world in the mid-1990s. Only the young and ambitious who grew up with the computer saw it for what it might become. They had absorbed the computer’s digital processing early in life. To them, it didn’t seem so much like a tool as it did part of their autonomic nervous systems, the part of the central nervous system that enables mammals to breathe without having to think about it. Only they could feel the boundless possibilities of the Web. Astonishingly few people born before 1970 ever got it, no matter how brilliant they might be in business or academia. The old boys looked at the Internet from the outside in and wondered what was the big deal. The digital age’s children didn’t have to look at it. It was in their innards. They were visionary puppies who realized that the Internet would become the world’s first great new industry in a half century—created, developed, operated, and, more important, owned by children. It had the potential to make television and nuclear power look like relics.

  It also had entry points that had never been heard of on the East Coast. Paying your dues in Silicon Valley? Out here, that meant starting as a chief executive officer of a start-up and then failing. That was step one: the glorification of starting at the top—not the bottom or the mailroom—as a founder, crashing dramatically, and then putting it on your resume as a bragging right. It was a new way of making it for those who didn’t have the right pedigree. You could come from anywhere, regardless of country or degree, and there were no real steps you had to follow. The people who hit it big—and even if it was only a few billion-dollar ­companies—felt like they could be the everyman, or the any-nerd. It was a hopeful message, even if it was the lucky few who crowed the loudest about their improbable leap to Silicon Valley royalty.

  It was also their looks. Back home, wherever they were from, a scrawny nerd with thick glasses, baggy jeans, and a T-shirt would be unlikely to score a mate. Here at Cougar Night, women were crawling on just this type of specimen.

  But how could the cougars tell who was successful and who wasn’t? Everyone looked the same, from the venture capitalists to the Stanford University seniors. The former may have just dyed their hair.

  The scene here at the hotel reflected the industry’s first glow of glamour and turned a four-mile stretch of Sand Hill Road into a destination as magnetic as Manhattan, London’s Mayfair District, Paris’s Champs-Élysées, Rio, Hong Kong, Las Vegas, and the Via Veneto in Rome. In short, it’s the heart of the Silicon Valley, a geographical and emotional location referring to a vaguely defined fifteen-hundred-square-mile stretch beginning twenty-five miles south of San Francisco and running down the peninsula through Palo Alto and all the way to Mountain View, near San J
ose.

  It wasn’t always this way. The area surrounding the ritzy Rosewood was a cattle farm two hundred years ago. Sand Hill Road? A cow path. A hundred years ago? The area where Facebook’s sprawling campus covers acres of Menlo Park, about ten minutes from the Rosewood, was filled with fruit orchards—so many that the whole area was called the Valley of Heart’s Delight.

  Back then, the richest man in the valley was also an entrepreneur, but in a decidedly lower-tech field: piano manufacturing. His name was James Lick, and in the nineteenth century, he brought six hundred pounds of chocolate by Ghirardelli to San Francisco, and it was on his advice that they came to the United States and founded the Ghirardelli Chocolate Company. He also bought land. Leland Stanford, the railroad magnate and founder of Stanford University, was another deity in that era’s Valley of the Gods. Stanford University was able to convince Fred Terman to leave MIT and return to Palo Alto, where he had earned undergraduate and master’s degrees, to teach engineering there when most of the East Coast professors approached by the university rejected the idea of leaving what would become the Ivy League for a little-known upstart institution all the way across the country.

  What they didn’t know was how many other “start-ups” were going to come out of that upstart university. Bill Hewlett and Dave Packard were students there before they started what would become Hewlett-Packard—famously founded in their tiny garage, a place that is the closest thing Silicon Valley has to a temple of old. First, they did contract work, such as designing a motorized clock drive for the telescope at the Lick Observatory, named for James Lick. Finally, in 1938 they sold their resistance-­capacitance audio oscillator, used for testing sound gear and priced at around $55, to the Walt Disney Company for its forthcoming animated movie Fantasia. Disney was their first real customer. They stopped doing contract work and became manufacturers instead.

  It was Silicon Valley’s first big student success story, and the first of many companies now routinely—and almost jokingly, at this point—founded in tiny garages. Halcyon Molecular, a now-defunct genome-sequencing start-up, for example, was so enamored of this “garage mystique” that even though its venture capitalist investors had given the company plenty of office space and hundreds of thousands in capital, its founders chose to work in a garage anyway.

  Silicon Valley, as we think of it, didn’t get its name until 1971, when California entrepreneur Ralph Vaerst named it after all the silicon chip manufacturers that had moved there. Now that valley is punctuated by the lore of its landmarks—not just garages where major companies started but also the establishments where the ideas were born. Today entire industries, aside from Internet companies, have massive bases there, such as Lockheed Martin and the National Aeronautics and Space Administration (NASA). In 1972 Kleiner Perkins (now Kleiner, Perkins, Caufield and Byers, or KPCB) became the first venture capital firm on Sand Hill Road. Now virtually all of the major venture firms have a presence there.

  In this fabled land is one of the biggest concentrations of billionaires in the world. They are also the oddest bunch of billionaires: a tribe of overage boys, to a man.

  From its inception, the Silicon-chic Rosewood hotel started having star-studded events that only Los Angeles and New York used to see. Back in 2011, the hotel hosted a five-hundred-person fund-raiser in its Madera restaurant for the Lucile Packard Children’s Hospital, headlined by Steve Carell and Dana Carvey. Over peanut-butter-and-jelly sushi rolls and macaroni and cheese, the comedians mingled with some of the foremost philanthropists in the country, including chairwomen Anne Lawler and Elizabeth Dunlevie, wives of prominent venture capitalists. And these celebrities arrived only weeks after others—from President Barack Obama, to Katy Perry, to Snoop Dogg—had made a point of passing through Palo Alto to pay homage to Silicon Valley’s boy CEOs.

  Still, even years ago, a hopping power scene in Silicon Valley would have been considered an oxymoron. Casual was king, and engineering, emperor. Today it’s hard to keep the money out. Now there are tech barons such as Mark Zuckerberg—thirty-two years old, worth $35 billion after he went public with Facebook; Jeremy Stoppelman of Yelp; Dustin Mosko­vitz of Asana; Charlie Cheever of Quora; LinkedIn cofounder Reid Hoffman, at forty-nine, ancient for a founder; Sergey Brin, the Russian-born entrepreneur who cofounded Google in 1998 when he was twenty-five; and, above all, Peter Thiel, who cofounded what would become PayPal the same year at age thirty-one. Most of them are regulars at Madera restaurant. PayPal was the Internet’s first bank, giving online commerce badly needed rigor and rules. When eBay bought PayPal in 2002, Thiel rolled his share of the money into a hedge fund. Then he invested in Facebook, helping it to become a real company when it was nothing but Zuckerberg’s hopeful lark. Thiel made nearly $2 billion when Facebook sold for upward of $100 billion in an initial public offering, or IPO, ten years later. By then, he had invested in over a dozen more start-ups and started a hedge fund of his own, called Clarium Capital Management. He had also begun thinking of what the new industry and information technology in general could do for a society. He was its first philosopher. He’s now known as the godfather of the PayPal Mafia, which includes Hoffman and Stoppelman, who went on to found many of Silicon Valley’s splashiest tech companies.

  Today’s uber-nerds are like the robber barons of the industrial revolution whose steel and automobile manufacturing capabilities changed entire industries.I But instead of massive factories and mills, they’re doing it with little buttons. Actually, buttons would be an overstatement. They’re doing it with a tip of a finger. With a single tap of the Uber app, millions of users have disrupted the transportation industry in America. Now hailing a cab is an anachronism. You might as well ride a covered wagon. As for dining, in a growing number of cities around the world, apps and sites such as OpenTable and Yelp make sampling new places—or discovering them in ads—passé.

  For the first time, tech titans are celebrities themselves, and their lives have become objects of fascination. The tech boom has not only launched new media, it has also created a new social order, one with an anti-“society” aesthetic that has taken on a singular style. Here more than 5 percent of the residents are millionaires and help make up the wealthiest 1 percent of the country. Since 2010, the resurgence of tech has brought two hundred thousand new jobs to the area. In the last year, the price of the average single-family residence in Palo Alto—home to eight newly minted billionaires, including Zuckerberg and Sergey Brin—rose to $2.5 million. Many of those homes were bought with profits of payouts from the first boom, such as those earned by early employees of Google and the technology company Oracle. Twenty more billionaires live in the surrounding towns, and their off-the-charts successes have set the tone for an area of extremes: extreme health, extreme comfort, and, of course, extreme wealth.

  It’s the last extreme—wealth—that isn’t outwardly detectable, and that’s the key to Silicon Valley style. “The richest person in the room is often wearing flip-flops and a hoodie,” says entrepreneur David Llorens. The hoodie becomes the symbol of Mark Zuckerberg, the richest of the new breed. He’s thirty-two and looks twenty. Youth is a must for the new breed; they go to great lengths to appear young. They have no interest in society in the old sense of dignified New York, Boston, Philadelphia ­Society—­or even San Francisco Society, forty miles away. It’s as if San Francisco doesn’t exist. The transistor and the microchip and the Internet were all created by midwesterners and westerners. To the pioneers, inventors William Shockley and Robert Noyce, eastern ways seemed decadent.

  • • •

  From the moment the valley wakes up, the day unfolds much like it does for the students on the nearby Stanford campus. Most wealthy tech founders do not rise under twenty-foot ceilings or stumble into marble bathrooms with lofty bay windows to brush their teeth. Unlike the storied mansions of Greenwich, Connecticut, and Long Island, the moguls of Silicon Valley’s houses are often inversely proportional in size to the year
they made their money. Whereas older billionaires such as Oracle founder Larry Ellison live in gated compounds along Woodside’s Mountain Home Road or Atherton’s Park Lane, younger entrepreneurs, many of whom have already sold their companies for hundreds of millions, increasingly stay in their first apartment or that same sentimental start-up garage they moved to after Stanford. They witnessed the housing bubble firsthand, are often single, and prefer to invest in companies.

  They may look like they live in dorms, but they reside in homes that cost $35,000 ten years ago and now sell for $2 million. The cattle farms that existed in the 1850s on the road between Cupertino and downtown San Jose are no longer full of flower petals and fruit but of frozen yogurt and cereal bars. It’s the dormification of acres of land. Ironically, many of the residents seem to find college inconsequential.

  It was Google that first defined the social identity that companies gave their employees. Engineers go to grad school at Google and Facebook and become perennial students. They keep wearing the student uniform and often start companies with their friends from college. From the picnic benches up and down Palo Alto’s University Avenue to entrepreneurs’ backyard barbecues outside one-story row houses in Sunnyvale, Silicon Valley is a place of eternal freshman herds.

  As the area’s wealth increases, so do the lengths that entrepreneurs will go to hide it. “Beverly Hills is great, but that’s not us,” says former Palo Alto mayor Sid Espinosa. “We’re not flashy and glitzy—and we don’t strive to be. In fact, it’s antithetical to our culture.” ­Katrina Garnett, the dashing forty-three-year-old former tech exec says she’s seen an increase in requests for building permits to build down, not up. The number of elaborate basement expansions has skyrocketed in recent years. When someone as successful as Reid Hoffman decides to stay in the same one-bedroom apartment after making $3 billion in a single week, it sets an anti-ostentatious tone.