The New New Thing: A Silicon Valley Story

by Michael Lewis

  The result of his self-imposed psychology surprised even Clark. He insists that the transformation occurred overnight and that he cannot really explain it. But all of a sudden the best graduate students at Stanford wanted to work with him on his special project—a computer chip he’d been tinkering with for nearly three years. Computer science became a formal academic discipline only in the late 1960s when an obscure subdivision of the U.S. government called ARPA (for Advanced Research Projects Agency) funded four university departments—at the University of Utah, the Carnegie-Mellon Institute, the University of California at Berkeley, and Stanford University. The best computer science students at Stanford were some of the best computer science students anywhere. Under Clark they gathered together into a new, potent force. “The difference was phenomenal, for me. I don’t know how many people around me noticed. But my God I noticed. The first manifestation was when all of these people started coming up and wanting to be part of my project.”

  That project turned out to be Clark’s first experience with the new new thing. It was 1979. Silicon Valley was chiefly a place where chips were made, though this new company called Apple Computer was having some success mass-marketing computers. Clark set to work turning his new interest in being alive into new technology. With his graduate students he created a chip that could do things no other computer chip could do. That much I knew from a fascinating new book, called Dealers in Lightning, about the role of Xerox’s Palo Alto Research Center (PARC) in the modern computer industry. That day I showed Clark a passage from a chapter called “The Silicon Revolution”:

  Years later Lynn Conway [a PARC researcher] could still remember the moment she first laid eyes on the chip that would launch a new science. It was a week or two after Christmas 1979. She was seated before her second-floor window at PARC, which looked down on a lovely expanse of valley in its coat of lush winter green, sloping down toward Page Mill Road just out of the view to the south. But her eyes were fixed on a wafer of silicon that had just come back from a commercial fabrication shop.

  There were dozens of chip designs on the wafer, mostly student efforts from a Stanford course being taught with PARC’s technical supervision. They all strived toward an intricate machined elegance, comprising as they did tens of thousands of microscopic transistors packed into rectangular spaces the size of a cuticle, all arranged on a wafer that could fit comfortably in the palm of one’s hand. A few years earlier the same computing power could not have fit on an acre of real estate.

  One design stood out, and not only because it bore along its edge the assertive hand-etched legend: “Geometry Engine © 1979 James Clark.” Where the others looked to be simple arrays of devices that formed simple digital clocks and arithmetic search engines and the like, Clark’s was obviously something more—larger, deeper, more complex than the others, even when viewed with the naked eye.

  …After the appearance of Clark’s chip, the art and science of computer graphics would never be the same. The computer-aided design of cars and aircraft, the “virtual reality” toys and games of the modern midway, the lumbering dinosaurs of the movie Jurassic Park—they all sprang from the tiny chip Lynn Conway held by its edges that winter day.

  Once again Clark’s mind wandered out of the conversation. He had no interest in his Geometry Engine. He’d never heard of the book or its author, Michael A. Hiltzik, though he did, vaguely, recall Lynn Conway. “Kind of overblown title isn’t it. Dealers in Lightning,” he snorted, and then moved back to finding something in his house that needed to be changed. His ego was far too big for garden-variety immodesty, taking pride in his past accomplishment. He was actually irritated that he was somehow obliged to exhibit pride in something he had done; and he reacted by looking for something he might do. He’d pulled out the previous owner’s idea of iron work and put up his own. He’d dug up his swimming pool and moved it across his yard. Twice. Now he cast around with the blank expression that always preceded a new plan.

  I left him to it and returned once again to the room that had been cleaned one thousand times and cardboard boxes that had never been opened. They went silent. Right up until 1991 was a giant black hole. But after that the paper came fast and thick. First there was a big bill to Clark from a local hospital. “Motorcycle accident,” read a scrap of paper attached to it. A note described an “interior tibia detached completely from bone.” Beneath the hospital bill and the clinical description of Clark’s shattered leg was a rough draft of a paper written by Clark, and dated just after his motorcycle accident. His paper was called “The Telecomputer.”

  4

  Disorganization Man

  In 1956 a Fortune magazine writer named William H. Whyte published his classic study of American corporate life, The Organization Man. The book found its way onto the shelf crammed with evocative 1950s titles such as The Lonely Crowd and The Man in the Gray Flannel Suit. All these texts tried in one way or another to explain the strange uniformity of the American businessman. He commuted to work in his immaculate gray suit from his neat suburban tract house. He kept his front lawn and his hair trimmed to lengths tacitly agreed upon by his peers. He avoided high culture, or anything else that smacked of elitism. He worked for some enormous gray corporation such as IBM or AT&T that was more of a home to him than his house in the suburbs. The enormous gray corporation maintained a constant lookout for anarchists trying to pass themselves off as conformists. They devised clever multiple-choice personality tests, which they gave to anyone who applied for a job:

  Underline the word you think goes best with the word in capitals:

  NIGHT: (dark, sleep, moon, morbid)

  NAKED: (nude, body, art, evil)

  That question came from a test Whyte dug out of the archives of one of the enormous gray corporations. An actual human being read these tests, presumably looking for the fellow stupid enough to circle “morbid” and “evil.” When the true Organization Man read NAKED, he underlined “nude,” even if he thought “evil.”

  In any case, the Organization Man’s taste for conformity led Whyte to a simple theory: the Protestant Ethic, with its emphasis on rugged individualism, had been displaced in American life by something else. “The Social Ethic” is the fancy name Whyte gave that something else. The Organization Man believed in the essential rightness of large groups—and the essential wrongness of the individual. He felt very strongly that people had a moral obligation to fit in. To Whyte this represented an important and possibly permanent shift in American values—a kind of loss of innocence. Americans were not merely working differently than they had in the past. They were voting, praying, dressing, buying, and loving differently, too. And all of it flowed from changes in the corporate culture. When Americans changed the way they made money, they changed a lot of other things too.

  The character at the center of Whyte’s wonderful psychodrama was “the well-rounded man.” The well-rounded man was the ideal 1950s type. Whyte wrote his book in part as an argument against the well-rounded man. He believed that when society exalted the well-rounded it punished the truly talented: the scientists, the artists, the musicians, the engineers, the people who came at life from surprising new directions. The pressure exerted on the oddballs to be “normal” caused extraordinary products of the human imagination to be discouraged and suppressed:

  Searching for their own image, management men look for the “well-rounded” scientists. They don’t expect them to be quite as “well rounded” as junior-executive trainees; they generally note that scientists are “different.” They do it, however, in a patronizing way that implies that the difference is nothing that a good indoctrination program won’t fix up. Customarily, whenever the word brilliant is used, it either precedes the word but (cf. “We are all for brilliance, but…”) or is coupled with such words as erratic, eccentric, introvert, screwball, etc.

  Somewhere along the line the Organization Man passed from the American scene. Whether he was murdered or died of natural causes is hard to say; obviously
, he had a lot of bad luck between the late 1950s and the late 1990s. One piece of bad luck was rapid technical change, which was a weapon that oddball upstarts could use against the enormous gray corporations. Another was Jim Clark or, more generally, the engineer with a taste for anarchy, who lifted one big middle finger in the direction of the enormous gray corporation. Silicon Valley hatched a lot of certifiable weirdos interested in getting their hands on money and power. These people became some of the most admired businessmen on earth. And yet, by the standards of the Organization Man, they were barely socialized.

  Clark’s quixotic bid for power and money began at Silicon Graphics. The company he founded with several of his Stanford graduate students was one of a handful that extended the reach of the computer and caused important people to rethink what the machine might be capable of. The chip Clark had designed, the Geometry Engine, was better able than any before it to process three-dimensional graphics in real time, and so create a simulation of reality on the computer screen. “Jim’s logic was that the world was three-dimensional, and so the computer world would have to be, too,” said Kurt Akeley, one of Clark’s students. “He thought the right way to interact with the machines is the way you interact with the world.” Clark had long been fascinated by virtual reality. The Geometry Engine made it possible to draw and redraw the real world inside a computer, which was the equivalent of bestowing upon the computer a sense of sight. When you turned on the computer in Clark’s Stanford lab, you now saw a realistic, three-dimensional picture. “Computer graphics is as fundamental to computers as vision is to humans,” Clark wrote back in his teaching days. That thought, strange at the time, soon became commonplace.

  A lot of people who should have seen the importance of Clark’s Geometry Engine thought it was a useless toy. Half the venture capitalists on Sand Hill Road who made their money, in theory at least, financing the future had failed to see its potential. So had the enormous gray corporations of the late 1970s. Clark had offered to license his invention to IBM, Apollo, Hewlett-Packard, and DEC. All turned him down. Even people whose work would be transformed by his invention were slow to grasp its importance. For instance, an engineer from Lockheed visited Silicon Graphics (SGI) soon after the company was founded. The SGI engineers offered him a demonstration: an automobile depicted and manipulated in three-dimensional space on an SGI computer. “That might be good for designing cars,” said the man from Lockheed, “but I design airplanes.” He essentially did not believe what he had just seen; he assumed Clark and his engineers had made a one-off trick of putting a picture of an automobile inside the computer. He didn’t understand that Clark’s new company had made it possible to design everything inside a computer. And that every new Lockheed airplane from now until eternity would be created by Silicon Graphics’ technology.

  The Hollywood people were shrewder about the possibilities, and it wasn’t long before Steven Spielberg and George Lucas were banging on Clark’s door and asking to be his first customers. The Silicon Graphics work station made possible a lot of new special effects. The spectacle that overran movies and television in the 1980s and 1990s, and kept viewers glued to bad stories, were all accomplished with SGI’s technology. When a moviegoer rubbed his eyes and said, “What’ll they think of next?” it was usually because SGI had upgraded its machines. Someone once said that the best technology is indistinguishable from magic. Clark now had the best magic act in Silicon Valley.

  The best magic act attracted many of the best engineers. In the Valley it often did. The Valley had given engineers a place where they could make their living outside the enormous gray corporations that expected them to conform. It tended to attract the technologists who valued their freedom and wanted to live out on the edge. In any case, for a certain kind of engineer the chance to play with hot new technology offset the career risk of doing so. Clark gave them that chance.

  In the early 1980s the labs that housed the world’s finest technical talent—those of Hewlett-Packard, Bell Labs, Xerox PARC, Stanford, MIT—surrendered some of their best minds to Clark’s new company. They came from all over, but they came for the same simple reason: they saw the possibilities in Jim Clark’s silicon chip. Not all engineers were so adventuresome as Clark. Some of them probably wanted to linger back East and be given multiple-choice personality tests until they retired to Sarasota or St. Petersburg. But a lot of the smart ones were looking for the chance to show just what they could do. Greg Chesson, a young engineer at Bell Labs, recalls visiting Clark’s Stanford lab in 1981 and seeing the Geometry Engine in action. He watched a computer-generated image of Snoopy flying his doghouse across Clark’s computer screen—a sight that just a few years later would seem unremarkable. In 1981 it was a kind of miracle. Chesson knew instantly he was looking into the future. “There was no question in my mind,” he says. “I just said, ‘All right, here is where I work now.’”

  Before long, Jim Clark’s new company exerted a gravitational force on the technical mind. When you ask people who dealt with Silicon Graphics, or who worked for Silicon Graphics, or who bought machines from Silicon Graphics, or who simply observed Silicon Graphics from afar, they all say the same thing about it: “It was the smartest group of engineers I’ve ever seen in one place.” Tom Jermoluk recalls his first encounter with the company. This was ten years before Jermoluk became, at Jim Clark’s behest, the CEO of @Home Networks. In 1986 Jermoluk was an impressionable thirty-one-year-old engineer at Hewlett-Packard. Someone at Silicon Graphics called him up and said he should come over, just to have a look around. He met Clark. Within minutes they were off on an argument about the potential for computer-generated images. It lasted the afternoon. “I just joined literally on the spot: ‘Okay I’m in,’” says Jermoluk. “Jim was building the coolest stuff. You wanted to be around just to see what was going to happen next.”

  What was going to happen next, just about everyone thought, was that Silicon Graphics would become a big company. And it did. Clark had invented the technology, bet his career on it, and been right. He had attracted the most talented engineers in Silicon Valley to his company, and they in turn created the most talented computers. But as a group, Clark began to complain, they had precious little to show for it. The lion’s share of the equity and the power had been taken by others. Financiers and managers owned huge chunks of Silicon Graphics and had seized control of the board of directors, while Clark’s engineers owned tiny slivers and watched the decision making from afar. Sure, they were doing much better for themselves than they would have done back East. But they did not do as well as people who had had no hand in creating the technology.

  It didn’t take long for Clark to become deeply irritated by the rules of American capitalism. In his opinion, the game was rigged so that the people who really mattered got the shaft. He believed in his bones that the people who mattered most were the brilliant engineers: the chefs who cooked up the new recipes. (Clark was a New Growth Theorist long before anyone in Silicon Valley heard of New Growth Theory.) This opinion was hardly surprising; he was one of them. What he did with his opinion, however, was astonishing. He forced it down Silicon Valley’s throat. He left it to the Valley to take care of the rest of the world.

  Of course, if the creator of the concept and the engineers who executed the concept were not getting what they deserved, someone else was getting more than he deserved. The first person Clark fingered was the man who lent him the money to build his new machine. When he set about to create his first company, Clark had no experience of the venture capitalists who back new enterprises. He wound up selling a 40 percent stake in Silicon Graphics to a man named Glenn Mueller at the prestigious Mayfield Fund for $800,000. Initially Clark kept a 15 percent stake for himself—which implied that he, his invention, and his ability to attract engineers were worth $300,000. He liked the deal when he made it; it took him about six months to change his mind. His original stake in his own business soon became a lot smaller; and he became irritated. His backers were about to
discover what that meant.

  Building new hardware costs a lot of money, much more than Clark realized. He and his engineers ran through their initial $800,000 of venture capital in less than a year, and were forced to return to the venture capitalists, hat in hand. Mueller and others put up another $17 million in exchange for another piece of the company. By the end of 1984 Clark’s engineers had run through the $17 million and needed even more money, and so had to sell even more of their stakes in the business. As a result, before they’d made their first dollar, Clark and his engineers were largely squeezed out of their own enterprise. “I wouldn’t be surprised if, of all the hugely successful companies in Silicon Valley, Silicon Graphics made the fewest millionaires out of the engineers who founded it,” says Greg Chesson. The Mayfield Fund ended up making about $400 million on its investment.

  Clark took this and almost everything else that happened at Silicon Graphics personally. At each step of the way it became clearer that SGI would be a huge success; yet at each step of the way Clark found himself more at the mercy of his financiers, who had nothing at risk but their money. Six months after Silicon Graphics received its first infusion of capital, Clark decided somehow that he had sold too cheap. Glenn Mueller had cut a sweet deal for himself. Mueller was supposed to be a nice guy—everyone said so. The Mueller family threw the Christmas party each year that most everyone who was anyone in Silicon Valley wanted to attend. Clark had trusted him. He’d never do that again with a venture capitalist. And he never forgave Mueller for exploiting his ignorance. At board meetings Mueller often found himself subjected to Clark’s fury. “Jim’s face would get red and he’d start shouting that Glenn had cheated him and his engineers,” recalls Dick Kramlich, a Silicon Valley venture capitalist who joined the board of Silicon Graphics in 1984. “Glenn would just sit there and take it.”