Valley of Genius

by Adam Fisher

  Howard King: After Napster closed down we had another six, seven, eight years of fifty other bootleg sites where you were able to get the same music. We did not end bootlegging. We lost the war, even though Lars was in it for only this one battle.

  Sean Parker: So Napster shatters into a million jagged little pieces, all of the users scatter all over the world to these decentralized services that take its place—services that they are incapable of litigating against because they have no corporate structure and no nation-state behind them.

  Jordan Ritter: We blazed the path, and they would build cities on the soil stained with our blood. We had everything against us, and yet we still had the one thing, that we can see now with hindsight, we had that social empathetic connection: Facebook taps into that, YouTube taps into that.

  Sean Parker: The story of how you take a completely un-indexed hypertext world and turn it into an information resource that anybody can tap into, that’s the Google story. And then at the same time you have the social story, this is what people are using to share music in their dorm rooms and this is what people are using in order to connect with one another, and Napster is way early to the party, but in some strange way doing both of those things.

  Ali Aydar: Prior to Napster, it was all about “Who is the adult in the room?” If there is a young founder, there is an adult CEO. Napster was the first case where you’ve got young founders, and the VCs came in with the “adult supervision,” and it was an utter disaster.

  Jordan Ritter: I know why we failed, and it had nothing to do with the tech, and it really didn’t have anything to do, in my opinion, with the industry. It was a political game; we didn’t play it in a political way, it was a game, and we didn’t know how to play that game, and Hank Barry sure as shit didn’t know how to play that game.

  Ali Aydar: Now, it’s all about the young founder remaining the CEO, and why is that so important? It’s important because nobody can understand their company, their product or their service, at a visceral level, better than the founder. Nobody is going to care more than the founder, and now VCs understand that, and now the thinking is, “Hey, we’ll just surround the founder with people that are adults who have skills in areas that they don’t have skills. Coach them, help them, give them whatever resources they need, but they’re going to stay the CEO.” And that would have been a totally novel approach in 1999. It would have been completely ridiculous for any of us in that room to be the CEO. But it probably would have been the right thing.

  Sean Parker: I think at that point I was nineteen.

  Jordan Ritter: You know the iPod would have eventually come out and we probably would have done deals with Apple, and instead of Madonna getting prime position on iTunes it would have been like local band X, because we know what music you like, because we know the ones that you download!

  Shawn Fanning: From our standpoint it was hard to wait. Especially coming from a generation where you can get basically anything you want instantly. It’s frustrating when you want to make a change and you see a fix but you can’t make it happen. So sometimes you push too hard.

  Sean Parker: You have to learn how to take it step-by-step. Even if you see the ultimate outcome, you’ve got to be willing to understand other people and how to sequence all the steps to get to that outcome. My end of the bargain at Napster, having gone from a programmer to helping run the company and handling label negotiations and the legal stuff, that part of it was a failure. My whole contribution to Napster in some sense was a failure. And so I didn’t feel like I had finished the job that I set out to do until I got a chance to help negotiate the licenses for Spotify. That’s when things kind of came full circle. We now have a service that looks basically identical to what we were trying to build at Napster.

  Hilary Rosen: Napster was very prescient, but everyone was greedy.

  Sean Parker: There was so little greed on the part of the people who worked at Napster. We would have given the company to the record labels! Like, you can just have it! We just wanted the idea to survive. We knew that we were the best chance that the record business had of a seamless and orderly transition to a future where artists and labels and publishers all would have been paid—because we had every user all in one place. I made the argument to the heads of every record label that was willing to listen. They didn’t listen to us.

  The Dot Bomb

  Only the cockroaches survive… and you’re one of the cockroaches

  Wired’s first issue predicted digital revolution and it showed up right on schedule, engulfing the Bay Area at the start of the new century. Wave after human wave washed up in Silicon Valley and flowed to its most exciting outpost—San Francisco, the unofficial headquarters of the dawning web. It was kids and carpetbaggers; MBAs and coders. And they all wanted to meet each other, preferably with a drink in each hand. These were the “dot-commers” who worked for “internet companies”—the web was so new at the time that the net itself was seen as a type of economic activity, like mining. Indeed, it was a new gold rush, and by the turn of the century the entire region erupted in a speculative frenzy—with plenty of money left over for parties. It didn’t make much sense to the generation of hardware engineers that had actually put the silicon in Silicon Valley, but the newcomers were having a lot of fun and billions were pouring in. So why question it? And then, one day in March 2001, the music stopped.

  Sean Parker: When you think about the history of Silicon Valley, if the first era is personal computing, and what it took to establish personal computing as a ubiquitous platform, then the second movement is the rise of the web.

  Jamis MacNiven: In 1991 I opened a restaurant in Woodside, Buck’s, that has become pretty well known. In 1992 there was one mention of Buck’s in InfoWorld: Bob Metcalfe said he was having “a power breakfast at Buck’s.” In ’93, there was a mention in the Economist that John Doerr, whoever that was, was having breakfast at Buck’s. Netscape had a lot of their early meetings at Buck’s. That was the most important thing that ever happened here, because it allowed all of us to go online seamlessly.

  Peter Thiel: So Netscape comes along in ’93 and things start to take off.

  Jamis MacNiven: In ’94, three TV crews came in. In ’95, 150 TV crews came in.

  Peter Thiel: It was Netscape’s IPO in August of 1995—over halfway through the decade!—that really made the larger public aware of the internet. It was an unusual IPO because Netscape wasn’t profitable at the time. They priced it at $14 a share. Then they doubled it. On the first day of trading the share price doubled again. Within five months, Netscape stock was trading at $160 a share—completely unprecedented growth for a nonprofitable company.

  Jamis MacNiven: All of a sudden, everything broke open like in The Wizard of Oz. We’d been in black-and-white and then it all turned into color, and that happened in ’95.

  Jamie Zawinski: Netscape was the poster child. We were the first big IPO. The time when the industry changed from one thing to another? That was us.

  John Couch: The money was coming too fast and furious. I started interviewing people and they started to say, “Oh, I’m going here for two years because they’re doing an IPO.” The Bill Hewletts, and the Fairchilds, and the Groves of the world had been replaced by twenty-year-olds who were not focusing on building a long legacy.

  Po Bronson: There’s an old Silicon Valley lifestyle that comes off of the old NASA base in Santa Clara that was confused by the dot-com thing, right? They built satellites and stuff and what was happening up in San Francisco just didn’t make sense to them. They were like, “What’s their technology?” They were like, “HTML? It’s not like you can build a company on that!” And so they were like, “They’re not that hard-core.”

  John Markoff: The San Francisco scene really emerged with the web.

  Tiffany Shlain: At the time there were only sixteen million people online—and a lot of them were in San Francisco making and creating this nascent medium. It was so exciting.

  Fred Davi
s: So, why did the internet get started in San Francisco? Why did that become the center of all the internet things? Because we had the talent already sitting right here, from the multimedia industry! The multimedia industry drew a lot of artists and creative types and interactive people to San Francisco. So we were already building connected multimedia applications—but we had to build them all on a CD-ROM. They all lived in a tiny, six-hundred-megabyte universe. And now, if you could take the principles of HyperCard and interconnect everything, it was like, “Wow, this is amazing. This is going to change everything.”

  Tiffany Shlain: It was so exciting.

  Jim Clark: From our going public in ’95 to the year 2000—five years in there—there was an eruption of historic proportions.

  Fred Davis: Wall Street called it “the New Economy,” and indeed it was. It was that big.

  Jeff Rothschild: I remember people used to talk about the New Economy, and the New Rules. “Those are the old rules, where you value the company based on margins and return. That stuff doesn’t apply anymore.” I think the people saying those things believed them, I really do.

  John Markoff: Silicon Valley began to move north. It began to be about software instead of hardware. It began to be about commercializing and disrupting normal business.

  Joey Anuff: It was wave after wave of fortune-chasing opportunism. And it took different shapes. There was a distinct 1995–1996 era which was much more literal. There was the Spot, which was going to be The Real World for the web. There was Amazon. They were very basic ideas, and some of them were completely inconsequential like the Spot, and some of them more world-defining like Amazon.

  John Markoff: Silicon Valley had been an insular world dominated by engineers, and now it was touching the mainstream.

  Tiffany Shlain: The first Webby awards were in March of 1996, and I started working on them the year before. I wanted to create something that was just as edgy and crazy as the web was at that time.

  John Markoff: The Webbys was doing something that was an imitation of Hollywood in Silicon Valley.

  Tiffany Shlain: That first year I brought in Cintra Wilson as the MC, and she was the one who said, “Let’s limit acceptance speeches to five words,” and I was like, “That’s a friggin’ brilliant idea!” She came out in a dominatrix outfit, and if anyone went over the five words, she would whip them.

  John Markoff: It was just so odd and off-putting to me—even though I am a judge.

  Joey Anuff: From 1997 to 1998, it got to a level where there were so many companies with so many IPOs, the idiotic rhetorical question of “If you know so much why aren’t you rich?” became overpowering at that time. “How can we make a buck off of this when every jackass is getting rich?”

  Jamis MacNiven: We had people coming in to Buck’s looking for work just so they could meet venture capitalists. We had a guy come in once, Nan Omo was his name, and he was an Eskimo who weighed about three hundred pounds and was not very tall, so he had a spherical suit on, and was walking around with a copy of the Industry Standard magazine.

  John Battelle: The Industry Standard was an idea I had at Wired. I was the editor at Wired that brought the business stories in. And in ’97 I thought it was getting really interesting, but it just seemed like Wired couldn’t contain all the stories. So I conceived of a magazine with a weekly cadence, that was part Economist, part Variety.

  Jamis MacNiven: Nan Omo was looking at pictures of venture capitalists, spying the room, seeing someone, going up and slapping down something the size of an old Manhattan phone book, saying, “This is the new Amazon, you’ve got to look at this!”

  Chris Caen: At the time everyone wanted to be the Amazon of fill-in-the-blank. “We want to be the Amazon of pets!” Pets.com!

  Jamis MacNiven: He chased Steve Jurvetson out across the parking lot. So I had to grab him and threaten to drop him in the creek if he didn’t stop. He goes, “Oh, but it’s my dream!” People came here with this big dream, and it was just off the hook.

  Chris Caen: So imagine there is more money than God, and it has no place to go, but there are a lot of cocktail napkins with things scribbled on them, and those are what are called start-ups. I’m being a little facetious but not by much. The joke used to be at the time, this being ’97 through 2000—the golden era—was basically all you had to do was stand at the corner with a cocktail napkin, and VCs would throw money at you from a passing car. I loved it.

  The dot-com scene was clustered around South Park, a seedy neighborhood park in San Francisco’s industrial South of Market district. Wired magazine had its headquarters on the park, as did many of the most notable dot-com companies.

  Steve Perlman: South Park is this small little oval-shaped park that’s largely grassy except for a few swings and a couple of picnic tables.

  Yves Béhar: I had either lived or worked on South Park since 1993. Artists and makers lived around South Park. Technical people at that time lived in Silicon Valley.

  Po Bronson: South Park felt authentic for a while—this rustic industrial corridor full of garages, corrugated-tin roll-up doors, no heat.

  Yves Béhar: Then during the dot-com boom it went from being known as Heroin Park to having Japanese tour buses driving around the loop and taking pictures.

  Steve Perlman: You couldn’t find a square foot of grass to sit on and cross your legs and eat your lunch—it was that packed.

  Yves Béhar: It was the epicenter of the dot-com boom: We had eGroups, 21st Century Internet, which was a VC firm, BigWords. We had Pets.com a block away.

  Scott Hassan: I was mostly doing eGroups at the time, and Yahoo purchased the company for $450 million, which is not bad for two or three years of work.

  Yves Béhar: All these companies were right there. People have always been looking for where the internet is—and for a little while the internet was “at” South Park.

  Po Bronson: Masses of young people who didn’t know even why they were coming were coming. There was this sense of a whole generation just showing up here, unannounced. And I wanted to tell the little people’s story, so I was doing things like staying at the airport, and in the middle of the night, at two in the morning, the flights from different countries would arrive and I would stand outside customs and I would look for people who looked like they didn’t know what they were doing, and say, “You’ve heard of Wired, right? I’m a Wired writer!” I met some people like that and I would follow these people on and off—just follow the string for a while.

  Patty Beron: Back then pretty much everyone that you met was like, “Oh, I’m in the tech industry,” or “I’m trying to get into it.” It was like, the thing. At first we would go to these boring networking events, but everybody still wanted to go because it was like, “Oh look, there’s Craig Newmark from Craigslist!” you know? Like, how exciting.

  Po Bronson: I thought I was telling this story about the little people. They’re just getting chewed up alive. They’re living on each other’s couches and they’re not having any fun, and relationships were being broken up and the parents aren’t talking to them and they can’t even get a job in this thing. And I’m telling this story and then there’s this guy Ben Chiu. He was just another naïve kid that I just found, another naïve kid from Taiwan who had no real chance. He and his six-person start-up had no chance. Then all of a sudden Ben Chiu has been bought out for $35 million. And I couldn’t fucking believe it! I was like, This really is insane!

  Ev Williams: There was a lot of talk about who was getting funded and who was doing biz-dev deals with who and then, of course, the parties and the events. What’s interesting is how that information came out, because there wasn’t any social media at all. There was a nascent blogging world being built: just a handful of hand-rolled web-logs—this was before they were called blogs.

  Biz Stone: I was reading EvHead.com, and really impressed by the guy. Totally in sync philosophically with his thinking. I was completely sold on this idea that blogging was the true democratization of i
nformation.

  Peter Thiel: Launch parties became so important that someone put together an exclusive e-mail list that published rankings of the various parties going on that day.

  Patty Beron: So I had this website, SFgirl.com, and pretty much everybody in the tech community knew about it. We listed all the dot-coms, we had community forums where people involved in start-ups would come and discuss what was happening. I don’t know who decided to start having these launch parties, but that became a thing—going to dot-com parties. The new dot-com would get all this publicity and the more extravagant their event was, the more publicity they’d get.

  Ev Williams: Every night there was a party to go to, where you could drink for free and eat for free and there would be lots of young people—half of whom were brand-new to town.

  Patty Beron: The more extravagant the event was, the more publicity they’d get: the more write-ups, the more people talking about them, like, “I heard that blah blah blah had pig races at their party,” and “This or that party had ten-foot ice sculptures and vodka luges,” and things like that. It just became a thing to one-up the last party and get attention.

  Ev Williams: I remember leaving some party with a bottle of champagne. It was like, “You’re leaving? Have a bottle of champagne!” In those days, it wasn’t a ridiculous gift…

  Jamis MacNiven: There was a guy—the name of the company was Pixelon—he raised fifteen, eighteen million dollars, had no product, went to Las Vegas, hired the Who and, I think, Kiss. He basically just threw away all the money. And put all his friends up at a hotel until the regulators came in and arrested him. It’s, like, that wasn’t unusual.

  Patty Baron: There was a party where the Barenaked Ladies played, and then we went to another party and the B-52s played.

  Max Kelly: There was a company called Icebox Studios which was doing online animation series. They did this one show called Mr. Wong, which was amazingly, psychotically offensive. This company got funded, had no revenue, had high production costs—and they still threw this huge bash. Run-DMC played! There were all these celebrities that they invited and they had a walk where photographers were out there just like a movie premiere. The whole shebang went on for, like, twelve hours.