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by Margaret O'Mara


  As both of the major American political parties embarked on projects of reinvention—the Republicans triumphantly waving the flag of entrepreneurship and free enterprise, the Democrats scrambling to redefine their party for a postindustrial age—they found the future-tense allure of the Valley irresistible. America’s political class wanted to write themselves into Silicon Valley’s story, and make its California dream a model of where the nation might go next.

  Yet the Valley was still small, still young, still feeling out its identity. It was unparalleled in its ability to produce tech companies, but not much else. Its denizens were outliers: engineers with many letters trailing their names, who’d spent lifetimes obsessively working on things that very few people cared about or understood. Success had come from the sharp-elbowed, inwardly-focused pursuit of building better products faster than the guy down the hall or down the street. The Valley wasn’t ready to be a model for the rest of the world. “If this area has that much influence on our ideologies and our philosophies and our way of life,” one resident remarked as Election Day 1980 neared, “God help us.”2

  ATARI DEMOCRATS

  The same August that Apple fever seized Wall Street, pinstriped stockbrokers flipping through The Wall Street Journal on the morning commuter train would have encountered a front-page article about Colorado Democrat Gary Hart, who was running for reelection to a second term in the U.S. Senate. Hart was an odd cover boy for the conservative paper, as he had burst onto the scene as campaign manager for the most liberal presidential nominee in modern memory, George McGovern. Yet as the Journal explained, the Colorado senator was no bleeding-heart liberal. Nor was he a populist/centrist like Carter. He was a new kind of Democrat: one of the huge wave of “Watergate babies” elected in the wake of Nixon’s resignation, who tended to be younger, more suburban and Western, and single-minded about changing a broken political system.3

  Many, like Hart, represented places with thriving electronics industries. Senator Paul Tsongas was the son of a Greek-American grocer from Lowell, Massachusetts, who had seen how much high-tech enterprises had revived his hometown economy after Wang moved its headquarters there a few years before. Once rated a “perfect liberal,” Tsongas believed his party was increasingly out of step with an economy that ran on specialized skills instead of union power. The future lay neither with hard-nosed conservatism nor traditional liberalism, but a middle ground of “free market forces softened by compassion.” Congressman Tim Wirth was another of the new breed. A telegenic and outdoorsy Coloradan with the vibe of someone who’d embark on a miles-long mountain hike at the drop of a hat, Wirth had made a name for himself by crusading for alternative energy and the breakup of AT&T. He was sharply observant, unafraid to talk out of school, and a reliably quotable source for Washington reporters.4

  Then there was the young legislator of chiseled jaw and resolute demeanor, Albert Gore Jr. of Tennessee. While not from a high-tech district, Gore was both a passionate environmentalist and an unabashed Toffler-style futurist. A long-range thinker stuck in a relentlessly right-now political world, Gore organized a “Congressional Clearinghouse on the Future” that met for monthly brown-bag seminars to learn about mind-stretching topics like cloning, climate change, and computer networking. The group was bipartisan: joining Gore in the room was another Toffler enthusiast and fan of very big ideas, Georgia Republican Newt Gingrich.5

  The new wave took over state capitals as well. A bushy-haired former McGovern campaign worker named Bill Clinton became Arkansas governor at age thirty-two, in 1978. Another youthful lawyer, Bruce Babbitt, became governor of Arizona. Some started out as centrists; others moved right amid the new mood. The fierce anti-tax sentiment of 1978 swept out of office Massachusetts’ liberal young governor, Michael Dukakis, replacing him with a more business-friendly Democrat, Edward King. (King was so conservative that Ronald Reagan praised him as “my favorite Democratic governor.” He later became a Republican.) A chastened and distinctly more centrist Dukakis beat King in 1982 to return to office. A similar thing happened to the Arkansan: knocked out by a Republican after one term in the Governor’s Mansion, he won his old job back after a move to the political center. It also involved acquiescence to the state’s traditionalism: Hillary, his wife and partner in politics, changed her last name from Rodham to Clinton.6

  High technology hadn’t been on the minds of these men when they entered politics. These were the kids who ran the student council instead of building radio sets in their basements. But they, too, had been transformed by the 1960s, giving them a similar change-the-world sensibility. Lee Felsenstein and Liza Loop had bucked the establishment; these men had decided to change it from within. The group’s collective enthusiasm for the high-tech sector eventually prompted the Washington press corps to bestow a sardonic moniker: “Atari Democrats.” Those so named didn’t like it much. “We prefer Apple Democrats,” Wirth remarked wryly. “It sounds more American.” But once the pundits got going, it was a hard label to shake.7

  Although the rumor mill buzzed with speculation about which one of these ambitious young leaders might run for president, only California Governor Jerry Brown had been feckless enough to jump his place in line and bid for the 1980 Democratic nomination. Although Brown’s celebrity ties were stronger in Hollywood than in Silicon Valley—his high-glamour posse included Warren Beatty and Francis Ford Coppola—he eagerly hitched his campaign to the industry’s rising star, arguing that the nation’s “reindustrialization” hinged on what places like the Valley were selling.8

  Brown’s White House bid proved flailing and short. His exit was cemented by a speech televised live from the steps of the Wisconsin State Capitol, directed by Coppola himself. Only two weeks away from winning the Best Picture Oscar for Apocalypse Now, the director got inventive. He placed Brown before a blue screen, projecting a background of bold images intended to echo the governor’s futurist agenda. But the chroma-key technology didn’t work, and on television it looked as if Brown’s disembodied head was floating before the photos in the background. The subzero temperatures, a pot-toasted crowd, and Brown’s awkward delivery compounded the damage. The weird display was one of the most disastrously staged speeches in American political history—a high-tech candidate sunk by fickle electronics. Political reporters gleefully labeled it “Apocalypse Brown.”9

  * * *

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  Democrats may have talked a good high-tech game, but it was the Republicans who had the electoral edge in Silicon Valley in 1980. The Valley felt the same as voters elsewhere: Carter had been a disappointment, and it was time for a change. Regis McKenna was a lifelong Democrat, but he worried deeply about the future. “I don’t believe that the present administration understands economics,” he admitted ruefully.10

  Reagan’s courting of the Religious Right turned off many in the laid-back Bay Area, and the way he’d slashed public higher education spending when California governor hadn’t gained him many fans in the brainy confines around Stanford and Berkeley. Yet here was a candidate who sounded like he’d deliver all the tax cuts and regulatory reforms they’d been wanting for years. Dave Packard, who pointedly had endorsed Gerald Ford instead of Reagan in the 1976 race, joined a high-profile group of corporate leaders who were raising millions for Reagan in 1980. As their political capo stepped up, normally reticent Valley types went on the record to commend Reagan’s “clearer grasp of how to effectively stimulate the productive forces in our economy.” By the eve of the election, Jerry Sanders was getting straight to the point, telling his chip-making colleagues: “I would like to make an unabashed appeal for all of you to vote Republican!”11

  It really shouldn’t have been much of a surprise. For all the hype around the countercultural personal-computer crowd, Silicon Valley remained in the hands of patriotic midcentury men who’d grown rich in the Cold War economy. The Midwest-born movie star who rode horses and cleared brush on his ranch became the perfect candidate for a
group of California transplants and self-made millionaires who liked to think of themselves as cowboy capitalists. The tech industry’s late-1970s adventures in Washington lobbying had only reinforced its conviction that government bureaucrats were bad for business, and deepened its faith in supply-side economics.

  Plus, many people simply sat politics out. By and large, the next-generation newcomers of the personal-computer industry were too busy building things in 1980 to pay much attention to the political world, even as it paid increasing attention to them. “I’ve never voted for a presidential candidate,” Steve Jobs admitted a few years later, without a speck of embarrassment. “I’ve never voted in my whole life.” InfoWorld’s election-season commentary was limited to a single editorial cartoon. “I was going to keep track of all the candidates’ significant statements,” one man remarked to another as they stood in front of a computer terminal, “but there’s no way to process an empty disk.”12

  FREE-MARKET REPUBLICANS

  November 4 was a glorious Election Day for the Republican Party. Not only did Reagan have his landslide victory, but the U.S. Senate swung to Republican control for the first time in three decades. The next day, Wall Street had its busiest trading day in history, with more than 84 million shares bought and sold. Defense contractors could barely contain their enthusiasm. “I fixed myself a vodka martini and woke up the next morning with a fat head,” confessed an executive at Southern California–based Rockwell International, whose recently cancelled contract for a multimillion-dollar bomber jet would be restored by Reagan. The win, proclaimed an ebullient U.S. Chamber of Commerce head Richard Lesher, was “the end of a forty-year period of economic liberalism where you would turn to the government bureaucracy to get results.”13

  The new Democratic generation agreed. “The New Deal died Tuesday,” declared Paul Tsongas. “The old Democratic slogans and solutions aren’t selling any more,” said Gary Hart. “Traditional liberalism, the old pragmatic approach, is not marketable, at least in this period of time.”14

  The election of Ronald Reagan turned Washington, D.C.’s slow-brewing affection for entrepreneurs into a passionate love affair. These were Reagan’s people: some of his earliest fundraisers and advocates as he entered politics in the 1960s had been self-made Southern California moguls like conglomerate king Justin Dart and nursing-home millionaire Charles Wick. Small-business people squeezed by inflation and government regulations had supported the tax-cutting, government-shrinking Reagan with zeal. In contrast, buttoned-down corporate America had thrown its lot in with nearly every other Republican candidate until it was clear that Reagan would become the nominee.

  While Reagan’s White House aggressively courted business support in general, his staff and supporters talked nearly nonstop about the entrepreneur as a special case, an example of a higher and better form of American capitalism, and a model for a better kind of government. “The goal of the entrepreneur is to be successful,” declared Wick. “He’s a risk taker.” The country is “just a giant business. Other people who have run the country—social scientists—have never had to meet a payroll.” It made sense for the White House to do all it could to support, and learn from, entrepreneurs.15

  High-tech leaders weren’t the same breed as the Darts or the Wicks, nor did they have much in common with Main Street shopkeepers, but Reagan paid little heed to those distinctions. “Entrepreneur” was a loose and expansive category for the Great Communicator, and a potent rhetorical strategy to advance his agenda. The entrepreneur was at the center of his idealistic framing of what America once was, and what it would again become. Americans were starting their own businesses in record numbers, and the new president was here to support it. “Two centuries ago in this country,” Reagan proclaimed, “small business owners . . . rebelled against excessive taxation and government interference and helped found this nation.” Now it was time for “another revolution” against red tape and high taxes, the president continued, to support the imaginative risk-takers of the new generation. A few years later, Reagan would declare that America had entered “the age of the entrepreneur.”16

  The message hit a chord with voters. Starting your own thing was risky, but it could put a person back in control after a decade of economic unpredictability. “It is you,” enthused one Boston business owner, “who has your finger on the pulse of everything.” Business no longer meant just pinstripes and briefcases; it no longer meant selling out to The Man. “Entrepreneurs are the rock stars of business,” quipped Ben Rosen from his new venture-capitalist perch.17

  High-tech lobbying groups seized the moment. The American Electronics Association had morphed from a dusty Palo Alto field office into a K Street force, its membership stretching from coast to coast, 1,600 companies strong. Chief lobbyist Ken Hagerty became a master of what he liked to call “grassroots lobbying,” sending a regular stream of CEOs to Washington to testify personally before Congress. “Their experience,” Hagerty boasted, “is something no smooth-talking Washington lobbyist can duplicate.”18

  Then there were the venture capitalists. Reagan promised more tax cuts; the VCs wanted to see him go one step further, and make the tax disappear. “Capital is seed corn,” proclaimed the NVCA’s then president, swashbuckling Valley venture capitalist Tom Perkins. “Capital should not be taxed.”19

  Yet the new “entrepreneur lobby” consisted of men from the earlier generation: the bankers and electronics manufacturers and established venture capitalists. They were the Burt McMurtrys and the David Morgenthalers and the Ed Zschaus; they’d been around for a while and believed in working within the system rather than blowing it up.

  Meanwhile, the part of the industry that was a chief catalyst for all this political hyperventilation—personal-computer hardware and software makers—continued to mostly ignore Washington. Read InfoWorld; go to one of Dyson’s or Rosen’s PC conferences; walk into the Wagon Wheel or The Oasis: you’d hear plenty of talk of new chip designs and user interfaces and operating systems and video games. But you wouldn’t hear much about politics. And that seemed to suit the new generation just fine.

  NERDS’ PARADISE

  The swiftness with which the personal-computer market grew was truly remarkable. In 1980, Americans bought 724,000 computers from a couple of dozen computer makers. Two years later, in 1982, the market had ballooned to 2.8 million units, manufactured by more than 100 companies. In the 1981–82 school year, 16 percent of American schools had a microcomputer. That figure more than doubled, to 37 percent, the following year. Mainframes and minicomputers still moved more product and had bigger sales revenues, but the distinctly different thing about personal computers was that they were personal—the majority of Americans encountered these machines nearly on a daily basis, whether at home, at work, or at school. And all those sales meant lots of profit, much of it flowing into one ten-by-twenty-mile patch of Northern California.20

  As the personal-computer boom created millionaires by the minute, journalists descended on the Valley to document its nerdy ruling class with anthropological exactitude. “Low, tasteful, glass-and-concrete buildings are sprinkled among the brown hills, like some enormous landscaped junior college,” reported Esquire. “No smokestacks, no railroad sidings, no noise, only ‘the world’s most beautiful freeway’ and high-tech industries with sales in the billions.” Some looked upon the same panorama with barely disguised horror. Gazing at the beige tilt-ups and bland shopping centers, British architectural critic Reyner Banham saw rapacious Reaganite capitalism meeting hippie-Californian earnestness, a strange kingdom ruled by “keen, thrusting, socially responsible, ecologically aware Porsche-driving PhDs.”21

  Even middlebrow American publications could not resist getting in some digs amid the general praise. “Driving through Silicon Valley, I am flanked by a monotone sprawl of low rectangular buildings, on which corporate nameplates display fusions of high-technology words that give few clues to what goes on inside,” wrot
e the correspondent from National Geographic. Hovering over it all in this intensely car-dependent place was an “opaque veil of pink-brown smog.” Outsiders responded to the Valley with the same mix of fascination and fear Americans had displayed about computers since the days of the electronic brain. No matter how alien, how relentlessly geeky, how drearily flat and full of freeways, Silicon Valley was still a marvel—a place with unmatched capacity to pump out one innovation after another, and fistfuls of dollars along with them.22

  The personal-computer years sent what one engineer called the Valley’s “predatory Calvinistic ethos” into overdrive. Eighty-hour weeks were the norm; utter immersion in work was a badge of honor. When your industry’s poster boys were Bill Gates and Steve Jobs, it seemed normal that success should entail surrender of a personal life, regular bathing, and even purchasing proper living-room furniture. Workaholism had become endemic to late-twentieth-century American capitalism. In the personal-computer business, however, it gained additional punch because it rested on a total-immersion hacker culture that was about putting all else to one side to build a motherboard or write the perfect string of code. “Having friends,” as one Apple engineer put it, “is orthogonal to designing computers.”23

  But the race to work the hardest wasn’t mere vanity. Just as in the semiconductor industry fifteen years earlier, the pace of technological change was breathtaking. Companies had to sustain a punishing pace in order to keep their product lines from sinking into obsolescence. As always, a veneer of California casual encased staggeringly high expectations for every worker, who labored under the knowledge that they could be exiled from tech paradise at a moment’s notice. “The goal is not utopia,” observed one columnist in Esquire, “it is profits.”

 

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