“The New New Thing” by Michael Lewis

newnew

I really do think, and not just because I happen to be writing a book about it, that the business of creating and foisting new technology upon others that goes on in Silicon Valley is near the core of the American experience. The United States obviously occupies a strange place in the world. It is the capital of innovation, of material prosperity, of a certain kind of energy, of certain kinds of freedom, and of transience. Silicon Valley is to the United States what the United States is to the rest of the world. It is one of those places, unlike the Metropolitan Museum of Art, but like Las Vegas, that are unimaginable anywhere but in the United States. It is distinctively us.

This snapshot of late-1990s Silicon Valley is interesting because it’s so far removed from today. Think about what has changed: Google wasn’t started until 1998, Apple was floundering, and Microsoft ruled software; all while cell phones were novelties that could barely even function as phones.The ‘new new thing’ has since been fawned over and discarded a hundred times.

The main character here is Jim Clark, a name the public has forgotten who made billions from taking the Netscape browser public on the stock market. From reading this, I’m certain than he did a lot to push technologies from Netflix to GPS navigation from fanciful to commonplace. His gusto prompted gigantic tech companies to pour billions of dollars into these innovations that were terrible failures for their first dozen iterations.

Michael Lewis’ musings on untrammeled ambition and the ceaseless desire for New and More that technologists foist upon the world are not to be missed.

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Highlights

The new new thing. It’s easier to say what the new new thing is not that to say what it is. It is not necessarily a new invention. It is not even necessarily a new idea–most everything has been considered by someone, at some point. The new new thing is a notion that is poised to be taken seriously in the marketplace. It’s the idea that is a tiny push away from general acceptance and, when it gets that push, will change the world.

It’s one of the little ironies of economic progress that, while it often results in greater levels of discomfort, it depends on people who prefer not to get too comfortable.

The overwhelming impression made by Silicon Valley at a distance of three thousand feet is one of newness. The houses are new, the grass is new, even the people are new. And not merely new: designed to never grow old. With the exception of Stanford University no structure on the horizon had been built to any longer than it took some engineer to think up a good excuse to tear it down.Everything in Silicon Valley, including the people, was built so that no one would find it tragic, or even a little bit sad, when it was destroyed and replaced by something new. It was one great nostalgia-prevention device. It ensured that the greatest wealth-producing machine in world history was never gummed up by pointless emotions.

A stunning ignorance of mass tastes was a common problem in high technology. When a brilliant engineer dreamed up a product, he tended to build the sort of things only a brilliant engineer would appreciate. Typically, he overestimated the average person’s willingness to learn how to use some new machine and underestimated the cost of making the machine. When you page through the history of computing, you find a lot of very weird examples of just this. In a warehouse behind the Computer Museum just north of San Jose, for instance, stands a gleaming red four-feet-high computer built by Honeywell in the mid-1960s. The kitchen Computer, it was called. The Organizational Man’s housewife was meant to program her recipes into it. “If only she could cook as well as Honeywell can compute,” read the ad in the Neiman Marcus catalog. The computer was premised on the dubious assumptions that every American housewife would (a) want a massive computer in her kitchen and (b) know how to program it. Neiman Marcus failed to sell a single unit.

It’s a good rule of the technology business that the more intellectually appealing a machine, the less likely anyone will pay for it.

On April 1, 1994, Clark told Mueller for the last time that he would not be permitted to invest in Netscape. Mueller was calling from his sailboat, off Cabo San Lucas. He pleased with Clark one last time, and Clark rebuffed him. On April 4, 1994, the day Netscape was incorporated, Mueller picked up a gun and shot himself through the head. He died instantly.

It took a while for people who thought they knew Glenn Mueller to find an explanation that put their minds at rest. Mueller’s wife let his colleagues know what they had not known, that he suffered from intense fear that people were out to destroy his business. In other words, he suffered from an extreme version of a mental disorder that many Silicon Valley tycoons prided themselves on, paranoia. The genealogy chart of Silicon Valley companies that decorated the walls of every office (Shockley  spawned Fairchild, Fairchild spawned Intel, Intel spawned…) was a cheery place on a violent truth. The new companies often put the old ones out of business; the young were forever eating the old. The whole of the Valley was a sped-up Oedipal drama. In this drama technology played a very clear role. It was a murder weapon.

In the frenzy that followed, a lot of the old rules of capitalism were suspended. For instance, it had long been a rule of thumb with the Silicon Valley venture capitalists that they didn’t peddle a new technology company to the investing public until it had had at least four profitable quarters. Netscape had nothing to show investors but massive losses. But its fabulous stock market success created a precedent. No longer did you need to show profits; you needed to show rapid growth. Having a past actually counted against a company, for a past was a record and a record was a sign of a company’s limitations. Never mind that you weren’t actually making money–there’d be time for that later, assuming someone eventually figured out how to make money from the Internet. For the moment you needed to plow all of your revenues back into growth. You had to show that you were the company not of the present but of the future. The most appealing companies became those in a state of pure possibility.

“Technically the Netscape browser was not much of an accomplishment at all,” Kittu says. It did not belong on the same page with what he and Pavan and the others had achieved in Orlando. Kittu could rattle off all the technologies brought together to create the world’s first interactive television: 3-D graphics, 2-D graphics, ATM, frequency modulation, IMP1, IMPEG2, switching, infrared, a blizzard of baffling terms that leaves the outsider with the clear opinion he does not want to know any more than he needs to. “We got all wrapped up in the technology,” Kittu says. “We all thought, ‘Damnit this technology is so cool. It must bring so much value to someone.

This puts a fine point on a painful truth: the purpose of that technology was to make money. The higher purpose of the interactive television was to facilitate the stupor of the guy on the couch with the beer in one hand and the remote control in the other–which is to say that it had no higher purpose. Its lack of any higher purpose made its ultimate failure even more absurd. “ITV was, from a technical standout, as challenging as putting a man on the moon,” says Kittu, “and in the end, it was one great academic exercise. A waste of fucking time.”

The first and most obvious change was the miracle in the U.S. stock market. From the launching of Netscape to the launching of Hyperion the Dow Jones industrial average ran up more than 5,000 points. More to the point, the Nasdaq stock exchange, which listed most new technology companies, quadrupled. The market paid people a great deal of money for technology companies that made only losses. The American public decided that it was willing to take a flying leap on whatever Jim Clark, and entrepreneurs like him, were willing to take a flying leap on, at ten times the price.

“Silicon Valley has more in common with Hollywood than it does with Detroit,” says Vern Anderson, the first CEO of Silicon Graphics and thus the first captain of the first ship built by Jim Clark. “The venture capitalists are the studios. The managers are the directors. The ordinary engineers are the writers. And the entrepreneurs are the stars.”

A bright line ran through the programmers’ world, and it divided the air between Lance and Steve. On one side of the line were the aesthetes who took pleasure in the computer’s complexity, and spent a great deal of time writing deliciously elaborate programs that caused others to exclaim “cool!” when they saw it but often has no economic purpose. On the other side of the line were the utilitarians. They were interested only in the computer’s crude and brutish ability to impose its will on the world around it.

Clark liked to say that human beings, when they took risks, fell into one of two types, pigs or chickens. “The difference between these two kinds of people,” he’d say, “is the difference between  the pig and the chicken in the ham-and-eggs breakfast. The chicken is interested, the pig is committed. If you are going to do anything worth doing, you need a lot of pigs.”

The Internet formula for success turned traditional capitalism on its head. Traditionally a company persuaded people to invest in it by making profits. Now it persuaded people to invest in it first, and hoped the profits would follow.

When you sat back and looked at it, you saw that a single assumption underpinned the entire boom: the future would be better than the past.

Clark said that Netscape “made anarchy respectable.” Late at night, when no one else was around, he must have wondered how long the odd sentiment could survive in corporate America. Institutions loathe disorder. They seek to socialize forces of anarchy. It’s one of the many internal contradictions that have failed to collapse capitalism: wealth generation is suppressed by those who are supposedly most interested in wealth. Rapid technological investment threatens people who already have power, even when those people are technologists. This simple fact creates a certain internal tension in putatively high-technology corporations. While promoting change, big established companies also wish for change to occur slowly enough that it does not overwhelm them. Netscape was so threatening to the established order because it suggested change could happen outside of that order, as fast a people like Jim Clark could make it happen, without regard to the establishment.

To run on the world’s five hundred million or so personal computers, Netscape’s browser needed to be compatible with the latest release of Microsoft Windows–at that time Windows 95. Anyone who wished to write software for the personal computer obviously had to make sure that it was compatible with Windows. Netscape, like every other software company, needed Microsoft to release early versions of something called “the APIs” for Windows. API stood for application programming interface, a typically incomprehensible piece of geekspeak. An API was a kind of keyhole into Windows. To create keys that fit, Netscape needed to know the shapes of the holes. Microsoft’s programmers routinely provided these to programmers who created software that didn’t threaten Microsoft.

To get onto the Internet, at least for the moment, you had to go through a personal computer. And the personal computer had a single point of entry–the first window that popped up on the computer screen after a user had logged on. To get to any software inside the computer the user had to pass through that window. Since Microsoft controlled that window, it controlled everything on the other side of it, too. This sort of power was not unique to the computer industry–the railroad industry had some of the same monopolistic tendencies.

An American court of laws is in many ways un-American. In our everyday lives we Americans celebrate the subversion of the social order; everywhere a visitor to our country looks he will find a poor American boy trying to make good, usually with the encouragement of his society. An American courtroom is designed first and foremost to preserve the social order, to keep the poor boy down. The judge sits on a raised dais from which he can condescend to the lawyers, the lawyers stand up so that they may condescend to the seated witness, and the witness, though he may have no one whom he can plausibly condescend other than perhaps the curiosity seekers on the hard benches at the back of the room, at least has the comfort of his upholstered chair. If anyone dares to step the slightest bit out of line, a large man emerges from the back to shout, “Order in the court!” If the judge decides he needs to relieve himself, the large man appears again to shout, “All rise!” And everyone in the room stands and waits stupidly until the judge has ambled off to pee. There is not a “please” or a “thank you” or a “by your leave” in any of this. Our democracy’s system of justice is a feudal society in miniature.

Why do people perpetually create for themselves the condition for their own dissatisfaction? Listening to Clark talk about how much money he needed to make was like watching the racing dog who had the wit to grab hold of the remote device that controls the mechanical rabbit. Rather than slow it down, however, he speeds it up. Clark played these little tricks on himself so that he would have an excuse, however flimsy, to keep running as fast as he could. It was the same way with his resentments. He treated those he did not like who had more money than he did. They were all motives. Plainview, the Navy, Glenn Mueller, Ed McCracken, various venture capitalists: he needed people or places to doubt him so that he could prove them wrong.

Like all good photographers, Louie clearly had a talent for turning up where he wasn’t wanted, and remaining inconspicuous.

With computer people, the appearance of inaction masks the drama of their thoughts. They were maybe the first tyrants to attempt to conqueror the world logically.

 

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