The New New Thing: A Silicon Valley Story Read online

  The NEW NEW Thing

  The NEW NEW Thing

  A Silicon Valley Story

  Michael Lewis

  W. W. Norton & Company • New York London

  For Tabitha

  The age demanded an image

  of its accelerated grimace

  —Ezra Pound

  Contents

  Preface

  1 The Boat That Built Netscape

  2 The Accelerated Grimace

  3 The Past in a Box

  4 Disorganization Man

  5 Inventing Jim Clark

  6 The Boom and the Mast

  7 Throwing Sand in Capitalists’ Eyes

  8 The Great Brain Quake of August 9, 1995

  9 The Home of the Future?

  10 God Mode

  11 How Chickens Become Pork

  12 New New Money

  13 Cheese Sandwiches for Breakfast

  14 Could Go Either Way

  15 At Sea in the Home of the Future

  16 Chasing Ghosts

  17 The Turning Point

  18 The New New Thing

  19 The Past outside the Box

  Epilogue

  Acknowledgments

  More Praise for The New New Thing

  Preface

  This book is about a search that occurs on the frontiers of economic life. Maybe the best way to introduce it is to explain why I bothered to write it.

  In the second part of the 1990s Silicon Valley had the same center-of-the-universe feel to it as Wall Street had in the mid-1980s. There was a reason for this: it was the source of a great deal of change. Up until April 4, 1994, Silicon Valley was known as the source of a few high-tech industries, and mainly the computer industry. On April 4, 1994, Netscape was incorporated. Suddenly—as fast as that—Silicon Valley was the source of changes taking place across the society. The Internet was a Trojan horse in which technogeeks entered all sorts of markets previously inhospitable to technogeeks. Wall Street, to take just one example, was turned on its head by new companies and new technologies and new social types created just south of San Francisco. The financial success of the people at the heart of this matter was unprecedented. It made 1980s Wall Street seem like the low-stakes poker table. As yet, there is no final reckoning of the wealth the Valley has created. Hundreds of billions of dollars, certainly; perhaps even trillions. In any case, “the greatest legal creation of wealth in the history of the planet,” as one local capitalist puts it.

  The money was only part of what I found interesting. 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.

  Within this unusual place some people were clearly more unusual than others. Many of those who sought and found fortune in Silicon Valley in the 1990s could just as easily have found it on Wall Street in the 1980s or in London in the 1860s. But a certain type of person who has recently made it big in Silicon Valley could have made it big at no other time in history. He made it big because he was uniquely suited to this particular historical moment. He was built to work on the frontier of economic life when the frontier was once again up for grabs. He was designed for rapid social and technological change. He was the starter of new things.

  Oddly enough, this character at the center of one of history’s great economic booms, who, in effect, sits with the detonator between his legs, could not describe what he did for a living. When a person sets out to find the new idea or the new technology that will (a) make him rich and (b) throw entire industries into turmoil and (c) cause ordinary people to sit up and say, “My God, something just changed,” he isn’t doing science. He isn’t engaged in what any serious thinker would call thought. Unless he makes a lot of money, he isn’t even treated as a businessman, at least not by serious businessmen. He might call himself an “entrepreneur,” but that word has been debased by overuse. Really, there’s no good word for what he does. I first noticed this problem when I watched one of these people—a man who had made himself a billion dollars—try to fill in a simple questionnaire. On the line that asked him to state his occupation, he did not know what to write. There was no name for what he did. Searcher? He couldn’t very well put down that.

  For that matter, there is no name for what he’s looking for, which, typically, is a technology, or an idea, on the cusp of commercial viability. The new new thing. It’s easier to say what the new new thing is not than 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.

  The searcher for the new new thing conforms to no well-established idea of what people should do for a living. He gropes. Finding the new new thing is as much a matter of timing as of technical or financial aptitude, though both of those qualities help. The sensation that defines the search is the sweet, painful feeling that you get when you can’t think of a word that feels as if it’s right on the tip of your tongue. For most people the relief they experience upon finding it is almost physical. They sink back in their chairs and try not to stumble upon any more difficult words. The person who makes his living searching for the new new thing is not like most people, however. He does not seriously want to sink back into any chair. He needs to keep on groping. He chooses to live perpetually with that sweet tingling discomfort of not quite knowing what it is he wants to say. It’s one of the little ironies of economic progress that, while it often results in greater levels of comfort, it depends on people who prefer not to get too comfortable.

  From the start of my investigation of Silicon Valley, I knew I was trying to describe a process: how this fantastic wealth got created. It just so happened that the process was best illustrated by this character. After all, the greatest legal creation of wealth in the history of the planet came directly from the new new thing. When you asked, “How is it that an entire economy made this little leap?” you were really asking, “How is it that some person gave an entire economy a little push?” Believe it or not, there are people, inside and outside of Silicon Valley, who consider it almost their duty to find the new new thing. That person may not be entirely typical of our age. (Is anyone?) But he is, in this case, representative: a disruptive force. A catalyst for change and regeneration. He is to Silicon Valley what Silicon Valley is to America. And he has left his fingerprints all over the backside of modern life.

  What I’ve tried to write, in a roundabout way, which is the only way I could think to write it, is a character study of a man with the gift for giving a little push to Silicon Valley, and to the whole economy. To do this I had to follow him on his search. I hope the reader will, too. At any rate, I hope he or she gets a sense of what it feels like to be so oddly, and messily, engaged. Progress does not march forward like an army on parade; it crawls on its belly like a guerrilla. The important events in capitalism no longer occur mainly in oak-paneled offices, if indeed they ever did. They can happen in the least likely of places. On a boat in the middle of the Atlantic
Ocean, for instance.

  As it turned out, the main character of this story had a structure to his life. He might not care to acknowledge it, but it was there all the same. It was the structure of an old-fashioned adventure story. His mere presence on a scene inspired the question that propels every adventure story forward: What will happen next? I had no idea. And neither, really, did he.

  The NEW NEW Thing

  1

  The Boat That Built Netscape

  The original plan, which Lord knows didn’t mean very much when that plan had been made by Jim Clark, was that we would test the boat quickly in the North Sea and then sail it across the Atlantic Ocean. If nothing went too badly wrong, it would take us six days to sail down to the Canary Islands and another ten to the Caribbean. I had seen Clark in so many different situations that I felt sure I knew him, and the range of behavior he was capable of. But there is nothing like sixteen days on the high seas with a small group of people who have a lot of doubts about each other to test one’s assumptions about human character. On the Atlantic crossing Hyperion would carry only the captain and his seven crew members, one or two computer programmers, Clark and me.

  Why Jim Clark was so worthy of study was another matter, and I’ll come to that soon enough. For now I’ll just say that the quirks in the man’s character sent the most fantastic ripples through the world around him. Often starting with the best intentions, or no intentions at all, he turned people’s lives upside down and subjected them to the most vicious force a human being can be subjected to, change. Oddly enough, he was forever claiming that what he really wanted to do was put up his feet and relax. He could not do this for more than a minute. Once he’d put up his feet, his mind would spin and his face would redden and he’d be disturbed all over again. He’d thought of something or someone in the world that needed to be changed. His new boat was a case in point.

  For all I knew, Clark would be remembered chiefly as the guy who created Netscape and triggered the Internet boom, which in turn triggered one of the most astonishing grabfests in the history of capitalism. Maybe somewhere in a footnote it would be mentioned that he came from nothing, grew up poor, dropped out of high school, and made himself three or four billion dollars. It might even be said that he had a nose for the new new thing. But to my way of thinking these were only surface details, the least interesting things about him. After all, a lot of people these days have a billion dollars. Four hundred and sixty-five, according to the July 1999 issue of Forbes magazine. And most of them are no more interesting than you or me. You have to trust me on this.

  Along the stretch of canal outside of Amsterdam where the water is deepest, the swollen tankers and stout tugs come to rest. Neither the driver nor I had the slightest idea where in this stand of massive industrial ships one might park a pleasure boat. It was not a place anyone would normally come for fun. The driver finally turned around and asked me exactly what I was looking for, and I told him I was looking for the sailboat that would take me out to sea. He laughed, but in the way people do who want to prove they get the joke. The Dutch do this a lot. They appear to live in terror of being mistaken for Germans, and to compensate by finding a funny side to life where none exists. Tell a Dutchman that your dog just died, and he will pretend that you have just made some impossibly witty remark. This is what the driver did when I told him I was about to go sailing in the North Sea. It was early December, the winds were up around thirty-five miles an hour, and the North Sea—well, the North Sea in winter is not the place to be in any kind of sailboat. The driver roared in the most un-Germanly fashion. “Yachting!” he said, and burst out laughing again, far too loudly, as if he had seen me my one joke and raised me another. “Yes,” I said, which only brought forth more peals.

  The great mast rescued us. One moment we were lost; the next we turned a corner and spotted on the horizon the tall, rigid white rod. Its brightly colored pennants flew in relief against the gray sky, and its five spreaders reached up into the clouds like a chain of receding crucifixes. They beckoned everyone within five miles to drop his jaw in wonder. It was then that the driver finally stopped laughing. “Yacht,” after all, is a Dutch word.

  Three minutes later we drove onto the dock up near the low white sailboat, next to the name painted in blue cursive on the side: Hyperion. You could tell the driver knew at least a bit about sailboats because he immediately called the boat a “sloop.” A sloop is a sailboat with one mast, to distinguish it from a sailboat with two masts, called a “ketch.” “How long is this sloop?” he asked me. “One hundred and fifty-five and a half feet,” I said. “That is the biggest sloop I have ever heard of,” he said. I said that that was because it was the biggest sloop ever built. His eyes moved from the hull to the mast, and from the mast to the boom, and from the boom to the sails, which, unfurled, would cover a football field. “How many men are needed to handle the sails?” he asked. “None,” I said, “at least in theory.”

  The Dutchman laughed again, but nervously, as if deciding whether it was better to be mistaken for a German or a fool. It wasn’t until I told him that the boat did not exactly require a crew, that it could be completely controlled by a computer, that conviction returned to his laughter. The whole thing, after all, had been some foreigner’s idea of a joke.

  When I arrived that morning of the first North Sea trial, Wolter Huisman was standing on the deck beneath the mast. Wolter owned the boatyard that had built Hyperion. Wet snow dribbled from his rain gear, and his woolen cap drooped around his ears. His chin sunk glumly into his dark tattered parka, and his old Dutch shoulders sagged like a commuter’s at the end of a long day. He seemed to be melting. Coming up from behind, I caught him muttering to himself. Later I learned that Wolter hadn’t slept. He’d stared at the ceiling all night, worrying.

  “What’s the worst weather you ever tested a sailboat in?” I asked him.

  “Dis wedder,” he replied. Then he sighed and said, at once apropos of nothing and everything, “When Yim wants something, Yim gets it.”

  In his pessimism Wolter had found a strategy for getting through this life and onto a new and better one: so long as he insisted to himself that tomorrow would be worse than today, it did not matter as much if it was. He still had the Dutch habit of laughing at whatever you told him, just in case it happened to be a joke. But his laugh was harsh and unhappy. Wolter was pushing seventy, and his heart was old and weak, but this gloom of his was young and vital. Who could blame him? His fate was now intertwined with Hyperion’s. And Hyperion was at this very moment the most spectacular maritime disaster waiting to happen since the launching of the Titanic.

  Of course, every new yacht that left the Huisman Shipyard was, so far as Wolter was concerned, an accident waiting to happen. It had taken Wolter, and his father before him, and his father’s father before him, decades to build their reputation as perhaps the world’s finest makers of yachts. Each time Wolter launched a new yacht, that reputation went up for grabs. But this was different. This was new.

  “Where is he?” I asked.

  “Behind duh computer,” said Wolter. Pause. “When Yim sits behind duh computer, he is not any more in dis world.”

  That was true. He was creating a new one.

  On that bitterly cold December morning Hyperion left its moorings so silently that the programmers didn’t notice. The programmers were three young men Jim Clark had flown over from Silicon Valley to the North Sea to help him turn his new yacht into a giant floating computer. Technogeeks. Each was in his early thirties, each possessed a wardrobe that appeared to consist of nothing but T-shirts and blue jeans, and each was a former employee of Clark’s first technology start-up, Silicon Graphics. They clambered up on deck from below, where they had been typing away on their keyboards, to see what they’d wrought. It was as if they hadn’t quite believed that Hyperion would float.

  The bridge was a technogeek fantasy. Where an experienced sailor would expect to find a familiar row of gadgets—radar, sonar, radio
, GPS, and so on—were four large flat-panel computer display screens. The three young men took seats in front of these and started pressing buttons. Soon enough they were making small quivering sounds that suggested all was not right with the computers. On one of the screens was a map of Holland. The map focused on the area immediately around us, perhaps twenty square miles. A miniature Hyperion inched stealthily across it, like a boat in a video game. But according to the computer map we were chugging on top of a farmer’s field, and heading toward an airfield. The slender canal we were actually on lay three miles to the east. Any captain using the computer to run the boat would think he was heading full tilt into an aircraft watchtower.

  I walked out onto the deck to find that the same map occupied the computer screen in front of Allan Prior, the man Clark had hired to captain Hyperion. Allan was from the old school. He’d won the Whitbread around-the-world race in a sailboat so stripped down that it looked vandalized. Allan himself looked vandalized; the wind and the sun had ravaged his complexion. Allan did not believe that sailboats should be run by computers. Now he was staring straight ahead, attempting to avoid a large ferry that was making a dash across the canal. “Don’t bother me with that,” he said when I asked him why his boat was in the middle of a wheat field. “That’s a computer problem.” Clearly, he was in no mood to consider the undeniable fact that his entire boat was a computer problem.

  I returned to the programmers on the bridge. After a couple of minutes of furious typing, they had the boat back on the water. Yet the head programmer, a fellow named Steve Hague, retained a certain dubiousness. His eyes darted back and forth between the edge of the canal and the map on which Hyperion chugged along. All of the computer’s gauges seemed to be either inadequate or inaccurate. A captain steering off them—which Allan Prior at that moment declined to do—would not only think that he was sailing through a wheat field. He’d think he was sailing through a wheat field in the wrong direction. For no apparent reason a red light flashed on one of the screens. It said, DANGER, DANGER, DANGER.