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Americans like to tell the story of the early microcomputer industry in Silicon Valley as a history of invention. At its most facile, this manifests itself in stories of individual iconic businessman geniuses: David Packard, Gordon Moore and Robert Noyce, Steves Jobs and Wozniak, Bill Gates and Paul Allen. Even if they may not have been the best engineers or programmers in the region—only a couple of them were even in that conversation—they were visionaries who saw the future in advance. The true path of invention is rarely clean or simple, but when scientific credit fails to align with net worth, the second trumps the first in public memory. After all, crediting inventors is notoriously difficult; every innovation building on the last, every inventor inextricably embedded in a series of communities. Two or more often alight on the same idea at the same time. Money provides a sort of scoreboard, an equivalent by which we can compare the otherwise incomparable. Steve Jobs goes on the THINK DIFFERENT poster, just as Leland Stanford stars in the Southern Pacific’s celebratory painting. Judah and Wozniak go down in history as the brains behind their operations, and the workers who built the tracks and assembled the chips are background figures at best.
Like a not inconsiderable number of other people, Bill Gates was in the right place at the right time to write an operating system for the first generation of personal computers. That he did not write one of them isn’t surprising, since a lot of other people didn’t, either. What distinguishes Gates is that, unlike everyone else, he came to own the legal rights to PC-DOS. Why him, and how? The “Open Letter to Hobbyists” helps explain. It’s a landmark assertion of property rights within the community: It attempts to draw a thick line between the hobbyist era and the microcomputer industry, and it’s characteristic of the way Gates made his billions with Microsoft. The Homebrew pirates saw computer science as essentially a public domain, and in the 1970s, in a descriptive sense, they were right. Public dollars paid for almost all the computing power in the country, even when the computers were technically privately owned. The hackers could point to Gates’s use of the ARPA PDP at Harvard not only because they had experience pulling the same con, using official processors after hours for personal projects, but also because there were only so many computers he could have used to write the BASIC interpreter. They all learned to code on publicly financed Big Science machines, whether at universities, at commercial defense contractors, or in the military itself. With a draft on, where exactly individuals fit in this complex wasn’t usually up to them anyway. The knowledge products of that work, like BASIC, belonged to the people. It was acceptable to use the knowledge to make products and sell them—hobbyists were always first in line to buy, too—but to fence off an important set of instructions and start charging monopoly rents for them was an audacious move. [...]
Unheard-of sums flowed through these men; what did Gates and Jobs represent to the money they attracted? The Xerox PARC visit infused Apple’s Mac with years of prized research and development, and they didn’t do it because they liked the boss—Jobs literally stunk up the place—or even for the opportunity to invest. Contracting with Apple was a way to solve the problem of the company’s labor costs, secured by the firm’s workers during the previous decades, when big business, big government, and big labor collaborated to split the proceeds of racing growth. Apple combined great branding with the worst of Silicon Valley’s labor practices. Journalist Michael Malone, fellow son of the Bay Area space settlers, described the hypocrisy: “While the company propaganda stressed its community, its democracy, its adherence to the ideals of the Howdy Doody generation, each day an unmarked car picked up blank boards and boxes of chips from Apple’s back door and delivered them to a roomful of Filipino women and housewives in a Saratoga home, who watched soap operas and stuffed boards at piece rates.”42 That network is what really made Apple a desirable partner.
These were the first internet boom years, when vast arrays of internetworked hardware promised to disrupt every industry in the world. Companies raced to snap up networking and hosting equipment from 3Com, Cisco, and Sun as well as the software-as-a-service offerings of Oracle. Buoyed by market enthusiasm, the firms scaled by acquisition, interweaving into friendly keiretsus through their shared shareholders. In 1995, Bechtolsheim left Sun to found a company devoted to speeding up Ethernet, which was quickly snapped up by Cisco for a cool $220 million, a nice payback to Bechtolsheim for designing the company’s original computer board.10 The firm 3Com got so big that it bought the naming rights to Candlestick Park, home of the San Francisco Giants and 49ers, a venue previously named for the chilly promontory where it had sat since the baseball team moved there, in 1960. Though I have it on good authority that some fans declined to use the privatized name, it marked a new era for the region, which had become something different over the previous decade and a half. Palo Alto and Silicon Valley and Stanford and tech and the internet stood for more than the newest electronics; that cluster of nouns meant a new way of doing business, a new plan for growth in a unipolar American capitalist world. They stood for getting fucking rich.
The internet’s business implications were huge. Long before the Valley became associated with “disruption,” Kenney and von Burg pointed out that, with internetworking, “industries that appeared to stabilize, in terms of organizational forms or business models, could be reopened for new rounds of firm formation.”12 That meant growth—albeit the destructive kind—and Silicon Valley became a bipartisan darling as it promised a new phase of postindustrial American expansion. The NASDAQ composite index grew from under 200 in the 1982 recession to over 5,000 in the spring of 2000. With support from the so-called Atari Democrats such as Paul Tsongas, Gary Hart, and Al Gore, the tech industry sealed the precepts of the Reagan Revolution into new and seemingly permanent layers of national infrastructure, from defense and finance to computing and telecommunications to who knows what else. These lean tech firms wiggled out from under the obligations of the New Deal and compensatory versions of the state, and it showed in their numbers. Capital utilization was high, as was revenue per employee, and their profit margins reflected their monopoly positions. Key employees were committed to companies through stock options and grants. One hundred years or so later, it was strikingly analogous to the railroad boom. And as in the joint-stock model back then, the financial regime was about as important as the underlying technology.
Coffee and cocaine had a lot in common for the Bay Area tech milieu: Both came from the Americas as part of the restructuring of Third World economies toward consumable exports; both were increasingly available at several price points; and both made people go fast for long periods of time. Following Miami, Los Angeles, and New York, Silicon Valley was the fourth corner of the American coke binge. Thanks in part to the industry’s cozy relationship with elements in the U.S. federal government, the international cocaine trade increased in volume during the period. In the 1980s, street and wholesale prices fell rapidly while purity increased.30 Blow became as central to the tech industry as it was to Hollywood or Wall Street, and Palo Alto gave the drug its own nerdy spin. “The valley’s would-be titans of industry preferred their cocaine at the office, or at house parties where husbands gathered together to talk incessantly about computers, while ignoring their wives,” writes scholar Charlton D. McIlwain. “Cocaine retained every bit of its glitz and glamour. But in the valley, it was all designed to push the work. Cocaine labored in service of the dream. For most, the dream was a fantasy, but they chased it nonetheless. Cocaine kept them in the race.”31 Michael Malone describes the era as a white-powder blizzard—the only kind the Bay ever saw—complete with coke mirrors made of clean silicon wafers purloined from work.32 The drugs certainly help explain both the wacky business models and the general surfeit of enthusiasm—as well as the country’s highest divorce rate.33
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[...] Protests targeted public-facing brands, holding them accountable for conditions in their supply chains, since the ability to sully brands was one of the movement’s few points of leverage over the private sector. The endgame for this strategy was a reform promise from the target, a sort of DIY regulation without the state. Going after individual violators was an anticapitalist strategy for the war-on-crime era, and brand-heavy offshored textile companies were especially vulnerable. Most famous was Nike: Activists successfully associated the trademarked Swoosh logo with children working in Third World sweatshops, yielding a wide-ranging series of promises from the cofounder and CEO, Phil Knight (Stanford MBA ’62).viii 39 These agreements were not an effective way of improving labor’s situation, and few involved were under the false impression that they were. These were bad days for working people. You could tell because the stock market was going up.
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To speak about crime in this context, even critically, is to accept a classed definition. Wage theft, stock fraud, and tax evasion are serious crimes, and they escalated dramatically in this period, but those are not the traditional referents for the 1990s “crime wave” discourse, because we have come to see ruling-class violations as part of a system that encourages cheating and corner cutting rather than as individual acts of social antagonism.40 The crime wave refers to crimes that interest the police and prosecutors, which is to say crimes committed by working-class and poor people, which also increased during the period. Any serious analysis of this kind of crime puts labor conditions at the forefront rather than some individualist idea of criminal intent; there was never much mystery to the phenomenon from a sociological point of view. But administrations from Reagan through George Bush Jr. (at least) understood that, to avoid risking another wage-price spiral, they had to deal with crime as a problem of too many criminals rather than too few good jobs.
Despite some victories on the cultural and legal fronts, Netscape had to match Microsoft and give up on charging users in the meantime. Software tended toward free, and the internet was made of software. Netscape pivoted to advertising, which became the standard move for companies with nothing to sell but user attention. Still, early investors were not too worried about how web start-ups were going to eventually make profits; it was a land rush, so they pushed in and kept their eyes fixed on the IPO horizon. Established banks were happy to play along, especially considering the inflated fees they could charge players in the frothy sector. Remember that people were doing a lot of cocaine.
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The real problem with the delivery dot-coms was that the people running them didn’t understand their historical context. In 2013, Peter Relan, the founding head of technology at Webvan, published a post on TechCrunch discussing why the company failed and how the next round of delivery start-ups could avoid the same fate. Webvan’s strategy, he wrote, was to offer “the quality and selection of Whole Foods, the pricing of Safeway, and the convenience of home delivery.”59 But according to Relan, the company shouldn’t have invested in so much infrastructure. Webvan built high-tech distribution systems from scratch: giant networks of new algorithms, miles of conveyor belts, fleets of custom trucks with PalmPilot-wielding delivery drivers. At its short peak, Webvan had a billion-dollar contract with Bechtel to build new distribution facilities around the country. This was the utopian vision of e-commerce, one in which the web’s efficiencies generated gains for everyone involved: investors, workers, and customers alike. In a 2000 report to the Securities and Exchange Commission, Webvan bragged that all its couriers “are Webvan employees.… The courier training lasts two weeks and includes 36 hours of classroom training, 12 hours of driving training and 28 hours of on the job training.… Webvan’s couriers receive a competitive compensation package, including cash and stock options…”60 Commentators pegged Webvan’s delivery-labor costs at $30 an hour, or over $50 in 2022 money.61 Of the company’s 4,476 reported employees on January 1, 2001, 3,705 worked out of the “real” operating facilities spread over nearly 1.5 million square feet of rented urban warehouse space across seven metropolitan regions.62 The company filed for Chapter 11 bankruptcy in the summer of 2001 after losing hundreds of millions of dollars the year before.63
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