A History of

Silicon Valley
Almost a 3rd Edition/ 2015 Update

Piero Scaruffi

2015

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Scaruffi, Piero
A History of Silicon Valley. Almost a 3rd Edition
All Rights Reserved © 2015 Piero Scaruffi

Printed and published in the United States

ISBN-13: 978-1508758730
ISBN-10: 1508758735

(In the USA only one company is authorized to sell ISBNs: Bowker. And Bowker sells them
at an outrageous price when other nations issue ISBNs for free. I consider this as, de facto,
one of the most blatant scams in any industry. To protest against this government-sanctioned
Bowker ISBN monopoly rip-off, I opted to obtain a free ISBN from Amazon CreateSpace,
which will then appear as the publisher of this book, and I encourage all authors and
publishers to do the same)

Photo credits: Piero Scaruffi

Due to Bruce Damer for pictures of machines in his Digibarn.
Some pictures were also taken at the Intel Museum and at the Computer History Museum.

No part of this book may be reproduced or transmitted in any form or by any means, graphic,
electronic or mechanical, including photocopying, recording, taping or by any information
storage retrieval system, without the written permission of the author and publisher. Your
support of the authors’ rights is appreciated.

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Table of Contents

A History Of This History of Silicon Valley

Introduction
Pioneers: Stanford University, Radio Engineering, the Melting Pot, and an Artistic
Genesis (1900-25)
Scouts: Electrical Engineering, Nuclear Engineering, the Navy, and a Culture of
Innovation (1925-40)
Moles: The Military Boom, Artistic Boom, and Economic Boom (1941-48)
Engineers: Stanford Industrial Park, Inventions, Discoveries, and Rebellion at the
Dawn of the Computer Age (1949-61)
Hippies: Fairchild, the Spin-offs, the Minicomputer, Artistic Creativity, and Social
Revolution (1961-68)
Geniuses: DRAM, Intel, SRI, PARC, Arpanet, and Utopia (1968-71)
Hobbyists: The Microprocessor, Computer Kits, Ethernet, Internet, the Alto, and
Genetic Engineering (1971-75)
Entrepreneurs: Apple, Oracle, Unix, Biotech, Alternative Music, and Spirituality
(1976-80)
Warriors: Personal Computers, Killer Applications, and SUN Microsystems (1980-
83)
Artists: New Paradigms of User-Computer Interaction, Open Architectures, Cisco,
Synthetic Biology, and Cyberculture (1984-87)
Startups: Fabless Manufacturing, Networking, Mobility, and Nanotech (1987-90)
Surfers: The World-Wide Web, Netscape, Yahoo, Multimedia, and Bioinformatics
(1990-95)
iBoomers: Google, Hotmail, Java, the Dotcoms, High-speed Internet, and Greentech
(1995-98)
Other Boomers: The Y2K Bug, Wi-Fi, Personal Digital Assistants, and DNA Mapping
(1995-98)
Survivors: Paypal, Wikipedia, and Genomics (1999-2002)
Downsizers: Facebook, YouTube, Web 2.0, and Tesla Motors (2003-06)
Sharks: the iPhone, Cloud Computing, Location-based Services, Social Games, and
Personal Genomics (2007-10)
The Rest of the World
The Selfies (2011-14)
Conclusions
A Timeline of Silicon Valley
Bibliography
Alphabetical Index

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 A History Of This History of Silicon
Valley
The idea for this book came to Arun Rao. At first I thought it was a stupid
idea: who would want to read a history of Silicon Valley and why would it
matter anyway? In Silicon Valley people are only interested in the latest release
of whatever is popular and in the future (not in the past). The rest of the world
probably doesn’t even know where Silicon Valley is.
Luckily, at the same time I was researching the great moments and places in
history when science and art boomed at the same time: Athens, Florence, Paris,
etc. Those are big mysteries. Nobody in Egypt would have guessed that the next
hub of creativity would have been located in the arid, boring, uncivilized land
of Greece. Nobody in medieval Europe would have guessed that the next hub of
creativity would have been located in Italy, a region split into dozens of tiny
states, decimated by the plague, torn by endemic warfare, ruled by barbaric
dynasties (and no less barbaric popes) and half occupied by foreign powers.
And who would have guessed the artistic and scientific boom of France at the
turn of the 19th century, after France had lost one war after the other and had
gone through a civil war? These are veritable paradoxes. The history of
creativity appears to be a history of paradoxes.
I started wondering which is the place in my own age that nobody would
have guessed would become the hub of creativity in the 21st century. And
suddenly I realized that I was living in the middle of it. Who a century ago
would have bet on this area as the future of technology? Why did it happen here
instead of so many more advanced regions of the East Coast and of Western
Europe? The traditional explanations did not make sense. One Stanford
professor encouraged his students to start businesses? Countless German
professors had done so. One inventor from Bell Labs opened a small lab in
Palo Alto? Countless inventors had opened laboratories on the East Coast. The
nice weather? I am from Italy and the regions of Italy with splendid weather
have invented very little (other than the mafia and the pizza) over the last few
centuries. There was a lot more money, brains and know-how on the East Coast
and in Western Europe.
Yet, here we are: the Bay Area has become the world’s most spectacular
show of creativity. And rather than slowing down it seems to be accelerating.
As I write, Silicon Valley is the home of the #1 company in semiconductors, of
the #1 company in personal computers, of the #1 company in databases, of the
#1 company in Internet technology, of the #1 company in social media, and of
the most valued company in the world. Fifty years ago there was no #1 here.

5
 Why did it happen here?
To answer that question, we wrote the “red book”, the first edition of our “A
History of Silicon Valley” (2011). I researched the chronology, Arun, who
works in the financial world, wrote analyses of the most influential events. The
next question was whether anyone could be interested in reading it. We
reprinted the book three times and each time sold all copies within weeks. Note:
no literary agent had been interested in the book (we submitted it to more than
50), so we had given up trying to find a publisher and had self-published it with
poor editing.
Arun was unhappy with the many typos and I already had a boatload of
updates. When he found the time, Arun curated a new edition, the “blue book”.
This time he only published it as an ebook. You can purchase it on Amazon.
Needless to say, progress (or, at least, change) is endemic around here.
Arun had hardly finished his massive proof-editing, revising, polishing and
updating job that I already had accumulated more than 30 pages of updates.
James Yan was curating the Chinese translation (Note: finding a Chinese
publisher was much easier than finding a US publisher). After that was
completed, I started thinking about a third edition. This time it was my turn to
work while Arun was busy with his job. This “green book” is limited to my
chapters but is updated to 2014 and contains dozens of little additions to the
early chapters. I have become fascinated with the very early days of California.
The answer to the paradox probably lies in the early history of the colonization.
Furthermore, I have become intrigued by all the failed attempts to replicate
Silicon Valley in other countries, and, at the same time, by the explosive
success of East Asia (although a success of a different kind). Those are, in a
nutshell, the novel contents of this “green book”.

Piero Scaruffi
www.scaruffi.com
Silicon Valley, June 2014

6
 Introduction
This book is a history of the high-tech industry in the San Francisco Bay
Area.
I have read many books on Silicon Valley. The best ones are listed in the
bibliography. Most of them are (explicitly or implicitly) collections of essays.
Those are easy to write. We’re all good at analyzing the world. I could not find
a book that is a detailed chronological history of Silicon Valley, which is, of
course, much more difficult to write. I also felt that I disagreed with most of the
conclusions of those books: those “essays” only partially represented Silicon
Valley, and were based on a small sample of biographies and case studies. I felt
that they pretty much missed the point, propagating a handful of very popular
myths while missing too much of the real story. I cannot help thinking that there
is a correlation between the two facts: because those authors did not study the
detailed chronology of Silicon Valley, they formed a very partial vision of it. So
I set out to write a detailed chronicle, densely packed with facts. I know that a
detailed chronicle is not an easy book to read compared with an eloquent
analysis, but that in my opinion is the book that was missing. In a sense, I
wanted to see the data before drawing the conclusions. After all, my background
is in the empirical sciences.
Needless to say, this also means that my history is not fictionalized and not
sensationalistic. I stick to the facts. If you want to read Hollywood-style
anecdotes, you are reading the wrong book.
As you read through this preface, you will find my bias to my history of
Silicon Valley. It matured as I wrote. The more details I added to my chronicle,
the more apparent some threads became. They may sound quite controversial to
those who only heard the myths (and, obviously, to those who fabricated those
myths). I just beg the reader to believe that the bias came after analyzing the
data, not before.
It is difficult to write a history of Silicon Valley without mentioning what
else was going on in computers around the world. Therefore this book is also a
minor history of computing (and biotechnology) in disguise.
A meta-theme of this book concerns how one industry led to the next one in
an apparently endless cascade of continuous reinvention: gold led to railways
that led to shipping operations that led to ports that had two side effects: ports
created coastal cities that needed electrical power that required high-voltage
power transmission that established the region as a leader in electrical
engineering; and ports needed radio communications that needed electronics that
created the semiconductor industry that led to the microprocessor that led to the
personal computer that created the software industry that benefited from the
Internet that created huge fortunes that were invested in biotech and greentech.
That’s, in a nutshell, the history of the Bay Area during the 20th century. The

7
question is how.
Silicon Valley does not exist in a vacuum. Its history cannot be divorced
from the history of the Bay Area’s economy and society at large. Even more
importantly, its ascent cannot be dissociated from the artistic and cultural
renaissance that took place in the region. The great centers of technological
progress often boasted artistic creativity at the same time: Athens, Italy during
the Renaissance, Belle-Epoque Paris, and Berlin at the turn of the century.
Silicon Valley was part of a region in which creativity was treasured, along
with a provocative, subversive and irreverent attitude. Alternative lifestyles and
a utopian counterculture seem to have always been in the genes of the Bay Area,
starting with the early poets and visual artists and then continuing with the
hippie generation. Scholarly books tend to discuss too many abstract models and
ignore the most important of all factors: creativity. Silicon Valley has
consistently boasted a very high degree of creativity. One could argue that
everything else is a footnote.
Somewhat related is a mindset of independence and individualism that
predates Silicon Valley and that led to the “do it yourself” philosophy of the
hobbyists who started Silicon Valley. Traditionally, the emphasis on Silicon
Valley’s development has been on technology transfer from universities, in
particular commercialization via startup company creation. While that certainly
played an important role, the hobbyist (whether a university alumnus or not)
played an equally important role. The hobbyists represent the passion to toy and
tinker with novel technology. It was part of the US psyche, but in the Far West it
had the additional advantage of being far enough from all the industrial colossi.
That attitude might explain Silicon Valley better than any economic theory.
We tend to take for granted that Silicon Valley is an economy of high-tech
companies and we think it is natural that they were started by engineers, not
businessmen. But maybe we should instead look at Silicon Valley businesses
from the opposite direction: because this was a place where engineers rather
than businessmen started companies, then it was inevitable that their companies
would be high-tech companies.
There now seems to be agreement among scholars that Silicon Valley started
in the early years of the 20th century, meaning that behaviors normally
associated with Silicon Valley were pioneered back then. I feel that one should
go even further back. As one analyzes how the various waves of business got
started, one realizes that the one thing they have in common is a spirit of the
Wild West. The Wild West’s eccentric and independent character is the
predecessor to all the inventors and gurus of Silicon Valley. The prominent
attitude towards risk-taking may also derive from the pioneers of the Wild West.
Each and every mass-consumed product has changed society, from Coca
Cola’s soda to McDonald’s burgers, from Levi’s blue jeans to Hollywood’s
movies. However, Silicon Valley has specialized in products that cause much
bigger social change of a more endemic kind. There are, in fact, places in the

8
world where much more sophisticated technology is created, from nuclear
power plants to airplanes. But personal computers, web services and smart
phones (and, in the near future, biotechnology and greentech) have changed our
lives in a more invasive and pervasive manner. Somehow these are the
technologies in which Silicon Valley excels. It is not about the complexity and
sophistication of the technology, but about the impact it will have on human
society. In a sense, Silicon Valley “loves” socially destabilizing technologies.
Could it be that this happens because Silicon Valley arose from what used to be
a very unstable quasi-anarchic society?
Much has been written about the “knowledge economy” of Silicon Valley,
mostly by people who worked at very high levels (or did not work at all in
Silicon Valley). The knowledge that the average engineer has is usually limited
to her/his field. In fact, it is hyper-specialized. The anecdotal histories of
Silicon Valley are full of self-made multimillionaires but they rarely talk about
the thousands of engineers who retired early because their hyper-specialized
skills became useless and it was just too difficult for them to retrain. Those
specialists actually had very limited knowledge which was often worthless
outside their cubicle. By definition, labs that are full of specialists are designed
to produce incremental improvements on existing technology, not
groundbreaking innovation. Most of the innovation came from elsewhere.
At the same time, though, the great innovators of Silicon Valley (Fairchild,
HP Labs, Intel, Xerox PARC, Apple, Google, Facebook) built companies not so
much around a technology as around their people. They hired the best and
nurtured highly creative environments. The way companies cared for creating
superior “firepower” inside their labs (rather than for a “return on investment”)
may have more to do with innovation than any other myth of Silicon Valley. And,
again, a big chunk of innovation came from the independent eccentric hobbyist
(whether inside or outside the academia), who did have a lot of “knowledge”
about the technology and the industry, but not because of the famed networks of
venture capitalists and entrepreneurs. Hobbyists invest all their spare time into
their hobby, absorbing knowledge from magazines, blogs and party chats.
Many have written about the importance of venture capitalists in the
development of Silicon Valley. However, we need to give credit to the biggest
venture capitalist of all: the government. The history of high-tech in the Bay
Area constitutes a prime example of the benefits of technologies that move from
military to civilian use, and of government intervention in general. The initial
impulse to radio engineering and electronics came from the two world wars,
and was largely funded by the armed forces. It was governments (US and
British) that funded the development of the computer, and NASA (a US
government agency) was the main customer of the first integrated circuits. The
ARPA (another US government agency) created the Internet. The World-Wide
Web was created at CERN, a center funded by multiple European governments
(the worst possible nightmare for those who hate government bureaucracies).

9
 Much has been made of the way Silicon Valley attracts and spawns
businesses, trying to explain it in terms of academic and financial factors.
However, this model would not work in Siberia or the Congo, and not even in
most of Western Europe and Japan. In fact, there were very few places where it
could have worked, and there are still very few places where it can work today.
The Bay Area managed to attract brains from all over the world thanks to its
image as a sunny, “cool,” advanced and cosmopolitan region, a dreamland for
the highly educated youth of the East Coast, Europe and Asia. Because the Bay
Area was underpopulated, those national and international immigrants came to
represent not an isolated minority but almost a majority, a fact that encouraged
them to behave like first-class citizens and not just as hired mercenaries. And I
believe that the wave of college-level immigration got started in the 1960s,
before the boom of Silicon Valley, and for reasons that are more related to the
“summer of love” than to microprocessors.
The biggest of all myths must be dismissed at the onset: we must recognize
that Silicon Valley invented very little. Computers were not invented in Silicon
Valley. Robots were not invented here either. Silicon Valley did not invent the
transistor, the integrated circuit, the personal computer, the Internet, the World-
Wide Web, the browser, the search engine, social networking, nor the smart
phone. Neither biotech nor greentech are from Silicon Valley. Silicon Valley
was instrumental in making them go “viral.” Silicon Valley has a unique (almost
evil) knack for understanding the socially destabilizing potential of an invention
and then making lots of money out of it; Schumpeter’s “creative destruction”
turned into destructive creativity. That’s, ultimately, what people mean when
they talk about Silicon Valley as a factory of innovation.
The eccentric independent is truly the protagonist of this story. People,
especially Europeans, wonder why Silicon Valley happened where it happened.
One simple answer is that the US in general is friendlier than Europe towards
the eccentric independent, and California in particular is the friendliest. The suit
and tie is my favorite metaphor. In Europe you can’t possibly be a successful
employee if you don’t wear a suit and tie. Therefore the employees who rise in
the hierarchy tend to be the ones who are better at dressing up, and not
necessarily the ones who are more knowledgeable, competent and creative. In
California even billionaires wear blue jeans and t-shirts.
Another reason why it could not happen in Europe is the risk-averse mindset
that I can summarize in an autobiographical anecdote. I worked for a decade at a
European multinational. Every time one of us had an idea for a new product
line, the management would ask us a trick question: “Has anybody else done it
yet?” If we answered “yes,” the management would conclude: “Then we are too
late.” If we answered “no,” the management would conclude: “Then there is no
need for it.” A case in which we could work on something new just did not
exist. Silicon Valley, instead, amplified the passion of the US for risk-taking.
Silicon Valley has cultivated a philosophy of risk-taking and turned it into a

10
science.
Another key difference between Silicon Valley and most of the world,
particularly Europe, is the mindset of faculty at universities. European
universities are static, feudal bureaucracies in which a professor is the
equivalent of a baron (granting favors to assistants) and is, in turn, the vassal of
a department head. For life. On the contrary, the Bay Area’s universities and
colleges encourage their faculty to start their own companies.
One can finally wonder why it happened on the West Coast and not on the
East Coast, which was more educated, wealthy and cosmopolitan. I think the
answer is the same one as the answer to the question why the hippies were born
in San Francisco, or why the Free Speech Movement was born in Berkeley: a
unique strand of anti-establishment sentiment and a firm belief in changing the
world.
I also felt that too little is written about the “failures” of Silicon Valley, i.e.
the many industries that had a strong base here, including massive research
programs at the local universities, but never made it big: robotics, laser, virtual
reality, etc. Hence I also chronicle those less exciting fields.
There were a number of financial stimuli to the development of Silicon
Valley. Once fortunes were created, though, Silicon Valley benefited from the
generosity of its own millionaires. Philanthropy and “angel” investing provided
a secondary boost to the creation of creativity. “Be creative when you are not
yet rich, and support creativity when you get rich:” that could be the motto of
Silicon Valley’s entrepreneurs. The lifestyle of the Bay Area creates social
pressure to “be different” and social pressure to “be good.” Rich, self-made
people who meet at a party don’t just boast of how they made their money: they
also boast of how they are spending it to help worthy causes or to help fledging
startups. In a sense, here self-made multimillionaires feel a sense of gratitude
towards the system that allowed them to become self-made multimillionaires.
It’s a phenomenon that has been part of the fabric of US society, and here may
find its most sublime expression.
Therefore a major theme is that Silicon Valley was a sociological and
economic experiment before it was a technological and financial experiment.
Silicon Valley fostered a marriage of advanced technology and unbridled
capitalism via a triangular relationship with utopian collectivism: Silicon
Valley wed utopian collectivism and advanced technology (the sociological
experiment), and, at the same time, Silicon Valley wed utopian collectivism and
unbridled capitalism (the economic experiment).

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 Piero Scaruffi’s Biography
Piero Scaruffi received a degree in mathematics (summa cum laude) in 1982 from the
University of Turin, Italy, where he did work in the general theory of relativity. In 1983 he
relocated to Silicon Valley to work at Olivetti’s Advanced Technology Center, where he was
employed first to port the Unix e-mail program to Olivetti’s version of Unix and then to
implement the first object-oriented system (Smalltalk) for a Wintel personal computer. In
1985 he started and managed Olivetti’s Artificial Intelligence Center, leading a number of
joint projects with universities in the US and Europe. After a visiting scholarship at Stanford
University to conduct research on cognitive science, in 1999 he joined Intellicorp. There he
continued to work on artificial intelligence-based business solutions.
Since 2003 he has been a free-lance consultant for Silicon Valley and European
companies. He has lectured in three continents on “Theories of Mind” and “History of
Knowledge,” most recently at UC Berkeley. He has published a number of books on artificial
intelligence and cognitive science, the latest ones being “The Nature of Consciousness”
(2006) and “Demystifying Machine Intelligence” (2013). Meanwhile, he pioneered Internet-
based journalism with thousands of articles on music, science, cinema, literature, and
history. In 1985 he started his first e-zine, distributed by e-mail over the Internet. Between
1986 and 1990 he created an online database, downloadable via FTP. That database mutated
into his own website Scaruffi.com in 1995. In 2006 the New York Times ran an interview
with him titled “The Greatest Website of All Time.”
Meanwhile, Piero has continued writing poetry both in Italian, for which he was awarded
several prizes in the 1980s, and in English. His book “Synthesis” (2009) collected poems
and meditations. In parallel, Piero has become a controversial music critic. His latest books
on music are: “A History of Jazz Music” (2007), and “A History of Rock and Dance Music”
(2009). He has organized several interdisciplinary cultural events in the Bay Area, notably the
monthly “Leonardo Art Science Evening Rendezvous” (LASERs) held at Stanford, UC
Berkeley and USF since 2008. He has also published an ebook “A Visual History of the
Visual Arts”. In 2014 he also founded the L.A.S.T. (Life Art Science Technology) festival,
arguably the largest such event ever held in the Bay Area.
An avid traveler who spends months on the road, he has visited more than 150 countries
of the world as of 2014.

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 .

Pioneers: Stanford University, Radio

Engineering, the Melting Pot, and an Artistic
Genesis (1900-25)

After the Gold Rush

Just over twenty thousand people lived in San Jose in 1900. When James
Lick died in 1876, he was the wealthiest man in California. His “high-tech”
occupation had been piano manufacturing. He had in fact accumulated a little
fortune by building and selling pianos in South America. In Peru he had met
Domingo Ghirardelli, a maker of chocolate. When Lick moved to California, he
invited Ghirardelli to set up shop in San Francisco, an advice that turned out to
be golden: one year later gold was discovered near Sacramento, and both
immigrants benefited by the economic boom. Lick was smart enough to buy land
all around the Bay Area, while living in the small village of San Jose.
Lick was planning to use his fortune to build himself the largest pyramid on
Earth, but somehow the California Academy of Sciences convinced him to fund
the Lick Observatory, the world’s first permanently occupied mountain-top
observatory, to be equipped with the most powerful telescope on Earth. That
observatory, erected in 1887 on nearby Mt Hamilton, was pretty much the only
notable event in the early history of San Jose. (If you feel that Lick was a bit out
of his mind to think of building a pyramid to himself, don’t forget that his
contemporary, Joshua Norton of San Francisco, had proclaimed himself
“Emperor of the United States” in 1859: those were strange days).

Stanford University
Until 1919, the only road connecting San Jose to San Francisco was the old
“El Camino Real,” a dusty country road (at the time known as US 101) that
snaked its way through orchards and barren hills. The only way to travely
quickly was the Southern Pacific Railroad. It had been acquired by the railway
empire of Leland Stanford, the president of the company charged with the
western section of the first transcontinental railroad. Stanford was a former
California governor and a US senator. The Stanfords donated land and money to
start a university near their farm after their only son, Leland Junior, died. They
had a station built on the Southern Pacific route, the station of University Park,
later renamed Palo Alto.
Stanford University opened in 1891. It was not the first university of the Bay

13
Area: the Berkeley campus of the University of California had opened in 1873
at the other end of the bay. However, Leland was a man with a plan: his express
goal was to create the Harvard of the West, something like New York State’s
Cornell University. At the time, despite the huge sums of money offered to them
by Leland, neither the President of the Massachusetts Institute of Technology
(MIT) in Boston, nor the President of Cornell were willing to move to such a
primitive place as the Bay Area from their comfortable East Coast cities; so
Leland had to content himself with a humbler choice: a relatively young Cornell
graduate, David Starr Jordan. In 1892 he hired Albert Pruden Carmen from the
College of New Jersey (later renamed Princeton University) to teach electricity
(at the time still a new discipline) within the Physics Department. The
following year, another Princeton graduate, Fred Perrine, became the first
professor of electrical engineering within a department furnished with
equipment donated by local electrical firms.

Stanford’s Quadrangle (2010)

The light bulb (Edison) and the alternating current motor (Tesla) had been
invented on the East Coast, but California pioneered their domestic use. In
1860s Horatio Livermore's Natoma Water and Mining Company, based in
Folsom, had built an extensive network of dams to supply water to the miners of
the Gold Rush on the American River. Leveraging that investment, in July 1895
his company opened a 35 km hydroelectric power line to bring electricity from
Folsom to Sacramento, with water powering four colossal electrical generators
(dynamos), the first time that high-voltage alternating current had been
successfully conducted over a long distance. In September 1895 Sacramento
celebrated the coming of electricity with a Grand Electrical Carnival, and very
soon the streets of the state's capital were roamed by electric streetcars. Unlike
on the East Coast, where electricity mainly served the industry, in the Bay Area
and in Los Angeles electricity first came to the cities for public and domestic
use. That also explains why electric consumer goods (such as the washing

14
machine) would spread more rapidly in California, creating a myth of high-tech
living.

Santa Clara Valley

The Santa Clara Valley (the valley between Palo Alto and San Jose) was
known as the “Valley of Heart’s Delight” because it was an endless expanse of
orchards. Its agriculture was growing rapidly and, thanks to the invention of the
refrigerated railroad car, it soon became the largest fruit production and packing
region in the world. At one point there were 39 canneries in the valley, notably
the San Jose Fruit Packing Company. At the peak, Chinese workers represented
48% of agricultural labor in the Santa Clara Valley. In 1863 the second railroad
of California (after the pioneering Sacramento-Folsom of 1855) connected San
Francisco to Mayfield (now Churhill Avenue in Palo Alto), a rough town
popular with loggers (and later with students), and then to San Jose (in 1864)
with a daily ride that took three and a half hours. The Menlo Park depot (built in
1867) was the major station on that route until Palo Alto began to grow.
The first transcontinental railroad was finally completed in 1869, linking the
East Coast with Oakland (and then by ferry to San Francisco).
Perhaps the first "high tech" of the Bay Area came in the form of the aerial
tramway invented in 1867 by the British-born Andrew Hallidie, a former gold
miner and a bridge builder. Installed on high towers that frequently overlooked
incredibly steep slopes, it was used across the Sierra Nevada to transport ore,
supplies and miners. In 1873 Hallidie, using a similar design with help from
German-born engineer William Ep, inaugurated the Clay Street Hill Railroad in
San Francisco, the world's first cable-car system.
At the time the Bay Area also had its flirt with oil, in fact predating the
celebrated Edward Doheny well of 1892 that started the oil rush in Los
Angeles. In 1879 a San Francisco banker and politician, Charles Felton,
founded the Pacific Coast Oil Company (PCO). Within a few months the new
company discovered large oil deposits on Moody Gulch, a few kms west of San
Jose in the south bay. In 1880 PCO opened a refinery in the island Alameda,
located near Oakland by the bay, i.e. with good access to the railroad terminal
and the port. In 1902 Rockefeller's Standard Oil, that two years earlier had
acquired PCO, built a new refinery further north, in what is now Richmond, one
of the largest and most advanced refineries in the world. In 1907 this refinery
invented Zerolene, one of the most successful Standard Oil products.
The agricultural boom increased the demand for firewood and lumber,
which made the fortune of the Santa Clara Valley Mill & Lumber Company of
Felton. (But mostly the boom made the fortune of the "railroad barons", who
provided the main form of transportation for goods and people. In fact, Santa
Clara county confronted the arrogant railroad empires in a case that became
famous in and had consequences for the whole nation: in 1886 the Supreme

15
Court of the USA decreed that corporations should have the same rights as
persons, and therefore the Southern Pacific Railroad Company was entitled to
deduct mortgage from its taxable income just like any household). And, of
course, ports dotted the bay, notably Redwood City’s port that shipped lumber
to San Francisco. Redwood City was located in the “Peninsula,” i.e. the stretch
of land between San Francisco and Palo Alto.
Most of the Peninsula belonged to San Mateo County and was
underpopulated. The county road from San Francisco to Belmont (north of
Redwood City) served the wealthy San Franciscan who had bought a mansion in
the countryside, typically for the summer, when San Francisco was blanketed by
its famous fog. These mansions usually controlled a large tract of land and
constituted self-sufficient agricultural units. The First World War (1917) helped
populate one town, Menlo Park, just north of Palo Alto, where the Army
established Camp Fremont to train tens of thousands of soldiers.
The Bay Area became one in the early years of the 20th century. In the
1880s Frank Smith, who had made his fortune with his borax mines in Nevada
and Death Valley, settled in Oakland and began to create a network of railways
that eventually (1903) would become the Key System, connecting San
Francisco, Oakland and San Jose.
Not much else was going on in the sleepy bay accidentally discovered in
1769 by Spanish explorer Gaspar de Portola.
A lot was going in the rest of the US. The nation was booming with
innovative ideas revolutionizing agriculture, industry, mining and transportation.
Since there were more and more numbers to crunch, it is not surprising that in
those years inventors devised several computing machines. The most influential
were William Burroughs’ adding machine of 1885 and Hermann Hollerith ‘s
tabulator of 1890 (chosen for the national census). However, the new sensation
at the turn of the century was electricity, which was enabling a whole new
spectrum of appliances, from the light bulb to the phonograph.

Electrical Engineering
The railway brought people to the Bay Area, and created the first fortunes.
But then, the Bay Area needed electricity. California had plenty of water,
coming down from its mighty Sierra Nevada mountain range. Entrepreneurs
understood that dams (hydroelectric plants) could provide the electrical power
needed by the coastal cities, and engineers were working on solving the
problem of how to distribute that power. The East Coast had not faced the
problem of carrying high-tension voltage over long-distances, but that was
precisely the problem to be solved on the West Coast. Stanford professors and
students, under the leadership of the new head of the Electrical Engineering
Department, Harris Ryan, another Cornell alumnus who had arrived in 1905,
helped solve the problem. They inaugurated a cooperative model between

16
university and industry. The Bay Area’s electrical power companies used the
Stanford High Voltage Laboratory (as well as the one at UC Berkeley) for the
development of long-distance electric power transmission. That cooperation, in
addition, raised a generation of electrical engineers that could match the know-
how of the East Coast.

Radio Engineering
At the same time, San Francisco’s inhabitants showed a voracious interest
in the radio technology invented in Europe at the turn of the century. The Italian
inventor Guglielmo Marconi, then in Britain, had galvanized the sector with his
long-distance radio transmissions, beginning in 1897 and culminating with the
radio message from the US President Theodore Roosevelt to the British king
Edward VII of 1903. Marconi’s company set up radio stations on both sides of
the Atlantic to communicate with ships at sea. However, it was not yet trivial
how to create a wireless communication system.
In 1906 an independent with a degree from Yale, Lee DeForest, had built a
vacuum tube in Chicago without quite understanding its potential as a signal
amplifier. In fact his invention, the "audion", was useful to amplify electrical
signals, and therefore to wireless transmissions. (In 1904 the British chemist
John Ambrose had invented the two-element amplifier, or "diode", and a few
months before DeForest the Austrian physicist Robert von Lieben had already
built a three-element amplifier, or "triode"). In 1910 DeForest moved to San
Francisco and got into radio broadcasting, a business that he had pioneered in
January when he had broadcasted from New York when he had broadcasted
from New York a live performance by legendary Italian tenor Enrico Caruso. In
fact, DeForest is the one who started using the term “radio” to refer to wireless
transmission when he formed his DeForest Radio Telephone Company in 1907.
However, his early broadcasts did not use the audion yet. Interest in radio
broadcasting was high in the Bay Area, even if there were no mass-produced
radios yet. A year earlier, in 1909, Charles Herrold in San Jose had started the
first radio station in the US with regularly scheduled programming, including
songs, using an arc transmitter of his own design. Charles Herrold had been one
of Stanford’s earliest students and founded his own College of Wireless and
Engineering in San Jose.
The Bay Area stumbled into electronics almost by accident. In 1909 another
Stanford alumnus, Cyril Elwell, had founded the Poulsen Wireless Telephone
and Telegraph Company in Palo Alto, later renamed the Federal Telegraph
Corporation (FTC), to commercialize a new European invention. In 1903 the
Danish engineer Valdemar Poulsen invented an arc transmitter for radio
transmission, but no European company was doing anything with it. Elwell
understood its potential was not only technological but also legal: it allowed
him to create radio products without violating Marconi’s patents. Elwell

17
acquired the US rights for the Poulsen arc. His radio technology, adequately
funded by a group of San Francisco investors led by Beach Thompson, blew
away the competition of the East Coast. In 1912, he won a contract with the
Navy, which was by far the biggest consumer of radio communications. Thus
commercial radiotelegraphy developed first in the US. The “startup” was
initially funded by Stanford’s own President, David Starr Jordan, and employed
Stanford students, notably Edwin Pridham. Jordan had just inaugurated venture-
capital investment in the region.
In need of better receiver amplifiers for the arc transmissions, FTC hired
Lee DeForest, who by 1912 had finally realized that his audion could be used as
an amplifier. The problem with long-distance telephone and radio transmissions
was that the signal was lost en route as it became too faint. DeForest’s vacuum
tube enabled the construction of repeaters that restored the signal at intermediate
points. The audion could dramatically reduce the cost of long-distance wireless
communications. FTC began applying the audion to develop a geographically
distributed radiotelegraphy system. The first tower they had built, in July 1910,
was on a San Francisco beach and it was 90 meters tall. Yet the most
impressive of all was inaugurated in 1912 at Point San Bruno (just south of the
city), a large complex boasting the tallest antenna in the world (130 meters).
By the end of 1912 FTC had grown; it had stations in Texas, Hawaii,
Arizona, Missouri and Washington besides California. However, the Poulsen
arc remained the main technology for radiotelephony (voice transmission) and,
ironically, FTC was no longer in that business. Improvements to the design by
recent Cornell graduate Leonard Fuller (mostly during World War I, when the
radio industry was nationalized to produce transmitters for the Navy) that
allowed the audion to amplify a signal a million times eventually led FTC to
create the first global wireless communication system. The audion was still
used only for receivers, while most transmitters were arc-based. It was only in
1915 that DeForest realized that a feedback loop of audions could be used to
build transmitters as well. DeForest had already (in 1913) sold the patent for
his audion to Graham Bell’s AT&T in New York, and AT&T had already used it
to set up the first coast-to-coast telephone line (January 1915), just in time for
the Panama-Pacific International Exposition. Meanwhile, DeForest had moved
to New York. There, in 1916, he shocked the nation by broadcasting the results
of the presidential elections with music and commentary from New York to
stations within a range of 300 kilometers, and this time using an audion
transmitter. Radiotelephony would switch from the Poulsen arc to his audion
during the 1920s. In due time Leo Fuller took Elwell’s place as chief engineer
of FTC, in 1920 Navy engineer and former Marconi engineer Haraden Pratt was
hired to launch commercial wireless telegraph service, and sugar magnate
Rudolph Spreckels bought control of FTC.
The wireless industry was booming throughout the US, aided by sensational
articles in the mainstream press. Earle Ennis had opened a company (Western

18
Wireless Equipment Company) to sell wireless equipment for ships. He also ran
a radio broadcast to deliver news to ships at sea. In 1910 he organized the first
air-to-ground radio message, thus showing that the same technology could be
used by the nascent airline industry.
Because of its maritime business, the Bay Area became one of the largest
centers for amateur radio. The Bay Counties Wireless Telegraph Association
was founded in 1907 by (then) amateurs such as Haraden Pratt, Ellery Stone and
Lewis Clement. Among the amateurs of the second decade were Charlie Litton,
an eleven-year old prodigy who operated an amateur station in Redwood City in
1915, and Frederick Terman, a teenager who operated an amateur station in Palo
Alto in 1917. Some of those amateurs went on to create small companies. Little
did they know that their hobby would in time of war constitute a strategic
industry for the Air Force, Navy and Army: during World War I (in 1918)
Elwell’s technology would be a pillar of naval communications for the US. The
Navy had set up radio stations all over the place. In January 1918 the President
of the US, Woodrow Wilson, proudly spoke live to Europe, the Far East and
Latin America.
Magnavox Corp. was founded in 1910 in Napa (north of the bay). It was the
brainchild of Peter Jensen (one of the Danish engineers imported by FTC to
commercialize the Poulsen arc) and Edwin Pridham (a Stanford graduate who
also worked at FTC). In 1917 they introduced a new type of electrical
loudspeaker.
Alas, after World War I it became obvious that radio technology was
strategic, and it couldn’t be left in the hands of West-Coast independents. The
US government basically forced a large East-Coast company, General Electric,
to buy the US business of Marconi. The US government also helped the new
company to acquire the most important radio patents. Thus a new giant, RCA,
was born and soon became the dominant player in consumer electronics, as the
number of radios grew from 5,000 in 1920 to 25 million in 1924. Hence FTC
was doomed and other Bay Area-based radio companies had to live with only
military applications.
Radio engineering created two worlds in the Bay Area that would greatly
influence its future: a high-tech industry and a community of high-tech amateurs.

Culture and Society

In the 1890s most of California was still unexplored. A vast area of the
state, the Sierra Nevada, was virtually inaccessible. The fascination for finding
out what lay inside drew men from all backgrounds but especially scientists. In
1860 (just a few years after becoming a state of the USA) California had created
the Office of State Geologist and had hired Josiah Whitney, professor of geology
at Harvard University, to lead it. Between 1863 and 1864 Whitney had led
expeditions that had included botanists, zoologists, paleontologists and

19
topographers to explore the High Sierra, discovering" what today are known as
Yosemite and King's Canyon national parks. Another geologist, Clarence King,
who had traveled overland to California in 1863 from Yale, had become the
first white man to spot Mount Whitney, the highest mountain in the USA outside
of Alaska. The mountains were largely explored by the least documented of all
explorers: the European shepherds, who probably created many of the trails
used today by mountaineers. The High Sierra was an ideal terrain for sheep,
thanks to its many meadows and relatively mild climate. One such shepherd was
John Muir, originally from Scotland, a nomadic sawyer who had reached San
Francisco in 1868, having traveled by steamship from Florida via Cuba and
Panama. He settled in Yosemite for a few years and eventually became
influential enough to convince the USA to create Yosemite and Sequoia National
Parks in 1890, but never actually hiked what is today North America's most
famous trail, the John Muir Trail from Yosemite to Mt Whitney. The idea for that
trail must be credited to Theodore Solomons, born and raised in San Francisco,
who in 1892 set out to independently explore regions of the Sierra Nevada that
no white man had seen before. The 1890s were the golden age of Sierra
exploration.
San Francisco was still living with the legacy of the “Gold Rush” of 1849.
The “Barbary Coast,” as the red-light district was known, was a haven for
brothels and nightclubs. The thousands of Chinese immigrants who had been
lured to California to build railways, mine gold and grow food had fathered a
new generation that settled in “Chinatown,” the largest Chinese community
outside Asia. The port served steamers bound for the coast or Asia as well as
ferry traffic to the bay and the Sacramento River, and supported a large
community of teamsters and longshoremen that also made it the most unionized
city in the US.
Dubious characters still roamed the landscape: the career of despised media
tycoon William Randolph Hearst got its start in 1887 when his father handed
him the San Francisco Examiner. But there were also honest enterprising men,
such as Amadeo Giannini, who founded the Bank of Italy in 1904 to serve the
agricultural economy of the Santa Clara Valley (it was later renamed Bank of
America). At the turn of the century one could already sense San Francisco’s
predisposition towards rebellion: John Muir’s Sierra Club (formed in 1892) led
the first environmental protest when the state planned a dam in Yosemite; the
American Anti-Imperialist League (formed in 1898) organized the first anti-war
movement when the US went to war against Spain (a war largely architected by
Hearst to sell more copies of his newspapers); and the Union Labor Party
(formed in 1901) became the first pseudo-socialist party to win a mayoral
election in a US city. Most of this was irrelevant to the rest of the nation. San
Francisco made the national news in 1906 because of the earthquake and fire
that leveled most of it.
California was also blessed with some of the most reformist governors in

20
the country, notably Hiram Johnson (1911-1917), who democratized California
and reduced the power of the political barons, and William Stephens (1917-
1923), who did something similar to curb the political power of unions. Their
policies focused on raising the living standards of the middle class, and
therefore of the suburbs.
Immigration made San Francisco a cosmopolitan city. There had already
been Italians when California was still under Mexican rule. They were
fishermen and farmers. By the turn of the century, old and new Italians had
created an Italian quarter in North Beach. Then came the Japanese, who
replaced the Chinese in agriculture. At the beginning of the century San
Francisco boasted two Japanese-language newspapers: “The New World” and
the “Japanese American.” Mexicans immigrated from 1910 to 1930, following
the Mexican revolution and the construction of a railway.
San Francisco was also becoming friendly toward the arts. In 1902, the
California Society of Artists was founded by a cosmopolitan group that included
the Mexican-born painter Xavier Martinez and the Swiss-born painter and
muralist Gottardo Piazzoni. At the California School of Design, many students
were influenced by muralist and painter Arthur Mathews, one of the founders of
the American Arts and Crafts Movement that tried to reconcile craftsmanship
with industrial consumerism (a major national trend after the success of
Boston’s 1897 American Arts and Crafts Exhibition). A symbolic event took
place after the 1906 earthquake when Mathews opened his own shop (both as a
craftsman and a painter) and started publishing one of the earliest art magazines
in town, the Philopolis. Another by-product of the American Arts and Crafts
Movement was Oakland’s California College of the Arts and Crafts founded in
1907 by one of the movement’s protagonists, Frederick Meyer.
More and more artists were moving to San Francisco. They created the
equivalent of Paris’ Montmartre artistic quarter at the four-story building called
“Montgomery Block” (also nicknamed “Monkey Block”), the epicenter of San
Francisco’s bohemian life. Another art colony was born in the coastal city of
Carmel, about two hours south of San Francisco. Armin Hansen opened his
studio there in 1913. Percy Gray located there in 1922 and impressionist master
William Merritt Chase taught there in 1914.
Architects were in high demand both because of the fortunes created by the
railway and because of the reconstruction of San Francisco after the earthquake
(for example, Willis Polk). Mary Colter studied in San Francisco before
venturing into her vernacular architecture for the Southwest’s desert landscape.
The Panama-Pacific International Exposition of 1915, held in San Francisco, for
which Bernard Maybeck built the exquisite Palace of Fine Arts, symbolized the
transformation that had taken place in the area: from emperors and gold diggers
to inventors and investors (and, soon, defense contractors). A major sculptor
was Ralph Stackpole, who in 1913 founded the California Society of Etchers
and in 1915 provided sculptures for the Panama-Pacific International

21
Exposition, notably the Palace of Varied Industries (demolished after the
exposition). Influenced by the Panama-Pacific International Exposition, during
the 1920s Maynard Dixon created an original Western style of painting. Last but
not least, in 1921 Ansel Adams began to publish his photographs of Yosemite.
It was another small contribution to changing the reputation of that part of
California and the birth of one of the most vibrant schools of photography in the
world. Literature, on the other hand, lagged behind, represented by Frank
Pixley’s literary magazine the “Argonaut,” located at Montgomery Block.
Classical music was represented by its own school of iconoclasts. From
1912 to 1916, Charles Seeger taught unorthodox techniques such as dissonant
counterpoint at UC Berkeley. Starting with "The Tides of Manaunaun" (1912),
pianist Henry Cowell, a pupil of Seeger, began exploring the tone-cluster
technique. That piece was based on poems by John Osborne Varian, the father of
Russell and Sigurd Varian, who had moved to Halcyon, a utopian community
founded in 1903 halfway between San Francisco and Los Angeles by the
theosophists William Dower and Francia LaDue. Varian's sons Russell and
Sigurd later became friends with Ansel Adams through their mutual affiliation
with the Sierra Club.

The Prehistory of Office Automation

Elsewhere (mainly in New York and Detroit) the sector of computing
machines was taking birth, fueled by the frantic growth in statistical and
bookkeeping activities (the initial boost had come from the Census Bureau of the
government). In 1911, Hollerith’s Tabulating Machine Company was acquired
by a new company based in New York. In 1924, it changed its name to
International Business Machines (IBM) under President Thomas Watson. These
“tabulating machines” processed punched cards that stored information. The
idea of using holes to program machines was not new: the same principle had
been used to “program” silk looms and player pianos. Hollerith’s main rival,
Powers Accounting Machine, founded in 1911 and also based in New York,
would later (1927) be merged by James Rand with Remington, the main
manufacturer of typewriters since 1873 when it had introduced the first mass-
produced model (and the QWERTY keyboard invented by Christopher Latham
Sholes). Besides government agencies, the main customers of tabulating
machines were insurance companies and railroad companies.
Other inventors created useful business machines too. In 1894 Charles
Kettering at John Patterson’s National Cash Register (NCR) of Ohio had
invented the electrical cash register. In 1922 NCR sold more than two million
electrical cash registers (about 90% of the market). In 1925 Burroughs of
Detroit introduced a portable adding machine (still weighing quite a bit but
“portable” by a strong man), which became a runaway success for bookkeeping
calculations in large firms. It represented the first step towards automating an

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office.
By the 1920s most businesses were fully equipped with labor-saving
machines such as typewriters (a field dominated by Remington Rand), adding
machines (a field dominated by Burroughs), tabulating machines (a field
dominated by IBM) and cash registers (a field dominated by NCR).

23
 Scouts: Electrical Engineering, Nuclear
Engineering, the Navy, and a Culture of
Innovation (1925-40)

Stanford and Electrical Engineering

A pivotal event in the history of the Bay Area’s high-tech industry took
place in 1925: Harris Ryan’s student, Frederick Terman (a ham radio fan who
had also studied at MIT in Boston with Vannevar Bush, joined Stanford
University to work at Ryan’s pioneering radio-communications laboratory.
Terman was the son of a Stanford professor, so he represented a highly educated
generation that had been raised in the Bay Area, a step forward from the
immigrants of previous decades. Within two years, the young apprentice became
a visionary on his own, fostering a new science on the border between wireless
communications and vacuum-tube electronics. Terman didn’t just perfect the art
of radio engineering. The Bay Area offered precious few opportunities for
employment, and during the Great Depression that started in 1929 virtually
none. Terman encouraged his students to start their own businesses rather than
wait for jobs to be offered to them. After all, Stanford had perfected a number of
engineering technologies that could potentially be of general interest (one being
the resistance-capacity oscillator built by Bill Hewlett in 1935). Many of those
students were coming from the East Coast. He encouraged them to start
businesses in the Bay Area. He viewed the university as an incubator of
business plans. It was a step up from Harris Ryan’s philosophy of encouraging
cooperation between academia and industry.
A vibrant industry was taking hold around Stanford University by the time
Ryan retired in 1931 and Cyril Elwell’s Federal Telegraph Corporation (FTC)
moved east. Several startups were spin-offs of the early radio companies.
Stanford’s student Ralph Heintz, a former radio amateur and employee of
Earle Ennis, had started a business to install short-wave radios on ships and
airplanes. In 1926 he founded Heintz & Kaufmann in San Francisco; but soon
had to start manufacturing their own vacuum tubes to compete with RCA, for
which they hired radio hobbyists Bill Eitel and Jack McCullough.
Litton Engineering Laboratories had been founded in 1932 by ham-radio
hobbyist, Stanford student, and FTC manager Charlie Litton at his parents’
Redwood City home to manufacture tools for vacuum tube manufacturers (the
same job he had at FTC). Eitel-McCullough (later Eimac) was formed in 1934
in San Bruno by Heintz’s employees Bill Eitel and Jack McCullough to develop

24
better vacuum tubes for the amateur or ham radio market (which would become
the Armed Forces’ favorite tubes during the war). Another FTC employee,
German-born Gerhard Fisher invented the metal detector in 1928, and founded
Fisher Research Laboratories in 1931 in his home’s garage in Palo Alto. Many
of these independents who scouted the market for radio communications and
electronics had started out as ham radio amateurs, some of them at a very early
age.

Stanford’s “Engineering Corner” (2010)

Berkeley and Nuclear Engineering

Meanwhile, another industry came to the Bay Area because of just one
creative scientist and his groundbreaking invention. UC Berkeley had opened
LeConte Hall in 1924 to enlarge its Department of Physics. It had gone on a
hiring spree to fill it with young talent. In January 1931, one of these young
physicists, Ernest Lawrence, hired in 1928 from Yale University, designed the
first successful cyclotron (a particle accelerator). It was theoretically known
that nuclear particles undergo transformations as they travel faster, but no lab
had devised a machine yet that could accelerate particles to the point that this
phenomenon would be observable. It was called “cyclotron” because its
principle was to send particles in a loop through the same accelerating field,
thus increasing their speed with each cycle. A former FTC executive, Leonard
Fuller, had become the head of the Electrical Engineering Department at the
University of California and had managed to obtain from FTC a 1000-kilowatt
generator that Lawrence used to build his monster (actually quite small, just 66
centimeters in diameter). The Radiation Laboratory that Lawrence opened that

25
year in August right halfway between LeConte Hall and the campus’ bell tower
(and later moved up the hill and renamed Lawrence Berkeley Lab) became one
of the most celebrated research centers for atomic energy and would bring
several of the world’s most promising scientists to Berkeley. Another nuclear
physicist, Robert Oppenheimer, had joined UC Berkeley in 1929, one year after
Lawrence. He was important in shaping the intellectual mood of the campus
with his passion for Eastern philosophy and his donations to socialist causes.
During the 1930s, several of his friends, relatives (including the woman he
married in 1940) and students were affiliated with the Communist Party.
Lawrence and Oppenheimer created in Berkeley a school of nuclear physicists
that would eventually take the leadership away from Western Europe.
The relevance of atomic energy became more and more self-evident as the
1930s progressed, and not only for particle physics. John Lawrence, brother of
the Lawrence Berkeley Labs’ founder, realized that it could be useful in another
field too: in 1936 he founded the Donner Laboratory to conduct research in
nuclear medicine. In 1939 Ernest Lawrence was awarded the Nobel Prize in
Physics, the first time the prize came to the Bay Area. As important as
Lawrence’s engineering/scientific achievements was his concept of “big
science:” he created a large interdisciplinary team of engineers and scientists to
focus on a practical project. It didn’t come just out of good will, but also out of
necessity: the construction of his increasingly bigger cyclotrons required an
increasingly large number of specialists in different disciplines. Lawrence’s
team would include four future Nobel Prize winners (Edwin McMillan, Luis
Alvarez, Glenn Seaborg and Emilio Segre) plus mechanical engineers such as
William Brobeck, as well as the physicians who followed his brother John.
Last but not least, Lawrence was skilled at obtaining donations from
philanthropists, a difficult task in the middle of the Great Depression.
The Stanford counterpart to Lawrence was Swiss physicist Felix Bloch,
who fled the Nazis in 1934. He and Oppenheimer organized a joint Berkeley-
Stanford seminar on theoretical physics that brought European science to the
West Coast. Bloch would become Stanford’s first Nobel Laureate. Meanwhile,
young graduate Bill Hansen imported know-how about Lawrence’s accelerator
and set out to find a way to use high-frequency waves to accelerate electrons to
high energy.

26
 Lawrence Berkeley Labs Overlooking UC Berkeley
(2010)

New Inputs
The military was creating cities from empty land. The vast activity in radio
engineering convinced the Navy in 1933 to open a base between Palo Alto and
San Jose called Naval Air Station Sunnyvale (later renamed Moffett Field). The
contacts that had existed between the Bay Area’s engineering companies and the
military bureaucracy found a major outlet. In 1939 the US government would up
the ante by establishing the Ames Aeronautical Laboratory (renamed NASA
Ames Research Center in 1958) at Moffett Field. The area to the north would
develop into the town of Mountain View, and the area to the south would
develop into Sunnyvale (originally the two were part of just one huge Mexican
ranch).
The local tradition of radio engineering led an immigrant to settle in San
Francisco to conduct his experiments. In 1927, Philo Farnsworth, a
stereotypical amateur who had been discovered in Utah by San Francisco
venture capitalists Leslie Gorrell and George Everson, carried out the first all-
electronic television broadcast. It was based on a theory that he had conceived
as a teenager. Farnsworth’s team included the young Russ Varian and Ralph
Heintz. In 1931 the investors decided to cash in. They sold the company to the
Philadelphia Storage Battery Company (later renamed Philco). At the time,
Philco was the main maker of home radios in the US and therefore in a much
better position to mass-manufacture television sets. The power of RCA,
however, was such that the Russian-born scientist Vladimir Zworkyn of their
New Jersey laboratories was credited by the media with inventing television.

27
Farnsworth’s reputation was saved by his good San Francisco friend, Donald
Lippincott, formerly a Magnavox engineer and now an attorney, who in 1930
defended the young inventor’s intellectual property against RCA. Lippincott
exemplified a tradition of heavy intellectual-property litigation in the Bay Area
that would be crucial to the development of the high-tech industry run by young
inventors.

Culture and Society

Meanwhile, San Francisco was changing. It had become one of the financial
capitals of the US. In 1930, its Ferry Building was the second busiest
transportation terminal in the world after Manhattan. The Bayshore Highway
opened in 1932 to Palo Alto and in 1937 reached San Jose. In 1964 it would be
renamed US I-101, previously the number for El Camino Real. The rapidly
spreading urban area required the building of the Oakland Bay Bridge and of the
Golden Gate Bridge, completed respectively in 1936 and 1937. The latter was
the longest bridge yet built in the world. Rich patrons allowed the city to open
its own Museum of Art (1935) and to found the first professional ballet
company in the US (1933), the San Francisco Opera Ballet, whose protagonists
were three brothers, William, Harold and Lew Christensen, who had cut their
teeth in the vaudeville. William Christensen on Christmas Eve of 1944
premiered Pyotr Tchaikovsky's "Nutcracker" in the USA, turning that ballet into
an enduring nation-wide Christmas tradition.
Capitalizing on the pioneers of the previous generation, the arts flourished.
Among the new talents were: the surrealist sculptor Adaline Kent, one of Ralph
Stackpole’s students at the California School of Fine Arts; the Japanese-born
painter Chiura Obata, famous for his 1927 paintings of the Sierra Nevada, who
founded the East-West Art Society; and the bizarrely reclusive Achilles Rizzoli,
who between 1935 to 1944 created intricate visionary architectural drawings in
the “Art Nouveau” style. German-born Abstract Expressionist painter Hans
Hofmann moved to UC Berkeley in 1930 and became the most influential
teacher of the Bay Area, pushing for curricula that were heavy on modern art. It
turned the Bay Area into one of the US’s friendliest regions for experimental
artists.
The Bay Area was probably the only place in the world where the dominant
fine art was photography (perhaps as a reaction to Los Angeles’ movie
industry). After Ansel Adams, the Bay Area produced Dorothea Lange, famous
for her work on the homeless of the Great Depression, Imogen Cunningham,
famous for her industrial landscapes of the late 1920s, and James Weston, based
in Carmel, famous for his still lifes and nudes of the late 1920s. Seven Bay
Area-based photographers (including Adams, Cunningham, Weston and
Weston’s apprentices Willard Van Dyke and Sonya Noskowiak) founded Group
f/64 in opposition to Alfred Stieglitz’s pictorialism that had dominated

28
photography in the first decades of the century. The group held their first (highly
publicized) exhibition in 1932.
Another art that was relatively unique to San Francisco (as far as the US
goes) was wall painting, heavily influenced by Diego Rivera’s work in Mexico.
In 1936 muralist Edith Hamlin painted the Western-themed murals for the
Mission High School. Whereas the dominant art in Los Angeles generated
colossal revenues and the arts on the East Coast created world-famous
movements, San Francisco artists were mostly independents and eccentrics, just
like the hobbyists of radio engineering.
In 1935 art historian Grace Morley founded the San Francisco Museum of
Art, the second museum in the US devoted exclusively to modern art. Again, San
Francisco had its own idea of what "modern art" was. In 1946 Morley hired
filmmaker Frank Stauffacher to start the "Art in Cinema" series, that inspired the
California School of the Arts to assign a film course to Sidney Peterson.
Peterson, who had been a painter and sculptor in France at the time of Dada,
directed the manifesto of the San Francisco avantgarde with poet James
Broughton: "The Potted Psalm" (1946).
In 1939 San Francisco celebrated its status as a vibrant center of innovation
with a World’s Fair (the “Golden Gate International Exposition”) that was held
on an artificial island in the middle of the bay, Treasure Island. Its highlight was
Ralph Stackpole ‘s 24-meter tall colossus “Pacifica” (dynamited in 1942 to
make room for a naval base). In the years that it lasted, 16 million visitors came
to visit.
In 1911 James Phelan had a villa built in the south bay, precisely in the hills
of Saratoga overlooking Santa Clara Valley. He had made his fortune during the
Gold Rush as a trader and a banker and had then become the mayor of San
Francisco and was soon to become a US Senator from California. Phelan had
bequeathed this villa (named "Montalvo" in honor of the 16th century Spanish
writer who coined the name "California") to the state so that it could be turned
into a cultural center to support promising artists, writers, musicians and
architects. It took a while, but in 1939, Villa Montalvo opened the doors to an
artist residency program, the first one in the Western United States.
The great musical innovator of the Bay Area (and perhaps of the whole
country) was Henry Cowell, a bisexual who spent four years in prison for that
"crime." In 1930 he commissioned the Russian instrument builder Leon
Theremin to create the first electronic rhythm machine (the "Rhythmicon").
Cowell later taught the influential course "Music of the Peoples of the World" at
UC San Francisco (already tested in 1933 at the New School for Social
Research in New York) promoting atonality, non-Western modes, percussion
ensembles, and even chance composition. He also was probably the first
classical composer to live a parallel life as a successful pop songwriter. In San
Francisco his pupil Lou Harrison took advantage of the Bay Area's ethnic Babel
and incorporated Chinese opera, Native-American folk, jazz, and later the

29
gamelan music of Indonesia into Western classical music. In New York, his
other pupil John Cage became famous by expanding on several of his master's
intuitions.
Rich patrons also funded San Francisco’s legendary nightlife, a legacy of
“Barbary Coast” that religious groups tried in vain to suppress. In 1936 Joe
Finocchio opened the gay bar “Finocchio’s” on Broadway. Those were the
years of the Great Depression, which had started with the financial collapse of
1929. However, not a single bank failed in San Francisco. The Bay Area was
certainly affected by the crisis, but it fared a lot better than the rest of California
and of the US. In fact, it was during the Great Depression that San Francisco
leapfrogged to the higher ranks of metropolitan areas, despite remaining a
relatively small city in itself. After growing rapidly since the earthquake
(416,000 people in 1910), the population stabilized at 634,000 during the
1930s. Residential growth was now spreading to the north, east and south.
At the time San Francisco was famous around the country for its ethnic
diversity, but little else. At the end of the 1930s San Francisco was still a
relatively lawless place. A popular joke was that the organized crime of
Chicago and New York had no chance to infiltrate San Francisco because the
entire city was just one big racket.

Stanford and US Industry

Stanford University was becoming a major center of innovation, and its
doctrine of encouraging entrepreneurship was beginning to pay off. In 1937 Fred
Terman’s students William Hewlett and David Packard started working on an
audio-oscillator. In January 1939 they founded a company called Hewlett-
Packard in a Palo Alto garage. Their first customer was Walt Disney: the
Hollywood animation company purchased their oscillator in 1939 for the
animation film “Fantasia.” Also in 1937 Stanford University’s Professor
William Hansen teamed up with two hobbyists who had a brilliant idea:
brothers Sigurd Varian (an airplane pilot) and Russ Varian (a Stanford dropout
who had roomed with Hansen, and a former engineer in Philo Farnsworth’s
television laboratory). They were refining an electronic device that worked as
an amplifier for generating electromagnetic waves at higher frequencies than
radio frequency (microwaves). Working with Hansen at Stanford they
developed the klystron tube, the first generator of microwaves. This invention
revolutionized and greatly improved radar technology (and, in fact, enabled
airborne radars, Sigurd Varian’s original motivation) on the eve of World War
II. The radar dish broadcasts pulses of microwaves, which bounce back
whenever they hit an object in a time interval that reveals the distance of the
object.
These pioneers knew each other well via Stanford: in 1938 Terman
organized a research team around Russ Varian, with Charles Litton reporting to

30
him and Dave Packard reporting to Litton.
In 1940 the cash-rich Sperry Corporation of New York, which specialized
in aircraft navigation equipment, basically “bought” Hansen and the klystron
from Stanford. It rewarded Stanford with a huge investment in its electrical
engineering lab, allowing the lab to grow even more rapidly. Stanford already
had a national reputation in high-voltage power transmission. It had now found
the money to expand in electronics too. The Varian story was a further
refinement of the FTC story: interaction between industry and university led to
an advanced technology whose first customer was the government and whose
first application was warfare.

The house where Bill Hewlett and Dave Packard started HP – the garage to the left

Progress in Electronic Computation

Mostly unbeknownst to the Bay Area scientists who were working on radio
engineering and atomic energy, significant theoretical progress was being made
elsewhere in the theory of computation. In 1937, the British mathematician Alan
Turing described a machine capable of performing logical reasoning by
manipulating symbols (like a mathematician does), the “Turing machine.” He
then described a “universal Turing Machine,” capable of simulating any Turing
machine by reading a symbolic description of the machine to be simulated. It
was a purely abstract concept, but it proved the feasibility of a machine capable
of solving all problems; in technical words, a “programmable” machine. A few
years later the Hungarian-born mathematician John Von Neumann at Princeton
University showed how it would be more efficient to build a computing machine
that holds both its data and its instructions, the “stored-program architecture.”

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The idea spread quickly thanks to Princeton’s policy of making its research
publicly available.
A major research center had been created in 1925 by AT&T in New York
and named after AT&T’s founder Alexander Graham Bell. From the beginning,
Bell Labs had featured a department for applied mathematics, led by Thornton
Fry. Here George Stibitz had the idea of using relay circuits (the same kind of
circuits that AT&T was deploying for telephone systems) to perform binary
arithmetic computations. In 1937 he built a relay-based binary calculator, the
“Model K.”
The computer had many more fathers. In 1938 John Atanasoff at Iowa State
College had conceived a rudimentary electronic digital computer. It was not
programmable, though. Konrad Zuse built the first program-controlled computer
in 1941 in Germany, the “Z3,” the first hardware implementation of the
universal Turing machine. It still employed electro-mechanical relays. For
practical purposes, though, the “differential analyzer” was still the most
advanced computing device. It was a mechanical analog computer, capable of
performing sophisticated computations as fast as a professional mathematician.
Vannevar Bush (the Professor of Electrical Engineering at MIT in Boston who
had graduated Terman in 1924) constructed a computer in 1931, which was
installed in 1935 at the Moore School of Electrical Engineering of the
University of Pennsylvania to help the Ballistics Research Laboratory of the
Army calculate the trajectory of bombs. The “soldiers” assigned to perform
computations for the artillery were usually women, and were called
“computers.”

High-tech Construction
The New Deal and World War II sent huge government investments to the
West Coast. Henry Kaiser, who had paved roads in Cuba, was one of the
contractors for the colossal concrete Hoover Dam (inaugurated in 1936), then
built the first integrated steel mill in the Pacific states (at Fontana, near Los
Angeles, in 1942). During World War II his shipyards built thousands of cargo
ships (Richmond alone in the north Bay built 727) employing the latest
technology (inherited from the prefabrication techniques of dam building) that
allowed him to shorten the shipbuilding process from one year to 48 days.
Those shipyards alone caused a population boom. Kaiser was getting immensely
rich but his conglomerate was actually known for treating the workers humanely.
In the 1940s Kaiser's corporate welfare programs was among the most generous
in the USA. After two more giant dams (the Bonneville and Grand Coulee
Dams), Kaiser then ventured into aluminum, steel, real estate, broadcasting and
many other businesses.
The Hoover Dam also created the fortune of another Bay Area construction
and engineering company, the one that would become number one in the country.

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Started by a railroad worker, Warren Bechtel, it remained (and still remains)
privately held within the family. Bechtel also built San Francisco's Bay Bridge
(1936). In 1937 John McCone created Bechtel-McCone-Parsons (BMP) to build
oil refineries, starting with one in Richmond. In 1940 Bechtel began expanding
abroad with a project in Venezuela. In 1942 it built Marin City, north of the
Golden Gate Bridge, for guest worker housing during the wartime boom of
shipyards. It then ventured into power plants and chemical plants all over the
world.

The Aerospace Industry in Los Angeles

The Bay Area was also home to early aviation (after all, John Joseph
Montgomery of Santa Clara College had built one of the earliest airplanes in the
1880s, two decades before the Wright brothers),, although not much came out of
it: Allan Loughead started out in San Francisco with his Alco Hydro-Aeroplane
Company in 1912 before founding Lockheed in Los Angeles a decade later.
The history of aviation in the Los Angeles area well illustrates how
California developed via the interaction between defense spending, university
and industry. Aviation was, after all, the first high-tech industry to spread
globally from California.
In 1921 Donald Douglas founded an aircraft-building company in Los
Angeles to commercialize his "Cloudster", the first airplane to lift a load
exceeding its own weight, and in 1925 Claude Ryan founded a company in San
Diego to build the Ryan M1 (Charles Lindbergh's "Spirit of St Luis" that flew
from New York to Paris in 1927 was a Ryan plane). In 1926 Allan Loughead,
Jack Northrop and Kenneth Jay founded yet another company to build aircrafts,
Lockheed. Both Douglas and Lockheed soon came to rely on lucrative contracts
from the military (e.g., the World Cruisers of 1924, the T2D-1 torpedo bomber
of 1927, the flying boat Sinbad of 1930).
Using a donation by philanthropist Daniel Guggenheim, the California
Institute of Technology (formerly Throop Polytechnic Institute) opened the
Guggenheim Aeronautical Laboratory (GALCIT) in 1928. The lab featured a
state-of-the-art wind tunnel and teachers such as Harry Bateman (a British
mathematician), Todor Karman (a Hungarian physicist) and Douglas' chief
engineer Arthur Raymond. This group pioneered the collaboration among
university research, industrial labs and government agencies that would become
common in the Bay Area. That collaboration changed a world that was still
dominated by railroads.
Meanwhile an important decision was taken by the government. The Post
Office had launched air mail in 1918 using old British planes built by Geoffrey
de Havilland at the Aircraft Manufacturing Company (Airco), then the largest
aircraft manufacturer in the world. Transcontinental air mail had begun in 1924
but the complexity of manning the equipment required for safe long-distance air

33
travel had prompted the government to subcontract mail delivery to commercial
airlines. A scandal led in 1934 to a law ordering the dissolution of holding
companies mixing airlines and aircraft manufacturers, thus boosting competition
in the field.
One year after its DC-1 had set a new record for coast-to-coast flight (11
hours from Los Angeles to New York in April 1935), Douglas struck gold with
the 21-passenger DC3 (first delivered to American Airlines in June 1936) that
did for air travel what the Ford Model T did for car travel. Its transcontinental
record, meanwhile, was beaten repeatedly by Howard Hughes' H-1 Racer
planes, down to 7 hours in 1937. By 1939 Southern California was home to
most of the aircraft industry of the USA and Douglas airplanes were carrying
more than 90% of civilian air passengers.
Meanwhile at GALCIT the self-taught Jack Parsons experimented with
solid-fuel rockets (the JATO of 1942), Karman's student Frank Malina with
liquid fuel (the WAC Corporal of 1945, built jointly by Douglas and GALCIT),
and the Chinese-born Qian Xuesen, aka Hsue-shen Tsien, even speculated about
nuclear-powered rockets. In 1942 these university researchers (Karman,
Malina, Parsons) founded a company, Aerojet Engineering, thus pioneering the
model of the start-up. In 1944 Karman, Parsons and Malina founded the Jet
Propulsion Laboratory (JPL) to work on rockets, ostensibly a joint project
between the army and the university, and in 1945 Karman was drafted by the
military to start Project RAND at Douglas, the prototype of the "think tank",
later turned into the self-standing RAND Corporation (1948).
World War II made the fortune of several other aircraft builders: Northrop,
who founded his own company in 1939 in Los Angeles, Jim McDonnell, who
established his firm in St Louis (Missouri) also in 1939, and, of course, Boeing
(founded in 1916 in Seattle by William Boeing, that reached its wartime apogee
with the B-29 of 1944, the first intercontinental bomber). In the Los Angeles
area the other big ones (besides Douglas, Lockheed and Northrop) were Vultee
(originally founded by Jerry Vultee and Vance Breese as the Airplane
Development Corporation in 1932 to sell six-passenger V-1 passenger planes to
American Airlines) and Dutch Kindelberger's North American Aviation, another
huge beneficiary of military contracts. Lockheed became a darling of the Air
Force when its Lockheed Advanced Development Projects (LADP), aka "Skunk
Works", located on the northern side of the San Gabriel mountains, established
in late 1943 under Kelly Johnson, designed the first jet fighter of the USA, the P-
80 Shooting Star, later followed by other strategic projects like the spy plane U-
2 (1957) and the F-104 Starfighter (1958). By 1943 the industry had already
built 100,000 warplanes. By the end of the war industrial production in the Los
Angeles area was second only to the Detroit area. Uniquely in history, Los
Angeles had been industrialized in a brief period of time (the war) and largely
by government intervention, creating a third massive industrial region (after the
Northeast and the Midwest). In other words, World War II had the side effect of

34
revolutionizing the economy of California and of integrating California with the
national industrial complex. World War II accelerated western migration,
California's population growing from 7 million in 1940 to 10.5 in 1950, until in
1962 California passed New York state as became the most populous state. If
California had been one of the three top beneficiaries of military spending
during the World War, it would become the number one in 1958 during the Cold
War.
Weird people already abounded in those days. For example, architect Julia
Morgan was designing a castle on the coast for newspaper magnate William
Randolph Hearst (eventually completed in 1947). But rocket science went
beyond the extravagant. The esoteric cult Ordo Templi Orientis, founded in
Germany by Theodor Reuss, had spread to Britain, where it fell under the sell of
magician Aleister Crowley, who had turned it into his own personal cult, known
as "Thelema" from the manifesto published by Crowley as "The Book of the
Law" (1904). By the end of World War II only the California chapter survived,
surprisingly led by one of the most distinguished rocket scientists, Jack Parsons.

35
 Moles: The Military Boom, Artistic
Boom, and Economic Boom (1941-48)

The Bay Area as a Strategic Weapon

The Japanese attack on Pearl Harbor dragged the US into World War II. It
had an enormous impact on Bay Area scientists since they had the most
advanced radio technology in the nation..
In 1940 the US government sponsored a new laboratory at the MIT, the
Radiation Laboratory (or "Rad Lab"), for the purpose of developing defense
systems. The MIT Rad Lab became the birthplace of cybernetics thanks to the
work of Norbert Wiener and others. The Rad Lab (as well as its successor, the
Research Laboratory of Electronics) applied Ernest Lawrence's concept of "big
science": large interdisciplinary teams working together to solve mission-
critical problems.
In June 1941, the US government established a new agency (the Office of
Scientific Research and Development) to coordinate nation-wide scientific
research for the US military, and put Vannevar Bush in charge of it. Traditionally
the US government (like every other government) had relied on top-secret
military labs (or their private contractors) to develop military technology. Bush,
instead, directed funding to and influenced the direction of research programs at
universities. Bush’s approach created a new template for interaction between
science and government, as well as between science and war.
Fred Terman had graduated from the MIT in 1924 with a thesis supervised
by Bush, and the Rad Lab summoned Terman from Stanford to direct the Radio
Research Laboratory, that in 1942 was being relocated to Harvard University.
Terman was basically in charge of electronic warfare, a new kind of warfare
that was fought in labs instead of tanks, ships or planes.
Berkeley was no less strategic, thanks to its know-how in nuclear physics.
In 1942, the US government launched the “Manhattan Project” to build a nuclear
bomb, and appointed UC Berkeley Professor Robert Oppenheimer in charge of
it. Oppenheimer applied Lawrence’s concept of “big science” and assembled a
large team of physicists to design the weapon. The project soon exceeded the
capacity of the Berkeley campus and was moved to Los Alamos in New
Mexico. It was Lawrence himself who designed an electromagnetic process to
separate the explosive U-235 isotope from the U-238 isotope of uranium that led
to the building of the facility at Oak Ridge in Tennessee. In parallel Edwin
McMillan and Glenn Seaborg at the Radiation Lab in Berkeley used the
cyclotron to discover a new element, plutonium, and immediately realized that it

36
was even better than U-235 at sustaining an explosive chain reaction. The
government rushed to build another plant, this time to produce plutonium, at
Hanford in the state of Washington. The “Trinity” bomb that was detonated in
July 1945 in the desert of New Mexico used plutonium. The bomb dropped on
Hiroshima one month later used U-235, the one dropped on Nagasaki used
plutonium.

The Cyclotron

Business was mainly affected by World War II in terms of providing high-

tech components to the booming defense industry. This was a lucrative business
that turned several small companies into giants.
Companies also benefited from the war by cultivating new technologies.
The Dalmo Manufacturing Company, based in San Carlos since 1944, had
evolved from the shop that Tim Moseley had opened in 1921 in San Francisco
to manufacture simple electrical appliances. During World War II it developed
the first airborne radar antenna, which was crucial for the air force to win the
war. The invention was largely the work of the Russian-born engineer
Alexander Poniatoff, who had joined the company in 1934. Moseley’s company
(now a joint venture with Westinghouse renamed Dalmo-Victor and based in
nearby Belmont) was becoming a major defense contractor. Meanwhile, in
1944 Moseley himself invested in Alexander Poniatoff’s new company Ampex,
located in San Carlos, to manufacture electrical parts for radar that were hard to
find. Poniatoff, however, moved into a new field, the tape recorder, a novelty
that a US soldier, Jack Mullin, had brought back from occupied Germany. It was
one of Germany’s fields of excellence: the magnetic tape had been invented by
Fritz Pfleumer in 1927. The first tape recorder (later dubbed Magnetophon) had
been introduced by AEG in 1935 and perfected into a high-fidelity system in

37
1941. AEG used tape made by IG Farben, a manufacturer of the lethal gas used
in Nazi extermination camps. In 1947, Ampex delivered its own tape recorder,
which had been requested by pop- star Bing Crosby and soon became a favorite
among pop and movie stars.

The First Computers

One of the major technological outcomes of World War II was the computer,
another “imported” technology. The British had built a series of machines, all of
them dubbed Colossus, to help decipher encrypted German messages. In 1943,
British engineers led by Tommy Flowers (working for the Post Office Research
Station in north London) built the Colossus Mark 1, the world’s first
programmable digital electronic computer, and the first electronic computer to
be used extensively. It was “electronic” because it used vacuum tubes. The
closest thing in the US was the result of a joint project between IBM and
Harvard University: a prototype code-named Automatic Sequence Controlled
Calculator (ASCC) that Harvard preferred to call “Harvard Mark I,” designed
by Howard Aiken of the Harvard Computation Lab and completed in February
1944. It was the first computer programmed by punched paper tape, but it still
employed electro-mechanical relays, just like Zuse’s Z3 (and it wasn’t as
programmable as the Z3). One of its “programmers” was Grace Murray-
Hopper, a female Navy officer dispatched to the Harvard Computation Lab.
The paper tape was a significant innovation: all the previous computers
required human intervention during the calculation, while the paper tape
contained all the instructions needed to run without any human help.
Whatever the merits of these early machines, they provided momentum to
fulfill Turing’s dream. In 1946 the ENIAC, or “Electronic Numerical Integrator
and Computer,” was unveiled by Professor John Mauchly and his student
Presper Eckert at the University of Pennsylvania’s Moore School. It contained
18,000 vacuum tubes and occupied about 160 square meters of space. That too
had been funded by the US military. “Project PX,” started in 1943 by the Army’s
Ballistics Research Laboratory (BRL) to replace the old Bush differential
analyzer. The ENIAC was not able to store a program internally: a group of
programmers (mostly women) had to organize switches and wires to “enter” the
program into the computer. Also, the ENIAC was a decimal computer, not
binary. Luminaries such as Vannevar Bush and Howard Aiken were very critical
of the project.
An improved version of the Harvard Mark I, the SSEC (Selective Sequence
Electronic Calculator), built by astronomer Wallace Eckert at Columbia
University, was unveiled by IBM in 1948: it contained 12,500 vacuum tubes and
21,400 relays.
In December 1947, the brand new discipline of computer science was given
a boost by the invention of the transistor: AT&T Bell Labs’ engineers John

38
Bardeen, William Shockley and Walter Brattain demonstrated the principle of
amplifying an electrical current using a solid semiconducting material. As the
name implies, a semiconducting material lies in between electrical conductors
and insulators. Germanium and silicon are two of the most common
semiconducting materials. Unlike conductors, which always conduct, and unlike
insulators, which never conduct, the behavior of a semiconducting material can
be customized by “doping” it, i.e. by disturbing it with an electromagnetic field
or by heating it. In other words, pure germanium and silicon conduct poorly, and
“dopants” are added to increase conductivity: either extra electrons (negative-
type dopant) or extra holes (positive-type dopant). The trick in the fabrication
consisted of joining “positive-type” semiconductors with “negative-type”
semiconductors, where positive or negative refers to the majority electrical
charge. That “p-n junction” is the elementary unit of a semiconducting device. A
transistor is simply made of two “p-n junctions” (usually n-p-n). Shockley
immediately realized the potential of the transistor: it was a better amplifier than
the vacuum tube and it was easier to mass manufacture.
Other revolutionary ideas revolved around the concept of information. In
1945 Vannevar Bush at MIT envisioned the Memex, an electromechanical
device capable of accessing archives of microfilms (which at the time were the
most widely used format of storage after paper), of creating paths of navigation
by linking pages, and of combining microfilms with annotations. In 1943 MIT
mathematician Norbert Wiener pioneered Cybernetics (later refined through a
series of ten Macy Conferences from 1946 until 1953),, having realized that
machines and animals shared two fundamental concepts: control and
communication. In 1947 John Von Neumann at Princeton University advanced
the notion of self-reproducing automata. In 1948 Claude Shannon at AT&T’s
Bell Labs was researching how much information could be sent on a noisy
phone line. In the process, he came up with a mathematical definition of
“information,” founded information theory, and coined the term “bit” to describe
the fundamental unit of information. Shannon’s definition implied that an
unexpected occasional event contains more information than a regular behavior.
In 1950 Turing (still in Britain) proposed a test to determine whether a machine
could be considered intelligent or not. Human imagination was jumping way
ahead of human technology.
Interest in electronic computers was skyrocketing, although only a handful of
people had actually seen one and even fewer were capable of using them. The
main centers for research on electronic computing were Boston (Harvard and
MIT), Philadelphia (UPenn’s Moore School of Electrical Engineering, BRL)
and New Jersey (Bell Labs, Princeton, RCA Labs).
The computer is widely considered one of the all time great inventions, but
it is not clear who the inventor was. Saying that Alan Turing invented it
(because he designed the Universal Turing Machine which is the fundamental
architecture of our digital computers) is like saying that Leonardo da Vinci

39
invented the airplane. There were numerous projects in the 1940s and early
1950s (and even earlier in Germany) but none of their leaders can be
considered the "inventor". It was truly a remarkable story of many pieces
coming together rapidly from different places to eventually create the first
programmable electronic computer, the Manchester Small-Scale Experimental
Machine, or, better, its commercial version, the Ferranti Mark 1 (1951), the first
programmable electronic computer that could actually be purchased and used by
a customer (the Colossus was semi-programmable, i.e. not general purpose, the
ENIAC and the Harvard Mark I were both electromechanical).
The effect of WWII was that the government could assemble the best brains
in computer science and electronic engineering to solve big problems instead of
having them scatter among competing corporations. Once the military secrets
were lifted, these scientists were free to spread the know-how at will: there
were no patents and no industrial secrets.

The Bay Area and the Cold War

The Bay Area finally got involved in computers via a newly created
offshoot of Stanford University. In 1946 Stanford spun off the Stanford Research
Institute (SRI). Its purpose was to create an industrial research center that
would leverage Stanford’s high-tech know-how for commercial products. After
six months, SRI moved off campus (to Menlo Park, which had swollen after the
government had run a large military hospital there between 1943 and 1946) and
began to relax its ties with the university. One of its very first projects was to
improve the ENIAC: SRI replaced some key components with the latest
electronic novelties and obtained a smaller machine. The original ENIAC was a
30-ton monster that covered 167 square meters of floor space and contained
17,468 vacuum tubes, 70,000 resistors, 10,000 capacitors and 1,500 relays.
SRI pioneered a new business model: the first consulting firm based in an
academic world but working for the military and for large corporations.
At the same time Fred Terman returned to Stanford University as the dean of
the engineering school, and used his connections with the US military (notably
the recently instituted Office of Naval Research) to found and fund a new
Electronics Research Lab (ERL). The Korean War (1950) brought another huge
infusion of money from the Office of Naval Research to carry out research in
electronics, which Terman used to open an Applied Electronics Laboratory
(AEL). After the Soviet launch of the first artificial satellite, Sputnik, the US
government rapidly increased funding for research, and the beneficiaries were
mainly MIT on the East Coast and Stanford University on the West Coast.
After the invention of the klystron, Bill Hansen continued his research into
accelerating electrons and in 1947 inaugurated his first linear accelerator.
Meanwhile, his former assistants, the Varian brothers, opened their own
business in San Carlos in April 1948 to work on radio, radar and television.

40
The ties with Stanford were still strong: Ed Ginzton, an alumnus of the klystron
project, was both a director at Varian Associates and a Stanford professor. The
Varian brothers chose San Carlos because that city north of Palo Alto was
becoming an electronic industrial center. San Carlos was a mini-urban
experiment: it had been built ex-novo between 1917 and 1925 just north of
Redwood City by the Mercantile Trust Company following the arrival of the
Southern Pacific railway. San Carlos was still a very tiny village in 1930, but
then Charles Litton (1930s), Dalmo (1944) and Eitel-McCullough (1945)
opened offices there. Around them other companies were created to serve the
electronics industry.

The San Francisco Renaissance and the Economic

Boom
It was during World War II that the foundations for the “San Francisco
Renaissance” were laid down. San Francisco had previously lacked a literary
scene that could match its visual arts. The poets Kenneth Rexroth and Madeline
Gleason started it. In 1954, Gleason founded the Poetry Center at San Francisco
State University and, in April 1947 organized the first “Festival of Modern
Poetry.” Rexroth and Gleason helped Berkeley poet Robert Duncan, one of the
first openly gay intellectuals who wrote “The Homosexual in Society” in 1944.
Rexroth also befriended poets William Everson, a former Catholic monk,
Muriel Rukeyser, a Jewish feminist, and Philip Lamantia. In the 1940s San
Francisco also witnessed a dramatic increase in black immigrants. Most of them
settled around Fillmore Street, the “Harlem of the West.” That street became the
epicenter of nightlife and of live music.
The end of the war was unleashing the industrial potential of the US.
Industrial production rose by almost 50% in the ten years after the war. The
civilian economy, busy engineering the lifestyle of the winners, was an avid
consumer of new appliances. The defense economy, busy countering the moves
of the Soviet Union in the “Cold War,” was an avid consumer of new weapons.
In 1946 a new entity joined the US government in funding technological
innovation: the venture capital firms. Three big firms debuted in 1946. First
was Boston’s American Research and Development Corporation (ARD), led by
the French-born former Harvard Business School’s Professor Georges Doriot
with assistance from MIT’s President Karl Compton and Federal Reserve Bank
of Boston’s President Ralph Flanders, which was the first publicly owned
venture-capital firm (that would fund spin-offs of MIT and Harvard). Second
was New York’s J.H. Whitney & Company, led by Jock Whitney (his partner
Benno Schmidt coined the term “venture capital”). Third came New York’s
Rockefeller Brothers, led by Laurance Rockefeller (later renamed Venrock).
They were often attracted by the potential of commercializing technologies
invented during the war. The exuberance of private investors spread to

41
California, where at least two such ventures were incorporated in 1946:
Industrial Capital, founded by San Francisco’s stock broker and “angel”
investor Edward Heller, and Pacific Coast Enterprise.
The US was beginning one of the longest and fastest periods of economic
expansion in history. The population of California had been less that 100,000
people in 1850 and 1.5 million people in 1900. During World War II, it rose
from seven million to over nine million in just four years.

42
 Engineers: Stanford Industrial Park,
Inventions, Discoveries, and Rebellion at the
Dawn of the Computer Age (1949-61)

Commercial Computers
Key early computer components were being created in the US and Britain.
In October 1944 the Army funded a project for Mauchly and Eckert (still at
UPenn’s Moore School of Engineering) to develop a binary (not decimal)
computer capable of storing a program internally. They hired John von Neumann
as a consultant, and in June 1945 the trio delivered the design for the Electronic
Discrete Variable Automatic Computer (EDVAC), a stored-program computer.
It was eventually deployed at the University of Pennsylvania in August 1949
three years after the two inventors had already left the university to start their
own company (EMCC). Meanwhile, Alan Turing in Britain in February 1946
had been commissioned by Britain’s National Physical Laboratory to create an
electronic computer. He delivered the design for the Automatic Computing
Engine (ACE). The Pilot ACE, deployed in May 1950, had 1,450 thermionic
valves (vacuum tubes). However, Pilot ACE was not practical for programming
and Turing's template was quickly abandoned in favor of John von Neumann's
architecture.
Still in Britain, Frederick Williams at the University of Manchester
developed a tube that was a variation on the cathode-ray tube. These Williams
tubes could be used to implement Random Access Memory (RAM), a type of
computer memory that was convenient for storing a program (in previous
computers the program had to be entered manually each time, either through
switches or paper tapes). Williams’ team set out to build a computer. Williams’
assistant Tom Kilburn ran the first computer program in June 1948. What really
made the difference was the memory: the Williams tube allowed memory to
extend enough so as to hold not only the data but also the program. The world's
first stored-program computer, officially named Manchester Small-Scale
Experimental Machine, was nicknamed "Baby".
The computer was ready in 1949, and British defense contractor Ferranti built
the commercial version, the Manchester Mark 1, in 1951.
Another early stored-program electronic computer from Britain was the
Electronic Delay Storage Automatic Calculator (EDSAC), that debuted in 1949,
built by Maurice Wilkes at the University of Cambridge.
The first stored-program electronic computer to be deployed in the US for

43
general use was the SEAC in May 1950 at the National Bureau of Standards
(NBS) in Washington, basically a scale-down version of the EDVAC (originally
intended as an “interim” computer when it was conceived in 1948). It was also
the first computer to use semiconductor devices (10,500 germanium diodes)
instead of vacuum tubes for its logic. It had a memory of 512 words of 45 bits
each (the equivalent of about 2.5 kilobytes). A program was entered via teletype
or paper tape as a string of hexadecimal characters. The console to control the
computer had no keyboard but just switches and dials. The NBS trained a
relatively large staff of programmers. The “interim computer” was designed by
a huge team of 33 people, organized in two groups: the engineers, headed by
Sam Alexander and featuring Bob Elbourn, Ruth Haueter (the sole female
engineer) and Sidney Greenwald; and the mathematicians, headed by Ed Cannon
and featuring Ida Rhodes, Ethel Marden and Joe Levin.
The age of differential analyzers was coming to an end. The last one was the
Magnetic Drum Digital Differential Analyzer (MADDIDA), built in 1951 in Los
Angeles by Northrop Aircraft.
Corporate interests in the US were also plowing ahead. In 1950, the
Remington Rand Corporation of New York purchased Mauchly’s and Eckert’s
computer business (EMCC). Rand turned it into their Univac division with the
aim of creating the “UNIVersal Automatic Computer” (a computer useful for
business as well as scientific purposes). Mauchly and Eckert dutifully delivered
it at the end of 1952 to the Census Bureau of the US government, their first and
only customer before they were rescued by Remington Rand. In 1951 Grace
Murray-Hopper, a pupil of Aiken at Harvard who had joined the Eckert-
Mauchly Computer Corporation in 1949, developed the first compiler for a
computer programming language, the A compiler for the Univac, a language that
eventually evolved into B-0 or Flow-matic (1955).
IBM was involved in computers too. The main customer for IBM’s early
computers was the Naval Surface Weapons Center at Dahlgren, Virginia. The
Center bought the electromechanical Mark II in 1948 and then the semi-
electronic Mark III in 1951, both designed again by Howard Aiken like the
Harvard Mark I. In 1952 IBM introduced its first electronic computer, dubbed
IBM 701, designed at a facility north of New York (the Poughkeepsie
Engineering Laboratory) by the team assembled by Ralph Palmer, a former
electronic engineer of the Navy who had no experience with the Harvard project
but had just introduced IBM’s line of electronic calculators. Palmer had hired
Von Neumann as a consultant.
All the first computer customers were part of the military establishment.
Remington Rand responded in 1953 with the Univac 1103. In 1946 the Navy had
set up a company in Minneapolis, Engineering Research Associates (ERA), to
build its top-secret computer, first the Atlas (operational in December 1950 and
only available to the Navy) and then the Atlas II (of which 20 were built and
sold to the general market). In 1952 Remington Rand bought Engineering

44
Research Associates (including a young Seymour Cray) and commercialized the
Atlas II as the Univac 1103 (in 1954). Then Gene Amdahl architected the IBM
704 of 1954, which used vacuum tubes, had RAM and also came with a
rudimentary “operating system.” The RAM of both the Univac 1103 and the IBM
704 replaced the cathode-ray tube storage with a new kind of storage, “magnetic
core.” However, IBM’s first mass-produced computer, designed at yet another
laboratory in upstate New York, was the low-cost 650, also introduced in 1954,
but it was still decimal, not binary, and had a rotating drum memory instead of
the magnetic-core RAM.
The era of commercial computers had begun with a race between Univac
and IBM. Univac had acquired the technology from outside and needed to
integrate the Remington Rand research center of Connecticut with the EMCC
facility of Pennsylvania and with the ERA facility of Minnesota. IBM had
created the technology internally, notably at Aiken’s and Palmer’s laboratories.
IBM probably won out (in the long term) because of its involvement in a
groundbreaking and important military project, the Semi-Automatic Ground
Environment (SAGE). With funding from the Navy, that was interested in a flight
simulator, between 1948 and 1951 a team led by Jay Forrester had built the
Whirlwind computer at MIT, the first real-time system and the first computer to
use a video display for output. Norman Taylor had worked on the Whirlwind
from its inception in 1948 and Jack Gilmore had written the assembler program.
SAGE was created because the Air Force needed a system to rapidly
process the data coming from a radar network in case of a Soviet attack against
the US. SAGE was assigned to MIT’s Whirlwind team in 1954 with the goal to
create a system for monitoring and intercepting enemy rockets. IBM was in
charge of adapting the Whirlwind computer to the task, and the result was the
AN/FSQ-7 computer, which (first delivered in 1958) still remains the largest
computer ever built: it weighed 275 tons and covered 2,000 square meters of
floor space, and contained 55,000 vacuum tubes. Another innovation was a
radar device that would send data to the computer in digital format by modem
over telephone lines (a feature developed by AT&T that jumpstarted its digital
telecommunications business). Half of IBM’s computer-related revenues of the
1950s came from two military contracts: the guidance computer for the B-52
bomber, and SAGE. SAGE alone accounted for sales of $500 million in the
1950s.
Early IBM computers that later became industry standards were the 704 and
709. The 704 used ideas originally developed for yet another military contract.
In 1950 a government agency, the Navy Bureau of Ordnance, commissioned a
superfast computer for the Naval Surface Weapons Center at Dahlgren
(Virginia), which IBM named Naval Ordnance Research Computer (NORC).
Built between 1950 and December 1954 in collaboration with Columbia
University under the direction of astronomy professor Wallace Eckert, this
vacuum-tube computer that used RAM with Williams tubes was indeed the

45
fastest computer of its time. It also introduced an architectural innovation: an
input-output subsystem that executed while the computation continued, to
minimize in-between time (a feature that was transferred to the commercial
computer IBM 709 in 1960 and then became a standard for all computers).
The transition from the early task-oriented computers to the general-purpose
IBM and Univac computers had largely been enabled by the development of
Random Access Memory (RAM). Its first successful and affordable
implementation was in terms of magnetic-core memory, a technique that
emerged out of research conducted in the 1950s mainly around Boston. Two
groups contributed to its refinement: Chinese-born physicist An Wang at
Harvard’s Computation Laboratory under Aiken since 1949 (and at his own
Wang Laboratories since 1951) and Jay Forrester’s Whirlwind project at MIT.
Wang can also be credited for introducing the idea of outsourcing hardware
manufacturing to the Far East, as magnetic-core memories were probably the
first computer component whose price declined rapidly thanks to cheap labor in
the Far East. Magnetic-core memories replaced the old assemblies of relays
and/or vacuum tubes that were not effective in retrieving and returning data.
Within ten years the computer industry had undergone a dramatic
transformation. Initially computers were wartime government projects. Then
small companies such as EMCC and ERA (mainly working for government
agencies) tested the new technology and the private market for it. Finally, the
large office automation players (Remington Rand, IBM, NCR, Burroughs)
entered the field. Burroughs’ Philadelphia research center built the Unitized
Digital Electronic Computer (UDEC) in 1951 and the company sold the first unit
in 1953. NCR purchased the California-based CRC in 1953. The electronics
mega-corporations (General Electric, RCA, AT&T, and Western Electric) were
followers, not leaders; their first computers were respectively the ERMA
(1956) and the BIZMAC (1956). In 1955, General Electric’s revenues were $3
billion, whereas IBM didn’t even reach half a billion: General Electric had the
know-how, the engineers and the capital to dwarf IBM and Univac in the
computer field; but it didn’t. On the contrary, in 1955 IBM passed Remington
Rand for number of installed computers and became the world leader in
computers.
The computer had been invented by scientists interested in solving complex
mathematical problems such as nonlinear differential equations and had found
its first practical application in military-related tasks. The first companies to
realize the non-military potential of the computer were the ones making
typewriters, cash registers, adding machines and tabulating machines, not the
ones making electronic components.
Jay Forrester’s Whirlwind project (and the subsequent SAGE project) gave
Boston a huge lead in computer science over the rest of the country. In 1951, the
Air Force chose MIT to create a state-of-the-art laboratory for computer
science, the Lincoln Laboratory, which probably became the main center for

46
training computer scientists in the entire world.
Another major center for computer innovation was the University of Illinois
at Urbana-Champaign, where in 1951 a team develped the ORDVAC, based on
Von Neumann's EDVAC, which became the second computer entirely built
within a university (after the Manchester one) although on behalf of the Army,
followed in 1952 by its more famous twin, the ILLIAC I (Illinois Automatic
Computer), which remained to be used by the university. They boasted 5
kilobytes of memory (or, better, 1024 40-bit words). Incidentally, a member of
that team, Saburo Muroga, returned to Japan to build that nation's second
computer, the Musashino-1 (1957), following Okazaki Bunji's FUJIC (1956) at
Fuji. In 1960 Donald Bitzer at University of Illinois at Urbana-Champaign used
this very ILLIAC computer to create PLATO, the first computerized system for
learning that inaugurated the field of computer-based education. Despite the
limitations of input/output devices, Bitzer realized that graphics was to be
crucial to using computers to teach.

The Birth of the Semiconductor Industry

An important decision was made by AT&T, the owner of Bell Labs, to share
the technology of the transistor with anyone who could improve it. Jack Morton
organized a symposium to disseminate know-how about semiconductors among
scientists and engineers from all over the world.
The first symposium, held in September 1951, specifically targeted defense
contractors. Yet the second one, in April 1952, was open to everybody who had
purchased the license for the transistor technology. Several electrical companies
understood the long-term potential of transistors: Sylvania, a vacuum-tube
company based in Massachusetts that had expanded during World War II and that
introduced one of the earliest transistors in 1949; Motorola, which opened its
Semiconductor Division in Arizona in 1949; Texas Instruments, one of the
companies that bought the license in 1952; and, of course, Western Electric
itself, AT&T’s manufacturing arm, that opened a factory in Pennsylvania (at
Laureldale) to make transistors and diodes exclusively for the government. A
“startup” that understood the importance of the invention was Transitron
Electronics. Leo and David Bakalar (the latter a graduate from MIT who had
worked at Bell Labs on transistors) founded it in 1952 near Boston to take
advantage of Western Electric’s transistor license.
In 1954 Gordon Teal's team at Texas Instruments beat everybody at finding a
cheap way to make transistors out of silicon.
The first applications of transistors had nothing to do with computers.
Raytheon became the largest manufacturer of transistors by selling transistors
used in hearing aids. What made a “transistor” a household name was the first
portable radios: the Regency TR-1 (October 1954), which used Texas
Instruments’ transistors, and the TR-52 (March 1955) by the Tokyo

47
Telecommunications Company (later renamed Sony). By then the cost of a
transistor had been reduced to $2.50 and the Regency (that contained four
transistors) was sold for $50. The portable radio marked the birth of consumer
electronics, a trend towards miniaturization and lower prices that would
eventually bring ever more powerful appliances in every house and even every
pocket.
The first fully transistorized computer, the TRADIC (TRAnsistor Digital
Computer), was built by AT&T‘s Bell Labs for the Air Force in 1954, but
AT&T was barred from commercial computer business. It was followed in
1955 by the TX-0, built at MIT and basically a transistorized version of the
Whirlwind. IBM did not introduce a transistorized stored-program computer
until 1960, the 7070 (meant as a replacement for the 650).
The role of the government in nurturing the nascent computer and
semiconductor industries was significant and probably crucial. In 1956 both
IBM and AT&T settled antitrust suits by accepting to license their technologies
to their own competitors. This was just one notable example of how the
stringent antitrust policies of that era contributed to the rapid diffusion of
intellectual property throughout the computer and semiconductor industries;
otherwise the barrier to entry would have been too high for small companies to
compete with these giants.

The Computer Industry on the West Coast

The West Coast computer industry was located far from the research centers
of the large office automation companies (IBM, NCR, Burroughs, Remington).
It was peripheral to the strategies of the electronic giants (General Electric,
RCA, Honeywell, AT&T) and left out of the loop of the large government-
funded computing projects (Boston’s Lincoln Lab and UPenn’s Moore School).
On the West Coast the computer industry was limited to serve the needs of the
booming aviation industry of Los Angeles, namely Northrop Aircraft, Raytheon,
Rand and Hughes.
These projects too were mostly funded by government agencies. The staff of
the National Bureau of Standards (NBS) was valuable to the computer industry
of the West Coast because many of those programmers accepted to move west
and joined the aviation industry. To start with, in July 1950 UCLA completed a
computer for the government’s National Bureau of Standards, code-named
Standards Western Automatic Computer (SWAC) and designed by Harry
Huskey, who in 1947 had been a member of Turing’s ACE team. The SWAC
contained 2,300 vacuum tubes.
Northrop, however, did not believe in electronic computers. In 1950 some
of its engineers, who had worked on the Magnetic Drum Differential Analyzer,
quit to form Computer Research Corporation (CRC) and work on computer
contracts for the Department of Defense, but was acquired by NCR in 1953.

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 The rest of Northrop’s computer lab was sold to Bendix, a maker of
appliances and radios based in Indiana. In March 1956 Bendix introduced their
first digital computer, the Bendix G-15, designed by Harry Huskey and inspired
by Turing’s ACE. It took input from paper tape or punched cards and sent its
output to a typewriter (about ten characters per second) or a pen plotter. It was
much smaller than the monsters created by IBM and Univac, a premonition of
the minicomputers to come.
New computers were sprouting up. In 1957 some of the former Northrop
engineers led by Max Palevsky quit Bendix and joined Packard Bell (a Los
Angeles-based maker of consumer radios) to open their computer labs.
Raytheon developed the code-named Hurricane (later Raydac) in 1953 for a
Naval Air Missile Test Center, which was also supposed to replace the SWAC
at the NBS.
The RAND Corporation had been chosen as one of the five sites for
development of a computer designed by Von Neumann in 1946 at the Institute for
Advanced Studies in New Jersey (IAS). It was completed in 1953, a few
months after the IAS machine became operational in June 1952. The IAS
machine, built by Julian Bigelow (one of the founding fathers of Cybernetics),
was the one that popularized the term “Von Neumann architecture” to refer to
stored-program computers (in which computation is due to the interaction
between a processor and a memory, with the memory storing both instructions
and data).
Finally, there were at least two spin-offs from the California Institute of
Technology (CalTech): the Librascope division of General Precision (that built
another “small” computer); and the ElectroData division of Consolidated
Electrodynamics Corporation (CEC), spun off in 1954 to market its first
computer (the 205) and sold to Burroughs in 1956. The dynamics in Los
Angeles were significantly different from the East Coast: engineers moved from
one company to another, and several of them started new companies. All of them
were funded, directly or indirectly, by military projects.
The Institute for Advanced Study at Princeton was one of the most important
centers of research on electronic computers. Established in 1930 by
philanthropists Caroline and Louis Bamberger (brother and sister) and initially
directed by Abraham Flexner (the man who had written the article "The
Usefulness of Useless Knowledge" in 1939 in defense of pure scientific
research), it employed mathematicians such as Oswald Veblen and Kurt Goedel,
and physicists such as Albert Einstein, Hermann Weyl and Robert Oppenheimer.
Julian Bigelow was the chief engineer on Von Neumann's computer projects
from 1946 until 1952. The IAS computer commissioned electronic components
to the RCA Research Laboratory, located nearby. Von Neumann tested his new
computer by trying to solve a problem that no human being had been able to
solve: predicting the weather. The first computer application was a weather
forecast application. While the IAS became famous for simulating the hydrogen

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bomb of 1952, it was the simulation of air flows that proved its power.

The Stanford Industrial Park

In the Bay Area, the Terman doctrine of close interaction between academia
and industry was further implemented in 1951 when Stanford University,
prodded by the rapidly growing Varian that needed more space, created the
Stanford Industrial Park. Located along Page Mill Road, the southern border of
the campus, the park was meant to be an area for companies interested in high-
tech innovation. Stanford had meant to lease the unused land to companies, and
Terman simply proposed that land be leased “only” to high-tech companies.
There had been industrial parks before, but none so oriented towards
technological innovation. Its first tenant (in 1953) was going to be Varian, then
Hewlett-Packard, General Electric (1954), Eastman Kodak, Zenith (1956),
Lockheed (1956), and many others.
Incidentally, it wasn’t the only scheme devised to increase Stanford’s
revenues. In September 1955 the Stanford Shopping Center opened its doors to
the first tenant: this part of Stanford was reserved for retailers and would
become a celebrated open-air shopping mall.
The founders of Hewlett-Packard created a unique corporate culture. Their
management style had little to do with the cold, opportunistic style of the East
Coast. Instead of focusing only on profits, HP focused on its human resources.
Employees were treated like family members. Hewlett-Packard probably
introduced the custom of addressing even the owners of a large company by
their first names. Hewlett-Packard pioneered the idea that the workers of a
company are co-owners of it, giving them stock options. While most companies
hired specialists whose value depended on how long their specialization was
valuable, HP pioneered the practice of retraining employees for different
functions in the company, thus avoiding the career pitfall of hyper specialization.
Lay-offs were anathema, no matter how well or badly the company was doing.
HP was also one of the first companies to promote women to higher management
positions. Hewlett-Packard invested first not on technology or customers but on
its own workforce. Before it created products, it created a sense of community.
The company had done well during the war, providing high-quality electronic
equipment, and it was rapidly expanding. Revenues grew from $5.5 million in
1951 (215 employees) to $88 million in 1961 (5,040 employees).
Varian (whose revenues had increased more than tenfold during the Korean
War) went public in 1956, Hewlett-Packard in 1957, and Ampex in 1958. The
IPO (Initial Public Offering) meant that the region was becoming less dependent
on the big conglomerates of the East Coast. These three companies had raised
the money they needed without having to sell bits to the incompetent East Coast
electronics companies. These IPOs also marked the beginning of a partnership
between Silicon Valley and Wall Street.

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 The Valley was finding other places to apply computer technology. In 1950
the Stanford Research Institute was hired by Bank of America to design a
computer for the automation of check processing. In September 1955, the
prototype of the ERMA (Electronic Recording Machine Accounting) was ready
and the following year the machine was manufactured by General Electric and
NRC. It was the first successful use of a computer for a banking application, and
even pioneered optical character recognition.

HP Labs (2010)

The Culture of Invention

The Bay Area was becoming an ever more attractive location for business.
The inventions continued to flow. Notably, in 1956 Charles Ginsburg at Ampex
Corporation, heading a team that included a young Ray Dolby, built the first
practical videotape recorder, a device that changed the way television
programming worked (previously, all programs had been broadcast live, and,
obviously, at the same time in all time zones). In 1961 Laurence Spitters, a Wall
Street investment banker who had moved to San Francisco and joined Ampex in
1958, founded Memorex in Santa Clara taking three Ampex engineers with him
to work on computer magnetic tape .
UC Berkeley had its own stored-program computer project, CALDIC
(California Digital Computer), completed in 1954 by Professor Paul Morton
who employed former ENIAC staff from Pennsylvania and local students
(including a young Doug Engelbart).
The number of engineers produced by Stanford and UC Berkeley was
beginning to draw the attention of East-Coast companies. In 1952 IBM opened
its first West-Coast laboratory in San Jose. In September 1956 this lab unveiled

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the Random Access Method of Accounting and Control (RAMAC) 305, another
vacuum-tube computer and the first to use magnetic-disk storage, invented at this
lab in 1954. Its RAMAC 350 hard-disk drive had a capacity of five megabytes.
This computer shipped with a processing unit, a card-punch machine, a console
(card feed, typewriter, keyboard), a printer and the 350 hard-disk drive.

The Original Location of IBM’s Western Labs (2010)

The Defense Industry

The defense industry was still the main employer of the Bay Area. In 1956
sales in the US of electronic equipment exceeded $3 billion, and half of that
went to the military. During the Korean War (1950-53), California finally
overtook New York as the state receiving the largest share of military contracts
(26% of all contracts). The majority of the money went to the aircraft industry
based near Los Angeles, but next was the Bay Area. Afraid that the Soviet
Union was leapfrogging their missile technology, in 1953 the Army, thanks to
Terman, commissioned Sylvania to create a missile detection system. Sylvania
set up an Electronic Defense Lab (EDL) in Mountain View, near Moffett Field,
not the first defense contractor to get involved in military projects at this
location. This project, directed by Stanford alumnus Bill Perry, lasted several
years and eventually led to Sylvania’s Ballistic Missile Early Warning System
(BMEWS). In 1958 IBM shipped its first transistorized 709 (originally built
with vacuum tubes) specifically for this project, before that machine was
renamed IBM 7090. In 1959 Sylvania was bought by General Telephone to form
General Telephone and Electronics, or GT&E. By then Sylvania’s EDL had
become one of Santa Clara Valley’s largest companies, with over 1,000
employees, and already spawned the first start-ups in the field of microwave
devices for military applications, such as Microwave Engineering Laboratories
in 1956. In fact, in 1952 General Electric had already dispatched one of its top

52
researchers, Barney Oldfield, to set up a new Microwave Laboratory at
Stanford, one of the very earliest examples of industry-government-university
collaborations (radars and missile defense systems).
In 1954, Charlie Litton sold his glorious San Carlos-based vacuum-tube
operations to Litton Industries. Despite its name, Litton was based in Los
Angeles and owned by Tex Thornton, a former vice-president at Hughes Aircraft
with strong ties to the Defense Department (he had started Electro Dynamics
Corporation in 1953). Litton’s original business in San Carlos became the
Electron Devices Division of Thornton’s Litton Industries. Thornton was one of
the businessmen who understood that the Cold War would require increasingly
sophisticated weapons. By 1959 he could count on sales of $120 million, of
which about 50% came from the government. By 1963 sales would top half a
billion dollars. Meanwhile, in 1954 General Electric opened its Electric
Microwave Lab at the Stanford Industrial Park to manufacture electronic
devices for radars and missile defense systems.
When the Department of Defense awarded Lockheed a contract to work on
the project for a submarine-launched ballistic missile (the Polaris), Lockheed
relocated its electronics research group to the Stanford Industrial Park (1956)
and built a factory for its Lockheed Missiles Division near Moffett Field in
Sunnyvale. That same year the US decided to invest in satellites to spy on the
Soviet Union (a project code-named “Corona”) and that division of Lockheed
got the contract and opened another factory, the Advanced Projects division.
Within ten years it would become the main employer of the region. For the
record, the Corona satellite, first launched in June 1959, was the world's first
reconnaissance satellite program, capable of taking pictures of the Soviet Union
from the sky. The project was carried out by Itek (the camera), Kodak (the film),
General Electric and Lockheed Missiles Division in Sunnyvale. The Corona
project was then assigned to a new entity, initially called Air Force Satellite
Test Center (later renamed many times and eventually Onizuka Air Force
Station) based in the "Blue Cube" (or Lockheed "Building 100"), built in 1960
between Sunnyvale and Milpitas, not far from Moffett Field.
In 1957 Paul Cook opened Raychem in Redwood City to manufacture wires
and cables for the military and aerospace industries.
The Valley’s companies were still small by the standards of the East-Coast
conglomerates. In 1956 both General Electric and RCA had revenues of over
$700 million, while Varian (the largest of the native Bay Area companies)
barely reached $25 million. HP had more employees (901) but less in revenues
($20.3 million).

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 Lockheed’s Palo Alto Research Laboratories (2010)

The Culture of Discovery

In those years the scientific reputation of Stanford and UC Berkeley grew
rapidly. In 1952, Felix Bloch of Stanford University was awarded the Nobel
Prize in Physics, the first for Stanford. Berkeley had already accumulated more
Nobel Prizes than any other university in the five years since the end of the war:
John Northrop and Wendell Stanley (1946), William Giauque (1949), Glenn
Seaborg and Edwin McMillan (1951).
At the end of the war Robert Oppenheimer realized that the future would
need a new kind of weapons laboratory, one that wouln’t just build them but
also improve them. He helped conceive Sandia National Laboratories,
established near Los Alamos and assigned to the University of California. Later,
President Truman decided to transfer its management to AT&T.
When the US decided to develop a “hydrogen” bomb to stay ahead of the
Soviet Union (that had detonation its first atomic bomb in August 1949), in 1952
the Atomic Energy Commission established a branch of the Lawrence’s
Radiation Laboratory (later renamed Lawrence Berkeley Lab) in the town of
Livermore (on the underdeveloped east side of the bay), soon to become known
as the Lawrence Livermore Laboratory. The lab in Livermore was charged with
military projects, while the lab in Berkeley was free to conduct theoretical
research. In 1954 the lab in Berkeley, which had relocated up the hill from the
UC Berkeley campus, installed a 10,000-ton synchrotron (nicknamed
“Bevatron”) that could accelerate protons to 6.2 BeV (one billion
electronvolts), enough to create antimatter on Earth: the first antiproton was
detected in October 1955.
The lab in Livermore, instead, became one of the sites for the top-secret

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Project Sherwood with Princeton and Oak Ridge to produce a “controlled”
nuclear fusion reaction. Fusion is the kind of nuclear reaction that takes place in
the sun and generates enormous amounts of energy out of hydrogen. The goal of
Project Sherwood was to turn hydrogen (the most available element on Earth)
into energy for industrial and domestic purposes. Unfortunately, fusion seems to
happen only at very high temperatures. The project was started in 1951 under
British physicist James Tuck of Los Alamos, who had worked on fusion for
nuclear weapons within the Manhattan Project, but in 1953 Berkeley alumnus
Amasa Bishop was appointed the new director.
In August 1955 Homi Bhabha chaired the United Nations’ Conference on the
Peaceful Uses of Atomic Energy and said: “I venture to predict that a method
will be found for liberating fusion energy in a controlled manner within the next
two decades. When that happens the energy problem of the world will truly
have been solved forever for the fuel will be as plentiful as the heavy hydrogen
in the oceans.”

Culture and Society

The Californian governors of the post-war era helped modernize the state.
Earl Warren (1943-1953), a charismatic politician, unified the state behind him
and launched an ambitious program of public works, basically continuing the
New Deal. He built state universities and community colleges as well as a vast
network of freeways. Goodwin Knight (1953-1959) and Pat Brown (1959-
1967), a San Francisco lawyer, continued these policies. The political climate
was so united that at one point Warren was nominated by all three main parties
and Pat Brown switched from one party to another. These governors invested
heavily in the infrastructure of the state while wisely managing its finances.
Thanks to the prosperity created by their policies, immigrants flocked to the
“Golden State” from all over the country.
Meanwhile, San Jose experienced a population boom in the 1950s due to
the soldiers who relocated there after World War II. They could find affordable
suburban housing and well-paid jobs. In 1955 a new fast road connected San
Jose to San Francisco, the I-280 freeway.
World War II had two parallel effects on the distribution of the Bay Area.
On one hand the massive defense build-up around San Francisco transferred
valuable technological know-how to an area that had very little of its own (there
were virtually no electronics firms). At the same time, massive black migration
to the shipyards of the East Bay resulted in white families fleeing south, where
the government was building freeways and subsidizing suburban mortgages for
single-family detached homes. Rural areas such as the Santa Clara Valley gained
a more urbanized middle-class population. Silicon Valley's urban development
covered about 50 square kms (US Geological Survey, 1940); by 1960 it covered
290 square kms.

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 The cultural life of San Francisco was beginning to take off too, although in
a rather bizarre manner. In 1951 Zen apostle Alan Watts moved from Britain to
San Francisco, where he became a major influence on the assimilation of
Eastern philosophy into Western lifestyle. He started a radio program in 1953 at
Berkeley’s KPFA station.
India had become fashionable in California since at least 1948 when Indra
Devi, born Eugenie Peterson in Latvia but relocated in 1927 to India where she
had learned yoga from Tirumalai Krishnamacharya, had opened a studio in
Hollywood and become an evangelist of yoga among the rich and fashionable.
Meanwhile, Peter Martin can be credited as the man who imported the spirit
of New York’s intelligentsia into San Francisco. In 1952 he began publishing a
literary magazine titled “City Lights.” The following year, Lawrence
Ferlinghetti was convinced by Ken Rexroth to move to San Francisco. He
opened a bookstore, “City Lights,” which was an experiment in itself: the first
all-paperback bookstore in the nation. The bookstore soon became the
headquarters of alternative writers.
In October 1955, Allen Ginsberg ‘s recitation of his poem “Howl,”
organized by Rexroth at the Six Gallery, transplanted the “Beat” aesthetic to San
Francisco. Other writers came to inspire the local “Beat Generation.” Jack
Kerouac moved to San Francisco in 1956 and Robert Creeley moved to San
Francisco in 1957. Among the local talents who embraced the new style were
Michael McClure and Jack Spicer (part of Robert Duncan ‘s Berkeley circle).
The most lasting influence was perhaps that of two poets who had studied in
Oregon at Reed College. Gary Snyder and Philip Whalen, because they adopted
Zen Buddhism, started a trend that would make California an international
center of Zen and would make Zen a staple of the counterculture. Snyder, in
particular, delved into Chinese and Japanese poetry, bringing to California the
passion for exotic cultures (instead of contempt for their poor emigrants).
Seymour Locks, a Stanford graduate, began teaching at San Francisco State
College in 1947 and was influential in creating two different cultures. First of
all, he practiced as a sculptor using found objects, i.e. junk, as his raw material.
Secondly, in 1952 he started experimenting with light shows. Locks influenced
Elias Romero, whose light shows began in 1956.
At the same time, San Francisco still maintained its old sexually permissive
atmosphere. In 1955 the police staged a coordinated campaign of persecution
against homosexuals, but its outcome was to cement solidarity within that
community, and, for example, in the same year the “Daughters of Bilitis” was
founded in San Francisco, the first exclusively lesbian organization in the US. In
1959 Stanford University hired Austrian-born chemist Carl Djerassi, who four
years earlier at Syntex of Mexico City had invented synthetic progesterone,
which accidentally turned out to be “the birth-control pill.” Syntex was run by
Uruguayan-born Alejandro Zaffaroni and manufactured synthetic steroid
hormones.

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 A notable event in the artistic life of the Bay Area was the 1945
establishment of the Photography Department at the California School of Fine
Arts (later renamed the San Francisco Art Institute), thanks to Ansel Adams. It
recognized photography as a fine art in a way that no other academic institution
had yet done. In 1946, Adams convinced other distinguished photographers to
accept positions at the school: Minor White, a former student of Alfred Stieglitz
in New York, Berkeley’s Dorothea Lange, and San Francisco’s Imogen
Cunningham.
Another notable event was the birth of the art movement later dubbed “Bay
Area Figurative Painting.” The founder was David Park, who moved to San
Francisco in 1943 to teach at the California School of Fine Arts and later
exhibited the first abstract paintings with figurative elements. He influenced
Elmer Bischoff, who started teaching at the School of Fine Arts in 1946, and
Richard Diebenkorn, who began teaching at Oakland’s California College of
Arts and Crafts in 1955. In 1947 and 1949 New York’s abstract expressionist
Mark Rothko taught at the same school. The Contemporary Bay Area Figurative
Painting Exhibition at the Oakland Art Museum of September 1957 featured
Park’s, Bischoff’s and Diebenkorn’s student Henry Villierme, the leader of the
second generation. Oakland's California College of Arts and Crafts instead
raised Nathan Oliveira (class of 1952) and Bruce McGaw (class of 1955). Paul
Wonner graduated in 1955 from U.C. Berkeley.In 1949 the Austrian-Mexican
surrealist Wolfgang Paalen moved to San Francisco after pioneering abstract
expressionism in New York. Together with Lee Mullican and Gordon Onslow-
Ford he formed the group Dynaton, that debuted in 1951.
Starting in 1952, Wally Hedrick began constructing collages of metal
objects that he scavenged in junkyards (cans, lamps, radios, appliances). Jess
Collins in 1952 founded the King Ubu Gallery, which in 1954 Hedrick renamed
Six Gallery and turned into an artist-run cooperative. Around it revolved artists
such as Manuel Neri and Mary-Joan “Jay” DeFeo, a UC Berkeley alumna who
had absorbed influences from Native-American, African and prehistoric art.
Most of them were also grouped in Bruce Conner ‘s Rat Bastard Protective
Association (an non-existent association, just a term coined in 1959). They
represented the counterpart to the Beat movement in the visual arts. Bruce
Conner, who had arrived in 1957 in the city, upped the ante of the movement
with his chaotic sculptures of junk wrapped in sexy nylon stockings.
San Francisco’s avantgarde cinema scene came to life thanks to Frank
Stauffacher ‘s “Art in Cinema,” held in the San Francisco Museum of Modern
Art since 1946. It marked the first time in the US that an art museum presented a
series of experimental films. Despite the focus on avantgarde films, the events
often drew a sold-out crowd. The San Francisco International Film Festival
debuted in 1957 (and eventually became the longest-running film festival in the
Americas).
Very little of this fervor reached the south bay. In 1955 peace activist Roy

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Kepler opened a bookstore in Menlo Park to sell paperbacks (which at the time
were shunned by most high-brow bookstores), and his Kepler's remained an
outpost of alternative culture in the Peninsula.
A bizarre contribution to the cultural life of the Bay Area came from the
Central Intelligence Agency (CIA). In 1953 the CIA launched a secret project,
“MK-Ultra,” to develop a truth drug that would control the mind of its victims.
This was in response to reports that the Communists in North Korea had
brainwashed US prisoners of war. The CIA administered Lysergic Acid
Diethylamide (LSD) to the volunteers of the program. One of these volunteers
(in 1959) was a Stanford student named Ken Kesey. In 1960 Ampex's electrical
engineer Myron Stolaroff, having been introduced to LSD by Canadian inventor
Alfred Hubbard (perhaps the first person to view LSD as a tool to achieve
higher dimensions of thought), founded the International Federation for
Advanced Studies in Menlo Park recruiting scientists such as Willis Harman of
Stanford University.
Up until the 1950s the Bay Area was mainly known (outside California) as a
haven for unorthodox artists and writers. Very few engineers dreamed of moving
from imperial Europe (who cities and universities still dominated the world) to
provincial California, and very few engineers dreamed of moving from the
political and industrial hubs of the East Coast and the Midwest to the
picturesque but isolated Bay Area. It was mainly the artists who found that
distant western outpost fascinating.

Electronic Brains
The computer industry was still largely absent from the Bay Area. In the rest
of the nation it was however progressing rapidly. In 1956 there were 800
computes in operation in the US. By 1959 there were about 6,000. The press,
which had barely followed the original efforts, was now fascinated by these
machines that journalists dubbed “electronic brains.”
The brains helped automate manual tasks. In 1949 John Parson in Michigan
invented “numerical control,” the computer-based automation of machine tools.
In 1951 David Shepard at AFSA, the government agency that would later be
renamed National Security Agency (NSA), devised a computer program capable
of recognizing printed text and went on to build a “reading machine” called
“Gismo.” The first commercial system was installed at Reader’s Digest in
1955. When IBM introduced a similar product in 1959, it named it Optical
Character Recognition (OCR). In 1951 Princeton University’s student Marvin
Minsky built SNARC (Stochastic Neural Analog Reinforcement Calculator), a
machine that simulated the way the neural network of the brain learns.
In 1952 a “Conference on Mechanical Translation” was organized at MIT
by Yehoshua Bar-Hillel, attended in particular by Leon Dostert, who in 1949
had built (on machines donated by IBM) a computer-based system for language

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interpretation at the Nurember trial of Nazi officers and subsequently had
established the Institute of Languages and Linguistics at Georgetown University
in Washington. In 1954 George Devol, a former radar specialist who had joined
Remington Rand, designed the first industrial robot, Unimate, which was finally
delivered to General Motors in 1961. In 1955 on his dying bed John Von
Neumann warned the computer community that the brain (the original computing
device) worked accordingto wildly different principles than the ones employed
in computers: not a sequence of instructions but a network that self-reorganizes
dynamically.In 1956 John McCarthy of MIT organized the first conference on
artificial intelligence at Dartmouth College, the goal being to study how
computers could be made as intelligent as humans (not just number crunchers).
Allen Newell at RAND Corporation in Los Angeles and Carnegie Mellon
University’s Herbert Simon in Pittsburgh unveiled the “Logic Theorists” in 1956
and in 1957 the “General Problem Solver,” a computer program that represented
another step in abstracting a Turing machine. It not only separated data and
instructions, but even knowledge (about the domain of the problem) and
inference (the logical methods that lead to solutions). Also in 1957 Frank
Rosenblatt conceived the “Perceptron,” a machine that simulated the neural
structure of the brain and that could learn by trial and error (one of the few
scientists who followed Von Neumann’s advice). Also in 1957 Morton Heilig
invented the “Sensorama Machine,” a pioneering virtual-reality environment. In
1959 McCarthy and Minsky, who had joined MIT in 1958, founded the
Artificial Intelligence Lab. In 1959 Norbert Wiener’s pupil at MIT, Oliver
Selfridge, described “Pandemonium,” a computer modeled after the neural
networks of the brain and capable of machine learning that could be used for
problems of pattern recognition that eluded existing computers.
Not everyone thought computers were electronic brains. In 1955, on his
death-bed, John Von Neumann warned the computer community that the brain
(the original computing device) worked according to wildly different principles
than the ones employed in computers: not a sequence of instructions but a
network that self-reorganizes dynamically.

The Art of Programming

Software was considered such a negligible part of computing that it didn’t
even have a name (the term “software” was introduced in 1959). During the
1950s most programs came bundled with the computer. The computer
manufacturer was in charge of providing the applications, which typically
targeted the big sectors (banking, manufacturing, retailing) to which the
manufacturer was marketing the machines. In other words, the application
program was just one of the many accessories that helped sell the machine.
There were also user-written programs, but they were not really “sold.”
They were made available to the community of users of the same machine.

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“Share” was the name of the IBM user group (originally formed in 1955 by
aerospace companies of the Los Angeles area that used the 701) and “Use” was
the name of the Univac user group. It was the manufacturer itself (IBM or
Univac) that facilitated the flow of know-how. The largest organizations could
also afford to maintain in-house teams of programmers for developing ad-hoc
applications; but, again, these were not for sale.
Software became a real industry after John Backus at IBM in New York
unveiled the FORTRAN programming language in 1957. It was the first
practical machine-independent language. This language basically created the
job of the software engineer. The following year another seminal programming
language was introduced: COBOL (Common Business Oriented Language),
which was defined by a Conference on Data System Languages (CODASYL)
called by the Department of Defense, and largely based on Grace Murray-
Hopper ‘s Flow-matic.
Both manufacturers and customers were beginning to realize that computers
were powerful hardware but their usefulness depended on their software
applications. However, given the limitations of the hardware, it was not
possible to create large, sophisticated applications even if one wanted to.
SAGE was the notable exception, a task originally estimated at one million
instructions. And SAGE, in fact, did spawn the first software company: RAND
Corporation, selected in 1955 to write the code for SAGE, created a new
System Development Division that in 1957 was spun off as System
Development Corporation (SDC). SDC created from scratch a whole new
profession by training about two thousand programmers at a time when most
countries had zero programmers and only a few countries had more than 100.
Software was not taught in college at the time (the first masters program would
come only in 1979). For the record SAGE was only completed in 1962, the
largest computer project in the world.
Software consulting slowly gained in importance. John Sheldon and Elmer
Kubie of IBM’s scientific software division had already started the Computer
Usage Company in March 1955 in New York specifically to provide software
consulting. The biggest software consulting company in the late 1950s was
CEIR (Corporation for Economic and Industrial Research), originally a
financial consulting firm. Founded in 1957 by Herbert Robinson in Washington
after fulfilling a contract with the Air Force, it had a software division headed
by Orchard Hayes whose custom software applications rapidly became the main
source of revenues. Fletcher Jones, one of the founders of Share, started
Computer Sciences in Los Angeles in 1959. Their “labs” were valuable training
grounds for self-taught programmers.

The Minicomputer
Most computers at this point were still the size of entire rooms. While few

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minicomputers had any commercial impact, they contributed to create the myth
of the machine that could take over the world. Size did matter: the bigger ones
had greater processing power and so more intelligence. There was, however,
one event that would have a great commercial impact. In 1957 Georges
Doriot’s ARD Corp. (the American Research and Development Corporation)
made a modest investment in a computer company started near Boston by a
former MIT scientist and SAGE engineer, Ken Olsen. It was the Digital
Equipment Corporation (DEC). Its “mini-computer” PDP-1 (Program Data
Processor), basically a streamlined version of the TX-0 (the first transistorized
computer built at MIT), was introduced in 1960 at a price of $125,000. The
PDP-1 came with a keyboard and a monitor in a much smaller (and cheaper)
package than the IBM and Univac computers. It could process 100,000
instructions per second and had a memory of 4,000 words (each word being
made of 18 bits). The PDP-1’s first customer was MIT’s Project MAC.

Factory Automation
Two important steps toward automating factories were taking place.
First, in 1958 Patrick Hanratty at General Electric unveiled Pronto, a
numerical-control programming language that allowed computers to control
machine tools, while the Automatically Programmed Tool (APT) was still being
developed by Douglas Ross at MIT (APT would become the industry’s
standard). This was an important step towards automating a factory.
What numerical control did was to introduce the concept of "real time" in
commercial computing. It placed the computer inside a "living" system, the
factory. The computer was no longer an isolated machine that could compute an
exotic scientific problem in isolation and leisurely, but a cog in a complex
clockwork that had to interact with other machines on the fly. For these
applications the sensor was as important as the processor.
A second step was the development of Computer-Aided Design (CAD),
which is entangled with the story of spy satellites. In 1957 Kodak’s executive
Richard Leghorn was in the unique position of knowing the top-secret plans for
flying spy satellites over the Soviet Union (he had originally proposed them
when he was in the Air Force) and of knowing the state-of-the-art in
photography. He obtained money from Laurance Rockefeller and founded Itek in
Boston to build reconnaissance cameras just in time to sell them to the CIA for
its Corona project (1959), beating the competition of camera leader Fairchild
Camera and Instrument. With that money in 1960 Itek funded the Electronic
Drafting Machine (EDM), a machine to automate the design process of
engineering departments. This required the ability to display graphics and not
only text on monitors, something that had been experimented by the
Whirlwind/SAGE project at MIT. In fact, the brains behind the project were two
MIT gurus who had worked on the Whirlwind/SAGE project: Norman Taylor,

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who had been hired by Itek, and Jack Gilmore, who had started one of the
earliest software companies. They decided to use a PDP-1 just released by
another SAGE alumnus, Ken Olsen. In 1962 they delivered the first
Digigraphics system, the forerunner of graphics workstations.

Semiconductors in the Bay Area

A series of events in the second half of the 1950s led the Bay Area into the
nascent computer industry. The defense industry was still driving a big chunk of
the Valley’s economy. It was so prevalent that in 1955 Stanford University
merged the Applied Electronics Laboratory and the Electronics Research
Laboratory into the Systems Engineering Laboratory under the direction of Fred
Terman to focus on electronic warfare. The Cold War was proving to be a gold
mine for electronics. NASA too opened a research center at Moffett Field in
Mountain View (1958). New ideas for defense-related business were floating
around. It was not easy, though, to start a new company. In 1955 private
investors or “angels,” including John Bryan, Bill Edwards and Reid Dennis (an
employee of the Fireman’s Fund in San Francisco), established “The Group” to
invest together in promising electronics companies of the Bay Area. They
invested their own money.
The timing could not have been more auspicious for semiconductors.
William Shockley, inventor of the transistor, had joined Beckman Instruments, a
company based in Los Angeles that was willing to open an entire research
center for transistors. In 1956, Beckman opened its Shockley Semiconductor
Laboratory division in Mountain View to work on semiconductor-based
transistors that would replace vacuum tubes. Shockley’s transistors had used
germanium but he was aware that in 1954 Texas Instruments had introduced
silicon transistors, and knew it was the right direction. He tried in vain to
convince former coworkers at Bell Labs to follow him west. Eventually he
settled on hiring young local engineers, all of them still in their 20s. Among
them were Philco’s physicist Robert Noyce and Caltech’s chemist Gordon
Moore.
The reason transistors were so important in those days was the Cold War:
had a nuclear war broken out, the USA would have fought it with weapons
guided by vacuum tubes. The military needed something more reliable and
smaller. Shockley was very good at assembling teams, as he had demonstrated
at Bell Labs. Unfortunately for him, just one year later, in October 1957, eight of
these engineers, including Robert Noyce (from the Midwest via MIT), Jean
Hoerni (Swiss), Eugene Kleiner (Austrian), and Gordon Moore (the one born
and raised in the Bay Area), quit the Shockley Transistor Laboratories to form
Fairchild Semiconductor in Mountain View. They obtained funding from
Sherman Fairchild’s New York-based Fairchild Camera and Instrument thanks
to the help of a young investment banker, Arthur Rock. It was the first venture-

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funded “startup” company in the Bay Area. Note that 33 companies turned down
the "eight traitors" before Fairchild decided to give them a chance. Fairchild's
main selling point was that transistors could be made with a cheap and
ubiquitous material like silicon instead of the germanium that the industry had
been using. Shockley called them traitors, and maybe they were. Yet they
legitimized the practice of quitting a company and starting a competing
company, thus betraying their employer but also advancing the state of
technology.
The rupture was made possible by the realization that the semiconductor
industry did not require a huge capital investment: silicon can be found
everywhere and it is cheap. Unlike the old economy of big, complex, and
expensive products, in the semiconductor industry starting a competitor in
competition against one’s own employer was relatively easy. The problem was
other competitors: Texas Instruments in Dallas, Motorola in Phoenix, and
Transitron and Raytheon in Boston.

Shockley’s Old Laboratory Building (2010)

The Beginnings of Venture Capital

There were still few groundbreaking ideas coming out from the Bay Area
electronics sector, but somehow there was an interest in funding ideas. In 1957
Dean Watkins of Stanford’s ERL (where he had supervised the project for
traveling-wave tubes or TWTs, tubes that allowed the amplification of radio
signals to very high power) started Watkins-Johnson to manufacture components
for electronic intelligence systems. It was one of the first venture-capital funded
companies in the Santa Clara Valley (it would also prove to be one of the most
successful of its generation, with sales decupling in four years). Its main
investor was Tommy Davis, a realtor in southern California.

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 At the same time, spurred by the Cold War and by the need to boost the post-
war economy, the US enacted a law to help start new companies: the Small
Business Investment Company Act of 1958. The government pledged to invest
three dollars for every dollar that a financial institution would invest in a startup
(up to a limit). In the next ten years, this program would provide the vast
majority of all venture funding in the US. The Bay Area was a major
beneficiary.
Numerous venture firms sprung up. In 1958 Draper, Gaither and Anderson
was founded in Palo Alto by Rowan Gaither (founder of the RAND
Corporation), William Draper, and Fred Anderson. It was the first limited-
partnership venture-capital firm in California, although short-lived. A limited
partnership made it easier to compensate partners with carried interest and
reduced investors’ risk. One year later, Frank Chambers established the venture-
capital company Continental Capital in San Francisco. In 1961 Tommy Davis
and Arthur Rock (an investment banker who had been a student of Georges
Doriot at Harvard and who had just relocated from New York after facilitating
the Fairchild deal) founded the limited-partnership company Davis & Rock in
San Francisco. They mainly raised money on the East Coast for investment in
the Bay Area. In 1962 Bill Draper and Franklin Johnson formed Draper &
Johnson. In 1961 the Venture Capital Journal started being published in San
Francisco.

The Integrated Circuit

The major jump for computers came with the invention of the integrated
circuit. It was Jack Kilby at Texas Instruments who (in 1958) invented the
integrated circuit, a tiny silicon device containing a large number of electronic
switches. With Kilby’s technique, multiple transistors could be integrated on a
single layer of semiconductor material. Previously, transistors had to be
individually carved out of silicon or germanium and then wired together with
the other components of the circuit. This was a difficult, time-consuming and
error-prone task that was mostly done manually. Putting all the electrical
components of a circuit on a silicon or germanium “wafer” the size of a
fingernail greatly simplified the process. It heralded the era of mass production.
The first customers of integrated circuits were the Air Force and NASA,
followed by Lockheed and Boeing for the Polaris (1961) and Minutemen (1962)
missile systems.
The golden team at Fairchild Semiconductor merely improved the idea. In
1959, Jean Hoerni invented the planar process that enabled great precision in
silicon components, and Robert Noyce designed a planar integrated circuit.
Fairchild introduced the 2N1613 planar transistor commercially in April 1960,
and the first commercial single-chip integrated circuit in 1961 (the Fairchild
900), a few months after the Texas Instruments’ SN502.

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 The motivation to package multiple transistors into the same chip arose due
to the fact that the wiring had become the real cost. Both Fairchild and Texas
Instruments had improved the process of printing the electronic chips, but each
chip contained only one transistor and the wiring ran outside the chip. Progress
in the wiring was not keeping pace with progress in printing, and therefore the
wiring was becoming the real cost. The integrated circuit was saving money.
For the record, this wasn't really "silicon" valley yet: almost all the transistors
made in the world were still made of germanium, and this would still be true
throughout the early 1960s.
Meanwhile, Fairchild continued to harness talent, such as Don Farina,
James Nall, Bob Norman (from Sperry Gyroscope), Don Valentine (their Los
Angeles sales manager), and Charles Sporck (production manager), all hired in
1959. Later hires were Jerry Sanders (1961, sales, from Motorola), Jack
Gifford (1963, Los Angeles sales and in 1966 product marketing in Mountain
View), Mike Markkula (sales). However, Fairchild Semiconductor made a big
mistake when it did not focus on integrated circuits. A number of engineers who
disagreed (led by David Allison) left Fairchild to start Signetics in 1961.
Signetics benefited from the decision in 1963 taken by the Department of
Defense to push for architectures based on integrated circuits. Throughout 1964,
Signetics dwarfed Fairchild and everybody else in the manufacturing of
integrated circuits.
Fairchild is important in the history of Silicon Valley’s semiconductor
industry not only for the technology it patented but also for the people it hired
and trained. In fact, its contribution might be bigger as a creator of talent than as
an innovator. Fairchild represented a corporate culture that treasured human
resources: it hired the best of the best, and then it trained them to become even
better. To use a physics metaphor, the potential energy at Fairchild was probably
bigger than all the kinetic energy it ever produced. Since the early days Robert
Noyce introduced an unorthodox management style at Fairchild Semiconductor,
treating team members as family members, disposing of the suit-and-tie dress
code, and inaugurating a more casual and egalitarian work environment.
An early supporter of the Bay Area’s semiconductor industry was Seymour
Cray, a former Univac engineer who had founded the Minneapolis-based
Control Data Corporation (CDC) in 1957. He built the first large transistorized
computer in 1960 (the CDC 1604). Cray sponsored research at Fairchild that
resulted (in July 1961) in a transistor made of silicon that was faster than any
transistor ever made of germanium. Cray’s new “super-computer,” the CDC
6600 (first delivered in 1964 to the Lawrence Livermore Lab), would employ
600,000 transistors made by Fairchild. General Electric, RCA and Texas
Instruments made germanium-based products. Fairchild became the first silicon-
only company. The Bay Area was beginning to get into computer hardware, but
it was still largely software illiterate.

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 The Old Offices of Fairchild Semiconductor (2010)

The Advent of DNA

Meanwhile, the great scientific news of the decade came from Europe. In
April 1953, Francis Crick and US-born James Watson, two molecular biologists
working in Britain at the Cavendish Laboratory (the Department of Physics of
Cambridge University), discovered the double helical structure of DNA. The
code of life looked amazingly similar to a computer program. The always alert
Fred Terman (now Stanford’s provost) foresaw the potentiality of
biotechnology, and decided to invest in Stanford’s chemistry department.

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 Hippies: Fairchild, the Spin-offs, the
Minicomputer, Artistic Creativity, and Social
Revolution (1961-68)

The Era of Large Computer Projects

IBM was the 800-pound gorilla of computers. After its successful
introduction in 1960 of the 7000 series (that was transistorized), IBM owned
more than 81% of the computer market. However, the market wasn’t too big.
Computers were cumbersome and expensive. In 1960 the price of an IBM 7030
was $13.5 million. They were even more expensive to run. Only the government
and a few large corporations could operate one.
However, IBM had struck some lucrative contracts. One of them was for
automating American Airlines’ reservation system. Someone at IBM had noticed
that an airline’s reservation system was very similar to the monitoring problem
solved by SAGE. IBM basically adapted SAGE to the airline business, and the
result was a system called SABRE, the first online transaction processing (it
debuted in 1960 but it took over 100% of reservations only in 1964).
In the next three years, several foundational elements of computing were
established by researchers throughout the country. In 1961 Fernando Corbato at
MIT created the first working time-sharing system, CTSS (Compatible Time
Sharing System). This allowed many users to share the same computer and to
remotely access a computer, an IBM 7090/94. The idea of time sharing spread
both to academic and industrial centers to minimize the cost per user of using a
computer. Charles Bachman at General Electric in New York developed the first
database management system, Integrated Data Store or IDS (1961). AT&T
introduced the first commercial modem (1962). Steve Russell and others at MIT
implemented the computer game “Spacewar” on a PDP-1 (1962), a sign that
enthusiastic computer engineers were beginning to see the computer as a vehicle
for entertainment. In 1963 a standards committee worked out the “American
Standard Code for Information Interchange” or “ASCII” to encode character
symbols in the digital format of the computer. In 1963 MIT student Ivan
Sutherland demonstrated “Sketchpad,” subtitled “A Man-Machine Graphical
Communication System.” It was the first computer program ever with a
Graphical User Interface (GUI) and the first computer program to display three-
dimensional objects on a two-dimensional screen. Hungarian-born
mathematician Gyorgy Kemeny and Thomas Kurtz at Dartmouth College in New
Hampshire invented the BASIC programming language (1964) for the

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university’s time-sharing system.

The Era of Large Computer Networks

The seeds were also being planted for connecting computers through a
network. In 1962 Paul Baran at the RAND Corporation (a Los Angeles-area
“think tank” that mainly consulted for the armed forces and that Baran had joined
in 1959) proposed that a distributed network of computers was the form of
communication least vulnerable to a nuclear strike, a highly sensitive topic
during the Cold War. At the same time Joseph Licklider, an MIT professor of
psychology and a SAGE alumnus who (in 1957) had become vice-president at
Boston’s consulting firm Bolt Beranek and Newman (BBN), was preaching
about the power of computer networks. In 1965 Harvard student Ted Nelson
coined the word “hypertext” to refer to nonsequential navigation of a document.
The most influential ideas of those years were tied to government agencies.
The Department of Defense established the Advanced Research Projects
Agency (ARPA) in February 1958. Within a few years, this agency provided the
highest proportion of funding for computer engineering research. In October
1962, ARPA created a specific office devoted to computers, the Information
Processing Techniques Office (IPTO). IPTO hired the visionary Licklider from
MIT and BBN to be its first director. In his new capacity, Licklider sponsored
the pioneering time-sharing system Project MAC (Machine Aided Cognition) at
MIT. This “project” (actually a laboratory), established in July 1963 by Robert
Fano, was mainly devoted to artificial intelligence and time sharing. It featured
Marvin Minsky as the director and John McCarthy as the resident visionary.
Corbato envisioned a successor to CTSS, eventually named MULTICS
(Multiplexed Information and Computing Service) and initially a collaboration
among MIT, General Electric and Bell Labs, first deployed in 1965.
Multics was indirectly important for the development of the hacker
community because those who didn't like the Multics direction, mostly in the
A.I. Lab, started working on a different time-sharing operating system, called
ITS (Incompatible Timesharing System), and these were the original hackers, or
at least the first ones who delivered something significant, working initially
with an old PDP-6 and later a PDP-10. Computer hackers were computer
programmers who loved to program just for fun, not because they were told to.
The first organized group of hackers was the one that emerged from the Project
Mac laboratory in the 1960s. The ethos of these hackers was communal: all
software was available to everybody in the community.
Licklider also dispatched money to the budding research centers in the Bay
Area: Stanford University, UC Berkeley (neither of which had a graduate
program in computer science yet), and especially Douglas Engelbart’s team at
SRI. Licklider’s funds established a West-coast counterpart to Project MAC,
called Project Genie. It started in 1964 at UC Berkeley and its main

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achievement was a public-domain time-sharing system. Several team members
(notably Charles Thacker) started a company, Berkeley Computer Corporation
(BBC), to market it.
Another benefactor of Engelbart was NASA’s Office of Advanced Research
and Technology in the person of Bob Taylor. He had joined NASA in 1961 after
working for Maryland-based defense contractor Martin Marietta. NASA was
interested in using computers for flight control and flight simulation, not purely
“number crunching.” Licklider was succeeded at IPTO in 1963 by Ivan
Sutherland, who in 1965 hired Bob Taylor away from NASA. Taylor used
ARPA to promote his philosophy: he wanted computers to be more useful than
for just rapid large-scale arithmetic, and one way was to connect them in a
network.
Taylor was a crucial person in the US government, funding key projects in
computer science research. In February 1966, Taylor launched an ARPA project
to create a computer network, later named ARPAnet (the predecessor to the
Internet). Wes Clark was a Berkeley graduate of 1947 who had joined the
Whirlwind project at MIT in 1951. He designed MIT’s minicomputer LINC
(Laboratory INstrument Computer) in 1962. Now at Washington University of St
Louis, Clark suggested not having each node write its own software on its own
mainframe in order to connect to a network. Instead, the network should hand
each node a small “gateway” computer (later named “router”) in charge of
networking functions, the same one at each node, letting the local mainframe do
what it normally did. Bolt Beranek and Newman (BBN) won the contract to
develop the Interface Message Processor (IMP), a customized version of the
Honeywell DDP-516; basically, the first router.
In 1965 a pupil of Howard Aiken, Gerry Salton, founded the department of
Computer Science at Cornell University bringing from Harvard an information
retrieval project commonly known as "Salton's Magical Retriever of Text" or
SMART (officially "System for the Mechanical Analysis and Retrieval of Text")
and running on an IBM 7090, that established the field of what one day would
be called "search engines".

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 The SRI Building with Doug Engelbart’s Laboratory
(2010)

Computerized dating originated at Stanford in 1959 with a matchmaking

program running on an IBM 650 mainframe computer designed by math students
Jim Harvey and Phil Fialer for the Happy Families Planning Service; but the
first commercial computer-based dating system was Operation Match, launched
in 1965 by Compatibility Research, i.e. Harvard students Jeff Tarr and Dave
Crump, and run from a dormitory of the university. Progress would be slow if
non-existent until two decades later, when the Internet would come to the rescue
with newsgroups and bulletin board systems.

The Era of Large Computers

Something monumental happened in 1964. IBM introduced the System/360,
a computer that was controlled by a full-fledged “operating system,” the
OS/360. IBM’s chief architect, Gene Amdahl, had designed a family of
computers that were software-compatible and, to some extent, modular, so that
customers could migrate and upgrade their software applications at will. The
processor and the memory of the machines of this generation were enclosed in a
metal cabinet called “mainframe,” and somehow the term came to identify that
generation of computers. This eventually led to the mass production of software
applications.
This computer too was the result of a government contract, although not a
military one. In January 1956, two government agencies had sponsored a project
code-named “Project Stretch.” one was the National Security Agency (NSA),
which needed to process strings (characters) and the other one was the Atomic
Energy Agency, which needed to carry out calculations (numbers). In April
1961 Gene Amdahl at Ralph Palmer’s lab in upstate New York had completed

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the new transistorized computer, now renamed the IBM 7030, which was good
at encoding both tasks. It had been on this project that a German born scientist,
Werner Buchholz, had coined the term “byte” (eight bits). Only nine 7030s were
built; they were sold to government agencies and large research centers, but its
architecture laid the foundations for the 360, a mainframe for both the scientific
and the business communities (i.e., numbers and strings).
IBM was still the industry leader. By 1965 IBM had a 65% market share of
the electronic computer industry. Its main competitors were called “the seven
dwarfs.” They were: Burroughs in Detroit, mostly targeting banks; Sperry Rand
in New York (formerly Remington Rand, which included Univac and ERA),
which still relied on military contracts; Control Data in Minneapolis, an
offshoot of ERA that consistently beat the competition in terms of processing
speed; Honeywell in New Jersey, whose computer business was purchased
from Datamatic and started in 1955 near Boston, funded by Honeywell and
Raytheon, and staffed with many of the pioneers of the Harvard Mark I, ENIAC
and EDVAC; NCR, which in 1953 had purchased Los Angeles-based Computer
Research Corporation and began to specialize in computers for banking; and
finally the New York-based conglomerates General Electric and RCA, which
was the first one to introduce a 360-compatible model, the Spectra 70, in April
1965.
It was difficult to compete with these mainframe companies. A group of
computer engineers including Max Palevsky from Packard Bell (an electronics
company that manufactured the last computer ever based on Turing’s ACE
design) formed Scientific Data Systems (SDS) in September 1961 in Los
Angeles. They raised $1 million from Arthur Rock and the Rosenwald family
(heirs to the Sears Roebuck fortune). They introduced their first model, the 24-
bit silicon computer SDS910, in 1962. It was basically a mini-computer, meant
to challenge IBM and the other mainframe manufacturers. Their first customer
was NASA. Scientific Data Systems’ SDS 940 was built in April 1966 for the
time-sharing system at UC Berkeley, funded by DARPA’s Project Genie.

Software and Services

Two major software ventures were created in Texas. Ross Perot founded
Electronic Data Systems (EDS) in 1962 and de facto invented the business of
outsourcing. EDS would gladly implement custom software for any mainframe
customer that did not have the in-house resources to do it (many of them).
University Computing Company (later renamed Uccel) was founded in 1963 on
the campus of Southern Methodist University (one of the earliest college spin-
offs) by Sam and Charles Wyly with funding from Swiss billionaire Walter
Haefner Their claim to fame was the packaged product Tape Management
System (TMS). Within a decade they would become two of the largest software
companies in the world.

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 As the costs of owning and operating a mainframe were prohibitive for most
companies, time-sharing became a lucrative business. In 1964 Tymshare started
one of the most popular time-sharing services in Cupertino. It was the company
that brought the software business to Silicon Valley in earnest. The importance
of time-sharing for the spreading of software skills cannot be overstated. Before
time-sharing systems, only a small elite had access to computers. Time-sharing
allowed students to program all they wanted. It multiplied by an order of
magnitude the number of hours of programming around the world. Indirectly, it
also enabled the concept that software can be a hobby, just like reading comics
or playing the guitar. It helped not only computer lovers in high-tech cities like
Boston but also and especially computer buffs in low-tech parts of the world
like the Midwest.
Tymshare later created a circuit-switched network (mostly based on
Scientific Data Systems’ SDS 940) that predated the Internet.
The impact of computers on existing jobs varied greatly between “white-
collar” industries (business) and “blue-collar” industries (manufacturing). The
ones that became disposable were the white-collar workers, notably the
accountants. From the very beginning of commercial computing, a computer was
used to crunch numbers faster than an army of accountants, 24 hours a day, seven
days a week. Luckily for accountants, only the very large firms could afford a
computer.
The history of manufacturing applications is tied to the Midwest, where
many of the US’s manufacturing giants resided. Their major problem was to
guarantee the smooth flowing of materials through the several stages of a
production phase. The structure that was used to list all the components of a
product was called a “bill of material” (BOM). It was in the Midwest that IBM
first tried to automate the management of the BOM. These firms were aware of
Japan’s “lean manufacturing,” designed by Taichi Ohno at Toyota, which made
factories much more efficient. In 1961 Joe Orlicky at J.I. Case, a manufacturer
of tractors, implemented such an automated system on an IBM RAMAC 305.
IBM engineers expanded that idea into more general systems named BOMP
(“Bill Of Materials Planning”) in 1963, LAMP (“(Labor & Material Planning”)
in 1964, and PICS (“Production Information and Control System “) in 1966.
Eventually the field got the name MRP (initially from “Material Requirements
Planning” but later renamed “Manufacturing Resource Planning”). Each
generation integrated more functions to further optimize the plant. In 1966 IBM
was asked to cooperate with Rockwell and Caterpillar in designing a BOM
system for the Apollo mission to the Moon. The result was the Information
Management System (IMS), a hierarchical database completed in August 1968
and destined to become IBM’s main software product.
The computer industry had started from government contracts.
Fundamentally, computer manufacturers designed computers in collaboration
with research laboratories for use in research laboratories. Then the computer

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manufacturer would give the computer a business name, publicize it as a
general-purpose machine and educate large customers on what that machine
could do for them. That changed in the 1960s. Increasingly the specifications
were driven by private customers. The successful computer manufacturers
learned to listen to their customers. The importance of software became more
obvious: software represented the application, i.e. the very reason that a
customer purchased or rented a computer. Software caused a trend away from
the general-purpose computer towards specialized vertical-market machines. In
turn, vertical markets increased the demand for specialized software.
Transistors had made a difference. In 1960 there were a little over 5,000
computers in the USA, and not many more in the rest of the world. In 1965 there
were probably already 25,000 in the USA alone, mostly transistorized models.
While computers were still enormous and enormously expensive, the transistor
had lowered the threshold for owning one of these monsters.

Computers in the Bay Area

Project MAC and the Arpanet, plus government-funded research on
computer graphics and artificial intelligence at MIT, further increased Boston’s
lead over the rest of the nation. However, the Bay Area received Project Genie
at UC Berkeley, leaving the San Jose area (and Santa Clara Valley in particular)
still with no significant computing investment. Meanwhile, the computer
industry was still mostly concerned with the big financial institutions of the East
Coast and the manufacturing base of the Midwest. No major business or
industrial user of computers existed in the Bay Area other than Bank of
America.

Culture and Society

The culture-makers of San Francisco couldn’t care less about computers.
Cultural life was, in fact, moving in the opposite direction, towards primitive,
grotesque and provocative forms of expression. The assault to the senses was
global. In 1959 dancer and mime Ron Davis had founded the R.G. Davis Mime
Studio and Troupe, better known as the San Francisco Mime Troupe,
specializing in silent anti-establishment mimed comedies inspired by the Italian
“commedia dell’arte.” And, incidentally, San Francisco's most famous dancer
was Carol Doda, who became famous because, at the age of 26 in 1964, she
performed topless in a bar, the Condor Club, creating a whole new profession.
In 1961 Bruce Baillie and Mildred “Chick” Strands founded the San
Francisco Cinematheque to show experimental films and videos. At the same
time, Bruce Baillie started the artist-run cooperative Canyon Cinema that also
distributed the films (one year before Jonas Mekas started the more famous
Film-Makers Cooperative in New York).
In 1962 composers Morton Subotnick and Ramon Sender established the

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San Francisco Tape Music Center to foster avantgarde music. Pauline Oliveros’
dadaistic chamber music and Terry Riley’s repetitive patterns had little to do
with classical music. Subotnick indulged in chaotic live electronic music, thanks
to Berkeley-based hobbyist Don Buchla, who built his first electronic
synthesizer in 1963.
The experimental music of the Bay Area was, again, representative of an
alternative lifestyle and an anti-conformist approach to innovation.
The first technical director of the Tape Music Center, Michael Callahan,
was still a teenager when he helped poet Gerd Stern create the multimedia show
"Verbal American Landscape". The duo then moved to New York where in 1964
they helped Steve Durkee form USCO, whose first mentor was a luminary like
Marshall McLuhan at the University of Rochester. Their multimedia
performance "Who R U" shocked San Francisco in 1964. In 1966 their show
"Shrine" at New York's Riverside Museum coined the term "be-in".
Unlike Europe and the East Coast, where the audience was mainly music
specialists, in San Francisco experimental music reached a broad and diverse
audience. It was, yet again, the spirit of the eccentric independent, indifferent to
the rules and the traditions of the genre.
Tony Martin also injected the light show (pioneered by Seymour Locks and
Elias Romero) into the artistic mix of the Tape Music Center. Locks'
improvisational light shows were an early influence on trumpet player Stan
Shaff and electrical engineer Doug McEachern. Starting in 1963, they crafted
public three-dimensional sound events and in 1967 established the sound theatre
Audium, which in 1975 would move to a new location on Bush St and begin
offering weekly performances in complete darkness. Bill Ham took Locks' light
show into the psychedelic era, "decorating" a 1965 rock concert in Virginia City
and organizing a three-week performance of "electric action painting" in San
Francisco the following year. Both Martin and Ham had been trained in abstract
expressionism as art students. The light show spread to New York (where
Danny Williams animated Andy Warhol's "Exploding Plastic Inevitable", that
also staged a sensational act in San Francisco in May 1966), to Seattle (notably
Don Paulson's Lux Sit & Dance and Ron McComb's Union Light Company, both
formed after a November 1966 concert held by community-based radio station
KRAB) and to Los Angeles (Single Wing Turquoise Bird in 1968). The other
influence on the light show was free jazz. Bill Ham's Light Sound Dimension
(LSD) debuted in 1967 at the San Francisco Museum of Modern Art and
featured electronic jazz improvisers. In 1968 became a weekly light and sound
event at the Light Sound Dimension Theatre.
In 1962 Michael Murphy, a former Stanford student who had spent two
years in India to practice meditation, opened the “Esalen Institute“ at Big Sur to
promote the integration of Eastern and Western philosophy and “spiritual
healing.” Esalen became the epicenter of the “human-potential movement,”
named after Aldous Huxley’s lectures on the idea that humans are not fully

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realizing their potential, which could lead to much better lives.
The visual arts found a new haven in the East Bay. Peter Voulkos, who had
started the “Funk” movement by applying the aesthetics of abstract
expressionism to ceramic sculptures, had moved to UC Berkeley in 1959. UC
Davis (between Berkeley and Sacramento), in particular, became a major
artistic center. Pop art was pioneered by Wayne Thiebaud (even before Warhol
made it famous in New York), who moved to Davis in 1960. Ceramic artist
Robert Arneson became the local leader of the funk aesthetics pioneered by
Voulkos. William Wiley, who joined Davis in 1963, expanded funk to painting.
Roy De Forest joined the faculty in 1965. The most influential of the Davis
group was perhaps Wayne Thiebaud’s assistant Bruce Nauman, who (after
joining the San Francisco Art Institute in 1966) went on to dabble in a variety of
media (photography, neon, video, printmaking, sculpture, performance). He
established a praxis of interdisciplinary art. Meanwhile, the first public
showing of computer art was held at San Jose State University in May 1963,
organized by Joan Shogren, who had programmed a computer with “artistic”
principles.
There were other symbols of the era. In 1966 Dutch coffee roaster Alfred
Peet opened Peet's Coffee & Tea in Berkeley's "gourmet ghetto". Its second
location was in downtown Menlo Park, the only coffee house in town. Both
stores became the fashionable social hubs of the 1970s outside San Francisco.
Something truly monumental was happening in the Bay Area. In 1964, Mario
Savio at UC Berkeley started the “Free Speech Movement,” the first major case
of student upheaval, peaking with the “Sproul Hall Sit-In” of December in
which 768 protesters were arrested. This movement eventually would lead to
massive student marches and riots around the nation and Western Europe. The
underground political magazine "Berkeley Barb", founded in August 1965 by
Max Scherr, became the main organ of anti-establishment propaganda.
Meanwhile in 1964 in the South Bay, MkUltra’s alumnus Ken Kesey organized
the “Merry Pranksters,” a group of young freaks who traveled around the
country in a “Magic Bus.” They lived in a commune in La Honda and
experimented with acid.
LSD began to be manufactured in large quantities by Owsley “Bear” Stanley
at the UC Berkeley campus. It soon became widely available and relatively
cheap. UC Berkeley had hosted an Institute for Personality Assessment and
Research since 1949. The CIA was involved from its inception and probably
contributed to the diffusion of psychoactive drugs on campus. Incidentally, the
most famous of LSD gurus, Timothy Leary, was at the time (late 1950s) the
director of the Kaiser Foundation Psychological Research in Oakland and did
teach at UC Berkeley. Yet he did not try LSD until 1960, when he had just
moved to Harvard. Whatever the original source of hallucinogenic drugs, they
became the common denominator of the Bay Area’s cultural life, and the symbol
of an attack on the “American way of life.”

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 In 1965 the cultural world became even more effervescent. For example,
Ron Davis of the San Francisco Mime Troupe published the essay “Guerrilla
Theatre.” Ben Jacopetti inaugurated the Open Theater as a vehicle devoted to
multimedia performances for the Berkeley Experimental Arts Foundation. The
Family Dog Production organized the first hippie festival. The authorities had
lost control of the situation and a youth culture was taking over the area,
headquartered in the Haight-Ashbury district. Word of mouth was spreading
throughout the US and young people were attracted to San Francisco’s
extravagant and tolerant society. By 1966 the media could not ignore the
phenomenon anymore. Stewart Brand, who had been a volunteer at Stolaroff's
International Federation for Advanced Studies and a member of the Merry
Pranksters, organized the “Trips Festival,” collating Ken Kesey’s “Acid Test,”
Jacopetti’s Open Theater, Sender’s Tape Music Center and rock bands. The
Jefferson Airplane and the Grateful Dead popularized a new genre of music
inspired by psychedelic drugs, acid-rock. Willie Brown formed the Artists
Liberation Front at the Mime Troupe’s Howard Street loft. The first issue of the
San Francisco Oracle, an underground cooperative pamphlet, was published.
Emmett Grogan and members of the Mime Troupe founded the “Diggers,” a
group of improvising actors and activists whose stage was the streets and parks
of the Haight-Ashbury district and whose utopia was the creation of a Free City.
The first “Summer of Love” of the hippies was going on, including a three-day
“Acid Test” with the Grateful Dead performing. Huey Newton, Bobby Seale,
Angela Davis and other African-American Oakland-based activists founded the
socialist-inspired and black-nationalist “Black Panther Party” (the violent
counterpart to the pacifist “flower power” ideology of the hippies).
Coming out of the Free Speech Movement, the Free University was
inaugurated in 1965, operating out of a trailer at San Francisco State University.
Within a few years there would be dozens of Free Universities around the USA,
that provided both free college-level education and country-wide networking.
Next door to the Free University of Menlo Park in 1966 Dick Raymond founded
the Portola Institute to bring computer education to schools and hired Stewart
Brand and Bob Albrecht. In 1968 Willis Harman started teaching the influential
class "Human Potential" at Stanford University
The gay community, which on New Year's Day of 1965 had staged a widely
publicized "Mardi Gras Ball", was indirectly a beneficiary of the hippie
phenomenon. Eureka Valley, the area south of the Haight-Ashbury (the
headquarters of the hippies), was a conservative middle-class neighborhood
that did not quite appreciate the crazy circus going on a few blocks away. Many
families decided to emigrate to the suburbs and Eureka Valley became a ghost
town. Gay couples, unwelcome elsewhere, were able to snatch up cheap
Victorian homes and renovate them. The district soon became known for its
main street, Castro Street.
The revolution was widespread and octopus-like.

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 In retrospect, nothing has undermined the "American way of life" and its
traditional moral values as much as California did: the male society of the Gold
Rush, the sexual promiscuity of the hippies, the same-sex families of gay
couples, the decadent lifestyle of the Hollywood stars, and the eccentric
indulgence of the tycoons.

Science in the Bay Area

Stanford University was hyperactive also. Ed Ginzton continued Hansen’s
work on a particle accelerator propelled by ever more powerful klystron tubes
(i.e. microwaves). Ginzton was the co-founder with Russell and Siguard Varian
of Varian Associate. He still kept one foot in Stanford and had built by 1952 a
one-billion electron-volt (1GeV) particle accelerator, the Mark III. It was the
most powerful in the world, and led to Stanford’s Microwave Laboratory. In
1951 Pief Panofsky had been hired away from the Berkeley’s Radiation Lab,
where he had designed the latest proton accelerator. The two joined forces to
launch “Project M” for building a more powerful machine. The result was the
Stanford Linear Accelerator Center (SLAC), the longest linear accelerator in the
world, which started operating in 1962.
Other East-Coast transplants thrived at Stanford. In 1963 John McCarthy,
the founding father of artificial intelligence, moved to Stanford from MIT. In
1966 he opened the Stanford Artificial Intelligence Laboratory (SAIL) on the
hills a few kilometers away from the campus. It became a West-Coast
alternative to Project MAC. Another transplant from the East Coast, Herbert
Simon’s pupil Ed Feigenbaum, designed the first knowledge-based or “expert”
system, Dendral (1965). It was an application of Artificial Intelligence to
organic chemistry (a collaboration with Carl Djerassi). It differed from Simon’s
Logic Theorist because it aimed at a specific domain (organic chemistry). Just
as humans tend to be experts only in some areas, the project emphasized the
importance of domain heuristics, the “rules of thumb” that experts use to find
solutions to problems. Following his former scientist Carl Djerassi, Al
Zaffaroni relocated biotech pioneer Syntex from Mexico City to the Stanford
Industrial Park in 1963, and the following year the birth-control pill was
introduced commercially.
Stanford’s inventions even reached into music. In 1967, John Chowning, a
graduate in music composition and a pioneer of computer music, was using the
computer at the Stanford Artificial Intelligence Lab. He invented “frequency
modulation synthesis,” a technology that allowed an electronic instrument to
simulate the sound of orchestral instruments. Yamaha refined this invention in
the 1970s to manufacture electronic keyboards.
At SRI, Douglas Engelbart toyed with the first prototype of a “mouse”
(1963), part of a much bigger project funded by NASA to reinvent human-
computer interaction. Indirectly McCarthy and Engelbart started two different

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ways of looking at the power of computers: McCarthy represented the ideology
of replacing humans with intelligent machines, whereas Engelbart represented
the view of augmenting humans with machines that can make them smarter.
Stanford had become an ebullient scientific environment and it was rapidly
expanding beyond the original “Quadrangle.” In 1968, Niels Reimers
established an office at Stanford University, later renamed Office of Technology
Licensing (OTL), to literally market Stanford’s inventions to industry. By 2001
Stanford’s income would pass the $1 billion mark.

Fairchild’s Golden Years

Progress at Fairchild had been rapid, and mainly due to two new employees
from the Midwest: Dave Talbert (hired in 1962) and Bob Widlar (hired in
1963). In 1963 Widlar (a wildly eccentric character) produced the first single-
chip “op-amp.” In 1964 Talbert and Widlar created the first practical analog (or
“linear”) integrated circuit that opened a whole new world of applications.
Over the years their work accounted for the vast majority of linear designs at
Fairchild and set the standard for design of semiconductor devices.
Another isolated genius at Fairchild was Frank Wanlass, a Utah engineer
who worked for Fairchild for less than two years (1962-63). He completely
changed the face of the semiconductor industry. In 1963 he invented a new
technique to build integrated circuits, Complementary Metal-Oxide
Semiconductor (CMOS). A Metal-Oxide Semiconductor (MOS) element
consists of three layers: a conducting electrode (metal), an insulating substance
(typically, glass), and the semiconducting layer (typically, silicon). Depending
on whether the semiconductor has been doped with electrons (n-type) or holes
(p-type), the MOS circuit can be nMOS or pMOS. CMOS, by combining both
types in appropriate complementary symmetry configurations, greatly reduced
current flows. Thanks to CMOS, MOS circuits thus provided low power
consumption, low heat and high density, making it possible to squeeze hundreds
of transistors on a chip, and eventually to drop semiconductors into digital
watches and pocket calculators.
Wanlass quit Fairchild in December 1963 to join General Microelectronics
(GMe), where the first MOS product was completed in 1964, a few months
ahead of Fairchild. Yet Wanlass quit again after just one year and moved to the
East Coast, and then back to his native Utah. The gospel of CMOS spread thanks
to Wanlass’ job changes and to his willingness to evangelize.
Initially the main customers of MOS circuits were government agencies
(NSA and NASA). Lee Boysel, a young Michigan physicist working at Douglas
Aircraft in Santa Monica, met Frank Wanlass of General Microelectronics
(GMe) in 1964 and learned about MOS technology. In 1965 Lee Boysel moved
to IBM’s Alabama laboratories to apply his MOS skills. In 1966 Fairchild hired
Boysel from IBM to start a MOS group. Boysel perfected a four-phase clocking

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technique to create very dense MOS circuits. In 1967, at a time when computer
memory made of transistors were still a rarity, Boysel proved that he could
build an entire computer with MOS technology.
Finally, there was another independent genius, Federico Faggin, originally
hired in Italy. He relocated to Fairchild’s Palo Alto labs in 1968. Faggin
invented silicon-gated MOS transistors. Silicon control gates are faster, smaller
and use less energy than the aluminum control gates that had been commonplace
until then. Now that both contacts and gates were made of silicon, the
manufacturing process was simpler. It was this invention that allowed for the
exponential growth in chip density (the number of transistors that could be
packed into a chip). Fairchild introduced the first silicon-gate integrated circuit
in October 1968.
On the business side, Fairchild wasn’t doing well. Under the casual
management of Noyce, it was basically run by the marketing people. The
competitors were catching up and the company posted its first loss in 1967.

Federico Faggin of Fairchild Semiconductor (2010)

The Semiconductor Community

Several semiconductor companies dotted the landscape between Stanford
and San Jose, and almost all of them could trace their roots back to Fairchild.
They were:
Amelco (a division of Teledyne), co-founded in 1961 by three Fairchild
founders including Jean Hoerni. It developed one of the first analog
integrated circuits;
Molectro, founded in 1962 by James Nall of Fairchild. In 1965 it hired
the two Fairchild geniuses, Bob Widlar and Dave Talbert, and was
acquired in 1967 by East-Coast based National Semiconductor
(controlled by pioneer high-tech venture capitalist Peter Sprague).
National eventually relocated to Santa Clara (in 1968) after “stealing”
many more brains from Fairchild (notably Charlie Sporck, Pierre
Lamond, Don Valentine, Floyd Kwamie and Regis McKenna);

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 General Microelectronics (GMe), founded in 1963 by Fairchild
engineers (including Don Farina and Phil Ferguson), that developed the
first commercial MOS (Metal-Oxide Semiconductor) integrated circuits
in 1965 (for the Victor 3900 calculator), and was eventually (1966)
bought by Philadelphia-based Philco (that in turn had been acquired by
Ford Motor);
Applied Materials Technology (AMT), founded in 1967 by Mike
McNeilly;
Electronic Arrays, founded in 1967 by Jim McMullen;
Intersil, started in 1967 by Jean Hoerni to produce low-power CMOS
circuits for electronic watches (funded by a Swiss watchmaker); and
Monolithic Memories, founded in 1968 by Fairchild engineer Zeev
Drori.

The Semiconductor Spin-offs

Fairchild was generating the same phenomenon of “spin-offs” similar to
FTC two generations earlier. Virtually the only semiconductor companies that
were not based in the Santa Clara Valley were Texas Instruments, Motorola and
RCA. They did not have a genealogical tree like Fairchild’s spin-offs. The Bay
Area was unique in encouraging engineers to expand their ideas outside their
employer and to continuously innovate over already successful businesses.
The vast incestuous network of local spin-offs was creating a self-sustaining
manufacturing community. It mixed Darwinian competition and selection with
symbiotic inter-dependent cooperation. It was this odd coupling of competition
and cooperation that made the rapid pace of technological progress in
semiconductors possible. The startups were very jealous of their industrial
secrets but at the same time aware of who was working on what, and not shy to
band together when advantageous.
As a whole, the system of companies which were easily born and easily
“killed” was highly flexible and therefore capable of adapting quickly to
changing circumstances. The system “metabolized” a complex technology by
way of inter-related specialized technologies. The system exhibited a form of
collective learning from the responses to its actions. The network as a whole, in
fact, constituted an efficient organism that, just like biological organisms, was
capable of adaptation, evolution, reproduction, metabolism and learning. It is
not true that Silicon Valley companies shared knowledge (they were actually
were jealous of their industrial secrets); but it is true that the network as a
whole did so through its dynamics.
In 1965 Gordon Moore predicted that the processing power of computers
would double every 12 months (later revised to 18 months; this came to be
known as “Moore’s law”). The semiconductor industry experienced a rapid
acceleration towards increased power, smaller sizes and lower prices.

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 The Military Sponsors
The military played a fundamental role in fostering this process. The new
technologies were too expensive and unstable to be viable for the general
market. The military was the only entity that was willing (in fact, eager) to
experiment with novel technologies, and it did not bargain on price. The “Cold
War” was even more powerful than World War II in motivating the US
government to invest in research. Global intelligence and communications were
becoming more important than the weapons themselves, which were really used
only in Vietnam. And these systems were built out of microwave devices that
were the Bay Area’s specialty. The US government served as both a munificent
venture capitalist that did not expect a return (and not even co-ownership) and
an inexpensive testbed.
For communications, the field of digital signal processing was born due to
the military. In 1964 the head of Sylvania’s Electronic Defense Lab (EDL),
Stanford alumnus Bill Perry, took most of his staff and formed Electromagnetic
Systems Laboratory (ESL) in Palo Alto. He worked on electronic intelligence
systems and communications in collaboration with Stanford and in direct
competition with his previous employer. His idea was to embed computers in
these systems. By turning signals into digital streams of zeros and ones, ESL
pioneered the field of digital signal processing. It was initially for the new
satellite reconnaissance systems designed by Bud Wheelon, a former Stanford
classmate who in 1962 had been appointed director of the Office of Scientific
Intelligence at the CIA.
ESL’s innovation was not only technological, but in employee compensation
too. Perry’s intention was to replicate Hewlett-Packard’s corporate culture, and
in fact to better it. HP handed out stock only to management, but ESL was the
first company to extend the program to every employee. Perry went on to
become defense secretary under President Bill Clinton).
An important boost to the industry of integrated circuits came from NASA’s
Apollo mission to send a man to the moon. NASA had been using analog
computers, but for this mission in August 1961 it commissioned MIT’s
Instrumentation Lab to build a digital computer. The Apollo Guidance Computer
(AGC) was the first computer to use integrated circuits. Each unit used more
than 4,000 integrated circuits from Fairchild. That number represented a
significant share of the worldwide market for integrated circuits. In 1964 NASA
switched to Philco’s integrated circuits, thus turning Philco into a semiconductor
giant and enabling it to buy General Microelectronics.
In 1965 Hewlett-Packard employed about 9,000 people, Fairchild had
10,000, and Lockheed’s Missile Division had 28,000 employees. The defense
industry was still dominant.
The semiconductor boom also created a fertile ground for hobbyists. Halted

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Specialties Company would become the first electronics superstore of Silicon
Valley. It opened its doors in 1963 in Santa Clara to sell electronic components
and instruments.
Few of the companies that had thrived in the age of microwave electronics
made a successful transition to the age of the integrated circuit. The protagonists
had changed. What had remained was the template of collaboration among
university, industry, and the military.

Other Tech Companies beyond Semiconductors

Other tech companies besides semiconductors started to thrive also. In 1961
Laurence Spitters, a Wall Street investment banker who had moved to San
Francisco and joined Ampex in 1958, founded Memorex in Santa Clara. He took
three Ampex engineers with him to manufacture high-precision magnetic tapes
that could also be used as data storage. At the other end of the bay, Berkeley
wasn’t just the site of student riots and psychoactive drug tests: in 1965 UC
Berkeley’s Lotfi Zadeh invented Fuzzy Logic. Ray Dolby, a former Ampex
employee, founded Dolby Labs in Britain in 1965 and relocated to San
Francisco in 1976. Also new investment companies sprouted, notably Sutter
Hill Ventures, formed in 1964 by Bill Draper and Paul Wythes.

Towards a More Humane Electronic Brain

One big trend was that computers were becoming more affordable. In 1965
the Digital Equipment Corporation (DEC) of Boston unveiled the mini-computer
PDP-8, which used integrated circuits. Designed by Gordon Bell and Edson de
Castro, it was much smaller and cheaper than an IBM mainframe, selling for
only $16,000. The success of this model launched Massachusetts Route 128 as
a rival to Silicon Valley for innovation in computing. DEC spawned several
companies, notably Data General, founded in 1969 by Edson de Castro (the
brain behind the PDP-8). Its Nova introduced an elegant architecture that fit a
16-bit machine on a single board and that only had one instruction format, each
bit of which had meaning. Also, unbeknownst to most in the US, in 1965 Italian
computer manufacturer Olivetti introduced an affordable programmable
electronic desktop computer, the P101.
Crowning this race to miniaturization, in 1967 Jack Kilby at Texas
Instruments developed the first hand-held digital calculator. Computers were
getting smaller and cheaper. However, very few people had personally seen
one, and even fewer knew how to operate them. Computers were still an exotic
topic. In 1966 there were 2,623 computers in the US, and 1,967 of them were
owned by the Defense Department. Integrated circuits had been manufactured
since 1958, but very few computer models employed them in 1965.
Hewlett-Packard still concentrated on instrumentation. It got into computers
(the HP 2116A in November 1966, its first machine that used integrated circuits)

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and desk calculators (the 9100A in 1968) and hand-held calculators (the HP-35
in 1972) only because they were the natural evolution of instrumentation. The
2116A was marketed as an “instrumentation computer” and boasted interfaces
for more than 20 scientific instruments. It had been designed by engineers from
Data Systems, a Detroit company that HP had acquired in 1964. Data Systems
already marketed a computer, the DSI 1000. However casual and half-hearted, it
was the beginning of the computer industry in Silicon Valley.
Computers were becoming more affordable, but they were still impossible
to operate. In 1967, Nicholas Negroponte, originally an architect with a vision
for computer-aided design, founded MIT’s Architecture Machine Group to
improve human-computer interaction. He had the same goal as Douglas
Engelbart’s team at SRI. Also in 1967 the artist Gyorgy Kepes, who had joined
MIT’s School of Architecture and Planning in 1946, founded MIT’s Center for
Advanced Visual Studies, a place for artists to become familiar with computer
technology.
The chimera of having computers speak in human language had been rapidly
abandoned, but there was still hope that computers could help translate from one
human language to another. After all, computers had been invented to decode
encrypted messages. The Hungarian-born Peter Toma, hired in 1958 by the
Georgetown University machine-translation team, spent a decade refining his
Russian-to-English machine-translation software until he could demonstrate his
SYSTRAN on an IBM/360 in 1964. The ALPAC (Automatic Language
Processing Advisory Committee) report of 1966 discouraged the US from
continuing to invest. Toma was forced to complete his program in Germany and
he returned in 1968 to California to found Language Automated Translation
System and Electronic Communications (LATSEC). It sold SYSTRAN to the
military at the peak of the Cold War.
Unbeknownst to the masses and to the media, an important experiment was
conducted at Stanford for the first time in the world. Two psychology
professors, Patrick Suppes and Richard Atkinson, created a computer-based
program to teach children from lower-income families, the precursor of e-
learning. Later, Suppes became the Terman of e-learning, encouraging local
startups in this field.

Lasers
Laser technology was one of the other high-tech industries flowering in
Silicon Valley. A Stanford graduate, Ted Maiman, working at Hughes Research
Laboratories in Los Angeles had demonstrated the first laser (a ruby laser) in
May 1960. He beat the more famous teams of Charles Townes at Columbia
University and Arthur Schawlow at Bell Labs, not to mention the very inventor
of the laser, Gordon Gould, who had moved to the firm TRG (Technical
Research Group) from Columbia. In 1959 Gould had coined the term, which

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stands for “Light Amplification by Stimulated Emission of Radiation.”
Schawlow joined Stanford’s Microwave Lab in 1961.
Meanwhile, Eugene Watson and Earl Bell had worked at Varian in the
1950s, where Herb Dwight had led the project to build the first practical
helium-neon laser (completed in 1961). To capitalize on that invention, in 1961
Dwight and Bell founded Spectra-Physics in Mountain View, the world’s first
laser startup. In 1962 they hired Watson as a sales manager. Revenues soared
mostly because labs all over the world wanted a taste of the new technology.
Watson and Spectra-Physics’ young scientist James Hobart then opened
Coherent Radiation Laboratories (later Coherent Laser) in May 1966 at the
Stanford Industrial Park. They staffed it with Spectra-Physics engineers and
commercialized the more powerful lasers invented at Bell Labs (the carbon-
dioxide laser) and at Spectra-Physics (the ion laser). Another spin-off of
Spectra-Physics would be Chromatix in 1969 in Sunnyvale. Spectra-Physics
went on to build in 1974 the first bar-code scanner ever used in a store.
The laser was a formidable invention. No other invention would be
integrated so quickly in society and become so pervasive in such a short time
(bar-code scanners, compact discs, cutting and welding, holography, precision
surgery).

Culture and Society

Ironically, San Francisco was still moving in the opposite direction, away
from technology and towards nature and humanity. In January 1967 a “Human
Be-In” was held at the Golden Gate Park, and the beach town of Monterey
hosted the first major rock festival in June of that year. John Lion started the
Magic Theatre in 1967.
In 1968 Stewart Brand of the Portola Institute published the first “Whole
Earth Catalog,” a sort of alternative yellow pages that listed products targeting
the hippie lifestyle and featured articles on all sorts of counterculture topics.
Not only did the catalog sell well (in 1971 it would print one million copies): it
also introduced the praxis of letting readers review products. The Whole Earth
Catalog, just like (on a smaller scale) the flyer-based grass-roots campaigns of
the hippies, pioneered the process of "going viral" without the traditional
marketing that came from the mainstream media.
In 1968 Chip Lord founded the Ant Farm to promote avantgarde architecture
and design.
The news media went berserk reporting from San Francisco about the
bizarre youth counterculture. Millions of young people around the world started
imitating it. The whole hippie phenomenon paralleled the Bay Area’s flare in
interest for computer science and the growth of the Bay Area’s semiconductor
industry. Indian musician Ali Akbar Khan founded the Ali Akbar College of
Music in 1967 in Berkeley to teach and spread Indian classical music, which

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was becoming increasingly popular among rebellious youth like everything else
from India and the Far East.
At the same time, many new residential areas were being created between
San Francisco and San Jose. The underpopulated Bay Area fostered a different
urban model than the one popularized by Manhattan’s skyscrapers. There was
plenty of free space south of San Francisco, and therefore no need for high-rise
buildings. Earthquakes also helped shape the urban environment as an endless
flow of flat buildings with no particular center. The community lay horizontally,
reached by walking instead of elevators. The main square had disappeared.
Even Main Street and Broadway (the two staples of urban topography in most
US towns) were missing (or few knew where they were). San Francisco was
called “the city” because the cities of Silicon Valley were not cities.
One of the most important events of 1965 for Silicon Valley had nothing to do
with technology per se. The Immigration Act of 1965 greatly increased the
quotas of immigrants allowed from various countries. It allowed immigration
based on rare skills, such as software or hardware engineering. For example,
only 47 scientists migrated to the US from Taiwan in 1965, but in 1967 the
number was 1,321. That immigration law started a brain drain of engineers and
scientists from Europe and especially the Far East towards Silicon Valley that
would have far-reaching consequences.

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 Geniuses: DRAM, Intel, SRI, PARC,
Arpanet, and Utopia (1968-71)

DRAM
The booming sales of smaller computers and the Bay Area’s experiments in
semiconductors came together in July 1968 when Robert Noyce and Gordon
Moore started Intel in Mountain View to build semiconductor memory chips. It
was funded with money collected by Arthur Rock. The price of magnetic core
memories had been declining steadily for years. The founders of Intel, however,
believed that semiconductor computer memory could fit a lot more information
(bits) and therefore become a cheaper method to hold large amounts of data.
Intel was not alone in believing in new memory technology. An IBM
researcher, Robert Dennard, achieved the first breakthrough in 1966, when he
built the first DRAM. His DRAM, or dynamic random access memory, needed
only one transistor and one capacitor to hold a bit of information, thus enabling
very high densities. It was called “dynamic” because it needed to be refreshed
continuously. The combination of Kilby's integrated circuit and Dennard's
dynamic RAM was capable of triggering a major revolution in computer
engineering, because together the microchip and the micromemory made it
possible to build much smaller computers.
Lee Boysel at Fairchild Semiconductor achieved a 256-bit dynamic RAM in
1968. Then he founded Four Phase Systems in 1969 to build 1024-bit and 2048-
bit DRAMs (kilobits of memory on a single chip). Advanced Memory Systems,
founded in 1968 not far from Intel by engineers from IBM, Motorola, and
Fairchild Semiconductor, introduced one of the first 1K DRAMs in 1969. Intel
introduced its own in 1970, the 1103.

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 Four Phase

Before DRAMs, the semiconductor firms mainly made money by building

custom-designed integrated circuits. Like all customized solutions, they did not
have a huge market (often just one customer) but were lucrative and safe.
DRAMs, instead, were general-purpose and rapidly became a commodity. Their
advantage was that they could be sold by the thousands. Their disadvantage was
that the semiconductor firms had to learn to live with competition, i.e. with a
constant downward pressure on prices. By 1972 Intel had more than 1,000
employees and posted revenues of $23 million. Intel pioneered what would
become a well-honored Silicon Valley tradition: all employees were made
shareholders through "stock options" from the moment they joined the company.

Intel’s First Office Building (2010)

Reversed and Advanced Engineering

The new business model meant that the entry point was lower. Many other

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firms opened up. In 1969 Advanced Micro Devices (AMD) was founded by
Jerry Sanders, the marketing guru of Fairchild Semiconductor. AMD invented a
sort of parasitic business plan: let others invent and then improve over their
original design. While it was less “creative,” this approach required
sophisticated engineering skills to reverse engineer the products of other
companies (typically, Intel) and then tweak it to obtain a better product.
Gordon Moore's story is emblematic of how Silicon Valley was started, and
useful to demystify some legends about what stimulates people to work in
Silicon Valley. He was a fifth-generation Californian who studied at San Jose
State College and then at UC Berkeley before graduating as a chemist at the
California Institute for Technology (Caltech) in Pasadena, where his research
was founded by the Office of Naval Research, like many scientific projects of
the time: in the 1950s the Cold War was raging. Jobs for scientists were not
easy to find in California, so he and his wife (also a Bay Area native) moved to
Johns Hopkins University's Applied Physics Laboratory (APL). Shockley,
another California-raised man, had moved back to the Bay Area because of his
mother, and was looking for talents to jump-start his laboratory (located a few
blocks away from his mother's house). Moore intended to move back to the Bay
Area for a similar reason: to be near his folks (and in-laws). So two of the
founding fathers of Silicon Valley defy the stereotype of the immigrant: they
were family men, looking for a stereotypical family life. Shockley offered
Moore that opportunity, and he joined his lab; not to change the world or to
become a millionaire, but simply to live a normal bourgeois life. Luckily for
Moore, none of Shockley's East Coast friends wanted to move to the Bay Area:
the East Coast was the high-tech place to be, the Bay Area was, by comparison,
a third-world country. So much for the much vaunted appeal of the California
weather. When Moore joined Shockley, interest in transistors mainly came from
the government, that needed to build more reliable rockets. Again, the Cold War
helped Moore get a start. When the eight "traitors" were plotting against
Shockley, One man whom Shockley had convinced to move west was Robert
Noyce, an engineer of the Philco Corporation in Philadelphia. Shockley had
attended a semiconductor symposium on the East Coast specifically to unearth
young talents. Noyce got convinced because he loved the prospect of working
on state-of-the-art transistor technology, but also because his brother had moved
to the Bay Area and housing was much more affordable in the Bay Area than in
Philadelphia (he already had a wife and two children). Noyce and Moore led
the rebellion of the eight "traitors" that founded Fairchild and then Moore
became Fairchild's director of Research and Development. The reason they left
Shockley and started Fairchild was not the money: it was the love of science
(and Shockley's impossible attitude). Moore, as a teenager, had played with
explosives, and he came from a family that had witnessed the explosive growth
of the Bay Area; last but not least, he married a sociologist. These factors may
account for the fact that, ultimately, the so-called "Moore's Law" describes an

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exponential growth, and is actually a social meditation on (technological and
social) change. Moore was a visionary about the future of electronics working
inside that industry, a rarity at the time. In fact, the famous (and very brief) paper
of April 1965 titled "Cramming More Components onto Integrated Circuits" (in
the anniversary issue of Electronics) had been preceded in 1963 by a longer
essay, titled "Semiconductor Integrated Circuits", that appeared in
"Microelectronics - Theory, Design, and Fabrication" (McGraw-Hill, 1963).
His prediction was actually a bold prediction, based on rather scant data:
Fairchild's chip of 1959 had hosted only 1 transistor, whereas Intels' chip of
1965 had 50. He extrapolated and decided that the chip of 1975 would contain
65,000. To some extent this was a self-fulfilling prophecy, because Moore at
Intel set out to prove his "law" right, and he did. Moore went on to become the
longest-serving CEO of Intel and the richest man in California (in the 2000s).
By then IBM had shot far ahead of the competition. The competition relied
on the anti-trust laws to manufacture “clones” of IBM mainframes. They were
called the “bunch” from the initials of their names: Burroughs, Univac (that in
1971 bought RCA’s computer business), NCR, Control Data Corporation (that
had acquired Bendix), and Honeywell (that in 1970 bought General Electric’s
computing business).
Honeywell had jumped late into computers but had made some bold
acquisitions and hired bright engineers. Bill Regitz was one of them, a specialist
in core memory systems from the Bell Labs. He became a specialist in MOS
(Metal Oxide Semiconductor) technology and came up with an idea for a better
DRAM (using only three transistors per bit instead of the four or more used by
the previous mass-market DRAM chips). He shared that idea with Intel (and
eventually joined Intel) and the result was the Intel i1103, a 1,024-bit DRAM
chip, introduced in the fall of 1970. It wasn’t the first one, but it was the first
one that could be easily used to build computer memories. Hewlett-Packard
selected it for its 9800 series, and IBM chose it for its System 370/158. It
became the first bestseller in the semiconductor business.
Within two years Intel was dominating the market for DRAMs. By the end of
the year not only Intel but the whole Santa Clara Valley had become the place to
go and buy semiconductor technology: five of the seven largest US
semiconductor manufacturers were based here.
However, core memory was still the memory of choice among large
computer manufacturers, still accounting for more than 95% of all computers in
the mid 1970s.

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 AMD’s “White House” Headquarters (2010)

Bay Area High-Tech Creativity

Besides the semiconductor industry, the Bay Area was now producing all
sorts of high-tech ideas. In December 1968, Doug Engelbart of the Stanford
Research Institute (SRI) publicly demonstrated the NLS (“oN-Line System”),
one of the most celebrated “demos” of all times. It was a project started in 1962
and financed by NASA and ARPA. NLS featured a graphical user interface and
a hypertext system running on the first computer to employ the mouse. Engelbart
stood in front of the audience in San Francisco and interacted live with a
computer in Menlo Park (at SRI’s offices). When the Apollo program ended and
ARPA and NASA ended funding to Engelbart’s team at the SRI, SRI sold the
team and its NLS to Tymshare.
The hippie anti-military ideology indirectly affected SRI. Student protests
against SRI’s reliance on military projects caused Stanford to spin off SRI as an
independent non-profit entity, which later (1977) renamed itself SRI
International. In 1969, SRI’s Artificial Intelligence group, led by Charlie
Rosen, demonstrated “Shakey the Robot,” a mobile robot that employed
artificial intelligence techniques. In 1970 Stanford University’s Ed Feigenbaum,
capitalizing on Dendral, launched the Heuristic Programming Project to create
“expert systems” that could match the behavior of human experts in specific
domains.

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 Shakey the Robot of SRI (1969)

Xerox PARC
In 1969 the New York-based photocopier giant Xerox decided to get into
computers and acquired Scientific Data Systems (SDS) for $900 million. That
division went on to produce the Sigma line of 32-bit mainframe computers.
Xerox’s venture into computers would be so unsuccessful that the division
would be closed in 1975.
However, a major corporate center came out of Xerox’s foray. In order to
support its venture into computers, in 1970 Xerox set up the Palo Alto Research
Center (PARC) in the Stanford Research Park to conduct research in computers
far away from the company’s headquarters. Xerox PARC hired Bob Taylor, the
former director of ARPA’s IPTO, to lead the Computer Science Laboratory
(CSL). A year earlier Xerox’s scientist Gary Starkweather had invented the
laser printer. The first working laser printing system was developed at PARC.
Among the center’s many promising talents was Alan Kay, hired in 1971, a
pupil of computer-graphic pioneer Ivan Sutherland in Utah and a lecturer at
Stanford’s AI Lab (SAIL) in 1970. Kay had the vision of a mobile computer that
he named Dynabook, and of “object-oriented” (a term that he invented)
educational software. He designed a completely new software environment to
develop software applications, Smalltalk. It was inspired by Simula 67, a
programming language for simulations that had been defined in Norway by Ole-
Johan Dahl and Kristen Nygaard. They all had created a GUI with children in
mind (overlapping windows and then the “desktop” metaphor).

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 Alan Kay had a completely different view of what a computer was and what
it should do, and that vision came from his passion for education. In a sense, he
envisioned children as the ultimate users of computers, and therefore computers
as tools for children. Once framed this way, the problem became one not of
faster processing but of better interaction. It was not humans who had to learn
the language of computers but computers who had to learn the “language” (or at
least the way) of humans. Alan Kay’s team included Adele Goldberg and Dan
Ingalls (the man who developed most of the programming language in 1972).
PARC also hired most of the gurus behind the Berkeley Computer Corporation
(BCC) that had tried to commercialize Berkeley’s Project Genie, notably
Charles Thacker.
Perhaps as important as the technology was the work ethic at Xerox PARC,
an ethic that basically consisted in not having a work ethic at all. Xerox funded
the center, and left the scientists free to do what they wanted with the money.
Unlikely as it may sound for someone coming from government agencies, Taylor
fostered an environment that was casual, informal and egalitarian, with no dress
code and no work hours. Xerox PARC came to symbolize for research centers
the equivalent of the alternative lifestyle preached by the hippies (if not a
premonition of the punks).
Besides HP, IBM had to face a new competitor that was based in the Bay
Area. The chief architect of IBM’s mainframes, Gene Amdahl, started his own
business in 1970 in Sunnyvale to build IBM-compatible mainframes, less
expensive and faster than IBM’s models. Amdahl’s first machine would come
out in 1975.
Meanwhile, the hippy anti-military ideology indirectly affected the SRI:
student protests against SRI's reliance on military projects caused Stanford to
spin off the SRI as an independent non-profit entity, which later (1977) renamed
itself SRI International.

Xerox PARC’s Old Building (2010)

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 The Age of the Minicomputer
The PDP-10 (1966), and even more the PDP-11 (1970), represented a real
revolution in the way thousands of users could interact with the computer.
Instead of having to deliver their deck of punched cards to the computer room's
staff, this generation of users could access the computer directly, without an
intermediary. The machine was still shared with many other users, but at least
each user was able to touch and feel the computer.
Hewlett-Packard was ready to enter the minicomputer market with the 3000,
a project begun in 1970 and released in November 1972. HP used a new
strategy to design this machine: it employed both hardware and software
engineers to write the specifications. The result was that the 3000 was one of
the first computers to be completely programmed in a high-level language
instead of the prevailing assembly languages, and (from 1974) it came with a
database management system (IMAGE), something that in the past only
mainframes had been able to offer. The PDP of DEC had introduced a “do-it-
yourself” mindset in data centers. By enabling staff with little computing skills
to manage strategic data, the HP/3000 pushed that mindset one floor up to the
business offices. The success of this machine would transform HP’s culture. To
start with, HP would use this product to expand from its traditional industrial
base into the business world. In a few years revenues from the 3000 would
account for almost half of total revenues, propelling HP to the forefront of the
minicomputer industry.
The early 1970s witnessed the global adoption of minicomputers for
multiple purposes, but particularly for controlling machine tools ("numerical
control"). The PDP and the minicomputers that followed, easier to program and
to connect than the old colossi, caused rapid acceleration in factory automation.
Those were also the days that witnessed the birth of the first computer
graphics systems for the design of parts, the ancestors of Computer Aided
Design (CAD): one by Computervision, founded in 1969 near Boston by Marty
Allen and Philippe Villers to design integrated circuits (originally with software
running on a time-sharing mainframe), and one by M&S Computing (later
renamed Intergraph), founded in 1969 in Alabama by a group of IBM scientists
(notably Jim Meadlock) who had worked on NASA's "Apollo" space program,
to work for NASA and the military (originally using a Scientific Data System
Sigma computer).
At the same time, a small revolution in printing was taking place on the East
Coast. In 1970 DEC introduced the first dot-matrix printer, the LA30, which set
the standard for minicomputer printers. In the same year Centronics (based in
New Hampshire) introduced its Centronics 101 with the parallel port interface
that would become a standard for connecting printers to computers.
The first PLC (Programmable Logic Controller), the Modicon 084, was

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introduced in 1969 by Richard Morley's Bedford Associates (later renamed
Modicon from "Modular Digital Control"), founded a year earlier near Boston.
Morley's PLC put intelligence into factory's machines and changed forever the
assembly line and the manner in which machines were controlled. The
automation of industrial process became a problem of "programming", not of
manufacturing. And in 1975 Modicon would introduce the "284", the first PLC
driven by a microprocessor.

The Floppy Disk

IBM’s San Jose laboratories were assigned the task to develop a cheap
storage medium to load the 370 mainframe’s microcode and replace the
cumbersome tape units. Previous IBM mainframes had used non-volatile read-
only memory to store the microcode, but the 370 instead used a read and write
semiconductor memory that had become affordable and reliable, besides
solving many engineering problems. However, semiconductor memory was
volatile (it was erased whenever the power was switched off). Therefore IBM
had to provide a medium to reload the microcode. In 1971 David Noble came
up with a cheap read-only 80-kilobyte diskette: it was nicknamed the “floppy
disk.” It made it easy to load the control program and to change it whenever
needed. It was originally designed to be written once and read many times, but
just one year later a team at Memorex led by Alan Shugart built the first read-
write floppy-disk drive, the Memorex 650. It obviously could serve more
purposes than just loading control programs into a mainframe.

The Videogame
People also began to realize that advanced computer technology could be
used for purposes totally unrelated to computing. Inspired by Steve Russell’s
ten-year old but still popular “Spacewar,” in 1971 Ampex employees Nolan
Bushnell and Ted Dabney quit their jobs and created the first arcade videogame,
“Computer Space.” It was a free-standing terminal powered by a computer and
devoted to an electronic game that anyone could use. When, in May 1972,
Magnavox introduced the first videogame console, Ralph Baer ‘s transistor-
based “Odyssey,” Bushnell was inspired again, this time by an electronic ping-
pong game. He founded Atari in Santa Clara (mainly with Ampex engineers) and
asked his engineer Allan Alcorn to create a similar game, which became “Pong”
in November 1972, a runaway success.

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 Atari’s Pong Videogame System (1972)

The Financial and Legal Infrastructure

The high-tech industry of the South Bay began attracting serious capital in
1968 when ARD’s investment in Digital Equipment Corporation (DEC) was
valued at $355 million. It was the first well-publicized case of an investment in
a computer company that paid off handsomely. The same model could be
replicated on the West Coast. New investment companies were founded: Asset
Management by Franklin Johnson (1965); Hambrecht & Quist by William
Hambrecht and George Quist in San Francisco (1968); Bryan & Edwards by
John Bryan and Bill Edwards (1968); Crosspoint Venture by John Mumford in
Woodside (1970); and so on. As their returns beat national stock index
averages, New York firms such as Bessemer Securities opened branches in the
Bay Area.
At the same time, a law firm located in the Stanford Industrial Park, evolved
from a firm that a Redwood City attorney John Wilson had started in 1961. Its
customers were Tymshare, ESL and Coherent Laser. Wilson’s firm just added
two Berkeley graduates (Larry Sonsini in 1966 and Mario Rosati in 1971) and
laid the foundations for the typical Silicon Valley law firm, which specialized in
setting up startups, writing contracts between founders and venture capitalists,
taking startups public through IPOs, and, controversially, accepting equity in its
clients as a form of payment.

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 Wilson Sonsini’s Law Offices (2010)

Biotech’s First Steps

In 1959 the medical department of the University of the Pacific had moved
to Stanford University’s campus in a joint venture between the City of Palo Alto
and Stanford University. In 1968 this medical center was purchased by Stanford
University and renamed as Stanford University Hospital. Coupled with the
success of Syntex, this event symbolized the coming of age of the area in
pharmaceutical research.
A few early biotech companies were created. Alza was founded in 1968 by
former Syntex’s President Alejandro Zaffaroni in Palo Alto and rapidly became
the most successful of the new pharmaceutical companies. Cetus, the first
biotech company of the Bay Area was founded (in 1971) by Donald Glaser, a
Nobel-winning nuclear physicist at UC Berkeley who had switched to
molecular biology, to develop methods to process DNA. In those days the
composition of DNA was still largely a mystery, and the main business was to
devise automated methods to carry out research on DNA.

Arpanet
By the end of 1960s the Bay Area didn’t yet boast a major computer
manufacturer. Hewlett-Packard was still mostly manufacturing electronic
equipment. Even worse was the situation with software: there was no major
software company. It was no surprise, therefore, that all the important decisions
still took place on the East Coast. In 1968 the hypertext project run by Dutch-
born Andries van Dam at Brown University, originally called Hypertext Editing
System from the idea of his old Swarthmore college friend Ted Nelson, yielded
the graphics-based hypertext system FRESS for the IBM 360. Influenced by
Douglas Engelbart ‘s NLS project at the SRI, FRESS featured a graphical user

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interface running on a PDP-8 connected to the mainframe. This system also
introduced the “undo” feature, one of the simplest but also most revolutionary
ideas introduced by computer science.
Paul Baran ‘s old idea that a distributed network was needed to survive a
nuclear war had led the Advanced Research Projects Agency (ARPA) in 1966
to launch a project for one such network under the direction of MIT’s scientist
Lawrence Roberts. He had implemented one of the earliest computer-to-
computer communication systems. In October 1969 Arpanet was inaugurated
with four nodes, three of which were in California: UCLA, in the laboratory of
Leonard Kleinrock, the man who in 1962, as a student at MIT, had developed
the mathematical theory of packet switching for communication between
computers; Stanford Research Institute in Doug Engelbart’s Augmentation
Research Center; UC Santa Barbara; and the University of Utah. Bolt Beranek
and Newman delivered one Interface Message Processor (IMP) to each node.
The IMPs communicated via software that sent messages over ordinary
telephone lines.
The Arpanet implemented Baran's original vision of 1962 for a "survivable"
communications network: decentralization (so that no central command that the
enemy can take out), fragmentation (so that each "packet" of the message
contains the information required to deliver it), and relay (so that the packets are
delivered by store and forward switching via any available path of nodes). The
Arpanet involuntarily introduced a paradigm shift that would have wide-ranging
implications (and not only technological ones): it shifted the emphasis from the
privately-owned top-down control of the telephone system and its inflexible
switching circuits towards a model of public adaptive bottom-up
communication in which there was no center and command was spread
throughout a dynamic population of "routers". A few years later that would
become the very ideology of the "counterculture", albeit in a completely
different context. By accident the Arpanet had just invented the counterculture.
As a historical note, the Arpanet had been preceded by the Octopus
network, implemented in 1968 at the Lawrence Livermore Laboratories by
connecting four Control Data 6600 mainframes (the project had begun in 1964).

Unix
In November 1971 Bell Labs unveiled its Unix operating system. It was the
successor to MULTICS (Multiplexed Information and Computing Service), a
time-sharing operating system for General Electric’s mainframe GE-645 that
had been jointly developed by MIT’s Fernando Corbato (the father of time
sharing) and by Bell Labs, and that was first deployed in 1965. Two Bell Labs
scientists, Kenneth Thompson and Dennis Ritchie, pulled out in 1969 and
worked on a smaller version of Multics, which became Unix, written in the
assembly language of the PDP. In 1973 they also rewrote it in a programming

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language called C, developed by Ritchie the year before. That marked the first
time that an operating system was written in a high-level language, and therefore
easy to port across computers (although de facto until 1976 Unix only ran on
DEC PDPs).
In 1958 AT&T (the owner of Bell Labs) was struck with an antitrust court
order that forbade it to ever enter the computer business and that forced it to
license any non-telephone inventions to the whole world. This odd ruling turned
Unix into a worldwide phenomenon, as it spread from one corner of the
computer world to the other.

Remote Computing
Meanwhile, the time-sharing industry had popularized the concept of remote
computing. For example, Ohio-based CompuServe, founded in 1969 and
actually a spin-off of the University of Arizona’s time-sharing system, made
money by renting time on its PDP-10 midrange computers (what later would be
called “dial-up” service). Computers were especially valuable for “real-time”
transactions, when they had to process multiple critical transactions in
milliseconds, a problem typical of financial applications. In July 1969 IBM
introduced the transactional system CICS (Customer Information Control
System).

The Unbundling of IBM

In June 1969 IBM preempted an antitrust lawsuit by basically opening up its
software business to the competition. Its decision might also have been driven
by the increasing costs of developing software. IBM was “bundling” the
software with the computer. In theory the software was free, but, its cost was
factored into the price of the computer. As the cost of developing software
increased, IBM was forced to charge higher prices for computers that could
have been much cheaper, and the customer was forced to pay for all the
software that came with the computer regardless of what was really used.
The historical “unbundling” created a golden opportunity for independent
software companies, as the market for mainframe applications was colossal.
Until then, only Max Palevsky ‘s Scientific Data System (SDS) had charged
customers for software. Initially IBM’s customers were not amused when told
that they had to pay for software that used to be free, but soon the advantages of
having a free market for software applications became obvious. Multiple
companies introduced competing packages addressing big industries. Suddenly
software companies were no longer “consultants” working on custom
applications but third-party vendors selling off-the-shelf packages.
The first packaged product from an independent software company was
probably Autoflow, an automatic flowcharting system unveiled in 1965 by
consulting firm ADR (Applied Data Research). It was originally founded in

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1959 in Princeton (New Jersey) by a group of Univac programmers, notably
Martin Goetz, formerly of Sperry Rand. Before Autoflow the business of
software was a pure custom service. Nobody had tried to sell the same
applications to multiple customers: “standard” applications were bundled for
free with the computer by the manufacturer. Goetz also went down in history as
the first person to be awarded a patent for a software “invention” in 1968; it
was for a sort program that he had developed in 1964.
Informatics was founded in 1962 by Walter Bauer, the former manager of
information systems at Ramo-Wooldridge in Los Angeles, and Frank Wagner, a
former president of Share. It introduced the term “informatics” into popular
jargon. In 1964 Informatics acquired Advanced Information Systems from
aviation giant Hughes and turned its file management system (developed by John
Postley) into a product, Mark IV (November 1967), that went on to become the
first best-seller of the software industry. Bauer modeled the business after
IBM’s business model, assuming that selling software wasn’t different than
selling hardware
In 1968 John Cullinane started the first software company, in Boston, funded
by Wall Street investors, Culliname Corp. It was the first software “startup.”
Culliname’s vision was that it made more sense to sell applications to the
department that used them than to the data processing department. His idea was
to purchase successful custom applications and generalize them so that they
could be resold to other customers.
Software, whether developed by computer manufacturers, software
companies, or in-house facilities of large users, was growing rather chaotically.
For too long software had been conceived as a mere appendage to hardware.
Millions of lines of code had been written with no standards and often no
methodology. Now the computer manufacturers were plagued with “bugs” in
their operating systems that were impossible to fix, and customers were plagued
with mission-critical applications that contained “spaghetti code” which was
difficult to update and difficult to port to other machines. In 1968 the Dutch
mathematician Edsger Dijkstra wrote an article titled “GO TO Statement
Considered Harmful.” It was a simple (and typically illiterate) statement about
how “not” to write software. Computer programmers had conceived programs
as sequences of instructions. It was time to conceive them as the complex
architectures that they were. In October 1968, NATO organized a conference in
Germany focusing on methodologies for software development titled “Software
Engineering.” In 1969 Joseph Piscopo founded Pansophic Systems in Chicago;
it was a pioneer of CASE (Computer Aided Software Engineering).
The importance of software was also recognized when (in 1968) Los
Angeles-based Computer Science Corp (CSC), the largest software company in
the country, became the first software business to be listed on the New York
Stock Exchange. The world of computing was beginning to be called
“Information Technology” (IT).

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 The Software Industry in Perspective
The first software companies were consulting operations that helped data
centers program their computers to provide applications to their organization.
The term “user” tended to apply to the data processing center, not to the
department that actually used the results of the application program. The typical
customer in the 1950s was a government agency or a research laboratory. As
prices decreased and “standard” software became more useful for practical
office chores, computers spread to financial and industrial corporations.
Initially they too thought that the “user” of a computer was the data processing
center. The standard software that came bundled with a computer solved simple
problems of accounting and recording. Organizations that had spent millions to
buy computers wanted to do more with those computers. There were few
“programmers” around and organizations were reluctant to hire “programmers”
(still an uncharted profession). So it made sense that some of those programmers
decided to start companies specializing in writing programs for data processing
centers. On the one hand, these organizations did not want to hire programmers
who were needed only for the duration of a project but were useless for the
main business of the organization. On the other hand, the programmers
themselves were not excited to work for an organization because there was no
career path for them. Their status and salary was certainly higher than it had
been for the early (female) programmers, but they had no prospects for
promotions within the organization. Thus the software business was born as a
form of outsourcing.
The main problem that the early software companies encountered was in
estimating the costs of a software project. There was no science behind it. It
was based on intuition and negotiation: you charged what the customer was
willing to pay. Since the costs were so difficult to estimate, it was natural that
software companies started to pay attention to which code was being rewritten
for different applications. Code could be recycled from one project to the next,
thus reducing the unpredictability of development costs.
The other problem that the early software companies had to face had to do
with the perception that software was not a product. Customers were reluctant
to pay for software, since they saw it as an integral part of the computer. They
naturally expected the computer to solve their problem, not to become an
additional problem. The data processing centers quickly realized the reality: the
computer was indeed an additional problem that needed a whole new class of
solutions. It took longer for the other departments of an organization to accept
that the computer was not a solution but a problem, albeit one that potentially
could lead to higher productivity and competitiveness.
The next step for software companies was to resell an entire application to
multiple customers, and the category of software products was finally born.

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Suddenly, organizations were willing to pay good money for software
applications, while software companies were able to control the costs.
Software was becoming a lucrative business.
At the beginning, many software companies seemed unconvinced that
software products were useful. These companies had very few sales people.
Their official reason was that only few people understood their software
products, but in reality those sales people did not understand the product as
much as they understood the customer, i.e. how to convince the customer to buy
the product. The product was something that most customers were not asking for
and sometimes did not even understand. The sales person had to create a market
that did not exist. The sales person was someone in between the organizational
consultant, the explorer, and the itinerant medicine peddler.
All of this happened far away from the Bay Area. Most software companies
were based on the East Coast or in the Midwest, because most computer users
were based on the East Coast or in the Midwest. The only major exception was
Los Angeles, where the aviation industry was based. The Bay Area had only
two major users of computers: Bank of America in San Francisco (that had
already installed the ERMA in 1955) and the Lawrence Livermore Laboratories
in the East Bay (an early adopter of the PDP-1 in 1961 and of the CDC 6600 in
1964). Not much, however, existed in the Santa Clara Valley. In 1975, just
months before the introduction of the first Apple computer, the whole market for
software products in the US was still worth less than $1 billion.

Case Study: the Bell Labs

In the late 1960s the Bell Labs in New Jersey had about 50,000 people.
From the 1930s it had been a magnet for engineers throughout the country.
Founded in 1925 by AT&T, it enjoyed immense funding because AT&T had the
monopoly of telephone communications in the USA. Bell Labs was, in fact, an
odd case of a private research laboratory funded by the customers with
approval from the government: the government de facto allowed AT&T to
charge the cost of the research on the customer's phone bill. The Bell Labs were
mostly working on long-term projects. They belonged to an organization whose
products had a life expectancy measured in decades. The Bell Labs themselves
were not making products that would be sold in stores, i.e. that marketing
campaigns could turn into front-page news. It was similar to tenured faculty, but
without the obligation to teach and with greater accountability. Throughout their
history they had virtually no connection with nearby aristocratic Princeton
University (where people like Einstein were working). In 1936 Mervin Kelly
had become the director of the labs. His fame was due to the vacuum tube, that
his group had perfected, but he was keenly aware of the limitations of the
device: it was unreliable and it sucked a lot of power. In 1945, at the end of the
war, he established the solid-state team (unusually for those times, an

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interdisciplinary group) under the supervision of the relatively young William
Shockley, a Palo Alto-raised physicist. Kelly had created an environment that
valued collaboration over cooperation: it was anathema to compete with fellow
scientists. Shockley did just that with John Bardeen and Walter Brattain, the
"first inventors" of the transistor. Then Shockley would migrate to the San
Francisco Bay Area and transfer the know-how to what would become Silicon
Valley. In a sense, Silicon Valley was born out of Shockley's betrayal of the Bell
Labs' ethics: Shockley's ego was the original sin that begat Silicon Valley.
Meanwhile, AT&T shared the technology with the rest of the country out of two
considerations, one purely political (they had to avoid being accused of being
the monopoly that they were) but the other one moral: as internal
correspondence shows, they realized the importance of the discovery and felt a
moral duty to share it with the scientific world. After the transistor, other
notable inventions to come out of the Bell Labs would be: the solar cell (in
1954 by Daryl Chapin, Calvin Souther Fuller and Gerald Pearson), the laser (in
1958 by Arthur Schawlow and Charles Townes), the communications satellite
(the Telstar in 1962), the touch-tone telephone (in 1963 by Leo Schenker and
others), the Unix operating system (in 1971 by Kenneth Thompson and Dennis
Ritchie), and the cellular phone system (first tested in Chicago in 1978). The
Bell Labs won several Nobel Prizes in those decades: Clinton Davisson (1937),
the three inventors of the transistor (1956), Phillip Anderson (1977), and Arno
Penzias and Robert Wilson (1978), who discovered the cosmic background
radiation (and the Bell Labs would win two more in the 1990s). However, the
Bell Labs remained mainly focused on refining a giant communication platform:
it was not disrupting innovation, but sustainable evolution. They ended up
missing packet switching and fiber optics, two of the most important innovations
in their field. The labs also had a history of racial discrimination (particularly
against Jews), which clearly did not help diversity, and clearly were not as
good at importing foreign immigrants as California would be. Their scientists
were mostly on the reserved and austere side, with the notable exception of
Claude Shannon (the inventor of communication theory), who was wildly
eccentric.

Labor Fluidity
Silicon Valley already exhibited a unique job dynamics that would only
accelerate in the age of software. First of all, California was blessed with an
almost unstoppable economy, which mostly outperformed the rest of the US.
Therefore there were plenty of jobs available. It was an employee’s market and
not an employer’s market. The job of the “head hunter” (an employment broker)
was more important than elsewhere since recruiting talented people was not
easy. Second, California law forbade any labor contract that limited what an
employee could do after quitting. Section 16600 of the California Business and

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Professions Code, a clause that dated back to the 19th century, was enforced by
courts. In the rest of the US, trade secrets were guarded jealously and
employees were forbidden to join competitors.
The job market in the Bay Area exhibited high turnover. Silicon Valley
engineers exhibited a preference for horizontal instead of vertical mobility, that
is, for hopping from job to job instead of following a career of promotion after
promotion. Europe and the East Coast had an entrenched concept of vertical
mobility (a career within a company). Sometimes, even at the expense of skills,
an engineer might be promoted to a role that had nothing to do with engineering
simply because it was the only available higher-level position. However
Silicon Valley was about horizontal mobility, changing jobs in order to
maximize one’s skills based on available opportunities across the industry. In
fact, it became commonly understood by engineers that staying with the same
company for more than a few years did not look “good” on a resume. This
created a system that was an odd and involuntary model of cooperation.
Job turnover and no protection for trade secrets were clearly not beneficial
to the individual company, but they were to the entire ecosystem because they
fostered an endless flow of knowledge throughout the community. No
educational institution could spread knowledge as fast and efficiently as this
pervasive job mobility did. This resulted in rapid dissemination of knowledge
within an industry across companies, as well as in cross-fertilization of ideas
across research groups.
Somewhat related to the high-speed job market was the status symbol of
being an engineer. Probably no other region in the world held its engineers is
such high esteem. The engineers represented a higher social class in Silicon
Valley than, say, marketing executives. The status symbol of being an engineer
was only second to the status symbol of being an entrepreneur.

Culture and Society

The effervescent cultural scene of San Francisco attracted artists whose
eccentric visions were tamed in their native East Coast. In particular, George
Kuchar, the prophet of lo-fi cinema, moved from New York to the San Francisco
Art Institute in 1971.
The leading art in San Francisco, however, was now an art that mixed
fiction and painting: the comic strip. A number of eccentric cartoonists, most of
whom had moved west during the "Summer of Love" and lived in the Haight-
Ashbury neighborhood, repudiated Walt Disney's poor-heart ethics and adopted
mocking tones and a vulgar language: the "underground comix" movement was
born. The pioneer had probably been Joel Beck, one of the original contributors
to the Berkeley Barb, with the full-length comic book "Lenny of Laredo" (1965;
but the movement coalesced in 1968 when publisher Don Donahue opened
"Apex Novelties", Robert Crumb penned the comic book "Zap Comix" (1968)

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for that very publisher, and Gary Arlington opened the first comics-only store in
the USA (in the Mission District). Then came Bill Griffith's strip "Young Lust"
(1970), that mocked sexual attitudes, Roger Brand's comic magazine "Real Pulp
Comics" (1970), that promoted the whole burgeoning scene, Trina Robbins' "It
Ain't Me Babe Comix" (1970), the first all-women comic book, Dan O'Neill's
collective "Air Pirates" (1971), Gilbert Shelton's "The Fabulous Furry Freak
Brothers" (1971), Justin Considine's "Binky Brown Meets the Holy Virgin
Mary" (1972).
Meanwhile, Philip Dick marked the convergence of the drug culture and the
science fiction culture with his masterpieces "Do Androids Dream of Electric
Sheep" (1968) and "Ubik" (1969). He died in extreme poverty before his novels
"Blade Runner" (based on "Do Androids..."), "Total Recall" (written in 1966),
and "Minority Report" (written in 1956) were turned into Hollywood
blockbusters.
The contradictions of the “hippie” era peaked with the election of a
conservative governor who seemed to stand for everything that California was
not. Ronald Reagan, a former Hollywood actor who was governor from 1967
till 1975, ended an enlightened age in which the state of California was focused
on building its infrastructure. Reagan inaugurated an age in which citizens
revolted against government and cared more about improving their economic
conditions (for example, by lowering taxes) than investing in the future. The
dream land of idealistic immigrants was on its way to become a pragmatic state
of greedy bourgeois.
The post-hippie era in California also witnessed the rapid political growth
of the grass-roots environmentalist movement. It started with the article
“Tragedy of the Commons,” published in Science in 1968 by Garrett Hardin of
UC Santa Barbara. The first victory of the movement came in 1969 when the
Sierra Club managed to stop Walt Disney from building a tourist resort in the
mountains of a national park. Anti-nuclear sentiment also increased, leading
David Brower to split from the Sierra Club and start Friends of the Earth in
Berkeley. In the fall the United Nations organized a conference titled “Man and
his Environment” in San Francisco. One of the speakers, California-based peace
activist John McConnell, the editor of the utopian “Mountain View” magazine,
proposed an international holiday. In March 1970, San Francisco allowed him
to hold the first “Earth Day.” In 1972 the United Nations held its first
“Conference on the Environment” in Sweden. One of the people who traveled
from the US to attend it was Peter Berg, who in 1973 founded Planet Drum in
Berkeley. The influence of the environmentalists would be felt for decades.
At the same time that the Reaganite establishment was curbing public
spending on ideological grounds, a rising environmentalist movement pressed to
curb the infrastructure boom of the previous decades on almost opposite
ideological grounds. The effect of this “double whammy” was to be felt decades
later.

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 In the arts it was notable that in 1971 Judy Chicago and Miriam Schapiro
established a "Feminist Art Program" at the California Institute of the Arts
specifically to train female artists.
In 1970 the PARC also started an artist-in-residency program. In 1969 the
physicist Frank Oppenheimer opened the Exploratorium at the Palace of Fine
Arts. Its first show was "Cybernetic Serendipity", an exhibition of computer art
that Jasia Reichardt had organized the previous year at the Institute of
Contemporary Arts in London.

Britain and Japan

In the 1940s Britain had pioneered computers. In the 1960s Japan was
experiencing the most spectacular economic boom in the world. These two
countries were the only countries that could potentially compete with the US.
Their stories were very different. The British computer industry had all the
know-how necessary to match developments in the US. The Japanese computer
industry had to start from scratch in the 1950s. In both cases the government
engaged in sponsoring long-term plans and in brokering strategic alliances
among manufacturers. In Britain leadership came from the National Research
Development Corporation (NRDC). In Japan, it came from the Ministry of
International Trade and Industry (MITI).
In both cases initial research came from a government-funded laboratory. In
Britain the National Physical Lab (NPL) and in Japan the Electrotechnical Lab
(ETL). However, the outcomes were completely different. Japan created a
vibrant computer industry within the existing conglomerates (notably Fujitsu,
Hitachi and NEC), whereas Britain’s computer industry imploded within two
decades. In 1972 Fujitsu and Hitachi partnered with Amdahl to reverse
engineer IBM’s mainframes. By 1979 Fujitsu would pass IBM to become
Japan’s main computer manufacturer. By then International Computers Limited
(ICL), created by merging all the main British manufacturers, went broke.
Eventually, Fujitsu would acquire it.

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 Hobbyists: The Microprocessor,
Computer Kits, Ethernet, Internet, the Alto,
and Genetic Engineering (1971-75)

The Microprocessor
A microprocessor is a programmable set of integrated circuits; basically, a
computer on a chip. It had been theoretically possible for years to integrate the
CPU of a computer on a chip. It was just a matter of perfecting the technology. In
1970 Lee Boysel at Four Phase Systems had already designed the AL1, an 8-bit
Central Processing Unit (CPU). It was de facto the first commercial
microprocessor.
Yet the microprocessor that changed the history of computing was being
developed at Intel. Ted Hoff at Intel bet on silicon-gated MOS technology to
hold a 4-bit CPU onto a chip. In 1970 he hired Federico Faggin, the inventor of
silicon-gated transistors. Faggin implemented Hoff’s design in silicon, and in
November 1971 Intel unveiled the 4004, a small thumbnail-size electronic
device containing 2,300 transistors and capable of processing 92,000
instructions per second. This had started as a custom project for Busicom, a
Japanese manufacturer of calculators (that in January had introduced the world's
first pocket calculator, the LE-120A Handy). Intel’s tiny 4004 chip was as
powerful as the ENIAC, but millions of times smaller and ten thousand times
cheaper. By August 1972 Intel had ready an 8-bit version of the 4004, the 8008,
whose eight-bit word allowed it to represent 256 ASCII characters, including
all ten digits, both uppercase and lowercase letters and punctuation marks.

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 The Intel 4004 Chip (1971)
Intel was not convinced that a microprocessor could be used to build a
computer. It was up to Bill Pentz at California State University in Sacramento to
prove the concept. In 1972 his team built the Sac State 8008, the first
microcomputer, and helped Intel fine-tune the microprocessor for the task of
building computers.

Bill Pentz
Intel’s initial motivation to make microprocessors was that microprocessors
helped sell more memory chips. A few months earlier Intel had introduced
another important invention, the EPROM, developed by the Israeli-born
engineer Dov Frohman. An EPROM (Erasable Programmable Read Only
Memory) is a non-volatile memory made of transistors that can be erased. By
making it possible to reprogram the microprocessor at will, it also made it more
versatile.
The 4004 and the 8008 had been produced in small quantities (the latter
mainly as the basis for DEC’s own processors), but in April 1974 Intel unveiled
the 8080, designed at the transistor level by Japanese-born Masatoshi Shima. It

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lowered both the price and the complexity of building a computer while further
increasing the power (290,000 instructions per second). It was bound to happen.
(In 1968 a reclusive electrical engineer, Gilbert Hyatt, had founded Micro
Computer in the Los Angeles region and filed for a patent on what would be
known as the microprocessor, but apparently never built one).
Meanwhile, at least 60 semiconductor companies had been founded in the
Santa Clara Valley between 1961 and 1972, many by former Fairchild engineers
and managers. It was a highly competitive environment, driven by highly-
educated engineers.
The center of mass for venture capital had steadily shifted from San
Francisco towards Menlo Park. In 1972, the venture capital firm Kleiner
Perkins, founded by Austrian-born Eugene Kleiner of Fairchild Semiconductor
and former Hewlett-Packard executive Tom Perkins, opened offices on Sand
Hill Road. It was followed by Don Valentine of Fairchild Semiconductor who
founded Capital Management Services, later renamed Sequoia Capital. That
year the Electronic News correspondent Don Hoeffler popularized the term
"Silicon Valley,” the new nickname of the area between Pale Alto and San Jose,
which fell in the Santa Clara Valley. In 1974 Reid Dennis (a member of the
“group”) and Burton McMurtry (of Palo Alto Investment) founded the
investment company Institutional Venture Associates. In 1976 it split into two
partnerships, McMurtry’s Technology Venture Associates and Dennis’
Institutional Venture Partners, while Tommy Davis launched the Mayfield Fund.
In 1968 Harvey Wagner and several UC Berkeley professors had founded
Teknekron, one of the world's first startup incubators focused on IT.
In 1970 Regis McKenna, a former marketing employee of General
Microelectronics (1963) and National Semiconductor (1967), started his own
marketing agency, one of the many that were proliferating to help the engineering
startups with advertising and public relations (in the days when engineers read
magazines such as "Electronic News"). McKenna was one of the people
responsible for making New York listen to the West Coast. In those days most
magazines had little interest in the West Coast. McKenna and the other marketers
managed to get the attention of New York and often the "inventor" would capture
the attention of the New York media more than its product. In a sense, the "cult
of personality" that would become a staple of Silicon Valley was born back
then, when the eccentric personality of founders and engineers was often more
easily "sold" to influential magazines than their exotic technologies. Regis
McKenna was one of the people who promoted Silicon Valley as an "attitude".
This process would culminate in 1982, when Time magazine would put Steven
Jobs (then 26) on the front cover.

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 Regis McKenna

The Impact of Microprocessors

Very few people knew what “silicon” was, but many began to understand
that it was important to build smaller and cheaper computers that could be
embedded into just about any device. For example, in 1973 Automatic
Electronic Systems (AES) of Canada introduced the “AES-90,” a “word
processor” that combined a screen (a cathode ray tube or CRT monitor), a
floppy disk, and a microprocessor. The term “word processing” had first been
used in 1964 by IBM for its MT/ST system, but it was just a typewriter
connected to a magnetic tape.
The most direct impact was on calculators. MITS (Micro Instrumentation
and Telemetry Systems) of New Mexico built the first calculator to use the Intel
8008, MITS 816, in 1971. A year later, Hewlett-Packard, Texas Instruments,
Casio (a Japanese manufacturer of mechanical calculators), and Commodore (a
manufacturer of typewriters founded by Polish-Canadian Jack Tramiel that had
relocated from Silicon Valley to Pennsylvania) all debuted small calculators.
Texas Instruments soon produced its own microprocessors, notably the 4-bit
TMS 1000 series (1974) that integrated the CPU, the ROM, and the RAM on a
single chip. In 1973 Japan’s Sharp developed the LCD (Liquid Crystal Display)
technology for the booming market of calculators.

Mail-order Computer Kits

The Intel 8008 was used by companies targeting the electronic hobbyist
market, which was huge. These companies were mostly selling kits by mail-
order that hobbyists could buy to build exotic machines at home. The first two
companies were Scelbi (SCientific, ELectronic and BIological), first advertised
in March 1974 by a Connecticut-based company, and Mark-8, developed by
Virginia Tech’s student Jon Titus and announced in July 1974. However, they
were all beaten at the finish line by Vietnamese-born engineer Andre Truong
Trong Thi, who used the 8008 to build the Micral in February 1973 for a
governmental research center in France (and it was an assembled computer, not

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just a kit).
Magazines such as “Radio Electronics,” “QST” and “Popular Electronics”
were responsible for creating excitement about the microprocessor. Basically,
the microprocessor reached a wider audience than its inventors had intended
because of hobbyist magazines. Otherwise it would have been known only to the
few large corporations that were willing to buy microprocessors in bulk. The
most creative and visionary users were not working in those corporations.

Networking Computers
At the same time that microprocessors were revolutionizing the concept of a
computer, progress continued in the field of networking, although its impact
would be felt only decades later. In 1972 Ray Tomlinson at Boston’s consulting
firm Bolt, Beranek and Newman (BBN) invented e-mail for sending messages
between computer users. He also coined a procedure to identify the user name
and the computer name separated by a “@.”
The visible hand of government was at work again, and one of its decisions
was influential in the development of computer networks, although not as
popular as the creation of the Internet. In 1971 the government banned AT&T
(the telephone monopoly) from entering the data-processing business, in
particular the online services that obviously AT&T would have dominated with
its existing long-distance network. By doing so the government basically treated
"data processing" a special, strategic field in which competition was deemed
essential to innovation. The history of computers and networks would have been
very different if a monopoly had been able to control the development of data
telecommunications.
In 1971 computer-science students from UC Berkeley, including Lee
Felsenstein (formerly an activist of Berkeley's Free Speech Movement in 1964)
formed Resource One, an organization operating out of an abandoned warehouse
in San Francisco and aiming to create a public computer network. Lee
Felsenstein (the software specialist), Efrem Lipkin (the hardware specialist)
and Mark Szpakowski (the user interface specialist) had access to a Scientific
Data Systems' time-sharing machine. The first public terminal of what came to
be known as the "Community Memory" was set up in 1973 inside Leopold's
Records, a record store run by the Student Union of UC Berkeley, and it was
later moved to the nearby Whole Earth Access store. This college drop-outs had
created the first public computerized bulletin board system.
In 1973 Bob Metcalfe at Xerox PARC coined the term “Ethernet” for a
local-area network that they were building. PARC wanted all of its computers to
be able to print on their one laser printer. Unlike the Internet, which connected
remote computers using phone lines, the Ethernet was to connect local
computers using special cables and adapters. Unlike the Internet, which was
very slow, the Ethernet had to be very fast to match the speed of the laser

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printer. The first Ethernet was finally operational in 1976. Metcalfe also
enunciated “Metcalfe’s Law:” the value of a network of devices increases
exponentially with the number of connected devices. This was popularly
translated in terms of users: the value of a network increases exponentially with
the number of the people that it connects.
Groups of computer users were already working together, sharing “notes”
on files that were accessible by the whole network. The most popular of these
early note-sharing systems (later “groupware”) was perhaps PLATO Notes,
written in August 1973 by University of Illinois’ student David Woolley,
originally to keep track of software “bug” reports on their mainframe-based
time-sharing system PLATO, used to host the educational software of the
Computer-based Education Research Laboratory (CERL). As the PLATO time-
sharing system (hosted on one CDC mainframe at the CERL) spread to more and
more organizations, PLATO Notes, renamed Group Notes in January 1976,
rapidly evolved into an online community discussing a broad range of topics.
Commercialized in 1975 by Control Data Corporation in Minneapolis as simply
Plato, it spread around the world.
Another early piece of “groupware” was the Emergency Management
Information System And Reference Index (EMISARI). Murray Turoff at the
New Jersey Institute of Technology created it in 1971 on a Univac mainframe. It
was a computer conferencing system to let geographically-distributed
government agencies discuss opinion surveys.
EIES, founded in 1975 by Murray Turoff at the New Jersey Institute of
Technology, provided its customers with electronic discussion boards.
Meanwhile the Arpanet had 2,000 users in 1973 (the year when the first
international connection was established, to the University College of London),
and Vinton Cerf of Stanford University had nicknamed it the “Internet.” A study
showed that about 75% of its traffic was e-mail messages: the Internet had
become a replacement for telephone and mail communications (not the intended
purpose). The following year Cerf and others published the Transmission
Control Protocol (TCP), which became the backbone of Internet transmission: it
enabled Arpanet/Internet computers to communicate with any computer,
regardless of its operating system and of its network.
Vint Cerf figured out a 32-bit address space for an estimated 16 million
time-sharing machines for each of two networks in 128 countries (TCP/IP
would run out of addresses in 2011 and be replaced in 2012 by IPv6).
Built into Cerf's engineering principle was actually an implicit political
agenda: the "packets" represent an intermediate level between the physical
transport layer and the application that reads the content. The packets, in other
words, don't know what content they are transporting. All packets are treated
equal regardless of whether they are talking about an emergency or about
tonight's movie schedule. Each computer in the network picks up a packet and
ships it to the next computer without any means to decide which packet is more

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important. The routing is "neutral". The hidden policy was soon to be called
"net neutrality" and later vehemently defended by activists: the Internet was
being designed so that participants in the network (later called Internet Service
Providers) could not favor one content over the others (e.g. a Hollywood movie
over an amateur's Youtube movie).

Vint Cerf

A transformation was taking place in the nature of the Arpanet that was not
visible from outside. The Arpanet, a military tool, had been handed (out of
necessity, not by design) to Unix hackers. These hackers were imbued with a
counterculture that was almost the exact opposite of the military culture. So the
Arpanet was increasingly being “hijacked” by a bunch of hackers to become a
social tool (although originally only used to chat and play games).
The Arpanet had not been designed with any particular application in mind.
In fact, its “application neutrality” would remain one of the main drivers of
innovation. It actually appeared to be ill suited for any application. The Arpanet
worked pretty much like a post office: it made a “best effort” to deliver
“packets” of data in a reasonable timeframe, but packets might be delayed and
even lost. Email could live with a delay of minutes and even hours, but not with
a loss of text. A phone call, on the other hand, could live with the loss of a few
milliseconds of voice but not with a delay. Being application-agnostic, the
Internet solved no problem well.
TCP was not the only option. In fact, the service that popularized packet-
switching technology in the age of analog telephone lines was X.25, a standard
published in March 1976 by the International Telecommunication Union (ITU).
Packet-switching consisted in breaking up each phone call into packets. This
allowed X.25 to carry multiple phone calls over a single line. For the telephone
companies that sponsored the standard it meant increasing capacity. An indirect
benefit was the ability to carry digital data over their analog telephone lines.

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The first large X.25 public network was Telenet (1974), established by Bolt
Beranek and Newman (BBN) basically to create a for-profit version of the non-
profit Arpanet (that BBN was contracted by the government to run). In 1978 the
British Post Office, Western Union and Tymnet collaborated to create the first
international packet-switched network, the International Packet Switched
Service (IPSS), basically an X.25 evolution of Tymnet (offered by Cupertino's
Tymshare since 1971). In 1982 the Post, Telephone and Telecommunication
(PTT) Bureau of France debuted what was to remain arguably the most popular
of X.25 services (and of all Videotext services before the World-wide Web),
Minitel, an online service that any subscribers were able to access via their
home telephone and that displayed text on the screen of their television set.
Unlike the Arpanet, X.25 could be used to carry for commercial activities.
Electronic commerce between companies already existed, but had never
been standardized. In 1968 the railways had pioneered a standard for their
paper documents. That consortium, the Transportation Data Coordinating
Committee (TDDC), came up in 1975 with a set of rules for exchanging
electronic documents. Its name was later changed to Electronic Data Interchange
Association (EDIA) and Electronic Data Interchange (EDI) became the place
for electronic commerce. Electronic commerce was, instead, forbidden within
the Arpanet, which in theory was reserved for ARPA-funded research projects.
These wide-area networks worked over traditional telephone lines. In April
1973 Martin Cooper at Motorola demonstrated the first portable, wireless or
“cellular” telephone.
Radio Frequency Identification (RFID), an evolution of the radar technology
used in World War II and perfected at the Los Alamos National Laboratory
during the 1970s, was turned into an industrial product by Charles Walton, a
former IBM scientist, who had founded Proximity Devices in Sunnyvale in
1970, and in 1973 designed a "portable radio frequency emitting identifier".

The Hobbyist Market

By that time a large number of young people were children of engineers.
They were raised in technology-savvy environments. Many of them picked up
electronic kits as teenagers and eventually continued the local tradition of the
high-tech hobbyists. In fact, that tradition merged with the mythology of the
juvenile delinquent and with the the hippie ideology in legendary characters like
John Draper (better known as Captain Crunch), the most famous "phone phreak"
of this age who in 1971 built the "blue boxes" capable of fooling the phone
system. Phreaking went viral and in October 1971 Esquire Magazine published
an article exposing the underground phenomenon, resulting in Draper's arrest.
One of his fans was Steve Wozniak, back then an engineer at the Cupertino
public radio station KKUP.
The hobbyist market was growing. The year 1974 ended in December with

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an advertisement in hobbyist magazines of Ed Roberts’ kit to build a personal
computer, the Altair 8800, based on Intel’s 8080 microprocessor and sold by
mail order (for $395). It was the first product marketed as a “personal
computer.” Roberts’ company MITS, which used to make calculators, was based
in Albuquerque, New Mexico. Two Harvard University students, Bill Gates and
Paul Allen, wrote a BASIC interpreter for it, and then founded a company
named Micro-soft, initially also based in Albuquerque. MITS sold 2,000 Altair
8800 systems in one year and started the whole personal-computer frenzy,
despite offering only 256 Kbytes of memory (static RAM). Additional static
RAM and cards, which could be used to connect to input/output units (e.g., a
teletype), were not included in the price. Basically, the Altair was meant for
hobbyists. Roberts assumed that his customers were technically savvy enough to
buy the missing pieces, connect them together and program the box.
One of the most daring architectures built on top of the Intel 8080 came from
Information Management Science Associates (IMSAI), a consulting company for
mainframe users founded by William Millard in 1972 in San Leandro, in the
East Bay. Its engineers realized that a number of microprocessors tightly
coupled together could match the processing power of a mainframe at a fraction
of the price. In October 1975 they introduced the Hypercube II, which cost
$80,000 (the comparable IBM 370 mainframe cost about $4 million). Ironically,
they were more successful with IMSAI 8080, a clone of the Atari 8800 that they
sold to the hobbyist market starting in December 1975, while only one
Hypercube was ever sold (to the Navy).

The IMSAI 8080 (1975)

The Hobbyist Revolution Continued

In 1973 Gary Kildall, who was an instructor at the Naval Postgraduate
School in Monterey, developed the first high-level programming language for

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Intel microprocessors, PL/M (Programming Language /Microprocessor). It was
“burned” into the Read Only Memory (ROM) of the microprocessor. Intel
marketed it as an add-on that could help sell its microprocessors. However,
when Kildall developed an operating system for Intel’s 8080 processor, CP/M
(Control Program/Microcomputer), which managed a floppy drive, Intel balked.
Intel was not interested in software that allowed users to read and write files to
and from the disk; but makers of small computers were.
The 8080 had inspired several companies to create 8080-based kits, notably
MITS and IMSAI. Both needed software for the ever more popular floppy disk.
MITS offered its own operating system. IMSAI bought Kildall’s CP/M.
Kildall’s CP/M was largely based on concepts of the PDP-10 operating system
(VMS). Kildall then rewrote CP/M isolating the interaction with the hardware
in a module called BIOS (Basic Input/Output System). This way CP/M became
hardware-independent, and he could sell it to any company in need of a disk
operating system for a microprocessor. In 1974 Kildall started his own
company, Digital Research, to sell his product on hobbyist magazines. CP/M
soon became a standard.
Kildall’s operating system was a crucial development in the history of
personal computers. It transformed a chip invented for process control (the
microprocessor) into a general-purpose computer that could do what
minicomputers and mainframes did.
In 1975 Alan Cooper, a pupil of Gary Kildall's at Monterey and a DRI
alumnus, started his own software company, Structured Systems Group (SSG) in
Oakland to market his General Ledger, a pioneering business software for
personal computer, only sold via computer magazines.
Several hobbyists rushed to mimic Altair’s concept. In 1972 the Portola
Institute had spawned a magazine, the People's Computer Company, run by Bob
Albrecht and devoted to computer education, as well as a coworking space, the
People's Computer Center (PCC) in Menlo Park, for proto-nerds to play with a
minicomputer, one of them being Lee Felsenstein of the "Community Memory".
In March 1975 a group of PCC regulars such as Bob Marsh, Lee Felsenstein and
Steve Wozniak met in Gordon French's garage to discuss the Altair. This was the
first meeting of what would be known as the Homebrew Computer Club and
later relocated to the SLAC's auditorium. These were young people who had
been mesmerized by the do-it-yourself kits to build computers. Some of them
would go on to build much more than amateur computers. For example, Hewlett-
Packard engineer Steve Wozniak demonstrated the first prototype of his Apple at
the Homebrew Computer Club meeting of December 1976. Bob Marsh and Lee
Felsenstein (formerly an activist of Berkeley’s Free Speech Movement in 1964)
used the Intel 8080 to design the Sol-20 for Processor Technology in Berkeley,
which was released in June 1976, and became the first microcomputer to
include a built-in video driver, and the archetype for mass-produced personal
computers to come.

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 Another influential member of the Homebrew Computer Club was Li-Chen
Wang, who in 1976 signed his Tiny Basic with the motto "Copyleft - All Wrongs
Reserved" to mock the standard "Copyright - All Rights Reserved" of
proprietary software, an idea that predated Richard Stallman's "GNU
Manifesto" (1983).

The Hobbyist Community

The role played by hobbyists should not be underestimated. The computer
market was split along the mainframe-minicomputer divide. IBM and the
“BUNCH” sold mainframes. DEC, HP, and others sold minicomputers. These
large corporations had the know-how, the brains, and the factories to produce
desktop computers for the home market. They did not do it.
The market for home computers was largely created by a group of
hobbyists. They were highly individualistic home-based entrepreneurs who
worked outside the big bureaucracies of corporations, academia, and
government. Many of them did not have a higher education. Many of them had no
business training. Many of them had no connections whatsoever with
universities or government agencies. However, it was a grass roots movement
of hobbyists that created what the corporate world had been unable to do. They
created their own community (via magazines, stores and clubs) to obviate to the
lack of financial, technological, and marketing infrastructure.
One could argue the personal computer was not invented by an individual,
by a laboratory, or by a company; it was invented by a community. In fact, its
dynamics was not too different from the dynamics of a community that had taken
hold a decade earlier in the Bay Area: the community of the counterculture (agit-
prop groups, hippie communes, artistic societies). Until then progress in
computer technology had been funded by governments, universities and
corporations. The next step would be funded by humble hobbyists spread all
over the nation.
To serve the growing community of computer hobbyists, in 1975 a Los
Angeles hobbyist, Dick Heiser, had the idea to start a computer store,
Arrowhead Computers. It became the first computer retail store in the world. In
December 1975 a member of the Homebrew Club, Paul Terrell, opened a store
in Silicon Valley, the Byte Shop, which became a reference point for the local
hobbyists, and sold the first units of Wozniak’s Apple hobbyist computer.

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 The Byte Shop
In 1976 William Millard of IMSAI 8080 fame opened the “Computer
Shack,” a store located in Hayward (again in the East Bay) that offered
everything a personal computer user needed. That store would soon become a
nation-wide chain, Computerland. It sold computers to the public, a proposition
that only a few years earlier (when computers were astronomically expensive
and impossible to use) that would have been inconceivable. The retail sale of a
computer represented a monumental paradigm shift not only for the industry but
also for society as a whole.
Journalists and hobbyists were the true visionaries, not corporate executives
with their gargantuan staffs of planners and strategists. The journalists relayed
news across the country. The hobbyists organized the newsletters, clubs, and
conferences that cemented the community. It was the editor of one such magazine
(Dr. Dobb’s editor Jim Warren) who in April 1977 organized the first personal
computer conference in San Francisco, the “West Coast Computer Fair.” It was
attended by 13,000 people, the largest computer conference ever. Newsletters,
clubs (such as the Southern California Computer Society formed in September
1975), and user conferences proliferated in the following years.
This hobbyist network had another role. It compensated for the fact that
most of those early microcomputers came with no customer support, very little
quality control, and only the most elementary software. The network provided
the education and the support that large computer manufacturers provided to
their customers. The network even did the marketing and proselytizing. At the
same time, the network influenced the manufacturers. The community of users
probably helped shape the personal computer market more than any
technological roadmap.
Many of the real geniuses of this microcomputer revolution never made
money out of it. Often they didn't even get recognition from the ones who did
make money. In particular, software was still a strange "good", that the law
didn't know how to treat. When it came to software, intellectual property

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basically did not exist. IBM had officially lost the monopoly of software but de
facto still owned most of the business software in the world, and software did
not have a perceived value. The pioneers of microcomputers freely exchanged
software, or, better, borrowed from each other. No surprise then that some of
Bill Pentz's original code ended up in Gary Kildall's CP/M and that Kildall
claimed Microsoft had "stolen" some of his code. (Microsoft did not develop
DOS, but bought it from Tim Paterson, who had clearly plagiarized some of
Kildall's code). And, of course, later on when software became more valuable
than hardware, the promiscuous origins of the software industry would cause
major controversies. Financial success almost never reflected technical merit.
Few people doubt that CP/M was not only the original but also the better
operating system, and Kildall had even conceived before Microsoft the low-
cost licensing model that would make Microsoft rich.

Microprocessor Wars
Meanwhile, a business decision in Texas involuntarily launched another
wave of personal computers. Texas Instruments owned the market for CPUs
used in calculators. When in 1975 it decided to increase the price of the CPU to
favor its own calculators, the other manufacturers were left scrambling for
alternatives. Texas Instruments had realized it was getting difficult to compete
with Intel. Intel boasted a full line of state-of-the-art semiconductor products:
RAMs, EPROMs and CPUs. Microprocessors (CPUs) drove memory sales
which then funded improvements in microprocessors.
The market for calculators collapsed. Out of the ruins, Commodore decided
to change its business. Tom Bennett at Motorola in Arizona had created the 8-bit
6800 in 1974, a more advanced microprocessor than anything that Intel had
introduced yet. Chuck Peddle, a former employee of Tom Bennett’s at Motorola,
developed the 8-bit 6502 at MOS Technology (1976) in Norristown
(Pennsylvania); it was much cheaper ($25) than the 6800 ($180) or Intel’s 8080
($360). He was hired by Commodore to build an entire computer, the
Commodore PET (Personal Electronic Transactor), demonstrated in January
1977.
Competition to Intel eventually came from Silicon Valley itself. In 1975
Jerry Sanders’ Advanced Micro Devices (AMD) introduced the AMD 8080, a
reverse-engineered clone of the Intel 8080 microprocessor, putting further
pressure on prices. AMD then developed the 4-bit 2901 chip that used the faster
Schottky bipolar transistors instead of the unipolar MOS transistors used by
Intel. Federico Faggin left Intel with coworker Ralph Ungermann right after
finishing the 8080, taking Shima with them, and, having convinced Exxon to
make a generous investment, started his own company, Zilog. It became a
formidable competitor to Intel when in July 1976 it unveiled the 8-bit Z80
microprocessor, which was faster and cheaper than the 8080 (designed at

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transistor level by the same Shima). National Semiconductor had already
introduced PACE in December 1974, the first 16-bit microprocessor.
The new startups invested heavily on microprocessors, forcing competition
at the technological level. The established companies used microprocessors as
a weapon, forcing competition at the price level.

Relational Databases
On the software front, a new field of databases was born at IBM’s San Jose
laboratories (later renamed Almaden Research Center). In 1970 Edgar Codd
had written an influential paper, “A Relational Model of Data for Large Shared
Data Banks,” in which he explained how one could describe a database in the
language of first-order predicate logic. A Relational Database group was set up
in San Jose. In 1974 Donald Chamberlin defined an algebraic language to
retrieve and update data in relational database systems, SEQUEL, later renamed
SQL (Structured Query Language). It was part of the development of the first
relational database management system, code-named System R, begun in 1973
and finally unveiled in 1977 (running on a System 38). However, IBM’s flagship
database system remained the IMS, originally developed in 1968 for NASA’s
Apollo program on IBM’s mainframe 360. That was the most used database
system in the world. Since IBM was not eager to adopt a new technology, it did
not keep it secret and the idea spread throughout the Bay Area.
In particular, IBM’s work on relational databases triggered interest in a
group of UC Berkeley scientists led by Michael Stonebraker, who started the
Ingres (INteractive Graphics REtrieval System) project in 1973, a project that
would transplant the leadership in the field of databases to the Bay Area and
create colossal fortunes.

IBM’s Almaden Labs (2010)

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 Software for Manufacturing
Some significant progress was being made in software applications for
manufacturing applications. Evans & Sutherland was formed in 1968 by David
Evans, who had worked on the Bendix G15 and on UC Berkeley’s time-sharing
system, and Ivan Sutherland, an MIT pioneer of graphical user interfaces
(GUIs). Both were now employed at the University of Utah, creating a
pioneering LDS (Line Drawing System) in 1969 that in 1973 evolved into their
Picture System, a graphics system for Computer Aided Design (CAD). They
employed bright young engineers such as Jim Clark, Ed Catmull, and John
Warnock, who went on to establish the field of computer graphics in the Silicon
Valley.
In the 1970s MRP (Manufacturing Resource Planning) was one of the
success stories of the mainframe software industry. In 1972 some IBM engineers
in Mannheim, Germany, founded Systemanalyse und Programmentwicklung
(SAP, later read as “Systeme, Anwendungen und Produkte”) taking with them
some software that IBM had inherited from Xerox and that IBM didn’t want
anymore. SAP set out to create integrated business and manufacturing
applications for large firms, and eventually introduced a mainframe-based
product that integrated manufacturing, logistics, distribution, inventory, shipping,
invoicing, and accounting. That became the reference for Enterprise Resource
Planning (ERP) applications (the term was actually coined in the 1990s).
Another pioneer was based in Mountain View, and it was even by a woman,
Sandra Kurtzig (one of the first multimillionaire women of the computer
industry): ASK. In 1974 it introduced ManMan, a "universal manufacturing
program" running initially on the Tymshare's time-sharing service, and later on
the HP3000 mini-computer, that enabled mid-sized manufacturing companies to
control the operation of an entire factory. Unlike SAP, that was thinking big,
ASK aimed for a broader market.

User Interfaces
Experiments with new kinds of hardware and software platforms were
changing the vision of what a computer was supposed to do. Engelbart’s group
at SRI had lost funding from ARPA (and was eventually disbanded in 1977).
Several of its engineers started moving to PARC, which was a pioneer in
graphical user interfaces, optical character recognition, and WYSIWYG
applications.
In 1973 Xerox PARC unveiled the Alto, the first workstation with a mouse
and a Graphical User Interface (GUI). Inspired by Douglas Engelbart’s old On-
Line System, and developed by Charles Thacker ‘s team, it was a summary of
all the software research done at PARC and it was far ahead of contemporary

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computers. More importantly, it wasn’t just a number cruncher: it was meant for
a broad variety of applications, from office automation to education. It wasn’t
based on a microprocessor yet, but on a Texas Instruments 74181 chip (it wasn’t
a full microprocessor). In 1974, Hungarian-born Charles Simonyi developed
Bravo, the word processor that introduced the “what you see is what you get”
(WYSIWYG) paradigm in document preparation.
In 1974 a strong believer in artificial intelligence, former MIT student Ray
Kurzweil, introduced Optical Character Recognition (OCR) software that could
read text written in any font. Coupled with a scanner and a text-to-speech
synthesizer, it yielded the first reading machine for the blind. Xerox would
eventually acquire the software in 1980.
The industry felt the need for better human-machine interfaces as much as
the scientists did. In 1972 IBM introduced the 3270 terminal to connect to
mainframes. Previous terminals (generally known as “ASCII terminals”)
interacted with the mainframe at every keystroke, basically sending characters
back and forth. The 3270 instead presented the user with a form to fill, and sent
the form to the mainframe only when completed. Because it greatly reduced the
input/output interactions with the mainframe, it allowed many more terminals to
connect to the mainframe at the same time. It also introduced a highly popular
display with 24 lines of 80 characters each, a size that would remain a standard
for at least two decades.
In 1974 IBM also introduced the Interactive System Productivity Facility
(ISPF), one of the earliest integrated development environments, which allowed
programmers to design menu-driven applications. It basically marked the end of
the punched cards. Previously, a program was entered by punching the cards and
then feeding them in the card reader of the mainframe. With the 3270 and the
ISPF the programmer could enter (“edit”) the program directly on the terminal.
In 1974 the German government funded development of an integrated
development environment by Softlab, which resulted in Programm Entwicklungs
Terminal system (PET, later renamed Maestro), implemented by US-born
Harald Wieler on a Four Phase IV/70 (distributed by Philips in Europe).
Two major innovations came from a Route 128 company. In May 1972
Boston-based Wang Labs introduced the 1200, a word-processing machine.
Harold Koplow, a designer of Wang calculators, had simply wired together a
calculator, a typewriter and a cassette so that the user could type a document,
store it, retrieve it, edit it, and print it. He had rewritten the microcode of the
calculator so that it would perform word-processing functions instead of
mathematical functions. In 1975 Wang added a CRT monitor so that the typist
could check the text before printing it. This was one of the inventions that
changed every office in the world. For centuries people had to retype a page in
order to correct trivial mistakes or to make simple changes. For decades people
had to use a photocopier to make copies of a document. That era ended in 1975.
When in 1977 Wang’s Office Information System also added an Intel 8080

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microprocessor, AES’ vision finally went mainstream. Wang's word-processor
had at least one notable precedent: in 1971 Redactron, a New York company
founded and run by a woman, Evelyn Berezin, a pioneer in computer design
since the 1950s, introduced the "Data Secretary", an electronic text-editing
typewriter. By 1975 Redactron had the second-largest installed base after IBM,
whose analogic "word-processing machine", the Magnetic Tape Selectric
Typewriter, had added a magnetic tape for storing characters to the very popular
Selectric typewriter, introduced in 1961.
Unbeknownst to most people, one of the most influential technologies of the
future was being developed in Europe. In 1972 Bent Stumpe, a Danish-born
engineer at the CERN in Geneva (the joint European laboratory for particle
physics) invented the concept of a touch screen, a screen that reacts to being
touched with a finger. In 1977 CERN inaugurated its use for industrial control
and in 1980 the Danish industrial-control manufacturer NESELCO
commercialized the technology in the world's first touch-screen computer.
Simultaneously, in 1972 Donald Bitzer's PLATO project at the University of
Illinois' Education Research Laboratory (CERL) introduced a new terminal
based on plasma display for the PLATO IV release.

The Xerox Alto Computer (1973)

The State of Computing Jumps Ahead

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 During the 1950s and 1960s computers had evolved rapidly from the
ENIAC. Most of the credit goes to a few companies that devised how to sell
computers to corporations and to the government agencies that de facto
subsidized those companies with large projects. However, there had only been
an evolution and not a revolution. Computers had evolved into faster and
cheaper machines that were also easier to program and maintain. They were
now employed to perform mission-critical industrial and business applications,
not only scientific ones. They had not changed significantly, though. The
Arpanet, the Unix operating system and the minicomputer, instead, represented a
different kind of progress, one that could be more appropriately termed as a
revolution. Each of them changed the way computers were used, what they did,
and who used them. In fact, they changed the very meaning of a “computer.” The
term itself became misleading, as computers were beginning to be used less to
“compute” than to perform many other functions.
Again, this revolution had taken place mostly far away from the Bay Area,
although centers like the SRI and the Xerox PARC were beginning to put the
South Bay on the map. PARC’s experiments with graphical user interfaces,
desktop computers, and local area networks expanded the computer culture of
the Bay Area. PARC also played the role of a venture capitalist investing in new
technologies. By hiring Robert Taylor, Xerox transplanted the futuristic vision of
ARPA’s IPTO into the Bay Area. The IPTO’s mission, in turn, represented two
decades of computer research in the Boston area. Xerox was transferring
Boston’s lead in computing to the Bay Area, which also happened to be the
world’s capital of semiconductor engineering. This was similar to what
Shockley had done when he had transferred the East Coast’s lead in
semiconductors to the world’s capital of radio engineering. And, again, the
recipient of the transplant was a community imbued with a different spirit than
the one of the scientists of the East Coast.

Other Tech-Based Industries

While the semiconductor industry was booming, another Bay Area industry
was in its infancy. A local biomedical drug industry had been created by the
success of Alza. Silicon Valley soon developed as a center for biomedical
technology, the industry of medical devices that draws from both engineering
and medicine.
Meanwhile, several groups of biologists were trying to synthesize artificial
DNA in a lab, trying to extract a gene from any living or dead organism and
insert it into another organism (“recombinant DNA”). In 1972 Paul Berg ‘s team
at Stanford University synthesized the first recombinant DNA molecule. In 1973
Stanford University’s medical Professor Stanley Cohen and UCSF’s biochemist
Herbert Boyer invented a practical technique to produce recombinant DNA.
They transferred DNA from one organism to another, creating the first

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recombinant DNA organism. That experiment virtually launched the discipline
of “biotechnology,” the industrial creation of DNA that does not exist in nature
but can be useful for human purposes. Boyer had just discovered that an enzyme
named EcoRI allowed him to slice DNA molecules to produce single strands
that could be easily manipulated. Cohen had just devised a way to introduce
foreign DNA into a bacterium. They put the two processes together and obtained
a way to combine DNA from different sources into a DNA molecule. Cohen
decided to continue research in the academia, while Boyer decided to go into
business.
The Asilomar Conference on Recombinant DNA, organized by Paul Berg in
February 1975 near Monterey, set ethical rules for biotechnology. Meanwhile,
the Polish geneticist Waclaw Szybalski coined the term “synthetic biology,”
opening an even more ambitious frontier: the creation (synthesis) of new
genomes (and therefore of biological forms) that don’t exist in nature.
That attention to Biology was not coincidental. In 1970 Stanford had set up
an interdepartmental Human Biology Program focused on undergraduate
students. The founders were all distinguished scholars: Joshua Lederberg, a
Nobel laureate who was the head of Genetics at the Medical School, David
Hamburg, chair of Psychiatry at the Medical School, Norman Kretchmer, chair
of Pediatrics, Donald Kennedy, chair of Biology, Paul Ehrlich, who had jump-
started environmental science with his book "The Population Bomb" (1968),
Sanford Dornbusch, former chair of Sociology, and Albert Hastorf, former chair
of Psychology. This was an impressive cast, and Lederberg and Hamburg were
already teaching a pioneering course titled "Man As Organism" since 1968.
However, there was little support for this idea from the establishment. The
reason that Stanford went ahead was money: the Ford Foundation (not the
Stanford establishment) believed in multidisciplinary approaches and its
generous funding made the program possible. The class on "Human Sexuality"
started in 1971 by Herant Katchadourian attracted a record 1,035 students in its
first year. Well into the 21st century the Human Biology Program would still
remain the single most successful program at Stanford.
A major oil crisis hit the world in 1973. It was a wake-up call that the US
did not control the main material required by its economy: oil. It became the
first drive to seriously explore alternative sources of energy, although it would
take many more crises and wars before the government would launch a serious
plan to get rid of fossil fuels. In 1973 the Lawrence Berkeley Lab founded the
Energy and Environment Division, which came to specialize in lithium-ion
batteries. The federal government, instead, chose Colorado as the site for the
main research center in alternative sources of energy. In 1974 it mandated the
establishment of the Solar Energy Research Institute, later expanded to wind and
biofuel and renamed National Renewable Energy Laboratory (NREL).
Research on lasers at Stanford University yielded a major discovery in
1976. John Madey invented the “free-electron laser,” a laser that differed from

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previous varieties (ion, carbon-dioxide and semiconductor lasers) because it
can work across a broader range of frequencies, from microwaves to
(potentially) X-rays.

Culture and Society

The New Games Movement was an offshoot of the participatory spirit of the
hippy era. Its practitioners staged public highly-physical games whose goals
were therapeutic, creativity-augmentation and community-bonding, not unlike
Steve Russell's computer game "Spacewar" (1962) and not unlike Stewart
Brand's mock-simulation anti-war game "Soft War" (1966). The most famous
prophet of the movement was Bernie De Koven, who in 1971 created the Games
Preserve in Pennsylvania, a farm where people could convene a play physical
games; but San Francisco had pioneered the idea in the 1960s, new-age writer
George Leonard had promoted it, and in 1973 Patricia Farrington created the
New Games Foundation with its first "tournament" held in the Marin Headlands
north of San Francisco.
The utopian sharing economy of the hippies manifested itself again in Menlo
Park in 1974, when Dick Raymond of the Portola Institute, just before he helped
to jumpstart the Homebrew Computer Club, founded the Briarpatch society, a
community of mutually supporting businesses linked together via a newsletter
(edited by Gurney Norman), kept alive by local philanthropists, and spreading
thanks to the missionary work of Andy Phillips. By the mid-1970s San
Francisco’s art scene was shifting towards video, performance art, participatory
installations, mixed media, and time-based art, often accompanied with live
electronic music. Alternative art spaces popped up in the Mission and South of
Mission (SOMA) districts, notably notably Southern Exposure in 1974, New
Langton Arts in 1975 and Gallery Paule Anglim in 1976. “Conceptual” artists
Howard Fried and Terry Fox pioneered video art and performance art. Lynn
Hershman ‘s “The Dante Hotel” (1973) pioneered site-specific installations.
The ultimate site-specific installation was David Ireland’s own house at 500
Capp Street, which the artist began to remodel in 1975 with sculptures made of
found objects. Chip Lord ‘s Ant Farm created one of the most influential
installations in 1974 in the desert of Texas, “Cadillac Ranch,” using parts of old
cars. The Ant Farm also organized multimedia performances such as “Media
Burn” (July 1975) during which they burned in public a pyramid of television
sets.
In 1970 Tom Marioni founded the Museum of Conceptual Art (MOCA), one
of the first alternative art spaces in the nation. There he debuted his “Sound
Sculpture As” (1970) which, together with Paul Kos’s “The Sound of Ice
Melting” (1970), which recorded the sound of disintegrating ice, pioneered
sound sculpture.
The Mission District had a large Mexican and Chicano (descendants of

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Mexican immigrants) population. In 1972 two Chicanas, Patricia Rodriquez and
Graciela Carillo, started painting murals in their neighborhood, soon joined by
other women, mostly students of the San Francisco Art Institute. They came to
be known as Las Mujeres Muralistas, and specialized in sociopolitical
activism, such as the large mural "Panamerica" (1974).
In 1973 British painter Harold Cohen joined Stanford University’s Artificial
Intelligence Lab to build AARON, a program capable of making art, thus
creating an artistic equivalent of the Turing test: can a machine be a good artist
if experts appreciate its art? The project would continue for several decades. In
1975 John Chowning founded Stanford’s laboratory for computer music, later
renamed Center for Computer Research in Music and Acoustics (CCRMA).
The Bay Area stole a bit of Hollywood's limelight in 1971 when film
producer George Lucas opened Lucasfilm in San Francisco, a production
company that went on to create "American Graffiti" (1973), "Star Wars" (1977)
and "Indiana Jones and the Raiders of the Lost Ark" (1981).
The "underground comix" movement continued to prosper, but now the
reference point was the magazine "Arcade" (1975-76), started by Bill Griffith
(of "Young Lust" fame) and Swedish-born cartoonist Art Spiegelman (later more
famous for the character "Maus").
The city’s main sociocultural development was the rapid rise of the gay
community. The first “Gay Pride Parade” was held in 1970. Around that time
gays and lesbians started moving to the “Castro” district in large numbers. It
was the first openly gay neighborhood in the US and it would elect the first gay
politican (Harvey Milk) in the US later that decade. Arthur Evans formed the
"Faery Circle" in San Francisco in 1975. It evolved into the "Radical Faeries"
movement at a conference held in Arizona in 1979 and later became a
worldwide network of groups that mixed gay issues and new-age spirituality
and that staged hippie-style outdoors "gatherings".
Meanwhile, the "Seed Center", which was really just the backroom of
DeRay Norton's and Susan Norton's Plowshare Bookstore in downtown Palo
Alto, had become a new centre of counterculture by (re)publishing Thaddeus
Golas' "The Lazy Man's Guide to Enlightenment" (1971), the Bible of
California-style spirituality.
Down in Silicon Valley the entertainment and intellectual scene was far less
exciting. On the other hand, credit must be given to hard-drinking establishments
like Walker's Wagon Wheel (282 E. Middlefield Road, Mountain View,
demolished in 2003) for the "technology transfer" that Silicon Valley became
famous for. There was little else for engineers to do than meet at the Wagon
Wheel and talk about technology.

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 Entrepreneurs: Apple, Oracle, Unix,
Biotech, Alternative Music, and Spirituality
(1976-80)

The Apple Vision

Apple’s hometown, Cupertino, was a young city created only in October
1955. It was Santa Clara County’s 13th city, originally known as the
“Crossroads” because it developed around the crossroads of Stevens Creek
Boulevard and Saratoga-Mountain View Road (later Saratoga-Sunnyvale Road,
and then De Anza Boulevard). The area had one large employer, who was also
one of the state’s richest men: Henry Kaiser. He owned the local rock quarry
and cement plant (renamed Kaiser Permanente Cement Plant in 1939). After the
war Cupertino’s high school, Homestead High School, started a class on
electronics under John McCollum, one of the first in the world. One of
McCollum’s students and assistants was a kid named Steve Wozniak.
In April 1976, Apple Computer was started in Cupertino by the hobbyist
Steve Wozniak (now a college dropout and a Hewlett-Packard employee) and
the hippie Steve Jobs. Jobs was another college dropout who had joined Atari
in 1972 and who had experimented with LSD and Buddhism in the 1960s, and
had grown up on Stewart Brand ‘s “Whole Earth Catalog,” and actually knew
very little about semiconductors. Wozniak had designed their first
microcomputer in his Cupertino apartment and built it in Jobs’ garage in nearby
Los Altos. Wozniak used MOS Technology’s 6502 microprocessor ($20)
because he could not afford the more advanced Motorola 6800 or Intel 8080
(both about $170). The user had to provide her/his own monitor but an Apple I
could be hooked up to an inexpensive television set. Their friend Paul Terrell of
the Byte Shop was the first one to promotean Apple I (he paid Jobs $666.66 for
each unit).
Wozniak was unique in that he designed both the hardware and the software
of the Apple I. He was still an HP employee when he did that. He was reluctant
to resign and did so only in October 1976. The key difference between the
Apple I and its predecessors (such as the famous Altair) was actually in the
amount of its memory. Wozniak felt that a computer without a programming
language was an oxymoron and strived to build a computer powerful enough to
run a real programming language. The main requirement was to install more
memory than the first personal computers had. Unfortunately, static RAM was
expensive. Therefore he had to turn to cheaper dynamic RAM. A 4K DRAM

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chip had just been introduced in 1974. It was the first time that RAM
(semiconductor memory) was cheaper than magnetic core memory. Being much
cheaper than the static RAM used by the Altair, the DRAM allowed Wozniak to
pack more of it in the Apple than the Altair. The key design issue was how to
continuously refresh the dynamic RAM so that it would not lose its information
(the static RAM used by the Altair did not lose its information). Roberts,
basically, had merely dressed up an Intel microprocessor in order to create his
Altair. Wozniak, instead, dressed up a memory chip in order to create the Apple
I.
The 4K computer Wozniak created was capable of running a real
programming language. Since there was no language yet for that microprocessor,
Wozniak also had to write, in assembly language, the BASIC interpreter for the
Apple I. Note that Wozniak’s motivation in creating the Apple I was not a
business plan but simply the desire to own a computer; a desire constrained by a
lack of money. The Apple I was the result of an optimization effort more than
anything else: Wozniak had to minimize the parts and simplify the structure.
Wozniak, however, shared the same “business” vision that Roberts had with
the Altair. His personal computer was meant for hobbyists, i.e. for technically
savvy users who were going to program the computer themselves to solve their
problems. Wozniak had simply made it much easier to write a program. He did
not envision that the average user of a personal computer would be someone
who “buys” the application programs (already written and packaged).
It was, however, the Apple II, still based on a 6502 and released in April
1977, which really took off. Apple was funded by former Fairchild and Intel
executive Mike Markkula, who had retired at age 32 thanks to the stock of those
two companies. The Apple II desktop computer was fully assembled, requiring
almost no technical expertise. It boasted the look and feel of a home appliance.
It had a monitor and a keyboard integrated with the motherboard shell, as well
as a ROM hosting a BASIC interpreter and a RAM of 4 kilobytes (but no
operating system). Part of its success was due to Apple’s Disk II, the first
affordable floppy-disk drive for personal computers, which replaced the
cassette as the main data storage medium.
The other factor in its early success was the software: a dialect of BASIC
licensed from Microsoft (popularly known as "Floating Point BASIC") and the
word-processor EasyWriter, written in 1978 by John Draper while in jail for
phone phreaking.
Apple was just one of many companies that used the 6502. Commodore was
another one: after the PET (released in October 1977) in 1980 came the VIC-20,
the first personal computer to sell one million units. The Atari 800, announced
in late 1978 and designed by Jay Miner, was also based on the 6502. British
computer manufacturer Acorn, founded in 1978 near Cambridge University by
German-born Herman Hauser, also used the 6502 computer for the BBC Micro
that was deployed throughout the British educational system. However, most

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companies used the 6502 for something else. In October 1977, Atari introduced
a videogame console, the VCS (Video Computer System, later renamed 2600).
Previous generations of videogame machines had used custom logic. The
videogame console that pioneered the use of a microprocessor was Fairchild‘s
Video Entertainment System, released in August 1976 and based on Fairchild’s
own F8 microprocessor.
The other popular low-cost microprocessor was the Zilog Z80, used for
example in Tandy/Radio Shack’s TRS-80 microcomputer, another bestseller of
1977. One of the many startups that preferred the Z80 over the IMSAI 8080 was
Cromemco, started in 1976 by Stanford students Harry Garland and Roger
Melen in their dormitory (hence the acronym Crothers Memorial). The
companies that missed the market were, surprisingly, the ones that dominated the
market for calculators. Texas Instruments’ TI 99/4 (December 1979) was based
on its own 16-bit TI 9940 processor that was simply too expensive; and the
even more expensive Hewlett-Packard‘s HP-85 (January 1980), based on an HP
custom 8-bit processor, was something halfway between a mini and a micro.
The year 1977 was a turning point, as 48,000 personal computers were sold
worldwide. The following year more than 150,000 were sold, of which 100,000
were Tandy/ Radio Shack TRS-80s, 25,000 Commodore PETs, 20,000 Apple
IIs, 5,000 IMSAIs and 3,000 Altairs.

Steve Jobs’ Childhood Home and Garage (2010)

The Value of Software

Steve Jobs’ vision was to create a computer that was a home appliance. In
reality the Apple II was still a hobbyist novelty, like most small computers
based on microprocessors. It never became a home appliance, but it got
transformed into something no less pervasive: an office tool. The transformation
was not due to a hardware idea but to software. In October 1979 Harvard

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University’s business-school student Dan Bricklin and his friend Bob Frankston
shipped VisiCalc, the first spreadsheet program for personal computers. That
was the moment when sales of the Apple II truly started to take off.
A software application made the difference between selling thousands of
units to hobbyists and selling millions of units to the general public. The Apple
II only had 64 kilobytes of memory, and the application could only use a
memory space of 48 Kbytes. VisiCalc fit in 32. Apple went public the following
year. Its IPO (initial public offering) raised a record $1.3 billion, creating more
instant millionaires than any other event in history at that point. Visicalc was
ported to the Tandy TRS-80, Commodore PET and the Atari 800, becoming the
first major application that was not tied to a computer company.
WordStar, a word-processor developed in 1979 by former IMSAI engineer
Rob Barnaby for the CP/M operating system and published by MicroPro, a
company founded in 1978 by another former IMSAI employee, Seymour
Rubinstein, became the first widely known word-processor for personal
computers (and the new best-selling package for this class of machines); and its
success propelled MicroPro to become the first major software company of the
Bay Area. WordStar and VisiCalc were the two top-selling programs of the
early 1980s, each boasting sales of more than half a million copies by 1983.
The company that understood the value of software was Tandy, an old Texas
shoe business that in 1963 had converted to electronics buying the Radio Shack
chain, and that, thanks to a former Byte Shop employee, Steve Leininger,
suddenly found itself at the vanguard of personal computer technology. Its TRS-
80 of 1977 boasted an unprecedented library of applications (mostly games, but
also word processors and spreadsheets).
The age of Visicalc represented a major shift in the use of computers. Other
than for scientific research and military applications, commercial mainframe
computers had been useful mainly for business applications such as accounting
and minicomputers were mainly employed in factories. The new software for
personal computers opened up the market of regular offices that were still
mostly based on paper or that were using expensive time-sharing services.
After the Japanese company Epson launched the MX-80 dot-matrix printer
in 1979 home printing too became feasible.
Software companies tended not to understand the value of software.
Bricklin and Frankston founded Software Arts in Boston to commercialize
VisiCalc, which they had originally prototyped on MIT’s Multics system and
funded with their own money. But their company never sold its product. They
gave it to a publisher, Daniel Fylstra ‘s Personal Software (later renamed
VisiCorp), that paid them royalties. Eventually this led to a legal dispute that
indirectly allowed the competition to overtake VisiCalc. It never occurred to
Bricklin and Frankston to look for venture capital to jumpstart their business.
Of course, not everybody shared Steve Jobs’ vision. Just like in the old
days, an IBM executive had predicted a very small market for computers, so in

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1977 DEC’s founder Kenneth Olsen proclaimed that “there is no reason anyone
would want a computer in their home.”

Apple’s Old Building in Cupertino (2010)

The Pace of Progress in Semiconductors

Meanwhile, the war of the microprocessors was still raging. In June 1979
Intel introduced the 16-bit 8088 (containing 29,000 transistors), and in
September 1979 Motorola introduced the 16-bit 68000 microprocessor
(containing 68,000 transistors). In between the two, Zilog introduced the 16-bit
Z8000 (only 17,500 transistors). At the same time, sales of DRAM continued to
skyrocket. Intel then assigned the task of designing the 8086 (eventually released
in June 1978) to a software engineer, Stephen Morse: it was the first time that a
microprocessor was designed from the perspective of software.
Chips got more powerful and foreign manufacturers entered the market. In
1974 the size of the chips had reached 4 kilobytes and in 1975 it was already 16
kilobytes. In 1977 the semiconductor industry of Silicon Valley employed
27,000 people. By 1979 there were 16 companies selling DRAMs of 16
kilobytes. Five of them were based in Japan.
Progress in semiconductor technology was no longer making the headlines,
but continued faster than ever. By 1980 integrated circuits (the vast majority of
which were manufactured in the US) incorporated 100,000 discrete components.
In 1978 George Perlegos at Intel created the Intel 2816, an EEPROM
(Electrically Erasable Programmable Read-Only Memory), basically an
EPROM that did not need to be removed from the computer in order to be
erased.
In 1977 the market for memory chips of all kinds was twice the size of the
market for microprocessors. Combined, the two markets had grown from $25
million in 1974 to $550 million in 1979. However, it was not obvious yet that

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computers were going to be the main market for microprocessors. In 1978 the
industry sold 14 million microprocessors, but only 200,000 personal computers
were manufactured. The vast majority of microprocessors were going into all
sorts of other appliances, calculators, and controllers, with Japanese
conglomerates becoming increasingly aggressive.
An impressive phenomenon of the era was the number of hardware spinoffs
launched by enterprising Chinese immigrants trained in some of Silicon Valley's
most advanced labs: Compression Labs (CLI) by Wen Chen (1976) to make
video conferencing and digital television components; Solectron by Roy
Kusumoto and Winston Chen (Milpitas, 1977) to make printed circuit boards;
Data Technology Corporation (DTC) by David Tsang (Milpitas, 1979) for
floppy-disk and hard-disk drives; Lam Research by David Lam (Fremont, 1980)
for equipment for chip manufacturing (or "etching"); Integrated Device
Technology by Chun Chiu, Tsu-Wei Lee and Fu Huang (San Jose, 1980) for
semiconductor components; Weitek by Edmund Sun, Chi-Shin Wang and
Godfrey Fong (San Jose, 1981) for chips for high-end computers; fiber-optic
pioneer E-Tek Dynamics by Ming Shih (San Jose, 1983); magnetic-disk
manufacturer Komag by Tu Chen (Milpitas, 1983); etc.

The Business of Storing Data

Another front was being opened by companies studying how to store data.
More computers around meant more data to store. It was intuitive that some day
the industry for data storage would be a huge one. Audiocassettes were used for
data storage by most microcomputers of the first generation, including the Apple
II, the Radio Shack TRS-80 and the Commodore PET. Floppy disks had become
increasingly popular, especially after Alan Shugart developed the smaller
version (originally in 1976 for Wang). The first “diskettes” were manufactured
by Dysan, a storage-media company formed in 1973 in Santa Clara by Norman
Dion.
The growing number of applications running on personal computers
required a growing number of floppy units. Finis Conner, working for Shugart,
had the idea of building a fixed, rigid disk of the same physical size as Dysan’s
flexible diskette that would provide both high performance and high capacity,
equivalent to an entire bunch of floppy drives. Shugart and Conner formed
Shugart Technology in December 1979 in Scotts Valley (south of San Jose), later
renamed Seagate Technology, with funding from Dysan. In 1980, Seagate
introduced the first hard-disk drive for personal computers (capable of 5
Megabytes), and soon hard disks would greatly improve the usability of small
machines. That same year Sony introduced the double-sided, double-density
3.5” floppy disk that could hold 875 kilobyte.
Seagate also published the specifications of a computer interface that would
allow users to connect different peripherals to the same personal computer, a

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device-independent “parallel” connection. They named it SASI (Shugart
Associates Systems Interface), later renamed SCSI (Small Computer System
Interface) when it was adopted as an industry standard. In 1981 the manager of
the SASI project, Larry Boucher, quit Seagate to found Adaptec in Milpitas
(north of San Jose), taking with him several Seagate engineers in a move that
evoked the memory of Shugart’s own exodus from IBM of 1969. Adaptec
specialized in manufacturing computer cards (at factories in Singapore) to solve
the growing problem of input/output bottlenecks in personal computers as the
machines had to deal with a higher and higher traffic of data.
Storing data was not enough. It was also important to guarantee that the
transactions of those data were reliable. Since computers and their software
were prone to crashes, this was not a trivial problem, particularly in the arena
of financial transactions. Former HP employee James Treybig convinced a few
HP engineers to work at a fault-tolerant machine and started Tandem Computers
in Cupertino. In 1976 they delivered the first product, the Tandem 16, based on a
CPU derived from the HP3000 and running a proprietary operating system.
Many of these CPUs were managed as a team so that if one failed the others
could continue its job. Tandem servers were ideal for mission-critical business
applications carried out by banks. Tandem’s monopoly of fault-tolerant
computers would last until at least 1982.
The exponential growth of digital communications led to the rapid
expansion of the field of cryptography. The most pressing problem was to
secure communications over distances between parties that had never met
before, i.e. who could not exchange a secret key in private before beginning
their digital communications. This problem was solved in 1976 by combining
ideas from Stanford (Whitfield Diffie and Martin Hellman) and UC Berkeley
(Ralph Merkle), opening the era of Public-Key Encryption (PKI). The following
year the Israeli cryptographer Adi Shamir at the MIT invented the RSA
algorithm and added digital signatures to PKI.

Whitfield Diffie

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 The ever larger amount of data stored on disks created ever bigger
databases, which, in turn, required ever more powerful database management
systems. Larry Ellison, a college dropout from Chicago who had moved to
California in 1966, had been employed at Ampex in Redwood City. He worked
as a programmer on a database management system for the Central Intelligence
Agency (CIA) codenamed “Oracle,” under the management of his boss Bob
Miner, the son of Middle-Eastern immigrants. In August 1977 Bob Miner and Ed
Oates (also an Ampex alumnus, now at Memorex) founded the Software
Development Laboratories to take advantage of a software consulting contract
facilitated by Larry Ellison at his new employer, Precision Instruments (also a
manufacturer of tape recorders, based in San Carlos, mainly serving NASA and
the Navy). The startup used offices in PI’s Santa Clara building. When Ellison
joined them, he steered them towards developing an SQL relational database
management system of the kind that IBM had just unveiled in San Jose but
targeting the minicomputer market. Miner and their fourth employee Bruce Scott
(another former member of Miner’s team at Ampex) wrote most of it in the
assembly language of the PDP-11. The company was soon renamed Relational
Software and relocated to Menlo Park, and in 1978 the CIA purchased the first
prototype. In 1979 Relational officially shipped the first commercial SQL
relational database management system, Oracle. In 1982 the company would be
renamed one more time and would become Oracle Corporation.
A rival project, Michael Stonebraker ‘s relational database system Ingres at
UC Berkeley, was demonstrated in 1979. For all practical purposes, Ingres
looked like a variant of IBM’s System R for DEC minicomputers running the
Unix operating system. Being open-source software like UC Berkeley’s Unix
(BSD), within one year Ingres was deployed by many universities around the
country as the first available relational database system (IBM’s System R was
not available outside IBM). In 1980 Stonebraker himself started a company,
Relational Technology, later renamed Ingres, to market the system. That same
year, Roger Sippl and Laura King, who had implemented an experimental
relational database system, started Relational Database Systems in Menlo Park,
a company that was later renamed Informix. In 1984 some of Stonebraker’s
students (notably Mark Hoffman and Bob Epstein) formed Systemware, later
renamed Sybase, in Berkeley.
All of these startups had something in common: they did not target the huge
market of mainframe computers. They targeted the smaller market of
minicomputers, in particular the ones running the Unix operating system. IBM’s
IMS dominated the database market for mainframe computers, but IBM had
failed to capitalize on the experimental System R developed at its San Jose
laboratories. IBM eventually released a relational database management system,
the DB2, in 1983, but it was running only on its mainframe platform. IBM still
showed little interest in smaller computers. This allowed Oracle, Sybase and

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Informix to seize the market for database systems on minicomputers.
Those database management systems were ok for larger machines but
obviously not for the personal computer. In 1980 most personal computers had
only 32 Kbytes of RAM and a cassette tape drive. The 120-Kbyte floppy drive
was still a rarity but random access to storage was coming. Hard drives did not
exist yet for personal computers. The first major database program for this class
of machines was Personal Filing System (PFS), written by John Page for the
Apple II. This would become part of a suite of software products (or
"productivity tools") sold by Software Publishing Corporation, founded in 1980
by three former Hewlett-Packard employees to implement Fred Gibbons' vision:
he was one of the first people to view a personal computer as the equivalent of
a music player, playing not music but applications. In 1983 the same company
would start selling the word-processor PFS:Write, followed by a spreadsheet
program, a reporting program and a business graphics program.

The Old Omex/Precision Instruments Building where

Oracle Began as Software Development Laboratories (2010)

Early Telecommunications and Networks

The other field still in its infancy was the field of telecommunications. The
company that put Silicon Valley on the map of telecommunications was probably
ROLM, founded by a group of Stanford students. In 1976 they introduced a
digital switch, the CBX (Computerized Branch Exchange), a computer-based
PBX (private branch exchange) that competed successfully with the products of
Nortel and AT&T. Meanwhile, the Southern Pacific Railroad of Burlingame
(south of San Francisco) renamed its Southern Pacific Communications (SPC),
which had been selling private phone lines since 1972 during the days of the
AT&T monopoly on public telephony, as "Sprint" (Switched PRIvate Network
Telecommunications) in 1978 when it was finally allowed by the government to
enter the long-distance telephony business. Its Burlingame laboratory was

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another early source of know-how in telecommunications. Sprint would be later
(1982) acquired by GTE and then (1986) by United Telecom of Kansas.
In 1979 Bob Metcalfe, the “inventor” of the Ethernet, left Xerox PARC to
found 3Com (Computers, Communication and Compatibility) in Santa Clara.
The idea was to provide personal computer manufacturers with Ethernet adaptor
cards so that businesses could connect all the small computers in one local-area
network. 3Com became the first company to ship a commercial version of
TCP/IP (1980). In 1979, Zilog’s cofounder Ralph Ungermann and one of his
engineers at Zilog, Charlie Bass, formed Ungermann-Bass in Santa Clara to
specialize in local-area networks, particularly in the Ethernet technology.
Nestar Systems, started in Palo Alto in 1978 by Harry Saal and Leonard
Shustek, introduced a pioneering client-server network of personal computers.
Meanwhile, in Georgia in 1977 Dennis Hayes, a hobbyist who was
employed at National Data Corporation on a project to provide bank customers
with modems for electronic money transfers and credit card authorizations,
started working on a modem for personal computers. He created a device that
converted between analog and digital signals and therefore allowed personal
computers to receive and transmit data via telephone lines. He soon founded his
own company, Hayes Microcomputers Products, and announced the
Micromodem 100 that could transmit at 110 to 300 bits per seconds (bauds).
This modem was a lot simpler and cheaper than the ones used by mainframes,
and, more importantly, it integrated all the functions that a modem needed to
perform. Texas Instruments too introduced a 300-baud modem for its TI 99/4 in
1980. Meanwhile, the Bell Labs deploted the first cellular phone system (in
Chicago in 1978).
The mother of all computer networks was still largely unknown, though. In
1980 the Arpanet had 430,000 users, who exchanged almost 100 million e-mail
messages a year. That year the Usenet was born, an Arpanet-based discussion
system divided in “newsgroups,” originally devised by two Duke University
students, Tom Truscott and Jim Ellis. It used a protocol called UUCP (Unix-to-
Unix Copy), originally written in 1978 by Mike Lesk at AT&T Bell
Laboratories for transferring files, exchanging e-mail and executing remote
commands. Despite the fast growing number of users, at the time nobody
perceived the Arpanet as a potential business.
In 1977 DARPA, working closely with SRI International, chose the San
Francisco Bay Area to set up a “packet” radio network (Prnet) capable of
exchanging data with Arpanet nodes. It was the beginning of wireless computer
networking. After early experiments by Canadian ham radio amateurs, in
December 1980 Hank Magnuski set up in San Francisco a ham radio to
broadcast data (the birth certificate of the AmPrnet). The first wireless products
for the general market would not appear for a decade, but, not coincidentally,
would come from a company based in Canada, Telesystems, and a company
based in the Bay Area, Proxim (founded in 1984 in Sunnyvale).

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 In 1980 CompuServe introduced a chat system, the CB Simulator, that was
modeled after Citizen's Band radio (CB radio). This was the most popular form
of short-distance two-way radio communications. CB clubs had multiplied all
over the world during the 1970s as more and more ham-radio hobbyists had
been able to purchase the equipment thanks to a drop in the price of electronics.
On a smaller scale, another influential communications technology was
getting started in those days. Radio-frequency identification (RFID) is basically
a combination of radio broadcast technology and radar. It is used to have
objects talk to each other. The idea, that dates back at least to 1969, when Mario
Cardullo sketched it while working at the Communications Satellite Corporation
(Comsat) and before starting ComServ in Washington, was tested by pioneering
projects like Raytheon's "Raytag" (1973) and Fairchild Semiconductor's
"Electronic Identification System" or EIS (1975), but it truly matured at the Los
Alamos National Laboratory in the 1970s. Its first mass-scale applications came
thanks to two spin-offs from that laboratory: Amtech in New Mexico and
Identronix in California (established in 1977 in Santa Cruz and soon managed
by Vic Grinich, one of the original "traitorous eight" who had split off from
Shockley Labs to start Fairchild Semiconductors). Their work originated the
automated toll payment systems that became common on roads, bridges and
tunnels around the world after Norway pioneered them in 1987, as well as the
remote keyless entry systems.

Video Games
Computers also started making an effect in the gaming/entertainment
industry. The Atari 2600 home videogame console was a runaway success that
yielded Atari more than 50% of the market. In 1980 Atari hired Alan Kay from
the Xerox PARC to work on computer graphics for its products.
The business of gaming software came to the Bay Area via Broderbund,
founded after hobbyist Doug Carlston had written the game “Galactic Empire”
for the TRS-80 in 1979. This came one year after Toshihiro Nishikado, a
veteran game designer who had developed Japan’s first video arcade game in
1973, created the first blockbuster videogame, “Space Invaders.” In 1980 it was
ported to the Atari 2600, and broke all sales records, creating the demand for
videogame consoles that made the video arcade obsolete. “Galactic Empire”
thrived in its wake.
Hobbyists were also finding ever-newer uses for microprocessors. For
example, in 1977 Dave Smith, a former UC Berkeley student who had started a
company to make music synthesizers, built the “Prophet 5,” the first
microprocessor-based musical instrument, and also the first polyphonic and
programmable synthesizer. Dave Smith also had the original idea that led (in
1983) to the MIDI (Musical Instrument Digital Interface), a standard to attach
musical instruments to computers. Fundamental for the development of the

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multimedia world was the introduction in 1978 of Texas Instrument's TMS5100,
the first digital signal processor. Daniel Kottke, one of Apple’s earliest
employees who helped Wozniak assemble the very first Apple computers in
Jobs’ garage, also assembled a portable Apple to compose and play music for
his own use (in 1980).

User Friendliness
Progress was also needed in developing user-friendly computers. The
Xerox Alto had been the single major effort in that area. Xerox never sold it
commercially but donated it to universities around the world. That helped
trigger projects that later yielded results such as the Stanford University
Network (SUN) workstation. In 1979 Steve Jobs of Apple had his first
demonstration of an Alto at Xerox PARC, and realized that the mouse-driven
GUI was the way to go. Xerox eventually introduced in April 1981 the 8010
Star Information System, which integrated a mouse, a GUI (largely designed by
Norm Cox), a laser printer, an Ethernet card, an object-oriented environment
(Smalltalk), and word-processing and publishing software. Programming this
computer involved a whole new paradigm, the “Model-View-Controller”
approach, first described in 1979 by Trygve Reenskaug. Xerox PARC was also
experimenting with portable computers: the NoteTaker, unveiled in 1976 but
never sold commercially, was basically a practical implementation of Alan Kay
‘s Dynabook concept (by a team that included Adele Goldberg). In 1977 Xerox
PARC gave a presentation to Xerox’s management of all the achievements of the
research center, titled “Futures Day.” Despite the spectacular display of
industrial prototypes, the management decided that Xerox should continue
focusing on document processing. This started the exodus of brains from Xerox
PARC towards the Silicon Valley startups.
Computer graphics began to be commercialized. In 1979 filmmaker George
Lucas hired Ed Catmull to open a laboratory (later renamed Pixar) in San
Rafael (far away from Hollywood, on the quiet sparsely populated hills north of
San Francisco) devoted to computer animation for his San Francisco firm
Lucasfilm. Catmull had studied with Ivan Sutherland at the University of Utah,
established the Computer Graphics Laboratory at the New York Institute of
Technology in 1975, and helped create a computer animation in a scene of the
film “Futureworld” (1976) that was the first ever to use 3D computer graphics.

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 Ed Catmull

The 1980s also witnessed the birth of the first computer graphics studios.
Carl Rosendahl started Pacific Data Images (PDI) in 1980 in his Sunnyvale
garage. Richard Chuang and Glenn Entis created a 3D software platform
(initially running on a DEC PDP-11) that turned PDI into the first mass producer
of computer animation, initially for television networks but later (after
Thaddeus Beier and Shawn Neely perfected feature-based morphing on Silicon
Graphics' workstations) also for feature films.
These projects were way ahead of their time. The ordinary world of
computing was content with the VT100, the "video" display introduced by
Digital (DEC) in 1978, the computer terminal that definitely killed the teletype.
Progress in video terminals had been steady, driven by cheaper and more
powerful memory. In 1978 it reached the point where a video terminal was
cheap enough for virtually every organization to purchase one.
The Bay Area was also the hub for a lively debate on artificial intelligence.
In 1950 Alan Turing had asked, “When can the computer be said to have become
intelligent?” In 1980 UC Berkeley philosopher John Searle replied, “Never.”
Searle led the charge of those who attacked the very premises of artificial
intelligence. Nonetheless, in the same year Stanford’s Ed Feigenbaum and others
founded IntelliGenetics (later renamed Intellicorp), an early artificial
intelligence and biotech startup, and the first of many to capitalize on the “expert
systems” pioneered by Stanford University.
In 1978 Earl Sacerdoti, a scientist at SRI International's AI Center, founded
Machine Intelligence Corporation, one of the earliest robotics startups.
French conglomerate Schlumberger acquired in 1979 the whole of Fairchild
Camera and Instrument, including Fairchild Semiconductor and the following
year hired Peter Hart from the SRI International to establish the Fairchild
Laboratory for Artificial Intelligence Research (FLAIR), later renamed the
Schlumberger Palo Alto Research (SPAR) Center, a clear reference to Xerox
PARC.

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 John Searle of UC Berkeley (2010)

The Unix Generation

Betting on the Unix operating system was a gamble. The dominant computer
company, IBM, had no intention of adopting somebody else’s operating system.
AT&T (the owner of Bell Labs) had made Unix available to anyone that wanted
to use it. No major computer manufacturer was interested in an operating system
that all its competitors could use too.
The vast majority of the users of Unix were at Bell Labs and in universities
around the world. Universities that received the source code of the operating
system began to tinker with it, producing variants and extensions. UC Berkeley
had received its copy in 1974. Within three years its version, assembled by
former student Bill Joy as the “Berkeley Software Distribution” (BSD), became
popular outside Berkeley. The second BSD of 1978 included two pieces of
software developed by Joy himself that became even more popular: the “vi” text
editor and the “C shell.” Berkeley made it very easy for other universities and
even companies to adopt BSD. Unix hence became by far the world’s most
portable operating system. Until then, however, the vast majority of Unix
implementations used a PDP-11. Eventually, in 1980, a company, Onyx, started
in Silicon Valley by former Harvard Professor Bill Raduchel, had the idea to
build a microcomputer running UNIX. The Onyx C8002 was based on a Zilog
Z8000, had 256-kilobyte RAM and included a 10-megabyte hard disk for the
price of $11,000, a cheaper alternative to the PDP-11. It was followed by
Apollo in the same year, then SUN Microsystems in 1981 and Silicon Graphics
in 1982.
Consulting and software companies followed until a major Unix backer
arose. In 1979 Larry Michels founded the first Unix consulting company, Santa
Cruz Operation (SCO), another major act of faith in an operating system that had
no major backer in the industry. In 1980 Microsoft announced the Xenix
operating system, a version of Unix for the Intel 8086, Zilog Z8000 and
Motorola M68000 microprocessors. What was missing was the killer
application. Help arrived from the US government. In 1980, when the time came

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to implement the new protocol TCP/IP for the Arpanet so that many more kinds
of computers could be interconnected, DARPA (Defense Advanced Research
Projects Agency) decided not to go with DEC (which would have been the
obvious choice) but to pick the Unix operating system, specifically because it
was a more open platform. Until that day there had been little interaction
between the Internet world and the Unix world. After that day the two worlds
began to converge. It is interesting that DARPA decided to unify the “nodes” of
the network at the operating system level, not at the hardware level.
Membership in the Unix world mainly came through academia. Just about
every Unix user had been trained in a university. All software refinements to the
Bell Labs code had come from universities. However, the Unix community soon
came to exhibit “counterculture” dynamics that mirrored the dynamics of the
computer hobbyists who had invented the personal computer.
Unix was another case of a technology ignored by the big computer
manufacturers and left in the hands of a community of eccentric independents.
They could not avail themselves of the financial, technological and marketing
infrastructure of the computer business. The big difference, of course, was that
in this case the universities served as local attractors for the community more
than magazines, clubs or stores. The Internet played the role that magazines had
played in the 1970s, helping to disseminate alternative ideas throughout the
nation. Another difference was that the average Unix innovator was a highly
educated scientist, not just a garage engineer (hence the widely used expression
“Unix guru” instead of the more prosaic “computer hobbyist”). However, just
like hobbyists, Unix users came to constitute a counterculture that reenacted the
rituals and myths of the counterculture of the 1960s. Both movements were
founded on dissent, on an anti-establishment mood. Last but not least, both the
personal computer and the Unix account had an appeal on this generation as a
medium of individual expression in an age in which the media were castrating
individual expression.
Both in the case of the personal computer and of the Internet, it was not a
surprise that the invention happened: it was feasible and there was a market for
it. The surprise was how long it took. The business “establishment” created a
huge inertia that managed to postpone the inevitable. Viewed from the top,
government funding from the 1910s till the 1960s had accelerated innovation
whereas large computer corporations in the 1970s had connived to stifle
innovation (outside their territory).

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 Evans Hall on the UC Berkeley Campus, where
Researchers Developed the BSD Unix and Invented “vi”
(2010)

The Visible Hand of Capital

The amount of money available to venture capitalists greatly increased at
the end of the decade because of two important government decisions. First,
venture capital became a lot more appealing. In 1978 the US government
enacted the “Revenue Act,” which reduced the capital gains tax rate from 49.5%
to 28%. Second and more importantly, in 1979 the government eased the rules
on pension funds, allowing them to engage in high-risk investments.
The investment returns numbers were likely important too. Arthur Rock had
invested less than $60,000 in Apple in January 1978 and reaped almost $22
million in December 1980 when Apple went public. For several years Kleiner-
Perkins was able to pay a 40% return to the limited partners of its high-tech
fund. The base of the Bay Area’s venture capital industry started moving from
San Francisco to 3000 Sand Hill Road, in Menlo Park, a complex of low-rise
wooden buildings a few blocks from the Stanford Research Park. Within a few
years several more venture-capital funds were founded and several of the East-
Coast funds opened offices here.

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 3000 Sand Hill Road, Menlo Park (2010)

The Invisible Hand of Government

Government spending also helped in less visible manners. In 1977 the
Defense Department hired Bill Perry, the former ESL founder, to head their
Research and Engineering Lab. The US had just lost the war in Vietnam, and one
country after the other was signing friendship treaties with the Soviet Union. The
US government decided that it was likely to lose a conventional war against the
Soviet Union. The only hope to defeat the Soviet Union lay in launching a new
generation of weapons that would be driven by computers, a field in which the
Soviet Union lagged far behind. In the next four years the budget for the Defense
Advanced Research Projects Agency (DARPA) was increased dramatically,
leading to a number of high-tech military projects: the B-2 stealth bomber, the
Jstars surveillance system, the Global Positioning System (GPS, launched in
1972), the Trident submarine, and the Tomahawk cruise missile. Many of these
projects depended on technology developed in Silicon Valley.

Biotech
The age of biotech started in earnest in the Bay Area with Genentech. It was
formed in April 1976 by Herbert Boyer (the co-inventor of recombinant DNA
technology or “gene splicing”) and by 28-year-old venture capitalist Robert
Swanson, who set up offices at Kleiner Perkins’ offices in Menlo Park. They
subcontracted experiments to the laboratories of UCSF, the City of Hope, and
the California Institute of Technology in Pasadena (whose student Richard
Scheller became one of their early employees) to genetically engineer new
pharmaceutical drugs. Genentech’s first success came in 1977 when they
produced a human hormone (somatostatin) in bacteria, the first cloning of a
protein using a synthetic recombinant gene. In 1978 Genentech and City of Hope

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produced human insulin; a year later Genentech cloned the human growth
hormone.
The biotech business had begun with human proteins made in bacteria. The
field got another boost in 1977 when Fred Sanger at Cambridge University in
Britain developed a method for “sequencing” DNA molecules (genomes), i.e.
for deciphering the sequence of the constituents of a DNA molecule, a process
not all too different from deciphering the sequence of characters in a computer
message. (For the record, the first genome that Sanger sequenced was the
genome of the Phi X 174 bacteriophage). Another method was developed by
Walter Gilbert ‘s team at Harvard University. Gilbert joined forces with MIT
Professor Phillip Sharp and founded Biogen in Geneva in 1978. In 1979 Walter
Goad of the Theoretical Biology and Biophysics Group at Los Alamos National
Laboratory established the Los Alamos Sequence Database to collect all known
genetic sequences from a variety of organisms and their protein translations
(basically, a catalog of genes and their functions), hiring the consulting firm
BBN (Bolt Beranek and Newman), the same firm that had set up the Internet.
More biotech companies surfaced in those years on both coasts of the US. In
1979 Sam Eletr, who had been the manager of a medical instruments team at HP
Labs, founded GeneCo in Foster City, near Oracle. It was later renamed
Applied Biosystems to build biotech instrumentation: first a protein sequencer
and later a DNA synthesizer. Also notable in the Bay Area was Calgene, formed
in 1980 by UC Davis scientists. Scientists from UCSF and UC Berkeley formed
Chiron in 1981 in Emeryville.
A decision by the Supreme Court opened the floodgates of biotech startups.
In 1980 it ruled that biological materials (as in “life forms”) could be patented.
Due to these scientific and legal developments, the Bay Area’s first biotech
company, Cetus, went public in 1981, raising a record $108 million. In 1983
Kary Mullis at Cetus would invent the “polymerase chain reaction,” a process
capable of amplifying DNA, i.e. of generating many copies of a DNA sequence.
Outside the Bay Area the most successful company in recombinant DNA
technology was perhaps Los Angeles-based Applied Molecular Genetics (later
abbreviated to Amgen), founded in April 1980 by four venture capitalists who
hired a stellar team of scientists from Caltech and UCLA. In 1983, Taiwanese-
born physiologist Fu-Kuen Lin cloned the hormone erythropoietin (better known
as EPO), later patented as Epogen, into the ovarian cells of hamsters; two years
later Larry Souza cloned another hormone, granulocyte colony-stimulating factor
(G-CSF), later patented as Neupogen. Revenues passed $1 billion in 1992.

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 Genentech’s Campus (2010)

Culture and Society

The Bay Area’s cultural life was booming at the same time that the computer
industry was beginning to boom; and it was still rather eccentric by the
standards of mainstream culture. The Residents started the new wave of rock
music with their bizarre shows and demented studio-processed litanies. In 1976
William Ackerman launched Windham Hill to promote a new genre of
instrumental music, “new age” music. It was the soundtrack to a “new age
movement” that simply updated Esalen‘s “human potential movement” and the
spiritual element of the hippie generation for the new “yuppies” (young urban
professionals), thereby creating an alternative spiritual subculture that promoted
Zen-like meditation, astrological investigation, extra-sensorial powers, crystal
healing, holistic medicine). A huge influence on the new-age movement, besides
the Esalen center, was the "human potential movement" launched by George
Leonard's "The Transformation" (1972). At the same time punk-rock reached
California where it mutated into a particularly abrasive and vicious form,
hardcore, notably with the Dead Kennedys. Meanwhile the gay community
patronized disco-music. Punk-rock was headquartered at the Mabuhay Gardens
(on Broadway) and disco-music at the I-Beam (Haight-Ashbury).
Non-musicians were doing well too. In 1976 playwright Sam Shepard
relocated to San Francisco to work at the Magic Theatre. The Herbst Theatre
was established in 1977 on the site of the 1945 signing of the United Nations’
charter. In 1977 George Coates founded his multimedia theater group,
Performance Works. In 1978 Mark Pauline created the Survival Research
Laboratories, which staged performances by custom-built machines. In 1979
Martin Muller opened the art gallery Modernism. In 1980 Sonya Rapoport
debuted the interactive audio/visual installation “Objects on my Dresser.”

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 San Francisco, an old port city, was transitioning from a shipping economy
to a banking and tourism economy. This was leaving many old buildings empty.
The Survival Research Laboratories were the main group taking advantage of
those abandoned building for staging unorthodox (and mildly illegal) events, but
not the only one. For example, the Suicide Club was founded in 1977 by
Adrienne Burk, Gary Warne and Nancy Prussia and staged all sorts of
provocative activities: costumed street pranks, sewer walks, a vampyre party in
an abandoned funeral home, Nancy Prussia rode naked in a cable car, a treasure
hunt that would become a staple of the Chinese New Year parade, pie fights, and
especially bridge climbing. Also in 1977 Jack Napier, a member of the Suicide
Club, started the Billboard Liberation Front, that coordinated graffiti artists
(including the young Shepard Fairey) devoted to "improving" the commercial
billboards, an entertaining form of anti-capitalistic warfare. If SRL was about
machine exploration, the Suicide Club was about urban exploration. Both had
something in common: an unusual degree of intensity (paralleled in music by the
local punk-rock scene).
There were already many examples of philanthropy. For example, in 1979
Stanford University's professor and former Syntex scientist Carl Djerassi
purchased land in the Santa Cruz Mountains west of Stanford and started the
Djerassi Resident Artists Program. The program would attract dozens of world-
class artists to create sculptures in the forest. In the mid-1980s John Rosekrans
would establish the Runnymede Sculpture Farm on the family's vast estate in
Woodside, acquiring over 160 outdoor monolithic sculptures.
The main scientific achievement of those years (not only in California) was
the "Inflationary Theory", devised by Alan Guth at the Stanford Linear
Accelerator (SLAC) at the end of 1979, a theory that changed the way
cosmologists viewed the history of the universe.
The Bay Area was a tolerant but boring place. In 1977, San Francisco’s city
supervisor Harvey Milk became the first openly gay man to be elected to office
in the US. Meanwhile, Silicon Valley was just a place to work. The only major
entertainment was represented by the amusement park Great America, which
opened in 1976 in Santa Clara. The rest of Silicon Valley was one large set of
strip malls and dingy buildings.

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 Warriors: Personal Computers, Killer
Applications, and SUN Microsystems (1980-
83)

The Coming of the Personal Computer

In 1980 IBM enjoyed a virtual monopoly in the mainframe-computer market.
It then decided to enter the personal computer (PC) market. IBM opened a small
Entry Systems Division in Florida under the direction of Donald Estridge, who
opted for building a computer from off-the-shelf, widely available components.
One reason for this decision was that IBM was still wary of an antitrust lawsuit
brought against it by the government in 1969. The best way to avoid accusations
of monopolistic practices was to make the specifications available to its
competitors. IBM put William Lowe in charge of the top-secret project, code-
named “Acorn.”
IBM had two key decisions to make about its PC, regarding the processor
and the operating system. To start with, IBM chose the Intel 8088
microprocessor instead of a proprietary IBM microprocessor (IBM had already
acquired the rights to manufacture Intel chips). IBM did not have an operating
system for Intel’s processors, so it was necessary to buy one from a third party.
When in 1978, Intel had introduced the 8086, a young Seattle programmer, Tim
Paterson, had been hired by Seattle Computer Products (SCP) to develop a
CP/M-compatible operating system for it. In December 1980 he finished work
on his 86-DOS. Asked by IBM to deliver an operating system for the 8086, in
1981 Bill Gates’ Microsoft bought the rights on 86-DOS from SCP and hired
Paterson to port 86-DOS to the first prototype of the machine provided by IBM.
It was renamed MS-DOS, and Microsoft decided to retain the rights on the
operating system.
IBM launched its machine as the IBM PC in August 1981. The basic version
with 16 kilobytes of RAM and a cassette unit sold for $1,600. Another
revolutionary move by IBM was to let outside distributors (initially Sears &
Roebucks and Computerland) sell the PC. Previously, the best-selling computer
in IBM’s product line had sold only 25,000 units over five years. The PC would
sell a million units in less than three years.
The IBM PC legitimized the personal computer. No other computer
company before IBM had entered the personal-computer market. The PC
companies such as Apple, Tandy and Commodore were not considered real
computer companies by the corporate world but rather more akin to toy makers.

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 The business models chosen by IBM and Microsoft would have far-reaching
consequences. Because IBM had used off-the-shelf components for their PC,
and because Microsoft had retained the rights on MS-DOS, it didn’t take long
for engineers all over the world to realize that one could build a “clone” of the
IBM PC. The only difficult trick was to replicate the BIOS (Basic Input/Output
System), the software written to “bootstrap” the computer. Rod Canion and
other former Texas Instruments engineers founded Compaq to reverse engineer
IBM’s BIOS. In January 1983, after licensing MS-DOS from Microsoft,
Compaq introduced the 8088-based Portable PC, fully compatible with the IBM
PC but even smaller (a premonition of the laptop). It was equipped with 128
kilobytes of RAM and priced at $3,000 (the same configuration cost $3,800 on
the IBM PC). Soon there would be an entire PC-clone industry worth more than
the entire personal-computer industry of the previous years. Compaq was the
most aggressive because it had hired marketing and sales executives from IBM.
It was not a garage-style startup but a carefully planned large-scale operation.
Compaq’s strategy was to sell almost exclusively through retailers and
resellers.
The personal-computer industry was already mature before the introduction
of the PC-clone. About 1.4 million personal computers were sold in 1981, half
of them in the US. However, less than 1% of all households in the US had one.
That changed in 1982. Another winner of 1981 (at the low end of the spectrum)
was the Commodore VIC20. It sold 800,000 units in 1982. Its successor, the
slightly more powerful Commodore 64 introduced in August 1982 with a price
tag of only $600, would fare even better. It was the first affordable color
computer. It could be directly plugged into a television set, and came with 64
kilobytes of RAM. The technology was only part of the reason for its success:
Commodore decided to sell it in retail stores instead of electronics stores, thus
addressing a much bigger audience. It went on to sell more than 20 million units
(four times the Apple II).
Next to these giants there were the many makers of microcomputers based
on the Zilog Z80: Sinclair, Osborne, Sony, Sharp, NCR, Olivetti, Philips and, of
course, most models of the popular Tandy Radio Shack TRS-80 series, which
was still a best-seller. Notably, in April 1981 Osborne Computer, founded in
1980 in Hayward by British-born hobbyist Adam Osborne (an old member of
the Homebrew Computer Club), delivered the Osborne 1. It was a portable
computer running the CP/M operating system that weighed only 11 kgs and cost
$1,800. Hardware engineer Lee Felsenstein, a fellow member of the Homebrew
Computer Club, designed it and basically, it was a commercial version of the
Xerox NoteTaker. A few months later, in 1982, Japanese manufacturer Epson
introduced an even smaller computer, the HC-20, designed around a Motorola
microprocessor dressed up by Hitachi. In April 1982 GRiD Systems, founded in
1979 by a former Xerox PARC scientist of the Alto team, John Ellenby, and
already gone public before it had a product, introduced a portable computer

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based on the Intel 8086 microprocessor, the 1101. Manuel Fernandez, a refugee
from Cuba who had become the CEO of Zilog during the Z80 era, founded
Gavilan and in May 1983 introduced the first portable MS-DOS computer
marketed as a “laptop” ($4,000).
Finally, there was Apple. In 1982 it became the first personal-computer
company to pass the $1 billion mark in revenues. Unlike the IBM PC, which
featured an operating system used by many other manufacturers, the Apple II
relied on a proprietary Apple operating system that did not encourage
independent software companies. Willingly or unwillingly, IBM had established
an open software standard, whereas Apple still lived in the era of closed
proprietary architectures. It wasn’t clear which of the two strategies would be
the winning one. That year almost three million personal computers were sold
worldwide.

The First IBM PC (1981)

The Coming of Software

A major reason for the skyrocketing sales in personal computers was that
they were becoming more useful. And that was due to the software, not the
hardware. A number of word-processing and spreadsheet programs could run on
the IBM PC. In the next few years a lot of software applications turned the PC
into a necessity for any office. They caused the rapid decline of application-
specific machines, for example Wang’s word-processing machine Office
Information System, the wildly successful 1977 descendant of the Wang 1200.
Software application companies sprung from nothing and made highly useful
office software. In 1981, Los Angeles-based Context Management Systems
introduced Context MBA for Apple computers. It was a software package that
integrated spreadsheet, database, charting, word-processing and communication
functions. In 1982 they ported it to the PC. In January 1983, the Massachusetts-

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based Lotus Development Corporation, founded the year before by Mitch Kapor
(previously responsible for VisiCalc at VisiCorp) introduced the spreadsheet
program “Lotus 1-2-3” for MS-DOS (i.e. the IBM PC). It was developed by
MIT alumnus and Lotus’ co-founder Jonathan Sachs, who had already developed
a spreadsheet for Data General’s minicomputer. Visicorp’s VisiCalc had been
ported to the IBM PC, but it was still limited to Apple II’s 8-bit architecture and
48 kilobyte memory space. Lotus 1-2-3, on the other hand, was written
specifically for the IBM PC in assembly language, taking advantage of its 16-bit
Intel processor and of its 640 kilobyte memory space. It became a bestseller.
Lotus instantly became the second largest software company for personal
computers after Microsoft, with sales in 1983 of $53 million.
Software Plus, founded in 1980 by George Tate and Hal Lashlee, was a Los
Angeles-based distributor and publisher of software for personal computers, a
booming business. In 1981 they stumbled into the Vulcan database management
system for the CP/M operating system developed at home by Wayne Ratliff, an
employee of NASA’s Jet Propulsion Labs, modeled after the database system of
his lab’s Univac mainframe. Software Plus acquired the program, changed its
own name to Ashton-Tate, turned Vulcan into a popular product, dBase ($700),
and in 1982 ported it to MS-DOS.
Intuit, founded in 1983 by Scott Cook and Tom Proulx in Palo Alto, offered
Quicken, a personal finance management tool for the Apple II.
Ray Noorda’s Novell in Utah in 1982 came up with the idea of a network
operating system to allow several personal computers to share the same files
and printers. Their NetWare for DOS was the first stepping-stone to enable
personal-computer users to work as a team.
A network effect was created between the PC-clones and the software
manufacturers. The IBM PC could not run the many applications written for the
CP/M operating system, but that rapidly became a non-issue. Thanks to IBM’s
charisma and to Microsoft’s licensing skills, in 1982 fifty companies bought a
MS-DOS license. As more computers used MS-DOS, the motivation to make
software applications for MS-DOS increased. As more applications were
written for MS-DOS, the motivation for hardware manufacturers to buy a MS-
DOS license increased. Furthermore, Microsoft invested the money in greatly
improving the operating system. In March 1983, release 2.0 of MS-DOS offered
features derived from the Unix operating system (such as subdirectories and
pipes) that made it much more competitive against CP/M on technical grounds.
An impressive number of software companies were started in 1982 in
Silicon Valley, a fact that began to alter the relative proportion between
hardware and software. Some notable ones included Autodesk, Symantec,
Activision, Electronic Arts, and Adobe.
Autodesk was founded in 1981 in Mill Valley to commercialize Mike
Riddle ‘s Interact, the first Computer-Aided Design (CAD) program for CP/M
and MS-DOS personal computers, the first affordable tool for creating detailed

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technical drawings. Riddle, a user of ComputerVision’s CAD system for
graphical workstations, teamed up with John Walker ‘s Marinchip Systems that
had built a computer based on a Texas Instrument microprocessor. Both had a
second life. Riddle, based in Arizona, was an inventor who had built a
successful electric guitar tuner. Walker, a libertarian-leaning intellectual, had
designed one of the first Trojan viruses, Animal (1975). Walker renamed
Riddle's Interact as AutoCAD, ported it to the Victor 9000, one of the early
graphics Intel-based personal computers, and turned it into a novelty hit.
Symantec was founded in March 1982 in Sunnyvale to pursue artificial
intelligence-based research, notably in natural-language processing. Gary
Hendrix, who had worked at the SRI International with Charlie Rosen, a pioneer
of perceptron (neural-network) machines, founded and hired a group of
specialists from Stanford University. Symantec went on to specialize in
development tools for software engineers, i.e. software to help build other
software.
Borland was founded in 1983 in Scotts Valley (between San Jose and Santa
Cruz) by three Danish developers (Niels Jensen, Ole Henriksen, and Mogens
Glad) and Philippe Kahn, a Frenchman who had cut his teeth on the Micral
project. They targeted the growing needs not of the end user but of the software
developer.
Activision was founded in October 1979 by music industry executive Jim
Levy and a group of Atari game designers. It became the first company focused
on game design. Until then the games for a console had been published
exclusively by the console manufacturer. Activision introduced the praxis of
giving credit and even publicizing the creators. Its first success, “Pitfall”
(1982), drove many others to start similar companies.
Apple’s marketing manager Trip Hawkins founded Electronic Arts in May
1982 in San Mateo. He aimed to market home computer games, viewed not as
mere games but as a form of interactive digital media. Both their business plan
and their ethics treated game publishing just like book publishing, and treated
videogame production just like a movie studio treated movie production.
Adobe was founded in December 1982 in Mountain View to commercialize
printer software made by John Warnock (a former employee of Evans &
Sutherland) and Charles Geschke. They had worked at Xerox PARC on the
page-description language InterPress, whose purpose was to enable all
computers of a network to print on any printer of the network. By then they were
both in their 40s. They left Xerox to develop a simpler language, PostScript.
PostScript was the first building block for desktop publishing, which still
needed a viable computer platform and a suitable software environment (both
unsuccessfully pioneered by Xerox’s Star). Unlike most startups, Adobe was
profitable from its first year.
HP had decided to start selling printers for the little handheld scientific
calculators and its scientists (mainly John Vaught) began to work on the inkjet

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technology (originally invented at Germany's Siemens in 1977). HP launched the
ThinkJet in 1984 and Japan's Canon introduced the BJ-80 in 1985. Soon the
inkjet printer began to replace the noisy dot-matrix printer in the world of
personal computers. Color printing came with HP's PaintJet, introduced in
1987, an evolution of HP's plotter technology. Inkjet technology began to offer
laser-printing quality at a much lower price with the HP Deskjet of 1988. Until
then Epson's dot-matrix printers had ruled the market, but now HP was rapidly
becoming the leader, challenged only by Canon (whose laser printers would
become the standard engine for HP's later printers).
The Argentine-born mathematician Trabb Pardo and Les Earnest (who had
previously built the first spelling checker at the MIT in 1961) founded Imagen in
1980 to commercialize a pioneering desktop publishing system used at the
Stanford Artificial Intelligence Laboratory.
Visicalc had opened up the market of offices to the computer industry.
Electronic Arts understood that the same device could be used by millions of
people to play games, and Xerox PARC scientists that computers could be used
for education and for publishing.
Generally speaking, an important transition was underway. Computers are
formed by two interacting substances: hardware and software. At the beginning
the cost of a computer was entirely the cost of its hardware parts and of
assembling them. Until the 1970s the hardware still represented most of the cost.
However, in the 1980s the falling prices of hardware components had enabled
ever more sophisticated software applications and triggered a growing demand
for them. This meant that the cost of software was escalating at the same time
that the cost of hardware was plunging. This vicious loop also constituted a new
powerful motivation for the hardware industry to continue producing more
powerful chips in order to support ever-larger software applications.
Semiconductor components had become commodities, while software now
represented the luxury item. Software was also the place where profit margins
could be very high.
One could see the same phenomenon in the world of mainframes, which still
accounted for the majority of IT revenues. Computer Associates, was formed in
1976 by two Standard Data employees and Columbia University alumni,
Chinese-born Charles Wang and Russell Artzt. It was a joint venture with a
company owned by Swiss billionaire Walter Haefner, was initially focused on
system utilities for mainframe computers. But in the early 1980s it inaugurated a
cynical strategy of growth not through invention but through ruthless acquisitions
that would eventually gobble up all the historical software companies of the
mainframe world (Uccel in 1987 for a record $830 million, ADR in 1988,
Pansophic in 1991, Cullinet in 1989).

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 Electronic Arts’ Offices (2010)

Losers
The growing complexity of computer applications also induced a growing
concern for the user experience. User interfaces were still too technical for a
machine that aimed at becoming a home appliance used by ordinary people.
After Xerox invested in Apple, in November 1979 Steve Jobs of Apple was
given a “demo” of the Alto. That demo set the course of Apple for the 1980s. In
January 1983 Apple introduced the Lisa, the first personal computer with a GUI,
the “WIMP” (Window, Icons, Mouse, Pull-down menus) paradigm pioneered by
the Xerox Alto. The Lisa, based on a Motorola 68000 microprocessor and
equipped with one megabyte of RAM and five megabytes of hard-disk storage,
heralded the second building block of desktop publishing. Unfortunately, it was
too expensive ($10,000) and too slow to truly capture the imagination (and the
wallets) of the masses. In October VisiCorp introduced the equivalent GUI for
the IBM PC, VisiOn. Neither application lived up to the expectations of their
creators.
The principal victim of the personal-computer boom was the videogame
console. In the early 1980s there were many best-sellers: Atari 2600 and 5200,
Bally Astrocade, Coleco Vision, Emerson Arcadia 2001, Fairchild Channel F,
Magnavox Odyssey, Mattel Intellivision, Sears Tele-Games, etc. However,
personal computers were getting cheaper and were beginning to offer graphics
and sound. A personal computer could play videogames but also run many other
useful applications. In 1983 the US market for videogame consoles crashed.

Winners
The semiconductor industry in Silicon Valley was booming, serving a
market that ranged from watches to airplanes. The startups continued to
multiply:

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 Linear Technology, founded in 1981, and Xilinx, a Zilog spin-off
formed in 1984, addressed programmable logic (chips that customers
could program themselves);
Maxim, founded in 1983 by former Fairchild’s marketing executive and
AMDs’ co-founder Jack Gifford, perfected the analog integrated
circuits that Fairchild pioneered;
Cypress Semiconductor, an AMD spin-off formed in 1982 by a team of
CMOS experts, and Altera, founded in 1983, focused on high-
performance integrated circuits.;
VLSI Technology, a Fairchild spin-off of 1979, and LSI Logic, formed
in 1981 by Fairchild’s engineer Wilfred Corrigan, specialized in ASICs
(Application-Specific Integrated Circuits) for embedded systems.
Meanwhile, voice messaging became a household feature after Octel
Communications, founded in 1982 by Robert Cohn and Peter Olson in Milpitas
(near San Jose), introduced a voice-mail system. It was smaller and cheaper
than the traditional ones because it used Intel and Zilog microprocessors.
Logitech, the first major seller of mouse devices for personal computers,
was founded in 1981 in Switzerland but had its roots in Silicon Valley, as
Swiss-born Daniel Borel and Italian-born Pierluigi Zappacosta had met there in
graduate school and had met there the third founder, Giacomo Marini, an
executive at Olivetti's Advanced Technology Center, located next door to Apple.

Intimations of the Future

SRI International’s scientist Stan Honey founded Etak in Sunnyvale in 1983
with seed money from Atari’s founder Nolan Bushnell. Etak became the first
company to digitize maps. In 1985 it introduced the Navigator, a navigation
system for cars. It was based on the Intel 8088 and the maps were stored on
cassette tapes.
Hewlett-Packard experimented with the touch-screen just invented in
Europe with the HP-150 (1983), a personal computer based on the Intel 8088,
one of the world's earliest commercial touchscreen computers.
Few people heard of "Elk Cloner," a program that a 15-year-old high-
school student, Rich Skrenta, unleashed on an Apple II in 1982. It was the first
personal-computer virus. Elk Cloner was capable of spreading from floppy-disk
to floppy-disk, and therefore from computer to computer. What this hacker had
implicitly realized is that the widespread adoption of personal computers had
de facto connected millions of people (even though the "connection" still relied
on copying files on floppy-disks).

Expert Systems
A mini-bubble within the bubble of software existed with startups that
specialized in “expert systems.” These were systems based on artificial

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intelligence (AI) techniques developed at Stanford and operating in a narrow
domain (such as troubleshooting or configuring complex equipment ). The novel
approach to computing adopted by these systems consisted in emphasizing the
knowledge required to solve a problem.
An expert system had two fundamental components: a knowledge base,
constructed by eliciting knowledge from a human expert, and an “inference
engine,” which contained a set of algorithms to perform inference on the
knowledge base. This was therefore a nonsequential kind of computing that
differed from most software (in which the solution is achieved via a sequence of
instructions). Expert systems targeted complex problems for which a traditional
program was not feasible. Just like a human expert, an expert system could only
provide a “plausible” solution, not necessarily a perfect one. The favorite
programming languages for these programs were Prolog and Lisp. In fact, there
were also startups specializing in “Lisp machines.”
A few startups tried to build expert systems. In 1981, Stanford Professor
(and expert-system pioneer) Ed Feigenbaum and others founded Teknowledge,
which for a while was the most hyped of the AI startups. In 1983, Intellicorp
introduced its flagship object-oriented development environment, KEE
(Knowledge Engineering Environment), also running on Lisp Machines. Brian
McCune, an alumnus of the Stanford Artificial Intelligence Laboratory (SAIL),
was one of the founders in 1980 of Advanced Information and Decision Systems
(AIDS) in Mountain View, later renamed Advanced Decision Systems (ADS). It
was a consulting firm specializing in AI research for the Department of Defense.
He and Richard Tong, a Cambridge University graduate, designed a concept-
based text-retrieval system, Rubric, a progenitor of search engines.

Workstations
One step up from the personal computer, the world was completely different.
The early 1980s were the age of the workstation, similar to a personal computer
because it was dedicated to a single user but more powerful (especially in
graphics). It was also designed to be connected to a network. This kind of
computer targeted the engineering market. They were usually based on the
Motorola 68000 (not on Intel microprocessors) and they usually ran the Unix
operating system. The market came to be dominated by Apollo (founded in
1980 in Boston by former NASA scientist William Poduska), SUN (1981),
Silicon Graphics (1982) and Hewlett-Packard (1983). They all stole market
share from DEC’s much more expensive minicomputers. Both SUN and Silicon
Graphics originated at Stanford University.
SUN Microsystems was founded in February 1982 in Palo Alto by two
foreign Stanford students, German-born Andrea Bechtolsheim of the computer
science department and Indian-born Vinod Khosla of the business school. In
1981, Bechtolsheim, while working at the Stanford University Network, had

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modified a Xerox PARC’s Alto into a workstation running Unix and networking
software. His goal was simply to have machines for individual researchers that
would make it as easy as possible to be connected and share data. Khosla
realized that this could become a business. They joined forces with Scott
McNealy, a former Stanford graduate and now at Unix startup Onyx, and hired
Berkeley graduate Bill Joy of BSD fame. He developed a dialect of Unix,
SunOS, based on BSD (Berkeley’s version of Unix). Backed by venture
capitalists such as Kleiner Perkins, SUN was started to market that concept.
The SUN workstation was an evolution of a display terminal invented in
1971 at the Stanford Artificial Intelligence Laboratory (SAIL) and of the Xerox
Alto computer (some units of which Xerox had donated to Stanford University
in 1979). The SUN workstation marked a turning point in VLSI (Very Large
Scale Integration) hardware technology for integrated circuits, which allowed
Bechtolsheim to pack a Motorola 68000 CPU, a memory bank, a parallel port
controller and a serial port controller into the main CPU board. The other two
boards were a graphics display controller and an Ethernet controller (which
was still a laboratory device, no commercial Ethernet controller being available
in those days). The SUN workstation had more than one spin-off because
Yeager's software for connecting multiple Ethernet controllers would later
evolve into Cisco's first router, and the version for high-performance graphics
display designed by the young James Clark would become the foundation for
Clark's first startup, Silicon Graphics.
Unlike the Apollo workstation, which used custom hardware and a
proprietary operating system, the SUN workstation used standard off-the-shelf
hardware components and a standard operating system (Unix). Thus, in a sense,
it replicated the business model of the IBM PC. Soon, the concept of the SUN
workstation was competing with Microsoft. The SUN workstation was basically
a more powerful personal computer that also happened to be hooked to a
network. It ran Unix instead of Windows. It used a Motorola 68000 processor
instead of the Intel x86 processors used by Windows-based computers. Also the
SUN corporate culture was to the Microsoft culture what the counterculture was
to the mainstream.
Silicon Graphics was started in November 1981 by Jim Clark and Abbey
Silverstone of Xerox to manufacture graphic workstations. Previously, Evans &
Sutherland’s Picture System had pioneered hardware implementations of
computer graphics. At Stanford University in 1980, former Evans &
Sutherland’s employee Jim Clark and his student Marc Hannah developed an
improved version (funded by DARPA) called the “Geometry Engine.” The
original idea was to have Motorola 68000-based workstations connected to a
DEC VAX minicomputer that boasted high-performance graphics needed for
engineering design. Later those workstations became stand-alone Unix
computers. Silicon Graphics benefited from an exodus of HP engineers,
including Jim Barton who went on to create a real-time version of Unix

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(essential for flight simulation) and the first video-on-demand system (Full
Service Network for Time Warner)
Workstation developers talked about the RISC (Reduced Instruction Set
Computer) architecture, which promised faster CPUs. For three decades, there
had been a trend towards implementing more and more complex functions
directly in the hardware of a computer. The principle behind the research in
RISC architectures was that, while it is nice to be able to perform complex
operations, applications mostly execute simple operations. Hence, it might be
more efficient to perform those (frequent) simple operations faster than to
implement (infrequent) complex operations. So again, many startups were
formed:
Ridge Computers was founded in 1980 in Santa Clara by a group of
Hewlett-Packard engineers (including Hugh Martin);
In 1980 David Patterson and Carlo Sequin launched the RISC project at
UC Berkeley;
The following year, John Hennessy started a RISC project at Stanford
University. Hennessy eventually left Stanford, founded a company,
MIPS, and in 1985 released the first major RISC processor, the R2000.
Silicon Graphics would switch to MIPS processors in 1986 (the IRIS
4D series). MIPS was also adopted by Nintendo in Japan, and by
Siemens and Bull in Europe;
When SUN introduced its SPARC architecture in 1986, it was based on
Berkeley’s RISC project; and so did Pyramid Technology, formed in
1981 by former HP employees;
British computer manufacturer Acorn debuted a RISC processor in
1985, the Acorn Risc Machine or ARM, designed by Sophie Wilson. It
would become the company’s most successful product, causing the birth
in 1990 of a spin-off, Advanced RISC Machines (ARM), which in
1991 would introduce its first embeddable RISC chip.
The giant in the field of minicomputers was DEC. In October 1977 it
introduced a 32-bit family of computers, the VAX, to progressively replace the
various 16-bit PDP-11 models. DEC had designed a proprietary multi-user
operating system for the VAXes, the VMS. However, in 1978 Bell Labs had
already ported the PDP-11 Unix to the VAX platform. Unix had become “the”
operating system for universities and DEC hardware had always been a favorite
of universities. Therefore DEC involuntarily had one of the most popular Unix
platforms. DEC calculated that in 1985 about 25% of all VAXes was running
Unix. The VAX with Unix was also the computer of choice for the Internet, since
Unix had become the operating system for the Internet and the PDP-11s had
become the preferred minicomputers for the Internet.

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 SUN’s Old Building (2010)

The Great Unix Wars

Unix was important to all software developers. In 1983 Oracle announced
that its engineers (basically Bob Miner and Bruce Scott) had rewritten its
database management system in the C programming language, the language
preferred by all Unix systems. It was an achievement that made Oracle’s product
easily portable across computer platforms. It was therefore ported to the most
popular minicomputers and even to mainframes (that already had C compilers).
It was also the first 32-bit relational database management system.
Something important happened in 1983 that had little to do with Unix
technology but would have repercussions on Unix computers. The US
government decided that AT&T (the company that owned Bell Labs and the Unix
operating system) constituted a monopoly violating the anti-trust law. The
government ordered the dismemberment of this colossal conglomerate (at the
time the largest company in the world). AT&T had been forced since 1958 to
make non-telephone technologies available to others. But now, broken up into
separate companies, it was free to make money out of the Unix operating system.
Before the end of the year AT&T had a commercial version ready, which was
renamed Unix System V. That was the beginning of the great Unix wars of the
1980s, pitting System V against BSD, i.e. AT&T’s corporate profit-driven
world versus the idealistic Bay Area hobbyists (notably SUN, which was
rapidly dwarfing the competition).
To further complicate the Unix landscape, in 1983 Richard Stallman at MIT
started working on a free clone of Unix that would contain no Unix code, code-
named GNU. In 1985, he issued a GNU manifesto and launched the Free
Software Foundation that denounced proprietary software.
In theory, the Internet belonged to the US government (via DARPA). In
practice, most decisions were taken by the various scientists that cooperated
casually in maintaining it. For example, SRI International had always

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maintained the “directory” of Internet nodes (a text file that returned a physical
network address for each node). In 1983 Paul Mockapetris at SRI was assigned
the task of developing the Domain Name System, so that each node would be
identified by a “domain name” in a hierarchy of domain names. The DNS
mapped domain names (such as www.scaruffi.com ) into IP addresses,
replacing the old text file named HOSTS.TXT that SRI maintained on behalf of
the entire Arpanet. The concept was refined (like all other concepts on the
Internet) by the community via “Requests for Comments” (RFCs). The following
year the first DNS was implemented in Unix by students at UC Berkeley. This
process was eventually formalized (in January 1986) in an Internet Engineering
Task Force (IETF), which was open to everybody.

The Counterculture and the Computer Culture

Just like the personal computer and the Unix, the Internet too was largely
shaped by a community of eccentric independents. From the beginning, Arpanet
was run by a powerful government agency. Yet its director, Lawrence Roberts,
had relied not on top-down decisions but on a decentralized model that involved
the very users of the Internet to submit proposals for future directions. He
organized retreats for Arpanet users. It was truly a government-mandated
collaborative effort. It was another case in which the consumer was the
producer, a community of “prosumers.” In a sense, the Arpanet was conceived
from the beginning as a project in progress, not as a fully specified project, a
concept that is more likely to surface in military projects than in commercial
product development. One of the side effects of this approach was that the
Arpanet changed mission over time, transforming from a military project to
survive a nuclear attack into a system for interpersonal communication and
knowledge sharing. It fostered collaboration among geographically remote
research labs, which was already not one of the initial goals.
Even more unexpectedly, Arpanet became a popular tool for intranode
communications and collaboration, as each node started connecting its multiple
computers among themselves. E-mail itself was a user idea, never planned by
the Arpanet’s bureaucracy. Nobody commissioned it, approved it, or promoted
it. A user deployed it and other users started using it. By 1973 it probably
accounted for the majority of Arpanet traffic. Again, the pseudo-socialist and
anarchic idealism of the counterculture had found another form. The ethics of the
Internet, just like the ethics of the Unix world and the ethics of the early
personal-computer hobbyists, was not the brutal, heartless ethics of the
corporate world nor the brutal, heartless ethics of Wall Street. It was the utopian
ethics of the hippie communes transposed into a high-tech environment.
The nature of the revolution in personal computers, Unix, and the Internet
mirrored more closely the continuous renovation of rock music than anything
else. Rock magazines and radio stations were used to hail a “next big thing”

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every month and got music listeners to expect a new genre every month.
Similarly, computer magazines (and later Usenet groups) started talking about a
technological “next big thing” every month and thus created the expectation for it
in computer users.
However, the parallel between counterculture and the high-tech industry had
an obvious limit: neither the personal computer nor Unix nor the Internet had
anything to do with San Francisco itself. The headquarters of personal-computer
innovation was the Santa Clara Valley, the part of the Bay Area that had
witnessed the fewest student riots, hippie be-ins, and rock concerts. Stanford, in
particular, had been largely indifferent to the whole counterculture. Unix and the
Internet had now strong roots in Berkeley, but it was only in part a phenomenon
of the Bay Area. It looked as if the marriage between counterculture and high-
tech culture had to take place in neutral territory, close enough to the epicenter
but far enough not to be affected by its more extreme manifestations.

Shrink-wrapped Software
Until the dotcom boom of the 1990s Silicon Valley was home to many small
software vendors but no major one. The 1980s witnessed a boom of software
startups, but most of them remained small throughout the decade, and didn't
survive more than a decade. However, the companies in Silicon Valley were
among the first to adopt the "shrink-wrapped" model of the software business:
selling software programs in boxes by mail order and through retail outlets.
The distribution channels were the visible difference, but behind it there
were bigger conceptual differences. First of all, the idea behind "boxed"
software was to sell thousands of units, not just a handful. Software had long
been an artisan-kind of field, in which software companies customized a
package for a customer (typically a very larger company or agency). Once
boxed, a program was the same for everybody, larger or small. Secondly, the
boxed product had to be priced like a consumer good, no more than the machine
on which it would run. And, finally, there was no direct sales force, which made
an enormous difference in client relationships. Companies like IBM invested
huge amounts of resources in developing and maintaining client relationships
(and would continue to do so longer after the era of the mainframe). Companies
in the low-price high-volume business could not afford a direct sales force of
that nature, and therefore sacrificed client relationship altogether. Silicon Valley
would never develop a passion for client relationships even after it became the
main software center in the world. Silicon Valley engineers would always
perceive custom applications as not as exciting as the application that is being
used (without customizations) by thousands or millions of people.

Lasers and Nanotechnology

The personal computer was much larger than all the other sectors, but the

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early 1980s were also, for example, the era of semiconductor lasers. Startups
specializing in these high-power lasers included: Stanford Research Systems
(SRS), founded in 1980 in Sunnyvale; Spectra Diode Labs, a 1983 joint venture
between Spectra-Physics and Xerox PARC; and Lightwave, founded in 1984 in
Mountain View. Despite the immense and rapid success of laser technology in
all sorts of applications, the laser industry never took off like the computer
industry. There were many parallels with the computer industry: Stanford had
one of the best research teams in the world; Ed Ginzton was for lasers what
Terman had been for electronics; Ginzton’s laboratory at Stanford spun off
several startups; and employees fluctuated among those companies and founded
new ones. While lasers were similar to computers, this is a significant example
of an industry based in Silicon Valley that did not achieve momentum.
Micro-Electro-Mechanical Systems (MEMS) represented the infancy of
nanotechnology. These were miniaturized devices made of microsensors,
microactuators and microelectronics. In 1982 Kurt Petersen wrote the influential
paper "Silicon as a Mechanical Material" and founded Transensory Devices in
Fremont (later IC Sensors in Milpitas), a pioneering company in
commercializing MEMS devices. Petersen envisioned "a broad range of
inexpensive, batch-fabricated, high-performance sensors and transducers easily
interfaced with the rapidly proliferating microprocessor."
In 1980 Stanford Electrical Engineering professor John Linvill had the idea
for the Center for Integrated Systems, a lab that, working in close interaction
with the industry, was to bring together material, hardware and software
engineers for the purpose of designing integrated circuits. For example, Gregory
Kovacs would design sensor systems that combine detectors on silicon wafers
the same way electrical circuits are integrated on computer chips.

Anarchy
The 1980s was the age of the spiritual revival that turned so many former
hippies into new-age adepts. Arguing for a return to a more natural way of life,
they were fiercely opposed to science and rationalism, and viewed technology
as evil. The intellectual zeitgeist of the Bay Area was hardly in sync with its
high-tech boom. The dichotomy between luddites and technophiles would
remain a distinctive contradiction of the Bay Area, just like materialism and
spirituality could coexist in the lifestyle of the same “yuppie” (young urban
professional).
An important contribution to these booming industries came from people
who were completely immune to the intellectual mood of the Bay Area:
immigrants. The 1970s had witnessed the first wave of immigration of engineers
from Europe and Asia. In the early 1980s they contributed significantly to the
boom of Silicon Valley. For example, Chinese and Indian executives ran 13% of
Silicon Valley’s high-tech companies founded between 1980 and 1984.

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Additionally, the Bay Area had been attracting young people from the other
states of the US since the 1960s. It was sunny, “cool,” advanced, cosmopolitan,
and opportunities popped up all the time. It had the mythological appeal of the
Far West and the quasi-mystic appeal of the Promised Land. At the same time it
had become a nice and wealthy place for living, a dreamland for the highly
educated youth of the East Coast and the Midwest. Silicon Valley was quite
unique in that it was both a place of great ethnic diversity and a place of high
technological saturation.
It was also a place where the boring corporate world was inexistent and
despised. In 1980, there were about 3,000 electronics firms in the Bay Area: the
vast majority had less than 10 employees, and only 15% of them had more than
100.
Silicon Valley exhibited a propensity towards spawning new firms even
when the market was not ready for an avalanche of products. Viewed from
above, the creation and destruction of companies was chaotic. The lifespan of
startups was getting shorter, not longer. What mattered was not the life
expectancy of an individual company but the success of the entire ecosystem.
The price to pay for the latter was a short lifespan for most of the individual
companies.
High labor mobility was crucial to the implementation of this model of
continuous regeneration as well as to sustain the breathtaking growth of
successful startups. The mobility of labor was also enabled by an anti-union
spirit. This was not trivial. After all, San Francisco was the most unionized city
in the country at the beginning of the 20th century, and socialist agit-prop groups
were ubiquitous in San Francisco and Berkeley during the 1960s. Perhaps it
was precisely a desire not to be identified with the old-fashioned business style
of San Francisco that led Silicon Valley to adopt the opposite stance towards
unions.
The old computing world (mainly based on the East Coast) was controlled
top-down and not at one but two levels. First, the users of a mainframe or mini
had to be hired by a company or university, i.e. access was controlled top-down
by the owner of the expensive computer. Second, the technology of that
mainframe or mini computer was proprietary, i.e. controlled top-down by the
computer manufacturer. The personal-computer world, instead, was
decentralized and anarchic at both levels.
It was ironic how an invention whose original purpose was purely military
and reserved for a tightly-guarded small number of laboratories was rapidly
evolving into a ubiquitous data processing and communication device for
ordinary offices and even households.

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163
 Artists: New Paradigms of User-
Computer Interaction, Open Architectures,
Cisco, Synthetic Biology, and Cyberculture
(1984-87)

The Graphical User Interface

A new era began in January 1984 when Apple introduced the Macintosh, the
successor to the Lisa, the result of a project started in 1979 by Jef Raskin who
had dreamed of a "computer appliance" and had hired his former student Bill
Atkinson from UC San Diego. Based on a 32-bit Motorola 68000 CPU, it still
featured a proprietary Apple operating system with the Lisa GUI. It went on sale
for $2,000.
The Macintosh created a new industry: desktop publishing. In 1985 Apple
also introduced the LaserWriter, the first printer to ship with Adobe’s
PostScript. Aldus of Seattle, founded in 1984 by Paul Brainerd (who coined the
term “desktop publishing”) introduced PageMaker, the software application that
made it easy to create books on a Mac. In 1987 Adobe followed with Illustrator,
a PostScript-based drawing application. All the pages were actually rendered in
the printer, which meant that the laser printer contained a more powerful
processor (with 1.5 megabytes of RAM) than the Macintosh itself. The “desktop
publishing” buzzword was spread by marketing executive John Scull, who
pulled together Apple, Adobe, and Aldus and virtually invented the whole
industry.
The Macintosh emphasized the user interface over anything else. For
example, before the Macintosh each application had its own set of keyboard
commands. The Macintosh introduced a standard set of commands: Z for
“Undo,” X for “Cut,” C for “Copy,” V for “Paste,” W to close a window, etc.
Each and every Macintosh application had to comply with this standard.
The Macintosh also introduced a new marketing concept: “Buy me because
I’m cool.” It was the “look and feel” that mattered. Previously, personal
computers had sold well because of their killer applications. All computer
manufacturers still thought of software as a means to the end of selling
hardware. Apple turned the concept upside down: the hardware was a means to
power appealing software. In a sense, fashion had come to the computer
industry. Apple became the master of style, the equivalent of Italian fashion
designers for digital devices. Nonetheless, the Macintosh was always thought of

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with the killer application in mind, and that was desktop publishing. However,
that per se would not have been enough to justify that the company ignored
legacy compatibility (Apple II applications did not run on the Mac).
The Macintosh marked a dramatic change in philosophy for Apple. The
Apple II was Wozniak's machine: an open platform for which (given the limits
of the technology of the time) anyone could write software and attach hardware
extensions. Crucially, Apple refused to license the Mac's operating system,
whereas Microsoft's operating system worked on any IBM clone. The
Macintosh was Jobs' machine: a closed platform that can only run Apple-
sanctioned software and attach to Apple-sanctioned hardware. In a sense Jobs
had hijacked Wozniak's vision of an open world of computing and turned it into
a walled garden. (By then Wozniak's health had been severely impacted by a
1981 airplane accident that he miraculously survived). Unlike IBM (that
spawned an entire generation of clones), Apple did not tolerate any clone.
Ironically, the combination of IBM's open platform and Apple's closed platform
contributed to turn Microsoft into the world's largest software company (and to
make Bill Gates the richest person in the world). Apple had the better product,
but Jobs' decision to opt for a closed world handed the victory to the lesser
product, the Intel/Microsoft machines.
There was no room for hobbyists in an industry that was trying to turn the
personal computer into a commodity. Apple had hired Pepsi’s President John
Sculley. In 1985 Steve Wozniak and Steve Jobs left Apple (the first saw the
writing on the wall, the second had to be fired). At the same time the company,
following its first quarterly loss, laid off 20% of its workforce, an action that
went against the old culture of the company. The first Apple computer with
color graphics, the Macintosh II, debuted in March 1987, priced at $3,900. Its
other improvement was a plug-and-play bus architecture that made it easier to
add expansion cards. The “Mac” was a critical success. It helped cement the
community of Apple fans, but the “open architecture” created by the IBM-
Microsoft axis was winning (in the broader market) over Apple’s closed,
proprietary architecture.
Competition pressed down against Apple. During 1984 Ashton-Tate
announced its Framework for the IBM PC. It integrated word-processing,
database management, and business graphics within a windowing environment.
VisiCorp's VisiOn had been a flop (in January 1985 VisiCorp went bankrupt),
but Digital Research thought that it had the muscle to create a mass-market GUI
for the IBM PC and in 1985 it launched GEM (Graphical Environment
Manager), a GUI for the CP/M operating system designed by former Xerox
PARC's employee Lee Jay Lorenzen.
In November, Microsoft responded with Windows 1.0 for MS-DOS, a
rather mediocre imitation of the Lisa GUI. Unlike Apple, which controlled its
own hardware, Microsoft had to deal with the hardware delivered by PC
manufacturers. But PC manufacturer were only interested in cutting prices to be

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more competitive, not in tweaking their hardware to run a better GUI. Therefore
Microsoft couldn’t match the Apple GUI until the hardware of PC clones
became adequate. It was no surprise that these operating environments for the
PC market stagnated.
Also in August 1984 IBM introduced a multitasking operating system named
TopView for its new 80286-based PC AT. It never became popular and
eventually lost to Windows. A Bay Area programmer, Nathan Myhrvold, had the
idea of cloning TopView for MS-DOS and founded Dynamical Systems
Research in Oakland. To be on the safe side, Microsoft bought the company in
1986 and hired Myhrvold. Five years later, he would establish Microsoft
Research and eventually become the company’s chief technology officer.

Office Automation
Desktop publishing was not new to the users of (more expensive) Unix
workstations. Boston-based Interleaf, founded by David Boucher and Harry
George (two former associates of Kurzweil Computer), had introduced a
document processor that integrated text and graphics editing for the Unix
workstation market. Steve Kirsch saw an opportunity in that idea and founded
FrameTechnology in 1986 in San Jose to commercialize FrameMaker, a
publishing platform invented by British mathematician Nick Corfield. But those
were products for the high end of the market.
Both on the software and on the hardware fronts there was a push towards
making it easier to produce high-quality documents on a PC. In 1985 Hewlett-
Packard introduced its own laser printer for the home market, the LaserJet. In
January 1987 Aldus released PageMaker for Windows.
Office tools such as the spreadsheet, word-processor, and presentation
programs represented one of the fastest growing markets. In many cases, they
were the real reason to own a PC. In 1987 Microsoft unveiled a spreadsheet
program for Windows called Excel. These applications began to make Windows
more appealing. The most popular word-processors for MS-DOS were
WordStar and WordPerfect. Microsoft’s own word-processor, MSWord
(adapted from Xerox’s Bravo by Charles Simonyi after he joined Microsoft),
was not successful until, ironically, Microsoft made it available on the Apple
Macintosh in 1985. Only in 1989 would Microsoft release a version of Word
for Windows. In 1984 Robert Gaskins and Dennis Austin had developed
Presentation, later renamed PowerPoint. It was an application for the Macintosh
to create slide presentations. In August 1987, Microsoft bought the whole
company and ported the product to Windows. For a while the leader in this
sector was Software Publishing, which had acquired Harvard Graphics’ 1986
presentation program for Windows.

Graphics

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 The Macintosh was just one of many events of 1984 that displayed a
phenomenal acceleration in using computers as graphic media. In 1984,
Wavefront, founded near Los Angeles by Bill Kovacs, who had been creating
graphic applications with Evans & Sutherland’s Picture System in an architect
studio, introduced the first commercial 3D-graphics software, Preview. It ran on
a Silicon Graphics workstation.
Commodore and Atari meanwhile started a corporate war. In 1985
Commodore launched the Amiga 1000, a 16-bit home computer with advanced
graphics and audio (multimedia). It was designed by former Atari’s employee
Jay Miner with a GUI by Carl Sassenrath, and running a multitasking operating
system. It was Commodore’s response to the Macintosh. Atari’s entry in this
market was the ST. Both used the Motorola 68000 microprocessor. The two
companies engaged in a major feud because Commodore’s founder Jack Tramiel
had been fired and had bought Atari, bringing key engineers with him to the rival
company. Neither computer could attract the kind of third-party software that
Apple and especially the MS-DOS camp could attract. Therefore both
languished regardless of their technological merits.
Software had become the key to sell a computer. In 1986, Berkeley
Softworks (later renamed GeoWorks) was a third-party vendor in the Bay Area.
It was founded by videogame expert Brian Dougherty, who created GEOS
(Graphic Environment Operating System), a GUI for the Commodore 64. It
provided the look and feel of the Macintosh even on old 8-bit computers with
very limited RAM. It rapidly became the third most popular operating system
after MS-DOS and the Mac OS.
Steve Jobs himself had launched a new company, NeXT, to build the next
generation of computers with an even more advanced GUI than the Macs. Yet he
opted for proprietary hardware and a proprietary operating system, and even a
new programming language (the object-oriented Objective-C). These design
choices dramatically inflated the investment (the machine would not be released
until 1989) and discouraged third-party software developers. Unusual for the
time, NeXT also invested in sophisticated audio features, mostly designed by
Julius Smith of Stanford’s CCRMA from 1986 on. Furthermore, the NeXT
computer was the first to implement Adobe’s brand new Display PostScript,
which “printed” directly on the computer’s screen, thus ensuring that the user
saw on the screen exactly what he would get from the printer.
Research labs were contributing actively to the progress in computer
graphics. In 1984 Nicholas Negroponte, who had conducted research on human-
computer interfaces at the MIT's Architecture Machine Group, founded the MIT
Media Lab to foster the development of multimedia technologies.
Nobody could yet offer photo-quality images on a computer, but at least in
1987 an international standard for image file format was introduced, the JPEG
(Joint Photographic Experts Group). The timing was perfect because in 1986
camera manufacturer Kodak had built the first megapixel sensor, capable of

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representing a photograph with 1.4 million pixels (a pixel being the fundamental
unit of a computer display). The world was getting ready for scanning, storing,
manipulating, and transmitting images.
There were two obvious kinds of audience for graphics computers outside
the computer industry: artists and film studios. In 1984 Joel Slayton at San Jose
State University established the CADRE laboratory (“Computers in Art, Design,
Research, and Education”) that bridged the artistic and high-tech communities.
In 1986 Steve Jobs bought Lucasfilm‘s division that had worked on computer
animation, Pixar, and turned it into an independent film studio run by computer-
graphics veteran Ed Catmull. Pixar introduced the Pixar Image Computer, the
most advanced graphics computer yet, although a commercial flop.
Clearly, personal computers and workstations were mature enough that now
the attention was focused on making them easier to use as well as capable of
dealing with images and sound.

Virtual Reality
In 1984, a lab at NASA Ames in Mountain View created the first virtual-
reality environment. “Virtual reality” was basically an evolution of the old
computer simulation systems, such as the ones pioneered by Evans &
Sutherland. The software was interactive, meaning that it recreated the
environment based on the user’s movements, i.e. the user was able to interact
with the computer via body movements.
The history of virtual reality dated back to the 1960s and was associated
with military applications. Charles Comeau and James Bryan at Philco built a
head-mounted display in 1961 (“Headsight”). Meanwhile, Bell Helicopter
designed a head-mounted display for pilots that communicated with a moving
camera. Ivan Sutherland at ARPA had speculated about the “Ultimate Display”
in 1965. In 1966 he moved to Harvard University where he took Bell
Helicopter’s head-mounted display and connected it to a computer: the images
were generated by the computer rather than by a camera. When he moved to the
University of Utah, he created a rudimentary virtual-reality system in 1969 on a
PDP-1 attached to a Bell Helicopter’s display with funding from the Central
Intelligence Agency (CIA), ARPA, the Office of Naval Research and Bell
Laboratories.
Thomas Furness at Wright-Patterson Air Force Base in Ohio started work in
1969 on a helmet for pilots that displayed three-dimensional computer graphics
(the Visually Coupled Airborne Systems Simulator), first demonstrated in
September 1981. He then used it to design a virtual cockpit (the “Super
Cockpit”), first announced in 1986. It allowed a pilot to fly a plane through a
computer-simulated landscape by moving his head and his hand. Furness went
on to establish in 1989 the University of Washington’s Human Interface
Technology Lab (HITL) in Seattle. Meanwhile, in 1979 Eric Howlett in Boston

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invented an extreme wide-angle stereoscopic photographic technology, LEEP
(Large Expanse Extra Perspective).
Other researchers designed virtual reality devices for mapping and
exploration. In 1979 Michael Naimark at MIT’s Center for Advanced Visual
Studies debuted the Aspen Movie Map, a project directed by Andy Lippman that
allowed the user to navigate a representation of a city (Aspen) stored on
laserdiscs. The “movie map” had been created over two years by wide-angle
cameras mounted on top of a car. In 1984 UC Berkeley alumnus Michael
McGreevy joined NASA Ames Research Center and started the project for the
Virtual Planetary Exploration Workstation, a virtual-reality system for which he
built the first low-cost head-mounted display, the Virtual Visual Environment
Display system (VIVED). The system was hosted on a DEC PDP-11 interfacing
an Evans and Sutherland Picture System 2.
Videogame experts also become involved. In 1985 Scott Fisher, an MIT
alumnus who had worked both at the Center for Advanced Visual Studies in
1974-76 and at Negroponte’s Architecture Machine Group in 1978-82, moved
to the Bay Area. He joined Alan Kay ‘s research group at Atari and the left for
NASA Ames. There he built the VIrtual Environment Workstation (VIEW),
incorporating the first “dataglove.” By moving the dataglove the user moved in
the virtual world projected into her head-mounted display. In 1985 Jaron Lanier,
another self-taught videogame expert, established VPL Research at his house in
Palo Alto, the first company to sell Virtual Reality products, notably the “Data
Glove” invented by Thomas Zimmerman. VPL developed the data glove for
NASA, based on the one designed by Scott Fisher.
The history of virtual reality also overlaps the history of computer games. A
MUD (Multi-User Dungeon) is a computer game played by many users
simultaneously on different computers, all of them connected to the same virtual
world. There were predecessors but the game that created the term and started
the trend on the Internet was MUD. It was created in 1978 in Britain by Essex
University student Roy Trubshaw and launched online in 1980. In 1986
Lucasfilm launched “Habitat,” a social virtual world created by Randy Farmer
and Chip Morningstar. It ran on a Commodore 64 computer connected via dial-
up lines. Each user in this virtual world was represented by an “avatar.”

New Paradigms of User-Computer Interaction

With new technologies came new paradigms of computer-human interaction.
In 1987 a Virginia-based company, Linus Technologies, introduced the first pen-
based computer, WriteTop. It allowed the user to write directly on the screen. It
was PC-compatible and cost $2,750. Also in 1987 Jerry Kaplan, formerly chief
technologist at Lotus and co-founder of Teknowledge, started GO Corporation in
Silicon Valley to manufacture similar portable computers with a pen-based user
interface. GO never delivered anything of any consequence. Yet it went down in

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the history of the Valley for the impressive amount of venture capital that it
managed to amass: $75 million.
In 1987 Apple demonstrated its HyperCard software, which allowed
Macintosh users to create applications using interconnected “cards” that could
mix text, images, sound, and video. The cards constituted a hypertext. Designed
by Bill Atkinson, it was another idea derived from Xerox PARC, which had
built a hypertext system called NoteCards in 1984. NoteCards in turn was based
on the old experiments of Ted Nelson and Douglas Engelbart. HyperCard also
pioneered the idea of “plug-ins,” of external software that is allowed to access
the application’s internal data in order to extend its functionalities.
An early handheld mobile computer came out. It went largely unnoticed in
the US, but in 1984 Psion (established in Britain in 1980 by David Potter as the
software arm of local computer manufacturer Sinclair) introduced a hand-held
computer. The Psion Organiser was the archetype of a “personal digital
assistant.”

Bill Atkinson of General Magic (2010)

The Semiconductor Wars

Governments, at least in the US and Japan, quickly realized the strategic
importance of semiconductors. The US owed its lead in the Cold War to its
semiconductor advantage. Japan owed its lead in all sorts of gadgets to
semiconductors. Eventually the ferocious competition between companies was
escalated to a governmental level and the outcome indirectly helped Silicon
Valley focus on the microprocessor.
Silicon Valley’s technological lead was undisputed in the 1980s. In 1985
Intel introduced the 32-bit 80386 that contained 275,000 transistors and was
capable of performing three million instructions per second. The first 32-bit
microprocessor had been shipped already in 1983 by National Semiconductor
(the NS32032) and the second had been Motorola in 1984 (the MC68020). Yet
it was the Intel 80386 (abbreviated as 386) that shook the market. It boasted

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almost 100 times more transistors than the 4004 (275,000) and it could run both
MS-DOS and Unix.
However, 1985 was the year of the first crisis of the semiconductor
industry, brought about by cheaper Japanese products. The Japanese
government, via the Ministry of International Trade and Industry (MITI), had
sponsored a project headed by Yoshio Nishi at Toshiba for Very Large-Scale
Integration (VLSI). Its primary goal was conquering the DRAM market. In 1984
Japanese firms introduced the 256K DRAM chips. Silicon Valley’s companies
could not compete with the low prices of those chips.
Silicon Valley had gotten its start by selling customized military systems, not
by selling commodities. It relied on a network of local know-how and on
intimate relationships with the customer. Commodities, instead, rely on economy
of scale. So Japan started to win. In 1981 US manufacturers had enjoyed a
51.4% share of the world’s semiconductor market, whereas Japanese companies
had 35.5%. In 1986 the situation had been reversed, with Japan’s share reaching
51% and US companies reduced to a 36.5% share. Specifically, by 1985
Japanese firms had gained 70% of the DRAM market. Intel, AMD and Fairchild
had to exit the DRAM market. It was mainly a Silicon Valley problem, because
non-Silicon Valley firms such as Motorola, Texas Instruments and Micron
continued to manufacture competitive DRAMs. Thousands of hardware
engineers were laid off in Silicon Valley, pushing the region towards software.
What saved Intel was the microprocessor. The “computer on a chip” was
too complex and required too big a manufacturing investment to be handled like
a commodity. Japanese microprocessor technology was simply licensed from
the US. In 1984 the world market for microprocessors was worth $600 million:
63% of those sales went to US companies, 30% to Japanese companies, and 7%
to European companies. But the situation was even better for the US: 99% of
those microprocessors were designed under license from a US manufacturer.
Government intervention helped the chip manufacturers. In 1984 the US
government passed the Semiconductor Chip Protection Act, which made it much
more difficult to copy a chip. In 1987 the US government set up Sematech
(SEmiconductor MAnufacturing TECHnology), a consortium of US-based
semiconductor manufacturers funded by DARPA (basically the antidote to MITI
program). The semiconductor industry recovered and Silicon Valley-based
companies such as VLSI Technology, Linear Technology, LSI Logic, Cypress
Semiconductor, Maxim, Altera, and Xilinx went on to become international
juggernauts.
Intel’s corporate culture changed dramatically after the crisis that almost
sank it. Power shifted from Noyce to Andy Grove, who replaced Noyce’s
idealistic philosophy and casual management with a brutal philosophy of
Darwinian competition and iron discipline. Born in Hungary, Andy Grove (real
name Andras Grof) had studied at UC Berkeley and worked at Fairchild; he was
Intel’s third employee in 1968.

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 Experimenting with Business Models
In 1985 IBM had shipped its four millionth PC, but the following year IBM
made a historical mistake. Determined to stamp out the clones, IBM decided to
introduce a new computer based on a proprietary architecture built on top of the
old Intel 286 microprocessor. Compaq, which had been growing faster than any
other company in the history of the US, did not miss the chance to introduce in
September 1986 a faster machine based on the 386. When in April 1987 IBM at
last delivered a 386-based machine, the Personal System/2 (PS/2), it ran a new
operating system, OS/2, co-developed by IBM and Microsoft. This greatly
confused the customers. Its lasting legacy would be VGA graphics (Video
Graphics Array).
Unlike Apple, which was losing money thanks to its proprietary operating
system, Redmond-based Microsoft (not a Silicon Valley company) was
booming, thanks to an operating system (MS-DOS) that worked on so many
computers. Microsoft went from 40 employees and $7.5 million in revenues in
1980 to $140 million in revenues and 910 employees in 1985. In 1987
Microsoft’s stock hit $90, catapulting its main owner, Bill Gates, who was just
31, onto a list of billionaires.
While Apple languished and IBM blundered, some startup computer
manufacturers boomed. Michael Dell was still a student at University of Texas
at Austin when in 1984 in his dormitory room he founded PCs Limited, later
renamed Dell Computer. He decided to specialize in custom PC-compatible
computers. This relieved the customer of the tedious and risky business of
assembling components to customize the machine. Dell also wanted to deal
directly with the customer, initially by mail order only. It was a return to the
business model of the early hobbyists. Dell’s revenues rose exponentially.
Dell’s success relied on an automated supply-chain system that removed the
need for inventories: its PCs were “made to order.” Dell’s success mirrored
Compaq’s success in the early 1980s: both owed their low prices more to a
distribution strategy than to a technological breakthrough.
Gateway 2000 was another company that was created by a young hobbyist,
built to order, and sold directly to customers. It was formed in a South Dakota
barn by Ted Waitt. In 1987, it introduced its first PC. In 1991 it was ranked the
fastest growing company in the US. Dell was the heir to a glorious dynasty of
Texas electronic businesses that started with Texas Instruments and continued
with Tandy and Compaq.
All of them would soon have to battle on another front. In April 1985,
Japanese manufacturer Toshiba launched its T1100, one of the earliest IBM-
compatible laptops (the project of Atsutoshi Nishida). That machine set the
standard in terms of features: internal rechargeable batteries, an LCD (Liquid
Crystal Display) screen and a floppy-disk drive. HP had already debuted its

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first laptop, HP-110, in 1984, which was also IBM-compatible (running MS-
DOS on the Intel 8086) but Toshiba took the idea to a new level.
Therefore there were several business models for the personal computer
industry:
Lock customers with a proprietary operating system (IBM and Apple);
Copy the de-facto standard and get to market fast (Compaq); compete
with Unix workstations (AT&T);
Copy the de-facto standard and make to order “just-in-time” (Dell);
Produce not just desktop PCs but also portable “laptops” (Toshiba),
and;
Focus on a cross-platform software platform (Microsoft).

Networks
As personal computers became more powerful and easier to use, the client-
server architecture became a serious alternative to the monolithic mainframe. In
a client-server architecture, the software application was split into a client
portion, which ran on a personal computer, and a server portion, which ran on a
more powerful computer. Many clients (MS-DOS PCs or Macintosh machines)
were connected to the server. A Unix minicomputer was much easier to connect
to than an IBM mainframe. The server hosted the database. By distributing
software away from centralized mainframes and onto networked personal
computers, companies created more flexible environments and saved money.
Mainframes were rapidly abandoned. Software companies built fortunes by
porting “legacy systems” (applications created for the mainframe) to
minicomputers. Thousands of mainframe programmers of the Cobol generation
lost their jobs to software engineers of the C-language and Basic generation
(Basic having become the language of choice on personal computers).
In 1984 Oracle's executive Umang Gupta founded Gupta (one of Oracle's
earliest engineers) started Gupta Technologies to port client-server relational
database technology (named SQLBase) to the personal computer.
Computer networks began to proliferate, both within a corporation and
among corporations (due to the Internet). A router is a computer-based device
for routing and forwarding data to the computers of a network. Judy Estrin, a
pupil of Vint Cerf at Stanford and a former Zilog engineer, had already started a
company to sell routers, Bridge Communications in 1981 in Mountain View.
Stanford took the lead again. In 1981 Stanford had a team working on a
project to connect all its mainframes, minis, LISP machines, and Altos. William
Yeager designed the software (on a PDP-11) and ubiquitous student Andy
Bechtolsheim designed the hardware. Leonard Bosack was a support engineer
who worked on the network router that allowed the computer network under his
management (at the Computer Science lab) to share data with another network
(at the Business School). In 1984 he and his wife Sandy Lerner (manager of the

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other lab) started Cisco in Atherton to commercialize the Advanced Gateway
Server. It was a revised version of the Stanford router. Their product was
developed in their garage and first sold in 1986 through word of mouth. They
had correctly guessed that connecting networks to networks would become more
important as more corporations needed to connect geographically distributed
offices, each having its own network.
Other networking companies also launched. In 1983 Bruce Smith, a former
executive at a satellite communications company on the East Coast, founded
Network Equipment Technologies (NET) in Redwood City to provide high-end
multiplexers to large companies. In 1985 two Xerox PARC engineers, Ronald
Schmidt and Andrew Ludwick, started SynOptics in Santa Clara to develop
Ethernet products. In 1985 Washington-based bar owner Jim Kimsey founded
Quantum Computer Services that introduced a new business model. He
provided dedicated online services for personal computers (initially only
Commodore models). One could use a personal computer to connect to a bigger
computer where other applications could be found (such as videogames). In
1988 Quantum would add service for Apple and PC-compatible computers, and
rename itself America Online (AOL).
In 1986 there were already 30 million personal computers in the US. Yet
very few of them were “online” (capable of connecting to a service run on a
remote computer) because modems were slow and expensive. In 1987 US
Robotics of Chicago unveiled a 9600-baud modem, but it cost $1,000.
For decades most directors of Information Technology (or Electronic Data
Processing, as it was more commonly called) had reported to chief financial
officers, the reason being that a computer was a massive investment and it was
typically not trivial to justify the investment to the company's management. The
personal computer and office productivity software put a computer and an
application on every desk. This had two effects. First of all, a lot of information
technology did not require the approval of the chief financial officer because it
was as cheap as buying a desk or a typewriter. Secondly, the proliferation of
such software and hardware, coupled to the chaotic rapidly evolving nature of
the computer industry, created the need for someone to keep track of what I.T.
tools the company's productivity depended on. The role of the person in charge
of data processing changed: instead of being simply the liaison between various
departments and the massive mainframe computer, it became the czar in charge
of deciding which hardware and which software should be used across the
company. In 1986 Business Week magazine published an article titled
"Management's Newest Star: Meet the Chief Information Officer" that launched
the trend. The success of the client-server model was indirectly due to the
growing power of the CIO and to the main duty of such figure: to bring order
within the company. The client-server model centralized again power, like it
was in the old days of the mainframe, but did so in a highly distributed world.
The CIO became much more important than a manager of EDP had always been,

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because it soon became apparent that the company's productivity depended in
large part on the client-server strategy.
Far away from Silicon Valley, Martin Cooper's 1973 prototype of a cellular
phone finally became a commercial product when Motorola introduced the
DynaTAC in 1984, a phone capable of making wireless phone calls over a
network deployed by Bell Labs in 1983, the Advanced Mobile Phone System
(AMPS). Just like computers in their infancy, this was not a product that
ordinary families could afford, but its ubiquity in movies and on television fired
up the imagination of millions of potential consumers.

The DyntaTAC

The most important event of the era, however, was one that few noticed,
especially since it came from a government agency. In 1985 Michael Marcus, an
engineer working for the Federal Communications Commission (FCC) of the
USA, the agency in charge of regulating telecommunications, had the idea of
liberalizing the use of three useless bands of wireless spectrum: 900MHz,
2.4GHz and 5.8GHz. These came to be known as the "garbage bands". The US
government basically allowed anybody to use those bands without the need for a
licence, something that existed only for the old ham-radio channels. Little did
Marcus know that he had just started a major revolution, the Wi-Fi revolution.

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 Cisco’s Old Offices (2010)

Storage
Meanwhile, the saga of storage devices that had started with Alan Shugart’s
floppy disc continued to spawn new ideas and companies. In 1984 SUN had
unveiled the Network File System (NFS), designed by Bill Joy and managed by
Bob Lyon. It had a software component that allowed computers to access data
storage over a Unix network. When DEC, HP, IBM, and eventually AT&T
adopted NFS, it became an industry standard for distributing data storage over a
computer network..
Middleware for local area networks such as NFS enabled new architectures
for storing data. Auspex, founded in 1987 in Santa Clara by Adaptec’s boss
Larry Boucher, introduced the first data storage appliances for a computer
network. Among the young engineers hired by Boucher were MIPS’ file-system
expert David Hitz and Chinese-born Berkeley and Stanford engineering alumnus
James Lau.

The Threat from Japan

The Bay Area was beginning to have the larger share of computer-related
innovations. In the mid 1980s, only a handful of events compared with the boom
of Silicon Valley. A few came from Japan, which was going through its own
technological boom. In 1984 Sony and Philips introduced the CD-ROM for data
and music storage. In 1984 Fujio Masuoka at Toshiba invented flash memory, a
cheaper kind of EEPROM. This caused a significant revolution in the design of
storage. Since the invention of "Williams tubes", computer architectures had
split memory into a small, fast, short-term unit of DRAM and a larger, slow,
long-term storage drive. The common forms of storage were hard-disk drives
and floppy-disk drives, i.e. units that contained spinning disks and movable
read-write heads. Flash memories required solid-state drives: drives with no
drive motor (and, in general, no significant mechanical parts). The most popular

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technology of flash memory, NAND, represented a serious threat to EEPROMs
that were used for configuration data.
In 1983 Nintendo launched the Family Computer, a videogame console
designed by Masayuki Uemura. They renamed it the Nintendo Entertainment
System two years later in the US, where it single-handedly resurrected the
videogame console.

Changing of the Guard

In the fast-moving Bay Area, a new generation was taking over and the old
one was rapidly being buried. In 1987 National Semiconductor acquired
Fairchild from Schlumberger, which had acquired it in 1979 with the whole of
Fairchild Camera and Instrument. In the same year ComputerLand (that in 1985
was valued at $1.4 billion) was purchased for a modest sum by a private equity
firm. Zilog had long succumbed to Exxon and the managers of its historical Z80
era had already quit.
SUN was causing another revolution. Between 1986 and 1987, its revenues
almost tripled. By the end of 1988, it would pass DEC in market shares of
workstations (SUN 38.3%, DEC 23.1%, Apollo 16.7%, Hewlett-Packard
10.6%). SUN ended up eroding DEC’s supremacy in the academic and then in
the engineering market, which had traditionally been the bedrock of DEC’s
success.
Their business ideologies were, in fact, opposite. DEC still belonged to the
era of vertically integrated manufacturers that produced in-house virtually all
the hardware and software components of the computer. SUN, by contrast,
pioneered a manufacturing industry that relied on third parties to provide all the
components. The DEC generation believed that a company needed to personally
make the key components of its products. The SUN generation believed that such
key components ought to be delegated to specialty shops in Silicon Valley (and,
eventually, around the world). In-house development was unlikely to match the
same “best of breed” quality across the board guaranteed by a portfolio of
specialized companies. SUN’s departments were only in charge of designing,
coordinating, assembling, and selling. The complexity of creating a product had
shifted from a network of internal laboratories to a network of external
suppliers. What had changed was the pace of technological innovation. The
small startup SUN had been able to introduce more products in its first five
years in its market segment than a multi-billion dollar corporation like DEC.
The DEC generation relied on proprietary components to keep the competition
at bay. The SUN generation relied on the frenzied pace of product releases,
knowing that each product was easy for the competition to clone but difficult to
clone in time before a new product would make it obsolete. In the end, the SUN
model greatly increased its revenues per employee. It also reduced its exposure
to the risk of capital-intensive operations.

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 The SUN model would create a huge secondary economy in Silicon Valley
of hyperspecialized companies that would never become household names
despite achieving considerable revenues. Apple also adopted the SUN model,
whereas HP managed to fare better than DEC even with the old model of
vertical in-house integration. In 1987 SUN seemed to renege on its own “open-
architecture” ideology when it switched from off-the-shelf hardware and
software to its own RISC microprocessor, SPARC, and its own operating
system, Solaris. However, it was still outsourcing the production of its
components.

SUN’s Headquarters at the Agnews Development Center

(2010)

Cyberculture
In the 1980s, the media and the intelligentsia were fascinated by the
possibilities of the “cyberspace,” the invisible medium/dimension of data.
Thanks to networks, data now traveled through a space and lived a life of its
own. William Gibson invented a whole new genre of science fiction with his
novel “Neuromancer” (1984); he popularized the term “cyberspace.” In 1983
Bruce Bethke had written the story “Cyberpunk,” which introduced another term
in the genre: the punk that roams cyberspace. The media had been creating a
mythology of hackers, of software engineers who could manipulate programs
and data. The media had also been speculating on the possibilities of Artificial
Intelligence. All these threads resonated with a society that was haunted by the
fear of a nuclear holocaust and an alienated urban life.
In January 1986 a “computer virus” nicknamed “Brain” started spreading
among IBM PCs. Every time a user copied something from an infected floppy
disc, the user also involuntarily copied the virus on the PC, which then

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replicated itself on any other floppy disc used by that machine. Computers had
become vulnerable to contagious diseases just like living beings.
The virus had been created in faraway Pakistan by the owners of Lahore's
computer shop Brain (Basit Farooq Alvi and Amjad Farooq Alvi). The original
personal-computer virus "Elk Cloner" had done relatively little damage because
it was confined to the Apple II world, but the widespread adoption of the IBM
PC standard had created a whole new world of opportunities for digital
contagion.
The 1980s had witnessed a rapid rise in the status of the software engineer.
No longer a nameless cog in vast corporate bureaucracies, the software
engineer had emerged from the personal computer revolution as the cyberspace
equivalent of the medieval knight-errant. Steven Levy's book "Hackers - Heroes
of the Computer Revolution" (1984) glorified them. The decade would end with
Hans Moravec's "Mind Children" (1988), that quipped "Robots will eventually
succeed us: humans clearly face extinction" and with Fereidoun "FM-2030"
Esfandiary's futuristic vision "Are You a Transhuman?" (1989), while the
following decade would open with Ray Kurzweil's book "Age of Intelligent
Machines" (1990), predicting the coming of machines smarter than humans, what
Vernor Vinge had called "the singularity". Suddenly, the future of humankind was
in the hands of this obscure new worker, the hacker. In 1981 Wau Holland
formed a club of sociopolitically-aware Berlin hackers, the Chaos Computer
Club (CCC). In 1984 this club started organizing a conference for hackers in
Hamburg, the Chaos Communication Congress (C3) while publishing the
magazine Die Datenschleuder. In 1984 David Ruderman and Eric Corley (aka
Emmanuel Goldstein) founded the hacker magazine 2600 in New York. Another
early society of hackers was Cult of the Dead Cow (cDc Communications),
founded in 1984 in Lubbock (Texas) with the motto "Global Domination
Through Media Saturation", that spawned the hacker conference HoHoCon in
1990, modeled after the first hacker conference in the USA, the Summercon held
in St Louis in 1987. Another influential magazine was Hack-Tic, established in
1989 in the Netherlands and modeled after C3's Die Datenschleuder.

Synthetic Biology
Syntetic biology, which offered the prospect of creating genes, proteins, and
even living creatures, started to arise. In May 1985 Robert Sinsheimer
organized a meeting of biologists in Santa Cruz (south of the Bay Area) to
discuss the feasibility of sequencing the entire human genome. In a few months
Leroy Hood ‘s team at the California Institute of Technology in Pasadena refined
an automated method to sequence DNA, i.e. the first automated DNA sequencer,
which made it possible (not just theoretical) to sequence the entire human
genome. Lloyd Smith was the main developer of the machine thanks to his
background in both engineering and chemistry. Within one year that sequencer

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was launched on the market by Sam Eletr’s Applied Biosystems in Foster City,
which also provided an automated protein synthesizer, protein sequencer and
DNA synthesizer (these were easier technologies to develop). Leroy Hood’s
team included a young Mike Hunkapiller, who was also one of the first
employees of Applied Biosystems.
A brand new discipline was born when in 1984 Steven Benner at the
University of Florida created a gene encoding an enzyme, the first artificially
designed gene of any kind. Synthetic biology is to biology what mechanical
engineering is to physics: its goal is to build biological systems that do not exist
in nature. In 1988 Benner organized the conference “Redesigning the Molecules
of Life’, the first major conference on synthetic biology.
Meanwhile a third company joined Alza and Genentech among the
successes of the Bay Area’s pharmaceutical industry. Michael Riordan of
venture-capital firm Menlo Ventures founded Oligogen (later renamed Gilead
Sciences) in August 1987 in Foster City, a company that, after a number of
acquisitions, would experience exponential growth in the 1990s.

The Anthropology of High-Tech Individualism

Only a fraction of the high-tech workforce was born and raised in the Bay
Area. The others were, by definition, “strangers.” Some of them had come to
study, and therefore could count on a network of friends from college. Many of
them had come for work while in their 20s or 30s. Their social life was not easy
in a region where individualism was pushed to the extreme. People lived alone
most of the day: commuting by car (one person per car) because public
transportation was inefficient, working in a cubicle, living in apartments. The
housemate was often a social choice, not an economic one: it was a chance to
occasionally talk to somebody. Companies encouraged employees to mingle by
throwing company parties and the likes. Some companies (notably SUN) even
organized their workplace to mirror a college campus.
The connections tended to be very weak. Friendship tended to be rather
superficial. Most people’s “friends” were just random acquaintances who
would not hesitate to “flake out” on an appointment.
The poverty of social life was, however, offset by the broad range of
summer and winter activities that quickly became a feature of the regional
psyche. The geography blessed the Bay Area with proximity to the skiing area of
Lake Tahoe, the beaches of the Pacific coast, the forests and waterfalls of
Yosemite, the desert of Death Valley, and the mountains of the Sierra Nevada.
Furthermore, this part of California enjoyed six months of virtually no rain, a
strong motivation to spend weekends outdoors. During the week, people who
lived in the ubiquitous apartment complexes could enjoy the annexed amenities,
from the swimming pool to the gym.
The ethnic Babel, the appeal of the outdoors, and the apartment life caused a

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decline of quintessential American entertainment such as bowling, billiard,
baseball, and fishing/hunting.
Social events were monopolized by work-related issues. High culture was
virtually inexistent, completely subcontracted to San Francisco and Berkeley.
Restaurants, not politics, made news.
Silicon Valley engineers were also the users of the technology invented
there. The region posted a higher percentage of users of computer technology
than any other region of the world. An emblem of this recursive lifestyle was
Fry’s, the first electronic superstore that opened in 1985 in Sunnyvale selling
everything from cables to computers. The technology manufactured there had
therefore a direct influence on shaping the lifestyle of this heterogeneous
workforce. In fact, it was a unifying factor. High-tech (not the church or the
government) provided an identity to the community. An endemic problem in
Silicon Valley was the turnover of engineers, who could easily switch jobs
overnight, and who were generally more interested in short-term financial
success than in long-term career advancement within a large organization. At the
same time, the volatility of the job market in Silicon Valley was even higher than
in other parts of the US. The lifespan of a company was totally unpredictable. A
sense of insecurity was inherent in the lives of these highly paid professionals.
At the same time, it was a lot easier to land a high-tech job in Silicon Valley
than anywhere else on the globe just because of statistics (the sheer number of
high-tech companies). A sense of arrogance was therefore also inherent in the
lives of this population. Sometimes the psychological relationship was upside
down: the company had to be grateful that an engineer worked for it (whereas in
the rest of the world it was usually the worker who was grateful to the
company).
Insecurity and arrogance coexisted in the same mind, with wild swings from
one to the other depending on the company’s performance.
The typical career consisted in parasiting on a company’s success until that
success began to taper off, and then jump onto another company’s bandwagon. It
was a career path of quantum jumps. It also implicitly required a process of
lifelong training in order to avoid obsolescence. It wasn’t just instability: it was
accelerated and self-propelled instability.

Culture and Society

The main event of those years in the cultural life of San Francisco was
probably the WELL. Started in 1985 by Stewart Brandof the Whole Earth fame,
and modeled after Murray Turoff's EIES, the “Whole Earth Lectronic Link” (or
“WELL“) provided a virtual community of computer users, structured in bulletin
boards for online discussions. Brand had just invented social networking. Its
impact on the “alternative” lifestyle was significant. It was the first time that a
computer-based system had such an impact on a computer-illiterate public.

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 On the WELL people freely exchanged knowledge without expecting to be
paid for it. It was a miniature "sharing" economy. In 1969 the physicist Gerard
O'Neill at Princeton University had envisioned a human colony in outer space.
The WELL implemented O'Neill's space colony not in outer space but in what
William Gibson had just nicknamed "cyberspace". In 1987 Howard Rheingold
coined the term "virtual community". Among the most followed members of the
WELL was John Perry Barlow, an alumnus of Timothy Leary's acid trips in New
York who had written lyrics for the Grateful Dead.
Stewart Brand's nonprofit Point Foundation (the umbrella for the various
Whole Earth projects) and the Homebrew Computer Club organized the first
large-scale meeting of computer hackers, in November 1984 at Fort Cronkhite,
in the Marin Headlands just north of San Francisco. 150 hackers attended,
including Steve Wozniak and Bill Atkinson from Apple, Lee Felsenstein from
Osborne, Richard Greenblatt from the MIT, Richard Stallman from GNU,
hypertext pioneer Ted Nelson.
Cyberspace continued the metaphor of consciousness expansion, fifth
dimension, mystical experience and transpersonal communion of the hippies
replacing drugs as the vehicle with computer networks.
One decade after Daniel Bell's "The Coming of Post-industrial Society"
(1973), the new rising knowledge-based society was being hijacked by the
counterculture of the Bay Area and began shaping not a new political order but a
new economic and social order. In particular, this new order privileged
networks over hierarchies.
In 1984 Ken Goffman, then better known as R.U. Sirius, started the
underground magazine High Frontiers, billed as "the Space Age Newspaper of
Psychedelics, Science, Human Potential, Irreverence & Modern Art", making
yet another connection between the counterculture of the Bay Area and the
emerging high-tech scene (in fact, it would change its name to Reality Hackers
before becoming Mondo 2000).
In 1984 British-born broadcasting veteran Harry Marks and graphic
designer Richard Wurman organized in Monterey (two hours south of San
Francisco) the first Technology Entertainment and Design (TED) conference,
which would become an annual series starting in 1990.
In 1986 Judy Malloy published the computer-mediated hyper-novel “Uncle
Roger” on the WELL. In 1983 Christina Augello had founded the Exit Theatre,
that was becoming a reference point for the performance scene.

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 Stewart Brand, Creator of the Whole Earth Catalog (2010)

The Whole Earth Catalog had provided the first link between the art crowd
of San Francisco and the high-tech crowd of Silicon Valley. During the 1980s
the links multiplied: in 1981, Trudy Myrrh Reagan organized in San Francisco
the first YLEM meeting of artists working with new technologies; in 1984,
Roger Malina, an astronomer at UC Berkeley, established Leonardo in San
Francisco to foster the integration of art and science; in 1984, Marcia
Chamberlain at San Jose State University organized the first CADRE
conference.
Science was never quite predictable in the Bay Area. In 1984 the “Search
For Extraterrestrial Intelligence” or SETI Institute, a non-profit organization
founded by Thomas Pierson and Jill Tarter and supported by NASA and later by
private philanthropists, opened its doors in Silicon Valley. It implemented what
NASA Ames’ “Project Cyclops” had recommended in 1971 under the
leadership of HP’s director of research, Bernard Oliver.
In January 1985 Kevin Kelly launched the magazine “Whole Earth Review,”
the successor to Stewart Brand's “Whole Earth Catalog,” except that it was now
an opinion journal. It introduced virtual reality, the Internet, and artificial
intelligence to the masses of Silicon Valley hackers. Its articles embodied the
idealistic and futuristic aspects of software development in the Bay Area.
The marriage of academia, corporate world and military-industrial complex
was becoming even more promiscuous now that the Bay Area was strategic. For
example, in 1987 in Berkeley former SRI's strategist Peter Schwartz, now
working for an oil corporation, cofounded the consulting firm Global Business
Network with SRI's marketing analyst Jay Ogilvy, and hired Stewart Brand of
the WELL, who was already consulting for the same oil corporation. This
quickly became one of the most influential "think tanks" in the USA, specializing
in the kind of "scenario planning" pioneered by Herman Kahn at the Hudson
Institute.

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 Driven by college radio stations and alternative magazines, music for young
people underwent a major transformation. Despite the limitations of the
instruments, the musical avantgarde (for example, Negativland, Naut Humon,
Constance Demby and Robert Rich) was experimenting with techniques once
reserved to the research centers. Rock music, ranging from avant-metal band
Faith No More to avant-folk ensemble American Music Club, displayed a
preference for destabilizing genres.
The Mission District continued to be a center of street art. In 1984 Patricia
Rodriguez of Las Mujeres Muralistas fame and and Ray Patlan (a Vietnam War
veteran and Chicago muralist who in 1970 had helped jumpstart the Pilsen
community center Casa Aztlan for Mexican immigrants and who had moved to
SF in 1975) launched the PLACA project that gathered more than 30 artists to
protest the USA's involvement in the civil wars of Central America. This was
the beginning of Balmy Alley, between 24th Street and Garfield Square, soon to
boast the highest concentration of agit-prop murals in the state.
In 1986 Larry Harvey started the first “Burning Man” event on Baker Beach
in San Francisco. By simply burning a sculpture, he started one of the most
influential grass-roots festivals of the age. In a sense it represented a fusion of
the psychedelic and of the hobbyist cultures of the Bay Area. In a few years
Burning Man moved to a desert, and attracted thousands of independent artists
willing to burn their art after displaying it. Somehow, that phenomenon mirrored
the whole Silicon Valley experience (and, not coincidentally, would become
extremely popular among Silicon Valley “nerds” who otherwise had no interest
in art). “Burning Man,” born out of a counterculture that reacted against what
Silicon Valley represented, was an appropriate metaphor for what Silicon
Valley represented.

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 Startups: Fabless Manufacturing,
Networking, Mobility, and Nanotech (1987-
90)

Outsourcing the Fab

By the late 1980s software (both system and application) had trouble
keeping up with the progress in hardware. Hardware indirectly enabled a lot of
functions that software was not exploiting yet. So while in April 1989 Intel
introduced the 80486, containing 1.2 million transistors and performing 20
million instructions per second, IBM was right to ignore (yet again) the new
microprocessor. Meanwhile its competitors Compaq, Olivetti, and Zenith
rushed to introduce 486-based computers.
However, the real news for Silicon Valley’s semiconductor industry was not
technological but logistical. In 1985 the government of Taiwan hired Chinese-
born Texas Instruments’ vice-president Morris Chang to run the Industrial
Technology Research Institute (ITRI). Chang promoted the outsourcing of
semiconductor manufacturing by US companies to Taiwanese companies. In
1987 he personally founded the Taiwan Semiconductor Manufacturing
Corporation (TSMC). Taiwanese companies were able to slash costs, mainly
because of cheap labor.
This led to the establishment in Silicon Valley of “fab-less” semiconductor
companies, i.e. hardware companies that did not own a fabrication lab but
instead used TSMC for the actual manufacturing process. The model was
pioneered by Chips and Technologies and Xilinx, and particularly by their
executives Gordon Campbell and Bernard Vonderschmitt. Cirrus Logic, founded
in 1981 by Indian-born MIT alumnus Suhas Patil, and Adaptec, founded in 1981
by Laurence Boucher, were other early fab-less chip “manufacturers” in the
valley.
The fabless phenomenon became a form of inter-firm cooperation in
disguise. Whenever a Silicon Valley manufacturer outsourced a project to a
Taiwanese fab, it directly improved the Taiwanese plant both by injecting
capital and by the project’s new requirements. This indirectly constituted a
favor to the competitor who would outsource next to the same plant. As long as
this meant that the shared Taiwanese plant was going to be always better at
serving one’s needs, it was accepted that it would also be better at serving the
competition’s needs. It was like living in a polyandrous relationship in which it
was accepted to share the same wife as long as that wife became better and

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better at being a housewife for all the husbands.

The Software Industry

The late 1980s witnessed a flurry of new computer models to replace the
old text-only systems with graphical environments, and to add more power and
more memory. The main beneficiaries were the software companies, whose
power kept increasing.
However, no West Coast company could compete with the giants of the East
Coast. IBM remained by far the largest software company in the world: only
13% of IBM’s 1989 revenues came from software, but that corresponded to $8
billion. IBM’s total revenues of $62 billion constituted about a third of the
world’s total revenues for hardware and software. The first software company
to reach one billion dollar in sales was Computer Associates in 1989, based in
New York and still mainly focused on applications for mainframe computers.
Massachusetts-based Lotus, which had sold over four million copies of 1-2-3
by 1988, now trailed behind Oracle, with sales of $692 million in 1990. In
January 1990, Microsoft released Office for Windows, which integrated Word,
Powerpoint, and Excel. The days of Lotus’s domination in the application
business were numbered.

Data Management in the Bay Area

At the turn of the decade the largest software company in the Bay Area was
Oracle. Its relational database management system had become the de-facto
international standard after IBM had involuntarily legitimized SQL in the mid
1980s. The difference between IBM and Oracle is that Oracle had targeted
minicomputers and notably Unix. In 1982, before IBM introduced the DB2,
Oracle had 24 employees, a customer base of 75 companies, and revenues of
$2.5 million. In 1987 revenues had reached the $100 million mark. In 1989 they
skyrocketed to $584 million, and then they almost doubled in one year, just short
of a billion dollars for the fiscal year ending in May 1990. This was one case in
which a much bigger competitor had helped, not killed, the independent by
legitimizing its (better) technology. Seattle-based Microsoft was slightly ahead
of Oracle with revenues of $804 millions in 1989.
The other database manufacturers of the Bay Area were also booming. In
1988 Sybase became the darling of the stock market by introducing a
client/server relational database, SQL Server, and signing a deal with Microsoft
to port SQL Server to Windows (the joint project would lead to Microsoft’s
own namesake product). In 1989 Phil White took over at Informix and turned it
around in a dramatic way. By 1993 it would become one of the Bay Area’s most
valuable companies.
Two other database companies thrived. First, in April 1988 Michael Pliner
(former founder of networking company Sytek) started Verity, basically a spin-

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off from Advanced Decision Systems and largely staffed with MIT alumni such
as Clifford Reid, to capitalize on ADS’s text retrieval system for topic-based
queries. Topic, initially designed for the Strategic Air Command of the Air
Force by David Glazer and Phil Nelson, was one of the first commercial
“search engines.” Second, Legato, founded in September 1988 in Mountain
View by Bob Lyon and Russell Sandberg (the SUN engineers who had helped
Bill Joy create NFS), introduced a device to improve the performance of SUN’s
NFS. Yet it would soon become a leader in the more strategic field of cross-
platform automatic data backup and recovery.
The increasing importance of sharing data across applications on a variety
of software platforms in real time spawned a new industry of "middleware". In
1987 Indian-born Boston-based Vivek Ranadive founded Teknekron Software
Systems (which in 1997 would evolve into TIBCO and relocate to Palo Alto) to
market an "Information Bus" capable of shuttling mission-critical data between
software programs. It rapidly digitized Wall Street's transactions.
At the hardware level, SanDisk, founded in 1988 by two EEPROM experts
from Intel, Israeli-born Eli Harari and Indian-born Sanjay Mehrotra, was soon
to become a significant competitor of Asian leaders Toshiba and Samsung in the
strategic field of flash memory cards.

Xerox’s Inventions at Work

Xerox PARC’s inventions continued to spread through Silicon Valley, but
mostly at other companies. In January 1990, Adobe released Photoshop for the
Macintosh, thus completing the desktop-publishing revolution. Photoshop,
actually developed by Thomas Knoll, a student at the University of Michigan,
allowed ordinary computer users to do things that were difficult even for a
professional printer. IBM itself introduced the Interleaf desktop-publishing
software for its personal computers.
Operating systems made some headway. In 1988 a Los Angeles-based
company, Elixir, ported the Xerox Star windowing GUI to the IBM PC and to
MS-DOS, but it was too little too late to compete with the Macintosh. Smalltalk,
the first object-oriented environment, had never been marketed by its inventor,
Xerox. Los Angeles-based Digitalk had already developed in 1983 a version of
Smalltalk for the IBM PC, the first commercial release of Smalltalk. In 1989
Adele Goldberg, who had taken over management of Smalltalk at Xerox PARC
from Alan Kay, founded ParcPlace in Mountain View to market a version of
Smalltalk for Unix, Windows, and Macintosh platforms. Both companies (that
eventually merged) were trying to capitalize on the appeal of Smalltalk’s elegant
software development environment and graphical user interface, but Smalltalk
was an interpreted language and therefore very slow. Last but not least, it was
not endorsed by any major company.
Documentum, based in Pleasanton and founded in January 1990 by Howard

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Shao of Xerox PARC and John Newton of Ingres, was incubated by Xerox’s
own venture-capital arm, Xerox Technology Ventures, to consolidate PARC’s
efforts in document management software.
In 1988 Alan Cooper (of Digital Research and General Ledger fame) sold
Microsoft a visual form generator ("Ruby") that, combined with Microsoft's
BASIC programming language, would become Visual Basic. The spirit was
pure PARC: a friendly environment to develop business applications on
personal computers. It also introduced a new way for people to augment a
system by seamlessly integrating third-party software code ("widgets") into the
system.
Meanwhile, PARC’s other great invention, ethernet, had spawned an
industry of its own, and the demand for “broadband” was increasing
dramatically. Sensing an opportunity, Indian-born inventor Vinod Bhardwaj
founded Sunnyvale-based Kalpana in 1987 that in 1990 introduced the first
Ethernet switch. A “switch” is a device that connects the computers of a Local
Area network (LAN). The switch optimizes the traffic of data packets, thereby
reducing bandwidth usage and increasing the overall bandwidth of the network.
Another early player in that market was Crescendo Communications, founded in
1990 by Italian-born former Olivetti executives Luca Cafiero and Mario
Mazzola.

Software for Manufacturing

The market for enterprise resource planning (ERP) software had been
expanding rapidly. Corporations could run their entire business, from
procurement to sales, via one monolithic system. SAP dominated that market. In
the US the leader was JD Edwards. Both their platforms ran on mainframes.
That industry came to the Bay Area in 1987, when David Duffield founded
PeopleSoft in the East Bay. PeopleSoft started with the idea of taking the human-
resource management system developed for the mainframe by Duffield’s
previous company, Integral Systems (that he had founded in 1972 in New Jersey
but relocated in 1976 to Walnut Creek, near Berkeley), and port it to the client-
server architecture. The product rapidly overtook the mainframe-based
competition, generating revenues of $1.9 million in 1989 and $6.1 million in
1990. PeopleSoft went on to overtake JD Edwards and eventually absorb it.
Meanwhile, a new sector of software for manufacturing was being invented
in Detroit. In 1982 General Motors began to plan a new car, the Saturn.
Meanwhile GM had hired Wharton Professor Morris Cohen to improve its
factories. Cohen’s proposals went into the new Saturn factory, and basically
amounted to linking all GM dealers with the factory’s mainframe via satellite.
Cohen had modeled GM’s business as a series of “supply chains,” each one
representing a stream of “resources” (such as raw materials and third-party
components) towards a finished product that is delivered to the end customer.

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By doing that, the Saturn factory had built the first supply chain management
(SCM) system, integrating suppliers, factory and customers. A company named
Intellection (later renamed i2) was founded in Dallas in 1988 by two former
Texas Instruments employees, Indian-born Sanjiv Sidhu and Myanmar-born Ken
Sharma, to create an independent SCM software package (called Rhythm).
Needless to say, the border between ERP and SCM was blurred at best.
Locally in the Bay Area, there were many companies serving the needs of
the semiconductor industry. For example, Rasna Corporation, founded in
November 1987 in San Jose by George Henry and other engineers of IBM’s
Almaden Research Center (plus Keith Krach, founder of the robotics division of
General Motors), sold computer-aided engineering tools for the semiconductor
industry. Their compnay was eventually purchased by Parametric Technology of
Boston, which had just purchased CAD pioneers Evans & Sutherland.
Silicon Valley also missed the train on one of the most important
innovations in manufacturing: 3D printing. The technology was originally
introduced for "rapid prototyping" in 1986 by Charles Hull at 3D Systems in
Valencia (Los Angeles metropolitan area). His was the first 3D printer that a
factory could actually install and use to create objects based on a file created
with CAD/CAM (Computer-Aided Design/ Computer-Aided Manufacturing)
software. At the same time Carl Deckard invented a similar technology at the
University of Texas at Austin, and both were preceded (as far as the idea goes)
by Ross Housholder, who obtained a patent in January 1981 for Hico Western
Products in Phoenix (Arizona).

Unix and Internet

While Microsoft’s operating systems were spreading from computer to
computer, Unix continued to stumble. Unix had been stuck in a time warp of
sorts after AT&T and SUN had taken separate roads with incompatible
implementations. Just when peace was being agreed upon by AT&T and SUN,
the war resumed in 1988 on another front. IBM, DEC, Hewlett-Packard and
others formed the Open Software Foundation (OSF) to enact an open Unix
standard, clearly a preemptive strike against the blossoming AT&T/SUN
alliance.
Elsewhere in the US during the late 1980s, the trend towards networking
continued at all levels. In 1988 Bellcore, the descendant of the glorious Bell
Labs (that AT&T had to abandon when the government broke it up in 1984),
invented “Digital Subscriber Line” (DSL). It was a communications technology
that provided broadband on a regular phone line. Price permitting, this allowed
every household in the world to use their existing phone line to establish a high-
speed connection with a computer. This enabled the transmission of bulky files,
such as the ones produced by scanning a document or by a digital camera.
The Internet was still exclusive. In order to access it, a user needed an

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account (a login name and password) at a university or research laboratory or
government agency. With few exceptions the user interface was Unix, so the
Internet user needed to be fluent in Unix commands. The old UUCP protocol
was still the main way to provide access to Usenet and e-mail. UUCP was the
invisible “language” spoken by the nodes of the Internet as they transferred and
forwarded data.
The public internet started with the early internet service providers (ISPs).
Rick Adams, a system administrator at the Center for Seismic Studies in
Virginia, pioneered the idea of providing those UUCP-based services
commercially to companies in 1987 when he founded Uunet, the first
independent ISP. Initially it simply provided access to Usenet and e-mail, but in
1990 it also launched its AlterNet that made the Internet even easier to access.
Uunet’s customers were mainly companies that needed to do research on the
Internet. At the same time in 1989 Barry Shein in Boston started the ambitiously
named “The World,” another pioneering ISP. Every small business willing to
purchase a modem could get on the Internet. There was precious little for
ordinary households on the Internet other than e-mail, but every household could
do the same. In 1989 CompuServe, Ohio’s pioneer of “dial-up” time-sharing
services, connected its proprietary e-mail service to the Internet. This allowed
its customers to exchange e-mail with Internet users. CompuServe was pushing
information to their customers, providing some support for special-interest
discussion groups and offering a chat system.
Cheap computer models with built-in modems began to appear.
The main addition to the Internet was perhaps the one developed by Jarkko
Oikarinen in Finland and debuted in 1988: Internet Relay Chat, basically an
Internet version of "Relay", developed by Jeff Kell in Tennessee in 1985 for the
academic network Bitnet. That was the birth of real-time text transmission over
the Internet, i.e. of instant messaging and online chat.
Fighting computer viruses became big business. The vast majority was
propagated by simply copying files from one disk to another, but several were
already spreading over networks. In 1987 John McAfee founded in Santa Clara
one of the earliest companies specializing in anti-virus software. In 1988 Eva
Chen founded Trend Micro in Taiwan and Tjark Auerbach founded Avira in
Germany. In 1991 Symantec released Norton Anti-Virus.
With public networks came the first dangers. In 1988, “Morris,” the first
Internet “worm,” unleashed by graduate student Robert Morris at Cornell
University, infected most of the Internet, an omen of the dangers of networking.
As computer networks mushroomed, it became economically unfeasible to
provide every terminal user with expensive computers such as Unix
workstations. In 1984 MIT had created the specifications for a “thin client,” i.e.
a very simple machine to connect to a network. Simply called “X,” it created an
industry of “X terminals.” They also came to be associated with graphics
because the X protocol mandated a graphical user interface (GUI) on the

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terminal and enabled the transmission and remote display of high-resolution
images. These X terminals were therefore capable of displaying graphics
generated on a server, and basically constituted a cheaper alternative to Unix
workstations such as SUN. Network Computing Devices was founded in 1987
in Mountain View by Doug Klein and others, including a young Martin
Eberhard, who had worked at San Jose’s ASCII terminal maker Wyse
Technology. It was soon run by Judy Estrin, a pupil of Vint Cerf at Stanford and
the founder of Bridge Communications, to sell X terminals.
However, the Internet was still mainly a tool for research labs and
government agencies. In 1988 the first implementation of the Integrated Services
for Digital Network (ISDN), an international communications standard enacted
by the International Telegraph and Telephone Consultative Committee (CCITT),
heralded the age of digital transmissions of voice, video, data over traditional
telephone networks and telephone copper wires.
In 1990 DARPA transferred control over the Internet to the National Science
Foundation. Note that commercial activities were still banned on the Internet
itself, although common on several private networks such as CompuServe
(Ohio), Prodigy (formed in 1984 in New York state by CBS, IBM and Sears),
GEnie (a General Electric spin-off of 1985 based in Maryland), Quantum Link
(launched in 1985 in Virginia and later renamed America OnLine) and Delphi
(founded by Wes Kussmaul in Boston in 1983). Email, electronic bulletin
boards and online news were already the norm for many users of the Internet
and for many customers of those private for-pay networks.
Meanwhile, collaborative software platforms called “groupware” (a term
coined by Peter and Trudy Johnson-Lenz in 1978) became popular in the 1990s.
Ray Ozzie and other former students of the University of Illinois’s CERL, who
had grown up with the online community PLATO Notes, ported Notes to the
personal computer with funding from Lotus. The result in 1990 was Lotus Notes,
a system for interconnected personal-computer users to share a project.
Because it allowed people at the bottom of the organization to interact directly,
without the mediation of the management, it was the precursor of social
networking.
While little of this was done in the Bay Area, someone in Silicon Valley
understood what it all meant. Mark Weiser at Xerox PARC coined the term
"ubiquitous computing" in 1988, prophesizing that the world was just beginning
to enter a new era of computing, not personal computing but ubiquitous
computing.

Laptops and Videogames

Two off-shoots of the personal computer were becoming increasingly
significant in terms of revenues, and both were dominated by Japanese
companies.

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 First, laptops were becoming important, especially to travelling business
users. After Toshiba had revolutionized the field, there had also been rapid
progress in creating smaller mobile computers with the power of a personal
computer. In 1988 Compaq introduced its first laptop PC with VGA graphics,
the Compaq SLT/286. In 1989 NEC released the UltraLite, an even lighter
laptop (but still based on the older 8086 processor). Finally, in September 1989
Apple released the first Macintosh portable.
Laptops appealed to individuals who needed to work in different locations
on the same data. Instead of having to connect to a mainframe whenever they
needed to enter or access a record, the “mobile” workers were enabled by the
laptop to carry that record with them. Initially the laptop was a success mainly
with the sales force but it soon spread through the hierarchies and even became
a status symbol for the executive management itself. In 1990 the number of
mobile personal computers sold in the US skyrocketed to more than one million
(versus eight million desktops).
Second, the leadership for videogame consoles had decisively shifted to
Japan. In 1988 Sega introduced the Mega Drive/Genesis and in 1990 Nintendo
introduced the Super Nintendo Entertainment System, both destined to sell tens
of millions of units. No video console introduced in the US in those years would
even remotely compete with the Japanese numbers.
However, a new concept was being born in the Bay Area that would have
wide-ranging consequences. SimCity was a simulation game, first released in
1989 and created by game designer Will Wright for Jeff Braun’s Maxis in
Emeryville (near Oakland). It was different in that there was no winning and no
losing, no enemy and no weapons. A player simply created a city from scratch.
The "Wintel" personal computer (Windows operating system, Intel
microprocessor) was becoming a serious game platform thanks to a generation
of VGA-compatible graphics cards. In 1990 Texas' family-run Origin released
an epochal game, Chris Roberts' Wing Commander, whose almost three-
dimensional graphics represented a quantum leap forward for the industry. The
belief that games running on personal computers could not compete with games
running on consoles was shattered forever.

Biotech
The futuristic industries of the Bay Area, biotech and nanotech, were still
growing slowly.
In 1990 Swiss pharmaceutical giant La Roche acquired a majority stake in
Genentech, whichhad become the largest biotech company in the world with
revenues of about $400 million. The takeover legitimized the whole industry.
The history of genetics is largely a Boston enterprise, centered on the MIT.
In 1980 David Botstein founded Genomics with his paper about "linkage
mapping", the process of linking a gene to a disease. The problem at the time

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was gene sequencing, an expensive and slow process. The technique used at the
time, chromosome walking, would require years of work to achieve significant
results. Polygenic diseases (diseases due to more than one gene) require
association mapping in population, which is even more time consuming.
The first major success in linkage mapping probably came in 1990, when
UC Berkeley's Mary-Claire King identified the gene linked with increased risk
for breast cancer, BRCA1. This indirectly led to a controversy that shaped the
biotech business for 20 years. In 1994 Myriad Genetics, a Utah company,
sequenced the gene and patented it. In the next two decades almost 2000 genes
were patented until, in 2013, the Supreme Court ruled that companies cannot
patent DNA that occurs in nature. The faster sequencing techniques made it
possible to identify many more genes that cause diseases. By 2001 the number
of such known genes was about 1,300.
The government entered the picture of the bioscience in a grand way. In
October 1988 the National Institutes of Health, in collaboration with the
Department of Energy, established the Office for Human Genome Research. It
was later renamed the National Human Genome Research Institute (NHGRI).
James Watson, one of the co-discoverers of the structure of DNA, was its first
director. The US and other nations (eventually Britain, China, Japan, Germany,
France, Canada and New Zealand) launched the International Human Genome
Project with the mission to determine the sequence of the human DNA and to
map the approximately 25,000 genes of the human genome. The Human Genome
Project was mostly an MIT project.

Nanotech
The term “nanotechnology” (originally introduced by Japanese scientist
Norio Taniguchi in 1974) had been popularized by Eric Drexler ‘s book
“Engines of Creation - The Coming Era of Nanotechnology” (1986). Drexler
also founded the Foresight Institute in Menlo Park with Christine Peterson.
“Nano” referred to technology that operates at the atomic and molecular
scale, 100 nanometers or smaller. Materials are built from atoms. The
configuration of the atoms can produce materials with completely different
properties, like coal versus diamond, or sand versus silicon. Molecular
manufacturing would open a new era for the fabrication of materials. This
vision was originally propounded by theoretical physicist Richard Feynman in
1959.
Progress in nanotechnology was enabled by the invention of the Scanning
Tunneling Microscope (STM) in 1981 that allowed scientists to work on
individual atoms, and by the invention of the Atomic Force Microscope in 1986.
In 1989 Don Eigler at IBM’s San Jose Almaden labs carried out a spectacular
manipulation of atoms that resulted in the atoms forming the three letters “IBM.”
The problem with nanotechnology was, of course, that its tools were

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extremely expensive. The electron synchrotron nicknamed “Advanced Light
Source” in construction at the Lawrence Berkeley Lab (completed in 1993) was
designed to generate laser-like beams 10,000 times brighter than the brightest
light ever produced on Earth. It was the ideal tool for exploring the structure of
materials, for observing the nucleus of biological cells and for building
subatomic microstructures; but even that wasn’t “nano” enough.

The Culture of Risk

While all of this was going on, the Bay Area contributed relatively little to
groundbreaking technological innovation. It was mostly incremental evolution.
The real innovation was on another dimension. Silicon Valley did not
depend anymore on the military industry, and its financial independence had
created a new business model that questioned the old world order in many
ways. Funding from the military had helped create a very stable (hardware)
industry that, a few decades later, had spawned a new, highly unstable industry
of small software companies. Behind it there was a new attitude towards risk
that somehow may have been part of the regional psyche since the days of the
Far West, but was also due to the nature of the old semiconductor business.
Building chips had always been a tricky business. As chips got smaller and
faster, that business began to border on magic. By the late 1980s, companies
such as Intel had to build a completely new plant in order to create a new
generation of semiconductors, and each new plant easily cost in the
neighborhood of $1 billion. The smaller the chips were, the higher their demand
for capital. At the same time these products had a very short lifespan, in most
cases less than two years. During their lifetime these products were also subject
to price wars that reduced their return on investment.
The rule of thumb in the 1980s was that 25% of the new electronics firms
failed within a few years. Nonetheless, semiconductor components (memory
chips, programmable logic, micro-processors, custom-made circuits)
constituted the heart of the most successful appliances ever, from calculators to
videogames. It was worth the risk.
Investors learned that it was a statistical game: invest in several startups,
and only a few would survive, but those would make a lot of money for a short
period of time. Any company that stayed in the business learned to live with
high risk, aware that they could be gold mines today and broke in two years.
That culture of risk remained after its very creators had succumbed to it.
The culture reincarnated in the software industry of the late 1980s. The creation
of wealth continued and now depended on the venture capital available locally
rather than on the defense industry. Many of the new investors were former
startup founders themselves. They recycled their money in the same environment
in which they had made it. They had been raised in that culture of risk.
And it was more than a culture. It was a whole infrastructure designed to

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promote, assist, and reward risk-takers in new technologies. That infrastructure
consisted not only of laboratories, plants, and offices, but also of corporate
lawyers, marketing agencies, and, of course, venture capitalists. Coupled with
the continuous flow of international students from the local universities, this
world represented an entire ecosystem at the service of a risk-taking culture.
Law firms, for example, specialized not only in incorporating startups and
documenting the early funding process, but also in protecting intellectual
property. No other region in the world boasted attorneys that were more
efficient and skilled in protecting a company’s intellectual property. This hidden
economy of corporate lawyers pre-dated the boom of the 1980s. It certainly
helped that California law always displayed a bias towards the small company.
This was probably the legacy of having had to fight the East-Coast
conglomerates in the old days when the West Coast did not have any large
conglomerate. The task of defending California businesses was left to the state,
and the state enacted laws to that extent. Even more important might be the laws
that did not exist here: the best-known example was probably the lack of a law
forbidding employees of a firm to migrate to a competing firm. Other states had
such laws because the local conglomerates lobbied for them in the old days to
protect their dominant status.
By then Silicon Valley represented a significant demographic change for the
US: a shift in political and economic power from the old industrial and financial
capitals of the Northeast and Midwest towards a new pole of industry and
finance based on the West Coast.
This had even wider geopolitical implications: the biggest competitor of
California was Japan, not Western Europe. The old “Atlantic” economy, whose
industrial and financial centers stretched from the East Coast and Midwest of
the US to Western Europe, was being replaced by a new “Pacific” economy,
whose industrial and financial centers stretched from the Far East to California
and Texas. It wasn’t just the technology that had moved to the Pacific, it was
also the capital. The venture capitalists based in Menlo Park and San Francisco
accounted for a rapidly growing share of the world’s venture capital. In fact, the
semiconductor industry, which was slowing down, would have dragged the Bay
Area down with it if it weren’t for the large amounts of capital available to a
completely new industry, the software industry.
There was really no compelling reason for a software company to open
business in the Silicon Valley. After all, Microsoft was based in Seattle, and
Apple’s computers supported many fewer third-party developers than
Microsoft. IBM, still the largest hardware, software and consulting company in
the world, was based far away. The reason that a new industry boomed in
Silicon Valley was, ultimately, that there was a lot of money around. The
universities and companies of the region had attracted bright, highly educated
brains from all over the US and the world. The combination of capital and
brains replaced a declining industry with a booming one.

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 As a consequence, the symbiosis between venture capital and educational
centers (Stanford, Berkeley, UCSF, and also San Jose State University, which
churned out software engineers by the hundreds) had become an addiction.
The downside, of course, was the temptation to generate a profit as quickly
as possible. The great investor of the 1950s and 1960s, the US military, thought
and planned long-term. It had no interest in return on investment. The new
investors of the 1980s had a short-term view of business. Investors began to
promote corporate strategies that were focused not on innovation but on return
on investment. This fear became national when Japan’s MITI funded ambitious
long-term projects that no Silicon Valley startup could possibly match because
no investor would invest in long-term prospects.
However, the short-term approach helped translate well with the market for
products. The Silicon Valley startup was usually “visionary” but grounded in the
reality of technological feasibility and of market readiness. Furthermore, the
Darwinian system of small startups as a whole was more likely to find a
solution to a problem than, say, a large bureaucratic company. Progress was
incremental, but was rapid.
So the venture capital firms had created a ghost industry that evolved in
parallel to the technological one. This ghost industry was focused on making
money typically through one of two ways: the IPO (the startup goes public for a
value much higher than the capitalist’s investment) or an acquisition (a large
company, often based outside the Bay Area, buys the startup for a price much
higher than the capitalist’s investment).
Venture capital firms did not incubate healthy, long-lasting businesses as
much as they incubated their own prospects for profit. This ghost economy was
purely concerned with IPOs and acquisitions, independently of the intrinsic
(social, scientific, human) value of a startup’s technology. It was as much a
gamble to make money as stock gambling at Wall Street, except that the
multiplicator could potentially be much bigger.
Considering the voracious nature of the whole process of IPOs and
acquisitions, it is quite amazing that, at the end of the day, Silicon Valley as a
whole did generate real, groundbreaking products that triggered social changes
all over the world.
The precarious lives of startups also created a culture of employment
promiscuity. Engineers became accustomed to the idea that they may have to
change jobs many times in their career. Each new job was a bet on the chances
of a company. This culture created a further order of flexibility in that people
were also more willing to change jobs on their own. A new startup could easily
find the right brains to develop a new technology, whereas elsewhere in the
world people were less prepared to switch jobs.
It helped that so many Silicon Valley residents were immigrants (from other
states or from other nations). They were not afraid to move to a new
environment and start a new life. The goal in Europe and on the East Coast was

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the career: ascend the ladders of the company’s hierarchy. This was hard to
conceive in Silicon Valley, where a company’s (business) life expectancy was
much lower than its employee’s (biological) life expectancy. The fact that
people living in Europe and on the East Coast were, instead, more reluctant to
change jobs was, in fact, an important factor in determining the evolution of
their economies. Silicon Valley’s dream was a linear progression from engineer
in a startup to founder of a startup to investor in a startup. This dream
encouraged people to take chances working for a startup, to take chances
creating startups, and to take chances investing in startups. It was a self-
fulfilling prophecy and a self-sustaining metabolic cycle.
Now that venture capitalists employed or were themselves technology
specialists, their role had changed in a subtle way. A venture capitalist had
always had a vested interest in helping the company he had funded. But the
technology-savvy venture capitalist, totally immersed in the community of
innovators and with strong ties to the academia, could do more. She had to
become a knowledge broker, helping shape companies and their businesses
through her network of contacts. Venture-capital firms had become more and
more active in guiding if not running the business of their portfolio companies,
going from whom to hire for the executive team to which companies to choose
as partners.
Part of this passion for startups was also the legacy of the anti-establishment
(and therefore anti-corporate) sentiment of the 1960s. Software, in particular,
appealed to the long-haired alternative type of kid, being novel, invisible and
creative. It was at about this time that Silicon Valley witnessed the rise of a cult
of personality that went beyond mere admiration. Jobs, Ellison, Noyce, and
McNealy became more than founders or leaders; they became myths and
prophets. The Fairchild founders had not been folk legends at all. The HP
founders had been respected, but not over-hyped. They had been role models for
a selected number of people who knew their responsible and dignified role in
running the company.
On the other hand, the leaders of Apple, Oracle, Intel, and SUN acquired a
semi-divine status in Silicon Valley. These mythical figures fought epic battles,
typically against Bill Gates, Silicon Valley’s public enemy number one. The
local media chronicled their fantastic odysseys. Their charisma replaced the
charisma of the engineers who had truly invented their technologies (the likes of
Kirby, Faggin, Wozniak, and Bechtolsheim).
This phenomenon had a net effect on the ambitious youth of Silicon Valley.
The trend had been shifting away from inventing a product to starting a company,
with the emphasis on the business plan rather than on the technological
breakthrough.
One of the most influential figures of the era, Robert Noyce, cofounder of
Fairchild and Intel, and coinventor of the integrated circuit, nicknamed "the
Mayor of Silicon Valley", died in June 1990. That event, metaphorically,

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marked the end of the era of hardware and the beginning of the era of software.
The following year something truly monumental was going to happen that would
change the world forever.

Culture and Society

None of this could have happened if the Bay Area had not continued
attracting brainpower from all over the world. The old model of lifetime
employment in a large, safe company still prevailed on the East Coast, in
Western Europe, and in Japan. The West Coast, instead, spearheaded the
preference for the small, dynamic company. Even if it didn’t offer benefits,
required one to work on weekends, and was likely to go bankrupt, the startup
offered a big upside through equity. Silicon Valley’s agile, dynamic and brutal
Darwinian system won over all the other technology centers in the US and
Europe. Silicon Valley came to embody the old myth of the “the land of
opportunity,” and therefore became an even bigger attractor for young educated
people. Between 1970 and 1990 the population of San Jose alone almost
doubled, from 445,779 to 782,248 people. In 1989 San Jose passed San
Francisco in population. The San Francisco Bay Area was now officially a
misnomer.
While it was attracting engineers, the Bay Area continued to attract artists
and musicians who thrived on diversity. The collective of chamber, electronic,
ethnic music that revolved around Lights In A Fat City and Trance Mission, or
the iconoclastic collective of Thinking Fellers Union Local 282 were
emblematic of what the Usenet had labeled “alt-rock.” Visual artists formed the
multidisciplinary gallery Luggage Store (properly the 509 Cultural Center) in
1987. This followed the Lab, which was also founded by interdisciplinary
artists (in 1984), which in turn followed the Capp Street Project, founded in
1983 by Ann Hatch to promote avantgarde installations.
Michael Gosney launched the "Digital Be-in" in January 1989 in San
Francisco, an event mixing technology and art that transferred the ideals of the
counterculture to the digital age.
The strand of anti-technological spirituality was still proceeding in parallel
with the monumental achievements of the high-tech industry: the two behaved
like entangled Siamese twins. The human-potential movement that had mutated
into the new-age movement was still quite popular in the Bay Area. In August
1987, psychedelic painter Jose Arguelles organized the Harmonic Convergence
(1987) in Sedona (Arizona) to celebrate what he believed to be a planetary
alignment correlated with the Mayan calendar. Believers rushed to power
centers, or vortexes, were the phenomenon would be maximized. One vortex
was Mount Shasta, located 400 kilometers north of San Francisco.
In 1990 Burning Man came into its own. The first effigy had been built and
burned by Larry Harvey and Jerry James in 1986 at one of Suicide Club alumna

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(and old-school hippy) Mary Grauberger's summer solstice beach parties on
Baker Beach in San Francisco, but it was in 1990 that Kevin Evans and John
Law decided to transplant the event to the Black Rock Desert in northern
Nevada (simply because the San Francisco police had shut down the traditional
one at Baker Beach). Law and Evans had been members of the Suicide Club.
The Suicide Club had disbanded in 1983 when visionary Gary Warren died, but
the group had reorganized in 1986 as the Cacophony Society, inspired by the
Dada cultural movement. Carrie Galbraith was leading the "zone trips" of the
Cacophony Society, inspired by Andrei Tarkovsky's film "Stalker" (1979), and
in 1988 artists such as Kevin Evans had started joining the society. This was a
less secret, more inclusive and public society that indulged in what would later
be called "flash mobs". Jerry James was a humble carpenter and the other two
were jobless and penniless. That september about 70 people attended the first
real Burning Man, which originally had simply been planned as a "zone trip".
The number went up to 200 in 1991 and 500 in 1992. By 1996 more than 10,000
people flocked to the desert. Many, if not all, of the activists around the original
Burning Man had apprenticed at Survival Research Laboratories. Burning Man
was where the hippy, punk, machine art, Briarpatch and many other cultures met
and merged.
From the 1960s through the 1980s in San Francisco the philosophy of the
counterculture had largely been one of "public deeds", not mere theory.

John Law arguing with Piero Scaruffi on the rooftop of Oakland's highest
building

From those days the Bay Area assumed a physiognomy that wouldn’t change
for a while. Passed by San Jose, San Francisco was no longer the biggest city of
the Bay Area, but remained a major financial center and virtually its only
cultural center.
In terms of music, art and culture, Berkeley was its eastern appendix, with
UC Berkeley still producing a lively counterculture. During the 1980s UC
Berkeley was a unique center for alternative music, boasting three of the largest
record stores in the world within the space of three blocks. It also had non-stop,

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improvised collective drumming in the lower Sproul Plaza. Next to it, Oakland
was still a poor crime-ridden city. The East Bay between Oakland and San Jose
was home to large immigrant communities from the Indian subcontinent and from
Latin America.
Silicon Valley from San Jose to Mountain View was a breathtaking
industrial area with few equals in the world. Virtually any non-residential street
was lined with multi-story office buildings, a veritable “who’s who” of the
high-tech industry.
North of Mountain View was the Peninsula, which included Stanford
University. The human landscape around Stanford was quite different from the
one emanating from Berkeley. It was less culturally extravagant and more
business-oriented. The Peninsula contained some of the wealthiest communities
in the world: Atherton, Woodside, Portola Valley, Menlo Park, Los Altos Hills,
and Palo Alto itself (originally an industrial and student area, but which turned
into an expensive town by the boom). An impressive amount of private capital
was held in this area. The I-101 corridor was still industrial, especially
between Redwood City and the San Francisco airport. It included Oracle and
Genentech, but towards the hills the Peninsula was the habitat of new and old
multimillionaires.

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 Surfers: The World-Wide Web, Netscape,
Yahoo, Multimedia, and Bioinformatics
(1990-95)

The World-Wide Web

The 1990s opened with one of the most influential inventions of all times:
the Web. The British engineer Tim Berners-Lee of CERN, Geneva’s
multinational high-energy physics laboratory (funded by multiple European
governments) and the largest Internet node in Europe, realized that applying the
hypertext paradigm to the Internet would create a worldwide network beyond
the imagination of the original visionaries of hypertext. He set out to define a
HyperText Markup Language (HTML) to write hypertext documents linking each
other. Berners-Lee implemented the server on a NeXT computer, and wrote the
first client, a “browser” that he named “World-Wide Web.” The server
transferred (“served”) webpages to the client according to a simple protocol,
HTTP (HyperText Transfer Protocol). The browser was inspired by DynaText,
developed in 1990 by Electronic Book Technologies. It had been founded in
Rhode Island by original hypertext visionary Andries van Dam and some of his
collaborators at Brown University, notably Steven DeRose (who had done most
of the design of DynaText).
HTML was nothing more than a language to “publish” a document. There
had been many before. The HTML code tells the browser how to display the
content of the page. Since its Version 6 of 1975 (the first one to be released
outside Bell Labs), the Unix operating system had included a widely used text-
formatting system, “nroff.” Since 1986, the scientific community had used
LaTex (developed by Leslie Lamport at the SRI International) to produce
technical papers. A world standard for these “mark up” languages had been
defined in October 1986, the Standard Generalized Markup Language (SGML).
HTML was, in fact, a more primitive relative of these languages. The real
innovation was the “link” that, when the user clicked on it with the mouse,
instructed the browser to jump from the current page to another page, hosted on
the same or another computer (via the HTTP). This simple idea dramatically
changed the user experience on the Internet. A major quantum leap in the high-
tech industry had come from a government-funded laboratory.
The Web was disclosed to the whole Internet world in August 1991. In
December 1991, physicist Paul Kunz set up the first World-Wide Web server in
the US at the Stanford Linear Accelerator Center (SLAC). In April 1992 there

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was already another browser, Enwise, written for Unix by four Finnish students
at the Helsinki University of Technology. The first major browser in the US was
ViolaWWW, completed by Taiwanese-born student Pei-Yuan Wei at UC
Berkeley in December 1992. It was a project inspired by the look and feel of
Apple’s Hypercard. These two were notable for being graphical browsers.
At just about the same time in December 1991, the US government got
involved. It passed the High-Performance Computing and Communication Act,
originally proposed by Senator Al Gore. Gore envisioned a “National
Information Infrastructure” that would create a vast network of public and
private information systems to deliver potentially all the information of the
nation to potentially all the citizens of the nation. This law funded a number of
research projects around the US, and in particular it funded the project for a
graphical browser at the National Center for Supercomputing Applications of
the University of Illinois. The employees in charge of it were Marc Andreessen
and Eric Bina. Their goal was to create a user-friendly browser with a
graphical user interface. They completed their Mosaic web browser in 1993.
The project existed because in 1985 the National Science Foundation had set up
four (then five) "supercomputing centers", the main one being at the University
of Illinois because the original proposal had come from its professor Larry
Smarr. The center's first hit had also been related to the Internet: the first (and
free) Telnet for the Macintosh and the Windows personal computers (1986),
allowing anyone with a modem to access the Internet from home. In retrospect,
the Mosaic browser was simply a smarter Telnet for the newly invented World-
wide Web.
Mosaic’s graphical user interface made all the difference. It also made it
easier to display documents containing both texts and images. Originally
developed for UNIX, it was soon ported to Windows, turning any PC into a
client for the World-wide Web. The National Center for Supercomputing
Applications released Mosaic in November 1993. Within six months more than
one million people were using Mosaic to access the World-wide Web.
Andreessen found a job in Silicon Valley. There he met Silicon Graphics’
founder Jim Clark who encouraged him to commercialize Mosaic.
In April 1994 the duo opened Mosaic Communications Corporation, later
renamed Netscape Communications, in Mountain View. In October 1994 Mosaic
Netscape was available for download. In 1995 about 90% of World-wide Web
users were browsing with Netscape’s Navigator. Netscape went public in
August 1995 even before earning money. By the end of its first trading day, the
company was worth $2.7 billion and Clark had become overnight half a
billionaire.
In 1994 Berners-Lee introduced the Uniform Resource Locator (URL) to
express the hierarchy of domain names of the Internet into World-wide Web
names (e.g., www.stanford.edu). The most popular domain was “.com,” which
became known as “dot com.” It was originally meant to identify commercial

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activities, as opposed to “.edu” (for educational institutions), “.gov” (for
government agencies) and “.org” (for non-profit organizations). The craze that
followed Netscape’s IPO became known as the “dot-com craze.”
Netscape did more than simply start a new gold rush. It made the Web easy
to navigate for anybody, as long as they knew how to type on a keyboard and
they could find a computer connected to the Internet. It leveled the playing field
so that the illiterate computer user could browse the Web the same way that a
pro did. Thanks to Netscape's browser, the shapeless and non-intuitive cluster
of digital information that had accrued on the Internet became intelligible and
meaningful to everybody. This in turn prompted more and more people to add
content to the Web. It now became clear that one boom had enabled the other
one: the personal computer boom of the 1980s had placed a computer in
millions of households, and that now constituted the vast public of the Web. A
key factor was that the Netscape browser was free for individuals and non-
profit organizations. Netscape also "protected" the Internet from monopolies that
would have loved to hijack it. Its browser used open standards and indirectly
forced much larger corporations to adopt those same standards, thus avoiding
the kind of wars that still plagued the world of operating systems.

Netscape’s Old Offices (2010)

Searching the Web

Meanwhile the World-wide Web had created another kind of application.
Already in 1990, before anyone had heard of the Web, some students in
Montreal had created a “search engine” named “Archie” to find sites on the
Internet, which in those days were accessed via FTP (File Transfer Protocol).
Before the Web took hold, the most popular way to catalog and transmit
documents over the Internet was Gopher, created by Mark McCahill at the

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University of Minnesota and also debuted in 1991. Immediately, two
applications were born to search Gopher catalogs: Veronica (in Nevada) and
Jughead (in Utah). EINet’s Galaxy, launched in January 1994 in Texas, was the
first catalog of websites. WebCrawler, created by Brian Pinkerton at the
University of Washington and launched in April 1994, was the first search
engine for the web, a website that indexed and then searched the texts it found
on the web. At about the same time Michael Mauldin at Carnegie Mellon
University started the project Lycos to catalog pages of the web, which went
live in July. By 1999 Lycos, one of the first dotcom to post profits from
advertising, had become the most visited website in the world. For the record,
Mauldin also developed an Artificial Intelligence-based chatterbots, Julia, who
in 1997 mutated into Sylvie and in 2000 into Verbot.
In 1993 the Web had clearly won over Gopher. A catalog of websites was
casually circulating at Stanford University. In January 1995, the authors of that
catalog, Stanford’s students Jerry Yang (originally from Taiwan) and David
Filo, launched Yahoo! (Yet Another Hierarchical Officious Oracle!), which was
simply a website dedicated to cataloging all the existing websites in some
predefined categories.
The Internet grew geometrically. In October 1994 the Internet already
consisted of 3,864,000 hosts. It had increased in size by 61% in one year. The
need for search tools was becoming obvious. Tools like Yahoo! greatly
increased the usefulness of the Web: instead of knowing only the few websites
run by friends, one could now find out about websites run by complete
strangers.
The Internet was affecting culture and the public. It was writer Jean Armour
Polly who coined the phrase “Surfing the Internet” (1992). Surfing soon became
an activity for a growing population of Internet users. Some did it for
entertainment and some did it for work/study. The Internet had existed for a long
time. It took the Web to turn it into a major attraction. And, thanks to the Web,
applications that had been around for more than a decade became widely
popular (notably e-mail).
Email had created a powerful alternative to "snail" mail. A new technology
would soon provide a powerful alternative to the telephone. The origins of
instant messaging for personal computers go back at least to the CompuServe
CB Simulator of 1980 and Q-Link, the original America OnLine chat system
(acquired from PlayNET, that had operated it since 1984, basically a version for
Commodore machines of the old Unix "talk" command). However, it was only
with Tribal Voice, founded in December 1994 in Colorado by John McAfee (of
antivirus software's fame) and later relocated to Scotts Valley, ICQ, introduced
by the Israeli company Mirabilis in November 1996, and AOL Instant
Messenger, launched by AOL in May 1997, that instant messaging reached the
masses and became a viable alternative to a phone call.
Microsoft responded in 1999 with the text chat service MSN Messenger,

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that made "texting" popular with teenagers.
In theory, Netscape allowed anyone to see any website. In practice,
however, most people used services like America OnLine to access the Internet.
AOL provided a simple way to connect a home computer to the Internet: the
customer would receive a floppy disc in the mail with all the software needed
to perform the magic. The price to pay was freedom. The customers of AOL
would typically only see what AOL wanted them to see, i.e. an AOL-sanctioned
subset of the World-wide Web. Most people were content to visit the AOL
pages and rarely ventured outside the AOL world.

The Net Economy

For decades the Internet had been used only for research and entertainment
(if e-mail and Usenet groups can be defined as “entertainment”). Commercial
activity was de facto banned from the Internet, which was viewed as a scientific
tool and not as a shopping mall. It was still funded by a military agency and not
for the use of consumers. Somehow the advent of the Web led to relax that
ethical rule, and the most shameless commercial activities began to surface
(initially just individuals who took advantage of the network to buy/sell items).
The impact on society was colossal.
Technically speaking, commerce on the Internet had always been illegal.
However, most corporations maintained an Internet node and did so for business
purposes. However, it was still illegal to blatantly market and sell products or
services on the Internet (with the exception of the Usenet, because UUCP was
administered separately). The Internet’s backbone (the NSFnet) was run by the
National Science Foundation (NSF). In 1992 the US government allowed
commercial networks to link to the NSFnet, despite protests from the academia.
The result was that in a few years the commercial networks made the NSFnet
look expensive and obsolete. In 1995 the government finally decided to relieve
the NSF of the responsibility for the backbone, therefore de facto legalizing
commerce over the entire Internet.
The World-wide Web did not create e-business. Electronic commerce had
existed before the Internet (notably, Electronic Data Interchange), and e-
commerce had existed the Internet before the WWW. For example, in 1991
William Porter, who already owned a stock-brokerage firm in Palo Alto,
founded E*trade to offer online electronic trading via AOL and CompuServe.
But the WWW basically provided a friendlier (and free) user interface, which
encouraged many more businesses to go online.
The first online stock brokerage, E*Trade, was launched in 1992 from Palo
Alto by William Porter and Bernard Newcomb via America Online and
Compuserve, offering brokerage services directly to individual investors.In
1994 the first online bank opened, First Virtual, designed by two email experts
such as Nathaniel Borenstein (author of the MIME standard) and Marshall Rose

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(author of the POP3 protocol). First Virtual also introduced the first online
payment service, rivaled by CyberCash in Virginia, also launched in 1994.
The venture capital world of Silicon Valley was ready for it. A number of
founders of successful companies of the Bay Area had retired and had become
venture capitalists themselves, so called “angels.” Hans Severiens knew many
of them and proposed that they joined forces. So in 1994 the “Band of Angels”
was born. In the true spirit of Silicon Valley it wasn’t just a scheme to pool
money together. The primary goal was to pool knowledge together, not money.
They met every month. They led the way.
Collaboration among venture capitalists had always been a trademark of
Silicon Valley, and probably one of the reasons for its success. Frequently
sharing a history in the valley’s high-tech industry, venture capitalists and angels
formed a highly interconnected network of firms. Successful entrepreneurs
became successful because of that network, and were expected to join the
network after they had become successful. Since venture-capital firms
frequently invested with other firms in the same startup, they depended on each
other’s well being. Since they invested in multiple companies at the same time,
their main interest was not in a particular startup but in the broader picture. In a
sense, the venture-capital world of Silicon Valley did not invest in a company
but in Silicon Valley as a whole.
Last but not least, venture capital firms in Silicon Valley exhibited a high
degree of technological competence, either directly through their partners or
indirectly through their consultants. Here venture capitalists nurtured startups,
shaping their management structure and providing advice at every stage of
development. They relied on informal networks of high-tech specialists and
knowledge workers. Venture capital had not grown much since the heydays of
the microprocessor. It was about $3 billion in 1983. It was about $4 billion in
1994. Then it skyrocketed to $7.64 billion in 1995.
Netscape’s dazzling IPO in August 1995 was a dividing line in the history of
Silicon Valley just like the 1956 foundation of Shockley Transistor and the 1971
Intel microprocessor. Internet companies multiplied and many of them received
shocking amounts of funding. It had never been so easy for a startup to go public.
The dot-com craze had reinvented yet again the landscape of the Bay Area. This
time the repercussions on Wall Street were direct and immediate. The new
Silicon Valley propelled the technology-heavy stock index Nasdaq to the stars,
creating wealth all over the world.
A software industry that was not glamorous but was becoming increasingly
strategic had to do with Internet security. In particular, Midwestern entrepreneur
Kevin O’Connor invested in Internet Security Systems, founded in 1994 by
Georgia Institute of Technology’s student Christopher Klaus. The company
would be purchased by IBM in 2006 for $1.3 billion.
Not everybody was trying to make money out of the Internet. In 1993 three
students at the University of California in Santa Cruz (Rob Lord, Jeff Patterson

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and Jon Luini) launched IUMA (Internet Underground Music Association), a
platform for independent musicians to publish their works and share them with
the audience.

An early Yahoo Screenshot (1994)

Multimedia, Networking and Mobility

Progress in desktop publishing continued at an ever more rapid pace.
Apple’s most impressive product of those years was perhaps QuickTime,
introduced in December 1991. It allowed developers to incorporate video and
sound in Macintosh documents. In 1992 Macromedia was born in San Francisco
from the merger of Authorware, which sold a graphical programming
environment, and MacroMind, whose Director was a multimedia-authoring
environment. Director turned its users into “directors” of a film: it was a novel
metaphor for building applications, mainly useful for creating the software of
stand-alone kiosks. In 1993 Adobe Systems introduced the file format PDF (or
Portable Document Format) to create and view professional-quality documents,
and the free Acrobat reader for it.
After original founder John Walker relocated to Switzerland, in 1992 Carol
Bartz from SUN revitalized Autodesk and became one of the first women of
power in Silicon Valley. In 1990 Autodesk had released 3D Studio, a 3D
modeling, rendering and animation tool designed by Tom Hudson that would be
used for films such as "Johnny Mnemonic" (1996) as well as best-selling
videogames such as "Tomb Raider" (1996), the "Lara Croft" series and "World
of Warcraft" (2004). By 1994 Autodesk had become the sixth-largest personal
computer software company in the world. Bartz was credited as having coined
the "3F" philosophy: "fail fast-forward", i.e. risk failure but recognize it when it
happens and move on quickly (a concept later popularized by Marissa Mayer).
The boom of graphic applications led to a demand for better graphic
processors. Santa Clara-based Nvidia was a fabless semiconductor company
founded in 1993 by Jen-Hsun Huang, previously at LSI Logic and AMD, and

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two SUN engineers (Chris Malachowsky and Curtis Priem) to design graphic
chipsets for personal computers. Rambus was founded in 1990 by Mike
Farmwald and Stanford professor Mark Horowitz to commercialize a new
DRAM architecture to deal with the rapidly increasing graphic and video
applications, requiring high data transfer rates to display high-resolution
images.
Communications were also driving rapid progress. Cisco had entered the
Ethernet switch business by acquiring Crescendo Communications in 1993 and
Kalpana in 1994. By 1997 Ethernet switching was producing more than $500
million in annual revenues for Cisco.
C-Cube, started in August 1988 in Milpitas by Weitek's Edmund Sun and
Alexandre Balkanski, had already begun making chips for video compression
technology (MPEG codecs).
Early cloud services were developd too. In 1990 Marc Porat at Apple
started a project code-named Paradigm that aimed to build an innovative hand-
held mobile device. In May 1990 Porat and two Apple software engineers, Bill
Atkinson and Andy Hertzfeld, decided to start a company to develop the idea,
General Magic. Their vision was now more ambitious: they wanted to put the
power of a real computer into the hands of a casual mobile user. At the time this
was technologically impossible, so they thought of creating a “cloud” of
services running on interconnected devices: by roaming the cloud, even a
simple, weak device could muster the computing power of a real computer.
They came up with the Telescript programming language to write applications
for hand-held device (a “personal intelligent communicator”) that would
physically and opportunistically spread onto remote computers but eventually
deliver back a result to the user of the hand-held device. Telecom and IT
(Information Technology) giants such as Sony, Motorola, Matsushita, Philips and
AT&T invested in the idea. Commercially, it was a spectacular flop, but a new
paradigm had indeed been introduced: “cloud computing.”
EO, launched in 1991 by French-born C-Cube's executive Alain Rossmann
to manufacture a personal digital assistant that was also a cellular telephone
using GO's PenPoint operating system that recognized handwritten commands
(basically, the hardware "arm" of GO).
Meanwhile Apple invested in developing a pen-based tablet computer with
software for handwritten recognition, eventually released in 1993 as the Newton
platform. Newton was another flop, but launched the vogue for small, mobile
personal digital assistants (PDAs) in Silicon Valley (a decade after the Psion).
Incidentally, it was running the ARM processor from Britain. Newton failed but
indirectly it helped ARM survive by targeting small devices. In 1991 HP too
had entered that market with the Jaguar. Apple therefore was a late comer, but
its MessagePad (the first device based on Newton) came with a stylus and
handwriting recognition. More importantly, it looked “cool.”
Digital pictures and printing started to overtake the chemical photo variety.

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In 1990, Los Angeles-based Dycam, probably the first company founded (in
1988) to link electronic photography and computers, introduced the world’s first
digital camera, Model 1. It was capable of storing pictures as digital files on an
internal one-megabyte RAM chip and of downloading them to a PC. The Kodak
DCS100 arrived half a year later. It had taken 15 years from invention to
commercialization because Kodak's engineer Steven Sasson had invented the
digital camera already way back in 1975. In 1991 the Nikon D1 set the standard
for digital single-lens reflex cameras. Meanwhile in 1990 Kodak had launched
the Photo CD, a box to convert negatives or slides to image files on a CD, but it
used a proprietary format instead of Jpeg. The first camera that could download
images into a personal computer (via the serial port) was the Apple QuickTake
100 (introduced in February 1994), that could store up to 32 images at a
resolution of 320x240 pixels on a flash memory. However, it was the Kodak
DC40 (March 1995) that made the concept popular worldwide. In May 1994
Epson introduced the Stylus Color, the world’s first color inkjet printer that
allowed households to print their own digital photos. Early digital cameras used
an analog process to convert the image into a set of pixels (a process originally
invented at Bell Labs in 1969 by Willard Boyle and George Smith for computer
data storage). Image sensors made of CMOS technology, the same technology
used to make computer processors and computer memories, were invented in
1993 by Eric Fossum at NASA’s Jet Propulsion Laboratory in southern
California. Yet these Active Pixels Sensors (APS) would not become popular
until the 2000s.
In a rare instance of cross-industry collaboration, IBM, Intel, Microsoft,
Compaq, DEC, and others joined together to define a Universal Serial Bus
(USB) for personal computers, eventually introduced in 1996. It would make it
a lot easier to connect peripherals to computers, and it would enable gadgets
such as digital cameras to be treated like computer peripherals. By 2009 more
than three billion devices would have a USB port.
Meanwhile, Finland was the leader in the field of mobile (cellular) phones.
In 1982, a European consortium of national telecommunications agencies,
notably France Telecom and Deutsche Bundespost, had joined together to create
a common standard for mobile phone communications, the Groupe Special
Mobile (GSM). They had envisioned that every mobile phone would be
equipped with an integrated circuit, called a SIM (Subscriber Identity Module)
card, to contain information about the user, so that the information would be
independent of the mobile phone and therefore portable across phones (an idea
that had been pioneered in 1972 by the German mobile phone system B-Netz).
The first SIM card was made in 1991 in German by Giesecke & Devrient for the
Finnish wireless network operator Radiolinja, the one that launch the first GSM
service (now renamed Global System for Mobile Communications), heralding
the second generation (2G) of mobile telephony (digital instead of analogic).
Meanwhile, Qualcomm in San Diego was developing a different technology,

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CDMA, launched in 1992, but adopted only in North America (and eventually
sold to Japan's Kyocera). GSM and CDMA made Bell Labs' AMPS obsolete.
In 1993 Nokia introduced a feature to send text messages to other cell
phones, the Short Message Service (SMS).
British computer scientist Neil Papworth is credited with having sent the
first message, thereby creating the popular acronym "LOL" in December 1992,
but he sent it from a computer, not from a mobile phone (phones didn't have a
full keyboard yet).
Despite the fact that there were already 34 million cell-phone subscribers in
the US in 1995, the field was virtually non-existent in Silicon Valley.
Qualcomm was computerizing the low-power mobile communications at the
time when the emphasis was still on high-power land lines, which were getting
faster and faster thanks to fiber-optics. Its founders, in 1985, were Andrea
Viterbi and Irwin Jacobs, who had studied at the MIT with Claude Shannon.
Viterbi was the main mind behind the Code Division Multiple Access (CDMA),
a system to maximize capacity in a medium (the air) where the wireless
spectrum was a limited resource. Qualcomm understood that collapsing chip
costs made computing a resource less precious than the wireless spectrum and
therefore used computing to maximize what can be done with and in the wireless
spectrum. (In 2012 Qualcomm's market capitalization would surpass Intel's)
Cell-phone technology truly came to the Bay Area in 1992, when Martin
Cooper (Motorola’s prophet of cellular phones) established ArrayComm in San
Jose to improve the capacity and coverage of cellular systems. While not
particularly successful, ArrayComm would train and spread alumni in the
region.
Smartphones to access the internet were in the making. Redwood City-based
Unwired Planet (later renamed Phone.com and Openwave) pioneered mobile
Internet browser software technolony called a "microbrowser. It developed
Handheld Device Markup Language (HDML), basically an HTML for handheld
devices. While most companies in the mobile-phone business were busy
adopting the "push" paradigm of SMS, Openwave adopted its own "pull"
paradigm. One year later Openwave and three giants of mobile communications
(Ericsson, Motorola and Nokia) would turn HDML into WML (Wireless
Markup Language), the international standard for cell phones to access the
Internet.
Speech-recognition technology would turn out to be crucial for the user
interfaces of mobile devices, and one of the main research centers was the old
SRI International. Michael Cohen led a team that developed the technology used
in the Air Travel Information System (ATIS), a project originally funded by the
DARPA, a technology that combined two in-house backgrounds, one in voice
recognition and one in natural language processing. In 1994 Cohen quit and
founded Nuance in Menlo Park that would become one of the leaders in the
sector (Nuance would be licensed by Siri for the Apple iPhone and Cohen

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would be hired by Google in 2004).
Thad Starner, a student at the the MIT Media Laboratory, started wearing a
self-made custom computer device in 1993. He would eventually graduate with
a thesis titled "Wearable Computing and Contextual Awareness". At roughly the
same time Daniel Siewiorek at Carnegie Mellon University designed wearable
computing devices, mainly for the military, such as the VuMan3.

Thad Starner

MIT's Lizzy 1 (1993)

Daniel Siewiorek demonstrating a 1993 VuMan3

Contributions to wearable and virtual reality also came from the world of
videogames, such as Nintendo's Virtual Boy console (1995)

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 Virtual Boy

IBM versus Microsoft

Microsoft continued to dominate the operating-system market. In May 1990,
Windows 3.0 finally had the success that had eluded previous versions of
Windows. The difference was that Windows now boasted a vast portfolio of
well-tested applications, starting with Microsoft’s own Word, Excel, and
Powerpoint. Windows 3.0 gained widespread third-party support. When 3.1
was released in April 1992, three million copies were sold in just two months.
When Windows 95 was released in August 1995, the frenzy was even bigger. In
1991, Microsoft had revenues of $1,843,432,000 and 8,226 employees. Bill
Gates was becoming one of the richest men in the country. More importantly,
millions of computer users were abandoning the text commands of MS-DOS for
the overlapping windows, the pull-down menus and the mouse clicks of
Windows.
The holy alliance between IBM and Microsoft that had turned Microsoft
into a software powerhouse came abruptly to an end in 1990. Microsoft realized
that Windows 3.0 was a much more successful product than OS/2 could ever
become. It was available on a lot more platforms, it was sold pre-loaded by a
lot of computer manufacturers, and it boasted a fast-growing catalog of third-
party applications. On the other hand, OS/2 was sponsored only by IBM and it
was much more expensive. Microsoft decided to part ways and continue to
focus on Windows. IBM had lost its grip on the computer industry: for the year
1992 it reported a loss of $4.96 billion, the highest in the history of the US up to
that point. In January 1993, as one stock kept rising while the other one kept
plunging, Microsoft’s market value ($26.78 billion) passed IBM’s ($26.76
billion), though IBM still employed many more people and still had revenues of
$64 billion. The market just didn’t believe that IBM’s business model had a
future.
Digitalk and ParcPlace had introduced commercial versions of the object
environment Smalltalk and had created a small but devoted following for it. In
1991 IBM launched its own Smalltalk-based project that in 1995 yielded the

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object-oriented environment VisualAge. Apple, in turn, had started Pink, a
project to design an object-oriented operating system written in the object-
oriented version of C, the C++ programming language. In 1992 IBM and Apple
banded together and formed Taligent in Cupertino with the goal to complete Pink
and port it to both platforms. The whole plan was widely viewed as an anti-
Microsoft move, now that Microsoft was a common enemy. Again the project
failed, but it yielded at least one intriguing idea: the “People, Places and
Things” metaphor that provided procedures for these three categories to interact
at a high level of conceptualization.
In fact, the deluge of Windows could not be stopped: Microsoft became the
largest software company in the world with annual sales in 1994 of over $4
billion. It even began to draw the attention of the US government, which feared a
monopoly in software. The US government forced Microsoft to be less “evil”
towards the competition, but it was only the beginning of a series of lawsuits
and investigations into Microsoft practices both in the US and in Europe.
The rise of Microsoft and the decline (and sometimes demise) of the
traditional giants of IT came at a price: the shrinking research lab. When the IT
and telecom worlds were ruled by the likes of IBM and AT&T, the research
laboratories were huge and their ambitions were huge. Those labs invented the
transistor, the Internet, the programming language, the operating system, the hard
disk, the relational database, and Unix. Microsoft’s research laboratories
invented nothing. AT&T’s descendants (the regional Bell companies and the
new telecom companies) invented nothing. IBM and AT&T did not need to
acquire other companies: their products came from their research labs (the likes
of Rolm and Lotus contributed relatively minor product lines to IBM).
Microsoft and later Google bought their most famous products from startups.
Their cash did not buy them great research teams: it bought them great
intellectual-property lawyers who filed patents for countless trivial features of
their products, a tactic meant to discourage competitors from venturing into the
same areas of development. The Microsoft era was the era of the business plan:
companies relied on a business plan, not on technological innovation, in order
to achieve domination. No wonder that they did not produce anything
comparable with the transistor or the many inventions of IBM.
In Silicon Valley, in particular, the rate at which companies were created
and destroyed was one practical explanation for why the old-fashioned research
lab became less and less viable. It was basically inherent to the Silicon Valley
model of frenzied growth that no single company could afford to have a long-
term plan, and especially one that was not focused on any one product. Life
expectancy was very low. And the only way to prolong your life was, in fact, to
live by the day. It was the law of the wilderness transferred from the lawless
towns of the Far West to the high-tech industry. That was, ultimately, the lesson
learned from the experience of Xerox PARC.

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 Free Unix
While the great Unix wars were still going on, in 1991 a Finnish student,
Linus Torvalds, a believer in the philosophy of Stallman’s Free Software
Foundations, developed a new Unix kernel, called Linux. He equipped it with
GNU tools (at the time GNU did not offer a kernel yet). In this way Torvalds had
accomplished what Stallman had advocated: a free and open-source version of
Unix. However, initially the only support came from independents, certainly not
from the big corporations who were fighting the Unix wars. In 1994 Marc
Ewing, a graduate from Carnegie Mellon, completed his Red Hat Linux and
started Red Hat in North Carolina. Novell’s engineer Bryan Sparks in Utah
founded Caldera, with funding from Novell’s former boss Ray Noorda, to
distribute a high-end version of Linux. In January 1993 Novell itself bought all
the rights to the Unix source code from AT&T for $150 million.

Storage
One company tried to compete with storage specialists such as the East-
Coast giant EMC and the Japanese colossus Hitachi. Network Appliance was an
Auspex spin-off founded in 1992 in Sunnyvale by David Hitz and James Lau.
They conceived of data storage devices as a new type of appliance that could be
shared by all the computers of a local area network. Data storage over Ethernet
was a simple concept but also a gold mine, that allowed NetApp to double
revenues every year throughout the 1990s. Theirs was a Copernican revolution:
instead of using (expensive) custom hardware to run a general-purpose
operating system as fast as possible, they used standard hardware running
proprietary software that did only one thing: store and retrieve data.
One of the first consumer products to use flash memory as storage was the
Psion MC 400 of 1989. In 1991 SanDisk created an affordable flash-based
solidstate drive. Up to that point the flash memory had been mostly used inside
the computer, not for removal storage. In 1995 Toshiba replaced the floppy disk
with a NAND-type flash memory, the SmartMedia card, while Intel introduced a
different NAND format, the MiniCard, backed by Fujitsu and Sharp. Flash
memory would become ubiquitous in digital cameras and other consumer
electronics, but soon the winning format would be CompactFlash, unveiled by
SanDisk in 1994 and adoped by Canon and Nikon for their digital cameras and
camcorders.

Enterprise Resource Planning (ERP)

ERP and supply chain management (SCM) were ripe for growth in the Bay
Area. PeopleSoft added a financial module in 1992, pushing revenues up to
$575 million in 1994. Next it added a manufacturing module in 1995, after
acquiring the supply chain management system developed by Red Pepper
Software, pushing revenues to $816 million in 1997. It was one of the most

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sensational success stories of the client-server era. Red Pepper had been
founded in 1993 in San Mateo by Monte Zweben, a former scientist at NASA’s
Ames Research Center, where he had developed an artificial intelligence-based
scheduling system for NASA’s Kennedy Space Center.
In 1993 former Oracle sales executive Thomas Siebel started Siebel to
market a software application for sales force automation, the first step towards
customer relationship management (CRM).
Meanwhile, in 1992, SAP had launched R/3, moving its ERP system from
the mainframe to a three-tiered client-server architecture and to a relational
database. It was an immediate success. In 1994 SAP’s revenues increased 66%
and then 47% the following year to $1.9 billion, three times what they had been
in 1991.

Competing Economic Models

In 1991 the US computer industry posted its first “trade deficit:” more
computer technology was imported than exported (in dollar value). The
dynamics of the various regions were wildly different. In the US, the computer
industry was constantly changing, with large companies disappearing overnight
and new giants emerging almost as quickly. In Europe, on the other hand, the
computer market was dominated by old bloated companies: Nixdorf in
Germany, Bull in France, ICL in Britain, and Olivetti in Italy.
The Europeans had generally been more eager to jump on the bandwagon of
“open systems,” despite the fact that their revenues largely depended on
proprietary custom design, notably in operating systems. Their business model
typically emphasized the one-stop shopping experience for their customers, and
those customers were typically very large businesses (notably banks).
Europeans preferred to sell “solutions” rather than individual pieces of
hardware and software, a solution being a tailored combination of hardware and
software. For many years these components had been made in house. It was
basically a scaled-down and nationalistic version of the IBM business model.
They could successfully compete against IBM because of two factors: political
protection from national governments, and national non-English languages (in an
age in which only a tiny minority of Europeans understood English). They all
employed hardware and software from the US, but they made a point of
changing the name and the interface to turn it into a proprietary product. Their
products could be very creative. Olivetti, in particular, had developed a Unix-
like real-time operating system, Multi-functional Operating System (MOS),
designed by Alessandro Osnaghi and initially implemented at their Cupertino
labs. They mostly endorsed Unix (as an alternative to IBM), and joined the
Open Systems Foundation and similar standardizing alliances. An OSF
laboratory was opened at Grenoble in France.
However, the large computer manufacturers of Europe had started on a

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decline that would rapidly lead to disaster. In 1982 Bull had been nationalized
by the French government. In 1990 German conglomerate giant Siemens
acquired Nixdorf, the Japanese conglomerate Fujitsu acquired 80% of ICL, and
Olivetti struggled to survive (it would capitulate in the mid 1990s). The
transition to open systems turned out to be a form of mass suicide.
Europe did not fare much better in the realm of software: only SAP began a
worldwide power, dominating the ERP sector even in the US. Japan managed to
become a powerhouse of hardware but failed to make a dent in software.
However, it was not clear from what the US computer industry derived its
advantage. After all, the World-wide Web was “invented” at CERN by a pan-
European team, and Finland was the first country to implement a GSM network.
If one had to name a region that was forward-looking, it wouldn’t be Silicon
Valley but Switzerland, the world’s most energy-efficient economy, that had
pioneered both “greentech” (renewable energy, “green” buildings, waste
management, sustainable transportation) and biotech since the late 1980s.
Nonetheless, only a specialist in Swiss affairs could name a Swiss company,
and even that specialist would probably not be able to name a single Swiss
invention of the era.
The overall economic model clearly played a role. The German economic
model favored gradual innovation and long-term planning (the kind of thinking
that was useful, say, in metallurgy). In contrast, the US model favored disruptive
innovation in real time (besides favoring overconsumption and overborrowing).
Silicon Valley was the ultimate implementation of the US philosophy.
At the same time, the Silicon Valley model was not just unbridled capitalism
as often depicted elsewhere. For example, in 1993 leaders from government,
business, academia, and the community established the Joint Venture Silicon
Valley Network. They sponsored the Economic Development Roundtable (later
renamed Silicon Valley Economic Development Alliance) and other initiatives
to make the region as business-friendly as possible, while another spin-off,
Smart Valley, helped schools, local government and community centers get on
the Internet.
Intel benefited from the booming market for personal computers, and in
1992 became the world’s largest semiconductor company, ahead of NEC and
Toshiba. Its revenues had doubled in five years, reaching $8 billion. It was
taking its revenge against the Japanese that almost bankrupted it a few years
earlier.
In 1991 the US computer industry posted its first trade deficit, but it was not
good news for Europe or for Japan. Unseen to most, it was good news for the
still very poor countries of India and China.

Biotech
Because of the success of Genentech, the biotech industry was expanding in

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the Bay Area, albeit at a modest pace. In 1990 Michael West from the University
of Texas’ Southwestern Medical Center in Dallas started Geron with funding
from oil-industry tycoon Miller Quarles. He wanted a “cure” against aging (in
other words, immortality). In 1992 the company relocated to Menlo Park where
West had found more venture capital. In 1998 its scientists, led by Calvin
Harley, would isolate human embryonic stem cells (but never get any closer to
marketing immortality). In 1992 Calgene, a spin-off of UC Davis, near
Sacramento, created the “Flavr Savr” tomato, the first Genetically Manufactured
Food (GMF) to be sold in stores (in 1994).
The science of biotech itself, however, was progressing rapidly. To start
with, the Human Genome Project was finally underway. In 1992 the saga of
Craig Venter began. Venter, raised in the San Francisco peninsula, had joined the
National Institutes of Health in 1984 in Maryland, at the time still run by James
Watson as a traditional biomedical center. In 1992 Venter, frustrated that the
center wouldn’t move faster towards automation of genetic processing, quit his
job and the Human Genome Project to set up The Institute for Genomic Research
(TIGR) a few kilometers away, in Rockville. It was funded by venture capitalist
Wallace Steinberg of New Jersey with $70 million over seven years and staffed
with many of Venter’s old coworkers at the NIH. Meanwhile, Steinberg hired
William Haseltine, who had pioneered research on AIDS at Harvard University
since the 1970s in collaboration with Robert Gallo of the National Cancer
Institute (who a few years later would discover the cause of AIDS, HIV).
Steinberg put Haseltine in charge of a new company named Human Genome
Sciences (HGS), the business plan being that Venter’s TIGR would create a
database of genetic information and Haseltine’s HGS would sell it to
pharmaceutical companies.
This was a bold plan because until then no biomedical company had ever
made a profit by simply selling information. It corresponded to a vision of future
medicine as “bioinformatics.” In 1993 HGS sold its genetic database to
SmithKline Beecham for $125 million. In 1995 Robert Fleischmann of TIGR
used research by Nobel laureate Hamilton Smith of Johns Hopkins University in
nearby Baltimore to sequence (“map”) the genome of a free-living organism, the
bacterium Haemophilus Influenzae, responsible for ear infections. This success
triggered a series of genome sequencing projects around the US.
Other researchers were working hard at products too. Stephen Fodor was
doing research at the Affymax Research Institute, a pharmaceutical company
founded in 1988 by Alza’s Zaffaroni in Palo Alto, on fabricating DNA chips
using the same manufacturing techniques used to make semiconductors.
Meanwhile, Peter Schultz was a pioneer in combinatorial chemistry at the
Lawrence Berkeley Lab. They both wanted to overcome the slow pace at which
genetic testing was carried out and find a method for simultaneously testing
thousands of molecules. With help from Zaffaroni, the duo started Affymetrix in
Santa Clara in 1992 to produce “gene-chips,” the biological equivalent of

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electronic chips, by printing a huge number of DNA molecules on a silicon
wafer. The first DNA chip came out in 1994.
Along the same lines in 1992 South African-born geneticist Sydney Brenner
(a pupil of Francis Crick at Cambridge University who had just moved to the
Scripps Institute in San Diego) joined Applied Biosystems’ founder Sam Eletr
to start Lynx Therapeutics in Hayward. The company developed a massively
parallel method for simultaneous interrogation of multiple DNA samples in a
single test.
After the Human Genome Project had enumerated all human genes, the next
step would be to understand what those genes mean. Molecular Applications
Group, founded in 1993 in Palo Alto by Stanford’s biologists Michael Levitt
and Christopher Lee, applied the techniques of data-mining software to genetic
information in order to help biotech companies figure out the function of a
protein from its DNA.
The business potential of human-genome science was obvious from the
beginning to pharmaceutical companies: knowing how the genome works would
allow medicine to understand which ones cause which diseases, and possibly
how to cure them.
The first “genomic” startup to have an IPO in November 1993 was the
invention of a New York venture-capital firm. In 1991 a group had acquired a St
Louis-based biotech startup, Invitron, founded by scientist Randall Scott. Then
they had transformed it into Incyte Pharmaceuticals, a Palo Alto startup. In 1994
Incyte launched a service for personal genomics, LifeSeq. It was accessible by
yearly subscription for several million dollars and basically contained two
databases: a catalog of genes of the genome, and a catalog of where each was
expressed and what its probable function was. LifeSeq had actually been
constructed for Incyte by consulting biotech firm Pangea Systems. It was
founded in 1991 in Oakland by Dexter Smith and Joel Bellenson, a scientist who
had worked at Stanford on an early DNA synthesizer. Pangea later (1997)
introduced a search engine for genetic databases, and eventually (December
1999) put it online as DoubleTwist.
Another major sequence repository for bioinformatics was GenBank
(Genetic Sequence Data Bank), created in 1982 as a successor to Los Alamos’
Sequence Database. It was maintained for a while by IntelliGenetics until 1989
when it was assigned to the newly created National Center for Biology
Information. Finally, UniGene was a database of transcript sequences, also
maintained by the National Center for Biotechnology Information.
Some progress was made to solve aging. In 1993 Cynthia Kenyon, a pupil of
Brenner at Cambridge University now at UCSF, discovered that a single-gene
mutation could double the lifespan of the roundworm Caenorhabditis Elegans.
This finding stimulated research in the molecular biology of aging.
The media focused on biotechnology for pharmaceutical applications (“red
biotech”) and for genetically-modified food (“green biotech”). But there was

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also a third application: biotechnology to produce biochemicals, biomaterials
and biofuels from renewable resources (“white biotech”).
This latter technology was based on fermentation and biocatalysis. It
typically required “bioreactors” fueled with tailored micro-organisms (e.g.
yeast, fungi and bacteria) to convert crops or other organic materials into sugars
and then into useful chemicals. The “products” of white biotech ranged from
sophisticated ingredients for red and green biotech to bulk chemicals such as
biofuels. The promise was to replace the synthetic, petroleum-based materials
that had become popular in the 20th century with biodegradable materials.
These would also require less energy to manufacture and create less waste
when disposed.
Biologists such as Chris Sommerville at Stanford University and Yves
Poirier at the University of Lausanne in Switzerland carried out pioneering
experiments to prove the feasibility of environmentally friendly (biodegradable)
plastics, a line of research picked up by Kenneth Gruys at food giant Monsanto
in St Louis. In 1992 the Bio/Environmentally Degradable Polymer Society was
established in Ontario (Canada).
Robotic surgery was pioneered by Computer Motion, founded in 1989 in
Goleta (southern California) by Yulun Wang. They developed a voice-activated
robotic system for endoscopic surgery called AESOP that in 1993 became the
first robot approved in the USA for surgery. A few years later, in 1999, Intuitive
Surgical (founded in 1995 in Sunnyvale by Frederic Moll as Integrated Surgical
Systems) introduced the DaVinci Surgical System, a commercial version of
work done at SRI Intl in the 1980s, the Green Telepresence Surgery system.

Affymetrix’s Offices (2010)

Greentech
Another nascent industry had to do with energy: fuel cells. Their promise
was to open an era of environmentally clean power plants. In 1991 United

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Technologies Corporation, a large East-Coast defense contractor, became the
first company to market a fuel-cell system, mainly used by NASA in the Space
Shuttle. Meanwhile, research on lithium batteries at the Lawrence Berkeley Lab
spawned the startup PolyPlus Battery, which opened offices in Berkeley in
1991.

The Anthropology of the Digital Frontier

Ironically, all the technological changes had not changed the nature of
society all that much. Society in Silicon Valley still embedded the “frontier”
model: most individuals were single and male. Most immigrants were male,
whether coming illegally from Mexico to clean swimming pools or legally from
India to write software. The main difference from the old days of the frontier
was that they, at some point, would bring their wives with them (as opposed to
patronizing brothels). The national immigrants (coming from other states of the
US) were mostly male (and almost exclusively male in the engineering and
executive jobs). Graduates from San Jose State University in the late 1990s
were still only 18% female. Women, however, did not just stay home: more and
more women studied business, law, and marketing, all professions that could
potentially lead to highly paid jobs. The “saloon,” too, had changed
dramatically: the new saloon was itinerant, located at the home or in a bar
where a party was being thrown, and the party was often meant as a business
opportunity (an event to find a new job, not an event to find a wife).
Spare time was still chronically limited, with many people working
weekends and even holidays. The standard package granted only two weeks of
vacation, and immigrants (whether from other countries or other states) used
them mostly to visit family back home. The real vacation often came in the form
of a “sabbatical” of six or twelve months. It was difficult to take a few days off
during a product’s lifecycle. It was easier to just take six months and be
replaced by someone else during that period.
At the same time there was increased pressure to know the world, because
business was increasingly international. And the world was increasingly the
countries touched by the Pacific Ocean, not the Atlantic Ocean.
After many venture capitalists moved to Menlo Park in the 1980s and Palo
Alto in the 1990s, San Francisco lost its role as the financial center of the Bay
Area. It resumed its old role as the entertainment hub for the frontier. Silicon
Valley engineers and entrepreneurs moved to San Francisco for, essentially, the
nightlife. Compared with the sterilized and structured lifestyle of Silicon Valley,
where people’s main forms of entertainment were the gym and the movie theater
(or, at home, the videogame and the video) and everything closed at 10PM, San
Francisco promised a “wild” lifestyle.
However, Palo Alto itself was rapidly becoming an ideal concentration of
restaurants, cafes and stores, most of them lining up on University Avenue (the

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continuation of Stanford’s Palm Drive). It had lost its “student town” charm and
become one of the most expensive places to live. The nearby Stanford Shopping
Center was becoming the most celebrated shopping experience in the whole Bay
Area.
Mountain View, which historically had no fewer influential startups,
proceeded to create something similar to University Avenue in its “intellectual”
heart, Castro Street. It was originally lined with bookstores, via a seven-block
renovation project that ended in 1990. Mountain View had just inaugurated in
1986 its outdoor 22,000-seat Shoreline Amphitheatre, a major venue for music
concerts.

Culture and Society

The marriage of the World-wide Web and of the utopian WELL culture recast
old debates about personal freedom into the new distributed (and government-
operated) digital medium. Notably, the Electronic Frontier Foundation was
formed in San Francisco in July 1990 by three people: Lotus founder Mitch
Kapor; John Perry Barlow (a former lyricist for the Grateful Dead now turned
libertarian activist); and by Usenet and GNU veteran John Gilmore, to defend
civil liberties on the Internet. It evoked the myth of the hippy commune settled in
a rural world. It was created in response to "Operation Sundevil" launched in
1990 by the FBI to arrest hackers involved in credit card and calling card fraud.
It was the first major operation of its kind, since the authorities had rarely
bothered to investigate (let alone prosecute) the "phreakers". In 1996 John Perry
Barlow would also publish the "A Declaration of the Independence of
Cyberspace".
The cyberlibertarian movement got its manifesto in 1994, when Esther
Dyson, the daughter of the famous physicist Freeman Dyson, who had joined the
Global Business Network in 1988, published "The Magna Carta for the
Knowledge Age", co-written with George Gilder (author of "Microcosm - The
Quantum Revolution In Economics And Technology" in 1989), Hewlett-
Packard's physicist George Keyworth, and Alvin Toffler (author of "Future
Shock" in 1970 and "The Third Wave" in 1980). That Magna Carta caused quite
a stir among those who thought of cyberspace as potentially a space for the
counterculture. Despite its title, the manifesto directly or indirectly supported
the big corporations lobbying the government for maximum deregulation,
something that hardly justified their claim that cyberspace belonged to the
people. Many saw it as an attempt to steal cyberspace from the people and hand
it over to big telecom corporations eager to reshape cyberspace to their
economic advantage, just what the conservative politicians were advocating.
Two years later (in 1996) the USA adopted a landmark Telecommunications
Act, that boosted the online activities of the telecom giants. The debate around
the new digital technologies yielded books such as Howard Rheingold's "Virtual

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Community" (1993), Kevin Kelly's "Out of Control" (1994), Nicholas
Negroponte's "Being Digital" (1995) and, a little later, "The Long Boom"
(1999) by Peter Schwartz, Peter Leyden and Joel Hyatt.
In 1993 Kevin Kelly, the publisher of the "Whole Earth Review", joined the
magazine "Wired", where he continued to deal with the interaction of
technology, culture and society. Wired's founder, Louis Rossetto had run Electric
Word in Amsterdam and founded Wired in San Francisco with his employee
Jane Metcalfe, and using funds provided by the Global Business Network and
by Nicholas Negroponte of the MIT Media Lab.
Incidentally, its online emanation, Hotwire, launched one year later with a
new form of advertising, the "banner", that would soon spread around the web
turning websites into billboards. Wired had been preceded by a far more
radical publication, Mondo 2000, started in 1989 by Ken Goffman and Alison
Kennedy in Berkeley, a glossy magazine devoted to underground cyberculture
that dealt with both the technology of the Internet age and the "smart drugs" of
the rave age.
Mondo 2000 and Wired were instrumental in moving technology to the
lifestyle of young college-educated people. They served, and helped grow, the
hacker culture created in the 1980s. Hacker conferences multiplied, notably
Defcon, started in Las Vegas in 1993 by Jeff Moss, and HOPE (Hackers on
Planet Earth), founded in New York in 1994 by the hacker magazine 2600.
The 1990s were the age of the raves, all-night dance parties often held
illegally in abandoned warehouses. The longest economic expansion in the
history of the US helped fuel the decade-long party. The music scene expanded
dramatically yielding not pop stars but all sorts of alternative concepts: prog-
rock trio Primus, folk-rock combo Red House Painters, acid-rock project
Subarachnoid Space, stoner-rockers Sleep, the surreal electroacoustic act of the
Thessalonians and electronic/digital composer Pamela Z.
The visual arts were also expanding dramatically, fueled by a growing art
market. A new generation of art galleries emerged in the early 1990s, such as
the Catharine Clark Gallery (established in 1991), and the Yerba Buena Center
for the Arts was inaugurated. San Francisco continued to specialize in creating
subcultural movements (as opposed to high-brow art and music). The 1990s
witnessed a boom in mural and graffiti art, notably Ricardo “Rigo 23” Gouveia,
Margaret Kilgallen, Barry McGee (“Twist”) and Ruby “Reminisce” Neri. The
Clarion Alley Mural Project (CAMP) was established in October 1992 by local
residents. Students from the San Francisco Art Institute originated the “Mission
School,” an art movement centered in the Mission district that was inspired
more by street art than by museum art. They often built their artworks with found
objects. Chris Johanson emerged from this crowd. In 1990 even the San
Francisco main dump began a program of artists in residence, mainly an idea of
pioneering environmental artist Jo Hanson. Harrell Fletcher and Jon Rubin, both
students at the College of Arts and Crafts, opened a “gallery” in Oakland where

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they created art installations about the neighborhood using neighborhood
residents. In 1995 Amy Franceschini founded the artist collective Futurefarmers
to promote participatory art projects.
In 1992 a group of San Francisco street artists (Aaron Noble,
MichaelO'Connor, Sebastiana Pastor, Rigo 92, Mary Snyder, Aracely Soriano)
started painting murals in Clarion Alley, between Mission and Valencia streets
and between 17th and 18th Streets, the beginning of what came to be known as
the Clarion Alley Mural Project (CAMP).
Mark Pauline's Survival Research Labs had raised an entire generation of
machine artists, several of whom were responsible for the apocalyptic
sculptures of Burning Man. Kal Spelletich, founder of the influential machine art
collective Seemen in Austin, moved to San Francisco in 1989 and joined SRL.
The 1990s opened with the robotic opera "Trigram" (1991) by Chico
MacMurtrie and a few years later (in 1994) Marc Thorpe organized the first
"Robot Wars" at Fort Mason in which remote-controlled cybernetic gladiators
battled to death like in medieval tournaments. Meanwhile, Death Guild, a 1993
club modeled after London's legendary Slimelight by David "DJ Decay" King,
defined the look of the gothic/industrial scene.

Piero Scaruffi, Dan Kottke, Kal Spelletich and John Law at the Stanford
coffee house in 2015

San Francisco was also becoming the hub of one of the most vibrant design
schools in the world, thanks to designers such as the four Michaels: Michael
Vanderbyl, Michael Manwaring, Michael Cronin and Michael Mabry. While the
first graphic designer to embrace the Macintosh was April Greiman in Los
Angeles, San Francisco was the base of Rudy Vanderlans, who started Emigre
(the first major magazine that used the Mac), and of John Hersey, another
pioneer of computer-based graphic design.
However, the Bay Area that had witnessed the hippies and the punks was
falling into the hands of high-tech nerds. As its universities graduated thousands
of software and hardware engineers every year, thousands more immigrated into

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the area. The age witnessed another wave of immigration of youth from all over
the world, just like 30 years earlier. But, unlike in 1966, this time the drivers
were not “peace and love” but vanity and greed.
The metropolitan area of the Bay Area expanded dramatically in all
directions, but especially southward and eastward. Its population was
cosmopolitan and young. Agriculture had definitely been wiped out. The
demographic change made the Bay Area even more tolerant and open-minded. In
1993, the political science professor Condoleezza Rice became Stanford
University’s youngest, first female, and first non-white provost.

Condoleezza Rice

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 iBoomers: Google, Hotmail, Java, the
Dotcoms, High-speed Internet, and
Greentech (1995-98)

Searching the Internet

Netscape’s billion-dollar IPO started the “dot-com bubble” of the late
1990s. Visionaries all over the world envisioned the Internet as a vehicle that
would revolutionize business. The Internet would reduce the importance of the
“brick and mortar” company (for example, of the physical store) and create new
ways for companies to market/sell their products online. Consumers could shop
online from a vast worldwide catalog.
Sensing a lethal threat, in August 1996 Microsoft, which so far had
contributed nothing to the Internet, introduced Internet Explorer 3.0, which many
judged superior to Netscape's Navigator, until then the popular favorite
(boasting an 85% market share), and gave it away for free with its operating
system. Many observers interpreted this as a strategy to kill Netscape (whose
browser was not available for free) while it was still small. Microsoft’s move
not only fatally wounded Netscape (eventually bought out by America OnLine
for $4.2 billion), but de facto preempted any other company from developing a
browser for the Windows operating system. Internet Explorer had been quickly
packaged by recycling code from the commercial version of Mosaic marketed
by Spyglass (the business arm of the University of Illinois). Microsoft also
acquired in January 1996 the tool developed by Boston’s Vermeer Technologies
for building websites, FrontPage.
Eventually (in 1998) the government would force Microsoft to unbundle
Internet Explorer from the Windows operating system, but it would be too late to
save Netscape.
Search engines were still at the forefront of the Internet revolution. The Bay
Area quickly generated startups in that field. In February 1995, Steve Kirsch
launched the search engine Infoseek, based in Sunnyvale. It pioneered "cost-per-
impression" and "cost-per-click" advertising. Yet the company's main claim to
fame might be that it raised Yanhong Li, the engineer who in 1999 moved to
China and co-founded the Chinese search engine Baidu.
At Stanford six students, notably computer scientist Graham Spencer and
political scientist Joe Kraus, started the project Architext in February 1993. It
changed its name to Excite when it launched in December 1995. Excite was
notable for being started by a team without a product. The six kids founded the

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company before deciding what to do with it. The initial investors, Geoff Yang
and Vinod Khosla, were instrumental in turning Spencer’s tool for searching text
archives into a search engine for the Web, an idea that had not occurred to the
founders. Thanks to a deal with Netscape, Excite went on to become the
number-two search engine and the fourth most visited website in the world.
They became the poster children of venture capitalists’ often repeated (but
rarely applied) motto that it is wiser to fund a great team than a great idea.
DEC had opened a research center in Palo Alto. The center created an
internal search engine called AltaVista, made available to the Web in October
1995. AltaVista boasted a more sophisticated technology than previous search
engines, notably Louis Monier’s crawler (the software that roams the Web
looking for documents) and it allowed users to input natural-language queries. In
1997 it even introduced automatic language translation, Babel Fish, based on the
old Systran system. DEC was the only one of the computing giants to enter the
search business: Microsoft ignored the field, as did IBM and AT&T.
David Patterson and others at UC Berkeley had obtained DARPA funding
for a project called Network of Workstations (NOW) that envisioned a
supercomputer built out of networked personal computers and workstations (a
forefather of cluster computing). That architecture was used by Eric Brewer and
his graduate student Paul Gauthier to create the fastest search engine yet,
Inktomi, and spin off a namesake company. HotBot, launched in May 1996, was
based on Inktomi‘s technology and quickly overtook AltaVista as the number-
one search engine.
None of the early players figured out how to make money with searches.
Their main asset was traffic (the millions of Internet users who accessed the
webpage of the search engine), but none of these startups figured out how to turn
traffic into profits. They morphed into general-purpose portals, the Web
equivalent of a shopping mall.
Yahoo!, meanwhile, was happy to use other people’s search technology:
first Open Text (a spin-off of the University of Waterloo in Canada), then
AltaVista, and then Inktomi. Yahoo! went public in April 1996. In the first hour
of trading its value reached $1 billion. Not bad for a company that so far had
revenues of $1.4 million and had lost $643,000.
An alternative approach to indexing the Web was pursued by the Open
Directory Project (originally Gnuhoo), a public index of websites launched in
June 1998 by SUN's employees Rich Skrenta (the inventor of the first personal
computer virus) and Bob Truel. It was a collaborative effort by thousands of
volunteer editors, initially modeled after the old Usenet. ODP was acquired by
Netscape in October 1998. It surpassed Yahoo!'s directory sometime in 2000.

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 An Early Google Screenshot (1998)

Google was founded in 1998 by two Stanford students, Larry Page and
Russian-born Sergey Brin. They launched a new search engine running on Linux;
it was an offshoot of a research project begun in 1996. The amount of
information available on the Web was already causing information overload,
and the issue was how to find the information that was really relevant. Google
ranked webpages according to how “popular” they were on the Web (i.e. how
many webpages linked to them). Google went against the trend of providing
ever more sophisticated graphical user interfaces: the Google user interface was
just text (and very little text). In 1999 Google had eight employees. Their first
“angel” investor (before the company even existed) was Andy Bechtolsheim of
SUN. Then (in June 1999) they obtained $25 million from Sequoia Capital and
Kleiner-Perkins.
Outside the Bay Area, the most significant player was perhaps InfoSpace,
founded in March 1996 by former Microsoft employee Naveen Jain, who built
an online “yellow pages” service, also offering “chat rooms” where users could
exchange live text messages.
These companies did not invent search technology. Search technology had
existed for a while. Verity was the main vendor of tools for searching text
archives. However, companies like Verity, that had pioneered the field and were
getting rich by selling text search to the corporate world, were too busy
maintaining their legacy applications to think about making a Web version of
their tools. There was still a huge divide between software companies working
in the old off-line world and the software companies working in the new on-line
world. The former did not quite understand the Web yet and, in fact, would
never catch up. The wheel had to be reinvented by young inexperienced kids
because the older, experienced, skilled, and competent experts were stuck in a
time warp.
The concept of the "chat room" had been pioneered on the Web by at least

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Bianca's Smut Shack, started in February 1994 in Chicago by David Thau and
Chris Miller.
Social networking was born in April 1995 when Cornell University's
students Stephan Paternot and Todd Krizelman launched theGlobe.com, an
online community that expanded the old concept of the Usenet. In November
1998 theGlobe.com went public. On its first trading day the price of its stock
closed at 606% the initial share price, setting an all-time record for IPOs.
Another application that would become popular on the Internet was born in
Israel: in 1996 ICQ debuted. Invented by Arik Vardi, it would become the first
instant messaging program to spread worldwide.

The Garage where Google Started (2010)

Creating a Webpage
Creating a website and finding a place that would host it was still a bit too
complicated for the masses, but it got a lot easier and even free in 1995 when
David Bohnett and John Rezner launched GeoCities in Los Angeles (the original
name was BHI, Beverly Hills Internet). GeoCities basically created a web
within the Web. The GeoCities web was structured in six virtual neighborhoods.
Users (known as “homesteaders”) could choose a neighborhood and an address
within that neighborhood. GeoCities automatically created a webpage for each
homesteader and provided an easy way for the homesteader to customize it. In
October 1997 Geocities reached the milestone of one million users. In August
1998 it went public. By the end of the year it had become the third-most visited
website on the Web after AOL and Yahoo. In January 1999 Yahoo purchased
GeoCities for $3.57 billion.
Two Williams College classmates, Bo Peabody and Brett Hershey, and an
economics professor, Dick Sabot, launched the website Tripod in 1994 out of

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their office in northwestern Massachusetts Tripod, like Geocities, became
popular as a place where Internet users could easily create webpages, but its
most lasting invention would be the "pop-up" ad, "invented" by Ethan
Zuckerman in 1998.
Social networking was born in April 1995 when Cornell University’s
students Stephan Paternot and Todd Krizelman launched theGlobe.com, an
online community that expanded the old concept of the Usenet. In November
1998 theGlobe.com went public. On its first trading day the price of its stock
closed at 606% the initial share price, setting an all-time record for IPOs.

Getting Online
The explosion of interest for the Internet meant, first and foremost, an
explosion of ISPs (internet service providers). The government helped the
commercial boom of the Internet in yet another way. In 1994 the National
Science Foundation commissioned four private companies to build four public
Internet access points to replace the government-run Internet backbone:
WorldCom in Washington, Pacific Bell in San Francisco, Sprint in New Jersey,
and Ameritech in Chicago. Then other telecom giants entered the market with
their own Internet services, which they often subcontracted to smaller
companies. By 1995 there were more than 100 commercial ISPs in the US. The
user had to pay a monthly fee and was sometimes also charged by the hour.
Some ISPs simply gave users remote access to a Unix “shell” running on the
ISP’s server. Services based on SLIP (Serial Line Internet Protocol), the first
protocol (1988) devised for relaying Internet Protocol packets over “dial-up”
lines, and later PPP (Point-to-Point Protocol) implied that the user was given a
modem and had to dial a phone number (sometimes a long-distance number) to
reach the ISP.
In 1995 the leading ISPs were: Uunet (yearly revenue of almost $100
million), which targeted companies (not individuals) willing to pay $1,000 a
month for Internet service; Netcom (just over $50 million), which skyrocketed
from zero to 400,000 subscribers in its first year thanks to a simpler pricing
scheme (a flat fee for 400 hours) targeting the consumer market; and PSINet.
Also in 1995 telecom giant AT&T unveiled its ISP service, called WorldNet,
which copied Netcom’s flat-rate model. In April 1996 Pacific Bell, a regional
telephone company, began offering Internet access to most of the four
metropolitan areas of California (Bay Area, Los Angeles, Sacramento, San
Diego).
The number of ISPs in the nation passed 3,000 at the beginning of 1997, and
about 1,000 more were born in the next six months. By the year 2000, Uunet, the
first and still the largest ISP, running 500,000 kilometers of fiber and cable,
owned about 30% of the Internet’s infrastructure. Dial-up pioneer CompuServe
(acquired by AOL in 1997) was a distant second.

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Metricom, founded in Los Gatos (south of Cupertino) in 1985, pioneered the
business of a wireless ISP in 1994 when it launched Ricochet Networks and
offered service to Cupertino households. By 1996 it was covering the whole
Bay Area.
At the other end of the dial-up connection, companies like Ascend
Communications of Alameda (near Oakland) made fortunes by selling
equipment to manage dial-up lines (acquired in 1999 by Lucent for $20 billion).
The one piece of equipment that almost everybody needed was the modem.
US Robotics was an example of a company that never bent to the standards (its
modems used proprietary protocols) and managed to become the leader in its
sector. In 1997 3Com purchased US Robotics for $6.6 billion.

Browser-based Computing
Unless one worked for a university or research laboratory, an individual’s
e-mail was run by her or his ISP. When a user subscribed to the service, the ISP
gave the user one or more e-mail addresses. The user had to install software on
the home computer that periodically downloaded email messages. Starting with
Soren Vejrum’s WWWMail (launched in Denmark in February 1995), several
attempts had been made at providing an email service that could be accessed
from a browser.
Hotmail was the first big winner. In July 1996, two former Apple hardware
engineers, Sabeer Bhatia and Jack Smith, funded by venture capitalist Tim
Draper of Draper Fisher Jurvetson, launched Hotmail. It liberated the Internet
user from the slavery of the ISP. Hotmail was a website. Hotmail users checked
their e-mail on the Web, regardless of where they were. E-mail had just become
location-independent. Even better: e-mail “traveled” with the user, because it
could be accessed anywhere there was a web browser. Its model was so easy to
understand that Hotmail signed up more than 8.5 million subscribers by
December 1997, in just 18 months. It helped that Hotmail was free. Microsoft
bought Hotmail in December 1997 (for about $400 million).
Another secondary business created by the emergence of the browser had to
do with a browser’s “plug-ins.” A plug-in was a piece of software written by
someone else that was incorporated into the browser to add a functionality that
was not present in the original browser. One could add and remove plug-ins at
will, thus customizing the browser. Macromedia released two of the most
popular and innovative plug-ins for Netscape’s browser Navigator: Shockwave
in 1995, an evolution of Director to display videos; and Flash Player in 1996,
an evolution of the animation tool FutureSplash acquired from Jonathan Gay's
FutureWave. Flash would quickly become the world standard for embedding
multimedia files into HTML pages (in other words, for displaying videos within
webpages). Most plug-ins were made available for free.
In 1995 SUN launched Java, originally developed by James Gosling. It was

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both an elegant object-oriented programming language and a virtual machine.
The advantage of a virtual machine is that any application written for it runs on
any physical machine on which the virtual machine has been ported. Java
basically recycled the concepts made popular among older software engineers
by Smalltalk. Language-wise, the nearest relative of Java was NeXT’s
Objective-C. Java, however, specifically targeted the new world of the Internet,
for no other reason than portability of applications. SUN gave away Java for
free and Netscape soon introduced a feature to process webpages that contained
“applets” written in Java.
The promise of Java as the Esperanto of the Internet was such that venture-
capital firm Kleiner-Perkins hastily created a $100 million fund to invest in
Java startups. Supported by a growing number of companies, notably IBM and
Oracle, Java indeed became the language of choice for Internet applications.
The more the Internet grew, the more Java grew. Eventually it started threatening
the decade-old supremacy of the C language.
A web server is a software tool that transfers (“serves”) pages of the World
Wide Web to clients via the Hypertext Transfer Protocol (HTTP). It is the
foundation of a Web-based application. The browser wars between Netscape
and Microsoft also extended to the web server in 1995 when Microsoft
introduced a free add-on to its NT operating system, Internet Information Server.
It competed against Netscape’s web server that cost $5,000. WebLogic, formed
in 1995 in San Francisco, launched an application server for the Java 2
Enterprise Edition (J2EE). It was acquired in 1998 by San Jose-based BEA,
founded by Chinese-born former SUN manager Alfred Chuang. Another
pioneering Java application server was delivered by Steve Jobs’s NeXT in
1995: WebObjects. It was also an object-oriented rapid application
development environment.

The Original Offices of Hotmail (2010)

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 Building Bricks
Many of the tools required by Internet-based applications were available
for free. In 1995 in Oregon a veteran of the Smalltalk environment, Ward
Cunningham, who had his own software consulting business, created
WikiWikiWeb, the first “wiki.” It was an online manual (of reusable software
programming methods) maintained in a collaborative manner on the Internet.
Soon there would be “wikis” for everything. A wiki is an online knowledge-
base that is created, edited, and maintained by a community of users. Any
member of the community is allowed to change the content of any webpage of
the knowledge-base from within an ordinary browser. The knowledge-base (in
this case the manual) has no single author. It continuously evolves as more
knowledge is provided by the users.
Meanwhile, a community of Unix developers launched the Apache server in
1996 as open-source software. The project extended and refined the web server
implemented by Robert McCool at the government-funded National Center for
Supercomputing Applications of the University of Illinois at Urbana-
Champaign. Apache made it possible for anybody to start a website on their
own home or office computer, thus increasing the amount of content and the
number of applications that reached the Web.
In 1997 the World Wide Web Consortium (W3C), founded in October 1994
at MIT by Tim Berners-Lee as the international standards organization for the
World-wide Web, introduced the XML standard for exchanging documents on
the Web, thereby recasting EDI (Electronic Data Interchange) for the age of the
Web.
In 1998 a struggling Netscape that was being strangled by the free Microsoft
browser and the free Apache server decided to license the code of its browser
for free as open source so that anybody could use it to build a better browser.
Thus began the project “Mozilla.” It was a desperate survival strategy.

Hotmail’s Exponential Growth

Hotmail grew its user base faster than any media company in history and so
in an instructive case study.
The founders were both hardware engineers, not software engineers. This
was a case in which the idea came from a user viewpoint, not from a technology
viewpoint. They needed a way to bypass the company’s firewall and figured out
how to do it. Many software engineers could have done the same because they
knew the Web technology well enough but simply did not come up with the idea
because they personally didn’t need it. Being hardware engineers helped
Hotmail’s founder deliver a sturdy no-nonsense “product.” Software engineers
are artists who proceed by trial and error, and are not terribly concerned if their
product has bugs (one can always fix the bugs later). Hardware engineers cannot
afford bugs: every time a mistake is made, the cost is huge. Therefore Hotmail’s

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founders naturally delivered something that was ready to be used by millions of
people. About 100,000 people signed up for Hotmail in the first three months.
Most new software needs a lot of tweaking before it gets it right: theirs didn’t
need any tweaking. Hotmail was a case in which the cultures of hardware and
software converged and leveraged each other.
Hotmail, like Yahoo, was also another story that proved the unprecedented
power of the Internet to spread news by word of mouth. Email, the very nature
of Hotmail’s business, was also the most powerful grass-roots tool ever to
spread information. Hotmail’s founders did two things to further improve its
efficiency. First, they added a tagline to every email that invited the recipient to
join Hotmail. Second, they gave each and every user an email address that
contained “hotmail.com” so that each recipient would know (even without
reading the tagline) that Hotmail existed. Both were useful for “branding”; but
neither would have worked if Hotmail had not been useful and usable. Users
spread the gospel that there was a simpler, better and cheaper way to do email.
Hotmail’s concept (Web-based email, or “webmail”) was a very easy
concept to copy. In fact, it was copied. It was copied by many and by several
companies that were much larger. Hotmail, however, proved how difficult it
was to catch up. Precisely because the Internet medium was so unique in rapidly
multiplying users, it created a de-facto standard even before the industry could
do so. Once it became a de-facto standard, a startup (such as Hotmail) enjoyed a
huge advantage even over much larger companies (such as Microsoft). The
advantage was such that the larger company would have to invest millions in
R&D and marketing for several years to match the startup. Indirectly this also
ended up discouraging large companies from trying to catch up with successful
startups: much cheaper to just buy them for outrageous prices. Rocketmail
became Hotmail’s main competitor after being a partner (they build Hotmail’s
directory of registered users) and being funded by the same venture capitalist.
Eventually, Yahoo bought Rocketmail (in 1997) the same way Microsoft had
bought Hotmail.
Finally, Hotmail bet on advertising as a viable source of revenues. Hotmail
failed to prove that concept (it was never profitable) but represented one more
step towards proving it. Hotmail’s founders realized that email was even more
powerful than Yahoo to generate “click-throughs” (actual visits to the advertised
website). Indirectly, Internet start-ups realized that advertising (and marketing in
general) had become such a key component of the capitalist society. One could
almost claim that more creativity was going into marketing a product than in
designing it. That industry had been consistently looking for innovative
advertising vehicles: the newspaper, the nickelodeon, the radio and the
television. The Internet boom took place at precisely the time when advertising
was booming too. Cable television revenues had an 82% growth rate in 1994-
95. The Web was also capable of delivering interactive advertising. And its
advertising led straight to the store (through a mouse click, i.e. a “click-

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through”).
Ads were perceived by the masses as a negative feature. Many startups
failed because they were perceived to be too “commercial” once their web-
based services started displaying too many ads. It was a tricky balance. On the
one hand, startups needed the revenues from ads that were proportional to the
number of people visiting their websites. But on the other hand, ads were
making their websites less attractive and therefore reducing the number of
visitors. Websites without any ads were more likely to earn the trust of the
Internet public than websites with ads. However, the Internet public was not
willing to turn that “trust” into financial support: websites that tried to charge a
fee for each visit were even less likely to survive than websites that displayed
ads. The Internet public was an odd beast: it wanted information without
advertising, but it was not willing to pay for that information in any other
manner. The good news for Internet startups is that the costs of operation were
very low (Hotmail had 15 engineers when it was bought by Microsoft for $400
million).
Internet startups that followed the “free service” model indirectly adopted
the view that their real product was the user base. A car manufacturer makes a
car and makes money by selling the car. Many websites offered a web-based
service that was only an excuse to create a large user base, and then they made
money by selling advertising to corporations interested in selling whatever
products/services to that user base; or upselling a different kind of service to
that user base.

The Net Economy: 1995

Dotcom companies soon appeared in every sector of society; electronic
commerce spread quickly.
Amazon.com: In 1995 Jeff Bezos, a former Wall Street investment banker
who had relocated to Seattle, launched Amazon.com as the “world’s largest
bookstore,” except that it was not a bookstore but a website. Amazon was the
quintessential declaration of war to the “brick and mortar” store.
Craigslist.com: It was launched in 1995 by Craig Newmark from his San
Francisco residence, provided a regional advertising platform (initially only for
the Bay Area) that quickly made newspaper classified obsolete (since it was
free and reached more people). It became a cult phenomenon, spreading by
word of mouth. Newmark refused investments and offers to sell.

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 Craig Newmark of Craiglist (2010)
(Photo: Stephanie Canciello, Unali Artists)

Xing Technology: Based in southern California, it developed the first live

audio and video delivery system over the Internet, StreamWorks, i.e. a system to
play an audio or video file while it is downloaded from the Internet. Xing was
acquired by RealNetworks in 1999.
Progressive Networks (later renamed RealNetworks): Formed in Seattle by
ex-Microsoft executive Rob Glaser in 1995, it introduced the RealAudio
“streaming” audio software. These two companies enabled live broadcasts on
the Internet.
Viaweb (Yahoo Stores): In 1995 New York-based computer scientists Paul
Graham and Robert Morris (famous for having created the “Morris worm” in
1988 when he was still a student at Cornell University) started Viaweb (sold to
Yahoo in 1998). It was a website to create online stores which made it easier
for many people to get into e-commerce. It was also one of the first Web-based
applications: it ran on a server and was controlled by the user by clicking on the
links of a webpage displayed on a browser. Viaweb was similar to what had
been done with X-terminals to run X-Windows (the browser being the
equivalent of the X terminal).
eBay: In 1995 French-born Armenian-Iranian and former General Magic’s
engineer Pierre Omidyar founded AuctionWeb (renamed eBay in 1997), a
website to auction items. The idea was that strangers would buy from strangers
whom they never met and with no direct contact. By the end of 1998 eBay’s
auctions totaled $740 million.
The online dating system Match.com was launched in 1995 in Los Altos by
Gary Kremen, one of the pioneers of Internet-based classified advertising with
his company Electric Classifieds (1993)
Other companies ventured into Internet telephone, security, and website
development tools. In 1995 the Israeli company VocalTec released the first
commercial Internet phone software, i.e. a system capable of dispatching
telephone calls over the Internet. In 1995 Kevin O’Connor, with the money he

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made at Internet Security Systems, started Internet Advertising Network (IAN),
which later acquired and retained the name of the DoubleClick system of New
York’s Internet ad agency Poppe Tyson, largely the creation of Tom Wharton.
Indian-born Samir Arora, who had managed Hypercard at Apple, founded
NetObjects in 1995 in Redwood City to develop tools for people to build their
own websites (at the time not an easy matter).
In 1995 only 15% of Internet users in the US were women. Yet two New
York media executives saw that the number was growing and that women were
not served adequately by the new male-dominated medium. Candice Carpenter
(Time Warner) and (Doubleday) Nancy Evans founded the female-oriented
portal iVillage in June 1995.
In 1995 corporate lawyer Stacy Stern, Stanford law and economics student
Tim Stanley, and German-born Stanford student Martin Roscheisen created
FindLaw, a portal for law-related information, the first time that case law was
made easily accessible to the US public.
Some also started thinking about the possibility of combining Internet and
the television. In July 1995 former Apple and General Magic employee Steve
Perlman (a hobbyist who had studied liberal arts) founded Artemis Research,
later renamed WebTV. He wanted to build a set-top box based on custom
hardware and software which would allow a television set attached to a
telephone line to plug into an Internet service using a dial-up modem and to
browse the Web via a thin client. The goal was to turn the World-wide Web into
a home appliance. The WebTV set-top box (introduced in September 1996 by
Sony and Philips) was not very successful but it pioneered the idea of accessing
the Web via a consumer electronics device instead of a workstation or personal
computer. In April 1997 WebTV was acquired by Microsoft.
The dotcom boom also boosted the stock of e-learning, a field pioneered by
Stanford in the 1960s. However, very few of the startups of the era survived,
notably Saba, founded in 1997 in Redwood Shores by Oracle's executive Bobby
Yazdani.
At this point the “users” of a dotcom service were typically technology-
savvy professionals, especially those raised on Unix. At the time not everybody
was connected to the Internet, not everybody had access to high-speed lines, and
not everybody understood what the World-Wide Web was. In 1996 there were
14 million households in the US with Internet access, almost all of them on dial-
up lines. Even in 1998, when the number of users in the US had skyrocketed to
75 million, the vast majority still used dial-up services. Ordinary people were
still reluctant to use email, let alone sophisticated ecommerce websites. Many
households were just beginning to get familiarized with computers.

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 Craigslist’s Office (2010)

The Net Economy: 1996-97

Significant innovations for the Web were push technology and subscription
models. In February 1996 Pointcast, founded by Christopher Hassett, started a
fad for “push” technology with its software that gathered information from the
Web and then displayed it on a personal computer, which amounted to basically
the opposite of surfing (a software agent sending information to the user instead
of the user searching the Web). Marimba, a spin-off of SUN’s Java group
founded in 1996 in Mountain View by Arthur van Hoff and Jonathan Payne and
headed by Kim Polese (at the time a rare female CEO of a high-tech startup),
offered subscription-based software distribution so that one could automatically
get updates to its applications.
The movie industry was helped by an early Web subscription-model
business named Netflix. In August 1997 Reed Hastings, who had been selling
tools for programmers with his first startup Pure Software, founded Netflix in
Scotts Valley (between San Jose and Santa Cruz). He wanted to rent videos
(initially on DVD) via the Internet. DVD rentals were a direct strike against
movie theaters, one of the pillars of social life in the 20th century. Netflix upped
the ante by removing even the DVD store and allowing movie buffs to simply
order movies online. The movie still required a physical device, the DVD, but
was delivered at home.
The world was being mapped and made available. In 1997 Jim Gray of
Microsoft, working with Aerial Images of North Carolina, created the web-
based mapping service TerraServer that also offered satellite images from the
United States Geological Survey (USGS) and Russia’s space agency
Sovinformsputnik. In 1996 Chicago-based GeoSystems Global launched the
web-based mapping service MapQuest that also provided address matching. In
1996 Jim Clark of Silicon Graphics fame founded Healtheon (originally

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Healthscape) to create software for the health-care system (to “map” treatment
data).
In October 1996 Microsoft launched Expedia, an online travel agency (that
would become the largest travel agency in the world in the 2010s).

eBay’s Campus (2010)

A few companies even ventured into early social

networking. In 1997 Stanford University’s engineering
students Al Lieb and Selina Tobaccowala founded Evite, a
free website to manage invitations. A milestone for web-
based social networking software was SixDegrees.com,
launched in 1997 by New York’s corporate lawyer Andrew
Weinreich and named after the hypothesis that all human
beings are linked by at most six connections. A user could
link to friends and family and reach people beyond the first
level of connection. At the peak it had one million registered
users.
The world of finance was affected too. Online stock
brokerage moved to the Web with E*Trade, launched in
1992 in Palo Alto by William Porter and Bernard Newcomb.
Internet banking (a bank with no physical branch) was
pioneered by ING Direct, founded in 1996 in Canada by
Arkadi Kuhlmann.

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 The Net Economy: 1998-99
As the technology became more reliable, the applications became more
sophisticated too, spreading to broadcasting, books, and groceries.
In 1998 UC Berkeley Professor Abhay Parekh founded FastForward
Networks to provide radio and television broadcasting over the Web
(FastForward’s first customer was RealNetworks when it set up its Real
Broadcast Network).
NuvoMedia was founded that same year in Palo Alto by Martin Eberhard
(one of the founders of Network Computing Devices) and Marc Tarpenning,
introduced the Rocket eBook. It was a paperback-sized handheld device to read
digital books downloaded from online bookstores (“ebooks”). Another e-book
reader was introduced at the same time by rival SoftBook Press, founded by
Amiga’s videogame guru James Sachs and by publishing industry executive Tom
Pomeroy in 1996 in Menlo Park. The two startups were eventually purchased by
Rupert Murdoch’s media conglomerate.
Webvan, born in 1999 to deliver groceries purchased online (initially only
in San Francisco), raised $375 million in 18 months and at one point it was
worth $1.2 billion. Kozmo in New York, started in 1998, was even more
ambitious, planning to deliver all sorts of goods within one hour: it raised $280
million.
Internet banking was pioneered by ING Direct (1996, Canada), Everbank
(1998, Florida) and Ally Bank (2001, Utah).
At the moment that companies started doing business on the Web, it became
important to have reliable services to display webpages in real time. Akamai,
founded in 1998 by MIT mathematician Thomson Leighton and his student,
Israeli-born Technion alumnus Daniel Lewin, replicated content to servers
located around the world in order to minimize the time it took to deliver it to the
end users.

The New Nature of Innovation

The semiconductor boom had largely been the making of one legendary
company. Fairchild Semiconductor gave birth to more than 50 semiconductor
startups. The vast majority of Silicon Valley engineers working in
semiconductors during the 1960s had worked at Fairchild at one time or another.
The history of the semiconductor industry in Silicon Valley is the Fairchild
genealogical tree. The semiconductor boom largely consisted in the refinement
of one technology. It was a very vertical kind of technological development.
The age of Apple, Cisco, SUN, and Oracle was different. This boom was
more diversified. The inventions of Apple, Cisco, SUN, and Oracle had little in
common. Furthermore, neither of them gave rise to a significant genealogical
tree. Compared with Fairchild Semiconductor, relatively few startups were
created by former Apple, Cisco, SUN, or Oracle engineers, and fewer survived

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or stayed independent (Salesforce.com is one of the rare few). No major
company of the size of Intel emerged from any of these. What each of them
created was a chain of suppliers. There was a vertical economy that relied on
them but the boom was becoming more horizontal.
The dotcom age was completely horizontal. The dotcom boom was wildly
diversified. It wasn’t just the refinement of a technology, but the application of a
technology to many different applications in wildly different fields. The dozens
of dotcoms were exploring a vast landscape. Some dotcoms refined previous
ideas (for example, search or social networking), but most of them did not refine
a previous application at all: they were the first to implement that application on
the Web. If someone else had preceded them, there was no relationship between
the two sets of engineers (it was not a Fairchild-Intel kind of relationship). The
Internet resettled Silicon Valley in a new landscape, and the dotcom boom was
mostly about exploring this new landscape and finding gold mines in it.
One reason that dotcoms did not bother to refine previous dotcoms’
inventions (the way semiconductor startups had done in the 1970s) was that
there were so many opportunities. Why compete with an existing dotcom?
Another reason that dotcoms did not bother to refine previous dotcoms’
inventions was outsourcing: the job of refinement was best left to India.

Network Neutrality
The dotcom boom owed a lot to a fundamental principle of the Internet,
never encoded in a law but tacitly accepted by the whole community. The
network had to be company-neutral and application-agnostic. The network was
simply a highway that anybody could use. There was no VIP lane. No matter
how large and powerful a corporation was, it had to use for its ecommerce
activities the very same network that the poorest student was using to set up her
personal website. The Internet had been conceived to be as general as possible
and with no particular application in mind.
The dotcom boom was a boom of applications, not of platforms. The
innovation went into the applications. The platform was roughly still the same
as in the 1980s if not the 1970s.
The application boom was driven by the neutrality of the Internet. First of
all, that neutrality protected the small Internet startup from the “brick and
mortar” corporation. Everybody could get a fair chance in the marketplace, a
fact that was not true in the “brick and mortar” economy where large businesses
could use a plethora of tactics to hurt smaller newcomers.
Secondly, the network allowed the producer (the creator of a Web-based
service) to offer its “product” directly to the consumer (the user). There was no
need for an intermediary anymore. In the traditional economy users shopped for
the products that an intermediary had decided to deliver to the store. It was not
the user who decided which products would show up at the store: it was a chain

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of intermediaries starting from the product planning division all the way down
to the store owner. The Internet removed the whole chain. People were creating
applications on the Web, and users were deciding which ones became
successful.
In the “brick and mortar” economy a corporation decided which product to
sell and then proceeded to publicize it. In the “net” economy, instead, it was the
user who decided which “product” (website) to use. The marketing for that
product, its website, was the “buzz” created within the community of users.
There was no advertisment publicizing a website, no salesman selling it door to
door, and no store displaying it on its window.

Getting Online Part II

Internet dial-up services were multiplying, but dial-up access was slow.
Two technologies appeared at the end of the 1990s to remedy the problem. The
US government made another important decision for the future of the Internet in
1996. The “Telecommunications Act” allowed cable television providers to
offer Internet services. Milo Medin, a former NASA scientist, and tycoon
William Randolph Hearst III started At Home Network (@Home), technically a
joint venture between TCI (the largest cable operator in the US) and the venture
capital firm Kleiner Perkins Caufield & Byers. Their mission was to deliver
Internet broadband to a million homes by the first quarter of 1997. Tthe high-
speed cable ISP was born! In 1997 US West launched the first commercial DSL
(Digital Subscriber Line) service in Phoenix. Cable Internet used the cables laid
down for cable television. DSL used the ordinary telephone lines. Neither was
widely available at the time.
The obvious beneficiaries of the age of networking were the companies that
specialized in networking hardware. By the mid-1990s the three Silicon Valley
giants Cisco, 3Com, and Bay Networks (formed by the merger of SynOptics and
Billerica) had achieved $1 billion in revenues. Indian-born Pradeep Sindhu, a
former semiconductor scientist at Xerox PARC, founded Juniper Networks in
1996 in Sunnyvale to manufacture high-end routers in direct competition with
Cisco. When it went public in 1999, its IPO was one of the most successful in
history, turning it overnight into a $4.9 billion company.
The astronomical growth of Internet communications also created demand
for high-speed fiber-optic cables to connect not only research centers but also
millions of ordinary homes.
Fiber optics are made of thin glass wires. Optical switches convert the
digital signals into light pulses. The light pulses are transmitted over these
optical cables instead of the copper wires of the traditional telephone lines.
The story of fiber optics goes back many decades, but applications were not
feasible until more progress in both optical fibers and laser technology (the only
light source capable of high-speed modulation) took place in the 1960s and

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1970s. Seven months after Theodore Maiman's demonstration of the first laser
(the ruby laser), a team at Bell Labs (Ali Javan, William Bennett and Donald
Herriott) demonstrated the first continuous-wave laser. Robert Hall at General
Electric created the first semiconductor diode laser already in 1962, but it was
not a practical one. Only in 1970 did someone invent a semiconductor diode
laser capable of emitting continuously and at room temperature (Zhores Alferov
in Russia, followed by Bell Labs), and only in 1975 did a company begin
commercialization of the technology (Laser Diode Labs, a spinoff of RCA
Labs). By the following year Bell Labs was demonstrating laser diodes with a
long life. Throughout the 1960s fiber optics communication was promoted
mainly by Charles Kao at Stanford, but its feasibility had to wait until 1970
when the first practical optical fiber was developed by glass maker Corning
Glass Works. In 1975 Manfred Boerner at Telefunken Labs in Germany
demonstrated the first fiber-optical data transmission. Commercial applications
had to wait for optical fiber amplifiers, which came of age with pump laser
diodes. The age of fiber optics truly began in 1988 with the first transatlantic
cable to use optical fibers, the TAT-8 (a collaboration among AT&T, France
Telecom and British Telecom), the eighth transatlantic communications cable,
capable of carrying 40,000 telephone simultaneous conversations (as opposed
to the 138 conversations of the 1966 transatlantic cable).
The boom for optical cables began in 1996, when the US government
enacted the Telecommunications Act that deregulated the telecom market. This
created ferocious competition among local and global telecom companies at the
same time that the pundits predicted an exponential rise in broadband need due
to the advent of the Web.
It is not a coincidence that the capacity of optical cables almost doubled
every six months starting in 1992 until in 2001 it achieved a bit rate of 10 terabit
per second. Lucent, a 1995 spin-off of AT&T (including Bell Labs) and
Canadian giant Nortel, which had deployed the world’s first commercial fiber-
optic link in 1980, dominated the market. In 1999 Nortel and Lucent together
owned more than 50% of the $12.3 billion market, a market that had just grown
by 56% from 1998.
There was big money even in acquisitions. In 1999 Cisco acquired Cerent
of Petaluma (north of San Francisco, formed in 1996 with funding from Vinod
Khosla) for $7.4 billion, and became the third power. Meanwhile Nortel bought
Xros of Sunnyvale in 2000 for $3.25 billion. In 1988, the Southern Pacific
Railroad began installing fiber-optic cable along its lines and in 1995 it
spawned Qwest, headquartered in Denver, Colorado. By 1999 it had revenues
of $3.92 billion. Aerie Networks of Denver raised $100 million of venture
capital in its first two years (1999-2000). Sycamore Networks, located in
Massachusetts, was worth $29.1 billion in September 2000.
Silicon Valley became one of the hotbeds of optical technology. A spin-off
of Optivision founded in 1997 in San Jose by Indian-born Rohit Sharma, ONI

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Systems was one of the first to go public. Then came the deluge: Kestrel
Solutions of Mountain View; Lightera Networks of Cupertino; Calient of San
Jose; Mayan Networks of Mountain View; Amber Networks of Fremont; Zaffire
of San Jose; Luminous Networks of Cupertino; Luxn of Sunnyvale and others.
The world was suddenly awash in fiber-optic cables. This overcapacity, not
mandated by governments but simply the result of business miscalculations,
dramatically lowered the cost of broadcasting information, thereby increasing
the motivation to broadcast information. The fiber-optic rush created on the
Internet the equivalent of the freeway system created by the US government in
the 1950s. It did so rapidly and at no cost to the taxpayer. The cost was
political: the vast fiber-optic infrastructure did more than connect the nation
electronically: it connected the nation to India too, thus accelerating the process
of outsourcing IT jobs to India.
Something else was brewing amid all the startup frenzy, but mostly
elsewhere. In 1988 Mark Weiser had proposed the vision of a future in which
computers will be integrated into everyday objects ("ubiquitous computing")
and these objects are connected with each other. This became known as the
"Internet of Things" after 1998 when two experts in RFID at the Massachusetts
Institute of Technology, David Brock and Sanjay Sarma, figured out a way to
track products through the supply chain with an RFID tag linking to an online
database. Neil Gershenfeld published the book "When Things Start to Think"
(1999) and later (2001) established the MIT's Center for Bits and Atoms
(2001).
In 1996 Japan's Sony had introduced the chip FeliCa for RFID technology.
The foundations had been laid down. Silicon Valley had pioneered RFID
applications with Identronix, but little had come out of it.

Cyberculture and Cybersociety

The Internet was also beginning to be used for cultural purposes. The online
magazine Salon was founded in 1995 in San Francisco by David Talbot, a
former editor for the San Francisco Examiner. In April 1999 Salon would
purchase the glorious WELL. The term “blog” came to be associated with
websites run by an individual who published content on a more or less regular
basis, the Web equivalent of a television talk show or of a newspaper column.
In 1998 Bob Somerby, an op-ed writer for the Baltimore Sun, started “The
Daily Howler,” the first major political blog. In 1998 Piero Scaruffi, formerly
the manager of Olivetti’s Artificial Intelligence Center in Cupertino, launched
his own website Scaruffi.com to publish articles on music, cinema, politics,
etc. In September 1997 Michigan’s computer-science student Rob Malda
launched Slashdot, a website catering to an audience of the open-source
hobbyists (“news for nerds”) that provided an index of stories published by
other websites or magazines, the first news aggregator.

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 Anthropologists were excited about the convergence of the virtual
communities enabled by cyberspace and the technology of virtual reality that
had matured since the pioneering years. In 1994, Ron Britvich in southern
California created WebWorld, later renamed AlphaWorld and then again
renamed Active Worlds. In it people could communicate, travel, and build.
Bruce Damer was a former member of the Elixir team in LA. Inspired by the
hippie communes of the 1960s, they had purchased a ranch in the Santa Cruz
Mountains south of Silicon Valley, established the Contact Consortium in 1994.
In 1996 the ranch yielded three-dimensional virtual-reality environments such as
a virtual town (Sherwood Forest) and a virtual university (The U).
A virtual-reality project that would have an impact throughout the country
was the "CAVE". The Electronic Visualization Lab at the University of Illinois
Chicago created a "Cave Automatic Virtual Environment", a surround-screen
and surround-sound virtual-reality environment in which graphics was projected
from behind the walls of a room. The walls themselves are basically just very
large screens, and ditto the floor. Many universities would build a Cave system
in the next decade.

The Anthropology of Transience

Silicon Valley’s real (non-virtual) society was characterized by transience
at all levels. People were coming and going. Companies were being started and
closed. This society of transience created a landscape with no monuments. Not
even rich people cared for building monuments. In a place that had no great
buildings, a company’s sign might become a landmark. Buildings were to be
destroyed so nobody felt the need to start a building meant to last forever like
all civilizations had done before.
This “flatness” of the world created a strange contradiction: there was no
visible sign of Silicon Valley’s grandeur. The greatness of Silicon Valley was
defined by products designed in corporate rooms and built in laboratories that
were hidden from the public. People could read about what made Silicon Valley
great but there was no exterior manifestation to prove it. The office buildings of
Intel, Hewlett-Packard, Oracle, and Apple were almost incognito. Dubai was
erecting one skyscraper after the other, and Shanghai would soon begin to do the
same. The Roman and the British empires had left countless public buildings to
celebrate their triumphs. Silicon Valley, by contrast, didn’t even have a
landmark of the kind that any midsize city in the US could boast of (like
Seattle’s Space Needle or St Louis’ Arch). A tour of Silicon Valley’s historical
buildings was a tour of garages and offices. Silicon Valley was “inside,” not
“outside.”
It is not that these rich individuals and companies were reluctant to spend
their money. They did spend. In the 1990s Silicon Valley contributed more than
one billion dollars to charitable causes. However, the typical contribution was

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in the form of philanthropy. A company or an individual was more likely to
spend a fortune in a “project” (whether helping the poor in Africa or helping a
local organization) than in a building. It was all part of the mindset of
transience: a project does not depend on a physical location.
Civic life was, in fact, often shaped by philanthropy rather than planned by
government. Silicon Valley’s very beginning had been shaped by an act of
philanthropy and not by an act planned by the government: Stanford University.

Bubble Deals
The business model that became ubiquitous among dotcom startups was
about becoming popular and cool, not necessarily making money. The dotcom
startup was after market share, not profits. In other words, the competition was
about getting as many users as possible, typically by providing a service for
free, hoping that eventually the large number of users would also bring in
revenues. Therefore the typical dotcoms were operating at a net loss. Very few
actually had a plan on how to make money. Most of them envisioned a day when
they could charge a fee for their services, but the trend was obviously in the
opposite direction, with more and more companies waiving fees for their online
services. Netscape, for example, made Navigator available for free in January
1998. A different avenue to profitability was taken by the dotcoms that began to
sell advertising space on their websites, notably Geocities in May 1997.
In the second half of the 1990s there were more than 100 venture capital
firms at work in the Bay Area. The five most prominent were Accel (founded in
Palo Alto in 1983 by Jim Swartz and Arthur Patterson, both former partners of
Jay Adler ‘s firm in New York), Kleiner Perkins Caufield & Byers, Crosspoint
Ventures, Sequoia Capital, and Hambrecht & Quist. In 1998 Taiwanese
computer manufacturer Acer opened Acer Technology Ventures to invest in
Silicon Valley startups. Venture capitalists were becoming popular heroes too,
notably John Doerr, a former Intel salesman. At Kleiner-Perkins he had invested
in SUN, Compaq, Lotus, Genentech, Netscape, Amazon, and Google.
The new wave of software companies had further changed the demographics
of Silicon Valley with a significant injection of brains from Asia. By 1998
Chinese and Indian engineers ran about 25% of Silicon Valley’s high-tech
businesses, accounting for $16.8 billion in sales and 58,000 jobs. But the
bubble was getting frothy. In November 1998 Netscape surrendered and was
purchased by America OnLine (AOL). It was a bad omen for the dotcoms.

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 Other Boomers: The Y2K Bug, Wi-Fi,
Personal Digital Assistants, and DNA
Mapping (1995-98)

The Y2K Bug

At the same time that the dotcoms were booming, another factor contributed
to a dramatic increase in software revenues: the Y2K phenomenon.
“Y2K” was an abbreviation for “Year 2000.” The vast majority of business
software for large computers had been written in the 1960s and 1970s, and then
ported to new generations of computers. Because of the limitations of storage at
the time, and because, quite frankly, very few people expected those
applications to last that long, most businesses could run only until 1999. Their
applications had no way to represent a date beyond 1999 (the commonly used
two-digit abbreviation of the year, for example “55” instead of “1955,” would
turn the year 2000 into the year 1900).
Panic spread when the corporate world realized what that meant. As the
world entered a new century, unpredictable glitches could bring down the world
economy and cause all sorts of disasters. Virtually all the business software in
the world had to be rewritten, or at least analyzed to make sure there was no
“Y2K bug.” At one point, the Gartner Group estimated the cost of fixing the
Y2K bug at $600 billion.
This was a boon for software companies that serviced legacy applications.
So much code needed to be rewritten that, globally, one of the main
beneficiaries of the Y2K panic was India. Since 1991 it had begun liberalizing
its protectionist economy, and it boasted a large and cheap English-speaking IT
workforce. US companies had to outsource millions of codes to Indian
companies. India’s National Association of Software and Service Companies
(Nasscom) estimated that India’s software exports in 1998-99 reached $2.65
billion, growing at a yearly rate of over 50%. Y2K-related projects accounted
for $560 million or about 20% of the total.
The Y2K economy fueled the software industry at the same time that the
Internet was doing it, thus generating an economic bubble on top of another
bubble. The mayhem was so loud that very few people realized that the year
2000 was the last year of the 20th century, not the first year of the 21st century.
That honor belonged to the year 2001: for the age of the computer anything with
a zero at the end ought to be a beginning, not an end. The second millennium of
the Christian calendar lasted only 999 years (the first millennium had been from

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year 1 to 1000, i.e. 1000 years).
A 1999 article by international consultant Peter de Jager in the reputable
magazine Scientific American concluded: “I believe that severe disruptions will
occur and that they will last perhaps about a month.” Highly educated people
stockpiled food and water, and some decided to spend the last day of the year in
bunkers. The apocalypse would come, but it would come a few weeks later, in
March 2000, and it would have little to do with the way computers represent
dates.

Software Tools
Meanwhile, the proliferation of software startups in Silicon Valley was not
limited to the Internet and the Y2K bug. In 1998 Stanford’s scientist Mendel
Rosenblum (an assistant to John Hennessy on multiprocessor projects) was
working on SimOS, a project to create a software simulator of hardware
platforms. Such software would be able to run the operating systems written for
those hardware platforms. Rosenblum and others founded VMware to pursue
that mission. In May 1999 they introduced VMware Workstation, which was not
a workstation but a SimOS-like software environment (a “virtual machine”). It
allowed a Unix machine to run the Windows operating system (and therefore all
of its applications). Eventually they would broaden the idea to allow one
physical computer to run multiple operating systems simultaneously. Server
virtualization had already been popular in the mainframe era, but Rosenblum
was the first one to implement it on smaller computers.
Red Hat had become the darling of the Linux world. In 1998 it merged with
Sunnyvale-based Cygnus Solutions, founded in 1989 by John Gilmore and
Michael Tiemann to provide tools for Linux. When Red Hat finally went public
in August 1999, it achieved one of the biggest first-day gains in the history of
Wall Street. Meanwhile, in 1999 Marc Fleury started the Georgia-based JBoss
project for a Java-based application server (JBoss would be acquired by Red
Hat in 2006).
The Internet and Y2K booms on top of the pre-existing software boom
increased the need for software development environments. One of the
paradigms that took hold was Rapid Application Development (RAD),
originally championed by James Martin at IBM in 1991 but fitting very well the
frantic world of Silicon Valley. Instead of developing an application top-down,
RAD calls for the immediate creation of a working prototype followed by a
series of incremental improvements (in a sense, similar to what Nature does).
Delphi, released by Borland in 1995, was an early example of a development
environment for RAD. Java also called for a new type of development
environment. Visual Cafe, released by Symantec in 1997, was an early example.
There had been and there continued to be a proliferation of software tools to
overcome the dearth of software engineers and the pressure to deliver ever

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faster.
In those years, supply chain management was brought to the Bay Area. Agile
Software, founded in 1995 in San Jose by Bryan Stolle, sold a suite to help
firms manage bills of materials (BOMs). Ariba was started in 1996 in
Sunnyvale by Keith Krach (a GM veteran) and by Paul Hegarty (NeXT’s vice-
president of engineering); it automated the procurement process. Both pioneered
business-to-business (B2B) commerce over the Internet. Supply chain
management was as hot as ERP. Sales of i2’s Rhythm went from $26 million in
1995 to $65 million in 1996, and in 1999 i2 would boast a 13% share of the
$3.9 billion supply-chain software market. ERP was already well established in
the Bay Area thanks to PeopleSoft and Oracle, although the German companies
continued to dominate. In 1997 the total revenues for the ERP software market
was $7.2 billion, with SAP, Baan, Oracle, J.D. Edwards, and PeopleSoft
accounting for 62% of it.

The Computer Market at the Turn of the Century

For the time being the evolution of computers was largely independent of
the dotcoms. 34 million households owned a computer in 1996 in the US. In
1997 IBM’s revenues were $68 billion, but now a big chunk of them came from
technical support to its aging mainframes, a business that employed 160,000
people. In 1997 IBM introduced a new generation of mainframes based on Intel
microprocessors, the Netfinity series. In 1995 IBM purchased Lotus
Development, one of the many moves that realigned IBM towards the world of
personal computers.
Compaq was the rising star. In 1994 it had overtaken IBM in personal-
computer sales. In 1997, the year it shipped 10 million personal computers and
laptops, Compaq’s revenues skyrocketed to $24.6 billion. Compared with Dell
and Gateway, Compaq was most successful with corporate customers. In the
second half of the 1990s it moved aggressively to capture that market from IBM.
In 1997 Compaq acquired Tandem Computers and their line of fault-tolerant
servers, a move that gave Compaq more credibility in mission-critical business
applications. In 1998 Compaq acquired Digital Equipment Company (DEC),
which had been struggling to adjust to the new world of personal computers.
DEC was certainly in trouble: despite reducing its workforce (in 1997 it
employed 50,000 people, down from a peak of 130,000), DEC still employed
about 65% more people than Compaq to generate about 50% lower revenues.
However, DEC’s products included both high-end servers (priced at $1 million
and up) and low-end servers (priced under $100,000), plus workstations. More
importantly, 45% of its revenues came now from services: DEC’s technical and
customer support was a worldwide army of 25,000 people. That was exactly
what Compaq needed to take on its rival IBM.
Dell got an edge in PCs and Toshiba built one in laptops. In 1996 Dell

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began selling its computers via its website. The website used NeXT’s just
released WebObjects technology. It allowed consumers and businesses to order
directly, and even to customize the configuration of their PC. By spring 1999
Dell had erased the US sales gap with Compaq (Compaq 16.8%, Dell 16.4%),
although Compaq continued to sell more units abroad. The market for laptop
computers was dominated by Toshiba, which in 1997 enjoyed a market share of
20.4%. Toshiba also introduced the first DVD player in 1996.
Compared with the fortunes of IBM, Compaq, Dell, and Toshiba, the two
Silicon Valley giants, Hewlett-Packard and Apple, had a mixed record. Since
1995 HP had become one of the most successful personal-computer
manufacturers. It owned more than 50% of the market for printers in that market.
And it looked very aggressive: in 1994 it had partnered with Intel to develop a
64-bit processor (code-named “Merced”) that promised to be a dramatic
departure from Intel’s x86 architecture. However, when it was eventually
released in 2001 with the official name of Titanium, it was a flop because in the
meantime Intel had released a faster x86-based processor, the Pentium. As for
Apple, which had allied with IBM and Motorola in 1994 to use their PowerPC
microprocessor for a new line of high-end Macintoshes, in 1996 it purchased
NeXT, and with it the Unix-based NextStep operating system and the
WebObjects technology, a Java-based application server for rapid object-
oriented software development of Web-based applications. Steve Jobs was
therefore back at Apple. In 1997 Apple followed Dell in using WebObjects to
create a website (the “Apple Store”) to sell customized machines directly to the
end customer. However, Apple was bleeding. It couldn’t compete with the
DOS/Windows-based computers and in 1999 it laid off 2,700 of 11,000
employees.

A Wireless Future
The new semiconductor companies often targeted emerging niche markets.
In 1994 wireless pioneer Proxim had introduced a product to let ordinary
computers exchange data via the ether, which truly inaugurated the era of office
wireless networks. In May 1998 John Hennessy (of MIPS fame) and Teresa
Meng of Stanford University opened in Santa Clara a startup named Atheros that
specialized in chipsets aimed at wireless local area networks, later known as
"Wi-Fi networks".
The story of Wi-Fi had begun in 1985, when the US government had made
the so-called "garbage bands" (900MHz, 2.4GHz and 5.8GHz) available to
anybody. In 1988 Victor Hayes of NCR (a company that was considering
connecting wireless cash registers) and Bruce Tuch of Bell Labs had begun
working on a wireless standard similar (in purpose) to the one devised for the
Ethernet. This standard-defining committee, that came to be called 802.11, took
almost a decade to complete its research, but eventually in 1997 the

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specifications were published. Two more years and in 1999 Richard van Nee of
Lucent and Mark Webster of Harris Semiconductor (later renamed Intersil)
debuted their 802.11b, operating in the 2.4GHz band. The consortium (including
these two companies as well as 3Com and Nokia) that adopted this "wireless
Ethernet" standard nicknamed it "Wi-fi". Lucent delivered the world's first Wi-
Fi card to Apple and Apple incorporated it in its iBook laptops. Apple had
understood that Wi-Fi would soon become a household name, allowing millions
of home computers to communicate with the modem that connected them to the
Internet. In this case it was a government decision (not a technological
invention) and it was cooperation (not competition) that created the vast market
of Wi-Fi devices.
As wireless LANs moved to the home, this would turn out to be a lucrative
market. Marvell was started in 1995 in Santa Clara by Indonesian-born Sehat
Sutardjia, his Chinese-born wife Weili Dai and his brother Pantas. It was a
fabless maker of semiconductors used in data storage and mostly serving Asian
companies. Marvell too would rapidly jump onto the wireless bandwagon.

Gadgets
This was also the age of the gadgets propelled by digital technology but
decoupled from the computer industry.
In the arena of videogames, in 1995 Sony introduced the Playstation, one of
the most popular platforms of all times. In 1998 sales of videogame consoles in
the US alone amounted to $6.2 billion, which dwarfed the sales of videogame
software on personal computers ($1.8 billion). The situation had reversed itself
one more time, and now the videogame console was rapidly gaining, thanks to a
combination of lower prices and much improved performance.
Progress in graphics video, animation, and audio continued at a rapid pace.
In 1995 the Moving Picture Experts Group (MPEG) of the International
Organization for Standardization (ISO) published the “mp3” standard (more
properly, MPEG-1 Layer 3) for digital audio and video compression, largely the
1989 thesis of German student Karlheinz Brandenburg. Mp3 had been designed
to compress video and audio into the bit-rate of a CD. While Mp3 proved
inadequate for videos, it became a very popular format for digital music. In
March 1998 Korean-based Saehan Information Systems released the MPMan
F10, the first portable Mp3 player, capable of storing nine songs.
Digital media companies proliferated around San Francisco’s South of
Market (SoMA) district, an area previously known mostly for night-clubs and
abandoned warehouses that was now nicknamed “Multimedia Gulch.” More
than 35,000 people worked in the multimedia sector in San Francisco in 1999.
Many of them were self-employed or worked for small companies: there were
almost 1,000 multimedia businesses. The Multimedia Gulch briefly transplanted
Silicon Valley’s model to the “city.”

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 Ironically, the company that had pioneered 3D graphics in the Bay Area was
the exception to the general euphoria. Silicon Graphics’ spectacular growth
peaked in 1995: its market capitalization reached $7 billion in 1995 and
revenues were $2.2 billion. However, the company began a rapid decline as it
seemed to live in a different world where the Internet did not exist. It mostly
specialized in visual effects for Hollywood.
A successful movie, John Lasseter ‘s “Toy Story” (that premiered in
November 1995), made history for being the first feature-length computer-
animated film. Lasseter, a former Walt Disney animator, worked at Lucasfilm
under Ed Catmull at a groundbreaking computer-animated short, “The
Adventures of Andre and Wally B” (1984), for which they used even a Cray
supercomputer. When Jobs purchased Lucasfilms in 1986 and turned it into
Pixar, Lasseter was given the power and freedom to invest in that technology,
but it took almost a decade to come out with a full-length film. This followed the
short animated films made by Pacific Data Images (PDI) since the mid-1980s
and was followed by their first feature films: "Antz" (1998), "Shrek" (2001) and
"Madagascar" (2005). Personal computers, instead, had to live with humbler
features. For example, in 1997 RealNetworks introduced RealVideo to play
videos on a computer, but it still used a proprietary format.
Gadgets started to infringe on TV. Introduced in the Bay Area in 1998, TiVo,
developed by former Silicon Graphics executives Jim Barton and Mike Ramsay,
was a digital video recorder capable of digitizing and compressing analog
video signal from a television set and of storing it onto a computer's hard-disk.
(The company had originally been founded in 1997 as Teleworld). At that point
the tv viewer was able to do with television programs what a computer user
could do with data, except that it completely changed the experience of watching
television because it gave viewers control over "when" they watched television
programs. A TiVo user could watch a program at any time, as many times as she
wanted, and could fastforward through commercials and pause during a live
program. This receiver, that sat on top of the television set and looked like a
VCR, could store up to 40 hours of programming, and it could be programmed
to record an entire season of a television series. It was a relatively simple idea
but it changed forever the definition of "live event" and ended the age in which
all viewers were synchronized on the same program."
A hyped event of 1996 in Silicon Valley was the release of a hand-held pen-
based computer called Palm Pilot. It was a computer with no keyboard, whose
user interface was simply a screen on which the user could write in natural
language. The founder of Palm, Jeff Hawkins, had studied automated hand-
written text recognition at UC Berkeley. It was the first pen-based user interface
to gain wide acceptance. In 1998 the Palm Pilot had almost 80% of the market
for palm-sized computers, and in 1999 it would enjoy four consecutive quarters
of triple-digit revenue growth. Palm had already been purchased by US
Robotics in 1995, which then merged with 3Com in June 1997.

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 Jeff Hawkins, Founder of Palm Computing (2010)
The most sensational high-tech product introduced abroad in 1996 was
probably Nokia’s 9000 Communicator, which invented the category of “smart
phones.” Palm had tried to create a “personal digital assistant” (PDA) starting
with a computer. Finnish conglomerate Nokia, the world leader in mobile
phones, started with a mobile phone, adding computer capabilities based on an
Intel 386 processor running Berkeley Softworks’ GEOS operating environment
on top of DOS. In 1994 IBM had done something similar with its short-lived
Simon. The Nokia 9000 ran over GSM, the IBM Simon ran over Bell Labs'
AMPS.
In 1997 Psion, the British company that had invented the personal digital
assistant, adopted the ARM processor in its Series 5 in conjunction with a brand
new operating system that was later renamed Symbian, a joint venture with
Ericsson, Nokia, Panasonic, and Motorola.
One of the most daring gadgets introduced in the mid-1990s was a by-
product of the feud between Microsoft and Oracle. In 1996 Oracle introduced a
disk-less desktop computer, the network computer. Larry Ellison preached a
world in which data did not have to reside in the house or the office of the user,
but could reside on the Internet. Ellison envisioned a future in which the
computing power was on the Internet and the user’s machine was simply a tool
to access that computing power. Indirectly, this was also a world in which
desktop computers had no need for Microsoft’s operating systems. The net
computer was the counterpart to General Magic’s hand-held device, and yet
another premonition of “cloud computing.” Alas, it also became another
embarrassing Silicon Valley flop.
Until then connecting devices to computer had involved different cables for
different kinds of devices. In 1996 an Intel team led by the Indian-born scientist
Ajay Bhatt introduced the specifications for USB (Universal Serial Bus), a
method that would soon greatly simplify the lives of consumers worldwide and
dramatically increase the number of devices that can be connected to a

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computer.
In 1998 Sony launched its own removable flash-memory card format, the
Memory Stick, and "memory stick" would remain the affectionate term for all
removable flash-memory units that one could carry in the pocket. In 1999
SanDisk, Matsushita and Toshiba unveiled yet another standard for NAND flash
memories: the Secure Digital (SD) format. The SD card would displace
CompactFlash as the most popular flash-memory format for consumer
electronics the way that CompactFlash had displaced SmartMedia in the
previous decade.

GPUs
Personal computer graphics of the 16-bit, 2D generation was dominated for
a while by the Canadian company Array Technology Inc (ATI), manufacturers of
1987's EGA Wonder and 1988's VGA Wonder. They had been founded in 1985
by three Hong Kong immigrants (Kwok Yuan Ho, Lee Lau and Benny Lau).
Computer games ran on DOS because it was impossible to achieve high
performance on Windows. The first major improvement came with the
introduction of 32-bit operating systems, and not so much 1991's System 7 for
the Apple Macintosh, that initially charmed few developers, but Windows 95,
introduced by Microsoft in 1995. The second important factor was the drop in
DRAM price: in 1995 Intel introduced the low-cost 430FX chipset that
supported Extended data out DRAM. Regular DRAM was becoming as fast as
the expensive Video DRAM (or VRAM). Finally, standards became to emerge.
In 1992 Silicon Graphics released an API for both 2D and 3D graphics,
OpenGL (an evolution of their proprietary IRIS Graphical Library), that was
meant for their traditional Unix market but became a standard for PC gaming in
1996 when Texas-based game developer id Software, that had revolutionized
PC gaming with 1993's "Doom", ported its stylish 3D game "Quake" to
Windows using OpenGL. In 1996 Microsoft released its own API, Direct3D (an
evolution of the technology developed by British company RenderMorphics,
founded in 1992 by Servan Keondjian and Doug Rabson). For a while,
however, the winner was neither Direct3D nor OpenGL: Brian Hook of 3Dfx
Interactive, a company founded in 1994 in San Jose by three former Silicon
Graphics employees (Ross Smith, Gary Tarolli and Scott Sellers), wrote Glide
API in 1995. Glide versions of Activision's "MechWarrior 2" (1996) and id
Software's "Quake II" (1997) were among the hits that legitimized Glide as the
ruling standard of the late 1990s.
The net result of these developments was a boom in 3D graphic cards for
personal computers, aiming at the mainstream consumer. Founded in 1989 in
Fremont by Dado Banatao (who had pioneered fabless manufacturing with
Chips and Technologies), S3 introduced in 1995 a low-cost graphics chipset
that was a 2D/3D hybrid, the Virtual Reality Graphics Engine (ViRGE). Months

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later in 1995 ATI introduced the Rage line of 3D graphics accelerators. And in
1996 3Dfx introduced the Voodoo1, a 3D graphic accelerator that truly left
behind the world of 2D graphics. While this trio competed for supremacy, the
boost in speed generated a boom in videogames (with "video" truly meaning
"video"). When Nvidia entered the market, 1996's NV1 and 1997's Riva 128
did not compare with the trio's products; but 1999's GeForce 256 virtually
defined the modern graphics processing unit (GPU), 2000's GeForce 2
GigaTexel Shader (GTS) hit 1 gigatexel/second (1 billion filtered textured
pixels per second, a texel or texture pixel being the fundamental unit of texture
space), and 2001's GeForce 3 (released three months after NVIDIA acquired
3dfx) would introduce pixel shading, the technology for 21st century
videogames. AMD Advanced Micro Devices (AMD) would acquire ATI in
2006.

Biotech
In biotech the state-of-the-art moved fast. The Human Genome Project had
been slow to get started, like all big projects, but at last in April 1996 human
DNA sequencing began in earnest at several universities funded by the National
Institute of Health. Most of these research centers were using the sequencing
machines of Applied Biosystems, acquired (in February 1993) by East-coast
pharmaceutical colossus Perkin-Elmer. Also in 1996, Sydney Brenner (Francis
Crick’s successor at Cambridge University, now at the Scripps Institute in San
Diego) founded the Molecular Sciences Institute in Berkeley, and the year that
Monsanto, a multinational corporation, acquired Calgene.
For the media 1996 was the year of cloning. A team assembled by Ian
Wilmut at the Roslin Institute in Britain cloned “Dolly” the sheep, the first time
that a mammal had been cloned in a lab from adult cells. The experiment was
centered on the ideas of Keith Campbell, who in 1995 had already succeeded in
cloning a pair of lambs, albeit from embryonic cells. In May 1999 Geron of
Menlo Park bought the rights on Roslin’s nuclear-transfer technology for $25
million.
PE Biosystems, the new name of Applied Biosystems after being acquired
by Perkin-Elmer, had become a wealthy company with revenues of $871 million
by 1998. It sold sequencing machines to the centers of the Human Genome
Project. The company’s new President, Michael Hunkapiller, a former assistant
of Leroy Hood at CalTech, boldly attacked his academic customers by deciding
to launch a private project to decode the human genome before the Human
Genome Project. Basically, he was convinced that the result depended on his
machines, not on the army of biologists of the research centers (and that private
industry is more efficient than government bureaucracies). He hired a man who
shared his passion for automated genetic processing, Craig Venter of Maryland’s
Institute for Genomic Research, where the first sequencing (“mapping”) of a

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living being’s genome had been carried out in 1995. Venter had fallen out with
Haseltine after their mutual investor Steinberg had died in 1997, since Venter
was more interested in the science and Haseltine in creating a multibillion-
dollar pharmaceutical conglomerate.
In May 1998 Michael Hunkapiller and Venter set up a new company, Celera
Genomics, which soon relocated to the Bay Area (Alameda, near Oakland).
Technically, both Biosystems of Foster City and Celera Genomics of Alameda
were owned by Applera, a spin-off of Perkin-Elmer’s Life Sciences Division
which in 2000 also became the official new name of Perkin-Elmer. However, in
2006 Applera renamed itself Applied Biosystems and spun off Celera
Genomics. It was a confusing business story that still left two tightly related
companies, one engaged in building machines and the other one in using those
machines to sequence DNA. The main investor in both was Cuban-born
businessman Tony White, the head of their parent company (which used to be
called Perkin-Elmer) who had brokered the deal between Venter and
Hunkapiller. Celera Genomics filled a staff of distinguished scholars, including
Nobel laureate Hamilton Smith, and bought 300 of Applied Biosystems’ most
advanced machines to create the world’s largest automated factory for mapping
DNA.
A new method to sequence DNA ("sequencing by synthesis technology")
was devised in 1997 at Cambridge University by Shankar Balasubramanian and
David Klenerman, who in 1998 founded Solexa in Hayward 9acquired in 2007
by Illumina).
The Israeli-born computer scientist Victor Markowitz, who had developed a
data management system for genome databases at the Lawrence Berkeley Labs,
founded the bioinformatics company Gene Logic in Berkeley in 1997 to market
a database management system for gene expression data to biotech companies.
In 1997 the Department of Energy established the Joint Genome Institute
(JGI) in an industrial park in Walnut Creek (northeast of Berkeley) to coordinate
the three main biological laboratories involved in genomics: Lawrence
Berkeley Labs, Lawrence Livermore Labs and Los Alamos (located in New
Mexico). In 2010 JGI would hire Victor Markowitz of Gene Logic as chief
information officer.
The local universities were central to biotech’s development. In the 1990s
Stanford held 124 biotech patents, SRI International had 50, and the University
of California as a whole had 321 (mainly at Berkeley and San Francisco). Some
private companies had many patents too: Genentech 335, Incyte 322, Alza 238,
Syntex 168, Chiron 167. Genentech’s former employees had opened more than
thirty Bay Area-based startups. South San Francisco, where the Genentech
campus was located, had become a major R&D center for biomedicine. For
example, Exelixis and Cytokinesis had been started in 1997 a few blocks from
Genentech) Investment in biotech companies peaked at $1 billion in the year
2000, up from $668 million in 1999. Between 1995 and 2000 $3 billion in

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venture capital had created 71 startups. At the beginning of 2000 the Bay Area’s
90 publicly-traded biotech companies reached a market capitalization of $82
billion. Meanwhile, in 1998 James Thomson at University of Wisconsin and
John Gearhart at Johns Hopkins University reported that they had grown human
embryonic stem cells.
As biotech boomed, nanotechnology finally began to take off in the second
half of the 1990s. One important startup was NeoPhotonics, founded in 1997 by
Timothy Jenks and specializing in photonic integrated circuits.
A merge of biotech and nanotech (Micro-Electro-Mechanical Systems or
MEMS) took place in 1996 with the founding of Cepheid in Sunnyvale by
former Syntex executive Thomas Gutshall, Bill McMillan (who had invented a
rapid automated analysis system at Syntex), MEMS pioneer Kurt Petersen (of
Transensory fame), and Greg Kovacs of Stanford's Center for Integrated
Systems. Their goal was to build machines that perform rapid molecular testing,
typically to detect infectious disease and cancer, i.e. to provide DNA test results
when and where they are needed.

Culture and Society

San Francisco’s counterculture reacted again in its own idiosyncratic
manner to the capitalistic culture of Silicon Valley. Since Silicon Valley had
adopted the religion of ever faster and cheaper products, in 1996, Stewart
Brand of Whole Earth fame and Danny Hillis, who had designed the
supercomputer Connection Machine at MIT, established the “Long Now
Foundation” to promote slower and better thinking, long-term thinking.
Underground subversive, so called "guerrilla", art staged a significant coup
in 1997 when Brian Goggin, coming out of the Burning Man culture, took over
the dilapidated Hugo Hotel on 6th and Howard streets and started hanging
home-built furniture provided by about 100 volunteers from the hotel's walls.
("Defenestration" would be razed in 2014, after the disorderly invasion of
Silicon Valley and consequent gentrification of the city).

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 "The planetary display for the 10,000 year clock of the Long Now
Foundation (2014)"

Meanwhile, pop and dance musicians such as Dan Nakamura, Matmos, Kit
Clayton, Kid 606, Blectum From Blechdom and Irr. App. (Ext.) were pushing
the envelope of digital music, showing what could be done with a simple
laptop, while the psychedelic tradition survived in Devendra Banhart.
During the 1990s the population of the Bay Area grew by 13%. The San
Francisco- Oakland- San Jose metropolitan region had seven million people in
2000, making it the fifth largest metropolitan area in the US.

The Anthropology of the Untouchables

In the 1990s the median income in Santa Clara County was almost twice the
median income in the US, but within the Valley the income gap kept increasing.
There were at least three classes with widely different income levels.
The common laborers (such as the security guards who worked night shifts,
the cleaning people, and the clerks of the gas stations) had a low income. It was
difficult for them to afford the cost of living of the Bay Area. Many of them
resided in the East or South Bay, where rent was cheaper, and many of them
lived in old-fashioned familiar nuclei. They were not very visible: you had to
take one of the freeways into the Bay Area very early in the morning to see them
commute to work from distant places.
Then there was the huge mass of engineers, who could afford a nice car and
a nice apartment. However, the cost of living was such that many of them shared
a house or an apartment with someone else. Those who bought a house most
likely bought a town home in a subdivision. Each subdivision provided long
lines (or circles) of identical homes with minimal separation from each other.
These were the most visible inhabitants of the valley, stuck in traffic during rush

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hours.
The upper class consisted of the rich: either hereditary rich or beneficiaries
of the computer boom. Their company was acquired, their company’s stock had
skyrocketed, or they were just highly paid executives. This third class was much
larger than in any other part of the world. Entire areas of Atherton, Woodside,
Portola Valley, and Los Gatos were carpeted with multimillion-dollar homes.
And yet the lower class was dreaming of sending its children to school so
that they would become engineers, and the engineering class was dreaming of
becoming millionaires, so both castes happily accepted their subordinate roles.
Finally, there was the old generation who bought a home in the 1960s and
lived a much more relaxed life in single-family detached houses, most of them
with a swimming pool and a large backyard. They paid very little for their
house before the computer boom. During the 1990s, as they began to retire,
many of them sold their homes to the younger generation of the computer boom.
This generation of ordinary middle-class families quietly faded away, enjoying
the profits from their investment in real estate but rapidly obsolete in the digital
age.

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 Survivors: Paypal, Wikipedia, and
Genomics (1999-2002)

The Bubble Bursts

The party was wild. The dotcom boom was driving all sorts of indicators
through the roof.
Between 1998 and 1999 venture-capital investments in Silicon Valley firms
increased more than 90% from $3.2 billion to $6.1 billion. In 1999 there were
457 IPOs in the US. The vast majority of the companies that went public were
high-tech startups and about 100 were directly related to the Internet. An
impressive number were based in Silicon Valley. In 2000 the number of public
companies in Silicon Valley reached 417. In 2000 venture-capital investment in
the US peaked at $99.72 billion or 1% of GDP, mostly going to software
(17.4%), telecommunications (15.4%), networking (10.0%) and media (9.1%).
By the end of 1999, the US had 250 billionaires, and thousands of new
millionaires had been created in just one year. Microsoft was worth $450
billion, the most valued company in the world, even if it was still many times
smaller than General Motors. Bill Gates was the world’s richest man with a
fortune of $85 billion.
One of the worst deals ever in the history of Silicon Valley took place in
January 1999, when @Home acquired a struggling Excite for $6.7 billion. It
was at the time the largest Internet-related merger yet. Later that year Excite
refused to buy for less than one million dollars the technology of a new search
engine developed by two Stanford students, Google.
A symbolic event took place in January 2000 when America Online (AOL),
the pioneer of dial-up Internet access, acquired Time Warner, the world’s
largest media company. A humble startup of the “net economy” had just bought a
much larger company of the old “brick and mortar” economy. At one point or
another in the early months of 2000s, Microsoft, Cisco, and Intel all passed the
$400 billion mark by market valuation, and the only company of the old
economy that could compete with them was General Electric.
Then came the financial crash of March 2000. The dotcom bubble burst
even faster than it had expanded. Within 30 months (between March 2000 and
October 2002) the technology-heavy Nasdaq lost 78% of its value, erasing $4.2
trillion of wealth. The losses in Silicon Valley were astronomical. In 2001 there
were only 76 IPOs.
There were multiple causes for the crash, i.e. for the inflated values of
dotcom stocks. One was certainly the gullible and inexperienced “day traders”

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who enthusiastically purchased worthless stocks. Another one was the
incompetent or dishonest Wall Street analysts who created ad-hoc reports to
justify the aberrations of those worthless stocks. A final boost may have come
from the US central bank, the Fed, which pumped more money into the system in
late 1999 so that people had cash and wouldn’t need to stockpile more for a
Y2K Armageddon.
If this were not enough, the large IT companies based on the East Coast
were probably hurt more by the end of the Y2K panic than by the dotcom crash.
The first of January of 2000 came and went without any apocalypse. The Y2K
paranoia was rapidly forgotten, as if it had never existed. The last day of
December of 1999 would remain the best day ever to fly, because planes were
empty: people were so afraid that airplanes would crash all over the world.
Unfortunately, the Y2K paranoia had created an easily predictable “boom and
bust” situation. Billions of dollars had been spent in acquiring new hardware
and software before 1999, but all of this, by definition, came to an end one
minute after midnight. It was one of the few cases in which a “bust” was widely
advertised before it happened.
There was no question that the dotcom bubble had gone out of control, but
the drop in IT investment after the Y2K scare exacerbated the problem.
The direct impact of the stock-market crash was on jobs. Half of all
dotcoms shut down. The other half had to restructure themselves to live in a new
age where growth was proportional to (not independent of) profits. They needed
to make money, and, failing real revenues, the only solution was to cut costs.
Silicon Valley learned how to trim costs in the early 2000s. On top of the
layoffs due to cost cutting, there were three additional problems. First of all, the
number of software engineers coming out of universities had massively
increased to keep up with demand: but now there were no jobs for these young
graduates. Secondly, Silicon Valley companies had begun outsourcing jobs to
India: 62% of India’s exports of software in 2000 went to the US. Thirdly, the
US government had just bent to the demands of the IT industry to increase the
number of visas for foreign IT workers, causing a flood of immigrants: 32% of
Silicon Valley’s high-skilled workers were foreign-born in 2000, and mostly
from Asia. These combined factors caused the first massive decline in
employment in the Bay Area since the end of the Gold Rush era.
The 2001 recession was significant because California, and the Bay Area in
particular, had been largely immune from recessions since the Great
Depression. Recessions in California tended to be milder, while recoveries
were faster and stronger. In 2001 the opposite happened: California fared a lot
worse than the rest of the nation.

Out of the Ruins

The Nasdaq crash did not mean that the Internet was already dying. On the

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contrary, in 2000 it was estimated that 460 million people in the world were
connected to the Internet and that 10 billion e-mail messages a day were
exchanged over the Internet. In 2001 alone 42 million users traded $9.3 billion
worth of goods on eBay. For the first time, even a small business in a remote
town could reach a market of millions of people. To mention just one
emblematic statistic, Merrill Lynch reported that trades by institutional clients
over its e-commerce platforms amounted to $1.9 trillion in 2000. According to
the US Census Bureau, the grand total of e-commerce was just short of one
trillion dollars in 2000. 94% of e-commerce was B2B (Business to Business,
basically the Internet-based version of the decade-old Electronic Data
Interchange) and not yet B2C. Retail e-sales (B2C, Business to Consumer) were
only $29 billion in 2000, but in the following years they would increase rapidly,
with a double-digit year-over-year growth rate.
Some of the most innovative ideas for the Web emerged out of the Bay Area
right in the middle of the crisis. In February 1999 Marc Benioff founded
Saleforce.com to move business applications to the Internet, pioneering “cloud”
computing (you don’t need to own a computer in order to run a software
application). SalesForce launched the "software-as-a-service" (SaaS)
revolution: corporations were no longer required to purchase, install and run
business software in house, but they could instead pay for it only when using it.
This would become a trillion-dollar market within less than two decades.
eHow.com was founded in March 1999 to provide a practical encyclopedia
to solve problems in all sorts of fields via articles written by experts in those
fields. Friendster, launched in March 1999 in Morgan Hill, south of San Jose, by
Jonathan Abrams, allowed people to create “social networks.” Blogger.com,
founded in August 1999 by Evan Williams and Meg Hourihan, enabled ordinary
Internet users to create their own “blogs,” or personal journals.
Even music search was affected. Tim Westergren, an alumnus of Stanford’s
Center for Computer Research in Music and Acoustics (CCRMA), had devised
a search engine for music called Savage Beast and had launched the Music
Genome Project out of his Menlo Park home to archive songs based on their
musical genes and calculate musical proximity (the algorithm was largely the
work of co-founder Will Glaser): the search engine simply looked for songs
whose genome was similar to a given song. In January 2000 that project website
evolved into Pandora, an Internet-based streaming radio simulator that
“broadcast” music based on the listener’s preference: given a song, Pandora
produced a customized radio program of similar songs.

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 Tim Westergren of Pandora

The smartphone application Shazam, designed by Stanford alumnus Avery

Wang and launched in 2002 in Britain as "2580", allowed users to identify
songs.
When in 2000 Yahoo opted for Google‘s search engine, Inktomi read the ink
on the wall (that Google was going to wipe out the competition) and decided to
invest in a new field: streaming media. Inktomi paid $1.3 billion for
FastForward Networks, which specialized in large-scale delivery of radio and
television broadcasting over the Web in the wake of Seattle’s RealNetworks. In
December 2001 Listen.com launched Rhapsody, a service that provided
streaming on-demand access to a library of digital music (RealNetworks
acquired Listen.com in August 2003).

Virtual Money
The late boom bought dreams of virtual money. German-born Peter Thiel,
founder in 1987 of the conservative student magazine Stanford Review and a
successful currency trader, funded Confinity in December 1998 in Palo Alto
with two editors of the Stanford Review, Luke Nosek and Ken Howery. The
company was the brainchild of cryptography expert Max Levchin. He was a
Ukrainian Jew from Chicago who brought with him a group of University of
Illinois alumni, including Russel Simmons and Jeremy Stoppelman (all indirect
beneficiaries of the National Center for Supercomputing Applications' Mosaic
project). Their goal was to develop a system for Palm Pilot users to send
(“beam”) money to other Palm Pilot users, i.e. to make payments without using
cash, cheques, or credit cards.
The first entities to be impressed by Confinity were European: Nokia and
Deutsche Bank used Confinity software to “beam” from a Palm Pilot their $3
million investment in the company to Thiel. Meanwhile, X.com had been
founded also in Palo Alto by South African-born Elon Musk in March 1999
after he had sold his first company Zip2 (its software powered websites for
news media companies). X.com offered online banking services including a
way to email money.
In 2000 Confinity and X.com merged to form PayPal. Confinity’s original

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concept evolved into a web-based service to send money over the Internet to an
e-mail address, therefore bypassing banks and even borders. Thiel’s utopian
vision of a universal currency was embedded in much anti-government rhetoric
that reflected the traditional anti-establishment mood of the Bay Area from a
right-wing perspective.
However, ironically, PayPal quickly had to devote most of its efforts to fight
fraud. For example, to make sure that the user was a human being and not a
program, Dave Gausebeck and Levchin resurrected a technique invented by
AltaVista in 1997. Their display blurred and distorted characters and asked the
users to enter them on the keyboard. Basically it was a reverse Turing test (a
machine that tries to figure out if it is talking to a human), which became
popularly known as CAPTCHA (Completely Automated Public Turing test to
tell Computers and Humans Apart).
PayPal’s success was immediate. It beat all its competitors that had
preceded it in trying to help consumers sell and buy over the Internet. Paypal
was another case, like Netscape before it, of the public choosing a standard
before either government or corporations could do so. In October 2001 PayPal
already boasted 12 million registered users. Its IPO in early 2002 netted $1.2
billion dollars. The establishment, however, struck back: both banks and local
governments tried in every legal way to derail PayPal. Eventually, PayPal found
that the only way to survive was to sell itself to eBay in July 2002, for $1.5
billion.
PayPal was an impressive nest of talents, and extremely young ones among
its 200 employees. Levchin was 26 at the IPO, Musk was 31, and Thiel was the
oldest at 35. Half of those 200 would quit by 2006 and found or staff new
startups. In December 2002 Reid Hoffman of PayPal launched LinkedIn in
Mountain View, the main business-oriented social networking site. In 2002
PayPal’s co-founder Elon Musk founded Space Explorations Technology or
SpaceX to develop space transportation (in December 2010 his Falcon 9 would
become the first private spaceship to orbit Earth). Roelof Botha became a
partner at Sequoia Capital, and Thiel started his own venture-capital fund,
Clarium Capital. In the following years former PayPal employees would start
Yelp (Jeremy Stoppelman and Russel Simmons in 2004), YouTube (Chad
Hurley, Steven Chen and Jawed Karim in 2005), Slide (Max Levchin in 2005),
and Halcyon Molecular (Luke Nosek in 2009).
It was not just a mafia (as the “Paypal Mafia” was widely known in Silicon
Valley), but a self-sustaining and cooperative group because it included venture
capitalists, entrepreneurs, managers, and engineers. By 2015 the companies
founded by former PayPal employees would be worth more than $60 billion (in
order of valuation: Tesla, LinkedIn, Palantir, SpaceX, Yelp, YouTube, Yammer),
a staggering amount given that there were only about 200 PayPal employees. No
other corporation after Fairchild had created such a lucrative family tree. As
Conner Forrest wrote, "PayPal's success rate relative to billion-dollar

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companies is 350 times that of Google."

The Old Offices of Paypal (2010)

Monetizing the Web

In June 2000 Google had achieved the feat of indexing one billion pages, a
world record. Google’s technology was clearly superior in many ways to the
technology of the other web-search contenders. In January 2001 Google hired
Wayne Rosing, a Silicon Valley veteran who had overseen the Lisa at Apple and
Java at SUN. In February Google completed its first acquisition (an archive of
the old Usenet, dating back to 1995) to create an extra application (Google
Groups). It was the same tactic used in the past by Microsoft to create its
portfolio of applications. Venture capitalists John Doerr of Kleiner-Perkins and
Michael Moritz of Sequoia Capital became more involved in steering the
business of the company, which eventually led to hiring another Silicon Valley
veteran, Eric Schmidt (Zilog, Xerox PARC, SUN), as chairman. In 2002 Google
got the support of AOL, the new owner of Netscape and a rival of Microsoft.

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 Eric Schmidt of Google

The Faustian deal for Google’s rapid success was AdWords, a pay-per-
click advertising system, by far its main source of revenues. Google had started
selling "sponsored links" in 2000, a practice already followed by their rivals.
This was a manual process involving a salesperson and it mainly targeted large
corporations. AdWords, instead, introduced in 2002, was mostly automated and,
because it slashed the price of posting an advert on the Web, it targeted medium
and small businesses that had been reluctant to advertise on the Web.
The days of a commercial-free Web were not only over: Google de-facto
turned the Web into an advertising tool that incidentally also contained
information. The business model was the ultimate in cynicism. Millions of
website editors spread all over the world added content to the Web on a daily
basis, and Google used that colossal amount of free content as a vehicle to sell
advertising services to businesses. Web surfers used Google to search for
information, but Google “used” them to create the audience that justified the
amount it charged for advertising. Both the producers of content and the
consumers of content were getting no money out of this splendid business model.
Intermediaries had always made money in business, but this case was different.
Google was an intermediary of sorts in the flow of content from producer to
consumer and was making money even though there was no money transaction
between producer and consumer. The money was coming from an external entity
that wanted to sell its products to the consumer. Every time someone added a
webpage to the Web it made Google more powerful. Unlike traditional
intermediaries, which made money by charging a fee per each transaction,
Google never charged the user anything for searching. Yahoo and Excite had
already understood the power of this business plan but Google was the one that

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implemented it to perfection.
Except for the few headline stories, the new Silicon Valley startup was very
different from the exuberant ones of the 1990s. The term “ramen profitable” was
coined by venture capitalist Paul Graham to refer to a startup that makes enough
money to pay the bills while the founders aim for a big score.

Google’s Campus, formerly the Silicon Graphics’ Offices

(2010)

Winners and Losers

Many of the established Silicon Valley companies did well through the
recession. For example, Oracle in 2000 abandoned the client-server
architecture in favor of the browser-based architecture and in the first quarter of
2001 posted growing revenues of $2.3 billion. Siebel at that time owned almost
50% of the customer relationship management (CRM) market in 1999 and
minted money.
Advanced Micro Devices (AMD) beat Intel to a historical milestone. In
February 2000 its microprocessor Athlon broke the 1000 megahertz (1
gigahertz) barrier. Intel’s Pentium III (running at the same speed) came out a few
months later. However, 2001 decimated the sector. Revenues for the
semiconductor industry plunged more than 30% in 2001, with Intel alone
declining 21% from $33.7 billion in 2000 to $26.5 billion.
British chip manufacturer ARM had been selling embeddable RISC chips
since 1991, and in 1998 its technology was mature enough that it was licensed
by Qualcomm for its cell-phone technology. By 2001 ARM dominated the
market for embedded RISC chips, particularly for cell-phone applications. Only
Intel, IBM, AMD and Taiwan-based fabless VIA owned a license for Intel’s x86
technology, while ARM had made it very easy for anyone to license its
technology. Besides the merits of its chip, its business model was friendlier to

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manufacturers interested in developing their own custom processors. It was no
surprise that dozens of other companies had done so.
Palm was in troubled waters: by the end of 2001 its revenues had collapsed
44%.
In March 2002 the Canadian company Research In Motion (a spin-off of the
University of Waterloo) introduced the “smart phone” BlackBerry 5810. It was
a hand-held device with a real keyboard that allowed users to check e-mail,
make phone calls, send text messages, and browse the Web. The telephone had
just been turned into a wireless email terminal, and email had become a mobile
service. Silicon Valley took notice and in October 2002 Danger, founded by
former WebTV’s employee Andy Rubin in Palo Alto, released the mobile phone
Hiptop, later renamed T-Mobile Sidekick.
However, Silicon Valley scarcely cared when Ericsson, Nokia, Toshiba,
IBM and Intel joined together to form the Bluetooth Special Interest Group to
promote the short-range wireless technology invented by Ericsson that would
become the standard for the headphones of mobile phones and for many other
devices. In 2000 Ericsson introduced the first mobile phone with built-in
Bluetooth, the T36.
In July 1999 Hewlett-Packard appointed Carly Fiorina as CEO: she became
the first female CEO of a company listed in the Dow Jones Industrial Average,
another tribute to the Bay Area’s propensity to encourage diversity. In May 2002
Hewlett-Packard acquired Compaq, becoming the largest manufacturer of
servers, the second largest computer company in the world after IBM, and the
only serious contender for Dell in the personal-computer market. It looked like
after the breathtaking ups and downs of the personal-computer market, the
company that was still standing was one of the older generation. Because
Compaq had purchased DEC, HP now contained a division that contained a
division that was the old rival DEC. Symbolically, this represented the end of
the war between Silicon Valley and Boston. At the peak of that war nobody
would have imagined that some day DEC would end up being just a small
division within a Silicon Valley company. And DEC had been the very
originator of the “Route 128” boom in the Boston area.
The other surviving giant of the old generation, IBM, had pretty much left
the personal-computer market, but dominated software services. In 2000
software and services accounted for 50% of IBM’s business. The history of
computer manufacturing looked like a vast graveyard of distinguished names,
from Univac to DEC to Compaq.

Corporate-tech
Web-based commerce was there to stay and some of the obscure winners of
those years were companies that could see beyond the temporary debacle. In
particular, e-commerce, being entirely software-driven, lent itself to better

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analytics. During the following decade a huge number of startups would try to
capitalize on this fact, continuing a trend towards retail sales optimization that
had been going on in Corporate America ever since. DemandTec, founded in
1999 in San Mateo by Stanford's professor of supply chain management Hau Lee
and economist Mike Neal, became one of the leaders in analytical software
tools for retailers, or Consumer Demand Management (CDM) software. Such
products performed a behind-the-scene scientific study of shoppers' behavior on
the Web to help e-retailers with their pricing and marketing strategies. This was
also one of the early applications of "cloud computing" (software that sits on the
Web, invisible to the user) coupled with large-scale data management.

Consumer Multimedia
A sector that showed promise was the whole consumer multimedia
business. Photography had gone digital thanks to ever-cheaper digital cameras.
Music had gone digital, especially when free software allowed music fans to
“rip” CDs into mp3 files. And digital formats for videos were beginning to
spread. Consumers needed two things: applications to display and play these
digital files, and storage to save them. In 1999 IBM released a 37.5-gigabyte
hard-disk drive, at the time the world’s largest. In November 2000 Seagate
Technology, which had been purchased for $3 billion by Veritas Software,
based in Mountain View and specialized in storage management software,
smashed that record with the Barracuda 180-gigabyte hard drive. 3PAR was
founded in 1999 in Fremont by former SUN executive Jeffrey Price and Indian-
born former SUN chief architect Ashok Singhal to deliver shared storage
devices. It utilized allocation strategies of “just-enough” and “just-in-time” for
increased efficiency.
In 1995 the Israeli company M-Systems, founded in 1989 by Dov Moran,
had introduced the first flash-memory drive, and in 1999 it introduced the first
USB flash drive, marketed as "a hard disk on a keychain". That was the birth of
flash-based solid-state drives, an alternative (with no movable parts) to the
electromechanical hard-disk drives (with movable parts, including a spinning
disk) that was going to revolutionize the industry. M-Systems was acquired by
Milpitas-based flash-memory pioneer SanDisk in 2006.
Meanwhile, in 2000 Microsoft demonstrated the Windows Media Player to
play both music and videos under Windows. In January 2001 Apple responded
with its iTunes software (available also on Windows in 2003). In October 2001
Apple chose a completely different route: it launched a consumer device, the
iPod (designed by Tony Fadell), to play music files. It was basically a
“walkman” for mp3s with a five-gigabyte internal hard-disk (a market created in
1998 by South Korea's SaeHan with the world's first MP3 player, the MPMan,
and until then dominated by Singapore's Creative Technology with its digital
music players Nomad). Apple also defied common wisdom by launching a chain

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of fashionable Apple Stores, an idea perhaps modeled on what Olivetti did in
the 1950s (Olivetti stores such as the one opened on New York's Fifth Avenue in
1954 and especially the one in Venice's St Mark Square of 1959 were created
by celebrated architects, the latter by Carlo Scarpa).

The Apple Store in Palo Alto

The history of P2P, one of the big innovations of the era, was mostly based
outside the Bay Area. Shawn Fanning, a student at Boston Northeastern
University, came up with the idea of a Web-based service to distribute mp3
files, i.e. music, over the Internet. His Napster went online in June 1999. It
allowed consumers all over the world to share music files, thus circumventing
the entire music industry. The music industry reacted with a lawsuit that
eventually shut down Napster in July 2001. It was too late to stop the avalanche,
though. Napster inspired a new generation of similar Web-based services,
except that the new generation improved Napster’s model by using Peer-to-Peer
(P2P) architectures.
A P2P service basically facilitates the transfer of files between two
computers, but does not physically store the file in between the two computers.
Kazaa, for example, was developed in Estonia by Ahti Heinla, Priit Kasesalu
and Jaan Tallinn, and introduced in March 2001 by the Dutch company
Consumer Empowerment. In July 2001 San Francisco resident Bram Cohen
unveiled the P2P file sharing protocol BitTorrent, soon to become the most
popular service of this kind. It was faster than previous P2P services because it
downloaded a file from many different sources at the same time (if multiple
copies were available on multiple servers). These whiz kids became heroes of
the counterculture for defying the music industry.
Napster and BitTorrent relied on a central server. However, Justin Frankel's
and Tom Pepper's Gnutella (2000) was conceived in Arizona but it relied on a
peer-to-peer network. Another decentralized network was Freenet, originally
organized in London a few months later by Irish-born Ian Clarke in 2000. Four
employees of Microsoft published "The Darknet and the Future of Content
Distribution" (2002), acknowledging the increasing power of inscrutable

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password-protected networks within the Internet. Anonymous peer-to-peer
networks started using the Onion Router (TOR), the outcome of a military
research project launched in 1995. One of the original scientists, Paul Syverson,
helped Roger Dingledine and Nick Mathewson develop the onion router TOR
that became operational in 2002. Such dark nets would become very popular
with political dissidents in places where the Internet was massively censored,
e.g. in Syria before the civil war (but also by child pornographers, drug dealers,
counterfeiters and terrorists). The Freenet itself would become a dark net in
2008.
Gaming was also undergoing a dramatic transformation. In 1996 the San
Francisco Chronicle’s website had introduced “Dreadnot,” a game built around
a fictional mystery that took place around real locations in San Francisco. It
featured real people and used phone numbers, voice mailboxes, email
addresses, and other websites (in other words, an interactive multiplatform
narrative). It was the first “alternate reality game” and it was free. A few years
later in nearby Redwood City the team of game designers of Electronic Arts
began working on “Majestic,” that eventually debuted in July 2001, the first
“alternate reality game” for sale. In keeping with the theme of the genre, it was
credited to two fictional game designers, Brian Cale and Mike Griffin. These
games involved the real life of the players, and therefore Electronic Arts
marketed it with the motto “It plays you.” The game that launched the genre on a
planetary scale was Microsoft’s “The Beast,” that debuted a few weeks before
“Majestic.” It was the brainchild of Jordan Weisman.
Unbeknownst to Silicon Valley, a major revolution was taking place in the
Far East. Among the pioneers of smartwatch technology had been Seiko's Data
2000 watch (1983), the first in a line of smartwatches that would last for
decades, Casio had been making smartwatches since at least the VDB-1000
(1991). Computerized watches became serious business at the turn of the decade
with Samsung's SPH-WP10 (1999), the world's first watch phone, which would
be followed by several other models over the years, Casio's WMP-1 (2000), the
world's first watch capable of playing MP3 files, Casio's WQV (2000), the
world's first watch to include a camera, followed by Casio's GWS-900 G-
Shock (2004), the world's first watch capable of mobile payment. In the USA
interest for smartwatches had always been tepid, with half-hearted experiments
such as IBM's Watchpad (2001), jointly developed by IBM and Citizen Watch
and running Linux, and later Microsoft's SPOT (2004).

Corporate Multimedia
Radio Frequency Identification (RFID), a wireless technology that used
radio waves to track items, had been invented in the 1970s but largely forgotten.
In 1998 MIT professors David Brock and Sanjay Sarma developed Internet-
based UHF RFID that made it feasible for top retailers such as Wal-mart (that

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had pioneered bar coding in the 1980s) to deploy RFID technology extensively
(typically for inventory purposes within supply chain management). Wal-mart
eventually mandated RFID to all its suppliers by 2005. Among the early
manufacturers of RFID products was Alien Technology, founded in 1999 in
Morgan Hill (south of San Jose) by Stephen Smith, a professor of electrical
engineering at UC Berkeley.
RFID found another application in contact-less credit cards (or "blink
technology"). These were credit cards with an embedded RFID microchip that
didn't need to be swiped but simply waved. The idea was pioneered by the
Octopus card in Hong Kong in 1997 to pay for public transportation and by oil
company Mobil's Speedpass keychain in 1997 for gasoline pumps.
The leaders were in Europe and in Japan. The European market was
dominated by Mifare, developed in 1994 in Austria by Mikron (Mifare meaning
"MIkron Fare Collection System") and acquired by Dutch conglomerate Philips
in 1998, while Sony's FeliCa, introduced in 1996, ruled in Japan. Both were
proprietary technologies because they had been introduced before the
international standard was decided.
Encryption for digital communications had been born in the Bay Area (PKI,
in 1976) but owed its improvement to Israeli scientists. Adi Shamir (who had
invented the crucial RSA algorithm for PKI) proposed a simpler form of
encryption in 1984: Identity-Based Encryption (IBE), in which the public key is
some unique information about the identity of the sender (typically, the person's
email address). The first practical implementation of IBE was the work of
Stanford's Israeli-born Computer Science professor Dan Boneh in 2001. Two of
his students, Rishi Kacker and Matt Pauker, started Voltage in 2002 in Palo Alto
(or, better, in Stanford's dormitory) to develop security software for corporate
customers.

Wikipedia
The website that would have the biggest impact on society, Wikipedia,
originated in the Midwest. Chicago-based day trader Jimmy Wales had co-
founded in 1996 Bomis, a website of pornographic content for a male audience.
At the same time he was preaching the vision of a free encyclopedia and, using
Bomis as his venture capitalist, he had hired Ohio State University’s
philosopher Larry Sanger as the editor-in-chief of this Nupedia, which debuted
in March 2000. The concept was aligned with Richard Stallman’s Free
Software Foundation, except that it was not about software but about world
knowledge.
Next came the wiki. In January 2001 Sanger decided to add a “wiki” feature
to let contributors enter their texts. Wikis had become popular in company’s
intranets as ways to share knowledge, basically replacing the old concept of
“groupware.” This method proved a lot more efficient than the traditional

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process of peer review, and therefore “Wikipedia” (as Sanger named it) was
already surpassing Nupedia in popularity when Bomis decided to pull the plug.
Wales realized that Wikipedia was the way to go, abolished Nupedia, and
opened Wikipedia to everybody. Formally established in 2003 as a non-profit
foundation based in San Francisco, Wikipedia became a free, multilingual
encyclopedia edited collaboratively by the Internet community. Within a few
years it would contain more information that the Encyclopedia Britannica ever
dreamed of collecting. It was another example of how utopian ideals percolated
into the Internet world.

A Wikipedia Screenshot (2010)

Larry Sanger left to join the Digital Universe Foundation based in Scotts
Valley. It was founded in 2002 by Utah-based entrepreneur Joe Firmage, a
former Novell executive, and by German-born astrophysicist Bernard Haisch.
Its mission was to create a more reliable web-based encyclopedia, Digital
Universe (originally called OneCosmos).
The “copyleft movement” was a new intellectual trend shaped on the Web. It
rejected the praxis of big media corporations who retained all rights and thus
stifled creativity. Larry Lessig, a law professor at Stanford Law School,
founded the Creative Commons in 2001 in San Francisco to promote sharing and
diffusing creative works through less binding licenses than the traditional “all
rights reserved” copyright. Lessig went on to found at Stanford in 2008 the
Center for Internet and Society (CIS) “to improve Internet privacy practices.”
In the second half of the 1990s the Zapatistas, a small rebel group in
Mexico, had staged a publicity coup by using a network of alternative media to
publicize their political agenda on the Internet. Following their lead, in late
1999 political activists spread around the world started the Indymedia project
to provide and distribute alternative coverage of the protests against the World
Trade Organization that were taking place in Seattle. Indymedia used software
originally developed by hackers in Sydney that allowed individuals to update
the website in real time. In 2001 violent anti-G8 protests erupted in the Italian
city of Genoa, and Indymedia played an even bigger role in disseminating agit-
prop news. Indymedia would die out after Facebook and other social media
began providing more professional platforms.

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 Uploading
The key difference between this generation of the Web's users and the
previous generation was not so much in the number of people who were
browsing it but in the number of people who were uploading content to it.
Digital content had been around for decades. The vast majority of archives
in the developed world had already been converted to databases. Large amounts
of text had been scanned and digitized. New text was almost all in digital form.
No other appliance since the ice box had disappeared so rapidly from
households like the typewriter did in the 1990s. The telex had been replaced by
e-mail. Newspapers and magazines had converted to digital composition. And
now an increasing number of individuals were producing digital texts at an
exponential pace, whether students writing their essays for school or adults
writing letters to friends. Digital cameras and digital recorders were flooding
personal computers with digital images and sounds. Napster-like services were
popularizing the idea that a song is a file.
All this digital material was available, but it had been largely kept private
on someone's home or work computer. The browser and the search engine, by
definition, had encouraged people to "download" information from the Web, not
to "upload" information to it. Wikipedia, blogs, P2P tools, social networking
sites and soon YouTube and Flickr heralded an era in which the rate of
uploading was going to almost match the rate of downloading. In fact, uploading
was becoming a form of entertainment in itself. The 1990s had been the age of
democratizing the Internet. The 2000s witnessed the democratization of the
"uploading": more and more individuals began to upload their digital content to
the Web in what became one of the most sensational processes of collective
knowledge creation in the history of humankind.
In this scenario the business model of America OnLine was terribly
outdated. Warner, originally a film production company, had merged in 1990
with publisher Time. Then Time Warner had entered the cable television
business by acquiring Ted Turner's TBS in 1996. The media conglomerate now
owned films, tv shows and articles. Then in 2000 America OnLine (AOL)
purchased Time Warner and AOL Time Warner was born, the first media
conglomerate of the Internet age that was making everything from cinema to
email. The idea was to couple content and online distribution. It failed because
AOL was rapidly losing its grip on the World-wide web as the era of dial-up
access was being replaced by the era of Digital Service Lines (DSL) and cable
broadband. There was no need anymore for AOL's dial-up service (that came
with the limitation of being able to see only the part of the World-wide Web that
AOL owned).

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 Biotech
Unfortunately the dotcom crash also affected the biotech industry. Funding
for biotech startups collapsed after reaching a peak of $33 billion in 2000. It
didn’t help that Bill Haseltine ‘s Human Genome Sciences, one of the most
hyped startups on the East Coast, turned out to be an embarrassing bluff. It
raised a huge amount of money before the dotcom crash, but it did not introduce
any pharmaceutical product. Luckily, philanthropy offset the retreat of the
venture capitalists. In 2000 Victoria Hale, a former Genentech scientist, started
the first non-profit pharmaceutical company, the Institute for OneWorld Health,
in San Francisco. In 2000 the Bill and Melinda Gates Foundation became the
world’s largest foundation, and specifically addressed biotechnology.
Biofuels too (not only medicines) began to attract capital. In 2002 Codexis
was founded as a spin-off from drug developer Maxygen. Amyris
Biotechnologies, founded in 2003 by some Berkeley scientists including Jay
Keasling and Kinkead Reiling, raised over $120 million in venture capital in a
few years due to the Institute for OneWorld Health. Solazyme, based in South
San Francisco and founded in 2003 by Jonathan Wolfson and Harrison Dillon,
specialized in fuel derived from algae.
In 2000 the government-funded Human Genome Project and the privately
funded Celera made peace and jointly announced that they had succeeded in
decoding the entire human genome.
After the publication of the draft (in 2004) laboratories all over the world
proceeded to sequence the genome of several other organisms. By comparing
the human genome with the genome of other organisms, scientists figured out
what the human genome is, and the picture was wildly different from what
expected. It turns out that the human genome contains only 21,000 genes, but
thousands of non-coding RNA genes and millions of regulatory elements. The
transposons, that were assumed to be just "junk", turn out to be crucial for
spreading new genetic "ideas", i.e. for enabling evolution, and evolution mostly
works on the regulatory elements (very little has changed in the genes
themselves over millions of years).
Enumerating the genes of human DNA enabled a new discipline: genomics,
the study of genes. In particular, biologists were interested in finding out which
genes cause which diseases, and how to create a predictive medicine or just
how to develop smarter diagnoses. In other words, Celera and the HGP had
produced billions of bits of information, but the next task was to interpret that
information and apply it to understanding human diseases. This implied that
someone had to scavenge that mass of information looking for useful bits.
Silicon Genetics was founded in 2000 in Redwood City by Australian-born
mathematician Andrew Conway of Stanford’s Biochemistry Department to focus
on “expression software,” software tools to investigate gene expression.

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 DoubleTwist, Human Genome Sciences and Invitron were examples of
companies that revised their business plan accordingly. They were biomedical
companies trying to sell not pharmaceutical drugs but information and analysis.
That was the bioinformatic side of the biotech business. Then there was the
genomic side of the business, which analyzed a specific person’s genome
against that mass of annotated information.
An important step towards personal genomics was the establishment in
October 2002 of the International HapMap Consortium. It was a collaboration
among research centers (Canada, China, Japan, Nigeria, Britain, and four in the
US, including UCSF) to create a “haplotype map” of the human genome. This
map was about SNPs (Single-Nucleotide Polymorphisms). SNP means that a
nucleotide of the DNA can have different values in different individuals of the
same species. The 10 million or so SNPs that exist in human populations
explain why some people are more likely to develop a certain disease than
others. In 2002 Jeffrey Trent of the National Human Genome Research Institute,
established the non-profit Translational Genomics Research Institute in Arizona.
The sequencing of the human genome made the database of Palo Alto-based
pioneer Incyte partially irrelevant, but Incyte continued to acquire biotech
startups and in 2000 launched an online version of Lifeseq that offered
information about a gene’s functions at a more affordable price. DoubleTwist,
instead, in 2002 succumbed to the double whammy of the dotcom crash and the
sequencing of the human genome.
The media seized on the announcement (in October 2001) by Advanced Cell
Technology (ACT) that it had cloned the world’s first human embryo, causing
the ire of right-wing President George W Bush who opposed human cloning on
religious grounds. ACT was a spin-off of the University of Massachusetts
founded by James Robl whose lab there had been the first to clone calves from
somatic cells. The team included Jose Cibelli, a pupil of Robl who had
experimented with nuclear transfer to rejuvenate cells, Robert Lanza, who was
working on clones of endangered species, and even Michael West of Geron
fame (who had joined ACT in 1998). Their goal was actually to generate
embryonic stem cells that were needed for controversial medical research.
Meanwhile, an important milestone was achieved by synthetic biology. In
July 2002 Eckard Wimmer ‘s team at University of New York at Stony Brook
created the first synthetic virus by cloning the polio virus from its chemical code
that they had simply downloaded from the Web.
The pharmaceutical industry kept growing in the area around South San
Francisco, fueled in no small part by Stanford's School of Medicine. For
example, in 2002 Israeli-born professor Daria Mochly-Rosen started KAI
Pharmaceuticals.
Plexicon, founded in December 2000 in Berkeley by Croatian-born Israel
biochemist Joseph Schlessinger and Korean-born structural biologist Sung-Hou
Kim was one of the many "drug discovery" startups, i.e. companies that were

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not focused on one specific biotech experiment but on discovering a new
method of accelerating drug discovery in general.

Neurotech
There was also renewed interest in artificial intelligence, a field that had
markedly declined since the heydays of the 1980s. However, the action came
mostly from futurists and intellectuals rather than from practitioners, and the
funding came from philanthropists rather than the academia or the government.
The Singularity Institute for Artificial Intelligence (SIAI), devoted to super-
human intelligence, was founded in 2000 in San Francisco by Eliezer
Yudkowsky, while in 2002 Jeff Hawkins (of Palm Computing fame) founded the
Redwood Neuroscience Institute in Menlo Park.
The Stanford Artificial Intelligence Laboratory was quietly experimenting
with robots and in 2005 would win the “Grand Challenge,” a race of driver-less
cars funded by the DARPA in the Nevada desert, with its Stanley, a modified
Volkswagen Touareg.

Greentech
Times of economic crisis had always been good for imagining completely
new business sectors. An emerging theme in Silicon Valley was energy,
especially after the 2001 terrorist attacks that highlighted how vulnerable the US
was to the whims of oil-producing countries. In 2001, KR Sridhar, an alumnus
of India’s prestigious National Institute of Technology who had worked on
NASA’s Mars mission, founded Ion America (renamed Bloom Energy in 2006)
in Sunnyvale to develop fuel-cell technology to generate environmentally-
friendly electricity. Within a few years it had raised $400 million in venture
capital money. Its fuel cells (eventually unveiled in February 2010) were based
on beach sand. Each unit cost between $700,000 and $800,000. Google and
eBay were among the early adopters of these fuel-cell power generators. Fuel
cells opened up the possibility of liberating individuals from the slavery of
power plants and transmission grids.
Founded in 2002 in San Jose by Stanford engineering student Brian Sager
and by Martin Roscheisen of FindLaw fame, NanoSolar (the first solar energy
company based in Silicon Valley) collaborated with Stanford University and
Lawrence Berkeley National Laboratories. They developed an ink capable of
converting sunlight into electricity; it became the foundation for its family of
flexible, low-cost and light-weight solar cells.

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 Bloom Energy’s Offices (2010)

Nanotech
Nanotechnology, on the other hand, seemed to benefit from the dotcom
crash, as venture capitalists looked elsewhere to invest their money. The US
government enacted a National Nanotechnology Initiative in 2001, which helped
fuel the sector. New startups in Silicon Valley included Nanosys, founded in
2001 to produce “architected” materials, and Innovalight, founded in 2002 and
specializing in solar cell technology. Venture capitalists saw opportunities in the
convergence of biotech, infotech, and nanotech. However, the nano hype mainly
resulted in books and organizations with pompous titles, such as “Kinematic
Self-Replicating Machines” (2004) by Robert Freitas and Ralph Merkle.
In the old tradition of government intervention to boost high-tech
investments, in 1999 the Central Intelligence Agency (CIA) set up an odd not-
for-profit venture-capital firm in Menlo Park, called In-Q-Tel. It would invest in
leading-edge technologies such as nanotech and biotech. One of their
investments in Silicon Valley was in Keyhole, founded in 2001 by Brian
McClendon and John Hanke. It developed a geospatial data visualization tool
(software to display three-dimensional images of satellite images).

Bionics
The Bay Area’s passion for creating a society as inclusive as possible had
always made it a friendly place for disabled people, particularly around the
Berkeley campus. In 2000 DARPA decided to fund a project at UC Berkeley’s
Robotics and Human Engineering Laboratory. It built technology capable of
mobilizing paralyzed people. These “exoskeletons,” named BLEEXes (Berkeley
Lower Extremity Exoskeletons), were lightweight battery-powered artificial
legs that helped a disabled person not only to walk but also to carry a heavy
load. The first BLEEX was introduced in 2003. In 2005 the director of that
laboratory, Homayoon Kazerooni, founded a company, Berkeley ExoWorks

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(later renamed Berkeley Bionics), to commercialize the devices. In 2010
Berkeley Bionics would introduce eSuit, a computer-controlled suit to make
paralyzed people walk.

The Anthropology of E-socializing

Email became pervasive in the 1990s. Email and the Web came rapidly to
be used not only for business but also for personal matters, fun, and family.
High-tech tools were not social in themselves but the people who produced
them and used them daily discovered their “social” value. They soon came to be
used as social tools too to replace the lacking social life of Silicon Valley; to
create networks of soccer players, hikers, music listeners, etc. This “discovery”
that high-tech tools were valuable for building social networks would have
widespread implications. It also meant that individuals came to be
progressively more and more often plugged into the network.
Email developed a new mindset of interaction with the community: it
allowed people to delay a response, to filter incoming messages, to assign
priorities. Of course, this had already been made possible by answering
machines; but email was written and was stored on the computer. Email also
allowed a message to have multiple recipients, which led to the creation of
mailing lists. In other words, email increased control over personal
communications.
Electronic socializing also helped remove some of the ethnic barriers that
still existed. After all, in 1997 more than 80% of newborn babies had parents of
the same ethnic group. For a region with such a large percentage of foreign-born
people, it was surprising that the ethnic background still mattered so much. The
advent of e-socializing removed some of the formalities that one expected from
friends.
High-tech also fostered mobility of information at the expense of mobility of
bodies. Telecommuting became more common, if not widespread.
Telecommuters lived and worked in the same place: the home office. And they
worked when inspired. They had no work hours, as long as they delivered their
task by the deadline. Teleconferencing and telecommuting further reduced
personal interactions. Co-workers became invisible although present 24 hours a
day. On one hand, high-tech tools made one reachable anywhere any time. On
the other hand, it also estranged one from the community.
Silicon Valley’s engineers were the first users of their technologies. But the
opposite was also true: Silicon Valley’s engineers could also be the last users of
technologies developed in other regions. For example, the rate of adoption of
cellular phones was a lot slower than in Europe.
One reason why the virtual community was so successful was that the
physical community was so unsuccessful. Silicon Valley was a sprawling
expanse of low-rise buildings but did not have an identity as a community (other

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than the identity of not having an identity). San Jose, in particular, had become
one of the richest cities in the nation. It was, however, not a city, but just an
aggregate of nondescript neighborhoods that had grown independently over the
years. In true Silicon Valley fashion, the city decided to create a downtown area
overnight that would introduce a flavor of European lifestyle. It spent almost
one billion dollars to create a large shopping, dining, and entertainment complex
strategically located at the border with Santa Clara and Cupertino. In 2002
Santana Row opened for business. It was totally artificial.

The Myth
Throughout the 1990s, thanks to the dotcom boom and to the favorable
global political environment (the Cold War had ended in 1991 with a complete
conversion of the communist world to capitalism), there was much discussion
about how to export Silicon Valley’s model to other regions of the world,
notably Singapore, India, and China. Nobody found quite the right formula,
although they all took inspiration from many aspects of Silicon Valley.
In the US itself there were different opinions on how to foster innovation.
For example, in 2000 Microsoft’s former research head, Nathan Myhrvold,
founded Intellectual Ventures, a secretive enterprise with a business model to
purchase as many patents as possible in just about every imaginable field. But
the emphasis was more on filing patents than on incubating viable companies.
Owning a huge portfolio of patents is mainly a legal business, involving armies
of intellectual-property attorneys, and it can be lucrative because any other
company trying to develop a product in the same sector will have to buy the
related patents. Of course, this “patent farming” business hampers rather than
fosters innovation because many smaller companies will never even think of
venturing into a field for which a billion-dollar venture fund owns a patent.
Regardless of the philanthropic merits of encouraging inventors from all over
the world, Silicon Valley looked down on this kind of approach: it was artificial
and it did not create a real integrated networked economy.
Microsoft’s co-founder Paul Allen had pioneered this approach in 1992
when he had established the Palo Alto-based Interval Research Corporation. It
was a technology incubator that made no products but filed a lot of patents that
were used 18 years later to sue just about every major company in the Web
business.

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 Downsizers: Facebook, YouTube, Web 2.0,
and Tesla Motors (2003-06)

Distributed and Small

The early 2000s were an age of downsizing. Silicon Valley companies had
to learn the art of cost cutting. Startups had to learn the art of actually
developing a product and selling it. Once again, the beneficiary was India.
Creating a lab in India (where software engineers earned a fraction of Silicon
Valley engineers) was a relatively painless way to dramatically cut costs. By
2005 more than 50% of all jobs outsourced by Silicon Valley companies went to
India.
There were other lessons to be learned too. In July 2003 AOL spun off
Mozilla. It was originally founded by Netscape to foster third-party
development on the browser under a free open-source license. It quickly built a
reputation as a new browser. The first chair of the Mozilla Foundation was
Lotus’ founder Mitch Kapor. The lesson learned by Netscape through Mozilla
was that the open-source model works, but it is a Darwinian process, and, just
like in nature, it works very slowly. The Mozilla community hated Microsoft’s
Internet Explorer and therefore loved the Netscape browser. Unfortunately, this
meant that dozens of people added features to Mozilla to the point that it became
famously fat and slow.
Mozilla needed a re-birth. This came in 2002 when a new batch of
developers (mainly Stanford students Blake Ross, who had started working on
Mozilla at the age of 14, and Dave Hyatt) produced a “lighter” version of the
Mozilla browser. It was eventually named Firefox. Firefox was indeed a state-
of-the-art browser that could match IE (whose team Microsoft had just
disbanded anyway in 2001). Yet precious time had been lost. In 2003
Microsoft’s Internet Explorer (IE) owned 95% of the browser market. The
market share of Apple's Safari was negligible, but Apple made its WebKit
rendering engine open source in 2005, a fact that would have far-fetched
consequences a few years later in the age of the smartphones.
Computing devices had been getting smaller since the first Eniac was
unveiled. That trend had never really stopped. It just proceeded by
discontinuous jumps: the minicomputer was a significant downsizing from the
mainframe, and so was the personal computer from the minicomputer. The
laptop/notebook, however, was just a variation on the personal computer, the
only major difference being the screen. In 2005 sales of notebook computers
accounted for 53% of the computer market: the traditional desktop computer

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was on the way out. IBM pulled out of the market for desktop computers. There
was a clear trend towards a portable computing device, but the laptop per se
did not truly represent a quantum leap forward, just a way to stretch the
personal-computer technology to serve that trend.
At the same time sales, of smart phones were booming too, but there was a
lesson there too. In 2004 Motorola introduced the mobile phone Razr, an
elegant-looking device that by July 2006 had been bought by over 50 million
people, propelling Motorola to second position after Nokia. Yet sales started
dropping dramatically in 2006. Motorola learned the hard way an important rule
of the cell phone market: phones went in and out of fashion very quickly. There
was room for more players, and Silicon Valley had largely been on the sidelines
until then.
Ironically, the mobile smartphone of the 2000s rediscovered the three-line
navigation menu button (known as the "hamburger icon") that the Xerox Star
personal workstation had used in 1981 (because of graphical limitations).
No Silicon Valley company (or, fot that matter, US company) was part of the
consortium formed in 2004 to develop and promote Near Field Communication
(NFC), basically the smartphone equivalent of the old RFID. This was a method
to allow smartphones to exchange data by simply pointing at each other at close
range. The founders were Nokia, Philips and Sony. It would take seven years for
Silicon Valley to catch up (when Google would introduce the technology in its
NFS-enabled smartphones).
Wearable computing was born in April 2003 with the Nokia HDW-2, the
first Bluetooth headset for mass consumption.
The positive note for the dotcoms was that the Web was spreading like a
virus all over the world. By 2006 Google had indexed more than eight billion
pages, coming from the 100 million websites registered on the Web. In March
2006, the English version of Wikipedia passed one million articles. The Internet
was being accessed by 1.25 billion people in the world. The dotcom bubble had
not been completely senseless: one just had to figure out how to capitalize on
that massive audience.
By 2005 Yahoo!, Google, America OnLine (AOL) and MSN (Microsoft’s
Network) were the four big Internet “portals,” with a combined audience of
over one billion people. Never in history had such a large audience existed.
Never in history had Silicon Valley companies controlled such a large audience
(most of that billion used Google and Yahoo!). There were only two threats to
the Internet: spam (undesired marketing emails) and viruses (malicious software
that spread via email or downloads and harmed computers).
Intel capitalized on the popularity of the Web with a new generation of
microprocessors. Wi-Fi became a household name after Intel introduced the
Centrino for laptops in March 2003 (largely the vision of Indian-born Anand
Chandrasekher). From that point on a laptop would be associated with wireless
Internet as much as with mobility.

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 In 2004 the first Wi-Fi-certified cell phones reached the market. These were
portable devices that provided both Wi-Fi and cellular communications. In other
words they merged the worlds of email (and web-browsing) and phone
conversation (and text messaging). The Nokia's Symbian-based 9500
Communicator and Motorola's Windows-based MPx were the vanguard of this
generation. Both were equipped with a QWERTY keyboard, and the MPx also
incorporated a 1.3 megapixel camera (which by this point had become a fairly
standard feature on high-end phones).
Mobile television, already available in South Korea since 2005, spread
worldwide in a few years, finding millions of customers in Asia, Africa, and
Latin America. Ironically, the West lagged behind, and in 2010 mobile TV was
still a rarity in the US. But even in this case Silicon Valley was actually at the
vanguard: the leading mobile TV chip maker, Telegent Systems, a fabless
company founded in 2004 by LSI Logic’s inventor Samuel Sheng, was based in
Sunnyvale.

Google and its Inventions

Google’s growth had been particularly stunning, dwarfing even the excesses
of the dotcom bubble. In 2003 Google had 10,000 servers working nonstop to
index the Web (14 times more servers than employees). In 2002 Google
acquired Blogger and in 2004 they acquired Keyhole (a CIA-funded startup), the
source for their application Google Earth. More than a search engine, Google
was expanding in all directions, becoming a global knowledge provider. In
early 2004 Google handled about 85% of all search requests on the Web. In fact,
a new verb was coined in the English language: to “google” something (search
for something on the Web). Google’s IPO in August 2004 turned Google’s
founders, Sergey Brin and Larry Page, into billionaires. In 2004 an ever more
ambitious Google launched a project to digitize all the books ever printed.
In 2004 Google hired German-born natural-language expert Franz-Josef
Och, whose machine-translation system at the University of Southern California
had been selected by DARPA. In 2005 Google introduced its own automatic-
translation system to translate webpages written in foreign languages. In
October 2004 Google acquired Danish-born Australian-based Berkeley alumnus
Lars Rasmussen ‘s company Where2 and its mapping software; and in 2005
Google introduced Google Maps. MapQuest, the pioneering Web-based
mapping service acquired by AOL in 2000, lost to Google Maps because the
latter allowed third-party developers to add information to the map and use the
map in their own software. The time-consuming process of scaling a web
application was more easily done by “exploiting” the Internet community of
software developers.
Much was being said of Google’s ethics that allowed employees vast
freedom to be creative. However, almost all of Google’s business was driven

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by acquisition of other people’s ideas. Gmail, developed internally by former
Intel employee Paul Buchheit and launched by invitation only in April 2004,
was not much more than Google’s version of Hotmail. What made it popular
was the hype caused by the “invitation-only” theatrics, plus the large amount of
storage space offered. The only clear difference over Hotmail was that Gmail
offered a gigabyte of storage versus Hotmail's two megabytes, i.e. 500 times
more memory. Google Checkout, introduced in June 2006, was a poor man’s
version of PayPal. Google Streetview, introduced in 2007, was quote similar to
Vederi’s ScoutTool (StreetBrowser), launched in 2000. So Vederi sued.
Google's Android operating system for smartphones, acquired in 2005 from
the namesake startup and introduced in 2007, was widely believed (not only by
Steve Jobs) to be a diligent but uninspired imitation of the iPhone's operating
system. The "semantic" improvement to the Google search engine of 2009 was
due to the Orion search engine, developed in Australia by Israeli-born Ori
Allon an acquired in 2006.
Google replicated Microsoft’s model. Its own research labs were
incredibly inept at inventing anything original, despite the huge amount of cash
poured into them. That cash mostly bought them patents on countless trivial
features of their products, a tactic meant to prevent innovation by the
competition. What drove Google’s astronomical growth was (just like in
Microsoft’s case) the business strategy, not the inventions.
Google's real innovation was in the field of advertising. In June 2003
Google introduced AdSense, designed by Paul Buchheit right after Google
acquired the technology from Applied Semantics (which had been founded in
1998 by Caltech graduates Gilad Elbaz and Adam Weissman in Los Angeles)..
It was a vast technological improvement over AdWords: content-targeted
advertising. AdSense was capable of "understanding" the topic of a webpage
and therefore automatically assign to it the relevant ads among all the ads
provided by paid advertisers. By systematically monitoring the behavior of its
search engine's users, Google had invented (or, at least, perfected) an automated
system with three aims: first, for advertisers to create more effective ads;
second, for Google itself to display more relevant ads; and third, for users to
view the most relevant ads. The traditional ad in a newspaper had mostly been a
one-sided decision, based on what an advertiser wanted to print and how much
it was willing to pay, mediated by one of the newspaper's salespeople. In
Google's world the ad became a computer-mediated deal among three entities:
the advertiser, Google's AdSense and the user. Basically, AdSense created an
infinite feedback loop that allowed advertisers to continuously improve their
adverts, and at the same time promoted a race among advertisers to develop the
"fittest" ad in a sort of Darwinian process. If previous progress in search-based
advertising had lowered the barrier from large corporations to small businesses,
AdSense enabled any content provider (from established news media to the
smallest website on a rock star run by a teenage fan) to monetize its content. Of

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course, this also led to an alienating process in which very serious texts were
being used to publicize trivial products (famously AdSense associated ads
about plastic bags with the news of a murderer who had stuffed its victim's body
parts in a plastic bag). The new landscape for advertisers was the whole
behavior of the user, that Google monitored as much as possible through the
user's searches. Thus, for example, someone dying of cancer and desperately
searching the Web for medicines and devices would automatically be turned by
AdSense into a golden business opportunity for any company advertising those
medicines and those medical devices.
Yahoo! had lost part of its sheen, but still generated yearly revenues of $1.6
billion in 2003 (up from $953 million in 2002), with an astronomical yearly
growth and market value. In 2003 it acquired Overture/GoTo, nurtured by Los
Angeles-based incubator Idealab, and introduced the “pay per click” business
model for advertisers instead of the traditional "per view" model. GoTo had
also introduced the idea of letting advertisers bid to show up higher in the
results of a search (the "pay-for-placement" model).. In 2006 revenues would
reach $6.4 billion. Note that these dotcom companies were mainly selling ads.
The initial dotcom business plan of simply becoming popular had eventually
worked out: all you needed was a large audience, and then the advertisers
would flock to your website. What was missing in the 1990s was the
advertisers.

Social Networking
Initially, instead, the idea behind the dotcoms had been to transfer commerce
to the Web; hence e-commerce. This was a more than viable business, but, in
hindsight, it lacked imagination. It soon proved to be viable mostly for the
already established “brick and mortar” corporations.
It took a while for the dotcoms to imagine what one could “sell” to one
billion people spread all over the world: social networking. For the first time in
history it was possible for one billion strangers to assemble, organize
themselves, discuss issues, and act together.
Social networking was another practical implementation of Metcalfe’s law,
that the value of a network of users increases exponentially with each new user.
Friendster had already been imitated by a few websites, notably tribe.net,
founded in 2003 in San Francisco by Mark Pincus, Paul Martino and Valerie
Syme.
The first truly successful social-networking site was MySpace. It was
launched in 2003 in Los Angeles and purchased in July 2005 for $580 million
by Rupert Murdoch’s News Corp.
In February 2004 Harvard student Mark Zuckerberg launched the social-
networking service Facebook. It soon spread from college to college. Weeks
later Zuckerberg and friends relocated to Silicon Valley and obtained funding

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from Peter Thiel of PayPal. Somehow this one took off the way that previous
ones had not. Facebook started growing at a ridiculously fast pace, having
signed up 100 million users by August 2008 on its way to becoming the second
website by traffic after Google by the end of the decade.
In 2005 Gina Bianchini and Netscape’s founder Marc Andreessen launched
Ning, a meta social-networking software. It allowed people to create and
customize their own social networks. Inktomi’s founders
Brian Totty and Paul Gauthier formed Ludic Labs in San Mateo in 2006, a
venture devoted to social media software for consumers and businesses that
launched offerfoundry.com, talkfilter.com and diddit.com.
Last but not least, in 2006 Jack Dorsey created the social-networking
service Twitter, where people could post short live updates of what was going
on in their life. A “tweet” was limited to 140 characters. That limit reflected the
way people wanted to communicate in the age of smart phones: very brief
messages. Twitter soon became popular for current events the way CNN had
become popular during the first Gulf War. In 2004 an MIT scientist, Tad Hirsch,
had developed TxTMob, a platform that enabled individuals to send anonymous
text messages to large groups of people. This had been designed for political
activists just like Indymedia, except that it was even more oriented towards the
"mob". One of Twitter's developers was Evan Henshaw-Plath, who was
precisely one of those political activists with a background in Indymedia and
TxtMob, and he took TXTMob as the foundation for Twitter's technology.
The Unix (and in particular Linux) world had been the first example of a
social networking platform. It was used to refine the platform itself. Facebook
and the likes simply adopted the concept and transferred to it the sphere of
private life.
Facebook’s sociological impact was colossal. For example, Facebook
offered a “Like” button for people to applaud a friend’s statement or picture, but
did not offer a “Dislike” button. Facebook was creating a society in which it
was not only rude but even physically impossible to be negative. The profile
picture of the Facebook user was supposed to be a smiling face. The whole
Facebook society was just one big collective smile. The Web’s libertarian
society was turning into a global exercise in faking happiness. After all, the
French historian Alexis de Tocqueville had warned in 1840 (in his study
“Democracy in America”) that absolute freedom would make people lonely and
desperate. In a sense, social networking universes like Facebook were testing
the possibility of introducing a metalevel of behavioral control to limit the
absolute freedom enabled by the Web.
Google, eBay, Facebook and Twitter shared one feature that made them such
incredible success stories was: simplicity. Initially, they all had a humble, text-
only “look and feel” in the age of graphic design, banners, chat rooms, etc. All
that Twitter had needed to change the world was 140 characters.
In Asia the most successful of these sites was still Friendster.

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 By this time instant messaging had become very popular but there were
countless different providers, each of their own protocol. Meebo, founded in
2005 in Mountain View by Sandy Jen, Elaine Wherry and Seth Sternberg was an
instant-messaging service that integrated all the most popular instant-messaging
services such as AIM, Windows Live Messenger, MySpaceIM, Google Talk,
ICQ and Yahoo Messenger. (Meebo was acquired by Google in 2012).
The story of "crowdfunding" began in New York: in 2001 Brian Camelio
launched artistShare, the first music crowdfunding site. In 2005 Kiva, founded
by Matt Flannery and Jessica Jackley in San Francisco, made waves with a new
form of idealistic capitalism, "microlending" (typically for small businesses in
third-world countries).

Facebook’s Original Building (2010)

Your Life Online

In November 2005 a group of former Paypal employees, all still in their
twenties, got together to launch a new website, YouTube. The founders were
Steve Chen (a Taiwanese-born software engineer), Chad Hurley (an art
designer) and Jawed Karim (a German-born Stanford student working part-
time). Based in San Mateo, they were funded by Roelof Botha of Sequoia
Capital, another PayPal alumnus. The concept sounded innocent enough. It was
just a way for ordinary people with an ordinary digital videocamera to upload
their videos to the Web. It turned out to be the perfect Internet video application.
By July 2006 more than 65,000 new videos were being uploaded every day, and
more than 100 million videos were viewed by users worldwide every day. In
October Google bought YouTube for $1.65 billion.
YouTube did more than simply help people distribute their videos
worldwide: it ushered in the age of “streaming” media. “Streaming” means to
watch a video or to listen to a recording in real time directly from its Web

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location as opposed to downloading it from the Web on one’s computer.
YouTube’s videos were “streamed” to the browser of the viewer. YouTube did
not invent streaming, but it demonstrated its power over cable television, movie
theaters, and any previous form of broadcasting videos to the masses.
Another idea that matured in the 2000s was Internet-based telephony. Skype
was founded in Europe in 2003 by Niklas Zennstroem and Janus Friis to market
a system invented by Kazaa’s founders Ahti Heinla, Priit Kasesalu, and Jaan
Tallinn. Internet users were now able to make free phone calls to any other
Internet user, as long as both parties had a microphone and a loudspeaker in
their computer. The lesson learned in this case was that telephony over the
Internet was a major innovation for ordinary consumers, not companies, but
ordinary consumers could not afford suitable computers until the 2000s. Skype
was not charging anything for the service, so, again, the business model was just
to become very popular all over the world.
Microsoft would purchase Skype in 2012, thus de facto ending the era of its
MSN Messenger.
Expanding the concept of the female-oriented portal iVillage, Indian-born
former Apple scientist and NetObjects founder Samir Arora set up Glam Media
in 2003 in Brisbane, near South San Francisco, staffing it with the old
NetObjects team. They initially focused on the fashion/lifestyle website
Glam.com targeting the female audience.
Yelp, founded in 2004 in San Francisco by "Paypal mafia" members Jeremy
Stoppelman and Russel Simmons, joined Amazon and social media in letting
customers recommend, judge and rate products and services, i.e. do the
marketing that really matters. Yelp embodied the new philosophy of crowd-
marketing that would come to be called "Likeonomics". Sites like Yelp would
rapidly displace CRM as the most effective way to market a product/service.

YouTube’s Old Offices (2010)

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 E-commerce
The net economy was, however, recovering from the dotcom burst. For
example, Amazon lost a staggering $2.8 billion between 1995 and 2001. Its first
profit was posted at the end of 2001, and it was a mere $5 million. But in 2005
it posted revenues of $8.5 billion and a hefty profit, placing it inside the
exclusive club of the “Fortune 500.” In 2006 its revenues would top $10.7
billion. In 2007 sales would increase a stunning 34.5% over the previous year.
eBay’s revenues for 2006 reached $6 billion. Netflix‘s revenues were up 48%
from the previous year, just short of one billion dollars, and it had almost six
million subscribers.
It took a while before the business world understood the benefits of selling
online: it makes it easier to track customer's behavior and fine-tune your
marketing to attract more customers or to attract more advertisers. The amount
of data generated world-wide had been increasing exponentially for years, and
those data were mostly ending up on the Internet. Enerprise software was
ridiculously inadequate to dealing with that avalanche of data. A new kind of
applications, spearheaded by Splunk, launched by serial entrepreneurs Rob Das
and Erik Swan in 2002 in San Francisco, filled that niche: analyze customer
behavior in real time and churn out business metrics data.

Digital Entertainment
A lesson was creeping underneath the massive amount of music downloaded
both legally and illegally from the Internet. In 2003 the file-sharing system
Rapidshare was founded in Germany, the file-sharing system TorrentSpy went
live in the US, and a BitTorrent-based website named “The Pirate Bay” opened
in Sweden. In 2005 Megaupload was founded in Hong Kong. In 2006 Mediafire
was founded in the US. These websites allowed people to upload the music that
they had ripped from CDs, and allowed the entire Internet population to
download them for free. The “fraud” was so extensive that in 2006 the music
industry in the US (represented by the RIAA) filed a lawsuit against Russian-
based Internet download service AllOfMP3.com for $1.65 trillion. Needless to
say, it proved impossible to stop half a billion people from using free services
that were so easy to use. Music downloading became a pervasive phenomenon.
Apple’s iTunes store, opened in April 2003, was the legal way to go for
those who were afraid of the law, and by the end of 2006 a hefty 48% of
Apple’s revenues was coming from sales of the iPod, one of the most successful
devices in history. Digital videos came next, although the sheer size of the video
files discouraged many from storing them on their home computers.
The lesson to be learned was twofold. One lesson was for the media
company: it was virtually impossible to enforce copyrights on digital files. The
other lesson was for the consumer: it was wishful thinking that one could
digitize a huge library of songs and films because that would require just too

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much storage. A different system was needed, namely streaming.
The phenomenon of digital music downloading was another premonition of
an important change in computing. From the viewpoint of the “downloader,” the
whole Web was becoming just one huge repository of music. Its geographical
location was irrelevant. It was in the “cloud” created by multiple distributed
servers around the world.
The situation was quite different in the field of books. In the late 1990s,
companies such as SoftBook Press and NuvoMedia had pioneered the concept
of the e-book reader. Microsoft and Amazon had introduced software to read
ebooks on personal computers (Amazon simply purchased the technology in
2005 from the French company Mobipocket that had introduced it in 2000). That
was at the time when there were virtually no ebooks to read. This changed in
2002 when two major publishers, Random House and HarperCollins, started
selling digital versions of their titles. Amazon became and remained the main
selling point for ebooks, but “ebookstores” began to appear elsewhere too,
notably BooksOnBoard in Austin (Texas) that opened in 2006. In October 2004,
Amazon had hired two former Apple and Palm executives, Gregg Zehr
(hardware) and Thomas Ryan (software), who in turn hired mostly Apple and
Palm engineers, and had started a company in Cupertino called Lab126 to
develop a proprietary $400 hand-held e-book reader, the Kindle. It was
eventually introduced in November 2007. The Kindle was not just a software
application but a custom device for reading books. That device, conceptually a
descendant of the Palm Pilot, was the device that tilted the balance towards the
ebook.
The company that democratized video was instead based in San Francisco:
Pure Digital Technologies, originally founded in 2001 by Jonathan Kaplan to
make disposable digital cameras. In May 2006 it launched the Flip video
camera, sold in popular department stores at an affordable price. Designed for
direct conversion to digital media and particularly for Internet video sharing, it
helped countless unskilled users of the Internet become amateur filmmakers. In
just 18 months PDT sold 1.5 million of its one-button camcorders and became
the leader of that market. The lesson to be learned here was that the smartphone
was going to threaten the existence of entire lines of products, well beyond
voice communication.
The Bay Area had a mixed record in the field of photography, with only the
Flip gaining ephemeral momentum for a few years. Lytro was founded by
Stanford's computational mathematician Ren Ng in 2006 and based in Mountain
View. It aimed at designing more than a cheaper better camera: it went for the
light-field cameras, a camera capable of capturing much more information and
therefore of creating a much richer digital representation of the scene. The most
obvious benefit was to be able to refocus the image after having taken the
picture. The technology had been originally invented at the MIT Media Lab in
1992 by John Wang and Edward Adelson. Yet it was Mark Levoy's team at

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Stanford University that perfected it made it fit for the consumer market.
Woodman Labs (later renamed GoPro), founded in 2003 in San Mateo by
Nick Woodman would become one of the success stories of the 2010s. It
introduced a wrist-worn camera, the GoPro Hero, that let users snap photos on
35mm color film. This rapidly evolved into the Digital Hero (2006) and finally
into the HD HERO (2009) that offered audio and high-definition video.
In 2002 the United States government found five DRAM manufacturers
guilty of manipulating the market: Samsung, Hynix (spun off by Hyundai in
2001), Infineon (spun off by Siemens in 1999), Elpida (a 2000 joint venture
among NEC, Mitsubishi and Hitachi), and Micron (founded in Idaho in 1978 by
former Mostek engineers to make DRAM chips). In reality the price for memory
had been collapsing after the dotcom bust and, despite a spike in 2002, it
continued to do so. In 1980 a gigabyte of memory cost several million dollars;
in 2001 that price had plunged to about $1,000, and within a few years it would
fall below $100, thus enabling high-resolution digital photography and video.

The Aging Internet

The dramatic success in the 2000s of the new business models of Netflix
(videos), YouTube (videos), Apple (music), Facebook (news), Google (news)
and Twitter (news) was beginning to bring out a fundamental problem of the
Internet. All these services depended on the ability to distribute content over the
Internet Protocol (IP). In other words, the Internet was increasingly being used
as a media distribution network (in other words, to access data). Unfortunately,
it had been designed to be a (host-to-host) communications network.
The Internet was becoming simultaneously the world's greatest distribution
network and one of the world's worst distribution networks.
Nobody was proposing to dump the Internet yet, but it was obvious that the
system needed to be tweaked. In particular, the router had to be reinvented. In
2006 Xerox PARC came up with Content Centric Networking (CCN), a project
under the direction of Van Jacobson of Cisco and the Lawrence Livermore
Laboratory. CCN was an idea already pioneered by Ted Nelson in 1979 and
developed by Dan Cheriton at Stanford in 1999. It aimed at redesigning the
Internet around data access.

Serving the Old Economy

Some sectors, like business software and Oracle, had little to learn from the
dotcom revolution. In the 2000s Oracle represented an old-fashioned business
model, the one that targeted “brick and mortar” companies. However, the Web
had not slowed down the growth of software demand by the traditional
companies that manufactured real products: it had increased it. They all needed
to offer online shops backed by the fastest and most reliable database servers.

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 The escalating transaction volumes for e-business were good news for
Oracle. Oracle was the undisputed leader in providing database management
solutions, but these companies also demanded ERP systems and CRM systems.
Oracle proceeded to acquire two Bay Area companies that had been successful
in those fields: PeopleSoft (2004) and Siebel (2005). Now Oracle could
literally connect the plant of a company to its corner offices and even to its
traveling salesmen. In 2005 the total revenues of ERP software were $25.5
billion, with SAP making $10.5 billion and Oracle $5.1 billion. Oracle’s
founder and CEO, Larry Ellison, was estimated to be worth $18.7 billion in
2004, one of the richest people in the world.
High-density flash memory drives of the kind invented by M-Systems
(acquired in 2006 by SanDisk) were improving and replacing hard drives in
high-performance servers. The new star in this market was, however, not a
Silicon Valley company but Fusion-io, founded by David Flynn in 2006 in Utah.

Oracle’s Campus (2010)

Robots and Avatars

Recovering from the dotcom crash, Silicon Valley was more awash with
futuristic ideas than ever before. In 1999 Philip Rosedale had founded Linden
Lab to develop virtual-reality hardware. In 2003 Linden Lab launched “Second
Life,” a virtual world accessible via the Internet in which a user could adopt a
new identity and live a second life. In 2005 Andrew Ng at Stanford launched the
STAIR (Stanford Artificial Intelligence Robot) project to build robots for home
and office automation by integrating decade-old research in several different
fields. In 2006 early Google architect Scott Hassan founded Willow Garage to
manufacture robots for domestic use.
The emphasis on virtual worlds had a positive effect on the US videogame

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industry. After losing the leadership to Japan in the mid-1980s, the US
recovered it in the 2000s because Japanese videogames were not as
“immersive” as the ones made by their US competitors. For example, the
simulation game “The Sims,” created by SimCity’s creator Will Wright for
Maxis in February 2000, had become the best-selling PC game of all times
within two years of its release. With the exception of Nintendo, which
successfully introduced the Wii home console in 2006, Japanese game
manufacturers were losing market shares for the first time ever. The Wii
popularized hand-held motion-sensitive controllers, which led to a new
generation of videogame consoles controlled by gestures and spoken commands.
However, the next big thing in videogames was online virtual worlds in
which users created “second-life” avatars and interacted with each other.
Hotelli Kultakala (later renamed as Habbo Hotel), launched in August 2000 by
Aapo Kyrola and Sampo Karjalainen in Finland, and Go-Gaia (later renamed
Gaia Online), launched in February 2003 by Derek Liu in San Jose, were among
the pioneers. They became extremely popular, involving millions of users
spread all over the world. In February 2006 Alyssa Picariello even established
a website to chronicle life in Gaia Online: the Gaiapedia.

Mobile Payment
The "electronic wallet" was another application of the smartphone. Nokia
pioneered the combination of smartphone and RFID with the Nokia 5140 in
2004. That was the first GSM phone integrated with RFID reading capability.
The Japanese used mainly Sony's FeliCa chip for their electronic wallets (by the
end of 2009 Sony had shipped more than 400 million FeliCa chips). In 2004
Sony and Philips Semiconductors, the semiconductor arm of Philips (spun off in
2006 as NXP) developed Near Field Communication (NFC) and Nokia joined
them in founding the NFC Forum. Like RFID, NFC was a wireless technology
for short-range communications between electronic devices. The main
advantage was that it was cheaper and easier to implement, and therefore should
foster mobile payments using a smartphone. NFC chips allowed for two-way
communication instead of only one way. In 2007 Nokia unveiled the first fully
integrated NFC phone, the Nokia 6131 NFC, while Sony and NXP were still
holding on to their proprietary standards FeliCa and Mifare. At the same time in
2004 Wal-Mart began forcing RFID on its suppliers, a fact that contributed to
the boom of interest in RFID. This is when the Bay Area entered the fray. Blaze
Mobile, founded by telecom veteran Michelle Fisher in Berkeley, invented the
NFC payment sticker in 2006.
Nonetheless, it was in Africa that mobile payment took off in earnest. Given
the poor financial infrastructure but the broad availability of cellular phones,
people spontaneously started "trading" airtime credit as a replacement for
monetary transactions. In 2004 Mozambique's cellular-service provider Mcel

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institutionalized the practice by introducing a full-fledged airtime credit
swapping service. This service allowed users to remove money from monetary
transactions throughout Mozambique. Using a similar principle, Safaricom, de
facto an East African subsidiary of British multinational Vodafone, introduced a
money transfer system in Kenya called M-Pesa through which mobile phone
users could "store" money on their phone and "text" money to others (via
traditional SMS technology). M-Pesa remained the largest mobile payment
system in the world well into the 2010s. By 2012 Africa was awash in popular
mobile payment services: EcoCash in Zimbabwe (2011), mKesh in
Mozambique (2011), Easywallet in Nigeria (2012), as well as several Mpesa
spinoffs.

Engineering the Future

The Web was only a decade old but high-profile critics were already
complaining that it was inadequate. Berners-Lee in person had written an article
in 2001 explaining the need for a “Semantic Web” in which a webpage would
be able to declare the meaning of its content. In 2004 the first “Web 2.0“
conference was held in San Francisco to promote the idea that the Web had to
become an open platform for application development, with such development
increasingly decentralized and delegated to the users themselves. The term had
originally been coined in 1999 by San Francisco-based writer Darcy DiNucci.
In the beginning of the Web one could only be either a producer or a consumer
of webpages. The user of a browser was a passive viewer of webpages. Web
2.0 aimed for “active” viewers of webpages. A Web 2.0 webpage is a
collaborative effort in which the viewers of the page can modify it and can
interact with each other. Wikipedia was an example of a Web 2.0 application;
and Google’s search indirectly too, since it relied on a “page ranking” algorithm
that was based on what was linked by millions of webpages all over the world.
The first widely publicized example of Web 2.0 was Flickr, a photo-sharing
service that allowed users to “tag” photos (both their own and other people’s),
founded in February 2004 by game industry veterans Caterina Fake (based in
San Francisco) and Stewart Butterfield (based in Vancouver). Unlike Ofoto and
Snapfish, whose websites were just ways to encourage people to print photos,
Flickr understood that in the age of ubiquitous camera phones and social
networking the real value was in sharing photos across the community. Soon
people started taking pictures precisely for the purpose of posting them on
Flickr, pictures that they would not otherwise have taken.
Yahoo! was the first major dotcom to invest in Web 2.0. It acquired Flickr in
March 2005 and introduced in June its own My Web service, which allowed
webpage viewers to tag and share bookmarks. Then in December it bought the
most popular website for social bookmarking and tagging, Del.icio.us
(originally started by Wall Street financial analyst Joshua Schachter in 2003).

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Basically, Yahoo! wanted to present itself as a “social search” that was fine-
tuned by humans as they browsed the web, as opposed to Google’s impersonal
algorithmic search.
The technical underpinning of Web 2.0 consisted of free tools such as Ajax
(Asynchronous JavaScript and XML), a concept invented in 2003 by Greg
Aldridge in Indiana (but the term was coined only in 2005 by San Francisco-
based writer Jesse James Garrett). Ajax was a platform for website developers
to create interactive web-based applications (essentially HTML, XML and
JavaScript).
In a nutshell, the goal was simple: to allow the viewer to make changes to a
webpage on a browser without reloading the whole page. This, obviously, had
been done before: JavaScript, among other tools, had been available in
Netscape’s browser since 1996, and web-based applications were already
pervasive during the first dotcom boom but most of them went out of business
quickly. Amazon allowed users to post reviews of books since the very
beginning. However, Web 2.0 had a more ambitious vision: that the Web could
be viewed as a platform for creating applications, a platform that would
eventually replace the individual computer.
Blogging started to democratize too. Matt Mullenweg in San Francisco
introduced in 2003 a new popular platform for people to create their own
website or blog: Wordpress. The reason it spread like wildfire is that it was
maintained as “open source” by a growing community of volunteers. In June
2003 Mark Fletcher, already the founder of ONElist (acquired by Yahoo! in
2000), launched Bloglines, the first Web-based news aggregator.
Digg, founded in November 2004 by serial entrepreneur Jay Adelson in San
Francisco, pioneered the idea of letting visitors vote stories up or down (i.e.,
"digging" or "burying"), thus bridging the world of news aggregators and social
networking.
By 2012 Digg, initially a darling of the Internet, was worth very little, due
to both a more complicated user interface and to the emergence of powerful
competitors with very similar concepts for people to share news. San
Francisco-based Redditt had been founded in Boston in June 2005 by Steve
Huffman and Alexis Ohanian, two graduates from the University of Virginia, one
year before Digg. 2012 is the year when its traffic passed Digg's and Reddit
kept growing. It was just easier for people to submit a bunch of stories quickly
to Reddit than to Digg. Because of its own algorithm, Digg had become a sort of
elitist club in which about 25% of the stories that went popular were submitted
by the same few dozen of people. Reddit was powered by a more democratic
algorithm that, indirectly, distributed "glory" among all its users, including
beginners. Digg then started posting "sponsored links" prominently, which
definitely turned off the troops. Reddit, meanwhile, in 2008 introduced
"subreddits" (categories). One particularly popular subreddit, dating from May
2009, was IAmA ("I Am A") where users can post "AMAs" (for "Ask Me

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Anything"), a way for users to interact. It was used by many celebrities.
TechCrunch was founded in June 2005 by Michael Arrington out of his
home in Atherton to publish high-tech news and gossip about Internet startups.
An even more powerful kind of criticism was leveled at the Web: it did not
contain enough "semantic" information about its own data. According to Danny
Hillis of the Connection Machine fame, it contained information, not knowledge,
and what was needed now was a knowledge web. In July 2005 in San Francisco
he established Metaweb, a company that proceeded to develop what in March
2007 became Freebase, an open, free and collaborative knowledge base. For all
practical purposes it worked just like Wikipedia, except that its output was a set
of structured data, or, better, "meta-data". In July 2010 Metaweb would be
acquired by Google.
That inherent lack of semantics was actually good news for a new batch of
startups that saw that limitation as a business opportunity: as the amount of data
increased, the need to understand those data would also increase exponentially.
Paypal's co-founder Peter Thiel, Alex Karp and others founded in 2004 in
Palo Alto (with funding from the CIA) Palantir Technologies to make data-
mining software for the government and financial companies.
In New York in 2007 former DoubleClick's founder Dwight Merriman and
fellow DoubleClick alumni Kevin Ryan and Eliot Horowitz founded 10gen
(later renamed MongoDB) for mining of unstructured data such as text, video
and audio files.

Yahoo!’s Campus (2010)

Biotech
Biotechnology was becoming mainstream and synthetic biology was the new
frontier, though its goal was not clear. Yet the businessmen behind it envisioned

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the possibility of building new living species (initially just bacteria) that would
perform useful industrial or domestic functions. It would exist just as electronics
had led to devices that performed useful industrial and domestic functions (the
word “military” was carefully omitted). Scientists in synthetic biology was
actually not very interested in cloning existing species: why not use existing
species then? They were interested in modifying existing organisms to create
organisms that do not exist in nature. Genetic engineering is about replacing one
gene, whereas synthetic biology is about replacing entire genomes to generate
“reprogrammed organisms” whose functions are different from the original ones
(because the DNA instructions have changed).
Synthetic biology exploited the power of microbes to catalyze a sequence of
biological reactions that transform a chemical compound into another
compound. The first synthetic biology conference was held at MIT in 2003. A
year later, Codon Devices was the first company to commercialize synthetic
biology; it was founded by MIT Professor Drew Endy. In 2006 Jay Keasling
inaugurated the world’s first synthetic biology department at the Lawrence
Berkeley Laboratory. UCSF also became a major center of biological research.
In 2003 Christopher Voigt founded a lab to program cells like robots to perform
complex tasks, and in 2005 UCSF opened an Institute for Human Genetics.
One example of synthetic biology that captured the attention of the media in
April 2005 was the announcement that Keasling had successfully converted
yeast into a chemical factory by mixing bacteria, yeast, and wormwood genes.
This “factory” was capable of turning simple sugar into artemisinic acid, the
preliminary step to making an extremely expensive anti-malarian drug,
artemisin. Artemisinin was commonly extracted from a plant. The goal of
synthetic biology was now to create “designer microbes” by selecting genes
based on which protein they encode and the path they follow. Some day,
synthetic biology could even replace industrial chemistry, which relies on a
sequence of chemical reactions to manufacture materials.
Venter’s saga continued. After disagreements with Celera’s main investor
Tony White, in January 2002 Venter left Celera taking Hamilton Smith with him.
In 2003 they synthesized the genome of a virus (just eleven genes) which, unlike
the artificial polio virus at Stony Brook, truly behaved like a virus. With a keen
sixth sense for money and publicity, in September 2004 Venter started his own
non-profit institute in both Maryland and California (San Diego) to conduct
research in synthetic biology and biofuels. In particular, he worked on building
the genome of a bacterium from scratch and on inserting the genome of one
bacterium into another. Bacteria are the simplest living organisms, made of just
one cell.
Bioinformatics continued to thrive. Two former Silicon Genetics executives,
Saeid Akhtari and Ilya Kupershmidt, started NextBio in Cupertino in 2004 to
create a platform to perform data mining on public and private genomic data.
In 2003 the biochemist Joseph DeRisi at UCSF used a microarray (a gene

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chip) to identify the coronavirus causing SARS (Severe Acute Respiratory
Syndrome), a method that inaugurated a new way to to identify pathogens (by
analyzing DNA).
US citizens were spending billions of dollars in blood tests. Theranos,
founded in 2003 in Palo Alto by Stanford dropout Elizabeth Holmes, offered a
cheaper, simpler and faster way to test blood: no needle, just a few drops of
blood. The company would skyrocket to stardom and Holmes would be known
as the world's youngest female self-made millionaire, while boasting one the
weirdest boards of directors ever seen in Silicon Valley, which at one point
would include two former secretaries of state (Henry Kissinger and George
Shultz), two former senators (Sam Nunn and Bill Frist), a former secretary of
defense (William Perry) and even a retired admiral.

Nanotech
Nanotechnology was still a mystery. While returns were low and nano
startups routinely switched to more traditional manufacturing processes, during
both 2006 and 2007 venture-capital firms invested more than $700 million in
nanotechnology startups.
A promising avenue was to wed “nano” and “green,” a mission particularly
nurtured in Berkeley. NanoSolar engineers formed the core of Solexant, founded
in 2006 in San Jose by Indian-born chemist Damoder Reddy and by Paul
Alivisatos, Professor of Chemistry and Materials Science at UC Berkeley.
Alivisatos was also the director (since 2009) of the Lawrence Berkeley
Laboratory to manufacture printable thin-film “quantum dot” photovoltaic cells
using a technology developed at the Lawrence Berkeley Laboratory. This was
held to be the next generation of solar technology: flexible, low-cost, and high-
yield.
Other solar research was promising too. Michael Crommie, a scientist at the
Materials Sciences Division at the Lawrence Berkeley Laboratory and a
professor of physics at UC Berkeley, was working on solar cells the size of a
single molecule. Canadian nanotechnology specialists Ted Sargent of the
University of Toronto developed a “quantum film” capable of a light-capturing
efficiency of 90%, as opposed to 25% for the CMOS image sensors employed
in digital cameras. In October 2006 he founded InVisage in Menlo Park to make
quantum film for camera phones.

Greentech
Skyrocketing oil prices and concerns about climate change opened a whole
new range of opportunities for an environmentally friendly energy generation,
nicknamed “greentech” or “cleantech.” Of the traditional kinds of renewable
energy (wind power, solar power, biomass, hydropower, biofuels) solar and
biofuel emerged as the most promising. At the same time, the US started

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investing in fuel-cell companies in 2005 with the goal of fostering commercial
fuel-cell vehicles by 2020. By 2008 it had spent $1 billion. California
embarked on a project to set up a chain of stations to refuel hydrogen-driven
vehicles (despite the fact that the state had only 179 fuel-cell vehicles in service
in 2007).
Silicon Valley entrepreneurs and investors delved into projects to produce
clean, reliable, and affordable energy. A startup that focused on renewable fuels
was LS9, founded in 2005 in South San Francisco to create alkanes (a
constituent of gasoline) from sugar by Harvard Professor George Church and
Chris Somerville, the director of UC Berkeley’s Energy Biosciences Institute; it
was financed by Vinod Khosla and Boston-based Flagship Ventures.
Cars were another interesting sector. After selling their e-book company
NuvoMedia, in 2003 Martin Eberhard and Marc Tarpenning founded Tesla
Motors in Palo Alto to build electrical cars. In 2006 they introduced the Tesla
Roadster, the first production automobile to use lithium-ion battery cells.

The Tesla Roadster (2010)

In 2004 SUN’s co-founder Vinod Khosla, who had joined venture capital
firm Kleiner Perkins Caufield & Byers, founded Khosla Ventures to invest in
green-technology companies. One year later another SUN co-founder, Bill Joy,
replaced him at Kleiner Perkins Caufield & Byers to invest in green technology.
Another legendary “serial entrepreneur” of Silicon Valley, Marc Porat of
Go fame, turned to building materials for the “green” economy focused on
reducing energy consumption and carbon emission. Some startups included:
Serious Materials (2002) in Sunnyvale for eco-friendly materials; CalStar
Cement (2007), a spin-off of the University of Missouri based in the East Bay
(Newark) that manufactured eco-friendly bricks; and Zeta Communities (2007)
in San Francisco for pre-assembled homes that operate at net-zero energy.
Meanwhile, UC Berkeley and the Lawrence Berkeley Laboratory launched a
joint “Helios Project” for artificial photosynthesis, i.e. to convert sunlight into
fuel.
Sebastian Thrun at Stanford built the robotic car that in 2005 won a "race"

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sponsored by the Pentagon in a California desert. Thrun was then hired by
Google to work on autonomous vehicles that, in following years, would be seen
driving over California highways with only one person in the car: the passenger.
In 2006 Elon Musk (of Paypal, Tesla and SpaceX fame) co-founded with his
cousins Peter and Lyndon Rive what would become California's main provider
of residential solar power: Solar City, based in San Mateo.

Solar City

Culture and Society

The arts mirrored progress in the high-tech industry. The 2000s were the
decade of interactive digital art, practiced by the likes of Camille Utterback
and Ken Goldberg. Andy Cunningham and Beau Takahara formed Zero1 in San
Jose to promote the marriage of art and technology. In 2005 the Letterman
Digital Arts Center opened in San Francisco to house Lucasfilm’s lab. The first
Zer01 Festival for “art and technology in the digital age” was held in San Jose
in 2006, sponsored by San Jose State University’s CADRE. Stephanie Syjuco’s
counterfeit sculptures, Lee Walton’s web happenings, and Amy Balkin’s
ecological projects referenced the issues of the era. In 2006 San Mateo held the
first "Maker Faire". In 2006 Josette Melchor and Peter Hirshberg formed the
Gray Area Art Foundation. In 2000 Fecalface.com was launched to support the
alternative art scene (later also a physical gallery, the Fecal Face Dot Gallery).
The Adobe Books Backroom Gallery, another epicenter of new art, opened in
2001. The Mission School’s mission of mural paintings and found-object
sculpture was being continued by Andrew Schoultz and Sirron Norris. Also
Dave Warnke focused on stickers and hand-painted posters, Sandro “Misk”
Tchikovani specialized in three-dimensional letters, and Damon Soule explored
mixed media on found wood.
Hacker parties had always been popular in Silicon Valley but during the
2000s they reached new height, both in terms of size and enthusiasm. In May
2005 a group of high-tech geeks convened at the Hillsborough house of David

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Weekly, a Stanford graduate who was working on his startup (later incorporated
as PBwiki). That was the first "SuperHappyDevHouse", a concept that soon
became popular in Silicon Valley: a casual meeting in a casual environment of
creative engineers to work in the same building on their pet projects. Unlike the
many networking events, the goal was not necessarily to publicize one's idea nor
to meet other people: it was to go home having written some actual software or
at least come up with ideas for some software. Unlike hacker competitions, it
was not about showing one's dexterity at coding. And, unlike the raves of San
Francisco, it was not a wild party of drinking and drugs; quite the opposite in
fact. It was a way to create a more stimulating environment than the cubicles of
an office, and, in fact, more similar to the dormitory of a university campus.
(The idea would spread internationally within a few years). The ambition was
to emulate the success of the Homebrew Computer Club of the 1970s, although
the similarity was mostly superficial.
The Bay Area, already home to the Search For Extraterrestrial Intelligence
Institute (or SETI Institute), became the birthplace of another project aimed at
discovering life in the universe, and one that, yet again, resurrected the social-
utopian spirit of the Bay Area: SETI@Home, launched in 1999 by UC Berkeley
astronomers, which harnessed the power of millions of home computers
provided by volunteers and distributed around the globe (5 million in 2014)
with the goal of trying to detect radio transmissions from extraterrestrial
civilizations picked up by a telescope based in Puerto Rico.
In 2000 the computer scientist Bill Joy, one of SUN's founders, had written
an article titled "The Future doesn't need us" warning against the threat posed by
robotics, genetics and nanotech. Meanwhile, Jaron Lanier was ranting against
the "digital Maoism" of Silicon Valley. The very founders of the high-tech world
started a debate about the pros and cons of the new technology.

The Anthropology of Pan-Ethnic Materialism

The cultural diversity of the Bay Area continued to ablate religious
certainties. A person’s loyalty to her religious group was undermined by the
proximity of so many other religious groups (in the workplace, at shared homes,
in sport activities). This led to an increasingly higher degree of flexibility in
choosing one’s faith. The new-age movement, with its syncretic non-dogmatic
view of spirituality, had left its own influence on the region, even though its
message was now being interpreted in a more materialistic manner. For many
people religion was to be shaped by how one wanted to behave. For example,
greed and promiscuity were definitely “in” for the vast majority of
independently religious people. Religious axioms that constrained one’s
lifestyle were not particularly popular. Religious practices that were perceived
as beneficial to one’s mind and body were. Thus Zen retreats and yoga classes

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were popular even among people who did not believe in Buddhism.
Santa Clara Valley had traditionally been a Catholic region. It had become a
unique experiment within the Catholic world: a Catholic region with sizeable
minorities of other religious groups that were not poor segregated immigrants
(as was the case in Italy or France), but who lived on equal footing with the
original Catholic families. Both the percentage and the level of integration were
unique among Catholic regions.
The time and attention usually devoted to religious functions were translated
to the high-tech world. The public rituals of religion were replaced by public
rituals of lectures and high-tech symposia. The mass in a church was replaced
by a business or technology forum. The technology being produced downplayed
the cultural differences. People tended to recognize themselves more strongly as
workers of a company than as members of a religious or ethnic group.

Re-inflating Cities
Those who had predicted the demise of Silicon Valley had completely
missed the point. In 2005 Silicon Valley accounted for 14% of the world’s
venture capital. San Jose’s population of 912,332 had just passed San Francisco
and San Jose had become the tenth largest city in the US. The Bay Area as a
whole was the largest high-tech center in the world with 386,000 high-tech jobs
in 2006.

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 Sharks: the iPhone, Cloud Computing,
Location-based Services, Social Games, and
Personal Genomics (2007-10)

The Decline of the Computer

The late 2000s were the age of streaming media, smart phones, and cloud
computing; all trends pointed towards the demise of the “computer” as it had
been known for 50 years.
Music and file sharing were at the bleeding edge. In 2008 digital music
downloads grew by 25%, to $3.7 billion (including 1.4 billion songs). This
accounted for 20% of all music sales, but the music industry estimated that over
40 billion songs were illegally file-shared, which meant that 95% of the market
for digital music downloads was underground. In 2009, file-sharing services
ranked among the Internet’s most popular websites: Rapidshare was 26th and
Mediafire was 63rd. In 2009 BitTorrent accounted for at least 20% of all
Internet traffic. The numbers were so large that it was hard to believe all these
people were criminally motivated. It was instead an important signal that people
like to download files instead of buying physical objects. Movies, on the other
hand, were encoded in very large files: it was more effective to “stream” them
than to download them. Here, too, the public was sending the message that the
physical object was becoming redundant.
As images, music, and videos proliferated (at increasingly higher
resolutions), the demand for storage became prohibitive. At the same time that
the demand for remote downloads increased, network bandwidth was increasing
rapidly. It then became sensible to think of keeping the files on the Internet
instead of downloading them on the home computer. In the past the main reason
to download them before viewing them had just been that the network was
“slow.” Once the network became fast enough, using a home computer to store
multimedia files became redundant, and consumers started playing them directly
from the Internet. For example, Netflix (that had become the main movie rental-
by-mail service) launched its streaming feature in January 2007. In just two
years its catalog grew to more than 12,000 titles (movies and television
episodes). In March 2010 YouTube broadcast the Indian Premier League of
cricket live worldwide, the first major sport competition to be broadcast live on
the Internet.
Smart phones that allowed browsing the Web and exchanging e-mail had
become very popular, notably the BlackBerry and the Razr, but the brutally
competitive field was not for the faint of heart. In June 2007 Apple, which after

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the iPod had become the master of fashionable devices, introduced the iPhone. It
immediately captured the imagination of the younger generation thanks to sleek
design, a multitouch user interface, a (touch) QWERTY keyboard, the Safari
browser, an email client, Google Maps, 3.5-inch widescreen display to watch
videos, a 2-megapixel camera coupled with a photo management application,
Wi-Fi, an MP3 player, and a real operating system that turned it into a computer
(a platform for software applications, not just a gadget). Last but not least, it
was backed by telecom giant AT&T. Never mind that it lacked stereo Bluetooth
support, 3G compatibility. copy and paste, and it came with a stingy memory. In
2008 Apple also introduced the “App Store,” where independent software
developers could sell their applications for the iPhone (by April 2010 there
were more than 180,000).
In 2007 Google began freely distributing Android. It was a Linux-based
open-source operating system for mobile phones that had originally been
developed by a Palo Alto stealth startup named Android and founded by Andy
Rubin and others. Google also created the Android Marketplace to compete
with the App Store (by April 2010 it had 38,000 applications for Android-
based devices). Motorola was the first company (in late 2009) to deliver an
Android-based smart phone, the Droid, and reaped the benefits: it shipped 2.3
million units in the first quarter of 2010, thus resurrecting itself after the
collapse of the Razr. In 2010 Taiwanese cell-phone manufacturer HTC entered
the Android market with its Indredible phone, and so did Samsung with its
Galaxy S. Every Android manufacturer had little control on its future, though,
because the success of its device depended on Google’s whims and on the
whims of the carrier (Verizon, AT&T and Spring being the main ones).
At the beginning of 2010, Research In Motion was estimated to have 42% of
the market, followed by Apple with 25%, Microsoft with 15% and Android-
based devices with 9%. Android sales in the first three months of 2010
accounted for 28% of all smart phone sales, ahead of iPhone’s 21% but still
behind BlackBerry’s 36%. This would change more rapidly than anybody
predicted.
The loser was Palm, which released its Pre at the same time as Apple
released the iPhone. It didn’t have the charisma to compete with Google and
Apple, and in April 2010 was sold to HP. In March 2008 John Doerr of Kleiner
Perkins launched a $100 million venture-capital fund, the iFund, for iPhone
applications, crediting the iPhone as an invention more important than the
personal computer because it knew who the user was and where s/he was.
Apple's iOS was a hit because of its multi-touch technology, but that was
hardly an Apple invention. Touch-screen technology had come from Europe, and
it had been in Britain (at Xerox's EuroPARC) that sixteen years earlier (in 1991)
Pierre Wellner had designed his multi-touch "Digital Desk" with multi-finger
and pinching motions. Then a student Wayne Westerman at the University of
Delaware and his professor John Elias had founded (in 1998) Fingerworks to

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commercialize a technology to help people with finger injuries use a computer.
Fingerworks had gone on to sell a full line of multi-touch products, notably the
iGesture Pad in 2003. Apple had acquired Fingerworks' multi-touch technology
in 2005. The iOS, unveiled in January 2007 (although it was not named that way
until March 2008), was a Unix-like operating system that incorporated that
technology: one-finger swipe to scroll horizontally, a finger tap to select an
object, A reverse two-finger pinch (an "unpinch") to enlarge an image, etc.
Incidentally, in 2001 Paul Dietz and Darren Leigh at Mitsubishi Electric
Research Labs (MERL) in Boston had even developed a multi-touch interface
that could even recognize which person is touching where ("DiamondTouch").
It was easy to predict that soon more users would access the Internet from
mobile devices than from desktop computers (and probably many of them would
be unaware of being on the Internet). In 2009, almost 90% of households in the
US owned a cell phone. Yet the average time of voice minutes per call (1.81
minutes) was lower than in 2008, despite the fact that millions of households
were disconnecting their land phone lines. At the beginning, voice conversation
was the only application for cell phones. Then came text messaging, Web
browsing, navigation and so forth.
Text messaging, in particular, proved to resonate with the psychology of the
digital age. It was less time-consuming and disruptive than a voice call, even if
it took longer to type a message than to say it. Voice communication was rapidly
becoming an afterthought, while a myriad of applications (most of which had
nothing to do with telephone conversations) were becoming the real reason to
purchase a “phone.” The purpose of a cell phone was more data than voice.
Handset design was less and less “cheek-friendly,” more and more palm-
friendly, because people were not supposed to “hear” but to “see” with their
cell phone. In 2010 the cell phones from Nokia (that were truly meant to be
telephones) were to the Apple and Android smart phones what typewriters were
in the age of the personal computer.
Phones were penetrating other key devices. In 2008 Chrysler pioneered the
router system that installed the Internet even in cars (by connecting a cellular
device to a wireless local-area network). At the end of 2009 there were already
970,000 cars equipped with Internet access.
In May 2010, a symbolic event took place when Apple’s market
capitalization ($227 billion) passed Microsoft‘s ($226 billion). In August 2011
Apple passed ExxonMobil to become the most valuable company in the world
based on market capitalization.

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 Apple’s Infinity Loop and Headquarters (2010)

Towards Computing as a Utility

At the same time the traditional computer was attacked by the paradigm of
“cloud computing.” This was Internet-based computing in which the computers
are hidden from the users and computing power is delivered on demand, when
needed, just like electricity is delivered to homes when and in the amount
needed.
A classic example was Spotify, a service launched in 2008 by Swedish
serial entrepreneur Daniel Ek that allowed subscribers to stream music. Napster
had figured out a way that Internet users could simply gift each other music
(alas, this was deemed illegal). Apple's iTunes had created the virtual music
store, from which customers could buy (and download) their music. Spotify did
not sell music, and its subscriber did not pay to "own" the music: they paid to
listen to it. The music remained on the cloud, owned by the music companies or
by the musician. Spotify did not require any hardware to play music, just a
regular computer or smartphone (all of which were by now capable of playing
the most popular music formats).
Public cloud storage had been legitimized in 2006 when Amazon had
introduced its Simple Storage Service, or S3, service that anyone could use.
Box, founded near Seattle in 2005 by Aaron Levie and Dylan Smith but soon
relocated to Silicon Valley (Los Altos), decided to use its own servers (not
Amazon's) and to target the corporate world. Dropbox, founded in 2007 by MIT
students, created a friendlier service based on S3.
Cloud computing was typically built on “virtual” infrastructures provided
by “hypervisors,” or virtual-machine monitors, that allowed multiple operating
systems to run concurrently on a single computer, enabling any application to run

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anywhere at any time.
The pioneer and leader of virtualization had been Vmware. Its 2008
revenues increased 42% to $1.9 billion, and new hypervisors were offered by
Oracle (VM, introduced in 2007 and based on open-source Xen technology),
Microsoft (Hyper-V, introduced in 2008), and Red Hat (Enterprise
Virtualization, introduced in 2009). The virtual-machine monitor Xen was
developed in 2003 at the University of Cambridge by Ian Pratt’s team and
acquired by Florida-based Citrix Systems in October 2007. In August 2010
Hewlett-Packard acquired 3PAR, specialized in data storage for cloud
computing shared by multiple companies (“utility storage”).
There were only four companies selling the kind of storage required by
cloud computing: IBM, Hitachi, 3PAR, and EMC. EMC was based in Boston,
but in 2003 had acquired three Silicon Valley success stories: Documentum,
Legato, and VMware.
EMC represented yet another business in which Silicon Valley had largely
failed to lead. Founded in 1979 by Richard Egan and Roger Marino to make
memory boards for minicomputers, in 1990 EMC had introduced a data storage
platform for mainframe computers, Symmetrix (designed by the Israeli-born
engineer Moshe Yanai). It was the right time: the explosion of data that came
with the Internet created a demand that only data storage systems like Symmetrix
could satisfy.
The next step after virtualizing the operating system and the databases was
to virtualize the network, which was precisely the mission of Palo Alto-based
Nicira Networks, a 2007 spin-off of a joint Stanford-Berkeley project around
the dissertation of Stanford student Martin Casado supervised by British-born
Stanford professor Nick McKeown and UC Berkeley professor Scott Shenker.
In 2011 Oracle acquired Montana-based RightNow Technologies, a
provider of cloud-based Customer Relationship Management (CRM)
applications to compete directly with SalesForce. Locally, similar services
were offered on the cloud by Pleasanton-based Workday, the new company of
PeopleSoft's founder Dave Duffield (started in 2005).
Virtualization allowed a “farm” of computing power to create a virtual
machine for a customer, no matter where the customer was located. A computing
environment (made of disparate software and hardware components) could be
dynamically configured to represent several different machines, each assigned
to a different customer. This “multi-tenant system” was conceptually similar to a
power plant: it supplied computing power over the Internet to multiple
customers the way a power plant supplied electricity over the electric grid to
multiple customers.
For decades, software and hardware manufacturers had relied on business
plans that envisioned selling the very same system to multiple customers who
were using it to perform identical tasks. Ubiquitous and cheap broadband was
fostering an era in which a “computing utility” could provide that service

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(hardware and software) to all those customers over the Internet, with no need
for those customers to purchase any of the components (just pay a monthly fee).
Knowledge production was becoming centralized the way energy
production had become centralized with the invention of the electrical grid
(spreading the power created by a power plant) and the way food production
had become centralized 5000 years earlier after the invention of the irrigation
network. Each “network” had created a new kind of economy, society and,
ultimately, civilization.
Social networking too was destined to become a "utility" of sorts for
businesses. The idea of collaboration software over the Web had been
pioneered by startups such as Jive Software, founded in 2001 by two students
from the University of Iowa, Matt Tucker and Bill Lynch, and originally based in
New York. In the age of Facebook it was renamed "enterprise social network
service" and embraced by startups such as Yammer, originally developed in
2007 by Adam Pisoni and David Sacks (a Paypal alumnus) at Geni in San
Francisco, and spawned off in September 2008 (and bought by Microsoft in
2012). This platform hinted at the first major revolution in ERP since SAP's
glorious R3.

Google versus Microsoft

The 1990s had been the decade of Microsoft. Microsoft owned the
operating system, and it owned the most popular applications. Microsoft’s
success relied on the concept of the personal computer: one user, one
application, one computer. Web-based computing represented the first serious
challenge to Microsoft’s business model. Due to increased bandwidth and more
sophisticated Internet software, it had become possible to create applications
that ran on websites and that users could access via their Web browser. It was
basically a client-server architecture, except that the “server” was potentially
the entire Internet, and the client was potentially the entire human population.
Cloud computing was on-demand Web-based computing. The concept was
pioneered by startups such as Saleforce.com. In February 2007, Google targeted
Microsoft’s core business when it disclosed a humbler version of cloud
computing, Google Docs. That suite could be accessed by any computer via a
Web browser, and included a word-processor and a spreadsheet program (both
acquired from independent companies, respectively Upstartle and 2Web
Technologies). One could already imagine the end of the era of the operating
system, as the Web replaced the need for one. A computer only needed a
browser to access the Web, where all other resources and applications were
located.
Microsoft was still dominant and powerful. In 2008 Microsoft Windows
owned almost 90% of the operating system market for personal computers,
while Google owned almost 70% of the Internet search market. The future,

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though, seemed to be on Google’s side. In April 2010, Microsoft’s IE
commanded 59.9% of the browser market, followed by Firefox with 24.5% and
Google’s own Chrome (first released in September 2008 and based on Apple's
WebKit)) with 6.7% That was a steep decline from the days when IE was
ubiquitous.
On the other hand, Google’s revenues depended almost entirely on third-
party advertising. The “war” between Google and Microsoft was well
publicized, but the war between Google and Yahoo! was probably more serious
for Google’s immediate future. In 2007 Google paid $3.1 billion for
DoubleClick, the New York-based company that dominated “display
advertising.” This was the method favored by Yahoo! when Google was piling
up millions with its keyword ads. As the quality of browsers and computers
improved, Yahoo!’s glamorous ads became more and more popular, and they
were served by DoubleClick. By acquiring it, Google struck at the heart of
Yahoo!’s business. And now Google had all the pieces to create an “advertising
operating system.” In 2009 Yahoo! owned 17% of the market for display ads,
followed by Microsoft at 11% and AOL at 7%.
Google’s strategy became even more aggressive in 2010 when it launched
into an acquisition spree. Notably, it purchased BumpTop, the three-dimensional
GUI developed since 2006 by University of Toronto’s student Anand Agarwala,
and Plink, a visual search engine developed by two Oxford University’s
students, Mark Cummins and James Philbin. Chrome OS was first released in
November 2009. It was a variant of the Linux-based operating system Ubuntu
that was developed in Britain by Mark Shuttleworth's Canonical. At the same
time, the products that Google engineers truly invented and that the company
widely hyped, such as the social networking platform Buzz and the groupware
Wave, were embarrassing failures.
Google's technology was consistently inferior to what the Silicon Valley
landscape was producing. For example, Superfish, started in 2006 in Palo Alto
by Israeli-born semiconductor-industry veteran Adi Pinhas and A.I. guru
Michael Chertok, launched in 2010 a visual search tool that, unlike Google
Goggles, was able to recognize pictures regardless of perspective, lighting,
distance and so forth.
The effect of Google’s domination of the search-engine market was the same
as the effect of Microsoft’s domination of the personal-computer operating-
system market: to stifle innovation. Google had built its reputation on returning
webpages based on their “relevance.” Now it was mostly returning commercial
websites that had little relevance to the search string, and the ubiquitous
Wikipedia (for which one was better off just searching within Wikipedia itself).
A very relevant article written by a scholar was very unlikely to show up in the
first page of results. The “irrelevance” of Google’s searches was mainly driving
an entire economy based on advertising products and services. And, of course,
the fact that the Web was being littered with the ubiquitous “Google Adwords”

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hardly represented a welcome change. Most of the text and images that flooded
a user’s screen constituted commercial ads (in ever more creative and invasive
fashions). Due to the proliferation of Google AdWords, the Web was becoming
not only unsearchable but also unreadable.
Alas, Google had a virtual monopoly on web search: any search engine that
was truly committed to “relevance” had scarce chances of success against
Google, just like any operating system for personal computers against
Microsoft.
The line-up of winners in the cloud world was small. In 2009 Microsoft
was still the largest software company in the world with revenues of $50
billion, while Google’s revenues were “only” $22.8 billion. Google had
already passed IBM’s software revenues ($22 billion), Oracle ($17.5 billion)
and SAP ($15.3 billion, and the most troubled of all of these). By comparison,
the wildly popular Facebook only made an estimated $550 million in 2009. At
one point in March 2010 Microsoft was the second largest company in the US,
with a market capitalization of $256 billion, following oil producer Exxon
($315 billion) and followed by a fast-growing Apple ($205 billion) that had
passed the retail giant Walmart ($205 billion). Google’s market capitalization
was $184 billion.
Those numbers sent two messages, both adverse to Microsoft. The personal
computer was being attacked simultaneously on two fronts, by the smart phone
and by web-based computing. In April 2010 Apple further weakened the
personal computer when it introduced the tablet computer iPad, which sold one
million units in less than one month.
Another battlefront was television. In 2010 Google debuted an open
platform for television sets that was the home-video equivalent of its mobile-
phone platform Android. It was another attempt to marry content and hardware,
something that only Apple had successfully achieved so far but with a
proprietary platform. Not being a maker of hardware, Google chose again to
offer an open platform. The first hardware partner to sign up was Japanese
conglomerate Sony. Sony had a history of championing networked television. An
early adopter of WebTV, Sony had introduced already in 2000 a product called
AirBoard, a tablet computer that let users watch television, surf the Internet,
view photos and wirelessly control several gadgets. Sony wasn’t interested as
much in TV-based web surfing (the feature provided by the alliance with
Google) as in video and music streaming, i.e. selling its content (not just a piece
of hardware) to the consumers. Sony owned a vast library of films and music.
Google did not make any hardware and did not own any content. Google had
become a giant by simply facilitating the connection between the hardware and
the content, but now it was debatable who owned the future: the company that
laid the cable connecting a device to some content or the companies making the
device and providing the content?
The wild card in this scenario was Facebook. It began the year 2009 with

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150 million users and grew by about one million users a day, the fastest product
ever to reach that many users in just five years. In 2010 it was approaching half
a billion registered users. In June it was being valued at $23 billion, despite not
being profitable yet. In May 2007 Facebook had announced an open platform for
third parties to develop applications. This amounted to a Copernican revolution:
applications were no longer written for an operating system but for a social
network. This event spawned a new industry of widget makers for the Facebook
platform, notably RockYou (originally RockMySpace), founded in Redwood
City in 2006 by Lance Tokuda and Jia Shen. However, Facebook was also being
widely criticized for its ever-changing privacy policies after having contributed
to distribute all over the world sensitive personal information of millions of
people. It had basically become the premier stalking tool in the world.
The price paid by users of social networking platforms was a massive
dissemination of private information. By the late 2000s there was so much
information available on the Web about individuals that it was natural to put
together a person's lifestyle just by browsing her name. A new kind of
application, social network aggregators, was soon born to help that process. In
2006 a group of Stanford students based in Mountain View, including Harrison
Tang, came up with such an idea and developed Spokeo. In October 2007 in
Mountain View former Google employees including Paul Buchheit (the creator
of Gmail and AdSense) and Bret Taylor (the creator of Google Maps) launched
FriendFeed, capable of integrating in real time information posted on social
media. In July 2009 it was acquired by Facebook.
Facebook indirectly also set a new (low) standard for creating a startup. In
the fall of 2007 B. J. Fogg, an experimental psychologist who was running the
Persuasive Technology Lab at Stanford, instructed his students to create
Facebook applications with the only goal of having as many people as possible
use them in as short a period of time as possible. The students were forced to
create no-frills applications whose main asset was that they were easy to use
and spread around. That class alone created a number of millionaires because
many of those applications became hits on the Facebook ecosystem. These
Stanford CS student authors went on to join successful companies. They had just
hit on a new formula to create a successful product: just make it easy to use and
spread virally. You can always refine it later.
In April 2012 Facebook paid $1billion for tiny San Francisco-based startup
Instagram, a mobile photo-sharing service for the iPhone that had been
introduced in October 2010 by Kevin Systrom (formerly at Google) and
Brazilian-born Mike Krieger, both Stanford graduates.
Google basically used Internet technology to steal advertising from media: it
was not a tech company but an advertising agency. Facebook, targeting a young
audience that gets bored quickly, was a talent scout, constantly trying to ride the
next "flavor of the day": Instagram, What's App, ...
Another social networking platform for photo sharing and messaging,

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specifically designed for the iPhone (and later mobile devices in general) was
Path, launched in November 2010 in San Francisco by Shawn Fanning of
Napster fame and by former Facebook executive Dave Morin. What initially
distinguished Path from Facebook was that it limited the number of friends to
50.
Location was becoming important again. Craigslist had been the last major
Web-based service to address the geographic community, while almost every
other major service addressed the virtual community of the whole Web. The
trend was reversed by the end of the decade. In 2010 Facebook belatedly added
Places, a location-based service. It was similar to Foursquare, founded in 2007
in New York by Dennis Crowley and Naveen Selvadurai, and Gowalla,
launched in 2009 from Austin, Texas by Josh Williams and Scott Raymond.
These services basically let friends equipped with mobile devices know each
other’s location. Meanwhile, Google rolled out Realtime Search that performed
location-based filtering of status updates, for example to find out what is going
on in a town. In 2011 Google tried to acquire discount-coupon site Groupon,
launched in November 2008 in Chicago by Andrew Mason. Groupon brokered
deals between consumers and local stores. Maybe it was not “Google versus
Microsoft” after all, but “Google versus Facebook.”
Incidentally, in 2010 eBay acquired shopping engine Milo, founded in 2008
in Philadelphia by Jack Abraham. Milo kept track of which goods were
available in neighborhood stores.
Because of Google and Facebook, the way people used the Internet had
changed dramatically since the day that Marc Andreessen had created the
Netscape browser. Nonetheless, the browser had not changed much since those
days. Microsoft’s Internet Explorer, Mozilla’s Firefox, Google’s Chrome, and
Apple’s Safari had simply copied the concept, the look and the buttons of the
original, barely introducing collateral features.
A startup that tried to “upgrade” the browser to the age of Facebook was
Mountain View-based RockMelt, founded in November 2008 by Eric Vishria
and Tim Howes, both former employees of networking company Opsware
before it was acquired by Hewlett-Packard. It also marked Marc Andreessen’s
returns to his roots, since he was the main financial backer of RockMelt.
RockMelt represented the typical paradigm shift that periodically shook Silicon
Valley. In this case the victim was Facebook. Instead of having the Facebook
user look at the Internet through the filter of his Facebook page and his friends’
Facebook pages, RockMelt allowed the user to view the Facebook world and
many other popular services (e.g., real-time news) as an extension of the
browser.
The other thing that had not changed much since the invention of the Web
was the search engine. While Google dominated the field, its search engine was
largely agnostic about the contemporary boom of social networks. The
emergence of "social search" technology was well represented by Blekko,

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founded in Redwood Shores in June 2007 by Rich Skrenta. He was the high-
school hacker who had created the first personal-computer virus in 1982; the
SUN guru who had created the Open Directory Project; and the entrepreneur
who had created Topix. It was basically a hybrid approach that mixed the
traditional machine-powered search engine with the human-powered wiki. Nor
was Facebook a dogma in its space. In March 2010 former Google employee
Ben Silbermann launched the image bookmarking system Pinterest out of Palo
Alto. Within two years it was second only to Facebook and Twitter among
social networking platform. The key difference was that it organized networks
of people around shared interests not social connections.
For the record, in 2007 independent consultant Chris Messina (cofounder of
the idealistic Citizen Agency) invented the Twitter hashtag, a way to group
conversations on Twitter. It became even more useful in 2008 after Twitter
acquired the search tool Summize (a two-year old Washington-based startup
founded by Eric Jensen, Abdur Chowdhury and Ajaipal Virdy).
The first browser to integrate social networking and media services had
actually been Redwood City-based Flock, launched in 2005 by Bart Decrem
and Geoffrey Arone.
Facebook was also coming under attack because of its loose security
policies. Furthermore, Facebook content was exclusive to the Facebook
website, and there was a deliberate attempt by Facebook to isolate the
Facebook user from the rest of the Internet world. While dissatisfaction was
pervasive, the people who dared to take on Facebook were almost always
technology enthusiasts based outside the Bay Area. In 2004 Chicago-based
developer Michael Chisari, started Appleseed, the first open source social
networking engine. In 2007 Belgium-based developer Laurent Eschenauer
announced OneSocialWeb. This one was based on XMPP, the technology behind
Instant Messaging. David Tosh and Ben Werdmuller, two researchers at the
University of Edinburgh in Britain, founded Elgg in 2004. The most hyped by the
media of this generation of open-source social networks was Diaspora,
developed by four New York University students.

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 A Facebook Screenshot (2010)

In 2007 Justin Kan, a recent graduate in Physics and Philosophy from Yale
University, started streaming his life nonstop 24/7 over the Internet via a
webcam attached to his head, thus implementing what many dystopian films and
novels had predicted. His live video broadcast on Justin.tv lasted for eight
months. Then, with help from Emmett Shear and others, he turned Justin.tv into a
public channel for anyone to "lifecast". Given the success of the idea for sports
and games, in 2011 those channels spawned a separate, San Francisco-based
company: Twitch.tv (acquired in 2014 by Amazon).
Live video-streaming platforms multiplied after the success of Twitch.
Periscope was founded by Kayvon Beykpour and Joe Bernstein in San
Francisco in 2014, and Twitter acquired them in 2015. At the same time in 2015
Meerkat, founded in 2012 in San Francisco by Ben Rubin and Itai Danino,
launched its platform for Twitter users to instantly stream their lives over
smartphones.

Our friend Wu Bin broadcasting a Stanford L.A.S.E.R. live with Periscope

This generation of live-streaming apps had been enabled by new 3G and 4G

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cell phone networks. Precursors included Redwood City-based Qik (founded by
Ramu Sunkara, Bhaskar Roy and Nikolay Abkairov in 2006), that launched in
2008 and was acquired by Skype in 2011; Israeli-based Flixwagon, founded by
Sarig Reichert, which also launched in the same year; and Britain-based
Next2Friends, founded in 2007 by Roy Shelton and Anthony Nystrom, which
also launched in 2008. For the record, live video streaming over the Internet had
been inaugurated in 1995 in Holland by Jacques Mattheij (using a Silicon
Graphics workstation), way before Silicon Valley even thought of it. "Life-
streaming" had been born in 1996 at Pennsylvania's Dickinson College when
19-year old student Jennifer Ringley had installed a webcam in her dorm room
and started uploading black-and-white images photos of herself to JenniCam.org
to track her daily life.

The Bay Area Giants

The other giants of Silicon Valley were left scrambling for an exit strategy
during these times of upheaval. In 2008, Hewlett-Packard purchased Texas-
based giant Electronic Data Systems (EDS) in a shift towards services, and in
2009 Xerox followed suit by purchasing Affiliated Computer Services. HP also
purchased Palm, now a struggling smart-phone maker (April 2010). The value
of Palm was twofold: an operating system designed for cloud computing; and an
application development environment based on a drag-and-drop metaphor. This
was also a last-ditch attempt to enter the market for mobile operating systems
that was rapidly becoming a duel between Apple (iOS) and Google (Android).
After all, Palm's WebOS had pioneered the phone software platform based on
Web technology.
In 2006 HP had finally passed Dell in worldwide personal-computer
shipments (16.5% market share versus Dell’s 16.3%), while Gateway had
disappeared, having been bought in 2007 by Acer of Taiwan: for the first time a
Silicon Valley company ruled the personal-computer market.
However, the glory of becoming the biggest personal-computer maker in the
world did not mean much at a time when Apple's tablet was crippling personal-
computer sales, and in August 2011 HP announced that it was going to spin off
(i.e. exit) its personal computer business. This came at the same time when HP
dumped the recently acquired Palm (and its WebOS mobile platform introduced
in January 2009) and at the same time that HP acquired British database
application company Autonomy. Autonomy and EDS represented the future of
HP, not personal digital assistants and personal computers.
In 2010 a new player emerged in the battle for the mobile operating system,
and, while it was not based in the Bay Area, it relied on technology developed
by a Bay Area startup. Long ridiculed for its lack of design style and for its long
list of flops (the Bob desktop metaphor, the Spot wristwatch, the Tablet PC, the

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Ultimate TV, the Zune music player, the Kin smartphone), Microsoft (partnering
with Nokia) finally got it right with the mobile operating system Windows
Phone: it was derived from the Danger technology that they had acquired from
the same man who sold Android to Google, i.e. Andy Rubin.
Oracle, instead, still aiming mainly at the corporate world, acquired
middleware experts BEA in 2008 and decided to enter the hardware market by
purchasing a struggling SUN in 2009.
Cloud computing started to take hold even in corporate settings. In 2009
Cisco partnered with Massachusetts-based EMC, the largest provider of
networked storage in the world, to found Acadia and convert the old data-
centers of the corporate world to cloud computing. In the same year Cisco
introduced its first line of servers, the Unified Computing System. It competed
directly with HP and IBM while upping the ante by integrating VMware‘s
virtualization software (that now allowed to move applications from one server
to another at the click of a mouse). At the beginning of 2010 Cisco posted its
best quarter ever, with sales of $10.4 billion. Intel was largely immune to the
turmoil: in 2010 it posted record sales again.
In March 2009 AMD spun off its manufacturing unit to create
GlobalFoundries. Within a year it became the world's second largest silicon-
chip foundry company after Taiwan's TSMC.
However, the next battleground for chips would be in the mobile space.
British chip manufacturer ARM still dominated cellular-phone applications
which required all-day battery life. Third-generation cellular phones were being
integrated with video, music, and gaming and this triggered a boom in chips for
mobile devices. Ironically, both Intel and AMD had exited that market in June
2006. Intel had sold its ARM-based technology to Marvell, and AMD had sold
its MIPS-based technology to Raza Microelectronics. In 2010 Intel reentered the
market with both an in-house project (Moorestown) and the acquisition of
German-based Infineon. ARM chips were already powering devices such as
Sony television sets, the Amazon e-reader Kindle, and hotel keycard locks, and
analysts foresaw a future in which thousands of small devices would need ARM
chips to interact among themselves and to retrieve information from the Internet.
In 2009 ARM was a $0.5 billion corporation versus Intel’s $35 billion, but the
trend was towards ARM’s small low-power chips. Intel took action in
November 2010: for the first time it accepted to manufacture someone else’s
chips (San Jose-based fab-less Achronix, a competitor of XIlinx and Altera in
the high-end accelerating chip market). Intel also entered the market
traditionally dominated by Taiwanese and Chinese factories. It was unlikely this
was due to a desire to enter the brutal market of contract manufacturing and
more likely a desire to learn new markets. And, when in September 2011
Microsoft announced that the Windows operating system would for the first time
also run on the ARM platform, Intel signed a deal with Google to use Intel chips
in Android phones. Intel had been incapable of adapting to ARM's licensing

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business model.
The boom of smartphones also benefited makers of Wi-Fi chips, such as
Atheros and Marvell: 56 million Wi-Fi-enabled cellular phones shipped in
2008 (a 52% increase over the previous year). More than 54 million
smartphones were sold in the first quarter of 2010, an increase of 56% over the
previous year.
It was not unusual for Silicon Valley to be late on innovation, but this was
embarrassing for a region named after silicon. All the big providers of chips for
smartphones (San Diego-based Qualcomm, Texas Instruments, Korea-based
Samsung, Irvine-based Broadcom) except for Marvel were based outside the
Bay Area. Even Apple’s iPhone used a chip manufactured by Samsung. Ditto for
all the providers of wireless telecommunications networks: Verizon (started in
1983 as Bell Atlantic) was based in Philadelphia, AT&T was based in New
Jersey, Sprint was based in Kansas (although its origins were in the Bay Area),
T-Mobile was the subsidiary of Deutsche Telekom, and Clearwire was founded
in 2003 in Seattle.

Intel’s Headquarters (2010)

Beyond Moore's Law

A bigger problem lay ahead for the semiconductor industry in general. In
ultimate analysis a lot of computer technology's accelerating progress was due
to its fundamental component: the transistor. Transistors were expensive in the
1960s. In 1982 they were already cheap enough that $1 could buy a few
thousand of them. Twenty years later in 2002 the same dollar bill could by more
than two million of them. Thirty years later in 2013 the same dollar bill could

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buy 20 million transistors.
The semiconductor industry was very aware that Moore's law was rapidly
coming to and end. As transistor gets smaller, it gets harder to make them. For
the first time in 50 years there was a real chance that the price of transistor
would stall or even increase. The industry began experimenting with new
materials, such as carbon and graphene, and even with quantum computing.

Social Games
Virtual worlds were booming. The audience for pioneering virtual worlds
such as Gaia Online and Habbo had passed five million monthly active users.
The next front was the social network. Launched in May 2008 and only
accessible as an application on Facebook, the virtual world YoVille passed five
million monthly active users in March 2009. By allowing people to create
“second-life” avatars and interact with each other, YoVille de facto created a
new concept: a virtual social network within the real social network. The
success of YoVille spawned a generation of browser-based “social games”
running on Facebook. YoVille itself was acquired in July 2008 by Zynga,
founded in July 2007 in San Francisco by serial entrepreneur Mark Pincus. In
June 2009 Zynga released FarmVille, a shameless clone of the Facebook-based
social game Farm Town that was introduced by Florida-based Slashkey a few
months earlier. In 2010 FarmVille had become the most popular Facebook
game, boasting more than 50 million users. Zynga also introduced Mafia Wars
(2009), a shameless copy of another pioneering social game, David Maestri’s
Mob Wars, that had debuted on Facebook in January 2008 (Maestri was still an
employee at Freewebs). Six months after the release of Playfish’s Restaurant
City from Britain, Zynga released Cafe World.
Competitors soon started retaliating by copying Zynga’s games too. While
Zynga kept churning out clones of popular games, the founder of Freewebs (now
renamed Webs), Shervin Pishevar, opened Social Gaming Network (SGN) in
January 2008 in Palo Alto to develop original social games for the Facebook
platform. Whatever the strategy, the Bay Area was becoming again the epicenter
for videogame evolution. By 2010 Apple was promoting the iPhone itself as a
gaming platform, further eroding Nintendo’s console-based empire.
Videogames were still selling strongly. Activision was setting one record
after the other, selling 4.7 million copies of “Call of Duty - Modern Warfare 2”
on its first day in 2009 and 5.6 million copies of “Call of Duty - Black Ops” on
its first day in 2010 (grossing more than $650 million worldwide during the first
five days of sales). In December 2010 Activision’s Cataclysm sold 3.3 million
copies in the first 24 hours.
Note that the "Call of Duty" games were developed by Infinity Ward in
southern California (Encino) using the id Tech 3 engine developed in Texas by
PC game pioneer John Romero and others at Id Software. The technological

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breakthroughs were coming from somewhere else.
Videogames had become a huge industry, a phenomenal economic success.
However, the state of the videogame craft was not all that advanced if one
considered that videogames still relied on the original idea: create something
that stimulates interest via the two primal impulses (kill and make money, given
that sex was off limits) and make it as addictive as possible so people will
come back for the sequel. Zynga's "FarmVille" was an addictive game
exploiting the pulse to get rich, and hits like "Call of Duty" were addictive by
exploiting the pulse to kill. Not exactly high art. In August 2008 San Francisco-
based game designer Jonathan Blow released "Braid", a videogame for
Microsoft's Xbox. The concept was completely different. Blow focused on his
own aesthetic values, on sophisticated scripting and subtle psychology. Blow
conceived the videogame as an art (not "art" as in "craft" but "art" as in
"Michelangelo" and "Van Gogh"). He then invested the profits into producing an
even more "artistic" game, "The Witness", introduced in March 2012.
The very notion of how to play a videogame was changing. OnLive was
launched in March 2009 in Palo Alto by Apple alumnus and WebTV’s founder
Steve Perlman after seven years of work in stealth mode. OnLive, which went
live in June 2010, was out to kill the videogame console by providing
videogames on demand to any computer. The videogames were hosted on the
“cloud” of the Internet instead of requiring the user to purchase them on physical
cassettes. This was advertised as "5G wireless": 2G (1992) marked the
transition from analog to digital voice; 3G (2001) enabled Internet browsing;
4G provided basic video streaming; and 5G was meant to provide high-
definition video streaming.
OnLive didn't succeed, but Perlman continued the experiment within his
incubator Rearden, eventually spawning Artemis in 2014 (co-founded by
Pearlman and his Italian-born chief scientist Antonio Forenza) just when mobile
video began to account for more than 50% of all mobile data. The big service
providers were trying to increase capacity by adding more antennas (i.e. by
shrinking the size of the wireless cells) but there was a physical limit due to
signal interference, and Perlman was instead focusing on exploiting that very
interference to achieve fiber-optic speed in cellular communications.
In 2010 the first blockbuster of iPhone videogaming took off. Angry Birds,
developed by Finnish game developer Rovio Mobile, founded in 2003 by three
students from Helsinki University of Technology (Niklas Hed, Jarno Vakevainen
and Kim Dikert). Introduced in December 2009, it sold over 12 million copies
in just one year.

User Experience
As 3D motion-control and motion-sensing products started to become
affordable and therefore popular (e.g., Microsoft's Kinect, a motion sensing

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input device introduced in 2010 for the Xbox videogame console, based on
technology originally developed by PrimeSense in Israel), the idea was copied
in the Bay Area by a new generation of startups, notably San Francisco-based
Leap Motion, founded in 2010 as OcuSpec by David Holz and Michael
Buckwald. Leap Motion introduced motion-controlled input devices that, unlike
Microsoft's ruling Kinect, reacted to natural gestures to manipulate objects on
the screen. In 2013 Hewlett Packard was the first major manufacturer to embed
that user interface in its computers. Meanwhile, Apple acquired PrimeSense, the
company that developed Kinect, and Google acquired gesture-recognition
startup Flutter, also founded in San Francisco in 2010 (by Navneet Dalal and
Mehul Nariyawala).
The most significant improvement in human-computer interface of the time
(as far as related to smartphones and tablets) was the Swype keyboard,
originally developed for the Windows Mobile operating system by Seattle's
Swype, founded in 2003 by Cliff Kushler (co-inventor with Dale Grover and
Martin King of the T9 predictive text system used on cell phones of the 2000s)
and by Randy Marsden (developer of the Windows Mobile touch-screen
keyboard). Swype was capable of guessing the intended word when the user
slides his finger on a touch-screen from the first letter to the last letter of the
word. First introduced by Samsung in late 2009 and acquired by Nuance in
2011, Swype spread like wildfire on Android devices. In 2010 SwiftKey,
started in London in 2008 by Jon Reynolds and Ben Medlock, debuted a system
capable of predicting the next word the user intends to type. These were all part
of a trend to improve the speed of typing on ridiculously small devices. As the
keyboards got smaller and smaller, the speed of the skilled typist had been lost.
People were writing more but much slower than the older generations. This
opened opportunities for a deluge of startups to offer systems to speed up typing.
In 2010 Steve Jobs of Apple largely decreed the demise of Adobe's
multimedia platform Flash when he hailed HMTL5 as the standard of the future
for video on the Web (and one year later Adobe itself adopted HTML5 instead
of Flash on mobile devices). HTML5 had been formally introduced in 2008 by
the Web Hypertext Application Technology Working Group (WHATWG), a
group formed by Apple, Mozilla and Opera Software (a Norwegian maker of
Web browsers since 1997).
Improvements in "user experience" had a split-personality kind of effect. On
one hand they were truly improving the life of the user, while on the other hand
they were turning that improved experience into an increasingly lucrative
opportunity for the business world. The proliferation of sensors, location-based
applications and social media (continuously capturing information about the
user) was leading to increasingly more sophisticated, personalized (and
intrusive) personal assistants, capable of "anticipating" the user's behavior and
the user's needs.

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 Cyber-currency
In 2009 a person disguised under the moniker Satoshi Nakamoto introduced
the digital currency Bitcoin. This became the first successful currency not to be
printed by a government. From an engineering point of view, its main
achievement was that the system was capable of creating copies that could not
be copied. Bitcoin seemed to prove again the theorem that major progress in
peer-to-peer technology only came from independents. The previous proof had
come from Napster.
Bitcoin was the latest in a long genealogy of "dark nets".
Bitcoin's distributed blockchain mechanism was making central authorities
of trust obsolete. Trust had always been guaranteed by something like the
national bank or the title company. Blockchain created trust through an
algorithm. Its potential applications extended way beyond digital currencies.
Any form of peer-to-peer contract (whether selling a house or renting a car)
could be made safer through blockchain. Indirectly, blockchain was raising the
issue of what the function of government can be in the digital era, when
computer algorithms can maintain "order" with no need for a police force.
Decentralization had always meant chaos, but blockchain was a system based on
decentralization that actually guaranteed order; and, unlike government
databases, it was virtually invulnerable to hacking.
The success of peer-to-peer models generated a lot of enthusiasm in the
digital counterculture. Ori Brafman's "Starfish And The Spider" (2007) and
Yochai Benkler's "The Wealth of Networks" (2007) publicized the notion of
"decentralized autonomous organizations" (DAOs) and Michel Bauwens
publishe the "Peer-to-peer Manifesto" (2008).

Mobile Payment
Some startups understood that mobile users carry a computer with them, not
just a phone. In fact, they even carry a GPS that knows their location.
Bling Nation, founded in 2007 in Palo Alto by Argentinian serial
entrepreneur Wenceslao Casares and Venezuelan economist Meyer Malka,
developed a sticker for smartphones (or any other device) with an embedded
NFC chip to charge purchases to a Paypal account.
In 2009 Jack Dorsey (of Twitter fame) founded Square and designed a
"reader" that allowed anybody with a mobile phone to make a payment and
anybody with a mobile phone (and a Square-provided "cash register") to accept
it (no cash, no credit cards, no RFID, no receipt).

The Empire
Looking at the numbers, Silicon Valley had never been healthier than it was
in 2008, before the big worldwide financial crisis struck. It had 261 public
companies and countless startups. eBay was selling $60 billion worth of goods

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in 2007, a figure higher than the GDP of 120 countries of the world. In 2007
venture capitalists invested $7.6 billion in Silicon Valley and an additional $2.5
billion in the rest of the Bay Area. The Bay Area boasted the world’s highest
concentration of venture capitalists. Silicon Valley’s share of venture-capital
investment in the US reached 37.5% at the end of 2009 (compared, for example,
with New York’s 9.2%). Silicon Valley had 2.4 million people (less than 1% of
the US’s population) generating more than 2% of the US’s GDP, with a GDP per
person of $83,000.
The rest of the Bay Area was equally stunning: by 2009 the Lawrence
Berkeley Labs alone boasted 11 Nobel Prize winners, more than India or China,
and UC Berkeley boasted 20. So the tiny town of Berkeley alone had 31, more
than any country in the world except the US, Britain, Germany, and France. Add
Stanford’s 16 and UCSF’s 3 for a grand total of 50 in a region of about 19,000
square kilometers, smaller than Belize or Slovenia. In 2006 the Bay Area
received three Nobel prizes out of nine: one each to Stanford, Berkeley, and
UCSF. In the last 20 years the winners included: Richard Taylor of Stanford
University (1990), Martin Perl of Stanford University (1995), Douglas Osheroff
of Stanford University (1996), Steven Chu of Stanford University (1997),
Robert Laughlin of Stanford University (1998), and George Smoot of the
Lawrence Berkeley Labs (2006) for Physics; William Sharpe of Stanford
University (1990), Gary Becker of Stanford University (1992), John Harsanyi of
UC Berkeley (1994), Myron Scholes of Stanford University (1997), Daniel
McFadden of UC Berkeley (2000), Joseph Stiglitz of Stanford University
(2001), George Akerlof of UC Berkeley (2001), and Oliver Williamson of UC
Berkeley (2009) for Economics; Sydney Brenner (2002), the founder of the
Molecular Sciences Institute in Berkeley, Andrew Fire of Stanford University
(2006), and Elizabeth Blackburn of UCSF (2009) for Medicine; Roger
Kornberg of Stanford University (2006) for Chemistry.
Another Nobel prize in Physics came in 2011: Saul Perlmutter of Lawrence
Berkeley Lab. And then Brian Kobilka of Stanford in Chemistry in 2012. And
then in 2013 Michael Levitt for Chemistry (Stanford), Randy Schekman for
Medicine (Berkeley) and Thomas Sudhof for Medicine (Stanford).
The Bay Area was more than a region: it was an economic empire. The
number of jobs that had been outsourced to countries like India probably
exceeded the number of jobs created in Silicon Valley itself. And the
relationship with the rest of the world was as deep as it could be. A study by
Duke University found that 52.4% of Silicon Valley’s high-tech companies
launched between 1995 and 2005 had been founded by at least one immigrant.
This phenomenon was probably a first in history. At the same time investors
flocked from all over the world. For example, in 2008 Taiwanese conglomerate
Quanta invested into two Silicon Valley’s “fab-less” startups: Tilera (founded in
October 2004 by Anant Agarwal) and Canesta (founded in April 1999 by Cyrus
Bamji, Abbas Rafii, and Nazim Kareemi).

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 Neurotech
In neurotech the new approach was based on computational power. In
practice, the cumbersome, slow and expensive computers of the 1960s had
forced computer scientists to focus on models, whereas now the small, fast and
cheap processors of the 2010s were encouraging computer scientists to use
brute force. The availability of colossal amounts of information on the Web
made this change of strategy even more appealing. For example, Stanford's
professor Andrew Ng led a team at Google that wired 16 thousand processors
to create a neural net capable of learning from Youtube videos. The new
approach contained little that was conceptually new, just a lot more computing
power. The "deep belief networks" at the core of the "deep learning" of these
systems was an evolution of the old "neural network" of the 1980s and it had
mostly been done by Geoffrey Hinton at the University of Toronto.
Diffbot, the first startup to be funded in 2008 by Stanford's on-campus
venture capital fund StartX, used artificial intelligence to analyze and catalog
the whole World Wide Web.
The sensation in robotics was coming from Boston. In 2012 Rethink
Robotics, founded in 2008 by one of the most celebrated robot scientists in the
world, Rodney Brooks, introduced Baxter, a low-cost programmable industrial
robot that promised to make robots affordable for small companies.
In 2012 Kurt Konolige and Gary Bradski of Willow Garage founded
Industrial Perception (IPI) in Palo Alto to build 3D-vision guided robots
("robots that can see").
In 2007 the Stanford Artificial Intelligence Laboratory unveiled
"Switchyard", better known as the Robot Operating System (ROS), a toolkit for
developers of robot applications, later expanded at nearby Willow Garage.
Progress in Artificial Intelligence was also coming from an idea originally
advanced by Carver Mead at the California Institute of Technology (Caltech) in
1990: build processors that look like the brain. In 2008 Dharmendra Modha at
IBM's Almaden Labs launched a project to build such a "neuromorphic"
processor, i.e. made of chips that operate like neurons.
Google's broadly publicized "driverless car" was a project begun by
Sebastian Thrun at the Stanford Artificial Intelligence Laboratory, the
descendant of Thrun's robotic vehicle Stanley (2005).

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 Google’s self-driving car

More prosaic applications were needed in the age of smart phones, cloud
computing and social networking. SRI International's Artificial Intelligence
Center, that had already spawned Nuance in the 1990s, spawned Siri in the new
century. Adam Cheyer was the leader of a software project (code-named
CALO/PAL and sponsored by DARPA) to develop a personal assistant capable
of learning and self-improving. Founded in 2007 by Cheyer with Dag Kittlaus (a
telecom executive from Norway) and Tom Gruber (an alumnus of Stanford's
Artificial Intelligence Lab who had worked on collaborative knowledge
management), Siri launched a virtual personal assistant for mobile devices that
was acquired by Apple in 2010.
New Zealand-born Oxford-educated physicist Sean Gourley and Bob
Goodson (Yelp's first employee and a YouNoodle co-founder) started Quid in
San Francisco in September 2010. Quid developed a global intelligence
platform for tackling large unstructured data sets (initially about high-tech
innovation, i.e. about Silicon Valley startups).
The groundbreaking technologies feeding the social-networking frenzy kept
coming from other regions, though. For example, face-recognition came to the
masses via Face.com, launched in May 2010 by an Israeli company founded by
Moti Shniberg, who had previously founded the pattern-recognition firm
ImageID in 1998, and by Gil Hirsch. They turned their technology into a
smartphone application (KLiK) and a Facebook application (Photo Finder),
both real-time facial recognition programs capable of automatically identifying
friends in photos (Face.com was acquired by Facebook in 2012).

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 Virtual Reality
The Bay Area had pioneered virtual reality but then pretty much lost interest
in it. It was now sitting on the side while major developments were bringing the
technology to the general audience: mass market immersive-reality devices such
as Sony's head-mounted display HMZ-T1, introduced in November 2011; mass-
market tracking devices such as the Microsoft Kinect, launched in November
2010 and originally conceived to allow gamers to interact with the Xbox 360
game console via gestures; and mass-market lenticular printing (that creates the
illusion of three dimensions or the effect of a changing image as it is viewed
from different angles) by companies such as Futuredisplay, founded in 2003 in
South Korea.

Biotech
Biotech, just like infotech, was moving towards the individual, which in its
case meant personal genomics for predictive medicine. Navigenics was founded
in Foster City in November 2007 by cancer specialist David Agus and Dietrich
Stephan of the Translational Genomics Research Institute to provide genetic
testing for predisposition to a variety of diseases. It was still an expensive
service but the rapid cost reduction in DNA chips and the knowledge derived
from the Human Genome Project helped bring it closer and closer to the masses.
New biotech startups included iZumi Bio, founded to develop products based
on stem-cell research (2007) and iPierian, founded to develop products based
on cellular reprogramming (2007). In 2009 Swiss pharmaceutical giant
LaRoche purchased Genentech for $46.8 billion.
The cost of a personal genetic test-kit was $3 billion in 2003, and there was
only one (the Human Genome Project). In 2009 the cost had decreased to
$48,000. It was made by San Diego-based startup Illumina, originally formed in
1998 by venture-capital firm CW Group to commercialize a system developed
at Tufts University, that in 2007 had acquired Solexa's gene sequencing
technology. Complete Genomics was founded in March 2006 in Mountain
View. It announced a genome-sequencing service for under $5,000.
The genesis of this company spoke loud about the mature state of the
industry. One of the founders was serial entrepreneur Clifford Reid, co-founder
of Sunnyvale-based information-retrieval startup Verity in 1988 and of San
Mateo-based digital video communications company Eloquent in 1996. The
other founder was Serbian-born biologist Radoje Drmanac, who had
participated in the Human Genome Project since 1991 and had later (1994) co-
founded Sunnyvale-based biotech startup Hyseq. By the end of 2009 only about
100 human genomes had ever been sequenced. Complete Genomics planned to
sequence 5,000 human genomes in 2010, 50,000 genomes in 2011 and 1 million
genomes by 2014.
Human-genome sequencing firms were proliferating, each using a different

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technique and each focusing on different data. 23andme, founded in April 2006
in Mountain View by former Affymetrix executive Linda Avey and by Sergey
Brin’s wife Anne Wojcicki, analyzed parts of the human genome to derive useful
medical information. Its kits were priced under $500 by 2010. Halcyon
Molecular, founded by Michael and William Andregg in Arizona in 2003 and
relocated to Mountain View in 2008, hired PayPal’s Luke Nosek in September
2009 and set a goal to sequence individual genomes in a few minutes and for
less than $100. In 2007 the Bay Area boasted about 700 biomedical companies.
Synapse, founded in 2008 at Stanford University by a team of entrepreneurs
and software engineers, boasted one of the largest repositories of human
molecular profiles. As these tools were landing into doctor's offices, it became
important to link a patient's genomic data with traditional non-genomic data such
as the patient's medical history and lifestyle to provide a comprehensive health
assessment. Swedish biologist Hossein Fakhrai-Rad, whose previous startup,
ParAllele Bioscience, was acquired by Affymetrix in 2005, founded Genophen
(later renamed BaseHealth) along with Finnish software engineer Karim Pourak
in 2009 in Redwood City.
However, the promises of the Human Genome Project were still largely
unrealized. In particular, the thesis that genes cause diseases had sent biologists
hunting for the common variants in the genome of individuals who are affected
by the same health problems. Ten years later, the “common variant” strategy was
being attacked by an increasing number of scientists, throwing into disarray the
whole industry of personal genomics.
Meanwhile, life was being made in the lab. Venter’s new venture heralded
the birth of synthetic biology as a business. In May 2010 Hamilton Smith’s team
at the Craig Venter Institute in Maryland achieved another milestone in synthetic
biology by building a bacterium’s DNA from scratch in the lab. He then
transplanted it into the cell of a host bacterium of a different species, where the
artificial DNA took control of the host cell and started replicating. The resulting
living being behaved like the species made of synthetic DNA. It was the first
time that a living cell was being regulated entirely by artificially manufactured
DNA. They had just managed to reprogram a living being. That living being’s
parent was a computer. This event opened the doors to an industry that would
design custom bacteria on a computer and then build them in the lab.
Eventually, one could envision a day when individuals would be able to
program a living organism on a handheld device connected to the lab and order
the living organism on the fly. This vision was becoming possible in reality
because all the economic factors were converging. It was becoming increasingly
easier to sequence (“map”) the DNA of an organism, a fact that resulted in ever
larger databases of genomes of existing organisms. It was becoming
increasingly cheaper to synthesize (“build”) DNA molecules. Both processes
were a lot faster than they used to be, due to their rapid computerization. The
only tool that was missing for a broader availability of life synthesis was a tool

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to edit the DNA sequences. The other tool that a wary humankind would have
liked to see was the equivalent of the “undo” feature of computers. The media
frenzy around this event resembled the media frenzy of the 1950s when
computers were labeled as “electronic brains” that would eventually take over
the world. Now it was bacteria which were bound to take over the world.
Venter’s next target was algae. Bacteria are single-cell organisms. So are algae.
Algae can be used to make biofuels, because they can make carbon dioxide into
fuels by photosynthesis.
"Biohacking" was around the corner. BioCurious, not a startup but a
volunteer run non-profit organization, was established in 2010 by a group of
young independent biologists (Eri Gentry, Raymond McCauley, Tito Jankowski,
Joseph Jackson, Josh Perfetto, Kristina Hathaway). It aimed at providing a
"hackerspace for biotech" at its Sunnyvale offices. It marked the rise of a
community of worldwide hobbyists taking advantage of public-domain
databases of genetic parts. In 2010 two of BioCurious' founders, Tito Jankowski
and Josh Perfetto, founded OpenPCR in San Francisco to manufacture a machine
that could bring biotech to the desktop, basically a copy machine for DNA. Most
genetic applications (such as DNA detection and sequencing) required a
machine to perform Polymerase Chain Reactions (PCRs), i.e. to amplify
sections of DNA. OpenPCR dramatically lowered the price of these PCR
"printers" and made them affordable for individuals. In 2010 Austen Heinz
founded Cambrian Genomics in San Francisco to manufacture the first "laser
printer for living beings", a machine capable of rapidly and accurately
producing DNA.
Drew Endy at Stanford University was working on creating a catalog of
“biobricks” that synthetic biologists could use to create living organisms. His
model clearly mirrored the way the personal-computer industry got started, with
hobbyists ordering kits from catalogs advertised in magazines and then
assembling the computer in their garage.
In 2003 researchers from MIT, Harvard, and UCSF had unveiled the MIT
Registry of Standard Biological Parts, which later folded into iGEM, the
International Genetically Engineered Machine. Both iGEM and the BioBricks
Foundation were Drew Endy's brainchildren. By 2014 the repository would
contain 20,000 biological parts (biobricks). "Open-source" biotech was starting
a global grassroots revolution in synthetic biology. Every year the iGEM
Jamboree, first held in 2004 in Boston, gathered young bioengineers from all
over the world to create new life forms, mostly microbes for useful
applications. There would be 2,500 competitors from 32 countries in 2014.
Biodesic's co-founder Rob Carlson published a book titled "Biology is
Technology" (2010), that became the motto of this movement.
Ginko Bioworks, founded in 2008 in Boston by MIT's synthetic biology
pioneer Tom Knight with other MIT alumni (Jason Kelly, Reshma Shetty, Barry
Canton, and Austin Che), demonstrated how important robotic laboratories

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could be: it aimed to create new microbes by using robots. Some of the initial
applications were: a pesticide, a sweetener, a perfume.
In 2012 a Stanford bioengineering team led by Markus Covert produced the
first complete computer model of a free-living organism, the bacterium
Mycoplasma genitalium.

Complete Genomics’ Headquarters (2010)

Greentech
On the greentech front, in 2008 solar technology accounted for almost 40%
of worldwide private investments in greentech, followed by biofuels at 11%. In
the US, venture capitalists invested a grand total of $4 billion into “green-tech”
startups in 2008, which was almost 40% of all investments in high-tech in the
US. Solar-energy company Solyndra was started in May 2005 in Fremont (East
Bay) by Chris Gronet, formerly an executive at Applied Materials that
manufactured equipment for the semiconductor industry. By 2009 Solyndra had
$820 million in venture funding and more than a billion dollars in product
orders. In March 2009, the Department of Energy helped Solyndra build a 500-
megawatt factory for cylindrical solar cells at the cost of $733 million; but then
Solyndra went bankrupt in September 2011 leaving behind mostly doubts about
the whole industry. In 2007 Google‘s founders established Google.org, the non-
profit arm of Google, to fund greentech startups. In 2008 they invested in eSolar,
a Pasadena-based manufacturer of solar thermal plants, and in AltaRock Energy,
a Sausalito-based firm tapping geothermal energy.
Siluria was founded in 2008 in Menlo Park by MIT professor Angela
Belcher, who developed a method to reprogram the DNA of viruses so that they
create inorganic materials. They applied the method to produce gasoline from
natural gas.
Solar startups multiplied after President Obama’s blessing. Twin Creeks
Technologies, founded in 2008 in San Jose by veterans of the semiconductor

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industry such as Indian-born Siva Sivaram and Venkatesan Murali; and Cogenra
Solar (originally called SkyWatch Energy), a spin-off of semiconductor
manufacturer Applied Materials led by Gilad Almogy, started in 2009 in
Mountain View and was funded by Vinod Khosla.
Innovation, as often in the past, was not really coming from Silicon Valley,
though. The big news in greentech came from Boston-based 1366 Technologies
(founded by MIT professor Ely Sachs in 2007), that developed a more accurate
way to cast the silicon wafers for solar cells so that solar cells can be produced
at lower costs. This company was leapfrogging Silicon Valley startups using a
typical Silicon Valley model: partnership with the DARPA to bring the
technology to maturity and then application to a commodity product.
A different kind of "greentech" was represented by the companies that aimed
at serving the "green" market. Simbol Materials, founded in 2008 in Pleasanton
by Luka Erceg and Scott Conley, hired geochemists from the Lawrence
Livermore National Laboratory and bought technology from that lab to produce
lithium from geothermal brines (the best source of renewable energy).
More interesting were the many attempts at fundamentally changing the way
people behave. For example, in 2008 Simon Saba founded his own company in
San Jose to design and manufacture a mass-market sport electric car. He
envisioned the Saba as a Tesla for ordinary families.
The potential for linking infotech and greentech did not go unnoticed.
German giant SAP had pioneered the field with software to perform carbon
accounting, energy auditing, safety management and resource planning, soon
followed by archrival Oracle. Anticipating legislation about climate change
(that would penalize the emission of greenhouse gases) a few Bay Area startups
entered the space of software for energy and emission management to help
companies control their “carbon footprint.” Hara was founded in 2008 by SAP’s
executive Amit Chatterjee and run by Oracle alumni. In January 2009 Tom
Siebel, the founder of Siebel Systems who had become a passionate advocate of
net-zero energy homes, launched C3 with a board that comprised former
secretary of state Condoleezza Rice and Shankar Sastry, the dean of engineering
at UC Berkeley. UC Berkeley had nurtured the science of energy conservation.
One of its scientists, Charlie Huizenga, had founded already in 2005 Adura
Technologies, whose software aimed at monitoring and optimizing the lighting
of a building.

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 Solyndra’s Offices (2010)

Cold Fusion
In 1985 the US, the Soviet Union, Japan, and the European Union had
launched a joint project to build the International Thermonuclear Experimental
Reactor (ITER). The hope was that it would lead to a power plant fueled by
fusion. ITER had been designed according to the Soviet tomahawk reactor
invented by Soviet physicists Igor Tamm and Andrei Sakharov.
The holy grail of nuclear fusion, however, was “cold fusion,” i.e. fusion that
does not require the high temperatures generated by such an expensive reactor.
In March 1989 Stanley Pons, a chemist at the University of Utah, and Martin
Fleischmann from the University of Southampton in Britain had announced that
they had achieved “cold fusion,” i.e. nuclear fusion at room temperature (about
20 degrees Celsius). Within a few months the scientific community had come to
consider it a bluff, which discredited the entire field. Meanwhile, ignored by the
media, in 1989 New Zealand electrochemist Michael McKubre had just begun
to study cold fusion at SRI International. For about two decades the field had
virtually been silenced by mainstream science. By the end of the 2000s interest
had returned, as cold fusion would solve the problem of energy forever.
Construction of ITER, mostly funded by the European Union, finally began in
2008 in southern France after India, mainland China, and South Korea had
joined the original quartet. At the same time mainstream science began to accept
the results on “cold fusion” that Michael McKubre’s lab had achieved.
Meanwhile, hot fusion remained the scientifically proven way to go. The
Livermore Labs were entrusted in 1997 with the National Ignition Facility
(NIF). The project required high-power lasers to trigger nuclear fusion in the
hydrogen fuel. The term “ignition” refers to the point when more energy is
generated than is consumed by the plant. The Lawrence Livermore National
Laboratory basically planned to simulate the nuclear fusion of a star (more than
100 million degrees Celsius, hotter than the center of the sun) with the world’s

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most powerful laser.

Lasers
One of the great scientific endeavors of the 2000s was a joint project among
CalTech, MIT, and Stanford to detect gravitational waves: the Laser
Interferometer Gravitational-Wave Observatory (LIGO). The most expensive
project ever funded by the National Science Foundation (NSF), LIGO became
operational in August 2002 in two observatories located 3,000 kilometers apart
(Louisiana and Washington state). The experiment required the most precise
measurement ever. Capitalizing on laser amplification studied by Robert Byer ‘s
team at Stanford, Ueda Kenichi in Japan developed transparent ceramic laser
for high-energy applications that, in turn, led to Northrop Grumman’s
announcement in 2009 that it had created a 100-kilowatt laser, an impressive
achievement for a discipline that in 1984 could only produce two-milliwatt
lasers. This combination of high precision and high energy was unprecedented
in history. Livermore Labs’ researchers realized that the technology could also
serve the purpose of the National Ignition Facility (NIF).
Lasers were also employed at the Lawrence Berkeley Labs to create a new
generation of “miniature” particle accelerators. In 2006 Wim Leemans’ team
accelerated electrons to a billion electronvolts (1GeV) in a distance of
centimeters rather than hundreds of meters. The next project was the Berkeley
Lab Laser Accelerator (BELLA), in which a laser would produce one-
quadrillion watts (one billion million watts) for a millisecond, enough to
accelerate electrons to an energy of 10 GeV in a distance of just one meter.
Meanwhile, SLAC inaugurated the Linac Coherent Light Source (LCLS),
that in April 2009 produced the world’s brightest X-ray laser (X-rays being
much higher-frequency radiations than microwaves). It was now technically
possible to pinpoint a biological cell, and, generally speaking, explore matter at
the molecular scale.
The Community: Coworking Spaces, Incubators and Accelerators
If Silicon Valley had always failed to create a community of engineers, the
boom of the startup model led to the creation of a community of aspiring startup
founders. The idea of the incubator was pioneered by Bill Gross, a Caltech
graduate who had founded a few companies around its campus and who founded
Idealab in 1996, again in Pasadena. Y Combinator was started in 2005 by Paul
Graham in Mountain View, and went on to become the most famous of
incubators thanks to the success of its 2008 alumnus Airbnb. By 2015 it had
launched more than 800 startups and the value of its portfolio exceeded $80
billion (as a comparison, Intel's valuation at the time was $140 billion). The
philosophy behind the two incubators was critical. Idealab depended on its
team's ideas, nurtured them internally and finally spun them off as independent
businesses: the founders of Idealab's startups were really "co-founders". Y

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Combinator, instead, looked for ideas and talents in the outside world and
simply mentored them. Y Combinator came to be known as an "accelerator": it
accelerated the time to market great ideas. Y Combinator also made it easier for
startups based outside Silicon Valley to move their operations to Silicon Valley.
Indirectly, it motivated thousands of engineers to move to Silicon Valley.

Y Combinator

Plug and Play Tech Center, founded in 2006 in Sunnyvale by Iranian serial
entrepreneur Saeed Amidi, specialized in the international connection: in 2015
about 40% of its 400 startups hailed from abroad. Its first success story was
Renaud Laplanche's and Joaquin Delgado's LendingClub, which would go on to
post the largest IPO for a US tech company in 2014. Rocket Internet, founded in
2007 in Berlin by brothers Marc, Oliver and Alexander Samwer, invented the
mass-market version of the accelerator: they specialized in launching startups
that copied other people's successful ideas. Meanwhile, the idea of a co-
working space had been pioneered in London by the Hub, opened in 2005 by
Jonathan Robinson and others. This was a space that provided office facilities
and a think-tank to people interested in starting high-tech ventures, people who
wanted to save money on infrastructure but also and mainly to share their
experience and meet other creative people. The idea was transported to San
Francisco by Citizen Space, the office space rented by Chris Messina and Tara
Hunt in 2006 where aspiring startup founders could share their experiences. At
one point the biggest "hackerspace" in the city was Sandbox Suites, opened in
2007 by Roman Gelfer and Sasha Vasilyuk. Across the Bay in Oakland the
premiere community space for high-tech was Tech Liminal, founded in 2009 by
Anca Mosoiu, which was followed in 2011 by Sudo Room, founded by 23
people including Jenny Ryan and Marc Juul. More typical of the hacker
counterculture were the Metalab, founded in 2006 in Vienna by Paul Bohm and
Philipp Tiefenbacher, and Noisebridge, established in 2007 in San Francisco by
Jacob Appelbaum of the Tor project and Mitch Altman (a veteran of Jaron
Lanier's virtual-reality startup VPL Research) after they attended a C3 hacker
conference in Germany.
Accelerators with coworking spaces popped up everywhere, notably
Techstars, founded in 2006 in Boulder (Colorado) by David Cohen, Brad Feld,
David Brown, and Jared Polis. But the epicenter remained the Bay Area, where
they multiplied rapidly: Parisoma, opened in 2008 in San Francisco by French
veterans; AngelPad, founded in 2010 in San Francisco by former Google

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executive Thomas Korte; 500 Startups, launched in 2010 in Mountain View by
former Paypal executive Dave McClure; Matter.vc, founded in 2012 in San
Francisco (with a five-month acceleration program, one of the most extensive in
the business); Upwest Labs, opened in 2012 in Palo Alto by Israeli veterans
Shuly Galili and Gil Ben-Artzy; Founders Space, opened in 2014 in San
Francisco by videogame industry veterans Steve Hoffman and Naomi Kokubo;
Alchemist, an incubator for B2B startups, founded by Stanford professor Ravi
Belani in 2012 in San Francisco, an emanation of the city's Harvard Club; as
well as incubators specifically targeting a nationality, notably the ones for
Chinese startups such as Innospring, founded in 2012 in Santa Clara by Chinese-
born angel investor Eugene Zhang, and Hanhai zPark, founded in 2013 by Victor
Wang and other investors in San Jose. Among coworking spaces some of the
most popular ones were Hacker Dojo, opened by David Weekly and others in
2009 in Mountain View; RocketSpace, founded in 2011 in San Francisco by
Duncan Logan; and the GroundFloor in Santa Clara, opened in 2012 by brothers
Max and Peter Bloom.

Founders Space
Meanwhile, someone came up with the ultimate idea of combining
entrepreneur training and collaborative workspaces, basically inventing the
university for startup creation. In 2009 serial entrepreneur Adeo Ressi launched
the Founder's Institute, originally based in Palo Alto, a "university" for startup
founders in which the goal was to launch a company by the end of a four-month
program and payment was by tuition and equity. It would expand to more than 70
cities by 2015. Similar "institutes" were soon created in many other parts of the
world: TechHub, founded in 2010 in London by Elizabeth Varley and Mike
Butcher; General Assembly, founded in 2011 in New York by Jake Schwartz,
Adam Pritzker, Matthew Brimer, and Brad Hargreaves; Galvanize, founded in
2012 in Denver by Lawrence Mandes, Chris Onan, Jim Deters; etc. They had
precious few success stories, but thousands of enthusiastic applicants.

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 Makers Movement
From ham-radio amateurs to the Homebrew Computer Club, the Bay Area
had always been a hotbed of the Do-It-Yourself (DIY) culture. Make magazine,
founded in 2005 by Dale Dougherty of the Tim O'Reilly publishing house (one
hour north of San Francisco), spawned the Maker Faire of 2006 in San Mateo, a
conference that would rapidly spread around the world. Tech Shop, founded in
2006 by Jim Newton and Ridge McGhee in Menlo Park, pioneered the concept
of the shared workshop offering its members not only classes but also tools and
equipment. The incubator for makers was Hacker Dojo in Mountain View,
following the example of PCH Innovation, that had opened in Ireland in 1996 by
Liam Casey.

Fintech
The financial world moved decisively online during the Great Recession.
The demand of small businesses that could not borrow money was met by non-
bank lenders such as OnDeck (New York, 2007), Kabbage (Atlanta, 2009) and
Funding Circle (London, 2010).
Another alternative form of lending was devised by two companies founded
in 2006 in San Francisco: peer-to-peer (social) lending. Prosper, founded by
Chris Larsen, and LendingClub, founded by former Oracle executive Renaud
Laplanche, provided marketplaces for lending that matched those who wanted to
borrow money with people who wanted to lend money. Their platforms marked
the marriage of fintech, P2P and the sharing economy The concept had been
pioneered by Zopa in London the year before. Initially peer-to-peer lending was
geographically confined but Virginia-based Zidisha, founded in 2009 by Julia
Kurnia as a nonprofit, showed how one could also link lenders and borrowers
in different countries.
Automated financial advisory was legitimized by the success of Betterment,
founded in 2008 in New York by Jon Stein, and Personal Capital, founded in
2009 in Redwood City by EverBank's co-founder Rob Foregger, Paypal's
former CEO Bill Harris and digital security expert Louie Gasparini. It was
perhaps the most obvious case of automation in the financial world because all
financial advisors were already using algorithms. Creating an algorithm-based
financial advisor simply required access to those algorithms.

Culture and Society

The debate on "net neutrality" erupted in 2007, following a case in which
the largest Internet provider in the country was caught discriminating against
some Internet traffic. Since its inception, the utopia behind the Internet had been
that Internet providers and governments should not discriminate economically
against any data traveling on the Internet; they should not charge more for better

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service, should not decide who gets faster or slower speed, etc. That was
precisely what Comcast, the largest cable-television and Internet provider after
the 2002 acquisition of AT&T Broadband, was caught doing in 2007. The
concept of net neutrality was particularly dear to the children of the Bay Area
counterculture. Not surprisingly, the debate ended up pitting the telecom
superpowers of the East Coast, namely Verizon (Philadelphia), AT&T (New
Jersey) and Comcast (originally founded as American Cable Systems in Tupelo,
Mississippi, in 1963 by Ralph Roberts but relocated in 1969 to Philadelphia),
against the Silicon Valley superpowers (Google, Yahoo, Twitter and Facebook
among others). In 2015 the government would rule that the Internet was a public
utility, like phone service, and forbade providing faster service to anybody.
The future was more mysterious than ever, even though these technologies
diverged in so many directions. The debate about the future permeated many
Bay Area circles, mostly centered around oracles of the future (“futurists”).
Taking inspiration from the private International Space University (ISU),
founded by MIT professors in 1987, in 2009 OCR inventor Ray Kurzweil and
ISU’s founder Peter Diamandis started the Singularity University, located at
Moffett Field. It basically bestowed academic credentials upon futurists.
Sometimes the futurists’ rhetoric was oddly reminiscent of the post-hippie new-
age spirituality of the 1970s, except that now it was focused on achieving
immortality (scientists at the Singularity University speculated that in the future
immortality could be achieved by downloading one’s consciousness onto a
computer).

Ray Kurzweil at Singularity University

The Seasteading Institute, founded in 2008 in Sunnyvale by Patri Friedman,

envisioned cities floating in the middle of the ocean as utopian libertarian

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communities to experiment with alternative social systems.
The arts reacted seemingly by discarding the whole notion of a future, by
embracing in fact a playful tone even when they confronted tragic themes. Al
Farrow used guns and bullets to sculpt his “Cathedral” (2007). In 2010 Scott
Sona Snibbe, one of the many Bay Area practitioners of immersive interactive
art, turned one of his interactive software artworks, Gravilux, into an
application for the iPhone and iPad. It was downloadable for free from the
iTunes store: within weeks it became a worldwide success. At the intersection
of art and science in 2001 neuroscientist Semir Zeki had founded the Institute of
Neuroesthetics in Berkeley, and in 2008 Piero Scaruffi started the Leonardo Art
Science Evenings (LASERs) in San Francisco.
Berkeley’s passion for “including” disabled people culminated in 2010 with
the inauguration of the Ed Roberts campus, a place not only devoted to people
with disabilities but designed (by architect William Leddy) to make sure that
anyone (anyone) could use it, even blind people without arms or legs.
Skyrocketing real-estate costs in San Francisco were sending more and
more artists across the bay to Oakland. Oakland had long been famous mainly
for crime. In 2007 it still had the third highest murder rate in California with
120 murders (one every three days). In 2012 it was still the 7th deadliest city in
the USA. This, of course, simply reflected the widespread poverty and neglect:
between 2007 and 2012 more than 10,000 homes were foreclosed. Secondly,
Oakland had become the state's capital of "weeds" (marijuana) or, at least, was
at the forefront of the campaign to legalize cannabis. An entire district was
nicknamed "Oaksterdam", a reference to Amsterdam, the European city where
marijuana was virtually legal. In 2004 Oakland voters approved "Measure Z",
which officially made marijuana-related "investigation, citation and arrest" a
low priority for the city's cops. In 2007 Richard Lee even founded the
Oaksterdam University, a non-profit organization teaching how to grow
(medical) marijuana. There were shops where anyone, paying a small fee, could
get a prescription to buy marijuana. It didn't look like the ideal place for
engineers, and, in fact, Oakland's only major success story of the high-tech
community was Pandora. In 2013 venture capitalists poured $7 billion into San
Francisco's two thousand high-tech companies providing 50,000 jobs. In the
same year venture capitalists poured slightly over half a billion into Oakland's
350 high-tech companies, providing not even 6,000 jobs (10% of which worked
at Pandora). However, the cost of office space was about half in Oakland than in
San Francisco. But the arts thrived and Oakland was increasingly on the map for
major art shows. In 2006 eight art galleries located in the Northgate and
Temescal (north Oakland) neighborhoods of Oakland (21 Grand, 33 Grand,
Auto 3321, Boontling Gallery, Buzz Gallery, Ego Park, Front Gallery, and Rock
Paper Scissors Collective) joined together to launch "The Art Murmur", a free
art walk open to everybody held on the first Friday of every month. The
demographic shift underway was easy to detect: between 1990 and 2011 the

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black community went from 43% of the population to 26%. Landlords were
evicting black families (typically lower-income families) to rent to higher-
income families. In 1994 California voters passed Proposition 184 (better
known as the "three-strikes" law), mandating life sentences for those convicted
of three violent felonies; and in 1996 Bill Clinton signed a law authorizing
landlords to evict tenants suspected of any crime. The combined effect of these
two laws was to decimate the black community. A side-effect was to open
neighborhood to the artists who were fleeing the high rent prices of San
Francisco.
An important ideological change was taking place inside the Bay Area's
universities about using new digital media to export knowledge to the rest of the
world. For example, Khan Academy was launched by Salman Khan to make a
free K-12 education available through short instructional videos on YouTube.
Copying that idea in 2011, Stanford professors Peter Norvig and Sebastian
Thrun created free courseware on the Web that could be accessed by students
worldwide. In 2011 Sebastian Thrun quit Stanford to start the online university
Udacity that would educate tens of thousands of students worldwide for free.
Also in 2011 two Stanford researchers, Andrew Ng and Daphne Koller, whose
free Web-based courseware had already been used by more than 100,000
students, launched their own startup, Coursera, aiming at providing interactive
courses from Stanford, UC Berkeley, the University of Michigan, the University
of Pennsylvania and Princeton University in all sorts of disciplines.
By 2015 Udacity had 1.6 million users and Coursera 12 million. A similar
revolution was taking place in primary and secondary education (the so called
"K-12" in the USA). Edmodo, founded by Nic Borg and Jeff O'Hara in 2008 in
San Mateo, would be used by more than 50 million people worldwide in 2015.
Schoology, founded in 2009 in New York by three students of St Louis'
Washington University (Jeremy Friedman, Ryan Hwang and Tim Trinidad),
provided a cloud-based platform for teachers to share their educational material
with other teachers and for third parties to write applications. By 2015 it
boasted 12 million users in more than 130 countries. This movement
represented the first real change in public education in decades, since early
Internet-based educational software such as WebCT (developed in 1996 at the
University of British Columbia by Murray Goldberg) and CourseInfo
(developed in 1997 by Daniel Cane and Stephen Gilfus at Cornell University).
Education was one field where technology was still roughly the same as at the
time of the first eLearning systems of the 1970s, simply with tablets replacing
terminals. At the same time, education had become ever more expensive,
coming to constitute almost more than 7% of the country's GDP (more than one
trillion dollars in 2015). It helped that in 2009 the governors of several states
had come together to define a cross-country standard for education the Common
Core Standards Initiative, thereby creating a much bigger market for any
educational platform.

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 Meanwhile, the ever-shifting demographics of the Bay Area were
experiencing another major make-up. This time, they were Muslims. Most of
them came from the Indian subcontinent and chose Fremont as their new
hometown. In October 2006, an Afghan woman wearing the Muslim head scarf
was killed in a brazen daylight shooting. That tragic incident put Muslims on the
social map of the Bay Area. The Zaytuna Institute, the first Muslim liberal arts
institution in the US, had been founded by Shaykh Hamza in 1996 in Berkeley.
The first Bay Area Muslim Film Festival had been held in March 2004 in
Berkeley. The Muslim population of the Bay Area was estimated at 250,000 in
2008.
The success of Paypal, Facebook and the likes had transformed Palo Alto
from a student town to a startup town. Mountain View, the first beneficiary of the
dotcom since the days of Netscape and Yahoo and now the heartland of Google,
was on its way to become another exclusive community. Silicon Valley had
expanded north (to Oracle's Redwood City and to Genentech's South San
Francisco) but not quite north to the intellectual hubs of Berkeley and San
Francisco that, despite nurturing several startups, never quite experienced the
same ebullient business creativity, as if to prove that a startup needs
irresponsible thinking more than it needs worldly erudition.
However, Silicon Valley was paying an increasingly high psychological
price for its lifestyle. Nowhere else in the world could one see so many people
driving alone in their car to work and back home (or just to the
mall/gym/whatever). Nowhere else in the world could one find such a
widespread use of cubicles in office buildings, so that each person has her/his
personal space. And probably in no other urban center was the single-family
detached home so popular as in California. An increasing number of people
lived by themselves, drove alone to the office, worked alone in a cubicle, ate
their lunch alone... All of these used to be not only social but even crowded
activities. From the beginning the suburban environment within which Silicon
Valley prospered seemed to be designed to provide some kind of "isolation".
Not quite "loneliness", but certainly a degree of separation that reinforced the
North American tendency towards individualism and bottom-up organization.
Socialization was happening through the institutions created by that bottom-up
approach, such as the ancient Gold Rush practice of meeting in saloons
(nowadays bats and restaurants) or at the rodeo (now a gym). As Silicon Valley
sociologist said in a private conversation while we were discussing this issue,
"There must be a reason if eating is so important here". People had never been
so far from family and never had so superficial friendships. No surprise then
that social media became so popular in Silicon Valley: their function was,
fundamentally, to keep people isolated while connecting them.

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 Peter Norvig at Singularity University (2012)

The Anthropology of the Age of Self-awareness

The 2000s were the decade when Silicon Valley was obsessed with itself.
The Tech Museum of Innovation opened in 1998 in San Jose, and the Computer
History Museum opened in 2003 in Mountain View. Silicon Valley had always
been a bit surprised of being a world-famous phenomenon. The Stanford Silicon
Valley Archives reopened in 1999 at the Green Library and began amassing
donations of documents from companies and individuals. As many of its original
founders were reaching the age of the memoir, Silicon Valley was becoming a
self-celebratory phenomenon.
In fact, some began to argue that Silicon Valley was, ultimately, the history
of single individuals, or, better, titans: David Packard, Robert Noyce, Steve
Jobs, Bill Joy, Larry Ellison, Marc Andreessen, Larry Page, Mark Zuckerberg,
Peter Thiel, Elon Musk, etc. The cult of personality had never been high in a
place that traditionally abhorred the rich and powerful, but things were
obviously changing, as manifested by a flurry of hagiographies: Mike Wilson's
"The Difference Between God and Larry Ellison" (2003), Stewart Gillmor's
"Fred Terman at Stanford" (2004), Leslie Berlin's Robert Noyce's biography
"The Man Behind the Microchip" (2006), Michael Malone's Hewlett and
Packard biography "Bill & Dave" (2007), Joel Shurkin's William Shockley
biography "Broken Genius" (2008), and continuing with Walter Isaacson's best-
selling biography of Steve Jobs (2011), Michael Lewis' Jim Clark biography
"The New New Thing" (2014), etc. And if this phenomenon sounded a little bit
like the mythology of the Far West, it is because it was, indeed, rather similar.

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 In another act of self-celebration, in 2006 Julie Newdoll of YLEM gave a
commission to sculptor Jim Pallas, who specialized in plywood hitch-hikers.
She wanted sculptures of six founding fathers of Silicon Valley (DeForest,
Hewlett, Packard, Shockley, Terman and Noyce) to be dispatched around the US
equipped with tracking devices.
This society saturated with high-tech was still humane. A few events were
emblematic of the anti-technological reaction that was more pervasive than ever
despite the appearances. First was the growing popularity of the outdoors. A
store like REI, founded in 1938 in Seattle by a group of mountaineers, became a
conglomerate due to its success in the Bay Area, where it maintained eight
locations. It specialized in sporting goods, notably for hiking, climbing, and
biking. The Bay Area had always been obsessed with fitness (and the gym had
become ubiquitous) but this went beyond fitness. Silicon Valley engineers used
their spare time to train for the epic hikes of Yosemite and the High Sierra, as
well as for marathons, bike races, and triathlons, no matter how unprepared they
were.
The “Burning Man” festival had moved to an isolated corner of the Black
Rock desert in Nevada where it had completely lost its “counterculture” status.
It was now one of the most advertised and expensive events of the year. But it
was a futuristic, urban experiment. During Labor Day weekend in September,
tens of thousands of people, mostly from the Bay Area, set up a tent city, lived in
it, and were stimulated to be creative and spontaneous. Then they simply
“undid” it all, leaving no traces behind. Burning Man had become famous for its
fantastical and participatory art installations (that were meant to be burned at the
end of the festival) and for its picturesque costumes and body art of the crowd.
But it was becoming more interesting as a self-organized community. Burning
Man had originally been studied as a semi-religious ritual of purification and
communion by the high-tech generation, but now it was also studied as a city
powered by solar energy and motorized by biodiesel. It was decorated with the
arts instead of billboards, and cleaned by the citizens themselves. By
comparison, the European equivalent was the “Love Parade,” which was really
just a big party of music, alcohol, and drugs.
And then there was the end of the world. The cycles of the Maya calendar
end with the year 2012. This and other coincidences led to the formation of
theories about some kind of impending apocalypse that became a favorite topic
of discussion among engineers who had never cared about Maya history (and,
alas, probably didn’t really know who the Maya were).
Growing awareness of the role of technology in shaping society was
mirrored by growing moral anxiety. In October 2011 a new class of corporation
was created in California, the "benefit corporations", which are corporations
whose charters specifically mandate the pursue of ethical and environmental
goals instead of giving priority to maximizing the financial return to
shareholders.

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 While these phenomena could be viewed as reactions to the materialism of
high-tech business, they were also emblematic of a shift towards more
superficial hobbies. Knowledge-driven hobbies had been replaced by skills-
driven hobbies: salsa dancing, mountain biking, snowboarding, marathon
running, etc. This shift translated into a rapid collapse of the independent
bookstores, several of which were vestiges of the counterculture of the 1960s. It
wasn’t just the online bookstore that killed them: it was also a rapidly declining
audience for high-brow culture. In 2001 Printers Inc. in Palo Alto closed.
Kepler’s in Menlo Park closed in 2005 but was saved by a grass-roots
campaign. In 2006, both Cody’s in Berkeley and A Clean and Well Lighted
Place in Cupertino had to shut down.
In reality, there were increasingly big differences between the various poles
of the Bay Area. Long work hours and maddeningly slow traffic were
progressively isolating Silicon Valley from the rest of the Bay. Silicon Valley
was a region of low-rise residential buildings and town-home parks organized
in geometric neighborhood that were largely self-sufficient. Therefore the need
to visit other parts of the Bay was minimal. The distances between Silicon
Valley and the artistic world of San Francisco, and the political world of
Berkeley, and the scientific world of Stanford had increased dramatically. No
wonder that Silicon Valley was (in)famous for no cultural variety: everybody
read the same book, watched the same movie and sang the same song. Its
inhabitants were too isolated from culture. Silicon Valley was giving a new
meaning to the word "provincial".
For a long time the engineering world had been fundamentally male. The
21st century began with an increasing number of women joining the ranks of
engineers. There was also significant progress in promoting women to executive
jobs. Young female executives included Sheryl Sandberg (1969), chief operating
officer of Facebook, and Marissa Mayer (1975), a vice-president at Google and
soon the CEO of Yahoo. However, there still was no female equivalent to
Hewlett, Packard, Gordon Moore, Steve Jobs, Bill Joy, Larry Ellison, Marc
Andreessen, Larry Page, Mark Zuckerberg, Elon Musk, Peter Thiel, etc. The
people who fueled the boom of Silicon Valley were all men; and almost all
white. So much for the much vaunted diversity of Silicon Valley.

A typical event at the Computer History Museum (2015): no more than 5% of the
audience is female, and there isn't a single African-American

This society was still very transient. In 1992 unemployment in Silicon

Valley had reached 7.4%. In 2000 it had declined to 1.7%. One year later it had

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increased to 5.9%. By 2007 it was down again. It was not the same people who
left and came. Those who left probably never came back. It was terribly
difficult to resettle in the Bay Area after one left it, both in terms of real estate
(home prices tended to skyrocket during a recovery due to a chronic shortage of
housing) and in terms of employment (easy for a recent immigrant or fresh
graduate to take a risky job, difficult for someone who already had a career
somewhere else). Silicon Valley was the one region of the world whose identity
was not defined by the people who lived in it, because they changed all the time.
However, perhaps the most unique aspect of culture and society in the San
Francisco Bay Area was that there was absolutely no building reflecting the
booming economic, technological and political power. Rarely had human
civilization been so invisible. There was no breathtaking skyscraper, no
imposing monument, no avantgarde city landmark: Silicon Valley and the rest of
the Bay did not invest a single penny in advertising its own success. In March
2012 the New York Times estimated that all fine arts museums of San Francisco
combined ranked 13th in the nation for investments in new acquisitions, even
behind the Princeton Art Museum, with a total that was less than 10% of what
the Metropolitan Museum of New York alone spent.

The Gift Economy

At the end of the Great Recession of 2008, economists were beginning to
understand one important factor among the causes of the chronic unemployment
in the US: free community content. In 2006 YouTube only had 60 employees, but
they were managing 100 million videos. YouTube’s employees were not making
the videos: millions of people around the world were donating them to
YouTube. If a Hollywood studio had decided to create 100 million videos, it
would have had to hire hundreds of thousands of people to act them, direct them,
produce them, edit them, and upload them. In 2004, Craigslist only had ten
employees moderating more than a million advertisements posted every month.
A newspaper handling the same amount of advertisements would have to hire
hundreds of editors. In 2005 Flickr only had nine employees, but they were
managing a repository of millions of pictures. Those pictures were taken around
the world, edited, uploaded, documented and even organized by millions of
users. A magazine that decided to create a similar repository of pictures would
have to hire thousands of photographers, tour guides and editors. In 2005 Skype
only had 200 employees, but they were providing telephone service to more
than 50 million registered users. Any telecom in the world that provided a
comparable service employed tens of thousands of technicians, operators,
accountants, etc. One of the fundamental discoveries of the “net economy” had
been that users of the Web around the world are happy to contribute content for
free to websites willing to accept it.
This phenomenon obviously displaced workers who used to be paid to

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create that very content. This phenomenon was not creating joblessness but
merely unemployment: it was creating unpaid jobs. Millions of people worked
(some of them for many hours a day) to create and upload content to other
people’s businesses (such as Wikipedia, Facebook, Twitter, Flickr and
YouTube). They were working, but they were not employed. They worked for
free, out of their own will. Not even slaves did that. Indirectly, the Web had
created a broad new class of knowledge workers: volunteer amateur editors.
Their net effect was to displace the existing knowledge workers, such as
photographers, journalists, actors, directors, researchers, writers, librarians,
musicians, as well as all the engineers and clerical staff who provided services
for them.
When thousands of knowledge workers lose their job, i.e. when their
purchasing power collapses, inevitably this has a repercussion on the entire
economy and creates further ripples of unemployment. Every time someone adds
a line to Wikipedia, a professional knowledge worker becomes less
indispensable and more disposable. Every time someone adds a picture to
Flickr, a video to YouTube, news on Twitter, a notice on Facebook, or an ad on
Craigslist, the job of a professional becomes more vulnerable. In the past each
wave of technological innovation had come with a wave of new jobs that
replaced the old ones.
Society had to train millions of users of word processors to take the place
of million of typists. Companies had to churn out computers instead of
typewriters, a process that involved hiring more (not fewer) people. In fact,
each wave of technological progress typically created new opportunities for
knowledge workers, and this class therefore expanded rapidly, creating more
(not less) employment (and higher incomes). The expansion was still happening:
there ware now millions of people making videos instead of just a few
thousands, and there ware now millions of people taking pictures and millions
posting news. The difference was that this time they didn’t ask to be paid: they
were doing it for free.
Therefore businesses could operate with a minimal staff: the old knowledge
workers were replaced by free labor. Therefore the number of knowledge
workers was still increasing (and even exponentially), but the number of those
who were paid for their work was shrinking dramatically.
It was an illusion that YouTube was run by only a handful of employees.
YouTube “employed” millions of “employees.” It just so happened that 99% of
them were happy to work (provide content) for free. Therefore there was no
need anymore to actually hire people to create content. Protectionists were
complaining that developing countries were “dumping” cheap products on the
US market that caused US companies to go out of business. Protectionists were
inveighing against “unfair trade.” But the real enemy of employment was free
labor. Nothing kills jobs faster and more permanently than free labor. That is a
form of competition that was coming from inside the US society, an accidental

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by-product of technological progress.
This accidental by-product was actually the dream of socialist utopians. The
net economy had created production tools that were available for free to
everybody. That was precisely Marx’s definition of socialism: the collective
ownership of the means of production. This accidental by-product was also the
dream of the hippie utopians of the San Francisco Bay Area. In the 1970s
Stewart Brand of the WELL had imagined precisely such a virtual community of
people engaged in the free production and exchange of knowledge goods: a
community of people investing their time and sharing their content for free. The
utopian society of Marx and Brand had materialized as a “gift economy” (a term
coined in 1985 by Lewis Hyde and applied to the net economy in 1998 by
Richard Barbrook) in which a few businesses provided the means of production
to a mass of millions of volunteer amateur editors.
The free labor of these many worker ants allowed a very small number of
queens to get extremely rich while causing millions of middle-class families to
lose their income.
The irony is that they were often the same people. The very person who
uploads a picture, a text or a video for free is the person who will (directly or
indirectly) need to look for another (often less remunerative) job as a (direct or
indirect) consequence of that act of free labor.
The Internet had indeed democratized society. Everybody could now start
their own business. At the same time the Internet had increased the value of
knowledge, another step in the progress of human civilization from survival-
based goods to knowledge-based goods. The problem was that the Internet had
also democratized knowledge production: everybody could now provide
content, and they were willing to do it for free.
The net economy was, in fact, rapidly evolving towards an economy of one-
man operations. There were now Web-based tools available to build, run, and
monetize a business that only required limited technical skills and no more than
a few days of work. One person alone could create an assembly line entirely on
the Web to produce a mass-market product/service (in the same category as
YouTube, Flickr and Craigslist). That assembly line did not employ any worker
other than the founders who assembled it. Once the one-person business was up
and running, its success mainly depended on how many people were willing to
contribute content for free, i.e. how much free labor you could harvest on the
Internet. One could foresee a future when a startup would require even fewer
founders. If successful (i.e., if it ever managed to attract millions of amateur
content providers), it would employ even fewer people, and only those very few
would benefit financially from its success.
In the age of smartphones and email there was another victim: physical
proximity was no longer a necessity for a startup. There was no need to be
based, say, in Palo Alto, where the cost of living was so high. The time had
come for geographically distributed startups. For example, StackOverflow was

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founded in 2008 by Jeff Atwood in Berkeley and Joel Spolsky in New York, and
employed people in different states.
These startups of the "gift economy" were annoyed by the pressures of
investors. Therefore it came as no surprise that in April 2010 Jared Cosulich
and Adam Abrons founded Irrational Design with the explicit goal of not
seeking venture capital. The "business plan" of the startup was to be creative,
with no specific product in mind. Venture capitalists were perceived as
hijacking the minds of the founders to focus on a lucrative product. Irrational
Design was emblematic of a generation that aimed for precisely the opposite: let
the minds of the founders invent at will, with no regard for market response or
potential acquisitions.
In July 2002 eBay paid $1.5 billion for PayPal, a tiny unprofitable online
payment service. In October 2006 Google paid $1.65 billion for YouTube, a
video uploading site that had no revenue.
The traditional economy had tended to concentrate wealth in the hands of a
few large companies that had run giant empires of hundreds of thousands of
employees around the world. The gift economy was rapidly concentrating
wealth in the hands of a few individuals who ran giant empires of tens of
millions of unpaid amateurs.

Twitter’s Offices (2010)

The New Labor

Websites like Etsy, founded in 2005 in New York, and eLance, founded in
1999 in Boston by Beerud Sheth, were allowing anybody to become a self-
employed businessman. As jobs disappeared due to automation, the population
of "entrepreneurs" was destined to skyrocket.
As Venkatesh Rao argued in his article "Entrepreneurs Are The New Labor"
(2012), the number of startup founders was destined to increase exponentially
but they could no longer be viewed as the old-fashioned entrepreneurs: in
reality they were becoming the modern equivalent of specialized work.

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Artisans, craftsmen. The startup had become the modern form of apprenticeship:
startup founders learn how the modern, lean company works. When a bigger
company buys them out, they are de facto "hired" and transition from
apprenticeship to full-fledged work. Large companies will increasingly be
aggregations of startups, they will increasingly rely on a workforce of
entrepreneurs.

The Assembly Line Model of Startup Funding

The first boom of Silicon Valley’s venture capital world took place in the
mid-1980s when large semiconductor companies needed money to build “fabs”
(short for “fabrication plants”). A fab is an extremely expensive project that
requires hundreds of millions of dollars. The age of one-man startups, though,
did not require such massive investments. The returns (as a percentage) could
be even higher with a much smaller investment. Unlike fabs, that need an
accurate plan of implementation, Web-based startups could adjust their functions
in real time based on user’s feedback. So all one needed to start a company was
just a good idea and a rudimentary website. Instagram, a company of 16 people,
had 130 million customers when it was bought by Facebook in 2012.
At the end of the 2000s it was getting so easy and cheap to start a company
that the business of funding companies was beginning to resemble an assembly
line. When car manufacturing became cheap enough, Ford built an assembly line
and launched the first mass-market car. Something similar was happening in
Silicon Valley in 2010 in the business of manufacturing startups. Sometimes
angels would invest without even having met the founders in person.
This logic was being pushed to the extreme limit by a new generation of
angel investors who were sometimes barely in their 30s. The Google,
Facebook, and PayPal success stories, plus all the startups that they acquired
(Google acquired more than 40 companies in 2010 alone), had created plenty of
very young millionaires and even some billionaires. They could comfortably
retire, but it was “cool” to become angel investors and help other young
founders get started and get rich. These new angels were “kids” compared with
the veterans of 3000 Sand Hill Road. Yet many of these kids felt that they could
more accurately guess the future of the world and jumped into the game
passionately. Needless to say, these kids tended to fund startups that were
started by kids even younger than them.
The mindset of both investors and founders was very different from the
mindset of investors and founders of the 1980s. The credentials of a founder
were often based on popularity, not on a professional business plan. In fact,
these new investors “hated” the Wall Street type of founder. They loved, on the
other hand, the “cool” kid. The successful founder was someone who could
create “buzz” on the Internet about his or her idea, even if he or she had no clue
how to monetize that idea. It was, in a sense, the psychology of the high school

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transplanted into the world of finance. The intellectual idealism of the early
Internet was being replaced by the subculture of high-school gangs (albeit one
that abhorred drugs and violence).
The new angels, in turn, were not professionals educated by Stanford or
Harvard in the subtleties of economics; they were former “cool” kids. They
invested based on their instinct, trying to guess who would become the next cool
kid. To some extent the venture capital business had always been a statistical
game: you invest in ten startups hoping that just one makes it big. But it had
always been backed by some (economic) science. It was now becoming pure
gambling. The psychology required from an angel investor was more and more
similar to the psychology of the gambler who spent the day in front of a slot
machine in Las Vegas casinos. The inception of this new kind of venture
capitalism was commonly taken to be 2005, when Paul Graham started Y
Combinator in Mountain View and incubated eight seed-stage startups.
Another significant change in the way startups are funded took place when
the "crowd-funding" website Kickstarter launched (in 2008 in San Francisco by
day trader Perry Chen, online music store editor Yancey Strickler and web-
designer Charles Adler). The concept had been pioneered by Brian Camelio's
New York-based music company ArtistShare: raise money among ordinary
people to fund a (music) event. Kickstarter transferred the concept into the
world of the Bay Area startups with amazing success: by July 2012 Kickstarter
had funded more than 62,000 projects that had raised more than 200 million
dollars. Kickstarter got further help from the government when the JOBS Act
was enacted in April 2012: it made it legal for smaller investors to fund a
company and with fewer restrictions.
Kickstarter's main rival was Indiegogo, founded in 2008 by Wall Street
analyst Danae Ringelmann with Slava Rubin and Eric Schell in New York.
Another formidable rival would emerge from San Diego in 2010, GoFundMe.
Last but not least, the early adopters too were of a different kind than for
previous generations of products. The early adopter of an Intel product or of an
Oracle product was a multinational corporation. The early adopter of an Apple
gadget was a professional with a good salary, and typically a technology-savvy
one. Now the early adopter of a website (say, a social networking platform)
was, instead, just a kid himself. The early adopter was not paying anything to
use the “product” (the social networking platform). Therefore the profile of the
early adopters was, for the first time ever, disconnected from their financial
status and instead related to how much spare time they had and were willing to
spend on the Internet. The early adopters were typically very young. These
“kids” created the “buzz.” They established the credentials of a new platform.
The adult audience followed the trend set by a very young audience.

The Big-Brother Web

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 Google, Facebook, and other cloud companies justified their new features
on the basis of providing “better services,” but in reality they were providing
better services mainly to marketers. The multinational marketers (such as WPP
Group) were now in control of the Web. They drove the new features of the
most popular websites. For that reason Google and Facebook were improving
the “services” of tracking what people do on the Internet. In theory, this vast
database of individual behavioral patterns was meant to provide a personalized
experience on the Internet. In practice, its motivation was economic. Marketers
were willing to pay more for advertising on platforms that tracked individual
behavior. For the marketers it meant the difference between a shot in the dark
and targeted advertisement. Targeted ads were obviously much more valuable.
Google’s and Facebook’s founders kept swearing that there was no “Big
Brother” in the future of their worlds, but a sort of Big Brother was precisely
the ultimate outcome of their business plan.
One major event created even more anxiety. In August 2010 Google signed a
deal with Verizon that basically terminated the “net neutrality” principle. The
Internet had been born as a noncommercial platform. Therefore it had been easy
to enforce a principle that every piece of data, no matter how powerful its
“owner,” should move at the same speed through the vast network of nodes that
physically implement the Internet. That principle was never codified in a law,
but it had been respected even during the dotcom boom, allowing, for example,
Amazon to grow at the expense of the traditional bookstore chains and Netflix to
hurt the business of the traditional movie theater chains. The Google-Verizon
deal represented a major departure because it specifically stated that the age of
wireless access to the Internet was different in nature. Since the future of the
Internet was obviously to be wireless, this was not a hypothetical scenario: it
was a promise.

The Changing Nature of Innovation

Significant changes were occurring in the very focus of innovation.
Technological innovation was no longer what it used to be, especially for the
software industry. Silicon Valley had become the testbed for extremely complex
system engineering (rather than the testbed for new ideas). The real value was to
be found not in the products themselves (their features and their looks) but in the
complexity that surrounded and enabled their success. Oracle (the distributed
ERP system), Apple (especially iTunes), Google (billions of simultaneous
searches and videos), HP and Vmware (the cloud), and Facebook (billions of
simultaneous posts) were ultimately engaged in solving very complex problems
of scale. The customer paid for a product (and sometimes didn't even pay for it)
but in reality the customer was buying an infrastructure. For example, Google's
great innovation in its early years was the search engine, but the rest of Google's
history was largely a history of acquiring or copying other people's ideas: the

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real contribution by Google consisted in turning rudimentary platforms (such as
Android and Maps) into formidable robust distributed platforms.
The big Silicon Valley companies (notably Google and Oracle) were now
growing through acquisition. They specialized in turning around not businesses
but platforms. They had become extremely efficient reengineering factories.
The hardware industry was prospering but knowing that physical limits
were going to be reached soon. In particular, it was getting more and more
difficult to achieve faster speeds without generating unmanageable heat.
Increasing the clock speed of a chip also increases its consumption which also
increases the heat it generates. The stopgap solution had been to squeeze
multiple processors on the same chip, but that was becoming impractical too.
There was a general feeling that the age of the CMOS transistor was about to
come to an end. For some the solution was to move away from transistors. Stan
Williams at Hewlett-Packard was working on "memristors" based on titanium
dioxide. Transistors are "volatile", i.e. they must be continually powered in
order to preserve information, whereas "memristors" would be a nonvolatile
technology, that only needs to be powered when "reading" or "writing"
information (changing its state or checking its state). At Stanford University the
Robust Systems Group led by Subhasish Mitra was researching nanocircuits: the
smaller the circuit the smaller its demand for power and the heat it generates.
Mitra was experimenting with carbon nanotubes.
The change here reflected the new dynamics of the computer industry. In the
past change had been driven by the demands of bureaucratic, military or space
applications, i.e. by government demand, and to some extent by the needs of
corporate America. Now change was driven by the insatiable appetite of
consumer electronics.
Another concept that had not changed in decades was the one underlying
magnetic data storage. In 2011 Andreas Heinrich's team at IBM's Almaden
Research Center reduced from about one million to 12 the number of atoms
required to store a bit of data. In practice, this meant the feasibility of magnetic
memories 100 times denser than the most popular hard disks and memory chips.
Quantum computing was, instead, still largely ignored in Silicon Valley. The
idea of using the odd features of Quantum Physics to create supercomputers
dated from 1982, when one of the greatest physicists, Richard Feynman,
speculated that a computer could store information by exploiting precisely the
principles of quantum superposition (that a particle can be in two states at the
same time) using "qubits" (quantum bits) instead of binary bits. In 1994 Peter
Shor at Bell Labs proved an important theorem: that a quantum computer would
outperform a classic computer in a category of difficult mathematical problems.
In 1997 British physicist Colin Williams and Xerox PARC's Scott Clearwater
published "Explorations in Quantum Computing", a book that actually described
how a quantum computer could be built. Vancouver's D-Wave, founded in 1999
by quantum physicists Geordie Rose and (Russian-born) Alexandre Zagoskin of

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the University of British Columbia, aimed at doing precisely that. In February
2007 D-Wave finally demonstrated its Orion prototype at the Computer History
Museum in Mountain View. In 2009 Yale's professor Steven Girvin unveiled a
macroscopic quantum processor (quantum processors were supposed to be very
microscopic). In May 2011 D-Wave announced the sale of its first commercial
quantum computer (purchased by Lockheed for the Quantum Computing Center
that it established with the University of Southern California in Los Angeles),
although purists debated whether it qualified as a real "quantum" computer.

The Electronic Empire

The world economy was hit hard in September 2008 by a financial crisis
that started in the US, due to reckless banking speculation. The crisis was
mostly a Wall Street problem, but it dragged down the entire economy.
However, high-tech companies in the Bay Area did relatively well, most of
them reemerging after two years unscathed. The dotcom crash had been useful to
teach them how to trim costs quickly in the face of an economic downturn.
Silicon Valley had traditionally been indifferent to national and especially
internationally events. Even the various wars that the US fought (World War I,
World War II, Korea, Vietnam, the first and second Iraqi wars, Afghanistan)
were perceived as distant echoes and, quite frankly, as business opportunities.
This happened despite the strong anti-war sentiment of San Francisco and
Berkeley, yet another contradiction in the ideological dynamics of the Bay Area.
This was true because of the relative isolation of California, but also because
for a long time Silicon Valley’s core business did not need anybody else.
Silicon is the second most abundant chemical element of the Earth’s crust after
oxygen.
The entire industry of semiconductors had a colossal advantage over other
industries: its primary element was cheap and widely available. There was no
need for wars in the Gulf War and no wild spikes in prices like for gold.
Software had an even smaller resource footprint: a software engineer just
needed two fingers to type on a keyboard. Until the 1990s, Silicon Valley saw
the rest of the world either as a market or as an outsourcing facility.
The age of the cell phone, of the videogame, of the digital camera, and of the
digital music player, instead, relied on another material, tantalum, which was far
less abundant. Tantalum was obtained from coltan (columbite-tantalite) and one
country held the largest reserves of coltan: the Democratic Republic of Congo.
That nation also held another record: the bloodiest civil war since 1998.
Reports started circulating that the civil war was funded by the smuggling of
coltan towards the Western companies that needed it for their consumer
electronics products. At the same time stories also appeared of the terrible work
conditions in the Chinese factories of Shenzhen, where hundreds of thousands of
low-paid workers assembled electronic devices for US manufacturers (notably

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Apple).
Meanwhile, lithium batteries, widely used in mobile electronic devices,
obviously relied on lithium being available and cheap. Yet about 50% of the
world’s reserves of lithium were based in Bolivia, which had just elected a
socialist president with an anti-US agenda. China had become the biggest
producer of “rare earths” (vital to cell phones, laptops and greentech) and
pressure was mounting to reopen the Californian mines that used to dominate the
world markets. The 50 million tons of electronic waste generated worldwide
each year were mostly sent for disposal to developing countries where valuable
metals were converted into scrap metal for resale at the cost of human lives and
environmental disasters.
At the same time California was going through very turbulent financial times
for the first time in its history. It had one of the highest unemployment rates in the
country, slow growth, and a chronic budget deficit. Silicon Valley had risen
(from the 1940s to the 1990s) in a state that was booming. Now it was
embedded in a state that was failing. Putting it all together, Silicon Valley was
no longer insulated from global politics as it had been for decades.
It was not a coincidence that in 2010 two of its most popular executives,
Meg Whitman and Carly Fiorina, entered the national political scene. Even
more relevant was the role of Silicon Valley technology which influenced world
events. In 2009, Iranian youth took to the streets using Twitter to coordinate and
assemble protests against their rigged national elections. In 2010, students
armed with cell phones and social networking software overthrew the Tunisian
dictator. Later in 2011, a webpage created by Google executive Wael Ghonim
indirectly started the mass demonstrations against the regime in Egypt. In
response to the events, the Egyptian government took down the Internet within
its borders. A few days later Google launched a special service to allow the
protesters in Egypt to send Twitter messages by dialing a phone number and
leaving a voice mail: the purpose was not to help Twitter (a competitor) make
money but to help the protesters win the revolution. Silicon Valley was
becoming a political player largely independent of any government.

Google vs Apple vs Facebook vs...

During the 2000s, Google largely represented the battle between the Web-
based world against the desktop-based world of Microsoft. Google won this
ideological battle, as even Microsoft was beginning to move towards cloud-
based applications. Yet Google made little money out of it. Mostly it was the big
virtualization platforms that were benefiting from this epochal switch in
computing platforms. Google and Facebook were growing thanks to business
plans that relied almost exclusively on selling advertising. They both offered a
free service (in Google's case, many free services) based on content (text,
images, videos, posts) provided for free by millions of "volunteers" (the public

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of the Web). Both companies made money by selling advertising space to
companies eager to publicize their products to the viewers of all that content.
Neither Google nor Facebook was creating any content. They were just being
parasites off of other people's content. Neither had found a way to make money
other than through advertising techniques. From a strategic point of view there
was a difference between the two though.
Google's search engine had been invincible for a few years, but by the end
of the decade it was increasingly weaker than other kinds of businesses. It was
becoming apparent to Google's own management that the switching cost for a
user to adopt one of the newer (and perhaps better) search engines was virtually
zero. The network effect of a search engine is low by definition (a network
effect is how much the value of the product depends on the number of users
using it). On the contrary, Facebook enjoyed both high switching costs that kept
users from leaving and so its network effect was very high (the more people that
used it, the more valuable it was). It was no surprise then that in 2011 Google
announced Google+, its second attempt at establishing a viable social-
networking platform (after the embarrassing Buzz). By then Facebook had
passed 750 million users.
At the same time Google invested in the smartphone market. In July 2008
Apple had launched the App Store for iOS applications (an iOS device was an
iPhone, iPod Touch or iPad). By July 2011, the App Store had 425,000 apps
(uploaded by thousands of third party developers), downloaded 15 billion
times, on 200 million iOS devices. By then Google's equivalent, the Android
Market, had 250,000 applications, downloaded 6 billion times, on 135 million
Android devices; and it was growing faster. Google was activating new
Android devices at the rate of 550,000 per day. By the end of 2011 Android
smartphones owned 46.3% of the market and Apple iPhones owned 30%,
leaving RIM (14.9%) and Microsoft (4.6%) way behind: there was now one
area in which Silicon Valley alone beat the rest of the world.
Google's management, probably aware that Google's successes tended to be
the ones acquired from others as opposed to the ones developed internally,
launched Google Ventures, the venture-capital arm of the company. Basically, it
was beginning to make sense for Google to invest its huge cash reserves into
other companies rather than into Google's own R&D. Google was trying yet
another revolutionary business model: to become an incubator of startups
(infotech, biotech and cleantech). As an incubator, it offered a much more
powerful infrastructure than a venture capitalist could, starting with office space
at its Googleplex and computing power in its gargantuan server farm. Google
even offered a huge bonus ($10,000 in 2011) to any employee who suggested a
startup resulting in an actual investment.
Three major development platforms were competing for world domination:
the Facebook Platform (launched in 2007), the iPhone App Store (in 2008) and
the Android platform (2007).

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 The company that was rapidly losing its sheen was Yahoo! Its advertising
business remained strong but Yahoo! had done the opposite of Google: invested
in creating content, even hiring journalists and bloggers. Yahoo! had basically
moved towards becoming a media company at a time when Google and
Facebook had been moving towards the more cynical model of purely exploiting
the content created by their users. In a sense, Yahoo! still believed in quality at a
time when Google and Facebook were proving that quality did not matter
anymore and that advertising revenues depended almost exclusively on quantity.
To make matters worse, Yahoo! had not contrived a way to have its users
disclose personal information the way Google and Facebook had, which meant
that Google and Facebook (happy to violate as much privacy as tolerated by the
law) could offer targeted advertising to their advertising customers.
Yahoo alumni seemed to be more creative than the company itself. In 2009
two Yahoo executives, Brian Acton and Jan Koum, founded WhatsApp in Santa
Clara to provide instant messaging over the Internet Protocol for smartphones
(Android, BlackBerry, iPhone, etc). While Facebook and Google were not
paying attention, WhatsApp did to SMS what Skype had done to the old
telephone service: it turned it into a computer application. By the end of 2009
Whatsapp already had one million users; but that was just the beginning of its
meteoric rise: one year later they were ten million, and by the end of 2012
Whatsapp had passed the 200 million users mark. In 2014 Facebook acquired
WhatsApp for a huge amount of money. By then WhatsApp had 450 million
users and was growing faster than Twitter, but had always refused the
advertisement-based model of all the major dotcoms and was therefore making
very little money.
Another front in the multiple wars that Google was fighting was the
intellectual-property front. In November 2010, a consortium including
Microsoft, Apple, Oracle, and EMC paid $450 million for 882 networking-
software patents owned by Novell, or about $510,000 per patent.
The purpose became clear a few days later: Apple had levied multiple
lawsuits against Android-based smartphone manufacturers like HTC and
Samsung, accusing them of "copying" the iPhone, and now HTC was in a
position to sue Apple using some of the patents purchased by Google.
During the second decade of the century Silicon Valley was devastated by
such patent wars. Google, Apple, Oracle and others filed patents by the
thousands (and bought even more) and then filed lawsuits against each other. A
patent was becoming a weapon of mass destruction: the richest corporations
could file patents about the most trivial of ideas and use it to prevent
competitors from implementing entire families of products. The main losers
were the small companies and the startups: they did not have an army of
attorneys to file patents and did not have an army of attorneys to fight the big
corporations in court. We will never know how many inventors were on the
brink of creating revolutionary products and either gave up, were forced to give

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up or were acquired by bigger companies. The process of filing a patent was
considered ridiculous by the very corporations that indulged in it, but there was
no chance of changing it: those same corporations hired an army of lobbyists in
Washington to counter any attempt to rectify a clearly flawed process. A patent
is a license to sue. It rarely represents a true innovation. In most cases it
represents the exact opposite: an impediment to innovation, and even a blunt
threat to anyone who dares innovate. Companies that have limited cash were
forced to spend much of it fighting lawsuits instead of spending it to fund
research and development. In other words: more and more money was being
spent to fund lawyers than to fund research.
They were not interested in Novell's technology, but simply in protecting
themselves from potential lawsuits. In June 2011 a consortium that included
Microsoft, Apple, Ericsson, Sony, EMC, and Research In Motion purchased the
6,000 patents for wireless communication owned by bankrupt telecom company
Nortel. They paid $4.5 billion, or $750,000 for each patent. Microsoft now co-
owned the Nortel patents for voice services and the Novell patents for Linux,
while Apple co-owned the Nortel patents for manufacturing and semiconductors
and Oracle owned the patents for Java (acquired from SUN). Google's Android
service was left naked and subject to lawsuits. In August 2011 Google paid
$12.5 billion for Motorola's smartphone business in order to acquire its 24,500
patents, which was about $510,00 per Motorola patent. The purpose became
clear a few days later: Apple had levied multiple lawsuits against Android-
based smartphone manufacturers like HTC and Samsung, accusing them of
"copying" the iPhone, and now HTC was in a position to sue Apple using some
of the patents purchased by Google.

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The Rest of the World
India's Silicon Valley
The history of India's involvement with computers started with the five
Indian Institutes of Technology (IITs), established in Kharagpur (1950), Mumbai
(1958), Chennai (1959), Kanpur (1959) and Delhi (1961), and supported by
five different countries from both the democratic and communist worlds
(Kanpur was the USA-affiliated one). Meanwhile, the Indian families that could
afford it were sending their children to graduate in Britain and in the USA. The
Indian-born historian Peter James Marshall at Cambridge encouraged Indian
students to become entrepreneurs not academics because he saw that as the most
pressing need for post-independence India. The main destination in the USA
was the MIT and the Indian graduates from the MIT mostly remained in the
USA, but they created a network that provided the first link between the high-
tech industry of the USA and India. In 1972 MIT-graduate Narendra Patni
founded the software enterprise Data Conversion (later renamed Patni Computer
Systems) with offices both in Boston (USA) and Pune (India). In 1981 some of
Patni's engineers (mostly from the MIT too) founded Infosys in Pune.
Meanwhile, the government had decided to install high-speed satellite
communications in Bangalore, the site of the Indian Institute of Science (founded
in 1909 thanks to steel industry magnate Jamsetji Tata). Because of that
decision, in 1985 Texas Instruments opened a software laboratory in Bangalore.
Within a few years Infosys and Wipro too moved their operations to Bangalore.
Bangalore had several advantages over other cities. To start with, it was a
center of the defense industry (Bharat Electronics, Hindustan Aeronautics, the
National Aeronautics Laboratory, the Aeronautical Defence Establishment, the
Electronics and Radar Development Establishment) as well as the home of
several strategic industries (the Indian Telephone Industries, the Gas Turbine
Research Establishment, and the Central Power Research Institute, Hindustan
Machine Tools). In 1988 a private venture capital company had already been
established, the Technology Development and Information Company of India
(TDICI). Soon the city opened several industrial parks, including Electronics
City and the Peenya Industrial Estate (the largest in India).
In 1986 Patni obtained the first contract from a USA company (Data
General) for offsourcing software to India. By 1990 India could already boast 3
million scientists and engineers graduating from 80 universities, and more than
200 research institutes specializing in electronics. Meanwhile, in 1991 India
liberalized its protectionist economy, that had long been influenced by anti-
capitalist precepts. During the 1990s Infosys enjoyed double-digit growth rates.
By 2010 it would become one of the largest software companies in the world,

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with over 100,000 employees. However, Infosys well represented the problem,
not the solution: by 2010 this industrial colossus had been granted only twelve
patents in the USA Microsoft had fewer employees, but had passed the 5,000
patent mark already in 2006.
High-tech spread from Pune and Bangalore to other cities; notably in 1998
Hyderabad opened the Cyber Towers, nicknamed "Cyberabad", the first phase
of the Hyderabad Information Technology and Engineering Consultancy
(HITEC) project.
In general, graduates from the IIT lacked the counterculture spirit that was
pervasive in the Bay Area, the passion for nonconformist behavior (and ideas),
the curiosity about nontechnical topics (literature, philosophy, visual arts,
history, etc), the push to innovate rather than just execute orders. Many graduates
from the IIT did extremely well around the world (and notably in Silicon
Valley) but many more became simple hired hands in the software industry, and
the vast majority held humble (if well-paid) jobs back in India contributing little
in terms of imagination. Most of them were trained to be not intellectuals but
skilled craftsmen; not the successors to the great philosophers of India but the
successors to their grandparents' world of religious sculptors and shoemakers.

The Asian Miracle

East Asia is a more complex story.
Asian economies managed to progress from starvation in the 1960s to the
top tier of development and wealth. In 1981 East Asia still had the highest
poverty rate in the world, higher than Africa. In 2011 two of the top three
economies in the world were from East Asia, and very soon they might have
three out of four including the number one.
There is no single cultural/political explanation for the Asian miracle
because the countries of Asia spanned a broad spectrum of philosophies
(Confucian, Shinto, Buddhist, Hindu, Muslim) and of political systems: fascism
(South Korea, Singapore, Taiwan, Thailand), communism (mainland China),
socialism (India), democracy (Japan, Hong Kong).
There were actually two Asian miracles. The first Asian miracle was low-
tech and largely based on cheap labor and loose business regulations. The first
Asia miracle relied on a simple business plan: do what the West does but do it
cheaper and possibly better. This became an art in itself. It also caused the rapid
Westernization of all US allies in Asia (that until World War II had largely held
on to their traditions). The second Asian miracle was high-tech and based on
improving Western high technology. By this time Asia had become very
Westernized and, in particular, democracy had become widespread.
The first Asian miracle was largely the consequence of the Cold War
between the USA and the Soviet Union. The USA helped the Asian (and Western
European) economies develop in order to create stable and strong defenses

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against the communist world. The USA encouraged trade with its oversea allies,
and tolerated that they competed unfairly with US-based manufacturers by
keeping their currencies very low.
Government intervention was crucial to the development of these
economies: they all boomed under the supervision of a benevolent dictatorship
that nurtured and guided the private sector.
Most of the political leaders of the first boom came not from the aristocracy
but from the very poor class. These leaders were interested in copying Western
industrial methods but ignored Western economic theory: they used common
sense and traditional values. They nonetheless became enlightened leaders who
somehow made mostly good choices to turn their starving countries into
economic tigers. They in fact greatly improved the economies of their respective
countries.
All the early boomers lacked natural resources. In order to pay for them,
they had to focus on exporting. The big open market was the USA. Therefore it
was natural that they focused on exporting to the USA. The USA also provided
the military protection that helped these countries focus only on the economy.
Security was guaranteed and paid for by the USA. What these early boomers
had in common was not a cultural or political background but that they were all
allies of the USA during the Cold War.
The first "Asian tigers" were Japan, South Korea, Taiwan, Singapore and
Hong Kong. They embodied different philosophies (Shinto, Buddhist,
Confucian) and came from different histories: Japan was already westernized,
Taiwan partially (as a Japanese colony), Korea never was, Hong Kong and
Singapore were British colonies The role of the state varied from ubiquitous
(Japan) to totalitarian (Singapore, South Korea, Taiwan) to indifferent (Hong
Kong). The governments were run by people who were mostly of humble
origins and uneducated. A widespread figure was the "benevolent dictator",
whose main goal was not his own wealth or a dynasty but the good of the
country. East Asian countries lacked natural resources. To pay for imports, they
exported cheap goods to the USA. They developed a knack for understanding
Western consumer behavior and social trends. The USA de facto paid for their
development . The geopolitics of the Cold War (need to contain the Soviet
Union) de facto drove the early Asian boom. What they had in common is not
cultural or political background but that they were allies of the USA during the
Cold War. In these countries technological progress remained largely in the
hands of large national conglomerates. Singapore, however, established a
unique model: it favored foreign investment by multinationals over nurturing
national conglomerates. They ignored Western economic theories and used
common sense and traditional values. They also ignored social and economies
ideologies of the Third World. Centralized economies enabled long-term
planning and short-term decisions. The government rewarded with favors the
companies that achieved world-class results. Asian people demanded economic

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growth before democratic growth. These were not "nice" places to live in: they
were overcrowded and poor for a long time. Nor did they benefit from high
education: relatively few people were able to obtain a computer-science degree
(or a science degree in general) unless they were able to pay for an education
abroad.
The second Asian miracle was largely the consequence of the end of the
Cold War. The collapse of the Soviet Union and of its communist block turned
the whole world into one colossal capitalist market. The Asian countries
applied their learned skills on a larger scale to a larger market. Globalization
favored Asian products over the more expensive products from Western Europe
and the USA. However, by now Asia had learned sophisticated industrial and
business methods, and was not restricted to cheap goods. Its factories had
developed into high-tech factories by serving US manufacturers, but the know-
how could now be recycled internally to create factories that served Asian
manufacturers. Therefore Asia found itself capable of competing with the West
in the much more lucrative high-tech field.
This second Asian miracle introduced two colossal players. Mainland
China simply followed the path of Western imitation that had been tested by the
old "tigers". India, however, could also sell a widespread knowledge of the
English language and Western-style universities that graduated scores of
mathematically-inclined students, two factors which created an opportunity for
the service industry. Again, the natural customer was the USA, in this case the
booming computer and Internet industry. The USA, again, provided the military
protection that helped these economies grow in a world largely at peace. West
of Pakistan, Asia was relatively at peace. The real trouble was in the Middle
East and East-Central Asia, i.e. in the Islamic world. The USA and its Western
allies of NATO were busy maintaining some kind of order there, which also
provided for safe trade routes. Even mainland China, that quickly became the
USA's main rival on the world stage, relied on trade routes from Africa and the
Middle East that were guarded by the mighty military of the USA.
The second generation of "Asian tigers" (in the 1990s) includes China,
India, Thailand and Malaysia. Again, they came from different philosophies:
Confucian, Hindu, Buddhist, Muslim. The role of the state was significant in that
liberal reforms reduced the power of the state (especially in China and India).
Their government was mostly run by well-educated technocrats.
Of the two Asian colossi, China probably had the better infrastructure. India
had the disadvantage of poor transportation and electricity infrastructure. That,
combined with restrictive labor laws, discouraged the kind of labor-intensive
sectors that were booming in its eastern neighbors. While Taiwan, Singapore,
South Korea, etc, China capitalized on cheap labor to capture offsourced jobs
from the USA, India capitalized on English-speaking, college-educated and
cheap engineers to capture offsourced jobs from the USA. The USA lost blue-
collar (low-paying low-skills) jobs to East Asia and ended up losing white-

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collar (high-paying high-skilled) jobs to India.
A popular joke is that in China the conglomerates succeeded because of the
government, whereas in India the conglomerates succeeded despite the
government. Indian conglomerates had to aim for self-sufficiency. Jindal
produced steel and power through backward integration from its own captive
coal and iron-ore mines. Gautam Adani bought port and coal mines, built a
power plant and a railway. Unlike China's labor-intensive exports, India
became an exporter of capital-intensive items that require skilled workers

Asia's High-Tech Industry

In the second half of the 20the century the only country that competed with
the USA in terms of mass-scale innovation that changed the daily lives of
billions of people was Japan: the transistor radio (1954), the quartz wristwatch
(1967), the pocket calculator (1970), the color photocopier (1973), the portable
music player (1979), the compact disc (1982), the camcorder (1982), the digital
synthesizer (1983), the third-generation videogame console (1983), the digital
camera (1988), the plasma TV set (1992), the DVD player (1996), the hybrid
car (1997), mobile access to the Internet (1999), the Blu-ray disc (2003), the
laser television set (2008). However, Japanese innovation mostly came from
conglomerates that were very old: Mitsubishi (1870), Seiko (1881), Yamaha
(1887), Nintendo (1889), Fujitsu (1934), Canon (1937), Toyota (1937), Sony
(1946), NTT (1952), etc.
With the exception of the media hub in Tokyo (mostly devoted to pop
culture), there was no major industrial cluster in Japan that could compare with
Silicon Valley. Tokyo's "high-tech" regions were the traditional industrial hub
that grow around big companies, like Aichi, the location of Toyota's main plant
and of many Toyota suppliers, Hiroshima, Sendai, Yonezawa. Later a sort of
Silicon Valley emerged in Fukuoka, in the far south of Japan (Kyushu island)
thanks to a cluster of universities (Kyushu University, Kyushu Institute of
Technology, Kitakyushu University, the Institute of Systems & Information
Technologies) and mostly for the semiconductor industry.
South Korea followed a similar path to high-tech innovation. Like Japan it
relied mainly on well-established companies like Samsung (1938). Like Japan
the environment was hostile to foreign companies. Like Japan there was little
interaction between universities and industry, with professors more similar to
government bureaucrats than to incubators of ideas or coaches of entrepreneurs.
However, South Korea also had two regions that looked a bit like Silicon
Valley. In 1973 South Korea established the Korea Advanced Institute of
Science and Technology at Daedeok, south of Seoul. This area began to attract
R&D labs and eventually to spin off startups. It therefore came to be known as
"Daedeok Valley" and officially as Daedeok Science Town. The software
industry, instead, assembled around Teheran Road in Seoul (between Gangnam

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Station and Samseong Station), nicknamed "Teheran Valley", a three-km stretch
that probably got the majority of South Korean venture-capital investment during
the dotcom boom.
In terms of process, however, Taiwan was the real story. In 1973 Taiwan
established the Industrial Technological Research Institute (ITRI) to develop
technologies that could be turned into goods for foreign markets, an institute that
would spawn dozens of semiconductor firms (starting with UMC in 1980 and
TSMC in 1987), and then the pioneer of Asian state-founded high-tech parks, the
Hsinchu Science-based Industrial Park, established in 1980 about 88 kms from
Taipei near four universities. In 20 years more than 100 companies were formed
by graduates of those universities. Taiwan was also the place where venture
capital took off in Asia and was also the first place that implemented the
feedback loop between university and corporate R&D typical of Boston and
Silicon Valley. TSMC launched the independent silicon-chip foundry, that turned
Taiwan into Silicon Valley's main destination for outsourcing chip
manufacturing, and which in turn helped create a vibrant chip-design industry
with companies such as MediaTek (1997) and NovaTek (1997).
Neither Japan nor Korea nor Taiwan attracted highly educated immigrants
from elsewhere like Silicon Valley did. The only Asian country to do so was
Singapore. It is not a coincidence that Singapore was also the country that
invested the most in attracting foreign businesses (and their know-how).
Singapore too developed an advanced venture-capital industry and fostered
interaction between its universities and the private industry.
Neither of these countries created a vibrant software industry like Silicon
Valley.
China was a late-comer and capitalized on its neighbors' many experiments,
avoiding Japan's model because it simply did not have the kind of old
established manufacturing and financial giants that Japan had. The idea of a
"Chinese Silicon Valley" came to nuclear scientist Chunxian Chen of the
Academy of Sciences after a 1979 trip to California. Back home in 1980 he
tried unsuccessfully to start a privately-funded Advanced Technology Service
Association just outside Beijing. However, the Academy took up his idea and
began to play the role of incubator for high-tech startups, one of which would
become Lenovo, most of them based along the ten-km Zhongguancun Street. The
idea appealed to both staff and students of the two leading universities of
Beijing, Peking University and Tsinghua University, who needed to make more
money than the tiny government salaries and subsidies. Finally, in 1988 the
government gave its blessing and the whole region came to be called
Zhongguancun Science Park. In little over than a decade massive government
incentives created thousands of new companies, the vast majority in software
and telecommunications.
In 2008 the USA entered the Great Recession while Asia was still booming.
Nonetheless in 2010 Asians overcome Hispanics as the largest group of

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immigrants to the USA. That is Asia's single biggest failure: people were still
leaving the continent by the hundreds of thousands even at a time when Asia
looked like a land of opportunities and the USA was widely considered on the
way out as a world power. One had to wonder what it would take to reverse the
tide if the biggest economic crisis in 70 years didn't do it.

The Importance of Process and of Evolution

The most important event in the modern history of Asian industry, however,
may predate all of this. In 1953 Taiichi Ohno invented "lean manufacturing" (or
"just-in-time" manufacturing) at Japan's Toyota. That was one of the factors that
turned Toyota into a giant success story (and eventually into the largest car
manufacturer in the world). More importantly, it created the mindset that the
process is often more important than the product. When (in 1987) ITRI's
president Morris Chang launched Taiwan's Semiconductor Manufacturing
Company (TSMC), the first independent silicon-chip foundry in the world, to
serve the "fabless" companies of the USA, he simply applied that mindset to the
computer industry and realized that one could decouple the design and the
manufacturing. That does not mean that only the design is creative: the design
would not lead to a mass-market product (and possibly to no product at all)
without a highly efficient manufacturing process that lowers the cost and
improves quality.
From the point of view of the Asian suppliers, what was really
revolutionary (and not just evolutionary) was the process, not the product. The
fabless process and the offshore customer-service process were the real
breakthroughs, not the new laptop model or the new operating system. Without
significant progress in Asia in the industrial process many great success stories
of Silicon Valley products may have not happened at all. The world viewed
from Silicon Valley was a world centered on the place where a product was
designed and marketed. The world viewed from Japan, Taiwan and Korea was
a world centered on the industrial centers that could manufacture products based
on whatever design, faster, cheaper and better. The world viewed from India
was a world centered on the army of software engineers that could deliver
software based on whatever needs, faster, cheaper and better. From the Asian
viewpoint, it was the increasing evolutionary efficiency of the "builders" that
allowed Silicon Valley to create "revolutionary" products and new markets. For
example, despite being a relatively small economy and boasting virtually no
invention that ordinary people can name, Taiwan rapidly became the fourth
country in the world for patent filing (after the USA, Japan and Germany); and
Japan rapidly became the country with the highest percentage of GDP spent in
R&D.
That "evolution" stemmed from a mindset driven by incremental progress,
the equivalent of new releases of an operating system, each one enabling a

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whole new range of features (and prices) for the next product to capture the
headlines.
From the viewpoint of Asia, ideas for "revolutionary" products are actually
easy. What is difficult is "making" those products, not imagining them.
Furthermore, it is debatable which region and system has yielded more
"revolutionary" products. The argument that small companies and Silicon Valley
rule is an opinion, not a fact. The perception is that in Japan innovation was
driven only by big companies. That perception is true. What is not true is the
perception that the source of innovation was significantly different in the USA. It
is easy to forget that Silicon Valley has invented very little: most of the things
that changed the high-tech world (from the transistor to the disk drive) were
invented by big companies (like AT&T and IBM), and many of the really
revolurionary ones (the computer, the Internet, the World Wide Web) were
invented by government labs. Blaming Japan for relying too much on big
companies and big government means not knowing what Silicon Valley actually
does, which is not to invent the computer nor the Internet nor the transistor nor
the smartphone. In fact, the rigid bureaucratic big-company system of Japan has
invented a lot more than Silicon Valley. And it has arguably created more wealth
for ordinary people, turning a poor country into one of the richest countries in
the world.

The Western Contribution to the Success of Asia's

High-tech Industry
Part of the success of Asia was obviously made in Silicon Valley: the fiber-
optics boom of the 1990s helped collapse the cost of a leased telecom line
between California and Bangalore, and then the Voice Over IP technology of the
early 2000s made it irrelevant. Without this simple improvement in the cost of
communications India's software industry would not have picked up the way it
did. The dotcom boom introduced dozens of online services that eliminated the
distance factor and therefore helped remote firms compete with local firms.
Even the passion for industry standards that has always been a peculiarity of the
USA ended up favoring those abroad who wanted to create critical mass for
their services of outsourcing.
The government of the USA has indirectly been proactive in creating
opportunities for Asian firms. When Bell Labs invented the transistor, it was
under government pressure that its owner AT&T decided to license transistor
technology at a low price to anybody who wanted it, including the company that
later became Sony. It was under government pressure that IBM decided to
"unbundle" the software applications from its mainframe computers, thereby
spawning a software boom worldwide. It was the government that created and
funded the Arpanet, that went on to become (as Internet) the backbone of the

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global outsourcing movement.
The biggest gift of the West to Asia was perhaps the revolution in
management that had started in earnest in the 1920s but got a phenomenal boost
in the 1990s with the collapse of the communist world and the boom of free
trade. The USA boasted the most advanced class of business administrators in
the world in terms of maximizing profits (at least short term), and their
discipline almost inevitably took them to outsource both manufacturing and
services. One of the tools that they used was also a Western invention: ERP
software to manage complex sophisticated distributed supply chains.
And, of course, it was the USA and its allies that had taught Asia to speak
English: India, Hong Kong and Singapore had been British colonies, and
Taiwan, South Korea and Japan had been militarily occupied by the USA in one
fashion or another. The language turned out to be an important factor in
leapfrogging ahead of the Europeans.
Another, less obvious, reason why it was so easy for Asian companies to do
business with Silicon Valley is that Silicon Valley (and the high-tech industry in
general) was in reality being less innovative than it appeared to be to
consumers: both software and hardware (consumer) products tended to follow a
predictable evolutionary path that it was easy for suppliers to anticipate with the
required building blocks and services.
Of course, we don't mean that Asia was just a lucky beneficiary of some
Western policies. These various forms of indirect "help" from the West would
not have worked without native factors that were already in place. In brief,
those successful regions of Asia had traditionally valued higher education (and
now also and especially in engineering and science), enjoyed enlightened state
planning (that, for example, placed emphasis on electronics while Europe was
still focused on cars and appliances), boasted world-class work ethos (that
guaranteed quality and reliability) and were largely non ideological (they didn't
view capitalism as evil, like large segments of the European public, and did not
harbor religious/ethnic hostilities towards Westerners).

The Missing Ingredients in Asia

However, nothing like Silicon Valley has emerged in East Asia. One simple
reason for this is that it is not only startup founders who have to be visionary in
order to achieve technological breakthroughs: venture capitalists have to be
visionary too. In Singapore, for example, they are government bureaucrats. Asia
has a tradition of keeping the money in the hands of trusted (and prudent)
bureaucrats. The USA has a tradition of letting the (reckless) successul self-
made man be the one who funds the next big thing.
However, that cannot be the whole story. For example, Japan never created
a vibrant software industry. But it would be unfair to blame it only on the
economic and political system: very few startups in Silicon Valley were

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founded by Japanese immigrants, despite the fact that the number of Japanese
engineers working in Silicon Valley has always been significant. Compare with
the incredible percentage of Indian and Chinese immigrants who started
companies. And this despite the fact that Japanese education is routinely ranked
higher than Indian and Chinese education.
It might look surprising that a country like Singapore, that appears to be a lot
more "modern" than the San Francisco Bay Area, contributed less to
technological innovation than Silicon Valley. Singapore is a model of urban
design and management. Silicon Valley is decades (if not a century) behind
Singapore, meaning that it would probably take a century for Silicon Valley to
catch up with Singapore's infrastructure projects, not to mention to match
Singapore's architectural wonders (compared with Silicon Valley's none). It's
not only the subway and the quality of roads that are superior in Singapore:
Singaporean citizens are far more "high-tech" than their peers in Silicon Valley.
Singaporeans had cell phones when these were still a rarity in Silicon Valley.
Silicon Valley still has to match the Internet speed that Singaporeans have been
enjoying for years. People in Silicon Valley got the first taste of mobile payment
a decade after it became commonplace in Singapore. And yet, as hard as it may
have tried, Singapore produced no Apple, no Oracle, no Google and no
Facebook. The reason might be the very concept of what high-tech is. In Silicon
Valley people need just a cubicle to work (and a car to get there, given the
stone-age public transportation). They are perfectly happy living in a culturally
poor place of ugly buildings and restaurant chains. In Singapore people expect a
town that is comfortable; a nice place to live in. High-tech is a means to an end
just like concrete and plastic. It is part of the urban fabric. It is one of the
elements that contribute to making Singapore a model of urban design and
management. In Silicon Valley people are willing and even excited to be
worked to death like slaves for the privilege of being part of the high-tech world
that designs the tools of tomorrow (and for a tiny chance of becoming the next
billionaire). In Singapore there is nothing particularly prestigious about working
in high tech: the prestige is in using it to do something that is relevant to society.
Silicon Valley assumes that one can change the world just by releasing a new
device or a new website that will spread virally. Singapore assumes that one
can change the world by adopting whichever the best available tools are at the
moment, and it is largely irrelevant who invented them; just like it's irrelevant
who makes the blue jeans or the shoes that became popular after independence.
The single most visible advantage that Silicon Valley had over the rest of
the world is immigration. The exodus of brains from India and China did not
stop during their boom years. No matter how many billionaires were created by
the booming high-tech industry in China, there were still thousands of Chinese
students willing to work as salaried employees in Silicon Valley rather than
return to China's land of opportunities.
In 2013 more than 350,000 Chinese returned home after graduating abroad,

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which was 17 times more than the number for 2003, but in 2013 more than one
million Chinese were studying abroad, 11 times more than in 2003.

China's High-tech Industry

The story of China's software industry borders on the incredible because it
was born so late in time that it basically coincided with the "dotcom boom" in
the USA. Whereas in the USA the World-wide Web represented yet another
generation of software, in China it pretty much represented the first one. Chinese
software was born online.
China's software industry first emerged out of the primitive enterpreneurial
culture fostered in the provinces bordering Hong Kong. This was the heroic era.
Several of the pioneering programmers (some of them self-taught) became
legendary like the heroes of China's martial arts.
Kau Pak Kwan, hailed as "China's first programmer" (or, better, the first one
to become rich and famous), who in 1989 had created the the first Chinese
wordprocessor (later renamed WPS) while working for Hong Kong-based PC
clone manufacturer JinShan, founded Kingsoft and developed an entire
Microsoft-compatible office automation suite. (Kingsoft in 2012 even
introduced its own browser, Liebao).
Ufida (later renamed Yonyou), founded in 1988 by two veterans of the
Ministry of Finance, Wenjing Wang and Qipiang Su, developed Chinese
accounting software and then became China's reigning ERP company. Its main
domestic rival was Kingdee, founded in 1991 by Shaochun "Robert" Xu, a
former software engineer in a government agency.
Neusoft was founded in 1991 by Jiren Liu, one of the earliest Chinese
graduates in computer science. The company was an offshoot of the pioneering
software lab that he had established in 1988 at Shenyang's Northeastern
University. In 1996 Neusoft became the first software company listed in the
Chinese stock market.
The hardware industry had gotten an earlier start. In 1984 Chuanzhi Liu of
the Chinese Academy of Sciences had founded a privately-run but state-owned
company, Legend (later Lenovo), to sell IBM's personal computers in China. In
1997 Lenovo passed IBM to become China's main vendor of personal
computers.
Huawei was founded in 1988 by Zhengfei Ren, a former telecommunication
engineer for the army, and by 2012 it had overtaken Sweden's Ericsson to
become the world's biggest telecom-equipment maker.
Meanwhile, a geographic shift had taken place thanks to the government's
1988 decision to establish the Zhongguancun Science Park outside Beijing: the
center of mass shifted towards Beijing. The other tectonic shift was the
introduction of the Internet: in 1994 the Chinese government allowed Spring to
connect China to the Internet (on a very slow data line). These events led to the

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second generation of software heroes.
In 1991 Zhidong Wang, who had already created the first Chinese-language
platform for personal computers, founded Suntendy Electronic Technology and
Research (later renamed Stone Rich Sight or SRS) to develop a Chinese version
of the Windows operating system (RichWin, launched in 1993). His partner was
a legendary self-taught computer scientist of the National Research Institute,
Yanchou Yan, who had designed China's first computer systems and developed a
Chinese-language version of Microsoft DOS. In 1998 venture capitalists
encouraged the merger of his company with Sinanet, a platform developed in
1995 by three Taiwanese-born Stanford graduate students (Hurst Lin, Jack Hong
and Ben Tsiang) to post news from Taiwan on the Internet using Chinese
characters. Thus Sina was born. The power of the Internet was demonstrated to
the Chinese public in 1999 when the USA accidentally bombed the Chinese
embassy in Belgrade: government propaganda paled in comparison with the
deluge of both live news and outraged opinions posted on Sina's website.
Thanks to that crisis, Sina became the largest Internet portal in China. For the
record the previous bump in traffic (when Sina was still called SRS) had come
from China's participation in the 1997 qualifying games for the soccer world-
cup. In 2009 Sina launched Weibo, China's Twitter equivalent.
Its main competitor, Sohu, launched in 1996 as Internet Technologies China
(ITC), was an offshoot of Boston's MIT where its founder Charles Zhang had
created a Chinese search engine. That soon became China's most popular search
engine.
In 1998 Yueqiao Bao, who had become famous for developing the MSDOS-
compatible operating system PTDOS (originally created in 1992 while working
in a rubber factory and later renamed UCDOS), founded OurGame, China's
premiere online gaming platform.
William Ding, a former Sybase engineer, founded Netease in 1997 and
created the first bilingual email system.
Jiangmin Wang became rich and famous thanks to the antivirus company he
had founded in 1996, Jiangmin Science and Technology (also known as New
Science & Technology).
In 1998 Shenzhen University's graduates Huateng Ma and Zhidong Zhang
founded Tencent (originally called Tengxun) to develop the instant messaging
platform Open ICQ or QQ. By 2010 Tencent had become the world's third-
largest Internet company by market capitalization.
In 1995 Jack Ma, an English teacher with no computing training started
China Yellowpages, one China's earliest dotcoms, and in 1999 he founded the
portal Alibaba, that in 2003 launched a consumer-to-consumer marketplace,
Taobao, borrowing ideas from both eBay and Amazon. In 2014 Alibaba's IPO
set a new world record.
In 2000 Robin Li and Eric Xu realized that there was an opportunity for a
Chinese search engine and founded Baidu. The opportunity was both political

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and social: the Chinese government was keeping a tight control over Western
search engines and those search engines were not designed for Chinese
characters. The main brain behind Baidu was Li, who in 1996, while working
for a Boston-area aggregator of financial data, invented a page-ranking
algorithm for search engines that would later inspire the Google founders, and
who had then joined Infoseek in Silicon Valley. Baidu quickly became the
second search engine in the world by number of users, and expanded to provide
a sort of Wikipedia for the (highly censored) Chinese nation. And Li became
one of the richest people in China.
Baidu's founder was influential in injecting the Silicon Valley style into the
old-fashioned business world of Beijing. Baidu would remain a symbol of
casual office environment, flat organization, no honorific titles, no formal
dressing and so forth (even a "no smoking" policy in a country notorious for
chain smokers). The median age at Baidu would still be a record-setting 25.8 in
2015 when Baidu would have grown to 50,000 employees. Ditto for Sina and
Sohu, also founded by returnees. This generation of "returnees", who founded
the early Internet startups in China, created a virtual link with the startups of the
USA even without formal business affiliations.
Between 1988 and 2003 high-tech ventures in Beijing's Zhongguancun grew
from 527 to more than 12,000. Instead the semiconductor foundry
Semiconductor Manufacturing International Corporation (SMIC) was founded in
Shanghai's Zhangjiang High-Tech Park. By 2013 it had become the fifth largest
in the world after Taiwan's TSMC, Silicon Valley's Globalfoundries (formerly
AMD), Taiwan's UMC and Samsung.
Joseph Chen, a Stanford and MIT graduate, started Renren (originally called
Xiaonei), China's Facebook equivalent, in 2005 in Beijing. In 2011 Tencent
released the social networking platform Weixin/WeChat for smartphones.
WeChat became a hybrid of Facebook and Skype, providing free voice and text
messaging as well as social interaction à la Facebook, and greatly reducing the
appeal of QQ and RenRen. This became one of the greatest success stories of
the Internet Age: by 2014 WeChat had almost 500 million monthly active users.
Tencent managed to dominate both age groups. QQ targeted the younger
generation and made money with games, especially second-life games. Wechat
targeted older users, especially professionals. By 2015 WeChat was also
becoming the Chinese equivalent of Paypal, providing online banking and
payment.
Founded at the end of 2005 in Beijing by Jinbo Yao, 58.com, better known
as Wuba, was the Chinese clone of Craigslist.
Companies that pioneered online shopping in China included: Dangdang,
founded in 1999 in Beijing by Peggy Yu and Li Guoqing; Joyo, spawned off by
Kingsoft in 2000 and acquired in 2004 by Amazon; and Alibaba's Taobao.
Then in 2004 Qiangdong "Richard" Liu Jingdong Mall, later renamed
launched the online website www.jdlaser.com for 360Buy.com (and later

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renamed again JD.com) from Beijing's Zhongguancun to sell an increasingly
broader range of goods and to deliver them via a fleet of motorcycles. The
delivery part was not negligible: China did not have anything like FedEx and
UPS. In 2007 JD.com emulated Amazon by creating its own logistics network
that enabled it to deliver goods in less than 12 hours in many cities.
The 2010s saw the globalization of China's high-tech industry, particularly
with the success of WeChat and Alibaba.
At this point the Internet industry was dominated by three big companies,
collectively known as the "BAT" (Baidu Alibaba Tencent).
The heroes of the past were being replaced by sophisticated teams. For
example, Xiaomi, which in 2014 passed Samsung to become the leader of
China's mobile phone market (and third globally behind Apple and Samsung),
had been founded in 2010 (just four years earlier) by a team comprising:
Kingsoft veteran (and soon to be billionaire) Jun Lei, former Kingsoft engineer
Wanqiang Li, former Motorola executive Guangping Zhou, former Google and
Microsoft executive Bin Lin, former Microsoft executive Jiangji Wong, Google
engineer Feng Hong, Chuan Wang, founder of two hardware companies, and De
Liu, founding director of the Industrial Design Department at Beijing University
of Technology. Xiaomi introduced its first phone in August 2011 and used only
the Internet to market it and sell it (mainly the Twitter-like platform Weibo). The
big leap forward came with the Redmi model in 2013. Chinese companies were
now being designed to be global players from the start.
Note that China had succeeded where Japan, Taiwan and South Korea had
failed. Neither of these original "tigers" managed to create a vibrant software
industry comparable to the one experiencing exponential growth in the USA.
China, a late comer whose software industry was born during the Internet era,
managed to create just that kind of software industry in a very short period of
time.
There were several factors that made China's companies unique. First of all,
they could not rely on advertising as the sole source of revenue like Yahoo,
Google and many others did in the USA. Chinese portals needed to "move
goods", and get a cut on the transaction. Secondly, those goods had to be cheap:
these companies had to specialize in selling cheap goods to cheap people.
Thirdly, they had to create a degree of trust between user and provider that was
much higher than anything needed in the USA where mail catalogs have been the
norm for more than a century. In particular, Chinese companies needed to
provide real customer service. Customer service in the Microsoft era had
decline to a "you are on your own" level: go online and see if anyone has found
a solution for your problem. Chinese companies, instead, were striving to
provide excellent customer support. Compare the dedicated customer support
provided by Taobao, WeChat and Xiaomi with the non-existent customer
support provided by their Silicon Valley counterparts eBay, Facebook and
Apple.

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 There was a fundamental difference between the Chinese model and the
Silicon valley model. The typical startup in Silicon Valley started out by
catering to a relatively small section of society, i.e. to the people or
corporations that were willing to spend money on untested
ideas/products/services: tech-savvy and high-income individuals or Fortune
500 corporations. The privileged individuals who belonged to this section of
society could use their mobile phones to improve their lives in a plethora of
ways. The rest of the world had to wait until these ideas/products/services had
been tested and had generated a profit (sometimes when competitors from
abroad had already started offering clones for much less). Many tech companies
served that tiny minority that could afford their services. That minority de facto
subsidized the Silicon Valley startups and corporations that were working on the
next big (expensive) thing, The Chinese model, instead, was the exact opposite.
The Chinese startup tended to target the lower middle class first. If Apple
embodied the "higher-income-consumer-first" business model, Xiaomi
embodied the "mass-market-first" business model; ditto for Uber versus Didi
Dache. (India's Flipkart and Snapdeal were following the Chinese model).
By the same token, the Chinese Internet companies were more likely to
invest in O2O ("online to offline") than their Western counterparts. Delivery
was cheap in China, and the overworked Chinese consumers, armed with
smartphones, could easily afford the price of home delivery. China also had a
more fragmented business world of "mom and pop" stores. Solving the issue of
"multipoint to multipoint" logistics was not terribly expensive in China
compared with the Western countries.
China launched the Internet+ initiative in 2014 to bring online the countless
small businesses who still weren't. An entire street of Beijing's Zhongguancun
district (now affectionately known as "Z-Park") was renamed Innoway in 2014.
A traditional hub of bookstores, it was turned into a hub of startup incubators,
each disguised as a coffeehouse. Garage Cafe had already opened in 2011. Z-
Park, home to success stories such as Baidu, Lenovo, JD and Xiaomi, incubated
13,000 new startups in 2014 alone, bringing the total to about 20,000 for a
combined revenue of $500 billion. Other Chinese cities followed suit,
especially those, like Hangzhou, that were blessed with a top-notch university.
This high-tech corridor, running from Beijing to Shenzhen, began to replace the
old centers of export-led manufacturing, the Pearl River Delta and the Yangtze
River Delta.
In 2015 there were more than 500 million smartphone users in China. In
2014 Chinese smartphone users downloaded 185 billion apps (mostly gaming
and shopping), 59% of all downloads worldwide.
Venture capital too was growing rapidly in China. In 2014 it grew more than
300% to $15.5 billion. Up until the mid 2010s there had been little motivation
for Chinese startup to succeed in the USA because they had access to plenty of
capital in China, because of the fast growing e-economy in China, and because

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of the high valuations for tech startups in China compared with Silicon Valley. In
any case, venture capitalism was a young science in China. The Chuang Yeban,
the Chinese equivalent of the NASDAQ index, had been inaugurated only in
2007. Before 2007 high-tech companies were de facto owned by the
government. It was still a young science because venture capitalists were de
facto discouraged from investing abroad: the government limited currency
exports. Investments abroad were mainly carried out by large companies, most
notably Lenovo's acquisitions of IBM and Motorola business, but also Alibaba
invested in Tango, Lyft, Shoprunner, search engine Quixey and mobile gaming
publisher Kabam; while Tencent invested in Snapchat and design website Fab,
and LeTV invested in Atieva, a designer of electrical cars.
Despite the similarities between Zhongguancun and the Bay Area, the
culture shock couldn't be bigger when it came to the investors. Chinese venture
capitalists liked what had already been successful: they invested in the
copycats. Chinese venture capitalists liked what sold in China, which could be
replicated only in immature markets. China's evaluations were astronomical,
fueled by investors who had made money in other industries and who did not
understand the technology.
The main drawback to Internet applications in China was the very slow
speed of Internet connections (China ranked (82nd in the world at the end of
2014, according to Akamai), but slow Internet speeds in China were blamed on
the "Great Firewall of China", the vast apparatus of censorship put in place by
the government of mainland China mainly to fight (quote) "Western hostile
forces", and not on technological backwardness. The Great Firewall of China,
introduced in 2003 after five years of work (officially known as the "Golden
Shield Project"), was blocking or at least limiting just about every Western
social media (Facebook, Twitter, etc), the most popular Western search engines
(such as Google), and many portals of general knowledge (from YouTube to
Slideshare), not to mention millions of ordinary websites (such as Piero
Scaruffi's www.scaruffi.com ), thus depriving the Chinese population of
valuable sources of information.
China was also the only country in the world that was successful at creating
a domestic clone of whatever succeeded in the USA: Baidu instead of Google,
Renren instead of Facebook, WeChat for chatting, Weibo instead of Twitter,
Alibaba's Taobao instead of Amazon and Ebay, Didi Kuaidi instead of Uber,
YouKu instead of YouTube, LeTV (founded by Yueting Jia) instead of Netflix,
MoMo instead of OK Cupid, Tmtpost instead of the Huffington Post, and so on.
Viewed from the outside this seemed like a grotesque show of copycats, and
even the Chinese joked that the main high-tech business in China was C2C
("Copy to China"), but it had created bigger software companies than Europe or
the rest of Asia ever dreamed of.

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 Innoway in Beijing’s Zhongguancun

A Timeline Of Asia's High-Tech Industry

1949: Japan's MITI is established as an architect of industrial policy
1954: Sony's transistor radio
1954: Fujitsu enters the computer market
1958: The USA forces Taiwan's regime to abandon plans to recover the mainland and focus
on economic development
1959: Hitachi builds its first transistor computer
1961: Shigeru Sahashi becomes director of the Enterprises Bureau at Japan's MITI
1964: South Korea launches plan to improve exports
1965: Chinese physicist Kuo-ting Li becomes Minister of Economy in Taiwan ("the father of
Taiwan's economic miracle")
Dec 1966: Taiwan's Ministry of Economy establishes an "Export Processing Zone" (EPZ) in
Kaohsiung, whose tenant companies enjoy privileges but must export all their output
1967: Sony introduces the Video Rover, the first portable videotape recording system (the
first "portapak")
1968: Singapore's plan to woe foreign multinationals
1968: Japan's Epson introduces the first digital printer, the EP-101
1969: Texas Instruments, National and Fairchild open plants in Singapore
1969: Shih Ming and Andrew Chiu found Taiwan's first semiconductor company, Unitron
1969: Japan's Seiko introduces the world's first commercial quartz wristwatch
1969: India's Tata appoints Faqir Chand Kohli in charge of computer services
1970: Japan's Sharp and Canon introduce the first pocket calculators
1971: Unitron's engineer Stan Shih designs Taiwan's first desktop calculator
1971: Busicom introduces the LE-120A Handy, the world's first pocket calculator
1972: Indian-born MIT-graduate Narendra Patni founds Data Conversion (later Patni) in the
USA with back-office operations in Pune
1973: Taiwan establishes the Industrial Technological Research Institute (ITRI) to develop
technologies that can be turned into goods for foreign markets
1974: Tata obtains a software contract from Burroughs, the first major software project
offsources by the USA to India
1973: Japan's Canon introduces the first color photocopier
1973: Ichiro Kato's team at Waseda University in Japan unveils the first full-scale
anthropomorphic robot in the world, Wabot-1
1973: South Korea establishes the Korea Advanced Institute of Science and Technology at

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Daeduk
1974: Tai-Ming "Terry" Gou founds the plastic factory Foxconn in Taiwan
1974: Japan's Hitachi produces its first IBM-compatible mainframe computer
1975: Azim Premji's Mumbai-based Wipro starts selling the first computer made in India
1976: Stan Shih and his wife Carolyn Yeh found the calculator maker Multitech (later Acer)
in Taiwan
1977: 57 foreign firms, including IBM, dclose down their Indian plants rather than meet
Indian demands for some degree of Indian ownership
1978: Deng launches economic reforms in mainland China
1978: Karnataka State's agency Keonics establishes Electronics City in Bangalore, India
1979: Mainland China sets up a Special Economic Zone (SEZ) in Shenzhen to experiment
with foreign investment and export manufacturing
1979: Japan's Sony introduces the portable music player Walkman
1980: Japan's Sony introduces the double-sided, double-density 3.5" floppy disk
1980: Japan's Yamaha releases the first digital synthesizer
1980: Wipro, to fill a gap after IBM left India, hires Sridhar Mitta who sets up offices in
Bangalore to make computers
1980: Taiwan's ITRI spawn the first startup, UMC
1980: The USA grants mainland China most-favored-nation status, i.e. access to US
investors, technology and market
Dec 1980: Taiwan's minister Kuo-ting Li establishes the Hsinchu Science Park
1980: The largest semiconductor manufacturers in the world are: Texas Instruments,
National, Motorola, Philips (Europe), Intel, NEC (Japan), Fairchild, Hitachi (Japan) and
Toshiba (Japan).
1981: Taiwan's Multitech (later Acer) introduces its own computer, the Micro-Professor
MPF-I
1981: Infosys is founded in Pune, India, by Patni employee Narayana Murthy
1981: Japan's Sony introduces the video camera Betacam, the first camcorder
1982: Japan's Sony introduces the compact disc
1983: Japan's Sony releases the first consumer camcorder
1983: Japan's Nintendo launches the videogame console Nintendo Entertainment System
Dec 1983: Taiwan's Multitech (Acer) introduces one of the earliest IBM-compatible
personal computers
1983: Japan's Seiko introduces the Data 2000 watch, the world's first smartwatch
1984: Stan Shih of Taiwan's Multitech (Acer) founds the research firm Suntek in Silicon
Valley
1984: Fujio Masuoka at Japan's Toshiba invents flash memory
1984: Japanese firms introduce the 256K DRAM chips
1984: Liu Chuanzhi of the Chinese Academy of Sciences founds a privately-run but state-
owned company, Legend (later Lenovo), to sell IBM's personal computers in China
1985: Taiwan hires US-based semiconductor-industry executive Morris Chang to run the
ITRI
1985 Texas Instruments opens a software laboratory in Bangalore, India
1986: Taiwan's Acer, leveraging its supply-chain optimization strategy, releases the world's
second computer based on Intel's 386 microprocessor (one month after Compaq)
1986: The Japanese government founds the Advanced Telecommunications Research
Institute International (ATR)
1987: ITRI's president Morris Chang founds Taiwan's Semiconductor Manufacturing
Company (TSMC), the first independent silicon-chip foundry in the world, to serve the

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"fabless" companies of the USA
1987: Ren Zhengfei founds the telcom-equipment maker Huawei in mainland China
1987: The largest semiconductor manufacturers in the world are Japan's NEC, Japan's
Toshiba and Japan's Hitachi
1988: Foxconn opens a pioneering factory in China's experimental city Shenzhen
1988: China sets up the Zhongguancun Science Park outside Beijing
1988: Japan's Fujitsu introduces the world's first fully digital consumer camera
1988: Barry Lam founds Quanta Computer in Taiwan
1989: Singapore's Creative Technology introduces the Sound Blaster card for personal
computers
1990: China's Lenovo introduces its first homemade computer when the market is dominated
by IBM, HP and Compaq
1991: Wipro wins a software contract from a US customer that interacts via the Internet
1993: American Express outsources the management of its credit-card business to its Indian
office led by Raman Roy, the first major project of business-process outsourcing to India
1991: The Indian government sets up the Software Technology Parks of India (STPI) to
promote software exports and opens the first park in the Electronics City of Bangalore
1991: Japan's Sony releases the first commercial lithium-ion battery
1992: Japan's Fujitsu introduces the world's first mass-produced plasma display
1992: South Korea's Samsung becomes the largest producer of memory chips in the world
1994: Japan's Sony introduces the PlayStation
1994: Alpha and Frank Wu found the contract manufacturer AmTran Technology in Taiwan
1996: Japan's Toshiba introduces the first DVD player
1996: Japan's Sony introduces the chip FeliCa for RFID technology
1997: The Octopus card in Hong Kong pioneers contact-less credit cards
1997: Japan's Toyota introduces the Prius, the first mass-produced hybrid vehicle
1997: Lenovo passes IBM to become China's main vendor of personal computers
1997: Japan's Panasonic introduces the first flat panel television set
1997: Cher Wang, the richest woman in Taiwan, founds HTC
1998: South Korea's SaeHan Information Systems introduces the first mass-produced mp3
player, the "MPMan"
1998: Tencent is founded in China by Huateng Ma and Zhidong Chang to develop the instant
messaging platform Open ICQ or QQ
1998: A merger creates China's Sina and China's Tencent is founded
1999: Jack Ma founds Alibaba in China
1999: Singapore's Creative Technology introduces the Nomad line of digital audio players
1999: Japan's NTT DoCoMo ("Do Communications over the Mobile network" introduces the
"i-mode" service that allows mobile phones to access a broad range of Internet services
1999: Alibaba is founded in China by Jack Ma, an English teacher with no computing
experience
1999: South Korea's Samsung introduces the SPH-WP10, the world's first watch phone
2000: Japan's Casio introduces the WMP-1, the world's first watch capable of playing MP3
files, and the WQV, the world's first watch to include a camera
2000: Robin Li and Eric Xu launch the search engine Baidu in China
2000: Japan's Sharp introduces the J-SH04, the first mobile phone with a built-in camera
2000: Japan's Honda introduces the humanoid robot ASIMO
2000: Almost 50% of Japanese who access the Internet do so via a cell phone
2000: The foundry Semiconductor Manufacturing International Corporation (SMIC) is
founded in Shanghai's Zhangjiang High-Tech Park

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2001: South Korea's Hyundai spins off its electronics division as Hynix
2002: South Korea's Samsung is the second semiconductor manufacturer in the world after
Intel, and Japan's Toshiba is third, passing Texas Instruments
2002: There are more than 2,000 startups in Seoul's Teheran Valley, and 69% of them are in
IT
2002: Vizio is established in the USA to sell AmTran's television sets
2003: Between 1988 and 2003 high-tech ventures in Beijing's Zhongguancun grew from 527
to more than 12,000
2003: Sony introduces the first Blu-ray disc player
2003: Hitachi and Mitsubishi create the joint venture Renesas Technology specializing in
microcontrollers (embedded chips)
2003: Asia produces about 40% of the world's IT goods and consumes about 20% of them
2003: Japan accounts for 21% of all patents awarded worldwide
2004: South Korea's Samsung is the world's largest OLED (Organic Light-Emitting Diode)
manufacturer, producing 40% of the OLED displays made in the world
2004: Japan's Epson introduces the mirrorless camera
2004: Japan's Casio introduces the GWS-900 G-Shock, the world's first watch capable of
mobile payment
2005: Taiwan's companies produce 80% of all personal digital assistants, 70% of all
notebooks and 60% of all flat-panel monitors
2005: Lenovo acquires IBM's personal computer business
2005: Joseph Chen founds Renren in China
2006: Between 1993 to 2006 the number of new science and engineering PhDs increased by
24% in the USA, by 189% in South Korea, and by more than 1,000% in mainland China
2007: The world's largest vendors of personal computers are HP, Dell, Taiwan's Acer, China's
Lenovo and Japan's Toshiba
Aug 2007: Taiwan's Acer acquires its US rival Gateway
2008: Japan's Sony unveils the world's first OLED tv set, the XEL-1, the world's thinnest tv
set at just 3 mm
2009: Asia employs 1.5 million workers in the computer industry while the USA employs
only 166,000
2009: Vizio, whose products are made by Taiwanese company AmTran, becomes the main tv-
set brand in the USA
2009: South Korea's Samsung announces mass production of 512 Mbit phase-change
memory
2009: Taiwan's Foxconn (Hon Hai Precision Industry), becomes the world's largest
manufacturer of electronics with revenues that dwarf Apple's and Intel's, employing 800,000
people
2009: India's Infosys sets up the largest corporate university in the world at Mysore
2009: China's Sina launches Weibo
2010: China's Tencent is the world's third-largest Internet company by market capitalization
2010: Xiaomi is founded in China
2010: Renesas acquires NEC's semiconductor division, becoming the world's largest
manufacturer of microcontrollers (embedded chips) and the world's fourth largest
semiconductor company
2010: Taiwan's Quanta Computer is the largest manufacturer of notebook computers in the
world
2010: South Korea's Samsung introduces the smartphone Galaxy S
2010: Taiwan's HTC introduces the world's first 4G smartphone, the EVO

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2011: Tencent releases the social networking platform Weixin/Wechat
2011: Tencent releases the social networking platform Weixin/WeChat for smartphones
2012: China's Huawei overtakes Sweden's Ericsson to become the world's biggest telcom-
equipment maker
2012: Taiwan's Acer introduces the world's thinnest notebook, the Aspire S5
2012: China's Huawei overtakes Sweden's Ericsson to become the world's biggest telcom-
equipment maker
2012: South Korea's Samsung sells twice as many smartphones as Apple and five times more
than Nokia
2012: South Korea's Hynix merges with SK Group to form the world's second-largest
memory chipmaker after Samsung
2012: The Tokyo Institute of Technology creates a robot that learns functions it was not
programmed to do (based on Osamu Hasegawa's technology)
2014: China's Xiaomi is third behind Apple and Samsung in the mobile phone market
2014: China's Xiaomi doubles its revenues in just one year
2014: China's Alibaba sets a new world record with its IPO
2015: Japan's Sharp introduces the in-cell type touch display that combines LCD and touch
sensor.

Silicon Valleys in Time

If a historian specializing in technological evolution had examined the
world a century ago, s/he would have never bet her money on a primitive,
underpopulated and underdeveloped region like the San Francisco Bay Area.
She might have picked a place in the USA (most likely Boston, New York or
Philadelphia), but more likely a place in Western Europe, probably somewhere
between Oxford and Cambridge. With 20/20 hindsight everybody has a theory
about why it all happened in "Silicon Valley" (that for our purpose is really the
broader Bay Area) but most of those theories are easily disproven if one studies
other regions of the world: the same conditions existed somewhere else and to
an even greater degree.
One needs to spend more time analyzing the previous cases of economic,
technological and cultural boom. Three obvious candidates are Athens in the 5th
century BC, Firenze (Florence) of the Renaissance and the electrical Berlin of a
century ago. There was little that made Athens truly special. Other cities might
have succeeded better than Athens, particularly the ones on the coast of what is
today Turkey that were the cradle of Greek civilization. However, Athens was
probably the nicest place to live: the attitude of its citizens was different,
somewhat eccentric for those times. Eventually it was that attitude that led to the
invention of democracy and capitalism. I would argue that it was also that the
real protagonist of Athens' renaissance was that attitude (harder to pinpoint than
the wars and political upheavals that historians describe in detail).
It may have been easier to predict Firenze's (Florence's) ascent given that
the city had been getting richer since at least the 12th century. However, who
would have bet on a city state within a peninsula (Italy) that was mostly famous

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for endemic warfare? And if you had to pick an Italian city-state why not
Venezia (Venice) that was creating a little empire (not surrounded by dozens of
city-states like Florence was in Tuscany) and that constituted a crucial link
between the superpower (Constantinople) and Western Europe? Again, what
stands out is the attitude of the Florentines: if you liked adventure and
innovation, it was nicer to live in Florence than in greedy, narrow-minded
Florence, and eventually Florence did produce more liberal regimes and
enlightened dictators instead of Venice's faceless dogi.
The "electrical Berlin" of the early 20th century came out of a black hole:
Germany did not even exist 30 years earlier. Germany was the last place in
Europe that was still politically divided in tiny medieval-style states the late
19th century. When Germany got unified, the spirit of unification certainly fueled
nationalistic pride but, again, there was hardly anything special about German
science and technology up to that point (there was indeed something special
about German philosophy and German poetry, but one can argue it actually went
against progress). What was unique about Berlin at that time was the enthusiasm
of its population: the attitude, again, was indeed unique. In all three places it
was the attitude (the spirit) of the population that was markedly different from
the norm. In all three places that attitude rewarded the independent in ways that
were not the norm, and it instituted a stronger degree of meritocracy than
elsewhere.
The same might be true also for the San Francisco Bay Area. The great
universities, the mass immigration and the venture capital (knowledge, labor
and money) came later. What was already there was the spirit of the Frontier,
the spirit of the eccentric independent explorer that later would become the
hobbyist and the hacker.

Silicon Valleys in Space

There have been many attempts to recreate Silicon Valley in other countries.
It was worth examining the ones in Western Europe that at the time led the world
in universities, immigrants and capital.
France created Sophia Antipolis, a technology park in Southern France.
First of all, it was created by the French government with a socialist-style
centralized plan. The region has become a magnet for foreign IT companies that
want a foothold into Europe, but hardly the creator of domestic startups that the
Bay Area is in the USA. There are a few factors that make a huge difference:
there is social pressure to join big corporations, not to start small companies; if
you do open your own company, failure is terminal; very few foreign talents
have been (permanently) attracted to the area; on the contrary many of the
French talents trained there have emigrated to the USA where they did start the
kind of company that they would not start in France. Note that, by all accounts,
the quality of life in southern France matches if not surpasses the quality of life

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in California.
The Munich metropolitan area in southern Germany has become another
high-tech hub. In this case the German government did not quite plan a Silicon
Valley per se: it was the defense industry that brought advanced manufacturing
to the area in ways not too different from how the defense industry bootstrapped
Silicon Valley's high-tech industry. The advanced manufacturing that led to the
success of companies like BMW transformed an essentially rural community in
Bavaria into a high-tech hub. Here there are also excellent educational
institutions: the Fraunhofer Institute and the Max Planck institute, that provide
world-class public education. The quality of life is quite high by European
standards (and the weather is much better than in most of Germany). The
socialist underpinning here is represented by the fact that the main "venture
capitalist" has been Bayern Kapital (an arm of the state government). The region
has indeed spawned a varied fauna of infotech, biotech and cleantech startups
just like in Silicon Valley. The region has also avoided the brain-drain that
consumes most of Western Europe: relatively few German entrepreneurs and
engineers have moved to the USA. However, this region too has failed to attract
significant numbers of foreign talents.
Four factors made Germany completely different from the Bay Area. First of
all, Germany's fundamental problem was the high cost of its labor (about ten
times the cost of labor in China in 2010). Therefore the whole nation was
engaged in a collective distributed project to devise ever more efficient ways to
manufacture goods. Therefore both universities and corporations focused their
research on innovating the manufacturing process, rather than innovating the
products made through those processes. The German system is biased towards
perfecting existing technology rather than creating new technology. RWTH
Aachen spent billions of euros to create a technology park that specializes in
just manufacturing techniques. Stanford's technology park was never meant for
just one specific application of technology. Secondly, the relationship between
industry and academia has always been different in Germany than in the USA.
German corporations fund academic research that is very specific to their needs,
whereas universities in the USA receive money that is generically for research.
This means that the transfer of know-how from academia to industry is much
smoother and faster in Germany than in the USA, but at the same time the
students are raised to become workers and then managers in the existing
corporations rather than start new creative businesses. Thirdly, Germany's big
success story could also be a curse: Germany achieved an impressive degree of
distribution of high education, spreading world-class research institutes all over
its territory (the Max Planck Institute had 80 locations in 2010, the Fraunhofer
Society had 60), but this also means that most of the bright scientists, engineers
and entrepreneurs don't need to move to another city, as they can find a top-notch
technological centers right where they live. Silicon Valley was mainly built by
immigrants (from both other states of the USA and from abroad). It was one

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place where everybody converged to do high-tech because most of the rest of
the country did not have the conditions that are favorable to the high-tech
industry. Germany provides them almost to dozens of regions, therefore none of
them can become the equivalent of Silicon Valley. Finally (and this is true for all
of continental Europe), German industry has to deal with a strong anti-
technological and anti-capitalist sentiment that was created over the decades by
an alliance of socialists, environmentalists, hippies, philosophers, psychologists
and so forth.
So far the main success stories of Europe have come from these regions:
SAP (Heidelberg), ARM (Cambridge) and Nokia (Oulu). The European region
that came closest to resembling Silicon Valley (although at a much smaller
scale) was Oulu in northern Finland, where more than a thousand startups were
born in the 2000s, most of them in wireless technology, but also in biotech,
cleantech and nanotech.
Israel was, actually, the country with the highest venture capital per person
in the entire world ($170 compared with $75 in the USA in 2010). Its startups
focused on the military, communications, agricultural and water technology that
were essential for the country's survival. Many of these startups were acquired
by Silicon Valley companies. None of these startups managed to grow to the
point of becoming an international player.

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 The Selfies (2011-14)
The Saga of Apple
In July 2011 Apple had more cash and securities ($76 billion) than the cash
reserves of the government of the US (which was facing a temporary liquidity
crunch due to debt ceiling debates). Google was on a buying spree (basically an
admission of inferior technology) while Apple rarely bought anything from
others (an impressive demonstration of technological superiority). Apple had
always been a strange company, a distant second to Microsoft in operating
systems for personal computers, but possibly better respected than Microsoft
(certainly so in Silicon Valley), as if Microsoft's rise was mere luck while
Apple's survival was pure genius.
Meanwhile, Apple continued to refine its MacOS to the point that
Microsoft's Windows look positively troglodytic to the Apple base. The iPod
and the iPhone increased Apple's reputation in designing wildly appealing
products, even though neither fully dominated its market (there were lots of
digital music players, and Google's Android was growing a lot faster than
Apple's iOS). The MacOS and iOS had, however, an incredible following
worldwide, unmatched by any other desktop and mobile software platform.
And, last but not least, Apple ruled the handheld tablet market with the iPad
(almost 70% of the marked in mid-2011). Apple had never embraced social
computing (just like it had been slow to embrace the Internet to start with) and it
was late in cloud computing (the iCloud was announced in June 2011).
Yet there was a general feeling that Apple did things only when it was
capable of stunning the world. No other company could afford to be so late to
the market and still be expected to make a splash.
The philosophical difference between Google and Apple was even wider
than between Google and Microsoft: Apple still conceived the Web as a side-
effect of computing, not as the world inside which computing happens, whereas
Google (whose slogan was "nothing but the Web") was pushing the vision of the
Web as "the" computing platform.
The difference in business models was even more profound: Google was
making (mostly buying and distributing) relatively trivial technology and letting
people use it for free (with the advertisers footing the bill), de facto turning the
Web into a giant advertising billboard. Meanwhile, Apple was expecting people
to pay a premium for its devices and services, just like any other traditional,
quality-branded good.
In fact, one of Apple's great and unlikely success stories was its retail
stores: the "Apple store" was popular worldwide, making Apple of the most
valuable brands in the world. In July 2011, revenues from its retail stores were
$3.5 billion, up from $2.6 billion the previous year (2011 was a terrible year

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for the whole Western economies). Apple was planning to open 40 new stores
in the following six months, mostly abroad.
Google was trying to make computing more or less free, while Apple was
trying to make computing as fashionable as cosmetics and apparel. Apple had
tried this before, when its closed platform Macintosh had competed with
Microsoft's open platform Windows. Now it was the relatively closed iPod,
iPhone and iPad versus Google's Android platform. In many ways the iPod, the
iPhone and the iPad marked a regress in computing. They were computers, but
limited to a few functions (that they did very well). For the sake of making those
functions as mobile as the transistor radio (the first great mass-market portable
electronic device) Apple reduced the power of the computer. In theory
application developers could add their own applications to the iPhone, but in
practice Apple had veto rights over which applications were allowed (so much
for freedom of choice and the free market).
Apple's success was frequently viewed as the work of one man, Steve Jobs;
but Jobs had to retire in August 2011 for health reasons.
When Steve Jobs, the ultimate icon and mythological figure of Silicon
Valley, died in October 2011, his legacy was the legacy of the whole of Silicon
Valley: a new discipline that, borrowing other people's inventions, was not
solely about the functionalities of a product and was not solely about the "look
and feel" of a product, but was very much about the way that the human mind
and the human body should interact with technology. It was a discipline born at
the confluence of the utopian counterculture of the Sixties, the tech hobbyist
culture of the 1970s and the corporate culture of Wall Street; and it was about
creating a new species, a machine-augmented Homo Sapiens (Home Sapiens
Plus?). Just like Silicon Valley as a whole, Jobs had mostly copied other
people's ideas, but turned them into existential issues. Jobs elevated to a
sophisticated art the idea that producer and consumer should engage in one and
the same game: exhibitionism; and then congratulate each other, and even
worship each other like fraternal deities.
It was telling that very few people noticed the death, also in Palo Alto, and
just six months later, of Jack Tramiel, the founder of Commodore, the first
company to sell a million units of a personal computer and whose Commodore
64 sold four times the sales of the Apple II.

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 Flowers and apples in front of Steve Jobs' home the day after he died

The Age of the Smartphone App

The importance of the "app store" was skyrocketing by the day, just like the
availability of applications had favored Windows on the desktop, except that
this time around Microsoft was on the losing end. In 2013 Microsoft announced
the acquisition of Nokia's mobile business within two years the two companies
introduced state-of-the-art smartphones such as the Nokia Lumia 1020, equipped
with a camera worthy of professional digital cameras, and the Nokia Icon,
whose user interface was as advanced (if not more advanced) than the
Android's and the iPhone's ones. Unfortunately, Nokia's smartphones were
running Windows Phone, and Windows still did not have the same apps
available to Android and iPhone. No matter how technologically advanced,
Nokia's smartphones were doomed to be outsiders.
In 2013 worldwide sales of smartphones passed the one billion mark,
posting a 38.4% increase from the previous year, with Samsung accounting for
31.3% of the units, followed by Apple with 15.3%.
While apps continue to proliferate in all possible fields, the biggest success
stories had to do with extending the social network enabled by smartphones.
Tencent had been founded in China in 1998 by Huateng Ma and Zhidong
Zhang to develop the PC-based instant messaging platform Open ICQ or QQ. In
2009 the Chinese government had blocked access to Facebook, and soon Twitter
and Youtube were banned too (as well as millions of other websites including
www.scaruffi.com ). In January 2011 Tencent released the social networking
platform Weixin/Wechat, designed by Allen Zhang, which simply integrated the
features of all those social networking platforms, and also provided a sort of
digital walkie-talkie (verbal instant messaging, very popular in a nation whose
complex language is not friendly to texting). Within three years it had 300
million users, growing faster than Facebook.
Tango, founded in 2009 in Mountain View by Eric Setton and Israeli serial
entrepreneur Uri Raz, provided a voice and video messaging mobile platform
for all smartphones, competing with Apple's proprietary Facetime. The app

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went viral so quickly that Tango already had one million users after just ten days
of launching (Tango later added entertainment, gaming and ecommerce and
became a "unicorn" after Alibaba invested in it in 2014).
Snapchat was started by Stanford students Reggie Brown and Evan Spiegel
in 2011 for smartphone users to share photos and videos. In the age when the
public was increasingly concerned about privacy, Snapchat pledged to delete
every messages from its servers within a few seconds.
This was, after all, the age of the "selfie", the self-portrait photograph
posted on social media for all your friends to see how cute and cool you are.
The company that had perhaps the biggest trouble adjusting to the new
world was Yahoo! In 2012 it hired Marissa Mayer from Google, the rare case of
a major CEO coming from the ranks and files of a high-tech company. She
launched into an acquisition spree of her own, purchasing 16 startups in her first
year at the helm of the company. The biggest purchase (2013) was blogging
platform Tumblr, founded in New York in 2007 by Marco Arment and David
Karp (who was barely 20). This was not the first attempt by Yahoo! to enter the
blogging sphere. Yahoo! had already purchased the most famous blogging site of
1999, Geocities, only to cause its rapid demise. Just like then, Yahoo! was more
interested in Tumblr's customer base of 105 million bloggers than in
contributing to progress in this technology. And, just like in the age of Geocities,
it was still not clear how these platforms were supposed to make money. Most
of the other acquisitions were for mobile applications and services, like the
gaming platform PlayerScale and the video platform Qwiki. Among them was
London-based "whiz kid" Nick D'Aloisio's news aggregator Summly (originally
called Trimit and developed for iOS in 2011, when he was still 15), based on
Artificial Intelligence software coming from SRI International. Just like with
Google, this was also a way to hire top software engineers (the so-called
"acqui-hire" method).
The mother of all applications was the "personal assistant", or, better, the
voice-controlled contextual search tool. Apple had introduced Siri with the
iPhone 4S of 2011 after merging a personal-assistant technology acquired from
Siri with the speech-recognition technology acquired from Nuance.
During the year 2012 Apple's Siri was joined by a number of tough
competitors: Samsung's S-Voice, launched in May 2012 for its Galaxy S3
smartphone; LG Quick Voice, launched in June 2012 for its Optimus Vu
smartphone, and, last but not least, Google Now, launched in July 2012 on
Samsung's Galaxy Nexus smartphone.
Microsoft followed suit in 2014 with its Cortana. In 2014 Apple's iOs8
introduced the "Hey Siri" feature that enabled any app to summon Siri; and in
2015 Uber introduced a similar feature to summon Uber from any other app.
The new generation of intelligent assistants included Kasisto (2013), an SRI
International spin-off just like Siri, and Digital Genius, designed by London-
based Russian-born Dmitry Aksenov, as well as some specializing in scheduling

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meetings, such as Clara (2013), founded by Maran Nelson and Michael Akilian
in San Francisco, and X.ai (2014), founded by Dennis Mortensen in New York.
In 2015 Facebook launched its own virtual assistant, M.
However, these "assistants" were still a far cry from a real "contextual and
predictive technology".
Social apps for the mobile world continued to multiply. Flipagram, founded
in 2013 in Los Angeles (by Raffi Baghoomian, Brian C. Dilley, Joshua Feldman,
Farhad Mohit), and funded by Michael Moritz and John Doerr (who famously
invested together in Google), offered an app that allowed users to quickly
produce short video clips combining photos, videos, text and music. In 2014
Fyusion, founded in 2013 in San Francisco by Willow Garage alumni Radu
Rusu, Stefan Holzer and Stephen Miller, debuted the mobile photo app Fyuse
that pushed social media beyond panoramic snapshots and towards immersive
3D photography.
The age of the selfie quickly turned into the age of the short video. Snapchat
passed 6 billion daily video views in 2015, just three years after the
introduction of its video service. By then Facebook boasted 8 billion daily
video views. In 2015 Google acquired Fly Labs, founded by Tim Novikoff in
2012 in New York, creator of immensely popular video-editing apps for the
iPhone. Cinematique, founded by Randy Ross in 2012 in New York, provided a
platform for making interactive online videos. In 2014 Shutterstock, an online
marketplace for trading stock images launched in 2003 in New York by Jon
Oringer, debuted an in-browser video-editing tool, Sequence.
New creative kinds of collaboration tools were introduced in the 2010s,
notably: TinySpeck (later renamed Slack), founded in 2013 in San Francisco by
Stewart Butterfield of Flickr fame with Serguei Mourachov, Eric Costello and
Cal Henderson; and HipChat, founded in 2010 in San Francisco by Chris
Rivers, Garret Heaton and Pete Curley, and acquired by Australian company
Atlassian in 2012. Slack was tapping into a transformation of the main decades-
old form of interpersonal digital communication: email. Email had been
attacked on one side by chat applications, that provided a much simpler way to
carry out instant bidirectional communication than traditional email. Email itself
had become less of a person-to-person communication tool and more of a
machine-to-person communicaton tool and a campaign-to-the-masses
communication tool, as many emails were generated by machines (not only
marketing but also receipts, social-media notifications, bank statements, etc) and
many emails were crafted for an audience by a Mailchimp user (Mailchimp
having become the main email marketing platform, originally founded in 2001 in
Georgia by Ben Chestnut). Google too had contributed in giving email a bad
reputation among younger people by unnecessarily overloading Gmail (the most
popular email application) with features and icons that sounded confusing,
complicated and old-fashioned to kids used to one-click communications. Slack
was one of the tools that became popular because, indirectly, reduced email

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communications (in this case within a group).
In 2013 Quip (founded in San Francisco by former Facebook technologist
Bret Taylor and by former Google engineer Kevin Gibbs) launched a mobile
office application.
In 2013 Opera's cofounder John von Tetzchner founded Vivaldi
Technologies to develop a new Chromium-based browser for power users.
The dark side of the Internet came to light in 2011, when a researcher
discovered that spyware developed by Carrier IQ (a company founded as Core
Mobility in 2005 in Sunnyvale by former Apple engineer Konstantin Othmer)
was recording detailed user behavior on smartphones sold by AT&T, Sprint, T-
Mobile, Apple and Samsung, which accounted for the majority (only two major
manufacturers, Nokia and Research in Motion, never used this spyware). This
followed a 2010 lawsuit, in which Skyhook Wireless sued Google for patent
infringement, that indirectly revealed to the public a vast and secret three-year
project by Google (from 2007 until the lawsuit) to collect WiFi signals using
StreetView vehicles (hence renamed "Wi-Spy vehicles" by the hacker
community). Skyhook Wireless, founded by Ted Morgan in 2003 in Boston, had
become the world leader in "location intelligence", i.e. the leading source of
information about Wi-Fi locations. That information provides a more accurate
and battery-friendly way to pinpoint a mobile user's location than GPS or cell
tower triangulation, the user's location being in turn very valuable for
advertisers and therefore meaning big money for search engines. Google had a
vested interest in improving its knowledge and tracking of the exact location at
any time of users of Android smartphones. Skyhook was candidly admitting on
its website that "Wi-Fi is far more than a network connection - it's a location
source." In other words, Wi-Fi had become a way to track where a mobile user
was.
In 1975 the FBI had funded the development of fingerprint scanners but it
took decades for the technology to reach the consumer market. In 2011 Motorola
became the first company to offer a fingerprint scanner in a smartphone (its
Atrix). The fingerprint scanner used by Motorola in Atrix 4G was made by
Authentec, which was acquired by Apple in 2012. Sure enough in 2013 Apple
added a fingerprint scanner to the iPhone. A few months later HTC used the
technology developed since 2010 by Validity (founded in 2000 in San Jose and
acquired by Synaptics in 2013) for its One Max. China's Xiaomi introduced its
fingerprint scanner in 2015.

Gaming
The world of gaming was shaken in 2012 when Ouya, founded in San
Francisco by Julie Uhrman, announced an Android-powered open-source
gaming console. Unlike other platforms, that charged game developers, Ouya
promised no licensing fees, no retail fees and no publishing fees. While less

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powerful than the best-selling consoles of the time (like Microsoft's Xbox 360
and Sony's PlayStation 3), Ouya was promising a whole new world of games,
not confined to the big developers. In July 2013 Ouya raised more than $2.5
million in just 8 hours on Kickstarter.
In 2012-13 the big videogame console producers introduced a new
generation: Microsoft's Xbox One, Sony's PlayStation 4, Nintendo's Wii U.
None of these was based in Silicon Valley. However, two of them (Xbox and
PlayStation) were powered by general-purpose processors made in Silicon
Valley (by AMD) instead of the custom chips of previous generations.
Furthermore, one reason why nobody in Silicon Valley was trying to compete
with the giants of consoles was that mobile devices were rapidly becoming a
major platform for gaming.
Gaming engines such as Denmark-based Unity (David Helgason and
Nicholas Francis) and Palo Alto-based Corona (Walter Luh, 2008) were making
life easier for designers.
Silicon Valley was not innovating in mobile game design but it was
acquiring. In 2015 Activision Blizzard paid a fortune for one of the most
successful mobile games yet, "Candy Crush Saga", launched in 2012 and
already downloaded by more than 500 million people (mostly women) on
smartphones and Facebook. King had been founded in 2003 in Sweden by
Riccardo Zacconi and others, a spin-off of Melvyn Morris' online dating
website uDate.com (after it was acquired by Texas-based Match.com).
3D open-world gaming had been pioneered by games such as Yu Suzuki's
"Shenmue" (1999) for Sega and "Grand Theft Auto III" (2001) by DMA Design
in Britain. Markus Persson's "Minecraft" (2011) in Sweden became the most
powerful game of that genre, registering its 100 millionth user in 2014.

Virtual and Augmented Reality

The head-mounted displays of the early days of virtual reality had been
heavy and cumbersome, and required cables running to a supercomputer. In
2013 Google Glass, manufactured by Foxconn, captured the headlines: it
coupled that kind of display with a "wearable" computer and provided the kind
of functionalities offered by Internet-enabled consumer electronics. Thad
Starner, one of the pioneers of wearable computing, was the mastermind behind
Glass, a project largely implemented by Greg Priest-Dorman at Georgia Tech.
Google Glass, which was basically a wearable smartphone, failed because it
was socially disruptive, eventually killed by social stigma. Google Glass failed
just like its closest competitor, Atheer, founded in 2011 in Mountain View by
Lebanese-born entrepreneur Soulaiman Itani and Allen Yang, whose glasses
offered a wider 65-degree field of view (as opposed to Google Glass' 12
degrees) but required a physical cable to an Android smartphone..

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 Greg Priest-Dorman

The vanguard in this field was perhaps Lumus, founded in 2000 in Israel by
Yaakov Amitai, that in 2012 introduced see-through wearable displays.
In 2014 Facebook acquired Oculus, a manufacturer of virtual reality
headsets for games founded in 2012 in Irvine by Palmer Luckey, and originally
funded through a Kickstarter campaign.
Jaunt VR, founded in 2013 in Palo Alto, introduced a 360-degree camera
that allowed users to create a virtual-reality video. In 2015 Matterport
(founded in 2010 in Mountain View by Matt Bell and by David Gausebeck, the
engineer who designed the first commercial CAPTCHA security system at
PayPal) introduced a $4,500 camera to turn interior spaces into virtual worlds.
Lucid VR, founded by Han Jin and Adam Rowell in Fremont in 2014 with the
aim of becoming the GoPro of virtual reality, introduced the LucidCam, a
stereoscopic 180-degree 3D camera. In 2015 Samsung Gear VR, powered by
Oculus and strapped to a Samsung Galaxy (Android) phone, further lowered the
threshold to play with virtual-reality games, but Google already offered a cheap
virtual-reality viewer, Cardboard, that used the smartphone as a screen.
Meanwhile, NextVR, founded by filmmaker DJ Roller and David Cole in
2009 in Los Angeles promised live VR experience for live broadcast.
In 2015 Apple acquired Swiss-based Faceshift, a spinoff from Lausanne's
Polytechnique Federale, whose technology was capable of capturing the user's
facial expressions in real time and creating animated avatars of the user.
In 2013 graphics-processing specialist Nvidia demonstrated a head-
mounted display that used light fields. A near-eye light field display was also
being developed by Florida-based startup Magic Leap, founded by Rony
Abovitz
Virtual Reality required a new generation of user interfaces, beyond voice
and touch. Portland's OnTheGo, founded in 2012 by Ryan Fink, introduced a
purely software system to track a user's gestures, a gesture-recognition system
that could work on any Android-based smart glass with a standard camera. (It
was acquired by Atheer in 2015).
Augmented Reality systems allowed the user to mix virtual and reality
objects. Coincidentally, Google shut down Glass the very same week of 2015 in

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which Microsoft announced HoloLens, a cordless, self-contained smart-glasses
headset with an embedded Windows computer, whose user interface replaced
the mouse with the gaze of the user and the mouse click with a motion of her
finger. It allowed the user to walk around three-dimensional virtual objects and
employed gaze, gesture and voice to modify them. To carry out the same
functions, Oculus' Rift needed to be supplemented with gesture recognition
(Leap Motion or Kinect) and stereoscopic cameras; and Rift was plugged into a
host computer, whereas HoloLens was stand-alone. Microsoft leveraged
technology acquired from Osterhout Design Group, a company founded in 1999
in San Francisco by Ralph Osterhout that introduced its first consumer glasses in
2015. If Facebook/Oculus targeted the gaming community, Microsoft aimed at
the enterprise, viewing the HoloLens as a productivity tool. in 2010.

Wearable Computing
In 2011 Los Altos-based WIMM Labs (founded in 2009 by former Intel
executive Dave Mooring and acquired in 2013 by Google) introduced the
Android-based Wimm One smartwatch. 2012 and 2013 saw the debut of mass-
market smartwatches such as the Samsung Galaxy Gear and the Sony
SmartWatch, both powered by Android, and the Pebble smartwatch, running its
own operating system but capable of communicating with both Android and iOS
apps. The latter, introduced by Palo Alto-based Eric Migicovsky's garage
startup, set a new record ($10 million) in Kickstarter funding. A similar feat
was achieved later that year by Laurent LePen's Omate for its TrueSmart
smartwatch (LePen was based in China but the company was based in Mountain
View). In 2014 Google introduced the Android Wear platform. The first
smartwatches based on Wear were Motorola's Moto 360 (2014), Sony's
Smartwatch 3 (2014), LG's G Watch (2014) and Samsung's Gear Live (2014).
Apple introduced its Apple Watch in April 2015, and this quickly became the
bestselling smartwatch in the world.
Wearable devices posed a challenge to high-tech companies because they
involved issues more related to fashion than to technology. Hence San
Francisco-based Fitbit, founded in 2007 by James Park and Eric Friedman,
maker of the Tracker, partnered with Tory Burch, a boutique specializing in
women's designer apparel, Google partnered with industrial designer Isabelle
Olsson for Google Glass, and Intel partnered with retail chain Opening
Ceremony, founded in 2002 in New York by fashion specialists and Berkeley-
graduates Carol Lim and Humberto Leon. Apple hired Angela Ahrendts, former
chief executive of iconic luxury British retailer Burberry.
Scientific progress too was introducing new variables. For example, in
September 2010 a team led by Ali Javey from UC Berkeley unveiled an
"electronic skin", a flexible and touch-sensitive film of superconductive
nanowire transistors.

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 Fitbit had a virtually infinite number of competitors, from Misfit, founded in
2011 in San Francisco by Sonny Vu and Sridhar Iyengar, to Moov, founded in
2014 in Mountain View by Meng Li, Nikola Hu, Tony Yuan (offering a wearable
band and a voice app to coach users).

Ubiquitous Computing
The 2000s were bringing back the hardware. The biggest revolution of the
2000s may not have been the Internet (which has been hijacked by the likes of
Google and Facebook to become an advertising platform) but the sensor
revolution. Thanks to progress in micro-electronics, batteries and wireless
connectivity, sensors had become orders of magnitude cheaper and thickly
networked. Sensors were opening virtually infinite horizons to a new generation
of applications. Wearable computing, self-driving cars, embedded
nanotechnology, robots and so forth were the "real thing". By comparison, social
media were simply entertainment, that are replacing late-night clubs and bars.
There was a reason that they were called "social" and not "industrial"...

3D Printing
3D Printing was an evolution of CAD (Computer-Aided Design) and of the
inkjet printer, a humble product that, indirectly, had pioneered additive
manufacturing for the mass market.
3D printers are capable of turning digital blueprints into real-world objects.
3D Printing converted bits into atoms, another step in the convergence of the
digital and the physical.
Charles Hull is credited with inventing the first 3D printer (in 1984) and
with introducing it to the market in 1988 with his Los Angeles-based company
3D Systems. A different technique was developed by Scott Crump in Minnesota,
brought to the market in 1992 by the company he founded in 1989, Stratasys. Yet
another pioneer was Sanders Prototype (later Solidscape), founded in 1993 in
New Hampshire by Royden Sanders. In 1995 Z Corporation commercialized the
technology developed at the Massachusetts Institute of Technology (MIT). 3D
Systems, Stratasys and Z Corp remained the leading manufacturers of 3D
printers throughout the 2000s (Z Corporation was acquired by 3D Systems in
2012). A key technology to make 3D printing more practical was Selective
Laser Sintering (SLS), invented in 1986 by Carl Deckard at the University of
Texas. In 1989 Deckard cofounded Desk Top Manufacturing (DTM) that
manufactured the first SLS printer. His company was acquired by 3D Systems in
2001 and it took a few years before SLS printers became competitive. In 2008
the Israeli company Object Geometries (acquired by Stratasys in 2011)
introduced "polyjet printing", the ability to print and combine different materials
in the same printed part.
With the exception of the MIT, the academic world had lagged behind

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industry, but in Europe two projects took the lead. In 2006 Adrian Bowyer at the
University of Bath launched an open-source project, Reprap, to develop a self-
replicating 3D printer, a feat first achieved in 2008 when their 3D printer built a
copy of itself. In 2011 Dutch scientists, frustrated with the inability to make the
Bath model work, started a competing project, Ultimaker, which also became a
startup.
When 3D printers started logging in successful applications, startups began
to multiply. One of the most publicized was New York-based MakerBot, a
descendant of RepRap founded in in 2009 by Bre Pettis, Adam Mayer and Zach
Smith, popular because of its ability to make its own spare parts. Makerbot also
started selling a Do-It-Yourself kit for users to build their own 3D printer.
(MakerBot was acquired in 2013 by Stratasys). In 2013 MIT-offshoot Formlabs
(founded by Maxim Lobovsky, Natan Linder and David Cranor) introduced a
stereolithography 3D printer for the desktop, dubbed "the Leica of 3D
printers".In 2014 New Matter, founded in Los Angeles by Caltech scientist
Steve Schell under the aegis of incubator Idealab (i.e. serial entrepreneur Bill
Gross), introduced the first 3D printer for the mass market.
In 2015 Carbon3D, founded in 2013 in North Carolina by scientists of the
University of North Carolina (Joseph DeSimone, Edward Samulski, Alex
Ermoshkin) and later relocated to Redwood City, unveiled a 3D printing
process named Continuous Liquid Interface Production (CLIP) that improved
printing speed by an order of magnitude.
E-commerce portals for buying and selling home-made items, such as Etsy
(founded in 2005 in New York by Robert Kalin) and Philips' spinoff Shapeways
(founded in 2007 in New York) became even more promising in the age of 3D
printing. With Shapeways, users could design a product and upload 3D printable
files, that Shapeways would turn into products, and sell and ship them.
Autodesk had been a 3D desktop development platform for a long time and
was likely to benefit from the 3D printing vogue. In 2015 it launched a cloud-
based platform for makers to design 3D objects, coupled with a venture fund to
invest in the boldest ideas.
Two Autodesk alumni, Evi Meyer and Erik Sapir, founded uMake in 2014 in
San Francisco to offer a mobile alternative to Autodesk's 3D-design tools.
When 3D printing met wearable technology, a whole new horizon of
applications opened up. In 2010 Dutch fashion designer Iris van Herpen
pioneered 3D-printed fashion. Until 2014 the idea was mainly exploited by
provocative artists such as New York-based Chinese-born artist Xuedi Chen,
who 3D-printed "disappearing" lingerie (that revelead more and more of her
naked body as she was active online), and Dutch designer Borre Akkersdijk,
who 3D-printed garments with embedded electronics. In 2012 Wisconsin-based
student Bryan Cera had even 3D-printed a wearable cell phone that could be
worn like a glove. In 2014 New York-based architect Francis Bitonti 3D-
printed a nylon gown based on the Fibonacci series (and in 2015 even designed

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a digital jewelry collection). 2015 saw an avalanche of new applications.
Christophe Guberan, Carlo Clopath and Skylar Tibbits from the MIT 3D printed
a "reactive" shoe that changes shape dynamically to provide maximum comfort.
Vancouver-based Wiivv, founded by Shamil Hargovan and Louis-Victor Jadavji,
launched its service of custom 3D printed insoles. New Balance 3D printed a
high-performance running shoe. London designer Julian Hakes 3D-printed shoes
for Olympic gold medal winner Amy Williams. Italian designer Paola Tognazzi
3D-printed garments that changed dynamically as the wearer moved. California-
based Iranian-born designer Behnaz Farahi 3D-printed a "helmet" that changed
shape in response to the wearer's brainwaves. Lidewij van Twillert from Delft
University of Technology (Netherlands) 3D printed lingerie, and Shanghai-
based Iranian-born designer Nasim Sehat 3D printed extravagant eyewear. 3D
printing was reinventing the tailor in the digital age.

Big Data
The first companies to deal successfully with "big data" were probably the
big two of the 2000s: Google and Facebook. It was becoming more and more
apparent that their key contributions to technology were not so much the little
features added here and there but the capability to manage in real time an
explosive amount of data.
A Facebook team led by Avinash Lakshman and Prashant Malik developed
Cassandra, leveraging technology from Amazon and Google, to solve
Facebook's data management problems. Facebook gifted it to the open-source
Apache community in 2008. DataStax, founded in 2010 in Santa Clara by
Jonathan Ellis and Matt Pfeil, took Cassandra and turned it into a mission-
critical database management system capable of competing with Oracle, the
field's superpower.
A Google team led by Jeff Dean and Sanjay Ghemawat (in about 2004)
developed the parallel, distributed algorithm MapReduce to provide massive
scalability across a multitude of servers, a real-life problem for a company
managing billions of search queries and other user interactions. In 2005 Doug
Cutting, a Yahoo! engineer, and Mike Cafarella implemented a MapReduce
service and a distributed file system (HDFS), collectively known since 2006 as
Hadoop, for storage and processing of large datasets on clusters of servers.
Hadoop was used internally by Yahoo! and eventually became another Apache
open-source framework. The first startups to graft SQL onto Hadoop were
Cloudera, formed in 2008 in Palo Alto by three engineers from Google, Yahoo!
and Facebook (Christophe Bisciglia, Amr Awadallah and Jeff Hammerbacher)
and later joined by Doug Cutting himself (Cloudera was acquired by Intel in
2014); and Hadapt, founded in 2011 in Boston by Yale students Daniel Abadi,
Kamil Bajda-Pawlikowski and Justin Borgman. Other Hadoop-based startups
included Qubole, founded in 2011 in Mountain View, by two Facebook

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engineers, Ashish Thusoo and Joydeep Sen Sarma; and Platfora, founded in
2011 in San Mateo by Ben Werther. Qubole offered a cloud-based version of
Apache Hive, the project that the founders ran at Facebook (since 2007) and that
was made open-source in 2008. Hive sat on top of Hadoop for providing data
analysis and SQL-like query.
Meanwhile, Google developed its own "big data" service, Dremel,
announced in 2010 (but used internally since 2006). The difference between
Hadoop and Dremel was simple: Hadoop processed data in batch mode,
Dremel did it in real time. Dremel was designed to query extremely large
datasets on the fly. Following what Amazon had done with its cloud service,
Google opened its BigQuery service, a commercial version of Dremel, to the
public in 2012, selling storage and analytics at a price per gigabyte. Users of the
service could analyze datasets using SQL-like queries. Dremel's project leader
Theo Vassilakis went on to found Metanautix with a Facebook engineer,
Apostolos Lerios, in 2012 in Palo Alto.
At the same time that it disclosed Dremel, Google published two more
papers that shed some light on its internal technologies for handling big data.
Caffeine (2009) was about building the index for the search engine. The other
one (2010) was about Pregel, a "graph database" capable of fault-tolerant
parallel processing of graphs; the idea being that graphs were becoming more
and more pervasive and important (the Web itself is a graph and, of course, so
are the relationships created by social media). MapReduce not being good
enough for graph algorithms, and the existing parallel graph software not being
fault tolerance, Google proceeded to create its own. Google's Pregel, largely the
creature of Grzegorz Czajkowski, used the Bulk Synchronous Parallel model of
distributed computation introduced by Leslie Valiant at Harvard (eventually
codified in 1990). The Apache open-source community came up with their own
variation on the same model, the Giraph project.
The open-source project Apache Mesos, inspired by the Borg system
developed at Google by John Wilkes since 2004 to manage Google's own data
centers, was conceived at UC Berkeley to manage large distributed pools of
computers and was used and refined at Twitter. In 2014 in San Francisco a
veteran of Twitter and Airbnb, Florian Leibert, founded Mesosphere to
commercialize Mesos. Meanwhile at Google the old project Borg evolved into
Omega,
Apache Spark, a project started in 2009 by Matei Zaharia at UC Berkeley,
was a platform for large-scale data processing. Zaharia later founded his own
company, Databricks, but the project survived and in fact grew. In 2015 IBM
pledged 3,500 researchers to Apache Spark while open-sourcing its own
SystemML machine-learning technology.
The world actually didn't have enough data, particularly from the
developing world, a fact that skewed research and hampered remedies to
problems. Premise, founded in 2012 in San Francisco by MetaMarkets' co-

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founder David Soloff and MetaMarkets' chief scientist Joe Reisinger, harnessed
the power of the crowd to collect economic data around the world, provided in
real-time from ordinary individuals armed with smartphones.

Beyond the Cloud

The biggest outside threat to Google and Apple was probably Amazon. On
the surface the Seattle-based rival was simply a huge retailer (in 2014 carrying
more than 200 million items sold by over two million third-party vendors), and
mainly famous (or infamous) for destroying the business of bookstores, but
deeper down Amazon was an extremely sophisticated technology company that
pioneered online customer reviews and ratings, that in 2006 introduced pay-as-
you-go cloud computing (later used by the likes of Instagram, Pinterest and
Spotify), that in 2007 turned ebook readers into commodities, that in the 2010s
turned its colossal PHX6 fulfilment center at Phoenix (Arizona) into an
automated, robot-intensive facility (while making the whole supply chain
available to other merchants as well), and that was rapidly moving online
business towards same-day delivery and mobile shopping.
New methods for software development made it easier for startups to create
distributed applications.
Introduced in 2008 and based on open-source Xen technology, Amazon's
Elastic Compute Cloud (EC2) provided a self-service portal for developers to
rent their own virtual private servers on which to run their own applications.
Containers were a legacy of the Unix operating system (SUN's Solaris
edition of 2004, an evolution of Bill Joy's "chroot" command incorporated into
Berkeley Unix in 1982). An application run within a container is isolated from
the hardware platform. If it sounds like virtualization, that's because they are
closely related. Containers are a faster way to implement virtual machines and a
better way to optimize hardware resources. The net result for the software
developer is the same: application portability across platforms. In 2008
Solomon Hykes and Sebastien Pahl founded DotCloud (later Decker) in San
Francisco to provide an open-source platform based on containers that quickly
built an entire community of developers. Google then legitimized the field when
it introduced Kubernetes to manage clusters of containers.
The Nebula project, started in 2008 by Ray O'Brien at NASA Ames in
Mountain View, evolved in 2010 into an open-source cloud platform,
OpenStack, technically a joint venture with Texas-based cloud service
Rackspace (a 1998 offshoot of San Antonio's Trinity University). Rackspace
donated the software behind OpenStack's Swift storage service, and in 2011
acquired Anso Labs, the San Francisco-based company that maintained Nasa's
Nebula cloud (and that developed the Nova computer). In 2012 some of Anso
Labs' original team (including former NASA Ames scientists Chris Kemp and
Devin Carlen) left RackSpace and founded Nebula in Mountain View. By 2015

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more than 500 companies had joined OpenStack, basically an open-source
alternative to Amazon's and VMware's cloud services.
The new generation of middleware was represented by platforms like
Anypoint, introduced in 2013 by MuleSoft, a company started in 2006 in San
Francisco by Ross Mason and Dave Rosenberg. It connected and integrated
software as a service (SaaS) on the cloud with legacy databases and
applications running on personal devices: "any application, any data source, any
device, any API".
In 2015 Cisco acquired cloud-security provider OpenDNS, founded in 2006
by David Ulevitch in San Francisco (who in 2001 in Saint Louis had launched
the free DNS management service EveryDNS).
Jyoti Bansal founded AppDynamics (in 2008 in San Francisco) to improve
performance of cloud-based applications, which were typically heavily
distributed (the startup would become a unicorn in 2015).
Notice that peer-to-peer, revitalized by the blockchain mechanism, was
competing with cloud computing to introduce collectivization in cyberspace.
The two models were wildly different, but both were removing the data from the
individual's home computer and relocating the data somewhere else: either on a
distributed network of participants or on a distributed network of corporate
computers. Peer-to-peer computing had generated a lot of philosophical,
sociological and political discussion by the independents who had created it
and were using it. Cloud computing was less naturally analyzed and discussed,
because it mostly belonged to governments and corporations, its "architects"
mostly unknown.

Shopping Experience
With the proliferation of online merchants, there arose a need for
simplifying the online shopping experience. For example, Wish.com launched in
San Francisco by ContextLogic, a company founded in 2010 by former Google
engineer Peter Szulczewski and by former Yahoo engineer Danny Zhang, was a
mobile commerce platform that aimed at replicating online the shopping
experience of the shopping mall.

Biotech
In summer 2011 the University of California started a program called
"California Institute for Quantitative Biosciences", or QB3, to help Berkeley,
San Francisco and Santa Cruz researchers become entrepreneurs. The program
became particularly successful in the life sciences. At the same time in 2012,
pioneered at UC Berkeley by Jennifer Doudna’s laboratory, a new technique to
edit genomes stole the limelight in biotechnology. Discovered as an adaptive
immune system in bacteria for protection against invading viruses, CRISPR-
cas9 was seen by Jennifer Doudna's group as a way to target and edit a genome.

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CRISPRs (Clustered Regularly Interspaced Short Palindromic Repeats) are
sections of DNA that are often associated with genes that code for proteins (the
genes are then called Cas, short for "CRISPR-associated"). These CRISPR-Cas
systems offer a faster and cheaper way to edit genomes than the TALEN-based
systems that had been prevalent since 2009. In 2011 Rachel Haurwitz founded
Caribou Bio in Berkeley to commercialize the Cas9 enzyme, a genome editing
platform.
The CRISPR technique made it a lot easier, faster and cheaper for scientists
to change, delete and replace genes (i.e. rewrite the genomes) in any form of
life, including humans. The first results, though, were limited to plant biology,
and mostly came from Asia. In 2014 Gao Caixia in China created a strain of
wheat that was fully resistant to powdery mildew. This experiment was
followed by genetic engineering of tomatoes, soybeans, rice and potatoes. In
2015 Moritoshi Sato discovered a light-sensitive Cas9 nuclease that further
improved the CRISPR technique, making it more precise and reliable.
In 2013 Google funded Calico and hired Arthur Levinson, a former
Genentech executive, to run it. Calico's first project was a joint venture with
pharmaceutical firm AbbVie to focus on diseases that affect the elderly.
The intensive information-processing techniques of biotech led to a boom in
biotech-lab robotics. Startups began specializing in automation for biological
laboratories included: Transcriptic (Menlo Park, 2012, Max Hodak) for drug
testing; Bolt Threads (San Francisco, 2009, Dan Widmaier, David Breslauer,
Ethan Mirsky) to manufacture spider silk fibers from bacteria; Zymergen
(Emeryville, 2013, Jed Dean and Joshua Hoffman) for DNA insertion into
bacteria.
South San Francisco and Emeryville had become the centers of the biotech
industry. For example, Refactored Materials (later renamed Bolt Threads),
founded in 2009 in Emeryville by Dan Widmaier and David Breslauer, made
spider silk, stronger than steel but very light, an ideal alternative to petroleum-
based materials for clothes.
Scientific progress was not slowing down at all. In 2015 Chinese Scientists
led by Junjiu Huang at Sun Yat-sen University in Guangzhou announced that they
had genetically modified human embryos.

Neurotech
The most active company in Artificial Intelligence was, by far, Google. At
the end of 2013 Google purchased Boston Dynamics, founded in 1992 in Boston
by MIT professor Marc Raibert to build a new generation of robots (never
actually sold to the public). It was Google's eighth acquisition of a robotics-
related company, and Andy Rubin was chosen to run Google's robotics research.
In 2013 Google also purchased Redwood Robotics, a joint venture formed in

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2012 by SRI International, Meka Robotics and Willow Garage.
In 2014 Google acquired British-based Artificial-Intelligence company
DeepMind, founded in 2011 by former game developer Demis Hassabis.
At the same time in 2013 Google acquired Israeli-based mobile mapping
company Waze (founded in 2008 as Linqmap by Ehud Shabtai with businessmen
Amir Shinar and Uri Levine), specializing in real-time traffic information and
using principles of crowd-sourcing in addition to the traditional GPS
technology.
The mix of machine intelligence and crowd-sourcing was, in effect, what
had given the Web its "intelligence", i.e. its ability to answer questions about
anything.
Thanks to progress in neural networks, the 2010s witnessed a resurgence of
investment in Artificial Intelligence. Pretty much all the major players acquired
some startup operating in this space: Amazon acquired Boston-based Kiva
(2012); Yahoo acquired Mountain View-based LookFlow (2013); Google also
acquired Industrial Robotics, Meka, Holomni, Bot & Dolly, DNNresearch,
Schaft, a Japanese manufacturer of robots, and Boston Dynamics; Facebook
acquired the Israeli company Face.com (2012), founded in 2007 by Yaniv
Taigman, and used their technology to develop DeepFace (2014); IBM had the
Watson project, Apple had Siri, Microsoft had Project Adam.
In 2015 Yahoo's Flickr division introduced sophisticated auto-tagging and
image-recognition features. Flicker was capable of identifying what (not only
"who") was in a photograph, and then automatically categorize it. George
Hinton, Yann Lecun, Andrew Ng and the other protagonists of "deep learning"
became heroes or, better, prophets of the intelligent machines to come. Google
hired Peter Norvig and George Hinton. Facebook hired Yann Lecun. Baidu in
China hired Andrew Ng.
Silicon Valley startups included: Saffron Technology, founded in 1999 in
Los Altos by Manuel Aparicio and Jim Fleming for decision support; Vicarious,
founded in 2010 in San Francisco by Numenta's cofounder Dileep George to
work on computer vision; Wise.io, a Berkeley spin-off founded in 2012 by Joey
Richards, Dan Starr, Henrik Brink, Joshua Bloom to commercialize the machine
learning technology invented by Damian Eads, formerly at the Los Alamos
National Laboratory; Viv Labs, founded in 2014 in San Jose by three former
members of the Siri team (Adam Cheyer, Dag Kittlaus, and Chris Brigham), to
work on an "intelligent" digital assistant; MetaMind, founded in 2014 in Palo
Alto by Stanford graduate Richard Socher.
Petaluma-based GTFS (later renamed General Vision), founded in 1987 by
Anne Menendez, introduced a 1,024-neuron chip, the NeuroMem CM1K chip, to
solve pattern recognition problems.
Osaro, founded in 2015 in San Francisco by Derik Pridmore (who
previously worked for Peter Thiel), worked on a form of machine learning
known as deep reinforcement learning that promised to enable a robot to learn

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from trial-and error interactions with its environment.
Google's acquisition of DNNresearch was particularly noteworthy because
that startup was founded in 2012 by University of Toronto's professor Geoffrey
Hinton and two of his graduate students, Alex Krizhevsky and Ilya Sutskever, the
team responsible for the 2012 paper on deep learning that revolutionized the
field of computer vision.
In 2015 Google gifted its deep-learning technology TensorFlow, the
artificial brain behind its image search and speech recognition apps (replacing
2011's DistBelief), to the open-source world.
More ambitious than the Silicon Valley crew was perhaps Narrative
Science, founded in 2010 in Chicago by Kris Hammond, director of the
University of Chicago's Artificial Intelligence Laboratory, Larry Birnbaum, and
Stuart Frankel, a former DoubleClick executive. Narrative Science was the
grandchild of Roger Schank's experiments in generating narratives, now trying
to construct journalist-proof texts out of big data.
New York-based Wochit, founded in 2012 by two serial Israeli
entrepreneurs (Dror Ginzberg and Ran Oz), created videos based on the text. In
other words, you write the script and the artificial intelligence turns it into a
video. North Carolina-based Automated Insights' Wordsmith, designed by Cisco
engineer Robbie Allen, was the most popular "news generator", used regularly
in 2014 by the Associated Press to turn earnings reports into narratives that
looked like written by professional writers.

The Sharing Economy

The "gift economy", about sharing content for free, rapidly evolved in
something more lucrative and also based on the contribution of the masses: the
"sharing economy", in which people make available to others under-utilized
assets such as rooms and cars.
Airbnb, founded in 2008 in San Francisco by two alumni of the Rhode
Island School of Design, Brian Chesky and Joe Gebbia, and by Nathan
Blecharczyk, was the most famous of the bunch, offering rooms or houses for
short stays in dozens of cities (600,000 rooms in 160 countries by mid 2014).
In 2007 Logan Green and John Zimmer debuted a computerized ridesharing
service at Cornell University called Zimride. Relocating to San Francisco, in
2012 they launched a smartphone application called Lyft that allowed anybody
to offer and order car rides. Sunil Paul launched SideCar, also in 2012, with the
exact same business model (except that SideCar "matched" driver and passenger
rather than simply "dispatching" a driver to a passenger).
In 2009 in the same city Travis Kalanick and Garrett Camp had launched a
similar smartphone app, UberCab (later simply Uber), which initially was for
limo drivers. Lyft democratized the concept and found a huge audience among
ordinary people driving ordinary cars and among ordinary people going to

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ordinary places. In fact, the typical Lyft passenger was a social animal, ready to
strike a conversation with the driver, whereas the typical Uber passenger was
still viewing the driver the traditional chauffeur. By 2014 Lyft had spread to
over 30 cities, and Uber had converted to Lyft's populist business plan,
spreading to more than 230 cities in 50 countries and adding on average one city
per week.
SnapGoods, founded in 2010 in New York by Ron Williams and John
Goodwin, facilitated lending and borrowing household items from cameras to
toasters.
The sharing economy was born during the Great Recession, when people
were busy saving every penny they could, and the whole idea was ironically
reminiscent of the way things worked in the old days in communist countries
like the Soviet Union, when you simply flagged down cars going in your
direction and offered money to be taken there.

Space Exploration
The field of space transportation had been galvanized by Elon Musk's
widely advertised SpaceX.
Virgin Galactic, founded on 2004 in Pasadena by British billionaire Richard
Branson, had been the first private company to attract media attention with a
plan to develop commercial spacecraft and space tourism, but in 2014 a crash
killed one of its test pilots. In November 2015 Blue Origin, founded in 2000 by
Amazon's founder Jeff Bezos, became the first company to launch a rocket into
space and land it gently and safely back down on Earth.
A major change in the approach to the whole field was emerging in
academia, though. In 1999 Jordi Puig-Suari of California Polytechnic State
University and Bob Twiggs of Stanford University had proposed the CubeSat
standard, largely inspired by the standards that had allowed the personal
computer industry to flourish. A CubeSat is a small satellite made of
commercial off-the-shelf electronic components. The original proposal was for
these "nanosats" to have a size of exactly one cubic liter. In November 2013
Orbital Sciences, based in Virginia, launched 29 satellites and Kosmotras,
based in Russia, launched 32 satellites. In January 2014 Orbital Sciences sent
an additional 33 satellites up to the International Space Station. Most of these
satellites were CubeSat-compliant. They were built by Planet Labs, founded in
2010 in San Francisco by former NASA scientists Will Marshall, Robbie
Schingler and Chris Boshuizen. Another San Francisco-based startup,
Nanosatisfi, worked on affordable satellites (nicknamed "ArduSats") based on
an open-source platform, again using an engineering model borrowed from the
computer industry. It was founded in 2012 by four graduates of France's
International Space University (Austrian-born former CERN physicist Peter
Platzer, Belgian-born Jeroen Cappaert, Canadian-born Joel Spark and

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Hungarian-born Reka Kovacs), three of which were also former NASA interns.
Google had spent more than $28 billion on more than 160 companies since
2001, so it wasn't really surprising that it also ventured into the sky, from
Skybox Imaging, founded in 2009 in Mountain View by four Stanford graduate
students (Dan Berkenstock, Wall Street financial analyst Ching-Yu Hu,
aerospace engineer Julian Mann, and air force research physicist John
Fenwick), that had just launched its first mini-satellite with the goal that
someday users would be able to see any spot on Earth, to the New Mexico-
based Titan Aerospace that made solar-powered flying drones (acquired in
2014).
3D Robotics was founded in 2009 in Berkeley by tech writer Chris
Anderson and Mexican-born enfant prodige Jordi Munoz, and rapidly became
the largest drone manufacturer in the USA.
In 2015 Facebook built its own drone, designed by its own aerospace team,
to deliver high-speed Internet connectivity to remote parts of the world.
Camera drones, such as the Chinese-made DJI Phantom and the French-
made Parrot AR Drone, rapidly became common toys.

From Productivity Tools to Entertainment Tools

One of the fundamental changes in the nature and spirit of Silicon Valley
was the transformation from a maker of productivity tools (integrated circuits,
microprocessors, personal computers, groupware, database management
systems, search engines) to a maker of entertainment platforms (mainly
videogames and social media).
Silicon Valley from the 1950s to the 1990s was one of the technological
centers that contributed to a rapid and significant increase in industrial
productivity. Its customers were the big industrial centers of the world, not only
households. There was a direct chain of transmission from the innovation in
Silicon Valley to the innovation at the assembly line or in millions of offices.
In the 2010s Silicon Valley innovation (at least the commercially successful
one) was mainly in videogames and social media. The impact on productivity of
a new Facebook timeline or of a new Zinga game was obviously not as big as
the impact that the first microprocessors or the first relational databases or the
first personal computers had. After all, the dotcom revolution had failed when it
had tried to make money out of productivity tools sold to the usual customers
(the industrial and financial powerhouses). The dotcom startups succeeded
when they started targeting the spare time of ordinary people and started making
money out of advertising products to those masses. The gigantic creation of
wealth in Silicon Valley during the 2000s had little to do with increasing
productivity.

Internet of Things

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 As the number of objects equipped with a communication chip increased
and soon surpassed the number of people connected to the Internet, the Internet
of Things (IoT) moved from the intellectual sphere to the corporate sphere.
The first appliance to be connected to the Internet was a modified Coca
Cola machine at Carnegie Mellon University in 1982. In 1991 Mark Weiser had
published an article in the Scientific American magazine titled "The Computer
of the 21st Century" that frame the discussion around "ubiquitous computing".
Paul Saffo's article "Sensors - The Next Wave of Infotech Innovation" (1997)
had foretold the coming of objects capable of sensing and transmitting. In 1999
Bill Joy had included "Device to Device" (D2D) communication in his "Six
Webs" framework at the Davos World Economic Forum. In 2008 Adam Dunkels
(Swedish Institute of Computer Science), who in 2003 had created an open-
source operating system for the Internet of Things named Contiki, organized with
others the IPSO Alliance to promote the development of "smart objects"
interacting via the Internet Protocol (IP).
A number of factors enabled the Internet of Things. Firstly, IPv6 was
published in 2006, replacing the 25-year old IPv4 (published in 1981). IPv6
introduced a 128-bit address, allowing 2 to the 128th power (or 10 to the 38th
power) Internet addresses, enough to assign an Internet address to every atom of
the Earth. Secondly, hardware platforms such as Arduino, invented in 2005 by
an international team based at Ivrea's Interaction Design Institute in Italy
(Massimo Banzi, David Cuartielles, Tom Igoe, Gianluca Martino, David
Mellis) made smart objects practical. Arduino was meant as an open-source
platform for a community of makers, facilitating the transition to a world of
interactive objects that could sense and control the physical world thanks to
microcontroller-based kits. The first Arduino device was introduced in 2005 by
SmartProjects in Italy. Most Arduino boards were based on a chip developed by
Atmel in San Jose, a company (founded in 1984) specializing in
microcontrollers. Thirdly, an infrastructure providing a public cloud service for
machine-to-machine communication came to maturity. "Machine cloud" pioneers
included Pachube, founded in 2007 by London architect Usman Haque, and
acquired in 2011 by Boston-based 8-year old cloud service LogMeIn (and
renamed Xively); Axeda, founded in the Boston area in 2000 by Dale Calder
and James Hansen, and acquired in 2014 by Parametric Technology (PTC), a
30-year old design-software company of the Boston area; and Spark, founded in
2008 in Minneapolis by Zach Supalla and later renamed Particle and relocated
in San Francisco. Spark, for example, provided a development kit for makers
and hobbyists to build smart devices and its SparkCloud to make them
communicate over the Internet.
In the 2010s the prophecies of the 1990s became reality and "Machine-to-
Machine" (M2M) business became a hot topic. In the attempt to forge a winning
standard, major corporations formed consortia such as the Industrial Internet
Consortium (AT&T, Cisco, IBM, GE, Intel) and the Open InterConnect

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Consortium (Broadcom, Samsung, Dell). However, the giant in this field was
Qualcomm, because Qualcomm had the numbers. In 2014 more than 120 million
smart home devices were shipped with embedded Qualcomm chips, and 20
million cars were equipped with Qualcom chips, and several wearable devices
had chosen Qualcomm for communications. Qualcomm's "standard" was
AllJoyn, whose objects could broadcast what they could do to all other nearby
AllJoyn objects (via WiFi or Bluetooth).
The applications ranged from controlling home appliances to planning
traffic. Connected car platforms, that allowed smarphone apps to check data
such as fuel consumption and travel times, were particularly appealing in the
USA: Automatic (founded in 2011 in San Francisco by Jerry Jariyasunant and
Thejo Kote), Dash (founded in 2012 in New York by Brian Langel and Jamyn
Edis), and Zubie (founded by Best Buy in 2012 in South Carolina and originally
called GreenLight Connectivity Solutions) were among the leaders.
The most ambitious experiments were carried out in South Korea, like the
Songdo International Business District, a six square kms "smart" city developed
jointly with Cisco, LG CNS and ADT Caps.
In 2014 Apple introduced HomeKit to connect smart home appliances via
Bluetooth and WiFi to the iPhone.
In 2015 the Wi-Fi Alliance, that included Apple, Microsoft and Intel,
launched Wi-Fi Aware, a technology that allowed Aware-enabled devices to
discover and communicate directly with nearby Aware-enabled devices. Once
enabled, apps on one Aware devices could exchange information with apps on
other Aware devices.
Rising above the chaos of standards, San Francisco-based SeeControl,
founded in 2010 by Bryan Kester (and acquired by Autodesk in 2015), provided
a cloud-based platform for makers to create M2M applications by connecting
and managing smart sensors and devices spread around the world.
Chip manufacturers rushed to design boards containing all the sensors and
chips needed to wirelessly connect objects. In 2014 Samsung launched the open
platform ARTIK and acquired SmartThings (founded in 2012 in Palo Alto by
veterans of online marketing). In 2015 Samsung acquired French startup Sigfox
(founded in 2006 by Christophe Fourtet) whose goal was to build a low-cost
alternative to the cellular network for connecting low-battery demand objects. In
2015 Intel introduced the Curie module, comprising a sensor hub, a
microprocessor and a Bluetooth connection in a tiny space.
The Internet of Things opened up a new horizon to "smart" cities, and
therefore heralded a revolution in urban planning. In 2015 Google, whose
overall activities were now credited to the newly formed Alphabet, even
invested in a New York-based startup to redesign urban living, Sidewalk Labs,
led by Daniel Doctoroff, a former Bloomberg executive. The startup's first
project was a joint venture called Intersection to bring free high-speed Wi-Fi to
cities around the world like LinkNYC had done in New York.

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 The products on the market, however, were still modest in scope. In 2014
Google acquired Nest, founded in 2010 in Palo Alto by former Apple's
designers Tony Fadell and Matt Rogers to develop "smart" home appliances
(initially just a thermostat) that were capable of self-adjusting and be controlled
by smartphone. Switchmate, founded in 2014 in Palo Alto by three John
Hopkins graduates (Robert Romano, Daniel Peng and Ashish Dua), introduced a
button controlled from a smartphone app to turn lights on and off, and potentially
any other appliance activated by pressing a button. August's smartphone app,
launched in 2013 in San Francisco by Jason Johnson and Yves Behar, controlled
the deadbolt of a door and issued "virtual keys" to guests.
Security on Internet of Things was obviously not trivial. Some adopted a
strategy similar to what doctors do to prevent infections: check for signs of
intrusion and immediately isolate compromised devices before they could infect
all the other devices in the network. Thus Atlanta-based Luma (founded by Paul
Judge and Mike Van Bruiniss) sold a WiFi router capable of checking traffic
inside the home network and detecting "infections", and Finnish-based F-Secure
Sense sold a security monitor, a device sitting between the home router and
connected devices to scan all traffic for "infections".

E-shopping
The world of online shopping had not changed much in the early 2010s after
Amazon, eBay and PayPal had introduced the de-facto standards, and after
Google and Yahoo had invented modern advertising.
However, startups tried to find the weakest link in the chain. Blippar,
founded in 2011 in New York by Omar Tayeb, Ambarish Mitra, Steve Spencer,
Jessica Butcher, offered a new advertising platform.
Magic, an SMS-based assistant launched in 2015 by Mike Chen in Mountain
View, delivered goods to people, thanks to an army of operators available 24
hours a day, seven days a week. This was the kind of "online-to-offline" (O2O)
that was big in China. A similar product came out of Germany: GoButler,
launched in 2015 by ex-Rocket Internet executives including Navid Hadzaad
(Rocket Internet being a startup incubator founded in 2007 in Germany by Marc,
Oliver and Alexander Samwer specializing in clones of US-based e-commerce
success stories).
Mobile payment still had not found its king. In 2007 Kevin Hartz and Alan
Braverman launched Xoom in San Francisco to provide an online platform for
money transfers that, unlike the traditional bank services, could make funds
available immediately at the other end, anywhere in the world (initially Latin
America). PayPal acquired it in 2015 (when Hartz had already left in order to
found the ticket-management service Eventbrite in 2006 with his wife Julia). At
the time of the acquisition Xoom was really just a replacement for the services
traditionally offered by the likes of Western Union and MoneyGram (typically

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for remittances to developing countries such as India and Mexico). Flint,
founded by Greg Goldfarb and Andrew Laszlo in 2011 in Redwood City,
competed directly with Square, offering a similar credit-card payment for
merchants but requiring no additional hardware because it used the mobile
device's camera to scan credit cards. Paypal's mobile payment platform was
Beacon, introduced in 2013, a Bluetooth-based technology that detected
Beacon-enabled smartphones when customers entered a Beacon-enabled store
and then automated the purchase of merchandise. Credit card giants Visa and
American Express, however, sided with Stripe, founded as
Slashdevslashpayments in 2010 in San Francisco by Patrick and John Collison
to provide a similar platform for online and mobile payments. Apple's iBeacon
(2013) was similar to Paypal's Beacon in that it used Bluetooth technology to
alert devices of the presence of fellow iBeacon devices. The company then
introduced Apple Pay (2014), claiming to make online payments as secure as in-
store payments. The digital wallet was incorporated directly into the operating
system and the smartphone included a SIM-independent secure memory chip, an
NFC radio, and a fingerprint reader (the digital wallet was "physical" again).
Clinkle, founded by Stanford student Lucas Duplan, launched in 2014, promising
compatibility with every merchant and phone-to-phone payments.
Music streaming was still one of the biggest online businesses. In 2014
Apple bought the music streaming service just launched by Beats (the company
founded by hip-hop musician Dr Dre) and in 2015 turned it into its own Spotify-
like service to offset the decline in the popularity of iTunes. People, basically,
were rather renting than buying music, just like they did with videos.

Fintech
Branch-less banking had become commonplace by the 2010s, but lending
was still a complicated process. Kreditech (founded in Germany in 2012)
represented the vanguard: it provided almost instant lending to individuals
based on their credit score, a purely algorithmic solution. Peer-to-peer lending,
pioneered by the likes of Prosper and LendingClub, became ever more popular.
A newcomer was Upstart, founded in 2012 in Palo Alto by Google veterans
Dave Girouard and Anna Mongayt with a Peter Thiel alumnus, Paul Gu.
Automated financial advisory was making strides in the mainstream
financial world. In 2011 Wealthfront, founded in Palo Alto by Dan Carroll and
Andy Rachleff (a co-founder of Benchmark Capital), joined the ranks of the
algorithm-based financial advisors, and in 2014 Charles Schwab introduced
Intelligent Portfolios.
The first major success fintech story in the world of real estate was Nestio,
founded in 2011 in New York to help finding residential rentals and later
repackaged as a platform for residential landlords. Point, founded in 2014 in
Palo Alto by Eddie Lim, tried a new concept: a home equity marketplace that

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allowed people to divide their homes and trade their fractional equity just like it
was done with vacation rentals.
Peer-to-peer payments, typically for mobile users, multiplied: Venmo,
founded by Andrew Kortina and Iqram Magdon-Ismail in 2009 in New York
(and acquired by PayPal in 2013); Square's own Square Cash (2013);
Snapchat's Snapcash (2014), powered by Square; and Google's 2015 version of
Wallet.
Venture capitalists themselves came into attack. Online collection of money
from individuals to fund startups, as an an alternative to banks, angel investors
and venture capitalists, was pioneered by EquityNet (founded in Arizona in
2005) that offered a social network for investors and entrepreneurs, but until
2012 investments by random individuals in businesses were not legal in the
USA. Equity crowdfunding was legalized in the USA in 2012 with the
"Jumpstart Our Business Startups" act. England already had Crowdcube (2011)
and Seedrs (2012), and in 2011 two startups for equity crowdfunding had
already opened in San Francisco: CircleU, founded by Ryan Caldbeck, and
Wefunder, founded by Nick Tommarello, Mike Norman and Greg Belote.
Square's co-founder Jim McKelvey founded the most active of startup
accelerators specializing in fintech, SixThirty (in 2013 in St Louis).

Blockchain Technology
Bitcoin became a world-wide phenomenon before its value crashed in
2013, and bitcoin mining became a lucrative activity in its own. Bitcoin relied
on a distributed consensus system and on a "secure hash algorithm" called SHA-
256, which, ironically, had been invented by the National Security Agency
(NSA). This process, that basically consisted in adding records to a shared
public ledger, had the fundamental property of being easy to verify but
(purposefully) difficult to execute (in order to deter counterfeiting). In other
words, its usefulness and safety came at a price: it was computionally very
demanding. In 2013 the first ASICs (application-specific integrated circuits) for
bitcoins, known as "bitcoin hash chips", became available. They specialized in
"mining" SHA-256 cryptocurrencies, Soon there were farms of custom-built
servers, capable of solving very complex math problems, linked to Bitcoin's
network via high-speed Internet connections. Each "miner" was rewarded with
some bitcoins. Bitcoin mining hardware started popping up all over the world.
At one point there was a farm of 45,000 special-purpose computers in northern
Sweden.
Bitcoin was neither the first nor the only cryptocurrency. Cryptsy, the largest
"altcoin" exchange, listed dozens of them: Namecoin, Litecoin, Dogecoin,
Reddcoin, Darkcoin, Bitshares, Feathercoin, Mastercoin, Devcoin, etc.
In 2014 the second cybercurrency by market capitalization was Ripple,
introduced by Vancouver-based Ryan Fugger in 2012.

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 The implications of Bitcoin extended beyond the world of currencies. For
example, in 2014 the Russian-born Toronto-based Bitcoin fan Vitalik Buterin
launched Ethereum, superficially a platform to develop Bitcoin-like
"currencies" but in reality a broader interpretation of what a digital currency is.
Ethereum aimed at executing any kind of secure service as a digital contract.
That was the essence of the "block chain" mechanism driving Bitcoin.
The Bitcoin blockchain offered a new method to register and transact
physical and intellectual property. "Smart property" was property whose
ownership was controlled via the Bitcoin blockchain; but the killer application
of Bitcoin was "smart contracts" that opened up a whole new horizon of
applications. A smart Contract was a program stored on the blockchain that
could automatically execute the terms of a contract. With smart contracts, auto-
executing code replaced the legal process of enforcing a contract. In a sense,
smart contracts made the legal system redundant. Two open-source projects,
Codius, invented in 2014 by Stefan Thomas and Evan Schwartz at San
Francisco-based Ripple Labs, and Ethereum provided platforms for smart
contracts.
Austin-based Factom, founded in 2014, was the first to provide an
unalterable record-keeping system via blockchain technology.
Fintech spread to the bitcoin world. CoinBase, founded in San Francisco in
2012 by Fred Ehrsam and Brian Armstrong, offered a bitcoin marketplace and a
platform for bitcoin payments. Epiphyte, founded in 2013 in San Francisco by
Edan Yago, offered banking for crypto-currencies. Circle, founded by Jeremy
Allaire in 2013 in Ireland, allowed users to send bitcoins to friends and family.
NextBank, founded in 2015 by Dimitry Voloshinskiy, aimed to become the first
all-bitcoin institution.
The Counterparty platform was created in 2014 to provide a peer-to-peer
financial market within the Bitcoin protocol. It enabled the creation of peer-to-
peer financial applications on the Bitcoin blockchain; basically the foundations
for setting up exchanges of digital currencies, smart properties, and anything
else priced in bitcoins. The platform included a protocol that allowed
Counterparty nodes to communicate with each other via the Bitcoin blockchain,
a native currency (XCP) and wallets (both browser-based and mobile). In
particular, Counterparty allowed users to create their own currencies inside the
Bitcoin blockchain. Anyone could now launch their own "coin" on Counterparty.
Swarm, "catalyzed" in 2014 in Palo Alto by Joel Dietz, was the first startup
to use the Counterparty protocol. It offered a crowdfunding platform for creating
digital currencies.

Semiconductors
In the age of the smartphone app people almost forgot why this region was
called "Silicon" Valley. However, the semiconductor industry was still very

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much at the core of the valley, except that a process of consolidation was
rapidly changing its shape. In 2015 Intel acquired Altera (specialized in
semiconductors for communications), its biggest-ever acquisition, one year after
buying LSI's networking business from Avago; and in 2015 Avago (that had been
founded in 2005 over the ruins of a 44-years-old division of Hewlett-Packard
and Agilent Technologies) acquired Broadcomm, besides CyOptics and Javelin
(meanwhile it had acquired LSI and then sold LSI's networking business to
Intel).
Consumer electronics was putting pressure on the memory industry. In
particular, the price gap between hard-disk drives and solid-state drives (used
mainly for NAND flash memory) kept shrinking. In 2013 Samsung announced a
three-dimensional Vertical NAND (or 3D V-NAND) flash memory. In 2014
SanDisk and Toshiba opened a fabrication plant specialized in 3D VNAND in
Japan, whose first product, released in 2015, was a flash chip that doubled the
capacity of the densest memory chips. In 2015 Samsung unveiled the world's
largest storage device, a 16-terabyte 3D NAND solid-state memory; while Intel
teamed up with Micron to introduce its 3D-memory chip. 3D memory
represented the first new class of memory in a quarter century. Micron and Intel
joined forces to manufacture NAND flash memories back in 2005, and in 2010
Micron had acquired Swiss-Italian flash-memory maker Numonyx from Intel.

The Micro-startup
When in 2015 Microsoft acquired LiveLoop (Powerpoint groupware),
Sunrise (calendar app for iPhone) and Accompli (mobile email), it added
exactly 42 people to its workforce. Twitter added a grand total of 13 people
from acquiring Vine (video sharing) in 2012 and Periscope (video streaming) in
2015. Facebook added 16 from acquiring Instagram in 2012 and Luma (video
sharing) in 2013. Google's acquisitions in 2015 of Odysee (photo sharing) and
Tilt Brush (painting in virtual reality), among others, hardly changed its
headcount. One can go back to 2005, when Google acquired a nine-people
startup, Android, that went on to dominate the smartphone market. By
comparison YouTube, that Google acquired in 2006 when it already had 65
employees, looks like a ridiculously large deal. The moment something went
viral on the Internet there were big corporations ready to buy it; but sometimes
this happened even before that “something” has had a chance to go viral; in fact
Twitter acquired both Periscope and Vine before they launched. (Vine had just
been founded in New York two months earlier by Dom Hofmann, Rus Yusupov,
and Colin Kroll)
What the corporations were looking for was simple: talent. Google, Twitter,
Facebook and Microsoft had been founded by talented people and remembered
how important talent was when they started. They had neither been the first in
their field nor possibly the best, but they had the talent to succeed where others

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did not.
Silicon Valley attributed this attitude to Google's acquisition of 45-people
Applied Semantics in 2003, the deal that had coined the term "acqui-hire": that
team had gone on to develop AdSense, a major source of revenues for Google.
Seattle, on the other hand, could claim that Microsoft had pioneered this
model when it had acquired Groove in 2005: Microsoft had not done much with
Groove's peer-to-peer collaboration software, but Groove's founder Ray Ozzie
had eventually replaced Bill Gates as Microsoft's chief software architect. In
other words, Microsoft had acquired Ozzie's talent, not Groove's product.
Silicon Valley could, however, respond that Microsoft acquired Danger and
did nothing with it, whereas Google acquired Danger's founder Andy Rubin and
its Android technology, and for a much cheaper price than Microsoft paid for
Danger.

Exponential Organizations
A new buzzword was created in 2014 when Salim Ismail, a founding
director of Singularity University, co-wrote with Michael Malone and Yuri van
Geest "Exponential Organizations" (2014): 3D printing had gotten 400 times
cheaper over just 7 years, industrial robots got 23 times cheaper over 5 years,
drones got 143-times cheaper in 4 years, and sequencing the human genome got
10,000-times cheaper in 7 years.

The Investment Bubble of 2013

A staggering 88 of the 100 largest venture capital rounds of all times took
place between 2007 and 2014. A huge amount of money was flowing towards
Silicon Valley, largely attracted by stellar evaluation for high-tech startups. In
2014 Airbnb set a new record raising $500 million, while the even younger
Lyft raised $200 million. On the East Coast, a seven-year old Dropbox raised
$250 million. Silicon Valley, in fact, had not started this trend: in Texas at the
end of 2008, in the middle of the worst economic recession since the Great
Depression, the small HomeAway had raised $250 million. The traditional
venture capital firm was increasingly joined by the hedge funds, the mutual
funds and private equity firms. This phenomenon was allowing startups longer
incubation periods, but it was also viewed by many as an alarm bell that a new
bubble was about to burst.
For example, a blog screamed "uBeam is everything that is wrong with
Silicon Valley", uBeam being a much gossiped startup working on an exotic
technology to broadcast electricity via high-pitched ultrasound beams in a
manner similar to how transducers work in hi-fi speakers. The skeptics were
shocked that such an unlikely business could gather big names such as Marc
Andreessen, Marissa Mayer and Shawn Fanning among its initial investors.
Except that uBream was founded in 2011 by University of Pennsylvania

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graduate Meredith Perry, who then relocated to Los Angeles, where its main
investor, Upfront Ventures, was based. This startup was hardly a Silicon Valley
startup at all. But Silicon Valley was held responsible for the phenomenon. This
was the era of the "unicorns," or billion-dollar start-ups: Square, Stripe,
Airbnb, Pinterest, Uber, Dropbox, Snapchat, Palantir, GoPro, Slack, Cloudera,
Eventbrite, electronic notebook Evernote (founded by Stepan Pachikov in 2008
in Sunnyvale), enterprise social media platform Sprinklr (founded in 2009 in
New York by Ragy Thomas), discount shopping site Jet (founded by Marc Lore,
who had sold his e-commerce company Quidsi to Amazon in 2010); etc. Most of
these startups generated no cash flow, i.e. were losing money.
By 2015 there were 144 unicorns with a total value of $505 billion.
The unicorns were also emblematic of the decline of the Initial Public
Offering (IPO). Apple had gone public in 1980 with a market valuation of $1.8
billion, Microsoft was worth less than a billion dollars at its 1986 IPO,
Netscape had gone public in 1995 when it was worth $2 billion, but Twitter
waited until it was worth about $25 billion and Facebook until it was worth
more than $100 billion. And now many of the unicorns showed no intention of
going public. Part of the reason was bureaucratic. The government had reacted
to the Enron scandal, revealed in October 2001, with the Sarbanes-Oxley
legislation, but that legislation, meant to protect investors and consumers, ended
up being a gigantic tax on small businesses because it requires fleets of lawyers
and accountants. To protect smaller investors from discrimination, the
government had enacted the Regulation Fair Disclosure legislation of 2000.
This mandated that all publicly traded companies should disclose information to
all investors at the same time. Ironically, this made it difficult for small
companies to counter hostile rumors that could devastate their stock values.
Generally speaking, the regulatory system began to favor big corporations and
discouraged startups from going public. Venture firms such as Marc
Andreessen's explicitly stated that their goal was not to take companies public.

Management for Delight

Silicon Valley had always pioneered new forms of management. Fairchild
and Intel allowed engineers to behave in a more casual manner than their
counterparts on the East Coast, and Xerox PARC made it even more casual. HP
pioneered a family-style approach to management. And so forth.
At the beginning of the new century new experiments characterized the
biggest success stories. Larry Page debuted as CEO of Google by fighting
bureaucracy, to the point that eventually middle management was wiped out; but
only to retract and re-hire all those supervisors. However, Larry Page had
shifted the emphasis to hiring the right people, even if that meant slowing down
the pace of growth, and that principle remained in place even when the
hierarchy was reintroduced.

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 Twitter embraced the principle that "the purpose of hierarchy is to destroy
bad bureaucracy" (credited to Chris Fry). So hierarchy is good but bureaucracy
is bad. That became a recurring theme. Ask people to obey a boss and they will
be happy to be followers; ask them to fill a form and they will quit. So much so
that Adobe removed the yearly performance evaluation, one of the most common
practices in the USA, and replaced it with a year-long feedback from the boss;
basically "guidance" instead of "examination".
A lot of startups also realized that the DIY (do it yourself) model is not
always productive and, alas, often alienates engineers, who would rather focus
on what they do best. Hence the DIFM (do it for me) model, in which the
engineer expects the structure to provide everything that is needed for engineers
to focus on their tasks. Even the concept of the "job description" was not always
clear. Facebook hired the best and then sent them to a six-week boot camp to
figure out the best way for them to contribute to the organization. Slogan: "every
job is temporary". Team work was always important in Silicon Valley, but this
was the age when most companies, large and small, recognized Richard
Hackman's rule of thumb that "no work team should have membership in the
double digits". And Bob Sutton at Stanford admonished that "one deadbeat cuts
team performance by 30-40%". Combine the two rules of thumb and you get the
typical engineering team of the 2010s. As for customer relationships, Intuit's
Stephen Gay spoke of "Design for Delight", create an organization that "evokes
positive emotion throughout the customer's journey".
Unspoken but widespread was the rule that an organization must be able to
steal from others, and morally and legally justify it, while at the same time
making sure, on both moral and legal grounds, that others didn't steal from itself.
The history of Silicon Valley had often been the history of how a "genius" stole
an idea from someone else and turned it into a runaway success
(semiconductors, personal computers, database management systems, social
media). Terms like "traitors" and lawsuits settled out of court are as much part
of the history as the more widely publicized products.

Culture and Society

The years of the Great Recession (2008-11) witnessed the beginning of a
significant migration of high-tech companies or of their employees from Silicon
Valley towards San Francisco. One reason was certainly that over the years San
Francisco had invested in improving its "look and feel" (especially for young
people) whereas Silicon Valley remained one of the ugliest urban landscapes in
the world with virtually no aesthetic appeal for young people. San Francisco
also offered the convenience of neighborhood stores and decent public
transportation versus Silicon Valley's giant malls and chronically congested
roads. The Great Recession of 2008-11 had greatly affected the average family,
and certainly a lot of the artists and musicians who formed the backbone of San

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Francisco's intellectual life, while the employees of companies like Google and
Facebook had been getting richer, and their purchasing power had skyrocketed.
By the end of that recession more and more Silicon Valley employees had
moved to San Francisco. Companies like Google were offering free shuttle
rides to their employees from San Francisco to the workplace. This, in turn,
encouraged even more young, single Silicon Valley people with good salaries to
move to San Francisco.
A tectonic shift in lifestyle was taking place. Silicon Valley had been born
between Palo Alto (Hewlett-Packard) and Mountain View (Shockley Labs). It
had then drifted steadily south (Lockheed, Intel, Apple). Then the era of
software had started moving the high-tech industry north: Oracle in Redwood
City; Paypal, Facebook and Google in Palo Alto; Twitter in San Francisco. This
may reflect both the age group and the social class of the people involved. The
hardware industry (which is, after all, a kind of manufacturing industry) was
originally driven by children of the working class (Robert Noyce, Gordon
Moore, Andy Grove, Steve Jobs) and they tended to be family men. Their
natural habitat was in the suburbs. The early software heroes (Larry Ellison,
Bill Joy) were also from working-class suburbia; but the post-Internet software
industry (the generation of Larry Page and Peter Thiel), on the other hand, was
mainly founded by young and single people who were often raised in the upper
middle class. They wanted a city life: not "delis" and pubs, but European cheese
stores and plenty of evening activities. San Francisco still had relatively
underperforming schools compared with, say, Cupertino, but singles don't care
for good schools: they don't have children to send to school. It was almost
literally a "building" culture (Silicon Valley) versus a "coding" culture (San
Francisco).
By 2013 this had become a sociopolitical issue: the free shuttle buses
heading for Silicon Valley had come to symbolize the growing income inequality
of the Bay. Real estate prices were skyrocketing in San Francisco while
ordinary families were struggling to make ends meet. Rent rapidly became
unaffordable for most people, causing an exodus of artists and musicians (and,
in general, lower income individuals) towards Oakland. They were being
replaced by what used to be called "yuppies": young urban professionals with
little or no interest in the community.
In 2013 the community began to fight back: protesters targeted shuttle buses
in well-publicized events. There was no way to stop the trend, though. San
Francisco was home to more high-tech startups than ever in its history. Stopping
the commuters from Silicon Valley wasn't going to make a huge difference.
The city was changing. For critics it was becoming "Silicon Valley with bad
weather" (a reference to its cold foggy summers). For supporters (and
speculators) it was becoming an incredible business opportunity. Silicon Valley,
meanwhile, struggled to retain its charisma. It was still charismatic for millions
of foreigners who knew it only from books and movies; but anyone living there

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had little praise for Silicon Valley's poor infrastructure and spartan buildings.
Some defended Silicon Valley's plain, unsophisticated, uncultured, sober
appearance as representing the spirit of the garage startups.
In 2014 San Francisco, a city with less than a million people, received 16%
of all US venture investment. Venture capital was clearly moving back from
Menlo Park to San Francisco. The number for Palo Alto was still impressive
though (4.8%), given how small the town was.
Despite the high-tech invasion, San Francisco was increasingly a city of
contradictions. San Francisco was a place in which people already lived in the
future. They could hang out with their friends even when they were alone, thanks
to social media. They inhabited a "sharing economy": they could book a
weeklong stay in a cool apartment through Airbnb, which had disrupted the hotel
industry, or hire a luxury car anywhere in the city through the mobile app Uber.
However, instead of using a bullet train to travel somewhere for the weekend,
they were trapped in a city with below-standard transportation. Instead of
paying with their smartphone they still paid with credit cards. Their Internet
connections were the slowest in the Pacific region. They proudly streamed
movies at ridiculously slow speeds. They took buses that ran on diesel and, if
they ever wanted to visit Berkeley across the Bay, they took a medieval-style
subway called BART, and, if they ever wanted to visit Silicon Valley down
south, they took a medieval-style train called Caltrain (or, worse, "express
buses" that were slower than the average run-down bus of a developing
country). There were neither multi-layered monorails nor magnetic-levitation
trains (not to mention good-looking skyscrapers. The people who worked in the
high-tech industry self-congratulated all the time about how futuristic their lives
were (one reason being that they rarely took a vacation that would allow them to
check how the rest of the world actually lived). Ironically, it was the people
who "didn't" work in the high-tech industry who realized how "low-tech" the
Bay Area was, because those were the people traveling for vacation in Asia and
Europe.
The culture around the Bay Area had changed a lot in terms of sharing
information. In fact, the new corporations had created a kind of police state in
which employees were not allowed to say anything about their project (and
often not even "what" project they worked on).
And, of course, the spreading of the high-tech industry had created a mono-
culture that increasingly had no clue who Kafka or Monet were, that was wiping
out decades of avantgarde music and legions of eccentric artists and performers.
It was emblematic that in 2015 only one art gallery remained at the fabled
address of 77 Geary St, a multi-story building that had hosted several galleries
for at least three decades. It was emblematic of the whole art scene around
Union Square. Philanthropists abounded, but they were not interested in the arts.
In 2012 Sergey Brin (Google), his wife Anne Wojcicki (23andMe) and Mark
Zuckerberg (Facebook) joined forces with Jack Ma (Alibaba) and Russian

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venture capitalist Yuri Milner to establish a new international award, the
Breakthrough Prize, for math and science; hardly a way to encourage young
people to become artists.
Burning Man had become a tourist attraction for boring nerds and rich
European kids. In 2015 the city hardly noticed the centennial of the Panama-
Pacific International Exposition of 1915, although two years earlier Leo
Villareal had built the world's largest light sculpture. In 2011 Autodesk acquired
Instructables, a portal for do-it-yourself projects founded in 2005 in San
Francisco by MIT Media Lab alumni Eric Wilhelm and Saul Griffith. At the
same time Autodesk launched its own artists-in-residence program, located in
the renovated Pier 9 of San Francisco's port.

Autodesk Pier 9
A net beneficiary of the exodus of intellectuals and artists from San
Francisco was Oakland. In 2014 Oakland launched its largest revitalization
project since World War II, Brooklyn Basin, an entire new neighborhood by the
sea (incidentally codeveloped with a Beijing-based company, Zarsion, the
largest investment by China in California ever).
Despite all the hoopla about the inclusive multi-ethnic community of Silicon
Valley, the facts spoke otherwise: Silicon Valley had been and still was very
much dominated by the white male culture. The technology (the transistor, the
computer, the operating system, the database, the Internet, the personal computer,
the World-wide Web, the smartphone) and the ideology (Fred Terman, the first
startups, the venture capitalists) had been invented by Caucasian males.
By the second decade of the 21st century not much had changed: sure there
were many startups founded by Asians, but the ones that defined the industry
(Apple, Oracle, Netscape, Google, Facebook) were almost all founded by
Caucasian males (as were Microsoft and Amazon in Seattle, and as were Texas
Instruments, Motorola, Compaq, Dell and so forth in other parts of the
southwest).
Women like Meg Whitman and Marissa Mayer made news when they were

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appointed to the helm of a large corporation, but they were not founders (nor
inventors), and this was true in general of the high-tech industry in the world
(Virginia Rometty, Marillyn Hewson, Ellen Kullman, Phebe Novakovic, Anne
Mulcahy, Ursula Burns and so forth, and incidentally all of them Caucasians
except Burns). Ditto for venture capital, that was mostly in the hands of big
firms run by Caucasian males. The idea of Silicon Valley as a melting pot of
brains from all over the world and of both sexes was still mostly just that: an
idea.

A Birds’ Eye View of Silicon Valley (2010)

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 Conclusions
The computer that drives your smart phone is nearly a million times
cheaper, a hundred thousand times smaller, and thousands of times more
powerful than a mainframe of the 1970s. In less than four decades the computing
power that one can buy with the same amount of money has increased a billion
times. The amount of data that one can store for $100 has also multiplied
astronomically. Today a person can buy one terabyte of storage for $100
versus 28 megabytes for $115,500 in 1961 (the IBM 1301 Model 1); note that
one tera is one million megas. The number of documents that one can print and
mail has also increased by several orders of magnitude. The speed at which a
document is transmitted has decreased from days to milliseconds, down nine
orders of magnitude. The amount of free information available to the user of a
computer has escalated from the documents of an office in the 1960s to billions
of webpages.
Originally, computing meant speed. A computer was a machine capable of
performing computations in a fraction of a second that would have required
many humans working for many days. Fifty years later, this simple concept has
led to a completely different understanding of what computing means.
Computing power now means two things: access to an overwhelming amount of
knowledge, and pervasive worldwide communication. The former has created a
knowledge-based society, in which problems are solved by tapping into a vast
and dynamic archive of knowledge; in a sense, the same utopia as artificial
intelligence. The latter has created virtual communities. It is not obvious
anymore to ordinary users how these two effects related to computing speed, the
original purpose of computers, but they do.
The computer has transformed human society into a digital society, in which
humans are creators, archivists, relayers, and browsers of digital data which
encode world facts into Boolean algebra. It is a vastly more efficient way of
encoding the world than the previous paper-based society. At the same time
progress in telecommunication technology, and in particular the convergence of
telecommunications and information technology, has turned the innocent phone
into an all-encompassing personal assistant that is only marginally used for
voice communication.
Silicon Valley is widely viewed as the symbol of this revolution.
However, computers were not invented in Silicon Valley, and Silicon Valley
did not invent the transistor, integrated circuit, personal computer, Internet,
World-Wide Web, the browser, the search engine, nor social networking.
Silicon Valley also did not invent the phone, the cell phone, nor the smart phone.
But, at one point in time or another, Silicon Valley was instrumental in making
them go “viral,” in perfecting a product the world wanted.

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 Silicon Valley’s startups excelled at exploiting under-exploited inventions
that came out of large East Coast and European R&D centers and somehow
migrated to the Bay Area. AT&T (an East Coast company) invented
semiconductor electronics and Shockley ported it to Mountain View. IBM (an
East Coast company) invented data storage at its San Jose laboratories. Xerox
(an East Coast company) perfected human-machine interfaces at its Palo Alto
Research Center. The government invented the Internet and chose the SRI as one
of the nodes. CERN (a European center) invented the World-wide Web and the
first US server was assigned to the SLAC. The smartphone came from Finland.
And so forth.
In fact, Silicon Valley’s largest research centers were never truly “research”
centers but rather “R&D” (research and development) centers. They were more
oriented towards the “D” than the “R.” Nothing was comparable to AT&T’s
Bell Labs or to IBM’s Watson labs (each of which produced Nobel Prize
winners, unlike, say, HP Labs or Xerox PARC). Some would argue that the “R”
of Silicon Valley was done at Stanford University and UC Berkeley, but even
those two research centers produced no monumental invention in the realm of
high technology, nothing comparable to the transistor or to the World-Wide Web.
They were much better at incubating businesses than at inventing the technology
for those businesses.
Don’t look at Silicon Valley to guess what the next big thing in high-tech
will be: it is being invented somewhere else. Silicon Valley will find a way to
use it to revolutionize the lives of ordinary people or workers.
The Bay Area might also be the place that perfected the delicate balance
upon which the modern capitalist state rests, the balance among government, big
business and small business. Innovation in the high-tech industry has been a
cooperation among big corporations (the transistor, the integrated circuit, disk
storage, the database, all Japanese inventions), small companies (the
microprocessor, the personal computer, the search engine, social media,
biotech), and government-funded projects (the computer, the Internet, the World-
wide Web, the Human Genome Project). All three groups contributed
significantly to the progress of the field.
There was nothing intrinsic in the Silicon Valley model that made it work
for computers in particular. Whatever it was, that model worked for high-tech in
general. Silicon Valley represented a platform for perennial innovation that
could be applied to other fields as well (such as biotech and greentech). It
coincidentally started with “infotech,” the first massively destructive industry
since the electrical revolution.
The Silicon Valley model until 2000 could be summarized in three mottos:
“question authority,” “think different,” and “change the world.” Silicon Valley
did not exist in a vacuum. It paralleled important sociopolitical upheavals that
started in the San Francisco Bay Area and then spread all over the world, such
as the free-speech movement and the hippie movement. Alternative lifestyles

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and utopian countercultures had always been in the genes of the Bay Area,
starting with the early pioneers of the Far West. The propensity towards
independence and individualism predates Silicon Valley’s startups. That
propensity led to the “do it yourself” philosophy of the hobbyists who started
Silicon Valley. The hobbyists came first. Then came the great engineering
schools, the massive government investment, the transfer of technology from
academia to industry, and, at last, massive private investment. All of this would
not have happened without that anti-establishment spirit which propelled the
Bay Area to the front pages of newspapers worldwide during the 1960s. Many
of today’s protagonists of Silicon Valley are, consciously or not, part of or
children of the generation that wanted to change the world. They did.
The history of the high-tech industry in the Bay Area, from Philo Farnsworth
to Peter Thiel, is largely the history of a youth culture, just like the “other”
history of the Bay Area, from the Gold Rush to the hippies, is a history of a
youth culture. The protagonists were often extremely young, and almost
invariably contributed the most significant ideas in their youth (just like rock
musicians or mathematicians). One cannot separate the evolution of that youth
culture and the evolution of the high-tech industry: they are each other’s alter
ego. In fact, the two biggest technological waves and financial bubbles were
started by young people for a market of young people (personal computers and
Internet, i.e. hobbyists and dotcoms). They represented the ultimate feedback
loop of youth culture.
The eccentric independent is truly the protagonist of this story. Silicon
Valley could not have happened in places that were not friendly towards the
eccentric independent. For example, Europe was a place where employees had
to wear a suit and tie in order to succeed. Therefore Europe created an upper
class of people who were better at dressing up, and not necessarily the ones
who were more knowledgeable, competent, and creative. In the Bay Area even
billionaires wore blue jeans and t-shirts (before and after becoming
billionaires). Silicon Valley could not have happened on the East Coast either,
for the same reason that the hippies and the free-speech movement were not
born on the East Coast: the Bay Area was permeated by a unique strand of
extravagant and idiosyncratic anti-establishment sentiment and by a firm belief
in changing the world. The one place that came close to replicating Silicon
Valley was Route 128 near Boston, which was also the second most anti-
establishment place in the nation.
However, the East Coast was similar to Europe and dissimilar from Silicon
Valley in another respect: vertical instead of horizontal mobility. Europe and the
East Coast encouraged employees to think of a career within a company,
whereas Silicon Valley encouraged employees to think of switching jobs all the
time. In Europe there was little motivation to hire someone from another
company, since one could not recycle that person’s skills legally, and it was
even illegal to start a new business based on what one learned at a company.

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Hence Europe created big companies where people’s main motivation was to
get promote to higher and higher positions; and, typically, away from
engineering. This praxis had the double effect of “detraining” engineers (as they
were shuffled around in search of better-sounding titles, and typically landed
non-technical positions) while limiting the flow of knowledge to the internal
departments of a company, whereas in Silicon Valley engineers continuously
refined their technical skills as they moved from company to company while at
the same time facilitating a flow of knowledge from company to company.
Perhaps this was the ultimate reason why in Europe an engineering job was
considered inferior to a marketing job or even to sales jobs, while in Silicon
Valley the status symbol of being an engineer was only second to the status
symbol of being an entrepreneur; and so was the salary, while in Europe
marketing/sales people or even bank clerks made more money and had better
prospects than engineers. Europe converted tens of thousands of bright
engineering talents into mediocre bureaucrats or sales people (in a suit and tie)
while Silicon Valley converted them into advisers to the board or founders of
companies (in blue jeans and T-shirt).
The different cultural patterns also explain the meritocracy that has ruled in
Silicon Valley with no exception since the days of the first microprocessor. It is
difficult, if not impossible, to mention the heir of a major Silicon Valley
entrepreneur who inherited the family business the way, say, the grandchild and
the great-grandson inherited the Ford Motor Company from the original founder.
Who you are matters very little in a society that was created by eccentric
independents.
It certainly didn’t help Europe that it relied so much on the three “Bs” (big
government, big labor and big corporations) while Silicon Valley despised all
three. However, the history of Silicon Valley and of computing in general shows
that big government can be the greatest engine of innovation when it is driven by
national interest (typically, in times of war) and that big corporations do work
when they can afford to think long-term (for many years most innovation in
computers came from AT&T and IBM, and in Silicon Valley they came from
Xerox). Big labor was always absent from Silicon Valley, but in a sense it was
volunteered by the companies themselves (the HP model).
The role of big government, big corporations, and big labor in the success
of Japan and Britain is instructive. The Japanese computer industry had to start
from scratch in the 1950s. The failing British computer industry had pioneered
computers in the 1940s and had all the know-how necessary to match
developments in the US. In both cases the government engaged in sponsoring
long-term plans and in brokering strategic alliances among manufacturers, and in
both cases initial research came from a government-funded laboratory.
However, the outcomes were completely opposite: Japan created a vibrant
computer industry within the existing conglomerates, whereas Britain’s
computer industry self-destroyed within two decades.

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 Between Japan and Silicon Valley it is debatable which region benefited
more from government aid. The Japanese conglomerates were certainly nurtured
and protected by the government, but their main customer was the broad market
of consumers. From Sony's transistor radio to Samsung's smartphones the
revenues of East Asia's high tech were coming from selling millions of units to
millions of people. Silicon Valley innovation, instead, was routinely funded by
the government (specifically by DARPA): the money that started Fairchild,
Oracle, SUN, Netscape and many others was coming, ultimately, from
contracts/grants with/from government agencies, whether NASA, CIA or (more
often) DARPA.
In 1977 California had more high-tech jobs than New York and Boston
combined, but both Los Angeles and the Bay Area also benefited from more
defense contracts than New York and Boston combined.
When the Cold War ended and military funding began to drain, Silicon
Valley found a great substitute in advertising (thereby treating technology like
what it was becoming, i.e. entertainment). In retrospect, Steve Kirsch's Infoseek,
that in 1995 pioneered "cost-per-impression" and "cost-per-click" advertising,
might prove to be a milestone event in the history of the region, fueling a boom
(of free services and products) comparable to the Gold Rush, the Oil Rush, etc.
Last but not least, the Bay Area managed to attract brains from all over the
world. The competitive advantage derived from immigration was immense.
Brains flocked to the Bay Area because the Bay Area was “cool.” It projected
the image of a dreamland for the highly educated youth of the East Coast, Europe
and Asia. Because the Bay Area was underpopulated, those immigrants came to
represent not an isolated minority but almost a majority, a fact that encouraged
them to behave like first-class citizens and not just as hired mercenaries. The
weather and money certainly mattered, but what attracted all those immigrants to
the Bay Area was, ultimately, the anti-establishment spirit applied to a career. It
made work feel like it wasn’t work but a way to express one’s self.
And, as usual, luck has its (crucial) role: had William Shockley grown up in
Tennessee instead of Palo Alto, maybe he would have never dreamed of starting
his company in Mountain View, and therefore neither Fairchild nor Intel nor any
of the dozens of companies founded by his alumni and the alumni of his alumni
would be based in the Bay Area, or in California at all. All the reasons usually
advanced to explain why Silicon Valley happened where it happened neglect the
fact that the mother of all "silicon" startups was based there simply because
Shockley wanted to go back where he grew up
Some myths about Silicon Valley have been exaggerated and some truths
have been downplayed.
Mentorship, to start with, was not as important as claimed by the mentors. It
was customary that the founder of a successful company received funding to
start another company. This did work in terms of profitability, because the star-
appeal brought both investors and customers, but it rarely resulted in

416
technological breakthroughs. Recycling a successful entrepreneur was just an
advanced form of marketing. In practice, the vast majority of quantum leaps
forward in technology were provided by young newcomers who knew very little
about the preexisting business.
Another factor that has been over-emphasized is the importance that the
military industry had in transferring high technology to the Bay Area. While this
is certainly true, and certainly accounted for an initial transfer of engineers from
other parts of the country to the Bay Area, there is very little that the military
industry contributed to what today is Silicon Valley. In fact, very few startups
originated from the big military contractors (if nothing else because their
employees are under much stricter non-disclosure agreements) and even those
few startups mostly worked for the military establishment from which they
originated, a business model that dominates the technology parks around the
Pentagon in Virginia, which might or might not have been a blueprint for what
happened in Silicon Valley.
One factor in the evolution that is often underestimate is (as odd as it might
sound) how important the shortcomings of the established industry leaders have
been to foster innovation. Apple completely missed the advent of the Internet,
Google completely missed the advent of social networking and Facebook will
soon completely miss the "next big thing". Each of these blunders helped create
a new giant and an entire new industry. If Apple had introduced a search engine
in 2000, perhaps Google would never have existed, and if Google had
introduced a social-networking platform in 2004, perhaps Facebook would
never have existed. Each of them had the power to easily occupy the new
niche... except that it failed to notice it. In most cases the founders and CEOs of
Silicon Valley companies are visionaries in the narrow field in which they
started, but not very skilled at noticing seismic shifts in the overall landscape.
The Bay Area was uniquely equipped with the mindset to subvert rules and
embrace novelty. However, history would have been wildly different without
the government’s intervention. The Bay Area constitutes a prime example of
technologies that moved from military to civilian use. The initial impulse to
radio engineering and electronics came from the two world wars, and was
largely funded by the military.
The first wave of venture capital for the high-tech industry was created by a
government program. It was governments (US and Britain) that funded the
development of the computer, and NASA (a government agency) was the main
customer of the first integrated circuits. The Internet was invented by the
government and then turned into a business by the government. Generally
speaking, the federal government invested in high-risk long-term projects while
venture capitalists tended to follow short-term trends. The US government was
the largest venture capitalist of Silicon Valley, and the government of the US
was also the most influential strategist of Silicon Valley; whereas, one could
argue, venture capitalists mainly created speculative bubbles.

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 However, even the "bubble ideology" has a positive function in Silicon
Valley: it accelerates business formation and competition.
Needless to say, it is difficult to tell which of those factors were essential to
Silicon Valley becoming what it became.
There’s another element to the success of Silicon Valley that is hard to
quantify: the role of chance in creativity. Because of its lifestyle and values,
Silicon Valley has always maximized the degree of chance. Work is often
viewed as play, not duty. Fun and ideals prevail over money and status. Hence
chance, hence creativity.
From this point of view the importance of the arts is often underestimated:
the Bay Area was famous as a refuge for "crazy" artists way before it became
known as an incubator of startups. Like every other phenomenon in the world,
Silicon Valley does not exist in a vacuum.
The golden question is why Silicon Valley worked for some sectors and not
for others. It failed in laser applications, although it had a head start, and it
never made a dent into factory automation (despite a head start in robotics). My
guess is that the individual is not enough: it takes a community of inventors. The
defense industry created that community for the radio engineering and the
semiconductor industry. The venture capitalists are creating it for biotech and
greentech. Factory automation, however, despite the potential of causing one of
the most dramatic changes in human society, was largely left to heavy industry
that was not based in the Bay Area. The Defense Department created that
community elsewhere. The Japanese government created it in Japan. Nobody
ever created it in Silicon Valley. The whole premise of numeric control
(coupling processors with sensors) remains largely alien to Silicon Valley.
There have been attempts at creating “Silicon Valleys” around the world:
Malaysia’s Multimedia Super Corridor, France's Sophia Antipolis, Germany's
Silicon Allee (Berlin) and Bavaria, Dubai’s Internet City, Bangalore’s eCity,
China’s Zhongguancun Science Park, Russia's Skolkovo (begun in 2010), etc.
The closest thing to Silicon Valley outside the US has probably been Singapore,
whose GDP of $182 billion (2008) is less than half of the Bay Area’s GDP of
$427 billion. However, venture capitalists invested $1,370 per capita in the Bay
Area (2006) versus $180 in Singapore (nonetheless ahead of New York’s
$107). Another close second could be Israel, a country rich with venture
capitalists and high-tech companies; but Israel has been entangled in the
perpetual political turmoil of the Middle East. Ditto for Jordan, a true miracle
of high-tech expansion surrounded by civil wars, revolutions and counter-
revolutions.
The only country that can compete with the USA in terms of mass-scale
innovation that has changed the daily lives of billions of people is Japan.
However, Japanese innovation has mostly come from conglomerates that are a
century old. It is hard to find a Japanese company that emerged thanks to a new
technology and became a major player. The whole phenomenon of venture

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capitalists and high-tech start-ups has virtually been inexistent in Japan.
And one simple reason is that Japanese society has little tolerance for
failure, and the Japanese public has little sympathy for those who take risks.
Entrepreneurs are not role models. Nonetheless, Japan boasts a spectacular
degree of innovation. Innovation happens at the level of the corporate lab, of the
university lab and of the government-funded research lab; but rarely at the
enterpreneurial level. Stanford University receives relatively few students from
Japan (certainly very few compared with those from China and India), and one
simple reason is that their future will not be shaped by the model of Silicon
Valley but by a model that is almost the exact opposite. Nonetheless, Japan has
been a model of innovation for several decades.
Silicon Valley is improbable outside of the Bay Area. Other regions of the
world may come up with their own models (like East Asia did) but replicating
Silicon Valley is probably a senseless idea. As Mike Malone (one of the
greatest historians of Silicon Valley) has written: "The next Silicon Valley is...
Silicon Valley."
Many have written about the role of East Asian governments in the
astronomical growth of their economies. Little has been written about how much
those economies owe to Silicon Valley. Both the venture capitalists and the
startups of Silicon Valley contributed to creating the very economic boom of
East Asia that then they set out to exploit. Silicon Valley literally engineered the
high-tech boom in Taiwan and mainland China as much as those governments
did. Those economies have become not what they wanted to become but
precisely what Silicon Valley needed: highly efficient futuristic science parks
with all the tools to cheaply and quickly mass produce the sophisticated
components needed by Silicon Valley companies. The same is true for India: the
large software parks such as the one in Bangalore have largely been shaped by
the demand of software coming from Silicon Valley, not by a government-run
program for the future of software technology. Whenever such programs exist,
they often embody precisely the goal to serve the demand coming from the US.
The “Golden Projects” of mainland China of the 1990s, that created the high-
tech infrastructure of that country, would have been pointless without a major
customer. That customer was Silicon Valley.
Asians are proud to point out that in 2009 their continent employs 1.5
million workers in the computer industry while the US employs only 166,000.
That is true. But they forget to add that most of those 1.5 million jobs were
created by Silicon Valley. Foxconn (or, more properly, Hon Hai Precision
Industry), founded in Taiwan in 1974 by Tai-Ming “Terry” Gou to manufacture
plastic and that in 1988 opened a pioneering factory in China’s then
experimental city Shenzhen, became the world’s largest manufacturer of
electronics by 2009, with revenues of $62 billion. It dwarfed Apple and Intel,
employing 800,000 people (more than the whole Bay Area). However, its main
customers were Apple, Intel, Cisco and Hewlett-Packard, besides Sony,

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Microsoft and Motorola. In 2005 Taiwanese companies produced 80% of all
personal digital assistants, 70% of all notebooks, and 60% of all flat-panel
monitors.
This, of course, also translated into an interesting (and somewhat unnerving)
social experiment: Silicon Valley was generating and investing ever larger sums
of money, but creating an ever lower number of jobs. The investment and the
profit were based here, but the jobs were based “there” in Asia. In fact, the Bay
Area’s unemployment rate in 2010 was close to 10%, one of the highest in the
entire world. One could see a future when the low-level workers of the high-
tech industry would start moving out of Silicon Valley towards Asia. The same
was true of the other industries, from energy to biotech.
Nobody in the US government planned Silicon Valley. The president of the
USA probably learned of Silicon Valley from a magazine article. The
government had no direct role in creating Silicon Valley. The spirit of Silicon
Valley was created by an alternative culture, by people who were thinking
different, and in particular thinking of how to use technology in unorthodox
ways. The San Francisco Bay Area had no advantage over many other places,
like Boston, Philadelphia, London and New Jersey. These places had more
brains, technology, money and powerful corporations than the Bay Area. Silicon
Valley happened in a very unlikely region. What was special in that region was
the way people thought. It is difficult to reproduce it in other regions. Other
regions can learn a few things here and there, but they are unlikely to recreate
the same phenomenon.
For more than a century the San Francisco Bay Area has been the home of
people who think differently, and who come from all over the world. This area
has had all sorts of unorthodox phenomena, from the ham-radio amateurs of a
century ago to the "beat" poets of the 1950s, from the hippies of the 1960s to the
garage kids of the 1970s who created the personal computer industry, from the
artists of the 1980s who played with robots to the software engineers who
turned the Internet into a social platform, from the founders of the incubators to
the founders of Burning Man. I don't consider all of them "good" role models,
but all of them have something in common: they like to think different, and they
are not afraid of acting accordingly. Be different, believe in your idea, take the
risk, and do it. If you fail, it's ok. If you don't try, it is NOT ok.
Very often (and more realistically) the expression "Silicon Valley" is used
to mean "a concentration of high-tech companies". Nothing wrong with it. Japan,
Singapore, Taiwan (the region of China where the Internet is open), South Korea
(the half of Korea where the Internet is open) have created great high-tech
industries that have given us some of the most important inventions, from digital
music players to flat screens. They don't have anything that is really like Silicon
Valley, but they have their own centers of innovation. Their models are
sometimes very different from the Silicon Valley model. So i think that "Silicon
Valley" sometimes simply means "high-tech industry". And hopefully every

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country will have one such region because the future belongs to the high-tech
industry. The only thing that all of these regions need to have in common is the
very definition of "high tech": high tech is something that becomes low tech very
quickly. The personal computer that was considered a miracle of engineering
just 20 years ago is today a relic that makes us laugh; ditto for my first
smartphone, that was considered trendy in the mid-1990s. Today's tablet will
look ridiculous in 5 years. This is high tech: high tech is what becomes low tech
in just a few years. Any high-tech region has to be capable of recreating itself
nonstop. To me that's what "Silicon Valley" really means around the world: a
region where companies evolve and adapt to collectively remain on top of
technological progress.
To decide where the next big thing in high tech will come from, i never look
at the money or the big companies or at government plans. I look for "cool"
places, places where i would like to live and work because i would be
surrounded by a spirit of creativity. There are many places in the world where
young people are creating hubs of creativity, like Berlin (the Kreuzberg and
Friedrichshain districts) and Barcelona (the Gracia district) in Europe,
Melbourne (the Fitzroy district) in Australia, and, before Erdogan started
censoring the Internet, Istanbul (the Beyoglu district) in the Middle East. These
are also the places where young college-educated people from all over the
world want to live. Some of these young people will start the next big thing.
As China is rapidly emerging as an economic world power, its government
has spent more than any other country in creating technology parks. I personally
don't believe China (as it is now) stands any chance of creating its equivalent of
Silicon Valley. I explain why to my Chinese friends by simply pointing to what
China does to my website: my website is banned in China (for whatever reasons
unknown to me). Obviously it is not the only one: millions of websites are
banned in China. Here are some of the consequences: 1. There is an enormous
amount of know-how that doesn't percolate through Chinese society (for
example, my website has many resources about Silicon Valley); 2. It is
impossible to raise a generation of creative kids when they can only "consume"
what the government selects and mandates (that is a recipe for raising very
dumb citizens); 3. On top of other reasons, this is a very strong reason why
virtually no educated foreigner dreams of emigrating to China for the rest of
their life the way millions of us foreigners decided to move to California. Three
key factors in the success of Silicon Valley are automatically removed when a
government decides to ban websites at will: know-how, creativity and
immigration.
China will not create a vibrant creative society like Silicon Valley for as
long as websites like Google, Facebook, Twitter and even Slideshare are
banned. There is an infinite amount of knowledge that is not available to the
Chinese public, including the college kids who are supposed to drive the
innovation of the future. In a sense, the Chinese are not on the Internet: the

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Internet is the free network that the entire world uses, except for Eritrea, North
Korea, Saudi Arabia, Azerbaijan, Vietnam, Iran and mainland China (Source:
"2015 list of Most Censored Countries", Committee to Protect Journalists).
None of these countries can raise a generation of world-class entrepreneurs to
compete with Silicon Valley. As far as the high-tech industry goes, these
countries can only create a local economy, mostly based on copying ideas that
others have invented. Silicon Valley is a knowledge-driven economy. You
cannot create a knowledge-driven economy if you ban just about every website
that contains knowledge. In the long run you are much more likely to create a
depression. I read and hear a lot about Chinese innovation, but i can't find
Chinese innovation in the high-tech industry. Copying someone else's idea is not
innovation. The Chinese have always been the best business people in the
world. This is not new. What is new is that today they mostly copy foreign
inventions. In the old times the Chinese were inventing them and the West was
copying them. Think of paper, the printing press, even robots (automata). In the
old days China was inventing, and the West was copying. Now think of
computers, smartphones, search engines, social media, etc: the West is
inventing, and China is copying. I don't see much innovation in China. Chinese
companies (and especially very small companies, like the family-run restaurant)
are world-class at understanding their market and meeting their customer's
needs; and then at running their business. This has not changed since ancient
times. Wherever you go in the world, whether in Malaysia or Italy or San
Francisco, the Chinese community is famous for its clever and hard-working
business spirit. No wonder then that the same spirit enabled Tencent, Baidu and
Alibaba to be very successful. Still, i can't rank any Chinese high-tech company
among the main innovators in the world.
The question that I get most often when I present these ideas is: what is the
state of Silicon Valley today? Certainly, not much is left today of the original
spirit. "Hobbyists" have slim chances of starting the next big thing. In the age of
marketing, the entry point for starting a business and going viral is not
negligible: venture capitalists tend to invest in "safe" companies and in tested
management teams. There are thousands of startups, but their chance of
becoming the next giant is very low.
The profile of the average person has always changed. The creative
eccentric of the 20th century has been replaced by a generation of disciplined
but unimaginative “nerds” who would be helpless without a navigation system
and a cell phone (or just without air conditioning).
Government intervention in high-tech has been scaled down (as a
percentage of the industry), with the result that there is less investment in long-
term projects, and the public mood against “big government” leaves few hopes
that the trend can be reversed any time soon.
Immigration laws (or, better, anti-immigration laws), economic downturns,
and a chronically weak dollar have greatly reduced the number of graduate-

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level immigrants from other developed countries. The ones who come to study
in the USA and would like to stay have a hard time obtaining a work visa. The
time-consuming and humiliating procedure to obtain a green card discourages
even those who do obtain a work visa. It is impressive how many of the
innovators of the Bay Area were not natives of the Bay Area. Immigration has
been a true engine of innovation.
At the same time, the tightly knit community of Silicon Valley has been
ruined by the massive immigration of opportunists who don’t have the
eccentric/independent spirit, and by the outsourcing of jobs to Asia that has
disenfranchised the engineer from her/his company.
In turn the two recessions of the 2000s created a culture of extreme
pragmatism in the industry. The proverbial family-style management pioneered
by HP has turned into a 60-hour workweek with virtually no vacation days and
indiscriminate layoffs whenever needed. Both companies and employees have
become opportunists instead of idealists.
Fairchild, HP Labs, Intel, Xerox PARC, Apple, and so forth had built
companies not so much around a technology as around their human resources.
They hired the best, and nurtured highly creative environments. Today the
chances of an engineer being hired by a company may depend much more on
how well her/his resume had been written by her/his “head hunter” (employment
agency) than on the real skills and I.Q. of the engineer. In fact, any “headhunter”
can tell you that the correlation between a person’s skills and chances of being
hired is very low. However, the correlation between a good-looking resume and
chances of being hired is very high. Such is the way in which the labs of the 21st
century are being created in Silicon Valley.
The growing power of lawyers introduced another degree of distortion in
the system: the chances of being laid off by a company are becoming inversely
proportional to how much one is willing to pay for an attorney. An attorney is
more likely to obtain something from a company on behalf of an employee than
the employee through her or his work. This is beginning to replicate the
problems that Europe has with unionized labor, except that it is much more
expensive to defend one’s job in the Bay Area through a lawyer than to defend
one’s job in Europe through the unions.
To make matters worse, in 2010 rumors began to circulate that since 2005
some of the major Silicon Valley companies (Apple, Google and Intel) had
engaged in a dirty scheme of not hiring each other's employees, a case that
eventually ended in court in 2014. So much for Silicon Valley's vaunted job
mobility. Furthermore, it was becoming common practice for companies to have
their employees cede all rights on their inventions, a practice indirectly
expanded by a new patent law (the "America Invents Act" of 2013) that made it
harder for individuals to apply for a patent.
The academic environment offers mixed news. On one hand, it still acts as
an incubator of startups. On the other hand, each college and university has

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greatly expanded the activities for students to the point that it has become a
walled city. Students do not find the time to stick their neck outside the campus.
This does not encourage interaction with other cultural environments. One can
argue that such a closed system is designed to create hyper-specialists and stifle
creativity.
Meanwhile, the infrastructure of Silicon Valley, and of the USA in general,
risks falling behind the ones in the most advanced European countries of Asia
and Europe. Gone are the days when it was Asians and Europeans who would
marvel at the transportation, the technology, and the gadgets of Silicon Valley. It
is now the other way around. Silicon Valley does not have anything that even
remotely resembles the futuristic public transportation of Far Eastern
metropolises (the magnetic levitation trains, the multi-layered monorails, the
bullet trains, its clean and efficient subways). Its households have to live with
one of the slowest and most expensive "high-speed" Internet services in the
world (in 2012 South Korea connected every single home in the country at one
gigabit per second, which was about 85 times the average speed provided to
Silicon Valley homes in 2011 by the number one Internet provider, whose
marketing campaing labeled it as "blazing speed"). In 2012 cellular phone
coverage was poor everywhere and non-existent just a few kilometers outside
urban areas. US tourists abroad marvel at what the Japanese and the Germans
can do with their phones. In 2014 you could pay for gasoline with your mobile
phone in Madagascar, but not in Palo Alto. The 2014 drought was enough to
bring California to its knees because California (a state with 1,350 kms of
coastline) never developed the desalination technology that has been known for
more than 2,000 years (Aristotle explained how to do it in 320 BC). Silicon
Valley produces a huge number of useless apps and gadgets, but not a single
desalination plant that would actually improve the lives of ordinary families
(and help farmers grow the food that those people eat).
There are other fields in which the Bay Area suffers from national diseases.
Incredibly stupid immigration laws are keeping away the best brains of the
world and sending away the ones who manage to graduate in the USA. And this
happens at a time when countries from Canada to Chile have programs in place
to attract foreign brains. At the same time, a growing wealth gap has created an
educational system that disproportionally favors the children of the rich: if a
student graduates from Stanford, most likely s/he is from a rich family, not
necessarily a world-class student.
Unlike the other high-tech regions of the world, the (boring, nondescript)
urban landscape of Silicon Valley looks like the epitome of no creativity, no
originality, no personality, no style. It is difficult to find another region and time
in history that witnessed an extraordinary economic boom without producing a
single building worthy of becoming a historical monument.
That fact probably goes hand in hand with another blatant fact: the high-tech
industry of the Bay Area has produced no Nobel Prize, unlike, say, the Bell

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Labs, another high-tech power-house.
There is another dimension in which Silicon Valley has changed
significantly. Until the 2000s, Silicon Valley had never witnessed a case in
which the leaders of a technological/business revolution where all based in
Silicon Valley itself. Intel was dominant in microprocessors, but its competitors
(Motorola, the Japanese) were located outside California. HP was a major
personal-computer maker but its competitors were located outside California
(IBM, Compaq, Dell, the Japanese and Taiwanese). Apple and Netscape were
briefly dominant in their sectors (personal computers and browsers) but they
were quickly defeated by the Microsoft world. Oracle faced competition from
IBM (based on the East Coast) in databases and from SAP (based in Germany)
in ERP.
The 2000s, instead, have witnessed an increasing concentration of power in
Silicon Valley, as the companies vying for supremacy have become Google,
Apple, Facebook, and Oracle. Google is becoming the monopolist of web
search. Apple is becoming the reference point for hand-held communication
devices. Oracle is becoming the behemoth of business software. Facebook
towers over anyone else in social media (outside of China). Each of them is
trying to impose not only its products but also its view of the world. Each
indirectly assumes that their business models are not compatible: the others
have to die. It is the first time in the history of Silicon Valley that the local giants
are engaged in such a deadly struggle. This constitutes a moral rupture in the
traditional “camaraderie” of Silicon Valley.
The 2010s were also the first time ever that Silicon Valley was not about
"being small" but being big: Intel (the number-one semiconductor company),
Oracle (number one in ERP), Apple (most valuable company in the world),
Google (by far number one in web search), Facebook (by far number one in
social networking), Cisco (number one in routers) and HP (number one in
personal computers) were large multinational corporations, the kind that did not
exist in Silicon Valley in the old days. Silicon Valley was originally about
"being small". As Silicon Valley becomes a place for big corporations, the
attitude towards risk-taking might change too. The whole spirit of innovation has
clearly changed. More and more people move here to find a safe job with good
benefits, not to challenge the status quo.
In a sense, computing technology was hijacked twice here. The first time the
technology invented by corporations and governments (from the transistor to the
Internet) was hijacked by independents who turned it into a global grass-roots
movement with the potential to dramatically change human society. The second
time the technology was hijacked by corporations and government that turned it
into an advertising and surveillance medium.
Having spent a month in Dubai, this author started realizing how similar
Silicon Valley has become to that city-state. Dubai is a very efficient society
neatly divided in three classes: a very small group of very rich people (in this

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case, the natives, starting with the sheik’s family), a very small group of highly-
skilled and hard-working people which is responsible for running the business
(mostly Westerners who spend one or two years there), and finally a large
population of quasi-slaves (mostly from Islamic Asia) that perform humble tasks
with very little knowledge of the bigger scheme of things. Silicon Valley has
basically produced a similar three-tier society: a small group of financiers, a
small intelligentsia that is responsible for inventing the business, and then a
large population of quasi-slaves with regular, uneventful lives who simply
implement the business without knowing much of the bigger scheme of things.
In concluding, I believe not much is left of what made Silicon Valley what it
is now. Silicon Valley has become a much more conventional and crowded
metropolitan area. It actually “looks” much less “modern” than other
metropolitan areas. Its vast expanse of dull low-rise buildings is hardly a match
for the futuristic skyscrapers of Shiodome (Tokyo), Pudong (Shanghai), Zayed
Road (Dubai), or just La Defense (Paris).
However, the exuberant creativity boom of the previous decades has left a
durable legacy: a culture of risk-taking coupled with a culture of early adoption
of new inventions. And it is more than a culture: it is a whole infrastructure
designed to promote, assist and reward risk-takers in new technologies. That
infrastructure consists not only of laboratories and plants, but also of corporate
lawyers, marketing agencies, employment agencies and, of course, investors.
After all, the culture of “inventing” was never all that strong in the Bay Area,
whereas the culture of turning an invention into a success story has always been
its specialty; and it may even be stronger than ever.
The original spirit of Silicon Valley survives in one notable aspect. Nothing
motivates people more than telling them that "it can't be done". Tell someone
that it can't be done and the following day there will be a new startup doing just
that.
It has in fact become easier than ever to start a company. The entry point is
getting lower and lower. It is inevitable that sooner or later Silicon Valley will
produce the Mozart of the Web, the child prodigy who will create a successful
website (and therefore business) at age 8 or 10.
Silicon Valley is the engine of a world in which people are plugged into the
Web because of a smartphone, search for information because of Google,
socialize on the Web because of Facebook, shop on the Web because of eBay
and pay on the Web because of PayPal. Soon that world will also offer biotech
tools for “human life extension” and greentech devices for ubiquitous low-cost
energy.
Silicon Valley is not booming anymore: it has become the very process of
booming. Silicon Valley was an alternate universe. It is now gobbling up the rest
of the universe.
Finally, a word about a curious historical fact. In the old days the Bay Area
was famous for crazy artists and even crazier young people, best represented by

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the beat poets of the 1950s and the hippies of the 1960s. The Bay Area, since
the times of the Gold Rush, was also a unique ethnic mix. The Bay Area also
pioneered the gay and women liberation movements. However, the young
people who went on to change the world with their companies and products
were almost all "nerdy" male WASPs: it almost feels like the sociopolitical
revolution started by the long-haired thrift-clothed multi-ethnic working-class
sexually-promiscuous rebels of Berkeley and San Francisco was hijacked by the
short-haired well-dressed WASP upper-class straight male engineers of
suburban Silicon Valley. The tangible legacy of the quasi-communist deeply-
spiritual rebels was a work environment that was much more casual/relaxed
(moccasin slippers, colorful t-shirts and khaki pants instead of suits, ties and
white shirts) and less bureaucratic/feudal than on the East Coast; but the young
people working and succeeding in that environment were coming from a wildly
different ideological perspective, very much in favor of the dominant capitalist,
materialistic, mass-consumption, white, bourgeois society that the rebels had
antagonized; and the worst affront was that the hijackers were funded by the
military establishment (whereas the rebels had been waving and wearing the
peace sign). Silicon Valley was and still is, first and foremost, a contradiction in
terms.

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 A Timeline of Silicon Valley

(Lines in parentheses are events that did not occur in the Bay Area but
affected the development of computers)

(1885: William Burroughs develops an adding machine)

1887: The Lick Observatory is erected near San Jose, the world’s first permanently
occupied mountain-top observatory
(1890: Hermann Hollerith’s tabulator is chosen for the national census)
1891: Leland and Jane Stanford found Stanford University near Palo Alto
(1906: Lee DeForest invents the vacuum tube)
1906: The San Francisco earthquake and fire
1909: Stanford University’s President David Starr Jordan invests $500 in Lee
DeForest’s audion tube, the first major venture-capital investment in the region
1909: Charles Herrold in San Jose starts the first radio station in the US with regularly
scheduled programming
1909: Cyril Elwell founds the Federal Telegraph Corporation (FTC) in Palo Alto to
create the world’s first global radio communication system
(1911: Hollerith’s Tabulating Machine Company is acquired by a new company that will
change name to International Business Machines or IBM in 1924)
1915: The Panama-Pacific International Exposition is held in San Francisco, for which
Bernard Maybeck builds the Palace of Fine Arts in San Francisco
1916: General Motors opens a large Chevrolet automobile factory in Oakland
1917: Edwin Pridham and Peter Jensen found the electronics company Magnavox in
Napa
1921: Ansel Adams publishes his first photographs of Yosemite
1925: Frederick Terman joins Stanford University to teach electronics and electrical
engineering and encourages his students to start businesses in California
(1925: Burroughs introduces a portable adding machine)
(1925: AT&T and Western Electric form the Bell Labs in New York)
1927: Philo Farnsworth invents all-electronic television broadcasting while in San
Francisco
(1927: Fritz Pfleumer in Germany invents the magnetic tape)
1929: The physicist Robert Oppenheimer joins UC Berkeley
1931: Ernest Lawrence designs the first successful cyclotron and founds the Lawrence
Berkeley Laboratories
1933: The Navy opens a base at NAS Sunnyvale (later renamed Moffett Field)
1934: The first lesbian nightclub opens in San Francisco, “Mona’s”
(1935: Germany’s AEG introduces the first tape recorder)
1936: San Francisco builds the longest bridge in the world, the “Bay Bridge”
1936: Joe Finocchio opens the gay bar “Finocchio’s” in San Francisco
(1936: John Lawrence, brother of Lawrence Berkeley Labs’ founder, starts the Donner
Laboratory to conduct research in nuclear medicine
(1937: Alan Turing describes a machine capable of performing logical reasoning, the

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“Turing Machine”)
1937: Stanford University’s Professor William Hansen teams with brothers Sigurd and
Russell Varian to develop the klystron tube, used in the early radars
1937: The Golden Gate Bridge is completed in San Francisco
(1938: John Atanasoff at Iowa State College conceives the electronic digital computer)
1939: Fred Terman’s students, William Hewlett and David Packard, start a company to
produce their audio-oscillator
1939: Walt Disney becomes the first customer of Hewlett-Packard, purchasing their
oscillator for the animation film “Fantasia”
1939: Ernest Lawrence is awarded the Nobel Prize in Physics
1939: The US government establishes the Ames Aeronautical Laboratory (later
renamed Ames Research Center) at Moffett Field
1941: Stanford University’s Professor Fred Terman is put in charge of the top-secret
Harvard Radio Research Laboratory
1941: Glenn Seaborg and Edwin McMillan at UC Berkeley produce a new element,
plutonium
1942: The US government launches the “Manhattan Project” to build a nuclear bomb
under the direction of Robert Oppenheimer
1942: The health-care organization Kaiser Permanente is founded in Oakland
(1943: Tommy Flowers and others build the Colossus, the world’s first programmable
digital electronic computer)
(1943: Warren McCulloch and Walter Pitts describe an artificial neuron)
1944: Frank Malina founds the Jet Propulsion Laboratory (JPL)
1944: Alexander Poniatoff founds Ampex
(1944: Howard Aiken of IBM unveils the first computer programmed by punched paper
tape, the Harvard Mark I)
(1945: Vannevar Bush proposes the “Memex” desk-based machine)
(1940: John Von Neumann designs a computer that holds its own instructions)
(1945: IBM establishes the Watson Scientific Computing Laboratory (later Watson
Research Center) at Columbia University in New York)
1946: The Stanford Research Institute is founded
1946: Blacks constitute about 12% of Oakland’s population
(1946: The first venture capital firms are founded in the U.S., American Research and
Development Corporation (ARDC) by former Harvard Business School’s dean Georges
Doriot, J.H. Whitney & Company by John Hay Whitney, Rockefeller Brothers by
Laurance Rockefeller (later renamed Venrock)
1946: John Northrop and Wendell Stanley of UC Berkeley are awarded the Nobel Prize
in Chemistry
1946: Fred Terman returns to Stanford University as the dean of the engineering school
and founds the Electronics Research Lab (ERL), mostly founded by the US military
(1946: The first non-military computer, ENIAC, or “Electronic Numerical Integrator
and Computer,” is unveiled, built by John Mauchly and Presper Eckert at the University
of Pennsylvania
(1947: AT&T Bell Telephone Laboratory’s engineers John Bardeen, William Shockley
and Walter Brattain demonstrate the principle of amplifying an electrical current using a
solid semiconducting material, i.e. the “transistor”)
(1947: Norbert Wiener founds Cybernetics)
(1947: John Von Neumann describes self-reproducing automata)
1947: Ampex introduces a magnetic tape recorder

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1948: The Varian brothers found Varian Associates
(1948: Claude Shannon founds Information Theory and coins the term “bit”)
1949: William Giauque of UC Berkeley is awarded the Nobel Prize in Chemistry)
1950: Turing proposes a test to determine whether a machine is intelligent or not
(1950: Remington purchases Eckert-Mauchly Computer)
1951: The Stanford Industrial Park is conceived
1951: Glenn Seaborg and Edwin McMillan of UC Berkeley are awarded the Nobel Prize
(1951: The first commercial computer is delivered, the Ferranti Mark 1)
(1951: A team led by Jay Forrester at MIT builds the “Whirlwind” computer, the first
real-time system and the first computer to use a video display for output)
1952: IBM opens its first West Coast laboratory in San Jose (later Almaden Research
Center)
1952: Felix Bloch of Stanford University is awarded the Nobel Prize in Physics, the
first for Stanford
1952: The Atomic Energy Commission establishes a Livermore Laboratory as a branch
of the UC Berkeley’s Radiation Laboratory
1953: Varian is the first tenant of the Stanford Industrial Park
1953: The CIA finances a project named “MkUltra” to study the effects of psychoactive
drugs
1953: Electronics manufacturer Sylvania opens its Electronic Defense Lab (EDL) in
Mountain View
1953: Lawrence Ferlinghetti founds a bookstore in San Francisco, “City Lights,” that
becomes the headquarters of alternative writers
(1954: Remington Rand introduces UNIVAC 1103, the first computer with magnetic-
core RAM)
(1954: IBM introduces its first computer model, the 704)
1954: David Bohannon opens the Hillsdale Shopping Center, a suburban shopping mall
1955: The Stanford Research Institute demonstrates the ERMA computer
1956: IBM’s San Jose labs invent the hard-disk drive
Mar 1956: UC Berkeley Professor Harry Huskey designs Bendix’s first digital
computer, the G-15
(1954: George Devol designs the first industrial robot, Unimate)
1955: The first conference on Artificial Intelligence is held at Dartmouth College,
organized by John McCarthy
1955: The “Daughters of Bilitis” is founded in San Francisco, the first exclusively
Lesbian organization in the US
1955: Stanford University hires Carl Djerassi
1955: Allen Ginsberg’s recitation of his poem “Howl” transplants the “Beat” aesthetic
to San Francisco
1955: Private investors or “angels” (including John Bryan, Bill Edwards and Reid
Dennis) establish “The Group” to invest together in promising companies
(1955: Alexander Schure founds the New York Institute of Technology)
(1955: Remington Rand merges with Sperry to form Sperry Rand)
1955: Stanford University merges the Applied Electronics Laboratory and the
Electronics Research Laboratory into the Systems Engineering Laboratory under the
direction of Fred Terman and focusing on electronic warfare
1956: William Shockley founds the Shockley Transistor Corporation in Mountain View
to produce semiconductor-based transistors to replace vacuum tubes, and hires Robert
Noyce, Gordon Moore and others

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1956: Charles Ginsburg of Ampex Corporation builds the first practical videotape
recorder
1956: Aircraft-company Lockheed opens an electronics research laboratory in the
Stanford Industrial Park and a manufacturing facility in Sunnyvale
(1956: Werner Buchholz of IBM coins the term “byte”)
(Apr 1957: John Backus of IBM introduces the FORTRAN programming language, the
first practical machine-independent language)
Oct 1957: Several engineers (including Robert Noyce and Gordon Moore) quit the
Shockley Transistor laboratories and form Fairchild Semiconductor in Mountain View,
using funding from Fairchild Camera and Instrument
(1957: ARDC invests $70,000 in Digital Equipment Corporation (DEC)
(1957: Max Mathews begins composing computer music at Bell Laboratories)
1957: Dean Watkins of Stanford’s ERL founds Watkins-Johnson, one of the first
venture-capital funded companies in the Santa Clara Valley
(1957: Allen Newell and Herbert Simon develop the “General Problem Solver”)
(1957: Frank Rosenblatt conceives the “Perceptron,” a neural computer that can learn
by trial and error)
(1957: Morton Heilig invents the “Sensorama Machine,” a pioneering virtual-reality
environment)
(1957: Former SAGE engineer Ken Olsen founds the Digital Equipment Corporation)
1957: Rockefeller Brothers invests in Fairchild Semiconductor, the first venture-
funded startup of the Bay Area
(1958: Jack Kilby at Texas Instruments invents the integrated circuit, a micro-sized
silicon device containing a large number of electronic switches)
(1958: Charles Townes of Columbia theorizes about an optical laser and his student
Gordon Gould builds one and names it “LASER” or “Light Amplification by the
Stimulated Emission of Radiation”)
1958: Draper, Gaither and Anderson is founded, the first professional venture-capital
firm in California
1958: NASA opens a research center near Mountain View
1959: The first commercial Xerox plain-paper photocopier goes on sale
1959: Eveready (later renamed Energizer) introduces the alkaline battery
1959: Jean Hoerni at Fairchild Semiconductor invents the planar process that enables
great precision in silicon components, and Robert Noyce at Fairchild Semiconductor
designs a planar integrated circuit
1959: Dancer and mime Ron Davis founds the San Francisco Mime Troupe
1959: Arthur Kornberg of Stanford University is awarded the Nobel Prize in Medicine
1959: Emilio Segre and Owen Chamberlain of the Lawrence Berkeley Labs are awarded
the Nobel Prize for the discovery of the antiproton
1959: Frank Chambers founds the venture-capital company Continental Capital
1959: GTE buys Sylvania
1959: Several Stanford students volunteer to take part in the CIA project “MkUltra” to
study the effects of psychoactive drugs
(1960: William Fetter of Boeing coins the expression “computer graphics”)
(1960: Digital Equipment introduces the first minicomputer, the PDP-1 (Program Data
Processor), that comes with a keyboard and a monitor
(1960: Theodore Maiman of the Hughes Research Laboratory demonstrates the first
working laser)
1960: Donald Glaser of the Lawrence Berkeley Labs is awarded the Nobel Prize

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1960: Wayne Thiebaud at UC Davis pioneers “pop art”
1960: John McCarthy speculates that “computation may someday be organized as a
public utility”
(1961: Joe Orlicky of JI Case pioneers Material Requirements Planning or MRP)
1961: Laurence Spitters founds Memorex
(1961: Max Palevsky forms Scientific Data Systems)
(1961: Charles Bachman at General Electric develops the first database management
system, IDS)
(1961: Philco unveils the first head-mounted display)
(1961: Fernando Corbato at MIT creates the first working time-sharing system, CTSS
or “Compatible Time Sharing System,” that allowed to remotely access a computer, an
IBM 7090/94)
(1961: IBM owns more than 81% of the computer market)
(1961: General Motors unveils “Unimate,” the first industrial robot)
1961: Robert Hofstadter of Stanford University is awarded the Nobel Prize in Physics
1961: Melvin Calvin of the Lawrence Berkeley Labs is awarded the Nobel Prize
1961: Tommy Davis founds one of Santa Clara Valley’s first venture-capital firms with
Arthur Rock, Davis & Rock
1962: The San Francisco Tape Music Center for avantgarde music is established by
composers Morton Subotnick and Ramon Sender
(1962: Paul Baran proposes a distributed network as the form of communication least
vulnerable to a nuclear strike)
(1962: Steve Russell and others at MIT implement the computer game “Spacewar” on a
PDP-1)
1962: Stanford University founds the Stanford Linear Accelerator Center (SLAC)
1962: Bill Draper and Franklin Johnson form the venture-capital firm Draper and
Johnson Investment Company
1962: Michael Murphy founds the “Esalen Institute” at Big Sur to promote spiritual
healing
(1962: The first commercial modem is manufactured by AT&T)
1963: Douglas Engelbart at the Stanford Research Institute builds the first prototype of
the “mouse”
1963: John McCarthy moves to Stanford
1963: Syntex, a pioneer of biotechnology, moves from Mexico City to the Stanford
Industrial Park
(1963: The “American Standard Code for Information Interchange” or “ASCII” is
introduced
(1963: Ivan Sutherland of MIT demonstrates “Sketchpad,” a computer graphics program,
and the first program ever with a graphical user interface)
(1964: IBM introduces the first “mainframe” computer, the 360, and the first “operating
system,” the OS/360)
1964: Syntex introduces the birth-control pill
1964: Tymshare starts one of the most popular time-sharing service and creates a
circuit-switched network
(1964: Robert Moog begins selling his synthesizer)
1964: Mario Savio founds the “Free Speech Movement” and leads student riots at the
Berkeley campus
1964: Bill Draper and Paul Wythes form Sutter Hill Ventures
1964: MkUltra’s alumnus Ken Kesey organizes the “Merry Pranksters” who travel

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around the country in a “Magic Bus,” live in a commune in La Honda and experiment
with “acid tests” (LSD)
(1964: John Kemeny and Thomas Kurtz (at Dartmouth College) invent the BASIC
programming language)
(1964: American Airlines’ SABRE reservation system, developed by IBM, is the first
online transaction processing
1964: Former Sylvania employee Bill Perry founds computer-based electronic-
intelligence company ESL
1965: Gordon Moore predicts that the processing power of computers will double
every 18 months (“Moore’s law”)
1965: The Grateful Dead are formed in Palo Alto
Sep 1965: Ben Jacopetti inaugurates the Open Theater as a vehicle devoted to
multimedia performances for the Berkeley Experimental Arts Foundation
1965: Owsley “Bear” Stanley synthesizes crystalline LSD
1965: Ed Feigenbaum implements the first “expert system,” Dendral
1965: Lotfi Zadeh invents Fuzzy Logic
1965: George Hunter of the Charlatans introduces the “light show” in rock concerts
1965: Former Ampex employee Ray Dolby founds the Dolby Labs while in Britain
(relocating it to San Francisco in 1976)
1965: Ron Davis of the San Francisco Mime Troupe publishes the essay “Guerrilla
Theatre”
1965: The Family Dog Production organizes the first hippie festival in San Francisco
1965: Terry Riley composes “In C,” music based on repetition of simple patterns
(“minimalism”)
(1965: The Digital Equipment Corporation unveils the first successful mini-computer,
the PDP-8, which uses integrated circuits)
(1965: European computer manufacturer Olivetti introduces the first affordable
programmable electronic desktop computer, the P101)
1966: Stewart Brand organizes the “Trips Festival” putting together Ken Kesey’s “Acid
Test,” Jacopetti’s Open Theater, Sender’s Tape Music Center and rock bands
1966: John McCarthy opens the Stanford Artificial Intelligence Laboratory (SAIL)
1966: The first “Summer of Love” of the hippies is held in San Francisco, and a three-
day “Acid Test” is held in San Francisco with the Grateful Dead performing
1966: Hewlett-Packard enters the business of general-purpose computers with the HP-
2115
1966: Willie Brown organizes the Artists Liberation Front of San Francisco-based
artists at the Mime Troupe’s Howard Street loft
1966: The first issue of the San Francisco Oracle, an underground cooperative
publication, is published
1966: Emmett Grogan and members of the Mime Troupe found the “Diggers,” a group
of improvising actors and activists whose stage was the streets and parks of the Haight-
Ashbury and whose utopia was the creation of a Free City
1966: Huey Newton, Bobby Seale, Angela Davis and other African-American activists
found the socialist-inspired and black-nationalist “Black Panther Party” at Oakland
1966: There are 2,623 computers in the US (1,967 work for the Defense Department)
1966: Donald Buchla develops a voltage-controlled synthesizer for composer Morton
Subotnick, the Buchla Modular Electronic Music System
1966: The Asian Art Museum of San Francisco is inaugurated
(1967: Jack Kilby (at Texas Instruments) develops the first hand-held calculator)

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1967: A “Human Be-In” is held at the Golden Gate Park in San Francisco
1967: Monterey hosts a rock festival
1968: Stewart Brand publishes the first “Whole Earth Catalog”
1968: David Evans and Ivan Sutherland form Evans & Sutherland
1968: Philip Noyce, Gordon Moore and Andy Grove found Intel (“Integrated
Electronics”) to build memory chips
(1968: The hypertext system FRESS created by Andries van Dam at Brown University
for the IBM 360 introduces the “undo” feature)
(1968: ARDC’s investment in Digital Equipment Corporation (DEC) is valued at $355
million
(1968: Computer Science Corp becomes the first software company to be listed at the
New York stock market)
(1968: Dutch mathematician Edsger Dijkstra writes “GO TO Statement Considered
Harmful”)
(1968: Barclays Bank installs networked “automated teller machines” or ATMs)
1968: John Portman designs the Embarcadero Center in San Francisco
1968: William Hambrecht and George Quist found the investment company Hambrecht
& Quist in San Francisco
1968: Frank Malina founds Leonardo ISAST in Paris, an organization devoted to
art/science fusion
1968: John Bryan and Bill Edwards found the investment company Bryan & Edwards
1968: Doug Engelbart of the Stanford Research Institute demonstrates the NLS (“oN-
Line System”), the first system to employ the mouse
1968: Luis Alvarez of the Lawrence Berkeley Labs is awarded the Nobel Prize
1969: Gary Starkweather of Xerox invents the laser printer
(1969: Compuserve's dial-up service)
1969: Xerox buys Scientific Data Systems (SDS)
1969: Advanced Micro Devices is founded by Jerry Sanders and other engineers from
Fairchild Semiconductor
1969: The Stanford Research Institute (SRI) demonstrates Shakey the Robot
1969: Frank Oppenheimer founds the San Francisco Exploratorium as a museum of
science, art and human perception
1969: Construction begins at 3000 Sand Hill Road, in Menlo Park, soon to become the
headquarters of the venture-capital community
(1969: Ted Codd of IBM invents the relational database)
1969: Bell Labs unveils the Unix operating system developed by Kenneth Thompson
and Dennis Ritchie
1969: The computer network Arpanet is inaugurated with four nodes, three of which are
in California (UCLA, Stanford Research Institute and UC Santa Barbara)
1969: Leo Laurence in San Francisco calls for the “Homosexual Revolution”
1969: Four Stanford students found ROLM to design computers for the military
1970: Intel introduces the first commercially successful 1K DRAM chip
1970: 1970 Lee Boysel at Four Phase Systems designs the AL1, a commercial
microprocessors (an 8-bit CPU)
1970: The first “San Francisco Gay Pride Parade” is held in San Francisco
1970: Gays and lesbians start moving to the “Castro” district of San Francisco in large
numbers
1970: Charles Walton invents Radio Frequency Identification (RFID)
(1970: The first practical optical fiber is developed by glass maker Corning Glass

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Works)
(1970: Edgar Codd at IBM introduces the concept of a relational database)
1970: Five of the seven largest US semiconductor manufacturers are located in Santa
Clara Valley
1970: Xerox opens the Palo Alto Research Center or PARC
1970: Alan Kay joins Xerox PARC to work on object-oriented programming
1970: Stanford’s Ed Feigenbaum launches the Heuristic Programming Project for
research in Artificial Intelligence
1971: Cetus, the first biotech company, is founded in Berkeley
1971: Film director George Lucas founds the film production company Lucasfilm
1971: David Noble at IBM invents the floppy disk
1971: Nolan Bushnell and Ted Dabney create the first arcade video game, “Computer
Space”
1971: Ted Hoff and Federico Faggin at Intel build the first universal micro-processor, a
programmable set of integrated circuits, i.e. a computer on a chip
1971: Intel unveils the first commercially available microprocessor, the 4004
1972: At least 60 semiconductor companies have been founded in Silicon Valley
between 1961 and 1972, mostly by former Fairchild engineers and managers
1972: European manufacturer Olivetti establishes an Advanced Technology Centre
(ATC) in Cupertino
1972: Intel introduces the 8008 microprocessor, whose eight-bit word allowed to
represent 256 characters, including all ten digits, both uppercase and lowercase letters
and punctuation marks
1972: Magnavox introduces the first videogame console, the “Odyssey”
1972: Nolan Bushnell invents the first videogame, “Pong,” an evolution of Magnavox’s
Odyssey, and founds Atari
1972: Venture-capitalist company Kleiner-Perkins, founded by Austrian-born Eugene
Kleiner of Fairchild Semiconductor and former Hewlett-Packard executive Tom
Perkins, opens offices in Menlo Park on Sand Hill Road, followed by Don Valentine of
Fairchild Semiconductor who founds Capital Management Services, later renamed
Sequoia Capital
1972: Electronics writer Don Hoeffler coins the term “Silicon Valley”
(1972: A novel by David Gerrold coins the term “computer virus”)
(1972: The Global Positioning System (GPS) is invented by the US military, using a
constellation of 24 satellites for navigation and positioning purposes)
(1972: Ray Tomlinson at Bolt, Beranek and Newman invents e-mail for sending
messages between computer users, and invents a system to identify the user name and
the computer name separated by a “@”)
(1972: IBM engineers in Mannheim, Germany, found Systemanalyse und
Programmentwicklung or SAP)
1972: Bruce Buchanan leads development of the expert system “Mycin” at Stanford
University
1972: European computer manufacturer Olivetti opens a research center in Cupertino
(the “Advanced Technology Centre”)
1973: Lynn Hershman creates the first site-specific installation, “The Dante Hotel”
1973: Efrem Lipkin, Mark Szpakowski, and Lee Felsenstein start the “Community
Memory,” the first public computerized bulletin board system
1973: Stanley Cohen of Stanford University and Herbert Boyer of UCSF create the first
recombinant DNA organism, virtually inventing “biotechnology”

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(1973: Automatic Electronic Systems of Canada introduces the “AES-90,” a “word
processor” that combines a CRT-screen, a floppy-disk and a microprocessor)
(1973: Vietnamese-born engineer Andre Truong Trong Thi uses the 8008 to build the
computer Micral)
(1973: Japan’s Sharp develops the LCD or “Liquid Crystal Display” technology)
1973: The first international connections to the Arpanet, University College of London)
1973: Intel introduces a CPU named 8088
1973: William Pereira builds the Transamerica Pyramid in San Francisco
(1973: Martin Cooper at Motorola invents the first portable, wireless or “cellular”
telephone)
1973: Vinton Cerf of Stanford University coins the term “Internet”
1973: Xerox PARC’s Bob Metcalfe coins the term “Ethernet” for a local area network
1973: The Arpanet has 2,000 users
1973: Gary Kildall in Monterey invents the first operating system for a
microprocessor, the CP/M
(1974: The barcode, invented by George Laurer at IBM, debuts)
1974: Ed Roberts invents the first personal computer, the Altair 8800
1974: Donald Chamberlin at IBM’s San Jose laboratories invents SQL
1974: Xerox’s PARC unveils the “Alto,” the first workstation with a “mouse”
1974: Paul Flory of Stanford University is awarded the Nobel Prize in Chemistry
1974: Reid Dennis and Burton McMurtry found the investment company Institutional
Venture Associates
1974: Philips acquires Magnavox
1974: Spectra-Physics builds the first bar-code scanner ever used in a store
1974: Tommy Davis launches the Mayfield Fund
1974: Vint Cerf of Stanford and others publish the Transmission Control Protocol
(TCP)
1974: The Ant Farm art collective creates the installation “Cadillac Farm”
(1974: The Polish geneticist Waclaw Szybalski coins the term “synthetic biology”)
1975: Xerox PARC debuts the first GUI or “Graphical User Interface”
1975: Advanced Micro Devices introduces a reverse-engineered clone of the Intel
8080 microprocessor
1967: John Chowning at Stanford University invents frequency modulation synthesis
that allows an electronic instrument to simulate the sound of orchestral instruments
1975: John Chowning and Leland Smith at Stanford found a computer music lab, later
renamed Center for Computer Research in Music and Acoustics (CCRMA)
(1975: Ed Catmull and Alvy Ray Smith establish the Computer Graphics Laboratory at
the New York Institute of Technology)
(1975: Ed Roberts in New Mexico introduces the Altair 8800 based on an Intel
microprocessor and sold as a mail-order kit)
(1975: Bill Gates and Paul Allen develop a version of BASIC for the Altair personal
computer and found Microsoft)
1975: Steve Wozniak and others found the “Homebrew Computer Club”
(1975: John Holland describes genetic algorithms )
1976: Steve Wozniak and Steve Jobs form Apple Computer and build the first
microcomputer in Jobs’ garage in Cupertino.
1976: Stanford University researchers (Martin Hellman, Ralph Merkle and Whitfield
Diffie) describe the concept of public-key cryptography
1976: Bill Joy writes the “vi” text editor for Unix

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1976: William Ackerman founds Windham Hill to promote his “new age” music
1976: Burton Richter of Stanford University is awarded the Nobel Prize in Physics
1976: Biochemist Herbert Boyer and venture capitalist Robert Swanson found
Genentech, the first major biotech company
(1976: Ed Catmull and Fred Parke’s computer animation in a scene of the film
“Futureworld” is the first to use 3D computer graphics)
1976: Institutional Venture Associates splits into two partnerships, McMurtry’s
Technology Venture Associates and Dennis’ Institutional Venture Partners
1976: ROLM introduces a digital switch, the CBX (a computer-based PBX)
(1976: MOS Technology introduces the 6502 processor)
1977: Steve Jobs and Steve Wozniak develop the Apple II using the 6502 processor
1977: Bill Joy at UC Berkeley ships the first BSD version of Unix
1974: IBM’s San Jose laboratories unveils the relational database system System R
1977: 27,000 people are employed in the Semiconductor industry of Silicon Valley
1977: San Francisco’s city supervisor Harvey Milk becomes the first openly gay man to
be elected to office in the US
1977: George Coates founds his multimedia theater group, Performance Works
1977: UC Berkeley develops the “Berkeley Software Distribution” (BSD), better known
as “Berkeley Unix,” a variant of the Unix operating system
Aug 1977: Larry Ellison founds the Software Development Laboratories, later renamed
Oracle Corporation
1977: Atari introduces a videogame console, the 2600, based on the 6502 processor
1977: Dave Smith builds the “Prophet 5,” the world’s first microprocessor-based
musical instrument, the first polyphonic and programmable synthesizer
(1977: Dennis Hayes of National Data Corporation invents the PC modem, a device that
converts between analog and digital signals)
(1978: Toshihiro Nishikado creates the first blockbuster videogame, “Space Invaders”)
1978: The rainbow flag debuts at the San Francisco Gay and Lesbian Freedom Day
Parade
(1978: Mark Pauline founds the Survival Research Laboratories
1978: Apple launches a project to design a personal computer with a graphical user
interface
1978: Atari announces the Atari 800, designed by Jay Miner
1979: Dan Bricklin develops VisiCalc, the first spreadsheet program for personal
computers
1979: Larry Michels founds the first Unix consulting company, Santa Cruz Operation
(SCO)
1979: Michael Stonebraker at UC Berkeley unveils a relational database system, Ingres
1979: University of California at Berkeley launches the “Search for Extraterrestrial
Radio Emissions from Nearby Developed Intelligent Populations” project or “Serendip”
1979: Lucasfilm hires Ed Catmull from the New York Institute of Technology to lead
the Graphics Group of its Computer Division
1979: Kevin MacKenzie invents symbols such as :-), or “emoticons,” to mimic the cues
of face-to-face communication
1979: John Shoch of Xerox’s PARC coins the term “worm” to describe a program that
travels through a network of computers
1980: The Arpanet has 430,000 users, who exchange almost 100 million e-mail
messages a year
1980: John Searle publishes the article on the “Chinese Room” that attacks Artificial

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Intelligence
1980: Sonya Rapoport creates the interactive audio/visual installation “Objects on my
Dresser”
1980: The largest semiconductor manufacturers in the world are: Texas Instruments,
National, Motorola, Philips (Europe), Intel, NEC (Japan), Fairchild, Hitachi (Japan) and
Toshiba (Japan).
1980: Seagate Technology introduces the first hard-disk drive for personal computers
1980: Doug and Gary Carlston found the videogame company Broderbund
1980: Paul Berg of Stanford University is awarded the Nobel Prize in Chemistry
1980: Polish writer Czeslaw Milosz of UC Berkeley is awarded the Nobel Prize in
Literature
1980: Integrated circuits incorporate 100,000 discrete components
1980: The Usenet is born, an Arpanet-based discussion system divided in “newsgroups”
1980: Apple goes public for a record $1.3 billion
1980: UC Davis researchers found biotech company Calgene
1980: John Doerr joins Kleiner, Perkins, Caufield, and Byers
1980: Ed Feigenbaum and others found IntelliGenetics (later Intellicorp), an early
Artificial Intelligence and biotech startup
(1980: Sony introduces the double-sided, double-density 3.5” floppy disk that holds
875 kilobyte)
1980: Onyx launches the first microcomputer running the Unix operating system
1981: The Xerox 8010 Star Information System is the first commercial computer that
uses a mouse
1980: David Patterson and Carlo Sequin launch a RISC (Reduced Instruction Set
Computer) project at UC Berkeley
1981: John Hennessy starts a RISC project at Stanford University
1981: Ed Feigenbaum and others found Teknowledge, the first major startup to develop
“expert systems”
1981: Arthur Schawlow of Stanford University is awarded the Nobel Prize in Physics
1981: Roger Malina relocates Leonardo ISAST from Paris to San Francisco
1981: Jim Clark of Stanford University and Abbey Silverstone of Xerox found Silicon
Graphics in Sunnyvale to manufacture graphic workstations
(1981: The IBM PC is launched, running an operating system developed by Bill Gates’
Microsoft)
1981: Andreas Bechtolsheim at Stanford University builds a workstation running Unix
and networking software
1982: John Warnock and Charles Geschke of Xerox PARC develop PostScript and
found Adobe to commercialize it
(1982: John Hopfield describes a new generation of neural networks)
(1982: Thomas Zimmerman of IBM Almaden builds the first commercially-available
dataglove
1982: Stanford students Andy Bechtolsheim, Vinod Khosla and Scott McNealy (a
former Onyx employee) and former Berkeley student Bill Joy found SUN
Microsystems, named after the “Stanford University Network,” to manufacture
workstations
1982: Apple’s employee Trip Hawkins founds Electronic Arts to create home computer
games
1982: John Walker founds Autodesk to sell computer-aided design software
1982: Gary Hendrix founds Symantec

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(1982: Nastec introduces the term “Computer-Aided Software Engineering (CASE)”
for its suite of software development tools)
1983: The Lotus Development Corporation, founded by Mitchell Kapor, introduces the
spreadsheet program “Lotus 1-2-3” for MS-DOS developed by Jonathan Sachs
1983: Gavilan, founded by Manuel Fernandez, former CEO of Zilog, introduces the first
portable computer marketed as a “laptop”
1983: Crash of the videogame console market
1983: Compaq introduces the Portable PC, compatible with the IBM PC
1983: The Transmission Control Protocol and Internet Protocol or “TCP/IP” running on
Unix BSD 4.2 debuts on the Arpanet, and the Arpanet is officially renamed Internet
1983: Paul Mockapetris invents the Domain Name System for the Internet to classify
Internet addresses through extensions such as .com
1983: Apple introduces the “Lisa,” the first personal computer with a graphical user
interface
1983: Henry Taube of Stanford University is awarded the Nobel Prize in Chemistry
1983: The Musical Instrument Digital Interface is introduced, based on an idea by Dave
Smith
(1983: William Inmon builds the first data warehousing system)
1983: Gerard Debreu of UC Berkeley is awarded the Nobel Prize in Economics
(1983: Nintendo releases the Family Computer, renamed Nintendo Entertainment
System in the U.S.)
1984: Cisco is founded by Leonard Bosack and Sandra Lerner
(1984: Michael Dell, a student at University of Texas at Austin, founds PCs Limited,
later renamed Dell, to sell custom PC-compatible computers by mail-order only)
1984: Robert Gaskins and Dennis Austin develop “Presentation,” an application to
create slide presentations (later renamed “PowerPoint”)
1984: The “Search For Extraterrestrial Intelligence” or SETI Institute is founded
1984: Michael McGreevy creates the first virtual-reality environment at NASA Ames
(1984: Nicholas Negroponte and Jerome Wiesner found MIT Media Lab)
(1984: General Motors builds a factory that uses Supply Chain Management software)
(1984: Wavefront introduces the first commercial 3D-graphics software)
1984: Hewlett-Packard introduces the first ink-jet printer
1984: Apple introduces the Macintosh, which revolutionizes desktop publishing
(1984: William Gibson’s novel “Neuromancer” popularizes the “cyberpunks”)
(1984: The CDROM is introduced by Sony and Philips)
(1984: Psion introduces the first personal digital assistant)
(1984: The CADRE laboratory (“Computers in Art, Design, Research, and Education”)
is established at San Jose State University
(1984: Fujio Masuoka at Toshiba invents flash memory, a cheaper kind of EEPROM)
1985: Stewart Brand creates the “Whole Earth Lectronic Link” (or “WELL”), a virtual
community of computer users structured in bulletin boards for online discussions
1985: Digital Research introduces GEM (Graphical Environment Manager), a
graphical-user interface for the CP/M operating system designed by former Xerox
PARC employee Lee Jay Lorenzen
(1985: Microsoft releases Windows 1.0 for MS-DOS)
(1985: Commodore launches the Amiga 1000, a 16-bit home computer with advanced
graphical and audio (multimedia) designed by former Atari employee Jay Miner and
running a multitasking operating system and GUI designed by Carl Sassenrath)
1985: Richard Stallman founds the non-profit organization “Free Software Foundation”

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(FSF)
1985: Hewlett-Packard introduces the LaserJet, a printer for the home market
1985: Jobs and Wozniak leave Apple
(Jul 1985: Aldus introduces PageMaker for the Macintosh, the first system for desktop
publishing)
1985: A crisis in the semiconductor industry is brought about by the dumping of
cheaper Japanese products
(1985: Richard Stallman releases a free operating system, “GNU”)
1985: Warren Robinett, Scott Fisher and Michael McGreevy of NASA Ames build the
“Virtual Environment Workstation” for virtual-reality research, incorporating the first
dataglove and the first low-cost head-mounted display
(1985: Microsoft ships the “Windows” operating system)
(1985: Jim Kimsey founds Quantum Computer Services (later renamed America
Online) to provide dedicated online services for personal computers)
1985: The Arpanet is renamed Internet
1985: Jaron Lanier founds VPL Research, the first company to sell Virtual Reality
products
1985: Robert Sinsheimer organizes a meeting in Santa Cruz of biologists to discuss the
feasibility of sequencing the entire human genome
1986: Apple’s co-founder Steve Jobs buys Lucasfilms’ Pixar, that becomes an
independent film studio run by Ed Catmull
1986: A book by Eric Drexler popularizes the term “nanotechnology”
(1986: Phil Katz invents the zip compression format for his program Pkzip)
(1986: A virus spread among IBM PCs, nicknamed “Brain”)
1986: Larry Harvey starts the first “Burning Man” on Baker Beach in San Francisco
1986: Judy Malloy publishes the computer-mediated hyper-novel “Uncle Roger” on the
WELL
1986: Renzo Piano builds the California Academy of Science in San Francisco
1986: Yuan Lee of the Lawrence Berkeley Labs is awarded the Nobel Prize
1987: Chris Langton coins the term “Artificial Life”
1987: Jerry Kaplan and others found GO Corporation to manufacture portable
computers with a pen-based user interface
1987: David Duffield and Ken Morris found PeopleSoft to manufacture Enterprise
Resource Planning (ERP) applications
(1987: The JPEG (Joint Photographic Experts Group) format is introduced)
(1987: Linus Technologies introduces the first pen-based computer, WriteTop)
1987: Bill Atkinson at Apple creates the hypermedia system HyperCard
1987: The largest semiconductor manufacturers in the world are Japan's NEC, Japan's
Toshiba and Japan's Hitachi
(1987: Uunet becomes the first commercial Internet Service Provider, ISP)
1988: “Morris,” the first digital worm, infects most of the Internet
1988: Steven Benner organizes the conference “Redesigning the Molecules of Life’,
the first major conference on synthetic biology
(1988: 1988: Digital Subscriber Line (DSL) that provides broadband on a phone line is
invented by Bellcore)
1989: UC Berkeley introduces the “BSD license,” one of the first open-source licenses
1989: Adobe releases Photoshop
(1989: Barry Shein founds the first Internet Service Provider, “The World,” in Boston)
1990: Richard Taylor of Stanford University is awarded the Nobel Prize in Physics and

440
William Sharpe of Stanford University is awarded the Nobel Prize in Economics
1990: Between 1970 and 1990 the population of San Jose has almost doubled, from
445,779 to 782,248
(1990: Dycam introduces the first digital camera, Model 1)
(1990: Microsoft announced that it will stop working on OS/2)
(1990: The “Human Genome Project” is launched to decipher human DNA)
1990: Michael West founds the biotech company Geron that pioneers commercial
applications of regenerative medicine
(1990: Tim Berners-Lee of CERN invents the HyperText Markup Language “HTML”
and demonstrates the World-Wide Web)
(1990: The first Internet search engine, “Archie,” is developed in Montreal)
1990: LaRoche acquires a majority stake in Genentech
(1991: The World-Wide Web debuts on the Internet)
(1991: United Technologies Corporation becomes the first company to market a fuel-
cell system)
(1991: Microsoft has revenues of $1,843,432,000 and 8,226 employees)
(1991: Finnish student Linus Torvalds introduces the Linux operating system, a variant
of Unix)
(1991: Paul Lindner and Mark McCahill of the University of Minnesota release
“Gopher,” a software program to access the World-Wide Web)
1991: Pei-Yuan Wei introduces a “browser” for the world-wide web, Viola
1991: Apple introduces QuickTime
1992: Macromedia is founded in San Francisco
1992: Intel becomes the world's largest semiconductor manufacturer, passing all its
Japanese rivals
(1992: The first text message is sent from a phone)
1992: The “Information Tapestry” project at Xerox PARC pioneers collaborative
filtering
(1992: The Electronic Visualization Lab at the University of Illinois Chicago creates a
“CAVE” (“Cave Automatic Virtual Environment”), a surround-screen and surround-
sound virtual-reality environment (graphics projected from behind the walls that
surround the user)
(1992: SAP launches R/3, moving its ERP system from mainframe to a three-tiered
client-server architecture and to a relational database)
1992: Gary Becker of Stanford University is awarded the Nobel Prize in Economics
1992: Calgene creates the “Flavr Savr” tomato, the first genetically-engineered food to
be sold in stores
(1992: Jean Armour Polly coins the phrase “Surfing the Internet”)
(1992: Thomas Ray develops “Tierra,” a computer simulation of ecology)
1993: Stanford University’s Professor Jim Clark hires Mark Andreessen
1993: Condoleezza Rice becomes Stanford’s youngest, first female and first non-white
provost
1993: Thomas Siebel founds Siebel for customer relationship management (CRM)
applications
1993: Steve Putz at Xerox’s PARC creates the web mapping service Map Viewer
1993: The first “Other Minds Festival” for avantgarde music is held in San Francisco
1993: Broderbund introduces the videogame “Myst”
1993: Adobe Systems introduces Acrobat and the file format PDF (or Portable
Document Format)

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1993: Marc Andreessen develops the first browser for the World Wide Web (Mosaic)
1994: John Harsanyi of UC Berkeley is awarded the Nobel Prize in Economics
(1994: Mark Pesce introduces the “Virtual Reality Modeling Language” or VRML)
1994: The “Band of Angels” is founded by “angels” to fund Silicon Valley startups
(1994: University of North Carolina’s college radio station WXYC becomes the first
radio station in the world to broadcast its signal over the Internet)
1994: The search engine Architext (later Excite) debuts
1994: There are 315 public companies in Silicon Valley
1995: Stanford student Jerry Yang founds Yahoo!
1995: Salon is founded by David Talbot
1995: Steve Kirsch's Infoseek pioneers "cost-per-impression" and "cost-per-click"
advertising
1995: Netscape, the company founded by Marc Andreessen, goes public even before
earning money and starts the “dot.com” craze and the boom of the Nasdaq
(1995: Microsoft introduces Internet Explorer and starts the browser wars)
1995: John Lasseter’s “Toy Story” is the first feature-length computer-animated film
(1995: The MP3 standard is introduced)
1995: Mario Botta builds the Modern Museum of Art in San Francisco
1995: Martin Perl of Stanford University is awarded the Nobel Prize in Physics
1995: Jacques Mattheij pioneers live video streaming over the Internet)
(1995: The Sony Playstation is introduced)
1995: Ward Cunningham creates WikiWikiWeb, the first “wiki,” a manual on the
internet maintained in a collaborative manner
1995: SUN launches the programming language Java
1995: Piero Scaruffi debuts his website www.scaruffi.com
1995: Craig Newmark starts craigslist.com on the Internet, a regional advertising
community
(1995: Amazon.com is launched on the Web as the “world’s largest bookstore,” except
that it is not a bookstore, it is a website)
1995: The At Home Network (@Home) is founded by William Randolph Hearst III
1996: Sabeer Bhatia launches Hotmail, a website to check email from anywhere in the
world
(1996: Dell begin selling its computers via its website)
1996: Steve Jobs rejoins Apple
1996: Jeff Hawkins invents the Palm Pilot, a personal digital assistant
1996: Stewart Brand and Danny Hillis establish the “Long Now Foundation”
1996: Douglas Osheroff of Stanford University is awarded the Nobel Prize in Physics
1996: Macromedia introduces Flash
(1996: The first DVD player is introduced by Toshiba)
(1996: GeoSystems Global launches the web mapping service MapQuest that also
provides address matching) Donnelley began making maps with computers in the mid-
1980s to generate maps for customers. Much of that code was adapted for use on the
Internet to create the MapQuest web service
(1996: The Apache HTTP Server is introduced, an open-source web server)
(1996: 1996: Monsanto acquires Calgene)
(1996: Nokia introduces the first smartphone)
1996: Sydney Brenner founds the Molecular Sciences Institute in Berkeley
1996: Brent Townshend invents the 56K modem
(1997: Andrew Weinreich creates SixDegrees.com, the first social networking website)

442
(1997: US West launches the first commercial DSL service in Phoenix)
1997: Reed Hastings founds Netflix to rent videos via the Internet
1997: The XML standard for exchanging documents on the World-Wide Web is
introduced
(1997: Myron Scholes of Stanford University is awarded the Nobel Prize in Economics
1997: Steven Chu of Stanford University is awarded the Nobel Prize in Physics
1997: Evite is founded by Stanford engineering students Al Lieb and Selina
Tobaccowala
(1997: The total revenues for ERP software market is $7.2 billion, with SAP, Baan,
Oracle, J.D. Edwards, and PeopleSoft accounting for 62% of it)
1998: Stanford’s scientist Mendel Rosenblum and others found Vmware
1998: TiVo is launched in San Francisco
1998: NuvoMedia introduces the Rocket eBook, a handheld device to read ebooks
1998: Netscape makes its browser Navigator available for free in January 1998.
1998: Chinese and Indian engineers run about 25% of Silicon Valley’s high-tech
businesses, accounting for $16.8 billion in sales and 58,000 jobs
1998: SoftBook Press releases the first e-book reader
1998: Saul Perlmutter’s team at the Lawrence Berkeley Lab discovers that the
expansion of the universe is accelerating
1998: Celera, presided by Craig Venter of “The Institute for Genomic Research”
(TIGR), is established to map the human genome (and later relocated to the Bay Area)
1998: Netscape launches the open-source project “Mozilla” of Internet applications
1998: Robert Laughlin of Stanford University is awarded the Nobel Prize in Physics
1998: America Online acquires Netscape
1998: Pierre Omidyar founds eBay, a website to auction items
1998: Two Stanford students, Larry Page and Russian-born Sergey Brin, launch the
search engine Google
1998: Yahoo!, Amazon, Ebay and scores of Internet-related startups create overnight
millionaires
1998: Peter Thiel and Max Levchin found Confinity
(1998: Jorn Barger in Ohio coins the term “weblog” for webpages that simply contain
links to other webpages)
(1998: Jim Gray creates the web mapping service TerraServer that also offers satellite
images)
(1998: Bob Somerby starts “The Daily Howler,” the first major political blog)
(1998: Taiwanese computer manufacturer Acer opens Acer Technology Ventures to
invest in Silicon Valley startups
1999: Camille Utterback’s “Text Rain” pioneers interactive digital art
1999: Between 1998 to 1999 venture capital investments in Silicon Valley firms
increases more than 90% from $3.2 billion to $6.1 billion
1999: Google has 8 employees
(1999: Total revenues for supply-chain software are $3.9 billion, with i2 owning 13%
of the market)
1999: Siebel owns almost 50% of the CRM market
1999: Friendster is launched by Jonathan Abrams
1999: Blogger.com allows people to create their own “blogs,” or personal journals
1999: Marc Benioff founds Saleforce.com to move business applications to the
Internet, pioneering cloud computing
1999: Philip Rosedale founds Linden Lab to develop virtual-reality hardware

443
1999: The world prepares for the new millennium amidst fears of computers glitches
due to the change of date (Y2K)
(1999: The recording industry sues Shawn Fanning’s Napster, a website that allows
people to exchange music)
(1999: A European consortium introduces the Bluetooth wireless standard invented by
Ericsson)
1999: 100 new Internet companies are listed in the US stock market
1999: The US has 250 billionaires, and thousands of new millionaires are created in just
one year
(1999: Microsoft is worth 450 billion dollars, the most valued company in the world,
even if it is many times smaller than General Motors, and Bill Gates is the world’s
richest man at $85 billion)
1999: At Home acquires Excite, the largest Internet-related merger yet
2000: The NASDAQ stock market crashes, wiping out trillions of dollars of wealth
2000: Victoria Hale, a former Genentech scientist, starts the first non-profit
pharmaceutical company, the Institute for OneWorld Health
2000: Venture-capital investment in the US peaks at $99.72 billion or 1% of GDP,
mostly to software (17.4%), telecommunications (15.4%), networking (10.0%) and
media (9.1%)
2000: 32% of Silicon Valley’s high-skilled workers are foreign-born, mostly from Asia
(2000: Software and services account for 50% of IBM’s business)
2000: Daniel McFadden of UC Berkeley is awarded the Nobel Prize in Economics
2000: There are 417 public companies in Silicon Valley
2000: 10 billion e-mail messages a day are exchanged over the Internet
2000: Confinity and X.com merge to form Paypal, a system to pay online
2000: The government-funded Human Genome Project and the privately-funded Celera
jointly announce that they have decoded the entire human genome
(2000: Dell has the largest share of worldwide personal computer sales)
2001: Apple launches the iPod
2001: Listen.com launches Rhapsody, a service that provides streaming on-demand
access to a library of digital music
2001: KR Sridhar founds Bloom Energy to develop fuel-cell technology
2001: Nanosys is founded in 2001 to develop nanotechnology
2001: Semir Zeki founds the Institute of Neuroesthetics
2001: Joseph Stiglitz of Stanford University is awarded the Nobel Prize in Economics
2001: George Akerlof of UC Berkeley is awarded the Nobel Prize in Economics
2001: Jimmy Wales founds Wikipedia, a multilingual encyclopedia that is
collaboratively edited by the Internet community
2001: Hewlett-Packard acquires Compaq
2002: Ebay acquires Paypal and Paypal cofounder Elon Musk founds SpaceX to develop
space transportation
2002: Bram Cohen unveils the peer-to-peer file sharing protocol BitTorrent
2002: Sydney Brenner is awarded the Nobel Prize in Medicine
2002: Codexis is founded to develop biofuels
(2003: Skype is founded in Europe by Niklas Zennstroem and Janus Friis to offer voice
over IP, a system invented by Estonian engineers)
2003: Matt Mullenweg launches a platform for people to create their own website or
blog, Wordpress
2003: Linden Lab launches “Second Life,” a virtual world accessible via the Internet

444
2003: Amyris Biotechnologies is founded to produce renewable fuels
2003: Christopher Voigt founds a lab at UCSF to program cells like robots to perform
complex tasks
2003: Martin Eberhard and Marc Tarpenning found Tesla to build electrical cars
(2003: The first synthetic biology conference is held at MIT)
2004: Mark Zuckerberg founds the social networking service Facebook at Harvard
University (soon relocated to Palo Alto)
2004: Mozilla releases the browser Firefox, created by Dave Hyatt and Blake Ross
(2004: Drew Endy of MIT founds Codon Devices to commercialize synthetic biology)
2004: Oracle buys PeopleSoft
2004: Google launches a project to digitize all the books ever printed
2004: UC Berkeley establishes a Center for New Media
2004: Vinod Khosla of venture capital firm Kleiner Perkins Caufield & Byers founds
Khosla Ventures to invest in green-technology companies
2005: Adobe acquires Macromedia
2005: San Jose’s population of 912,332 has passed San Francisco, and San Jose is now
the tenth largest city in the US
2005: Andrew Ng at Stanford launches the STAIR project (Stanford Artificial
Intelligence Robot)
2005: Oracle acquires Siebel
2005: Gina Bianchini founds Ning
2005: Google launches the web mapping system Google Earth that also offers three-
dimensional images of terrain
2005: More than 50% of all jobs outsourced by Silicon Valley companies go to India
2005: UCSF opens the “Institute for Human Genetics”
2005: The Letterman Digital Arts Center opens in San Francisco
(2005: Sales of notebook computers account for 53% of the computer market)
2005: Yahoo!, Google, America OnLine (AOL) and MSN (Microsoft’s Network) are the
four big Internet portals with a combined audience of over one billion people worldwide
2005: Silicon Valley accounts for 14% of the world’s venture capital
2005: 52.4% of Silicon Valley’s high-tech companies launched between 1995 and 2005
have been founded by at least one immigrant
(2005: Total revenues of ERP software are $25.5 billion, with SAP making $10.5
billion and Oracle $5.1 billion)
2005: Ebay acquires Skype
2005: Solar-energy company Solyndra is founded
2005: SUN’s founder Bill Joy joins venture-capital firm Kleiner Perkins Caufield &
Byers to invest in green technology
2005: Former Paypal employees Chad Hurley, Steve Chen and Jawed Karim launch
YouTube
2006: Jack Dorsey creates the social networking service Twitter
2006: The Bay Area is the largest high-tech center in the US with 386,000 high-tech
jobs
2006: YouTube is bought by Google for $1.65 billion
2006: Jay Keasling inaugurates the world’s first Synthetic Biology department at the
Lawrence Berkeley National Laboratory
2006: Lyndon and Peter Rive found SolarCity
2006: The first Zer01 Festival is held in San Jose
2006: Roger Kornberg of Stanford University is awarded the Nobel Prize in Chemistry,

445
 Andrew Fire of Stanford University is awarded the Nobel Prize in Medicine, and George
Smoot of the Lawrence Berkeley Labs is awarded the Nobel Prize in Physics
2006: Tesla Motors introduces the Tesla Roadster, the first production automobile to
use lithium-ion battery cells
2006: The World-Wide Web has 100 million websites
2006: Google acquires YouTube
2006: Walt Disney acquires Pixar
2006: Scott Hassan founds Willow Garage to manufacturer robots for domestic use
2007: 48% of Apple’s revenues come from sales of the iPod
(2007: Safaricom launches the mobile payment system M-Pesa in Kenya)
2007: Apple launches the iPhone
2007: Forrester Research estimates that online retail sales in the US reached $175
billion
2007: The biotech company iZumi Bio is founded to develop products based on stem-
cell research
2007: The biotech company iPierian is founded to develop products based on cellular
reprogramming
2007: The world's largest vendors of personal computers are HP, Dell, Taiwan's Acer,
China's Lenovo and Japan's Toshiba
2008: The Silicon Valley has 2.4 million (less than 1% of the U.S.’s population)
generating more than 2% of the U.S.’s GDP, with a GDP per person of $83,000
2008: Microsoft Windows owns almost 90% of the operating system market for
personal computers, while Google owns almost 70% of the Internet search market
2008: For a few months San Francisco issues marriage license to same-sex couples
2008: Venture capitalists invest $4 billion into green-tech startups in 2008, which is
almost 40% of all US investments in high-tech
2008: Taiwanese conglomerate Quanta invests into Silicon Valley startups Tilera and
Canesta
2008: Hewlett-Packard purchases Electronic Data Systems in a shift towards services
2008: There are 261 public companies in Silicon Valley
2008: 20% of smartphones in the world use an operating system made in Silicon Valley
(Symbian 47%, Blackberry 20%, Windows 12%)
(2009: Satoshi Nakamoto introduces the digital currency Bitcoin)
2009: Oracle buys SUN
2009: Travis Kalanick and Garrett Camp launch the smartphone app Uber
2009: Google’s market value is more than $140 billion
2009: BitTorrent accounts for at least 20% of all Internet traffic
2009: Facebook has 150 million users in January and grows by about one million users
a day, the fastest product ever to reach that many users in five years
2009: President Barack Obama appoints Steve Chu, director of the Lawrence Berkeley
Laboratory, to be Secretary of Energy
2009: Tesla Motors obtains a $465-million loan from the US government to build the
Model S, a battery-powered sports sedan
2009: Elizabeth Blackburn of UCSF shares the Nobel prize in Medicine and Oliver
Williamson of UC Berkeley shares the Nobel prize in Economics
2009: Thomas Siebel founds energy startup C3 LLC
2009: Xerox purchases Affiliated Computer Services in a shift towards services
2009: Microsoft is the largest software company in the world with revenues of $50
billion, followed by IBM with $22 billion, Oracle with $17.5 billion, SAP with $11.6

446
 billion, Nintendo with $7.2 billion, HP with $6.2 billion, Symantec with $5.6 billion,
Activision Blizzard with $4.6 billion, Electronic Arts with $4.2 billion, Computer
Associates with $3.9 billion, and Adobe with $3.3 billion.
2010: Google is worth $180 billion
2010: YouTube broadcasts the Indian Premier League of cricket live worldwide
2010: Apple is worth $205 billion, third in the US after Exxon and Microsoft
2010: HP purchases Palm, a struggling smartphone maker
2010: The Lawrence Livermore National Laboratory plans to simulate the nuclear
fusion of a star (more than 100 million degrees Celsius, hotter than the center of the
sun) with the world’s most powerful laser, called the National Ignition Facility
2010: Microsoft’s IE has 59.9% of the browser market, followed by Firefox with
24.5% and Google Chrome with 6.7%
2010: Apple introduces the tablet computer iPad that sells one million units in less than
one month
2010: SAP buys Sybase
2010: The smarphone market grows 55% in 2010, with 269 million units sold
worldwide
2010: Craig Venter and Hamilton Smith reprogram a bacterium's DNA
2010: Facebook has 500 million users
2011: Apple’s Siri
2012: Pinterest becomes the third largest social network in the USA, surpassing LinkedIn
and Tagged
2012: Facebook goes public, the biggest high-tech IPO in history
2012: SpaceX launches the first commercial flight to the International Space Station
2012: Jennifer Doudna ‘s CRISPR-cas9 genome editing technique
2013: 92% of smartphones in the world use an operating system made in Silicon Valley
(Android 75%, iOS 17%, Windows 3%, Blackberry 3%, Symbian less than 1%)
(2013: Microsoft buys Nokia's mobile-phone business)
2013: 61.5% of traffic on the Web is not human
2013: 90% of the world's data have been created in the last two years
2013: Worldwide sales of smartphones pass one billion units, while sales of personal
computers decline by 9.8%
2014: Facebook has 1.3 billion members, Google owns 68% of the searches in the USA and
more than 90% in Europe, Amazon owns more than 50% of the book market in the USA,
LinkedIn has 300 million members, Alibaba controls 80% of e-commerce in China,

447
 Bibliography
Note:
As a side note to this bibliography, Wikipedia turned out to be the worst
possible source. Most of its articles are simply press releases from public-
relationship departments, with all the omissions and distortions that they deem
appropriate for their business strategies. On the other hand, vintage magazines
and newspapers were an invaluable source of information and analysis. If
websites like Wikipedia are going to replace the magazines and newspapers of
the past, the loss to scholarship will be colossal: the most persistent marketing
department (or fan) will decide what information will be available to future
generations.
Too many books written about Silicon Valley rely heavily on interviews
with the “protagonists” (or presumed such). Having written several “history”
books, my experience is that interviews with the protagonists are not (at all) a
good way to assess what truly happened. The protagonists generally hold a
biased view of the events, and sometimes just don’t remember well (dates,
places, names).
More information, a photographic tour and biographies of many individuals
mentioned in this book can be found at www.scaruffi.com

448
BIBLIOGRAPHY

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Blank, Steve. Hidden in Plain Sight: The Secret History of Silicon Valley: website, 2009.
Campbell-Kelly, Martin & William Aspray. Computer: A History of The Information Machine, Second
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Ceruzzi, Paul E. A History of Modern Computing (2nd Edition). Cambridge: MIT Press, 2003.
Chandler, Alfred D., Jr. Inventing the Electronic Century: The Epic Story of the Consumer Electronics
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Flamm, Kenneth. Creating the Computer: Government, Industry, and High Technology. Washington,
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Freiberger, Paul & Michael Swaine. Fire in the Valley: The Making of the Personal Computer,
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Roszak, Theodore: "From Satori to Silicon Valley" (Frisco Press, 1986)
Rowen, Henry, et al. “Making IT: The Rise of Asia in High Tech.” Stanford: Stanford UP, 2006.
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Schwartz, Peter et al: "The Long Boom" (1999)
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Vance, Ashlee. Geek Silicon Valley: The Inside Guide to Palo Alto, Stanford, Menlo Park, Mountain
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Zhang, Junfu & Nikesh Patel. The Dynamics of California’s Biotechnology Industry. San Francisco:
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 Alphabetical Index
@Home, 251, 270
10gen, 308
1366 Technologies, 342
23andme, 339
2Web Technologies, 320
3270, 125
360Buy, 383
3Com, 141, 252
3D Robotics, 415
3D Systems, 405
3Dfx Interactive, 265
3PAR, 279, 319
4004, 109
500 Startups, 346
8010 Star Information System, 144
AARON, 130
Abadi, Daniel, 407
Abkairov, Nikolay, 327
Abovitz, Rony, 403
Abraham, Jack, 324
Abrams, Jonathan, 272, 465
Abrons, Adam, 359
Acadia, 328
Accel, 256
Accompli, 422
ACE, 43
Acer, 256, 328
Achronix, 329
Ackerman, William, 151, 457
Acorn, 133, 164
ACT, 287
Activision, 157, 331
Activision Blizzard, 401
Acton, Brian, 368
Adams, Ansel, 22, 28, 57, 448
Adaptec, 138, 192
Adelson, Edward, 302
Adelson, Jay, 307

451
Adler, Charles, 362
Adler, Jay, 256
Adobe, 158, 194, 216
Adobe Books Backroom Gallery, 313
ADR, 101, 159
ADS, 161, 194
AdSense, 295
Adura Technologies, 343
Advanced Information Systems, 101
Advanced Memory Systems, 88
AdWords, 276
AEG, 38, 448
Aerial Images, 248
Aerie Networks, 253
AES, 112
Affiliated Computer Services, 327
Affymax Research Institute, 227
Affymetrix, 227, 339
Agarwal, Anant, 335
Agile Software, 259
Agus, David, 338
Ahrendts, Angela A, 404
AIDS, 161
Aiken, Howard, 38, 39, 44, 45, 46, 70, 449
Airbnb, 413, 424
Aircraft Manufacturing Company, 34
Airplane Development Corporation, 34
Ajax, 306
Akamai, 249
Akerlof, George, 335, 466
Akhtari, Saeid, 309
Akkersdijk, Borre, 406
Aksenov, Dmitry, 399
AL1, 109, 455
Albrecht, Bob, 78, 119
Alchemist, 346
Alco Hydro-Aeroplane Company, 33
Alcorn, Allan, 97
Aldridge, Greg, 306
Aldus, 170, 172
Alessandro Osnaghi, 225
Alexander, Sam, 44
Alferov, Zhores, 252
Alibaba, 382, 383, 385, 389, 391
Alivisatos, Paul, 310
Allaire, Jeremy, 421
Allen, Marty, 96
Allen, Paul, 117, 291, 457
Allen, Robbie, 413

452
Allison, David, 66
Allon, Ori, 295
Ally Bank, 249
Almaden Research Center, 122
Almogy, Gilad, 342
Altair, 117
AltaRock Energy, 342
AltaVista, 236, 274
Altera, 160, 178, 422
AlterNet, 197
Altman, Mitch, 346
Alto, 124, 144, 159, 162, 180
Alvarez, Luis, 26, 455
Alvi, Amjad Farooq, 185
Alvi, Basit Farooq, 185
Alza, 98, 128, 187, 267
Amazon, 300, 301, 307, 382, 407, 408, 412
Amazon.com, 245
Amber Networks, 253
Ambrose, John, 17
AMD, 90, 122, 277, 329, 383
Amdahl, Gene, 71, 72, 95
Amelco, 81
America OnLine, 198
American Airlines, 34, 35, 68, 453
American Anti-Imperialist League, 21
American Music Club, 191
Ameritech, 239
Ames Aeronautical Laboratory, 27
Amgen, 150
Amidi, Saeed, 345
Amiga, 173
Amitai, Yaakov, 402
Ampex, 37, 51, 52, 84, 97, 139, 449, 450, 451, 453
Amr Awadallah, 407
AMT, 82
Amtech, 143
Amyris Biotechnologies, 285
An Wang, 46
Anand Agarawala, 321
Anderson, Chris, 415
Anderson, Fred, 64
Anderson, Phillip, 105
Andras Grof, 178
Andre Truong Trong Thi, 113, 456
Andreessen, Marc, 210, 297, 324, 325, 353, 424, 463
Andregg, Michael and William, 339
Android, 316, 422
AngelPad, 346

453
Angry Birds, 332
Anso Labs, 409
Ant Farm, 87, 130
AOL, 180, 213, 214, 239, 240, 256, 270, 275, 285, 292, 293, 294, 321, 467
Apache, 407, 408
Apache Hive, 407
Apache Spark, 408
Aparicio, Manuel, 412
Apollo, 147, 162, 184
Appelbaum, Jacob, 346
Apple, 8, 104, 119, 120, 132, 133, 134, 135, 136, 137, 140, 143, 144, 148, 153, 154, 155,
156, 157, 159, 160, 161, 170, 171, 172, 173, 176, 178, 179, 180, 184, 185, 199, 203,
205, 210, 215, 216, 217, 219, 222, 240, 246, 250, 255, 260, 264, 275, 280, 292, 299,
301, 303, 316, 317, 318, 321, 322, 324, 327, 328, 329, 331, 332, 333, 337, 362, 363,
365, 366, 367, 368, 369, 379, 383, 384, 390, 391, 395, 396, 397, 398, 404, 408, 412,
426, 429, 436, 439, 442, 443, 444, 445, 457, 458, 459, 460, 461, 462, 464, 466, 468,
469
Apple QuickTake 100, 217
Applera, 266
Appleseed, 325
Applied Biosystems, 150, 186, 265
Applied Materials, 342
Applied Semantics, 423
APT, 62
Archie, 212
Architext, 235
ARD, 42
Arduino, 416
Arguelles, Jose, 206
Ariba, 259
Arlington, Gary, 106
ARM, 164, 278, 328
Arment, Marco, 398
Armour Polly, Jean, 463
Armstrong, Brian, 421
Arneson, Robert, 76
Arone, Geoffrey, 325
Arora, Samir, 246, 299
ARPA, 69
Arpanet, 70, 99, 142, 166
ArrayComm, 219
Arrington, Michael, 307
Arrowhead Computers, 120
Artists Liberation Front, 77
artistShare, 298
ArtistShare, 362
Artzt, Russell, 159
Ascend Communications, 240
ASCII, 68

454
Ashton-Tate, 156, 171
Asilomar Conference, 128
Asset Management, 98
AT&T, 19, 32, 39, 45, 46, 47, 48, 55, 68, 100, 104, 113, 141, 142, 146, 165, 179, 183,
196, 217, 222, 223, 236, 239, 252, 253, 316, 329, 348, 377, 378, 432, 434, 448, 450,
452
Atanasoff, John, 32, 449
Atari, 97, 133
Atari 2600, 143, 160
Atheer, 402
Atheros, 260, 329
ATI, 264
Atkinson, Bill, 170, 176, 189, 216, 462
Atkinson, Richard, 85
Atmel, 416
Auerbach, Tjark, 197
Augello, Christina, 189
Auspex, 183
Austin, Dennis, 172, 460
Authentec, 401
Autodesk, 157, 216, 406, 428
Automated Insights, 413
Avago, 422
Avey, Linda, 339
Avira, 197
Axeda, 416
B. J. Fogg, 323
Baan, 259
Babel Fish, 236
Bachman, Charles, 68, 452
Backus, John, 60
Baer, Ralph, 97
Baidu, 235, 382, 386, 389
Bajda-Pawlikowski, Kamil, 407
Bakalar, David and Leo, 47
Balasubramanian, Shankar, 266
Balkanski, Alexandre, 216
Balkin, Amy, 313
Bally Astrocade, 160
Bamberger, Caroline, 49
Bamji, Cyrus, 335
Banatao, Dado, 265
Bao, Yueqiao, 382
Baran, Paul, 69, 99, 452
Barbrook, Richard, 358
Bardeen, John, 39, 104, 450
Bar-Hillel, Yehoshua, 59
Barlow, John Perry, 189, 230, 231
Barnaby, Rob, 135

455
Barton, Jim, 163, 262
Bartz , Carol, 216
BASIC, 69
Bass, Charlie, 141
Bateman, Harry, 34
Bauer, Walter, 101
Bauwens, Michel, 334
Bay Counties Wireless Telegraph Association, 19
Bay Networks, 252
BBN, 113, 150
BCC, 94
BEA, 241, 328
Beats, 419
Bechtel, Warren, 33
Bechtel-McCone-Parsons, 33
Bechtolsheim, Andrea, 162
Bechtolsheim, Andy, 180, 237, 460
Beck, Joel, 106
Becker, Gary, 335, 463
Beerud Sheth, 360
Beier, Thaddeus, 145
Belani, Ravi, 346
Belcher, Angela, 342
Bell Labs, 252
Bell, Daniel, 189
Bell, Earl, 86
Bell, Gordon, 84
Bell, Graham, 19, 32
BELLA, 344
Bellcore, 196, 462
Bellenson, Joel, 227
Ben-Artzy, Gil, 346
Bendix, 49, 92
Bendix G-15, 49
Benioff, Marc, 272, 465
Benkler, Yochai, 334
Benner, Steven, 187, 462
Bennett, Tom, 122
Bennett, William, 252
Berezin, Evelyn, 126
Berg, Paul, 128, 459
Berg, Peter, 107
Berkeley Bionics, 289
Berkenstock, Dan, 414
Berlin, Leslie, 353
Berners-Lee, Tim, 209, 210, 242, 306, 462
Bernstein, Joe, 326
Bessemer Securities, 98
Bethke, Bruce, 185

456
Betterment, 348
Beykpour, Kayvon, 326
Bezos, Jeff, 245, 414
Bhabha, Homi, 55
Bhardwaj, Vinod, 195
Bhatia, Sabeer, 240, 464
Bhatt, Ajay, 264
Bianca's Smut Shack, 238
Bianchini, Gina, 297, 467
Bigelow, Julian, 49, 50
BigQuery, 407
Bina, Eric, 210
BioBricks Foundation, 341
BioCurious, 340
Biodesic, 341
Biogen, 150
Birnbaum, Larry, 413
Bischoff, Elmer, 57
Bisciglia, Christophe, 407
Bishop, Amasa, 55
Bitcoin, 333, 420, 421
Bitnet, 197
Bitonti, Francis, 406
BitTorrent, 281, 315
Bitzer, Donald, 47
BIZMAC, 46
Black Panther Party, 78
Blackberry, 278
BlackBerry, 315
Blackburn, Elizabeth, 335, 469
Blaze Mobile, 305
Blecharczyk, Nathan, 413
Blectum From Blechdom, 268
BLEEX, 289
Blekko, 325
Blippar, 418
Bloch, Felix, 26, 54, 450
Blogger, 294
Blogger.com, 272
Bloglines, 307
Bloom Energy, 288
Bloom, Joshua, 412
Blow, Jonathan, 331
Blue Origin, 414
Bluetooth, 278
Boeing, 34, 452
Boeing, William, 34
Boerner, Manfred, 252
Bohnett, David, 238

457
Bolt Beranek and Newman, 69, 116
Bolt Threads, 411
Bolt, Beranek and Newman, 165
Bomis, 283
Boneh, Dan, 282
Borel, Daniel, 160
Borenstein, Nathaniel, 214
Borg, Nic, 351
Borgman, Justin, 407
Borland, 157, 258
Bosack, Leonard, 180, 460
Boshuizen, Chris, 414
Boston Dynamics, 411, 412
Bot & Dolly, 412
Botha, Roelof, 274, 299
Botstein, David, 200
Botta, Mario, 464
Boucher, David, 172
Boucher, Larry, 138, 183
Boucher, Laurence, 192
Bowyer, Adrian, 405
Box, 318
Boyer, Herbert, 128, 149, 456, 457
Boyle, Willard, 217
Boysel, Lee, 80, 88, 109, 455
Bradski, Gary, 336
Brafman, Ori, 334
Brainerd, Paul, 170
Brand, Roger, 106
Brand, Stewart, 77, 78, 86, 130, 132, 188, 189, 190, 191, 267, 358, 454, 461, 464, 472
Brandenburg, Karlheinz, 261
Branson, Richard, 414
Brattain, Walter, 39, 104, 450
Braun, Jeff, 199
Bravo, 124
Breese, Vance, 34
Brenner, Sydney, 227, 265, 335, 464, 466
Breslauer, David, 411
Brewer, Eric, 236
Bricklin, Dan, 135, 136, 458
Bridge Communications, 180
Brigham, Chris, 412
Brin, Sergey, 237, 294, 339, 428, 465
Brink, Henrik, 412
British Telecom, 252
Britvich, Ron, 254
Broadcomm, 422
Brobeck, William, 26
Brock, David, 254, 282

458
Broderbund, 143
Brooks, Rodney, 336
Broughton, James, 29
Brower, David, 107
Brown, Pat, 56
Brown, Reggie, 398
Brown, Willie, 77, 454
Bruce Baillie, 75
Bruce Scott, 164
Bryan & Edwards, 98
Bryan, James, 174
Bryan, John, 62, 98, 451, 455
BSD, 146
Buchanan, Bruce, 456
Buchheit, Paul, 295, 323
Buchholz, Werner, 72, 451
Buchla, Don, 75
Buckwald, Michael, 332
Bud Wheelon, 83
Bull, 224
BumpTop, 321
Bunji, Okazaki, 47
Burk, Adrienne, 152
Burning Man, 191, 206, 354, 428
Burns, Ursula, 429
Burroughs, 23, 46, 48, 49, 72, 91, 387
Burroughs, William, 16, 448
Bush, George W., 287
Bush, Vannevar, 24, 32, 36, 39, 449
Bushnell, Nolan, 97, 161, 455, 456
Busicom, 109, 387
Buterin, Vitalik, 421
Butterfield, Stewart, 306, 399
Byer, Robert, 344
Byte Shop, 120, 132
C3, 343
Cacophony Society, 206
CADRE laboratory, 174
Cafarella, Mike, 407
Caffeine, 408
Cafiero, Luca, 195
Cage, John, 30
Caixia, Gao, 410
Caldera, 223
CALDIC, 52
Calgene, 150, 226, 265
Calient, 253
Callahan, Michael, 75
CalStar Cement, 312

459
Calvin, Melvin, 452
Cambrian Genomics, 340
Camelio, Brian, 298, 362
CAMP, 232
Campbell, Gordon, 192
Campbell, Keith, 266
Canesta, 335
Canion, Red, 154
Cannon, Ed, 44
Canyon Cinema, 75
Capital Management Services, 111
Capp Street Project, 206
Cappaert, Jeroen, 414
Carbon3D, 405
Cardullo, Mario, 143
Caribou Bio, 410
Carillo, Graciela, 130
Carlson, Rob, 341
Carlston, Doug, 143
Carlston, Doug and Gary, 459
Carpenter, Candice, 246
Carroll, Dan, 419
Caruso, Enrico, 17
Casares, Wenceslao, 334
Casey, iam, 347
Casio, 112
Cassandra, 407
Castro District, 78
Catharine Clark Gallery, 232
Catmull, Ed, 124, 144, 145, 174, 262, 457, 458, 461
CAVE, 254
CCRMA, 131, 272
C-Cube, 216
CDC, 66
CEIR, 61
Celera, 286
Celera Genomics, 266
Centronics, 96
Cepheid, 267
Cera, Bryan, 406
Cerent, 253
Cerf, Vinton, 114, 115, 180, 198, 456, 457
CERN, 209
Cetus, 99, 150
Chamberlain, Marcia, 190
Chamberlain, Owen, 452
Chamberlin, Donald, 123, 457
Chambers, Frank, 65, 452
Chandrasekher, Anand, 294

460
Chang, Morris, 192, 376, 388
Chapin, Daryl, 105
Zhang, 381
Chase, William Merritt, 22
Chatterjee, Amit, 343
Chen, Chunxian, 375
Chen, Eva, 197
Chen, Joseph, 383, 390
Chen, Mike, 418
Chen, Perry, 362
Chen, Steve, 299, 467
Chen, Steven, 274
Chen, Tu, 137
Chen, Wen, 137
Chen, Winston, 137
Chen, Xuedi, 406
Cheriton, Dan, 303
Chertok, Michael, 321
Chesky, Brian, 413
Cheyer, Adam, 337, 412
Chicago, Judy, 107
China Yellowpages, 382
Chips and Technologies, 192
Chiron, 150, 267
Chisari, Michael, 325
Chiu, Andrew, 387
Chiu, Chun, 137
Chowdhury, Abdur, 325
Chowning, John, 79, 131, 457
Chris Larsen, 348
Christensen, Harold, 28
Christensen, Lew, 28
Christensen, William, 15, 16, 21, 22, 26, 28, 449, 472
Chu, Steven, 335, 464, 469
Chuang, Alfred, 241
Chuang, Richard, 145
Church, George, 311
Cibelli, Jose, 287
CICS, 100
Cinematique, 399
Circle, 421
CircleU, 420
Cirrus Logic, 192
Cisco, 180, 216, 252, 253, 270, 328
Citizen Agency, 325
Citizen Space, 346
Citrix Systems, 319
Clara, 399
Clarium Capital, 274

461
Clark, James, 162
Clark, Jim, 124, 163, 210, 248, 459, 463
Clark, Wes, 70
Clarke, Ian, 281
Clayton, Kit, 268
Clearwater, Scott, 364
Clement, Lewis, 19
Clinkle, 419
Clinton, Bill, 83, 351
Cloudera, 407, 424
CMOS, 80
Coates, George, 152, 458
COBOL, 60
Codd, Edgar, 122, 455
Codd, Ted, 455
Codexis, 285
Codius, 421
Codon Devices, 309
Cogenra Solar, 342
Cohen, Bram, 281, 466
Cohen, Harold, 130
Cohen, Michael, 219
Cohen, Morris, 195
Cohen, Stanley, 128, 456
Coherent Laser, 86
Cohn, Robert, 160
CoinBase, 421
Coleco Vision, 160
Collins, Jess, 58
Collison, Patrick, 419
Colossus, 38, 40
Colter, Mary, 22
Comcast, 348
Comeau, Charles, 174
Commodore, 112, 122, 153, 154, 173
Compaq, 154, 178, 192, 259, 278
Complete Genomics, 338
Compression Labs, 137
Compton, Karl, 42
CompuServe, 100, 197, 198, 240
Computer Aided Design, 96
Computer Associates, 193
Computer Motion, 228
Computer Sciences, 61
Computer Shack, 121
Computer Usage Company, 61
ComputerLand, 183
Computervision, 96
Confinity, 273

462
Conley, Scott, 342
Conner, Bruce, 58
Conner, Finis, 138
Considine, Justin, 106
Consumer Empowerment, 281
Contact Consortium, 254
Content Centric Networking, 303
Context Management Systems, 156
ContextLogic, 410
Contiki, 416
Continental Capital, 65
Conway, Andrew, 286
Cook, Paul, 54
Cook, Scott, 156
Cooper, Alan, 119, 195
Cooper, Martin, 117, 181, 219, 456
Corbato, Fernando, 68, 100, 452
Corfield, Nick, 172
Corley, Eric, 186
Corning Glass Works, 252
Corrigan, Wilfred, 160
Cosulich, Jared, 359
Counterparty, 421
Covert, Markus, 341
Cowell, Henry, 22, 29
Cox, Norm, 144
CP/M, 118, 121, 154
Craigslist, 356
Craigslist.com, 245
Cranor, David, 405
Cray, Seymour, 45, 66
CRC, 49
Creative Commons, 284
Creative Technology, 280
Creeley, Robert, 56
Crescendo Communications, 195, 216
Crick, Francis, 67, 227, 265
CRISPR, 410
Cromemco, 134
Crommie, Michael, 310
Cronin, Michael, 233
Crosspoint Venture, 98, 256
Crowdcube, 420
Crowley, Aleister, 35
Crowley, Dennis, 324
Crumb, Robert, 106
Crump, Dave, 71
Crump, Scott, 405
Cryptsy, 421

463
CSC, 102
CTSS, 68
CubeSat, 414
Culliname Corp, 101
Cullinane, John, 101
Cullinet, 159
Cummins, Mark, 321
Cunningham, Andy, 312
Cunningham, Imogen, 28, 57
Cunningham, Ward, 464
Cutting, Doug, 407
CyberCash, 214
Cygnus Solutions, 258
CyOptics, 422
Cypress, 178
Cypress Semiconductor, 160
Cytokinesis, 267
Czajkowski, Grzegorz, 408
Da Vinci, Leonardo, 40
Dabney, Ted, 97, 455
Dahl, Ole-Johan, 94
Dalal, Navneet, 332
Dalmo, 41
Dalmo Manufacturing Company, 37
D'Aloisio, Nick, 398
Damer, Bruce, 2, 254
Dangdang, 383
Danger, 278, 423
Danino, Itai, 326
Das, Rob, 300
Data General, 84
Data Technology Corporation, 137
Databricks, 408
DataStax, 407
Dave Hyatt, 292
Davis & Rock, 65
Davis, Angela, 78, 454
Davis, Ron, 75, 77, 452, 453
Davis, Tommy, 64, 65, 111, 452, 457
Davisson, Clinton, 105
dBase, 156
de Castro, Edson, 84
De Forest, Roy, 76
de Havilland, Geoffrey, 34
de Portola, Gaspar, 16
Dead Kennedys, 151
Dean, Jeff, 407
Debreu, Gerard, 460
DEC, 61, 84, 96, 97, 100, 111, 119, 136, 140, 145, 147, 162, 163, 164, 175, 183, 184,

464
196, 218, 236, 259, 278, 279, 451, 454
Deckard, Carl, 196, 405
Decrem, Bart, 325
DeepFace, 412
DeepMind, 411
DeFeo, Mary-Joan "Jay", 58
DeForest, Lee, 17, 18, 448
DeKoven, Bernie, 130
del.icio.us, 306
Delgado, Joaquin, 345
Dell, 259, 278, 328
Dell, Michael, 178, 460
Delphi, 198
Demby, Constance, 191
Dennard, Robert, 88
Dennis, Reid, 62, 111, 451, 457
DeRisi, Joseph, 310
DeRose, Steven, 209
Desk Top Manufacturing, 405
Devendra Banhart, 268
Devi, Indra, 56
Devol, George, 59, 450
Diamandis, Peter, 349
Diaspora, 326
Dick, Philip, 106
Didi Kuaidi, 386
Diebenkorn, Richard, 57
Dietz, Paul, 317
Diffie, Whitfield, 138, 139, 457
Digg, 307
Diggers, 77
Digigraphics, 62
Digital Genius, 399
Digital Research, 119, 171
Digital Subscriber Line
DSL, 196, 252, 462
Digital Universe Foundation, 283
Digitalk, 194
Dijkstra, Edsger, 102, 454
Dikert, Kim, 332
Dillon, Harrison, 285
Ding, William, 382
Dingledine, Roger, 281
DiNucci, Darcy, 306
Dion, Norman, 138
Dixon, Maynard, 22
DJ Decay, 233
Djerassi, Carl, 57, 79, 152, 450
DJI Phantom, 415

465
DMA Design, 401
DNNresearch, 412
Documentum, 195, 319
Doda, Carol, 75
Doerr, John, 256, 275, 316, 459
Doheny, Edward, 15
Dolby Labs, 84
Dolby, Ray, 52, 84, 453
Donahue, Don, 106
Donald Bitzer, 126
Doriot, George, 42, 61, 65, 449
Dornbusch, Sanford, 129
Dorsey, Jack, 297, 334, 467
Dostert, Leon, 59
DotCloud, 409
DoubleClick, 246, 321, 413
DoubleTwist, 287
Doudna, Jennifer, 410
Dougherty, Brian, 173
Dougherty, Dale, 347
Douglas, Donald, 33
Dower, William, 22
Draper & Johnson, 65
Draper, Bill, 65, 84, 452, 453
Draper, Gaither and Anderson, 64
Draper, John, 117, 133
Draper, Tim, 240
Draper, William, 64
Dreadnot, 281
Dremel, 407
Drexler, Eric, 200, 461
Drmanac, Radoje, 339
Dropbox, 424
Drori, Zeev, 82
Duffield, David, 195, 462
Duncan, Robert, 41, 57
Dunkels, Adam, 416
Duplan, Lucas, 419
Durkee, Steve, 75
Dwight, Herb, 86
Dycam, 217
Dynabook, 144
Dynamical Systems Research, 172
Dysan, 138
Dyson, Esther, 231
Dyson, Freeman, 231
E*trade, 214
E*Trade, 214, 249
Eads, Damian, 412

466
Earnest, Les, 158
Eastman Kodak, 50, 54, 62
Easywallet, 306
eBay, 246, 288, 300, 382, 384
Eberhard, Martin, 198, 249, 311, 467
Eckert, 43
Eckert, Presper, 38, 449
Eckert, Wallace, 39, 46
Eckert-Mauchly Computer Corporation, 44
EcoCash, 306
Edison, 14
EDM, 62
Edmodo, 351
EDS, 73, 327
EDSAC, 43
EDVAC, 43, 44, 47, 72
Edwards, Bill, 62, 98, 451, 455
Egan, Richard, 319
Ehrlich, Paul, 129
Ehrsam, Fred, 421
Eigler, Don, 201
Eimac, 24
EINet, 212
Einstein, Albert, 50, 104
Eitel, Bill, 24
Eitel-McCullough, 41
Ek, Daniel, 318
eLance, 360
Elbaz, Gilad, 295
Elbourn, Bob, 44
Electric Classifieds, 246
Electronic Arrays, 82
Electronic Arts, 157, 158, 281
Electronic Frontier Foundation, 230
Eletr, Sam, 150, 186, 227
Elgg, 325
Elias, John, 317
Elixir, 194
Elk Cloner, 161
Ellenby, John, 155
Ellis, Jim, 142
Ellis, Jonathan, 407
Ellison, Larry, 139, 205, 264, 303, 353, 426, 458
Eloquent, 339
Elpida, 302
Elwell, Cyril, 18, 19, 24, 448
EMC, 319, 328
Emerson Arcadia 2001, 160
EMISARI, 114

467
Emmett Shear, 326
Endy, Drew, 340, 341, 467
Engelbart, Doug, 52, 70, 71, 79, 85, 92, 93, 99, 124, 176, 452, 455, 472
Engineering Research Associates, 44
ENIAC, 38, 40
Ennis, Earle, 19, 24
Enron, 424
Entis, Glenn, 145
Enwise, 209
EO, 217
Epiphyte, 421
Epson, 135, 154, 217
Epstein, Bob, 140
EquityNet, 420
ERA, 44
Erceg, Luka, 342
Ericsson, 381, 391
ERMA, 46, 51, 104, 450
Esalen, 151
Esalen Institute, 76
Eschenauer, Laurent, 325
Esfandiary, Fereidoun, 186
eSolar, 342
Estridge, Donald, 153
Estrin, Judy, 180, 198
Etak, 161
E-Tek Dynamics, 137
Ethereum, 421
Ethernet, 114, 144
Etsy, 360, 406
Evans & Sutherland, 123, 163, 173
Evans, Arthur, 131
Evans, David, 124, 454
Evans, Kevin, 206
Evans, Nancy, 246
Eventbrite, 418, 424
Everbank, 249
Evernote, 424
Everson, George, 27
Everson, William, 41
Evite, 249
Ewing, Marc, 223
Excite, 235, 270
Exelixis, 267
Expedia, 248
Exxon, 184, 322
F-104 Starfighter, 35
Face.com, 337, 412
Facebook, 8, 292, 297, 298, 303, 320, 322, 323, 324, 325, 326, 330, 331, 338, 352, 355,

468
357, 361, 362, 363, 366, 367, 368, 379, 383, 384, 397, 402, 404, 406, 407, 412, 415,
425, 426, 429, 436, 444, 445, 446, 467, 469
Facebook,, 383
Faceshift, 403
Factom, 421
Fadell, Tony, 280
Faggin, Federico, 81, 109, 122, 455
Fairchild, 8, 62, 63, 65, 66, 67, 68, 80, 81, 82, 83, 84, 88, 90, 111, 133, 134, 143, 146,
160, 177, 178, 183, 205, 250, 387, 388, 425, 435, 442, 451, 455, 456, 459
Fairchild Channel F, 160
Fairchild Semiconductor, 63, 146
Fairey, Shepard, 152
Faith No More, 191
Fake, Caterina, 306
Family Dog Production, 77
Fanning, Shawn, 280, 324, 424, 465
Fano, Robert, 69
Farahi, Behnaz, 406
Farina, Don, 65, 82
Farmer, Randy, 175
Farmwald, Mike, 216
Farnsworth, Philo, 27, 30, 433, 448
Farrington, Patricia, 130
Farrow, Al, 349
FastForward Networks, 249, 273
Fecalface.com, 313
Federal Telegraph Corporation, 18
Feigenbaum, Ed, 79, 93, 145, 161, 453, 455, 459
FeliCa, 305
Felsenstein, Lee, 113, 119, 154, 189, 456
Felton, Charles, 15
Fenwick, John, 414
Ferguson, Phil, 82
Ferlinghetti, Lawrence, 56, 450
Fernandez, Manuel, 155, 460
Ferranti Mark 1, 40, 450
Fetter, William, 452
Feynman, Richard, 201, 364
Fialer, Phil, 71
Filo, David, 212
FindLaw, 246
Fingerworks, 317
Fink, Ryan, 403
Finocchio, Joe, 30, 448
Fiorina, Carly, 278, 366
Fire, Andrew, 335, 468
Firmage, Joe, 283
First Virtual, 214
Fisher Research Laboratories, 25

469
Fisher, Gerhard, 25
Fisher, Michelle, 305
Fisher, Scott, 175, 461
Fitbit, 404
Flanders, Ralph, 42
Flannery, Matt, 298
Flavr Savr, 226
Fleischmann, Martin, 343
Fleischmann, Robert, 226
Fleming, Jim, 412
Fletcher, Harrell, 232
Fletcher, Mark, 307
Fleury, Marc, 258
Flexner, Abraham, 49
Flickr, 306, 357, 412
Flint, 419
Flip, 302
Flipagram, 399
Flixwagon, 327
Flock, 325
Flowers, Tommy, 38, 449
Flow-matic, 44
Flutter, 332
Fly Labs, 399
Flynn, David, 303
Fodor, Stephen, 227
Fong. Godfrey, 137
Ford Model T, 34
Foregger, Rob, 348
Forenza, Antonio, 332
Foresight Institute, 200
Formlabs, 405
Forrester, Jay, 45, 46, 47, 450
FORTRAN, 60
Fossum, Eric, 217
Founder's Institute, 347
Founders Space, 346
Four Phase Systems, 88, 109
Foursquare, 324
Fox, Terry, 130
Foxconn, 439
FrameTechnology, 172
France Telecom, 252
Franceschini, Amy, 232
Francis, Nicholas, 401
Frank Malina, 454
Frankel, Justin, 281
Frankel, Stuart, 413
Frankston, Bob, 135

470
Fred Terman, 41
Free Software Foundation, 165, 283
Free Speech Movement, 76, 119
Freenet, 281
Freewebs, 331
Freitas, Robert, 289
French, Gordon, 119
FRESS, 99
Fried, Howard, 130
Friedman, Eric, 404
Friedman, Patri, 349
FriendFeed, 323
Friendster, 272, 298
Friis, Janus, 299, 466
Frohman, Dov, 111
Fry, Chris, 425
Fry, Thornton, 32
F-Secure Sense, 418
Fugger, Ryan, 421
Fujitsu, 108, 225, 374, 387, 389
Fu-Kuen Lin, 150
Fuller, Calvin Souther, 105
Fuller, Leonard, 18, 25
Funding Circle, 348
Furness, Thomas, 174
Fylstra, Daniel, 136
Fyusion, 399
Gaia Online, 330
Gaither, Rowan, 64
Galactic Empire, 143
Galbraith, Carrie, 206
Galili, Shuly, 346
Gallo, Robert, 226
Galvanize, 347
Garland, Harry, 134
Garrett Camp, 413
Garrett, Jesse James, 306
Gaskins, Robert, 172, 460
Gasparini, Louie, 348
Gates, Bill, 117, 153, 171, 178, 205, 221, 270, 457, 459, 466
Gateway, 259, 328
Gausebeck, Dave, 274
Gausebeck, David, 402
Gauthier, Paul, 236, 297
Gavilan, 155
Gay Pride Parade, 131
Gay, Jonathan, 241
Gay, Stephen, 425
Gearhart, John, 267

471
Gebbia, Joe, 413
Gelfer, Roman, 346
GenBank, 228
Gene Amdahl, 45
Gene Logic, 267
Genentech, 149, 187, 200, 226, 267
General Assembly, 347
General Electric, 19, 46, 48, 50, 51, 53, 54, 62, 66, 68, 69, 72, 92, 100, 270, 452
General Ledger, 119, 195
General Magic, 216
General Microelectronics, 80, 82, 84, 111
GEnie, 198
Gentry, Eri, 340
Geocities, 398
GeoCities, 238
George, Dileep, 412
George, Harry, 172
GeoSystems Global, 248
GeoWorks, 173
Geron, 226, 266
Gerrold, David, 456
Gershenfeld, Neil, 254
Geschke, Charles, 158, 459
Ghemawat, Sanjay, 407
Ghirardelli, Domingo, 13
Ghonim, Wael, 366
Giannini, Amadeo, 21
Giauque, William, 55, 450
Gibbons, Fred, 140
Gibbs, Kevin, 400
Gibson, William, 185, 189, 460
Gifford, Jack, 66, 160
Gilbert, Walter, 150
Gilder, George, 231
Gilead Sciences, 187
Gillmor, Stewart, 353
Gilmore, Jack, 45, 62
Gilmore, John, 230, 258
Ginko Bioworks, 341
Ginsberg, Allen, 56, 451
Ginsburg, Charles, 52, 451
Ginzton, Ed, 41, 79, 167
Girouard, Dave, 419
Girvin, Steven, 364
Gismo, 59
Glad, Mogens, 157
Glam Media, 299
Glaser, Donald, 99, 452
Glaser, Rob, 245

472
Glaser, Will, 272
Glazer, David, 194
Gleason, Madeline, 41
Globalfoundries, 383
GlobalFoundries, 328
GNU, 165, 223
Gnutella, 281
GO Corporation, 176
Goad, Walter, 150
GoButler, 418
Goedel, Kurt, 50
Goetz, Martin, 101
Goffman, Ken, 189, 231
GoFundMe, 362
Goggin, Brian, 268
Golas, Thaddeus, 131
Goldberg, Adele, 94, 144, 194
Goldberg, Ken, 312
Goldfarb, Greg, 419
Goodson, Bob, 337
Goodwin, John, 413
Google, 8, 219, 222, 235, 237, 238, 256, 270, 273, 275, 276, 277, 288, 293, 294, 295,
297, 298, 299, 303, 304, 306, 308, 312, 316, 320, 321, 322, 323, 324, 325, 327, 328,
329, 332, 336, 337, 342, 352, 355, 359, 361, 362, 363, 366, 367, 368, 369, 379, 382,
383, 384, 395, 396, 398, 399, 401, 404, 406, 407, 408, 409, 410, 411, 412, 414, 425,
426, 429, 436, 443, 444, 445, 446, 465, 467, 468, 469
Google Glass, 401
Gopher, 212
GoPro, 302, 424
Gordon Moore, 63
Gore, Al, 210
Gorrell, Leslie, 27
Gosling, James, 241
Gosney, Michael, 206
GoTo, 296
Gould, Gordon, 86, 451
Gourley, Sean, 337
Gowalla, 324
GPS, 149
Graham, Paul, 245, 277, 361
Grand Theft Auto III, 401
Grateful Dead, 77
Grauberger, Mary, 206
Gray, Jim, 248, 465
Gray, Percy, 22
Green, Logan, 413
Greenblatt, Richard, 189
Greenwald, Sidney, 44
Greiman, April, 233

473
GRiD Systems, 155
Griffith, Bill, 106, 131
Griffith, Saul, 428
Grinich, Vic, 143
Grogan, Emmett, 77, 454
Gronet, Chris, 342
Groove, 423
Gross, Bill, 405
GroundFloor, 346
Group, 63
Group f/64, 29
Groupon, 324
Grove, Andy, 178, 426, 454
Grover, Dale, 333
Gruber, Tom, 337
Gruys, Kenneth, 228
GTE, 141, 452
Gu, Paul, 419
Guggenheim, Daniel, 33
Guoqing, Li, 383
Gupta, Umang, 180
Guth, Alan, 152
Gutshall, Thomas, 267
Habbo, 330
Hacker Dojo, 346, 347
Hackman, Richard, 425
Hadapt, 407
Hadoop, 407
Haefner, Walter, 73, 159
Haisch, Bernard, 284
Hakes, Julian, 406
Halcyon, 22
Halcyon Molecular, 274, 339
Hale, Victoria, 285, 466
Hall, Robert, 252
Hallidie, Andrew, 15
Ham, Bill, 75
Hambrecht & Quist, 98, 256
Hambrecht, William, 98, 454
Hamburg, David, 129
Hamilton Smith, 309
Hamlin, Edith, 29
Hammerbacher, Jeff, 407
Hammond, Kris, 412
Hamza, Shaykh, 352
Hanhai zPark, 346
Hanke, John, 289
Hannah, Marc, 163
Hanratty, Patrick, 62

474
Hansen, Armin, 22
Hansen, Bill, 26, 41
Hansen, William, 30
Hanson, Jo, 232
Hara, 343
Harari, Eli, 194
Hardin, Garrett, 107
Harley, Calvin, 226
Harman, Willis, 58, 78
Harmonic Convergence, 206
Harris, Bill, 348
Harrison, Lou, 30
Harry Huskey, 49
Harsanyi, John, 335, 463
Hart, Peter, 146
Harvard Mark I, 38, 40
Harvey, Jim, 71
Harvey, Larry, 191, 206, 461
Haseltine, Bill, 285
Haseltine, William, 226
Hassabis, Demis, 411
Hassan, Scott, 304, 468
Hassett, Christopher, 247
Hastings, Reed, 248, 464
Hastorf, Albert, 129
Hatch, Ann, 206
Hathaway, Kristina, 340
Haueter, Ruth, 44
Haurwitz, Rachel, 410
Hauser, Herman, 134
Hawkins, Jeff, 287
Hawkins, Trip, 157, 263, 460, 464
Hayes Microcomputers Products, 142
Hayes, Dennis, 142, 458
Hayes, Orchard, 61
Hayes, Victor, 260
Healtheon, 248
Healthscape, 248
Hearst III, William Randolph, 251
Hearst, William Randolph, 21, 35, 464
Hed, Niklas, 332
Hedrick, Wally, 58
Hegarty, Paul, 259
Heilig, Morton, 60, 451
Heinla, Ahti, 281, 299
Heinrich, Andreas, 364
Heintz & Kaufmann, 24
Heintz, Ralph, 24, 27
Heinz, Austen, 340

475
Heiser, Dick, 120
Helgason, David, 401
Heller, Edward, 42
Hellman, Martin, 138, 457
Hendrix, Gary, 157, 460
Hennessy, John, 163, 258, 260, 459
Henriksen, Ole, 157
Henry, George, 196
Henshaw-Plath, Evan, 297
Herbst Theatre, 152
Herriott, Donald, 252
Herrold, Charles, 17, 18, 448
Hersey, John, 233
Hershey, Brett, 239
Hershman, Lynn, 130, 456
Hertzfeld, Andy, 216
Hewlett Packard, 84, 172
Hewlett, Bill, 24, 31
Hewlett, William, 30, 449
Hewlett-Packard, 50, 85, 92, 95, 134, 184, 196, 260, 278, 327, 426
Hewson, Marillyn, 429
HGS, 226
Hillis, Danny, 267, 308, 464
Hinton, Geoffrey, 412
Hinton, George, 412
HipChat, 399
Hirsch, Gil, 338
Hirsch, Tad, 297
Hirshberg, Peter, 313
Hitachi, 108, 154, 223, 319, 387, 388, 390, 459, 462
Hitz, David, 183, 223
HMTL5, 333
Hobart, James, 86
Hoeffler, Don, 111, 456
Hoerni, Jean, 65, 81, 82, 451
Hoerni. Jean, 63
Hoff, Ted, 109, 455
Hoffman, Mark, 140
Hoffman, Reid, 274
Hoffman, Steve, 346
Hofmann, Hans, 28
Hofstadter, Robert, 452
Holland, John, 457
Holland, Wau, 186
Hollerith, Hermann, 16, 448
Holmes, Elizabeth, 310
Holomni, 412
Holz, David, 332
Homebrew Computer Club, 154

476
Honey, Stan, 161
Honeywell, 72, 92
Hong, Feng, 383
Hong, Jack, 381
Hood, Leroy, 186, 266
Hook, Brian, 265
Horowitz, Eliot, 308
Horowitz, Mark, 216
Hossein Fakhrai-Rad, 339
HotBot, 236
Hotmail, 240
Hotwire, 231
Hourihan, Meg, 272
Howery, Ken, 273
Howes, Tim, 324
Howlett, Eric, 175
HP Labs, 8, 51, 150, 432, 442
Hsue-shen Tsien, 34
HTTP, 209
Huang, Fu, 137
Huang, Junjiu, 411
Huawei, 381, 391
Hub, 346
Hubbard, Alfred, 58
Huffman, Steve, 307
Hughes, Howard, 34
Huizenga, Charlie, 343
Hull, Charles, 196, 405
Human Be-In, 86
Human Genome Project, 200, 226, 265, 286
Humon, Naut, 191
Hunkapiller, Michael, 186, 266
Hunt, Tara, 346
Hurley, Chad, 274, 299, 467
Huskey, Harry, 49, 450
Huxley, Aldous, 76
Hyatt, Gilbert, 111
Hyde, Lewis, 358
Hykes, Solomon, 409
Hynix, 302
HyperCard, 176
Hyseq, 339
i2, 196
IBM, 23, 38, 39, 44, 45, 46, 48, 49, 52, 53, 59, 60, 61, 68, 70, 71, 72, 73, 80, 84, 85, 88,
91, 92, 95, 96, 99, 100, 101, 108, 112, 117, 119, 121, 122, 123, 124, 125, 136, 138, 139,
140, 146, 153, 154, 155, 156, 160, 163, 167, 171, 172, 178, 179, 183, 185, 186, 192,
193, 194, 196, 201, 203, 215, 218, 221, 222, 224, 236, 241, 258, 259, 260, 263, 278,
279, 293, 319, 322, 328, 336, 364, 377, 378, 381, 387, 388, 389, 390, 412, 431, 432,
434, 444, 448, 449, 450, 451, 452, 453, 454, 455, 456, 457, 458, 459, 460, 461, 466,

477
469
IBM 370, 118
ICL, 224
ICQ, 238
id Software, 264
Idealab, 296, 405
Identronix, 143
IDS, 68
IG Farben, 38
iGEM, the International Genetically Engineered Machine, 341
ILLIAC I, 47
Illumina, 266, 338
Imagen, 158
IMP, 70
IMS, 74, 123
IMSAI, 134
Incyte, 267, 286
Incyte Pharmaceuticals, 227
Indiegogo, 362
Indredible, 316
Industrial Capital, 42
Industrial Perception, 336
Industrial Robotics, 412
Indymedia, 284
Infineon, 302
Infinity Ward, 331
Informatics, 101
Information Management Science Associates, 117
Informix, 140, 193
Infoseek, 235, 435
InfoSpace, 237
Infosys, 370
ING Direct, 249
Ingalls. Dan, 94
Ingres, 123, 140
inkjet printer, 158
Inktomi, 236
Inmon, William, 460
Innospring, 346
Innovalight, 289
In-Q-Tel, 289
Instagram, 324, 361, 408, 422
Institutional Venture Associates, 111
Institutional Venture Partners, 111
Instructables, 428
Integral Systems, 195
Integrated Device Technology, 137
Intel, 2, 8, 88, 89, 90, 92, 109, 110, 111, 112, 113, 117, 118, 119, 122, 125, 132, 133, 136,
137, 155, 156, 160, 161, 162, 163, 171, 177, 178, 179, 192, 194, 199, 201, 205, 214,

478
218, 226, 250, 255, 256, 259, 260, 263, 264, 270, 277, 278, 293, 295, 328, 329, 330,
362, 388, 390, 404, 425, 426, 435, 439, 442, 443, 444, 445, 454, 455, 456, 457, 459,
463
Intel 8086, 147
Intel 8088, 153
Intellectual Ventures, 291
Intellicorp, 145, 161
Intergraph, 96
Interleaf, 172
International Business Machines, 23
International Space University, 349
Internet of Things, 253
Internet Security Systems, 215
Internet Technologies China, 381
Intersil, 82
Interval Research, 291
Intuit, 156
Intuitive Surgical, 228
InVisage, 310
Invitron, 227
iPad, 322
iPhone, 316
iPierian, 338
iPod, 280, 301, 316, 367, 395, 396, 466, 468
IPTO, 69
IPv6, 416
Ireland, David, 130
Irr. App. (Ext.), 268
Irrational Design, 359
Isaacson, Walter, 354
Ismail, Salim, 423
ISPF, 125
Itani, Soulaiman, 402
Itek, 54, 62
ITER, 343
iTunes, 318
IUMA, 215
iVillage, 246, 299
iZumi Bio, 338
Jackley, Jessica, 298
Jackson, Joseph, 340
Jacobs, Irwin, 218
Jacobson, Van, 303
Jacopetti, Ben, 77, 453
Jain, Naveen, 237
James, Jerry, 206
Jankowski, Tito, 340
Java, 241
Javan, Ali, 252

479
Javelin, 422
Javey, Ali, 404
Jay, Kenneth, 33
JBoss, 258
JD.com, 383
Jefferson Airplane, 77
Jen, Sandy, 298
Jen-Hsun Huang, 216
Jenks, Timothy, 267
Jensen, Eric, 325
Jensen, Niels, 157
Jensen, Peter, 19, 448
Jet, 424
JGI, 267
Jiangmin Science and Technology, 382
JinShan, 380
Jive Software, 320
Jobs, Steve, 132, 134, 135, 136, 143, 144, 159, 171, 173, 174, 205, 241, 260, 262, 295,
333, 353, 354, 396, 426, 457, 458, 461, 464
Jobs, Steven, 112
Johanson, Chris, 232
Johnson, Franklin, 65, 98, 452
Johnson, Hiram, 21
Johnson, Kelly, 35
Johnson-Lenz, Trudy, 198
Joint Venture Silicon Valley Network, 225
Jonathan Sachs, 156
Jones, Fletcher, 61
Joy, Bill, 146, 162, 183, 194, 311, 313, 353, 409, 416, 426, 457, 458, 460, 467
Joyo, 383
JPEG, 174
Jughead, 212
Juniper Networks, 252
Justin.tv, 326
Kabbage, 348
Kacker, Rishi, 282
Kahn, Herman, 191
Kahn, Philippe, 157
KAI Pharmaceuticals, 287
Kaiser, Henry, 32, 132
Kalanick, Travis, 413
Kalpana, 195, 216
Kan, Justin, 326
Kao, Charles, 252
Kaplan, Jerry, 176, 462
Kaplan, Jonathan, 302
Kapor, Mitch, 156, 230, 292
Kapor, Mitchell, 460
Kareemi, Nazim, 335

480
Karim, Jawed, 274, 299, 467
Karjalainen, Sampo, 305
Karman, Todor, 34
Karp, Alex, 308
Karp, David, 398
Kasesalu, Priit, 281, 299
Kasisto, 399
Katchadourian, Herant, 129
Kato, Ichiro, 387
Katz, Phil, 461
Kay, Alan, 94, 143, 144, 175, 194, 455
Kazaa, 281
Kazerooni, Homayoon, 289
Keasling, Jay, 285, 309, 468
Kell, Jeff, 197
Kelly, Kevin, 190, 231
Kelly, Mervin, 104
Kemeny, Gyorgy, 68
Kemeny, John, 453
Kenichi, Ueda, 344
Kennedy, Alison, 231
Kennedy, Donald, 129
Kent, Adaline, 28
Kenyon, Cynthia, 228
Keondjian, Servan, 265
Kepes, Gyorgy, 85
Kepler, Roy, 58
Kerouac, Jack, 56
Kesey, Ken, 58, 77, 453, 454
Kester, Bryan, 417
Kestrel Solutions, 253
Keyhole, 289, 294
Keyworth, George, 231
Khan Academy, 351
Khan, Ali Akbar, 87
Khan, Salman, 351
Khosla, Vinod, 236, 253, 311, 342, 460, 467
Kickstarter, 362
Kid 606, 268
Kilburn, Tom, 43
Kilby, Jack, 65, 85, 451, 454
Kildall, Gary, 118, 119, 121, 457
Kildall,, Gary, 118
Kilgallen, Margaret, 232
Kimsey, Jim, 180, 461
Kindelberger, Dutch, 35
Kindle, 301
King, Clarence, 20
King, Laura, 140

481
King, Martin, 333
King, Mary-Claire, 200
Kingdee, 380
Kingsoft, 380, 383
Kirsch, Steve, 172, 235, 463
Kittlaus, Dag, 337, 412
Kiva, 298, 412
Klaus, Christopher, 215
Klein, Doug, 198
Kleiner Perkins Caufield & Byers, 251, 256, 311
Kleiner, Eugene, 63, 111, 456
Kleiner-Perkins, 111, 148, 149, 162, 237, 316
Kleinrock, Leonard, 99
Klenerman, David, 266
Knight, Goodwin, 56
Knight, Tom, 341
Knoll, Thomas, 194
Kobilka, Brian, 335
Kodak, 174
Kodak DC40, 217
Kodak DCS100, 217
Kohli, Faqir Chand, 387
Kokubo, Naomi, 346
Komag, 137
Konolige, Kurt, 336
Koplow, Harold, 125
Kornberg, Roger, 335, 468
Korte, Thomas, 346
Kortina, Andrew, 420
Kos, Paul, 130
Kottke, Daniel, 143
Koum, Jan, 368
Kovacs, Bill, 173
Kovacs, Greg, 267
Kovacs, Gregory, 168
Kovacs, Reka, 414
Kozmo, 249
Krach, Keith, 196, 259
Kraus, Joe, 235
Kreditech, 419
Kremen, Gary, 246
Kretchmer, Norman, 129
Krieger, Mike, 324
Krishnamacharya, Tirumalai, 56
Krizelman, Todd, 238, 239
Kubie, Elmer, 61
Kuchar, George, 106
Kuhlmann, Arkadi, 249
Kullman, Ellen, 429

482
Kunz, Paul, 209
Kupershmidt, Ilya, 309
Kurnia, Julia, 348
Kurtz, Thomas, 68, 453
Kurtzig, Sandra, 124
Kurzweil Computer, 172
Kurzweil, Ray, 125, 186, 349
Kushler, Cliff, 333
Kussmaul, Wes, 198
Kusumoto, Roy, 137
Kwamie, Floyd, 82
Kwan, Kau Pak, 380
Kyrola, Aapo, 305
Lab, 206
Lab126, 301
Lakshman. Avinash, 407
Lam Research, 137
Lam, Barry, 389
Lam, David, 137
Lamond. Pierre, 82
Lange, Dorothea, 28, 57
Lanier, Jaron, 175, 313, 461
Lanza, Robert, 287
Laplanche, Saeed, 345
Laser Diode Labs, 252
Lashlee, Hal, 156
Lasseter, John, 262, 464
Laszlo, Andrew, 419
Lau, Benny, 264
Lau, James, 183, 223
Lau, Lee, 264
Laughlin, Robert, 335, 465
Laurer, George, 457
Law, John, 206
Lawrence Berkeley Labs, 201, 266
Lawrence Berkeley National Laboratory, 309
Lawrence Livermore Laboratory, 55
Lawrence, Ernest, 25, 26, 448, 449
Lawrence, John, 26, 448
LE-120A Handy, 109, 387
Leap Motion, 332
Leary, Timothy, 77, 189
Lecun, Yann, 412
Leddy, William, 350
Lederberg, Joshua, 129
Lee, Christopher, 227
Lee, Tsu-Wei, 137
Leemans, Wim, 344
Legato, 194, 319

483
Legend, 381
Leghorn, Richard, 62
Lei, Jun, 383
Leibert, Florian, 408
Leigh, Darren, 317
Leighton, Thomson, 249
Leininger, Steve, 135
LendingClub, 345, 348, 419
Lenovo, 381
Leon, Humberto, 404
Leonard, George, 130, 151
LePen, Laurent, 403
Lerios, Apostolos, 407
Lerner, Sandy, 180
Lesk, Mike, 142
Lessig, Larry, 284
Letterman Digital Arts Center, 312
LeTV, 385, 386
Levchin, Max, 273, 274, 465
Levie, Aaron, 318
Levin, Joe, 44
Levine, Uri, 411
Levinson, Arthur, 411
Levitt, Michael, 227, 335
Levoy, Mark, 302
Levy, Jim, 157
Levy, Steven, 186
Lewin, Daniel, 249
Lewis Michael, 354
Li, Kuo-ting, 387, 388
Li, Robin, 382, 389
Li, Wanqiang, 383
Li, Yanhong, 235
Lick, James, 13
Licklider, Joseph, 69
Lieb, Al, 249, 464
Liebao, 380
Lightera Networks, 253
Lights In A Fat City, 206
Lightwave, 167
LIGO, 344
Lim, Carol, 404
Lim, Eddie, 420
Lin, Bin, 383
Lin, Hurst, 381
Lindbergh, Charles, 33
Linder, Natan, 405
Linear Technology, 160, 178
LinkedIn, 274

484
Linus Technologies, 176
Linux, 223, 258, 316
Linvill, John, 168
Lion, John, 86
Lipkin, Efrem, 113, 456
Lippincott, Donald, 28
Lippman, Andy, 175
Lisa, 159
Listen.com, 273
Litton, Charles, 31, 41
Litton, Charlie, 19, 24, 53
Liu, Chuanzhi, 381
Liu, De, 383
Liu, Derek, 305
Liu, Jiren, 380
Liu, Qiangdong "Richard", 383
LiveLoop, 422
Livermore, Horatio, 14
Lobovsky, Maxim, 405
Lockheed, 50, 84, 426
Lockheed Corporation, 33, 34, 35, 53, 54, 364, 451
Locks, Seymour, 57
Logan, Duncan, 346
Logitech, 160
Long Now Foundation, 268
LookFlow, 412
Lord, Chip, 87, 130
Lord, Rob, 215
Lore, Marc, 424
Lotus, 156, 193, 259
Loughead, Allan, 33
Lowe, William, 153
LS9, 311
LSI, 422
LSI Logic, 160, 178
Lucas, George, 131, 144, 455
Lucasfilm, 174, 175, 262, 312
Lucent, 253
Lucid VR, 402
Luckey, Palmer, 402
Ludic Labs, 297
Ludwick, Andrew, 180
Luggage Store, 206
Luini, Jon, 215
Luma, 418, 422
Luminous Networks, 253
Lumus, 402
Luxn, 253
Lyft, 413

485
Lynch, Bill, 320
Lynx Therapeutics, 227
Lyon, Bob, 183, 194
Lytro, 302
Ma, Huateng, 389, 397
Ma, Huateng, 382
Ma, Jack, 382, 389, 428
Mabry, Michael, 233
Machine Intelligence Corporation, 145, 157
Macintosh, 170
Macintosh II, 171
MacMurtrie, Chico, 232
Macromedia, 215, 241
MADDIDA, 44
Madey, John, 129
Maestri, David, 331
Maestro, 125
Magdon-Ismail, Iqram, 420
Magic, 418
Magic Leap, 403
Magic Theatre, 86, 152
Magnavox, 19, 97
Magnavox Odyssey, 160
Magnetic Drum Digital Differential Analyzer, 44
Magnetophon, 38
Magnuski, Hank, 142
Mailchimp, 400
Maiman, Ted, 86
Maiman, Theodore, 252, 452
MakerBot, 405
Malachowsky, Chris, 216
Malda, Rob, 254
Malik, Prashant, 407
Malina, Frank, 34, 449
Malina, Roger, 190, 459
Malka, Meyer, 334
Malloy, Judy, 189, 461
Malone, Michael, 353, 423
Malone, Mike, 438
Mann, Julian, 414
Manwaring, Michael, 233
MapQuest, 248
MapReduce, 407, 408
Marconi, Guglielmo, 17, 18, 19
Marcus, Michael, 182
Marden, Ethel, 44
Marimba, 248
Marini, Giacomo, 160
Marino, Roger, 319

486
Marioni, Tom, 130
Mark IV, 101
Mark-8, 113
Markkula, Mike, 66, 133
Markowitz, Victor, 266, 267
Marks, Harry, 189
Markus Persson, 401
Marsden, Randy, 333
Marsh, Bob, 119
Marshall, Peter James, 370
Marshall, Will, 414
Martin, Hugh, 163
Martin, James, 258
Martin, Tony, 75
Martin. Peter, 56
Martinez, Xavier, 21
Martino, Paul, 296
Marvell, 261, 329
Mason, Andrew, 324
Masuoka, Fujio, 183, 388, 461
Match, 401
Mathews, Arthur, 21
Mathews, Max, 451
Mathewson, Nick, 281
Matmos, 268
Mattel Intellivision, 160
Matter, 346
Matterport, 402
Mattheij, Jacques, 327
Mauchly, 43
Mauchly, John, 38, 449
Mauldin, Michael, 212
Maxim, 160, 178
Maxis, 199
Maxygen, 285
Mayan Networks, 253
Maybeck, Bernard, 22, 448
Mayer, Adam, 405
Mayer, Marissa, 355, 398, 424, 429
Mayfield Fund, 111
Mazzola, Mario, 195
McAfee, John, 197
McCahill, Mark, 212, 462
McCarthy, John, 59, 69, 79, 450, 452, 453, 454
McCauley, Raymond, 340
McClendon, Brian, 289
McClure, Dave, 346
McClure, Michael, 57
McCollum, John, 132

487
McComb, Ron, 76
McCone, John, 33
McConnell, John, 107
McCool, Robert, 242
McCulloch, Warren, 449
McCullough, Jack, 24, 25
McCune, Brian, 161
McDonnell, Jim, 34
McEachern, Doug, 75
Mcel, 305
McFadden, Daniel, 335, 466
McGaw, Bruce, 57
McGee, Barry, 232
McGhee, Ridge, 347
McGreevy, Michael, 175, 460, 461
McKelvey, Jim, 420
McKenna, Regis, 82, 111, 112
McKeown, Nick, 319
McKubre, Michael, 344
McMillan, Bill, 267
McMillan, Edwin, 26, 36, 449, 450
McMillan. Edwin, 55
McMullen, Jim, 82
McMurtry, Burton, 111, 457
McNealy, Scott, 162, 460
McNeilly, Mike, 82
Mead, Carver, 336
Meadlock, Jim, 96
Mediafire, 301, 315
Medin, Milo, 251
Medlock, Ben, 333
Meebo, 298
Meerkat, 326
Mehrotra, Sanjay, 194
Meka, 412
Melchor, Josette, 313
Melen, Roger, 134
Memex, 39
Memorex, 52, 84, 97
Meng, Teresa, 260
Menlo Ventures, 187
Merkle, Ralph, 139, 289, 457
Merriman, Dwight, 308
Merry Pranksters, 77
Mesosphere, 408
Messina, Chris, 325, 346
Metalab, 346
MetaMarkets, 408
MetaMind, 412

488
Metanautix, 407
Metcalfe, Bob, 114, 141, 296, 457
Metcalfe, Jane, 231
Metricom, 240
Meyer, Evi, 406
Meyer, Frederick, 22
Michels, Larry, 147, 458
Micral, 113
Micro-Electro-Mechanical Systems, 168
Micromodem 100, 142
Micron, 177, 302
MicroPro, 135
Microsoft, 121, 147, 153, 154, 171, 172, 178, 193, 213, 221, 222, 235, 248, 270, 280,
299, 316, 317, 319, 320, 322, 380, 381, 383, 384, 412
Micro-soft, 117
Migicovsky, Eric, 403
Milk, Harvey, 131, 152, 458
Millard, William, 117, 121
Miller, Chris, 238
Milner, Yuri, 428
Milo, 324
Milosz, Czeslaw, 459
Minecraft, 401
Miner, Bob, 139, 164
Miner, Jay, 133, 173, 458, 461
Minitel, 116
Minsky, Marvin, 59, 69
MIPS, 163
Mirabilis, 213
Misfit, 404
Mitra, Subhasish, 364
MITS, 112, 117
Mitta, Sridhar, 388
mKesh, 306
MK-Ultra, 58
Mobipocket, 301
Mochly-Rosen, Daria, 287
Mockapetris, Paul, 165, 460
Modha, Dharmendra, 336
Modicon 084, 96
Molectro, 81
Molecular Applications Group, 227
Moll, Frederic, 228
MoMo, 386
Mondo 2000, 231
Mongayt, Anna, 419
MongoDB, 308
Monier, Louis, 236
Monsanto, 265

489
Montgomery, John Joseph, 33
Moog, Robert, 453
Moore, Gordon, 63, 83, 88, 426, 451, 453, 454
Mooring, Dave, 403
Moov, 404
Moran, Dov, 279
Moravec, Hans, 186
Morgan, Julia, 35
Morgan, Ted, 400
Morin, Dave, 324
Moritz, Michael, 275
Morley, Grace, 29
Morley, Richard, 96
Morningstar, Chip, 175
Morris, 197
Morris, Melvyn, 401
Morris, Robert, 197, 245
Morse, Stephen, 136
Morton, Jack, 47
Morton, Paul, 52
MOS Technology, 122
Mosaic, 210, 235
Moseley, Tim, 37
Mosoiu, Anca, 346
Moss, Jeff, 231
Motorola, 47, 63, 82, 117, 122, 136, 177, 293, 316, 383
Motorola M68000, 147
Mozilla, 243, 292
MPEG, 261
M-Pesa, 305
MPMan, 280
MS-DOS, 153
MSN Messenger, 213, 299
M-Systems, 279
Muir, John, 20, 21
Mulcahy, Anne, 429
MuleSoft, 409
Mullenweg, Matt, 307, 466
Muller, Martin, 152
Mullican, Lee, 58
Mullin, Jack, 38
Mullis, Kary, 150
MULTICS, 69
Mumford, John, 98
Munoz, Jordi, 415
Muroga, Saburo, 47
Murphy, Michael, 76, 452
Murray-Hopper, Grace, 38, 44, 60
Musashino, 47

490
Musk, Elon, 273, 274, 312, 353, 414, 466
Myhrvold, Nathan, 172, 291
Myriad Genetics, 200
MySpace, 297
Naimark, Michael, 175
Nakamoto, Satoshi, 468
Nakamura, Dan, 268
Nall, James, 65, 81
Nanosatisfi, 414
NanoSolar, 288
Nanosys, 289
Napier, Jack, 152
Napster, 280
Nariyawala, Mehul, 332
Narrative Science, 412
National Semiconductor, 81, 111, 122, 177, 183
Natoma Water and Mining Company, 14
Nauman, Bruce, 76
Naval Ordnance Research Computer, 46
Navigenics, 338
NCR, 23, 46, 48, 49, 72, 91, 154
Nebula, 409
NEC, 108, 199, 226, 388, 391, 459, 462
Neely, Shawn, 145
Negativland, 191
Negroponte, Nicholas, 85, 173, 231, 460
Nelson, Phil, 194
Nelson, Ted, 69, 99, 176, 189, 303
NeoPhotonics, 267
Neri, Manuel, 58
Neri, Ruby "Reminisce", 232
Nestar, 141
Nestio, 420
NET, 180
Netease, 382
Netflix, 248, 300
NetObjects, 246
Netscape, 235, 241, 243, 292
Netscape Communications, 210
Network Appliance, 223
Network Computing Devices, 198
Neusoft, 380
New Balance, 406
New Matter, 405
New Science & Technology, 382
Newcomb, Bernard, 214, 249
Newdoll, Julie, 354
Newell, Allen, 59, 451
Newmark, Craig, 245, 464

491
Newton, Huey, 78, 454
Newton, Jim, 347
Newton, John, 195
NeXT, 173, 241, 260
Next2Friends, 327
NextBank, 421
NextBio, 309
NextVR, 403
Ng, Andrew, 304, 336, 351, 412, 467
Nicira Networks, 319
Ning, 297
Nintendo, 163, 183, 199, 304, 331, 374, 388, 401, 460, 469
Nishi, Yoshio, 177
Nishida, Atsutoshi, 179
Nishikado, Toshihiro, 143, 458
Nixdorf, 224
NLS, 93
Noble, Aaron, 232
Noble, David, 97, 455
Noisebridge, 346
Nokia, 263, 273, 397
Nomad, 280
Noorda, Ray, 156, 223
Norman, Bob, 65
Norman, Gurney, 130
Norris, Sirron, 313
Nortel, 253
Northrop, 344
Northrop Aircraft, 44, 48
Northrop, Jack, 33
Northrop, John, 55, 449
Norton, DeRay, 131
Norton, Joshua, 13
Norton, Susan, 131
Norvig, Peter, 351, 353, 412
Nosek, Luke, 273, 274, 339
Noskowiak, Sonya, 29
Novakovic, Phebe, 429
Novell, 156, 223
NOW, 236
Noyce, Robert, 63, 65, 66, 81, 88, 178, 205, 353, 354, 426, 451, 454
Nuance, 333, 398
Numenta, 412
Nupedia, 283
NuvoMedia, 249
Nvidia, 216, 265, 403
Nygaard, Kristen, 94
Nystrom, Anthony, 327
O’Connor, Kevin, 215, 246

492
Oates, Ed, 139
Obama, Barack, 469
Obata, Chiura, 28
Object Geometries, 405
O'Brien, Ray, 409
Och, Franz-Josef, 294
Octel Communications, 160
Octopus, 100
Oculus, 402
Odysee, 422
Odyssey, 97
Ogilvy, Jay, 191
Ohanian, Alexis, 307
O'Hara, Jeff, 351
Ohno, Taichi, 73
Ohno, Taiichi, 376
Oikarinen, Jarkko, 197
Oldfield, Barney, 53
Oliveira, Nathan, 57
Oliver, Bernard, 190
Oliveros, Pauline, 75
Olivetti, 84, 154, 192, 224, 254, 280
Olsen, Ken, 61, 62, 451
Olsen, Kenneth, 136
Olson, Peter, 160
Omate, 403
Omidyar, Pierre, 246, 465
OnDeck, 348
O'Neill, Dan, 106
O'Neill, Gerard, 189
ONElist, 307
OneSocialWeb, 325
OneWorld Health, 285
ONI Systems, 253
OnLive, 332
Onslow-Ford, Gordon, 58
OnTheGo, 403
Onyx, 146
Onyx C8002, 146
Open Directory Project, 236
Open ICQ, 382
Open Software Foundation, 196
Open Theater, 77
OpenDNS, 409
OpenPCR, 340
OpenStack, 409
Openwave, 219
Oppenheimer, Frank, 107, 455
Oppenheimer, Robert, 26, 36, 50, 55, 448, 449

493
Oracle, 139, 140, 150, 164, 193, 259, 263, 277, 303, 319, 328, 368, 407, 426
Orbital Sciences, 414
ORDVAC, 47
Origin, 199
Oringer, Jon, 399
Orlicky, Joe, 73, 452
OS/2, 221
Osborne, 154
Osborne, Adam, 154
Osheroff, Douglas, 335, 464
Osterhout Design Group, 403
Ouya, 401
Overture, 296
Ozzie, Ray, 198, 423
P101, 84
P2P, 280
P-80 Shooting Star, 35
Pachikov, Stepan, 424
Pachube, 416
Pacific Coast Enterprise, 42
Pacific Coast Oil Company, 15
Packard, David, 30, 353, 449
Page, John, 140
Page, Larry, 237, 294, 353, 425, 426, 465
Pahl, Sebastien, 409
Palantir, 424
Palantir Technologies, 308
Palevsky, Max, 49, 72, 101, 452
Palm, 278, 316, 327
Palm Pilot, 273
Palmer, Ralph, 44, 72
Pamela Z, 232
Pandora, 272
Pangea Systems, 227
Panofsky, Pief, 79
Pansophic, 159
Pansophic Systems, 102
Papworth, Neil, 218
ParAllele Bioscience, 339
Parametric Technology, 416
PARC, 94
ParcPlace, 194
Pardo, Trabb, 158
Parekh, Abhay, 249
Parisoma, 346
Park, David, 57
Park, James, 404
Parrot AR Drone, 415
Parson, John, 59

494
Parsons, Jack, 34, 35
Particle, 416
Pastor, Sebastiana, 232
Paternot, Stephan, 238, 239
Paterson, Tim, 121, 153
Path, 324
Patil, Suhas, 192
Patlan, Ray, 191
Patni, Narendra, 370, 387
Patterson, Arthur, 256
Patterson, David, 163, 236, 459
Patterson, Jeff, 215
Pauker, Matt, 283
Paul, Sunil, 413
Pauline, Mark, 152, 232, 458
Paulson, Don, 76
Payne, Jonathan, 248
Paypal, 298, 426
PayPal, 274, 297
PC, 153
PCH Innovation, 347
PDF, 216
PDP, 84
PDP-1, 61, 62, 68, 104, 174, 452
PE Biosystems, 266
Peabody, Bo, 239
Pearson, Gerald, 105
Pebble, 403
Peddle, Chuck, 122
Peet, Alfred, 76
Pentz, Bill, 110, 121
Penzias, Arno, 105
PeopleSoft, 195, 224, 259, 303
Pepper, Tom, 281
Perceptron, 59
Pereira, William, 456
Perfetto, Josh, 340
Periscope, 326, 422
Perkin-Elmer, 265
Perkins, Tom, 111, 456
Perl, Martin, 335, 464
Perlegos, George, 137
Perlman, Steve, 246, 332
Perlmutter, Saul, 335, 465
Perot, Ross, 73
Perrine, Fred, 14
Perry, Bill, 53, 83, 149, 453
Perry, Meredith, 424
Personal Capital, 348

495
Pesce, Mark, 463
Petersen, Kurt, 168, 267
Peterson, Christine, 200
Peterson, Sidney, 29
Pettis, Bre, 405
Pfeil, Matt, 407
Pfleumer, Fritz, 38, 448
PFS, 140
PFS:Write, 140
Phelan, James, 29
Philadelphia Storage Battery Company
Philco, 27
Philbin, James, 321
Philips, 154, 183, 246
Phillips, Andy, 130
Photoshop, 194
Piazzoni, Gottardo, 21
Picariello, Alyssa, 305
Picture System, 124, 163, 173
Piero Scaruffi, 254, 350
Pierson, Thomas, 190
Pilot ACE, 43
Pincus, Mark, 296, 331
Pinhas, Adi, 321
Pinkerton, Brian, 212
Pinterest, 408, 424
Pirate Bay, 301
Piscopo, Joseph, 102
Pishevar, Shervin, 331
Pisoni, Adam, 320
Pitts, Walter, 449
Pixar, 174, 262
Pixley, Frank, 22
Planet Drum, 107
Planet Labs, 414
Platfora, 407
PLATO, 114
PLATO Notes, 198
Platzer, Peter, 414
Plexicon, 287
Pliner, Michael, 193
Plink, 321
Plug and Play, 345
Poduska, William, 162
Point, 420
Pointcast, 247
Poirier, Yves, 228
Polese, Kim, 248
Polk, Willis, 22

496
Polly, Jean Armour, 212
PolyPlus Battery, 229
Pomeroy, Tom, 249
Pong, 97
Poniatoff, Alexander, 37, 449
Pons, Stanley, 343
Porat, Marc, 216, 311
Porter, William, 214, 249
Portman, John, 454
PostScript, 158
Potter, David, 176
Poulsen Wireless Telephone and Telegraph Company, 18
Poulsen, Valdemar, 18
Pourak, Karim, 339
PowerPoint, 172
Pratt, Haraden, 19
Pratt, Ian, 319
Precision Instruments, 139
Pregel, 408
Premise, 408
Premji, Azim, 387
Price, Jeffrey, 279
Pridham, Edwin, 18, 19, 448
Priem, Curtis, 216
Priest-Dorman, Greg, 402
PrimeSense, 332
Primus, 232
Prnet, 142
Processor Technology, 119
Prodigy, 198
Project Adam, 412
Project Cyclops, 190
Project Genie, 70
Project MAC, 69
Prosper, 348, 419
Proulx, Tom, 156
Proxim, 142, 260
Pruden Carmen, Albert, 14
Prussia, Nancy, 152
Psion, 176, 223, 263
PTDOS, 382
Puig-Suari, Jordi, 414
Pure Digital Technologies, 302
Pure Software, 248
Pyramid Technology, 164
Qian Xuesen, 34
Qik, 327
QQ., 382
Qualcomm, 218, 416

497
Quanta, 335
Quantum Computer Services, 180
Quantum Link, 198
Quarles, Miller, 226
Qubole, 407
Quid, 337
Quidsi, 424
Quip, 400
Quist, George, 98, 454
Qwest, 253
Rabson, Doug, 265
Rachleff, Andy, 419
Rackspace, 409
Radical Faeries, 131
Radio Shack, 135
Raduchel, Bill, 146
Rafii, Abbas, 335
Raibert, Marc, 411
RAMAC, 52
Rambus, 216
Ramsay, Mike, 262
Ranadive, Vivek, 194
Rao, Venkatesh, 360
Rapidshare, 300, 315
Rapoport, Sonya, 152, 459
Raskin, Jef, 170
Rasmussen, Lars, 294
Rasna Corporation, 196
Rat Bastard Protective Association, 58
Ratliff, Wayne, 156
Raychem, 54
Raydac, 49
Raymond, Arthur, 34
Raymond, Dick, 78, 130
Raymond, Scott, 324
Raytheon, 48, 63, 143
Raz, Uri, 398
Razr, 315
RCA, 19, 24, 28, 40, 46, 48, 54, 66, 72, 82, 91
RCA Labs, 252
Reagan, Ronald, 107
Reagan, Trudy Myrrh, 190
RealNetworks, 245, 262, 273
Rearden, 332
Red Hat, 258, 319
Red Hat Linux, 223
Red House Painters, 232
Red Pepper, 224
Redditt, 307

498
Reddy, Damodar, 310
Reenskaug, Trygve, 144
Refactored Materials, 411
Regency TR-1, 48
Regitz, Bill, 92
Reichardt, Jasia, 107
Reichert, Sarig, 327
Reid, Clifford, 194, 338
Reiling, Kinkead, 285
Reimers, Niels, 80
Reisinger, Joe, 408
Remington Rand, 23, 44, 45, 46, 59, 72, 450, 451
Ren Ng, 302
Ren, Zhengfei, 381
Renaud Laplanche, 348
Renren, 383, 390
Reprap, 405
RepRap, 405
Research In Motion, 278, 316
Residents, 151
Ressi, Adeo, 347
Rethink Robotics, 336
Reuss, Theodor, 35
Rexroth, Ken, 56
Rexroth, Kenneth, 41
Reynolds, Jon, 333
Rezner, John, 238
RFID, 142
Rheingold, Howard, 231
Rhodes, Ida, 44
Ricardo "Rigo 23" Gouveia, 232
Rice, Condoleezza, 233, 234, 343, 463
Rich, Robert, 191
Richards, Joey, 412
Richter, Burton, 457
RichWin, 381
Adams, 197
Riddle, Mike, 157
RightNow Technologies, 319
Riley, Terry, 75, 453
Ringelmann, Danae, 362
Ringley, Jennifer, 327
Riordan, Michael, 187
Ripple, 421
Ripple Labs, 421
Ritchie, Dennis, 100, 105, 455
Rive, Peter, 312
Rivera, Diego, 29
Rizzoli, Achilles, 28

499
Robbins, Trina, 106
Roberts, Chris, 199
Roberts, Ed, 117, 350, 457
Roberts, Lawrence, 99, 166
Robinson, Herbert, 61
Robinson, Jonathan, 346
Robl, James, 287
Rock, Arthur, 63, 65, 72, 88, 148, 452
Rockefeller, Laurance, 42, 62, 449
Rocket Internet, 345
Rocketmail, 244
RocketSpace, 346
RockMelt, 324
RockYou, 323
Rodriguez, Patricia, 191
Rodriquez, Patricia, 130
ROLM, 141
Romero, John, 331
Rometty, Virginia, 429
Roosevelt, Theodore, 17
Rosati, Mario, 98
Roscheisen, Martin, 246, 288
Rose, Geordie, 364
Rose, Marshall, 214
Rosedale, Philip, 304, 465
Rosekrans, John, 152
Rosen, Charlie, 93, 157
Rosenblatt, Frank, 59, 451
Rosenblum, Mendel, 258, 465
Rosendahl, Carl, 145
Rosing, Wayne, 275
Ross, Blake, 292, 467
Ross, Douglas, 62
Rossetto, Louis, 231
Rossmann, Alain, 217
Rothko, Mark, 57
Roy, Bhaskar, 327
Roy, Raman, 389
Rubin, Andy, 278, 316, 328, 411, 423
Rubin, Ben, 326
Rubin, Jon, 232
Rubinstein, Seymour, 135
Ruderman, David, 186
Rukeyser, Muriel, 41
Runnymede Sculpture Farm, 152
Russell, Steve, 68, 97, 129, 452
Ryan, Anca, 346
Ryan, Claude, 33
Ryan, Harris, 17, 24

500
Ryan, Kevin, 308
Ryan, Thomas, 301
S3, 265
Saal, Harry, 142
Saba, Simon, 342
Sabot, Dick, 239
SABRE, 68
Sacerdoti, Earl, 145
Sachs, Ely, 342
Sachs, James, 249
Sachs, Jonathan, 460
Sacks, David, 320
Saehan Information Systems, 261
Safaricom, 305
Saffo, Paul, 416
Saffron Technology, 412
SAGE, 45, 60, 68
Sager, Brian, 288
Sakharov, Andrei, 343
Saleforce.com, 272, 320
Salon, 254
Salton, Gerry, 70
Samsung, 302, 383, 391
Samuel Sheng, 294
San Francisco Mime Troupe, 75
San Jose Fruit Packing Company, 15
Sandberg, Russell, 194
Sandberg, Sheryl, 355
Sandbox Suites, 346
Sanders Prototype, 405
Sanders, Jerry, 66, 90, 122, 455
Sanders, Royden, 405
SanDisk, 223, 264, 422
Sanger, Fred, 150
Sanger, Larry, 283
SAP, 124, 224, 259
Sapir, Erik, 406
Sargent, Ted, 310
Sarma, Sanjay, 254, 282
Sassenrath, Carl, 173, 461
Sastry, Shankar, 343
Sato, Moritoshi, 410
Satoshi Nakamoto, 333
Savio, Mario, 76, 453
Scarpa, Carlo, 280
Scelbi, 113
Schachter, Joshua, 306
Schaft, 412
Schank, Roger, 413

501
Schapiro, Nina, 107
Schawlow, Arthur, 86, 105, 459
Schekman, Randy, 335
Schell, Steve, 405
Scheller, Richard, 150
Schenker, Leo, 105
Scherr, Max, 77
Schingler, Robbie, 414
Schlessinger, Joseph, 287
Schlumberger, 146, 183
Schmidt, Benno, 42
Schmidt, Eric, 275, 276
Schmidt, Ronald, 180
Scholes, Myron, 335, 464
Schoology, 351
Schoultz, Andrew, 313
Schultz, Peter, 227
Schwartz, Peter, 190, 231
SCO, 147
Scott, Bruce, 139
Scott, Randall, 227
Scull, John, 170
Sculley, John, 171
SDC, 61
SDS, 72, 101
Seaborg, Glenn, 26, 36, 55, 449, 450
SEAC, 44
Seagate Technology, 138, 279
Seale, Bobby, 78, 454
Searle, John, 145, 146, 459
Sears Tele-Games, 160
Seasteading Institute, 349
Second Life, 304
SeeControl, 417
Seedrs, 420
Seeger, Charles, 22
Sega, 199, 401
Segre, Emilio, 26, 452
Sehat, Nasim, 406
Selective Laser Sintering, 405
Selfridge, Oliver, 60
Sellers, Scott, 265
Selvadurai, Naveen, 324
Sematech, 178
Semiconductor Manufacturing International Corporation
SMIC, 382
Sen Sarma, Joydeep, 407
Sender, Ramon, 75, 452
Sequin, Carlo, 163, 459

502
Sequoia Capital, 111, 237, 256, 274, 299
Serious Materials, 312
SETI Institute, 190, 313
SETI@Home, 313
Setton, Eric, 398
Severiens, Hans, 214
Shabtai, Ehud, 411
Shaff, Stan, 75
Shannon, Claude, 39, 105, 218, 450
Shao, Howard, 195
Shapeways, 406
Share, 60
Sharma, Ken, 196
Sharma, Rohit, 253
Sharp, 112, 154
Sharp, Phillip, 150
Sharpe, William, 335, 462
Shazam, 273
Shein, Barry, 197, 462
Sheldon, John, 61
Shelton, Gilbert, 106
Shelton, Roy, 327
Shen, Jia, 323
Shenker, Shenker, 319
Shenmue, 401
Shepard, David, 59
Shepard, Sam, 152
Shih Ming, 387
Shih, Ming, 137
Shih, Stan, 387, 388
Shima, 122
Shima, Masatoshi, 111
Shinar, Amir, 411
Shniberg, Moti, 338
Shockley Transistor, 63, 214, 451
Shockley, William, 39, 63, 104, 435, 450, 451
Shogren, Joan, 76
Sholes, Christopher Latham, 23
Shugart Technology, 138
Shugart, Alan, 97, 137, 138, 183
Shurkin, Joel, 353
Shustek, Leonard, 142
Shutterstock, 399
Shuttleworth, Mark, 321
SideCar, 413
Sidewalk Labs, 417
Sidhu, Sanjiv, 196
Siebel, 224, 277, 303, 343, 463, 465, 467
Siebel, Thomas, 224, 463, 469

503
Siebel, Tom, 343
Siewiorek, Daniel, 219
Signetics, 66
Silbermann, Ben, 325
Silicon Genetics, 286
Silicon Graphics, 147, 162, 262, 264
Siluria, 342
Silverstone, Abbey, 163, 459
SimCity, 199
Simmons, Russel, 273, 274, 299
Simon, Herbert, 59, 79, 451
Simonyi, Charles, 124, 172
Sina, 381, 382, 389, 391
Sinanet, 381
Sinclair, 154
Sindhu, Pradeep, 252
Singhal, Ashok, 279
Singularity Institute, 287
Singularity University, 349
Sinsheimer, Robert, 186, 461
Sippl, Roger, 140
Siri, 337, 398, 412
Sivaram, Siva, 342
SixDegrees, 249
SixThirty, 420
Sketchpad, 68
Skrenta, Rich, 161, 236
Skrenta, Rick, 325
Skybox Imaging, 414
Skyhook Wireless, 400
Skype, 299, 383
SLAC, 79, 345
Slack, 399, 424
Slashdot, 254
Slashkey, 331
Slayton, Joel, 174
Sleep, 232
Slide, 274
Smalltalk, 94, 144, 194, 222
SMART, 70
Smart Valley, 225
SmartThings, 417
Smith, Bruce, 180
Smith, Dave, 143, 458, 460
Smith, Dexter, 227
Smith, Dylan, 318
Smith, Frank, 16
Smith, George, 217
Smith, Hamilton, 226, 266, 339, 469

504
Smith, Jack, 240
Smith, Julius, 173
Smith, Leland, 457
Smith, Lloyd, 186
Smith, Ross, 265
Smith, Zach, 405
Smoot, George, 335, 468
SMS, 218
Snapchat, 398, 399, 424
SnapGoods, 413
Snibbe, Scott Sona, 349
Snyder, Gary, 57
Socher, Richard, 412
Social Gaming Network, 331
SoftBook Press, 249
Softlab, 125
Software Development Laboratories, 139
Software Plus, 156
Software Publishing, 172
Software Publishing Corporation, 140
Sohu, 381, 382
Sol-20, 119
Solar City, 312
Solectron, 137
Solexa, 266
Solexant, 310
Solidscape, 405
Solomons, Theodore, 20
Solyndra, 342
Somerby, Bob, 254, 465
Somerville, Chris, 311
Sommerville, Chris, 228
Sonsini, Larry, 98
Sony, 48, 138, 154, 183, 246, 261, 322, 387
Soriano, Aracely, 232
Soule, Damon, 313
Southern Pacific Railroad Company, 16
Souza, Larry, 150
Space Invaders, 143
Spacewar, 68
SpaceX, 274, 414
Spark, 416
Spark, Joel, 414
Sparks, Bryan, 223
Spectra Diode Labs, 167
Spectra-Physics, 86
Spelletich, Kal, 232
Spencer, Graham, 235
Sperry Corporation, 31

505
Sperry Rand, 72, 101, 451
Spicer, Jack, 57
Spiegel, Evan, 398
Spiegelman, Art, 131
Spitters, Laurence, 52, 84, 452
Spokeo, 323
Sporck, Charles, 65
Sporck, Charlie, 82
Spotify, 318, 408
Sprague, Peter, 81
Spreckels, Rudolph, 19
Spring, 381
Sprinklr, 424
Sprint, 141, 239, 329
Sproul Hall Sit-In, 77
Spyglass, 235
SQL, 123
Square, 424
SRI International, 95
Sridhar, KR, 288, 466
SRS, 167
SSEC, 39
SSG, 119
Stackpole, Ralph, 22, 28, 29
Stallman, Richard, 119, 165, 283, 461
Standard Oil, 15
Stanford Industrial Park, 50
Stanford, Leland, 13
Stanley, Owsley "Bear", 77, 453
Stanley, Tim, 246
Stanley, Wendell, 55, 449
Starner, Thad, 219, 402
Starr, Dan, 412
StartX, 336
Stauffacher, Frank, 29, 58
Stein, Jon, 348
Steinberg, 266
Steinberg, Wallace, 226
Stephan, Dietrich, 338
Stephens, William, 21
Stern, Gerd, 75
Stern, Stacy, 246
Sternberg, Seth, 298
Steve Kirsch, 435
Stibitz, George, 32
Stieglitz, Alfred, 29, 57
Stiglitz, Joseph, 335, 466
Stolaroff, Myron, 58
Stolle, Bryan, 259

506
Stone Rich Sight, 381
Stone, Ellery, 19
Stonebraker, Michael, 123, 140, 458
Stoppelman, Jeremy, 273, 274, 299
Strands, Mildred "Chick", 75
Stratasys, 405
Strickler, Yancey, 362
Stripe, 419, 424
Stumpe, Bent, 126
Su, Qipiang, 380
Subarachnoid Space, 232
Subotnick, Morton, 75, 452, 454
Sudhof, Thomas, 335
Sudo Room, 346
Suicide Club, 152
Summer of Love, 77
Summize, 325
Summly, 398
SUN, 144, 162, 184, 196, 241, 328
SUN Microsystems, 147, 153, 162, 460
Sun, Edmund, 137, 216
Sung-Hou Kim, 287
Sunkara, Ramu, 327
Sunrise, 422
Suntendy Electronic Technology and Research, 381
Supalla, Zach, 416
Superfish, 321
Suppes, Patrick, 85
Survival Research Laboratories, 152, 207
Sutardjia, Pantas, 261
Sutardjia, Sehat, 261
Sutherland, Ivan, 68, 70, 94, 124, 144, 174, 453, 454
Sutter Hill Ventures, 84
Sutton, Bob, 425
Suzuki, Yu, 401
SWAC, 49
Swan, Erik, 300
Swanson, Robert, 149, 457
Swarm, 422
Swartz, Jim, 256
SwiftKey, 333
Swype, 333
Sybase, 140, 193, 382
Sycamore Networks, 253
Syjuco, Stephanie, 312
Sylvania, 47, 53
Symantec, 157, 258
Symbian, 263
Syme, Valerie, 296

507
Synapse, 339
Synaptics, 401
SynOptics, 180, 252
Syntex, 267, 285
System R, 123, 140
System/360, 71
Systran, 236
SYSTRAN, 85
Systrom, Kevin, 324
Syverson, Paul, 281
Szpakowski, Mark, 113, 456
Szulczewski, Peter, 410
Szybalski, Waclaw, 128, 457
Tabulating Machine Company, 23
Taigman, Yaniv, 412
Tai-Ming "Terry" Gou, 387, 439
Taiwan's Semiconductor Manufacturing Company, 376
Takahara, Beau, 312
Talbert, Dave, 80, 81
Talbot, David, 254, 463
TALEN, 410
Tallinn, Jaan, 281, 299
Tamm, Igor, 343
Tandem, 259
Tandem Computers, 138
Tandy, 134, 135, 153, 154
Tang, Harrison, 323
Tango, 398
Taniguchi, Norio, 200
Taobao, 382, 383, 384, 386
Tape Music Center, 75
Tarolli, Gary, 265
Tarpenning, Marc, 249, 311, 467
Tarr, Jeff, 71
Tarter, Jill, 190
TAT-8, 252
Tata, Jamsetji, 370
Tate, George, 156
Taube, Henry, 460
Taylor, Bob, 70, 94
Taylor, Bret, 323, 400
Taylor, Norman, 45, 62
Taylor, Richard, 335, 462
Tchaikovsky, Pyotr, 28
Tchikovani, Sandro "Misk", 313
TCP, 114
Teal, Gordon, 48
Tech Liminal, 346
TechCrunch, 307

508
TechHub, 347
Technology Venture Associates, 111
Techstars, 346
Teknekron, 111, 194
Teknowledge, 161
Telefunken Labs, 252
Telegent Systems, 294
Telenet, 116
Telesystems, 142
Teleworld, 262
Tencent, 382, 383, 385, 389, 391, 397
Tengxun, 382
Terman, Fred, 30, 36, 62, 67, 429, 448, 449, 451
Terman, Frederick, 19, 24
TerraServer, 248
Terrell, Paul, 120, 132
Tesla, 14, 292, 311, 342, 467, 468, 469
Texas Instruments, 47, 63, 82, 112, 122, 134, 142, 177
Thacker, Charles, 70, 94, 124
Thau, David, 238
theGlobe.com, 238, 239
Theranos, 310
Theremin, Leon, 29
Thessalonians, 232
Thiebaud, Wayne, 76, 452
Thiel, Peter, 273, 297, 308, 353, 426, 433, 465
Thinking Fellers Union Local 282, 206
Thomas, Ragy, 424
Thompson, Beach, 18
Thompson, Kenneth, 100, 105, 455
Thomson, James, 267
Thornton, Tex, 53
Thorpe, Marc, 232
Thrun, Sebastian, 312, 336, 351
Thusoo, Ashish, 407
Tiemann, Michael, 258
TIGR, 226
Tilera, 335
Tilt Brush, 422
Time Warner, 270
time-sharing, 73
TinySpeck, 399
Titan Aerospace, 414
Titus, Jon, 113
TiVo, 262
T-Mobile, 278
TMS, 73
Tmtpost, 386
Tobaccowala, Selina, 249, 464

509
Toffler, Alvin, 231
Tognazzi, Paola, 406
Tokuda, Lance, 323
Tokyo Telecommunications Company, 48
Toma, Peter, 85
Tomlinson, Ray, 113, 456
Tong, Richard, 162
Tony White, 309
TOR, 281
TorrentSpy, 301
Torvalds, Linus, 223, 462
Tosh, David, 325
Toshiba, 177, 179, 183, 226, 260
Totty, Brian, 297
Townes, Charles, 86, 105, 451
Townshend, Brent, 464
TR-52, 48
TRADIC, 48
Tramiel, Jack, 112, 173, 396
Trance Mission, 206
Transcriptic, 411
Transensory Devices, 168
Transitron, 63
Transitron Electronics, 47
Trend Micro, 197
Trent, Jeffrey, 286
Treybig, James, 138
Tripod, 239
Trubshaw, Roy, 175
Truel, Bob, 236
Truscott, Tom, 142
Tsang, David, 137
Tsiang, Ben, 381
TSMC, 328, 383
Tuch, Bruce, 261
Tuck, James, 55
Tucker, Matt, 320
Tumblr, 398
Turing, Alan, 32, 38, 39, 40, 43, 49, 59, 72, 130, 145, 274, 449, 450
Turner, Ted, 285
Turoff, Murray, 114, 188
Twiggs, Bob, 414
Twin Creeks Technologies, 342
Twitch.tv, 326
Twitter, 297, 325, 381, 408, 426
Tymnet, 116
Tymshare, 73, 93
U.S. Robotics, 181, 240
U-2, 35

510
uBeam, 424
Uber, 413, 424
ubiquitous computing, 198
Uccel, 73, 159
UCDOS, 382
uDate, 401
Uemura, Masayuki, 183
Ufida, 380
Uhrman, Julie, 401
Ultimaker, 405
uMake, 406
UMC, 383
Ungermann, Ralph, 122, 141
Unified Computing System, 328
UniGene, 228
Unimate, 59
United Technologies, 229
United Telecom, 141
Unitized Digital Electronic Computer, 46
Univac, 44, 91
Universal Turing Machine, 40
Unix, 12, 100, 105, 115, 127, 132, 140, 142, 146, 147, 148, 157, 162, 163, 164, 165,
166, 172, 177, 179, 183, 193, 194, 196, 197, 198, 209, 213, 222, 223, 225, 239, 242,
247, 258, 260, 264, 297, 317, 455, 457, 458, 459, 460, 462
Unwired Planet, 219
Upstart, 419
Upstartle, 320
Upwest Labs, 346
URL, 210
US West, 251
USB, 218, 264
Usenet, 142
Utterback, Camille, 312, 465
Uunet, 197, 240
Vakevainen, Jarno, 332
Valentine, Don, 65, 82, 111, 456
Valiant, Leslie, 408
Validity, 401
van Dam, Andries, 99, 209, 454
Van Dyke, Willard, 29
van Geest, Yuri, 423
van Herpen, Iris, 406
van Hoff, Arthur, 248
van Nee, Richard, 261
van Twillert, Lidewij, 406
Vanderbyl, Michael, 233
Vanderlans, Rudy, 233
Vardi, Arik, 238
Varian, 50, 51, 86

511
Varian Associates, 79
Varian, John Osborne, 22
Varian, Russ, 27, 30, 31
Varian, Russell, 22
Varian, Sigurd, 30
Vasilyuk, Sasha, 346
Vassilakis, Theo, 407
Vaught, John, 158
VAX, 164
Veblen, Oswald, 49
Vederi, 295
Vejrum, Soren, 240
Venkatesan Murali, 342
Venmo, 420
Venrock, 42
Venter, 339
Venter, Craig, 226, 266, 309, 339, 340, 465, 469
Veritas Software, 279
Verity, 193
Verizon, 348
Vermeer Technologies, 235
Veronica, 212
Viaweb, 246
Vicarious, 412
Video Rover, 387
Villa Montalvo, 29
Villareal, Leo, 428
Villers, Philippe, 96
Villierme, Henry, 57
Vine, 422
Vinge, Vernor, 186
Vinod Khosla, 162
ViolaWWW, 210
Virdy, Ajaipal, 325
Virgin Galactic, 414
Vishria, Eric, 324
VisiCalc, 135
VisiCorp, 171
VisualAge, 222
Viterbi, Andrea, 218
Viv Labs, 412
VLSI Technology, 160, 178
Vmware, 319
VMware, 258, 319, 328
VocalTec, 246
Vodafone, 305
Voigt, Christopher, 309, 467
Voloshinskiy, Dimitry, 421
von Lieben, Robert, 17

512
Von Neumann architecture, 49
von Neumann, John, 43
Von Neumann, John, 32, 39, 44, 47, 49, 59, 60, 449, 450
von Tetzchner, John, 400
Vonderschmitt, Bernard, 192
Voulkos, Peter, 76
VPL Research, 175
VT100, 145
Vulcan, 156
Vultee, Jerry, 34
Wagner, Frank, 101
Wagner, Harvey, 111
Wagon Wheel, 131
Waitt, Ted, 179
Wales, Jimmy, 283, 466
Walker, John, 157, 216, 460
Walmart, 322
Walton, Charles, 117, 455
Walton, Lee, 313
Wang, 138
Wang, Avery, 273
Wang, Charles, 159
Wang, Cher, 389
Wang, Chi-Shin, 137
Wang, Chuan, 383
Wang, Jiangmin, 382
Wang, John, 302
Wang, Li-Chen, 119
Wang, Victor, 346
Wang, Wenjing, 380
Wang, Zhidong, 381
Wanlass, Frank, 80
Ward Cunningham, 242
Warhol, Andy, 76
Warne, Gary, 152
Warnke, Dave, 313
Warnock, John, 124, 158, 459
Warren, Jim, 121
Watkins, Dean, 64, 451
Watkins-Johnson, 64
Watson, Eugene, 86
Watson, James, 67, 200, 226
Watson, Thomas, 23
Watts, Alan, 56
Wavefront, 173
Waze, 411
Wealthfront, 419
Web 2.0, 306
WebCrawler, 212

513
WebCT, 351
WebLogic, 241
Webster, Mark, 261
WebTV, 246
Webvan, 249
WeChat, 386
Weekly, David, 346
Wefunder, 420
Wei, Pei-Yuan, 210
Weibo, 381, 386, 391
Weili Dai, 261
Weinreich, Andrew, 249, 464
Weiser, Mark, 198, 253, 415
Weisman, Jordan, 281
Weissman, Adam, 295
Weitek, 137
Weixin/Wechat, 397
Weixin/WeChat, 383, 391
WELL, 188, 254
Wellner, Pierre, 316
Werdmuller, Ben, 325
Werther, Ben, 407
West, Michael, 226, 287, 462
Westergren, Tim, 272, 273
Westerman, Western, 317
Western Electric, 46, 47, 448
Western Wireless Equipment Company, 19
Weston, James, 28
Weyl, Hermann, 50
Whalen, Philip, 57
Wharton, Tom, 246
What's App, 324
WhatsApp, 368
Where2, 294
Wherry, Elaine, 298
Whirlwind, 45, 46, 47, 48, 62, 70, 450
White, Minor, 57
White, Tony, 266
Whitman, Meg, 366, 429
Whitney & Company, 42
Whitney, Jock, 42
Whitney, John Hay, 449
Whitney, Josiah, 20
Whole Earth Review, 190
Widlar, Bob, 80, 81
Widmaier, Dan, 411
Wieler, Harald, 125
Wiener, Norbert, 36, 39, 60, 450
Wiivv, 406

514
Wikipedia, 283, 293, 322
WikiWikiWeb, 242
Wiley, William, 76
Wilhelm, Eric, 428
Wilkes, John, 408
Wilkes, Maurice, 43
Williams, Colin, 364
Williams, Danny, 76
Williams, Evan, 272
Williams, Frederick, 43
Williams, Josh, 324
Williams, Ron, 413
Williamson, Oliver, 335, 469
Willow Garage, 304, 336
Wilmut, Ian, 265
Wilson, John, 98
Wilson, Mike, 353
Wilson, Robert, 105
Wilson, Sophie, 164
Wilson, Woodrow, 19
WIMM Labs, 403
Wimmer, Eckard, 287
Windham Hill, 151
Windows, 163, 171, 172, 193, 194, 210, 221, 222, 235, 246, 258, 260, 264, 280, 321,
328, 329, 333, 395, 396, 397, 461, 468, 469
Windows 3.0, 221
Windows 95, 221, 264
Wintel, 199
Wired, 231
Wise.io, 412
Wish.com, 410
WML, 219
Wochit, 413
Wojcicki, Anne, 339, 428
Wolfson, Jonathan, 285
Wong, Jiangji, 383
Wonner, Paul, 57
Woodman, Nick, 302
Woolley, David, 114
Wordpress, 307
WordStar, 135
World, 197
WorldCom, 239
Wozniak, 120
Wozniak, Steve, 117, 119, 132, 171, 189, 457, 458
Wright, Will, 199, 304
Wuba, 383
Wurman, Richard, 189
Wyly, Sam and Charles, 73

515
Wyse, 198
Wythes, Paul, 84, 453
X.25, 116
X.ai, 399
X.com, 273
Xen, 319
Xenix, 147
Xerox, 159, 327
Xerox PARC, 8, 94, 95, 114, 124, 128, 141, 143, 144, 146, 155, 158, 162, 167, 171, 176,
180, 194, 195, 198, 223, 252, 275, 303, 364, 425, 432, 442, 455, 457, 459, 461, 463
Xerox Star, 293
Xiaomi, 383, 384, 391
Xiaonei, 383
Xilinx, 160, 178, 192
Xing Technology, 245
Xively, 416
XML, 242
Xoom, 418
Xros, 253
Xu, Eric, 382, 389
Xu, Shaochun, 380
Y2K, 257, 271
Yago, Edan, 421
Yahoo, 239, 273, 293, 296, 306, 321, 384, 407, 410, 412
Yahoo!, 212, 236, 367
Yammer, 320
Yan, Yanchou, 381
Yanai, Moshe, 319
Yang, Allen, 402
Yang, Geoff, 236
Yang, Jerry, 212, 463
Yao, Jinbo, 383
Yazdani, Bobby, 247
Yeager, William, 180
Yelp, 274, 299
Yerba Buena Center for the Arts, 232
YLEM, 354
Yonyou, 380
YouKu, 386
YouTube, 274, 298, 356, 422
YoVille, 330
Yu, Peggy, 383
Yudkowsky, Eliezer, 287
Yulun Wang, 228
Z Corp, 405
Zacconi, Riccardo, 401
Zadeh, Lotfi, 84, 453
Zaffaroni, Al, 79
Zaffaroni, Alejandro, 57, 98

516
Zaffire, 253
Zagoskin, Alexandre, 364
Zaharia, Matei, 408
Zapatistas, 284
Zappacosta, Pierluigi, 160
Zehr, Gregg, 301
Zeki, Semir, 350, 466
Zenith, 50, 192
Zennstroem, Niklas, 299, 466
Zer01 Festival, 312
Zerolene, 16
Zeta Communities, 312
Zhang, Allen, 397
Zhang, Danny, 410
Zhang, Eugene, 346
Zhang, Zhidong, 382, 389, 397
Zhengfei, Ren, 388
Zhongguancun Science Park, 376, 381
Zhou, Guangping, 383
Zidisha, 348
Zilog, 122, 134, 136, 154, 184
Zilog Z8000, 146, 147
Zimmer, John, 413
Zimmerman, Thomas, 175, 459
Zip2, 273
Zuckerberg, Mark, 297, 353, 428, 467
Zuckerman, Ethan, 239
Zuse, Konrad, 32
Zweben, Monte, 224
Zworkyn, Vladimir, 28
Zymergen, 411
Zynga, 331

517