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Weaving a Common Thread Through Silicon Valley’s History
Originally aired on
June 14, 2020 @ 6:00 AM - 6:30 AM EDT
Best of: Internet Summit 2018
Adam Fisher - Author, Valley of Genius
Richard Tedlow - Professor of Business Administration, Harvard Business School
Moderator: Matthew Prince - Co-founder and CEO, Cloudflare
🎵Outro Music🎵 Welcome back.
Hopefully everyone had a good coffee break. There are lots of seats that people want to come up and fill in.
We've spent a lot of today talking about the future, and so I get to talk about the past with these two fine speakers.
First, immediately to my left, is Adam Fisher.
Adam grew up in Silicon Valley programming computers, has written for publications including Wired, the MIT Technology Review, the New York Times Sunday Magazine, and most recently wrote a book called Valley of Genius, and we have a bunch of copies of the book for attendees, and for a little bit after this, if you grab a book, then Adam has promised to sign them, and it's a great read, so I encourage you to read it.
And then Richard Tedlow.
Richard was the class of 1949 Professor of Business Administration Emeritus at the Harvard Business School.
He was a member of the faculty from 1979 to 2010, and was actually one of my professors when I was at business school, and I'm very happy that we've stayed in touch over the years.
He wrote the book, he would say a biography of Andy Grove, I would say the biography of Andy Grove, called Giants of Enterprise and Andy Grove.
They were selected by Bloomberg Business Week among the top ten business books in their respective years, and Barack Obama actually recommended the Andy Grove book as one of the books he would recommend people read.
And he also more recently was one of the people who helped build Apple University, which is one of the internal organizations of Apple University, and he was on the faculty there until fairly recently.
So I'm really honored to have you both on stage.
We're sitting right now in almost hallowed ground for Silicon Valley and technology.
We're in an area known as South Park, and I thought, Adam, you could tell us a little bit about what have been some of the companies that have been born and grown up and some of the organizations and some of the stories that have happened within a couple blocks of where we are sitting right now.
Well, little known fact, South Park wasn't always called South Park.
It used to be known as Heroin Park. That was before it was $150 per square foot at the real estate listings that are there now.
Exactly, exactly. Yeah, it was a place where you'd run into homeless people and junkies.
And around it, it wasn't so much companies, and I'm talking early 90s now, but kind of artists.
The first big rave scene in San Francisco, which was a direct import from London, had a commune that was on South Park.
So these are all just like Cloudflare, basically.
Yeah, just like Cloudflare, yeah. Without the Harvard connection.
That's right, yes. You know, there was a guy named Yves Behar, who was an artist who started a business on the park.
There were a bunch of little magazines, a kind of San Francisco magazine scene was headquartered off South Park.
There was a magazine called Future Sex. There was a magazine called Mondo 2000.
And there was a magazine called Cups, which was a precursor to what we now know as McSweeney's.
And there was a magazine called Wired.
Those are probably the most notable businesses, and they were there because it was cheap.
And they were actually there because of technology. The reason you could even have kind of a slick magazine culture in San Francisco is because of the Macintosh and desktop publishing.
You know, suddenly you could make these kind of underground magazines look like magazines coming out of New York.
And that's what was here. Yeah, this building was actually, at one point, the home of Monster Cable, which then turned into Beats Audio over time.
And if you go down to the electrical panels downstairs, you can still see the labeling for that.
So both of you have had, you know, really an opportunity to interview a lot of the kind of great business leaders through the history of Silicon Valley.
And I wondered if there was any common thread or common theme that you've seen across those.
And Richard, I'll start with you.
What have you seen that's been common among many of the leaders that you've gotten a chance to get to know over the years?
I think there are two things, I guess.
One is, in Tim Cook's words, he has rhinoceros skin. And that's really required, I think.
And the second is that they have an ability to think different.
And it's those two things that the people who made history in Silicon Valley, to me, share.
And I find quite impressive. Adam, themes that have, I mean, when you read Adam's book, it's really fascinating because it almost reads like a screenplay.
Because it's a series of statements from all of the different people who were involved that have been put together to form a narrative.
In the process of interviewing all those people, were there things that really just stood out as themes that made sense through that time?
Well, yeah. I mean, I'd second what Richard says, for sure.
But the big surprise for me when I went and collected all these origin stories from all the companies you've heard of, and some probably you might not have, but should have heard of, were that in the earliest days, people knew they were creating history.
And they were having an enormous amount of fun.
There was just an incredible spirit of kind of creativity that was going on.
And that's what caused people to kind of end up working all night.
Not because of this kind of, this lash of like, I'm gonna just work harder. And it's almost a leading indicator.
If everybody says, oh my God, we were having so much fun, it was so great because we were creating something new every day.
Well, then that's, that augured really well for the future of these companies.
What was, is it, were, was that, some of your book is, I mean, your whole book is telling the stories of largely the people that won.
Although you tell stories like General Magic, which would, I mean, an incredible cast of characters that went through there and didn't turn into anything.
Did you see any, do you see a difference between, or did you talk to many of the people who didn't, who didn't win, or some of the hundred thousand people who left San Francisco in 2000 when the bubble burst?
Yeah, I mean, the way I see the kind of modern history of Silicon Valley is basically, you know, Atari early 70s to, say, 84 when the Macintosh came out.
And then you've got the kind of Internet 95 on, right? And there's this, so there's essentially three main acts, this early Atari Apple act, this later Internet act, and then this middle act, 84 to 95, so Macintosh launched to Netscape IPO, where essentially everything that Silicon Valley tried to do failed.
Okay, and that's a third of the book.
And that's the general magic captor, that's the well, that's VPL, which invented virtual reality, I can go on.
But there was a lot of failure.
And yeah, they were having fun too, I admit it.
But as it turned out, general magic maybe was a failure as a company, but they invented the iPhone to a first approximation.
Is it, I mean, you get, it's almost like, I don't know if you watch the TV show Halt and Catch Fire, but it's the same people go from inventing Compaq to AOL to video games.
You almost get the same feeling from the book where Yves Behar weaves his way through the story along the way.
And you've got characters that feel like they kind of continue to repeat through that.
How much of the story of modern Silicon Valley is being really written by those people?
No, the same, it's like two dozen people made Silicon Valley, in a way.
And that's because companies like, just to mention one, General Magic.
Yeah, it was a failure because a bunch of VCs lost their money, but so what?
It wasn't a failure to... All the VCs in the audience just sort of strung out in their chairs.
Sorry, sorry. But it wasn't a failure. The people who are really creating the technology and moving on and getting incredible experience, which they then almost literally brought to Apple later.
And so you see this kind of...
The vector is a human vector that goes through all these companies.
The names of the companies change, but the ideas are associated with people and at some point, the technology and the market is right.
You get product market fit and you get another billionaire.
So Richard, Silicon Valley is kind of this funny...
You're talking about genius of Silicon Valley. There's not much silicon being made in Silicon Valley anymore, but you've spent a bunch of time studying and really getting to know Andy Grove and the team at Intel.
Can you talk a little bit about back the history of when Silicon Valley was actually making silicon?
Well, it certainly was when he was there and when I was writing that book, among the people that I met was Arthur Rock, which is a name that may be familiar to some of you.
And we had dinner at a place called the Lion and Compass, which I don't know if any of you know that place.
I remember when the dinner was organized, there were four of us there, I was instructed by the person who invited me to meet Arthur to pick up the check.
Now, this is strictly confidential, but Arthur's wealthier than I am.
He basically invented venture capital. Yeah, and he was a seed investor in Intel and in God only knows how many other companies.
And Apple, he was on the board of Apple forever and this and that and the other.
And it was at that dinner that he said to me that Intel needed Noyce, Moore, and Grove, and it needed them in that order.
And that helped me understand why he was so much wealthier than I am.
That's true. I mean, Noyce was this magic man. I mean, he was, talk about the beginnings of Silicon Valley, I mean, Shockley came out to found Shockley Semiconductor after being the co-inventor of the transistor at Bell Labs, because he wanted to be near his mother and because the weather was better out here.
And eight people went to work for Shockley Semiconductor and Arthur Rock knew all these people and he knew Shockley and Shockley was, you know, impossible.
And so they all decamped from Shockley Semiconductor to Fairchild Semiconductor.
Fairchild Semiconductor, and they were called by, they were labeled immortally by Shockley, the traitorous eight.
And so these traitorous eight went to Fairchild Semiconductor.
Fairchild Semiconductor, founded by Sherman Fairchild, whose father was the first CEO of IBM in 1911.
I'm a historian. I do the past. You do the future, okay?
Noyce was not chosen to become the CEO of that, so he decided to leave that firm and in June of 1968, he went to Gordon Moore of Moore's Law and he said, I have an idea for a company.
And Andy Grove was Intel employee number three. So Noyce was the co -inventor of the integrated circuit.
You know, as smart as anybody. Moore is the Moore of Moore's Law, still alive, made more money from Intel than anybody else.
And Andy Grove is in many ways a very unlikely character.
I mean, he spent the first 20 years of his life in Hungary, served in the Hungarian army, spent the first 10 years of his life running from the Nazis and the next 10 years of his life running from the communists.
And in 1956, there was a revolt in Hungary. The border between Hungary and Austria was open for a brief time.
He literally crawled into Austria, managed to get to New York, got a degree at the City College of New York where the engineering school is now, the Andy Grove Engineering School.
Then came out here to Berkeley, got a PhD in chemical engineering and he had two choices.
He could go to Bell Labs or to work first at Fairchild with Gordon Moore. And he was so enchanted that Moore understood his thesis that he said, you're my guy.
And one of the fascinating things about Grove was he thought he was going to a startup.
I mean, he was Intel employee number three. Actually, he was Intel employee number four.
He should have been Intel employee number three, but a guy named Les Vadez turned out to be Intel employee number three.
Andy has described Les as a typical Hungarian.
He gets into a revolving door behind you and comes out ahead of you.
It was Andy who helped engineer this very important change, which is much studied in business schools, from a focus on dynamic random access memory to a commitment to the microprocessor.
And there's one important moment in that story in which Andy and Gordon, they're depressed.
This is the difference between business strategy and brain weight.
These guys are both smart, but thinking about business and strategy can be different from just brain weight.
And at one point, Andy says to Gordon, if the board fired us and brought in a new CEO, what do you think he would do?
The assumption was it was going to be a he. This was in 1985. This discussion took place.
And Moore answered without hesitation, he would get us out of memories.
And then Grove said, why don't you and I walk out the door, come back in, and do it ourselves?
And that thought experiment was a way of erasing history.
Intel went public on the 1103 memory chip. They were memory. When that business started, they had 100% market share.
And when they were being overwhelmed by the Japanese, they couldn't believe it.
And they finally got out of the business when they had 3% market share.
And then they concentrated. Andy became the CEO of the company in 1987.
They concentrated on microprocessor, and the rest is Wintel.
The rest is history, so to speak. So why did you need them in that order then?
You sort of talked about the value that Grove brought in there, but why did you need Noyce, then Moore, then...
Noyce was the magnet. Noyce was the man who was already well-known.
Noyce knew Kleiner. Noyce knew John Ernie. Noyce knew the Traitors Eight.
He was one of them. Moore is perhaps the greatest technologist that the United States produced in the 20th century.
So you needed him then because the 1103...
I'm not an engineer, but I've spoken to my share of them.
Everybody said it was just a miserable device to try to make work. So you needed somebody with a large brain to go out to customers and show them how.
Andy was a born marketer.
And it was under Andy that Intel Inside was born. And that, as I say, I'm a historian, is extraordinarily rare that a component supplier becomes a channel commander.
And they were only able to do that because they branded the chip Intel Inside.
Back in the day, you're young. You, for example.
I mean, you're young, and so are you. I used to be young. Now I'm old. That's how this works.
But back when I was young, like you, people would go into places like CompUSA, which they can't go into now because they aren't around, and they wouldn't ask for a Compaq or a Dell or an Osborne.
They'd ask for a 386 machine.
In other words, the microprocessor, the component came to define the product.
And that's extremely rare, and that was Andy. So that's Noisemore and Grove.
So you both have written a ton about the history of Silicon Valley.
We're living through an interesting time now. We've had a bunch of panels this morning talking about how the worm has turned to some extent, to a large extent, on this, where technology used to be the panacea and the thing that was going to solve the world's problems, and now we see increasing regulation and attention, negative attention on that.
Are there times in the past in what you've studied before that are instructive to what we're doing now?
Or maybe, what's the advice?
Richard, you had Sheryl Sandberg as a student at some point. What would be the advice that you'd give Facebook right now?
Once again, there's no brain weight issue there.
I mean, Sheryl Sandberg was a Baker Scholar, as I believe you were as well.
A recovering lawyer, too. I try and hide a lot of things. I think I just saw an article just before coming on stage, and I didn't get a chance to read it, so maybe one of you can help me out.
But I understand that Facebook still hasn't discovered the cause of the latest data breach.
And advice that I would give her she wouldn't need, but it's get control of your product, because it seems to be out of their hands right at the moment.
And as we've just learned with the Supreme Court hearings, what teenagers and young people do isn't going to disappear.
It's going to matter a lot in their future lives. In other words, there's a heavy ethical component, and especially with the coming of artificial intelligence, there's going to be a heavy ethical component to technological advances, and people have to take ownership of that.
So that's the advice that I would give.
See a political philosopher in a hurry. Adam, any advice? Oh, well, you know, I'm a historian, so I have to take the long view, have to step back.
And what I see now is definitely the worm has turned. When I started writing my book four years ago, five years ago, Silicon Valley kind of could do no wrong.
It kind of pulled us out of the 2008 depression, and we were great.
Now I look at kind of the mainstream media, the discourse, and it's kind of everybody is bad in Silicon Valley.
And what I see is that this is just another in a long series of boom and bust cycles, okay?
So I don't know what happened during the Silicon era, but when Atari was kind of Silicon Valley in the 70s, it was making more money than all of the Hollywood studios combined.
And 18 months later, completely collapsed. That was...
Look at Silicon Graphics. Yeah, I mean, Silicon Graphics. So that was 77. Actually, there was another collapse in 84.
You know, there was this long dead period that we talked about before the Internet was kind of opened up.
There was a huge collapse in 2000, 2001.
That's why I'm a recovering lawyer and not a securities lawyer, by the way.
Exactly. And now what I see is another big collapse.
And companies like Facebook and Google, you know, are probably too dug in to actually collapse in the way that Pets .com collapsed, for example.
But there is this, you know, rhyme.
You know, history doesn't repeat, it rhymes. And we have this reputational collapse.
And what I see and what we've learned from these prior collapses is that it really pushes out a lot of the people who are here for the wrong reasons.
The kind of people who, you know, want to get rich quick. The MBA students.
The Harvard MBA students, you know. There's no BS like HBS. Yes, exactly.
But, you know, and you get back to the kind of more high-minded technologists.
And they get back to their, like, crazy ideas that really don't need venture money and don't need a business plan, but need just some time in a basement coding and, you know, creating stuff.
So, you know, what am I talking about?
I'm talking about Twitter, you know. I'm talking about, well, Facebook. I'm talking about Napster, which I know is a failure, but we've got Spotify now.
Can I just, for a split second, hitchhike on what Adam's been saying?
Because you've mentioned failure more than once.
And I think there's one thing that needs to be emphasized is that sometimes failure happens in Silicon Valley because people don't know what they have.
The classic example is Xerox PARC. But another very interesting example is AltaVista.
And I wonder if I can ask you, could you tell the AltaVista story?
Well, I mean, in 1998, AltaVista was the leading search engine that was built by, everyone forgets, but Digital Equipment Corporation.
And they built it. It was an advertising platform, but there was only one ad on all of AltaVista, and it was buy a deck mainframe.
So they built a search engine, the leading technologically advanced search engine in the world, in order to sell mainframes, because what you needed at the time to build a great search engine was a big mainframe.
And then there were two kids getting their PhD down at Stanford who didn't have the money to buy a mainframe but thought, can we write some clever software to hook a bunch of cheap computers together to build something that was more powerful?
And that obviously became Google. But it is amazing, and you see this a lot through your book, where the future is out there already.
It just hasn't completely materialized.
I'm going to let people ask questions in a second, but I had one more question maybe for both of you.
Where would you... I mean, if you'd been sitting in General Magic, you'd have met all the people that went on to build the iPhone, right?
Where would you go sit today, and where would you be looking for those people and those ideas to build whatever it is that comes next?
If you're asking me, I'd sit in Cupertino.
The company's got a lot of imagination.
There are a lot of people working at that company.
I've spent eight years there, but I'm not employed there anymore, and I'm not in their public relations department.
But I was simply enormously impressed by not just the vice presidents, many of whom you may have heard of, but it struck me that there were about as many vice presidents at Apple as there were tenured professors at the Harvard Business School.
And it also struck me that if you put their names on a large sheet of paper and threw a dart, you were much more likely to hit somebody really smart on the Apple VP list than on the HBS professor list.
That's because at the Harvard Business School, there's something called tenure, which means that you get to stay there no matter how dumb you grow as you age.
At Apple, you either achieve results or you're not going to keep working there.
You put that together with the fact that inside the organization, I mean, the people who built the camera here are the best camera people in the phone world on Earth.
And the way they work together, the fact that this company is vertically integrated from silicon to retail, all these different functions having different schedules, and the fact that they can still make it work, I just think...
And that they have resources.
I would sit in Cupertino. They've become the IBM that they once sought to disrupt.
I really appreciate you guys coming and sharing this, and Adam's going to stick around for a little bit to sign some books, and so thank you so much, and I encourage you to read both of their books.
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