The Valley Guy
THE NEW YORK TIMES BOOK REVIEW – October 3 1, 1999
THE NEW NEW THING
A Silicon Valley Story
By Michael Lewis
268 pp. New York: W. W. Norton & Company. $25.95
MOST BOOKS about business are boring. A great exception was ”Liar’s Poker,” Michael Lewis’s funny, knowing depiction of the monstrously giddy frat-guy world of investment banking. ”Liar’s Poker” was the perfect nonfiction companion volume to ”The Bonfire of the Vanities” in the 80′s canon. During the decade since, Lewis has produced good, charming, thoughtful journalism about business and politics, but I was unprepared for the accomplishment of ”The New New Thing.” It is a splendid, entirely satisfying book, intelligent and fun and revealing and troubling in the correct proportions, resolutely skeptical but not at all cynical, brimming with fabulous scenes as well as sharp analysis. Lines that seem slightly portentous at the outset — The business of creating and foisting new technology upon others that goes on in Silicon Valley is near the core of the American experience” — by the end seem unquestionably true, fully borne out by the tale he has told. ”The New New Thing” may be to Silicon Valley what Pepys’s diary was to 1660′s London or Twain’s ”Roughing It” to the American West of the last century.
Lewis chose to focus on a single, pivotal Silicon Valley player — a new-capitalist adventurer who ”could have made it big at no other time in history.” The result is a wide-ranging but sharply focused chronicle that gathers force and clarity as it unfolds. It was shrewd of Lewis to pick a subject who is important but not a household name — not a Bill Gates or a Steve Jobs or a Steve Case. ”The New New Thing” thus reads, for most of us, like fiction in the best sense, providing character revelation and narrative surprises all along the way.
The book tells the story of the engineer and entrepreneur Jim Clark, reported and written as Clark continued to bestride and transform Silicon Valley — and by extension the American economy. Lewis does not say, but nonetheless proves, that the 55-year-old Clark, not Gates or Jobs or anyone else, is the grandest figure of that realm — at least as accomplished and more interesting, inspiring and likable than his younger peers.
Raised poor and fatherless in a dreary Texas town, Clark must have been a candidate for his yearbook’s Least Likely to Succeed. He unleashed a skunk at a dance, exploded a bomb on a school bus — but wasn’t actually expelled until he told a teacher to go to hell. Because he had never before encountered a multiple-choice exam when he joined the Navy in the early 60′s, and since most of the answers seemed to him partly correct, he circled them all. The Navy accused him of cheating, certain he had tried to fool the computer scoring the tests — which was, in a particularly Dickensian moment of ironic injustice, the first time Clark had ever heard of a computer. Nine months later, however, he scored higher than anyone else on a math test and was promoted to algebra instructor. After the Navy, his life continued its new upward swing — marriage, a master’s in physics, a Ph.D. in computer science — but Clark’s hooligan instincts messed that up in short order: his first marriage collapsed, his second wife left him after he was fired for insubordination from a teaching job, and he sank into a depression.
Providence, however, deposited Clark in the exurbs south of San Francisco, the place no one yet called Silicon Valley. ”In something like an instant the man had changed his life,” Lewis writes. He wound up at the Palo Alto Research Center, known as PARC — the legendarily fecund computer lab created by Xerox. He and his band of Stanford graduate students invented a microchip he called the Geometry Engine, which made possible three-dimensional computer graphics. He decided to start a company based on the chip.
But the hurdles he faced in financing Silicon Graphics permanently inflamed Clark’s righteous, roughneck sense of meritocratic grievance. Although it became perhaps the most successful company in the valley during the 1980′s, ”financiers and managers owned huge chunks of Silicon Graphics and had seized control of the board of directors.” Lewis offers Clark as the ultimate anti-Organization Man, the apotheosis of a new, late-capitalist type, the productive and brilliant corporate worker ”with a taste for anarchy.” A decade after he started Silicon Graphics — essentially powerless, nursing resentments against the money men and mere managers — he walked away.
Clark distilled his experience into a doctrine: ”The guy who finds the new new thing and makes it happen wins. . . . He wanted to create the company that invented the future.” He understood before anyone else at Silicon Graphics that cheap computer power would wreck the company’s business in $70,000 workstations. And a full decade ago he very clearly saw the potential of the embryonic World Wide Web. ”Will personal computing and personal communications be combined,” Clark was asked during a panel discussion in 1990, ”or will it just remain as science fiction?” He gave the correct answer, and then wrote a paper elaborating on his notion. In ”The Telecomputer,” he sketched out an information and entertainment network that average Joes would access through their cable television systems. Suddenly Time Warner, AT&T, Viacom and U.S. West were all madly pursuing Clark’s vision of the future.
But while the giant corporate beasts were lumbering and stumbling to try to build what he had imagined, nimble Jim Clark outflanked them. Recruiting a few young engineers in 1994, he abandoned the ”telecomputer” and instead conjured Netscape into existence — and thus, with the world’s first mass-market Web browser, turned the geeks-only Internet into a vast consumer phenomenon. Three months after he forced Netscape to go public (he wanted cash to build a giant $37 million computer-controlled yacht), the share price had risen from $12 to $140. Clark therefore also more or less single-handedly ignited the stock market’s high-tech I.P.O. explosion.
”People started drinking my Kool-Aid,” Clark told Lewis, casting his persuasive abilities in a classic Valley trope. While Netscape didn’t create the Web, it made friendly and accessible a technology that was regarded as anarchy. ”What the I.P.O. did was give anarchy credibility,” he said. This was the unequivocally salutary part of Clark’s achievement. The other part — the speculative stock-market frenzy he unleashed — will surely prove more of a mixed blessing. ”The most appealing companies became those in a state of pure possibility,” Lewis writes. ”Which is to say that the U.S. capital markets acquired the personal predilections of Jim Clark.”
And there is a remarkable third act as well, played out during just the last couple of years, which Lewis, who had extraordinary access to Clark, witnessed firsthand. After Clark was hospitalized in 1995 — for an impossibly apt affliction, a kind of anti-anemia, too much iron in his blood — he dreamed up Healthscape or, as it came to be called, Healtheon. Unlike Silicon Graphics, which was based on a revolutionary new piece of hardware, or Netscape, based on a revolutionary new piece of software, Healtheon was driven merely by an administrative problem (fragmented, logistically messy American health care) and Jim Clark’s entrepreneurial hubris. His idea was to eliminate medical paperwork by creating a computerized clearinghouse that would act as the intermediary between American patients, doctors, hospitals, H.M.O.’s and insurance companies — to accomplish the idealized efficiency of socialized medicine without the Socialism. This is the point at which the saga begins looking suspiciously tulipomaniacal. ”Clark had no plans to spend even a day in the Healthscape offices,” Lewis writes. ”He had ceased to be a businessman and become a conceptual artist.”
The venture capitalists and bankers were a bit more resistant to Clark’s new big idea than the A-list Silicon Valley engineers who begged to join him, but only a bit. And earlier this year, just a few months after one attempt at an I.P.O. failed, Healtheon successfully sold its shares to the public. Today its market value is $2.6 billion. ”No one asked how a company that the stock market deemed unworthy was now, suddenly, desirable,” Lewis writes. ”Like other Internet companies, it said to the stock market: Our future will look nothing like our present; ergo, you cannot determine our value by looking at the present. You must close your eyes and imagine a new world. . . . In this new world skepticism was not a sign of intelligence. It was a sin.”
Clark has devoted much of the last four years to building Hyperion, possibly the largest sailboat in the world, which he and his on-board team of programmers control with 25 Silicon Graphics workstations. Lewis’s scenes at the Dutch shipyard and aboard the boat make for a refreshing counterpoint to the main story, since they take place in the real world — outdoors, with high winds and ripping sails, among craftsmen and sailors who aren’t obsessed by computers. Clark himself, however, pronounces Hyperion’s maiden trans-Atlantic voyage ”boring as hell” — and it’s true that an awful lot of pages are spent describing the crew and minor computer snafus they face. The tedium of the ocean crossing, however, is redeemed by a spectacular finale: Clark’s own Gulfstream jet buzzes the boat so the pilot can inform the boss by radio that America Online bought Netscape for almost three times what the company was worth when Hyperion left the Netherlands 10 days earlier.
”Now that he had a billion dollars,” Lewis writes of Clark, ”his life had become a great deal more . . . financial. He truly loved money, money truly loved him, and he wanted all the people he liked to be a part of the new relationship.” Indeed, Clark doled out enough Healtheon shares to his yacht captain and yacht programmers to make them millionaires. Yet although he remains magnanimous, at the end of the book one starts to worry that he is becoming a depressingly standard-issue rich guy, who merely wants to get richer instead of doing so in the course of inventing cool new ways to discombobulate the old order. Before Silicon Graphics, Clark said a fortune of $10 million would make him happy; before Netscape, $100 million; before Healtheon, a billion; now, he told Lewis, ”Once I have more money than Larry Ellison, I’ll be satisfied.” Ellison, the founder of the software company Oracle, is worth $13 billion.
There is nothing seriously wrong with this book. One forgives the author’s occasionally coy chattiness, and faux Tom Wolfean exclamatory passages (”Oh, the disdain! Oh, the contempt! . . . Who did Jim Barksdale, Serious American Executive, think these whisperers of secrets and tappers of laptops were? Serfs!”). Only a little more annoying are lapses into smirky men’s-magazine prose, as when he describes Clark piloting a helicopter while ”enduring the aftershocks of two bottles of fine Burgundy.” But Lewis conveys with a rare combination of wisdom and glee both the thrill and absurdity of late-20th-century business. Even his asides are to the point, as when he describes Microsoft’s lead trial lawyer as ”a triple agent in his own soul: a big-city lawyer who thought he had adopted strategically the surface mannerisms of a stupid hick but who was, for the purposes of this trial, a stupid hick.”
”The New New Thing” leaves one with a fond respect for Jim Clark and a dizzy awe at the weird, hypercapitalist moment in which we find ourselves. He may or may not turn out to be a great American, but he is profoundly American. ”As a practical matter Clark had no past, only a future. That’s when he really came alive: when you got him on the subject of what was going to happen next.” He was always open to accident, Lewis writes of Clark — that knack being, in fact, nothing but a more practical formulation of E. B. White’s famous prescription for would-be New Yorkers, the willingness to be lucky.