Why do a post about the Gawker-Peter Thiel court case?
Because the Gawker-Peter Thiel court case marks a step change in Silicon Valley culture and will likely change media practices in new media companies.
What is the Gawker-Peter Thiel court case?
Silicon Valley veteran financier Peter Thiel was behind the financing of a court case that Terry Bollea “Hulk Hogan” filed over a sex tape. An extract of the video was published by Gawker Media.
What Bollea did was stupid. As a veteran celebrity he must have realised that any kind of compromising position would be a tempting pay check for even his closest friends. The behaviour ran of the risk of endangering any commercial endorsements or media deals that he may have had in place. Usually commercial deals of this nature come with a good behaviour clause – I’ve had these clauses in every celebrity and influencer endorsement I’ve been involved with.
Bollea does have a family who would be caused considerable embarrassment by his actions. And it could be argued that secretly filmed sex between two consenting adults isn’t really newsworthy or pertinent for public consumption.
Gawker Media did what growing media empires have done in the past and conduct ‘yellow journalism’. Content of a puerile or sensational nature had been the stock in trade of William Randolph Heart, Joseph Pulitzer, Rupert Murdoch or William Aitken (Lord Beaverbrook). It isn’t morally defensible and it isn’t clever, it is an indictment of the audience.
Gawker did do the public a service, shining a torch on Silicon Valley in a way that hadn’t been done since the early days of InfoWorld’s Notes From The Field column and the book Accidental Empires: How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition, and Still Can’t Get a Date. The problem was that both of those were pre-smartphone and pre-Internet era portraits of the ‘Valley; back when it really did have foundries manufacturing microprocessors.
As an external observer and someone who has done PR for similar companies in the past. I would argue that the relationships between journalists and the Silicon Valley technology beat had become sufficiently docile that media didn’t provide the reader with insightful analysis of what was really going on.
It is the kind of relationship that the US military struggled to have in Iraq and Afghanistan through the embedding process. Instead of MREs and sharing the emotional highs and lows of action; San Francisco journalists got executive access and invites to the same social mixers and conferences.
Valleywag shook up media practices. Although editorial teams won’t admit it; the likes of Recode, TechCrunch and The Information took note.
Peter Thiel is the most interesting person in the cast of the Hulk Hogan court room drama. Thiel is known for his wealth and unique take on libertarianism. I won’t go into is Thiel right or wrong as none of the parties including Mr Thiel deserve our unreserved sympathies. It all just makes me want to re-apply hand sanitiser before using the internet.
What I find most interesting about Thiel’s actions is the way it signifies a cultural shift in Silicon Valley that I have talked about for a good while.
It is hard to believe that within living memory San Francisco was a port city with fish canneries that attracted drug addled misfits drawn by everything from its freewheeling culture and access to drugs. The Santa Clara valley to the south was fertile farm land that grew apricots and prunes. Fruit brand Del Monte started right here. The area grew up as Stanford University and the scientific developments of the late 19th to mid-20th century science revolutionised the US military.
Silicon Valley had a reputation for doing things differently. The mix of academia, counterculture and defence expenditure created a unique culture that evolved over time. The collegiate work environment founded by Bill Hewlett and Dave Packard had much to do with their background in education at Stanford. The HP Way, a set of values guided the company for over 60 years until Carly Fiorina’s tenure as CEO.
Bob Noyce came to Silicon Valley to do pioneering work at Shockley’s lab. Unfortunately, Bill Shockley’s poor people management meant that Noyce became a last minute member of the traitorous eight and went on to found Fairchild Semiconductor and then Intel. In both of these businesses he founded a relaxed culture that was decades ahead of its time and similar to a modern day worker. If you work in a ‘cube farm‘ rather than offices – you can likely blame that on Noyce. His culture influenced interior design and did away with corner offices.
Whilst the enterprise software businesses like Oracle and chip companies like AMD mirrored the hard driving sales teams of their East Coast counterparts at IBM; many Bay Area companies were made of something different. Counterculture had seeped into the industry. The hacker culture of sharing software and the transformative nature of technology brought forth the Home Brew Computer Club and a missive from a nascent Microsoft CEO complaining about early software piracy. Steve Jobs had talked about how his LSD experiences had helped him do the things he did at Apple. Wired magazine was founded by former hippies like Stewart Brand and Kevin Kelly. There was a very good reason why The Grateful Dead were one of the first bands with a website.
I interviewed with a H-P employee back in the late 1990s who told me how had bought his ‘dancing bears’ tie and Jerry Garcia mouse mat from dead.net
The hippies in Silicon Valley brought their ‘back to the land’ ethos and doing their own thing. It is a form of libertarianism, but not one that Thiel or Uber’s Travis Kalanick would likely recognise as their own.
This was the libertarianism of the pioneer who ventured westward or the outlaw biker gang that yearned for the same freedom. The key difference is that the hippy technologist build their frontier to carry onwards, not having to worry about the Pacific ocean and instead going to new realms in code and network infrastructure.
The counterculture ethos could be seen even in web 2.0 products like Flickr which freely allowed customers to move their data or build their own apps on the APIs that the development team used.
Facebook is a marker in time for when the cultural tone of Silicon Valley changed. The hippies were out and the yuppies had taken over. Brogrammers and zero hour working for ‘Uber for’ applications that provide labour as a service.
The Gawker court case marks a similar milestone event in Silicon Valley culture. Thiel’s actions brought a number of his peers out in public to support him. Silicon Valley stops sounding like yuppies and more like the titan’s of the gilded age that would brook no disrespect and governed riches in the face of massive inequality. The Bay Area version of the American dream is dead for the secretaries and engineers who will no longer become financially independent on share options.
Customer service, once seen as a a way into start-ups is now a purgatory. I used to have a client in the late 1990s who worked their way up through a chip company from being in admin when the business was a new start-up to running marketing communications and PR across EMEA in the space of 10 years or so. That progression just wouldn’t happen now, the gilded class have their compliant (if at times resentful workforce) and now want a more respectful media.
The seeds of destruction are already sown for the gilded class. Innovation has moved East to the other side of the Pacific. Baidu is likely to be a leader in deep learning, driverless vehicles and innovation. The leading drone brand is DJI based in Shenzhen – rather than being designed in California and just assembled in China. Networks infrastructure leader Huawei are showing the kind of smarts marketing Android smartphones that Silicon Valley hardware makers would have had a decade ago.
Tencent has shown how dangerous it could be with the right marketing smarts. It already has as good software design chops as the Bay Area. Facebook Messenger bots have been on WeChat for years. If you haven’t done so give WeChat a try, just to see what the application looks like.
A compliant sycophantic media won’t help the gilded class build the financially successful future Silicon Valley in the same way that an inquiring body of journalists could do.
Welcome to my February 2025 newsletter, I hope that your year of the snake has gotten off to a great start. This newsletter marks my 19th issue – which feels a really short time and strangely long as well, thank you for those of you who have been on the journey so far as subscribers to this humble publication. Prior to writing this newsletter, I found that the number 19 has some interesting connections.
In mandarin Chinese, 19 sounds similar to ‘forever’ and is considered to be lucky by some people, but the belief isn’t as common as 8, 88 or 888.
Anyone who listened to pop radio in the mid-1980s to mid-1990s would be familiar with Paul Hardcastle’s documentary sampling ’19’. The song mixed narration by Clark Kent and sampled news archive footage of the Vietnam war including news reports by read by Walter Cronkite. 19 came from what was cited as the average age of the soldier serving in Vietnam, however this is disputed by Vietnam veteran organisation who claim that the correct number was 22. The veteran’s group did a lot of research to provide accurate information about the conflict, overturning common mistakes repeated as truth in the media. It’s a handy reminder that fallacies and trust in media began way before the commercial internet.
New reader?
If this is the first newsletter, welcome! You can find my regular writings here and more about me here.
Things I’ve written.
Zing + more things – HSBC’s Zing payments system was shut down and was emblematic of a wider challenge in legacy financial institutions trying to compete against ‘fintech startups. I covered several other things as well including new sensor technology
The 1000 Yen ramen wall is closing down family restaurants across Japan. A confluence of no consumer tolerance for price elasticity due to inflation driven ingredients costs is driving them to the wall. Innovation and product differentiation have not made a difference.
Luxury wellness – why luxury is looking at wellness, what are the thematic opportunities and what would be the competitors for the main luxury marketing conglomerates be successful.
Technical capability notice – having read thoroughly about the allegations that Apple had been served with an order by the British government to provide access to its customer iCloud drive data globally – I still don’t know what to think, but didn’t manage to assuage any of my concerns.
Books that I have read.
World Without End: The million-copy selling graphic novel about climate change by Jean-Marc Jancovici and Christophe Blain. In Japan, graphic novels regularly non-fiction topics like text books or biographies. A French climate scientist and illustrator collaborated to take a similar approach for climate change and the energy crisis. Their work cuts through false pre-conceptions and trite solutions with science.
Laws of UX by Jon Yablonski. Yablonski breaks down a number of heuristics or razors based on psychological research and how it applies to user experience. These included: Jakob’s Law, Fitt’s Law, Hick’s Law, Miller’s Law, Peak-End Rule and Tesler’s Law (on complexity). While the book focuses on UX, I thought of ways that the thinking could be applied to various aspects of advertising strategy.
I re-read Hooked: How to Build Habit-Forming Products by Nir Eyal. Eyal’s model did a good job at synthesising B.J. Fogg’s work on persuasive computing, simplifying it into a model that the most casual reader can take and run with it.
Kapferer on Luxury by Jean-Noël Kapferer covers the modern rise of luxury brands as we now know them. Like Dana Thomas’ Deluxe – how luxury lost its lustre Kapferer addresses the mistake of globalised manufacturing and massification of luxury. However Kapferer points out the ‘secret sauce’ that makes luxury products luxurious: the hybridisation of luxury with art and the concept of ‘incomparability’. The absence of both factors explain why British heritage brands from Burberry to Mulberry have failed in their current incarnations as luxury brands.
Black Magic by Masamune Shirow is a manga work from 1983. Masamune is now best known for the creation of Ghost In The Shell which has been turned into a number of anime films, TV series and even a whitewashed Hollywood remake. Despite the title, Black Magic has more in common with space operas like Valerian & Laureline by Pierre Christin and Jean-Claude Mézières than the occult. In the book Masamune explores some of the ideas which he then more fully developed in Ghost In The Shell including autonomous weapons, robots and machine intelligence.
Doll by Ed McBain. Doll was a police procedural novel written in 1965 that focused on the model agency industry at the time. The novel is unusual in that it features various artistic flourishes including a model portfolio and hand written letters with different styles of penmanship. The author under the McBain pen name managed to produce over 50 novels. They all have taunt dialogue that’s ready for TV and some of them were adapted for broadcast, notably as an episode of Columbo. You can see the influence of McBain’s work in the likes of Dick Wolf’s productions like the Law & Order, FBI and On Call TV series franchises.
Things I have been inspired by.
Can money make you happy?
Past research indicated that happiness from wealth plateaued out with a middle class salary. The latest research via the Wharton School at the University of Pennsylvania indicates that might not be the case instead, earning more makes you happier and there might not be a point at which one has enough. The upper limit on the research seems to have been restricted by finding sufficiently rich research respondents rather than natural inclination. As a consumer insight that has profound implications in marketing across a range of sectors from gaming to pensions and savings products.
AgeTech
I came across the concept of ‘agetech’ while looking for research launched in time for CES in Las Vegas (7 – 11, January 2025). In the US, the Consumer Technology Association (CTA) and American Association of Retired People (AARP) have put together a set of deep qualitative and quantitative research looking at the needs of the ‘aged consumer’ for ‘AgeTech’. AgeTech isn’t your Grandma iPad or your boomer CEO’s laptop. Instead it is products that sit at the intersection of health, accessibility and taking care of oneself in the home. The top five perceived age technologies are connected medical alert devices,digital blood pressure monitors, electric or powered wheelchairs/scooters, indoor security cameras, and electronic medication pill dispenser/reminders. Their report 2023 Tech and the 50-Plus, noted that technology spending among those 50-plus in America is forecast to be more than $120 billion by 2030. Admittedly, that ’50-plus’ label could encompass people at the height of their career and family households – but it’s a big number.
It even has a negative impact on the supply side of the housing market for younger generations:
The overwhelming majority (95%) of Americans aged 55 and older agree that aging in place – “the ability to live in one’s own home and community safely, independently, and comfortably, regardless of age, income, or ability level” – is an important goal for them. This is up from 93% in 2023.
The Mayfair Set v 2.0
During the summer of 1999, a set of documentaries by Adam Curtis covered the reinvention of business during the latter half of the 20th century was broadcast. I got to discover The Mayfair Set much later on. In the documentaries it covered how the social contract between corporates and their communities was broken down and buccaneering entrepreneurs disrupted societal and legal norms for profit. There is a sense of de ja vu from watching the series in Meta’s business pivots to the UK government’s approach to intellectual property rights for the benefit of generative AI model building.
It probably won’t end well, with the UK population being all the poorer for it.
The Californian Ideology
As to why The Mayfair Set 2.0 is happening, we can actually go back to a 1995 essay by two UK based media theorists who were at the University of Westminster at the time. It was originally published in Mute magazine.
This new faith has emerged from a bizarre fusion of the cultural bohemianism of San Francisco with the hi-tech industries of Silicon Valley. Promoted in magazines, books, TV programmes, websites, newsgroups and Net conferences, the Californian Ideology promiscuously combines the free-wheeling spirit of the hippies and the entrepreneurial zeal of the yuppies. This amalgamation of opposites has been achieved through a profound faith in the emancipatory potential of the new information technologies. In the digital utopia, everybody will be both hip and rich. Not surprisingly, this optimistic vision of the future has been enthusiastically embraced by computer nerds, slacker students, innovative capitalists, social activists, trendy academics, futurist bureaucrats and opportunistic politicians across the USA.
It reads like all these things at once:
A prescient foreshadowing from the past.
Any Stewart Brand op-ed piece from 1993 onwards.
The introduction from an as-yet ghost written book on behalf of Sam Altman, a la Bill Gates The Road Ahead.
A mid-1990s fever dream from the minds of speculative fiction authors like Neal Stephenson, William Gibson or Bruce Sterling.
What the essay makes clear is that Peter Thiel, Larry Ellison and Elon Musk are part of a decades long continuum of Californian Ideology, all be it greatly accelerated; rather than a new thing. One of the main differences is that the digital artisans no longer have a chance to get rich with their company through generous stock options.
Even Steve Jobs fitted in with the pattern. For a hippy he drove a 5 litre Mercedes sports car, parked in the handicapped spaces in the Apple car park and had a part in firing Apple’s first gay CEO: Michael Scott because of homophobia and Scott’s David Brent-like handling of Black Wednesday. It may be a coincidence that Tim Cook didn’t come out publicly as gay until over three years after Steve Jobs died.
… a European strategy for developing the new information technologies must openly acknowledge the inevitability of some form of mixed economy – the creative and antagonistic mix of state, corporate and DIY initiatives. The indeterminacy of the digital future is a result of the ubiquity of this mixed economy within the modern world. No one knows exactly what the relative strengths of each component will be, but collective action can ensure that no social group is deliberately excluded from cyberspace.
A European strategy for the information age must also celebrate the creative powers of the digital artisans. Because their labour cannot be deskilled or mechanised, members of the ‘virtual class’ exercise great control over their own work. Rather than succumbing to the fatalism of the Californian Ideology, we should embrace the Promethean possibilities of hypermedia. Within the limitations of the mixed economy, digital artisans are able to invent something completely new – something which has not beenpredicted in any sci-fi novel. These innovative forms of knowledge and communications will sample the achievements of others, including some aspects of the Californian Ideology. It is now impossible for any serious movement for social emancipation not to incorporate feminism, drug culture, gay liberation, ethnic identity and other issues pioneered by West Coast radicals. Similarly, any attempt to develop hypermedia within Europe will need some of the entrepreneurial zeal and can-do attitude championed by the Californian New Right. Yet, at the same time, the development of hypermedia means innovation, creativity and invention. There are no precedents for all aspects of the digital future. As pioneers of the new, the digital artisans need to reconnect themselves with the theory and practice ofproductive art. They are not just employees of others – or even would-be cybernetic entrepreneurs.
They are also artist-engineers – designers of the next stage of modernity.
Barbrook and Cameron rejected the idea of a straight replication of the Californian Ideology in a European context. Doing so, despite what is written in the media, is more like the rituals of a cargo cult. Instead they recommended fostering a new European culture to address the strengths, failings and contradictions implicit in the Californian Ideology.
Chart of the month: consumer price increases vs. wage increases
This one chart based on consumer price increases and wage increases from 2020 – 2024 tells you everything you need to know about UK consumer sentiment and the everyday struggle to make ends meet.
Things I have watched.
The Organization – Sydney Poitier’s last outing as Virgil Tibbs. The Organization as a title harks back to the 1950s, to back when the FBI were denying that the Mafia even existed. Organised crime in popular culture was thought to be a parallel corporation similar to corporate America, but crooked. It featured in the books of Richard Stark. This was despite law enforcement stumbling on the American mafia’s governing body in 1957. Part of this was down to the fact that the authorities believed that the American arm of the mafia were a bulwark against communism. Back to the film, it starts with an ingenious heist set piece and then develops through a series twists and turns through San Francisco. It was a surprisingly awarding film to watch.
Nakita – Nakita is an early Luc Besson movie made after Subway and The Big Blue. It’s an action film that prioritises style and attitude over fidelity to tactical considerations. The junkies at the start of the film feel like refugees from a Mad Max film who have happened to invade a large French town at night. It is now considered part of the ‘cinéma du look’ film movement of the 1980s through to the early 1990s which also features films like Diva and Subway. Jean Reno’s character of Victor the Cleaner foreshadows his later breakout role as Leon. It was a style of its time drawing on similar vibes of more artistic TV ads, music videos, Michael Mann’s Miami Vice TV series and films Thief and Manhunter.
Stephen Norrington’s original Blade film owes a lot to rave culture and cinéma du look as it does to the comic canon on which it’s based. It’s high energy and packed with personality rather like a darker version of the first Guardians of The Galaxy film. Blade as a character was influenced by blaxploitation characters like Shaft in a Marvel series about a team of vampire hunters. Watching the film almost three decades after it came out, it felt atemporal – from another dimension rather than from the past per se. Norrington’s career came off the rails after his adaption of The League of Extraordinary Gentlemen did badly at the box office and star Wesley Snipes went to jail for tax-related offences.
The Magnificent Seven– I watched the film a couple of times during my childhood. John Sturges had already directed a number of iconic films: Bad Day at Black Rock and Gunfight at The OK Corral. With The Magnificent Seven, he borrowed from The Seven Samurai. It was a ‘Zappata western’ covering the period of the Mexican revolution and was shot in Cuernavaca, Mexico. The film did two things to childhood me: made me curious about Japanese cinema and storytelling. There are some connections to subsequent Spaghetti Westerns:
Eli Wallach played a complex Mexican villain in bothThe Magnificent Seven and Leone’s The Good, The Bad & The Ugly.
The visual styling of the film is similar to spaghetti westerns, though the clothes were still too clean, Yul Brynner’s role as the tragic hero in black is a world-away from the traditional Hollywood coding of the good guys wearing white hats (or US cavalry uniforms).
The tight, sparse dialogue set the standard for the Dollars Trilogy and action films moving forward
Zappata westerns were the fuel for more pro-leftist films in the spaghetti western genre. While The Magnificent Seven still has a decidedly western gaze, it took on racism surprisingly on the nose for a Hollywood film of this era.
Watching it now as a more seasoned film watcher only sharpened my appreciation of The Magnificent Seven.
Breaking News by Johnnie To feels as much about now as it when the film was shot 20 years ago. First time I watched it was on the back of a head rest on a Cathay Pacific flight at the time. Back then I was tired and just let the film wash over me. This time I took a more deliberate approach to appreciating the film. In the film the Hong Kong Police try and control and master the Hong Kong public opinion as a robbery goes wrong. However the Hong Kong Police don’t have it all their own way as the criminals wage their own information campaign. This film also has the usual tropes you expect from Hong Kong genre of heroic bloodshed films with amazing plot twists and choreographed action scenes along with the spectacular locations within Hong Kong itself. Watching it this time, I got to appreciate the details such as the cowardly dead-beat Dad Yip played by veteran character actor Suet Lam.
Useful tools.
Current and future uncertainties.
This could be used as thought starters for thinking about business problems for horizon scanning and scenario planning. It’s ideal as fuel for you to then develop a client workshop from. But I wouldn’t use something this information dense in a client-facing document. You can download it as a high resolution PDF here.
Guide to iPhone security
Given the propensity of phone snatching to take over bank accounts and the need to secure work phones, the EFF guide to securing your iPhone has a useful set of reminders and how-to instructions for privacy and security settings here.
Novel recommendations
I got this from Neil Perkin, an LLM-driven fictional book recommendation engine. It has been trained on Goodreads (which reminds me I need to update my Goodreads profile). When I asked it for ‘modern spy novels with the class of John Le Carre’ it gave me Mick Herron’s Slow Horses, Chris Pavone’s The Expats and Chris Cumming’s The Trinity Six. All of which were solid recommendations.
Smartphone tripod
Whether it’s taking a picture of a workshop’s forest of post-it notes or an Instagrammable sunset a steady stand can be really useful. Peak Design (who were falsely accused of being a ‘snitch‘) have come up with a really elegant mobile tripod design that utilises the MagSafe section on the back of an iPhone.
Apple Notes alternative
I am a big fan of Apple Notes as an app. I draft in it, sync ideas and thoughts across devices using it. But for some people that might not work – different folks for different strokes. I was impressed bu the quality of Bear which is a multi-platform alternative to the default Notes app.
The sales pitch.
I am now taking bookings for strategic engagements; or discussions on permanent roles. Contact me here.
General Magic has a reputation of being the technology equivalent of the Jordan-era Chicago Bulls, but it ended up going nowhere. I never got to see the device in person, it was only available in Japan and the US. It’s as famous much for its alumni, as it is for its commercial failure.
This is captured in a documentary of the same name. For students of Silicon Valley history and Apple fan boys – the team at General Magic sounds like a who’s who of the great and the good in software development and engineering.
General Magic started within Apple with a brief that sounds eerily like what I would have expected for the iPhone decades later.
“A tiny computer, a phone, a very personal object . . . It must be beautiful. It must offer the kind of personal satisfaction that a fine piece of jewelry brings. It will have a perceived value even when it’s not being used… Once you use it you won’t be able to live without it.”
Sullivan M. (July 26, 2018) “General Magic” captures the legendary Apple offshoot that foresaw the mobile revolution. (United States) Fast Company magazine
The opening sequence tells you what the documentary is going to lay out. Over carefully curate images of Silicon Valley campuses, Segway riders and the cute bug like Google autonomous vehicle a voice talks about success and failure. That failure is part of the process of development. That General Magic has a legendary status due to its status as precursor to our always-on modern world and while the company failed, the ideas didn’t.
The genesis of the spirit of General Magic goes back to the development and launch of the Macintosh with its vision of making computers accessible. The team looked around the next thing that would have a similar vision and impact of a product. The Mac had got some of these developers on the front cover of Rolling Stone – they were literally rockstars.
You get a tale of dedication and excitement that revolved around a pied piper type project lead Marc Porat, who managed to come to the table with a pretty complete vision and concept of where General Magic (and the world) would be heading. The archive of footage of the offices with its cool early to mid 1990s Apple Office products still amazes now. The look of the people in the archive footage, make my Yahoo! colleagues a decade later seem corporate and uptight by comparison.
Veteran journalist Kara Swisher said that she started following the company because it was ‘the start of mobile computing, this is where it leads’.
What sets the documentary apart is that it tapped into footage shot by film maker David Hoffman who was hired to capture the product development process. The protagonists then provide a voice over of their younger selves. Their idealism reaches back to the spirit of the 1960s. You can see how touch screen screens and the skeuomorphic metaphors were created and even animate emoticons.
I’ve never known a development process with so much documentary footage. Having been in this process on the inside, the General Magic documentary portrays a process and dynamics that haven’t changed that much.
The ecosystem that the startup assembled including AT&T, Apple, Motorola and Sony made sense given the ecosystem and power that Microsoft had behind it. It’s hard to explain how dominant and aggressive Microsoft was in the technology space. Newton came out as a complete betrayal and John Sculley, who is interviewed in the documentary comes across worse than he would have liked.
The documentary also has access to the 1994 promotional film where General Magic publicly discussed the concept of ‘The Cloud’ i.e. the modern web infrastructure – but the documentary doesn’t dwell on this provable claim.
Goldman Sachs was a key enabler, the idea of the concept IPO set the precedent for Netscape, Uber, WeWork and the 2020s SPAC fever.
In a time when there is barely one thing changing the technology environment, General Magic were pursuing their walled garden of their private cloud and missed the web for a while. Part of this is down to their relationship with AT&T.
The documentary covers how project management dogged the project. Part of the problem was perfectionism was winning over the art of the possible and not focusing on the critical items that needed to be done. The panic of having to ship.
It’s about getting the balance between ‘move fast and break things’ versus crafting a jewel of a product.
But shipping wasn’t enough, the execution of shopper marketing and sales training was a disaster. The defeat was hard given the grand vision. But the ultimate lesson is that YOU are not representative of the mainstream market.
The documentary post-mortem featuring thinkers like Kara Swisher and Paul Saffo points out the lack of supporting infrastructure, that would take years to catch up to where General Magic’s Magic Link had gone. Paul Saffo uses a surfing analogy that I had previously read in Bob Cringely’s Accidental Empires about catching the right wave at the right time.
John Sculley over at Apple made similar mistakes to the General Magic team which resulted in him being fired from Apple. Sculley makes the very human admission that being fired from Apple took him about 15 years to recover from personally.
IBM Simon
The documentary gives a lot of the credit (maybe too much of it) to General Magic as the progenitor of what we now think of as smartphones. The reality as with other inventions is that innovation has its time and several possible ‘inventors’; or what author Kevin Kelly would call ‘the technium’. This is the idea that technological progression is inevitable and that it stands on the layers of what has gone before, like fossils found inside rocks several foot deep. For instance, IBM created a device called Simon which was ‘smartphone’ which sold about 50,000 units to BellSouth customers in the six months it was on the market. Motorola – who were a General Magic partner also launched a smartphone version of the Apple Newton called the Motorola Marco in January 1995 and there are more devices around the same time.
Reality is messy and certainly not like the clean direct line that the General Magic documentary portrays, even the Newton was only part of the story.
The Wonder Years
I was thinking about what I liked so much about the General Magic documentary. I immediately thought about it reminding me of my falling in love with the nascent internet and technology, which then bought me to the start of my agency career working with Palm (the company that eventually helped kill off General Magic’s product ambitions) and the Franklin REX which came out of sychronisation pioneers Starfish Software.
But it was deeper than that. The Silicon Valley portrayed in the General Magic documentary wasn’t the dystopian hellscape of platform firms, generation rent, toxic tech bro culture and ‘churn and burn’ HR culture. Instead the General Magic documentary story represented a halcyon past of Silicon Valley portrayed in books like Where Wizards Stay Up Late, Fire In The Valley and Insanely Great. Where talented people motivated by a fantastic vision thing, with a user centred mission worked miracles. The darkness of fatigue and god knows what else is largely hidden by a Wonder Years TV show feel good nostalgia. Maybe it gives us hope again in the tech sector, despite Peter Thiel, Mark Zuckerberg, Tim Cook and Elon Musk? Maybe that hope might inspire something great again?
Marc Porat’s personal tragedy and Tony Fadell’s business failure brings a hint of the real world through the door. The documentary uses Fadell’s link with the iPod and iPhone as a point of redemption, resilience, perseverance and vindication for General Magic.
There’s also a cautionary tale full of lessons learned for new entrepreneurs, who often get the vision thing but forget about the details. More on General Magic here.
The Code – Silicon Valley and the Remaking of America by Margaret O’Mara is the second book I have read recently about Silicon Valley, this review follows my review of Chip War by Chris Miller. The Code covers the history of Silicon Valley from the post-war to the present.
Margaret O’Mara
In terms of her background, O’Mara is a Clinton administration era policy wonk. When O’Mara left policy circles, she became an academic and is now a history professor at the University of Washington in Seattle – at the other end of the country. Her area of focus is on the history of the modern technology industry. She spent five years researching the book in the mid-2010s, just as Silicon Valley was going under a technological and social change.
The lens shaping everything else that I have written here
I am a sucker for books on the history of technology and like Chip War, The Code was right in my wheelhouse. It complemented, rather than overlapped some of my existing favourite technology history books like Bob Cringely’s Accidental Empires, John Markoff’s What The Dormouse Said or most of Michael Malone and Steven Levy’s output to date.
Like Miller’s Chip War, O’Mara brought a degree of distance from her material to her writing. She has done a lot of research and surfaced lesser known characters like community computing pioneer Liza Loop in her work, she doesn’t have the inside track.
Bob Cringely with his work on InfoWorld‘s Notes From the Field column got an inside track from the Valley’s engineers before he went on to write is magnus opus Accidental Empires. Like Cringely, Michael Malone was brought up in the Silicon Valley area and then worked the business section beat as a reporter for the local newspapers. Cringely and Malone lived and breathed the valley. If you are are fan of Cringely and Malone’s works, expect something that is interesting but stylistically very different.
On to The Code itself
Other reviewers have used words like ‘masterful’ and ‘majestic history’ to describe the book – which while being a reasonable guide to overall quality aren’t really all that helpful. In contrast to Chip War which took me six months, I managed to storm through The Code in a week. This is partly down my familiarity to the material covered and the airplane view that O’Mara takes when writing about her subject. I enjoyed O’Mara’s writing, but could also see someone coming to it with a good grasp of American political history and current affairs, but no knowledge of Silicon Valley history enjoying it just as much.
Being an academic O’Mara worked hard to source everything in The Code, she also provides a recommended reading list that goes into different aspects of the story that she laid out in more depth including John Markoff’s What the Dormouse Said and Theodore Roszak’s From Satori to Silicon Valley.
H-P’s first product taken by Robert Scoble
The book starts in the post-war period as Stanford and Silicon Valley peaked as an area for military contractors. O’Mara references the political lives of the H-P founders alongside the growth of cold war technologies and the space race.
O’Mara leans hard into Stanford’s defence industry connections that started pre world war II. The book then veers to the decline of the military industrial complex in the area due to a number of factors. The Vietnam war demolished the defence budget. The space programme started to wind down after NASA met Kennedy’s challenge to put man on the moon. Johnson’s social programmes took spend away from scientific developments. Finally the social climate in the US changed.
The next stage of computing was shaped by counter cultural values which O’Mara covered the libertarian instincts of Silicon Valley pioneers alongside the more community orientated views of the counterculture folks. Unlike other writers, O’Mara also covers the Boston area technology corridor that Silicon Valley eventually overshadows.
O’Mara focuses more on the finance of Silicon Valley covering some of the highlights featured in Sebastian Mallaby’s The Power Law. But O’Mara also delves into the public markets and the role of lobbying in the Silicon Valley finance machine.
O’Mara tells how immigration affected the nature of Silicon Valley through the story of Jerry Yang, co-founder of Yahoo!. As is the case with policy wonks she puts a lot of emphasis on Al Gore, the information superhighway and the Clipper chip. The Clipper chip resurrected like Godzilla the libertarian Republican party arm of Silicon Valley elites and paved the way for the likes of Peter Thiel later on.
The Code finishes on the future hopes for autonomous driving by university research teams and Google’s Waymo business.
You can get hold of Chip War here. More book reviews here.
Prior to reading The Power Law Mallaby wasn’t a familiar name to me. Looking into his background I could see why, Mallaby is a Washington Post columnist and specialises in international economics for the Council of Foreign Relations. A perfect CV for a policy wonk. His previous works have included a biography of Alan Greenspan, the World Bank and a book on hedge funds.
What the book doesn’t cover
The origins of modern venture capital in the pre-second world war era was through the family offices of people like the Wallenbergs and the Rockefellers. The Power Law only picks up the story post-war and has a distinct US bias in its storytelling.
Synopsis of The Power Law
George Doriot
Mallaby starts the story with Georges Frédéric Doriot and the American Research and Development Corporation (ARDC). What’s interesting Doriot is how he was different from today’s VCs with a focus on patriotism. Doriot is most famous for his funding of Digital Equipment Corporation (DEC), an enterprise computer company whose mini-computers facilitated the early internet and many business computer systems. At the time of DEC, the Boston area seriously rivalled the Bay Area as the technology centre.
Treacherous eight
As the book goes into the story of Arthur Rock and his relationship with the treacherous eight who left Bill Shockley’s lab, this is where many Silicon Valley histories start to coalesce with The Power Law. Mallaby adds a little more, such as the 600x return that both the eight and Rock enjoyed from their investment. At 96, Rock is still alive at the time of writing. He is more recently remembered for his involvement of firing of Steve Jobs from Apple in 1985, a good deal of this came down to his distaste for Jobs informal appearance.
Sandhill Road
Arthur Rock and former Doriot student Bill Draper benefited from being in the right place and at the right time. The US government looked to spur innovation as part of the cold war and the Bay Area was were much of this innovation would happen. Sequoia and Kleiner Perkins followed soon after, these names are now central to the Sandhill Road venture capital ecosystem, but in 1972 they were just starting off with businesses like Atari. Atari wasn’t started by experienced business professionals, but by a twenty something who thought meetings in the hot tub were a good idea. Atari marked a point in time when VCs had to become the adults in room, or as Mallaby put it ‘active investors’.
What I didn’t realise at the time was how early in Kleiner Perkin’s history was their engagement with biotech pioneer Genentech. I didn’t realise that Genentech was funded before Apple and was more a peer of Tandem Computers. Much of the early networking was based on a two-way door between established venture funded firms that were descendants of the treacherous eight and early venture capital firms that employed experienced executives as partners.
Apple was notable for two reasons. Firstly, venture capital firms operated for the first time rather like an insurance syndicate with several funding the business rather than one large investor. Secondly, the returns on Apple seems to have solidified the model and bought niche financing to a wider awareness beyond the geographic pockets of the technology industry. Where many books like Accidental Empires would use this as a jumping off point to tell the story of the PC industry. The Power Law instead talks about computer networking, this makes sense if one thinks of Metcalfe’s Law as the power law that matters the most in the internet age. The early east coast venture capital community were more cautious than their west coast counterparts, partly because the east coast technology corridor had less of a loose network of connections compared to the west coast. I think that the different business culture of the east coast also had an effect.
Connectors
Doerr connected Cypress Semiconductor and Sun Microsystems, two companies that Kleiner Perkins funded so that they would make the SPARC RISC microprocessor. You could put this as the starting point for the golden age of UNIX servers and workstations – which we can trace forward to today’s Mac range and modern Google servers.
Doerr had attempted other alliances before and in this way we see a different way how Metcalfe’s Law was the power law of the title. VCs has access to several nodes that they could connect together to try and build a technical vision. This is different to the idea we’re usually sold of the tech visionary / company founder a la the Google founders, Mark Zuckerberg or Steve Jobs.
Meanwhile Don Valentine of Sequoia Capital usurped the founders of Cisco Systems and brought in a new team to run the business bilking the founders out of much of their money. Part of this was down to one of the original Cisco founders being a woman.
Government money
The VC industry of the early 1990s capitalised on government money. Netscape was a remake of Mosiac which was the first graphic internet browser software developed in the NCSA software design group. This was part of the government-funded National Center for Supercomputing Applications (NCSA) at the University of Illinois. UUNET was a commercial ISP based on the back of the ARPANET email delivery system. As the dotcom boom took off it was the largest ISP and the fastest growing. UUNET eventually became part of MCI WorldCom and then Verizon, where UUNET remains a key part of the Verizon business offering. Both Netscape and UUNET were viewed at VC successes but as The Power Law shows, the reality was more complicated.
Irrational behaviour
I thought that the original dot.com boom was irrational behaviour, but I learned from the account of GO Computers a decade or so earlier that irrational behaviour is very much in the blood of venture capital, which explains how we had WeWork and Uber in the 2010s which is where The Power Law finishes its tale. The funny thing about the irrational behaviour is that both the dot com era and the 2010s Softbank appear to have been an accelerant with their late stage momentum approach to venture capital deals which blew valuations on businesses up far beyond what would be reasonably expected otherwise. Softbank gave birth to ‘growth equity’ as a business model that took in many existing and new VC businesses including Russian Israeli Yuri Milner and his DST Ventures business which invested in Facebook, Stripe and GroupOn.
Paul Graham and Peter Thiel
Paul Graham was a founder of an ad tech business who then moved over to investing and had a reputation for warning startup founders about the nature of VC funding. It fitted neatly into the ‘John Gaunt’ type narrative that played well with some of his peers like Peter Thiel. The impact of these people setting an ideological agenda of sorts for Silicon Valley founders, together with a plethora of other founders providing seed capital to businesses from Google onwards greatly impacted the freedom of VCs to operate using their previous models and left the industry open for the Softbanks of the world to inflate everything.
China off-note
The Power Law offers a largely truimphantist view of the role of VCs such as Sequoia Capital in China. However, this seems to ignore the impact of Chinese VC and angel investors. It also chooses to ignore the negative impact of Xi Jingping.
Conclusion
Mallaby illuminates part of Silicon Valley history that I wasn’t familiar with, in particular VCs strategic role in steering technological change during the 1990s. Time has somewhat outpaced the book. The rise of Xi Jingping and the change in attitude towards safety and innovation amongst young Chinese is likely to make the China section look overly optimistic. The end of easy money, at least for the time being will impact the VC industry globally and growth equity looks like a folly during the present time. But if you want to understand how things were The Power Law is the ideal book for you.
