SEPTEMBER 19, 2019
THE SECOND SEASON of the underappreciated but marvelous AMC television series Halt and Catch Fire ends with a team of computer programmers clamoring aboard a jet plane in Dallas, giddy with excitement. Their destination is California and a fresh start for their company. The fact that the show’s plot unfolded for two entire seasons outside of Silicon Valley must have baffled many of the show’s casual watchers. After all, it’s 1985 — what’s a computer company doing in Texas anyway?
The show’s characters arrive in what, a century ago, was billed as the “Valley of Heart’s Delight,” hubristically believing that (their) technology will change the world. Quickly finding everything an entrepreneur might want — an ample supply of coders, a like-minded cohort of tech evangelists, and venture capitalists flush with easy money — they’re in a habitat exquisitely tuned to converting risk-taking into stunning commercial success. Or into devastating failure. Silicon Valley is a place of binaries after all, with entire industries based around manipulating 0s and 1s into product and profit. If your idea doesn’t catch fire, as it were, you disappear faster than pets.com.
The Code, Margaret O’Mara’s ambitious new history of Silicon Valley, can be read as a story of binaries, or at least of stark contrasts in terms of interpretative frameworks for understanding how Santa Clara Valley became “Silicon Valley.” A professor of history at the University of Washington, she explores in her 400-plus-page tome the tension between historical continuity and disruptive change in its creation, as well as the role of East Coast versus West Coast business networks, reality versus image, and, most importantly, federal support versus private monies. Where the characters of Halt and Catch Fire arrive in a version of a Valley seemingly without a history, O’Mara’s account insists on its importance, showing how the Bay Area’s transformation into Silicon Valley was the product of specific factors stretching back to the late 19th century. The past matters, not least because it created the conditions for the emergence of a region trafficking in the belief that a new technology can render entire industries, perhaps even history itself, obsolete, often just with one demo. None of its new technologies, however, any more than Silicon Valley itself, emerged ex nihilo.
One idea in particular animates the book’s sprawling narrative: the role of federal patrons (and not private monies) in making Silicon Valley. The government’s role isn’t news to academic historians but it might come as a surprise to the general audience O’Mara’s book is intended for. Not necessarily always a sexy story, it’s nonetheless an important one that destabilizes popular notions about the region. As she recounts in the early pages of her book, the symbiosis between federal patrons and private enterprise was securely baked into the region well over a century ago with the rise of Leland Stanford’s vast railroad empire. Founder of the eponymous university, he had made his fortune as the ruler of that empire — which he most certainly could not have done without the direct support of federal powers. The federal government’s stake was clear enough even at this early date: lushly fertile Santa Clara Valley, circa 1900, was an increasingly pivotal node in a continent-spanning agricultural network that relied on dependable rail service to ferry streams of immigrant pickers and packers to key agricultural destinations.
The region’s shift from agriculture to electronics spurred the second stage of this federal-private symbiosis. That phase started with the radio, the key emerging technology of the 1910s. Location mattered. The Valley happened to be, at the time, home to one of the most active amateur radio communities. But it was the desire of these enthusiasts and of the burgeoning commercial radio industry to broadcast over larger distances to reach more listeners and improve the quality of radio transmissions that spurred actual formalized research into radio technology and electrical engineering. Companies in the San Jose area partnered with engineering programs at Stanford University. Entrepreneurs from electronics companies were then duly enticed to teach classes there, covering technical material that their firms valued. Who was the most reliable customer for this expensive hardware? The federal government by way of the US military, especially the Army’s Signal Corps and the Navy. Again, location mattered: the military’s binge-buying coincided with the expansion of the US empire out into the Pacific as ships needed to communicate with shore stations.
In short, already in the 1910s and ’20s, the region was deeply entangled with the interests of the United States. Not only this, but the feedback loop between the university, corporate interests, and federal money was potent enough to catalyze the growth of ever newer high-tech industries in the area, many of them already underway well before the outbreak the World War II.
Relatedly, in this prewar period we also find the seeds of the Valley’s self-mythologizing, a key ingredient in attracting talent and accelerating the loop into regional stardom. In the late 1930s, two Stanford graduates, David Packard and William Hewlett, started making a series of improved vacuum tubes for radio and other electronics applications. Less important than what they made, though, was where they made it: their now-legendary garage at 367 Addison Avenue in Palo Alto, which is now on the National Register of Historic Places. The area was thus acquiring circa 1940 a self-fulfilling mystique as a mecca of innovation.
The Cold War further amplified this interacting cluster of federal and private interests and myth-making. The Code takes us briskly through the next wave of federal-private intimacy in the later ’50s and ’60s, when the government became the largest customer for the area’s chips and circuits, now churned out by companies like Fairchild Semiconductor. The Addison garage notwithstanding, it was really only during this Cold War wave that Silicon Valley truly became a synecdoche for technology itself, wresting away recognition from other places, such as from the tech corridor of Route 128 near Cambridge, Massachusetts. But, this said, there was still plenty of “technology” happening outside the Bay Area. One could, for example, consider the Houston area, home to Exxon and all the other ancillary oil-extracting companies that depend on high technology. Or shift focus to small-town Bentonville, Arkansas, where Walmart, founded in 1962, would have remained small potatoes without the advantages of computer-managed retail data, logistics, and its own communications satellite network. All companies are technology companies (something that today’s “tech reporters” typically fail to appreciate).
Unlike in her previous book, O’Mara doesn’t focus on the role of specific higher education institutions in fostering potential areas of tech innovation — even though, as described above, the region’s universities were very much part of the loop that created Silicon Valley. It could plausibly have been The University of Anywhere that propelled a different region into tech stardom instead (assuming it had some initial salience to government interests). But this relative neglect on her part is understandable: the main story she wants to tell in this new book is not about the role of higher education per se but about the federal government mattering most of all in making Silicon Valley what it is. She may indeed be right about the federal government underwriting Silicon Valley, but the fact is that the causal strands are profoundly entangled with one another.
Certainly, as is common knowledge, the ARPANET, one antecedent to today’s internet, was funded and supported by the Defense Advanced Research Projects Agency (DARPA). But O’Mara also notes that perhaps even more important to Silicon Valley was the support the federal government gave to higher education in general. Following the shock of Sputnik in 1958, Congress passed the National Defense Education Act. The NDEA funneled tens of millions of dollars to revamping classrooms and reforming university curricula. In essence, this generous federal support created an entire generation of scientists and engineers, many of whom would migrate to California and contribute to Silicon Valley’s expansion. These future programmers and computer scientists (and their kids) could take advantage of generous state support for public universities, including at the campuses within the University of California system where tuition was practically free in the 1960s. They became the shock troops who literally wrote the code that propelled Silicon Valley into the hothouse of commercial invention and innovation it is famous for today.
In calling her book The Code, O’Mara is presumably referring to the billions of lines of software written by Silicon Valley programmers since the 1960s. The title also suggests other locales’ search for the not-so-magic formula that might allow them to emulate, if not replicate, Silicon Valley. But there’s a third reading that, I think, represents her book’s biggest contribution: the importance of federal tax codes and immigration laws to the success story Silicon Valley supporters traffic in. O’Mara’s detailed narration of how lobbyists, entrepreneurs, and politicians worked to their mutual advantage is not just important historically but also informs contemporary controversies over the tax breaks given to businesses, especially those like Apple that park huge sums of cash offshore.
In a series of richly detailed anecdotes — one might have wanted a little more analysis — O’Mara explores how executives, lawyers, and lobbyists won a series of battles to convert federal laws into a tailwind that propelled their region’s growth. In 1960 for example, then-senator Lyndon Johnson helped pass the Small Business Reinvestment Act, which gave an “eye-poppingly generous set of tax breaks and federal loan guarantees.” This directly benefited the growing community of venture capitalists, many from out of state, eager to invest in Bay Area tech firms. For every dollar they raised, Uncle Sugar would kick in three. If VC money was the rocket fuel that propelled Silicon Valley’s growth, then the federal government provided the armada of tanker trucks it came in.
O’Mara also shows how hypocrisy combined with opportunism and myth-making in the speeches of prominent Silicon Valley executives-turned-community leaders like David Packard. By the mid-1960s, their speeches to regional and civic groups were already strenuously extolling the virtues of unfettered markets and free enterprise; they were, in other words, willfully obscuring the reality of federal support in order to create a certain image of American innovation. The reality: They accepted lavish federal contracts to make the chips, circuits, and computers needed to win the arms race, the space race, and an expanding war in Southeast Asia. O’Mara’s narrative unveils Silicon Valley as its own special interest group via characters like Ed Zschau. Elected as a Republican congressman representing California’s 12th Congressional District (which includes San Francisco) in 1982, he could claim with a seemingly straight face that the industries he advocated for had “never asked for government help.” By the time we get Apple CEO Steve Jobs saying, in a 1996 conversation with the Clinton White House, “Silicon Valley doesn’t traditionally look for handouts,” one is beginning to sense a region that is getting high on historical amnesia, if not outright delusion.
Re-tooling the tax code to allow for easier investment and lower capital gains taxes was one thing. But Silicon Valley’s growth also depended on access to a large, well-educated, and ambitious workforce. Again, the federal government helped, not only in the way detailed above (by creating a generation of American engineers), but this time by modifying immigration laws. The passage of the Immigration and Nationality Act in 1965 opened the door to millions of people from India and China, many of whom joined the tech workforce. The creation of the H-1B visa program in 1990 added a new generation of technologists to the labor pool. Less remarked on is how anti-union Silicon Valley was (and remains). As Louis Hyman’s new book Temp makes clear, a huge part of the workforce powering the region’s tech companies (including giants such as Hewlett-Packard and Apple) was itinerant and expendable Asian or Latinx labor holding less-than-secure jobs with no cushy stock options. The pattern continues today; Google employs more temporary workers than full-time ones, paying them less and offering fewer benefits. This is not the Silicon Valley with a McLaren in every garage.
For me, the crux of The Code was the middle part dealing with the 1980s and 1990s. Once again, O’Mara takes us inside the profitable partnerships between Silicon Valley and Washington, DC — from the passage of the Bayh-Dole Act, which allowed universities to commercialize and patent research paid for by the federal government to the irrational exuberance leading up to the dot-com bust of 2000. This alliance was not without strife, such as in 1996, when a Republican-controlled Congress passed the Communications Decency Act and the Telecommunications Act, both of which aimed to prevent minors from accessing pornographic materials via the internet (how quaint!). This seeming betrayal prompted cyber-libertarian John Perry Barlow, while at a meeting of the World Economic Forum in Davos, to write his Declaration of the Independence of Cyberspace. “Governments of the Industrial World,” the former Grateful Dead lyricist began, “you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind.”
As eloquent and entertaining as Barlow’s declaration was, it also exhibited the same historical amnesia and outright misdirections that “free-market champions” who fed at the trough of federal contracts and customers proclaimed. Barlow and other “techno-Jeffersonians” such as Mitch Kapor (founder of Lotus Software) might have declared the internet neither had nor needed an elected government to make it work. But without the standards and protocols developed and put into place via federal research, there would be no internet. Likewise, Barlow’s claim that the “global conveyance of thought no longer requires your factories” would have come as a big surprise to the hundreds of thousands of people in the Valley and around the planet soldering, wiring, and fabbing away.
Claims to the “overthrow of matter” aside — a phrase used in another cyberlibertarian screed — the Valley’s gales of creative disruption caused real environmental destruction. Today, Santa Clara county has the largest concentration of Superfund sites in the country — 29 spread out over just 1,300 square miles. Most of them are located where companies like Fairchild and HP used a potent stew of highly toxic chemicals (e.g., trichloroethylene, Freon, and polychlorinated biphenyls) to make semiconductors. The new “postindustrial economy” might be based on moving bits of information around but it still required the manipulation of actual stuff. “Cloud computing” is just a metaphor for data management practices that, like Bitcoin and other cryptocurrencies, have an ever-growing carbon footprint. All those servers have to be built, cooled, powered, maintained, replaced, and recycled. O’Mara acknowledges this environmental impact but — as in other places in her book — one wishes for a little more analysis and direct critique, especially given the likelihood that her book will reach a large audience (and deservedly so).
This shortcoming is actually somewhat ironic given the analogy O’Mara deploys consistently throughout her book: Silicon Valley, the reader is often reminded, is best understood as an “ecosystem” in which species like VCs, engineers, law firms, patent officers, and tech entrepreneurs all try to survive and thrive. (This says nothing — nor does the book in general — about all the other contributors to the ecosystem, such as the gardeners, nannies, baristas, and Google bus drivers whose combined efforts smooth the path for the much-vaunted tech entrepreneurs.) At other turns, Silicon Valley is directly likened to the Galápagos Islands. Together, such environmental comparisons appear more than 30 times, enough to make the reader believe this is book’s primary animating analogy.
But it is a flawed one. Silicon Valley was never isolated from the main evolutionary currents of the 20th century. It was not left to develop on its own. Not only was it connected at the hip wallet to Washington, DC, and older, established banks and investment firms, it was directly linked to other tech regions such as Seattle (Boeing and Microsoft), Los Angeles (aerospace writ large), Boston (Raytheon and the complex of government funded labs associated with MIT). Throughout its history, national and global firms played a vital role in creating Silicon Valley. For example, Shockley Semiconductor — from whence spun off the “traitorous eight” who founded Fairchild Semiconductor, which later begot Intel — was established as part of Beckman Instruments, a firm based in Pasadena. IBM may have had an outpost in San Jose, but its main headquarters were in New York. This pattern continues today: almost every major domestic and international carmaker has a lab of some sort in Silicon Valley, as does Walmart. Put another way, it’s difficult to argue for Silicon Valley’s isolated exceptionalism while also showing how tightly bound it was and is to other locales and actors. O’Mara herself notes, toward the book’s end, that Silicon Valley is “no longer merely a place in Northern California” but instead the hub of a “vast supply chain” stretching from China to Israel. This Silicon Valley, located everywhere, loses solidity and melts into the ether. Moreover, as John Patrick Leary has recently argued, the word “ecosystem” itself is a term redolent of late 20th-century capitalism-speak and B-school jargon that veils and distorts as much as it reveals.
On another note, the main cast of characters in O’Mara’s telling can also be problematic at times. Her narrative rightly reveals the casual misogyny and racism that have pervaded Silicon Valley since its creation. (The anecdote of male employees at Sun Microsystems bringing their computers, named after women, online each morning by hollering out, “I am mounting Cathy now!” is shocking but unsurprising given what we know of the Valley’s brogrammer culture.) Throughout her book, O’Mara introduces new characters — women, immigrants, people of color — largely through short sections called “Arrivals.” We meet, for example, Trish Millines Dziko, who grew up in New Jersey, went to college, and then moved west for a career in the tech industry. Enriched by shares of Microsoft stock but despondent at the lack of diversity in Silicon Valley’s rank and file, she eventually quit her job and started an academy to promote tech skills to minority children. As an author, I appreciate O’Mara’s efforts to bring a wider plurality of perspectives and personae to the story. But these people rarely become more than colorful sprinkles scattered on a heaping dish of vanilla ice cream.
This was all the more puzzling to me as the recent history of Silicon Valley has a deep roster of powerful women whose inclusion would have enlivened the book. I was surprised not to meet Carly Fiorina (HP), Marissa Mayer (Google and Yahoo!), or Meg Whitman (eBay and then HP as well as a gubernatorial candidate worth $4 billion) somewhere in The Code. For that matter, Elizabeth Holmes, the disgraced founder of a high-tech Ponzi scheme that bilked enough high-powered investors to fill a few Gulfstream G650s, is Exhibit A for the pathology Silicon Valley produces when its inhabitants thrive in an environment featuring lies and self-deception. To be sure, O’Mara acknowledges the ethical shortcomings displayed by some individuals in the tech ecosystem but, given the outsize political and cultural influence of the region today, more could have been said. For example, I would have liked to see her more aggressively swing at Peter Thiel. Not only is Palantir, the company he co-founded in 2003, a posterchild for surveillance capitalism, but Thiel himself is the avatar for the anti-government, apoco-libertarian types who keep their private jets fueled up and pointed toward New Zealand in anticipation of the day when the masses rise up and the pitchforks come out.
This said, punching Silicon Valley these days is as easy as swiping left on Tinder, whereas writing a readable, informed synthesis of its tangled history is hard. The Code stands as a very good, sometimes excellent, sweeping narrative of a place and mindset that have come to dominate our thinking, imagination, and economy. Silicon Valley’s sins are as legion as its contributions to the modern world. Its history, as The Code reveals, is imbued with all sorts of intriguing juxtapositions. O’Mara offers an exciting tale of its transformation as fueled by federal interests and money, individual ambition, and the white heat of technology. But it is also a place steeped in self-delusion and permeated by an ideology of supposedly self-made entrepreneurs who succeeded on the basis of their own merit alone. While she doesn’t walk through all the doors her book points to, Margaret O’Mara’s book surveys the history of a complex territory while suggesting new paths for future writers to pursue.