Tech Won't Save Us - How State Funding Built Silicon Valley w/ Margaret O’Mara

Episode Date: May 6, 2021

Paris Marx is joined by Margaret O’Mara to discuss how the state and military have been at the center of the US tech industry since the very beginning, but how it was written out of the popular narrative during the neoliberal turn in the 1980s.Margaret O’Mara is the author of “The Code: Silicon Valley and the Remaking of America” and a professor at the University of Washington. Follow Margaret on Twitter as @margaretomara.Tech Won’t Save Us offers a critical perspective on tech, its worldview, and wider society with the goal of inspiring people to demand better tech and a better world. Follow the podcast (@techwontsaveus) and host Paris Marx (@parismarx) on Twitter, and support the show on Patreon.Find out more about Harbinger Media Network at harbingermedianetwork.com.Also mentioned in this episode:“Regional Advantage: Culture and Competition in Silicon Valley and Route 128, with a New Preface by the Author” by AnnaLee SaxenianAnother relevant book: “From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism” by Fred TurnerSupport the show

Both Democrats and Republicans embrace tech as this entrepreneurial superstar, like this is going to solve everything and conveniently kind of downplay the connection it has to the state. Hello and welcome to Tech Won't Save Us. I'm your host, Paris Marks, and this week my guest is Margaret O'Mara. Margaret is the author of Silicon Valley and the Remaking of America, and she's also a professor at the University of Washington. This week's episode is the first in a four-episode series that I'm doing this month on the history of tech industries and network technologies in four different countries. You know, this week with Margaret, we're looking

at Silicon Valley. Next week, I'll be looking at Minitel in France with Kevin Driscoll. The week after that at Cybersyn in Chile with Eden Medina. And the following week at the Soviet Networks with Ben Peters. I'm really excited for this series and I hope you're going to enjoy it. So in this week's episode, I talked to Margaret about the history of Silicon Valley, and we go all the way back to World War II and even before that, really, to look at, you know, what the Bay Area was like before these high technology industries, these electronics industries, these computing industries moved in and started to grow. And really, World War II was key to that because this was a moment when the United States poured a ton of money into universities and private companies to get them to develop new technologies

and new arms that they could use in the war. And you know, in the interview, I think you're going to learn a lot about the history of this region and the importance of the role that the government played, even as Silicon Valley acts like the history of their industry is one simply of entrepreneurship and of markets. But there are a few trends that we draw on that really come through in Margaret's book, and we only get time to discuss some of them in the interview. But when you go back through the history of this industry, you can really see how these ideas about technological utopianism and determinism go all the way back to World War II or before. These are threads that you can draw through the history of the Valley. You can see this boom-bust cycle as technologies take off, and then they mature, and then you need to wait until the next one comes along, and then there's another boom again. There's this very clear history of the elite in the Valley

pushing down workers, fighting unions that you can see through a long period of time, the importance of the military in particular, and getting money from them, which I think is really important when you consider things that are happening today. And there's also this really important piece about how when the United States has a foe that it's trying to fight, whether militarily or economically, that is fantastic for Silicon Valley and these high technology industries. And we do manage to get to that piece, so I won't say too much about it. And you can wait for the interview to hear about it. But I think this is a great interview to give some more insight into the history of Silicon Valley in the tech industry that can help to inform us as we think about the industry in the future, you know, as we have these critical

conversations about tech and about the tech industry. So I really think you're going to enjoy this one as the first part in this four part series that I'm doing this month. Now, before we get into the interview, I just want to say again that the fundraiser we did last month was absolutely fantastic. The response has just been so great to see. And I thank all of you so much who were willing to go to patreon.com slash tech won't save us and become supporters of the show. Naturally, even though April is over, you can still go ahead and do that if you're enjoying the show and want to help support it. We're actually very close to having 200 monthly supporters right now. But there were some other names that I didn't get to thank last week because

we didn't have a guest. So I just want to thank them this week, you know, for becoming monthly supporters. And those people are Christine, Victor Pellicero, Grant from Nova Scotia, Rory, Ben from Atlanta, Axel Henriksen, Taylor Case, Alex Pinate, Arden, Lucas Rizzoli, Charles Windland, and Sean S. So thanks to those people and to the other people who've supported the show. And obviously, if you want to do the same, you can go to patreon.com slash tech won't save us and do that. If you like the show, please remember to leave a five star review on Apple podcast, we've been getting some really great ones lately. And I really appreciate that. And if you like the show and find it informative, and I think you really will find this one informative, please make sure to share it on social media or with any

friends or colleagues who you think would be interested in it. So thanks again for listening and enjoy this week's conversation. Margaret, welcome to Tech Won't Save Us. It's great to be here. Thanks for having me. I'm really excited to speak with you. You know, obviously you are the author of this fantastic book on Silicon Valley called The Code that really gives us this detailed history of so many of the events. And I think a lot of things that a lot of people won't know, but even if they know like kind of the broad strokes of things that have happened, won't know like these really important details that are kind of in the book to

really draw out what happened over these many decades as the Bay Area became the industry, the city that it is today that we're always kind of talking about and wondering what's going to happen because it determines so much, I think, about the future of not only the American economy, but the world economy at this point, right? And so I wanted to start by bringing us back almost a century to where I feel like a lot of these narratives often start when it comes to Silicon Valley and the high tech industry that was kind of formed there. And so that is kind of the public funding what is happening around that time period and what the role of this kind of investment in the Bay Area does to the industries that are going on there? And I guess just generally, like what is happening around that time? what becomes Silicon Valley is just another agricultural valley in California that's distinctive for one big reason, which is that Stanford University was founded there in the late 1890s. And there are a few companies that have grown up around Stanford that are specializing

in radio communication and small electronics, Hewlett Packard being the most famous of them. That's founded in 1939 by a couple of Stanford alumni who were persuaded by their grad advisor to come home. But look, there were little clusters of garage startups all over the country then, right? You could go anywhere. You go to Dayton, Ohio, home of the Wright brothers. They're much more innovative, inventive places that seemed more logical destinations. So what's the difference? What's the difference? Well, World War II unleashes this huge wave of military spending and establishes this new kind of, let's call it a public-private partnership, where the federal government is mobilizing American industry at a scale never seen before to become the arsenal of democracy. Even before the U.S. is an active participant in the war, before Pearl Harbor, the U.S. is,

you know, the factories are worryingS. is, you know, the factories are worrying, putting out, you know, armaments and tanks for Great Britain and the allies. And so this is changing the entire political economy. In the Pacific West, the war with Japan, the war in the Pacific, is precipitating a huge military mobilization up and down the West Coast. There's already a lot of military installations there. They enlarge. There's a huge influx of population, war work, you know, the Rosie, the Riveters, all the people coming out to work in the factories. Then those factories aren't in Silicon Valley or the future Silicon Valley. It's still pretty quiet.

But what is there is Stanford. And after the war, the model of federal funding, not only for industry, but also for science and technology, the federal investment in the Manhattan Project, that becomes institutionalized and made permanent by some of the same people that were running the Manhattan Project. The establishment of the National Science Foundation happens in 1950. The U.S. government gets into the research and development business, as well as the electronics business on a permanent footing, which it had not done before. And this greatly advantages this little valley because it has two things going on. It's got a university whose administrators are really hungry to get a piece of this new

wave of spending. The chief architect, the really pivotal person here is a guy named Fred Terman, who was the dean of engineering and then later the provost, who incidentally went to graduate school and was mentored by this other guy named Vannevar Bush, who was the person who ran Roosevelt's science effort during the war and was the guy who cooked up the idea for the National Science Foundation. So strangely enough, the Valley was the most famous first production of tree fruit, apricots, and prunes. That's all that was going on there. But it had these personal connections, these institutional connections into this emerging military industrial complex,

and this early specialization in small electronic devices and communication devices, which turn out to be the building blocks of a communications revolution to come. You know, I think there's so many interesting pieces in what you just described. But one of them that I want to seize on is what you described about Stanford, right? And so I think that in a lot of the histories that you read, not only Stanford, but this kind of relationship between Stanford and the Bay Area, along with MIT and Boston, end up being this really important kind of relationship to the founding of the high-tech industry in the United States, the electronics industries. So can you describe a bit about that relationship? What's going on

in Boston versus what's going on in the Bay Area? And how Stanford is kind of unique from the, I guess, university model that is typically seen around that time? Yeah. So to be clear, Boston is the capital of tech at this time. And all the computing industry, the emerging computer industry, IBM, all the mainframe computing, that's all on the East Coast. And MIT is, and to a lesser degree, Harvard, but particularly MIT are really the anchors of the Boston tech cluster. And the people who are running those institutions are also the people designing science policy in Washington, D.C. Like they're in it. So Stanford is trying, is kind of up and coming and the Bay Area is up and coming, but it very quickly establishes a strong symbiotic

relationship between the two, the two institutions in the two regions, which I think is really important. Honestly, I've been studying the history of the Valley since the dot-com era, and I didn't fully appreciate kind of the-Bay Area connections and the way that that dynamic played out until I wrote this last book and really went deep into people. It's all about people. They're shuttling between MIT and Stanford. They're pinging back and forth. The Bay Area gets a little bit of advantage because when people move from Boston to the Bay Area, they're like, oh, the weather's nice here in February. I shall stay here in Palo Alto. So there gets a little bit of an advantage because when people move from Boston to the Bay Area, they're like, oh, the weather's nice here in February. I shall stay here in Palo Alto.

So there was a little bit of that going on. But Stanford is distinctive. plays a huge role in explaining why Silicon Valley comes to be because California is investing in its higher education system massively during this period, creating this huge flood of human capital, trained human capital coming out. But Stanford is able to do what a public university like Berkeley is not, which is that it entirely reinvents itself to make itself the perfect Cold War university. It's starting in the late 40s and into the 50s. Terman and Wally Sterling, who's president of Stanford at the time and other leaders of Stanford, they build up physics. They build up specialized electronics programs.

They build up graduate programs in silicon semiconductor fabrication, which was really niche, and are learning from industry, looking at what industry is doing and taking that state of the art and training people to do those things. It establishes a really liberal policy in terms of faculty moving back and forth between industry and university. You can make money consulting on the side. That's sort of innovation. That students are working by day at an electronics firm and then going to grad school at night, making it really attractive for students that didn't come into this game with money but have a lot of smart engineering skills. All these things, to be clear, are viewed with horror by the humanities faculty. This is not the way universities do these things. But it's a really important distinction. And I think it's really important because so many places

around the country and around the world subsequently tried to do what Silicon Valley did and use a university as an anchor. And the thing about Stanford is it's unlike any other. It had this very expansive mission statement that was very utilitarian and focused. It wasn't like an Ivy League college founded in the 17th century to educate Puritan clergymen. It was founded in the 19th century by a robber baron, a railroad baron, Leland Stanford, to bring something useful into the world. And it had an immense amount of latitude to kind of turn itself into a technical school, to be a competitor with MIT, to be very, very,

go deep on the sciences and technology and let other things, you know, come along for the ride, but not focus on them quite as much. And so this results in kind of an imbalanced curriculum to this day, but also makes it the perfect engine for this very particular economic development. And then you have individuals like Terman, who is convincing his former grad students like Hewlett and Packard to come back and start companies. He is working with the leaders of electronics companies that are mostly based on the East Coast and convincing them to come out and establish a research lab near Stanford where they can hire people who are at Stanford and create this virtuous circle between industry and university, which again, is a very different model of higher education. It's something that Berkeley cannot do.

It is a public university that is there to serve a public purpose. It cannot do away with the French department and build up physics. Stanford didn't do away with French, but it really is a, you know, there's an imbalance that faculty at the time recognized. The other thing that Stanford had that no one else had, it had land. It had 9,000 acres of land around it that by the terms of its charter, it could not sell. It could lease it out and develop it, but it couldn't sell. The Stanfords had deeded the land. It was their farm, their horse farm to the university, and they didn't want it broken up. So this becomes a huge moneymaker for Stanford. And it also allows it to manipulate the landscape and design the landscape around it. So what does it build? It builds some residential subdivisions, mostly for faculty housing,

but it also leases space to build a very nice shopping mall, which is still there to this day. And also, importantly, to build a research park next to its campus, which no university had done pretty much until then. It develops this industrial park for these companies, these electronics companies, to co-locate. And that, again, is a model that so many other places around the world follow. But it is something that's a product of this very particular circumstance and this time and place and this ability to just kind of run the board. It's unlike any other place. And that's what makes it so generative for this distinctive economy that arises as a result. Yeah, it's really fascinating to learn about that relationship. You know, Annalise Saxenian, of course, in Regional Advantage talks about this as well and really kind of outlines it and makes a specific point about the quality of the education that was happening in California and kind of the education system between the public system, but also, you know, with Stanford and what's going on there, right? And so as we move a bit further, as you were saying,

you know, the National Science Foundation is founded after the war, but then Nazi Germany is defeated, but there's a new kind of enemy, I guess, for the United States, right, that it wants to compete with. And the technological progress becomes almost like a battlefield in this new kind of Cold War. And so you have the Soviet Union testing its first atomic bomb in 1949. And then you have the Sputnik launch in 1957. And so the United States is naturally very concerned about these developments. And the floodgates of research spending open once again. And so what effect does that have on the ability of universities like Stanford, I guess, and in particular, what's happening in the Bay Area to take advantage of this? And what kind of developments or research outcomes come of this

new wave of funding in order to try to win the Cold War, I guess? Yeah. So the Cold War spending has a transformative effect. And it's not just the amount of the spending, which is considerable. Ironically, happening at a moment when the president is someone who's a fan of small government, not big. But it's not just how much it is, but it's the way it's spent. And this is a very American story. And I think this is a really important thing to think about when we're thinking about the history of these regions in an international

context, you know, how Silicon Valley is so distinctively American. And also, it helps us explain the collective amnesia that American tech has about its roots in the military-industrial complex. So there's this, you know, the threat of Soviet Stalinism and military buildup and the fact that you have two atomic powers going to war with one another becomes a rationale for immense amounts of investment in all sorts of things, including advanced electronics, communication devices, spycraft, rockets, missiles, a lot of things that hit the sweet spot of the electronics industry. That's the specialist electronics that are growing up in and around the Valley. But you can't, you know, if you're going to spend all this money, the way that the U.S. does it is not all directly, not all with government research institutions themselves.

They are giving contracts to private industry. They are sending grants and contracts to universities, public and private, like Stanford, like Berkeley. They become the agents of state expansion. They become the participants, the peristatal entities that are growing this military industrial complex. So what happens in the Valley is that Stanford, the anchor, becomes a major recipient of federal money, and that pays for education, pays for the growth of technical programs, growth of buildings and campus. It also grows defense contracting firms, aerospace companies, including Lockheed, which is based in Southern California, but fatefully opens its missiles and space division 10 miles down the road from Stanford in 1954-55

as a result of kind of Fred Terman again recruiting them to go, come, come, come, we're going to do all this cool stuff together. Lockheed, get this. Lockheed is the biggest employer in the Valley from the 1950s through pretty much the end of the Cold War in sheer numbers. You'd never know it. There was never a Fortune magazine cover story on Lockheed, mostly because almost all it did was top secret stuff. They were making nuclear submarines and Polaris missiles and spy satellites, all sorts of things. The people building them couldn't go home and talk about at the dinner table. But it's this huge magnet for engineers to, you know, come west, to come work at Lockheed. You know, it's this fly wheel that gets it going. It brings people in. It's not the only thing. There are other, you know,

HP has a lot of people. It's very successful. There are other companies that are growing. But in the 1950s, it's mostly, you's mostly big companies that have branches in the valley. It's not a startup capital yet. But Lockheed is really generative. Look, Steve Wozniak's dad was a Lockheed engineer. The kids of the Lockheed engineers are the ones who become the tech revolutionaries, but also the Lockheed people themselves go on to found companies and go on to do all these things. So the Cold War is just kind of creating this whole flow of money that these private and academic entities are taking advantage of. But it's kind of doing it out of sight, right? You have people working in these companies, and yeah, they know it's defense business, but it's also, you know, they aren't working for the government. And it's vastly enlarging

the academic capacity of both the University of California system as well as research universities like Stanford. It's the influx of resources that gets everything going. So you have the basic kind of Cold War spend. Then everything for the Valley goes into overdrive in October 1957 after Sputnik, the Soviet satellite, gets into space first. So that, of course, sets Washington, D.C.'s hair on fire, and all this money starts flooding into the space program. What does the space program need? Really small, light, fast electronics. What does the Valley make? Well, it's the place where, in 1955, William Shockley, the co-inventor of the transistor,

sets up shop, silicon semiconductor startup, Shockley Semiconductor, hires eight guys, smart engineers, brings them out. Turns out Shockley Semiconductor, hires eight guys, smart engineers, brings them out. Turns out Shockley is a terrible person to work for. All the engineers quit. They start their own company. They incorporate it. Get this two weeks before Sputnik. And it's called Fairchild Semiconductor. And in its first few years, most of its book of business was defense business. And it really kind of gets off the launchpad, so to speak, not to use too many rocket metaphors when we're talking about the space program, but Fairchild Semiconductor, which is the grandfather of all venture-backed startups. It's the one that is hailed as the model for everything that comes after. It's not kind of conceiving itself as a defense contractor,

but the space program is really integral to its growth. It's where the integrated circuit is developed at Fairchild. It's a super expensive, super niche, high-tech, high advanced electronic product. It's exactly what the Apollo program needs to send men to the moon. They buy a whole bunch of them. That drives the cost down, allows it to scale up to commercialized. So you see this symbiotic relationship between public and private, it's not just the government funded things and then they were commercialized. It's happening in this very American, for these political reasons. Americans like to pretend it's all a free market paradise. Silicon Valley certainly does, but the state is everywhere. That's the cool part of the story. It's government involvement. It's the government putting its thumb on the scale and funding things it wants to see happen. But it's also

doing in a way that's allowing this entrepreneurial culture to flourish and for people to build companies and make money doing so. And this whole thing to kind of get a life of its own after a certain period of time. Yeah, I think there are several things that stand out with what you described that I want to get into that I think kind of tell us something else about, I guess, what dominates the industry at the time. They generally come from a middle class kind of background, as I understand it. And even, I don't know if it's in this period or if it's a little bit later, but generally have kind of conservative political beliefs, would generally, I guess, support Republicans and be concerned about taxes and things like that.

And you also describe, I don't know if it's in this period or a little bit later, how the venture capitalists are kind of very open about the fact that they tend to fund people who are like them. You quote John Doerr, who kind of describes how there's this pattern recognition, right? And he sees that, you know, white men are the ones founding the companies and doing these things. And so those are the type of people he tends to fund. And, you know, we know that in the computing industry, it used to be women in the earlier days, and then, you know, the men kind of take over. So I wonder, can you talk a little bit about that, like, what that is like in the Valley at that time and how that kind

of evolves, I guess, when you look at it, because I feel like we're still kind of dealing with these issues today where there's this lack of diversity within the tech industry. Yeah, I think the diversity problem is so hard to unwind because it's spent 75 years being wound up. And look, the first generation that comes to the Valley are, you know, the guys who are coming to a place like the Santa Clara Valley, Silicon Valley in the 50s and 60s. Generally, they are privileged in their race and their gender. They're white and male. They're privileged in that they've had good engineering educations at places like Rice and MIT. They are not, by and large, wealthy people. They don't come from wealthy backgrounds. They're scholarship kids. And that's really interesting. I hadn't fully internalized that until I was doing the research.

I was sitting down and having long lunches at the retirement home with 80-something and 90-something venture capitalists who've been incredibly successful. But you talk about their biographies and they grew up poor in rural South Carolina in the 1920s. They're just really coming from very modest backgrounds. Why did they end up in California? In part, because in the 1920s. They're just really coming from very modest backgrounds. Why did they end up in California? In part because in the 50s, if you had a rich father, you had Ivy League connections, you stayed on the East Coast because that's where all the action was. Why would you come to Palo Alto? There were two restaurants. There was nothing going on. It was in the middle of nowhere. But here's the thing, the separateness, the fact that you have this small community that's very sort of all these engineers who are all kind of living together, working together, this really, really tight community.

That is part of the secret of Silicon Valley. This really, this network. And this is something that Annalise Saxenian kind of outlined so well in her book, which I should shout out. That came out in 1996, and it is totally relevant. Like, you know, not that old books become irrelevant, but just a reminder, the tech world has changed a lot since then, and her thesis holds. It's a really powerful book. I hope that my work holds up as well when we're this far out from 2021.

But that network is part of the secret, and that is also its great weakness. Because the network starts out, you're right, in the 50s and 60s, who are the people who are in engineering programs? Well, that is a time when women were not allowed in the classes if the professor decided they didn't want them in there. You have all male worlds of engineering, electrical engineering, all male worlds of finance and business school. There are other people who kind of come out with Harvard MBAs at a time when women aren't allowed into the Harvard MBA program. So it's very homogenous.

Those are the people who are in the companies, starting the companies, becoming venture capitalists after they've been operators. It's all male. It's almost entirely white and native born. And that, because you continue to hire people that you know, because in a startup world where people are untested, you want to know people. You want to know, you want to be able to get along with somebody. These personal connections matter so much because people aren't coming in with a resume. They're just coming in with a, here's who I am. And then that becomes, it just builds on it over and over again with one generation after another.

And then you have the famous pattern recognition where like, okay, the last super successful company I invested in was started by a couple of Stanford graduate students in hoodies that were a little asocial. So I'm going to look for guys like that. Like that could be the next Larry and Sergey. And so that just keeps it going. And yes, in the beginning, there were women, you know, there were, there've been technical women in Silicon Valley history since the very beginning. They, to be clear, we're not, you know, given the roles and the advancement and the stock options that the men were, They, to be clear, were not given the roles and the advancement and the stock options that the men were. It was still a very, very intensely male atmosphere,

hard charging, overworking. Another key to Silicon Valley success were all the wives that were at home that were keeping everything else running so these guys can work all the time. And that culture of overwork and really kind of tough criticism, kind of the unvarnished criticism of the engineering lab, where like, your stuff is crap. The women that I interviewed for the book who were part of this, particularly on the technical side of the Valley in the early days, were like, well, you just built up a really thick skin. You just got to tough it out. You got to just put up with it. And they put up with it, but they also didn't get the upside. I wasn't sitting around with 80 and 90 something female billionaires who'd made money in venture capital. There was a real, real divergence. And there was a very deeply ingrained

belief that it's still so hard to shake that, you know, women don't like this stuff, or they're not good at this stuff. Well, part of it is the culture was so intensely masculine, and so kind of exclusive and exclusionary, and continues to this day, you know, how many like Apple just built this beautiful spaceship and with a, you know, all these amenities and no childcare center, like, there's still this kind of blindness to the fact that you have talent that is at different places in the life course that has different caregiving demands. But part of the problem is that it's been so successful. Like this model, keeping it close has been so successful and it's very hard to break. Yeah. Like that makes sense, you know, when you describe it that way. And I think that you can still like, you know, you talk about Apple and the lack of childcare.

But I think in the past few years, we've also seen the stories out of what you'd sort of call startups. But I think are far beyond that now, like WeWork and Uber, where they've had these really, you know, toxic bro cultures, where you can see why people who are not young men, I guess, wouldn't necessarily want to be around this. You know, I feel like I read these stories and I wouldn't even want to be around it. So, you know, I can kind of see where that is coming from. But I want to keep moving on. You described how there's all this research funding that has been going into it. And, you know, there's more funding as we move into the Vietnam War and the United States is fighting over there.

But naturally, there is also a backlash to the Vietnam War and to some other things that are happening around that time. You know, backlashes to social norms, you know, the very issues that we were just talking about. And naturally, the counterculture, which I think is something that's very important in the narrative of Silicon Valley, also emerges kind of in response to some of these trends. So can you talk a bit about what is going on when the counterculture emerges, and specifically what the perspective of the counterculture is on technology and how that comes to play an important role in kind of defining how we think about technology, or at least how the people who kind of come after it start to think about technology and frame it, I guess.

So the baby boom generation, I mean, the great irony is that these baby boomers are kind of coming up, they're coming, they're getting access to this higher education at a time when higher education is booming and opening up and becoming more accessible. And among other things, they are encountering computer labs, computers for the first time in these universities, these federally funded computer labs. And they are interacting with computers and both seeing computers as the symbol of an establishment that is failing them.

Berkeley and Stanford are just, like so many other campuses in the late 60s, aflame with protest, particularly because these institutions are centers of government research and mostly military research. And there's protest against that. And so the computers, I mean, think about where computing was in the late 60s. Like, you know, go back to 2001, A Space Odyssey that comes out in 1968. Like that's sort of the classic,

you know, this is what the computer, where the computer was in the public imagination, right? This malevolent AI, which I guess we've come back to now. But these are these giant entities that are controlled by giant entities. Who has the computers? It's the establishment. So part of this 60s generation, the part that gets really turned on to computers, and it isn't the whole counterculture. There are plenty of people who don't really care about computers, but there are this group of people who are part of the anti-war movement, are part of the new left broadly defined. They see computing as a tool of liberation. Instead of the computers being in the hands of the establishment, let's take the computers out

of the establishment's hands and use those as tools to advance these goals that we want to see, that are world we want to see. They are feeling this is possible because the technology is getting to an important inflection point. So you have a student who's like going to Berkeley or Stanford in the late 60s, they're going to the computer lab doing time-sharing punch cards, it's all this giant and personal IBM, blah, blah, blah. Only a few years on, the ARPANET comes online in 1969, you're starting to get the beginning of networking, but that's still very institutional and inside academia.

But there's sort of this idea of computers as communications devices that is really taking hold. And then the miniaturization of the technology is continuing. And so in 1971, you have Intel coming out with what they call a computer on a chip, a microprocessor. Other microchip companies are coming out with the same thing. They basically downsized the computing power. So once you have a computer on a chip, you can put a wooden box around it in shop class and add a keyboard and hook it up to a TV monitor and you have a personal computer. This is where we get. So you have this group of tinkerers, the kids who are like science fair ribbon award winners in junior high that end up radicalized to some degree in college. And then they come out and they're like, you know how I'm going to change the world? I'm going to do it through computers.

And so you have this computing movement, personal community movement that emerges in the Bay Area and other places, but we really see it flower around Stanford, around Berkeley, where there are these storefronts that are using computers to improve education. And it's all very mission-driven. It's not about making money. But these are the seeds. And these are some of the same people that only a few years later are turning these little visions into companies and commercializing them into desktop computing.

That basically leads right into my next question. You know, because naturally, what you're describing there is this, this kind of evolution, right? How these kind of ideas inspire a lot of people and and they see hope in computers and in these new technologies that are being formed. And you know, one of the groups, I guess that you describe, and you know, that is described in many histories of this time is, you know, the homebrew clubs that are, you know, experimenting with these new kind of hardware. And I guess software would be there as well. But I feel like, you know, as you're describing, there's this kind of division that gets put on display when it comes to hardware, but also with software and

some of the hacker movements and things like that, where on one side, there's this idea that, you know, this should be something that is free, that should be shared, that should be tinkered with. And then on the other side, you have these ideas that this is something that should be commercialized, that you shouldn't be able to share because we need to sell it as a product. So I guess, can you talk a little bit about that division and how that kind of, I don't know if I would say rivalry, but kind of these opposing ideas kind of play out? Yeah. And this is where some familiar protagonists come in, right? So yeah, by the seventies, you have these little computer clubs propping up and they're again, all over the country and elsewhere outside the United States as well. But the Bay Area is the most famous one, is the Homebrew Computer Club, which first meets in someone's garage in the Silicon Valley and then

meets it in the auditorium at Stanford, kind of a monthly swap meet for people who are building their own motherboards. It is like these are people with their own soldering irons. These are people who are, you know, this is hardcore. These are not, you know, no one is buying anything off the shelf. And originally they are, they are building their own computers in true fashion and they're hardware people. And I mean, think about the computer industry up until the 1970s. And it's a massive industry, right? IBM's a giant and you have companies like DEC that are making many computers, big, big business. They're hardware companies and the software that they sell, they just sell along with the computers. There isn't a standalone software industry per se. There's some software companies, but not in the way like you don't buy the computer and then

buy the software. It's not a money-making business. And so for these hobbyists, they see the computer itself, the hardware is the art, and the software is something that you freely share. There's nothing proprietary about it. You write programs, you share the code, you print the code in the newsletter, the hand-printed newsletter that you distribute. It's all very homegrown, homebrewed. And the free sharing of software is a foundational principle for this hobbyist community. Everyone's got their own cool machine, but we're sharing ideas about how to build a cool machine. No one's in it for the money yet. There are no trade secrets yet. And certainly software,

you just print the code in the newsletter. What's the deal? This is not something that is a product. A software isn't a thing. It's ephemeral. It's just lines of code. So this is the state that the Humber Computer Club and these other computer clubs find themselves in when they receive a letter from a young guy named Bill Gates at a company called Microsoft, which then had a hyphen between the micro and the soft. And what Bill Gates and Paul Allen's company did was it was selling software to go with the first kit that wasn't, you totally build it yourself, but this thing called the Altair, which is the first thing you could order as a kit to put your own computer together. And they had basic, this was the,

this was the original Microsoft product, right? And they're selling this as a business. And then the homebrewers and these other hobbyists are just printing the code in their newsletters. Like, and so Bill Gates send this letter to all these computer clubs, including Homebrew. It's like, what you are doing is theft. And it is a full, you can just hear his Bill Gates circa this 1979 voice going on. It's great. It's this moment because of course, here's Gates. And then among the homebrewers at this time included Steve Jobs and Steve Wozniak, who show up at meeting number two. And there are a lot of heavy hitting, really smart people in homebrew, but they set themselves apart when Wozniak sets himself apart by having figured out how to design this beautiful motherboard around a really, really kind of cruddy, cheap chip and still make it work really well, which was,

you know, to the engineers in the room was like, wow, it's amazing. So you see these two worldviews, the Silicon Valley worldview of like free software, open source, and the worldview of Bill Gates, which is like, this is a cathedral, not a bazaar. We are doing this. And the battle lines are drawn in the late 70s and they continue for two decades on. I mean, there's a lot of collaboration on the way, to be clear. Apple and Microsoft did tons of business together before they started suing each other. So it wasn't always as clear cut as one might think. But there's these two visions that are very clearly set out from the get go. And they continue to animate the industry today. to the 1980s, then there is, I think, like a further evolution of this kind of worldview and what the politics, I think, of the valley are, right? You know, you described how Steve Jobs, notably, kind of describes the history of Silicon Valley, and notably leaves out the role of the

government in that, right? The role of the military and the funding that came along with that and positioned it as something that came from the free market and from entrepreneurs. And of course, this is also the time when Ronald Reagan is becoming president and when there's this new kind of drive to cut government spending, to have smaller government. And so how do those kind of ideas end up kind of melding together in the way that the Silicon Valley's myth-making, the stories it likes to tell about itself, and the way that it was also accepted pretty uncritically in these media celebrations and accounts of Jobs and Gates and others in the early days, was it the kind of, oh, these totally different, think different guys, off to the side doing something completely different, totally rewriting the rules of capitalism and doing it all differently. And actually, the secret of Silicon Valley success, particularly

when we look at this moment, kind of late 70s, early 80s moment, where Silicon Valley kind of becomes a term of art that people know, and the first consumer-facing products of the Valley, video games and personal computers kind of take the world by storm and make Steve Jobs a household name, et cetera, et cetera. What else is happening in the world right now? Well, in the United States, the bottom is falling out of the American manufacturing industry. The carmakers are going to Congress asking for bailouts. Everything's bad news. Japan is the rising sun, the great competition. All of the alarmist, borderline, not so borderline, xenophobic language

that now is being employed about China, same story going on with Japan in the 80s. And it was a very real economic threat. This is a heavily subsidized Japanese electronics industry that's coming in, and among other things, eating the lunch of American microchip makers for a while. So all this is kind of, there's a lot of bad news stories. And when you're politicians, either both parties, they're like, we need some good news. We need some sunrise industries. And so both Democrats and Republicans embrace tech as this entrepreneurial superstar, like this is going to solve everything and conveniently kind of downplay the connection it has to the state. So the entrepreneurs themselves and the venture capitalists are kind of telling

this story and the Wall Street analysts and the media are seconding it. And then people like Ronald Reagan are celebrating these, you know, garage entrepreneurs. And, you know, Ronald Reagan knew full well what was the role of the Cold War in the military industrial complex. Like his whole Star Wars program, SDI, was all about supercomputing. Like there's the close ties haven't gone away. They're intensifying. But this story is a perfect, you know, it's a great story if you want to sell American free market capitalism and you want to make a case for limited government and for entrepreneurial innovation and free enterprise and low taxes and low regulation and all those things.

And, you know, the industry is lobbying actively for lowering taxes. You know, the venture capitalists are going to Washington and lobbying for gains, successfully lobbying for cuts in the capital gains tax. So this sort of slipstream of politics is really flowing in Silicon Valley's direction. And also kind of going back to kind of the way the money flowed through private entity, private contracting, a government out of sight contributed to technologists themselves being able to sort of say, yeah, this is our story. Like we come from this, we're just this amazing entrepreneurial story that just came out of nowhere. And we're showing, you know, capitalism in action. And

we're thinking different, building different things, changing the world. And yet those institutions mattered a lot. And we're responsible for the technologies getting off the ground in the first place. I think what you're describing there is such an important point, right? And you already kind of made the point I was going to bring up about this connection to what we're seeing with China today. But I feel like one of the things that is lost in this narrative that is told about Silicon Valley is the importance of the state funding, you know, along with everything else that's going on in the Valley, naturally, these networks that are happening, the role of venture capital as well is obviously very important. But without this state role, you know, it's a lot more difficult to, I think, get these kind of progressions that we're seeing happening, like the importance of the funding to fight the

Nazis in World War Two, then the importance of the couple stages of funding in order to counter the Soviet Union, the importance of the money to counter the Japanese as they are kind of taking over the semiconductor industry and these other industries. And now what we're seeing today where it looks like there's going to be some sort of attempt to counter Chinese technology, and that's naturally going to benefit Silicon Valley as well. So how do you kind of see that, I guess, that long trajectory playing out? And how is the government helping this along? And why is it important to recognize that when we think about the Valley instead of being lost in this kind of narrative about the entrepreneurialism that's going on exclusively? Yeah, well, I think it actually is important. There's a number of

reasons important to recognize. One's a number of reasons important to recognize. One is to sort of make people understand the value of paying taxes and sort of being part of a larger collective. But it actually goes back to the question you asked me earlier about the Valley's diversity problem. Here's one example. Actually, what the Cold War state did, you know, effectively was it did create an extraordinary amount of opportunity for people that previously didn't have that opportunity. They were all white men, but they were people from pretty modest backgrounds who, because of engineering education and the opportunities of the Cold War moment, had these amazing careers, extraordinary careers, and were able to

kind of do extraordinary things. I think about, you know, people like Andy Grove came to the US in 1958 as a Hungarian immigrant, a refugee from communist Hungary, speaking very little English, big, thick eyeglasses, probably did not impress the person processing his papers as he came over the border as someone who's like, oh, that guy's not going to amount to much. Well, turns out he goes and completes college and then gets his PhD in two and a half years and then goes on to co-found Intel and become Andy Grove. Sort of the mid-century United States created this incredible escalator of upward mobility. It did that through immigration and refugee policy. Immigration policy is liberalized in 1965.

That's a very big part of Silicon Valley's story. Why is it so successful? Not because Americans are better at tech. It's because America let people in who were great at tech and gave people a chance. And their children kind of went on to found companies, just portioned rates, all this stuff. And also just investment in the social sector, investment in people, investment in education, do that again, but hey, maybe do it for a wider group of people, like not just the white men from rural Iowa, which is great. I think the class mobility story of the Valley often gets lost because now you have to have a great deal of privilege, class privilege, economic privilege to do the startup hustle. Let's be honest. Like the whole kind of, oh yeah, go start your own company, be a founder, blah, blah, blah. You know, you have to have parents who are bankrolling you

in your apartment in San Francisco while you're making no money. Like, let's be very, very transparent about this. You can't be a caregiver. You can't be someone who has to put money aside to send home to family overseas. You can't do those things. So here's where the public, the government, the government represents the public, the collective. It can put its thumb on the scale and encourage certain types of investment. In the 60s, it was sending a man to the moon. Now, it could be, I don't know, green energy might be a good option or other things that are sort of for the broader society that the market itself doesn't have enough of an incentive to do yet. So you use capitalism in a generative way. And you also recreate that escalator of upper mobility, open up the opportunities to more people, because that's going to be good for everybody. Like it's, you know, more ideas in the system, less inequality, you know, there's so many arguments in favor of that. And we've kind of gone to this really artificial austerity that has

generated an immense amount of wealth for Silicon Valley, for parts of it. I mean, look, like this sort of low tax environment has been something tech leaders have worked very hard to affect over the last 40 years, and it's been very effective. But has it been good for the broader whole? Has it generated better technological advancement or contributions than the alternative? I mean, counterfactual history is impossible to prove, but there are a lot of really powerful arguments in Silicon Valley's history for investment. And to be clear, the government has never left the picture. It's just made different choices. It's made choices to cut taxes or deregulate or not regulate the internet industry faithfully, right? That has allowed a lot of companies to grow large

and lots of things to grow. Yes, that's awesome. There's a lot of things that have been created by that. But policy choices are always shaping what the market is doing. It's never left. And so we who are citizens need to decide what are the choices we want our governments to be making and who is getting advantaged by them. What you're describing really shows that, right? Like when we look back at the history of the valley, it's not just these really amazing entrepreneurs who are churning out these ideas. Like, yes, that's there. But a lot of these ideas come from having this stability of, you know, government contracts, government funding, whether it's through universities or through private sector to allow these things

to be done, right? And it's not just the private sector doing these things alone. There's another piece of this that really kind of stood out to me, because when you look back at especially what comes out of the counterculture and how that influences kind of the ideas about technology, you know, there's this notion that it is bringing in a different way of working, right, a different kind of way of organizing the company. And I think it's absolutely true that we do see that, like in the beginning, right, you know, you talked about in the book how there are older companies who are operating in the valley in the beginning, and then you get

these newer startup kind of companies like Apple and whatnot that grow later that do operate in a very different way. But you also described how in the 1980s, Hewlett Packard reorganized to have a more conventional structure. And I think when we look at, you know, these companies that came out of, I guess, the 80s and the 90s, in particular today, that kind of dominate the valley, that, you know, I think it's very fair to say are major companies that are not operating like, you know, the Davids, they're the Goliaths now. I wonder how these ideas about the counterculture kind of convinced people to go into the corporate world and think that, you know, they were changing the corporate world by bringing in these new ways of working, by using the computers in these ways that you were talking about.

And whether you think that was successful or whether you think that was just creating, you know, a new industry that became another dominant player that didn't really disrupt things. And that was, I don't know if you'd say corrupted, but just served similar ends in the end when you look at it, the same driving force for profit and things like that. Yeah. Well, look, there has been stunning amounts of things that have been accomplished by these companies. Look, I'm sitting here talking to you with an Apple Watch on my wrist, with AirPods in my ears. I am fully, Tim Cook has surrounded me with goodness. But look, I have a supercomputer on my wrist. I think it's important as we critique the companies,

as the shortcomings, as we push the people of this industry to do better and all of us to do better, we also recognize like, holy cow, like, this is amazing. And here we are, you know, you and I are having this conversation enabled by all of these layers of technology that have been advanced. I mean, the last year, pandemic year has been made, brought to you by Silicon Valley as their earnings reflect. But all that being said, in a way, it's a sad story of you can't have it both ways, right? I think a lot of the 60s generation kind of went into this being like, you know what? We can build companies. We can make money on this and we don't have to leave our values behind.

And actually, when you look at what's the secret of success for the most successful companies, Apple is a great example. Apple, it kind of positioned itself from the very beginning as a countercultural company, as a company that was sort of doing things differently. And to be clear, it was a place where people were, you know, by and large, just gloriously happy to work in the early days, partially because they're getting rich. But also, there were a lot of women actually at Apple kind of working in some senior roles, not necessarily technical roles, but some very senior important roles. It was a real, very mindfully trying to create a different sort of workplace and to many of its employees executing on that. But why was Apple successful as opposed to why did it get out of the garage when others didn't? Well, Steve Jobs sought out the best possible help he could

get from the establishment players. He got the best marketer PR guy in the Valley, Regis McKenna, who'd worked for Intel and persuaded him to take on this little Apple as a client. And Regis does the logo, that rainbow logo is courtesy of Regis. Before that, they had some horrible wood etching, hippy dippy thing. All these things that professionalized it, got venture capitalists to invest money, got adult supervision in the form of Mike Markkula, who was a former Intel executive. The reason Apple was successful was kind of conventional MBA stuff. And you look at other companies that were successful. It's capitalism, baby. That's what it is. But here's the challenge. Recruitment and retention has been one of the most important things that these companies do. Talent is the thing that sets them apart, right?

So you want to be a great place to work. That's why you have all these perks. That's why you create this culture and make people feel like they're part of something special. And that's what companies very successfully have done. They've created these beautiful, these wonderful playgrounds where you get days off for Burning Man and you get to play ping pong and you get free food. And now that these companies are no longer David's

and they're Goliath's, another hallmark of tech companies has been, they still think they're startups long after they left that behind. But they're like, we're still a startup. Like, no, you are not a startup. But that kind of mentality is seen as really integral to the culture. What it does do is it allows one, I think it allows a kind of lax inattention to when the culture gets out of control and becomes oppressive. You mentioned earlier, Uber is a great example. This is a consequence of not having like taking HR seriously and kind of letting people kind of be brilliant jerks because it's all about innovation. Like, no, dude, it's not. Like you're creating an

oppressive work environment and you're a large public company. Like you can't do that. But by recruiting people on the promise that in Google's case, you're not going to be evil, like say, you can come here and you can make lots of money, same promise as the 70s, right? We can make a lot of money and we don't have to leave our values behind. This is awesome. And then when the reality is those values are being compromised, whether it's Pentagon Drone Project or something else, now we're having a reckoning within these companies where employees at Google and other companies are pushing back and saying, wait a minute, this is not what you promised we were going to do. And there's still a lot of employees that are perfectly happy, but this is

a real departure from what we've seen thus far. And I think it's a reflection of how big and how powerful these companies are. There's no such thing as a countercultural capitalist company, like your job is to make money, and this is what you do. Like, like the mythology is kind of gets in the way of reckoning with the realities of what these institutions, these entities are, and and also can make the leaders of these companies kind of have blinders on, you know, they believe what they're selling, in part, because, you know, that's been successful for them to believe that. And you can't have it both ways, sadly. Yeah, I completely agree with that. You know, and I think what you're describing there also shows up in the history of what you described, right? Where in the past, there have been opposition to the companies being involved

with government contracting, like back in the 80s. And we can see how, you know, there were issues with with labor long term opposing unions or having long work days and things like that. So I think you can really kind of see these things, I guess, playing out through the history of the valley. And so it's really fascinating to hear you, you know, describe everything that has happened. I know that there are so many more pieces that we could have gotten to, because there's just so much that has happened over this course of decades that is just so fascinating. But I really appreciate you taking the time to enlighten us on some pieces of this so we can get a better picture of what is going on and hopefully, you know, cultivate a better understanding of Silicon Valley so that when we think about how it works and how it can be improved for the future,

you know, we have a better understanding of how we might do that or what the best approach might be. Tech is very forward thinking. It's all about building the future, right? And history sometimes seems just so irrelevant, like, or maybe it's a nice plaque on a building, like, oh, yeah, this happened here once, but that's not relevant to what I'm doing. I'm building the future. I'm leaving the past behind. But everything you're doing has a history. And everything you're doing is constrained and enabled by that history. And understanding that history gives you the tools, the necessary foundation to build the future. You got to understand where you came from to go forward, either to go on a different path, to build on paths already taken

or paths not taken. But having that broader education and awareness, like every single thread that we look at in the tech industry, you can trace back and there are breadcrumbs there. And so having that knowledge is, I think, really important. Wherever you're coming into this, as a user, as an employee, as an activist, whatever, we're all somehow involved in the tech economy. I wanted to create a way for people, technical and non, to really understand this broader landscape and why it matters to them. Maybe cutting out the humanities at Stanford or not putting so much focus on them wasn't so great?

I don't know. I'll say this. This is probably heresy. Since I'm a history professor, I should be encouraging everyone to take humanities classes, and they should. But I don't know if all of Silicon Valley's ills would have been rectified if some of these moguls had read more Plato. I think there's bigger things going on. But you know, doesn't hurt. Take a history class. That's a good point. Well But you know, doesn't hurt, take a history class. That's a good point. Well, you know, and if they didn't take a history class, they can obviously read your book, or hopefully get some insights from this podcast. Margaret, I really appreciate you taking the time to chat with me and to fill us in on parts of this history.

There's so much more that people can learn. Thank you so much. Thank you so much for having me. Margaret O'Mara is the author of The Code, Silicon Valley, and the Remaking of America. She's also a professor at the University of Washington. You can follow her on Twitter at Margaret O'Mara. You can follow me at Paris Marks, and you can follow the show at Tech Won't Save Us. Tech Won't Save Us is part of the Harbinger Media Network, and you can find out more about that at harbingermedianetwork.com. And if you want to support the work that I put into this show every week, you can go to patreon.com

slash techwantsaveus and become a supporter. Thanks for listening. Thank you.