Jul 10, 2019

We love stories about Silicon Valley success, but what is its history?

Its history involves visionary entrepreneurs, but also engineers, politicians, schools and lawyers.

Tales of visionary entrepreneurs or the rise of trillion-dollar companies — these are the American tech stories that most often grace magazine covers and book jackets. But little has been written about the entire economic ecosystem of Silicon Valley and the many stakeholders and influences that have been part of its evolution.

Marketplace’s Jed Kim spoke with Margaret O’Mara about how Silicon Valley is a uniquely American product, born of being in the right place at the right time. O’Mara’s new book, “The Code,” lays out a more comprehensive history of the modern American tech industry dating back to the 1940s. Kim talked to O’Mara about “The Code” and the question she says everyone asks her: “What’s the secret sauce of Silicon Valley?” The following is an edited transcript of their conversation.

Margaret O’Mara: We know that one of the secret ingredients is time. It’s history. What we have now, the Silicon Valley of today, is the product of 75 years of history. It’s a story of big government, incredible entrepreneurship and technological advancement, including the famous people you’ve heard of — these business leaders who kind of took their companies and broke out from the pack and became really market-disrupting, market-defining companies. But it’s also a cast of thousands of both technical and nontechnical people who helped make the magic happen.

Jed Kim: What are the things that people pay too much attention to that you don’t think warrant it and why?

O’Mara: I think people pay too much attention to “think different,” to the iconoclastic, [the idea of] “this is a different place, these are special people.” There is something to that, like this was a place that was off to the side of the main action. It was a little agricultural valley in Northern California far away from Wall Street and Washington, far away from Boston, which was the original capital of high tech. And that isolation kind of created this really distinctive community. I call it a Galapagos of not only technologists, but also their specialized business services, venture capital being one. Plus marketing, legal, investment. That is real important part of the Silicon Valley story, and that often doesn’t get emphasized.

Steve Jobs … doesn’t come from connections, doesn’t come from wealth. His public high school, however, had a computer lab in the late 1960s.

-Margaret O’Mara

Kim: What is the ingredient that people most overlook?

O’Mara: I think the ingredient that they overlook is the public sector side — and not just [the defense industry]. Things like investment in R&D, but also education — K-12 education and higher education, both public and private. You know, this first generation of people who come out to Silicon Valley in the 1950s, they were young men with engineering degrees but not many connections. The people who were Ivy League graduates who went to prep school, who had fathers and uncles who had big fancy jobs and Wall Street, they tended to stay on the East Coast. The people who came out to the Valley were kind of middle-class kids who came out to California because the living was easy and it was not that expensive. It’s kind of strange to say this now that it costs $3 million to buy a little bungalow in Palo Alto.

You also have people like Steve Jobs, for example. He’s this lower-middle-class kid who’s growing up in this place and has the great advantage of being in the right place at the right time. He doesn’t come from connections, doesn’t come from wealth. His public high school, however, had a computer lab in the late 1960s.

Kim: Speaking of Steve Jobs, I love the anecdote of him stumping in Congress for two weeks frustrated that the tax cuts he wanted weren’t happening — and he was surprised by it. And it really goes to show that there were just so many factors and different kinds of people that were key to making this region the tech capital of the world. How aware of each other were these different players?

O’Mara: These different players were aware of one another, but they often didn’t understand one another. This book is about Silicon Valley, but it’s also about Silicon Valley, Wall Street and Washington. You know, these three power centers and how they relate to one another. The story of Steve Jobs going and lobbying for tax breaks for computers in schools in the early 1980s is such a great example. This is a guy who a couple years later admits that he had never voted in his life and says that without a speck of embarrassment. But yet he recognizes that lawmakers — both national and state — are really important. And he sees education — and computers in education is a really important growth area for Apple. It’s really, really important to get computers in front of kids.

He tries for a couple weeks to get this bill passed. It doesn’t go anywhere because, you know, oftentimes legislation doesn’t go anywhere in Congress for a host of reasons. He kind of throws up his hands and comes back to California. And Jerry Brown, who then was governor — his first time as governor —was a great ally of the tech industry. Brown says, “Well, we’ll do a tax break at the state level.” And they did. So it was a great boon for Apple because that meant that Apple IIs were in classrooms across California. And so the next tech generation has an Apple as their first exposure to personal computing. It was a really great move.

Related links: more insight from Jed Kim

If Silicon Valley success is something you dream of, realize that living in it is a grind. And it takes its toll, even on those at the top. TechCrunch has a phone conference interview with a former successful venture capital investor who coaches executives on managing their mental health. Most of the interview is behind a paywall, but the snippet that’s free to read has an interesting take on ambition and its effects on leadership. Basically, fear is the mind killer.

You can’t talk about Silicon Valley without talking about how expensive real estate is there, especially with big tech companies buying up and developing property. Well, those new constructions mean new property taxes for counties. San Jose Spotlight looked at the property assessment roll recently released for Santa Clara County, where most big tech campuses are located. It’s $516 billion. Last year, Apple opened its sprawling Apple Park office in Santa Clara. The company is appealing its tax assessment. It says the facility isn’t worth that much on the open market … because what buyer is going to pay full value for a spiral elevator down to a giant underground theater?

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