The New New Thing: A Silicon Valley Story

by Michael Lewis

Once all the parts were checked, Clark and the cop climbed into the front seats equipped with the controls. We rose with a disturbing jolt. The helicopter lifted and swiveled toward the south end of Silicon Valley. Beneath us lay the salt pools and the sewage dumps that used to upset local environmentalists—back before environmentalists were priced out of the local real estate market. From a height of three thousand feet the waste was the most beautiful thing in sight. The cop leaned out the window to stare, leaving Clark to fly his new machine. It was his sixth hour of flying a helicopter.

“So” cuts across the borders within the computing class just as “like” cuts across the borders within the class of adolescent girls. It’s the most distinctive verbal tic manufactured by the engineering mind. Silicon Valley engineers for whom English is a second or even third language acquire it as readily as native speakers. Nobody knows why. Some say that “so” imposes the semblance of logic on an essentially illogical event, human conversation. After all, “so” implies that the answer follows directly from the question. Others claim that “so” just buys you time to think.

Not long after he drew the Magic Diamond with himself at the center of the U.S. health care industry, Clark drove up to Sand Hill Road to see the venture capitalists. The venture capitalists advertised themselves as the great financial risk takers of the Valley, but you could learn everything you needed to know about their attitudes toward risk, simply by driving up Sand Hill Road. Sand Hill Road was where the venture capitalists clustered together for safety, like ducks in a park waiting for the bread crumbs to fall. Each time Clark made this trip, the ducks came out of it worse than the time before. The price of the crumbs rose; and they had to quack louder for them.

The Indian educational system was conceived by Nehru in reaction to the British colonial experience. Nehru believed that India was more likely to remain an independent country if it made itself technologically equal to its former rulers. To that end he created a ruthlessly efficient mechanism for finding and exploiting Indian technical talent. It was called the Indian Institute of Technology. The IITs were created in the early 1960s with foreign aid. The first two, at Kharagpur and Madras, were funded by Germany; the third, in Bombay by the USSR; the fourth, at Kanpur, by the United States; the fifth, at Delhi, by the United Kingdom. The IITs became the funnel through which young Indians who finished high in a national standardized test passed on their way into Nehru’s game of catch-up ball. The force of their attraction was spectacular. It was as if a nation of 900 million people had set out to find the few among them most able to program a computer, and leave nothing to chance. By the time the Nehru regime finished engineering Indian society, every parent in the country wanted his son to become either a doctor or an engineer.

A system designed to churn out engineers for a Third World economy would soon be used to its greatest effect in the quest for the new new thing. The talent that the government had gone to such trouble to find and cultivate wound up being some of the most sought-after corporate employees on the planet. All these bright young men spoke English. They could quite easily pick up and go to America, which was paying the highest price for their talent. And, in massive numbers, that is exactly what they did. Indian engineers flooded Silicon Valley in the 1980s and 1990s. By 1996 nearly half of the 55,000 temporary visas issued by the U.S. government to high-tech workers went to Indians. In early 1999 a Berkeley sociologist named AnnaLee Saxenian discovered that nearly half of all Silicon Valley companies were founded by Indian entrepreneurs.

Kittu, like Pavan, left India the minute he graduated from his IIT. After the requisite two years inside some American graduate school, which the Indians treated as a weigh station en route to Silicon Valley, Kittu had landed his job at Silicon Graphics. Not long after that he met Clark. And not long after that he found himself a kind of professional observer of Clark’s quest for the new new thing. Jim Clark’s mind was Kittu’s hobby; Kittu was fascinated that such a technically minded person could be so happy groping blindly toward big piles of money. “Jim Clark has a clarity of vision that is prompted by the purest form of greed,” says Kittu. “Nothing clouds it.”

Clark was onto something when he went looking for Indians. It wasn’t just that half his work had been done for him by the Indian government. It wasn’t just that, next to the sifting mechanism through which Pavan and Kittu had passed, the Harvard admissions office was a kind, forgiving place. It was that any person with the brains to get into the IIT’s and the gumption to get himself to the United States was capable of all manner of miracles.

bright line ran through the programmers’ world, and it divided the air between Lance and Steve. On one side of the line were the aesthetes who took pleasure in the computer’s complexity, and spent a great deal of time writing deliciously elaborate programs that caused others to exclaim “cool!” when they saw it but often had no economic purpose. On the other side of the line were the utilitarians. They were interested only in the computer’s crude and brutish ability to impose its will on the world around it. Lance was in love with the computer’s beauty, Steve with its power.

The trip from Healtheon’s main office on the northern fringes of San Jose to downtown San Francisco took an hour. We rolled up in front of a skyscraper, parked illegally, strolled into the elevator, and pressed a button. Up, up, up we rose, and as we did I became aware of his incongruity. Downtown San Francisco was one of those old-fashioned places where businessmen went to work in suits and measured their status by their views of the Bay. Clark wore a yellow polo shirt, khaki slacks held up by a soiled sailor’s belt, and his rat-gnawed pair of sneakers with their grimy MEPHISTO label. The bike messengers were better dressed.

In 1986 when Clark had wanted Wall Street bankers to sell Silicon Graphics to the public, he flew to New York City, hat in hand. Many of the bankers treated him poorly. The CEO of Salomon Brothers, John Gutfreund, stood him up—left him sitting like some hick in the lobby of Salomon Brothers. These days the investment bankers came to Silicon Valley. This was only one of many recent changes along the capitalist food chain. Wall Street had gone from being the celebrities of the money culture to being its lackeys. It was in June 1998 that six bankers from Goldman Sachs visited Healtheon; directly on their heels came five more bankers from Morgan Stanley. Together with Long, Pavan Nigam, Jim Clark, and a dozen Healtheon employees, they crammed their lightly starched selves into a small conference room. What ensued was a wonderfully elaborate money ballet.

Clark had seen the health care system as he saw much of the world, in black and white. To his way of thinking there were health care professionals who clearly served a purpose. They were called doctors. And there were people who clearly needed health care. They were called patients. Everyone else in between—the hundreds of billions in paperwork and bullshit—could go. All Mike Long’s soothing talk about “partnering” and “win-win relationships with other health care firms” was a smoke screen for what Clark was up to when he created Healtheon. “We want to empower the doctors and the patients and get all the other assholes out of the way,” Clark had once told me, then laughed. “Except for us. One asshole in the middle.”

We groped our way toward Antigua. A couple of hundred miles offshore a spotted hawk flew overhead. It was a poignant moment; it often is when the first bird appears in the sky. The first bird, like a man ahead of his time, is a tragic figure. Typically, the first bird has flown too far from shore, and is flapping its way to its death. The good news that land is near is quickly followed by the realization that land is not near enough for the bird. The crew gathers on deck and hopes that the bird will roost in the mast, and sail back to shore. It almost never happens.

A long time ago Clark had told several of them personally what was going to happen. “At the end of the first trading day Healtheon will be worth two billion plus,” he’d said. “And I don’t see any reason why it shouldn’t go to five billion fairly quickly. It depends on what kind of publicity we get.” To the engineers this was a mythical Clark moment; and I knew it to be a true myth because he had said that very thing to me, a year and a half earlier. How often did a man say to you, “Come with me, I’ll make you rich,” and then tell you exactly how rich he was going to make you, and then do it. It was a bit like watching Babe Ruth stride to the plate and point to the fence with his bat.