The New New Thing: A Silicon Valley Story

The New New Thing: A Silicon Valley Story by Michael Lewis Page A

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Authors: Michael Lewis
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Multi-Media server loop. Each loop will represent tens of thousands of clients, each using a telecomputer. In the loop will be high-speed computer systems for serving audio and movies on demand, virtual reality games, digital forms of daily newspapers, weekly and monthly magazines, libraries, encyclopedias and interactive books. In time, all media will be available in dynamic form.
    He was wrong about all of this, at least in his timing. He was off and running down a dark tunnel that ran directly into a brick wall. But at least he was running.
    Clark’s paper attracted a lot of attention from everywhere except Silicon Graphics’ boardroom. The cardboard box in Clark’s guest room contains a tall stack of fan mail and his responses. For instance, on August 4, 1992, he replied to a letter from Lance Glasser at the U.S. Department of Defense, who agreed with Clark and wanted to know why he didn’t just build his new machine. “Silicon Graphics Management considers pursuit of Digital TV a distraction,” Clark wrote. “I am the driving force but…left to its own, SGI will not pursue this for at least four or five years…. I believe the solution is to form a new company.”
    By far the most important letter he had came from Jim Chiddix. Chiddix was the chief technology officer at Time Warner Cable. Chiddix told Clark that he had heard his talk and that Time Warner shared his interest in the telecomputer. He agreed with Clark that now, at last, the world was ready for the new machine. Time Warner had just decided to yank out all of its copper cables and replace them with fiber-optic cables, which transmitted data much more efficiently. In other words, the infrastructure would be laid for a telecomputer to traffic in moving images. More to the point, Time Warner was willing to pay someone to build a telecomputer. Chiddix suspected Clark was just the man for the job.
    The deeper Chiddix dug into the problem, the more certain he became that Clark was the only man for the job. Or, at least, the company Clark had founded was the only company for the job. In late 1992 Chiddix toured the companies that might conceivably build the black box he needed: Microsoft, Oracle, Sun Microsystems, Silicon Graphics. They contained the biggest egos and brightest minds in technology. They sold themselves as hard as they could to Chiddix, and yet Chiddix came away with a very clear opinion: the engineers Jim Clark had brought together were in a class by themselves. “It was clear that Clark himself had no power in the company,” says Chiddix. “But it was also clear that if anyone could build an interactive television it was Silicon Graphics. Everyone at all these companies was smart. But the engineers at SGI, they were the real cowboys.”
    In October 1992 Clark finally made his pitch for his telecomputer to the Silicon Graphics board of directors. He opened with a slide that read “How We Can Be to Entertainment Computing What Microsoft Is to Productivity Computing.” He laid out his view of the market, which he thought could be as big as 10 billion dollars a year. He discussed potential competitors—Sun Microsystems, IBM, DEC. And then he pulled a kind of bait and switch: rather than create the telecomputer inside SGI, he suggested, SGI should finance a new company to do it. In exchange for money and technical support, SGI would be granted a large equity stake in the new enterprise, which Clark would control. No more Fucking Ed McCracken. Clark called his new company an Entertainment Computer Company. As a kicker he mentioned that Time Warner was willing to pay for the telecomputer to be built.
     
    N ot long after Clark’s presentation to the SGI board, Pavan Nigam was called in to see Tom Jermoluk—T. J. as he was called. Improbably, T. J. had been able to win Clark’s friendship without alienating Ed McCracken. While McCracken was off playing corporate statesman, T.J. ran the company; and it was through T. J. that Clark exercised

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