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The Hidden History of How the Government Kick-Started Silicon Valley

Margaret O’Mara, author of The Code: Silicon Valley and the Remaking of America, explains why it’s time to move past the tech sector’s creator myths

Photo: Chesnot/Getty

MMargaret O’Mara remembers working as a staff member at the Clinton White House in the early 1990s when she watched in amazement as a colleague in the Department of Health and Human Services sent an email to his son at college. It was the first time she’d seen someone send an electronic message, and it was “very uncommon, especially in D.C. political circles,” she tells OneZero.

Now a tech historian at the University of Washington — she began her academic career at Stanford in 2002, first as a fellow and then teaching — O’Mara dedicates her time to studying the intersection of tech and U.S. politics, and looking at the internet through a historical lens. Her latest book, The Code: Silicon Valley and the Remaking of America, re-examines the self-serving genesis tales around tech’s biggest breakthroughs, dispelling the myth that entrepreneurs alone are responsible for the great tech innovations of our time. In this wide-ranging work, O’Mara delves into the history of the Valley, from the 1930s when David Packard built the foundation for what became Hewlett-Packard (HP), to our modern, always-connected society, exploring the important figures, policies, and global events that changed the course of tech history.

OneZero spoke with O’Mara to discuss how Silicon Valley was born and why she thinks big tech companies like Facebook should be treated like the Standard Oil monopoly of the 1920s.

This interview has been edited and condensed for clarity.

OneZero: Figures like Steve Jobs and Mark Zuckerberg are considered practically superhuman for their impact on the tech landscape. But your book lays out how government investment has been instrumental in driving tech innovation. So why do these founder myths persist?

Margaret O’Mara: It’s kind of the quintessential American story, right? The story of rugged individualism, the rebels and the revolutionaries who overthrew a monarch and started a whole new country. The “pull yourself up by your own bootstraps” tale that has been celebrated throughout American history. We love heroes — both in Hollywood and in real life.

So in Silicon Valley, or the tech industry more broadly, you have these genius individuals who do extraordinary things. But these breakthroughs are made possible by a larger cast of thousands around them, by broader social structures, and by other things that America, writ large, makes possible — whether it be public policies or public education.

No one was sitting behind a desk in Washington saying, “Oh, this is how we’re going to build a tech industry.” But that is what happened.

The government often becomes a catalyst in ways that are perhaps not consciously intended. And that is part of the magic. Dwight Eisenhower never declared, “I shall build a science city in Northern California.” Yet the military spending and space program spending that started under Eisenhower was the launching pad for Silicon Valley’s rocket.

How did federal contracts create those building blocks? How is Fairchild Semiconductor, an early, transformative Silicon Valley company that built semiconductors and circuits, an example of the collaboration between government and industry?

In the 1960s, the space race creates this opportunity for, and this demand for, smaller and smaller things. So the military and nonmilitary work are closely intertwined.

Federal contracts were Fairchild Semiconductor’s bread and butter. The integrated circuit was developed at Fairchild by Bob Noyce and others which proved to be an extraordinary advance in transistor technology — the beginning of the microprocessor that would eventually become a computer on chip miniaturization. It was an extraordinary device, but there was no commercial market for it. Then the Apollo program becomes a customer, and when NASA orders up a whole slew of those chips, that drives down the price. Then you were able to scale it up and make it something that can be a commercial product.

No one was sitting behind a desk in Washington saying, “Oh, this is how we’re going to build a tech industry.” But that is what happened.

Why did the Santa Clara Valley become come the country’s tech hub, rather than Boston, where you have Harvard, MIT, and a plethora of researchers? What was special about California — and, specifically, this area?

For the first few decades after World War II, Silicon Valley was always trying to compete and catch up to Boston. And while people like to talk about how they were rivals, the power of both places came from a symbiotic relationship. You had people bouncing back and forth. You have people educated at MIT coming out west. It’s really not until the 1980s and 1990s with the rise of the mini-computer industry that Boston falls off the map.

The Valley was isolated — which initially made it difficult to get people to move there. And so the people who did move there were these kind of young, scrappy people who might not have had the family connections or the wealth that would have gotten them a job at a Fortune 500 company. That might have made them more willing to come out west and try something new.

East coast companies, like IBM, opened outposts in the Valley in the 1950s, and the reason they’re coming is Stanford. Stanford is now mentioned in the same breath as Harvard, right? But Stanford and Harvard are radically different institutions in conception and design. Harvard was created to educate 17th century clergymen. It’s a liberal arts school that has grown to be a major research institution. Even MIT is the product of a certain time and place. But Stanford is a product of the 19th century, founded by a railroad baron and his wife with an explicitly pragmatic purpose: to put useful things into the world.

Also, Stanford created industry affiliate programs for people to work at local electronics companies and get their graduate degrees on the side for free, making it very appealing to the young smart guys who didn’t have a lot of money. They also did something none of their peers were doing: building entire engineering programs oriented towards the cutting edge of industries. Look at semiconductors. Dean of Engineering, Fred Terman dispatched a newly-hired assistant professor named Jim Gibbons to the newly-opened Shockley Semiconductor company — that’s Silicon Valley’s very first chipmaker, founded by a Nobel prizewinning inventor of the transistor. His job there was to figure out how they built the things so he can come back to Stanford and set up an entire lab and program that trains people in semiconductor technology. No other university is doing that.

The “Big Five”Apple, Alphabet/Google, Amazon, Facebook, Microsofthave a combined valuation of over $3 trillion. As a historian, what do you think of the size and scale of these companies? And what is the role of government in regulating them?

The growth of the Big Five, and the significance of these large companies on so many aspects of global life, makes understanding this history all the more important. If we understand the origins of these companies and the business communities that they come from, we get a better sense of how and why they’re doing what they’re doing. Not only why they’ve been so successful, but where their blind spots might lie. A couple of decades ago, they didn’t exist. And now they’re having to reckon with the fact that they aren’t just disrupting the markets they set out to disrupt, but they’re disrupting so many other things.

When the rules of the road for the internet economy were being laid out in Washington, D.C. in the 1990s, tech advocates would say, “We need to make sure that this internet economy doesn’t get squashed by the big, bad business of big media companies and cable companies.”

The industry made a convincing argument that they would self-regulate free speech.

When the Communications Decency Act, section 230, was written, which holds that these social media platforms are not responsible for what happens on them, Google was still a couple of years away from being incorporated. No one was thinking about the political conversation about, say, pornography on the internet. And the industry made a convincing argument that they would self-regulate — that it would be wrong to contain speech.

There was legitimate worry that the big companies that controlled speech, or controlled communication, would find some way to somehow squash what Mitch Kapor (co-founder of the Electronic Frontier Foundation and the creator of web browser, Firefox) memorably called the “Jeffersonian Internet” [in a 1993 Wired article]. We’re not Jeffersonian anymore. Not even Hamiltonian — it’s bigger than that.

I’ve spent a lot of time thinking about the Progressive Era in the 1920s. There was a similar, dizzying degree of change — new industries had grown very large, and there was great anxiety about the immense power of companies like Standard Oil, and the lack of consumer choice that came along with it.

We’re at another moment like that. This is the great dilemma of 2019 Silicon Valley: How do you harness the dynamism? Even though the mood is kind of sour right now, there are a lot of good things coming out to the Valley. I’m talking to you on my iPhone, aka supercomputer. It’s kind of amazing. How do we keep that, but recognize that we’re in a different place?

Writer (currently) in Budapest, bylines @TheAtlantic, @Undarkmag, @VICE, @voxdotcom & more; follow on Twitter @hope_reese; hopereese.com

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