Eden, Next Three Exits
So this must be what the world’s most beautiful place looks like. The hills rise softly in the west as if Bob Ross had daubed them onto the horizon: A few trees here, a small cottage there, and behind it the Pacific. Brochures handed out by Jehovah’s Witnesses are often graced with drawings of this kind of paradise. They show people lying around with blissful expressions on their faces in verdant grass, while others pick fruit from the most magnificent of trees. Sometimes, wild animals are helping, or are simply lying around, but they are all happy together. They are images of peace and salvation from the afterworld. If you were to look for this world in the here and now, it would probably look like Palo Alto, California. With only three highway exits, this Eden might seem easy to overlook — but chronic traffic jams from San Francisco in the north to San Jose in the south make it almost impossible to miss. Some say Palo Alto has nothing to do with the rest of the United States — nothing in common with New York, Boston or Chicago. The scents of pine and flowers linger in the air in Palo Alto, a city of 60,000 people who could be described as being among the happier in the world. Palo Alto’s zip code is one of the richest in the entire nation. The city is also the heart of Silicon Valley, a place that some believe is home to a future that will, sooner or later, enable all of us to prosper. Others, though, say that, in truth, Palo Alto is a kind of hell. If that’s true, then it has disguised itself well.
Breakfast of Champions
Just outside the front of AOL’s Palo Alto offices, young men are gazing into the warm sun and smoking at a safe distance from the building as the law requires. Inside, in the naturally lit lobby with AOL-blue walls, other young men hand out name badges with handwritten first names only — some with friendly salutations. "Hi, I’m Jeff," reads one. Jeff, who is a trim man of around 40, immediately registers for the raffle that will take place later.
Right now though, the TechBreakfast, an event for budding entrepreneurs either seeking to establish a startup or who have one already, is about to start. Those who have paid the $40 registration fee are entitled to sign up for the raffle as Jeff has done. The "Ask a VC"-themed breakfast has attracted around 100 people. Workers at the event say they weren’t surprised about the throng, but nonetheless mention repeatedly how quickly it sold out – this is, after all, a unique opportunity.
The venture capitalist is a somewhat scarce figure in Silicon Valley. They have to have a finely honed sense of when an idea is no longer an idea but an innovation. It’s difficult to get an appointment with a venture capitalist. It’s said that it’s easier if you know someone who knows one. But for those who have flown to Silicon Valley from Estonia, Switzerland, China, Russia, Singapore and even Oklahoma, that’s not likely. Many of the biggest venture capital firms are headquartered just a few miles away on Sand Hill Road, one of the richest streets in the country. Yet with their flat, sand-colored blocks on a softly hilly road with barely pruned bushes and trees, the place doesn’t feel ostentatious. In New York, those ruling over capital like to show it off with soaring cathedrals to wealth, but here you just see utilitarian boxes. One could easily imagine stepping inside and finding nothing but the empty desk of some delusional megalomaniac or that the place is really just a poorly connected holiday resort. Either way, they’re not the kind of offices one would expect from the people who are keeping the Silicon Valley gold rush going and seem to know what they’re doing. Those who park on the brightly polished asphalt have appointments. Those who don’t are politely asked what they are doing there. "Just looking" is not a valid answer.
During the TechBreakfasts, participants get to do more than just look – they also get to ask questions. The participants whose names are drawn in the raffle are given one minute to pitch their idea to one of the investors — a moment when they must hope that a number of ifs go their way: If investors see a market, if the pitch is convincing, if there’s demand for an idea like that, if the venture capitalist has money to give for it — then, perhaps something might emerge. Perhaps. In the darkened conference room, the moderator asks guests to fill downtime with networking, as people call it here, and the room is suddenly flooded with industry jargon. Are you in your Series A funding round? Series B? Already in the Beta phase? How large is your critical mass? And yes, of course data based.
The firm Thync has a stand here and two women are demonstrating plastic discs you stick to the temple of your head like a Band-Aid. They’re supposed to stimulate the brain in order to make you more alert, relaxed, concentrated or sleepy. One says the disc is an innovation — for the body and mind, the future of motivation. With scrambled eggs oxidizing in aluminum and turpentine-flavored black coffee pouring out of thermal beverage dispensers, the breakfast has more of a blast from the past feel to it than anything futuristic. "Ok, Kids," the moderator says as five investors from venture capital firms join him on stage. They all look down at the crowd with the same severity with which they answer the audience’s questions. Yes, we’re looking for real innovation. Yes, it depends on whether it can be monetized. Yes, there are still industry sectors that can withstand disruption. Yes, life science is The Next Big Thing. And so on.
After a while, alarm bells go off and a prize wheel appears over the investors’ heads featuring the names of all the participants. The first spin of the wheel stops at "Jiwan." Jiwan would like to market training software for workers. A woman name Xenia wants to use an algorithm to control the heating in peoples’ homes. A guy named Eddy wants to develop an app for real estate sales that informs users of the best times to buy or sell. There are ideas for startups for green grocers, help purchasing shoes for "the modern woman on Facebook" and pitches for a geolocation app to help a person find a parking spot.
Some of the participants note that they have Stanford diplomas and "all the stuff that people normally have in the Valley." A consensus seems to have been reached that presentations are best given in a this-is-going-to-bowl-you-over tone, with even the good ones coming off as parodies of Steve Jobs. After each one-minute pitch, the moderator offers praise — "great job," "great passion," "wow" – but the cheerleading does nothing to soften the investors, who inevitably have critical questions about distribution strategies, market size and "monetization plans." None of the answers seem to sate them, with some visitors leaving the room frustrated. Others defiantly hand out their business cards showing that they have at least achieved the status of CEO. When the moderators says, "Thank you for the inspiring morning," it’s hard to say whether what has just been experienced was a peculiar form of speed dating or the Silicon Valley equivalent of alms for the poor. The investors peer down from the stage like Buddhas, a little weary, a little annoyed – perhaps because the first guests have already lined up beneath to ask them direct questions. People refill their coffee. Over at the Thync stand, the two women are demonstrating the future of motivation, even as the present rushes past outside. A bus out front bears a sign reading, "Have a Great Day."
Parking Lot Problems
"How old are you?"
"And does the Tesla belong to your parents?"
Capitalism with a Childish Face
The scene is one of a concrete wasteland, replete with highway onramps, arterial roads and bumper to bumper traffic because there’s always traffic here. In the middle lies an architectural oasis of purpose-built, palm tree-surrounded structures high enough to not look profane, but low enough so as not to command too much attention.
This is the home of Google, the company that is, for many, synonymous with the Internet — the most powerful company in the world. Here is where evil resides, you could say, if you were evil yourself, but that’s difficult since everyone here is smiling so openly, here in Mountain View at the Googleplex, or campus, as technology companies are fond of calling their offices. But before there’s even a chance to ask somebody about the source of the perpetual smiles, a bus arrives and spits out a group of Chinese tourists with baseball caps and tablet computers.
Google recently opened up its campus to the public and visitors now flock here daily to walk along the paths between the buildings, supervised from afar. A delegation of Chinese businessmen is waiting impatiently in front of one building for someone to let them in. Little green, grinning Android robot mascots line the path, as does a Tyrannosaurus Rex skeleton, giant plastic donuts, a gingerbread man and other oddities as though it were Willy Wonka’s chocolate factory — also a place where only a select group of people are allowed to enter. Capitalism here has a childish face. A man from Austria is standing in front of a pair of the Adirondack chairs that are generously set up all across the campus. Once in his life, the 27-year-old says, he wants to get a good look at this place. He googles every day, he says, and everything here is also a part of his life. He adds that he considers the new logo to be a vast improvement. Afterwards, he says he wants to go over to Facebook to get a photo in front of the sign at the entrance to the parking lot with the giant "like" button. To post on Facebook, of course. It’s almost touching, if you allow yourself to briefly forget that this is a corporate headquarters – and that something like this would never happen in the parking lot of Miele in Gütersloh, even though people use their washing machines every day and that too is a part of their lives.
That may in part explain the stream of envious German politicians who come to visit Silicon Valley – not just because they’re tending to Germany’s business connections abroad, but perhaps also because they think they can learn here how to make business back home a bit more fun. Perhaps by adding beach volleyball courts, bowling allies, playgrounds for grown-ups, plastic figures at the door or, at a minimum, palm trees. The next bus rolls up. The Chinese businessmen are still waiting for someone to greet them. Of course, it didn’t take coming all the way from China for everyone here to notice immediately that they’re not locals. That’s immediately apparent from the suits they’re wearing, shimmering in the sun. In his book "Zero to One," Peter Thiel, one of the pop stars of the Silicon Valley, wrote that he didn’t even listen to people who came to investment talks wearing suits. A young woman with a Google shirt, a Google backpack and a Google keycard sits alone on a deck chair staring into her smartphone. Do you enjoy working here? Absolutely. She then smiles for just long enough that you have no other choice but to believe her.
You Will Fail and Fail Again
Tony wants to found a startup. Carly wants to found a startup. And their friends do too. They all have extremely white teeth and ooze amiability — and seem very pleased to be participating in "Startup U," a docu-soap airing on ABC. The opening credits feature young millennials on the beach, standing in front of trees or just leaping into the air out of sheer joy and enthusiasm for the future and saying things like, "Yeah!"
"Startup U" is the California take on the Next Top Model franchise, but here, would-be catwalk stars are replaced by aspiring entrepreneurs seeking a helping hand from Tim Draper. Billionaire Draper is one of America’s most-successful venture capitalists, and he is world famous, here at least. He’s made investments in Tesla, Skype and, eons ago, Hotmail. A few years ago, he built the "Draper University of Heroes" in San Mateo, about 30 minutes away from Palo Alto. And, yes, that is the actual name. You can now apply to take part in a seven-week course at the converted hotel. Tuition of just under $15,000 entitles you to move into a room in the brightly decorated building, an interior-design cross between a palace and a child daycare center gone wild. Students inside must take a hero’s oath each day: "I will fail and fail again until I succeed!"
Failure is part of the Silicon Valley’s compulsory vocabulary. San Francisco even has an event called FailCon, a conference preaching the merits of failure where you can see people like tech maven Travis Kalanick, CEO of the taxi service Uber, boasting about how he flopped badly with his P2P file-sharing service Scour and then got sued by the entertainment industry to the tune of hundreds of billions of dollars. This church service devoted to failure couldn’t be any further from the practical, courage-inspiring mantra of the lifestyle magazines that failure always presents an opportunity. Here, failure is an ontological principle: Those who fail the most get the last laugh.
Tim Draper is constantly seen laughing in "Startup U," like a man who can afford it. There’s a YouTube video showing him and the young startup talent dancing their way through the Super Heroes School to the tune of "Happy" by Pharell Williams. Draper even climbs down the façade of his school for "Startup U" candidates, perhaps because he calls himself "The Riskmaster" — or maybe because he’s a fan of Spiderman and the other comic book heroes painted on the school’s walls. Draper himself looks as though he has stepped out of a cartoon. You could imagine him as a character in "The Simpsons" explaining to life-weary residents of Springfield how fun success is and how you feel when the eternal sun shines in California. Incredible, of course.
Draper once proposed that Silicon Valley ought to be split off from the rest of the state, thus creating an independent territory allowing people to leave behind the infrastructural problems, the Section 8 social housing and the crime and enjoy wealth in peace while pursuing the dream of a bright and shiny future. Graduates of his school receive a superhero cape, but first they have to earn it by learning to think differently than the rest of the business world.
"Think Different" isn’t just Apple’s motto — it has also become a diktat, the seal of approval of the successful in the Silicon Valley. With Wall Street bankers long since having been unmasked as monsters, with word having gotten around that it’s not easy to become a pop star, with the realization that models are more likely to end up on a shopping center runway in Ohio than on a Paris catwalk, the startup founder has become the latest embodiment of the American Dream. "Startup U" is, for now, the pinnacle of that development. The movie version of Mark Zuckerberg’s ascent was showered with Oscars, the eighth film about Steve Jobs is now in the theaters and even people in the Silicon Valley watch the comedy series "Silicon Valley."
The tech world has created its own pop stars, their Elon Musks, their Steve Jobs, and a whole cult of creativity has arisen around them, the cult of the one great idea. At "Startup U," students must approximate this state of mind by joining Hogwarts-like teams with names like the Angels, the Titans, the Catalysts and then engaging in activities like karaoke or inventing new rules for volleyball. When, suddenly, those rules call for using their heads instead of their hands to play, Draper responds with a , "wow," "well done," and then later jumps into the pool with all his clothes on because, after all, people who want to shake things up in the world have to be prepared to do crazy things. With their dreams of shopping apps for women or programs for ordering marijuana, these well-educated young people are quick to agree.
Look how white the floor is. We don’t use any oil. We’re accelerating the automobile industry. We’re building the best cars. We’re building thousands of vehicles each week. We’re changing the world. And look, no oil for as far as you can see, just look. It’s 9 a.m. and Adam, a totally likeable, polite and enthusiastic guy, is telling the company story.
The source of his enthusiasm can be found in the 4.3 million square feet that it is his privilege to show. We’re at the electric carmaker Tesla Motor’s plant in Fremont - directly across San Francisco Bay from Palo Alto – a white, unimposing building complex adjacent to the vast void of a highway onramp. The building used to belong to General Motors, with Toyota later assembling vehicles here. Tesla bought the factory during the financial crisis at a price far below its true value. Steel chain hoists on the ceiling are reminders of the plant’s past, of the peak of the Ford era and the heyday of the American automobile industry. At the time, during the 1960s, the Fremont Assembly had the reputation of being something like a penal colony. It was an image from an old world, with workers hunched over the assembly line working inhumane hours.
The American media raves about Tesla these days. The company’s electric cars, they write, are doing for mobility what the iPhone did for communication. Indeed, one would be hard pressed to find a more perfect embodiment of Joseph Schumpeter’s notion of creative destruction: The self-declared destroyer of the old automobile industry has now moved into his victim’s building. The young men now riding their bikes through the assembly halls here all look healthy, trim and exceptionally cheerful. The walls are plastered with encouraging quotes from Aristotle.
Look, says, Adam, isn’t that crazy? He points to a partition: crazy. Then at a machine behind a glass wall: crazy. Then at the unpainted doors of the Tesla Model S: crazy. The Model S is surely the most gorgeous and fastest sedan on the streets today – prettier than any BMW and faster than a Maserati, but presumably slower than Adam can talk. One could be forgiven for thinking he might have to be hooked up to a charger himself after the tour. But back to the tour: Adam calls gasoline "dinosaur juice" and says he thinks the old car industry is nuts, and that when the sector eventually rethinks its business model of gas and combustion engines, he will be able to say he was a part of things when Elon Musk outpaced and transformed an entire industry.
Adam has full faith in sphynx-like Tesla CEO Musk’s ability to create a new world of automobiles in which filling up actually means plugging in to a charging station and servicing means a software update. At the time of this visit, Musk is away on a trip to Europe where he’ll be asked by people like German Economics Minister Sigmar Gabriel how innovation works and why Germany isn’t managing to pull it off despite being home to generous two-car garages where it ought to be possible to invent a few things and despite lavish government subsidies.
Even in Musk’s absence in Fremont, his spirit seems present everywhere - in every screw, every battery and every sentence that Adam speaks. Elon says, Elon figures, Elon thinks, Elon will, Elon has. That Elon has named all the manufacturing robots here after X-Men figures out of his sheer adoration of the comic series. Adam points to a robot as it silently carries a sheet metal part. That’s Wolverine, he says. Behind it are Storm, Ice Man and Mystique. Musk himself is often called Tony Stark or Iron Man, like the heavily armed savior of the world. His biographer Ashlee Vance describes him as the "Da Vinci of the 21st Century."
When his name is mentioned by people in the Silicon Valley, it’s with a mix of admiration, reverence and concern. Musk’s latest idea, the Hyperloop project, would connect San Francisco and Los Angeles using transport tubes that fire passengers at speeds of up to 1,200 kilometers per hour (760 miles per hour). Before that, though, in the not too distant future, he wants to send people to Mars with his firm SpaceX. The most disturbing thing is that he might actually succeed. Recently he had to face the protests of the 27 residents of a Texas town where he hopes to build his rocket launch site. The protests continue today, but they appear to be futile. Musk is the perfect synthesis of efficiency and eccentricity, genius and mercilessness. People who know him say he’s nicer than Steve Jobs and more educated than Bill Gates. People in the Silicon Valley love figures like those, even more than the word "disruption," a term that is deeply anchored in the tech enthusiasts’ jargon.
Potential Tesla buyers walk into a room that looks not dissimilar to an Apple store, which, of course, is also about "disruption." A monitor can be used to choose model, color and desired extras. They then hit the "buy" button and the car is finished within two months. Crazy, isn’t it? says Adam, and then indicates that the tour has come to an end.
It’s back to the parking lot where, on a small patch of grass, a few of people are doing pushups and knee bends. It’s 10 o’clock in the morning and young men are getting out of buses with their Tesla keycards hanging from their pants as if they are membership cards to a better world. The standard uniform here is the t-shirt, which is itself symbolic of the evolution of a working world that has moved from blue collar to white collar and, now, to the crewneck. "Hi Al," they say to the man selling coffee from his van at the entrance to the factory: a latte please, a cold brew please, a cappuccino please, lactose-free please. Sure thing, Al answers. When he says today is going to be a gorgeous day, his customers look at him suggesting they in no way want to disagree.
It’s practically a law of nature that when people have a lot of money, they tend to buy the most hideous things. Anyone who has visited the grotto hall in the New Palace in Potsdam’s Sanssouci Park knows that even Frederick the Great imagined the seaside as the gaudy sauna landscape of a Russian oligarch’s wife.
Perhaps that’s what’s most likeable about Palo Alto – although there are more wealthy people and nouveau riche here than almost anywhere in the US, you don’t see it. People don’t flaunt their money here. Steve Jobs never had his teeth gold-plated, preferring instead to wear black turtleneck sweaters and jeans. Mark Zuckerberg still wears a white t-shirt or a hooded sweatshirt, which could either be interpreted as understatement or as an utter lack of interest in fashion.
Hardly any of the homes in Palo Alto have more than two stories, in contrast to nearby Atherton, which is home to famous football players and actors and is the richest zip code in the US. Aerial photos of Palo Alto resemble a cross between a chess board and a crossword puzzle, with small parcels of property and middle-class homes bathed in violet and blue as the sun sets — those who believe the world is nothing but ugly should simply gaze at the heavens above this place.
How about Antonio’s Nut House, suggests one of three young men walking along California Avenue, the main street in Palo Alto’s old business district. Antonio’s Nut House is always a good choice, says another of the three, it’s the best bar in town, or the most normal at least — and for now, normal sounds good. He is holding a laptop bag in one hand and a thermos mug in the other, the standard accoutrements for tech workers. A short distance away, the muted screech of Caltrain, the Silicon Valley’s commuter rail, can be heard and the sound of Van Halen’s "Can’t Stop Lovin’ You" is blaring out the front door of Antonio’s Nut House. Antonio’s feels like a bar you might see in a movie, the kind of place Tom Cruise, playing a down-to-earth young lawyer, would go to play pool.
In real life, it’s a place where Mark Zuckerberg is said to have been spotted frequently back in the days when Facebook was still located at the end of the street. That alone, though, isn’t sufficient to explain why Antonio’s has become a favorite watering hole for the class of male technology workers here known as "brogrammers." Neon beer signs line the walls and college football is playing on the TV screens: Stanford versus who cares, since everyone here is a Stanford fan, no matter which team is in the lead. A few students are also here wearing Stanford T-shirts with the "S" logo and mascot redwood tree. The back side is emblazoned with the words: "Nerd Nation."
At the Counter
At the counter:
"What are you doing here?"
"I just sold my first startup to Apple for $18 million."
"I’ve started a new one."
The New Center of the World
Of course, the Google bus. There’s one. And another one. Yet another. They drive by slowly, white with dark tinted windows, the windshields bearing the acronyms of their final destinations. MTV is for Mountain View, or, Google headquarters. Not every Google bus is actually a Google bus. A few years back, novelist Rebecca Solnit coined it as a collective term for all tech-company shuttle buses, which have since come to characterize Silicon Valley’s roads.
In an essay of outrage, Solnit described the buses as being akin to the "spaceships on which our alien overlords have landed to rule over us" and as having become symbolic of the division of northern Californian society. The buses stopped in public bus stations, she complained, yet only the chosen ones could board — the same chosen ones who are proliferating in San Francisco, Solnit writes, especially in the Mission District, until recently a largely Latino working class neighborhood known for its dive taquerias, affordable rents and crime problem. There’s another one. And another. At first glance, it would be easy to mistake them for the party buses people in Europe often rent to celebrate stag parties – and the surplus of men makes the comparison all the more apt.
Recently, Google buses have often been met with violence at the places where they stop. They’ve been pelted with rocks, spit on or just screamed at. Two years ago, a leading Silicon Valley executive likened Mission District residents’ hostility towards techies to the Nazi Kristallnacht pogroms against the Jews. In the neighborhood, it feels like close to every other building has an "I Love SF" sign posted, a protest for affordable rents. Since the city began attracting technology companies with tax incentives, San Francisco has become the most expensive city in the world. People seeking to flee the constraints of suburban life in Palo Alto, Menlo Park or Sunnyvale have flocked to apartments here and are willing to pay rents of $4,000 a month on average. Each morning, they board the buses that shuttle them to Google, Facebook, Apple and Tesla.
The buses don’t take any secret routes and there are no granite entrances opening up like in a James Bond film. They get stuck in the traffic just like all the other vehicles on the road. Since 2014, the investments made by venture capitalists in San Francisco have been as high as all of those in the rest of Silicon Valley combined. Twitter is located here in the city, as are Airbnb and Uber. Tech companies are notorious for promising the world, but they are also very good at not delivering, and many Mission District residents worry the future – as science fiction author William Gibson, whose novels can be found in rummage bins outside bookstores here, has noted — will not be evenly distributed. Next door, on Valencia, one of the neighborhood’s main streets, a new café recently opened serving "American Kobe Beef." A few young men are sitting with headphones, hunched and concentrated over their laptops. Around the corner, there’s a Bi-Rite, an organic grocery where you can find all the products available at the prohibitively expensive, feel-good supermarket Whole Foods, only at even more astronomic prices. It’s the kind of place where tech millionaires — or those who want to come across as being them — go to get their kale smoothies. The Mission itself has become a stage for the crass contrasts emerging in San Francisco, where you have people willing to fork out $12 for a cup of coffee and a cupcake in one place and a homeless person lying in front of a construction site across the street.
A sign proclaims that new apartments are being built, but with all the "I Love SF" posters angrily plastered on it, it is clear who they aren’t being built for. Further south, in Hunter’s Point, previously a rough area, social housing is now being dismantled to make way for luxury condominiums with views of the San Francisco Bay. Andrew Keen, one of the fiercest critics of the tech boom, writes that the influence of the state is waning, noting that privately run buses are taking over responsibility for transporting a few privileged people. Those who can’t ride along can always take an Uber taxi. Keen writes that there’s no room left for a collective identity. Instead, the dreams of the techno-libertarians are being made real. On the other side, a new class is emerging at the bottom end of the social status, the precariat, to serve the tech workers.
Meanwhile, the tech companies are building the equivalent of small cities to ensure that their employees are in want of nothing. They can get their hair cut or laundry done; there are fitness clubs and places for sushi and burritos. With amenities like that, one might be correct in asking why they even need neighborhoods like the Mission District any longer. In many respects, the new, $5 billion headquarters Apple is building in the middle of Cupertino is a city within a city. Discussing the construction of the site, Apple officials recently remarked that employees would never even have to leave the complex if they didn’t want to.
Some time ago, a new club called The Battery opened not far from the Mission District. For many, it’s a symbol of the hubris, a symbol of the parallel society that has developed in San Francisco. The club was founded by Michael and Xochi Birch, a married millionaire entrepreneur couple who invented the messaging app Bebo but come across in interviews as if they couldn’t care less about the money. Michael Birch calls San Francisco the "center of the world" and The Battery is an effort to "curate a community," as his wife said in an interview several years back. It’s an exclusive, members-only affair with an annual fee of $2,400. Those wanting to join have to be recommended by a current member and go through an interview process. In a way, The Battery is a modern-day version of the gentlemen’s lounge and, at the same time, the subject of envious whispering. Have you ever been inside? Do you know anyone who’s been inside? Would you even want to go there? Queries from the press are politely ignored. In an article in The New Yorker one member describes the club as such: "It’s a cross between Noah’s Ark and that shampoo commercial, ‘It was so good and I told two friends about it and they told two friends about it.’" Then, of course, there’s the description the club provides of itself: "Our vision is to create a culture where inspiration is embraced, diverse communities come together and egos are checked at the door." Visions, inspiration, community. It’s that enlightenment vernacular in which even a gentlemen’s lounge sounds like a blessing.
The Other Side of the Highway
Route 101 may be Silicon Valley’s perennially clogged artery, but it is also a border of sorts, a chasm, and if you cross it heading north, you leave behind the manicured front yards and freshly washed windows that pedestrians on Palo Alto’s University Avenue stride past with a bounce in their step.
On the other side of the freeway is East Palo Alto, a city with 30,000 residents whose crest depicts the city founders’ vision of California’s soul: green trees, gently rolling hills and a family walking into the sunset. In truth, though, East Palo Alto is a wake-up call. One could say it is here where the rest of America begins. The unemployment rate is two times higher than in neighboring Palo Alto and around 18 percent of the population lives under the poverty line in flat-roofed, wooden homes with rickety fences and lawns that haven’t fared well in the draught. My neighborhood, says Carlos*.
Carlos is sitting in front of a taqueria at an intersection — a shack that is the brightest structure around, despite the bars on the window. Carlos is 19 and has spent his entire life in East Palo Alto: his childhood, his school years, and now he "does this and that," as he says. "But nothing with computers!"
Shortly before he was born, East Palo Alto was given the dubious title "Murder Capital of the World," with 42 homicides in a single year. Not long later, the film "Dangerous Minds" was released, with Michelle Pfeiffer playing a teacher in a drug and violence-plagued school in Belmont, located just up the road and Coolio’s "Gangsta’s Paradise" was on the soundtrack. Carlos hums the melody briefly and breaks out in laughter. Of course there’s trouble here sometimes, he says, but it’s become much worse in Oakland.
East Palo Alto doesn’t look particularly threatening. The crime rate has been dropping steadily for years and, compared to its darker days, the city’s appearance has also changed. The place used to be home to the county dump, a recycling center for toxic substances, a couple of shops and a McDonalds. The city added a glass-fronted community center housing a public library and a police station, and there is now an industrial park with a Taco Bell and department stores. Carlos says that more "white guys" can now be seen, climbing out of their BMWs or Teslas. More than there used to be. Just a couple of years ago, he says, most people from "over there" only came for the IKEA, for the Mexican food or to buy drugs for the weekend — and they would then quickly disappear back to the other side, often enough with tires squealing. More recently, though, Carlos reports, "tech people" have begun moving into his neighborhood. It’s not far from here to the headquarters of Google and the Facebook campus is practically right out the front door.
In the neighboring towns of Palo Alto and Menlo Park, a house can go for $2 million, while the same place still costs just a fraction of that in East Palo Alto. But here too prices have doubled in the last two years and Carlos says he knows families that have had to move away because they can no longer afford the rent. Or they left after selling their homes and are looking for work elsewhere in California where it is better for their children. Mostly because of the schools. Whereas just a couple of miles away, media mogul Arianna Huffington and actor James Franco in 2014 inaugurated the multimillion dollar Media Arts Center at tony Palo Alto High School, one-third of East Palo Alto school children don’t graduate from high school. And some of them don’t have smartphones or even Internet, making it impossible to participate in the world on the other side of the highway. It’s funny in a way, Carlos says pointing at the hazy yellow sky: Over there is Facebook and over here there are people who "can’t even log into that stuff."
East Palo Alto is one of the newest cities in California, but it is already loaded down with heavy symbolism — including the fact that Hispanics and African-Americans, the two largest segments of East Palo Alto’s population, are hardly to be found working at technology companies. It’s a peculiar state of affairs: Inequality in a region full of companies claiming to solve the world’s problems, but which do nothing about the problems just outside their front door, aside from making occasional donations. Not-for-profit projects such as the Streetcode Academy aim to integrate East Palo Alto residents into the Valley ecosystem that surrounds them.
One evening, in the theater of a Jewish community center, Lisa Yarbrough-Gauthier, the mayor of East Palo Alto, stands on the stage and asks: "What kind of place should Silicon Valley actually be?" Yarbrough-Gauthier opens up a public discussion on "innovation and poverty." The theater is full, with many people from East Palo Alto having shown up, and the mood inside fluctuates between anger and helplessness. The ensuing discussion doesn’t help much. Justin Steele from Google.org, the company’s philanthropic arm, enumerates how much Google donates every year in the San Francisco Bay area ($40 million) and speaks of internships at Google that are open to those without a university degree. Leila Janah, CEO of the nonprofit organization Samasource, asks if millions in donations made by Google and Facebook don’t just obscure the fact that the economic developments in Silicon Valley have established an exclusive system that keeps the poor at arm’s length: Philanthropy performed as a salve for one’s conscience. And Kim-Mai Cutler, a journalist for TechCrunch and one of the most intelligent voices on the changes Silicon Valley is undergoing, says that the large tech companies have managed to construct gigantic buildings for their servers but not for their workers. And what, asks a woman from the audience with a voice quivering in anger, does the "Sharing Economy" have to offer people who have no room for AirBnB and no car insurance for Uber? The unanswerable question floats over the audience, much too big — as though the mere attempt to answer it would cause something to collapse.
* Name has been changed by the editors to protect his privacy.
"If you want to invest in China, please get in touch!"
It is easy to forgive Silicon Valley. While it’s not difficult to wholeheartedly despise the work-hard-play-hard attitude that dominates Wall Street, California pacifies hot tempers by its very existence. "How can you be mad at it all here?" wonders Fred Turner. "It’s so nice here."
Turner, 54, is a former journalist who is now a communications professor at Stanford. He lives in Mountain View with a yard full of trees. You have to imagine the Valley like Florence, like Medici-era Florence, or something like that, says Turner. Well, he adds, Florence without the painters and poets. And the role of the patrons has been taken over by billion-dollar companies. All of that may sound like a provocation in Europe, where the lofty old culture is evoked with devotional solemnity. But here in Turner’s lush backyard, it makes perfect sense when he refers to programmers not just as artists, but as intellectuals. Turner speaks with great admiration of people like the mathematician Norbert Wiener and open-source pioneer Tim O’Reilly.
One can also call Turner himself an intellectual, a man who likely knows more about the region’s deeply rooted culture than all of the employees of Facebook, Google and Yahoo taken together. Years ago, he wrote "From Counterculture to Cyberculture," an extremely erudite history book about the beginnings of Silicon Valley euphoria — an exhilaration that developed here out of the hippie culture, out of the Free Speech Movement and out of the desire to free machines from the grip of politicians and the military and give them to the people. It describes the evolution of the California state of mind, born out of lava lamps, Janis Joplin and anti-authoritarianism. Turner’s book tells the complex story of the communes — which ultimately returned to the woods — and of the New Left, as Turner dubbed it.
It was a time when computers were still uncool, yet Fred Turner is a man who gets excited about the ideas bound up in the concept of technological progress: a cybernetic view of the world as a gigantic computer that humans program like artists — humans controlling technology, making it a part of themselves and, by doing so, changing the world. This idea has been celebrated for the last 30 years at the Burning Man Festival in the Nevada desert, an event which sees thousands of people gather in their RVs to spend eight days in utopic ecstasy. It’s a kind of Woodstock for people from Silicon Valley. In recent years, it has been reported, the number of CEOs at the event has been on the rise — and Fred Turner also returned for last year’s event, but says he was a bit disillusioned. "It was like a normal festival," he says. It didn’t feel any more like a new kind of society was being born, in much the same way, Turner says, that tech companies are also no longer focused on creating a better world.
Turner is not a Silicon Valley skeptic, but neither is he a fan who proclaims the advent of the digital age. If he has a complaint, it is over the loss of utopia. "The alliance between technology and counterculture has been broken," he says. Turner embodies the kind of dialectic approach that one seldom encounters in this valley of affirmation. Too often, he says, the focus is on the fun side of Silicon Valley — on the obscure tales of heroism, often involving geniuses tinkering in a garage. But people quickly forget, Turner says, the degree to which Silicon Valley resembles a totally normal industrial region, with class struggles and pollution. In fact, Santa Clara County is one of the most polluted areas in all of the USA. And how narrowly defined the concepts of fun and success — that curiously Californian combination of hedonism and work — have become: Earn money to become independent. Investors like the famous Peter Thiel adhere to a philosophy that anything goes, so long as the markets allow it. Yet there is little room in the philosophy for community, which tech companies are also beholden to.
Some of Turner’s colleagues at Stanford have even called for Silicon Valley’s independence and others have suggested that the most powerful companies should move to a Pacific island so they can develop our next reality without state interference. Turner is concerned about those things that no longer seem to matter in the app-economy, the Sharing Economy and the gold rush that appears to have taken hold here: People no longer care for the poor, women’s rights and the elderly. "I’m almost 54 and I feel really old. If digital culture is supposed to change the world, I ask myself if I want to live in this world if it doesn’t work for everybody." And if you must imagine a Californian version of totalitarianism, Turner says, then it probably looks like the new building Apple is building a few miles away in Cupertino: a closed circle. There is no bitterness, not a trace of regret, in Turner’s voice when he says it. Perhaps because he knows that things here come and go and that waves and bubbles are a constant in Silicon Valley. And likely also because you can’t really be mad at this place.
Saving Wall Street, Too
Silicon Valley has a unique sense of humor. It’s a kind of geek humor that isn’t easy to understand at first, though it can be found everywhere on the streets of Palo Alto where young men, wearing hoodies and holding open laptops, stand in line in front of restaurants only because review sites like Yelp say they are good.
The humor is emblazoned on T-shirts, with sayings like "Data is the new bacon" or "Sorry, I’m getting things done" — T-shirts parodying the bustle that the wearer embodies. Even in the evening at expensive restaurants, you can see groups of such men sitting at tables covered elegantly in white tablecloths as the waiter serves their meals next to their computers.
A particularly dark form of geek humor can be found in the name of Palantir, a globally operating software company counts among its clients the CIA, which it helps with counterterrorism. Headquartered in Palo Alto, Palantir takes its name from J.R.R. Tolkien’s "Lord of the Rings" and refers to the "seeing stone" that the villains Sauron and Saruman use to control Middle Earth. A company name like Robinhood, by contrast, sounds much friendlier, like the avenger of widows and orphans, perhaps even like salvation, though the Palo Alto version is active in a world that seems beyond such salvation: the stock market.
Robinhood is a so-called Fintech startup that seeks to stir up the broadly reviled financial world. In 2015, Robinhood was listed as one of the "hottest startups" in the Valley by the magazine Business Insider — and even if such lists, which are assembled almost weekly for such things as actors and pasta dishes, should be taken with a grain of salt, some of the Robinhood hype seems to be justified. The principle is a simple one: Normally, those who buy stocks privately have to pay a fee to a brokerage firm of between $7 and $10 per transaction. Users of Robinhood, though, can buy and sell free of charge.
Vlad Tenev and Bhaju Bhatt, two Stanford graduates, came up with the apparently novel idea and venture capitalists provided them millions — thus far around $70 million — to develop the product. Even before the app launched last March, it had already received a coveted Apple Design Award, its first significant accolade, and then its waiting list grew to almost a million people. Robinhood now has 40 employees, and one of them is Jack.
He is waiting across from the Palo Alto transit center in Philz Coffee, a chain into which Snoop Dogg invested millions because it’s so cool. Philz serves coffee with cardamom and a bundle of mint — and once its reputation spreads to Europe, it won’t be long before excited Berlin residents begin drinking coffee with cardamom and mint as though they had never drunk anything else. Jack, for his part, is drinking iced coffee. A slender man, he looks even younger than his 21 years and says with Californian gravity: "We love our product just like Steve Jobs loved the iPad."
After completing an internship with Apple, he joined Robinhood and is responsible for press inquiries, with which the new company has been inundated of late. Many of its employees came to Robinhood from large, influential companies in Silicon Valley: programmers from Facebook and Palantir, Google and Pixar. The financial crisis changed everything, says Jack, and people don’t trust the banks anymore. The majority of Robinhood users came of age during the crisis and watched as banks were declared to be enemies of society. The average age of Robinhood users is 26 and, Jack says, they are part of a generation that no longer trusts investment advice provided by banks, instead placing stock in advice from their friends. What we are aiming at, says Jack, is the democratization of the stock market — a real innovation — and, with around a billion dollars’ worth of stock having been traded using the Robinhood platform thus far, it seems that progress has in fact been made.
There is no minimum — some Robinhood accounts hold $500 while others have $50,000 — and money sitting idle in users’ accounts is used by the company to make its own deals, Jack says, though users have immediate access to their funds when they need it. Essentially, Robinhood is a bank itself, even if, as he says: "We look like Instagram!" He has considered the risk of young users suddenly buying stocks like they were snapping selfies, but Jack notes the risk of losing money on the stock market is nothing new. Now, the game isn’t just different, it’s better: "We are showing the brokerage firms that their 70-year-old business model is inefficient." They didn’t understand the changes in the market, he says, adding that the brokerages are likely now keeping a close eye on Robinhood.
The next market the company hopes to expand into is Australia, where 20,000 people are already waiting for the app, Jack says. "At first, I thought that 20,000 wasn’t much," he says, but he soon realized that it actually is quite a few — and Robinhood is also thinking of expanding to Europe, he adds, before he has to return to his office. Jack smiles in response to the last question before he leaves: Do you have yoga in the office? He knows it’s a Silicon Valley cliché — but he answers in the affirmative.
Death in the Andes
Last summer, a small book began making the rounds in Silicon Valley. It turned up one morning in select mailboxes belonging to tech journalists and startup entrepreneurs, a 20-page short story called Iterating Grace. Nobody, not even the best-networked journalists, knew where it had come from or who had written it. It remains a mystery today. A short story printed on high-quality paper with calligraphies of Tweets full of business maxims and mythological hollowness. It tells the story of Koons Crooks, an "inexhaustible foot soldier of the dot-com boom," who was found starved-to-death in the Andes one day next to his tent, decayed and eaten by animals. Around his neck was a pendant reading: The Sharing Economy :-)"
Yeah! Yeah! Yeah!
Whenever the question arises as to why companies wanting to reprogram the world’s source code pop up in Silicon Valley and not in Europe — where there is likewise no shortage of garages where people could come up with ideas — the immediate response is often that, in cities like Palo Alto and Mountain View, there is a different way of thinking — and hardly any utterance embodies it better than the word awesome. It’s not just the palm trees, the sun and the mild climate that are awesome, all of which are certainly worthy of the appellation, but everything else here too — and the superlative also floats among the guests of HanaHaus. Awesome here, awesome there.
Located directly on University Avenue, Palo Alto’s shady shopping street where myriad companies have their headquarters and hummingbirds flit around drinking from flowers, HanaHaus used to be a grand theater. Last year, the software company SAP transformed the building, which had long stood empty, into a café. White people sitting at white tables and staring into their computers: Those who don’t have a laptop in front of them seem as though they were dropped off by a horse-drawn carriage from a 19th century history book. Science fiction writer Arthur C. Clarke once wrote that technology, to a certain extent, is like sorcery, and in the bright courtyard of HanaHaus, some of the magicians-in-training sit in anticipatory self-absorption fiddling with their iWatches and discussing their projects — which will of course be awesome. Clusters of sketches fill their screens along with snippets of code and myriad numbers. A fountain splashes quietly and the walls are covered with self-affirming posters praising creativity and collaboration. They say things like "release the genius inside" — because despite the great technology narratives about collaboration and networking, a fawning romanticism has grown up around the idea of individual brilliance. In one group, a man dressed in a sweatshirt and wool cap says so loud that it could be heard even at the most distant table: "We’ll just go ahead and say yeah!"
It is a small word. Here, though, the word defines the parameters of this microcosm. Computer language may be based on binary code, zeros and ones, but the standard language used in Silicon Valley apparently is not. This eagerness to affirm is not an indication of simplemindedness. On the contrary, this is a place with an unusually high median IQ, which is one reason why everything seems to work so well. "Yeah" is not just a link between hedonism and work, rather it is a fundamental state of mind. Those who say "no" have lost — they are either defeatists or cowards, and there is no room for either in a place where there are no problems, only challenges. Not far from here, in public speaking classes at Stanford, where the entrepreneurs of tomorrow learn how to present their ideas, the word "No" has been struck from the lexicon, as has the word "But," its little brother of doubt.
If, for example, you want to say that a startup idea isn’t good because it’s too expensive, you don’t say: Your idea isn’t good because it’s too expensive. You say: I like your idea and you should have another talk with the bank. And where doubt is very clearly unwelcome — where goodness is synonymous with feasibility — skepticism becomes an enemy of a philosophy which holds that technology is inherently good. Silicon Valley has consistently rewarded optimism and has only rarely smiled on hesitation and melancholy, which is closely related to hesitation and skepticism.
It is in this spirit that journalism professor and Google lobbyist Jeff Jarvis declared all critics of Google to be enemies of the Internet as a whole. The sentiment is less interesting for its disregard of discourse, a paucity which already accompanies almost all debates over technology, than for the cult of progress that it conveys. In Silicon Valley, technology often goes hand-in-hand with messianic notions. Wired co-founder and technology esoteric Kevin Kelly wrote in his book "What Technology Wants" that "we can see more of God in a cell phone than in a tree frog." Star investor Peter Thiel urges young entrepreneurs to develop a cult aura to intensify the loyalty of employees. Indeed, the distance isn’t great between a startup and a sect: Scientology, after all, is a religion based on science fiction. When Kai Diekmann, who was editor-in-chief of Germany’s mass-circulation tabloid Bild at the time, moved to Silicon Valley for a year in 2012 to experience its atmosphere, he spoke of being baptized. It is an atmosphere that is laden with a unique form of persuasive power against which resistance is indeed largely futile.
Economic indicators would seem to be on the Valley’s side, which is why companies from the apprehensive Old Economy are constantly inviting delegates from the new Arcadia to learn about their visions for the future economic order. Even if it is impossible to know whether faith in unconditional progress was, in fact, invented in Silicon Valley (or whether it was just an update of Max Weber’s Protestantism), the business maxims of Steve Jobs and Elon Musk haven’t just filled entrepreneurial self-help books. They have also come to dominate university business courses in more exotic locales like Amsterdam and Detmold.
Terms like innovation and revolution have since become standard even at those startups that are not trying to change the world, though even there, "awesomeness" obscures the question as to whether they are perhaps solving problems that almost nobody has — even if that question sounds perhaps too moral and can only lead to strife. The manic faith in progress, after all, engenders its own morality against which old fashioned concerns have no chance: When AirBnB brings an old business model to the brink of collapse, yet looks cool while doing so, it’s good. When Instagram works better with 13 employees than Kodak with several thousand, then it’s good. When a state seeks to regulate these companies and when critics ask about jobs, salaries and taxes, then it’s bad, because it hinders innovation. Not to put too fine a point on it, it’s Ayn Rand with the methods of Sheldon Cooper.
In HanaHaus, the fountain continues burbling. Let’s have another yeah, the man says to the rest of the group. Yeah, says one. Yeah, says the next. Yeah, says the last. Then they grow quiet and return to their laptops looking extremely content.
Translated by Charles Hawley und Daryl Lindsey