Tech giants like Facebook and Google dominate headlines, out of a mix of curiosity, admiration and concern, for the social value they provide, the wealth they have and – continue to – create and the enormous power they have vis-à-vis unprecedented access to the world’s information. Global interest in Silicon Valley, where these giants were born and still call home, has never been greater. Policymakers around the world, as well as technology pundits, are interested in what made Silicon Valley, as the phrase has become shorthand for a vibrant cluster of innovation and entrepreneurship. At the same time, there’s a growing call for alternative models, for ecosystems that have a more inclusive character or where the state has a more evident role. Analysts are also interested in knowing the ‘secret sauce’ in order to assess its ability to maintain technology leadership over rising centres, notably China (so Kai-Fu Lee explored in his excellent AI Superpowers: Silicon Valley, China and the New World Order).
Whether you are a Silicon Valley enthusiast or critic, Margaret O’Mara’s new book, The Code: Silicon Valley and the Remaking of America, will be of interest for its remarkable account of the region’s evolution. O’Mara, an authoritative American (technology) historian at University of Washington and former White House staff member, offers a compelling narrative of the key players and events underpinning Silicon Valley’s tremendous, but messy, rise.
O’Mara’s account – relative to others by VCs and tech leaders in the region, such as the Secrets of Sand Hill Road by Scott Kupor – helps to bring the American government into the story. It is not, as O’Mara systematically documents, that Silicon Valley was either the result of pioneering entrepreneurs who did not need nor care about government support. Instead, she offers insight into how Silicon Valley mavericks like Steve Jobs sought – and benefited from – the support of the national government and the state of California.
In this review, I focus on the book’s efforts to ‘bring the state back in’ to the myth of the state-less rise of Silicon Valley. Two new insights from The Code help bust this myth:
Laissez faire in good times, seeking state support in tough times
The Code effectively showcases the glaring inconsistencies in the narrative that Silicon Valley has spun about being the product of American entrepreneurialism and laissez faire, and then in the next breath pleading the moral case for government support for this essential sector. This was particularly evident in the 1980s with rising competition in semiconductors – amongst other areas, such as the Sony Walkman – when leading Silicon Valley voices called for the government to organise a consortium to boost American competitiveness. O’Mara notes the inconsistency (hypocrisy) by citing the September 1982 California Commission on Industrial Innovation report as saying that ‘California shows that the spirit of risk-taking is alive in well in America’, but that due to growing competition from Japan, the government ‘must do whatever is necessary to guarantee that our cutting-edge industries – like semiconductors, computers, telecommunications, robotics and biotechnology – retain their competitive lead’ (214).
In fact, fears of losing out to ‘Japan Inc.’ spawned the push for a public-private research consortium (Sematech) to rival Japan’s highly effective Ministry of International Trade and Industry (MITI)-led VSLI consortium, which had put Japanese manufacturing of semiconductors on par, or even ahead in some respects, in very-large scale integration (hence, VLSI) in chip production. When Silicon Valley chipmakers – for which the region gets its name, because of the role of silicon as a cooling agent in semiconductors – and now social media and information giants dominate markets, they squawk that the government – for society’s sake – just needs to get out of the way. But when they face stiff international competition, as with Japan in the 1980s and China today, they claim – in the interest of national security – that it is imperative that they receive (more) trade protection and tax subsidies.
2. The computer industry became a matter of national security
Much has been said about the role that the military-industrial complex played in the foundations of Silicon Valley. Government funding, from the Defense Advanced Research Projects Agency (DARPA) in particular, is noted as critical in accounts that emphasise the role of the American ‘national security state’ in its technology sector (see Linda Weiss’s book, America Inc.). O’Mara does not contest the essential role of military funding from the outset; in fact, she shows how legendary venture capitalists like David Morgenthaler themselves had significant military backgrounds: in Morgenthaler’s case, he had been the US Army’s Chief Technical Officer in the Eastern Mediterranean (11). She adds essential colour to the way the ‘computer as national security’ narrative evolved. For instance, the famed ARPA only added the ‘D’ in 1972. It also, over time, shifted away from radar and rockets, and towards ‘supercomputers and AI and scenario modelling and cybersecurity’ (225). DARPA, from the early 1980s, integrated supercomputing, AI and machine learning into its remit and, crucially, into its expansive budget. Computing capabilities were essential to security and to economic competitiveness, and so defense contracts should spur their advance just as much as traditional military technologies.
The Silicon Valley story that O’Mara lucidly tells is one of two-sided self-depiction: one of self-proclaimed rebels who build technology for the love of the intellectual pursuit and without asking for any help from the state, versus another in which overwhelmingly interested investors and CEOs seek government help in their focus on boosting profits. These opposite logics reflect variation in the political and sectoral orientations of the variety of individuals and firms who compose Silicon Valley; O’Mara carefully chronicles this variation, which is often missed in accounts of the singular Silicon Valley. But she also exposes how the two-way narrative emanates from a fundamental inconsistency in the story that Silicon Valley has told about itself. O’Mara quotes Ed Zschau, tech entrepreneur-turned-congressman, for instance, who said that he had ‘come from an industry that has grown like Topsy and has never asked for government help’. The Silicon Valley lore has been one of never asking for help, but also not acknowledging the vital role that state (military) funding, tax breaks and more have played.
For policymakers around the world looking to build their own ‘venture capital state’, read O’Mara’s account of the various ways in which the visible hand of the US government – not only the skills and risk-taking of the Steves and Bills – helped to raise the Valley. Also, pay heed to the women; as The Code exposes, gender imbalance – and casual misogyny – has been a longstanding characteristic of Silicon Valley. If striving to build a local innovation hub, one could aim for a story with more diversity and inclusion at the core.
Robyn Klingler-Vidra is Senior Lecturer in Political Economy in the Department of International Development at King’s College London, where her research focuses on innovation and venture capital policy in East Asia. She is the author of The Venture Capital State: The Silicon Valley Model in East Asia.