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The following podcast contains explicit language.
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Hello, and welcome to the Valley of Genius edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon. I'm joined by Anna Shymansky.
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Hello.
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And by Emily Peck of the Huffington Post.
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Hello.
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By Adam Fisher, who is the author of the book named Valley of Genius, the Uncensored History of Silicon Valley. Although I'm not quite sure if there were censored histories of Silicon Valley. In any case, it's this amazing oral history of Silicon Valley where. Adam, you talk to. I'm just gonna say everybody who.
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C
Pretty much everybody.
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Pretty much everybody. And you got them on tape. And we are going to listen to some of that tape. We're going to work out what it tells us about Silicon Valley. We're going to listen to a bunch of little clips, and at the end of it all, we are going to talk to Charles Duhigg about Elon Musk, because I feel like that is the apotheosis and the ultimate culmination of what Silicon Valley has become. And he wrote this amazing piece in Wired magazine about just how impossible it is to work for him. Or we are going to talk about the financial basis of Silicon Valley. We are going to talk about the managerial basis of Silicon Valley, we are going to talk about the crazy party basis of Silicon Valley. And we are going to talk about. And we're going to talk about the iPhone, because you can't talk about Silicon Valley without talking about the iPhone. All of that is coming up on Slate Money. So, Max Jacobs, producer extraordinaire, let's start with Biz Stone, who is one of the co founders of Twitter that you don't hear quite so much about normally. But he kind of nailed one of the reasons that Silicon Valley is Silicon Valley. Let's see what he has to say for himself.
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Only in Silicon Valley can you be like, yeah, we would like $10 million and we'll sell you a percentage of our theoretical company that may one day have lots of profits. And if we lose all of the money, we don't have to give it back to you, and maybe we'll start something else. In what crazy world does something like that exist? Like, wait, you can just blow the money and then you don't know it back. Just wash your hands clean.
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Done.
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D
Sorry about that.
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Sorry.
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Spent all your money.
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Oh, well.
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D
I mean, when I tell friends who aren't in Silicon Valley, they're like, what the hell is that? I'm like, it's just crazy. And not only that here's another scenario. Here's what some people do. They say we need $25 million, but you know, just so we can stay focused, my co founder and I each need $3 million of that money and in our bank accounts so that we don't have to, you know, worry about bills and if we could really focus, okay? And then they blow the bunny.
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That.
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Except they, and they say, oh well, that didn't work out, but we're still keeping the 3 million each. So now we're rich. What the hell.
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C
That is crazy.
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That.
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So it's a crazy world. This is like some kind of nut place place where you can do that kind of stuff.
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B
He's not wrong.
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C
I mean, he's absolutely right and he's hilariously funny and he really, even though he's, you know, his name is on the Twitter patent. Okay. He's absolutely inside. Inside. He, he kind of has always had an kind of outsider perspective because he really, he's really kind of an artist. He's really a singular, as a singular position in Silicon Valley.
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And he is dynastically wealthy.
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C
Well, now he is, but you know, he was, you know, porous dirt when he, when he came out of here.
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B
But tell me about this idea. Actually, I want to ask Anna about this idea because it's very common. If a company IPOs or something like that, even if it's losing money, you can sort of project forward the cash flows and say, well, I can see how you're going to be profitable in the future and I'll invest in you on the basis of this product and this product market fit and all of the rest of it. But what, what Biz is talking about is people investing money in an idea, in a company which doesn't even exist yet. There are all of these stories about people getting checks from investors before they've been even incorporated.
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C
It's crazier than that. There's investors that go pre idea. Yeah.
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My question for Ana is does this happen anywhere other than Silicon Valley?
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I mean, if you look at kind of the VC model, a lot of it has to do, especially in the, you know, the past 10 or so years when you've had just exceptionally low rates and you also have a tremendous amount of money coming into a lot of these firms and they need somewhere to put it that the idea is that you're going to lose money on a lot of the things that you're putting, you're investing in. That's kind of the idea. You know, this is not a new thing that but then the one big one kind of pays for everything else.
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The question is, has this model ever worked anywhere outside Silicon Valley?
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Well, it was invented in Silicon Valley and everybody who wants to. Implement money on this model actually moves to Silicon Valley.
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A
I was just going to say it is interesting if you compare it to say 19th century when you had really the development, especially post civilization, civil war kind of development of the US economy and especially the railroad economy. Granted it's a very different industry because it's very capital intensive. But there was just so much, you know, fraud and money being thrown at things. And it's not exactly the same thing obviously. But I would say in like in the, in economic history this isn't unheard of. It's just different because the type of products are so different.
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E
I was thinking it's sort of like the socially acceptable equivalent of Annie Lowery giving people money. It's like on the total opposite scale you give people money who don't kind of don't need it, but you really just give people money and sometimes it pays off.
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C
I mean what's amazing is that even in the dot com, I think there was a total of $3 billion of venture capital money mobilized a year in like you know, 98 or something. And now what? We have $100 billion funds, right? SoftBank. So the question, so money has just gotten easier and easier and of course it's, it takes less and less capital to start a company on the Internet because of cloud and that kind of thing.
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Well, I think that's the old model. I think that if you go back five years there was this idea that you don't need to buy server racks anymore because you can just do everything in the cloud. And then what happened more recently is that you get this competition between VC backed companies to see who can burn money the fastest and who can grow the fastest. And it's this winner takes all economy where a thinly capitalized company simply can't compete, especially not in any kind of consumer facing. I think the last successful thinly capitalized company that I can think of was probably WhatsApp. Since then they just raise insane amounts of money because they feel they need that to compete with each other.
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C
Well and also you see these giant companies, Google, Facebook, Apple, they're deploying enormous amounts of capital to create defensible IP patents and trying to find capital intensive industries to go invade because that's how they're competing now. I think let's find, let's develop something that has and have a massive patents that you Know, that will give us that monopoly that, you know, it's kind of back to the future.
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I would say it's going to be interesting to see what happens if we do shift from a world of just low rates kind of globally, if we really do start to move away from that, what is going to happen to this model? Because you can't divorce what's been happening from the reality of rates.
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But Anna, let's, I mean this model goes back 40, 50 years in Silicon Valley. We've had a few business cycles.
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It's a little different. I mean if you look at like when Microsoft, you know, when they IPO'd like they had, you know, pretty decent margins. This, it's as I've said, I mean going back to 19th century, we've definitely had periods of time where there's just this kind of euphoria. And for, and usually because of monetary policy or others, money is just really cheap. So you have a lot of money flowing into different things. So it's not that this has never happened before, but there's something about this particular incarnation that I just think you can't divorce from the environment it came in.
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C
Let me just ask a bigger question. Like, so what if all these venture capitalists lose all their money funding a bunch of 25 year old kids?
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B
Like no, I mean that's absolutely right. And Dan Gross wrote a great book called Pop about the, you know, the positive effects of bubbles. That what happens is you get a bunch of investment, a lot of the investment is wasted but, but it does go somewhere and you wind up creating a certain amount of infrastructure almost by mistake.
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A
Right. It's also just not their money, it's their client's money. And you're talking about institutional clients, you're talking about endowments, you're talking about pension funds, you're talking about sovereign wealth funds.
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It's rich people, Rich people lose money.
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Well, there are rich people and people who have like some pension or another and you know, I don't know, I mean if everybody, when we were all 20 and everybody said here, here's your own magazine, I'm sure all of us would have blown it.
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B
I would have been hugely successful. But let's move on to what happens in the off chance that one of these crazy VC funded dreams actually gets traction. One of the great stories that you tell in the book is the story of ebay, which was very early on in the web era. And suddenly it started getting this enormous amount of traction, started growing really fast. The venture capitalists were super happy the founders were super happy. And then something really interesting happened. So let's listen to Pierre Omidya, who's the founder of ebay.
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For the first, I think three years at least, the first two full years of our history, we grew at 20 to 30% every single month. And I don't think any other business has seen, I mean, every business in the startup phase sees that kind of growth for a short period of time, but for such an extended period of time. And so as we were doing projections in terms of, okay, so this is what we've seen in the past. You know, what can we project for growth next year or next quarter or whatever, so we can do budgeting and all that. We would only say, well, this can't last, this can't last. There's no way you can grow this fast. So clearly there's no way I anticipated it. And even as we were growing, even with smart people, when I finally hired business people to actually look at this thing, everyone would say, oh, there's no way it can continue to grow this fast. But it has, which is remarkable.
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So the key bit in there for me, Anna, was where he said, I finally hired business people, that he was just growing on like crazy. And then what happened, which is fascinating, is he's like, I, I wasn't a businessman, I couldn't project forward. I had no idea what was really going on. And I voluntarily stepped back and turned this entire company over to like grown up supervision. And he hired Meg Whitman to run ebay. And far from being one of those like micromanaging founders, he gave her complete freedom to run the company as she saw fit.
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He just walked away.
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It's a remarkable bit of intelligence and maturity on his part.
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C
And to be fair, you know, he, it wasn't the co founder, but is, you know, basically first guy you started working with was a bit of a business guy, engineer slash business guy, Jeff Skoll. And he walked away too. And they, and they both decided a couple years in, yeah, give it to Meg. Which is not the model anymore. You know, post Facebook. It's all about keeping the young founder who doesn't know anything about business in that, that seat. Although I think we're going to swing back now considering what's happened with Facebook.
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Although you could argue that bringing in Sheryl Sandberg was not exactly the same thing, obviously, because Zuckerberg was not stepping back, but was that idea of we need adults in the room.
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So there was a model, which it was always, at some point we're going to get adult Supervision. And you guys are going to have to step aside. Remember, Jobs was never the CEO of Apple. In the early days, even Larry Page and Brin had to kind of step aside. But then Facebook came along and there's an interesting story why. And Zuckerberg kept control and they just put a phalanx of people around him, you know, Cheryl Sandberg first among them. And that's the new. That was, that was the new model, I think, kind of, because everybody saw.
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Sort of like a compromise, basically keep the original person around because it's now understood that you can't just get rid of them after what happened with Steve Jobs and Apple, which you document in the book. And this is sort of like the.
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Middle way, Napster had a bigger impact, actually.
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So explain why Napster had a big. Was that just because Sean Parker was an investor in Facebook or.
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Well, that is part of it. So Napster, when you look at Napster through kind of Silicon Valley lens or people who are really involved early on Napster, the question is, well, why did Napster get run out of town and shut down by the courts and YouTube didn't. The answer, at least when you talk to the people who worked at Napster, is because they pushed out the founders and the financing was so fucked up and there was so much interference from kind of adult, they, they put in adult supervision and it just. And the adults didn't understand anything about the product or the users or how to proceed and, you know, messed up a golden opportunity. So. And that's really, that's really Sean Parker's view, but really everybody who worked there in the early days. And so it was Sean Parker who saw Facebook first essentially and said, I'm gonna make sure that doesn't happen to this guy. You know, and I understand how the VC community comes in and steals the company from the founders and I'm gonna make sure it doesn't happen. And so he was the first president of Facebook and he kind of negotiated with Thiel and other people.
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But what you saw at Facebook as well was it was not just Sean Parker, it was also Peter Thiel, who himself was an entrepreneur. Like, I think Facebook was the first company where the angel investors, the early investors were largely entrepreneurs themselves.
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C
Pincus Reid Hoffman was also early investors. And they all agree with this founder centric vision. I mean, it's also, it's also about, you know, money getting cheaper, venture capital money getting cheaper, because there's just more of it. But even then, there wasn't that much then because we were still in the Downturn.
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So Anna, do you think we're going to have the pendulum swinging back and founders getting replaced by grownups once the easy money comes to an end?
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It'd be interesting to see, I mean, I think in maybe companies that are already like a company like Facebook, I think maybe we may see people pushing back, but new companies, I don't know because it just seems to me like unless corporate governance really changes and because what pressure is there going to be on a lot of these founders?
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Well, we saw with Travis Kalanick that sometimes the pressure can be enormous. It can be.
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But as he still fundamentally is connected with the company even though he was pushed out. So you.
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Well, so is Pierre Media. Pierre made billions from ebay even though he stepped away and basically didn't run it.
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I mean, I hope, I'll be perfectly honest, like, I hope that if money is harder to come by, you do put more pressure on some of these mostly guys. And that if someone is maybe good at being a founder but not great at being a CEO, they are pushed out and they don't, they can't just continue to access more funding.
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C
Well, and remember the other thing too is like Silicon Valley is kind of tapped out. You know, the money has been taken off the table on the Internet. You know, it's controlled by, you know, two big companies arguably. And what Silicon Valley is building now is often not digital. You know, it's like, you know, it's, it's self driving cars. It's like we're going into health care, going into real high intent, you know, capital intensive markets or maybe even Wall street where there's this huge regulatory thing you have to deal with. And so with when it takes more capital to execute an idea, you're going to have to give up more control. So I think that's working against the founders as well.
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B
Let's talk a bit more about this crazy Silicon Valley boys club and we're going to run through a few of these things because it's a running theme in this book. And before we listen to any of these quotes, Adam, can you just give us a rough breakdown of the gender ratio in this book? Like what's the ratio of men to women that you talk to for this book?
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I think there's about 15% women. Yeah.
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I was pulling quotes for the ones we wanted to listen to in this show and there was this long list of quotes and literally every single one was from a man. And you're like, okay, like this, this really was and still is a white man. Well, mostly white.
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C
Well, remember, it is a history. So it starts in 68. You know, things have changed a lot in the last 50 years.
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B
So, Adam, name me like a really big, successful female Silicon Valley founder.
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C
Oh, I'm thinking of Theranos right now. That was. See, you know, that was, you know, what's her name? Elizabeth Holmes was who everybody pointed to.
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E
What about Katrina Lake?
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C
Found out that she could be as psychotic as any man. Perhaps more, since she was dealing with people's lives.
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B
Let's listen to what these founders got up to, because a lot of them are in their 20s, and they seem to be unconstrained by any corporate governance because they're inventing, making the stuff up as they go along. They're in hippie Palo Alto, and, well, here's Michael Malone about Nolan Bushnell.
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But, you know, Nolan Bushnell kind of did was. It was a unique character. And they don't really capture just how crazy Nolan was in those early days. I mean, it was, you know, Coke with the. The assembly girl, assembly line, girls in the hot tub. And. And he really had that whole Master of the universe thing. I went out and saw him right after he left Atari, and he took me to this warehouse. He was in this little office out by Lockheed, and he said, hey, come on, let's go take a walk. And we went down to this warehouse and this damn thing was filled with giant puppets. And he says, I'm gonna sell pizza. What are you talking about? He said, I just figured pizza costs nothing. It doesn't have to be good. All people want to do is be entertained. So I got these big audio animatronic puppets. When I'm going to start this thing called Pizza Time Theater, I said, well, that's pretty goddamn crazy. What's that over there? And it was. It was an entire English pub. He said, oh, I saw that name for sale, so I bought it. I don't know what the hell I'm going to do with it.
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B
This is back in the, what, late.
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Late 60s, early 70s, early 70s, we should say.
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Nolan Bushnell's founder of Atari and was.
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B
One of the very early sort of people to start with an idea and a bunch of crazy and turn it into a multimillion dollar company and become dynastically wealthy as a result. And in the early 70s, late 60s, in the wake of the, you know, hippie 1968, anything goes palo Alto, San Francisco vibe, you can kind of almost understand where that's coming from. But let's. Let's just fast forward a little bit to Google when, you know, now we're in the 90s and we really ought to know better. And here's Charlie Ayers talking about Google.
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C
They had like, a group of. They got, like, this gaggle of girls who were hot, all becoming like their little, like, harem of admins. I call them the LNS Harem. All of those girls are now different heads of departments in that company years later.
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B
So the lns, LNS there stands for Larry and Sergey. And then when they do that thing of bringing in adult supervision, who do they bring in? Eric Schmidt, who's even more of a womanizer than either of them. And it goes on and on, this kind of bro party culture. Here's Ezra Callaghan talking about Facebook.
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There'd be mornings where I walk in, you know, reaching my 9am shift of covering the automatic unlocking door and going upstairs, and that feeling almost of like, opening a door and hearing beer cans being moved as you open the door. It's like, oh, God, like, you know, in the office smelling like stale beer and just being trashed all the time. You know, even when the office was quote, unquote neat, it still looked pretty messy.
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A
Well, this just makes me think of something I was mentioning earlier, is that when I was looking back through my book and I was looking at all the notes I made, the word that just kept showing up all over and over and over was just childish, which.
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C
I said it was just like, childish, childish, childish question. I mean, remember these? Larry and Sergei never had a job before they founded Google, you know, and same. Same with Zuck. He never had a job.
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A
This is something I think is really interesting because it reminds me of, like, sometimes when you deal with, like, you know, athletes who hit it big really young, and they never have to go through those stages that turn normal people into adults, where you actually have to realize that you're not the center of the universe and you just do everything right.
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B
Well, you know, who else never had a job before he finally got his first job. I hate to say this, but it's.
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C
Steve Job, Donald Trump. Oh, gosh.
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B
It's the same syndrome of, like, this is the kid who never had to grow up and who won the lottery and got everything he wanted, from, you know, drugs to babes to whatever. And it's just like, it kind of. I mean, it is disgusting.
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E
I mean, it comes from a place of entitlement. I didn't get the sense that any of these founders were coming up from out of poverty or anything. These are people that were raised in a way where they kind of got what they wanted and the world is kind of like at their feet. Their feet. And also they're creating businesses that are really rooted in playfulness. I mean, Nolan Bushnell, I mean the beginning of your book starts with everyone playing Pong, basically. And you know, in some way, like the, the whole computer industry started out because there are a bunch of mostly boys who wanted to play better and cooler video games. I mean this isn't like serious stuff, you know, Right.
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C
And remember the Apple was built, the Apple ii, the spec was I want to play video games at home. Arcade video games at home. It all comes out of play.
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E
And Facebook too. I mean it was really just created to like figure out who the hot girls were at Harvard.
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C
It's kind of a dating app.
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E
It's just goofing around. And then all of a sudden all this money starts coming into these entitled people. It's kind of like Donald Trump, if you want to take that analogy to that place. And then things get serious and all of a sudden it's like you messed up a presidential election somehow.
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A
Well, and I think this is important because do think when you have a lot of these people who, you know, they have never been told no, they, from a very young age, everyone's saying that every idea they have is brilliant. They don't, they kind of assume that if they think it, it must be true. And they don't think that, well, you know what, other people might use my product differently. I may design it this way, but that doesn't mean that's how people are going to use it. And I think that is what we are seeing more and more now is that, you know, you hear Zuckerberg out there saying, you know, talking in these like ridiculous terms about what Facebook does, like not realizing like actual human beings use this product and they are not going to use it how you want it.
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B
Talking about video games, this is one of the eternal tensions in Silicon Valley where on the one hand it's very nerdy geeks who love to get their hands deep into C and try and make super efficient chips. And there's Moore's law of just power doubling every 18 months. And the amount of brain power that you need to be able to do that in very, very sophisticated engineering is off the charts. And then against that is this idea that what you're ultimately doing is just creating toys. And there's this really interesting quote from John Markoff about Steve Jobs in his second incarnation at Apple.
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H
Steve didn't look backwards very much. But with Next and With the Mac, it had been targeted at this notion of augmentation that Engelbart had thought up years before, that these tools could really sort of enhance your ability to do intellectual work. And Steve.
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C
I don't know why he.
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H
Moved, but he had really focused on. Alan Kay had seen this years before. It was a universal medium and Steve sort of was turning it into an entertainment device, first with audio, then with video. I was very sad about that. But that's the way the world moved.
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C
Right. You know, we started with this idea that computers were this empowering thing, this bicycle for the mind. You know, we're bringing the power that governments had when they were working on the nuclear bomb simulations and just giving it to ordinary people, putting it on ordinary desktops, and then we figured out.
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E
How to put porn on it, and the rest is history.
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A
But I think it.
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C
Yeah, exactly. And it became the new opiate for the masses. Right.
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A
Well, I really question whether it ever really changed, though, because I know, like going back to Emily was saying, and I think I got the same idea from the book too, about how much of it came from just games. So this idea that we have now that, like, oh, you know, Steve Jobs, they all initially thought it was going to be this, you know, grand idea. I'm like, did they really?
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C
Yes, because Steve Jobs got all his ideas from Alan Kay. Alan Kay is an intellectual and an academic. And there is no question that Alan Kay was trying to build a kind of brain amplification machine. And he followed directly in the footsteps of Douglas Engelbart, who was really the first to do that. The first to put a keyboard on a computer and a screen and make the computer wait for the person to tell it what to do. And he was literally, you know, there is no question that those guys were trying to. To make the world a better place. You know, that's a hackneyed, awful cliche now, because it's so often used kind of cynically. But in the 60s where all this came from, late 60s, that is what was happening for sure.
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B
So I was just, you know, last night at like 11 o' clock at night, don't ask me because I'm a nerd. Um, I was on my computer writing something about the spread over treasuries of the China $2048 global bond. And it's something where I can, like, in a minute I can just move my mouse around a little bit, press a couple of keys and boom, there it is. It's 92 basis points. And in terms of brain amplification, that's completely bonkers. Like, I am old enough to remember when it would be almost impossible to work that out. It could take days, if not weeks to try and work that kind of thing out. Getting the prices, doing the mathematics, even finding out that this bond exists in the first place. Now it's just there at my fingertips. And that increase in pro. In productivity and the way that things are just available to us, it's not just about games. These things, we take them for granted now, but they're unbelievably powerful. And, and it's happening in parallel with the. You know, everyone has porn on their phones.
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C
Well, well, well. What John Markoff, who. Who wrote that quote, was talking about was that was the shift from the personal computer where you can do this kind of amazing financial calculation, to the phone, where you can't. The phone is really locked down, so you can't really get into the guts and it. And create simulations, for example. And it's really designed as an entertainment. It came out of the ipod, which obviously was an entertainment delivery machine. They put a screen on it, they put a transceiver on it, called it a phone, but it's still an entertainment delivery machine. And, you know, it's. And we're having these problems now. It works too well. A lot of us are addicted to it. Maybe it's creating a kind of global ADD epidemic. We don't. Don't really know. But it certainly doesn't empower people like the computer could. And that's the new platform. And so we do have this. The whole book is about this kind of. This transition from these utopian, kind of beautiful ideas to kind of the reality that we're in today, which is.
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E
I don't mean to denigrate the idea of. Of inventing things just to play with them, because I feel like playfulness, inventiveness, and creativity is all of a piece. I mean, if something. There's something just really delightfully human about being so driven to find something fun to play with and being so creative that you wind up stumbling onto these amazing advances that help you in a future world. You know, trade bonds, you know, faster or whatever there. And what's sort of interesting is that kind of playfulness and creativity comes from a place where you have time and space and freedom to think. And now in the world we are in, where the iPhone is this ubiquitous device that everyone, you know, is hanging over all the time, we're like, we've. We've closed off the avenue to creativity that created it in the first Place.
- [32:33]
B
And also we've used, we've. There's this word which has entered the vocabulary, which has only entered the vocabulary in the past couple of decades really, since we've had this shift from computing to phones, which is gamification. And it's, it's not, not that we're creating games so much as that we're using game like devices to make artificially addictive products. And Twitter is a prime example that what they do is they put a little button underneath every tweet showing how many times it's been retweeted and how many times it's been liked. And it becomes this game to like, try and maximize that number. And it's a deeply, deeply damaging game to society. But it's great for Twitter's engagement numbers and therefore for its profitability.
- [33:22]
A
And I think this is kind of the problem, but also to a certain set, like the potential you see when you're reading this book or you're thinking about what's happening in tech is that, you know, they've been able to amass just, you know, so much data on people and they can, on the one hand, that does allow us to do things we could not do before in a way that can be very, very good. You know, Felix, as you, what you were talking about it, I think that is very true. And I think when we are talking about tech, we should never forget that it has allowed us to do a tremendous number of, however, that has also given people information, better information about how to manipulate people. And so I think the problem is it's not to say, well, let's just throw it all out. It's to say, well, how can we figure out how to gain a balance here?
- [34:02]
C
Well, yeah, I mean, this whole, this whole. If you look at the last 50 years and you could see it in every era as well, you go from this beautiful idea, from empowering people, whether it's like, here's how to find stuff on the Internet better, here's how to stay connected to your friends when you're, you know, moving every six months. Here's how to like, you know, do you know, here's a computer at home, you know, and then it, but it turns in, it's within 50 years we've got these monopolistic corporations that are not helping us really. They're extracting rents, you know, they're like every, every monopoly ever, they're, they're exploiting us and milking us like, like cows.
- [34:45]
E
Capitalism ruins everything.
- [34:49]
C
And what's amazing to me, it's the same people running them, running the companies. You know, the kind of utopian visionaries turned into the kind of, you know, rent extracting plutocrats. You know, it's not like, oh, in the next generation, something went wrong. It's the same people.
- [35:13]
B
My favorite rent extracting utopian visionary is Elon Musk. So we have Charles Duhigg here to talk about Elon. Charles literally just walked in without any clue what the hell is going on here. Which is exactly how we like people get them fresh. So, yeah, so Giles was doing something completely unrelated. And he also just happens by sheer coincidence to have written this amazing thing for Wyatt. And by sheer coincidence, we have Adam Fisher, who has done this amazing oral history of Silicon Valley, which is like 8 million pages of incredible gossip.
- [35:53]
I
Yeah, it's fantastic. I love it.
- [35:55]
B
Oh, you've read it? Oh, my God.
- [35:57]
C
So now it's $2 on Amazon right now. They have like a Kindle special, I mean, for your electronic.
- [36:05]
E
Everyone should buy it right now.
- [36:06]
B
I'm going to buy it right now. So, Charles, you are like bringing this oral history up to date by talking to how many different people within Tesla?
- [36:18]
I
We talk to a lot of people. Dozens and dozens and dozens and dozens of people, both former and current executives. And I think I reached out to over 150.
- [36:31]
A
Wow.
- [36:31]
C
150. You talked to 150. No, we didn't.
- [36:34]
I
Not all of them would talk to us. Not all of them would talk to us. So. So that was just who I sort of reached out to. And I will say a number of people refused to talk to me for various reasons, but. But thankfully a number of them did. Which, which was great.
- [36:49]
E
How long did it take you to report the story?
- [36:51]
I
I've been working on it for about six or seven months now.
- [36:53]
B
Okay, wow.
- [36:55]
I
Yeah.
- [36:56]
E
And what did you go into it looking to learn?
- [36:59]
I
Well, I basically, like, there was this big question that I was asking, which was over the summer and fall, we saw this kind of. This crazy. I don't want to say crazy, but.
- [37:10]
B
I will say crazy.
- [37:11]
E
We've said it.
- [37:12]
B
When you're calling someone a pedophile on Twitter, like, that's kind of crazy.
- [37:17]
I
It seemed unusual, let's say unusual behavior. And I was wondering, usually when stuff like that happens, it doesn't come out of nowhere. Right. And I knew that the car that the company had been making had, had gone through this, what Elon Musk had called a manufacturing hell. He'd said it was the hardest, hardest period of his life. And so I wondered, what was it if it was that hard for him, what was it like for everyone else inside the company?
- [37:39]
B
And what was it like everyone else inside the company?
- [37:41]
I
It sounds like it was pretty bad. It was pretty hard, right?
- [37:44]
B
He would just, like, fire people randomly.
- [37:47]
I
So. And I should say Tesla does not like the story. And they have said that it is wrong. And they say, they've said that he does not fire people randomly, that he always has a reason for firing people.
- [37:57]
B
So wait, can I. Can I. I'm gonna. Only he knows. I was just going back and forth with Nick Thompson about this. My favorite quote in the entire story was this, parenthetical, where it goes, a Tesla. A Tesla spokesperson said Musk, quote, very much cares about individual people, unquote.
- [38:15]
A
Oh, my God.
- [38:15]
I
We wanna hand the mic to them.
- [38:17]
B
We wanna give them.
- [38:18]
E
My God.
- [38:18]
I
But what people do describe, and again, I'm going to put it in context, that Tesla disagrees with this characterization, is a place where people are held to very high standards and where Elon Musk is very driven to succeed. And part of that spills over into what one person described to me as being in an abusive relationship with Elon, that the whole company is in an abusive relationship with him because he does. He demands things, right? And he'll walk up and down the assembly line and if you get an. If he asks you a question out of nowhere and you don't know the right answer, according to people I've spoken to, he might say, that's it, you're fired.
- [38:54]
A
Right?
- [38:54]
I
And we opened the story with that. This one poor engineer walked over and within a minute was fired because he couldn't figure out the question that Elon Musk was answering him. And he said, can I use bad words on this?
- [39:06]
B
You can say bad words.
- [39:07]
I
So he said, you're a fucking idiot. Get the fuck out of here. And that was the end of that kid's career at Tesla.
- [39:12]
B
So, Adam, I have a question for you, which is, is this the kind of story that you have heard in other aspects of Silicon Valley, or is this off the charts crazy, even by Silicon Valley standards?
- [39:27]
C
I think Elon is. It's in the zone. I mean, you know, Steve Jobs was really hard to work with, but, yeah, the firing people, I don't know.
- [39:45]
B
There's bad in Silicon Valley.
- [39:46]
C
There is a lot of craziness. Okay. And, you know, I. Last I. Last time I saw Elon Musk was actually on the Playa, and he was in full regalia.
- [39:56]
B
Oh, at Burning Man.
- [39:58]
C
Oh, yeah.
- [39:59]
B
Is he a burner?
- [40:00]
C
Burner. He's a big Burning man guy. But a lot of them are.
- [40:04]
E
This is the natural culmination of when you, when you call these men geniuses and brilliant and you think they walk on water. And like someone just said in the past 10 minutes, he's the most important car company in the world. He feels entitled to act like a. And may I curse a total asshole. Like, that's, that's what happens when you, when you foster a culture of, of the, of the genius. That's, that's how people, some, not everyone would act like that, but it's inevitable.
- [40:33]
B
And Charles, you, you make this point in the story that like, he went from being Silicon Valley famous to being famous famous.
- [40:40]
I
Absolutely, absolutely. And that is head turning. Right? People told me around him, when that happens to you, when suddenly celebrity tabloids are reporting about your life, that's all of a sudden you should feel like you get to live a celebrity lifestyle.
- [40:56]
B
One of the names which comes up quite a lot in your story is Amber Heard, who is his glamorous model girlfriend. One name which doesn't come up in your story is Grimes, which is the glamorous pop star girlfriend. What's with the Grimes sub?
- [41:13]
I
It's a good question. I don't know. I tried to limit myself to what was happening mostly inside the factory, as it understood.
- [41:22]
B
So you didn't talk to Grimes for this?
- [41:23]
I
I did not talk to Grimes.
- [41:25]
B
Now that's the next story we need to read.
- [41:27]
C
That would be.
- [41:28]
I
Adam, let me ask you a question. Cause one of the things that came up, I felt like when I was doing this reporting, and I report a lot about the Valley, is that some of the behavior, behavior that everyone would, would sort of acknowledge is stuff that if it happened at say, the Dow Jones Company or, you know, Ford Motor Company, people would get fired. Right. But then they say that's why Ford Motor Company is failing is because it's old and it's stodgy, is that do they have something there like Silicon Valley allows weirdos to succeed. It embraces weirdos. It allows, it allows this eccentric behavior. I don't see a lot of people from Ford at Burning Man.
- [42:08]
C
Right. I know. I do think, you know, one of the historical questions that the more serious historians ask is why, you know, why Palo Alto? You know what, you know Massachusetts Route 1, what was it?
- [42:22]
I
128.
- [42:23]
C
128. You know, they had some good universities called MIT and Harvard, and they had, you know, early computer companies there. Well, why not Texas? They. There's a wide open kind of capitalism. The Texas Instruments, you know, lots of smart people going to and everywhere else, but it really happened in Silicon Valley. And so the question is why? And there are some like kind of legalistic, you know, business type reasons. There's slightly different laws regarding whether you can sue someone for joining it, making a spin off and joining or joining another company. But I think the real answer is because there's this kind of Northern California weirdo think different kind of culture. And yes, to your point, there is lots of behavior that would get people fired and never working again. That happens in Silicon Valley. That doesn't happen, I assume, I mean, in more established industries. You know, Silicon Valley hasn't had its Harvey Weinstein moment or really. But, but I think one thing we have to understand and one thing that kind of most of these companies in Silicon Valley have a real problem with that we're talking about is like there's really a difference of a company of a couple dudes or you know, 10 people operating out of a garage or a spare bedroom where kind of anything goes and you know, you can fake it till you make it and, and cut corners and like a real, you know, world spanning power, you know, a monopolistic kind of rent extracting, you know, government size and entity. And you know, you just have to be a different kind of place at that point, you know, and I think that's, that's what we're seeing is that this, this transition from hey, we're just an upstart, we're just a bunch of 20, 20 year old, 20 something year old people having fun, quote unquote, change in the world to holy sh. Well, you know, we can throw an election if we want.
- [44:57]
I
I mean, and I will say we don't know the name of the head of Ford or General Motors, but we, everyone listening knows the name Elon Musk.
- [45:08]
C
Right.
- [45:09]
B
Actually, the head of Ford has a wonderful name. It's Hackett. And I mean it's the most Silicon Valley name. His name, his name is Lincoln and he knows so much about cars that he came from a furniture company.
- [45:25]
I
There you go.
- [45:25]
B
Yeah. What could possibly go on? Charles Duhigg, thank you so much for jumping in and being awesome.
- [45:31]
I
Thanks for having me.
- [45:32]
C
Yeah, thanks.
- [45:33]
B
Adam Fisher, thank you so much for coming on Slate Money. It's been great using all of your painfully gathered clips which took you years to put together. Go buy the book. It's available on Kindle at like incredibly good value and anywhere else that books are sold in Slate. Plus, we are going to ask, is a phone really a phone? Many thanks to Max Jacobs for what is a crazy job of putting this show together. And we will talk to you next week on Slate Money.