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Nanosecond to None

[whitespace] Daniel Sroka
Christopher Gardner

Silicon Valley's transformation from a manufacturing to an information economy translates into speed

By Eric Johnson

IN THE FAST LANE on Interstate 280, during the 9:20am post-rush-hour rush, a brand-new Ford Expedition bears down on my 10-year-old Accord, which is already passing traffic at 75 mph in a driving rain. The driver positions the truck three feet off my bumper, his halogen headlamps blasting in my rearview. He looks distracted, talking on his cellphone, I figure, to an investor in Manhattan or a supplier in Hong Kong. I slide into a middle lane and let him pass. He roars up to a minivan 15 feet ahead, and repeats the process.

When I first came back to work in San Jose nine months ago after being away for 15 years, that kind of thing really pissed me off. Now I shrug my shoulders and take a deep breath.

This is the new Silicon Valley, where fortunes are won in a matter of months. New technologies spring up daily. Markets are cornered or lost in teleconferences lasting all of two minutes.

Like the old world's great commercial centers, the new Silicon Valley has evolved a recognizable citizen: comfortable at high speeds, unconcerned with money, at home with the quirky intelligence of creative types and techno-wizards alike.

And for the most part, workers in the valley no longer build things--they invent ideas. They design software systems that are sold over the Internet as electronic pulses. They write code; they channel vast amounts of capital with the casual offhandedness of an alternative suburban garage band.

Today, more venture money is flowing into Silicon Valley from investors worldwide than into any other place on earth. At the same time, the valley has just this year become the nation's largest export economy--selling billions worth of goods to markets from Tokyo to Tehran.

Nothing close to that mark was ever reached when the valley sold personal computers in the '80s, or chips in the '70s, or aerospace products in the '60s, or apricots before that.


The New Silicon Valley:

Suddenly we're cool.

The next generation of movers and shakers.

Silicon Valley through the decades.


The World's E-Market

ON THE WAY through the cubicle maze at Yahoo!'s expansive office loft in Santa Clara, I'm distracted from my search for Daniel Sroka by an annoying alarm. From unseen speakers in the ceiling, a tinny claxon emits bursts of electronic tones, followed by a mechanical voice: "Please evacuate the building immediately. Proceed to the nearest exit, and move to the designated assembly area."

As I find Sroka (official title: Creative Yahoo), the warning continues to blare, and I realize the floor is shaking under my feet. Sroka looks out his doorway as if to investigate. I climb on one knee up onto a desk to peer over the wall of his cube, and the source of the vibration becomes clear. The heads of a dozen workers poke up above their cubes--"prairie-dogging," in Silicon Valley parlance. Satisfied that there is no smoke or rush for the exits, the Yahoos drop back down to the floor, producing a series of muffled thumps.

Sroka returns to his chair and answers my questions about what it is he's up to here in the yellow-and-purple-striped, balloon-and-poster-strewn gymnasium that is the the nerve center of the biggest success story on the Internet and now one of the valley's legendary companies.

More than 32 million people logged onto one of Yahoo's Web sites during the month of December, according to the company's calculations, and while many simply used it as a search engine--to find something they were already looking for--many others followed Yahoo! links to buy airline tickets, purchase stock from Wall Street firms and make hotel reservations.

Talking about the technological breakthrough that has transformed the workplace--and many a teenager's bedroom--from the valley to Wall Street to Peoria, Sroka clicks through a series of Yahoo! pages, including the financial page. Today, the Dow Jones Average has climbed back over 8,000. Less than a decade ago, nobody thought the Dow would ever break four thousand. Sroka clicks twice more, and we're looking at a graph tracking the Dow since 1990--showing the steady climb of more than 2,000 points in the past three years--since Yahoo! began to make the Internet accessible to everyday users.

When Sroka was at Hampshire College, a small, innovative school in upstate New York, there were no classes offered in Web tour-guide marketing and development, so he studied applied psycholinguistics, where his course work covered "visual communication and how it relates to language development"--in other words, how people read symbols.

Although his work focused on American Sign Language, it forced Sroka to think in new ways about how people understand symbols in general. That gives him a good perch from which to reach people with pictures on a screen.

"When I ask people what they like about Yahoo!, they always say it's because it's not so serious," Sroka says. "But here, look at it." He turns to the site--displayed across the Sony monitor sitting on his PC PowerBase 200--then scrolls down so the company's colorful logo is hidden. "It's a bunch of words," he says, shrugging. "The real reason people find it fun is that suddenly they have access to things they didn't have access to before."

"It's an aesthetic of information," he says. "The information dictates what we do. The things people are getting excited about are really straightforward. This isn't on a par with cloning sheep: That is really amazing, but what difference does it make to anyone? This is stuff that really changes people's lives."

Slash and Burn

MIKE HACKWORTH, CEO OF Cirrus Logic, has been navigating Silicon Valley for 40 years--exactly 10 years longer than Dan Sroka has been alive. He recalls driving on 101 on his way to his engineering classes at Santa Clara University, back when the idea of communicating with computers was a wild burr in the saddle of a handful of tech-heads with pocket-protectors.

"I remember driving along, passing this big open field that just went on forever, looking west out at the mountains," he says, "and I noticed this big, wide street being built. I wondered, 'What are they doing putting a street out here in the middle of nowhere?' and I looked at the sign. It said 'Lawrence Expressway.' "

Hackworth had been working in the electronics industry since 1957, while he was a student at San Mateo High. In those days, the valley was a company town, and its fortunes rose and fell on whether or not Santa Clara's Lockheed Missiles and Space division won government contracts.

"The valley would do well or not depending on how Lockheed was doing," he recalls. "You could measure the economy by the value of your own home. If there were layoffs at Lockheed, you couldn't give your house away. If Lockheed got a big contract, you couldn't afford to live here."

That important criterion was something over which nobody in the valley had any control.

"It was subject to government contract awards. The government would either fund a project or it wouldn't. And Lockheed would either get the contract or it wouldn't."

The economy that now feeds the valley is inherently stronger and more resilient because it is more diverse--by orders of magnitude, just as, in the world of nature, an ecosystem which exhibits diversity is stronger and healthier.

"Now you have thousands of companies driving employment in an enormous number of markets and uncountable market segments," he says. "Now there are thousands of contracts being negotiated with markets around the world. This economy has the power of numbers and complexity going for it."

Real-World Networks

RUSH HOUR IN THE north valley begins at 2:30, and even the fast lane is stop-and-go. Wishing I had a cellphone, I pull off the road at Middlefield and cruise for a phone booth. I call and am relieved to hear patience and understanding in high-tech strategy consultant Rod Hsiao's voice.

Hsiao works at SRI International, where the information revolution was launched. The modem was invented here in 1961. The first message ever sent on the Arpanet--later renamed the Internet--was sent to SRI. It has since grown to become a $350 million research and development operation, and Hsiao works there as a consultant.

Hsiao's job is to help budding tech companies look in their crystal balls and find their way through a virtual world that is changing fast. A 28-year-old graduate of Oberlin College with an M.A. from Harvard's Kennedy School of Government, Hsaio advises clients that the new business climate means they must pick up the pace, streamline the process and not be greedy.

The most telling characteristic of the economy today, Hsaio says, is accelerating product cycles. This means that soon after an innovative product has hit the market, a competitor has got the thing reverse-engineered and is already peddling its clone, cheaper.

"It's just a matter of months," he says.

In the old days--say, four years ago--a local company could build a nice profit margin into the selling price of its newest widget, at least for a while after the product was just released, as long as it was the only game in town.

Those days are past. "It's no longer advisable to keep the price high in the beginning, to 'skim the market,' " Hsaio says. Instead, he advises clients to practice "penetration-pricing," selling even the most innovative products cheaply and quickly.

Since leaving 18 months ago a job in the U.S. House of Representatives, where he was an aide to U.S. Rep. Robert Matsui (D-Sacramento), Hsiao has headed up a team at SRI's Business Intelligence Center, exploring how the nature of work is being transformed. The most important business innovation he says he's come across is another hallmark of business life in Silicon Valley: the network--"not the computer network but the social and professional network."

"What makes Silicon Valley work is the tightly knit network of academics, business leaders and entrepreneurs creating so much energy.

"Networks have their own way of functioning," Hsiao says, adding that they are much more efficient than the standard contractual business arrangement.

"In an informal network, there is a climate of trust," he says. "For companies that are open to new ideas, networks allow them to monitor what's going on in the industry, capture knowledge and retrieve the benefits to their organization."

Hsiao says this new structure that is growing organically throughout the valley mimics the "bamboo networks" that have guided business throughout Asia for centuries. Whereas those networks were built around the stability of families going back centuries and these are built around the flux of an industry in its infancy, the key element is the same: "There's a tacit understanding that each member of the network will try to fulfill the needs of the others, and a joint gain will be achieved by all in a collaborative environment.

"That's the great thing about Silicon Valley," he says. "It's a perfect set of clusters of high-tech companies finding the most efficient way to utilize people's know-how.

"That's the fabric of our community."

Along with the Net's tens of millions of surfers, Silicon Valley's power and wealth is growing with the Internet's bandwidth and reach. And, as with everything these days, it's happening fast.

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From the January 15-21, 1998 issue of Metro.

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