NRO Weekend, December 22, 2000 to January 1, 2001
Geek Chic
Anthropologist in a strange land.

By Dinesh D’Souza, research scholar at the American Enterprise Institute

Editor's note: This is an excerpt from Dinesh D'Souza's new book The Virtue of Prosperity: Finding Values in an Age of Techno-Affluence. His website is dineshdsouza.com.

o see the new world that is being born, you don't have to go to Silicon Valley. You can see it in Austin, Texas; or Boise, Idaho; or Boston, Massachusetts; or Salt Lake City, Utah; or Raleigh-Durham, North Carolina; or Reston, Virginia, or Champaign, Illinois, or any of the other high-tech cities that dot the map of the United States. You can also find it in Montreal, Canada; Cambridge, England; Dublin, Ireland; Tel Aviv, Israel; Melbourne, Australia; Kuala Lumpur, Malaysia; Taipei, Taiwan; or Bangalore, India. Actually, you don't have to go anywhere. Just turn on your computer and get on the Internet, that Global Brain detached from human bodies and powered by hundreds of millions of silicon transistors.

I am in Silicon Valley, however, which is the undisputed nerve center of the computer and telecommunications revolution that is transforming the world economy. Home to an estimated 250,000 millionaires, Silicon Valley has been described as the only place in the world not trying to figure out how to be Silicon Valley. Here, on Sand Hill Road, sit the lordly venture capitalists willing to bet millions of dollars on new ideas that promise to wipe out old industries. Here are the semiconductor companies who have found a way to convert sand and oxygen, two of the most abundant materials on earth, into silicon chips, thus making possible e-mail, e-commerce, e-everything. Apple Computer is based here, as are Cisco, Intel, Oracle, Sun, Yahoo, eBay, and E*Trade. Most important, there is a critical mass of brain power here that rivals that of any other place or any other time in history. The people of the Valley — many of them scientists, many of them entrepreneurs — are determined to keep astonishing the world, and to ensure that the technological revolution unleashed by the silicon chip never stops.

I'm not your typical Silicon Valley guy. Although I use e-mail and do my writing on the computer, I'm a bit of a techno-peasant; when my PC starts misbehaving I have to call my brother-in-law. I've heard more than I want to about "browsers," "portals," "search engines" and "bandwidth." Fortunately, I am not here to reveal new technological breakthroughs or identify the Next Big Thing. Rather, I want to witness the new culture that has taken shape here, because behind it I sense a powerful new ideology that has already formed a new generation and a new establishment and has staked its claim to lead and liberate the world.

My strategy is to approach the place in the manner of an anthropologist studying a faraway culture.

Sure enough, there is a resemblance between the tribal inhabitants of California and New Guinea. Both cultures include lots of half-naked people who worship the sun. Both are heavily into ear-rings, nose-rings, body-piercing and other forms of primitive art. And in both places there is a strong belief in magical contrivances, only in California they go by the name of technology and they actually work.

The event I am attending in October 1999 is called "Inktomi Rocks." Inktomi is a widely-used search engine that, in the words of CEO David Peterschmidt, "does a lot of the heavy lifting" for companies that use the Internet. Peterschmidt explains that the strange name refers to a mythical Lakota Indian spider that supposedly has healing qualities…well, suffice to say that the company was started by two young fellows in their twenties who regarded this as a meaningful reference. The party is "your pretty typical Silicon Valley bash," I am assured by Inktomi's attractive vice president for public relations, Shernaz Daver, and besides, "there will be some big names there." The dress code specified on the invitation: "Whatever you wear to climb to the top."

I arrive at the Hotel De Anza in San Jose, where the tribe has already gathered and the music is blaring. Most of the people are men in their twenties and thirties. Scanning the room I look to see who's dominating the conversation; I want to locate the alpha males. Just as I suspect, they aren't menacing gorilla types but nerdy little chimps whose bragging rights no doubt derive directly from their bank balances. The only middle-aged face in the room belongs to CEO Dave Peterschmidt, whose green eyes and balding head make him easy to spot. Still, Dave's attire has been fashioned to help him fit into this younger crowd. He's wearing the Steve Jobs look-alike, Silicon Valley uniform: black pants, black T-shirt. As I watch him saunter across the room, his demeanor says: I'm cool.

The room itself has been decorated to look like a dungeon. At one end there is a mountain of rocks that you can climb to the top. There you slip your arms into this contraption which catapults you across the ceiling. Traveling on cable wires, you land at the other end of the room, to the applause and cheers of the natives below. There is plenty of food and drink, most of it going to waste. Conversation is animated, with the only interruption being to applaud as a human projectile occasionally flies across the ceiling.

A party is a great place to see Silicon Valley at work, because just about everyone who is at the party is working. The normal purpose of a party — to drink a lot, say funny things, and meet members of the opposite sex — seems entirely out of place here. Two young men are animatedly discussing the application of Moore's Law and Metcalfe's Law to the stock market. One guy is arguing that, contrary to the conventional wisdom, Internet companies are in general grossly under-valued.

Moore's Law, formulated by Intel founder Gordon Moore, states that the amount of computing power on a microchip doubles every 18 months. What this means, in practice, is that the average secretary's desktop now has more computing power than the Manhattan Project, and this is likely to increase by several orders of magnitude before Moore's law runs into its physical limits: there are only so many transistors that can fit on the tiny surface of a chip.

Metcalfe's Law, first developed by Ethernet inventor and 3Com founder Robert Metcalfe, says that the value of a network increases in proportion to the square of its users. If the number of telephone users in a Third World country triples, for example, suddenly more and more people find they need phones. So the value of that particular network increases nine-fold. A quadrupling of e-mail users worldwide means a sixteen-fold increase in the value of that network. The Internet is the ultimate network, and its efficiency and use are both predicted to grow exponentially over the next decade. Plug in Moore's Law and Metcalfe's Law, the argument goes, and only then can you understand the stock market's heady evaluations of leading Internet companies.

The two men suspend their discussion to admit me into the conversation.

"Nice party," I say, adding however that there don't seem to be many women present.

"Correction," replies one of the two, a burly young man in khakis and navy blazer, "there are no women present."

This is clearly an exaggeration, so I point to three or four young women milling about the room.

"Oh, those are girls who have been supplied by the P.R. company that is organizing this event."

"Of course Shernaz Daver is here," a tall man in black pants, black shirt, and black pony tail says. "And I thought I saw Dave's wife earlier." That would be CEO Dave Peterschmidt.

"But don't you feel odd going to a party without women?"

"Oh no," the first guy replies casually. "We're not interested in women."

H'm. I pause to digest this answer.

"It's not that," the pony-tailed fellow says, eager to correct any false impression. "The reason we're here is to meet people, to make contacts."

Now I understand. These men are possessed by the eros of enterprise. Just about every one of these young tech entrepreneurs has a new idea that they're convinced will revolutionize society, wipe out Ford or General Electric or, better still, Microsoft, and make them the new Bill Gates or the new Jeff Bezos. Now they just have to make it work. And that's why they're here. Inktomi is part of an extremely influential club — call it the New Boys Network — and they all want to be insiders, or at least members. Who has time for women when there are millions of dollars to be made and only so much time to do it? The only exception is Dave's wife, better be nice to her.

Now that we were on the theme of under-representation, I observe that I see only one black face in the room. "High tech," I state the obvious, "doesn't seem to be a very diverse place."

"High tech," the pony-tailed fellow responds, in a slightly testy voice, "is more diverse than just about any industry in America. My company is pretty typical, and we have four Russians, three Armenians, a couple of Greeks, several Indians. We just don't have any blacks. Well, we have one black guy, but he's from Africa. Educated at Stanford."

The two of them give me the same look, as if to say, why are you obsessed with this stuff? I realize that this theme of who is not here does not captivate this duo, and so they drop the subject and proceed to discuss the new economy.

"The other day I saw an ad," the burly guy says. "It said: We're an Internet company. Can you believe this bullshit? We're an Internet company. Why? Because you're on the Internet?"

"The old guys just don't get it," the pony-tailed fellow chuckles. "I mean, imagine it's 1920 and you're U.S. Steel. The new technology is the telephone. Do you run ads saying: U.S. Steel. We're a phone company. What morons! I mean, duh!"

"When are these people going to realize that in a few years every company will be an Internet company."

"Excuse me," Shernaz Daver breaks in, "But there is someone I want you to meet." Taking my arm, she leads me to Eric Brewer, the 32-year-old cofounder of Inktomi.

"He's a really modest person," Daver whispers to me. "He doesn't live or act like a tycoon at all."

He certainly doesn't look the part. Brewer is a shy, soft-spoken guy with a baby face and a mustache. If I had to guess I would say that he was completing his air-conditioning repair course at some junior college. In fact, Brewer is chief scientist at Inktomi but is based at the University of California at Berkeley, where he is a tenured professor. Brewer and an even younger man, 27 year old Paul Gauthier, founded Inktomi when they figured out a new technology to locate websites on the Internet; now each of them are worth around $500 million dollars.

Why, I ask Brewer, is he still at Berkeley and not working full-time at Inktomi? Come to think of it, why is he working at all?

"I don't care about the money," Brewer says, with an air of complete sincerity. "My goal is to stay on the cutting edge of technology. I want to look 10 years ahead. I can't do that if I retire, and I can't even do it at a company. The outlook at Inktomi is too short-term, too profit-driven. So I prefer to stay at Berkeley."

I make the mistake of asking Brewer what he's currently working on, and he launches into a lecture of such erudition and complexity that I feel the overwhelming urge to refill my drink. I wonder why Brewer is going into such technical detail, and I finally guess the reason: there are plenty of Asian Indians in high tech, and he naturally assumes I'm one of them. I must keep nodding as Brewer speaks, because he interprets my responses as an invitation to take the discussion to an even more sophisticated plane. Fortunately, a crowd gathers to hear him, the five-hundred-million-dollar man himself, and I make my escape, plunging into a group of exuberant techies discussing a topic of considerable interest to me, big-money startups.

They are talking about a guy they knew who just launched an initial public offering and saw his net worth go from zero to "two commas," meaning several million dollars.

"He's just bought an 8,000 square foot house," one fellow in his late twenties says. "I asked him how big his previous house was and he said, one bedroom. So he's gone from one bedroom to seven bedrooms."

"Are you envious?" I ask.

"No way," the young man replies, "Some people might be because they don't feel there's a lot separating them from him. But my reaction is the complete opposite. I see my friends get rich and I say: I can do that. They had a good idea. And they stuck with it. They put themselves on the line. And it paid off. So that's where I'm headed."

"But does what these fellows do justify that kind of money?"

"Absolutely," the young man says. "Do you know how hard these guys work? Thirty-six hour shifts. They go a day and a half without stopping, without sleeping. They eat at their desks, and some of them probably pee into a cup rather than waste time going to the bathroom. But it's worth it, man, because they're in their twenties and they have a chance to do something that very few people get to do. They're changing the way we do business in America. They're the pioneers of a new generation. They're revolutionaries, man. They are opening the doors to a whole new outlook, a new way of life."

"My young friend here is smoking web heroin," an older guy says. "I know I'm a bit of a skeptic, especially in this crowd. Yes, the net is making things more efficient, but no, these dot-com companies are not worth their market caps. And there's no justification for the net worth of a lot of people in this room, and if they had any sense they'd know it. I see my Qualcomm friends walking around with their chests out. And they tell me, 'I'm worth 10 million.' What I'm thinking is, what the hell did you really do? You just did your job. And the stock took off so you lucked out."

"It isn't luck," insists a lanky fellow in glasses who inserts himself into our conversation. He seems very sure of himself. "That's what the losers always say: he got a lucky break."

This new fellow must be somebody, because there is an awed silence after he speaks. The older guy starts to say something in response, then thinks better of it, and shuts up.

Another member of our group says, directly addressing the new guy in an eager-to-please voice, "You're absolutely right, John. Luck has nothing to do with it. By the way, my dad keeps saying the whole Internet economy is a bubble. He keeps predicting it will all come crashing down."

There is a moment of silence, followed by nervous laughter. I take this to mean: ah yes, we've all heard about The Crash. But it hasn't happened yet, has it?

"When I graduated from college it was the proudest day in his life," the eager-to-please fellow goes on, "but now that he knows what I'm making he's a little pissed, because it's more than he's ever made his whole life. So he's down on the whole thing. He is morally revolted by all this wealth, and he needs to believe it's an aberration."

John wears a smug look as if to say: Dream on, old man!

I am wondering how he can be so sure of himself when, suddenly, I recognize the speaker. He is John Little, the founder of Portal Software, based in Cupertino. I haven't met Little before, but earlier that month I published a lead story in Forbes about the new tech affluence. The editors titled it "The Billionaire Next Door" and chose a picture of Little, fashionably posed behind his fully loaded speed bike, for the cover of the magazine. Forbes noted that Little was worth one billion dollars. In case you haven't guessed, that's an incredible status symbol. Three commas.

One might expect that John Little would be feeling pretty good, having, as he did, a net worth equivalent to the gross domestic product of a small country. And he did commend my article, which pleased me until I realized what impressed him the most. "That was a great photo of me."

"I didn't have anything to do with it," I confess, "but you've had a lot of compliments?"

"The girls tell me that I looked really good," Little says, pushing out his chest. "The guys tell me they liked my bike."

Despite these accolades, something has really been rankling Little and he proceeds to get it off his mind.

Little explains that he was on a plane a few days ago, and he was reading the issue of Forbes with his picture on the cover. (Have I mentioned that modesty is not one of Little's most striking qualities?) Sure enough, the guy on the plane sitting next to Little saw his picture and the accompanying caption, "The Billionaire Next Door." Not making the connection between Little and his photograph, the man erupted with indignation, "I'm so sick of these rich Internet brats. What right do those jerks have to make so much money? I'm a smart fellow, I went to a good college, I've got years of experience, I work 10 hours a day, and these twenty five year olds make millions overnight while I'm struggling to feed my family."

"How did you respond?" I ask Little in my most casual tone of voice.

"I know what I should have said," Little fumes. "The guy undoubtedly thought I got the idea for my company last week and this week I'm worth a billion dollars. Actually I've been in this business for fourteen years. Fourteen friggin' years. I've worked my butt off, and finally it's come together."

A roar goes up as an Inktomi staffer zips across the ceiling. Little ignores the shouts.

"I don't feel sorry for that guy," Little says. "I've had my time in the wilderness. Show me someone who has been at it as long as I have. Show me somebody who's worked as hard as I have. Show me someone who's taken the risks that I've taken. Then if they haven't seen any rewards, then if they want to complain, I'm willing to listen."

Little is still nursing his grievance, but the night is getting on, and it's time for me to go.

Shernaz Daver catches me on my way out the door. "Are you leaving already?"

"Yes," I say.

She gives me a kind of black power salute. I take it to mean: Long Live the Silicon Revolution.

As I step out of the tech culture into the mundane world of the street, I see two very different societies. One of them is very old, the other is very new. But I also see that they are in the process of becoming one. Already our everyday life is being affected by the new technology and the wealth it is creating; very soon it will be transformed. The reason has nothing to do with the extravagant claims made by the twenty-somethings at the Inktomi bash. It is the inexorable logic of Moore's Law and Metcalfe's Law.

Moore's Law predicts that in the next 10 years, microprocessor chips will contain 1 billion transistors. That's an increase in computing power of one hundred times. Before Moore's Law reaches its physical limit a couple of decades years from now, computing power is going to expand to one-million times what it is today. Other forms of computing — parallel computing, molecular computing, quantum computing and DNA computing — promise to continue exponential growth in this area. There is also a bandwidth revolution under way that radically increases our power to transmit digital signals over optical networks, providing the capacity to feed oceans of video, audio and data at the speed of light into every home and business. Bandwidth is growing even faster than computer power. And as networks become more powerful, Metcalfe's Law dictates that they will also become more indispensable. A company or person who does not work and live in cyberspace will be as out of it as a person today who does not have a car and a phone.

I remember Henry Bessemer, creator of the Bessemer method, describe his final test of a new way to produce large-scale steel. He wrote in 1854: "I could now see in my mind's eye the great iron industry of the world crumbling away under the irresistible force of the facts so recently elicited. In that one result the sentence had gone forth, and not all the talent accumulated in the last 150 years…nor all the millions that had been invested in carrying out the existing system of manufacture, with all its accompanying great resistance, could reverse that one great fact."

The computer and telecommunications revolutions will have a vastly greater impact. I am thinking not merely about the obsolescence of an industry but about an historic transition from one age to another. This cannot just be conceived in economic terms, as a question of whether Amazon will replace Borders, or whether the Nasdaq will surpass the Dow. That's minor stuff. Rather, think about how printing accelerated — some would say caused — the Reformation. More recently, think about how the railroad and the automobile forever changed local communities.

According to management guru Peter Drucker, "The social and political consequences of the information revolution will greatly outweigh its economic and technological consequences." I think he's right. The changes under way are likely to affect human ways of thinking and living no less dramatically than the shift from an agrarian to an industrial society. The Inktomi event gives a hint of some of the new tensions and challenges that society will face. But the full ramifications of the changes ahead begin to press down on me. Surely the new economy will produce a new kind of community. It will dramatically affect our basic political, educational and religious institutions and reshape our lives. But how? And for better or worse? These are questions we have to figure out.

Of course the skeptics have a point too. There's a lot of hype surrounding computerized gadgets and the Internet. For all the giddiness surrounding them these are twentieth-century technologies that will soon become part of the infrastructure of our lives, like electricity or the telephone. It's obvious that in the not-too-distant future they will cease to capture our imagination. But that's only because there are other revolutions in store that are so near in their realization but so profound and far-reaching in their implications that they make the computer and the Internet seem like nothing more than grown-up toys. These revolutions promise to transform our very nature as human beings, and possibly introduce a new species into the world, the post-human. What all this means, and whether we want to go there, are the questions explored in this book.