The New New Thing: A Silicon Valley Story (17 page)

While they waited for the computer to search itself, the three young men reasoned aloud. All agreed that what Steve had just said made sense: if Lance had told the computer to play a movie on the big screen in the main salon, a lot more than Tina’s table should have moved. But if someone had told the computer that he wanted to watch a movie in
the galley
, the computer quite possibly would have responded by merely sealing off the galley. There was no reason this could
not
have happened. After all, it was possible to watch a movie on any of the boat’s twenty-five flat-panel display screens. Tim and Lance and Steve followed this train of thought to what seemed to be its obvious conclusions: if someone had demanded a movie in the galley, then the problem was not caused by Lance or Steve or Tim. At the moment the computer crime was committed, all three programmers had been sitting together in the long cafeteria table in the main salon. They were each other’s alibi.

Steve raised his chin like a coyote preparing to howl at the moon. “
Yonboxum
!” he shouted.

Jan Bocksum was the beleaguered Dutch fellow at the Huisman Shipyard assigned by Wolter Huisman to help the sailing novices from Silicon Valley gain sufficient understanding of the boat that they could control it. He’d quit, or threatened to, several times over the past two and a half years. He kept saying that he knew how software should be written because he knew how Microsoft wrote software. Microsoft deployed thousands of programmers in human waves whenever it sought to create something new. Jim Clark had deployed three young men on top of a Jenny Craig weight loss center in Menlo Park, California. But Jan Bocksum was given no choice. By edict from Wolter Huisman, he and four or five other stout and sturdy Dutch workers had acquired a working knowledge of Clark’s new computer system. None of them actually knew how to program the boat, but all of them knew how to use the computer. More to the point, they knew the password to gain entry to the system. Any one might have ordered a movie in the galley.

Soon enough the Dutch workers stood uneasily beside the long cafeteria table like children called before the principal.

“In the past hour and a half,” Steve asked, “did any of you play with the touch screen in the galley?”

They shook their heads in unison. Steve looked at them for a moment as if they were political prisoners—which, in a sense, they were. None of the Dutchmen broke down and confessed, however, so Steve dismissed them. “The trouble is,” said Tim after the Dutch workers had left, “they all use the same password. Anyone could have done it, and no one wants to admit it.”

The young men returned to their keyboards, and for maybe ten minutes the only sound was of fingers typing. A few minutes later Tim’s computer spewed out the historical record. It, too, was silent on the matter of Tina’s table. So far as the computer was concerned, Tina’s table had levitated all by itself. “What about a wiring problem?” asked Tim. “Well,” said Lance, “Simon has been fastidious about the cable making.” Having ceased to be the prime suspect, Lance had become more animated. He was now leaping to the defense of others. Simon was the crew member responsible for the computer hardware at sea. He’d just returned from his training course in Silicon Valley. He now worshiped the programmers, and the programmers appreciated it.

“Nah,” said Steve, “Hyperion 24 received an instruction. It’s just unclear where the instruction came from.”

More silence.

More tap-tap-tapping on keyboards. Clark turned up to see how they were coming along. Steve explained the problem with Tina’s table. Clark shrugged. His attitude seemed to be that there were so many big things wrong with the software that no one should be overly concerned with small matter such as furniture vanishing into the ceiling. His unconcern acted as a narcotic on the programmers. Steve actually giggled. “I’m not sure I’m cut out to be a manager,” he said.

“It’s an affliction that goes with enjoying actual work,” said Clark, and returned to his computer in his cabin.

Fifteen minutes later Tim looked up from his keyboard and admitted the obvious. “Well, that’s unsatisfying. We have no idea why it happened. It would be nice to have closure.” Nice…but not necessary. Tim was leading them to a popular solution to an intractable computer bug. Give up! Forget about it! Hope it doesn’t happen again! The boat still had dozens of bugs. What was so special about this one?

The three young men breathed easier. The bug that sent Tina’s table into the ceiling underwent a subtle change in status. No longer was it a problem bug. A critical bug. A meaningful bug. It was a bug that could be ignored. It could be hunted down tomorrow, or the next day, or even the next. Or maybe never. Steve snickered, conspiratorially. “It’s going to be difficult to concentrate with Tina shrieking all the time,” he said. “Tina did not quite shriek,” reflected Lance. “It was more of a warble.” The three young men in T-shirts and blue jeans shared a final chuckle and returned to their computers.

I
t seemed at least worth asking why anyone would hand his life over to a computer program that made its own programmer uneasy. Each crew member of
Hyperion
had his reasons. Robert the British engineer hoped to be the first engineer with total command of both computers and boats. Simon the Canadian deckhand had fallen in love with the idea, if not the fact, of computers. Jaime the Australian first mate left a great job with the Japanese America’s Cup challenge for the chance to sail the boat of the future. “This boat has an aura,” he’d say. “Everyone in yachting knows about it, or wants to know about it.” Tina the American chef simply liked Jim Clark more than anyone she’d ever worked for. She was a brilliant cook, and she knew it, and she knew Clark knew it. Clark’s praise counted for a lot with her.

But the larger reason
Hyperion
’s crew members agreed to cross the Atlantic Ocean on a boat run by a computer that did not seem to work very well is that already they were in so deep that they really could not turn around. Clark liked to say that human beings, when they took risks, fell into one of two types, pigs or chickens. “The difference between these two kinds of people,” he’d say, “is the difference between the pig and the chicken in the ham-and-eggs breakfast. The chicken is interested, the pig is committed. If you are going to do anything worth doing, you need a lot of pigs.” The members of
Hyperion
’s crew were now pigs, for a very simple reason: they all had a stake in Clark’s Internet businesses. Clark couldn’t stand the idea of anyone’s working for him without having the chance to accumulate a bit of wealth. He’d given
Hyperion
’s crew members that chance by handing them stock options in Healtheon.

If the crew members couldn’t exactly explain the Magic Diamond that put Jim Clark at the center of 15 percent of the U.S. economy, they had heard Clark and others say that the new enterprise might one day be as big as Microsoft. And they knew that they would also get shares in the new new thing, whatever that turned out to be, and that the new new thing would likely be even bigger. Like a lot of people who entered ClarkWorld, the crew members of
Hyperion
suspected that Jim Clark would make their dreams come true. They needed only to keep his boat floating long enough for that to happen.

T
he funny thing was that the engineers at Healtheon felt much the same way. They, too, were chickens who had been transformed into pigs. And they, too, soon found that pigs paid a surprisingly high price to play a role at Clark’s breakfast table.

The first bad sign came for Healtheon about six months after the engineers built their software for Blue Cross/Blue Shield of Massachusetts. The software created by Pavan’s group was something of a triumph. It was secure, reliable, and worked as well for ten million people as for ten. They had done the work of several years in six months. And Blue Cross/Blue Shield did not want it. After saying how pleased it was with the work, Blue Cross/Blue Shield of Massachusetts then announced that it could not really afford to focus on new technology. Blue Cross/Blue Shield had run into financial trouble; and, as always happened in bad times, its investment in the future needed to be reduced. It fired its new-technology group.

For most of 1996 the engineers did what they were told by their sales force. The sales force was in turn put together by a Kleiner Perkins venture capitalist, David Schnell, who, against his better judgment, had agreed to captain Clark’s new ship. The sales force told them that the key to the Magic Diamond was to write the software to enable corporate employees to interact with their health plans over the Internet. They wrote this software…and no one wanted it! The sales people hired by David Schnell had led them down a blind alley. “They had hired a bunch of perfectly nice people to sell who might as well have been selling insurance,” says Stuart Liroff. “A bunch of insurance salesmen—and they didn’t have a clue. Good old boys.” The good old boys were wrong! Worse than wrong. One day in late 1996 the engineers looked up and realized that they were no longer even thinking about the Magic Diamond. They were doing nothing but talking to big companies about making it possible for their employees to handle all their health care problems over the Internet, rather than with the usual blizzard of paperwork. A worthy goal perhaps, but nothing so grand as the original ambition of taking over the $1.5 trillion health care industry. In short, they realized that the business was misguided. And when they realized this, they were angry. “At that point,” says Pavan. “We engineers took over the business.”

The engineers, who had always been content to act on instructions from the marketing department, did what they had never before done. They kicked the salesmen to one side—eventually they were all fired—and went out on the road to sell their software themselves. They were looking for the keys to the Magic Diamond. If they found one large and important customer, they figured, others would follow. Briefly, they believed they might be hired to sort out Fidelity’s health care plan, but that came to nothing. Fidelity would pay them $20 million to do this. Clark reappeared and told them that Netscape’s first contract, with MCI, had been for only $6 million: they were three times better than Netscape!

And then in March 1997 Fidelity announced it had decided not to fiddle around with new technology after all, and the engineers found themselves without anyone who wanted to buy what they had done. “We’d just given up our lives for six months,” says Stuart. “My wife was pissed at me. My daughter was crying because I never came home. We worked twenty-hour days. And then finally we deliver the product and it was like: What did we just do? We gave up so much…for
this
? It was a total look-inward kind of thing. We were all pretty pissed. Pavan, Kittu and myself…we’d sit around having these nighttime meetings to discuss what to do, and we were all essentially yelling at one another. We’d all gotten into this fucking thing. We put our life into this fucking thing. We’d been led down a path. The period in 1996 was the most awful time in any of our lives. We knew we had created something very significant. It was just that we couldn’t sell it to anybody. And what did we know? Pavan and Kittu and I, we didn’t know shit. We just built what they told us to build. It was ITV all over again.”

Their main fear was the main fear of every new Silicon Valley company, mass exodus. These companies could not withstand pessimism, and now there was a lot of it at Healtheon. It got so bad that Pavan went to his white board and drew what he called a “loyalty matrix.” The first ten engineers he’d hired, he figured, were loyal to him. He called each and told them to find the people who were loyal to them, and persuade them not to quit. It only took a few people trickling out the door for the flood to begin.

It was the second time in a few years that a highly talented group of engineers had raced down a path Clark had put them on, and yet, oddly enough, they didn’t blame Clark. It did not even occur to them to blame Clark. Through it all they viewed Clark as their patron. Whenever the Healtheon board of directors convened, the venture capitalists streamed past the engineers without saying a word. Clark stopped and spent half the day talking to them about the software. Whenever the Healtheon board spoke of watering down the equity stakes that had been given to the engineers, Clark fought it. The engineers assumed that Clark was the only one in the place who stuck up for them.

Instead, they blamed David Schnell, the venture capitalist who had been installed by Kleiner Perkins as temporary CEO. They told Clark, as Clark later said, that “David occasionally left customers with the impression that the train was leaving the station, and if they didn’t get on now, they would be left behind.” (This can be useful for a customer to feel but it should never be explicitly said.) But, of course, Schnell was the problem! Schnell was a venture capitalist, and venture capitalists normally did not need to be polite to anyone, as people usually came to them on hands and knees to plead for money. And as a venture capitalist Schnell had the tendency, suddenly unfortunate, to make a few quick bucks rather than reshape the world in his image. He had pushed the engineers away from the Magic Diamond and toward this mundane little backwater called benefits administrations, where he thought they might make money immediately. And he didn’t even do this well.

What Clark and his engineers realized was that they needed a charismatic leader who could make the Magic Diamond real. What they needed was one of those guys with gray hair and soothing manners who could speak to the CEOs of large health care companies in their own language. One of those guys from mainstream corporate America who instantly, by his mere presence on the scene, made the implausible plausible. What they needed, in other words, was something Jim Clark alone could never provide. A Serious American Executive.

Until that moment of high despair in early 1997, it was never entirely clear why Clark had gone to the venture capitalists on Sand Hill Road in the first place. He didn’t need their money. He had more money than all of them combined. But he did, after all, need them: he needed them to translate his extraordinary ambition into the ordinary language understood by corporate America. The man who groped for the new new thing was in many ways ill suited for mainstream business. Clark knew that the time would come to put a smiley corporate face on his ferocious ambition. He knew, also, that he did not know how to do this. As one longtime Clark watcher put it, “Jim is smart enough to know when he shouldn’t trust himself.” In particular, Clark sensed that alone he was unlikely to entice a Serious American Executive into running his insanely ambitious company. The Serious American Executive would get one long whiff of ClarkWorld and run the other way. Premised as they were not on profits but on perceptions, these new Internet businesses were still all but unrecognizable to the Serious American Executive. A simple background check would reveal that, translated into business-speak, “Jim Clark” meant “Big Trouble.”

The venture capitalists, on the other hand, talked the talk and walked the walk. In tone and spirit they were not all that different from Serious American Executives. The VCs had been to business school, they spoke the jargon, they wore the suits, or at least owned them. The VCs kept their neckties on hooks on the back of their office doors, so they could go either way. They were pleasantly free of the odor of a man on a suicide mission. One VC in particular had a gift for persuading mainstream CEOs that the only place to be was a Silicon Valley start-up: John Doerr. Doerr was the only VC whom Clark favored with something akin to respect. He asked Doerr to join Healtheon’s board and to help him recruit a CEO. Doerr, who had told a lot of people that Healtheon might one day be the biggest company Kleiner Perkins ever backed, then set out to find the Serious American Executive who could make the Magic Diamond plausible to the wider world. He found him at a conference in Phoenix, Arizona. His name was Mike Long.

Long had graduated from the University of North Carolina at Chapel Hill in 1974 with a degree in history and spent the next twenty years building a nice little computer services business in Austin, Texas, called Continuum. In 1996 Continuum sold itself for 1.7 billion dollars to another equally obscure computer services company called Computer Sciences. It was a big deal at the time—the seventh largest deal ever done in the computer industry. Everything about Mike Long was reassuring to Jim Clark: his gentle manner, his prematurely gray hair, his ability to appear to be in complete control. When Mike Long entered a room, everyone in it felt somehow better. He attracted followers as a magnet attracts filings. In other words, he was exactly the right man to take an inherently implausible idea and lead others to believe in it.

It did not occur to Mike Long that he wanted to work in Silicon Valley until John Doerr put it to him. Over six months Doerr called Long “more than a hundred times” and talked him into leaving his stable, successful company, called Computer Sciences, and joining the Internet revolution. Long flew out to California to meet Jim Clark. When asked his first impressions of Clark, he’d say, “Jim’s a visionary.” He’d also say, “Jim’s an eccentric.”

It took Long six months to extract himself from his old company. When he arrived at Healtheon in July 1997, the place was in high despair. The entire company, now more than one hundred people, assembled in a room. They switched off the fake waterfall so that no one missed a word. Long rose and explained how he intended to restore the company to the heart of the Magic Diamond. “It was clear what had happened,” he later said. “This company started out with great ambitions, and then the ambition got smaller and smaller. I just took it back to Jim’s original vision.” This was exactly what the engineers wanted to hear. They did not know exactly what it was that Mike Long did, but they sensed he did it well. “He uses all these incredible words and way of speaking,” says Stuart, though he can’t remember any of them. It was the engineer’s way of saying that at last Healtheon had found its Serious American Executive.

The Serious American Executive, for his part, found chaos. At the board meeting in September 1997 Mike Long announced he was running out of money. Before the meeting Dick Kramlich and his partners at New Enterprise Associates had valued their portfolio of investments. They ran down a list and guess how much each company was now worth. When it came to Healtheon, they wrote “0.” Healtheon was as good as finished, they assumed. Along with Clark they had already put six million dollars into the company, and they had no desire to put in more. And so when Long said he needed money the venture capitalists looked hard at the shiny conference table. Finally, they came up with a plan to raise twenty million dollars from outside investors. Of course, if they had thought Healtheon had a future, they would have kept it to themselves. Since they did not, they went looking elsewhere for capital.

The exception was Clark. Clark called Long a few days after the board meeting and told him that he had thought about it and had decided that Healtheon was simply too good an opportunity to let others in on. He said he would personally provide Long with as much money as he needed. If Long needed twenty million dollars, Clark would cut him a check for twenty million the next day.