"a fish, a barrel, and a smoking gun"
for 8 June 1999. Updated every WEEKDAY.

Tall Dollars Today



Nobody resented Woz. Nobody

keyed Woz's copper-colored

Porsche. Truck drivers, Wall

Street tycoons, and 12-year-old

Atari videogame champions could

all agree: Steve Wozniak,

inventor of the personal

computer and poster child of

Silicon Valley in the '70s,

deserved every penny he

earned. Woz was thought to have

accomplished something beyond

the powers of mortal men: Just

for starters, he programmed a

machine to simulate a ball

bouncing off a moving paddle and

breaking through multicolored,

animated bricks. And he didn't

just write the software — he

also designed the chip. Atari's

most popular arcade game,

Breakout, was now available in

your own home. For an encore, he

invented the floppy drive. Genius!


After Woz, at 26, created the

Apple II, people wrote

breathless and completely

justified paeans to his

precocious talent and his great

fortune — which amounted to

more than US$100 million.

Paperback biographies could be

found in airport bookstores,

with titles like The Wizard

Called Woz. After crashing his

personal airplane and leaving

Apple, Woz turned his attention

to another fundamental human

problem: the proliferation of

remote controls for electronic

appliances. Using his own

money — and his own

programming skills — Woz

started a company whose mission

it was to empower people to turn

off their CD players and turn on

MTV without switching devices.

Meanwhile, with his extra cash,

he paid for fun, money-losing

rock concerts with Bill Graham,

who returned the favor by

calling the bearded Wunderkind

(affectionately, we're sure) "a

simpleton." OK, so people took

advantage of Woz. But they

never hated him.


Of course, that was back when

$100 million was real money,

before the advent of Internet

insta-wealth. The dogma that

money flows toward the best

ideas is believed more

passionately in Silicon Valley

than anywhere else in America,

which is why everybody who knows

Perl has to answer the question:

"If you're so smart, why aren't

you rich?" And rich doesn't mean

six figures. Or seven. Or eight.

"A million dollars?" we heard

one bearded sadist say to a

young man who hadn't yet come up

with his big score. "I make that

much in interest." Perhaps the

class of 1950 had to deal

with a similar problem at

its 25th reunion — a midlife

reckoning among competitive

classmates with brilliant careers.

But the crisis today has nothing

to do with careers. This is just

about money.



The change started with

Microsoft. Bill Gates got

rich on something you could

imagine pulling off yourself: a

savvy bluff. What if IBM had

said, "Hold on there, Billy,

we're happy to pay you a big

fee, but we'd like an exclusive

license for that operating

system, thanks"? But they

didn't, and young Billy kept a

poker face, and good for him.

It's not the same pure,

childlike talent that makes Woz

practically a saint, but it's an

excellent story. Still, it

signaled a definite adjustment

in the balance between talent

and luck. The anti-Microsoft

passion that erupted in Silicon

Valley in the early '90s had

something to do with competitive

resentment, and something

to do with regional resentment,

and something to do with

high-minded aesthetic resentment.

But that adds up, in our

scientific estimation, to only

about 10 percent of the total

free-floating resentment. The

rest was something else, something

prescient, something visionary.

It was windfall resentment.


In 1994, things got worse. The

first child-mogul of the

Internet was Netscape's Marc

Andreessen, who made a quick

half-billion dollars

commercializing a popular free

program whose basic architecture

was developed by a mild-mannered

physicist in Europe. Now, we've

met Andreessen, and we always

like to reassure people that

he's a regular guy. To which the

inevitable response is,

exactly. What did he ever do for

his $100 million? Invent the

blink tag? Before Netscape's

IPO, a self-confident Silicon

Valley banker warned us against

buying the stock. "Fuck

Netscape," he said. "Any

dumbshit can write a browser."


On the other hand, if any

dumbshit can write a browser,

how smart do you have to be to

make a catalog of Web sites?

Bystanders who scorned Yahoo

still resent the fact that two

Stanford students, doing

approximately the same kind of

work for which travel publishers

pay interns $200 a week,

followed Andreessen into the lap

dance of Fortune. "How much do

they want, $10 million?"

laughed a would-be-tycoon of our

acquaintance when Yahoo was

shopping around for financing.

He waved his hands. "For that

much money, I'll make my own

Internet catalog."



Our tycoon buddy didn't actually

get around to creating that

catalog, unfortunately, or we

would have hit him up for a few

shares at the offering price.

It's hard to get over these

"close calls." For every

billion-dollar Web site, there

are thousands of people who can

show you the email to prove they

had the same idea at the same

time and rejected it because it

was too trivial. A Web site from

which you can send free email?

Easy, but where's the revenue? A

Web-page hosting service? No

problem, but what's your

competitive advantage? Only

relatively simple-minded people

start a business without any

prospect of profit, you thought

then. And only now, when the

full force of envy has arrived,

do you slap your forehead and

mutter, "It was too goddamn

stupid to fail."


If Hotmail and GeoCities inspire

mean-spirited ridicule, how do

you think people react to the

name Pierre Omidyar, who built a

little trading system so that

his girlfriend could swap Pez

dispensers? When non-millionaires

in the Bay Area realize that

Omidyar could buy 10 Wozniaks

with his founder's stock

in eBay, they actually get

grayish-green with moral

outrage. Still, the capacity of

the Internet supermoguls to

inspire envy is limited. Their

wealth is exposed to the last

zero in the Securities and

Exchange Commission documents

their companies are required to

file. This reduces the capacity

for imaginative exaggeration.

And they are pioneers, of

sorts, which gives them an

aura of sanctity and almost

suffices as a justification

for fabulous rewards.


It is the third wave of

millionaires — call them the

millionaires next door — who

inspire the most pathos. Here's

the kind of story we hear almost

daily: A friend of a friend of

ours, let's call her Indira,

started at a Web company —

let's call it NiceWeb — two

years ago. While waiting in line

for a chicken wrap last week,

our friend overheard Indira

saying that she's really sick of

her job cutting and pasting

credit-card data into email. But

she can't afford to quit. At her

current NiceWeb stock-vesting

schedule, she's making more than

$2,000 a day. "I'm so glad that

wasn't what I was thinking about

when I was 22 or 23," said our

friend, his voice creaking with

what we suppose was gratitude.

"She probably spends all her

time doing the addition." He

moved the fingers of his right

hand against the palm of his

left. "Wow, half a million per

year," he counted sadly. "Her

perspective on life must be

completely distorted."



We agree entirely. It's growing

more and more difficult to keep

your head on straight during

these days of excess liquidity.

Another young San Franciscan we

know loves to tell us about the

manager of the convenience store

on his block, who, last year,

sunk his entire savings into a

portfolio of Yahoo, Amazon, and

Excite. "I told him it was a

stupid thing to do, but he's not

a very sophisticated investor,"

our friend told us. "He thinks

that because he made a quarter

of a million dollars last year

he's got a great strategy. Every

morning I tell him to sell, or

at least to switch to an index

fund, but he never listens. He

just points to his new SUV and

laughs and says, 'I paid cash.'"


How could we comfort him? He'd

been smart enough not to buy

eBay, but even if he'd been a

little dumber, and bought it

after it doubled or tripled from

its offering price of $18, he'd

never have been able to resist

selling out at $100 or $200 or

$600. So even if he'd made good

money, he would still be

suffering from an inferiority

complex that would grow worse

with every 20-point daily gain.

"Maybe you should buy some eBay

now?" we ventured. "How fucking

stupid do you think I am?" was

the inevitable reply.

courtesy of The Day Traders


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