#274 Jim Clark (Silicon Graphics, Netscape)

Transcript from https://podmenti.com/t/8e0c1484e0d2aebd

As it turned out, the main character of this story had a structure to his life.
He might not care to acknowledge it, but
But it was there all the same.
It was the structure of an old fashioned adventure story.
His mere presence on a scene inspired the question that propels every adventure story forward.
What
Will happen next.
I had no idea.
And neither did he.
Why Jim Clark was so worthy of study was another matter.
For now, I'll just say that the quirks in the man's character sent the most fantastic ripples through the world around him.
Often starting with the best intentions.
Or no intentions at all, he turned people's lives upside down and subjected them to the most vicious force a human being can be subjected to.
Change.
Oddly enough
He was forever claiming that what he really wanted to do was put up his feet.
And relax.
He could not do this for more than a minute.
Once he put up his feet.
His mind would spin.
And his face would turn red.
And he would be disturbed all over again.
He thought of something or someone in the world that needed to be changed.
For all I knew
Clark would be remembered chiefly.
As the guy who created Netscape.
And triggered the internet boom.
Which in turn triggered one of the most astonishing grab fests in the history of capitalism.
Maybe somewhere in a footnote.
It would be mentioned that he came from nothing
Grew up poor.
Dropped out of high school.
And made himself
Three or four billion dollars.
That is an excerpt from the book that I reread and the one I'm going to talk to you about today, which is The New New Thing, a Silicon Valley story, and is written by Michael Lewis.
I first read the book for episode twenty three, which came out four and a half years ago.
And the reason I wanted to revisit this book is one, it's a fantastic book, Michael Lewis is an amazing writer, but Jim Clark is also a very unusual character compared to the other people that you and I study.
He's the first person in history to found three separate billion dollar technology companies.
And so actually wanna start at the end of the book.
Which is an overview of Jim Clark's early life.
And I think knowing this up front will make it easier for you to understand
who Jim Clark was and why he made the decisions he made.
And so it says On the rare occasions Clark visits Plainview, Texas. He lands at the airfield on the outskirts of town, has lunch with his mother, and then flies off to someplace else as quickly as he can.
He seldom drives into town and never visits home.
He has never seen the house his mother bought.
with the stock options that he gave her.
And so the author Michael Lewis is driving into Plainview, Texas, and he's interviewing Jim's mom, Hazel, and his sister Sue.
So his mom said that most of what she knows about her son's illustrious career she knew from having read it in magazines.
She has difficulty squaring the boy she raised with the man she read about. Remember, it started the podcast with, hey, he dropped out of high school and he winds up making himself three or four billion dollars. So says she has difficulty squaring the boy she raised with the man she read about. She has no advanced theory to why Clark became
Who he became.
in the middle of this conversation they're having, the phone rings
And his sister picks it up and she goes, No, we're not investing right now
No
No, I said we're not investing and then she hangs up the phone.
And Michael's like, What's going on?
And she returns and she says she explained that the shares in Netscape that Clark had given them, meaning the family, hi the his sister and his his mom, right? Had made them rich.
And I'm gonna pause right there because I wanna tell you the note I re left myself before I read the rest of this paragraph to you.
I go, it is worth remembering.
That your drive.
That fire in the belly that you have.
benefits other people as well.
So why would I say that at this point?
Because she just said, Hey, we get a bunch of calls now. People know that we're rich because of the stock options that Clark gave us, right? And she said, You have to understand.
She said.
That when this happened, meaning that when we got the stock options, we were poor.
I was ready to cook.
The cat.
I assumed this is now Michael speaking, I assumed this was a joke and I laughed.
I assumed wrong.
She had
In fact
Been ready.

The cat.
The Netscape IPO had saved at least one life.
So then Jim's mom is telling Michael her life story. I'm just gonna pull out a couple parts.
And it has to do with the fact that Jim's dad
was a giant piece of shit who beat up his mom.
And so it says the most chilling of the story concerned Clark's father, who apparently drank all day and beat Hazel up all night.
Hazel put up with the routine for years.
Until she finally divorced him, she divorced uh him when Jim was four tent.
So you think okay, this guy's horrible, he's a drunk.
He's a loser, he's beating up on this woman.
At least that you know, he she divorced him, she got away from him. No. The guy would hang out and follow her around.
And then he would sabotage her car.
And this happened multiple times.
And think about this crazy story about today. He's putting his ba he's got a baby daughter.
In the car.
That he's sabotaging, he's putting her life at risk. So he had open he had put in steel shavings into a transmission.
So the man at the auto shop helped her clean them out, thinking they'd fix the problem. Hazel set out with her baby daughter, Sue, to visit friends. On the road, the car broke down.
He had put sand.
In the oil.
Fixing this
cost Hazels two month two months of pay. She's not making a lot of money.
And then Jim does something about this. That night she told her son what had happened. Clark had just turned sixteen.
Jim got up and left the house, his mother said, and went to find his father.
When he came back, he was crying.
I never knew what happened, his mom said.
But I tell you what, his sister said.
After that.
My father never bothered
My mother again.
These are the parts of the story where I get induced
Into a state of rage.
If you're an adult and you want to destroy your life because you want to be an alcoholic, then go do it.
Don't mess with kids.
I hate that people do this. Okay.
So now we get into the next part. It's really an illustration of just how dire their circumstances were and that just
That's like the behavior's father makes it even worse.
So
Michael brings up to his mom. It's like when I visited uh Jim's house in in California, like
He's not a nostalgic guy.
But he had like a tuba.
Uh w why is this tuba here?
And so he says, I turned uh to Hazel and
And uh I mentioned that uh she also remembered the tuba.
Uh the the instrument was propped up in the corner of Clark's guest bedroom and had struck me as odd. It was the only artifact of his past that he thought was worthy of display.
And it says the two bed come a surprise to Hazel as well. One day Jim came home from school with it, she said.
So why did he select a tuba, right? Hazel supported a family of four on$225 a month that she took home from the hospital, where she worked as a doctor's assistant. After she had paid the bills, she had$5 a month to spend on groceries.
Clark was obviously well aware
Of their situation from an early age.
And this part kills me, but you really
It's it you understand.
his insane amount of drive. He has a part where I'm gonna get to
The most powerful
paragraph in the book, he's thirty eight years old. He is drinking. He feels he's a self described loser. He's a college professor, so I don't think many people on the outside would describe him as a loser, but he just snaps and he just has this maniacal
Drive.
to accomplish something. It's I I'll get to it. It's it's one of the f my favorite
parts of any book that I've ever read.
But you go back and you think about it, it's like you have five dollars a month to spend on groceries.
You're embarrassed by your family's poverty.
due to complete bad luck your fa you are the son your father's a loser
And it says he had chosen to play the tuba.
Because the tuba was the one instrument supplied to
To the pupil.
By the school.
free of charge. If you wanted to play a flute
A trumpet.
A trombone
You had to buy your own instrument. He had to play the tuba because that's the only one that was free.
Not long after he'd come home in tears, the
From what he turned from what turned out to be the final meeting with his father.
Right, that happened when he's sixteen.
Clark quit playing the tuba.
Soon after he was expelled from school and left town.
He would turn up every now and again, and one time not long after he'd left, he came home talking about nothing but computers.
No one in plain view had even seen a computer except in the movies, said his mom.
Another time he came home with financial ambition.
When Jim came home from the Navy, his mom said he told his uncle that someday he was gonna make fifty thousand dollars a year.
His sister hooted and clapped. He's done a bit better than that.
His mother continued.
I remember him telling me when he came back from the Navy.
Mama.
I'm gonna show
Plain view.
And this is just one of the things that makes this f this story so fascinating. So how do you go from
high school dropout being expelled from school, which I'm gonna get into right now to being the first person in history to found three separate billion dollar companies. So I'm gonna go to this conversation that Michael Lewis and Jim Clark are having at his house about his early life.
And so it says there was a clipping from a local newspaper in Plainview, Texas, where Clark had grown up. The paper wanted to let the townspeople know that one of their own had gone to California and created a big company called Silicon Graphics. It was a local boy makes good story and made light of Clark's boyhood failure. It mentioned that he had been expelled from the local public high school.
The offense that got Clark tossed out of school was for telling the English teacher to go to hell.
Before that, he had exploded a small bomb on a school bus, smuggled a skunk inside a horn case.
Into the school dance.
And set off a string of firecrackers inside another student's locker.
So Michael's trying to piece all this together. He pulls something out of the box that he's going through. He says the next clue was a photograph of Clerk in nineteen seventy, having just received his master's degree in physics.
on his way to a PhD program. And this is uh just a fantasti this is just great writing.
And it really makes the story really, really curious, right? In under eight years.
This person
who is considered unfit to graduate from public high school in Plainview, Texas.
Had earned himself a PHD in computer science.
So how does this happen? The story was more remarkable than that. His father abandoned the family. His mother should have taken welfare, but it never occurred to her. When I asked him about the article in the Plainview paper,
All he said was
I grew up in black and white.
I thought the whole world was shit.
And I was sitting in the middle of it.
So once he gets kicked out of school.
It's only option, he's like, Okay, I'll just go to the Navy.
Uh at the age of seventeen, Clark asked his mother to sign a piece of paper that permitted him to join the Navy.
And this is a hilarious story of the first time Jim Clark ever heard of a computer.
When he gets into the Navy, he's going through like the all these tests they make you take. And it says he had never seen a multiple choice test before and he didn't know how to take one. To most of the questions, several different answers at least partially correct. Instead of picking w the one that seemed the most correct, he just circled them all.
The Navy assumed that he knew that circling more than one answer fooled the computer that graded the tests. Thus, this is the this is a example of why Michael Lewis is such a great writer. Thus the first time Jim Clark had ever heard of computers when was when he was accused of trying to fool one into thinking he was smarter than he was.
So then he has to take a math test and this is where he realizes, oh, I'm actually gifted in math. I didn't even know that. He took his first math test and scored the highest grade in the class. He was unaware that he had any particular aptitude for math and didn't quite believe the result.
Neither did anyone else. The Navy gave him another test. Same result.
And what the instructor does here.
changes his life. The instructor told him that it had been a long time since he'd seen someone so naturally gifted in mathematics. He suggested that Clark enroll in night classes at Tulane University.
with a view of getting a college degree after he finished his tour of duty. Within eight years, Clark had his college degree, plus a master's in physics, plus a PhD in computer science.
And this is the first time they mentioned what I feel is a made theme if you read the book and I highly recommend you do, because not only is Jim Clark an interesting character, but it is a a period piece of what was it like to be in Silicon Valley in the late nineties and early two thousands.
And the the the main theme.
Is
Success.
as a form of revenge, he learned that his desire for revenge could lead to success. He was propelled in the classroom by his anger about the humiliation that he had suffered. Thus success for him became a form of revenge.
So he's accomplished a ton in eight years, but he's still
A turbulent personality. When I think of Jim Clark.
I think of what the founder of Patagonia said.
Ivan Chenard.
says if you want to understand the the entrepreneur study the juvenile delinquent
the delinquent is saying with his actions, This sucks. I'm gonna do my own thing.
Jim had a turbulent early career.
between nineteen seven and nineteen seven eight he had been married at least twice
uh moved back and forth across the country at least three times and held at least four different jobs. He was fired for insubordination, at which point
A wife and not his first.
Left him.
He tried to explain this extraordinary leap in his career
From thirty eight year old unsuccessful college professor
to founder of a multi billion dollar corporation.
And this is the most powerful paragraph in the entire book.
One day I was sitting at home and I remember having the conscious thought.
You can dig this hole as deep as you want to dig it.
I remember thinking, my God.
I'm gonna spend the rest of my life in this fucking hole.
You reach these points in life where you say
Fuck.
I've reached some sort of dead end here.
And you descend into chaos.
All those years.
You thought you were achieving something.
And you achieved nothing.
I was thirty eight years old.
I had just been fired.
My second wife had just left me.
I had somehow fucked up.
I developed
This maniacal паше.
For wanting to accive
Something.
The result of this self imposed psychology surprised even Clark.
He insists that the transformation occurred overnight.
And that he cannot really explain it.
Okay, so let's go into
Jim's philosophy. It's this is gonna remind you, I just did this two part series on Van Ever Bush. If you haven't listened to those episodes, they're extremely important to listen to.

Jim's whole thing, or Van Ever's whole thing is like, Hey, engineers are the engine of capitalism and they should be rewarded as such. Jim would agree with that statement. We're gonna get into this idea. It's like a variation of this thing called new new growth fair theory.
But the way Michael tells the story is absolutely fantastic. He says I couldn't have been more than a few hours after the last guest stumbled out of his front gate that Clark called me and made this suggestion. I'm going up in the helicopter, he said, Do you want to come?
His voice was deep and thick and unsteady. Apparently he hadn't slept. It was just before eight in the morning on the fifth of July. He had spent the last three hours writing code, and the seven hours before that drinking with seventy of his favorite engineers
Who worked for the companies he created.
And then more or less abandoned.
And then before they get into this discussion on new growth theory.
They go into just what a crazy economic time.
This was
And here's an example of that. He says he didn't need to show how much money he had. The number was in the newspaper every day.
It was public knowledge that Jim Clark owned sixteen million shares in Netscape, and that Netscape
at this at the time their meeting on July fifth, nineteen ninety eight.
was trading at twenty five dollars a share.
That was four hundred million dollars.
And that was six hundred and fifty million less than Clark had been worth two years ago.
And for that matter
три більон долар лес
Then he would be worth nine months from now.
The number was always changing.
So think about four hundred million on this specific day.
Two years earlier it had been a billion, nine months from where we are in the story, he's gonna be worth three billion dollars.
So then they start talking about this book that came out in nineteen twenty nine.
Uh, written by this guy named Veblen is his last name. It's called The Engineers in the Price System.
And this is what I mean about why I think Jim Clark and Bush and Van Ever Bush have similar uh thoughts.
Like similar philosophies on this.
Uh so it says back in nineteen twenty nine or nineteen twenty one
This author had predicted that engineers would one day rule the US economy. He argued that since the economy was premised on technology and the engineers were the only ones who actually understood how the technology worked, that they would inevitably use their superior knowledge to seize power from the financiers and the captains of industry.
Jim was particularly keen on the idea of the engineer grabbing power from the financier.
That is happening right now, he said.
Right here.
In the valley.
The power is shifting to the engineers who create the companies.
Clark thought.
That was as it should be.
Engineers are the ones that created the wealth.
That's a theory from the nineteen twenties they're discussing. Then they're talking about this theory.
uh that came about uh from an ec economist in the nineteen eighties. This is new growth new growth theory.
New growth theory argued that wealth came from the human imagination. Wealth was having entirely new things.
Growth is just another word for change.
The metaphor that Romer, this is the guy that made that wrote New Growth Theory
The metaphor that Romer used was that of a well stocked kitchen waiting for a brilliant chef to exploit it. So I'm gonna read this entire paragraph to you. Just keep in mind, I'll tell you what Lewis is doing here.
He's essentially saying hey
The chefs that create wealth, Jim Clark is one of those. Okay, so it says the metaphor the Romer used was that of a well stocked kitchen waiting for a brilliant chef to exploit it. Everyone in the kitchen starts with more or less the same ingredients, but not everyone produces good food. And only a few a very few people who wander into the kitchen find entirely new ways to combine old ingredients
into delightfully tasty new recipes. These people were the wealth creators.
Their recipes were wealth.
Electricity.
The transistor.
The microprocessor, the personal computer, the internet.
If followed from the theory, the reason I'm reading this to you, I know it's a little bit a little bit long, is because this is he's telling us how Jim thinks about these things. I think that's really important. If followed from the theory that any society that wanted to become richer would encourage the traits, however bizarre.
That led people to create new recipes.
A certain tolerance for nonconformism.
Із рили критико та просе.
The prime mover of wealth
Was the geek holed up in his basement all weekend discovering new things to do with his computer?
He was Jim Clark.
And then it goes into a little bit about the history of Silicon Valley, which is really interesting. I've done, you know, dozens of podcasts on that.
But what was fascinating is how the point that the author's making here
is that Jim is one of the very few people that j that jumped from part one of Silicon Valley History into part two.
And so it says, unlike just about everyone else's age, fifty-four, at the time uh this book is being written, Clark had made the leap from part one to part two.
of the Silicon Valley story. Part one had been about engineers building machines cheaper, faster, and better.
Part two of the Silicon Valley story was when the engineers had figured out that they didn't need to build new computers to get rich. They just had to cook up new things for the computers to do. So Silicon Graphics made actual physical hardware.
Their first product was three D graphic computer work stations.
Jim's n new company, the w the one he's working on.
at this point in the story, his uh co founder is actually Mark Andreessen.
is software, it's Netscape.
And so that's the point that Michael Lewis is making here. It's like hey
Uh part two.
It's the engineers figured out they didn't need to build new computers to get rich. They just had to cook up new things for the computers to do. The notion of what this this is so important.
Because it was true back then, is even more true today, and I double underline this one sentence the notion of what constituted useful work
had broadened.
One of my favorite lines I think about over and over again, it comes from the almanac of Naval Ravakant, that book that I covered back on episode one ninety one. And Naval says the internet has massively broadened the possible space of careers and most people haven't figured this out yet.
That is
A book that came out and a statement that was said, you know, in the last few years
This book that I'm holding in my hand.
Is
Over twenty years old, it says the notion of what constituted useful work had broadened. All across Silicon Valley you found office buildings crammed with young techno geeks cooking up recipes that they hope
Would turn the economy on its ear. The role model for this activity was Jim Clark.
And then the book goes into how Jim actually approaches his work and his life.
And so it made me think of this fantastic quote that says A master in the art of living draws no sharp distinction between his work and his play, his labor and his leisure, his mind and his body, his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence, through whatever he's doing, and leaves others to determine whether he is working or playing.
To himself.
He always appears to be doing both. That is a fantastic quote. And it says he left himself open to accident. If nothing surprising or interesting was happening to him, he moved on until the situation corrected itself. This was as true for his work as his leisure.
Indeed, it was hard to say whether the work where the work stopped and the leisure began. They formed a seamless disturbing pattern of motion and change.
Impatience might be a social vice, but to Clark
It was a commercial virtue. That's fantastic writing again. Impatience might be a social vice, but to Clark it was a commercial virtue. Why he said if everyone was patient
There'd be no new companies.
And they describe this process in which
Clark gets his ideas multiple times throughout the book as groping.
Clark never used the words and phrases that we have come to expect
from the technology types who pretend to see the future.
That sort of grand talk struck him as perfect bullshit. In all the time I spent with him, I never once heard him refer to his ability to see the future. He couldn't see it, and that's why he had to grope for it.
He would be seized by some overwhelming enthusiasm and he would be off and running down some long dark tunnel leading God knew where.
With him enthusiasm was a physical event.
So I want to skip ahead to this idea where he snaps
thirty years old, he's like, I gotta accomplish something.
We already know he's very gifted with computers, very gifted at math.
There's a line in the book, I don't know if it's true or not, but they said Jim invented
Three D.
He definitely invented this thing called a geometry engine.
And what this did, it allowed computers to process three dimensional graphics. He said this was just obvious because he says Jim's logic was that the world was three dimensional.
three dimensional and so the computer world would have to be two.
So uh Clark's bid for power and money began at Silicon Graphics, the company he founded with several of his Stanford graduate students.
And at the very beginning no one thought it was valuable. A lot of people who should have seen the importance of Clarks
Geometry engine.
thought it was a useless toy. So they go and try to sell it to people to like large corporations, to people that are designing cars or airplanes.
And it was funny that I'm skipping over a bunch of that part part. I just want to point point out who were the first people to get it. I've done podcasts on both of these people.
George Lucas, founders number thirty five, and Steven Spielberg, founders number two oh nine.
The Hollywood people were shrewder about the possibilities and it wasn't long before Steven Spielberg and George Lucas were banging on Clark's door and asking to be his first customers.
the silicon graphics workstation made it possible made possible
A lot of new special effects.
And so everything that's happening is happening before the conversation that Michael Lewis and Jim Clark are having about hey, engineers.
are creating the wealth, they should be the ones
That
Make all the money.
And the reason for that is
Silicon Graphics, a lot of people say, and I'm about to read this paragraph that hey, they had a large collection of talent. They also had the smallest number of millionaires created from a public company because all the money went to the financiers, and that's why that's a main theme of the book. Jim like is constantly
trying to find ways to eliminate
Anybody that's not doing the actual work. Before long, Jim Clark's new company exerted a gravitational force on the technical mind. When you ask people who dealt with silicone graphics or who work for silicon graphics or who brought who are purchased machines for silicone graphics, or who simply observe silicone graphics from afar.
They all say the same thing about it.
It was the smartest groups of grub engineers.
I've ever seen in one place.
And so then it goes into how he saw these
The fact that he was giving up equity, that he was creating the fewest millionaires.
He saw these as all problems that he would fix with future companies. And so this is everything I'm reading to you, uh this is spread out over m m multiple pages. This is a main theme of the book.
the fact that Clark thought there was this deep injustice and that engineers should be the ones that get rich.
So it says Clark had invented the technology about his career on it, and he had been right. He had attracted the most talented engineers and they in turn created the most talented computers. But as a group, Clark began to complain they had precious little to show for it.
The lion's share of the equity and the power had been taken by others.
Financiers and managers who own huge chunks of silicon graphics.
It did not take long for Clark to become deeply irritated by the rules of American capitalism. In his opinion, the game was rigged so that the people who really mattered got the shaft. He believed in his bones that the people who mattered were the brilliant engineers.
The chefs who cooked up the new recipes.
And so before this Clark had no experience starting a company and he felt
One of the venture capitalists took advantage of his inexperience. He wound up selling forty percent.
of silicon graphics for eight hundred thousand dollars to this guy named Glenn Mueller.
So Mueller was running this thing called the Mayfield Fund.
They wind up it says the Mayfield Fund wind up ended up making
Four hundred million dollars.
on its investment in silicon graphics.
And so it says Clark had trusted him, meaning Mueller
He would never do that again with venture capitalists, and he never forgave Mueller for exploiting his ignorance. There is a crazy story that happens later in
The book
where Clark and Mueller on the phone. Mueller wants to invest in Clark's new company.
Clark obviously tells him to go to hell.
And Mueller.
shoots himself in the head.
So the book goes into all kinds of detail about the conflict within this organization.
Uh Jim.
is a misfit, a troublemaker, he is not they call him the disorganization man.
Meaning he's not gonna act like business like what people at the time thought businessmen should act like
So there's this huge fight between
Clark and the rest of the board, they're like, We're gonna bring in a professional CEO. They bring in this guy named McCracken.
And I'll get into the environment that I'm a crack in
creates in which Jim cannot and will not participate in. So he winds up just leaving the company. And his solution every time or almost every time is
All right, the solution is we need to start another company.
But before I get there, I just want to point out what was the company like before professional quote unquote quote unquote professional management came in.
And it's this quote that came that I read one time about Steve Jobs, and it says he remade
Or he made and remade Apple in his own image.
Apple is stief jobs with ten thousand live.
This is something that appears over and over again. The leader, the founder of the company, the leader of the company, they imbibe, they put into the company the personality.
Uh, it says uh one way of viewing silicone graphics in the mid nineteen eighties
is if an extraordinary willful human being
with great technical aptitude is permitted to create a large business organization
How will that organization behave?
By nineteen eighty four, everyone understood that it would behave like Jim Clark.
Which is to say that it would behave as no big successful American company had ever uh behaved.
It would be a loose collection.
of argumentative
Brilliant.
Bullheaded engineers.
Who might or might not make money.
but almost certainly would build something wonderful. I wanna read that part.
One more time'cause I think this is very interesting.
It's a collection of loose argument argumentative, brilliant, bullheaded engineers who might or might not make money, but most certainly would build something wonderful.
And so from the board of directors to people that own the equity in the company, you can see their perspective, like, hey, we got great technology, we're not making any money.
We're gonna keep the great technology. We don't necessarily have to improve the great technology. We're gonna put this put this layer of people to actually know how to run a business.
And the result is they wind up making a lot of money for a short amount of time until there's they get disrupted. But the point of this is like you see both sides
If you're the founder, you're not gonna wanna work in this environment. You made a drastic mistake, uh, in the sense that you gave up way too much equity.
And you gave up way too much control and then you're surprised the people with the money and the equity and the control get to tell you what to do.
This is why you and I, I feel, talk about this a lot, where I really do believe
That a lot of people think entrepreneurs are in it for the money. And I think if you ask them the control, the independents and the control.
is worth a lot more than the money and the kind of
Usually ego that are associated with founders and entrepreneurs.
they're probably think, hey, if I have the independents on the control, I'll get the money anyways.
Uh so it says McCracken brought in layer upon layer of people more like him.
uh indirect managerial diplomatic policy minded
These people could never build the machines of the future, but they could sell the machines of the present. That is a great line. So Jim and his crew, they're building the machines of the future.
These quote unquote professional managers can sell the machines of the present, and they did this very well. For the next six years, Silicon Graphics was perhaps the most successful company in Silicon Valley. The annual revenue swelled from a few million.
Two billions.
At the same time, McCracken dealt Clark
Out of his own business.
And so this is when Jim is looking for something new. He realizes hey we have these expensive work stations
They're fantastic, but there's this.
Parallel revolution happening.
In personal computing.
And I think the important point here is not to give you like a history of silicon graphics, but the I what's behind
Jim's idea.
Because that could be applicable and useful today. And so he knew. He's like
They he might he might not be calling it in the innovator's dilemma, but he knew that
It happens, and so he has the idea.
And the willingness to avoid the innovators' dilemma. And so it says Moore's law came with a social corollary.
High tech.
could not remain high tech for long. Right now they are high tech. That's why. And they're making the transition, right, to the personal computing revolution. You might be the smartest engineer in the valley and you might have built the most sophisticated computer, but it was only a matter of time before some schlep with a PC wrote a program that let him do everything you could do at a fraction of the cost.
And so then he gets into this idea of like how do we avoid
being disrupted. Clark thought that Silicon Silicon Graphics had to cannibalize itself. For a technology company to suc to succeed, he argued, it needed always to be looking to destroy itself. If it didn't, somebody else would.
It is the hardest thing to do in business, Jim would say. Even creating a low cost product runs against the grain because low cost products undercut the high cost, most profitable products.
Everyone in a this is he's just describing human nature, right? This is why this this occurs over and over again, or part of one of the reasons it occurs over and over again. Everyone in a successful company from the CEO on down has a stake in whatever the company is currently selling.
He's describing what's taking place in his career, right? It does not naturally occur to anyone to find a way to undermine that product.
Clark.
thought he knew how to become the agent of his own creative destruction, and he was prepared to do the deed.
He wanted Silicon Graphics to operate in the same self corrosive spirit.
And you can imagine what happens. If you try to go and you you look at it from McCracken, the guy running the company, right? It's like
I'm not gonna listen to Jim.
Like you guys ha made this great invention, but you weren't making any money. I come in here, I take you from millions to billions, and now you're telling me I have to undercut all these profits that I'm making because of these cheaper, inexpensive computers.
So McCracken obviously doesn't agree, Jim winds up just essentially like retiring on the job, which I'm gonna get to
Um right now. But there is I don't think I have the highlight, but I remember reading it. They go over the revenue. So sure, yeah, he he jumps in.
Brings it up, but then it gets to a peak and then it just drops off just like Jim t said it was going to.
So what I found interesting was that the fact that Jim wasn't happy with his company
S cause him to search for a distraction. This happened.
In the life of Walt Disney.
in between the problems with his animation studio and him finding a new outlet for
uh his creative output which is winds up being Disneyland and his obsession with amusement parks.
He would stay at home and he'd and he built like this
tr giant train that he would actually get on and ride.
And it was in his backyard.
And people would come over and they're like
This is
the the world's greatest innovator in animation and I can't get him to come to the studio all he wants to play
He like all he wants to do is play with the train all day long.
Jim's doing the same thing with toy helicopters.
In the middle of a weekday, when the neighbors were all at work, Jim would take out his helicopter kit and fly.
Soon enough Clark had become obsessed with his little choppers. He would put them together in the garage, then take them out and fly them around the neighborhood.
His wife would come out of the garage and see this forty seven year old man bent over the ground piecing together a toy designed for a small boy.
He would stand out there for hours in the middle of the day, in the middle of the week.
Executing takeoffs and landings.
Of these giant toy helicopters.
So eventually he makes his departure from Silicon Graphics.
Formal This is again, I d I just think there's like a handful of themes throughout the Snier book that are just you see it in different points of his life.
And it's this idea that he really does use revenge as motivation, which I think is he's not alone in, by the way.
Um, but he's gonna say, Okay, my solution is
I'm gonna make myself very rich. I'm gonna get out of this company. I'm gonna start a new company. I'm not gonna make the same mistakes I did with the last company. So says Jim Clark was gone. He'd up and left the company he created and said he was gonna start another.
Publicly he said he was leaving on the best terms. Privately he told friends that he was gonna show fucking Ed McCracken, that it was he and not McCracken who had been responsible for the success of silicone graphics. He told the engineers who had helped him create
Silicon Graphics that he was gonna get rich.
I'm going to make a hundred million dollars, he said. If I do this next thing and I do not make a hundred million dollars, it'll be a failure.
I will be a failure.
So as he's searching what to do, he's introduced to a twenty two year old Mark Andreessen.
And something that Mark tells Jim
makes Jim realize, okay, this is the opportunity I was looking for.
Uh Mark had mentioned again that twenty five million people were now using the internet and that their numbers had been doubling every year.
uh Clark recalls. I thought, Jesus, those are big numbers. I've never been in a business with those kind of big numbers. Eventually you were talking about all the people on earth.
All of a sudden it was clear to me. When I looked at the internet, I was looking at the personal computer in nineteen eighty five, Clark says. It was a slow, clunky technology, but people were using it and it would get faster.
I realised
That this was the thing
I had been groping there's that word again, I had been groping for.
And so this is the beginning of Netscape. This is also beginning of this crazy economic time in American history. That again, Jim's a fascinating character.
There's two reasons to pick up this book. I think he's just gonna change the way
It just he's got his own very unique way of doing life, let's just put it that way. And then also for this, it is like a time piece. It's like what was happening in this in this
One sector of the economy at this point in American history. It's just fascinating.
And one of the fascinating things is that
Netscape goes I think it's eighteen months.
after it was created. It becomes public. I need to get there first. This is what I mentioned earlier, how create the the story's just so wild.
Uh, so it says throughout March nineteen ninety-four, Muller had called Clark repeatedly and pleaded with him to be let in on Netscape. He apologized for the way he had treated Clark at Silicon Graphics.
Uh, obviously Clark is not gonna let him do this. On April first, Clark told Mu Mu Mueller for the last time that he would not be permitted to invest in Netscape.
He pleaded with Clark one last time and Clark rebuffed him.
Three days later
The day Netscape was incorporated, Mueller picked up a gun and shot himself through the head.
And before the book goes into Netscape going uh public in record time, this is just fantastic writing. The genealogy chart of Silicon Valley
Companies that decorated the walls of every office was a cheery face on a violent truth.
The new companies often put the old ones out of business.
The young were forever eating the old.
In this drama, technology played a very clear role.
It was the murder weapon.
Uh, there's a famous quote from Don Valentine who's the founder of Sequoia, and he says the art of storytelling is of critically important.
most of the entrepreneurs who come to us cannot tell a story. Learning to tell a story is critically important because that's how the money works.
The money flows as a function of the stories.
I feel Jim was a fantastic storyteller. Six months after he founded Netscape, Clark agitated for the company to go public. Jim was pressing for us to go public way before anyone else.
recalls Mark and Jason.
Eighteen months after Netscape was created, Netscape sold shares of itself to the public.
Uh those shares rose from twelve dollars apiece to f on the first day of training, those shares rose from twelve dollars apiece to forty eight dollars. Three months later it was one hundred and forty dollars a share.
There is only one explanation for its success. This is how I'm trying to tie all this together. This is what Clark said.
People started drinking my Kool-Aid.
Another way to think about that is what Steve Jobs said. The storyteller is the most powerful person in the world.
This is the difference, though. This time
Jim Clark had the power and he kept the power, and you see that in who got rich off this IPO. Anyone who bothered to read the prospectus discovered a curious fact. The venture capitalists and the new CO, this guy named James Barksdale, owned a few milli million shares each. In the end, they made hundreds of millions of dollars from Netscape.
Uh and they had no reason to complain. But the young engineers whom Clark had pulled together to create the company also became rich.
Clark made certain that Mark Andreessen did not suffer the same fate at the hands of the venture capitalists as he himself had twelve years before. After the IPO, Andreessen was twenty four.
And worth eighty million dollars.
Clark also made sure
Yeah, by the by the
That by far the biggest stake in the company belonged
To himself.
Clark became the valley's newest billionaire.
Jim Clark was fifty one years old.
So I wanna pause there because as I'm reading this, it made me think
I read Mark Mark and Dreeson used to be a prolific blogger. Um you can go to his site for free, or if you just go to the show notes on episode fifty, you can download a two hundred page blog archive of Mark's great uh some of his best posts. I did a podcast on that years ago.
I have no idea. You can never predict like how people react to things.
I get messages
Every week.
About people discovering that podcast now and listening to it and seem to really like it.
It makes me think I should reread it and do another podcast on it.
But
Something that Mark said in that blog post was it was talking about like it's obviously positioning for founders and he's like, Listen, recruiting is one of the most important things you you have to do to ensure the comp your s the success of your company.
But it's also one of the most difficult and he talks about
Even Jim Clark had a problem with this because
Once NetScape
uh goes public there is
Other engineers that that were offered the job by Jim Clark, but said no.
And they wind up taking r they're in the book as well. They wind up taking more risk later on after this happen because they're like, Hey
We were the A team. We all said no, Jim built this company with a B team.
We are making eighty thousand a year.
These guys are making millions, how did this happen?
And you know, who knows who's A or B, like these are just personal opinions. But
The point being
Uh the why I'm telling you this is'cause you tie the this back to just how difficult it is to recruit truly great talent. And so Mark is writing in his blog and he says
As a founder of a startup trying to hire a team, you'll run into this again and again. When Jim Clark decided to start a new company in nineteen ninety four, I was one about a I was one of about a dozen people at various Silicon Valley companies he was talking to about join me joining him in what became Netscape.
I was the only one who
Who went all the way
to saying yes. So think about that. Uh he's talking to at least a dozen people.
He's recruiting.
I'm the only one.
One out of twelve.
Eleven people said No
I'm not gonna do this, right?
So it says I was the only one who went all the way to saying yes, largely because I was twenty two and had no reason not to do it.
The rest flinched.
And didn't do it.
And this was Jim Clark.
A legend in the industry who was coming off of the most successful company in Silicon Valley.
Silicon Graphics Incorporated how easy.
Do you think it's going to be for you?
So skipping way ahead. If you buy the book and read the book, uh
I would say like maybe thirty, forty percent of the book is this idea well, probably thirty percent of the book is this cr th this transatlantic sailing expedition that Michael Lewis and Jim Clark are on together. Main part of the book is the fact that
Jim did a lot of some of the some of the stuff he did was to get public fast so he could buy this giant sailboat and then he wants to make
It's like one of the world's largest sailboats, but also he wanted to make it like completely automated and computerized and so
Michael's on this crazy trip across the Atlantic with them, which is interesting, but a lot of that's omitted because it's kind of outside the scope of the discussions that you and I usually have, right?
But I just want to point in
Or put in rather.
Uh, just this again, it goes back to the same theme, that there is really no distinction between work and play for
For Jim Clark, and then he figured, okay, what what's the role that I want to play? And let maybe make sure I define design my environment so I'm always playing that role.
To the casual observer.
Uh no casual observer could say when Clark was working when he was playing. This was because to Clark's way of thinking the big distinction wasn't between work and play, but between creating new technology for money
and creating new technology for pleasure.
In part it was because there was no distinction at all. So he's going to leave Netscape.
He's now he's gonna go found his third billion dollar technology company, but it's really about the role and d making sure you're designing the job that you want. What's the point of being an entrepreneur if you don't do that?
Uh, having learned now he's finished with Netscape, having learned from Silicon Graphics that he did not really belong inside a large organization, he designed all future large organizations without a place for himself inside of it.
He kept the title of chairman.
And sat on the board.
and held on to most of his shares, but really he didn't do much but attend a few meetings and trouble the company's new chief executive with his various premonitions about what was gonna happen next.
So after Netscape he has this idea
Where he's gonna work in he's gonna revol u use the internet to revolutionize use the internet software, I should say.
To revolutionize the healthcare industry, he's gonna start this company called Healthy on.
I think at one point
in the public market. It's crazy. There's a story in the book where they try to
Take IPO.
No one wants to do it. Five months later.
It comes out in an insane number and I think
goes all the way up to like fifteen or sixteen billion dollars.
In market cap.
And had I think
Nothing but losses.
That's another reason I think the book is interesting to read because you have all these
economic data points that just seem unusual, I guess is the way to put that. This is one example of this because
Because so many people Jim Clark being one of them
just make an unbelievable amount of money in a rapid time. This is an example of that.
Uh, before Netscape went public, a lot of venture capitalists had thought that John Doer
uh and his firm Kleiner Perkins had been mad to agree to Clark's terms.
Clark had charged him
Three times the going rate for startup capital.
And in the end, it didn't make a difference at all. John had cleared five hundred million dollars.
In eight teen months.
Or thirty times his origin his original investment.
So on this next company, one of the co founders, I think he's a co founder, I'm pretty sure he's a co founder of Health Eon. It's this engineer named Pavan. He makes or Paven maybe, he makes the point. I'm just gonna read what he said because
What's fascinating is if you read about Steve Jobs, he says this is the beginning of his career.
the middle of his career and the end of the career, and he talks about the fact that
There w in the technology industry and I think there's a lot of other things like this. I would argue maybe literature, like authors are definitely like this.
Movies.
I would argue that podcasts are the same thing.
But that for most things in life the range between this is Steve talking, for the most things in life the range between the best and the average is thirty percent or so.
The best airplane flight, the best meal, they may be 30% a better than your average one. What I saw with Wozniak was somebody who was fifty times better.
than the average engineer.
In fact, yesterday let me pull it up
I was rereading my uh highlights from that book in the company of Giants.
Uh, that's Founders episode two oh eight. If you haven't listened to it yet, I highly recommend you listen to it after this one.
And
There's something in this book that I thought was interesting. Because it that book is uh it's published in nineteen ninety seven. It's two Stanford NBA students who are interviewing
sixteen technology company founders.
uh Bill Gates, Steve Jobs, all these people on there. And Steve says something in that book that is very similar again to what uh the the other quote I just read to you and what I'm about to read to you in this book.
And he says you must find extraordinary people in in the field that I was interested in.
I noticed that this is Steve talking. I noticed the dynamic range between what an average person could accomplish and what the best person could accomplish was fifty or a hundred to one.
Given that you are well advised to go after the cream of the cream.
That is what I that is what we have done.
You can uh you can then build a team that pursues
A plus players, and he says, Why?
Why is this important? One of the greatest quotes he ever said a small team of A plus players can run circles.
Around a giant team of B and C players.
And so Jim's co founder says the same thing, paven or maybe Paven.
Uh often said the difference between a great software guy and an okay software guy is huge. A great software guy is worth ten times an okay software guy.
Software was not like hardware.
Software was more like art.
And so this is what I was referencing earlier.
There you have this huge
Like there's a huge obviously bubble.
Right be before it pops, there's some there's like a pause, uh that happens. And so this is where they try, they're like, Hey, we had s we we took Netscape from zero to eighteen
I type up a company in eighteen months, that's try to do the same thing with Healthyon.
the market says no no no no chill out five months later
It's a very successful IPO.
But in between those two events
Jim did something extraordinary where he's like okay
The IPO is canceled. The company needs forty million dollars to keep going. And so he has this idea where you
Uh he has this metaphor of pigs and chickens, which I'm gonna describe to in a minute.
And so because at this point
No one wants to put up the money. He's like, Okay, fine.
I'll take I'm gonna get do the entire forty million myself. Get out of the way.
And then when he does that, all of a sudden they're like, Oh wait.
What does he know that we don't okay, we're gonna get in on it. So he says the only thing I could do is start him. His role in the valley was suddenly clear. He was the author of the story. He was the man with the nerve to invent the tale in which all the characters
uh agreed to play the role assigned to them. And if he was going to retain his privilege of telling stories, he had to make sure that the stories had happy endings. If that meant supplying forty million dollars more to Healthy on, then so be it.
Clark's willingness to take risks others shunned was
Was the source of his financial power. Clark's faith in his new enterprise was actually faith in his own imagination.
As a new enterprise was merely an extension of that imagination. The power of that faith was transforming.
One moment the financiers were wondering aloud where their forty million dollars is gonna come from.
The next moment they were trying to prevent Clark
From supplying the full amount.
and acquiring for himself an even larger stake in the company.
In the end, the bankers and the venture capitalists agreed to let Clark give twenty of the forty million dollars and they supplied.
The rest.
And so what he did is he turned chickens into pigs. And this is what he said.
Clark, this is one of my favorite things. I remember this from four and a half years ago when I read the book the first time.
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.
The pig game is life.
Chicken just laid an egg, right?
The chic is interested. The pig is committed.
If you're gonna do anything worth doing
You need a lot of picks.
Just one more example of the crazy swings in wealth that was occurring at this time.
Uh Clark reached for a cal uh calculator.
A O L, American Online.
had agreed to uh acquire Netscape.
AOL had agreed to swap point four five of its own shares for each outstanding share of Netscape.
Clark owned fourteen point two million shares of Netscape.
He punched
Point four five times.
Fourteen point two million into the calculator.
Which means that he owned six point three million.
AOL shares, he multiplied six point three million by one hundred and seventy four dollars and fifty cents.
One point one billion dollars was the result.
They find us out the day they come back from that.
Transatlantic.
sh uh ship expedition they were doing in our ten days at sea, the value of his holdings had nearly tripled.
And his response here was fantastic.
This is fantasy land, he said.
Putting his calculator away.
And just two paragraphs for you, real quick. Again, this idea that the internet has massively broadened the possible space of careers, and most people haven't figured this out yet.
And the fact that there is always new opportunities, the internet created many opportunities for people like Clark.
Outsiders.
trouble makers to think thoughts that would turn entire industries on their heads.
And it's the part about there always being new opportunities. Once we admit that there is room for newness.
That there are vastly more conceivable possibilities than realized outcomes. That's fantastic. More
possibilities and realized outcomes.
Vastly more conceivable possibilities than realized outcomes, we must confront the fact that there is no special logic behind the world we inhabit.
No particular justification.
For why things are the way they are.
And I wanna close on this. I'm gonna read my note first.
Лет'єдея deep into our mind. It will never be enough.
And this is what I mean by that.
One evening as we sat in his kitchen, I reminded Clark that he had said that once he became a real after tax billionaire,
He'd retire.
He said without missing a beat.
I just want to make more money than Larry Ellison, then I'll stop.
I pointed out that he had never before mentioned this ambition.
I don't know why, he said.
But once I have more money than Larry Ellison, I'll be satisfied.
So then I asked him, What happens after you have more than Larry Ellison?
Would you want to have more money than say Bill Gates?
Oh no.
Cars said.
That'll never happen.
A few minutes later, he came clean.
You know, he said, just for one moment.
I would kinda like to have the most.
Just for one tiny moment.
It was one of those tiny moments when it was good to have a record of our conversations.
Just a few months before when he was worth a mere six hundred million dollars, Clark had said
I just want to have a billion dollars after taxes and then I'll be satisfied.
Back further before he started Netscape.
He had told Mark Grossman, one of the young engineers who'd helped him create silicon graphics, something similar.
Jim came into my office just before he left to start Netscape and said
I'd really like to have a hundred million dollars.
Back even further.
Before he started Silicon Graphics, he told Tom Davis that what he really wanted was to have ten million dollars.
The numbers.
They keep moving.
Why do people perpetually create for themselves the conditions for their own dissatisfaction?
Clark played these little tricks on himself.
So that he would have an excuse to keep running as fast as he could.
It was the same way with his resentments.
He treated those who had done him wrong in much the same way he treated those he did not like
Who had more money than he did.
They were all motives.
He needed people or places to doubt him.
So that he could prove them wrong.
The reasons he couldn't stop
were ultimately unknowable.
But I assume that the best and most lasting motive for wanting to change the way things are is to be unhappy with the way things are.
People who are unhappy with the way things are
tend to remain unhappy.
Even after
They have changed them.
the nature of their unhappiness is such that change
Does not slake it.
The difference with Clark.
Із даню то болів і ес посиліз.
Even after
He experienced its limitations.
And that is where I'll leave it for the full story. Highly recommend buying the book. It's a fantastic read.
You buy the book using the link that's in the show notes in the podcast player.
You'll be supporting the podcast at the same time.
If you want to use the same app that I use to store and remind myself of past highlights.
I use this app called ReadWise.
Readwise has been reminding and recommending highlights from this book.
For me for years.
You could try it for free for sixty days to readwise dot io forward slash founders.
That is two hundred and seventy four books down.
One thousand ago.
And I'll talk to you again soon.