The Silicon Valley Challenge E-Book

Christoph Keese

• Herausgeber: Penguin Verlag
• Kategorie: Geisteswissenschaft
• Sprache: Englisch
• Veröffentlichungsjahr: 2016

Seitenzahl: 442

Beschreibung

An Insider Report from the Centre of the Digital Universe

Silicon Valley shook the European economy to its core. American technology companies are the big winners of digitization. With the capacity to reach billions of people, they are aggressively making inroads into traditional industries. Digital Disruption poses a major threat to European industries such as: automotive, retail, logistics, healthcare, pharmaceuticals, banks, insurance companies and chemicals. No sector is spared from the onslaught of Silicon Valley - with dramatic consequences for workers in Europe. Who is behind Silicon Valley’s enormous success? How do the founders and investors think? Where does all the money come from? Why are their universities so successful? In short: How does Silicon Valley function? Christoph Keese, a Berlin-based author and top executive of Axel Springer, the highly digitalized publishing house, lived and worked in Silicon Valley for half a year on behalf of his company. He wrote an account of his experiences in this book. It is a gripping narrative written from the epicenter of the 21st Century: vivid, memorable and well-informed. His book has become a bestseller in Germany. It is now available in English for the first time.

Leseprobe

Silicon Valley shook the European economy to its core. American technology companies are the big winners of digitization. With the capacity to reach billions of people, they are aggressively making inroads into traditional industries. Digital Disruption poses a major threat to European industries such as: automotive, retail, logistics, healthcare, pharmaceuticals, banks, insurance companies and chemicals. No sector is spared from the onslaught of Silicon Valley – with dramatic consequences for workers in Europe. Who is behind Silicon Valley’s enormous success? How do the founders and investors think? Where does all the money come from? Why are their universities so successful? In short: How does Silicon Valley function?

Christoph Keese, a Berlin-based author and top executive of Axel Springer, the highly digitalized publishing house, lived and worked in Silicon Valley for half a year on behalf of his company. He wrote an account of his experiences in this book. It is a gripping narrative written from the epicenter of the 21st Century: vivid, memorable and well-informed. His book has become a bestseller in Germany. It is now available in English for the first time.

Christoph Keese

The Silicon Valley Callenge

A Wake-Up Call for Europe

English Edition

Translated by Zaia Alexander

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PENGUIN and Penguin Logo are trademarks of

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Copyright Original Edition © Albrecht Knaus Verlag, München

Copyright English Edition © 2016 Penguin Verlag

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Inhaltsverzeichnis

Preface to the English edition

Preface to the first German edition

THE VALLEY

The reluctant capital

Palo Alto: An explosive mix of mind and money

Analog work culture: If you’re not in, you’re out

Stanford and its founders: »I go to class to get some rest«

Exclusive boom: Real wealth is accessible only to the gifted few

THE CULTURE

Technology cult: Problems, give us problems

Boundless innovation: Nobody is spared the attack from below

High-velocity economy: The discovery of speed

Risk culture: Fail better next time

THE CONSEQUENCES

Scale or lose: Surviving in the platform era

Winner takes all: The power of monopolies

The brave new world of work: New uncertainties arise

No more secrets, anywhere: The era of real-time communication

Limitless feasibility: Uploading human beings to the cloud

THE FUTURE

Acknowledgements

Preface to the English edition

How do they do business in Silicon Valley? Why is the California technology hotbed so successful and powerful? Why does it spawn innovations faster, better and more radically than anywhere else in the world? In the past few decades, how did Silicon Valley transform from a fruit-growing region in California to the most powerful economic center on Earth? Why does Silicon Valley believe that everything is doable and that everything that can be done is always good? Why is it virtually blind to the social risks that follow on the heels of its inventions?

These questions have been fiercely debated in Europe for years. Almost every major European media outlet has joined in on the debate. Rarely does a day go by in which newspapers or websites do not run an article on the subject. What began as a discussion among intellectuals has now reached a broader public. Few subjects are presently capable of polarizing and rallying Europe more than digitalization. This is not because Europeans are inherently hostile to progress, but rather because they have specific notions about how participatory and democratic society should function. As concerned citizens, they want to actively shape the digital future and not leave matters to free – and often ruthless – market forces. They believe people with money should not be the only ones with a say, which is why regular citizens should get involved.

Silicon Valley, its products and the consequences of its inventions are being debated in Europe with almost the same vehemence as the refugee crisis, Greek bailouts, Brexit and the future of the Euro. The disputes between technology companies based in Silicon Valley and the political institutions of the European Union, as well as its member countries, serve as a barometer for gauging this somewhat troubled relationship. The lawsuits against Google, Facebook, Netflix, Amazon and Uber are just a few examples of the ways in which differing value systems can collide in such an impactful way. This relates to far more than simple questions of copyright law, tax codes or trade regulations. We are dealing with the question of how digital society should be managed, which is why it pays to learn the European point of view, even if readers outside the European Union do not necessarily embrace Europe’s opinions on the matter.

This book was published in Germany in the fall of 2014. The Vice Chancellor and Minister of Economic Affairs, Sigmar Gabriel, presented the book at a public event in Berlin. Numerous major news media outlets and networks reported in detail on the challenge that Silicon Valley poses for Europe. The public’s interest, particularly in the German business sector, could not have been greater. I have been invited to present myresearch andideas at over 100 lectures, interviews and discussions at the very core of German industry: executive boards and management teams, staff meetings, management conferences, and union town halls. Audiences came from automotive, computer, aviation, engineering, pharmaceutical, chemical, trade, food and many other fields. Literary circles, think tanks, churches and political parties were just as interested.

People everywhere showed a similarly keen interest in the key questions: How can we respond to the disruptive challenge presented by Californian companies? Is it too late, or do we still have a chance to catch up?

A comprehensive book on Silicon Valley was yet to be published in Germany, much less a thoroughly researched book based on a personally experienced, six-month sojourn in Palo Alto – the epicenter of the Valley. This may be a sign of how late Germany and Europe are in engaging, not only with an existential threat, but also the extraordinary opportunities that digitalization can offer.

Discussions with friends and colleagues in the United States have shown me that Americans living outside of Silicon Valley know nearly as little about this mysterious place as Europeans. I have frequently been asked when an English edition of this book would be published. Even in the US, there are not many books that offer a clearly written overview of Silicon Valley’s culture and way of life. This gap in the book market has encouraged my publishing company and me to produce an English-language edition.

This book was written by a European from a European perspective. During the translation process, we deliberately left the European viewpoint intact without altering or omitting any aspects of it. In other words, there has been no attempt to rewrite the book for an American market. All we did was delete some references to a few very specific German political matters, which would have bored and distracted foreign readers. It was our choice to preserve a decidedly European sensibility. We believe that readers can doubly profit from this book: they will gain a deeper insight into Silicon Valley and simultaneously learn about Europe’s view of the US technology industry and how they plan to move forward in the future. This dual perspective may help reduce the many misunderstandings and prejudices that have spoiled the climate of today’s transatlantic debates concerning the Internet.

Christoph Keese

Berlin, September 2016

Preface to the first German edition

»In a way, we are the canary down the coal mine and, unless we do something about it, we will be the first to be extinguished by the gases of file sharing.«

Peter Gabriel, Musician

In 2013, my wife, our three children and I spent six months in Palo Alto, the heart of Silicon Valley. At the behest of my employer, Axel Springer, a major publishing house based in Berlin, I explored the evolution of digital technology and how it affects the media industry. At the beginning of this research, I felt a certain amount of anxiety. Europe was undeniably behind the times. Why hadn’t the major technologies of the 21st century been invented here? Previously, almost all breakthroughs had originated in Europe. Binoculars, microscopes, trains, cars, penicillin, radio, television and computers, among many others. However, Europe lags far behind the most important technology of our era – digitalization. Not only did we not invent Google, Facebook, Apple, or Twitter & Co., we could not have invented them. These companies derive from more than the ingenious inspiration of gifted students. They are the product of a unique culture, which is bundled together under the somewhat vague signifier Silicon Valley. This culture is evolving at breakneck speed to affect mainstream culture of the digital age. Living in Germany during the Internet revolution is a bit like spending the 19th century in Lisbon. It is pleasant to live there but relatively out of touch and detached from the Industrial Revolution. We Europeans are witnessing Californian companies create a new culture of innovation that allows for technological breakthroughs and unprecedented entrepreneurial success. While an entire generation of talented engineers is growing into successful entrepreneurs and creating millions of jobs in America and abroad, legacy companies in Europe that are bound to traditional employment practices are still considered ideal role models. We are watching as billions of dollars of venture capital flows into the economy in America and revamps it from the ground up. We are seeing European wealth being siphoned to California. Californian companies make inroads into one crucial market after another and gain increasing shares of these markets through their brilliant products and superior skills. How they are able to enforce their ideas of rules and law, how they claim interpretive dominance over the digital world and how they decide what is modern or old-fashioned affects companies and individuals around the world. Furthermore, they are largely determining what the Internet should or should not be as well as which laws are applicable and which are not. The Internet does for the human mind what the steam engine did for human muscle. As Frank Schirrmacher, the late publisher of the renowned Frankfurter Allgemeine Zeitung (FAZ), aptly noted, the Internet increases the effect of human minds immeasurably. What does this mean in terms of the individual domains of our lives? This debate is constantly occurring in Silicon Valley, but it has only just begun for us. For far too long, Europeans were not concerned about getting into the debate, informing themselves or confidently defending their interests. Now this seems to be changing, and it is urgently necessary. This book aims to expand on this crucial discussion.

It would be easy to condemn Silicon Valley, but we cannot afford to take the easy way out. Silicon Valley thinks in a more complex way and with more sophistication than it might appear at first sight. The ability to actually do things and morality do not stand in simple contradiction to one another. Even the people who program for the NSA are not immoral, at least not in the way that whistleblower Edward Snowdon and his supporters blame them. They live according to their own morality – which suggests that all technological means should be put to use to prevent terrorist attacks and other evil, regardless of the negative effects on civil liberties. If you want to understand Silicon Valley, you have to deal withit on its own terms. The debate become more interesting when you look at both the ambivalence and complexity of this culture and additionally try to grasp its values, incentives to motivate and codes of conduct. My approach is to be as impartial as possible about Silicon Valley, to point out the opportunities and risks before weighing them against each other. I am particularly concerned with what these developments mean to us as Europeans and how we can respond to them.

Silicon Valley is a geographical location, a unique set of values and an exotic region on the other end of the world. However, it is also a cipher for a new era. Both are discussed in this report – the concrete valley and the spirit of the place that haunts nearly every location where modern people live today.

Every person who moves to Silicon Valley is personally challenged, given that they will inevitably be confronted by their hopes and fears. At first, everything seems puzzling, and only after a while do certain things start making sense. That is what happened to me, which is why this book is a personal account of how I got to know the Valley. To some extent, it is written like a documentary report, but it is essentially an empirical examination of facts, developments and prognoses.

I am biased when it comes to Google, as my employer has initiated a number of political and legal disputes with the company. These concern copyright law and Google’s abuse of its market dominance. Professionally, I am highly involved in these cases. Nevertheless, my intent with this book is to maintain a position of fairness and objectivity by presenting a balanced view. That has not been a problem for me because Google is also an esteemed business partner. We can be thought of as so-called frenemies – friends and enemies at the same time. Every technological era has inspired society to ask itself certain fundamental questions. That was the case with the invention of the railroad, steam engine, telephone, airplane and nuclear energy. These questions concern the clash of differing ideas about the future. Only an open discourse can ensure that societies open themselves to progress without abandoning their core values. Without such a discourse, the Internet can become a destructive totalitarian force depriving us of civil liberties and wealth. The best counter-strategy for Europe is to get more involved in technology and shape the future, rather than being shaped by it.

Christoph Keese

Berlin, July 2014

THE VALLEY

The reluctant capital

Silicon Valley is a powerhouse that controls the world’s knowledge, but those at the center of the Internet prefer to deny their own importance. The most powerful valley in the world looks like provincial suburbia.

We want to find out how the Valley, which could not be more inconspicuous, is changing our lives. It is February 12, 2013, and we’ve been sitting on the airplane from Berlin via Zurich to San Francisco for 13 hours. As the children sleep with their heads on our knees, Silicon Valley emerges into view. I am gazing out the window as we dive into the thick cumulus clouds over the Golden Gate Bridge. I have been here half a dozen times in the past decade, but the suburban character of this area never ceases to amaze me. I do not mean that the landscape is dull. In fact, it is grandiose. Spectacular even. Few places on Earth are more beautiful, but the buildings are uninspiring. Nothing has changed since my last visit. Boring. Yawn! The Valley is a world power on Valium, a power center hiding under an invisibility cloak.

There is no sign of global corporations, factories or research labs. You would think that the Valley would look totally different than it does. The home of Google should appear powerful, important and influential; but that is not the case. There are no high-rise buildings, industrial zones or villas with gigantic gardens. The tightly run Internet corporations, respected for their power to transform the rest of the world into defenseless digital colonies, are sitting in cardboard boxes made of concrete. Billions of people are being led into electronic dependence by these corporations, but why is it being done in such impersonal office parks? Don’t they get bored in there? If this is supposed to be the Rome of the Internet age, why doesn’t anyone build a capital? People say that building high rises in earthquake country is foolish, but San Francisco has done it, so why is the tallest building in Palo Alto only twelve stories high? That’s how high the entry halls in New York are for companies that don’t earn a thousandth of what Silicon Valley companies bring in. There are as many millionaires and billionaires in this tiny area of California than anywhere else in the United States, so why don’t they build pools in their backyards? To be fair, some do, but most choose not to. Why can’t the city planners come up with a better street grid than the ubiquitous checkerboard given the astounding spirit and genius that flows into the design of Apple’s products? On the way to San Francisco, our Airbus makes a 180-degree curve over Palo Alto, just as every other airplane does. The plane veers steeply on my side, and outside the window, there is this strange flat little town. Architecture students do not need to come here, but media managers do.

Silicon Valley is not even a real valley. The name itself is misleading. The Pacific lies to the west, and there are surprisingly few beaches along the coastline, but the Valley more than makes up for this in steep cliffs and a wooded ridge that slopes upwards, which is considered the western boundary of the »valley.« Placed under protection as a nature conservancy, it is sparsely populated. Half of Silicon Valley is more or less a jungle. There is no elevation east of the Valley. The flank of the hill slopes gently downward to San Francisco Bay. The mountains reappear 20 miles behind it, far beyond the other side of the bay. »Valley« sounds better than »hill flank«, which is what it actually is. The alleged Valley is 50 miles long and 20 miles wide. Ten miles of it are forest and grasslands, and only ten miles can be considered civilization. The whole area is barely larger than Berlin.

The poet Durs Grünbein once described California as the last speck of the West before the East begins. Airplane pilots must pay attention to their steering wheel if they don’t want to fly past Silicon Valley. One minute too long, and the plane will have already passed over. Our Swiss plane lowers its landing gear and rumbles above the small homes and flat office quarters of Menlo Park, a little town north of Palo Alto. In 2014, 26 billion dollars of venture capital will be invested here in the epicenter of the Venture Capital industry. Facebook even has its headquarters here.

According to a study, if the Internet were a country, within four years, it would economically outstrip every other nation in the world except for four countries. However, it cannot finance a real capital city, even though five of the six most visited websites in the world are based there: Facebook, Google, YouTube (owned by Google), Yahoo! and Wikipedia. The sixth website is based in China. Nevertheless, you will search in vain for any sign of grandeur. When you fly to New York, the skyline alone tells you how rich and powerful Manhattan is. New Yorkers flaunt what they have, and take pride in their self-confidence. Any city that has taller skyscrapers is a thorn in New York’s side. Los Angeles is also not known for its modesty. From an airplane window over LA, visitors behold wealth and luxury in the form of thousands of swimming pools stretching as far as the eye can see. By contrast, radical humility is the name of the game in Silicon Valley. From the sky, it reminds me of a small garden colony. Nothing stands out, and everything is in hiding, but the 21st century is being driven from here. Massive streams of money and data flow here from the digital economy. Never before have there been so few people who have owned so much information about everyone else in the world. And yet, Silicon Valley makes itself small. Coincidence or method?

San Francisco, located at the tip of a peninsula lying between the Pacific Ocean and the San Francico Bay, is a respectable metropolis, but in terms of population and surface area, it is smaller than Munich. The city also does not belong to Silicon Valley. The Valley, strictly speaking, consists of charming little towns with Spanish or dreamy-sounding names like San Carlos, Palo Alto, Mountain View and Cupertino, along with an ugly, tattered city named San José. With the exception of San José, the towns are of little importance. They would have remained insignificant were it not for the high-tech industry, which has come to be a godsend. These towns are tiny specks that have become home to world powers, including Oracle, Apple, Google, Intel and Stanford. In a way, these towns are delivering the dream of every ambitious mayor on the planet.

German companies like BMW, Audi, Volkswagen, Mercedes, Bosch, BASF and Lufthansa fear this area. Some of them have even set up major research centers here as a precaution. Angela Merkel, the German Chancellor, warned that Germany’s proud industries would soon be made obsolete by this former fruit orchard, which is all that Silicon Valley was until after the Second World War. Is this sounding of the alarm an exaggerated response or a legitimate concern? The heart of the Internet began beating in sleepy suburbs. Hewlett-Packard, Google and Apple were founded in places that are decidedly boring. Idyllic surroundings, yes, but they are utterly banal in terms of urban planning.

Our three children – aged eight, six and three – will attend the German school in Mountain View. German International School of Silicon Valley, GISSV, is located right beside the Google headquarters and the NASA Research Center. The parents of their classmates work for tech companies whose logos are recognized by every child in the country. Soon, our six-year-old son will think I work for Apple, as Apple is the brand of all my computers and phones. None of the other dads work for a publisher, namely because publishing companies are considered obsolete. They are seen as dinosaurs that never truly grasped the Internet. The big money is in platforms, not with the services themselves. Silicon Valley sees itself as a modern answer to the Industrial Age: production is out, information is in.

»A journey in search of the future,« wrote the media as we departed from Berlin. The media took interest, as it was unusual for a publishing company to investigate technology in Silicon Valley. Most other publishers tend to ignore technology as much as possible. What the media described as a »search for the future«, we prefer to see as a journey that will help get Europe back up to speed. For every General Electric, there was a Siemens in Germany; for every IBM, a Nixdorf; for every Kodak, an Agfa; for every Pfizer, a Hoechst; for every Sony and Samsung, a Telefunken, Grundig or Loewe. However, since the rise of digitalization, Germany has fallen behind, despite being a model country for decades. The Germans are ill at ease with the Internet. »Uncharted territory,« Angela Merkel somewhat clumsily dubbed the Internet, but she was spot on. The Internet is now roughly 30 years old, but the Germans have yet to discover a deep love for it.

SAP, Germany’s most recent international computer success story, was founded in the 1970s. With the exception of the network service provider United Internet, no major success in the Internet era has been based in Germany, and even United Internet has remained a mostly regional phenomenon. Germany was years late in recognizing the leading technology trends, from the search engine and social networking to the smartphone revolution. What are Californians doing better than Germans? Why are they able to attract so much talent? How did they get so innovative? Why are they so fast? For publishers, this is a vital question. Although they launched their websites in 1994, or shortly thereafter, the claim cannot be made that publishing houses always recognized important trends early on. Their websites were more like a carryover from traditional newspaper and magazine journalism. Publishers asked themselves too late about the meaning of search engines, about the nature of social media, why auctions are unavoidable, why algorithms can outpace human intelligence, why the cloud bursts value chains and why data is not only the currency for many things but may also represent the greatest value of all in the future.

As the plane touches down in San Francisco, I am overwhelmed with a mixture of feelings of home and of anxiety. I feel at home because I know my way around here, yet I feel anxious because I know that my profession in Silicon Valley will be met with little respect. Journalism that is financed independently is not part of their mission. I have advocated that aggregators like Google pay royalties to publishers, but will they hold it against me? Will anyone want to talk to me? I imagined many things as we landed but had not considered the reality I found. Silicon Valley was totally open to us, which ran contrary to my initial concerns. They were willing to to answer every question and to actively engage in every conversation. The journey begins in Palo Alto, the center of this valley of innovation.

Palo Alto: An explosive mix of mind and money

Palo Alto started a revolution that is shaking the world. How did a university town in the middle of nowhere transform into a hotbed for innovation in the 21st century? By inspiring their students to reach for the stars and work for themselves, rather than huge legacy companies.

The exhausted passengers climb out of their seats and are greeted by a mild breeze. It is 66 degrees. This comes as a welcome relief from Berlin, where we had departed under conditions of ice, snow and plenty of backslapping: »Have a great vacation!« Going to work in California seems like a contradiction for most people. After suffering through the usual visa bureaucracy, we pick up our rental car – a seven-seater Toyota – and head south on Highway 101, the main artery of Silicon Valley. Clouds cling to the coastal mountaintops and drift slowly down to the airport. San Francisco is a bad weather trap. Mark Twain was right when he aptly quipped, »The coldest winter I ever spent was a summer in San Francisco.« However, it has an amazing microclimate. After only a few miles, the sun shines through, and the temperature rises by five degrees Celsius. Few places in the world experience such a massive fluctuation in temperature in such a short distance. During the hottest summer months, there is a 15-degree Celsius difference between San Francisco and San Jose. Palo Alto, located only 40 miles away from San Francisco, is sunny and warm throughout the year. Deciding whether to live in San Francisco or Silicon Valley means that you will either freeze or sweat, live in a city or a town. Rarely can you attend a dinner party in the Bay Area without someone starting a passionate debate about which of the two is a better place to live.

The freeway is pitifully run down. Stretches of road are missing lane markings, guardrails are rusty, thick strips of truck retread lie haphazardly and potholes abound. Wealthy citizens in a poor country is also the plight of California, not just Italy. The Golden State is living under precarious conditions. At times, employees don’t receive their salary for weeks and service providers barter rather than get paid in cash, while schools and other institutions have to rely on their own resources to get by. Only the wealthy communities in Silicon Valley are doing well, and that’s due to their robust tax revenues. With close to 7000 residents, Palo Alto is one of the wealthiest communities in the US, but the city does not make a big deal out of it. Modesty is civic duty number one. A run-of-the-mill sign on the highway plainly states: »Next 3 Exits Palo Alto.« If you’re distracted, you’ll race right past it.

There are no inscriptions in the mountains, like the famous Hollywood sign, or the fancy street signs in Beverly Hills. We exit on »University Avenue« and head for Stanford, the top university of the Internet Age. Even so, the exit sign looks like any other: green, no-nonsense, with glittery studs that reflect at night. The community provides for few extravagances. Just beyond the freeway, we discover a carved, colorfully painted city limits sign made of cedar that says, »Welcome to Palo Alto.« It was likely donated by the Rotary Club. The community expresses its wealth by watering its trees, flowers and lawns more than anywhere else in draught-ridden California. The desert landscape of the Golden State is normally yellow as straw from April to November, but in Palo Alto, the drought gives way to a veritable Garden of Eden. Tall trees line the streets, each of them pruned to perfection. Front yards flaunt luscious flower beds and colorfully painted wooden fences surround the properties. Open verandas with white rocking chairs sparkle in the sun. The perfectly trimmed hedges allow an unabashed view of well-kept houses. Nothing is hidden; everything seems open. Sidewalks invite you to saunter along, and people stroll down the streets wearing straw hats, white trousers and loafers made of linen or leather. We see a man wearing a red and blue wide-striped jacket, who looks as though he is on his way to an outing in the English countryside, when he is actually heading for the nearest Wells Fargo ATM. Students walk around in shorts and flip-flops. Not a single cloud serves as a reminder of San Francisco’s chill. »Why are the powerlines hanging on poles instead of under the ground,« my children ask. It’s true, powerlines and phone cables dangle like black spaghetti on the brown waterproofed trunks in the humble metropolis.

University Avenue leads to the tiny town center, which consists of a main street of shops, and a few more shops on the side streets. There is no pedestrian zone, and cars are allowed to pass through. Even so, the place attracts a sizable crowd. The sidewalks are teeming with people, and the cafes and restaurants are always filled to capacity. You’re out of luck if you don’t make a reservation. At the most popular restaurants, like Evvia on Emerson Street, you have to reserve a table weeks in advance. The trees are still covered with Santa Claus decorations and Christmas lights. Small town, student metropolis, center of commerce and hippy commune… that’s Palo Alto in a nutshell. We drive past a yoga shop, a shop for esoteric paraphernalia and an Indian song bowl salesman. Across from the baguette shop, there are about a half-dozen casually elegant furniture stores, Middle Eastern fast food restaurants, and the University Café, where billion-dollar deals are made. People are lining up at a homemade waffle and ice cream specialty shop, Samsung is remodeling a bankrupt bookstore into an incubator for startups, and there is a huge bike shop, cafés, hairdressers, kiosks and three arthouse cinemas. These cinemas are a phenomenon: Stalwart holdouts against mass culture. They only screen classics from the 20s and 30s. Blockbusters are taboo. A charming antique shop has also survived. I found Lincoln’s Gettysburg Address in a variety of original editions for sale there. A few days after we’d arrived, I was browsing around the well-stocked store, but left empty-handed. Intellectuals compose the majority here, much like you would find at Harvard or Oxford.

Palo Alto is the opposite of New York. The city’s rise from quiet university town to epicenter of a global industry is largely due to Manhattan’s decline. Big finance had its heyday in the 1980s. Stockbrokers, realistically portrayed by the fictional character Gordon Gekko in Oliver Stone’s film, Wall Street, provided a role model that millions of young people uncritically sought to imitate. Getting rich quick, without creating something of lasting value, became the epitome of the American dream. Landing a job in investment banking, buying out businesses cheaply, gutting them, selling them for huge sums and earning a fortune in the process – that seemed like a worthwhile career for many people.

The torrent of fraud scandals and the stock market crashes of 1987, 2000 and 2008 brought this model to its knees. International backlash against the Wolves of Wall Street turned admiration into criticism and rejection, and a new generation of high school graduates deliberately distanced themselves from this soulless form of capitalism. Essentially, New York lost its mojo. Many students, who previously would have majored in business, chose to instead become engineers and programmers. The invention of the World Wide Web offered them an exciting career alternative, and this new generation gathered on the west coast. The universities turned into hotbeds of traditional engineering arts mixed with entrepreneurship. Inventing things of lasting value became an unspoken contract. Palo Alto promised a purpose in life, and New York’s financial community could do very little to counter it. Over time, the computer industry replaced New York’s financial industry as a key sector. It was the start of a new era and the sleepy town of Palo Alto began exerting the same magnetic appeal that New York once had. It was the cool place to be. Silicon Valley transformed itself into the hotspot of the modern age.

As visitors, we sense this atmosphere immediately. Palo Alto is not a ghetto for corporate mercenaries, such as La Défense, located just outside Paris. Palo Alto is hip, nonconformist, unconventional and sophisticated, yet also laid back. The first order of the day on our first weekend: buy a pair of shorts, flip-flops, canvas shoes and linen trousers. A single suit could fit within the 50-pound limit for my suitcase, but in the six months I lived in Palo Alto, I never wore it once.

Everyone who arrives here gets a whiff of this revolutionary spirit. For generations, California has been home to rebellious thinkers. A land far removed from the government in Washington, it has always gone its own way. Outside-the-box thinkers and revolutionaries are a fixed feature of the landscape. The influx of engineers in the 1990s mirrored the hippie revolution that the area experienced in the 1960s. Nerds and hippies have more in common than meets the eye; namely, they share an urge to challenge the establishment. San Francisco, the city of flower children, subversives, drug gurus and the »Summer of Love« in 1967, along with the Haight-Ashbury district, gradually transformed into a city of entrepreneurs, and the surrounding communities like Palo Alto followed suit. Hippie manes and batik shirts were replaced by hoodies and Mark Zuckerberg-style tank tops. The spirit of 50 years ago has remained, ever since the days of the Monterey Pop Festival, a symbol of the hippy movement and a battle cry against the establishment. Back then, the rebellion started with music, but today it comes in the form of technology. Computers are what revolutionaries had been waiting for. You can attack existing power structures with them, exerting little effort, but having a huge effect. Computers are far more efficient than sit-ins, demonstrations and hash brownies. Everyone can participate in this revolution. Outside-the-box dreamers are scheming to eradicate big banks, telephone companies and auto multinationals, only – unlike in the sixties – they are doing it through legal means. They are not winning with sabotage, but rather competition.

Palo Alto is an idiosyncratic blend of mind and money. Its willingness to call everything into question is surpassed only by its compulsion to reinvent everything. The ruling order should be beaten by its own means, and the successes of this subversion are significant. Ironically, the hippies of yesteryear are now being exiled from their urban habitats. Their tech successors have indeed taken up the social energy of the Sixties, but they have created an entirely different scene. No self-respecting Googler would have anything to do with a real hippy. Consequently, the gentrification of entire neighborhoods is inexorably progressing.

Those who wish to change society become programmers, unlike in Germany, where socially committed people enter the world of politics. It is hardly a coincidence that Apple was founded around the same time as the Green Party. Palo Alto spawned Steve Jobs, while Germany’s city of Frankfurt brought forth Joschka Fischer, one of the founders of the »Greens«, a party devoted to environmental issues. Fischer’s stellar political career sent him to the top of Germany’s federal government. Both men were similarly radical in their approach. Fischer, a professional revolutionary in his youth, threw rocks; Jobs smashed the monopolies of Microsoft and IBM. The two men differed in their means, but not in their demand for change. Apple’s legendary slogan (»Think Different«) could equally apply to the German reformer. Interestingly, Apple used the same heroes for its commercials as the Green Party did in Germany: Mahatma Gandhi, Martin Luther King, the Dalai Lama and Albert Einstein.

In the early 1980s, I was an exchange student in Silicon Valley. The Valley was already famous for its technology industry, but back then, the arms industry was calling the shots. The Moffett Federal Airfield, located between Mountain View and Sunnyvale, had served as the main military airfield in the region since WWII. Key corporations from the military-industrial complex, including Lockheed, settled in the area. They formed the nucleus of the burgeoning high-tech region. Pressures of the Cold War led to increasingly sophisticated electronics for long-range missiles, early warning systems, aircraft carriers, submarines and satellites. Corporations rallied around the military base in San José and the NASA Research Center in Mountain View, reaping billion-dollar contracts from the armaments programs. Silicon Valley was essentially an outpost of the Pentagon, so products for civilians were of little interest. The Internet was elitist in its early days and considered part of the military arsenal. Only the army and universities were allowed access; the public was largely relegated to the sidelines. The Internet was a matter of national security. It was supposed to secure communications when Russia’s nuclear missiles struck. The thought was that at least the data would survive a nuclear war.

The first networked computer I ever saw was in Palo Alto, in the summer of 1980. It was so new at the time that I could not comprehend what I was looking at. It was a muggy afternoon at a schoolmate’s home. His family had belonged to the Internet elite back then. His father was researching secret projects for the Pentagon, his mother taught engineering across the street from Stanford at Palo Alto High School, and his uncle was the legendary world chess champion, Bobby Fischer. These people were probably the only ones who knew where the chess genius was hiding, but they never revealed his whereabouts to me. The Internet hadn’t reached beyond those circles. In the family’s den, they had set up a game console without a monitor. It was connected to Stanford’s central computer and printed its electronic answers to our typed-in data requests on endless rolls of paper using a dot matrix printer. It was located between pennants and coffee cups… a do-it-yourself gizmo that would soon grow obsolete. The Internet, inconspicuous and plain, in no way indicated its future importance.

At the time, I was thinking about staying in California and studying there, but ultimately decided against it. Today, I would have responded very differently. Today, those lucky enough to land in Silicon Valley as exchange students would likely do everything possible to get into Stanford, land a job at Google, Facebook or Apple, and possibly start their own business at some point in the future. Back then, however, things were a lot different. No one from my year, including me, felt like living there. A career in the arms industry? Inconceivable. At home, we were demonstrating against Pershing, and Silicon Valley was where they were being built. I had dreamed of working in media or film, so Hollywood, not the computer industry, captured my imagination. Our heroes were George Lucas and Steven Spielberg, the great visionaries of the day. We’d heard of Steve Jobs, but his big break with the Macintosh would not come for another four years. Jobs was a nerd. He was a man who produced writing tools, whereas Lucas and Spielberg wrote screenplays. Steve Jobs was a tinkerer, technician and supplier. Apple, a rinky-dink garage business, wasn’t hiring.

Today, the military presence has shrunk to nearly zero. Palo Alto could hardly be more civil – a city straight out of the manual for perfect communities. It is not just rich, but also extremely civic-minded. Public transportation is free, so you simply climb aboard. City buses are covered with ads that have smiling faces praising the city’s clean, natural environment: »Free Shuttle – Just hop on.« The town boasts a communal swimming pool, five public libraries, a stately town hall, an opulent art nouveau post office, plenty of parks and swanky schools.

The citizens treat their city as though it were a gift. No effort or expense is too great for them if it enhances their quality of life. The main library, luxurious by any standard, is undergoing an ambitious renovation. Admission to the swimming pool costs one-fifth the price in Berlin. City Council meetings are well attended; if you’re called upon, it goes without saying that you run for office. Greeting a stranger on the street is commonplace, and a weekend without street festivals is the exception, not the rule. The town is teeming with churches of every major religion and faction. Rude, big-city behavior is frowned upon. Most intersections don’t have traffic lights; instead, four stop signs are usually placed on each corner. When cars meet at the crossing, drivers make eye contact and give a friendly wave to signal if the other has the right of way. People prefer to wait a few seconds over being the first to drive through. In Berlin, people would buy satellite equipment if it helped them determine who arrived first at an intersection. This is not the case in Palo Alto. No one here insists on having the right of way. Interestingly, in a meritocracy, where status is determined by achievement, the rules of the road also seem to function better.

Second only to Stanford, the astoundingly beautiful Palo Alto High School is a point of pride within the town. It is much more beautiful now than it was during my years as an exchange student there. It is also significantly larger after they renovated and expanded. Spanish-style white stucco buildings surround a sprawling palm-lined lawn. Baseball teams train on giant fields, and the school even has a church and their own theater. Beside the school is »Town & Country«, the most beautiful shopping center in the city; its wooden buildings add a charming, rustic touch. The students’ lockers are located outside under the open sky. Academic life generally takes place outdoors whenever possible. Palo Alto High is not the only one renowned for its ambitious standards; all the other public schools are also good, as Palo Alto is a wealthy community. I’ll never get used to this equation, but for Californians, spreading the wealth through public funding is tantamount to socialism. Through lavish private donations, Paly, as the school is lovingly called, students are assured of getting the best possible preparation for Stanford.

After having children, some wealthy Asian residents purchase one of the million-dollar homes in the town. They don’t actually live there; they do so in order to be legally entitled to enroll their children at Paly. This is the ultimate dream of Tiger Moms and Helicopter Dads. You constantly hear stories about residence fraud: foreign parents pay residents to use their address so they can falsely register their children. That being said, there is one good thing about the Paly cult: It is considered a matter of honor to donate money for public schools. Public schools are a moral duty, whereas private schools are frowned upon. This is highly unusual for the United States.

The town doesn’t make a big deal out of its own history. It lives for the future. Everything that denotes the past has disappeared, including, for example, the garage where William Hewlett and David Packard founded their company in 1939. It still stands today, but it belongs to a private home and is not open to the public. A plaque in the front garden serves as a small reminder of the founder. Anywhere else, such a site would draw hordes of tourists and souvenir shops would clutter the streets. Palo Alto is different. If you don’t know where the garage is – 367 Addison Avenue – you won’t find it. We moved in with our family around the corner on Lincoln Avenue. We only discovered the HP garage by chance. The same goes for the Medallion Rug Store on University Avenue, a carpet dealer who made innovation history by renting offices to Facebook founder Mark Zuckerberg. Nearby, Steve Jobs would constantly check how his equipment looked in the display window of the Apple Store. The electronics business where Apple was invented is also nowhere to be seen. Steve Jobs and his co-founder, Steve Wozniak, still in their twenties, had produced computer boards for the business until the owner asked them to screw the components together into a finished device. They did so reluctantly, as assembly kits were considered more hip at the time. Who would want to buy a readymade computer? Regardless, Jobs and Wozniak needed the money, and the Apple I was born. The electronics store later went bankrupt. An erotic shop moved in, but that is history too. Apple’s founding site has simply been forgotten. Relics are being collected at the Computer History Museum in Mountain View, which is a worthwhile place to visit, by the way.

Slightly more conspicuous is PARC, the Palo Alto Research Center, located in the mountains above the university. PARC was commissioned by the Xerox photocopy Corporation to conduct basic research. The mouse and the graphical user interface were invented here. Xerox did not know what to do with it at first, but Steve Jobs copied the idea. A friend had brought him to PARC, but Jobs only went because he was forced to. Fortunately, he recognized the potential of the technology and ended up building his computer around the idea. Without PARC, smartphones and tablets would not exist today. Despite that fact, nothing has been placed there to commemorate this history. All you will see is a flat, nondescript bungalow in the mountains.

The mixture of mind and money always ignites where creative brains gather. The spark races through the city, randomly flaring in every direction. Even insiders find it difficult to follow the course of innovation. Projects usually begin somewhere on the university’s campus, in one of the many cafes, on a sunny field, or during a pick-up game on a basketball court. Whenever two or three like-minded people begin concocting something, they gather together and create. The university also offers rooms free of charge. Startups usually camp out in the back rooms of venture capitalists, in the kitchens of shared apartments, dorm rooms, coworking spaces or incubators. They don’t need more than a kitchen table and a laptop. Shutting out the world around you is part of the place’s spirit. Palo Alto has its eye so focused on virtual future worlds that the inconveniences of daily life hardly matter. No computer-controlled maglev trains speed through Silicon Valley, but they do have a wheezing diesel locomotive that trudges along at a walking pace. The route to San Francisco has not been electrified, and at dangerous railroad crossings, you can hear the wail of sirens going off day and night. It is an anachronism, without a doubt. For the first few nights after our arrival, we had a hard time getting to sleep, even though the next railroad crossing is about a mile away. Those sirens pack a punch. On the other side of the bay, the BART, short for Bay Area Rapid Transit, has been running since the 1970s, and was considered the most modern public transport system in the world at that time. It boasted fully automated trains without conductors or ticket collectors. Silicon Valley, on the western end of the bay, could have been connected, but the measure fell through based on a popular vote. The people simply could not see the advantage of having it. To this day, the residents prefer to be mercilessly torn from their sleep, rather than invest in maglev trains. Silicon Valley is not modern; it simply builds modern products.

Ecological thinking is embraced enthusiastically and stands in stark contrast to the backwardness of the public transport system. Healthy eating is a major topic of conversation. Hardly anyond eats anything other than organic food. All of Palo Alto seems to buy their groceries at Whole Foods, a top-notch organic supermarket. Quality, freshness and reliability are exemplary. Whole Foods is located in the middle of the city and is surrounded by startups. Proximity to the store is considered an added bonus when companies advertise for employees. The shelves are overflowing with vegan specialties; each aisle has a sign displaying which percentage of goods comes from the region. Recycling is practiced passionately. Schools have to take mandatory trips to processing centers and they put on shows about recycling in the school auditorium. Green technology is one of the university’s main areas of research. The same number of engineers is working on developing clean energy products as there are engineers devoted to the Internet. Electric cars are booming and Tesla, the leading innovator of the technology, is headquartered there. In all likelihood, the first fully automated, computer-controlled, emission-free, mass-produced electric car in the world will be made in Palo Alto.

Our Toyota rolls toward our destination. Actually, there are two destinations: 481 Washington Avenue and 381 Lincoln Avenue. The house on Washington Avenue was rented by our company; my family moved into the Lincoln Avenue house at our own expense. My colleagues and I share the company house, a brand new Spanish-style hacienda. All around us, the hedges are blossoming, the sandstone facade glows in the sun and a huge tree with a mighty trunk provides shade in the garden. Trees like these gave Palo Alto its name, which means tall tree. Breakfast is served in the kitchen, meetings take place in the living room, work is done in the foyer and we cook our food from the communal refrigerator. Land in Palo Alto is so expensive that buyers often demolish an old building to build their dream home. Construction costs hardly affect the purchase price, which was the case with our house. The result required some getting used to: a kitschy illuminated fountain in the backyard, for example, or a bathroom in the basement modeled as a stone grotto with computerized showers and no faucets. We completely furnished the house with products from Ikea. The Swedish furniture store is located right at the entrance into town. It is only a five-minute bike ride from the company house on Lincoln Avenue. The family house, made entirely of wood, was built in 1892. University founder Leland Stanford personally invested in it for his professors. Entire streets were dedicated to houses for the academic staff. Today, the neighborhood is called Professorville.

The rear side of our garden on Washington Avenue nearly borders Steve Jobs’ garden. A plot of land is all that lies between us. On the corner of Waverley Street and Santa Rita Avenue stands the brick, thatched roof house that Jobs lived and died in. Seven apple trees are blossoming on a wild meadow in front. It’s the only wild meadow in the area. No one else has the nerve to defy the unwritten front yard code that requires a cleanly mown lawn, but the local hero has been forgiven for his insubordination. Jobs’ widow Laurene Powell still lives there, in quite a modest home compared to its owner’s wealth. Behind the small windows on the ground floor is the office. I recognize it from the photos in Walter Isaacson’s biography. It is a quiet, magical place. Whoever visits speaks softly, including myself.

The house embodies the character of the town: modest, open, discrete and creative. In this very living room, Jobs revolutionized four industries: computers with iMac computers and the iPad, music with iPods and iTunes, film with Pixar, and communication with iPhones and the AppStore. How astoundingly modest such epicenters of revolution can be, but what had I really expected? A faux-ancient villa like Hearst Castle, the palatial domicile of megalomaniacal publisher William Randolph Hearst in San Simeon on the California coast? Or perhaps a mansion of glass, similar to the Apple stores? Neither would fit in Palo Alto, and neither would fit Steve Jobs’ taste, who had spent most of his life there. Creativity does not need much space. A dining room table. A small office. Three or four people concocting something together. A notepad to record ideas.