Zucked. Roger McNamee

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СКАЧАТЬ directly to fans. The site had become a huge success, and by the time I showed up, it was generating almost as much profit as the band had made in its touring days. Unfortunately, the technology was out of date, but there was an opportunity to upgrade the site, federate it to other bands, and prosper as never before. One of the bands that showed an interest was U2. They found me through a friend of Bono’s at the Department of the Treasury, a woman named Sheryl Sandberg. I met Bono and the Edge at Morgan Stanley’s offices in Los Angeles on the morning after the band had won a Grammy for the song “Beautiful Day.” I could not have named a U2 song, but I was blown away by the intelligence and business sophistication of the two Irishmen. They invited me to Dublin to meet their management. I made two trips during the spring of 2001.

      On my way home from that second trip, I suffered a stroke. I didn’t realize it at the time, and I tried to soldier on. Shortly thereafter, after some more disturbing symptoms, I found myself at the Mayo Clinic, where I learned that I had in fact suffered two ischemic strokes, in addition to something called a transient ischemic attack in my brain stem. It was a miracle I had survived the strokes and suffered no permanent impairment.

      The diagnosis came as a huge shock. I had a reasonably good diet, a vigorous exercise regime, and a good metabolism, yet I had had two strokes. It turned out that I had a birth defect in my heart, a “patent foramen ovale,” basically the mother of all heart murmurs. I had two choices: I could take large doses of blood thinner and live a quiet life, or I could have open-heart surgery and eliminate the risk forever. I chose surgery.

      I had successful surgery in early July 2001, but my recovery was very slow. It took me nearly a year to recover fully. During that time, Apple shipped the first iPod. I thought it was a sign of good things to come and reached out to Steve Jobs to see if he would be interested in recapitalizing Apple. At the time, Apple’s share price was about twelve dollars per share, which, thanks to stock splits, is equivalent to a bit more than one dollar per share today. The company had more than twelve dollars in cash per share, which meant investors were attributing zero value to Apple’s business. Most of the management options had been issued at forty dollars per share, so they were effectively worthless. If Silver Lake did a recapitalization, we could reset the options and align interests between management and shareholders. Apple had lost most of its market share in PCs, but thanks to the iPod and iMac computers, Apple had an opportunity to reinvent itself in the consumer market. The risk/reward of investing struck me as especially favorable. We had several conversations before Steve told me he had a better idea. He wanted me to buy up to 18 percent of Apple shares in the public market and take a board seat.

      After a detailed analysis, I proposed an investment to my partners in the early fall of 2002, but they rejected it out of hand. The decision would cost Silver Lake’s investors the opportunity to earn more than one hundred billion dollars in profits.

      In early 2003, Bono called up with an opportunity. He wanted to buy Universal Music Group, the world’s largest music label. It was a complicated transaction and took many months of analysis. A team of us did the work and presented it to my other three partners in Silver Lake in September. They agreed to do the deal with Bono, but they stipulated one condition: I would not be part of the deal team. They explained their intention for Silver Lake to go forward as a trio, rather than as a quartet. There had been signals along the way, but I had missed them. I had partnered with deal guys—people who use power when they have it to gain advantages where they can get them—and had not protected myself.

      I have never believed in staying where I’m not wanted, so I quit. If I had been motivated by money, I would have hung in there, as there was no way they could force me out. I had conceived the fund, incubated it, brought in the first billion dollars of assets, and played a decisive role on the three most successful investments. But I’m not wired to fight over money. I just quit and walked out. I happened to be in New York and called Bono. He asked me to come to his apartment. When I got there, he said, “Screw them. We’ll start our own fund.” Elevation Partners was born.

      In the long term, my departure from Silver Lake worked out for everyone. The second Silver Lake fund got off to a rocky start, as my cofounders struggled with stock picking, but they figured it out and built the firm into an institution that has delivered good investment returns to its investors.

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       Silicon Valley Before Facebook

      I think technology really increased human ability.

      But technology cannot produce compassion. —DALAI LAMA

      The technology industry that gave birth to Facebook in 2004 bore little resemblance to the one that had existed only half a dozen years earlier. Before Facebook, startups populated by people just out of college were uncommon, and few succeeded. For the fifty years before 2000, Silicon Valley operated in a world of tight engineering constraints. Engineers never had enough processing power, memory, storage, or bandwidth to do what customers wanted, so they had to make trade-offs. Engineering and software programming in that era rewarded skill and experience. The best engineers and programmers were artists. Just as Facebook came along, however, processing power, memory, storage, and bandwidth went from being engineering limits to turbochargers of growth. The technology industry changed dramatically in less than a decade, but in ways few people recognized. What happened with Facebook and the other internet platforms could not have happened in prior generations of technology. The path the tech industry took from its founding to that change helps to explain both Facebook’s success and how it could do so much damage before the world woke up.

      The history of Silicon Valley can be summed in two “laws.” Moore’s Law, coined by a cofounder of Intel, stated that the number of transistors on an integrated circuit doubles every year. It was later revised to a more useful formulation: the performance of an integrated circuit doubles every eighteen to twenty-four months. Metcalfe’s Law, named for a founder of 3Com, said that the value of any network would increase as the square of the number of nodes. Bigger networks are geometrically more valuable than small ones. Moore’s Law and Metcalfe’s Law reinforced each other. As the price of computers fell, the benefits of connecting them rose. It took fifty years, but we eventually connected every computer. The result was the internet we know today, a global network that connects billions of devices and made Facebook and all other internet platforms possible.

      Beginning in the fifties, the technology industry went through several eras. During the Cold War, the most important customer was the government. Mainframe computers, giant machines that were housed in special air-conditioned rooms, supervised by a priesthood of technicians in white lab coats, enabled unprecedented automation of computation. The technicians communicated with mainframes via punch cards connected by the most primitive of networks. In comparison to today’s technology, mainframes could not do much, but they automated large-scale data processing, replacing human calculators and bookkeepers with machines. Any customer who wanted to use a computer in that era had to accept a product designed to meet the needs of government, which invested billions to solve complex problems like moon trajectories for NASA and missile targeting for the Department of Defense. IBM was the dominant player in the mainframe era and made all the components for the machines it sold, as well as most of the software. That business model was called vertical integration. The era of government lasted about thirty years. Data networks as we think of them today did not yet exist. Even so, brilliant people imagined a world where small computers optimized for productivity would be connected on powerful networks. In the sixties, J. C. R. Licklider conceived the network that would become the internet, and he persuaded the government to finance its development. At the same time, Douglas Engelbart invented the field of human-computer interaction, which led to him to create the first computer mouse and to conceive the first graphical interface. It would take nearly two decades before Moore’s Law and Metcalfe’s СКАЧАТЬ