Andrea spent the weekend blogging and seeing the beach. The people on the beach seemed to be of another species to the ones she saw walking the streets of Hollywood and Miami and Ft. Lauderdale. They had freakishly perfect bodies, the kind of thing you saw in an anatomical drawing or a comic-book — so much muscular definition that they were practically cross-hatched. She even tried out the nude beach, intrigued to see these perfect specimens in the altogether, but she chickened out when she realized that she’d need a substantial wax-job before her body hair was brought down to norms for that strip of sand.
She did get an eyeful of several anatomically correct anatomic drawings before taking off again. It made her uncomfortably horny and aware of how long it had been since her last date. That got her thinking of poor Lester, buried underneath all that flesh, and that got her thinking about the life she’d chosen for herself, covering the weird world of tech where the ground never stood still long enough for her to get her balance.
So she retreated to blog in a cafe, posting snippets and impressions from her days with the boys, along with photos. Her readers were all over it, commenting like mad. Half of them thought it was disgusting — so much suffering and waste in the world and these guys were inventing $10,000 toys out of garbage. The other half wanted to know where to go to buy one for themselves. Halfway through Sunday, her laptop battery finally died, needing a fresh weekly charge, so she retreated again, to the coffin, to wait for Monday and the new day that would dawn for Perry and Lester and Kodacell — and her.
Tjan turned out to be a lot older than she’d expected. She’d pictured him as about 28, smart and preppie like they all were when they were fresh out of B-school and full of Management Wisdom. Instead, he was about 40, balding, with a little potbelly and thinning hair. He dressed like an English professor, blue-jeans and a checked shirt and a tweedy sports-coat that he’d shucked within seconds of leaving the terminal at Miami airport and stepping into the blast-furnace heat.
They’d all come in Lester’s big, crazy car, and squishing back in with Tjan’s suitcases was like a geometry trick. She found herself almost on Perry’s lap, hugging half a big duffel-bag that seemed to be full of bricks.
“Books,” Tjan said. “Just a little personal library. It’s a bad habit, moving the physical objects around, but I’m addicted.” He had a calm voice that might in fact be a little dull, a prof’s monotone.
They brought him to their place, which was three condos with the dividing walls knocked out in a complex that had long rust-streaks down its sides and rickety balconies that had been eaten away by salt air. There was a guardhouse at the front of the complex, but it was shuttered, abandoned, and graffiti tagged.
Tjan stepped out of the car and put his hands on his hips and considered the building. “It could use a coat of paint,” he said. Andrea looked closely at him — he was so deadpan, it was hard to tell what was on his mind. But he slipped her a wink.
“Yeah,” Perry said. “It could at that. On the bright side: spacious, cheap and there’s a pool. There’s a lot of this down here since the housing market crashed. The condo association here dissolved about four years ago, so there’s not really anyone who’s in charge of all the common spaces and stuff, just a few condo owners and speculators who own the apartments. Suckers, I’m thinking. Our rent has gone down twice this year, just for asking. I’m thinking we could probably get them to pay us to live here and just keep out the bums and stuff.”
The living quarters were nearly indistinguishable from the workshop at the junkyard: strewn with cool devices in various stages of disassembly, detritus and art. The plates and dishes and glasses all had IHOP and Cracker Barrel logos on them. “From thrift shops,” Lester explained. “Old people steal them when they get their earlybird specials, and then when they die their kids give them to Goodwill. Cheapest way to get a matched set around here.”
Tjan circled the three adjoined cracker-box condos like a dog circling his basket. Finally, he picked an unoccupied master bedroom with moldy lace curtains and a motel-art painting of an abstract landscape over the headboard. He set his suitcase down on the faux-chinoise chest of drawers and said, “Right, I’m done. Let’s get to work.”
They took him to the workshop next and his expression hardly changed as they showed him around their cabinets of wonders. When they were done, he let them walk him to the IHOP and he ordered the most austere thing on the menu, a peanut-butter and jelly sandwich that was technically on the kids’ menu — a kids’ menu at a place where the grownups could order a plate of candy!
“So,” Perry said. “So, Tjan, come on buddy, give it to me straight — you hate it? Love it? Can’t understand it?”
Tjan set down his sandwich. “You boys are very talented,” he said. “They’re very good inventions. There are lots of opportunities for synergy within Kodacell: marketing, logistics, even packing materials. There’s a little aerogel startup in Oregon that Kodacell is underwriting that you could use for padding when you ship.”
Perry and Lester looked at him expectantly. Andrea broke the silence. “Tjan, did you have any artistic or design ideas about the things that these guys are making?”
Tjan took another bite of sandwich and sipped at his milk. “Well, you’ll have to come up with a name for them, something that identifies them. Also, I think you should be careful with trademarked objects. Any time you need to bring in an IP lawyer, you’re going to run into huge costs and time delays.”
They waited again. “That’s it?” Perry said. “Nothing about the designs themselves?”
“I’m the business-manager. That’s editorial. I’m artistically autistic. Not my job to help you design things. It’s my job to sell the things you design.”
“Would it matter what it was we were making? Would you feel the same if it was toothbrushes or staplers?”
Tjan smiled. “If you were making staplers I wouldn’t be here, because there’s no profit in staplers. Too many competitors. Toothbrushes are a possibility, if you were making something really revolutionary. People buy about 1.6 toothbrushes a year, so there’s lots of opportunity to come up with an innovative design that sells at a good profit over marginal cost for a couple seasons before it gets cloned or out-innovated. What you people are making has an edge because it’s you making it, very bespoke and distinctive. I think it will take some time for the world to emerge an effective competitor to these goods, provided that you can build an initial marketplace mass-interest in them. There aren’t enough people out there who know how to combine all the things you’ve combined here. The system makes it hard to sell anything above the marginal cost of goods, unless you have a really innovative idea, which can’t stay innovative for long, so you need continuous invention and re-invention too. You two fellows appear to be doing that. I don’t know anything definitive about the esthetic qualities of your gadgets, nor how useful they’ll be, but I do understand their distinctiveness, so that’s why I’m here.”
It was longer than all the speeches he’d delivered since arriving, put together. Andrea nodded and made some notes. Perry looked him up and down.
“You’re, what, an ex-B-school prof from Cornell, right?”
“Yes, for a few years. And I ran a company for a while, doing import-export from emerging economy states in the former Soviet bloc.”
“I see,” Perry said. “So you’re into what, a new company every 18 months or something?”
“Oh no,” Tjan said, and he had a little twinkle in his eye and the tiniest hint of a smile. “Oh no. Every six months. A year at the outside. That’s my deal. I’m the business guy with the short attention span.”
“I see,” Perry said. “Kettlewell didn’t mention this.”
Tjan wandered around the Elmo-propelled Smart car and peered at its innards, watched the Elmos negotiate their balance and position with minute movements and acoustic signals. “I wouldn’t worry about it if I were you,” he said. “You guys aren’t temperamentally suited to doing just one thing.”
Lester laughed. “He’s got you there, dude,” he said, slapping Perry on the shoulder.
Andrea got Tjan out for dinner that night. “My dad was in import-export and we travelled a lot, all over Asia and then the former Soviets. He sent me away when I was 16 to finish school in the States, and there was no question but that I would go to Stanford for business school.”
“Nice to meet a fellow Californian,” she said, and sipped her wine. They’d gone to one of the famed Miami deco restaurants and the fish in front of her was practically a sculpture, so thoroughly plated it was.
“Well, I’m as Californian as…”
“…as possible, under the circumstances,” she said and laughed. “It’s a Canadian joke, but it applies equally well to Californians. So you were in B-school when?”
“Ninety-eight to 2001. Interesting times to be in the Valley. I read your column, you know.”
She looked down at her plate. A lot of people had read the column back then. Women columnists were rare in tech, and she supposed she was good at it, too. “I hope I get remembered as more than the chronicler of the dot-com boom, though,” she said.
“Oh, you will,” he said. “You’ll be remembered as the chronicler of this — what Kettlewell and Perry and Lester are doing.”
“What you’re doing, too, right?”
“Oh, yes, what I’m doing too.”
A robot rollerbladed past on the boardwalk, turning the occasional somersault. “I should have them build some of those,” Tjan said, watching the crowd turn to regard it. It hopped onto and off of the curb, expertly steered around the wandering couples and the occasional homeless person. It had a banner it streamed out behind it: CAP’N JACKS PAINTBALL AND FANBOAT TOURS GET SHOT AND GET WET MIAMI KEY WEST FT. LAUDERDALE.
“You think they can?”
“Sure,” Tjan said. “Those two can build anything. That’s the point: any moderately skilled practitioner can build anything these days, for practically nothing. Back in the old days, the blacksmith just made every bit of ironmongery everyone needed, one piece at a time, at his forge. That’s where we’re at now. Every industry that required a factory yesterday only needs a garage today. It’s a real return to fundamentals. What no one ever could do was join up all the smithies and all the smiths and make them into a single logical network with a single set of objectives. That’s new and it’s what I plan on making hay out of. This will be much bigger than dot-com. It will be much harder, too — bigger crests, deeper troughs. This is something to chronicle all right: it will make dot-com look like a warmup for the main show.
“We’re going to create a new class of artisans who can change careers every 10 months, inventing new jobs that hadn’t been imagined a year before.”
“That’s a pretty unstable market,” Andrea said, and ate some fish.
“That’s a functional market. Here’s what I think the point of a good market is. In a good market, you invent something and you charge all the market will bear for it. Someone else figures out how to do it cheaper, or decides they can do it for a slimmer margin — not the same thing, you know, in the first case someone is more efficient and in the second they’re just less greedy or less ambitious. They do it and so you have to drop your prices to compete. Then someone comes along who’s less greedy or more efficient than both of you and undercuts you again, and again, and again, until eventually you get down to a kind of firmament, a baseline that you can’t go lower than, the cheapest you can produce a good and stay in business. That’s why straightpins, machine screws and reams of paper all cost basically nothing, and make damned little profit for their manufacturers.
“So if you want to make a big profit, you’ve got to start over again, invent something new, and milk it for all you can before the first imitator shows up. The more this happens, the cheaper and better everything gets. It’s how we got here, you see. It’s what the system is for. We’re approaching a kind of pure and perfect state now, with competition and invention getting easier and easier — it’s producing a kind of superabundance that’s amazing to watch. My kids just surf it, make themselves over every six months, learn a new interface, a new entertainment, you name it. Change-surfers…” He trailed off.
“You have kids?”
“In St Petersburg, with their mother.”
She could tell by his tone that it had been the wrong question to ask. He was looking hang-dog. “Well, it must be nice to be so much closer to them than you were in Ithaca.”
“What? No, no. The St Petersburg in Russia.”
“Oh,” she said.
They concentrated on their food for a while.
“You know,” he said, after they’d ordered coffee and desert, “it’s all about abundance. I want my kids to grow up with abundance, and whatever is going on right now, it’s providing abundance in abundance. The self-storage industry is bigger than the recording industry, did you know that? All they do is provide a place to put stuff that we own that we can’t find room for — that’s superabundance.”
“I have a locker in Milpitas,” she said.
“There you go. It’s a growth industry.” He drank his coffee. On the way back to their cars, he said, “My daughter, Anushka, is 12, and my son, Lee, is 8. I haven’t lived with them in four years and I’ve only seen them twice since. They’re good kids, though. It just couldn’t work with their mother. She’s Russian, and connected — that’s how we met, I was hustling for my import-export business and she had some good connections — so after the divorce there was no question of my taking the kids with me. But they’re good kids.”
“We videoconference. Who knew that long-distance divorce was the killer app for videoconferencing?”
That week, she filed two columns and blogged ten or more items a day: photos, bits of discussion between Lester, Perry and Tjan, a couple videos of the Boogie Woogie Elmos doing improbable things. Turned out that there was quite a cult following for the BWE, and the news that there was a trove of some thousands of them in a Hollywood dump sent a half-dozen pilgrims winging their way across the nation to score some for the collectors market. Perry wouldn’t even take their money: “Fella,” he told one persistent dealer, “I got forty thousand of these things. I won’t miss a couple dozen. Just call it good karma.”
When Tjan found out about it he pursed his lips for a moment, then said, “Let me know if someone wants to pay us money, please. I think you were right, but I’d like to have a say, all right?”
Perry looked at Andrea, who was videoing this exchange with her keychain. Then he looked back at Tjan, “Yeah, of course. Sorry — force of habit. No harm done, though, right?”
That footage got downloaded a couple hundred times that night, but once it got slashdotted by a couple of high-profile blogs, she found her server hammered with a hundred thousand requests. The Merc had the horsepower to serve them all, but you never knew: every once in a while, the blogosphere hit another tipping point and grew by an order of magnitude or so, and then all the server-provisioning — calculated to survive the old slashdottings — shredded like wet kleenex.
Subject: Re: Embedded journalist?
This stuff is amazing. Amazing! Christ, I should put you on the payroll. Forget I wrote that. But i should. You’ve got a fantastic eye. I have never felt as in touch with my own business as I do at this moment. Not to mention proud! Proud — you’ve made me so proud of the work these guys are doing, proud to have some role in it.
She read it sitting up in her coffin, just one of several hundred e-mails from that day’s blog-posts and column. She laughed and dropped it in her folder of correspondence to answer. It was nearly midnight, too late to get into it with Kettlewell.
Then her Powerbook rang — the net-phone she forwarded her cellphone to when her Powerbook was live and connected. She’d started doing that a couple years back, when soft-phones really stabilized, and her phone bills had dropped to less than twenty bucks a month, down from several hundred. It wasn’t that she spent a lot of time within arm’s reach of a live Powerbook, but given that calls routed through the laptop were free, she was perfectly willing to defer her calls until she was.
“Hi Jimmy,” she said — her editor, back in San Jose. 9 p.m. Pacific time on a weeknight was still working hours for him.
“Andrea,” he said.
She waited. She’d half expected him to call with a little shower of praise, an echo of Kettlewell’s note. Jimmy wasn’t the most effusive editor she’d had, but it made his little moments of praise more valuable for their rarity.
“Andrea,” he said again.
“Jimmy,” she said. “It’s late here. What’s up?”
“So, it’s like this. I love your reports but it’s not Silicon Valley news. It’s Miami news. Knight-Ridder handed me a 30 percent cut this morning and I’m slashing to the bone. I am firing a third of the newsroom today. Now, you are a stupendous writer and so I said to myself, ‘I can fire her or I can bring her home and have her write about Silicon Valley again,’ and I knew what the answer had to be. So I need you to come home, just wrap it up and come home.”
He finished speaking and she found herself staring at her Powerbook’s screen. Her hands were gripping the laptop’s edges so tightly it hurt, and the machine made a plasticky squeak as it began to bend.
“I can’t do that, Jimmy. This is stuff that Silicon Valley needs to know about. This may not be what’s happening in Silicon Valley, but it sure as shit is what’s happening to Silicon Valley.” She hated that she’d cussed — she hadn’t meant to. “I know you’re in a hard spot, but this is the story I need to cover right now.”
“Andrea, I’m cutting a third of the newsroom. We’re going to be covering stories within driving distance of this office for the foreseeable future, and that’s it. I don’t disagree with a single thing you just said, but it doesn’t matter: if I leave you where you are, I’ll have to cut the guy who covers the school boards and the city councils. I can’t do that, not if I want to remain a daily newspaper editor.”
“I see,” she said. “Can I think about it?”
“Think about what, Andrea? This has not been the best day for me, I have to tell you, but I don’t see what there is to think about. This newspaper no longer has correspondents who work in Miami and London and Paris and New York. As of today, that stuff comes from bloggers, or off the wire, or whatever — but not from our payroll. You work for this newspaper, so you need to come back here, because the job you’re doing does not exist any longer. The job you have with us is here. You’ve missed the red-eye, but there’s a direct flight tomorrow morning that’ll have you back by dinnertime tomorrow, and we can sit down together then and talk about it, all right?”
“I think–” She felt that oh-shit-oh-shit feeling again, that needing-to-pee feeling, that tension from her toes to her nose. “Jimmy,” she said. “I need a leave of absence, OK?”
“What? Andrea, I’m sure we owe you some vacation but now isn’t the time–”
“Not a vacation, Jimmy. Six months leave of absence, without pay.” Her savings could cover it. She could put some banner ads on her blog. Florida was cheap. She could rent out her place in California. She was six steps into the plan and it had only taken ten seconds and she had no doubts whatsoever. She could talk to that book-agent who’d pinged her last year, see about getting an advance on a book about Kodacell.
“Are you quitting?”
“No, Jimmy — well, not unless you make me. But I need to stay here.”
“The work you’re doing there is fine, Andrea, but I worked really hard to protect your job here and this isn’t going to help make that happen.”
“What are you saying?”
“If you want to work for the Merc, you need to fly back to San Jose, where the Merc is published. I can’t make it any clearer than that.”
No, he couldn’t. She sympathized with him. She was really well paid by the Merc. Keeping her on would mean firing two junior writers. He’d really cut her a lot of breaks along the way, too — let her feel out the Valley in her own way. It had paid off for both of them, but he’d taken the risk when a lot of people wouldn’t have. She’d be a fool to walk away from all that.
She opened her mouth to tell him that she’d be on the plane in the morning, and what came out was, “Jimmy, I really appreciate all the work you’ve done for me, but this is the story I need to write. I’m sorry about that.”
“Andrea,” he said.
“Thank you, Jimmy,” she said. “I’ll get back to California when I get a lull and sort out the details — my employee card and stuff.”
“You know what you’re doing, right?”
“Yeah,” she said. “I do.”
When she unscrewed her earpiece, she discovered that her neck was killing her. That made her realize that she was a 45-year-old woman in America without health insurance. Or regular income. She was a journalist without a journalistic organ.
She’d have to tell Kettlewell, who would no doubt offer to put her on the payroll. She couldn’t do that, of course. Neutrality was hard enough to maintain, never mind being financially compromised. She stepped out of the coffin and sniffed the salty air. Living in the coffin was expensive. She’d need to get a condo or something. A place with a kitchen where she could prep meals. She figured that Perry’s building would probably have a vacancy or two.
- – - – - – - – - – - -
The second business that Tjan took Perry into was even more successful than the first, and that was saying something. It only took a week for Tjan to get Perry and Lester cranking on a Kitchen Gnome design that mashed together some Homeland Security gait-recognition software with a big hard-disk and a microphone and a little camera, all packaged together in one of a couple hundred designs of a garden-gnome figurine that stood six inches tall. It could recognize every member of a household by the way that they walked and play back voice-memos for each. It turned out to be a killer tool for context-sensitive reminders to kids to do the dishes, and for husbands, wives and flatmates to nag each other without getting on each other’s nerves. Tjan was really jazzed about it, as it tied in with some theories he had about the changing U.S. demographic, trending towards blended households in urban centers, with three or more adults co-habitating.
“This is a rich vein,” he said, rubbing his hands together. “Living communally is hard, and technology can make it easier. Roommate ware. It’s the wave of the future.”
There was another Kodacell group in San Francisco, a design outfit with a bunch of stringers who could design the gnomes for them and they did great work. The gnomes were slightly lewd-looking, and they were the product of a generative algorithm that varied each one. Some of the designs that fell out of the algorithm were jaw-droppingly weird — Perry kept a three-eyed, six-armed version on his desk. They tooled up to make them by the hundred, then the thousand, then the tens of thousands. The fact that each one was different kept their margins up, but as they gained popularity their sales were steadily eroded by knock-offs, mostly from Eastern Europe.
They weren’t as cool-looking — though they were certainly weirder looking, like the offspring of a Norwegian troll and an anime robot — but they were more feature-rich. Some smart hacker in Russia was packing all kinds of functionality onto a single chip, so that their trolls cost less and did more: burglar alarms, baby-monitors, streaming Internet radio source, and low-reliability medical diagnostic that relied on quack analysis of eye pigment, tongue coating and other newage (rhymes with sewage) indicators.
Lester came back from the Dollar Store with a big bag of trolls, a dozen different models, and dumped them out on Tjan’s desk, up in old foreman’s offices on the catwalk above the workspaces. “Christ, would you look at these? They’re selling them for less than our cost to manufacture. How do we compete with this?”
“We don’t,” Tjan said, and rubbed his belly. “Now we do the next thing.”
“What’s the next thing?” Perry said.
“Well, the first one delivered a return-on-investment at about ten times the rate of any Kodak or Duracell business unit in the history of either company. But I’d like to shoot for thirty to forty times next, if that’s all right with you. So let’s go see what you’ve invented this week and how we can commercialize it.”
Perry and Lester just looked at each other. Finally, Lester said, “Can you repeat that?”
“The typical ROI for a Kodacell unit in the old days was about four percent. if you put a hundred dollars in, you’d get a hundred and four dollars out, and it would take about a year to realize. Of course, in the old days, they wouldn’t have touched a new business unless they could put a hundred million in and get a hundred and four million out. Four million bucks is four million bucks.
“But here, the company put fifty thousand into these dolls and three months later, they took seventy thousand out, after paying our salaries and bonuses. That’s a forty percent ROI. Seventy thousand bucks isn’t four million bucks, but forty percent is forty percent. Not to mention that our business drove similar margins in three other business units.”
“I thought we’d screwed up by letting these guys eat our lunch,” Lester said, indicating the dollar-store trolls.
“Nope, we got in while the margins were high, made a good return, and now we’ll get out as the margins drop. That’s not screwing up, that’s doing the right thing. The next time around, we’ll do something more capital intensive and we’ll take out an even higher margin: so show me something that’ll cost two hundred grand to get going and that we can pull a hundred and sixty thou’s worth of profit out of for Kodacell in three months. Let’s do something ambitious this time around.”
Read Chapter 5.