November/December 2000 | Contents

A LETTER FROM SILICON VALLEY

BY MICHAEL S. MALONE

It used to be so peaceful here. Herb Caen was in his Baghdad and all was right with the Bay Area.

Every weekday morning in the San Francisco Chronicle, Herb would sling the gossip and redefine the local gestalt. And every Sunday he would draft a nostalgia piece to keep us happily looking backwards to the days when ladies wore white gloves on Market Street and San Jose didn't even know it was an object of ridicule.

San Francisco owned it all: the important newspapers, the big radio stations, the network TV affiliates. The City was smug, Oakland seethed, and the South Bay wished it could be cool.

Then all hell broke loose. Silicon Valley grew rich and famous, the Internet boomed, Oakland elected Jerry Brown, and Herb is drinking again with Trader Vic somewhere in Babylon by the Styx. In the process, Bay Area journalism, for a century sleepy, bucolic, and parochial, went mad.  

From my childhood well into adulthood, nearly all of it spent in the archetypal 'burb of Sunnyvale, my sources for news were utterly predictable. In the morning I read the Chronicle, in the afternoon the San Jose Mercury News. The Chronicle had all the best writers, especially the columnists, but you never believed a word of its news coverage. The Mercury News, by comparison, was precise, unbiased, except in its coverage of downtown politics, and utterly boring. All television news came from the three network affiliates, all based in San Francisco -- meaning I was more likely to hear about traffic on the Bay Bridge than a mass murder down the street. The sole South Bay news station, KNTV, had a signal so weak that it was forced to hand out signal boosters in the form of softball-sized hunks of metal that viewers had to bolt to their aerials. Radio was a San Francisco monopoly as well. And as for magazines, unless you were very, very interested in flame ionization gas chromatographs, and other hot local trade magazine topics, you stuck to Time and Newsweek. It remained that way for nearly a quarter century.

Then, in the early eighties, tiny cracks began to appear in this edifice. Epicene old Joe Ridder retired as publisher of the Mercury News, to be replaced by his preppy, upbeat jogger nephew, Tony. The Mercury News suddenly became younger, less parochial, and tougher on the downtown establishment. It was still boring, but at least it was now the paper of record for the Bay Area. It even landed two Pulitzers, one for helping pull down Ferdinand Marcos, with a 1985 series documenting how he transferred wealth abroad, the other for covering the 1989 Loma Prieta earthquake that devastated the Bay area. It also launched a Monday business section that became the de facto newsletter of the Valley.

The Mercury News was now a very good paper, and it might have been great with a little more imagination and money -- i.e., had its growing Silicon Valley ad revenues not been used to bolster the rest of the Knight Ridder chain. Meanwhile, in the City (as San Francisco continued to call itself without a trace of irony), the Chronicle's best writers were beginning to die off one by one.

Local television remained unchanged. KNTV made a small nod to the massive industrial revolution taking place outside its windows by hiring a tech reporter. But on the day in 1989 that Intel introduced the 486 processor, the most important new product on the planet, the reporter was sent to cover a cat in a tree. Approached with an outside proposal for the nation's first half-hour tech news show, KNTV chose instead to run Three's Company reruns. Up North, KGO (ABC), KRON (NBC), and KPIX (CBS) treated Silicon Valley events with the kind of slack-jawed awe one might expect from a UFO landing. As for the Chronicle, its Valley coverage was often inferior to that being filed by the new tech beat reporters from The New York Times and USA Today. The stage was now set.  

The break-up of the Old Order came in the 1990s, and the catalytic event was the birth of two new magazines: Upside (1989) and Wired (1992). They were the most unlikely creations of such a retro community. But like Rolling Stone two decades earlier, they were the product of a new generation of writers and a newly prosperous subculture desperate to tell its story.

Wired, with its migraine-inducing graphics and weird mix of the sacred (techno-utopianism) and the profane (the Burning Man Festival), quickly perfected the illuminati vs. ignorant masses style that made it a necessary read -- even if you didn't know what it was talking about. Upside, by comparison, celebrated, ridiculed, and in every way treated Silicon Valley as Hollywood, as if it were the center of the universe (which it was about to be).

Neither magazine would have succeeded at any other time in Valley history, yet both now did, wildly. And, with typical Valley volatility, they quickly blew up -- scattering entrepreneurial talent all over the Bay Area. The next few years saw the rise of Forbes ASAP (1992); Red Herring (1993); Business 2.0 (1998), and Industry Standard (1998); as well as non-native imitators such as Fast Company (1995) and, most recently (June 2000), Fortune's eCompany Now.

These new "eMagazines" could not have been better timed, because in the 1990s Silicon Valley managed to escape the quadrennial economic downturn it had known for thirty years, and instead enjoyed the greatest boom in American economic history. It pulled the stock markets and most of the rest of the world up with it. Better yet, this sustained boom was driven by the arrival of the Internet, which in turn spawned thousands of local eCommerce companies. These dot-coms may have employed little more than six kids with nose rings, but they also were backed by millions in venture capital -- and later by billion-dollar IPOs -- with a charter to build brand awareness at any cost. And the first place these little motley crews looked to place advertisements to build that awareness was to the new eMagazines they all read.

Thus, where a decade before the Bay Area could barely sustain MacWorld and the local PBS magazine, suddenly these new magazines were overrun with money and ads. It didn't matter that most of their reporting was formulaic and predictable; by the end of the decade some of their issues were among the thickest ever published. In June, a 408-page hernia-inducing issue of Business 2.0 landed with a crash on my desk, and before I had time to remark that it was thicker than the Palo Alto phone book, a 608-page copy of Red Herring thudded atop it.

Critics caviled that people didn't actually read these publications, but, as with bridal magazines, merely thumbed through the ads. Others complained that the eMagazines, unlike their historical predecessors such as The New Yorker and Esquire, had done nothing innovative or interesting with their great opportunity -- and that most would never make a dime in profits. But the simple fact was that they had succeeded in one of the greatest launches the publishing world had ever seen -- and they had done so largely with inexperienced editors and an army of post-adolescent reporters.

It is that army of reporters that may prove the most important new phenomenon in Bay Area journalism. Young reporters fresh out of college dreamed not of going to New York or Washington, but to San Francisco to cover the birth of the Internet Age. The eMagazines, watching their news holes double in size every month, snapped up every one who stepped off the bus. And if they didn't get them, the content-oriented Web sites, like Quokka.com and Salon.com (started by ex-Examiner writers and editors), did.

Predictably, many of these youngsters were energetic but not very good. They desperately needed adult supervision, so the eMags and Web journals began raiding the area's traditional media outlets. The result was a feeding frenzy that ran through much of last year and into this spring. Headhunters dangled high salaries, titles, and stock options, and called every tech and business writer in the Bay Area at least twice a week.

You didn't have to be an economist to predict what would happen when supply and demand curves went this wacky: experienced reporters played musical chairs for the highest offer, twenty-five-year-old "veterans" demanded six-figure salaries and senior editor titles, and old grizzled newsroom types in black outfits sat on Aeron chairs in South of Market lofts. Both the Mercury News and Chronicle business sections resembled revolving doors.

And that was just the start. About this time, traditional media suddenly discovered Silicon Valley as well. Everyone from CNN to Le Monde began sending reporters to the Valley to find the Big Story. But the biggest effort was made by the three dominant business magazines, which saw not only a sexy business story, but also the biggest advertiser opportunity around. Forbes, Fortune, and Business Week didn't just cover tech. Sometimes they seemed to turn their entire publications over to it. It wasn't long before the newsmagazines followed suit.

At its best, this new level of coverage was a magnificent reconciliation between traditional journalism and the brave new tech world. At its worst, it was like having your newly divorced uncle start wearing his cap backwards. At its nadir, which occurred just this past August, Time's managing editor, Walter Isaacson, visited Burning Man, where he watched the naked revelers, and pronounced it "unbelievably cool."

At full frenzy, which history may record as the early spring of 2000, it almost seemed that there were more people covering Silicon Valley than actually working in it. On any given day there may have been two thousand ambitious young reporters shaking the bushes of the Valley, all covering the same damn story about programmable logic arrays.

Ironically, Valley corporate flacks -- the biggest beneficiaries of this generally shallow and nonjudgmental attention -- were among the first to complain. For decades they prayed the world would notice -- and now they'd gotten their wish in the form of a tsunami ("Neil Cavuto on line one, The Washington Post on line two, Grok magazine on line three . . .") Increasingly, their job became making sure the c.e.o. didn't spend every waking hour talking to reporters.

Obviously it couldn't last forever. And when a stock market crash finally came in the late spring, no one but the true-believing Jimmy Olsens were surprised. What did surprise the old-timers was that even as the dot.coms imploded, yet another boom, this time among the big chipmakers (Intel) and their suppliers (Applied Materials), as well as the giant software companies (Oracle), actually minimized the blow.

And a good thing, too, because the eMags were all bursting with staffers, and some, such as Red Herring and Business 2.0, were racing toward a biweekly cycle. Had there been a traditional, across-the-board, Valley downturn, the very survival of some of these magazines might be at stake. Instead, the local tech journalism community is holding its collective breath, as its universe of reportable content contracts. An estimated one thousand dot.coms may be dead or merged into oblivion by the end of the year. What will that do to magazine advertising revenues? Are there enough blue-chip tech companies to fill in the breach with big advertising supplements? Or will the eMagazines have to look elsewhere? Having established themselves as the house experts of eCommerce, how will they morph themselves to report the new reality?

Already, Red Herring is whispering about becoming the "new Vanity Fair" -- but that's a long journey from where it and its counterparts currently sit, exposed for what they really are: very, very lucky trade magazines. The hard times are yet to come. The last of the eCommerce shakeout will likely occur this Christmas.

And what of the Bay Area's newspapers? Remarkably, their story is almost as wild as those of the eMagazines. The Mercury News grew so fat off the Valley that even Knight Ridder couldn't ignore the truth. Tony Ridder had become Knight Ridder c.e.o. and had moved from San Jose to Miami by now, leaving Jay Harris as publisher of the Mercury News. Then, in September 1998, Tony Ridder picked up the whole corporation and went home; he moved Knight Ridder headquarters to an office building at ground zero in San Jose. The better to put his bread where it was being buttered.

The Mercury News, meanwhile, after two decades of treating the Valley like an unpleasant, but very rich, aunt, suddenly decided to embrace it -- to the point of naming most of its sections ("Silicon Valley Life") and its Sunday roto ("SV") after the region in a shameless bid for loyalty. Unfortunately, it trained its staffers to cover high tech just in time for the eCommerce boom -- and thus the Mercury News became the chief headhunting target for every new tech magazine and content site in America. Even as it pronounced itself the hometown paper of Silicon Valley, the Mercury News was being bled of nearly everyone who knew how to cover the place.

Up north it got even weirder. Hearst made a bid to buy the Chronicle and put the San Francisco Examiner, which was doing the standard dying fall of all afternoon papers, up for sale. No takers for months. Then, suddenly Hearst announced it was giving the Examiner to a local publisher, the Fang family, a fate many local reporters thought was worse than corporate death. The Fangs own a controversial thrice-weekly called San Francisco Independent. Not only that, but Hearst agreed to toss in up to $66 million in subsidies on the deal.

The local alternatives screamed foul, claiming that Hearst had been pressured into selling to the Fangs by the latter's allies in city hall. A federal judge looked at the matter and concluded that Hearst was just trying to keep antitrust regulators off its back. That didn't keep him from describing the whole affair as "malodorous." But the Chronicle sale took place on July 28.

The word "malodorous," deserved or not, could also have been used to describe the Fangs' reputation for being both too close to advertisers and too willing to publicly eviscerate any local figure they didn't like. On top of that, the Fangs quickly hired Warren Hinkle as the Examiner's gray eminence. Hinkle is a local legend, both for being something of a newspaper genius, and for being an outrageous character in a city that's never been short of such eccentrics.

Hearst offered jobs at the Chronicle to the Examiner staff. Many reporters couldn't dive out of the Examiner fast enough.

Senior management never got any job promise, however. And so, a top editor beauty contest between the Chronicle's Jerry Roberts and Matt Wilson and the Examiner's Phil Bronstein began. Meanwhile, down in the newsroom, redundancy is causing some people to look for a way to stab their counterparts in the back. In one already legendary case, an Examiner staffer, when asked to describe the job she wanted, not only suggested a roving reporter position that would enable her to travel the world, but also tried to stick her Chronicle counterpart with a rotten desk beat. She then proceeded to list, in an e-mail to the editor that became public, all the people she should never have to work with.

Inside the now-crowded Chronicle, the scene is one of nervous expectation. The paper would appear to have more talent and more financial capital, and thus be ready to break out in a sleek and more powerful new form. Certainly, the Chron's strategists are talking a good game -- turning the Sunday magazine into a New York Times Magazine lookalike, for example -- but the view from the trenches is more foggy. There will be a lot of two-person games of musical chairs in the weeks ahead, and a lot of unhappy people are going to be left standing. What that will do to the quality of the newspaper is anyone's guess.

The Mercury News, meanwhile, always sympathetic to its condescending neighbor to the north, quickly opened a new bureau in San Francisco and began to all but give away newspapers there. The rumor was that the Mercury News was less interested in new readers and more in extending its readership range to jack up ad rates for its Silicon Valley customers. The Mercury News, of course, presented the move as a way to offer its readers more complete regional coverage.

Finally, just to make sure that the craziness stretched from one end of the Bay Area to the other, the Marin (County) Independent Journal, a fine regional paper, was bought by the cost-slashing Singleton Group (ANG Newspapers), already notorious for running the Oakland Tribune like an Indonesian Nike factory.

Almost lost in the chaos was the fact that readership of all the papers continued to fall, making them look like snail darters fighting over the last cup of pond water. Silicon Valleyites (and that now included professionals in San Francisco and Oakland) faced with a barrage of news coming across their TVs, radios, and computer screens, were turning less and less to newsprint. And Valley workers, caught in the longest commutes in America, simply didn't have time to read. Thus the Mercury-News was selling about 290,000 copies in a community of one and a half million of the best-educated people on the planet.

And, speaking of post-literacy, what of local TV? Remember little KNTV in San Jose? Well, it found religion too, announced it had been bought by Oprah's Granite Broadcasting, dropping its ABC affiliation and switching to wall-to-wall prime time technology news -- apparently ignoring the fact that even engineers can hear only so much about application specific integrated circuits and gate arrays. But before KNTV managed to embark on that dubious course, an amazing thing happened: the powerful San Francisco station, KRON, feuded with NBC and lost its NBC affiliation. KNTV quickly snapped it up. And though the transfer won't be fully consummated until 2002, it is already obvious that in media, as in business, the center of gravity in the Bay Area has shifted south. Even the freeway traffic has reversed direction. Frisco still has the views, but San Jose has the news.

What next? A shakeout, as the Chronicle excises its duplicates, the eMagazines deflate, and the Valley finally slows into a well-earned recession.

That's the bad news -- but it's also good news. All of those young eMagazine reporters have had an unmatched training camp the last couple of years. Set free, they are likely to stay on the turf they know. Same with those veteran reporters at the Examiner and Chronicle. Together, they represent a potent mix; perhaps enough to spark a revolution equivalent to the one that's taken place here in electronics. Apply a little venture capital and a lot of entrepreneurial ambition, and maybe those folks will uncork the next Media Renaissance we've all been awaiting since we first saw the Web. We'll know in about two years, when broadband hits the home.

And it used to be so peaceful here.

 

Michael S. Malone is editor of Forbes ASAP. Raised in Silicon Valley, he has worked for or against nearly every business mentioned in this article.

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