This week, Tim O’Reilly provided much-needed perspective in his essay “The End of Silicon Valley As We Know It.” If you can overlook the clickbait title, this essay is among the most valuable things you can read to understand our present and think about our future. While there has been much hoopla about folks leaving Silicon Valley, new distributed work philosophies, and other daily headlines, these are primarily distractions from a deeper, more profound change afoot in what we call Silicon Valley.
The Algorithmic Accountability Index: Ellery Roberts Biddle and Jie Zhang have created an accountability index for the algorithmic economy. They looked for companies’ answers to some fundamental questions about algorithms: How do you build and train them? What do they do? What standards guide these processes? An essential piece.
How the race for autonomous cars started: We might be on the brink of the future where we all zoom around in self-driving cars and other autonomous vehicles. It is easy to forget that, 16 years ago, autonomous driving was a chaotic dream. In his new book, Driven: The Race to Create the Autonomous Car, Alex Davies chronicles what brought us to this moment. Wired magazine recently ran an excerpt, and you should check it out.
Did Tech prevent the World from a bigger meltdown?: While we have read many articles about technology becoming a dominant force in our lives during the pandemic, this article in Foreign Policy asks (and answers) the question from a different angle. I liked the nuanced argument, and that is why I recommend it for your weekend reading.
The cassette tape creator is dead: In time, what was a disruptive technology becomes a part of our life that we don’t even notice. One hundred billion units later, cassette tape is one of those technologies. It kicked off the ability to personalize the curation of music. You can draw a straight line between those tapes and Spotify playlists. Lou Ottens, the engineer who created the cassette tape, died recently. Ottens also helped create the compact disc, which ultimately killed the cassette tape. His obituary is a reminder that only very few are fortunate enough to create technology that touches everyone’s lives.
Not every brick and mortar retail chain selling goods that people can get more easily — even instantly — online gets the GameStop treatment. Some of them (most of them) just quietly fade. But that doesn’t mean they weren’t loved.
Younger generations might wonder why so many old farts are moaning about Fry’s Electronics shuttering. Isn’t it outdated? Hasn’t it been dying a slow death for a while? And the answer to such (snotty, if you ask me) questions is: Yes, of course!
Fry’s was built for a world that no longer exists. We live in a world where Amazon’s revenues ballooned 38% to $386 billion in the middle of the worst health crisis. We live in a world where stock markets value a food delivery company at roughly $55 billion. The elders are lamenting not the death of a store but the slow fading of Silicon Valley itself.
“It looks like Fry’s is going the way of Netscape, SGI, and Sun Microsystems, and I for one, am pretty bummed,” wrote Mike Cassidy, about the slowly withering retail pioneer. “In fact, in many ways, it is more representative of the valley than any of the region’s famous start-ups.”
First, a bit of history!
In 1985, three Fry brothers, John, Randy, Dave, and Kathy Kolder, opened the first store in Sunnyvale, California. Retailing was in the Frys’ blood. Their dad, Charles, started Fry Food Stores. He sold the company for $14 million in 1972. He gave his boys a million each and sent them on their way. John went to Santa Clara University and majored in Mathematics. He was a good football player and a good student. In the end, he decided to do what he knew best: retail.
In 1985, the personal computer was still young, but you could see the revolution was on the horizon. The center of gravity for this revolution was going to be Silicon Valley. It was the perfect place for an electronics megastore. The first Fry’s was opened in Sunnyvale and covered 20,000 square feet. At one time, Fry’s retailed over 50,000 electronics items within each store. They now call them big-box stores, and they dot the American landscape. But in 1985, it was a radical and bold idea. He also started selling shelf space to vendors, much as they did in supermarkets. It allowed Fry’s to make profits.
Photo courtesy of John Wall via Flickr under Creative Commons
Why did vendors pay for shelf space? Because Fry’s had foot traffic. Having learned all the tricks of the trade selling disposable goods at a food store, John knew that it was essential to get people into the store, even if it meant making, at best, no profit on fast-moving items like Coke and Playboy magazines. Get them into the store, and expect them to buy other things. As the son of a food market owner, he knew that you gotta move goods — and inventory kills.
We applaud fashion designers like Paul Smith for creating a unique look for their stores across the world, but this is one area where Fry’s innovated as well. Fry’s was ahead of the curve in their belief in experiential retail. Each store had its unique theme. Palo Alto store (my favorite) was straight out of the Old West. The store in Fremont had an 1893 World’s Fair theme. It was all kitsch, but it made visits even more memorable. And it attracted customers.
Fry’s was an aggressive user of security cameras to prevent theft. You couldn’t get a quick refund out of them if you tried. The employees were not very knowledgeable. They were making a calculated bet that most people walking into an electronics store would know what the hell they wanted to buy. And for a long time, this bet paid off.
If you are a person of a certain age in Silicon Valley, you have a Fry’s story. I said hello to Andy Bechtolsheim while walking the aisles. And there were others. We have all hit up one of the Fry’s stores at an ungodly hour to find a component or just because we couldn’t sleep. During the internet bubble, I ended up in Fry’s Palo Alto store on a shopping spree with folks who would eventually become my sources. It was the only way for them to loosen up.
Thirty-six years is a long time for any company to exist, especially for a retailer. A lot of the vendors who sold their products on the shelves of Fry’s are long gone. The name “Zoom” belonged to a modem maker back in the day. And how many people remember AST? Undeniably, Fry’s had a good run. But we can’t forget the ultimate truth: Change is constant. And these days, things change more quickly than ever before. No place exemplifies that reality quite like Silicon Valley.
Fry’s came of an age when what we call “ the information technology industry” was still very young. The PC revolution had yet to turn Microsoft and Intel into leviathans. The client-server networking that would change work — and eventually the world — had yet to emerge from their creators’ minds. It was all so innocent, and everything was possible. Hell, no one quite knew what was possible.
In 2003, Red Herring, a magazine I wrote for, shuttered its doors for good. In my eulogy for it, I pointed out that “Silicon Valley of the 1990s succeeded beyond its wildest dreams. If you pause and take the tally, the technology industry is now mainstream.” Time has only reinforced my core belief in the Internet’s inevitably — and by extension, the tyranny of what is known as the network effect.
In retrospect, as is often the case, Fry’s death was inevitable. In Fry’s heyday, many of us built our own computers (or at least tinkered with them). We bought software and installed it. The struggle of being a lover of computers was what made it so special. Every year, however, computers became less cumbersome.
The unrelenting nature of Moore’s Law and the amazing growth of the network have allowed technology to become not just mainstream but an integral part of our lives. Technology has become less tangible, existing mostly as an abstract. Fewer and fewer people buy hardware. We buy iPhones and Chromebooks. We don’t know how it all works. When they break, we don’t fix them ourselves. Someone else does it. Or we throw them away.
We don’t quite realize it yet, but in 2020, thanks to the pandemic, we abstracted Silicon Valley itself. Amazon, Google, and Microsoft collectively had $115 billion in “cloud revenues” last year. Today’s entrepreneurs aren’t walking the aisles of Fry’s. Their world is that of complex algorithms, machine learning, and ways to generate demand using technology.
From Lisbon, to London, to Bozeman, the future is being created everywhere now. Silicon Valley is becoming less of a place and more of a mindset. It’s a philosophy that can take root anywhere. The primary association with the word “Zoom” is no longer a brand of a modem. Suffice to say, it is a new era. And it seems that Fry’s is no longer needed.
The loss of this iconic store is a reminder that what once was a revolution is now part of our lives. I am glad that I got to experience it all, and I will cherish all those memories of that unique place we called Fry’s.
February 25, 2021, San Francisco
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