Want to know what scares tech executives? It’s not competition from China, WannaCry ransomware attacks, or being coded out of existence by Mark Zuckerberg clones. It’s radial tires.
Until around 1970, almost all cars and trucks rolled on bias-ply tires. Under the rubber treads, nylon belts ran diagonally, at 30 or 45 degrees, forming a crosshatch. This allowed for stronger sidewalls and cheaper manufacturing. The problem was that bias-ply tires needed to be changed every 12,000 miles.
Then along came radial tires. Introduced in 1949 by Michelin, radials have steel belts inside that run across the tread at a 90-degree angle. They are wider, better at dissipating heat, and safer. Although radials cost a little more to manufacture, they last at least 40,000 miles.
The first American car that came with radials was the 1970 Lincoln Continental. Four years later, Goodyear was making only radial tires. Other companies missed out and paid dearly. By the end of the decade, radials effectively had 100% market share for cars.
Which brings us back to Silicon Valley. In the 1980s and ’90s, technology was changing so fast that a new computer was almost disposable. You upgraded every few years. But as innovation slowed, they lasted longer, which meant fewer people buying computers.
Bill Gates was worried about this all the way back in 1991. “When radial tires were invented,” he said in an interview, “people didn’t start driving their cars a lot more, and so that means the need for production capacity went way down, and things got all messed up. The tire industry is still messed up.”
During the dot-com boom, Mr. Gates invoked the analogy again. “Every time I read about optic fibers or wireless, I say to myself, ‘Wow, that sounds like radial tires,’ ” he said. “When they got radial tires did people drive four times as much just because the tires lasted longer? No, the industry shrank.”