The Origins of Silicon Valley: Why and How It Happened

[Music] Stanford University what happened that caused this to be the epicenter of Technology for the world it's a special culture of innovation that we weave in bread here when you leave today you'll know why that happened and what the secret sauce is for this well I want to welcome all of you here on this beautiful afternoon I'm pleased you're spending it with me here to hear a little bit about what happened that caused this to be the epicenter of technology for the world it's a rather interesting story it goes way back which I like to do I'm going to start with a tale that were all fairly familiar with and that's the homebrew Computer Club classic Silicon Valley's story from 1976 a bunch of hobbyists that were meeting in Menlo Park and then moved to slack to meet their monthly Steve Wozniak and Steve Jobs got together stell Wozniak had this great idea he could take this 6502 microprocessor which was only 20 bucks which was a lot less than the three or $400 Motorola wanted for theirs but this one was neat because it worked with all the chips that worked with the Motorola one so we could buy this inexpensive one which was not the same operating system but used the same chips and he could design his own machine so he sold his HP 35 calculator and Steve Jobs sold his VW van and they put a cobble together enough money to put together what they called the Apple one and was niak mainly just wanted to make it available for his friends he thought this would be a great thing he might make 30 or 40 or 50 and I'm making about 200 it was little Fernandez who introduced them they lived about a block and a half apart the critical mass of nerds here is pretty high and so block half apart so bill fernandez introduced the two of them and says you guys ought to be working together which they did what happened well the partnership they called an Apple computer company and it started in a garage which is how things are supposed to work around here and they have but now the largest market capitalization in the world is the most valuable brand in the world so the question is why did this happen I mean a couple of kids turning into a multi hundred billion dollar company and why did it happen in the San Francisco Bay Area when you leave today you'll know why that happened and what what the the secret sauce is for this well back some years ago before 1900 this was the valley of heart's delight and it was awash with blossoms as it was about a month ago here in the valley and this was typically what our product was it was boxes of fruit but the golden product here was apricots and so as Leland Stanford said someday you will see Palo Alto blooming with nearly all the flowers of the earth and the fruit and shade trees of every zone in the future we shall can this fruit and send it all over the globe in exchange for wealth which did happen but that cause supplanted and so technology overtook agriculture as this wealth generator for the Silicon Valley I'm going to go back a ways to a company called federal telegraph and was formed in 1909 in Palo Alto by a Stanford grad named Cyril Elwell lee deforest then joined them in 20 and 1912 to 1913 for a couple of years to further develop his Audion tube this was his original Audion tube this is the very first vacuum tube here's his patent on this first vacuum tube this was an improved version and I'm going to actually pass around an even more improved version so you can take a look at what this Audion looked like basically handle these very carefully but you can see what a vacuum tube in those days look like and the details are on the card that's attached to it so pass these on around and we'll collect them in the back so this was the start of early technology for our local area so Cyril Elwell wanted to improve on the spark transmitter which was being used the spark transmitter made so much noise only one could run it at a time and it was very difficult to have conversations with it and so they developed an arc transmitter was developed in Denmark so Cyril Elwell went to licensed the Paulson Park transmitter he brought back the first one a little 15 watt transmitter which is in the param collection he raised fun funds from angel investors including the president of Stanford David Starr Jordan Jordan pony DUP $500 which is about $18,000 today he also got money from Charles Marx the professor and civil engineering and John Kasper branner who was the geology professor and cobbled together enough venture capital well wasn't really called venture capital then call it angel investing to start his company and over the next year or so he was able to demonstrate communication reliable consistent communication from San Francisco to Honolulu which was quite a jump and here's a cartoon from the San Francisco Sun commemorating this feat of being able to jump the Pacific Ocean and communicate reliably with voice and Morse code back and forth to Honolulu so here we have the first venture capital in its early stages and Stanford's involvement the staff and faculty of Stanford getting involved with the local companies well they built a number of high-powered stations and the 1920s they had three stations they were operating as a business in Portland Oregon San Francisco and Los Angeles covering most of the Pacific Ocean so ships would pay 10 cents a word to send information back to their home base and the shipping companies could then send word to the ship's instructions and so on this was quite a good business there's a California historical packet Palo Alto at Channing and Emerson that commemorates this well the first radio broadcast the first regular commercial radio broadcast from a Stanford engineering student back hair hold he started a school out behind what's now the Fairmont Hotel in San Jose to teach radio arts because it was a hobby of his and he wanted more people to be able to participate in this they needed radio operators for ships and so on plus he would put together receivers for people so they could have it in their home and then they would broadcast for an hour and night his wife Sybil on Wednesday nights would have a preview of some of the current records of 78 that were being brought into the the record stores and she would play those over the air for the local audience for an hour she was basically our first DJ and that was station they call it station F n you picked your own call signs in those days had became eventually KCBS when CBS brought that bought that station in the late 40s they renamed at KCBS well Otis Morehead was one of those early technology entrepreneurs he was a Stanford engineering grad he was a radio amateur operator what we call ham radio operators also he liked building vacuum tubes they weren't that difficult to build although they weren't that good in those days and he established Morehead laboratories in 1917 in San Francisco and he manufactured basically bootleg tubes he figured this is how you make a good tube I'm going to make them just like that well you can do that for a few hundred or a thousand but if you're making five or ten thousand somebody might notice and the East Coast companies noticed and they filed a patent infringement lawsuit and put them out of business in the early 20s this is a very interesting theme and we're going to follow this through the talk this idea of intellectual property and patent infringement very key but this is an early example of what happens in this to business well some of the defining events days there was that independent wealth from the California Gold Rush so there was a lot of wealth in San Francisco and Oakland and around the Bay Area from the gold which was still being pulled out of the hills the Titanic sinking in 1912 was a major catastrophe and made it really brought home the issue that we need radio communication for ships to ship and ship to shore they had it but in those days the operator was employed by the radio company so the operator on the carpathian had already gone to bed and couldn't get this emergency signal from the Titanic well they were then they quickly change the rules to say no the steamship companies have to have their own radio operators war one brought a very big awareness that technology is going to be key and so the US Navy had a push to put in more transmitters receivers ship to shore and ship the ship and they knew this was a key technology after the war also the economics of radio was really desirable rather than having a hundred telegraph lines going from Albuquerque to Phoenix and having you go out there and repair them all the time wouldn't it be great if you just had a radio link and you send stuff back and forth also undersea cables tended to be pretty reliable but very difficult to maintain being down two or three miles in the ocean and wouldn't it be nice to go across the ocean with radio as Marconi had demonstrated in the very early part of the 20th century so this brought a frenzy of activity and a lot of funding to San Francisco to our Bay Area for our radio companies we're going to follow three pioneers to give you a feeling for what happened and why it happened William I tell Jack McCullough and Charlie Linton were kids in Bay Area families they had a strong history of entrepreneurship and their families trying new things having hobbies and they were born and raised here this is Charlie Linton at 11 and on the door there which you can't quite read this as wireless house so here's a kid at 11 he's got a little transmitter and a receiver and he's talking to the neighbors down the street maybe across the town using this wireless technique bill I tell took shop classes at Los Gatos high school I like to say that's because Homestead High School wasn't there yet which is where Steve Wozniak and Steve Jobs went at any rate he worked during the year at his father's quarry in the Santa Cruz Mountains as an assistant blacksmith and a machine operator and also during the summer at his uncle's motor company the whole Scott motor car company that made the victor the victory engines for airplanes in World War one and got to know quite a bit about operating machinery making new jigs making new equipment maintaining things a real hands-on capability there Jack McCullough and Charlie Denton went to high school at the California School of Mechanical Arts what we now know as liqui merging High School in San Francisco it was opened by lick who funded the Lick Observatory up on Mount Hamilton in 1895 to give a free education for boys and girls that had a technological bent kind of a school where you could get hands-on experience they had a rigorous training in mechanical trades being able to build things wood shop metal shop the kind of things I remember when I was a kid Lytton said he gained a realistic feel for materials and the processes there at Lick Wilmerding when he was a high school student well McCullough continued at a local junior college and Litton enrolled in Stanford in mechanical engineering in those days engineering almost all engineers majored in mechanical engineering for the four years the fifth year to get their Engineer degree was a specialty year and then they could go into electrical engineering if they wish to as a specialty which could be a locomotive propulsion it could be power transmission those kinds of things were fairly common in those days Nott Communications anyway he got his mechanical engineering degree in 1924 and then got his engineers degree specializing in electrical engineering taking that first communications engineering class in 1925 and it was a very small electrical group about three people in the electrical side of the business well I tell Linden McCullough were introduced very early in their kids years to ham radio through their family and friends and we saw Litton and his little Radio Shack their ham radio in the Bay Area was quite a novel thing it was the Bay Area was pretty isolated it was oriented toward the seaports here in San Francisco and Oakland the shipping out of Maryland those kinds of things so they needed radio paraders and there was a lot of radio stuff going on so kids could get to find somebody down the street maybe who knew radio they could get surplus parts they could get circuits figure out how to do things they have little clubs they could get together and work on this together well in the early 1920s when they started licensing radio operators 1200 of those were from San Francisco Bay Area which was 10% of the whole nation's population of ham radio operators so you can see there's a bubble forming here this is this is not very normal to have that huge number so already the Bay Area is starting to put down some statistics showing that it's going to be something big well as I said this was an active area for radio production we had a number of firms REM were made radio sets Magnavox a guy named Jensen you've probably heard of Jensen speakers Magnavox speakers started in Napa and moved to Oakland Heinsohn Coughlin I'll talk a little bit more about them it made custom radio equipment for shipping for companies that sort of thing and federal telegraph which I mentioned and they had transmitters in the 1910s and in 1919 they were building 1 million watt transmitters they had one in the Canal Zone one in Alexandria Virginia they had them on the west coast and the government the Navy and others were using these across the world and so radio parts were available for hobbyists and that was great for the radio amateurs also there were a lot of jobs so if you were 18 or 19 and a ham radio operator you could probably get a good job at one of the local radio companies how many of you are ham radio operators or ipalo the license in the past so I see there's a fair number of you I'm km 6 LH well the nice thing about ham radio is it's a way to make friends us nerds us you know technical kinds of people don't like to really talk to other people but we're happy to talk about a circuit or something we've done recently like talking to somebody in in Kansas or some faraway place so the hobby becomes a way for us to socialize it's a way to communicate over the air of course but also face-to-face it's very egalitarian there's very little distinction by class or education for example ITIL said in the Santa Clara County radio Club that he shared the mid 20s he said they had farm boys and Stanford students and federal telegraph technicians and retired executives a whole panoply of people they're all working toward the same goal helping each other in the hobby or trying to take a next step and make something better so it was a rap grassroots kind of hobby much like that homebrew Computer Club I talked about a little earlier and which was a big contrast for what we saw in the large companies which were typically tried to be monopolies we had the large oil companies communications companies like AT&T that had a monopoly on stuff well these kids and these young people were interested in extending this radio technology and I mentioned that lead to for us to develop this triode which is being passed around to help get us away from spark transmitters and arc transmitters into what we know today which is good communications transmitters and receivers and the kids would build their personal reputations based upon maybe new circuitry or better transmitters or better antennas or being able to talk to a faraway land being the first one to come in and say hey I just did this it was a combination of competition and collaboration so once they did it they wanted to show you how to do it so you could do it too and we can help each other in this hobby a lot like that homebrew Computer Club I mentioned earlier and a lot like what goes on in Silicon Valley today we see a lot of these in meetups and tech organizations keeping that technology going moving to the next next step so another pioneer was young Fred Terman his dad Lewis Terman moved to San Bernardino where he was the principal of San Bernardino high school for a year which is where I went to high school in the early 60s and then his father was hired by Los Angeles Normal School which we know today is UCLA and he spent three years there until Cubberley who this auditorium is named for in the school of education hired Lewis Terman to come and be a professor at Stanford in 1910 and so little fred term it was ten years old there he was born in 1900 they rented for a couple of years the term ins did while his dad got established here his dad you may remember was one of the generators of the stanford-binet intelligence quotient test we all took in the 60s 50s 60s and 70s he was involved in research on learning styles mainly at the high school level well they've been build a house on Dolores Street and right across the street in about 1950 Herbert Hoover moved in he came back to the campus and moved right across the street rented a place for a couple of years until they built their own house about a block and a half away so Herbert Hoover jr. was a kid across the street from Craig Kerman and down the street was rollin Marx who was the son of Charles Marx the professor and civil engineering and George branner whose dad was the famous geologist and Jack Franklin the son of the head of the chemistry department who built the big chemistry building and so Herbert Hoover jr. said all three of us were neighbors and upon pushing the key of one of our imposing contraptions would holler out the window to see what had been received on the other side of the street these are like eight 12 15 year old kids working in this hobby and helping each other along this is the faculty kids around the campus and others well Fred Terman says if you saw a 90-foot pole sticking up somewhere you go and knock on the door and get acquainted with him because this is obviously somebody involved in radio Federal Telegraph had moved over to El Camino it was about a mile a mile and a half down from the campus so Fred would hang out a federal Telegraph Hill and his friends and get pieces or talk to the people there and then he worked there one summer when he was working on his bachelor's degree in engineering and this is Fred Terman when he was seventeen sitting there at his radio station so following our entrepreneurs I tell Lynn and McCullough experimented with vacuum tubes which is the new technology they built their own parts and equipment their own receivers transmitters circus things like that and made notable contributions for example in 1924 when he was at Stanford radio Club made the first radio contract with across the ocean with Australia and New Zealand and I tell pioneered in 1928 what we call the ten meter band the 30 megahertz band which was way up there in the unusable part of the spectrum in those days well I mentioned the to business in connection with Otis Morehouse and it was a an interesting business a General Electric Westinghouse and AT&T their Western Electric division made tubes makes mostly on the East Coast they developed high power transmitting tubes in the early 1920s but they had difficulty producing consistent reliable ones they were flaky to make they might die after 30 days or 60 days instead of having a long life of several years they required precise machining they had to blow the Pyrex glass which came from Corning in New York then to be able to seal that as a vacuum so the tube would work correctly a lot of exotic materials and difficult sealing techniques well Litton got a local job through a ham friend at federal telegraph which was just down from the campus Leonard Fuller was their first engineering PhD here at Stanford at first electrical engineering PhD in 1919 and he served as chief engineer from around 1912 to 1921 of federal telegraph and that became the sole supplier of tubes and radios to international telephone and telegraph they set up well obviously a lot of maritime communications but also for a lot of other companies in China the Philippines France Italy places like that AT&T and these Eastern companies had Dena Polly on the United States I tell meanwhile got a job through a ham friend at Heinz and Kaufman one of the other companies I mentioned that made radio systems and Heinz was himself a ham so he liked to hire guys who had that kind of experience and they focused on what we call HF radio the stuff from five to twenty maybe thirty megahertz and he recruited McCulloch to work for them about a year later this was the term house over in Palo Alto where federal telegraph located this was their laboratory in this little house here is where lee deforest was the research director that worked on the improvements of the tube that I'm passing around well the to business was interesting after World War one you couldn't buy transmitting tubes on the open market they were constricted restricted technology the Navy and General Electric set up a new company called Radio Corporation of America RCA to hold all these patents and to assure us domination and in fact they took over any European companies like Telefunken and Marconi the u.s. arms had to become American companies in order to use this technology and they had an exclusive cross licensing with RCA GE Western Electric Westinghouse and the other companies only those companies could use these high-power transmitting tubes and therefore they refused to sell them to our Bay Area companies Heinsohn Coughlin and Federal Telegraph because they were selling internationally they want to keep the secrets here and was also a threat RCA is monopoly so both companies need to develop high-power triodes so let me and I tell headed up the tube shops at these two different companies the challenge there at the tube shops was to design around these key patents held by RCA which couldn't be licensed to our companies which was very difficult so they hired a lot of local hams I tell them that the two companies collaborated with each other this would be unheard of on the East Coast I mean IBM talking to RCA R Raytheon or other companies you kept things close to the vest out here because they're little companies and trying to hang on I had to work together much like today's Silicon Valley companies it's a different method they would collaborate with each other because they knew each other as friends and trying to solve the same problems they also worked closely with our patent attorneys and they engineered rugged new power tubes one of them I tell and McCullough put together using new materials and manufacturing methods that weren't covered by patents for example the patent said that the plate surrounds the grid okay as well what if we just made it three-quarters of the way around or two halves or whatever a new patent okay so they found ways around the RCA patents they had new shock resistant seals Litton was a master of process development he developed the oil vacuum pump to get higher vacuums to get better reliability better sealing and so on and they had a longer life and were more reliable than the RCA tubes of the same type and it didn't infringe RCA patents that's the key thing they could make them in quantity without infringing the patent here's an example of one of those early tubes behind some Coffman 3:54 well let me as I said he was a process guy invented what he called the glass lathe and you can see it here it's basically like the lady would use for turning wood and he would you put the glass the blob of Pyrex glass that you blew on one end and you had a an axis of symmetry you could build your tube in there and then seal it right on that same axis and you got high rigidity great repeatability and a high precision and he built this not in the garage but in a shack on the back of his parents property so that sort of council's of Silicon Valley startup this is this as Charlie that then came the u.s. depression in the 1930s and I tell him McCulloch who had been at Heinsohn Kaufman Hines and Kaufman was shutting down they left and formed their own company which all US hams Noah's iMac they built high power high frequency tubes mainly for the ham radio operators because the commercial people weren't working at that high frequency high power area but the hams really wanted better tubes these guys were good at designing them so they got some financing Preti ran up some music some movie theaters in San Francisco and Harrison had a real estate business in San Bruno they had some money and they invested the money to start up the company I tell amico I brought the intellectual property and they split it 50/50 here's our first venture capital basically they shared ownership and the profits of this company became very profitable and so this is precursor today's Menlo Park venture capital firms kleiner perkins and all those companies this is back in the very early 30s another key point I made earlier was that they cooperated closely so Litton helped I tell McCullough set up their vacuum tube shop gave him some castings for his lathe and gave him the blueprint so they could make more of them he wasn't in the business of making lathes he wanted to improve the technology so once he had what he wanted he could give them give his friends this and he freely exchanged information and technical developments back and forth as I said this reduced the risk for these little companies little startups competing with monoliths from the East Coast it gave them a better foothold as small tube companies and radio companies to be able to develop this new stuff kind of like jobs and Wozniak in the homebrew Computer Club getting together with your friends helping each other figuring out how to make it better and collaborating well during the Depression Federal Telegraph in the late 20s had was building a two million watt transmitter to install in Spain and in Shanghai but that got cancelled because the war had wound down there was no longer any funding for that so the this large machine which you see in the background here huge thing had great big magnets and stuff in it was sitting out in the rain in Palo Alto so when federal Telegraph was sold and moved to the East Coast these leftover magnets for this two mega watt transmitter were donated by Leonard fuller do UC Berkeley to use in earnest Lawrence's 42 inch cyclotron that he used to do high energy particle physics resulted in a half of those Nobel Prizes by 1960 that cyclotron electron has to be a very great development and it was Leonard Fuller who passed that long now Leonard Fuller was quite quite an illustrious guy in fact two of his grandsons are here today we've got Greg and Clark here in the row and his great-grandson Chris the audience I'm passing around were part of Leonard Fuller's collection that he gave to his son Clark he went on to become the head of engineering UC Berkeley in the 30s and that's one of the reasons of course that he acquired this for Ernest Lawrence and they installed this and the Berkeley high energy lab learns radiation lab well Fred Terman 1936 asked Charlie Litton to join Stanford's faculty at least the department as a lecturer to share his knowledge with students and the staff and to help with the labs and show them how to do things and part of the klystron Development Realtors will talk about later when Sperry purchased the rights to the klystron technology there was $1,000 for a piece of intellectual property that belonged to Charlie Linton and Linton said well why did you just give that to Fred Terman all the sudden Fred's got a thousand dollars so he writes back to one of his students who graduated in 34 who's got a job remember jobs are hard to get but he's working at General Electric in New York and he writes back to David Packard and says you and Lucille why don't you come out to California you can work on your graduate degree I've got five hundred dollars you can live on and five hundred dollars for lab equipment and Dave Packard thought long and hard and got in his car and came out to California and he worked with Bill Hewlett on a circuit that bill Hewlett had developed for an audio oscillator that was stable as opposed to having to be tweaked every time you changed the frequency that was their first product and it was developed in a garage so that counts and so that formula packard again Fred Terman getting these two guys together using some of Charlie Linton's of money from an intellectual property item so this demonstrates more university industry cooperation as we saw with federal telegraph and with other companies earlier well in the late 30s there was a growing threat to peace Japan and Germany Ruri arming and President Roosevelt was rebuilding the Army and Navy in England they had developed something called radio detection and ranging called radar where you could send out a pulse of a radio and then you waited you heard and it came back after a little while you said well that's 14 miles so that's 32 mile you could range where it was and get a fairly idea of where it was coming from but to make it better so that was more than just hate as a blob out there I don't know what it is you want to increase the power and you want to go to a higher frequency so you can see smaller and smaller things like warships or airplane and they needed high-voltage high-frequency transmitting tubes and in those days only the iMac tubes would have would be able to do that so they work best at those high voltages and high frequencies so they were in in demand by the US Navy as they developed this radar capability about that time well earlier Russell sig variant two kids in Palo Alto this is pictures of them as kids were worried about Germany they had ideas that maybe they could use microwaves to detect things as small as airplanes and so 1937 Russell Varian moved to Stanford's lab electronics lab to work with Bill Hanson the physics professor to develop the klystron Russ Varian would come up with ideas let's try this let's try that let's do this and and Hanson would then study and say well this won't work but this is a possibility so we go back and try something else they finally come up with what they thought would work and they developed this place drawn in 1937 this is a picture of about a five kilowatt klystron and these are the brothers here and so they used Litton's free advice and Hanson's theoretical assistants develop this klystron and probably only in palo alto you're going to see a front page like this this is 1939 and you see our president over here saying it's starting to look pretty bad for for peace in the world this guy over here saying I just want one more country give me Czechoslovakia and then I'll stop but the big headline was this one here the new Stanford radio invention Harold's revolutionary changes and they had Russ and Sigrid vary in here talking about this klystron which was just released to the press in 1939 probably that and maybe the mercury news and that 80s and 90s was were you read about the technology well Sperry purchased the rights to the klystron got exclusive rights they bought lathes and welders and pumps from Litton who was making lots of these and Litton continued then to make klystrons for IT this international telephone and telegraph because very early france was trying to buy this radar and communications technology until Germany took over France that became a dead end there well Lytton became itt's very high frequency of a microwave design arm during the war and he developed continuous wave klystrons and VHF and radar triodes that could be used for this new technology in defense so at this point San Francisco Bay Area and especially around Stanford was a microwave hotbed this is where all the develop moves happening about half of the tubes are being made here so wartime expansion we have a very progressive approach to business here in the Bay Area's which we didn't see on the East Coast and in Detroit and places like that it was much more egalitarian between the engineers and the marketing the cost accounting all of the production people in these companies it was a very open style it was typically developed here the managerial techniques were great at forwarding union organizers but they also kept employees happy and productive for example they started prom profit sharing some companies free tuition for their their professionals the local colleges had cafeterias Kaiser had their steel mills and developed lots and lots of ships the Kaiser shipyards and they developed their own clinics which developed into Kaiser Permanente hospital system that we know of today but that came out of world war two and these clinics started by these progressive companies we had the HP way philosophy which spread across Jula Packard Fairchild Intel I worked at tandem for quite a few years we had a number of very interesting rules one of them that I remember was if a new idea comes up in a meeting you can't say anything bad about it for five minutes you have to say well it could work you can't say that'll never work nobody would you got to say well if you did this how about if we tried this you've got to try to build it up first before you shoot a town and this allows more openness and more intrapreneurship in our companies than you see in many other companies well in the post war realignment RCA and the eastern companies focused on TV and broadcast because Philo Farnsworth developed electronic TV on the peninsula so we had television and we had broadcast and iMac went on to develop a better line of high-frequency tetrode power tubes that worked at even higher frequencies than they were using in those days the FCC the Federal Communications Commission did a surprise they were going to open up what we know as the FM band around 50 megahertz but as you all know it's really up at about a hundred megahertz 88 to 108 that's where we find KQED and so on well it turns out that RCA's tubes wouldn't work as those VHF frequencies so these the next best thing imac koobs did work so they copied them kind of like Morehead had done earlier but there was a reversal of fortunes in 1947 imac sued RCA and General Electric and oneness patent infringement lawsuit and shut them down so iMac transformed the Eastern companies then into their own sales force and distribution network so they would either make the tubes here or license them to be built there their iMac tubes stamped RCA on the side so the big dog now was Silicon Valley we had pretty much taken over that business to intellectual property through entrepreneurship California before the war had about seven million people way down here about half of what was in New York states like that but a few years ago California now has twice as many as New York and twice as many as Florida so this huge growth this blue line you see here shows that California was really growing a lot there are a lot of reasons for that but key one was technology you see we were a microcosm of this new technology permeating the 50s 60s 70s and so on and it involved electronics defense electronics aerospace Lockheed had their missiles and satellites Ford and and Sylvania and venture capitalists here and that helped to fuel the growth both here and in Southern California and California became a leader then in technology but also in population growth and wealth growth after the war charlie didn't focused more on these high-power klystron see that that was a really neat technology and they was using it for physics search they had developed the mark one two and three linear accelerators and they developed klystrons going from 30 kilowatts up to 30 megawatts and that transformed stanford into a major player Fred Terman manned Wally Stirling one is stanford to have these pinnacles of excellence you could have lots of studies but you want to focus on these pinnacles where you're really great and focus on those as graduate schools and so on and electronics and especially microwaves was one of those microwave physics so then they got a contract from the US government to fund a two-mile linear accelerator slack to do physics research and we see these Linton klystrons today in radiation treatment for cancer the radiation treatment you get its source as a clay stron so it turtle didn't develop a recipe for how to build a firm he says get some initial capital not too much you don't want these guys to go crazy with you know the unicorns or whatever but get some initial capital together get an R&D contract or some new idea pull together your engineering team and develop it develop a product line go into production and then build on that build on this market that was Charlie Linton's way of approaching the startup of little companies well one of the companies after the war was variant associates started by the very ends and some other Stanford people and you notice it wasn't called very incorporation they thought of as kind of an egalitarian progressive company where we were all sort of equals working on stuff and so it was called variant associates well they were developing microwave equipment and they had to develop microwave measuring instrumentation to develop that so they could test their equipment and put it in the field and get it working and they developed a very nice piece of measurement gear and they approached Packard and said we'll sell you the rights to this and tell you how to make it for 20,000 bucks an HP says that sounds like a good idea because we're making instrumentation so that was a good match so HP enlarged its product line by picking up the the new equipment and increase their revenues and developed the Santa Rosa and Santa Clara divisions which became Agilent and then became now keysight so this a whole new line of business HP kept divisional izing and breaking off pieces as they got too big to develop these different businesses in medical diagnostics things like that well this is a mural up in Palo Alto basically at the corner of El Camino and Page Mill it's on in Courthouse Square and some of you how many of you have seen this a visited courthouse square and seeing this I know my wife has very few okay well you can go and take a look at it I'll show you where it's located but it shows the number of these people this was this was painted in 2002 but here you'll see Leonard for shaken hands with Ernest Lawrence giving him this big magnet to build a cyclotron and Cyril L well here's doc pare hold broadcasting to his audience in San Jose you see Lee de Forest with one of his original howdy ons here's Charlie Litton this little glass lathe making a vacuum tubes here you see Fred Terman talking to Bill Hewlett and Dave Packard this is their audio oscillator they built they sold the first half a dozen first seven to Walt Disney for producing the Fantasia movie it was the first client and you see Philo Farnsworth had developed the first electronic television Jack McCullough and Bill I tell here working on their circuits so this is kind of a pulls together this thread of the Bay Area and Stanford and this technologies to early technology developers and it's up in Palo Alto at Courthouse Square it's in an office the office is now called easy home so if you want to go online you can go to easy home and they will arrange for your bush trimming and lawn maintenance that's a company that's occupying this but you can look and take a look at it it's at birch and Sheridan and this is Nikola Tesla one of the heroes of electronics engineering there's a statue there of Nikola Tesla once fast forward to the 1950s a little kid named Bill Shockley here he's shown eight years old with his dog at his home until graduated from Caltech went to MIT and got his ph.d and went to Bell Labs where he and his courts invented the transistor which would come to replace the tube much less power much more reliable much smaller well he wasn't too well-liked at Bell Labs you may already know that story so he left bill apps you didn't feel he was getting enough recognition and so on he went to Caltech to teach and he's approached by Arnold Beckman who said well why don't you start up a silicon transistor company and you can locate it here in Culver City and I'll provide the money and and Shockley says Culver City says I don't think so so he thought he would come up his mom was still living in Palo Alto he came up to Palo Alto and started this company in Mountain View there's a plaque there although right now there's a big construction zone where the old Sears building was and about two years later some of the guys couldn't stand his management style kept changing priorities and changing things it was very difficult working for Bill Shockley so he left these these eight the trader is a left Shockley semiconductor to form Fairchild with the first real venture capital lined up by Arthur Rock one of the New York financier who moved to the west coast a lot of you who were in engineering might have used Shockley's book in the 50s and 60s in your electronics engineering class he was one of the pioneers in the field of solid-state physics and semiconductors one of the things that was developed there was the planar process it was difficult to make transistors impurities would get in contamination and it would ruin them after a few days or a few weeks it was pretty difficult to make good ones so Jean Hearn a at Fairchild in 1959 developed what's called the planar process and required special infrastructure needed hype high vacuum well we've got that here you have to have precise furnaces we know how to do that glass and quartz capability we have machinists who can machine course we've got the glass lathes we've been doing this for decades ultra pure gases and water were top-notch at process development and process control and so all of this said this is the place to build transistors and and semiconductors and so when this all was developed here it turned out we already had the infrastructures we developed during this tube era to go on to semiconductors it made sense for Fairchild signetics all these companies to be to be located here where the technology was where the people were where the practitioners were and so there's a plaque up in Palo Alto at the original Fairchild plan upon Charleston which is a California historical plaque for the first commercially practical integrated circuit and we here's an I Triple E milestone plaque and we had a dedication there four or five years ago Gordon Moore spoke and different people this is the epicenter of where the planar process was developed an Isaac Asimov the famous science fiction writer said the planar process was the most important moment since man emerged as a life-form and he may have been exaggerating a little bit but perhaps not much because cell phones communications technology high-definition TV all of this technology came out of what developed this of the semiconductors developed using this planar process it's used by all semiconductors today licensed very broadly okay well the fair children were formed after Fairchild Fairchild was funded by bench real venture capital Arthur Rock pulled together a funding for this he had a two-page hand typed prospectus the sold companies on and they developed memory chips and then in 1971 they developed the microprocessor you see the four thousand four here developed initially to be part of the heart of a calculator but it was a true microprocessor put together by Ted Hoff employee number twelve and I've got a video interviewing him which you can find at Silicon Valley history org and at the end in the 1960s the situation had changed dramatically instead of the East Coast big companies controlling technology for communications and radio and so on the peninsula and the Santa Clara Valley were the major electronic centers in the nation they developed the new technologies they had the production of tubes about half of the microwave tubes in the country built here typically upon San Carlos all the weapon systems of space systems traveling-wave tubes for satellites were developed here there was a right wide range of industrial goods to for example broadcast TV of microwave ovens which they originally called radar ranges which probably was the wrong thing to call them but the microwave oven uses magnetrons that were developed here and elsewhere but were certainly a key part of that Stanford microwave hegemony and so Silicon Valley became the central focus of the u.s. defense effort in those days and also the u.s. manufacturing economy and the business climate was quite different East Coast focused on the vertically integrated firms you picture IBM and they also tended to be rather slow adjusting to new technology changes and marketing changes and the needs or the abilities of Zek nology to deliver for the Defense Department or for the the consumer economy contrasting that Silicon Valley was highly fragmented and decentralized I mentioned this earlier lots of little companies and therefore they had to kind of be nimble and they had to help each other they were very engineering driven looking at the next best way to do something processes being able to improve existing processes so we had a dense regional network of small and medium-sized companies that had to support each other and when you had to do something instead of doing yourself you'd find somebody else who was better at that and they would provide it to you what's very nice another key thing that's different in California and 1870s back right after the gold rush California passed a law that said you can't enforce a non-compete clauses in employment contracts very few states had it in those days and today most states still don't have that so if you're in Boston for example and you want to leave your company to start your own new company that you may have signed an agreement that says you can't compete for two years you've got to go pump gas or design websites or do something like that until that two years runs out not in California you may have it in your employment contract but it's unenforceable so you see people leaving HP leaving Google leaving companies starting your own companies and they can't take the intellectual property or the customer lists but they can take their intellectual ability and their knowledge and then you can start building beyond that and so this is a rather unique thing in California that also helped this very different we can adapt much more rapidly to change and we thrived in this very competitive and dynamic environment well it was pretty unique we had practices skills and competencies that we developed over that 100-plus years we had a lot of hobbyists and collaborators that work together a lot of this came out of hobbies like ham radio or the homebrew Computer Club or meetups I'm going to a meet-up tomorrow for example and we started with analog which is the area that I covered but then we moved on to digital the integrated circuits then to software to biotech in the 80s to mobile computing now it's big data deep learning virtual reality and augmented reality and autonomous vehicles this is all technology coming out of the valley supplemented obviously the lava comes out here so a lot of cutting-edge entrepreneurs we have people willing to risk things and try it out for a couple of years we have the engineers to support them and the venture capital we have local universities to conduct research and development in these areas and then we have the supporting role role models the expectations for our high school and college kids you're supposed to go out be able to invent something new or start go to a startup company and you know make a few million dollars on your stock option it's a special culture of innovation that we've we've inbred here along the 40s and 50s we had Shockley semiconductor within Fairchild SR I Stanford Research Institute developed a lot of stuff with Doug Engelbart and other the graphical user interface in the mouse Ampex for video the audio and video recording you accurate I mentioned universities are Stanford and UC Berkeley then in the 60s we've come up with the other semiconductor companies AMD we have national semiconductor and Intel and Intersil we start getting infrastructure companies like Applied Materials developing all the equipment you need to make the semiconductors it's a big business right there in the 70s now we have the computer companies I worked at tandem we have Apple for phase Amdahl develops their big mainframe I worked there for seven or eight years video games we have Atari now with a video game you can actually play in your home on your television we have the start of communications technology Western Digital is developing disk drives we have Genentech in the 80s software where all the sudden discovering there's a market there are so many computers now that there's a market for software so Adobe is making Photoshop for the Mac and for the PC we have workstation companies with Silicon Graphics and Sun and MIPS we have Cisco now we've certainly to interconnect these computers in what becomes the eat the Internet this is the ethernet technology that was developed at Cisco and my favorite Fry's Electronics where you go to buy all these little bits and pieces of things and try out the new technology you have to leave your credit card at home when you go to Fry's iBM has their element in research center there's a lot going on here in the valley in the 80s and the 90s and beyond we have Tesla starting their electric car business browsers and Google we have another networking company we start seeing Facebook coming up eBay where you can buy and sell stuff Palantir analyzing large data sets for looking for secrets of information PayPal where we can actually have online transactions and then software is a service with Salesforce and then Netflix and Pandora are rolling out the content that we love so much and companies are moving here the major auto companies are all here Fortis wants to hire another one or two hundred people right next door to Stanford GM is going to be hiring over a thousand at their cruise automation in San Francisco this on BMW Volkswagen we've got a branch of the US Patent Office now in San Jose Toyota is investing a billion dollars much of it right next to Stanford and the rest around MIT Samsung big and company they would like to be really great in their operating systems for smartphones and robotics and other things like that but when they buy a little company in the Bay Area they can't convince the people to move to South Korea so instead they built a large ten story building over in Santa Clara and they buy a company and they say okay you're on the second floor in the West Wing and you're on the fourth floor in the south wing and they're bringing them all in there to form this bubbling pot of disparate ideas to create these new technologies as Samsung's going to need and there's this little Arkansas company that for about the last 15 years has had their development labs here on the peninsula doing things and always the lowest price always and biotech I mentioned Genentech they've sprung off a lot of companies they were formed in 1976 kleiner perkins venture capital to do a gene splicing turned out it was possible they didn't think it was but it turned out to be calico is the Google research thing that's supposed to increase our lifespan to about a hundred and fifty years and some people say well it's named for the calico cat which is a rather unique cat if you know about calicoes but I think it stands for California Life company and that's that's what's going on there babe Cambrian genomics transcript ik gene we've all of these patís here in the Bay Area and lots more in Southern California around the world off of that pioneering development at Genentech so we're exactly a Silicon Valley well I looked at a map and it turns out it says Silicon Valley a certain rate now where we are Palo Alto to Sunnyvale to San Jose they're really it's all the way from San Francisco to the Monterey and Santa Cruz maybe over to Livermore it's it's it's really a metaphysical space San Francisco is now considered part of Silicon Valley and who would have guessed but it is an Silicon Valley now really refers to a whole area there just wasn't enough land here to house what became Silicon Valley I mentioned venture capital funding where is it well in the spring of 2014 I found I found this map showing the Bay Area has about 55% of the u.s. a venture capital invested here compare that to New England with 10% New York about 9% and bits and pieces around the rest of the nation and you can see why it's so darn hard to start major companies in other parts of the nation it can be done there is need obviously to spread out what we're doing here because we the housing prices are so high you can't afford to move here anymore but the point is the venture capital will start up is very often here so how different is Silicon Valley I follow Thomas Friedman in The New York Times and in January of 2013 he said in Silicon Valley great collaborators are prized in Washington DC they are hanging when they say collaborator they mean praetor but here in Silicon Valley they mean colleague so we don't even speak the same language we have a different way of operating it's really our attitude for example we think of failure as a feature not a bug if you're if you have a project that fails and you're working at a company on the East Coast chances are you'll you'll be in maintenance engineering or maybe you'll be the janitor for your next project out here if you have a project that fails out from under you you want to hire you for our startup because you've got experience and we want to tap that and learn better how to do stuff so out here if you've had a massive failure of a start-up people are looking for you in a good way and I like Facebook's one of their mottos is move fast and break things don't wait try it out iterate along the way make it better you saw the f8 conference this week they're coming out with new things going to be trying and probably cycling old things out of the way so that's kind of a trademark of what happens here in Silicon Valley and around here the failure rate instead of being nine out of ten is more like eight out of ten you either go big you get acquired by Samsung or somebody or Microsoft or you you maybe make some some profit and become a reasonable company we don't feel anymore we call it a pivot we have a different term for that so if you've started up something and it's now working out all of a sudden you're working on something else as William Gibson said the future is already here it's just not evenly distributed so we already know what the future is other people are starting to get a picture of it and we'll get involved in it over the next decades this is kind of where it happens so I suggest you if you're interested in this there's a great book put up by Christophe la calle called making Silicon Valley he says from 1930 to 1979 but he really goes back to 1910 that's a very good quick book to read Fred Terman at Stanford is a great book to read it's a thick one but it has lots and lots of content talks about the technologists the technology and what happened in the tens 20s 30s 40s 50s and 60s another fun book is called the tube guys written by norm pond he talks about the early to days and also this is one of the big klystrons that you see here so if you happen to like the radios that glow in the dark this book is a fun one to read and I have an interview on the on the Internet of norm pond and some others about this the HP phenomenon talks a lot about what it's like being in a stand in a startup company in the Bay Area starting from the 50s through the well through through Mark Hurd in 2009 and it's a big thick book but a fun read about how HP grew Divisional eyes and their philosophy I recommend Leslie Berlin's book on Bob Noyce behind the microchip here's a kid from the Midwest who made good he was working at Philco in Philadelphia and he gets his phone call other than line says this is William Shockley he says he was like getting a phone call from God because everybody knew Shockley and his developments in the solid-state physics he had developed and here's big William Shoplet calling little Bob Noyce working back of the company of course Bob came out to join Shockley semiconductor another view we've got Steve Jobs this is a more closed type of company but a very successful way Walter Isaacson's book another view of a very innovative and open environment is Google a book called I'm feeling lucky if you've ever clicked on the I'm feeling lucky it just brings you to one thing which is probably what you're looking for or in the Plex which is the other book by Steven Levy very good books about this open environment where you're encouraged to spend maybe 10% of your time working on your own hobby stuff which may develop into Google stuff or may not when I was a Danville corporation and I'll set aside 10% of my time on their payroll to spend time with the I Triple E institute of electrical Electronics Engineers as an officer and involved in conference development and so on because this is a way of not only hearing what we had picking up what other people were learning this this partnership got me into a lot of different companies I mentioned I went to IBM in Fishkill and went through their plants wouldn't have been likely to get in as an and all employee you had to know somebody how many of you have Netflix streaming how many of you have seen this video yes some of you have this is great it's called something ventured back and it was at the South by Southwest in 2011 one of their best documentaries and it covers a start-up of a lot of these companies that we're more familiar with Apple Intel Cisco tandem and Genentech talks to the original founders Gordon Moore Sandy Lerner Jimmy try big those kinds of people interviews them and talks to them and also talks to Tom Perkins and Arthur Rock and some of the venture capitalists about how this happened what the importance is a venture capital and of entrepreneurship and what this this cauldron of activity is like here I recommend watching that it's think it's a little less than an hour so thank you for walking with me through these origins of Silicon Valley and Stanford's participation in it and why I see it as the hub of technology development which I think will continue for the next number of decades you can download the slides there are also a number of Technology History presentations and interviews on Silicon Valley history.com which you may find fun to go through so thank you for your attention and wrap it up okay [Music] and and [Music]

Channel: Stanford

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Length: 62min 31sec (3751 seconds)

Published: Mon Jun 26 2017