Silicon Valley’s Unlearned Lessons (Part 2)

This is the second part of my history of Silicon Valley series. If you haven’t read Part 1 and want to know why I’m writing about history, you can find your answers here.

Begin Part 2

William Shockley and Shockley Semiconductor Laboratory

After earning degrees in engineering from Caltech and MIT, the British inventor, William Shockley, and his two partners (John Bardeen and Walter Brattain) were working at Bell Labs on an alternative to vacuum tubes for conducting electrons. (Can you guess what the alternative was? Silicon!). But his partners made the discovery (which they named “transistor”) while Shockley was out of the office. So they filed a patent immediately and didn’t include Shockley.

Shockley… wasn’t known for being a calm person. So it’s no surprise he got very very angry, shun his partners, and created his own transistor that could be sold commercially in 1951.

After getting the recognition he wanted, William Shockley left Bell Labs, left New York and moved to Silicon Valley (mainly because his mother was sick and lived in the area) in 1956 to build Shockley Semiconductor Laboratory.

Side note: Shockley and Beckman (his professor at Caltech) signed a letter of intent to create the Shockley Semiconductor Laboratory on February 13 1956, what many consider to be the date Silicon Valley was founded.

The First Trillion Dollar Startup

William Shockley assembled a team of the brightest young minds in electronics. However, as we’ve seen before, he wasn’t exactly known for his calm demeanor. His management style and personality drove eight of his employees to quit (naturally, Shockley called them “The Traitorous Eight”, Robert Noyce, Gordon Moore, Jay Last, Julius Blank, Sheldon Roberts, Eugene Kleiner (co-founder of Kleiner Perkins), Victor Grinich and Jean Hoerni), and form Fairchild Semiconductor in 1957.

Fairchild brought two great innovations to the world:

  1. Making Bell Labs’ 1955 creation the mesa transistor (the first silicon transistor) commercially available in 1958.
  2. The Planar Transistor (developed by Jean Hoerni of the Traitorous Eight) in 1959. This revolutionized the building of semiconductors (from being hand-made and slow, to mass produced. AND is still the essence of how chips are made today!).

And needless to say Fairchild was probably the first GREAT Startup in Silicon Valley. It was so influential it would take an entire article just to talk about that. You know what, it just so happens Tech Crunch wrote a great article about it called “The First Trillion-Dollar Startup” (I especially love the diagram at the bottom called “Silicon Valley companies that can be traced back to Fairchild Semiconductor”). Read it, and once you’re done picking your jaw from the floor, let me know what you think.

This wasn’t without competition though (so many companies were doing the same thing they were nicknamed “Fairchildren”), since at the time the world was racing to solve the transistor problems (which even led to a court fight between Fairchild and Texas Instruments over who made the initial discoveries, an argument won by Fairchild).

No matter the innovation level, Bob Noyce failed to see any profit for his computer chip. Therefore, in 1968 Bob Noyce, Gordon Moore and another Fairchild star, Andy Grove, left Fairchild and founded a company focused on Integrated Electronics; Intel.

Intel— A Players only hire A Players

Picture this: If Shockley Semiconductor Laboratory (SSL) was a collection of the finest brains in electronics, Fairchild was a collection of the finest brains at SSL, and Intel was a collection of the finest brains at Fairchild.

In 1971, Intel created the world’s first commercially viable microprocessor.

To this day Intel is one of the world’s largest chip makers.

But arguably Intel, and it’s founders’, influence on Silicon Valley was far greater.

  • In 1965 Gordon Moore wrote a paper describing how the number of transistors in an integrated circuit doubles every two years, he predicted it would last 10 years and yet we still use it to this day; that phenomenon became known as Moore’s Law.
  • Andy Grove became CEO of Intel between 1987 and 1998 (during which Intel went from being worth $4 billion to $197 billion). Grove also wrote two of Silicon Valley’s most influential books, “High Output Management” and “Only the Paranoid Survive”(which was a huge influence on Steve Jobs and Bill Gates). For many in the Valley, Andy Grove was both a friend and a mentor, and his recent death on March 21st 2016 led to an outpouring of love from all walks of life in Silicon Valley and elsewhere who were touched by Andy Grove’s work in one way or another. You can watch the tribute Ben Horowitz dedicated to Grove a few months before he died, when he was honored as the 2015 Legendary Leader for “inspirational leadership and contributions to others’ innovation and success”.
  • Intel also hired a young man by the name of Mike Markkula, who made a fortune in stock options and retired at age 32. Only to become an angel investor and abandon retirement 3 years after to become employee #3 at a new startup known as Apple in 1977. Apple’s co-founder, Steve Wozniak, credit’s Apple’s early success with Markkula’s involvement more than his or Steve Jobs’ involvement.

In January 11 1971, Electronic News reporter Don Hoefler wrote a column about the local silicon computer-chip companies. He titled the column “Silicon Valley USA”. The name stuck.

The creation of the microprocessor was the flapping of a butterfly’s wings which snowballed into a hurricane of innovation, led mainly by the creation of the personal computer, turning hippies into super entrepreneurs, and truly changing the world.

End of Part 2

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