A History of Silicon Valley

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These are excerpts from Piero Scaruffi's book
"A History of Silicon Valley"

(Copyright © 2010 Piero Scaruffi)

4. The Engineers (1949-61)

by Piero Scaruffi

Commercial Computers

This section has moved to A Brief History of Electrical Technology

Birth of the Semiconductor Industry

This section has moved to A Brief History of Electrical Technology

The Computer Industry on the West Coast

Located far from the research centers of the large office automation companies (IBM, NCR, Burroughs, Remington), peripheral to the strategies of the electronic giants (General Electric, RCA, Honeywell, AT&T) and left out of the loop of the large government-funded computing projects (Boston's Lincoln Lab and Philadelphia's Moore School), on the West Coast the computer industry was limited to serve the needs of the booming aviation industry of Los Angeles, namely Northrop Aircraft, Raytheon, Rand and Hughes. These projects too were mostly funded by government agencies. The staff of the National Bureau of Standards (NBS) was valuable to the computer industry of the West Coast because many of those programmers accepted to move west and joined the aviation industry. To start with, in july 1950 UCLA completed a computer for the government's National Bureau of Standards (NBS), code-named Standards Western Automatic Computer (SWAC) and designed by Harry Huskey, who in 1947 had been a member of Turing's ACE team, it contained 2,300 vacuum tubes. Northrop, instead, did not believe in electronic computers. In 1950 some of its engineers quit to form Computer Research Corporation (CRC), which was later acquired by NCR in 1953. The rest of its computer lab was sold to Bendix, a maker of appliances and radios based in Indiana. In march 1956 Bendix introduced their first digital computer, the Bendix G-15, designed by Harry Huskey taking inspiration from Turing's ACE. It took input from paper tape or punched cards and sent its output to a typewriter (about ten characters per second) or a pen plotter. It was much smaller than the monsters created by IBM and Univac, a premonition of the minicomputers to come. In 1957 some of the former Northrop engineers led by Max Palevsky quit Bendix and joined Packard Bell (a Los Angeles-based maker of consumer radios) to open their computer labs. Raytheon developed the code-named Hurricane (later Raydac) in 1953 for a Naval Air Missile Test Center, which was also supposed to replace the SWAC at the NBS. The Rand Corporation had been chosen as one of the five sites for development of a computer designed by Von Neumann in 1946 at the Institute for Advanced Studies in New Jersey (IAS) that was completed in 1953 (a few months after the IAS machine became operational in june 1952). The IAS machine was the one that popularized the term "Von Neumann architecture" to refer to stored-program computers (in which computation is due to the interaction between a processor and a memory, with the memory storing both instructions and data). Finally, there were at least two spin-offs of the California Institute of Technology (CalTech): the Librascope division of General Precision (that built another "small" computer); and the Electrodata division of Consolidated Electrodynamics Corporation (CEC), sold to Burroughs in 1956. The dynamics in Los Angeles was significantly different from the East Coast: engineers moved from one company to another, and several of them started new companies. All of them were funded, directly or indirectly, by military projects. The Institute for Advanced Study at Princeton was one of the most important centers of research on electronic computers. Established in 1930 by philanthropists Caroline and Louis Bamberger (brother and sister) and initially directed by Abraham Flexner (the man who had written the article "The Usefulness of Useless Knowledge" in 1939 in defense of pure scientific research), it employed mathematicians such as Oswald Veblen and Kurt Goedel, and physicists such as Albert Einstein, Hermann Weyl and Robert Oppenheimer. Julian Bigelow was the chief engineer on Von Neumann's computer projects from 1946 until 1952. The IAS computer commissioned electronic components to the RCA Research Laboratory, located nearby. Von Neumann tested his new computer by trying to solve a problem that no human being had been able to solve: predicting the weather. The first computer application was a weather forecast application. While the IAS became famous for simulating the hydrogen bomb of 1952, it was the simulation of air flows that proved its power.

The Bay Area at the Dawn of the Computer Age

In the Bay Area the Terman doctrine of close interaction between academia and industry was further implemented in 1951 when Stanford University, prodded by the rapidly growing Varian that needed more space, conceived the Stanford Industrial Park. Located along Page Mill Rd, the southern border of the campus, the park was meant to be an area for companies interested in high-tech innovation. Stanford had meant to lease the unused land to companies, and Terman simply proposed that land be leased "only" to high-tech companies. There had been industrial parks before, but none so oriented towards technological innovation. Its first tenant (in 1953) was going to be Varian. And then Hewlett-Packard. And then General Electric (1954), Eastman Kodak, Zenith (1956), Lockheed (1956) and many others.

Incidentally, it wasn't the only scheme devised to increase Stanford's revenues. In september 1955 the Stanford Shopping Center opened its doors to the first tenant: this part of Stanford was reserved for retailers and would become a celebrated open-air shopping mall.

The founders of Hewlett-Packard created a unique corporate culture. Their management style had little to do with the cold, opportunistic style of the East Coast. Instead of focusing only on profits, HP focused on its human resources. Employees were treated like family members. Hewlett-Packard probably introduced the custom of addressing even the owners of a large company by their first names. Hewlett-Packard pioneered the idea that the workers of a company are co-owners of it, giving them stock options. While most companies hired specialists whose value depended on how long their specialization was valuable, HP pioneered the practice of retraining employees for different functions in the company, thus avoiding the career pitfall of hyper specialization. Lay-offs were anathema, no matter how well or badly the company was doing. HP was also one of the first companies to promote women to higher management positions. Hewlett-Packard invested first not on technology or customers but on its own workforce. Before it created products, it created a sense of community. The company had done well during the war, providing high-quality electronic equipment, and it was rapidly expanding. Revenues grew from $5.5 million in 1951 (215 employees) to $88 million in 1961 (5,040 employees).

Varian (whose revenues had increased more than tenfold during the Korean War) went public in 1956, Hewlett Packard in 1957, and Ampex in 1958. The IPO (Initial Public Offering) meant that the region was becoming less dependent on the big conglomerates of the East Coast. These three companies had raised the money they needed without having to sell bits to the incompetent East Coast electronics companies. These IPOs also marked the beginning of a partnership between Silicon Valley and Wall Street.

In 1950 the Stanford Research Institute was hired by Bank of America to design a computer for the automation of cheque processing. In september 1955 the prototype of the ERMA (Electronic Recording Machine Accounting) was ready and the following year the machine was manufactured by General Electric and NRC. It was the first successful use of a computer for a banking application, and even pioneered optical character recognition.

The Bay Area was becoming an ever more attractive location for business. The inventions continued to flow. Notably, in 1956 Charles Ginsburg at Ampex Corporation, heading a team that included a young Ray Dolby, built the first practical videotape recorder, a device that changed the way television programming worked (previously, all programs had been broadcast live, and, obviously, at the same time in all time zones).

Berkeley had its own stored-program computer project, CALDIC (California Digital Computer), the first computer developed in the San Francisco Bay Area at a time when the West Coast computer industry was concentrated in Los Angeles, completed in 1954 by professor Paul Morton who employed former ENIAC staff from Pennsylvania and local students (including a young Doug Engelbart). This team (notably Albert Hoagland) emphasized magnetic data storage. ## military project

The number of engineers produced by Stanford and Berkeley was beginning to draw the attention of East-Coast companies. In 1952 IBM opened its first West-Coast laboratory in San Jose. In september 1956 this lab unveiled the Random Access Method of Accounting and Control (RAMAC) 305, another vacuum-tube computer and the first to use magnetic-disk storage, invented by Jacob Rabinow at the National Bureau of Standards in 1954 but improved by Berkeley engineers who had worked on the CALDIC project (such as Albert Hoagland). Its RAMAC 350 hard-disk drive had a capacity of five megabytes. This computer shipped with a processing unit, a card-punch machine, a console (card feed, typewriter, keyboard), a printer and the 350 hard-disk drive.

In 1961 Laurence Spitters, a Wall Street investment banker who had moved to San Francisco and joined Ampex in 1958, founded Memorex in Santa Clara taking three Ampex engineers with him to work on computer magnetic tape.

The defense industry was still the main employer of the Bay Area, though. In 1956 sales in the USA of electronic equipment exceeded $3 billion, and half of them went to the military. During the Korean war (1950-53) California finally passed New York as the state receiving the largest share of military contracts (26% of all contracts). The majority of the money went to the aircraft industry based near Los Angeles, but next was the Bay Area. Afraid that the Soviet Union was leapfrogging their missile technology, in 1953 the Army, thanks to Terman, commissioned Sylvania a missile detection system. Sylvania set up an Electronic Defense Lab (EDL) in Mountain View, near Moffett Field, not the first defense contractor to get involved in military projects at this location. This project, directed by Stanford's alumnus Bill Perry, lasted several years and eventually led to Sylvania's Ballistic Missile Early Warning System (BMEWS). In 1958 IBM shipped its first transistorized 709 (originally built with vacuum tubes) specifically for this project, before that machine was renamed IBM 7090. In 1959 Sylvania was bought by General Telephone to form General Telephone and Electronics, or GT&E. By then Sylvania's EDL had become one of Santa Clara Valley's largest companies, with over 1,000 employees, and already spawned the first start-ups in the field of microwave devices for military applications, such as Microwave Engineering Laboratories in 1956. In fact, in 1952 General Electric had already dispatched one of its top researchers, Barney Oldfield, to set up a new Microwave Laboratory at Stanford, one of the very earliest examples of industry-government-university collaborations (radars and missile defense systems).

In 1954 Charles Litton sold his glorious San Carlos-based vacuum-tube operations to Litton Industries, which, despite the name, was based in Los Angeles and owned by Tex Thornton, a former vice-president at Hughes Aircraft with strong ties to the Defense Department who had started Electro Dynamics Corporation in 1953. Litton's original business in San Carlos became the Electron Devices Division of Thornton's Litton Industries. Thornton was one of the businessmen who understood that the Cold War would require increasingly sophisticated weapons. By 1959 he could count on sales of $120 million, of which about 50% came from the government. By 1963 sales would top half a billion dollars. Meanwhile, in 1954 General Electric opened its Electric Microwave Lab at the Stanford Industrial Park to manufacture electronic devices for radars and missile defense systems.

When the Department of Defense awarded Lockheed a contract to work on the project for a submarine-launched ballistic missile (the Polaris), Lockheed relocated its electronics research group to the Stanford Industrial Park (1956) and built a factory for its Lockheed Missiles Division near Moffett Field in Sunnyvale. That same year the USA decided to invest in satellites to spy on the Soviet Union (a project code-named "Corona") and that division of Lockheed got the contract and opened another factory, the Advanced Projects division. Within ten years it would become the main employer of the region. For the record, The Corona satellite, first launched in june 1959, was the world's first reconnaissance satellite program, capable of taking pictures of the Soviet Union from the sky. The project was carried out by Itek (the camera), Kodak (the film), General Electric and Lockheed Missiles Division in Sunnyvale.

In 1957 Paul Cook opened Raychem in Redwood City to manufacture wires and cables for the military and aerospace industry.

The native companies were still small by the standards of the East-Coast conglomerates: in 1956 both General Electric and RCA had revenues of over $700 million, while Varian (the largest of the native Bay Area companies) barely reached $25 million. HP had more employees (901) but smaller revenues ($20.3 million).

In those years the scientific reputation of the two universities grew rapidly: in 1952 Felix Bloch of Stanford University was awarded the Nobel Prize in Physics, the first for Stanford. Berkeley had already accumulated more Nobel Prizes than any other university in the five years since the end of the war: John Northrop and Wendell Stanley (1946), William Giauque (1949), Glenn Seaborg and Edwin McMillan (1951). At the end of the war Robert Oppenheimer realized that the future would need a new kind of weapons laboratory, one that wouln't just build them but also improve them. It was called Sandia National Laboratories, established near Los Alamos and assigned to the University of California. Later, president Truman decided to transfer its management to the East-Coast colossus AT&T. When the USA decided to develop a "hydrogen" bomb to stay ahead of the Soviet Union (that had detonation its first atomic bomb in august 1949), in 1952 the Atomic Energy Commission established a branch of the Lawrence's Radiation Laboratory (later renamed Lawrence Berkeley Lab) in the town of Livermore (on the underdeveloped east side of the bay), soon to become known as the Lawrence Livermore Laboratory. The lab in Livermore was charged with military projects, while the lab in Berkeley was free to conduct theoretical research. In 1954 the lab in Berkeley, which had relocated up the hill from the Berkeley campus, installed a 10,000-ton synchrotron (nicknamed "Bevatron") that could accelerate protons to 6.2 BeV (one billion electronvolts), enough to create antimatter on Earth: the first antiproton was detected in october 1955. The lab in Livermore, instead, became one of the sites for the top-secret Project Sherwood with Princeton and Oak Ridge to produce a "controlled" nuclear fusion. Fusion is the kind of nuclear reaction that takes place in the Sun and generates enormous amounts of energy out of hydrogen. The goal of Project Sherwood was to turn hydrogen (the most available element on Earth) into energy for industrial and domestic purposes. Unfortunately, fusion seems to happen only at very high temperatures. The project was started in 1951 under British physicist James Tuck of Los Alamos, who had worked on fusion for nuclear weapons within the Manhattan Project, but in 1953 Berkeley alumnus Amasa Bishop was appointed the new director. In august 1955 Homi Bhabha chaired the United Nations' Conference on the Peaceful Uses of Atomic Energy and said: "I venture to predict that a method will be found for liberating fusion energy in a controlled manner within the next two decades. When that happens the energy problem of the world will truly have been solved forever for the fuel will be as plentiful as the heavy hydrogen in the oceans."

Culture and Society: The Origins of Bay Area Non-conformism

The governors of the post-war era, namely Earl Warren (1943-1953), the charismatic politician who unified the state behind him and launched an ambitious program of public works (basically continuing the New Deal) including state universities and community colleges as well as a vast network of freeways, Goodwin Knight (1953-1959) and Pat Brown (1959-1967), a San Francisco lawyer. The political climate was so united that Warren at one point was nominated by all three main parties and that Pat Brown could switch from one party to another. These governors invested heavily in the infrastructure of the state while wisely managing its finances. Thanks to the prosperity created by their policies, immigrants flocked to the "Golden State" from all over the country.

Meanwhile, San Jose experienced a population boom in the 1950s due to the soldiers who relocated here after World War II: here they could find affordable suburban housing and well-paid jobs. In 1955 a new fast road connected San Jose to San Francisco, the 280 freeway.

World War II had two parallel effects on the distribution of the Bay Area. On one hand the massive defense build-up around San Francisco transferred valuable technological know-how to an area that had very little of its own (there were virtually no electronics firms). At the same time, massive black migration to the shipyards of the East Bay resulted in white families fleeing south, where the government was building freeways and subsidizing suburban mortgages for single-family detached homes. Rural areas such as the Santa Clara Valley gained a more urbanized middle-class population. Silicon Valley's urban development covered about 50 square kms (US Geological Survey, 1940); by 1960 it covered 290 square kms.

The cultural life of San Francisco was beginning to take off too, although in a rather bizarre manner. In 1951 Zen apostle Alan Watts moved from Britain to San Francisco, where he became a major influence on the assimilation of Eastern philosophy into Western lifestyle, particularly with the radio program he started in 1953 at Berkeley's KPFA station. Peter Martin can be credited as the man who imported the spirit of New York's intelligentsia into San Francisco. In 1952 he began publishing a literary magazine titled "City Lights". The following year another East Coast immigrant, convinced by Ken Rexroth to move to San Francisco, Lawrence Ferlinghetti, helped him open a bookstore, "City Lights", which was an experiment in itself: the first all-paperback bookstore in the nation. The bookstore soon became the headquarters of alternative writers. In october 1955 Allen Ginsberg's recitation of his poem "Howl", organized by Rexroth at the Six Gallery, transplanted the "beat" aesthetic to San Francisco. Other writers came to inspire the local "beat generation": Jack Kerouac, who moved to San Francisco in 1956, and Robert Creeley, who moved to San Francisco in 1957. Among the local talents who embraced the new style were Michael McClure and Jack Spicer (part of Robert Duncan's Berkeley circle). The most lasting influence was perhaps due to two poets who had studied in Oregon, at Reed College, Gary Snyder and Philip Whalen, because they adopted Zen Buddhism, starting a trend that would make California an international center of Zen and would make Zen a staple of the counterculture. Snyder, in particular, delved into Chinese and Japanese poetry, bringing to California the passion for exotic cultures (instead of contempt for their poor emigrants).

In 1955 Anna Halprin founded the Dancer's Workshop in Marin (just north of San Francisco) and began her pioneering experiments in dance improvisation. One of her first students was Simone Forti (until 1959), who then moved to New York and in 1961 stunned the dance world with her minimalist "dance constructions".

Seymour Locks, a Stanford graduate, began teaching at San Francisco State College in 1947 and was influential in creating two different cultures. First of all, he practiced as a sculptor using found objects, i.e. junk, as his raw material. Secondly, in 1952 he started experimenting with light shows. Locks influenced Elias Romero, whose light shows began in 1956. In 1957 film-maker Jordan Belson began collaborating with composer Henry Jacobs at the Morrison Planetarium in San Francisco. For two years they produced a series of "Vortex Concerts", concerts of electronic music accompanied by visual projections.

In the 1930s Donald MacKinnon had studied in Henry Murray's psychological clinic at Harvard University, and during World War II he had operated a secret laboratory at a remote Maryland farmhouse whose task was to select spies to infiltrate in Europe (on behalf of the Office of Strategic Services). In 1949 MacKinnon, now a professor at UC Berkeley, founded the Institute of Personality Assessment and Research (IPAR). IPAR interviewed and tested "creative" thinkers from various disciplines (such as writers, architects, scientists and mathematicians). MacKinnon concluded that engineering students were not creative ("Fostering Creativity in Students of Engineering", 1961) and outlined his own model of human intelligence ("The Nature and Nurture of Creative Talent", 1962). IPAR's most prominent researcher, Frank Barron, published the seminal book "Creativity and Psychological Health" (1963) and in 1969 moved to UC Santa Cruz, where he taught an influential course on creativity.

At the same time the city still maintained the old sexually permissive atmosphere: in 1955 the police staged a coordinated campaign of persecution against homosexuals, but its outcome was to cement solidarity within that community, and, for example, the "Daughters of Bilitis" was founded in San Francisco, the first exclusively lesbian organization in the USA. In 1959 Stanford University hired Austrian-born chemist Carl Djerassi, who four years earlier at Syntex of Mexico City had invented synthetic progesterone, which accidentally turned out to be "the birth-control pill". Syntex was run by Uruguayan-born Alejandro Zaffaroni and worked on synthetic steroid hormones.

A notable event in the artistic life of the Bay Area was the 1945 establishment of the Photography Department at the California School of Fine Arts (later renamed San Francisco Art Institute), thanks to Ansel Adams. It recognized photography as a fine art in a way that no other academic institution had yet done. In 1946 Adams convinced other distinguished photographers to accept positions at the school: Minor White, a former student of Alfred Stieglitz in New York, Berkeley's resident Dorothea Lange, and San Francisco's resident Imogen Cunningham.

Another notable event was the birth of the art movement later dubbed "Bay Area Figurative Painting". The founder was David Park, who moved to San Francisco in 1943 to teach at the California School of Fine Arts and in 1950 exhibited the first abstract paintings with figurative elements. He influenced Elmer Bischoff, who started teaching at the School of Fine Arts in 1946, and Richard Diebenkorn, who began teaching at Oakland's California College of Arts and Crafts in 1955. In 1947 and 1949 New York's abstract expressionist Mark Rothko taught at the same school. The Contemporary Bay Area Figurative Painting Exhibition at the Oakland Art Museum of september 1957 featured Park's, Bischoff's and Diebenkorn's student Henry Villierme, the leader of the second generation. Oakland's California College of Arts and Crafts instead raised Nathan Oliveira (class of 1952) and Bruce McGaw (class of 1955). Paul Wonner graduated in 1955 from U.C. Berkeley.

In 1949 the Austrian-Mexican surrealist Wolfgang Paalen moved to San Francisco after pioneering abstract expressionism in New York. Together with Lee Mullican and Gordon Onslow-Ford he formed the group Dynaton, that debuted in 1951.

The year 1949 was epochal for the California School of Fine Arts (CSFA), with both Clyfford Still and Mark Rothko injecting doses of unorthodox creativity. Even more influential may have been Ad Reinhardt, who taught at CSFA in 1950. However, the pioneering era of the CSFA was coming to and end: in 1949 Rothko returned to New York, in 1950 Still followed him, and David Park and Elmer Bishchoff resigned a little later.

Starting in 1952 Wally Hedrick began constructing collages of metal objects that he scavenged in junkyards (cans, lamps, radios, appliances).

In 1952 the poet Robert Duncan and the painters Harry Jacobus and Jess Collins opened the King Ubu Gallery at 3119 Filmore St for teachers and students of the CSFA. In 1954 the poet Jack Spicer renamed the gallery the Six (Spicer, Wally Hedrick, and four more artists) turned it into an artist-run cooperative". Another influential figure was the painter, photographer and poet Wallace Berman, who started the yearly mail-order literary magazine Semina in 1955. Its first issue boasted Cameron Parsons-Kimmel's drawing of a copulating couple Members of his circle included the sculptors Joan Brown, Bruce Conner and Jay DeFeo.

Around the Six revolved artists such as Manuel Neri and Mary-Joan "Jay" DeFeo, a U.C Berkeley alumna who had absorbed influences from Native-American, African and prehistoric art. Most of them were also grouped in Bruce Conner's Rat Bastard Protective Association (an inexistent association, just a term coined in 1959). They represented the counterpart to the beat movement in the visual arts. Bruce Conner, who had arrived in 1957 in the city, upped the ante of the movement with his chaotic sculptures of junk wrapped in sexy nylon stockings.

Much of the artistic and literary life of the city actually revolved around the cafes of North Beach (the Italian area): Vesuvio, Miss Smith’s Tea Room, The Cellar, The Place... In the 1957 Norman Mailer published the essay “The White Negro” that created the stereotypical figure of the “hipster”, the depressed white existentialist of the Cold War, who identifies with the condition of the black musician. The hipster loved the music of black people (blues and jazz), which was born as a music of protest; and jazz was based on improvisation, which had an influence on how these artists came to think of art. For example, in 1956 Rachel Rosenthal in Los Angeles created the Instant Theatre, itinerant theater based on improvisation. New galleries nurtured the beat generation, abstract expressionism and the funk movement (epitomized by Peter Voulkos' sculptures): Dilexi Gallery, opened by Jim Newman in 1958, and Batman Art Gallery, opened in 1960 at 2222 Fillmore St by William Jahrmarkt, a wealthy friend of Bruce Conner and Michael McClure. In 1959 Dorothy Miller organized the exhibition "Sixteen Americans" at the Museum of Modern Art that featured both New York and Bay Area artists. In 1961 the Museum of Modern Art held the first exhibition "Art of Assemblage". In 1960 the sociologist Milton Yinger wrote the essay “Contraculture and Subculture” that introduced the notion of the "counter-culture", a culture that tries to subvert the dominant culture. The term "counterculture" would be popularized years later by Theodore Roszak's book "The Making of a Counter Culture - Reflections on the Technocratic Society and Its Youthful Opposition" (1969), which painted it as a reaction to the technocratic society.

San Francisco's avantgarde cinema scene came to life thanks to Frank Stauffacher's "Art in Cinema", held in the San Francisco Museum of Modern Art since 1946, which marked the first time in the USA that an art museum presented a series of experimental films. Despite the focus on avantgarde films, the events often drew a sold-out crowd. The San Francisco International Film Festival debuted in 1957 (and eventually became the longest-running film festival in the Americas).

Clearly, the Bay Area had become an attractive location for nonconformist artists. One reason is that the Bay Area was relatively sheltered from the bleak atmosphere of what came to be known as "McCarthism". The hunt for "communists" (real or imaginary ones) actually started in October 1947 when the House Committee on Un-American Activities started investigating Hollywood's film industry. In February 1950 senator Joseph McCarthy claimed to possess a list of members of the Communist Party who were working in the US government. Hundreds of people lost their job, their reputation and sometimes even their freedom. Thousands were discriminated and even persecuted by right-wing radicals. These events created an atmosphere that, like in Stalin's Soviet Union and in Mao's China, forced people to become informers about their own friends. Many people were convicted on the basis of testimony that was later admitted to be false. Besides Hollywood stars (famously, Charlie Chaplin), the persecution affected writers and musicians, even physicists like Albert Einstein and David Bohm, even Robert Oppenheimer, the scientific director of the Manhattan Project. Much of the right-wing press went along. The press that didn't go along suffered, notably radio personality Drew Pearson. McCarthy's downfall was largely the work of a journalist, Edward Murrow, who in March 1954 exposed the senator's dishonesty on his national television show "See It Now". The following month, for the first time, and at the request of US president Dwight Eisenhower in person, the public was able to watch live on television as McCarthy interrogated some hapless defendants, and the public was disgusted. The Bay Area probably looked like a distant paradise for dissident intellectuals who elsewhere risked being shamed as communists. Much of the legendary creativity of the Bay Area may be due, indirectly, to a fascist demagogue who scared creative minds away from other cities.

Very little of this fervor reached the south bay. In 1955 peace activist Roy Kepler opened a bookstore in Menlo Park to sell paperbacks (which at the time were shunned by most high-brow bookstores), and his Kepler's remained an outpost of alternative culture in the Peninsula.

A bizarre contribution to the bizarre cultural (?) life of the Bay Area came from the Central Intelligence Agency (CIA). In 1953 the CIA launched a secret project, "MK-Ultra", to develop a truth drug that would control the mind of the victims. This was in response to reports that the communists in North Korea had brainwashed USA prisoners of war. The CIA administered Lysergic Acid Diethylamide (LSD) to the volunteers of the program. One of these volunteers (in 1959) was a Stanford student named Ken Kesey. In 1960 Ampex's electrical engineer Myron Stolaroff, having been introduced to LSD by Canadian inventor Alfred Hubbard (perhaps the first person to view LSD as a tool to achieve higher dimensions of thought), founded the International Federation for Advanced Studies in Menlo Park recruiting scientists such as Willis Harman of Stanford University.

Up until the 1950s the Bay Area was mainly known (outside California) as a haven for unorthodox artists and writers. Very few engineers dreamed of moving from imperial Europe (whose cities and universities still dominated the world) to provincial California, and very few engineers dreamed of moving from the political and industrial hubs of the East Coast and the Midwest to the picturesque but isolated Bay Area. It was mainly the artists who found that distant western outpost fascinating.

The Electronic Brains

This section has moved to A Brief History of Electrical Technology

Factory Automation

This section has moved to A Brief History of Electrical Technology

Semiconductors in the Bay Area

A series of events in the second half of the 1950s steered the Bay Area towards the nascent computer industry. The defense industry was still driving a big chunk of the economy, so much so that in 1955 Stanford University merged the Applied Electronics Laboratory and the Electronics Research Laboratory into the Systems Engineering Laboratory under the direction of Fred Terman to focus on electronic warfare. The Cold War was proving to be a gold mine for electronics. NASA too opened a research center at Moffett Field in Mountain View (1958). New ideas for defense-related business were floating around. It was not easy, though, to start a new company. In 1955 private investors or "angels", including John Bryan, Bill Edwards and Reid Dennis (an employee of the Fireman's Fund in San Francisco), established "The Group" to invest together in promising electronics companies of the Bay Area. They invested their own money.

The timing could not have been more auspicious. William Shockley, co-inventor of the transistor, had joined Beckman Instruments, a company based in Los Angeles that was willing to open an entire research center for transistors. In 1956 they opened the Shockley Semiconductor Laboratory division in Mountain View to work on semiconductor-based transistors that would replace vacuum tubes. The early transistors were made of germanium. It was only in 1954 that Morris Tanenbaum's team at Bell Labs and Gordon Teal's team at Texas Instruments both produced silicon transistors. The one made by Texas Instruments was the first silicon transistor to be commercially available. Silicon is easily found in nature (in sand all over the world), unlike germanium. Shockley knew it was the right direction. He tried in vain to convince former coworkers at Bell Labs to follow him west. Eventually he settled on hiring young local engineers, all of them still in their 20s: among them were Philco's physicist Robert Noyce and Caltech's chemist Gordon Moore. At the time the Bay Area was not a particularly place for young engineers, but Shockley could attract talents because of his Nobel prize. The reason transistors were so important in those days is the Cold War: had a nuclear war broken out, the USA would have fought it with weapons guided by vacuum tubes. The military needed something more reliable and smaller. Shockley was very good at assembling teams, as he had demonstrated at Bell Labs. Unfortunately, Just one year later, in october 1957, eight of these engineers, including Robert Noyce (from the Midwest via the MIT), Jean Hoerni (Swiss) and Eugene Kleiner (Austrian), and Gordon Moore (the one born and raised in the Bay Area) quit the Shockley Transistor Laboratories to form Fairchild Semiconductor in Mountain View, using funding from Sherman Fairchild's New York-based Fairchild Camera and Instrument thanks to the help of a young investment banker, Arthur Rock. It was the first venture-funded "start-up" company of the Bay Area. Note that 33 companies turned down the "eight traitors" before Fairchild decided to give them a chance.

Yet again, a series of coincidences made it happen. Eugene Kleine's father approached its New York brokerage firm, Hayden Stone, about loaning money to the new venture. The case was assigned to one of their employees, Arthur Rock, who flew to California and liked the idea. Nobody was willing to invest in a separate company, but an existing company offered to fund them and keep them under its umbrella as an independent unit based in California, Fairchild Semiconductor. Rock had accidentally met Sherman Fairchild, an inventor and a very rich man. Sherman's father George had been a partner of Tom Watson, basically the co-founders of the modern IBM, except that Watson had a lot of children and George Sherman only one. Hence Sherman Fairchild had inherited the largest share of IBM stock. Noyce was actually the last one to join the "traitors."

The rapture had been made possible by the realization that the semiconductor industry did not require huge capital investment: silicon can be found everywhere and it is cheap. Unlike in the old economy of big, complex and expensive products, starting a competitor to one's own employer was relatively easy in the semiconductor industry. The problem was the competition: Texas Instruments in Dallas, Motorola in Phoenix, Transitron and Raytheon in Boston.

The Beginnings of Venture Capital

There were still precious few groundbreaking ideas coming out from the Bay Area electronics sector, but somehow there was increasing interest in funding ideas. In 1957 Dean Watkins of Stanford's ERL (where he had supervised the project for traveling-wave tubes or TWTs, tubes that allowed to amplify radio signals to very high power) started Watkins-Johnson to manufacture components for electronic intelligence systems, one of the first venture-capital funded companies in the Santa Clara Valley (it would also prove to be one of the most successful of its generation, with sales decupling in four years). Its main investor was Tommy Davis, a realtor of southern California.

At the same time, spurred by the Cold War and by the need to boost the post-war economy, the USA enacted a law to help start new companies: the Small Business Investment Company Act of 1958. The government pledged to invest three dollars for every dollar that a financial institution would invest in a start-up (up to a limit). In the next ten years this program would provide the vast majority of all venture funding in the USA. The Bay Area was a major beneficiary. In 1958 Draper, Gaither and Anderson was founded in Palo Alto by Rowan Gaither (founder of the RAND corporation) and two generals, William Draper and Fred Anderson: it was the first limited-partnership venture-capital firm in California, although short-lived. A limited partnership made it easier to compensate partners with carried interest and reduced the risk. One year later Frank Chambers established the venture-capital company Continental Capital in San Francisco. In 1961 Tommy Davis and Arthur Rock (an investment banker who had been a student of Georges Doriot at Harvard and who had just relocated from New York after facilitating the Fairchild deal) founded the limited-partnership company Davis & Rock in San Francisco. They mainly raised money on the East Coast for investment in the Bay Area. In 1962 Bill Draper and Franklin Johnson formed Draper & Johnson. In 1961 the Venture Capital Journal started publication in San Francisco.

The Integrated Circuit

However, it was Jack Kilby at Texas Instruments who (in 1958) invented the integrated circuit, a tiny silicon device containing a large number of electronic switches. With Kilby's technique multiple transistors could be integrated on a single layer of semiconductor material. Previously, transistors had to be individually carved out of silicon or germanium, and then wired them together with the other components of the circuit. This was a difficult, time-consuming and error-prone task that was mostly done manually. Putting all the electrical components of a circuit on a silicon or germanium "wafer" the size of a fingernail greatly simplified the process and heralded the era of mass production.

The golden team at Fairchild Semiconductor merely improved the idea. In 1959 their Jean Hoerni invented the planar process that enabled great precision in silicon components, and Robert Noyce designed a planar integrated circuit. Hoerni's planar process, in particular, enabled the mass production of chips and can be credited with inventing the semiconductors industry as it came to be. Fairchild introduced the 2N1613 planar transistor commercially in april 1960, and the first commercial single-chip integrated circuit in 1961 (the Fairchild 900), a few months after the Texas Instruments SN502. The motivation to package multiple transistors into the same chip arose due to the fact that the wiring had become the real cost. Both Fairchild and Texas Instruments had improved the process of printing the electronic chips, but each chip contained only one transistor and the wiring ran outside the chip. Progress in the wiring was not keeping pace with progress in printing, and therefore the wiring was becoming the real cost. The integrated circuit was saving money.

For the record, this wasn't really "silicon" valley yet: almost all the transistors made in the world were still made of germanium, and this would still be true throughout the early 1960s.

The first customers of integrated circuits were the Air Force and NASA, followed by Lockheed and Boeing for the Polaris (1961) and Minutemen (1962) missile systems.

Meanwhile, Fairchild continued to harness talents, such as Don Farina, James Nall, Bob Norman (from Sperry Gyroscope), Don Valentine (their Los Angeles sales manager), and Charles Sporck (production manager), all hired in 1959. Later hires were Jerry Sanders (1961, sales, from Motorola), Pierre Lamond (1962, from Transitron), Jack Gifford (1963, just graduated from UCLA, and in 1966 product marketing in Mountain View), Mike Markkula (1966, from Hughes, also in marketing). However, Fairchild Semiconductors did not believe in integrated circuits. A number of engineers who begged to disagree (led by David Allison) left Fairchild to start Signetics in 1961. Signetics benefited from the decision in 1963 by the Department of Defense to push for architectures based on integrated circuits. Throughout 1964 Signetics dwarfed Fairchild in the manufacturing of integrated circuits, until in 1965 Fairchild started investing seriously.

Fairchild is important in the history of Silicon Valley's semiconductor industry not only for the technology it patented but also for the people it hired and trained. In fact, its contribution might be bigger as a creator of talents than as an innovator. Fairchild represented a corporate culture that treasured human resources: it hired the best of the best, and then it trained them to become even better. To use a physics metaphor, the potential energy at Fairchild was probably bigger than all the kinetic energy it ever produced. Since the early days Robert Noyce introduced an unorthodox management style at Fairchild Semiconductor, treating team members as family members, disposing of the suit-and-tie dress code, and inaugurating a more casual and egalitarian work environment.

An early supporter of the Bay Area's semiconductor industry was Seymour Cray, a former Univac engineer who had founded Control Data Corporation (CDC) in 1957 and had built the first large transistor computer in 1960 (the CDC 1604). Cray sponsored research at Fairchild that resulted (in july 1961) in a transistor made of silicon that was faster than any transistor ever made of germanium. Cray's new "super-computer", the CDC 6600 (eventually released in 1964), would employ 600,000 transistors made by Fairchild. General Electric, RCA and Texas Instruments made germanium-based products. Fairchild became the first silicon-only company.

The Bay Area was beginning to get into computer hardware, but it was still largely software illiterate.


Meanwhile, the great scientific news of the decade came from Europe: in april 1953 Francis Crick and USA-born James Watson, two molecular biologists working in Britain at the Cavendish Laboratory (the Department of Physics of Cambridge University), discovered the double helical structure of DNA. The code of life looked amazingly similar to a computer program.

The always alert Fred Terman (now Stanford's provost) foresaw the potentiality of biotechnology, and decided to invest in the chemistry department.

(Copyright © 2010 Piero Scaruffi)

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