#1: The Start-up Culture:
Quonset hut semiconductor
operation sparked revolution in '55
BY TOM QUINLAN
Mercury News Staff Writer
It was the relative lack of
silicon in the soil of
Santa Clara Valley that helped
persuade 18th-century Spaniards to
make this fertile region the
site of the first
real city in California.
Today, it's impossible to imagine
what the valley
-- or the world -- would be
without silicon. From the time your
clock radio wakes you up in
the morning to the moment
you switch off your flat-screen
television at
night, you're probably never
more than 10 feet away from a
transistor, an integrated circuit
or a microprocessor. Silicon
chips, which were largely
developed here, are now virtually
everywhere.
Although the physical amount
of silicon used in
high-tech products is pretty
small by weight, the element
has also become the symbol
for the wealth, power,
entrepreneurial energy and
fast-paced change that define the valley's
collection of semiconductor
firms, software
companies and Internet start-ups.
In 1998, 119 of the top 150
companies in Silicon
Valley were in high-tech, accounting
for $183.2 billion
in sales and employing 1.3
million people.
But in some ways, the fact that
it all happened
here is a historical accident.
The valley's advances
in semiconductor technology
could have taken place anywhere
-- and did. Although
Robert Noyce invented the integrated
circuit here
in 1959, for example, Texas
Instruments' Jack
Kilby had made a similar breakthrough
months
earlier.
Old-line East Coast tech giants
such as General
Electric Co., RCA, Philco,
AT&T, Eastman
Kodak and IBM had world-class
research labs in the
1950s, and indeed, they funded
most of the
original semiconductor research.
Even Intel Corp., which arguably
developed the
first commercially viable microprocessor
in
1971, had competition from
companies all over the
country within a couple of
years.
But the Santa Clara Valley of
the 1950s was also
primed for the tech revolution.
Local officials
were promoting industrial growth
and drawing
people to the area. Defense
contractors were
moving in, transforming a somewhat
sleepy
agricultural region into a
bustling industrial center.
Frederick Terman -- known as
the father of Silicon
Valley -- was transforming
Stanford
University into a world-class
institution and
extolling the virtues of the
engineer as entrepreneur.
However, the spark that set
off the explosion was
William Shockley's 1955 decision
to start his
semiconductor company in a
Quonset hut at 391 San
Antonio Road in Mountain View
-- not far
from his boyhood home in Palo
Alto.
Shockley -- who co-invented
the transistor in 1947
with John Bardeen and Walter
H. Brattain
while working at AT&T's
Bell Laboratories in New
Jersey -- set about luring
eight of the best
and brightest young engineers
he could find. That
included recruiting the Iowa-raised
Robert
Noyce away from Philco and
giving Gordon Moore a
chance to return to his own
valley roots.
``If Shockley hadn't happened
to have grown up in
Palo Alto, I don't think any
of us would have
been here,'' said Moore, one
of Intel's founders
and himself a central figure
in Silicon Valley
lore.
Shockley had such an intuitive
feel for the physics of
semiconductors that the joke
at his company was
that ``he could see electrons
moving.''
Despite his brilliance as a
physicist, however,
Shockley was a disaster as
a leader. ``He was very erratic as a
manager,'' said Moore. ``It
seemed like he was almost paranoid.''
Eventually, Shockley's team
couldn't stand it
anymore. Rather than dispersing
to other companies, the renegade
engineers -- nicknamed the
``Traitorous Eight'' by Shockley --
decided to stick together and
form a new company.
First, the engineers needed
money, and to get it
they turned to Arthur Rock,
a Massachusetts banker who ultimately
landed funding from Fairchild
Camera in New York. Rock
later funded many other local
start-ups, essentially founding
the Silicon Valley venture
capital industry.
Spawned start-ups
The creation of Fairchild Semiconductor
also set
in motion a way of doing business
that now defines Silicon Valley.
Although the company had its
technical successes
-- it patented the integrated
circuit, still the fundamental building
block of the digital revolution
-- the legacy of Fairchild isn't in its
products or sales, but in the
companies it spawned.
Following the lead of Fairchild's
founders,
engineers with good ideas or
talent didn't have to
wait for approval from Fairchild
Camera to try
something new; it was just
as easy to start their
own company or move elsewhere.
The departing ``Fairchildren''
helped to create or
reinvent the who's who of the
chip industry:
Advanced Micro Devices Inc.,
LSI Logic Corp.,
Teledyne, Rheem and National
Semiconductor
Corp. The most successful company
to trace its
lineage to the company was
chip giant Intel
Corp., founded by Noyce and
Moore, the last of the
Fairchildren to leave.
More important, the Fairchildren
established the
central philosophy of Silicon
Valley: that anyone
with a good enough idea can
get the capital, the
workforce and the markets to
make it a reality.
Failure: rite of passage
Eventually, the model moved
beyond semiconductors
to spawn hardware giants like
Apple
Computer Inc. and Sun Microsystems
Inc., software
companies like Oracle Corp.
and Internet
pioneers like Netscape Communications
Corp. and
Yahoo Inc.
Could the start-up culture have
taken hold if
Shockley had stayed in New
Jersey?
``I don't think so,'' Moore
said. ``There was just
a different attitude out here.
People were more
adventurous. There wasn't the
fear of failure here
that there was back east. Failure
out here is like
a rite of passage that you
have to go through.''
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