On the eve of the millenium, the San Jose Mercury News ran a series of
articles listing the "Top Ten" factors in the making of "Silicon Valley."
Number 9 was Fred Terman and Stanford.

#9::  Provost's revamping of university courses built regional economy

BY BARBARA FEDER
Mercury News Staff Writer

It was one of those small, quiet events that become
extraordinary only in hindsight.

On July 1, 1955, Stanford President Wallace Sterling
appointed Frederick Terman provost, the university's
second-in-command. Coming as it did during a sleepy
summer on campus, Sterling's announcement merited only
a small article in the Stanford Daily.

But Stanford -- and the region that became Silicon
Valley --would never be the same.

A brilliant, at times Machiavellian engineer best
known for hooking up Bill Hewlett and Dave Packard, Terman
created a symbiotic relationship between Stanford,
industry and government that would eventually vault the
university into international prominence and seed the
valley's nascent electronics industry with money and brainpower.

Terman is a towering figure in the development of
Silicon Valley: He recruited top scholars and created
unheard-of collaborations between Stanford and local companies.

``If he isn't the father of Silicon Valley, then
he's the grandfather,'' says C. Stuart Gillmor, a professor of
history and science at Wesleyan University who is
writing a biography of Terman. ``He had a fierce desire
for the West Coast in general and the Bay Area and Stanford in
particular to take on the East.''

Terman spent nearly all of his career at Stanford, and his
devotion to the school is legendary. Son of famed
Stanford psychologist Louis Terman,
Frederick Terman graduated
from Stanford in 1920, returning to teach
after receiving his doctorate
in engineering at the Massachusetts
Institute of Technology. By
1927, he was running the electrical
 engineering department, and
he became dean of Stanford's school of
engineering in 1945. The only
time he left campus was during World
War II, when he ran an
800-person radio engineering lab at Harvard
for the war effort.

Terman was one of the
country's leading radio engineers; he held 40
 patents and wrote the seminal
textbook in his field. By the time he
became provost, he had built
the school of engineering into a national
powerhouse and wielded a
considerable amount of power on campus.

``Uncle Freddy,'' as he was
known, had been on the short list for
Stanford's presidency in
1949, but the modest, workaholic engineer
lacked the necessary
glad-handing and diplomatic skills. Still, he was a
world-class networker and a
formidable salesman, and his role as the
second-most powerful official
at Stanford gave him plenty of clout to
achieve his goals.

At the time, Stanford was a good university but
not a great one, a merely regional institution
nursing a bad case of Harvard envy.

Cash-poor but land-rich, Stanford was struggling
financially. In 1955, quarterly tuition was a mere $250. Stanford
was just beginning to reap the benefits of its real estate
through the new Stanford Shopping Center and Stanford Industrial
Park. And while MIT and Caltech were rapidly developing
lucrative ties with  industry, Stanford, like other generalist
institutions in that era, held back, fearful of losing academic independence.

National research

Terman scoffed at such attitudes. He'd won
millions in outside grants for his department and viewed close
relationships with industry, government and the military as a
``win-win-win'' situation for Stanford. He envisioned
 Stanford as a self-supporting university that
conducted top-flight research in areas of national importance.

Contrary to the mythology that surrounds him,
Terman never intentionally set out to build a
regional economy, says Henry Lowood, curator of
the History of Science and Technology
 Collections at Stanford. Rather, the interlocking
relationships he fostered stemmed from
Terman's frustration that his students felt they
had to return to the East Coast to advance their
careers. He wanted to create opportunities that
would keep them close, in Stanford's embrace.

As provost, Terman wasted no time in revamping
departments he didn't think were pulling their
weight. Some old-guard departments with few
majors, like classics, were eviscerated. Within
five years, the chemistry department was
completely refocused on biochemistry, and the number
of its professors who were members of the
prestigious National Academy of Sciences shot from
one to seven. In other departments, he pressured
scholars to choose research programs that
would bring in the most federal dollars, according
to historian Rebecca Lowen's book,
``Creating the Cold War University: The
Transformation of Stanford.''

``His philosophy was that . . . (to have) no
program was better than a mediocre program,''
Lowood said. ``There was a wholesale
reorganization of some departments. It was very
ruthless.''

His reforms angered some professors on campus. But
President Sterling and Stanford's board of
trustees stood firmly behind him.

Start-ups got access

Terman is famous for his early financial support
of Hewlett and Packard, but he also attracted top
graduate students by paying them more than other
universities, and he even donated his own
money for graduate fellowships in engineering,
Gillmor notes.

Despite pressure to build homes on Stanford's
pristine lands, he cannily reserved the land for
campus use, encouraging businesses to locate near
Stanford at the new industrial park. He
presided over the move of the Stanford Medical
School from San Francisco to Palo Alto. And he
set up programs in which start-ups got access to
Stanford research before it was published -- and
students got opportunities for internships and
jobs after graduation.

Terman's mission meshed neatly with the country's
postwar obsession with science and
educating new engineers, and the money flowed in.
By 1963, the Stanford Industrial Park was
home to 42 companies employing some 12,000 people.
In 1965, after a decade as provost,
Terman retired from Stanford. He died in 1982.

Today as many as 100 ``Stanford start-ups'' in
Silicon Valley have contributed more than $65
billion to the economy, according to a 1996
Stanford Business School study. And historians are
still trying to tease out the many tentacles of
Terman's legacy.
 

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