Silicon Valley: How Stanford, science, and war made tech history | Margaret O’Mara


The first part of the 20th century, Silicon
Valley wasn’t known as Silicon Valley. It was the Santa Clara Valley. It was a agricultural region. It was best known for being the prune capital
of America. It was where the fruit was grown, and canned,
and harvested. So it really was off to the side of the main
action. Where the real turning point for the Valley
was the 1940s, World War II. It was the turning point for California and
the Pacific West. The Pacific Theater brought thousands of servicemen
streaming through ports like San Francisco. It built up the military installations up
and down the San Francisco Bay Area, as well as up and down the West Coast. And then after the war, this continued with
the Cold War and a great deal of military activity. California getting a huge amount of this spending,
of military spending, that Dwight Eisenhower later memorably labeled the military-industrial
complex. And California was one of its capitals. So in the middle of all this is this little
university, Stanford, which had been founded in the 1890s by a railroad baron and his wife. Stanford is an unusual place. Unlike the colleges of the Ivy League, which
were founded in colonial times to educate future clergymen and lawyers– kind of liberal
arts institutions, Stanford was started with a very practical mission in mind. In its founding grant it says, to the effect,
“Bring something useful into the world.” And so Stanford always had a technical bent. The sciences and engineering were always a
focus. And as the government kind of ramped up this
unprecedented spending on engineering, on science as America entered the nuclear age,
the leaders of Stanford, notably its dean of engineering, an electrical engineer named
Fred Terman, recognized there was, as Terman put it, a wonderful opportunity that Stanford
could take advantage of. Terman had spent World War II in Boston. He was working for the government. Working as part of the many, many thousands
of academics, scientists, and engineers who had gone to work for the Office of Wartime
Research and Development, which was run by Terman’s graduate mentor from MIT, a guy named
Vinnie [? Verbush. ?] and Terman realized that everything was going to change for the
sciences, that there was this big opportunity. And for Stanford, a place where he had grown
up– he was a faculty kid. His father had been a professor there, too. Palo Alto was home. He wrote to a friend during the war, “Stanford
has this opportunity to become like Harvard, if we take advantage of this. Or it could just kind of be a place like Dartmouth,
which is respected, but not important to the national conversation.” I don’t know how people at Dartmouth would
feel about that, but he was being a little– there was a little bit snark there. So Terman comes back. And partnering with the then-president of
the university, Wallace Sterling, who was a historian, I like to always add, they really
remade Stanford’s whole curriculum to beef up the physics department to create whole
programs that were designed to work with industry, with these new defense industries that are
growing up in California and in the Bay Area. And to really tailor programs so that they
are training undergraduates and graduates in the sciences and engineering to go out
and go into this work of these new electronics companies that are booming in this post-war
period. It was something that no other university
has done really, before or since. And that’s one thing that set the Valley apart. The invention that transformed the Valley
was not invented in the Valley. It was invented in Bell Laboratories, New
Jersey– The transistor, 1947. And one of its co-inventors was a guy named
William Shockley, who happened To be from Palo Alto, originally. And so when he leaves Bell Labs and decides
he wants to start up a company of his own, That’s producing and marketing silicon semiconductor
technology based on this transistor, this breakthrough transistor. He decides to go to Palo Alto. He is persuaded in part by his friend and
fellow Palo Altan, Dean Fred Terman Of Stanford, who said come out here. But also, his mother was still in– Shockley’s
mother was still in Palo Alto. She was ailing. And he was a mama’s boy and wanted to come
home. So that choice proved to be momentous, because
Shockley was a Nobel Prize-winner. His move to Palo Alto really made everyone
sit up and take notice. And he hired some of the brightest engineers
he could find. Recruited them to come out and work for his
new Shockley Semiconductor Lab, 1955 56. And off to the races. But, plot twist, Shockley turned out to be
world’s worst boss. He was terrible to work for. He was imperious. There was a reason that none of his team from
Bell Labs Came with him to Shockley Semiconductor. As the new recruits quickly found out, this
was not a good place to work. Shockley, later in his life, actually, in
his later stage of his life is marked by an embrace of eugenics, scientific racism. Shockley was a very complicated and flawed
character. But the immediate effect was Shockley recruited
these amazing engineers To come out to develop this silicon semiconductor technology. And within a few years, those engineers had
decided they were going to quit And they were going to form a rival company of their own. And those eight men, who became famously known
as the Traitorous Eight, Left Shockley and started a company called Fairchild Semiconductor,
Getting venture backing from an East Coast industrialist. Funnily enough, it was a son– A guy named
Sherman Fairchild, Fairchild was able to invest in Fairchild Semiconductor or create Fairchild
Semiconductor, because he had inherited a lot of money from IBM stock. So funnily enough, IBM is sort of granddaddy
of all computer companies. Helped indirectly fund the first, the iconic
grandfather of all these Silicon Valley startups. A semiconductor industry that in turn would
give way to a personal computer industry that would displace IBM atop the computer heap. So there’s a wonderful circular story, here. So Fairchild Semiconductor is incorporated
in September, 1957. What happens two and 1/2 weeks later? Sputnik satellite shoots off into space. And so the Space Race, that race, was part
of what sent Silicon Valley’s rocket ship off the launchpad, so to speak. Because what it created was an intensified
demand for very small and light electronics, which is what the Valley specialized in. Think about the West Coast. You had a number of hubs of defense-related
industry. You had my town, Seattle, aerospace town,
building big planes, building big things. Down in LA, also building airplanes, building
big things. In the Valley, they built small. And the Space Race creates intensifies the
demand for small computational and communications devices that the Valley specialized in. So these early chip makers, even though they
grow large, grow wealthy with private sector customers and their private businesses, at
the very beginning, a company like Fairchild, for example, in the very early years got 80
percent of its book of business from the Defense Department and from government agencies, including
NASA. The government was an extremely important
customer. It was very deep-pocketed. It was willing to spend a lot of money on
blue sky technology for which there was not yet a market. And it kind of created the safe foundation
for a competitive private sector entrepreneurial startup culture to start. It’s really funny, the biggest of big government
programs helped Silicon Valley, the startup world, get its start. And that’s the alchemy. It isn’t just big government and it isn’t
just free market entrepreneurship. It’s this blend of both that comes together
in the Valley at this particular time and place. And starts generating generation after generation
of companies. OK. So many places have tried to become Silicon
Valley. We have silicon everything’s around the world. And so why is Silicon Valley still reigning
supreme? Well, you really can’t make another one because
it’s a product of a distinctive time and place. It also is the product of seven decades of
multiple tech generations building on one another. One of the secret ingredients of Silicon Valley
is time. Now, this doesn’t mean that other places around
the world can’t build vibrant, high-tech regions. There are plenty places around the world that
are growing hubs of innovative industry, of creative industry, of tech-based industry. But the Silicon Valley magic was something
that was very much a product of post-war America, of the way that– the geopolitical conditions,
the nature and the lack of meaningful overseas competition for a while. I mean, one of the reasons that the American
economy and American industry grew to become so dominant in the 25 years after World War
II is because the rest of the industrial world left World War II literally in ruins. And when those economies, like Germany and
Japan, get themselves rebuilt, and rebuilt in even better ways, that’s when they start
becoming serious competition to American industry.