Silicon Valley History

Silicon Valley History

by Gregory Gromov

In the beginning was the WORD and the word was...Silicon Valley. Don Hoefler  is credited with coining the phrase:Silicon ValleySilicon Valley is the only place onEarth not trying to figure out how to become Silicon Valley.Robert Metcalfe

Silicon Valley is an areathat 'located on the San Francisco, California, peninsula, radiates outward from Stanford University. It is contained by the San Francisco Bay on the east, the Santa Cruz Mountains on the west, and the Coast Range to the southeast. At the turn of the century, when fruit orchards predominated, the area was known as the Valley of Heart's Delight.

as Carolyn E. Tajnai, former Director (1988 - 1997) ofStanford Computer Forum begins one of her comprehencive online-manuscripts   that described Silicon Valley history from some of the WWW best personal viewpoint.

According to the "Silicon Valley Joint Venture Index 2000"  the  Silicon Valley's cities   were located around the South side of San Francisco Bay:

 10 years later the above viewpoint of Silicon Valley Joint Venture was changed:  

The geographical boundaries of Silicon Valley vary. The region抯 core has been defined as Santa Clara County plus adjacent parts of San Mateo, Alameda and Santa Cruz Counties. In order to reflect the geographic expansion of the region抯 driving industries and employment, the 2011 Index includes all of San Mateo County. Silicon Valley is defined as the following cities: Santa Clara County (all) Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Milpitas, Monte Sereno, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara, Saratoga, Sunnyvale Alameda County Fremont, Newark, Union City San Mateo County (all) Atherton, Belmont, Brisbane, Broadmoor, Burlingame, Colma, Daly City, East Palo Alto, Foster City, Half Moon Bay, Hillsborough, Menlo Park, Millbrae, Pacifica, Portola Valley, Redwood City, San Bruno, San Carlos, San Mateo, South San Francisco, Woodside Santa Cruz County Scotts Valley Santa Clara San Jose Newark Fremont Union City.  The Silicon Valley Joint Venture  Index 2011

 

About 60 years ago,Stanford University had some financial problems. The authorities of university tried to resolve these problems by leasing part of the university land to high-tech companies for 99 years.

Carolyn Tajnai clarified this point of Stanford's history in more detail:

' In the 1950's, the idea of building an industrial park arose. The university had plenty of land over 8,000 acres....but money was needed to finance the University's rapid postwar growth. The original bequest of his farm by Leland Stanford prohibited the sale of this land, but there was nothing to prevent its being leased. It turned out that long-term leases were just as attractive to industry as out right ownership; thus, the Stanford Industrial Park was founded. The goal was to create a center of high technology close to a cooperative university. It was a stroke of genius , and Terman, calling it ``our secret weapon,'' quickly suggested that leases be limited to high technology companies that might be beneficial to Stanford. In 1951 Varian Associates signed a lease, and in 1953 the company moved into the first building in the park. Eastman Kodak, General Electric, Preformed Line Products, Admiral Corporation, Shockley Transistor Laboratory of Beckman Instruments, Lockheed, Hewlett-Packard, and others followed soon after.' Fred Terman, The father of Silicon Valley by Carolyn Tajnai, 1995




According toVarian Associates it was a simple decision:

'Gradually, facilities were moved from leased quarters in San Carlos to a quiet corner of Stanford land, thus creating what is today the Company's headquarters site, and incidentally bringingi nto being the Stanford Industrial Park - the most successful complex of its kind in the world.'  Source:Varian Associates: An Early History

 

The First building of Silicon Valley

First Varian Associates building, Stanford Industrial Park, Palo Alto, California,1953. Source: 'Russell and Sigurd Varian - The Inventor and The Pilot', by Dorothy Varian. Palo Alto, 1983, p.258.

The picture is reproduced here withVarian Associates permission since 1995.

Is it a reasonable doubt or ... just invitation to the further discussion?Among the different organizations that were instrumental in the process of creating Silicon Valley the significant role  was the Stanford Research Institute (SRI):

After World War II, a great industrial push was under way to reinvigorate the economy. Founded by a small group of business executives in conjunction with Stanford University, Stanford Research Institute (our founding name) was created in 1946 as a West Coast center of innovation to support economic development in the region. The world's first digital computer (ENIAC, weighing in at 30 tons) was introduced, and in what is now known as Silicon Valley a three-bedroom home sold for $10,000.  Source: SRI Timeline

.Perhaps it was just one of the reasons why at least some of  SRI people appeared to be  very skeptical  about the above photo of Silicon Valley's building #1. Alice Resnick Senior Director, Corporate and Marketing Communications SRI International wrote to us concerning this subject

 31 Jan 2002 14:41:03 -0800:

For example,  SRI had a building in Menlo Park (one that we still occupy) in 1947, several years before what you call the 'The First building of Silicon Valley: First Varian Associates building, Stanford Industrial Park, Palo Alto, California, 1953' on your web page at http://netvalley.com/.

In 1995  William Hewlett decided to described in more details his own concept of Silicon Valley's birth.

Supernova  ofSilicon Valley: What does it mean?

'...in June, 1995, I had lunch at the Stanford Park Hotel and while leaving, I noticed a man holding a cane and sitting on a bench as though waiting for someone. I walked on by and then stopped, turned around, and walked back. I said, 'Are you Mr. Hewlett?', and he replied, 'Yes'. I thanked him for his kindness in verifying information for me when I was writing my paper on 'Fred Terman, The Father of Silicon Valley.'He said 'But Fred Terman didn't start Silicon Valley; the beginning of Silicon Valley was a supernova.' He asked if I knew what a supernova was and I said yes, that it was an explosion of a large star. Mr. Hewlett spoke so softly that it was difficult to catch every word, but he proceeded to explain that a supernova caused a rippling effect that set the stage for future events. He explained thatLee de Forest, who was an electronics pioneer in the Palo Alto area in the early part of the Century, and his work were thesupernova'. (c) Carolyn Tajnai, 1995Bill Hewlett, center, with his partnerDavid Packard, left, and former Provost Frederick Terman, who inspired the two graduate students to follow their dream of starting an electronics company. Hewlett and Packard honored their mentor by funding construction of the Terman Engineering Building, dedicated in 1952. (Source: Stanford News Service)Moving to California in 1910,Le De Forest ( photo above --  De Forest, Palo Alto, 1915 ) worked for Federal Telegraph Company atPalo Alto. While there, de Forest finally made his Audion tube perform as an amplifier and sold it to the telephone company as an amplifier of transcontinental wired phone calls. For this innovation he received $50,000. By the beginning of 1916, he had finally perfected his Audion for its most important task, that of an oscillator for the radiotelephone transmitter. By late 1916 de Forest had begun a series of experimental broadcasts from the Columbia Phonograph Laboratories on 38th Street, using for one of the very first times his Audion as a transmitter of radio: According to de Forest, 'The radio telephone equipment consists of two large Oscillion tubes, used as generators of the high frequency current.'' Source:  Le De Forest bio. Photo left: Lee De Forest's first Triode or  'Audion', 1906

According to Rogers and Larsen, in 1912 'de Forest and two fellow researchers for the Federal Telegraph Company, an early electronics firm, leaned over a table watching a housefly walk across a sheet of paper. They heard the fly's foot steps amplified 120 times, so that each step sounded like marching boots. This event was the first time that a vacuum tube had amplified a signal; it marked the birth of electronics and opened the door for the development of radio, television, radar, tape recorders, and computers.' Also Rogers and Larsen add  that,'Lee de Forest had a Stanford University connection; his work was partly financed by Stanford officials and faculty.'Links Between Stanford University and Industry, by  Carolyn Tajnai, 1995

Supernova  of theSilicon Valley: Can we really see it ?

According to astrophysicist Joseph Shklovski (lectures, 1981) the total level of energy produced by human civilization during the last 300 years of industrial revolutions, is still about one hundredth of a percent of the total energy flow that reaches the surface of the earth from the sun. Meanwhile in recent decades of info-tech revolution, the total level of energy that earth eradiates to space comes to a million times more than it would have done naturally as the planet heated to 300 K. From this point, for the last couple of decades, Earth outran planet-giants Jupiter and Saturn and became comparable to Sun. So, for a radio-telescope's observer from outer space, the earth's info-tech revolution looks like the birth of a new bright star on the cold Earth-planet.Source: 'National Information Resources', byGregory Gromov,  Nauka, 1984, p.15

RENAISSANCE GEEKS

Unfortunately, much of the rest of the world would love to be like Silicon Valley. In one subgenre of the Valley success-myth article, a journalist visits the high-tech heart of a foreign country and asks, 'Does this self-styled Silicon Glen/Alley/Gulch/Fjord/Pampas/Polder/Fen have what it takes to match the success of the original?'

Precisely because the Valley possesses the Renaissance qualities of being dynamic, entrepreneurial, innovative and wildly financially successful, it has become a model the rest of the world is keen to follow. But if what's being emulated places little value in old ideas of culture and has little interest in developing new ones, aren't we all aspiring to a debased ideal -- to an impoverished kind of Renaissance, devoid of much that makes life rich? Florence had entrepreneurial energy, education, ambition and technology; it also attracted Giotto, Donatello, Dante, Michelangelo, Brunelleschi, Petrarch and others besides. Who can Silicon Valley point to?

If the Valley wants to find a way out of the binary thinking that opposes business success and high culture, it only has to look to Renaissance Florence for help. In his 'The Building of Renaissance Florence,' historian Richard A. Goldthwaite -- in an economic analysis rigorous enough to warm the heart of any Valley CFO -- considered the Florentine approach of building for prestige, history and art's sake and reckoned its worth to the city's economy. The building of the great architectural monuments of Renaissance Florence, he concludes, 'resulted in considerable internal development and, ultimately, a more mature economy...'RENAISSANCE GEEKS by Simon Firth, Salon.com, 2000.

Silicon Valley Entrepreneurial Phenomenon

Let us take a look again on the live example. Astronomy Ph.D.Frank Levinson entered optics tech 1980 with Bell Labs. Left 1988 to start Finisar fiber optics -- high speed networking company --  with $60,000. According to the Forbes magazine  Finisar worth $8 billion in 2000. Frank clarifies below his personal viewpoint on the sociological nature of Silicon ValleyEntrepreneurial Phenomenon:
Despite its many contributions to the world economy, the technical community here in Silicon Valley is actually much smaller than most people believe. People end up making connections in strange ways and often these ties last for many years... My wife Wynnette and I went to dinner at the Flea Street Cafe in Menlo Park recently with a small group to hear a presentation on saving endangered species of domesticated animals such as the Cotswold Lamb. This farm and the organization that supports it was started by Robyn Shotwell Metcalfe...Robyn's husband is Bob Metcalfe, one of the two inventors of Ethernet. Bob and Dave Boggs invented Ethernet when they were scientists at Xerox Palo Alto Research Center (PARC) in the 1970s.Ethernet is also a huge factor in Finisar's past successes, as well as our future growth prospects. Bob went on to be the founder of 3Com, then to work as an insightful and articulate columnist for InfoWorld magazine. He recently became a venture capitalist with Polaris Ventures. Bob is witty, engaging, way smart, funny and an especially good writer. He is a technologist's techie.

Dave Boggs (the otherEthernet inventor) was also at the Flea Street Cafe dinner with us. Currently, Dave is working on optical extensions for networks in the metropolitan area. He has steeped himself in the technology of networking since the 1970s. Another dinner guest was Ron Crane. Ron was a key technical contributor for 3Com from the very beginning of Ethernet.All of today's Ethernet adapter cards installed in the tens of millions of PCs throughout the world are related to the first adapter cards built and tested by Ron, who is still very well connected in the networking industry.

You might think that I was invited to attend this dinner because Finisar is a major participant in the Ethernet industry through its Gigabit Ethernet transceivers and other Ethernet modules and because of a professional association I have with Bob. But that's not the reason we were there.

We were invited to this dinner because my cat-loving daughter Alana attended preschool in the late 1980s with Julia Metcalfe, daughter of Robyn and Bob. My wife Wynnette and Robyn also became friends and have stayed in touch. At the time our daughters first met, Bob was already an industry icon and I had to use my wife's and daughter's friendships to wedge my way in with the Silicon Valley geniuses behind Ethernet.

Bob and Robyn really liked Wynnette and Alana (and eventually me, too!), so our family would often be invited to their social occasions. During those times I would listen carefully for pearls of wisdom on how Finisar could grow and make its mark on the world.

One evening years ago, Bob and I talked about Finisar's early product line and he pointed out that since we were not supporting established standards, our appeal to the industry was being limited. Over the next few years Finisar changed our direction in line with Bob's counsel and this was a major factor in Finisar's growth during the second half of the 1990s.
As Paul Harvey would say, now you know the rest of the story!   

A Tale of Lambs, Preschoolers and Networking,by Frank Levinson, 2001

  

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Steve Jobs Three IT Revolutions

Personal Computing:  

 

World Wide Web:

By Christmas 1990, Berners-Lee had set up a Next computer - an easy-to-program, Unix-based black cube that was thebrainchild ofSteve Jobs - as the world's first Web server.

Using NeXT's object-oriented technology, the first Web server and client machines were built by CERN -- the European Laboratory for Particle Physics in November 1990. Since then the Web has truly encompassed the globe and access has proliferated across all computer platforms in both the corporate and home markets.

Mobil Computing:

 

The most important Googler you've never heard of 

...  Google started in Susan Wojcicki's rented garage. But in her mind, that might be the single least important fact about her long and deep relationship with the Internet giant.  Thirteen years ago, the then-tiny company's former landlord became its 16th employee and first marketing manager [She then married to Google executive Dennis Troper and introduced a future husband to her younger sister Anne, who married Brin ] Today, she is one of its 12 senior vice presidents, although by one measure she is first among equals: The advertising products she oversees accounted for about96 percent of Google's revenues in 2010. By Mike Swift

 Susan and her house that helped build Google

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Google 3G: why Bing more useful to Google than to Microsoft
By Gregory Gromov.

Yahoo switched to Bing-powered search results in August 2010. Shortly thereafter, search specialists at Google began noticing that many of the results for Yahoo! searches were the same as those Google searches of the same terms.

Google engineers set up random results on their site for a series of unlikely search terms, such as 'hiybbprqag.' (Google arranged for the nonsense word to point to a Los Angeles theater seating plan on its search engine.) 'Within a couple weeks of starting this experiment, our inserted results started appearing in Bing,' Google said in a statement on its official blog ...

'Google: Sting proves Bing copied search results'  By the CNN Wire Staff

When Google published the search experts' findings, their colleagues at Microsoft only shrugged, essentially saying that such things happen, that it was no big deal. However, they immediately stopped copying Google's results. Yahoo! somehow skirted the debate altogether.

However, it was not until later that the most interesting part of the story emerged. At the outset, Google's experts were very vocal in complaining about the abovementioned results. They then did an abrupt about-face, apparently accepting Microsoft's explanation. As if on a signal, all the once-spirited grumbling ceased. Both sides suddenly stopped discussing the story.

The reason for this is that with the search engine market so out of balance, Google really needs at least a nominal competitor in the business. In other words, if Bing spontaneously combusted tomorrow - if, for example, Microsoft decided that there was no further need to pursue the already long-lost race for search engine dominance - this would in fact be a great blow to Google.

Google would then be completely vulnerable to accusations of having a monopoly on the US search engine market, and would quickly become the next subject of the Department of Justice's anti-trust investigations. Conjoined twins Yahoo and Bing hold second and third places in the search engine market, protecting Google from allegations of monopoly, and  making Bing more useful to Google than to Microsoft.

 

How I ended up working for a big corporation by Gregory Gromov

... In other words, I followed one of my last startups from being just one of a variety of enterprises developing in the field of e-commerce, to working for one of the largest, oldest corporations in the country.

This is a typical story for that relatively small segment of Valley startups that are statistically referred to as successful or 'well-established'...

Looking into the past, it was a strange feeling. I had begun as a single cell in a fish egg that was lucky enough to survive to small fry-hood. Over the course of several years, we grew to marketable size and were then swallowed up by an incomparably larger fish. We didn't even have time to figure out what it was going to be like being inside such a big fish when we learned that this bigger fish had itself been swallowed up by a shark.

Silicon Valley Versus Route 128  by  Annalee Saxenian

Silicon Valley has a regional-network-based industrial system -- that is, it promotescollective learning and flexible adjustment among companies that make specialty products within a broad range of related technologies. The region's dense social networks and open labor market encourage entrepreneurship and experimentation. Companies compete intensely while learning from one another about changing markets and technologies through informal communication and collaboration. In a network-based system, the organizational boundaries within companies are porous, as are the boundaries between companies themselves and between companies and local institutions such as trade associations and universities.

The Route 128 region is dominated by a small number of relatively vertically integrated corporations. Its industrial system is based on independent companies that keep largely to themselves. Secrecy and corporate loyalty govern relations between companies and their customers, suppliers, and competitors, reinforcing a regional culture that encourages stability and self-reliance. Corporate hierarchies ensure that authority remains centralized, and information tends to flow vertically. The boundaries between and within companies, and between companies and local institutions, thus remain distinct in the independent-company-based system.

The performance of Silicon Valley and Route 128 in the past few decades provides insights into regional sources of competitiveness. Far from being isolated from what's outside them, companies are embedded in a social and institutional setting -- an industrial system -- that shapes, and is shaped by, their strategies and structures.

Understanding regional economies as industrial systems rather than as clusters of producers, and thinking of Silicon Valley and Route 128 as examples of the two models of industrial systems -- the regional-network-based system and the independent-company-based system -- illuminate the different fates of the two economies.

Silicon Valley and Route 128  by Paul Mackun

Job mobility statistics show the extent of success of these networks: the average turnover rate for small-to medium sized firms was 35% and the average job tenure (in the 1980s) was approximately two years (Saxenian 1994). Geography probably played as critical role in this rate as the informal social contacts. The spatial concentration of a large number of technology-based firms enabled people to change employers without altering other aspects of their lives. When a person left one firm in Palo Alto for another, there was no need to move one's residence or take one's kids out of a particular school district to enter a different firm. The attitude of the Valley served as a catalyst for this risk-taking. In many cases, a small coterie of employees in a firm dissatisfied with their current place of employment would gather together after work to tinker around with some of their own ideas. They would then develop a business plan, acquire funds from venture capitalists, and seek advice from local academic sources. If they succeeded they were heroes. If they failed, many employers were located in the same town or in a neighboring community (Saxenian 1994).

As people in the region became occupationally mobile, their roles became interchangeable: employers become employees and co-workers can become competitors. The result is that the engineers developed strong loyalties to technology and their fellow engineers and scientists while possessing far less allegiance to a single firm (Saxenian 1994). Although it may seem paradoxical that such cooperation would occur under such obviously competitive circumstances, Saxenian (1994) notes the motto of the region: ' competition demands continuous innovation, which in turn requires cooperation among firms.' Rapid flows of practical information became the currency of choice. Applied scientific research was constantly reworked to develop market goods. It is not surprising that rapid changes led to industrial diversification and contributed to the flexibility and resilience of the economic region (Saxenian 1994). The lack of rigid hierarchies extended to the firms themselves. The traditional delineations between employers and employees were not so sharp as on the East Coast, and in some cases they disappeared entirely. Beginning with Hewlett and Packard, many of the Silicon Valley companies sought a much more interactive environment between employers and employees. Decentralization of powers followed: major divisions of firms were given a large amount of autonomy (Saxenian 1994).

'In short, Silicon Valley has a regional-based industrial system -- that is, it promotes collective learning and flexible adjustment among companies that make specialty products within a broad range of related technologies. The region's dense social networks and relatively open labor markets encourage entrepreneurship and experimentation' (Saxenian 1994).

The Birth of Silicon Valley:  by Carolyne Tajina

... to the early 1930's during the Great Depression. Santa Clara County, California, known as the Valley of Heart's Delight, was a tranquil expanse of apricot, plum, and cherry orchards. Professor Frederick Terman of Stanford University's Department of Electrical Engineering enjoyed the tranquillity, but he was concerned with the great lack of opportunities for Stanford Engineering graduates to find jobs in the area. His graduates had to go 3000 miles to the east coast because there were few jobs for them locally. He began to encourage some of his students to start companies near the university.

How Silicon Valley Came To Be ...

A Legal Bridge Spanning 100 Years: From the Gold Mines of El Dorado to the 'Golden' Startups of Silicon Valley  by Gregory Gromov  

  

In this piece, the author examines a uniquely Californian law that was enacted for the sake of gold miners, and explains the law's significance in powering the high-tech boom in Silicon Valley. 

Timeline of events in the 100 years leading to Silicon Valley's creation

1848 - the first year of the Gold Rush. All over the world spread rumors of fabulous gold reserves discovered on the west coast of North America. Gold was discovered in El Dorado County, not far from Sacramento, the current state capital of California, and 'El Dorado' entered the vocabulary of treasure-seekers around the world.

1849 - the first tens of thousands of the more adventurous of gold-seekers from all over America arrive in California, in what was at that time still a territory of Mexico. Not counting the Native Americans, only about 2000 Americans lived there at the time... Thus, the first tens of thousands of California gold seekers went down in history as the 'Forty-niners'.

1850 - California gains statehood, becomes known as 'The Golden State' ( California is also known variously as The Land of Milk and Honey, The El Dorado State, and The Grape State).

1853 - The number of new arrivals to California exceeds 300 thousand people...

1872 - as a result of the state's experience during the regulation of the more violent of business disagreements during the first two decades of the state's existence (as noted earlier, this experience was accrued particularly quickly in the first days of the Gold Rush, when the groundwork was laid for California's government) the California Civil Code was adopted, in which the state's lawmakers included a special provision guaranteeing the freedom of employees in the state of California to choose their own place of work.

1891 - Stanford University is founded by former governor of California Leland Stanford.

1910  -  Lee de Forest arrives in San Francisco Bay Area. He was by then already well-known as the inventor of the triode (US Patent 879532, February 1908). Of all the influential inventions in the development of electronics and radio technology in the first half of the 20th century, the triode turned out to be the most critical component in the development of transcontinental telephone communications, radio, television, radar and early digital electronics.

Lee de Forest's arrival in what would later become Silicon Valley began the process of transformation that turned this area into one of the world's central confluences of talent and professional knowledge in electronics. A couple of years later Silicon Valley's development got its first big boost from a series of important defense contracts related to World War I, reaching critical mass 40 years later, in the first decade following World War II.

1951 - Stanford Industrial Park is established as a high tech center by businesses working in close partnership with the university. Among the first companies to rent space in the Park were Varian Associates, General Electric, and Eastman Kodak.

1956 - William Shockley, co-inventor of the semiconductor triode arrived in San Francisco Bay Area and founds Shockley Semiconductor as a division of Beckman Instruments in Mountain View. On the road to Silicon Valley's development, the baton was thus passed from Lee de Forest, inventor of the vacuum tube triode, to Shockley, inventor of the solid-state triode - transistor.

 

 

The Nobel Prize in Physics 1956 was awarded jointly to William Bradford Shockley, John Bardeen and Walter Houser Brattain'for their researches on semiconductors and their discovery of the transistor effect'.

1957 - The 'Traitorous Eight' leave Shockley Semiconductor to found Fairchild Semiconductor.

Fairchild Semiconductor's founders, clockwise from far left:Jean Hoerni,Julius Blank,Victor Grinich,Eugene Kleiner,Gordon Moore,Sheldon Roberts,Jay Last, Robert Noyce.

1968 - Two of the 'Traitorous Eight'  (Robert Noyce and Gordon Moore) leave  Fairchild Semiconductor to found Intel. 

Thus, over the course of just 20 years, a mere eight of Shockley's former employees gave forth 65 new enterprises, which then went on to do the same... Conflicts between creative teams and their veteran leadership were of course common in all American industrial parks, both before and after the aforementioned disagreement at Shockley. However, the crux of the matter is that, with the exception of California, all across America there are many different agreements signed between business owners and their employees that restrict the employee's right to quit and join competing firms or, even worse, go on to create his or her own company in direct competition with their former employer. These non-compete agreements, which new recruits are required to sign play the role of graphite rods in a nuclear reactor, slowing the chain reaction of creation of new start-ups all over America.

1971 - Term 'Silicon Valley' by the press.

NDA Experiment Set up by Mark Hurd  by Gregory Gromov

... even in those rare cases when the company employee signs an NDA in exchange for a persuasive large monetary reward - even in this case - an employer cannot, under the conditions of the state of California, create legal barriers to an employee leaving to work for his employer's competition.

 

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