Dissent, “Treacherous Eight” & the Birth of the Silicon Valley

 

                                         

18 September, in a way is celebrated as a birthday of sorts for the Silicon Valley in the US of A. It was on this day (September 18) in 1957, eight brilliant minds - Julius Blank, Victor Grinich, Jean Hoerni, Gene Kleiner, Jay Last, Gordon Moore, Robert Noyce, and Sheldon Roberts - who were working with a genius Nobelist, William Shockley in the Shockley Semiconductor company, resigned en masse to chart their own future. It was this historic decision which paved the way for the birth of what we now call as the Silicon Valley. The eight of them were collectively dubbed as ‘treacherous eight’ by their boss, William Shockley, an ‘erratic, mistrustful, and impatient boss’. Shockley was suspicious of his employees and went to an idiotic extent of spying on them by hiring detectives and sometimes asking them to take a lie-detector tests. It was therefore no wonder that eight of his best employees decided to call it quits.

Shockley was a brilliant scientist who had served for long with the Bell Labs and one of his most significant achievements at the Bell Labs was the transistor. It is pertinent to note that the computers of that time - ENIAC - used power hungry and bulky vaccum tubes which often times blew out due to extreme heat leading to the breakdown in the functioning of the devices. The discovery of the transistor effect and the subsequent mass production of the small transistors paved the way for a transformational change in the electronics industry. The market impact of William Shockley’s research at the Bell Labs can be understood with just one just example - The Sony Corporation. This Japanese company, which is now a global leader in the consumer electronics industry, owes its success to the Ball Labs transistors using which Sony began manufacturing radio transistors to make an international market presence for the Sony products. In recognition of his research, William Shockley was awarded the 1956 Nobel Prize in Physics which he shared with John Bardeen and Walter Brattain "for their researches on semiconductors and their discovery of the transistor effect".

Bell Labs knew the market potential of the discovery of the transistor effect and therefore they organised an international demonstration of how their new device - transistor- could replace the power hungry Vacuum tubes and also reduce the size of the computers and make them more reliable, besides being economical. One of the beneficiaries of their discovery was Sony which helped Japan to become the consumer electronics leader in international market. Shockley therefore was expecting a reward from Bell Labs, which was commensurate with the market potential of his discovery. Unfortunately, the management of the Bell Labs did not entertain Shockley’s demand. Unhappy with the treatment that he was getting in Bell Labs, Shockley decided to part ways with his company and start his own semiconductor company. Until then, it is important to note that most of the business enterprises were mostly located in the east coast in US including Bell Labs, which was located in New Jersey. Shockley decided that he will not only quit Bell Labs but will move to the other side - the west coast, to establish his own company far away from the Bell Labs.

Shockley founded the Shockley Semiconductor company in 1955 with an objective to work on semiconductors and to build transistors. He managed to obtain funds for his new venture from Beckmann Instruments. Shockley Semiconductor opened its business in 1955 at Palo Alto, California, near Stanford University, which is now at the heart of the Silicon Valley. Shockley knew that if his company was to succeed he would need the best of minds. Moreover, Shockley had a knack for identifying the best of talent. He scouted for the best talent in the universities and managed to put together a team of highly talented young men to work for his company. His team was referred to as the ‘greatest collection of electronic geniuses’ ever assembled under one roof.

Shockley Semiconductor became the first High Technology company in what would become the Silicon Valley. Unfortunately, things did not go well for the company from the beginning. Most of the brilliant young men hired personally by Shockley were actually attracted to the the glamor of working under the genius scientist, Shockley - the co-creator of the first transistor. Unfortunately, that was not to be. During those early days there was limited talent with specialised semiconductor knowledge in the market, and among those talent, the best of it was working with Shockley. The researchers working under Shockley faced a myriad of challenges. They were never given a free hand to work on their passion in the frontiers of the semiconductor technology. Their preference to work with silicon semiconductors was rejected by Shockley. They were constantly heckled by Shockley with micro-management, impatience, and skepticism. Moreover, Shockley’s paranoia of internal mutiny by his genius employees made him to resort to extreme measures. He hired detectives to spy on his employees and often put them to lie detector tests. Shockley had no sense of professionalism and his employees saw him as an incompetent businessman. The constant outburst of Shockley on his employees were a cause for mounting friction. The resulting work environment in the company, which was to work in the state of the art research field, was contemptuous, stressful, and stifling. What would happen next would give rise to perhaps the most influential birth of a tech giant companies in late 1950s

Among the people who were continuing to be ill treated at the Shockley Semiconductors were the ‘traitorous eight’. These eight best minds (Julius Blank, Victor Grinich, Jean Hoerni, Gene Kleiner, Jay Last, Gordon Moore, Robert Noyce, and Sheldon Roberts), who would become famously known as "the traitorous eight", went on to form their own company the Fairchild Semiconductors, which ushered in unprecedented growth and innovation and laid a strong foundation and a culture of innovation in the Silicon Valley. The description given by Arthur Rock, a Venture Capitalist, defines the nature of the eight people who revolted against Shockley to found their own company. “These were, by their résumés, very superior people. And I thought, gee, maybe there is something here, something more valuable than just being an employee.” - Arthur Rock, Venture Capitalist.

One fine day on a hot summer morning in San Francisco in 1957, the eight of the most talented young minds working for Shockley Semiconductors convened for a clandestine meeting at the Clift Hotel. They gathered over breakfast in the famed Redwood Room, a bastion of the city’s old guard. One of them was Robert Noyce, an MIT genius engineer, who is also to be credited for the invention of the Integrated Chip, for which Jack Kilby was awarded the Nobel Prize. Robert Noyce was the leader they needed. Noyce was initially not keen to revolt against Shockley and leave his company since he had a young family to care for. However, the remaining seven of the traitorous eight persuaded Noyce to join them for creating a new company in a new field based on nothing more than combined knowledge, faith, ideas, and passion. The result was the formation of Fair Child Semiconductor company.

It was on September 19, 1957, a day after these eight brilliant minds left Shockley Semiconductors company, that they signed on a dollar bill promising to establish their own company. Their startup, Fairchild Semiconductor Corporation, went on to develop some of the most important innovations in 20th century electronics technology and sowed seeds that spawned Silicon Valley and changed the world. In the formation of their new company the eight of them were assisted by Arthur Rock, who later formed one of the first West Coast venture capital firms. The eight men raised $1.38 million from East Coast−based Fairchild Camera & Instrument Corporation. Their timing was impeccable. This was the time when USA was lagging far behind their Cold War rivals the Soviet Union in every space venture and it was time for the US to recoup the loss of leadership to the Soviet Union. This resulted in the military contractors engaged in crash programs to miniaturize and improve the reliability of aerospace electronic systems. Fairchild founders identified this as an opportunity for a new kind of silicon transistor to serve these applications.

In just five months they outfitted an R&D facility in Palo Alto, developed new processes and equipment, and introduced a range of new transistors which found instant acceptance in the space market. Fairchild’s rapid growth in revenue, number of employees, and impact on the local community can be compared to that of Google 40 years later. This extraordinary level of success was built on revolutionary insights by three co-founders—Jean Hoerni, Robert Noyce, and Gordon Moore and amplified by what is called as a start-up and innovation culture with the best of creative engineers and scientists. Fair Child continued to innovate and churn out new products and services all through the 1960s. Fairchild scientists pioneered reliable metal oxide semiconductor (MOS) production and also patented the all-important complementary MOS (CMOS) technology which is so fundamental to mainstream chip manufacturing today. Fairchild also developed analog chips and the most famous among them is µA709 operational amplifier (op-amp), which was developed in 1965. This IC established a mass market for analog devices and a highly profitable business unit for Fairchild. Fairchild alumni started many important analog IC companies including Linear Technology and Maxim.\

The Fairchild company grew from twelve to twelve thousand employees in no time and was soon raking in some $130 million a year. Led by Robert Noyce, the company introduced what has become a distinctly "Californian" style of management, complete with casual clothing and laid back atmosphere. Fairchild was the seedbed for a great industrial complex, as over the years many of the founders left to form other companies. Dubbed the "Fairchildren," these defectors helped Silicon Valley grow into the semiconductor ‘Mecca’ it has grown to become today.

According to journalist Michael Malone, “Fairchild Semiconductor was a company of legend – perhaps the most extraordinary collection of business talent ever assembled in a startup company. If Fairchild had a corporate culture it could only be described as volatility incarnate... brilliant young engineers and marketers working long days, and partying long nights... And somehow in the middle of it all, they also managed to invent the integrated circuit, the defining product of the late 20th century, and in the process helped to create the modern world”.

The management style that emerged from this culture differed from the conventional, bureaucratic, almost feudal ethos of the East Coast companies. Youth, inexperience, undying spirit, passion, a diverse mix of immigrants from across Europe and Asia, particularly from India, a tolerance for risk-taking, and a strong engineering discipline evolved into a formula that was replicated across the Valley. This culture now spans to successor companies such as AMD, Intel, and National Semiconductor and on to Apple, Atari, Netscape and Sun and also to Cisco, Google, Facebook and beyond.

The Fairchild Semiconductor reached heights of influence in no time. But then as it happens with most companies Fairchild too was beset by inept absentee management woes. Key people started leaving the company to chart their own paths and to found new companies of their own. Among those who left the Fair Child to form their own companies included their founder, the MIT genius engineer, Robert Noyce. He co-founded Intel with Gordon Moore in 1968. This process haemorrhaging key people continued with the company and those who left the company went on to found new semiconductor companies like Intel, AMD, National LSI Logic and many others. It is estimated by some that more than 400 companies can trace their roots to the Fairchild Semiconductor company, which was formed by those "Fairchild Eight" the most famous being Robert Noyce and Gordon Moore, who co-founded Intel Corp. in 1968.

Today, that culture which was created by the founders of Fair Child Semiconductors in the Silicon Valley continues unabated. And this culture is inextricably linked to Innovation and entrepreneurship and it is/was here that the so called ‘geeks’ work passionately in an informal work culture, alongside their unending and night partying- ‘to give birth to the future’. The origin of the raise and raise of this new knowledge culture in the Silicon Valley, where innovation is a norm, goes back to the decades of the 50s, 60s and 70s of the twentieth century. This tradition has continued to remain uninterruptible even today and the culture of innovation, creativity and birthing new technologies in the Silicon Valley has spread to far off places across the world including in cities like Bangalore, Hyderabad and Gurugram in India.

The semiconductor industry was, is and will continue to be the engine that drives the Silicon Valley. It ushered the much heralded Information Revolution, the computers, cell phones, satellites, internet etc. and these new technologies, which owe their existence to the semiconductor industry have completely transformed our lives and collectively led us to the knowledge society and to what is termed the Fourth Industrial Revolution - IR4.0.

The history of the Silicon Valley therefore owes its Genesis to the dissent by the eight brilliant minds who left en-masse the Shockley Semiconductors company on this day to not only found their own company but also create a culture which thrives even today in the valley.

India has been immensely benefitted from this culture. Bangalored, a neologism, which became famous because of Barack Obama’s, (former American president) election address to the Buffalo audience, where he spoke on the dangers of the Buffalo (American) youngsters losing their jobs to their Bangalore counter parts in India, reminds us of the spin off benefits that the exponential growth of Silicon Valley in San Francisco Bay Area has brought for India, particularly to Bangalore which is considered to be the Silicon Valley of India. Let us owe it to those traitorous eight who made this possible.

Long live Creative culture which was birthed in the Valley to create more opportunities for India.