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Speaker 1: Hey, it's Jacob. As you may know, I also host

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Speaker 1: a show called Business History. And a lot of the

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Speaker 1: time when we're making episodes of Business History, I think

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Speaker 1: people who listen to What's Your Problem would like this

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Speaker 1: episode of Business History. So starting today, we are going

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Speaker 1: to run some of those episodes in this feed, in

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Speaker 1: the What's Your Problem feed. If you already subscribe to

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Speaker 1: Business History, thank you. Welcome to Skip These. And if

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Speaker 1: you don't already subscribe, I hope you like them. Hope

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Speaker 1: you like these episodes. We're going to start with one

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Speaker 1: that is about really the origin of Silicon Valley, how

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Speaker 1: Silicon Valley came to be. I hope you like it.

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Speaker 1: Imagine you're just starting out. in your field. And one

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Speaker 1: day out of the blue, you get a call from

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Speaker 1: this guy who basically invented the field, this guy who

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Speaker 1: is a giant in the field. And he says, I

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Speaker 1: want you to come work for me. Dream come true.

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Speaker 1: So of course, you go, you work for him. But

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Speaker 1: he turns out to be an absolute nightmare. This is

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Speaker 1: what happened to young Robert Noyce in 1956. And I'm

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Speaker 1: going to argue on the show today that this chain

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Speaker 1: of events is is actually what led to the creation

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Speaker 1: of Silicon Valley. One bad boss, Silicon Valley. One bad boss,

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Speaker 1: a couple geniuses, the right mix of technology and historical facts,

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Speaker 1: Silicon Valley.

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Speaker 2: Let's do it.

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Speaker 1: So, Robert Noyce, the guy who got the call, he

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Speaker 1: was a golden boy. He was a real corn-fed Iowa

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Speaker 1: American golden boy. He grew up in Iowa in the

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Speaker 1: 1930s and 40s, went off to Grinnell College in his hometown.

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Speaker 1: When he was there, he sang in the choir, he

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Speaker 1: was a champion diver, and he played the leading man

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Speaker 1: in a local radio soap opera.

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Speaker 2: Heartthrob.

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Speaker 1: Heartthrob. A few decades later, the great Tom Wolfe wrote

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Speaker 1: a profile of Noyce in Esquire. Yeah, why don't you

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Speaker 1: give us a little hint, Robert?

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Speaker 2: Let me read this. While he looked at you, he

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Speaker 2: never blinked and never swallowed. He absorbed everything you said

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Speaker 2: and then answered very lovely in a soft baritone voice,

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Speaker 2: And often with a smile that showed off his terrific

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Speaker 2: set of teeth. He also had a good dentist. Look

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Speaker 2: at that.

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Speaker 1: Yeah, Wolf said it was like he had a halo

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Speaker 1: floating on his head. And, kind of annoyingly, he was

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Speaker 1: a genius. Yeah. Got into transistors before anybody really knew

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Speaker 1: what transistors were. Went off to MIT. Got a PhD.

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Speaker 1: And then he got a job at this little electronics

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Speaker 1: company in Philadelphia. And... He got bored. Suddenly, he's in

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Speaker 1: his 20s. He's a golden boy. He's working at this

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Speaker 1: kind of second-tier place, and it's just not going that well.

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Speaker 1: And then one day, Noyce is at his office, and

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Speaker 1: the phone rings, and he picks up the phone, and

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Speaker 1: hears this voice on the other end. The voice says,

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Speaker 1: Shockily here. Noyce later said this was like picking up

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Speaker 1: the phone and talking to God. Three months later, Noyce

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Speaker 1: moved to Mountain View, California to work.

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Speaker 2: Middle of nowhere.

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Speaker 1: At the time.

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Speaker 2: Yeah.

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Speaker 1: Turns out God, William Shockley, is a horrible boss, a

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Speaker 1: paranoid micromanager. Cruel, really. Cruel. And the fact that he

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Speaker 1: was such an asshole wound up having profound consequences for

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Speaker 1: the world. I'm Jacob Goldstein.

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Speaker 2: And I'm Robert Smith. And this is Business History, a

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Speaker 2: show about the history of business. Today on the show,

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Speaker 2: the invention of Silicon Valley, a place that is an

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Speaker 2: actual place, But it's more a state of mind, a

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Speaker 2: culture where restlessness is a virtue and quitting your job

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Speaker 2: is heroic.

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Speaker 1: Yeah, I mean, Silicon Valley, it's this agglomeration, right? It

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Speaker 1: is the most important agglomeration in the history of agglomeration, perhaps.

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Speaker 1: It has created the most important technologies of the 21st

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Speaker 1: century and truly the most valuable companies in the history

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Speaker 1: of the world.

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Speaker 2: And it started with an asshole, William Shockley, and a

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Speaker 2: golden boy, Robert Noyce.

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Speaker 1: So let's start with Shockley. He really comes first in

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Speaker 1: the story. Shockley was roughly a generation older than Noyce.

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Speaker 1: He grew up in Palo Alto in California in the

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Speaker 1: 19-teens and 20s when it was, you know, a little

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Speaker 1: college town surrounded by farms and orchards.

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Speaker 2: Yeah, think Grapes of Wrath, East of Eden, right? These

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Speaker 2: classic books about farm workers. That's what Silicon Valley was

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Speaker 2: at the time. Yeah, yeah.

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Speaker 1: Right over the hill from Salinas, right? Not far. Shockley

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Speaker 1: was a difficult child. He bit his mother a lot.

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Speaker 1: He bit multiple babysitters. He didn't go to school. He

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Speaker 1: was homeschooled until he was eight. His parents were high achievers.

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Speaker 1: His dad had a Ph.D. from MIT. His mom graduated

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Speaker 1: from Stanford. Was one of the first people to solo

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Speaker 1: climb Mount Whitney. I believe the highest mountain in the

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Speaker 1: continental United States. And, you know, Shockley eventually went to

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Speaker 1: school and turned out to be a brilliant student. Got

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Speaker 1: a Ph.D. from MIT. And in 1936, he went off

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Speaker 1: to work at Bell Labs in New Jersey.

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Speaker 2: We haven't really talked about Bell Labs yet on the show,

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Speaker 2: and we should do a whole episode about it because

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Speaker 2: it was really critical for all the development of the

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Speaker 2: technologies of the 20th century. It was set up as

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Speaker 2: AT & T' s research lab in the early part of

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Speaker 2: the century. And AT & T, of course, had a

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Speaker 2: monopoly on the phone system. So, you know, they had

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Speaker 2: a ton of extra money. But more than that, bringing

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Speaker 2: all these geniuses together to work on technology was wasn't

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Speaker 2: just about phones. It was about any hard problem that

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Speaker 2: they could think of. They developed the first solar panels, right?

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Speaker 2: The first cell phone system, the quartz clock. They found

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Speaker 2: evidence of the Big Bang. The creation of the universe

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Speaker 2: was discovered by the phone company, which is amazing. And

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Speaker 2: the main part of this was this idea that if

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Speaker 2: geniuses just interact, they will come up with solutions that

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Speaker 2: they could not come up with alone. And if you

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Speaker 2: want to picture it, one of the Bell Labs, there

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Speaker 2: were several of them, one in lower Manhattan, a couple

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Speaker 2: in New Jersey. One of the Bell Labs is the

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Speaker 2: building they use for the show Severance.

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Speaker 1: Is that true?

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Speaker 2: That giant hall, you know, the outside shots of it,

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Speaker 2: that's what Bell Labs look like.

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Speaker 1: I didn't know that. So Shockley is hired and, you know,

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Speaker 1: there is all of this incredible creative work going on,

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Speaker 1: but Shockley is hired, frankly, to work on A more

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Speaker 1: practical problem for AT & T. A more phone company-centric problem.

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Speaker 1: And that is this. Vacuum tubes. Vacuum tubes were these

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Speaker 1: little glass tubes, kind of like an elongated light bulb.

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Speaker 2: The size of your thumb, maybe a little taller.

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Speaker 1: Okay. And the fundamental thing they did was amplify electric signals.

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Speaker 2: Which is a huge problem in technology at the time, right?

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Speaker 2: If you speak into a microphone or, say, a telephone headset...

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Speaker 2: The electricity your voice generates is tiny. The signal is

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Speaker 2: very small. How do you get that into wires that

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Speaker 2: go across the United States? You have to amplify it

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Speaker 2: along the way. And they use these little tubes to

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Speaker 2: do it. Now, the problem is these tubes are fragile,

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Speaker 2: like they are glass tubes, and they used a tremendous

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Speaker 2: amount of energy. They would heat up. In fact, you

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Speaker 2: had to like let them heat up before you could

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Speaker 2: even turn on the tube radio at the time or

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Speaker 2: the tube amplifier.

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Speaker 1: You're really speaking as a man who is familiar with

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Speaker 1: vacuum tube technology, Robert.

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Speaker 2: I have spent some time with old radios where you

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Speaker 2: have the vacuum tubes and, of course, the audio professionals

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Speaker 2: who say, Those were the golden days.

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Speaker 1: You are that audio professional.

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Speaker 2: I love a vacuum tube, but go on.

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Speaker 1: So, okay, so it's the 30s. Long-distance calling is growing fast,

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Speaker 1: but the vacuum tubes, for the reasons you're describing, are

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Speaker 1: a nightmare. And also, by the way, they burn out, right?

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Speaker 1: They are like incandescent light bulbs. It's very hard to

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Speaker 1: scale a company on this technology that's expensive and unreliable,

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Speaker 1: and you have to keep sending people out to put

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Speaker 1: in new vacuum tubes, right? Right. So Shockley is put

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Speaker 1: in charge of this team that's trying to find a

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Speaker 1: better replacement for the vacuum tube.

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Speaker 2: Something that is solid state that doesn't break. Yeah, yeah,

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Speaker 2: that doesn't break, that's cheaper, that scales.

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Speaker 1: So, you know, Shockley at a fundamental level is thinking

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Speaker 1: about electricity and specifically how electrons move through materials. And,

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Speaker 1: of course, there is this spectrum where on one end

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Speaker 1: of the spectrum you have insulators like glass and rubber

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Speaker 1: where electrons don't flow easily through them. On the other

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Speaker 1: end of the spectrum you have conductors like copper and

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Speaker 1: Where electrons flow right through them.

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Speaker 2: If only there was something in between, you know, not

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Speaker 2: an insulator, not a conductor, sort of a quasi-conductor?

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Speaker 1: And people were starting to understand that you could maybe

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Speaker 1: control them so that their behavior would change under different settings.

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Speaker 1: And that if you could do that, if you could

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Speaker 1: get it to switch from basically an insulator to basically

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Speaker 1: a conductor, you could use that as a way to

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Speaker 1: amplify an electric signal.

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Speaker 2: You could put a tiny electrical signal in there and

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Speaker 2: it would be boosted by like a hundred times is

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Speaker 2: the way it works. Yes.

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Speaker 1: And the dream is it would be, you know, a cheaper,

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Speaker 1: more reliable version of the vacuum tube. So Shockley's working

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Speaker 1: on this in the late 30s. And then Hitler invades Poland.

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Speaker 1: Damn it. World War II comes along, and Shockley and

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Speaker 1: every other high-powered nerd in America gets reassigned to go

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Speaker 1: work on the war effort. Side note, I feel like

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Speaker 1: we should do a show or a series sometime of, like,

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Speaker 1: how the nerds beat the Nazis. I feel like there's

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Speaker 1: a lot there.

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Speaker 2: Yeah, yeah.

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Speaker 1: I mean, one obvious one is the first sort of

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Speaker 1: modern style computer was built as part of the war effort.

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Speaker 2: Using vacuum tubes.

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Speaker 1: Using like 18,000 vacuum tubes in a room that was

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Speaker 1: like 1,500 square feet, right?

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Speaker 2: Yeah.

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Speaker 1: Bigger than, you know, your apartment. You know, a million

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Speaker 1: times weaker than an iPhone or whatever. But yes, that

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Speaker 1: was a computer. It was used to calculate the trajectories

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Speaker 1: of artillery, which I love. Shockley, for his part, was

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Speaker 1: working on tactics for Navy convoys to fight subs, which

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Speaker 1: is dear to my heart because my own grandfather was

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Speaker 1: on a Navy convoy in the North Atlantic fighting Nazi subs. Okay,

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Speaker 1: so the nerds beat the Nazis.

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Speaker 2: Good news.

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Speaker 1: Thank you, nerds. And then Shockley goes back to work.

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Speaker 1: trying to figure out a replacement for the vacuum tube.

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Speaker 1: And it is hard to get it to work, right?

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Speaker 1: It's classic leap from theory to practice is quite hard.

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Speaker 1: They can't get it to work. They can't get it

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Speaker 1: to work. But then finally, in November of 1947, two

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Speaker 1: researchers on Shockley's team, they start to figure it out.

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Speaker 1: They have what comes to be called the miracle month.

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Speaker 1: And the next month in December, they get this slab

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Speaker 1: of germanium with a little bit of, like, jerry-rigged foil

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Speaker 1: on it to work, to amplify an electrical signal by

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Speaker 1: a factor of 100. And they call it the transistor.

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Speaker 2: And Shockley, William Shockley, is not throwing them a party,

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Speaker 2: is not entirely psyched. Here, let me read his quote.

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Speaker 2: My elation with the group's success was tempered by not

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Speaker 2: being one of the inventors. I experienced some frustration... that

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Speaker 2: my personal efforts started more than eight years before had

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Speaker 2: not resulted in a significant inventive contribution of my own.

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Speaker 1: Not a lovable guy, Shockley. Not a team player, right? He,

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Speaker 1: in fact, goes to the lawyers at Bell Labs and

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Speaker 1: is like, you guys should put my name on the patent.

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Speaker 1: I know I didn't actually do the work, but come on,

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Speaker 1: it's my team. I've been working on it. The lawyers

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Speaker 1: don't actually agree to do this. They don't do it.

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Speaker 1: And so Shockley goes off in secret And starts working

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Speaker 1: on a better way to make a semiconductor, basically. Take

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Speaker 1: this work and improve upon it. And remember, he is

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Speaker 1: a genius, right? He is a very talented engineer. And

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Speaker 1: so he succeeds.

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Speaker 2: Obviously, we're making fun of Shockley a little bit. But this, like,

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Speaker 2: monomaniacal resentment that he had, and had his entire life,

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Speaker 2: leads to all of these breakthroughs.

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Speaker 1: Yes, well, not only does it lead to these breakthroughs, right?

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Speaker 1: So he's acting like a jerk at Bell Labs. He's

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Speaker 1: acting completely... contrary to the ethos of the place, right?

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Speaker 1: Which is supposed to be everybody comes together. And so

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Speaker 1: once he does this, nobody wants to work with him anymore.

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Speaker 1: He gets passed over. And so he decides, and here's

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Speaker 1: the quote, he decides, the hell with that. I'll go

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Speaker 1: set up my own business. I'll make a million dollars

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Speaker 1: that way. So in 1954, Shockley leaves Bell Labs, leaves

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Speaker 1: New Jersey, moves home to Palo Alto, California.

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Speaker 2: Still remember, Kind of the middle of nowhere.

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Speaker 1: Kind of the middle of nowhere. Still known for its

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Speaker 1: annual prune festival. Although, to be fair, I mean, Hewlett

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Speaker 1: Packard was there by this time. It's a legit company.

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Speaker 1: Stanford was growing. They had just set up their industrial park.

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Speaker 1: But yes, far from the center of the technological action, right?

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Speaker 1: Bell Labs was the center of the tech world. MIT

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Speaker 1: was the center of the tech world. The East Coast

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Speaker 1: was where all the action was, not California. Shockley is

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Speaker 1: moving to Palo Alto because it's home. And two years

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Speaker 1: after he moves home, he starts a company that he

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Speaker 1: calls Shockley Semiconductor with the idea of making transistors ubiquitous.

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Speaker 1: And he writes in his journal something I actually find

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Speaker 1: kind of poignant. He writes, idea of setting world on fire,

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Speaker 1: father proud.

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Speaker 2: We're already seeing the very beginnings of the Silicon Valley ethos, right?

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Speaker 2: The person who doesn't really get along with others, the resentment,

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Speaker 2: you know, the focus, right? But also this other thing

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Speaker 2: that like, I can change the world, the universe.

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Speaker 1: Yes, yes. He is a very smart engineer with a

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Speaker 1: lot of ambition and some tragic flaws, right? And all

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Speaker 1: of those are important in the story and classic Silicon

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Speaker 1: Valley traits. So Shockley gets there. He is, in fact,

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Speaker 1: a visionary. He sees the future and he is right, right?

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Speaker 1: He sees that semiconductors, the transistor, is going to be

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Speaker 1: useful in a lot of ways, not just for the

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Speaker 1: phone company, right? Like transistor radio's are starting to be

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Speaker 1: a thing around this time. Hearing aids. It's clearly going

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Speaker 1: to be really important for military applications.

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Speaker 2: Because until this time, anything electronic had to stay in

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Speaker 2: one place. So he's seeing this world where you can

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Speaker 2: move electronics. Yes.

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Speaker 1: And they won't break.

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Speaker 2: Yeah.

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Speaker 1: Miniaturization, right? Things getting smaller. This is a huge theme

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Speaker 1: that is going to be key to the whole 20th century.

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Speaker 2: And I remember in the 1970s, getting a transistor radio,

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Speaker 2: it was so important that they had it in the name.

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Speaker 2: You got a transistor radio that Because people were still like,

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Speaker 2: I can't believe a radio can be held in my hand.

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Speaker 1: Robert Smith, am I right that you actually bought a

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Speaker 1: transistor radio a year ago or something?

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Speaker 2: I bought 10 of them for my students. Just so

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Speaker 2: they could see what it was like. They could move

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Speaker 2: the dial. And yes, you could still buy them on Amazon.

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Speaker 1: Does it have the pull-out antenna?

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Speaker 2: It does have the pull-out antenna.

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Speaker 1: We had one at home. We used to listen to

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Speaker 1: the baseball game. We used to listen to the Padres

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Speaker 1: games on a transistor radio.

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Speaker 2: I still have one in my shower. I listen to

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Speaker 2: it every morning.

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Speaker 1: I love that. So Shockley has this vision. He is

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Speaker 1: right about the future of the world. He is a

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Speaker 1: genius who has been central to the invention of the transistor.

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Speaker 1: He started his company, and now he needs a team.

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Speaker 1: And so he calls his, you know, engineers from Bell Labs.

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Speaker 1: He's like, hey, let's do this. They're like, no, I

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Speaker 1: know you. There's no way I'm leaving the center of

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Speaker 1: the world to move out to the middle of nowhere

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Speaker 1: to work for you.

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Speaker 2: So he has to find people who don't know him.

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Speaker 1: Who don't know him, but who know of him. That's

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Speaker 1: the sweet spot for him. This is how he finds

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Speaker 1: Robert Noyce, this golden boy engineer we talked about at

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Speaker 1: the beginning of the show, right? Noyce had actually gotten

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Speaker 1: a hold of an early transistor when he was in college,

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Speaker 1: before anybody really, you know, knew what they were. He

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Speaker 1: was really excited about it. And by the time Noyce

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Speaker 1: gets this call, he's working at this second tier electronics

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Speaker 1: company in Philadelphia. And suddenly out of the blue, William Shockley,

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Speaker 1: the great genius, calls him on the phone. And as

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Speaker 1: Noyce said later, It was like he whistled and I came.

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Speaker 1: Shockley is a good spotter of talent. He hires like

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Speaker 1: a dozen, by all accounts, extremely talented engineers, young guys

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Speaker 1: in their 20s. Another key we're going to talk more

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Speaker 1: about is Gordon Moore of Moore's Law. And so they

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Speaker 1: get out to California. And at first, it's great. Noyce

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Speaker 1: and Moore and these other young engineers are living the dream, right?

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Speaker 1: Working hard. for this guy who founded their field, who

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Speaker 1: helped discover the transistor. And he's got this former apricot

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Speaker 1: shed in Mountain View that's the headquarters.

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Speaker 2: Which is probably worth $ 10 million. Yeah.

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Speaker 1: Shockley really is talented, right? He has this breakthrough idea

328
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Speaker 1: right at the beginning of the company, which is this.

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Speaker 1: The transistors that he'd been working on at Bell Labs

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Speaker 1: were made of germanium. But germanium is hard to work with.

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Speaker 1: It's brittle. stops working at high temperatures. And so he

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Speaker 1: decides to use silicon, of course, another semiconductor.

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Speaker 2: It would have been weird if it were Germanium Valley, right?

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Speaker 1: I like Germanium Valley. They call themselves germies or something.

335
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Speaker 1: Silicon's cheaper. It's easier to work with. But, you know,

336
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Speaker 1: it's hard to get things to work. It's hard to

337
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Speaker 1: produce them economically at scale. It's hard to make hardware.

338
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Speaker 1: But it's a problem they think they can solve, which

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Speaker 1: is the sweet spot, right? If you're a young, ambitious engineer,

340
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Speaker 1: it's where you want to be. They all know it's

341
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Speaker 1: going to be big. this very ambitious thing they're trying. And,

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Speaker 1: you know, every morning at 8 a.m., the team shows

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Speaker 1: up at the headquarters in the former apricot shed. And

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Speaker 1: Shockley conducts what Tom Wolfe, the journalist, calls the arcane

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Speaker 1: symphony of, you know, getting all these engineers to work together.

346
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Speaker 1: And Shockley apparently had this incredible intuition for engineering and

347
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Speaker 1: for physics. One of the engineers who worked with him said,

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Speaker 1: His intuition for experiments was so good, it was like

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Speaker 1: he could see individual electrons. He just saw what was

350
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Speaker 1: going to happen. Isn't that great? Isn't that beautiful?

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Speaker 2: If only he could have seen individual human beings, he

352
00:18:42,636 --> 00:18:45,376
Speaker 2: would have been much better off. Yes, yes.

353
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Speaker 1: A classic kind of problem. And soon, this sort of

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Speaker 1: monstrous side of Shockley starts to show itself. He gets paranoid.

355
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Speaker 1: There's this moment when a secretary cuts her hand on

356
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Speaker 1: a doorway. There's like a little pin or something sticking

357
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Speaker 1: out of the doorway. And Shockley becomes convinced that an

358
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Speaker 1: employee is trying to sabotage the team, demands that everybody

359
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Speaker 1: take a lie detector test, which they refuse to do.

360
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Speaker 1: He doesn't get over it, stays paranoid, winds up splitting

361
00:19:15,666 --> 00:19:18,896
Speaker 1: the engineers into different teams and not telling one team

362
00:19:18,936 --> 00:19:21,476
Speaker 1: what the other is doing, hiding information, which is like

363
00:19:22,316 --> 00:19:24,396
Speaker 1: as far as you can get from the dream, from

364
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Speaker 1: the Arcane Symphony, from Bell Labs, right?

365
00:19:26,856 --> 00:19:30,256
Speaker 2: And at this point, it's starting to sound like mental illness. Yeah.

366
00:19:30,316 --> 00:19:34,476
Speaker 1: It really is. Yeah. Something is wrong with William Shockley, right?

367
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Speaker 1: And around this time, in 1956, he actually wins the

368
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Speaker 1: Nobel Prize, shares the prize for his work on semiconductors,

369
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Speaker 1: on transistors, and it only makes him worse. He has

370
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Speaker 1: this paranoid idea that there were people who were trying

371
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Speaker 1: to keep him from getting the prize he writes to

372
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Speaker 1: the Nobel Committee saying like tell me the names of

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Speaker 1: my enemies.

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Speaker 2: After he won the prize.

375
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Speaker 1: He's won the prize. Like, take the win, William Shockley.

376
00:20:03,666 --> 00:20:04,306
Speaker 2: Unbelievable.

377
00:20:04,866 --> 00:20:06,686
Speaker 1: And then he does one more thing. And, you know,

378
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Speaker 1: you can get away with a lot if you're managing

379
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Speaker 1: a team of engineers. But there is one thing, if

380
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Speaker 1: they're ambitious and talented, that you cannot get away with.

381
00:20:15,496 --> 00:20:19,976
Speaker 1: And that is becoming less ambitious, scaling back the vision.

382
00:20:20,056 --> 00:20:21,756
Speaker 1: And that is what he does around this time. He

383
00:20:21,796 --> 00:20:26,126
Speaker 1: decides that rather than making a silicon transistor that can

384
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Speaker 1: be used for anything, but that's quite hard to make

385
00:20:29,066 --> 00:20:31,166
Speaker 1: that they haven't really figured out yet. Instead of doing that,

386
00:20:31,206 --> 00:20:33,716
Speaker 1: he decides that they're going to make something that has

387
00:20:33,996 --> 00:20:37,896
Speaker 1: a clear, defined, limited use case. And that is a

388
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Speaker 1: semiconductor that can do mechanical switching in telephone exchanges.

389
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Speaker 2: Oh, he wants to revolutionize the phone company?

390
00:20:45,836 --> 00:20:48,976
Speaker 1: Yeah, like Come on, man, right? Like, we came out

391
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Speaker 1: here to the apricot warehouse to change the world.

392
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Speaker 2: And you want to make calls clearer. Okay.

393
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Speaker 1: So this is, like, the last straw for a lot

394
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Speaker 1: of the young, talented engineers. But remember, this is not

395
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Speaker 1: an era where if you're, like, a young, talented engineer

396
00:21:03,486 --> 00:21:06,306
Speaker 1: on the forefront of technology, you can just quit and

397
00:21:06,376 --> 00:21:09,316
Speaker 1: go do your own thing, right? Like, that doesn't exist yet.

398
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Speaker 1: You know, sure, Shockley started a company, but he was, like,

399
00:21:11,616 --> 00:21:13,816
Speaker 1: this very senior guy. He invented the industry. He was

400
00:21:13,876 --> 00:21:17,586
Speaker 1: about to win the Nobel Prize. And crucially, right, There's

401
00:21:17,646 --> 00:21:21,386
Speaker 1: no money for them. Nobody's going to give them money.

402
00:21:21,406 --> 00:21:23,736
Speaker 1: There's no venture capital industry. That is not a thing.

403
00:21:24,536 --> 00:21:29,076
Speaker 1: So one of these young engineers, a guy named Eugene Kleiner, thinks,

404
00:21:29,096 --> 00:21:31,036
Speaker 1: who can I call? He thinks, I'll call my dad's

405
00:21:31,176 --> 00:21:32,936
Speaker 1: stockbroker back in New York.

406
00:21:32,976 --> 00:21:33,796
Speaker 2: That guy knows money.

407
00:21:33,856 --> 00:21:37,076
Speaker 1: That guy knows about money. And he calls him. And

408
00:21:37,216 --> 00:21:39,276
Speaker 1: the broker puts him in touch with another guy at

409
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Speaker 1: the firm, this 30-year-old Harvard MBA named Arthur Rock.

410
00:21:44,016 --> 00:21:46,256
Speaker 2: Knowing 30-year-old MBAs, it was almost like they were pushing

411
00:21:46,296 --> 00:21:49,746
Speaker 2: him off on the young guy. Like, you understand this stuff.

412
00:21:50,066 --> 00:21:52,106
Speaker 2: Let the young guy handle it. Yeah, I mean, Rock

413
00:21:52,186 --> 00:21:52,766
Speaker 2: did like.

414
00:21:52,926 --> 00:21:55,786
Speaker 1: You know, kind of more interesting, more risky ventures. And

415
00:21:55,846 --> 00:21:58,606
Speaker 1: so Rock and another banker, they fly out to San

416
00:21:58,626 --> 00:22:03,126
Speaker 1: Francisco and they meet with Kleiner and Moore and a

417
00:22:03,166 --> 00:22:09,126
Speaker 1: few other disgruntled young engineers from Shockley Semiconductor. And Rock

418
00:22:09,306 --> 00:22:11,086
Speaker 1: is talking to them and he's like, well, these guys

419
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Speaker 1: are smart and I believe that transistors... are going to

420
00:22:14,136 --> 00:22:16,156
Speaker 1: be a thing. And he's like, look, you guys are smart.

421
00:22:17,276 --> 00:22:19,896
Speaker 1: You've got the pocket protectors and the thin ties. You

422
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Speaker 1: see the future. I'm like, I don't want to say

423
00:22:23,276 --> 00:22:26,226
Speaker 1: you're a bunch of nerds, but like, is there somebody

424
00:22:26,246 --> 00:22:29,706
Speaker 1: you work with who's like, got some charisma, who walks

425
00:22:29,746 --> 00:22:32,326
Speaker 1: into a room and people want to follow him? And

426
00:22:32,346 --> 00:22:35,776
Speaker 1: they're like, yes, yes. As a matter of fact, our buddy,

427
00:22:35,836 --> 00:22:41,076
Speaker 1: the former Soap opera starred diving champion. With the perfect teeth.

428
00:22:41,166 --> 00:22:43,586
Speaker 1: With the perfect teeth. He's just chilling back in Palo

429
00:22:43,626 --> 00:22:44,266
Speaker 1: Alto right now.

430
00:22:45,026 --> 00:22:45,726
Speaker 2: They thought of Noyce.

431
00:22:45,826 --> 00:22:46,606
Speaker 1: They thought of Noyce.

432
00:22:47,506 --> 00:22:48,126
Speaker 2: Noyce.

433
00:22:48,746 --> 00:22:52,106
Speaker 1: So they go back and they convince Noyce to go

434
00:22:53,146 --> 00:22:55,926
Speaker 1: talk to Arthur Rock, essentially to join them. And I

435
00:22:55,966 --> 00:22:59,326
Speaker 1: believe it's the very next day. Noyce goes with these

436
00:22:59,426 --> 00:23:03,006
Speaker 1: seven other engineers and Rock sees Noyce and he's like, yes,

437
00:23:03,766 --> 00:23:05,026
Speaker 1: this is the guy we need.

438
00:23:05,516 --> 00:23:07,776
Speaker 2: I love that the money guys are already like, I

439
00:23:07,816 --> 00:23:10,436
Speaker 2: need someone who looks like a president of a company.

440
00:23:10,576 --> 00:23:13,716
Speaker 1: And is a genius, right? Not trivially. And Rock agrees

441
00:23:13,736 --> 00:23:15,816
Speaker 1: to work with them. And these eight make a pact

442
00:23:15,876 --> 00:23:17,886
Speaker 1: that if they get the money, if they can, they're

443
00:23:17,906 --> 00:23:22,166
Speaker 1: going to leave Shockley Semiconductor. And I want to make

444
00:23:22,186 --> 00:23:24,986
Speaker 1: the case in a slightly overdetermined, but I think fundamentally

445
00:23:25,046 --> 00:23:30,506
Speaker 1: accurate way, that this moment when these eight engineers and

446
00:23:30,586 --> 00:23:35,706
Speaker 1: this banker make this agreement. This is the moment when

447
00:23:35,766 --> 00:23:37,126
Speaker 1: Silicon Valley is born.

448
00:23:37,466 --> 00:23:41,186
Speaker 2: Not when the first company has started, the Shockley Semiconductors.

449
00:23:41,746 --> 00:23:45,166
Speaker 2: It's when there's a revolution and they leave to start

450
00:23:45,206 --> 00:23:48,886
Speaker 2: a second company. And that really is the spirit of

451
00:23:48,946 --> 00:23:51,886
Speaker 2: Silicon Valley. That's why they're all located in the same place,

452
00:23:52,266 --> 00:23:54,636
Speaker 2: because they can do this. That's the promise.

453
00:23:54,846 --> 00:23:57,496
Speaker 1: Yes, you can do it even if you have no

454
00:23:57,556 --> 00:24:03,106
Speaker 1: intellectual property. No money, no customers, right? Just guts and

455
00:24:03,146 --> 00:24:05,786
Speaker 1: a dream and some amount of raw talent and a

456
00:24:05,846 --> 00:24:07,926
Speaker 1: banker who is willing to help you find the money.

457
00:24:07,946 --> 00:24:10,386
Speaker 2: That's a key part, right? So you have money and

458
00:24:10,466 --> 00:24:14,006
Speaker 2: ambition and talent. And like that is Silicon Valley.

459
00:24:14,396 --> 00:24:14,676
Speaker 1: Yes.

460
00:24:15,156 --> 00:24:15,496
Speaker 2: Love it.

461
00:24:15,716 --> 00:24:19,656
Speaker 1: Yeah. In fact, these eight guys, they become legends in

462
00:24:19,696 --> 00:24:23,536
Speaker 1: Silicon Valley and they become known as the traitorous eight

463
00:24:24,216 --> 00:24:27,116
Speaker 1: because they're, you know, being traitors to Shockley, to Shockley Semiconductor.

464
00:24:27,716 --> 00:24:29,806
Speaker 1: And I want to just dwell for a sec on

465
00:24:29,846 --> 00:24:32,406
Speaker 1: that word traitorous, right? Because it is a word that

466
00:24:32,426 --> 00:24:35,306
Speaker 1: has a very negative connotation as a general matter. A

467
00:24:35,346 --> 00:24:36,536
Speaker 1: traitor is a bad person.

468
00:24:36,596 --> 00:24:36,776
Speaker 2: Yes.

469
00:24:36,836 --> 00:24:39,196
Speaker 1: But in the context of Silicon Valley, it is heroic.

470
00:24:39,716 --> 00:24:42,136
Speaker 1: These guys are leaving this company because it has a

471
00:24:42,156 --> 00:24:45,416
Speaker 1: bad boss who lacks vision. They're being traded for the

472
00:24:45,436 --> 00:24:48,916
Speaker 1: greater good to start this company. And that is the core.

473
00:24:48,976 --> 00:24:49,576
Speaker 2: They're pirates.

474
00:24:49,976 --> 00:24:51,356
Speaker 1: They're pirates. Very good.

475
00:24:51,446 --> 00:24:51,686
Speaker 2: Yeah.

476
00:24:52,106 --> 00:24:56,736
Speaker 1: Now, at this moment, I believe 1957- This whole thing

477
00:24:56,756 --> 00:24:58,956
Speaker 1: that we're talking about is not a thing, right? There

478
00:24:59,016 --> 00:25:01,316
Speaker 1: is not this spirit of doing this. This is not

479
00:25:01,356 --> 00:25:04,056
Speaker 1: a known thing. There is not an ecosystem of capital

480
00:25:04,296 --> 00:25:08,016
Speaker 1: ready to support them. And so Rock, the banker, he

481
00:25:08,036 --> 00:25:11,746
Speaker 1: starts calling around, seeing if there's some company, basically, that

482
00:25:11,786 --> 00:25:15,366
Speaker 1: wants to support these guys. And everybody says no, because

483
00:25:15,686 --> 00:25:18,146
Speaker 1: why would they say yes, right? They're like, if we

484
00:25:18,186 --> 00:25:21,506
Speaker 1: wanted to make semiconductors, we'd just hire a bunch of engineers. Like,

485
00:25:21,586 --> 00:25:24,606
Speaker 1: why would we give it to some random guys? But

486
00:25:24,766 --> 00:25:28,176
Speaker 1: after a few months... Somebody tells Rock he should call

487
00:25:28,216 --> 00:25:35,666
Speaker 1: this guy named Sherman Fairchild. Great name. Interesting guy. Son

488
00:25:35,706 --> 00:25:37,226
Speaker 1: of one of the founders of IBM.

489
00:25:38,066 --> 00:25:38,526
Speaker 2: Nepo baby.

490
00:25:38,986 --> 00:25:42,706
Speaker 1: Nepo baby, but also talented and successful on his own.

491
00:25:43,306 --> 00:25:44,966
Speaker 1: I guess not on his own. That's the Nepo part.

492
00:25:45,026 --> 00:25:48,646
Speaker 1: But a talented and successful guy. He got into photography

493
00:25:48,726 --> 00:25:52,446
Speaker 1: early in his life. started this company Fairchild Camera that

494
00:25:52,486 --> 00:25:55,046
Speaker 1: wound up making a lot of the like aerial cameras

495
00:25:55,136 --> 00:25:59,096
Speaker 1: used in World War II. Also loves to take a risk,

496
00:25:59,176 --> 00:26:02,116
Speaker 1: never got married, loves to spend money, built himself this

497
00:26:02,216 --> 00:26:05,136
Speaker 1: glass house in Manhattan, goes out to the clubs every night.

498
00:26:05,156 --> 00:26:09,496
Speaker 1: So really the perfect guy to fund the Trader Sate.

499
00:26:10,316 --> 00:26:13,116
Speaker 1: So he ends up agreeing to put up $ 1. 5 million.

500
00:26:14,206 --> 00:26:17,306
Speaker 1: Went a lot farther back then. But, you know, it's

501
00:26:17,406 --> 00:26:19,516
Speaker 1: not like a start-up like we would know it today,

502
00:26:19,556 --> 00:26:22,616
Speaker 1: because people didn't make those deals. Instead, what he's creating

503
00:26:22,676 --> 00:26:28,916
Speaker 1: is this semi-autonomous division of Fairchild Camera. The trader estate

504
00:26:28,976 --> 00:26:32,876
Speaker 1: will get some equity, but Fairchild will have an option

505
00:26:33,296 --> 00:26:37,296
Speaker 1: to buy the project, the company, outright for $ 3 million

506
00:26:37,736 --> 00:26:41,046
Speaker 1: if it succeeds. So they agree to the deal. This

507
00:26:41,066 --> 00:26:43,126
Speaker 1: is going to be the deal. Now the trader estate

508
00:26:43,206 --> 00:26:46,606
Speaker 1: are ready to leave Shockley. Now they've got their exit.

509
00:26:47,396 --> 00:26:52,036
Speaker 1: And on September 8th, 1957, Gordon Moore broke the news

510
00:26:52,096 --> 00:26:57,156
Speaker 1: to Shockley. And it's interesting because Shockley was clearly paranoid,

511
00:26:57,616 --> 00:27:00,876
Speaker 1: and yet he didn't see this coming. He was shocked.

512
00:27:01,456 --> 00:27:04,216
Speaker 1: He staggered out of the room. He felt completely betrayed.

513
00:27:04,876 --> 00:27:07,996
Speaker 1: And the company, Shockley Semiconductor, it never recovered. It never

514
00:27:08,036 --> 00:27:10,536
Speaker 1: recovered from these guys leaving. Kind of staggered on for

515
00:27:10,556 --> 00:27:14,996
Speaker 1: a while, never did anything great. And Shockley himself became

516
00:27:15,036 --> 00:27:18,396
Speaker 1: a professor of engineering at Stanford And then his story

517
00:27:18,436 --> 00:27:21,116
Speaker 1: gets kind of more grim, like he gets obsessed with

518
00:27:21,556 --> 00:27:25,756
Speaker 1: race and IQ and eugenics. It gets kind of bleak.

519
00:27:25,996 --> 00:27:28,556
Speaker 1: And frankly, that's enough, I think, about Shockley. That's the

520
00:27:28,636 --> 00:27:30,236
Speaker 1: end of Shockley in our story today.

521
00:27:30,476 --> 00:27:32,936
Speaker 2: Because the people we care about are the pirates. The

522
00:27:32,956 --> 00:27:36,706
Speaker 2: eight engineers who left to start something new in 1957

523
00:27:36,706 --> 00:27:39,586
Speaker 2: are heroes of the Traitorous Eight. And we'll hear more

524
00:27:39,606 --> 00:27:40,606
Speaker 2: about them after the break.

525
00:28:07,106 --> 00:28:11,246
Speaker 1: And we're back. Trader Estate have just left Shockley Semiconductor.

526
00:28:11,936 --> 00:28:18,566
Speaker 1: And on October 1st, 1957, they found Fairchild Semiconductor, a

527
00:28:18,606 --> 00:28:23,676
Speaker 1: semi-autonomous division of Fairchild Camera and Instrument. Three days after

528
00:28:23,736 --> 00:28:28,676
Speaker 1: they started the company, the Soviets sent Sputnik into orbit.

529
00:28:29,836 --> 00:28:33,396
Speaker 2: Amazing. An amazing confluence of events. Amazing, right?

530
00:28:33,496 --> 00:28:35,756
Speaker 1: I mean, the U.S. is completely surprised by this, right?

531
00:28:35,776 --> 00:28:38,136
Speaker 1: This is the first satellite to orbit the Earth ever.

532
00:28:38,946 --> 00:28:42,266
Speaker 1: And it's terrifying for the Americans, right? I mean, you know,

533
00:28:42,686 --> 00:28:45,506
Speaker 1: America is afraid of the spread of communism. It has

534
00:28:45,546 --> 00:28:49,416
Speaker 1: gone from the Soviet Union to Eastern Europe to North Korea.

535
00:28:49,716 --> 00:28:51,496
Speaker 2: To the skies above your home.

536
00:28:51,636 --> 00:28:54,096
Speaker 1: Literally, it is now flying over your head, right?

537
00:28:54,316 --> 00:28:57,376
Speaker 2: And they think we need a lot more electronics that

538
00:28:57,396 --> 00:29:00,456
Speaker 2: are portable and we can put on planes and rockets

539
00:29:00,616 --> 00:29:02,136
Speaker 2: and satellites of our own. Yes.

540
00:29:02,336 --> 00:29:08,246
Speaker 1: And to be clear, this is extraordinarily lucky timing for...

541
00:29:08,706 --> 00:29:10,686
Speaker 1: Noyce and Moore and the rest of the trade restate, right?

542
00:29:10,726 --> 00:29:12,806
Speaker 1: Like their geniuses, there's a good chance they would have

543
00:29:12,826 --> 00:29:16,726
Speaker 1: succeeded anyway. But a useful lesson, it is great to

544
00:29:16,766 --> 00:29:18,406
Speaker 1: have lucky timing in business.

545
00:29:18,606 --> 00:29:21,106
Speaker 2: And a desperate customer, which was the U.S. government.

546
00:29:21,566 --> 00:29:24,766
Speaker 1: Yeah, right. There is now suddenly this space race. This

547
00:29:24,806 --> 00:29:26,666
Speaker 1: is a thing now. The Soviets are winning the race.

548
00:29:27,146 --> 00:29:29,146
Speaker 1: The U.S. has to catch up. And so, you know,

549
00:29:29,186 --> 00:29:32,636
Speaker 1: it's like Sputnik went up and billions of dollars in

550
00:29:32,676 --> 00:29:37,916
Speaker 1: government funding rained down on Fairchild Semiconductor and labs around America.

551
00:29:38,276 --> 00:29:43,406
Speaker 1: Because you can't fit many vacuum tubes in a satellite,

552
00:29:43,666 --> 00:29:46,986
Speaker 1: in the nose of a rocket, in, you know, a

553
00:29:47,046 --> 00:29:50,546
Speaker 1: fighter jet. You know what you can fit a lot of? Transistors.

554
00:29:51,746 --> 00:29:56,376
Speaker 1: So now there is essentially unlimited demand from the government

555
00:29:56,836 --> 00:29:58,596
Speaker 1: for Fairchild to build transistors.

556
00:29:58,636 --> 00:30:01,116
Speaker 2: But they still have to make it work. It is

557
00:30:01,236 --> 00:30:04,916
Speaker 2: not easy to do. It is a very hard technical

558
00:30:04,976 --> 00:30:07,966
Speaker 2: problem because it's not just you put some silicon on

559
00:30:08,006 --> 00:30:11,066
Speaker 2: and put some wires on it. Even a speck of

560
00:30:11,146 --> 00:30:15,246
Speaker 2: dust on one of these early transistors could short it out,

561
00:30:15,526 --> 00:30:16,666
Speaker 2: could create a problem. Right.

562
00:30:16,786 --> 00:30:19,566
Speaker 1: And it's, you know, we think of breakthroughs as binary.

563
00:30:19,586 --> 00:30:21,806
Speaker 1: It's like, oh, they figured out how to make a

564
00:30:21,866 --> 00:30:26,446
Speaker 1: silicon chip, done. But production and scale and efficiency are

565
00:30:26,506 --> 00:30:30,756
Speaker 1: these endless problems, right? And they are extremely inefficient. They

566
00:30:30,776 --> 00:30:34,436
Speaker 1: have an extremely high failure rate. And so they're trying,

567
00:30:34,516 --> 00:30:36,776
Speaker 1: trying every day, how can we make this better? How

568
00:30:36,796 --> 00:30:38,576
Speaker 1: can we make it faster? How can we have fewer

569
00:30:38,716 --> 00:30:43,126
Speaker 1: of them fail? And to that end, one of the

570
00:30:43,186 --> 00:30:47,226
Speaker 1: engineers at Fairchild had this idea, and that is, okay,

571
00:30:47,246 --> 00:30:50,766
Speaker 1: so the fundamental problem is the silicon is super finicky

572
00:30:50,986 --> 00:30:54,886
Speaker 1: and fragile. What if we protect it by leaving a

573
00:30:54,986 --> 00:30:59,046
Speaker 1: layer of silicon oxide on top of the chip, and then...

574
00:30:59,476 --> 00:31:02,876
Speaker 1: We just put little tiny windows in that silicon oxide

575
00:31:02,916 --> 00:31:06,516
Speaker 1: layer wherever you need to access the silicon directly.

576
00:31:06,536 --> 00:31:07,416
Speaker 2: It's like painting a house.

577
00:31:08,156 --> 00:31:10,186
Speaker 1: Sure, right, where the paint is protecting the house and

578
00:31:10,206 --> 00:31:12,096
Speaker 1: then there's like a window. Is that the metaphor? Okay,

579
00:31:12,126 --> 00:31:14,906
Speaker 1: I buy it. So he takes this idea to Noyce.

580
00:31:15,966 --> 00:31:18,266
Speaker 1: And Noyce loves the idea. Noyce has his own metaphor.

581
00:31:18,286 --> 00:31:21,146
Speaker 1: He says it's like wrapping the silicon in a cocoon,

582
00:31:21,366 --> 00:31:24,726
Speaker 1: which I like. And he takes the idea to Fairchild's

583
00:31:24,946 --> 00:31:28,646
Speaker 1: patent lawyer. And the patent lawyer, being a good patent lawyer, says...

584
00:31:29,326 --> 00:31:32,006
Speaker 1: I love it. Let's patent the hell out of it.

585
00:31:32,746 --> 00:31:35,316
Speaker 1: Don't just tell me this one use. Spend a few

586
00:31:35,336 --> 00:31:38,676
Speaker 1: days and think of all the possible uses that we

587
00:31:38,716 --> 00:31:41,056
Speaker 1: can make of this little idea so that we can

588
00:31:41,256 --> 00:31:44,196
Speaker 1: build as big a patent moat as possible. So Noyce

589
00:31:44,216 --> 00:31:47,066
Speaker 1: starts thinking about it, starts talking to Moore, you know,

590
00:31:47,906 --> 00:31:49,886
Speaker 1: doing stuff on the chalkboard. And he's like, OK, the

591
00:31:49,926 --> 00:31:52,546
Speaker 1: problem isn't just that the silicon is finicky, right? Like,

592
00:31:52,976 --> 00:31:56,626
Speaker 1: These little transistors, they're complicated. And on every one, we've

593
00:31:56,646 --> 00:31:58,846
Speaker 1: got to put like little wires. We actually have to

594
00:31:58,966 --> 00:32:01,786
Speaker 1: solder by hand wires into every chip. Yeah, because you

595
00:32:01,806 --> 00:32:03,166
Speaker 1: have to get the signal in there and then you

596
00:32:03,186 --> 00:32:05,826
Speaker 1: have to pull the amplified signal out. And just imagine

597
00:32:05,866 --> 00:32:10,116
Speaker 1: just hundreds of little tiny wires, right? And they think, well,

598
00:32:10,136 --> 00:32:13,236
Speaker 1: wait a minute. What if we can sort of etch

599
00:32:13,316 --> 00:32:15,056
Speaker 1: this cocoon a little bit?

600
00:32:15,676 --> 00:32:20,666
Speaker 2: And essentially... Print the wire on top of the silicon

601
00:32:20,726 --> 00:32:23,146
Speaker 2: oxide on top of the silicon. So basically the wires

602
00:32:23,246 --> 00:32:25,326
Speaker 2: are in the little thing.

603
00:32:25,666 --> 00:32:28,646
Speaker 1: Yes, yes. And now that he's got this, he goes

604
00:32:28,706 --> 00:32:32,006
Speaker 1: even bigger, right? He thinks about an even bigger problem

605
00:32:32,046 --> 00:32:34,306
Speaker 1: that he and the industry are facing, and that is

606
00:32:34,876 --> 00:32:38,556
Speaker 1: the uses of transistors are multiplying and getting more complex, right?

607
00:32:39,056 --> 00:32:43,656
Speaker 1: People are starting to build computers with transistors instead of

608
00:32:43,956 --> 00:32:47,726
Speaker 1: vacuum tubes, and they have all these little components, right?

609
00:32:47,746 --> 00:32:53,356
Speaker 1: These complex circuits with not just transistors, but capacitors and resistors.

610
00:32:53,476 --> 00:32:57,236
Speaker 1: And there can be thousands of connections among the components.

611
00:32:57,356 --> 00:33:00,976
Speaker 1: And people are wiring them all together by hand for

612
00:33:01,216 --> 00:33:04,826
Speaker 1: every computer, right? Which is a total nightmare for manufacturing,

613
00:33:04,886 --> 00:33:07,726
Speaker 1: extremely hard to scale. And so Noyce is thinking about

614
00:33:07,746 --> 00:33:10,066
Speaker 1: this transistor in a cocoon. And he's like, wait, it

615
00:33:10,686 --> 00:33:15,046
Speaker 1: doesn't just have to be a transistor and the wire. Like,

616
00:33:15,556 --> 00:33:17,716
Speaker 1: We could use this idea to put all kinds of

617
00:33:17,776 --> 00:33:20,296
Speaker 1: things on one piece of silicon, right? Like we could

618
00:33:20,316 --> 00:33:23,966
Speaker 1: put an entire circuit, all the components on this one

619
00:33:24,386 --> 00:33:30,926
Speaker 1: piece of silicon. This idea is the integrated circuit. This

620
00:33:31,066 --> 00:33:33,626
Speaker 1: is Robert Noyce inventing the chip.

621
00:33:34,436 --> 00:33:34,786
Speaker 2: Love it.

622
00:33:36,176 --> 00:33:37,876
Speaker 1: He's not the only one. He's not the only one.

623
00:33:37,916 --> 00:33:40,076
Speaker 1: You know, when there is a technological frontier and a

624
00:33:40,096 --> 00:33:41,856
Speaker 1: ton of money and lots of smart people working, one

625
00:33:41,876 --> 00:33:45,696
Speaker 1: of the great things about competition and the world, is

626
00:33:45,996 --> 00:33:48,456
Speaker 1: lots of people are right at the edge thinking similar thoughts.

627
00:33:48,476 --> 00:33:51,596
Speaker 1: So as Noyce is doing this, in fact, slightly earlier,

628
00:33:51,616 --> 00:33:54,826
Speaker 1: a thousand miles away, another engineer, a guy named Jack

629
00:33:54,886 --> 00:33:58,186
Speaker 1: Kilby at Texas Instruments, is also inventing the chip.

630
00:33:58,486 --> 00:34:01,786
Speaker 2: Texas Instruments, famous for their calculators. In the 1970s, that

631
00:34:01,826 --> 00:34:04,506
Speaker 2: to me was high tech, a Texas Instrument calculator.

632
00:34:04,546 --> 00:34:09,656
Speaker 1: Yes, yes. Also a chip pioneer. And in fact, Kilby

633
00:34:09,676 --> 00:34:12,076
Speaker 1: came up with the idea just before Noyce, maybe Noyce's

634
00:34:12,116 --> 00:34:14,656
Speaker 1: idea is a little more elegant. There's, of course, a

635
00:34:14,676 --> 00:34:18,276
Speaker 1: patent case, Kilby v. Noyce. But in the end, the

636
00:34:18,296 --> 00:34:20,696
Speaker 1: important thing about this moment in history and this story

637
00:34:20,956 --> 00:34:23,896
Speaker 1: is the government is going to pay for all the

638
00:34:23,936 --> 00:34:26,776
Speaker 1: chips everybody can make. There's enough to go around. And

639
00:34:27,216 --> 00:34:30,736
Speaker 1: Fairchild and Texas Instruments agree to share the intellectual property.

640
00:34:30,876 --> 00:34:33,336
Speaker 2: Amazing. They decide not to destroy each other. Right.

641
00:34:33,736 --> 00:34:37,306
Speaker 1: Like in the Cold War. So Fairchild and Texas Instruments

642
00:34:37,426 --> 00:34:39,846
Speaker 1: are making chips. They're selling them to the government for

643
00:34:40,246 --> 00:34:46,556
Speaker 1: ballistic missiles, for Apollo rockets. coming along. And, you know,

644
00:34:46,916 --> 00:34:50,116
Speaker 1: think of this moment, right? This is like peak nerd

645
00:34:50,156 --> 00:34:52,336
Speaker 1: in a short sleeve buttoned down with the like heavy

646
00:34:52,396 --> 00:34:56,826
Speaker 1: rimmed glasses doing the space race, right? This is peak

647
00:34:56,986 --> 00:35:00,226
Speaker 1: military industrial complex. And I think of the chip as

648
00:35:00,266 --> 00:35:03,506
Speaker 1: the little hyphen between military and industrial. It's like the

649
00:35:03,626 --> 00:35:05,726
Speaker 1: center of the military industrial complex.

650
00:35:05,866 --> 00:35:06,806
Speaker 2: Very Tom Wolfe of you.

651
00:35:07,526 --> 00:35:13,476
Speaker 1: So all this government demand is driving more scale. It's

652
00:35:13,596 --> 00:35:16,956
Speaker 1: pushing more Fairchild and Texas Instruments to come up with

653
00:35:17,056 --> 00:35:22,656
Speaker 1: more efficiencies, right? And one key thing they're doing is

654
00:35:22,696 --> 00:35:25,876
Speaker 1: they're figuring out how to put more and more transistors

655
00:35:26,066 --> 00:35:29,286
Speaker 1: and other components on each piece of silicon, on each chip,

656
00:35:30,146 --> 00:35:34,626
Speaker 1: so that it gets more powerful and cheaper. And they're

657
00:35:34,646 --> 00:35:36,886
Speaker 1: pretty good at doing this. They're pretty good at doing this, right?

658
00:35:36,926 --> 00:35:40,806
Speaker 1: We know this. The price falls from $ 1, 000 in the

659
00:35:40,846 --> 00:35:48,376
Speaker 1: late 50s to $ 25 by 1963. And this moment, the mid-60s,

660
00:35:49,026 --> 00:35:50,596
Speaker 1: is when we come to what I'm going to call

661
00:35:51,136 --> 00:35:56,336
Speaker 1: the most unlikely great moment in business history that we

662
00:35:56,356 --> 00:35:58,396
Speaker 1: have yet encountered in the young life of our show.

663
00:35:58,416 --> 00:35:59,036
Speaker 2: All right, bring it.

664
00:35:59,696 --> 00:36:02,656
Speaker 1: That is the moment in 1965 when the editors of

665
00:36:02,696 --> 00:36:06,876
Speaker 1: an electronics trade magazine ask Gordon Moore, one of our

666
00:36:06,916 --> 00:36:10,626
Speaker 1: Traders 8, to write an article. This is the great moment,

667
00:36:10,766 --> 00:36:14,486
Speaker 1: writing an article for a trade magazine. This electronics trade

668
00:36:14,526 --> 00:36:16,726
Speaker 1: magazine is called, wait for it, Electronics.

669
00:36:17,286 --> 00:36:19,066
Speaker 2: I love when they have a simple title.

670
00:36:19,306 --> 00:36:21,606
Speaker 1: Business History, a show about the history of business. And

671
00:36:21,826 --> 00:36:25,546
Speaker 1: Electronics Magazine asks Moore to predict where the integrated circuit

672
00:36:25,566 --> 00:36:27,686
Speaker 1: business is going to be in 10 years.

673
00:36:27,876 --> 00:36:30,056
Speaker 2: Could be a puff article. But he actually thinks about it.

674
00:36:30,056 --> 00:36:33,936
Speaker 1: He thinks about it. He sees that Fairchild and Texas

675
00:36:33,976 --> 00:36:37,216
Speaker 1: Instruments are have gotten much better at making integrated circuits

676
00:36:37,256 --> 00:36:39,066
Speaker 1: that they can put more and more components on each

677
00:36:39,086 --> 00:36:42,266
Speaker 1: little piece of silicon. And he does the math. He

678
00:36:42,286 --> 00:36:45,826
Speaker 1: actually makes a little graph and he sees that the

679
00:36:46,046 --> 00:36:49,406
Speaker 1: number of components on each ship has been basically doubling

680
00:36:49,866 --> 00:36:53,186
Speaker 1: every year. And at the point he's writing this article,

681
00:36:53,226 --> 00:36:56,816
Speaker 1: there's somewhere around 60 components. So he figures that's likely

682
00:36:56,856 --> 00:37:00,126
Speaker 1: to continue. And he just extrapolates. He does the math.

683
00:37:00,286 --> 00:37:02,846
Speaker 1: He extrapolates out his graph, actually makes a little dotted

684
00:37:02,906 --> 00:37:04,606
Speaker 1: line 10 years out into the future. And he says, OK,

685
00:37:04,626 --> 00:37:08,006
Speaker 1: we're making 60 or so components on a chip today.

686
00:37:08,346 --> 00:37:11,256
Speaker 1: In 10 years, it'll be 65,000 components on a chip.

687
00:37:13,646 --> 00:37:16,246
Speaker 1: The magic of doubling, the magic of compounding.

688
00:37:16,426 --> 00:37:18,046
Speaker 2: I feel like this is the point in business history

689
00:37:18,086 --> 00:37:21,566
Speaker 2: where we see what happens when you have exponential growth.

690
00:37:21,906 --> 00:37:24,826
Speaker 2: Thomas Edison made the light bulb better, of course. Everyone

691
00:37:24,866 --> 00:37:28,146
Speaker 2: made inventions better, but not doubling every year or two years.

692
00:37:28,666 --> 00:37:33,916
Speaker 1: No, this is the central fact about the chip, right?

693
00:37:34,156 --> 00:37:37,376
Speaker 1: And Moore knows it, crucially, right? Crucially, a huge testament

694
00:37:37,396 --> 00:37:40,116
Speaker 1: to him and his vision. Here, read this paragraph from

695
00:37:40,136 --> 00:37:42,256
Speaker 1: this article. He knows what this is going to mean.

696
00:37:42,816 --> 00:37:47,076
Speaker 2: Integrated circuits will lead to such wonders as home computers,

697
00:37:47,356 --> 00:37:50,596
Speaker 2: or at least terminals connected to a central computer, automatic

698
00:37:50,636 --> 00:37:55,276
Speaker 2: controls for automobiles, and personal portable communications equipment.

699
00:37:56,086 --> 00:38:01,146
Speaker 1: Wild science fiction-like claims. 1965.

700
00:38:01,146 --> 00:38:01,846
Speaker 2: He's writing this.

701
00:38:02,206 --> 00:38:03,006
Speaker 1: And he's right.

702
00:38:03,166 --> 00:38:04,646
Speaker 2: He's 100% correct.

703
00:38:04,686 --> 00:38:07,796
Speaker 1: So this is the birth of Moore's Law, which Moore

704
00:38:07,836 --> 00:38:10,616
Speaker 1: himself did not call Moore's Law, which is not a law,

705
00:38:11,196 --> 00:38:17,186
Speaker 1: but which basically was right, right? In 1975, 10 years later,

706
00:38:17,226 --> 00:38:19,186
Speaker 1: the year he was predicting out to, he went and

707
00:38:19,246 --> 00:38:21,466
Speaker 1: looked at how things were going. He was pretty close

708
00:38:21,486 --> 00:38:24,306
Speaker 1: to right. He realized that progress was slowing down a little.

709
00:38:24,606 --> 00:38:27,086
Speaker 1: He figured doubling two years or so, one of his

710
00:38:27,106 --> 00:38:29,766
Speaker 1: colleagues was like, no, it's more like 18 months. And

711
00:38:29,846 --> 00:38:33,466
Speaker 1: so Moore's law was adapted, right? That's what it became.

712
00:38:33,506 --> 00:38:37,026
Speaker 1: It became the number of essentially transistors eventually on a

713
00:38:37,066 --> 00:38:39,646
Speaker 1: chip Doubles 18 months. In fact, the rate of increase

714
00:38:39,666 --> 00:38:41,726
Speaker 1: has started to slow in the past decade or so.

715
00:38:41,836 --> 00:38:43,816
Speaker 2: It's reaching the limit of physics itself.

716
00:38:44,136 --> 00:38:46,536
Speaker 1: Right. There's like, you're at like weird quantum things are

717
00:38:46,576 --> 00:38:49,536
Speaker 1: happening with the atoms, right? Jensen Wong from NVIDIA basically

718
00:38:49,596 --> 00:38:52,936
Speaker 1: said Moore's law is dead. Maybe, maybe not. But the

719
00:38:53,056 --> 00:38:57,706
Speaker 1: key thing here is this doubling and doubling and doubling

720
00:38:57,816 --> 00:39:00,646
Speaker 1: over many decades that Moore predicted from, you know, 60

721
00:39:00,646 --> 00:39:05,156
Speaker 1: or so components on a chip to billions of Of

722
00:39:05,216 --> 00:39:10,056
Speaker 1: transistors on today's chips. Like, this was, I think clearly, right,

723
00:39:10,646 --> 00:39:13,946
Speaker 1: certainly the most important business trend of the last hundred years.

724
00:39:14,486 --> 00:39:18,966
Speaker 1: It enabled, obviously, the computing revolution, cell phones, the internet, AI. Like,

725
00:39:18,986 --> 00:39:22,226
Speaker 1: these key drivers of our world come out of Moore's Law.

726
00:39:22,646 --> 00:39:27,476
Speaker 2: And if you understood Moore's Law, then you could predict...

727
00:39:27,356 --> 00:39:30,896
Speaker 2: what something could do in 18 months, in three years,

728
00:39:30,956 --> 00:39:33,096
Speaker 2: in five years, in 10 years. You could start to

729
00:39:33,136 --> 00:39:37,546
Speaker 2: invent things that literally were not possible today, knowing that

730
00:39:37,586 --> 00:39:40,096
Speaker 2: the chips will be there when you finish in a

731
00:39:40,136 --> 00:39:40,756
Speaker 2: year or two.

732
00:39:41,016 --> 00:39:45,236
Speaker 1: Yeah. You see smart entrepreneurs catching onto this and doing this. Like,

733
00:39:45,256 --> 00:39:48,416
Speaker 1: I mean, the example that comes to my mind is Netflix, right?

734
00:39:48,776 --> 00:39:52,906
Speaker 1: Which started out as DVDs by mail, which was a

735
00:39:52,946 --> 00:39:55,666
Speaker 1: great service, but they did not call themselves DVDs by mail,

736
00:39:56,226 --> 00:39:59,026
Speaker 1: even though when they started Most people didn't have broadband.

737
00:39:59,046 --> 00:40:01,756
Speaker 1: Streaming video was not a thing. But they knew that

738
00:40:01,816 --> 00:40:04,296
Speaker 1: because of Moore's Law, it was going to be a thing.

739
00:40:04,376 --> 00:40:07,806
Speaker 1: They knew that would happen, and they planned around it,

740
00:40:08,016 --> 00:40:11,676
Speaker 1: and it happened. And Gordon Moore basically.

741
00:40:11,276 --> 00:40:11,776
Speaker 2: Saw it coming.

742
00:40:12,676 --> 00:40:16,856
Speaker 1: But, interestingly, around the time he wrote that famous piece,

743
00:40:16,916 --> 00:40:22,146
Speaker 1: around 1965, Moore and Noyce, our golden boy, were starting

744
00:40:22,166 --> 00:40:25,406
Speaker 1: to get restless again. You know, they like to shake

745
00:40:25,426 --> 00:40:28,226
Speaker 1: it up, these guys. They're fundamentally kind of nerd pirates.

746
00:40:28,706 --> 00:40:31,546
Speaker 1: And they are about to make one more big move

747
00:40:32,326 --> 00:40:58,396
Speaker 1: after the break. That was the break.

748
00:40:58,876 --> 00:41:01,376
Speaker 2: And now we're back. The story of Silicon Valley.

749
00:41:02,556 --> 00:41:08,266
Speaker 1: So Sherman Fairchild at Fairchild Camera and Instrument, remember our

750
00:41:08,706 --> 00:41:13,126
Speaker 1: investor in Fairchild, he had exercised his option to buy

751
00:41:13,406 --> 00:41:16,646
Speaker 1: Fairchild Semiconductor outright in 1959.

752
00:41:16,646 --> 00:41:17,466
Speaker 2: Very shrewd man.

753
00:41:17,606 --> 00:41:21,366
Speaker 1: Shrewd man. Noyce and Moore and the others kept working there.

754
00:41:21,386 --> 00:41:23,256
Speaker 1: You know, they got some money. They kept working there,

755
00:41:23,476 --> 00:41:25,616
Speaker 1: kept figuring out how to put more components on a chip.

756
00:41:25,956 --> 00:41:28,676
Speaker 1: selling all they could make to NASA and the military.

757
00:41:29,396 --> 00:41:32,516
Speaker 1: But Noyce and Moore start to get this feeling that

758
00:41:32,596 --> 00:41:36,586
Speaker 1: would really become a classic feeling among Silicon Valley founders

759
00:41:36,626 --> 00:41:39,166
Speaker 1: who have sold their companies, right? They got a bunch

760
00:41:39,206 --> 00:41:39,566
Speaker 1: of money.

761
00:41:40,626 --> 00:41:40,986
Speaker 2: Great.

762
00:41:41,426 --> 00:41:43,726
Speaker 1: They weren't really in it for the money, right? What

763
00:41:43,746 --> 00:41:46,666
Speaker 1: they wanted was to be doing big, important work. They

764
00:41:46,686 --> 00:41:49,326
Speaker 1: wanted that feeling of, you know, being free out there

765
00:41:49,406 --> 00:41:52,336
Speaker 1: on the technological frontier like nerd cowboy.

766
00:41:52,686 --> 00:41:54,996
Speaker 2: Yeah, inventing the chip is great. Putting more things on

767
00:41:55,006 --> 00:41:58,016
Speaker 2: the chip is great. But then it's just scale. It's

768
00:41:58,056 --> 00:42:01,316
Speaker 2: going from 100 components to 1,000 components to 65,000 components.

769
00:42:01,336 --> 00:42:03,996
Speaker 1: And even that might be fun if you're, like, doing

770
00:42:04,036 --> 00:42:06,686
Speaker 1: it on your own, right? Yeah. The problem for them

771
00:42:06,746 --> 00:42:10,166
Speaker 1: was they weren't, right? They were no longer pirates, like

772
00:42:10,186 --> 00:42:10,506
Speaker 1: you said.

773
00:42:10,546 --> 00:42:10,806
Speaker 2: They were.

774
00:42:11,456 --> 00:42:15,666
Speaker 1: middle managers at a division of Fairchild Camera, right?

775
00:42:15,706 --> 00:42:17,266
Speaker 2: They were going to be the next Bell Labs.

776
00:42:17,406 --> 00:42:19,796
Speaker 1: Yeah, yeah. No, now they're working for a company that

777
00:42:19,836 --> 00:42:23,976
Speaker 1: makes movie cameras and stamp machines. And they're like, hey, listen...

778
00:42:24,196 --> 00:42:26,516
Speaker 1: We're going to give stock options to the engineers. And

779
00:42:26,536 --> 00:42:29,936
Speaker 1: the company in New York is like, no, you're not. Why? Yeah, why?

780
00:42:30,956 --> 00:42:32,586
Speaker 1: And they're like, okay, but at least we're going to

781
00:42:32,606 --> 00:42:35,546
Speaker 1: take our profit and put it back into development, right?

782
00:42:35,586 --> 00:42:37,086
Speaker 1: Because things are going so fast. Why?

783
00:42:37,166 --> 00:42:39,586
Speaker 2: Your business, you produce money for the investors.

784
00:42:39,626 --> 00:42:41,766
Speaker 1: Yeah, like the point is to make money for the shareholders.

785
00:42:41,826 --> 00:42:43,726
Speaker 1: Just be quiet and keep making chips.

786
00:42:44,366 --> 00:42:46,686
Speaker 2: It's so funny, still a 1950s view of what a

787
00:42:46,756 --> 00:42:47,396
Speaker 2: business was.

788
00:42:47,666 --> 00:42:49,976
Speaker 1: Yeah, that's right. This very kind of man in the

789
00:42:50,076 --> 00:42:51,596
Speaker 1: gray flannel suit corporation.

790
00:42:51,616 --> 00:42:51,696
Speaker 2: Yeah.

791
00:42:52,286 --> 00:42:56,686
Speaker 1: And so Noyce and Moore don't like this. In 1968,

792
00:42:56,686 --> 00:43:00,966
Speaker 1: they go back to Arthur Rock, the banker who had

793
00:43:01,006 --> 00:43:04,706
Speaker 1: helped them get set up with Fairchild about a decade earlier.

794
00:43:05,586 --> 00:43:10,096
Speaker 1: And crucially, the world is really different now, in large

795
00:43:10,136 --> 00:43:13,536
Speaker 1: part because of the work that these guys have done, right? Rock,

796
00:43:14,036 --> 00:43:16,536
Speaker 1: over this time, had gotten into this idea of connecting

797
00:43:16,736 --> 00:43:20,256
Speaker 1: East Coast capital with these, you know, new companies out

798
00:43:20,296 --> 00:43:23,276
Speaker 1: on the West Coast. And he'd kind of built on

799
00:43:23,316 --> 00:43:26,856
Speaker 1: this old tradition that like old money East Coast families had,

800
00:43:26,876 --> 00:43:29,246
Speaker 1: where like with a little bit of the money on

801
00:43:29,266 --> 00:43:31,346
Speaker 1: the side, they would sort of play around with what

802
00:43:31,386 --> 00:43:33,806
Speaker 1: they called adventure capital.

803
00:43:34,166 --> 00:43:35,566
Speaker 2: Adventure capital, yes.

804
00:43:35,706 --> 00:43:38,126
Speaker 1: Right. It's just a little too, can you just tighten

805
00:43:38,146 --> 00:43:39,896
Speaker 1: that up a little bit? Just a little bit.

806
00:43:39,936 --> 00:43:40,336
Speaker 2: Right.

807
00:43:40,666 --> 00:43:44,396
Speaker 1: So, you know, around this time, Rock and a few

808
00:43:44,556 --> 00:43:49,236
Speaker 1: other finance types are creating venture capital, right? This is happening.

809
00:43:49,276 --> 00:43:51,546
Speaker 1: It's going from being a rich man's hobby to into

810
00:43:51,606 --> 00:43:54,786
Speaker 1: a more formal part of the financial system. And so remember,

811
00:43:55,146 --> 00:43:58,506
Speaker 1: the first time Noyce and Moore went to rock, it

812
00:43:58,526 --> 00:44:03,396
Speaker 1: took him months to find the money. And in part, well,

813
00:44:03,436 --> 00:44:05,136
Speaker 1: obviously in part because Noyce and Moore are way more

814
00:44:05,176 --> 00:44:07,096
Speaker 1: legit now and they've made the success at Fairchild, but

815
00:44:07,236 --> 00:44:10,836
Speaker 1: also because finance and capital allocation has developed and venture

816
00:44:10,856 --> 00:44:14,056
Speaker 1: capital is becoming a thing. Instead of two months this time,

817
00:44:14,256 --> 00:44:16,416
Speaker 1: he raises the money in two days.

818
00:44:16,996 --> 00:44:21,906
Speaker 2: And remember, this is 1968, right? So the entire... culture

819
00:44:22,346 --> 00:44:23,996
Speaker 2: of the United States has sort of shifted to the

820
00:44:24,046 --> 00:44:26,716
Speaker 2: West Coast, not just in terms of technology, but in

821
00:44:26,736 --> 00:44:31,216
Speaker 2: terms of music and fashion and lifestyle, right? And there's

822
00:44:31,256 --> 00:44:34,596
Speaker 2: this excitement out there, finally. It's not just farm fields.

823
00:44:34,656 --> 00:44:38,696
Speaker 2: It's people doing amazing, weird stuff. And I picture these,

824
00:44:38,716 --> 00:44:42,006
Speaker 2: you know, stuffy, rich people on the East Coast going, hmm,

825
00:44:42,286 --> 00:44:44,166
Speaker 2: how do we get a little bit involved in what

826
00:44:44,186 --> 00:44:46,206
Speaker 2: the kids are doing out there on the coast?

827
00:44:46,546 --> 00:44:48,226
Speaker 1: So that's why they raised the money in two days

828
00:44:48,286 --> 00:44:50,826
Speaker 1: this time. And, you know, the core idea is still

829
00:44:50,866 --> 00:44:53,426
Speaker 1: this breakthrough that they've had at Fairchild, right? It is

830
00:44:53,946 --> 00:44:58,066
Speaker 1: the integrated circuit. It is integrated electronics. They know this

831
00:44:58,126 --> 00:45:01,756
Speaker 1: is going to be huge. And so they're founding their company.

832
00:45:01,816 --> 00:45:03,696
Speaker 1: It's 1968. And they're like, what if we call it

833
00:45:04,296 --> 00:45:05,856
Speaker 1: integrated electronics?

834
00:45:05,896 --> 00:45:07,296
Speaker 2: Very nice. Very little nerdy.

835
00:45:07,316 --> 00:45:08,276
Speaker 1: A little long.

836
00:45:08,936 --> 00:45:09,176
Speaker 2: Do it.

837
00:45:09,836 --> 00:45:10,236
Speaker 1: Intel.

838
00:45:10,636 --> 00:45:12,016
Speaker 2: Intel. Beautiful.

839
00:45:12,316 --> 00:45:15,116
Speaker 1: So they create Intel, right? They create Intel. And now,

840
00:45:15,536 --> 00:45:18,596
Speaker 1: crucially this time, there's no East Coast camera company that

841
00:45:18,616 --> 00:45:20,736
Speaker 1: can tell Noyce and Moore what to do. Now they

842
00:45:20,756 --> 00:45:24,446
Speaker 1: can build this engineer's paradise they've been dreaming of. And

843
00:45:24,486 --> 00:45:26,966
Speaker 1: they do. They build a company where all the engineers

844
00:45:27,006 --> 00:45:30,906
Speaker 1: get stock options, where it's very non-hierarchical, right? No reserved

845
00:45:30,926 --> 00:45:33,496
Speaker 1: parking spaces, no fancy offices for the boss. Everybody has

846
00:45:33,536 --> 00:45:38,046
Speaker 1: the same The plain gray aluminum desks. And remind you,

847
00:45:38,066 --> 00:45:41,026
Speaker 1: this is 55 years ago and all the pieces are

848
00:45:41,066 --> 00:45:41,466
Speaker 1: in place.

849
00:45:41,826 --> 00:45:43,686
Speaker 2: Yes. All the things that we think of now as

850
00:45:43,766 --> 00:45:46,326
Speaker 2: cutting edge Silicon Valley culture, the people going out there

851
00:45:46,366 --> 00:45:49,626
Speaker 2: now to do AI, right? Yeah. 55 years ago, that's

852
00:45:49,666 --> 00:45:51,486
Speaker 2: when this got solidified. Yes.

853
00:45:51,966 --> 00:45:54,286
Speaker 1: And it worked, right? They were like, let's build this company.

854
00:45:54,326 --> 00:45:57,286
Speaker 1: Let's make it centered on engineers and let's have everybody

855
00:45:57,346 --> 00:46:00,566
Speaker 1: come in every day and try and invent the future.

856
00:46:00,986 --> 00:46:04,836
Speaker 1: And they succeed, right? Very quickly, they... have a new

857
00:46:04,876 --> 00:46:09,356
Speaker 1: technological breakthrough that propels them ahead, and Intel remains the

858
00:46:09,436 --> 00:46:14,256
Speaker 1: dominant chipmaker in the world for decades to come. And interestingly,

859
00:46:14,536 --> 00:46:18,796
Speaker 1: it's not just Noyce and Moore. Other members of that

860
00:46:18,876 --> 00:46:22,686
Speaker 1: original traitorous eight also continue to be these kind of

861
00:46:23,146 --> 00:46:28,566
Speaker 1: restless pirate types. People actually talk about Fair Children, companies

862
00:46:28,586 --> 00:46:31,716
Speaker 1: that came out of Fair Childs. One of them started AMD,

863
00:46:31,956 --> 00:46:34,496
Speaker 1: which today is also one of the biggest chip companies

864
00:46:34,516 --> 00:46:34,856
Speaker 1: in the world.

865
00:46:35,096 --> 00:46:38,176
Speaker 2: And they didn't just start companies. They also, because they

866
00:46:38,196 --> 00:46:40,936
Speaker 2: made money, became the money people themselves.

867
00:46:41,186 --> 00:46:43,886
Speaker 1: Yeah, yeah. Eugene Kleiner, the guy who called his dad

868
00:46:43,946 --> 00:46:48,246
Speaker 1: stockbroker when they were originally looking for money, he started

869
00:46:48,266 --> 00:46:52,326
Speaker 1: a venture capital fund called Kleiner Perkins, which you've probably

870
00:46:52,366 --> 00:46:55,986
Speaker 1: heard of, because it funded companies like Netscape and Google

871
00:46:56,106 --> 00:46:56,626
Speaker 1: and Slack.

872
00:46:57,226 --> 00:46:57,606
Speaker 2: Meaning.

873
00:46:58,026 --> 00:47:01,276
Speaker 1: that, you know, these original guys, they didn't just start

874
00:47:01,296 --> 00:47:03,296
Speaker 1: this company. They didn't just create the model. They actually

875
00:47:03,716 --> 00:47:08,316
Speaker 1: brought the money to fund generations of people who were restless,

876
00:47:08,356 --> 00:47:10,916
Speaker 1: who wanted to go out on their own and try

877
00:47:11,016 --> 00:47:11,576
Speaker 1: a new thing.

878
00:47:11,876 --> 00:47:15,676
Speaker 2: Yeah, if you were a golden boy in the last

879
00:47:15,676 --> 00:47:18,476
Speaker 2: 55 years, you did not have to work in Philadelphia

880
00:47:18,496 --> 00:47:20,596
Speaker 2: for an electronics firm. You didn't have to wait for

881
00:47:20,616 --> 00:47:24,636
Speaker 2: the phone call from anyone, even God, because you knew

882
00:47:24,736 --> 00:47:28,606
Speaker 2: there was a place that respected your genius and ambition

883
00:47:28,786 --> 00:47:32,756
Speaker 2: and restlessness, right? And that would overlook whatever personal flaws

884
00:47:32,796 --> 00:47:35,416
Speaker 2: you might have. There was a place that was on

885
00:47:35,836 --> 00:47:38,756
Speaker 2: the edge of everything, and it was called Silicon Valley,

886
00:47:39,156 --> 00:47:41,316
Speaker 2: and you could just go there and make your fortune.

887
00:47:42,816 --> 00:47:47,346
Speaker 1: Next week on Business History. One more guy from Fairchild

888
00:47:47,886 --> 00:47:50,886
Speaker 1: was the head of sales, starts his own VC firm,

889
00:47:51,786 --> 00:47:54,626
Speaker 1: and his very first investment was He's in a company

890
00:47:54,646 --> 00:47:57,706
Speaker 1: full of stoners that's doing business out of an abandoned

891
00:47:57,766 --> 00:47:58,286
Speaker 1: roller rink.

892
00:47:58,886 --> 00:48:00,866
Speaker 2: It's like the apricot shed of the 70s.

893
00:48:01,526 --> 00:48:04,226
Speaker 1: That company is Atari. And it's the story of the

894
00:48:04,276 --> 00:48:05,576
Speaker 1: birth of the video game industry.

895
00:48:06,096 --> 00:48:09,336
Speaker 2: Our producer is Gabriel Hunter Chang. Our engineer is Sarah Bruguier.

896
00:48:09,856 --> 00:48:11,656
Speaker 2: And our showrunner is Ryan Dilley.

897
00:48:11,976 --> 00:48:12,736
Speaker 1: I'm Jacob Goldstein.

898
00:48:12,776 --> 00:48:14,636
Speaker 2: And I'm Robert Smith. We'll be back next week with

899
00:48:14,676 --> 00:48:16,876
Speaker 2: another episode of Business History.

900
00:48:17,356 --> 00:48:18,186
Speaker 1: A show about the history.

901
00:48:19,586 --> 00:48:22,286
Speaker 2: Wait for it. Of business.