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Speaker 1: Pushkin too quick. No, it's perfect push kid stuff. You

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Speaker 1: got it.

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Speaker 2: Imagine you're just starting out in your field and one day,

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Speaker 2: out of the blue, you get a call from this

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Speaker 2: guy who basically invented the field, this guy who is

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Speaker 2: a giant in the field, and he says, I want

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Speaker 2: you to come work for me. Dream come true. So

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Speaker 2: of course you go, you work for him. But he

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Speaker 2: turns out to be an absolute nightmare. This is what

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Speaker 2: happened to young Robert Noise in nineteen fifty six. And

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Speaker 2: I'm going to argue on the show today that this

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Speaker 2: chain of events is actually what led to the creation

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Speaker 2: of Silicon Valley.

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Speaker 3: One Bad Boss, Silicon Valley, one Bad Boss, a couple geniuses,

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Speaker 3: the right mix of technology and historical facts, Silicon Valley.

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Speaker 3: Let's do it.

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Speaker 2: So Robert nois the guy who got the call. He

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Speaker 2: was He was a golden boy. He was a real

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Speaker 2: corn fed Iowa American golden boy.

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Speaker 3: He grew up in Iowa.

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Speaker 2: In the nineteen thirties and forties, went off to Grinnell

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Speaker 2: College in his hometown.

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Speaker 3: When he was there, he sang in the choir. He

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Speaker 3: was a champion diver, and he played the leading man

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Speaker 3: in a local radio soap opera, heart Throb, heart Throb.

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Speaker 3: A few decades later, the great Tom Wolfe wrote a

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Speaker 3: profile of Noise in Esquire. Yeah, why don't you give

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Speaker 3: us a little hit? Let me read this While he

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Speaker 3: looked to you. He never blinked and never swallowed. He

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Speaker 3: absorbed everything you said and then answered very levely, in

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Speaker 3: a soft baritone voice, and often with a smile that

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Speaker 3: showed off his terrific set of teeth. He also had

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Speaker 3: a good dentist. Look at that, yeah, wolf said, it

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Speaker 3: was like he had a halo floating on his head,

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Speaker 3: and kind of annoyingly. He was a genius.

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Speaker 2: Got into transistors before anybody really knew what transistors were,

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Speaker 2: went off to Mit, got a PhD. And then he

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Speaker 2: got a job at this little electronics company in Philadelphia,

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Speaker 2: and he got bored. Suddenly he's in his twenties, he's

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Speaker 2: a golden boy. He's working at this kind of second

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Speaker 2: tier place and it's just not going that well. And

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Speaker 2: then one day Noise is at his office and the

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Speaker 2: phone rings and he picks up the phone and here's

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Speaker 2: this voice on the other end. The voice says, Shockley here.

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Speaker 2: Noise later said this was like picking up the phone

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Speaker 2: and talking to God. Three months later, Noise moved to

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Speaker 2: Mountain View, California, to Wortlenoah.

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Speaker 3: At the time. Yeah, turns out God, William Shockley is

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Speaker 3: a horrible boss, a paranoid micromanager, cruel, really cruel, and

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Speaker 3: the fact that he was such an asshole wound up

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Speaker 3: having profound consequences for the world. I'm Jacob Goldstein and

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Speaker 3: I'm Robert Smith. And this is Business History, a show

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Speaker 3: about the history of business today. On the show, the

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Speaker 3: invention of Silicon Valley, a place that is an actual place,

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Speaker 3: but it's more a state of mind, a culture where

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Speaker 3: restlessness is a virtue in quitting your job. It's heroic.

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Speaker 2: Yeah, I mean Silicon Valley is this agglomeration, right, It

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Speaker 2: is the most important agglomeration in the history of agglomeration.

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Speaker 2: Perhaps it has created the most important technologies of the

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Speaker 2: twenty first century and truly the most valuable companies in

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Speaker 2: the history of the world.

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Speaker 3: And it started with an asshole William Shockley and a

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Speaker 3: golden boy, Robert Noise.

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Speaker 2: So let's start with Shockley. He really comes first in

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Speaker 2: the story. Shockley was roughly a generation older than Noise.

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Speaker 2: He grew up in Palo Alto in California in the

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Speaker 2: nineteen teens and twenties, when it was you know, a

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Speaker 2: little college town surrounded by farms and orchards.

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Speaker 3: Yeah. I think grapes of wrath east of Eden, right,

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Speaker 3: these classic books about farm workers. That's what Silicon Valley

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Speaker 3: was at the time. Yeah. Yeah, right over the hill

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Speaker 3: from Salinas, right, not far. Shockley was a difficult child.

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Speaker 3: He bit his mother a lot, He bit multiple babysitters.

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Speaker 3: He didn't go to school. He was homeschooled until he

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Speaker 3: was eight. His parents were high achievers. His dad had

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Speaker 3: a PhD from MIT, his mom graduated from Stanford. It

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Speaker 3: was one of the first people to solo climb Mount Whitney,

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Speaker 3: I believe, the highest mountain in the continental United States. True.

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Speaker 3: And you know, Shockley eventually went to school and turned

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Speaker 3: out to be a brilliant student, got a PhD from MIT,

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Speaker 3: and in nineteen thirty six he went off to work

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Speaker 3: at Bell Labs in New Jersey. We haven't really talked

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Speaker 3: about Bell Labs yet on the show, and we should

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Speaker 3: do a whole episode about it because it was really

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Speaker 3: critical for all the development of the technologies of the

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Speaker 3: twentieth century. It was set up as AT and T's

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Speaker 3: research lab in the early part of the century. And

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Speaker 3: AT and T of course had a monopoly on the

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Speaker 3: phone system, so you know, they had a ton of

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Speaker 3: extra money. But more than that, bringing all these geniuses

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Speaker 3: together to work on technology wasn't just about phones. It

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Speaker 3: was about any hard problem that they could think of.

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Speaker 3: They developed the first solar panels right, the first cell

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Speaker 3: phone system, the Courtz clock. They found evidence of the

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Speaker 3: Big Bang, the creation of the universe was discovered by

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Speaker 3: the phone company, which is amazing. And the main part

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Speaker 3: of this was this idea that if geniuses just interact,

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Speaker 3: they will come up with solutions that they could not

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Speaker 3: come up with alone. And if you want to picture it,

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Speaker 3: one of the Bell Labs, there were several of them

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Speaker 3: when in Lower Manhattan, couple in New Jersey. One of

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Speaker 3: the Bell Labs is the building they use for the

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Speaker 3: show Severance. Is that that giant hall, you know, the

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Speaker 3: outside shots of it. That's what Bell Labs look like. Huh.

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Speaker 3: I hadn't knowne that. So Shockley is hired, and you know,

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Speaker 3: there is all of this incredible creative work going on,

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Speaker 3: but Shockley is hired frankly to work on a more

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Speaker 3: practical problem for AT and T, a more phone company

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Speaker 3: centric problem, and that is this vacuum tubes. Vacuum tubes

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Speaker 3: were these little glass tubes kind of like an elongated

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Speaker 3: light bulb, all the size of your thumb, maybe a

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Speaker 3: little taller, okay. And the fundamental thing they did was

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Speaker 3: amplify electric signals, which is a huge problem in technology

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Speaker 3: at the time. Right if you speak into a microphone

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Speaker 3: or say a telephone headset, the electricity your voice generates

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Speaker 3: as tiny, the signal is very small. How do you

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Speaker 3: get that into wires that go across the United States?

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Speaker 3: You have to amplify it along the way, and they

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Speaker 3: use these little tubes to do it. Now, the problem

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Speaker 3: is these tubes are fragile, like they are glass tubes,

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Speaker 3: and they used a tremendous amount of energy. They would

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Speaker 3: heat up. In fact, you had to like let them

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Speaker 3: heat up before you could even turn on the tube

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Speaker 3: radio at the time, or the tube amplifier. Really, speaking

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Speaker 3: as a man who is familiar with vacuum tube technology

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Speaker 3: or ever, I have spent some time with older radios

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Speaker 3: where you have the vacuum tubes and of course the

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Speaker 3: audio professionals who say those were the golden day. You

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Speaker 3: are that audio profession I love a vacuum tube, but

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Speaker 3: go on, so, okay, so it's the thirties.

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Speaker 2: Long distance calling is growing fast. But the vacuum tubes,

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Speaker 2: for the reasons you're describing, are a nightmare and also

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Speaker 2: by the way they burn out, right, they are like

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Speaker 2: incandescent light bulbs. It's very hard to scale a company

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Speaker 2: on this technology. That's expensive and unreliable, and you have

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Speaker 2: to keep sending people out to.

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Speaker 3: Put in new vacuum tubes.

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Speaker 2: Right, So Shakley is put in charge of this team

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Speaker 2: that's trying to find a better replacement for the vacuum.

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Speaker 3: Tube or something that a solid state that doesn't brick. Yeah, yeah,

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Speaker 3: that doesn't break, that's cheaper, that scales.

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Speaker 2: So you know, Shokley at a fundamental level is thinking

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Speaker 2: about electricity and specifically how electrons move.

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Speaker 3: Through materials, and of course there is this spectrum.

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Speaker 2: We're on one end of the spectrum, you have insulators

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Speaker 2: like glass and rubber, where electrons don't flow easily through them.

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Speaker 2: On the other end of the spectrum, you have conductors

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Speaker 2: like copper, where electrons flow right through them.

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Speaker 3: If only there was something in between, you know, not

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Speaker 3: an insulator, not a conductor, sort of quasi conductor.

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Speaker 2: It's like a conductor, it's like a semi conductor. There

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Speaker 2: were these materials that were semi conductors, things like silicon

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Speaker 2: and germanium, and people were starting to understand that you

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Speaker 2: could maybe control them so that their behavior would change

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Speaker 2: under different settings, and that if you could do that,

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Speaker 2: if you could get it to switch from basically an

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Speaker 2: insulator to basically a conductor, you could use that as

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Speaker 2: a way.

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Speaker 3: To amplify an electric signal. You could put a tiny

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Speaker 3: electrical signal in there and it would be boosted by

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Speaker 3: like one hundred times. This is the way it works.

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Speaker 2: Yes, And the dream is it would be, you know,

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Speaker 2: a cheaper, more reliable version of the vacuum tube. So

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Speaker 2: Chockles were on this in the late thirties and then

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Speaker 2: Hitler invades poland damn it, World War two comes along

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Speaker 2: and Shockley and every other high powered nerd in America

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Speaker 2: gets reassigned to go work on the war effort. Side note,

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Speaker 2: I feel like we should do a show or a

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Speaker 2: series sometime of like How the Nerds Beat the Nazis.

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Speaker 2: I feel like there's a lot there. Yeah, yeah, I

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Speaker 2: mean one obvious one is the first sort of modern

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Speaker 2: style computer was built as part of the war effort,

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Speaker 2: using vacuum twas, using like eighteen thousand vacuum tubes in

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Speaker 2: a room that was like fifteen hundred square feet, right

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Speaker 2: like bigger than you know, your apartment, you know, a

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Speaker 2: million times weaker than an iPhone or whatever.

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Speaker 3: But yes, that was a computer. It was used to

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Speaker 3: to calculate the trajectories of artillery, which I love. Shockley,

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Speaker 3: for his part, was working on tactics for Navy convoys

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Speaker 3: to fight subs, which is dear to my heart because

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Speaker 3: my own grandfather was on a Navy convoy in the

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Speaker 3: North Atlantic fighting Nazi subs. So okay, so the words

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Speaker 3: beat the nazis good news, Thank you nerds. And then

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Speaker 3: Shockley goes back to work trying to figure out a

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Speaker 3: replacement for the vacuum tube. And it is hard to

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Speaker 3: get it to work, right, classic leap from theory to

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Speaker 3: practice is quite hard. They can't get it to work.

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Speaker 3: They can't get it to work. But then finally, in

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Speaker 3: November of nineteen forty seven, two researchers on Shockley's team

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Speaker 3: they start to figure it out. They have what comes

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Speaker 3: to be called the Miracle month, and the next month,

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Speaker 3: in December, they get this slab of germanium with a

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Speaker 3: little bit of like Jerry rigged foil on it to

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Speaker 3: work to amplify an electrical signal by a factor of

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Speaker 3: one hundred, and they call it the transistor. And Shockley,

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Speaker 3: William Shockley is not throwing them a party, is not

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Speaker 3: entirely psyched. Here. Let me read his quote. My elation

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Speaker 3: with the group's success was tempered by not being one

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Speaker 3: of the inventors. There is some frustration that my personal efforts,

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Speaker 3: started more than eight years before, had not resulted in

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Speaker 3: a significant inventive contribution of my own. Not sure. Not

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Speaker 3: a lovable guy, Shockley not a team player, right. He

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Speaker 3: in fact goes to the lawyers at Bell Labs and

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Speaker 3: it's like, you guys should put my name on the patent.

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Speaker 3: I know I actually do the work, but come on,

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Speaker 3: it's my team. I've been working on it. The lawyers

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Speaker 3: don't actually agree to do this. They don't do it,

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Speaker 3: and so.

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Speaker 2: Shockley goes off in secret and starts working on a

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Speaker 2: better way to make a semiconductor. Basically, take this work

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Speaker 2: and improve upon it. And remember he is a genius, right,

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Speaker 2: he is a very talented engineer, and so he succeeds.

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Speaker 3: Obviously, we're making fun of Shockli a little bit, but

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Speaker 3: this like monomaniacal resentment that he had and had his

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Speaker 3: entire life leads to all of these breakthroughs. Yes, well,

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Speaker 3: not only does it lead to these breakthroughs.

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Speaker 2: Right, So he's acting like a jerk at Bell Labs

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Speaker 2: and completely a contrary to the ethos of the place, right,

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Speaker 2: which is supposed to be everybody comes together. And so

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Speaker 2: once he does this, nobody wants to work with him anymore.

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Speaker 2: He gets passed over. And so he decides, and here

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Speaker 2: here's the quote. He decides, the hell with that, I'll

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Speaker 2: go set up my own business. I'll make a million

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Speaker 2: dollars that way.

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Speaker 3: So in nineteen fifty four, Shockolei leaves Bell Labs, leaves

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Speaker 3: New Jersey, moves home to Palo Alto, California. Still remember

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Speaker 3: kind of the middle of nowhere, kind of the middle

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Speaker 3: of nowhere.

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Speaker 2: Univers still still known for its annual Prune Festival, although

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Speaker 2: although to be fair, I mean Hewlett Packard was there

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Speaker 2: by this time. It's a legit company. Stanford was growing.

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Speaker 2: They had just set up their industrial park. But yes,

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Speaker 2: far from the center of the technological action. Right, Bell

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Speaker 2: Labs was the center of the tech world. Mit was

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Speaker 2: the center of the tech world. The East Coast was

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Speaker 2: where all the action was, not California. Shockley's moving to

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Speaker 2: Palo Alto because it's home. And two years after he

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Speaker 2: moves home, he starts a company that he calls Shock

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Speaker 2: Semiconductor with the idea of making transistors ubiquitous. And he

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Speaker 2: writes in his journal something I actually find kind of poignant.

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Speaker 2: He writes, idea of setting world on.

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Speaker 3: Fire, Father Proud, We're already seeing the very beginnings of

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Speaker 3: the Silicon Valley ethos, right, the postute doesn't really get

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Speaker 3: along with others, the resentment, you know, the focus, right,

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Speaker 3: but also this other thing that like I can change

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Speaker 3: the world, the universe.

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Speaker 2: Yes, yes, he is a very smart engineer with a

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Speaker 2: lot of ambition and some tragic flaws, right, and all

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Speaker 2: of those are important in the story and classic Silicon

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Speaker 2: Valley traits.

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Speaker 3: So Shockley gets there. He is, in fact a visionary.

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Speaker 3: He sees the future and he is right right.

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Speaker 2: He sees that semiconductors, the transistor is going to be

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Speaker 2: useful in a lot of ways, not just for the

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Speaker 2: phone company. Right, Like transistor radios are starting to be

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Speaker 2: a thing around this time, hearing aids. It's clearly going

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Speaker 2: to be really important for military applications.

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Speaker 3: Because until this time anything electronic had to stay in

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Speaker 3: one place. So he's seeing this world where you can

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Speaker 3: move electronics, yes, and they won't break. Yeah. Miniaturization, right,

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Speaker 3: things getting smaller. This is a huge theme that is

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Speaker 3: going to be key to the whole twentieth century. And

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Speaker 3: I remember the nineteen seventies getting a transistor radio. It

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Speaker 3: was so important that they had it in the name,

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Speaker 3: you got a transistor radio, because people were still like,

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Speaker 3: I can't believe a radio can be held in my hand, Very.

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Speaker 2: Smith, Am I right that you actually bought a transistor

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Speaker 2: radio a year ago or something.

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Speaker 3: I bought ten of them for my students just so

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Speaker 3: they can see what it was like. They can move

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Speaker 3: the dial, and yes, you can still buy them on Amazon.

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Speaker 3: They have the like pull out antenna. It does have

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Speaker 3: the pullout antenna. We had what's at home? We used

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Speaker 3: to listen to the baseball game. We used to listen

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Speaker 3: to the Padres games on a transistor radio. I still

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Speaker 3: have one in my shower. I listened to it every morning.

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Speaker 3: I love that. So Shockley has this vision. He is

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Speaker 3: right about the future of the world. He is a

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Speaker 3: genius who has been central to the the transistor. He

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Speaker 3: started his company and now he needs a team. And

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Speaker 3: so he calls his you know, engineers from Bell Labs, like, hey,

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Speaker 3: let's do this. They're like, no, no, I know you.

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Speaker 3: There's no way I'm leaving the center of the world

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Speaker 3: to move out to the mill of nowhere to work

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Speaker 3: for you. So he has to fight people who don't

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Speaker 3: know him, who don't know him, but who know of him. Right,

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Speaker 3: that's the sweet, that's the key.

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Speaker 2: Yes, this is how he finds Robert Noise, this golden

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Speaker 2: boy engineer we talked about at the beginning of the show. Right,

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Speaker 2: Noise had actually gotten hold of of an early transistor

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Speaker 2: when he was in college before anybody really you know,

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Speaker 2: knew what they were. He was really excited about it.

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Speaker 2: And by the time Noise gets this call, he's working

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Speaker 2: at this second tier electronics company in Philadelphia and suddenly,

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Speaker 2: out of the blue, William Shockley, the great genius, calls

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Speaker 2: him on the phone, and as Noise said later, it

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Speaker 2: was like he whistled and I came.

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Speaker 3: Shockley is a good spotter of talent.

299
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Speaker 2: He hires like a dozen by all accounts, extremely talented engineer,

300
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Speaker 2: young guys in their twenties. Another key we're going to

301
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Speaker 2: talk more about is Gordon Moore of Moore's Law's Law.

302
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Speaker 3: And so they get out to California and at first

303
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Speaker 3: it's great noise and more and these other young engineers

304
00:16:27,800 --> 00:16:31,320
Speaker 3: are living the dream, right, working for this guy who

305
00:16:31,440 --> 00:16:34,880
Speaker 3: founded their field, who helped discover the transistor. And he's

306
00:16:34,880 --> 00:16:40,880
Speaker 3: got this former Apricot shed in Mountain View that's the headquarters,

307
00:16:41,200 --> 00:16:44,920
Speaker 3: which is probably worth ten million dollars. Yeah, Chocolate really

308
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Speaker 3: is talented, right.

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Speaker 2: He has this breakthrough idea right at the beginning of

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Speaker 2: the company, which is this. The transistors that he'd been

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Speaker 2: working on at Bell Labs were made of germanium. But

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Speaker 2: germanium is hard to work with. It's brittle, stops working

313
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Speaker 2: at high temperatures, and so he decides to use silicon, of.

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Speaker 3: Course, another semiconductor. It would have been weird if it

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Speaker 3: were germanium Valley, right, I like germadium valley. They call

316
00:17:10,679 --> 00:17:14,280
Speaker 3: themselves Germys or something. Yeah, Silicon's cheaper, it's easier to

317
00:17:14,320 --> 00:17:17,000
Speaker 3: work with, but you know, it's hard to get things

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Speaker 3: to work.

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Speaker 2: It's hard to produce them economically at scale, it's hard

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Speaker 2: to make hardware.

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Speaker 3: But it's a problem they think they can solve. Which

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Speaker 3: is the sweet spot, right, It's just if you're a young,

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Speaker 3: ambitious engineer, it's where you want to be.

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Speaker 2: They all know it's going to be big. It's this

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Speaker 2: very ambitious thing they're trying. And you know, every morning

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Speaker 2: at eight am, the team shows up at the headquarters

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Speaker 2: in the former Apricot Shad and Shockley conducts what Tom Wolf,

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Speaker 2: the journalist, calls the Rcane symphony of you know, getting

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Speaker 2: all these engineers to work together. And Shockley apparently had

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Speaker 2: this incredible intuition for engineering and for physics. One of

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Speaker 2: the engineers who worked with him said his intuition for

332
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Speaker 2: experiments was so good it was like he could see

333
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Speaker 2: individual electrons.

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Speaker 3: He just saw what was going to happen. Is that great?

335
00:18:06,480 --> 00:18:09,600
Speaker 3: Isn't that beautiful? If only he could have seen individual

336
00:18:09,880 --> 00:18:14,520
Speaker 3: human being, Hey o, he would have been much better off. Yes, yes,

337
00:18:14,760 --> 00:18:17,280
Speaker 3: that classic kind of problem. And soon this sort of

338
00:18:17,440 --> 00:18:22,720
Speaker 3: monstrous side of Shockley starts to show itself. He gets paranoid.

339
00:18:23,400 --> 00:18:26,480
Speaker 3: There's this moment when a secretary cuts her hand on

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Speaker 3: a doorway. There's like a little pin or something sticking

341
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Speaker 3: out of the doorway, and Shockley becomes convinced that an

342
00:18:32,720 --> 00:18:36,480
Speaker 3: employee is trying to sabotage the team demands that everybody

343
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Speaker 3: take a lie detector test, which they refuse to do.

344
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Speaker 2: He doesn't get over it, stays paranoid, winds up splitting

345
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Speaker 2: the engineers into different teams and not telling one team

346
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Speaker 2: what the other is doing, hiding information, which is like

347
00:18:51,359 --> 00:18:53,439
Speaker 2: as far as you can get from the Dream, from

348
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Speaker 2: the Arcane Symphony from Bell Labs.

349
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Speaker 3: Right, And at this point it's starting to sound like

350
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Speaker 3: mental illness. Yeah, really is, Yeah he is. Something is

351
00:19:01,960 --> 00:19:03,600
Speaker 3: wrong with William Shockley. Right.

352
00:19:04,200 --> 00:19:07,000
Speaker 2: And around this time, in nineteen fifty six, he actually

353
00:19:07,840 --> 00:19:11,920
Speaker 2: wins the Nobel Prize, shares the prize for his work

354
00:19:12,040 --> 00:19:16,760
Speaker 2: on semiconductors on transistors, and it only makes him worse.

355
00:19:17,240 --> 00:19:20,120
Speaker 2: He has this paranoid idea that there were people who

356
00:19:20,119 --> 00:19:23,000
Speaker 2: were trying to keep him from getting the prize. He

357
00:19:23,040 --> 00:19:25,760
Speaker 2: writes to the Nobel committee saying, like, tell me the

358
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Speaker 2: names of my enemies.

359
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Speaker 3: After he's won of the prisons.

360
00:19:29,000 --> 00:19:33,480
Speaker 2: He's won the prize, like take the win, William Shockley, unbelievable.

361
00:19:33,880 --> 00:19:35,200
Speaker 3: And then he does one more thing.

362
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Speaker 2: And you know, you can get away with a lot

363
00:19:37,240 --> 00:19:40,040
Speaker 2: if you're managing a team of engineers, but there is

364
00:19:40,080 --> 00:19:43,200
Speaker 2: one thing, if they're ambitious and talented, that you cannot

365
00:19:43,240 --> 00:19:47,800
Speaker 2: get away with, and that is becoming less ambitious, scaling

366
00:19:47,880 --> 00:19:50,359
Speaker 2: back the vision, and that is what he does. Around

367
00:19:50,400 --> 00:19:54,400
Speaker 2: this time, he decides that rather than making a silicon

368
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Speaker 2: transistor that can be used for anything, but that's quite

369
00:19:57,680 --> 00:19:59,400
Speaker 2: hard to make that they haven't really figured out yet,

370
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Speaker 2: instead of doing that, he decides that they're going to

371
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Speaker 2: make something that has a clear, defined limited use case.

372
00:20:06,560 --> 00:20:10,040
Speaker 2: That is a semiconductor that can do mechanical switching in

373
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Speaker 2: telephone exchanges.

374
00:20:12,119 --> 00:20:15,399
Speaker 3: Ough, he wants to revolutionize the phone company. Yeah, like

375
00:20:16,160 --> 00:20:18,439
Speaker 3: come on, man, right, Like we came out here to

376
00:20:18,480 --> 00:20:21,720
Speaker 3: the aprilcot Warehouse to change the world and you want

377
00:20:21,760 --> 00:20:24,359
Speaker 3: to make calls clear. Okay, So this is.

378
00:20:24,440 --> 00:20:26,720
Speaker 2: Like the last straw for a lot of the young

379
00:20:27,080 --> 00:20:30,720
Speaker 2: talented engineers. But remember this is not an era where

380
00:20:30,760 --> 00:20:33,119
Speaker 2: if you're like a young talented engineer on the forefront

381
00:20:33,119 --> 00:20:35,919
Speaker 2: of technology, you can just quit and go do your

382
00:20:35,960 --> 00:20:38,639
Speaker 2: own thing, right, Like that doesn't exist yet, you know.

383
00:20:38,840 --> 00:20:40,760
Speaker 2: Sure Shockley started a company, but he was like this

384
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Speaker 2: very senior guy. He invented the industry. He was to

385
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Speaker 2: win the Nobel Prize.

386
00:20:44,720 --> 00:20:49,919
Speaker 3: And crucially right, there's no money for them. Nobody's going

387
00:20:49,960 --> 00:20:52,159
Speaker 3: to give them money. There's no venture capitol industry. That

388
00:20:52,280 --> 00:20:55,480
Speaker 3: is not a thing. So one of these young engineers,

389
00:20:55,560 --> 00:20:59,160
Speaker 3: guy named Eugene Kleinder, thinks, who can I call? He thinks,

390
00:20:59,200 --> 00:21:02,199
Speaker 3: I'll call my dad, stockbroker back in New York. That

391
00:21:02,240 --> 00:21:02,960
Speaker 3: guy knows money.

392
00:21:02,960 --> 00:21:06,000
Speaker 2: That guy knows about money, and he calls him, and

393
00:21:06,280 --> 00:21:08,399
Speaker 2: the broker puts him in touch with another guy at

394
00:21:08,440 --> 00:21:12,480
Speaker 2: the firm, this thirty year old Harvard NBA named Arthur Rock.

395
00:21:13,080 --> 00:21:15,080
Speaker 3: Knowing thirty year old NBAS, It's almost like they were

396
00:21:15,080 --> 00:21:18,440
Speaker 3: pushing him off on the young guy, like you understand

397
00:21:18,440 --> 00:21:21,360
Speaker 3: this stuff. Let the young guy hap, yeah, I mean Rock.

398
00:21:21,280 --> 00:21:23,359
Speaker 2: Did, like, you know, kind of more interesting and more

399
00:21:23,440 --> 00:21:26,880
Speaker 2: risky ventures. And so Rock and another banker they fly

400
00:21:27,040 --> 00:21:31,000
Speaker 2: out to San Francisco and they meet with Kleiner and

401
00:21:31,160 --> 00:21:37,000
Speaker 2: Moore and a few other disgruntled young engineers from Shockley Semiconductor.

402
00:21:37,760 --> 00:21:39,920
Speaker 2: And Rock is talking to them, and he's like, well,

403
00:21:39,920 --> 00:21:43,000
Speaker 2: these guys are smart, and I believe that transistors are

404
00:21:43,000 --> 00:21:44,399
Speaker 2: going to be a thing. And he's like, look, you

405
00:21:44,440 --> 00:21:46,440
Speaker 2: guys are smart and.

406
00:21:46,760 --> 00:21:49,600
Speaker 3: Got the pocket protectors future.

407
00:21:50,960 --> 00:21:52,840
Speaker 2: I'm like, I don't want to say you're a bunch

408
00:21:52,880 --> 00:21:55,680
Speaker 2: of nerds, but like he is there somebody you work

409
00:21:55,760 --> 00:21:59,080
Speaker 2: with who's like got some charisma, who walks into a

410
00:21:59,119 --> 00:22:00,160
Speaker 2: room and people want.

411
00:22:00,000 --> 00:22:03,159
Speaker 3: To follow him and they're like, yes, yes, as a

412
00:22:03,160 --> 00:22:07,800
Speaker 3: matter of fact, our buddy, the former soap opera starred

413
00:22:08,000 --> 00:22:11,120
Speaker 3: diving champion with the perfect teeth, with the perfect teeth.

414
00:22:11,160 --> 00:22:14,200
Speaker 3: It's just chilling back in Palo Alto right now. They

415
00:22:14,200 --> 00:22:18,200
Speaker 3: thought of Noise, They thought of noise. Noise, so they

416
00:22:18,240 --> 00:22:22,480
Speaker 3: go back and they convince Noise to go talk to

417
00:22:22,600 --> 00:22:25,480
Speaker 3: Arthur Rock, essentially to join them, and I believe it's

418
00:22:25,520 --> 00:22:29,040
Speaker 3: the very next day Noise goes with these seven other

419
00:22:29,160 --> 00:22:33,439
Speaker 3: engineers and Roxy's Noise is like, yes, this is the

420
00:22:33,480 --> 00:22:36,000
Speaker 3: guy we need. I love that the money guys are

421
00:22:36,000 --> 00:22:39,040
Speaker 3: already like I need someone who looks like a president

422
00:22:39,080 --> 00:22:40,439
Speaker 3: of a company and is a genius.

423
00:22:40,560 --> 00:22:43,480
Speaker 2: Ye right, non trivially, and Rock agrees to work with them,

424
00:22:43,520 --> 00:22:45,600
Speaker 2: and these eight make a pack that if they get

425
00:22:45,640 --> 00:22:49,200
Speaker 2: the money. If they can, they're gonna leave Shockley Semiconductor.

426
00:22:49,800 --> 00:22:51,240
Speaker 3: And I want to.

427
00:22:51,160 --> 00:22:53,520
Speaker 2: Make the case in a slightly overdetermined but I think

428
00:22:53,560 --> 00:22:58,960
Speaker 2: fundamentally accurate way that this moment, when these eight engineers

429
00:22:59,359 --> 00:23:04,480
Speaker 2: and this banker make this agreement, this is the moment

430
00:23:04,600 --> 00:23:06,280
Speaker 2: when Silicon Valley is born.

431
00:23:06,560 --> 00:23:10,320
Speaker 3: Not when the first company has started, the Shockley Semiconductors.

432
00:23:10,800 --> 00:23:14,280
Speaker 3: It's when there's a revolution and they leave to start

433
00:23:14,320 --> 00:23:17,960
Speaker 3: a second company. And that really is the spirit of

434
00:23:18,000 --> 00:23:21,000
Speaker 3: Silicon Valley. That's why they're all located in the same place.

435
00:23:21,320 --> 00:23:24,439
Speaker 3: Because they can do this. That's the promise. Yes, you

436
00:23:24,440 --> 00:23:27,760
Speaker 3: can do it even if you have no intellectual property,

437
00:23:28,359 --> 00:23:32,760
Speaker 3: no money, no customers, right, just guts and a dream

438
00:23:32,880 --> 00:23:35,719
Speaker 3: and some amount of raw talent and a banker who

439
00:23:35,840 --> 00:23:37,320
Speaker 3: is willing to help you find them money. That's a

440
00:23:37,400 --> 00:23:40,239
Speaker 3: key part, right, So you have money and ambition and

441
00:23:40,280 --> 00:23:45,080
Speaker 3: talent and like that is Silicon Valley. Yes, love it. Yeah.

442
00:23:45,080 --> 00:23:49,200
Speaker 3: In fact, these eight guys they become legends in Silicon

443
00:23:49,280 --> 00:23:53,520
Speaker 3: Valley and they become known as the Traders eight because

444
00:23:53,560 --> 00:23:56,280
Speaker 3: they're you know, being traders to Shockoli, to Shockley Semiconductor.

445
00:23:56,680 --> 00:23:58,879
Speaker 3: And I want to just dwell for a second on

446
00:23:58,960 --> 00:24:01,520
Speaker 3: that word traitorous, right, because it is a word that

447
00:24:01,520 --> 00:24:04,320
Speaker 3: has a very negative connotation as a general matter.

448
00:24:04,320 --> 00:24:06,159
Speaker 2: A trader is a bad person, yes, but in the

449
00:24:06,160 --> 00:24:09,360
Speaker 2: context of Silicon Valley, it is heroic. These guys are

450
00:24:09,440 --> 00:24:11,840
Speaker 2: leaving this company because it has a bad boss who

451
00:24:12,280 --> 00:24:15,080
Speaker 2: vision they're being traded to him for the greater good

452
00:24:15,200 --> 00:24:16,639
Speaker 2: to start this company.

453
00:24:16,280 --> 00:24:18,760
Speaker 3: And that that is the core. They're pirates.

454
00:24:19,040 --> 00:24:23,800
Speaker 2: They're pirates, very good. Now at this moment, I believe

455
00:24:23,880 --> 00:24:26,639
Speaker 2: nineteen fifty seven, this whole thing that we're talking about

456
00:24:26,720 --> 00:24:29,520
Speaker 2: is not a thing, right, There is not this spirit

457
00:24:29,560 --> 00:24:31,360
Speaker 2: of doing this, This is not a known thing. There

458
00:24:31,400 --> 00:24:34,440
Speaker 2: is not an ecosystem of capital ready to support them.

459
00:24:34,800 --> 00:24:38,679
Speaker 2: And so Rock the banker, he starts calling around seeing

460
00:24:38,680 --> 00:24:42,359
Speaker 2: if there's some company basically that wants to support these guys,

461
00:24:42,840 --> 00:24:46,160
Speaker 2: and everybody says no, because why would they say yes? Right,

462
00:24:46,200 --> 00:24:49,119
Speaker 2: They're like, if we wanted to make semiconductions, we just

463
00:24:49,240 --> 00:24:51,360
Speaker 2: hire a bunch of engineers, Like why would we give

464
00:24:51,359 --> 00:24:54,679
Speaker 2: it to some random guys. But after a few months

465
00:24:55,440 --> 00:24:59,920
Speaker 2: somebody tells Rock he should call this guy named Sherman Fairchild.

466
00:25:00,960 --> 00:25:05,720
Speaker 2: Great name, interesting guy, son of one of the founders

467
00:25:05,720 --> 00:25:10,720
Speaker 2: of IBM, NEPO Baby, Nepo Baby, but also talented and

468
00:25:10,760 --> 00:25:13,200
Speaker 2: successful on his own. I guess not on his own,

469
00:25:13,280 --> 00:25:16,000
Speaker 2: that's the NEPO part, he tells it. And successful guy.

470
00:25:16,400 --> 00:25:20,120
Speaker 2: He got into photography early in his life, started this company,

471
00:25:20,280 --> 00:25:22,879
Speaker 2: Fairchild Camera, that wound up making a lot of the

472
00:25:23,000 --> 00:25:27,399
Speaker 2: like aerial cameras used in World War Two. Also loves

473
00:25:27,440 --> 00:25:30,480
Speaker 2: to take a risk, never got married, loves to spend money,

474
00:25:30,480 --> 00:25:33,320
Speaker 2: built himself this glass house in Manhattan, goes out to

475
00:25:33,320 --> 00:25:36,760
Speaker 2: the clubs every night. So really the perfect guy to

476
00:25:36,960 --> 00:25:40,520
Speaker 2: fund the trader's eight. So he ends up agreeing to

477
00:25:40,560 --> 00:25:43,399
Speaker 2: put up one point five million dollars. I went a

478
00:25:43,480 --> 00:25:47,080
Speaker 2: lot farther back then. But you know, it's not like

479
00:25:47,119 --> 00:25:49,600
Speaker 2: a startup like we know it today because people didn't

480
00:25:49,640 --> 00:25:53,159
Speaker 2: make those deals. Instead, what he's creating is this semi

481
00:25:53,200 --> 00:25:58,440
Speaker 2: autonomous division of Fairchild Camera. The traders say will get

482
00:25:58,440 --> 00:26:02,960
Speaker 2: some equity, but Fairchild will have an option to buy

483
00:26:03,080 --> 00:26:06,920
Speaker 2: the project the company outright for three million dollars if

484
00:26:06,920 --> 00:26:07,600
Speaker 2: it succeeds.

485
00:26:09,000 --> 00:26:10,399
Speaker 3: So they agreed to the deal. This is going to

486
00:26:10,440 --> 00:26:13,199
Speaker 3: be the deal. Now the trader is are ready to

487
00:26:13,400 --> 00:26:14,320
Speaker 3: leave Shockley.

488
00:26:14,400 --> 00:26:18,160
Speaker 2: Now they've got their exit, and on September eighth, nineteen

489
00:26:18,280 --> 00:26:23,200
Speaker 2: fifty seven, Gordon Moore broke the news to Shockley. It's

490
00:26:23,240 --> 00:26:27,960
Speaker 2: interesting because Shockley was clearly paranoid, and yet he didn't

491
00:26:27,960 --> 00:26:31,280
Speaker 2: see this coming. He was shocked. He staggered out of

492
00:26:31,280 --> 00:26:35,160
Speaker 2: the room. He felt completely betrayed. And the company, Shockley

493
00:26:35,160 --> 00:26:37,800
Speaker 2: semi Conductory, it never recovered. It never recovered from these

494
00:26:37,840 --> 00:26:40,200
Speaker 2: guys leaving kind of staggered on for a while, never

495
00:26:40,240 --> 00:26:44,720
Speaker 2: did anything great. And Shockley himself became a professor of

496
00:26:44,760 --> 00:26:48,359
Speaker 2: engineering at Stanford. And then his story gets kind of

497
00:26:48,480 --> 00:26:51,159
Speaker 2: more grim, like he gets obsessed with like race and

498
00:26:51,240 --> 00:26:55,880
Speaker 2: IQ and eugenics. It gets kind of bleak, and frankly,

499
00:26:55,920 --> 00:26:57,399
Speaker 2: that's enough, I think about chocolate.

500
00:26:57,440 --> 00:26:59,800
Speaker 3: That's the end of Shocoley in our story today, because

501
00:26:59,840 --> 00:27:02,160
Speaker 3: the people we care about are the pirates. The eight

502
00:27:02,200 --> 00:27:05,080
Speaker 3: engineers who left to start something new in nineteen fifty

503
00:27:05,119 --> 00:27:08,560
Speaker 3: seven are heroes, are the Traders eight. And we'll hear

504
00:27:08,560 --> 00:27:36,760
Speaker 3: more about them after the break, and we're back.

505
00:27:37,200 --> 00:27:42,800
Speaker 2: Trader Essay have just left Shockley Semiconductor, and on October first,

506
00:27:43,240 --> 00:27:48,480
Speaker 2: nineteen fifty seven, they found Fairchild Semiconductor, a semi autonous

507
00:27:48,680 --> 00:27:52,960
Speaker 2: division of Fairchild camera an instrument. Three days after they

508
00:27:53,000 --> 00:27:57,720
Speaker 2: started the company, the Soviets sent Sputnik into orbit.

509
00:27:58,920 --> 00:28:01,560
Speaker 3: Amazing, an amazing confluence of events.

510
00:28:01,600 --> 00:28:04,639
Speaker 2: Amazing, right, I mean, the US is completely surprised by this.

511
00:28:04,720 --> 00:28:07,320
Speaker 3: Right, this is the first satellite to orbit the Earth.

512
00:28:07,960 --> 00:28:11,280
Speaker 2: And it's terrifying for the Americans, right, I mean, you know,

513
00:28:11,640 --> 00:28:14,639
Speaker 2: a is afraid of the spread of communism. It has

514
00:28:14,680 --> 00:28:18,040
Speaker 2: gone from the Soviet Union to Eastern Europe, to North

515
00:28:18,080 --> 00:28:20,560
Speaker 2: Korea to the skies above your home.

516
00:28:20,720 --> 00:28:23,479
Speaker 3: Literally it is now flying over your head, right, And

517
00:28:23,520 --> 00:28:27,160
Speaker 3: they think, we need a lot more electronics that are portable,

518
00:28:27,400 --> 00:28:30,359
Speaker 3: and we can put on planes and rockets and satellites

519
00:28:30,359 --> 00:28:30,760
Speaker 3: of our own.

520
00:28:30,960 --> 00:28:36,280
Speaker 2: Yes, And to be clear, this is extraordinarily lucky timing

521
00:28:36,920 --> 00:28:39,840
Speaker 2: for noise and more and the rest of the trader essay, right,

522
00:28:39,880 --> 00:28:41,840
Speaker 2: Like their genius is there's a good chance they would

523
00:28:41,880 --> 00:28:42,719
Speaker 2: have succeeded anyway.

524
00:28:43,080 --> 00:28:46,360
Speaker 3: But a useful lesson. It is great to have lucky

525
00:28:46,400 --> 00:28:49,560
Speaker 3: timing in business and a desperate customer, which was the

526
00:28:49,640 --> 00:28:53,520
Speaker 3: US government. Yeah, right, there is now suddenly this space race.

527
00:28:53,720 --> 00:28:55,800
Speaker 3: This is the thing. Now the Soviets are winning the race.

528
00:28:56,200 --> 00:28:57,719
Speaker 3: The US has to catch up.

529
00:28:57,760 --> 00:29:00,120
Speaker 2: And so you know, it's like Sputnik went up, and

530
00:29:00,320 --> 00:29:04,880
Speaker 2: billions of dollars in government funding rain down on fair

531
00:29:04,960 --> 00:29:09,080
Speaker 2: Child Seming conductor and labs around America. Because you can't

532
00:29:09,120 --> 00:29:13,440
Speaker 2: fit many vacuum tubes in a satellite, in the nose

533
00:29:13,840 --> 00:29:17,120
Speaker 2: of a rocket, in you know, a fighter jet, you

534
00:29:17,120 --> 00:29:20,920
Speaker 2: know what, you can fit a lot of transistors. So

535
00:29:21,520 --> 00:29:26,040
Speaker 2: now there is essentially unlimited demand from the government for

536
00:29:26,160 --> 00:29:27,920
Speaker 2: a fair Child to build transistors, but.

537
00:29:27,880 --> 00:29:30,239
Speaker 3: They still have to make it work. Is it is

538
00:29:30,360 --> 00:29:34,040
Speaker 3: not easy to do. It is a very hard technical

539
00:29:34,080 --> 00:29:37,000
Speaker 3: problem because it's not just to put some silicone on

540
00:29:37,440 --> 00:29:40,160
Speaker 3: and put some wires on it. Even a speck of

541
00:29:40,280 --> 00:29:44,320
Speaker 3: dust on one of these early transistors could short it out,

542
00:29:44,520 --> 00:29:46,880
Speaker 3: could create a problem, right, And it's you know, we

543
00:29:46,920 --> 00:29:50,040
Speaker 3: think of breakthroughs as binary. It's like, oh, they figured

544
00:29:50,040 --> 00:29:53,200
Speaker 3: out how to make a silicon chip done, But production

545
00:29:53,480 --> 00:29:57,640
Speaker 3: and scale and efficiency are these endless problems, right, And

546
00:29:57,680 --> 00:30:01,440
Speaker 3: they are extremely inefficient. They have an extremely high failure rate,

547
00:30:01,560 --> 00:30:05,120
Speaker 3: and so they're trying, trying every day, how can we

548
00:30:05,160 --> 00:30:06,920
Speaker 3: make this better, How can we make it faster? How

549
00:30:06,920 --> 00:30:12,240
Speaker 3: can we have fewer of them fail? And to that end, the.

550
00:30:12,240 --> 00:30:16,280
Speaker 2: Engineers at Fairchild had this idea and that is okay.

551
00:30:16,320 --> 00:30:19,440
Speaker 2: So the fundamental problem is the silicon is super finicky

552
00:30:20,000 --> 00:30:23,960
Speaker 2: and fragile. What if we protect it by leaving a

553
00:30:24,080 --> 00:30:27,680
Speaker 2: layer of silicon oxide on top of the chip, and

554
00:30:27,760 --> 00:30:31,560
Speaker 2: then we just put little tiny windows in that silicon

555
00:30:31,560 --> 00:30:35,600
Speaker 2: oxide layer wherever you need to access the silicon directly.

556
00:30:35,640 --> 00:30:38,280
Speaker 2: It's like painting a house, sure right where the paint

557
00:30:38,320 --> 00:30:40,480
Speaker 2: is protecting the house, and there's like a window, said

558
00:30:40,480 --> 00:30:40,920
Speaker 2: the metaphor.

559
00:30:40,960 --> 00:30:41,520
Speaker 3: Okay, buy it.

560
00:30:41,920 --> 00:30:45,600
Speaker 2: So he takes this idea to Noise, and Noise loves

561
00:30:45,640 --> 00:30:47,320
Speaker 2: the idea. Noise has his own metaphor.

562
00:30:47,400 --> 00:30:50,200
Speaker 3: He says, it's like wrapping the silicon in a cocoon,

563
00:30:50,400 --> 00:30:53,880
Speaker 3: which I like. And he takes the idea to Fairchild's

564
00:30:54,000 --> 00:30:57,640
Speaker 3: patent lawyer, and the patent lawyer, being a good patent lawyer, says,

565
00:30:58,400 --> 00:31:01,160
Speaker 3: I love it. Let's patent the hell out of it.

566
00:31:01,760 --> 00:31:02,920
Speaker 3: Don't just tell me this one.

567
00:31:03,040 --> 00:31:05,880
Speaker 2: Use spend a few days and think of all the

568
00:31:06,000 --> 00:31:09,440
Speaker 2: possible uses that we can make of this little idea

569
00:31:09,520 --> 00:31:11,800
Speaker 2: so that we can build as big a patent mote

570
00:31:11,800 --> 00:31:12,560
Speaker 2: as possible.

571
00:31:12,800 --> 00:31:14,000
Speaker 3: So Nois starts thinking.

572
00:31:13,800 --> 00:31:17,400
Speaker 2: About it, starts talking to more, you know, doing stuff

573
00:31:17,440 --> 00:31:19,720
Speaker 2: on the chalkboard, and He's like, Okay, the problem isn't

574
00:31:19,800 --> 00:31:23,760
Speaker 2: just that the silicon is finicky, right, Like these little transistors,

575
00:31:23,800 --> 00:31:26,240
Speaker 2: they're complicated and on every one we've got to put

576
00:31:26,240 --> 00:31:27,400
Speaker 2: like little wires.

577
00:31:27,400 --> 00:31:30,640
Speaker 3: We actually have to solder by hand wires into every chip. Yeah,

578
00:31:30,640 --> 00:31:32,040
Speaker 3: because you have to get the signal in there, and

579
00:31:32,040 --> 00:31:34,160
Speaker 3: then you have to pull the amplified signal out and

580
00:31:34,240 --> 00:31:38,120
Speaker 3: just imagine just hundreds of little, tiny wires, right, And

581
00:31:38,160 --> 00:31:41,480
Speaker 3: they think, wait a minute, what if we can sort

582
00:31:41,520 --> 00:31:46,840
Speaker 3: of etch this cocoon a little bit and essentially print

583
00:31:47,000 --> 00:31:50,480
Speaker 3: the wire on top of the silicon oxide on top

584
00:31:50,480 --> 00:31:53,719
Speaker 3: of the silicon. So basically the wires are are in

585
00:31:53,760 --> 00:31:57,000
Speaker 3: the little thing. Yes, Yes, And and now that he's

586
00:31:57,000 --> 00:31:59,040
Speaker 3: got this, he goes even bigger. Right, he thinks about

587
00:31:59,640 --> 00:32:02,760
Speaker 3: an even bigger problem that he and the industry are facing,

588
00:32:02,840 --> 00:32:06,120
Speaker 3: and that is the uses of transistors are multiplying and

589
00:32:06,160 --> 00:32:07,640
Speaker 3: getting more complex. Right.

590
00:32:08,120 --> 00:32:12,800
Speaker 2: People are starting to build computers with transistor instead of

591
00:32:13,000 --> 00:32:13,720
Speaker 2: vacuum tubes.

592
00:32:13,720 --> 00:32:15,640
Speaker 3: And they have all these.

593
00:32:15,840 --> 00:32:20,400
Speaker 2: Little components, right, these complex circuits with not just transistors

594
00:32:20,400 --> 00:32:24,440
Speaker 2: but capacitors and resistors, and there can be thousands of

595
00:32:24,640 --> 00:32:28,480
Speaker 2: connections among the components, and people are wiring them all

596
00:32:28,600 --> 00:32:32,200
Speaker 2: together by hand for every computer, right, which is a

597
00:32:32,240 --> 00:32:35,760
Speaker 2: total nightmare for manufacturing, extremely hard to scale. And so

598
00:32:35,880 --> 00:32:38,520
Speaker 2: Noise is thinking about this transistor and a cocoon, and

599
00:32:38,560 --> 00:32:41,920
Speaker 2: he's like, wait, doesn't just have to be a transistor

600
00:32:42,560 --> 00:32:43,479
Speaker 2: and the wire.

601
00:32:44,040 --> 00:32:46,720
Speaker 3: Like, we could use this idea to put all kinds

602
00:32:46,720 --> 00:32:49,160
Speaker 3: of things on one piece of silicon, right, Like we

603
00:32:49,200 --> 00:32:52,640
Speaker 3: could put an entire circuit, all the components on this

604
00:32:52,800 --> 00:32:59,680
Speaker 3: one piece of silicon. This idea is the integrated circuit.

605
00:32:59,840 --> 00:33:05,360
Speaker 3: This is Robert Noise inventing the chip. Love it. He's

606
00:33:05,400 --> 00:33:07,040
Speaker 3: not the only one. He's not the only one.

607
00:33:07,040 --> 00:33:09,160
Speaker 2: You know, when there is a technological frontier and a

608
00:33:09,160 --> 00:33:11,000
Speaker 2: ton of money and lots of smart people working. One

609
00:33:11,000 --> 00:33:14,719
Speaker 2: of the great things about competition and the world is

610
00:33:15,040 --> 00:33:17,600
Speaker 2: lots of people are right at the edge thinking similar thoughts.

611
00:33:17,640 --> 00:33:20,760
Speaker 2: So as Noise is doing this, In fact, slightly earlier,

612
00:33:21,280 --> 00:33:24,360
Speaker 2: one thousand miles away, another engineer, guy named Jack Kilby

613
00:33:24,440 --> 00:33:27,360
Speaker 2: at Texas Instruments, is also inventing the chip.

614
00:33:27,520 --> 00:33:30,680
Speaker 3: Texas Instruments, famous for their calculators in the nineteen seventies.

615
00:33:30,720 --> 00:33:34,280
Speaker 3: That to me was high tech. A Texas Instrument calculator, yes, yes,

616
00:33:34,440 --> 00:33:39,040
Speaker 3: also a chip pioneer, and in fact Kilby came up

617
00:33:39,040 --> 00:33:41,520
Speaker 3: with the idea just before noise, maybe noises ideas a

618
00:33:41,560 --> 00:33:45,280
Speaker 3: little more elegant. There's of course a patent case killby

619
00:33:45,480 --> 00:33:48,200
Speaker 3: the noise. But in the end, important thing about this

620
00:33:48,320 --> 00:33:52,320
Speaker 3: moment in history and this story is the government is

621
00:33:52,360 --> 00:33:54,160
Speaker 3: going to pay for all the chips everybody can make.

622
00:33:54,160 --> 00:33:57,280
Speaker 3: There's enough to go around, and fair Child and Texas

623
00:33:57,280 --> 00:34:00,960
Speaker 3: Instruments agree to share the intellectual property. Amazing, they decided

624
00:34:01,000 --> 00:34:03,640
Speaker 3: not to destroy each other, right, like in the Cult War.

625
00:34:04,200 --> 00:34:07,720
Speaker 2: So fair Child and Texts Instruments are making chips, they're

626
00:34:07,760 --> 00:34:12,120
Speaker 2: selling them to the government for ballistic missiles, for all

627
00:34:12,160 --> 00:34:17,000
Speaker 2: of rockets coming along. And you know, think of this moment, right,

628
00:34:17,000 --> 00:34:20,360
Speaker 2: this is like peak nerd and a short sleeve button

629
00:34:20,440 --> 00:34:24,520
Speaker 2: down with the like heavy rimmed glasses doing.

630
00:34:24,280 --> 00:34:25,000
Speaker 3: The space race.

631
00:34:25,080 --> 00:34:28,640
Speaker 2: Right, this is peak military industrial complex. And I think

632
00:34:28,640 --> 00:34:32,040
Speaker 2: of the chip as the little hyphen between military and industrial.

633
00:34:32,080 --> 00:34:34,320
Speaker 2: It's like the center of the military.

634
00:34:33,920 --> 00:34:39,520
Speaker 3: Industrial complex, very Tom Wolf of you. So all this government.

635
00:34:39,160 --> 00:34:44,960
Speaker 2: Demand is driving more scale. It's pushing Fairchild and Texas

636
00:34:44,960 --> 00:34:49,560
Speaker 2: Instruments to come up with more efficiencies, right. And one

637
00:34:49,680 --> 00:34:53,080
Speaker 2: key thing they're doing is they're figuring out how to

638
00:34:53,120 --> 00:34:56,680
Speaker 2: put more and more transistors and other components on each

639
00:34:56,880 --> 00:34:59,799
Speaker 2: piece of silicon on each chip, so that it gets

640
00:34:59,840 --> 00:35:01,280
Speaker 2: more powerful and cheaper.

641
00:35:02,440 --> 00:35:05,319
Speaker 3: And they're pretty good at doing this. They're pretty good

642
00:35:05,360 --> 00:35:07,960
Speaker 3: at doing this, right, we know this. The price falls

643
00:35:07,960 --> 00:35:11,240
Speaker 3: from one thousand dollars in the late fifties to twenty

644
00:35:11,280 --> 00:35:16,719
Speaker 3: five dollars by nineteen sixty three. And this moment the

645
00:35:16,760 --> 00:35:19,239
Speaker 3: mid sixties is when we come to what I'm going

646
00:35:19,320 --> 00:35:24,560
Speaker 3: to call the most unlikely great moment in business history

647
00:35:25,160 --> 00:35:27,239
Speaker 3: that we have yet encountered in the young life of

648
00:35:27,280 --> 00:35:28,160
Speaker 3: our shows. Right, bring it.

649
00:35:28,719 --> 00:35:31,080
Speaker 2: That is the moment in nineteen sixty five when the

650
00:35:31,200 --> 00:35:35,719
Speaker 2: editors of an electronics trade magazine ask Gordon Moore, one

651
00:35:35,760 --> 00:35:39,040
Speaker 2: of our traders eight, to write an article. This is

652
00:35:39,080 --> 00:35:42,320
Speaker 2: the great moment writing an article for a trade magazine.

653
00:35:42,600 --> 00:35:46,080
Speaker 2: This electronics trade magazine has called wait for it, Electronics.

654
00:35:46,320 --> 00:35:48,520
Speaker 3: I love when they have a simple title.

655
00:35:48,320 --> 00:35:51,400
Speaker 2: Business History, a show about history of business, and electronics

656
00:35:51,440 --> 00:35:55,080
Speaker 2: magazine asks more to predict where the integrated circuit business

657
00:35:55,160 --> 00:35:56,800
Speaker 2: is gonna be in ten years.

658
00:35:56,920 --> 00:35:59,160
Speaker 3: Could be a puff article, but he actually thinks about it.

659
00:35:59,200 --> 00:36:03,040
Speaker 2: He thinks about it. He sees that fairchild and texts

660
00:36:03,080 --> 00:36:06,440
Speaker 2: instruments have gotten much better at making integrated circuits that

661
00:36:06,480 --> 00:36:08,399
Speaker 2: they can put more and more components on each little

662
00:36:08,400 --> 00:36:11,560
Speaker 2: piece of silicon. And he does the math. He actually

663
00:36:11,560 --> 00:36:15,719
Speaker 2: makes a little and he sees that the number of

664
00:36:15,800 --> 00:36:19,399
Speaker 2: components on each chip has been basically doubling every year.

665
00:36:20,239 --> 00:36:22,920
Speaker 2: And at the point he's writing this article, there's somewhere

666
00:36:22,960 --> 00:36:26,480
Speaker 2: around sixty components. So it figures that's likely to continue.

667
00:36:26,560 --> 00:36:29,080
Speaker 2: And he just extrapolates, He just he does the math,

668
00:36:29,360 --> 00:36:31,960
Speaker 2: He extrapolates out his graph, actually makes a little dotted

669
00:36:32,000 --> 00:36:33,759
Speaker 2: line ten years out into the future, and he says, Okay,

670
00:36:33,760 --> 00:36:36,520
Speaker 2: we're making sixty or so components on.

671
00:36:36,440 --> 00:36:37,160
Speaker 3: A chip today.

672
00:36:37,400 --> 00:36:41,920
Speaker 2: In ten years it'll be sixty five thousand components on

673
00:36:42,000 --> 00:36:45,360
Speaker 2: a chip. The magic of doubling, magic of compounding.

674
00:36:45,440 --> 00:36:47,120
Speaker 3: I feel like this is the point of business history

675
00:36:47,160 --> 00:36:50,360
Speaker 3: where we see what happens when you have exponential growth.

676
00:36:50,920 --> 00:36:53,920
Speaker 3: Thomas Edison made the light bulb better. Of course, everyone

677
00:36:53,960 --> 00:36:57,799
Speaker 3: made inventions better, but not doubling every year or two years. No,

678
00:36:58,040 --> 00:37:02,920
Speaker 3: this is the central fact about the chip, right, and

679
00:37:03,400 --> 00:37:06,719
Speaker 3: Moore knows it, crucially right, crucially huge testament to him

680
00:37:06,760 --> 00:37:09,239
Speaker 3: and his vision. He read this read this paragraph from

681
00:37:09,239 --> 00:37:11,480
Speaker 3: this article. He knows what this is going to mean.

682
00:37:12,000 --> 00:37:15,440
Speaker 3: The grided circuits will lead to such wonders as home

683
00:37:15,520 --> 00:37:18,640
Speaker 3: computers or at least terminals connected to a central computer,

684
00:37:19,200 --> 00:37:25,600
Speaker 3: automatic controls for automobiles, and personal portable communications equipment. Wild

685
00:37:26,200 --> 00:37:31,359
Speaker 3: science fiction, like nineteen sixty five. He's writing this, and

686
00:37:31,440 --> 00:37:33,800
Speaker 3: he's right. He's one hundred percent correct.

687
00:37:33,840 --> 00:37:36,879
Speaker 2: So this is the birth of Moore's law, which Moore

688
00:37:36,920 --> 00:37:40,200
Speaker 2: himself did not call Moore's law, which is not a law,

689
00:37:40,239 --> 00:37:45,560
Speaker 2: but which basically was right right in nineteen seventy five.

690
00:37:45,680 --> 00:37:47,840
Speaker 2: Ten years later that year he was predicting out to

691
00:37:47,920 --> 00:37:49,920
Speaker 2: He went and looked at how things were going. He

692
00:37:49,960 --> 00:37:52,560
Speaker 2: was pretty close to right. He realized that progress was

693
00:37:52,560 --> 00:37:55,759
Speaker 2: slowing down a little. He figured doubling two years or so,

694
00:37:55,840 --> 00:37:57,319
Speaker 2: when of his colleagues was like, no, it's more like

695
00:37:57,360 --> 00:37:58,080
Speaker 2: eighteen months.

696
00:37:58,719 --> 00:38:02,560
Speaker 3: And so Moore's law was adapted. Right, that's what it became.

697
00:38:02,600 --> 00:38:06,120
Speaker 2: It became the number of essentially transistors eventually on a

698
00:38:06,200 --> 00:38:08,760
Speaker 2: chip doubles eighteen months. In fact, the rate of increase

699
00:38:08,800 --> 00:38:10,759
Speaker 2: has started to slow in the past decade or so.

700
00:38:10,880 --> 00:38:13,759
Speaker 3: It's reaching the limit of physics itself. Right, there's like

701
00:38:13,880 --> 00:38:16,840
Speaker 3: you're at like weird quantum things are happening with the apps, right.

702
00:38:16,960 --> 00:38:19,799
Speaker 3: Jansen Wong from Nvidia basically said Moore's law is dead.

703
00:38:20,400 --> 00:38:25,359
Speaker 3: Maybe maybe not, but the key thing here is this

704
00:38:25,480 --> 00:38:28,160
Speaker 3: doubling and doubling and doubling over many decades that more

705
00:38:28,200 --> 00:38:31,560
Speaker 3: predicted from you know, sixty or so components on a

706
00:38:31,640 --> 00:38:37,040
Speaker 3: chip to billions of transistors on today's chips. Like this

707
00:38:37,680 --> 00:38:41,480
Speaker 3: was I think, clearly, right, certainly the most important business

708
00:38:41,520 --> 00:38:44,920
Speaker 3: trend of the last hundred years. It enabled obviously the

709
00:38:44,920 --> 00:38:49,239
Speaker 3: computing revolutions, cell phones, the Internet, AI like these key

710
00:38:49,360 --> 00:38:51,799
Speaker 3: drivers of our world come out of Moore's law. And

711
00:38:51,880 --> 00:38:56,480
Speaker 3: if you understood Moore's law, then you could predict what

712
00:38:56,640 --> 00:39:00,120
Speaker 3: something could do in eighteen months, in three years, and

713
00:39:00,239 --> 00:39:02,600
Speaker 3: five years and ten years. You could start to invent

714
00:39:02,680 --> 00:39:06,719
Speaker 3: things that literally were not possible today, knowing that the

715
00:39:06,800 --> 00:39:09,440
Speaker 3: chips will be there when you finish in a year

716
00:39:09,560 --> 00:39:13,399
Speaker 3: or two. Yeah, you see smart entrepreneurs catching onto this

717
00:39:13,480 --> 00:39:15,759
Speaker 3: and doing this like I mean, the example that comes

718
00:39:15,800 --> 00:39:18,280
Speaker 3: to my mind is Netflix, right, which.

719
00:39:18,080 --> 00:39:22,600
Speaker 2: Started out as DVDs by mail, which was a great service,

720
00:39:22,640 --> 00:39:25,359
Speaker 2: but they did not call themselves DVDs by mail, even

721
00:39:25,400 --> 00:39:28,480
Speaker 2: though when they started. Most people didn't have broadband streaming

722
00:39:28,600 --> 00:39:31,320
Speaker 2: video was not a thing, but they knew that because

723
00:39:31,360 --> 00:39:33,399
Speaker 2: of Moore's law, it was going to be a thing.

724
00:39:33,480 --> 00:39:36,960
Speaker 2: They knew that would happen, and they planned around it,

725
00:39:37,040 --> 00:39:40,920
Speaker 2: and it happened, and Gordon Moore basically saw it coming.

726
00:39:41,760 --> 00:39:45,919
Speaker 2: But interestingly, around the time he wrote that famous piece,

727
00:39:45,960 --> 00:39:50,239
Speaker 2: around nineteen sixty five, More and Noise or Golden Boy,

728
00:39:50,400 --> 00:39:53,560
Speaker 2: we're starting to get restless again. You know, they're they're

729
00:39:53,600 --> 00:39:54,759
Speaker 2: like they like to shake it up.

730
00:39:54,760 --> 00:39:58,080
Speaker 3: These guys. They're fundamentally kind of nerd pirates, and they

731
00:39:58,080 --> 00:40:01,960
Speaker 3: are about to make one more big move after the break.

732
00:40:26,960 --> 00:40:29,799
Speaker 3: That was the break, and now we're back the story

733
00:40:29,800 --> 00:40:30,560
Speaker 3: of Silicon Valley.

734
00:40:31,640 --> 00:40:37,359
Speaker 2: So Sherman Fairchild at Fairchild Camera and instrument Remember our

735
00:40:37,760 --> 00:40:42,160
Speaker 2: investor in Fairchild, he had exercised his option to buy

736
00:40:42,400 --> 00:40:46,560
Speaker 2: Fairchild Semiconductor outright in nineteen fifty nine. Very shrewd Man,

737
00:40:46,640 --> 00:40:50,480
Speaker 2: shrewd Man, Noise and Moore and the others kept working there.

738
00:40:50,520 --> 00:40:52,359
Speaker 3: You know, they got some money. They kept working there,

739
00:40:52,520 --> 00:40:54,840
Speaker 3: kept figuring out how to put more components on a chip,

740
00:40:55,040 --> 00:40:56,960
Speaker 3: selling all they could make to NASA.

741
00:40:56,880 --> 00:41:00,359
Speaker 2: And the military. But Noise and More start to get

742
00:41:00,360 --> 00:41:04,200
Speaker 2: this feeling that would really become a classic feeling among

743
00:41:04,360 --> 00:41:07,839
Speaker 2: Silicon Valley founders who have sold their companies. Right, they

744
00:41:07,840 --> 00:41:11,400
Speaker 2: got a bunch of money, great, They weren't really in

745
00:41:11,440 --> 00:41:13,600
Speaker 2: it for the money, right, Ye. What they wanted was

746
00:41:13,680 --> 00:41:16,600
Speaker 2: to be doing big, important work. They wanted that feeling of,

747
00:41:16,880 --> 00:41:20,000
Speaker 2: you know, being free out there on the technological frontier,

748
00:41:20,120 --> 00:41:21,680
Speaker 2: like nerd cowboys.

749
00:41:21,800 --> 00:41:24,080
Speaker 3: Yeah, inventing the chip is great. Putting more things on

750
00:41:24,120 --> 00:41:27,120
Speaker 3: the chip is great, but then it's just scale. It's

751
00:41:27,160 --> 00:41:29,560
Speaker 3: going from one hundred components to a thousand components to

752
00:41:29,600 --> 00:41:31,840
Speaker 3: sixty five thousand, and even if that might be fun,

753
00:41:32,040 --> 00:41:34,239
Speaker 3: if you're like doing it on your own, right, Yeah.

754
00:41:34,760 --> 00:41:37,600
Speaker 3: The problem for them was they weren't right. They were

755
00:41:37,600 --> 00:41:41,440
Speaker 3: no longer pirates, like you said, They were middle managers

756
00:41:41,600 --> 00:41:45,120
Speaker 3: at a division of fair Child Camera. Right. They were

757
00:41:45,120 --> 00:41:47,200
Speaker 3: going to be the next Bell Laps. Yeah. Yeah.

758
00:41:47,280 --> 00:41:49,560
Speaker 2: Now now they're working for a company that makes movie

759
00:41:49,600 --> 00:41:53,399
Speaker 2: cameras and stamp machines and they're like, hey, listen, we're

760
00:41:53,400 --> 00:41:55,680
Speaker 2: going to give stock options to the engineers. And the

761
00:41:55,719 --> 00:41:57,920
Speaker 2: company in New York is like, no, you're not. Why

762
00:41:58,120 --> 00:41:59,160
Speaker 2: why yeah? Why?

763
00:42:00,000 --> 00:42:01,600
Speaker 3: And they're like okay, but we'll at least we're going

764
00:42:01,640 --> 00:42:04,600
Speaker 3: to take our profit and like put it back into development, right,

765
00:42:04,640 --> 00:42:07,160
Speaker 3: because things are going so fast? Why your business you

766
00:42:07,200 --> 00:42:09,640
Speaker 3: produce money for the investors. Yeah, Like the point is

767
00:42:09,640 --> 00:42:12,279
Speaker 3: to make money for the shareholders. Just be quiet, keep

768
00:42:12,280 --> 00:42:15,280
Speaker 3: begging chips and so so funny still in nineteen fifties

769
00:42:15,360 --> 00:42:16,480
Speaker 3: view of what a business was.

770
00:42:16,680 --> 00:42:19,080
Speaker 2: Yeah, that's right, this very kind of man in the

771
00:42:19,080 --> 00:42:22,879
Speaker 2: grave flannel suit corporation and so noise and more. Don't

772
00:42:22,920 --> 00:42:28,200
Speaker 2: like this. In nineteen sixty eight, they go back to

773
00:42:28,320 --> 00:42:31,000
Speaker 2: Arthur rock, the banker who had helped them get set

774
00:42:31,080 --> 00:42:36,480
Speaker 2: up with Fairchild about a decade earlier. And crucially, the

775
00:42:36,520 --> 00:42:40,000
Speaker 2: world is really different now in large part because of

776
00:42:40,080 --> 00:42:43,239
Speaker 2: the work that these guys have done. Right, Rock over

777
00:42:43,280 --> 00:42:46,040
Speaker 2: this time had gotten into this idea of connecting East

778
00:42:46,040 --> 00:42:49,440
Speaker 2: Coast capital with these you know, new companies out on

779
00:42:49,480 --> 00:42:52,600
Speaker 2: the West Coast, and he'd kind of built on this

780
00:42:52,719 --> 00:42:55,920
Speaker 2: old tradition that like old money East Coast families had

781
00:42:55,960 --> 00:42:58,319
Speaker 2: where like with a little bit of the money on

782
00:42:58,360 --> 00:43:00,440
Speaker 2: the side, they would sort of play around with that

783
00:43:00,480 --> 00:43:02,920
Speaker 2: They called adventure capital.

784
00:43:03,160 --> 00:43:06,520
Speaker 3: Adventure capital, Yes, right, it says a little too. Could

785
00:43:06,560 --> 00:43:09,200
Speaker 3: you just tighten that up a little bit a little bit, right.

786
00:43:09,280 --> 00:43:13,520
Speaker 3: So you know around this time, Rock and a few

787
00:43:13,560 --> 00:43:18,320
Speaker 3: other finance types are creating venture capital. Right, this is happening.

788
00:43:18,320 --> 00:43:20,759
Speaker 2: It's going from being a rich man's hobby into a

789
00:43:20,800 --> 00:43:23,920
Speaker 2: more formal part of the financial system. And so remember

790
00:43:24,200 --> 00:43:27,600
Speaker 2: the first time Noise and More went to Rock, it

791
00:43:27,640 --> 00:43:32,440
Speaker 2: took him months to find the money. And in part well,

792
00:43:32,440 --> 00:43:34,560
Speaker 2: obviously in part because Noise and More way more legit

793
00:43:34,640 --> 00:43:36,560
Speaker 2: now and they've made the success at Parchil, but also

794
00:43:36,640 --> 00:43:40,280
Speaker 2: because finance and capital allocation has developed and venture capital

795
00:43:40,360 --> 00:43:43,200
Speaker 2: is becoming a thing. Instead of two months, this time,

796
00:43:43,320 --> 00:43:46,560
Speaker 2: he raises the money in two days. And remember this

797
00:43:46,600 --> 00:43:51,440
Speaker 2: is nineteen sixty eight, right, So the entire culture of

798
00:43:51,480 --> 00:43:53,840
Speaker 2: the United States has sort of shifted to the West coast,

799
00:43:53,920 --> 00:43:56,160
Speaker 2: not just in terms of technology, but in terms of

800
00:43:56,640 --> 00:44:01,279
Speaker 2: music and fashion and lifestyle, right, and there's this excitement

801
00:44:01,400 --> 00:44:04,400
Speaker 2: out there. Finally it's not just farm fields. It's people

802
00:44:04,440 --> 00:44:06,600
Speaker 2: doing amazing, weird stuff.

803
00:44:06,960 --> 00:44:09,719
Speaker 3: And I picture these you know, stuffy rich people on

804
00:44:09,719 --> 00:44:11,759
Speaker 3: the East Coast going hmmm, how do we get a

805
00:44:11,760 --> 00:44:13,920
Speaker 3: little been involved in what the what the kids are

806
00:44:13,960 --> 00:44:15,320
Speaker 3: doing out there on the coast.

807
00:44:15,560 --> 00:44:17,400
Speaker 2: So that's why they raise the money in two days

808
00:44:17,400 --> 00:44:19,919
Speaker 2: this time, and you know, the core idea is still

809
00:44:19,960 --> 00:44:22,520
Speaker 2: this breakthrough that they've had at Fairchild. Right, it is

810
00:44:23,040 --> 00:44:26,480
Speaker 2: the integrated circuit. It is integrated electronics.

811
00:44:26,520 --> 00:44:29,040
Speaker 3: They know this is going to be huge, and so

812
00:44:29,760 --> 00:44:30,680
Speaker 3: they're founding their company.

813
00:44:30,680 --> 00:44:32,400
Speaker 2: It's nineteen sixty eight and they're like, what if we

814
00:44:32,440 --> 00:44:34,960
Speaker 2: call it integrated electronics?

815
00:44:35,080 --> 00:44:41,120
Speaker 3: Very nice, very little, nerdy, little long do it Intel? Intel? Beautiful?

816
00:44:41,360 --> 00:44:44,320
Speaker 3: So they create Intel, right, they create Intel, and now

817
00:44:44,600 --> 00:44:47,680
Speaker 3: crucially this time, there's no East Coast camera company that

818
00:44:47,719 --> 00:44:49,839
Speaker 3: can tell noise and more. What to do now they

819
00:44:49,840 --> 00:44:53,520
Speaker 3: can build this engineer's paradise they've been dreaming of, and

820
00:44:53,560 --> 00:44:53,879
Speaker 3: they do.

821
00:44:53,920 --> 00:44:57,000
Speaker 2: They build a company where all the engineers get stock options,

822
00:44:57,040 --> 00:45:00,800
Speaker 2: where it's very non hierarchical, right, no reserve parking spaces,

823
00:45:00,800 --> 00:45:02,120
Speaker 2: no fancy officers for the boss.

824
00:45:02,160 --> 00:45:07,160
Speaker 3: Everybody has the same plain gray aluminum desks. And remind you,

825
00:45:07,320 --> 00:45:10,000
Speaker 3: this is fifty five years ago, and all the pieces

826
00:45:10,000 --> 00:45:12,200
Speaker 3: are in place. Yes, all the things that we've think

827
00:45:12,239 --> 00:45:14,920
Speaker 3: of now as cutting edge Silicon valley culture, the people

828
00:45:14,920 --> 00:45:17,800
Speaker 3: going out there now to do AI, right, yeah, fifty

829
00:45:17,800 --> 00:45:21,120
Speaker 3: five years ago that's when this got solidified, Yes, and

830
00:45:21,200 --> 00:45:21,880
Speaker 3: it worked. Right.

831
00:45:21,880 --> 00:45:23,960
Speaker 2: They were like let's build this company, let's make it

832
00:45:24,360 --> 00:45:27,239
Speaker 2: centered on engineers, and let's have everybody come in every

833
00:45:27,320 --> 00:45:31,520
Speaker 2: day and try and invent the future. And they succeed right,

834
00:45:31,680 --> 00:45:35,560
Speaker 2: very quickly. They have a new technological breakthrough that propels

835
00:45:35,600 --> 00:45:40,120
Speaker 2: them ahead, and Intel remains the dominant chip maker in

836
00:45:40,200 --> 00:45:43,920
Speaker 2: the world for decades to come. And interestingly, it's not

837
00:45:44,360 --> 00:45:49,040
Speaker 2: just Noise and more. Other members of that original Tradorus

838
00:45:49,040 --> 00:45:53,840
Speaker 2: eight also continued to be these kind of restless pirate types.

839
00:45:54,200 --> 00:45:58,120
Speaker 2: People actually talk about fair Children companies that came out

840
00:45:58,160 --> 00:45:58,680
Speaker 2: of fair Child.

841
00:45:58,880 --> 00:45:59,440
Speaker 3: Yeah.

842
00:45:59,480 --> 00:46:02,640
Speaker 2: One of them started AMD which today is also one

843
00:46:02,640 --> 00:46:04,080
Speaker 2: of the biggest chip companies in the world.

844
00:46:04,160 --> 00:46:07,279
Speaker 3: And they didn't just start companies. They also, because they

845
00:46:07,280 --> 00:46:11,760
Speaker 3: made money, became the money people themselves. Yeah. Yeah. Eugene Kleiner,

846
00:46:11,800 --> 00:46:14,239
Speaker 3: the guy who called his dad's stockbroker.

847
00:46:13,680 --> 00:46:17,520
Speaker 2: When they were originally looking for money. He started a

848
00:46:17,640 --> 00:46:21,640
Speaker 2: venture capital fund called Kleiner Perkins, which you've probably heard

849
00:46:21,680 --> 00:46:25,720
Speaker 2: of because it funded companies like Netscape and Google and Slack,

850
00:46:26,320 --> 00:46:30,120
Speaker 2: meaning that you know, these original guys, they didn't just

851
00:46:30,160 --> 00:46:31,960
Speaker 2: start this company. They didn't just create the model. They

852
00:46:32,000 --> 00:46:36,200
Speaker 2: actually brought the money to fund generations of people who

853
00:46:36,239 --> 00:46:38,959
Speaker 2: were restless who wanted to go out on their own

854
00:46:39,400 --> 00:46:40,640
Speaker 2: and try a new thing.

855
00:46:40,920 --> 00:46:43,640
Speaker 3: Yeah, if you were a golden boy in the last

856
00:46:44,040 --> 00:46:46,960
Speaker 3: fifty five years, you did not have to work in

857
00:46:47,000 --> 00:46:49,560
Speaker 3: Philadelphia for an electronics firm. You didn't have to wait

858
00:46:49,600 --> 00:46:53,359
Speaker 3: for the phone call from anyone, even God, because you

859
00:46:53,440 --> 00:46:57,000
Speaker 3: knew there was a place that respected your genius and

860
00:46:57,120 --> 00:47:01,520
Speaker 3: ambition and restlessness right and that would overlook whatever personal

861
00:47:01,520 --> 00:47:04,080
Speaker 3: flaws you might have. There was a place that was

862
00:47:04,200 --> 00:47:07,880
Speaker 3: on the edge of everything, and it was called Silicon Valley,

863
00:47:08,200 --> 00:47:11,560
Speaker 3: and you could just go there and make your fortune.

864
00:47:12,000 --> 00:47:16,440
Speaker 3: Next week on Business History, one more guy from Fairchild

865
00:47:17,040 --> 00:47:20,279
Speaker 3: was the head of sales starts his own VC firm,

866
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Speaker 3: and his very first investment is in a company full

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Speaker 3: of stoners that's doing business out of an abandoned roller rink.

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Speaker 3: It's like the Apricot Shed of the seventies.

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Speaker 2: That company is Atari, and it's the story of the

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00:47:33,360 --> 00:47:34,800
Speaker 2: birth of the video game industry.

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Speaker 3: Our producer is Gabriel Hunter Chang, our engineer is Sarah Bruguier,

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00:47:38,840 --> 00:47:41,920
Speaker 3: and our showrunner is Ryan Dilly. I'm Jacob Goldstein and

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00:47:41,920 --> 00:47:44,000
Speaker 3: I'm Robert Smith. We'll be back next week with another

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00:47:44,040 --> 00:47:48,840
Speaker 3: episode of Business History. A show about the history wait

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Speaker 3: for it, of business.