Speaker 1: Pushkin too quick. No, it's perfect push kid stuff. You
Speaker 1: got it.
Speaker 2: Imagine you're just starting out in your field and one day,
Speaker 2: out of the blue, you get a call from this
Speaker 2: guy who basically invented the field, this guy who is
Speaker 2: a giant in the field, and he says, I want
Speaker 2: you to come work for me. Dream come true. So
Speaker 2: of course you go, you work for him. But he
Speaker 2: turns out to be an absolute nightmare. This is what
Speaker 2: happened to young Robert Noise in nineteen fifty six. And
Speaker 2: I'm going to argue on the show today that this
Speaker 2: chain of events is actually what led to the creation
Speaker 2: of Silicon Valley.
Speaker 3: One Bad Boss, Silicon Valley, one Bad Boss, a couple geniuses,
Speaker 3: the right mix of technology and historical facts, Silicon Valley.
Speaker 3: Let's do it.
Speaker 2: So Robert nois the guy who got the call. He
Speaker 2: was He was a golden boy. He was a real
Speaker 2: corn fed Iowa American golden boy.
Speaker 3: He grew up in Iowa.
Speaker 2: In the nineteen thirties and forties, went off to Grinnell
Speaker 2: College in his hometown.
Speaker 3: When he was there, he sang in the choir. He
Speaker 3: was a champion diver, and he played the leading man
Speaker 3: in a local radio soap opera, heart Throb, heart Throb.
Speaker 3: A few decades later, the great Tom Wolfe wrote a
Speaker 3: profile of Noise in Esquire. Yeah, why don't you give
Speaker 3: us a little hit? Let me read this While he
Speaker 3: looked to you. He never blinked and never swallowed. He
Speaker 3: absorbed everything you said and then answered very levely, in
Speaker 3: a soft baritone voice, and often with a smile that
Speaker 3: showed off his terrific set of teeth. He also had
Speaker 3: a good dentist. Look at that, yeah, wolf said, it
Speaker 3: was like he had a halo floating on his head,
Speaker 3: and kind of annoyingly. He was a genius.
Speaker 2: Got into transistors before anybody really knew what transistors were,
Speaker 2: went off to Mit, got a PhD. And then he
Speaker 2: got a job at this little electronics company in Philadelphia,
Speaker 2: and he got bored. Suddenly he's in his twenties, he's
Speaker 2: a golden boy. He's working at this kind of second
Speaker 2: tier place and it's just not going that well. And
Speaker 2: then one day Noise is at his office and the
Speaker 2: phone rings and he picks up the phone and here's
Speaker 2: this voice on the other end. The voice says, Shockley here.
Speaker 2: Noise later said this was like picking up the phone
Speaker 2: and talking to God. Three months later, Noise moved to
Speaker 2: Mountain View, California, to Wortlenoah.
Speaker 3: At the time. Yeah, turns out God, William Shockley is
Speaker 3: a horrible boss, a paranoid micromanager, cruel, really cruel, and
Speaker 3: the fact that he was such an asshole wound up
Speaker 3: having profound consequences for the world. I'm Jacob Goldstein and
Speaker 3: I'm Robert Smith. And this is Business History, a show
Speaker 3: about the history of business today. On the show, the
Speaker 3: invention of Silicon Valley, a place that is an actual place,
Speaker 3: but it's more a state of mind, a culture where
Speaker 3: restlessness is a virtue in quitting your job. It's heroic.
Speaker 2: Yeah, I mean Silicon Valley is this agglomeration, right, It
Speaker 2: is the most important agglomeration in the history of agglomeration.
Speaker 2: Perhaps it has created the most important technologies of the
Speaker 2: twenty first century and truly the most valuable companies in
Speaker 2: the history of the world.
Speaker 3: And it started with an asshole William Shockley and a
Speaker 3: golden boy, Robert Noise.
Speaker 2: So let's start with Shockley. He really comes first in
Speaker 2: the story. Shockley was roughly a generation older than Noise.
Speaker 2: He grew up in Palo Alto in California in the
Speaker 2: nineteen teens and twenties, when it was you know, a
Speaker 2: little college town surrounded by farms and orchards.
Speaker 3: Yeah. I think grapes of wrath east of Eden, right,
Speaker 3: these classic books about farm workers. That's what Silicon Valley
Speaker 3: was at the time. Yeah. Yeah, right over the hill
Speaker 3: from Salinas, right, not far. Shockley was a difficult child.
Speaker 3: He bit his mother a lot, He bit multiple babysitters.
Speaker 3: He didn't go to school. He was homeschooled until he
Speaker 3: was eight. His parents were high achievers. His dad had
Speaker 3: a PhD from MIT, his mom graduated from Stanford. It
Speaker 3: was one of the first people to solo climb Mount Whitney,
Speaker 3: I believe, the highest mountain in the continental United States. True.
Speaker 3: And you know, Shockley eventually went to school and turned
Speaker 3: out to be a brilliant student, got a PhD from MIT,
Speaker 3: and in nineteen thirty six he went off to work
Speaker 3: at Bell Labs in New Jersey. We haven't really talked
Speaker 3: about Bell Labs yet on the show, and we should
Speaker 3: do a whole episode about it because it was really
Speaker 3: critical for all the development of the technologies of the
Speaker 3: twentieth century. It was set up as AT and T's
Speaker 3: research lab in the early part of the century. And
Speaker 3: AT and T of course had a monopoly on the
Speaker 3: phone system, so you know, they had a ton of
Speaker 3: extra money. But more than that, bringing all these geniuses
Speaker 3: together to work on technology wasn't just about phones. It
Speaker 3: was about any hard problem that they could think of.
Speaker 3: They developed the first solar panels right, the first cell
Speaker 3: phone system, the Courtz clock. They found evidence of the
Speaker 3: Big Bang, the creation of the universe was discovered by
Speaker 3: the phone company, which is amazing. And the main part
Speaker 3: of this was this idea that if geniuses just interact,
Speaker 3: they will come up with solutions that they could not
Speaker 3: come up with alone. And if you want to picture it,
Speaker 3: one of the Bell Labs, there were several of them
Speaker 3: when in Lower Manhattan, couple in New Jersey. One of
Speaker 3: the Bell Labs is the building they use for the
Speaker 3: show Severance. Is that that giant hall, you know, the
Speaker 3: outside shots of it. That's what Bell Labs look like. Huh.
Speaker 3: I hadn't knowne that. So Shockley is hired, and you know,
Speaker 3: there is all of this incredible creative work going on,
Speaker 3: but Shockley is hired frankly to work on a more
Speaker 3: practical problem for AT and T, a more phone company
Speaker 3: centric problem, and that is this vacuum tubes. Vacuum tubes
Speaker 3: were these little glass tubes kind of like an elongated
Speaker 3: light bulb, all the size of your thumb, maybe a
Speaker 3: little taller, okay. And the fundamental thing they did was
Speaker 3: amplify electric signals, which is a huge problem in technology
Speaker 3: at the time. Right if you speak into a microphone
Speaker 3: or say a telephone headset, the electricity your voice generates
Speaker 3: as tiny, the signal is very small. How do you
Speaker 3: get that into wires that go across the United States?
Speaker 3: You have to amplify it along the way, and they
Speaker 3: use these little tubes to do it. Now, the problem
Speaker 3: is these tubes are fragile, like they are glass tubes,
Speaker 3: and they used a tremendous amount of energy. They would
Speaker 3: heat up. In fact, you had to like let them
Speaker 3: heat up before you could even turn on the tube
Speaker 3: radio at the time, or the tube amplifier. Really, speaking
Speaker 3: as a man who is familiar with vacuum tube technology
Speaker 3: or ever, I have spent some time with older radios
Speaker 3: where you have the vacuum tubes and of course the
Speaker 3: audio professionals who say those were the golden day. You
Speaker 3: are that audio profession I love a vacuum tube, but
Speaker 3: go on, so, okay, so it's the thirties.
Speaker 2: Long distance calling is growing fast. But the vacuum tubes,
Speaker 2: for the reasons you're describing, are a nightmare and also
Speaker 2: by the way they burn out, right, they are like
Speaker 2: incandescent light bulbs. It's very hard to scale a company
Speaker 2: on this technology. That's expensive and unreliable, and you have
Speaker 2: to keep sending people out to.
Speaker 3: Put in new vacuum tubes.
Speaker 2: Right, So Shakley is put in charge of this team
Speaker 2: that's trying to find a better replacement for the vacuum.
Speaker 3: Tube or something that a solid state that doesn't brick. Yeah, yeah,
Speaker 3: that doesn't break, that's cheaper, that scales.
Speaker 2: So you know, Shokley at a fundamental level is thinking
Speaker 2: about electricity and specifically how electrons move.
Speaker 3: Through materials, and of course there is this spectrum.
Speaker 2: We're on one end of the spectrum, you have insulators
Speaker 2: like glass and rubber, where electrons don't flow easily through them.
Speaker 2: On the other end of the spectrum, you have conductors
Speaker 2: like copper, where electrons flow right through them.
Speaker 3: If only there was something in between, you know, not
Speaker 3: an insulator, not a conductor, sort of quasi conductor.
Speaker 2: It's like a conductor, it's like a semi conductor. There
Speaker 2: were these materials that were semi conductors, things like silicon
Speaker 2: and germanium, and people were starting to understand that you
Speaker 2: could maybe control them so that their behavior would change
Speaker 2: under different settings, and that if you could do that,
Speaker 2: if you could get it to switch from basically an
Speaker 2: insulator to basically a conductor, you could use that as
Speaker 2: a way.
Speaker 3: To amplify an electric signal. You could put a tiny
Speaker 3: electrical signal in there and it would be boosted by
Speaker 3: like one hundred times. This is the way it works.
Speaker 2: Yes, And the dream is it would be, you know,
Speaker 2: a cheaper, more reliable version of the vacuum tube. So
Speaker 2: Chockles were on this in the late thirties and then
Speaker 2: Hitler invades poland damn it, World War two comes along
Speaker 2: and Shockley and every other high powered nerd in America
Speaker 2: gets reassigned to go work on the war effort. Side note,
Speaker 2: I feel like we should do a show or a
Speaker 2: series sometime of like How the Nerds Beat the Nazis.
Speaker 2: I feel like there's a lot there. Yeah, yeah, I
Speaker 2: mean one obvious one is the first sort of modern
Speaker 2: style computer was built as part of the war effort,
Speaker 2: using vacuum twas, using like eighteen thousand vacuum tubes in
Speaker 2: a room that was like fifteen hundred square feet, right
Speaker 2: like bigger than you know, your apartment, you know, a
Speaker 2: million times weaker than an iPhone or whatever.
Speaker 3: But yes, that was a computer. It was used to
Speaker 3: to calculate the trajectories of artillery, which I love. Shockley,
Speaker 3: for his part, was working on tactics for Navy convoys
Speaker 3: to fight subs, which is dear to my heart because
Speaker 3: my own grandfather was on a Navy convoy in the
Speaker 3: North Atlantic fighting Nazi subs. So okay, so the words
Speaker 3: beat the nazis good news, Thank you nerds. And then
Speaker 3: Shockley goes back to work trying to figure out a
Speaker 3: replacement for the vacuum tube. And it is hard to
Speaker 3: get it to work, right, classic leap from theory to
Speaker 3: practice is quite hard. They can't get it to work.
Speaker 3: They can't get it to work. But then finally, in
Speaker 3: November of nineteen forty seven, two researchers on Shockley's team
Speaker 3: they start to figure it out. They have what comes
Speaker 3: to be called the Miracle month, and the next month,
Speaker 3: in December, they get this slab of germanium with a
Speaker 3: little bit of like Jerry rigged foil on it to
Speaker 3: work to amplify an electrical signal by a factor of
Speaker 3: one hundred, and they call it the transistor. And Shockley,
Speaker 3: William Shockley is not throwing them a party, is not
Speaker 3: entirely psyched. Here. Let me read his quote. My elation
Speaker 3: with the group's success was tempered by not being one
Speaker 3: of the inventors. There is some frustration that my personal efforts,
Speaker 3: started more than eight years before, had not resulted in
Speaker 3: a significant inventive contribution of my own. Not sure. Not
Speaker 3: a lovable guy, Shockley not a team player, right. He
Speaker 3: in fact goes to the lawyers at Bell Labs and
Speaker 3: it's like, you guys should put my name on the patent.
Speaker 3: I know I actually do the work, but come on,
Speaker 3: it's my team. I've been working on it. The lawyers
Speaker 3: don't actually agree to do this. They don't do it,
Speaker 3: and so.
Speaker 2: Shockley goes off in secret and starts working on a
Speaker 2: better way to make a semiconductor. Basically, take this work
Speaker 2: and improve upon it. And remember he is a genius, right,
Speaker 2: he is a very talented engineer, and so he succeeds.
Speaker 3: Obviously, we're making fun of Shockli a little bit, but
Speaker 3: this like monomaniacal resentment that he had and had his
Speaker 3: entire life leads to all of these breakthroughs. Yes, well,
Speaker 3: not only does it lead to these breakthroughs.
Speaker 2: Right, So he's acting like a jerk at Bell Labs
Speaker 2: and completely a contrary to the ethos of the place, right,
Speaker 2: which is supposed to be everybody comes together. And so
Speaker 2: once he does this, nobody wants to work with him anymore.
Speaker 2: He gets passed over. And so he decides, and here
Speaker 2: here's the quote. He decides, the hell with that, I'll
Speaker 2: go set up my own business. I'll make a million
Speaker 2: dollars that way.
Speaker 3: So in nineteen fifty four, Shockolei leaves Bell Labs, leaves
Speaker 3: New Jersey, moves home to Palo Alto, California. Still remember
Speaker 3: kind of the middle of nowhere, kind of the middle
Speaker 3: of nowhere.
Speaker 2: Univers still still known for its annual Prune Festival, although
Speaker 2: although to be fair, I mean Hewlett Packard was there
Speaker 2: by this time. It's a legit company. Stanford was growing.
Speaker 2: They had just set up their industrial park. But yes,
Speaker 2: far from the center of the technological action. Right, Bell
Speaker 2: Labs was the center of the tech world. Mit was
Speaker 2: the center of the tech world. The East Coast was
Speaker 2: where all the action was, not California. Shockley's moving to
Speaker 2: Palo Alto because it's home. And two years after he
Speaker 2: moves home, he starts a company that he calls Shock
Speaker 2: Semiconductor with the idea of making transistors ubiquitous. And he
Speaker 2: writes in his journal something I actually find kind of poignant.
Speaker 2: He writes, idea of setting world on.
Speaker 3: Fire, Father Proud, We're already seeing the very beginnings of
Speaker 3: the Silicon Valley ethos, right, the postute doesn't really get
Speaker 3: along with others, the resentment, you know, the focus, right,
Speaker 3: but also this other thing that like I can change
Speaker 3: the world, the universe.
Speaker 2: Yes, yes, he is a very smart engineer with a
Speaker 2: lot of ambition and some tragic flaws, right, and all
Speaker 2: of those are important in the story and classic Silicon
Speaker 2: Valley traits.
Speaker 3: So Shockley gets there. He is, in fact a visionary.
Speaker 3: He sees the future and he is right right.
Speaker 2: He sees that semiconductors, the transistor is going to be
Speaker 2: useful in a lot of ways, not just for the
Speaker 2: phone company. Right, Like transistor radios are starting to be
Speaker 2: a thing around this time, hearing aids. It's clearly going
Speaker 2: to be really important for military applications.
Speaker 3: Because until this time anything electronic had to stay in
Speaker 3: one place. So he's seeing this world where you can
Speaker 3: move electronics, yes, and they won't break. Yeah. Miniaturization, right,
Speaker 3: things getting smaller. This is a huge theme that is
Speaker 3: going to be key to the whole twentieth century. And
Speaker 3: I remember the nineteen seventies getting a transistor radio. It
Speaker 3: was so important that they had it in the name,
Speaker 3: you got a transistor radio, because people were still like,
Speaker 3: I can't believe a radio can be held in my hand, Very.
Speaker 2: Smith, Am I right that you actually bought a transistor
Speaker 2: radio a year ago or something.
Speaker 3: I bought ten of them for my students just so
Speaker 3: they can see what it was like. They can move
Speaker 3: the dial, and yes, you can still buy them on Amazon.
Speaker 3: They have the like pull out antenna. It does have
Speaker 3: the pullout antenna. We had what's at home? We used
Speaker 3: to listen to the baseball game. We used to listen
Speaker 3: to the Padres games on a transistor radio. I still
Speaker 3: have one in my shower. I listened to it every morning.
Speaker 3: I love that. So Shockley has this vision. He is
Speaker 3: right about the future of the world. He is a
Speaker 3: genius who has been central to the the transistor. He
Speaker 3: started his company and now he needs a team. And
Speaker 3: so he calls his you know, engineers from Bell Labs, like, hey,
Speaker 3: let's do this. They're like, no, no, I know you.
Speaker 3: There's no way I'm leaving the center of the world
Speaker 3: to move out to the mill of nowhere to work
Speaker 3: for you. So he has to fight people who don't
Speaker 3: know him, who don't know him, but who know of him. Right,
Speaker 3: that's the sweet, that's the key.
Speaker 2: Yes, this is how he finds Robert Noise, this golden
Speaker 2: boy engineer we talked about at the beginning of the show. Right,
Speaker 2: Noise had actually gotten hold of of an early transistor
Speaker 2: when he was in college before anybody really you know,
Speaker 2: knew what they were. He was really excited about it.
Speaker 2: And by the time Noise gets this call, he's working
Speaker 2: at this second tier electronics company in Philadelphia and suddenly,
Speaker 2: out of the blue, William Shockley, the great genius, calls
Speaker 2: him on the phone, and as Noise said later, it
Speaker 2: was like he whistled and I came.
Speaker 3: Shockley is a good spotter of talent.
Speaker 2: He hires like a dozen by all accounts, extremely talented engineer,
Speaker 2: young guys in their twenties. Another key we're going to
Speaker 2: talk more about is Gordon Moore of Moore's Law's Law.
Speaker 3: And so they get out to California and at first
Speaker 3: it's great noise and more and these other young engineers
Speaker 3: are living the dream, right, working for this guy who
Speaker 3: founded their field, who helped discover the transistor. And he's
Speaker 3: got this former Apricot shed in Mountain View that's the headquarters,
Speaker 3: which is probably worth ten million dollars. Yeah, Chocolate really
Speaker 3: is talented, right.
Speaker 2: He has this breakthrough idea right at the beginning of
Speaker 2: the company, which is this. The transistors that he'd been
Speaker 2: working on at Bell Labs were made of germanium. But
Speaker 2: germanium is hard to work with. It's brittle, stops working
Speaker 2: at high temperatures, and so he decides to use silicon, of.
Speaker 3: Course, another semiconductor. It would have been weird if it
Speaker 3: were germanium Valley, right, I like germadium valley. They call
Speaker 3: themselves Germys or something. Yeah, Silicon's cheaper, it's easier to
Speaker 3: work with, but you know, it's hard to get things
Speaker 3: to work.
Speaker 2: It's hard to produce them economically at scale, it's hard
Speaker 2: to make hardware.
Speaker 3: But it's a problem they think they can solve. Which
Speaker 3: is the sweet spot, right, It's just if you're a young,
Speaker 3: ambitious engineer, it's where you want to be.
Speaker 2: They all know it's going to be big. It's this
Speaker 2: very ambitious thing they're trying. And you know, every morning
Speaker 2: at eight am, the team shows up at the headquarters
Speaker 2: in the former Apricot Shad and Shockley conducts what Tom Wolf,
Speaker 2: the journalist, calls the Rcane symphony of you know, getting
Speaker 2: all these engineers to work together. And Shockley apparently had
Speaker 2: this incredible intuition for engineering and for physics. One of
Speaker 2: the engineers who worked with him said his intuition for
Speaker 2: experiments was so good it was like he could see
Speaker 2: individual electrons.
Speaker 3: He just saw what was going to happen. Is that great?
Speaker 3: Isn't that beautiful? If only he could have seen individual
Speaker 3: human being, Hey o, he would have been much better off. Yes, yes,
Speaker 3: that classic kind of problem. And soon this sort of
Speaker 3: monstrous side of Shockley starts to show itself. He gets paranoid.
Speaker 3: There's this moment when a secretary cuts her hand on
Speaker 3: a doorway. There's like a little pin or something sticking
Speaker 3: out of the doorway, and Shockley becomes convinced that an
Speaker 3: employee is trying to sabotage the team demands that everybody
Speaker 3: take a lie detector test, which they refuse to do.
Speaker 2: He doesn't get over it, stays paranoid, winds up splitting
Speaker 2: the engineers into different teams and not telling one team
Speaker 2: what the other is doing, hiding information, which is like
Speaker 2: as far as you can get from the Dream, from
Speaker 2: the Arcane Symphony from Bell Labs.
Speaker 3: Right, And at this point it's starting to sound like
Speaker 3: mental illness. Yeah, really is, Yeah he is. Something is
Speaker 3: wrong with William Shockley. Right.
Speaker 2: And around this time, in nineteen fifty six, he actually
Speaker 2: wins the Nobel Prize, shares the prize for his work
Speaker 2: on semiconductors on transistors, and it only makes him worse.
Speaker 2: He has this paranoid idea that there were people who
Speaker 2: were trying to keep him from getting the prize. He
Speaker 2: writes to the Nobel committee saying, like, tell me the
Speaker 2: names of my enemies.
Speaker 3: After he's won of the prisons.
Speaker 2: He's won the prize, like take the win, William Shockley, unbelievable.
Speaker 3: And then he does one more thing.
Speaker 2: And you know, you can get away with a lot
Speaker 2: if you're managing a team of engineers, but there is
Speaker 2: one thing, if they're ambitious and talented, that you cannot
Speaker 2: get away with, and that is becoming less ambitious, scaling
Speaker 2: back the vision, and that is what he does. Around
Speaker 2: this time, he decides that rather than making a silicon
Speaker 2: transistor that can be used for anything, but that's quite
Speaker 2: hard to make that they haven't really figured out yet,
Speaker 2: instead of doing that, he decides that they're going to
Speaker 2: make something that has a clear, defined limited use case.
Speaker 2: That is a semiconductor that can do mechanical switching in
Speaker 2: telephone exchanges.
Speaker 3: Ough, he wants to revolutionize the phone company. Yeah, like
Speaker 3: come on, man, right, Like we came out here to
Speaker 3: the aprilcot Warehouse to change the world and you want
Speaker 3: to make calls clear. Okay, So this is.
Speaker 2: Like the last straw for a lot of the young
Speaker 2: talented engineers. But remember this is not an era where
Speaker 2: if you're like a young talented engineer on the forefront
Speaker 2: of technology, you can just quit and go do your
Speaker 2: own thing, right, Like that doesn't exist yet, you know.
Speaker 2: Sure Shockley started a company, but he was like this
Speaker 2: very senior guy. He invented the industry. He was to
Speaker 2: win the Nobel Prize.
Speaker 3: And crucially right, there's no money for them. Nobody's going
Speaker 3: to give them money. There's no venture capitol industry. That
Speaker 3: is not a thing. So one of these young engineers,
Speaker 3: guy named Eugene Kleinder, thinks, who can I call? He thinks,
Speaker 3: I'll call my dad, stockbroker back in New York. That
Speaker 3: guy knows money.
Speaker 2: That guy knows about money, and he calls him, and
Speaker 2: the broker puts him in touch with another guy at
Speaker 2: the firm, this thirty year old Harvard NBA named Arthur Rock.
Speaker 3: Knowing thirty year old NBAS, It's almost like they were
Speaker 3: pushing him off on the young guy, like you understand
Speaker 3: this stuff. Let the young guy hap, yeah, I mean Rock.
Speaker 2: Did, like, you know, kind of more interesting and more
Speaker 2: risky ventures. And so Rock and another banker they fly
Speaker 2: out to San Francisco and they meet with Kleiner and
Speaker 2: Moore and a few other disgruntled young engineers from Shockley Semiconductor.
Speaker 2: And Rock is talking to them, and he's like, well,
Speaker 2: these guys are smart, and I believe that transistors are
Speaker 2: going to be a thing. And he's like, look, you
Speaker 2: guys are smart and.
Speaker 3: Got the pocket protectors future.
Speaker 2: I'm like, I don't want to say you're a bunch
Speaker 2: of nerds, but like he is there somebody you work
Speaker 2: with who's like got some charisma, who walks into a
Speaker 2: room and people want.
Speaker 3: To follow him and they're like, yes, yes, as a
Speaker 3: matter of fact, our buddy, the former soap opera starred
Speaker 3: diving champion with the perfect teeth, with the perfect teeth.
Speaker 3: It's just chilling back in Palo Alto right now. They
Speaker 3: thought of Noise, They thought of noise. Noise, so they
Speaker 3: go back and they convince Noise to go talk to
Speaker 3: Arthur Rock, essentially to join them, and I believe it's
Speaker 3: the very next day Noise goes with these seven other
Speaker 3: engineers and Roxy's Noise is like, yes, this is the
Speaker 3: guy we need. I love that the money guys are
Speaker 3: already like I need someone who looks like a president
Speaker 3: of a company and is a genius.
Speaker 2: Ye right, non trivially, and Rock agrees to work with them,
Speaker 2: and these eight make a pack that if they get
Speaker 2: the money. If they can, they're gonna leave Shockley Semiconductor.
Speaker 3: And I want to.
Speaker 2: Make the case in a slightly overdetermined but I think
Speaker 2: fundamentally accurate way that this moment, when these eight engineers
Speaker 2: and this banker make this agreement, this is the moment
Speaker 2: when Silicon Valley is born.
Speaker 3: Not when the first company has started, the Shockley Semiconductors.
Speaker 3: It's when there's a revolution and they leave to start
Speaker 3: a second company. And that really is the spirit of
Speaker 3: Silicon Valley. That's why they're all located in the same place.
Speaker 3: Because they can do this. That's the promise. Yes, you
Speaker 3: can do it even if you have no intellectual property,
Speaker 3: no money, no customers, right, just guts and a dream
Speaker 3: and some amount of raw talent and a banker who
Speaker 3: is willing to help you find them money. That's a
Speaker 3: key part, right, So you have money and ambition and
Speaker 3: talent and like that is Silicon Valley. Yes, love it. Yeah.
Speaker 3: In fact, these eight guys they become legends in Silicon
Speaker 3: Valley and they become known as the Traders eight because
Speaker 3: they're you know, being traders to Shockoli, to Shockley Semiconductor.
Speaker 3: And I want to just dwell for a second on
Speaker 3: that word traitorous, right, because it is a word that
Speaker 3: has a very negative connotation as a general matter.
Speaker 2: A trader is a bad person, yes, but in the
Speaker 2: context of Silicon Valley, it is heroic. These guys are
Speaker 2: leaving this company because it has a bad boss who
Speaker 2: vision they're being traded to him for the greater good
Speaker 2: to start this company.
Speaker 3: And that that is the core. They're pirates.
Speaker 2: They're pirates, very good. Now at this moment, I believe
Speaker 2: nineteen fifty seven, this whole thing that we're talking about
Speaker 2: is not a thing, right, There is not this spirit
Speaker 2: of doing this, This is not a known thing. There
Speaker 2: is not an ecosystem of capital ready to support them.
Speaker 2: And so Rock the banker, he starts calling around seeing
Speaker 2: if there's some company basically that wants to support these guys,
Speaker 2: and everybody says no, because why would they say yes? Right,
Speaker 2: They're like, if we wanted to make semiconductions, we just
Speaker 2: hire a bunch of engineers, Like why would we give
Speaker 2: it to some random guys. But after a few months
Speaker 2: somebody tells Rock he should call this guy named Sherman Fairchild.
Speaker 2: Great name, interesting guy, son of one of the founders
Speaker 2: of IBM, NEPO Baby, Nepo Baby, but also talented and
Speaker 2: successful on his own. I guess not on his own,
Speaker 2: that's the NEPO part, he tells it. And successful guy.
Speaker 2: He got into photography early in his life, started this company,
Speaker 2: Fairchild Camera, that wound up making a lot of the
Speaker 2: like aerial cameras used in World War Two. Also loves
Speaker 2: to take a risk, never got married, loves to spend money,
Speaker 2: built himself this glass house in Manhattan, goes out to
Speaker 2: the clubs every night. So really the perfect guy to
Speaker 2: fund the trader's eight. So he ends up agreeing to
Speaker 2: put up one point five million dollars. I went a
Speaker 2: lot farther back then. But you know, it's not like
Speaker 2: a startup like we know it today because people didn't
Speaker 2: make those deals. Instead, what he's creating is this semi
Speaker 2: autonomous division of Fairchild Camera. The traders say will get
Speaker 2: some equity, but Fairchild will have an option to buy
Speaker 2: the project the company outright for three million dollars if
Speaker 2: it succeeds.
Speaker 3: So they agreed to the deal. This is going to
Speaker 3: be the deal. Now the trader is are ready to
Speaker 3: leave Shockley.
Speaker 2: Now they've got their exit, and on September eighth, nineteen
Speaker 2: fifty seven, Gordon Moore broke the news to Shockley. It's
Speaker 2: interesting because Shockley was clearly paranoid, and yet he didn't
Speaker 2: see this coming. He was shocked. He staggered out of
Speaker 2: the room. He felt completely betrayed. And the company, Shockley
Speaker 2: semi Conductory, it never recovered. It never recovered from these
Speaker 2: guys leaving kind of staggered on for a while, never
Speaker 2: did anything great. And Shockley himself became a professor of
Speaker 2: engineering at Stanford. And then his story gets kind of
Speaker 2: more grim, like he gets obsessed with like race and
Speaker 2: IQ and eugenics. It gets kind of bleak, and frankly,
Speaker 2: that's enough, I think about chocolate.
Speaker 3: That's the end of Shocoley in our story today, because
Speaker 3: the people we care about are the pirates. The eight
Speaker 3: engineers who left to start something new in nineteen fifty
Speaker 3: seven are heroes, are the Traders eight. And we'll hear
Speaker 3: more about them after the break, and we're back.
Speaker 2: Trader Essay have just left Shockley Semiconductor, and on October first,
Speaker 2: nineteen fifty seven, they found Fairchild Semiconductor, a semi autonous
Speaker 2: division of Fairchild camera an instrument. Three days after they
Speaker 2: started the company, the Soviets sent Sputnik into orbit.
Speaker 3: Amazing, an amazing confluence of events.
Speaker 2: Amazing, right, I mean, the US is completely surprised by this.
Speaker 3: Right, this is the first satellite to orbit the Earth.
Speaker 2: And it's terrifying for the Americans, right, I mean, you know,
Speaker 2: a is afraid of the spread of communism. It has
Speaker 2: gone from the Soviet Union to Eastern Europe, to North
Speaker 2: Korea to the skies above your home.
Speaker 3: Literally it is now flying over your head, right, And
Speaker 3: they think, we need a lot more electronics that are portable,
Speaker 3: and we can put on planes and rockets and satellites
Speaker 3: of our own.
Speaker 2: Yes, And to be clear, this is extraordinarily lucky timing
Speaker 2: for noise and more and the rest of the trader essay, right,
Speaker 2: Like their genius is there's a good chance they would
Speaker 2: have succeeded anyway.
Speaker 3: But a useful lesson. It is great to have lucky
Speaker 3: timing in business and a desperate customer, which was the
Speaker 3: US government. Yeah, right, there is now suddenly this space race.
Speaker 3: This is the thing. Now the Soviets are winning the race.
Speaker 3: The US has to catch up.
Speaker 2: And so you know, it's like Sputnik went up, and
Speaker 2: billions of dollars in government funding rain down on fair
Speaker 2: Child Seming conductor and labs around America. Because you can't
Speaker 2: fit many vacuum tubes in a satellite, in the nose
Speaker 2: of a rocket, in you know, a fighter jet, you
Speaker 2: know what, you can fit a lot of transistors. So
Speaker 2: now there is essentially unlimited demand from the government for
Speaker 2: a fair Child to build transistors, but.
Speaker 3: They still have to make it work. Is it is
Speaker 3: not easy to do. It is a very hard technical
Speaker 3: problem because it's not just to put some silicone on
Speaker 3: and put some wires on it. Even a speck of
Speaker 3: dust on one of these early transistors could short it out,
Speaker 3: could create a problem, right, And it's you know, we
Speaker 3: think of breakthroughs as binary. It's like, oh, they figured
Speaker 3: out how to make a silicon chip done, But production
Speaker 3: and scale and efficiency are these endless problems, right, And
Speaker 3: they are extremely inefficient. They have an extremely high failure rate,
Speaker 3: and so they're trying, trying every day, how can we
Speaker 3: make this better, How can we make it faster? How
Speaker 3: can we have fewer of them fail? And to that end, the.
Speaker 2: Engineers at Fairchild had this idea and that is okay.
Speaker 2: So the fundamental problem is the silicon is super finicky
Speaker 2: and fragile. What if we protect it by leaving a
Speaker 2: layer of silicon oxide on top of the chip, and
Speaker 2: then we just put little tiny windows in that silicon
Speaker 2: oxide layer wherever you need to access the silicon directly.
Speaker 2: It's like painting a house, sure right where the paint
Speaker 2: is protecting the house, and there's like a window, said
Speaker 2: the metaphor.
Speaker 3: Okay, buy it.
Speaker 2: So he takes this idea to Noise, and Noise loves
Speaker 2: the idea. Noise has his own metaphor.
Speaker 3: He says, it's like wrapping the silicon in a cocoon,
Speaker 3: which I like. And he takes the idea to Fairchild's
Speaker 3: patent lawyer, and the patent lawyer, being a good patent lawyer, says,
Speaker 3: I love it. Let's patent the hell out of it.
Speaker 3: Don't just tell me this one.
Speaker 2: Use spend a few days and think of all the
Speaker 2: possible uses that we can make of this little idea
Speaker 2: so that we can build as big a patent mote
Speaker 2: as possible.
Speaker 3: So Nois starts thinking.
Speaker 2: About it, starts talking to more, you know, doing stuff
Speaker 2: on the chalkboard, and He's like, Okay, the problem isn't
Speaker 2: just that the silicon is finicky, right, Like these little transistors,
Speaker 2: they're complicated and on every one we've got to put
Speaker 2: like little wires.
Speaker 3: We actually have to solder by hand wires into every chip. Yeah,
Speaker 3: because you have to get the signal in there, and
Speaker 3: then you have to pull the amplified signal out and
Speaker 3: just imagine just hundreds of little, tiny wires, right, And
Speaker 3: they think, wait a minute, what if we can sort
Speaker 3: of etch this cocoon a little bit and essentially print
Speaker 3: the wire on top of the silicon oxide on top
Speaker 3: of the silicon. So basically the wires are are in
Speaker 3: the little thing. Yes, Yes, And and now that he's
Speaker 3: got this, he goes even bigger. Right, he thinks about
Speaker 3: an even bigger problem that he and the industry are facing,
Speaker 3: and that is the uses of transistors are multiplying and
Speaker 3: getting more complex. Right.
Speaker 2: People are starting to build computers with transistor instead of
Speaker 2: vacuum tubes.
Speaker 3: And they have all these.
Speaker 2: Little components, right, these complex circuits with not just transistors
Speaker 2: but capacitors and resistors, and there can be thousands of
Speaker 2: connections among the components, and people are wiring them all
Speaker 2: together by hand for every computer, right, which is a
Speaker 2: total nightmare for manufacturing, extremely hard to scale. And so
Speaker 2: Noise is thinking about this transistor and a cocoon, and
Speaker 2: he's like, wait, doesn't just have to be a transistor
Speaker 2: and the wire.
Speaker 3: Like, we could use this idea to put all kinds
Speaker 3: of things on one piece of silicon, right, Like we
Speaker 3: could put an entire circuit, all the components on this
Speaker 3: one piece of silicon. This idea is the integrated circuit.
Speaker 3: This is Robert Noise inventing the chip. Love it. He's
Speaker 3: not the only one. He's not the only one.
Speaker 2: You know, when there is a technological frontier and a
Speaker 2: ton of money and lots of smart people working. One
Speaker 2: of the great things about competition and the world is
Speaker 2: lots of people are right at the edge thinking similar thoughts.
Speaker 2: So as Noise is doing this, In fact, slightly earlier,
Speaker 2: one thousand miles away, another engineer, guy named Jack Kilby
Speaker 2: at Texas Instruments, is also inventing the chip.
Speaker 3: Texas Instruments, famous for their calculators in the nineteen seventies.
Speaker 3: That to me was high tech. A Texas Instrument calculator, yes, yes,
Speaker 3: also a chip pioneer, and in fact Kilby came up
Speaker 3: with the idea just before noise, maybe noises ideas a
Speaker 3: little more elegant. There's of course a patent case killby
Speaker 3: the noise. But in the end, important thing about this
Speaker 3: moment in history and this story is the government is
Speaker 3: going to pay for all the chips everybody can make.
Speaker 3: There's enough to go around, and fair Child and Texas
Speaker 3: Instruments agree to share the intellectual property. Amazing, they decided
Speaker 3: not to destroy each other, right, like in the Cult War.
Speaker 2: So fair Child and Texts Instruments are making chips, they're
Speaker 2: selling them to the government for ballistic missiles, for all
Speaker 2: of rockets coming along. And you know, think of this moment, right,
Speaker 2: this is like peak nerd and a short sleeve button
Speaker 2: down with the like heavy rimmed glasses doing.
Speaker 3: The space race.
Speaker 2: Right, this is peak military industrial complex. And I think
Speaker 2: of the chip as the little hyphen between military and industrial.
Speaker 2: It's like the center of the military.
Speaker 3: Industrial complex, very Tom Wolf of you. So all this government.
Speaker 2: Demand is driving more scale. It's pushing Fairchild and Texas
Speaker 2: Instruments to come up with more efficiencies, right. And one
Speaker 2: key thing they're doing is they're figuring out how to
Speaker 2: put more and more transistors and other components on each
Speaker 2: piece of silicon on each chip, so that it gets
Speaker 2: more powerful and cheaper.
Speaker 3: And they're pretty good at doing this. They're pretty good
Speaker 3: at doing this, right, we know this. The price falls
Speaker 3: from one thousand dollars in the late fifties to twenty
Speaker 3: five dollars by nineteen sixty three. And this moment the
Speaker 3: mid sixties is when we come to what I'm going
Speaker 3: to call the most unlikely great moment in business history
Speaker 3: that we have yet encountered in the young life of
Speaker 3: our shows. Right, bring it.
Speaker 2: That is the moment in nineteen sixty five when the
Speaker 2: editors of an electronics trade magazine ask Gordon Moore, one
Speaker 2: of our traders eight, to write an article. This is
Speaker 2: the great moment writing an article for a trade magazine.
Speaker 2: This electronics trade magazine has called wait for it, Electronics.
Speaker 3: I love when they have a simple title.
Speaker 2: Business History, a show about history of business, and electronics
Speaker 2: magazine asks more to predict where the integrated circuit business
Speaker 2: is gonna be in ten years.
Speaker 3: Could be a puff article, but he actually thinks about it.
Speaker 2: He thinks about it. He sees that fairchild and texts
Speaker 2: instruments have gotten much better at making integrated circuits that
Speaker 2: they can put more and more components on each little
Speaker 2: piece of silicon. And he does the math. He actually
Speaker 2: makes a little and he sees that the number of
Speaker 2: components on each chip has been basically doubling every year.
Speaker 2: And at the point he's writing this article, there's somewhere
Speaker 2: around sixty components. So it figures that's likely to continue.
Speaker 2: And he just extrapolates, He just he does the math,
Speaker 2: He extrapolates out his graph, actually makes a little dotted
Speaker 2: line ten years out into the future, and he says, Okay,
Speaker 2: we're making sixty or so components on.
Speaker 3: A chip today.
Speaker 2: In ten years it'll be sixty five thousand components on
Speaker 2: a chip. The magic of doubling, magic of compounding.
Speaker 3: I feel like this is the point of business history
Speaker 3: where we see what happens when you have exponential growth.
Speaker 3: Thomas Edison made the light bulb better. Of course, everyone
Speaker 3: made inventions better, but not doubling every year or two years. No,
Speaker 3: this is the central fact about the chip, right, and
Speaker 3: Moore knows it, crucially right, crucially huge testament to him
Speaker 3: and his vision. He read this read this paragraph from
Speaker 3: this article. He knows what this is going to mean.
Speaker 3: The grided circuits will lead to such wonders as home
Speaker 3: computers or at least terminals connected to a central computer,
Speaker 3: automatic controls for automobiles, and personal portable communications equipment. Wild
Speaker 3: science fiction, like nineteen sixty five. He's writing this, and
Speaker 3: he's right. He's one hundred percent correct.
Speaker 2: So this is the birth of Moore's law, which Moore
Speaker 2: himself did not call Moore's law, which is not a law,
Speaker 2: but which basically was right right in nineteen seventy five.
Speaker 2: Ten years later that year he was predicting out to
Speaker 2: He went and looked at how things were going. He
Speaker 2: was pretty close to right. He realized that progress was
Speaker 2: slowing down a little. He figured doubling two years or so,
Speaker 2: when of his colleagues was like, no, it's more like
Speaker 2: eighteen months.
Speaker 3: And so Moore's law was adapted. Right, that's what it became.
Speaker 2: It became the number of essentially transistors eventually on a
Speaker 2: chip doubles eighteen months. In fact, the rate of increase
Speaker 2: has started to slow in the past decade or so.
Speaker 3: It's reaching the limit of physics itself. Right, there's like
Speaker 3: you're at like weird quantum things are happening with the apps, right.
Speaker 3: Jansen Wong from Nvidia basically said Moore's law is dead.
Speaker 3: Maybe maybe not, but the key thing here is this
Speaker 3: doubling and doubling and doubling over many decades that more
Speaker 3: predicted from you know, sixty or so components on a
Speaker 3: chip to billions of transistors on today's chips. Like this
Speaker 3: was I think, clearly, right, certainly the most important business
Speaker 3: trend of the last hundred years. It enabled obviously the
Speaker 3: computing revolutions, cell phones, the Internet, AI like these key
Speaker 3: drivers of our world come out of Moore's law. And
Speaker 3: if you understood Moore's law, then you could predict what
Speaker 3: something could do in eighteen months, in three years, and
Speaker 3: five years and ten years. You could start to invent
Speaker 3: things that literally were not possible today, knowing that the
Speaker 3: chips will be there when you finish in a year
Speaker 3: or two. Yeah, you see smart entrepreneurs catching onto this
Speaker 3: and doing this like I mean, the example that comes
Speaker 3: to my mind is Netflix, right, which.
Speaker 2: Started out as DVDs by mail, which was a great service,
Speaker 2: but they did not call themselves DVDs by mail, even
Speaker 2: though when they started. Most people didn't have broadband streaming
Speaker 2: video was not a thing, but they knew that because
Speaker 2: of Moore's law, it was going to be a thing.
Speaker 2: They knew that would happen, and they planned around it,
Speaker 2: and it happened, and Gordon Moore basically saw it coming.
Speaker 2: But interestingly, around the time he wrote that famous piece,
Speaker 2: around nineteen sixty five, More and Noise or Golden Boy,
Speaker 2: we're starting to get restless again. You know, they're they're
Speaker 2: like they like to shake it up.
Speaker 3: These guys. They're fundamentally kind of nerd pirates, and they
Speaker 3: are about to make one more big move after the break.
Speaker 3: That was the break, and now we're back the story
Speaker 3: of Silicon Valley.
Speaker 2: So Sherman Fairchild at Fairchild Camera and instrument Remember our
Speaker 2: investor in Fairchild, he had exercised his option to buy
Speaker 2: Fairchild Semiconductor outright in nineteen fifty nine. Very shrewd Man,
Speaker 2: shrewd Man, Noise and Moore and the others kept working there.
Speaker 3: You know, they got some money. They kept working there,
Speaker 3: kept figuring out how to put more components on a chip,
Speaker 3: selling all they could make to NASA.
Speaker 2: And the military. But Noise and More start to get
Speaker 2: this feeling that would really become a classic feeling among
Speaker 2: Silicon Valley founders who have sold their companies. Right, they
Speaker 2: got a bunch of money, great, They weren't really in
Speaker 2: it for the money, right, Ye. What they wanted was
Speaker 2: to be doing big, important work. They wanted that feeling of,
Speaker 2: you know, being free out there on the technological frontier,
Speaker 2: like nerd cowboys.
Speaker 3: Yeah, inventing the chip is great. Putting more things on
Speaker 3: the chip is great, but then it's just scale. It's
Speaker 3: going from one hundred components to a thousand components to
Speaker 3: sixty five thousand, and even if that might be fun,
Speaker 3: if you're like doing it on your own, right, Yeah.
Speaker 3: The problem for them was they weren't right. They were
Speaker 3: no longer pirates, like you said, They were middle managers
Speaker 3: at a division of fair Child Camera. Right. They were
Speaker 3: going to be the next Bell Laps. Yeah. Yeah.
Speaker 2: Now now they're working for a company that makes movie
Speaker 2: cameras and stamp machines and they're like, hey, listen, we're
Speaker 2: going to give stock options to the engineers. And the
Speaker 2: company in New York is like, no, you're not. Why
Speaker 2: why yeah? Why?
Speaker 3: And they're like okay, but we'll at least we're going
Speaker 3: to take our profit and like put it back into development, right,
Speaker 3: because things are going so fast? Why your business you
Speaker 3: produce money for the investors. Yeah, Like the point is
Speaker 3: to make money for the shareholders. Just be quiet, keep
Speaker 3: begging chips and so so funny still in nineteen fifties
Speaker 3: view of what a business was.
Speaker 2: Yeah, that's right, this very kind of man in the
Speaker 2: grave flannel suit corporation and so noise and more. Don't
Speaker 2: like this. In nineteen sixty eight, they go back to
Speaker 2: Arthur rock, the banker who had helped them get set
Speaker 2: up with Fairchild about a decade earlier. And crucially, the
Speaker 2: world is really different now in large part because of
Speaker 2: the work that these guys have done. Right, Rock over
Speaker 2: this time had gotten into this idea of connecting East
Speaker 2: Coast capital with these you know, new companies out on
Speaker 2: the West Coast, and he'd kind of built on this
Speaker 2: old tradition that like old money East Coast families had
Speaker 2: where like with a little bit of the money on
Speaker 2: the side, they would sort of play around with that
Speaker 2: They called adventure capital.
Speaker 3: Adventure capital, Yes, right, it says a little too. Could
Speaker 3: you just tighten that up a little bit a little bit, right.
Speaker 3: So you know around this time, Rock and a few
Speaker 3: other finance types are creating venture capital. Right, this is happening.
Speaker 2: It's going from being a rich man's hobby into a
Speaker 2: more formal part of the financial system. And so remember
Speaker 2: the first time Noise and More went to Rock, it
Speaker 2: took him months to find the money. And in part well,
Speaker 2: obviously in part because Noise and More way more legit
Speaker 2: now and they've made the success at Parchil, but also
Speaker 2: because finance and capital allocation has developed and venture capital
Speaker 2: is becoming a thing. Instead of two months, this time,
Speaker 2: he raises the money in two days. And remember this
Speaker 2: is nineteen sixty eight, right, So the entire culture of
Speaker 2: the United States has sort of shifted to the West coast,
Speaker 2: not just in terms of technology, but in terms of
Speaker 2: music and fashion and lifestyle, right, and there's this excitement
Speaker 2: out there. Finally it's not just farm fields. It's people
Speaker 2: doing amazing, weird stuff.
Speaker 3: And I picture these you know, stuffy rich people on
Speaker 3: the East Coast going hmmm, how do we get a
Speaker 3: little been involved in what the what the kids are
Speaker 3: doing out there on the coast.
Speaker 2: So that's why they raise the money in two days
Speaker 2: this time, and you know, the core idea is still
Speaker 2: this breakthrough that they've had at Fairchild. Right, it is
Speaker 2: the integrated circuit. It is integrated electronics.
Speaker 3: They know this is going to be huge, and so
Speaker 3: they're founding their company.
Speaker 2: It's nineteen sixty eight and they're like, what if we
Speaker 2: call it integrated electronics?
Speaker 3: Very nice, very little, nerdy, little long do it Intel? Intel? Beautiful?
Speaker 3: So they create Intel, right, they create Intel, and now
Speaker 3: crucially this time, there's no East Coast camera company that
Speaker 3: can tell noise and more. What to do now they
Speaker 3: can build this engineer's paradise they've been dreaming of, and
Speaker 3: they do.
Speaker 2: They build a company where all the engineers get stock options,
Speaker 2: where it's very non hierarchical, right, no reserve parking spaces,
Speaker 2: no fancy officers for the boss.
Speaker 3: Everybody has the same plain gray aluminum desks. And remind you,
Speaker 3: this is fifty five years ago, and all the pieces
Speaker 3: are in place. Yes, all the things that we've think
Speaker 3: of now as cutting edge Silicon valley culture, the people
Speaker 3: going out there now to do AI, right, yeah, fifty
Speaker 3: five years ago that's when this got solidified, Yes, and
Speaker 3: it worked. Right.
Speaker 2: They were like let's build this company, let's make it
Speaker 2: centered on engineers, and let's have everybody come in every
Speaker 2: day and try and invent the future. And they succeed right,
Speaker 2: very quickly. They have a new technological breakthrough that propels
Speaker 2: them ahead, and Intel remains the dominant chip maker in
Speaker 2: the world for decades to come. And interestingly, it's not
Speaker 2: just Noise and more. Other members of that original Tradorus
Speaker 2: eight also continued to be these kind of restless pirate types.
Speaker 2: People actually talk about fair Children companies that came out
Speaker 2: of fair Child.
Speaker 3: Yeah.
Speaker 2: One of them started AMD which today is also one
Speaker 2: of the biggest chip companies in the world.
Speaker 3: And they didn't just start companies. They also, because they
Speaker 3: made money, became the money people themselves. Yeah. Yeah. Eugene Kleiner,
Speaker 3: the guy who called his dad's stockbroker.
Speaker 2: When they were originally looking for money. He started a
Speaker 2: venture capital fund called Kleiner Perkins, which you've probably heard
Speaker 2: of because it funded companies like Netscape and Google and Slack,
Speaker 2: meaning that you know, these original guys, they didn't just
Speaker 2: start this company. They didn't just create the model. They
Speaker 2: actually brought the money to fund generations of people who
Speaker 2: were restless who wanted to go out on their own
Speaker 2: and try a new thing.
Speaker 3: Yeah, if you were a golden boy in the last
Speaker 3: fifty five years, you did not have to work in
Speaker 3: Philadelphia for an electronics firm. You didn't have to wait
Speaker 3: for the phone call from anyone, even God, because you
Speaker 3: knew there was a place that respected your genius and
Speaker 3: ambition and restlessness right and that would overlook whatever personal
Speaker 3: flaws you might have. There was a place that was
Speaker 3: on the edge of everything, and it was called Silicon Valley,
Speaker 3: and you could just go there and make your fortune.
Speaker 3: Next week on Business History, one more guy from Fairchild
Speaker 3: was the head of sales starts his own VC firm,
Speaker 3: and his very first investment is in a company full
Speaker 3: of stoners that's doing business out of an abandoned roller rink.
Speaker 3: It's like the Apricot Shed of the seventies.
Speaker 2: That company is Atari, and it's the story of the
Speaker 2: birth of the video game industry.
Speaker 3: Our producer is Gabriel Hunter Chang, our engineer is Sarah Bruguier,
Speaker 3: and our showrunner is Ryan Dilly. I'm Jacob Goldstein and
Speaker 3: I'm Robert Smith. We'll be back next week with another
Speaker 3: episode of Business History. A show about the history wait
Speaker 3: for it, of business.