Article: Silicon Valley--Success, Failure, and a Bit of Luck :: Smithsonian Lemelson Center
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Amanda Murray, Lemelson Center Project Specialist
The Altair 8800 personal computer kit, designed around the Intel 8080 chip and manufactured by a small firm in New Mexico. The first microcomputer to sell in large numbers, the Altair helped launch a new industry. Smithsonian image 88-19284

Clusters, hot spots, hubs--the names vary, but they exist around the world: geographical concentrations of people, institutions, and resources that leverage regional strengths to support innovation. Perhaps the most emulated high-tech hot spot is Silicon Valley.

Ethernet inventor Robert Metcalfe wrote in 1998 that "Silicon Valley is the only place on earth not trying to figure out how to become Silicon Valley." It has proven to be a tough region to replicate. While the entrepreneurial spirit, groundbreaking ideas, and technical dexterity of the Valley's pioneers cannot be underestimated, technology writer Michael Malone points out that "[T]he real strength of the valley lies in its embrace of failure. Not stupid failure but noble failure--the mistake that teaches you something about the business, the market, the technology or, most of all, about yourself. The simple fact is that 90 percent of all Valley startups die. Thus, were failure stigmatized here, the valley would disappear almost overnight." A look at a few of Silicon Valley's origin stories illustrates how instances of failure, success, and serendipity, as well as crucial attitudes toward those factors, turned a valley of peach groves into a synonym for invention.

Frederick Terman grew up in Palo Alto and studied electrical ("radio") engineering at Stanford. He moved across the country for graduate work and completed his doctorate at MIT. Terman accepted a faculty position there in 1924, but during a visit home, he contracted tuberculosis and ended up back at Stanford so the California climate might sustain his recovery. 

Among Terman's students at Stanford were David Packard and William Hewlett. When they graduated in 1934, both men moved east. To lure back his protégés, Terman secured engineering fellowships for them at Stanford. When Hewlett and Packard returned and set up shop in their now-iconic garage, Terman provided a loan to help kickstart their audio oscillators manufacturing business.

Terman's influence stretched beyond mentoring Hewlett and Packard. In 1951, Stanford's administrators, keen to capitalize on the university's vacant land, created the country's first high-technology industrial park. Terman urged the university to structure the Stanford Industrial Park as a bridge between university researchers and local businesspeople. When Hewlett-Packard leased space in the Park in 1954, General Electric, Eastman Kodak, Lockheed Martin, and dozens of other firms followed suit. The Park became a model for similar parks worldwide.

In the next phase of the Valley's evolution as a place of invention, a critical mass of innovative companies crystallized, combining entrepreneurial spirit, expertise, and a willingness to exchange information. Adaptive attitudes toward failure and chance also played a role.

In 1956, Bell Labs physicist William Shockley set out to capitalize on the invention that earned him and his Bell Labs colleagues John Bardeen and Walter Brattain the Nobel Prize in Physics that year. The transistor, with its ability to act as both a switch and an amplifier, would replace vacuum tubes and become a fundamental component of modern electronics. Shockley moved to California and founded Shockley Semiconductor Laboratory to develop new types of transistors and other semiconductor devices. Why did he choose California? To be closer to his mother. Shockley grew up there, and his mother still lived in Palo Alto.

Intel co-founders (left to right) Andrew Grove, Robert Noyce, and Gordon Moore. Courtesy of the Intel Museum

Shockley quickly recruited some of the brightest minds in the field, including Gordon Moore and Robert Noyce. But Shockley was not "management material." As historian Leslie Berlin pointed out during the Lemelson Center's "Hot Spots of Invention" symposium in 2009, "Shockley had them take psychological tests to ensure that they could work well together, which they could ... [but he] failed to test them to see if they could work with him." Gordon Moore, future co-founder of Intel, recalled, "[Shockley] developed traits that we came to view as paranoid. He suspected that members of his staff were purposely trying to undermine the project and prohibited them from access to some of the work."

Had Shockley been a better boss he might not have catalyzed, as Gordon Moore characterized it, "one of the most spectacular and successful industry expansions in history," forged by scientists who, in a radical move, left his company and formed their own. Among them, Noyce went on to have an enormous influence on Silicon Valley. He co-invented the integrated circuit, or microchip, and co-founded Fairchild Semiconductor and later Intel. Fairchild especially became a breeding ground for scores of spin-off companies and would prove to be "one of the greatest concentrations of talent that the Bay Area has ever seen." [1]

Whereas Shockley hindered collaboration, Noyce nurtured it. Berlin says, "Noyce always worked in groups. He did his best work in collaboration with other people. He never started a company alone and his best inventive ideas came through collaboration with other people." [2] Noyce's relaxed style and his encouragement of new ideas set the tone for the Valley's start-up culture.

Fairchild benefited from being in the right place at the right time. Its founders entered the Bay Area electronics industry as California's population was exploding after World War II, creating an enormous pool of talent. (Immigration to the region remains crucial to the Valley's persistence.) Furthermore, with the "space race" heating up, the federal government spent unprecedented amounts of money on electronic systems for defense purposes, and became the primary customer for Fairchild's early integrated circuits. 

Like Fairchild's founders, personal-computing pioneer Steve Wozniak was also in the right place at the right time, and forged success out of failure. Growing up in Silicon Valley, where his father worked for Lockheed, Wozniak tinkered tirelessly, recovering from small mistakes and applying a new understanding to his next attempt. "With any idea I have," he explained, "I'll go through and work it out, work it out." [3] Where some would see failure, Wozniak saw incremental invention.

One forum for Wozniak's inventive activity as an adult was the Homebrew Computer Club, founded in 1975 in a Menlo Park garage by electronics hobbyists galvanized around the new Altair 8800 personal computer kit. The Altair looked like a box with blinking lights, but it gave the first glimmer of what a personal computer might be, at a time when most computers were enormous, expensive, and inaccessible to the average individual.

Homebrew soon outgrew the garage and met in a Stanford auditorium, where engineers, hobbyists, entrepreneurs, activists, and social scientists gathered to share information, buy and trade electronics parts, and even form companies. Engineer, inventor, and long-time "master of ceremonies" for Homebrew meetings Lee Felsenstein has said of the motley membership, "We saw ourselves as crazed ignored geniuses, or possibly geniuses, but at least we could each hope to get our hands on a computer of our own." Engineer and entrepreneur Len Shustek recalled the Homebrew meetings: "We sort of all united around this neat technology. There was this notion that we could do things, and we ought to be able to do things, that big companies could." [4]

This January 1975 Popular Electronics announcement helped launch the personal computing industry. Courtesy of DigiBarn Computer Museum and Stan Veit

Homebrew was not unique. Spurred by the Altair, dozens of computer hobbyist clubs sprouted all over the country. Homebrew had a significant influence on the computing industry, though, and this had much to do with its locale, amid a high concentration of skilled people who believed the personal computer's time had come.

Furthermore, much of Homebrew's success derived, ironically, from its rather anarchic structure. Lee Felsenstein said, "What made [Homebrew] pivotal was its lack of organization. The Southern California Computer Society of Los Angeles was highly organized. It immediately became a hot bed of politics and basically they never did anything and they destroyed themselves." [5]

The openness of Homebrew created a safe place to take risks and try out ideas. As Shustek remarked, "How did Steve Wozniak and Steve Jobs know they were going to succeed? The answer is they didn't. Back at the Homebrew Club there were plenty of people who set up card tables who showed stuff. I would say 90% of them went nowhere. They didn't make a company. They never built a product. They were just showing off what they had built in the garage." [6] Steve Wozniak agreed: "The Apple I and II were designed strictly on a hobby, for-fun basis.... There was a lot of showing off to other members of the [Homebrew] club."

When Wozniak and his friend Steve Jobs went into business together in 1976, working out of another, now-fabled garage, they carried this attitude with them. Their company was not immune to failure; in 1982, Jobs made light of the disastrous launch of the Apple III, released too soon and rife with technical problems, by stating, "One of Apple's greatest assets is having made more mistakes than anyone else in the industry." [7]

Mistakes and failures, mixed with successes and a bit of luck, and topped off with flexible attitudes toward the unexpected, are essential to progress. And they are essential to what makes Silicon Valley an inimitable place of invention.

Notes:

[1] Leslie Berlin, Project Historian, Silicon Valley Archives, Stanford University, "Robert Noyce and Silicon Valley Innovation," New Perspectives on Invention and Innovation symposium, "Hot Spots of Invention," 2009. Transcript.

[2] Ibid.

[3] Kenneth Brown, Inventors at Work: Interviews with 16 Notable American Inventors (Redmond, Wash.: Microsoft Press, 1988), p. 232.

[4] Interview with Len Shustek, conducted by Amanda Murray at Computer History Museum, Mountain View, Calif., June 2009.

[5] Interview with Lee Felsenstein, conducted by Amanda Murray at LO*OP Center, Milpitas, Calif., June 2009.

[6] Shustek interview.

[7] Judith Larsen and Everett Rogers, Silicon Valley Fever: Growth of High Technology Culture (New York: Basic Books, 1986), p. 21.

From Prototype, June 2010

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