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  At the company’s headquarters at the heart of the Stanford Research Park, employees and shirtsleeved executives ate lunch together on the building’s sun-drenched patio. They played volleyball and horseshoes on the lawn out back, and spent off-work hours socializing together with their wives. Although this was a high-water mark of worker unionization in the U.S., Hewlett and Packard had about as much patience for card-carrying union members as they did for three-piece suits and corner offices. Instead, to build loyalty and camaraderie, HP gave out stock.

  After HP went public in November 1957, fortunes rose along with its share price. Yet from the start, the two founders consciously presented their firm as a business concerned with higher and better things. “I think many people assume, wrongly, that a company exists simply to make money,” Packard once told HP managers. “While this is an important result of a company’s existence, we have to go deeper to find the real reasons for our being.” Nonhierarchical, friendly, a change-the-world ethos paired with an unflagging focus on market growth and the bottom line—HP created the blueprint for generations of Silicon Valley companies to come.7

  HP’s founders really were about more than just business. As his company grew, Dave Packard became one of the area’s most important civic leaders, including a stint leading Stanford’s Board of Trustees. A staunch Republican and champion of free markets and entrepreneurial public policy, Packard had sharp political instincts to match his ideological convictions. A friend to one generation of politicians and mentor and donor to the next, he leveraged his business reputation to become a de facto Silicon Valley brand ambassador in the world of politics. And Packard may have been a free-enterprise man, but he was keenly attuned to how the tech industry’s relationship with Washington shaped its fortunes.8

  Like his mentor Fred Terman, Dave Packard’s political education began during World War II, when he had rallied fellow executives to form the West Coast Electronics Manufacturers Association, known as WEMA, which successfully lobbied for a chunk of wartime military contracts. As electronics companies flocked to the Valley in the 1950s, Packard became the region’s booster-in-chief, traversing a speaking circuit that ranged from national conferences to local Rotary breakfasts. In any venue, he made sure to point out what set the West Coast industry apart from the rest. It was fine for the Eastern electronics companies to have the lock on radio and television production, he told one audience. “The West Coast attraction has been . . . the technical and scientific aspects of the business,” and that was where true growth and innovation came from.9

  Packard also used the rubber-chicken circuit to talk politics. By the early 1960s, Packard had become an outspoken critic of the activist, expansive liberalism that was having its heyday in Kennedy’s Washington. “Socialists in our government—and among our people—would place the importance of the state above the importance of the individual,” Packard warned an audience in his hometown of Pueblo, Colorado, in April 1963. “They would direct our lives from Washington! They would take our wealth and distribute it as they see fit!” The way to protect individual liberties, in Packard’s telling, was to unfetter markets from burdensome taxes and regulation. Lyndon Johnson’s Great Society made things even worse. “Once social welfare becomes a government monopoly—as it is rapidly becoming—it is only a matter of time before we see it requires only another series of steps to put business under government monopoly,” he lamented to a Palo Alto audience in 1965.10

  Packard was not alone in articulating these views. Other postwar businessmen, especially those from the booming precincts of the Sunbelt, were becoming particularly vocal about their free-market beliefs and starting to donate generously to conservative candidates and causes. An ideological godfather to this movement—and someone that Packard had come to know very well—was ex-president and Stanford alumnus Herbert Hoover, who made the campus his home for the final three decades of his life. Hoover, too, was a fierce critic of the liberalism afoot in Washington, the original anti–New Dealer whose conservative views had solidified into strong anticommunism as the Cold War commenced. In 1959, he turned his namesake Hoover Institution from a modest foreign-policy research institute into a powerful, sharply opinionated think tank. Packard chaired Stanford’s Board of Trustees at the time, bestowing the institutional seal of approval permitting this transformation.11

  Hoover’s new chapter opened with a bang. “The purpose of this institution,” the former president wrote in the institution’s newly revised charter, “must be, by its research and publications, to demonstrate the evils of the doctrines of Karl Marx.” To keep “left-wingers” from taking control, Hoover personally selected the institution’s new director, a thirty-five-year-old economist named W. Glenn Campbell.

  Protests from the faculty ensued almost immediately—Fred Terman was entering into unholy alliances with industry, and now Herbert Hoover was playing politics?—but Hoover, with Packard’s assist, prevailed. The institute would remain independent from the rest of Stanford, and Campbell would report directly to President Sterling. Campbell proved to be exactly the man the institution needed. Over a close to thirty-year tenure as its leader, he turned the Hoover Institution into a powerhouse with a massive endowment and a reputation as the nation’s premier conservative think tank.12

  Thus, at the same time that Fred Terman was turning the Farm into the nation’s most entrepreneurial technical university, Glenn Campbell was making the campus home to an all-star roster of conservative thinkers and politicians—undeterred by the periodic angst they stirred up in the more liberal campus precincts surrounding Hoover Tower. In the decades to come, Packard became one of the Hoover Institution’s most faithful and generous donors.

  Meanwhile, Dave Packard continued to nurture WEMA and its growing member base of young California-based electronics companies. The industry was so new that more seasoned folk didn’t have qualms about helping newcomers. “Executives felt free to reveal inside information about getting started, or how to grow a company,” recalled one entrepreneur. While still ferocious competitors, the Westerners knew they were underdogs who’d fare better if they stuck together rather than going it alone.13

  LIFTOFF

  Despite Northern California’s later legendary reputation for growing start-ups, locally born companies like HP and Varian were a small piece of the region’s story in the 1950s. Company founders and entrepreneurs had not reached the mythical, kingly status they would one day attain in the Valley. Those that went out on their own were outliers.

  Burt McMurtry saw this firsthand. “If you were starting a company,” he observed, “it probably meant that you were odd and couldn’t work for people.” The most visible, interesting, and prestigious places to work were large national firms. They had the money and clout to recruit top-notch staff, build out top-end facilities, and secure the largest defense contracts. The majority of the engineers in the Valley worked for companies that already comfortably rested in the Fortune 500.14

  The two biggest of these players—and shapers of what the Valley would become—were Lockheed and IBM. Big Blue opened a Northern California electronics research laboratory in 1952. Father and son CEOs Thomas Watson Sr. and Jr. were beginning their major push into digital computing and were having little luck persuading California-based engineers to return to upstate New York snowdrifts. After five years in a modest building in downtown San Jose, IBM built a lavish new manufacturing facility that won one trade magazine’s 1957 “Factory of the Year” award for its “carefully cultivated ‘campus’ atmosphere.” San Jose Mercury columnist Frank Freeman raved that the IBM plant was “so different from the usual pell-mell workaday experiences that it’s like being in another world, a sort of Buck Rogers’ world . . . peopled by young brains, no long hairs.”15

  However, the real Buck Rogers action happened at the local branch of another national company, a facility closed off to casual visitors because of the top secret nature of most of its operations. Rig
ht along the freeway, next door to the looming government airship hangar at Moffett Field, sprawled a giant plant that was the Valley’s largest high-tech employer for decades: Lockheed Missiles and Space Company. Here’s where the Cold War economy of the region had its beating heart.

  Lockheed had come up from Southern California to open up shop in Sunnyvale in 1954, drawn by a desire to be close to Stanford’s electronics experts and the high-speed aerodynamics research going on at NACA’s Ames Aeronautical Laboratory. Lockheed soon became one of the most stalwart and eager of Fred Terman’s industrial affiliates. Another reason for the move: security. With a nation on high alert at the possibility of Soviet bombs raining down from the sky, the Defense Department encouraged its contractors to locate in “dispersed” areas away from major population centers that, presumably, would be ground zero for attack. For Lockheed, it also made sense not to have all of its many sensitive military operations located at its Southern California headquarters. The Missiles and Space division moved north. Thus properly dispersed, the company soon landed the prime contract from the Air Force for a new missile-launched satellite.16

  The next year, the company won another huge contract, for the Polaris, one of five giant, long-range ballistic missiles that made up an extraordinary federal push to find ways to zoom ever-more-powerful nuclear weapons halfway across the planet. They were among the highest of high tech at the time, marrying two technologies of World War II—the atomic bomb and the German V-2 rocket—into a deadly and powerful delivery system. By the spring of 1957, the missile program was entering its first flight-test phase, and was already estimated to cost two times the price of the entire Manhattan Project. One Stanford researcher confidently predicted that the missile program would result in “the greatest explosion of scientific devices” in history. He wasn’t that far off the mark.17

  In addition to bringing big-ticket government contracts to the Santa Clara Valley, Lockheed brought people, people, and more people. By the end of the 1950s, tens of thousands of engineers streamed daily into Lockheed’s doors in their white shirts and narrow ties, working on cutting-edge technologies so top secret that they couldn’t tell their families over the dinner table what they did at work that day. Nearby suburbs filled with Lockheed men and their wives and children, further skewing the Valley’s demographics toward the white, the middle class, and the college educated.

  Plenty of blue-collar workers found jobs in Sunnyvale as well; like the other electronics firms of the era, Lockheed had assembly lines alongside its research labs. But the lack of diversity carried through even in jobs that didn’t require an engineering degree. In an era before affirmative action, Lockheed and the other major electronics firms of the Valley had no pressure to recruit minority or female employees. Even after the enactment of federal minority hiring laws that required contractors like Lockheed to meet certain hiring targets, the percentage of Latino, Asian, and black workers at its Sunnyvale facility only reached 10 percent. More than 85 percent of its workforce was male.18

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  The missile maker, the entrepreneurial university, the distinctive business sensibility, the professional networks, the government money, the elite (and homogeneous) workforce: many of the key ingredients were coming together in Palo Alto by the middle of the 1950s. Some people were also starting to make considerable amounts of money, as the Valley’s first generation of tech stars—Varian, HP, Ampex—had splashy public debuts on Wall Street.

  But HP and other early electronics firms were not computer companies. The Valley made instrumentation and communication components—oscillators, high-frequency radar, magnetic tape—not digital hardware and software. Its biggest tech employers had corporate headquarters elsewhere. Over time, Lockheed would subcontract out a good deal of its work, driving business to other, smaller Valley companies, but in the 1950s it was a mostly closed world.19

  In many respects, mid-1950s Santa Clara Valley was merely a smaller-scale Los Angeles, home to aerospace companies, light manufacturing, and some smart academic scientists. While California was gaining a reputation for being an excellent place to hire an electrical engineer, it didn’t offer much in terms of capital and operational support for those who wanted to strike out on their own and start a new company. To do that, you really needed to return east, to the place most tightly connected into the Cold War research machine: postwar America’s first start-up capital, Boston.

  For Boston had MIT, which continued to rake in more federal money than any other university, and which had strong ties to Pentagon brass and the largest East Coast electronics incumbents. MIT’s famous Rad Lab had disbanded after the war, but spectacularly innovative military-funded laboratories had risen in its stead: MIT’s Lincoln Laboratory, home to high-powered digital computing, and Instrumentation Lab, which designed guidance systems for rockets and missiles; the Air Force Cambridge Research Laboratories, devoted to radar defense. Down the way was Harvard, the second-largest recipient of federal dollars, boasting an ivied intellectual pedigree and a large stable of faculty stars, including the imperious and mesmerizing father of high-tech venture capital, Georges Doriot.

  Lockheed Missiles and Space might rule the Valley, but Boston had Vannevar Bush’s Raytheon, now one of the nation’s most important defense and aerospace contractors, and plenty of others. In the New England countryside encircling Boston’s metropolitan fringe ran “America’s Technology Highway,” Route 128, and a string of modern research parks and corporate campuses that lured electronics firms out of grubby Cambridge and into the sprawling suburbs.

  Yet even for all its power and might, Boston, too, was missing a key ingredient, something that David Morgenthaler later characterized as the ultimate “enabler,” a cheap and potent “fuel” to propel electronics in the same way that refined oil propelled the auto industry. It was the magic something that could make already sophisticated electronics even faster and smaller, something that could scale up the Cold War’s “products of the intellect” to market-disrupting proportions.

  That something was the silicon transistor.

  SHOCKLEY & CO.

  In the same busy summer of 1957 that Burt McMurtry prepped for his cross-country move, Stanford’s chair of electrical engineering dispatched another young Texan to a one-year-old start-up in a refurbished Quonset hut next to a suburban Sears store in neighboring Mountain View. The company was Shockley Semiconductor Laboratory, and the man detailed there was a brand-new professor named James Gibbons. Born and raised in Texarkana (he and future computer magnate and presidential candidate H. Ross Perot were high school classmates), and attending MIT before going on to graduate study at Stanford, Jim Gibbons had recently returned to his graduate alma mater after a prestigious research fellowship in England. His job offer came with one condition: that he spend the first six months embedded at Shockley, the hottest new firm in town. Gibbons’s marching orders were to learn about semiconductor manufacturing from the company so that Stanford could “transistorize the curriculum” and build a solid-state electronics lab of its own.20

  The young assistant professor arrived to find a firm filled with some of the brightest engineers in town. But the shop was already becoming a toxic workplace, thanks to its brilliant and mercurial founder, Palo Alto native and co-inventor of the transistor, William Shockley.

  Shockley had departed the nation’s premier industrial research facility, Bell Laboratories, after becoming convinced that germanium (the material used for the first generation of transistor technology) was too weak and unreliable to power the tiny switches at the heart of electronic circuitry. Instead, he set out to commercialize transistors made with purer, stronger silicon. Unmarried and untethered, Shockley considered Southern California as a possible location, but ultimately decided to come home. His much-beloved elderly mother was unwell. Plus, his fellow hometown boy Fred Terman was making a pretty persuasive case that Palo Alto—and Stanford—would be a fitting d
estination.21

  While brilliant, Shockley had an eccentricity that was sometimes charming (he loved playing magic tricks with his staff) and sometimes difficult (he made all prospective hires take a battery of IQ tests and brain teasers). Tellingly, he had been unable to lure anyone who’d worked with him at Bell Labs to join him in the sunshine. So he recruited a group of young stars from other industrial labs and universities, a group mostly from modest backgrounds, whose greatest pedigree was their technical talent. One, Robert Noyce, was the son of an Iowa clergyman. Another, Jay Last, came from a family of Pennsylvania schoolteachers. A third, Eugene Kleiner, arrived in the U.S. as a teenage refugee from war-torn Europe. Only one was actually from Northern California, the shy and detail-obsessed Gordon Moore, who had grown up in a modest clapboard cottage in nearby Menlo Park.22

  The young recruits quickly concluded that Shockley was going about building his semiconductors in a wrong-headed way. He was committed to an expensive and laborious process called the four-layer diode, and refused to be persuaded that cheaper, simpler silicon chips were the way to go. Jim Gibbons showed up at the storefront just weeks before these Shockley lieutenants—Noyce, Last, Moore, Kleiner, plus four others—quit to start a company of their own called Fairchild Semiconductor, which quickly surpassed and outlasted Shockley’s operation. Before they went out the door, they invited the young professor to join them. He said no. “It was probably the most expensive decision I ever made,” Gibbons said later.23