Silicon Valley – How Success Built Success in the Technology Hub

This article was originally posted at http://mse238blog.stanford.edu/ as an assignment for course MS&E 238 at Stanford University 2017.

Silicon Valley hasn’t always been a software hub, but started to grow as the mainframe era of IT rose.

Russia launched Sputnik 1 in 1957 and America lost the space race and were more ready than ever to fund the resources to beat them. NASA was established in 1958, and one of the three research facilities set up was Ames Research Center, which is still located in Mountain View, California. As NASA was in need of different high-tech components, the innovation in the area was growing and a company named Bell Laboratories were doing research on transistors and semiconductors at this time.

Aerial photo of Ames Research Center

At Bell Labs in 1947, a man named William Shockley co-invented the first transistor that could be commercially practical. And together with his two colleagues, he would in 1956 be awarded the Nobel Prize in physics for this invention. Shockley later left Bell Labs to start his own semiconductor company, located in Mountain View, called Shockley Semiconductor Labs. Shockley Semiconductor Labs was the first company to manufacture semiconductors by silicon instead of germanium, which inspired the name Silicon Valley.  But Shockley Semiconductor Labs is more widely known for employing the “Traitorous Eight” (image on top).

The “Traitorous Eight” were a group of eight engineers; Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce and Sheldon Roberts, tired of Shockley, who wrote a letter to an investment bank in New York where a man named Arthur Rock worked as an investment banker. The Traitorous Eight knew they would be more valuable to an employer as a group and so they looked for a job together. Rock realized these men would be able to create even more value by starting their own business, and introduced them to Sherman Fairchild, and Fairchild Semiconductor was founded.

These eight engineers later quit Fairchild and founded companies that became the foundation for Silicon Valley, such as Intel (Moore & Noyce), Kleiner Perkins (Kleiner), Teledyne (Last & Hoerni) and XICOR (Blank).

A study published in 2013 by the research organization The Ewing Marion Kauffman Foundation, explains that the success of the Valley today is largely thanks to the companies that came before. Clifford (Entrepreneur, 2013) says that this paper shows “that a high density of technology startups is most directly sourced back to the number of existing companies in that region. Universities help, to be sure, but they are not the leading indicator.”

Jack Dorsey, founder of Twitter and Mark Zuckerberg, founder of Facebook

Today, we look up to the entrepreneurs of the century, such as Mark Zuckerberg and Jack Dorsey but we easily forget that we have a lot to thank Shockley, Fairchild and especially The Traitorous Eight for the ecosystem that we have today. Without the high concentration of high technology companies in Silicon Valley, it wouldn’t be as successful as it is today.

 

If you want to learn more about Silicon Valley and its history, I recommend watching the documentary Something Ventured (2011). 

 

Sources:

Protin, C., Stuart, M. and Weinberger, M. (2017) Animated timeline shows how Silicon Valley became a $2.8 trillion neighborhood. Business Insider, http://www.businessinsider.com/silicon-valley-history-technology-industry-animated-timeline-video-2017-5

Haroun, C. (2014) A Brief History of Silicon Valley, the Region That Revolutionizes How We Do Everything. Entrepreneur.com, https://www.entrepreneur.com/article/240534

Clifford, C. (2013) What Makes Silicon Valley Successful? Not What You Think. Entrepreneur.com, https://www.entrepreneur.com/article/228190

Nichols, S. (2015) Remember Fairchild? It’s still around, and worth $2.4bn in takeover cash. The Register, https://www.theregister.co.uk/2015/11/19/fairchild_sells_for_2bn/

Something Ventured, 2011. [DVD] Daniel Geller, Dayna Goldfine, USA: Miralan Productions, Geller/Goldfine Productions.

Leave a comment

E-postadressen publiceras inte. Obligatoriska fält är märkta *