The Secret History of Silicon Valley Part V: The Second 100 years

When the legend becomes fact, print the legend.
The Man Who Shot Liberty Valance

I always had been curious about how Silicon Valley, a place I had lived and worked in, came to be.  And throughout my career as an entrepreneur I kept asking questions of my VC investors and friends; Where did the valleys entrepreneurship culture come from?  How did Silicon Valley start? Why here?  Why now? How did this culture of “make it happen” emerge, etc.  And the answer came back much as it did in my past jobs; Who cares, get back to work.

After I retired, and before I started teaching at Stanford, Jerry Engel, director of the Lester Center on Entrepreneurship, at U.C. Berkeley Haas Business School was courageous enough to give me a forum teach the Customer Development Methodology. As I was researching my class text, I thought it would be simple enough to read up on a few histories of the valley and finally get my questions about the genesis of entrepreneurship answered.

The Legend: HP, Intel and Apple
I read all the popular books about the valley and they all told a variant of the same story; “entrepreneurs as heroes” building the Semiconductor and Personal Computer companies: Bill Hewlett and David Packard at HP, Bob Taylor and the team at Xerox PARC, Steve Jobs and Wozniak at Apple, Gordon Moore and Bob Noyce at Intel, etc.  These were inspiring stories, but I realized that, no surprise, the popular press were writing books that had mass appeal. They were all fun reads about plucky entrepreneurs who start from nothing and against all odds, build a successful company.


But no one was writing about where the entrepreneurial culture had come from.  Where were the books explaining why were all these chip and computer companies started here?  Why not elsewhere in the country or the world?  With the exception of one great book, no one was writing about our regional advantage. Was it because entrepreneurs keep moving forward and rarely look back? I needed to dig deeper.

The Facts: Vacuum Tube Valley – Our 100th Anniversary
To my surprise, I discovered that yes, Silicon Valley did start in a garage in Palo Alto, but it didn’t start in the Hewlett Packard garage. The first electronics company in Silicon Valley was Federal Telegraph, a vaccum tube company started in 1909 in Palo Alto as Poulsen Wireless.  (The 100th anniversary of Silicon Valley in 2009 went unnoticed and unmentioned by anyone.)  By 1912, Lee Deforest working at Federal Telegraph would invent the Triode, (a tube amplifier) and would go on to become the Steve Jobs of his day – visionary, charismatic and controversial.

* Federal Telegraph and Lee Deforest in Palo Alto are the first major events in what would become Silicon Valley. We need to reset our Silicon Valley birthday calendars to here.

By 1937, when Bill Hewlett and David Packard left Stanford to start HP, the agricultural fields outside of Stanford had already become “Vacuum Tube Valley.” HP was a supplier of electronic test equipment and joined a small but  thriving valley electronics industry with companies like Litton and Eitel and McCollough.

* By the late 1930’s when HP started, a small group (measured in hundreds) of engineers who made radio tubes were building the valleys’ ecosystem for electronics manufacturing, product engineering and technology management.

Who would have known?

Microwave Valley – the 1950’s and ’60’s
There isn’t much written about Silicon Valley during and after World War II.  The story of the valley post war, through the 1950’s, is mostly about the growth of the tube companies and the rise of Hewlett Packard and the birth of Fairchild.  The popular literature has the valley springing to life in the 1960’s with the semiconductor revolution started by Shockley, Fairchild, Signetics, National and Intel, followed by the emergence of the personal computer in the mid 1970’s.

But the more I read, the more I realized that the public history’s of the valley in the 1950’s and ’60’s were incomplete and just plain wrong. The truth was that huge dollars were spent on a large number of companies that never made the press or into the history books. Companies specializing in components and systems that operated in the microwave portion of the electromagnetic spectrum sprouted faster than fruit trees in the valley orchards. In ten years, from the early 1950’s to the early 1960’s, the valley went through a hiring frenzy as jobs in microwave companies went from 700 to 7,000.

This wave of 1950’s/’60’s startups (Watkins-Johnson, Varian, Huggins Labs, MEC, Stewart Engineering, etc.) were making  dizzying array of new microwave componentspower grid tubesklystrons, magnetrons,  backward wave oscillators, traveling wave tubes (TWT’s), cross-field amplifiers, gyrotrons, and on, on…  And literally across the valley, these microwave devices were being built into complete systems for the U.S. military by other new startups;  Sylvania Electronics Defense Laboratory, Granger Associates, Philco, Dalmo Victor, ESL (my first startup in the valley) and Argosystems. In the 1950’s and ’60’s more money was pouring into these companies than on the fledgling chip and computer companies.

* The 10x expansion in the number of engineers in the valley in the 1950’s came from the military and microwaves – before the semiconductor boom. And these microwave engineers were working at startups – not large companies. You never heard of them because their customers were the department of defense, the intelligence community and most often their devices were embedded in classified systems.

When I read the funny names of these microwaves devices… Backward wave oscillators, TWT’s, Magnetrons…long silent memories came back. These components were the heart of the electronic warfare equipment I had worked on; including Wild Weasels and fighter planes in Thailand and on B-52 bombers.  After decades, the story started coming home for me.

The Revolution Wasn’t Televised
What the heck happened here to create this burst of innovation?  What created this microwave startup culture in the 1950’s? And since there was no Venture Capital in the 1950’s/’60’s where was the money coming from?  This startup boom seemed to come out of nowhere.  Why was it occurring here?  And why on earth the sudden military interest in microwaves?


Part of the answer was that these companies and the military had forged some type of relationship.  And it appeared that Stanford University’s engineering department was in middle of all this. The formation of the military/industrial/university relationships during the Cold War and the relationship between Stanford and the intelligence community in particular, went on untold and out of sight.

While nothing I read described the specific products being worked on, or what specifically was Stanford’s contribution, there were some really tantalizing pointers to who the real customers were (hint, it wasn’t just the “military,”) or why was this work was being done at Stanford.

Few knew that the answers to all these questions pointed to just one guy at the center of it all –  Fred Terman of Stanford University.

* Stanford, the military and our intelligence agencies started the wave of entrepreneurial culture that today’s Silicon Valley takes for granted.

“U.S. Science and National Industrial Policy” on the Part VIa of the “Secret History” posts here.

14 Responses

  1. Steve – as I was reading your post from top to bottom, I was thinking “Terman” – and imagine my surprise when you sneaked up on the connection to Stanford University at the bottom. Although it may or may not be in written form, it is reasonably common lore at Stanford that Terman was spider in the web, so to speak, that really set the wheels in motion for both Stanford’s place in “the valley” as well as the valley’s place as a home to entrepreneurship. And precisely through these odd relationships between the military and the university and startups.

    It may be that this stuff was only discussed in Engineering, or even Computer Science, but it is definitely part of the lore in those groups. You might even find some good sources at Stanford proper on the subject (in the library, and maybe even primary sources from Terman himself if you want to really dig in).


  2. […] Steve Blank: The real story of Silicon Valley […]

  3. Great post! Very informative. I, too, have wondered how Silicon Valley came about.

  4. […] The Secret History of Silicon Valley Part V: Happy 100th Birthday Silicon Valley […]

  5. Alex Miroshnichenko of Virsto sent this link to me. Probably, cause we talk a lot about the roots of the Valley and the “Silicon” culture ; and I often times find myself quouting the article that I stumbled upon when first moved to the Valley in 2005: “How Silicon Valley Came to Be”

    The history of the Valley ab ovo. Basically, everything you are talking about in your post. Up until today I was under impression that it was a common knowledge. 😉

  6. @Natalie: Most non-engineers, and probably most current Silicon Valley engineers, do not have a clue about the history nor the various obscure academic historical writings so “common knowledge” generally isn’t except for a rarefied few who bother to know. Good link BTW!

    There is a earlier phase *prior to Vacuum Tubes* in Santa Clara Valley tech history as well involving Federal Telegraph and “Federal-Poulsen Arc Converter” radio transmitter. Poulsen Wireless Telephone and Telegraph Company was founded in Palo Alto in 1909. Poulsen Wireless was later bought by Federal Telegraph of San Francisco.

    I guess you could call it the “Continuous Wave Radio” technology period. The arc converter basically used the negative resistance of the an electric arc to cancel the positive resistance of an LC network thereby causing it to oscillate in a pure narrow-band CW frequency (aka Q-tuning). In contrast, spark gaps are broad-band radio “noise” sources – the idea of discrete radio channels was impossible spark gaps because of this. This is why there are FCC restrictions on the operation of spark gap radios today.

    Vacuum tubes were still very fragile in the 1920s and had only very low power capacity. Reliable high power tubes didn’t arrive until well into the 1930s though a few very expensive broadcast tubes started to appear in the late 1920s. Most of the ability to create a radio industry in the 1920s was due to the accident of ionospheric radio propagation.

    An interesting phenomena of the 1920s that illustrates the fragility and cost of vacuum tubes is the “Reflex Receiver” design methodology. This is an innovative but slightly bizarre design technique common to the 1920s and 1930s that conserved the number of vacuum tubes required for a radio receiver. This involved carefully filtering and re-routing the signal path back through the a single or reduced number vacuum tubes several times to perform RF amplification, detection and AF amplification. There are serious negative trade-off costs with using reflex designs but compared to the economic costs of each vacuum tube, it was a justified trade-off. The contrast between the necessity to use reflex designs with modern integrated circuits active device use (billions of transistors) is nothing short of stunning.

    The most extreme case (and my personal favorite) was by Armstrong who managed to create a full single conversion superheterodyne receiver all using a single vacuum tube! Armstrong was a god! Unfortunately like Tesla and Farnsworth, he was more idealistic engineer than cut-throat businessman and was badly abused by Wall Street types (nothing changes, does it). Telsa had his bully in Edison and RCA. Armstrong had his bully in Sarnoff and RCA. Farnsworth was also bullied to an early death by Sarnoff and RCA.

    Armstrong invented regeneration, super-regeneration and superheterodyne as receiver design classes – which until software-defined radios (SDRs) came along that was the whole ball of wax and even SDRs simply re-implement the same classes digitally. He also invented FM radio along with some of the early FM discriminator (detector) designs.

    Broadcast radio in the 1920s was medium wave (as AM is today) but didn’t need to propagate very far – but for “broadcast” that was all that was needed or desired for the most part. Intercontinental radio was CW only (morse code) and all used spark gaps, alternators and arc converters through out the 1920s. The first intercontinental radio using tubes required moving to the lower short wave bands which give crazy long-range propagation at very low power levels which fit adequately with vacuum tube performance in the late 1920s and early 1930s.

    Vacuum tubes were the classic “disruptive technology” to these earlier technologies but required the luck of short wave ionospheric propagation to get their foot in the door. The 1920s for vacuum tubes was very much similar to the 1970s for microcomputers. Commercial adoption happened in the 1930s just as the IBM PC and Mac created commercial adoption in the 1980s.

  7. Also should mention that Terman’s classic EE textbook “Radio Engineering” was the first university level textbook for EE to systematically present much of what is standard fare for EE students today.

    The whole business about systematically using circuit analysis with nodal and mesh analysis had never appeared in an English-language engineering textbook before Terman’s.

    Prior to that it was a far more ad hoc affair to design or understand electronic circuits – strictly electronic circuits without vacuum tubes was so simply one seldom really needed a systematic means. The non-linear features of vacuum tubes probably changed that.

    One of the benefits of collecting “antique” engineering books ravenously.

    Another piece of trivial: the road that is the side-entrance (during business hours) to Agilent Corporation HQ in Santa Clara is named “Terman Lane” after Terman. Agilent, of course, was once Hewlett-Packard’s Test & Measurement, Chemical, Components and Medical organizations. The first, T&M was the “original” HP business core which was founded at Terman’s encouragement by his students Dave Packard and Bill Hewlett in “The Garage” on Addison Avenue. The HP and Agilent credit union is called “Addison Avenue”. I’ll stop channeling James Burke now. 🙂

  8. […] to do that. You might think you need to be in Silicon Valley since the people there never shut up about their startup culture. But in fact, most startups need to keep their burn rate low more […]

  9. A book called Imperial San Francisco (amzn link ) provides a bit of history about the Stanford and Hearst families’ funding of Stanford U and UC Berkeley. It’ll provide a bit more background info.

  10. […] These posts will make a lot more sense if you look at the earlier Secret History posts.  If you read only one previous post, read this one (or this one.) […]

  11. Love the deeper history. I always traced back to Shockley wanting to live near his grandmother in Palo Alto and close to Mountain climbing in Yosemite. Didn’t realize it went further back yet.

    By the time I was growing up here, I was nearly drowning in tech entrepreneurs:

    And although the innovation story goes further back, I do miss the smell of fruit blossoms in the spring we had in the 70s and 80s.

  12. Why has Silicon Valley proved difficult to copy?…

    Because even the mythos of Silicon Valley’s origins is incorrect, and this has led all the attempts to copy it to be similarly wrongheaded. For example, every single answer on this page about Silicon Valley’s origins is missing key details. Most stor…

  13. YouTube has it as “The Secret History of Silicon Valley” :

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