Retrospective: what started the era of transistors and how the startup culture developed in the 1940s and 1950s

    This is a continuation of a retrospective about the culture of startups. The first material was well received. I hope that the second will seem interesting and will be discussed in the comments.

    Photo: Bardin, Shockley, and Walter at Bell Labs , 1948 | AT & T | PD I began

    thiscycle of articleswith a discussion of the most famous startup "out of the garage" and the first technology entrepreneurs. All this had to do with a startup culture that originated in the 1930s. Now we go further and discuss the formation of Silicon Valley and the beginning of the era of transistors - the context in which IT start-ups of that time worked.

    Without the government still could not have done

    In the 1930s, the development of the Valley and the startup ecosystem was moving at a slow pace. This process was not somehow streamlined, and the surrounding context only added chaos and confusion. Toward the end of the decade, when the first technology companies began to appear in California, the state still could not cope with the brain drain, and the creation of a hub or IT business center was not discussed at that time.

    Development slowed even further with the onset of World War II. Technology companies were forced to suspend the development of their own products to help the military. For example, HP created radar and electronic jamming systems.

    The wartime experience showed the US government the practical possibilities of IT companies of the time. They made a bet in the postwar period, when they decided to accelerate the growth of the high-tech industry. Financing continued in the 1950s.

    At that time, investment in technology was considered very risky, and venture capitalists in their present form did not yet exist. The government could afford to take the risk - after the war in the American economy began to rise. Therefore, money for technology entrepreneurs managed to find. For example, with the help of such support, the company Varian appeared , which still exists in one form or another (now one of the companies produces scientific and medical equipment).

    In the photo: Klystroan Varian V-260 | Erbade | CC BY-SA 3.0

    Before the advent of venture capital, there were not many other sources of financing for technology companies. Pension funds could not invest in high-risk assets in accordance with the law, and few people in the know-how knew about technology. It remained to hope that the development of cooperation with the state would change the situation.

    Then passed the act of "private companies that invest in small business" (SBIC). He encouraged investment in high-risk projects. It worked.

    By 1968, SBIC funds owned 75% of US venture capital.

    What brought Stanford "incubator"

    The second important factor in the development of IT in the Valley was Stanford University. Even before the war, the engineer and teacher Frederick Terman set himself the task of solving the “brain drain” issue when university graduates moved to work in other states.

    At that time, Stanford was not yet a super-prestigious university, and Terman decided to turn it into a real center of innovation. He achieved an increase in the number of laboratories, invitations to work for famous scientists and the creation of a program to support inventors.

    Photo Philip Odegard | CC BY-ND

    In addition, in 1951, Stanford Industrial Park was founded - the university leased land to high-tech companies. This collaboration helped Stanford graduates to get a job after university, and companies to share their experiences. As a result, Stanford became the first incubator in Silicon Valley.

    How has the management culture changed

    Another person who influenced the development of the Valley is William Shockley, Nobel Prize winner and one of the inventors of the transistor. He was born in the San Francisco Bay area, became famous while working at Bell Labs in New York, but returned to California to care for his elderly mother. There he founded the Shockley Semiconductor Laboratory.

    In the new company Shockley hired young and talented graduates. However, his management style was too aggressive and authoritarian. Therefore, eight talented engineers left in less than a year. And immediately found funding for independent development. In 1957, they founded Fairchild Semiconductor. Shockley faded into the background after being carried away by the ideas of eugenics and was expelled from the scientific community.

    The "treacherous G8" ​​of his followers was able to build a profitable company by proposing a liberal management approach. He moved in opposition to Shockley's legacy. According to reviews of former Fairchild employees, managers talked with experts on an equal footing and gave everyone the opportunity to develop their talents within the company.

    Pictured: Memorial plaque on Fairchild building | Hoenny | CC0

    Later, Robert Noyce invented the silicon integrated circuit. It was he and Gordon Moore who later left Fairchild and founded Intel. It was 1968.

    Intermediate conclusions

    Apple and Microsoft are often mistaken for the progenitors of a modern startup culture, but this is not true . They owe their existence and “cultural content” to start-ups from the 1950s and 1960s, as well as to economic reforms and support from the US government.

    Secondly, many modern technological giants are obliged to universities of that time. For example, Steve Wozniak's Homebrew Computer Club held regular meetings at Stanford. Other educational institutions seek to replicate the Stanford innovation infrastructure model — they hold events that encourage students to create start-ups.

    Thirdly, the Fairchild approach to business has introduced new management techniques to the industry. This has improved the working conditions in the field of IT. On the other hand, Apple and their contemporaries came up with one important thing - they understood how to make technology fashionable . At this point, I propose to dwell in more detail in the next article in this series.

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