
The History of Silicon Valley: Birth of Computers and the Internet - js7745
https://medium.com/founder-playbook/the-history-of-silicon-valley-part-2-computers-and-the-internet-7cb883eb522f
======
js7745
I'm working on part 3 for everything that was built on top of the PC and
internet revolution.

I'm thinking web browsers, early internet startups / bubble, social & web 2.0
and the sharing economy. Any suggestions?

------
eesmith
For those who want more than the standard Silicon Valley history given here, I
suggest [https://steveblank.com/secret-
history/](https://steveblank.com/secret-history/) . The topics covered are:

Part 1: The Vietnam War; Part 2: B-52’s and the Soviet Air Defense System;
Part 3: Bill Perry/ESL and the Cold War; Part 4: Undisclosed Locations; Part
5: Silicon Valley, the 2nd 100 years; Part 6a: The Endless Frontier: U.S.
Science and National Industrial Policy; Part 6b: Stanford, Terman and WWII;
Part 7: Stanford, Terman and the Cold War; Part 8: Stanford and the rise of
Cold War Entrepreneurship; Part 9: Stanford and Electronic Intelligence; Part
10: Stanford and Weapons Systems; Part 11: The Rise of Venture Capital; Part
12: The First Valley IPO’s; Part 13: Startups with Nuclear Missiles; Part 14:
Spy Satellites in Silicon Valley; Part 15: Lockheed – Silicon Valley largest
employer; Part 16: Balloon Wars.

For example, why was Steve Wozniak in Silicon Valley in the first place?
Answer: his father worked as an engineer at Lockheed Martin with a top secret
job involving electronics.

Which leads to the question, why was Lockheed Martin working on electronics in
what came to be Silicon Valley?

Now, part of the problem is that history is complex, and you might not want to
track down all of these different threads. And that's okay!

But in doing so you find curious things, like this Medium essay by Founder
Playbook which says at [https://medium.com/founder-playbook/the-history-of-
silicon-v...](https://medium.com/founder-playbook/the-history-of-silicon-
valley-transistors-stanford-and-venture-capital-6a761f171e9d) :

> Arthur Rock, now known as the father of Venture Capital, was the principal
> investor in Fairchild Semiconductor in 1961. His firm, Davis & Rock, is
> considered the first Venture Capital firm ever.

While [https://steveblank.com/2009/10/26/the-secret-history-of-
sili...](https://steveblank.com/2009/10/26/the-secret-history-of-silicon-
valley-11-the-rise-of-%E2%80%9Crisk-capital%E2%80%9D-part-1/) writes:

> In 1946, George Doriot, founded what is considered the first “venture
> capital firm” – American Research & Development (ARD).

ARD funded DEC, and "Some of the very early VC’s got their venture capital
education at Harvard as Doriot’s students", including Arthur Rock.

Indeed,
[https://en.wikipedia.org/wiki/Georges_Doriot](https://en.wikipedia.org/wiki/Georges_Doriot)
says "In 1946, he founded American Research and Development Corporation, the
world's first publicly owned venture capital firm, earning him the sobriquet
"father of venture capitalism"."

Now, this is a minor point, but it makes me wonder if there is a built-in bias
towards the standard (and insular) SV view of history.

And then there's:

> In the 1950s and 60s the semiconductor industry was just getting going out
> in Silicon Valley. William Shockley’s transistors were many times smaller
> and much more cost effective than vacuum tubes (part 1). Because of this,
> the idea of computers moved away from top secret government laboratories,
> and out west, where the parts it needed were becoming commercialized.

I can't make that fit into my understanding of the history. Univac was an east
coast company, not a top secret government lab. As I pointed out DEC was also
an east coast company. Jack Kilby was at Texas Instruments Instruments, in
Texas.

While on the other hand, Lockheed-Martin was working on top secret government
projects in what became SV.

~~~
js7745
Yeah I loved that video. The radio tower image in that other article you
referenced is because this was the technology worked on in the war that lead
to all of these ideas. And you do have a fair point. There were many factors
that lead to the settlement of Silicon Valley and why all the talent wound up
there.

However for me I what I really wanted to know about in silicon valley is less
lead-up, and more the development and the technical innovation.

I fixed that statement you mentioned about Arthur Rock to specify it was the
first private firm. Definitely a good distinction. Super interesting that
Arthur Rock was a student of George Doriot.

George Doriot was the first person to take advantage of SBICs (government
funded small business investment companies) that was created by the SBA to
encourage more entrepreneurship. Where I think Arthur Rock was particularly
innovative was that he raised all of this money from wealthy individuals
looking to do private investing. While I agree the VC industry wouldn't have
been started if it wasn't for Doriot, I think private money being used to fund
startups is really the inflection point in the industry. Government money
can't last forever.

~~~
eesmith
"what I really wanted to know about in silicon valley is less lead-up, and
more the development and the technical innovation."

I think a way to help understand the success of SV is to understand the
differences between there and Route 128, ""America's Technology Highway".
Quoting
[https://en.wikipedia.org/wiki/Massachusetts_Route_128#.22Ame...](https://en.wikipedia.org/wiki/Massachusetts_Route_128#.22America.27s_Technology_Highway.22)
):

> In 1955, Business Week ran an article titled "New England Highway Upsets Old
> Way of Life" and referred to Route 128 as "the Magic Semicircle". By 1958,
> it needed to be widened from six to eight lanes, and business growth
> continued, often driven by technology out of Harvard University and MIT.[15]
> In 1957, there were 99 companies employing 17,000 workers along 128; in
> 1965, 574; in 1973, 1,212. In the 1980s, the area was often compared to
> California's Silicon valley,[16][17] and the positive effects of this growth
> on the Massachusetts economy were dubbed the "Massachusetts Miracle".

It had many of the same ingredients as SV, but it's no longer the powerhouse
of technology that it once was.

Personally, I don't have an answer for why one succeeded and the other failed.

~~~
js7745
I think it could have something to do with the openness of silicon valley. For
example, california banned non-compete agreements.

Boston was used to the corporate mindset where information is an asset that
can't be shared. That free flow of information in silicon valley made
innovation progress much faster.

This is a great explanation: [https://psmag.com/social-justice/innovation-
thrives-richard-...](https://psmag.com/social-justice/innovation-thrives-
richard-florida-ethnicity-place-migration-talent-95973)

"The boston area was organized around these big, vertically integrated
minicomputer companies — dec, data general. They were classic postwar american
companies, with vertical hierarchies and career ladders. Planning and research
happened at the top of the organization and then funneled down. Whereas in
silicon valley you had, really by chance not design, a series of flat
companies, with project-based teams that moved around. People moved between
companies much more fluidly. At a time that technology and know-how were sort
of trapped within the vertically integrated companies of route 128, they were
being continually recombined in silicon valley. That gave them a real edge in
innovation."

~~~
eesmith
As another regional difference, which wasn't emphasized in your first essay,
I'll quote from Arthur Rock at
[http://hbswk.hbs.edu/archive/1821.html](http://hbswk.hbs.edu/archive/1821.html)
:

> We were doing a lot of deals in California, and it occurred to me that all
> of the energetic scientists were forming around Stanford. The reason for
> that, in my opinion -- although some people will differ -- is because of
> Fred Terman. He was head of the engineering school at Stanford, and he
> encouraged his students, especially the doctoral and postdoctoral students,
> to form companies and continue to teach at Stanford. That was an unknown
> concept at any other school in those days -- it certainly wasn't happening
> at MIT, Harvard, or Princeton, or any of the good engineering schools.
> People got fired from MIT in those days if they started companies. All these
> people were entrepreneurial, and yet there wasn't any money in California.
> The money was in the East, and Eastern companies weren't exciting. So I
> decided to try to get some Eastern money and move to California to set up a
> company to invest in these entrepreneurs.

That's more specific than the "no non-compete" argument for the whole state.

(I wrote "emphasized" because the first essay says only "This focus on pushing
colleagues and students to commercialize their ideas helped jumpstart
engineering at Stanford." It doesn't point out that other schools actively
resisted commercialization.)

