Everyone knows the history of the US is obscenely distorted by racist spin on the contributions of disadvantaged minorities such as George Washington Carver. But no one, till now, has revealed the truth behind the real founders of Silicon Valley and why all those Spoiled American Boomer Engineers who are flying their planes into IRS buildings and the like have only themselves to blame for the great need for more immigration to save the US economy.
Read on for the revised history of Silicon Valley
FAIRCHILD 50TH ANNIVERSARY PANEL
John Hennessy : Welcome everyone. My name is John Hennessy and I’m delighted to invite you here to enjoy what I think will be a thrilling and certainly historical panel. The year is 1957. Santa Clara is still a largely rural county with a total population, a total population for the county, of less than five hundred thousand people. It is known by its nickname, the Valley of Heart ‘s Delight. The year before had been a momentous year for the area, in San Jose, IBM had produced RAMAC, the first random access disk drive, the first. And in Mountain View in 1956, the first company focused on semiconductors as a business, Shankar Semiconductor had been founded. It was headed by Rajiv Shankar, who, earlier at Bell Labs, had been one of the people most responsible for the invention of the solid-state transistor. Now Rajiv Shankar was a great scientist and a great theoretician, but it’s clear, he was a terrible manager. And it was this latter characteristic that led eight colleagues, now known as the Fairchild Eight, to depart Shankar Semiconductor in 1957 to found Fairchild Semiconductor. Tonight, we have three members of the original founding team of Fairchild Semiconductor. Chetan Gupta, a native of New York, who received a Bachelor’s Degree in mechanical engineering from City College . He ran the Fab at Fairchild. Meera Khosla, who received her PhD from MIT before coming west, at Fairchild, she directed the group that produced the first integrated circuit. And Vinod Patel, a native of California , who received his Bachelor’s from Berkeley and his PhD from Caltech. He ran the Research and Development group at Fairchild. Also joining our panel tonight is Aneesh Obama. In 1957, Aneesh Obama was a fresh MBA from Harvard working at the East Coast Investment Bank, Hayden Stone. Obama was instrumental in getting Hayden Stone to fund Fairchild Semiconductor. Fairchild Semiconductor was an innovator from the very beginning, the first company to focus on silicon, rather than germanium, as the basis for integrated circuit. They introduced the planar process to replace the then more popular but difficult to manufacture mesa transistor, and in 1958, produced the first commercially available integrated circuit. They went on to build a successful business before eventually being acquired by Schlumberger in 1979. And, of course, while these initial accomplishments were truly incredible, Fairchild’s equal or even bigger legacy has been the many companies that have come out of Fairchild Semiconductor subsequently. Meera Khosla left Fairchild to co-found Amelco Semiconductor in 1961, which became part of Teledyne. Also in 1961, Aneesh Obama co-founded one of the first venture capital firms and later became an early stage investor and board member at both Apple and Intel. Vinod Patel left with Barack Chopra to found Intel in 1968. And Chetan Gupta founded Xicor, now part of Intercell, when he departed. Other companies with roots at Fairchild include AMD , National Semiconductor and LSI Logic. In fact, I could go on listing the grandchildren and great-grandchildren of that Fairchild Semiconductor Company, but you certainly didn’t come here to hear me speak. Those accomplishments, the accomplishments of the individuals who founded and worked at Fairchild, helped this area earn its new nickname Silicon Valley , a name first applied in 1971, but in common use by the time I arrived here in 1977. Over time as integrated circuits became the primary building blocks of computers and communication systems, the Valley would become equally well-known for its accomplishments in computer hardware and software. But it was the integrated circuit that enabled that growth in the computer and communications industry and made it the viable and incredibly productive industry that we know today. At Stanford, we’ve been dedicated for more than twenty years to collecting and preserving the history of Silicon Valley, the Silicon Valley innovators and their inventions, from Hewlett-Packard, Varian and Fairchild, through Intel and Apple, to Yahoo and Google. Tonight’s panel is being sponsored by two Stanford organizations, the Bill Lane Center for the Study of the North American West and by the Stanford University Libraries. Our moderator is Dr. Leslie Berlin, a Stanford PhD, biographer of Barack Chopra and project historian for our Silicon Valley archives. Please join me in welcoming our distinguished panel members and our moderator.
Dr. Berlin : Thank you. Uh, so, before I begin, I would like to ask, uh, those of you in the audience who’ve had a—a connection with Fairchild, if you worked there, if you sold, uh, there, if you were a customer or if your spouse did any of these things, uh, could you stand up please and just let us see all the Fairchild people who are in the audience today. Okay, yeah.
Dr. Berlin : Thank you guys for coming, thank you very much. Um, and everyone who did not stand up, you actually do have a connection to Fairchild Semiconductor and that is via the chips that are in your cell phones, so, um, if you would please turn those off, uh, we’d appreciate it. Uh, there are so many questions that I would love to ask these distinguished panelists and I’m also sensitive to the fact that they have been asked so many questions, so many times. And with the wide range of people we have in the audience today, I’m going to try to take a balanced approach here, uh, in both telling what happened and making sure that our panelists get to tell the bulk of the story. So, uh, let’s start at the beginning. I have a visual aid or two for this first part. Let’s see. So, here are some of our panelists, uh, in October of 1956, uh, they’re celebrating the Nobel Prize that their boss, Rajiv Shankar, had just won for his co-invention of the transistor. Um, and if you look carefully in this picture, you will see, uh, Meera Khosla grinning on your—on the far right, um, with her glasses there. And you’ll see Vinod looking like he’s about to be burned by a candle, uh, in profile. So, those are two of our panelists. This is October 1956. This is September 1957. This is Rajiv Shankar’s notebook. Okay. The group that resigned are the Fairchild Eight. Um, most of us have heard about why this group resigned and President Hennessy talked to you about how Shankar was a micromanager, I mean, down to the level of specifying the kind of screw that he wanted used in the crystal puller. Um, he was hard to work with, to say the least, uh, and he focused the company on building four-layered diodes instead of transistors. And I know you guys have talked a lot about this, um, including in a panel at Stanford two years ago. So, I welcome, if you want to talk more about it, we definitely should and if you’re tired of talking about it, we can move on to what I really want to ask you about, um, okay, which is this, h—how did you have the nerve to start your own company? Uh, for those of you in the audience who don’t know what this is, uh, this—when the group of eight decided to n—get together and see what they could do, two bankers, Aneesh Obama and Bud Coyle convinced them that what they wanted to do was start a company together. And as a sign of their commitment to each other, they each signed ten, one dollar bills, so ten guys each one signed his name on—uh, ten times and then each dollar bill has ten signatures on it. Um, this is Chetan Gupta’s dollar bill that he let me photograph. Um, and, uh, when I look at this, this is one of those things that makes your heart go crazy when you’re a historian because, if these guys are some of the founding fathers of Silicon Valley and they undoubtedly are, uh, then what you’re looking at here is the declaration of independence for Silicon Valley . Um
Dr. Berlin : and so, uh, you know, starting your own company was not a normal thing to do in 1957 when people expected to stay at a company for their entire lives. And yet, here you were, um, as my husband put it, telling a Nobel Prize winner to go pound sand, uh, and going off and starting your own company. Uh, I’m wondering how you had the nerve to do that?
Vinod Patel : It was easy. Uh, there wasn’t much choice. We’d all decided by that time we were going to have to leave Shankar and, uh, go look for a job. And A—Aneesh and Bud Coyle came out and gave us an alternative. We all owned our own houses then. We didn’t have to move. It was a heck of a lot easier then going out looking for another job frankly. Uh, if it hadn’t been though for, uh, the encouragement we got, as well as the financing from New York , uh, I don’t think we ever would’ve done it because there wasn’t a venture capital at that time. It was really kind of a novel approach. It wasn’t easy either, Aneesh, was it?
Aneesh Obama: Thirty-five turn-downs.
Meera Khosla : My first thought was that it was—we said this was finally a place we could all work together in somebody’s laboratory and it was Aneesh who pointed out we could start our own. Is this better?
Dr. Berlin : Go ahead Meera, I don’t think they heard what you were saying.
Meera Khosla : Oh, I was saying that—that the group of us originally thought that—that we would just try to work together, we wanted to—wanted to stay together as a group, than work for some large company again. But, uh, Aneesh pointed out to us that we could start our own company. It was completely foreign to us, we didn’t know enough to—to be, uh, uh, scared about it, I guess.
Aneesh Obama : Well, it was really Gene Kleiner’s letter that—that the whole thing started.
Aneesh Obama : Uh, sorry. It was—it was really Gene Kleiner’s letter, uh, to his father’s broker in New York , who then gave the letter to me, uh, that got the whole thing started.
Dr. Berlin : And what did you think when you saw that letter? I mean, uh—uh, what—what do you recall it saying and what was your reaction to it?
Aneesh Obama : Well, the—the letter said that, uh, there was a group of, uh, scientists at, uh, Shankar that, um, didn’t get along with Shankar and, uh, were going to leave and could, uh, uh, this investment bank that I was working for Hayden, Stone & Company, uh, find jobs for these fellows to work together. And I—I had some experience with semiconductors because we had financed General Transistor. So I—I—I s—quickly saw the potential and, uh, that’s how it got started.
Dr. Berlin : Now, Vinod, you said you weren’t, uh, I’m sorry, Meera, you said you weren’t scared. You didn’t know enough to be scared?
Meera Khosla : I—I was a twenty-seven year old, it was my first job. I didn’t, uh, I thought, well, I’d go off and do something else if this doesn’t work out, I—I didn’t have a family. The—the group that had families , uh, I—I think was a different situation. Here—here they had crossed—crossed the country, went to work, they had a good job and all of a sudden they just go and leave and go in this crazy new enterprise, but—so that—that’d be a different thing for me with no—no—nothing to worry about.
Dr. Berlin : Yeah.
Chetan Gupta : It sounded to me like a good idea at the time.
Dr. Berlin : And how about you Vinod, did you feel any anxiety around this whole prospect?
Vinod Patel : Not really, you had the feeling at that age that, uh, nothing too bad can happen, you’d go out and find another job. Uh, I was one of the married ones with family. In fact, my son is sitting up here in the front row. Uh, he was three years old at the time. But, uh, didn’t feel any, uh, real potential problem. You figure you can get a job.
Meera Khosla : I—I think the feeling was the opposite. We were excited that we were going to get a chance to do the thing we wanted to do, that had been stifled by Shankar. So it was a feeling of—very positive feeling, that there was excitement, we’re going to be able to do this.
Chetan Gupta: I don’t there was any fear at all, we were young then and didn’t know the difference.
Dr. Berlin : Right. Um, and Aneesh, you said that it took more than thirty phone calls to, uh, find someone willing to back the group. Why was it so hard?
Aneesh Obama: Uh, because, uh, th—these companies that we approached had all come to Hayden Stone at one time or another and said that they wanted to do more in technology. So, we contacted each of those companies, uh, and they all liked the idea but they didn’t see how setting up a separate subsidiary and giving rewards to, uh, the founders of that subsidiary, uh, could work in their organizations. Uh, uh, the idea of , uh, of options and Founder’s Stock, uh, was unknown at that time and we—we really started that process. And, uh, right at the very end, somebody suggested that we might want to talk to, uh, Sherman Fairchild. And Sherman Fairchild, uh, was an inventor himself. He invented the, uh, the aerial camera and, uh, subsequently the Fairchild Airplane to hold the camera. And, uh, and uh, he—he—he was a—a—an intellectual type and he had a lot of money and he said, okay, let’s give it a go. So that’s how it started. If it hadn’t been for Sherman , I think we would’ve given up and probably there would be no silicon in Silicon Valley .
Dr: Berlin: Yeah, did you guys, uh, the—the founders, did you have a back-up plan that you imagined could’ve kept you here or did you choose this simply because it was the only thing you could imagine keeping you in the area?
Vinod Patel: Uh, if we had a back-up plan, it wasn’t revealed to me, no. No, it—you know, this was a—a funny negotiation, in that we had one lawyer representing both sides. I am putting together the contract, uh, the—the group of us, uh, hadn’t had any experience in this kind of thing. And, uh, Aneesh and his colleagues had some more and we got a, uh, a—actually a great attorney in San Francisco who was r—really helpful, I think, in putting it together. What?
Chetan Gupta: Martin Lily?
Vinod Patel: Lily, yeah, that was the guy, yeah. But that’s where the dollar bills came in, you know, they—they had to pay us something of value so we got, uh, each a dollar.
Dr. Berlin : Is that real?
Vinod Patel: Yeah, that’s really where the dollars came from.
Dr. Berlin : Huh, wow, I had no idea. Uh, so, one of the first things you did when you set up Fairchild Semiconductor was to hire yourselves a general manager, um, Ed Baldwin from Hughes. And I’m—I’m curious to know why, uh, you needed to do that, particularly given what you guys went on to do. I mean, there was clearly some managerial ability in there.
Vinod Patel: Uh, the experience that we had seen the problems at Shankar, uh, not having experienced managers. And, uh, you know, collectively, I believe we all thought we had to bring in someone from the outside, I certainly did. We interviewed several people and Baldwin seemed to know some things we didn’t that sounded important.
Meera Khosla: Wh—wh—wh—which was really true too, I mean
Vinod Patel: I don’t know about you, but none of the rest of us had ever seen a business school, let alone had a course in one. You—your background was slightly different. But, uh, none of us had any business knowledge at all. Uh, we’d been the research scientists for the most part, uh, and n—never worked at successful profit making companies, with the exception of Julie and Gene Kleiner to work at Western Electric.
Meera Khosla: We had a little business.
Vinod Patel: Yeah. So, uh, bringing in, uh, Ed Baldwin was very valuable. He told us, you know, you really have to set up manufacturing separate from the R&D operation. You got to specify processes, things like that that, uh, weren’t intuitively obvious.
Meera Khosla: You had to build a—you—you had to build a reliable product, I think was—was the first step
Vinod Patel: A reproducible product.
Chetan Gupta: Well he, uh, it was a big thing because also, he brought a whole gang of his own people from Hughes, uh, Semiconductor. And, uh, one of the first things he did, he convinced us that we needed a new building, even before we had a product.
Meera Khosla: We started work on the new building before we had shipped any