This document provides a history of the development of high-tech industries in the San Francisco Bay Area from 1900-2010. It discusses the early development of electrical engineering and radio engineering industries in the area. It also summarizes the growth of computing technologies on the East Coast during this period and how Stanford University encouraged students to start tech businesses in the Bay Area in the 1920s-1950s, leading to the founding of companies like Hewlett-Packard. The document also notes how military funding drove growth in the Bay Area's electronics and semiconductor industries during World War II and the Cold War.

1. A History of Silicon Valley 1900-2010
The Greatest Creation of Wealth in History
(a moral tale)
being a presentation by piero scaruffi
www.scaruffi.com
adapted from a book by Arun Rao and piero scaruffi

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Piero Scaruffi
• Cultural Historian
• Cognitive Scientist
• Blogger
• Poet
• www.scaruffi.com

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Where are the pictures?
• This slide presentation omits the pictures to make it
smaller and easier to download
• Pictures of machines and buildings are here:
– A visual history of computing:
http://www.scaruffi.com/monument/silicon/cm.html
– A historical tour of Silicon Valley:
http://www.scaruffi.com/politics/svtour.html
• If you have time and skills, use these pictures to
create a more appealing version of this presentation
and send it to me for approval

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What the book is about…
• The book is a history of the high-tech industry in the
San Francisco Bay Area (of which Silicon Valley is
currently the most famous component)

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Electrical Engineering
• The challenge for the West Coast in the 19th century:
to carry high-tension voltage (dams) over long-
distances to the cities of the coast
• Harris Ryan at Stanford (1905) inaugurates a
cooperative model between university and industry
• The Bay Area's electrical power companies use the
Stanford High Voltage Laboratory

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Radio Engineering
• San Francisco's port needs a wireless
communication system
• Charles Herrold in San Jose starts the first radio
station in the USA with regularly scheduled
programming (1909)
• Cyril Elwell’s FTC in Palo Alto, funded by Stanford’s
president, commercializes Valdemar Poulsen’s arc
transmitter (1910) and acquires Lee DeForest’s
vacuum tube to amplify electrical signals (1912)
• FTC builds the first global wireless communication
system
• The Navy is the biggest consumer of radio
communications (World War I)

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Radio Engineering
• The Bay Area becomes one of the largest centers for
amateur radio (Bay Counties Wireless Telegraph
Association, 1907)
• Some ham-radio amateurs: Charles Litton, Frederick
Terman, ….

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Society
• Chinese railway workers and agricultural workers (the
largest Chinese community outside Asia), Italian
fishermen and farmers, Japanese farmers, Mexicans
• San Francisco is the most unionized city in the USA
(teamsters and longshoremen)
• John Muir's Sierra Club (1892) leads the first
environmental protests
• The American Anti-Imperialist League (1898)
organizes the first anti-war movement
• The Union Labor Party (1901) becomes the first
pseudo-socialist party to win a mayoral election in a
USA city

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Culture
• The California Society of Artists (1902), California
College of the Arts and Crafts (1907)
• Artists move to San Francisco’s "Montgomery Block"
and to Carmel
• Halcyon, a utopian community (1903)
• The Panama-Pacific International Exposition (1915)
• Ansel Adams’ photographs of Yosemite (1921)

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Meanwhile elsewhere…
• Remington’s mass-produced typewriter and the
QWERTY keyboard (1873)
• William Burroughs' adding machine (1885)
• Electricity
• Hermann Hollerith's tabulator of 1890 hat processes
punched cards that store information
• NCR’s electrical cash register (1894)
• IBM (1911)

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Meanwhile elsewhere…
• The automated office:
– typewriters (a field dominated by Remington
Rand),
– adding machines (a field dominated by
Burroughs),
– tabulating machines (a field dominated by IBM)
– cash registers (a field dominated by NCR)
• Midwest and East Coast industries dominate office
automation

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Electrical Engineering
• Frederick Terman at Stanford encourages students to
start businesses (1925)
• Companies started by ham-radio hobbyists: Heintz &
Kaufmann, Litton Engineering Labs, Eimac, …
• A 21-yo amateur, Philo Farnsworth, carries out the
first all-electronic television broadcast (1927)
• The lawyer Donald Lippincott defends Farnsworth's
intellectual property against RCA (1930)

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Defense
• Moffett Field (1933): the Navy opens a base between
Palo Alto and San Jose
• Ames Research Center (1939): the US government
opens an aeronautical laboratory at Moffett Field

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Nuclear Engineering
• Robert Oppenheimer (UC Berkeley, 1929) studies
Eastern philosophy and contributes to socialist
causes
• Ernest Lawrence (UC Berkeley, 1931) designs the
first successful cyclotron (a particle accelerator)
• Ernest Lawrence’s "big science": a large
interdisciplinary team of engineers and scientists to
focus on a practical project
• John Lawrence (1936) founds the Donner Laboratory
to conduct research in nuclear medicine
• First Nobel laureate of the Bay Area: Ernest
Lawrence (Berkeley, 1939)

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Culture
• Hans Hofmann (UC Berkeley, 1930) promotes
modern art
• Dominant fine arts: photography, wall painting
• Group f/64 founded by Bay Area-based
photographers (1932)
• The first professional ballet company in the USA
(1933)
• The Museum of Art (1935), the second museum in
the US devoted exclusively to modern art

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Culture
• Henry Cowell, a bisexual composer, designs the first
electronic rhythm machine (1930), promotes
atonality, non-Western modes, percussion
ensembles and even chance composition (UCSF,
1935) and lives a parallel life as a successful pop
songwriter
• Lou Harrison incorporates Chinese opera, Native-
American folk, jazz and later the gamelan music of
Indonesia into Western classical music

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Culture
• Villa Montalvo (1939) in the South Bay inaugurates
the first artist residency program in the Western
states
• Frank Stauffacher starts the "Art in Cinema" series at
the Museum of Art (1946)
• San Francisco artists are mostly independents and
eccentrics
• Achilles Rizzoli

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Society
• San Francisco’s Ferry Building is the second busiest
transportation terminal in the world (1930)
• Not a single bank fails in San Francisco during the
Great Depression (1929-33)
• The Bayshore Highway reaches San Jose (1937)
• The Oakland Bay Bridge and the Golden Gate Bridge
(1936 and 1937)
• The "Golden Gate International Exposition“ (1939),
held on an artificial island in the middle of the bay,
Treasure Island

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Society
• Legendary nightlife, e.g. gay bar Finocchio (1936)
• “The organized crime of Chicago and New York has
no chance to infiltrate San Francisco because the
entire city is just one big racket”

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Electronics
• Stanford's professor William Hansen and brothers
Sigurd and Russ Varian develop the klystron tube
(1937), the first generator of microwaves (a device
that enables the airborne radars of World War II)
• Fred Terman's students William Hewlett and David
Packard found a company (1939) in a Palo Alto
garage to sell oscillators
• The Varian story is a repeat of the FTC story:
interaction between industry and university leads to
an advanced technology whose first customer is the
government and its first application is warfare

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Meanwhile elsewhere…
• Vannevar Bush’s mechanical analog computer or
“differential analyzer” (1931)
• Theory of computation: Turing Machine (1936)
• George Stibitz’s relay-based binary calculator, the
"Model K“ (1937)
• John Atanasoff’s electronic digital computer (1938)
• Konrad Zuse’s Z3 (1941), the first programmable
computer, the first hardware implementation of the
Turing machine
• John Von Neumann’s stored-program architecture
(1945)

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World War II
• Terman in charge of electronic warfare at the Harvard
Radio Research Laboratory (1941)
• Oppenheimer manager of the “Manhattan Project" to
build a nuclear bomb (1942)
• Lawrence designer of the electromagnetic process to
separate the explosive U-235 from uranium
• Edwin McMillan and Glenn Seaborg (Berkeley) use
the cyclotron to discover a new element, plutonium
• Alexander Poniatoff invents the airborne radar
antenna and starts Ampex to commercialize the
German tape recorder (1944)

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Meanwhile elsewhere…
• Britain: Tommy Flowers’ Colossus Mark 1 (1943), the
world's first programmable digital electronic computer
• Boston (IBM and Harvard): Howard Aiken’s Harvard
Mark 1 (1944), the first computer programmed by
punched paper tape
• Philadelphia: John Mauchly’s and Presper Eckert’s
ENIAC (1946)
• New York: IBM's SSEC (1948), an improved version
of the Harvard Mark I
• New Jersey (AT&T): John Bardeen’s, William
Shockley’s and Walter Brattain’s transistor (1947), a
better electrical amplifier than the vacuum tube made
of semiconducting material.

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Meanwhile elsewhere…
• Boston: Vannevar Bush’s Memex, an
electromechanical hypermedia device (1945)
• Boston: Norbert Wiener’s Cybernetics (1947)
• New Jersey: John Von Neumann’s self-reproducing
automata.
• New Jersey: Claude Shannon Theory of Information
(1948)
• Main centers for research on electronic computing:
Boston (Harvard and MIT), Philadelphia (Moore
School of Electrical Engineering, BRL), New Jersey
(Bell Labs, Princeton, RCA Labs), New York
(Columbia and IBM)

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Meanwhile elsewhere…
• Venture capital firms (1946): Boston's American
Research and Development Corporation (ARD); New
York's J.H. Whitney & Company; and New York's
Venrock

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The Cold War
• The SRI (1946), Stanford’s industrial research center
• Fred Terman brings defense contracts to Stanford
• Bill Hansen’s linear accelerator at Stanford (1947)
• Varian (1948) to work on radio, radar and television

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Culture
• The San Francisco Renaissance:
– Kenneth Rexroth’s Poetry Center at SFSU and
Festival of Modern Poetry (1947)
– Robert Duncan’s "The Homosexual in Society“
(1944)
– Muriel Rukeyser, a Jewish feminist

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Meanwhile elsewhere (computers)
• Philadelphia: John von Neumann’s EDVAC (1949), a
stored-program electronic computer
• Britain: Alan Turing’s Pilot ACE (1950)
• Britain: Ferranti’s Manchester Mark 1 (1951), the first
computer to use Williams tubes for RAM
• Washington: SEAC (1950), a scaled-down version of
the EDVAC, using semiconductors for its logic
• New York: Remington Rand’s Univac division (1950)
• New York: Grace Murray-Hopper’s compiler for a
Univac programming language (1951)
• New York: IBM’s first electronic computer, 701 (1952)
• Minneapolis: ERA’s Atlas for the Navy (1950)

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Meanwhile elsewhere (computers)
• Boston: Alan Wang’s Magnetic-core memory
• Boston: Jay Forrester’s Whirlwind at the MIT (1951),
the first real-time system and the first computer to
use a video display for output
• New York: Remington Rand’s Univac 1103 (1953),
the commercial version of ERA’s Atlas II with
magnetic-core RAM
• New York: IBM’s and Columbia Univ’s NORC for the
Navy (1954)
• New York: Gene Amdahl ‘s IBM 704, a commercial
version of the NORC with magnetic-core RAM (1954)
• Wang outsources magnetic-core manufacturing to
the Far East, the first computer component whose
price declines rapidly thanks to cheap foreign labor

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Meanwhile elsewhere (computers)
• Boston: MIT’s and Navy’s SAGE (1954) to rapidly
process the data coming (in digital format by modem
over telephone lines) from a network of radars for
monitoring and intercepting enemy rockets
• IBM passed Remington Rand for number of installed
computers and becomes the world leader in
computers (1955)
• The electronic megacorporations (General Electric,
RCA) are followers, not leaders (1956)
• New York: IBM AN/FSQ-7, IBM’s version of
Whirlwind (1958) the largest computer ever built
(275 tons, 2000 square meters of floor space,
55thousand vacuum tubes)

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Meanwhile elsewhere (computers)
• The computer
– Invented by scientists interested in solving
complex mathematical problems such as
nonlinear differential equations
– First practical application: warfare
– First commercial computers: large office
automation players (Remington Rand, IBM, NCR,
Burroughs)

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Meanwhile elsewhere (computers)
• The computer
– The first companies to realize the non-scientific
and non-military potentiality of the computer are
the ones making typewriters, cash registers,
adding machines and tabulating machines, not the
ones making electronic components
– General Electric has the know-how, the engineers
and the capital to dwarf IBM and Univac in the
computer field; but it doesn't.

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Meanwhile elsewhere (computers)
• The Computer
– The Whirlwind and SAGE projects give Boston a
huge lead in computer science over the rest of the
country
– Boston is the main center for training computer
scientists in the entire world
– In 1959 there were about 6,000 computers in the
USA

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Meanwhile (semiconductors)
• AT&T shares the technology of the transistor with
anyone that can improve it (1951): Sylvania (Boston),
Motorola (Arizona), Texas Instruments (Texas),
Transitron Electronics (a Boston startup)
• Applications of transistors: Raytheon’s hearing aids,
Regency’s portable radio (october 1954)
• The portable radio marks the birth of consumer
electronics, a trend towards miniaturization and lower
prices
• The first fully transistorized computer, the TRADIC
(1954), is built by AT&T for the Air Force in 1954, but
AT&T is barred from commercial computer business

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The West-Coast Computer Industry
• Aviation industry of Los Angeles: Northrop Aircraft,
Raytheon, Rand and Hughes
• UCLA’s SWAC for the government's National Bureau
of Standards (1950)
• CRC, a Northrop spinoff (1950)
• Raytheon’s Raydac (1953)
• Rand’s IAS computer (1953)
• Packard Bell’s computer labs (1957)
• All of them funded, directly or indirectly, by military
projects
• During the Korean war (1950-53) California passes
New York as the state receiving the largest share of
military contracts

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Birth of the High-tech Industry in
the Bay Area
• Stanford Industrial Park (1951) and the Terman
doctrine (land to be leased "only" to high-tech
companies): Varian (1951), Hewlett-Packard,
General Electric (1954), Eastman Kodak, Zenith
(1956), Lockheed (1956).
• Hewlett-Packard’s corporate culture: focus on human
resources (stock options for employees, women
executives)
• High-tech IPOs: Varian in 1956, Hewlett Packard in
1957, and Ampex in 1958.
• IBM’s West-Coast laboratory in San Jose (1952)

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Birth of the High-tech Industry in
the Bay Area
• Computers
– IBM’s RAMAC 305 (1954), the first computer to
use magnetic-disk storage
– SRI’s ERMA for Bank of America (1955)
– Berkeley’s CALDIC (1954)

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Birth of the High-tech Industry in
the Bay Area
• Main industry: Defense
– Santa Clara Valley's largest company: Sylvania’s
Electronic Defense Lab
– General Electric’s Electric Microwave Lab to make
electronic devices for radars and missile defense
systems (1954)
– Lockheed’s submarine-launched ballistic missile
Polaris and satellite system Corona (1956)
– Raychem (1957) to make wires and cables for the
military and aerospace industry
– NASA’s research center at Moffett Field (1958)

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Birth of the High-tech Industry in
the Bay Area
• Electronics
– The Cold War is a gold mine for electronics
– "The Group" of private investors (1955) to invest in
promising electronics companies of the Bay Area
– Watkins-Johnson (1957) to manufacture
components for electronic intelligence systems,
one of the first venture-capital funded companies
in the Santa Clara Valley

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Birth of the High-tech Industry in
the Bay Area
• Semiconductors
– Shockley Semiconductor Laboratory (1956)
– Fairchild Semiconductors (1957), the first venture-
funded "start-up" company of the Bay Area:
Robert Noyce, Gordon Moore, Jean Hoerni,
Eugene Kleiner, etc
– The semiconductor industry does not require huge
capital investment

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Birth of the High-tech Industry in
the Bay Area
• Science
– Nobel laureates: John Northrop and Wendell
Stanley (Berkeley, 1946), William Giauque
(Berkeley, 1949), Glenn Seaborg and Edwin
McMillan (Berkeley, 1951), , Felix Bloch (Stanford,
1952)
– Lawrence Livermore Lab to develop hydrogen
bomb (1952) and nuclear fusion (1953)
– Berkeley Lawrence Lab’s Bevatron (1955) detects
antimatter

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Culture
• Bay Area Figurative Painting (1950)
• Alan Watts’ radio program promotes Eastern
philosophy (1953 )
• Peter Martin’s literary magazine "City Lights" (1952)
and Lawrence Ferlinghetti’s bookstore "City Lights“
(1953) promote the Beat Generation
• Allen Ginsberg's recitation of "Howl“ (1955)
• Beat generation of poets
• Gary Snyder and Philip Whalen adopt Zen Buddhism
• San Francisco International Film Festival (1957)

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Society
• Massive state-wide infrastructure building
• Weather, military facilities and economic boom attract
immigrants from other states
• San Jose experiences a population boom
• "Daughters of Bilitis" (1955), the first exclusively
lesbian organization
• CIA’s MK-Ultra project (1959) to experiment on drugs

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Meanwhile elsewhere…
• Artificial Intelligence
– Marvin Minsky’s simulation of the neural network
of the brain (1951)
– Conference on Mechanical Translation (1952)
– George Devol’s Ultimate, the first industrial robot
(1961
– Conference on Artificial Intelligence (1956)
– Allen Newell’s and Herbert Simon’s Logic Theorist
(1956)
– Frank Rosenblatt’s Perceptron (1957)
– Morton Heilig’s Sensorama Machine (1957)
– Oliver Selfridge’s Pandemonium (1959)

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Meanwhile elsewhere…
• Software
– During the 1950s most programs came bundled
with the computer
– User-written programs were not sold: they were
made available to the community of users of the
same machine ("Share“, "Use")
– The FORTRAN programming language (1957),
the first practical machine-independent language,
and COBOL (1958), invent the job of the software
engineer,
– Software companies: Rand’s SDC (1955),
Computer Usage Company (1955), CEIR (1957)

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Venture Capitalists
• Small Business Investment Company Act (1958)
• Draper, Gaither and Anderson (1958), the first
limited-partnership venture-capital firm in California
• Continental Capital (1959)
• Tommy Davis and Arthur Rock (1961)
• Bill Draper and Franklin Johnson (1962)

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Semiconductors
– Fairchild Semiconductors’ planar integrated circuit
(1961)
– Fairchild Semiconductors employees: Don Farina,
Don Valentine, Charles Sporck, Jerry Sanders,
Jack Gifford, Mike Markkula
– Signetics (1961), first Fairchild spinoff
– Main customers of integrated circuits: the Air
Force and NASA

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Life Sciences
• Stanford hires Carl Djerassi (1959), inventor of the
birth-control pill
• Alejandro Zaffaroni’s Syntex relocates to the Stanford
Industrial Park (1963)

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Meanwhile elsewhere…
• New York
– IBM 7000 transistorized series (1960)
– IBM’s SABRE (1960), the first online transaction
processing, an adaptation of SAGE to automating
American Airlines' reservation system
– GE’s IDS (1961), the first database management
system
• Boston (MIT)
– CTSS (1961), the first time-sharing system
– "Spacewar" (1962), the first computer game
– Ivan Sutherland’s "Sketchpad“ (1963), the first
computer program with a GUI

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Meanwhile elsewhere…
• US Government
– Paul Baran (Rand Corp): a distributed network of
computers can survive a nuclear strike (1962)
– Ted Nelson (Harvard Univ): hypertext (1965)
– Joseph Licklider (DARPA’s IPTO) funds Project
MAC for A.I. at the MIT (1963) and Project Genie
for time-sharing at UC Berkeley (1964)
– Bob Taylor (NASA) funds Douglas Engelbart‘s
ARC for human-computer interaction at the SRI
– Bob Taylor (DARPA): Arpanet (1966)
– Project MAC and the Arpanet further increase
Boston's lead over the rest of the nation

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Integrated Circuits
• Exponential growth in chip density
– Frank Wanlass at General Microelectronics
(1964): CMOS, i.e. low power consumption, low
heat and high density (i.e. semiconductors into
digital watches and pocket calculators)
– Lee Boysel at Fairchild (1966): four-phase
clocking technique to create very dense MOS
circuits
– Federico Faggin at Fairchild (1968): silicon-gated
MOS transistors (faster, smaller and low energy)
• Gordon Moore’s law (1965): the processing power of
computers will double every 12 (18) months

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Integrated Circuits
• Fairchild spinoffs: Amelco (Jean Hoerni), Molectro
(James Nall), General Microelectronics (Don Farina),
Intersil (Jean Hoerni); AMD (Jerry Sanders ), etc
• Texas Instruments, Motorola and RCA do not spawn
a similar genealogical tree of spinoffs
• A self-sustaining manufacturing community that
mixes Darwinian competition/selection with symbiotic
cooperation
• The system exhibits a form of collective learning
• Few of the companies that had thrived in the age of
microwave electronics survive to the age of the
integrated circuit

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Integrated Circuits
• Role of the government
– The military serves as both a munificent venture
capitalist that did not expect a return (and not even
co-ownership) and as an inexpensive testbed
– NASA's Apollo mission to send a man to the Moon
builds the Apollo Guidance Computer (1961-64),
the first computer to use integrated circuits

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Culture
• San Francisco Mime Troupe (1959)
• Peter Voulkos’ Funk Movement in ceramic sculpture
(1959)
• Canyon Cinema (1961)
• Tape Music Center (1962)
• Esalen Institute (1962)
• Pop Art at UC Davis (1960
• First public showing of computer art (San Jose, 1963)
• The Ali Akbar College of Music (1967)

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Culture
• SLAC (1962), the longest linear accelerator in the
world
• Stanford Artificial Intelligence Laboratory (1963)

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Society
• Free Speech Movement (1964)
• Ken Kesey’s Merry Pranksters (1964)
• First hippie festival (1965)
• The Diggers (1966)
• The "Summer of Love" (1966)
• Black Panther Party (1966)
• Monterey’s rock festival (1967)
• Stewart Brand’s "Whole Earth Catalog“ (1968)
• The hippie phenomenon further increases
immigration from other states
• All these movements are hostile to technological
progress

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Society
• The Immigration Act (1965) greatly increases the
quotas of immigrants allowed from various countries
and allows immigration based on rare skills, such as
software or hardware engineering
• Only 47 scientists immigrate to the USA from Taiwan
in 1965, but in 1967 the number is 1,321
• Brain drain of engineers and scientists from Europe
and especially the Far East towards the Bay Area

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Meanwhile elsewhere…
• IBM’s System/360 (1964), a family of computers that
are software-compatible and modular (the first
“mainframe” computer), derived from the military
Project Stretch (1956-61)
• The seven dwarfs: Burroughs in Detroit, Sperry Rand
in New York (Univac , ERA, etc), Control Data in
Minneapolis, Honeywell in New Jersey, NCR,
General Electric and RCA in New York
• The "bunch": Burroughs, Univac, NCR, Control Data
Corporation, and Honeywell

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Meanwhile elsewhere…
• New businesses
– Software companies in Texas: EDS
(outsourcing) and Uccel (the packaged
product TMS)
– Tymshare (1964) offers time-sharing
services in Cupertino

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Meanwhile elsewhere…
• Small computers
– DEC’s PDP-1 (1960), an MIT spinoff funded by
venture capitalists
– SDS’ 910 (1962), a Packard-Bell spinoff funded by
venture capitalists
– DEC’s PDP-8 (1965) that uses integrated circuits
– Olivetti’s P101 (1965), a programmable electronic
desktop computer
– Texas Instruments’ hand-held calculator (1967)
– First computer manufacturer of the Bay Area:
Hewlett-Packard, but their calculators are simply a
natural evolution of an instrumentation product line

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Dynamic Memory
• Advanced Memory Systems (1968), Intel (1968) and
Four Phase (1969): semiconductor computer
memories instead of magnetic core memories
• Before the DRAM: the semiconductor firms make
money by building custom-designed integrated
circuits (small market but lucrative)
• The DRAM: a commodity sold in large numbers at a
low price
• Constant downward pressure on prices
• Intel’s i1103 is the first bestseller of the DRAM

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High-tech Creativity
• SRI
– Doug Engelbart’s NLS (1968): a graphical user
interface and a hypertext system running on the
first computer equipped with a mouse and
connected to a remote computer
– "Shakey the Robot“ (1969)

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High-tech Creativity
• Xerox PARC (1970)
– Alan Kay’s Dynabook and Smalltalk
– Not faster computation but better interaction
– Casual, informal and egalitarian workplace
– The equivalent for a workplace of the alternative
lifestyle preached by the hippies

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High-tech Creativity
• Computer manufacturers
– IBM Western Labs’ floppy disk (1971): a cheap
storage medium to load the 370 mainframe's
microcode and replace the cumbersome tape
units
– HP/3000 (1972): one of the first computers to be
completely programmed in a high-level language
instead of assembly language
– The PDP of DEC had introduced a "do-it-yourself"
mindset in data centers. The HP/3000 pushed that
mindset one floor up to the business offices.
– Amdahl (1975): cheaper IBM-compatible
mainframes

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High-tech Creativity
• Computer games
– Nolan Bushnell’s "Computer Space“ (1971): a
free-standing terminal powered by a computer
– Atari’s “Pong“ (1972)

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Life Sciences
• Alejandro Zaffaroni’s Alza (1968): biomedical industry
• Cetus (1971), the first biotech company of the Bay
Area (to develop methods to process DNA)
• Paul Berg's team at Stanford University synthesizes
the first recombinant DNA molecule (1972)
• Stanley Cohen (Stanford) and Herbert Boyer (UCSF)
transfer DNA from one organism to another, creating
the first recombinant DNA organism (1973)

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Labor Fluidity
• California is blessed with an economy which mostly
outperforms the rest of the USA
• California is an employee's market and not an
employer's market
• California’s law code forbids any labor contract that
limits what an employee can do after quitting
• Silicon Valley engineers exhibit a preference for
horizontal instead of vertical mobility, for hopping
from job to job instead of following a career of
promotion after promotion
• Staying with the same company for more than a few
years does not look "good" on a resume

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Labor Fluidity
• Job turnover and no protection for trade secrets
foster an endless flow of knowledge throughout the
communityspread
• Pervasive job mobility spreads knowledge quickly
and efficiently
• Rapid dissemination of knowledge within an industry
across companies, as well as in cross-fertilization of
ideas across research groups.
• Status symbol of being an engineer like in no other
region in the world (second to the status symbol of
being an entrepreneur)

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Society
• Ronald Reagan’s era (1967-75): the age in which
citizens revolt against big government and taxation
• Post-hippy grass-roots environmentalist movement
(Garrett Hardin’s article "Tragedy of the Commons“)
• Man and his Environment conference (1968)
• "Earth Day“, a new international holiday (1970)
• The Reagan-ite establishment pressed to curb public
spending and the environmentalist movement
pressed to curb the infrastructure boom on almost
opposite ideological grounds

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Meanwhile elsewhere…
• Arpanet
• Unix
• Remote Computing
• The Unbundling

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Meanwhile elsewhere…
• The Arpanet (1969): four nodes, three of which are in
California (UCLA, SRI and UC Santa Barbara) run by
BBN in Boston
• Unix:
– Bell Labs’ successor to the MULTICS time-
sharing operating system (1971)
– Rewritten in C, it can be easily ported across
computers (1973)
– AT&T is forbidden to enter the computer business
and forced to share any non-telephone invention
with the whole world
– The Unix becomes a worldwide phenomenon

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Meanwhile elsewhere…
• Remote Computing
– IBM’s transactional system CICS for real-time
transactions (1969)
• The Unbundling
– Before the unbundling only SDS had charged
customers for software
– IBM forced to unbundle the application program of
its mainframes (1969)
– Free market for software applications
– Software companies shift from the consulting
business of custom applications to selling off-the-
shelf packages

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Meanwhile elsewhere…
• Britain
– Britain had the know-how (it had pioneered
computers)
– National long-term plan (NRDC)
– Britain's computer industry self-destroyed within
two decades
• Japan
– Japan was experiencing the most spectacular
economic boom in the world
– National long-term plan (MITI)
– Japan created a vibrant computer industry within
the existing conglomerates (Fujitsu, Hitachi, NEC)

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The Microprocessor
• Four Phase Systems’ AL1 (1970)
• Intel’s 4404 (1971), as powerful as the ENIAC, but
millions of times smaller and ten thousand times
cheaper
• Intel's motivation to make microprocessors:
microprocessors helped sell more memory chips
• Bill Pentz at California State University in Sacramento
proves that a microprocessor can be used to build a
computer (1972)
• Intel’s 8080 (1974) lowers both the price and the
complexity of building a computer while further
increasing the power (290,000 instructions per
second)

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The Microprocessor
• MITS of New Mexico builds the first calculator to use
the Intel 8008 (1971)
• Hewlett-Packard, Texas Instruments, Casio and
Commodore debut small calculators (1972)

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The Home Computer
• "Radio Electronics", "QST" and "Popular Electronics"
publicize the microprocessor among hobbyists
• Kits by mail-order for hobbyists to build machines at
home: Scelbi (1974), …, Altair 8800 (1974)
• The microprocessor reaches a wider audience than
its inventors intended to reach thanks to the
magazines
• The most creative and visionary users are not
working in corporations but at home
• The Homebrew Computer Club (1975)

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The Home Computer
• IBM, the "BUNCH“ and DEC had the know-how, the
brains and the factories to produce desktop
computers for the home market. They did not do it.
• The market for home computers is largely created by
a grassroots movement of hobbyists who work
outside the big bureaucracies of corporations,
academia and government.
• They create their own community (via magazines,
stores and clubs)
• Another Bay Area community of counterculture
• Journalists and store owners are the real visionaries

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The Home Computer
• Obstacle to widespread diffusion: the home computer
is expensive (because the Intel microprocessor is
expensive) and pretty useless (because it has no
software)

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Venture Capitalists
• The center of mass for venture capital shifts from San
Francisco towards Menlo Park
• Kleiner-Perkins (1972), Sequoia Capital (1972),
Mayfield Fund (1974), etc

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The Microprocessor Wars
• Microprocessors drive sales of memories, and sales
of memories fund improvements in microprocessors
• AMD introduces the AMD8080, a reverse-engineered
clone of the Intel 8080 (1975)
• Zilog (1976)

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Databases
• Leadership in database technology: IBM’s IMS
• IBM's Almaden Research Center starts the
“relational” database management system System R
(1973)
• Berkeley’s Ingres (1973)

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The GUI
• Leadership in user interface: IBM’s form-driven 3270
terminal to connect to mainframes
• Xerox PARC unveils the Alto, the first workstation
with a mouse and a Graphical User Interface (1973)

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Culture
• Video art, performance art, participatory installations,
mixed media, live electronic music

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Society
• "Gay Pride Parade" (1970)
• The Castro district becomes the center of gay life

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The Apple Vision
• Apple I vision (1976):
– A computer without a programming language is an
oxymoron
– A real programming language requires DRAM
– Enabling technology: the 4K DRAM, just
introduced in 1974, much cheaper than the static
RAM of the Altair
– Roberts had basically just dressed up a
microprocessor to create his Altair. Wozniak
dresses up a memory chip to create the Apple I
– Wozniak also writes the BASIC interpreter
– Target user: the hobbyist

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The Apple Vision
• Apple II vision (1977):
– Funded by Mike Markkula
– Fully assembled, with a monitor and a keyboard,
requiring almost no technical expertise
– The look and feel of a home appliance
– The first affordable floppy-disk drive for personal
computers, which replaces the cassette as the
main data storage
– Still no operating system

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Low-cost Microprocessors
• The Motorola 6502 generation
– Apple I (1976)
– Commodore PET (1977)
– Atari 800 (1978)
– Acorn
• The Zilog Z80 generation
– Tandy/Radio Shack's TRS-80 (1977)
• The companies that miss the train are the ones that
dominated the market for calculators: Texas
Instruments, Hewlett-Packard

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A New Office Tool
• VisiCalc (1979), the first spreadsheet program for
personal computers for the Apple II
• Apple’s IPO (1980) raises a record $1.3 billion
• Visicalc ported to the Tandy TRS-80, Commodore
PET and the Atari 800, the first major application that
is not tied to a computer
• Lesson learned: the value of software

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The Microprocessor Wars/ II
• Intel assigns the task of designing the 8086 (1978) to
a software engineer
• The 16-bit microprocessor
– Intel’s 8088 (1979)
– Motorola’s 68000 (1979)
– Zilog’s Z8000 (1979)
• 14 million microprocessors are sold in 1978 but only
200,000 personal computers are manufactured

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Data Storage
• Alan Shugart’s smaller floppy-disk (1976)
• Seagate’s 5Mbyte hard-disk drive for personal
computers (1980)
• Tandem (1976): fault-tolerant machine for mission-
critical transactions

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Databases/ II
• Oracle (1977): an SQL relational database
management system
• Ingres (1979), an open-source variant of IBM's
System R for DEC minicomputers running the Unix
operating system
• The relational database startups do not target the
huge market of mainframe computers but the smaller
market of minicomputers
• IBM's IMS dominates the database market for
mainframe computers and IBM fails to capitalize on
the System R developed at its Almaden labs until
1983 (DB2)
• Oracle rewrites its DBMS in C for Unix (1983)

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Communications
• 3Com (1979): Ethernet for personal computers
• Ungermann-Bass (1979): Ethernet-based local-area
networks

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The GUI/II
• Exodus of brains from Xerox PARC towards Silicon
Valley companies (1977)
• Xerox 8010 Star Information System (1981) that
integrates a mouse, a GUI, a laser printer, an
Ethernet card, an object-oriented environment
(Smalltalk) and word-processing and publishing
software.
• Artificial Intelligence: Intellicorp (1980)

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BSD
• Unix ethics and philosophy a good match for the Bay
Area’s utopian ideology
• Berkeley Software Distribution (1977) spreads in
universities
• The world's most portable operating system
• Onyx (1980), Apollo (1980), SUN (1981), Silicon
Graphics (1982): a microcomputer running UNIX, a
cheaper alternative to the PDP-11
• Santa Cruz Operation (1979), the first Unix consulting
company
• DARPA chooses Unix for the Arpanet (1980)

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BSD
• A technology ignored by the big computer
manufacturers and left in the hands of a community
of eccentric independents
• Counterculture dynamics that mirrors the dynamics of
the computer hobbyists who have invented the
personal computer
• Universities serve as community aggregators more
than magazines, clubs or stores

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The Moral Tale
• Government funding (from the 1910s till the 1960s)
accelerated innovation whereas large computer
corporations in the 1970s de facto connived to stifle
innovation

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The Moral Tale
• The Visible Hand of Capital
– The amount of money available to venture
capitalists greatly increases after the Apple IPO
– For several years Kleiner-Perkins is able to pay a
40% return to the customers of its high-tech fund

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The Moral Tale
• The Invisible Hand of Government
– The US government reduces the capital gains tax
rate ("Revenue Act“, 1978)
– The US government eases the rules on pension
funds (1979)
– Silicon Valley’s high-tech industry benefits from
computer-based military projects: the B-2 stealth
bomber, the Jstars surveillance system, the Global
Positioning System (GPS), the Trident submarine
and the Tomahawk cruise missile.

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Biotech
• Genentech (1976) to genetically engineer new
pharmaceutical drugs
• DNA sequencing invented in Britain (1977)
• Applied Biosystems (1979) to build biotech
instrumentation (protein sequencer, DNA
synthesizer)
• The US Supreme Court rules that biological materials
(as in "life forms") can be patented (1980)
• Calgene (1980), Chiron (1981), …
• Cetus’ IPO (1981) raises a record $108 million

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Culture
• Music: new wave and punk-rock vs new-age music
• George Coates’ multimedia theater group
Performance Works (1977)
• Survival Research Labs (1978)

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Meanwhile elsewhere…
• The IBM PC (1981), a personal computer from off-
the-shelf, widely available components based on the
Intel 8088 microprocessor and running an operating
system by Microsoft (derived from Unix)
• The “open” model of the PC creates an industry of
"clones" (Compaq, Olivetti) and an industry of
independent software companies
• Commodore 64 (1982) is sold in retail stores instead
of electronics stores
• Osborne 1 (1981), a portable computer designed by
hardware engineer Lee Felsenstein of the Homebrew
Computer Club

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The Apple Vision/ II
• Apple (1982) is the first personal-computer company
to pass the $1 billion mark in revenues
• Apple’s model: a proprietary Apple operating system
• Apple Lisa (1983), the first personal computer with
the GUI pioneered by the Xerox Alto
• Apple’s added value: it looks cool

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Software
• Sales of personal computers skyrocket because they
have become useful: Apple thanks to office programs
(Visicalc, Context MBA) and the PC thanks to the
DOS-compatible applications (Lotus 1-2-3, dBase
($700)
• Activision (1979), Electronic Arts (1982): computer
games
• Autodesk (1981): CAD
• Adobe (1982): desktop publishing
• Symantec (1982), Borland (1983): tools for software
developers

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Software
• 1950s-1970s: the hardware represents most of the
cost of a computer
• 1980s: the falling prices of hardware components
enables ever more sophisticated software
applications and triggers a growing demand for them;
and the need to run more sophisticated applications
motivates the hardware industry to produce more
powerful chips

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Workstations
• Single-user graphic networked computer for
engineering applications
• Mostly based on the Motorola 68000 (not on Intel)
and running Unix (not DOS)
• Apollo (1980), SUN (1982), Silicon Graphics (1982),
DEC and Hewlett-Packard (1983)
• Apollo (Boston): custom hardware and proprietary
operating system
• SUN (Stanford): Berkeley’s Unix running on standard
off-the-shelf hardware components (the business
model of the IBM PC)
• The SUN culture is to the Microsoft culture what the
counterculture is to the mainstream

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Workstations
• Corporate networks of local networks
– Cisco’s commercial version of Stanford’s router
(1986)

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Diversifying
• Fairchild, Intel, Zilog created a genealogical tree:
each one improved over the invention of the
predecessors
• The inventions of Apple, Cisco, SUN and Oracle have
little in common
• Neither of them gives rise to a (significant)
genealogical tree
• No major company of the size of Intel emerges from
any of these
• Each of them creates a chain of suppliers

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The Great Unix Wars
• The US government allows AT&T to sell its Unix,
System V (1983)
• AT&T's corporate world versus the idealistic Bay
Area hobbyists (SUN)
• Open Software Foundation (1988): IBM, DEC,
Hewlett-Packard, etc
• Meanwhile Microsoft keeps increasing its market
shares…

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The Internet
• Just like the personal computer and the Unix, the
Internet too was largely shaped by a community of
eccentric independents
• Decentralized model that involves the very users of
the Internet to submit proposals for future directions
• A government-mandated grass-roots movement
• The consumer is the producer
• E-mail itself is a user invention, never planned by the
Arpanet's bureaucracy

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The Internet
• The Arpanet as a project in progress, a concept that
is more likely to be accepted in military projects than
in commercial product development
• The Arpanet changes mission over time, transforming
from a military project to survive a nuclear attack into
a system for interpersonal communication and
knowledge sharing
• The ethics of the Arpanet, just like the ethics of the
Unix world and the ethics of the early personal-
computer hobbyists, is not the brutal, heartless ethics
of the corporate world nor the brutal, heartless ethics
of Wall Street: it is the utopian ethics of the hippie
communes transposed into a high-tech environment

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Society
• Spiritual revival of the New Age
– Arguing for a return to a more natural way of life
– Hostility towards science and rationalism
– Luddites vs tecnophiles

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Society
• Chinese and Indian executives run 13% of Silicon
Valley's high-tech companies founded between 1980
and 1984
• Silicon Valley is both a place of great ethnic diversity
and a place of high technological saturation

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Society
• Chaotic creation and destruction of companies
• High labor mobility
• Anti-union spirit
• The decentralized and anarchic personal-computer
world is a good fit for the spirit of the Bay Area

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Apple’s Vision/III
• Apple’s Macintosh (1984)
• The hardware is a means to appealing software
• Microsoft cannot match Apple’s GUI because it
cannot tweak the hardware of the PC
• Apple’s HyperCard (1987)
• However, Microsoft can invest more in marketing its
office automation suite (Word, Excel, Powerpoint)
• The futuristic Mac helps cement the community of
Apple fans
• But Apple’s closed architecture loses to the "open
architecture" created by the IBM-Microsoft axis

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The GUI
• Virtual Reality
– NASA’s VIVED (1984) and VIEW (1985)
– Jaron Lanier’s VPL Research (1985)
– Lucasfilm’s virtual world "Habitat“ (1986)

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The Semiconductor Wars
• Japanese firms introduce low-cost 256K DRAM chips
(1984) and gain 70% of the market (1985)
• Intel, AMD and Fairchild exit the DRAM market
• Japan's share of the world's semiconductor market
reaches 51% (1986)
• First large-scale layoffs in Silicon Valley
• What saved Intel is the microprocessor. The
"computer on a chip" is too complex and required too
big a manufacturing investment to be handled like a
commodity

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Intel’s Vision
• The real competitors are at home: VLSI Technology,
Linear Technology, LSI Logic, Cypress
Semiconductor, Maxim, Altera and Xilinx
• New corporate culture: a brutal philosophy of
Darwinian competition ("Only the paranoid survive")
and iron discipline

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Outsourcing the Fab
• 1985: The government of Taiwan hires Morris Chang
who promotes the outsourcing of semiconductor
manufacturing by US companies to Taiwan
• “Fab-less" semiconductor companies of Silicon
Valley: Chips and Technologies, Xilinx, Cirrus Logic,
Adaptec…
• Whenever a Silicon Valley manufacturer outsources a
project to a Taiwanese fab, it directly improves the
Taiwanese plant both by injecting capital and by the
project's new requirements and therefore does a
favor to its own competitors who can use the same
factory

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SUN’s Vision
• SUN erodes DEC's supremacy in the academia and
then in the engineering market
• The DEC generation believed that a company
needed to personally make the key components
• The SUN generation believes that key components
ought to be delegated to specialty shops
• In-house development is unlikely to match "best of
breed" quality across the board by specialized shops
• The pace of innovation rewards SUN over DEC
• This model creates a secondary economy in Silicon
Valley of large hyperspecialized companies that don’t
become household

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Meanwhile elsewhere…
• Dell (1984): custom PC-compatible computers sold
directly to the customer by mail order (almost a return
to the business model of the early hobbyists) thanks
to an automated supply-chain system that removes
the need for inventories ("made to order“)
• Both Dell and Compaq owe their success more to a
distribution strategy than to a technological
breakthrough

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Meanwhile elsewhere…
• Japan
– Nintendo launches the videogame console
Nintendo Entertainment System (1983)
– Sony introduces the CD-ROM for data and music
storage (1984)
– Toshiba invents flash memory (1984)
– Toshiba (1985) enters the market of the IBM-
compatible laptops

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Meanwhile elsewhere…
• Distributed computing
– The client-server architecture as a cheaper
alternative to the monolithic mainframe
– Groupware to make personal-computer users to
work as a team
• Novell’s network operating system NetWare for
DOS was the first stepping-stone
– Dedicated online services for personal computers
• CompuServe, America Online (1985)

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The Peacetime Dividend
• End of the Cold War: Silicon Valley does not
depend anymore on the military industry
• Building chips is a high-risk business: huge
capital investment, very short lifespan of the
product, price wars
• The reward: the survivors dominate the most
important industry of the era
• The semiconductor industry creates a culture
of risk that spreads to the software industry

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The Peacetime Dividend
• The culture of risk is a whole infrastructure designed
to promote, assist and reward risk-takers in new
technologies (laboratories, plants, offices, corporate
lawyers, marketing agencies, venture capitalists,
universities, immigrants)
• The main change: need to generate a profit as
quickly as possible (the great investor of the 1950s
and 1960s, the military, thought long-term, with no
interest in return on investment)
• The venture-capital firms create a ghost industry
(focused on making money) that evolves in parallel to
the technological one

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The Peacetime Dividend
• The short-term approach helps communicate
effectively with the market.
• The Silicon Valley start-up is both "visionary"
AND grounded in the reality of technological
feasibility and of market readiness
• The Darwinian system of small start-ups as a
whole is more likely to find a solution to a
problem than a large bureaucratic company
• Progress is incremental, but rapid

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The Peacetime Dividend
• Europe and East Coast: the goal is a lifetime career
in a large, safe company
• Silicon Valley: a company's life expectancy is low
• The goal is to change jobs hoping to hit the jackpot
• Silicon Valley's dream is a linear progression from
engineer in a start-up to founder of a start-up to
investor in a start-up
• This dream encourages people to take chances
working for a start-up, to take chances creating start-
ups, and to take chances investing in start-ups

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The Peacetime Dividend
• Venture capitalists employ or are themselves
technology specialists
• The venture capitalist becomes a knowledge
broker, helping shape companies and their
businesses through her/his network of
contacts

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The Peacetime Dividend
• The leaders of Apple, Oracle, Intel and SUN
acquire semi-god status
• They fight epic battles (e.g. against Microsoft)
• Their charisma replaces the charisma of the
engineers who had truly invented their
technologies (Faggin, Wozniak,
Bechtolsheim…)
• The trend shifts from inventing a product to
starting a company

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Geopolitical Implications
• Historical shift in political and economic
power from the old industrial and financial
capitals of the Northeast and Midwest
towards a new pole of industry and finance
based on the West Coast
• The biggest competitor of California is Japan,
not Western Europe
• The old "Atlantic" economy is being replaced
by a new "Pacific" economy

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Society
• Search For ExtraTerrestrial Intelligence Institute
(1984)
• The WELL (1985), a virtual community of computer
users structured in bulletin boards for online
discussions (social networking ante-litteram)
• The "Whole Earth Review“ (1985) introduces Virtual
Reality, the Internet and Artificial Intelligence to the
masses of Silicon Valley hackers
• "Burning Man" (1986)
• "Burning Man", born out of a counterculture that
reacted against what Silicon Valley represents, is an
appropriate metaphor for what Silicon Valley is

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Society
• The population of San Jose passes San Francisco’s
• Menlo Park replaces San Francisco as the financial
center for the high-tech industry
• The new billionaires build mansions in the Peninsula
instead of San Francisco

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Meanwhile elsewhere…
• 1988: Bellcore invents DSL that allows every
household to use the existing phone line to establish
a high-speed connection with a computer
• 1987: U.S. Robotics unveils a 9600-baud modem
($1,000)
• 1987: Uunet, the first independent ISP
• Anybody willing to purchase a modem can get on the
Internet
• 1989: CompuServe enables its customers to
exchange e-mail with Internet users
• 1991: Tim Berners-Lee invents the World-wide Web

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Meanwhile elsewhere…
• 1991: The US government enacts the “High-
Performance Computing and Communication Act”
• 1993: Mosaic (funded by the “High-Performance
Computing and Communication Act”), later renamed
Netscape in Silicon Valley
• 1994: WebCrawler (search engine)
• 1995: The US government blesses the commercial
use of the Internet

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The Dot Coms
• The importance of Netscape’s browser:
– Free for ordinary users
– Illiterate computer uses can browse the Web the
same way that a pro does
– The non-intuitive cluster of digital information that
has accrued on the Internet becomes intelligible to
ordinary people
– More and more people are motivated to add
content to the Web

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The Dot Coms
• The importance of Netscape’s browser:
– The personal computer boom of the 1980s
has placed a computer in millions of
households and the browser turns them
into the audience of the Web
– The computer monopolies are forced to
adopt open standards for the Web

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The Dot Coms
• Netscape IPO (1995)
• Yahoo (1995)
• Excite. AltaVista (1995), Hotbot (1996), Google
(1998)
• Java (1995)
• WebLogic (1995), Apache (1996)
• Craigslist (1995)
• HotMail (1996)
• GeoCities (1995)
• eBay (1995)
• Netflix (1997)

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Hotmail’s Lesson
• Founded by hardware engineers: a user’s idea, not a
technological idea; a sturdy no-nonsense "product“
• Advertising as a source of revenues
• Internet startups offer free services because their real
product is the user base
• The boom of the Web is not a consequence of the
Internet but of the boom in advertising: cable
television revenues stage an 82% growth rate in
1994-95 just when the Web is maturing

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Connecting the World
• Beneficiaries of the age of networking: Cisco, 3Com
and Bay Networks
• Fiber-optic boom
• Overcapacity dramatically lowers the cost of
broadcasting information, thereby increasing the
motivation to broadcast information
• The fiber-optic rush creates on the Internet the
equivalent of the freeway system created by the US
government in the 1950s
• The vast fiber-optic infrastructure connects the USA
to India too, thus accelerating the process of
outsourcing IT jobs to India

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The Mobile World
• General Magic (1990) to put the power of a real
computer into the hands of a casual mobile user
connected to a “cloud” of services
• Apple Newton (1993): a pen-based tablet computer
with software for handwritten recognition
• Apple QuickTake 100 (1994): the first camera that
can download images into a personal computer
• SoftBook Press ebook reader (1996)
• Palm Pilot (1996)

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Meanwhile elsewhere…
• Finland implements a GSM network for mobile
computers (1991)
• Nokia introduces SMS (1993)
• Linux (1991)
• Nokia's 9000 Communicator (1996), the smartphone
• The "Telecommunications Act" allows cable television
providers to offer Internet services (1996)
• MapQuest’s mapping software (1996)
• SixDegrees’ social networking software (1997)
• The Y2K Bug (1999)
• Napster (1999)

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Meanwhile elsewhere…
• Human Genome Project (1992)

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The Nasdaq Crash
• Between 1998 and 1999 venture-capital
investments in Silicon Valley firms increases
more than 90%
• The Internet and Y2K booms generate a
bubble that bursts in 2000

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The Nasdaq Crash
• Silicon Valley before the bust:
– Personal computers: HP and Apple dwarfed by
IBM, Compaq, Dell and Japanese
– Videogame consoles: Japan rules
– Semiconductors: The Far East rules
– Mobile phones: Europe rules
– Chips for mobile devices: ARM rules
– Software: Microsoft and SAP dwarf Oracle
– Dotcoms: No profits

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Beyond the Crash
• HP acquires Compaq (1999): DEC downgraded to
just up a small division within a Silicon Valley
company (HP)
• Paypal (2000)
• Apple iPod (2001)
• Yahoo and Google de-facto turn the Web into an
advertising tool which incidentally also contains
information
• Almost all of Google's businesses are driven by
acquisition of other people's ideas

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You Are a Gadget
• Wikipedia (2003)
• Intel Centrino makes Wi-Fi a household name (2003)
• Facebook (2004)
• YouTube (2005)
• Twitter (2006)
• Kindle (2007)
• Zynga (2007)
• Apple iPhone (2007) and Google Android (2007)

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The Age of Uploading
• Wikipedia
• Blogs
• P2P tools
• social networking sites
• YouTube
• Flickr
• Digital cameras and camcorders
• Smartphones

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The Demise of the Computer
• The smartphone (a computer that also does
voice)
• Cloud computing (an invisible, omnipotent,
virtual computer)
• Applications are written for social networks
(Facebook apps) and smartphones (iPhone
apps), not for an operating system

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The Gift Economy
• The audience “gifts” content to the companies
that make money out of it
• The companies are small but handle a huge
amount of content
• The companies make money as advertising
platforms
• The audience receives a free service but also
provides a free service

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The Great Internet Wars
• Google vs Microsoft: Microsoft owns the
operating system but Google owns the search
engine (Internet traffic)
• Google vs Facebook: vying to become the
premier advertising platform
• Apple vs Google: proprietary or open
smartphones

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The Empire
• The Bay Area is the largest high-tech center in the
world (2006)
• HP passes Dell in worldwide PC shipments (2006)
• Google's revenues pass IBM's software revenues
(2009)
• Oracle passes SAP (2009)
• Facebook grows by about one million users a day
(2009)
• Apple's market capitalization passes Microsoft's
(2010) and becomes #1 in the world (2011)
• The Bay Area has won more Nobel prizes than any
country except USA, Britain and Germany

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The Future
• The one-man startup
• Advertising vs privacy

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Biotech
• Elsewhere:
– Celera and HGP announce the human genome
has been sequenced (2000)
– Stony Brook creates the first synthetic virus (2002)
– Craig Venter creates an artificial being (2010)
• Silicon Valley:
– The world's first Synthetic Biology department at
the Lawrence Berkeley Lab (2006)
– UCSF Institute for Human Genetics (2005)
– The Bay Area boasts about 700 biomedical
companies (2007)
– Bubble of Personal Genomics startups

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Greentech
• Solyndra (2005)
• The Tesla roadster (2006)

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The Unlikely Symbiosis (1900s-70s)
A brief technological and sociopolitical history of Silicon Valley
Far West
Utopians/
Independents
Mining &
Damming
Ship comm-
unications
Electrical
Engineering
Radio
Engineering
Nuclear
Engineering
Big
ScienceBerkeley
Stanford
Hobbyists
WWII
Startups
Terman Startups
Defense
Industry
Transistor
Integrated
Circuit/ Micro
processor
Hippies
PC
Unix
Internet
Immigration
Startups
GUI
Venture
capitalists

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The Unlikely Symbiosis (1970s-2010s)
A brief technological and sociopolitical history of Silicon Valley
PC
Unix
Internet
Immigration
Software
industry
Dotcoms
DBMS
ERP
Graphics
GUI
Games
Communications
Venture
capitalists
Hardware
industryr
Fabless
industry
Work
stations
Personal
Digital
Devices
Virtualization/
cloud

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Conclusions
• Silicon Valley is the symbol and catalyst for the
revolution that turned electronic computing from a
math appliance into pervasive worldwide
communication
• Almost none of the enabling technologies was
invented by Silicon Valley
• SV excels at incubating businesses, not at inventing
technology
• SV excels in disruptive technologies (that change the
world)
• A platform for perennial innovation

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Conclusions
• Silicon Valley did not exist in a vacuum: sociopolitical
and artistic/cultural background
• Alternative lifestyle, anti-establishment spirit, utopian
counterculture: "question authority", "think different"
and "change the world"
• SV is largely the product of a youth culture (just like
rock music and videogames)
• SV hates the big government, big labor and big
corporations
• SV loves the eccentric individualist and the "do it
yourself" philosophy

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Conclusions
• The Bay Area was uniquely equipped with the
mindset to subvert rules and embrace novelty
• But it would not have happened without big
government:
– government was the largest venture capitalist of
Silicon Valley
– government was also the most influential strategist
of Silicon Valley
– government invested in high-risk long-term
projects while venture capitalists tended to follow
short-term trends

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Conclusions
• Homework for you: why did it happen here
and not elsewhere, and why it is still not
happening anywhere else?

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Conclusions
• In the book: