The Idea Factory: Bell Labs and the Great Age of American Innovation

by Jon Gertner

  To Kelly, however, what was looking to be the most memorable thing about a year of extraordinary events was not the Nobel. The 1949 Justice Department lawsuit to break Western Electric off from AT&T had also been settled in 1956. AT&T’s public relations department circulated an internal memo to staffers in the wake of the decision, explaining that the “decree does not affect the general relationship among AT&T, Western Electric, Bell Telephone Laboratories,” and the local phone companies. That much was true; the government had agreed that the phone monopoly could remain intact, as long as its business was limited either to publicly regulated communications services or to military work like the kind being done on the Nike missiles and the Distant Early Warning line.15 Some years later, it would be revealed in congressional testimony that just prior to the 1956 consent agreement, Herbert Brownell, President Eisenhower’s attorney general, had quietly given to AT&T’s general counsel “a little friendly tip” to analyze its operations and identify “practices” that it could compromise on without harming its business.16

  The government had hinted that in exchange for a fig leaf of compromise from AT&T, it was inclined to drop the suit and allow the company to maintain its monopoly. AT&T offered two fig leaves. The first was its agreement not to enter the computer or consumer electronics markets. The second concession, at least on its face, seemed far more dramatic: The phone company agreed to license its present and future U.S. patents to all American applicants, “with no limit as to time or the use to which they may be put.” In other words, eighty-six hundred or so of AT&T’s U.S. patents “issued prior to January 24, 1956 are in almost all cases to be licensed royalty-free to all applicants.” (All future patents, meanwhile, would be licensed for a small fee.) But this largesse didn’t worry AT&T executives, whose confidence in the strength of their business had now been restored. The patent giveaway was in fact deceptive. So what if entrepreneurs all over the country now had essentially free access to transistors, microwave long-distance systems, underwater repeaters, solar cells, coaxial cables, and thousands of other devices and industrial processes? The Bell System remained a monopoly. Competitors trying to gain a foothold in the telephone equipment business still had no way in.17

  THE CAKE WAS SHAPED like a transistor, which had just turned ten years old. Walter Brattain—now older, now grayer—came down from his office at Murray Hill to cut the first slice. Kelly looked on, wearing a dark suit and a tie patterned with the atomic energy symbol, three electrons running ovals around a nucleus. It was a daylong program for journalists all over the country—demonstrations on fabrication techniques and exhibitions exploring the transistor’s military and commercial applications, as well as its potential uses in electronic switching, pulse code modulation, and the like. Kelly made a keynote speech to the crowd. In the previous year, he noted, 30 million transistors had been manufactured and semiconductors were now a $100 million industry. The transistor would infiltrate the industries created by vacuum tubes and would be the driving force in transforming the world in ways “yet undreamed.”18

  One striking proof of this assertion was imminent. The capacity of the two-year-old transatlantic cables would soon be increased thanks to a transistorized technology developed at the Labs known as TASI, or Time Assignment Speech Interpolation. How this worked seemed a marvel. Bell Labs technicians had long known that when someone is talking on a telephone line, they send out signals only about 35 percent of the time. Between all the spoken words there are gaps, pauses, hesitations. The TASI machinery would “inspect” the voices coming through the channels two thousand times per second and would switch back and forth as the talkers’ speech paused and resumed, paused and resumed. “During pauses or listening times,” one Bell Labs manager told the audience at the tenth-anniversary gathering, “a talker is disconnected from the channel so that it may be used for another; and, upon his resumption of speech, he is automatically connected to another channel in a millionth of a second.” TASI could save both the money and effort of installing another cable. TASI made enough room on the cable to double the traffic from thirty-six channels to seventy-two. It was better; it was cheaper.

  If there was an air of victory at Bell Labs in the late 1950s, it was in the dawning recognition of an empire built. Though not without its surprises, the future seemed to be weaving itself in a way Kelly had foreseen many years before. He had predicted grand vistas for the postwar electronics industry even before the transistor; he had also insisted that basic scientific research could translate into astounding computer and military applications, as well as miracles within the communications systems—“a telephone system of the future,” as he had said in 1951, “much more like the biological systems of man’s brain and nervous system.”

  In addition to the ocean cable and the military defense systems and the Nobel Prize, Kelly’s management had been validated in The Organization Man, William Whyte’s influential 1956 book that analyzed the conformity of America’s corporate culture and the merits of creative thinking. “If ever there were proof of the virtues of free research, General Electric and Bell Labs provide it,” Whyte wrote, pointing in particular to the achievements of thinkers like Claude Shannon. “Of all corporations’ research groups these two have been the two outstandingly profitable ones … of all corporation research groups these two have consistently attracted the most brilliant men. Why? The third fact explains the other two. Of all corporation research groups these two are precisely the two that believe in ‘idle curiosity.’”19

  Even more flattering was an extremely detailed November 1958 Fortune story that christened Kelly’s shop as “The World’s Greatest Industrial Lab.” Francis Bello, who had written on Shannon’s information theory and the transistor, had spent months at Murray Hill chronicling almost every aspect of its research and development. “The preeminent discovery of the twentieth century is the power of organized scientific research,” Bello began. “The industrial enterprise that has carried out this mobilization most brilliantly in the U.S.—and indeed the world—is Bell Telephone Laboratories, Inc.”20 The story opened with Kelly and Fisk together, noting that Kelly’s retirement as president was just a few months away. Fisk looked to be the heir apparent. Usually in photographs Kelly was grim and unsmiling; clutching his cigarette, he would appear as if trapped in a moment of forced repose, ready to burst with kinetic relief when the shutter clicked. But the Fortune portrait showed another man entirely. Kelly had the look of a man kicking back at the end of the day. On his face was what might have been a grin.

  Bello highlighted the combined power of the transistor and Shannon’s information theory to create the future. It’s likely that at the time of their breakthroughs, Shannon and Shockley did not see their work as being linked.21 But within a decade their ideas had become intertwined. As Bello wrote, “The transistor pointed the way to tiny, inexpensive, and indefinitely lived devices—requiring little power—that could be used in very large numbers to implement the teachings of Shannon’s theory.”

  The executives at Bell Labs would no doubt agree with this observation. But some time later, a number of Labs veterans would also reflect that Shannon’s and Shockley’s work had fostered something potentially self-defeating. One of these scientists was Max Mathews, who had joined the acoustics department at the Labs in 1955 and eventually rose to department head of its acoustic and behavioral research unit. In many respects, says Mathews, a phone monopoly in the early part of the twentieth century made perfect sense. Analog signals—the waves that carry phone calls—are very fragile. “If you’re going to send sound a long way, you have to send it through fifty amplifiers,” he explains, just as the transatlantic cable did. “The only thing that would work is if all the amplifiers in the path were designed and controlled by one entity, being the AT&T company. That was a natural monopoly. The whole system—an analog system—wouldn’t work if it was done by a myriad of companies.”22

  But when Shannon explained how all messages could be classified as information
, and all information could be digitally coded, it hinted at the end of this necessary monopoly. Digital information as Shannon envisioned it was durable and portable. In time, any company could code and send a message digitally, and any company could uncode it. And with transistors, which were increasingly cheap and essential to digital transmission, the process would get easier by the year. Mathews argued that Shannon’s theorem “was the mathematical basis for breaking up the Bell System.” If that was so, then perhaps Shockley’s work would be the technical basis for a breakup. The patents, after all, were now there for the taking. And depending on how it played out, one might attach a corollary to Kelly’s loose formula for innovation—namely, that in any company’s greatest achievements one might, with the clarity of hindsight, locate the beginnings of its own demise.

  Part 2

  Twelve

  AN INSTIGATOR

  John Robinson Pierce’s first book was entitled How to Build and Fly Gliders; it was published in 1929 and cost one dollar. It was an attempt to cash in on the fad among Pierce’s teenage friends in Southern California of building large glider planes that could be launched from a high dune and piloted by a single man, circling around, up, and down—sometimes dangerously so, like a berserk kite—in the air currents wafting in from the Pacific. “In those first days,” Pierce later noted, “it was practiced not by wealthy men or sportsmen, not by those who knew something of aviation, but by the ignorant, the odd, the impecunious. Those who had a romantic turn and plenty of time and scraped together a hundred dollars or so built gliders.”1 A glider pilot like Pierce sat on a wooden bench called a “skid”; there was nothing else between him and the earth, hundreds of feet below.2 Often the glider and its pilot came hurtling down, their descent attributable to an equipment malfunction or a sudden gust or an error in judgment. Sometimes, too—it had happened to several of Pierce’s friends—a pilot died on the beach. His comrades would pull his body, bloodied and limp, from a heap of splintered wood and torn sailcloth.

  Pierce’s book was ninety-three pages long. Since he knew only a modest amount about gliding and even less about writing, he composed only forty of those pages himself. The remaining text was a montage of government reports on aeronautics that he obtained and stuffed into the manuscript to make it publishable. Gliders was, by Pierce’s later admission, “atrocious.” On the other hand, the title and the rushed nature of the endeavor said a lot about the man Pierce was becoming. For one thing, it demonstrated that he enjoyed pushing ideas and projects on people—“dropping them on our desks like an egg,” as one of his colleagues would later put it.3 For another, the book suggested that even as a young man Pierce did things quickly and then moved on, excited by another new idea and rarely polishing a finished product after the idea took shape. When he happened to reflect back on the glider book many years later, for instance, he wondered if his work had done actual harm: “Because of me, did human beings build crazy gliders without benefit of engineering, and kill themselves therewith? I wouldn’t be a bit surprised.” He seemed less troubled by that prospect than by the poor quality of his prose.

  Standing about five foot ten and a skeletal 126 pounds,4 with wispy blond hair that had receded dramatically by his late twenties, Pierce impressed people mainly with his nervous energy, droll demeanor, and a tendency to become easily bored. He was so thin and slight that even in late middle age he could fit into the slender office lockers that staffers used to stow their jackets or lab coats. “People think you can’t fit into these, but you really can,” Pierce said one day to Henry Landau, a Bell mathematician, who looked up from his desk to see Pierce walk unannounced into his office, squeeze himself into Landau’s locker, close the locker door, open it, squeeze himself out, and then exit the room.5 It was quite common for Pierce to suddenly enter or leave a conversation or a meal halfway through. Sometimes it was involuntary—something in his makeup, “in the way his mind would click on and click off,” as his colleague Bob Lucky, who later succeeded Pierce in his management position at Bell Labs, describes it. Other times it was by design. Lucky recalls that during a phone call Pierce might suddenly hang up in the middle of his own sentence, leaving the person on the other end with the impression that a technical glitch had ended the call. No one could imagine that he would hang up on himself.

  There was no obvious explanation for his peculiar social rhythms. Pierce had grown up happily in Iowa and Minnesota; he admired his parents and was especially close with his mother, in part because (as he once told an interviewer) she had a sharper mind than his father.6 His father sold women’s hats to clothing stores, a job that often took him out of town for weeks on end, leaving Pierce’s mother in charge at home. He was always interested in technical things, even before he could understand them. Before he learned how to read, he would ask his mother to get him library books on electromotive force; as he grew older, he and his friends played with electric motors and steam engines, crystal radio sets and vacuum tube receivers. In the mid-1920s, Pierce, an only child, moved with his parents to California. At his high school in Long Beach, he discovered that algebra came easily to him. Then he discovered that geometry came easily to him. Then he discovered that chemistry came easily to him. He graduated first in his class. Later he would say that during these years he saw “a glimmer of the dawning of the idea that things can be understood, and that learning, in science at least, is understanding.” His forays with his new gliding friends were important, too. “This”—he said about constructing gliders—“was the first time I built something complicated that really worked, that was a practical realization of purpose rather than mere tinkering.”7

  He was moving, unwittingly, along a path similar to that of other men—a brotherhood of radio enthusiasts still unbeknownst to him—who were on their way to Bell Labs as scientists and engineers. Pierce’s parents hadn’t gone to college, but they encouraged their son to take an entrance examination for Caltech, the science school in nearby Pasadena. “They were bothered when I was young that I seemed to be not very capable of dealing with the world,” he said later, noting that it was clear to both parents that he would never succeed as a hat salesman like his father.8 When Pierce passed the examination he decided to go. Caltech was now Robert Millikan’s school, a fact that put Pierce, also unknowingly, in the center of a web of contacts that led east—to Frank Jewett, Bell Labs’ president, for instance, who was still close with Millikan. Caltech was also home to several other physicists destined for the Labs, like Bill Shockley, who had come through Caltech just a few years earlier, and Dean Woolridge, a classmate of Pierce’s.

  Pierce wasn’t drawn to physics, though. At first he thought he might try chemistry, a science of unforgiving precision, which proved a misstep for a young man with a fascination for electronics and a hummingbird-like tendency to flutter from idea to idea. He was befuddled by his introductory chemistry lectures; even worse, his experiments—“I dropped things, spilled things,” he recalled—were disasters.9 Aeronautical engineering seemed a sensible next step, especially for a young man who had built and flown gliders, and had even written a book on the subject, but he was soon bored with that subject, too, claiming later that his instructors made him draw pictures of rivets over and over again. That left electrical engineering, and here Pierce finally felt at home. He quickly demonstrated his expertise in electronics classes and was soon asked to help teach; a professor who had a side job as a legal witness even hired Pierce to dissect radio circuits for him in an effort to prove patent violations.10 Years later, Pierce would avoid giving reporters, as well as readers of his own voluminous writings, the sense that he was calculating or unusually accomplished, sometimes offering the impression instead that his life at Caltech, and the successes that followed, were mostly serendipitous. Though he was eventually the subject of a long profile in the New Yorker, Pierce was inclined to describe his career as a procession of fortunate events rather than the product of his own restless intellect.11 He described himself, depending on the cir
cumstances, as either lucky, lazy, stumbling, or shambling. And sometimes he purported to be all of those things at once.

  No one made that mistake at Caltech. “Even then, everyone knew who John Pierce was,” Chuck Elmendorf, Pierce’s friend at Caltech, recalls. In part it was Pierce’s eccentricity. But mainly it was his dazzling quickness of mind. As Elmendorf, an electrical engineer, recalls, “Everyone knew John Pierce was going to be a great man.”12

  ELMENDORF ARRIVED in New York City during a sweltering week in the summer of 1936. He had been hired to work at Bell Labs’ West Street building in Greenwich Village, and after finishing his master’s degree at Caltech in engineering, he had driven with a friend from California to Chicago. In Chicago he had hopped on a train to New York. “It was one of the hottest days in New York history,” he recalls, pegging the exact date of his arrival in Manhattan as July 9, 1936. “I went down to West Street and met with a guy named Ernie Waters. Ernie was the personnel manager, and he gave me 275 dollars.” The money, a substantial amount in a country just emerging from the Great Depression, was ostensibly meant to reimburse him for his first-class train ticket.