The Innovators

by Walter Isaacson

  Upon graduation, Noyce received what was, for someone with his style and charm, the college’s highest honor, awarded by a vote of his classmates: the Brown Derby Prize, given to “the senior man who earned the best grades with the least amount of work.” But when he arrived at MIT to pursue a doctorate, he realized that he was going to have to apply himself more diligently. He was deemed deficient in theoretical physics and had to take an introductory course in the topic. By his second year he had regained his stride and won an academic fellowship. His dissertation investigated how the photoelectric effect was manifest in the surface state of insulators. Although it was not a triumph of lab work or analysis, it did familiarize him with Shockley’s research in that field.

  Thus when he got the summons from Shockley, he was eager to accept. But there was one strange hoop he had to leap through. Shockley, who had failed to triumph on an IQ test as a kid and was starting to show the creepy paranoia that would mar his later career, insisted that his new hires go through a battery of psychological and intelligence exams. So Noyce spent an entire day at a testing firm in Manhattan reacting to ink blots, opining on weird drawings, and filling out aptitude quizzes. He was judged to be an introvert and not a good potential manager, which revealed a lot more about the weaknesses of the tests than of Noyce.58

  * * *

  Shockley’s other great hire, also judged by the psychology firm to be a poor potential manager, was the soft-spoken chemist Gordon Moore, who also got a phone call from Shockley out of the blue. Shockley was carefully assembling a team with different scientific talents that could be mixed together to catalyze innovation. “He knew chemists had been useful to him at Bell Laboratories, so he thought he needed one in his new operation, and he got my name and gave me a call,” Moore said. “Fortunately, I recognized who it was. I picked up the phone, he says, ‘Hello, this is Shockley.’ ”59

  With his self-effacing and genial manner cloaking a precision-guided mind, Gordon Moore would become one of the most revered and beloved figures in Silicon Valley. He had grown up near Palo Alto, in Redwood City, where his father was a deputy sheriff. When he was eleven, the kid next door got a chemistry set. “In those days there was really neat stuff in chemistry sets,” Moore recalled, lamenting that government regulations and parental fears have since neutered such kits and probably deprived the nation of some needed scientists. He was able to turn out a small quantity of nitroglycerin, which he made into dynamite. “A couple of ounces of dynamite makes an absolutely fantastic firecracker,” he gleefully recounted in an interview, wiggling all ten of his fingers to show that they had survived such childhood foolery.60 His fun with chemistry sets, he said, helped set him on a path to a chemistry degree from Berkeley and a doctorate from Caltech.

  From his birth until he finished his doctorate, Moore never ventured farther east than Pasadena. He was a true-bred Californian, easygoing and affable. For a brief period after getting his PhD, he went to work at a Navy physics laboratory in Maryland. But he and his beloved wife, Betty, also a native of northern California, were restless to get home, so he was receptive when the call from Shockley came.

  When Moore went for his interview, he was twenty-seven, a year younger than Noyce, and was already balding in a distinguished manner. Shockley peppered him with questions and brainteasers, holding a stopwatch to time his answers. Moore did so well that Shockley took him to dinner at Rickeys Hyatt House, the local hangout, and did his magic trick of bending a spoon without seeming to apply any physical force.61

  The dozen engineers recruited by Shockley, almost all under thirty, considered him a bit bizarre but absolutely brilliant. “He just showed up in my lab at MIT one day, and I thought, my God, I’ve never met anybody this brilliant,” remarked the physicist Jay Last. “I changed my whole career plans and said, I wanna go to California and work with this man.” Among the others were Jean Hoerni, a Swiss-born physicist, and Eugene Kleiner, who later became a great venture capitalist. By April 1956 there were enough new employees to throw a welcome party. Noyce drove across the country from Philadelphia, rushing to make it in time. He arrived at 10 p.m., while Shockley was doing a solo tango with a rose in his mouth. One of the engineers described Noyce’s arrival to his biographer Berlin: “He hadn’t shaved, he looked like he’d been living in his suit for a week—and he was thirsty. There was a big goddamn bowl of martinis on the table there. Noyce picks up the goddamn bowl, and starts drinking [from] it. Then he passes out. I said to myself, ‘this is going to be a whole lot of fun.’ ”62

  SHOCKLEY UNRAVELS

  Some leaders are able to be willful and demanding while still inspiring loyalty. They celebrate audaciousness in a way that makes them charismatic. Steve Jobs, for example; his personal manifesto, dressed in the guise of a TV ad, began, “Here’s to the crazy ones. The misfits. The rebels. The trouble-makers. The round pegs in the square holes.” Amazon’s founder Jeff Bezos has that same ability to inspire. The knack is to get people to follow you, even to places they may not think they can go, by motivating them to share your sense of mission. Shockley did not have this talent. Because of his aura, he was able to recruit brilliant employees, but soon after they began working together, they were rankling under his ham-fisted management, just as Brattain and Bardeen had.

  One useful leadership talent is knowing when to push ahead against doubters and when to heed them. Shockley had trouble striking this balance. One case arose when he devised a four-layer diode that he thought would be faster and more versatile than a three-layer transistor. In some ways, it was the first step toward an integrated circuit, because the new device would perform tasks that would require four or five transistors on a circuit board. But it was difficult to manufacture (the paper-thin silicon had to be doped differently on either side), and most of the ones that came off the line proved useless. Noyce tried to get Shockley to abandon the diode, but to no avail.

  Many transformative innovators have been similarly stubborn about pushing a new idea, but Shockley crossed the line from being visionary to being hallucinatory, turning him into a case study in bad leadership. In his pursuit of the four-layer diode, he was secretive, rigid, authoritarian, and paranoid. He formed private teams and refused to share information with Noyce, Moore, and others. “He couldn’t face up to the fact that he’d made a bad decision so he started blaming everybody around him,” recalled Jay Last, one engineer who resisted him. “He was very abusive. I went from being his fair-haired boy to being one of the causes of all his problems.”63

  His paranoia, already diffusing into his personality layers, was manifest in disruptive incidents. For example, when a secretary at the firm cut her finger opening a door, Shockley became convinced it was a sabotage scheme. He ordered everyone in the firm to take a lie detector test. Most refused, and Shockley had to back down. It was later discovered that the cut was caused by the remains of a thumbtack that had been used to post a notice on the door. “I don’t think ‘tyrant’ begins to encapsulate Shockley,” Moore said. “He was a complex person. He was very competitive and even competed with the people that worked for him. My amateur diagnosis is he was also paranoid.”64

  Worse yet, Shockley’s infatuation with the four-layer diode turned out to be misplaced. Sometimes the difference between geniuses and jerks hinges on whether their ideas turn out to be right. If Shockley’s diode had proved practical, or if he had evolved it into an integrated circuit, he may have again been regarded as a visionary. But that didn’t happen.

  The situation became even worse after Shockley, along with his erstwhile partners Bardeen and Brattain, won the Nobel Prize. When Shockley got the call early on the morning of November 1, 1956, his first reaction was that it was a Halloween trick. Later he would become darkly suspicious that there were people who had tried to deny him the prize, and he would write the Nobel committee seeking information about those who wrote in opposition to him, a request that was denied. But for that day, at least, there was a respite in the tension and a chanc
e to celebrate. A champagne lunch was held at Rickeys.

  Shockley was still estranged from Bardeen and Brattain, but the atmosphere was cordial when they convened with their families in Stockholm for the awards ceremony. The chair of the Nobel committee used his speech to highlight the combination of individual genius and teamwork that was involved in the invention of the transistor. He called it a “supreme effort of foresight, ingenuity and perseverance, exercised individually and as a team.” Late that night, Bardeen and Brattain were having drinks at the bar of the Grand Hotel when, shortly after midnight, Shockley walked in. They had barely spoken to him for six years, but they put their differences aside and invited him to join their table.

  * * *

  When Shockley returned from Stockholm, his head was swelled but his insecurities were undiminished. In a talk to coworkers, he noted that it was “about time” that his contributions were recognized. The atmosphere at the firm “deteriorated very rapidly,” Last observed, until it began to resemble “a big psychiatric institute.” Noyce told Shockley of the “general feeling of resentment” that was accumulating, but his warning had little effect.65

  Shockley’s unwillingness to share credit made it hard for him to create a spirit of collaboration. When some of his employees wrote papers to be presented at the American Physical Society in December 1956, the month after he had received his Nobel, Shockley required that his name be listed on them all as a coauthor. The same was true on most patent applications coming out of his firm. Yet he insisted, somewhat contradictorily, that there was truly only one real inventor of any device, because “there’s only one light bulb to go on in somebody’s head.” Any other people involved, he added, were “mere helpers.”66 His own experience with the team that invented the transistor should have disabused him of such a notion.

  Shockley’s ego caused him to clash not only with subordinates but also with his nominal boss and owner, Arnold Beckman. When Beckman flew up for a meeting about the need to control costs, Shockley surprised everyone by declaring in front of the entire senior staff, “Arnold, if you don’t like what we’re doing up here I can take this group and get support any place else.” He then stormed out of the room, leaving his owner humiliated in front of the staff.

  Thus Beckman was attentive when he was called in May 1957 by Gordon Moore, who had been tapped by other restless colleagues to present their grievances. “Things aren’t going well up there, are they?” Beckman asked.

  “No, they really are not,” replied Moore, who assured Beckman that the top staff would stay if Shockley quit.67 The reverse was also true, Moore warned; if Shockley was not replaced by a competent manager, the staff would likely leave.

  Moore and his colleagues had recently seen The Caine Mutiny, and they started plotting against their own Captain Queeg.68 Over the next few weeks, in a series of secret meetings and dinners with Beckman and seven disgruntled top staffers led by Moore, a deal was hammered out to move Shockley into a senior consulting role with no management duties. Beckman took Shockley to dinner and informed him of the change.

  At first Shockley acquiesced. He would allow Noyce to manage the lab and confine his own duties to offering ideas and strategic advice. But then he changed his mind. It was not in Shockley’s nature to cede control. Plus, he had qualms about Noyce’s executive ability. He told Beckman that Noyce would not be an “aggressive leader” or decisive enough, and there was some merit to that criticism. Shockley may have been too driven and decisive, but Noyce, who was naturally congenial and accommodating, could have benefited from a dose of toughness. A key challenge for managers is how to strike a balance between being decisive and being collegial, and neither Shockley nor Noyce got the calibration precise.

  When forced to choose between Shockley and the staff, Beckman got cold feet. “With one of my misdirected feelings of loyalty, I felt I owed Shockley and should give him enough of a chance to prove himself,” Beckman later explained. “If I had known what I know now, I would have said goodbye to Shockley.”69 Beckman stunned Moore and his supporters with his decision. “Beckman essentially told us, ‘Shockley’s the boss, take it or leave it,’ ” Moore recalled. “We discovered a group of young PhDs couldn’t push aside a new Nobel Prize winner very easily.” A revolt became inevitable. “We were just completely sandbagged, and we realized then we had to leave,” said Last.70

  Abandoning an established enterprise to start a rival was rather unusual back then, so it took some courage. “The business culture that existed in this country was that you go to work for a company, and you stay with that company, and you retire with that company,” observed Regis McKenna, who became a marketing maven for technology firms. “This was what traditional East Coast—and even Midwestern—American values were.” That’s no longer true, of course, and the Shockley rebels contributed to the cultural shift. “It looks easy nowadays because we have a tradition—largely set in motion by those guys—where it’s accepted in this town,” said Michael Malone, a historian of Silicon Valley. “You’re better off to go out and start your own company and fail than it is to stick at one company for thirty years. But that wasn’t true in the 1950s. It must’ve been scary as hell.”71

  Moore rallied the rebel contingent. There were seven of them at first—Noyce had not yet enlisted—and they decided to form their own company. But that required funding. So one of them, Eugene Kleiner, wrote a letter to his father’s stockbroker at the venerable Wall Street brokerage firm Hayden, Stone & Co. After describing their credentials, he declared, “We believe that we could get a company into the semiconductor business within three months.” The letter ended up on the desk of Arthur Rock, a thirty-year-old analyst who had been succeeding with risky investments since his days at Harvard Business School. Rock convinced his boss, Bud Coyle, that it was worth a trip west to investigate.72

  When Rock and Coyle met with the seven in San Francisco’s Clift Hotel, they found one thing missing: a leader. So they urged the rebels to recruit Noyce, who was resisting because of his feeling of commitment to Shockley. Moore was finally able to persuade him to come to the next meeting. Rock was impressed: “As soon as I saw Noyce I was struck by his charisma, and I could tell he was their natural leader. They deferred to him.”73 At that meeting, the group, including Noyce, made a pact that they would all leave together to form a new firm. Coyle pulled out some crisp new dollar bills, which they signed as a symbolic contract with each other.

  It was hard to get money, especially from established corporations, to start a completely independent company. The idea of seed funding for startups was not yet well established; that important innovation would have to wait, as we shall see, until the next time Noyce and Moore leaped into a new venture. So they searched for a corporate sponsor that might set them up as a semiautonomous division, just as Beckman had done with Shockley. Over the next few days, the cabal pored over the Wall Street Journal and came up with a list of thirty-five firms that might adopt them. Rock started making calls when he got back to New York, but to no avail. “None of them were willing to take on a separate company division,” he recalled. “They felt that their own employees would have problems with it. We had a couple of months of doing this and were about to give up, when someone suggested that I see Sherman Fairchild.”74

  It was a fine match. Fairchild, the owner of Fairchild Camera and Instrument, was an inventor, playboy, entrepreneur, and the largest single stockholder in IBM, which his father had cofounded. A great tinkerer, as a Harvard freshman he invented the first synchronized camera and flash. He went on to develop aerial photography, radar cameras, specialized airplanes, methods to illuminate tennis courts, high-speed tape recorders, lithotypes for printing newspapers, color engraving machines, and a wind-resistant match. In the process, he added a second fortune to his inheritance, and he was as joyful spending it as he had been making it. He frequented the 21 Club and the El Morocco nightclub wearing (in the words of Fortune) “a fresh pretty girl every few days like a new boutonniere
,” and he designed for himself a futuristic house on Manhattan’s Upper East Side with glass walls and ramps overlooking an atrium garden with green ceramic-clad rocks.75

  Fairchild readily put up $1.5 million to start the new company—about twice what the eight founders had originally thought necessary—in return for an option deal. If the company turned out to be successful, he would be able to buy it outright for $3 million.

  Dubbed “the traitorous eight,” Noyce and his posse set up shop just down the road from Shockley on the outskirts of Palo Alto. Shockley Semiconductor never recovered. Six years later, Shockley gave up and joined the faculty of Stanford. His paranoia deepened, and he became obsessed with his notion that blacks were genetically inferior in terms of IQ and should be discouraged from having children. The genius who conceptualized the transistor and brought people to the promised land of Silicon Valley became a pariah who could not give a lecture without facing hecklers.

  The traitorous eight who formed Fairchild Semiconductor, by contrast, turned out to be the right people at the right place at the right time. The demand for transistors was growing because of the pocket radios that Pat Haggerty had launched at Texas Instruments, and it was about to skyrocket even higher; on October 4, 1957, just three days after Fairchild Semiconductor was formed, the Russians launched the Sputnik satellite and set off a space race with the United States. The civilian space program, along with the military program to build ballistic missiles, propelled the demand for both computers and transistors. It also helped assure that the development of these two technologies became linked. Because computers had to be made small enough to fit into a rocket’s nose cone, it was imperative to find ways to cram hundreds and then thousands of transistors into tiny devices.