08/25/97 THE ENGINEER WHO JUMP-STARTED SILICON VALLEY

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THE ENGINEER WHO JUMP-STARTED SILICON VALLEY

"The price that is paid for all these blessings is annoying traffic congestion around 8 a.m. and 5 p.m. in the 10- to 20-minute drive between home and work. But this is really a pretty small price to pay to avoid having to live in the East, or even in Southern California where the traffic is worse and the smog is denser."
Fred Terman had just retired as provost of Stanford University when he offered that 1965 assessment of what was to become Silicon Valley at a Palo Alto, Calif., civic celebration honoring him as one of the region's most distinguished citizens. Terman may have failed to foresee the mega-traffic jams that lay 30 years in the future, but he was on the mark about the blessings of Silicon Valley: Hundreds of thousands of jobs, countless products, and world-changing technology have emerged from the electronics community that he almost single-handedly launched during his tenure as Stanford's dean of engineering in the 1940s.
Fred who? "You could walk into [popular Valley pub] Gordon Biersch on a Friday afternoon, and 99% of the people there would owe their jobs to him and not know who he was," says Paul Saffo, technology forecaster for the Menlo Park-based Institute for the Future. In a way, Saffo adds, that helps explain Silicon Valley's success. "This is a place with no regard for history," he says, so it "reinvents itself regularly and ruthlessly." In any examination of what makes Silicon Valley go, however, it's worth understanding the handful of people who gave birth to the modern electronics revolution.
BOUND FOR GLORY. Terman was mentor to Hewlett and Packard, and after Stanford's lean years during World War II, he turned the school into a source of high achievers and pivotal technology for the electronics industry. "Everything we've built in Silicon Valley comes down almost to the role of one man," concludes Saffo. "Fred Terman."
Born in English, Ind., in 1900, Frederick Emmons Terman seemed destined from the start for intellectual glory. His father, Lewis, who suffered from chronic battles with tuberculosis, moved his family to Stanford's sunny environs when Fred was a youngster. There, Lewis, a noted scholar and educator, invented the Stanford-Binet IQ test. He also prepared a course of home tutelage that enabled young Fred to complete grade school in just four years.
By the time he was 14, the younger Terman had developed an interest in ham radio (which he pursued with his friend, Herbert Hoover Jr.), and with it, a lifelong love of electronics. He earned two Stanford degrees, in chemistry and engineering, then a PhD from MIT, where his mentor was Vannevar Bush, who later became director of the government's Office of Scientific Research & Development. In the 1920s, Terman returned to Stanford, where he developed a reputation as an excellent teacher, particularly in the nascent field of radio science, for which he eventually wrote the essential textbook. Hewlett-Packard co-founder David Packard would later write in his autobiography, "The HP Way," that "Professor Terman had the unique ability to make a complex problem seem the essence of simplicity."
GO WEST. Beyond that, Terman had a key though indirect role in the founding of Hewlett-Packard in the 1930s. Packard had graduated from Stanford and gone east to work for General Electric. But Terman had taken a shine to him, his friend Bill Hewlett, and several other promising young electrical engineers. It gnawed at Terman to watch so many of his students go East, and he found a way to lure Packard West again -- by arranging for him a $500-a-year Stanford fellowship to help a young inventor named Russ Varian with a high-frequency vacuum tube. (It would later become the technology behind radar and particle accelerators.)
Back in California, Packard joined up with Hewlett. And after designing a few unusual and marginally profitable devices, such as one that indicated a foul-line roll in bowling alleys and another that helped the telescope at the Lick Observatory on Mt. Hamilton, just east of San Jose, track stars more accurately, they began developing Hewlett's design for an audio oscillator. Several would later be purchased by Walt Disney to help make the movie "Fantasia."
The writings of Packard and Terman during this period provide a poignant look at the people who founded Silicon Valley. For instance, Terman would describe Hewlett's and Packard's early years in business in a letter to HP's internal employee newsletter:
"Even in their early days at Stanford, they showed the ability to work with their hands as well as their minds. Packard had a tradition throughout his youth of tinkering and building things. Hewlett, on the other hand, didn't really have this opportunity or inclination until he got into graduate work. Then he went at it with a vengeance, spending countless hours in the lab. I must say that at the outset he had more energy than finesse, but as time went on he developed into a first-rate designer...
"I can remember after they set up shop in Packard's garage, going over occasionally to see how they were getting along. If Packard's car was in the garage, it meant they had no orders. But if it was out in the street, they had some work soldering, wiring, painting, you name it. Dave's wife, who had a full-time secretarial job at Stanford during the day, spent the evenings helping with the accounting and the correspondence. It was a real do-it-yourself operation."
INSTANT VETERANS. Packard's recollections complete the picture: "I clearly recall having [the first oscillator production unit] sitting on the mantel above the fireplace," he wrote in "The HP Way." "There we took pictures of it and produced a two-page sales brochure that we sent to a list of about 25 potential customers provided by Fred Terman. We designated this first product the Model 200A because we thought the name would make us look like we'd been around for awhile."
Several hundred boxes of Terman's papers are on file today in Stanford University's archives, full of declassified war documents about radar specs and jamming strategies, stories about Silicon Valley legends, and hundreds of letters. They reveal a meticulous Fred Terman, with many of his letters advancing a conversation by miniscule steps as he developed an idea or strategy, or requesting large amounts of small detail to complete a project. He worked seven days a week, writing during evenings at home with his wife Sibyl Walcutt Terman (a Stanford psychology grad) and three sons. Later, he told a young faculty member that the secret to a full publishing life was to write a page a day, and at the end of the year one would have a 365-page book.
Photos of Terman invariably show his thick thatch of hair, his boxy period suits, and a grandfatherly face -- the image, in short, of a kindly professor in the Jimmy Stewart mold. He was not. Those who worked with Terman describe him as a driven, taciturn man with no time for levity. "He rode roughshod over people," recalls John Linvill, professor emeritus of electrical engineering at Stanford and a Terman protege. "He was right, he knew he was right, and he didn't want to waste time talking about it." Photographer Carolyn Caddes, who took some portraits of Terman just months before he died in 1982, describes the professor's delight in showing her the original diagram Bill Hewlett made of the first audio oscillator in 1938: "He nearly smiled," she recalls.
However, Linvill and others also describe a devoted teacher, a brilliant engineer, a visionary, and what Linvill says was "the world's most effective mentor. He was deeply interested in a limited group of people." He was also a relentless networker. Recalls Linvill: "There were no chance encounters" for Terman. Other contemporaries say Stanford's early lead on Silicon Valley vis-a-vis UC-Berkeley, was largely because Stanford had the aggressive and well-connected Terman, while Berkeley had a dean of engineering who was building a much broader base with young faculty.
JAMMIN' THE RADAR. During the early years of World War II, Vannevar Bush recruited Terman to head the Harvard Radio Research Laboratory, back at Cambridge, Mass. Terman would later be awarded the highest civilian medal -- the Medal of Merit -- for his work there. Under his direction, the lab developed strategies and methods to confound enemy radar, particularly through the use of jammers and aluminum decoys, or "chaffs," dropped from airplanes.
During this period Terman both added to his already far-flung network of powerful people in industry and government and lobbied for the government to devote much more funding for science and engineering in higher education as a key to military success. When he returned to Stanford in 1946 as dean of engineering, he embarked upon what he called his "steeples of excellence" strategy to gain world reknown for Stanford. Terman's notion: As on a track team, it was better to focus on recruiting outstanding, world-class faculty in a few select areas, than to develop a solid team without major stars. "It is better to have one seven-foot jumper than any number of six-foot jumpers" he would say.
This approach was instrumental in nursing back to financial health a Stanford that World War II had threatened. Not only did Stanford lose a lot of tuition-paying students to the war, it got virtually no research money from the federal government, which did, in fact, pour money into Harvard, Yale, and other Eastern schools. As dean, Terman was happy and anxious to take on government contracts that would later fuel the cold war arms race. He also offered his network of contacts, and his students' research and labor, to local companies such as Lockheed that were engaged in the same pursuit. The war brought to the Silicon Valley area "the beginnings of a great new era of industrialization," he wrote.
He had three key programs at Stanford: In chemistry, in physics, and in electronics. The chemistry program was undistinguished during his tenure. But in physics, Felix Bloch discovered nuclear magnetic resonance and won the Nobel Prize. And electronics, of course, became the foundation of Silicon Valley.
BOLOGNA ON THE PACIFIC. Also during this time, Terman developed a notion for what he would later call his "modern community of technical scholars." The well-read engineer wanted to recreate the ancient centers of learning in Bologna or Oxford, where intellectual discourse was common and freewheeling, and information flowed easily between the real world and the university. His model was the Boston area, but he reinvented the notion in the West with several critical twists. For one thing, he allowed and encouraged employees of local companies to take courses at Stanford part-time. He also promoted the building of an industrial park near Stanford. Along with HP, Lockheed, Varian, and Watkins-Johnson, one of its tenants in the mid-1950s was Shockley Transistor Laboratories. Fairchild Semiconductor sprang from it when eight key employees, fed up with Shockley's high-handed management, defected to start one of the great Silicon Valley wellsprings.
"This is the twentieth and twenty-first century form of the honored and ancient community of scholars," Terman wrote of the community he brought to life. "The faculty and students of such a place live in no 'ivory towers.' They have numerous contracts with stimulating, highly creative individuals in industry..."
Elementary to Terman's way of doing business was making sure that both Stanford and its partners benefitted, and, when possible, the community at large. He had lived through the Depression and two world wars, and being able to help develop thousands of jobs for West Coast families was a huge source of satisfaction to Terman. So it also was to Hewlett and Packard, who became known for their fair treatment of employees and their high business ethics and integrity. Terman's students would also continue to support Stanford to a remarkable degree -- often in his name. Hewlett and Packard together donated more than $300 million to the university and were always quick to credit Terman with providing the inspiration for their great success.
GEOGRAPHY IS DESTINY? After retiring from Stanford, Terman spent years traveling the country, advising other universities and other regions on how to try to replicate the near-miracle he had worked in Silicon Valley. Terman wanted to see other centers of academic/industrial progress flower, and during his tenure as dean and provost, he'd encourage interactions between Stanford and companies from all over the U.S. Indeed, in regional planner AnnaLee Saxenian's book "Regional Advantage," she notes that even East Coast companies such as Digital Equipment felt for many years that they enjoyed better and more open relationships with Stanford and Berkeley than they did with their own neighboring MIT.
But Terman's success in exporting his model was decidedly mixed. Michael Spence, the current dean of the Stanford Graduate School of Business, points out a key reason why Silicon Valley wasn't so easy to replicate: "Physical geography matters" he notes. The acres and acres of fruit orchards that once stood in the Valley where the Intels, Ciscos, and Hewlett-Packards stand today, not to mention the hundreds of startups shoehorned into myriad industrial parks, were all part of the recipe that made Terman's miracle. "The accident is that Stanford was built here and nearly went broke during the war," says Spence. "Then, an outstanding individual had a vision, and it began and grew, and there just wasn't anything in the way."
By Joan O'C. Hamilton in San Francisco

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