Fun fact: the Nobel-prize-holder man who laid the first foundations of the Silicon Valley, and chose its San Francisco Bay Area location, had business values exactly opposed to what became Silicon Valley culture. And that’s no coincidence.

William Shockley was a genius in the 1950s fields that became electronics, having invented the transistor, which pioneered the field; and for some reason, he wouldn’t listen to investors who pressured him to start his R&D business on the East Coast, where the rest of the industry was. For some reason, he had chosen the tiny village of Mountain View, CA, and convinced a number of brilliant PhD holders to join him there.

However brilliant an early electronician, Shockley was a very poor manager. He considered his leadership and vision never to be questioned, and had poor trust for his employees, famously requesting once that they all go through a lie detector (which they refused), recording all phone conversations, and forbidding them to talk to each other. He would find ways to retaliate against employees seeming to be looking for work elsewhere, or simply leaving the company.

In 1957, eight Shockley employees, including the only ones he trusted, decided to leave at once, and founded their own company, which they would call “Fairchild”; he was probably the one to coin the name History ironically would remember them under, “the traitorous eight”.

The Traitorous Eight

It would have been complicated for 8 families to move at the same time, so they decided to stay in the vicinity, even though investors wanted them too on the East Coast. Relieved from their frustrations, they decided to intentionally build Fairchild at the extreme opposite of Shockley’s obsessive and controlling behaviors.

  • People would be allowed to work on what they felt was most promising and interesting, which led to amazing discoveries of better technologies than those built at Shockley; this matches today’s value of “managers stay out of the way”.
  • They decided to refrain from choosing leaders so as to avoid for anyone to start behaving poorly, following what is known today as “flat organization”. Ultimately, as the company became immensely successful, they had to pick two people to represent them to the outside, which they named “leaders amongst equals”.
  • People would be encouraged to communicate and shared their findings and success with others.
  • Employees wishing to leave were encouraged, and helped to find a more fitting position elsewhere, as is still custom today in the Silicon Valley.

After only 2 years of shared ownership and rapid technological breakthroughs, the 8 founders had to sell back all of their shares to the initial investor, as per the agreement they had with him. Little had the investor planned that it made them become regular employees again, and according to their own company culture, it didn’t take long for them to start pursuing other interests, with no moral penalty. The company, remained glorious for a few years, but eventually fluttered and failed a few years later. One would argue that this generated the respected opinion in Silicon Valley that employees must be given stock if the employer expects to keep them motivated, and the whole “winning together” approach to ownership.

The “traitorous eight” walked away significantly wealthy, and founded or invested in all of the first major technological companies to be in the area, which started to be know as “Fairchildren”; companies such as, Compaq, Genentech, Intuit, Lotus, Macromedia, Netscape, Sun Microsystems, Symantec, …

One of them, Robert Noyce, who had been one of Fairchild’s “leaders amongst equals”, and before that, had been the most trusted employee of Shockley, went on to found Intel.

Those technology companies were all following the very successful Fairchild model and culture, and a lot of them ended up meeting success as well, making some more people rich; who founded or invested in other technology companies who adopted a similar trusting culture; etc. The Silicon Valley, and more importantly, the Silicon Valley culture, was born.

The main takeaway: it took a genius tyrant with an extreme love for California to spur, in contradiction, all of the uplifting culture and unprecedented decades-long economic success that we’re getting now in the San Francisco Bay Area. Even though barely any of them knows the story, you definitely can feel that people over there are still very much fighting William Shockley every day.