Due to the local naval bases and the strong maritime trade, the San Francisco Bay Area became one of the leading centers for the development of radio and radar. Bell Labs was back east, in New York and New Jersey, but around the San Francisco Bay was perhaps the highest concentration of amateur or “ham” radio operators anywhere in the world. These amateur enthusiasts were constantly figuring out better ways to send or receive a radio signal. Around 1920, there were many local, mostly young, men who had caught the radio bug.
A few notable teenagers among them were Bill Eitel, Jack McCullough, Charles Litton, and Frederick Terman. Bill Eitel picked up his mechanical skills in shop classes at Los Gatos High School and at his father’s granite quarry. Jack McCullough picked up his set of mechanical skills at the California School of Mechanical Arts (later, Lick-Wilmerding High School) in San Francisco. Charlie Litton was a child prodigy, who in 1915, at age 11, operated an amateur radio station from his parents’ Redwood City home. Later, he also attended the same school in San Francisco.
Terman, the son of a Stanford professor, began operating his own amateur radio station in 1917 in Palo Alto at age 17. These young men, along with many others, were fascinated with radio and competed intensely to come up with new ways to solve practical problems. In the joy of solving a problem, they shared their knowledge with other “hams” at radio clubs throughout the area. This friendly competition and sharing of information led to many innovations among them and eventually to the founding of Litton Engineering (in 1932 in Redwood City) and Eitel-McCullough (in 1934, in San Bruno).
Eitel-McCullough designed and manufactured high powered vacuum tubes; Litton built vacuum tube making equipment. Both businesses were at the cutting edge of tube development and were propelled by the amateur radio market, which was constantly clamoring for more powerful tubes that could transmit and receive radio signals at greater and greater distances. In the late 1930s, when Radio Detection and Ranging, or radar, was proven to be practical, they were in prime position to win large government contracts. The local electronics industry began to blossom. Photo:
Vacuum Tubes. Get FROM IBM (See folder) Vacuum tubes. These vacuum-sealed glass jars with electrodes in them were the main components of radio “sets,” as they were called. By running an electrical current through them, depending upon the design, they were used to generate, detect, or amplify radio signals. Suddenly math became very important. It wasn’t always that way: When I got my bachelor’s degree and then my master’s degree [in mathematics], what could I do? Well, I could teach mathematics in a high school. Or maybe I could try to be an actuary in an insurance company.
That’s what I thought I was gonna do, partly because I was office boy in the actuaries department during the interval between my graduation from Los Angeles High School in 1923 ‘til I came [to Stanford] as a freshman in 1924. And I thought, “this is great stuff. ” So I went back to LA and worked a year…before I came here on a PhD program. That was an outlet for people who were mathematicians, and of course, if they went on and did graduate work to a fair extent, or even on to a PhD…then there was the university opportunity for teaching too.
But there wasn’t much. But my goodness, the technological revolution, to say nothing of the computer revolution and everything else…The importance of mathematics in all fields has increased so much that, if you get a degree in mathematics, you may become a doctor of medicine… It’s a much wider market (that’s a nasty word), for people who have degrees in mathematics now… This is a matter of the whole society changing. Harold Bacon, former Stanford mathematics professor With the military getting involved, Bay Area tube development was given a huge push forward.
Charles Litton, at the request of Professor Terman, set up a tube research laboratory at Stanford, which proved to be highly beneficial to the university, to Litton Engineering, and to the advancement of electronics in general. Into that lab at Stanford came Russell Varian, a genius with learning disabilities who needed six years to get his Bachelor’s degree. He, along with his brother, Sigurd, a college dropout, would there, in the Stanford laboratory, invent by far the most powerful vacuum tube. It was called the klystron, and it changed everything in the fields of radar, microwaves, and telecommunications.
After the invention of the klystron, Stanford and the Varian brothers made an agreement whereby they would be partners in its further development. The brothers and the group with them would have access to the physics laboratory and to William Hansen, one of the premiere mathematicians on campus. The university and the group would split the profits from the group’s innovations 50-50. This agreement continued until the threat of war became great, at which time the entire Stanford klystron team went east to Sperry Gyroscope to advance its development.
The klystron was urgently needed in order to perfect radar into the defensive weapon it could be, but was not yet. After World War II, the Varians and almost all of the Stanford team returned to California and Stanford University. In 1948 the brothers, along with William Hansen and Edward Ginzton, a physics professor at the university, formed Varian Associates. From the beginning, their directors included the head of the physics department at Stanford, Leonard Schiff, and Frederick Terman. By this time, these men had worked together for several years and many people followed them into the company.
Varian, Eitel-McCullough and Litton Engineering were not typical companies and they set a pattern for later Bay Area electronics businesses on many fronts. From the gold rush years, San Francisco took the lead in the labor union movement in the United States, and by the late 1930s and early 1940s, the region’s unions were stronger than those anywhere else in the western states. Consequently, once Eitel-McCullough began landing government contracts, the unions wanted (as is commonly said), “a piece of the pie,” and there was a union organizing drive.
But the unions were not dealing with dock workers, merchant marines, or carpenters here. They were dealing largely with engineers and highly skilled machinists. The company, unwilling to lose control of production to shop stewards, established a profit-sharing program, a generous pension plan, made provisions for job security, and established a medical clinic for employees and their families. They even opened up a cafeteria and subsidized meals. Litton did similarly, and union organizers moved on to easier targets. The Varian brothers took the employer-employee relationship further.
They were born and raised in Halcyon, California, a utopian society on the central coast, and idealism was in their blood. Their company would be employee owned—a cooperative, and “an association of equals. ” Sigurd Varian was one of the early members of the Ladera community in the Portola Hills above Stanford. The cooperative, called the Peninsula Housing Association, was a nice idea but soon failed as money was needed to build and maintain the community and the directors refused to adopt restrictive covenants on the title deeds.
Likewise, the idealism at Varian Associates was sorely tried. The Cold War, and especially the Korean War, greatly increased the klystron market and to remain in the business, the company had to accept help from Wall Street. They were playing with the big boys now and the rules are different. The relationship with Stanford, however, remained strong, and both Varian and the university would grow together. In an era when academic and industry relations were frowned upon or even forbidden, Stanford and industry thrived:
Varian, like Hewlett-Packard, began to develop very rapidly after the war, and it became obvious that very soon we would outgrow the tiny facility at San Carlos where the company was formed, [and] that we ought to identify some piece of land where we could build our own laboratory. One of the cornerstone ideas of the Varian Associates enterprise was that we wanted to be very close to the research being done at American universities, but Stanford University in particular.
It was obvious to this group, both at the board level and to consultants, that we would push our ideas even further with access to Stanford faculty, Stanford students, and some of the Stanford facilities. I believe it was my idea to try to convince the university to lease us some land, and this was debated at Varian because even though it might have been a good idea, people said that Stanford land was more expensive, and might have other limitations. But we decided to try it and made the proposal for leasing a piece of land to the business office of Stanford. Terman was asked for his advice and obviously supported the idea.
For one thing, he was on Varian’s Board of Directors and for another he saw the beginning of further development of industry in the proximity of Stanford. We started with six acres and increased holdings to seventy-five acres over time. Hewlett-Packard made a decision to follow our example, and Terman helped provide Hewlett-Packard a site of leased land. After that, Terman’s ideas began to generalize. You could see this growing into a very large enterprise, and he became the spokesman at Stanford developing the idea that this could grow into something that might be called a park.
Edward Ginzton And a park it was, and Stanford Industrial Park would add many tenants. The early ones, besides Varian and Hewlett-Packard, included GE, Lockheed, Eastman-Kodak, and Zenith. Hewlett-Packard also had a profit-sharing plan and a stock option plan for employees. Originally, they sold stock at a small discount to their employees, but were disappointed when some of the employees who bought discounted stock turned around and sold it right away. By necessity they added a vesting period. Before I go on to more early Hewlett-Packard stories, I need to say something about “The HP Way.
Perhaps it is best expressed in the short paragraph below, which is quoted from an article in Stanford Magazine. The two stories that follow it testify that it was “the genuine article. ” Early on, David Packard was jeered, not cheered, for his views on management. In 1942, at age 29, he attended a Stanford conference on wartime production. Dominated by industrialists from giants like Standard Oil and Westinghouse Electric, it was presided over by business school professor Paul Holden, a major management guru of the day.
Somehow, we got into a discussion of the responsibility of management,” Packard later told Peninsula journalist and historian Ward Winslow, “Holden made the point that management’s responsibility is to the shareholders—that’s the end of it. And I objected. I said, ‘I think you’re absolutely wrong. Management has a responsibility to its employees, it has a responsibility to its customers, it has a responsibility to the community at large. ’ And they almost laughed me out of the room. ”