Ray Zinn, the longest serving CEO in Silicon Valley, discusses the history of silicon as only he can, having watched it from Shockley to Facebook.
In Part II, Ray and Goldman Sachs analyst Peter Marchetti cover the changes after silicon defined the tech-centric nature of the valley.
Peter Marchetti has spent the past 20 years as an advisor to some of the most significant families and foundations in the country. He joined the Goldman Sachs team in 2000 after receiving his MBA from the Haas School of Business at the University of California, Berkeley.
Ray Zinn: Hello, everyone and welcome to the Second History of Silicon Valley this is Ray Zinn, a founder and author of Tough Things First and we’re so delighted to have you join us again. As I mentioned on our previous podcast, we’re going to be discussing the history of Silicon Valley. So those of you who are interested in Silicon Valley you’re going to enjoy these podcasts. Thanks for joining us and this is our second in our series of the podcast. If you missed our first one, you can go to our website, toughthingsfirst.com and pick it up and we would suggest you start from the beginning. So if you’re a newcomer to this series, please go back and then listen to them all in sequence otherwise it’ll be a little confusing. I have my good friend financial advisor, Pete Marchetti, who is joining us today as our moderator for Tough Things First, Silicon Valley history series. And so welcome again, Pete so happy to have you.
Peter Marchetti: Thanks again for having me, Ray, I’m looking forward to continuing our series of talks.
Ray Zinn: Where we left off was I started in 1963, I had left the United Technology and joined this new fledgling six year old company called Fairchild Camera and Instrument in Mountain View, California.
Peter Marchetti: Yeah. Thanks Ray. Well, last podcast ended with you talking about how you became aware of Fairchild from your father-in-law and he kind of sold you on the idea of working at the company and you go there and I guess, it would be great to hear a little bit about what Fairchild represented back then, because I think and nowadays we all talk about other semiconductor companies, but not as much about Fairchild. It had a kind of out-sized importance in terms of the development of Silicon Valley and what it meant for the evolution of the area in the industry. And so could you talk a little bit about like where Fairchild was at that time and how important it was and maybe a little bit about how it began?
Ray Zinn: Dr. Shockley left Bell Labs and he had a group of scientists, people that he brought with him to the Bay Area and primarily in the Palo Alto area. And again, just to rehash, Dr. Shockley is from Bell Labs in I think Pennsylvania where they were again, developing very high tech processors. And so there was a group of men, they were called the traitorous eight split away from Shockley and formed Fairchild. And Pete’s going to have to help me remember all these people’s names because he has that list in front of him. But there was Dr. Robert Noyce who ultimately, who was the CEO and President of Fairchild.
So what just to kind of a quick rehash on that, Fairchild Camera and Instrument was a company back in Maine, I think, or somewhere around there and they made cameras and other kinds of instrumentation. And so that name, Fairchild Camera and Instrument actually was nothing related to semiconductors was more related to cameras and instrumentation more like Hewlett-Packard kind of a company. But anyway, they helped start or fund Fairchild Camera and Instrument is what it was called back in the late ’50s, early ’60s. And I joined them in 1963 where they had only been in business for six years. And so there’s Dr. Noyce, Robert Noyce, Gordon Moore, Jay Last, Jean Hoerni, Julius Blank, Andy Grove and who else did I miss?
Peter Marchetti: We have Victor Grinich, Sheldon Roberts.
Ray Zinn: Okay. And then-
Peter Marchetti: And Andy Grove just for clarification, Andy Grove came in later, right?
Ray Zinn: That’s right. That’s right. That’s right. He was from Israel. So let’s see.
Peter Marchetti: Eugene Kleiner too, sorry.
Ray Zinn: Yeah. Eugene Kleiner, which ultimately became Kleiner Perkins, a venture capital company. Okay. So those were what they call the traitorous eight because they left Dr. Shockley and they had developed this planar process, silicon planar process. And so that was the first time that we’d actually done planar technology. And that was a major patent allowing us to move to more of a planar technology which is really the heart and soul of making integrated circuits is a planar process. But we didn’t start out with integrated circuits and integrated circuit means that you combine more than one transistor on the same piece of silicon. That’s why they’re called integrated because you’re integrating multiple transistors on the same piece of silicon. So silicon is a material that is a like glass basically or sand. And it starts as a little seed, they take a seed crystal and then they grow that crystal in a cylindrical way so it looks like a big ingot of silicon.
And then after they grow it, it’s a single crystal, no separations. It’s a one single crystal of silicon, and then they sliced it into these very thin slices. And back in the day when I started, they were only three quarters of an inch in diameter. Now, they’re well over 12 inches in diameter per wafer. And so that’s a little primer on what silicon is. And so we had to make all of our own equipment to process these wafers and so we had actually another division, actually two divisions that actually made in Fairchild that made the equipment and then a division that made some test equipment because we had to test this product.
These fellows that we just mentioned, we’re part of Fairchild they were kind of the heart and soul in the beginning of the silicon semiconductor industry in Silicon Valley located on Whisman Road in Mountain View, which is just right off the freeway from Highway 101. And that’s kind of how that kind of got started as far as the facilities.
Peter Marchetti: What was it like to work there at that time? I mean, you we’re young man, recently married and what was the culture at Fairchild like and kind of how exciting was the environment, I guess during that time, when things were being developed and invented at such a rapid pace?
Ray Zinn: We’re all kind of, except for the research group up in Palo Alto, the Fairchild Research Group, which Gordon Moore ran and Jean Hoerni and Vic Grinich were up there, but down in Mountain View at the manufacturing facility, it was a small building. It wasn’t that huge, I think it was like 30 or 40,000 square feet originally. So it’s a small building we’re all kind of jammed together there. I mean, we’re literally elbow to elbow in that building because the company was growing extremely rapidly. So you have to remember back in that time, the major customer was the military because no one could really afford to pay thousands of dollars for a transistor. Because the way that the electronics was done before you had the semi-conductor was tubes and Berrien made tubes and as well as GE and other Westinghouse made these electronic systems out of tubes. A tube had a glass bulb on it and a connector on top and some pins coming out the bottom and so it was called a vacuum tube.
And so that was a way that electronics originally done was with tubes. If you remember, well, you wouldn’t, none of you probably remember this, but we had tube radios. I mean, you know, a radio mic consisted of one or two tubes to run the radio and it was quite clunky and drew a lot of power. In comes the transistor or the planar transistor that we made at Fairchild that cost hundreds and hundreds of dollars and upwards over a thousand dollars just for a [three-leaded 00:09:41] device. Because it was all new and the process was difficult to control and so it was a really very expensive technology, but the government was the primary customer. I think probably 80 to 90% of the revenue came from government contracts. And so almost all the products that I worked on back in the early ’60s were all military products.
Peter Marchetti: On that Ray, what sort of things was the government using the chips or the semis for? The transistors for? What were the end uses?
Ray Zinn: Primarily, instrumentation for airplanes because we needed, the tubes are big and heavy and so the transistor was small, very, very tiny, I mean, very tiny, the size of your fingernail back in those days. And so we could cram a lot more electronics in the airplane or in the equipment, the military equipment. Well, they had it also in some of the armament like tanks and so forth and on ships, but primarily airplanes because airplanes needed the lightweight. And then of course we were in the middle of this Sputnik and the Race to the Moon and satellites and that sort of thing.
So NASA, which was right next door to us, which also was another reason why Silicon Valley took off was because you had NASA there. And NASA was one of the biggest customers for electronics, for these space devices like satellites. And so it’s because of the lightweightness of the transistor that allowed the satellites to be able to put on orbit.
Peter Marchetti: Right. I remember reading something about the government SPAN is related to NASA and the space race, and how incredible the spending was during that almost entire decade, and really helped to kind of push the semiconductor industry.
Ray Zinn: Oh, yeah. If it weren’t for the U.S. Government military, primarily the industry would never have taken off. So it’s primarily the military-cut contracts that really sprung to life and got the industry up and rolling, up and running. But the players now that we need to talk about, of course, because they’ve become more of the history of Silicon Valley are the people like Dr. Bob Noyce, Dr. Gordon Moore, Dr. Andy Grove, Victor Grinich and now there’s another character that came on the scene his name is Charlie Sporck, which we’ll talk about him pretty soon and Jerry Sanders. So those are going to be important names going forward and in our conversation.
So again, probably a good place to end this particular podcast, and then we’ll move on to the next one and we hope everybody will join with us and it’ll be exciting… So we’re really only up to about 1964 in the series, so we want to cover a couple of years. There’s a lot of interesting stories, a lot of good things that you’re going to get to hear about the industry, if you’re going to want to follow this podcast. So again, thanks Pete for hosting this one, and I’m doing most of the talking, because I guess I’m the one that has the history.
Peter Marchetti: It wouldn’t be very exciting, Ray if I did any talking here.
Ray Zinn: Well, you know, yeah probably the oldest living survivor of the industry yet on earth.
Peter Marchetti: Yeah. Well, I mean your combination of experience and as I mentioned to you many times, your ability to recollect that combination is really powerful. It’s a great thing for everybody else to be able to tap into and learn from. So again, I’m better off being quiet and you’re better off talking.
Ray Zinn: Well, thanks again for having this series with me. So thanks again, everyone for joining us today for this second in the series of History of Silicon Valley. Please join us as we go forward with our third, fourth, fifth, and sixth, however long it’s going to take us to complete this series. Please join our website, toughthingsfirst.com. You can pick up my book, Tough Things First at Amazon or other local book retailers or my new book, Zen of Zinn, which is a philosophical book that’ll help you in your everyday life. So again, thanks Pete for joining us and thanks for all of you for following our podcast.