Once it was called the Valley of the Heart's Delight and it was filled with orchards. Today you know it as Silicon Valley. The orchards are mostly gone. They've been replaced with thousands of companies filled with engineers, entrepreneurs and venture capitalists. How that happened has a lot to do with Eugene Kleiner, who died there on November 20, at the age of 80.
The teenaged Kleiner and his family got out of Austria ahead of the Nazis and settled in New York. He served in the military and then used the GI Bill to finance an engineering education. In 1956, the inventor of the transistor, William Shockley, invited him to come to California to join Shockley Labs where Kleiner was to help other engineers try and cram as many transistors as possible on a wafer of germanium.
Wait a minute! Germanium? Yep, that's the material Shockley, who was a Nobel Prize winner after all, thought would be best. Kleiner and several others disagreed. They favored silicon.
In 1956 Kleiner and seven other engineers, whom Shockley would dub "The Traitorous Eight," left Shockley to start their own company. They had lots of brain power. Besides Kleiner there were also Jean Hoerni, Jay Last, and Sheldon Roberts later founded Amelco, which became Teledyne. Robert Noyce and Gordon Moore (that's Moore as in "Moore's Law") became co-founders of Intel.
The eight could only scrape together some $3500 in capital, so money became their most immediate problem. Kleiner wrote a now legendary letter to his father's stockbroker, the only person he knew who might be helpful. The letter got passed on to Arthur Rock who was just starting out as a venture capitalist.
Rock checked out the men and their ideas. Then he helped arrange funding from Sheldon Fairchild. The engineers called their company Fairchild Semiconductor.
Kleiner was, by all accounts, a great engineer, but he turned out to be a great manager too. The company followed his personal style. It was informal, without titles, a comfortable place to work.
Fairchild Semiconductor was profitable within six months. The company stayed profitable even as other founders left to start other companies. By 1972, Kleiner, who always lived modestly, had more than enough money and was ready for something new himself.
Kleiner decided that he wanted to be a venture capitalist. There weren't many back then to use as models, so he made up his own model. The idea was to be a venture capitalist that dispensed more than money. He wanted to be something of a hands-on manager as well as a financial angel.
Kleiner met Tom Perkins at a breakfast that turned into a weekend-long bull session. On Monday they called investment banker Sandy Robertson and said they wanted to raise money for a venture fund.
The firm they started became Kleiner, Perkins, Caulfield and Byers. They worked the way Kleiner wanted to, hands-on. He could do that because he'd been there. He'd been the engineer with the idea that needed funding. He'd been the entrepreneur who'd built a company on the idea. Now he was helping others.
That's what he did for the rest of his life. His firm financed a lot of the companies that became Silicon Valley icons including Sun Microsystems, Tandem Computers, Compaq and Amazon. In the process the Valley of the Heart's Delight became Silicon Valley and Silicon Valley became more than a place.
Silicon Valley was an idea that others tried to copy all over the country where Silicon Gulches and Prairies and who-knows-whats sprouted like mushrooms. Silicon Valley was the idea of a driven but informal workplace where technological innovation created profit. Silicon Valley was the idea of a community of engineers, entrepreneurs and venture funders who were shaping the world.
Look around you. Everywhere the silicon chips that Eugene Kleiner the engineer helped develop are part of all kinds of devices that define daily life from computers to automobiles, from hotel room locks to microwave ovens, Game Boys, and cell phones. All around you there are brands for companies that sprang from companies run by Eugene Kleiner the entrepreneur or nurtured by Eugene Kleiner the venture capitalist. The next generation of technological innovation with be built with management and funding tools he developed.
Stop for a moment today. Put your hand on something in your world with a silicon chip in it, which is almost anything these days. Then take a moment to be thankful for the quiet life of Eugene Kleiner that made it all possible.
Some Quotes from Eugene Kleiner
His rules for folks looking for capital.
- Get the facts straight.
- Don't lie.
- Leave nothing out.
- Take the money as soon as it's offered.
"When they're passing hors d'oeuvres, take two."
"The more difficult a decision is to make, the less it matters what you decide."
On the importance of determining if the market wants your wonderful idea: "Make sure the dog wants to eat the dog food."
And, my personal favorite, indeed one of my favorite quotes of all time: "In a hurricane, even a turkey can fly."
8 December 2003
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