Nice short story in the Fast Company on the birth of what’s now known as ‘Silicon Valley’ by a group of 8 guys who fell out with their boss, and secured the very first VC funding:
Most of the modern technology that we hold dear today–from laptops to ATMs to iPhones–probably wouldn’t exist if in 1957 a group of eight young geniuses hadn’t banded together and left their brilliant but maniacal boss, William Shockley, to form the first venture-backed startup.
Dubbed the “Traitorous Eight” by Shockley, the colleagues, who included future Intel cofounders Gordon Moore and Robert Noyce, would go on to build the first practical integrated circuit and the first wave of Valley companies. One of the eight, Jay Last, now 83, recalls how it happened.
Shockley was a brilliant scientist but a terrible manager. He’d won the Nobel Prize for inventing the transistor and started trying to make an impossible device that didn’t work. So he took it out on us. We complained to Arnold Beckman, who funded Shockley Labs. At first he sided with us, but when we confronted Shockley, Beckman left us adrift. We knew we couldn’t keep working there.
One evening we met at the house of Vic Grinich [another member of the Traitorous Eight] to talk about our next move. We were all downhearted, sitting in this dark-paneled room. We could get jobs easily, but we liked working together. That night, we made the decision to find some way that we could work as a group. But we were asking, How can we get a company to hire a group of eight people?
We sent a letter to Hayden, Stone & Co., a firm that the father of Eugene Kleiner [another member of the group] knew, telling them what we had to offer. Art Rock was a young guy working there, and he had the wit not to throw our letter in the wastebasket. He and his boss, Bud Coyle, flew out to meet us and told us about this novel idea that was really the start of venture capital. Art said, ‘The way you do this is you start your own company.’ We were blown away. There was no concept of funding a group back then. Hayden, Stone agreed to find us a backer.
After being turned down by 30 people, we met with Sherman Fairchild, whose father was one of the first IBM investors. He invested $1.5 million in our group to create Fairchild Semiconductor. The eight of us, plus Hayden, Stone, owned the company, and we had a buyout option after a five-year period. We didn’t realize at the time the legacy we’d leave. If you trace the family tree, several hundred companies came out of Fairchild. I helped start Silicon Valley. Thank God Shockley was so paranoid or we’d still be sitting there.