FRED TERMAN, THE FATHER OF SILICON VALLEY
CAROLYN E. TAJNAI, MANAGER
STANFORD COMPUTER FORUM
STANFORD, CALIFORNIA, 94305 USA
Silicon Valley, located on the San Francisco, California, peninsula, radiates
outward from Stanford University. It is contained by the San Francisco Bay on
the east, the Santa Cruz Mountains on the west, and the Coast Range to the
southeast. At the turn of the century, when fruit orchards predominated, the
area was known as the Valley of Heart's Delight. Today, semiconductor chips,
made of silicon, are the principal product of the local high-tech industries.
It has been said that an institution is but the lengthened shadow of one great
man. Inasmuch as Silicon Valley is an institution, Fred Terman was such a man.
In the 1930's, Professor Frederick Emmons Terman of Stanford University's
Department of Electrical Engineering was concerned by the lack of good
employment opportunities in the area for Stanford engineering graduates. It
troubled him that his best graduates had to go to the East Coast to find
employment, especially in the field of radio engineering. His solution was to
establish the then-new radio technology locally.
One of his first steps was to bring together two of his former students,
William Hewlett and David Packard, founders of the Hewlett-Packard Company.
After World War II, when Terman was dean of the School of Engineering, he was
successful in attracting research support from a number of sources. This
amount eventually became very large, especially when compared with prewar
experiences. Terman was thus able to attract bright new faculty and students.
In addition, he continued to encourage his graduates to start their own
companies. Faculty members soon joined inconsulting, investing, and, in some
instances, founding new companies.
Fred Terman became a legend in his own time. Newspapers and a recently
published book have perpetuated a myth regarding his activities: in fact,
Terman did not loan William Hewlett and David Packard money to start their
The Early Days
Bill Hewlett and Dave Packard hung around the lean Stanford electronics
laboratory talking about ``someday'' having their own company.(Note 2) Upon
graduation in 1934, however, Packard took a job at General Electric in New
York, while Hewlett stayed on for a year of graduate study with Terman before
leaving for MIT, where he received a master's degree. Hewlett returned to
Stanford in 1936 to work on an electrical engineering degree.
``I did a number of little things then to help get their business started,''
Terman said. ``A new idea in electronics (the so-called `resistance-tuned
oscillator') turned up. I told Bill, `It looks to me as if you could use this
to make an instrument. It would be a lot simpler and cheaper than anything on
the market. But you'll have to solve a couple of problems to make it
function.' Bill came up with an absolutely perfect solution. He designed and
built an audio oscillator, a device that generates signals of varying
frequencies.''(Note 3) To remove serious instability, Hewlett took advantage
of the nonlinear resistance-temperature characteristic of a small light bulb.
The addition of one standard and inexpensive component turned a balky
laboratory curiosity into a reliable, marketable instrument.
Money was a problem, but by great effort and a bit of luck, Terman was able
to get some money together for the project, including a $1,000 grant from
Sperry Gyroscope.(Note 4) ``We spent $500 for materials and $500 for Packard's
salary. You didn't just get on a plane in those days to hop across the
country. In the autumn of 1938, Packard took a leave of absence from his job at
GE (which paid $110 a month) to come back here (for $55 a month).''(Note 5)
Packard and his wife rented the lower floor of a duplex, and the two young
entrepreneurs went to work in the small garage behind the house. Hewlett moved
into a backyard cottage at the same address. Packard later said that after
he'd been back three or four weeks, he knew Hewlett was right and that he'd
never return to the East. Terman could always tell how the new young firm was
doing: ``If the car was in the garage, there was no backlog, but if the car was
parked in the driveway, business was good.''(Note 6) Their first large order
was from Walt Disney Productions. It was for four oscillators to be used in
making the motion picture Fantasia.
That modest garage shop housed the beginnings of the Hewlett-Packard Company,
which was incorporated in January 1939. Today, Hewlett-Packard is one of the
world's largest producers of computers and electronic measuring devices and
equipment. It currently employs more than 80,000 people worldwide (22,000 in
Santa Clara County) and has sales of more than $6 billion per year.
A Fighter From the Start
Born at the turn of the century, Terman was 10 years old when he moved to
Stanford with his parents. The rolling foothills of the Santa Cruz mountains
were his playground, and he spent his early teens roaming the hills near
Stanford University hunting rabbits and looking for butterflies, turtles and
skunks. He fished for bass in Felt Lake and learned to swim in Lake Lagunita
(on the Stanford campus). Even as a youngster, Terman had an entrepreneurial
instinct; during the holidays, he would collect mistletoe in the hills and sell
it to Stanford faculty wives, who were deterred by poison oak.(Note 7)
If Terman had not contracted tuberculosis, he probably never would have
joined the faculty at Stanford. The stage was seta young man received his
A.B. in chemical engineering and an Engineer Degree in electrical engineering
from Stanford. He then headed East to MIT. In those days, Terman recalled, ``a
serious young engineer had to go back east to put spit and polish on his
education.''(Note 8) He earned a Ph.D. in 1924 at MIT under the tutelage of
Professor Vannevar Bush.
At the age of 24, doctorate in hand, he returned home to the Stanford
campus to spend the summer. He planned to join the faculty at MIT in the
fall as a new assistant professor. Instead, tragedy struck; he developed a
serious case of miliary tuberculosis.
Terman spent the next year in bed, with sandbags on his chest. There was no
specific treatment for tuberculosis, and sandbags were used to immobilize his
Two doctors abandoned his case at one point, declaring it hopeless, but two
other physicians fought to save him. His appendix ruptured in the spring, and
he developed eye trouble that was to bother him for several years thereafter.
During his illness, Terman became engrossed once more in radio. As a
teenager, he had been a radio ``ham'' and enjoyed experimenting with the
fascinating new ``wireless.'' By age 16 he had his own transmitter, which he
used to contact other amateurs as far away as Texas. Lying in bed he had the
opportunity to read Morecroft's Principles of Radio Communication(Note 10) from
cover to cover. He realized he could improve on Morecroft and set about to do
so. While still in bed, he began drafting his first book, Radio
Engineering,(Note 11) which was published in 1932. One of his important
contributions was the development of ``universal'' curves for representing the
selectivity of radio circuits. This technique made possible a great savings in
time, and the approach was adopted in the textbooks that followed.(Note 12)
Terman's former advisor, Professor Harris J. Ryan, the head of electrical
engineering at Stanford, offered Terman a half-time teaching job at the
university beginning in the fall quarter of 1925. Terman gratefully accepted.
He spent most of the year in bed, however, getting up only about two hours a
day to go to class.
While convalescing, Terman had to learn to conserve his energy; he developed
strong work habits and an exceptional ability to concentrate. His friends
noted that he could turn his attention on and off at will. A friend once said
of him: ``If there are 10 minutes to work on a manuscript, Terman is able to
make nine minutes and 50 seconds of it count.''(Note 13)
Professor Oswald (Mike) Villard of the Stanford School of Engineering, a
former student and protege of Terman's, once recalled: ``Along with enormous
energy, Terman always had a clear idea of what he wanted to do and what to do
to meet his objectives. He was phenomenal in his self-discipline. After
spending a full day at the university, he would go home and work on his
books.'' When asked if he ever pursued a day without working, Terman replied,
``Why no, how could you ask that question?'' Joseph M. Pettit, one of Terman's
best students, and currently president of Georgia Technological Institute, once
said: ``Terman never took a year off to write a book. Instead, he used to say
that if he wrote only a page per day, he would have a 365-page book by the end
of the year.'' Terman worked seven days a week and felt no need for vacations.
``Why bother,'' he once remarked, ``when your work is more fun?''(Note 14)
Terman's health gradually improved, and in 1927 he was appointed assistant
professor of electrical engineering. In 1930 he was promoted to associate
professor, and in 1937, at the age of 37, he became professor and executive
head (now known as chair) of the Electrical Engineering Department.
Beating the Odds
While reminiscing about the early days in electrical engineering, Terman
said: ``The Depression years were more difficult than you can imagine. We had
nothing, literally nothing, to work with. An accident that burned out a few
vacuum tubes or damaged a meter would produce a crisis in the laboratory budget
for a month. As an economy measure, I insisted that the laboratory meters be
protected by an elaborate system of fuses. Students often chafed at this,
because the fuses frequently got blown and it was always difficult to find a
replacement of the right size. But the meters survived!'' The prewar
electronics laboratory was in an attic under the eaves, over the electrical
machinery laboratory. The roof of the attic leaked, and at times these leaks
became quite bad. There was no money to repair the roofs, so they built big
wooden trays and lined them with tar paper and tar. As the trays filled, we
walked around them. Our morale didn't suffer. One winter Bill Hewlett added a
homey touch by stocking the trays with goldfish.''(Note 15)
At a testimonial dinner for Terman, Edward Ginzton told about his own arrival
at Stanford during the depths of the Depression. Ginzton had graduated in
electrical engineering from the University of California at Berkeley in 1936.
He estimated that out of about 10,000 students who graduated that year, two or
three had found jobs. Ginzton had unsuccesssfully interviewed with 10 big
companies, after which he tried the utility companies. He then started walking
the streets of San Francisco, where he was living, trying to find any job, but
with no luck. ``Finally, the fall came, and I was pretty desperate. I heard
that Professor Joseph Carroll at Stanford was looking for an assistant in
high-voltage engineering. I came to see him, and he talked to me for a few
minutes and realized that even though he had some positions available, I wasn't
the right person for his needs.'' Carroll sent him to Terman. ``I'll never
forget the conversation I had with Fred. I was discouraged about life, after
walking the streets of San Francisco, and in one hour's time Fred transformed
my life from a hopeless, dismal experience to one of excitement and
anticipation and looking forward to what might happen in the future. He
offered me a research assistantship at $135 per quarter. That made it possible
for me to come to Stanford, and I did. People complain that faculty members
don't have much time for their students, that they are always traveling,
looking for contract support, or whatever, but Fred spent endless hours with
us, his students.''
Ginzton continued, ``Working for Fred was an unforgettable experience. He
taught us a lot, directly and indirectly. He had meager resources within the
department, and only one professor, Karl Spangenberg, whom he had brought in.
There wasn't enough faculty to go around, so he encouraged us to create our own
seminars, to teach each other. To be working for yourself, by yourself, along
with Fred Terman, arguing with him about problems, helping him write his books
it was just an exciting period to be a member of his graduate coursesan
unforgettable experience.''(Note 16)
Terman was instrumental in putting Ginzton in the right place. As Villard
remarked, ``Terman could have kept him for himself, but instead he sent him
over to Professor William Hansen in physics. It proved to be a stroke of
genius.'' Ginzton had the right combination of organizational and scientific
abilities needed to manage technical projects and keep them moving forward.
In March 1939, Ginzton, while still a graduate student, became involved with
Hansen and Russell and Sigurd Varian in the development of the klystron tube.
He received his Ph.D. in physics in 1940 and spent the war years with the
klystron group at Sperry on Long Island. In 1943, when the Varians were making
plans to start their own company as soon as the war was over, they invited
Ginzton to join them.
In her book, The Inventor and the Pilot, Dorothy Varian says: ``One of the
reasons for asking Ed to join the group was to have him manage the company. At
that time, he had two years of experience as a project manager at Sperry and
was very successful in working with the men in his department. As plans for
the laboratory proceeded, his ideas on how to work with others, the kinds of
business incentives that might be desirable, and procedures for organizing the
company were important to the basic concepts later incorporated into company
policy.'' She continues: ``As the war neared its end in 1945, Ginzton was
offered an appointment as assistant professor of physics at Stanford. He
discussed this offer with other members of the group, for his proposed role as
manager was a crucial one, but they urged him to accept the Stanford
appointment. The laboratory was still a year or more in the future, and
Ginzton agreed to serve as a consultant on both management and scientific
Varian Associates was organized in 1948. For the 11 years that followed,
Ginzton divided his time between teaching and researching at Stanford and
consulting on the company's technical projects and serving on its board of
directors. After Russell Varian's death in 1958, Ginzton became chairman of
the board and chief executive officer at Varian. In 1961, he left Stanford to
devote his full attention to Varian. While continuing as chairman of the
board, he served as president from 1964 to 1968 and remained the chief
executive officer until 1972.(Note 18)
A Tireless Worker
Terman's friends describe him as a serious man who knew what he wanted to
accomplish and who attended to details with the utmost care. He dressed in
conservative suits, wore old-fashioned shoes, and always drove second-hand
cars. As one friend commented, ``He was not a hale fellow well met,'' but he
did have a sense of humor and an appreciation of odd turns of events. He had
no hobbies other than a zestful mania for the doings of the Stanford football
team. He was also noted for his keen intelligence. ``He was always three or
four sentences ahead of everybody else,'' an admirer once said. ``He was
always alive and thinking about problems. He would sometimes telephone late in
the evening, long after I'd buried myself in a martini.''(Note 19)
In 1965, at a dinner honoring Terman, David Packard reminisced: ``As a
student, I became acquainted with Professor Terman before I enrolled in his
course. Among my hobbies was amateur radio and I spent a spare hour now and
then in the radio shack in the attic of the Engineering Building. Professor
Terman's laboratories were next door. Sometimes he would stop to chat for a
minute or two. After several such brief visits, I was amazed to find that he
knew a great deal about me. He knew my interests and abilities in athletics;
he knew what courses I had taken and what my grades had been; and he had even
looked up my high school record and my scores on the entrance examinations.
``At that time, Professor Terman had already developed a broad knowledge of
and a personal acquaintance with the business and industry related to his
academic discipline. He would often tell us about the corporate history, as
well as the current activities, of all the important firms in this newly
developing industry. Although he had been teaching only a few years, many of
his former students were already making important contributions in their new
jobs, and he kept in touch with them.
``The highlight of his course for me was the opportunity to visit some of the
laboratories and factories in this area. Here, for the first time, I saw
young entrepreneurs working on new devices in firms that they had
established. One day Professor Terman remarked that many of the firms we
visited, and many other firms throughout the country in this field, had been
founded by men with little or no formal education. He suggested that someone
with a formal engineering education, and perhaps a little business training,
might be even more successful.''(Note 20)
During the early 1940's, Terman was called upon by Vannevar Bush to head a
big defense research project at Harvard University, developing radar
countermeasures. The experience put him in the mainstream of government
electronic research. The success of the wartime work led him to believe that
the government would not allow this work to disappear completely in peacetime.
He also felt that it would be appropriate for the government to support
fundamental research in universities. There was a widespread feeling at the
time that wartime applications had exhausted the supply of
fundamental discoveries, and that it needed to be replenished. Accordingly,
he set out to expand Stanford's School of Engineering after he returned to the
university in 1946 as the dean of engineering. In this capacity, his
government contacts helped him to attract federal funding.(Note 21)
As a corporate board member of new young companies and a frequent speaker at
industry meetings, Terman took advantage of these opportunities to spread his
message. In his words: ``I encouraged our new, young faculty members to get
out and get acquainted with local industry and with the people in it who were
doing interesting and creative things. Likewise, I encouraged industry to know
their university by getting acquainted with what was going on at Stanford as it
related to their own technical interests, and to make the acquaintance of those
university people who had similar interests.''(Note 22)
Stanford Industrial Park
In the 1950's, the idea of building an industrial park arose. The university
had plenty of landover 8,000 acres(Note 23)but money was needed to finance
the University's rapid postwar growth. The original bequest of his farm by
Leland Stanford prohibited the sale of this land, but there was nothing to
prevent its being leased. It turned out that long-term leases were just as
attractive to industry as outright ownership; thus, the Stanford Industrial
Park was founded. The goal was to create a center of high technology close to
a cooperative university. It was a stroke of genius, and Terman, calling it
``our secret weapon,'' quickly suggested that leases be limited to high
technology companies that might be beneficial to Stanford. In 1951 Varian
Associates signed a lease, and in 1953 the company moved into the first
building in the park. Eastman Kodak, General Electric, Preformed Line
Products, Admiral Corporation, Shockley Transistor Laboratory of Beckman
Instruments, Lockheed, Hewlett-Packard, and others followed soon after.
In 1955, Terman became provost, and three years later he became vice
president of Stanford. He transformed the university's Chemistry Department
into one of the best in the country. Two outstanding chemists, William Johnson
from the University of Wisconsin, and Carl Djerassi, a University of Wisconsin
graduate, who had become vice president for research at Mexico-based Syntex
Corporation, joined the faculty at Terman's behest. By bringing Djerassi to
Stanford, Terman set in motion a whole new chain of company formations in
biology and medicine. Largely at Djerassi's urging, Syntex established a U.S.
subsidiary and research branch in the Stanford Industrial Park. Djerassi
brought Alejandro Zaffaroni, Syntex's executive vice president, with him.
Djerassi and Zaffaroni were responsible for the formation of four new
Zoecon, Alza, and Dynapol.(Note 24)
Professor John Linvill, former chair of electrical engineering, credits
Terman with attracting him to Stanford. Linvill said, ``He had a remarkable
way of keeping track of people. He had contacts all over the place. He knew I
had gone from MIT to Bell Laboratories to work on transistors, and he recruited
me in 1954 to set up a transistor program at Stanford.''(Note 25) Linvill
started his own company with partial backing from the university in 1971. He
is now codirector of the Center for Integrated Systems, a research center on
campus, funded primarily by corporations, that does basic research in
Terman encouraged William B. Shockley, co-inventor of the transistor, to
return to his hometown of Palo Alto. In 1956 he established the Shockley
Transistor Laboratory of Beckman Instruments where they produced Shockley
four-layer diodes. Shockley, who joinedthe Stanford faculty as a professor of
electrical engineering in 1963, said that the decision was made predominantly
because of the Bay Area, the fact that there are more trees in the area than
there are in Southern California, and Stanford.(Note 26)
However, eight of Shockley's bright young electronics specialists left in
1957 to establish Fairchild Semiconductor in Palo Alto. This was the beginning
of the semiconductor industry; Fairchild became a corporate seedbed as no less
than 38 new companies were started by former employees. (Intel is one of the
most famous.)(Note 27)
Professor Dean A. Watkins was director of the electron devices laboratory and
codirector of the Stanford Electronic Laboratories. Terman recognized
qualities in Watkins that he knew would make him a good businessman. When
people from the Kern County Land Company let it be known that they wanted to
invest in a military electronics enterprise based on microwave tubes, Terman
told them he had just the right man and introduced Watkins to them.(Note 28)
That was the beginning of Watkins-Johnson, which was founded in December 1957
by Watkins and H. Richard Johnson. Watkins continued on the faculty of
electrical engineering as a professor until 1964, and then as a lecturer until
Johnson was also a lecturer in electrical engineering from 1958 until 1968.
The atmosphere for growth became contagious; Terman continued to encourage
his graduates to start their own companies, and faculty members continued to
participate in the consulting, investing, and founding of new companies.
The Honors Cooperative Program
Early in the 1950's, at the close of the Korean conflict, the managers of
several local firms asked Terman to permit their employees to continue their
education on a part-time basis. In 1953, Terman decided that it was possible
to accept some additional graduate students without increasing costs greatly.
Companies in the area were notified that they could send qualified employees to
regular day-time classes; the workers would be released from their company
duties during this time. The response from industry was dramatic, and classes
were quickly overloaded. Tuition covered less than half of the actual cost to
educate a student. The result was overflowing classrooms and the underpayment
To solve the problem of maintaining the quality of education, Termanthen
Dean of the School of Engineeringoriginated the Honors Cooperative Program, in
the autumn quarter of 1954. Under this program, four companies (Sylvania,
Hewlett-Packard, SRI International, and General Electric) agreed to select a
number of qualified employees for enrollment in graduate work at Stanford. The
companies signed five-year agreements specifying that they would pay double
tuition for each student. This arrangement essentially covered the full cost
of educating the Honors Cooperative students. The matching funds were
transferred to the departments in which the students were studying and were
used to hire additional professors to handle the increased teaching load.(Note
Once when fruit orchards predominated, it was called the Valley of Heart's
Delight; it is now called Silicon Valley. Today semiconductor chips, made of
silicon, are the principal product of the local high-tech industries. The term
Silicon Valley was used occasionallymostly by easterners who would mention
making a trip to Silicon Valley, until 1971 when it was popularized in a series
of articles, ``Silicon Valley USA,'' written by Don Hoefler for Electronic
News. Quite likely it was the first time the term was used in print.(Note 30)
Silicon Valley radiates outward from Stanford Universityto the adjacent
cities of Palo Alto and Menlo Park; northwest to Redwood City and San Carlos;
southeast to Los Altos, Mountain View, Sunnyvale, Cupertino, Santa Clara,
Campbell and San Jose; and is gradually expanding to Alviso, Milpitas and
Morgan Hill. It is contained by the San Francisco Bay on the east, Santa Cruz
Mountains on the west and the Coast Range to the southeast.
Approximately 2000 electronics and information technology companies,(Note 31)
along with numerous service and supplier firms, are clustered in the area. The
valley contains the densest concentration of innovative industry that exists
anywhere in the world, including companies that are leaders in such
fast-expanding fields as computers, semiconductors, lasers, fiber optics,
robotics, medical instrumentation, magnetic recording, and educational and
consumer electronics. Some are branches or subsidiaries of bigger corporations
that felt obliged to establish research facilities in the area, even though
their headquarters may be located elsewhere. Most of the new industry is home
grown, however.(Note 32)
Terman once said, ``When we set out to create a community of technical
scholars in Silicon Valley, there wasn't much here and the rest of the world
looked awfully big. Now a lot of the rest of the world is here.''(Note 33)
Terman had long believed that the academic community and the business community
could and should work together for the benefit of both.(Note 34) Once Terman
had attained a position of influence and power at Stanford, he practiced (and
preached) a principle that he called ``steeples of excellence.'' Its cardinal
rule was to go for the best. ``Academic prestige depends on high but narrow
steeples of academic excellence; it is not possible to cover all the
Terman, who died in 1982, never took credit for the development of Silicon
Valley,(Note 36) but it is interesting to note in retrospect that a young man
who fell ill at the age of 24, and who assumed that he would be unable to
fulfill his destiny in the East, instead brought the world to his doorstep.
It has been said that an institution is the lengthened shadow of one man.
Inasmuch as Silicon Valley is an institutionFred Terman is that manthe Father
of Silicon Valley.
(1)William Hewlett, telephone interview, November 1984.
(2)Sandra Blakeslee, Stanford University News Service, 3 October 1977.
(4)George F. Climo, Historian, Public Relations Services, Hewlett-Packard
Company, telephone interview, February 1982.
(7)``Fred Terman's favorite stories recalled by John Halamka, who lives in
his basement,'' Campus Report, 12 January 1983.
(9)Frederick W. Terman, telephone interview, November 1984.
(10)J. H. Morecroft, Principles of Radio Communication, Wiley, New York.
(11)F. E. Terman, Radio Engineering, McGraw-Hill, New York, 1932.
(12)Oswald (Mike) Villard, interview, Sunnyvale, California, 11 November
(15)Blakeslee; Villard; Hewlett.
(16)``Terman Dinner,'' concluding remarks, 5 May 1977 (provided by Professor
(17)Dorothy Varian, The Inventor and the Pilot, 1983.
(18)Varian Associates Magazine, Volume 19, Number 1, January/February 1984
(20)David Packard, ``Address honoring Dr. Terman,'' 31 May 1965.
(21)Gene Bylinsky, Fortune Magazine, ``California's Great Breeding Ground for
Industry,'' June 1974.
(22)F. E. Terman, ``Address delivered at WEMA (Western Electronics
Manufacturers Association) 30th Anniversary Dinner,'' 10 November 1973.
(23)Andrew Doty, Stanford University Office of Public Affairs, Stanford,
California, telephone interview, November 1984. The original grant by the
Stanford's plus accumulated land totaled 8,847 acres; since then 667 acres have
been condemned for easements, leaving 8,180 acres.
(25)John Linvill, interview Stanford University, Stanford, California, 26
(26)William B. Shockley, telephone interview, 24 May 1985.
(29)Stanford Engineering News, School of Engineering, Stanford University,
No. 92, January 1974.
(30)Don C. Hoefler, publisher of Microelectronics News, telephone interview,
9 January 1985. Hoefler was choosing a name for an article about the
semiconductor industry that he was writing for Electronic News. Ralph Vaerst,
then president of Ion Equipment, suggested Silicon Valley. Hoefler named his
article, ``Silicon Valley USA;'' it was a series that ran for 3 weeks,
beginning 11 January 1971.
(31)J. Parietti, American Electronics Association, telephone interview, 29
(35)Bob Beyers, Stanford University News Service, 19 December 1982.
(36)F. W. Terman.
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