The Traitorous Eight: The 1957 Mutiny That Created Silicon Valley

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William Shockley, co-inventor of the transistor, persuaded financier Arnold Beckman to give him $1 million for a lab in Palo Alto, then mostly fruit orchards. He recruited eight young scientists, among them Gordon Moore, Robert Noyce, Eugene Kleiner, and Jean Hoerni, after putting each through psychological and intelligence tests. Then the dream job soured. Shockley recorded phone calls, forbade staff from sharing results, mailed their reports to Bell Labs to be checked, and demanded that everyone take a lie detector test.

This episode recounts the revolt that followed. Kleiner slipped off to New York to hunt for investors, the group asked Beckman to replace Shockley and was refused, and bankers Arthur Rock and Alfred Coyle met them at the Clift Hotel in San Francisco. Backed by a $1.38 million loan from Sherman Fairchild, all eight resigned on September 18, 1957, and founded Fairchild Semiconductor. Their company produced the planar process, then splintered into Intel, Kleiner Perkins, and dozens of spin-offs.

• Shockley abandoned the commercially promising bipolar transistor to chase a four-layer device he named the Shockley diode, which proved nearly impossible to manufacture.
• Consultants who reviewed the hiring tests warned that Noyce and Moore lacked the personality to be good managers.
• Coyle laid ten one dollar bills on the table and had everyone sign each one as their contract with one another.
• Hoerni's planar process buried the transistor flat in silicon under a protective oxide layer, which made the integrated circuit possible, yet Moore largely ignored it at first.
• Sherman Fairchild bought out the founders' shares for $3 million in 1959, turning them into salaried employees and setting off the departures that ended with Intel in 1968.