Something Ventured

I was in my laboratory...

probably talking to students.

Here's a call, comes out of the blue.

This young guy...

wanted to know if the technology

was ready to be commercialized.

Then he said the magic word.

He says'

"I have access to some money

that would allow us to get started."

And I said, "Okay."

I said, "Where does the money originate?"

And he said,

"I'm a junior member

at a venture capital firm."

I went to look up what

"venture capital" meant.

I had never heard of it before.

The risks were just enormous.

They came to me

with no business plan.

Willing to risk everything

You have to be a street fighter.

Tick, tick, tick, tick, tick.

We didn't know what we were doing.

Silicon Valley.

Technical breakthrough.

$100000.

A million dollars.

$10billion.

Intel.

Apple.

Genentech.

Cisco.

Good markets.

Create companies.

Growing companies.

The sky's the limit.

The rest is history.

I don't know to write a business plan.

I can only tell you how we read them.

And we start at the back.

And if the numbers are big, we look at the

front to see what kind of business it is.

You have to look at the way conventional

wisdom works and abandon it.

No one has ever accused

me of underestimating...

myself.

Jobs and Wozniak came up to see me.

Steve Jobs is a national treasure.

He is so visionary and so bright.

Uh, I had to fire him though.

These men didn't always wield

such influence and power.

In the beginning, they barely

knew what they were doing.

Fifty years ago, they were just

young guys from modest means...

who thought they could

help build innovative companies.

This is the story of a handful of men...

who stirred up a revolution

in finance and technology,

because they saw opportunity

where others only saw risk.

Venture capital.

I don't think I thought of it first.

But I don't know anyone...

who used the term before I did.

Back in the spring of1957,

Arthur Rock was just

a junior banker on Wall Street.

But then one day, an unsolicited letter

arrived at the office.

The letter was unusual, and no one else at

his brokerage firm knew what to do with it.

It was a cry for help.

And it would forever change

the trajectory of Arthur Rock's life.

You gotta be lucky.

Everybody's gonna be lucky

at some time or another.

Thing I'd say is,

I was lucky to be lucky early.

The letter on Arthur Rock's desk...

had come from eight engineers

in California.

A group of brilliant young men...

who would soon become known

as "the Traitorous Eight."

We were young guys.

A bunch of young engineers

and scientists mostly...

working together

at Shockley Semiconductor.

They were having a hard time with

Shockley, and they were gonna leave.

Things had deteriorated

at Shockley Lab.

He was a very difficult person

to work with.

And a group of us started considering

the possibility at least of leaving.

So anyhow, we did write-

"'This prospectus is to introduce a group

of senior scientists and engineers...

who have been working together at the

Shockley Semiconductor Laboratory."

Shockley had just won a Nobel Prize.

It was probably a little presumptuous

of us to think we could push him aside.

"A group feeling arose

to the effect...

that rather than leave one by one,

we believe that we are much more

valuable to an employer as a group."

These were, by their resumes,

very superior people,

and I thought, "Gee, maybe

there's something here."

Something more valuable

than just to be an employee.

That "something" that Arthur saw...

inspired him to step out of his

ordinary role as a Wall Street banker.

And that's when we met

Arthur Rock.

Arthur came out to meet

with the group of us.

And Arthur said, "You ought to start your own

company, and we'll find financing for you."

They hadn't thought

of this idea themselves.

Nobody thought of starting

their own company in those days.

It was a new idea,

but it was a good one.

At that time, there was

no venture capital,

so starting companies was new.

It was innovative.

Arthur Rock had to get creative about

finding capital for the Traitorous Eight.

His bank had contacts with rich families

like the Rockefellers and the Whitneys,

but they weren't interested in backing a

start-up all the way out in California.

So we, uh, made a list

of companies.

In fact we sat down with

the Wall Street Journal-

Looking for companies to ask to invest in

these eight fellas in forming a new company.

I think we had 35 companies.

All of them said no. "No!"

The attempt

to start a new company...

might have ended then and there,

with the Traitorous Eight

returning to their job search...

and Arthur Rock admitting defeat.

But then Arthur received

one last lead.

We were pretty much at wits, end.

And somebody suggested

that I see Sherman Fairchild.

Sherman Fairchild was

an entrepreneur himself...

and also a very wealthy man.

He right away saw the possibilities,

and decided that Fairchild

Camera and Instrument...

would invest the million and a half

dollars we were looking for.

I call myself

"the accidental entrepreneur."

With the 1.5 million Arthur raised,

the Traitorous Eight started Fairchild

Semiconductor in Mountain View, California,

a sleepy rural town

35 miles south of San Francisco.

Fairchild was the first company

to manufacture...

the sophisticated silicon chips

that would power computers,

rockets and spacecraft,

paving the way

for the high-tech age.

In time, the fruit orchards

surrounding Fairchild...

would give way

to electronics companies,

and the area would become famous

as the Silicon Valley.

If they hadn't stayed together and

formed Fairchild Semiconductor,

probably there'd be

no silicon in Silicon Valley.

Arthur Rock had gotten a taste

of something exciting and significant.

But as it Tuns out,

he wasn't the only one...

trying to figure out

how to fund young companies.

Just up the road from Fairchild,

a handful of businessmen...

were experimenting with their own

version of venture capital...

together, around a lunch table

in San Francisco.

The best things in life

are free

But you can give them

to the birds and bees

I need money

In the '50s and '60s,

there were a group of us in San Francisco

that used to get interested...

in small, high-tech companies

down the peninsula.

There were, I think, five of us

in our group.

We all had jobs, but we had

other time on our hands too,

and we decided we just would put

a little investment club together.

We were just a bunch of

young men in San Francisco...

who knew each other

and respected each other.

What it was like was

a very close fraternity.

I guess I can use

that word carefully.

We'd have a table

of six or eight for lunch.

None of us had enough money to do an investment

by ourselves, so we had to have help.

If one of us ran across

an entrepreneur...

who was trying to start a company,

we would invite him up for lunch.

And after lunch, we would ask him to step

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