Home » The Secret History of Silicon Valley by Steve Blank (Transcript)

The Secret History of Silicon Valley by Steve Blank (Transcript)

Steve Blank Speaks on Silicon Valley

Hidden in Plain Sight: the Secret History of Silicon Valley by Steve Blank.


Male Presenter: Welcome everybody. It’s my pleasure to introduce Steve Blank. Steve Blank is a serial entrepreneur, he is lecturing at Stanford at the Engineering School of Stanford? Berkeley, at the business school of Berkeley, and the business School at Columbia University. He is a long time Silicon Valley denizen, he is into computer history, he was a marketing guru. That’s how I met him, the previous company where I worked at, Epiphany. And he’s here to give a talk which I think will tie nicely into Tom Perkins’ talk which was given a couple of weeks ago and I don’t know whether you have been to that one or not, Tom Perkins of the KPCB fame. And he talked a lot about Bill and Dave Packard and his relationship with them, and them being a mentor to him. And he touched on a lot of Silicon Valley history. But I thought Steve Blank’s talk will open this a lot more. I’ve seen this talk awhile ago and I can tell you it’s really interesting. Steve, please. Please give Steve a warm welcome.

Steve Blank: So I appreciate being here at the center of the universe and as Boris pointed out, I do drive by teaching in a number of universities which is what you do when you actually cash your Google stock when it crosses a thousand.

So the talk today is Hidden in Plain Sight: the Secret History of Silicon Valley. And a few caveats about the talk. I’m not a professional historian, some of this, hopefully not all of it, is probably wrong. And all of the secrets I’m going to share with you are from open source literature. I find history, particularly history of the Valley, kind of interesting because you could never tell where you’re going unless you know where you’ve been. And the Valley has several waves of innovation. The defense wave, integrated circuit wave, personal computer wave, internet wave, and it doesn’t mean that every one of these waves meant that everybody in the valley was just doing this. But it meant at that period of time, there was a core concentration of expertise in Silicon Valley, in this local area, on each one of these domains.

And what I want to talk about today, briefly, is an area you probably know very little about. And that’s the area about defense.

Silicon Valley was and in some cases still is the heart and mind of NSA, CIA innovation. And I’m going to illustrate this with five very short stories.

World War II

The first story is about World War II. And a surprise to me is the title. World War II is the first Electronic War. How many of you have ever seen World War II movies? Anyone? Okay. Planes, bombers. Anybody seen, you know, Air Force movies in World War II. Every movie you’ve ever seen about World War II that involved bombers were wrong, every one of them. Not because people were lying, but simply that the directors and the screen writers don’t know and still don’t know what I’m about to tell you today.

Just to set the scene, in September 1939, World War II started in Europe. By the summer of 1940, the Germans had overrun continental Europe. They owned everything from the English Channel and they were moving, starting in June 1941, into western Russia. Britain stood alone. And by December 1941, when the Japanese attacked Pearl Harbor, the US joined them.

But the only way to affect German power in Europe, in 1941, 1942, 1943, and half of 1944, was the start of strategic bombing campaign to destroy the industrial capacity of Germany. And this was called the Combined Bomber Offensive.

British planes and then American planes, took off everyday to fly from Britain to industrial targets over Germany. The British bombed with four inch of bombers called Lanchesters and Halifaxes, they bombed at night. Their goal was what they called area bombing, or euphemistically to dehouse the population. Unfortunately, if you were in the house, they also had some other effects on you. But since they couldn’t barely see what they were bombing at, this is carpet bombing of cities.

These planes flew at 7,000 to 17,000 feet, carried up to 20,000 pounds of bombs, roundtrip from Britain to Germany to back. And starting in late 1942 and really getting into it in 1943, the Americans started bombing. And their concept was, “We’re Americans. Heck, we could put these bombs down a smokestack.” This is precision bombing, we’re going to take out specific industrial targets. And we used B17s, which you see here, and B24s. These bombers flew somewhere between 15,000 and 25,000 feet. These planes were unpressurized. Pilots and crew were on oxygen for six to eight hours per mission. You’ll see some pictures of that in a second.

The goal was to destroy the transportation infrastructure, the petroleum, the fuel oils infrastructure, aircraft infrastructure and anything else that contributed to the German war economy.

Let me just put this in context about the size of this air strike. This wasn’t Moffett Field, a couple of planes a day. The size of the Allied air war in Europe was a titanic struggle, the likes of which we’ll never see again with manned aircraft. There were 28,000 Allied airplanes at its peak, bombers and fighters. 40,000 planes were lost and destroyed, 40,000.

Just in context, the entire jet fleet, Boeing, Airbus, smaller manufacturers today in operation, 15,000 planes worldwide. We lost 40,000 of them in Europe and just for scale, 160,000 airmen died over Europe. Not got shut down, just died. Half US, half British, and by the way, they were your age. They were all in their early 20s. That’s who manned these crews.

Let me give you an example. Can we get the audio?

[Video Playback]

Notice the oxygen mask. Those little black dots are not new clouds. Those little black dots are something called flak or anti-aircraft shells bursting around the aircraft. Couple of things to note, the crew, pilot, copilot, navigator, radio operator, bombardier, and lots of gunners who you’ll meet in a second.

As soon as they took off from Britain, they were facing the German air defense system and here’s the stuff no moviemaker ever knew. The Germans in 1940 set-up the Kammhuber Line. It was an integrated electronic air defense network that stretched from Northern France all the way into Germany. Its job was to defend Germany from British and US bomber raids to warn and detect German air defense, to target and aim their weapons, and then destroy the bombers before they got to the targets. The Germans could see the British and American planes forming up 200 miles away. These were the air defense radar sites in occupied France. And the air defense radars had 200 mile ranges.

The first phased-array radar ever built was the Mammoth, peak power of 200 kilowatts, 100 feet across. But the backbone of early warning radar for the Germans was a steerable tower, it actually pivoted, 190 feet high, almost a megawatt, and we’re talking about 1942. 150 of these spread across occupied France.

Now, once these bombers were detected in formation and they started flying, if you remember that video “Have we crossed the coast?”, what they encountered was something called the Himmelbelt, which was the German air defense network, which is local air defense organized by 30X20 mile boxes, and each one of those boxes had an integrated network of radars, flak, which was a German name for anti-aircraft guns, fighters, and for night time search lights.

And what happened was, as bombers started entering the Himmelbelt, they were detected by the Freya early warning radars, that provided warning through a command center that started vectoring or talking pilots of German fighter planes into the bomber stream, and this ground control to intercept technique was invented in Germany right here and directed fighters right into the bombers. And then the fighters, particularly at night, for the first time, had their own onboard radar. German fighter planes had radar that when they got into the vicinity, could lock on to the bombers and target their weapons.

The Freya, which was this local defense radar, 90 mile range, Giant Wurzburg, 1,500 of these were deployed in these Himmelbelt cells, 45 mile range, this thing is 25 feet across, there were a 150 of these. And all of these data for these Himmelbelts were pouring into air traffic control centers, they didn’t call them that but that’s what you should think about them. All the radar data from the short range radars, all the long range radar data, and they even have their equivalent to the National Security Agency who is picking up passive detection of picking up all the radio traffic from the bombers as they formed up, all came into these centers where they integrated all these data. And think of a giant movie theater, and you had fighter controllers looking at a giant map projected on a screen with the controller sitting in theater-like seats. And they would talk the fighters into the vicinity of the targets, the fighters would turn on their radar, and acquire and attack the target.

At night, when the British were bombing, the German night fighters would use their radar and it looked like this, and figured out this time in the war that, gee, you could put a radome, all right, that is a covering around these that would be transparent to radar. So these things looked like deer horns but they were pretty effective. But the weak link was the ground controller communications channel, we’ll talk later about what could happen if you could shut that down. These were the planes that were used for night attack.

During the day, ground control intercept just had to get these fighters into the general range, then you could eyeball the bomber stream, kind of hard to miss a thousand bombers heading for Berlin once you got into the general area. Again the weak link was the controller communications channel, typical planes were the Messerschmitt BF 109 and the Focke-Wulf 190. Yes?

Audience: [Question inaudible]

Steve Blank: Great question. If you’re flying during the day, you were vectored, if you were flying at night, you’d use your radar. And I’ll show you some more –another example.

Typically, that’s where the bombers would hide, but eventually they had to come out if they wanted to bomb. So I’ll show you an example.

[Video Playback]

Here’s an example of a fighter attack, this is real footage from World War II.

They didn’t have escorts until late in the war when the P51 which actually changed the tide of the bombing war allowed the bombers to have sufficient range to take them all of the way to the target. In 1941, ’42, ’43, beginning of ’44, there wasn’t adequate fighter protection. And when they started using fighters P-47, it didn’t have enough range to take them all the way into Germany.

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Couple of things to note, about 60% of bomber losses were the fighters. About 40% were lost to something called–which I mentioned earlier, anti-aircraft or flak. The Germans had 5,000 anti-aircraft radars. If you ever see pictures of anti-aircraft guns shooting, you never once see the fact that they were all radar-directed. Holy cow. And the guns they used, think of cannons pointing up in the air, the shells profuse for a time. There were fragmentation rounds. The shell went off, if you were within 50 feet of that shell your plane was peppered by shrapnel and the odds are, you would either get severely damaged or go down.

The good thing for the Allied, I take this –questions, if anybody is interested. The Germans never had proximity fuses. It could have dramatically changed the result of the air war. Also, Germans had designed a pretty effective prototype of a surface-to-air missile called The Wasserfall. But they also didn’t do that. They put all their resources into the B2 which while great for rocket science, was pretty ineffective as a strategic weapon.

The next thing was the bomb run. They fought their way over Europe, they’re getting to the target, and they’re about to line up the bomb. See all the flaks bursting around them. So, okay. They’re about to make their bomb run and somebody said, “Dark clouds.” There’s only four clear days a month in fall and winter over Europe. Great photos shows a nice day.

How did they see the target? Here’s the other piece you never saw in any war movie about World War II. They show the bombardier using an optical bomb sight. Works great when it’s clear. It’s optical. How do you bomb for a cloud. Great weather, by the way, that’s flak. Dropping their bombs on the target. Perfect aim. By the way, only about 30% of bombs, even at the end of the war came within a half a mile of the target. Precision bombing was an oxymoron.

So, what they finally decided to do and invented, and installed by 1943, was air-to-ground radar. By the end of the war, every US and British bomber had a bombing radar set. It meant for the first time, they no longer needed to cancel missions when it was overcast over the target. These were pretty primitive and all they did was paint an outline, of kind of the major ground features. But it was good enough to develop map overlays, to say, “Well, if you see a feature that looks like that, it’s probably Hamburg.” And so, targets could be over Berlin or, maybe it’s –hopefully not London. Targets could be seen under the cloud and the rain. The British installed this in mid 1943. The Americans took it and improved it a bit, and put it in mass production on every British and American bomber. This will come back in another story a little later on.

Now, supposedly, this story and this talk is about the Secret History of Silicon Valley. Well, this might be amusing and interesting, what the heck does World War II have to do with Silicon Valley.

So, let me just remind you about what’s going on here. Horrific casualties. Google math challenge, for every hundred bombers on a mission, each mission, 4% to 20% would not return. Holy cow. They’re your age. And you had to fly 25 missions to go home. It’s sobering. It was a priority to defeat the German air defense system. Air defense system at its core was electronic.

Electronic Warfare

So story two was the development of an electronic shield in the middle of World War II called electronic warfare. And it was run by the most secret lab you probably never heard of called the Harvard Radio Research Lab, which was in Harvard. But it was a code name for the US counter measures and its goal was to reduce losses to fighters and flak, and it did it with a couple of ways.

First, the Germans didn’t publish any papers on their radar. There’s no open source literature. Google wasn’t round. So the first one was we needed to gather electronic intelligence and signals intelligence about the characteristics of these signals. Then we needed to develop devices that jam and confuse those radars. This was a top secret 800 person lab.

The first thing to find and understand German air defense, we took a couple of bombers and stripped all the bombs and racks and everything you can imagine out of them, and pack them full of radar receivers, develop special purpose receivers that could go from 50 megahertz to 3 gigahertz, this is 1942. And flew these planes unarmed over Germany and recorded radar signals. Try to figure out frequency, power, pulse rate, etcetera.

Once we understood that, we came up with some defenses. And the first one, believe it or not, was mechanical, not electronic. It turns out, if you cut pieces of reflective material, and I don’t mean optically reflective, I mean radar reflective, to half the frequency of that radar, it would get false returns. You could jam the radar by throwing tin foil at the back of a plane. The British called it window, we called it chaff.

We used this to disrupt the German air defense by jamming the Wurzburg frequencies for both ground control intercept and radar guided anti-aircraft. It was first used over a city called Hamburg. And the first time this happened, we completely shut down the entire German air defense system, and it happened to be timed with a thousand bomber raid which used in [cinders] for the first time to try to destroy a complete German city. Some of you might know the results over Hamburg.

In this first attempt, the crews literally opened the door and manually tossed out packets of chaff, automatic dispensers, they came later. This was so important. During the war, it used three quarters of all aluminum foil in the United States disappeared. No one understood why we were having an aluminum drive. It’s for chaff.

But then this Harvard Radio Research Lab started earning their money. They systematically said, “We’re going to shut down every electronic component of German air defense. We’re going to start by jamming those early warning radars. And we’re going to put jammers on airplanes and blind the Wassermanns, Mammoths and Freyas. And they built jammers to do that first on escort fighters that flew along with the bomber, and then when there were enough of these devices, it went on every bomber.

Next thing was, let’s jam the German anti-aircraft radar, the Wurzburgs. We’re going to shut down the flak. We built 24,000 of these jammers, put them on all the bombers. And then for the British at night, we need to jam the airborne radar on the fighters. And they built a set of devices to do that. Not only jam the fighter radar, but to jam the communications link between that fighter and its controller trying to vector him in.

Now, this was great. It was on all British bombers. By the end of the war in 1944, 1945, a bomber stream had an integrated electronic defensive system that flew along with it. It had chaff, it had electronic intelligence planes making sure there were no new German signals coming up or other radar. We were jamming the ground control intercepts signals, and we were doing jamming against the AAA. And all of this was integrated not only on the planes itself, but by this time, there were dedicated planes that had nothing– nothing, no bombs, but racks full of jammers flying along with every bomber mission.

Now, this is pretty important. An integral part of the World War II war effort, you never heard about it. So who ran the secret lab and became the father of electronic warfare? And what the heck does this still have to do with Silicon Valley?

Because the Harvard Radio Research Lab which was the spin out of the MIT radiation lab, had 800 people. It wasn’t like five guys that never heard of it, 800 people. The guy who ran it was Fred Terman of Stanford. Any of you from Stanford? Anybody? Have you ever seen this Terman engineering building? It’s where my office is. Fred Terman, if you do know about him, is known as the father of Silicon Valley but not because he was the father of electronic warfare, he was known as the kindly professor who encouraged the students, Bill Hewlett and Dave Packard, to start a company. That’s what Fred Terman is known for in Valley lore.

And for those who of us in the black world, we kind of laugh because that’s not who Fred Terman really was. Fred Terman was the father 5of the military-industrial complex in Silicon Valley. He was Dean of Engineering in 1946 and he was provost in 1955.

I want to talk about what happened in the Valley when Fred Terman came back from World War II knowing what he knew and knowing what he did. Just for some history, in World War II, the office of Scientific Research and Development enlisted university research in helping win the war. It was the first time the military said, “No, no, no. We’re not going to use our own labs to do advanced R&D, though we will –we’re going to enlist all of society including university labs. And we’re going to give out serious bucks for the first time to do this.” $450 million was spent on weapons R&D, good chunk of it with the universities. MIT got an $117 million, Caltech $83 million, Harvard and Columbia $30 million, dramatically changed the direction of velocity of those universities.

Oh, and by the way, Stanford got 50 grand, 50 grand. Terman was so pissed he packed up, and his old PhD adviser, Vennevar Bush, recruited him to head up the Harvard Radio Research Lab. Terman, says, when he returns, this will never happen to Stanford again. His post war strategy is to make Stanford a center of excellence for microwaves and electronics, klystrons, traveling-wave tube, etcetera. And he’s going to build Stanford with the MIT, not Harvard model, of military-university collaboration from day one. Not going to be left out of the gravy train again.

So, Terman being smart, said, “Hey, I had the world’s best people in high power microwaves, radar, advanced electronics paid for by military sitting in Harvard. How can I get them at Stanford?” Eleven of them now become faculty members, pretty cute idea. He reassembles essentially the Radio Research Lab, cream of the crop, at Stanford as faculty. And he sets up the Electronic Research Laboratory, ERL, as part of the engineering department. And for the first four years, works on basic and unclassified research, very benign, great idea. And got the first Office of Naval Research contract in 1946. ONR was the only part of the military even interested in continuing military R&D.

By 1950, Terman turns Stanford’s Electronics Department into the MIT of the west. Well known, really impressive. But the Korean War came. I don’t know if any of you read history but the Soviet Union was our ally in World War II. And after the war ended, things went bad pretty quickly. We thought we had a nuclear monopoly, the Soviet Union detonated its first atomic weapon in 1949. They took over Eastern Europe and the Iron Curtain came down pretty fast. And from what became our ally, very quickly became a not only threat but a nuclear armed threat. It looked like communism was the winning bet.

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And then in 1951, North Korea invades South Korea, we joined yet again another war. We saw communist conspiracy everywhere and the Korean War truly changed the game not only for the country’s thinking but for Terman’s thinking as well. Spook Work comes to Stanford, Terman sets up a classified department at Stanford, the Applied Electronics Lab, and doubles the size of the electronics program. Says, “No, no. This will be separate from the unclassified work,” but it made, for the first time, the university a full partner in this military-industrial complex. We were doing serious weapons research at Stanford. Everything we knew of World War II, we’re doing but we’re doing it more.

Just to give you a context, this was paranoia time and probably not unrealistically, the Cold War battlefield moved from Germany to 500 miles to the east. Somebody is probably pointing out their hometown next to the ICBM site. There was a real fear this time of a nuclear Pearl Harbor because the Soviet Union was a closed country. Electronic counter measures, electronic intelligence, signal intelligence all become critical and that’s what Stanford’s expertise was known for, for its customers, the National Security Agency, the Central Intelligence Agency, and the arms of the military.

This Cold War is an electronic war. This Russian air defense system that they set up is Germany times 10, because not only are there fighters and anti-aircraft guns, but they started building surface-to-air missiles. They started adding sophisticated radar to not only their night fighters but their day fighters. So, the big job was, how do you understand the radar order of battle in the Soviet Union.

And now, they don’t have B2s, they’re starting to build intercontinental ballistic missiles. How can we monitor the telemetry that they put on in all of their test missiles and figure out its performance? How do we do photo reconnaissance to find out where the missiles silos are? And how do we monitor their growing Navy? And even more so, how do we even identify where their production facilities are and production capabilities for their nuclear weapons? All of this required not only photo evidence but required electronic and signal intelligence. So, Stanford throws its hat in, joins the Black World.

Terman decides to take the Electronics Research Laboratory which did basic and unclassified research, and the Applied Laboratory which did classified research, and gave up and merged them both. Stanford, in 1955, set up a systems engineering lab and became the most advanced signals intelligence, telemetry intelligence facility for its government customers.

Now, in the context of the time I’m not making any moral or value judgments about whether this is good or bad, but I will tell you the thing that Terman was doing, at the same time which changed all your lives, which is why you are here. He did something — I don’t think he gets any credit for it at all, and he changed the rules in how startsups and university work together. He was the first engineering dean and provost to encourage and almost throw out graduates students to start companies here in Silicon Valley. He encourages professors to consult for those companies and he encouraged professors to take board seats, advisory board roles, anything you can to help new nascent start-ups. And he made it easy to walk out of Stanford with all of this technology, like some other companies we might know, with incredibly easy terms. And in fact at Stanford, getting out into the real world was good for your academic career rather than bad.

Contrast this to any other environment in the mid-1950s. Now, back to the war, the Cold War. Stanford was helping the military understand the electronic order of battle. We believe our bombers were going to have to one day penetrate the Soviet Union. And just like everything we learned about doing that over occupied Europe, we’re going to have to relearn again. Where are the radars? The Strategic Air Command needed to know and the CIA needed to know for a reason I’ll show you in a second. What were the technical details of those radars? The NSA and CIA needed to give that detail to their contractors, to build jammers. The periphery, that is the outside of the Soviet Union, its radar order of battle was somewhat known because you could fly a plane right to the Soviet border. Radars were turned on, fighters would come out and you would know, “Yup, there are radars there, they’re trying to kill us.”

But you had no idea what was going on inside the middle of the country. This wasn’t an academic exercise, over twenty three planes were shot down in the middle of the Cold War, all of them electronic intelligence gathering planes that flew along the periphery of the Soviet Union, trying to record and identify the early warning radars that bombers would first see. Over 200 US citizens were shot down, some of them interred and never –interred and never released. This is a hot Cold War.

Now, some of you might have heard of a plane called the U-2. Anybody hear of that airplane? Now, any time I heard of the U-2, I saw those great photos and the 0U-2, that was a photo plane. Turns out, by weight, most of the payload was electronic intelligence gathering equipment. But, until today you’ll never read about that, about the U-2 payload being ELINT, it was all about cameras. It turns out, yes, we were trying to take pictures, but more so, we were trying to understand across the interior of the Soviet Union, what was the electronic order of battle? And the equipment that did that was courtesy of Stanford and Silicon Valley. Systems that went from 150 megahertz to 40 gigahertz, Stanford Electronics lab. Jammers to keep surface-to-air missiles away, Granger Associates, Watkins-Johnson, etcetera. The U-2s were jammed packed with ELINT receivers.

Now, what’s interesting was the innovation that came out of this. Just a side story, in 1960, at what was then Cape Canaveral, the Air Force was launching a rocket and they noticed that radar signals from a radar that had nothing to do with this test, somehow was bouncing off this missile when it was in the air and was picked up by another radar. Two separators, transmitter, receiver, completely separate happen to be bouncing off an ICBM as it was being tested. They said, “Huh, this is kind of interesting.” And they basically came up with the idea of a bi-static intercept receiver. Okay, so let’s use a separate transmitter and receiver and a non-cooperating thing in the middle. And, they said, “Where on earth could we actually use this to get some information about radars in the middle of the Soviet Union.”

So, Project Melody was born. And it turns out the Soviets were testing their ICBMs in the southwest corner of Soviet Union. So, we used their missiles as they were launched to pick up the radar transmissions of their radars inside the Soviet Union and received them in our receiving stations in Iraq. It produced intercepts of all the Soviet ground-based missile tracking radars including ABM radars and ballistic missile radars we had no idea existed. Somebody got a metal for this one.

The other thing we were building at that time after the U-2 was another intelligence platform called the Oxcart A-12 as the U-2 successor. The public name for this was the SR-71. Now, this was a CIA plane and the CIA was really concerned about how vulnerable this plane might be at high altitude because it was designed to fly above 80,000 feet in Mach 3. And it realized from the time it designed it to the time it was thinking about flying it over the Soviet Union, that the Soviet air defense system had gotten really dense. So, the ELINT staff office of the CIA said, “What’s the radar environment like inside the Soviet Union?” And they needed to find information about a radar called Tall King who is the primary Soviet air defense radar, 100 feet wide, range 375 miles.

And we were interested on where they were located. B52 bombers needed to know, this A-12 Oxcart plane needed to know. The problem with signal intelligence of course, it’s all the line of sight. The radar was inside Soviet Union and none of our ELINT aircraft could get high enough to pick up the signals.

So what we decided to do was to use the moon. We’re going to use the moon as a bistatic reflector and we’re going listen for Tall King signals as the Earth revolved and rotated around and the alignment happened like an hour or two a months. But if they had multiple big radar dishes, you actually could start plotting the position of Tall King radars. And it turns out, this was tested in New Jersey at Bell Labs. And they said, late 1950s, holy cow, this really works but we don’t have enough geographic separation, we need more big dishes–big dish.

Big dishes, all of a sudden get funded in the late 50s. Pay for and develop the Stanford dish, hide the relationships through cover agencies, all you needed was access to the dish about an hour or two a month. We have some researchers coming in, don’t worry, we’re there. And they didn’t–they didn’t take up much time. This only lasted four or five years until we put other systems in place but all the dishes that happened to get funded, you think we were really interested in radio astronomy in that order of magnitude? And we even built a bigger one at Sugar Grove in Virginia, a steerable dish, and the Jodrell Bank dish, in the UK, all of a sudden got funded as well.

So, we finally figured out where the Tall Kings were but one of the things we were interested in was now that we know where they are, we need to know more stuff about them for jamming and stealth. So the solution for this was to build a fleet of electronic Intelligence planes that literally, once in the air, [unspooled and tennis] that were miles long, I’m talking about miles, flew around the periphery of the Soviet Union, measured the Soviet air defense and basically said, holy cow, these guys are pretty good. And it changed the Strategic Air Command to integrated operating plan, so B52s which had been designed to fly in at, you know, high altitude, now had to go in at 200 feet, completely changed the nature of one of our strategic triads.

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And finally, there was something called Project Palladium. It said, “Okay, we know how good their –where all these other stuff is, but we need to know how sensitive the equipment is and how good are their operators.” And so what we built was a system, here in Silicon Valley, company to be unnamed, that electronically generated false targets into the Soviet radars, they saw a ghost aircraft, and we could simulate any aircraft, any speed, and the trick though is to know what were they seeing. So we trained a team with the National Security Agency to listen to the communications’ channels of the radar operators while we were injecting false signals and so we could decrypt them in real time. Thank you National Semiconductor, which we’ll –it’s another story. And watch when they turned on their tacking radars, and we used ground bases, naval ships, submarines and this lasted about three years, gathered enormous data on the sensitivity of the Soviet Air Defense System.

Finally, we had satellites. One of the first satellites we put in space was an electronic intelligence satellite, Project Grab. All of the sudden, we no longer needed to use the moon. We can just now use a satellite going around, collect radar emissions from Soviet air defense radars, when they got over ground station dump-out position, latitude, frequency, etc. Built by the Naval Research Laboratory and used by Strategic Air Command.

Then, the Navy put some stuff in space, except this time it wasn’t one satellite, they put a whole cloud of them up, it allowed them to direction find on radio and radar signals that Soviet ships were using in the middle of the ocean. Now, for the first time, you couldn’t hide anywhere in the ocean. Clusters of satellites, triangulated and direction find.

What does this have to do with Silicon Valley? As an example just of one of the contractors, many that exist in this valley, Sylvania, who you might think of–as being a light bulb manufacturer was the second largest employer in Silicon Valley in the late 1950s. They ran the Electronics Defense Laboratory which was basically an electronic counter measures lab. Terman was a consultant, half the professors in the electronic labs were consultants. Thirteen hundred employees, big deal.

But the bigger deal is, in 1964 their director thought it was the world’s biggest bureaucracy and quit and founded a company called ESL. Anybody know what happened to Bill Perry? Father of stealth became the Secretary of Defense. All right? Biggest spook in Silicon Valley, father of stealth, direct descendant of Terman in terms of military-industrial relationships. Terman’s legacy as the father of the relationship between university and the Military, began an institutionalized black Silicon Valley, ESL, Lockheed, GTL Sylvania, Argo. The university as a hand-in-hand collaborator with startups is probably his most lasting legacy. But the black version of what he did is completely missing from many of his histories or biographies. You’ll never see anybody talk about what Terman did at all, post-world war II.

But the good stuff– the stuff that’s lasting, the stuff that, in fact, makes us all here today, you see, developed this model for university and entrepreneurial partnerships consulting, patents, intellectual property, this notion of equity, all came from Terman. A really unique guy.

Now, normally I would end the story right here. But I thought I’d tell you story five for two minutes.

Unintended consequences.

University and industry relationships are the most visible part of his legacy. And the deep and pervasive university intelligence relationships are his secret legacy. But remember, what did Terman think the Valley was going to turn out to be? Anybody remember what he thought– said it was? Yeah, it’s military, klystrons, microwaves, electronics. We’re not the microwave valley, are we? How come? And here’s why it’s Silicon Valley.

On the other side of town, the head of radar bombing training from the Air Force starts a company. Remember, these guys?

[Video Playback]

This is a World War II bombing radar video. It’s Hawaii. Now, it turns out that this was really hard to do. That is, to pick up the signals and figure out what land masses they were. It was so hard, the Air Force put to –Army Air Force, put together a training group to build map overlays. And there was one guy who was responsible for all this in World War II. This is the guy who started a company at the same time Terman is working on all these black projects. He was also director of the Navy anti-submarine warfare operations at Columbia. Headed the Radar Bombing training for the Air Force. How many of you know who this guy is? He was Deputy Director of Weapons Systems Evaluation. He was helping us build ICBMs, he was the Deputy Director. Who’s this guy? He’s a co-inventor of the transistor and he found this Shockley Semiconductor. It’s William Shockley. Father of Silicon Valley.

William Shockley is the reason why we have all these semiconductor companies in Silicon Valley. He was a great researcher, awesome talent spotter and the worst manager, probably, in the planet. Unintended consequences, he hires the world’s best team and eight of them leave two years later including Robert Noyce and Gordon Moore. This group of eight found Fairchild Semiconductor which then becomes the father of almost every other chip company in Silicon Valley. By the way, his beliefs about eugenics just effectively end any type of commercial career in 1963.

But what he did for semiconductors, basically he’s at the root. All flowed from him. And Silicon Valley became Silicon Valley because of the guy who did radar bombing training in World War II. The legacy, military R&D put millions of dollars into the Valley –excuse me, billions of dollars. Secrecy limited as it does the diffusion of direct technology breakthroughs. But the biggest benefit is the one we never would have figured out. It was the university-industry collaborations is it’s most lasting benefit. So that’s it. Thank you for your time. And I hope it was interesting.

I’ll take any questions if there is –are any. Yes?

Question & Answer Session

Question: If the Germans were so big on radar, how come [inaudible]

Steve Blank: So it turns out –yeah, thank you. So the question was, how come during the battle of Britain, the Germans weren’t smart enough to shut down the British air defense system called Chain Home Radar. And it turns out that’s one of the ironies of the war, that the Chain Home Radar sites were so primitive, they operated at a frequency below what the German electronic intelligence systems actually could detect. No joke. Because the Germans –and in post-war, we all ask this — here these guys understood all these stuff. It turned out Chain Home was a very low frequency radar system. It barely worked but it–barely meant it worked. So the British were able to scramble fighters rather than having them orbit all the time, in time to intercept the German bombers during the blitz. And the Germans never understood the purpose of those tall towers. In fact there’s a long story that there are–The German electronic intelligence system used a zeppelin, Pre-World War II breakout, to orbit Britain and their radio receiver they had didn’t go down that low. Question?

Question: So you mentioned that in the Cold War, we injected false planes into the Soviet air defense system. How did we do that without actual planes?

Steve Blank: So the question was, how did we inject false signals into the Soviet and Eastern Bloc radar systems? How did we do that without planes? And so that falls under the, “If I told you, I’d have to kill you.” But the technique is–may or may not be in open literature. You can inject signals–the spoofing stuff was used extensively even in the first—in the two Gulf Wars, used in Vietnam, etc. Other questions? Yes?

Question: What do you think about the list of pilots that were shut down — Soviet defenses, why are all the names of the pilots Russian sounding if they’re American?

Steve Blank: So the question is the list of the pilots who were shot down, how come the names were Russian sounding? The pilots on that list were the names of the Russian pilots who shot down the planes. When I said this was open source, that list came from the ex-Soviet Union. Just to continue that conversation, one of the things we also did which almost started World War III is not only did we probe the periphery, pre U-2, we flew electronic intelligence planes all the way across the length and breadth of Soviet Union just to gather electronic intelligence. That’s how blind the Strategic Air Command was and how desperate they were to gather this data. Other questions? Yes?

Question: How much of this system design –

Steve Blank: All right, so, how much of—the question was, how much of this stuff fell into Soviet’s hands? The Soviet Union had a active, very active espionage ring in the United States and particularly targeted–one may branch of it at Silicon Valley. And while we all think of the KGB and that’s whose records we actually got access to, one of the more effective groups for espionage was the GRU, which was the Soviet Military Intelligence. It targeted almost every defense contractor in Silicon Valley. And that role has now been passed on to the Chinese. Other questions? In the back.

Question: You talked about gathering intelligence over the Soviet Union, where was the work being done for protecting the US against Soviet Intelligence?

Steve Blank: I guess–so the question was, where was the work being…So one of the things we built in the US was something called SAGE. And for those of you who haven’t been to the Computer History Museum, it was –stood for Semi-Automated Ground Environment, but was the first automated air defense system which really was a spectacular piece of hardware and software. In the late 50s, it ran operationally for about 20 plus years. Probably one of the most sophisticated pieces of integrated man-machine user interface. It came out with the first light guns and just worth walking next door and take a look at it in Mountain View. And there were other centers of excellence in the US. Around Route 128, for those of you who haven’t read AnnaLee Saxenian’s book called Regional Advantage, until the 70s, it wasn’t clear that Silicon Valley or Route 128 was going to be the winner in the center of US innovation. And she postulated some very interesting hypothesis about why it happened here rather than there.

But around 128 and around Washington DC, there were a lot of innovated electronics–military-industrial electronics companies. Other questions? Okay.

Thank you very much and thanks for your time.

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