Bill & Dave: How Hewlett and Packard Built the World’s Greatest Company [Hardcover ed.] 1591841526, 9781591841524

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"Mike Malone does the legacy of Hewlett and Packard a great service with this book. hope it inspires a whole new generation of entrepreneurs to rise to the standards set by these two remarkable leaders." Jim Collins, author of Good to Great, coauthor of Built to Last I

—

How

Hewlett and Packard

Built the World's Greatest

Company

:w.rM 95 Canada $3J.50

"This

not a history of the Hewlett-Padc afd

is

Company,

or

a book

a definitive biography

and David Packard. this

business thee:

of

of

William Hewlett

have chosen

I

or

to write

book this way because of the desperate

need the business world has

an archetype

of

enlightened

now

right

for

management

enduring quality, and perpetual innovation. It

is

not

enough

to

Hewlett, Packard,

simply

tell

the story of

and their company. What

why? and

are needed are the

The most momentous

first

the

how?"

meeting in modern busi-

ness history took place in the unlikely setting of a bench

beside a football sity students in

1938, Bill a small first

field,

between two Stanford Univer-

pads and helmets.

A few years later, in

Hewlett and Dave Packard were working in

garage in Palo Alto, California, building their

product, an audio oscillator.

It

was the

start not

only of a legendary company but also of an entire life

in Silicon Valley— and, ultimately, of our

way of

modern

digital age.

Others have written about the

rise of

Hewlett-

Packard, including Packard himself in a bestselling

memoir. But acclaimed journalist Michael the

first to get

S.

Malone

is

the full story, based on unlimited and

exclusive access to corporate and private archives, along

with hundreds of employee interviews. Malone draws

on

his

new

material to

show how some of the most

influential products of our time a culture of

innovation led

were invented and how

HP to unparalleled

success

for decades.

He

also

shows what was

really

behind the ground-

breaking management philosophy-"the put people ahead of products or

profits.

HP Way"-that

There have been

attempts in recent years to discredit the

HP Way as soft HP Way was

and outdated. But Malone argues that the a

hard-nosed business philosophy that combined simple

(CONTINUED ON BACK FLAP)

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BILL &

DAVE

BILL How Built the

&

DAVE

Hewlett and Packard

World's Greatest

Company

Michael

PORTFOLIO

NORTH END

S.

Malone

PORTFOLIO Published by the Penguin Group

Penguin Group (USA)

New York, New York

Inc.,

375 Hudson

Street,

10014, U.S.A.

Penguin Group (Canada), 90 Eglinton Avenue Toronto, Ontario, Canada

East, Suite 700,

M4P 2Y3

(a division of Pearson Penguin Canada Inc.) Penguin Books Ltd, 80 Strand, London WC2R 0RL, England Penguin Ireland, 25 St. Stephen's Green, Dublin 2, Ireland (a division of Penguin Books Ltd) Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) Penguin Books India Pvt Ltd, 1 1 Community Centre,

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1

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Penguin Group (NZ), 67 Apollo Drive, Mairangi Bay, Auckland 1311, New Zealand (a division of Pearson New Zealand Ltd.) (a division of Pearson New Zealand Ltd) Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: WC2R 0RL, England

80 Strand, London First

a

published in 2007 by Portfolio,

member

10

98

Copyright

of Penguin Group (USA) Inc.

7654 ©

Michael

3

S.

2

1

Malone, 2007

All rights reserved

LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA AVAILABLE isbn:

978-1-59184-152-4

Printed in the United States of America

Minion with Gotham Designed by Sabrina Bowers Set in

Without limiting the

rights

under copyright reserved above, no part of

this publication

may be

reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written

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The scanning, uploading, and

?/3o/67

To those

who

follow the

HP Way

Contents A

selection of photographs follows p. 214

Foreword:

Restoration

1

Chapter One:

Friendship

9

Chapter Two:

Apprentices

31

Chapter Three:

That

Damned Garage

71

Chapter Four:

The HP Way Chapter

Five:

Community Chapter

119

165

Six:

Bastion

245

Chapter Seven:

Legacy

303

Afterword:

The Last

Gift

373

Appendix/Lesson Guide

393

Acknowledgments

403

Notes

407

Index

425

BILL &

DAVE

Foreword:

Restoration

111

November 2005,

employees of one of the

in Palo Alto, California,

world's most technologically sophisticated companies regularly stopped by to

watch professional restorers patiently disassemble, wall

and roof timbers of

It

a

restore,

and reassemble the

humble and well-worn, century-old

garage.

Ground

was, without question, the most famous garage in the world:

Zero of the electronic age, wellspring of the greatest economic revolution of

modern

times.

And

it

was the universal symbol of an even greater

lution, entrepreneurship, that continues to

But

if

the

work on the

little

garage was one of preservation, carefully extracted the nails

damaged Douglas

fir

sweep the world.

twelve -by- eighteen -foot Addison Avenue

it

was

also of restoration.

As the

and lovingly removed the stained and water-

in this garage for a

few months in 1939.

the whole thing apart and are rebuilding

it

using the original

frame and original 52 boards," archivist Anna Mancini told the

"We want to do

it

right.

tive,

the world's

and Dave Packard founded what would be-

most famous and

enlightened, adaptive, and

overshadowed every company of

many

times larger. The

HP

day, as the gold standard

fair, its

influential corporations. Innova-

Hewlett-Packard under

time, even those

of those years

HP

and Packard stepped down from

CEOs

re-create the

—some competent, others

much better known and

is

its

HP

new HP.

In the years

com-

so

has been led by a suc-

—none of them

able to

two founders. Few were able

even to maintain the fabled company philosophy, the

company's prelapsarian

the

direct leadership of the

less

magic of Hewlett-Packard under

a genuflection to the

and Dave

few enterprises can ever hope to approach.

pany, and especially since Packard's death in 1996, cession of

Bill

haunts the business world to-

still

But the company haunted most by the old since Hewlett

Seattle Times.

We want to do everything right."

In that garage, Bill Hewlett

come one of

restorers

clapboards, they were also reaching back to the two

young men who worked

"We took

social revo-

glory.

"HP Way," as more

than

BILL &

2

This has led

observers,

from management

academics

specialists to

of HP managers, to question whether the principles HP Way are, in fact, anachronistic. That they were a brilliant

new generation

to even a

embodied set

many

DAVE

in the

of precepts for a business world long gone, a culture long since evolved,

and

for a

company

was much

that

than the 150,000-employee, $90 billion

The nadir came later

in 1999 with the hiring as

HP

chief executive officer (and

chairman) Carly Fiorina, formerly a senior executive

an archetype of the superstar

rina,

boom make

of the

CEO who

late 1990s, arrived at faltering

into her vision of a

it

at

Lucent Labs. Fio-

characterized the dot-com

Hewlett-Packard prepared to

modern company. She saw

the

HP Way not

re-

as a

turning the firm around, but rather as the biggest obstacle to do-

vital tool for

ing

more integrated, and far nimbler behemoth it would become.

smaller,

so.

Thus, even as she aggrandized the symbols of the old the garage

campaign

which became the leitmotif

itself,

—Fiorina was now

of her two

HP

—most notably

for a corporate

branding

actively dismantling almost every institutional legacy

legendary predecessors. The

company

built

on

trust,

where

down through the organization, and that was famously conservative about hiring, firing, and entering new markets, suddenly became a top-down, faceless (except for the CEO) corporation chasing after decision-making was pushed

one Big Plan

after another, all while jettisoning legions

Even the name Hewlett-Packard

and

it

of laid-off employees.

from company signage

by the simpler and supposedly hipper "HP."

collateral, replaced

Ironically,

largely disappeared

was Fiorina who made the purchase of the Addison Avenue

garage a priority after

it

had been held

in private

hands for a century. Then

she was gone, driven out by the same board of directors that had hired her.

Thus the garage future,

became, for

home to careers,

restoration, intended as a

HP

launchpad into an uncertain

employees, a portal to the past

—

to finding their

way

the Hewlett-Packard that for veterans was the lost glory of their early

and

late to ever

to

newcomers was the place of myth where they had arrived too

know. Behind those wide doors was the source of

it

all

—two

young men who had not only founded an empire, but along the way had rethought every traditional business practice.

Now those practices, rethought again. to the oldest

And

HPer

or at least their degraded descendents, needed to be

new CEO Mark Hurd

the question, for everyone from

to the

most recent

entry-level hire, was:

Could only

Bill

and

Dave build a Hewlett-Packard? Or could there be found, within the choices they

made

in their careers

and within the precepts of the

out of the company's current predicament? Most of build a

company

like

all,

HP Way, a road map

was

it still

possible to

the Hewlett-Packard of the era of mainframe comput-

Restoration ers, calculators,

and oscilloscopes

3

in the age of laptops, WiFi,

and the World

Wide Web? If these

questions obsessed HPers, they did no

nology world. In the years since parent that, while

many

world, none since

HP

Bill

and Dave,

it

less

the rest of the tech-

had become increasingly ap-

companies had risen and

great

fallen in the digital

had ever become emblematic of enlightened manage-

ment, and no David Packard had ever again emerged as the acknowledged spokesperson for the industry and the role model for Microsoft had become

them

called

more

more

trendsetters in enlightened

innovative, but few

Google attracted

company, or

its

as

much customer still

No, the Hewlett-Packard of

And

was the tragedy of

that

loyalty,

and

no one ever

management. Apple was

young entrepreneurs wanted

employees,

leaders. Intel

its

valuable than Hewlett-Packard, but

certainly

And

to be Steve Jobs.

but nobody was betting on the

being around after more than a half century. Bill

it all.

and Dave increasingly seemed

At

least in

sui generis.

high tech, but perhaps in

all

of

American industry (and, by extension, the world economy), there was no longer that one great integrity stood in

company whose combination of

permanent rebuke

success, longevity,

chose quick returns, or cut ethical corners, or mistreated or exploited ployees. In the early years of the twenty- first century, there to

which everyone turned and For

fifty years,

said,

"Why can't we be like

from

its

—Tandem, —seemed

HP

Google, even the early Apple

and

em-

them?"

Cisco, Silicon Graphics,

to take

penumbra. But most of those firms are now

rigid with age

its

was no company

Hewlett-Packard was that institution. In retrospect, even

the companies that tried to emulate Dell, Sun,

and

to every other organization that instead

success. Thus, not only

is

on an added glow

either

gone or grown

the original gone, but even the

pale imitations.

What makes this doubly tragic is that now, when technology is a global inwhen virtual organizations, telecommuting, and the rise of armies of

dustry;

contract employees are forcing a radical rethinking of the very idea of what

means

to

it

"work" and to be an "employee"; and when employers are desper-

ately seeking

ways to retain and motivate a gypsy-like workforce, what

may

be the best technique ever found for solving these problems has been

abandoned

—and the

two best practitioners of the

art are gone.

Hewlett and Packard were not only the best business theorists of also the greatest visionaries?

all

What

if

time, but

DAVE

BILL &

4

Reclaiming

and Dave

Bill

Finding the answers to those questions stored the garage

is

who

not only the task of those

re-

—and the thousands of HP employees they represent—but

also the goal of this book.

This of

HP

not a history of the Hewlett-Packard

is

—though the story

Company

necessarily connected with this narrative.

is

The

events of the last

HP story will only be summarized at the end, and only to show

decade of the

what happened

after the founders' departure.

Nor will this be strictly a book of business theory. There are numerous management books out there, some of them classics, that were derived in all or part from studying the lence, Built to Last,

Nor will I

and Packard's own The HP Way.

only brief attention to

will give

materials, and,

Those

no doubt

hagiography of the

— contrary

pair.

to

they sometimes

else,

fessional

culture, notably Theory Z, In Search of Excel-

be a definitive biography of William Hewlett or David Packard.

it

their childhoods.

beings

HP

much

in the years to

For

of the two men's personal

can be found in numerous

stories

all

lives,

come, other books. Neither

of their success,

Bill

hearts

And

if

lives.

They were

men

also

men

the descendents of both

their family files to

Having told you what is

That

is, it

it

be a

bad, stupid, or selfish decisions in both their pro-

me

of their time, exhibiting

this

that rarer species of

book

book

that

deals not just with both

not,

is

I'll

might

we

ignore

were willing to open their

in preparing this book,

the understanding that this text was mine, and

Dave

will

myth, they didn't even always get along. Like everyone

made

and personal

and

mine

now

it

only came with

alone. tell

you what

it is:

Bill

found

to

men, but

the two

each challenge in their careers

their relationship to each other

—and

meet those challenges. For that reason,

young

college students

met on

&

be called a "business biography."

(one of the most enduring friendships in business history) and, most of

how they met

to

and Dave were human

prejudices and moral blind spots that disappoint us today, even as

our own.

and

articles, archival

all,

the creative solutions they

this

book begins on the day

a football field at Stanford University,

and, an extended postscript aside, ends six decades later in the Stanford

Chapel a few yards away I

as they

made

their last good-bye.

have chosen to write this book as a business biography precisely because

of the desperate need the business world has right

now

for

an archetype of

enlightened management, enduring quality, and perpetual innovation.

not enough to simply listing the is

tell

the story of Hewlett, Packard, and their

key organizational and product milestones and their dates.

needed are the "why?" and

Bill

and Dave

the "how?" Why did

see this matter differently

—and

this crisis

usually earlier

appear?

—than

It is

company,

What

Why did

all

of their

Restoration

5

How did they solve it (or, on occasion, fail to)? Why did they take a different course than anyone before them? How did they implement it? peers in industry?

And how well did it work? Some of the problems that ing from

and Dave faced

Bill

world war, integrating the

a

first

vincing customers of the value of electronics

by modern

executives. Others

—

versus the

ing

bottom

upon those

decisions.

And

line

things

will

Bill

return-

into the workplace, con-

—

will likely never again

trusting your employees to

make the

be faced right de-

long-term market share, employee loyalty

cisions, short-term profits versus

—

— dealing with GIs

women

never go away.

and Dave

finally did,

book

that in turn, as this

What

will

is

crucial, then,

but

how

is

not focus-

they came to those

down

show, ultimately comes

to

character.

Over and over

and Packard faced business decisions that

again, Hewlett

men

were, in the end, character choices. Because they were

and Dave almost always made great business fallback position

— "What

is

choices.

the right thing to do?"

—

It

of character,

was

Bill

their ultimate

ambigu-

in the face of

ous data and conflicting pressures from investors, employees, and customers.

And,

in the end, their greatest business decision of all

may have been

(and yet leave brilliantly imprecise) that character into the Thus, you might think of

two men

—

as told

the legacy they

by the

Bill

be the

real

men and women who worked

the

and by

for them,

behind. The very notion of a "character study," with

left

it

shows

men and women

power they entrusted

in

out of vogue these days

is

source of our current

believe in character:

phy, in the

HP Way.

& Dave, at its heart, as a character study of

whiff of Victorian moral precepts, fact

to codify

difficulties.

how

—which may

its

in

But Hewlett and Packard did

they structured their business philoso-

they hired to work for them, and most of

to even the lowliest

HP

employee.

And

all

in

whatever

philosophical argument one can muster against this anachronistic approach, the simple and indisputable truth

is

that

it

worked

brilliantly for Bill

and

Dave. This book will have served business history gathering dust

its

purpose

on the

if it

becomes not

just

another

shelves of corporate libraries

and of

ex-employees, but a reference text that businesspeople, from young entrepre-

neurs to corporate senior executives,

themselves,

comparable event and

one

—

that

revisit regularly at

key turning points in

when

faced with some great career challenge, they ask What would Bill and Dave do? and then open these pages to find a

their careers. That,

is,

don't

choices Bill and

its

resolution.

Sometimes the lesson

do what Hewlett and Packard

Dave made (or

better yet, the

But

choices) will be as applicable today as they were twenty, years ago.

will

be a negative

more often the path they took to make those did.

far

fifty,

even seventy

DAVE

BILL &

6

For an author,

you want

an interesting challenge.

this presents

On

the one hand,

to present these lessons to the reader (and just as important, the

rereader) in a cogent

book, and

and easy-to-find way. At the same time,

have no interest in creating what would be

I

fleshed- out outline, or defacing the text with boldfaced

this

little

is

more than

axioms or

aphorisms. I'm a writer, and the career of Hewlett and Packard story,

one that deserves

So,

how to

to

a

italicized

a terrific

is

be told in narrative form.

reconcile the

the key lessons

not a text-

two competing demands?

My choice is to indicate

and decisions of Hewlett's and Packard's career by using an

as-

That way, the reader can race

terisk (*) placed after the crucial sentence.

through the text without tripping over font changes or other practices used to designate

some key point

ming back through

"good medicine." Then, for the rereader skim-

as

some

the text for

useful advice,

have compiled

I

all

of

these asterisked messages, with their proper page numbers, into a single ap-

pendix

at the

messages in

back of the book. This rereader can then either check the simple

this

appendix, or go back to the right page in the text to study the

larger context.

On

another structural question

—

that of the order in

Hewlett's and Packard's learning curve

noted

earlier, I've

chosen to

start

with the beginning and end of

and

Bill

—

I

which to present

have been given a lucky break. As

main

finish the

and Dave's

narrative of this

book

friendship. Fortunately, their

paths from entrepreneurs to start-up executives to small businessmen to cor-

porate executives to public corporation

statesmen and philanthropists

is

CEOs

exactly the

to global business titans to

dream

career trajectory of every

ambitious modern businessperson. This shouldn't be surprising, as Hewlett

and Packard were

largely the template for this career arc.

Better yet, the

—unlike

sequentially

loops in

Bill's

Best of

together

two men passed through most of these milestones

most celebrated

and Dave's adult

all,

careers, there are

no

great

backward

lives.

at least for a writer,

is

that the big steps in the

—and thus of the company they

built

—

two men's careers

rather neatly correspond

with the changes of the decades. Hence the simple organization of the chapters in this

book.

In the course of

and

women who

my career

when an aged Fred Terman, for

later,

days

the

men

last

I

first

them, when they were

last

known most of

the godfather of Silicon Valley, arrived for his

young

college student,

met

Bill

at the

at the

company.

I

was lucky

Hewlett and Dave Packard, and

very zenith of their careers. Twenty

well into a career as a journalist,

Packard in his

have

HP

board of directors meeting.

worked

I

(and the even greater fortunes) of to be at

the electronics revolution. As a

years

as a journalist,

built the great enterprises

I

again spent time with an aged

Restoration

Among the

first

all

of the powerful

flush of

fame and

the path of Hewlett

7

men and women

success, nearly

all

I've

met, especially those in

believed they could easily follow

and Packard. Some even thought they could do

—

quickly, or achieve even greater heights of glory

all

while

still

it

more

being admired

as enlightened leaders and paragons of high character.

ful

And yet, in all of the years since, none have done it. As even these powermen and women have come to admit, Bill and Dave stand alone. And that

makes

their story

something of a miracle

stop learning.

This

is

that story.

—and one from which we can never

Chapter One:

Friendship

The most momentOUS

first

meeting

in

modern business

history

took place in the unlikely, but strangely appropriate, setting of a bench beside a football field It

between two young

men

in

pads and helmets.

was autumn 1930, and the occasion was the annual tryouts

ford University football team. As always

would have been hot and

dry, the grass

on the

less

miles of orchards beyond.

nearby quad, with

its

it

field barely

green while that on

The

would have smelled

the surrounding fields was sunburned a pale gold.

of eucalyptus from the nearby groves of

for the Stan-

on the San Francisco peninsula,

air

gum trees, and manure from the end-

The sandstone

walls

and red

tile

roofs of the

arched entrance and Romanesque chapel beyond, would

have throbbed slightly in the heat. Train whistles, from the Palo Alto/Stanford

and Mayfield

stations,

would have marked the passage of the

day.

On-field there would have been the usual sounds of young into their blocks, whistles, cheers for tackles

cause this was

still

men

grunting

made, shouting coaches, and, be-

sound of shoe

the era of the dropkick, the

leather

thump-

ing pigskin. And, as this was the age of leather helmets without face masks

and unpadded goalposts, there would

been a

also have

lot

of blood, lost teeth,

and broken noses. As with most great

universities in America,

fall

football tryouts

were

al-

ready a long tradition at Stanford. By 1930, the school had been playing organized football for almost forty years, had already played in four Rose Bowls, and, just four years before, had

won the

national college championship.

There had already been enough football history for the first legends to begin

whose name would one day be well-known S.

was the

varsity coach, a

to millions of

man

American boys:

"Pop" Warner.

What Warner saw these

Stanford by this time

forming around the Indians team. As a case in

point, watching the freshmen try out that day

Glenn

at

that day likely impressed him. Before they graduated,

young men would help win two

Pacific

Coast championships, and

set

— DAVE

BILL &

10

the stage for not only a third, but a near miss at another national championship. Tryouts are always tough,

but with

this collection

of talent,

would have

it

been particularly competitive. Still,

in the midst of this quality,

caught Pop Warner's eye. At six foot

one tryout

still

would have

five in a five-ten age,

definitely

David Packard, a

freshman from Colorado, would have stood out anyway. But with

Roman nose, he was

blond hair and

image of a to

classic

campus

be a three-letter

worst sport Hall of

also extraordinarily

football hero.

man

to play

back-up

Famer Jim (Monk) Moscrip. Dave was

few months, in a track meet against

most points ever by

That David Packard also had a

his thick

—the very

And he was a natural athlete, destined was Dave Packard's

at Stanford. Football, in fact,

—he was destined

for scoring the

handsome

rival

at

end behind future College

far better at basketball,

USC, he would

some unknown reason

—

in a

a freshman.

brilliant

mind and was the rising star in the

new electronics department only furthered the notion

university's hot

and

school record

set a

perhaps to teach humility to everyone

been chosen by the gods to be favored with more than vantages. Packard himself, even at that

young

age,

else

that for

—he had

his share of natural ad-

seemed

to appreciate his

luck and carried himself with dignity, a quiet reserve, and a sense of

humor

which of course only made him seem even more impressive.

One

tryout player to

whom

none of the coaches

likely

gave a second

glance was a short, stocky kid with the wide face and cocky grin of a

Dead

took End Kid and a sense of mischief to match. If to make the team, Bill Hewlett would have been a starter, and one can picture him during the tryouts hitting and tackling with wild abandon. But it would heart and desire were

quickly have been obvious to everyone, except perhaps

wouldn't

make

the team.

He was

Bill

all it

himself, that he

the kind of player coaches think of fondly

even as they cross out their names.

William Redington Hewlett would one day be known as the most practical

of business

titans,

but on this day his very act of trying out for the football

team was the very embodiment of youthful

foolishness.

With

his

poor high

school grades, he had only been admitted to Stanford through influence and family connections as the place

— and

this

was the era when Stanford was

where rich farmers' sons could earn "gentlemen's

Underlying severe dyslexia

Bill's

—

still

well-known

C's."

apparent failure as a student was a learning disability

that not only hadn't been diagnosed, but wouldn't even be

named for another three decades. All that his frustrated mother and teachers knew of Bill's predicament was that he was an indifferent reader indeed, the

—

boy only seemed

to go

through the motion of looking

page because nothing seemed to real gift

— even

register.

a spark of native genius

To

—

at the

his credit, Bill

words on the

seemed

to have a

for mechanical things, especially

Friendship His functional near- illiteracy had forced young

electrical devices.

pensate by developing an extraordinary deed,

it

11

skill at

Bill to

com-

listening to other people (in-

was the only thing that got him through school).

But whatever the compensations,

a

freshman

could barely read should have been devoting

whom we know for a

fact

who

Stanford University

of his time to his classwork,

all

autumn

not going out for the football team. Yet on that

young man

at

afternoon, the one

was having second thoughts about

ing valuable study time to play football was the one for

los-

whom both came easy:

David Packard. Packard, in

despite setting school records,

fact,

would eventually quit the

track team, to the horror of his coach (or, as Packard diplomatically put varsity track coach

drop basketball

too. In the end,

he would admit

would write ford varsity

"was very upset with

many

in his

years

memoir, The

decision").

In time, he

1

the

it,

would

he would only stick with football, because, as

later,

team "reinforced

my

"the peer pressure was so strong." 2

Still,

he

HP Way, the experience of being on the Stan-

my ideas on how to build a winning team." 3

But that was four years into the future. This was freshman tryouts, and each young

had

man

sitting

on the bench, big or

small, talented or maladroit,

still

to prove himself.

As always on such occasions, the young men fidgeted to look cool

and experienced, and

those moments,

Bill

discreetly sized

in their pads, tried

up one another. And

Hewlett and Dave Packard saw each other, and heard

each other's names called out, for the

first

at

at his

making the team. Packard, one might imagine, would have looked

upon Hewlett,

if

he noticed him

small to play at this

And

must

time. Hewlett, for his part,

have looked upon the giant Packard and sunk into a silent despair chances

in

yet

it

level;

one

less

at all, as just

another cocky

little

guy too

competitor to worry about.

was the quiet giant who best remembered meeting the pugna-

cious fireplug that day. Hewlett, like

most everybody

on the Stanford

else

campus, might be expected to look upon Packard with a certain amount of

awe and admiration. But

and perhaps

first

it

was Packard who saw

in Hewlett a kindred spirit,

recognized his lifelong friend.

In the end, Packard

made

the team; Hewlett did not.

And both were

dis-

appointed.

The standard version of the Hewlett-Packard legend became

fast friends that

day on the gridiron.

It's

is

that the

a nice story,

two men

one that

fits

with

our desire for the most famous friendship in American business history to have been perfectly evident to the two protagonists from the very

first,

as well

as with the cliche that "opposite personalities attract."

But in partnerships, shared interests.

And

as in marriage, opposites attract

at this

point in their young

only

lives, Bill

if

they have

and Dave were

BILL &

12

headed on

DAVE

Though they would run

different trajectories.

one another

into

same

often over the next three years, occasionally finding themselves in the classes,

wouldn't be until their senior year that the two

it

men would make

bond. Thus for most of their undergraduate years, the famous

their lifelong

friendship of Bill Hewlett and David Packard might best be described as a casual acquaintance.

Such was the beginning of a sixty-year friendship that would become so complete

words of another tech pioneer, antenna maker John

that, in the

V.

Granger, "You could ask either of them a question on any matter, any important matter,

and you'd be sure I

really wonderful." 4 It

is

reality

that Hewlett

is

though

interests,

you got

reflected the feeling of

mean, they understood one another

the other one as well.

their years at Stanford

that the answer

easy to imagine that

it

perfectly. It

was

was always that way. But the

and Packard had come from

vastly different worlds,

were conducted on very different terms, and even their

close, did

not yet coincide.

Pueblo Days Though both Hewlett and Packard became synonymous with Northern fornia,

from the hallways of

great ranch they

co-owned

HP

and Stanford University

mountains south of the Santa Clara

in the

"Silicon") Valley, to the Packards'

Cali-

in Palo Alto, to the

(that

Monterey Aquarium, only Hewlett was

is,

a na-

tive Californian.

David Packard was born

was

still

very

much

in

1912 in Pueblo, Colorado, which in those days

a frontier town.

As Packard would

"Pueblo was

recall,

tough and violent, with immigrant workers, a few gangsters, and brothels

and saloons.

lots

of

and shootings were not uncommon." 5

Street fights

But that harsh world rarely touched young Dave Packard. His family belonged to what might be described as the local aristocracy. His father was a lawyer and his mother a high school teacher. They had met while attending

Colorado College Lorna Graber graduate.

in

nearby Colorado Springs. The 1902 yearbook

as class vice president, a scholarship student

The quote below her photograph

fore to be wooed." Sperry Packard

man, and

a three letter

position."

It

listed as the captain

a debater. His quote

and an honors

reads: "She's beautiful

is:

"He

is

and

there-

of the baseball team,

of a very melancholy dis-

must have been an interesting match.

The couple ble in a

is

lists Ella

settled in

nearby Pueblo to build as comfortable a

Wild West town where the

Leadville ore

steel mills

by day and the pianos played

life

as possi-

and foundries smelted and poured

in the

whorehouses by

night.

Friendship

13

The Packard house was located on the very north end of town (near modern Highway 50), as far from the bad neighborhoods as possible so far, in

—

fact, that

across the street

from the Packard house

running

the prairie began,

north to the towering bulk of Pike's Peak, and east to forever. Young Dave prairie,

sometimes with

Louise (born in 1915), often with his buddies,

many times just

Packard would often wander out into the

Ann

would look

horned toads and

for

and

birds,

his sister

alone.

away from the

try to stay

He

rattle-

And he would think about the

snakes that lurked under the occasional cactus.

bigger world out at the edge of that low horizon. Packard's most vivid astated

memory of his

early childhood

downtown Pueblo in 1921, when a him down to see mud

banks. His father took

Much

of that

mud

a flood that dev-

jumped

swollen Salt Creek

it

four feet deep in the shops and

"a railroad boxcar stuck in the second-floor buildings." 6

was

window of one of

ended up dumped onto the

from the Packard house, which probably didn't

sit

main

the

prairie across

well with his parents, but

provided an endless source of exploration for young David.

The occasional adventures

—

Packard family

aside,

it

was a very quiet and genteel

the front yard with his mother's well-tended

lilac

life

for the

bushes and

beds of peonies, his father with his well-paying job, and David helping his

mother garden, the smartest boy

in

high school (and, with his mother teach-

ing there, also one of the best behaved), and the pretty girls dreaming about the

tall star It

athlete with the perfect grades.

would

also have

been a

The

the ambition of David Packard.

may

especially for a

little dull,

fleshpots

have been out of bounds, but that didn't

risks, especially

boy with the mind and

and other

mean he

seems

as

across the alley

had

David

worked

as

friend,

and

his

mother and

sister

in the evening at the carnival to help support

But during whatever

—and,

first real

benighted as Packard's was charmed. The Penroses lived

from the Packards, and because both

tuberculosis, Lloyd

his family.

downtown

with an older kid living across the street to egg him on.

Lloyd Penrose appears to have been Dave Packard's his life

vices of

couldn't take a few

free

little

time he had, he hung out with

both were mechanically minded, they usually spent their time

building models or plotting elaborate schemes.

Most of these schemes, things up.

as they often

do

for boys that age, involve

blowing

And Pueblo was a perfect place to get both the necessary chemicals,

and even, sometimes, the explosives themselves. David, Lloyd, and other boys in the

neighborhood even made

nium made

nitrate it

(from

fertilizer)

their

own gunpowder, though

rather than the usual

even more powerful. They also

sodium

made ammonium

with

ammo-

nitrate,

iodide, the stuff of

percussion caps, which they could explode with a mere touch. Best of least in their

which

all,

at

minds, was the discovery in a rubbish heap that the local sand

BILL &

14

DAVE

behind a cup or two of residue in the

mill regularly left

five- gallon barrels

they used to store blasting powder. The occasional tossed-away barrel supplied

enough explosive

Stories

no

for endless carnage.

about boys and explosives almost always end badly, and

During one pyrotechnic experiment Packard

different.

tubing with explosive powder and then tried to flat

with a hammer. Not surprisingly, the

homemade

sparing David's eyes, but nearly blowing off his

had been party

to the scheme,

from

cloth (probably

physician, a Dr. Wise.

left

one

pipe

bomb

is

exploded,

hand. Lloyd Penrose,

wrapped Packard's gory hand with

his undershirt)

and raced him

who

a strip of

town

to the nearest

7

a telling indictment about

It is

this

some copper crimp one end by pounding it filled

life

in a frontier

town

that Dr.

Wise proved

to

be an inept surgeon and botched the restitching of David's hand, leaving him with, in Packard's

As

own words, "a distorted left thumb" for the

be seen in the career of

will

Bill

a thousand miles way, this sudden, shocking event in

served to divert

him from

follow for the rest of his

changed

his

own

life,

his current path into a

life.

life.

8

and Dave's mentor, Fred Terman,

whose own devastating incapacitation was taking place

life

of his

rest

at this

same moment

young David Packard's

new

direction he

In nearly blowing himself up,

would

Dave not only

but the world.

His hand incapacitated, his parents furious, and his newfound hobby

taboo forever, Dave

now had to

find something

something both mechanically challenging and

new to

fill

his

time

—

preferably

safely indoors.

He found it in the miracle of the age: amateur radio. From this great distance in time, it is almost impossible

to

imagine the

impact of radio not only upon American culture, but on American boys.

was the personal computer, video games, and the Internet Best of

all,

the technology itself was comparatively simple

be the 1925 equivalent of a Steve Wozniak dreaming bits

and bytes

to build a state-of-the art radio. All

it

—you

in

didn't have to

assembly code and

took was a tuned

crystal, a

few parts for the tuner and the antenna, and another new miracle

vacuum tube

—along with some rudimentary

skill at

It

rolled into one.

soldering,

—the

and you were

on your way. Thousands of boys throughout the United

States

took the challenge, not

whom Dave Packard. And the experience proved to be an epiphany: "I recall my first vacuum tube. connected this tube with a variable condenser, a coil, a good lead, an A battery, a B battery, and a set of headphones on our dining room table. There was great excitement as my family and took turns

least

of

I

I

listening to

WHO

from Pueblo!" 9

It

mountains and the

in

Des Moines, Iowa, an astonishing

was Packard's prairie.

first

real

six

hundred miles

glimpse of a world beyond the

Friendship

15

The Lost Boy If

David Packard's childhood

marred by only

notable for

is

consistency, a straight path

its

a few sharp turns, Bill Hewlett's early years are a heart-

— of paradise

breaking whipsaw of the most shattering kind

offered, then

snatched away.

And thus, though Hewlett story that learn

is

among the pair, it is the more inspiring, and from which we mere mortals can

the Packard

the

much more. Dave

George Washington,

to

Packard's

larger

can sometimes seem too easy:

life

and imposing forehead, he

everything he touches also turns to gold.

even revere, but so favored by nature as to be Hewlett,

Bill

like

whom he came to bear an uncanny resemblance thanks

to his great height, long nose,

whom

myth looms

on the other hand,

all

He

the golden giant for

is

man you

a

can admire,

but impossible to emulate.

Everyman, a

is

is

little

too short, a

little

too

thick in the waist, always trying to catch a break (and not quite believing

when

comes), and haunted by the

it

based on experience, that

fear,

it all

disappear at any

moment,

pounce.

knowledge of the dark side of the world that makes

It is

this

that failure

it

can

always lurking nearby ready to

is

Bill

Hewlett gruff and impatient, but also deeply engaged, forever self-effacing

and often astonishingly warmhearted. Packard seems born

to greatness, while

Hewlett had to earn his way there.

Throughout

his

life, Bill

Hewlett was involved with others in a way the

more Olympian Dave Packard could never came in part from knowing what it was like about helplessly by

HP

into the

that Bill

fidelity

to build

Dave needed

and the combination

idyllic

is

all

Bill

that

is

If

fall,

why, while

that they did,

even more.

to

upon

Packard

obvious

is

glory,

it

be-

Hewlett

was

in

many ways

than Packard's. Street wasn't

empty

but the bustling, noisy metropolitan world of San Francisco. 10

A year

younger than 1913, in

on the

it is

reflection

unbeatable.*

The view out the Hewlett family window on Union prairie,

and

empathy be flung

fail

didn't start out that way. Bill Hewlett's childhood

It

more

and

Hewlett's to

to

most humane of companies. And that

No doubt

was that understanding that enabled him

needed Dave to accomplish

comes apparent is

fate. It

be.

his future partner,

William Redington Hewlett was born in

Ann Arbor, Michigan, where

faculty of the University of

his father, a

renowned

physician, served

Michigan Medical School.

When Bill was three, his father accepted a new post on the faculty of Stanford University, and the family

moved

school in those days was located.

*

Asterisks refer to the Appendix, p. 393.

to

San Francisco, where the medical

— BILL &

16

Both of

Bill's

parents were extraordinary people. Not only was his father

an eminent figure in his

soon made her mark

and corresponded with the Bill

who

but his mother, a formidable personality

field,

in local society,

may have been

She owned one of the best private

tellectual equal.

Because

DAVE

likes

Hewlett wrote

at least

her husband's in-

libraries in

San Francisco,

of Rudyard Kipling.

little

many

about his childhood,

of

its

details

can only be gleaned from rare photographs and the memories of his older Louise. There survives one unforgettable photo of

ter,

Walter Hewlett, taken a few years before

about the man. 11

shows

It

Dr. Albion

Bill's father,

was born, that speaks volumes

man

compact

around a high

vat carefully knotted

combed smooth

a small,

Bill

sis-

and waistcoat,

cra-

celluloid collar, his hair parted

and

in a suit

no more than

across his head. Dr. Hewlett looks

thirty in the

photograph, and he has the same tight mouth, sharp eyes, and low brow of his

hands are surprisingly large

son. His

—presumably

holds a book

a medical text

— open on

sitting in his

examination room, because there

Anatomy

is

Lesson of Dr. Nicolaes Tulp

he

his crossed legs as

looks boldly at the camera with his eyebrows slightly raised.

brandt's The

man, and he

for such a delicate-looking

He

is

apparently

Rem-

a reproduction of

on the

wall behind his

left

shoulder, and a privacy screen behind his right. All in

all, it is

a

photograph of

a serious

and

looking out at the world with self-confidence est

twinkle in Dr. Hewlett's eye, the photo

is

the sideboard on which Dr. Hewlett's elbow

with a tobacco pipe clenched in ize

the whole photograph

An admired could laugh

is

its

—

successful

except, as betrayed

rests,

there

is

a full

own

human

notice the skull,

tini-

you

skull,

real-

a put-on.

physician, a professor at a great university,

at his

by the

also a joke. That's because, atop

Once you

teeth.

young professional

pretensions: the photograph

is

a

and

a

man who

reminder that

Bill

wasn't the only great Hewlett.

The 1920s were good

to

San Francisco. Rebuilt

after the

1906 earthquake

fire, the city was shiny and new. The port was booming and light and medium manufacturing was springing up all around the Bay Area. San Francisco

and

seemed

to enjoy the best of the twenties

team dominated the easily Street,

Pacific

—

the San Francisco Seals baseball

Coast League, flappers in their short

with elegant society ladies in their hats,

money and

skirts

mixed

and gloves on Market

veils,

jobs were everywhere, and optimism and a sense of an ex-

citing future filled the

air.

And

it

had escaped most of its worst past excesses

with the old Barbary Coast destroyed by the quake, the Fatty Arbuckle episode leading to a general crackdown tion that

made San

was now about

vice,

and

a casual attitude about Prohibi-

Francisco the "wettest" city on the Pacific coast, the city

as clean

In other words,

on

it

and crime-free was

a great

as

it

would ever

be. 12

time to be a boy in San Francisco.

Bill's

Friendship

mother took him

17

to cultural events at the city center or across the

Berkeley, his father took

him along

to his office or

main Stanford campus, and with his buddies mountains of the nearby town,

jump

elementary school,

On

and

pealing kid right out of Peck s

Bill's

in

China-

the Hewlett family journeyed to the

age nine at the Potter school, shows an ap-

at

Bad Boy,

face like he's just

his neatly

star

combed

be torn

been told by

boy who would be the

a

is

bombs

rode the streetcar to Potter private

Bill

summer

his eyes, a too-small belted jacked waiting to

This

the peninsula to the

could hike the forests and

Coast Range, buy cherry

school days, in the

A class picture of Bill, taken

still.

UC

for vacation. 13

Nevada

on young

down

at

rooftops, or explore the ruins of the 1915 Panama-Pacific Inter-

national Exposition.

Sierra

Pacific

Bill

bay

off,

hair

and

now fallen

over

a pissed-off look

his teacher to shut

up and stand

of every playground and the night-

mare of every teacher.

By all accounts, young something of

Bill

was a

brilliant child,

memorable occasion

—

surprisingly then, like his future friend,

—

and mortality

explosives

On

twice.

with shrapnel after setting off a

doorknob

to buy an old Luger

brought

home and set up

pistol

all, it

and scary

too had a near brush with

one occasion, he nearly

killed himself

grenade constructed from a brass

As a teenager traveling

in Europe, Bill

from an Austrian hotel manager. He

wounded by

age to shoot a hole in the furnace

In

Bill

a shooting range for himself

basement. Luckily, no one was

mother found

young

homemade

stuffed with black powder.

managed it

an indifferent student, and

He was constantly getting into fights including one when he came home covered with a bottle of ink. Not

a hellion.

ricochets,

and

his friends in the

though they did man-

—which they quickly patched before

Bill's

out.

would have been the

perfect

boyhood, complete with a few scars

stories to tell the grandchildren

—and then

it all

came apart

in the

worst way imaginable.

There

is

a

second photograph, taken in 1926 just four years

after the first.

And though it is clearly of Bill Hewlett, now thirteen, it is also of a very different boy, one who carries a terrible burden. His face is hard and wary, the look in his eyes fearful

and hurt, and

his

body inert, seemingly drained of all of the

energy of youth. In late

November

1925, Albion Walter Hewlett, author, head of the Stan-

ford University department of medicine, and father to a brokenhearted twelveyear-old boy, died of a brain tumor. carried

around the world

of doctors

and

who had been

He was fifty years old. The news was community to an entire generation

in the medical

trained

his English translation. of

The

on

his six-volume

Monographic Medicine

Principles of Clinical Pathology.

The Stan-

ford Academic Council passed a memorial resolution honoring Dr. Hewlett

DAVE

BILL &

18

unassuming and kindly manner, and

for his devotion to his profession, his

and unselfish

"his studious, fruitful

life"

—and,

in a glimpse of his final

months, expressed admiration for "his equanimity when faced suddenly by tragic events." 14

His death had been long, lingering, and awful, and

watch

as the

man

lost his

mind and then

Nothing would ever again be the same

would confide

to

his

life.

for Bill Hewlett.

Decades

later

he

life

gone

he might have become a physi-

differently,

like his father. 15

Now

that

door was

direction for his

Campus There

is

life.

closed.

Young

But before

Hewlett would have to find a

Bill

new

he would have to find himself.

that,

Rat

a third, crucial figure in this story

the two boys, but distinctly similar to

mentor and

father figure to Bill

whose

life

was now changing

and Dave. He was

tion to converge with those of Bill

as

to

Herant Katchadourian, Stanford's professor emeritus of hu-

man biology, that had his cian

had been forced

he admired most in the world, a figure of wisdom, au-

and humor, slowly

thority,

Bill

them

in personality,

and Dave

direc-

a generation older than

and he would serve

for a half century.

As the news of Dr. Hewlett's untimely death spread around the main Stanford campus, this young man, Fred Terman, the twenty-five-year-old son

of another famous Stanford professor, was lying in bed, encased in sandbags to

keep his chest

rigid, struggling to survive a devastating case

At that moment, Fredrick

man on

the Stanford campus. His father was the legendary Lewis

world-renowned and, most of

for his studies in

a

human

as the inventor of the

all,

The Terman family had moved in 1905,

of tuberculosis.

Emmons Terman was the least well-known Ter-

to

IQ

intelligence

test.

to help recover

M. Terman,

gifted children,

16

Southern California from the Midwest

where the senior Terman had taken

warm, dry climate

and

from

his

a high school principal job in

own

near-fatal case of TB. In

1910, he accepted a professorship at the School of Education at Stanford

University

— the

university at the time

1,442 undergraduates

Young rounding glasses

He was

found

a serious

and an indifference

characterize

him

less

than twenty years old, with just

—and the family moved north.

Fred, just ten,

hills.

was

his lifelong

home

young man,

at

17

Stanford and in the sur-

slightly built,

to details like his personal

for the rest of his

life.

with horn-rimmed

appearance that would

At Palo Alto High School, Fred com-

peted on the debate team, served as student body vice president, ran track

Friendship

19

rugby adequately, picked mistletoe in the

well, played

faculty wives

hills to sell to

Stanford

wary of poison oak, and, most importantly, spent much of

his

spare time hanging around a local business called Federal Telegraph.

By what turned out

be a history-making coincidence, the Bay Area, and

to

especially Palo Alto, had already

become

a hotbed of early radio. In 1909, a

year before the Termans' arrival, a recent Stanford graduate,

Cy

had

Elwell,

managed to broadcast a "wobbly" version of "The Blue Danube" from Palo Alto five miles to receivers in Los Altos and Mountain View. 18 By 191 to a loan

from Stanford president David

Starr Jordan, Elwell

Poulsen Wireless Telephone and Telegraph

Company

1,

thanks

had founded

in Palo Alto

and had

demonstrated a fifty-mile transmission in California's Central Valley between

A

Sacramento and Stockton.

named

few months

after that, the

company, now

Federal Telegraph, erected three hundred masts and successfully

pleted a 2,100-mile transmission to Honolulu. Within a year,

it

was

re-

com-

a full-time

service. 19

Elwell wasn't alone. In

downtown San

Jose,

another Stanford grad,

Charles David "Doc" Herrold, inaugurated "San Jose Calling"

of recorded music, voice-overs by Herrold's wife (the

commercials of dispute,

— on

it

is

new

his

radio station,

FN

first

—

(today KCBS). After

generally recognized today as the

first

a potpourri

disk jockey),

and

many years

commercial radio

broadcast in America. 20

That same

and

year, Federal

Telegraph saw the arrival of one of the greatest,

wildest, inventors of the twentieth century. Lee de Forest

geniuses fore,

who seems to

exist tangentially to the rest

he had invented the

first

vacuum

was one of those

of humanity. Five years be-

tube, the three-electrode audion, the

of more than three hundred patents in his career. 21

first

The prototype of

who would dominate Ameri-

the scientist-entrepreneur

can industry in the years to come, de Forest decided to capitalize on his invention

by creating

a

company

in

New

York to manufacture and market

it.

It

wasn't long before the firm went broke, largely through the financial shenani-

gans of his fellow est

was

left

company officers. Naive about

holding the bag

the ways of business, de For-

—and ended up broke himself

(setting yet another

precedent in high tech). Desperate for work, de Forest packed up his mother and the two headed out to the

West Coast, where,

his reputation preceding

the job of research director at Federal Telegraph well. It

seemed

lieved to be

by

him, he was quickly offered his old acquaintance

a perfect arrangement for both parties,

away at

last

Cy El-

and de Forest seemed

re-

from the hustle and bustle of East Coast business.

But the past was already pursuing, and in March 1912 federal marshals

stormed into Federal Telegraph and arrested de Forest for stock fraud related to his old

New York

firm.

Only

a hastily called meeting of Federal's

board of

DAVE

BILL &

20 directors scientist

and

a quick vote to

pay the $10,000

company's chief

out of jail.

With the prospect of

a trial

and

a long prison

Forest responded in his characteristic

and, knowing that this might be his

He had

bail kept the

a notion that if

dion, rewiring

way by burying himself

in his work,

research project, set a feverish pace.

last

he and his two assistants fiddled with his triode au-

might find a way to speed up the

in different ways, they

it

term hanging over him, de

transmission of telegraph messages. Instead,

and

by rearranging the location of the three

team discovered something

his

electrodes, de Forest

more important. Noticing

infinitely

that

one particular configuration seemed to intensify the signal passing through

it,

de Forest hooked that tube up to a telephone transmitter, put on his headphones, and then dangled his "trusty Ingersoll" pocket watch in front of the transmitter.

He

nearly blew out his eardrums.

realized that he ally)

When

had invented the electronic

he recovered from the shock, he amplifier.

It

was the

signal (liter-

invention of the age. Before long, de Forest was off again to

case, license his

new invention

of the amplifier into the ear of

to the

phone company, and shout

Thomas

settle

the

a description

Edison, whose incandescent light bulb

had been the grandfather of the audio vacuum tube. 22 the other young men — towers —the twin seventy-

For a teenaged Fred Terman

hooked on amateur radio eral

Telegraph were an

as for all

irresistible

in the area

rising over Fed-

five- foot

magnet. Fred had built his

first crystal set

radio receiver at thirteen, and within a year was delving ever deeper into radio theory.

While attending Palo Alto High School, when he wasn't running

he hung out with his buddies

at Federal,

could from the employees (he

may even

was led off

in handcuffs).

mer working

at Federal,

soaking up

of the knowledge he

have been there the day Lee de Forest

As an undergraduate

and joined

all

track,

at Stanford,

he spent a sum-

a fraternity (Theta Xi) filled with fellow

ham radio buffs, many of them also from Palo Alto. 23 He had even started his own amateur radio station, teaming with two other boys, one the son of a Stanford chemistry professor, the other the son of Herbert Hoover. 24 Terman recalled

many

years

later, "I get a

three of us were neighbors

contraptions,

would

the other side of

big kick to think back to the time

all

and upon pushing the key of one of our imposing

holler out the

window

to see if

it

had been received on

the street." 25

In retrospect,

ham

radio was the

first

newcomers and technology amateurs than any

dot-com boom almost

a century later.

boom, and, because simple, it was more open

Silicon Valley

the cost of entry was so low and the technology so to

when

And,

that followed

like the latter,

up

ham

until the

radio also

Friendship

showed many of the

21

characteristics of a bubble. In the beginning,

was

it

filled

with maverick characters, overnight sensations, quick fortunes, and starryeyed young players. Fred Terman would

happy days of running

recall the

residential streets of Palo Alto, looking for the telltale

around the

backyards and knocking on the front door, knowing that

towers in

antenna

a kindred

spirit lived inside.

But the

boom was

New York not

from

rus girl as his

over almost as soon as

began. Lee de Forest returned

it

only with a tentative deal with Bell Telephone, but a cho-

new bride. He was now the

first

and, not surprisingly given his personality,

it

superstar of the electronics age,

quickly went to his head. Within

months, he would leave Federal Telegraph and the Bay Area

new

He would

job in the movie industry.

years, in 1915, to join

Doc Herrold

in

demonstrating wireless radio

Francisco's Panama-Pacific International Exposition.

of his days living the Hollywood venting

life

of a

in pursuit

only return once in the next few

He would spend

(he later married a

new products (though none as important

movie

at

San

the rest

actress), in-

as the triode amplifier),

and

writing editorials decrying the debasement of his invention (so he claimed): radio.

Federal Telegraph was also destined for

come

it

would enjoy considerable

bumpy

ride. In the

decade to

success, including the first intercontinental

radio transmission in 1919, between Annapolis, Maryland, and Bordeaux, France.

And

Titanic, the less radios

But

as

that success

was not

just technological: after the sinking of the

Radio Law of 1913 mandated that

and

hire operators

would be the

—

a

huge

all

financial

passenger ships

boon

to the

wire-

install

company.

case with generations of technology companies to

come, that huge success quickly drew competitors, and not

just

from outside

the company. As early as 1910, Federal began to lose top talent: in that year,

two company engineers, Peter Jensen and speakers,

left

to

E. S.

Pridham, both experts in loud-

form what would become Magnavox. Others followed,

until

by 1920, Federal was bleeding personnel from every doorway. Meanwhile,

new competitors were lose

its

coni,

see entire

upon which

An

ing

up

the entire business

entire generation, Bill

in Palo Alto,

would

to

suffer the loss of even

—ultimately being acquired moved to

by then, Federal Telegraph had

Dave Packard and

it

departments spin off to create new companies, and

deep financial reversals

Still,

world.

up everywhere, and the company began

competitive edge. Over the next decade

more personnel, suffer

springing

in 1931

by Mar-

the East Coast.

left its

mark on Stanford and

from an adult Fred Terman,

Hewlett, to William Shockley,

still

the

to the college- aged

just a teenager

grow-

had been swept up by amateur radio and the magical

technology that powered

it.

BILL &

22

DAVE

But none of that future was obvious to Fred Terman in 1920 when he

showed up

work

to

at Federal, his

Beta Kappa key) in hand.

high school a semester

newly printed Stanford diploma (and Phi

He was just twenty years old, having graduated from

early,

enrolled at Stanford, and finished his bachelor's

in just over three years. Stanford in those days

where students,

of

A

play." 26

words of new president Ray Lyman Wilbur, were

in the

"content to do the

was a notorious party school,

minimum amount

serious student like Fred

of work and the

Terman was

maximum amount

able to roll through the

curriculum.

But even

as

Fred raced through his undergraduate years, Stanford was

changing around him. Thanks to his early high school graduation and university

admission, he had been on the Stanford campus to see the graduation of

the class of 1917, the

forms.

The

new

end, and a

"War

Class,"

many of the men

already in their

genteel orchard era of the Santa Clara Valley seriousness, driven

by Wilbur's

character of Stanford University. 27 Fred

efforts,

army uni-

was coming

began

Terman would prove

to

an

change the

to

to be

its

greatest

missionary.

Terman

Interestingly, the degree

carried that day to Federal Telegraph

in chemical engineering. That's because

what

little electrical

was

engineering Stan-

ford offered was only available in the graduate program. Moreover, one of

Terman's friends and fellow

ham

radio nut, Jack Franklin, was the son of the

most famous chemistry professor

at the university.

Fred had started out

Stanford in mechanical engineering, but apparently found

moved on

it

at

boring and

something more challenging.

to

Despite that diversion (and an ominous temporary medical leave from school in his junior year

what he wanted

And

the

first

electrical

—

likely his first

to do with his

life:

step toward that goal

engineering

work was

bout with tuberculosis) Fred knew as a scientist at Federal Telegraph.

to enroll in the graduate

program

in

at Stanford.

What came next was classic Fred Terman. He may not have wanted to become an academic, but nobody ever loved academia more. Over the course of six quarters,

he carried twice the normal course load, impressing every profes-

sor in the department well's old professor certificate,

a

but

—

especially the

and mentor

somehow

also

department head, Harris

Ryan,

Cy El-

—and earned himself not only an engineering

managed

to hike the

surrounding

much-admired peak-voltage-reading instrument, and

hills,

develop

find a girlfriend.

Fred Terman in 1920 had been one of the best students

Terman

J.

at Stanford;

Fred

the engineer in 1922 was one of the top graduate school candidates in

America. But despite the entreaties of both his famous father and Professor Ryan, he wavered.

A PhD

in electrical engineering conferred little

added ad-

Friendship

23

vantage in the 1920s; rather, the great figures in the

Cy

Elwell

—were

all

certified engineers

field

who'd gone on

—

to

Terman's hero

like

make

their

mark

in

the commercial world.

But

in the end,

probably because he loved going to

cause he rationalized that he was time, Fred agreed with his father

and

go back east to put It

and Ryan. Within

a

class so

much, and be-

that he wouldn't lose

any

week after his graduation

—he had already taken every EE course

Fred would

sides, as

young enough

he had sent off an application to Boston Tech (soon to be

certification,

named MIT)

still

later recall, in

available at Stanford. Be-

those days "a serious young engineer had to

and polish on

spit

re-

his education." 28

proved to be an inspired choice, not

just

because

MIT had a robust and

rigorous electrical engineering program, but because that program also fea-

tured tury.

some of

the

most

influential figures in that field in the twentieth cen-

One was Arthur Kennelly, who, before his title was taken by Fred himself,

was the most

influential electronics educator

on the

planet. Kennelly

was the

author or coauthor of a score of books and hundreds of technical papers.

He

was

also the discoverer of the earth's ionosphere.

sors

would be Norbert Wiener, the genius of nonlinear systems and one of the

greatest

mathematicians

who

ever lived.

Another of Terman's profes-

Terman earned honors awards from

both men. 29

The

third important faculty

member became

Terman's research adviser.

This was Vannevar Bush, the grand chancellor of U.S. electronics in the midcentury. In

twin.

He

many

ways, Bush, ten years senior to Terman, was like an older

too had been a

electronics whiz,

of engineering

and

at

ham

MIT,

just as

But in other ways, the two could seem

who

like

radio buff as a teenager, a college track

a legendary teacher. In time he

Terman would carry the same

men were utterly different

star,

an

would become the dean

—

title at

Stanford.

to the point that

Bush

Terman's mirror image. Whereas Terman was a private person

preferred to

work behind

the scenes, was indifferent to his dress to the

point of being an eccentric, and preferred to promote the successes of others over his own, Bush was smooth, always elegantly dressed, and loved the ex-

citement of

politics,

be

it

in

Cambridge or Washington, D.C.

Before his career was over, Vannevar Bush would

30

become one of

the

founding fathers of the modern computer, president of the Carnegie Institution, director

of Roosevelt's Office of Scientific Research and Development,

the deviser of the National Science Foundation, and, thanks to his theories

on

what would become hypertext, one of the acknowledged godfathers of the Internet. 31

Over the dislike

years, the

each other

—

as

two men,

initially close,

would come

to thoroughly

two successful individuals with opposite personalities

DAVE

BILL &

24

no one Fred

Ter-

man

could have benefited more from knowing. Like Terman, Bush was

bril-

liant

and had almost superhuman work

often do. But at this point in his career, there was probably

thanks to a ten-year head

start,

habits.

But unlike Terman, Bush,

was already thinking

big,

looking beyond the

MIT to how electronics could revolutionize society. It would prove to be a vital lesson to the man who would build Silicon Valley.* Fred Terman, now one of the rare individuals on the planet with a PhD in electrical engineering (for a man whose legacy would be microelectronics, it is

walls of

interesting to note that his dissertation

massive amounts of electric power).

mer of 1924 most

fully

prepared to

was on the long-range transmission of

He

returned to Stanford

sum-

late in the

finally start his professional career in industry,

likely at Federal Telegraph.

Had he done so, the story of the electronics revolution might have been much different. We can get a glimpse of what Terman's alternate career might have been by looking

of his near-contemporary, Charlie Litton. Like

at the life

the ten-years-younger

Bill

Hewlett, Charlie was a San Francisco boy, a

ham

radio buff, and a Stanford student. But, unlike the other characters in this story so

As

far,

Litton was also an

a teenager, frustrated

up glassblowing

medium was glass. cost of vacuum tubes,

his

Charlie took

own. By the time he finished high school, he was

vacuum

at creating

interfacing between glass

And

with the high

to create his

not only a master

artist.

tubes, but increasingly an expert at the

and metal (had he been born

thirty years later,

he

might well have been a founder of the semiconductor industry). By the time he graduated from Stanford

in 1924, just as

to California, Charlie Litton

Fred Terman was coming

may have been

the best

home

custom tube maker

anywhere.

Such was

his reputation that even at age nineteen Litton

pending orders for

Four years giant

later,

his tubes that

he decided to go into business for himself.

Federal Telegraph hired

RCA for leadership

Had

it

him

to lead the

company's assault on

in the tube business.

Federal been better

beaten RCA. But as

had enough

managed

in those latter days,

it

was, Litton's tubes were so remarkable

might well have

—

innovative, of

the highest quality, and brilliantly conceived to circumvent RCA's patents, that Federal

managed

to land the

plum

contract of the era

many

—with the

newly created International Telephone and Telegraph. Still, it

was too

early thirties the

one and moved set

up

his

little,

too late to save the old Federal Telegraph, and by the

company was

east,

searching for a buyer.

When

it

finally

found

Charlie Litton decided to stay in California. As before, he

own company, this time up

the road in

Redwood

City. Called Litton

Engineering Laboratories, he went right back to the work he'd always done.

He even designed and

built his

own manufacturing equipment, such

as a glass

Friendship lathe that

was so much better than anything

few to his

own

It

was a

giant competitors,

different

now in

ments, was

vacuum

Charlie's

I

else available that

boom

full

—and with the

recall later, "I

he sold the

first

RCA and Westinghouse.

world now. The second electronics

woke up one

age of instru-

era, the

arrival of the

Second World War,

demand by

tubes would be in desperate

ment. As he would sky

25

the U.S. govern-

and out of the

day,

clear blue

suddenly found myself the sole owner of a million-and-a-half-dollar

concern."

Twenty years and Charlie United

would lie,

Litton, master glassblower,

States. say,

would be

Litton Industries

later,

company,

a billion- dollar

would be one of the

men in the

richest

David Packard, who would spend many days

in Charlie's shop,

"Charlie Litton was one of the really brilliant engineers." But Char-

when asked about

would merely shrug and

his success,

say, "I

was

just a

lucky kid." 32

Fred Terman,

who

likely

would have ended up

Charlie Litton, might have enjoyed the dustries.

He might

scientist

and visionary

That

is

it is

hard to believe

money, he would not have become

moment, he may have

already sensed

about to undergo a trauma so profound the direction of his It

life

—

that, despite his relative in-

Terman, PhD, imagined for

home

terribly. It

to Palo Alto.

literally in his

that, if

bones

he survived,

it

But even

—

that he

at

was

would change

forever.

was a warm homecoming. Terman's parents,

missed him

to

at Litton In-

a very wealthy businessman.

certainly the career trajectory Dr. Fred

himself as he rode the train from Boston back that

bench next

not have been the artisan Charlie was, but he was a better

—and

difference to

at the lab

same "luck," perhaps even

was

to be a

summer

of

especially his father,

had

and

sur-

rest, visiting friends,

veying the business landscape to determine where to apply for work. At Stan-

Ryan had already put

ford, Harris

campus

as

an intern,

available in the nation today

that he will

ments of

in a request to lure

Wilbur, "In

telling President

do should,

in

is

Fred E. Terman.

my judgment,

Terman back onto

my judgment, the best man

If

appointed, the good work

be one of the outstanding achieve-

his generation of Stanford faculty

men." 33

But Fred never had to make the choice between town and gown. He had already run out of time: just three weeks after his arrival, the tuberculosis re-

turned, this time

plummeting,

more

virulent than ever.

his lungs erupting in severe

He

deteriorated rapidly, his weight

hemorrhaging.

So severe was Fred's condition that one doctor decided told Professor

Terman and

his wife to

he wanted to do, so as to enjoy the ple got a second opinion, this time

on

to

last

go ahead and

let their

few months of his

from Dr. Russell V.

found the Palo Alto Medical

Clinic,

life.

it

was

fatal

and

son do anything Luckily, the cou-

Lee. Lee,

who would go

proposed an extreme course of

treatment: Fred

would have

for at least nine

months. 34

to

The treatment, along with ents, saved Fred's it

DAVE

BILL &

26

life.

in bed, his chest

lie

immobilized by sandbags,

the continuous attentions of his devoted par-

But there were close

seemed Fred was on the mend,

calls.

The following May, just when

appendix burst, and once again he nearly

his

him under

died. Because of his state, the surgeons couldn't put thetic,

About the same

time, Fred also developed an eye infection that

his vision for years to

Before

Terman's

But

life.

it

better sense of

—

for

illnesses

wasn't a wasted year. As

and contemplation had

often the case, that extended

been a blessing, giving him a to do.

He used

the time

transmission based

electrical

MIT. But more important

for the future,

upon

he also

revisiting his old love of radio.

He began by

studying the current state of the art in radio technology, es-

pecially the innovative

He

is

also

who he was and what he wanted

his doctoral dissertation at

sors.

and the recovery consumed a year of Fred

one thing, writing a book on

found himself

would trouble

come. 35

was done, the

it

stretch of isolation

wisely

general anes-

but had to perform the appendectomy only under local anesthetic.

work on

circuitry being

read the core text in the

done by

MIT

his old

profes-

John Harold Morecroft's Principles of

field,

Radio Communications, cover to cover. Then, as his health improved, Fred tried building a radio of his

own. To

his astonishment,

distinct worlds of interest in his career

Then

I

had begun

discovered that this circuit theory that

I

learned from Kennelly,

telephone things and so on, could be tied with what tubes.

Bush had taught

could put the theory that

I

me

circuit theory, too,

vacuum tube

circuits

had learned there

at

and the

MIT

all

he found that the two

to converge:

and

I

knew about vacuum

all this

tied together.

non-vacuum tube

I

circuit

together for a nice understand-

ing of amplifiers and tuned amplifiers, and things like that.

I

worked

this

out for fun, just recreational reading, and worked out some equations for

how much

amplification you could get from

vacuum

tubes. 36

At the point of this synthesis was modern electronics, and Fred, ironically thanks to being sidelined from the of the very

first

the rest of his

The long

people to see

it.

scientific

world for twelve months, was one

Spinning out

its

implications

would consume

life.

illness

friends were. There

had

also taught Fred

had been no

real

Terman something

job offers

else:

who

his real

from the commercial world

while he lay there encased in sandbags. But the academic world hadn't forgotten him: both Stanford

and

MIT had

kept their offers open to

him

until he

— Friendship

was ready to work

again.

And that affected Fred deeply.

that Terman's deep loyalty to Stanford

university had shown him

That

27

that loyalty

began during

because the

this period,

first.

say that he didn't consider the

isn't to

His son Lewis believed

MIT

After

offer.

all,

men-

his

tors were there. Vannevar Bush would have taken him back in a heartbeat,

and, despite their later estrangement, an aged

been one of

good man.

.

his .

.

handymen, and

I've

it

was good

always wondered what

In the end, Stanford landed Fred

Terman would muse,

to be tied to the

would have been

it

Terman

for the

same reason

good weather. Wet, cold Boston was no place

ther: the

doctors told him.

It

would prove

to be

like if

for a

one of the most

it

TB

I

had

"I

of his

tail

kite, a " 37

[had]

had

his fa-

patient, his

influential prescrip-

tions ever given.

At Stanford, Fred's old professor, Harris Ryan, hadn't forgotten his student either.

He

and when he learned,

in early 1925, that the

young man was on the mend, he

quickly proposed that Fred teach a half-time course in the

from the professorship was overwhelming, letters in

Fred." 38

summer, when Terman was was already waiting

sales

it

members

as other faculty

finally

sent

him

brilliant

and by

up and around, the young man knew

a job

for him.

Whatever Terman's ultimate reason

century,

The response

attack in the spring deterred Ryan,

for going

inspired choice. As was strangely the case

just as

fall.

support of hiring, in the words of one note, "Dear old,

Not even an appendicitis

star

and the doctors

stayed in regular touch with both Fred

many

back to Stanford,

it

was an

times during the rest of the

MIT seemed to turn its back on a hot technology, in this case radio, began to boom commercially. Between 1920 and 1925, retail radio

exploded from $2 million to $325 million

—and

that

was

just the hard-

ware; broadcast hours and advertising revenues enjoyed a comparable jump.

This was the

first

lowed, anyone ton,

was But

radio:

great

consumer

who managed to

electronics

grab

its tail,

boom, and

with those that

fol-

such as Cy Elwell and Charlie

Lit-

as

in for a thrilling (and lucrative) ride.

MIT, Terman's mentors were already becoming disengaged from

at

Wiener back

tional policy. lost in the

Had

to mathematics, Kennelly to retirement,

Fred returned to MIT, and

lived,

But Stanford was

he might well have been

different,

and

Fred's arrival

was treated

like the

a beloved but prodigal son. Better yet, arriving that

teach, he looked out across the classroom to discover that his

to na-

crowd.

coming of was

and Bush

childhood neighbor and friend Herbert Hoover

only rekindled a friendship that would restarted their old

last

hobby of building radio

one of

Jr.

homeday to

his students

That day they not

the rest of their

transmitters.

first

lives,

but also

BILL &

28

Once

again,

DAVE

was perfect timing. While Terman had been

it

ford had at last committed

university was visited cific

MIT, Stan-

earning a 100-watt federal radio

itself to radio,

cense in 1922, and another for a 500-watt station, spring of that year, while

at

KFGH,

Terman was recovering from

his

li-

in 1924. In the

appendectomy, the

by representatives from AT&T, Western

Electric,

and Pa-

Telephone. They were touring the major universities around the country

stumping

for the creation of

communications engineering departments and

degrees in order to find talented recruits in the years to come. At Stanford, in-

dustry reps found a receptive audience, especially

new Communications

Lab.

when they offered to

Thus when Fred arrived that

working out of one of the best-stocked university radio

The next four

years were

among

fall,

stock a

he found himself

labs in the world.

the happiest times for Fred Terman.

By

being careful and shepherding his energy, spending most of the day in bed except for the two hours he taught at Stanford, he slowly regained his strength.

As he recovered, he began turn to hiking the the

young man with

more antiquated the

hills

class as

Fred and Herbert

an excuse to buy and

and experimental

independent radio

test

He

station

guy

subject.

Jr.

was

was

his natural bent, it

his

Jr.

used Ter-

receivers

and then

new

radio propagation build-

he settled in to write a textbook on the entitled,

now

and remains

combined

today,

numerous

university professor

— enough

radio.

It

It

to subsidize the research that

had

was, from

editions

and

in the

his salary as a

would earn him

between 1930 and 1947. 40

Radio Engineering

is

must have been

subject, the writing

And,

royalties

that he

made Terman famous

would pay him more than

its

all

as a teacher. 39

on

teacher.

first

as the go-to fac-

technology world, and

it

dorm

Stanford University's

translations later, the seminal text

what

into the radio

Herbert

growing reputation

would be

published in 1932,

thirty-six patents

and even

station.

Radio Engineering, as

it

sight,

installed the transmitter atop his

learned as a boy, as a graduate student, and the day

jumped back

numerous radio

for radio to lobby the university for a as

be a regular

around the quad and through

6XH became

Terman, meanwhile, began to use

And,

to

Stanford.

build a transmitter of his own.

ing.

He began

men trying to chase a train leaving the station.

like

man's

ulty

greater course load, as well as re-

university.

a cowlick of hair, glasses, an out-of-style suit,

this period,

world

building,

on an ever

shoes, striding purposefully

meadows above During

to take

around the

is

also a glimpse into the like to sit in

one of

extraordinarily clear

like all great teachers,

mind of Fred Terman, and

his classes.

For such a complex

and systematic, the mark of a

Terman knew how

great

to keep things simple,

such that even a neophyte can enter the text and make his or her way through.

— 29

Friendship To aid the

reader,

Terman even invented

sensitivity of radio circuits

quent

—

"universal" curves to represent the

a technique that has

been adopted by subse-

texts ever since.

But the strongest impression

economy. Terman

left

by Radio Engineering

precision

is its

about him, "If there are 10 minutes to work on a manuscript, Terman to

make nine minutes and 30 seconds of

member visitors

it

count." 41

His children

came and went, and he was surrounded by every possible

With

seemed

had recharged

and immobile

for

if

re-

distraction

It

was

as

hav-

if,

an entire year of his youth, Fred Terman

where he often seemed superhuman.

his batteries to the point

Once, when asked

able

to notice.

concentration came equally legendary energy.

this

ing been trapped

is

would

working on manuscripts while they played jazz music,

their father

yet he never

and

was famous for his concentration. As a friend once said

he had ever gone an entire day without working, Terman

"Why no, how could you ask that question?" 42 Joseph M. Petstar students, who would go on to become president of Georgia

was astonished. tit,

one of

his

Technological Institute, 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." 43

Even other professors held Terman in awe. One recalled that he got used

phone

to having the tini. It

ring in the evening, just as he was sitting

was Fred Terman with

He was

asked

It

is

why he

—and with

never took a vacation.

wasn't only Terman's professional

characteristic simplicity.

"Why bother," he

years.

It

father's students.

was

telling that

"when

replied,

life

that

underwent a

radical transfor-

was then that he met, courted, and married Sibyl

Walcutt, a graduate student in psychology and education at Stanford

dent. She

mar-

more fun?" 44

mation during those

one of her

to a

a question for his latest book.

But Terman described himself best

your work

down

also

when

She was as smart as Fred, but a

much more

outgoing and sociable

—

that

much worse

—and

a bit wild.

is,

stuIt is

she told her family she was marrying "Dr. Terman," one of

her cousins automatically assumed she meant Fred's father. "That's what they'll all say,"

that

it

will

she wrote Fred wearily, "and you might as well

probably be

divorced his wife and In later years she

is

all

warn your

father

over the U.S. pretty soon that he has lost/killed/

marrying a

would say

flapper." 45

that

it

was only

after a half

dozen dates that

Fred finally sneaked over to the psych department and looked up Sibyl's IQ score

—and decided on the spot

that she

was the

girl for

him. They were mar-

ried in the Stanford Chapel.

Even more than for Fred, marriage seemed to be what Sibyl had been

BILL &

30 waiting for to give her

life

a purpose.

become famous on her own lems,

all

started

would be together

accounts, deeply happy.

down

a

tears. 46

three sons. Sibyl

would

an educator of children with reading probfor teaching phonics.

And

for forty-seven years in a marriage that was,

When

mental and physical

his desk calendar, the

with

They would have

and would develop a hugely popular program

she and Fred

by

as

DAVE

she died in July 1975, Fred

spiral

Terman

from which he never emerged.

On

page for the day Sibyl died appears to have been soaked

Chapter Two:

Apprentices

Dave Packard's all

injury,

Bill

Hewlett's loss,

and Fred Terman's

illness,

events that took place within a span of just months, had diverted the tra-

jectory of each of their lives toward one another at a meeting place a decade into the future. In the

worked

meantime,

as the

newly married Professor Fred Terman

to establish his career at Stanford, Bill

and Dave

had

still

to finish

growing up.

As always, damaged, and

it

was much

his explosive

easier for

David Packard. His thumb healed,

hobby was replaced by

a compelling

new

one.

if

He

rode his horse, Laddie, went trout fishing in the Rockies with a friend's family (regularly catching the then limit of fifty fish per day), took violin lessons,

and, increasingly, built and operated

By the time he enrolled ready

made

a

name

ham

radios.

at Pueblo's Centennial

for himself as a radio operator.

the school's radio club,

and

like his

ham radio

station,

He became

ham

As he would

9DRV. In one of his

radio convention in Denver.

at Stanford,

antenna tower to transmit

first

encounters with the larger

alike in awe.

him an

and leaving both teachers and

With the exception of

Latin,

fel-

where he struggled

(comparatively), Dave found his high school classes a breeze technical ones:

invitation to

1

Dave Packard passed through Centennial High

trailing clouds of glory, thrilling the girls,

low students

secretary of

tall

technical world, his position with the school club earned

the statewide

al-

contemporaries out in Palo Alto, the

Packard family's backyard shed soon sported a David's

High School, Dave had

—

especially the

"The math and science courses were easy because

I

already

as much as the teachers did." He briefly pursued music, playing second violin in the orchestra and tuba in the band, but other interests drew him away. One was school politics: he ran and won election as his class president all four years. An even bigger draw was athletics, which Dave didn't pursue until he was a junior. But when at last he did go out, he left an indelible mark. Perhaps not

knew about

surprisingly, Centennial quickly

2

had championship teams

in the three sports

in

DAVE

BILL &

32

which Dave

lost the state

lettered: football, basketball,

and

track.

The

basketball

championship game, but Dave was nevertheless named

team

all-state

center. 3

Track was his best sport. As he wrote in his memoir, "I

won

the high jump,

jump (now the long jump), the low hurdles, the high hurdles, and the discus, setting a new record for the all-state meet." 4 It didn't hurt that a noted hurdler of the era, Gordon Allott, was studying law in Dave's father's office (he would later become a senator and a great friend of HP) and gave the boy some pointers. But the talent was all Dave's. the broad

Looking back on

Packard remembered most not ra-

his high school days,

dio,

but his athletic career. And,

ries

was not the fame or the many awards, but the lessons

tellingly,

what he cherished

in those

memo-

taught, especially

it

about teamwork:

[Pueblo athletic booster Mr. Porter told us] that

many

times two teams

playing for a championship each have equally good players. In this case

teamwork becomes very important,

especially in the split-second plays:

Given equally good players and good teamwork, the team with the strongest will to I

win

will prevail.

have remembered that advice, and

it

has been a guiding principle in

developing and managing HP. Get the best people, stress the importance of teamwork, and get them fired up to win the game. 5 *

Despite his father's hope that young David would follow the

boy would have none of

radio,

it.

Ever since he had

Dave had known he wanted

to

first

him

into the law,

played with an amateur

an engineer when he grew up. Once his

determination became known, the next question was where he would pursue

To the north, the University of Colorado

his engineering degree.

had

a solid electrical engineering

ham

radio buddies were already attending the program there.

assumed But

that

in the

at

Boulder

department, and several of Packard's older It

was generally

Dave would do the same.

summer

of 1929, before the beginning of his senior year, David

some of

his

mother's old friends. They toured through Southern California (probably

lis-

joined his mother and

sister

on

a trip to California to visit

tening to Lee de Forest's radio station in the car), then drove north through

Monterey (where Dave, with

mark with

their

lege friend, a Mrs. Neff.

had

his daughter,

would one day

aquarium), then up to Palo Alto to

just finished her

While they were

freshman year

visit

leave an indelible

Mrs. Packard's col-

there, the oldest daughter, Alice,

at Stanford,

who

took Dave for a tour of the

campus. It

was on

that tour that Packard

first

learned about Stanford's growing

Apprentices

33

reputation in electrical engineering, the Communications Lab, and the brilliant

young

Terman,

professor, Fred

who had

been promoted to run

just

it.

Young David, very impressed, decided that Stanford was the school for him.

He

applied the next spring and,

was accepted.

"much

my surprise" and nobody else's, he

to

6

But America was a different place in June 1930 than

months

The

before.

had been twelve

it

stock market had crashed in October, and though the

Great Depression had not yet struck in earnest, there was enough bad news

comingfrom Wall

Street, the

Midwest, and the major trading nations around

the world to worry any thoughtful person.

Not

surprisingly, then, the

David's acceptance to Stanford was received with

some ambivalence: happi-

ness that their son had been accepted into a top-flight university

over the cost of tuition at that university

money even the world's

in

good

times,

economy was

and

— $114 per

a frightening

news of

quarter.

and concern

That was a

lot

of

amount of assumed debt when

sliding into the abyss.

But the golden good luck that always surrounded David Packard came

through once again. At a time when attorneys were beginning to close their offices,

father

or take eggs and produce in barter payment for their services, Packard's

managed

to be appointed as a

with a big future

at the

dawn of

bankruptcy

write Dave's admission to Stanford, and the to

make

the

referee, the

the Depression. That was

one

legal career

enough

to under-

young man would have

to

work

rest.

Hewlett, the challenge was just the opposite. Thanks to his father's es-

For

Bill

tate

and book

royalties, as well as the tuition

discount for faculty children, he

could afford to go to Stanford. The real question was whether he could get

Not long

after

Albion Walter Hewlett's untimely death,

Bill's

in.

grandmother

shrewdly decided the best thing for the mourning family was to take a long journey. So she packed

They stayed

for fifteen

school in Paris, while

them up

—

Bill,

months. During that time,

Mom

it

around

is

a

own

his sister

Bill's sister

enabled the boy,

desperately in school, to learn at his

There

and

and Grandma tutored

second shrewd decision, because

to navigate

his mother,

—

for Europe.

was enrolled

Bill privately.

in a

This was a

who had been struggling own manner, and learn

pace, in his

his dyslexia.

photo of young

Bill,

now

about fourteen, in a wool

squinting in the sun at what appears to be a Paris cafe. This shattered boy: he looks older than he

would

in

is still

suit, sitting

very

photographs taken

much a

five years

later.

When the family finally returned, Bill was enrolled in Lowell High, the city's most distinguished

college preparatory school.

There he restored his friendship

34

DAVE

BILL &

with a childhood buddy, Noel "Ed" Porter, and together they plunged into the troubled waters of high school

A

Hewlett today would be spotted rather quickly as suffering from a

Bill

He was

serious learning disability.

he struggled gamely, but inevitably

books or keep up with his

memory

and

a classic case: in English failed.

He

history,

simply couldn't read the

his note-taking in class, so

text-

he had to rely entirely on

of the teacher's words. By comparison, in chemistry, physics,

and mathematics,

Bill's

performance was nothing short of astonishing. This

was particularly true when he was allowed

to

work with

Among

his hands.

other electrical items, he built a pair of crystal radios for himself and his sister,

made an

electric arc

some of

In math, he and

from carbon

rods,

and even fabricated

a Tesla coil.

the other students tore through the curriculum

so quickly that they had to beg the teacher to instruct

them

in college-level

calculus. 7

But grades

Bill's

technical brilliance only counterbalanced his miserable other

—and the

college prospect.

that he

resulting

seemed

It

would now have

median of mediocrity made him likely that his

less

formal education was

what

to attend a trade school, or use

at

than a good

an end, and

talent

he had

with his hands to make a way in the world.

But Dr. Hewlett had one

upon

it

himself would look back

kind of miracle. Since he didn't commit to paper his memories of

as a

this period,

last gift for his son. Bill

we have

Bill likes to tell

to

depend upon Dave Packard's

the story that

when

came time

it

telling

of the story:

to graduate, he, like

many

of his classmates, asked his high school principal for a recommendation to Stanford.

The

principal called his

mother

in

and

said,

"Mrs. Hewlett,

your son had indicated he wants to go to Stanford. There's nothing record to justify

my recommending

Do you know why

him.

go?" She said, "His father taught there."

"Was

asked,

"He was he got

made

his father

He added

I

and he

Bill,

and said,

was how

that the next year the principal retired, "So

I

just

it!"8

at

Stanford and not knowing a soul on

Hewlett came to the university bearing a

campus,

Bill

everyone

—and the immense expectations

more

yes,

ever had!" That, according to

Unlike Dave Packard, arriving

team

principal brightened

Albion Walter Hewlett?" She said

the finest student

in.

The

in his

he wants to

that

name known

came with

it.

Thus,

to almost it is

even

surprising that he would, soon after his arrival, go out for the football

—an attempt

that, given his size,

environment where Hewlett was

still

it

was doomed from the

start.

Even

in

must have seemed that everyone was watching him,

not afraid to

fail.*

an

Bill

Apprentices

35

Classmates Though

posterity

would

prefer the simpler story of Bill

the football field and immediately

becoming

and Dave meeting on

fast friends,

the truth

is

that they

spent the next two years as acquaintances and occasional classmates. Both

were working toward their bachelor's degrees in engineering, and so regularly

found themselves

in the

curricular

was

at his fraternity

filled

or

and seminars.

classes

dropped most of

But, until he finally life

same

his outside activities, Dave's extra-

with sports and "slinging hash" for spending

local cafeteria. 9

In the

summer, because he

that he should help contribute to the cost of his

"felt

money

strongly"

education, he would return

to

Pueblo and take odd jobs, most of them involving heavy physical labor. 10

One summer Creek

drilling

meant work

that

ests in explosives)

and helping

summer he unloaded

other

as a

hard-rock gold miner near Cripple

dynamite holes (he apparently hadn't

more

—

fully given

up

his inter-

away the shattered rock afterwards. An-

cart

still-hot bricks

from

kilns, often

him almost

on days of 100 As

if

to counter

that experience, he also took a job delivering ice in Pueblo, sawing

up the big

degrees or

a job that often left

delirious.

blocks into manageable smaller pieces he could lug on his back into the same

beer joints and gin mills he had so studiously avoided just a few years before.

And,

in his favorite

building a road

summer

Packard worked on a construction crew

job,

(now Highway

160) over

Wolf Creek Pass

Mountains of southern Colorado. The best part of fishing he

was

free to

Needless to athlete,

do each night

say, this

after dinner.

kind of work only

and even more heartbreaking

this

in the

San Juan

job was the hour of

11

made Packard stronger and a better

to his coaches as

he began to drop out

of one sport after another to focus on his classwork.

As

for

how Bill

Hewlett spent those years, the best description comes from

another classmate, Fredrick

Seitz,

who would go on

to

become president of

Rockefeller University. In his autobiography, Seitz described his fellow physics

students during those years, ball

among them David

Packard, "a major foot-

hero on campus," and "William R. Hewlett, usually to be found in the

library." 12 It's

likely that Bill didn't

have

studying in the campus library. effect.

His classmates, not

very few notes in

class,

least

much

It is

choice but to spend his free hours

also likely that

of that effort had Bill

little

took

but instead paid extraordinary attention to the lecture,

taking in what he thought important and filing

powerful with use.

all

of them Dave Packard, noticed that

Bill

it

Hewlett, everyone agreed,

knew how to listen to other people. What free time Bill did have was

memory grown was somebody who really away

in a

usually spent with his childhood pal

Ed

DAVE

BILL &

36 Porter,

who had

also

come up

bishop (who would eventually preside over

most of the Hewlett and Packard

Bill's

children),

ing the two future partners together.

Company as

reer at Hewlett-Packard

was the son of an Episcopal

to Stanford. Porter

wedding and the baptisms of

and the

crucial catalyst in bring-

He would spend

his entire

ham

While both Hewlett and Packard were very good didn't hold a candle to Porter. Recalled Packard,

was

Porter, in fact,

While they were

dio.

ca-

radio builders, they

"Ed knew so much about

dios that he partially supported himself by repairing them." It

working

a senior executive.

ra-

13

who had introduced Hewlett to the world of ham rahe had invited

in high school,

up

Bill

to the attic of his

house to show off his secret laboratory and the handmade transmitter by

which he had already connected with

Even a technical tyro

— and

Hewlett could understand enough to be impressed

like

using electrolytic the

five continents.

attic, all

rectifiers, Porter's

on bare

transmitter

pumped

a

little

scared:

1,000 volts around

wire. 14

Happily, Porter survived to be accepted to Stanford, and there help his old friend through.

And

if

Packard was famous for his gridiron exploits around

the rest of the campus, in the engineering department Porter was equally cele-

brated for having Porter's

set

up

a private radio station

nickname, "The Frisco Snake"

—

that

on campus,

was

W6BOA—hence

fully the equal

of Fred Ter-

man's over in the Communications Lab. Being a

ham

radio buff, Packard often

shop and see what the whiz was up to

And

it

was then,

young men

—and

swung by

Porter's

room

to talk

just as often ran into Bill Hewlett.

in their junior year, that the real friendship

between the two

actually began.

In the beginning (and perhaps always) this friendship was less about engi-

neering,

and more about

thousands of people start,

a

common

love of the outdoors. And, of course, as

who would meet them

an extraordinary complementarity between their two personalities.

But Ed Porter's place wasn't the only regularly visited. lab.

remarked, there was, from the

Like

He

also

made

it

ham

radio

on campus

that Packard

part of his regular routine to visit Terman's

most Stanford engineering undergrads, Dave was intrigued by the

young engineering legend with the famous

father

and the even more famous

new textbook. These had not been easy times for Fred Terman. The Depression had hit California

with

full force.

Unemployed men were

now

sleeping in Hoovervilles

along the creek beside the campus. The Central Valley was overrun with refugees from the Dust Bowl, even as the state's once powerful agricultural in-

dustry collapsed in the face of deflating food prices. Stanford no longer had the

money

to subsidize side ventures like the

Apprentices Communications Lab, even though

it

was

37

little

more than

a renovated attic

over the electrical engineering laboratory. In particular, there was no to repair the roof,

Terman and the students

the conditions that

lined with tarpaper and sealed with

trays,

man, "As the

One

winter

money

which leaked ever more with each rainstorm. So bad were

trays filled,

wooden

finally built large

to catch the drips. Recalled Ter-

tar,

we walked around them. Our morale didn't suffer. homey touch by stocking the trays with

Hewlett added a

Bill

goldfish." 15

But' times.

wasn't

it

Some of

amusing anecdotes

all

to

later

tell

during the good

the desperation of the era can be heard in another

Terman

reminiscence:

The Depression nothing,

years were

literally

more

nothing, to

with.

We

than you can imagine.

difficult

work

An

had

accident that burned out a

few vacuum tubes or damaged a meter would produce a

crisis in

the labo-

ratory budget for a month.

As an economy measure, tected

I

insisted that the laboratory meters

by an elaborate system of

fuses.

Students often chafed

because the fuses frequently got blown and a replacement of the right size.

Fred Terman quickly

come

going to

let

may

He was indeed

electrical

also

son and wasn't

Communications Lab

He

fought

all

—

his

—and

es-

into an academic powerhouse, a world

and

a

magnet

for the best students in

through the 1930s, using every to keep

trick,

connection,

both the department and the lab

great irony of Terman's career

on the brink of

him from

engineering department at Stanford

with the Communications Lab, just

was

his father's

anything, even a global economic depression, drive

and funding source he knew,

The

difficult to find

have backed into teaching, but once there he had

center for technical innovation in radio,

the country.

was always

at this,

But the meters survived. 16

to love the profession.

dream of turning the pecially the

it

be pro-

is

when

that, first

things

with his

seemed

his greatest breakthroughs.

illness

alive.

and now

their very darkest,

Even

as

he was

he

fretting

about the survival of Stanford's engineering program, already on campus was

group of students who would not only save the place, but change the world, make Stanford one of the best-funded universities on earth, and, not least, put Fred Terman and his lab in the history books. a

BILL &

38

DAVE

Building a Friendship Easily Bill's greatest asset during his undergraduate years at Stanford

he owned a

car, a rarity for a college

meant freedom:

to get

kid in Depression America.

away from school and head

was that

And

that car

and

for the hills to hike

fish

and forget one's problems. Their

happened by

first trip

to a hydroelectric

bered Packard, time. That

luck:

one of

their professors organized a visit

power plant run by Southern California Edison. Rememand I took the occasion

"Bill

was the precursor of many trips

For the next two years,

Bill

to

go fishing and had a wonderful

to the mountains." 17

and Dave took

off

on outdoor adventures

whenever they could. Sometimes Porter came along, but he was

outdoorsman and much more chained

came along The

all,

the one that cemented Bill

ing their separations in the years to come, 1934,

ing

when

came

Others

and Dave's friendship dur-

right after their graduation in

him in Colorado for a twoSan Juan Mountains. They rented horses (at a dollar

crew, convinced Hewlett to join

trip in the

and a mule and spent the fortnight wandering the mountains,

apiece)

and catching endless It

station.

Packard, remembering the good fishing he'd enjoyed while work-

on the road

week pack

campus by his radio

but increasingly the core pair was Hewlett and Packard.

as well,

biggest trip of

to

of an

less

talking,

fish.

would have been

a perfect trip

had not Hewlett, on the penultimate

day,

gotten a terrible toothache and been forced to ride out early in search of a

(who would charge

dentist

Bill

one dollar

that night, heard the nearby cry of a

ing to sleep while clutching his Still,

in retrospect,

high points of the college years Packard, recall,

who

"There

mountain

lion

and spent

looked back on the

trip as

no question

dawn

try-

one of the

—an extraordinary statement coming from

played on two Rose Bowl teams. Sixty years is

until

rifle.

men

both

for the extraction). Packard, alone

later,

he would

that a shared love of the outdoors strengthened

our friendship and helped build a mutual understanding and respect that at

the core of our successful business relationship lasting

more than

is

a half-

century." 18

There are

many famous

from Hewlett-Packard Co.

campus the

—but

to those

legacies of the Hewlett

who knew the two men

most personal statement

mountains south of

men purchased money came in. a retreat

it

Its

and Packard friendship,

to the engineering buildings

is

best, the

one

on the Stanford that stands out as

the giant ranch that stretches through the

Silicon Valley, the last great California rancho.

together in the 1950s, not long after the

The two

first really

big

log cabin and growing complex of buildings soon became

from the pressures of the world,

a place to

spend time with

their

Apprentices and even

families,

more

39

to hold corporate off-sites.

physical world of ranching, fishing

was

It

here, in the simpler,

and hunting that both men seemed

happiest.

The two young men

talked about

many

on those hikes and camp-

things

outs, as well as with Porter while they hung around the radio station. And, inevitably, those conversations

turned to

how

make a among under-

they each were going to

living after graduation. That topic, a perpetual discussion

graduates,

had an added touch of desperation

The Great Depression was now

in 1933

and 1934.

in full force. Stanford's

alum, President Hoover, product of the university's very to

most

illustrious

had

first class,

failed

stem the tide and had been run out of the White House by voters. His suc-

had offered optimism and a seemingly endless

cessor, Franklin Roosevelt,

of

ries

new programs

—but so

far neither his

much

soup of agencies had done

to

upbeat speeches nor his alphabet

buoy the economy. The young men knew

they were facing the worst job market in American history way,

it

was kind of

—and

in a strange

liberating: if the traditional corporate career paths

were

but closed, they were free to try something radical and new. They even

new

that

it

had been coined

after

all

mused

about teaming up and starting their own company, perhaps even in the of "electronics" (a term so

se-

field

they came to

Stanford).

But even with their limited experience with the business, the three knew that starting a

company required

capital, products,

which they currently had. The dream would have

to

and customers

—none of

be deferred for now.

Meeting their Mentor Dave Packard was the

first

of the group to connect with Fred Terman.

It

was

who spent Communications Lab, would eventually cross paths with the lab's director. And Fred Terman had apparently prepared well ahead for that moment. He wanted inevitable that

his free

one of the campus's best-known

moments hanging around

Packard in his

circle: as

he

scholar-athletes,

the radio station next to the

later told his son,

"You don't

get a seven-foot

jumper by hiring two three-and-a-half foot jumpers." 19 Packard knew none of

this.

Regularly

bumping

the radio station seemed merely a coincidence. As

knew nothing about Terman the

— or even

his

famous

into Professor

Dave would father.

Terman

later

at

admit, he

His encounters with

young professor were occasional and, by all appearances, random: "I would

occasionally spend time at the radio station,

stop by from time to time to visit with

me." 20

and Professor Terman would

40

BILL &

DAVE

So young Dave was surprised when Terman seemed to ing

amount about

But he assumed

astonish-

the classes he was taking, his grades, even his football

was

it

know an

just

an example of the professor's powerful

stats.

memory at

work.

Terman made

Finally,

his pitch. Recalled Packard:

[On] a spring day in 1933, he invited

me

into his office

take his graduate course in radio engineering during

was the beginning of a

series

and suggested

I

my senior year. That

of events that resulted in the establishment

of the Hewlett-Packard Company.

As the course,

undergraduate to be invited into Terman's graduate

first

very honored.

I felt

teacher, that really sparked

Terman

recruited in this

was

It

this class,

my enthusiasm

now

taught by a

legendary

for electronics. 21

way throughout

the engineering department,

bringing together the best and brightest for his graduate seminar. As for Packard, he loved the course, despite the heavy burdens already on his time.

Terman had the unique

"Professor

seem the essence of

simplicity." 22

Being selected while

and thus the youngest seems to have held football team.

one day

a

It

still

even

was

Dave was now hooked

forever.

was an honor Packard

esteem than being recruited for Stanford's varsity

made him class,

in over his

uncharacteristically cocky.

the age of a high schooler

in the course

And

—

to if

fail.

thus

when

a transfer

Dave quickly joined the others

head and destined

doubts: he told the young transfer student that

midterm exam

complex problem

a very

a senior to be part of Terman's graduate class,

—worse,

Cal Tech, appeared in the that the kid

make

in the professor's elite circle,

in higher

mere junior

ability to

from

in predicting

Even Terman had

he didn't pass the

first

he would have to drop out and wait a couple

years to take the course again.

But teenaged Barney Oliver was the smartest person bly

on the

entire

one of the It

room, proba-

campus. And when the midterm grades came back, Oliver

had not only passed, but had the highest grade every other

in the

test for

the rest of the year.

It

in the class

was the

first

—

as

he would for

chapter in the legend of

greatest applied scientists of the twentieth century.

wasn't long before Oliver joined the troika of Packard, Hewlett, and

Porter.

And,

like

sional career to

Ed

Porter, Oliver

working

would devote most of

his entire profes-

for Hewlett-Packard, in his case as the chief scientist

and director of research and development. Oliver was brusque, arrogant, and impatient with anyone not intelligent as he (in other words, everyone), but he willingly chose to his

two

spend the most productive years of

his life in the

shadow of

college friends (though, if Oliver's last great endeavor, the Search for

Apprentices

41

Extraterrestrial Intelligence [SETI] ever succeeds,

he

may

finally eclipse

them

in the history books).

With Packard,

and the other graduate students, along with

Oliver,

most talented undergrads, such had

a collection of pupils to

Hewlett and Porter, Fred Terman finally

as

match

his

A

turn that knowledge into a career.

ing.

—but even

that

find

corporations were in even worse "kids" might have to go

show them how,

work

as

in industry;

straits

to

meet

is,

It

was

would

They toured Charlie

in Palo Alto,

his

around the

field trips

Litton

s lab,

of course, but

Eitel-McCullough in Burlingame and the

move on Terman's

part.

His students state

television.

made connections of the art in elec-

most importantly, they came away with a good idea of what and run

take to start

a real technology

remember Terman saying something successful radio firms were built

company. Recalled Packard,

like: 'Well, as

In studying

see,

"I

most of these

someone with

a

sound theo-

in the field. This got us thinking." 23

background

Terman during

ready had in his

you can

it

by people without much education,' adding

that business opportunities were even greater for retical

knew

men running the very first gen-

with future employers (and vice versa), they saw the tronics, and,

in

most of the big

and eccentric genius, Philo Farnsworth, the inventor of a brilliant

home

vacuum tube-based) companies, many of them

spin-offs of Federal Telegraph.

great lone

as

than universities, Terman

their older counterparts: the

Kaar Engineering

a

alone.

it

eration of electronic (that

also

hard times, to

few colleges were hir-

and

For that reason, he regularly took his students on

Bay Area

in

might find

few, he knew,

was no longer guaranteed,

Rather, they would have

Now

ambitions for his radio program.

the task was to not only teach them, but

academia

his

mind

this era,

it is

hard not to conclude that he

al-

a scenario not unlike the future Silicon Valley and,

while nobody else noticed, was slowly putting together the pieces: Stanford, a collection of bright

young entrepreneurs, and

panies to provide a skeleton of infrastructure.

a network of established

Why else

com-

would he make

less-

than-subtle hints to his students that, even as the Great Depression raged,

they consider not just finding secure jobs, but taking the ultimate risk of be-

coming entrepreneurs? William Shockley, the

home

to the Valley

irascible

Nobel Prize winner who would come

twenty years hence,

start a transistor

through his cruel management, drive away his most seed the local semiconductor industry,

is

company, then,

brilliant

employees to

usually credited with being the

founder of Silicon Valley. Even Terman agreed with that assessment. strong case can be

made

his students of the

Bay Area electronics industry.

that the Valley really

And yet

a

began with Terman's tours for

Going Bill

Own Way

their

Hewlett, Dave Packard, and

Ed

once again, covered himself with to

DAVE

BILL &

42

summa cum

still

laude,

and

Porter graduated in June 1934. Packard,

glory, graduating

with Stanford's equivalent

Phi Beta Kappa. The

as a

trio,

plus Barney Oliver,

talked about starting a company, but as graduation approached they real-

would have

ized they

would

So, as they trip in

pondered

Colorado.

ing, the

to

abandon

When

get serious.

summer,

partnership

and Dave took

their options, Bill

that talk

—but another

talk

company

serious. In another

—and

force intervened.

Terman intervened, shrewdly suggesting

Terman

would prove

much

created a

month, different

Dave Packard received an unex-

pected job offer from General Electric in Schenectady,

learn a great deal that

off for their pack

about striking out on their own. Over

grew increasingly

they might well have built that

hesitated,

As Hewlett

they returned, and with no obvious jobs in the off-

group once again began to

the long

and

their fantasy

"Thirty- four was not a good year for being employed." 24

say,

own

useful in our

New

York.

When

to Packard that "I

he

would

endeavor." 25 Besides,

told Packard privately, Bill Hewlett needed another year of seasoning

at Stanford.

Packard agreed.

He

accepted the

GE job

offer, telling Bill that

determined that they build a company together, and went

Once

there, because the job wouldn't begin until

Colorado

for courses at the University of

in engineering

mathematics taught by

home

he was

to Colorado.

February 1935, he signed up

in Boulder. His favorite

who was

a professor

also

was a

class

something of

an arithmetic savant and could compute huge columns of numbers in a second. If nothing

else,

friends (a

mother and

common theme

he had any hopes about a career

at

sister to

Pittsburgh to

in their journeys).

came, Dave drove up to Schenectady and General If

split

the class was entertaining.

In January, Packard drove with his

some family

still

When

visit

the time

Electric.

GE, they were dashed that very

first

He was called into a meeting with the memorably named Mr. Boring, the man who had interviewed Dave at Stanford and offered him a job. The meeting started out bad and went downhill from there. "He knew of my interest in day.

electronics

(still

called 'radio') but told

tronics at General Electric,

interests in generators, motors,

plants If

River,

and

electrical

me

that there

and recommended

that

I

was no future

concentrate

and other heavy components

for elec-

my work and

for public utility

transmission systems." 26 *

Boring had told Packard that his job was to dredge the nearby

Mohawk

he couldn't have insulted him more. Dave hadn't put aside a promising

sports career

and crunched

his

way through Terman's graduate course

as

an

Apprentices undergraduate, and

made

neers in America, to

become

himself into one of the best young electronics engi-

tors

for hydroelectric dams.

that

first

day

at

43

a glorified mechanical engineer building genera-

And

he missed his

if

in Palo Alto before,

life

GE he must have positively despaired.

be uncharacteristically triumphant

in his

Decades

memoir when he

on

he would

later,

noted, "I have

often thought of the irony of Mr. Boring's advice because our electronics

Company, has become

firm, Hewlett-Packard Electric It

Company was

time he gave

only got worse. As was

David to work ing

at the

new

in a test

its

me that advice." 27

policy with newly hired grads,

department

refrigerators for leaks

politely describe

—

in Packard's case,

GE

on the swing

assigned shift test-

and other malfunctions. Packard would but

as "not very interesting,"

it

larger than the entire General

must have been

it

later

a night-

mare. 28 Six months before, he had been in the California sun, a campus hero,

working with some of the smartest young engineers anywhere, dreaming of starting his

own company

— and now here he was,

dead of winter, working

State, in the

at night

middle of

in the

New York

checking refrigerator

coils for

leaking coolant. Worse, he was expected to be honored by the opportunity.

Back

in Palo Alto,

Terman's electronics cruiting.

Ed

it

class.

Once

—not

was on Ed's

may

and take

his course,

new crop of students in

a

had been

surprising, as he

on the Stanford campus,

Hewlett

—and

again, the professor

Porter was in the class

radios than anyone

But

was a new school year

it

save

friend, Bill Hewlett, that

Terman

knew more about

himself.

Terman focused

student

but there was

Bill

Hewlett

is

that his approach to the

no guarantee

still

that he could pass

idea of getting a degree.

specifically

And one

day,

Terman

ing at your record, and you've been working resistance capacity oscillator,

and

I

figure if

pay $25, you could get an engineer's In that one conversation, Fred barely knew, (1) a direction in his

remarkable of

all,

degree.'

a

Bill

said,

I

on an

I

life;

interested.

the fact

I

had no

interesting project in the

that

up

as a thesis

and

did." 29 Bill

Hewlett, a student he

(2) a professional career;

the initial step toward Hewlett-Packard

modern

is

designed for Hewlett

was

you write So

it.

directionless

'You know, I've been look-

Terman had given

product, the launching point of the

The

still

a testament to his genius as a teacher. So

young man was so

alone. Said Hewlett, "I took courses simply because

had found

his attention.

have followed Terman's advice to stick around for another year

That Terman had even noticed the spark of talent in the

C

carefully re-

and

(3)

Company's

electronics age.

most first

The lonely boy

home. Hewlett

we

see in photos taken during this period

sad boy of his high school pictures.

Now, thanks

is

no longer the

to his friendship with

Porter and Dave Packard, as well as his fraternity brothers at

Kappa

Ed

Sig, the

44

DAVE

BILL &

The touch of mischief

nearly adult Bill Hewlett finally grins again.

seen in grade school has returned, and

showing up

The

in

will

it

never again leave

in his eyes

him

— even

HP annual report photographs decades in the future. Terman and

relationship between Fred

one. While there

an obvious

is

all

things,

Bill

men

none of those

an interesting

is

dedicated from the very beginning factors, at least at first,

between Terman and Hewlett.

in the relationship

Hewlett

between the single-minded Terman and the

two

blunt, plainspoken Packard, to excellence in

fit

come

into play

Hewlett as an under-

Bill

graduate at Stanford was a fun-loving, practical-joke-playing, second-rate

who was

student

up

forever not living

absolutely the opposite of

to his potential

what Fred Terman expected

in

—

in other words,

one of

his "select"

students.*

went both ways. The demanding, apparently humorless Terman would

It

have been the type of professor a avoid.

Bill

Though they would soon come

love each other like a father

marvel

at a

man whose

"[Terman] had no small

your leg

off.

He had

Hewlett would have usually tried to

to

admire one another, and eventually

and son, Hewlett, even

man, would

still

thought processes were so utterly alien to his own: talk,

but he had a really analytical mind.

mind, when

a distinctly one-track

might divert him, but he'd come back and right

as old

back to what he was saying

five

say, 'As

I

was on

it

was

saying,'

minutes previous.

He

He'd

talk

a subject.

You

.

.

.

and he'd jump thought in

clearly

a straight line." 30 Bill

like

Hewlett's mind, by comparison, clearly didn't

Dave Packard, whose sojourn through Terman's

eventful, his intelligence

day for a year

was both

erratic

Literally. Bill

had learned

was smooth and un-

and impetuous. Spending day

in that serious, high-pressure,

environment had him climbing the

work the same way. Un-

class

and

intellectually

after

overwhelming

walls.

to rock-climb

and rappel while he was

still

in

high school, and the rough-hewn sandstone walls of the Stanford quad posed a daily challenge. Fellow classmates

him clambering up

during that

fifth

year

would remember

the walls of the quad's engineering corner, especially the

Radio Lab. "You could get pretty

damn

high

—

if

you'd

come

off

you could

have banged yourself up," he recalled. 31

When it turns out that

Bill

and

the outside of the building, each

his fellow climbers

named

had

different routes

after the nearest faculty

parking spot, and that Hewlett's favorite was "Terman's Route" because riskier

up

member it

was

and more challenging, the metaphor becomes complete.*

When

rock climbing proved inadequate to burn off Hewlett's natural exu-

berance, he took to playing practical jokes. classic Bill

One

Hewlett of the

joke, in fact,

had

era.

The

goldfish in the drip trays

was

But that was only one example.

a six-decade-long

punch

line.

For years

it

had been

Apprentices assumed

that there

45

were no surviving photographs of Terman's laboratory historic importance.

during those years, a loss considering

its

the Hewlett family librarian, Robert

Boehm, came upon

that,

lab

when

—

Then, in 2003,

a set of negatives

developed, proved to be a series of photographs taken in Terman's

featuring Bill Hewlett

and one of his classmates, Bob Sink, pretending

drink bottles of booze and progressively slumping to end up, in the age, passed out

around

like a

on the

modern

floor.

Terman indulged was not

and

its

photo

also astonishing for the sheer

is

equipment.

and perhaps even admired them

these antics,

entirely without

im-

Besides the sight of a future legend clowning

college kid, the

primitiveness of the lab

final

to

humor

—though

and was exceedingly dry (once, years

later,

it

He

appeared only rarely in public

he gave a completely deadpan pre-

sentation before the Stanford trustees describing

Linear Accelerator was being used by students to

roadhouse to the campus). 32 So Terman

a bit.

how the three-mile-long pump beer from a nearby

may even have

enjoyed Hewlett, and

appreciated his contribution to the morale of his fellow lab students.

While

Bill

Hewlett was appreciated for his

one assumed he had any great aptitude very smart, friendly guy

who was good

humor and

his dedication,

in electronics. Rather,

no

he was just a

with his hands. But that was about to

change.

Course Correction Terman's strategy for tend

MIT

MIT's more

wanted

to

Bill

Hewlett had been a good one.

for his master's degree, difficult bachelor's

Bill

had wanted

to at-

and Terman, knowing both Hewlett and

program

in electrical engineering,

spend an extra year getting the young

Hewlett got his acceptance, and

at

man up

had wisely

to speed.

the end of the 1935 school year

left

Stanford for Boston. His charming good-bye letter to Terman happily survives as a

glimpse of both Hewlett's youth and the relationship between teacher and

student:

Dear

Sir:

I

am

sorry that

application to

MIT

I

was unable

I

would

like to tell It

was

ate year at Stanford.

you before

I

left

for the East.

was accepted with the requirements that

Economics and obtain

your direction.

to see

I

a reading

you how much

that

I

take

some

knowledge of French and German.

for that express

hope

I

My

shall

I

enjoyed

my year in

purpose that enjoy

I

the lab under

took the

first

gradu-

my year at MIT as much.

BILL &

46

DAVE

am going to stop at GE for a week or so with Dave. He is going to show me through and in this way I hope to get some idea of research and I

development and large

scale production.

Of the three keys I am enclosing, only two belong to the lab, and I know which they are. The odd one is no use to me, so if it does not anything you may throw it away.

don't fit

Sincerely,

William R. Hewlett 33

It is

a classic student letter to an

probably one of

many that Terman

Hewlett's appreciation of

that

all

admired (and

influential) professor,

received that spring.

Terman has done

It is

tone-perfect representation of a disorganized grad student leftover items as

he packed, and resonant in

union with Packard.

And

its

also touching in

for him,

amusing

who

in

its

has found

mention of Hewlett's

first re-

note the formal salutation and signature: no "Dear

Professor" nor "Bill Hewlett" in this relationship. If

Fred Terman hadn't been so organized and passionate a record-keeper,

likely that

it is

he would have tossed the

Hewlett hadn't become a business reading

it

today.

But

if

that

first letter is trivial,

sent soon after he arrived at

MIT,

soon

letter

titan,

after

own

it;

and

if Bill

very unlikely anyone would be

it is

the second letter from Hewlett to Terman, is

not. In fact,

it

must have made Terman's

jaw drop. Even the language was more that of equals, ing to sense his

he read

Hewlett was

as if

start-

abilities:

Dear Dr. Terman: Several weeks ago

though

I

I

bought your new book on Measurements and

had read parts of

several mistakes in

it

that

mistakes in printing, there

it I

is

before

I

have found

it

very useful. There are

have found and although most of them are

one that seems fundamental.

Hewlett goes on to describe how, on page 164 of the tration of a setup for

measuring "G of a tube

mental (and dumb, though Hewlett

Terman, grabbing

must have fect,

worry

felt

a

his

is

34

text,

Terman's

illus-

in a bridge" contains a funda-

too polite to say

it)

error.

copy of the book and tearing through the pages,

whole range of emotions: annoyance that

that he

al-

might have made a fool of himself

on how

his text wasn't per-

in front

of his profes-

make a correction (erratum insert? a new edition?), and, not least, both amazement and a new appreciation of the young man who had sent him the note. Of all people, it was Bill Hewlett who sional peers, calculation

best to

47

Apprentices spotted the error peers, but class

making

—not

cutup

Oliver, not Packard,

Bill

Hewlett.

And

so,

not one of Terman's academic

even as he was kicking himself for

such a foolish mistake, the professor

was

also likely patting himself

the back for his prescience in identifying real talent in that

on

young man.

After confirming for himself, Terman dashed off a return note:

Dear I

Bill:

enjoyed your

you

rors that

You

letter

much and

very

wish to thank you for the

are absolutely right with regard to the circuit. ...

bad and embarrassing mistake

er-

It is

a rather

to have. 35

whom

Hewlett was becoming someone with

Clearly,

want

also

measurements book.

have discovered in the

to stay in touch. Years later, Fred

Fred Terman would

would marvel how he almost missed

spotting the potential of his student: "I was slow in realizing that Bill not only

solved problems but looked beyond that

one good

them

for their implications.

problem solved always led

creative

to

He

could see

two more unsolved."*

Junior Exec Meanwhile,

if Bill

trying to find his

Hewlett was

Dave Packard was

finally finding his way,

just

way home.

Desperate to escape the endless dreary evenings testing refrigerators,

Packard quietly began exploring other departments

some job

perately searching for

He

finally

testers for

found one

that

would both

at

GE

interest

in the radio transmitter department,

equipment destined

for the U.S.

Army.

It

was

radios,

and

esting than refrigerators, but at least

it

wasn't it

Schenectady, des-

and challenge him. which was hiring

much more

was

a change.

inter-

Mean-

while, he kept looking. Finally, after a

few months of searching, Dave

the job he wanted: in the

bonus was

that this

finally identified

and landed

vacuum tube engineering department. An added

department shared a building with the GE's main research

—which meant Packard could make some connections with some

department

of the company's top

scientists.

The job title may have seemed familiar, but the reality was a long way from the elegant little radio tubes Packard had seen Charlie Litton fabricate back in Redwood tifiers

City.

These tubes were monsters

the size of gallon jugs

—and dangerous

—

too.

giant

mercury vapor

rec-

Each contained a reservoir

— BILL &

48

DAVE

when current passed through the tube. was also mounted into the tube to act as a

of liquid mercury that would vaporize

A pointed

piece of silicon carbide

control element.

As long But when exploded a

as the control

it

failed,

element worked, the giant tube worked just

the pressure of the mercury vapor spiked

grenade. For that reason, the testing unit was placed inside

like a

metal-mesh shield to stop the

the doors

fine.

—and the tube

on opposite

the tests because

when

and

flying glass splinters

sides of the ground-floor lab

shards. Meanwhile,

were kept open during

had only an

a tube exploded the technicians

instant to

run outside ahead of the expanding poisonous cloud of mercury vapor

when

returning only

worker safety It

the lab had been (apparently) aired out. Such was

in 1935.

wasn't until Packard took the job that he learned that, basically, every

tube exploded. Yield rates were so low on GE's mercury vapor

of the previous batch, every one had

informed that

his job

was

to

make

failed,

and most had blown up. Dave was

sure the next batch got through. 36

In desperation, he set about to learn every possible

vapor

could

rectifier

fail.

rectifiers that

way

that a

mercury

At the same time, he went and planted himself on

the factory floor, following each tube through every step of the fabrication

process to

make

No one ers,

sure there were

at the

pleased that

company had

someone from

tening, proceeded to

open up

no mistakes. ever

done

that before.

And

the factory work-

the lab was actually paying attention and

to the

young man.

tall

to identify the problem: the factory workers,

It

who were

didn't take

them by

Dave long

taking the rap for the

low-quality output, were in fact "eager to do the job right." that the instructions being given

lis-

The problem was

the engineering department "were

not adequate to ensure that every step would be done properly." 37 *

So Packard rolled up his sleeves and joined the

men on

the shop floor. To-

gether, they revisited each step of the production process, looking for errors,

the workers explaining the best

way

the instructions from engineering.

twenty It

rectifiers,

was the

to

The

their job even as

result

every one passed the final

first

was

later,

when HP

it

very important lesson for

up written

The death of the in

me

codified

—

first

its

theorists

realized that

practiced

it:

man-

leadership

—and business

— Packard looked back and

during those weeks on the factory floor that he

would,

Packard rewrote

of the next batch of

test.

"Management by Walking Around"

began to write books about

essary to back

that,

indication that David Packard was not only a brilliant

ager but an innovative one as well. Years practice, called

do

it

was

"That was

a

that personal communication was often nec-

instructions." 38

culture of the private office

many ways, prove

to be the

and the unapproachable boss

most pervasive and

influential of

all

HP

Apprentices

49

Once Dave Packard stepped out on

social innovations.

the vertical corporate world began to go

flat.

Even General

more threatened by than appreciative of Packard's place democracy,

little

Electric,

which was

broadside for work-

his philosophy.

Hewlett, meanwhile, was buried in classes at MIT. Terman's prediction

Bill

was

would eventually adopt

the shop floor at GE,

correct: the courses

in preparation

unlikely he

it is

ready, he received

were a handful, and had Hewlett not spent that year

some of

network synthesis and

would have

survived. Instead, because he

the best training

on the planet

which would prove

analysis,

in topics

was

such as

be crucial to the crea-

to

The courses weren't so hard

that Bill couldn't

sneak away from Boston every so often and catch the train

"that shake, rat-

tion of HP's early products.

tle

and

operation" 39

roll

Packard

— including John

an electronics tycoon (and an

HP

Fluke,

who would

also

go on to become

competitor), and John Cage,

and help

write a well-known textbook with Barney Oliver

the United

buddy Dave.

to Schenectady to see his college

point was sharing a rented house with a half dozen other

at this

bachelor engineers

— up

—

up

set

who would

HP

Ltd. in

Kingdom.

None of

the

young engineers was making more than ninety

month, so they decided

to pool their resources, renting a large

dollars per

house and

hir-

ing a housekeeper. Considering that these were guys fresh out of fraternities,

one can only pity that housekeeper. Worse, the house with

piles

97, the

to attic

company's junk

The

result,

mad

unbeknownst

these

light

up

if

when you

men

and go on

and Dave's

"We had

so

much power

in

pressed the key, the lights in the whole house

men, including Packard, managed

Bill

In their spare time, the

neighborhood, was something out

Recalled Packard,

—whether they were turned on or

a massive electrical field

During

pile.

they could coax any use out of them.

to the quiet

scientist's laboratory.

[one] transmitter that

would

the attic of the

and work on the various instruments, most of them de-

signed for huge electrical plants, to see

of a

filled

of defective electronic equipment liberated for a nominal fee

from GE's Building

would go up

men had

visits,

not." 40 Remarkably,

to survive this eating

most of

and sleeping

in

to enjoy long lives.

the pair likely talked about their various

work and at college, discussed once more their dream of startcompany together, and made plans for future outdoor trips. They even managed several times to get out to the woods and do some canoeing. It experiences at ing a

was probably still

also during

sweet on that

regular touch,

girl,

one of those

visits that

Dave told

Lu, he'd dated back at Stanford

—

Bill that

he was

that they were in

and that neither distance nor time had diminished

his feelings

for her.

Dave Packard's ing his senior year.

first

meeting with Lucile Salter had been a blind date dur-

Some of his

friends

had organized

a trip to

San Francisco

DAVE

BILL &

50

Mark Hopkins Hotel and, surprisingly, the dashing footHe also was scheduled to work until early that

to go dancing at the ball player didn't

have a date.

evening in his dishwashing job in the kitchen at the Delta

Gamma

sorority.

No problem, said one of his friends, I think I know a gal there that will probably be willing to go with you.

Packard wasn't prepared for what happened next: "There

immersed to my me and said, 'When do you want me?'

elbows in pots and pans,

kitchen,

By the time the band played

when

was

I

in the

up

to

Dave Packard was

in

Lucile strolled

" 41

the last dance that night,

love.

But for now, there wasn't

away in

could do about

it.

He was

a continent

—

company that hardly noticed him and it was the make matters worse, in June, Bill Hewlett graduated

a mediocre job in a

only job he could find. To

from

much he

MIT and headed back to California. Now Dave Packard's best friend and

his girl

were back

home and he was

stuck in Schenectady.

Fred Terman tried to help. Interestingly, he too was already thinking about

and Packard. While

a partnership of Hewlett

Philadelphia electronics

some of

sibly hiring

company wrote

his graduates.

to

Bill

was

still

at

Terman expressing

MIT

a small

interest in pos-

Terman's reply offers an insight into

how

he perceived the two young men:

I

would suggest the consideration of David Packard. Mr. Packard has

been with the General

Electric

Company for one and

Stanford graduate, Phi Beta Kappa,

campus

politician, etc.

He

is

a varsity football

a half years.

He

and baseball

player,

has had considerable amateur experience in radio, has taken

tric

is

now working in

Company and Another

who

is

a

a big, attractive fellow with unusual energy,

very brilliant in theory, and extremely competent in the laboratory.

Stanford and

is

He

my course at

the research division of the General Elec-

taking the Advanced Course.

possibility

is

a

former Stanford student, William Hewlett,

did one year of graduate work with us and has just completed a sec-

ond year

at

Massachusetts Tech ... [he

is]

a

good

substantial

young man

with an excellent personality and social poise. His chief characteristic

is

tremendous energy. He always has

to have several irons in the fire going

simultaneously and whenever he

around things happen. Hewlett needs

a

little

finishing

is

from the commercial point of view but

places wherever he

is

going to go

42 is.

Besides Terman's superb insight into the personalities of his two students,

two other features of

this letter are

of interest.

First,

there

is

the elevation of

Apprentices Bill

Hewlett into Terman's

letter

down

he

is

to

now

recommend is

now

his best talent, these are the is

that, for all

and would

whom Terman

stay that still

scientist.

cused young

time, in this

when Terman

to

the rest of their

had

lives.

sees as a high-energy young hustler with enin the intervening

months much more

whom Terman remembers as a fo-

Conversely, Packard,

scientist,

sat

two names that came

of his understanding of the two men,

way for

become

trepreneurial tendencies, has

of a research

first

behind the curve: in the intervening year, their roles

largely reversed,

Hewlett,

team" of graduates. For the

almost the equal of Dave Packard, so that

mind. The second feature

Terman

"first

51

has in the interim

at

GE

discovered an aptitude for

management. This

is

an important

both men's

shift in

lives.

During

—public —while Hewlett was always the

HP, Packard would always be seen as the "outside" guy mat, and industry statesman

many years

their

at

figure, diplo-

"inside" guy, the

who made sure HP always stayed on the And yet anyone who worked with Bill and Dave for any length of time understood that the two men could easily switch roles whenever they needed to and on many occasions did. This was only possible and it was a key factor in the success of Hewlett-Packard Co. because both men had known both incarnations, the businessman and the scientist, early in their hardcore technologist and innovator cutting edge.

—

—

—

careers.

But in early 1936, Dave Packard's apprenticeship wasn't looking very promising. upstairs didn't even It

know he

The

as a business

existed.

only got worse. That summer, with the Depression

nounced

that

it

was cutting back work hours

some of his roommates, work at 3 p.m. With into the

that

meant even

to save

less

pay

activity

he loved: sports.

still

raging,

GE

an-

money. For Packard and

—but

his engineering career temporarily frustrated,

one other

manager

factory-floor guys loved him, but the guys

He took up

at least

they got off

Dave threw himself

basketball again, and,

not surprisingly given his background, soon joined a local professional team.

Composed mostly of working men,

the team practiced in the evenings, and on weekends toured the small towns of upper New York and southern New

England playing against

local teams.

dollars a week, not a princely

depressed times.

We

sum, but

played our

team

ball to start the

lost

and

still

"We made

only a few

very useful in those economically

game of the season in New York City at don't remember much about the game ex-

last

the Thirty-fourth Street Armory. cept that our

Packard recalled,

I

that Kate Smith, a popular singer, tossed out the

game." 43

Even though he was never a

man

for irony, even

Dave Packard must have

DAVE

BILL &

52

noticed that, having abandoned a potential career in professional sports to

pursue his dream of being an engineer, he was

from engineering and back toward

now being

slowly driven away

a career in professional sports.

That autumn the situation had only marginally improved

at

GE, so

Packard and his roommates decided to spend their weekends hunting and

New

hiking in Vermont and state to

ing. It

When

Hampshire.

was the era of long hickory

natural.

And when

and

skis

the brave of heart. Despite his huge

size,

shape from basketball, that his

woods

skis

—he was

much

he knew what

envious.

and took

to

it

ski-

for

like a

three occasions he skidded

and

so strong,

in such

good

his legs did.

He was an ambi-

and who couldn't

his potential,

longer on the sidelines.

Hewlett was up

Bill

Now both

out his resume

it

this idyll forever.

and impatient young man who knew

bear to wait

If

— on

snapped before

But Dave Packard couldn't put up with

and thus only

rigid bindings,

Packard loved

disaster finally did strike

off a path into the surrounding

tious

winter came they drove up-

North Creek and took up the increasingly popular new sport of

a Stanford

— and gotten

and an

to,

Packard might not have been so

MIT

graduate, he had confidently sent

one job

exactly

offer: at

Jensen Speaker Co. in

Chicago, a job he probably could've landed just as easily two years before. So, in desperation,

about

Bill

he wrote to Fred Terman.

Hewlett,

it

had evaporated

not only quickly found

Bill a job,

If

Terman had any

months

after the letter six

but one that

hesitation before

moved him back

before.

He

to the lab at

Stanford.

The contract was with a

new

San Francisco doctor

a

who had

electroencephalograph. As Terman planned,

it

a novel design for

was an almost perfect

job for Hewlett, combining multiple elements from his

life:

Stanford, electronics, and medicine. Better yet, the project

would grow to con-

sume two

years. Yet there

ing out of the contract. cynical conclusion

is

student back to the

is

no surviving record of any

It is

that

lab.

almost as

it

was

all

He wrote

if

San Francisco,

finished product

Terman planned

it

that way; a

com-

more

a setup to get an unexpectedly brilliant

to

Barney

Oliver, then

on

a fellowship in

Germany, "Hewlett has been developing communications techniques

for

medical research during the past year and has spent most of his time in our laboratory although the work If

he did

set

is

being done for a doctor in San Francisco." 44

up Hewlett, Terman had

a very

good reason.

Just

two years

before, Bell Telephone Laboratories, the most important fount of innovation in basic electronics for

much

of the twentieth century, announced some ma-

jor breakthroughs in the design of "feedback circuits," devices that fed a small

— Apprentices

53

them

fraction of their output back to the input to enable

Terman was intrigued

ing conditions.

more

to

a

into the subject.

By 1937, he had made himself lishing a paper in the sign."

—here was way make instruments —and immediately embarked

and even adaptive

accurate, responsive,

on research

respond to chang-

to

He had

also

new

a leading researcher in the field, even

Electronics

magazine on "Feedback Amplifier De-

begun assembling around him

could explore with him the implications of this

Terman had stayed

tion of this plan,

team of students who

a

new

theory.

Oliver,

letters

and

Ed

if

an expecta-

in close contact with the best of his old

(who would be one of Silicon Valley's most important, and pioneers) was there as well.

Barney

As

had come home. His wall-climbing partner Ed Ginzton

students. Hewlett

one day be

pub-

And Terman made

Porter, the older graduate

HP senior executives

least

remembered,

certain that other grads

Noel Eldred,

—were constantly kept

all

men who would

in the

loop as well via

visits.

Fred Terman's genius was that he combined almost obsessive preparation

and attention

knew

exactly

his plans if

to detail with a

wide-open opportunism. He operated

where he was going,

yet

was willing

to

something better came along. This was something

dents learned from

him

—and

it

as if

he

throw out every one of his best stu-

proved to be the perfect strategy for the

fast-

changing world of high tech.*

Only one person was missing from Terman's team: Dave Packard. And, it

happened, Terman had a confederate in bringing him

Lucile Salter.

tion to drive

Dave was so anxious all

the

way

to see her that in

across the country.

home

August he used

He was

as

to Stanford: his vaca-

so broke that he took

along a sleeping bag and slept on the side of the highway.

The get

visit

only convinced Packard more that he needed to escape

GE and

back to Stanford. His feelings for Lu had only grown stronger, and they

had begun

to talk about marriage.

tronics research in the country

landmark

day,

he and

Bill

Terman was doing the most

—and hinting he'd

Hewlett held their

like

exciting elec-

Dave back. And, on a

first "official"

business meeting.

Recalled Packard:

The minutes of the meeting, dated August organization plans and tentative venture." ceivers

The product

ideas

we

23, 1937, are

work program

for a

headed "tentative

proposed business

discussed included high-frequency re-

and medical equipment, and

it

was noted that "we should make

every attempt to keep up on [the newly announced technology of] television."

Our proposed name

Company. 45

for the

new company: The Engineering Service

BILL &

54 If

the high-sounding

without a

DAVE

clue, playacting at real business,

and

hilariously sober

prosaic,

what

What

their search for a product.

and

if

the

also stands out

ness before they

This

knew what

They had learned

university classroom

and

and Packard from almost

them over

is

the next seventy

that they started their busi-

they were going to do.

a critical difference. Bill

is

partners.

many years yet to come)

the ecumenical nature of

is

separates Hewlett

every high-tech entrepreneurial team that follows years (and probably for

much of young men name of the company is

of the minutes smacks too

title

a

and Dave were

friends before they were

to trust each other in situations as different as a

Rocky Mountain

trail hike.

They knew how each

other thought, and realized they were in fundamental agreement on values, interests,

and ambitions

man was

as

fought

is

good

—

to the point that, in later years, dealing with either

as dealing

not quite true,

it

with both. accurate

is

And though enough

to

the

myth

that they never

be astonishing

— and

that

too wasn't the product of identical personalities (which they most certainly weren't) but It is

common

goals

and

a

interesting to note that this process of friendship before partnership

and business before products,

rare as

successful companies: think Jobs

Microsoft, and Noyce and ships, largely

and Wozniak

Moore

at

extremely

Apple, Gates and Allen

make

that Hewlett

jobs for themselves. As Packard wrote

make one

making money. Our idea was

for yourself."

if

Those entrepreneurs

aimed much higher

—

Bill

but were just strug-

later,

"We

weren't inter-

you couldn't find

didn't have that

a job,

that followed, in better

in large part because of the sheer success

his or her shoulder at the

and Dave

last fea-

and Packard,

of the Hewlett-Packard Company. Every high-tech entrepreneur after

Dave looked over

at

But even these famous partner-

at Intel.

and Dave partnership. Which was

ested in the idea of

times, always

among

not so unusual

in the Great Depression, weren't trying to get rich,

gling to

you'd

it is, is

because of Hewlett and Packard themselves, lacked one

ture of the Bill

mired

deep mutual understanding.

Bill

and

two founding fathers.*

example

to follow. All they

had were the

comparatively humble role models of Federal Telegraph and Charlie Litton.

And if that tended to

HP

to emulate?

—

it

lower their expectations

also liberated

—

that

is,

what

if

HP had had an

them. At the beginning there were no ven-

ture capitalists second-guessing their every decision, pushing

some

future liquidation event;

and trying

to

scoop their

no trade magazines analyzing

move

new product announcements; and no headhunters

raiding their shop for the best talent. Instead,

they were embarking into the unknown, ship.

them toward

their every

it

was just

at least

Bill

and Dave

—and

they were piloting their

if

own

Apprentices

55

Unexpected Genius There was one

last surprise

before the birth of Hewlett-Packard.

Fred Terman, fresh from the strong response to his Electronics magazine decided to write the most comprehensive article to date on feedback

article,

amplifiers nal).

and

oscillators (that

To create the

additional

work by several of his

finished in

May

1938, he decided to put not only his

C. Cahill,

F.

Hewlett was

who had

and William

contributed most to the content:

R. Hewlett.

The student who had

ecstatic.

when the article was own name on the byline,

students. Being Terman,

but also the three grad students R. R. Buss,

devices used to generate a controlled sig-

is,

he combined some of his recent writings with some

article,

dropped by

just

to take a

few

courses four years before was sharing authorship of a major research paper

with one of the giants of the

field. It

might even be a

engineer himself.

He

real research

quickly sat

down and wrote

boundless excitement of youth. In

was beginning

to

a letter to Packard that it,

is

Bill that

he

a classic for the

Hewlett manages to stuff three wildly

more properly should have been

different topics that

dawn upon

the subject of their

own

notes. 46 First,

he congratulates Packard on his impending nuptials (Dave had pro-

posed to Lu a few weeks before, and the news had made Stanford campus to

on

patient to get bride's

Bill) in a

manner

important

to the

that

stuff.

manages

He

to

way

its

across the

be both polite and im-

even manages to misspell the

name:

In the

first

place,

my

heartiest congratulations to

Everybody knows that

it is

went

excited.

east,

and was she

an

idea[l]

match.

saw

I

both you and

Lucille.

Lucille just before she

She was showing her presents and parad-

ing around in the dress she was to be married in

—happy

as a

clam

at

high

tide.

Done with The

the cordialities, Bill

first

thing

is

that

of the collaborators.

some of will

have got

I

.

now gets down to

.

.

his

"good news":

my name on a paper with Terman as one

Terman

actually did

all

the writing,

we

just did

the experimental and theoretical work. Nevertheless, the paper

have our names on

it.

Hewlett then embarks on several paragraphs of description of a design for "a

new type of oscillator" that has no inductances. It is a pretty arcane discusmay be seen that the resonant frequency is proportional to R and

sion ("It

DAVE

BILL &

56

1/C, whereas in the conventional oscillator the frequency (the square root of) 1/C ..."), but

should be able to

Then,

after

Pacific coast

sell

them

it

at quite a

announcing that he

"We

concludes with a telling phrase:

low

will

proportional to

is

figure."

be giving a paper on the subject

at the

convention of the Institute of Radio Engineers, Hewlett again

switches topics to say that he has enclosed a diagram for a six-watt amplifier,

who had

noting that an old classmate of theirs, John Kaar,

them

Palo Alto, has offered to build

now drumming up trade for this one together and see how you like it."

more. "Porter ley]

.

Put

at a unit cost

— and now

There here.

seems that there

sistant in the lab.

on top of that

will

you'll

salary plus whatever in,

If

you

In

all

and

is

five

or

changes direction one

last

the possibility of a job out

for nine

months

as-

at half time,

probably have to register for a few units and that will It

however would be a guarantee of some

you could make on the

You would have

side.

would work down here with you.

I

of

be a job open here next year as a research

The pay is very small, $500

reduce the net to about $400.

work

lots

drops a bombshell:

one more important thing and that

is

It

Bill

a factory in

in [California's Central Val-

is

Finally, after several pages, Hewlett's letter

time

up

set

of $24 in

It

might be

are interested in the slightest get in touch with

events, get in touch with

him by

a lab to

just the thing.

Terman

at

once

airmail.

Illumination Terman had

finally

found the money. Dave Packard was coming home to

Stanford.

Terman was

ecstatic.

He wrote

to Charlie Litton,

"Dave Packard has

ac-

cepted the assistantship in connection with the ultra-high-frequency tube investigation is

and

will

the best qualified

be with us beginning some time in September.

man

that

one could conceivably hope

I

think he

to find, so

I

am

highly pleased." 47

Meanwhile, while he waited for Packard,

and continued

his

experiment with

almost always empty except for

Bill

they struggled to solve the most

oscillators.

Bill It

Hewlett went into the lab

was summer, so the

lab

was

and graduate student Bob Sink. Together

intractable challenge to building oscillators:

maintaining consistently accurate signals over a wide range of amplitude tings.

The underlying problem was

nal to

produce "linearity"

set-

getting the resistance to vary with the sig-

in the output.

No one had yet come up with an

easy

Apprentices

way to do

it,

57

so the resulting instruments tended to be either cheap

and moderately

curate, or expensive

came up with

a solution so simple

man, and so profound in ceived as a

its

work of genius

And on

and elegant

was take a

All Bill did

could have thought of

Ed Porter

it.

it

day remains one of the most clever

And it

can

still

fifteen-watt light bulb, in

sounds simple, but

It

astonished Fred Ter-

it

was

in the electronics world. Seventy years later,

practical invention in technology history.

into the oscillator.

that

July 27, 1938,

bridging of theory and application that

Hewlett accomplished that July

immersion

a deep

re-

what

bits

of

bring a smile.

and solder

socket,

its

moment

at that

That's because only he

— combined both

inac-

accurate.

Hewlett and Sink were intent on finding an answer. Bill

and

only

Bill

—not Terman, not

it

Hewlett

Litton, not

and years of

in feedback theory

experience building amateur radios and electronic instruments.

What dawned on Hewlett was would vary

its

light bulb,

an arrow that paced

its

America.

It

after

all,

wasn't a light

as heat

and

light? In

of the electronics world studied Hewlett's

flabbergasted and delighted.

It

was the very

—and young

Bill

Hewlett

with something found in a drawer in every kitchen in

it

seemed

rest

most arcane feedback theory

the

had accomplished

And,

burned off extra power

Hewlett had found a way to hit a moving target with

more they were

embodiment of

itself.

a resistor in the circuit that

every shift in speed.

The more Terman and the solution the

needed

resistance with the oscillator

bulb's filament just a resistor that

emplacing the

that he

to

open the curtains

to a

new world of

low-cost, high-

performance electronic instruments for the everyday engineer, and hinted in turn at something even bigger: consumer electronic products, a notion that

had seemed

until then

far in the future.

Even Bob Sink, who was

sitting at the lab table

could scarcely believe his eyes.

He dashed

next to Hewlett that day,

off a quick,

and somewhat dazed,

note to Terman:

Bill

Hewlett and

I

are the only ones

working in the lab now.

eliminated the bugs from his oscillator. As you know, the cheif culty

was

in the amplitude control.

He

finally hit

upon

Bill finally [sic] diffi-

the scheme of us-

ing a fifteen cent light bulb in the negative feedback portion of his circuit.

The

result

was unbeliveably

[sic]

remarkable. His total distortion

is

better

than one fourth of one percent! 48

From of the

moment on, Bill Hewlett would be known as the technologist partnership. And Fred Terman would list him among the greatest enthat

gineers he

son

had ever known,

after his death,

"Mother

far greater

said that

even than himself. Wrote Terman's

Dad had

always

felt

that as a techni-

BILL &

58 cal

DAVE

innovator and inventor, he simply was not in the same class as the best

he knew like."

—Ed Ginzton,

Bill

Hewlett, Dave Packard, Russell Varian, and the

49

Bill

Hewlett had become one of Terman's "seven-foot jumpers."

Homecoming Fred Terman presented his feedback paper

two

at

Institute of

conventions that summer, and in November submitted scientific journal for publication.

proval process took a

number of months. During

went what economists have described last until

the run-up to

World War

as a

journal

its

particular

under-

to this

downturn, and the

number of pages in back on both the number and

budget, decided to cut back on the

—which

in turn

meant cutting

—was one of work on

—and

Bill

Hewlett's section in

the targets of the cuts.

Terman fought back with every Hewlett's

late 1930s,

"second Depression" that would

length of the research articles. Terman's paper

bit

of influence he had, arguing that

was

the "Oscillator with Resistance-Capacitance Timing"

of major importance.

He

prevailed,

and

in

November

1939, Hewlett had his

published paper.

first

An

astute entrepreneur,

might have spotted Bill

the intervening period, the

II.

The engineering profession was not immune IRE, to reduce its

to the organization's

it

As usual with such publications, the ap-

economy, which had been recovering slowly during the

U.S.

Radio Engineers

and Dave

to

had he or she read

a very competitive

that section of Terman's paper,

product-in-the-making

—and beaten

market by months. Not only did Hewlett's schematics show

the brilliant light bulb resistor, but also the use of "ganged" tuning condensers (like

those found in ordinary radio receivers), which together presented the

—

a

—

new instrument for generating frequency sound bargain price that any small company could afford. the world was Luckily for the two young men, nobody did notice

prospect of a powerful

—

distracted with a Depression that refused to die,

and

a

at

too

growing world war

in

Manchuria, Poland, and Ethiopia.

By the time the paper did appear, Dave Packard was home hadn't been an easy

trip.

In the spring of 1938,

Lu accepted

in Palo Alto. It

his proposal of

marriage. In August, she resigned her job as secretary to the registrar at Stanford and took the four-day train trip back to Schenectady. She took the trip east because

Dave considered

his position at

carious that he didn't dare take

GE, given the economy, so pre-

more than one day

off

work

to get married.

Apprentices

He and Lu were married on end with

it

long

Terman' s godsend offer of a part-time job

would have

less

at the

Stanford Radio Lab.

than half what Packard was making

pay for two, but Dave wanted to go

to

the week-

Schenectady about the same time as Lu did, and

letter arrived in

The $500 stipend was it

honeymoon over Monday morning.

a Friday, spent their

and Dave was back on the job

in Montreal, Bill's

59

mattered. Proving that he had

made

at

GE, and now

home and do work

the right choice in a mate,

that

Lu agreed

wholeheartedly with Dave's decision. Prudently, especially didn't simply resign

when

there few jobs to be found anywhere, Packard

from GE, but instead (on Terman's advice) convinced

his

bosses to give

him

his returning,

he was able to not only leave with their blessings, but also retain

a

backup

hoped

it

some of

a one-year leave of absence.

in case Palo Alto didn't turn

would

be.

rumble

seat

—and headed

represented his

commitment not

beyond

As he proudly

lay

that.

out to be the triumphant return he

He and Lu packed up

Dave's most important tools

press in the

By leaving open the chance of

the car, not only with clothes, but

—including

a Sears

and Roebuck

drill

mind that drill press new job, but to what

west. In Packard's

to Stanford

and

recalled, "It

would be HP's

his

first

piece of

equipment."*

The

Dave was

scientist

to

work with was an

eccentric forty-one-year-old

alum from William Hansen's physics department named also

sell

happened

to be

Russell Varian. Rus-

an authentic genius, one of the few in Silicon Valley

who actually deserved the title. The project itself, to build a unique new kind of vacuum tube, would prove one of the most important of the history

twentieth century. And,

still

working

Terman arranged

his network,

for the

It may new job

project to be located not at Stanford, but at Charlie Litton's laboratory.

not have paid much, but thanks to his old professor, Dave Packard's

was the most promising

in the electronics world.

For someone as supremely sane as David Packard, working for Russ Varian

must have been an unforgettably

exciting,

Like Packard, Varian was something of a legend for

and

frustrating, experience.

on the Stanford campus

—but

an entirely different reason. Russ Varian was born in 1898 in the tiny central California town of Hal-

cyon, where his parents ran the general store and post office. brothers, Sigurd, Russell

was three years younger, and was

was huge and

One

memorize everything he learned

disabilities),

—which meant

of his two

handsome and quick

slow. Like Hewlett, Russell likely suffered

(and probably a host of other learning to

as

as

from dyslexia

but so severe that he

had

that he didn't finish high

school until he was twenty-one, at the same time as his brother.

As a teenager, ral

it

was Sigurd who was the

aptitude for flying,

star

and an absolute lack of

of the family.

fear.

He had

a natu-

Because military airplanes

60

BILL &

were dumped on the market

DAVE

after the Armistice,

Sigurd and Russell were able

to secure (almost for nothing) and assemble surplus in their cases.

The miracle of

these years

was

"We smashed our

ber of horrible crashes.

World War I biplanes

that both boys survived a

planes

still

num-

over the state of Califor-

all

nia," Sig recalled later. 50

Not

surprisingly, Sigurd

went on

to a dashing career: flying

World Airways' new Mexico -to -Central America

He

route.

Pan American

also

married the

daughter of a British consul in Mexico.

Meanwhile, giant lumbering Russ Varian applied

ment of everyone,

and

to,

amaze-

to the

got himself accepted to Stanford in 1919. Because the

family was so poor, Russ decided to help by packing his backpack and hiking the 225 miles to Palo Alto.

had made

it

—and

Upon

that the entire trip

Stanford, he learned the locations of

campus and was known

all

had

cost

of the

him

home

to

tell

his folks

just ten cents.

While

and nut-bearing

fruit-

trees

went

work

to

for

an

oil

at

on

company. Then, for four

he worked in San Francisco helping Philo Farnsworth perfect the

home

sion tube. Finally, in 1935, he went

to Halcyon.

The impetus

for the project

televi-

There he was joined by

both Sig and their baby brother, and the three Varian boys built their vate laboratory.

he

to forage for his meals.

After graduation, Russ years,

he wrote

his arrival,

came from

Sigurd.

own pri-

Having spent

years flying over (and sometimes crashing into) dangerous jungles, he had be-

come something of an haunted by the news,

man

expert on aircraft instrumentation. Moreover he was

just

then emerging from the Spanish

civil

war, of Ger-

fighter planes strafing defenseless civilians in cities like Guernica.

Wasn't there a way, Sig asked his big brother, to build an instrument that could spot these planes long before they arrived, so that people could either

back or hide? Maybe, said

fight

"rhumbatron" but a

—because current moves very middle — and might be what the

lot in the

know just

Russell. There's this little at

just

it

the guy to

tell

us about

(officially

the top

and bottom,

you're looking

Bill

Hansen,

who was

for.

And

I

the inventor of the

an "electromagnetic resonator") and

guished professor of physics in their old school

down

device called a

it.

Russ contacted his old classmate,

rhumbatron

new

to Halcyon, not least because

lab.

now

a distin-

Hansen agreed

to

come

he was a budding pilot and wanted some

pointers from the great daredevil pilot.

As the three

men

talked, they slowly

sweep the sky with an

beam

as

it

invisible

would take

rent

vacuum tube out

a device that

would

beam, and then recapture and project

echoed off any object out

this

began to define

there.

that

Russ and Hansen also agreed that

a very intense high-frequency

there that could handle

wave

it.

—and

there was

no cur-

Apprentices Okay, suggested Sigurd, then

Russ would

let's

61

go up to Stanford and build our own.

he was "rather dubious" about the

later say that

along anyway. Hansen took the brothers

partment, Dr. Daniel Webster,

who

first

to the

but went

idea,

head of the physics de-

also turned out to

be a budding

pilot.

was so impressed by the idea (and perhaps by Sigurd) that he took Wilbur

university president, Dr.

and

research assistants rian brothers

would have

The two men the

campus

give to

agreed,

—who

them $100 work

and

in turn agreed to

make

for the project. But,

He

to the

it

the brothers

he added, the Va-

for free.

Russell

went back

to his old habit of foraging

fruit trees for food.

The work quickly divided up

match the

to

skills

of the three men. Sigurd,

of course, was to build the device once the other two figured

it

out. Russell,

meanwhile, with his incredibly powerful but inconsistent brain, was to

employ what he

called his "substitute for thinking" 51 to

make breathtaking

in-

ductive leaps in developing the design, while Hansen, the professor, systematically filled in first

the resulting gaps with careful mathematics.

was high

tech's

great design team.

As word got out that lab

It

was regularly

visited

them grad student

Bill

fall

about what the three

men were up

the physics

to,

by both physics and engineering students

Hewlett

—almost

all

coming

to see the

—among

amazing Russ

Varian at work.

The design was Hansen turned the

finished at the beginning of

Now

project over to Sigurd.

March

1936,

and Russ and

even more students came to

The

sight of

—and

invent-

the lab, many, like Hewlett, offering to help out where they could. Sig Varian, a figure out of a

ing as he went

Hollywood movie, slowly building

—the most sophisticated

electronic device

image that stayed with Hewlett the

rest

need to regularly test (against other

HP execs)

est

on the

planet,

was an

may have helped fuel his his own skill at building the lat-

of his

life. It

HP product. Even Fred Terman came by to watch, commenting

brother,

who was

and mechanical

rather clumsy with apparatus, Sigurd

and

sense,

great skill with his hands." 52

By now, the Varian brothers were the Stanford groaned vice because he

when

talk of the entire university. All of

Russell told Sigurd to

throw out the half-finished de-

and Hansen had come up with

two rhumbatrons

in a

that, "unlike his

had unusual design

a better design, this

vacuum. So infectious was the project

one using

that even Dr.

Webster, the department head, showed up to suggest that the rhumbatrons

should be shaped

like

bution that got his

doughnuts

—

toruses

—

—

for greater efficiency

a contri-

name on the patent and a lot of very large royalty checks in

the years to come.*

DAVE

BILL &

62

And

that wasn't Webster's only contribution. So

on campus

rian brothers' project

for the device. Frankel suggest "klystron," a

"splash in waves."

Thus the name: klystron

By mid-August, Sigurd had the sufficient

came running out of the Hansen, and anybody

Russell,

them

in to see the klystron

saw it

as well

—

as did,

he was in town to

The

fill

Though

its

detector screen.

the least

Lu and hold the

first

would be

And

of the three,

technology that

dream of building

Bill.

cir-

no

it is

won

less

its

important

invention was

the Second

World

a device to protect citizens

from

realized in just three short years during the

Lon-

for the Allies. Sigurd's

Blitz.

was the week

and the integrated

most immediate application following

as the heart of radar, arguably the

airplane attack

as this

business meeting with

influential inventions of the electronic age.

known and understood Its

Au-

he could find and dragged

klystron tube, along with the digital computer

than the others.

On

lab shouting, "It oscillates!"

else

by fortunate chance, Dave Packard,

visit

to

the screen with a matrix of flashes. Bill Hewlett

one of the three most

cuit, is

Greek verb meaning

prototype klystron emitting

six-foot-tall

microwaves to create some flashing on

and grabbed

don

walk over to the

to

tube.

gust 19, 1937, Sigurd

War

was able

department and ask Professor Herman Frankel to come up with a

classics

name

that Webster

well-known was the Va-

radar, of course,

would go on

become

to

structural feature in the rise of international private

the crucial infra-

and commercial

airline

service.

Modified as microwave transmitters, klystrons, big and small, sophisti-

homes

cated and crude,

would

home microwave

ovens, setting off mini-revolutions in everything from

munications to family

But

in everything

cellular

most important contribution

Bill

much

as

two

miles.

Atomic

after

particles

a metallic target, spinning off

Hansen would and exhaustion,

subatomic particles

at the

sweep of

struggling to

make

to

grand

down

this

and smash

into

fired

point of impact.

die at his desk in 1949, at age thirty-nine,

still

from lung

failure

his vision of this "linear accelerator"

took another seventeen years, but in 1966 Stanford University unveiled

the mile-long Stanford Linear Accelerator.

most important

coincidentally,

But vice.

com-

another along a tube

would be

tube, accelerated by each klystron in turn to near-light speeds,

the

to the

Hansen was already thinking ahead

machines that would place one powerful klystron

real. It

telephony to

prove to be in high-energy physics. Even as Russ and Sig were

completing the prototype,

stretching as

from

life.

in the end, the klystron's

may

history

find

first,

tools in

It

has proven not only to be one of

our understanding of the subatomic world, but,

was the birthplace of the personal computer.

the klystron had to

move from prototype

The Varian brothers had assumed

that the

first,

to actual, buildable de-

and most

enthusiastic,

Apprentices customer for the klystron would be the

Navy was met with

U.S.

Luckily, the

63

military.

But an

initial

approach to the

indifference.

commercial world proved more astute to the potential of the

device. Representatives of Sperry

the klystron, quickly

hopped

Gyroscope

in

New York, upon

learning of

By the time they

a train to take a look.

left

Palo

Alto with a contract, the Varian brothers had paying jobs, Stanford had a roy-

agreement (ultimately making millions off what had been essentially the

alty

slave labor of the Varians),

to

work on

money to

hire talented

stron's technology.

to bring

and Professors Hansen and Webster had contracts

the klystron in their spare time.

It

young engineers

was

also

had some spending

to assist Russell in advancing the kly-

money, handled by Fred Terman, that was used

this

Dave Packard back

The team

to Stanford.

Thus, the invention of the klystron proved to be a watershed moment, not only in the history of warfare, and in the story of the electronics revolution,

but also

at

Stanford University. The easygoing college for the sons and daugh-

(and very few of the

ters

latter, as

Leland Stanford's original decree of a four-

to-one male/female student ratio was

in effect)

still

had been transformed

over the previous decade into a serious and important academic institution.

Now, thanks would

to Fred Terman's

Radio Lab and the klystron project, Stanford

forever after be a world center for engineering

and business

—and

ulti-

mately, for entrepreneurship.

For Hewlett and Packard, the klystron project would prove equally impor-

men had now

tant.

Both

new

electronic product: the

seen,

up

close,

understanding, and manufacturing

work beside

what

skill.

Gyro

contract,

took to invent an important

In Russ Varian, Bill

a great scientist-engineer at the

to the Sperry

it

combination of technological prowess, market

Dave had been

had been able

to

peak of

his abilities.

And, thanks

able to

come home

to Palo Alto

and, as he would soon discover, get a job as an assistant to the Varians, working out of the lab at Charlie Litton's shop in daily

life at

—

in other words,

an apprenticeship

what was then one of the world's most successful

electronics

start-up companies.

In

Great

Company

There are no surviving photographs, so we can only guess what see these

two

brilliant giants,

it

was

like to

one young and handsome, the other middle-

aged and heavy- featured, both destined to become the wealthiest of tycoons,

working side by eyes

side

on

giant klystrons, as

—shockingly primitive laboratory

in

tall

as they were, in the

Redwood

City.

—

to

our

— 64

DAVE

BILL &

how

Packard's assignment was to help Russ figure out

vacuum tube

higher frequencies out of the klystron's

were based

at Litton

tube makers

work on

alive.

tweak ever

to

—which was why they

Engineering, as Charlie Litton remained one of the best

Though

was comparatively

his time there

brief, Packard's

would need before

the klystron project provided the last lessons he

the birth of Hewlett-Packard. First, there was the opportunity, as Hewlett had

enjoyed a few months before, of working with a true engineering genius

with

of the good and bad that entailed. Varian, with his clumsiness, his un-

all

work

systematic

habits,

have been a nightmare learned to

what

it

work

own

and

must

his willingness to risk wild creative leaps,

at first for the graceful, systematic Packard.

and even admire, Russ Varian

with,

takes to handle

sented their

and

—and

But he

in the process

saw

cultivate creativity. Russ's learning disabilities pre-

challenges

—

which must have made being

basically,

he kept everything in his head

his assistant particularly difficult,

good humor

—and compared

seems to have dealt with

it

dyslexic like Bill Hewlett

must have seemed

in

but Packard

to Varian, a

mere

a snap.

Russ Varian wasn't the only person there to teach Dave Packard that engineering

life

was much more complicated than engineering theory. Charlie

Lit-

ton himself was the prototype of software code writers three generations hence: he typically ate breakfast in the late afternoon, didn't fice until

evening, and then sometimes

Litton's

enabled

with

new

odd schedule

him

Bill

actually

to take the classes required

and study

in the afternoon,

bride before heading up to

Packard recalled, "I'm not sure

and

still

worked

worked

have had time for a

until

dawn.

by

his contract in the

City.

life."

time with his

Litton's

all this

it

morning, work

at least a little

Without

could have juggled

I

home

at the of-

to Packard's advantage, because

and spend

Redwood

show up

work hours,

work and study

53

Charlie Litton had another lesson for Dave Packard: humility. In almost

every situation in which he had ever found himself, from high school on,

Dave had been the best Oliver, but

in the

room. He may not have been

he was a better student.

He may

as

smart

as

Barney

not have been the best player on

the Stanford football team, but he was likely the best all-around combination

of player and student.

But with Charlie Litton, Packard ran into a character bined humility with the

ability "to

do everything

who somehow com-

better than

anyone

else."

54

Litton was the classic self-made, independent entrepreneur. That autumn,

when

swelling orders convinced

him

that the

Litton didn't hire a contractor, but simply

and did the foundation excavation turns on the machine

—

the roads for his ranch.

a skill

company needed

a

showed up one day with

himself.

He

Dave proudly put

even

let

new

plant,

a bulldozer

Packard take some

to use years later in cutting

Apprentices

What

65

how

Charlie Litton offered Dave Packard was a glimpse of

to find

happiness in success. Litton by then was a very rich man, as well as unequaled in his field. Yet

putting

work

on

he found his joy in living a comparatively simple

that he loved best.

own schedule, and never getting far from the craft He was largely indifferent both to the trappings of

found sometimes tromping around the

—

made four-wheel-drive truck the first of its of "how things are done." In other words, Charlie They would be

Dave Packard

home-

Sierras in a

and the

kind in the West)

that he didn't have to always be

One

without

airs, setting his

success (he could be

Litton taught

rules

Dave Packard

—and Dave loved him

for

it.

close friends for the rest of Litton's life.*

of the benefits (though

working

life,

it

may

not have seemed so

about science and technology, and most of

all,

of

at the time)

Labs was that Charlie never got tired of talking: about

at Litton

life,

about business. Packard was

al-

company to come, using his required units to law and management accounting, but Litton gave him real-life

ready, in preparation for the

take business

management

—and,

man. "As eccentric pay your

was

to Dave's surprise, Charlie

as

a conservative business-

he was, he knew you had to support your company and

bills."

some seminars at his quantum mechanics and business planning. Invitees included Packard, some Stanford graduate students and an engineer from Dalmo Victor, a radar antenna manufacturing company, whose In a rare effort at structure, Litton even organized

office

on

subjects as far-ranging as

—

extraordinary career had already included time as a fighter pilot in the Russian civil war, a heroic escape

from the Red Army, and seven years trapped

in

Shanghai trying to get passage to America. His name was Alexander Poniatoff,

and he would soon take

his initials,

add an "-ex"

new company (located just blocks from Litton company of both audio and video recording.

for excellence,

Charlie Litton was also a patriot, and that too

and name

his

Ampex,

the pioneering

would have

a lifelong effect

Labs)

upon Packard.

One of Litton's inventions was an featuring low-vapor-pressure

Until then,

oil.

new all-metal vacuum pump standard vacuum pumps, like

innovative

—and they ran

those used by Packard at GE, used mercury vapor

they had to be cooled by liquid oxygen. Needless to credibly expensive to

own and operate.

a better solution

commercial brand of motor

oil

and

distilling

made them

in-

example of how

his

say, this

Litton, in a classic

mind worked, came up with

by simply buying it

down

so hot that

a particular

to a highly purified,

low-vapor-pressure extract. In 1939, a group of scientists paid Charlie Litton a top-secret

visit.

He was

not supposed to talk about the meeting, but being Charlie Litton, he told

Packard

all

about

it

(probably over a beer in a Palo Alto saloon).

It

seems that

DAVE

BILL &

66

the scientists were part of the Manhattan Project to build the

bomb. Like most applied and

Litton, his tubes,

ered that

it

would need

America, they knew

scientists in

vacuum pump. So when

his

atomic

about Charlie

all

the fission project discov-

huge volume of low- vapor-pressure

a

the only person they could think of to produce

first

oil,

Litton was

it.

Charlie didn't hesitate for an instant in taking

on the

both an interesting technical challenge and a service to

job. It was, after

all,

And

his

his country.

solution was, once again, classic Charlie Litton: he went and bought a huge

redwood water tank

(in

abundance

spent a few weeks assembling it

from the public

oil.

eye,

The Manhattan It

was

it,

it

with his

distilling

then ordered railroad cars

Project got

brilliant seat-of-the-pants

filled

equipment

fiercely

to keep

with the right motor

crucial low-vapor-pressure

its

environment of

in this

in the agricultural Santa Clara Valley),

filled

oil.

independent entrepreneurship and

engineering that

Hewlett and Dave Packard

Bill

set

out to build their company.

They already had arrived

from

their corporate headquarters: even before

New York,

Bill

had scouted out

available

homes surrounding downtown

the blocks of

Dave and Lu

rooms and houses

Palo Alto.

He found

in

a perfect

candidate on Addison Avenue, about six blocks from the "main street" of University Avenue: a thirty-year-old, two-story foursquare

the front

and

a small storage shed

Lu rented the lower floor. Bill

and

moved

floor

into the

and had no

a chair,

and one-car garage

from the

elderly

shack

little

Bill

a

enough

for a cot

the garage, which was to be the drill

at

on the second

lived

just big

porch

Dave and

in the back.

woman who

—which was

electricity. In

pany headquarters, Dave unloaded the

and

house with

com-

press from the car trunk, and he

put up shelving and workbenches.

At some point the two

company was

men concluded

just too insipid

(as "-onics," "-el,"

and

forgettable.

and "com" would be

come), they decided to name

after

it

that the original

name

for their

As was the custom of the time

for tech

companies

themselves

in the decades to

—

just as Charlie Litton

had

done. To determine the order of the names, they flipped a coin. Needless to say,

Hewlett

won

the coin toss, and Hewlett-Packard

would remain even

name

after the trend

became

Company it became, as

that of putting "Corp."

it

on the

of publicly traded firms.

But the

real

point of the coin toss

shows that neither

not the

man was

occurred.

It

both

and Dave were willing

Bill

is

result,

but the very

willing to put his ego

fact that

first,

and

it

that

to accept the consequences of their agree-

ments, no matter which of them benefited more.*

The next

challenge, of course,

actually make.

What

is

was

curious here

and Packard had spent the

last

is

to figure out

what the company would

that, despite the fact that both Hewlett

eight years

immersed

in the

world of

elec-

Apprentices tronic instruments

GE,

time

at

their

minds

to Varian's klystron to take their

knew he

cause Packard

was

and equipment, from

—and so

new

and

67

work with

Bill's

Litton's tubes,

it

Or perhaps they thought

new

on

that everything important

had been invented

no space

might be that they were among the

first

radio,

was about

in in-

for a

left

new-

to recognize

upon

the

now

whole array of new

to explode with a

electronic products, especially television.

Though

would be

it

and Dave

nesses Bill

of young guys traditional

doing

was be-

this ultra- competitive field.

generation of electronic instruments, building

huge infrastructure of

consumer

it

it

wasn't an inventor, and Hewlett didn't believe he

neither thought they could play

comer. Or, charitably,

never seemed to cross

business in that direction. Perhaps

struments, the market was mature, and that there was

that the

oscillators to Dave's

who

nice to think they were that prescient, the initial busi-

tried to

pursue suggest that in

fact

they were just a couple

figured they could use their engineering prowess to dazzle

companies with compelling new solutions

—and make some money

so.

Unfortunately, after a lot of discussion, neither could

come up with

a win-

ning product idea. Instead, Hewlett and Packard did the next best thing: they used their lie

Litton,

some

own network of contacts and others

—and

prevailed

upon Fred Terman, Char-

for their business connections as well

—

to

drum up

contract work.

The larity,

result

and

was

a string of jobs notable only for their range, their singu-

their lack of connection to anything the

For example,

Bill

and Dave were hired by

signaling equipment. Lick Observatory,

company did

afterwards.

a local bowling alley to design lane

whose domes

still

shine over the

Santa Clara Valley from atop the region's highest mountain, contracted

Bill

among

the

and Dave

for the

synchronous motor drive for

its

telescope, then

largest in the world.

For future generations, the most amusing failed business foray was into the design of a

president Bill

and

Ed

Bill

self- flushing toilet.

Seventy years

Terry would joke, "Every time

later, retired

executive vice

stood at a urinal

I

thought of

Dave." 55

Porter,

who had moved

conditioning contracts, threw

to

Sacramento to work on some lucrative

some bucks

his old friends'

controllers for his systems. Charlie Litton letting

I

them borrow

his

foundry to

way in exchange

came through

cast the

aluminum

for Bill

air-

for

and Dave,

parts for the air-

conditioning controllers and use his engraving machine to engrave the names

of the customer hotels on the front panels.

Oddest of

all

was the work the two

men performed

for T.

I.

Moseley, the

founder of Dalmo Victor. Moseley was a combination of serious entrepreneur

and maniacal promoter

—the prototype

for

many

Silicon Valley tycoons to

BILL &

68

He

come.

learned from

Terman

work on one scheme

One

some crazy

always had

that the

DAVE

two boys were

poised for war,

it

available he quickly offered

made

mind

after

he noticed that almost

world came from Germany. With Germany

in the

suddenly hit him that there was about to be a world shortage

of harmonicas. The problem was that the Germans not only built

harmonicas, but they alone

knew how to tune

Moseley concluded,

So,

corner the world market. Build it

happened,

at that

would be

how

of the

—

damn

and he would

me a harmonica tuner, he told Bill and Dave.

time there was only one electronic device in the

to be Hewlett's prototype of his audio oscillator.

men

to tune the

a snap

world that had a chance of accurately tuning a harmonica

suggested the two

all

the reeds.

he could just figure out

if

things, the actual building of the harmonicas

As

them

after another.

of these projects came to Moseley's

every harmonica

and when he

idea in the back of his mind,

—and

it

happened

Moseley knew about

and

it,

try using the device to build the tuner. Unfortunately,

even Hewlett's oscillator wasn't precise enough for the job; otherwise

might have gotten an

earlier start

with a

lot better

on the back

Hewlett's invention found itself put

HP

funding. Instead, in failing,

shelf in favor of other work.

Moseley, undaunted, had another harebrained scheme. This time he

wanted to ter

Bill

and Dave

to design

work muscles without any then than

it

an exerciser that would use

effort

by the

user.

impulses

work any bet-

idea didn't

does today, and poor Mrs. Moseley had to suffer through one

long Sunday afternoon having

Bill

Hewlett and Dave Packard attach elec-

trodes to her leg, test various frequencies, and as her

The

electric

make her muscles

twitch

—

all

approving husband looked on.

Needless to

say,

neither invention for Moseley ever went into production.

But they did help pay the tant to the

bills,

as did the other contracts.

two men, especially Dave Packard,

as

And that was impor-

he was largely living on Lu's

small income as a secretary.

Looking back, Dave

also

of these contract projects, he

concluded

and

Bill

that, despite the wildly diverse natures

learned

some important

things from the

experience:

The miscellaneous jobs made us more They

also revealed

great benefit to

complementary. better trained

sure of ourselves and our

our partnership Bill

—namely,

was better trained

and more

that our abilities tended to be

in circuit technology,

abilities

and

I

was

experienced in manufacturing processes. This

was particularly useful facturing electronic products. 56 *

combination of

skills.

something that we hadn't planned but that was of

in designing

and manu-

Apprentices As 1938

closed, the

69

two men could look back on the year with

had landed some contracts and made some money. Not a

enough

to live

business. It

on

—and convince themselves

They had

also learned a

was a measure of both

viability

Packard

Company at

of money, but

few things about themselves and each other.

Bill

and

and Dave had

They resolved

to

do

the beginning of the

And* as they toasted each other that

that

their

doubts about the

yet to even formalize their

by incorporating Hewlett-

new year.

New

Year's Eve, the

two men must

have assured each other that 1939 would be a good year. In fact,

it

They

that they could run a viable

their trust in each other

of their enterprise that

business partnership.

lot

pride.

was the year they would change the course of

history.

Ihapter Three:

Damned Garage

That

January 1939,

In

Bill

Hewlett and Dave Packard signed the papers and

formally incorporated Hewlett-Packard Company. Bill

agreed, as part of the deal, to advance

purchase some components and he'd brought

home from

Although

General

was hardly an

it

tools.

some money to

the

company to

Packard contributed the equipment

Electric.

act

without consequence,

it

doesn't

seem

to

have been noted with any great importance by the two men. Packard, writing a half century later for

and

I

The

Scientist

magazine, could only remember that "Bill

signed our partnership agreement either shortly before or shortly after 1939." 1

they simply went to a lawyer's or notary's office

January

1,

one day

after Packard's classes

Dave had

home to

It's

likely

and signed the partnership agreement before

to take off for Litton Labs. Hewlett, for his part, probably just

went

the garage.

Seventy years on,

hard to separate the

it is

HP

garage of

one of reality. Over the course of the twentieth century, the

nue garage came,

at least at first, to represent the

myth from

little

the

Addison Ave-

touchingly humble begin-

nings of a great American company.

But by the 1980s, when high technology was ascendant in the world

economy and Fairchild)

had

a

number of

also

other powerful companies (such as Apple and

been born in "garages" ranging from

storefronts, the Packard garage, as the very

first,

real garages to

became the cynosure

cheap

for the

world of tech entrepreneurship, seat-of-the-pants engineering, and tough, pragmatic business leadership.

A trillion-dollar industry and the largest employer in the developed world is

an awful

lot to place

upon an

than two hundred square tial

old, uninsulated

feet at the

end of

wooden

neighborhood. But bigger myths have rested upon

The

reality

of the Packard garage

— even now

far

thinner reeds.

after the spiders

ried away, after every

board has been lovingly restored, and

ment has guaranteed

that

it

will

structure of less

a dirt driveway in a quiet residen-

probably survive long

have scur-

after the

after all

govern-

of the other

DAVE

BILL &

72

houses on the street have been demolished it

because

it

—

is

and Dave used

far simpler: Bill

was cheap and expedient, and they walked away from something

stant they could afford

it

the in-

better.

That, of course, doesn't take away the importance of the Addison Avenue

garage for the rest of us.

It is

the birthplace of the electronics age, and, in a

world of multibillion-dollar corporations with magnificent and giant buildings scattered that

over the planet,

garage, with

little

vacuum

all

tubes and

its

oil cans,

it

thin walls

and

and crude workbenches,

realize that the

medical monitors, the Internet,

cell

office

can be immensely moving to stand in its

boxes of

modern world of computers,

phones, robots

—

all

of

it

—begins

right

here.

That

said,

it is

also

Kirby, HP's longtime

important not to forget an anecdote told by David

PR director, about a visit to the garage with Dave Packard

in 1989:

They mony.

[had] declared the garage a state

landmark and had

a

drove Packard over there and as

we were walking up

the driveway

I

he turned to here in

me and

said,

"You know,

this

is

the

first

time

about. For him,

it

was always

just a garage:

the fuss was

and he was glad

to get out of

What he cared about, even when he was an What mattered to him was what was next. 2 * Dave joined

After the ceremony,

so

been back

all

it.

It

I've

cere-

fifty years."

That was Dave Packard. He never understood what

occasion.

little

Bill for a

One former HP employee had

happened

that

I

reception at

a vivid

on the naming of the garage

I

as

HP

to celebrate the

memory of that

was behind Dave Packard

and drinks were being served.

old man, was the future.

in the line

event:

where the food

took the opportunity to congratulate him

an historic monument. He put

his

hand

in

my back ushering me ahead of him in line and leaned over to reply in a low voice: "I am tired of that damn garage." 3

the small of

While Packard was working

for Russ Varian at Litton Labs, Hewlett

had

spent most of 1938 perfecting the design for his audio oscillator and researching the design of other

new

instruments. With

Terman touring around giving

speeches about negative feedback, the interest in

beginning to grow.

And

with Terman's

work, heading toward publication,

Bill

article,

Bill's

with

its

innovative design was

section about Hewlett's

decided that he needed to build a real

working model of the instrument. Packard offered

to help.

Their effort to get a working production model completed was given

— Damned Garage

That added impetus important

when

late in the year,

the

73

garage received a particularly

little

Harold Buttner had been one of Fred Terman's

visitor.

earliest stu-

dents. These days, Buttner was the vice president of research and develop-

ment

at International

Telephone and Telegraph. Terman convinced him to

take a look at Hewlett's audio oscillator.

much

Buttner was impressed. So

about as

much

ITT was paying

as

so that he offered Bill

and Dave $500

for a single oscillator in those days

foreign patent rights to the device.

He

—

for the

even offered to provide the legal help to

two young men the U.S. patent on the instrument.

get the Bill

and Dave

fairly reeled

from the

income

sent a tenth of their annual

visit.

Not only did the payment

to date, but

more important,

repre-

suddenly

it

suggested to the two that maybe, even while they were searching for their

good product, they might already be So they decided to give ished construction of their

IRE conference positive

enough

first

in Portland,

that

and

"I clearly recall

having

There we took pictures of Lu, that

we

sent to a

list

it.

In November, they fin-

test.

audio oscillator and Hewlett took

to

make

recalled,

a run for

model with

built a

this unit sitting it,

on

Oregon. Packard

we decided

By Christmas, they had

sitting

design a market

Bill's

first

it."

it

up

to

an

"The response was

4

a professional-looking case,

on the mantel above the

produced a two-page

sales

fireplace.

brochure, typed by

of about twenty-five potential customers provided

by Fred Terman." 5 As

Bill

and Dave planned

it,

recipients of the brochure

would

believe that

they were dealing with an established company. For that reason, they desig-

nated the

new instrument

just the latest in a

as the "200A,"

because that

number sounded

long line of products from a mature enterprise, not some-

thing from a pair of twenty- five -year- olds working out of a garage. the two decided

like

The

price

upon was even more arbitrary: the 200A audio oscillator was number chosen entirely because it amusingly reminded Bill

listed at $54.40, a

and Dave of the campaign

historic phrase "54'40" or Fight!" that

was used

in the 1844

to set the U.S. -Canadian border in the Northwest.

Though the story of the pricing has become part of the HP myth, less remembered is how foolish that decision was: $54.40 was well below what it cost the pair to build the 200A, meaning that they would lose money on every sale. It

was not a propitious

fact,

what saved them

like the oscillators

start for

in the

Not

still

titans

of American business. In to the 200A,

being sold by General Radio, were going for as

times that price. That enabled higher, while

two future

end was that competing products

Bill

and Dave

to scramble

and

much

as ten

reset the price

offering a bargain.

surprisingly, given the initial price, the

several orders, but

some of

the envelopes

brochure not only generated

came back with checks

stuffed into

DAVE

BILL &

74

men

them. That convinced the two

hands and to

that they

finally incorporate. Later,

way

a patent for

file

years

it.

for the

By the time

200A and hired

their

their pric-

Bill

Hewlett care-

a San Francisco attorney

the patent was awarded (No. 2,268,872) three

arrived to a very different world: Bill Hewlett

later, it

on

to turn back. Hewlett-Packard

end of January 1939,

a real enterprise. At the

drew up the schematic

fully

to

now

real business

by the time they discovered

ing error, they were already too far under

Co. was

had a

had gone

off

to war.

For now, there were orders to

fill

—and given the

foolish pricing Bill

and

now no room for anything but the cheapest possible production. For that reason, the two men decided to buy the cabinets for the 200A but make their own panels out of sheets of aluminum they Dave had

settled

sawed and take

them

would slight

upon, there was

drilled.

Then, once they'd spray-painted the panels, Dave would

into the house

recall that

chemical

during

and use

oven to bake on the enamel. Packard

Lu's

period the food cooked in that oven always had a

this

taste.

Next came the assembly of the guts of the former, and Hewlett's

Then Dave would engrave This

all

take the

bulb

light

little

box up

—and

oscillator

last

and engrave

to Litton Labs

was not an automatic process:

all

and use

Charlie's engraver to

rather,

Then he would go back to

told his

young

go up to Litton's place

the garage to calibrate the instrument, mark-

say,

up

to Litton's to engrave the final calibra-

friend that this

In doing so, Litton taught

Packard would

first

was always there to lend a hand

tions. Luckily, Charlie Litton

some point

because of variations in the

of the designations, scratching through the paint on the front

ing the dial with a pencil, then back

at

tubes, trans-

of the front-panel markings.

components of each instrument, Packard would

panel.

—board,

their installation into the cabinet.

was no way

Dave Packard one

"He never saw us

to

—and no doubt

run a business.

last lesson.

as competitors

Looking back,

but always as compatri-

ots." 6

That lesson was also reinforced by an unlikely source. Fred Terman

called

one day

had

to say that he

garage and introduce himself. Radio. Uncharacteristically,

It

a visitor

Bill

how much he had their part, told

some

and Dave

that

come over

the industry titan

to the

— over

to

—and Hewlett-

Addison Avenue and

for several hours. Afterwards,

enjoyed visiting

Terman

like to

was Melville Eastham, the founder of General

Terman brought

Packard's greatest potential competitor

him alone with

who would

such fine young men;

Eastham had been very

left

Eastham told Fred Bill

and Dave,

helpful, even giving

for

them

pointers about running a successful business. 7

The challenge now, with an underpriced but popular product, was to keep most unlikely of corporate sav-

the fledgling Hewlett-Packard alive. Enter the iors:

Walt Disney.

That

Damned Garage

Dave Packard was always anxious

75

debunk the standard myth, one of

to

would have

the best-known in the story of electronics, that Hewlett-Packard

gone out of business had

it

HP

not been for the fortuitous sale of a bunch of

HP

audio oscillators to the Walt Disney Co., and that without these

ments Disney would never have made the landmark film

instru-

Fantasia.

In truth, to quote Packard, "with or without the Disney sale, Bill

and

I

8

were determined to move ahead with our company." But that begs the question: could

Hewlett-Packard have lasted

much

longer with only a handful of

orders and an unprofitable product?

The

genesis of the Disney sale

1938 that people chief its

Bill

Hewlett attended with his prototype audio

at the event to

sound engineer

great,

at

Snow White and

test

Hawkins was upgrading

Pinocchio,

his equip-

instruments.

Hawkins was impressed by the performance but what sealed the deal for him was the price

— one-fourth what Hawkins would have oscillators.

One of the

push the envelope of content, animation, and sound with

to

ment, including the

Radio

oscillator.

Walt Disney Studios. Disney, flush from the success of

Fantasia. In preparation for the project,

$100

November

whom he showed the instrument was Bud Hawkins, the

pioneering long-format animated films

was now about

in

was that Portland conference

stats for the

quoted to him:

Bill

to

Hewlett device, less

than

pay for comparable General

For the future of HP, Hewlett was lucky that he gave the

higher estimate and not the final price.

He was doubly

lucky that Hawkins

came back

to Hewlett-Packard

asked for some modifications to the original design. This enabled

Dave

to escape the legacy of their widely circulated

slightly

improved follow-up product, the

actually profitable at $71.50.

HP

Bill

and and

brochure by announcing a

model 200B

Bud Hawkins ordered

eight,

—

still

a steal, but

which were used

in

the audio production of Fantasia, notably in helping the team achieve the trick, in the "Flight

of the Bumblebee" sequence, of making the sound of the

bee seem to come out of the screen and buzz around the theater.

Meanwhile, the profits from the Disney contract helped keep the fledgling Palo Alto

Company

[if]

very important because

it it

was

a

made

"We

very quickly learned that

good value and

it

along." 9

Less remarked, but far

that

was

a lesson that

possible for us to finance the

HP —wags would say the —would never make mistake again.*

we went priced"

Recalled Packard,

alive.

could raise the price

later

initials

we

was

company

as

stood for "highest

that

more

vital to the

long-term success of Hewlett-

Packard Co., was an encounter with another Los Angeles industry veteran.

Norm

Neely was a manufacturers' rep for radio and sound recording equip-

ment whose beat included most of Southern tainment industry.

California, especially the enter-

BILL &

76

on the lookout

Like Hawkins, Neely was to his customers.

sell

for

new products

that he could

Hearing about the two Stanford boys with their innova-

low-cost audio oscillator, he thought there might be an opportunity

tive,

there. So, sight unseen, les

DAVE

and speak to the

Neely invited

local

Bill

Hewlett to come

down

to Los

Ange-

Radio Engineers Club, a group Neely had joined

pri-

marily to hunt for customers. It

was

was the most important

over, fifty years later,

as a disaster.

The club

introduce

Neely ever wrote in his

life,

and before

it

.

.

known me

that he'd

.

my friend Bill Packard!'

for years

and 'Now,

I'd

"

found the whole thing hilarious

Fortunately, Hewlett

me

remembered, "got up and gave

president, as Hewlett

a very flowery introduction like to

letter

he was a very rich man. But the evening started out

—and

Norm

in

Neely an ambitious and hardworking salesman Hewlett-Packard could work with. Neely, for his part, quickly followed that meeting with a trip Alto. If

he was shocked by the sight of the humble

keep a straight face

—and before he

left,

little

garage, he

up

to Palo

managed

to

he and the two founders had, in

Packard's words, "reached a verbal agreement and sealed

it

That was the way we were to conduct our business with

with a handshake.

Norm

for the next

fifty years." 10

Before he

left,

Neely gave the two

contract business and focus

men one

dump

the

can't serve

two

piece of advice:

on manufacturing products. You

masters or run two different kinds of businesses.*

There

may

have been self-interest in that advice, but there was also wis-

dom. The world was changing

fast

around them. Hitler had invaded Poland

and Czechoslovakia, Russia had invaded Finland, Rudolf Heydrich had dered

all

Jews in

Warsaw

or-

into the city's ghetto, the Japanese were consolidat-

ing their control of China, and the Manhattan Project was under way.

Had Hewlett-Packard remained mostly

a contract manufacturer,

have prospered during the war to come, but disappeared soon like Federal

Radio in the

now

after, a

it

might

footnote

delayed story of the electronics revolution, in a

Santa Clara Valley that never became Silicon Valley. Instead, because they trusted the advice of a

young company cost of

man

they hardly knew,

exclusively to product

some defense work during

Bill

and Dave dedicated

manufacture and,

at the

their

probable

the war, positioned themselves for great

success. It

was Neely 's marketing and

California aerospace industry that

selling to the

At

first

independently, and later

powerhouse regional

first

would

create

Hollywood and the Southern

much

of HP's early revenues.

inside HP, Neely would build the company's

sales force

—the prototype

for

HP

field sales

ever

after.

Neely 's

efforts,

and the increased revenues

for

HP

that

came from

it,

en-

Damned Garage

That abled

Bill

and Dave

name was Harvey

to take

Zieber,

an important

step: hiring their first

and he joined the pair

who

employee besides the founders

77

as

an assistant

employee. His

—the only HP

could claim to have actually worked in

the garage.

As 1939, that remarkable "World of Tomorrow" year nology, ended, the rookie Hewlett-Packard

Having

as well. sis,

the

from

started almost

company had managed

scratch,

Company had much and survived

produce two

to

its first

distinct products,

tomer out of one of the world's hottest companies

and tech-

in science

to celebrate

business

made

cri-

a cus-

—and earned $5,369

in

sales.

Better yet, in spite of everything, Hewlett-Packard profit of $1,653, with

$500 cash on hand, zero

orders. In other words, even in a year

contract work,

when

it

when

had managed

liabilities,

half of

its

had dangerously underpriced

to turn a

and an in-box

full

of

business was pickup

its

only product, and

when it had needed to purchase its start-up equipment, Hewlett-Packard had still managed to earn a pretax profit of 25 percent. Few of the thousands of electronics start-up

manage

companies

to follow over the next half century

to even turn a profit in their first year,

most could only dream of margins

HP now

had products,

and among those

would

that did,

that high.

a business strategy, a distribution

and

sales net-

work, and enough cash on hand to grow the company without assuming debt. It

had been

a year of lessons. Bill

and Dave were now convinced not only

that

they could build a real company, but that they could do so by financing their

own growth

—and thus never again

leave the

company

financially vulnerable.

Miraculously, they did just that for the rest of their careers, the

most

and

fiscally conservative,

making

HP one of

financially secure, large corporations of the

century.

Lu & Flo Hewlett had more to celebrate in 1939 than just acclaim for his inven-

Bill

tion

and the success of

his

new company.

school and the fledgling company, he tall

still

many demands

Despite the

of

found time to court and marry the

and elegant Flora Lamson. Bill

had known Flo since childhood, though they had only recently been

reacquainted. She was a Berkeley

came when

for college, she applied to entire universities,

provinces, Flora

much

girl,

born and

raised,

and was accepted less science

at

and when the time

UC

Berkeley. In an era

departments, were mostly male

Lamson chose biochemistry as her

major.

BILL &

78

DAVE

She must have been quite a sight in the Cal biochem blonde with a of her

life.

toward brary

art

would

taste for elegant clothes that

lab: a five-foot-seven

characterize her for the rest

Flora was not only pretty and smart, but her interests also tended

and

literature,

and

religion (in later years she

Graduate Theological Union and serve

at the

would found

Hewlett's

mother

She and

—though Flora was much more

much

met

as youngsters, as the

same camp

regularly vacationed at the

touch during the

Whether

Bill

private

—and

it is

like

likely the

muster with the Hewlett family matriarch.

easily passed

Bill first

li-

as a trustee of the

San Francisco Theological Seminary). In that regard, she was very

young woman

a

Hewlett and Lamson families

in the Sierras.

But the families

lost

difficult years that followed.

much

noticed the younger Flora

isn't

recorded. But Flora

noticed the older boy with his big grin and his mischievous ways. After she

graduated from Cal in 1935 and by chance became reacquainted with Louise

Club outing, she probably couldn't help but hear about him and

on

a Sierra

his

accomplishments

at Stanford. Louise, for

and seeing her brother alone and, worse,

her part, being a protective

living

on

a cot in a shack

sister

behind the

Packard house, was resolved to find him a wife.

As the story was told

"Do

Louise finally called her brother and asked,

later,

you remember Flora Lamson?" "Back when we were

"Sure," said Hewlett.

"That's right," said Louise. "Well, she's

kids."

grown up now. And you need

to

ask her out." Bill

Hewlett would one day face

going to fight his

mor

sister.

He

Louise. But Louise, after

be famous for his judgment these two. Bill

and Flora

most preordained

hit

that they

down

entire governments, but he

agreed to take out all,

in it

was the

people

little

sister

of a

Flora once,

if

was not

only to hu-

man who would one

day

—she knew what she was doing with

off so well

on

that

first

date that

it

seemed

al-

would marry.

Not everyone agreed with that destiny: almost to a person, the members of Flora's sorority tried to talk her out of the marriage, saying that to

Bill's

plan

go into business for himself would only lead to poverty, unhappiness and

possibly even starvation. in 1977.

They would remain married

The marriage produced

until Flora's early death

five children, their births

almost evenly

spaced over the next dozen years: Eleanor Louise (born 1942), Walter Berry

(born 1944), James Sterry (born 1947), William Albion (born 1949) and Mary Joan (born 1951).

It is

a

measure of the quiet strength of Flora Hewlett's per-

sonality that of the five kids,

none followed

Rather, they chose a career like

Hewlett, like his namesake,

is

their father into the corporate

life.

that of their grandfather (William Albion

a doctor) or followed their

mother

into low-

That

Only Walter,

profile, arts-related careers.

There

is

a casual

a party at Cal, that

who

fol-

shows

They look

and comfortable

collar.

relaxed

second photo, taken a year

no

is

less

charming:

his left shoulder just

bunch of grapes.

Bill,

behind

blouse, and short It is

later

on

Flora's right.

on

honeymoon

their

She

is

shirt

and

in the

Grand

slacks, stands

with

more formally dressed, with

lapel a pin in the

its

And

company.

in each other's

wearing a khaki

jacket that has

a

shape of a large

obvious from their poses that Flora has grabbed another

and asked him

tourist

and probably at

and suspenders, standing beside

Bill in jeans, shirt,

has the smile of a happy man.

Tetons,

in 1938

wears dungarees, white blouse, and kerchief elegantly tied around

Bill

skirt,

well-known software designer,

photo of the young couple, taken

her

A

a

79

his father into high technology.

lowed

Flora,

Damned Garage

to take a

photo of the newlyweds. Flora

photograph head-on, her shoulders back, smiling but with the

faces the

slightest

touch

of concern that the stranger work the camera right. Bill,

meanwhile, embarrassed by

in his pockets

of

all

of

and ducked

this. Still,

of this attention, has shoved his hands

all

way that

his chin in a

he can't hide that he

sad and lonely teenager has

become

is

he doesn't quite approve

says

and

a contented

new

bride.

The

successful adult

and

very proud of his

husband.

Looking back on

would conclude

that

their long

education. His father, Walter

did

talk,

would

dren believed Flora had a

scientific

Just as important, Flora

inarticulate

was

his mother's

man of few words, and when he

was a

mind on

— indeed, her —the two chil-

a par with their father

level.

had good

instincts.

She usually knew what her it.

She used

this

the photo suggests) to "run interference" for Bill in difficult situa-

gests, Bill

being an introverted person herself. As the photo also sug-

Hewlett admired these

many years

traits in his

new

wife.

And he

continued to

they spent together. 11

Gauging the contribution of spouses

to the careers of successful

can usually never be more than speculation. But

note that not only did first

success

husband wanted long before he could verbalize

tions, all despite

women

its

women possessed in those days

could communicate on the same

for the

say,

for

he liked to speak on technical topics. Because Flora had an under-

standing of technology few

skill (as

and happy marriage, son Walter Hewlett

one important reason

Bill

and Dave enjoy

men and

it is

interesting to

lifelong marriages,

but that their

great year in business corresponded to the

We know of Lucile's obvious contribution to

first

year of their marriages.

the early Hewlett-Packard, from

her bookkeeping and marketing to her donation of the Addison Avenue kitchen oven. Flo Hewlett's participation

is less

visible,

but certainly the very

BILL &

80 act of enabling Bill to

a

new It

structure (and

may go

move out of the shed

much-improved

deeper than

that.

most "family-oriented" of

in

which each member has a is

into her Palo Alto house brought

living conditions) to his daily

compared

And

the famous

"HP Way"

to that of a highly functional family

role to play

no question

life.

Hewlett-Packard Co. became famous as the

large corporations.

business philosophy has been

sponsibly. There

DAVE

and

is

trusted to

that for both Bill

fulfill

and Dave,

that role re-

their notion of

family begins with Flora and Lucile.

There

an often-told story about the early days of

is

son Avenue garage.

It is

that

Bill

and Dave

in the Addi-

Terman and others could quickly gauge how

the

new company was doing merely by driving by the Packard place and peeking down the driveway. If the car was in the garage, business was slow; if the car was parked outside, then orders had come in and the pair were hard at work. If

the story

ness was parts,

is

indeed true, by

booming and

the two

fall

1939, the car was always outside. Busi-

men were

starting to

run out of room for

manufacturing, and inventory storage. In advising Hewlett and Packard

to focus

on products, Norm Neely had added one more piece of

one model, or even

stick to

to a single

advice: don't

market segment, but diversify the prod-

uct family as quickly as possible.

Hewlett-Packard

now had

the

200A and 200B audio

oscillators,

and the

two men were busily investigating the commercial potential of other audio frequency products that

Bill

had developed the previous year with students

Stanford. There was enough there to convince the two ate future

would involve

ment business

— and

a full-on assault

in

mind

facturer of test

company

in

that General Radio in 1939

its

one

Tinker

was the world's leading manu-

like a real

Bill

company,

street

thousands of miles from

and Dave knew, it

now had

utterly insane.

to act like

one

HP

not

—and look

fall

of 1939 the two

men

scouted for and finally

a real headquarters/factory building, a small structure, tucked Bell's

Fix-It Shop, the general repair workshop of John "Tinker"

was located just

a mile southeast of the Stanford

the founding, and

and

in direct

as well.

For that reason, in the

found

"we would be

12 *

key markets was ambitious enough, but to do so from a

main customer base was, even

only had to think like

at

immedi-

and measurement instruments. The very idea of taking on the

one of

cramped, unheated garage on a neighborhood the

that HP's

on the audio frequency measure-

that meant, as Packard said,

competition with the General Radio Company."

Keep

men

still

primary, road

down

campus

behind Bell. It

at the intersection

the peninsula, El

Camino

of

Real,

a barely used cross street, Page Mill Road, an old logging road that ran

Damned Garage

That

up

into the nearby

They packed up

hills.

81

equipment, and a

their tools, test

few parts, and, with Harvey Zieber, moved the ten blocks to the Tinker Bell building.

John Minck, an executive in HP's Microwave division, and

mal company

moved

historian,

into the

never forgot the gritty industrial area

neighborhood

a

later

an infor-

decade

He

later.

—what would one day be Ground Zero

of Silicon Valley:

remember

I

well because there

it

was

a concrete-mixing plant at

[a

nearby] intersection. At midnight the Southern Pacific railroad would deliver rail cars full

of sand and gravel and cement to the plant. As the

switch engine shuttled the cars around, the Page Mill street crossing gates

would come down

for

about 30 minutes, with the crossing

sounding. With a brand

Though

new baby,

the facility was small,

and Packard

up

to set

was nevertheless big enough

it

garage, the

It

all

new

was, in

fact,

we would

smaller than the lobbies of most

since demolished)

"It

After the

seemed

as if

ever need." 14

In retrospect, for both Hewlett and Packard,

(now long

test area.

seemed immense. Recalled Packard,

facility

the space

for Hewlett

back room, a

a small office in the front and, in the large

combination paint shop, machine shop, and assembly and

we had

bells loudly

that didn't help her sleep, or ours. 13

where they

HP facilities to come.

it

was

really learned

in this

little

building

about

how

business

worked. Their experiences there would be the template for generations of high-tech entrepreneurs to ger thoughts

— even

come

as they

had

—making big plans and dreaming even to

do every odd job around the

answering the phone to cleaning the

In those early days Bill and

everything ourselves

I

had

toilet.

place,

big-

from

Recalled Packard:

to be versatile.

We

had

to tackle almost

—from inventing and building products

to pricing,

packaging, and shipping them, from dealing with customers and sales representatives to keeping the books, at the

end of the

valuable,

day.

and not

That wasn't

all

from writing the ads

Many of the things

learned in this process were in-

I

of

it.

As anyone who watches weather reports knows, the

—and

within a couple of months each winter

one vast

alluvial plain striped

whole regions of

it

sweeping up

available in business schools. 15 *

Bay Area may have near-perfect weather, but the cost falls

to

with ancient, and

is

that

most of the

rain

as the Santa Clara Valley

now largely hidden,

is

streams,

are prone to flooding.

Unfortunately, one of those floodplains happened to be just outside the

BILL &

82

On

door of HP's new building.

DAVE and Dave had

several occasions, Bill

sandbags in front of the front door to keep the flood from running

Road and

Mill

right

through their

The two men were cal application

dents and

to stack

down

also taught a

little

of their engineering

when

came

to the practi-

They may have been

brilliant stu-

humility

skills.

it

product designers, but they weren't Charlie Litton, or even

terrific

"Tinker" Bell next door. Learning that

fact didn't

come

easy for either

Dave, and on one occasion their overestimation of their tinkering

most proved had

It

Page

offices.

Bill

or

skills al-

disastrous.

do with

to

building, they

still

a

new

When

oven.

the pair

first

moved

carried the newly painted parts back to

to their

new

Addison Avenue

to

cure in the Packards' oven. Eventually, even Lu ran out of patience, and told

men that she wanted her kitchen back exclusively for actual

the two

Instead of contracting out the work,

own

paint drier. And, to save even

Bill

knew much about

refrigeration

a

refrigerator, neither noticed that

When

its

to build the

used refrigerator. Unfortunately,

—and Ed

Porter,

mento, so he wasn't there to warn them. Thus, even

kapok, the stuff in

cooking.

to build their

more money, they decided

oven out of a good, cheap, insulated box: neither

and Dave decided

insulation was

who

as they

did,

was

in Sacra-

were rewiring the

made out

of flammable

life vests.

the rebuilt refrigerator/oven was

first fired

up,

it

worked

perfectly,

and the two men patted each other on the back and reminded themselves what great engineers they were. In

Dave took and

fact,

the oven

oven run

all

when even

El

Camino

Real was

—and those were the of — the

next. Luckily

empty by midnight

passing car happened to notice flames flickering in the

HP

plant,

out before

and

night.

The reader can guess what happened

the

that Bill

to putting another load of panels in before they left in the evening

letting the

days

worked so well

it

and he

called the fire department.

destroyed the building, and

HP

driver

windows from

a

inside

The burning oven was put

in the process.

That wasn't their only beginners' mistake. Hewlett on one occasion started

chuck

up Packard's old

—sending the key

drill

press without

removing the key from the

hurtling, fortunately not into Hewlett, but through

the plateglass storefront. Then, after replacing the window, the two ticed that the building in.

So

Bill

worked

had no privacy; every passerby seemed

and Dave decided

to paint the

fine until the first hot day,

when

windows black

to stop

men

no-

and peer

—which

for privacy

the absorbed sunlight cracked every

pane. Luckily,

that the tract

new

orders for the 300B were continuing to pour in

two men could not only cover the cost of

— enough

glass replacement, but con-

out some of the work to craftsmen with more practical experience than

— That their

Damned Garage

83

own. One of these was a carpenter and cabinetmaker named Al Spears.

In keeping with the style of the time, once

struments

was expected they would

it

walnut, but

and Dave told Spears

Bill

HP began

feature

market premium

to

wooden oak for

to go with

cabinets

—

in-

typically

durability, cost,

and

appearance.

Hew-

Before long, however, especially for their high-frequency products, lett

and Packard decided to switch to sheet-metal cabinets. For that work, they

went

who had his own Bill

on Addison Avenue,

to a neighbor

— even

would

act as if

cabinetmaker until he

one man,

Bill

Lessons

in

Ernie Schiller

is

for

guy named Ernie

Schiller,

small custom metal shop. Ernie was so gruff that often

or Dave would stop by

Schiller

a crusty old

HP

after

had become

he didn't want to see them.

and when the

retired,

and Dave sent over an

Still,

HP work

when

his sole client

he remained HP's

grew to be too much

HP employee to help him.

Loyalty minor of

the most

Dave Packard. And

players in the story of Bill Hewlett

yet he symbolizes

and

something profound and crucial to the

long-term success of the Hewlett-Packard Company: For Hewlett and Packard, the twenties, their childhood, was the decade of curiosity

and

risk-taking.

The

were the years in which they appren-

thirties

Terman and Charlie

ticed to great mentors, including Fred

listened to

and followed the advice of people

like

Norm

Litton, as well as

Neely, Melville East-

ham, and Russ Varian. For

Bill

and Dave, the

forties

would be the decade of loyalty. They had

ready learned to be loyal to each other

by a world war.

—

a fidelity that

would soon be

It is

far

more

difficult to

be loyal to people

than you need them. By the end of this

would, for the

tested

Now they would learn to show that same loyalty to others. It is

easy to be loyal to your employer and to your mentors, especially

good people.

al-

first

time, be

they are

who need you more

decade, Hewlett and Packard

of importance, wealth, and power

—and

had surpassed, and the people whose

liveli-

men

their loyalty to the friends they

new

if

hoods now depended upon them, would regularly be tested.* That they passed even to

difficult

this test,

men

like

Addison Avenue garage philosophy of the

HP

and did so with both graciousness and dignity

Ernie Schiller

—was

in the creation of the

lives

Bill

important as the

and Dave and the

Way. One comes away from reading the Hewlett and

Packard story with the sense that they never people whose

at least as

myth of

prospered because

Bill

left

anyone behind. The many

and Dave returned

their loyalty

DAVE

BILL &

84

stand as proof that sometimes, even in the unforgiving world of business, there can sometimes be justice.*

Loyalty

came

in

many forms

to Bill

In early 1940, ITT, having just

and Dave

won

a

in the 1940s.

major contract

for the

development

of an electronic aircraft landing system, put out a request for bids on two

components

for that system:

one a variable-frequency oscillator, and the other

a crystal- controlled, fixed- frequency oscillator. General Radio first deal,

jumped on

the

but experience told the big company to stay away from the second.

Hewlett-Packard lacked that experience and naively took on the second job.

wasn't long before

It

and Dave

Bill

realized that they

were in trouble: that

enough hours in the day to get the project completed on time. Though they had begun hiring employees over the next two years they would bring on board a secretary, Helen Perry, to finally relieve Lu Packard of the secretarial and bookkeeping work; a machinist named Dick Arms; Harvey Zieber's brother Glenn; two technicians named Harold Hance and Brunton there weren't

—

Bauer; and

Girdner, a mechanic

Bill

though the company was now

that,

They had

short of designers.

—

Bill

and Dave

fully staffed

failed to

realized to their

with builders,

it

dismay

was woefully

look beyond Hewlett's original design

day when the young company might have a wide product family.

to the

So the two

men

ent they could find,

quickly went out and began hiring the best available

wave radio maker, Heintz and Kaufman, where Dave had interviewed

work when he was

tal-

recruiting top engineers from the nearby veteran short-

still

a Stanford senior. That job interview

for

had been handled

by a young Heintz and Kaufman engineer named Noel Eldred. As Packard

would remember, "and fortunately me]

.

.

.

because

I

might have

as

it

just stayed

turned out they didn't have a job

Packard had been impressed by Eldred,

he went looking for talent first.

Eldred took the job

Doolittle. Eldred

at

—

among

Thanks

rived, the

were

to contact

named

Bill

crucial to the long-term success

HP vice presidents.

and an immense amount of hard work,

HP fiyoung

added

company had paid deliveries

whom

when

to build the fixed-frequency oscillator for ITT. But the

to the

managed

over the next two years,

others, a test engineer

and Doolittle would prove

of HP, and both would eventually serve as

nally

so,

Heintz and Kaufman, he knew

as did,

[for

there." 16

talent,

heavily for the effort: the employees were exhausted, other

late,

and worst of

two founders

all,

as the days passed

realized they

payroll. Finally, a desperate

and no ITT check

ar-

were within a week of not making

Dave Packard

called

Harold Buttner

at

ITT and

explained the situation. Buttner immediately wired the funds. Bill

and Dave never forgot

that gesture,

made

especially gracious

by the

Damned Garage

That fact that

it

came from

own

override his

the busy

CEO

85

who

of a big corporation

staff procedures. It colored

with small vendors in the years to come.

literally

own

Hewlett-Packard's

And when

Packard immediately called him and asked him to

had

to

dealings

Buttner retired from ITT,

sit

on the Hewlett-Packard

board. Buttner accepted and proved an important source of industry contacts

when HP began They had

its first

era of spectacular growth in the 1950s.*

been saved, but the close call

had shaken both

Bill

and Dave. Be-

little company encome from profits, not

ing children of the Great Depression, they had built their tirely as a

pay-as-you-go enterprise. All growth was to

debt. But the

a

ITT episode had taught them the dangers of poor cash

company could go out of

And

that in turn

business even with an in-box

meant they had

to learn the differences

full

of

flow; that

new

orders.

between short- and

long-term debt, and the advantages and disadvantages of each.* In the end,

Dave Packard resolved

pany at the Bank of

bank

the largest guy.

Italy

to establish a line of credit for the

(now Bank of America), founded

in California,

and famous

com-

nearby San

Jose,

for being the friend of the

little

He applied for a loan of $500, an amount he and company over if it got stuck again.

in

deemed

Bill

sufficient to

tide the

B of A,

as

was

its

procedure, sent a loan officer over to the Tinker Bell

building to check out the

company and

parently wasn't very impressed, for the

would

sign over to

it

Recalled Packard,

its facilities.

bank agreed

"He ap-

to give us a loan only if

we

our accounts receivable." 17

Packard refused. Instead, he drove over to the

little

neighborhood bank,

Palo Alto National, and introduced himself directly to the bank's president,

Jud Crary. Crary,

it

turned out, was a huge Stanford fan

Dave Packard's glory days on the gridiron and the about his

new company,

much? asked

its

Crary. Five

current financials, and

hundred

dollars,

who remembered well

track. its

Packard explained

need for

credit.

How

Packard replied. Crary nodded,

pulled out a notepad, wrote out a promissory note for that amount, and asked

Dave

to sign

it.

Then he

there drafted for

Once

him

escorted Packard to the other side of the bank, and

a deposit slip for $500.

again, trust given

—and

trust returned.

Out of

loyalty,

Hewlett-

Packard continued to do business with Palo Alto National for years

when

—and

company grew too big for the little bank, exceeding its legal financial still maintained the relationship by moving to National's associate bank, Wells Fargo. 18 * the

limits,

HP

That $500 loan proved to be worth tens of millions of dollars for those

two banks. And the story doesn't end

there, because

when HP

shifted

its

banking to Wells Fargo the bank shrewdly sent a retired engineer out to HP's headquarters to meet with Packard and gauge the company's financial plans. Recalled Packard, "I spent a

full

afternoon with

him and

I

have remembered

DAVE

BILL &

86 ever since

some

advice he gave me.

digestion than starvation.

I

He

said that

more

businesses die from in-

have observed the truth of that advice

many times

since then." 19

These

War ent,

San Francisco Bay Area before World

stories suggest a culture in the

characterized by an extraordinary willingness to share resources,

II

and experience among

players.

its

No doubt all And yet

of these companies were

—perhaps because

deeply competitive, even with one another.

tal-

the in-

dustry was so new, because the population of technologists was so small and

interdependent (everyone seemed to be orbiting around Fred Terman and his lab), or

perhaps because of the isolation of the West Coast electronics

—there was

a degree of camaraderie that didn't exist

industry

the Silicon Valley that

giant

itself in

would soon emerge.

interesting then to speculate that the Hewlett-Packard culture, the

It is

legendary

"HP Way," was

at its

heart like a fragment of a lost world kept alive

in a glass case, the enlightened

ment

among the

Bay Area

electronics firms of the East Coast, or for that matter in the

which

in

Packard were

Bill

(and obviously successful) business environ-

and Dave had founded

their

of the past,

brilliant preservers

company

—

that Hewlett

and

of that past,

at least the best

rather than corporate revolutionaries.

This in no

way

tional innovators

actually

takes

— on

make the

old

away from the two men

the contrary, they alone had the courage

work

fers a different perspective

gambling

their

in a

new era and within

on

their achievement.

company on some

a giant It

means

managers was

to

once been taken for granted, and do so before it

was

Bill

and Dave who held

man was

as

good

it

who worked

for

you

must have been surpassingly the wildest,

and

fast to a fixed

as his

as

any business leaders

In time, after the world

if Bill

—where

a

knew and

difficult to

hand-

trusted every

—while the world around them moved

on.

It

hold to what they believed, even as

But

Bill

and Dave knew they were

ever, they

had the courage of

HP

to appearing revolutionary, others

and Dave might have been

right

all

along.

right,

and

as

their convictions.

had changed so completely that the

from looking anachronistic der

place

word, you built friendship and

most aggressive community on the planet grew up around them,

largely because of them.

much

that they weren't

disappeared.*

business relationships that lasted a lifetime, and you

person

to

of-

new management idea, but rather And their greatest figure out how to elucidate what had

accomplishment

Thus,

it

radically

something they had already seen work.

shake sealed a deal, a

and genius

company. But

fighting to preserve as

and organiza-

as business

culture

went

began to won-

Damned Garage

That

A

87

Product Family

Norm

Neely hadn't only told

He

stick to standardized products.

new company

another

and Dave

Bill

also told

distributor,

HP 200A had been

a great

them

—

in a

custom work and

message seconded by

Midwest radio tycoon Al Crosley

they needed to expand their product

The

to get out of

product, and the 200B actually lines

enjoyed a

also

and

went without saying that Neely had

ad-

flexibility,

from competitors.

less vulnerability to attacks

the door of a potential customer

made

number of

vantages, including greater brand recognition, greater strategic loyalty,

that

line.

first

money. But a company with multiple product

more customer

—

It

a greater chance of getting through

he had a number of different products to

if

sell.*

Once ITT

again, Bill

and Dave

Moreover,

listened.

after the

and building

contract, the prospect of designing

nightmare of the

a product actually

within their expertise must have been appealing indeed. Nevertheless, they

shrewdly chose not to stray

far

from

designed devices that were related existing catalog.

—and

products

The

Like

IBM

come,

HP would

with computing products a decade

nied by the high quality of the

among thousands

sell

HP

was the case with

from

its

fired for

oscilloscopes),

buying Big Blue," so

Hewlett-Packard's

lyzer,

the

turf, Bill

first

it

was with

most

and

safest,

this

product, once again

oscillators

(a device that

with gain

sets

choice

didn't have the best version

usually got the benefit of the doubt said about

after the

IBM, "No one ever got

two

was followed by

revisited their original line

Hewlett displayed his amazing

in-

HP for the next forty years.

new product

tor that featured a gain control (the

On

HP

first,

a

oscillators

was the

harmonic wave ana-

model 3 00 A, designed by Hewlett. Then, having staked out and Dave

HP

products, began to create a purchasing

it still

distortion analyzer. This

each sale of an

later,

of engineers in which the

immense customer "family." As was

model 320

electrical engineers.

the one that followed. That, accompa-

was Hewlett-Packard. Eventually, even when (as

as a "suite" of

use this accretionary strategy

workbenches of America's

strument to an engineer helped to

process

their original products, but instead

even dovetailed with, the company's

was what would now be known

result

in the years to

to slowly take over the

to,

and upgraded

it

this

with an

new

oscilla-

model 205A).

—and

essentially for the last

gift for clever

design. Until the

time

—

Bill

model 205A,

were low-power systems in which an attenuator

reduced the amplitude of the signal) was mounted past the

transformer in the circuitry.

Hewlett instead put attenuators in front of the transformer. design change that in turn caused the

little

company

It

was

a small

a lot of trouble to get

it

DAVE

BILL &

88 to work.

But when

finally did,

it

Hewlett-Packard

Company found

one of the best higher-power (up

to five watts) audio sources

This alone would have earned the

company a lot of sales

itself

with

on the market.

in the years to

come.

But with the war, the demand for audio sources for low-wattage radio transmitters skyrocketed

—and with

it

the

demand

for the 205A.

perhaps the most successful single product of HP's

and Dave then followed up

Bill

that

first

It

would become

decade.

landmark product with one

last in-

strument to round out the 200 family: the model 21 0A square wave generator,

which would prove emerge a decade

especially useful to "clock" digital circuits as they

Nineteen forty would be a signal year for Hewlett-Packard Co.

Dave

—

for a

number of reasons, not

all

He would be

Julie,

born

in 1943, 1946,

family, the Packards

and 1953,

moved

With the

birth of her

respectively.

Bell's Fix-It

first child,

same time, her

To cope with

home

The

managed

pany helping

to interview prospective

in south Palo Alto,

official act

What makes sums

gave

in

this small

company and

donation important

Many

large firms

worthy individuals and

to

at

Stanford

founders,

its

is

that

it

at the

home

time create some of the largest foundations

history.

at

were

first secretary.

few hours each week

five dollars to local charities. It

of philanthropy by the

which would company's

to put in a

new employees, and company paperwork.

HP

of these

from her job

Lucile resigned

Lu

In June of that year,

growing

first

responsibilities at Hewlett-Packard

Nevertheless,

baby, helping with

this

Shop.

greatly reduced, thanks to the hiring of Helen Perry, HP's still

and

David Wood-

their first child,

several times during those years.

from Tinker

University. At the

Bill

followed by three daughters, Nancy, Susan, and

moves, from the Addison house, was to a larger across a vacant lot

—and

of them product related.

That November, Dave and Lucile had ley Packard.

began to

in the future.

com-

with the

was the

first

three of

all

in the world.

occurred so early in the

around the world donate enormous

to nonprofit organizations.

But

typically, es-

pecially in Silicon Valley, this corporate philanthropy begins after the firm has

achieved

some

real

measure of success, often

after

needs both the tax break and the good publicity. HP's just eighteen total

of

five

months

after the partnership

employees.

Bill

has gone public and

first

donation occurred

was founded, when

it

had

a

grand

HP became a good corporate citizen even before it was

a corporation, likely even before

Also that year,

it

and Dave,

it

was

listed in the

phone book.

in a casual decision that

would have

mental impact upon American business, decided that every

HP

a

monu-

employee

That

Damned Garage

89

should participate in the company's success. Toward that end, they announced a production

bonus

—

that

is, if

the

company exceeded

the employees would

its

production goals,

and thus increased its profits, The two founders had seen this program work at General Radio, but there it had only been for engineers; Bill and Dave decided to extend it to all HP employees.

What seemed mere common decency to

birth of corporate profit sharing,

wealth distribution in the

And

that

stunned the It

was

Bill

and Dave was

in fact the

one of the most important sources of

modern economy.*

just the beginning,

by handing out

staff

get a piece of those profits.

was a practice begun with

because that December

five-dollar

just three

Bill

and Dave

Christmas bonuses for everyone.

employees that would continue even

when HP had 30,000 employees. Hewlett-Packard finished 1940 with total revenues of $34,396, a five full-time

employees, four products in

its

catalog,

staff

of

expanded quarters

in

new baby. The electronics industry was grownew products was accelerating, and little HP, just two

the Tinker Bell building, and a ing rapidly,

demand

years old, already

for

was developing a reputation for innovative, high-quality, and

affordable instruments.

It

must have looked

like

nothing could get in the way

of the company's success in 1941 and beyond.

But the world had other plans.

Calls to

Duty

Whatever plans Hewlett and Packard had made

own

their

was

lives in

at war.

for their

company and

for

1941 and beyond were tossed aside that spring. The world

The German army had overrun most of Europe, bombed En-

gland in preparation for an invasion, and then shifted to attack Russia. Closer to

home

Asia,

in California, the Japanese

were fighting the British in Southeast

had annexed half of China, and tensions were building

to the break-

ing point between Washington and Tokyo over Japanese aggression and the resulting American oil in

embargo of Japan. Warships

regularly called

now

San Francisco before steaming out through the Golden Gate en route to

Hawaii.

Even

as Bill

and Dave had been handing out bonus checks

to

employees

the previous Christmas, Hitler was giving orders for the invasion of Russia,

army was locked in battle with the and London was facing the worst of the Blitz.

the British

War was coming

to the United States.

It

Italian

was

army

in

North

Africa,

inevitable; the only question

90

DAVE

BILL &

now was when. The

U.S. military, understaffed

and underequipped, was des-

perately playing catch-up before conflict erupted. In September 1940, Presi-

dent Roosevelt reinstituted the draft and Dave Packard registered.

was

ROTC

a different matter: thanks to

Army

mission in the

Reserve. For him,

the spring of 1941 the

He was

came.

call

at Stanford,

was

it

Hewlett

Bill

he already held a com-

just a matter of

time

—and

in

Army

ordered to Washington to join

Aviation Ordnance, ordnance (munitions) being the engineering side of the

army otic,

in those days.

lished in electronics

and

Dave Packard had

war

effort:

didn't

it

new

Packard was intensely patri-

hopes of landing

who

a contract.

ran the

that time

I

make

was pretty well

a

estab-

sense." 19

A year before, when HP had just been start-

East Coast sales rep, David Burlingame,

on the Army Signal Corps

Colonel Colton,

"By

make much

a solution.

he and the company's

called in

like

recognized that this was a waste of his talents, and that he could

better contribution to the

ing,

who

But even Hewlett,

laboratories in Fort

had

Monmouth, New Jersey,

They hadn't succeeded, but Dave had met

labs.

So Packard made a

call.

Colton not only

a

re-

membered him, but thanks to Burlingame's regular visits had been tracking HP's work. He quickly agreed that Hewlett would better serve his country from Palo Alto coming up with new instruments and prepared orders to transfer Hewlett under his command. From there he could be quickly

—

designated as an "essential employee" and sent home.

So

far,

mouth

so good. But then the plan hit a snag.

in July,

Though

Bill

Mon-

arrived at

he wasn't released until September. Recalled Hewlett, "The rea-

son that didn't happen before was that we were just a partnership, and the

government

didn't recognize that a partnership could be like a corporation

except under a different

Had

Hewlett

left

title."

20

HP at that moment, the company would have been in se-

rious trouble. Instead, his three-month absence served as a warning.

founders

and

if

now

the

realized that Bill's presence at Palo Alto

company was going

to survive the

have to restructure, scramble to hire its

own

new

The two

was now temporary,

impending

transition,

it

would

engineering talent, and prepare for

war.

Then came

Pearl Harbor.

time as an officer with the

Within weeks, Hewlett was called up again,

Army Signal

Corps.

He would

serve at that post for

the duration of the war, only visiting Hewlett-Packard a couple times,

was

rarely in contact with his business partner.

this

He would not return

and for

nearly five years.

Hewlett-Packard finished 1941 with revenues of $106,458 those of the year before. ing

fast. It

had

to.

nearly $1 million.

It

also

Within two

And

at war's

now had

six full-time

years, those

end

in 1945,

—nearly

triple

employees, but was hir-

annual revenues would jump to

HP would employ

two hundred

— That people.

The company

one he'd

left just five

Damned Garage

91

Hewlett returned to in 1945 looked nothing

Bill

like the

years before.

Partners Apart and Dave Packard are so simi-

Though

the professional careers of Bill Hewlett

lar as to

seem interchangeable, during the war years they

lives.

And

interval

For

if

the two

men

lived very different

ever exhibited envy for each other's experiences, this

was the cause. Bill

many men who

Hewlett, like

have been in uniform but never seen

combat, his army years were, with a few exceptions, a long boring sidetrack in

what was otherwise an exciting

career.

It

frustrated

him knowing

could make a far greater contribution to the war effort back building.

And

that Packard

during the few

visits

to,

But

if

for

it

Tinker Bell

was obvious

was accomplishing extraordinary things with the company

and without him. Dave was proving that he could run needed

at the

he did make to Palo Alto,

that he

something

Bill

HP

by himself

if

he

could never be sure of about himself.

the war years were frustrating for Hewlett, they were far worse

Dave Packard. At a time when

America was

in uniform,

seemed

it

when 4Fs and

that every able-bodied

men

other

man

in

were

in civilian clothes

seen as shirkers, David Packard, a physical giant, a former Stanford three-

man, could

letter

still

be seen around town in a

prosperous from war contracts.

war work was

Thirty years

came

men

suit,

to protest that he

looking increasingly

was doing

"essential"

a waste of time: only a handful of people in Palo Alto

what the company again

And

later, this

calling

had

a clue

did.

—

this

envy would

finally find

time for Dave Packard.

an outlet when Washington

And

the behavior of the two

then, seemingly inexplicable at the time, could best be understood

by

what had happened three decades before. Bill

him go

Hewlett's call to return to the the

first

time, Colonel Colton,

army came from and

Bill

the

would work

man who had for

him

of the war in the office of the Chief Signal Officer in Washington. position, primarily involving the introduction of

It

for

was a

new products from

let

most staff

industry

into the military.

Hewlett quickly learned that military types,

I

was

life,

onerous perhaps for corporate

frustratingly easy for a high-tech entrepreneur:

remember going

to

Washington, and not being used to [only] working

twelve hours a day. ...

I

would

stay

working

until 8:00 at night

—

until

.

DAVE

BILL &

92

"Oh

they finally said, 6:00."

was

It

trying to

a shock.

do things

have to leave

The job

at 6

to close the safe, so

Here [we] were,

—and

in the

you

can't

work

after

middle of a war, and you're

just for convenience's sake you're told that

p.m. I'm sure

command

in the Signal Corps.

when Hewlett and

we have

my wife was pleased, but

you

still. 21

only became interesting as the war ended. Hewlett was

really

transferred to the

no,

The

who ran a special staff new assignment only became clear

of a General Wharton,

details

of this

the team were transferred to the Philippines, ostensibly to

new commercial

continue introducing

products.

When

Japan surrendered,

Hewlett suddenly found himself part of a secret team formed by Koral

Compton,

a legendary

MIT physics professor in the Fred Terman

T.

mold.

According to Hewlett, the team's assignment was "to go into Japan before they could destroy technical evidence and try to find out what they'd been doing." 22

What that meant in practice was that "we interviewed

could to find out what science had been going on in Japan.

was

to find out

I

all

the people

we

think partially

it

what they had been doing with the atom bomb, but we weren't

told that." 23 It

proved to be an unforgettable experience

typical

—and one

that Hewlett, in his

manner, would turn to an immense business advantage.

scientists

Hewlett interviewed was a

man named

Hidetsugu Yagi,

Among who

the

arrived

formally dressed in a cutaway coat and striped pants. Yagi turned out to be the director of

all

nevar Bush.

antennas

—

of Japan's civilian research and development, the empire's Van-

He was

also a

his reflector

They were

famous

scientist, the world's leading

antennas are

still

used today on

many

expert

on

televisions.

also used, in terrible irony, in the altitude-sensitive fuses of the

atomic bombs dropped on Japan. Yagi had made his

new forms of

terror:

he was also the

own

contribution to the

scientist responsible for the incendiary

balloons that Japan developed to float across the Pacific and attack the United States.

Yagi was a very frustrated

ing anything,

man, because the military

didn't

and he found himself being used [mostly]

device. For instance, the

want him do-

as a

propaganda

government announced they were develop-

ing death rays, so he had to develop a death ray, although he

couldn't

do

it.

.

knew you

.

But he also told us where

whom we ought to talk to

all

of the technical information lay and

in the military.

So he was

really quite helpful. 24

Damned Garage

That Yagi's experiences,

and

his willingness to turn

93

on

his

former bosses, was

a

warning to Hewlett about the danger of disgruntled former employees.* But Hewlett's tour of occupied Japan had an even bigger lesson to teach.

The more he and the team traveled the country, the more disappointed they were by Japan's much-vaunted war machine.

I

remember

me was device

.

I

thought

.

.

called IFF,

by looking

tell

or an

enemy plane.

the

was pretty primitive. The thing that impressed

army and

the lack of cooperation between the

could

if

it

army plane

which

at

is

navy. There

was

"Identification of Friend or Foe," so

a

you

radar whether you were looking at a friendly plane

work with

[But] the navy IFF did not

flew over the navy ship

[it]

would

the

get shot

shows the degree of competition between these two groups.

army IFF, at.

That

... It

so

just

was

a

very fundamental problem. 25

Seeing the

literally fatal effects

of incompatible technology standards on

the Japanese military had an enduring impact

on

come (and even

would play

to this day), Hewlett-Packard

Bill

—

tablishing standards in the electronics industry

Hewlett. In the years to

that

is,

a leading role in es-

finding a

common

ground of performance and compatibility on which highly aggressive tech companies can compete without tearing

their industry apart or ruining the

experience for customers with products that cannot be interconnected.*

Some

reached a consensus. purely

selfless reasons,

HP

wasn't involved in these working committees for

of course

—the

story of the

company has always been

—but the

an interesting balancing act between good works and

mere

fact that

needed

more before they

of these standards committees sat for a decade or

it

stayed at the table for years,

to reach a solution,

is

a measure of Bill

self-interest

and accepted the compromises and Dave's commitment

to the

process.

The most famous of began

its life

these standards

is

inside Hewlett-Packard as the

to the entire industry in the late 1960s,

became the underlying standard peripherals

—and proved

to

the IEEE-488 interface bus, which

HP Interface Bus and adopted

(HP-IB). Offered

in the mid-1970s,

computers and

for linking together

it

their

be the crucial standard that made possible the

personal computer revolution. In

December

1945, Lieutenant Colonel Bill Hewlett at last earned his hon-

He returned home to Palo new daughter and son. He was titularly

orable discharge and was demobilized.

Alto not

only with Flora, but with a

the half-

owner of

would

fit

a thriving business, in.

though he wasn't sure

just

where or how he

94

DAVE

BILL &

Balancing Act If

Hewlett was bored with his work most of the time during the war years, for

Packard

was just the opposite:

it

and

contracts, just to

it

HP shuddered under an avalanche of defense

took every ounce of energy and every

bit

of

skill

Dave had

keep up.

Almost from the moment that Hewlett

left

for the army, Packard resolved

way he could serve the war effort was to give his all to helping the company meet its obligations, produce top-quality products, and make its deliveries on time. To do that, Packard said, "I recall moving a cot into the facthat the best

many nights." 26

tory and sleeping there

The

contracts

came

in quickly after Pearl Harbor. Strictly speaking,

HP was

not a supplier directly to the military, but to the companies that manufactured

weapons and

infrastructure for the military. That

typically called

upon

at the

meant Hewlett-Packard was

very beginning of the design process

turn meant that contracts were already pouring into the before

Bill

Hewlett

—and

that in

company even

little

and long before most of the U.S. military even saw

left,

combat.

Thus HP, already handicapped with the ment, had to ramp up

at lightning speed.

employment

Alto branch of the state

he could get

And, art,

— mostly women and

as usual,

he proved lucky in

loss

of half of

its

senior manage-

Packard took to haunting the Palo

office in search

retired

his hires.

men

A

of talent.

—and was

retired

army

He took what

grateful to officer,

do

"Cap" Stu-

hired to take over payroll, proved superb at the job. Recalled Packard,

did a very thorough job and

made

sure that everything balanced

so.

down

"He

to the

last penny." 27

A

retired

mechanical engineer, Rufe Kingman, brought in to make preci-

sion bearings and gears for an antenna servo-motor contract, not only did a brilliant job,

but in the process designed a machine to make plastic "cards" to

hold the components.

proved so innovative and

It

effective that

HP

used the

process for years.

HP

during the war years was Noel

Eldred, the engineer recruited out of Heintz

and Kaufman. During those

But the most important person to join

darkest

moments

at

HP in

the office, fearful that he rolling in

and would

must have

felt

let

1942,

when David Packard was

would never be

down

himself,

very alone. After

all,

Bill

man's Radio Lab. Then

had been

become

Oliver.

it

on

a cot in

his employees,

and

his country,

he

dream of what would become Hewlett-

three,

Only then, thanks

part of the plan.

Bill,

sleeping

up with the many orders

Hewlett and Ed Porter sitting outside Fred Ter-

Packard had begun with

by Barney

the

able to keep

when

they were joined in the dream

to his friendship with Bill,

had Packard

That

Now Ed Porter was gone

—

Damned Garage

first

95

to the air-conditioning job in Sacramento,

then to Bowdoin College to grad school, and now, thanks to Hewlett's recom-

mendation, he was working in the Bureau of Ships. Barney Oliver, graduated well after the others, was working

And

at Bell Labs.

who had even

Bill

Hewlett, his business partner, was gone. Dave Packard, the last to join, was

now the last left. He couldn't do

Nobody

himself.

it

revenues quintupled to

more than $500,000

again in 1943. Staffing grew even shifts

—and then would nearly double

faster, until

company was running two

the

per day. Adding to the challenge was the fact that most of the workers

were either short

and 1942, HP's

could. Between 1941

women,

retirees or

the former short

on job experience. Everyone, from the

ecutives like Doolittle, stepped

up

on endurance and the

latter

lowest-level assembler to the ex-

to the task magnificently. But

none more so

than the "other Noel" (because "Ed" Porter was Noel as well), Noel Eldred.

During the war least

years, Eldred

Dave Packard's most

became,

if

not the surrogate for Hewlett,

reliable operations officer.

At

first,

at

when new prod-

uct development was crucial, Eldred acted as HP's chief technologist. Later,

when production of

those products

became all-important, he

running HP's manufacturing. At the end of the war, when

from the dwindling military market

trying to shift

customers, Eldred

cial

ber, "I liked to it

worked out

jumped

do things with

a

in

shifted over to

HP was desperately

to industrial

and commer-

and ran marketing. Packard would remem-

broad brush and he'd

fill

in

all

the details

and

fine." 28

Having been

tested

on

his leadership skills,

Dave Packard next faced

a test

of his friendship. In the beginning of the 1940s, ITT, under the direction of

its

founder, Sos-

thenes Behn, built one of the largest electronics factories in the world. The

New Jersey plant was magnetrons

was

as

would that

designed specifically to be the primary manufacturer of

war

for the Allied

much

effort.

maneuver

political

recall, tartly, "It

was

laid

Like

It

decisions

made by Behn,

as thoughtful business strategy.

out with wide

Behn could comfortably escort the

had only one problem:

many

aisles in

As Packard

the production area so

big-brass visitors

couldn't even produce one

it

from Washington.

It

good tube!" 29

to the one man in his entire multiwho he believed could save him from this impending Litton. No doubt regretfully, Litton agreed.

In desperation,

Behn reached out

national corporation disaster: Charlie

Now Dave Packard had not only lost his partner, but his mentor. As Litton headed

east,

he was passed by Jack Copeland, another ITT ex-

ecutive, going in the other direction.

Litton Labs

and keep

it

Copeland was assigned

going until Charlie could return.

been a daunting task for any technology entrepreneur

—

It

to take over

would have

but, incredibly, Jack

DAVE

BILL &

96

Copeland was neither an entrepreneur nor even Litton Labs,

and would

What happened loyalty in

one of the

is

and sense of honor. He could

Redwood

orders,

likely kill the place

next

—

City

after

all,

there

a

and Dave himself could barely

He was

lost at

within months.

David Packard's

greatest testaments to

easily

was

a technologist.

have ignored what was happening

war on,

fulfill

his

HP

was being crushed under

own

And

duties.

Charlie was

way

gone. Instead, Packard contacted Copeland and offered to help in any

he could. His offer was happily accepted, adding more work to Packard's

crowded schedule.* Then, a year

and

later,

the unthinkable happened: a

utterly destroyed Litton's

broke out

fire

machine shop. Without

it,

the

at the labs

company simply

could not function. Once again, Packard came through: he offered to ton Labs use the

HP

machine shop during the night

shift.

"That

let Lit-

fitted their

schedule and enabled them to keep going until they could rebuild and re-

equip their

own

plant." 30

would return

Litton Labs survived. Charlie rebuilt

machine shop). As Litton

billion-dollar corporation,

and a

Industries, the labs vital

company (and would go on to become

to a thriving

a a

defense contractor for the United States

throughout the cold war.

A wife and baby at home

— and now another on the way. Sleeping on

Dealing with two

at the office.

shifts

a cot

of aged and inexperienced workers.

Turning over his machine shop every night to strangers. The business and staff

growing so

move

to larger facilities.

plant every six get

fast that

months

the entire

And

company would soon have

a business partner

—

on the

globe.

pack up and

lucky to stop by the

just long enough to enjoy a celebratory dinner and

an update on the status of the company

tant spot

who was

to

It is little

—before shipping out

wonder

that in late 1942

to

and

some

dis-

early 1943

man close to cracking. He had always been perfect and almost perfectly unflappable. He had always made it look easy. But not this time. Maintaining your integrity and upholding your standards isn't hard when times are good; it is infinitely harder when times are tough, especially (as Silicon Valley has seen many times since) when part of the problem is that business is too good. David Packard was a

—

At times

like those,

even a calm man, given the right goad, can explode.

And that moment came for Packard just a few months moment so singular in Dave Packard's long career that even chose to

tell it,

occurred, in The

in a

more

restrained

It

he never forgot

manner than

it

was it.

the war,

I

came

to the office to find

a

He

actually

HP Way:

One day early in cal

undoubtedly

after Bill left.

two men from the

lo-

Renegotiation Board waiting to see me. Renegotiation was a proce-

That

Damned Garage

97

dure established by the federal government to prevent companies from

making

excessive profits

from

under which the government

their

war

efforts. It

was a good program

tried to allow a reasonable profit for

good

performance.

and

Bill

I

had decided we were going

resort to long-term borrowing.

found we our

At to

I

and not

profits

strongly about this issue, and

some

members of

discussion with the

seemed

the board, they

be impressed with what we were doing, but said they had a limit of

this point,

on

equity. 31

an exhausted Dave Packard snapped.

remain even remotely

It

took everything he

cordial:

pointed out that our business had been doubling every year and that

would continue

to

do so

for several years.

I

also told

them

that

my salary at a lower level than it should have been because it was fair for my salary to be higher than Bill's army salary.

I

Moreover, that the

I

pointed out that

government could not

lower price. For these reasons

I

we had

they remembered

get better products

would not accept

had kept

did not think

from anyone

like

else at a

12 percent on equity.

man with a booming voice him making bone-crunching

been an intimidating experience. And,

I

in

your face (espe-

must have

blocks)

good bureaucrats, the two men

from the Renegotiation Board reacted by doing what bureaucrats do kicked the problem upstairs. Concluded Packard, "They said

my case

to

Washington.

I

I

best:

they

would have

to

did so and worked out an agreement with the

government that gave our company virtually everything we asked

—and won.

Packard called their bluff rule has

it

controlled our costs to the extent

To have a towering young cially if

take

we

were able to finance 100 percent growth per year by reinvesting

12 percent of profit they could allow

had

our

profits.

After to

felt

I

to reinvest

It is

for."

often forgotten now, after the

been regularly compromised by their successors, that during

Bill

and

Dave's tenure at the top of Hewlett-Packard Co., healthy profits were sacrosanct. list

It is

not for nothing that even in the company's famously enlightened

of corporate objectives, "Profit" comes

Again and again,

abandoned

Bill

first.

and Dave dropped beloved company products, even

entire businesses, if they failed to

That point of view was expounded for the

from the Renegotiation Board, and

unmatched

it

first

produce an adequate

would prove

success in the years to come.

profit.

time to that frightened pair essential to the

company's

BILL &

98

DAVE

Eye of the Storm One of the most interesting attributes

being crushed by work and the

that, despite

inexperienced

showed

of Dave Packard during the war years

he

staff,

still

managed

is

of hurried deliveries and an

stress

by

to stand

his core principles.

He

that in the episode with Litton Labs, as well as in the fight with the

government over

profits.

His refusal to take as a salary a penny more than

Bill

Hewlett was making in the army showed that he was unwilling to take advantage of either his country or his business partner.*

But perhaps the most remarkable

trait that

period was his willingness to take huge

Packard sustained during

A typical

risks.

executive, even a die-

hard entrepreneur, when faced with a business growing fivefold every

new

wouldn't even consider launching into a whole stead

work to

year,

market, but would in-

consolidate current gains.

But that wasn't David Packard build a successful company. diate challenges, firm.

this

overwhelming

Even while the

fate

looking to the direction

—he wasn't

in business to get rich, but to

And that meant he had to look beyond the immeas they were, to the

of the world was

long-term growth of his

undecided, he was already

still

HP would take in the postwar world.

Much of HP's business during the war years came from the U.S. Naval Research Laboratory.

It

was among the most progressive and inventive of the

government's technical operations and a major customer of HP's off-the-shelf instruments. As Hewlett-Packard was always looking for business,

long before the company's sales and technical people began asking

might be any other instruments the lab could

The most Haeff. Haeff tor

positive response

and

his

and they were

a clue

how

came from

a section

really

in search of a reliable manufacturer.

were a

have any of miracle, a

and the

little

signal genera-

Though HP

didn't have

and was suffering from a seriously over-

its

signal generators

make

sure the

first

got back

recalled,

we

didn't

machinists did their usual

new engineer named Norm Shrock stepped up

Haeff was more than impressed. just to

when we

overly ambitious because

the tools needed." 32 In the end, the

NRL got

there

head named Dr. Andy

burdened machine shop, Packard took the contract anyway. As he

"We

if

use.

team had designed a prototype microwave

to build these devices,

wasn't

it

to direct the project,

on time.

He

gave

HP

a few

project wasn't a fluke

—

more small

contracts

and when the company

again delivered on budget, on time, he was prepared to

make an

offer.

Would

Hewlett-Packard, Haeff asked, be willing to work on a top-secret project that

might make a major contribution to the war

The

project

effort?

was code-named "Leopard," and

it

Packard quickly agreed.

proved to be an extraordi-

Damned Garage

That

99

narily sophisticated technology for the era: an electronic countermeasures device that, in theory,

where

own

else.

would make

To accomplish

this,

a ship appear

HP

on radar

oscillators (Bill's other, absentee, contribution to the

vice that could pick

up incoming enemy radar

and then, by generating bury them dering

—thus

a

it

were some-

signals,

war

its

effort) in a de-

synchronize on them,

new signal, "bounce" the pulses back after a delay or

either changing the apparent location of the ship, or ren-

nearly invisible.

it

The components themselves, proved to be the easy nas and

as if

needed to design a system that used

part.

which

in all of

HP now

The challenge came with

had experience,

the design of the anten-

the servo motors needed to control them; the sending

and receiving

antennas had a tendency to interfere with each other.

The contract

called for

HP

to deliver a finished, fully tested system to the

Naval Research Lab by mid- 1945. The company

model cost.

for the

NRL on

The record

made

it,

Chesapeake Bay in February. But

suggests that

Dave Packard may have

field-testing a pilot

came

it

slept

on

at

enormous

his cot at the

factory for the entire duration of the project.

The Leopard contract was not World War

company

II,

but also

into the

just

most important.

likely the

microwave business

communications industry

—but

also

players. For the next quarter century,

facturer of

microwave

The Leopard at the

—

It

not only brought the

right at the birth of the

made

it

during

largest contracts

modern

one of that industry's leading

HP would be the world's leading manu-

signal generators.

project also gave the company's engineers a

time was called an "A Scope"

engineer-entrepreneur

— and

to

work with

its

first

look

at

what

designer, a brilliant

named Howard Vollum. The A Scope would soon

evolve into the oscilloscope, one of the

struments.

one of HP's

most important of

And Howard Vollum would soon

build them. Hewlett-Packard

would make

start a

a fortune

all

electronic in-

company, Tektronix, to

on

its

own

oscilloscopes,

but Tektronix would, maddeningly, be one of the few companies

HP

would

never best.

With the Leopard

project, Hewlett-Packard positioned itself for the post-

war world and, given what was

to

come,

likely

ensured

its

survival.

—and

Packard, at the most unlikely time, had taken a gigantic risk

it

Dave

had paid

off handsomely.

Few

celebrated high-tech entrepreneurs, before or since, have ever been

that forward-looking, or that risk-embracing. For those later generations

saw only the aged business tion, this

is

titan at the top

a very different image:

rolling tech entrepreneur.

who

of a giant multinational corpora-

young Dave Packard

as the ultimate high-

— DAVE

BILL &

100

Reassembly With the war's end, Dave Packard took stock of himself and

now

Hewlett-Packard Co. was

years.

had annual

It

line that

had grown

—

a fact that

work

no doubt aston-

for the last three of those

more than two hundred emRedwood Building, and a

facility in the

in four years

product catalog that included

oscillator to a

in

of $1 million,

sales in excess

new headquarters

ployees, a large

product

six years old

immersed

ished Packard, his having been so

company.

his

from

Hewlett's original audio

Bill

oscillators,

audio signal generators (which turned out to be big

microwave generators,

sellers

because of their

use in the making of proximity fuses), wave analyzers, and distortion analyzers.

The company also had an

cial contacts,

and

extensive network of

government and commer-

a reputation for the highest quality

—the

last

underscored in

when HP became one of only three California companies to earn the prestigious Army- Navy "E" Award. Packard knew that he had also put together a strong and highly adaptive management team, and that his factory floor was filled with talented and loyal 1945

craftsmen. Best of

own, and whose commitment great as Packard's,

every bit of

was

man whose

Hewlett, the

all, Bill

best

matched

company was

to the success of the

coming home. Packard knew

finally

and experience both men had

skill

skills

that

it

his

at least as

would take

through the tough post-

to get

war years looming just ahead.

What

is

unlikely

precisely because

it

is

that

Dave Packard included

didn't

into his (or

fit

years, the intangible assets of the

best of

—

a

HP

already had

huge reputation

fulfilling its contracts

all,

mental audit of HP,

else's)

thinking in those

Hewlett-Packard Company.

young company, these were considerable. providing a national stage

in his

anyone

And

—thanks

for such a to the

war

for innovation, quality, and,

on time. Thanks

to

its

willingness to

work

openly with other companies (even competitors) and to help out corporate friends in need,

it

had already developed

a

huge reservoir of goodwill. Because

of that and despite their relative youth, Packard, and soon Hewlett, would be seen by their peers as industry leaders and trusted spokesmen.

But there was even more than ever.

The technological advances

that.

The postwar slump wouldn't

in the military during the

huge commercial, then consumer, electronics

and with

it

tracting

and

in the

that talent

end would win the

By 1945, by intention or places to

from

and manufacturers. Those companies

and keeping

work

in the

war signaled

boom was waiting in

a race to recruit the very best talent,

to marketers

last for-

scientists

that a

the wings,

and engineers

that did the best job of at-

would invent and build the

best products

race.

not, Hewlett-Packard

world and, when

it

came

was already one of the best to personnel

management,

That easily the start.

most innovative.

when one

In 1942,

and Dave stepped

Bill

Damned Garage

Profit sharing

101

and annual bonuses were

just the

of their employees tragically contracted tuberculosis,

in

and supported the family

financially.

Then they took

the extraordinary, yet characteristic, step of establishing a catastrophic health

insurance plan for

HP

employees

—

a

commonplace now, but

a radical inno-

vation at the time. To that, six years later in 1948, Hewlett-Packard added an

insured pension plan for

all

company employees with more than

five years'

service.

And

that too

was only the

start.

made had

sion Hewlett and Packard

ness, even their choice of buildings.

and move the company simpler and

more

Road almost

During

this era,

a far-reaching

When

Bill

dot-com era

like a

sell

every deci-

to construct

survivor of a

would stand on Page Mill

—the two founders consciously decided

keep the interior open and barnlike. That way, they figured,

bad they could always

like

impact on modern busi-

—which,

primitive technological world,

to the

seems

and Dave decided

Redwood Building

to the

it

if

to

business went

the place off as a grocery store.*

Obviously, that dark day never came. But the wide-open floor plan, which

promoted communication between employees and democratized any between labor and management, proved so

chies

retained

it

for

all

future

company

buildings,

effective that Bill

and

it

layout of the electronics industry. Indeed, what began

wood cles,

hierar-

and Dave

became the signature

on the

floor of the Red-

Building became, in the form of open floor plans, dividers, and cubi-

most

the

visible feature

of daily business

life

in late-twentieth-century

America.

The crunch of

wood

Building,

war and

the

contracts during wartime, the

and the quality of

right

floor plan of the Red-

HP had been able to hire during

talent that

Packard to develop two management techniques

after also led

would resonate

that

open

up

and

to the present,

are likely to be studied

and

imitated for generations to come. Both were born in Dave's experiences at GE,

were tested in the crucible of a young cause they

came

Bill

fit

HP

in wartime, and, in large part be-

Hewlett's personality even

more than Dave

Packard's, be-

institutionalized in HP's corporate culture.

The 1980s,

first

of these, beloved by management theorists and authors in the

was "Management by Walking Around." This was the notion that

manager's job was not to

but to be out on the

sit

in

an

office

floor, talking

help, resolving disagreements

and

pushing papers and

firing off

a

memos,

with his or her people, looking for ways to disputes, supporting rather than

dominat-

ing the staff.*

The second,

called the

"Open Door

Policy,"

was unfortunately often con-

fused with the simpler, and less effective, policy of the same

number of progressive companies of the

era.

name

offered

by a

The cruder "open door" of those

DAVE

BILL &

102 firms typically

she could take

that

an employee had a concern or complaint, he or

if

to their superior at

it

any time and get a hearing.*

and Dave's Open Door Policy was much more inventive and power-

Bill ful. It

meant

any employee of the company,

said that

or complaint, could immediately take if

it

the problem wasn't solved, they could take

supervisor

—

in theory

The only restriction top) was that

could

all

move up

all

(to

the

way

to the

CEO

it

he or she had a concern

if

immediate supervisor, and,

to their

to the next level above that

or the chairman of the board.

keep every complaint from instantly being sent to the

possible remedies

the chain of

had

to be exhausted at each level before

In practice, this rarely happened. But in theory, that further

cemented the

the two founders. sent to Bill

And

it

command. feeling of a personal

indeed, forty years hence,

and Dave from the deepest

could

it

at

any time, and

bond between HPers and was

it

recesses of the

just

such a complaint,

company, that arguably

saved HP.

This kind of attitude came naturally to the two men, and even not, the pressure cooker of daily business in the early 1940s

them was

to

it.

Once

instituted

—by the

reviled rather than feared at

late

had

if it

would have forced

1950s the aloof, detached manager

HP — Management by Walking Around

had

the practical effect of turning the organizational chart upside down. In that inverted environment,

when

it

worked

right, the

higher you were in

agement, the greater the number of people you reported

HP man-

to.

These countervailing forces of authority and responsibility, meeting each other across the

HP

org chart, had the effect of leveling the organization

the point that even the entry-level hire or the janitor felt

that he or she

to find

knew

Bill

remedy anywhere

and Dave

HP

is filled

I

is

a classic of the type,

from many years

met both of them when

1988

—an award given

world.

I

to 100 sales reps

John Young, congratulating

me,

it's

Later

on

history of Bill

Then Dave

down

the chain of

command.

all

of the winners.

said, "Well,

My it's

in

and managers from around the

a great honor. Needless to say,

her."

were unable

later:

in the reception line

band's hand and congratulated him.

from the South

to

shift

directly to the

was awarded the President's Club Award

They were both standing

which was

that if they

—

with employee anecdotes of precisely this kind, where

the founders stepped in to help an employee far

Here

and

company they could go theory, but in practice. The

else in the

founders. This wasn't just true in

and Dave's

personally,

on the graveyard

I

with then president

was one of 5 women,

Dave Packard shook

husband

said,

"Oh

my

no,

hus-

it's

not

very nice to have a young lady

here."

that evening,

I

was the

first

one up

to receive

my plaque from

Damned Garage

That

&

Dave

Bill,

we were

John. In rehearsals

told

103

we would

get

our award,

then turn around to have our picture made. [But] the four of us turned

around, and there was no one there. So while someone ran off to get the got the chance to talk one-on-one to them.

photographer,

I

they could get

me

I

was almost

anything,

if

they could ever help me, to

I

was involved

didn't

and whispered

fit in.

in

band doesn't do After

my

He came up

that as well as

He

professional reputation.

and gave them

forever

once when

I

numbers

it,

he

made

it

even took away

to another sales rep,

my

back

new Apollo

bet your hus-

a point to try to destroy

my

customers that

who was

money from my commissions.

I

I

ended up

couldn't take that crap anymore.

sonal, hand-written letters apologizing for that behavior

would

few days

my house

get to the

later,

to talk to

He should

bottom of

me was

It

I

just quit-

wrote

me.

He

not be an

me

Bill

per-

and assuring

me

it.

they sent the corporate

want that man out of Bill else.

I

for the customers in order to

and Dave and told them what had happened. They both wrote

A

had

I'd

he was.

as slimy as

the orders were cancelled, he gave

my boss, but he was afraid of him. So

company because

that they

my

dirty.

talked to

I

when

customers, taking away

cheap and

ting the

up. Then,

a

was on the phone

do." Gag!

found out that fake orders had been entered get his

I

my shoulders, "I

ear as he massaged

told personnel about

I

me

to

HP

harassment thing.

in a sexual

had recently bought Apollo Computers and our area got

He

if

them know.

speechless!

Several years later

boss.

They asked

let

kept asking

human

me what

I

relations director to

wanted, and

I

said, "I

& Dave's company before he does this to anyone HP employee. He doesn't fit with the HP Way."

A few weeks later the man was fired. 33 this occurred when Hewlett-Packard had more than 80,000 emmore than one hundred countries around the world. It was just such a note, from a secretary in that case, that led Bill and Dave to return to the daily operations of the company in the great final act of their professional

Note that

ployees in

career (see chapter 7).

Management by Walking Around that arose at

HP

just after. This plicit.

In

fact, it

become famous self

because of

one was

Bill's

as subtle

and Dave's experiences during the war and

and complex and

never had even had a as the

wasn't the only corporate philosophy

name

—but

MBWA was simple and exit

underscored what was to

HP Way, an overarching corporate attitude that was itHP

too ineffable and subtle for outsiders (and even at least one future

CEO)

to fully understand.

— DAVE

BILL &

104

This second philosophy was, to put the interactions between

HP

simply,

it

Not merely

trust.

integrity in

employees, though that was part of

it.

the ability of customers, strategic partners, suppliers, distributors, ers to trust that

HP

would keep

though that was part of No,

deliver

on

just

retail-

agreements

its

too.

it

was even more profound,

it

entrusting every single

word and

its

Not

and

radical,

and far-reaching than

HP employee, from top to bottom, to

that. It

was

do the work that

they were assigned, to take responsibility for their actions, and to speak for

and represent the company

as if they

were the owners (which they were) and

the founders themselves.*

An

anecdote from the early years of Hewlett-Packard, told and retold by

generations of HPers, would

and Dave

cultivated

There was

—and

come

to symbolize the climate of trust that Bill

furiously enforced

—

at the

company.

HP that parts bins and storerooms were to be

a standing rule at

left open. The genesis of that rule had, like many negative examples, come from David Packard's experiences at General Electric in Schenectady.

always

While he was

there, the

GE

plant was suffering from a perceived security

Tools and instruments were disappearing

crisis.

pany's storage rooms. In reaction,

The

reality, as

GE

—

after

all,

from the com-

the attic he shared with his

with borrowed devices

filled

right

to the perpetrators.

Packard well knew

engineers was

and

GE clamped down, installing security guards

and threatening serious punishments

fellow

left

—was

home

ployees had simply taken the tools and instruments

that

to keep

most em-

working on

unfinished projects from their jobs. At worst, they were using them for hobbies that only

enhanced

their job skills.

Now, having criminalized what was

GE

productivity,

these

— or

borrowed items back

was even worse than challenge to see just

ever again

that: before long,

how much

it

When debacle:

employee dedication

to greater

work on

their

own

time. In fact,

angry employees were taking

it

it

as a

they could sneak out of the storerooms under

the eyes of the security guards.

and turn

in fact

but guaranteed that nobody would ever bring one of

all

GE had managed

to take a

minor

irritation

into a major morale problem.

it

came time

"When HP

to build his

own company, Packard remembered

got under way, the

GE memories

were

still

this

strong and

I

determined that our parts bins and storerooms would always be open. Sometimes not everyone gets the word, however, which accounts for an incident that occurred

some

years

later." 34

Packard was being charitable. The "incident"

HP

legends.

by putting

a

No doubt some

is

one of the most cherished

officious supervisor decided to assert his

padlock on the storeroom in his department.

It

was

power

a big mistake,

Damned Garage

That because one weekend

105

Hewlett wanted to do some work and stopped by

Bill

When

that particular storeroom to pick

up

locked, he exploded, stormed off,

and returned with

and snapped the padlock

off.

a microscope.

In the storeroom he

he found the door

a big pair of bolt cutters a signed note stating

left

that the door was never to be locked again.

One

Monday morning, seeing the know who has vio-

can imagine the supervisor arriving on

open door and the

split

padlock and angrily demanding to

lated his edict

—then reading

Hewlett as his

subordinates smother grins behind him.*

There

is

who was

easily to Bill Hewlett,

heart of gold. able.

stunned silence the note from William R.

every reason to believe that this attitude of trusting workmates

came

pletely

in

Whether or not

But there

is

no question

it

came

that

it

when

distrust

HP

dysfunctional it

came

—

filled

to the point of

unknow-

is

his life experiences to

a

up and make the

to step

he had seen just the opposite, an operation itself utterly

Dave Packard

had learned the power of

worked together and trusted one another

tivity

the classic gruff character with a

naturally to

was reinforced by

that point. In football at Stanford he

com-

team that

play.

GE

At

with talent that had rendered

having exactly zero net produc-

to fabricating rectifier tubes

and contempt between the engineering

—because

staff

it

was rent with

and the factory

floor.

during the war years had only deepened Dave Packard's apprecia-

tion of the

power of

trust in creating a successful enterprise.

perpetually understaffed, and lacking sufficient

had no choice but

—

responsibility that they

to entrust his

literally

management

assistance,

turers in the United States

—

—and pray

In the end, the employees not only did

was asked of them, they turned

HP

he

employees with inordinate amounts of

placing the fate of the firm in their hands

would come through.

recognized.

Buried in work,

into

all

that

one of the highest-quality manufac-

a fact that even the federal

They answered Packard's unprecedented

government publicly

trust with

superhuman

performance, and his loyalty with their own. Packard, true to his personality, learned that lesson better than anyone.

One and Only Time If the

1940s were the years of loyalty at HP,

it

wasn't only because

Bill

Dave learned the importance of not only taking care of each other and

and their

employees, but also that they came to appreciate that this loyalty extended to

— DAVE

BILL &

106 their teachers, their

community, and

their nation

likely people, like their competitors. Ultimately,

of loyalty might

demand

—and even

most un-

to the

they learned that the real

test

taking trust to terrifying heights.

But even that might not have been enough to convince the duo to maintain this philosophy, at

all costs,

giant multinational corporation.

of trust that haunted

tive lesson, a betrayal

careers

—

when Hewlett-Packard had grown to a That kind of commitment required a nega-

even

and made them

and Dave

Bill

for the rest of their

privately swear never to repeat that experience

again.

Hewlett and Packard had anticipated that the end of war would cause a

slump

in the

demand

for electronics instruments

—

after

all,

the military and

defense contractors had represented a huge market with an insatiable de-

its

mand

for the newest

and the

best.

But

if

demands of wartime had driven

the

technology to unprecedented heights, there was no equivalent need the commercial or industrial worlds.

On

world were

yet

in

the contrary, after four years of ra-

tioning, repurposing of production to military goods,

best technical

— —

minds into uniform, any advances

and the

transfer of the

for tech in the everyday

likely in reverse.

Thus, what was expected to be a downturn with demobilization turned into a rout. Hewlett-Packard's business,

protected by the company's

now

which

Bill

and Dave hoped might be

diverse product line, collapsed. In 1945,

company revenues had been nearly $1.6 million. In 1946, they were half that. The only good news in all of this was that HP's labor force was already beginning to drift away, as many of the women workers, with husbands coming

home, abandoned

their years as Rosie the Riveter to

go back to being

housewives.

But even that wasn't enough. In the end, of

layoffs.

Bill

and Dave faced the

bitter pill

Before they were done, HP's staff of two hundred had been cut to

eighty. This

was the hidden

cost of loyalty:

companies that hired and

fired

employees with impunity never suffered the pangs of conscience during major layoffs. But

Dave Packard

especially

knew what

the company, what they had sacrificed, and

these people

how much

them. This era was one he rarely discussed, other than to dip.

But we kept going even

—

for

he depended upon say, "It

was

a

tough

so." 35

So traumatic was the experience for both years

had done

men

that for the next thirty

their entire tenure directing the daily operations of the

Hewlett-Packard never again had a mass

layoff. In

company

an industry characterized

by endless cycles of overhiring and brutal cutbacks, Hewlett-Packard was the shining exception.

HP

was actually willing

times, thus risking the loss of fire

to forgo extra hiring during

added revenues,

employees during the bad.*

to keep

from having

to

good mass

—

*

Damned Garage

That

107

Even in the darkest days of 1973-74, when the end of both the Vietnam

War and

the Apollo space

entire electronics

way to

program triggered

and aerospace

navigate their

a recession that devastated the

industries, Bill

company through without

and Dave found an inventive firing a soul.

Their success

at

saving employees during those years stood as a perpetual rebuke to almost

every other high-tech company.

This

not to say that Hewlett and Packard suffered from the weakness,

some great entrepreneurs, of being unable to fire bad or unsuitemployees. The long-standing joke that the only way to get fired at HP

found able

is

in even

was to shoot your boss

—and

that even then you'd get a second chance

wasn't really true.

and Dave learned

Bill

One

of the most

after

we

difficult steps that

to

I

and

painfully. Recalled Hewlett:

can remember occurred a few years

company. This was when we had to

started the

duction manager.

we had done

that lesson early,

We

finally

had

improve our management

skills,

down

to a question of his job or the jobs of

The impact of has led us to

that decision

make every effort

ployee. Interestingly enough,

our pro-

he was not doing the job

needed to be done. Although he was a good

that

release

to face the fact that, despite everything

is still

to find

all

with

friend,

it

simply came

of the other employees.

us,

and

in subsequent years

an appropriate niche for a loyal em-

we have had

a

good success through the

years in relocating such employees within the company. 36

The heart of

this relocation

program was the notion

working employee shouldn't be punished for being put his or her ability.

On

the contrary, that

is

that a loyal, hard-

in a position

beyond

the fault of the supervisor for not

paying attention, or not understanding that employee's

abilities.

The under-

performing employee was given the chance to look elsewhere in the company, or take a demotion, without being stigmatized.

Improper, or offense,

illegal,

behavior was another matter. That was indeed a firing

an insult to a company synonymous with corporate

resulting dismissal

was supported

all

the

way to

Most problematic were those employees who, sheer incompetence, just didn't viduals, Hewlett-Packard

work out

showed

at

integrity,

and the

the top of the company. for personality reasons, or

HP. Toward these benighted indi-

a deep humanity.

This attitude even reached beyond the walls of the company. John

Minck

recalled

an encounter with Hewlett in the mid-1960s during a management

meeting

at Rickey's, a local restaurant. It

was

chief competitor in oscilloscopes, Tektronix,

a period

when both HP and

had both concluded

its

for business

reasons that they no longer needed independent sales representatives.

BILL &

108 Tektronix had simply fired

its

DAVE

independent

reps.

HP, which shared

many

of the same reps, decided instead to buy them out. Eleven of the thirteen reps

took

HP up

on

its

—

offer

a very expensive proposition.

Confused by the decision, Minck approached Hewlett:

I

asked

move.

I

him why HP had noted to

Bill that

spent something like $10-15 million for this

Tektronix hadn't spent a penny, but simply re-

leased their reps, one at a time, over a couple of years to sition,

and

set

up

their

own company sales

smooth the

tran-

offices.

His answer was, "Goddamnit, Minck, you just don't understand the situation.

These reps are

on

ness with them,

all

personal friends. For a decade,

a handshake.

We owe them

we

most of our

did busi-

success, in

building both the industry and our company, and there was no

were going to

just fire

them one

way we

at a time." 37

Baby Boom In 1947, to

demand

once again

finally

rise.

bottomed out

America's warriors had

businesses, filling corporate offices,

gree

on the GI

Bill.

and began

come home and were now building

and rushing through

a quick college de-

Their wives were giving birth to the baby boom, the largest

demographic bulge tainment devices

in the electronics industry

—

in

human

history. Together, in the appliances

radio, television, stereos

eration propelled the second great

boom

in

—they purchased,

consumer

At the same time, the United States was

itself

and enter-

this

new

gen-

electronics.

rebuilding. After the double

of the Depression and then the Second World War, America's physical

hit

plant was woefully out of date.

The promise of

rural electrification, a national

highway system, and pervasive telephony would Meanwhile, three other new factors

at last

—two

war, the third sitting in a laboratory awaiting war's

perfected fine

—were

also

emerging on the scene,

all

be

realized.

of them products of the

end and the time

to be

of them promising to rede-

both electronics and the postwar world.

The

first

of these, as already noted, was microwave, born out of the Va-

rians' klystron

and

radar, but rapidly

moving

into the world of wireless

telecommunications.

The second was information been created during the war to

compute complex

in

processing.

The

Germany, Great

artillery trajectories

first

modern computers had

Britain,

and the United

States

and to decode enemy secret mes-

That sages.

Now, though the

Damned Garage

would be famously underestimated

potential market

(one prediction was for a total U.S.

109

demand of ten computers), it was

increas-

ingly apparent that computers could be useful in managing corporate finan-

records and preparing sophisticated statistical analysis.

cial

As huge

each of these technologies would one day be, they would

as

still

be surpassed by the third: the transistor, arguably the greatest invention of the twentieth century. Before the war, two Bell Labs researchers, John Bardeen

and Walter

had seen

Brattain,

how an

a compelling demonstration of

insula-

tor, silicon, with the presence of certain impurities, could not only conduct a

strong current, but even be switched

ond

on and

off with a small, intersecting sec-

current. But before they could investigate further, war-related projects

took them away. They returned to the pursuit

minds of the century (and future

switch into a

tiny, solid-state "gate,"

The miracle of

and with the ad-

Lab researcher, William Shockley, one of the greatest

vice of another Bell entific

after the war,

HP

the transistor.

the transistor was that

it

replaced the fragile, hot, power-

consuming, and comparatively slow vacuum tube with a

tiny, fast, solid-state

device that was constructed from the most elemental natural materials: con, oxygen,

and copper. The impact of the

dustry was both complete and far-reaching

decade

it

sci-

neighbor), they perfected that

had replaced the vacuum tubes

transistor

—

on the

sili-

electronics in-

on the one hand, within

for

a

in almost every existing instrument,

rendering them smaller, more powerful, and sturdier. At the same time, the transistor

made

possible several

tronics products

new

generations of fundamentally

and instruments, which

new industry of the

made

in turn

new

elec-

electronics the hottest

1950s.

These products and

this

immense new

infrastructure

would

all

be de-

signed upon, manufactured with, and tested in operation by electronic instru-

ments, themselves transformed by some of these

new

inventions. There

have been no better time to build a great technology company,

manage

to stay

on top of the growing, but

ever- shifting, wave.

computers, General Electric (remarkably) did

Ampex

in video

and audio recording. And

giant competitors such as General Radio

company was

better positioned to

it

in

consumer

if

IBM

did

electronics,

in electronic instruments,

seemed

may

you could it

though

to rule the field, in fact

dominate than

little

in

and

no

Hewlett-Packard of

Palo Alto, California.

The question was whether

One

thing

right after

is

HP could survive long enough to do so.

certain about Hewlett-Packard Co. during the difficult years

World War

II:

the two founders, whatever their doubts about the

company's chances of survival in the near term, never stopped building the

company

for long-term success. Thus, even as they

were being forced by

DAVE

BILL &

110

slumping orders to lay off many of their manufacturing workers, they were actively recruiting the small cohort of scientists

still

lieved could lead

and executives they be-

HP into its next era.

The source of much of

this talent

was

their old friend

and mentor, Fred

Terman. At the beginning of the war, Fred had been called east by his old friend (and occasional politician,

rival)

Vannevar Bush. Bush, the archetype of the

had been named FDR's science

adviser,

and been assigned

the U.S. leadership in defense technology. To that end, he

Radiation Laboratory at MIT. Then, noticing that

and engineers from the East Coast, he vowed

tists

scientist-

it

first

to give

established a

mostly recruited scien-

that the next such program,

the comparatively larger Radio Research Laboratory at Harvard University,

would be run by

a

West Coaster who could draw from that

There was only one better

known

real

talent pool.

candidate for the job: Fred Terman. Terman was

than a practical

as a theoretician

scientist,

but he did have an

unequaled talent for identifying great young engineering talent long before the Radio Lab was available,

who

and was

filled

—and

wasn't

it

with some of the brightest talent

still

and Packard)

in regular contact with those (like Hewlett

weren't.

There

is

a wonderful

symmetry between some of the work

came out Stanford before the war, and

of the Harvard Radio Lab and Terman's work

at

nowhere more so than

his

in the use

Terman and

that

team made of

Bill

Hewlett's

HP model 200A audio oscillator. The 200A was cheap and very reliable, which made

it

perfect for uses ranging

tones) to signal testing. There

mounted on

alyze the characteristics of

men

even an

And when

The plane would visited the

Lee, Bruce

photo showing an

HP 200A

fly

over

signals.

Harvard Radio Lab whenever he had

moved to recruit many of these

earlier engineering hires,

—would

company for

stay with the

and reach senior management

—the nonagenarian former

important was Art Fong

through the restored Addison garage

as

long as

positions.

Of this group, the men who would run HP during shuffle

enemy territory and an-

Wholey, Ray Demere, Howard Zeidler, George Kan,

Horace Overacker, and Art Fong a half century

generated

peace arrived, he and Packard quickly

members. As with HP's

— Ralph

official

it

an airplane cabin that was used for

incoming radar

During the war, Hewlett

talented lab

is

a shelf inside the cabin of

electronic countermeasures.

the chance.

from Morse code training (where

its

golden age, the most

vice president

who would

as the last surviving "founder."

Fong's supreme importance was not due to his contributions to the company,

though they were considerable for

more than $200

first

million in

Asian-American engineer

(it

HP

was once estimated

that he

revenues), but because of

in Silicon Valley history.

was responsible

who

he was: the

Damned Garage

That

HP

This part of the

story

gated world of the late 1940s,

began at the top. As with this

was

rarely told.

is

HP

many

111

But even in the largely segre-

was nondiscriminatory

change the world than simple

less a desire to

—and

apparently radical moves by

that attitude

Bill

common

and Dave,

sense and de-

cency: Hewlett-Packard in the postwar years could only afford to hire a small

number of very color.

and so

talented people,

it

wanted the

best,

whatever their

5*"

But seen in the context of a California where Japanese Americans were just returning

home from wartime internment camps and Chinese Americans

were largely isolated in metropolitan "Chinatowns," the hiring of Art Fong

was a major victory Valley,

for civil rights.

Given the current demographics of Silicon

one of the most ethnically diverse communities on

to hire Art

Fong was one of the most far-reaching

earth, the decision

that Hewlett

and Packard

ever made.

The second, major recession their

potentially fatal, risk that Bill in the

and Dave took during

this first

company's history was to expand rather than contract

product catalog and the industries they served. Even as the market was

drying up on some of their businesses, they were rushing to consolidate their position in other businesses, such as microwave instruments, that they believed

would be the source of the

industry's future growth.*

This was an incredibly gutsy move, especially bigger

when

at the

same time

—and presumably more experienced— companies such

older,

as General Ra-

dio were choosing to back away from markets such as microwave test equip-

ment because they presented no immediate return on investment. Needless

to

company nearly to the breaking point. HPers, old and new, assumed multiple duties, some discovering skills they never knew they had. For example, Noel Eldred, Packard's say,

executing this strategy stretched the already thin

operations officer and manufacturing director during the war, transformed

himself into a world-class marketing executive rest

of his short

The

a role he held at

HP

for the

life.

biggest surprise, however,

been the golden boy

—the

was Dave Packard himself. He had always

perfect student, the perfect employee, and, increas-

ingly now, the perfect employer. But engineer. There

—

no one had ever considered him

was no grad school epiphany,

as there

a great

had been with

Bill

Hewlett's audio oscillator,

when everyone suddenly stepped back and looked

upon him with newfound

respect.

But Packard after

still

VJ Day, when

had

HP

a surprise left in him.

would keep the company just that:

he designed the

dozen generations, of

And, during the desperate days

was looking everywhere alive, first

he

sat

down and

of what would be

for that killer product that

quietly

five

came

close to doing

more than a voltmeter would

decades, and

HP voltmeters. The HP model 400 AC

DAVE

BILL &

112

stand as eternal proof that

Hewlett wasn't the only inventor-founder of

Bill

Hewlett-Packard.

As proof of

about the same time that he invented the

his versatility, at

model 400 voltmeter, Packard was builder, Rufe

Kingman, on how

in intense conversations with

main problem

to deal with the

in

HP's top

microwave

instruments: that of keeping their touchy components in the right configuration.

Kingman was

HP hire of the era— an old-time mechanical engi-

a classic

neer who, after a career in mining and working for the nearby

Works

(later

lenge of working

on new inventions

Now he

how to

ting

found himself

sitting

remember one morning

came

I

to Packard at

was taking

mounting those [components] on

a

.

.

.

and

I

"I

thought of the idea of

setting the

frame so that

had an indexing

point. Rufus

that design." 38

just at the

tronics inventor,

moment when

he could

he proved that he too was a top-tier

Dave Packard turned

his career in the executive offices. ability,

15 per-

an unexpected moment:

shower and

a

frame

the top of the waveguide element that you want

Then,

more than

with the president of the company, plot-

build reliable microwave instruments.

In the end, the answer

worked out

Iron

HP. Kingman had already devised a

at

process that had reduced the company's fabrication time by cent.

Hendy

Westinghouse), had retired, only to be lured back to the chal-

now move on

It

his

was

back on the lab and spent the

as

elec-

rest

of

having convinced himself of his

if,

to his real destiny.

He

didn't even

mention

these accomplishments in his memoirs.

Over time, even the company forgot Packard's inventor and engineer. In the late 1980s,

der the catchphrase

"What

design brainstorm in in to the office.

If

," .

.

.

HP

ran a series of television ads un-

one of which featured an engineer having

the shower and rushing

Apparently no one

same thing had happened

to the

early contributions as an

left in

the

a

to the telephone to call the idea

company knew

that exactly the

man whose name was on the titles at the end

of the commercial.

Packard before the Elders The most were

now

likely

reason that Dave Packard

turning in a

could become

new

—and what

it

As always, he discussed their conversations,

they

moved

quickly.

it is

direction,

would take it

with

Bill.

left

the lab was that his thoughts

toward a vision of the company

HP

to get there.

Though

as usual there

is

no record of

obvious they reached a consensus, and once they did,

Damned Garage

That

The

first

113

was turning the partnership into

step

company. In Au-

a real

gust 18, 1947, Hewlett-Packard formally incorporated, with

president and

the partnership was that the legal reorganization as

added tax advantages. But the unsaid reason,

more continuity

that "it also provided

could." 39

Dave Packard

as

Hewlett as vice president. The ostensible reason for ending

Bill

as

company conferred some

Packard

later

admitted, was

to the business than a partnership

The war had obviously taught them that nothing, even the business

partnership of two healthy young men, was forever.

During

this era,

tronics industry,

company

HP

began to make

and not

incorporated,

just for

HP

its

its

but one in a hurry to

products to

sell

—

young company

still

move

—not

in

New York

that the

—the

City

company trying

like a

HP now had

forward.

compared

within the elec-

The same year

IRE show

rolled into the

small

known

quality products.

leading industry gathering in the country vive,

presence

to sur-

a catalog of thirty-six

to the giants, but remarkable for a

but written off for dead a couple of years before

all

—and

dazzled the crowd.

But that was only the bility in the

start.

Packard had

now

reached that level of credi-

industry where he was being invited to give keynote speeches and

presentations. Just that opportunity presented itself at the IRE,

and Dave took

advantage of the moment: before the assembled crowd, he announced that

"HP's future appears very promising."

It

was

a bold thing to say in front of

your peers during the worst recession they had ever known. But Packard wasn't

making

idle predictions:

Hewlett-Packard had

That

year, 1947,

he had seen the recent

at last

sales

numbers and knew

that

turned the corner.

HP's revenues had climbed back to $851,287, up nearly

And

company was

hir-

ing as well, and not just a few top-flight engineers: by the end of the year,

em-

50 percent from the bottom of the postwar crash.

ployment would reach

111.

But the next year was the tripled to $2.2 million, its

employment

and by taking the huge

Packard was

now

—

in

to 128.

risks

in position to benefit

Dave would never again have

HP's revenues nearly

real breakout. In 1948,

nally begun,

a supermarket

the

The industry upturn had

most from

this

turnaround.

Bill

to design their buildings with a fallback use

fast:

was able

as fast as

that,

to

like

a second generation of volt-

meters that could measure very high frequencies never before possible; a

circuit,

and

—

mind.

The new products were now coming quency counter

fi-

of the preceding years, Hewlett-

fre-

thanks to Al Bagley's decision to add a second gate

count as

many

as 10 million cycles per second, fifty times

anything currently on the market; and the

first

of the company's

microwave instruments.

One might imagine

that just staying

on top of

this explosive

growth

BILL &

114

would have occupied every second of

DAVE

Bill's

and Dave's workdays. But,

as seen

over and over during the half century of their careers, the two men's greatest strength was their willingness to time.

was almost

It

endurance

—and

it

like a

do the

right thing at the absolute worst

perverse test of both their integrity and their

proved on numerous occasions to be their biggest com-

petitive advantage.*

Thus

it

was

when most

in 1948,

growth simply tried to hold on for the experiment with HP's personnel instituted It

was

its

Hewlett and Packard chose to

was the year when the company

policies: this

insured pension plan.

also the year that

more deeply

other executives faced with runaway ride, that

both

and Dave decided

Bill

community and

in their

to involve themselves

was the

their industry. This

HP

first

mani-

festation of their

mutual and deeply held

porate citizen.

It

was a laudable philosophy

one, given that

HP would eventually set the standard in this area for the entire

high-tech world

come

to

—but

it is

belief that

—and

must be

good

cor-

men

hard to imagine a worse time for the two

to

such a decision.

For Packard's part, he would run

for,

and be

elected to, the Palo Alto

School Board, a position he would hold for the next eight years

with questions about the number of teacher parking spaces tary schools long after he Bill

a

a profoundly influential

had become

—

dealing

still

at local

elemen-

a global figure.

Hewlett took a different path, once again on the advice of his old

mentor, Fred Terman. Terman's tenure as head of the Harvard Radio Lab

had been one of both singular achievement and considerable produced hundreds of inventions and, measures,

and

made an enormous

in the

form of

contribution to saving the

lab

had

of U.S. airmen

lives

But Terman was a teacher, not a CEO, and running the to

more than two hundred

an administrator.

condescended tire

The

sailors.

end had grown as

grief.

electronic counter-

It

to this

scientists,

didn't help that the

much

that even

some of

thought him a decade older than his

Terman returned

hour

manage

management, and

who worked

to

the en-

it

nearly

with him

real age.

to Palo Alto in 1946, six

be the next president of Stanford

against. In the end, the presidency

tried to

the people

months

of dean of engineering at Stanford was waiting for listed to

which by war's

his shining

Harvard Brahmins he reported

rough-hewn westerner. Terman

place without emplacing sufficient middle

crushed him; so

lab,

was not

went

—

after Hewlett.

The job

him. He was even short-

a job that he vigorously fought

to Wallace "Wally" Sterling,

former

head of the Huntington Library and well-known radio personality during the war. Sterling proved to be an able administrator, a big thinker, for the future of Hewlett-Packard

and

Silicon Valley, a

and best of

all

huge supporter of Fred

That

Terman and ling

his dreams.

Damned Garage

The two men became

would appoint Terman

as his provost

niously with an extremely able colleague

,"

and together they would take Stanford into

Over the next few

years, as

old students,

Dave and

Bill

I

thought.

used to go back

we had It

I

worked so harmo-

would say of Terman) 40

greatest era.

department and

to build his

talent,

he would sometimes join his

I

New York. We

fairly regularly to

didn't like air travel,

Terman and

a lot of chances to talk with

to be

done

usually trav-

and Terman very often was

was very interesting because he had very

what needed

He

Sterling

see

GE, and RCA, had

like Bell Labs,

schools of advanced study to teach theory

turned

One

about

in the field of engineering education.

pointed out that schools of engineering had very

companies

what he

clear ideas

much gone

the how-to-do-it side rather than the theoretical side. [At the large

in 1955 Ster-

and Dave. Recalled Hewlett:

eled by train, because

along. So

("Never have

its

and

close friends,

Terman began

journey around the country looking for

115

.

.

.

set

that this

into

same time]

up

their

had

all

own

gotten

around. 41

of Terman's ideas was that too

many young

engineers, anxious to

earn a living, were getting jobs right out of college and and not going on for their master's degrees.

He proposed

a co-op model,

by which engineers could

company such as HP half-time and attend Stanford the other half. To make the idea even more palatable to companies and students, the courses could even take place at the firm, rather than on campus. This would prove to be the genesis of HP and Stanford's Honors Coop-

work

at a

erative

Program, one of the most influential graduate continuing education

programs ever devised, a model

for universities

and corporations around the

world, and a huge source of talent for Hewlett-Packard. As Hewlett noted in 1984, izing

"The eastern it's

universities looked

down on

this

—but now

they're real-

a hell of a deal." 42

Another Terman idea was to make use of the thousands of acres of unused land owned

growing in

new kind

his

—and paid

mind

that

taxes

on

somehow

of industrial park,

filled

—by Stanford

this

University.

A notion was

open space might be turned into a

with high-technology companies

even those run by his former students

—

—perhaps

in a uniquely symbiotic relationship

with the university. This idea, perhaps Terman's greatest, would take a decade to be realized. In the meantime, he had one ately:

more

idea that could be acted

upon immedi-

put some of his former students and contacts into positions of impor-

tance in the electronics industry. Recalled Hewlett,

"Terman

said, 'Bill

you

* BILL &

116

DAVE

ought to run for director-at-large of the IRE. You spend quite a

on

advertising your name. People [now]

who was

a very

good

scientist

know

—and by

it.' I

bit

of

money

ran against Lloyd Burtner,

gosh, [Terman] was right,

and

I

won!" 43 Hewlett served in the leadership of the Institute of Radio Engineers for a

number of player

years, in the process

—and

standard-setter

The

president of the IRE. tronics

was now,

—

cementing HP's position

in the industry. In 1954,

who wasn't

college kid

at forty-one,

as a

dominant

he even became the

sure he wanted to study elec-

one of the acknowledged leaders of the high-

tech industry.

among

Packard

the Elders

As Hewlett-Packard Co. approached stone for taking stock,

all

its

tenth anniversary, a traditional mile-

the experiences of the previous decade began to

come together in the minds of the two founders. The garage, the sudden ramp-up to wartime, the hard postwar crash and layoffs, the inventive new personnel programs, the gathering of management talent, and now, most recently, the

turnaround

So too did the

—

seemed

all

many

their mentors, their industry peers,

the founding

and the

like pieces

relationships

of a larger lesson.

—between

and

the founders, their friends,

their competitors

—

that

had defined

early years of HP.

But perhaps most of

all, Bill

and Dave, from

their experiences not only

at their

own company,

back

Terman's lab and the Stanford football team, had come to appreciate

the

as

power of

own

skills

a

team

in

but

at

which each person was given the freedom

and judgment

choose the best path toward a

to

understood even more that

was

General Electric, in the military, and even as

in electronics, especially,

crucial to corporate survival, these

empowered

to use their

common goal. They

where rapid innovation "families" of employees,

under enlightened managers, could perpetually produce near-miracles of vention, quality,

and

far

in-

adaptability.

—

that would this new business philosophy now it was just the "HP way of doing business." know if it would still work when they scaled up

As yet they had no term for take yet another decade. For Bill

and Dave

from the

little

they intended

didn't even

company

HP

to

in the

Redwood Building

But they were willing to give all

it

a try. Bill

— otherwise they wouldn't have made

and the evidence so

to the giant corporation

become.

far

it

suggested that this

and Dave were

this far.

risk-takers after

They were pragmatists

new model could

too:

outrace any exist-

That

model they had

ing business

Damned Garage

117

yet faced, just as their instruments consistently

surpassed the competition.

Most of

all, Bill

Hewlett and Dave Packard were ambitious. They wanted

They wanted

to win.

And they wanted

to

and build

to beat their competitors

company.

a great

become great men.

They knew they could compete with anyone on the playing field of high technology. But this, this new way of doing business, was something else ennot only offered a path to success that few other companies would

tirely. It

dare follow, but

was

it

a natural

arisen organically out of Bill

fit

and Dave's

own

— indeed,

it

had

daily business interactions with

HP

to their

personalities

employees. Best of

and, in

Bill

all,

this

new way

of doing business was responsible, honorable,

They had gone

Hewlett's term, humane.

simply to earn a

living;

now the

and powerful men. From the beginning they had for each other, for their employees,

They

business.

more market

didn't

want

and

tried to

more personal

were close to

It

was

just these

the only

from

a

now

a solution that

way to

right thing

whom they did just for a

little

good en-

would assure them

it,

the

more

this

new

go.

thoughts that were on Dave Packard's

1948, he was invited to attend a gathering of corporate ecutives

do the

wealth. And, being

both honor and honors. The more they thought about

way of doing business seemed

become wealthy

for everyone else with

to surrender that integrity

share, even for a lot

gineers, they believed they

into business together

prospect before them was to

mind when,

CEOs and

in

senior ex-

number of different U.S. industries and organizations. Evencame around to corporate responsibility. Packard

tually the conversation recalled,

"We began

yond making

talking about whether businesses

had

responsibilities be-

a profit for their shareholders."

Packard watched, stunned, as one executive

after

another expressed his

opinion that profits were a company's only responsibility. "Looking back, I

suppose

I

shouldn't have been surprised. During the early decades of the

twentieth century, profit was the businessman's sole objective. Labor was a

commodity that could be bought and Finally,

the room,

on the market."

He

rose to his full height, surveyed

and told the assembled worthies that he completely disagreed with

their position. ties to

sold

Packard could take no more.

He

told

them they wrong, "that we had important

responsibili-

our employees, to our customers, to our suppliers and to the welfare of

society at large." 44

And he admonished them

to look

beyond mere

profit to

their larger civic responsibilities.* It

and

was an

its

incredible, historic

successor. In a career of

moment,

many

the turning point between one era

milestones and accomplishments, this

was perhaps David Packard's most shining moment.

BILL &

118

The

reaction of the other

Not the howls of jaded old

CEOs?

ridicule,

Laughter.

but the knowing and indulgent chuckles of

men toward the naive idealism

learn, they told each other, give

In

DAVE

fact, it

was

their

him

of a callow young man. The boy will

time.

time that was running out. Thirty- six-year- old Dave

Packard had stood before the captains of American industry and given them fair

warning.

Now he

ness down around

was going

their heads.

$50 million company celebrating

pany represented

in the

room

to pull the entire edifice of traditional busi-

When its

the

new decade was

over,

and

HP was

twentieth anniversary, nearly every

that day

would have adopted the business phi-

losophy pronounced by David Packard in that electrifying

moment

— or they

would be fading away. Having launched the

future, Bill

a

com-

and Dave now

set

out to

live there.

—

Chapter Four:

The HP Way

Between 1950 and I960,

Hewlett-Packard

$2 million in annual revenues to $61 million

—

a thirtyfold increase in just ten

At the same time, the company's employment

years.

more than

3,000,

and the number of

Company grew from

HP products

rolls

jumped from 146

from seventy

to

to nearly five

hundred.

was one of the

It

and

if it

fastest

was exceeded

ramp-ups

in later years

Google, eBay, and Microsoft,

it

American business history

to date

by other high-tech companies, such

should be remembered that those

had the benefit of HP's example

had

in

to follow. Hewlett-Packard,

to traverse with this kind of explosive

as

later firms

by comparison,

growth with few markers along the

path ahead.

Moreover, systems,

many

Wang, and

—Apple, Sun MicroGraphics being the most obvious — reacted

of these later meteoric companies

Silicon

to this

kind of growth trajectory by essentially coming apart. They cratered, or me-

andered around

lost for years, or

by comparison, followed the

now

they simply lost their edge. Hewlett-Packard,

fifties

with an even more amazing

managed to grow sixfold mained arguably more organized and more competitive than ever.

which,

How who

Bill

filled

a giant corporation,

it

still

and Dave, and the growing

the upper- and

coterie of

men

sixties, in

—and

(and a few

re-

women)

middle-management ranks of Hewlett-Packard

during these years, pulled off this extraordinary achievement has been studied

by business schools and other companies ever

A

definitive

answer

may

never be found

since.

— even HPers who were

there at

the time are undecided about exactly what happened, in part because they

were so busy in the trenches that they had scene.

And no doubt part

interactions

employees

of the answer

lies

little

in the

time to survey the overall

human

heart, in the subtle

between the personalities and perceptions of the thousands of

who made

Hewlett-Packard in the 1950s perhaps the greatest com-

pany there has ever been.

— DAVE

BILL &

120

But we do have a precise record of the events of that decade, of the decisions

made by

Bill

and Dave and

complete) of the people

their lieutenants,

and the memories

(if in-

who were there.

we have Hewlett's reminiscences and Packard's own memoirs of we have seen, the experiences and values that drove them make the decisions they did. The past is indeed another country, and the Finally,

those years, and, as to

United States of the 1950s

—triumphant,

and ambitious

fearful, confident,

only grows more alien and astounding by the year. But by putting diverse pieces together

and

it

to puzzle out just

how Hewlett-Packard groped

just

made

we can begin

the ideal of

all

its

what

Bill

way forward during

all

of these

and Dave

did,

the decade that

companies to come.

The Valley of Heart's Delight The

biggest factor underlying HP's extraordinary growth in the 1950s was, of

course, the

economy

itself.

After twenty years of being constrained

by the

Great Depression and redirected by the Second World War, the United States finally

broke out in the 1950s.

It

was propelled by the Korean War, the recon-

and the return of international

struction of war-battered Europe,

But most of get

on with

families,

and the

women

home from war work and unprecedented demographic bulge the baby boom ready to go

—

The modern consumer

Americans rushed out

a secondary

trade.

was driven by a population of returning GIs anxious

their lives,

created together. as

all, it

boom

to

buy

—they

culture was born in those years,

appliances, televisions,

and

and

radios, they set off

and instruments needed

in the tools

to

start

to create

and

test

them.

As the decade progressed, other powerful economic bear: the cold war, Sputnik arrival of

system. els,

and the space

mainframe computers

One

after another,

race,

forces also

came

to

audio and video recording, the

in the workplace,

they nudged the U.S.

even the interstate highway

economy

to ever-higher lev-

quickly making the United States the wealthiest nation the world had ever

known. The American people responded by consuming more, demanding ever

more

sophisticated products,

and ultimately enjoying

ing their grandparents could only have

A

dreamed

a standard of liv-

of.

second factor working in Hewlett-Packard's favor was the migration

new highway California. Hun-

of America's population, powered by the automobile and the system, south to the Sunbelt and,

more

importantly, west to

dreds of thousands of GIs and sailors passed through the ports of San Francisco,

Long Beach, and San Diego and, remembering the

beautiful weather

The HP Way and the good times they had and make fifties,

ets,

GI

new

a

Bill

They

start.

there,

swore that

121

if

they survived, they'd return

and

arrived throughout the late forties

early

degrees in electronics or aeronautical engineering in their pock-

new wives on

their arms, babies

on the way, and ready to make up

for lost

time.

The

some lar

result

was that companies such

of the best

was

a talent

as

Hewlett-Packard had their pick of

young engineers of the new generation

magnet

—and HP

program with Stan-

precisely for the graduate co-op

ford that the big East Coast companies (and

There were secondary benefits to

this

made good

Santa Clara Valley boys

—the

had dismissed.

universities)

population

in particu-

shift as well.

Two

Lockheed brothers had

other

set

up

shop before the war in Burbank and built themselves an aviation empire.

As the space age loomed, they decided other high-altitude hardware.

it

was time

town and saw Stanford, Hewlett-Packard, and

a

and

to get into missiles

The brothers looked north

to their old

home-

burgeoning population of

young, technically trained workers and professionals

—and

decided to go

home.

The

arrival, in the

mid-1950s, of Lockheed Missile and Space Corp.,

lowed by the thousands of employees who would quickly make largest employer, started the transformation

to the world's first high-tech

formed

a

Eichler,

colleges,

and

the Valley's

of the Valley from an agricultural

community. Those thousands of families

suburban infrastructure, drawing

and junior

it

fol-

retail business,

also

building schools

attracting homebuilders like the innovative Joseph

and ultimately creating

safe

and shiny new neighborhoods that were a

further attraction to talented technologists everywhere.

One of those drawn to most

brilliant

American

the Valley was the

man widely acknowledged as the

of the age, William Shockley. Having walked

scientist

out of Bell Labs in hopes of getting rich, Shockley looked at out west and decided to go

He tween

set

HP

up shop

young

in 1955 in

in Palo Alto

Corp. would open Transistor

home

its

of the ferment

Mountain View, geographically halfway be-

and Sunnyvale, where Lockheed Missile and Space

doors a year

and put out the word and

solid-state physicists

later.

that he

He

called the

wanted

him

Prize for Physics. Shockley's presence in the Valley,

most advanced

company Shockley

to hire the

most

brilliant

He hired new Nobel

electrical engineers in the country.

eight of them; they arrived just in time to help

the world's

all

to California.

transistors,

celebrate his

and

cemented the

his

area's

promise to build as the

new

Bay Area.

Am-

image

capital of high technology.

There was one other company also making

its

name

in the

pex had been founded in 1944 by Alexander Poniatoff, that former Russian fighter pilot

who had joined

Packard in the seminars

at

Charlie Litton's offices

DAVE

BILL &

122

before the war.

Ampex had

started out fast building small electric

the military, but in the postwar recession didn't find a

new business, and

But Poniatoff was

from German was

called a

a survivor.

magnetophone, and

before long, thanks to

its

He jumped on

ods

fast as

Its

a

technology, liberated It

—

motor

—and

Ampex was

drives,

and audio recording equipment.

Company grew

faster

new

didn't stick, but the technology did

existing expertise in small

when Ampex grew even

if it

could record images or sound on specially

it

name

Hewlett-Packard

synonymous with

facing bankruptcy

itself

companies had deemed impractical.

the world's leading manufacturer of video

As

found

fast.

laboratories, that other

prepared magnetic tape. The

it

motors for

in the 1950s, there

were peri-

where that company became

to the point

the go-go growth of technology companies during that era.

modernist buildings and huge sign beside Bayshore Freeway in Redwood

City,

not

far

from

Litton's old lab,

became

iconic, the very

emblem of America's

technical prowess.

Thus

there were in the Bay Area alone three other companies besides

Hewlett-Packard

—Lockheed, Shockley

positioned to take advantage of the list

Transistor,

boom

and Ampex

—

that were well-

To

in electronics in the 1950s.

this

can be added two more with familiar names: Litton Industries and Varian

Technology Corp., the

and Sigurd's klystron

latter

now

in the business of

commercializing Russell

tube.

And, indeed, every one of these firms enjoyed spectacular growth fifties,

only

and some well

HP

into the sixties. Yet of

emerged on the

far side stronger

in the

these remarkable companies,

all

and healthier than when

it

entered.

Shockley Transistor only lasted a few months, as the founder proved so tyrannical, paranoid, finally

and impossible

gave up, found

money

to

work with

elsewhere,

and

that the "Traitorous Eight"

quit.

The

scientist

who

led the

and the man who found him the investment

money

search,

capital,

Arthur Rock, would go on to create the Silicon Valley venture capital

Eugene

Kleiner,

industry, while another

two of the

Moore, would build that new firm

pany of legend, then go on

to

found

Lockheed Missile and Space,

"'traitors,"

—

Fairchild

Intel

Robert Noyce and Gordon

Semiconductor

—

into a

com-

Corporation.

parent company, found

itself

trapped

in the boom-bust cycle of the military aerospace industry and shook

itself to

pieces through

like its

one round of layoffs

ing bust in the early 1970s that Valley

on the unemployment

Much

the

after

seemed rolls.

same thing happened

another

— culminating

to put half the

LMSC

men

in a devastat-

in the Santa Clara

would never be the same

to Litton Industries, especially

death of the charismatic Charlie Litton stripped the

company of

again.

when its

the

strong

center.

Varian survives to this day, but as a quiet Silicon Valley backwater com-

The HP Way pany. In 1950, exclusively

on

it

made what seemed

like a

123

prudent decision to focus almost

klystron business. To that end,

its

waveguide business.

It

it

sold off

its

microwave

was a mistake that was only apparent

in retrospect, as

it

very

moment when

it

began a process of narrowing Varian's business should have been expanding

it

at the

— dooming the firm

to steady but uninterest-

ing growth and a long, slow twilight.

The buyer of Varian's waveguide business? Hewlett-Packard. Most tragic of all was the fate of Ampex. It managed to roar out of the 1950s with

IBM

as the hottest

growth stock on Wall

owned all sound and television recording had it made intelligent business decisions. Instead, a kind of collective

world

in the

madness seemed

Street. It essentially

—and might

to descend

upon

yet

still

the

com-

pany. Poniatoff 's wife held her horticultural society meetings in the corporate

while Poniatoff himself became increasingly eccentric

cafeteria,

wearing baseball caps, only driving white the

hope of living

make

forever.

cars,

a mistake, suddenly couldn't

do anything

started

and eating only raw foods

Meanwhile the company, which

In the arrogant belief that a backward

—he

for years

in

had never

right.

economy would never become

a se-

rious competitive threat,

Ampex licensed the jewels of its intellectual property

to Japanese corporations

— only

to have

them turn around and flood

the U.S.

market with medium-quality, but low-priced, cassette audio and video

Ampex

own consumer products, but in the words of an ex-employee, "It only knew how to do things well and costly." recorders.

tried to fight

The company lost The

its

tens of millions of dollars.

straw

final

back with

came

after Poniatoff 's death,

when

it

was discovered that

the company's books had been "cooked," that millions in leased items fact

been recorded

shareholder

suit,

as sales.

The stock

collapsed, the

company suffered

and Ampex faded away. Today only the famous

the Packard garage an historic

site,

had

in

major

a

sign, like

remains to draw quizzical looks from

passersby. So, the real question ally

is:

why, of

all

of these companies, each of them ide-

positioned to dominate their industries in a time of unprecedented eco-

nomic expansion, did Hewlett-Packard alone thrive and endure? The answer seems to lie in a series of momentous decisions

Bill

Hewlett

and Dave Packard made throughout the 1950s, dealing not only with the business

itself,

or even the products and technologies, but with the culture of

HP. Between 1950 and 1957, Hewlett-Packard embarked on the most important run of innovative employee initiatives ever attempted

before or since

—and

in the process

by any corporation

changed the quality of daily work

for

life

hundreds of millions of people around the world.

The 1940s was the decade

in

which

Bill

and Dave took the

loyalty they

had

— DAVE

BILL &

124 to each other

world. This

was one

in

and mapped

new decade which

Bill

—

it

outward

perhaps the changes in their

reflecting

and Dave grew that

deeper: into a family. Packard

member

in ever-increasing circles to the larger

would

later

lives

much

remark, with amazement, "I re-

comment

thinking and making the

own

something

loyalty into

that

most of the

best friends

I

had were working here in the company."

And once

it

was a

family, those ties

grew ever deeper and stronger with

time and experience, until Hewlett-Packard, tionally complete

was the

at its best, was the most emowork experience of any major public corporation, ever. This

HP Way at its full flowering:

legends, relationships,

and

difficult to describe to

an outsider. *

Old Friends and After the war, Bill

a fabric of rules, experiences,

complex

rituals as

New

as

any

real family

myths and

—and

just as

Family

and Dave made two

special,

and

final, hires to their

core ex-

ecutive team. Both carried particular resonance as they also closed the circle

on the beginnings of the company.

One

of these hires was the

man who

might have been the "P"

in

HP. Noel

"Ed" Porter, Hewlett's childhood friend and the classmate of both men. During the war, after Bill

the two

men had

had helped Ed obtain

stayed in touch,

recruit his old friend.

and

a position at the

Bureau of Ships,

war Hewlett

regularly tried to

after the

But Porter had always gone his

own

way, working as an

applications engineer for an air-conditioning business before the war. Finally,

with demobilization, Hewlett convinced Porter to join

manufacturing,

filling

the gap

left

HP

as

by Noel Eldred when he

marketing. Porter's arrival led Hewlett to joke that

HP

director of

its

shifted over to

was the only company

with "two Noels" in charge.

The second

hire

smartest classmate

on

to Cal

Labs

was Barney

Bill

in the

same

When

the

war came, he was hired by

facility as his intellectual equal, Bill

where he spent the duration. Whenever

work with the

arrived in 1952. Oliver, the

and Dave ever knew, graduated from Stanford and went

Tech to earn his doctorate.

—working

who

Oliver,

Signal Corps he

would

Bill

also

Hewlett was in

Bell

Shockley

New York City on

swing through nearby Murray

Hill,

New Jersey, to visit his old classmate. (It is

important to note the extraordinary degree to which

Bill

and Dave

maintained their personal networks during these years. They seemed to have lost track

of no one they thought they might one day hire

at

HP.)*

The HP Way

125

company back in Palo Alto took years. It seemed that every time Bill and Dave had their young friend ready to pack his bags, Bell Labs came up with some exciting new project to keep him in New Jersey. In the end, the partners finally recruited Oliver not through his head but his heart. Recalled Hewlett, "His mother was a widow and lived down near Santa Cruz, and we played on all of the heartstrings we Convincing Oliver to join a struggling

little

could." 1

HP now had its genius in the lab. Historian

Edward Sharpe would

"The addition of Barney Oliver

write,

completed the formula for [HP's] success. Hewlett-Packard's basic organization

went

Eldred in charge of

like this:

Porter in charge of production,

sales,

Barney in charge of R&D, and [Frank] Cavier in charge of finance. This basic structure, [complete]

by 1952, was to remain

intact for

many years

to come." 2

"Those were the four people," said Hewlett, "three of whom were Stanford graduates trained under Terman."

management team was crucial to the development of the HP family. Had the first line of management come and gone quickly as it does in many modern high-tech companies, Hewlett-Packard likely would never have enjoyed the stability and continuity it needed to The continuity of

underpin

its

this senior

complex corporate

culture.

As

it

was,

Bill

and Dave ensured the

cohesiveness of this top team by hiring not only proven talent, but friends.

These were

men whose

character they knew,

times and bad for years

—and

in the case of

whom

Ed

they had

Porter and

known

Bill

in

good

Hewlett, since

childhood.*

These were job offer

where

—

in

spend the

as

ties that,

during

if,

American rest

was

this decade, there

a better job to be

industry. Interestingly, of this

of their careers

ther death (Eldred vice (Cavier

once made, would never be broken merely by a better

at

group of

found any-

four,

all

would

HP. They would stay

and Porter) or retirement

after

at the company until eimore than thirty years' ser-

—an amazing accomplishment

and Oliver) took them away

what would soon be

Silicon Valley, the

most frenzied and

in

disloyal business

community to be found. But, unlike

many companies,

the "family" didn't stop

on

executive row,

but reached out to include every person in the organization. In 1950, Lucile Packard, no doubt spurred by the sudden domestication of postwar America,

began a tradition of buying a wedding

and a blanket

the entire decade, until

gift for

every employee

employee family having a

for every

child.

The

who

married,

practice survived

HP had thousands of employees and hundreds of new

babies each year.

Company picnics,

a

common

feature of business

life

during

this era,

had

DAVE

BILL &

126

been a regular practice ever since the Redwood Building days. Packard, in The

HP Way, recalled: Bill

and

I

considered picnics an important part of the

we had an annual picnic

early days

ple

and

their families.

It

was

one

a big event,

out by our employees themselves. The steaks,

and

HP Way, and in the

in the Palo Alto area for

hamburgers, Mexican beans or

largely

menu

of our peo-

all

planned and carried

consisted of

New

beer.

The company bought the food and machine shop people

to

beer. It

became customary

for the

barbeque the steaks and burgers, with other de-

partments responsible for other parts of the menu.

Bill

and

I

and other

senior executives served the food, giving us the opportunity to meet

the employees

and

their families. 35

as servers, this

is

HP

at last

on

HP

bought

of

its size,

and Dave de-

new level.

It

was

an hour's drive up into the Santa

called Little Basin,

and

to get a sense

one need only know that Big Basin was one of the Bay Area's

state parks.

saw,

Alto.

and the founders picnics of the

a parcel of land

Cruz Mountains above Palo

executives

most corporate annual

cided to take the experience to a whole In 1955,

of

a firm financial footing, Bill

a basic description of

But then, with

all

*"

With the exception, perhaps, of having senior

era.

York

green salad, garlic bread,

frijoles,

With Packard helping run the

tractor

largest

and Hewlett helping on the

HP employees cleared part of the parcel to create an open recreation area

capable of holding two thousand people at one time. The rest of the redwood forest lies

was

untouched and made

left

for overnight It is

hard to

available to

HP

employees and the fami-

camping.

measure the impact of

fully

Little

Basin on the collective

morale and memories of generations of HPers. The annual picnic was always

jammed, with employees'

cars not only filling the parking lot but lining the

entrance road for a half mile. Inside, one might see Dave Packard standing in a cowboy hat chatting happily with an old janitor or a group of

the lab, or have his

hand, ask, For

Hewlett, in an apron and chef's toque, a turning fork in

"How do you like your steak?"

many

weekends

Bill

families,

—and very

their parents'

work

—and

Little

often the

life. It

and the annual bonus anyplace else

tall

PhDs from

—

yet

Basin was a beloved place to

camp on

most vivid memory many children had of

was part of the added value

—

like the

stock options

made working at Hewlett-Packard different from another reason to stay with the company even in the that

face of better offers elsewhere.

The goodwill

created by Little Basin survived even

Bill

and Dave. During

The HP Way

127

the difficult Carly Fiorina years of 2002-2003,

were

sales

flat,

when HP

and the new management was indulging

offs after another, there were

in

stock was falling,

one round of

lay-

hundreds of surviving employees who

still

company because one of their parents had worked at HP and had taken them as children to Little Basin. They had fallen in love with that Hewlett-Packard, had joined that company to relive that experience, and now, even as the company seemed to be turning on them, still poignantly hung on in the belief that someday the HP of Bill and Dave and happy days in stayed loyal to the

Little

Basin would one day again return.

But that was a half century into the future. In the mid 1950s, HP's picnics

were

still

a novel concept.

grew, in typical manner, available to

They were

Bill

also wildly popular.

company employees, wherever they were.

all

As Hewlett-Packard

and Dave decided that the experience should be Recalled Packard, "In

Colorado we bought some land in the Rockies next to Estes Park, and in Massachusetts

on the

seashore. In Scotland

fishing (and possible sightings of the

Germany we bought land

we bought

a small lake, featuring

Loch Ness monster) and

and the

faceless

company conformist

Man, of the

alienated

his family, Hewlett-Packard offered a real alternative: the It is

interesting to speculate that

titude toward HP's employees

personal

one source of

as they

moved out

and Dave's evolving their

their partnership, their friendships,

was

largely

had enjoyed with Fred

men and

at-

own maturing

into the larger world

enced the early years of their marriages, the two

around

from himself and

just out of college

the teacher-student relationship they

Terman. After the war,

ture

Bill

lonely corpo-

Family Man.

and business partners was

Thus the company they founded

lives.

upon

built

good

Southern

suitable for skiing." 4

In the era of William Whyte's The Organization rate climber,

in

and experi-

reoriented the

HP

cul-

their sense of loyalty to

others.

Now,

men

as

approaching middle age, both with marriages more than a

decade old, and nine children between them, they began to standing of the dynamics of family

life

map

their under-

onto the equally large corporation

they had created. It

was not

Basin, Bill

a coincidence then that just

and Dave together bought

two years

after

HP

bought

Little

a ranch in the hills of southern Santa

Clara Valley. Packard wrote:

Bill

and

I

named San Felipe just south of Bay. We liked the area, so when the land was offered for sale

had been deer hunting

San Francisco

we decided

to begin a ranching partnership.

arrangement from the learned to

at a place

swim

first.

It

was a family participation

Most of the Hewlett and Packard children

in the pool at

San

Felipe.

The children

[also]

rode horses

DAVE

BILL &

128

through the

hills

and learned about the pleasures and problems of

cattle

ranching. 5

The San

was

Felipe ranch purchase

one of the

also

partners beginning to feel the power of their

new

examples of the

first

wealth

—and,

tellingly,

it

wasn't used for flashy, public display, but to purchase a working ranch. As the

two

men grew wealthier, they added to

San Felipe with the purchase of an ad-

joining old Mexican land grant spread, Los Huecos, thus creating a vast hold-

ing that stretched for miles along the ridgeline above the southern end of the

Santa Clara Valley. They later also purchased a second large ranch in the Central

—thereby making the two men among the — well ranch Idaho.

Valley

largest

the state of California

The

HP

ranch

at

as a large

as

San Felipe would host many

managers and other events, but ultimately It

was a place where

white shirts and thin corporate

first

made them

It

—

—

strengths

my

and Dave any

—

far

truly took the

situation.

friendship with

in

Bill

Hewlett.

—

more than while working

measure of each to anticipate

Surrounded by

other,

how

together at

saw each

the other

other's

would

re-

their families in the big cabin, or

out hunting together in the woods, the two men, different as they were in

most every way, learned

re-

company Bill and I develThis harmony has served us well

as well as the

and weaknesses, and learned

act to almost

HP

families.

HP" 6 *

was during these getaways that Bill

two

and business partners. Packard

friends

unique understanding of each other.

every single day of running

HP

meetings for

could escape from the politics and pressure of daily

ties,

"Another benefit from ranching was

a

off-site

retreat for the

and Dave, the two outdoorsmen usually trapped

Bill

By running the ranches together oped

was a

it

where they could perpetually recreate the places and experi-

life;

ences that had called,

landowners in

in

al-

to think each other's thoughts.

Hewlett remembered,

"It got to

be a joke. People are

like children:

they don't get the answer they want from one person, they

move on

when to the

next person, and they very quickly found that independent of each other

came up with the same answer. Dave and I worked together for we really felt very much alike." 7 * According to Packard, "Every season we'd round up the cattle from the range and drive them to the corral. Along the way, we'd come to a gate; the trick was to get them through the gate and not stampede them. I found, after [Dave and

I]

so long that

much

trial

worked

and

error, that

best. Eventually,

would soon

follow. Press

to pass

them too hard, and

rections. Slack off entirely, spots. This insight

applying steady gentle pressure from the rear

one would decide

and they'd

just

was useful throughout

through the

gate; the rest

they'd panic, scattering in

head back to

all

di-

their old grazing

my entire management career." 8

The HP Way

129

Beer and Bonuses Basin was only one of a series of inventive

Little

proved by

HP

and Dave

Bill

Dave taking the

stage at the Christmas party

each employee in turn. These moments,

were ways in which

picnic,

devised or ap-

in the early years of the 1950s 1960s to strengthen the

The Christmas bonus had now become an annual

family.

summer

new programs

and handing out the checks

to

like the serving of the food at the

and Dave maintained

Bill

tradition, with

direct personal

—

company employee and it is a testament to their relatively managed to know every HPer on sight, and by the fifties, even after the company's employment passed 1,000.*

contact with each

prodigious memories that they

name, well into

(An

interesting side note

bonus checks

to

words of

in the

were arriving their

employees didn't end because unofficial

home

HP

Still,

a

Camino

Eve,

and by

Real in Palo Alto

split

up and

became too

big,

at

at

and bars along

El

would be crowded with employees.

try to visit

all

until the

HP: the company would shut down

early afternoon restaurants

Bill

of these groups before evening.

pany legend that on one of these Christmas Eve afternoons,

HP

but because,

many employees

form of holiday celebration did survive

end of Hewlett's and Packard's time

would

it

historian John Minck, "too

long after the party, drunk, and with a good chunk of

paycheck gone." 9

noon on Christmas

handing out

that the tradition of Packard

is

and Dave

It is

a

com-

a couple of

to the Packard

home, where they

were graciously entertained by Lucile Packard and the kids

until they sobered

drunken

executives decided to drive

up

up and excused themselves.) was a regular event

Profit sharing too

Dave twice each year

(after the

at

Hewlett-Packard, with

Bill

or

second and fourth quarters) taking to the

company loudspeaker to announce the percentage upon which each employee's paycheck would be multiplied. Even into the late 1970s, long after Christmas bonuses had been moved to the department level, one of the two founders would still pick up the microphone and announce to tens of thousands of employees in company plants across the planet the bonus percentage

Two

—

to nods, cheers,

other

HP

and pumped

employee

fists.

traditions, these gustatory,

came

into practice

—

One was the coffee break a legacy of the Redwood when a small army of working women would leave their workand walk down to the end of the room for refreshment and perhaps a

during

this era as well.

Building days, tables

cookie.

A decade later, the HP coffee break had become institutionalized as an important part of the workday, a

moment when employees

—from assemblers

in

the manufacturing area to scientists in the laboratory to the senior managers in the executive offices

—would,

at the

sound of a

bell, leave

what they were

1

.

BILL &

130

doing (sometimes even business

calls)

DAVE and walk over

coffee stations set

up throughout the company

or a piece of

and, most of

fruit,

one of the scores of

to get a drink, eat a

and

get together

all,

to

talk for ten

doughnut

minutes until

the bell rang again. It

was

always with

also, as

Bill

and Dave,

a combination of kindness

and

business calculation. Says historian John Minck:

Twice a day

would

10 a.m. and 3 p.m.], the chimes

[at

leave their desks or production people their stools,

end of the production donuts, or

some

up with

line,

were

trays

variable

and

where there were coffee pots and

Danish

days,

donut and Danish set

would ring and everyone

rolls.

set

I

recall that

drift to the

large trays of

some production

line

over the top of several soldering irons,

power transformers

to heat

them up without burning

them.

Those breaks were

company furnished and used

all

tomers [whom] we were touring through the plants. job in Albuquerque, not only did

and donuts, but

fee

as

it

each way to the cafeteria.

One summer we

we employees have

...

to

to

At

amaze cus-

my previous

buy our own

cof-

turned out, we chose to walk about 20 minutes .

.

who we

hired a young business intern,

assigned a

study ... to determine the real cost-effectiveness of having company-paid coffee breaks

.

.

.

Not

surprisingly, the study

showed the

costs to have a

very high payoff factor. 10

The overall

was the most humble of

coffee break

HP

traditions, but in terms of

impact (the high-calorie food selection aside)

it

may have been one

anonymous and

of

the

most important. In

the

HP coffee break each day struck a blow for community. Office mates stood

and talked about of their projects,

a world of increasingly

their families, the latest joke last night's football

isolated work,

making the rounds, the

status

game. Employees and bosses met on

equal footing, and receptionists and switchboard operators talked with vice presidents.*

Most remarkably,

so uniform

was the process throughout the

poration that HPers visiting from one continent

break

at another.

And

they were at 10 a.m. est coffee table

if

when

The

the bell rang, they were invited to stop at the near-

—which sometimes meant

if

memo

all

for health reasons)

that an intern passing through the

might find himself being asked by

he took cream and sugar in his

cost of

right in during coffee

an employee was visiting another plant, wherever

executive offices delivering a

Hewlett

fit

entire cor-

coffee.

Bill

1

of this food (the doughnuts were suspended in the 1980s

and drink eventually ran

into the

hundreds of thousands

The HP Way

131

of dollars each year. The value to the company, in terms of enhanced nication, morale building,

and

"family,"

was

easily

many times

commu-

that.

on the

In early 2000, construction workers, building the Agilent headquarters site

Redwood when opened, was found to

Building, unearthed a dirty old

of the original Hewlett-Packard

brown box

that,

contain a case of Lucky Lager

beer, circa 1940.

There were several theories as to why a case of unopened beer would have

been buried ing that

former Hewlett-Packard building

at the

was some

it

sort of joke time capsule

site

—the most

likely be-

—but whatever the reason, the

old case was a reminder that the oldest and most enduring of HP's traditions was, in

the Friday afternoon beer bust.

fact,

The beer bust

likely

began during the war

way

as a

to let the employees,

exhausted after a week of long hours and high quotas, blow off some steam. In a world of rationing, children

who needed watching

in the evenings, tight

budgets, and limited entertainment, a glass of beer and

some

and

crackers

cheese at the end of the shift on Friday must have been a welcome benefit. After the war, as the

seen as yet another

company

way of leveling

grew, the Friday afternoon beer bust was the hierarchies within the company.

also a chance, like the coffee break but gle

and

Dave and out the

their executive

not only

at

this further

a larger scale, for employees to

team

talk directly to every

1950s, the beer bust

had become

headquarters but in

all

than

New Mexico.

Norm

Neely

—featured

called the

district offices,

etc.

—

the

of

de

same name.

with

California, Arizona tile

and

roofs, graceful out-

at the

for special occasions during

end of every work

day. Visitors

or Dave visited a Neely office (or any of the other

and serve

site

Campo

to take a period of relaxation in the bar. 12

was not unusual

the counter

Arizona, and

And almost all of them had a stylish bar room, usually

would always be opened

Bill

in California

around

style,

Cahuenga Room, which opened

the day, but

Whenever

War

a well-stocked bar of the

were always pleased

it

company tradition, as well. Nobody took

a hallowed

of HP's sales offices

Mexico, in the Spanish mission

door corridors,

offices)

and

company employee with-

Neely 's headquarters in North Hollywood, located on the

Neely built most of his

New

min-

to let Bill

at his sales offices in California,

the treaty signing that ended the Mexican

Cahuenga

which was

as well,

was

of a supervisor or manager.

filter

By the

on

There was an unsaid agenda

talk.

It

for

them,

at the

as bartender for

end of the workday,

everyone

else present.

HP

to step

sales

behind

— As important of

DAVE

BILL &

132

its

as the Friday afternoon beer bust

concomitant

ness culture.

effects

The beer

would prove

bust, as

it

more

far

became

was

to the

HP culture, one world busi-

influential to the

ritualized, led to the idea

of Friday

being a "Blue Sky Day," in which employees were allowed to dress casually, asked to use their time on the job to open their minds to inventions,

and then,

Dave

end of the day

at the

as a

thank-you for their contributions, join

tice,

actually

company

and employees who

and new

and

Bill

to HP's innovativeness

—and, thanks

left to start their

became de rigueur throughout where

added

practice of wearing casual clothes

standard practice at the

ideas

for the beer bust.*

Whether Blue Sky Days known. But the

new

who saw the

prac-

firms, casual Friday

soon

to visitors

own

Silicon Valley

un-

is

on Fridays quickly became

and other high-tech enclaves

HP had an office or plant.

As the next generation of workers entered the high-tech world, including HP, in the

and

ties

and

seventies, they

looked

at their elders in their

white shirts

and asked why casual Friday couldn't be every day. By the

early 1980s,

at places

sixties

such as Apple and Atari, casual dress

setting off a revolution in business dress

itself

became the

dress code

throughout the high-tech community

that continues to this day.

Today, in a

new millennium,

the

young code writer or department man-

ager in Bangalore or Budapest or Burlingame, dressed in jeans and T-shirt,

probably has no idea that his or her

during World

The

War

II

in a small

mode

wooden

of dress on the job has

its

roots

factory in Palo Alto, California.

Spirit of Invention

As seismic

as these cultural innovations

would ultimately prove

to be, at the

time they were merely seen, inside and outside HP, as some nice added benefits

—

company employees and yet another reason to work there. What was being noticed about HP, especially by competitors, was

for

the

sheer pace of invention taking place at the company. Year in and year out,

Hewlett-Packard seemed to be introducing

whole new categories

—

faster

than even

its

new products

— even inventing

biggest competitors.

averaged twenty product introductions per year during

The company

this era,

an astonish-

HP had just 215 employees. HP offerings. But some more so than the HP model 524A high-speed

ing figure, given that in 1951, for example,

Many of those

products were upgrades of existing

were true milestones. None was frequency counter.

The two men running HP's

families of audio frequency

and microwave

The HP Way

133

among

instruments were Bruce Wholey and Horace Overacker, both

group of engineers hired

just after the war,

of the company. Looking

to

expand

their

the

and now running major portions

men

product offerings, the two

de-

cided to look into nuclear counters: instruments, such as Geiger counters, that

would measure

the rate of radioactive decomposition.

They assigned two of

their best engineers to the task.

In end, after developing

was abandoned did identify an

some

prototypes, the pursuit of nuclear counters

as financially impractical.

unmet

But

in the process, the

company

need for a different kind of counter, one that

measure the frequency of a radio

would

There were already instruments on

signal.

the market that could perform this measurement, but they were painfully

slow

—taking

as long as ten

minutes to make a single measurement of a high-

frequency signal.

member

Al Bagley, another

of the early

the prototype nuclear counters, which at

HP engineering team, took one of

had been designed

to

measure

particles

an unprecedented 10 million counts per second, added a second electronic

gate

—and found he had

created a frequency counter that could measure

10 million cycles per second. This was

cycles per second. In practice, this

The

a top limit of just 200,000

that, instead

of the usual ten min-

HP 524A could precisely measure a signal in just one or two seconds. HP 524A, was a bombshell, a classic case of a

Federal

on the scene

was commercial

just as a giant

market needs

it.

were

fac-

Communications Commission regulations regarding the

sta-

In this case, the market

new

meant

resulting device, the

revolutionary product appearing

ing

times the performance of the then

on the market, which had

best frequency counter

utes, the

fifty

radio. Local radio stations

bility

of their signal frequencies. Without efficient measurement instruments,

some

stations' signals

would wander and

the dial. In response to complaints, the drift for radio stations

interfere

with adjoining stations on

FCC mandated

a very small average

over the course of a day.

Radio stations throughout the United States were in a panic as they ized that there stay

on top of

miracle, the

—

was no way

at ten

minutes per

test

—

their frequency drift to the precision needed.

HP 524A

real-

that they could possibly

And

then, like a

high-speed frequency counter was announced.

It

of-

fered stations the prospect of measuring their signal almost continuously, in

what today

is

called "real time."

Hundreds quickly put

creating almost overnight a major

new

in their orders to

HP,

business for the company, and, over

the next thirty years, putting millions of dollars in Hewlett-Packard's coffers.

In 1952, not long after he arrived at HP,

down and pondered audio Bill

oscillator. It

R&D

director Barney Oliver sat

the company's founding invention, the

HP

model 200A

had, of course, been invented by Barney's old schoolmate,

Hewlett, and already held a mythical place in the company's short history.

— BILL &

134

DAVE

HP 200A

In the intervening thirteen years, the units

and was a commonly seen instrument

Bill's

original version

cles); that

had sold thousands of

in laboratories

had been improved

about 50

to

over the world.

all

KHz

had an upper frequency limit of just 20

(20,000 cy-

KHz with the upgraded version, the

200B, after the war. But there development had stopped, as the circuitry had

begun

to

The

produce so

much

noise that

it

impeded

best engineers at Hewlett-Packard

stumped. Oliver merely looked

itself.

had studied the problem and been

—

at the circuitry

and decided that a new, more balanced

for the first time, in fact

circuit configuration

would

solve the

He tried it, and the upper frequency limit of this new version eventually named the HP 200CD—jumped twelve-fold to 600 KHz. Bill Hewlett's audio oscillator was given twenty more years of working life. And if anyone at HP had any doubts about the reputed genius of the new R&D diproblem.

they quickly evaporated.

rector,

But the spectacular growth of the company during entire story. Bill

these years

—

a

and Dave

also

this era doesn't tell the

made some very large business

reminder that these were

still

young men,

in a

mistakes during

young company,

without the wisdom yet to refrain from taking some dangerous

risks.

One of the most notorious of these was the Electronic Lettuce Thinner. From the earliest days of the company, Bill and Dave had used Paul Flehr as their patent attorney. Flehr's signature, in fact, appears on the original 200A audio oscillator patent.

was Flehr who introduced Hewlett and Packard

It

clients,

Leo Marihart, a lettuce farmer

in the Salinas Valley.

to another of his

Marihart had been

working, without success, to develop a device that could automatically thin lettuce Bill

and other row

crops.

and Dave, unfortunately, loved the

cerned that HP's product

line,

though

diversified. Electronic agricultural

large

idea.

They were growing con-

and growing, was

insufficiently

equipment, they concluded, might be

just

the thing. It

wasn't.

And

after considerable

time and expense

have been used more productively elsewhere

abandoned the just

ahead of

project.

its

time,

—both of which might

— Hewlett and Packard

The two men convinced themselves and

that

someday they would return

to say, they never did. But the experience taught

them

finally

that the idea to

it.

was

Needless

the importance of stick-

ing with their core competence, which, for now, was test and

measurement

instruments.*

A second story from this era, one which often stuns later Hewlett-Packard employees, who knew HP only as the paragon of honest business deals, is the story of the company's model 410A AC/DC voltmeter. There is a story that

— The HP Way can never be fully confirmed, but

135

generally believed

is

by older HPers, that

the 410A was introduced at the 1950 IRE trade show it was, in fact, a The voltmeter displayed had a battery and a knob to set the meter posibut otherwise had no internal circuitry.

when fake.

tion,

It

was one of the

earliest,

and most shocking examples of the "vaporware"

that bedevils the electronics industry to this day.

and perhaps

Minck

Bill

Hewlett

had decided that

argues, "Packard

to get orders first

— could have signed it

no

is

different

it

HP

in a recession

later."

many

of

whom

never deliver on

manufacturer and deliver the

a risky

move, suggestive of

a

company

And it likely haunted

Bill

desperate enough

still

and Dave, because not only

never again try to introduce an unfinished product, but

policy of refusing to reputation.

time

13

proved the beginning of yet another major business for the com-

was

to cut corners to survive.

did

only Dave Packard

this deceit. Perhaps, as

was important

their promises. Hewlett-Packard did indeed

it

on

from the rationale used by generations of

hardware, and especially software, makers,

pany. But

And

and finish the production engineering

Maybe, but that

410A, and

off

do

just that

became

a hallmark of the

Had any HP product manager done

Dave did with the 410A

in 1950, they

in 1960 or

would have been

formal

its

company's

sterling

1970 what

Bill

fired

and

on the spot.*

The New Athens Fred Terman had been talking about creating an industrial park on Stanford's

unused acreage

as far

back

as those train trips

after the war. In the years that followed,

Dave, and to Russell Varian

at

with Hewlett and Packard just

he regularly suggested both to

Bill

and

Varian Associates (he sat on the boards of both

companies), that they should consider building their future headquarter buildings

on Stanford

land.

But that unused land, about 9,000 als for its

use ranged from turning

search to building a

new town

it

acres, wasn't available.

Not yet. Propos-

into a natural refuge for biological re-

of 44,000 citizens that would support the

university with property taxes.

Terman had

his

own vision. Though he had happily hiked the hills around

Stanford for most of his part of

it

—

to create

dustrial parks.

life,

he was

what he saw

still

as the

Terman was convinced

the companies created

willing to give

up

that world

—

at least

most beautiful and progressive of

in-

that if he could continue to keep nearby

by his past students, and add

to

them

the firms likely to

be founded by future Stanford grads, he could earn huge rental revenues for

BILL &

136

DAVE

the university. But just as important, he also believed that such a park establish a powerful synergy

make

the Stanford

would

between companies and campus that would

community hugely competitive on

the world scene.

In a marvelous example of the teacher beginning to learn from his students, Terman's

model

for the ideal

company for his

industrial park was, as he

admitted, Hewlett-Packard:

later

had come

I

to the conclusion that there

were important advantages in

cating high-technology companies near a university

together

we could

Hewlett-Packard sult

—

that

by being

benefit each other in a variety of ways. In this the

Company was my model.

of a thesis, and during their

first

Their

first

product was the

Today they hire our graduates and employ our faculty people

we make

it

re-

year or two in business they were in

and out of the Stanford Communication Laboratory almost every

sultants, while

lo-

close

possible for

HP

day.

as con-

engineers to obtain advanced

degrees at Stanford by enrolling in courses that are

made

conveniently

available. 14

In pursuit of this vision,

Terman got himself appointed

Land and Building Development Committee. There,

ford's

another for the use of the land was shot

after

down by various

he pushed on. By early 1954, his proposal was the cause

it

seemed the

least

draconian:

it

clude areas for radio research (such as

alternative

interest groups,

proposed to expand the campus to satellite dishes)

in-

and William Hansen's

tracts

of land in the high

west of campus, and, importantly, open up 579 acres in the rolling pas-

tures

and low

hills to

the south, by invitation only, to industry.

Approval for the Terman plan came, fortuitously, as

one

standing, mostly be-

last left

proposed linear accelerator, leave pristine the vast hills

in 1951, to Stanas

at

about the same time

Terman's promotion to provost, putting him in the perfect position to

quickly implement his

own

idea.

came from Terman's neighbor had once been

set the

significant contribution to the

a Stanford football player, but these days he

business manager.

who new

A

And

program

in Palo Alto, Alf Brandin. Brandin, like Packard,

a particularly enlightened

one

was the

as well:

it

university's

was Brandin

remarkable, and unprecedented, architectural standards for the

Stanford Industrial Park. According to Terman's biographer C. Stewart

Gillmor:

Maintaining absolute architectural control, Brandin required

facilities to

be designed with deep landscaped setbacks, parking screened from view

by

trees

and shrubs, no heating or smoke

stacks,

and

especially lawns that

flowed from property to property with no fences, "one long sweep of

— The HP Way lawn," as

one of Brandin's

as the 'Brandin

staff later

Theory on Lawns.'

137

described

it.

"This came to be

known

" 15

The Terman-Brandin team worked exceedingly well. Brandin was able to such high standards simply because Terman was so efficient at using his

set

HP and Varian

network of contacts throughout the electronics industry. Both

quickly signed on, as did Lockheed Research Laboratories, General Electric

Microwaves (which spun off Watkins-Johnson, which also moved into the

and Beckman Laboratories (which,

park),

ironically,

now

included the gut-

ted Shockley Semiconductors). Other nontech companies, such as publisher

Houghton

Mifflin,

moved

in as well.

wasn't long before Brandin was turning

It

down

applications to the park,

accepting only those firms with the greatest potential to benefit the university.

As

for

not so

Terman,

much

among

his reputation soared, especially

the general public

for being a great professor, but for having created the

most beau-

business district on the planet. As building after building, plant after

tiful

plant, rose

on the land beside Stanford, hugging the contours of the green

missing the usual smokestacks and naked parking

hills,

grazing on the green strips between them, dustrial

Park—

lutionary

work.

A

like its

business, a radical

half century later

it

homes tucked away

oak

trees. It is

indeed the

and

a revo-

ideal.

A

steel nestled in

life at

report from 1984 vision.

green

hills,

It is all

magnifi-

meadows, ancient gnarled

Athens, with each

company an

intellectual

Scientist King." 16

and urban planners hailed the park, workers everywhere

dreamed of working

specifically

New

that Stanford In-

—represented

vision of quality of

in glens, horses grazing in

Academy, each president a

horses and cows

one can admire Terman's

there, the smokeless factories of glass

cent

new

remains that shining

notes, "Driving through the Park,

there. In 1960,

became evident

biggest resident, Hewlett-Packard

way of doing

Architects

it

lots,

there,

and corporate tenants boasted

when French

to recruits of being

president Charles de Gaulle visited California, he

asked to see two places: Disneyland and the Stanford Industrial

Park.

The its

first

company

to

move

into the park

headquarters at the base of the

Hansen Way, touchingly named

hill,

was Varian Associates, locating

just

up from

after their late friend

Dave weren't the only entrepreneurs

in the

El

Camino

and teacher

Real, (Bill

neighborhood who honored

on and

their

mentors.)

Hewlett-Packard, which

owned

fifty

acres

on the

broke ground in 1956, and began manufacturing in

hilltop

its first

above Varian,

building in the

Stanford Industrial Park the next year. The entire corporate headquarters wasn't completed until 1960, by which time 1501 Page Mill

Road

—the old

BILL &

138

logging

trail

now

a busy boulevard

DAVE

—had more than

turing and office space under one roof. HP's

and wide, with hill,

new

eight acres of

manufac-

headquarters building, low

and stretching across the top of a green

a sawtooth roof

backdropped by the ultramarine silhouette of the Coastal Range, quickly

became

a Valley icon.

HP's headquarters building reflected the company

it

housed. The space-

age entrance on the mountainside, featuring a cantilevered portico, was sur-

rounded by

trees

and berms

that hid the

employee parking

area.

The other

below, was a vast curtain of glass, offering employees

side, facing the Valley

both a spectacular view of the southern part of the San Francisco Bay and ever-changing natural its

exposed

light.

The sawtooth roof served

ment. The buildings were also air-conditioned California

Only meeting

—and the

floor space

dignitaries. Their

Everyone

up

else, right

—

offices,

and those were used mostly

doors were always open, symbolically and

if

Indeed, the challenge for

in getting to see the boss,

The huge rooms viders. It

at

many employees

HP

of

for hermetic of-

over the years was not

but in finding him.

HP's new headquarters were parceled up only by

There were no doorways, rarely even

was thus possible

at

all

bosses really were

"managing by wandering around" they would have no need fices.

for

literally.

to senior vice presidents, shared the floor with

The message was unmistakable:

the other employees.

Northern

rare for the era in

wide open.

and Dave had private

Bill

same purpose,

the

drawing sunlight to create a pleasant interior environ-

glass face

to stand at

glass

windows

di-

atop the dividers.

one end of the huge room and

see just about

everyone in the company arrayed out before you across several hundred thou-

sand square

A

feet

of sunlit expanse.

half century

later, after

comics

like Dilbert

and

satirical films like Office

Space have rendered the working world of cubicles as a kind of organizational hell, in

and

which employees hide behind carpeted walls trying not

"prairie

dog" up

sound,

at the slightest

it is

to be noticed,

hard to remember

just

how

revolutionary this kind of workspace was in the mid-1950s. Then, offices and factory floors were divided into two layouts: private offices, usually for

agement; and

vast,

open

floors featuring ranks

man-

and rows of desks and not

a

—

moment of privacy and that, of course, was the province of the workers. What HP offered instead was a middle ground: privacy in a public place. The layout of headquarters was the

visual analog of the

in turn, reinforced that culture every

That

Bill

and Dave understood

hour of every

this

is

it

culture

fact that

became standard

was possible

to

—and

it,

day.

evidenced by the

the opening of the headquarters, this layout

Packard buildings. By the 1970s,

HP

walk into

for

HP

soon

all

after

Hewlett-

facilities all

— The HP Way around the world and, even it

would

if

the

139

company logo had not been

in evidence,

have been instantly obvious you were in a Hewlett-Packard

still

building.

This corporate culture, because

ground when in the 1960s,

it

in

event only

first

men from

Way, stood

its

company

picnic.

Though Brown had

the

company showed

activity,

sent out notices

on the day of the

up. Recounted Minck:

furious, because the value of getting employees' families into

mix was

that there

HP

encountered resistance from a local culture. As a case in point,

advance that the picnic was a family

Brown was the

was the heart of the

John Brown, co-director of Yokogawa Hewlett-Packard in Japan,

announced YHP's

months

it

crucial.

So the next

would be no

excuses.

year,

It

he was extremely vocal in stating

was causing such

a cultural divide that

an employee committee was sent in to see him, to try to persuade him that Japanese

custom didn't permit wives and children

to join

men

in

company affairs. So [Brown] had to make if

it

a direct order, with serious consequences

not followed. That worked, because his employees observed direct or-

ders,

and considered [those orders]

to be

more important than

learned culture that excluded their wives and kids. Needless to picnics were highly successful,

say,

their

future

and the cultures "intermarried." 17 *

Tackling Tek By the mid-1950s, Hewlett-Packard was on successful years in

its

history, the

a tear. In 1954,

company introduced

one of the most

a series of important

new

products, including wave tube analyzers for microwave applications, a

(model 400D) voltmeter, two frequency counters, and a decade counter

(a de-

vice that counts electric pulses).

The

financials

were equally impressive. That

year,

HP's revenues reached

$15 million, and employment jumped to more than 750. With nearly a hundred products in as a

its

catalog,

—

and twenty more being added each year

Hewlett-Packard was the hottest young tech company on earth. surprisingly, also Bill

made the company

And that,

and Dave were not boastful men, but they were ambitious

scientists, engineers,

not

cocky. 18

mously proud of the company they had of

as well

worldwide reputation for high performance and even higher quality

built.

—and enor-

They believed they had

a

team

and marketers who could take on any competitor,

DAVE

BILL &

140

and win. And there was one tech instrument business they

large or small,

coveted

—

oscilloscopes, devices that graphically present electronic signals as

waves on a cathode-ray

The leading

display.

supplier of oscilloscopes

was a company

Beaverton, Oregon. Tektronix had been founded by

called Tektronix in

Howard Vollum,

the bril-

Dave had met during the war while working on

liant scientist- entrepreneur

the Leopard project. Indeed, the Tek oscilloscope was an evolved version of the "A Scope" Vollum had

shown Packard

at the time.

Tektronix oscilloscopes were exquisitely built and highly to

little

details like their carefully dressed wiring harnesses

ponent mountings. Oscilloscopes were

ment of choice

become synonymous with buying anything For a

Bill

this technology,

com-

becoming the

test instru-

name had

few engineers even thought about

else.

and Dave, Tektronix's ownership of the oscilloscope business was

growing annoyance

—

a fact

made

especially ironic considering that

and Dave who had advised Vollum

Bill

and

isolated

as the Tektronix

also rapidly

for electronics engineers,

thanks

reliable,

and

introduced him to

Norm

Neely,

was

it

founding of Tektronix, and even

at the

who became

Tek's

West Coast

distributor.

Hewlett and Packard saw scopes as a natural extension to HP's current product lines,

and

a linchpin to their

and measurement solution Tektronix on and

unmatched

steal its

They resolved

to engineers everywhere.

test

to take

business with superior products, better prices, and

service.

In this ambition they were

Hewlett-Packard shared

era,

long-term goal of providing a complete

goaded on by

many of its

their

own

sales reps.

sales representatives

panies, including future competitors. This

During

this

with other com-

was because the reps were not only

independent contractors, but also because they wanted to offer customers complete product packages across voltmeters, counters,

all

technologies. Thus,

and other devices and Tektronix

many

reps sold

But then, starting in the mid-1950s, Tektronix began to systematically those reps and replace

them with in-house

HP

oscilloscopes.

salespeople (as noted earlier,

fire

HP

eventually did the same, but hired the reps instead). For their part, the reps

suddenly found themselves without an oscilloscope supplier to round out their offerings.

So they begged

Needless to a

move, and

gram first

in

in scopes.

say,

HP to enter the business. on an HP already contemplating just such

the calls landed

1954

Bill

and Dave

Development took two

two oscilloscopes

battle with Tektronix.

as the

One

new product development

initiated a

years,

opening salvo

in

in 1956,

HP

introduced

what would become

its

a forty-year

of these scopes, the model 130A, was a beautiful

low-frequency oscilloscope perfectly targeted competitive offering.

and

pro-

at a

niche where Tek had no

— The HP Way

141

But the main weapon in HP's attack was the model 150A, a 10

model targeted

at the

very heart of Tektronix's business.

innovations, like a better display, but

most of

offered a few real

It

from

differences

its

MHz

its

Tek

counterparts were obvious (and not very compelling) attempts just to be different.

But worse, the model 150A was a dog. lems, and

HP

suffered terrible reliability prob-

It

wasn't prepared to deal with

overwhelming demand by furious

customers for immediate service. Hewlett recalled,

"We came

we had

fancy scope and the thing was just incredibly unreliable ... all

of those

out with this to replace

scopes." 19

Tektronix oscilloscopes, by comparison, were not only designed for bility,

but Vollum expected his

field

people to be repairmen

first,

relia-

salesmen

second. Every one was trained to align the company's products. Vollum even

required his salespeople to carry a screwdriver with

them on

calls, just

to fine-

tune any Tektronix scopes they found on-site.

To challenge an industry standard,

you have

be much

to

better.

And

the

it is

not enough to be just as good

HP

150A wasn't even

Tektronix users found no reason to switch and

proven brand.

to stick with the

For the

product

first

time in

strategy.

Convinced

its

history,

The humiliation

was

it

Hewlett-Packard stumbled with a

sent a shock

temporary setback,

a

And

new

wave through the company.

and Dave, with the support of

Bill

their senior executives, decided to redouble their efforts

ket again.

close. Existing

new users were quickly warned

and

assault the

mar-

again.

But they were up against an entrenched competitor, focused on a single business, with a culture of quality

the next four decades, business.

HP

HP

and innovation

enjoyed some victories

at the

its

it

own. For

out in the oscilloscope

low end of the business, but they

were soon matched there by comparable Tek age

as robust as their

and Tektronix slugged

offerings.

HP even tried to lever-

position by going into the business of building

its

own

cathode-ray

tube displays.

But try

as

it

might, Hewlett-Packard never

15 percent of the oscilloscope market.

business, that

meant the company

minority share. But

it

still

As

this

managed to capture more than would become a billion-dollar

enjoyed huge revenues even from

was always playing catch-up

to a better competitor

its

—an

experience HP, accustomed to being the leader, could never really stomach.

Packard said business

later,

much

"In retrospect

earlier

we should have

gotten into the oscilloscope

than we did." 20

The Tektronix experience grated no one more than Packard. And, in typical manner, they found a into a business lesson.

Bill

Hewlett and Dave

way to convert

their frustration

Never again, they concluded, would the company attack

DAVE

BILL &

142

an established market or competitor unless bution

HP

could offer a decisive contri-

—usually technological— over what was already

there,

no matter how

lucrative the potential payoff.*

This was just one

doing business that

more chapter

Bill

They would soon put them

company should be

in a

growing collection of lessons about

and Dave were compiling

in the

back of

together into a coherent vision of

all

their minds.

how

a great

run.

Public Exposure In 1957, Hewlett-Packard

Coming out of an no

profits,

later),

at

public. Its initial public offering of

$16 per share.

era (1995-2000) in

few employees, and

to great fanfare

months

Company went

on November 6

stock took place

little

which companies with

more than

a storefront office

and stratospheric valuations (and died

little sales,

went public

just as quickly a

few

important to remember the world of HP's IPO. In 1957,

it is

New York Stock Exchange listed about nine hundred publicly traded comNYSE and NASDAQ), and the Dow Jones stood at 435. In the entire state of California, there were fewer the

panies (compared with six thousand today on the

than a dozen publicly traded companies, none of them in electronics. Interestingly,

Hewlett-Packard and Walt Disney Co., two firms with his-

—

went public the same month as new generation of companies, and of the Pacific

torical links,

for

growth

in the U.S.

if

heralding the arrival of a

coast as the next great region

economy.

Going public was only part of what Packard would describe shed year for

HP"

21

—and

for

him and

with 900 employees and $20 million in

employees and $28 million in El

Camino

full.

Real,

In September, the

opened

It

first

—and was quickly

in October,

sales. Its

now numbering

The company entered the year and finished with nearly 1,800

older buildings at Page Mill

four including the

A

for four

to everyone, even the

that Hewlett-Packard

Nobody

appreciated this fact

Packard.

They knew

definite future, the

that to continue

other,

much

different companies.

more

headquarters on the

hill

buildings on the

site.

profound trans-

was undergoing

a

more than

Hewlett and Dave

growing

company would have

distant locations for expansion,

Road and

Building, were

growing number of cars driving past

on Page Mill Road, formation.

new

Redwood

second building, a new laboratory, opened

and ground was broken

was obvious

Bill.

sales,

building of the

filled.

as "a water-

at its

Bill

current rate into the in-

to restructure

and even consider

itself,

look to

new and

a strategy of acquiring

The HP Way Great executives worry most rest

of the

company was

of real fortune

when

143

times are good

—and even while the and the prospect

celebrating HP's incredible success

at the stock offering,

Hewlett and Packard met privately almost

every day trying to chart out the path ahead. Hewlett said,

cerned about the company growing and the the personal touch

One

we

felt

we were

men saw enormous

been signed that year, and Hewlett

was convinced that

company. After

it

Common

(in part, perhaps, influenced

Market, had

by

came home more

and

visits

with

officials,

enthusiastic than ever:

bankers, and

Europe had a

burgeoning electronic products industry in the form of Siemens, others, but not a

He

quickly set

up

a task force of Doolittle,

how and where

HP

By the time of the

Geneva, Switzerland, as the

European headquarters. 1959) by a West

Philips,

and

comparable instruments industry.

Finch to investigate in Europe.

his teenage

presented a unique business opportunity for the

trips to three countries,

executives there, he

con-

opportunities for growth

was Europe. The Treaty of Rome, the precursor to the

tour)

"We were

afraid we'd lose

was so important." 22

two

place where the

fact that

It

German

ment assembly plant near

site

set

up operations

IPO, the team was already settling on

of the

opened

Demere, and attorney Nate

Hewlett-Packard could

first

HP

European

office

in April 1959, followed

sales office,

and

(in

— eventually

soon

after (July

September) by a small instru-

Stuttgart.

Thus, within two years after making the decision to look at the European

HP became one of the largest U.S. electronics presences in Europe. It HP would repeat in Japan and China. Moreover, it is interesting to note that HP chose to extend its manufacturing operamarket,

was a pattern of decisiveness that

tions halfway

around the world even before

the United States

—

it

became

it

expanded

its

operations within

a global corporation even before

it

became

a

continental one.*

Meanwhile,

pending geographic extension of the company's opera-

this

and Dave even more

tions convinced Bill

—by

worse, torn apart

its

own

that

HP

risked being led astray

success. Hewlett recalled,

from a very small technical company where only Packard and stock into a publicly

owned company with

was needed, they had decided group of senior

HP

tions of daily work,

in late 1956,

executives, get

away

— or

"We were growing I

owned the What

a very different appearance."

was

for the

two of them

to someplace far

to gather a

from the

distrac-

and discuss how to keep the unique Hewlett-Packard

ture alive in a time of explosive change.

cul-

BILL &

144

Company

Rethinking the The

was held

retreat

enty miles north of San Francisco, at

would

to

was a good idea

it

make

About twenty

"a

summer

HP employ-

to get

at least three reasons.

our key managers together

plans for the future.

Second, there were

making

it

now more

than 1,200 people in the company,

increasingly difficult for Bill

to have a personal it

it.

sev-

once a year to discuss policies and problems, to exchange views,

at least

and

later describe

decided to have the meeting for

I

we thought

First,

— the Sonoma Mission Inn

The HP Way:

ees attended. Packard wrote in

Hewlett and

wine country town of Sonoma,

in early 1957 in the

place in winter," as Hewlett

Bill

DAVE

and

me to know everyone well and

knowledge of everything that was going on. So we

essential that despite

felt

HP's growth, we try to maintain a small-company

atmosphere and to have our key managers thoroughly familiar with our

management The

their review

drafted

Because

at the

and

objectives.

we had

and study a

set

and discussed with

this

Packard, but of

look

style

third reason

the meeting was to present to the group for

of corporate objectives that

had previously

meeting was so important to the future not only of Hewlett-

modern

business everywhere,

proceedings and

Bill

it is

and Dave's goals

To begin, there was the matter of precedent treat served as the

pany, and beyond.

It

was

rest

worthwhile to take a closer

for

it.

—and indeed, the Sonoma

prototype of annual executive

continue throughout the

off-site

re-

meetings that would

of Hewlett's and Packard's tenure at the com-

also the template for a

and departmental meetings

visional,

I

Bill. 23

that

growing number of group,

would come

to characterize the

di-

HP

annual planning process.

The second item on with

its

the agenda was the matter of

how HP was

rapid growth and the strains that growth was putting

ment. Hewlett

recalled,

divisionalize. We

should do

is

thought

was too

it

"Out of

big.

this

had

came

to deal

upon manage-

we probably and we units, we might

the concept that what

[nearly] 1,500 people at that point

By dividing up

into

two or three small

be able to keep that personal touch." 24

Other large corporations had decentralized into a division-based structure. Indeed, the idea

fred

P.

Sloan

management done

for

at

of independent operating divisions, as devised by Al-

General Motors in the 1920s, was one of the most popular

fads of the era. But, almost universally, this restructuring

product line or marketing reasons. Companies

was

got too big and un-

— The HP Way wieldy for senior management to control

145 or their products became

directly,

too diverse to manufacture or market in a unitary way, and managers con-

cluded that the best solution was to create separate, self-contained operating units

working under an umbrella of corporate governance.

Unquestionably, these were motivating factors as well for the

group

to conclude that

HP needed to move from a monolithic, centralized or-

ganization to a decentralized, divisional one. In fact,

it

was generally agreed

that anytime in the future a division reached the current size of is,

fifteen

hundred employees —

it

would divide once

HP Co. — that

again.

But note the fundamental difference: the primary reason for

was cultural

Sonoma

—the men who ran Hewlett-Packard,

this

move

especially the founders,

were deeply concerned about retaining the company's innovative, and already

"Way" of doing

well-established, to

approach

its

Once

business.

again,

HP

was choosing

business challenges backwards, giving priority to family over

financials.*

But the very choice of moving to a divisional organization, the group knew, meant stressing that culture to a degree

Sonoma group

question then facing the

it

was:

Packard into something entirely different, while

had never known before. The

how do you still

turn Hewlett-

remaining fundamentally

the same?

Those months of conversation had produced an idea that posed considerable risk, but just

might work: a

set

of corporate objectives that would serve

Hewlett-Packard as a kind of Constitution to the body politic of the

Way"

culture.

Packard remarked, "While

pany

like this

should be managed,

we were

thinking about

how

a

kept getting back to one concept:

I

"HP comIf

we

could simply get everybody to agree on what our objectives were and to

understand what we were trying to do, then we could turn everybody loose,

and they would move along Hewlett

known

as

of the

HP

said, "I

in a

common direction." 25

we were

think

Management by

the

first

Objective." 26

people to

But hardly the

initiate this last: after

program

the success

model, thousands of companies around the world over the next

half century prepared their

own lists of corporate objectives, most in the form

of that most vapid of corporate instruments, the "mission statement." Almost every one failed, most because they were quickly forgotten, others because

wrong purposes than empower them.

they were used for the ees rather

What made Hewlett-Packard

the

—

typically as a

first

way to

and the best

control employ-

— example of Man-

agement by Objective? Because, once again,

Bill

and Dave approached the problem from the

opposite side. Whereas most companies that imitated the

upon corporate

objectives as a

way

to keep their

HP model

looked

employees locked into the

— BILL &

146 specific targets set set

out to keep

by the

firm, Hewlett

HP management

employees to do their jobs

do so within the employees. *

to

Interestingly,

it

from

well, to

common

DAVE and Packard did

interfering with the natural desire of

value system they shared with other

It

was

for this reason, as

tion, that Bill tives

make

from above. So what you need

and Dave

and

let

them run with

Man-

managers know what

just basically said that if

guidelines of what's expected

company

a football analogy to describe

kinds of decisions are wanted, they are best able to their level rather than

They

advance the interests of the company, and

was Hewlett who used

agement by Objective: "We

just the reverse.

those decisions from

to give

them

are

some

the ball." 27

James Madison did in drafting the U.S. Constitu-

intentionally, in Hewlett's words,

made

those objec-

"very broad in nature." The idea was never to straitjacket any employee

with responsibilities and goals that were too specific and too rigid to deal with

an ever-changing and unpredictable world. That in turn meant setting very general corporate goals at the top, then enforcing a process by which each layer of

down ble

management pushed

as

much

decision-making and responsibility

the organizational chart as possible in order to leave the greatest possi-

freedom of action

to those below. Thus, in the perfect scenario HP's

agement by Objective would always place decision-making one person most experienced and best positioned whether that person was

to

make

in the

Man-

hands of the

the right choice

a senior vice president in Palo Alto or the

guy on the

loading dock in Boeblingen, Germany. In practice, what this else,

meant was

that, at

HP, unlike almost everywhere

managers gained power and authority by giving up control and responsi-

bility.

They had

to trust the

judgment and wisdom of the people who worked

for them.

Needless to

women

say, this didn't

come

easy to

put themselves

at the

mercy of

people.

upon

toward the

trust,

on the assumption

common

critical.

for the

and Dave,

Dave Packard company's off to

all,

Bill

that every other

A

member

regularly let the other

this trust

working

began

make even major

at the

decisions

him during one of

the

most

critical

periods of the

decade hence, Packard would do the same thing, going

Washington and entrusting Hewlett not only with

with his fortune.

is

Hewlett went off to war knowing that he could trust

to represent

history.

the

good.

after

both of them.

why

Successful families are

At Hewlett-Packard every employee could see that top. Bill

Most men and

their subordinates' decisions. That's

Hewlett-Packard culture of "family" was so built

many

go into management to gain greater control over their careers, not to

his

company, but

The HP Way Now, up

ing

Sonoma retreat, Bill and Dave set another example by dividcompany and entrusting the leadership of the individual parts

at the

their

The assumption

to their senior lieutenants.

founders

own

—was

new

that these

division

That was the

first

the right

and Dave's

step in Bill

number of corporate

objectives,

would encompass and provide guidelines out of the way of the people having to

and Dave, was

Bill

sixth

original first

1. Profit:

for

all

set

line.

The second was

of

corporate decisions

a masterpiece of compression

Citizenship,

—

yet get

— and the model

profit

is

five objectives.

though implicit

interest of clarity.

HP Corporate Objectives, circa

To recognize that

should attempt to achieve the

in the

Here

is

the

1966:

the best single measure of our contribu-

and the ultimate source of our corporate

tions to society

to create just

those decisions.

were added in the mid-sixties in the

complete

in turn entrust their

on down the

plan.

by the two

with just the right vagueness, that

make

and seventh, Organization and

list,

so

companies to come. There were originally

for generations of

The

severely enforced

product of consensus, but no doubt carefully

result, officially the

guided by

—

managers would

And

lieutenants with similar authority.

The

147

strength.

We

maximum possible profit consistent with our

other objectives.

2.

Customers: To strive for continued improvement in the quality, usefulness,

and value of the products and

3.

Field of Interest: tunities for

capability

4.

services

To concentrate our

we

offer

our customers.

efforts, continually

growth but limiting our involvement to

and can make

new opporwhich we have

seeking

fields in

a contribution.

Growth: To emphasize growth as a measure of strength and a requirement for survival.

5.

Employees: To provide

employment opportunities

for

HP

people that in-

clude the opportunity to share in the company's success, which they help

make possible. To provide

for

them job

security based

on performance, and

to provide the opportunity for personal satisfaction that

comes from

a

sense of accomplishment in their work.

6.

Organization: To maintain an organizational environment that fosters indi-

vidual motivation, initiative and creativity, and a wide latitude of freedom in

working toward established objectives and

goals.

Citizenship:

7.

DAVE

BILL &

148

To meet the obligations of good citizenship by making contri-

community and

butions to the

which

to the institutions in our society

generate the environment in which

we

operate.*

Almost every one of these words resonates with the history of HewlettPackard and the acquired wisdom of For example, No. learned by the its

company

in

its ill-fated

And

the

is

embodiment of

the lessons

venture into agricultural products and

company's profit-sharing and stock-

a distillation of the

is

option programs, as well as offs.

founders.

competing with Tektronix in oscilloscopes. The

frustrating experiences

Employees section

its

Field of Interest,

3,

and Dave's deeply held antipathy

Bill

Citizenship hides within

to

mass

lay-

not only HP's growing charitable work,

it

own sizable commitments to public service: Sonoma retreat was president of the IEEE (the

but Hewlett's and Packard's Hewlett

the time of the

at

Institute of Electrical

merger of the

and Electronics Engineers, formed

Institute of

Electrical Engineers), and, since 1953, at Fred

been serving

as a trustee

in 1963

Radio Engineers and the American

from the

Institute of

Terman's behest, Packard had

of Stanford University, and within a year would be

appointed chairman of Stanford's board.

Note

as well the order of the

ample, Profit comes

first.

after everything else,

from those

This

is

HP Objectives, which is not arbitrary. For exa

reminder that Hewlett-Packard, before and

a for-profit business

is

profits. It says that the

— and

HP Way

is

other good things accrue

all

not a social experiment, but

empowerment,

rather a sober calculation that employee

a positive workplace

environment, shared success, and a commitment to continuous innovation the best recipe for a healthy, competitive,

and

profitable

HP

This primacy of profits rebuts any notion that business that got very, very lucky.

On

the contrary,

it

is

company.

was merely

a family

underscores the reality

that Hewlett

and Packard were tough, ambitious businessmen. They weren't

lucky tyros,

like

many

of the dot-commers of the

tripped over their billions

Dave three decades

—and

lost

them

late

1990s,

just as quickly.

to earn their great fortunes,

It

and they did so

all

but

Bill

and

systematically,

against ruthless competition, using pragmatic business practices tic

who

took

and a

realis-

vision of the future.

The positioning of was,

it

Profit

is

also a

reminder

that, as radical as the

was merely revolutionary, not Utopian. That

Bill

HP Way

and Dave demanded

of themselves, and other HPers, that they trust one another and work together to achieve

common

objectives

was hugely

difficult,

but not impossible.

firms that attempted to imitate the

HP

more

initiatives that ultimately failed

progressive by embarking

they crossed the line of

human

on

nature.

model

A

tried to

classic case

Many

show they were even because

was Apple Computer's

— The HP Way attempt, in the early 1980s, to remove what

stigma by giving secretaries the quickly abandoned when

it

149

it

perceived as an organizational

new title of "area

associates"

became more an occasion

—

a plan that

was

for derision than social

engineering.*

The positioning of Customers tional phrase "the

comes second

—

it

also interesting.

customer always comes

Note

right after profits.

HP

tiresome word "satisfaction."

know

is

At HP, the

has an answer: no,

first" finally

as well that

nowhere

assumes that

realistically

is

it

the equally

can never really

it

something as complex, subjective, and ultimately metaphysical as what

takes to satisfy another

human

What

being.

the

company

does

know

can continuously improve the quality, usefulness, and value of

if it

motiva-

trite

ucts, those

customers

will

come back and buy more. And

Next, Growth. Notice that

must continue

grow

to

it

that

is

that

prod-

enough.

has two essential points.

First, that a

may be

contrary to

in order to survive. This

its

is

company more or-

ganic theories about business equilibrium, but Hewlett and Packard were

pragmatic enough to

growing quickly

and soon

know that,

meaning of the second

of corporate health and strength." Did that theoretically keep

and Dave were and Dave

thrill

were growing

measure

mean Hewlett-Packard could it

would

as

long as

Bill

there.

that

from not having the

still

point: "growth as a

growing forever? Perhaps not, but

Employees. As already noted, here there Bill

company that stopped

people to companies that

lost its best

died. That's the

in electronics at least, a

HPers

to

is

the implicit

commitment from

not only enjoy the sense of security that comes

will

worry about being

laid off

when

times are bad, but also

of knowing that they will enjoy a piece of the company's success

when times are good. But note that here, unlike in the Customers objective, the word "satisfaction" actually does appear. It arises from two sources: opportunity and a sense of accomplishment.

own

attitudes

about work and

career.

these are the factors that satisfy place. If

not

—and

it

It is

a glimpse into the founders'

For HPers,

it is

a two-edged sword:

them about work, then they

if

are in the right

many Silicon Valley entrepreneurs who craved their own lives HP was absolutely the wrong

wasn't for

independence and control of

—

place to be.

The Organization trust factor in the

objective

HP

is,

ing toward established objectives refers

back to the Objectives

in the organization

is

ultimately, a

reminder of the underlying

Way. The phrase "wide latitude of freedom in work-

and goals"

is

something of a tautology,

as well; nevertheless,

its

point

enough room

to

make

to be allowed

is

clear:

their

as

it

everyone

own

path to

their goals. Finally, Citizenship.

rate variety,

is

The

call to

good

one of the most overused

citizenship, especially of the corpo-

—and underaccomplished—

goals in

DAVE

BILL &

150

American business. rate behavior.

It is

also a

popular

PR fig leaf for just

HP Objective: at Hewlett-

But notice the singular phrasing of this

Packard, good citizenship

is

an

community. Most interesting of

You make

obligation. all is

the final phrase.

HP

a kind of cultural quid pro quo:

HP

and

the opposite corpo-

contributions to your

It is

entirely pragmatic,

employees are obliged to con-

tribute to those institutions in society that create the conditions for Hewlett-

Packard to survive and

view of

thrive.

Once

citizenship.

This

again,

their rationalism, rather than

is

a very practical, sober,

and transactional

harkens back to those other founders and

it

some transcendental notion of moral duty and

social justice.

HP Way>

The

mine

Packard's memoir, written at the end of his career,

for Dave's take

on the major events

in his

(and Hewlett's)

a gold

is

But

career.

it

can also be a frustrating book because Packard can be so judicious in his phrasing and so reserved in his emotions that breathing

man behind the words. (And memories

pair: Hewlett's written

And yet on

take

there

he talks about family

is

how

can be hard to find the

living,

Packard was the more eloquent of the

only in rare interviews and speeches.)

The HP Way one moment when David Packard's words

in

a passion that

exist

it

It is

when

Objectives underscore the larger culture

—the

makes them

HP

those

rise

almost to the

level

of poetry.

— of Hewlett-Packard:

Any

who

organization, any group of people

some

have worked together for

time, develops a philosophy, a set of values, a series of traditions

and customs. These Hewlett-Packard.

are, in total,

We

have a

set

unique

to the organization.

of values

—

So

it is

with

deeply held beliefs that guide

us in meeting our objectives, in working with one another, and in dealing

with customers, shareholders, and others.

upon

built

these values.

cision making.

and

practices.

The

objectives,

these words,

it is

apparent

—

that

that, as

great institution in the twentieth century,

HP

we employ

the combination of these elements

porate objectives, plans and practices

From

corporate objectives are

objectives serve as a day-to-day guide for de-

To help us meet our It is

Our

forms the

much

as

various plans

— our

values, cor-

HP Way. 28 *

anyone who founded

Dave Packard and

a

Hewlett saw

Bill

not just as buildings, intellectual property, and inventory, but as people as

well.

It is

also clear that,

men began

beginning that

by everyone who wore an (Bill

last

day of the Sonoma

to treat Hewlett-Packard as not only their

retreat, the

company, but

as

two

owned

HP name badge.

and Dave would continue these annual

their rest of their tenures at

HP.

An

off-site executive

meetings for

annual highlight was a raucous

skit,

usually

The HP Way

151

devised by Bagley, van Bronkhorst and corporate attorney Jean Chouinard, typically at the expense of Bill

and

One such "This

skit

pretty tough

is

and Dave.

was so outrageous that Kirby

on you

guys."

Packard replied, "The tougher the

Tellingly,

obliged to warn Packard,

felt

better.")

Moving Out The

decentralization of Hewlett-Packard not only enabled the

better deal with the strains of rapid growth, but also to look

and even

rent geographic,

With

management

to confine itself to Palo Alto.

established,

and

a structure to

becoming

a

mecca

The Santa Clara Valley was growing

for engineers, but

it

Bill,

and

especially the

of excellent graduate

electrical

was

also increasingly apparent

was going

that the competition for those professionals

while, as

to

cur-

HP Way now in place, there was no longer a reason why the com-

pany needed rapidly,

its

institutional, confines.

a system for divisional

preserve the

company

beyond

to be fierce.

Coloradoan Dave, knew, there were

a

Mean-

number

engineering programs at universities around

the country, producing thousands of alumni

who dreamed

of staying just

where they were. There were other factors

at

work

as well.

For example, in a way rarely

understood by East Coast companies, being based in California severely

handicapped HP's

ability to sell into

Europe, then the world's second most

important electronics market. The time difference interfered with communications,

and shipping

costs

—

either east

by train

to the Atlantic coast, then via

ship to Europe, or west via ship 15,000 miles through the Suez Canal

—were

prohibitive.

The

test

and measurement industry was

wasn't the only instrument a case in point

—

that

company born

had survived and

expansion of the 1950s, driven by

Korean and cold wars, the baby electronics, the

all

in

also maturing. Hewlett-Packard

World War

thrived.

Now

II

—Tektronix being

the rapid economic

of the forces already mentioned

boom

—the

demand for consumer new one, the space race

explosion in

semiconductor revolution

—plus

a

(Sputnik had been launched in October 1957), had seeded the landscape for a

new generation of instrument companies, each seeking out, as HP had done, new niche markets where they could grow. In many of these new markets, such as medical devices and analytical

hot

instruments (such as gas chromatographs, which could quickly detect the

— DAVE

BILL &

152

chemical components of a sample), Hewlett-Packard had no experience, and

might forever play catch-up others,

as

it

was doing,

to

its

dismay, in oscilloscopes. In

young companies were experimenting with the use of

other solid-state devices. There was simply no

could assign enough talent to become a player in

way

all

transistors

and

that Hewlett-Packard

of these

thus increasing the likelihood that one of the markets

new businesses missed would ex-

it

plode, creating a major future competitor.

Then

was the matter of customers. The

there

company like Hewlett-Packard could be one of the

fact that

largest electronics

creasingly a hotbed for east.

company on

to continue to grow,

wasn't as

if

it

agricultural

equipment

On

had already been

right to bust

were

and Dave had

company was going

a presence there as well.

the contrary, they

a decade earlier.

division of Varian Associates.

now

in-

expanding into other locations and new markets was a new

and Dave.

But

aside, Bill

big eastern customers. If the

would need more of

idea for Bill

lett

start-ups, the big tech customers

Disney and the big aerospace companies

largely built the

It

new electronics

compa-

West Coast was

nies in California only underscored the fact that while the

back

an instrument

the two

to

They had

experimented with

after all

also

bought the microwave

And, by the time of the Sonoma meeting, Hew-

Europe and begun

men

had

setting

up

sales offices there.

for the first time agreed that the

environment was

HP out of the Stanford Industrial Park and into the bigger world.

Crucial to this change of attitude was not just the structural innovations that

had come out of Sonoma, but the changed According to Packard, "By the clear.

financial picture of the

late 1950s, the

company.

need for diversification was

We were becoming the largest supplier in most of the major segments of

the electronic instrumentation business. But these segments, in total, were

growing at

its,

at

only 6 percent per year, whereas

we had been growing, out of prof-

22 percent. Obviously, that kind of growth could not continue without

diversification." 29

Before continuing, lett's

and Packard's

and unlike most their

company,

it is

important to note here an essential part of Hew-

failed executives, Bill

in

and Dave were

great business leaders,

ruthlessly realistic about

good times or bad. No matter what the

media, or even their

own

hearts said, they

Unlike, say, the legions of at

many

personalities: realism. Like

dot-com

knew

that

press releases, or the

the numbers

executives, or the

didn't lie.*

management teams

legendary corporate meltdowns from Lockheed to Eastern Airlines to

Enron, they never deluded themselves that the market would keep growing forever, or that

somehow they would just "turn

things around." Whatever per-

sonal affection they had for other people in their private lives or at the office, Bill

to

and Dave both prided themselves on being unsentimental when

making business

decisions.

Whether

it

came

to walking

it

came

away from the Ad-

The HP Way dison garage or from

some product

line that

153

had helped build the company,

they never hesitated to pull the plug, walk away, and never look back.

when Hewlett and Packard looked at HP's growth curve versus the industry's, they knew they would have to quickly diversify, expand, and acquire. That belief had been growing for some time, thus the Sonoma meeting. But there was one other sticking point, where the needs Not

surprisingly then, in 1958,

of the future had collided with the basic principles that had been formed in their past: debt.

and Packard's aversion

Hewlett's

seemed the two

to border

men)

practical one.

on the due

less

his father deal

pathological,

to

was

in fact (as

which

to outsiders

was often the case with

any moral objection to borrowing money than a

was more than

It

to long-term debt,

just the lesson

Packard had learned watching

with bankrupt companies during the Depression.

was

It

also

company assumed debt, it had to serve two masters: customers and lenders. And the demands of the two were not always congruent. Once they diverged, a company lost its ability to maneuver, to inthe realization that once a

novate, and to take risks.

often found itself choosing short-term profits (to

It

customer relationships.

service the debt) over long-term

road to

disaster.

That's why,

And

that

was the

5*"

from day they

Packard had always financed

first its

walked into the Addison garage, Hewlett-

growth on

profits alone.

By the

late

1950s

such an attitude was looking, even to some of their lieutenants, as both anachronistic and limiting HP's potential for growth. But the two founders

were firm. Packard

I

know

that in

recalled:

some

industries, particularly those requiring large capital

investments, the pay-as-you-go approach just that

it

has

become popular throughout

by leveraging

profits

how

also

know

the industry to meet capital needs

advocates of this approach say you can

But

I

with equity financing and long-term borrowing. The

leveraging them. That

we go and not

isn't feasible.

may be, but

at

make your

HP

it

profits

go further by

was our firm policy

to

pay as

to incur substantial debt. 30

then to square this

fiscal

conservatism with the needs of an ex-

panding company growing

faster

The answer,

things HP, was found in a synthesis of business,

like

almost

all

than any of the markets in which

it

operated? fi-

nance, and people.

The business solution arose from an

interesting dialectic

between Man-

agement by Objective and the company's new decentralized organization. Rather than acquiring other businesses willy-nilly based solely upon their potential business prospects,

HP

once again worked backwards:

if,

in pursuit of

*

its

DAVE

BILL &

154 objectives, a division of the

new

to enter a

company determined that the company needed

market, and that

enter that market

and superior products,

that desire

make

a contribution" with innovative

moved up through

— once again using the same

Next came the financing. As ing to

did not have the resources or the time to

was accepted, only then would

top. If that evaluation

gets for acquisition

HP

and immediately "make

a debt- free

the organization to the

HP look at potential tar-

criteria

of contribution.

company, the scenario of borrow-

the acquisition was always off the table. That

much

Hewlett-Packard, despite reinvesting as into research

as 10 percent of

which

cash, of

left

its

and development (which eventually became the

profits

back

electronics in-

dustry standard), usually had in abundance during those years.

But successful young companies don't always come cheap

HP

to

implement a second source of

and Dave decided

capital

—

to share in the

it

that led

When

the equity markets.

to take Hewlett-Packard public

company employees

—and

Bill

wasn't solely to enable

ownership of the company;

it

was

also to

have available the shares they might need to purchase other companies. Said Packard, "It

is

often

more

practical to acquire a

company by an exchange of

stock than by outright purchase." 31

The

best part

was that

firm being acquired

for HP, stock

was the chance

it

to

was comparatively cheap, while

jump on board a

to the

rocketing stock with

the prospects of even greater heights.

Corporate acquisitions through a combination of cash and stock wasn't new, not even in the electronics industry. Charlie Litton, for one, was building

an empire from mergers and acquisitions. But thing

new

to the process,

Bill

and Dave brought some-

one that smart companies of the future would

attempt to duplicate: they didn't simply take over other firms, putting the

Hewlett-Packard logo over the door; they completely absorbed into the

Hewlett-Packard culture the firms they acquired. The day a company was

bought by

HP

it

was expected

With those expectations ployee

empowerment,

culture so singular

to operate also

by the

came rewards:

picnics, coffee breaks

and

enviable.

HP Way, in all of its facets.

And

that

—

all

profit sharing, stock,

of the things that

was the

em-

made HP's

critical factor in Bill

and

Dave's acquisition strategy: the people.

Whatever company Hewlett-Packard targeted

most always the case

company

that the opportunities, the

for acquisition,

it

was

al-

work environment, and the

culture were vastly superior to anything the executives and employ-

ees at the target firm currently enjoyed. Unlike

many

acquisition,

nor

set off a

more made an

later,

high-tech giants, such as Oracle, Hewlett-Packard never

predatory,

unfriendly

bidding war, nor instigated a shareholder

During the Hewlett and Packard

era,

it

never had

to.

revolt.

So successful was HP,

The HP Way and so legendary

its

155

reputation for corporate munificence, that most

pany boards were happy

to

quisition as a positive career

com-

be bought, most management teams saw the ac-

move, and most employees were

likely thrilled.

This was Hewlett-Packard's secret weapon. Negotiations always go easier

when

the other party

As would be

and

processes,

is

rushing toward you rather than running away.

typical with

HP

under

HP made

were in place the company moved quickly. sition in 1958, of the

Moseley was task of

F.

L.

Moseley Company

a scientist

who,

X-Y

positions. In 1951,

corporated his

its first

corporate acqui-

of Pasadena, California.

in the 1920s,

marking out data points on

sign for an electric printer that

grew frustrated with the tedious

graph paper.

moved along two

axes

He came up

with a de-

and marked designated

working out of yet another California garage, Moseley

company and began

to sell a line of "Autograf

soon beloved by researchers and

that were

and Dave, while the procedures,

Bill

corporate structures might take a while to prepare, once they

statisticians

X-Y

in-

plotters"

everywhere.

He

also

quickly earned a reputation for being an enlightened boss.

Thus Moseley 's firm encompassed innovative products, cessful

company, and a happy

HP

that

staff

had the resources Moseley needed

technology. Best of

new product

all, it

a small but suc-

—along with the belief by

and Dave

Bill

to reach the full potential of the

offered to Hewlett-Packard not only an important

family, but a

new

business direction

—

into information output

devices for the laboratory.

The

deal, for

an undisclosed amount in cash and stock, was completed in

October 1958. Within a few years, the Hewlett-Packard Moseley division was

moved

to

San Diego, where, indistinguishable in look or culture from the

of the company, ters,

it

some of them

X-Y

spent three decades producing the world's best

and used

the size of billiard tables

thing from semiconductor chips to skyscrapers, and to

rest

plot-

in the design of every-

map

the landscapes of

other planets.

But that was just the beginning, because the same technology that enabled data points to be plotted automatically

souped up with

on

digital intelligence, plot the

thousands of points that

a page of type, or even a color photograph. Thus, in the 1990s, the tively

cheap acquisition of a

little

when made up

a sheet of paper could,

compara-

Pasadena company became the foundation

of Hewlett-Packard's printer family, a multibillion- dollar industry in which

it

dominated the world market.

A

year

later,

in 1959,

HP

became

a global

company when

manufacturing plant in Boeblingen, West Germany, to go with in

it

its

opened

its

sales office

Geneva. Within months, Hewlett-Packard was one of the largest electronics

manufacturers in Europe

—and

U.S. visitors to the factory were astonished to

BILL &

156

DAVE

German

signs

plant was almost indistinguishable

from

find that, other than the

and the its

better beer

on

Fridays, the

counterpart in Palo Alto. The em-

HP Way." A year after that, in 1960, HP opened its first new U.S. plant outside of the Bay Area in Loveland, Colorado, north of Denver. HP Loveland would even-

ployees even talked about "Die

—

tually

become

the

home

of the company's desktop calculators, which would

ultimately transform Hewlett-Packard,

and then

in pocket calculators

first

in

personal computers.

With

these three expansions,

tional firm,

and

a global business.

HP It

became, in turn, a conglomerate, a na-

was the end of one era and the beginning

And yet for all of the changes many more it was about to experience

of another. the

ture, largely the

largely

company had undergone

it still

remained, thanks to

—and

its

cul-

same.

At the time,

went

the

—

this continuity,

mostly because there was no visible change,

unremarked. But in retrospect,

now that we

have seen hundreds

of companies stumble and lose their way in the face of rapid growth, HP's

run-up during the 1950s was one of the most phenomenal corporate expansions in

modern

business history.

The High "Way" and the Low Way By the end of the 1950s what had been at

a collection of practices

Hewlett-Packard had coalesced into the

distinct

HP

HP

Way.

And

with

and

it

attitudes

had come

a

corporate personality.

That personality was not for everyone. For example, a number of people

would

bail

out of their companies

when

those enterprises were purchased by

Hewlett-Packard. These were typically people

who were happy

in the old

company because it fit their personalities or because they saw a clear advancement path ahead. They were discomfited by the prospect of joining a giant corporation with a way of doing business so different from what they knew and so highly evolved coherent. For them, benefits

that

it

seemed

at best counterintuitive,

no amount of reward

and

at

worst in-

in terms of position, salary, or

was enough.*

There were also thousands of people, mostly another ten years as "Silicon Valley,"

in

who found

what would be known

in

Hewlett-Packard to be an

alien culture for entirely different reasons.

There was, ley's culture.

as observers

Up on

remarked, almost a topographical

Page Mill

Hill, in the elysian

split in

the Val-

Stanford Industrial Park,

Hewlett-Packard embodied enlightened management, a harmonious work-

The HP Way place, quality products,

and gentlemanly competition. But

especially entrepreneurial personalities lives

and

careers,

ing tycoons,

ment

lay

157 for

and who

who wanted control over their own their own companies and becom-

relished a good, winner-take-all fight, the real excite-

among the companies

of the plain.

—and they were legion—found

home on

their

of the Valley, alongside the descendants of Shockley Labs.

and famous of these was Fairchild Semiconductor was

a

company of legend

—

a corporate culture,

it

Mountain View,

company.

If Fairchild

could only be described as volatility incarnate.

Hewlett-Packard had grown older, with

and

in

perhaps the most extraordinary col-

lection of business talent ever assembled in a start-up

had

the floor

The most impor-

on Shockley.

created by the "Traitorous Eight" after they walked out Fairchild

people,

who dreamed of building

These individuals

tant

many

their vice presidents just a

Bill

and Dave now

If

in their late forties,

few years younger, Fairchild Semiconductor

was by comparison a company of post-adolescents. Bob Noyce and Gordon Moore, the "old" men running the operation, were barely

Not brilliant

nights.

surprisingly, Fairchild

a company-as-frat-house:

young engineers and marketers working long

New hires were

Fairchildren, as they

on

a

early

and partying long

down trees out And somehow,

aged to invent the integrated

company

sales

meeting featured

board stretched across two sawhorses. The

would one day be

feuds and friendships.

and

One

titles.

scotch and brownies set out

crashed cars, chopped

days,

often recruited by drunken salespeople or Fairchilders

misrepresenting their job

century,

Semiconductor was

in their thirties.

called, stole

in the

middle of

circuit, the defining

in the process helped to create the

Though Noyce and Moore were

each other's

front of the plant,

and

it all,

they also

product of the

late

came from

modern world.

actually quite similar to Hewlett

a different generation

The semiconductor

industry, as

it

man-

twentieth

Packard in personality (and Noyce in particular was a good friend of Dave), they

women,

started lifelong

and inhabited

emerged

Bill

and and

a different world.

in the late 1950s

and exploded

onto the world scene over the next two decades, was the Wild West. Companies stole technology, customers, in endless lawsuits,

and employees from each

and hired and

quadrennial cycle of chip demand.

fired It

other, squabbled

thousands of their workers with the

was a high-risk game, and

it

was

thrill-

And if it produced a lot of walking wounded, it also offered unimaginable

ing.

rewards.

Except for the Valley

and

and the less,

its

commitment to perpetual

culture

HP Way, the yin

to HP's yang.

and the unrooted, even

family.

technological innovation, Silicon

was almost the perfect

as

It

was

antithesis of Hewlett-Packard

a place for the young, the reck-

Hewlett-Packard was older, more careful, and

DAVE

BILL &

158 Ironically,

modern

was created precisely because Fairchild

Silicon Valley

Semiconductor lacked the very structures that to

make HP more

New Jersey parent company

the

fused to

let

and Dave had implemented

Camera and Instrument, Mountain View firm, categorically re-

of the

enormous

Fairchild Semiconductor employees share in the

they were creating, or even be awarded

As

Bill

cohesive. In particular, Fairchild

profits

company stock. Semiconductor would begin to

a result, within the decade, Fairchild

bleed talent from every doorway. Within a few years, this diaspora of Fairchildren nies,

and grandchildren would found more than

most of them on the Valley

journalist

Don

"Silicon" Valley,

The

would byline

Hoeffler

and the name would

— Semiconductor, Zilog—would

germ of the

the

many

hundred compa-

several

chip companies that the

a series of articles

on the area he

Intel,

Advanced Micro Devices,

of them

all

Intersil,

to different degrees, carry with

all,

Fairchild culture. Their perspective

vironment, employment, even on time

from Hewlett-Packard

called

stick.

generation of these Silicon Valley companies, nearly

first

semiconductor manufacturers tional

floor, so

them

on competition, work en-

was fundamentally

itself,

Na-

—indeed, they often operated

different

in counterpoint to the

older firm.

For the second generation of Valley companies, thousands of firms crowded into concrete tilt-up buildings, often being born, peaking, ter

and dying

of months, the vast army of workers migrating from one hot

the next. Hewlett-Packard, the shining distant

and

company on

as exotic as the old castle

the

hill,

in a

mat-

company

to

seem

as

began

to

above to the citizens of the new

city

below.

Here, at the historical heart of supercharged, double-dealing, wildcatting,

card-sharping Silicon Valley was a

den mothers,

Mormons and

low-keyed, often self-effacing ing at a breathtaking pace

company of

Little

Republicans. Even

company continued

Inside the beautiful buildings

—almost

ing done.

and Dave had found

But not yet

and

and quiet

accomplished Bill

in envy.

extraordinary, this

year after year grow-

—without the usual sideshow of table-pounding

executives, trade secret thievery, employee- raiding

con Valley looked on

League coaches and

more

[from nothing] for

offices, all

and

price-slashing.

things were being

of the visible work be-

a key to greatness,

and the

rest

of

Sili-

in awe. 32

That would come

later, as

Silicon Valleyites

grew older

wiser.

—and perhaps commented on — the

For Hewlett-Packard publicly

it

for Bill

fact that

many

and Dave, though they never people would choose not to

— The HP Way join, or

of the it

even stay a part

of,

the

HP family came as a shock. The hidden danger

HP Way, as would become more

tended toward the hermetic, to

business world beyond

Packard Co. from

this

its

HP

was

a

achievements.

of the 1950s

it

The

walls.

floor,

—

happy family believed

It

it

but that

And

as

would always

didn't feel

growing

it

face Hewlett-

needed

fast,

had

still

to.

and proud of

its

— and by the end

to live in the bigger

just in Silicon Valley, crisis in

Hewlett-Packard

but everywhere.

America

—and

Bill

in a century.

and Dave

both hidebound and progressive, reactionaries and revolu-

fifties

of

drew

Owners and Dave had one more surprise

to a close, Bill

— one most

"family" innovation for the decade that would, in time, prove the

first

new Zeit-

both out of date and the greatest company on earth.

An Army

ential

ruthless

fast.

—not

over,

more

didn't understand the

were coming, the biggest cultural

would be seen

As the

it

nastier,

was the best company on earth

before the decade was

tionaries,

it

very nearly was. But that family

A new order was emerging sixties

from the

threat that

rich, healthy,

world, and that world was changing

The

apparent as the years passed, was that

isolate itself

point on was not that

emerging on the Valley

geist

159

and important of

This

all.

is

especially ironic because

such employee program that the two

men

it

was

final

influ-

also the

got wrong.

By 1959, HP stock had been publicly traded for more than a year, and the company was preparing its application for that great valedictory of success in America,

listing

New

on the

York Stock Exchange.

It

was

point that

at this

Hewlett and Packard announced the creation of an employee stock purchase

HP stock purchase plan enabled employees to apply a percentage of their salaries to the purchase of HP stock at a discounted price, with the com-

plan.

The

pany picking up the

rest

of the tab. 33

The announcement not only caught the attention of the

money:

as

rest

electrified the

ranks at Hewlett-Packard, but

of the business world. In essence,

an HPer you merely had to designate

what percentage of your salary (up

to 6 percent of

at the

it

was

free

end of each quarter

your base earnings) would

go to the purchase of company shares. Those shares, in turn, were sold at a discount from market price

—sometimes by

as

much

as

25 percent

—and HP

paid the difference. 34

Not

surprisingly,

HP

largest shareholders in

employees

as a

group quickly became among the

Hewlett-Packard stock.

And

if

workers

at

other com-

panies didn't already envy their counterparts at HP, they certainly did now.

BILL &

160

Meanwhile,

Bill

and Dave looked

DAVE most benevolent

to the larger public like the

of bosses.

One

of the least-noticed aspects of Hewlett's and Packard's managerial

genius was their ability to hide shrewd business strategy inside of benevolent

employee programs, and enlightened employee benefits within smart business programs

The this

HP

— often

same time.*

HP

kind of maneuver. By transferring

price, Bill

a classic

empowered them

cess, further

HP Way,

in the face of

(this

just

for the

company's suc-

time on the shareholder side) according

and increased the likelihood of

their retention

growing employment lures from the outside. At the same time,

and Dave were

volumes of stock out of the hands of in-

also keeping large

who might

stitutional investors,

changes in the company

use their holdings to leverage unwanted

— something

far less likely to

happen with thousands

of employees voting small portfolios of shares. Having so

HP

stock in the hands of

could better

example of

stock to employees at a bargain

and Dave simultaneously rewarded HPers

to the dictates of the

Bill

at the

employee stock purchase program was

resist

much company

employees ultimately meant that

Bill

and Dave

any pressure from Wall Street to substitute short-term gains

for long-term success.*

But

strategically, the

most important advantage Hewlett and Packard

ognized in the stock purchase program was that

What

cash creation.

some money; what

HP

saw was millions of

company

averse to long-term debt, this represented a

grew

as the years

Keep just

in

to help finance

mind,

this

pinch of being

left

its

at a

was almost pathologically

huge source of investment, one rolls

Semiconductor did

grew.

The stock

"has provided us with significant

later,

time when Fairchild Semiconductor was

own success.

had more chance of getting

Fairchild

that

young management had not

out of their

buy stock and make

our growth." 35

was 1959,

being founded, and

janitor

a powerful engine for

dollars of salary overhead being

passed and the employee

purchase plan, Packard would say

amounts of cash

was

the employees saw was a chance to

reinvested in the company. For a

that only

it

rec-

HP

yet

begun

to feel the

In fact, the realization that a night

stock than the general manager of

in getting shares

of

FC&I

surely grated

— and

within a decade would cause enough friction to set off an explosion. If

indeed

high tech

is

it

can be argued that the history of Silicon Valley and modern

really a story

Packard and

ownership to

its

its

— —then

of stock ownership

tions to lure talent to risky

new

start-ups

especially the use of stock opit all

begins with Hewlett-

munificent (and clever) methods of transferring stock employees. The fact that the American people, by any mea-

sure, are the largest

owners of

common

stock in the world

—and

thus, as

— The HP Way workers, have the greatest democratic also has

But world,

commitment

to their

own economy

HP corporate initiatives.

its

beginnings in these

if

the Hewlett-Packard stock purchase plan helped to change the

also

it

assumed

money

161

proved to be a small disaster for the company.

that, this being a great family,

HPers would be

as

Bill

and Dave had

prudent with their

Hewlett and Packard had always been. They were in for a rude

as

awakening. Recalled Packard:

In setting

We did

up the stock purchase plan we made one important mistake.

not require our employees

price to keep levels

it.

There

is

stock at a preferential

a long-standing truth about

—no matter what the We

about 10 percent more.

who bought HP

pay, the

wage and

salary

employee thinks he or she needs

found that many of our people who

partici-

pated in this preferential stock purchase plan sold their stock right away.

Even our employees as

soon

at

high

as they received

Packard

is

it.

levels

had standing orders

to sell their stock

36

being judicious in his phrasing here, sagely noting that even

wealthy people budget beyond their means, but you can sense that he

is

speaking through clenched teeth at the memory. In truth, Hewlett and

Packard were furious

own for

—

senior executives were flipping their stock.

some

entry-level salary

braces to turn this

making

already

little

It

company discount

pale.

(No one dared

This was, in

ing,

payday

men

for

to ask

Electric offered the

Bill's

to the

on

two founders, be-

what young Dave Packard would have

same

and Dave's minds,

plan.)

a violation of the trust that underlay

HP Way. And perhaps it was. But it was also the first indication of a growand

worked

irrevocable, gap

between the founders and the

for them. Hewlett

and Packard

as the

putting a price

made

their

on

their shares

had shown them

those fortunes liquid.

men and women who

major shareholders of a

and growing company had already been wealthy but

—but

into an extra

his kids'

a small fortune, to then cynically build a second fortune

done had General

the

their

might have been forgivable

worker trying to pay for a mortgage and

what they knew was an employee retention tool was,

yond the

some of

especially at the realization that even

to

men

large

before the IPO. But

be not only hugely wealthy,

They never again had

to

worry about putting

hands on any amount of money they needed. That wasn't true for the

people

who worked

for them.

Hewlett and Packard were already legendary in their commitment to

understanding the ures.

lives

of their employees, of sharing their successes and

fail-

But the demands placed on the leaders of a global corporation, and the

DAVE

BILL &

162

and

benefits

responsibilities of being multimillionaires,

were a long way from

those of meeting a quota on the assembly line or paying off a $100 Visa

And that gap, the two men pecially if their

fully

dreams

was a sobering

It

realized,

company came

for the

realization:

bill.

could only widen in the years to come,

es-

true.*

Hewlett and Packard could never again be

of Hewlett-Packard, the company they had built from scratch, and that

bore their names. The ated that process.

new

to

company only accelerdiscover new roles and a new

They would have

to accept the fact that the cor-

divisional structure of the

The two men would have

relationship to the company.

porate culture they had created, and of which they were deeply proud, would

company where everyone was

henceforth have to allow two exceptions. In a

and Dave needed

equal, Bill

the rules of that culture and keep

Being tives.

above the

set

That

is,

after

all,

rest

is

it

from going

a role that

the goal of

as the

decade ended, it

was

and how That

like all

a task the

tradition of trust

little

careers.

most senior execu-

But that wasn't why

was not a change they welcomed. But

to face.

They would have

to learn

when

company's operations.*

and stepped

clude a vesting period. They

was

to

what the two men did when they decided

just

only to enforce

of the other changes taking place with the com-

two of them had

to intervene in the is

it

if

astray.

would appeal

most business

Hewlett and Packard created HP, and

pany,

—

be more equal than others

to

to violate the

in to rewrite the stock purchase

knew it was

the right thing to

do

program

—and

HP

to in-

that there

chance of their employees imposing that discipline on themselves.

If

HP truly was a family, this was a moment when Dad had to lay down the law. A quarter century later, Packard would look back with pride on the decision, saying,

"That situation has been corrected, but

our employees

who

held on to their stock and sold

had gains of more than In fact, one can

Dave's intervention rolling going

on

it is

many

of

retired often

a million dollars." 37

make an even bigger claim for the wisdom of Bill and and the new rule they imposed by fiat: for all of the high-

in the rest

of Silicon Valley, with the millions in stock options

being tossed about in hiring incentives and the fortunes per, the

ironic that

when they

it

odds of an average worker becoming rich

made and

in the course

lost

on pa-

of a high-tech

career were likely greater at dull old Hewlett-Packard than anywhere else in

town.

But knowing when to intervene was only half of challenge facing

Bill

and Dave was knowing when

company's operations. For two

men accustomed

it.

The

far

to keep their

more

hands off the

to being intimately involved

in every aspect of Hewlett-Packard's business, this self-imposed

would take enormous Bill

discipline

and

difficult

detachment

self-restraint.

Hewlett and Dave Packard had already successfully negotiated the

The HP Way

163

—

jump

some great company founders had failed to make. And Bill and Dave had made it look easy. But, as the scores who had failed before them (and the hundreds who would fail after them) would prove, this next step from management to leadership was far, far more difficult. If that wasn't enough, the two men would have to make this leap during one of the worst cultural crises in American history: the sixties. The baby boomers were coming bright, iconoclastic, and rebellious. And Bill and transition

from entrepreneurs

to business executives

a

that even

—

—

—

men who, for all of their own maverick behavior now seemed to epitomize the old establishment.

Dave were two middle-aged over the previous decades,

The like

new

HP

family, like every other

never before. roles,

And

would have

American

family,

was about

to be stressed

Hewlett and Packard, even as they were learning their to figure out

sanctuary on the other side.

how

to lead their

company through

to

Chapter

Five:

Community

Buried

in

a distant Corner of

Day in

the Internet,

San Francisco,

radical leftist organization based in

is

on

Employee 85,292" by an author named

the Life of

Web

a

Jay

As one might expect from an agitprop group that began

Concerned Commies," the essay less

expected

is

riences in the late 1990s,

In

is

is

targeted

the author describes his

it,

at,

first

of

all

upon

places,

a

"A

Clemens. as the

and

resentful, anticapitalist,

that this rant, apparently based

run by

site

a blog entry entitled

"Union of

bitter.

the author's

What

is

work expe-

Hewlett-Packard Co.

days on the job at the

HP

Instrument

Division in Santa Clara:

I

was sent

say. It

to a big introduction to the

company,

to "see the garage" as they

was a four-hour media extravaganza with a

slideshow,

and

a big presentation

talk

by some VIP,

by personnel on "The

HP

a

Way." The

garage was the highlight of the slide show, the garage being the place

where

Bill

Hewlett and Dave Packard built their

lator for the

first

Walt Disney production of "Fantasia."

instrument, an oscilI

was

fully indoctri-

nated by the end of these four hours and found myself becoming an

android for I

Bill

and Dave.

kept trying not to think about the time

when Dave Packard was

Undersecretary of Defense for Nixon during the Vietnam

group of us

lit

fire

to the hotel he

was speaking

around the hotel and we could actually top of the hotel.

at.

War and

The flames were

see Packard

and

his

a

licking

buddies

at the

We all chanted "Pig Nixon, you're never gonna kill us all"

as

we blocked

to

break us loose and send us scattering into the balmy Palo Alto night. 1

What

is

the arrival of

fire

trucks.

astonishing about this essay

It

is

took several squads of

been written

at all.

What

is

cops

not the predictable attitude of

author, nor even the hint of self-delusion (he seems

orientation video than he

riot

more impressed by

prepared to admit), but the very

has happened to Hewlett-Packard

fact that

Company

it

its

the

has

in the

— DAVE

BILL &

166

intervening forty years since the 1950s that

would

take

it

from the family-

centered enterprise led by two benevolent and beloved founders to a firm that

would employ this angry anarchist who fondly on the time he tried to

The answer great

and controversial decade of

most every other

institution in

most of

entered the 1960s as a

this traverse takes place

during that

inflection in U.S. history, the 1960s. Like al-

American

Packard would be changed forever.

HP

and looks back

David Packard?

kill

a long one, but

is

despises his employer

society, in those years Hewlett-

And so would its

company with $50

founders.

million in annual revenues,

3,000 employees, a reputation for innovative products and personnel policies,

and taking

its first

steps as

both a national and international corporation.

the decade as a $330 million global giant, with 16,000 employees,

left

most admired company on earth

—but

also

embroiled in the

generational conflicts taking placing just beyond

its

It

and the and

political

walls.

company would fight to extend both its business model new territories and often forbidding cultures, and its products into altogether new markets including the biggest technology market of all. And it would have to make these changes even as it struggled to adapt to a new generation of workers the baby boomers who represented not just the largest In between, the

into

—

—

—

demographic group tion

upon which

To do

the business world was based.

that, Bill

tion of the

HP

but one that challenged almost every assump-

in history,

Hewlett and Dave Packard would have to expand the no-

"family" into something larger that incorporated not just the

employees of Hewlett-Packard and their

families,

but also those institutions

vendors, customers, governments, universities, even average citizens

shared

values

its

metamorphosed that its

and

community had

HP

vision of the future. In the 1960s, the

its

into the

HP

to be

survival. In the process,

—

that

family

community, and on more than one occasion

defended from the outside forces that threatened

HP

and

its

two founders

for the first

time found

themselves making blood enemies.

As also

if this

had

weren't enough, in the midst of

to fundamentally

now. They had

first

all

of this tumult,

Bill

change themselves. They were middle-aged

men

Now

they

been entrepreneurs, then business executives.

were going to have

to

and Dave

make

the dangerous,

and

largely (in high tech) un-

precedented transformation of becoming leaders: of their company, of their industry,

and even of

their country.

They would have

to learn

has shown, a profoundly difficult task for entrepreneurs

and when

to intervene,

when

to

make

history

—

—when

and when

to let

as history

to delegate it

take

its

course.

Like everyone else in the 1960s, they were entering uncharted waters. like

almost everyone

else,

Un-

they held the fate of thousands of other people in

Community their hands. In a volatile age,

where the

Hewlett and Packard had very

little

room

167

seemed

rules

change by the day,

to

for error.

Looking East and West The 1960s began

only pitched even higher. In 1960, the

products in in 1962

was a time

catalog.

company was

largest U.S.

Two

and

for milestones,

their celebration.

million in annual sales and five

A year later,

broke the $100 million

year the

hand

It

company passed $50

its

about the way the 1950s had ended,

for Hewlett-Packard

it

hundred

raced past five hundred employees, and

sales barrier.

first listed in

Nineteen

was

sixty- two

the Fortune magazine

also the

of the 500

list

number 460. 1964, there were more than 7,000 HP employees on celebrate its twenty- fifth anniversary. A few of them

companies, entering the

years later, in

to help the firm

list at

joined in the celebrations from HP's

first

joint venture,

Yokogawa Hewlett-

Packard, in Tokyo, Japan. In the midst of

all

of

U.S. economy: on Saint officially listed

this,

HP also had its official coming-out party in the

Patrick's Day,

March

on the Big Board of the

the Pacific Stock Exchange). Bill

17, 1961,

New York

and Dave were

Hewlett-Packard was

Stock Exchange (as well as

in attendance

—though

it

was

a close call.

As remains the custom today, the chairman of the ecutives to be

Board.

Bill,

on the

floor of the exchange as HP's

It

he

says

still

morning

to

House on Central Park South, and got up

head downtown to Wall

something about David Packard

equated

New York with his

instead of grabbing a cab (or as a

invited HP's ex-

HP executives flew back to Manhattan the

Dave, and several other

night before, stayed at the Essex early the next

NYSE

symbol went up on the Big

—

Street.

perhaps

that,

twenty years

days as a poor young engineer at

modern CEO would

GE

later,

—but

do, hiring a limousine),

Packard led his crew to the nearest subway station. As he

later recalled in

HP Way: Unfortunately,

we made

Street several

I

wasn't

much

of a subway navigator; after

wrong connection

the

minutes

late

at

Times Square.

We

and were immediately ushered

much

arrived into a

debate,

on Wall

huge cor-

ner office and greeted by the chairman of the exchange, Keith Funston.

He chuckled when

I

explained that we'd gotten lost on the subway.

think that he could fathom that

portant event.

we would

take the

I

don't

subway to such an im-

The

— BILL &

168

No

doubt.

And Funston would

DAVE

have been even more surprised

company with

been told that one day

this

the sense to call a cab

would someday become one of the

the two founders

who

thirty

if

he'd

didn't have

Dow

Jones

leading industrial stocks.

To America's

town

—but

was now anything

it

on the board, the company was moves

in

its

By the

may

financial czar, Hewlett-Packard

have appeared small

as the

HWP symbol was appearing

in the midst of

one of the smartest business

but.

Even

history.

early 1960s, driven

store the prosperity

by the universal

desire of

population to

its

re-

during the war, and armed with some important

lost

it

technology licenses from naive U.S. manufacturers such as Ampex, the Japanese electronics industry was beginning to ket. It wasn't yet a serious

become

on the world mar-

a force

competitor to the U.S. electronics industry, but an

astute observer like Bill Hewlett could see the future. Japan itself

coming

major market

a

exhibit a love for

and needed the

Yokogawa

electronics

also be-

younger generation began to

unmatched anywhere on the planet

tools to build them.

Works had been founded

Electric

meter research

for electronics, as the

consumer

was

By the 1960s

institute in Tokyo.

in the 1920s out of

an

electric

was not only a major Japa-

it

nese industrial instrument maker, but was already a veteran of agreements

with U.S. companies, having signed a technical assistance deal with Foxboro Co., the Massachusetts industrial

equipment maker.

U.S. high-tech partner to advance

new instruments Bill

was now looking

research and, with luck, develop

for a

some

for the Japanese market.

Hewlett, meanwhile, as he had with the European

five years before,

his

its

It

Common

saw an emerging opportunity, and didn't

move. He remembered the

brilliant scientists he'd

met

Market

hesitate to

make

in Japan at the end

of the war. Plus, he'd already been proven right on his European decision, as international sales

now amounted

the future, he decided,

HP

and

to 16 percent of

needed

HP's business. Japan was

to be there.

But there was one big obstacle in his way, one that would become a major source of contention

between U.S. tech companies and

counterparts in years to come: the Japanese

ernment firms,

restrictions

was

all

and impenetrable trading networks among domestic

But there was one loophole into

HP

their Japanese

market, thanks to both gov-

but closed to outsiders.

Yokogawa found

it:

a joint venture.

Japan), was formally

when most

home

U.S.

this walled

economy

—and both HP and

Yokogawa Hewlett-Packard,

announced by the two companies

companies

still

YHP

in 1963, at a

(later

time

looked upon "Made in Japan" as the epitome

of cheap schlock. Dave Packard led the negotiations

—and

after seeing the

— Community comparatively inferior manufacturing and

HP

part, insisted that

new

lead the

169

management

venture.

quality of his counter-

Yokogawa agreed, and the deal

was signed.

YHP success

would prove

—

and

manufacturer

major factor

to be a

in unlikely ways.

Though

in Hewlett-Packard's continuing

the operation was always a successful

printed circuit boards, medical and analytical equip-

of, in turn,

ment, and computers, YHP's greatest contribution was as a portal.

gave

It

Hewlett-Packard a beachhead in the Japanese market that few other U.S. tech-

nology companies could duplicate, especially

after the

between the two countries heated up and Japan

all

side competitors. Because Bill Hewlett

was so

competition in tech

but walled

prescient,

itself

off to out-

HP went through the

Japan-U.S. technology war of the early 1980s not only unscathed, but calmly

did business inside both camps.

But the biggest

from

portal

came from

apostles of "total quality," Joseph Juran

own

but ignored in their

the 1950s and 1960s. But

had

YHP

the other direction

inside Japan.

The two all

of the

effect

little

during

country, had found a ready audience in Japan in

Yokogawa had not

yet joined this crusade,

idea of the extraordinary gains being

this era.

On

underscored in the

and W. Edwards Deming,

made by

and so

other Japanese firms

—

a fact

HP

divi-

the contrary, Packard had seen just the opposite first

few years

sion managers' meeting the

after the deal,

when

HP

at the

annual

YHP director consistently presented quality (prod-

uct failure and warranty cost)

numbers

at

about the average for the

of the

rest

company. It

wasn't until the late 1960s that

miraculous

company

—and

all

event, the

but unreported

two

men

Bill

and Dave

—was going on

something

realized

in Japanese industry.

were cornered by an ambitious (and

young YHP manager named Kenzo Sasaoka. Packard

At

a

fearless)

recalled:

He said, "Why don't you let me run YHP? You send an American manager to us to oversee

time

—

blame.

our work.

talking to him,

We spend a lot of time

and

if

—

in fact,

something goes wrong,

wasted a

lot

he's the fellow

of

we

We really think you can do better."

So we

said,

"Okay, you go ahead

—you run the operation and

we'll see

how it goes." 2 * Before continuing,

during that encounter. side of the

world

it is

important to take a second look

at

what happened

A young manager from a company division on the other

—and thus only occasionally

buttonholes the two founders

at a

visited

by senior management

company event and

asks

them

to let

him

— BILL &

170

DAVE

run the division. Even assuming that Packard truncated a longer process

more closely, investigating his claims about the American management of YHP what happened next is still almost incredible. It sug-

vetting Mr. Sasaoka

—

two

gests

things:

that even in a global

first,

employees, the two founders were

promising employees well

employees seems

And, once again, was

ties

company, now with ten thousand

keeping close track of the most

the organizational chart; and second, that, at

legendary Hewlett and Packard ability to really

least in this case, the

their

down

still

Bill's

and Dave's judgment about people and

validated. After just a year

implementation of Japan's new culture of at

total quality

was

is

fairly

good.

on

failure rate

hundred times

its

failure rates .

.

.

Our

by the early 1970s sophical

We

thought

printed circuit boards of only ten per million. That's four

we had been

able to do." 3 all

YHP

would

would be one of the

first

U.S.

companies

to

make

rest

of the company to match

its

and

a philo-

to total quality. Just as important, the lesson of

and the struggle of the

in

quality awards in Japan,

leap in quality galvanized the rest of Hewlett-Packard, it

commitment

the rest of

in various parts of the

were about four in a thousand.

better than anything

Deming Prize. This quantum

who

Japanese unit, on the other hand, came in with a

time win that most prestigious and contested of the

his

an example of what YHP was

We had been making printed circuit boards

company. Our best

—and manufacturing—YHP

Hewlett-Packard. Even Packard,

expected good things, was taken aback: "Here

that

their abili-

under Kenzo Sasaoka's leadership

turned into a benchmark for quality

able to do.

listen to

true.

high standards,

YHP,

made

HP quality-obsessed—and unsympathetic to its vendors and strate-

gic partners

whose quality

fell

short.

bomb on the U.S. semiconductor industry by going public with the results of its own research, which That's why, in 1980, Hewlett-Packard dropped a

showed the quality of Japanese chips parts.

It

was the

single

most humiliating moment

semiconductor industry, and But

it

was

to be far superior to their U.S. counter-

HP

also the beginning of the turnaround,

American chip makers

—and the

in the history of the U.S.

was accused of everything short of treason.

and eventual triumph, of

restoration of U.S. leadership in electronics.

All of that because Bill Hewlett decided to take

before any of his competitors even thought of

it.

HP

into Japan ten years

Community

171

Geography as Destiny Hewlett-Packard's

first

to be just as unusual

Thanks

domestic expansion, into Loveland, Colorado, proved

— and ultimately

to a shortage of

sen over other

sites is a bit

ing the need for the

just as

important to tech history.

meeting notes, the reason that Loveland was cho-

obscure.

company

It is

known

home

state,

was attracted by the

near one of the major universities

engineering school. Pueblo lacked that attribute, so in 1960 Packard

and

its

sent

HPer Stan Selby to the northern part of the around Boulder, which

versity of (a

Dave Packard, recogniz-

to diversify geographically,

idea of opening a plant in his

ties

that

Colorado

state to

check out opportuni-

offered, beside spectacular scenery,

(for recruitment)

both the Uni-

and the National Bureau of Standards

customer).

Meanwhile, two small-town businessmen in Loveland, a town twenty miles north of Boulder, heard that Selby was in the area conducting a search.

Paul Rice was president of Loveland First National

an appliance dealer

— and both had big dreams

Bank and Bob Hipps was

for their

little

town.

However, they had never even heard of Hewlett-Packard, so before they

approached neur.

Thus

Selby, they first

had

to determine

if

HP was a legitimate entrepre-

assured, they invited Selby to Loveland.

Anyone who has

visited

both Boulder and Loveland knows that Rice and Hipps must have made one hell

of a good case for their town. Certainly Selby was impressed, because he

in turn invited the

to

come Bill

to Palo Alto

and make

a representative

from the governor's

their case in front of Bill

and Dave.

essentially structured into four

more manufacturing

divisions.

—frequency — each with one

product groups

and time, microwave, audio and video, and oscilloscopes or

office,

and Dave had come out of the Sonoma meeting with a newly orga-

company

nized

two men, plus

There was also

HP

headquarters, which

provided executive management, personnel, finance, and other corporate functions

—and, most important

for this part of the story, corporate research

and development, which was run by Barney Individual product groups, and

some

Oliver.

divisions,

employed

their

own R&D

managers, but those individuals also reported to Oliver. This was designed to

keep diverse company operations from conducting overlapping research or creating redundant products. But

of

HP

shared a single

facility in

it

was

also a leftover

Palo Alto

—

from the days when

as well as a function of

all

Barney

Oliver's personality.

But the creation of the Loveland division in 1962 made

R&D

structure increasingly untenable. Loveland

this centralized

was originally chartered

to

manufacture voltmeters and power supplies that were designed in California.

— DAVE

BILL &

172

But

wasn't long before the Colorado division began to conduct

it

its

own

research.

One

reason was practicality. According to desktop calculator historian

Steve Leibson:

With geographic unravel.

It

dispersion, HP's centralized

became much harder

for the

R&D

R&D

structure started to

engineers in Palo Alto to

learn about manufacturing issues arising at a remote location

and they

could not easily benefit from the knowledge manufacturing engineers

were developing when ironing out design problems and manufacturingprocess bugs. As sition,

HP

division

grew from both internal organic growth and by acqui-

it

developed a more decentralized

R&D

became more independent of Palo Alto by

own R&D

structure. starting

Each

HP

and nurtur-

lab. 4

ing

its

No

doubt, divisional pride and a sense of independence also played a part.

After

the Loveland

all,

the real plant opened.

R&D operation started as early as 1961, months before R&D lab was housed in a Quonset hut that grew so

The

summer months

hot in the Colorado

spray water over the curved roof.

transformer manufacturing It

may have been

that a sprinkler system

The

was

installed to

lab also shared the building with the

line.

small, but the Loveland

R&D set the precedent for other

divisions that followed, including a second Colorado facility a few miles south

of Denver in Colorado Springs, which was established in 1962. By 1966,

become obvious

to Hewlett, Packard,

and Barney Oliver

began to assume more control over the research and development

own product

and products. The into

HP

HP

lines,

corporate

result

was

R&D

was

free to

had

in their

pursue new technologies

a reorganization of Oliver's Palo Alto operation

Labs.

Freed to pursue fruitful era. Oliver

its

and

interests,

his

HP

Labs embarked on

its

Moore, and Jean Hoerni had found

a

way

sheets of specially prepared silicon.

(IC), the

computer

chip.

Even

creative

and

at Fairchild,

Noyce,

to "print" arrays of transistors

The

(it

on

result was the integrated circuit

better, this lithographic printing process

amazingly scalable, offering the prospect scores, even

most

team had been watching the convergence of two

major high-tech trends. One was semiconductors. Over

flat

it

that as the divisions

seemed

at the

was

time) of putting

hundreds, of transistors on a single chip.

number of established corporations such as IBM were already racing to stuff more and more transistors per chip and the resulting exponential improvements in miniaturization led Gordon Moore, in 1965, to first formulate what would become known as Moore's law, Fairchild, Motorola,

and

a

— Community

173

the fabled doubling of chip performance every 18 to 24 months. Moore's law

would prove but the

HP

to be the defining rule not only of the

metronome of modern was cognizant of

advance of the tech world,

life.

Intel's

work and of Moore's

resisted incorporating integrated circuit technology

transistors trust

it."

5

—

into

The

its

law,

but

instruments because, in Hewlett's words,

quality of the early chips

was

just too

had long

it

— instead of tubes and low

"We just them

for

to

didn't

be put

into HP's instruments, with their reputation for high reliability.

The second trend was computation. Computers had been around since II, when they had been used for artillery trajectories (ENIAC) or

World War

codebreaking (Alan Turing's Bombes). After the war, in spite of the rious prediction that the world market for computers

now noto-

would never amount

to

IBM, Burroughs, and

more than

a few dozen machines, companies such as

Univac

out to develop ever more advanced computers for industry. Their

set

competition was the greatest technology business story of the 1950s.

But these early "mainframe" computers were behemoths, the rooms, costing millions of service

them and

feed

of

size

and requiring an army of technicians

dollars,

them raw data from

great "batches" of

to

punched cards

or giant spools of magnetic tape.

—indeed, phone—but

These giant mainframes were primitive by today's standards they had a fraction of the processing power of a single their time they

were miracles of

ing Hewlett-Packard,

and

owned

efficiency.

cell

for

Every major corporation, includ-

several, typically

used for payroll, accounting,

research.

The increasing pervasiveness of

these computers in universities, gov-

ernment agencies, and corporations began

to

change the nature of work for

engineers and scientists. Increasingly, they saw the output of laboratory in-

struments as raw data for computer processing, not as results in themselves

and

that the incorporation of

computer technology

in their

work could

increase accuracy manyfold. But that also created frustration, because the

ever-growing mountain of raw data had to queue up to be dealt with in batches by the computer

—which

in turn set off

one of the great business

feuds of the age: between engineers and the computer technicians in the IT

department.

What engineers wanted, and what they told Hewlett-Packard they needed, was a new generation of laboratory instruments that could do their own processing

—

or, better yet, talk directly to

would eventually

attach to this

new

the big computer.

capability

The term

was that they wanted

that

their lab

instruments to be "smart." It is

worth a

The most

closer look at

salient fact

is

how HP learned of this need from its customers.

that this information gathering took place across

BILL &

174

DAVE

had long fostered

the company. In sales, Noel Eldred

a culture of

customer

advocacy. Recalled Packard:

[Eldred]

wanted our

he'd

them.

tell

customer's side in any dis-

sales engineers to take the

putes with the company.

"We

"We want you

don't want

to stick

up

you blindly agreeing with

for the customer. After

all,

us,"

we're

not selling hardware; we're selling solutions to customer problems." Noel stressed the

importance of customer feedback in helping us design and

develop products aimed

at real

customer needs. 6

when customers began

Thus,

didn't defend the status

but argued their

Meanwhile,

They knew

quo or assume such

clients' case to their Bill

least a joint

a transformation

interesting

work

DEC

the opportunity presented

venture and, most

In his tour,

ment Corp.

if

Dave focused

and Wang

was hard

at

likely,

for large-scale solutions.

in the field set

itself,

out to

was taking place the computer

visit

discuss the possibility of at

on two companies:

Digital Equip-

Laboratories.

work developing what would become one of computing

saw the work and was very impressed

(as

history, the

would be

the

most

PDP-11 Packard few years, when

Intel in a

used the PDP-11 as the model for the circuitry of the microprocessor

chip).

He

even went so far as to enter into negotiations to buy DEC.

—

Unfortunately

by

was impossible,

an acquisition.

particularly

influential "mini" architectures in

it

catalog, the sales engineers

own company.

along Route 128 outside Boston. So Packard

companies and,

HP

and Dave had begun looking

most of the

that

would require

talking about changes that

the reinvention of almost every product in the

especially given the

HP and DEC throughout the So

Bill

1970s

—the

and Dave did the next best

work on coming up with best of

minicomputer war

DEC's

deal

fell

that

would be fought

through.

thing: they set Oliver

a Hewlett-Packard

and

his

team

to

minicomputer, one that took the

architectural innovations, but that also incorporated those fea-

tures that best answered the needs of HP's engineer customers.

Packard's reaction to his visit to

An Wang and

his

Wang

Labs was just the opposite. There,

people were developing what could be described as an elec-

tronic calculator (the difference being that, at least in those days, computers

processed data via user-configurable programs, while calculators performed fixed arithmetic operations ficiently impressed,

nology that

on numbers). Packard was

and concluded

HP wanted to

that the calculator

intrigued, but not suf-

was not

a

product tech-

pursue.

So even as the calculator idea was abandoned (only temporarily,

it

would

Community

175

Thanks

prove), HP's initiative in computers raced forward.

R&D department was in-

actions of the Loveland research lab, HP's corporate creasingly free to take special that devising

Two company

on

an

special projects

me

and none

at the

moment was more

HP computer strategy.

engineers,

Kay Magleby and Paul

periment with the design of an sented

—

maverick

to the

HP

Stoft,

had began

computer. Packard recalled, "They pre-

with a vision of a system of

HP

HP

computers automating

instruments that were connected with our printers and plotters. excited about the prospect of an

to ex-

I

began to get

HP computer." 7

Packard loved the idea because

it

so perfectly

business philosophy, which was to extract the

fit

his

and

emerging

Bill's

maximum benefit

of individual products, but out of their interconnection. In this

not only out

new

strategy,

computers were not simply data processing machines, but the glue that turned discrete laboratory instruments into test

the classic

HP

fork, sold

and measurement networks. That,

in

not just computers, but even more of the company's

instruments.*

As seductive

as that vision was,

realize in actuality.

it

would prove

to

be

more

far

difficult to

As would occur with other many other popular new tech-

nologies that followed, the minicomputer industry was taking off so quickly that

it

was already becoming a networking Tower of Babel. One company's

computers typically could not

talk to another's,

nor one brand of instruments

interconnect with a different one. Meanwhile, customers were too prudent to bet the store if it

on

— even

a sole-source provider of everything in the laboratory

was HP. Besides, IBM, the world's

ready rumored to be preparing a major ing went at the time, Still,

"No one

greatest

move

computer company, was

into the market,

and

al-

as the say-

ever got fired for buying Big Blue."

shrewdly, Hewlett and Packard refused to give

up on

that vision.

And

common interconnection stanHP would create one of its own. The company immediately set to work developing a common protocol by which instruments and controlling comif

the computing world refused to establish a

dard,

puters could talk to one another over short linking cables; to use the technical

term, "bus."

The the

result,

introduced by Hewlett-Packard in the early 1970s, was called

HP Interface Bus, or HP-IB. It proved hugely successful— so much so that

with the support of HP's representation on the standards committee, the

IEEE adopted

it

as the standard interfacing protocol for the entire

puter/peripheral/instrument world.

And IEEE-488

didn't

end

there.

com-

By 1978,

an improved version became the standard for connecting not only struments, but peripherals such as printers and disk drives, to

computers, including those for general-purpose applications.

A

all

in-

kinds of

decade

later,

BILL &

176 further enhanced,

and now known

the protocol was extended to

computers

to video

By

what

then,

game

as

DAVE

GP-IB (General Purpose

Interface Bus),

kinds of programmable devices, from laptop

all

players.

started as HP's internal interconnection

scheme had

also

been adopted by other standards agencies throughout the world, including the

American National Standards

tro technical

Commission

Institute

(IEC). Today,

standard for connecting digital products Packard's

dream came

(ANSI) and the International Elec-

now the global many things, Dave

what was HP- IB

—and,

as

with

is

true not only for Hewlett-Packard but for the world.*

Rough and Tumble In the short term, there puter, the

was

new com-

the matter of what to do with HP's

still

model 2116A, introduced

in

1966 and priced between $25,000 and

$60,000 depending upon the configuration. The 21 16A was a good computer,

but hardly better than latter's

HP

name

its

recognition.

DEC It

counterpart, and

had every reason

it

certainly didn't enjoy the

to be a noble failure, yet another

product that sold well to the company's core base of engineers and scien-

tists,

but no further.

And then came place.

a surprise.

wasn't long before

It

computers than

Orders began to pour in from the most unlikely

HP

was

as controllers in lab

The founders were

selling

more 2116s

as stand-alone mini-

environments.

pleased, but astonished, as

was

HP

sales.

Only with

time did the company finally realize what had happened, and what had been the

HP 21 16's hidden appeal:

quality.

That pursuit of high

a quarter century in the instrument business,

puter project from the beginning,

I

remember

telling these guys,

sown

had

that

so on, and

So

it

[i.e.,

to

make

to pass Class

that

B

we

and

specs for shock, vibration,

way because we wanted them

to

work well.

the computers pass those [same] standards.

most of the computers

at that

we found our computers out on

a very hostile

that area.

hadn't appreciated at the

time were "hothouse" devices

they needed very protective operating environments]

denly,

was

had

we made them

was natural

Well,

We very carefully stuck to

a secondary advantage that

time: our instruments

HP com-

had been part of the

there by Bill Hewlett:

"Look, we're not in the computer business;

we're in the data reduction business."

Now,

quality, a legacy of

Texas towers

[oil

—and

derricks],

environment, simply because they were more

sud-

which

reliable. 8

Community The

21 16A had, in

first

and placed aboard

Institute,

erating environment

—

supply

fact,

it

worked

177

been sold to the Woods Hole Oceanographic

a research vessel. There, in the

— continuous motion,

flawlessly for a decade.

salt air,

was the

It

and

of

first

most

difficult

inconsistent

op-

power

many examples

of

customers using the computer in the most demanding situations.

one

In

respect, the

company responded

further customer research determined that

were being used set

up

its

own

But when

in time-sharing activities

quickly to this discovery.

many

Yet

of the stand-alone 2116s

thanks to their high

reliability,

HP

time-share applications unit to serve them. it

came

to fully

committing the company long-term to

prospective market, Hewlett-Packard hesitated. the very top.

When

As Packard admitted

HP made this

misstep for

later, all

And

that hesitation

this

huge

began

at

to get the message." 9 *

"we were slow

of the right reasons. The matter revolved

around the next generation of minicomputers and how Hewlett-Packard

would approach computer

—

it.

that

The model 21 16,

is, its

part of the appeal of the 21 16 in the industry-wide shift

it

was obvious

minicomputers

more

ble of far

1970s.

And

it

that, as

—twice

when

from

Inside HP, at the newly nia,

it

was

a 16-bit

it

was an early entry

in Cupertino, Califor-

Moore's law predicted, a new generation of 32-bit

apparent to the

first

as

8 bits to 16 bits.

as fast, able to access

just as

could be the

digits suggest,

was introduced,

sophisticated applications

was

two

formed computer division

Labs that Hewlett-Packard Co., tiative,

as the last

data was formatted into 16-bit "words." That had been

if it

put

much more memory, and

—would

arrive

sometime

capa-

in the early

R&D people in Cupertino and at HP its

heart and

company out with

a 32-bit

money

into a

machine

major

ini-

—and perhaps

capture a lion's share of the market.

There was an even a project, code-named Omega, started by the Cupertino division just to chase that dream.

even a prototype

the reality of

it

The

Bill

from the beginning, and despite

project.

They had

their attraction to the idea,

still felt

the need to justify the decision twenty-five years

HP Way: "It clearly represented a departure from HP's basic prin-

was expensive.

ciples. It

the Cupertino labs.

and Dave pulled the plug on the

Omega and what it represented had become a subject of increas-

ing concern. Packard later in

the end of the decade, there was

Omega computer running in

Then, shockingly,

been following

By

We would have to take on debt to fund and rather HP strengths, the project required expertise and cait,

than building on existing pabilities

we did not have

at the time,

such as an electronic data-processing

center, large-business processing applications,

leasing

and

And

twenty-four-hour service, plus

sales operations." 10

that

was

just part of

it.

Packard also admitted to worrying about the

DAVE

BILL &

178

marketing expense of going toe-to-toe with erful that

the

IBM itself, as Omega was so pow-

would reach beyond minicomputers and

it

bottom of Big

compete with

actually

mainframe business. He even quoted

Blue's

Bill

Hewlett's

standard advice about taking on large, entrenched competitors: "Don't try to take a fortified

hill,

especially if the

army on top

is

bigger than your own." And

IBM had the biggest army in tech. The sial."

11

decision, as Packard later admitted, "was difficult

That was an understatement.

was the

It

first

and controver-

time that

had ever allowed a major new product development project

Bill

and Dave far,

and

later

HP

to go this

then killed it*

The announcement, director)

young

Tom

delivered

by division general manager (and

Perkins, landed with a sickening thud

division just beginning to

grow confident of

about the prospect of capturing leadership of

And now,

world.

For many,

supposed suddenly

be

to

and

program

an

Cupertino, a

its abilities,

and excited

corner of the computing

betrayal, a violation of the trust in people that

of the

HP Way.

courage in the face of

arbitrarily, into the

in the

HP

hopes had been dashed.

instant, all of those

at the heart

lost their

ing, brutally

uct

in

seemed a

it

its

on

It

IBM

most

seemed

as if Bill

—and had

exciting

was

and Dave had

reacted by interven-

and important new prod-

company.

For some of the most talented young people in HP's computer operations, that decision,

head of the

HPers

in

and the way

Omega

it

was made, were simply unbearable. In

company

project quit the

in frustration.

fact,

the

A number

Cupertino took to wearing black armbands for their

of

now dead

dream.

Omega wasn't dead. Apparently there was a small coterie of people at who refused to give up on the project and secretly maintained an ongoing skunk works to perfect Omega all apparently without Palo Alto's But

the division

—

knowledge. Whether

this secrecy

Packard casually describes

he

was

real

when

a matter for speculation.

this clandestine project in his

may have known about it all along. What is known is that somewhere

scious of Bill

is

memoir

they were ready, they presented

along the way the secret team, con-

system, rename

to their bosses.

it

by some of the design features of

cided to scale back it

Omega to

"Alpha,"

When Alpha was

a 16-bit

—and

Those managers

this revised

in

computer, de-

minicomputer with a simpler operating

and present

it

to corporate.*

sprung on an ostensibly surprised Dave Packard, he ex-

pressed his satisfaction with the revamped product and gave

The

suggests that

and Dave's concerns, continued pursuing the project

turn, impressed

to continue

The way

it

the green light

development.

result,

introduced in 1972 (and, as will be shown, several times there-

— Community

HP model

was the

after),

signed to take on

all

179

3000 computer, a general-purpose computer de-

of the real-time (as opposed to batch) processing needs

of small and medium-sized business. The

HP

3000 became

terms of total

(in

revenues) probably the most successful product in Hewlett-Packard history

and one of the most popular computers of

many

would

variants,

long as the audio

as

"

tirement, ple

II

[The

on

oscillator.

HP 3000]

one of the

as

live

The model 3000,

time.

in

its

in the

HP

catalog for thirty-one years, nearly

Wrote

this

author on

ranks with the

greatest

all

IBM

ABCNews.com

360, the

computers ever made

.

.

.

at its re-

DEC VAX, and the Ap-

[and] the cornerstone of

HP's entry into the mainstream computer business, which in time would lead the

company

pany into

a

PCs and

into

printers

—and turn HP from

a

$500 million com-

Bill

Hewlett and Dave

$50 billion one." 12

There are a number of important insights into

Packard that can be taken away from the 21 16A/3000 episode is

that the

in:

men

two

they were only willing to enter this

said,

new

do so without violating the core philosophies of the

making

rectly attacking well-defended markets.

Thus

which had the added advantage of creating

sion to initially

the

and kill

their

the leap. if

they could

firm, notably those of

embrace of the 2116A,

among HP's exAnd if their deci-

synergistic effects

their initial resistance to the

the

make

business

of not assuming long-term debt, and of not di-

a real contribution,

isting products,

first

represented a significant departure from Hewlett-

Packard's historic product offerings, and were willing to

That

HP. The

were utterly unsentimental about the business they were

knew that computers

they

at

model 3000 seems both

HP

3000.

and

autocratic

in violation of

HP Way, it should be remembered that central to that business philosophy

was the idea that decisions should be made by the people

closest to the prob-

move into the business computer market to take company on the planet was in fact a decision

lem: since a major corporate

on the

biggest electronics

that put

of

all

HP

at risk, the

CEO

and chairman reserved that decision

for

themselves.

As

for the charge that Bill

and Dave showed

a lack of courage in not

jumping on the 3000 immediately and challenging IBM, both

to note that

men were

willing to accept the

it

should be enough

calumny of

their

own

beloved employee "family," even the loss of some key personnel, to defend their decision

not to violate the company's business standards. And,

be added, that four years bigger

—they went

showed

it

to

for

it

later,

when

the time was right

it

should

—and IBM was even

with every resource in HP's business arsenal. History

be an inspired choice.

Meanwhile, during those intervening years, the two founders never showed their hand.

Did they know about the

secret

skunk works? Probably. Did they

have a hand in making sure those computer division managers opted for a

more for

DAVE

BILL &

180

model 3000? Very likely. Did they take having stage-managed the whole thing? Never. realistic final

version of the

credit

Listening to Outsiders Hewlett-Packard's entry into a second other glimpse at the

way

Bill

new market during the 1960s offers antheir management tech-

and Dave were evolving

niques to match the changing nature of their company.

The Loveland

HP

conduct

division's decision to

its

own R&D, and

thus free

Labs to explore emerging technologies, resulted not only in HP's entry

into computers, but also calculators.

had

calculators

Even more than computers, arithmetic

a very long history, predating electronics

by

centuries. Their

roots lay in ancient mechanical devices, such as the abacus, and, beginning in

the seventeenth century with John Napier's discovery of a logarithmic equa-

and

tion to perform multiplication tieth century,

heart of accounting and electrified,

seemed ization

statistics.

By the

possible by the transistor it

in speed, power,

and the integrated

a job for Hewlett-Packard to take on?

Yet just a few

the idea of an

so,

but his

months

HP

visit to

Wang

came from

products. a

Dave Packard had

Labs had convinced him otherwise.

he not only changed his mind, but embraced

later

saw

finally

What makes

most unlikely source.

—and when

it

didn't,

lying technologies, patents,

it

fit

and integration with

this story especially

HP

had the com-

a version of the technology that

the company's criteria for innovation, contribution,

HP

and miniatur-

circuit.

calculator with even greater fervor than he

Why? Because Packard

products

early twen-

desk tool and the

1950s, these machines were not only

improvements

a natural target for the

made

But was

current

By the

common

but capable of very sophisticated mathematical calculations. They

thought perhaps

puter.

division, the slide rule.

mechanical adding machines were a

compelling

is

had almost always invented

that

its

it

own

acquired those products and their under-

and so on

as part of a corporate acquisition.

But in the case of HP's entry into calculators, one of the most momentous decisions in

its

history, the idea literally

In 1965, just as

HP

walked

in

through the door

—

twice.

Labs was embarking on the 2116A project, Barney

Oliver was visited, independently, by two inventors over the course of as

weeks. The two men,

who had

solute leading edge of the

many

never met each other, in fact embodied the ab-

two great movements

in the

automated computa-

tion world.

Malcolm McMillan was

a

Los Angeles physicist and mathematician

who

had come across the innovative work of an aerospace engineer named Jack

Community Voider. In 1956, Voider in

two formal reports

had published an

complex trigonometric and other

McMillan

internal Convair report (published

IRE three years

to the

nary numbers in a process of repeated

later)

shifts

He

to

how

to use bi-

perform amazingly

calculations.

CORDIC, which had

contacted Voider,

they built the prototype of the world's

origi-

supersonic bomber, the B-58

first

new kind convinced him

Hustler, could be used as the brains of a applications.

describing

and adds

realized that this "algorithm," called

been created for use in the world's

nally

181

of calculator for scientific to

first scientific

team up, and together

calculator.

Then McMil-

lan hit the road to find a buyer.

Given his background,

it

wasn't surprising that McMillan eventually ar-

rived at Hewlett-Packard, where, in June 1965, he

made

a presentation of his

product, code-named "Athena," to Barney Oliver and Paul Stoft (the latter

back from his work on the 2116A). As Oliver described his meeting with McMillan, "He and the other guy [Voider] had developed a calculator which could perform transcendental operations, transcendental functions, and he

brought

They

this big

finally got

for us.

It

kluge with him. it

took over a second to do

Oliver

was

It

a

box about the

working and computed

may have been

this."

a tangent

size

of two beehives.

and other

trig

functions

13

disappointed with McMillan and Volder's hardware,

CORDIC

but he instantly recognized that the

algorithm was a major break-

through. So he decided to show just enough interest to keep the pair talking to

HP, but not enough to

hoped

to find a

let

them any

Meanwhile, he

closer than arm's reach.

hardware solution somewhere.

Within days,

in

an amazing

bit

of serendipity, that solution walked into

his office.

Tom Osborne was ality.

a singular individual, a classic Silicon Valley person-

A young Berkeley grad, he was working at a typewriter/office equipment

company, SCM, that was already a major manufacturer of old-fashioned rotary mechanical calculators under the it

was going

to stay competitive

tors. It licensed just

evaluate the idea, then

cle:

Smith-Corona brand.

would need

SCM knew that if

to get into electronic calcula-

such a technology from consultant (and former Manhat-

tan Project physicist) Stanley

It

it

make

it

P.

Frankel

—and then hired Tom Osborne

to

real.

wasn't long before Osborne hit what seemed an insurmountable obsta-

Frankel's design required a lot of diodes,

to use "off-spec" diodes,

which

and

to cut costs,

either

wanted

cost a nickel, rather than higher quality, full-

performance versions that cost a quarter. Osborne knew

SCM's plan would

SCM

it

wouldn't work:

produce a machine that didn't work

at

all,

or would

be painfully slow.

But he couldn't convince his superiors.

"I

was

a junior

employee and

unable to convince them that there was a better way to design things,"

totally

he

DAVE

BILL &

182

recalled. 14 Finally,

on the

them produce and

it

give

me lab

time

I

he could stand no more: he refused to continue working

project: "In the

did).

of 1963

fall

a calculator that, in

offered to design a

I

in the design

told

them

that

could no longer help

I

my opinion, was doomed to

machine

space. Later, if they liked

had spent

I

them

no

failure

(it

was,

cost if they

would

what they saw, they could pay me

for the

for

at

and construction. 15

SCM turned him down, saying it didn't conform to company policy. Then the all

company turned around and threatened

to sue

him

if

he didn't turn over

of his research into the alternative calculator design, as well as the calcula-

tor prototype

SCM

itself.

When Osborne

replied that there

was no prototype, the

lawyers refused to believe him, determining that

make such

confident as to

a "can't lose" offer to a

major corporation without

having already built one. Exasperated, Osborne hired his the

no one could be so

own

lawyer and ran

company off.

(SCM

did in fact go on and build

Introduced in 1966, ble machine.

it

was a

its

calculator with the off-spec diodes.

disaster. Oliver

himself dismissed

it

as "a misera-

took forever to do anything.") 16

It

Tom Osborne

began 1964 "unemployed, miffed, but well armed with

good design techniques." 17 With

his wife

supporting him, he

set

build the calculator that had existed only in his imagination.

out to finally

From

the start,

he planned to build a prototype that was "going to be about 100 times take about

faster,

one tenth of the power, be about a third of the size and weight of

the then-existing calculators, and have a floating point arithmetic unit that

produced 10 build the

significant digits of accuracy." 18 In other words, he

planned to

true electronic calculator.

first

Shrewdly, he also decided to divide the prototype into two connected

boxes

— one with

a

keyboard and display that would show the anticipated

size

of the finished calculator, the other containing the real processor guts of the calculator. This enabled size

him, unlike McMillan, to show the actual anticipated

of the finished product

ing the It

—and not

scare prospective customers into think-

machine would be huge.

took him most of the year to build the prototype,

he had just such a calculator to help him design

it.

He

all

the time wishing

finished

on Decem-

ber 24, 1964.

Finally,

on Christmas Eve afternoon

functional.

of

me on

I

remember

in

1964 the calculator was totally

the overwhelming realization that sitting in front

a red card table in the corner of

more computing power per

unit

our bedroom/workshop,

volume than had ever

existed

on

sat

this

—

.

Community planet.

felt

I

creator.

more

like the discoverer

thought of things to come.

I

183

of the object before

If

me

could do this alone in

I

than

my

its

tiny

apartment, then there were some big changes in store for the world. 19

Mounting the components

it

into

two handmade balsa-wood boxes, Os-

borne finished by spray-painting everything with Cadillac green automotive paint.

a

Then, with his "Green Machine" in hand, he

set

out to find a buyer.

He soon discovered the nightmare of being a lone inventor trying to show new product to a major corporation. Some flatly refused to talk with him.

Others demanded he sign a nondisclosure agreement so onerous that he could only conclude they were preparing to legally defend themselves after they stole his idea.

There were times when Osborne's

sales

tour devolved into farce:

The IBM people were not slowed down

a bit

by

their inability to find

[my] apartment's slightly hidden entry. They climbed the

knocked on the over the

fire exit

hi-fi set

window.

which

I

opened

it

fire

escape and

and they entered by climbing

partially blocked their entry.

Through

it all

they

retained their composure. 20

The only good thing

to

come out of that meeting was

borne adopted IBM's nondisclosure agreement Before he was done, thirty

companies

Tom Osborne

as his

that henceforth Os-

own.

pitched to and was turned

—including Hewlett-Packard. A few had even passed on the Osborne himself job — and he returned the by

calculator but offered

favor

a

turning them down. The absolute nadir

came

in a series of meetings

Friden Corp., then the world's leader in calculators, and the reason

been rushing to get into electronic

mous

down by

interest in his calculator,

calculators. Friden initially

with

SCM had

showed enor-

but as negotiations went on, Osborne grew

increasingly suspicious of the company's motives. Finally, he nixed the deal

only to learn get rid of It

my

later that

Friden had planned to buy his technology and

any competition to

was a weary,

rope's end")

frustrated,

who,

its

current

kill it

to

was about

at

line.

and much wiser

Tom Osborne

("I

in June 1965, finally decided to take a break after six

miserable months pitching his invention, and gave himself a vacation.

At precisely that moment, across the Bay in Palo Alto, Tony Lukes, an engineer,

was talking with Paul

Stoft

HP

about the meeting with McMillan and

Voider. They've got something there, Stoft told him, at least in the software.

But the hardware ter

box

to

put

is

it in.

a mess.

We can't even consider taking it on without a bet-

DAVE

BILL &

184

A light went on in Lukes's head. He told Stoft about a guy he used to work with

SCM,

at

who he

a terrific design guy,

heard was working on a calculator

project of his own.

Bring

him

in, said Stoft,

But when Lukes

men

two

ally the

and

let's

what

he's got.

Tom Osborne

connected, and

Hewlett-Packard, in Paul

see

he only got Osborne's answering machine. Eventu-

called,

at last

Stoft's office, giving yet

found himself inside

one more demonstration of

the Green Machine. Stoft quietly watched the presentation for a few minutes,

Osborne minded

then asked

if

head of the

lab. Sure, said

they could be joined by Barney Oliver, the

if

Osborne.

Oliver in turn watched the presentation and, like Stoft before him, realized that he tor

Tom Osborne's Green Machine, the best calculadesign yet devised, running McMillan and Volder's CORDIC al-

was seeing the

hardware

future:

gorithm. There would be nothing on the planet to match

even being developed close to

HP's customers would love

it.

And

company

the two

"How did

Recounts historian Steve Leibson,

scientists

knew

that

Oliver and Stoft

know? They

HP

founding in

1939 to about 1990: next-bench market research.

means taking an

nothing

likely

it.

used the same marketing technique that served

research

—and

well

from

Briefly,

its

next-bench market

idea to the engineer at the next bench. If he

engineers were 'he' back then) liked

it,

then

it

was sure

to succeed."

(all

HP

21

Oliver had only one question: could Osborne redesign his device to run

CORDIC?

"Yes," replied

Osborne, not knowing what Oliver was talking

about, but convinced he could do anything with his design.

down the hall and showed him a prototype printed circuit board for a new kind of onboard computer memory for microcode called read-only memory (ROM). The Green Machine only used Oliver then took Osborne

simple diode-based

logic.

Could the

calculator be redesigned using this? Os-

borne hesitated, not because he didn't think he could do wasn't sure that

HP

Labs could really scale the

Great, said Oliver. Bill

He

and Dave.

inquired

"Bill

if

was

right.

Osborne could return the next day and

and Dave who?" Osborne asked.

The meeting the next day was memorable. Nothing with the previous companies. nies

but because he

ROM up the fifty times needed

to drive his calculator. "Yes," he finally said, praying that he

meet with

it,

It

appeared to

me

like

it

had occurred

that while other

compa-

were looking for a weakness that might preclude them from success,

HP was looking for the opportunity that might lead to a success.* We discussed the project's good points, its weak points, and the risks involved to both parties. We agreed to give it a try for six weeks during which would explain my design processes to HP's engineers and perI

— Community form

The meeting was about over when

a total evaluation of the project.

Mr. Packard along with

said,

it." I

185

"Oh Tom, we won't take the project without you coming

said,

"You

In those few words

it

can't

was

have

without me."

it

clear to

me

that

one of

to transfer the information that existed only in

whom

of the people with also clear that

advance the

I

I

would be working

of the

chine

home

for a

HP

Bill

Hewlett.

It

playing with the calculator that he had right all

it.

for a couple of years.

if

he could take the Green Ma-

get to work,

seemed

that Bill

re-

he was met by a

had been so excited

somehow managed to poke

his

thumb

through the balsa-wood box. Worse, he was afraid that he'd burned out

of the circuitry by accidentally plugging in the power supply backwards

which appeared Luckily,

to have shorted out the

Tom Osborne had

power diode.

welcomed Osborne

to HP,

evaluation period to

HPer Dave Cochran

Green Machine.

prepared for just such an eventuality by in-

stalling a protective

It

saved the calculator. Relieved, Hewlett

and they agreed upon

work with McMillan (now to see if the

a brief four- to six-week

company

a

consultant) and

Green Machine could be turned into a

CORDIC-equipped product. Osborne

I

was

excited.

was everything

I

to get into serious trouble,

mediately

tell

I

for.

nice,

but the opportunity to do the project

At that time,

would be the

I

first

decided that

Osborne,

it

project.

the project was

The

HP

me and I was not going to

seems, was already part of the

be a Hewlett-Packard employee ("He had a kind of called Oliver) but

if

one to know, and

Barney that we should cancel the

placed a great deal of faith and trust in

Tom

legal de-

me a check which meant that the project was a

The check was

had hoped

real,

recalled:

At the end of the six-week evaluation process, Al Smith of HP's

partment dropped by and gave go.

was

It

and trained to

Osborne agreed, but when he

up the machine and

sheepish and apologetic

minds

art. 22

few days and play with

to pick

was

tasks

into the

was among people who were open minded

state

At the end of the meeting, Hewlett asked

turned to

my main

my mind

I

would impeople had

misuse

HP Way. He would free spirit

it.

23

never

about him,"

re-

would remain connected with the company for more than

decade as a consultant or contractor. His very presence ingly legendary figure

who would come and go

when he was needed

or

Hewlett-Packard.*

when

at the

inspiration struck

at

HP — an

a

increas-

company according

—was something new

to

for

BILL &

186

The

First

The product

DAVE

Desktop Revolution emerged from the marriage of the Green Machine and

that

CORDIC was the Hewlett-Packard model 9100A desktop calculator. The prosame time and alongside the 21 16A computer at HP Labs,

totype, built at the

took just over a year to complete. It

was a masterpiece of design

creation of the reaction in

discipline. Oliver

would

later describe the

HP 9100A as "exothermic," thereby comparing it to a chemical

which various components mixed together spontaneously pro-

duce heat and

light.

What he meant was

that the 9 100

A

project brought

together the lab's in-house experts in logic circuits, minicomputer core

memory,

software, firmware, displays,

over

was the nonemployee

it all

Some in

industrial design.

And

presiding

Osborne.

of the most important players in the project had no real experience

what they were assigned

work on an

HP

to do. Thus,

Barney Oliver

for the calculator to

compute

Dave Cochran, who had

just finished

found himself in a meeting about the calcu-

digital voltmeter,

lator, listening to

asked

Tom

and

talk

about developing the right algorithms

efficiently.

"What's an algorithm?" Cochran

—and Oliver immediately gave him the job of devising them. Cochran — including learning on new program computer—before he could even

quickly embarked on a months-long research project

how to neer

get started

a

signment.

He

recalled,

"Up

until at least the 1980s,

as-

hired could undertake just about any engineering project: analog

it

design, digital design, IC design, software ing,

his

HP believed that any engi-

component

design, etc. After

and the same was expected of

all

all, Bill

programming, production engineerHewlett was an engineer's engineer

HP's engineers." 24

Cochran's experience wasn't unique. In signed to

manage

the

9100A

project,

a project director in oscilloscopes,

fact,

the engineer eventually as-

Dick Monnier, had most recently been

and he had almost no experience with

computers.

But in his

it all

worked, not

least

because

Tom

Osborne's long months working

apartment had given him not only an unequaled expertise

function, but the kind of

supreme adaptability

that

in calculator

comes from building

so-

phisticated electronics with Elmer's glue, balsa wood, and automotive paint.

Over and over through sign or architecture,

that year,

whenever the project

he somehow

—

—

and

came up with a solution. The most famous of these was Osborne's

project

form of memory

hit a wall in circuit de-

to the astonishment of others

decision to use a most unlikely

in the calculator. In those days,

any integrated

circuits

could trust were too expensive for use in anything but rockets and

and those you could afford

for everyday use

on the

you

aircraft,

were too unreliable. For that rea-

Community son,

187

HP decided to build the guts of the 9100 from standard diodes and other

discrete

semiconductor devices and stacked, custom-made printed

circuit

9100A just

boards. But, as Osborne laid out this circuitry, he realized that the

enough read-only memory.

didn't have

memory

His solution was to create a

'rope': a

braid of wires linking to-

gether an array of tiny doughnut-shaped magnets (the "core" in old-fashioned

mainframe computer core memory) threaded through the limited space remained

in the box.

made Osborne

All the while, Bill

was

It

this

a legend inside

that

kind of practical engineering genius that

HP even before the 9100A was completed.

watching over the 9100A project

like a

nervous

was

father,

Ma-

Hewlett. Perhaps in part because he had almost destroyed the Green

chine,

and because he was,

aesthete,"

but most of

all

in Leibson's words,

something of "an engineering

HP to

because he wanted

create the biggest possible

splash in the calculator market, Hewlett ordered for the

top-notch package: sleek and space-age, the 9 100 A

would

would eventually

also

find a

it

home

was so

as a

absolutely

distinctive for the

time that

prop in a number of movies.

be echoed in the design of the iconic Apple

Practical as always, Hewlett also

9100A an

(It

II.)

made another demand of the 9100A:

call-

ing a meeting in his office, he had the team gather around his walnut desk. Pulling out the standard typing stand built into the desk, he told the

he wanted the

enough to

be an

new

calculator to not only

to be folded

away with

it

fit

on the

stand, but also be small

just like a typewriter. If the

office tool, as well as a lab tool,

Hewlett told them,

into the office world. Writes Leibson, "It

was

a

little

team that

it

9100A

really

would have

ironic that the

form

was

to

fit

factor

of this extremely complex and advanced piece of electronic computing equip-

ment was

to be determined

tury piece of

by an old piece of

But Hewlett was

right.

One

revolution at a time. If the assembled team

suppressed a collective gulp, they also

them.

office furniture ... a 19th cen-

equipment." 25 *

now knew exactly what was

And if they set to work with serious

doubts whether they could accom-

plish everything expected of the 9 100 A, they also

neers working at the very limits of the

"For the next two years of the tors

I

spent

known

had the enthusiasm of engi-

tech world. Recalled Osborne,

some long hours keeping

the various aspects

HP 9100 project on course. I was barely able to stay ahead of the alligamy tail." 26

on

The prototype of the 9100A was it

expected of

was everything

HP

wanted

in

at last finished in early 1967. In the end,

its first

calculator: a beautiful design, break-

through technology, and performance that the market.

The 9100A

didn't just

make

far

outdistanced anything else on

a contribution, as required

Way, but fundamentally changed an entire industry

by the

HP

—arguably creating

brand-new one. Calculators would never be seen the same way

a

again; almost

BILL &

188 overnight, they

went from being simple arithmetic

tational engines. ally

DAVE

And

in a

world

changed, in both labs and

still

tools to powerful

ruled by slide rules, the

offices, the

compu-

HP 9100A liter-

very notion of what constituted

precision in measurement.

But there was

still

Luckily, Hewlett

one small matter: would

it fit

was out of town. So the team

type calculator over to his office

—

low employees to wander around

tellingly,

in Bill Hewlett's desk?

carefully lugged the proto-

how many

his office while

other

CEOs would

he was gone?

—and

set

it

al-

on

the desk's typewriter stand. It fit.

The team

Now

the acid

desk. There

was

the opening.

silently cheered.

test:

they slowly folded the stand into the opening in the

9100A smacked

a dull clunk as the top of the

The team gasped:

What happened

it

didn't

fit.

into the top of

Now what?

next offers an interesting glimpse into not only the inge-

nuity but also the generally unappreciated

humor and iconoclasm

that also

characterized Hewlett-Packard during this era.

The team quickly agreed upon trieve

a solution,

one of the carpenters from downstairs

arrived with his tools,

opening

in the desk

and one of them ran off in the

company

shop.

to re-

He soon

and under the instruction of the team widened the

by about an eighth of an inch, then

carefully cleaned

up

the evidence.

According to Dave Cochran, Hewlett never noticed the subterfuge. But

members weren't convinced; they believed that Hewlett immediately spotted the work done to his desk and, amused, never said a word.* The first public unveiling of the 9100A was to be at the March 1968 IEEE Electro show in New York. By then, the team had built five prototypes and planned to set them up in a hotel suite (standard procedure for new products not yet ready for market) to show off to select visitors, such as large cusother team

tomers, distributors, and even competitors.

One

of those competitors invited, out of professional courtesy, was

Wang, the already legendary

CEO

of

Wang

Laboratories, the

An

company Dave

Packard had long ago visited and concluded that calculators weren't in HP's future.

the

Now HP

Wang

had

a calculator that

Wang was

quick check-over of the

five

schedule to arrive, Barney Oliver did one

machines. As he opened the

check on the components inside, his

walked

believed put in the shade anything in

catalog.

But not long before last

it

tie, full

across the suite's carpet, accidentally

board, shorted out the circuitry

—and

of

lid

static electricity

of one to

from having

brushed across the 9100A's logic

instantly killed the prototype.

Hewlett quickly ordered the dead calculator taken away and hidden, the four surviving machines were rearranged, and the team pretended that noth-

Community ing had happened.

When Wang

189

at last arrived,

Hewlett immediately led him

9100A and had Oliver and Osborne demonstrate

to a

to

him how the machine

worked.

Wang watched

the demonstration in stunned silence.

Then he shook

men's hands and took his leave. At the door, he turned to Hewlett

"You have It

a

good machine.

and

the

said,

We had better get busy."

was a moment of triumph. In

just

two years Hewlett-Packard had come

out of nowhere, entering one of the most innovative and hotly contested

new

businesses in high tech, and had produced an initial product so superior to

anything on the market or under development that

it

had

rent industry leaders in a state of barely concealed panic.

left

one of the cur-

The

HP 9100A was

about to make Hewlett-Packard Co. a fortune. (Thirty years

later,

Wired magazine noted that an October

the $4,900 "Hewlett-Packard

recorded use of that term.

It

9100A personal computer" was

4,

1968, ad for

the very

seems that the 9100A not only kicked off the

entific calculator revolution, but, in

language

at least, the

first

sci-

personal computer

age as well.)

The others may have been ready Hewlett. In one of the defining

ahead. Wang, catch HP. So if

the

to save his

to

go out and celebrate. But not

moments of his

company, would

career,

Bill

he was already looking

now move

heaven and earth to

HP had won today, but it would be a brief victory

would Friden.

company didn't keep moving.*

Hewlett turned to Osborne and pointed tors. "I

at the

row of shiny new

think the next machine should be a tenth the cost, a tenth the

be ten times

faster

size,

and

HP 9100."

than the

Tom Osborne was

calcula-

An Wang had

moHe had just built the greatest calculator in the world. And now, at the moment when he should have been savoring his achievement, he'd been given instead a new assignment one that he knew in his heart was technically impossible. ment he was

at least as

shocked

the world's leading expert

as

on

been. At that

electronic calculators.

—

Four years

later,

with the help of some fortuitous technology break-

throughs, Osborne built that calculator.

It

would be the most famous product

in Hewlett-Packard history.

In

The

the Chips third in this troika of

was semiconductors. With calculators, the fact that

new all

HP

businesses for Hewlett-Packard in the 1960s

of the attention given to

HP

was both a pioneer and

a

computers and

major player in

BILL &

190

semiconductors

is

often overlooked.

DAVE

Founded

in 1960, HP's

semiconductor

operations were only a few years younger than Fairchild's, and a decade older

than most of Silicon Valley's chip companies. ten top chip makers

company's overall

One

on

though that

earth,

HP was also regularly one of the

detail

was

typically buried in the

financials.

reason for the near-invisibility of HP's chip business was that

from the

so different

of what was emerging in Silicon Valley.

rest

it

was

wasn't

It

brutally competitive, or particularly entrepreneurial, or even filled with outra-

geous characters. That in part was due to the

HP's semiconductor

fact that

business was almost entirely dedicated to producing components for other

HP

products. Moreover, at the beginning, as with calculators,

much

HP

didn't see

opportunity in chips. Recalled Hewlett:

Shockley was a genius, but very people, but he wasn't a manager,

difficult.

and

He

bunch of

attracted a

his thing quickly

fell

star

They

to pieces.

were the seed that started the semiconductor business here. This was not

We

of any great interest to us.

should have, but nonetheless

we decided we needed

point .

.

That's

.

was not

how we

to be selling

didn't perhaps get into

it

as quickly as

it

began to grow around

us.

Then

at

we

some

to get into that business.

got into the semiconductor business.

Our

objective

semiconductor products, but using specialized semi-

own products better. That's a different We now have a lot of our own proprietary

conductor products to make our twist,

and we followed

that.

products and make them in several spots, which

you make them to outside

sell

But it

if

it

was

spot.

in the

still

minds of others

for the philosophy

bore the stamp of the

in the field

under which

was made by one of

Dr. Lester

Hogan was

And

Bill

own

much

—not it

use. 27

public attention,

compo-

just for the

operated. In an industry

computer chips

at

Hewlett-

HP Way.

this business, officially called

uniquely Hewlett-Packard.

career,

are really for our

for being brilliant but ruthless,

Even the origins of

birth

We have a small semiconductor operation we

—but the bulk of them

made, but

best-known Packard

one

quite unusual. Usually

HP's semiconductor operation didn't draw

certainly

nents

in

is

it is

HP

telling that the best

and Dave's

Associates,

was

recounting of that

peers.

already a tech legend for the invention, early in his

of the gyrator, a fundamental device in microwave communications.

Shockley himself had dubbed

it

"amazing."

Hogan had gone from

Harvard to huge success running Motorola's chip business

Bell

Labs to

to, at last,

the

presidency of Fairchild following the departure of Bob Noyce.

Hogan had been hugely

successful wherever he'd worked,

and

as

one of

Community

191

known

the leaders of the semiconductor industry he had in his industry

—and

their flaws.

is

Hogan chose

remains one of the best stories about

also a valuable glimpse into

industry peers. Here

Jack Melchor a

that

company

tell

when

the story of the

and Dave and the

HP Way.

in full:

was very

successful.

and founded

He left the company in 1960 [and] know how much he made, but he

a few millions.

He went

Dave Packard

to

1960 and convinced Dave that he

in

[Packard] had to be in the semiconductor business. Integrated circuits

had just been introduced, but obviously they were going

more complex and would not be

—be

ten years or twenty years

it

to get bigger

able to build a unique state-of-the-art piece of

That's because the chip finally

box with some buttons on

Dave had enough

made him

Jack and he

Associates, in

it

becomes the whole

around the chip and

president of a

equipment

just

called Hewlett-Packard

also

own

roughly

50 percent. Hewlett-Packard had an option to buy 100 percent other 50 percent

—

the profits.

It

would

Packard Associates

made

ucts that

and the contract

five years later

would be based upon the also

made

put a

it.

50 percent and Jack and

would

the principals he was going to attract to the firm

you

chips.

He was impressed with

new venture like

thing;

that's

foresight to recognize this.

which Hewlett-Packard owned

and

— eventually you

away

had people who could design and even build unique

unless you

—

the

stated that the price

[current] sales of Hewlett-Packard, as well as

be based upon the contributions that Hewlettto the rest of

HP

by building unique prod-

the company's equipment substantially better than

competitors.

Now,

come

that last

to the

So

and

I

on

said, "I guess

can buy you out. option. So,

the subjective part of the contract. So

years later],

[five

principals

is

day of establishing the

I

price, [that's

a Friday night,

you

fellows

where]

it

that

when you

gets hazy.

Dave Packard

know

called in the

Monday morning

I

have an option to buy and I'm going to exercise that

want you

out what you think a

fellows to go

home

over the weekend and figure

fair price is."

Well, they not only did that, they [created] a forty page flip-chart pre-

sentation to justify the price.

"Here

is

And the flip-chart presentation

the lowest possible price

you can

offer,

It

seen by one of their few

Sylvania in 1956 with three other engineers

left

that

it is

Bill

how the two men were

subsequently sold the stock. Don't

made

to

HP Associates almost a half century before.

founding of It

interesting then, in his retirement,

It is

asked about Hewlett and Packard,

every major figure

which

consisted

gives us

no

of:

credit

DAVE

BILL &

192 for contributions.

and gave us tions.

We

all

.

.

Now,

.

this

is

the highest,

kinds of credit for

if

you were very generous

of these immeasurable contribu-

all

feel that [the latter] is a top-level price

and we think

that

it is

We think that some place in-between the two would

probably too greedy.

be proper."

As with

all

things like this,

you end up with an average and say "That's

fair."

walked into Dave Packard's

So, they this forty

page flip-chart presentation

He

fully thick.

office

And

"Hey, what's this?"

said,

on Monday morning with

—and Dave saw

that

was aw-

it

they said, "This

is

our

presentation."

And Packard said, "What do you need a presentation for?

I

just

need a

price."

"Well, this

"Ohhh,

is

to justify the price."

Packard. "But look:

see," said

I

your entire presentation. How's don't like

it, I'll

Then he

Melchor went on

become one of

more than one hundred

it

all,

he was

— many of which paid

Learning Company). learned at that

offer

—and

if

you

It

is

high-ball price! 28 *

Silicon Valley's

government on developing

Kingdom. Through

risk investments

went

them 20 percent above their

to

capitalists, investing in

the United

don't want to have to listen to

listen."

offered

vising the British

I

me make my

this? Let

off

start-up companies, even ada venture capital industry in

known

for his maverick, high-

handsomely (ROLM, 3Com, the

interesting to speculate just

Monday morning meeting

in carrying a formal presentation

most famous venture

how much Melchor

with Dave Packard. Certainly, he

— and came out the most unconven-

tional of venture capitalists.

Acquiring Directions HP, from the beginning, had always been a closed company. its

unique patterns of

responsibility, trust,

rather hermetic attitude (too outsiders.

much

so,

But that changed

in the 1960s.

to turn the

The

culture, with

a

some observers complained) toward

There were HPers, and then there was everybody

as seen in the relationship

Its

and interdependence, enforced

rise

of

new divisions

else.

outside Palo Alto,

between the Loveland division and

company's perspective away from Page Mill

Hill.

HP

Labs, began

So did Boeblin-

Community gen, Germany,

company to

and the new European

193

Geneva, which forced the

sales office in

see itself for the first time as a truly global organization.

As the decade continued,

became standard procedure

process of pairing that soon

Palo Alto was joined by a pertino, not far

of expansion continued apace. In a

this process

new home

for the

company,

for the computer division in nearby Cu-

from where young Steve Jobs and Steve Wozniak were attend-

new manufacturing

ing junior high school. Loveland also got a twin, in a

plant in Fort Collins, Colorado. Meanwhile, the instrument business ex-

panded with the addition of

Colorado plant,

yet another

Denver, closer to Packard's childhood

home

in

this

one south of

Colorado Springs.

But expansion wasn't the only way Hewlett-Packard grew in the 1960s: the

company also embarked on always, each buyout

the most active era of acquisition in

was voluntary, and each was chosen

quickly into an important

new instrument

Thus, in 1961, Hewlett-Packard bought Sanborn

first

monitors and nurses' stations

come among

—would

way to bring

As

HP

Company

HP Waltham its

products

in

Waltham,

would become

— including

fetal

hospitals around the world and be-

fill

HP product lines. once again, HP purchased

the best-known of

Four years

company,

and

East Coast division,

history.

business.

Massachusetts, a maker of medical electronics. the company's

as a

its

later,

twinning

a

second East Coast

F&M Scientific Corporation, in Avondale, Pennsylvania. F&M was a

highly respected maker of analytical instruments. HP's acquisition put

operation into overdrive

—and soon HP's

gas chromatographs

F&M's

and mass spec-

trometers were a staple of forensic labs and pollution control authorities.

The newly acquired companies, some with hundreds of employees (Sanborn had nearly a thousand), had to be assimilated quickly into HP. Before,

when Hewlett-Packard was hires in the

HP Way

work experience

still

geographically centralized, educating

had occurred

organically.

new

So deeply did the everyday

reinforce the corporate culture that

it

typically

took only a

few weeks for a new hire to become a true HPer.

company reached a dozen operating diviold, casual way of dealing with new when they arrived by hundreds at a time, had become

But by the mid-sixties, sions,

it

as the

was becoming obvious that the

employees, especially

unworkable. The simple analogy of in the 1950s,

HP to

a family,

which had worked so well

was becoming less tenable when Hewlett-Packard was a division-

alized, multinational

corporation with, by 1966,

more than

The days of Dave handing out Christmas bonus checks

10,000 employees.

in person to every

ployee were gone. So was Lucile Packard giving blankets to newborns.

though

it

was

still

em-

And

possible to see Bill or Dave, or sometimes both, at divisional

summer picnics, even that

ritual

was becoming hard

to maintain.

BILL &

194

DAVE

Indeed, Hewlett and Packard were struggling so hard to maintain a pres-

ence

at the

company's increasingly far-flung operations, and spending so

much time in transit, that a joke went around HP Palo Alto, to wit: What's the difference between God and Dave Packard? God is everywhere, while Dave Packard

is

everywhere but

The changes taking

at

HP.

place within the traditional

of the matter. The presence of

company— —showed the company moving

ships vastly different

two

men

this

family were only part

as well as the joint venture in Japan

from those

and Dave saw

Bill

HP

Osborne, a contractor, playing such a

the fate of the

critical role in

with Yokogawa

that the

Tom

it

coming

had known

into

new

business relation-

in the past.

as early as the late 1950s. In the

called for the divisionalization of the

company,

same year

as well as the

formal adoption of the company's Corporate Objectives, they also ordered the creation of a corporate personnel department.

The

occur until 1957, eighteen years after the company was founded,

The

fact that the institution

of

HR

at

move

fact that this

Hewlett-Packard

didn't

astonishing.

is

finally did take place

shows the increasing concern of the two founders that they were losing ability to personally deal

By the

with the growing legions of

early 1960s the

their

HP employees.

two men were obviously formulating a new vision

of the company, one that had evolved from "family" to something closer to

"community," encompassing not

just

HPers but

all

were touched

by, the

— —who touched, or

of those

suppliers, vendors, distributors, retailers, even customers

contractors,

HP Way.

For most of the decade, even as the company was expanding

dizzying

at a

new employees and introducing hundreds of new much of their attention to spinning out of the new notion of HP as a community and their own roles

pace, hiring thousands of

products, the two

men

implications of this

within

—

it.

Only during all

devoted

in this light

this era

become

does one of their most decisive, and unusual, moves explicable. This

Bill

and Dave's decision

to acquire

of HP's long-independent regional sales operations. As noted earlier, in the

mid-sixties, competitor Tektronix fired its

was

own

ments and

hire

its

of

its

independent reps and created

all?

One

honor

its

commit-

reps instead.

But the question remains: why did tions at

all

internal sales operation. Hewlett-Packard chose to

HP

standard explanation

is

shut

down

that, for

its

outside sales opera-

competitive reasons,

it

imitated Tektronix 's decision. But that not only seems uncharacteristic of

Hewlett-Packard, but also unlikely, given that Tektronix only competed with the in.

company

in just

one

—

oscilloscopes

Besides, any sales reps the

The

best explanation

— of dozens of markets HP was now

two companies shared were now HP's by

may be

that this

was

yet another case of

default.

an

"HP

Community fork," after the

move

Bill

is,

—and

sales

it

to have,

made good

sales representatives

common

a cultural strategy

if Bill

a classic example. Cer-

is

business sense at this point in HP's development to bring

in-house and erase some of

same time,

though often hidden,

vice versa.

Buying the independent tainly

more

to capture a piece in

with every important strategic business decision

and Dave always seemed

as well

you

in chess that positions

than one direction. That

195

their 15 percent

and Dave were going

commissions. But,

HP

to build a real

corporate culture, the sales reps, the biggest

at the

community, with

a

renegades in the com-

pany's larger sphere of relationships, had to be brought under control lest

new HP community. And no doubt some of these operations would

they undermine the

on

their

have done just that

own. Salespeople are always corporate mavericks, and

if left

in the hard-

drinking, fast-living, and high-paying world of tech in the early sixties, this

was particularly the

case.

At hot new companies, such as Fairchild,

it

much

often wasn't

when

behav-

sales reps,

better.

Especially notorious

Unlike today,

this

Among some of HP's

ior regularly crossed the line into criminality.

was the annual IEEE convention

in

New

York

City.

there are scores of trade shows covering almost every

niche in electronics, throughout the 1950s and into the 1960s, IEEE was the

only game in town rolled into

one

and customer

—

a

Consumer

—the one time each year when every

in the digital

and Comdex

Electronics Show, Semicon,

world met

in

one

spot.

It

supplier, manufacturer,

was the

single

week each

year toward which most companies targeted their big product introductions,

and salespeople were unleashed ter

what

it

to

make

as

many deals

as they could,

took and no matter what they had to promise.

Needless to

say,

with each year the event became more chaotic, beginning

with the bribes paid to Teamsters to get exhibits into the to the hookers

and booze used

rent almost the entire Essex

there as well.

Club

New York Coliseum,

to close crucial deals. Hewlett-Packard

House

nual sales meeting, and most of

cle

no mat-

its

hotel, including the ballroom, for

independent

The booze flowed continuously

sales firms

would

in the downstairs

take

would its

an-

rooms

Bombay Bicy-

bar.

Tiny Yewell, whose firm represented

HP

in

Boston and

New England, was

one of the wildest of the independent-operation owners. He became notorious for the initiation

rite

he

inflicted

on

his

newly hired

reps.

According to

historian John Minck:

All of his suite

managers and senior personnel would gather

on an upper

ling engineer

floor of the Essex

would have been

House. Previous to the

told that he

would

in Tiny's hotel trip,

the fledg-

get a call at a particular

BILL &

196 time,

and

to

come up

to Tiny

s

DAVE

suite for a drink

and informal

can only imagine the worry that engineer might have when he that

talk.

One

finally got

call.

[Then,] with the whole senior group sitting around the room, and the

new man knocking at the door, Tiny would tell him the door was unlocked and to come in. Imagine his surprise, and the delight of the audience, when the engineer opened the door to find a naked woman greeting him.29

In the male-dominated business world of the 1950s, these activities, tak-

ing place just beyond the edges of the preciated. But they

modern

business, with

allowed in the

HP family, were tolerated, and even ap-

were not acceptable

growing role for women.

its

new HP community. When

company, these

"rites"

It

especially could not be

the sales reps were acquired by the

were immediately ordered stopped (no doubt to the

dismay of many of the newly anointed

"They had no place

newly emerging world of

in the

in a professional

HP

sales professionals. Said

Minck,

company, and probably not even

in the

old independent organizations." 30 *

This notion of a corporate

community extended outward

to include not

only HP's outlying divisions, but the civic communities in which they operated. Here, ironically,

is

where Hewlett and Packard faced some of

biggest challenges. Already described in these pages

male employees

at

Yokogawa

HP

is

their

the resistance by the

to the idea of bringing their wives

and

chil-

dren to the company picnics. At Boeblingen, the paradoxical challenge was enforcing independent thinking and entrepreneurial attitudes.

But not

all

of the problems dealt with conflicts with the cultures in other

nations. In the end, Loveland proved to be

challenges the

company

one of the thorniest personnel

ever faced: the arrival from cosmopolitan California

of well-educated and well-paid young engineers created more than a

chaos in what had been largely a ranching town. started stealing girlfriends

And when

and wives, driving up

these

new

real estate prices,

little

arrivals

and

in-

creasingly dominating local politics, there was a backlash. In the local news-

paper, at city council meetings,

and

in the everyday conversations at coffee

shops and high school football games,

HP

was blamed

for

most of the com-

munity's problems.

The bad blood Bill

and Dave

lasted for

more than

a decade

—long enough

to convince

HP divisions needed to be emplaced in communities university and a more affluent population. That is why HP

that future

with an existing

divisions of the 1970s were located in Boise, Idaho; Corvallis,

OSU); and Santa Rosa, Sacramento, Santa was an admission that the

HP

corporate

Clara,

and San

Oregon (near

Jose, California.

community wouldn't work

It

in every

— Community civic

limit

—

community and on its influence.

197

HP Way

thus, for the first time, the

encountered a

Sending a Message It

was

growing recognition of the limitations of

this

led Hewlett-Packard to create the

its

business

most unique advertisement

model

that

in Silicon Valley

history.

As with personnel, advertising and public

relations at Hewlett-Packard

were essentially improvised as needed up through the 1950s. Advertising, as noted, actually predated the company's

company ads

in conjunction

first

named Dick Garvin and

succession of agencies. Together the two

following

men would

him through

a

devise the ads for every

line at Hewlett-Packard, as well as corporate ads.

Public relations consisted mostly of the

ments of

its

new products and

comments from, This

—the

advertising

What

mainstream press coverage

little

was handled the same way.

communications strategy had both strengths and

marketing

limitations

company putting out announce-

the trade press asking for interviews with, or

the two founders.

there was typically

latter

coming

to

dominate by the 1960s. The advantage in

was that Hewlett-Packard spoke with one voice

campaigns were consistent and internally congruent.

It

—and

Wonder"

series

all

of

its

ad

helped that Garvin

was something of an advertising genius, whose campaign ideas "Small

all

with a succession of advertising agencies, ultimately finding a

favorite account executive

product

product, but as late as 1960

HP division were created by marketing VP Noel Eldred

for every

—notably the

of ads for HP's microwave component products

were milestones in the world of tech, and models for

many

of the great cam-

paigns (Intel Inside, the early Apple ads) to come.

But the problems with the sheer

number of

this

methodology were manifold. For one

HP

different products

thing,

was producing by the beginning

of the decade inevitably led to a queuing up of product managers anxiously waiting for corporate to design and place their ads. Worse, the process, in violation of the spirit of the

HP

people most in the position to

managers often

And

—and put

knew

little

that in turn

it

in the

Way, moved decision-making away from the

make

—

division marketing

hands of a senior executive and a contractor who

about the product,

meant mistakes

historian Minck, "[Eldred

correct decisions

its

customers, or the best media venues.

in copy, style,

and placement. Recalled

HP

and the ad agencies] never asked many questions of

those of us out in the product groups

—

I

was an application engineer with the

— microwave lab

—and we would

product when

it

of

By the

usually find out about a

appeared in print. The process always contained the elements

early sixties, this process

was beginning

it

was becoming untenable. to

stakes

lacked sufficient flexibility to deal with a

and ultimately

ferent businesses;

couldn't keep in a business

were getting higher by the

company

that

was

in a

undermined the corporate

year;

dozen

culture.

dif-

The

of keeping up this pace was playing on the two managers as well: Garvin

was turning into a serious ter

it

It

make dangerous mistakes

where precision was everything and the

stress

new ad on our own

because there were often errors of specs and message." 31

disaster,

up with demand;

it

DAVE

BILL &

198

dropping off

his latest

alcoholic, often stopping at a local Palo Alto bar af-

ad mock-ups, while Eldred's health began a swift

decline. It

was

syncratic

clearly

time for a shake-up. But before the old, handmade and idio-

method of doing

advertising disappeared at Hewlett-Packard, El-

dred and Garvin produced one

Even today

it

Created in 1962,

last great

campaign.

has the power to astonish

—perhaps more than

tie,

surrounded by electronic instruments and, with an

intense look of concentration, staring forward ently at the screen of an oscilloscope.

The body

little

did then.

featured a black-and-white photograph of an engineer in

it

white shirt and dark

Want a

it

more experience

and

The headline

before

you

slightly to his right, appar-

read:

start a business of your

own?

copy, above the Hewlett-Packard logo, read:

may be the perfect proving grounds may never want to leave!

Hewlett-Packard of warning: You

As an

R&D

for you.

One word

engineer at Hewlett-Packard you'll be encouraged not

only to develop ideas for marketable products, but given every opportunity to follow your concepts through research

runs, manufacturing

and

finally

and development,

pilot

even into marketing. You will be totally

involved in every area of a business enterprise, gaining experience both as

an engineer and entrepreneur. 32

Visually,

an unremarkable, quarter-page corporate

ad.

But the message

by then Silicon Valley companies were already beginning to sue each other

and their

their

own

own ex-employees

for

firms. Entrepreneurs

who

for leaving to start

just a few years before had quit their em-

new company now turned around and sued their new emleaving. Even the normally dignified Gordon Moore, ignoring his

ployers to start a

ployees for

jumping employers or

Community own of

career history, publicly

199

denounced "vulture"

capitalists for stealing

some

Intel's best engineers.

By the

1980s, suing

and countersuing over

standard part of Valley business

life.

lost

employees had become a

Secret meetings, second sets of

employer- related lab notes, complicated employee contracts tition clauses

—by the end of the

there

was Hewlett-Packard,

become an

at the

art

form

schemed how

That offered to

to quit.

technical talents, but also offered to teach

management, marketing

ing,

And

was so secure

that

let

them

—they would need

in the quality of

its

No company in

company even

them not only advance

the other

skills

to start their

companies. it

would choose

Silicon Valley history, before or since, has

their

—manufactur-

own

corporate culture that

ing to bet that, in the end, these entrepreneurial souls

to duplicate this

in high tech.

very beginning of the era, plac-

ing a recruitment ad that invited potential employees to join the as they

own

century, exiting companies to start your

firm (and keeping you from doing so) had

And yet

non-

and noncompe-

was

will-

to stay.*

had the courage

HP advertisement. And none likely ever will. It is sui generis, a

testament to the supreme self-confidence of Hewlett-Packard in the early 1960s. It

would never be

by that one ad would

plified

time with the firm. with the fer

quite this self-assured again. But the philosophy

It

was

exem-

HP for the duration of Bill's and Dave's

stay with

this attitude

toward entrepreneurship, combined

HP Way and the company's standing rule that employees would

suf-

for leaving the company and then returning (indeed, it way of gaining more worldly experience), that increasingly

no consequences

was seen

as a

made HP It is

much

the heart of Silicon Valley, yet not 0/ Silicon Valley.

this attitude as well that

as Fairchild

made

Hewlett-Packard, perhaps even as

Semiconductor (and for entirely the opposite reason), the

—

boom and thus tragedy was that so many tried to

greatest seeder of the Silicon Valley start-up

electronics revolution. If the

HP

Way, only to

Materials and that

fail,

the

wonder was

Valley

—implemented

from

its

—

—

own

at least part

—Applied

excesses.

It is

of HP's cultural model likely saved Silicon

jump in attiRedwood Building

a long leap in time but a short

tude from Dave Packard handing out bonus checks in 1946 to the employees sitting with their dogs

Google

duplicate the

that a few of the great ones

Tandem Computer among them largely succeeded. The fact rest of them Apple, Cisco, Sun, eBay, Google, Intel, and

most of the

Yahoo!

of the entire

and

at the

bicycles in their offices at

sixty years later.

The 1962 ad was the

last great

achievement of the old marketing communica-

tions operations at Hewlett-Packard.

By the mid-1960s, Hewlett and Packard

— 200

DAVE

BILL &

had agreed that

it

was time

to create larger

and more

specialized operations

public relations and advertising/marketing communications

—

that would be more responsive to the divisions and to the marketplace. Tapped to direct "marcom" was the brilliant and imperious Russ Berg, late of Scientific American magazine. Berg's manner, combined with a standing "good taste review"

committee that vetted

all

division-created ads for false claims,

inaccuracy, enforced a consistency of style

and content on

equal to that of his predecessor, with a lot

more scope and

bad

HP

and

taste,

advertising

speed. Hewlett-

Packard ads would never again be as remarkable as those under Garvin and Eldred, but they

department

Berg's

would

puter. His

the

a lot

more numerous

HP

later

—and

also standardized the "look" of

accurate.

HP

advertising: simple

—

a style

be adopted and taken to legendary heights by Apple

Com-

elementary colors (mostly

fonts,

that

would be

HP

blue),

and

a lot of white space

department also created a second technical magazine (the

was

Journal founded in 1949), called Measure, that would become the

and

voice of HP's engineers

Dave

PR

Kirby, a local

scientists to the larger technical

community.

who had worked for years with PR director. Kirby was the antithesis

agency executive

HP, was tapped to become the company's

of Berg: hunched over his typewriter, chain-smoking cigarettes, his

and

first

sleeves rolled up,

tie

askew

he was a throwback to another era of journalism.

Kirby was also a wonderful, and simple, prose

became Dave Packard's

editor (Packard wrote

position he held for the rest of his career and beyond. the "voice" of Packard

stylist,

most of It

his

and he quickly

own

speeches), a

was Kirby who found

— simple, plainspoken, using few

adjectives

and ad-

verbs, eschewing exclamatory phrases and self-congratulation, and honoring

competitors

—

that

would become the

official style

of the

company

itself

dur-

ing this era.

Kirby 's second important contribution was to build the rate public relations

outstanding Intel

PR

department

executives, Regis

and Apple) and Fred Hoar

mately more sweeping, recruiter, talent,

and one of

if less

McKenna (Fairchild).

known. An

his first acts

great corpo-

first

in high tech. Silicon Valley already

was

(National Semiconductor, later

But Kirby's influence was

indifferent manager, he

to raid the dying

one of the few remaining bright spots

had two

at that

Ampex

was of

ulti-

a superb

its

key

PR

troubled firm.

This core team, with the addition of several retired newspaper reporters,

became the most innovative corporate

— —

number of techniques press releases, and so on

a

important,

no

HP

corporate

publicity operation in tech, inventing

press tours, application/feature stories, customized that are

PR

now

standard tools in the

set certain professional

standards

field.

More

— no

leaks,

preintroduction of products that weren't ready to ship or that had not

Community

201

been priced, no negative comments about competitors, no unproven

yet

specifications

—

that brought the

HP Way

PR

temporarily) to the

(at least

profession.

Way

the Family

In

of the corporate world was beginning to implement HP's cul-

Just as the rest

tural innovations, such as profit-sharing

them now

and stock-purchase

The notion

its

employee

appeared in 1967, interestingly,

first

some of

company, Hewlett-Packard an-

in place for a quarter century at the

nounced what would be the best-known of

plans,

benefits: "flex-time."

HP

at the

plant in Boe-

—

Germany showing not only how fully integrated the international divisions had become to the company, but also how completely the employees

blingen,

at

those divisions had internalized the

mented

throughout the company

it

—

work

rive early or late to

worked

a full

is

come

done. Roll in

If the

ample of

Way. "Flex-time,"

five years later,

as

HP

imple-

allowed employees to ar-

typically 6:30 a.m. to 9:30 a.m.

—

as

long as they

day afterwards.

In other words,

work

HP

at

to

work at

6:30 a.m.

and take

off at 3:30 p.m.

if

your

9 and plan to stay until at least 5 p.m.

1960s was HP's decade of community, then there was no better exthis

commitment than

flex-time, as

it

recognized not only that

its

fully rounded human beings (HP in the 1940s) and members (HP in 1950s), but also members of a larger community, who had larger commitments within that community. More than all of the billions in donations made by Bill and Dave and by

employees were of families

Hewlett-Packard

most

itself

fulfilled the

HP

over the course of a half century,

ployees around the world to individually adjust their best

fit

their larger lives,

into the

it

was flex-time that

Corporate Objective of Community. By enabling em-

HP

communities where

own work

schedules to

unleashed millions of hours of volunteer time it

operated.

The

was uncounted

result

League teams, Girl Scout troops, PTAs, and United

Way campaigns

Little

led or

manned by HP volunteers taking advantage of flex-time. Once again, as with every Hewlett-Packard employee initiative, flex-time was a lot more subtle and complex than it appeared at first glance. It too also featured the

HP "fork" in that, though it appeared to be strictly for the benefit

of employees,

With

it

also

had

a

closer inspection,

hidden business component.

many of these

other features

become

ample, flex-time was really just flexible on the edges. That

is,

clear.

only the

For ex-

first

and

last

DAVE

BILL &

202

tures are variable 3:30,

when most

—

anyway

went

still

isn't

The core

life

in Silicon Valley,

who

really

until 6 p.m. or later.

mattered to

HP

to

and

Humans

their careers.

—and stuck with

fit

are creatures of habit, so

their needs

—

But

Thus, on any given workday, probably 90 per-

it.

same percentage

as

was on the rare days

it

same time, proba-

most corporations.

—the morning

flex-time

thanked

Bill

The

rest

showed

its

value.

and Dave, and

And

game

grew just a

overlooked

little

deeper.

many of HP's

The

story took

late 1970s, the at

on

a

of

life

its

own: every couple of

world press would erupt

in a

spasm of

silently

5*"

earlier

innovations, but flex-time was too simple, and too obvious in miss.

—when

was on those days when HPers

it

their loyalty

may have

of the world

an early

after a late night,

departure to beat the holiday rush, a child's afternoon soccer

HP

most

typically the standard

cent of Hewlett-Packard employees were in the office at the bly about the

employees (and

company assumed their loyalty withmake the right choices in balancing

and trusted them

HPers found the schedule that best 8:30 to 4:30

many stayed

looked upon them with envy) was merely

the fact that flex- time was there; that the

their personal lives

Moreover, the na-

fixed.

—

what counted: what

it,

between 9:30 and

six hours, still

and depar-

naturally drew most people to the center; that is, work from about 8:30 to 4:30 and given the ex-

the millions of other workers

out demanding

arrivals

life

to

panding work hours of But that

are in play.

office productivity occurs, are

ture of everyday office

most HPers

—the time when employee

workday

three hours of the

its

employee

benefits, to

years, well into the flex- time

about

interest

HP. Feature stories would be written, camera crews would show up from

some corner of tually,

the story

the world, and the wire services

would

die

Ultimately, flex-time

down

— only

would prove

uct story in Hewlett-Packard history.

innovation during the last in

Bill

Bill

It

light

to erupt again a

to be the single

was

up

briefly.

few years

Even-

later.

most popular nonprod-

also the last great positive

and Dave era (which

the company's history).

decade, one in which

would

employee

also meant, unfortunately, the

The 1970s would prove

to be a

and Dave would be devoted not

to

much

different

enhancing their

employees' jobs, but defending them.

Racing Against the Clock Beyond

all

of these organizational and cultural stratagems, Hewlett-Packard

in the 1960s

—and perhaps was the— most innovative com-

remained one of

panies in high technology.

— Community

now

For

203

HP's forays into computers and calculators were

at least,

little

more than a sideshow. The company's bread-and-butter businesses remained and measurement instruments, microwave, and, thanks to acquisitions, medical and analytical instruments. By the end of the decade, HP had a catalog of almost a thousand products, nearly all of them from the older product test

lines.

new products were of major

Several of these

historic— importance. In 1963, for example, frequency analyzer.

was the

It

HP

— and

introduced the model 5100A

most complex

single

in the case of one,

HP

product to date

indeed one of the most sophisticated instruments of the age

—and

pointed

it

toward a new direction for the company.

The 5100A was ments,

all

essentially a collection of several established

work together

linked to

in

HP

such applications as automatic

instru-

tests for

manufacturing companies and, more famously, for communication with Apollo mooncraft.

HP

Beyond putting

in the thick of the space

were already, in

fact,

the tech world

on notice

decade's

used in laboratories

all

program (HP instruments

over NASA), the 5100A also put

that product integration

theme of "community" applied

—not

coincidentally the

to HP's technical side

—would be the

future of Hewlett-Packard.

In

many ways

this

terface technology,

was

inevitable.

The

rise

of semiconductor devices, in-

and onboard computation was increasingly making

instruments not only to share information, but process

sible for

Combined with would soon be

the right software,

it

much

able to take over

human

What

operator could

it

but

thanks to

that,

not only showed

efficiently

And

that

lowed by a analyzers

as well.

of the testing and measurement work

them

more

accurately

to.

delighted customers and frightened competitors about the

was that

more

tell

is

was leading the way

wide product

its

than anyone

line,

5100A

in this systems strategy,

HP would likely get there

faster

and

else.

what HP then proceeded to do. The 5100A was folHP systems products— notably vector and scalar network

exactly

series

—

HP

pos-

was obvious that these new "systems"

themselves, running through a battery of tasks far faster and

than any

it

it

of

that stunned the instrument industry

and transformed the world

of electronics manufacturing and testing. For example, the model 8410 net-

work

analyzer, introduced in 1967, transformed the business of

design and

test.

A

year

later,

the

HP 8540A

Automatic Network Analyzer

a big two-cabinet system that essentially bolted the

computer

to the

8410

— did the same thing

chips and commercial

communication

component

new HP 2100A mini-

for the testing of

satellites.

both microwave

204

BILL &

The technology may have been

HP was

using

its

DAVE

arcane, but the business strategy was clear:

leadership, or near-leadership, across a broad range of busi-

nesses, to create

complex systems that rendered obsolete

entire traditional

instrument industries. With the exception of a few superb companies that

—such —few instrument companies could withstand

could leverage their special expertise in a single business in oscilloscopes

as Tektronix

this onslaught.

By the end of the

1960s, Hewlett-Packard

dominated

entire regions of the in-

strument world.* It

was the perfect moment

The

to be in that position.

were

different forces

at play: the

Vietnam and cold wars

1960s would

late

prove to be the most famous technological confluence in history.

A number of

—wars always being

a

time of major technological leaps and quick application; NASA's race to the

moon

with the Apollo mission; a communication revolution (the music in-

dustry,

FM

radio) driven

centrality of television in

recording,

by demand from teenaged baby boomers; the

modern

(color broadcasting, commercial video

life

UHF); minicomputers and desktop

new logic and memory semiconductor They were

all

calculators;

chips.

to converge in that technological

which saw the birth of the microprocessor, the

annus

Internet,

walk on the moon. Hewlett-Packard would play a part in

The

historic

mirabilis, 1969,

and the all

first

man

to

of them.

product for Hewlett-Packard in the 1960s was the model 5060A

cesium-beam atomic

clock. Interestingly,

it

company's great products, perhaps because thing else in the tal

and sophisticated

innovation,

HP inventory

more

—

yet

it

remains the

it is

least

known

so utterly different

of the

from any-

may have been HP's most basic elemen-

so even than the company's semiconductor devices. 33

Timing had been one of the

great challenges in electronics ever since the

Second World War. The war had seen the explosion of communication technologies,

from wireline

to wireless, cable to

microwave, and, soon, to

satellite.

Every one of these communication protocols required exact synchronization of the signal between the transmitter and the receiver. The more precise this synchronization the

more

accurate the transmission, and thus the greater the

information that could be conveyed.

The nal

earliest

way

to achieve this kind of synchronization

from both the transmitter and

receiver,

and use

was

to

send a

sig-

a quartz-crystal oscillator

(quartz being a very stable source of signal vibration) to "discipline" the two signals.

But there were two big problems with quartz the oscillators themselves

would begin

to

oscillators.

show frequency

The

drift

first

was that

with age, tem-

perature change, and environment. As a result, they had to be regularly recali-

Community was accomplished

brated. This

205 through a collection of

in the United States

standard signals broadcast on radio out of Boulder, Colorado, by the U.S. National

And

Bureau of Standards.

was calibrated using yet

that clock in turn

by astronomical readings, based

another, this one timed

at the U.S.

Naval Ob-

servatory in Washington, D.C.

These superclocks, which timed every communication transmission in

North America, were themselves only quartz

same

most

in the

of that didn't solve the second problem, which was that the de-

all

mand from more

to the

and monitored continuously.

controlled environments imaginable

ever

and subject

commercial counterparts. So they were kept

stresses as their

But

oscillators,

telecommunication, computing, defense, and space research for

precise timing

was rapidly approaching the physical

limits of the

quartz crystals themselves. Luckily, nature itself offered a solution. Certain elements resonated at as-

tonishingly predictable rates at the atomic level, and

be measured,

it

would be possible

if

those resonances could

mere seconds

to create clocks accurate to

per century. By the end of the 1950s, the Bureau of Standards had installed just

such a clock, but

it

was hugely expensive, complicated, and of question-

able long-term reliability.

The technology proven, the next question was: would

it

be possible to

build an affordable commercial atomic clock? In 1962, Hewlett-Packard took

had

a

new

division, based

down

on the

challenge.

The company already

the road from Palo Alto in Santa Clara, dedi-

cated to time and frequency. Leading the design team was a famously personable scientist

named Len

Cutler (indeed, Cutler was so open to

customers and queries from his marketing department that

it

from

visits

remains some-

thing of a miracle he ever got anything done). It

was Cutler who chose to use cesium

chronize

it

microwave frequency

at a

for

constraints he set for the finished product

standard

HP

bench instrument,

clock running

and

that

it

when

it

(like

of

the

and

to syn-

was that

it

had

to be as small as a

carry an onboard battery to keep the electrical

2116A computer

to

source to another,

come)

to function

most extreme physical environments.

The model 5060A, introduced cal leapfrogs

it

was transferred from one

be tough enough

perfectly in the

that

as his elemental timer,

maximum precision. And among the

all

time

intosh twenty years

one second of error

in 1964,

— comparable

later. Its

was one of the biggest technologi-

to, say,

the

more

accuracy, for the time,

celebrated Apple

was breathtaking:

Mac-

less

than

in 3,000 years.

Then, just to make sure the world noticed, Hewlett-Packard put on an uncharacteristically

flamboyant promotional stunt for the clock.

gineers configured a pair of cesium clocks,

booked

Two HP

first-class tickets

en-

on

a

206

DAVE

BILL &

commercial

airliner,

and

making sure they could tap

(after

power systems) flew from San Francisco in D.C., then

on

first

into the planes'

to the U.S. Naval Observatory

world timekeeping laboratory in Neuchatel,

to the official

Switzerland, where the two standard clocks were compared.

The

stunt

made

headlines around the world. wasn't long before the

It

It

HP cesium clock was the de facto world standard.

remains so today; the descendants of the 5060A,

lent,

now manufactured by Agi-

account for 80 percent of the world's standardized timekeeping. Few

product families have ever owned a market so completely and for so long.

HP

cesium clocks were used for

timing tasks in

critical

all

subsequent

NASA

space missions, up through the space shuttle, for telecommunication, airplane

measurements, and

collision avoidance systems, deep-space astronomical

hundreds of other applications. But

was

it

one particular use that the cesium clock took Hewlett-

for

Packard into a dangerous

new

world: the testing and fusing of nuclear

weapons.

The

success of Silicon Valley

had not been

rest

of the U.S. electronics industry

innovation of the in-

infinite

and the regular appearance of new and more powerful generations of

dustry,

and instruments, was giving the United

chips, computers,

growing advantage the

and the

on the world. The seemingly

lost

same time,

just

States a distinct

economic development, productivity, and defense. At

in

how this magic was

—the complex web of

being pulled off

interaction between Moore's law, entrepreneurship, established tech nies,

and venture

Not threat

capital

—was not

and responded accordingly. Some, set out to create their

through government

initiatives.

guarantees of success.

A more

foe,

saw

like Japan, Israel,

own

this as potential

and the nations of

high-tech industries, typically

But that was a long-term solution, with few

—

either

intelli-

by buying and reverse-engineering

them, or gathering intelligence on the ground a result,

and

immediate opportunity was to gather

gence on the newest technologies

As

compa-

easily explained.

surprisingly other nations, both friend

western Europe,

and

in Silicon Valley.

beginning in the 1960s and continuing well into the 1980s

(and perhaps even today), a number of countries conducted corporate espio-

nage or

set

nations

it

up

"listening posts" in the Valley.

was believed ran

intelligence

The number, and

programs

the identity, of

in Silicon Valley alone

quite astonishing: the Soviet Union, China, Taiwan, Japan, France,

and

Israel,

among

was

Germany,

others.

Hewlett-Packard, as Silicon Valley's biggest company, and the world's leading manufacturer of the instruments used in the design and testing of

other electronic devices, was an obvious target. But HP's cesium clock took the issue of security to a whole

new level.

Community

207

In the early 1980s, two reporters for the San Jose Mercury-News, while in-

terviewing sources for a series

young man

in a

on drug abuse

addiction. In the middle of the interview, as an aside, the

tioned that he had been a low-level clerk vision,

came

in Silicon Valley,

across a

San Jose halfway house recovering from a methamphetamine

working

in the

at

young man men-

Hewlett-Packard's Santa Clara di-

cesium clock group. As he described

it,

several

men,

with "foreign accents" he didn't recognize, approached him offering to pay for a

copy of the blueprints

that he quickly rity to agents

atomic clock. For a few hundred dollars

for the latest

burned up on speed, the young

man sold out his

nation's secu-

unknown.

new HP product family, though perhaps not as revolutionary as may have had the greater impact upon mankind.

The

third

first

two, ultimately

In 1967, fittingly at the

same time

that

it

the

was enabling working mothers

to

schedule their time with their children though flex-time, HP's Boeblingen,

Germany, division introduced a noninvasive

fetal

heart monitor. This de-

and

vice enabled obstetricians to track the heartbeat of babies during labor

delivery

—and

thus, for the

first

time, determine

if

the infant was experienc-

ing dangerous stress and required immediate delivery via C-section.

The

fetal

heart monitor was emblematic of the great wave of

monitoring tools that

HP

began to

from simple heart monitoring

sell

starting in the 1960s.

new patient

These ranged

complex multiple-patient monitoring

tools to

systems that became the heart of nurses' stations in hospital wards through-

out the world. Indeed, so complete was HP's penetration of this market that is

likely that

every reader of this

has been hooked up to an

book who has

it

ever spent time in the hospital

HP monitor, either in surgery or during recovery in

the wards.

Medical monitoring devices were

known, of HP's products. And and bottom

line

among

the

most ubiquitous, but

their contribution to the

were comparatively negligible

—

sion revenues). But, looking intellectual

beyond

company's revenues

probably

cent of the company's $3 billion total sales in 1980

least

less

(HP never

than 10 perrevealed divi-

traditional metrics, such as financials

property creation, to the thousands of infant, child, and adult

and lives

saved through precise monitoring and early intervention, HP's medical devices

were probably the company's most enduring contribution to mankind.

Combining the process;

its

products into powerful systems

becoming the timekeeper

—and crushing competitors world— and ending up both in

for the

deeply involved in nuclear warfare and the target of international espionage;

208

DAVE

BILL &

and inventing devices that save thousands of of generations of newborns

marched out paradoxical,

And

it

ing a

vital to the fate

—the "community" Hewlett-Packard of it

the 1960s

was even more

and ambivalent, than even the founders had imagined.

was only going

was the

to get worse. This

1960s after

late

and

all,

apogees, the surrounding culture

its

The Vietnam War was approach-

to be heading in the other direction.

crisis

—and being

into the bigger world only to discover that

even as technology was reaching one of

seemed

lives

point with the Tet Offensive and the

bombing of Cambodia,

the

Utopian fantasy of Woodstock and Haight- Ashbury was turning into the darkness of Altamont and the

Manson

Kennedy and Martin Luther King had society itself

was about

and the assassinations of Robert

Family,

led to riots, despair,

and the sense

that

to collapse.

America's youth, the biggest demographic bulge in the country's history,

were

in full revolt.

ness heroes,

men

it

And

if

their anticapitalist

wasn't a thirty-year-old electronics giant

with Ivy League haircuts, horn-rimmed

no matter how enlightened

ties,

view of the world had any busi-

that

glasses,

full

white

company might

of middle-aged

shirts,

and skinny

To the students be-

be.

ginning to march in antiwar protests on the Stanford campus a few blocks away,

Bill

Hewlett and Dave Packard were no longer the famous entrepreneurs

they sought to emulate, but the very embodiment of the military-industrial

power

struggle that

And

was the enemy of everything good and

in 1969, in a

testers' suspicions,

move

just in the world.

that shocked HPers, but only confirmed the pro-

Dave Packard made

a decision that

would change

his repu-

tation for a generation.

Fork

in

the Road

In 1969, Bill Hewlett

was

fifty-six years old,

though the garage myth was the two

Dave Packard was

new and

still

men were a long way from

spreading

fast

fifty-seven.

And

around the world,

those budding young entrepreneurs in Ter-

man's laboratory.

Terman himself was growing

old.

He had

retired with great

his position as provost of Stanford University in

wife, Sibyl,

donated their campus

home

honors from

September 1965. He and

his

to the university to benefit the Ter-

man

Engineering Fund, and, after recovering from cataract surgery to both

eyes,

he devoted himself to preserving the history of the high-tech revolution,

both with IEEE (where he mostly of a $300,000 grant from

Bill

failed)

and

and Dave, he

subject at the Bancroft Library.

at Stanford,

set

up

where, with the help

a research

program

in the

Community

209

But Fred Terman's retirement was not a happy one.

Sibyl, after a lifetime

of heavy smoking, began to lose her health. She began to experience dizzy

and chronic

spells

up her

to give

for the

Beyond

—

—the

and speaker

— 80,000 miles

trips increasingly left

him

and she accompanied Fred

tors of the

gland.

company's

would be her

It

facilities in

last

major

to

in the first

Terman's

summer

was

his posi-

of 1969, Sibyl's health

HP

Switzerland, Germany, Scotland,

direc-

and En-

trip. 34

American business

storied,

and important,

story

almost always upon the early years,

in

life

Europe on a tour with other

The friendship between Hewlett, Packard, and Terman

is

few years of

exhausted.

his family, the brightest thing in Fred

tion as a director of Hewlett-Packard. In the rallied

had

feisty as ever, increasingly

work in childhood literacy. Terman himself was beginmoments of confusion a shocking experience for a man faacuity and precision of his mind. Though he still traveled

extensively as a consultant his retirement

and though

lifelong

ning to exhibit

mous

bronchitis,

history.

when

is

one of the most

But the focus of that

the legendary professor

served as teacher, mentor, and adviser to the two young entrepreneurs. Less often told reversed,

is

the story of the final years of that friendship,

when

and the two young men, now middle-aged and

far

the roles had

more famous

than their teacher, honored, protected, and indulged the old man. Their actions during the

about

Bill

last

and Dave, and redound

they did in their

decade of Fred Terman's

say as

life

to their credit, as anything else

much

important

lives.

Time and the hard work of thirty years had taken other tolls as well. On November 30, 1970, Noel Eldred, HP's vice president of marketing, died suddenly

at just sixty-two

attack. His death, the first of Hewlett-

management team, stunned

Packard's original

more

from a heart

the

company

so than in the executive offices in Palo Alto. After

one of the company's Hewlett had

left

where he did a

first

management

for the army, Eldred

brilliant job

hires during

had served

all,

—but nowhere

Eldred had been

World War

II,

and

man,

as Packard's right-hand

running manufacturing in the most

after

difficult

con-

ditions imaginable.

In

many ways,

Eldred had proven himself to be not only one of the most

capable, but certainly the

Eldred, after

all,

who

most

after the

versatile

of

Bill's

and Dave's

war pieced together HP's

crazy quilt of different distributors. Then, in his

lieutenants. sales force

decade

last

at the

It

was

from a

company,

he had, as vice president of marketing, given Hewlett-Packard both the look

and the voice the

first

that

would define the company ever

quarter century of the company, nobody,

for HP than Noel Eldred. Now he was gone. And his death

after. It

Bill

could be said that in

and Dave excepted, did

more

underscored to

all

of his peers that even

BILL &

210

DAVE

success was a poor defense against the stresses of working in a fast-moving

company.

electronics

the

It

was

also a

reminder that the

men and women who had joined

were no longer young

the

company

—indeed, many, including

first

generation of HPers,

in the

Redwood

Building,

the two founders, were

now

within a decade of legal retirement* Succession wasn't the only question facing these senior

There was also the matter of dealing with the sheer

tween 1968 and 1969,

dozen divisions

HP

its

more than

to

executives.

15,000 employees, located in a

current divisional structure.

It

company urgently needed to rethink its organization. The watershed 1958 meeting had successfully dividual divisions grew to an unwieldy size

—they were divided up

—

was obvious that the

decentralized Hewlett-

some of

these in-

usually about fifteen

hundred

Packard into product divisions. Then, in the early

employees

HP

of the company. Be-

dozen countries, and was becoming increasingly un-

in a half

wieldy to manage in

grew

size

sixties, as

again, in that "twinning"

manner unique

to

HP. Recalled Packard:

At that point [1,500 employees], to the limit,

lines of

communications were stretched

management becomes more

vision

doing. So,

is

became our

it

part of the division, giving

product

line

less

policy,

and people begin

their pride in

what the

observed today, to

still

to di-

split off

responsibility for an established, profitable

and usually moving

Packard called ber of other,

it

difficult,

and

lose their identification with the products

to a

it

new but nearby location. 35

this process "local decentralization,"

and

it

offered a

obvious advantages beyond dealing with division

num-

at critical

new division a short distance (typically less than many employees of the older division were will-

mass. For example, creating a fifty

miles)

away meant

that

new opportunity without the stresses of moving their families. Starting the new division with an existing and proven product line both reduced the risk of creating the new division, gave it a well-developed ing to

jump

customer

to the

and kicked

list,

it

There were other, more

enough

faith in

community tages

its

arrivals.

to

its

reputation that

which

it

The

it

For one thing,

HP

had

could almost always assume that the

planned to move was already envious of the advan-

local politicians

—and would

were

roll

likely the

out the red carpet to the

same

as well, so there

new

were few

R&D labs could easily keep each other updated. And given the con-

gruence of the product facilities in

The

ready-made identity*

subtle, advantages as well.

neighbor was enjoying

surprises.

both

off with a

result

lines,

both salespeople and customers could stop

the course of a single

was

at

visit.

that, despite a proliferation

of Hewlett-Packard divisions

Community come

in the years to

turing divisions

—by

—they would

and countries. This was a

HP

1992,

211

would have

sixty- five

product manufac-

be clustered within only about a dozen

states

new kind of economy of scale, written not on

a bal-

all

ance sheet but a map.

The

efflorescence of divisions

had one more very big advantage, one not

HP managers: more divisions meant more available management positions of division general manager and division marketing manager stepping-stones in turn to Palo Alto. And, as Hewlett-Packard almost always promoted from within, rather than recruitlost

on ambitious young

openings in the senior

—

ing talent from outside the

sumed

that only

HPers

company

—

it

was better

understood the

really

for morale,

and

HP Way—young,

it

was

as-

upwardly

mobile managers knew they had a good shot of landing one of these coveted positions within a few years.

But the path wasn't entirely titles

were

or more. for

HP

still

held by

clear,

many

because

of the senior division

company veterans who had been

in place for a

They were too experienced, and the company was too

to simply

for never firing

move them out of

way (and HP was

the

an employee without severe, or more

decade

loyal to

them,

already legendary

likely criminal, cause).

At the same time, there was no place for them in the superstructure of the

company. Bill's

and Dave's solution was once again the Hewlett-Packard of

as the rest

HP

was

tion of the company, at

still

fork.

Even

spinning out the implications of the decentraliza-

by the mid-sixties the two founders were looking ahead

what would be the inevitable emerging problem of coordinating too many

divisions in too

many locations.

value, underscored

by the

HP

In other words, even as they

spoke of the

Way, of spreading out authority in the com-

pany, of driving leadership and responsibility

and Dave were already plotting how the

still

down

into the organization, Bill

to reverse that process

company by adding another layer of management.* They unveiled the new "group" organizational model

—

to recentralize

in 1968. Recalled

Packard:

With the number of operating increasing,

we

divisions

and

their

product

lines steadily

gradually adopted a group structure. This involved

bining, organizationally, divisions with related product lines into a

group headed by a group manager with a small

was responsible all

operations and financial performance of

We more

had two

effectively

staff.

for the coordination of divisional activities

objectives: to enable

on

Each group

and the over-

members.

compatible units to work together

a day-to-day basis,

top-management functions so

its

com-

and markets

that the

and

to begin to decentralize

new groups would be

some

responsible

— DAVE

BILL &

212

some of

for

signed to corporate

and often

as-

vice-presidents. 36

important to stop for a

It is

fold,

and other functions previously

the planning activities

moment and

far-reaching, implications of

look more closely

what seems,

at the

mani-

at first glance, to

be a

comparatively simple corporate re-org.

For one thing, clustering

like divisions together

management added

dedicated group

and putting them under

structure, like installing a truss

strengthen the company's increasingly extended organization.

most talented and experienced

would eventually be

there

division

beam,

Moving

a

to

the

managers up into these positions

thirteen product groups

—rewarded them

for their

hard work immediately, rather than forcing them to wait years and compete with their peers for the occasional openings nior managers a

new challenge

to motivate

at corporate. It also gave these se-

them.

Meanwhile, by keeping these group operations small, with minimal forced the

staff, it

new group

and delegate most

HP Way. Human

most decision-making

responsibilities to the divisions, thereby reinforcing the

nature being what

more power

dize

vice presidents to defer

—but

that

it is,

would

the group

VPs would

in turn signal

ization.

That too was not a problem: Hewlett-Packard,

years

was well-managed, grew accustomed

it

cycle of centralization/decentralization

Yet even as Bill

senior

eventually aggran-

another round of decentral-

to regularly passing

also

rewarded

it

this

new level

of

with added capabilities. In one of

the cleverest organizational decisions of their careers, the two

way to

through a

about once per decade.

and Dave circumscribed the authority of

management, they

during the

at least

men managed

company even as they were recentralizing it.* This clever counterstroke came with their decision to strip HP corporate of some of its operations and give them back to the divisions via the groups. The new VPs were empowered to manage the financials, the long-term planto find a

ning,

and the

sales force,

decentralize the

daily operations of their groups.

breaking up

its

established

and

HP

even reorganized

its

entire

monolithic structure and assigning

salespeople exclusively to individual groups.

new group VPs were all but given complete control of independent enterprises, many the size of major corporations. Already thinking about succession, Bill and Dave had now created an internal training In other words, the

ground

for the future leaders of the

Meanwhile, the

number of

of a

door

was

shift to a

veteran executives to group vice president

for the next generation to

perfect, as a

company.

group organization, and the promotion upward

new cohort

move

into middle

of young managers was

slots,

opened the

management. The timing at that

moment

seasoned

Community and ready to move into for the years that

two decades

213

divisional leadership. This so-called Class of 1957-58,

many were hired, would ultimately lead Hewlett-Packard for

after the

founders retired from daily management of the com-

pany. This group, which included,

among

others,

Tom

Perkins (later one of

Silicon Valley's most important venture

capitalists),

Jim Treybig (founder of

Tandem Computer), and Dean Morton

(eventually

HP

dent) had been part of a conscious effort at

executive vice presi-

the time by

Bill

and Dave

to re-

company management. A decade later, they were ready to lead their own company divisions. One member of this Class of '57-58 had moved up through the ranks of the company more quickly than any of his peers: John Young. Young, a native of Idaho, had grown up in southern Oregon, graduated cruit

young

MBAs and

from Oregon

State,

bring

some new blood

and then joined the

into

air force,

where he worked

as a re-

Young

searcher in the famous rocket sled test program. Leaving the USAF,

earned his

MBA from

Stanford and worked as a

porate finance department.

summer

intern in HP's cor-

A few months later he joined the firm

full-time.

Young's next decade at Hewlett-Packard offers a glimpse of the wideranging and eclectic career development path that junior talent.

Upon

joining

HP

full-time,

Young was

HP

devised for

its

best

transferred to corporate

marketing, and from there was appointed regional sales manager in charge of

HP's

New

York,

New

and Philadelphia

Jersey,

John Minck, who worked with Young tles

at the time,

should really be Regional Sales Clerk.

quota-setting time because, for the next year, they

when

would

sales organizations. Recalled

Our

the [sales]

talk to

"We used to joke that our ti-

lowly status was confirmed at

Rep owners

visited to negotiate

John and me, for a time, then excuse

themselves and go talk directly with Noel Eldred and Dave Packard to set the real sales quotas." 37

Two Young

years

later,

ship with those cision to

project

Ed van Bronkhorst, HP's

to a research project

same

buy out

its

reps.

Young's report was the genesis of HP's ultimate de-

reps. Recalled

was fraught with

sonal friend of Dave and

chief financial officer, assigned

determining the future of the company's relation-

political Bill,

Minck, "As one could imagine, such a

landmines. Each of the owners was a per-

each was fiercely independent, and no one could

be sure whether they would [even] consider getting merged into the big corporation." 38

But Young's plan worked

brilliantly. In

the end, eleven of the thirteen reps

—

Young now had the eye of the two founders and in 1962, when the company formally decentralized, he was appointed marketing manager for the Microwave division, one of the company's four new operat-

joined Hewlett-Packard.

ing divisions. to

Two

years

later,

when

his boss,

Bruce Wholey, was transferred

run the new Waltham medical division, Young was promoted to division

DAVE

BILL &

214

manager

general that

—the

first

of the

new

generation of

HP

managers

to hold

title.

more than

There, he

became

up

lived

to Bill

and Dave's expectations. Indeed, he

who

a corporate superstar. Minck,

reported directly to Young during

this period, recounted:

Dave and

Bill

were "intuitive" managers

common sense and humanity.

HP

in a well-organized

who grew into

greatness

John [by comparison] brought

by sheer

his value to

approach to professional management.

It

was

his

establishment of the Microwave divisions new-product creation process that

made

that division

lion plus in 1969.

grow from about $22 million

The normal growth

for

HP

Test

in 1964 to $75 mil-

&

Measurement

in

those days averaged 15 percent per year, or doubling every 5 years. John

more than

Not

tripled

our

sales

revenues in 5 years. 39

when Hewlett and Packard embarked on the recompany, John Young, alone among his age cohort, was

surprisingly, in 1969,

centralization of the

promoted

to

group vice president

—and was already being spoken of

and Dave's heir apparent. Young himself talent

from the new generation

among

others

—Paul

—and made them

Ely,

set

as Bill

about assembling the brightest

Dick Hackborn, and Ned Barnholt

his lieutenants. This so-called

Microwave

Mafia would ultimately run most of Hewlett-Packard.

The Ultimate Entrepreneurs As the

HP

management moved into position at and Dave in the company inevitably

divisional, then group, layers of

during the 1960s, the role of

changed

Bill

as well.

They were beginning now

to enter uncharted territory.

American business history had taken founding

a

company from

Only

the very

men

in

day of

its

a few

first

of the way through going public, onto the Fortune 500, and then

all

into global competition.

Most entrepreneurs, then and now,

fall

to the

way-

side long before this point, the victim of impatient boards, personality flaws,

or their

The ries

own

unwillingness to change.

history of Silicon Valley

of brilliant entrepreneurs

and the high-tech industry

who founded

is filled

great companies, then

with sto-

one day

found themselves driven out of those firms because the maturing organizations could

no longer deal with

most famous of these

their mercurial, high-risk personalities.

stories belongs to Al Shugart,

who founded

The

the disk

Bill

at nine years

(HEWLETT FAMILY LIBRARY)

Dr.

Albion Hewlett, the distinguished physician (with a touch of whimsy).

(HEWLETT FAMILY LIBRARY)

Lt.

William

U.S.

R.

Hewlett,

Army. (Hewlett

LIBRARY)

Bill

Mt.

Hewitt rappelling on

Owen,

California, 1930.

(COURTESY OF HEWLETT-PACKARD

COMPANY. REPRINTED WITH PERMISSION.)

M

*

A

family

Packard

in

1934, playing

end

for Stanford University.

(COURTESY OF HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

Bill

Hewlett and friend

the only

known image

Bob

Sink

in

a joke photograph. Recently discovered,

of Terman's electronics lab. (Hewlett family library)

it is

Bill

and Flora Hewlett on

their

honeymoon

Grand Tetons. LIBRARY)

Lucille Packard,

leaving Schenectady for California, 1938.

(COURTESY OF HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

in

the

(Hewlett family

The garage

at

367 Addison Avenue, Palo

REPRINTED BY PERMISSION.)

Alto, (courtesy of hewlett-packard company.

Lucille Packard's kitchen oven,

used to bake early HP instrument panels,

1939. (COURTESY OF HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

HP's

first

product, the model

200-A audio

Oscillator, (courtesy of

HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

HP's

first

building, behind

John "Tinker"

Bell's

workshop, (courtesy of hewlett-

PACKARD COMPANY. REPRINTED BY PERMISSION.)

The HP Redwood Building

in 1942. Note the "E" flag for excellence in wartime production, (courtesy of hewlett-packard company reprinted by permission.)

HP's

new corporate headquarters on Page

Mill

Road, 1954. (courtesy of hewlett-

PACKARD COMPANY. REPRINTED BY PERMISSION.)

Hewlett, visiting Packard while on leave, 1944. (courtesy of hewlett-packard company REPRINTED BY PERMISSION.)

Company manufacturing

line in

1946. Ed Porter

is in

the center

left,

(cour-

tesy OF HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

Dave handing out bonus checks in 1947. Left to right: Lucille Packard, Flora Hewlett, Bill, and Dave, (courtesy of hewlett-packard company reprinted PERMISSION.)

by

Bill

and Dave,

late 1940s, (courtesy of hewlett-packard company, reprinted by

PERMISSION.)

Hewlett and Packard with

mentor Professor Fred Terman, 1952. (courtesy of

their

HEWLETT-PACKARD COMPANY. PRINTED BY PERMISSION.)

RE-

Bill

and Dave serving food

at the

1952

HP company

picnic, (courtesy of hewlett-

PACKARD COMPANY. REPRINTED BY PERMISSION.)

1/J

i

pLj*W

jjafrk

y^y

fl^^s

^v^^^^fl ^MNlfl

Dave handing out profit-sharing checks. Christmas, 1954. HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

(courtesy of

Dave Packard's memorial photO. (COURTESY OF HEWLETTPACKARD COMPANY. REPRINTED BY PERMISSION.)

and Dave San Felipe

Bill

at

Ranch, 1957. (COURTESY OF

HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

,..

BRi

PI PS

1

Bill

and

Dave, 1961.

'-

|H9

(COURTESY

OF HEWLETT-

T i

PACKARD COMPANY. REPRINTED BY

7i

HkT'

UK v^H

if*-'

^tLi

^H '

m.

PERMISSION.)

\

K ^1

fl

r mOim Rm^ BjH

>

HLl h| ^

•

^Mf

*

P^H^

Coffee break,

y

B

^^^a

ft

J

^^r

c. 1965. Left to right: Ralph Lee, Jack Petrak, Packard, Bruce Wholey, Jack Beckett, (courtesy of hewlett-packard company reprinted by permission.)

U.S.

Deputy Secretary

of Defense, David Packard, 1969. (courtesy of hewlett-

PACKARD COMPANY. REPRINTED BY PERMISSION.)

The HP-35 pocket scientific calculator,

one of the great tech inventions. (COURTESY OF HEWLETT-

PACKARD COMPANY. REPRINTED BY PERMISSION.)

Rancher Dave,

c.

1980.

(COURTESY OF HEWLETT-PACKARD

COMPANY. REPRINTED BY PERMISSION.)

Bill and Dave with John Young, 1982.

(COURTESY OF HEWLETT-PACKARD

COMPANY. REPRINTED BY PERMISSION.)

Bill

and Dave with new chairman/C.E.O. Lew

HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

Dave Packard at the Monterey Bay Aquarium Research Institute, 1994. (COURTESY OF HEWLETT-PACKARD COMPANY. REPRINTED BY PERMISSION.)

Piatt, 1993. (courtesy of

Community drive its

215

company Shugart Associates, which bore

board of

directors.

his

name

— only

to

be

fired

by

For years he had to drive past that company's sign in

Santa Clara, knowing that

if

he entered the lobby he'd be barred entry by a

guard wearing a Shugart badge. Eventually Shugart founded another disk drive

company, Seagate Technologies, in the mountains above Silicon

growing the firm to more than $1 kicked out of that

company as

billion in

everyone

who works

else

in

which they report

who

a vision of

sonal

Though

entre-

—

that

they see their se-

is,

no one but themselves

to

is

a

monomania

to

to entrepreneurs: they have

they want to be and what they want to create

—and they

do almost anything, including destroying themselves and

lives,

—

with them or for them, they are perceived as often

dangerously adventurous. There

willing to

to be

well.

preneurs perversely see themselves as risk-averse

one

— only

annual revenues

Great entrepreneurship requires a very special personality.

curest career path as

Valley,

are

their per-

to get there.

All of this

makes entrepreneurs

foolish, the greatest creators in tive people,

magnanimous and

inventions, provide

alternately

charming and rude, heroic and

our culture but also among the most destrucvicious. Because they devise

most of the new jobs, and

create

much

most of the

of the

great

new wealth,

among the supreme phenomena of the modern world. And, States, more than any other society, supports and honors the entrepreneur, it has become the most wealthy and adaptive economy in human history. But entrepreneurs also embody the atavistic side of modern life. To take entrepreneurs are

because the United

the risks they do, and to risk the humiliation of public failure, losing the

wealth of others, and wasting people's careers (including their own), entre-

preneurs also need to be utterly self-absorbed

ous

cases,

—

to the point, in

some

notori-

of near-solipsism. For the entrepreneur engaged in the pursuit of a

new product

in a

new company,

ideas, people,

and money

are merely tools to

be used and tossed away as needed. Great entrepreneurs turn simple business into a crusade, in their

wake

and with

— everyone knowing

does, they will have Bill

their guts, charisma,

had one of the

and obsession draw others along

that even

if it

ends up badly,

all

time.

it

often

greatest adventures of their lives.

Hewlett and Dave Packard are justly recognized

entrepreneurs of

as

among

the greatest

And, with equal justice, they are celebrated

for find-

way to be both successful entrepreneurs and enlightened businessmen at the same time. History has shown that most employee- centered companies become good employers after they get through the hard slog of getting to the top, when they are rich and established and trying to keep employees and ing a

hold their market position, rather than fighting for survival.

when they are young and

ruthless

and

BILL &

216

A

half century

later, it

DAVE

remains mind-boggling that Hewlett and Packard

implemented most of the important employee innovations of the age during a period

when

the

company was

still

young, small, and

at serious

competitive

risk.

But in the glow that surrounds often forgotten

They

neurs.

that Bill

is

are

honored

and Packard were

made

lence. Bill

remarkable accomplishment, what

and Dave were

beneath

still,

it all,

driven entrepre-

no decision they

HP was done purely out of decency, goodwill, or benevo-

and Dave, beyond everything, were tough, unsentimental men. They

were, as one early employee

at heart." 40

would describe them, "tigers

This was especially true after Hewlett-Packard went public:

were rock-hard businessmen; they knew

their first

proven to reduce employee productivity, it

Bill

Bill

and Dave

duty was to the share-

holders of the company. Thus, you can be certain that

doned

is

for their sensitive leadership, but as even Hewlett

pains to remind others in later years,

at

as executives at

this

if,

say,

flex-time

had

and Dave would have aban-

in a heartbeat.

What makes

men

the two

they tried flex-time (and they instituted the

HP

all

singular in the annals of entrepreneurs

of the other innovations) at

all.

Way, a business philosophy particularly

and Dave

built their entire careers

on

is

that

all,

that

antithetical

known

to the entrepreneurial personality. Entrepreneurs also aren't

trusting souls; yet Bill

Most of

for being

trusting others.

This suggests that Hewlett and Packard, despite their conservative and traditional

neurs

who

demeanor compared

some of the wilder

to

followed, were in fact

among

Silicon Valley entrepre-

modern

the greatest risk-takers in

business history. Having determined that cultural innovations were as important to the competitive success of their fledgling

innovations, they unflinchingly implemented

company

some of

the

as technological

most

radical

em-

ployee programs ever devised. Having determined that trust was the single

most powerful fate

tool in their business arsenal, they willingly turned over the

of their enterprise, and thus their

own

reputations, to others. This was

risk-taking of the highest possible order.*

That may explain why they did

Dave managed

it,

but

it still

doesn't explain

to adopt policies so contrary to the

how

normal business

Bill

and

practices

of entrepreneurs.

One answer, the one then and now,

is

generally accepted by

that Hewlett

and Packard were

older, they arrived at entrepreneuring

came

after.

The two men seemed

the result of having

down

different.

Being a generation

a different path

from those who

to subscribe to that explanation as well, con-

stantly explaining their contrary

company, the resistance

most observers of the company

approach

—the family atmosphere of the on debt — being

to layoffs, the unwillingness to take

grown up during the Great Depression.

as

Community There

certainly

is

some

217

truth to that. Like that harsh era, Hewlett-Packard

Co. seemed to encase conservative values within the most liberal practices, just as the

two

men managed to be staunch political conservatives while at the

same time the most

radical of corporate revolutionaries.

But a strong case can made for the reverse argument, which

that rather

is

than being different from other entrepreneurs, they were in fact just entrepreneurs

men

like

other

— only more

so. That they were, in fact, wfrer-entrepreneurs,

on the

and so

so focused

success of their vision,

that they were willing even to sublimate their

own

fiercely competitive,

egos in pursuit of their

goals.

A glimpse into this other side of Bill and Dave can be found in a memoir, "Three Generations," by William Jarvis. Jarvis was HP employee

entitled

number

300, hired in the early 1950s directly

More

proval of Dave Packard.

by Noel Eldred with the ap-

importantly, Jarvis later

left

HP to embark on a

own companies (including Wiltron and many of the men and women who watched

very successful career of building his the Jarvis Winery). Thus, unlike

Hewlett and Packard up close and on a daily basis, Jarvis saw them through the eyes of a fellow entrepreneur.

mous

respect,

is

also

in enoris

a

men.

Here

is Jarvis's

Pete Lacy

story about Bill Hewlett, capturing the man's voice in a

and

I

read a technical paper from an English engineer, a fellow

Harwell (the English atomic energy establishment)

was traveling

by Harwell and

way

did:

primitive sampling instrument that worked. As luck lett

men

unsparing about their ferociousness. The result

no public pronouncement ever

at

he holds the two

somewhat disorienting, break from the usual mythologizing of

refreshing, if

the two

he

And though

in

Europe

at that time.

see the instrument.

I

He

called

who had

would have

him and

did and seeing

bought the product idea and from then on

I

had top

told is

built a

it,

him

Hew-

to stop

believing; he

priority for

my new

product. I

got the team assigned and once

put together, plications

it

up

as

it

to Hewlett

and

is

got a

let

first

prototype instrument

him know

that for certain ap-

give us 1,000 times higher frequency coverage than

beside himself. Tektronix was our big competitor at

and Hewlett never shrank from competition. Hewlett's eyes

he chuckled, "Tektronix will be

she'll get

This

showed

He was

Tektronix. that time

I

would

we

chased and

a long

as benevolent

if

she stands

still

like a she-bitch in heat. If she'll get

far closer to the

she runs

screwed." 41

ways from the smiling, avuncular image of

teddy bear, and

lit

Bill

Hewlett

kind of ruthless drive to win

DAVE

BILL &

218

normally associated with the

likes

of

Now, here

Bill Gates.

Jarvis's story

is

about David Packard:

Hewlett-Packard's feeling about competitors further

when

I left

the

company

to start

my own

up

including a generous notice. But after

erly,

good wishes from everyone, Packard and

for us or he's against us,

expected a

I

little

him

a small fortune for for the

most

more

it's

I

came

to the fore

did everything prop-

was out the door with

I

all

casually passed the word: Either he's

obvious he's not for

neutrality

in the

firm.

us.

on Packard's part

since

had made

I

marketing area and laid the groundwork

successful product line [high-frequency counters] he ever

had. Over the years, as both our companies progressed, Packard never forgot that

I

was no longer

gressive competitor,

may

This

for

him and he played

the role of a

most

ag-

no holds barred. 42

not jibe with the standard image of David Packard the philan-

thropist-patrician, but

it

Dave Packard the

certainly does with

athlete. In

Packard's world, whether at Stanford or HP, you shook hands before the

game. Then, when the whistle blew, you pounded your competitor into the

mud

—then shook hands again when the clock ran

William

The day he

Jarvis, as

quit he

long as he worked

became

HP, was a

member

of the family.

and

his years with Hewlett-Packard

Jarvis doesn't

mention, though he no doubt

a competitor

were instantly forgotten. What

at

out.

knew, was that were he ever to decide to come back to HP, he would be wel-

comed back stated

on

as a prodigal son, his years with the

about his treatment

after

departing from

HP

with the image of Hewlett-Packard as the company that

fit

ing the

rein-

his pension.

Jarvis's story

quite

company immediately

and Dave

Bill

certainly helps explain

era) never publicly

how a

little

spoke

California

ill

a whirlwind:

on Hewlett-Packard of the

HP

would out-innovate you,

other, related products, outservice you, defeat in a living

legend or two to close the deal

(at least

dur-

of the competition. But

it

company could come out of noand beat them

where, take on some of the biggest companies of the age soundly. Taking

also doesn't

Bill

—

and Dave era was

outsell you, outflank

you with superior

—and,

to reap

you with

quality, bring

if all else failed,

even out-

price you.

IBM

survived this onslaught by being bigger, Tektronix (for a while) by

being even more innovative and staying focused, and

market

first

decades or

and

setting the standard.

But they

more looking over their shoulders

all

at

DEC by getting into the

ran their businesses for two

Hewlett-Packard. As for most

*

Community

219

numbered

other competitors, their days were

the

moment HP

entered the

market.

Raising the Bar But that was

abandon

and Dave

Bill

as entrepreneurs, a role they increasingly

become one of

their

more

to

matured and, through the various

in the 1960s as Hewlett-Packard

reorganizations, gained ever

had

layers of

management. Now,

most admired moves, they had

in

what has

to reinvent themselves as

professional business executives. It is

important to note here that most true entrepreneurs simply cant turn

themselves into businesspeople. The

years of high-tech history have

last fifty

underscored what psychologists have discovered during the same period in their research,

which

is

that entrepreneurs

and CEOs of established compa-

nies not only have different personalities, they almost have opposite personality traits.

Whereas entrepreneurial

personalities correlate closest to Peace

workers, bounty hunters, and other individuals in a

dangerous world, constructing their

rules as they go, the typical corporate

own

who

Corps

see themselves as alone

and making

reality

their

own

CEO is a social creature, working within

the confines of rules and regulations, like a general, marshaling troops

sources to conquer and hold territory,

making incremental gains

secured over time, and taking controlled risks that

still

and

re-

that can be

preserve the health and

integrity of the enterprise. It

is

not surprising, then, that

eventually find themselves that there

is

who has no new

successful entrepreneur- founders

unwanted strangers

in their

own

companies, or

a particular breed of individual called a "serial entrepreneur"

interest in ever

creation, but immediately start a

many

one.

One

being part of an established company of their

jumps ship from

own

their last successful start-up to

of the most famous of these

serial

entrepreneurs, Jean

Hoerni, one of the original Shockley "Traitorous Eight," started at least a

dozen companies

—and never stayed around

to

be part of their eventual suc-

cess or failure.

So

difficult is this psychological transition

person that

when

Bill

from entrepreneur

and Dave embarked on the process

you could count the number of comparable successes

in

in the

all

to business-

mid-1960s,

of American in-

dustry on a couple of hands: Henry Ford, David Sarnoff, Louis B. Mayer, Walt Disney, and a handful of others.

Hundreds of

others, including even the

men

— 220

DAVE

BILL &

who had taught the world of business to and Alexander

Litton

The

had

Poniatoff,

Hewlett and Packard, such as Charlie

failed.

number of tech entrepreneurs manage to transform themselves into professional businessmen and -women Noyce and Moore at Intel, Larry Ellison at Oracle, Scott McNeely at Sun, Bill Gates, Steve Jobs, Michael Dell, Jeff Bezos at Amazon. But with the exception, years that followed

would

see a greater

perhaps, of Gates and Dell, most of these individuals remained essentially entrepreneurs in mufti, their mercurial (and, in

unchanged, but

alities

now wrapped in

many cases,

layers of

unpleasant) person-

PR, professional management

teams, and, often, partnered with a traditional executive

who knew how

to

game (as with Ellison and Ray Lang, Noyce and Moore Andy Grove, and Jobs with Apple chairman Mike Markkula). By comparison, Bill Hewlett and Dave Packard seemed to make the transition from entrepreneur to executive almost effortlessly. Indeed, the two men

play the corporate

with

seemed

do

to

it

Valley to

so easily that they set the bar higher for every successful tech

who

entrepreneur

meant not

manage

it

followed

just

—henceforth,

real success in places like Silicon

founding a company and getting

into middle age.

It

rich,

now meant becoming

but learning

how

a business titan, not

merely an entrepreneurial success. Moreover, Hewlett and Packard didn't end up merely as entrepreneurs pretending to be real businesspeople, depending upon a small army of professionals

behind the scenes to do the

behind their thrones and you

will

real

work. Look for a hidden power player

be disappointed.

Bill

and Dave remained,

without a serious hitch or major misstep, the chief executives of their com-

pany from the Addison garage the two of

them

to a

sage so smoothly that

to $3 billion in

annual revenues, and from just

company of 60,000 employees. They managed it

was hard even

for the people

remember them any other way than they were

who worked

at the end,

this pas-

for

them

to

and the two men

transformed themselves so completely that in the process they also positioned themselves for the next career step

—the one

that

no one

else

has been able to

follow.

How

Hewlett and Packard did

scribed:

gating

it

was

more and more of

the chain of

this at

Hewlett-Packard has already been de-

a decade-long process, in accordance with the

command

HP Way, of dele-

their traditional decision-making

—while

at the

same time extending

down through this

chain

through divisional decentralization, then group recentralization. Before process was over,

Bill

and Dave had probably given up

as

much

first

this

as 80 percent

of their daily hands-on control of the company.

But what hasn't yet been explained

is

how the two men brilliantly replaced

Community

extraordinarily sophisticated kind of

management with an

this operational

221

symbolic management.

The company had grown too big bonus checks lab with

every

HP

and

engineers,

both

for

men

hang out every day

cook a steak

to

for each

company picnic. The two founders now found themselves

a different approach,

within the

new

one that created

reality

a

hand out

for Packard to personally

to every employee, for Hewlett to

in every

HPer

at

forced to find

simulacrum of the old personal touch

of a global corporation.

The solution they found was

a novel one: Bill

and Dave decided

to play

themselves.

Chief executives are always actors. They need to act confident, competent,

and optimistic

in even the worst of times. In fact, this

is

what often

trips

up

entrepreneurs turned CEOs: they are too honest in their statements, too con-

and they

tent in their eccentricities,

company, but are for themselves,

now

its

no longer personify the

measured, public voice. Entrepreneurs speak only

and they tend

to say exactly

company, and sublimate

for the

forget that they

own

their

what they

think.

CEOs

speak

opinions to the needs of the

company. Hewlett and Packard, as the founders and leaders of a major public corporation, were already accustomed to this side of their jobs

numerous times they were quoted mittees,

in the press, asked to

and charmed stock market

analysts, they

sit

—and, given the

on industry com-

were good

at

it.

But begin-

ning in the mid-1960s, as the nature of their jobs changed, the two their

performances to another

executives but with

level,

many famous

What enabled them

to

do

it

men

took

one they shared with few other corporate

leaders.

were those two seemingly contradictory sides

of their entrepreneurial personalities. Being that they were unlike most entrepreneurs, the personas Hewlett

men

themselves

stories

—

just

and Packard created were not unlike the

expanded, and with a conscious effort to create the

and assemble the legends

that

would survive them. And being

ultra-

entrepreneurs, they were willing to live within the straitjackets of these myths, to the point of sublimating their true selves, because Bill roles they after

and Dave knew the

were playing would help assure the survival and success of

HP long

they were gone.*

The notion of fied yet

Bill

Hewlett and Dave Packard consciously playing simpli-

mythical versions of themselves, beginning in the mid-1960s and con-

tinuing for the rest of their

two founders, in

lives,

their goodness,

mility that others

happened

doesn't

fit

with the standard

performing

to notice

HP

story of the

acts of honor, decency,

and passed down through the com-

pany's history in a great oral tradition. In truth,

many of these

and written down soon

not by others then by

after

and hu-

they occurred,

if

acts

were noted Bill

and

DAVE

BILL &

222

Dave themselves

They were releases

ployee

in speeches, articles, and, in Packard's case,

new-employee orientation

in the

who began

this

HP

and used by

also quickly standardized

and

HP

Way.

public relations in press

—where even the

them and was,

chapter heard

The

radical

em-

against his will, affected

by them. This

not to suggest anything cynical or fraudulent in Hewlett's and

is

Nobody could behave

Packard's actions during these years. for so

many

years

if this

persona wasn't in

person underneath. There

is

no moment

in such a

manner

an amplification of the

fact

in the Bill

real

and Dave story where the

angel masks are stripped away to reveal devils beneath;

no

cynical

PR ploy like

John D. Rockefeller handing out dimes to schoolchildren.

On the

and Dave's

contrary, the reason Bill

to corporate leaders to statesmen

so seamless

is

adopted were so congruent to themselves. After ating legends almost

transition is

all,

from entrepreneurs

that the characters they

the two

men had been cre-

from the day they opened the garage door. The

ence was that "Bill" and "Dave" were

now the vehicles through which

Dave

what they

told simple stories to convey

people throughout the world, both then and

That

Bill

biographies, but

certainly

it

fits

own

with

shrewdness, and competitiveness of

why HP seems

to have

more

and

really believed to millions

still

today.

of

5*"

and Dave might have been consummate corporate

consciously working through their

differ-

Bill

actors self-

may grate with the official what we know about the intelligence, and it helps explain the two men scripts

—

edifying tales about

its

founders than any other

company. If Bill

and Dave performed

all

of these acts spontaneously, and out of

natural decency, they are great men. If they did to creating enduring moral lessons for

men

HP

them

consciously, with an eye

employees, they are not only great

but geniuses.

Family Legends There are scores of

seem

to

of the

fall

Bill

and Dave legends

—though,

tellingly,

they almost

all

into a handful of categories that correspond with the core tenets

HP Way. Almost all seem to deal with earning a profit, taking risks with

innovation, personal humility, a family of equals, and trust.

The reader has already encountered clude, in chronological order, the

the tenacity to

fail

a

number of

these legends.

humble garage and

numerous times before discovering

They

in-

Lucile Packard's stove,

the right product, the

dangers in the arbitrary pricing of the 200A, the miraculous

sale to Disney,

Community

223

the crucial loan from the local banker, the support for the employee with TB,

number of smaller

Hewlett breaking open the locked storeroom, and any that captured something essential about

commitment

their

to the essential

Bill

and Dave,

themes of the

their

acts

humanity and

HP Way.

This corpus of stories served as the counterpoint to the rigorous and careconstructed

fully

HP

of

list

Corporate Objectives. The stories were those

Objectives played out in real

life.

They were

moral lessons disguised

also

as

company anecdote. And, though unplanned at this early stage, they were also and, a way to make the founders present and vivid when they weren't there ultimately, when they were gone from this world. Future HP employees would always have before them the "best of Bill and Dave," as it were, while Hewlett

—

and Packard's successors (and any other business executive) had ways

hand

at

women

—

if

for

how

become

to

a template al-

and even greater men and

great executives

they had the courage.

Though these larger implications were unknown to Hewlett and Packard when they performed these acts in the 1940s and 1950s, they certainly understood them by the end of that era. They only had to read the newspapers and

magazine

stories

about the company, which inevitably recycled a half dozen

of the legends.

Thus, by the time of the

and away from the

Sonoma

meeting,

when

daily operations of the firm, there

the two is

men moved up

the sense that Bill and

Dave had

a kind of epiphany, a realization that these older stories,

new ones

they could create during the rest of their time with the company,

might well be

their

most enduring contribution

they could no longer deal directly with every

company, they could

giant

ployees

on how

to

This ics

these lessons to

is

to Hewlett-Packard; that if

perform symbolic

still

their

now

acts to instruct their

em-

problem faced by

behave when the two of them weren't there. They would

teach by example and, as the

would use

little

HP Way

make

dictated, trust that their

to sovereigns

employees

the right decisions.

leadership of the highest order, a kind of

more common

and any

and

field

management by

aesthet-

marshals than corporate CEOs.

And

a dangerous tightrope to walk, because the message, once sent, can be

it is

construed in unpredictable ways. For that reason, the lessons must not only

be carefully designed, but edited well in their that the right conclusion

A staff,

lot

who

of this task

is

fell

few

retellings to

make

sure

drawn.

PR director Dave Kirby and his of many of these stories for employees

upon people

crafted the received versions

and then made them

first

like

available to the media. Kirby, even after his retirement,

continued sculpting the stories while working with Dave Packard on Packard's

The HP Way. Several of the

best-known

Bill

and Dave

stories of this

second era have

224

DAVE

BILL &

already been discussed. For example, there sion to pull

independent

its

and replacing them

And

thing to do.

—

is

by

Bill

dream

In both cases, Hewlett

buy

for a

to be sending messages about

honoring even unspoken contracts, and

good

fair price to retain a

HP Associates

figure.

and Packard seemed

integrity in business dealings, about

rather than firing

Hewlett as being the right

Packard's stunning offer to

price greater than that team's

about paying a

company

sales agents into the

a decision justified

there

John Minck's story of HP's deci-

is

relationship, rather than

gouging the

other party.

Here

a story,

is

from the more

more

skeptical William Jarvis, that teaches a

pragmatic lesson about profits and pricing.

While

marketing

in

at

HP made a study (after hours on my own time) I

of

the profitability and competitive position of [the company's] major products.

I

put together a

of about ten major instruments whose prices

list

could easily be raised about 10 percent without affecting their competitive position,

and

made

I

a second

list

of a half dozen instruments where

the profit was excessive, 30 or 40 percent.

I

those products should be

felt

reduced in price before they attracted competition.

mation through

my boss, Noel Eldred, to

After a couple

ing he approved

months of thinking about

all

of the

not to lower the prices as

was

right;

we never

I

passed on this infor-

Dave Packard.

recommended

it

he

finally

came back

price increases, but for

recommended on

the second

list.

say-

now

That old fox

did attract any competition on those overpriced

[instruments]. 43

This lesson, which corresponds to the

minder that Hewlett-Packard was profit

on

would

bear.

its

products

at the

There was more than a

in the 1970s)

about

garage, Hewlett

HP

Objective of

Profit, is a re-

making the

best possible

high end, meant whatever the market

little

truth to that joke

(first

made popular

HP standing for "highest priced."

Just the opposite

was true

at the

and Packard had

some way enhanced mental

—which,

first

in the business of

low end. As already seen with the Addison

little

the future. That's

nostalgia about the past unless

why

stories about the retirement of the

product, in the 1950s: once the product line, Bill

demand

it is

HP

fell off,

and Dave jettisoned

it

telling that there are

no

it

in

senti-

200A, the company's founding

and

all

profits

were wrung out of

with barely a glance back.

A

gen-

Community eration

the

HP-35

his

own

company would do

the

later,

calculator.

Had

the

225

same with

corporate publicist

initiative, a press release elegy

J.

most famous product,

its

Peter Nelson not written,

of the device,

its

on

passing would have

gone unremarked.*

In

Defiance

The most famous Packard defiance."

story of the era deals with the so-called "medal of

Chuck House, who would spend

nearly thirty years at HP, was at

the time a product engineer at HP's Loveland division. There, in his words, "I built a large screen oscilloscope that could

bosses weren't

all

that wild about

it,

be used as a computer display.

but they

let

me show it to Dave and

My

Bill."

The two founders weren't impressed.

my boss, 'When I come back next year I

Recalled House, "Dave told

want

to see this [product] in the

lab.'

But House believed in his new oscilloscope ing,

he continued to perfect

skunk work cation,

to finish a

it,

—

so, despite

among

orders.

House

Packard's warn-

turning the project into an unsanctioned

working prototype.

When he went to

he took a prototype of the monitor with him

interest

don't

"

— and met with

potential customers. That convinced

R&D

talked the division

manager

him

on

California

va-

universal

to ignore Packard's

into rushing the

monitor

into production.

Then

the day of reckoning arrived:

When

[Dave]

came back

was incensed. He

said, "I

was

a year later, the product

thought

I

said to

kill this

[Instead],

and

In

I

we

forecast

was

He

thing."

And I said, "No sir. What you said was that you the lab. And it's not. It's in production." The market

in production.

didn't

want

to see

it

in

for 31 of these things [to be sold] over time.

sold 17,000 of them.

Most importantly,

to see Neil Armstrong's foot hit the

it

was used

for

you

moon. 44

Chuck House's renegade monitor brought $35 million in new revethe company. House recalled, "I wasn't trying to be defiant or ob-

all,

nues to

streperous.

might cost

I

really just

wanted

a success for HP.

It

never occurred to

me that it

me my job." 45

In this case, Packard's business

bad manager might have

fired

judgment had proven completely wrong. A

House and

rewritten official corporate history

DAVE

BILL &

226 to take credit for being right

warded House, even

as

all

along.

A good manager would have quietly re-

he was being punished for insubordination, and then

buried the real story as a threat to the credibility of the CEO. Packard, by comparison, called a departmental meeting a couple of years later

and very publicly awarded House with

a

newly created medal for "ex-

traordinary contempt and defiance beyond the normal duty."

House would go on

to

become

a senior

of engineering

call

HP executive.*

The Hewlett Way For his part, as he began to remove himself from the day-to-day

HP,

Hewlett began to experiment with a series of

Bill

activities

new programs and

of

tech-

niques to keep himself in touch with the work being done in the trenches of the company.

One

technique, as described by Jerry Porras, Stanford professor and au-

thor of the classic book Built

to

Last (which discussed HP,

among

other great

companies), was that "Bill had a great reputation for walking into a junior engineer's office, putting his feet

doing. Tell

me what we

up on the desk and

should be doing.'

saying, 'Tell

me what you're

" 46

Hewlett expected the same curiosity from his lieutenants, the senior vice presidents of HP.

One way he

enforced this was the creation of what he called

"communications luncheons." Senior regularly visit

group of the

company

fifteen or

names of

HP executives were not only expected to

divisions, but while there ask to have lunch with a

twenty employees.

No

supervisors were allowed. Further,

the luncheon attendees were publicly listed so that other

employees could contact them and pass on their questions or complaints. Hewlett described the program in 1982, after several thousand HPers had participated in

it:

The format riers,

is

very simple. After light conversation to break

down

the bar-

usually an employee will ask a question about something in the

company

that he does not understand or with

This provides an opportunity to discuss

which he

company

is

unhappy.

policy or

company

problems.

Sometimes these items ten

are trivial,

down, sometimes the problems

sometimes the "word" has not gotare strictly personal

and must be

treated with great care so as not to interfere with the supervisory process.

Sometimes you detect

a pattern of

problems

—

say, for

example, in-

adequate supervisory training. Such problems can be dealt with on a

Community broad company-wide about

how

the

basis.

company

And

in

is

any event you always learn more

actually operates. Equally important, employees

have a chance to hear firsthand what

what management

227

happening

is

In practice, these luncheons usually began formal,

Hewlett noted, someone would

Then, as the

ice.

Then

the floodgates

realized that the

in the

company and

trying to do. 47

would open

VP was much more

and somewhat

finally ask the

—

especially

strained.

question that broke

when

the employees

nervous than they were. Typically, the

luncheons ended not when the HPers ran out of questions (they almost never did), but

that he

when

the exhausted executive looked at his watch and

had needed

to get

back to the

announced

office.*

Note Hewlett's comment about the "word" not getting down from corporate to individual

employees

in the divisions. This

would become an obses-

sion with Bill in the years to come. As he phrased entitled

"The

Human

The people

at the

the world of

Side of

it

in

an essay he wrote

Management":

top of an organization

how they want the

may

have the best intentions in

organization to be run. But there are a lot

of layers between the top and the bottom and, in transmitting them from layer to layer, It

sometimes ideas inadvertently become distorted.

always amazes

much some such as

this

me

at

our communications lunches to find out

how

concepts had changed in the transmission process. Feedback is

necessary

if

you wish

to determine

what

is

really

happening

in the organization. 48

Hence, not only the communications luncheons were created, but also the

broad range of employee communications programs newsletters to

company magazines (Measure

at

HP, from division

for business,

HP

Journal for

technology), and the founding in the early 1970s of a television studio near

company headquarters

to

produce

HP training and news videos.

But even that wasn't enough:

Bill

Hewlett needed to

know

that the

messages were getting through on a regular basis to every office in his vast

company. So he hired a major polling company, the International Survey Research Corporation, to regularly poll HP's U.S. employees

to, in

Hewlett's

words:

1.

Give employees a chance to express opinions about their workplace;

2.

Provide the ployees;

and

company with an opportunity to respond to these concerns

to listen to concerns of the

and

ideas;

em-

3.

DAVE

BILL &

228

Compare HP with other

large

companies with regard

to the attitudes of

employees; and

4. Set a

the

standard, or benchmark, for future surveys, possibly in other parts of

HP world. 49

Other large companies were

experimenting with

also

kind of em-

this

ployee surveying, but few as assiduously, and none in high technology. But the crucial difference

was what Hewlett-Packard did with the

weren't kept as privileged information by senior

how

better to deal with the rank

and

lished

distributed,

were no

On

file.

good news and bad,

another reminder to everyone that

and

secrets: family

at

management

They

results.

to determine

the contrary: they were pub-

to every employee.

HP

Hewlett-Packard that

was

was yet

It

family,

and

problems were brought out into the open to be

solved.

Truth be told, there were very few negative results from the surveys during this era.

Twenty years of continuous

success, a strong stock price, perpetual

expansion opening endless doors to promotion, and, no doubt, a of the Hawthorne effect

—

form

No doubt

—

all

management attencompany of happy employees.

converged to make a

those results were gratifying to

was congruence between the

Bill

attitudes of the

and what senior management assumed those

a lot of

Hewlett; but his real interest

employees out in the divisions, attitudes to be. For Hewlett,

wasn't enough that information be effectively conveyed

what he wanted was

ganization, nor even knowledge; ing

moving

mutual

in every direction within the

trust at the heart of the

House and

amount

the psychological discovery that employee morale

and productivity sometimes goes up merely from tion in any

fair

HP Way be

the large-screen oscilloscope

—

a

down through

common

it

the or-

understand-

company. Only then could the converted

—

as

it

had with Chuck

into independent, even maverick,

action in support of the company's larger objectives.* It

at

was

in pursuit of that larger goal that Hewlett instituted

HP: the executive

were

visiting

some of his

who

build-off.

On

one of the divisions

vice presidents

a regular basis, usually for

its

when

another Bill

ritual

and Dave

annual review, Hewlett would gather

and other company veterans and hold

a race to see

could assemble one of that division's newest products.*

These were

relatively

rowdy

affairs,

old engineers proving they

the chops, ridiculing each other, and giving

But for

all

his VPs.

It

of the fun, Hewlett was making a serious point

was that no matter how high up you went

understand

work was

no quarter even

how

like for

in

still

had

to the founders.

— one not

HP, you

still

lost

on

needed to

the company's products worked, to appreciate what daily

your lowest-level subordinates on the manufacturing

line,

— Community and be reminded

229

one of those employees could do

that every

this job better

than you.

Bottom Up Bill

how

Hewlett wasn't only obsessed with

down through

the organization.

understanding was conveyed

With each year he seemed

to

become more

and more focused on how new ideas were nurtured upward through the company. It

was more than

and picking and

values).

how

engineer's desk

Management by Walking Around to company ob-

and Dave inevitably hewed

Bill

By the end of the

technique for dealing with

up on some young

feet

his brain (itself a variant of

once again showing jectives

your

just putting

new

ideas.

It

sixties, Bill

had developed

a specific

was an outgrowth of his long-standing

Open Door Policy, and was designed to provide the maximum support for company innovators, while at the same time enforcing a necessary discipline to the

development process.

Even Dave Packard found Hewlett's technique so mirable, that he chose to describe

How

interesting,

Many HP managers

.

.

disappointment?

these situations.

Upon

first

with unbridled enthusiasm for a called "enthusiasm."

He would

and appreciation

retain

over the years have expressed admiration for the

way Bill Hewlett handled "hat-wearing process."

.

and ad-

memoirs:

do managers provide encouragement and help the inventor

enthusiasm in the face of

ate

in his

it

One manager has

called

it Bill's

being approached by a creative inventor

new

listen,

idea, Bill

immediately put on a hat

express excitement where appropri-

in general, while asking a

few rather general and not

too pointed questions.

A

few days

later,

he would get back to the inventor wearing a hat

called "inquisition." This

ough probing of the

was the time

idea, lots

for very pointed questions, a thor-

of give-and-take. Without a

final decision,

the session was adjourned.

Shortly thereafter,

Bill

would put on

his "decision" hat

and meet once

again with the inventor. With appropriate logic and sensitivity, judgment

was rendered and

a decision

made about

the idea. This process provided

the inventor with a sense of satisfaction, even against the project

—

ued enthusiasm and

a vitally important creativity. 50 *

when

outcome

for

the decision went

engendering contin-

230

DAVE

BILL &

The

single greatest threat to established high-tech corporations

they lose the innovativeness that

Through

a fatal

combination of

made them

stifling

successful in the

bureaucracy and

first place.

choked

rules,

that

is

lines

of

communications, nostalgia for the products that built the company, and

risk

aversion to cannibalizing existing product lines to support unproven

new

ones, established companies tend to resist

quo

—

right

up

younger and brink of

moment when

to the

less risk-averse

new

ideas to preserve the status

new

a radically

innovation from a

competitor pushes the older company to the

disaster.

This "innovator's dilemma" of staying competitive in a disruptive market

—most famously described the business —haunts every high-technology CEO. Few way

even as one's company matures best-seller of that

name

in

find a

out of this trap of success, hence the high turnover

companies year

Hewlett-Packard did escape Bill

among leading electronics

after year.

and Dave, and

for a

this trap, at least

number of years

largely be given to Bill Hewlett's

during the stewardship of

afterwards

—and

dealing with the innova-

fact,

tor's

identified,

it

and three decades

was named.

Once

again, this

structures

—and

stories, subtle

is

an example of the two founders building upon

and personality

natural tendencies

traits

to create larger,

their

company-wide

then, in the sixties, institutionalizing these structures through

manipulation, and carefully crafted symbolic gestures.

In this case, the

two

traits

were Packard's general indifference to

ment, nostalgia, and worship of the

past,

abandon products and product

lines,

the company's past greatness, the

this attitude

no matter how

moment

are

HP

to

historic or linked with

of the Addison garage

profitability. Packard's public indifference to the fate

why

enabled

they dropped below sufficient

became the defining story/myth. The message was: of the 200A and the garage,

senti-

and Hewlett's bottomless curiosity

about new technology. In the case of the former,

fate

may

growing emphasis on the flow of communi-

company in the 1960s. He was, in dilemma a quarter century before it was

cations at the

before

credit for that

if

you clinging

I

don't care about the

to a five-year-old oscil-

loscope design? Dave Packard was practicing "creative destruction" at

HP long

before the term was devised.

As

come

new technology led him to bemajor new product development at HP

for Hewlett, as seen, his curiosity

personally involved in every

about

(from the early instruments to the desktop calculator

come, the pocket calculator), always careful goals,

and provide

to

nudge

—and,

in the years to

projects along, establish

a reality check, yet never intrude into the actual creative

process.

This, in turn, as layers of

management began

to intercede

between him

Community and HP's

R&D

labs, led

231

Hewlett to make those regular drop-in

visits to

pick

the brains of young engineers, as well as to institute the executive build-offs to

make

sure both he

and

his lieutenants

were always up to

date.

This focus on communication culminated in Hewlett's "hat-wearing process."

Where

CEOs

a few other tech

of the era were consciously trying to

nurture innovation in their maturing companies, the

first

Bill

Hewlett

and perfected over

to formalize the technique. His process, tested

years with scores of

young

by which he could

inventors, served as a template

assure that his engineers could get a

fast, fair,

Hewlett could circumvent the layers of

filters

The "hat-wearing process" would have

may have been

and complete hearing

—and

Bill

between them. its

moment

defining

a decade

hence when Steve Wozniak would bring the personal computer to Hewlett.

was one of the most extraordinary meetings the

most

and one of the

controversial,

least

in Silicon Valley history,

one of

understood.

But Hewlett didn't stop with communication. Inevitably, his work with of these engineers,

among them

(like

all,

electronics.

No doubt

creativity

had, against what seemed like

enjoyed one of the most celebrated

all

Osborne) the most talented inven-

ponder the nature of

tors of their generation, led Bill to

wasn't surprising: he, after

Tom

It

moments of creativity in

all

itself.

This

odds, himself

the early years of

he often wondered just what happened to him that day

in Terman's lab.

This meditation would culminate twenty years ter

he himself received his

own

later,

and

a half century af-

graduate diploma there, in Hewlett's 1986

graduation address at MIT.

number of graduates would complain

Afterwards, a

that Hewlett's speech

in the school paper

was rambling, too much an advertisement

for Hewlett-

Packard Co., and addressed only to the engineering graduates. All of which

was

true, given Hewlett's lack of natural eloquence, his

deep identification

with his company, and his engineer's heart. But, reading his

—with

words now

most famous mavericks

—

ecutive ahead of his time.

it is

He was

Note

words

as well

are precise

how

Bill

and

one of HP's

Hewlett was a business ex-

would be one of

already wrestling with what

the greatest problems of the digital age. process, his

his telling reference to

apparent that

And when he is describing the creative

lucid.

Hewlett, apparently unconsciously,

is

also describing

himself:

How

do you define

creativity?

According to Chuck House,

up our engineering productivity program,

my

"Creativity

engineering program." Unfortunately, there

statement.

is

is

who

heads

what screws up

much

truth in that

.

BILL &

232

Thomas Edison "There

ain't

no

rules

DAVE

alleged to have

is

around

remarked about

his laboratory,

here. We're trying to accomplish something."

These two comments say a great deal about the creative process.

works best when

not too structured, but

it is

it

must, in the long run, be

tamed, harnessed and hitched to the wagon of man's needs. It is

sume.

for example, that education

creative. Psychologists can't

who

alone predict

way of finding

even agree on will display

is

.

not a sine qua non for being

how to measure flourishes

probably the best

is

this elusive characteristic.

Successful innovators share

many common

traits.

Creative people

have an abiding curiosity and an insatiable desire to learn things work.

They

take nothing for granted.

around them and tend

minds

this character-

Establishing an environment

it.

and observing who

that fosters creativity

their

.

very difficult to spot a creative individual just by looking at a re-

It is clear,

istic, let

It

stow away

to

for future use.

And

They

how and why

are interested in things

and pieces of information

bits

in

they have a great ability to mobilize their

thinking and experiences for use in solving a

new problem.

Problems, however, are rarely solved on the spur of the moment.

They must be organized and fined.

A

mulled over. You put them sciously is

dissected, then key issues isolated

period of gestation then

work

them

at

at

somewhat analogous

in

sets in,

and de-

during which these issues are

your mind and consciously or uncon-

odd hours of

the day or night

to trying to place a

name on

— even

at

the face of

work.

It

someone

you've met before. Often the solution to the problem comes to you in

much

the

same way you eventually

A decade later, when

— except

name. 51

the rest of the technology business world caught up,

and fostering innovation became the long forgotten

recall the

for

talk of the day, Bill Hewlett's speech

was

one paragraph, which would be the most widely

anthologized quote by this plainspoken man:

Creativity

is

an area

tage, since they

dom and

in

which younger people have

a

tremendous advan-

have an endearing habit of always questioning past wis-

authority.

They

say to themselves that there

must be

a better

way. Ninety-nine times out of a hundred, they discover that the existing, traditional

way

how progress

is

is

the best. But

it is

that

one percent that counts. That

Those who thought of

Bill

Hewlett as merely an old man, an anachronism

of another time, and read that quote, must have been shocked attitude

is

made. 52 *

at the radical

and youthful perspective of those words. But even they would have

Community

233

had no idea how much earning that wisdom had

cost Bill Hewlett,

and Dave

Packard, in the late sixties and early seventies.

King David There

is

a popular story told about t

self liked

much

so

it

other HPers

—

David Packard from

—and no doubt

that he repeated

King Alfred and the cakes, the

it

also

The

in

saw

HP

classic tale

it

Way.

as

Packard him-

this era.

an important lesson for

It is

the Packard version of

of the rich and powerful

who

are

taught a lesson in humility:

I

recall a time,

many

years ago,

when

I

was walking around a machine

shop, accompanied by the shop's manager.

We

stopped briefly to watch a

machinist making a polished plastic mold

die.

He had

polishing

it

and was taking

down and wiped

it

The machinist

my

with

a final cut at

Without thinking,

it.

He was

right

and

this is?"

replied, "I don't care!"

told

I

reached

my die!"

The manager quickly asked him, "Do you know who To which the machinist

I

finger.

"Get your finger off

said,

spent a long time

him

so.

He had an important

job and was

proud of his work. 53

This

is

a classic "Bill

fake, yet verified

taneous,

it is

and Dave" story of the

era, so perfect that

by numerous observers. Yet even

if

it

seems

the event itself was spon-

important to recognize that a number of elements to the story

are calculated. First

of

all,

Hewlett and Packard had, by the time Dave walked into that

machine shop, developed

a culture at

mere equals with everyone

HP

else in the firm,

that treated the

and

two founders

as individuals

who

as

could be

spoken to without unnecessary diplomacy by anyone in the firm. Second, the fact that machinist,

is

it

occurred in the machine shop, with a crusty master

probably no coincidence either

— one wonders

if

a

meddling

Packard would have gotten the same response from a young assembler on the

manufacturing

line in

Colorado Springs, or a senior engineer in the

R&D lab

in Cupertino.

As that

it

for the event

itself,

there were

actually occurred as claimed

fact that

—

some other crucial factors. Assuming and we can be pretty sure it did the

Packard apologized to the machinist

—

is less

important than that such

an apology was seen as characteristic of Dave Packard. Experience suggests

234

BILL &

more of corporate CEOs

that 50 percent or

apologize as well, as

it is

we can assume,

situation

that he earned

nevolent management, he and

it.

CEOs running com-

Bill

ated a culture at Hewlett-Packard

—

and anecdotes even beyond

"heart" of the

HP

Bill

HP

had

cre-

and informal communi-

that identified these stories as they occurred

family, ever

their

a family environment, a sense of personal

familiarity with the founders, a sophisticated formal

disseminated them through

and be-

Hewlett were beginning to become the stories

conscious efforts to create them. But equally important, he and

—

likely

putting the real executive jerks

After thirty years of revolutionary

growing body of

cations network

would

whom a similar story can be told. So why Dave Packard?

panies today about

beneficiaries of a

same

probably thousands of

aside, that there are

One answer is

in the

an almost unconscious response to being caught do-

ing something wrong. Thus

and monsters

DAVE

offices

and quickly

around the world. They became the

more cherished

as the

founders grew older and

pulled away from the daily operations of the company. Finally,

on Dave one

last

none of

this

was

lost

on Packard

Kirby. Stories, such as that of the

(or Hewlett), nor for that matter,

machine shop, would be recounted

time for future HPers, in the pages of The

be referenced long

after Bill

HP Way, where they could

and Dave were gone.

So the question needs to be asked: did Hewlett and Packard plan these

moments ahead of

Most

likely not,

with a few exceptions. Frankly, they didn't have

business had taught

five years in

them

time, orchestrating

the right

moment

afraid to

jump

teresting

moment

them the power of the grand

—and when such

in and,

even

at

a

moment

all

of

to their desired results?

presented

itself,

to:

twenty-

gesture at just

they were not

the cost of humiliating themselves, turn an in-

into a legendary one.

The Price of Success By the end of the gifted ally

as

and Dave Packard were probably

any top business executives

in history.

changed the world not only with the products they

rational

way they ran

their efforts:

nies

1960s, Bill Hewlett

and competent

on the

HP

their

generation, and, not

and Dave recognized

least,

(if

not the)

as the finest

as

liter-

but in the inspi-

company. And they had been amply rewarded

was consistently voted one of

planet, Bill

sold,

They had

for

best-run compa-

managers of

their

the two men had joined the ranks of the world's

wealthiest private citizens.

But for

all

of their achievements, Hewlett and Packard were

still

men, and

Community

235

immune from the stresses attendant to their kind of career paths. They were now in their late fifties, the time of midlife crises, when many men suddenly recognize their own failures and their own mortality. Add to this the fact that both men had children coming of age in the cultural and generational divide that defined the sixties both men experienced varythey were not

—

ing degrees of estrangement (political, social, and personal) from their kids,

none of whom,

Add

as noted, followed

to this the almost

them

into corporate

life.

unimaginable pressures of holding the

thousands of employees and their families in your hands of you making a single wrong decision.

company from

And

of them

with few markers to help you to the next

level.

surreal pressures that

you

that

come with

in the course of a single career,

And, not

least,

there are the

great wealth: that combination of euphoria

are unimaginably rich,

and horror

in the realization that

every predator, terrorist, and kidnapper out there in the darkness it

knows

too.

The golden aura scures the visible

a miracle,

and

that surrounds Bill

toll all

wouldn't have been is

at risk

a tiny garage to a giant multinational, publicly traded corall

knowing

all

of

the stress involved in taking a

poration with thousands of shareholders,

in

—

fate

in the public's

memory ob-

of this pressure took on both men. Frankly, they

human had

they endured

it all

unscathed; conversely,

it

a testament to their characters, that they survived a process

would have (and

that

and Dave

has) broken other

men and women

of great talent and

intelligence.

But though hidden, there are clues to a deeper

myth

suggests that through

never fought, 54

remembers

all

and almost never disagreed,

his father

story.

For example, though

of their years of partnership Bill's

coming home one day

and Dave

Bill

son Walter Hewlett vividly

furious,

and roaring,

"I

am

so

damn mad at David Packard!" Still,

rather than diminish the nature of their friendship, this story almost

seems the exception that proves the

worked together Indeed, Bill

it

for fifty years

may be

rule:

have any two business partners ever

and had only one verified argument?

impossible to ever fully explain the friendship between

Hewlett and Dave Packard. Even people

worked with them Dave Kirby

for decades,

a decade after they

who knew both men

admit they don't were gone, "I'm

still

well,

understand

who

it.

Said

puzzled about the

rela-

really

tionship between those two guys."

But there are other, darker

stories as well. In particular,

though

it

was gen-

known among the senior executives at HP, few HPers and almost no one outside the company ever knew about Dave Packard's weakness for women. It doesn't quite fit with Packard's image as the paragon of American erally

DAVE

BILL &

236 business leadership, but

young

giant

lionaire,

and

football star,

would enjoy the

times respond.

It

probably not surprising that the handsome

is

it

and

later the

awesome corporate

many women

attention of

— or

that he

way of temporarily escaping

was, perhaps, his

giant

and

bil-

would somethe burden of

being the always perfect David Packard. Short and chunky of

all

of his

much

Hewlett wasn't the object of as

was immune were even

to

life,

and notably uxorious toward

what there was. But the pressures on him

greater.

Flora, Bill

of this type of attention, and apparently

He found his emotional

CEO,

as

if

anything,

outlets in equally surprising ways.

In the mid-1960s, suffering a classic midlife

crisis,

he went out and pur-

chased a Porsche. Art Fong would remember terrifying rides with Hewlett up to

San Francisco in the Porsche, racing along the then two-lane Highway 280,

the car's tires barely touching the ground.

But

of uncharacteristic flamboyance didn't

this burst

soon replaced by a return to simplicity and humble little

to

do with Hewlett's own

affluent childhood,

to escape the expectations of tycoonship. to

make

this

too the stuff of

fished, cooked, played cards,

HP

last long. It

living that,

seemed

though

to be a

it

was

had

way for him

Almost despite himself, he managed

legend: the retreats to the ranch where he

and awoke the house each morning by playing an

accordion.

HPer Marc Saunders bumped ware

store.

He

into Hewlett

one day

noticed

Bill

Hewlett by a counter of

himself, since they

had once met

was doing some home project

at a

wood

Menlo Park hard-

screws, [and] introduced

management

for the day. Bill

screws, but the

way these

This, at a time

when

are packaged, I've got to Bill's

review.

nodded

patient voice complained, "Isn't this ridiculous?

Like

at a

As told by John Minck:

I

just

He

yes,

if Bill

but in an im-

need three wood

buy 24 of them."

wealth was about $1 billion. 55

many busy businessmen,

Hewlett during this period also seemed to

sense that his time was short with his fast-growing children to redouble his efforts to

asked

—and he seemed

spend more time with them. During the 1960s, the

Hewlett and Packard families spent considerable time on the ranch, until

became almost

a second

it

home.

He had tried to instill a love of science and engineering into his own children when they were young. Walter Hewlett recalled "many a painful moment when he would try to explain circular functions to me. I was in second grade." 56 Having largely failed then, he would try again now with his grandchildren, teaching them how a compass worked, how Lake Tahoe got its shape, how the colors of the rainbow are created without much more luck. 57

—

Community He

also indulged his love of tinkering

broken appliance and tool in

237

by becoming the

fix- it

guy for every

extended family, a notable example being the

his

time he heated a metal rod over a stove and used

nephew's stereo

—an unforgettable glimpse

must have been

like in the

to fix the circuitry of his

it

for the

new

generation of what

it

Addison garage.

But these were only the most

visible manifestations

of

Hewlett's re-

Bill

sponse to the enormous emotional stress that wealth, fame, and responsibility

upon him. One of the most curious anecdotes about him during these comes from Ned Barnholt, then an HP middle manager, and later CEO

placed years

and chairman of Agilent, the spin-off of HP's Instrument Group. As Barnholt taking a walk,

tells

it,

he and his wife were in Manhattan

when they saw

shuffling toward them. "At

Bill

late

one evening,

hunched, stocky figure in an overcoat and hat

first, I

Barnholt recalled. Then the

was

a

thought

man

it

was

glanced up

a

homeless guy, or a vagrant,"

—and

amazement,

to Ned's

it

Hewlett.

He greeted the

couple warmly, walked them to their hotel, and then, as the

Barnholts watched in amazement, "I've never quite figured that

sunny character of

the gruff but

and without

one

Bill

Hewlett shuffled off into the night.

deep

out," says Barnholt. Perhaps,

Bill

Hewlett there was

still

down

in

the lonely boy, lost

his father. 58

L'Age d'Or In 1969, high tech's great watershed year, Hewlett-Packard Co. was a $325 million firm, with 16,000 employees.

of the

was the market leader

and measurement instrument industry,

in

most segments

as well as in analytic de-

medical diagnostic devices, and desktop computers. Though

vices, far

test

It

behind companies such

puter industry,

it

as

it

was

still

IBM and Digital Equipment in the overall com-

was quickly becoming

a

dominant player

in

computers for

use in laboratories and in-field applications.

Meanwhile, surveys found that the company best places to

where

it

had

work

in the

States,

and

plants. Its business culture,

benefits were the envy of

tated

United

by their embarrassed

in

itself

was seen

as

one of the

most of the other countries

employee morale, and innovative

working people everywhere, and increasingly imibosses.

And its two founders were increasingly rec-

ognized as the premier business executives in electronics, perhaps in

all

of

American business. It

didn't just stop at the walls of Hewlett-Packard either.

relationship between HP,

its

The powerful

founders, and Stanford had helped to

make

DAVE

BILL &

238

magnet

that university a

entrepreneurs

—and

men and women

for

smart young

in turn,

when

scientists,

business students, and

they graduated, these ambitious young

fed the growing (and increasingly powerful) companies of

Silicon Valley.

company was now thirty but young for a firm that appeared

This was Hewlett-Packard's golden age. The years old, ancient

by high-tech standards,

destined to survive for generations.

world had ever seen, led by two manity, and the

its

It

was the most innovative company the

men of deep competence and even deeper hu-

jagged roof glowed like a diadem over the rolling green

now famous

There had never been a company quite so wonderful in the 1960s,

never be a

of

as

Hewlett-Packard

and few companies have ever been so well run. And there would

company like

again

it

and Dave had gone

Bill

hills

Stanford Industrial Park.

—not even Hewlett-Packard.

as far in their careers as

any entrepreneurs ever

had, from garage to global corporation. In the process, with their remarkable

had managed

vision, they

would go through

as

in themselves to lead

to anticipate each

grew

it

swing and turn the company

—and the changes they would have

to

make

it.

In bold strokes, Bill

and Dave had turned a wartime company full of Rosie

move surefooted through fast-moving "family" com-

the Riveters into a lean and aggressive start-up able to

the shoals of postwar bust and

boom; then

into a

pany capable of outthinking and outmaneuvering any giant competitor then into a decentralized multinational moving into

met;

new markets through

combination of in-house innovation and company acquisitions, tending

it

all

a

while ex-

family outwards into a "community" of strategic partners, like-

its

minded competitors, and Beyond

a few

loyal customers.

minor missteps, Hewlett-Packard,

led

by

its

two visionary

make a major strategic mistake. And there was no reason company ever would, at least not in the decade remaining in

founders, had yet to to think that the Bill

and Dave's tenure

at the top.

But even the best-laid business plans can go astray when they collide with the Zeitgeist. selves lost

And

at

those moments, even business visionaries can find them-

and confused.

company and American

Bill

and Dave may have had

industry, but the society

great plans for their

around them had

entirely

different plans.

This was 1969, after before:

two

all.

The United

States

political assassinations, race riots

ingly hopeless

Vietnam War. Now,

this year

was

still

reeling

and burned

cities,

from the year

and the seem-

would bring Woodstock, the sym-

bolic zenith of the counterculture generation before the short, dark slide to

Altamont and the Manson Family. Inside the peaceable

kingdom of Hewlett-Packard

these massive social

*

Community changes barely registered aged sons and the

239

Older employees worried about their teen-

at first.

sideburns grew longer (including on Dave Packard),

draft,

mustaches appeared in the workplace for the collar,

But outside the walls

Bay Area,

after

it

was

came

to

Summer

was the San Francisco

of Love had already peaked and scattered

and iconography around the world.

attitudes

an end.

a different story. This

the epicenter of the sixties revolution. In San Francisco,

all,

Haight-Ashbury and the its

time, as did hair over the

the secretaries wore miniskirts, and (at least in the outlying divisions)

the reign of the white short-sleeved shirt

as the

first

A

folk

group that had begun

Warlocks in the campus cottages just across Page Mill Road from

had gone

electric as the Grateful

various Acid Tests, then

Bill

Dead and become

band of the

the house

Graham's Fillmore Auditorium.

HP

On weekends, the

—and thus of HPers—would head north

children of the Santa Clara Valley

the city to listen to the Dead, drop LSD, and

war and

capitalist

dream of a

corporations and earnest

men

to

perfect world without

and skinny

in white shirts

ties.

Stanford, of course, changed as well.

Dave's undergraduate years

—

its

The

pastoral college of Bill

sandstone walls

filled

with rich

few ambitions beyond drinking and deflowering the local gone. So too increasingly was the Stanford of the

fifties

and

middle

brilliant

young men and women with dreams of

class into professional glory. Stanford's

marred with antiwar by

daily protests,

North Vietnamese ratist

posters, the

commons

girls

that Fred

helped to create: the up-and-coming "Harvard of the West," tious

frat

—was long

Terman had

filled

with ambi-

rising out of the

sandstone quad

now was

in front of the bookstore

marked

and the windows of the dorm buildings plastered with flags

and peace symbols. Black power and Chicano sepa-

groups held pride of place on campus, and in the classrooms where

and Dave's

class

and

boys with

had once prepared

itself for

war, professors

now

Bill

proudly

taught sedition. It

was

a

world that had grown to despise almost everything that Hewlett-

Packard and lution

its

founders stood

would bring and end

options

when

for.

Who cared about flex-time when the revoAnd who needed stock system was about to pulled down to its

to the slavery of

the whole evil capitalist

work?

rotting foundation?

The most tragic irony of the they had finally

managed

lightened corporate culture terested in

take

its

story of Bill Hewlett

to build the ideal business

—

just at the

vision out into the

is

that

model and the most en-

moment when the world was least inwhen HP was ready to community recoiled from it. The

knowing about them. At the very community, that

chance would never come again.

and Dave Packard

instant

240

DAVE

BILL &

Summons During the holidays at

December

in

one of their newest ranches,

there, a call It

was

came

in to the

for Dave,

was on the

1968, Bill

this

one

and Dave were on

in Merced, California.

a hunting trip

While they were

ranch house.

from Washington. Melvin

Laird, the secretary of defense,

line.

Packard had met Mel Laird a decade before when Dave had been the

newly elected president of the Stanford board. At that time, Stanford had joined with Harvard and Yale in making the argument in Washington that certain private U.S. universities should be considered "bell cows"

leaders that other schools followed.

—

that

the

is,

As president of the Stanford board,

Packard had joined with his counterparts

two

at the other

universities (in-

cluding Yale's Juan Trippe, president of Pan-American World Airways) and

made

their presentation before the Health,

Education and Welfare and Labor

Subcommittee of the House Committee on Appropriations cluded,

among

others,

cow"

a

group that

in-

Congressman Mel Laird of Wisconsin.

The presentation had been rize a 15 percent

—

successful,

and the committee voted

to autho-

overhead allowance on federal research contracts to the "bell

universities. Laird,

meanwhile,

like

almost everyone

who

else

ever

met

David Packard, came away deeply impressed by the man. In the mid-sixties, in

one of

New

Packard attended a meeting in

There he gave a speech

that,

his last acts as Stanford

board president,

York of the Council of Foundations.

while characteristic of his

management of

HP, was so shocking in the world of nonprofit foundations that

it

even

made

the newspapers.

Once

again, the topic

was the

"bell

cow"

though he was the president of the board of

universities.

trustees of

But

this time,

one of those schools,

Packard turned against them. As the Vietnam War had heated up, cisely these top schools that

off their

campuses and,

ties that I

had

led the drive to kick military

in Packard's words, "in

thought were not

some

even

it

was pre-

ROTC programs

cases supporting activi-

in the universities' best interests." 59

In his speech, Packard called

on America's corporations

to increase their

financial support to America's universities to ensure the continued creation of

new

scientists, engineers,

and managers,

ventions. But having said that, Packard targeted try,

as well as

went on

new

technologies and in-

to suggest that this support be

toward those schools and departments working to improve the coun-

not to tear

"Many

it

down.

university people took exception to this," Packard

60 That's putting later.

it

would write

mildly: the speech in fact created a storm of contro-

Community And

versy.

this

was

in the

241

mid- sixties, before the

real

anarchy

hit

America's

college campuses.

was

It

also Packard's first real public statement of his personal politics.

most postwar companies

Until then Hewlett-Packard Co., like

those on the West Coast

congressman,

contact their local

—

especially

Few even considered regulation came up, they

largely ignored politics.

when an important

hiring lobbyists; rather,

would

—had

mony themselves. The attitude in

bill

or

or, rarely,

present congressional

Silicon Valley, well into the 1970s,

you ignored Washington, Washington might ignore you

—

and

testi-

was that

that

if

was the

best possible scenario for entrepreneurship.

Moreover, with the exception of the longshoremen and Beat poets in San Francisco,

most of the Bay Area and Northern California was nominally

Democrat, but practicing Republican.

Bill

Hewlett and Dave Packard were ba-

two positions being almost indistinguishable along

sically the opposite, the

the political spectrum.

But the

sixties

changed

all

of

that.

The

cultural,

decade demanded that people chose sides publicly cast his lot with conservatives

and

literal,

warfare of the

— and Packard, with

his speech,

and Republicans. Hewlett did the

same, but not on a public stage. In doing so, the two founders put themselves in a position they

had never

been before in the thirty-year history of the company: in philosophical opposition to a large percentage of their employees.

never taken a strong stance on politics, politics were.

But

now

it

As long

as Bill

and Dave had

hadn't mattered to HPers what their

everything had changed: nothing divides people so

deeply as religion and politics, and

Bill

and Dave had just broken one of those

taboos.

In their minds, the two

men

probably believed they had no other choice.

By the

late sixties,

pieces.

Hewlett and Packard saw their society, their community, and, most of

all,

their

And who

company

it

seemed

at risk

perhaps they were

as if civilization itself

and saw no other choice but

right;

didn't share their politics

really

was about

but from that

might

still

moment

respect

to tear itself to

to speak out

and

fight.

on, thousands of HPers

and follow them

—but never

admire them again.

One person who was watching was the newly named secretary of defense. And when Mel Laird called, Dave Packard could guess what was coming. As requested, he put together a

list

of likely candidates. Recalled Packard, "I sent

him some names of people he could consider, and he called me back and asked me to meet him in Washington. So we met at the Baltimore airport early

one evening.

We

drove to his transition headquarters

Hotel and discussed some of the things he wanted to do

at the

Carlton

when he took

office.

242

DAVE

BILL &

After a few hours of discussion, he said he

me

wanted

to join

him

as

deputy

secretary." 61

Packard was intrigued, and told Laird that he would need a few days to think about

tors of

He flew home to California and spent the next week considerHe discussed it with his wife and family, Bill Hewlett, the direc-

it.

ing the offer.

HP, and several friends with experience in the Defense Department.

Lucile, in particular,

thought her husband needed a change and suggested he

The opinions of the others

go.

are unrecorded.

Packard knew that taking the job would

one thing, he would have stock, as well as

friend

any increases in

its

principal.

and partner, and walk away from

time in

its

history.

mean enormous

to donate to charity

all

sacrifices.

For

of the income from his

HP

He would have

And he would have to work for an

ticularly like, the Pentagon,

and report

to leave his best

company during a

his beloved

crucial

institution he didn't par-

to a president

he didn't admire,

Richard Nixon.

Packard called Mel Laird and told him that he would take the job as

deputy secretary of defense.

Why did he

accept? Packard himself

The money, though had wanted

Nor did Whatever

it

would amount

He would

Packard's decision.

to support

and

was never very

seemed

to millions,

say later that there were

this

was a good way

to

do

Bill's

doubts were about running

on

his decision.

to matter

some

little

in

charities that

he

it.

company seem

leaving Bill Hewlett in charge of their

who had run

clear

to matter.

HP himself after all of these years,

company solo, had none about his old partner: "I knew that Bill Hewlett could manage the company just as well as I could and that he had a strong team of management people to support him." 62 On the other hand, it may have been true, as some senior HP executives Packard,

the

hinted at the time, that Dave Packard had always

felt

a

little

guilty that Bill

Hewlett had gone off to war while he, the big college letterman, had stayed

home

to

mind

the store.

wasn't going to shirk the

But in the end

HP

it

Now the

bugle had finally called for Packard, and he

call.

may have been

just patriotism

Objective of Citizenship had called on the

rate citizen

—and by extension,

ing citizens as well.

it

ally

embarrass

same five

One

HP

city council.

to be a

The

good corpo-

have done just that, serving in local

Colorado

local election in

because three of

Even

a sense of duty.

expected HPers to be committed and serv-

And thousands must

governments, on school boards, and volunteering organizations.

and

company

its

at

thousands of nonprofit

in the early 1970s

would

Loveland employees would run

actu-

for the

HP vice president and old friend Ed Porter had served

terms as Palo Alto mayor

eventful periods in the city's

—and

brilliantly, too,

history. *

during one of the most

Community

243

Packard too had served, most notably on the Stanford board of trustees, but on industry groups as well. But this was the big one, the most important call to

public service in his

life,

and Dave Packard,

signed on. His country was at war, In answering the

HP, until

and

now

cultural

had chosen

just

call,

it

as

everyone

needed him, and he did

his duty.

Packard also did the same for Hewlett-Packard Co.

another large company on the periphery of the political

war dividing the country, was now

sides: for the

next five years, to

its

in the center of the fight.

friends

it

would be seen

chagrin) as an extension of the Defense Department, and to that anarchist at the beginning of this chapter

HP,

it

would come

knew he would,

to represent (to

its

its

It

(to its

enemies,

like

who would one day work

for

horror) a pillar in the military- industrial

war machine. That radicals

it

was neither made no

who would

difference.

Not

to the protesters.

try to firebomb Bill Hewlett's

Not

to the

house and burn down the

Palo Alto hotel in which Laird and Packard were meeting, and not to the fringe

group that would, long

after the

end of the Vietnam War,

set off a

bomb

at

an

HP building on Page Mill Road in the mistaken belief that "smart scopes" (oscilloscopes)

were components of "smart bombs."

Packard spent the month before the inauguration tying up loose ends and

meeting with Laird to strategize a plan for the department.

And

then he was

gone, not to return for three long years. By then, the company, and the world,

he came

home

to

was profoundly changed.

a stalled industry within a collapsing

There were

HP would be fighting for its life in

economy.

tears in Bill Hewlett's eyes

when he announced Dave

departure to his fellow HPers. At Hewlett-Packard, the

And though pany,

HP

in the next decade, Bill

would

see

some of

its

and Dave's

last at

greatest successes

Hewlett-Packard's golden age was over.

sixties

the

Packard's

had ended

early.

helm of the com-

and noblest achievements,

Chapter

Six:

Bastion

In

the early Seventies,

niversary issue of the

HP

for a special Hewlett-Packard twenty-fifth an-

magazine, Measure, Fred Terman was asked to talk

about his two most famous students.

Terman wrote just four paragraphs. Three were reminiscences of the

early

days of HP. But in the final paragraph, the old professor suddenly switched direction:

People have asked me, in view of HP's immense success, whether Dave

and I'd

Bill

were born businessmen.

have to say no, but

I'd

—and

point out that they had the knack

they needed to know, of taking a

determination and enthusiasm. This

around them and

is

still

new job and is

have

it

same time

— of learning what

tackling

contagious.

at the

it

It

with

all

kinds of

affects the

people

the true essence of leadership. 1

After a quarter century of continuous dual leadership, Hewlett-Packard

Co. entered the seventies with just one active founder

—and

it

wasn't the one

celebrated for his decisive leadership.

When Dave the only

Packard

left

for

Washington

HPer without any doubt

in early 1969,

that Bill Hewlett could

himself. His confidence wasn't shared

by many

he

may have been

run the company by

others.

company name right down to the annual report photos (where the towering Packard would sit in a chair to be at the same height as the short Hewlett), had always operated on the belief that the two founders were essentially interchangeable. Their superhuman ability to always seem to agree on everything only underscored that. As Art Fong, who knew them almost as long as anyone, would recall, "It seems that they had this Hewlett-Packard, from the

intuitive

knowledge of what each other was thinking that was truly amazing.

don't exactly

I

know what it was, but it was like the [unspoken] communication

between a husband and enced parents,

who

wife." 2

Others would draw the parallel to two experi-

long ago learned never to

make

decisions regarding the

— 246

DAVE

BILL &

children without

conferring with each other and presenting a united

first

front.

and Packard had

But, like parents or spouses, Hewlett

and had carved out

ties,

Those

their

roles did not always

own distinct roles

match

men

company they founded. and

their public image. Aristocratic

quent to the world, Packard was in

two

at the

different personali-

elo-

tougher and more decisive of the

fact the

in the day-to-day business struggle.

By comparison, the gruff and

plainspoken Hewlett was often the consensus-builder. As the Silicon Valley

magazine Upside would accurately describe them:

The commanding, sometimes gruff Packard was the person who made

when they had to be made. He is not afraid of controbeen known to pound tables to make a point. Packard is

the tough decisions

versy and has

also a visionary

and strong

strategic thinker.

on the other hand,

Hewlett,

anyone would

feel

whom

a shirt-sleeved engineer with

is

comfortable talking.

He

ensured that the company's

concern for the individual was not overlooked. Together, Packard's and Hewlett's different styles provided the tension that

strong

If physically

they were Mutt and

were good cop and bad cop, tive office.

a

Not

that he

philosophically Hewlett and Packard

Jeff,

and

tactics

strategy, operations

surprisingly, then, with Packard

doubted that Hewlett could run sure

made HP such

company. 3

HP

bility in the face

of a sudden market

and the execu-

Washington, some

to

by himself. Hardly anyone was

just fine

would have the long-term

gone

vision, or even the short-term flexi-

keep the company

shift, to

at the

top of

the high-tech world. But, as he

proved to be a

had

in those early days in

sleeper,

admirers, guessed.

He

with a

and, like Packard in the 1940s,

Just

of

HP

sions,

Hewlett once again

made

Bill

still

observers

studied in business schools

wonder whether Hewlett could

Hewlett accomplished in his thousand days alone

astonishing. Between 1970

rampant

inflation,

on the Fortune 500

fell

and

and 1981,

a decade

a gas crisis, nearly 30 percent of the

completely off that

4 list.

at the

marked by two

During

that

$365 million to a $3.6

was one of the

billion

company with

greatest surges

by

a

top

reces-

companies

same period,

Hewlett-Packard grew from a 16,000-employee company with annual

It

his

HP by himself.

what

is

lab,

quieted any doubts forever with a quick series of moves

so strategic and innovative that they are

have built

Terman's

mind more formidable than anyone, even

sales

of

nearly 67,000 employees.

mature business ever seen. In the

face

247

Bastion of just about every obstacle the world economy could throw in the seventies profits

managed

growing

at

to

grow

its

path,

HP in

compounded rate of 23 percent, with net compounded rate of 27 percent. By the end

at a

an even faster

of the decade, Hewlett-Packard would have 26 manufacturing plants around the world,

and 160

sales offices in

65 countries.

But those numbers told only part of the

HP turned

decade,

with international

from

itself

sales

a

And

it

a test

accomplished

stratospheric levels.

would recommend

domestic

without a single

sales.

HP managed

layoff,

to a

to transform itself

computer company.

and with employee morale

1979 survey found that 93 percent of

as a place to

it

period

this

its

and measurement company

this

A

because during that same

mostly American company into a global firm

beginning to surpass

Even more incredibly, during

from primarily

story,

all

HP

work, and that 83 percent said they

sonally responsible for contributing to HP's success

—the

at

employees

latter figure

felt

per-

25 per-

cent above the national average, which the survey specialists described as

"mind-boggling." 5 In other words, in one of the

most challenging economic environments of

the second half of the twentieth century, Hewlett-Packard Co.

change

its

business, invert

its

market, quadruple

its size,

grow

managed

at the rate

to

of a

and enjoy one of the highest employee

start-up company, not lay off a soul, satisfaction ratings ever recorded.

And

it all

began under the

wasn't sure he could run the

solitary

watch of

Bill

Hewlett, the

man who

company by himself.

Hewlett's Shining Hour When Dave

Packard

left

HP

for

cure in the knowledge that the

Washington

in January 1969,

economy was vibrant and

the

he departed

se-

demand for elec-

tronic instruments strong.

A the

year

first

later,

everything had turned upside down. Nineteen seventy was

year that the

would become

modern high-tech industry

a quadrennial cycle of

the recession at the end of the Second

faced the bad end of what

boom and bust. Until then, almost from World War, the

electronics industry

enjoyed nearly continuous growth, even vaulting over the downturn

end of the 1950s thanks

to a burst in

demand

for

had

at the

new consumer products

such as color television.

But a new factor was now setting the pace in high tech: semiconductors. The chip industry (and soon the rest of the economy) marched to the pace of

— 248

DAVE

BILL &

Moore's law, that vaunted doubling of chip performance every eighteen to twenty-four months. Moore's law drove the perpetual innovation and exponential

but

improvements

performance that have characterized tech ever

in

brought with

also

it

since,

regular, even predictable intervals of shortages,

it

double-ordering by anxious customers, overproduction, and collapse. This boom-bust cycle

made

its first

—

appearance in

form of

in the late

a

number of

boom demographic

shakeout

in chip orders

other

at the

later.

This

downward economic

winding down of both the Vietnam War and the

program (which devastated the aerospace baby

sudden drop

1970 and bottomed out two years

downturn was then exacerbated by trends: the

a

NASA

Apollo

industry), the shift of the great

bulge from teenaged consumers to young adults, a

low end of the desktop calculator industry (which had

filled

with more than a hundred U.S., Japanese, and European companies intent on tapping into a bubble in demand), and, ultimately, a general economic exhaustion after the go-go

sixties.

Hewlett-Packard, as one of the biggest beneficiaries of the boom, was hardly

immune from

the penalties of the bust.

Bill

Hewlett, in response to

Packard's departure, had formed a kind of operations troika at the top of HP,

and Ed

consisting of himself, Ralph Lee,

Porter.

Both Lee and Porter were

al-

company vice presidents, and both had come out of manufacturing, but they were of very different personalities and Hewlett had chosen them preready

—

childhood friend and a former mayor,

cisely for those differences. Porter, Bill's

was an

was

a

affable

diplomat and negotiator

—an

"outside" guy. Lee, by comparison,

tough guy (those on the receiving end of one of

episodes would

call

him

"inside" guy. In retrospect,

structed out of these two to himself the

When

power

and Dave's hatchet man"),

"Bill

HP through

it

intact,

Dave Packard

a surrogate

to overrule

with as

decisive,

and

a classic

seems obvious that Hewlett had cleverly con-

it

men

the 1970 recession

his budget-tightening

—

all

while reserving

them.

hit,

it

was

this trio that

damage

little

as possible,

had

to find a

and ready

way

to get

to exploit the

upswing on the back end. As with the recessions that followed, challenge in different ways

and

culture. For

—almost always

most companies,

ing layoffs. Certainly that's what sive layoff at Sunnyvale's

employer, almost knocked

different

that

in

companies responded

congruence with their character

meant round

happened

after

the

newborn

round of devastat-

in the aerospace industry: a

Lockheed Missile and Space, flat

to the

still

Silicon Valley,

mas-

the area's largest

and Lockheed

itself

was never quite the same again. HP's response, as might be expected, was to find an innovative solution that

would keep the company on

ing the tenets of the

HP Way.

a strong financial footing while

still

preserv-

249

Bastion That solution,

come

pany's history, didn't

Hewlett in particular

HP

many

answer to

like the

quickly or

—found

technical problems in the

But in the end,

easily.

HP — and

Bill

it.

Minck may have been on hand

historian John

com-

to see the event that

sparked Hewlett's most famous personnel innovation:

One

of

my friends

hired in from

had begun reporting

Ampex

to a

new manager who had been

Corporation, presumably for some of his systems

HP

expertise. Nineteen-seventy was not a good year for high-tech.

into a bit of a recession,

fell

and the word came down from top management

to trim 10 percent off operating costs.

My

friend got called into his boss's office

That was the

Ampex way

of controlling

and was

told that he

and

was

fire as

the

This kind of employee treatment was unheard of at HP. Luckily,

my

fired.

costs: hire

profits allowed.

friend didn't take

marched up Bill

it

to Bldg.

lying

down, but using HP's "Open Door"

3U and told

rescinded the order

on

guy's division manager, since

also

The word got back

appeared that

mance reviews might have been doctored might have been the one

capital

—

my

friend's perfor-

to justify the lay-off.

Now he

rather than tighten belts.

memo

duced here Bill

I

think

HE

—and the

least profligate

with hu-

probably hadn't even considered that ordering an across-the-

board cost cut would lead some of his managers to simply

pared a

Ampex

to the

let go. 6

Hewlett, the most empathetic of bosses

man

he

what had happened.

Bill

the spot. it

policy,

and had

it

had

to

move

quickly.

fire

He immediately

distributed throughout the company.

in full because of the insight

it

personnel

It is

pre-

repro-

offers into the leadership style of

Hewlett:

July 16, 1970

From:

Bill

Hewlett

To: See Distribution

SUBJECT: Evaluations

An

increasing

& Terminations

number of

cases are

ployees are being terminated with

mance has been

coming little

unsatisfactory. In

to

my attention

in

which em-

or no warning that their perfor-

some

glowing up to the time that an individual

is

cases, evaluations

released.

have been

250

BILL & no excuse

There just

is

justified.

would

I

you

like

The individual

(1)

evaluations

for this.

DAVE

not humane.

It is

to be guided

affected

not HP-like.

It is

by the four following

It is

not

points:

had had advance warning through written

and has been advised constructively on how he/she should

improve. (2)

Wherever

employee

practical, assure the

make

other placement where he/she might ployee placement

is

given an opportunity for

is

a greater contribution.

Em-

and Personnel and not a

a function of supervisors

function of the employee to be turned loose to find his

own

job some-

place in HP. (3) If

and

termination

is

believe the case

the only alternative, Personnel satisfactorily

is

must be

fully advised

documented, and the decision has the

approval of the general manager concerned. (4) Before

any adverse action

must recognize

is

taken,

it

should be well thought out.

We

that each of our people represents an individual with

problems, families,

etc.

Signed:

Bill

H.

WRH:dlt

It is

not humane.

been the only this.

CEO

It

is

not HP-like.

It is

of a Fortune 500

Indeed, as a manager,

not justified.

company

Bill

Hewlett

ever to write a

may have

memo

"humane" should probably be William

like

Hewlett's

epitaph.*

But reasserting a sense of corporate decency didn't solve the problem of a deepening downturn. first

HP

On

away

the contrary, bleeding

Objective. So Hewlett

now

between the requirements of the

profits violated the

faced a serious dilemma; he was caught

HP

Objectives and the

demands of

the

HP Way. Somehow profits the

he had to cut expenses corporate-wide in order to preserve the

company would need

to

come out of

the recession strong

and

competitive; yet he had to implement these cuts in a structure that didn't end

up

in

pink

slips,

revenge

firings,

faked personnel reports, managers getting rid

of promising future candidates for their jobs, and nastiness that attends corporate cutbacks. There

all

of the other destructive

was almost no example out

there in the business world of such a solution, the business partner

on

whom

he could sound out ideas was three thousand miles away and dealing with

own full plate of troubles, and his subordinates, new ideas, were looking to him for answers. The

solution

Bill

his

rather than being a source of

Hewlett found that squared this

circle

is

the

most

cele-

— Bastion brated of his career. Even at the time, zines

around the world, which

it

rightly

251

was covered saw

in

a

it

ployees during hard times. And, looking back,

new way of managing emwas

it

Bill

Hewlett's

most

management equivalent before when he put the light bulb

innovation as a business executive, the

brilliant

that

newspapers and maga-

in

moment

of genius thirty-five years

to in

the oscillator.

Hewlett's solution was simplicity

but the implications were im-

itself,

HP employee, from himself to the graveyard -shift janitors, to take off work every other Friday. Company VP mense and

far-reaching. Simply, he asked every

John Doyle dubbed In

it

"the

Nine-Day Fortnight."

announcing the plan, Hewlett

decision

—

essence of

his

way of making

Bill

Hewlett, and of the

guy on the

line

stay at work.

who

It is

takes

it

also explained the reasoning

sure that

wouldn't be abused.

it

behind It

his

was the

HP Way: "Usually in business, it is the little

on the

chin, while

management and higher-ups

only right that everyone share in the pain, up and

down

the

line." 7

Only

sales

was exempt from the new schedule, because

maximizing revenues.

that of

HP

The response at the

Many employees

from

actually

Inside HP, where

this period. Recalled

common

this

came

production lines were shut

in to

task remained

to

anyone who

Minck, "The employee

sense plan was wonderful to see.

work on those

Fridays, even

though the

down." 8

many employees had

inevitable layoff, the

already resigned themselves to an

Nine-Day Fortnight plan produced an upwelling of

gratitude, even love, for Hewlett-Packard

—and

Bill

Hewlett in particular

would carry the company through the next two decades, and would

tach to

Bill

Hewlett for the

up with the

perfect

ian heart. Hewlett

would

that

its

— manufacturing, head-

was unforgettable

inside Hewlett-Packard

company during

loyalty that resulted

that

offices

R&D — shut down for the day every other Friday.*

quarters,

worked

All other

HP

of his

rest

fork: a

life.

Once

again, the founders

at-

had come

pragmatic solution that also had a humanitar-

had managed to cut

sacrifice itself before

it

costs,

but

sacrificed

its

HP employees saw a company people.

Outside the company, the reaction was, arguably, even more intense, especially in Silicon Valley.

At a time when

Mercury-News carried

stories

dustry, to

be

when

cut,

it

seemed that every day the San

about bloody mass

supervisors were being told to

and

rich

CEOs

didn't

seem

to

Jose

layoffs in the high-tech in-

come up with

lists

of employees

be compromising their

own lives one

iota, here,

once again, the shining company on Page Mill Hill had found a way

to protect

its

"family."

Hewlett's plan choice."

It also,

shamed

in that

executives everywhere

complex way of

all

who

major

Bill

claimed they had "no

and Dave

initiatives,

BILL &

252

managed

to be enlightened

DAVE

and pragmatic

at the

same time. The

by con-

plan,

vincing employees to take a 10 percent pay cut to save the jobs of other HPers

(and perhaps themselves), managed to simultaneously cut overhead, preserve the company's intellectual capital, increase morale, earn billions of dollars

worth of good

company

publicity, position the

for the

market turnaround,

HP

embarrass the competition, and be one of the best recruiting tools

ever

found. Needless to

say, a

year

later,

Packard came out roaring. In

when

fact,

the

economy finally recovered, Hewlett-

by the time Packard returned

Hewlett and his team had, in the face of a recession,

company

at the typical 15

still

in early 1973,

managed

to

grow the

percent per year during the three years Dave had

been gone, increasing HP's annual revenues from $326 million to nearly $480 But even

million. its

single

D.C.

better, the

But

had back

it

also

man and

inside the Beltway

made him

was one of almost continuous

frustra-

a national figure.

Given the success

his

Bill

Hewlett

Washington, though perhaps the

of his career, could only be accounted as a

PR coup

for

both

company.

As he would do during every

new

market

in Palo Alto, Packard's sojourn in

least satisfying

the

to

calculator.

Dave Packard

Dave Packard's time tion.

company had developed and brought

most famous product: the HP-35

shift his in career,

Packard prepared for his

book he could on the him was of recent vintage: Cuban Missile Crisis, Robert McNamara,

post at the Defense Department by studying every

topic.

One

historical anecdote that stood out to

just seven years before,

during the

Kennedy's defense secretary, had found himself in a dispute with the Joint Chiefs of

Staff.

Though

the JCS officially reported to

McNamara, when the on how to con-

secretary approached the admiral in charge with instructions

duct the blockade, he was rudely told to go back to his office and leave the

decision-making to the professionals. Packard, though temperamentally the opposite of the notoriously technocratic

McNamara,

as a

Republican the

political

opponent of the

liberal

former

secretary, and emotionally drawn more to military officers than to politicians

and government bureaucrats, nevertheless found himself agreeing completely

McNamara was right. He should say as part of the administration about how the blockade was to be

with McNamara's position. "I think Bob have had a handled." 9

Bastion This assertion of politics,

253

common sense over any other consideration

sympathy, or precedent

—would

characterize

deputy secretary of defense.

It

would

many enemies

in

Washington.

but make

try,

It

started out well. Secretary

many

create

DoD

this vision

seemed

a philosophy congruent with the

with what he called "participatory management." As

mistic that he could spark a cultural revolution in

had

in industry.

The

first step,

as

had been

it

To that end, Dave, with hunt

at the

Though first

Bill,

San Felipe ranch

at

chiefs

Way, Dave was opti-

government the way he and

them

invited the Joint Chiefs to join

on

bagged

HP

Hewlett-Packard, was to build the family.

—an event

in future years these trips

year Packard was intent

Each of the

as

Melvin Laird had told Packard that he

run the

Bill

Dave Packard's career

admirers across the coun-

to

wanted

—including

that

in a deer

would become an annual

ritual.

would be more formal and gracious,

creating

a deer

some shared

that

experiences.

—and then came the work: they were

ex-

pected to help with dressing the animals, cooking dinner, and washing the

and Dave had always done. The

dishes, just as Bill in.

Sometime over the

and the founders

dirty dishes a friendship

that

would

flag officers

happily joined

was formed between the

chiefs

the annual hunting trip, long after

last, like

Packard returned to Palo Alto.

But

politics isn't business,

and on the

Packard quickly found that his friends

enemies in the

halls

at

battlefield

of procurement Dave

San Felipe ranch would be

of Congress and on the evening news.

that doing the right thing can

He

make enemies even among your

bitter

also learned

erstwhile

allies.

Packard arrived in Washington in early 1969 with some strong opinions

about the relationship between the military and industry. Hewlett-Packard

had been

though not particularly happy, defense contractor. And,

as

chairman of the Industry Advisory Council to the Department of Defense

(a

a long,

group of twenty-five industry executives, including another business legend, Walter Wriston of First National City Bank, that met three times per year at the Pentagon), Packard already tary procurement.

The

had strong opinions about the world of

mili-

None of them were good.

particular object of Packard's ire

was a program

called "total package

procurement." Packard recalled, "Under that plan contractors

who wanted

to

bid on military weapons were required to bid for the entire job of developing, testing,

and manufacturing them. This might be a good theory, but

it

was

simply impossible to make a bid on a weapons system that had not yet been designed." 10

Proof of

this fatal flaw in total

package procurement was everywhere by

the time Packard arrived in Washington. Indeed, almost from the

moment he

started

on the

job,

he found himself embroiled in one scandal

relating to the process:

"Almost

procurement policy were with them."

And the

DAVE

BILL &

254

of the programs under the total package

all

in trouble,

and we had

to figure out

how

to deal

11

wasn't just the total package

it

another

after

Vietnam War, the

DoD

model

that

was flawed. Thanks

to

bureaucracy, already swollen from the cold war,

was now almost paralyzed with indecision. According

to aviation historian

Charles Bright, beginning in 1947 "power [had] been increasingly centralized in the Pentagon,

and within

it

the Office of the Secretary of Defense.

dence points to increasing paralysis as a routine contract matters might

Packard would

many

call for fifty

later say, in his

it

just takes a long

As

Congress that he would just

tell all

of this

if this

damn

even

diplomatic mode, that "there are a great

people in the department ...

without

evi-

written concurrences." 12

time to get anything

done, even some of the most simple recommendations."

would

The

result. In the early seventies,

like to "give the

More

candidly, he

contractor a contract

red tape." 13

wasn't enough, Packard had

little

time to clean up the mess.

Lockheed, one of the biggest defense contractors, was on the brink of bankruptcy, thanks to cost overruns on the

same

its

fighter, featuring the latest electronics

War workhorse

new C-5A transport. At way procuring a fast new

giant

time, the military needed to get under

technology, to replace the Vietnam

the F-15, itself an example of cost overruns

and bureaucratic

compromise. Packard thought he had a solution to the bureaucracy problem. But before he could address

by the old system lion into the billion least

still

it,

he had to keep

—Lockheed

C-5A

unfinished

alive those big

project, realized

it

$650 million

— enough

to put the

Knaack, began with a

On March

2,

J.

Work on

final project loss

of at

into Chapter 11.

letter:

1970, Daniel

J.

Haughton, Chairman of the Board of Lockin a letter to

Deputy Secretary of Defense

Packard, acknowledged Lockheed's worsening financial plight. all

of Lockheed's defense contracts would cease unless the com-

pany received between $600 and $700 million, most of program.

bil-

events, according to military historian Marcel

heed Aircraft Corporation,

David

company

Lockheed, $3.1

would be paid only $2.6

by the government. That represented a potential

The subsequent chain of

companies victimized

in particular. In early 1970,

it

for the

C-5A

14

Haughton went on peals process to get

its

to say that

Lockheed could not wait

for the usual ap-

money, but needed immediate interim financing

to

255

Bastion

He admitted

keep working.

blamed

total

to

some

"deficiencies"

on

his

company's

part,

but

package procurement ("imprudent and adverse to our respective

interests") as the real cause of Lockheed's predicament.

Dave Packard, the always

Privately,

man, was disgusted

financially conservative business-

Lockheed could have ever gotten

that

predicament. Publicly, as deputy secretary of defense,

it

itself into

was

his

such a

duty to find

an acceptable resolution that would keep the military's most important new transport on track. After ten

met

months of continuous

with' Senator John C. Stennis (D),

Services Committee,

and

laid

negotiation, Packard

chairman of the Senate Armed

out what he saw as their options. According to

Knaack:

Packard, would leave Lockheed with "insuffi-

Prolonged

litigation, said

cient cash

and inadequate commercial

operation of ditional

vital

credit to finance the continued

defense programs." Moreover, the

government funding and bank support

and Lockheed's

failure,

because of the intricate relationship

heed and other defense contractors and trous chain reaction in the

As Packard saw

it,

company needed

industry. 15

there were two possible solutions.

—now

at

among Lock-

suppliers, could set off a disas-

American aerospace

Lockheed the disputed amount

ad-

to forestall bankruptcy;

$758 million

—

The

first

to keep

it

was

to give

alive,

then

company later to get back some fraction of that amount based on total aircraft deliveries. The second scenario was to convince Lockheed to drop all litigation immediately in exchange for $560 million, the company having to sue the

eat the

remaining $200 million shortfall as a

tion because get

it

ended the matter forever and

loss. let

Packard preferred

both the

DoD

this solu-

and Lockheed

back to work. Both Laird and Stennis respected Packard's judgment

enough

Not

to

go with his preference.

surprisingly, Lockheed's

plan to force his

company

Haughton responded

to lose

$200 million

as

hotly, calling Packard's

an "excessive and unwar-

ranted penalty." But he wasn't up against a government bureaucrat; rather he

was squaring off against

his superior in the business world.

Packard didn't

re-

spond, but merely waited. Unfortunately,

Dan Haughton

wasn't the other important figure upset

about Dave Packard's decision. Senator William Proxmire (D), the U.S. Senate's self-declared

tracking the

watchdog of government overspending, had been

C-5A almost from

carefully

the beginning. Even while the negotiations

were going on between Packard and Lockheed, Proxmire had brought up a vote in the Senate to

When

Packard's

C-5A program altogether. plan was finally made public, Senator Proxmire erupted kill

the

BILL &

256

DAVE

in disbelief, calling the deal a "bail-out" of Lockheed.

instantly stuck in the public's

mind

—and

Dave Packard, who had simply tried an important new

tion, preserve

space industry solvent,

all

still

to

It

was

a description that

does.

make

the best out of an ugly situa-

and keep the aero-

aircraft in production,

while trying to reform the Defense Department,

found himself attacked from every

side.

The

right

saw him

as betraying the

why should the government be propping up private corporations, no matter how big, to protect those companies from their own stupid free

market

itself:

business decisions? This was socialism.

The

left,

and anyone connected with

furious at the war

heed "bail-out"

as a paradigmatic

example of the government and the defense

industry cozying up in a secret cabal. Showing is,

here

carried

is

saw the Lock-

it,

how enduring this latter theory

an extract from an academic paper from 1975 that was

on the Web

site

of a

Company, the

In 1970, for example, Lockheed Aircraft military contractor,

Haughton

(a

tional City

being

nation's largest

was almost bankrupt. Lockheed's chairman, Dan

member of IAC) and his banker, Walter Wriston

Bank

still

UC Santa Cruz professor in 2006:

an IAC member) decided to

(also

visit

of First Na-

Deputy Secretary

of Defense David Packard (chairman of IAC). Wriston led a contingent of

bankers to Washington to meet with Packard, and shortly thereafter the Administration proposed a $250 million loan guarantee to bail out Lock-

heed and

Later,

its

when

creditors. 16

the

C-5A played

nam, then went on, with

its

a crucial role in the final evacuation of Viet-

descendants, to

become

the warhorse transport of

the U.S. Air Force for the next three decades, these disputes were largely forgotten. (Lockheed, ironically,

would go on

to be awarded,

by the Defense De-

partment, the David Packard Award for Excellence in Acquisition.) But Dave

Packard himself, though vindicated by events, would never stigma of the Packard,

Man Who

who had

Bailed

never

known

had known what he was getting

this

into,

on the sides,

floor of Congress

and

who

didn't take

it

disagreed with him.

personally.

was

also

made up his mind, to He was given a forum

respond to the charges. And, be-

man whom

even heads of state looked to for

— he knew who he was and

didn't sweat the attacks

But Lucile had none of those advantages. This wasn't HP, when

It

in the press to

he was David Packard, the

advice

escape the

kind of criticism, was stunned. But he

and

part of Dave's personality, once he had the facts and

charge on through no matter

fully

Out Lockheed.

on

his character.

like the early

she could participate in her husband's victories and

she was expected to put on a brave face, attend

all

days at

failures.

Now

of the right parties, and

257

Bastion

pretend she was unaffected by the unprecedented attacks on her husband. She paid a terrible price for her powerlessness

—none of

to his credit, lost

it,

on

her husband. Packard recalled:

The Washington

years were also hard

Lucile lost sixteen pounds.

turned on

As she

on

the family. In the

few weeks,

first

morning when

said at the time, "Each

I

the radio, they'd be saying something terrible about you, and at

noon when

I'd listen

worse, and that spoiled lunch.

Then you'd

get

Then

that spoiled breakfast.

an awful day you'd had and that spoiled dinner.

again

it

would be

tell

me what

I

supposed

home and So when was

to eat?"

After a while, she just stopped listening to the radio. 17

Seeing this cost to his family, Packard resolved to get himself and his family out of Washington as soon as possible. But before he could leave, he still

tal

wanted

to accomplish

what he had come

to Defense to do: replace the to-

package procurement process with a more rational weapons procurement

program

that

produced the highest-quality and the most

shortest time to delivery.

He

also

knew that he would have

the pressure was building for the creation of a " fighter that could

As part of

fill

the gaps

left

'hot,'

the

realistic price in

to

move

small,

quickly, as

and affordable"

by the oversized and overloaded F-15. 18

his self-education in the history of the

Defense Department,

Packard had studied the DoD's counterparts in other countries. That search,

there

and

his

own

experiences as a defense contractor, convinced

was not only a better way, but that

it

had already been

him

re-

that

and mistak-

tried

enly abandoned.

One

of the most telling characteristics of both

boundless curiosity. For example,

Bill

and Dave was

when Packard was asked

to

on the

sit

their local

school board, he immediately drove to Sacramento and spent an entire day at the state department of education, peppering the astonished staffers there

with questions

—not

exactly typical behavior of a corporate

CEO.

What Packard learned in his research about procurement was that, before II, the War Department had operated under an entirely different

World War

procurement system, one that paid aeronautics companies to create competing prototypes,

and then

selected the best candidates.

erally earthshaking: the P-38, the B-17, the P-51,

because

it

The

results

rewarded the creation of cutting- edge design shops

Johnson's legendary "skunk works" at Lockheed

had been

lit-

and the B-29. This system,

—

—such

also led to the

as Kelly

most inno-

vative period in aviation history.

In the United States,

all

of that had been slowly lost in the postwar

DoD

bureaucracy. Total package procurement had been designed to take the waste

— 258

BILL &

DAVE

out of the program (by eliminating the competition between different aviation companies), but replaced

with a system that presented a single

it

and expected competitors

specifications

set

of

on the contract

to bid blindly

a process that took the onus of responsibility off the government and put it on the backs of aerospace companies. Meanwhile, Packard's research told

him

that in France, the Dassault

$25 million

blown

—

Company had been

from scratch and

fighter prototype

little

more than

a

deliver

it

able to build a

new

to the French military for just

rounding error

in the total cost of a full-

fighter contract.

After consulting with Dr. John Foster, the director of research at Defense,

Navy Barry Shillito, and

Secretary of the to bring set

up

to

back the old process.

He

a

number of others, Packard decided

decided that a prototype program should be

produce not one but two prototype

fighter planes

and

let

them com-

pete against each other.

"Fly before you buy," the phrase used to describe the process, was quickly

picked up by the media

—

to

Dave Packard's dismay,

to actually build the prototypes

Packard

and conduct

as

would

take too long

19

And though

it

a true fly-off.

obliged to publicly backtrack from the term as too ambitious,

felt

"Fly before you buy" was such a simple and appealing notion that nently attached

the project,

itself to

and remains

to this

day the

perma-

it

title

of the

process.

But there was

still

one big problem. History

also taught Packard that

prototype-based programs, especially with competitions attached, while usually

more

creative

at least as

and

expensive

efficient

—an

than total package procurement, were often

interesting parallel to

new product

creation at

HP

itself.

However, the battle to

this wasn't

Dave Packard's company

—and he got

a glimpse of

come when Congress responded to his initial discussions about money for the prototype program out of the

the idea by wanting to take the overall

budget

pressure

had already approved. Such

it

a notion ran

smack

into the

coming from the White House. Almost from the day he had been

named deputy

secretary,

Secretary of State

Henry

Packard had been a Kissinger,

member

and including the

of a task force, led by likes

of

CIA

director

Richard Helms and James Schlesinger from the Bureau of the Budget (and the

man who,

as

the next secretary of defense,

Packard's plan).

One

of the

first

would one day implement

assignments of

this task force

was

to find

ways to cut the defense budget to pay for the Nixon administration's domestic programs. Thus, even as he was cutting the defense budget on one hand, Dave

Packard was calling for added expenditures (Lockheed, prototyping) on the other.

259

Bastion

Few government contradiction

could have navigated through this seeming

officials

—and perhaps only David Packard could have done so

in the

midst of the scandal-ridden Nixon administration.

The good news was

that

on the administration

side, Packard's

work, espe-

cially with Lockheed, had earned Dave considerable respect from both Secre-

tary Laird to

make

and the president. For them,

his

program

real,

he would get

if

Dave Packard needed more money

it.

Congress was a different matter. But here too, Packard's reputation worked

deputy

to his advantage. Earlier in his tenure as self

secretary,

embroiled in a matter in which two southern

he had found him-

textile mills that

supplied

the military had consistently fallen short of their minority hiring goals. This

had been going on

for a long time

—

in fact, the

punted the problem in hopes of embarrassing in

Dave Packard's

Johnson administration had

its

successor

—and now

it fell

lap.

His solution was

classic.

Packard remembered

how HP had "expended

considerable effort ... to increase the opportunities for the people in East Palo Alto, a predominately black community." 20

The

effort

had been

largely

unsuccessful until Packard heard about a Philadelphia organization called

Opportunities Industrial Center (OIC), and Sullivan.

OIC had been

its

leader, the

especially successful in helping gain

Reverend Leon

employment

—so Packard contacted Reverend

minority industrial workers in that city livan

and proposed the creation of OIC West. Then,

gram would work, he Alto area and invited

also contacted

them

proved a great success, not to be

to join

least

all

HP

for

Sul-

to assure that the pro-

of the corporate

CEOs

in the Palo

in hiring the program's graduates.

because most of the

It

CEOs were honored even

approached by David Packard.

Now Packard

decided to do the same thing with the controversial south-

—

ern mills. He contacted all three perhaps not surprisingly, he personally knew two of the CEOs and made a proposal: he would let them continue to

—

serve as defense contractors, but only

if

program and show adequate progress

in the years to

they agreed to join a similar hiring

come.

It

was a

typical

Packard move, finding a short-term practical solution that achieved a longer

and

larger goal.

Unfortunately, that wasn't

how it was perceived at

first

by Congress. What

Senator Ted Kennedy saw was that the Defense Department had gone ahead

and retained contracts with three southern companies with crimination.

and explain

He

a history of dis-

called Packard to give testimony before his

his actions.

—

subcommittee

But in the end, even Senator Kennedy agreed with

especially after Minority Leader Everett Dirksen showed up on Dave's behalf to intone that Packard "is right as rain." 21 Dave Packard's eminently pragmatic fix to this problem was not lost in

Packard's solution

260

BILL &

the hallways of the Capitol.

DAVE

He was now

seen as a clever businessman

who

brought a new and innovative high-tech approach to seemingly intractable

And

bureaucratic problems.

so

when Packard

brought his prototype

finally

competition acquisition model up for congressional approval,

it

was

more than anything else that won the day. Not long afterwards, the Defense Department embarked on

his repu-

tation

the Light-

weight Fighter program, which culminated in a competitive "fly-off" between

two prototypes, the McDonnell-Douglas YF-16 and the Northrop YF-17. In

became the top

the end, unexpectedly, both won: the F-16 force, while the

YF-17, renamed the F-18, the

jet

fighter for the air

of Top Gun, was the domi-

nant navy fighter for a generation.

But by the time of the fighter Washington.

He

left

Dave Packard was long gone from

fly- off,

behind a considerable

legacy.

His tenure

Defense was

at

how a smart, entrepreneurial busiand new life to even the most hidebound

seen at the time as a shining example of ness executive could bring

new ideas

government bureaucracy. Today, looking back, military historians consider one of the most successful and tary in the last fifty years

curement award

after

influential

it

performances by any deputy secre-

—hence the DoD's decision

to

name

its

highest pro-

Dave Packard.

Packard's three years in Washington did something else as well:

it

opened

the door to later generations of Silicon Valley executives to serve inside the Beltway, from sitting

running for elected

on

task forces to giving congressional testimony, even to

office.

would henceforth look

And

after Packard's

to Silicon Valley for

accomplishments, Washington

new

ideas, business expertise,

and

new blood. But for Dave Packard, those years in Washington were an exhausting and frustrating sidetrack in an otherwise

would

sit

career. In the years to

number of government commissions,

a

come, he

always trying to stream-

DoD

bureaucracy, improve interservice communications, and estab-

common

defense industry standards and protocols. In his final years, he

line the lish

on

happy

liked to think that in

military

some

small

way he had helped

from an organization riven by

rivalries,

to transform the U.S.

communications break-

downs, and dysfunctionality during the Vietnam War

to the efficient, coordi-

nated fighting force of the Gulf War.

As

for Packard himself, describing his

would say

that

now

Washington years

in his

he understood what President Eisenhower meant when

he warned of the dangers of a "military-industrial complex"

comment A more

memoir, he

that positioned

him very close

—

a

remarkable

to his greatest detractors.

accurate description of Packard's disgust with his time in Wash-

ington came

when he was asked by

a Business

Week reporter what he thought

Bastion

was

his greatest

accomplishment

at the

261

Pentagon. "Well," Packard replied, "I

gave up smoking."

But Packard's

many

real last

word on

times in the years to come,

how he had found

question about

Washington bureaucracy," he

and trying

foot rope,

would be reprinted

the matter, a quote that

came

time in government. "Working with the

his

replied, "is like

to get the other

another reporter's

in response to yet

end

to

pushing on one end of a forty-

do what you want."

The Engineer's Engineer Because they so often conferred before making decisions they eventually could intuit each other's responses Bill

and Dave managed But, for

all

it is

same way, with the same

in the

of their

—

common

—

to the point that

easy to assume that

attitudes

and

goals.

they were not the same man.

interests,

Packard's time in Washington offers a rare glimpse in the

HP

story of

how

Hewlett managed differently from his partner. Packard, as seen throughout this story, was a tough, unsentimental

businessman, with a basic decency toward his employees that translated into a kind of corporate noblesse oblige. His

HP

entered

new markets

was

zone strategy: under Packard,

a

very carefully, but once in them flooded the mar-

ket with superior products across the board, especially at the profitable high

moves were

end. His lateral

Packard was to as patient

and

own

fetal

HP move under new one nearby (such

typically small: a standard

on

a particular market, take

a

monitoring), then find a way to link them together with

a high-end multiuse product (patient

management systems

for nurses'

stations).

As

a business strategy, Packard's style

HP

was

relentless

and intimidating.

to

move

across the instrument

world in a carefully coordinated attack on a wide

front,

continuously envelop-

Throughout the 1950s and 1960s, ing and overrunning

But

this strategy,

ble to time

seemed

more narrowly focused competitors. powerful as

it

was, had a major weakness:

and innovation. With the former, the

time the market would mature, prices would

commoditized, and his

profits

complete lack of institutional nostalgia

—

inventory

its

fall,

profitability.

as Bill Terry did

—he

abandon any

HPers, in

fact,

it

was vulnera-

was always that over

products would become

would disappear. Packard met

products. Packard was prepared to

began to lose

risk

that challenge with

cared for employees, not

HP

business the

moment

learned to hide old

it

company

with the early company instruments, including

— DAVE

BILL &

262 the 200A, that

would eventually become the heart of the

HP museum

—before

Packard ordered them sold for scrap or tossed in a Dumpster.

As

for innovation

—the very

new technology

ary

real threat in

high tech that some revolution-

will instantly render one's entire business obsolete

HP in two ways: by diversifying the company's product line

Packard protected

and by funding

across almost the entire breadth of the instrument business,

a

R&D

operation, under the redoubtable Barney Oliver, to con-

stantly scour the

world for the potential new technical competition. These

world-class

new competitors Packard Still,

none of these

surement industry challenge was

But

Bill

either bought, beat to market, or outflanked.

strategies solved the larger issue of the test

growing old and unprofitable. In some ways, that

itself

beyond David Packard

Hewlett was a different

his perpetual search for the his partner never was.

and mea-

—he was

story.

radical,

but not a revolutionary.

His lifelong love of technology, and

Next Big Thing, made him a risk-taker

in a

way

Given a choice, Hewlett would always throw deep, hop-

ing for a tech touchdown.

Though both men were

compass

it

in a single image,

far

too complicated to en-

nevertheless might be said that for

Dave Packard,

technology was the means by which he achieved his business ambitions, while

was the vehicle by which he

for Bill Hewlett, business

realized his technology

dreams.

By the same token,

for Hewlett

it

often

seemed

that other

low members of an immense new product design team,

and professionals toward

as compatriots

Needless to

say,

vulnerabilities, the

technological If

Packard's

the

Bill

common

HPers were

fel-

working together

goal.

Hewlett business strategy had some very serious

most obvious being

unknown could

HP

a

all

that every

also prove to be a

risked being insular, Hewlett's

one of these leaps into the

jump

into business oblivion.

had the danger of being over-

extended and misdirected. But together, as long as the two along (which they seemed to do almost

effortlessly),

it

was

men

could get

a near-perfect

combination. Less obvious straints of the

also

HP Way, both

Washington,

fact,

that separately, for short intervals,

be extraordinarily

World War. Now, in

is

Dave's and

effective.

individual business styles could

Packard proved that during the Second

in the early seventies,

Bill

Bill's

and under the con-

during the three years his partner was

Hewlett showed that his strategy worked just as well. In

those three years under Hewlett alone would prove to be the most inno-

vative

and exhilarating

in

Hewlett-Packard company history.

Bastion

263

Time to Dream Bill set

the tone early. Even as the recession raged, and the

named

at

HP. Never

to be allowed to

paid work time on product concepts sult in a saleable product. This

was

— not

The

was that Hewlett was

reality

if

was nick-

explains,

"The idea

spend up to 10 percent of their

—

might

re-

model shop time

for

in the official plan

to include necessary

building materials, or purchased parts

official, it

Minck

the "G-Job," or "government work." John

was that every engineer was

cut back

what would be the partners' last

to the Nine- Day Fortnight, Hewlett instituted

important proactive personnel innovation

company

that

needed." 22

essentially offering

back to

employees

his

time for which they were largely idled by the recession anyway. Moreover,

most HPers who were after

still

busy for the entire day

likely

added

their "g-time"

hours anyway. But the gesture was deeply appreciated by Hewlett-

Packard employees, and had some stunning

results. Implicit in Hewlett's deci-

sion was a very special kind of social contract: I've saved everyone's jobs

—now

invent us out of these hard times.*

HPers across the company responded tried his

hand

amplifier for

enthusiastically.

Even Barney Oliver

at a new product idea. The result was a radically new solid-state home stereo systems that featured noise, hum, and distortion

lower than almost any other stereo amplifier

at

any

price.

Because

it

didn't

fit

with the company's current business strategy, the amplifier was never offered to the public, only to

HP

employees,

who

could buy

kits

from a

house run of front panels, enclosures, knobs, and printed proved so popular that

at least

special in-

circuit boards. It

two production runs, totaling about two hun-

dred amplifiers, were completely sold out. Today, a real "Barney Oliver costs collectors a tidy

sum on

A second g-time invention

also

came from Barney

Oliver,

who seemed

take the set-aside time as a personal challenge. In this case, the idea

an

Amp"

eBay. to

came from

HP salesperson in Chicago who, over a drink one night, happened to men-

tion to Oliver that

one of the biggest frustrations facing

test

engineers was the

need to cut a power wire to determine the current going down

it.

There had to

be a different way, said the salesman. Intrigued, Oliver his researchers,

Thanks by

went back

It

Labs and, with the assistance of one of

to a built-in circuit that could

a passing current, the

wire.

HP

to

came up with what would be

HP 428A

the

HP

42 8 A probing ammeter.

measure the magnetic

field

produced

merely had to be clamped over the intact

proved to be a successful and enduring product.

But that was

just the beginning:

another engineer

at

HP

Labs, reading

about the need by banks for high-speed check processing, rejiggered the probe

— 264

DAVE

BILL &

into a

flat

and used

reader,

to detect the

it

magnetic ink code on a passing

check. This invention too sold in huge numbers.

But the biggest g-time invention, the one that changed modern tion,

would come

pany's

use

later, in

when

the mid-seventies,

new Advanced Products

HP time and tools to invent

a

young HPer

civiliza-

at the

com-

Division in Cupertino, Steve Wozniak, would

—the personal computer.

HP's Greatest Product In a very short time, Bill Hewlett

ment

at

Hewlett-Packard.

suddenly

felt

young again

Now it began to pay off. The middle-aged company

—and ready

The opportunity came soon The four

had created a maverick innovative environ-

to stir things up.

thereafter.

years since the introduction of the

had seen major changes

HP

in the calculator industry,

9100 desktop computer

and not

just at Hewlett-

Packard. At HP, the Loveland, Colorado, division (where the desktop computing operation had been transferred) had continued to evolve the original 9100

design into a

new

generation of

much more

sophisticated scientific desktop

calculators.

This 9810/20/30 family was not only capable of

computing than the terfacing protocol

—

original 9100, but

was

also able

much more

—thanks

to the

powerful

HP-IB

in-

to operate multiple peripheral devices, or be plugged di-

automation systems. This quickly made HP new workhorses of labs and assembly lines around the

rectly into laboratory or factory

desktop computers the

world ble

—and,

HP But

if

helped to further spur the sale of compati-

as originally planned,

and measurement instruments.

test

HP owned

the high-end desktop business, the low end

scendants of the original four-function adding machines of dozens of competitors

an inevitable shakeout.

all

The

and Friden, and newcomers such

as

whole new generation of Japanese electronics companies

a

way

result

the de-

Among the players in this market were not only indus-

notably Sharp, Canon, and Sanyo devices as a

—

a near-chaos

scrapping for market share and facing oblivion in

try veterans such as Texas Instruments

Bowmar, but

—was

—

that

to break into the U.S.

was high

tech's first

saw these high-volume, low-priced

consumer

consumer

electronics business.

electronics bubble, with each

competitor trying to capture customers with lower prices, smaller designs,

and superior marketing. By the end of the

1960s,

some of

these companies

even had secret design projects under way to build true handheld calculators.

By 1969, TI was able

to

show

a prototype four- function calculator, code-

265

Bastion

named

would even

"Cal-Tech," that

time, Sharp

announced

a

new "portable" calculator

that

home

to the It

—and,

Gordon Moore

of

was an also-ran

would use the newest

memory

generation of large-scale integration (LSI) logic and

law had come to calculators

At about the same

in one's pocket.

fit

Moore's

chips.

were about to come

ironically, calculators

himself, Intel Corp.

company Busicom,

in the calculator wars, the Japanese

which unconsciously sparked the creation of the so-called product of the century and changed the high-tech world forever. Busicom had struggled to keep

up with

its

turn loomed,

was

vival

to

its

ber of chips.

on one

of

roll

set

hope of

could be done, Busicom might be able to leapfrog

If this

made

Intel that

Federico Faggin, and Busicom's

the revolution.

U.S. semiconductor makers,

A

team

own

that included

numcom-

its

Mostek and

all

supplier,

it

Ted Hoff, Stan Ma-

Masatoshi Shima

1969 to build a four-chip package that would perform basic calculator

sur-

costs.

and while the former would eventually become Busicom's

zor,

down-

as the

with the smallest possible

both in downsizing the product and cutting

was

It

Now,

convince a U.S. chip maker

the dice:

custom calculator chip

a

The company approached two Intel;

times.

executives concluded that the company's only

to bet everything

come up with

petitors

good

bigger competitors even during the

set

out in October

of the functions of a

and more.

took them a

year,

but the

chip set for a calculator.

result, the

was, in

It

dreamed-of "computer on a

fact,

the

first

modern

Intel created the 8-bit

Intel 8080, the direct ancestor

more than just

a

microprocessor, the long-

chip," and, billions of units

tions later, the defining invention of the

completing the 4004,

4004, proved to be

and

a

dozen genera-

world. Within

months

after

8008 and, in 1972, the epochal

of the Pentium family and almost every other

microprocessor on the planet. Luckily for history, Busicom didn't want the

4004 and reverted the rights to (to date)

more than $100

None of 9100A

to

—

these changes were lost

not forgotten the

tenth the

Intel

worth

on Hewlett-Packard. Tom Osborne had

comment Hewlett had made

An Wang: size,

a decision that has proven to be

billion to Intel.

that he

wanted the next machine

and be ten times

family had stayed the same

that day they

size,

faster

than the

HP

and about the same

showed the

to be "a tenth the cost, a

9100." Instead, the 9800 price,

and grown

at least

one hundred times more powerful. But even not.

Osborne

if

Osborne had forgotten Hewlett's challenge,

recalled, "I

knew he was

serious, but

we were

Bill

Hewlett had

kept hostage by

the lack of low-power integrated circuits." 23 Without those chips,

it

seemed

impossible to build a multifunction, battery-powered, handheld scientific calculator.

But that didn't keep Hewlett from regularly asking about the progress

of the project: "I was visited regularity by

Bill

Hewlett

who wanted

to

know

DAVE

BILL &

266

why we were not working on

the calculator he had prescribed.

The pressure

cooker would have been hotter had Mr. Packard not been in Washington the Department of Defense. Nonetheless, the

when he

did

visit

same question." 24 Luckily for the oppressed Osborne,

Packard came

home

article in a trade

to

make

magazine.

his life even

It

described

more

in 1971, before

miserable, he

how Mostek was

at

the labs, he asked

came

using a

Dave

across an

new

fabrica-

tion process called ion implantation to create chips that required only a tiny fraction of the usual

amount of

building these chips for the next

With

tors.)

current to operate. (Ironically, Mostek was

—and

final

—generation of Busicom

Osborne knew he could build

these chips,

a

the very day he read the article, he went to Bill Hewlett and told three years

later,

new

Osborne asked

it,

calculator should be. Hewlett

at the chest

him

that

On

now,

HP could finally build the calculator Hewlett wanted.

Then, as company legend has the

calcula-

handheld 9100.

pondered

Bill

for a

pocket of his white, short-sleeved dress

what

he thought

size

moment, then pointed Small enough to

shirt.

fit

in that pocket, he said.

Osborne had

his

wanted to design the

marching orders. He quickly contacted the team he device, his old friend Paul Stoft

and the

HP

Labs design

team led by Tom Whitney.

knew

I

would have

I

Paul Stoft,

Tom

a bit of trouble getting the project staffed because

Whitney, and Tom's engineers were hard

at

work on

a

briefcase-sized something-or-other. This was one of a very few times that

used whatever power

I

had

I

to pressure Paul

minds about what they wanted told

them

that

if

they were sure

to

and

we could not do

told

decided that

was

It

it

CEO

green

new

change their

we could do

it.

I

Bill

Hewlett

—because

I

During the next few days, they

possible. 25

less

than a week, an outside contractor

product, based on a largely unproven technology, to

of a $500 million firm with 20,000 employees, gets an immediate

light,

on the

that

might be

remarkable moment. In

a

presents a radically

the

him

just

to

a shirt pocket calculator,

then they would have to explain their reasons to

had already

Tom

be doing for the next couple of years.

and then

project.

redirects

The phrase

one of the company's top design teams

"agile corporation" wouldn't

to take

be invented for an-

other quarter century, but Hewlett-Packard during this era already personified

it.

It

his

was only

after the

team was assembled and under way that Osborne and

group made a wonderful discovery. Over

components

division, another

team had

Phoenix company named Unidynamics

at

HP Associates, the

just spent

company's

two years working with

to create the

a

keyboard and display for

267

Bastion

new calculator design. This team had spent two years coming up number of innovations, including an inexpensive photoconductor key-

a radically

with a

board of spectacular

and

reliability,

magnified by an optical screen,

all

LED

low-power

a

display that

would be

part of a larger effort to help Unidynamics

come up with a four-function calculator (with some added functions hidden in

memory for

the price and

HPA

future use) the size of a pack of cigarettes for just $200

gave the client everything

asked for

it

— only

never explained, but

it is

likely that its

market for the new calculator of just 10,000

as 100,000 of the

Unidynamics

units. In fact, given that

what happened next

—and

it

a total

would

would have sold

likely

planned calculator. Historian John Minck,

part of that team, explained

how the HP Way's

to have

market research had estimated

have been a year ahead of the market, Unidynamics

internal

half

The reason? Unidynamics

suddenly and without warning cancel the project.

many

—

of the competition's best.

size

as

who was

glimpse of

offers a

philosophy of trustworthiness affected even the company's

communications:

Once we confirmed released

that the project

from our self-imposed

HP

details to other

entities.

We

was

HPA

clearly cancelled,

rules

we

felt

we were

about revealing any

sales

always held such information strictly

components business,

confidential during our contract periods. In the

such technical and business details were sacrosanct.

If

should discover any such details about a competitor,

another

HP

we would

entity

lose

all

credibility. 26

This

is

a very long

way from

the standard business practices of the rest of

Silicon Valley during this period.

Now unleashed from any commitment to Unidynamics, Minck drafted a memo to HP Labs that laid out the nature of the planned calculator and the breakthroughs HPA had already accomplished to help realize Serendipiit.

tously,

one of the

scientists

on the routing of

1970, was Paul Stoft. So, twenty

memo,

dated January 27,

when Tom Osborne came callcalculator, Stoft already knew that half

months

ing with the idea for a pocket scientific

that

later,

of the technical obstacles to such a device were already solved.

Looking back, Osborne would describe the creation of this new calculator as

one of the happiest times of his working

The HP35

project

was

just plain fun.

rithms were similar to those in the

career:

We knew

HP 9100)

ciding whether the arithmetic keys should be

whether the

"

+

"

so

it

would work

we

on

(the algo-

spent a lot of time de-

the right or the

left,

and

key should follow the convention of adding machines

— 268

DAVE

BILL & and be placed where

most convenient. As

it is

worried about the

fact that

I

recall,

had

.

.

The

we

should be located

be the

to

first

people to have

the thing was to

if

all,

it

did not seem to be the least bit

we were going

non-standard key spacing. After pocket, the keys .

whether

in the lower right corner, or

fit

in a shirt

crunched together.

to be

design-to-production cycle was incredibly short

[calculator's]

We

for a product of that complexity.

got the official go ahead

on Ground

Hog's day (Feb. 2) and demonstrated working machines to the Board of Directors in August. time.

I

I still

remember being

do not know how

busy, but

do not

I

it

happened

recall

in such a short

having had any major

hang-ups. 27

Tom Osborne, but over at HPA the calculator team had to

Perhaps not for

break through one problem realization that Whitney's digit

on the LED display

The only lab to

One

after another.

of the biggest came with the

team would only be willing

—and

that

it

would

cost

pay $1.05 for each

to

HPA $5

each to build them.

solution was to upgrade HPA's Gallium Arsenide Phosphide

produce cheaper chips. But that promised to be a $500,000 investment

more than

that

approval from

What

team had ever asked

Bill

HPA

the

for at

didn't

know was

at that

proval just got infinitely lower. With

much

calculator might cost as

as

market research study on potential

— even

president of the

One day ing

on

the

HP

labs."

So

That was

Bill said, "I

it.

tion than the

proposed calculator was

month

as best. Bill Terry,

I

says,

"We've got

went up and talked

to Bill

Looking

want one of these

at

a

results

likely to

gen-

who was now vice

this calculator go-

and he gave

to

it.

[It's

me

the

going to

things." 28

market research that offered an even worse predic-

company dragging

had made the decision if it

The

slide rule.

one that had scared off Unidynamics,

away, at the head of a

might, even

scientific

Instrument Group, recalled:

twenty times more than a

Then,

new

high-end calculator.

sales for a

market research report that suggested we shouldn't do cost]

odds of getting ap-

on the market, Hewlett had ordered

phone rang and Hewlett

HP

at

their

estimates that the

$350 to build, almost double the average

at $395, the

erate sales of just 1,000 units per

moment

initial

price of standard calculators currently

weren't heartening

one time. And that would need

Hewlett himself.

spend HP's

itself

talent

his partner a continent

out of recession,

and fortune on

proved possible to build, never find customers.

Bill

Hewlett

a project that

269

Bastion

was Hewlett's

It

and bravest business

riskiest

he was the only person

at

HP who

decision.

made

could have

it.

And

it is

likely that

Even Dave Packard,

with his preference for playing within his game, likely would have killed the

had made the decision, he stood be-

project (though once he heard that Bill

hind his partner 100 percent).

But Hewlett during

most congruent:

at that

market that

moment,

piece of technology, such as scientists

their interests

Hewlett

Bill

knew

that

decade

a

and if

desires

was

later,

were

he liked some

al-

new

hundreds of thousands of other

this calculator,

and engineers out there would too.*

Did he make the

right choice? History says

in the context of the

HP Way and

HP

the

be deemed foolhardy and dangerous. But to keep Bill Hewlett

there to

Apple

this period, like Steve Jobs at

so perfectly attuned to HP's

make

that's

from chasing new ideas

sure that

it

was

a decision of genius. But

Corporate Objectives,

it

could also

why Dave Packard was there: own sake. Just as Bill was new ideas.

for their

Dave remained open

to

Now that Hewlett had made up his mind to pursue the calculator project, there

would be no stopping him. The goal now was

remove any obstacles

to

in

the path of Whitney's team getting the prototype built.

Meanwhile, the nervous ing

its

proposal for a

improved LEDs

HPA

team held one

new $500,000

lab.

last

Beyond the

meeting before present-

potential sales of the new,

to the calculator group, the division's

marketing people had

convinced themselves that there might be another, outside, market for the stand-alone displays.

How

big?

They had no

idea. Finally, division

Dave Weindorf announced abruptly, "What the

hell, let's

make

it

manager

a proposal

for a cool three-quarters of a million." 29

The team quickly

rejiggered the

numbers and, the next

day,

went

to see

Hewlett. Like the founders of the division had a dozen years before, they had

prepared an elaborate presentation justifying both the project and tag.

And

like

Packard had then, Hewlett

now waved them

off.

its

price

According to

Minck:

We had our arguments well-honed and practiced. utes of preliminaries, presenting our executive saying, "I've got another meeting, so I

should know? It

was by

If not, let's

go with

far the easiest project

Now it was up

to

unsung hero of the

is

who was

.

.

[But] after five Bill

min-

stopped

us,

there anything else important that

it." I

have ever sold. 30

Tom Whitney and

project,

.

summary,

his crew, notably

Dave Cochran, the

in charge of designing

all

of the "algo-

rithms" (the simple mathematical steps that produced the complex functions)

270

DAVE

BILL &

As

for the calculator.

for

Tom

Osborne, unlike the 9100, his involvement in

the actual circuit design of the

new

calculator

was minimal. Rather, he

cused on what functions the device should feature and making sure the design would lend

mable

itself to

what he saw

as

fo-

final

natural follow-up: a program-

its

calculator.

Yet even choosing the functions for the calculator proved complicated,

meddling of both Hewlett and Barney

largely because of the endless

moment Whitney had

continued right up until the

Oliver.

It

to send the final inte-

grated circuit masks to the semiconductor fabricators. Finally, in exaspera-

Whitney

tion,

sent a

memo

to

all

concerned saying that he had reserved a

meeting room for the entire day, and the group would meet to "freeze the key-

board functions to everyone's It

did, in fact, take

all

satisfaction." 31

day to reach an agreement; but

everyone

at last

signed their signature to the document. Exhausted, Whitney walked back to his office to it

put the

final

off in the morning.

touches on the paperwork in preparation for sending

He

arrived to find the

phone

ringing.

It

was Barney

Oliver: "I've got another idea."

"Too

late,"

Almost the Bill

most

said

Whitney and hung

instantly,

brilliant

up.

he had second thoughts. Oliver was,

person

at

HP, but also his

boss.

after

all,

not only

So he quickly put in a

call to

Hewlett to explain what had just happened.

Go with

the signed paper, Hewlett told him. 32

That August, the prototype Osborne demonstrated to the rectors, like the

9100 before

case with a cable

it,

was

basically a finished but

coming out of the top

working components. But

to a larger

was enough

it

to

HP board of di-

empty

calculator

box containing the

amaze the board, and

actual

thrill Bill

Hewlett. Later, in a

the calculator.

meeting with marketing, Hewlett went over possible names

The brainstormed

Marvel) to the

names

in

silly

looked

And

ranged from the

for

mundane (The Math

— four pages

of

Osborne turned

to

Whiz Bang Machine) a winner. 33 Finally,

"Do you have any preference?"

at the

machine

HP 35." It sounded OK to it

Billy's

and not one of them

all,

Hewlett and asked,

Bill

(Captain

titles

for a

minute or so and

said, "Let's call

me, but why the 35? He smiled and

it

the

said, "Well,

has 35 keys." 34

that

was

it.

The HP-35, according

to Forbes

ASAP

twenty products that changed the modern world, had volved in

its

creation, the calculator

seemed

like

magazine one of the

its

name. To those

in-

an almost mystical experi-

— Bastion ence. its

Osborne

own.

recalled,

simply chose

It

"Looking back,

HP

it

271

seems

HP- 3 5 had

as if the

a

life

of

as its birthplace." 35

Retailing a Revolution Creating the HP-35 calculator was one thing; selling

among

Hewlett-Packard there were serious doubts, even

who

quickly

fell

in love with the

little

was another. Within the legions of HPers

marvel, whether there would be enough

of a market for the device to escape serious losses,

Not only did the market research predict the HP-35, a product of

it

much

less

break even.

but the very eccentricity of

failure,

those internal battles over functionality, argued

all

against public acceptance as well.

For example, the HP-35 featured tiny keys in a nonstandard pattern,

computational language, called Reverse Polish Notation, that

as well as a

sounded

like a joke.

RPN

was, in

fact,

an extremely

efficient

way

to string to-

gether multiple operations without the need for traditional parentheses, equal signs,

and other formatting. But

it

was

also counterintuitive to

every one of HP's engineer customers) arithmetic. For example, in

der

Graham

Bell

2

+

2

(that

when they used

.

it.

of that seemed to matter, because once they saw the HP-35,

people simply had

to

own

it.

It

was the

first

great

example of

digital

consumer

product hysteria, an augur of what was to come with video games, watches, the Macintosh, Windows, and iPod. Orders for the

demand.

creating shortages that only fanned the flames of ket appeared of people

uisitions,

reselling

it

at inflated prices.

HP

to

in

A secondary mar-

who were lucky enough to have scored an HP-35

and skipped meals

the world, a market

digital

HP-35 poured

was quickly overwhelmed

so fast that manufacturing at Hewlett-Packard

and were now

is,

had invented the telephone and then demanded that people

only speak Hittite

And yet none

RPN,

anyone

who had grown up with traditional = became 2 2 + It was as if Alexan-

early,

People sold their cars, fudged req-

buy an HP-35.

On

had considered minor

college

for such

campuses around an expensive

tool,

ownership of an HP-35 was the zenith of cool in the engineering and science departments.

So great was demand for the HP-35 that even a black market formed for

machines that had been stolen off lab tables and right out of the at

NASA

office desks

hands of astonished owners. The

and other big research laboratories

— even ripped

theft rate

that

was so great

those organizations

began putting the HP-35 into locking cradles fixed to tabletops

—the 1970s

BILL &

272

DAVE

When

equivalent of the books chained to walls in medieval libraries.

Army refused tists at

honor purchase orders

to

an expensive item, the scien-

for such

money still in the train-

the White Sands Proving Ground, seeing extra

ing budget, merely Scientific

announced

new

a

Computers." The tuition

fee:

the U.S.

course in "Reverse Polish Notation $500, which included a

new HP-35

"training tool."

But the HP-35 was more than

how

just

was the

great

frankly, the

modern

glimpse of just

cultural

just a precious novelty.

tant

a decade before to put a

Tom Osborne found

American

trajectories.

and,

man

On

a visit to

ENIAC,

to take a look at

the

Washing-

tubes,

it

was the

size

technicians ran around in bathing suits inside

its

of a house

impor-

first

computer, built in the early 1940s to compute

With 18,000 vacuum

as

such as

in movies,

in space.

himself overwhelmed.

by the Smithsonian

digital

much computing power

had seen

the million-dollar, room-sized computers they

ton, he stopped

HP

technology had become. Here was an in-

vention they could hold in their hands that had as

Even

hard to gauge

world. For thousands of young people, the HP-35 was a

how miraculous high

had been used just

It is

impact of the calculator on both

—

artillery

so big that

glowing racks replacing

tubes that burned out on average every twelve minutes. As he read ENIAC's

performance the

little

more

specifications,

HP-35 he had

Osborne was staggered with the

in his coat pocket

was more powerful, and immensely

than the behemoth in front of him.

reliable,

The HP-35 would eventually join ENIAC on

One young man a brilliant

just

dropped out of the University of Colorado back together. He had built

in junior

that thing" 36

Boulder and was attending

a celebrated four-function calculator while

high school, and now, seeing the HP-35

— he had an epiphany. Though

would follow

at

few blocks from his old high school and trying to get

a local junior college just a

still

display at the Smithsonian.

who was especially affected by the HP-35 programmer named Steve Wozniak. Woz had young computer in Silicon Valley

was

his life

realization that

his father in

working

at

others

"I just

drooled seeing

had long been assumed

it

that he

Lockheed, Wozniak decided that his fu-

ture belonged with Hewlett-Packard, working

Though none of the

—

would go on

on

and computers.

calculators

to invent the personal computer,

thousands of other young people were drawn into the sciences by the ease with which the HP-35 could cut through what had been laborious culations. In the

meantime, two of the most venerable of

businesses, with centuries of enduring success behind

books of

would

scientific tables

write,

drudgery beater. efficient." 37

—

was "not only It

made

them

—

all

cal-

technology

slide rules

and

died seemingly overnight. The HP-35, John Minck a prestigious personal possession, but

better engineers,

and

it

made them

an amazing

faster

and more

273

Bastion

The prediction had been reality

for, at

was an order of magnitude

greater: 10,000 per

HP

would have been even higher had would take eighteen months

demand

— and

by then, the

most, 1,000 HP-35s sold per month. The

month, and the number

been able to build them. In the end,

the HP-35's nearly as famous suc-

cessor already in the pipeline, ready to set off another rush. scientific calculator finally

and

its

Packard, making Said

merged

descendants would

into the

PC

more than 20

sell

was willing

to take a risk

By the time the

in the early 1990s, the

HP-35

million units for Hewlett-

them the most popular products

Bill Terry, "Bill

up with

for Hewlett-Packard to finally catch

company had

it

in the

company's

—and boy was he

history.

right." 38

Selling Uncertainty For good and bad, the HP-35 also taught Hewlett-Packard something about

consumer marketing and thirty years

retailing.

Thanks

to the efforts over the course of

by Noel Eldred, Russ Berg, and Dave Kirby,

as well as the

pany's veteran PR, advertising, and marketing professionals, sell

com-

HP knew how to

technology to technologists about as well as anybody.

But the breakout of the HP-35 changed everything. Before of clever marketing

at the

to send, preintroduction, later,

the

Nobel Prize winners.

idea of even

how to

earful.

retailers

A

talk to these

the sales side, salesmen, marketing types, even group

They got an

few months

and learn something about

Remembered

consumers.

VP

selling to

Bill

Terry

consumers.

Packard:

Terry vividly recall [ed] going to Macy's department store in San Fran-

cisco.

ment. deal

to fifty

that, the height

inspired decision

to find itself selling calculators to college kids,

And HP had little

fanned out to talk to

Bill

HP-35s

company looked up

even teenagers.

On

company had been Barney Oliver's

Macy's, at that time, was interested in building an electronics departBill

remembers showing the

on the

price,

calculator, eliciting interest, striking a

then starting to talk about order and delivery schedules.

At that point the Macy's manager placed both hands squarely on the table in front of him, looked Bill in the eye,

and

don't understand.

I

was our

HP catalog

I

don't

sell

initiation into the

had always been seller.

anything unless

consumer

said,

have

it

"You young boys in the store."

That

market. 39

either a contract supplier of

equipment or

a one-off

Now it had to learn how to build for inventory, to keep retailers'

shelves replenished,

and

to

budget for returns.

It

was training that would

BILL &

274

company well

serve the

DAVE

in another twenty years with inkjet printers

and per-

sonal computers.

Meanwhile,

HP

advertising also

found

itself in a

brave

new world of con-

sumer promotion: student discounts, back-to-school promotions, expensive consumer media print color It

advertising, packaging, point-of-sale promotion, four-

brochures— all of the standard

was not something

HP

took to

tools for

easily,

the company's advertising looked like

promoting

to

mass audiences.

would be many

years before

more than tweaked-up

trade press

and

it

marketing.

HP HP-35

PR faced its own challenges. The good news was that the need much promoting: the world's media came to Hewlett-

corporate didn't

Packard for stories on the

found

itself

first

company

time, the

barraged with requests for review models, donations, sponsor-

ships of everything gifts for

miracle. But for the

little

from America's Cup yachts

and

to dirt-bike racers,

the rich and famous. For thirty years, the only people

free

who had

re-

HP instruments were trade magazine reporters who were often as technically astute as HP's own engineers. Now, HP public relations found itquested free

self dealing

them,

one

or, in

blew up the

who

with reporters case,

plugged

calculator, taped

it

took review machines and never returned into the

it

power cord of

into a standard envelope,

his electric shaver,

and mailed

it

back to

HP demanding another one. accommodating

Public relations learned to be patient and as to

all

of these requests.

Still, it

did draw the line at sponsorships

as possible

—mostly be-

cause Kirby and his team were fearful of an image on the nightly news of the sole surviving

remnant of

a

burning land speed record contender or the

HP logo.

ing shard of an exploded hydroplane bearing the It

HP

was only

after the

HP-35 had been on the market

public relations began to hear

calculator

—and quickly began

press releases.

It

seemed

that,

float-

some extraordinary

for a

few months that

stories

about the

to turn those tales into a series of

little

popular

thanks to the overengineering of almost every

part of the HP-35, especially the keyboard and the high-impact plastic case, the calculator was astonishingly durable. Stories began to

HP-35s being bounced off the backs of motorcycles dropped into

when

a bucket of

finally retrieved,

ability to

still

molten

lead, frozen in a

even as a twisted lump of

at

come

in

pond over plastic,

the winter

—and

having an uncanny

work.

This only added to the HP-35 legend, especially distribute these survival stories to the media.

The

when HP PR began

later,

other

HP

to

success of these releases led

Kirby and his team to embark a series of "application" stories about

HP-35, and

about

seventy miles per hour,

how

the

products, were being used in unusual real-life

applications from determining medication dosages in emergency

rooms

to

275

Bastion

bush

calculating flight paths of

pilots to directing the operations of giant

earthmoving equipment. These features, which would eventually number in the hundreds (and

would be Hewlett-Packard's most enduring contribution tronics trade press into the

HP-35 and

its

mainstream media. Before long,

at

HP Labs, the HP-35's creators were also learning some

important lessons from their

machine

little

—mostly about

Cochran, the algorithm expert, found himself

at gatherings

competitive mathematicians, whose reputations rose and

came up with

sion with whoever

It

same time,

Minck

became

idea,

the

all

but might

Tom ect,

and

it

lot

tell

false leads to

and

in their profes-

fell

about a new algorithm

put the other company on

were advantages to be gained in talking

established industry standards

art. Yet, all

and processes, and

information had to be taken with huge cau-

Did we gain more than we

gained a

clever

most elegant and powerful equations.

game. They might

salt-in traps

was an arcane

tion.

with potential fu-

were also scouting competitive information for their

track. Naturally, there

together since, often, it

the

Dave

recounts:

a kind of chess

wrong

duplicity.

from Bowmar and Texas Instruments, equally

ture competitors

at the

stories of the

Enquirer*

Meanwhile, over

But

profes-

descendants were appearing in everything from Time magazine

to the National

employers.

PR

to the

HP to be the first high-tech company to reach beyond the elec-

sion), enabled

lost?

Knowing Cochran,

I

suspect

we

more. 40

Osborne, as the best-known name connected with the HP-35 proj-

found himself

ized, heedful

computer

in

an even brighter spotlight. As the HP-35 was being

of his promise to

in one's pocket,

Bill

Hewlett to put the power of an

Osborne took

specifications in the calculator that

low-up machine. In HP-35, to be

fully

particular,

it

upon himself

would lend

he intended for

itself to

this

a

final-

HP desktop

to fight for certain

more powerful

fol-

next calculator, unlike the

programmable.

Calculating Opportunities The astounding

success of the

HP-35 not only immediately green-lighted Osdrew a host of competitors hungry for a piece

borne's follow-up plan, but also

of the huge

new

market. In the end, three different calculator models would

enter the design phase.

Two of them,

the HP-45, a

more powerful

version of

BILL &

276 the original, and the HP-55, a

DAVE

programmable

calculator,

were already

antici-

pated by the analysts, customers, and competitors.

But

was the

it

HP-65, that Osborne knew would be the com-

third, the

pany's next great product, and the linchpin of HP's future calculator business.

What made

only programmable, but

simply feed a narrow

gram

(that

programming

of

own

could write their

and preserve

He

at

which

was

I

them

So

far,

a speaker,

I

guessing what

somewhat

that to just have a

programs had

to

be

so honest

through

strip

HP-65, and Osborne knew

like the

if it

meant

that time, everyone in the calculator business

knew they would be second telling

display,

perform the operation.

programs, run a blank

decide to protect the crown jewels, even

Way: "By

HP-65 behind the to

their application for future use.

There was simply nothing in the world it.

in the

was not

it

containing a complex application pro-

plastic,

code), into a slot in the side of the

better, users

the HP-65,

that

of mathematical equations, rather than a computer's

and the calculator would then be programmed Even

dominance

HP-65 revolutionary was

featured a tiny magnetic card reader. Users could

it

strip

a series

is,

the

easily

we were

violating the

was aiming

HP

HP.

at

intentionally misled the competition

programmable

calculator

loaded into the machine." 41

—but then Osborne decided

I

HP

come from

successive loadings should

we were

ternal tape reader (at the time

to

send the competition on a

designing an internal card reader into

introduced the

HP

65 with

fall

by the wayside." 42

If

65).

When we

anyone

at

HP knew beforehand

its

mag

tiny internal

HP

Way, but

him.

worked.

HP-65 made an even bigger explosion on

If

anything, the

than the HP-35. Consumers were

now

HP-65

retail

delivered.

Even the $695

reader,

about Osborne's planned misrepresen-

wasn't in the spirit of the

tation, they didn't stop

It

is

an ex-

a magnetic media, like

could hear the competitor's projects

the

by

was inadequate. The

wild goose chase. To the assembled, he dissembled: "Keying them in once

OK, but

I

doing, so at a convention

it

the market

prepared for something new, and the price didn't scare

— on

them away

demand had now become so inelastic for HP calculators that the higher price merely made the calculator more exclusive and desirable. The HP-65 was destined for the Smithsonian too. And with good reason.

the contrary,

5**

It

was not only

a masterpiece of

compact,

reliable design,

enhanced the productivity of professionals from doctors and educators.

gramming

It

scientists

but

—thus

setting the stage for the

working world fact,

was the HP-65 that

it

became em-

blematic of the entire electronics industry in the early 1970s. And,

own

to

also brought, for the first

personal computer. So influential, in

sessions to

radically

time, the power of pro-

into the everyday

the hysteria surrounding

it

and engineers

it

—

thefts,

one, reporters

cooked books, students

scamming "review"

copies

if

anything,

selling their pos-

—was even

greater.

— Bastion

And HP's had

ence,

277

at

HP, as the HP- 3 5 had rolled out of

and into manufacturing, the company had created age

experi-

day getting the story out.

a field

As was standard practice

it.

now with some

PR, advertising, and marketing operations,

new

a

HP

Labs

man-

division to

HP's Advanced Products Division was located a few miles from head-

anonymous

quarters in Cupertino, in an

leased building across the street

from HP's new computer division campus. If

the computer operation was classic HP, from the cubicles to the stan-

APD

dardized building and grounds,

was anything

but. In retrospect,

it

was

the prototype of the next generation of Valley entrepreneurs, and one that still

survives at places such as Google

and eBay:

tchochkes, endless practical jokes, all-night

company

against

umph

dress codes

and management hierarchies

—

of the Tri-

all

Wozniak,

who

—the

of the

new young

hires at

APD

was Steve

quickly used his salary and employee discount to buy an

calculator he

would

nance the founding of Apple.

And Apple

fact,

credentials as his

own

—

APD

was so much

—including

itself

was

a

after those things

of innovation, and the culture of Packard. (Jobs, in

(along with Steve Jobs's

sell

and Jobs self-consciously modeled

project

newly founded Apple Computer.

at the

One

This wasn't a coincidence.

HP-35

sessions, active rebellion

of the Nerds corporate culture that would soon capture the world's

imagination a few blocks away

HP-65

with toys and

offices filled

work

company

HP

admired

to get a job at Atari.)

Wozniak

fi-

Wozniak spirit

Hewlett-

he worked on the

recalled, "It

them

at

to

that he presented Woz's

a fabricated claim that

thing magic. Designing the products, laying

that

—the HP Way, the

—they most

in thrall of

VW van)

was

just

some-

out, doing the software

—

and we were all part of the same thing, working together. And we knew while we were working together that we would take care of each other

work

and boy that sure influenced

Wozniak worked left

him

—and

to gravitate

of his

later,

for

for less than four years. Yet the experience never all

of his fame from his time

back to Hewlett-Packard

life.

marked

years

HP

for

my thinking." 43

first

This

by

is

somewhat

as representing

at

Apple, he seemed

one of the happiest times

surprising, given that his tenure there

sleep deprivation

and

distraction,

was

and then by the most disap-

pointing experience of his early career.

One

reason Wozniak was so happy at

with a childhood friend, in the creation of

Bill

APD was

Fernandez, the

that he

was able

now all but forgotten

to

work

third player

Apple Computer. The other was the HP-65, a machine that

instantly captured his heart:

Woz, who was naturally inclined toward finding the most economic and compact solution

to

any electronics design problem, found the HP-65 a

BILL &

278 revelation. "It's got this

he would

set,"

clue that

first

chip and serial registers and an instruction

little

later recall thinking.

my

computer, the love of it

might

"Except for

Happy with

his

work and

what he hoped

technician

—and

to

Wozniak rented an apartment and

life,

line,

an engineer. As

and through

it

met

a

of the new, third generation of HPers. wasn't to be

it

it still

offers a

— and

settled

he

to

set

up

at

home

soon thereafter

be an up-and-coming

though what happened next was certainly

glimpse into the changing nature of the electronics in-

dustry, entrepreneurship,

relevant in this

a hobby,

woman and

Wozniak looked

her. In every way, Steve

member But

a

as well. 44

married

unique,

it's

be a long and rewarding career as a Hewlett-Packard

in time, with luck,

phone

a Dial-a-Joke

I/O [input/output]

be possible to enter that middle ground of

computation from the other direction

into

its

Studying the HP-65's design, he got his

life."

now

DAVE

and Hewlett-Packard's growing struggle

new business

remain

to

world.

In Wozniak's case, as everyone knows, he ran into a Pied Piper, another

childhood friend named Steve Jobs. Jobs was manipulative, ious,

and

a

born entrepreneur. And he too had had

Packard. While

taught

(and

at

still

in high school, Jobs

obnox-

brilliant,

brush with Hewlett-

his

had taken some Stanford courses

HP and open to the public. There he had made his name as a fearless questioner of instructors after

tireless)

class.

At age sixteen, not long after he had met Wozniak and began helping him build an early (failed) computer, Jobs gave the

first

glimpse of his future

when, the team being short of components, he got on Bill

the

phone and

Hewlett to hustle free parts:

Hewlett, a great engineer and an even greater entrepreneur, was at this

way

point one of the most powerful businessmen in America and on the to

becoming

from It

a multi-billionaire. Forty

divisions

and

thousand people reported

sales offices in nearly

to

him

one hundred countries.

speaks volumes that, even as a teenager, Steven Jobs could detect a

touch in Hewlett and then contact him directly (and even more vol-

soft

umes line, lett

HP

that Hewlett

Jobs

made

would answer the

his pitch.

call).

Once he had Hewlett on

one

to turn

down

a student.

But once Steve Jobs scored, he wasn't about to stop pitched Hewlett for a

the

Remarkably, though also characteristically, Hew-

agreed. [He] was never

summer

job

at

HP.

He

there.

He

got that too, ending

the assembly line at HP's plant in Cupertino, building computers.

also

up on

The

ex-

perience was so compelling that Steven even tried to design a computer of his

own

—

a notion he quickly

abandoned

as too difficult. 45

self

called

— 279

Bastion

Now,

sojourn

after a

at

an ashram in India, Jobs was working

new video game company, founder, Nolan

Moreover, he had talked

Atari.

Bushnell, into letting

him

odd young man could pull preneur, he decided to give him a chance.

it

off,

flamboyant

its

but sensing a kindred entre-

But Jobs had an ace in the hole: Steve Wozniak, evenings after work in the Atari

hot

design a computer game. Bushnell

didn't think the

many

at the

who was

game room

already spending

new

trying out

products.

Jobs had just four days to create the game, to be called "Breakout," and having

no

such a product, he prevailed upon his friend

real ability to actually create

to help him.

Jobs

As

Woz

would work

all

work

already had a day job at HP, he agreed to

day,

and Woz

all

night.

In the end, to Bushnell's astonishment, Jobs delivered the game. tion

was made of Wozniak's

nor did Jobs honestly

role;

in shifts:

split

the

No men-

money he was

paid for the project. Nevertheless, a partnership was born.

Two

threads

—

work

his

HP

at

on programmable

calculators, and, be-

ginning with Atari, a growing interest in programming for consumer applications

—were

months the

third,

beginning to knit together in Wozniak's

and most

Francisco Bay Area, a growing

life.

Within

would appear. Around the San

crucial, thread

number of young

people, obsessed with

com-

puters thanks to university data processing centers, time-share terminals, and

not

HP

least,

desktop computers, were beginning to talk with each other

about the prospect of building their In

own

computers.

due time, the most committed of these computer

Homebrew Computer

organization called the

Club.

It

fanatics

formed an

met each month,

one

then eventually in a lecture hall

Stanford Linear Accelerator

at the

also a

first

few blocks from Stanford,

in yet another Silicon Valley garage, this

offices.

There they swapped notes, helped each other through design bottlenecks

and ultimately showed ongoing game of

off their

Wozniak was drawn

became

a mainstay of

problems.

newly

to this

computers to one another in an

crowd (Jobs had moved

Homebrew,

He seemed to

built

one-upmanship.

intellectual

It

was

the go-to guy for the really tough design cal-

and smallest design

so-

He

spent

awed even

inevitable that

high school) build his

Oregon) and soon

have a genius, no doubt enhanced by his work on

culators, for being able to find the cheapest, simplest, lutions, solutions that

to

his peers.

Wozniak would once again

(he'd tried once before in

own computer, and that he would show it to Homebrew.

much of his spare time in the second half of 1975 preparing to do now back in the Valley, saw Woz's work and, sensing a business

just that. Jobs,

opportunity, spurred

Thanks the Apple

I

in

him

on.

no small part

to his

HP "g-time," Woz

finished

prototype that December. But before he took

it

to

what would be

Homebrew, he

DAVE

BILL &

280 decided to

might decide

As

it

Myron

show

first

to build

it.

turned out, he wasn't the only Homebrewer

was

Tuttle

also

at

APD:

it

was

Tuttle

far superior to his

workmate

his

working on a personal computer prototype

— one

that

Woz had bought

even contained the same second-rate microprocessor that

on the cheap. When

HP

to his bosses at Hewlett-Packard in hopes that

it

saw Wozniak's design he instantly recognized that

own, and offered

to help

Woz

present

to their

it

supervisor.

two young men, along with a third technician, made

In January 1976, the

the presentation to their boss. This

is

how Wozniak remembered that meeting

thirty years later:

As soon

that said

I

said, "I

what

I

I

I

the Apple

II

BASIC

and talked

to

sell

PC board

a

do

it. I

could do.

your

of this

And

loved that

I

my company for life.

I

had the Apple

first.

and

I,

spoke of color.

home TV. And

Boy, did

had

I

I

make

a pitch.

I

what

a description of

described an $800 machine that

I

(an early computer language), to

we

don't

signed something, an employment contract,

approached Hewlett-Packard

wanted them

ran

think

designed belongs to Hewlett-Packard."

company. That was So

"Why

as Steve Jobs suggested,

computer?"

came out of

the

box

fully built

Hewlett-Packard found some reasons

it

couldn't be a Hewlett-Packard product. 46

Tuttle

would remember the meeting

those informal meetings.

It

wasn't a big deal.

minutes and showed Woz's board. that kind of market.'

slightly differently: "It

We

were

We

told,

just sort

was one of

of asked for

'HP doesn't want

five

to be in

" 47

From this has come the Silicon Valley's legend of HP's Great Lost OpporThe young hippie genius in its midst came up with the most valuable

tunity.

invention of the age shirts

built

had looked

truth

is

much more

at this

bearded freak with

complicated, as anyone

Advanced Products Division

The far

ties,

its

white

his

hand-

motherboard and dismissed him out of hand.

The the

—and hidebound old Hewlett-Packard, with

and skinny black

fact

was

in

more unusual than Wozniak

— and

moment

thanks to the announcement that ing to Corvallis, Oregon.

the halls of

1976 would have known.

that the entire building

hearing. Indeed, at that

who walked

was

their

full

of mavericks,

new product

many

plans always got a

the division was a hotbed of

APD

of them

new

ideas,

would be leaving Cupertino and mov-

With the next generation of

calculator designs al-

ready under way, and the division distracted with an imminent

move

(with

all

Bastion that

it

new Oregon

ably from the

mad

In fact,

it

facility),

APD

operations at

had slowed consider-

rush of the year before, and employees spent their empty

hours coming up with

new inventions.

can be said that Silicon Valley would not see anything

Advanced Products Division

until

Thus, by the time Wozniak

APD management some

and buying homes, transferring equipment,

entailed regarding selling

finishing the

281

conclusions.

—Apple Computer

made

like

HP's

itself.

their presentation,

it is

very likely that

had already seen similar proposals, and already come It is

also probable that

to

both the computer division across

the street in Cupertino and the desktop computer division in Loveland, Colorado, were also contemplating the

That

this

decision that

was indeed the case

HP

want

"doesn't

same is

to

idea.

suggested by the supervisor's remark: the

be in that kind of market" was not

likely

made by a divisional department supervisor, but had been made earlier by senior management after extensive consideration. Wozniak and Tuttle, unknowingly, had walked in

late to the conversation.

In fact, there were very

good reasons why

brand-new consumer market

company was still how to set up a viable the

in personal

learning

how

HP wasn't prepared to take on a

computing, the biggest being that

to sell calculators to that

distribution system to retailers,

millions of technically inexperienced customers. that

moment to throw another new product

HP

same market,

and how

to deal with

simply couldn't afford

at

category into the mix.

But the decisive arguments against the claim that Hewlett-Packard was too out of touch to recognize a brilliant

HP

new

idea like the Apple

I,

are other

products of the era, especially those coming out of APD. Both the

HP-35 and HP-65 were revolutionary products, innovative than the Apple featuring

making

some

I,

which was

inspired design work.

his pitch,

APD

in

many ways much more

essentially a

On

budget minicomputer

top of that, even as Wozniak was

had another product

watch, code-named Cricket, that was even

in the works, a calculator-

more

radical in

its

ambitions

than Woz's prototype. Finally, there

is

one

last factor to

be remembered. As

Wozniak's design was, there were other, nearly as designs

coming out of

places like the

brilliant,

brilliant as Steve

personal computer

Homebrew Computer

Club.

And most

far more powermade Apple unique was not Wozniak, though his contri-

used better processors, such as the Intel 8080, and were thus ful.

In the end, what

butions were considerable, but the marketing savvy and charisma of Steve Jobs.

And Jobs was not in that January meeting; on the contrary, he was trying

to pull

Wozniak the other way.

All of that having

been

said, the ultimate truth

about that historic meeting

BILL &

282

was

DAVE

however lackadaisical the supervisor may have seemed, word of

that,

young Steve Wozniak's invention reached the top of the company, indeed At the end of April Wozniak gave up and

department requesting a

gal

by

later

formal

filed a

memo

ket

PC boards"). Over the next two weeks HP's general counsel,

a partnership of myself

is

ran Wozniak's request past every got his release.

To the

last

work with

it

HP

and Steve Jobs founded

division.

There were no

was Hewlett himself who signed

It

moment,

Steve

Wozniak

still

mar-

C. Chognard,

takers.

Wozniak

it.

believed that he

and continue

his friend Steve Jobs

J.

to

to

would

way

find a

be an HPer for the

rest

of

But in the end, he couldn't do both, and the new company offered

his career.

a chance to be his

bolic

few days

a schematic of this "Microprocessor System," with the footnote, "Ap-

Computer Co.

him

to HP's le-

release of his technology (followed a

ple

to

to

Hewlett himself.

Bill

moment, he

own person and follow his computer dreams.

sold his

as his share in the

most cherished possession,

his

In a sym-

HP-65, and invested

founding of Apple Computer.

Did HP make a mistake in passing on the Apple I prototype? A decade later, when Apple had captured the world's imagination with the Macintosh com-

—and Woz's de—

puter and one of the most successful IPOs in business history sign

was properly acknowledged

certainly

and

a

seemed

so.

HP

workable business

was

as

still

strategy,

one of the great technology inventions struggling to find an attractive

and was looking

to

become

PC

it

design

a perennial also-

ran in the business.

But three decades on, when the myth of the Lost Opportunity

mind

the public's

the answer

is

(if

they

very different.

and had passed Apple tieth anniversary

largest personal

and

its

that of

Lost If

remember

the beginnings of the

of that fateful meeting,

computer maker,

the

fixed in

market share by the mid-1990s. By the

its

all),

HP

thir-

was now the world's second

market share four times that of Apple,

revenues and profits over those intervening years more notorious competitor.

in

is

industry at

HP at last found its footing in personal computers

in industry

total its

PC

far outstripping

Woods

Hewlett-Packard

made

sion in the mid-1970s,

it

a

major mistake with

its

Advanced Products Divi-

wasn't with Steve Wozniak, but rather in

operation to Corvallis, Oregon.

moving

the

283

Bastion

This was standard procedure at the company. Between HP's computer operations in Cupertino (expected to

grow

the company's instrument operations

rapidly),

APD

and

across the street,

than a mile away in Santa Clara, the

less

area was, for headquarters, getting too crowded.

The move into

more

to Corvallis

rural locations

was Ralph

Lee's idea.

would be good

for

He

believed that expanding

employee morale. For

didn't recognize

one of his own. In

HP

location for a major cility

manufacturing division:

Oregon

State University

was

in

Lee

idea",

seemed an excellent

big enough

to support a fa-

HP could be a ma-

with a thousand employees, but small enough where

jor player in town. city,

Lee's defense, Corvallis

man no-

a

dim bulb

torious for dismissing other people's radical plans as "a

town, and a medium-sized

Eugene, with the University of Oregon, was just an hour's drive away.

HP

Moreover, in keeping with the company's tradition of "twinning" plants, already had a small medical operation located nearby in McMinnville.

The move must have seemed

made

vanced Products Division was part of the

HP

centric workforce,

The Ad-

a dreadful mistake.

family, but

of the unique environment of Silicon Valley. With

that

when he

the perfect solution to Bill Hewlett

signed off on the proposal. But he had

its

it

was

also a

maverick

style

product

and

ec-

APD was Hewlett-Packard's outpost in the Wild West show in the 1970s, a world the rest of HP was largely insulated

was the Valley

from. 5

*"

Though APD drew Way,

its

its

sustenance from HP's infrastructure and the

HP

—

cut-

imagination lived outside the company in the singular ecology

throat competition, high risk,

emerged

in Silicon Valley.

and runaway entrepreneurship

—

that

had

There were hundreds of new companies out there

now, spawned by the disintegration of Fairchild Semiconductor and the

rise

of the semiconductor industry, then by the inexpensive and powerful chips those

new companies produced. APD may have

HP-65 from corporate R&D, but the taken the

company into an

division

inherited the

HP- 3 5 and

had run with those products,

equally successful line of financial calculators (no-

tably the hugely influential

HP- 80), and now had

a remarkable second gen-

eration of calculators waiting in the wings.

In

its

APD

brief tenure in Cupertino,

and dismay

for the rest of Hewlett-Packard.

but also disorganized, disrespectful, and, other words, the

it

was very

company in The move

distraction

had been a source of both wonder It

seemed spectacularly

many

creative,

thought, unprofessional. In

—and might have been a

Silicon Valley

great asset to

the years to come. But that wasn't to be. to

Corvallis

—the year

in

cost

the division

much

of a year lost to

which an underused Steve Wozniak found time

invent, in the personal computer, the world's biggest ($230 billion

electronics industry.

But the move

itself,

when

it

finally

to

by 2007)

happened, went

284

DAVE

BILL &

—almost too smoothly. APDers, weary from the

smoothly

real estate prices

and climbing

traffic

summer

of Silicon Valley, went up to Oregon that

and, like

generations of fair-weather Oregon tourists before them, found what they

thought was an undiscovered paradise: green meadows, pristine bling creeks,

and

fluffy

bedroom tract house

forest,

bur-

clouds in an azure sky. Even better, the price of a three-

in

Sunnyvale would buy a small estate on several acres in

Even the food was cheaper.

Corvallis.

Though some people

in the division decided to stay in the Valley, taking

advantage of HP's program of helping to find jobs in other divisions,

many

more packed up and left for Oregon. They arrived and set up shop in the shiny new standard HP building, this one set deep in the woods, and excitedly

made

plans to continue the revolution they'd begun in Cupertino.

And then It

boom was

electronics

games

the rains came.

was the bicentennial

— and,

year.

Back

under way

in Silicon Valley,

rain

it,

boom

the biggest

was the natural place

It

under leaden

and

ter the big

some of

skies

from

offices that

had made

realized they

had

to be brightly

of

for the

HP's Corvallis division to be. Instead, they looked out

the gloom,

and video

in digital watches, calculators,

for those with the vision to see

sonal computing, was just being born. icks of

an historic consumer

all,

per-

maver-

at the endless

day against

lit all

a terrible mistake. In less than a year af-

— including —began flow

migration from Cupertino to Corvallis, a steady stream

the division's

most important

intellectual capital

in

to

the opposite direction.

HP yet

Corvallis

had one

last

chance to return to

one more revolutionary calculator product

vanguard of the industry.

was the Cricket,

It

old glory, to produce

its

that

would put

it

back

in the

a calculator as powerful as the

HP-65, but stuffed into the form of a wristwatch.

— —and introduced

Designated the HP-01

many years

honor

a singular in 1977,

it

was

HP

that

yet

had held

one more

in reserve for

tiny miracle of

HP

innovation. Users could pull out a tiny stylus, so well integrated into the

wristband as to be

invisible,

them not much bigger than sign,

HP

tiny case.

engineers had

and punch the twenty-eight

a pinhead. In

managed

The software was

an astounding

to stuff six chips

and

just as remarkable: the

At $695 for the gold-plated version, the better Swiss watches of the era

for

maximum

solve sophis-

and two-hundred-year

fly. it

—and

HP-35 buyers had enjoyed

HP-01 hush-hush

of industrial de-

measurement systems, even dynamically

compute time-based operations on the

the cachet

feat

three batteries into this

HP-01 could

ticated arithmetic problems, serve as a stopwatch

calendar, convert between different

tiny keys, each of

was expensive, but no more so than it

promised

to confer

three years before.

impact

on

its

owners

HP Corvallis kept the

at introduction,

corporate adver-

Bastion

up

tising geared

for a

San Francisco the

285

PR

major ad campaign, and corporate

first

big

new product

organized in

press conference in the company's

history. 48

When

the big day came, the press conference was

The

HP

employees throughout the company schemed

list

jammed with

reporters.

announcement of the HP-01 around the world.

wire services carried the

of discount purchasers of the

first

HP-Ols

how

come

to

to get

on the short

off the manufacturing

line ... .

.

.

And then,

nothing.

The HP-01 never took tion,

remaining

off,

(albeit briefly)

but never a serious subject of purchase.

superbly,

and enjoyed the usual

sons not to buy

it:

HP

even HPers joked that

its

own

tomer.

looked beautiful, functioned

But there were too

many

rea-

the buttons were too small for older eyes, the case was so

big that shirt cuffs couldn't be pulled past

In time, the

It

reliability.

an object of admira-

it

it,

would slowly make

HP-01 would become a

and the HP-01 was so heavy that

arm longer than

that

the other.

joke, a case study in engineering for

sake without due consideration for the desires of the potential cus-

It

would

also be a prized collectible

laughing in Corvallis

on

eBay. But in

1

977,

no one was

— or on Page Mill Road.

HP hadn't been alone in misreading the digital watch business. Half of the semiconductor companies in Silicon Valley had been burned chasing the lower end of the same market. Gordon Moore for years wore a Microma digital

watch

remind him

to

again. But failure

to never let Intel dive into the

and recovery

are part of daily

Corvallis, the

HP-01 wasn't just a product

The

would produce

division

would never

come, but

it

ness faded

away

lost child, Steve

a

life

in Silicon Valley.

Up

in

but a cultural failure as well.

number of superb

take such a risk again.

in the face of the

Wozniak,

failure,

consumer market

calculators in the years to

And,

as the calculator busi-

new personal computer world

created by

its

HP Corvallis was reduced to a supplier of inkjets for

HP's printers.

The sad irony of

the APD/Corvallis story

is

that for twenty years, Bill

and

Dave, against one obstacle after another, had fought to bring the culture of the

HP Way out into the larger community, and had consistently failed. Now, with the cultural revolutions of the sixties largely over, a

new

culture, this

one

based on technology and entrepreneurship, was beginning to emerge. In the

Advanced Products Division,

new community; they sent

it

Bill

HP

had the

vehicle to take center stage in that

and Dave had Apple before there even was Apple. And

off to get lost in the

Oregon woods.

BILL &

286

Alpha If

Soup

Bit

Hewlett-Packard's calculator program seemed blessed from the beginning,

just the opposite

As noted, the

was true

for the

company's other big product

HP 2116A minicomputer, introduced in

initiative.

1966 as an adjunct

company's instrument family, had proven to be an unexpected success,

to the

not just because of to

DAVE

low price

its

(starting at $25,000)

but because

was

it

built

meet the stringent environmental standards of the company's instruments.

Two

years

later,

HP

announced

its

follow-up, the

Shared Basic System. Like the 21 16A before

it, it

was

model 2000A Time-

basically a 16-bit version

of the 12-bit Digital Equipment PDP-8 computer, a design

with

1964 purchase of Data Systems, Inc. 49 As the

its

it

name

had inherited suggested, the

2000 ran BASIC programming language software applications and could sup-

many as

port as

thirty-two time-sharing users.

proved to be an even bigger success than

It

schools were attracted both to

of

Bob Green, "Heavy

HP

tion.'

its first

computer.'

to

its

ability

computer

his-

the urge to 'make a contribu-

it

Cupertino said to themselves:

good using if

a funky

'If

computer

we designed our own

" 50

had

led

Omega

of this dream was the

computer plan Dave Packard

that

in

we could accomplish

killed for

project

—

that ill-fated

being too ambitious and

computer division employees

Omega had been

demise. The cancellation of cost

and with

a time-sharing system this

What came out 32-bit

predecessor, mainly because

of the 2000 brought the computer division

positive cash flow,

2116, think what

like the

and

sales

The engineers and programmers

we can produce

its

use of a popular language and

computer terminals. According

to serve a classroom full of

torian

its

to sport black

costly,

armbands

at its

expensive in other ways too:

it

HP several of its best computer scientists. If a

handful of the

celed, the rest, taking

Omega team

leaders

left

HP

after the project

was can-

advantage of the company's move-not-fire philosophy,

quickly accepted an invitation to join a follow-up project. This one was called

Alpha, perhaps because

it

was

to be the opposite of

its

predecessor. Alpha,

chartered to create a 16-bit computer, was already under

was canceled

—

so

told to keep doing

when

Omega

the

way when Omega

engineers arrived, they were essentially

what they were doing, but

figure out

how to stuff those fea-

tures into a 16-bit architecture. In a sense, they were being asked to

do with

do with

calcula-

computer architecture what the HP-35 team had been

told to

tor hardware.

the

now

Ironically, the additional

time

new team members and

get the

more ambitious design than

given to the Alpha team to integrate

computer

either the original

to

market resulted

Omega

in

an even

or Alpha. According to

287

Bastion Green, "As a

were

result, the

now much more

software specifications for this

original

and

all at

processor." 51

without a front-end

all

smaller machine

ambitious than those for the bigger Omega. They pro-

posed batch, time-sharing and real-time processing, first release,

much the

same time,

all at

By comparison, the

Omega was planned to only offer batch processing, with time-sharing

(using a front-end communications processor) as a possible add-on for later release.

Now with Alpha the team proposed to do much more. HP one of the best-known "Dave stories" involves

Packard,

Within

from the Defense Department, reimmersing himself in

his return

ing the is

company and

getting presentations

on new products

very likely that story was born out of Packard's

pha

project. This

is

that story, as told

first

upon

HP by tour-

in the works.

It

encounter with the Al-

by blogger, and ex-HPer, Katherine

Lawrence:

The Division General Manager made

his presentation:

two years of introduction, the product would

lose

would be break-even, and then the rewards would flow

The head of marketing got up and in the

room

The

delivered the

noticed that Packard grew ever

During the

first

money. The third year in.

same

strategy.

People

more grim.

head of Product Management was half-way

third presenter, the

through his presentation when Packard stopped the meeting and quoted

them

the

HP Way

profit," [he told

[more

precisely,

Corporate Objective #1].

"HP makes

them], "What have you people been doing while

I

a

was

away?"

He then ordered everyone members, and according

Not the

computer

team

still

as possible

to legend, spoke his

mind

to them. 52

Alpha project was scaled back to

surprisingly, the

fortunately, the

out of the room, save for the senior-most

tried to keep as

—and

lutions.

One

dresses,

would eventually lead

to

on budget. Un-

stay

much of the original functionality in

do so came up with some odd technical

so-

of these, which allowed for both positive and negative data adto disastrous

bugs in Alpha's proprietary

MPE

operating system.

The Alpha computer, now named the HP model 3000, was formally announced to the world at a trade show in the fall of 1972. The press carried the report that

HP

had now entered the computer business with

petitor to midsized

IBM and DEC

was $250,000, and prospective users were promised that the time). Writes Green:

com-

computers, and potential customers saw "a

fancy cabinet of pizza-oven doors, available in four colors."

support sixty- four users with 128

a serious

KB

of

memory

The base

HP

price

3000 would

(a sizable capacity at the

BILL &

288

The

inkling

first

had

I

that the

HP

DAVE

MPE

3000 was in trouble came in an

design meeting to review the system tables needed in main memory. Each

of the ten project members described his part of the

code segment

table, data

segment

MPE

and

his tables:

table, file control blocks, etc.

.

.

When

.

the total memory-resident requirements were calculated, they totaled

more than

KB maximum

the 128

Faced with such a problem,

would have a

instantly cut

size

of the machine. 53

and Dave, the supreme business

Bill

back on the 3000's targeted

capabilities.

But

realists,

HP

had

group organization now, with dozens of divisions and hundreds of depart-

ments underneath. Specmanship of individual products was now outside their purview; they trusted that individual

And this

HP Way.

was the

decisions. This

time,

it

managers would make the right

failed.

Desperate to succeed, the entire team

into self-

fell

delusion. Writes Green:

MPE]

[The

wouldn't

so

fit,

everyone squeezed. The programmers

squeezed in 18-hour days, 7 days a week trying to get the

Managers were

telling their bosses that there

hadn't had a chance to "optimize" the agers maintained,

would

it

all

went on

So, marketing

HP

happy users of the

MPE

to work.

was no problem, they

MPE yet. When

just

man-

they did, the

turn out as originally promised.

machines to the many existing

selling the

2000. As the scheduled date for the

first

shipment

approached, the Cupertino factory was festooned with banners proclaiming:

The

"November

Happening." 54

is

division hit

3000 to a

loyal

its

promised.

1,

1972, shipping the

first

HP

HP customer, the Lawrence Hall of Science in Berkeley. But the

computer sent was a components.

November

target date,

It

And

pile

of junk.

It

also supported only if

wasn't even finished, missing

two

users, not the sixty-four that

that wasn't insulting enough, the

ten to twenty minutes.

It

was

as furious as Bill Hewlett

Packard when they heard about the dead-on-arrival 3000 from an It

HP

had

computer crashed every

a $300,000 paperweight.

Lawrence Hall was angry, but not

Computerworld magazine.

some key

was the

first

and Dave article in

piece of truly bad press Hewlett-

Packard had experienced in thirty-three years

in

business,

and the two

founders, seeing the edifice they had constructed, the bastion of quality products

and good customer

First,

relations,

suddenly

at risk, reacted ferociously.

without hesitation, they pulled the

HP

3000 from the market and

endured the additional bad publicity that ensued. This alone was a remarkable

move

for a Silicon Valley

company:

a few years later,

Apple went ahead

289

Bastion

and shipped the

Apple

first

microprocessor would cause

knowing

Ills

that a flaw in the

many to be dead on

mounting of

arrival. Intel

its

famously went

into denial mode, even to the point of blaming customers, before

finally ad-

mitting the Pentium software "bug."

That wasn't

how

and Dave worked. Every customer

Bill

HP 3000s was contacted and their computers picked up and returned

ment of

when the application was the company over.*

to Hewlett-Packard. In their place,

HP delivered a free 2000 to tide

Meanwhile, inside HP's computer division,

form of Paul

in the

by

Way, to

and Dave

Bill

do whatever

to

what they were about

new

mass

in the

division general

hell

company's

manager and

bounds of the

took, within the

HP

make

this

HP

superstars, Ely

appointment

upon

the

HP

lightly.

They knew

3000 team.

Among

was the loudest, the brashest, and

With the exception of senior

VP

Ralph Lee, he more than any-

HP

provoked

real fear in the

that,

with the

HP

3000 team, though he might be constrained from

was not

afraid to consign miscreants to the outer darkness of

at

knew

made it

to deservedly inflict

generation of

the toughest.

one

and Dave unleashed

the mess.

fix

Hewlett and Packard didn't

the

Bill

computer-critical,

one of the hottest young executives

Ely,

well-run Microwave division. Ely was told

in the first ship-

layoffs, Ely

far-off

HP

service offices, or

make

people

who worked

for him.

Everyone

their lives so miserable that they quit the

company. Recounts Green:

Once

HP

the

was

division

managers realized the magnitude of the 3000 in for a lean time. Budgets

handle vast projected

sales

and

staffs that

were cut to the bone. Training, where

worked, was cut in one day from 70 people to fewer than 20. a firm

disaster, the

had swollen

HP

to I

adopted

"no futures" policy in answering customer questions [about up-

coming products and [Ely]

was

strictly

delivery dates].

no nonsense. Many people had gotten

into the habit

of taking their coffee breaks in the final-assembly area, and kibitzing with the teams testing the floor

and

new

3000s. Ely

instituted rigorous

banned

management

coffee cups

from the factory

controls over the

prima don-

nas of the computer group. 55

The chaos and upheaval even more

talent.

the killing of the

Tom

computer division now cost the company

Perkins, the senior executive

Omega project, announced his

number of managers and ers

in the

scientists,

who had been

central to

departure, taking with

him

a

including Mike Green, one of the design-

of the 2000A, and James Treybig, one of the company's brightest young

management

stars.

— 290

DAVE

BILL & This team of ex-HPers eventually

moved down

the street and founded

Tandem Computer, the most HP-like of all the Silicon Valley companies right down to the beer busts. Perkins eventually became a famous venture capitalist. Treybig,

hit every

famous

for being the only entrepreneur in Valley history to

revenue target on his

initial five-year

symmetry when,

business plan, as

thirty years later, with HP's purchase of

Compaq Computer

(which had bought Treybig's company in 1997), Tandem

company from which

the

Meanwhile,

at last

returned to

sprang.

it

HP

at the

Tandem CEO

HP Way. Thus there was a wonderful

openly expressed his admiration for the

computer group,

took several months of near

it

twenty-four-hour days, with an uncompromising Paul Ely holding the whip

hand, but eventually the programmers had managed to reduce the number of

MPE

crashes in

from forty-eight per day

bring the

number of concurrent

had been

originally

product. Writes

promised

users

for the

to just two.

up from two

HP

Bob Green, "Marketing

—

it

took a look

managed

still

to

not what

make

a real

it

what the 3000

at

IBM

as a replacement for the

HP no longer sold the 3000 as a souped-up version of 2000 time-sharing.

130.

Instead, they sold the 3000 as a

an

also

3000, but enough to

finally

could actually do, and found a market for 1

They

to eight

IBM

1

machine with more software

130 that could be available to a

number of

capability than

users at once, instead of

just one." 56

HP

public relations and advertising were brought in and given the un-

precedented assignment of introducing the same product for a second time

—

now aimed at a different market. And it seemed to work right up to moment when users began complaining that their 3000 seemed to crash only

the ex-

actly every twenty-four days. It

turned out to be a design flaw in the 3000's internal clock.

computer ran continuously

twenty-five days. Tellingly,

3000 had yet been

news that this

—

it

at least the

fix,

enough

to

and more bad

new problem was Ted Workman, an

and grimaced when/if they asked it

was not

back

reset itself

run that long. That was the good

publicity.

reliable.

One

me

The bad news was

of the

first

to hear of

MPE product specialist for HP in the

southern U.S. region: "I instructed the clients to do a cool

them, but

why.

I

start

once a week,

cannot remember what

[the truth]: 'The original designers of

MPE

I

Once more

HP

" 57

to the

drawing boards. This time, most of the

in the field.

And once more, the grumbling advertis-

went back

were fixed

told

never

thought the operating system would stay running for 25+ days in a row!'

installed 3000s

the

no one had noticed the problem before because no

reliable

computers were becoming more

meant another

When

seconds), the clock reg-

would overflow and the system would automatically

ister

HP

for twenty-four days (2

31

— Bastion

PR

ing and

291

people had to go back to the press with yet another

new product

announcement. But all

this

of these

time

it

worked

—

was now a

fixes

The

sort of.

solid, reliable

HP

3000 that

finally

emerged

HP

computer. This time the

after

engi-

neers got it right, including a proprietary operating system (MPE) that was a miracle of reliability. But the 3000 still was just a shadow of the machine that

had

been promised to customers.

first

until 1975

HP

called

and the introduction of 3000 Series

II.

Fulfilling that

new machine

This

—

finally get the

demand almost

at Hewlett's

completely backwards-compatible with the Series

guered customers

promise wouldn't occur

a second-generation computer, the so-

I

to let those poor, belea-

computer they wanted

—

at last

had the

soft-

ware, the performance, and the reliability claimed in the original promotion

Only the dream of concurrent real-time processing had

three years before.

been abandoned

and

as unrealistic,

a later-generation

3000 would

it

finally

would

be another seven years before

still

support sixty-four users. But,

at last, the

HP 3000 worked. ABCNews.com: It

was about

this

down from

ing

from the

office,

time

my 20 year old self joined HP PR. remember drivI

Palo Alto to Cupertino with a couple of the older guys

and asking them what the meeting was

replied, we're getting ready to introduce the

Really?

asked. But hasn't that already been done?

I

Yeah, three times, they grumbled. get

for.

Oh, they

And those stupid bastards

still

can't

to appreciate that the

3000

right.

it

didn't have to ask any

I

more questions

had become a very sore point rious. line.

HP 3000.

The

future of the

And my

little circle

at

Hewlett-Packard.

computer group and of

PR

its

Bill

and Dave were

fu-

employees was on the

guys was bracing for another humiliating

presentation to the press. 58

The self.

press

was indeed

skeptical. But, in the end, the

In 2003, thirty-one years after

finally

it

was

announced the retirement of the

had gone on

to

become

first

HP

HP

3000 proved

it-

announced, Hewlett-Packard 3000. After

its

rocky

start,

it

the cornerstone of HP's entry into the mainstream

computer business, which

would lead the company

into PCs and company to a $50 billion one. As an article this author wrote for ABCNews.com, "That it has survived so long and that its retirement is being met with goodbye parties all over the world,

printers

in time

—and turn HP from

a $5 billion

the biggest in Roseville, Calif, and Monterrey, Mexico

—

is

extraordinary quality of the 3000's architecture and quality.

testament to the It

ranks with the

— BILL &

292

IBM

DEC VAX,

360, the

DAVE

and the Apple

one of the

as

II

greatest

computers

ever made." 59

The

may have produced as much $40 decades

HP

incredible success of the

—was

3000

—the estimated 200,000 revenues for

billion in

HP during those three

and Dave and the tenacity of

also a testament to the will of Bill

Hewlett and Packard, in the face of revelations that the most impor-

Paul

Ely.

tant

new product

company had

initiative in the

fatal flaws,

the news of which

might have seriously damaged the company's reputation, had opted admission, withdrawal of the product to get

it

moment when

it

tomers. In other words, at the

Dave had maintained the Ely, for his part,

and

fixed,

had taught the company something

HP Way is

wishful thinking and mass delusion.

just

the problem,

tough

memory

real,

HP

in the

put on a happy

and

else:

form of Paul

it

companies are

not a suicide pact. The inherent danger is

the potential for

When the HP 3000 team discovered there

3000 to hold

face, trusted

and then assumed

leader, in the

demand

Bill

HP Way.

not democracies, and the

wasn't enough

for public

restitution to cus-

was most challenged,

with building an organization on trust and teamwork

one had

units sold

would

Ely, to

each other to solve their corner of

work

all

go

operating software, every-

its

in,

out.

and

didn't,

It

it

took a

turn the place upside down, and

measurable results.*

Revolution, Inside and Out In retrospect, the major events at Hewlett-Packard in the early 1970s

—the

political turmoil at Stanford, Packard's time in Washington, Hewlett's leader-

ship, the

HP

calculator project,

and the

company,

testing the boundaries of the

HP

its

3000 computer

leadership,

and

— can be seen

its

as

core philosophy.

The family company of the fifties that had reached out to become the community company of the sixties, only to be burned by an unexpected social revolution, now in the seventies began to test its own edges. Was the HP Way still

a

viable?

Were

there limits to

its

company built on openness and

engineers, or consumers

— did

owe

these

as

did to professionals?

it

newcomers

In their actions

now

and

it

application? equality?

as well?

And

What was

Who were

if

the

latter,

the role of leaders in

HP's

customers

real

what did the company

have the same responsibility to everyday users

their decisions during this period, their last as day-to-

day leaders of the company,

Bill

and Dave sent

a

whole new

set

of important

messages.

One was

that,

when

it

came

to employees, the

HP Way

was

a social con-

* Bastion tract,

293

not a sophisticated form of paternal benevolence. The early seventies

may have been

the years

operations, but

it

was

company made

daily

life

to their responsibilities.

The second

when Hewlett-Packard when,

also the period

a living hell for

Under

employees

HP

Bill

entered the decade

measurement instruments;

of data processing equipment. The only

HP Way

(with

Objectives (with their

its

common

commitment

commitment

Everything else was expendable

—

who had

its

U.S.

3000 team, the

up

failed to live

HP Way.

—not an

was a company

as a largely U.S.

ended the decade a

it

HP

and Dave, you earned the

lesson was that Hewlett-Packard

strument company.

vation, the

rolled out flex-time to

at least for the

maker of

test

largely international

in-

and

maker

thread was a spirit of inno-

to employees),

to customers,

and the Corporate

community, and

including, as Packard

success).

showed by going

to

Washington, the founders themselves.

The

and the most

third lesson,

had Dave may have entered the

boundaries. Bill

Packard culture and the seventies they

seemed

content to maintain

HP Way

human

— chose not would be

if

the rest of the world

to follow, then so be

to try

just

bastion of their humanistic standards.

itself as a

resources innovations at

challenge

would never happen, and were

to accept that

HP

Hewlett-

sixties believing the

would change the world, but by the mid-

They would teach by example, and industry

was that Hewlett-Packard had

subtle,

HP

it.

— even

just their

There would be no more great

after flex-time; henceforth, the great

and preserve, against manifold challenges inside the

company and out, what HP had already accomplished. The brief but eventful history of calculators at HP was also a lesson in boundaries for future HPers. The story of the HP-35's development was a reminder that even a mature company could and should take great risks,

—

even to the point of changing Packard's decision to

kill

the

its

—

entire trajectory. But, at the

Omega

project

and Hewlett's choice

same time, to turn his

back on the Wozniak computer were reminders that risk-taking was not about recognizing opportunity, but being tion

and HP's own

marketing,

sales,

founders

—

about both the competi-

capabilities in those other disciplines

and

Unfortunately,

realistic

just

beyond engineering:

distribution.

this

lesson

third

largely because this

was the

was one of the

least

well

rare areas in

taught by the

which

Bill

and

Dave disagreed, and thus gave mixed and contradictory messages. Hewlett,

for

much more willing to pursue cool new technologies and products for their own sake, while Packard seemed interested in new products only in terms of the revenues they could generate and the new markets they could one, appeared

penetrate.

The

truth was that the

philosophies.

It

two men

was Packard,

after

all,

really weren't that far apart in their

who had

driven the development of

BILL &

294

many

DAVE

of the company's most important

forty years;

because

it

Packard

and

it

lines over the previous

was Hewlett who walked away from the personal computer

was too much of

who

new product

a marketing challenge.

By the same token,

it

was

never looked back, and was most willing to abandon old

HP

new

businesses to pursue wholly

mented the Nine-Day Fortnight

had imple-

opportunities; while Hewlett

in a single-minded quest to maintain

HP's

profit margins.

A

shrewd observer might well have spotted,

many HPers

as

did in the

years to come, that there was indeed an underlying lesson about boundaries offered

by the two founders

running the company.

in their final years

that Hewlett-Packard, to not only endure but thrive,

innovative

— even

at the

novation must never be allowed to take on a

must always be

disciplined

Unfortunately, that there

Bill

was room

was

must remain perpetually

expense of abandoning beloved products and entire

had become synonymous with the company

industries that

It

life

of

its

—but

that this in-

own. Rather, innovation

by the marketplace.*

and Dave had

for others to

left

enough ambiguity

draw an

in these lessons

message

entirely different

—and

enough of these people would run Hewlett-Packard over the next quarter century to put the very survival of the

What was

this other

company at

message? Take the HP-35

risk.

story.

Wasn't

it

also a case

new technology without concern for what the demand would be indeed, a technology so innovative that it was impossible to even know what the demand would be? And wasn't that a license to pursue technology for its own sake and worry about the business side later? And hadn't Dave Packard done essentially the same thing with the 9810? study in pursuing a brilliant

—

eventual

By the same token,

in sticking with the

HP

3000, despite one disaster after

another, wasn't Packard sending a message to the future that

product and good business plan, you should stick with hadn't Hewlett taught, with the stay

away from

The answer Worse,

radical to

all

jumps

into

through

all

of the crucial

to

embody

costs? Similarly,

company should

wasn't a clear answer.

and Packard

technological radicalism and the Bill

and Dave often un-

all

of the years, and

business decisions, was that the two men, whatever

moved toward each

other, always

approaching a

ground.*

This was the secret of their success,

and why

it

did remain fixed through

their starting points, always

common

a solid

unproven markets?

other business conservatism, those roles weren't fixed:

What

you had

the subtle dialectic of Hewlett

Though one seemed

expectedly switched.

it all

episode, that the

of those questions was no. But

much depended upon

themselves.

Wozniak

if

—

to others at least

years of working together,

why they always seemed

—they never seemed Bill

to think alike,

to disagree. After nearly forty

and Dave automatically moved

to that center

295

Bastion point, a

and made

that shift so quickly that to the outside

world they seemed in

kind of perpetual, almost superhuman, concurrence. Reinforcing that repu-

tation

was the

fact that the

men had

two

learned early on to keep quiet with

others until they had reached that personal accord.

would be

In the years to come, Hewlett-Packard

when

peated this process,

at its best

when it recompany

these opposing natural tendencies in the

And

—

company would be at its worst which went on when the two forces pulled the company in opposite directions. Then the hidden danger of the HP Way would appear: unbridled innovation, marketing overreach, and management found

way

a

to converge.

happened more often

paralysis.

By

the

—

as the years

their character, their toughness,

Dave had never

let this

genie out of

its

bottle.

and

their

Future

pragmatism,

HP

Bill

and

leaders wouldn't be

as successful.

The Other HP Calculators and computers weren't the only stories at Hewlett-Packard in the 1970s, only the

most important ones.

HP

company, and the Instrument Group had

was

its

still

own

a test

and measurement

great successes during those

years.

The

HP to

seventies

Interface

become

was the decade

in

which the company

first

promulgated the

Bus for networking instruments to computers and then drove

it

the world's standard. These years were also the great transitional

years of testing, in

which computer

logic,

then the computer-on-a-chip, the

microprocessor, began to be designed into traditional instruments, giving

them

for the first time the "intelligence"

tions,

conduct sophisticated

analysis,

needed to perform automatic opera-

and even be programmed

for different

tasks.

Hewlett-Packard had been born in the tion,

and now, forty years

later,

HP

first test

and measurement revolu-

led the second,

and

likely the last, one.

Throughout the decade, the company's Instrument Group tackled one market after another, consolidating all

of the product threads that had been devel-

oped over the previous half century, adding

had been

a vast array of scopes, meters,

digital control,

and monitors

and turning what

into a handful of multi-

purpose "analyzers." These analyzers chemical that

tests,

made

it

—the

first

and the third

possible)

ways they were the

for digital logic (and thus a tester for the device

—were

finest

one for microwave networks, the second for

incredibly sophisticated for the time. In

many

product creations in Hewlett-Packard history, the

DAVE

BILL &

296

and the cornerstone of

zenith of the instrument maker's art,

manufacturing in the future struments would remain a

would never again

—but they

rule, either in

company

In fact, across the

mass spectrometry, microwave laser

high tech or

—

around the planet

scattered

Hewlett-Packard.

at

tools,

and

and

plotters, optoelectronics,

of the other product divisions

all

—Hewlett-Packard

was

in the mid-seventies

thousand ideas were

remarkable

creativity. It

offices, just

waiting for the recession to end. Because

HP

had kept

When

the

economy

as if a

employees, none of that inventiveness was turned,

was

it

gates

if

era. In-

but they

in electronics,

in medical products, gas chromatography,

devices, printers

measurement and surveying

end of the

also signaled the

and valuable industry

vital

technology

all

opened everywhere

lost.

at

once

at

sitting in a

showed

thousand all

of

its

again re-

Hewlett-Packard and the

company surged out of every doorway. In 1971,

HP

was company— one of the ten —with 35,000 employees. Those revenues would double again

Six years later,

manufacturers

had been a $375 million company, with 16,500 employees. $1.4 billion

it

largest U.S.

by the end of the decade.

Though

little-noticed at the time, this

was not only an amazing burst of

from a company heading toward

creativity

fortieth anniversary, but also a

its

stunning example of world-class management. future was imperfect, the example

And

gettable.

The

Bill

saw the

seventies

first real

many

prise of

seemed vative,

to top every

and the

for the

was unfor-

list

every year. fast,

least rigid

and

lifestyles.

This included the

first

in America, the top executives, the "best

and the best "corporate East Coast readers

and growing so

practices

set in the present

left

widespread reporting in newspapers and

as personalities

of the "best-run companies"

places to work,"

and Dave

the message they

time the world noticed.

this

magazines of business lists

If

citizens."

who had It

Hewlett-Packard, to the sur-

barely heard of the company,

seemed impossible

that a firm so inno-

could also have the most enlightened employee

management

structure. Yet that's

what the surveys

said.

make Hewlett-Packard even more paramost liberal work culture, but also the most conservative business practices. It was a huge "family" company full of traditional workers, yet seemed more innovative and more agile Closer inspection only seemed to

doxical.

It

seemed

than most of

And, most

its

to operative effectively with the

smaller,

incredibly,

it

more

seemed

entrepreneurial neighbors in Silicon Valley. to function with inverted

ture, yet at the

same time seemed

sions than the

most autocratic of corporations.

Not

surprisingly, these

less

management

chaotic and more monolithic

struc-

in its deci-

seeming contradictions soon provoked two decades

297

Bastion

of business school case studies, feature articles in magazines such as Fortune

and Business Week, and ultimately books, the best-known being the mammoth best-seller In Search of Excellence, which pointed to HP as a model for restoring America's competitiveness,

how

scribed

the

HP Way

had been

and the

classic Built to Last,

crucial to the

company's

David Packard's own The

HP

memoir, written primarily

for future generations of

Way, ostensibly an autobiography but

Hewlett had created and preserved the

The irony of all of this Packard was withdrawing outside world. That journalists

if

Hewlett-

company's culture to the the founders, but by

company they probed and analyzed

the

diffident to their queries,

HP Way

really a

how he and Bill

finally arrived just as

it

work would now be done not by

supposed) because the siders,

HPers on

and

culture.

efforts to export the

and academics. And

seemed somewhat

HP

attention was that its

which de-

durability,

it

was not

(as

many

reporters

reinforced privacy and distance from out-

but because Hewlett-Packard had long since given up missionary work

and was content

to preserve

its

cherished culture at home.

Departures On

October

1,

1976, Noel Porter died.

He was

just sixty- three. Bill Hewlett's

childhood best friend and Stanford classmate, Packard's lab partner, HewlettPackard vice president, and one of the most successful mayors in Palo Alto history, it felt

"Ed" Porter's death sent a shock wave through

more deeply than

The death of and an

in the offices of the

a friend

early death

is

a

life

—and nowhere was

two founders.

and contemporary

reminder that

HP

is

always a time for taking stock;

can be unpredictable and

its

end can

come at any time. It is also a time for taking stock of one's own legacy. Ed Porter, though far less famous than his two illustrious friends, had left a considerable mark. Not only had he played a crucial role in the founding of Hewlett-Packard Co., and

later, as

a vice president, in the company's success,

but arguably he had accomplished even more in his

member

of the Palo Alto city council, then the

life

city's

outside of work. As a

mayor, he had been in-

strumental in the creation of both the Stanford Industrial Park and, soon ter,

af-

the Stanford Shopping Center, both archetypes of intelligent, dignified

planning that would be imitated

all

over the world. Porter also played a key

role in the building of the Palo Alto/Stanford Hospital, its field

—and, perhaps

There were other

appropriately,

where Ed Porter

acts as well, smaller

but no

less

it

too paradigmatic in

died.

enduring.

One

of these

DAVE

BILL &

298

was the donation

to the Episcopal diocese of

of land on Lake Tahoe. For a half century, retreat for

Ed

Camp

Noel Porter has served

as a

thousands of people in hundreds of nonprofit organizations.

Porter had died while

still

what would have been, thanks retirement. That he

Packard was not

on the job, never having enjoyed

to a fortune in

was the same age

lost

on anyone

As the company had grown the founders' approval,

ment

Northern California of a parcel

had

at

older, set

as

HP

stock, a rich

a second of

and rewarding

Hewlett and a year younger than

HP, including the founders themselves.

and with

it

the earliest employees, HP, with

company

retire-

whether that date applied

to Bill

age sixty-five as the informal

date.

But there had always been questions

and Dave themselves. After

all,

as to

strictly speaking,

they weren't exactly employ-

—

but founders and with their immense stock holdings (enough to now make them among the handful of U.S. billionaires) they were also as close as a publicly traded company could have to owners. Their names were on the door, and on every product the company shipped, and, thanks to the glowing publicity of the last few years, they had come to embody the Hewlett-Packard Co. ees,

Other entrepreneur-CEOs had found themselves snug up against an retirement date and decided

and

(officially) that

(privately) that they could not give

the

company

still

"official"

needed them

up the work by which they defined

themselves.

Not

surprisingly, then, the

approach of their presumed retirement date

created considerable disquiet within and without the company. Outside, investors

and

analysts,

customers and suppliers wondered

perfect in their performance so

far,

other famous business executives before them. sented themselves as dispensable, just two

would be the

Bill

men, so

like so

many

60,000 equals; this

test.

There had never been an

pany

the two

and Dave had always pre-

men among

Inside the company, understandably, the concern

had always,

if

might fumble the transition

went much deeper.

HP without Bill and Dave. And though the two men HP Way, entrusted others to make vital com-

in the spirit of the

decisions, they

had

also always

been there to clean up the mess when

those decisions went wrong, even overrode those decisions

an obvious threat to the company's health. they were gone?

And who had

Who

when

would play

they posed

that role

when

the presence and the reputation to represent

Hewlett-Packard on the world stage? It

was the

classic fear

of a company about to lose

even the comforting world of the

pending

HP

its

founders

—and not

family could fully ease the fear of im-

disaster.

Most of the

attention

now

focused on Hewlett. Packard had, in

fact,

turned sixty-five the year Porter died. But ever since his return from Washing-

299

Bastion

had served

ton, he

chairman of the board, and though he

as

mately involved in the daily

and president, and

happy in the job and So

of the company, there was no

was

inti-

official re-

board members. Hewlett, on the other hand, was company

tirement age for

CEO

activities

still

his sixty- fifth birthday

certainly the

company was

would be

in 1978.

He seemed

thriving under his leadership.

why retire? The simple answer was

of the way,

Bill

trust, that centerpiece

and Dave had

no one demanded

of them

it

award themselves a

set the

—

same

of the

HP Way. At every step

rules for themselves

— even when To suddenly

as they did for every other HPer.

on retirement age would be

special dispensation

to

deny

everything they had said in the past, and to state that they were indeed special players in the ter:

HP

family.

That

Bill

and Dave

actually

were unique didn't mat-

HP Way depended upon them behaving as if it weren't so.

the

But there were other, personal forces

at

work on

which no other HPer besides Dave Packard was wasn't the only reminder to the two

men

privy.

Bill

The death of Ed Porter

was growing

that time

Terman, their mentor and teacher, had begun to visibly Sibyl. Bill

and Dave continued

but his presence drift off,

also

or

ist

fail after

short. Fred

the death of

honor Terman by keeping him on the board,

meetings became increasingly problematic

at the

demand endless

—he would

explanations, or get off topic. As time went on, he

began to grow confused

riving in the

to

Hewlett as well, to

— one HP employee was stunned

to hear him, ar-

HP headquarters lobby for a meeting, inquiring of the reception-

about "zeppelins."

But the most devastating intimation of mortality was even closer to

home.

On

years, the

February

1977, Flora Hewlett,

9,

mother of

Bill's

beloved wife of thirty-eight

and grandmother of

their five children

grandchildren, died of breast cancer. As dedicated to her

their twelve

work

as her hus-

band, she had attended a board meeting of the Stanford Board of Trustees just days before her death. It

was

a hard

blow

piece of his private

compensated

for Bill Hewlett. Flora

life,

for them.

the one person

If

one made there

it

had been, by

easier for Bill to deal

had been any thoughts

all

and

But

final,

phase of his

who would

replace

accounts, a

with the

It

happy and deeply

was time

satis-

mind about staying on at him to move on to the

for

life.

him?

By the mid-1970s, Hewlett and Packard had created team that was

his rock, the center-

weaknesses and had

loss.

in Bill Hewlett's

the top of HP, Flora's death ended them. next,

his

But in a way often found with widows and widowers,

the fact that the marriage fying

had been

who knew

strikingly eclectic.

A

a senior

management

handful of the postwar team

—Barney

Oliver in the labs, the baleful and intimidating Ralph Lee in operations (once,

300

BILL &

when

a

media

trainer

was brought into

DAVE

HP to train senior management to get

along better with the press, Packard scratched Lee's saying, "It'd be pointless"), Bruce

mere

in

manufacturing

—were

men who had

added the

profane Al Oliviero in

still

name from the trainee list,

in corporate services,

with the company. To

and Ray De-

this core

had been

joined the firm in the 1950s or early 1960s:

Bob

the small and impeccable

Wholey

Boniface,

who

ran marketing, the voluble and

sales, Bill Doolittle in international,

and

jolly

Ed van

Bronkhorst in finance.

and Dave had begun adding

In recent years, Bill

HP

the new, third generation of

to the

team the

stars

Young, the company's hottest rising

star

and newly named executive VP; the

supremely competent Dean Morton in medical products; and maverick Terry from the instrument group. Just behind

who had

just

most junior

Though

Bill

Bill

the fiery Paul Ely,

—and reporting

to Ely, the

Ed McCracken and

company, led by the

sly

in their early thirties,

were too young to lead

Krause.

the youngsters,

still

a billion-dollar corporation, play.

them was

turned around the computer group rising stars in the

hardworking

of

managers: smooth and competent John

all

of the other executives were considered in

There didn't seem even a remote chance that

Bill

and Dave would go

CEO: both men had always promoted from within the company, believing that only a longtime HPer could fully appreciate the company's complex culture. Moreover, it would have been an abandonment outside the

of the

company

for a

HP Way— if Bill

and Dave

didn't trust

HPers with

their

company, then

everything they had ever said would be shadowed by doubt.*

But what would they do? Would the founders pick from the

first

genera-

real candidate got a little more seaOr the second generation? But which of them had the breadth of skill and, more important, the personality, to lead the company? And the third generation? Would Bill and Dave put a forty-year-old in

tion,

buying three or four years while the

soning?

charge of the company, with the prospect of that person perhaps leading the

company seemed ton,

until the

to exhibit a

most seemed

end of the century? The major

quickly,

it

own

career

and "family" than they were ambitious

number of second-generation company were this crowd to come to leadership of the

including a

executives, quietly feared that,

company too

Hewlett-Packard than in their

less trusting

Many HPers,

of the third generation also

with the exception of Terry, and perhaps Mor-

less interested in

development; they were gunslingers.

flaw:

stars

would

sacrifice the

HP Way for the sake of short-term

success.

As always,

Bill

and Dave kept

their

own

counsel. Even the chapter

on

management succession in Packard's The HP Way is uncharacteristically vague on how the two men reached the most important personnel decision of

Bastion

301

their careers, other than to restate the obvious, that is

especially critical at the

upper

levels

But one young employee in the

who would be

clue as to

port,

make

a presentation

the young man,

vice presidents, did

of the organization." 60

PR department

(the author) got an early

Hewlett's heir apparent. Invited with his supervisor

to attend an executive meeting offices to

"management succession

in the

boardroom adjoining

on the theme

for the

despite being intimidated

manage

to notice

Bill's

and Dave's

company's next annual

re-

by the roomful of corporate

something unusual: while the others

were chatting, John Young put each foot in turn up against the side of the beautiful

wood

Only

later

table

and casually pulled up

his socks.

did he appreciate the meaning of that gesture. Recalled

Packard:

Long before we reached retirement, ing about reasons,

who might

and

CEO, and

I

Bill

and

I

had been thinking and

succeed us. John Young was our choice for

in 1977, the president's title passed to as

him.

Bill retired in

being

president. 61

1978 and John Young became

The formal announcement of the promotion

CEO

as

celebrations of the

end of

Bill

in addition to

to a Hewlett-Packard

em-

announced Young's

ployees was just as prosaic: just a couple of paragraphs

at the

many

remained

chairman. This provided a good transition to the time

when

new title. No grand

Bill

talk-

and Dave's forty-year tenure

helm of the company they had founded. No long

Packard's achievements. Just a simple announcement,

list

no

of Hewlett's and

different

from one

noting the promotion of an employee to division newsletter editor. It

was

classic Bill

and Dave. But behind the simple announcement, a mo-

mentous change had taken place

would soon back upon

at

Hewlett-Packard.

race to even greater heights, this

as the

end of HP's golden

age.

Though

the

company

announcement would be looked

Though no one knew

it

yet, neither

Hewlett-Packard, nor any other company, would ever have such a two-decade

run again.

What HPers and HP watchers did agree upon at the time was that Bill and Dave were now gone forever from the daily operations of the company. But in that they were wrong. One extraordinary day a dozen years in the future, the two founders, now very old men, would come roaring back to save the family one

last time.

Chapter Seven

Legacy NOW,

for the first time

and Dave

in nearly forty years, Bill Hewlett

Packard were no longer in day-to-day control of the company that bore their

names.

When

they had started HP, Franklin Roosevelt was president, Palo Alto

was a town of 5,000 vard's

Mark

1,

was

and the world's most powerful computer, Har-

souls,

fifty feet

long, five feet

weighed

tall,

pable of about three computations per second.

fingernail

Few ever

do

and Dave

ca-

the

left

president, Palo Alto

8086

Intel

personal computers) was the size of a

and capable of 4 million computations per second.

high-tech executives had ever led their companies through so

technological and societal change.

vacuum

HP

and was

and the newly introduced

to a population of 50,000,

(whose descendents would power

Bill

Jimmy Carter was

leadership of Hewlett-Packard in 1977,

had grown

When

five tons,

so.

And

it is

In the Addison garage, the two

tubes, radios,

and

hard to imagine

young men

slide rules; as old

much

how anyone

will

worked in a world of

men, they

retired into a

of semiconductors, the early Internet, and personal computers

world

—much of

it

their creation. Just as remarkably, Bill

and Dave bookended

with intervals of spectacular

their years at the

creativity: their first years

and

company

their last

were

ar-

On the day Bill Hewlett stepped CEO of HP, he was not only the most vital person at the company, he

guably the most innovative for the two men.

down

as

evidenced by both the Nine-Day Fortnight and the HP-35 calcula-

was

also, as

tor,

the most innovative as well.

achievement

None of

No one

has

come

close to

matching that

since. this

was

lost

on the other men and women who now

led the

thousands of high-tech companies, big and small, in Silicon Valley and

else-

where. The pioneers of electronics, such as Charlie Litton and

were

now dead and world of

Cy

Elwell,

mostly forgotten, their achievements part of the dusty old

crystal radios

and vacuum

tubes. But Bill

and Dave were not only

304

BILL & around, the

still

but

tors,

last

at the

still

DAVE

surviving entrepreneurs of the world before semiconduc-

top of the game.

For these younger entrepreneurs

—from

men

the middle-aged

running

the chip companies to the post-adolescents building personal computers

video games

—

and Dave were the gold standard. They had done

Bill

from entrepreneurs

in the ur-garage

a public corporation, to

CEOs

itself,

and all,

it

to small businessmen, to leaders of

of the valley's

first

company,

billion-dollar

to

business titans ruling a global empire, to (in the case of Dave Packard) a

statesman operating on a global stage.

Many

of these younger executives had started their careers assuming,

by watching

often

Bill

and Dave,

that each of these steps

easy for a smart and ambitious person that the path

once.

And

all

was comparatively

—and they had learned

to their

was both long and treacherous. Many had already of that combined to

make

dismay

failed at least

and Packard

their respect for Hewlett

ever greater. Those two guys, they realized, had not only already negotiated

every step of the career path they intended to follow, often doing so

first,

they had also done so with breathtaking grace. Indeed, they often bar so high that those

who

followed found

but

set the

impossible to reach. Even in

it

the virulently competitive world of high technology, even as people measured their

own

and Packard, many

careers against those of Hewlett

admitted that matching

and Dave was beyond

Bill

privately

No amount

their reach.

of revenue or percentage of market share would ever match a company

had invented

that

a

dozen

entirely

tory Business Week cover stories

new

no amount of lauda-

industries;

would ever match

ployees set historic records for loyalty and

a

company whose em-

commitment, and no number

of trips to Washington would ever equal having a medal for quality

named

af-

ter you.

Hewlett and Packard had

set

out the steps to a successful business career

—and

in the

second half of the twentieth century

shown

just

tech now, least

how to

and

take those steps well.

in the years to

attempt to follow the path that

But

if

it

Bill

tables they

spend the years they had

were

left

to

still

still

life,

a rare executive

and Dave marked

who

didn't at

for them.

men now by Silicon Valley standards,

comparatively young.

How

would they

them? Would they remain partners

of those years, would they go their

from public

had

They were the grand old men of high

would be

Hewlett and Packard were old

by the actuarial

all

come

then, by example,

or, after

separate ways? Would they withdraw

or immerse themselves even

more deeply

into

secretly run Hewlett-Packard, reducing John Young to

Would they more than a

it?

little

puppet? But the biggest, unspoken question of

would devote the

rest

of their

all

was whether

lives to actions that

Bill

and Dave

would further burnish

their

— Legacy reputations

— or would

305

and Shockley, wander

they, like Poniatoff

strange obsessions or the misuse of their great wealth that

shadow on

nal

the sterling careers that

The answer,

as those closest to the

restoration

—

good works

a legacy of

that in the

working years

two

men would

—and

eter-

minds of many

is

is

that

Bill

and

act of corporate

even more illustrious than their

who

dard (and a capstone career step) that those

upon with awe

have predicted,

—and one legendary

HP. In the process, once again, they

at

an

cast

had come before?

retirement from Hewlett-Packard,

in the years that followed their

Dave created

would

off into

set a professional stan-

followed could only look

struggle to match.

Corporate Diplomacy The

thing

first

Bill

and Dave did upon retirement was,

as a

show of trust,

leave

John Young alone. In Hewlett's case, this

was

inevitable;

he needed time to deal with the

repercussions of his wife's death. But for Packard, HP's chairman of the board, the solution was yet another of his classic far

end of the earth

He would go

— and

create

HP fork moves: he would travel to a

new business

for Hewlett-Packard.

to China.

amount of space more than he spends on HP go-

In his autobiography, Packard devotes an inordinate five

pages

—

to his dealings with China. That's

ing public, the

Sonoma

business. Obviously is

upon

largely lost

it

meeting, even the company's entry into the computer

represented an important milestone in his

the book's readers.

hidden lesson in Packard's actions

how

study in

to find

to-day management.

on corporate

first

restarted

formed

one may have been

this

Dave Packard, freed from business bringing a

little

of the

came

to Packard as a result of his

in the early 1950s to

cause, in Packard's words, "[We]

enough

his case

beyond day-

tactics to focus

HP Way

onto the

membership

in

an orga-

combat Soviet expansionism, had been

felt

we were not

in the

mid-1970s be-

strengthening our military

to counter the rapid buildup in the Soviet Union." 1

The committee included

a

number of

past (and future)

fense experts, including General Brent Scowcroft,

and diplomat

one that

Committee on the Present Danger. This group, which had

by Democratic senator Henry "Scoop" Jackson

capacity fast

life,

almost always a

is

stage.

invitation

nization called the

been

It is

—and

again, there

in a career after you've graduated

strategy, and, at last,

world diplomatic

The

meaning

Then

Max Kampelman

—

as well as

government de-

arms negotiator Paul Nitze,

Dave Packard, one of

its

few

BILL &

306 businessmen

—and

work would

its

DAVE

ultimately set the ground for

much

of

President Ronald Reagan's successful cold war policy. Nevertheless, as Jackson's

involvement suggests, the committee tried to be nonpartisan that

it

even delayed

formal creation until

on

threat

common The

northern

its

to the point

after the Carter inauguration.

wasn't long before the Chinese government, faced with

It

in

its

—

frontier, invited the

committee to

its

visit

own

Soviet

and discuss

interests.

come

invitation couldn't have

November

at a better

time for Dave Packard. And,

From

1977, the committee traveled to Beijing.

there, the

group

toured the country, listening as their hosts described China's security threats.

Apparently the tour went well, because the group was invited to return.

Meanwhile, newly retired secretary of

China

cently visited

—and gotten an

that the Carter administration

state

earful

Henry

down

U.S. business leaders he suggested the Chinese

Finally,

I

Chinese. In great haste,

and Chi-Ning nese general."

I

list

of names of

Leading the

list

was

this invitation.

assembled a special delegation: just myself, Lucile,

Liu, an engineer at

HP who

was the son of a Nationalist Chi-

2

contingent offers a

in fact carefully considered,

composition of

was

that this

was

U.S. mission (though indeed Packard

a personal contact, not

may

diplomatic message that he would never disclose, even to posterity).

agenda went nowhere, to

and

treat the entire trip as

an

of-

well have been carrying a

presence of Lucile signaled that Dave was perfectly willing,

derly businessman

this

glimpse into the mind of David Packard. The mes-

sage he gave his Chinese hosts ficial

a short

call.

for a substantial business conversation with the

The seemingly casual, but little

also re-

to their entreaties, es-

was tremendously excited by

recalled, "I

saw an opportunity

had

from the leadership complaining

was not being responsive

pecially regarding trade. Kissinger quickly wrote

David Packard, who

Kissinger

if

And

the

the formal

merely a vacation for an

el-

his wife.

Meanwhile, the addition of Mr. Liu sent

one thing, Packard was bringing

his

own

all

sorts of

translator,

complex

signals.

For

showing not only that he

was serious about any potential discussions, but that he would not be surrendering any advantages to his hosts. That he chose to bring the son of one of

Chiang Kai-shek's generals into the land of his hosts that It

worked. Just as

it

Packard's reminder to

it

seemed,

it

policies.

had been said that only a rabid cold warrior like

Richard Nixon could safely lead the so too,

Mao was

he was no sympathizer to their ideology or their

would take

political

rapprochement with Red China,

a conservative Republican

businessman (and

former deputy secretary of defense) to open the China business market without being accused of being soft on

communism.

307

Legacy The

spent the

trio

Dave awaited a any progress."

3

call.

"I did

Then,

week

first

visiting the tourist spots in Beijing, while

we were making

not have any idea about whether

end of the week, everything changed. Suddenly,

at the

and dinner

at the

Great Hall

of the People held in their honor. Packard wrote, "I immediately

knew then

the three found themselves attending a reception

getting somewhere." 4

we were

that

For the next week, while Lucile toured the historic

sites that just

days be-

been told were closed, Packard and Liu joined their host, Ye Zhen-

fore she'd

hua, vice chief of

R&D

for the People's

Army,

for a tour of local military

factories.

One was

a manufacturing facility for antiaircraft guns, "using 1950s tech-

nology, about which this facility,

I

knew

There were about 4,000 people

a great deal

and we were the

Americans ever to

first

what they were building would be

that

but

bat,

didn't say anything at the time, except to

I

visit. It

entirely useless in

was obvious to

at

me

modern-day com-

compliment them on

their

same obsolete

tech-

workmanship." 5

The next

tour, of a turbine engine plant, offered the

nologies. Packard regularly as

he recognized most of

guides that

I

it

complimented

wanted, and he

work

date,

work

"and

— even

told

I

my

United States so

in the

in related fields."

their parts perfectly.

now patiently waited

came

their fine

was a quarter century out of

Both parties had played

It

on

would happily arrange some meetings

that they could learn about our

their pitch.

his hosts

for the

Packard knew what his hosts

moment when

they would

a few days later, as the trio prepared to leave.

make

The hosts ap-

proached Dave with a proposal: "They said they wanted to form a joint venture with Hewlett-Packard.

were going to

rules It

be.

I

They

said that said

Packard.

It

set

up

I

wanted

to

know what the

rules." 6

a special corporation to deal directly with Hewlett-

also sent to the States a

HP's business practices. After cility,

Packard

fun with his

watch the There

is

— obviously

visitors.

cattle

He

dozen engineers and managers

relishing his retirement

invited the

being branded

if

to drive

to study

group dutifully toured HP's Palo Alto

— decided

group to join him

—and

to try

at the

to have

some

ranch in Merced

some Rocky Mountain

visitors' reaction to the taste

home just how well

fa-

oysters.

of fried

capitalism rewarded suc-

and hardworking entrepreneurs, Dave and Lucile invited the group

cessful

down to classic

this

no record of the Chinese

bull testicles. Next, as

that

was OK, but

could make the

wasn't long after the Packards returned to Palo Alto that the Chinese

government

to

I

their Big Sur estate, just south of Monterey.

Dave Packard: As

we

didn't have

hosts,

we

What happened next was

got there ahead of our guests and realized

any chopsticks in the house. So

I

went out into the shop

DAVE

BILL &

308

and made

a

dozen

of chopsticks out of redwood.

sets

When

our guests

ar-

me to autograph their new handmade chopsticks, which I And they took them back to China as souvenirs. 7 Needless to say, this was not how the party officials and nomenklatura back home behaved. And for the young Chinese engineers, many of whom rived, they asked did.

had

just survived the Cultural Revolution, the

week with Dave Packard must

have been an experience they never forgot.

By

1983, the ties between Hewlett-Packard

had grown so strong board

to

China

as a

—

first as

HP

That in turn opened the door for

for a meeting.

business in China

and the Chinese government

that the Chinese invited the entire Hewlett-Packard

a supplier of electronic instruments,

domestic manufacturer with several

HP

and soon

factories in the country.

Japan two decades before, Hewlett-Packard Co. through one of

had pioneered one of the world's

largest,

to

do

after

As with

founders

its

but closed, markets.

Giving an Example A constant

refrain

in the early 1990s

from nonprofits and the media

was

that the Valley's

back to the community even It

in Silicon Valley

beginning

newly minted tycoons had not given

a tiny fraction of

what they had taken

out.

wasn't long before the national media picked up the story, suggesting

that high tech's billionaires were greater cheapskates than their counterparts

and

in the rest of the business world,

coon philanthropists

—

especially in

comparison

Rockefeller, Carnegie, Getty,

The one counterexample the media used other techies was, of course,

and so on

to the great ty-

— of the

as a cudgel against

all

Hewlett and Dave Packard. By then,

Bill

past.

of the

Bill

and

Dave, measured by the size of their benefactions and the funds in their foundations, were

among

nists asked, couldn't

the greatest philanthropists in U.S. history.

high tech's other

CEOs

Why, colum-

be as enlightened as Hewlett and

Packard? Computerworld commented:

The

lesson of Hewlett's

people, for

whom

sion of real time

life

—shoves

Packard were competitive, other qualities, as

day

seems

on so many current technology

lost

the urgency of Internet time all all

that relentless

compres-

other considerations aside. Hewlett and

right,

some modern

in Silicon Valley

—

but they didn't value paranoia above

executives

and across the

U.S.

corporate or political leader can create

it.

deed and example. Hewlett and Packard

seem

is

to do.

What's missing to-

any sense of community.

They can only encourage

lived it. 8

it,

No by

Legacy person

Interestingly, the

tightwads was

Bill

Hewlett.

others weren't following

who

When

leapt to the defense of these purported

and

I

that,

too."

why

asked by the San Jose Mercury-News

him and Dave

good works, Hewlett

into

that they were being judged unfairly. "Give

away our fortune

didn't start giving

309

them time until

we were too busy running our company.

.

.

.

replied

you forget that Dave

we were 50

years old. Before

Just wait: they'll

come around,

9

Hewlett was, in

fact,

being both disingenuous and calculating in making

such a statement. Though he and Dave didn't really begin the philanthropic work for which they became famous until after they had retired from HP,

both had been making donations of time and money, especially to Stanford, almost from the day they

the garage. As early as 1964, the Packards

left

founded the David and Lucile Packard Foundation with $100,000 of money. Two years

later,

their

the Hewletts followed suit with the William and Flora

Hewlett Foundation. 5

*"

Both

men

were, in

fact, in their early fifties at

the time, which enabled

Hewlett to be truthful in his diplomatic remark a quarter century

1964 was also just seven years after Hewlett-Packard went public

later.

But

— and given

much more accelerated pace to IPOs in the personal computer and dotcom eras, that would have required the next generation of Valley leaders to step up to the charity bar in their early forties. Not many did.

the

But

if Bill

slack, his

thropists at

some point

one of the

also

"Never

Hewlett was publicly cutting the younger generations some

secondary message gave them no excuse: you

stifle

HP

in

your

career.

It is

your duty.

will

become

philan-

And that, of course, was

Objectives: Citizenship. Hewlett's remark, often repeated,

a generous impulse," underscored the challenge to his profes-

sional peers. 10

Hewlett and Packard also gave those that followed an example of just big that contribution should be: not merely

enough

how

to impress people with-

out great wealth, but commensurate with one's actual wealth. The Packard

Foundation, for example, funded during David's and Lucile's lifetimes with

more than

$1 billion, swelled after their deaths to

more than

$4.7 billion, with

an annual grant budget of more than $500 million. Forty years founded, the foundation was

still

after

the sixth wealthiest institution of

its

it

was

kind in

the United States.

Through

who

this legacy,

dismissed

him

Dave Packard

as a relic of

also

continued to surprise. Anyone

another time, or merely a reactionary business

tycoon, had to explain the fact that he and Lu decided to target their good

works

at

such nontraditional targets as population control, environmental

protection, preschool education,

Once

again,

and universal health insurance

Dave Packard had proven

to

for children.

be more radical than the radicals he

dismissed as deluded dreamers.

most ambitious dreams As

later,

his last lesson

on how

to

make even

the

real.

with that endless symmetry between the two business part-

ners, almost exactly the

and education

was

It

he and Flora created a foundation that would end up,

for Bill Hewlett,

four decades

tal

DAVE

BILL &

310

same

issues,

Flora's influence, the

but

size. It

too was dedicated to global environmen-

also

added global development and, showing

it

performing

(Their children would go on to create

arts.

another institution, the Flora Foundation, dedicated to supporting programs in the spirit of their mother's interests

and her

With the creation of the two foundations, what would be regarded

step in

preneur, start-up executive, billionaire tycoon,

anthropist. step),

and

for

to follow.

all

Bill

11

and Dave

it first,

was

last

as the ultimate high-tech career: garage entre-

official,

they did

global diplomat,

it

best (that

a ridiculously high bar to set,

corporation,

and world-class

phil-

they triumphed at each

is,

in the process they, largely unconsciously, It

took the

also

company president, CEO of a public

government

They did

life.)

threw

down the challenge

but that didn't keep hun-

dreds from trying.* It

is

impossible to quantify the

own

philanthropic activities have had on the world over the

Packard's century.

impact that Hewlett's and

also

The more than

$1 billion their

full

last

half

two foundations have given away

only a fraction of the overall impact of their example on those

is

who emulated

them. By making philanthropy of some kind an almost mandatory next career step for high-tech tycoons, Bill

ten times that gle

amount

to

and Dave have

likely already influenced

be given to good works around the world

—the

most important nongovernmental source of philanthropy of the

sin-

last half

century.

Not everyone followed, but those who shared Hewlett's and Packard's tudes almost always did. At

Intel, for

example,

all

three of the troika

who

atti-

built

company ultimately created major foundations. One, Gordon Moore, the Valley figure most like Bill Hewlett, endowed a foundation (also dedicated to that

environmental causes) nearly as large as Hewlett's and Packard's. William

Coleman, the founder of

BEA

software,

Dave when he gave $250 million

—

education

But

it

Hewlett's

— the

credit the

example of

Bill

and

largest gift in the history of higher

to the University of Colorado.

was the dot-com generation of entrepreneurs who

and Packard's example

Omidyar and

Jeff Skoll at eBay,

aside stock options in the very

to heart.

who

first

own

The

real

really

took

innovators were Pierre

didn't even wait to go public, but set

company with the express purthe IPO. They would go on to cre-

days of the

pose of creating a corporate foundation ate their

would

T.

at

large personal foundations. Their model, in turn,

was adopted

Legacy

311

by Sergey Brin and Larry Page, the two founders of Google

company went

public,

it

instantly also

endowed

—and when

that

a billion-dollar foundation.

who most closely followed Hewlett and one who appeared least like them, the richest pri-

the one tycoon

Ironically,

Packard's lead was also the

vate citizen in the world: Bill Gates.

Though

little

noticed, Gates's philan-

thropic career has resembled a supercharged version of

major grants to Stanford's

engineering program

and

Bill's

from

Dave's:

to the creation, with his wife,

Melinda, of America's largest foundation ($28 billion), in this case dedicated to the especially ambitious

Until fairly

date

low

But now, with greater

key.

some of

dream of ending AIDS

in Africa.

and Dave's retirements, both foundations had operated

Bill's

their

HP

free

at a

time and the opportunity to liqui-

both Hewlett and Packard began their philan-

shares,

thropic activities in earnest.

For

Bill

Stanford.

Hewlett, one of his

tasks

During the turbulence of the

at the university

had

trators, to Packard's

had

first

largely pulled

all

was

to bring his old partner

late 1960s,

when

back to

student protesters

but called him a war criminal, and school adminis-

mind, had

failed in their

away from

his beloved

duty to maintain control, Dave

alma mater, narrowing

his gifts

almost exclusively to the athletic department and the conservative Hoover Institution.

Hewlett,

on the other hand,

bombed, never gave up on the

despite the fact that his house

university. Recalled

had been

former Stanford president

Richard Lyman, "Packard pulled back some of his giving. But stopped, and

I

think

Bill

was instrumental

fire-

in bringing

never

Bill

Dave back into the

fold." 12

Hewlett had the perfect vehicle to turn Packard: a

new engineering build-

ing at the school for Fred Terman.

One

of the most admirable decisions the two

reers with regard to their charitable efforts solely after themselves (an act of

rarely

modesty

was that,

men made

to never

early in their ca-

name anything

perhaps not surprisingly, has

been followed by others). This agreement had a liberating

enabled

Bill

and Dave

to either

tributions to the larger

Their

first

Terman, more markable

life.

major frail

honor others or

again

to

more

effect, as it

closely link their con-

community. *

joint contribution

was an example of the former. Fred

and confused by the

day,

was nearing the end of

was too

late,

the world had

Happily, before

it

begun

his re-

to recog-

nize his great contributions to electronics, to the creation of Silicon Valley,

and

to Stanford University. In

October 1976, President Ford awarded him the

National Medal of Science "for his principal role in creating ics

and

his ability to

document

his

knowledge so that

it

modern

electron-

could be effectively

DAVE

BILL &

312

communicated

to his

many students who now

academics and public

try,

members and school Bohemian Club. ulty

Now

it

was

service."

13

Six

months

later, his

fellow Stanford fac-

him an honorary dinner

administrators gave

and Dave's turn

Bill

populate the worlds of indus-

at the

to give their old teacher the ultimate

thank-you. In October 1977, Terman was invited to attend the dedication

ceremony on campus of the new gineering Center, built from

crowd

gifts

$9.

1

million Fredrick

ceremony, Hewlett recalled,

at the

Emmons Terman

En-

by Hewlett and Packard. Standing before the

"Many

years ago

we were walking

out of the old Engineering Building and Terman said he was looking forward to the this,

day when

because

I

my first

gave

time

at the

Fred Terman would life. still

Though he attended

I

HP

—he seemed

five years, largely

withdrawn from public

was there

for the

board meeting. He was

errands, he

—though he was no longer

built that late

and announced

the next morning, and escorted In those last years,

on small

to derive great satisfaction.

company they had

HP

remember

I

incredible." 14

board meetings, from which

confusion, he drove over to

Bill

was so

another

live

pride in "the boys" and the

til

it

rarely left the house, except to be driven

really participating

that he

million dollars to the laboratory.

thought

So great was

one

night, in his

to a surprised security

politely told that

his

it

guard

wasn't un-

home.

Terman was

still

and Dave. The great men would

regularly visited

sit

by

his old students,

patiently while the old

man

remi-

nisced about their days together in the electronics laboratory. Art Fong would

him

often stop by as well to drive

other indulgent

On November tack at his

to

IEEE chapter meetings and serve

as an-

listener.

21, 1982, Fredrick

home on

Terman died

in his sleep of a heart at-

the Stanford campus. At his memorial service in January,

David Packard, one of

his

two most famous students, read Terman's eulogy.

Packard Unleashed During

this

period there

Packard's activities.

It

was

is

as

something almost superhuman about David

if,

now unleashed from

of interest, public image, influencing the stock price

he was to

do

finally free to

so.

pursue

all

the constraints

— of running

of his interests, and had the

a

—

conflict

company,

money and time

Indeed, he almost seemed to be in a hurry.

Thus, even as he was beefing up his foundation's endowment and helping build the

Terman Engineering Center, he was

also looking for other, even big-

— Legacy ger opportunities to give his

most unlikely

directions.

money

away.

313

And

new

the

came from

ideas

the

a pitcher of margaritas. 15

The best-known came over

Packard had asked his children to come up with a family project. Daugh-

Nancy Burnett, who, with her husband Robin Burnett, worked as a marine biologist at Stanford's Hopkins Marine Station in Pacific Grove, came up with the idea of rehabilitating the dilapidated and mostly abandoned buildings ter

—along Monterey's famous Cannery Row.

notably Knut Hovden's cannery This once lively area,

made famous by John

Steinbeck's novels,

had

fallen into

decay after the sardines abandoned Monterey Bay.

What

to

do with these buildings became the subject of

session over margaritas at the Burnetts'

Carmel Valley home. Besides the cou-

meeting was also attended by two of their fellow researchers, Chuck

ple, the

Somewhere

Baxter and Steve Webster.

someone The

—though no one remembers

in the course of the conversation,

quite

who

—

said the

word "aquarium."

quickly agreed.

rest

Robin Burnett then wrote up a proposal

and sent sister

a brainstorming

it

and

a

to his in-laws.

They loved

marine biologist

as well

it.

for a

So did

"Monterey Bay Aquarium"

Julie

Packard,

Nancy

—she immediately signed on

Burnett's

to be part of

the project.

The

original idea

of remodeling a brates."

was

16

little

was

and

little,

But when

some

inviting people in to see

"We were fishes

and

thinking inverte-

was discovered that the old Hovden Cannery building

it

more than

for a small facility. Said Webster,

a rusting shell facing

plans were scrapped for something far

imminent

collapse, the original

more ambitious. They would build

a

world-class facility from scratch.

Dave Packard was more than just the benefactor of the aquarium. He was, in fact,

all

over

its

creation,

blueprints, suggesting

At the foundry he

set

new up

seeming to take enormous pleasure in poring over features, and, at his

most of

shape of sea otters for the macro video exhibit. build the wave machines in the habitat areas derly giant in overalls joints

down on

and checking motor

all,

getting his

his knees

—

He

also designed

visitors

see an el-

with a wrench tightening plumbing

drives. at the

Hopkins

to review the latest plans with the aquarium's architects

exhibit specialists.

It

was on one of those afternoons,

plans for the tidepool exhibit at the

dirty.

and helped

would often

Every Friday afternoon, David and Lucile would arrive

Marine Station

hands

Big Sur home, Packard cast handles in the

on the

first floor,

and

in 1981, while looking at

that Packard glanced over

adjoining exhibit: a presentation of the Monterey Bay shoreline as

would be experienced walking from the rocky beaches of Big Sur and sea grass of Elkhorn Slough.

to the

it

sand

DAVE

BILL &

314

Packard studied the design for a moment, then

where are the birds? You need

said, "That's fine,

birds."

Everyone assembled was taken aback. Recalled Webster, to

become

We were all fish and invertebrates and seaweed people."

The room had not been designed was even sure

it

an

as

could even work in that

aquarium.

We didn't think of

it,

aviary,

role.

Recalled Webster, "It turns out the aviary at the

who would go on

"None of us had even con-

the aquarium's senior marine biologist,

sidered birds.

is

and

moment no one

at that

But they did

Packard asked.

as

one of the most popular exhibits

but he did." 17

When the Monterey Bay Aquarium opened its doors on October 20, it

was

a $55 million, state-of-the art facility,

world.

Though

first year, 2.1

but

the initial feasibility study

million

ing the Monterey

showed up

one of the

finest

—and they have continued

economy and

restoring

of

its

had predicted 300,000

Cannery

to

kind in the visitors the

come,

Row to one

1984,

revitaliz-

of the nation's

leading tourist destinations.

But Dave Packard didn't stop to visit,

and

The aquarium was an appealing

there.

a wonderful educational experience for

worthy accomplishments. But Packard, research, innovation,

as

he had been

and contribution. And

so,

young people

all

of his

life,

place

—both

was about

while the other people in-

volved in the aquarium project were congratulating themselves on a job well

done, Packard, twice the age of everyone

else involved,

was already rushing on

to the next cool thing.

Back during

his days as

deputy secretary of defense, Packard had been

volved in one of the strangest of

all

CIA programs of the

in-

era: the secret recov-

ery of part of a sunken Soviet submarine from the ocean floor under the guise

of a deep-sea mining operation. This recovery effort involved the Glotnar Explorer, a special ship built billionaire,

by Packard's

fellow,

but infinitely more eccentric,

Howard Hughes.

At the Pentagon, Packard had oversight of the Glomar Explorer and, according to marine biologist Marcia McNutt, "by necessity became familiar

with the prospects and limitations of deep-sea work.

He was proud

operation and enjoyed telling guardedly cryptic stories about

One tures

of the exhibits

at the

from the deep ocean

it

of that

later on." 18

Monterey Bay Aquarium was images of

in the nearby, 3,000-foot-deep

crea-

Monterey Trench,

taken with a broadcast-quality underwater video camera custom-built by an

aquarium engineer.

It

wasn't long before this camera had caught the attention

of undersea researchers, and in 1985 the camera was mounted on the

manned

submersible Deep Rover. The result was groundbreaking footage of the fish

and other

fragile creatures

—many seen

for the first time

—

jelly-

living in the

darkest regions of the ocean.

So successful was

this

work

that the

aquarium created

a research

wing

— Legacy

make new ocean

specifically to

315

discoveries that in turn could be displayed in

exhibits.

But Dave Packard wanted more than

some of

panel of

of establishing

that. In late 1986,

he convened a

the world's leading oceanographers to discuss the prospect

a full

oceanographic research institute on Monterey Bay. The

panel's report said that should such an institution be built, clear identity distinct

from that of other oceanographic

it

should have "a

institutions

and

a rea-

son for being that leaves no doubt that the institute occupies a mostly vacant niche of importance." In other words, the message to Packard was:

and do

it,

but make

it

different

from everyone

Dave Packard took the advice the Monterey Bay

to heart.

Aquarium Research

A

else."

few months

later, in

itself

advancing research in oceanography. To create that "clear

mandated the

May

1987,

(MBARI) was formally incor-

Institute

porated as an independent entity from the aquarium

and dedicated identity,"

to

Packard

advance the technology of underwater research,

institute to

which had hardly moved

"Go ahead

19

in the previous

In particular, Packard called

on the

two decades. institute to focus

on sending

instru-

ments, not people, into deep water, and to study undersea creatures in

situ,

sending information back to shore, rather than scooping up samples and dragging them back to the

lab.

Thus, demonstrating the vehicles]

utility to research

ROVs

of

equipped with high-quality cameras and a

sors

became the

own

words,

tions.

Said McNutt:

first

MBARI

[remotely operated suite

of in

situ sen-

assignment for the young institution. In [Packard's]

was

to

"Go

deep. Stay long. Take risks. Ask big ques-

Don't be afraid to make mistakes;

you don't make mistakes,

if

you're not reaching far enough." 20

It

tury,

was the

HP Objectives brought to undersea research. For a quarter cen-

Dave Packard had tried time and again

to bring the Hewlett-Packard business his great pleasure,

it

had found

a second

—and been

model

frustrated every time

to the outside world.

home in

this

Now,

to

most unlikely place.

And he didn't stop there. Next he brought the HP Way to the institute as well. He broke with the traditional academic model, in which scientists only tried to solve

problems for which they had the

tools,

and instead enforced a

peer-relationship structure between the institute's scientists, engineers,

and

operations people. In this format, scientists

would devise important research

gardless of whether the technologies to find the answers

the engineers

would then take on the

questions, re-

were available

—and

task of building the platforms

and

instrument systems to get the job done. Meanwhile, the operations people

DAVE

BILL &

316

would maintain and operate the ments. As

wouldn't

at

HP,

this

resulting tools during the actual experi-

system was designed to be

wouldn't build systems merely for their tion,

and operations people would

the experiments It

knew

own

sake, with

no

practical applica-

what they were doing

actually understand

for.

wasn't easy, but it

self- correcting: scientists

what they thought could be done, engineers

restrict their ideas to

it

worked

—

as the old corporate radical,

would. Said McNutt, "MBARI's sometimes

difficult

Dave Packard,

three-way part-

nership of the science, engineering, and operations cultures remains one of

its

chief distinguishing features." 21

Next, Packard went after that old bugaboo of corporations, information

management. In 1989, he announced, "Deep-water research involves im-

mense amounts of

data.

I

have the impression that

spent in collecting the data than in looking at

much more

and analyzing

it

time it.

is

We

being

believe

that situation can be greatly improved." 22

That meant bringing data processing power well

—

to the archiving, indexing,

—something Packard knew

and presentation of MBARI's extensive

formation collection. In one area in particular

—the

digital

in-

annotation of

video materials from undersea footage so that researchers can compare images from multiple sources

—

literally

revolutionized deep-water research.

Said McNutt, "Packard established a fourth leg of the stool: science, engineering, operations

and information dissemination." 23

For the employees of the Monterey Bay Aquarium Research

was

all

quite

comparison school team.

overwhelming to a Hall of

McNutt

— and

to

Institute,

Fame coach deciding

to devote his energies to a high

said:

As had been the case with the Aquarium, Dave Packard was personally volved with the research at his in

unannounced

ects

new

at laboratories

institution. ...

a justification

He

in-

frequently dropped

or shops to check on the progress of proj-

("Management by Walking Around," he

demand

it

an outsider, the story bears an amusing

called

it).

He

never failed to

from the project personnel whenever he thought

something should have been done with forceful personalities, the

is

sometimes the case

did not always

know when he was

differently.

staff

As

asking questions versus giving an order. 24

There were other echoes of the

HP

as well. Just as

company away from government

Hewlett had begun to steer

contracts in the 1970s because they

tended to straitjacket innovation, so too did Packard eschew federally funded grants at

MBARI,

believing they

questions and would

would

stifle creativity.

distract the institute

from tackling big

Instead, he provided both the start-up

Legacy costs

his life cile

entire annual operating

and the

—an underwriting

317

budget for the

was continued

that

institute for the rest

of

by the David and Lu-

after that

Packard Foundation.

As he had shown over forty years prodigious and technical searchers.

A

mind

at

HP, Packard continued to employ his

understand the work being done by his

to

well-known marine biologist was

him

visiting

at the

re-

Big Sur

ranch in 1989 and was surprised to discover on his reading table a textbook

on plankton. gan to

grill

When

him on

he asked about

it,

the seventy-seven-year-old Packard be-

the subject.

Also similar to

HP

was Packard's treatment of

He

legend looms large at

an

MBARI

people were fishing trips.

Said McNutt, "Packard never failed to ciated their efforts. ...

as

and joined Packard on hunting and

extended family. As with the company in the early days, invited to the Big Sur house,

employees

institute

let

the staff

know how much he

appre-

thus developed a loyal and devoted following. His

MBARI to

As always, Packard refused

this day." 25

to look back.

awards ceremony in Los Angeles,

Bill

Chuck House, now member of the Computer Design

On the plane flight home from an

and Dave were joined by their wives and

a distinguished Silicon Valley leader and educator, and

Hall of Fame.

When House began reminisc-

ing about the old days at HP, the others enthusiastically joined in

Dave Packard. He

rupted the happy conversation. "That's enough of

about finding squid." Packard

still

its

time."

Western Flyer,

By 1990 he

named

set

that,"

hadn't given up on his

new generation of deep-sea research vessel ship of

— except

listened with increasing irritation until he finally inter-

MBARI

after the ship

—

to

he

in his words, "the

work on

it

—

said. "Let's talk

dream of

creating a

most advanced

or, rather,

used by John Steinbeck and

them: the

Doc

Ricketts,

was a twin-hulled host ship crammed with computers, remote cameras, and a state-of-the-art control

room,

remotely operated vehicle. it

employed

electric

It

as well as the Tiburon (Spanish for "shark"), its

was the Tiburon that was the most revolutionary:

motors to minimize noise and disturbance, and a variable

buoyancy system (rather than off the

bottom without

stirring

thrusters) that enabled

up sediment. The

it

result

to

hover just inches

would be some of the

most extraordinary deep-sea images ever taken. Building and operating the two vessels was not only an taking for a small operation like

current

facilities.

farther north

MBARI, but was too much for the institute's it a new $20 million home, on four acres

So Packard bought

on Monterey Bay at Moss Landing.

In late 1995, just as the institute was

launched the Western ship.

immense under-

He would

live

Flyer.

Dave,

now

moving

into this

new facility, MBARI

eighty-two, was there to christen the

long enough to take one ride on the Western Flyer and to

see the Tiburon completed.

DAVE

BILL &

318

At an age when most of his peers were either dead or long retired from ac-

David Packard,

tive service,

in a bravura

performance of leadership, shrewd

investment, and relentless innovation beyond the abilities of the most talented executives half his age,

had

built a

new world-class

ized an entire scientific field. In the process, he

of the century's great managers in

ment, and nonprofit.

As

a postscript,

It

all

institution

and revolution-

had now proven himself as one

three social sectors: commercial, govern-

was a record no other American of the era could match.

it is

interesting to note that the presence of

Dave and Lu-

cile

Packard in the Monterey area during those years had a transformative

fect

beyond just Cannery Row. As

clear that

.

.

there were big needs here

.

Between

their

own

ef-

Packard told a local newspaper, "It was

and not so many donors." 26

behind-the-scenes support and that which followed

from the foundation, Dave and local arts

Julie

Lu's legacy in that

community ranged from

groups to the preservation of natural habitat. The

latter

included the

purchase of thousands of acres of land in Elkhorn Slough, Big Sur, and the Salinas Valley to be protected

from development. According

Land Watch Monterey County, "Ten years ference. all

out,

to

Gary Patton of

you might not notice much

dif-

But 30 years from now, you would be seeing hotels on the beach and

sorts of

defacement along the Big Sur coastline. Looking back

from now, you would say it made

much more. As Over the

all

at

it

50 years

of the difference in the world." There was

reported by the Monterey County Weekly:

years,

Packard

money

has

pumped through numerous

local

agencies and groups, from California State University Monterey Bay to local

school

districts,

from Natividad Hospital to the Big Sur Land

from the Monterey Symphony to the Carmel Bach

Festival

and

Trust, Pacific

Repertory Theatre.

Stephen Moore, founder and

artistic director

grant recipient, jokes that there would be

of Pac Rep, a 20-year

no Monterey County without

the Packards' help.

We

might

as well

hang

a sign,

"Welcome

to

Monterey County, spon-

sored in part by the David and Lucile Packard Foundation." 27

The Ultimate Alum One to

of the interesting ironies of

round out

Bill's

and Dave's retirement years

is

that, as if

their life experiences, they each crossed over into the other's area

of strength. Thus, Dave Packard, the ultimate businessman, spent his years

immersed

in the science

and technology

that

had been

central to his

last life

Legacy back in the Stanford days but secondary

319

the engineer's engineer, began to devote his

where he'd ever been

Meanwhile,

thereafter. life

Hewlett,

Bill

to supporting the only area

than a success (and Packard an almost

a less

effortless

success): education.

Where Packard seemed freed

from the

to roar out of the gate

from the moment he was

Not

daily operations of HP, Hewlett took longer to get rolling.

only did the loss of Flora occupy his 1977, but so did health problems.

life

for the years immediately following

He had

a

minor heart

attack in 1979 that

slowed him temporarily, but posed no major medical threat

—though

did

it

spread fear throughout Hewlett-Packard, where HPers had long assumed the

two founders were

larger than

life.

In 1978, just a year after Flora's death, Bill married

whom

how

often the survivors of long,

marry. Rosemary Hewlett,

who

dren,

seemed

and

wasn't long before the

it

many

he had met skiing. This surprised

understood

back to

to bring

also

HPers, but not those

who

happy marriages quickly

brought to the marriage

Bill's life

Bill

Rosemary Bradford,

the comfort

and

five

stability

grown

re-

chil-

he needed,

Hewlett of legend was back in action.

Where Dave moved outward

into

new

ventures, Bill

seemed content

to

bring his experience and wealth to bear on improving those institutions that

had always been part of

his

life.

Stanford had been, after university

had

also

all,

And none more

so than Stanford University.

the professional

home

been willing to take on young

Bill

of his

when he was

with his studies and his career choice. And, of course,

it

where he had met Fred Terman and Dave Packard and

set the

traordinary

life. Bill

late father.

had been

The

struggling

Stanford

at

course of his ex-

Hewlett and Stanford would be intimately connected for

an astonishing eighty-five years.

Now he would pay the school back. And by the time he was finished, Stanford Magazine, in appreciation of his work,

done more

for the university than

would

declare Bill Hewlett to have

anyone since founders Leland and Jane

Stanford back in the late nineteenth century. 28

More than anyone,

it

was

Hewlett, in support of Terman's vision, and in partnership with Packard,

who

turned Stanford from a sleepy college for rich California kids into one of the world's greatest,

and

wealthiest, universities. Said Hewlett's

former secretary

Mollie Yoshizumi, "Mr. Hewlett was very passionate and very emotional about Stanford. Mr. Packard

cause of Professor

and Mr. Hewlett had very strong

Terman and Stanford

that they

feelings that

wound up

with

it

was be-

this

very

successful company." 29

Walter Hewlett, his son and a Stanford doctorate, offers another clue: "I think the most important thing was that Stanford was making a worthwhile contribution to society." Like Packard in Monterey, at

Bill

Hewlett believed that

Stanford he could continue that most important of HP's Objectives.

BILL &

320 It

is

DAVE

estimated that Hewlett, Packard, and their respective foundations

have donated nearly $400 million to Stanford

grow by the

in the history of educational philanthropy

Hewlett's

—

a figure that continues to

Given the magnitude of that number

year.

most important contributions

—

it

— one of

the greatest

can be said that one of

was

to Stanford

in convincing

Bill

Dave

Packard not to give up on his alma mater during the dispiriting protest days of the

Whatever

late 1960s.

his

own

trusted his lifelong business partner

again

become

Bill

feelings at the time, Packard, as always,

—and

in the years to

come would once

a passionate supporter of the university.

Hewlett's support of Stanford was careful, subtle, and often anony-

mous. Arguably, he understood the university better than any of the succes-

knew

of administrators he dealt with, and

sive generations

precisely

how

to

obtain a desired result.

Bill

much

Hewlett's relationship with Stanford went

He was

in

many ways

times and bad

— sometimes indulgent, sometimes

tionally loving.

tarian role.

like a father to the University,

By

Not all

deeper than pockets. supporting

strict,

it

in

good

always uncondi-

that he ever publicly depicted himself in an authori-

accounts, he remained a down-to-earth and even shy

campus were

anonymous

man, whose contributions

to the

and who looked more

suburban weekend fisherman than

like a

frequently

a titan of

industry. 30

In practice, this "fatherhood" of Stanford

never

made

unrestricted donations,

tions were often in the didn't

want

and

rarely

meant

made

that Hewlett almost

gifts alone.

form of matching funds. Walter Hewlett

to be the only person giving a gift.

He

he didn't want to be the sole determining factor

in

felt it

was not

His donasaid,

"He

right.

And

whether something suc-

ceeded or not." 31

He was

also just as likely to refuse

sity presidents

Casper,

"He was

of people.

lots

an entreaty, as various Stanford Univer-

learned to their dismay. In the words of one of them, Gerhard clearly

somebody who was being asked for money a lot by clear that if I asked him for support, he might

was completely

I

say 'No,' or 'This

is

him

I

for granted.

too much.'

I

think he was concerned that Stanford not take

certainly did not." 32

For these presidents, one of the initiations connected with taking the job at

Stanford was the

first

meeting with the formidable Hewlett and Packard.

wasn't lost on these individuals that a bad

first

It

impression, even a misspoken

word, might jeopardize the entire financial underpinnings of the university itself.

Casper, for one, never forgot that

first

meeting. Hired from the University

— Legacy

321

of Chicago, he found himself being driven directly from the press conference to his first beasts,"

shorts that

meeting with

Casper

recalled.

and looking

Bill

and Dave.

"It

was

Then Hewlett walked

like a

like

suburban grandfather

moment, Casper knew everything would be

But, just as he

had been

at

going to meet two mythical

room, wearing a pair of

into the

From

family barbecue.

at a

all right.

HP, Hewlett mixed grumpy toughness and

rig-

moments of great warmth and For example, in 1989, when the Loma Prieta

orous intellectual discipline with disarming

human

insight into

nature.

earthquake damaged the sandstone Stanford quad, especially the Memorial

Church, Hewlett quietly offered to make an anonymous $3 million almost one-third of the total needed

— on

mediately. Said Professor Robert Gregg,

who was

gift

work begin im-

condition that the

then dean of the church, "I

monument was returned, we were back in operation." 33

think he understood that the sooner the centerpiece the sooner people

Not long

would have a sense

after his

that

appointment, Gerhard Casper found himself in a car

with Hewlett racing to a meeting in the East Bay. $1 million in discretionary

wanted

to."

money,

says Casper, "for

Casper gratefully accepted

me

to

him

offered

Bill casually

do whatever

—and spent the money on

I

initiatives

for undergraduate education.

Many of these

acts

were never known to the general public. For example,

in 1985, Hewlett's cardiac physician Christopher

McGregor decided

to

move

back to the United Kingdom. McGregor, a heart transplant expert, had reached

an agreement with the British government that surgeries there were successful the

new

center.

if

his first three transplant

government would consider supporting

Hewlett agreed to cover the cost of those

totaled several

hundred thousand

sulting transplant center in

dollars.

first

They were

three cases

successful,

a

—which

and the

Newcastle-upon-Tyne became one of the

re-

largest

in Europe. 34

Through

it

all,

those

who

dealt with Hewlett

during these years were struck by

how little

—and Packard

they resembled the standard im-

age of either a billionaire or a captain of industry. People

such as "humble" and "unaffected" to describe them. briefly tried the life of

had found

it

as well

It

now

was

used terms

as

if,

having

conspicuous consumption in the 1960s, the two

so unsatisfying that they

men

bounced back even further than where

they had begun. There were no castles or racehorses or great yachts. For

and Dave, the only indulgences

left

seemed

to be ranchland

and giving

Bill

their

—

money away and people, especially HPers, loved them for it. Here is how Herant Katchadourian, the biology professor to whom Hewlett once confided that he might have followed his father into medicine, described the older

be

Bill

know him, it could But when you got to

Hewlett to Stanford Magazine: "If you didn't

difficult to separate the

person from the purse.

DAVE

BILL &

322

know him, what was so impressive was how this man was so untouched by his fortune. He would have been the same person even if he did not have the fortune."

And

this,

from David Pierpont Gardner, former president of the William

UC Berkeley:

and Flora Hewlett Foundation and of

In his personal

life

he lived modestly for one of his position, preferring to

raise his five children in Palo Alto, to center Hewlett-Packard's corporate

interests within the city,

work of his beloved same

.

.

.

He

its

civic affairs

and

in the

drove himself to work and occupied the

His wants were remarkably simple and he did not seem to be

any way the object of

in

to participate in

(seemingly with the same furniture) for more than forty

office

years.

and

Stanford.

did what interested

him

his professional as

life.

He

an engineer and "the

told

me

money

once that he

happened

just

along." 35

Finally,

from

his son, Walter Hewlett:

"My dad didn't want to be distracted in other things. He never forgot

by the money he made. He was too interested

where he came from and who he was." 36 But these comments didn't lived in Palo Alto

town

in a

Supply Hardware

store.

Olds Toronado when

and take

come from

grew accustomed

company Ford Taurus

in paint-spattered overalls

driver,

just

I

Orchard

nails at the local

new

security experts insisted that he get a

car

telling, story is

about Hewlett's growing

confirmed by Walter Hewlett):

Bill,

his

son Walter, and

upcoming meeting of

me

at his

his foundation's

could not shop for a Christmas present for his second wife,

Rosemary, owing to an operation from which he was then recovering. He asked Walter to shop for the

gift

he wanted: a pair of binoculars for

Rosie's bird-watching.

He

gave Walter a hundred dollars for the purchase. Walter,

a great deal about binoculars

prefer

and

who knew might

optics, suggested that his father

one of the better German or Japanese binoculars that would cost

not a hundred dollars, but Bill

and

a different route to the office each day.

one conversation involving

Bill

around

Packard only reluctantly gave up driving his beat-up

HP

following a review of our

board.

who

wagon, or bumping into Dave Packard

buying wood screws and

comes from Gardner (and

recall

home

to seeing Bill Hewlett driving

station

Perhaps the most amusing, and simplicity

family and friends. HPers

six to eight

was having none of

twenty minutes.

this,

hundred

dollars.

and the matter was "discussed"

for

Finally, in exasperation, Bill said, "Walter, here

some

is

two

Legacy hundred

dollars. It

Please go

buy it."

more than enough

is

All this after just settling Bill's

money at our

A

Calculating

Bill

and Dave had

momentum

for a decent pair of binoculars.

on proposals

next board

to

spend some $15 million of

meeting. 37

End all

Hewlett-Packard racing forward with

a

left

—and, by

323

appearances, the right

new CEO

at its

helm.

and the

In the eleven years between Bill Hewlett's retirement in 1978

company's

fiftieth

anniversary year in 1989,

HP grew from

terrific

$1.9 billion in rev-

enues, with 42,000 employees, to $11.8 billion in revenues and nearly 100,000

employees. In between, the family, the 32-bit

become

HP

company introduced

9000, the

the mainstay of HP's

first

computer business,

"client-server" architecture that

1980s,

and

in

its last

a

major new minicomputer

so-called "desktop mainframe." first as

It

would

part of the emerging

would define corporate computing

in the

years as part of the Internet server revolution.

Also during the 1980s, the computer group would embark on the most

R&D

expensive

new computer

project in the company's history: that of developing a architecture based

upon

computing) technology recently invented

the

RISC (reduced

at Stanford.

instruction set

RISC, because

smaller operating "vocabulary," was intrinsically faster than the

monly used CISC (complex

HP

used to

featuring

its

its

used a

more com-

advantage in a series of computers and very high-end PCs

RISC "Precision"

architecture.

personal computer, the HP-85, in 1980. With

its first

it

instruction set computing), a characteristic

At the other end of HP's computer business, the company

duced

whole

mal paper printer and

tiny display,

it

was

closer to the

its

finally intro-

built-in ther-

company's existing

desktop calculator line than what Apple was building a few blocks away, but

was a

start.

Three years It

it

was a

solid

later,

HP introduced the company's first "real" PC, the HP- 150.

machine, with one interesting feature: a touch-screen system by

which the user could quickly manipulate data by simply pointing a finger near the surface of the display.

The company

sold tens of thousands of

HP- 150s,

but mostly as part of larger packages of company instruments or minicomputers. The eration of

rest

of the world was

IBM PCs and was

much more

interested in the latest gen-

anxiously awaiting the announcement of the

Apple Macintosh. There

may

have been

many good

reasons for Hewlett-Packard not to

BILL &

324 into personal computers

years

later,

the

was no excuse

in that market, there

was not more innovative than that

had

—

when Wozniak offered up the Apple I but six company had at last made the commitment to compete

jump

when

later,

HP

that,

touch screen

it

was an early clue all

was not

the

all,

ear a decade before with the

its

pany's impressive business success,

year

computer

for a

competitors. This was, after

its

world on

set the tech

pocket calculators. In retrospect,

A

DAVE

aside,

company

first scientific

of the com-

that, for all

right at HP.

introduced a follow-up version of the HP- 150 that was

more powerful and reduced the touch screen to an option. It was an improvement, but Hewlett-Packard would not be a serious player in personal computers until the arrival of

then,

it

IBM -compatible Vectra

its

would be an also-ran

cades catching up. In

company would mass marketing

its

often

it

By

line later in the decade.

—and would spend two more de-

desperate attempt to

make up

that lost ground, the

compromise or abandon many of the dictums about

to consumers, event sponsorship, attacking the competition,

compromising quality gins that

in the field

for price,

had adhered

Meanwhile, the

and choosing market share over

mar-

to for the previous half century.

rest

of

HP

seemed

new products

largely uninspiring

profit

to

chug along, producing

solid if

that often succeeded because of the

com-

pany's reputation for quality, because of the company's long history with key

customers, and because of the network advantages of interconnecting with the

HP Interface Bus. HP's Instrument Group, the most venerable and reliable

part of the company, continued to

dominance and generating long past the days

when

it

march

solid profits, but

along, maintaining it

was now

a

its

market

mature business,

could produce the kind of explosive growth that

had once propelled HP. Rather,

was slowly becoming

it

a secondary business

at

Hewlett-Packard.

at

HP, were quickly become a minor contributor to the company's growth.

Calculators, too,

though

There were several reasons for

any hot new business, of

new competitors

as Casio,

and

U.S.

Both saw the

—

few years before the most exciting business

just a

this,

scientific

most of them not

and business

in this case,

drew

a host

calculators, such as Texas Instruments.

margins that HP's calculators were producing

sponded by adding more and more functions ficing quality in

HP's control. As with

both Japanese calculator companies, such

makers of low-end

profit

in

calculators quickly

— and

to their calculators, while sacri-

exchange for a bargain. These companies bet that there were

hundreds of thousands of potential customers out there who wanted an calculator, but

They were

re-

would right.

settle for

something nearly

And though

current customer base,

it

as

good

HP

for half the price.

this didn't really cut into Hewlett-Packard's

certainly carved off large regions of

its

potential

customer universe. But even that arrangement might have proved profitable

Legacy for

all

325

of the competitors in the scientific/financial calculator business had

not Texas Instruments, enamored with the controversial Boston Consulting

Group learning-curve pricing model, decided hopes of capturing dominant market share.

And

did just that. But

it

try leader, but so

it

damaged

was a Pyrrhic

HP

calculators, but

The company thought "handheld computer."

made

the market in

itself

were

it

the indus-

and so trun-

commodity product,

was already looking

it

found the answer

It

was

and pro-

regular

its

for an exit strategy.

HP-75C,

in 1982 with the

basically a highly

programmable

HP

top calculator in a small (but nearly two-pound), pocket-sized form.

manage

also

peripherals, such as a cassette

that

but dead as a healthy business.

all

couple more generations of

continued to produce a

first

early adopter to

early 1980s high-end calculators

grammable

victory: TI

bomb

the profit structure of the industry,

cated the normal time span from

by the

to price

memory drive and

It

its

desk-

could

a printer. But

it

wasn't enough to revitalize an aging industry.

Hewlett-Packard would continue to produce these handheld computers, culminating in 1991 with the $700 HP-95LX, an exquisite palmtop personal

computer that featured lator,

a simple

word processing program,

and an innovative wireless infrared

top. Impressive as

was

it

for the time,

million worth of the device the

of the

link to transfer data to

and too

late.

Too

interesting offerings a

desk-

the

first year,

HP-95LX was

basically the

end

line.

late to

managed

to

be both too

keep the world interested in calculators

now

ruined that market, and consumers were

by

HP

an

and though the company sold $50

In handheld computers, Hewlett-Packard had early

a financial calcu-

distracted

coming from the desktop computer

—TI had

by the much more industry.

Too

early

decade for the handheld/laptop computer paradigm to be firmly estab-

lished. In the

meantime, given the choice, and a limited budget, customers

bought PCs over supercharged

calculators.

in drugstores, the calculator era

was

Other than the cheap versions sold

over.

Future Imprint But as had always been the case faded, the

at

Hewlett-Packard, just as one business

company invented another one

Few technology companies have

to take

its

place.

ever accomplished this;

most

rise

and

fall

with the market they were founded to pursue.

A few famous

companies have

managed

from memory

to microproces-

sors,

to

make

the shift once or twice: Intel

Apple from personal computers to consumer entertainment devices,

DAVE

BILL &

326

Motorola and TI from instruments and radios to semiconductors. justly celebrated for having, over the course of nearly a century,

jump from

office

machines to computers to information

But Hewlett-Packard

came

a

is

unique.

computer company, then

late 1970s, the world's

world's biggest

PC

began

leading printer

And

companies).

in smaller markets,

It

a calculator

IBM

made

is

the

services.

an instrument company, be-

as

company, and, beginning

company (and even

this doesn't

later,

even include

its

in the

one of the

dominance

such as analytical devices, optoelectronics, and medical

monitoring systems.

These were head-snapping changes in business direction; of these other great companies,

made

having been

HP managed

did the

make

these turns without

desperate by business reversals, without a sweeping

agement coup, and without massive

How

to

company do

it?

were the

man-

layoffs.

The answer seems

to

in HP's inverted

lie

business structure and the trust that was the central tenet of the

As with every other company

most

yet, unlike

in the world,

HP Way.

was HP's employees who

it

who understood their changing needs, and who interesting new technologies and solutions customers. What made Hewlett-Packard different, at least during its

closest to customers,

had the best chance of identifying for those

was that the company

listened to these line employees.

first

half century,

new

idea, even from outside contractors

like

Tom

post-adolescent hires like Steve Wozniak, got a

was judged interesting enough,

And

company of

being a

a result,

them

for business of

in

jump

its

fair

age and

hearing

—and

moved up through the

HP

if

the idea

organization.

new

did best was take

into real products.

HP

even into the 1980s,

pany its

quickly

engineers, the one thing

technological ideas and turn

As

it

A

Osborne, or brand-new,

size.

remained a surprisingly

agile

com-

And nowhere was this better proven

than

—an

most

into the printer business

idea that began in one of the

remote of the company's operations and quickly came to redefine the entire organization. In 1990,

when

President George H.

W. Bush

visited the Hewlett-Packard

printer division in Boise, Idaho, he publicly congratulated the company's en-

gineers there for the invention of the president's

comments

computer

weren't really accurate,

he might have made the mistake: by then

it

HP

laser printer.

was easy

to

imagine In fact,

it

it

was hard not

as the industry pioneer.

work on

laser printers

Center (PARC) just up the

hill

was during that fabled period laser printer,

the

how

had become so synonymous

with printers, and had dominated that market for so long, that to

Though

understand

had begun

from

at

HP

at Xerox's

Palo Alto Research

headquarters in the

PARC when

late 1960s.

This

researchers devised not only the

but the personal computer, windowing software, bit-mapping

Legacy displays, the

industry

—and then proceeded not

a cousin to

its

to capitalize

on any of

perhaps because

its

38 it.

underlying technology

manage

business, Xerox did

main photocopier

model out the door: the Xerox 9700, an ultra-high-end

to get a

( 120 pages per minute)

monster designed to support mainframe computers and priced

One

PC

computer mouse, indeed, almost every part of the modern

In the case of the laser printer,

was

327

$350,000.

at

company that saw the Xerox 9700 and decided to give chase with a low-

cost version

1982

was the Japanese camera and optics company Canon

had introduced

it

lutionary

a desktop laser printer called the LBP-10.

work on

quickly went to

a follow-up printer, the

new CX printer

how to

sell

Canon then

LBP-CX, featuring the revo-

engine.

But Canon had a problem: pecially

—and by

knew

it

into the data processing

Valley looking for partners.

had three

It

about the computer business,

little

in

community. So

it

came

es-

to Silicon

mind: Diablo, Apple, and Hewlett-

Packard. Diablo, ironically a subsidiary of Xerox, was the best choice.

It

was already

the world leader in letter-quality daisy-wheel printers and had recently

barked on a program of putting

its

label

on

OEM products

em-

from Honeywell

(dot-matrix printers) and Sharp (color inkjet printers).

But Diablo declined, giving soon-to-be giant industry in the

was

it

it

the unenviable record of losing twice in the

founded.

seems that Diablo already had a deal

It

works with another subsidiary, Fuji-Xerox

in Japan, for

what

thought

it

a superior printer.

Chastened, the

Canon

delegation next crossed the Bay from

Fremont

to

Palo Alto and visited Hewlett-Packard. HP, the team reasoned, might be interested because label

it

(OEMing)

was already spending

other sources) in support of well, largely at

its

computer

derfully clear),

upon

in part

by the

and

Diablo, that the

As with

testing

its

lines.

They almost

own from

failed there as

HP Way—that anything not invented at the CX engine was so indisputably

HP

all

(its

300 dot per inch resolution was won-

Canon

delegation

met with

new

from the outside, the

it

CX

engine passed through

HP

Labs for

to a division for completion,

manu-

Boise, Idaho, proved to be

was led by the most interesting new executive

entire corporation: Richard

They

technologies, especially those rarities that

and marketing. The division chosen,

serendipitous because

a positive reception.

CX to Hewlett-Packard.

fundamentally

and design, before being assigned

facture,

under

HP was so desperate to get out from under its dependence

with a deal to provide the

entered

reselling

couldn't be very good. Luckily, the

superior to anything on the market

left

money

because they ran smack into a growing, and dangerous, attitude

HP — spawned

company

a lot of

Diablo's daisy- wheel printers (and dot-matrix printers

Hackborn.

in the

BILL &

328

DAVE

By 1983, Hackborn was already well-known mind. Wrote the

analytical

New

inside of

HP

for his brilliant

York Times, "Sometimes, subordinates say, he

himself in his office for a few days and write a long

will closet

letter that in

compelling logic outlines the company's strategy in a particular area and the reasons for

it.

Mr. Hackborn

These missives then become the marching orders for his troops.

famous within Hewlett-Packard

is

a strategy in a single

for laying out

all

elements of

slide." 39

mind-boggling chart or

Outside of HP, Hackborn had also become somewhat famous,

pseudonymously. One of the biggest business

only

if

1976 was The

best-sellers of

Gamesman by Michael Maccoby. The hero of this nonfiction look at corporate leadership was a character named Jack Wakefield, who exemplified a new breed of executive "who views business as a game, adapts rapidly to change and

excels at crafting strategies

In profiling the

first

to win." 40

Hackborn the Times reporter Andrew Pollack was

outsiders to recognize the maverick side of

[Hackborn] at

and motivating teams

is

also considered

one of the

Hackborn

his

own Idaho

as well:

also

is

Calif.

.

.

.

in Hewlett-Packard's sprawling factory here [in Boise],

born works a couple of miles away

some-

fiefdom and avoiding the bu-

reaucracy at corporate headquarters in Palo Alto,

working

among

conventional executives

less

Hewlett-Packard. Fiercely loyal to Hewlett-Packard, he

what detached, operating

also

Instead of

Mr. Hack-

in a tiny suite of offices in a business-

oriented shopping center, near an insurance company, a dentist and an optometrist.

Brilliant, focused,

opportunistic and a risk-taker, Dick Hackborn

—

as

—

many HPers noticed seemed cut from the same cloth as the founders themselves. And he seemed to have the same knack for spectacular success. Others had looked

at

Canon's

CX

engine and, while recognizing

its

qualitative

im-

provements, had not seen anything sufficiently compelling to adjust their business model. But Hackborn looked at the

of products that

—

if

new market, but own Years before, take a fortified

Bill

hill,

he moved decisively

him

especially

if

the

army on top

—and now he saw

— dot matrix,

now

he could get there

first,

bigger than your own."

in established

and so on

hill,

HP might end up

impact

—had already been

well defended. Yet

looked to the horizon he saw an even bigger If

is

exactly that terrain lying be-

The high ground

daisy wheel,

taken by other companies and was

empty.

create a gigantic

Hewlett had explained to him his theory of "Never try to

in the printer business.

printer businesses

— could not only

future, a family

it.

Hackborn had never forgotten fore

CX and saw the

when Hackborn

low-cost laser printers,

still

controlling the entire field.

Legacy

And

that

precisely

is

what he

329

one of the most impressive examples

did, in

of product management in Hewlett-Packard history. Said Hackborn

"We

focused on the

May

In

troduced the

HP

company's

line in the

SX-powered

CX-powered

LaserJet

II,

history.

LaserJet

was so popular

many dealers were willing to LaserJet's success

many

of

its

sign

took off so

by

fast that

late

up and promote the HP- 150 and Vectra

This

last

resulted

was

It

on the

LaserJet.

all, it

a design breakthrough

was one-tenth the

it

enough

also small

output, and, best of

its

from

computing world

in the business

was well earned. At $3,500,

competitors.

comparatively quick in able.

It

was replaced by the more powerful

personal computer lines just to get their hands

The

engine, Boise in-

Hewlett-Packard had sold an estimated 500,000

units. Better yet, the printer

price of

CX

saw the Canon

already controlled 85 percent of the desktop laser printer business,

and, by the time the

that

it first

HP LaserJet printer. It was destined to become the largest dollar-

volume product 1985

that weren't fortified yet."

hills

1984, just a year after

later,

41

to

sit

on

a desk,

was astonishingly

by HP:

it

technology in the replaceable cartridge, rather than building

reli-

put the printing

it

into the printer

itself.

That meant that every time you replaced the (rather expensive) car-

tridge

you were

having to

actually upgrading the printer

call in a

—

a distinct

improvement over

technician to tear apart the printer whenever the print

quality degraded.

There were also bigger, structural reasons for the 1984, thanks to the Apple Macintosh

LaserJet's success. In

and Adobe PageMaker software, business

technology was quickly abandoning word processing to embrace simple desktop publishing, with

its

wide array of

impact printers couldn't handle brilliantly.

By rushing the

this

LaserJet to

fonts, charts,

new

output, but a laser printer could,

market quickly, and then supporting

with a wide range of programs in HP's proprietary guage),

Hackborn

essentially

industry, then gathered

That was

born decided to sweep the

PCL

(printer control lan-

pieces

Now

rest

and reassembled them

in HP's image.

that he controlled the high ground,

of the

field.

Hack-

That meant taking on the low end

of the printer business, the world of thermal, simple impact, and most of

cheap dot-matrix printers. Though

it

would take

Hackborn knew he already had the weapon As

a

to take that

market

— except one: shooting dots of ink onto

precise, but also potentially the cheapest.

holy grail in the printer world.

to put

the paper's surface in

a controlled pattern. This technique promised to be not only

and most

as well.

companies around

had come up with working versions of just about every way

marks on paper

all,

longer to perfect,

little

early as the late 1960s design engineers at various

the world

it

blew apart the upper end of the computer printer

up the

just the start.

and images. Traditional

Thus

it

one of the

became

fastest

a kind of

BILL &

330

The problem was the drop every time,

DAVE

how to

sprayer:

get

it

and not drip or quickly

at the right target,

same

to squirt exactly the

gum

up.

size

Over the

number of research teams at different companies had tried and failed come up with a solution. In 1979, HP Labs decided to take on the chal-

years, a

to

lenge. fluid

assembled a design team with the specific task of understanding the

It

dynamics of a workable

inkjet.

The team quickly determined

that the solution likely lay with using an off-

shoot of semiconductor (and computer disk drive head) technology called

But from there things got complicated.

thin-film.

vious

how to

get the ink to project

It

was not immediately ob-

from the thin-film surface across the gap

to

the paper.

As legend has

it,

the answer

ing for the office coffee

maker

looking at an answer. Heat.

came one day when

to finish percolating

If

a

team member was wait-

—and

realized that he

popping bubbles of vaporized ink might

trolled way, the

was

they got ink boiling and bubbling in a conin turn shoot a

droplet through a nozzle onto the paper.

As

turned out,

it

this

was

a classic

example of a revolutionary invention

that seems deceptively simple as an idea

The problem was destroy

that every time they built

What he

and ran such

a device

it

seemed

to

wrong

to

fell

team member John Meyer.

eventually discovered was that as the bubbles being created by the

process collapsed they acted like a

It

difficult in execution.

itself.

Figuring out what was going

Meyer

and incredibly

realized,

was

was

to

move

jackhammer on the

circuitry.

The

solution,

the bubble off the surface of the resistor chip. 42

a true breakthrough,

proving once again that no company on

earth was better at finding practical solutions to apparently impossible technological problems. Unfortunately,

breakthrough

The

HP

at

it

would

also

be the

last great

technical

Hewlett-Packard in the twentieth century.

Labs team would spend nearly four years improving inkjet tech-

nology, dealing with one technical problem after another involving print heads, inks, residue buildup

on the

cartridge resistor surface,

the project was given the formal go-ahead from corporate, St.

it

and so on. Once was code-named

Helens, officially because that volcano's recent eruption resembled the ac-

tion of the inkjet head

—but no doubt

unofficially because

working on

all

of

the technical challenges was like surviving a natural disaster.

Despite

all

the technology,

of it

its

problems, for those HPers

was nothing short of

a miracle.

For some years in the 1980s, Barney [Oliver]

an annual

HP

who

got an early glimpse of

According to John Minck:

set

up

a practice of holding

Labs Technology Show. This was intended to show the em-

—

.

Legacy

331

ployees just what a diverse and dramatic series of

under way

About showed

in his Labs.

.

R&D

projects were

.

a year before the ink-jet printer was introduced,

a technology

demo, with

a print

HP

head driving back and

Labs just

forth,

and

printing a line of alpha characters. believe our eyes

Most of us could hardly

when we were

told that the

succeeding in blasting millions of tiny droplets of ink out

engineers had

through microscopic holes in a process that happened in microseconds. For us engineers, could be

made

to

it

was hard to conceive that tiny amounts of liquid

move

that

But there

fast.

it

was, writing in front of our

eyes. 43

The work on

inkjet printing

tion of a cheap, portable

X-Y

finally perfected the process

ous that the

new PC

had been

enough

In April 1984, a

was much more

in 1983 to Boise

month

toward the crea-

HP

Labs team had

for full-scale manufacturing,

printer market

why it was transferred

originally targeted

But by the time the

plotter.

it

interesting.

was obvi-

And

that's

and Dick Hackborn.

before the LaserJet,

HP

Boise introduced the

Thinkjet ("thermal inkjet") printer to worldwide attention. Unlike the sophisticated LaserJet, the

first

Thinkjet was a pretty primitive machine.

—too crude

printed only 96 dpi special paper. But,

for letters

—used only black

compared with daisy-wheel

printers,

it

ink,

and required

was blindingly

(150 characters per second), extremely quiet and small, and, best of cost $495.

It

all, it

fast

only

wasn't yet good enough to compete directly with the best dot-

matrix printers on the market. But tain niche markets its

It

it

was good enough

now, and had the potential to be

to be profitable in cer-

much

better than any of

counterparts in the future.

As with the

laser printer, the

one of those rare marriages

HP

inkjet printer

—

like Steve Jobs

in tech

technology with a great marketer. Hackborn

and Dick Hackborn was and the iPod

knew that the key to

— of

a great

his strategy to

dominate both the high and low ends of the printer business depended upon getting inkjet technology through a couple of generations of

and he drove both the It

born

improvement

HP Labs and Boise to get there.

wouldn't be enough to improve the print quality of the Thinkjet, Hackrealized,

But to

though that would be part of

really separate

HP

users in the process, there

it.

from the pack, and

had

to

So would plain paper printing. steal

away current dot- matrix

be something more: low-cost color printing

on the desktop. HP's competitors in printing had already considered color, which would have added considerable cost to dot-matrix printers

— only

to have

customer

come back with

surveys universally

So

DAVE

BILL &

332

HP

rephrased the question in

tomers

the answer No.

Hackborn

didn't believe

survey to instead ask prospective cus-

its

they would be willing to buy a black text printer that could be occa-

if

sionally used to print color images

The answer was

a resounding

the inkjet business guys 'Go

Once

again,

it fell

upon

—

for only a marginally higher price.

all

Yes.

The Gamesman had found do the

John Meyer

his edge. color.'

team

recalled,

"Hackborn

HP Labs to come up with the technical

at

The team had already begun experimenting with using the

inkjet to

one

after an-

solution.

produced some adequate images, but the process was too cumber-

other.

It

some

for

consumer

applications.

Meyer was picked

to lead the

combination

unlikely

photolithography

of

team because he happened

PhD

a

to have the

and work experience

physics

in

—the kind of lucky break HP had long been famous

team went back

his

told

" 44

print, like a professional offset press, the three basic color runs,

and

it.

to the

drawing board. The

result

was

for.

in

He

a proprietary

HP called Architecture for Color Imaging, which instructed the print

software

head, in real time, to shoot combinations of red-green-blue (RGB) ink dots to

produce the color image. Said Meyer:

The

things that turn out

me,

much in the beginning, but often look like much in the beginning. That, to

[resulting images] didn't look like

is

The thing process. ...

colors

good don't

one of the fundamental things that that

We

HP Labs has got to be about

was remarkable was that there was no "expert"

took a

lot

by hand, and put

of what

it

I

knew, which was about

how

in the

to build

together with a lot of color science and imag-

ing science and created the intelligent printer driver from that software

program

—and

that's

been the basis for the drivers for

all

of our color

printers since then. 45

Now

Hackborn was ready

to

make

his

move. For the next decade,

stunned the low-end printer market with one new inkjet model In 1986, Boise introduced the Quiet Jet

quality 192 dpi resolution. first

A

year

full-color graphic printer.

It

and Quiet Jet+, both with

later, it

near-letter-

introduced the $1,395 PaintJet, the

quickly captured market leadership. Nine-

teen eighty-eight saw the arrival of the DeskJet, with laser-quality imagery plain paper.

A year

later,

Desk Writer, and the $729, quickly

HP

introduced three

PaintJet XL.

became the world's

And on and

on.

HP

after another.

The DeskJet

new

on

printers, the DeskJet-!-, the

500, introduced in 1990 for just

best-selling printer.

Under Hackborn,

HP

tions so quickly that competitors barely

Boise upgraded

had time

to react to

its

printer genera-

one model before

— Legacy its

From HP's

superior replacement appeared.

mere seven years

after entering the

An

trouncing the competition.

wanted an

By

inkjet

market,

fifty-four-year-old

New

HP had taken on and was soundly

industry insider at the time noted that

HP

if

you

or HP." 46

York Times traveled to Boise in 1992 to profile the

Hackborn, HP's printer

20 percent of HP's

much

$3 billion. Meanwhile, as

sales

were estimated-

revenues

total

That

inkjet line fully gained traction.

and high tech through

"In 1991, a

official history:

product you had your choice: HP,

the time the

lion, at nearly

333

year,

of the rest of

HP HP

—and

this

at $2.5 bil-

was

printer sales

before the

would reach

suffered through a malaise

a small recession, "strong printer sales" the

Times

noted, "continue to contribute and were cited as one reason the company's net

income

up an astounding 49 percent

is

in

most recent

its

quarter."

So successful had Hackborn been with HP's printers that by the time the Times reporter arrived in Boise, he had been promoted to company vice president and put in charge of turning around HP's long-troubled personal computer business. As a measure of the respect with which he was held by the

company, when Hackborn demanded that he manage

his

new assignment

from Idaho, Hewlett-Packard acquiesced.

Not

when Young As Bill

it

HP

throughout

surprisingly,

had already been picked

to

it

was whispered that Dick Hackborn

become John Young's replacement

five years

hence

retired.

turned out, those rumors would be answered in a matter of months.

and Dave were coming home.

Young

in

Retrospect

Assessing the fifteen-year tenure of John

Packard has always been problematic. For

and they are impressive

—

there

still

Young

all

helm of Hewlett-

at the

of the achievements on paper

remain the imperfect

finish

and

judgments of the founders. That ambivalence toward the Young era

final

echoed

at

Young was,

And

his

after

all, Bill

appointment

surprised

and Dave's handpicked choice

as president

tion at such a comparatively try. It also

still

HP a quarter century later. (and a year

young age

—

later,

CEO)

just forty-five

much of Hewlett-Packard:

as their successor.

of a giant corpora-

—surprised

in picking

the indus-

Young, Hewlett and

—

Packard leapfrogged the entire second generation of HP executives men who had spent as many as thirty years in loyal service to the company to name instead the superstar of HP's third generation. It may have been a classic Bill and Dave play, ignoring the predictable

—

— DAVE

BILL &

334 spoils tirely

appointment for the easy

qualified

on executive row in Palo

—

long-term

radical,

Alto.

had been one of the

his

play,

but

it

didn't go

down

en-

No one doubted that John Young was

great careers at

HP—but

there

would

al-

ways remain the question of whether he had the character and the tempera-

ment

to

and Dave's

Bill's

fill

shoes.

No doubt

founders

their

company. But

as the years passed, other,

more

questions were raised about the quality of Young's leadership.

realistic

there

Still,

no question

is

CEO

things as 1977,

head of

at the

part of this was the natural

had never known anyone but the

reaction of an employee population that

Young accomplished remarkable

that John

of Hewlett-Packard Co.

When

he was named president in

HP was a $1.4 billion company, with 35,000 employees. When Young re-

tired in 1992, Hewlett-Packard's

annual revenues had reached $16.4

billion,

and the company employed 92,000 people.

HP

In other words, during that fifteen year interval, despite the fact that

was now one of the in 1988),

Young

largest corporations in the

still

managed

to

world

grow the company

joined the Fortune 50

(it

at nearly its historic rate

under Hewlett and Packard. Meanwhile, during those of important

new product

inkjet printers, the ful

fifteen years,

Young

also presided over a

number

creations at the company, including laser

model 9000 computers, RISC computing, the

first

and

success-

HP personal computers, and palmtop computing. On the business side, he

led the

company

into

China with China Hewlett-Packard (CHP), the

He

high-tech joint venture in that country.

also

took

first

HP onto the Tokyo stock

exchange, implemented corporate recycling and energy efficiency programs,

opened

a

second major company research lab

and, most visibly, directed the building of a just

down

the

rampant

mean accomplishment, inflation,

one

new HP

especially in the face of oil price

failures. Like

his cleft chin, square jaw,

sion of a corporate

CEO.

in tech history,

and

company burdened with two almost mutu-

main product groups and passing through

few mistakes and fewer

and thick

its

half-century mark.

his life

had been one of

Packard, he even looked the part: with

hair,

Since joining

he looked

HP

like

in 1958, he

the central casting ver-

had served

as regional

manager, then in corporate finance, then marketing manager of the

Microwave all

England

corporate headquarters

But John Young was used to success. Like Packard,

sales

in Bristol,

one of the worst recessions

while managing a huge, ungainly ally exclusive

this

from the old one.

hill

This was no shocks,

—

of them

division,

and

finally

Microwave division general manager. He did

brilliantly.

Thus, except for actual lab research, Young by the age of thirty-one had ready punched

all

ready noted, that

of the tickets call

came

at

HP

to

five years

jump

to senior

later,

when he was named

management. As

alal-

a vice

Legacy

company and assumed

president of the

335

leadership of the Electronic Products

Group, which included instruments, measurement systems, and components.

Only

he jumped again. This was the big one: executive vice-

six years later,

president and a

Through

member

all

of

this,

HP board of directors.

of the

Young wasn't

a beloved figure,

but neither was he

He was just too And he seemed

through the company seemed inevitable.

liked. Rather, his rise

smart, too ambitious, too perfect to go anywhere but the top. so destined to lead call to

HP that no one really begrudged him his success when that

the presidency arrived just three years

But

least at the distance

saw

in Bill

later.

of that perfection came at a cost.

all

What Young seemed

most HPers saw him, was

and Dave.

It

was

to lack, at

humanity they

that touch of

imagine him pulling up a stool

difficult to

next lab bench and helping solder wiring on a

new prototype

at the

Hewlett

like

would, or pounding on a table and demanding respect for the lowliest employee, as they

Some of litical is

HP

knew Packard would.

was not John Young's

this

dis-

the fate of

all

fault.

corporate types

who

To be seen

and po-

as too aloof

follow founding entrepreneurs.

Professional managers don't get to the top by exhibiting the personal eccentricities

and maverick behavior

that

damage through

who knew him

well,

Young did have

accounts, a loving husband

a moderately animated statue, torian John Minck,

and

the founders, with their unassailas

much

capriciousness, either.)

In fact, to those

He was, by all

make

(Of course, they usually don't do

able stock holdings, so endearing.

and

father.

And

common

the

touch.

despite his image as

some HPers saw another side. Recalled HP hiswith Young both in the Microwave division

who worked

at corporate:

John was a knowledgeable manager. ing

Around

religiously, visiting

He

practiced

Management by Walk-

production operations regularly, and

learning of current problems.

One morning, just over a cup of coffee.

after

One

we

and

arrived at work, John

I

were chatting

of the production process managers came up,

and urgently told John of a possible problem that had happened about 10 p.m. the previous night.

It

seemed some excess

acidic chemicals

had

inadvertently released into the Palo Alto sewer system.

John

The

city

said,

was

"No problem. I know

notified.

I

was here

down having coffee with the But few

more miles

all

about

last night,

it,

and

it

was taken care

and learned of

it

when

I

of.

was

night crew." 47

HP employees ever saw this side of Young. Though he logged many in the eighties than the older Bill

and Dave had

in the seventies

BILL &

336

HP

visiting just

plants

DAVE

around the world, the impact of

of this attention was

not as great. Once again, this was not entirely Young's

everywhere they went; Young was merely the CEO.

would be the

stuff of conversation

and Dave knew

They knew

exactly

fault: at this

point

and Dave carried with them the penumbra of legend

in their careers, Bill

Bill

all

it.

A visit

and reminiscence

from the founders come.

for years to

By now they were the consummate corporate

how

the

little

friendly gesture

ployee or low-level secretary, or a spirited

by Packard

And

actors.

young em-

to a

new product assembly competition

between Hewlett and a couple of division executives, would pull together the "family" the

way

more than any formal Bill

directive. It

came

and Dave had always worked, and

it

easily to

them;

it

had been

was a natural extension of

their characters.

was none of those things

It

expert, not a technologist. ture.

for

John Young. He was a

He was drawn

sales

and marketing

to the big strategy, not the small ges-

And his personal warmth did not translate easily to the theatrical stage of

corporate leadership. tury of

A Bill and Dave visit brought a connection to a half cen-

HP glory; a John Young visit meant racing to meet revenue targets.

What was Young's

fault

was

a series of choices that actually amplified his

One was his decision number of personal appearances he made around the company

appearance of detachment from the daily lives of HPers. to reduce the

and

to substitute a corporate-wide television

make major company announcements, such In theory, large Bill

it

was

and far-flung that maintaining the

CEO. But

tween headquarters

now just

and

profit sharing.

a reasonable decision: Hewlett-Packard

and Dave era was becoming both

tivity as

network through which he could as earnings

in practice,

it

in Palo Alto

a talking head facing a

had grown so

traditional personal contact of the

difficult

and a

threat to Young's produc-

only increased the emotional distance be-

and the

rest

of the company. John Young was

camera thousands of miles away.*

But that miscalculation was minor compared with what would be one of the

most enduring decisions of Young's tenure

new corporate headquarters. Once again, this decision was made

as

HP CEO:

the construction

of the

nal headquarters building, with

prescient "green" architecture,

its

for

of the right reasons. The origi-

all

distinctive

sawtooth roof and impressively

was beginning

to look old. Moreover, as

had become a multibillion-dollar corporation, so too had operation seen a commensurate growth (too much,

With

all

headquarters

some HPers complained).

insufficient facilities at the old headquarters to hold

tions were scattered in rented offices

its

HP

them, these opera-

over that part of Palo Alto. Both

fi-

nancial prudence and managerial control argued for the construction of a

new, centralized headquarters

facility.

Hewlett-Packard had the land for

it:

even as they were helping Terman

— Legacy and Dave were already reserving

create Stanford Industrial Park, Bill

enough

337

parcel of land to deal with years of future growth.

grown even plants were well as a

faster

now

dozen

than the founders had imagined, and

scattered across almost every

states

and

had kept undeveloped

a score of nations

major

Though

a large

HP

had

manufacturing

its

city of Silicon Valley, as

around the world, the company

and

a large parcel adjacent to

just

down

the

from

hill

the old headquarters. was. here that John

It

Young

built

HP's

first

new

headquarters in thirty

years.

Ground was broken

in 1979,

and the building,

completed on schedule two years

later. It

at

was, and

3000 Hanover Drive, was

is,

a beautiful structure: a

low-slung bronze wedge that conforms to the topography so well that

almost be overlooked by those driving into the hillside that

headquarters, in

its

it

much

seems

down Page

smaller than

modesty and sense of

it

really

is.

civic responsibility,

and, in that regard, a distinct improvement

can

it

Mill Road, so well nestled

This

was a

new HP far cry

— over the triumphant, and un-

mistakable, old headquarters.

But

it

was

also gloomier

and more claustrophobic than

lacking the soaring spires, the walls of glass,

made working

in the older building

Worse, there

by

is

and the natural

predecessor,

light that

had

such an uplifting experience.

a "law" in Silicon Valley,

a local journalist, that

its

first

formulated around

this

time

"whenever a company builds a new headquarters,

stock." 48

The reasoning was that when a company decides to connew headquarters, most of the people who run the company the people who will work out of the new building are inevitably distracted from their real work by such considerations as who will get the best view or the corner office or be stuck near the bathrooms. And then, of course, there are all of the dislocations of the move itself. But the biggest danger of a new headquarters is that always for very good reasons it becomes the occasion for the senior executives to make their short

its

—

struct a

—

—

—

work environment even more at

exclusive than before. That

Hewlett-Packard; indeed, witnessing just those events at

is

what happened

HP

had given the

reporter the idea for the law.

The changes, by the standards of most Fortune 50 companies, weren't extreme

—an

elegant glass-curtained office for John Young, an executive

washroom, and ing. It

private dining

was hard

room

—but by HP standards they were shock-

to argue against the notion that the chief executive of a

$10 billion corporation should have a private dining area to meet with world leaders

and other distinguished

the old

HP

guests;

lunchroom and having

the bench beside you.

Bill

but

it

was

also

and Dave,

hard to forget

trays in hand,

sitting in

come

sit

on

And in light of that that memory, both John Young and

DAVE

BILL &

338

headquarters seemed even farther away. "Galactic Headquarters" was the place. 49

nickname some HPers gave the Still,

through the

seemed Bill

HP

underscored by the impressive growth numbers

as

eighties,

to slow

none of these compromises

to the

exhibited

company's culture

HP by even a step. John Young may not have been as warm as

and Dave, but when

it

came

to

running the machinery of a

giant,

modern

corporation, he was arguably a better pure businessman than either of them.

And under

HP became

management,

his

a

more

efficient, better-structured

company than it had ever been before. If it had lost some of the upside potenthat came with the mercurial decisions of its founders, it also lost the

tial

downside

risk of spectacular failure as well.

doned some of

its

ployee programs, and

more

And

if

Hewlett-Packard aban-

new markets, new eminitiatives, it also became much

excitement as a radical innovator of

new community service

HR

industry standards, rationalizing

efficient at driving

around the company, and serving

operations

communities through systematic under-

its

writing of nonprofits, pollution control, and giving

its

managers

leave to serve

in the public sector.

Young himself was

a classic

chief executive. While running

example of the balanced,

HP

socially

dent Reagan's Commission on Industrial Competitiveness and the Council

on Competitiveness. He was

Achievement and a founding

director,

Baldrige National Quality Award. President's council of Advisors

Committee National

for Trade Policy

engaged

he also served as chairman of Presi-

And

and

its

successor,

chairman of Junior

also national

later president,

in his retirement

of the Malcolm

he served on the

on Science and Technology,

the Advisory

and Negotiations, the Business Council, and the

Academy of Engineering.

All of this extracurricular activity certainly helped give Hewlett-Packard

—

—

even

as a company when Dave Packard was at

from

a highly successful

Co. a presence

business establishment.

nomic

health,

and

a

But these same that

worked so

it

had never before known,

Young turned

a pillar of the little

state

of the world economy.

Young during

his first

decade as

CEO

of HP, in time

on the company. Almost from the day of

his appoint-

talent, especially those individuals

sense that the old, unpredictable HP, the family that took even

was disappearing

—

to be replaced

its

by

who

They could

exhibited maverick, unorthodox, or entrepreneurial behavior.

to heart,

American

company began

organization, efficiency, structure, and stability

ment, Hewlett-Packard began to bleed

and prodigal sons

HP

was now a leading indicator of national eco-

barometer of the

toll

it

half century after the plucky

traits for

well for

began to take their

Washington

West Coast corporation into

A

Addison Avenue garage,

in the

in

the Defense Department.

a

black sheep

more

stan-

— Legacy dardized

339

HP "type." And as the years went on, the more the company seemed

to expel these nonconformists

even though they were

—

many

politely,

own volition

of course, and by their

who had

of the same folks

helped bring the

company to greatness. The first to go were the senior executives who looked at Young's management style and his comparative youth and realized they could never get along for the

twenty years until he retired and they

And once

they looked around, often for the

booming

first

had

a shot at his chair.

time in their careers, they

resume that included senior management

realized that a in

at last

at

HP

was

gold

like

Silicon Valley.

Thus, by the end of the 1980s, an entire vertical swath of management

at

HP's Computer Group was gone: group vice president Paul Ely to Convergent, division general

manager Ed McCracken

manager Ed Krause

sion marketing

to Silicon Graphics,

3Com. The

to

loss

and

of each was, in

divi-

its

own

way, devastating. Krause was a potential corporate vice president of marketing.

McCracken,

and

brilliant

generation, a fast- rising superstar

HP

was the John Young of the next

calculating,

who by

his late twenties

was already being

whispered about as the company's future CEO.

But the

loss of Ely

Dave partnership was other's weaknesses

— and

complementary

rational Young. But

just as importantly, trusted

the future of

HP

were

when

the time

came

for

that

each

each other to do

a perfect

so.

smooth,

match of opposites

As

a result, the

really trusted

two men never

each other's judgment.

John Young to appoint

his

number

HP's executive vice president, he made the single biggest mistake of his

From

and

Bill

filled in

just too far apart, their visions of

different.

and worse, they never

really got along,

Thus,

men

were simply too

They

antithesis of the cool,

what might have been

perhaps because the two

failed,

personalities.

and unpredictable, Ely was the

Fiery, difficult

and

was the worst blow. Much of the power of the their

moment, Hewlett-Packard turned onto

a trajectory that

timately lead to a corporate crisis and the end of Young's career as

two,

career.

would

ul-

CEO.

Nice Guys In choosing an executive vice president,

with Ely off the

table,

ment Group or from HP's Opto).

A

third

agement ranks,

and more as Bill

Young

essentially

had two

choices:

he could take a senior executive from either the Instrusecond-tier divisions (such as Medical, Analytical, or interesting choice

—reaching deeper

and Dave had with him,

to pick out

into the

man-

an up-and-comer

— 340 like

DAVE

BILL &

Hackborn, McCracken, or a young manager named Lew

beginning to make waves in large computer networks

who was

Piatt

—was not

in Young's

personality.

The head of

HP

instruments was

Bill Terry.

temporary, Terry was passionate, often

and unconventional. He had done a

ment Group

great job in keeping the aging

but seemed to have

relevant,

computers were obviously HP's edges, too Hewlett, for the

Approximately Young's con-

a tech romantic, mischievous,

fiery,

was

future. Terry

new HP with

also too

Instru-

And

rough around the

elegant headquarters

its

HP

interest in computers.

little

and global

diplomacy. Instead, in 1984

Morton,

as

tive vice president

charge of overall

Morton was people

and appointed

men comprised

Young, the two

telligent

Young picked HP's other group

HP's new chief operating

officer.

to the

In 1990

vice president, Dean Morton was made execu-

HP board of directors.

Together with

Hewlett-Packard's chief executive

company management. and thoughtful manager, and one of the most

a gracious

at

Hewlett-Packard.

He was roundly admired by his

ecutives for his calmness, his competence,

and

Young had picked

who complemented his

strengths

fatal error.

fellow ex-

—

his strategic thinking

spected corporate directors in high tech. His problem wasn't lack of lack of difference. John

in-

would make him one of the most desired and

traits that, in later years,

This was a

office, in

ability,

as his executive officer not

all

re-

but

someone

and weaknesses, but amplified them.

Young may have been

a superb businessman, but he

also, at heart, a consensus-builder. But that wasn't what HP needed. The HP Way took care of that; HPers naturally built consensus. Ironically, for such a family company, what HP always required was a bold, but ultimately con-

was

—

strained, decision-maker

trusted the

company with

a risk-taker

who

ambitious goals and then en-

the task of reaching them. Put metaphorically, the

Hewlett-Packard family needed a strong ally the

set

father,

and John Young was perenni-

golden boy, the overaccomplishing oldest son.

With

a strong

could have nineties

likely

and

their

and

maintained

own

COO, either Young or Morton Hewlett-Packard's momentum into the late

decisive technologist as

retirements. Instead, they

—

had each

wrong combination.

HP

could survive, even thrive, with a John Young

a

and

that

was

product generation or two

the

In the short term

other,

at the

helm. But high tech

was too fast-moving, too rough-and-tumble, and too unforgiving of prudence to

let

the eighties,

HP coast on its history and reputation for long. And by the end of it

was becoming increasingly apparent

astute outsiders, that

company

that

something was going wrong

had always been able

now suddenly seemed

to regain

its

old and slow and confused.

to HPers, as well as a at

few

Hewlett-Packard. The

youth by reinventing

itself

Legacy Nowhere was

first

the HP 9000 Series 90, way back in

1982

before

its

huge

size,

HP

tion in desktop calculators,

owned

computer workstation,

to introduce a

—not long

workstation, in the same year as the

DEC. With

in HP's workstation business. 50

more apparent than

this

The company had been one of the

first

341

Apollo introduced the

Sun workstation and two

first

immense

after

distribution network,

years

and reputa-

should have crushed the competition and

the market. Instead, exhibiting the arrogant

and

solipsistic

"Not

In-

vented Here" attitude that was beginning to infect every division of the company,

wasted time trying to do everything

it

itself.

much

Thus, while Sun and Apollo, working with put together ful

new models

new Motorola 680X0

to be called the Focus

Motorola

using off-the-shelf components, notably the power-

In fact, HP's for the job: the

HP

processor,

II.

On

—but on paper was

ing precious months,

smaller budgets, simply

decided

paper, the Focus

it

II

much where

pretty

would design

own

its

chip,

was a better chip than the

it

stayed, because after

burn-

HP dropped Focus and adopted the Motorola processor.

Computer Group

PA RISC

chip, a

already had in-house the perfect processor

product of

massive RISC program for mini-

its

computers. Unfortunately, given the increasing balkanization of the computer

RISC chip program was

group, the

and wasn't made

RISC program

the 9000

two

years, until

Thus

it

equivalent years after

wasn't until

power

at

HP

9000 team

Compounding

this,

ran into software problems and was delayed by

1986.

May

later

it

1987 that

HP

finally

was trumped by

almost half the price.

It

a

introduced a RISC work-

Sun RISC workstation of

wasn't until

March

1991, ten

HP began its RISC program, that the company finally introduced a

truly competitive

Not

itself

November

Two months

station.

zealously guarded by the

available for design into workstations.

RISC workstation.

surprisingly, Hewlett-Packard,

dominated every market that

now found itself fourth in

a

it

had

which

for fifty years

had consistently

either pioneered or entered very early,

four-company race.

The company responded with a move that foreshadowed its darkest years ahead: it went out and bought one of its biggest competitors, Apollo, for $500 million.

On

Wrote Upside magazine:

paper

this

gether held the in

move made HP look much number-one position

stronger.

HP

and Apollo

to-

in the workstation industry in 1989

both revenues and installed base. Below the surface, other problems

persisted

and some got worse.

This lack of coordination, which had long plagued HP's computer units,

was magnified with the addition of Apollo. "Sometimes the Apollo

people in Massachusetts did not

know what

the Fort Collins [Colorado]

— 342

DAVE

BILL &

people were doing," says Carolyn Griffin, a senior analyst at International

Data Corp. "In order to make a decision they often had to go up three or four levels to get

Thus, sign,

someone who had

responsibility for both product lines."

HP often did not take a systems approach in its workstation de-

which resulted

in products that did not offer top performance.

"The

workstations were put together from a bunch of different parts built by different divisions," says

an

HP employee. This approach also led to delays

and even some interdivisional

HP was

was that

rivalries.

doing an awful

mer Apollo employee

adds.

"We

"One of the

is

Sun Micro-

51

that in 1990, a year after the purchase of Apollo,

number one number two.

in the workstation market,

it

There were a few bright spots ing his magic in Boise

Cupertino,

Lew

Piatt, a transfer

personal computer business.

ment Group

rolling along,

company, and erally, in

its

in the

— and doing

tionalize the structure of the

fallen to a distant

company. Dick Hackborn was work-

his best to stay

away from headquarters. In

from the Medical Group, was fighting

Computer Group and bring

And

its

had already

it

which had made

Terry was

Bill

HP

to ra-

back into the

keeping the aged Instru-

still

profits serving as a cash

cow

for the rest of the

people acting as the enduring repository of the

HP Way.

(Lit-

company instruments now became the chief defender of

the case of Terry, who, having saved the old

including an

its

"

was a measure of just how lumbering and uncoordinated the company

had become

the

we recognized

competition

said, 'Hey, the

systems, not Cupertino versus Fort Collins.'

It

things

of fighting with each other," the for-

lot

HP 200A

—

in the early 1980s,

new company archives. HP,

future, but also losing

its

it

grip

seems, was not only becoming unsure about

on

its

But with increasing bureaucratic

past.)

inertia at the top, these heroic efforts at

the division level were increasingly stymied. Hewlett-Packard was

becom-

ing too thick with layers of management, too risk-averse, and too slow to

move. Even the at the

HP

Way, that dynamic philosophy of interpersonal relations

company, was becoming more

years after Hewlett's

employees having

ossified

by the

and Packard's retirements,

a

year.

By

1990, a dozen

whole new generation of

—nearly 60,000 of them—had joined the company without

known

life

under the founders. To them, the

handful of dictums: no

ever

HP Way was reduced to a

layoffs, flex-time, profit sharing, coffee breaks,

Man-

agement by Walking Around. Even the very heart of the mised: with so

many

layers of

HP

Way,

trust,

management,

it

had been seriously comprowas almost impossible

to set

general objectives at the top that were reduced to explicit orders by the time

they reached the rank and

file.

"The

HP Way under

John Young," said analyst

Legacy

343

Peter Rogers, "is to get a consensus ahead of time.

more of

And

a politician than

there was

It

He

never happens.

is

a businessman." 52

no indication

was going

that the situation

to get anything

but worse:

Under President John Young's

made

the

company

far in the direction

HP

leadership,

so successful in

its

lost the

earlier years.

a proliferation of

case study is

give

style

management system and

committees and meetings. 53

Wrote business author Richard but

management

of consensus decision-making. His

led to such organizational quagmires as a matrix

balance that had

The firm swung too

Pascale,

who was

at the

on HP, "The combination of John Young, who

non-confronting, with a

COO

[Morton]

who

is

time preparing a

is

a

smart cookie,

very genteel doesn't

you the same kind of power you had with Hewlett and Packard. These

guys have a

difficult

time with contention." 54

Michael Maccoby,

who wrote about Hackborn

back to the two founders to explain what had been

in

The Gamesman, looked

lost:

He

told Upside

maga-

"Hewlett was a craftsman, and Packard was a gamesman. The power of

zine,

HP lay in the combination of the two."

Wisdom and Reward But where were

Bill

and Dave?

For one thing, they were busy with their

Monterey Aquarium and and

fellowships.

Institute.

Managing

The two foundations. The

The new facilities

at Stanford.

men now

from medical problems

were also spending more time

in their seventies

—they were

Scholarships

and ranches.

their various properties

committees and boards. For case, suffering

lives.

—and,

Sitting

on

in Hewlett's

extraordinarily busy.

They

now with their families, including a small army

of teenaged grandchildren. It

est

was

also the time in their life for honors, as befitting

and most

carry long

influential

men

of their time. Their

of these awards and

lists

titles.

two of the wealthi-

official

biographies each

A sampling:

—Trustee of the Herbert Hoover Foundation, the American

David Packard

Enterprise Institute, and the

Hoover

nia Nature Conservancy in 1983,

Institution. Vice

and from 1983

chairman of the Califor-

to 1989 a director of the

Wolf

344

BILL &

DAVE

Trap Foundation in Vienna, Virginia, an organization devoted to the performing arts.

Appointed in 1985 by former president Reagan to chair the Blue Ribbon Commission on Defense Management. Member of the (beloved to conspiracy buffs) Trilateral Commission from 1973 to 1981. From 1975 to 1982, a member of the U.S.-USSR Trade and Economic Council's committee on science

and technology. Chairman of the 1983 to 1985.

Member

U.S. -Japan Advisory

Commission from

of the President's Council of Advisors on Science and

Technology from 1990 to 1992. Active in the Business Roundtable and founding vice chairman of the California Roundtable. Director of several business organizations, including

Boeing Co., Caterpillar Tractor, Chevron Corp., and Genentech of

Beckman

Inc. Director

Laser Institute and Medical Clinic. Founder and chairman of the

Monterey Bay Aquarium and Monterey Bay Aquarium Research

Awarded honorary degrees of doctor of

science

Institute.

from Colorado College;

doctor of law from the University of California, Catholic University, and Pepperdine University; doctor of

letters

from Southern Colorado

State College;

and doctor of engineering from the University of Notre Dame.

William Hewlett

—Awarded by President Reagan

in

1983 the National Medal

of Science, the nation's highest scientific honor. Trustee of Mills College and Stanford University.

Francisco regional panel of the

Member

Commission on White House

of the San

Fellows.

Director of the Kaiser Foundation Hospital and Health Plan from 1972 to

Drug Abuse Council in Washington, D.C. Honorary trustee of Academy of Sciences, member of the National Academy of Enand the National Academy of Sciences and fellow of the American

1978, and the

the California

gineering

Academy of Arts and

Sciences. Trustee emeritus of the Carnegie Institution of

Washington.

Chairman of the William and Flora Hewlett Foundation, which he established with his late wife, Flora. Director of the Monterey Bay Aquarium Research Institute.

Honorary doctor of law degrees from the University of

California at

Berkeley, Yale University, Mills College, Marquette University,

University; honorary doctor of science degrees

of

New

and Brown

from the Polytechnic

Institute

York and Kenyon College; honorary doctor of engineering degrees

from the University of Notre Dame, Dartmouth College, and Utah

State Uni-

versity;

and an honorary doctor of humane

versity.

Honorary doctor of public policy degree from the Rand Graduate

letters

from Johns Hopkins Uni-

— Legacy Institute,

and honorary doctor of humanities degree from Santa Clara Uni-

Honorary doctor of

versity.

345

Bologna in

electronic science degree

from the University of

Italy.

And these awards and honors the diminishments

and

from

are just

As always with advanced

age, Bill

their early retirement years.

and Dave were

losses within themselves

also

and those

of what would be a series of strokes that would

He was softer. tler

cope with

also learning to

brought with

her.

a

new

closest to

them. In

weak heart and the

Hewlett's case, there were ongoing health problems: the first

busy dealing with

mark

the rest of his

life.

wife and the extended family she

His strength was limited these days, and his face had grown

The gruff and

curt Bill Hewlett

had evolved

into a warmer, gen-

man.

Meanwhile

who had

dent

his intellect, if anything,

to

seemed more

memorize everything by

ear,

acute.

now,

The

dyslexic stu-

of

after a half-century

watching the behavior of people under the pressure of daily business, seemed to have distilled

it all

For example,

into a deep understanding of

when HP's

human

nature.

printers developed a quality problem,

manager

Rick Belluzzo was hauled in front of the Hewlett-Packard board of directors including

Bill

we had

that

for] Bill,

I

Hewlett

—

to explain the situation. Recalled Belluzzo, "I said

a range of tens of millions of dollars of

couldn't even

tell if

exposure here

—and

[as

he was paying attention."

But then, Hewlett suddenly turned to Belluzzo and asked, "Rick, what have you learned from this experience?"

man for his men talked like compatriots, dispassionately analyzing a difficult problem. And when Bill was satisfied that Belluzzo understood what had gone wrong and how to fix it, he gave Belluzzo was taken aback. Hewlett didn't attack the younger

He

error.

him only

never even raised his voice. Instead the two

a single ultimatum:

"Make

sure your No.

1

responsibility

is

to take

care of our customers."

That was

it.

Belluzzo

left

the

room

a

changed man.

It

was a moment he

never forgot. 55 If

with

Hewlett grew kinder in his old age, Packard became

human

remained strong, and

so, as always,

grown longer and more duced like

less

and

less patient

foolishness, especially self-delusion. Unlike Hewlett, his health

he seemed an iron man. His face had

jowly, his hair thinner,

and

his great height

now

was

re-

now by a slight stoop. But his voice, always deep, had become a rumble,

sound emerging from deep

rock.

Indeed, in his final years, there seemed something elemental about David

346

DAVE

BILL &

Packard

—

as if

he had been so successful and so famous that those things

didn't mean much to him anymore, except as tools to accomplish his goals. He had never been a sentimental man and now his attention seemed focused on getting things done with the minimum of wasted effort. At an age when most men stop to look backwards, Packard was still searching for op-

—

make a difference. One way was devote more time

portunities to

were

still

strategic;

he

But even here,

his actions

played the Packard "fork" with genius. Thus the

still

more time with

project to spend

to his family.

his daughters resulted in the creation of a

national institution in the Monterey Bay Aquarium. And, in the process, Julie also got to work beside him, apprenticing to him on how to become major civic leaders. Susan, meanwhile, trained with her father to become a director of HP, a trustee at Stanford, and chairman of the family foundation. David Woodley Packard, whose life had always led him in the op-

and Nancy

posite direction of his forever forward-looking father antiquities

— now, with

film preservation,

his father's blessing,

—

becoming one of the most important

figures in that field.

But in the years to come, he too would begin to show his neurial gifts (and politics)

—pulling away from the

family foundation, he would create the

Humanities

strategy that few

the end of their

in 2002,

increasingly left-leaning

conservative, $1.5 billion Packard

he would team up with Walter Hewlett to

either son had.

effective family partner to lives,

in the early years

Dave was

his wife, Lucile. Here, at

the two were again working together as closely as they

of their marriage,

delivering gifts to

new company

company

and beer

picnics

father's entrepre-

of their fathers' company, showing a talent for business

knew

But the most

had

And

Institute.

fight for the survival

more

and

into classics

took on the challenge of historic

parents,

busts. Lucile

when

Lucile

was doing HP's books,

and convincing her husband

had

also

to hold

been largely the impetus be-

hind the creation and expansion of the great foundation that bore their

names

—and had acted

busy running

HP

as

its

or working

director during the years in

when Dave had been

Washington (and, some complained,

it

was

her influence that had turned the foundation away from Dave's conservative politics).

Now, even years

—

Lucile

as her

own

health began to

found time not only

fail

—she would

fight cancer for six

to help her children create the

but embarked on the biggest project of her

own

career: a

aquarium,

brand-new

chil-

own

giant

dren's hospital at Stanford, to serve as an adjunct to the university's

teaching hospital. Lucile

had always been

years of watching

him

as entrepreneurial as her

husband, and the

many

in action, advising him, and then managing the foun-

Legacy dation had trained her to be,

own

in her

The

Lucile Packard Children's Hospital, as

and

built,

not the equal of Dave,

a brilliant executive

still

right.

memory, was visiting

if

347

a $60 million project. Lucile

to build

Even

right.

it

was

it

would be named

in her

relentless in her drive to get

it

as her health faded, she toured the country,

twenty other children's hospitals to research best practices. Recalled

Diamuid McGuire, community

affairs director at the hospital,

"She was con-

cerned about everything from the color of the upholstery of the furniture to the broad medical direction of the project."

Those who worked with her noticed that chairman of the project and

its

Lucile, despite being

underwriter, always

managed using

both the a

combi-

nation of consensus and decisiveness, a style remarkably like her husband's.

who would

Recalled Charles Anderson, tal,

"I've seen in the course of

follow her as chairman of the hospi-

my career many chairmen of the board. She was

probably the most effective in that role

domineering nor was she so

I've ever

known. She was neither

self-effacing so as not to exercise leadership.

She

who were

operated on the basis of getting the consensus views of the people involved in these activities." 56 Lucile Salter Packard died, at age seventy- two,

Packard family

home

in

Los Altos

Hills.

on May

Ground was broken on

Packard Children's Hospital in 1988, and the hospital 1990 to universal acclaim. Fifteen years

31, 1987, at the

later, it

officially

the Lucile

opened

in

had become one of the world's

leading hospitals for children, especially those with unusual care require-

ments, and was staffed by 650 physicians and nearly 5,000 teers.

In the

minds of many in

Hewlett-Packard Co. its

itself,

staffers

Silicon Valley, Lucile's hospital,

was the Packard

and volun-

more even than

family's greatest contribution to

home community. Lucile

Dave had

was gone,

as

were most of the

started their adventure

all

men and women with whom Bill and

those years ago in the Addison garage.

Time was running very short, and Dave Packard knew it. He was a physical giant who had lived now long beyond his three score and ten making a wid-

—

ower's

life

nothing;

now in

it still

a land few very

tall

men

ever reached. Yet his

presented challenge after challenge to

him

mind had

—and

all

he knew the big projects would never be finished under his watch.

was

There

Asked

still

is

the while

He was one

of the greatest leaders of his time, and he was in a hurry to use that there

lost

gift

while

time.

a classic story that captures the

David Packard of

this period.

on the board of Genentech, Dave had realized that he didn't really know enough about genetic engineering to give good business advice to the to

sit

company.

So, sitting

down

at his

home

in Los Altos Hills, he wrote

up

a long

BILL &

348

DAVE

of books that he needed and sent his

list

handyman down

the road to the

Stanford University bookstore to buy them.

A

few weeks

Packard would

recombinant executives

when

add anything, Dave reeled

like to

DNA so

had

the board meeting,

later, at

scientifically

CEO

the

inquired

if

Mr.

off a series of questions

arcane and penetrating that the

on

company

to send for their lab people to get the answers.

This was Dave Packard at eighty years old.

He would soon need every one of his skills, and those ner, to investigate,

of his business part-

and then deal with, an immense problem that had been

growing for years, but only now was he beginning to recognize.

It

was

HP itself.

The Great Return The

distraction of their retirement lives

and Dave earlier

was actually the

growing dysfunctionality

didn't spot the

than they did. Far more important was the

tual trust that

powered

at

lesser reason

why Bill

Hewlett-Packard Co.

HP Way itself, and the mu-

it.

As chairman of the board, Dave Packard was acutely aware of the dangers of his position.

He had

seen too

many companies

paralyzed by a founder-

chairman who interfered too deeply into the work of

had resolved not

to

do

that,

not

because

least

his successor.

Packard

violated the principles of the

it

HP Way* As Packard saw

it,

his task as

chairman was

to help

John Young formulate

the company's long-term strategy and oversee the results of that strategy's

implementation.

It

was not

to second-guess his successor

on

tactics,

product

development, and the day-to-day management of the company, because that

would

ercise their

them in

the

some

violate the core principle of entrusting

own judgment on

maximum

serious

achieving the company's objectives, and giving

freedom to do

manner

your subordinates to ex-

so.

Only

if

to achieve those goals

was

that subordinate

failing

was the manager obliged

to

intervene.

For

all

of the structural problems that were eating away

Packard in the

late 1980s,

Between 1988 and 1989, billion to $11.9 billion,

on paper the company was

for example,

its

still

at

Hewlett-

healthy and strong.

revenues grew 21 percent, from $9.8

and employment jumped from 87,000

to 95,000.

As

long as Young was hitting his revenue and profit targets, and the company wasn't suffering any scandals or obvious employee unhappiness, Packard saw

no reason But

to interfere with

its

daily operations.

as the 1990s began, the situation

on the ground

at

Hewlett-Packard

—

.

Legacy had begun

349

change for the worse. The indecisiveness and inattention of the

to

preceding years, fueled by an economic downturn, began to surface. Wrote the San Jose Mercury-News afterward:

In the late 1980s, as

if

reflecting the

growing age of

founders, Hewlett-

its

Packard began to slowly rot from the inside. The world was changing entire product categories, such as

seemed

to evaporate overnight.

survive

by dancing ahead of

ants like

Only the most nimble firms managed

events.

Wang, Data General and

were sunk or

The

Meanwhile,

DEC

to

sclerotic, flat-footed gi-

—HP's toughest old competitors

crippled in the water.

left

The clock was now didn't care.

fast,

the once dominant minicomputers,

entire

ticking

on Hewlett-Packard, and

HP

acted as

company seemed bloated and out of touch,

its

if it

em-

ployees buried in endless meetings. Products were late or inconsequen-

marketing programs were half-hearted or misdirected and the best

tial,

was bailing out

talent

seemed

suppliers

components

late

for

more

was

in 1990

profit

margins by

just 11 percent to $13.2 billion.

letting attrition

Now Packard began to its

.

reduce

its

notice. For those

still

Only some of

managed

that

to maintain

ranks to 89,000.

who were

paying attention, these

HP

were a subtle warning about a fundamental weakness of the

financials

Way:

.

dying. 57

could be blamed on the economy, and the company its

Even

to have caught HP's disease, consistently delivering

or incongruent with the original orders.

Hewlett-Packard Co. was

Growth

exciting opportunities elsewhere.

dependence upon

who were

trust

broke

down when

faced with subordinates

honestly fooling themselves.

Packard's

good friend President Ronald Reagan was saying

moment about

ance to "trust" in the

freedom of

all

The

the Soviet Union, "Trust but verify."

at that

great check

very

and

bal-

HP Way were Management by Walking Around and the

employees when they weren't being heard to take their message

to the top.

Now, with

his

tening closely and,

company beginning

to stumble,

Dave Packard

not yet walking around,

at least

what would privately be

called

if

asking

started

lis-

some penetrating

questions.

The

catalyst for

turn" was a note from an divisions,

unnamed low-level

by HPers "the Great Re-

secretary out in

one of the many

one of the thousands of veteran HPers who believed

and who had most suffered from the changes of recent to Packard because, as she said in the note, their doors

were open to everyone

at the

he and

company:

years.

Bill

in the

HP Way

She had written

had always

said that

— 350

DAVE

BILL &

was] a note that never would have been sent to the chairman of any

[It

other company, a note that never would have been read and believed by

any other corporate chairman, that turned Hewlett-Packard around.

The note was simply a complaint by this HPer that she was wasting of her time in meetings instead of getting anything done, and that

problem seemed endemic

to the entire

company.

Packard, and Hewlett with him, saw

The note was

a tiny cry for help

But the patriarch heard

family.

it

much

from a

more. 58 *

small, distant corner of the

—and now he began

two old men began

his concerns to Bill Hewlett, the

ports, interview key individuals inside

all

this

HP

to act. After expressing

to ask questions, study re-

and outside the company. Upside maga-

zine wrote in June 1991:

During

last

year Packard and Hewlett started "walking around" once

Both spent time

again.

visiting

with various

HP

employees to learn

first

hand the reasons why HP's computer business was having problems.

"We

spent

some time with

says a mid-level

HP

employee

"The meeting was held

Bill

Hewlett

year around Christmas,"

company's workstation operations.

in the

to give the

last

employees an opportunity to discuss

their operations with the co-founder."

The two founders the

also held meetings at the senior

same purpose. Often they brought

recent

book Managing on

much

decentralization and consensus

the

in the

Edge had

management

author Richard Pascale, whose

criticized

HP

for

what he saw

Bill

case.

HP who

had

management consultant

Sadler was a

and Dave

HP Way or to nostalgia for their own leadership days,

but marshaled the best empirical arguments to support their

Bob

as too

management, and not enough smart,

quick decision-making. Being engineers talking to engineers, didn't just appeal to the

level for

to

just

found

himself in considerable trouble. For a decade he had put on two- and three-

day workshops for companies, typically attended by about twenty-four managers

and

executives,

on managing change

in a highly competitive business

environment. In 1990 he

so well

had been invited

—HP having become

that he

was contracted

at

workshop

a textbook case of a

to put

course of the next year

to give the

on

HP

as

many as

divisions

at

HP.

company

thirty of the

It

had gone over

fighting change

workshops over the

around the world. Suddenly, Sadler

found himself with a lucrative full-time job working with Hewlett-Packard

and then

just as suddenly,

it

was

all at risk.

— Legacy

351

On the third day of a workshop in Palo Alto, he recalls, "we were working with one of the project leaders to mitigate some of the issues that were stalling his project.

leader [at

.

.

The major

.

and was

was

issue

who was an informal uncommon: most projects

related to a person

resisting the change.

That wasn't

a similar issue." 59

HP] had The

leader

was

critical to the future

had

was suggested. The change project

tried everything that

of the IT function. The business case for the

No amount He was acting

change was obvious and one person was holding up progress. of time and attention was enough to get him to step aside. as if

he worked in an academic environment where the bottom

line didn't

matter. 60

had had enough. He suggested that the

Finally, Sadler

recalcitrant

em-

ployee either be transferred or "laid off" from the company. This, in turn, led to "an intense discussion in

was very hard

It

to

which the participants bemoaned the

remove people

at

I

delivered at HP.

move people

HP."

at

HP

said that

I

because

I

I

didn't believe that

had seen

removing the person or canceling the

it

it

was that hard

done. Then,

believing that he should

remove the

among HP employees that even

word'

layoff

When in every

furious: her boss

—in my workshop. And

I

Bill

one of

his

the

workshop

and Dave, been

"that

was never

do

to

I

had used the

that again."

same

topic

came up

workshops, he was ordered to read the company's materi-

HP Way," which included the Corporate Objectives. There, he was

he would learn that "letting someone go was not an option." Sadler had,

in fact, read the materials:

I

a

had now become

manager who had con-

had learned

Sadler said that he didn't understand, that the

on "The

told,

was

left

certain terms

taboo. That night, Sadler received a call from the tracted him. She

suggested either

I

person. 61

But so ossified had become what had once, under social contract

to re-

project.

Canceling the project was not an option. The leader

als

it

was a conversation that broke out by the third day of every workshop

that

'L

fact that

said

the

I

was

sorry,

but

company couldn't

I

didn't see anything in the material that said that

lay

anyone

off;

that the closest thing in the

HP Way

was "Respect for Individuals."

The manager

said

I

could not conduct the workshops any more

DAVE

BILL &

352 unless

complied.

I

tional resistance to credibility if

So,

change would always come up and

couldn't deal with

I

comply because the question of

couldn't

I

irra-

would have no

I

honestly.

it

my scheduled workshops were canceled. 62

A week

HP

down

Sadler drove

later,

on another

would be

said

I

workshop,

Monterey

to

—

to the

aquarium

—

to put

one off the main contract. He assumed

this

it

his last for Hewlett-Packard.

Never having been to Monterey, he arrived several hours before the kickoff dinner,

I

and decided

was standing

to use the

at the

Wave Tank, observing

standing next to

me began

assumed he was

a docent,

He was

time to tour the aquarium's exhibits.

talking about

and

I

the action,

when someone

what was going on

him

didn't look at

in the tank.

I

for a while.

very knowledgeable about the microbiology of the tank.

He

described the importance of the wave action on the rocks to the entire

food chain and ecosystem.

I

was impressed with what he knew and the

way he communicated. Then, he in

said, "I

know this

tank because

I

built

it

my garage." That's

when I looked up

—and

realized

was David Packard. 63

it

Packard too had come early to look around the aquarium. Sadler intro-

duced himself. tional

and

When

Packard learned that he was a

specialist in organiza-

cultural change in organizations, he invited Sadler to join

cup of coffee

in the

aquarium

There they talked for

a long time. Sadler recalled that

questions with intense curiosity and played great clarity.

By the time we had

viewed] hundreds of

HP

him

for a

cafe.

my

conversation

this

Packard "asked

answers back to

managers and executives.

I I

me

had met [and

him

told

with

inter-

that change

was taking too long, not because the culture had become too complex, but because the culture had developed attributes which were increasingly dysfunctional." 64

Packard wanted more.

He wanted

evidence to support Sadler's claim.

Sadler pulled out research, cultural studies, that measured a dozen critical be-

haviors at

HP

and compared them

terms of constructive behaviors, coasting

on

its

prior

to

world business norms. Put simply,

"HP was

still

doing well but

momentum and excellent brand

name."

Worse, on destructive measures, the data showed that change, but hide that resistance. Executives wouldn't ect

was going

to

fail

until

it

had

failed."

in

was probably

"HP would

know that

a

resist

change proj-

Legacy Dave was

angry about what

visibly

the table with his

hearing and

"I'm

and

and

said.

I

saying.

I've

been

gets worse."

remember that

exactly because he did have big little. 65

thought he might be mocking himself a

I

He hammered

it!"

moment and said, "It

he

all ears,"

was

this data

"Damnit! That's exactly what

said,

don't understand

hesitated for a

I

ears

I

fist

353

Sadler next laid out the results of yet another pair of measurements, one

measuring perfectionism and the other oppositional tendencies. The gested that

HP was now so

keting strategies that

of polish before

numbers suggested in the

company

as

it

was almost paralyzed, waiting forever for that

move forward. At too many people at

could

it

first

that

sug-

obsessed with creating perfect products and mar-

one of finding

flaws.

last bit

the

same time, the oppositional

the

company now saw

their role

"Meetings were a forum for showing

forum

off an ability to find flaws instead of a

for creating

and buying

into

solutions."

I

told

him

the

HP Way was now

no negative consequences felt

that

for negative behavior.

I

told

life."

There were

him

that people

HP was a family and that the family would take care of them and

now an "entitlement mentality" was

that

Packard flinched

my

interpreted as "job for

at

my

firmly in place.

choice of words.

experience with the workshop and that

ommending that someone be

I

.

.

.

Then,

told

I

him about

had been removed

replaced for standing in the

for rec-

way of a

critical

change.

He pounded

his

fist

on the

things have gotten bad, but

the way.

I

table again

and

said "Damnit! I've heard

had no idea how bad. And

not true, by

that's

We fired people for not delivering. I don't know where this idea is

coming from!"

Packard asked Sadler for the tract,

and wrote

ment. Then, he Bill

and

I

it

name of the person who had

down. "Packard calmed down. He

said,

T haven't paid much attention

to the

are going to have to get very active for a while.

what you're doing and saying what you are

saying.'

Three months

was

later,

done with

mo-

company lately, but You

just

keep doing

" 66

Packard thanked Sadler for the information and porated some of the data into his speech.

killed the con-

sat reflecting for a

left.

That night he incor-

A week later, Sadler was rehired.

John Young "retired." Dean Morton retired

as well.

Young had,

after

all,

joyed one of the most successful careers ever seen at HP, and as

CEO

he had

It

all

great sensitivity

and

dignity.

en-

.

DAVE

BILL &

354

grown the company's revenues

eightfold

—

a spectacular achievement

by any

measure. Luckily, the timing was perfect: he would turn sixty in 1992, a perretirement milestone.

fect

CEO was handled so smoothly that most of the press

Young's departure as treated

it

as a standard corporate transition.

Only one enterprising

Eric

Nee of Upside magazine (and

that

something unusual was going on. But for

later

of Forbes and Fortune) even noticed

new HP

&

Bill's

Last

men back in the Addi-

personal computer), the story of the Great

—what one writer would describe "one of the most heroic modern business" —would never have been known the outside world.

Return in

"Dave

his story,

Adventure" (complete with a caricature of the two old son garage tinkering on a

reporter,

as

later

acts

to

That was

how

Bill

and Dave preferred

it.

In The

HP Way,

Packard would rec-

ognize Young's retirement with a single-sentence compliment for his having

done an "outstanding job." 67 John Young, not having to carry the stigma of a forced departure, would go on to great success as the head of a number of nonprofit organizations and

government task

forces.

CEO

temporarily as

One

of his roles was especially far-reaching:

filling in

of Novell Corp., he hired his replacement, Eric Schmidt,

—

in the job lessons that proved useful when Schmidt was named CEO of the hottest company of the new century, Google. Dean Morton, whose intelligence and knowledge of HP were greatly ad-

and trained him

mired within the organization, would remain associated with the for years to

come;

in a validation of his talents,

HP

family

he was asked to serve on the

board of both the Packard Foundation and the Monterey Aquarium. In addition to serving

on the boards of Clorox,

would become

a trusted

women CEOs two

to

Corp., and KLA-Tencor, he

one of the most successful

in high tech, Carol Bartz of Autodesk.

Instead of a vindictive termination, careers of

ALZA

mentor and adviser

brilliant

and

vital

Bill

and Dave had preserved the

men who would

go on to make important

contributions to the industry and to society.*

For the months between ture,

Packard (and to a

Bill

and Dave's return and John Young's depar-

lesser degree, Hewlett)

managed

the

company from

behind the scenes, plotting the restructuring of the organization and searching for a

new CEO. After Young's departure, they continued to stay on the number of months, completing the work they had done. Wrote the

scene for a

San Jose Mercury-News

Thus, sist

at

an age when rich old

men

retire to their

any threat of change, Packard and Hewlett

giant

company they had once

built.

.

country homes and

set off a

re-

revolution in the

.

Before they were done, Hewlett-Packard had been

all

but turned up-

Legacy

355

down. Decision-making had been streamlined,

side

retired,

managers

customer service improved, relationships with suppliers

ized (the problems there turned out to be HP's

pany had been turned again into an aggressive

What

recalcitrant

Hewlett-Packard was the

and had the highest

profit margins, in

force. 68

fastest- growing large

American

now

nated the printer business, but was

revital-

and the com-

fault),

HP standards By the mid-1990s, a

followed was remarkable, even by

lean, revitalized

own

industry.

corporation,

not only domi-

It

carving out large chunks of those

markets, such as workstations and PCs, where just a few years before

had

it

been an also-ran.

Two

come out of

octogenarians had

dollar corporation

—and

retirement and saved a multibillion-

the livelihoods of tens of thousands of people

around the world. Though hardly recognized

known

today,

Hail

and Farewell

it

was one of the

at the time,

and

still

little

greatest closing acts in business history.

how close Hewlett-Packard came to disaster during that period will never known. What is certain is that, had Dave Packard not listened to the letter

Just

be

writer

—and

people

later to

like

problems appeared a few years for

one

HP, but certainly for last

Bill

Bob

Sadler

later, it

—and waited

until real structural

would have been too

late.

and Dave. Their timing hadn't

Perhaps not

failed

them

this

time.

The immediate candidates

task

now was

to find a

—Dick Hackborn and Lew

brighter with printers

Piatt

new CEO. The two primary

—remained,

their stars

and computers enjoying explosive growth

now

even

in the re-

stored HP.

On

paper, both

men

looked

the resurgent company. Both

like

winners, and perfect candidates to lead

had been with the company

were true products of the company's culture. tions that were bigger than

But the

the business

And both had managed

both

opera-

most companies.

reality, as always,

the younger of the two,

for decades,

was more complex. To

his credit, Piatt, at fifty

was an engineer; he understood technology, not

just

—and though he had come from medical instruments, he seemed He was

also well-organized, capable of

that the operations of the giant

company would run smoothly.

to have picked

making sure

up computers

he was a

Best of

all,

people.

Some of

this

man

quickly.

of deep integrity:

empathy came from

fair,

his

honorable, committed to his

own

life

experiences

—he was

a

— DAVE

BILL &

356

single father, having lost his wife to cancer a decade before

—but

integral to his character. Piatt exemplified the very best of the

But the fear with ary.

Piatt

was that he was not a

According to Upside, "Piatt

is

it

was

also

HP Way.

strategic thinker, not a vision-

a meat-and-potatoes

man, someone you

wouldn't be surprised to find heading up a machine tools company in Toledo, Ohio. 'He's real down-to-earth,' says a manager

one who's much more hands-on than many troops and says what's happening.'

The magazine went on had given

to say that while every

support to the idea of him as

HP CEO. The New

by saying that he wasn't "as vivid"

contrast,

brilliant,

him

he was, of Bill

all

interviewed

as

damned him with

Hackborn. in a strate-

—and he had

a gift for

in his latest corporate crusade.

HP

taken a me-too product at a backwater exciting

it

York Times, while noting

audacious, and clever

enlisting talented people to join

most

manager

Dick Hackborn was everything one could ask for

He was

gic executive.

HP

with turning around the computer group,

Piatt's success

By

" 69

high marks as a manager, none had given their unconditional

Piatt

faint praise

who works for Pratt. 'SomeHe sits down with the

I've seen.

and celebrated businesses

division

He had

and created one of the

in all of electronics. In that respect,

the thousands of employees at Hewlett-Packard, the most like

and Dave. But there were also

many

CEO. There was about him, Packard.

He

HP

about

reasons to worry about Dick Hackborn as always, an

HP

odd ambiguousness about Hewlett-

professed to be a true HPer, but seemed to despise everything

corporate

—

to the point that he

seemed

to

do

his best to never visit

He remained in Boise even after Piatt moved to headquarters. many ways, with his relaxed style, willingness to delegate responsibility, and commitment to innovation, Hackborn seemed to embody the HP Way. Palo Alto. In

was heard

Yet privately he

to

complain that he had been given neither the

tune nor the fame that had come to Steve Jobs

—he considered

those entrepreneurs —

his equals in the

PC

Bill

for-

Gates and

revolution because he was

buried in a giant company.

among other HP executives was know when the game stopped, that it wasn't

But the greatest worry about Hackborn that the

an

just

knew

Gamesman

didn't always

intellectual exercise,

that while

but that people's livelihoods were

almost worshipped

—he was

HPers hoped for a return

and distribution

strategist;

Lew

and the team.

is I

They

rarely loved.

As the genteel but heated race

sales

at risk.

Hackborn was hugely respected within the company for

to the past.

for

CEO

approached

its

conclusion,

some

Dick Watts, director of HP's worldwide

computer systems,

told the Times, "Dick

is

the

the consummate professional communicator to customers

figure that since their initials are H-P, they should just take

Legacy

357

over as a tandem." 70 Others thought only Hackborn could maintain the aggressiveness that

those

finally

who knew Hackborn

returned to

HP

after the lost decade.

better prudently suggested that he

Meanwhile,

would make

a

COO under a more reliable CEO like Piatt.

perfect

In the end,

The

had

call

it

went out

came down to Dave Packard. And he went with audacity. Dick Hackborn to come to down to Palo Alto and meet

for

with the chairman.

Why Hackborn? Packard never explained his reasons. But he rarely made any decision at HP without a larger, often implicit message to the rest of the company. In offering the position

was never again

that Hewlett-Packard safe

Hackborn, Packard was obviously saying

to

to lapse into inertia, or to

choose the

path over the riskier but more promising one.

But

it

Hackborn

was

also a profession of faith in the people of Hewlett-Packard.

will give you the opportunity,

he was saying to them. You give him the

heart.

Dick Hackborn arrived Packard

still

left.

Packard,

thought Hackborn had said yes

A

headquarters in Palo Alto, where

kept his old office, in spring, 1992.

nearly an hour, then

head.

HP

old

at the

He was

in Packard's office for

who had grown hard

— only

of hearing,

to be told the opposite

was

initially

true.

stunned Dave Packard emerged, turned to those nearby, and shook his

"He

didn't

want the job."

Dick Hackborn, the crown prince of Hewlett-Packard, the entrepreneur

who wanted to be as famous and rich as his entrepreneurial peers, had turned down one of the most influential and financially rewarded corporate jobs in the world to stay in Boise, Idaho.

So

it

would be Lew

Piatt after

pany with both surprise and true HPer, a

all.

manager who watched out

But could he keep HP's renewed

term

The news was met throughout

satisfaction. Piatt

strategy,

the

com-

had the reputation of being a

for his people.

momentum

would the company sink back

going? Or, without a long-

into the introversion

and

inertia

of the recent past? Packard did what he could to create a balance, packing the

board with the kind of mavericks would, with luck, keep

But beyond

Piatt's eyes

that, there

was

—Terry and Hackborn among them—who on the horizon.

little

Packard could do.

He

sensed that his time

was running short now. The management of the company that he and

had created and run

for fifty-five years

would now have

to be

Bill

handed over

who would lead it into the new century. The future of HewlettCompany was theirs. On September 17, 1993, David Packard offistepped down as chairman of Hewlett-Packard Co, turning over the

to those

Packard cially

position to Piatt.

Never again would

H

and P be part of HP. From two young men

in

an

DAVE

BILL &

358

now numbered

unheated, dirt-floor garage, the Hewlett-Packard employees

92,000 scattered around the world in a $20 billion company. In his dress to the company's senior

poem

bye by quoting from a

management, Dave Packard chose

that

had been popular

in his

final ad-

to say

good-

childhood but

now

long forgotten. It

was "The Deacon's Masterpiece,

the Wonderful

or,

written in 1858 by Oliver Wendell Holmes.

It is

of the best, allegories ever written about the lures technology. In

a small-town

it,

deacon

One-Hoss

perhaps the

Shay,"

and one

earliest,

—and the dangers— of

in 1775 resolves to build the best one-

horse chaise carriage in town.

Recognizing that carriages always break

down

quality,

such that no component will break

because of a single weak

from materials of

point, the deacon decides to build his chaise

down

building of chaises, I

There

always somewhere a weakest

In hub,

tire, felloe,

tell

Find

it

you what,

thoroughbrace, —

A

lurking

somewhere you must and

To defeat nature rials

he can

find,

without a visible

that's the reason,

chaise breaks

itself,

piece," so superior to

The

generations of decay,"

it

its

seems

beyond a doubt,

is

better or worse than any other, a creation

resulting carriage

any other carriage

pass.

Then and

Then, on the morning of

in

down and

fifty.

Then

counterparts, even

as sturdy

its

for

his

on

town

fall

that as the years pass

apart,

creator.

perfect as the day its

indeed, "The Deacon's Master-

seems

it

And

And, "but it

was

and the

ageless.

the chaise outlived for a flavor of

mild

built.

hundredth anniversary, the town's parson de-

composes

a sermon.

He

is

halfway

composition when the horse suddenly stops. The chaise shudders

an instant

sitting

is,

seventy-five.

cides to take the chaise for ride while he

through

out.

the deacon builds his chaise out of the finest mate-

other carriages begin to break

Twenty years

still,

— —

will,

down, but doesnt wear

such that no part flaw.

—

sill,

Above or below, or within or without,

And

spot,

in spring or thrill,

In panel, or crossbar, or floor, or In screw bolt,

equal

first:

Now in is

all

—and then completely

disintegrates, leaving the

a rock.

What do you

When

think the parson found,

he got up and stared around?

stunned parson

Legacy The poor old chaise

As

had been

if it

You

359 heap or mound,

in a

to the mill

and ground!

of course, if you re not a dunce,

see,

How it went to pieces all at once, and nothing first,

All at once,

when

Just as bubbles do

—

—

they burst.

What final message Dave Packard meant to send to his lieutenants with this poem has been the subject of speculation ever since. Computer science come up with

students at Colorado State University are regularly assigned to

Was

possible explanations.

tendency of

HP

a

it

warning about technology and the notorious

engineers to waste time trying to create impossibly perfect

products? Or, conversely, was

it

a call to engineering glory

of a product was built to the highest possible standards forever

—

until, pop,

self.

Was HP,

last a

crashed

it

Another theory

the greatest

century or more?

more than

fifty

years

once and for

that

if

might

every part last

nearly

time?

all

was talking about Hewlett-Packard

last

forever

— and HP had already thrived

—without regularly being might one day seem

that Hewlett-Packard

it

it-

company of the age, so well designed that it could Or was he saying that, no matter how well con-

no company could

ceived,

all at

that Packard

is

—

rebuilt?

Was

running

to be

this a

for

warning

just fine

—then

suddenly disintegrate?

One

possibility that

no one considered

at the

time was that Dave Packard

might have been talking about himself. "But for at eighty- one

Packard chaise,

it

was time

seemed

as

seemed

as strong

though he might

a flavor of

and healthy

live forever.

mild decay,"

as ever. Like the deacon's

But Packard knew

better. It

to go.

The Last Word But David Packard wasn't yet done.

He had one

last task to

do

for his

HP

family.

For twenty years there had been talk of a Hewlett and Packard book, one that

the

would combine

a history of the

company with

the founder's musings

on

HP Way, their principles of management, and the processes by which they

made key

decisions in HP's history. There had, of course, been

house publications on the

had been described

in

numerous

in-

HP Way and Objectives, and the company's culture

numerous magazine

articles,

academic papers, and

360

DAVE

BILL &

books. But other than a couple of video interviews, and a few speeches, there

was

nothing from the founders themselves, no first-person record of

really

what

it

was

Now,

like to

be

and Dave during

Bill

would be by him alone

It

of those years.

of his long career, Dave Packard decided to

as the last project

that story.

all

—

a stunning departure

from

The

years of the "perfect" partnership. But Bill Hewlett was fading.

of strokes had a put

series

him

in a wheelchair,

something more: Packard had

also

impatient to

tell it. It

—but

autobiography

and

would be

as the

title,

his

The

a story

name on

HP

(who was brought back from

They spent from

the next six

Way, and

subtitle,

and gave the

the writing

—

pair their deadlines. Kirby

Hewlett

Dave Kirby

and Karen Lewis, HP's

the book. Packard,

who was

a persistent infection, established the structure for the

points,

How Bill

share equal credit

a small team: himself,

retirement),

months on

and he was

tell,

the book, and ostensibly his

Our Company, showed, Dave Packard would partner on every page.

To write the book, Packard assembled

But there

project.

he wanted to

I Built

with his

of a

first

and there was some question

whether he had the endurance to take on another major

was

tell

of those

all

archivist.

increasingly

book,

set the

ill

key

and Lewis would do most of

a straightforward task for Kirby, as he

had crafted Packard's

written voice for thirty years.

But

if

Dave Packard was doing

little

of the actual writing, he was

still

very

much in charge. It proved to be a frustrating experience for Kirby and Lewis, who wanted a richer, more elegantly written book, a compendium of anecdotes from Packard's

combined with the

life

lessons he

had learned over

his

remarkable career. All they got

end

it

was the

They may have written The

last.

was the book Packard wanted, and

in his voice

HP

Way, but

— not even

his

in the

spoken

word, which was often funny and profane, but the structured, plain exposition of an engineer with

The a

HP Way is

no time

to spare.

sometimes frustrating book. Anyone expecting

a quixotic,

chronology or a collection of interesting

stories

is

doomed

to disappoint-

ment. The book doesn't even have an index. Instead, except for opening

on Dave's and

sections

Bill's

of the company, most of

it

very different childhoods and on the founding is

structured around each of the

HP

Corporate

Objectives. It

is

very unusual narrative structure.

are always told to illustrate

Whenever anecdotes

one of the Objectives. The

about inkjet printers from the early 1990s appears other about quisition bit

company

picnics in the early 1950s,

on the creation of flex-time

of Kirby 's

skill as

in

a

appear, they that a story

is

dozen pages before an-

which

Germany

result

in turn precedes a dis-

in the 1960s.

It

takes every

a prose stylist to create the transitions that hold the tale

Legacy together.

Anyone expecting

a business titan

361

a straightforward

and standard autobiography by

destined to be very surprised by The

is

HP

Way. To the very

end, Dave Packard remains a maverick.

But Packard never broke the rules without closer study of the nonlinear narrative

a

deeper purpose. Only with

his strategy revealed:

is

an autobiography in name only; what Dave Packard has says)

title

Way.

It is

is

a

book about the

not really about

structure shows,

In

its

other HPer. They ideas,

book comes

HP

the

make

at

really written (as the

— and a career lived within—the HP

Bill

its

and Dave

and they adopt

HP Way is

creation of

how

how HP and

pages, Bill

The

and Dave created HP,

but, as the chapter

people created them.

are learning as they go along, just like every

come up with great What humor there is in the

mistakes, they triumph, they

better ideas

Packard's expense,

from

others.

some comeuppance by

organizational chart but far higher in experience

person lower on

a

and wisdom. Packard

doesn't diminish

what he has accomplished, but neither does he ever suggest

that he ever did

without the help of others, especially his partner.

it

the humblest books ever written by a successful

It is

one of

CEO.

But the ultimate message that Packard wanted to convey in the book was that,

whatever the

nated to the

HP

titles

and the awards

family and the

had been one subordi-

said, his career

HP Way,

and not vice

versa.

country trumped his sense of duty to Hewlett-Packard

his

people.

And though

he could not speak for

that this sense of duty

Though many

was true

Bill,

Only

his

duty to

Company and

implicit in the narrative

its

was

for Hewlett as well.

scratched their heads

when

they

first

read

it,

that didn't

keep thousands of HPers, and thousands more non-HPers, from turning The

HP Way

into a best-seller,

More important, the shelf, The

and one of the biggest business books of 1995.

quixotic as

it

was, the

book endured. Read once and put on

HP Way often found itself pulled down again and read for a sec-

ond time during

the dark days at Hewlett-Packard at the beginning of the

twenty-first century. Then, perhaps as Packard

succor and hope. This this

is

how

it

is

the

had planned,

way it was, Packard seemed

it

provided both

to say in

its

pages,

and

can he again.

David Packard The HP Way was

on

his

all

that

Dave Packard had

left.

And completing it took its toll

now fragile health. upon one of his and advise on the book's

In the early planning stages of the book, Kirby called

old staffers (the author of this book) to

come

in

DAVE

BILL &

362 structure.

The young

intern who, twenty years before,

himself flanked on a lunchroom bench by

Bill

had nervously found

and Dave, was now middle-

aged and a veteran journalist.

Waiting in the old company boardroom, adjoining Packard's

office,

he

was taken aback by what he saw: The door opened. At tall

men seem

David Packard was shockingly

eighty,

to be. His voice

was an even deeper rumble,

and having just recovered from an

infection,

old, as very

like

thunder,

he moved carefully and with

great fragility. It

would have been heartbreaking, but

mind. There, he hadn't

for his

lost a step.

He was still gracious, but tougher now, almost curt, as if there wasn't much time left to waste on delicacies. The legendary David Packard and the real man now seemed detached from one another, as if the myth was ready to break free and take wing.

The

last

saw of him was out the boardroom window. He was outside

I

now, hunched in a cold wind, taking instructions

as always

from

[his

long-time secretary] Margaret Paull. Then, an ancient king in his blessed

kingdom, he

set off

alone to face his

As always, he did

it

right

and he did

David Packard died on March

pneumonia, children.

at

1 1

p.m.

The news,

at

last challenge.

well. 71

it

26, 1996, at age eighty-three.

He

died, of

Stanford University Hospital, surrounded by his

carried by wire services

and network news, raced around

the world. At Hewlett-Packard divisions around the world, HPers openly

wept. At Reason magazine, editor Virginia Postrel wrote that cans,

San

David Packard was second only

Jose

Mercury-News

reset

its

to

Ronald Reagan

as a

among Ameri-

world

figure.

The

presses to create a special section devoted to

the Packard legacy.

That morning, Robert Boehm, archivist for the Hewlett Family Library, drove up to the Hewlett house in Portola Valley to work on some documents.

He found

tones. "I

the house quiet, with the family

went through the kitchen and saw

at the table in the breakfast

sadder-looking

nook. Just

hushed

Hewlett sitting his wheelchair

sitting there staring.

Boehm

I

have never seen a

considered walking over and speaking to the griev-

ing figure, but couldn't bring himself to the staff later told

since very early

talking in

man." 72

For a moment,

"Someone on

Bill

members

—and

morning

me

do

that Bill

so.

No one

had been

else

could

either.

sitting at that table

that he continued sitting there for hours."

Legacy The memorial

service

363

was held three days

Stanford Memorial

later at

—

Church. 73

The twelve hundred attendees from the governor of California to were handed a program as they arrived that featured loyal HP rank and file on its cover a sepia-toned photograph of Packard driving his tractor on the

—

ranch and looking back

at the

camera. The caption read:

David Packard, 1912-1996. Rancher,

On

etc.

the back was a photograph of a smiling Lucile Packard, captioned

Daves Sweetheart

The crowd

quietly filed into the church

derly figure in a wheelchair

mur

and

the pews.

filled

was wheeled up the center

of recognition as every head turned to watch

Bill

aisle.

Then an

el-

There was mur-

Hewlett pass.

helped out of the wheelchair and into the front pew, where he

He was

with his

sat

Rosemary, and members of the Packard family.

wife,

The emotional forty-five-minute

service

was presided over by Robert

Gregg, dean of the church. David Woodley Packard told the audience that his father

want

a

had written

memorial

a letter to the family saying "very sternly" that he didn't

service

when he

died.

But

later,

when

pressed on the sub-

—which the family had decided

he had "grunted" in reply

ject,

to take as

an

affirmation.

Packard then pointed ther

program, saying that those

at the

would understand why they had chosen the cover

on the back

the photo of Lucile Packard

page:

"My

who knew his faHe then noted

picture.

father

my

and

mother

were each other's sweethearts, and they're together again." Stanford provost Condoleezza Rice said of Packard that he "had a belief in

human

potential that

was unshakeable." Lew

he had served for three years stand just

how

as

Piatt

added that only now that

CEO of Hewlett-Packard did he really underHP was and that the greatest lesson

remarkable a company

—

he had learned from Dave Packard was to "apply

common sense consistently."

to say "I've seen him at him under pressure. He was always the same. Dave was a deducker. He knew what he thought, and he made decisions that

Former secretary of defense George Shultz rose ease, I've seen cider,

not a

worked. "Honesty, leadership, learning. To me, that's David Packard. for his vast accomplishments.

I

thank him for

all

I

he has taught me.

salute I

him

grieve at

the loss of this great, patriotic American." Family,

Packard's task

fell

Hewlett-Packard, Stanford, Washington. Each part of Dave

life

had been represented but one:

to Packard's old college

friend. With Hewlett unable, that buddy Morrie Doyle, who recalled a happy

364

DAVE

BILL &

two

trout-fishing trip the

months

five

before.

the road rise

up

The crowd

to

He

men had

closed by reciting the Irish blessing that begins,

meet you

filed

taken along the Lewis and Clark Trail just

.

out to a nearby reception, accompanied by the music of

Turk Murphy's Band, one of Packard's

favorites.

niscences, they returned to a Hewlett-Packard

time,

first

"May

." .

Then,

and a

after tears

and remi-

Silicon Valley that, for the

would be without David Packard.

Aftermath Lew

chairman and

Piatt served as Hewlett-Packard's

CEO

until 1999.

He

re-

mained, until the end, beloved by HPers for his dedication to the family of HP

and

his deeply felt belief in the

Under

HP Way.

watch, Hewlett-Packard would continue to dominate the

Piatt's

printer business (through such popular products as the all-in-one OfficeJet), stake out a

become

a

major position

major player

He proved wrong him

in

in laptop

computers (the Omnibook), and

PCs through the hugely

of his old classmates

all

off their project teams because they thought

Piatt also

to his

own

and family the process

home, he

led

HP

to

it

become

was

policies.

up.

Thanks

balance both a job

like to

a pioneer in

making Hewlett-Packard the most

tried to keep

him too slow to keep

turned out to be an innovator in personnel

personal understanding of what at

successful Pavilion family.

Wharton who had

at

finally

—

telecommuting

in

"virtual" of the world's large

corporations.

And, cess, the

in the ultimate recognition of

company was

selected to join the

industrial stocks, the ultimate

Lew

HP's half century of continuous suc-

honor

in

list

of the thirty

Dow Jones leading

American economic

life.

up to all that had been expected of him. By the midcompany had returned to its historic highs. The momentum that Bill and Dave had created for the company with the Great Return was maintained all the way through 1996, when HP's annual revenues nineties,

Piatt

had

morale

lived

at the

passed $38 billion.

But by then, the

fears

about

Piatt's lack

of strategic

—

skills

—

that he

might

become John Young redux were also beginning to be proven accurate. And no one understood this more than Piatt himself. As the years passed he felt

more and more he was It

that the task of

running

HP

was getting away from him, that

in over his head.

was during

dinary decision:

this

period that Piatt and the

HP

would spin

off

its

HP

board reached an extraor-

measurement, components, chemi-

Legacy cal analysis,

Packard

—

and medical businesses

new company.

into a

—

in other words, the original Hewlett-

would be

It

group's current executive vice president,

now HP

retired,

Though

now

365

called Agilent Corp,

Ned Barnholt (who had

was tapped

director, Bill Terry),

HP's venerable instrument operation, at

be Agilent's

to

and the

replaced the first

CEO.

than $8 billion per year,

less

represented only 15 percent of the company's business, the announce-

ment came divorce.

as a shock. After nearly sixty years as a single family, this felt like a

.

A man

of deep integrity and great loyalty to the

never do anything to hurt the

company revenues

in 1999

World War, he

much

looked

company and

fell

replace

for the first time since the

and

essentially fired himself

older, a situation not

around

HP

at the

stress

as

The

HPers experienced what came last

all

reeked of

of the job (one story

Piatt's cigarette

company

years at Hewlett-Packard

had taken a

lot

out of

—which only and when he

Piatt,

was seen

it

from the high tech wars. But before long he was back in

as a well-earned

action,

chairman of Boeing, whose board he had joined about the time he

—and,

Boeing was a long way culturally

Lew

Hewlett-Packard.

Piatt

smoke).

after.

took the job of CEO for the Kendall- Jackson winery, hiatus

only 58, but

time was that the company had to regularly

His departure was met with sadness throughout the

grew

And so when

end of the Second

He was

retired.

would

helped by a not-so-secret two-pack-per-

corporate vehicles because they

its

family, Piatt

the people he loved.

day cigarette habit that helped him deal with the that circulated

HP

it

becoming

left

HP.

proved, ethically

—from

found himself dealing with company executives

being sent to prison and accepted the resignations of two CEOs, both of them

enmeshed It

in scandals.

proved to be too much. In October 2005, just hours

some old

friends

from HP, Lew

Piatt died of a brain

after

meeting with

aneurysm.

He was

only

sixty-four. Piatt's

ecutive

more

sudden retirement from

crisis.

years,

As

it

HP

put the company once more in an ex-

was assumed that he would

no one had

yet

been groomed

stay as

HP board members, a search committee was formed. ers,

Dick Hackborn,

now slated to become

CEO

for at least a

It

included,

HP's new chairman.

The presence of the Gamesman, HP's Mr. Inside/Outside, proved Hackborn, whose

had

his

to look

beyond

its

decisive.

distaste for headquarters politics hadn't diminished,

chance to destroy

it.

For the

first

few

among the among oth-

as his replacement. So,

time in company history,

walls for a senior executive

—indeed,

for the

now

HP decided most senior

executive in the company.

Hackborn already had the -next step plotted as well. He championed young woman executive, Carly Fiorina, who had become something of

a

a

DAVE

BILL &

366 superstar at Lucent, a huge

new conglomerate

tems and technology unit of AT&T. Founded in

what would be a $46

well into style

had made

the late nineties

it

stories

later, after

sys-

Lucent was already

just 1996,

swashbuckling

billion acquisition spree. This

one of the biggest

—and again

from the

originally created

boom

of the telecom/dot-com

of

the bubble burst, for various scandals

involving foreign bribes and stock pumping. Fiorina had

made

her

ticularly successful IPO,

name

at

Lucent taking the company public in a par-

and had most recently served

of the company's global service provider business.

promoter, Fiorina was regularly in the news

as

Known

—and

that,

group president as a brilliant self-

combined with her

high position in one of the hottest companies of the decade, regularly put her of the most important businesswomen in the United

at the

top of the

States.

She was also a Stanford graduate.

list

Hackborn saw at

Hewlett-Packard and turn the company into his vision of what

become:

clever, high-profile,

would thus shock the

He would be

quo

in Fiorina the perfect instrument to shatter the status

still

and

agile.

That she was also a

mostly male executive ranks

at

HP

it

should

woman

—was

—and

a bonus.

her mentor, and together they would lead Hewlett-Packard into

the twenty- first century.

"I

could see he was dazzled by

calls.

"He was

feel for

her," fellow director Patricia C.

Dunn

re-

about her vision for the company. She had a

the company's strengths

feelings."

nical

really excited

and weaknesses.

It

Hackborn expressed mild concern about

corresponded with his Fiorina's lack of a tech-

background, but that wasn't a top-priority worry for him.

be getting one of the top two or three

CEOs

"We may

of our generation," Hack-

born declared. "She could be the next Jack Welch." 74

So impressed was Hackborn with Fiorina and her potential that he

pushed her through

a successful vote over

any in-house candidates and,

it

was

more than a hundred other non-HP candidates (including Paul who would go on to become CEO of Intel Corp.). What Hackborn

reported, Otellini,

never seemed to have noticed

is

that in hiring Fiorina, he

Young's mistake of teaming up with a person too

much

had repeated John

like himself.

And

if

a

company run by two nice guys was at risk of losing momentum, one run by two self-obsessed game players was a company unmoored and without a soul. Some board members questioned whether an outsider, no matter how brilliant, could come in at the top of a giant corporation with such an enduring and subtle corporate culture and actually assimilate those attitudes and

mores quickly enough

to

be an

effective leader.

never been a great expositor of the

Hackborn, who himself had

HP Way, dismissed

those concerns as sec-

— 367

Legacy ondary. To seal the vote, he guaranteed that he would stay to teach Fiorina the

moves by the new

company

culture

finally

tendered an offer to become HP's

claim.

act as a

as

HP chairman

check on any wayward

chief executive.

Hackborn's guarantee

Not

and

on

surprisingly, Fiorina's

Hidebound old

—and thus planet— the CEO

HP

swayed the board, and Carly Fiorina was president.

fifth

appointment was met with international ac-

had regained

its

lost youth. In hiring a

woman

making her the most powerful businesswoman on the

mind HP had gone from an anachronistic old dinosaur to an exciting new trendsetter. And, after sober and weary Lew Piatt, Fiorina's first public appearances, showing a handsome and telegenic young public's

in

woman

with a quick mind and an abundance of energy, were especially

freshing.

Any demurrals from HPers about

tech or the either

waved

Bill

aside as sour grapes or lost in the roar of the general acclaim. after Fiorina's arrival at

Hewlett

at his

The meeting began them, got

her lack of experience in either

HP culture, and from Lucent employees about her careerism, were

Not long meet

re-

lost

house

Hewlett-Packard, she was invited up to

in Portola Valley, in the hills

poorly. Fiorina

on the way and arrived

and her husband, late.

above Palo Alto.

as

had many before

Obviously anxious over both the

meeting and her tardiness, Fiorina rushed into the house and only

most perfunctory president of Ford

made

hellos to those assembled, including Arjay Miller,

former

Motor Company and dean of the Stanford Business School.

She also didn't take the time to make any small talk with Hewlett family bers or the house

the

mem-

staff.

This was a mistake, as most of the people there were prepared to warn Carly that, because of his strokes,

Bill

Hewlett was having difficulty assimilat-

ing large volumes of verbal information at one time. Instead, once she learned that Hewlett

chair beside the pool, Fiorina

up next

to

was outside,

"bounded" out

sitting in his

to join him.

wheel-

She pulled a chair

him, and as others followed and gathered around, she leaned over

man with what a great honor this was for her to head the company he had started, how she would be true to HP traditions and proceeded

to regale the old

while, of course,

making some needed changes. She

once been a secretary across the greatest

At

told Hewlett that she

—and now she was head of one of

street

had the

companies in the world.

this point,

Hewlett said something inaudible to the listeners present,

but for the word "here." Jeremy Hackett, Hewlett's nurse, was used to interpreting the old man's words.

Someone asked "I think," said

ting over here?'

"

Hackett, "Did he say something?"

one of the

guests, "that

he asked 'Did you have trouble

get-

— BILL &

368

DAVE

Bill

"

me the hell out of here.'

"No," the nurse replied, "He said, 'Get

Hewlett was quickly whisked away. 75

William Hewlett A

few months

after

Mountain View, campaign

Dave Packard's death, HP's Middlefield Road suggestion of one

at the

to plant

an oak tree in Dave's

The ceremony, which was kept

memory at

private

from the

dred people from the division, several senior

Packard family, and

She

Bill

Solis, led a

their site.

public,

drew

several

hun-

members of

executives,

the

Hewlett.

recalled:

Hewlett spoke.

make

stand to

He was

in a wheelchair, but appeared to insist that

he

him

to

his speech, rather

stand.

Although he was using

hear a

murmur

a

than

It

seemed at the

difficult for

podium,

mouth moving;

I

I

could only

could not make

was so sad because there he was, doing everything he

could to stand up and speak

him were

sit. It

microphone

of his voice and see his

out a single word.

next to

HP

division in

Donna

who would spend twenty- four years at HP, worked at the di-

Jo Ellen Sako, vision.

Bill

employees,

its

—and

able to appreciate

I

believe that only those immediately

what he

said.

He was accomwho had driven them over

In the courtyard afterwards, Bill sat in his wheelchair.

panied by his wife, his nurse, and the person

and they to

meet

sat

nearby and watched while we employees gathered and waited

Bill.

After the

first

brave individuals lined up and began taking photo-

graphs, the rest of us realized

the parking I

don't

hours. their

lot.

it

was okay and the

line

extended out into

There must have been three hundred people

know how

long

He shook hands

name, and

took for

all

of us to meet

in that line.

Bill;

maybe two

with each person, looked them in the eye, asked

either said

unique and personal

sunny and warm

it

—not

day, yet

I

urging of his companions.

something or asked

a question that

just the pat "Pleasure to

heard

He

It

was a

even

at the

meet you."

later that Bill refused to leave,

was

was going to stay until he met every person

in line. 76

Sako admits to being so awestruck that she tion with Hewlett. But she does

ments

later.

remember

recalls little

of her conversa-

a second conversation a few

mo-

369

Legacy

Susan Packard Orr was standing alone in the courtyard, looking away

from the crowd around her father, and

Bill

towards the building. She was very

remember thinking

I

it

must be very hard

tall, like

be

for her to

there so soon after her father's death. I

wanted

approach

to

her,

but also didn't want to disturb her

—when

a fellow employee, Rich Luerra, stepped up to introduce himself and speak to her.

He explained that he had starting working for HP when he was very

young— and ing such a

he wanted to thank Susan for both her father and

company and providing

a place for people like

Susan took his hand, looked him straight in the no.

We should be

Burdened with life.

Privately,

him

eye,

Bill start-

to work.

and

said,

"No,

thanking you" 77

Hewlett

ill-health, Bill

now

largely

withdrew from public

he remained engaged, and deeply committed to Stanford and the

work of the foundation. Improving education now became the paramount activity of his last years.

Wrote Stanford Magazine:

In an address at a 1995 event honoring

him and Packard, Hewlett

pressed concern about the rising cost of higher education sized the importance of Stanford sustaining policy.

"The answer, of course,

ships,"

he

said.

is

its

more and more

David Glen, a major

ex-

and empha-

need-blind admissions fellowships

gifts officer at

and scholar-

Stanford, says "hun-

dreds of students" have benefited from scholarships Hewlett helped fund, including

some

that carry other donors' names. Moreover, "there are

about 50 faculty walking around on

this

campus because of Bill Hewlett's

fellowships." 78

One

of those fellowships, a faculty chair in the medical school, was

for Albion Walter Hewlett.

It

was a

named

son's last tribute to a father for the brief

but important time they had together. Hewlett's contributions to Stanford weren't only financial. as

He

also served

an adviser and mentor to a generation of Stanford leaders, most famously

Condoleezza Rice, university,

the patient

world

his advice useful

later as national security adviser

and kind Hewlett, she was lucky

and

not just at the

U.S. secretary of state. In

to have her

first

experience of a

figure.

The friends self

but

who undoubtedly found

strokes were

made

coming more often now. But

the recoveries endurable.

approaching eighty,

who

kept

Bill

a steady stream of old

One regular visitor was Art company

Terman. They often talked about the company were young and there was a world to conquer. fore for Fred

Fong, him-

way he had a decade beold days, when they and the

the

DAVE

BILL &

370

Professor and Hewlett Foundation trustee Herant Katchadourian, an old friend,

would come by

trips,

on

to take Hewlett

the San Felipe ranch, the place where

drives

—sometimes

the

way

On

you can afford

don't think

paying

this place."

— only

Hewlett would smile and agree.

money on him.

he had no

to discover that

eat.

me take care of it;

let

one of these lunches, Hewlett had had enough, and

Finally, at

to

these

they would often stop at some hole-in-the-wall diner for a bite to

Katchadourian always insisted on paying, saying, "Please I

all

was always the happiest.

Bill

insisted

on

Laughing, Katcha-

dourian covered the tab and teased his friend, "What's going to happen to you without friends "I don't

like

me?"

know," Hewlett replied sheepishly. "I guess

Despite his growing physical

frailties,

strong, as did his pride. His driver once

computer. The display was suffering an the image

hand, as

a frustrated Hewlett

knock some sense

to

machine.

delicate "It

—and

if

can

It

has

if it

into

can't take that

my name on

it.

Bill

I'd

be homeless." 79

mind remained

Hewlett's

found him

sitting at

electrical short that

was smacking

it

personal

was scrambling

on the

"Mr. Hewlett," said the

HP

an

side with his

driver. "That's a

kind of treatment."

it,"

Hewlett replied, giving the computer an-

other whack.

Once, while recovering in the hospital,

who would had been

a

often

come

to keep

was

visited

down

at the

by Sandra Kurtzig,

him company. Two decades

young woman with young children and

nautical engineering that she

she sat

Bill

had put on hold

before, Kurtzig

a master's degree in aero-

mom. Bored one

to be a

code for what would be one of the

first

important minicomputer-based

ventory control programs. As she had written this software for the she decided to

day,

kitchen table while the kids played and began to write the

show

it

to Hewlett-Packard. Hewlett loved

it

HP

in-

3000,

and offered HP's

who saw a way to sell more machines, and agreed new company, Ask Computer, incubate inside HP

support. So did Paul Ely, to let Kurtzig

and her

Cupertino.

Ask would go on the

women

first

to

become

the

$400 million company and Kurtzig one of

executives to ever take a U.S.

forgotten HP's trust, and though visit

a

man who had believed

company

now a busy tycoon

at

some

across the parquet floors, workers heels so that she

"Let

me

see

would not your

heel,"

had never

found the time

in her.

Anxious about Hewlett's condition, she made small

had stopped beforehand

public. She

herself,

office

talk

about

how

she

under renovation. As she walked

had shouted

at

her to remove her high

leave marks.

Hewlett said from his hospital bed.

A

pause

to

Legacy and then,

"How much do you weigh?"

surprise as Hewlett

the

— one day

371

Kurtzig answered, then listened in

after a stroke

—

pounds per square inch she exerted on

enough

to

tried to calculate

the floor

whether

would have been

make an impression.

The garage genius

still

had

a

problem

to solve. 80

Hewlett's last appearance in the news was a poignant one. In late

ber 2000 a

fire

on the second

broke out floor.

at the

Hewlett home, trapping

The three-alarm

and caused more than

fire

a million dollars'

blazed for

Bill,

Novem-

now bedridden,

more than

three hours,

worth of damage, but firemen man-

aged to rescue Hewlett by passing him out, on a rescue stretcher, through a

window. Happily, no one was hurt.

One

constant visitor to

Bill

Hewlett during the

Casper, the former president of Stanford.

ing the days

when Casper was running

grown only deeper

last

was Gerhard

years

The two men had grown

close dur-

the university, and the friendship had

after Casper's retirement.

Casper would often push Hewlett in his wheelchair on tours of the Stanford

campus while they talked. And when even

that

became too taxing on the

old man, Casper visited Hewlett at his home. Near the end, during one of these

visits, as

the two

men

sat side

over and gripped Casper's hand:

Then he suddenly turned

to

by

me and

Casper, recounting the story

side,

"He held

Hewlett grew

my hand

silent,

then reached

tightly for a long time.

said, 'Gerhard, the curtain

on the news of Hewlett's

has

" fallen.'

passing,

was mo-

mentarily overcome, then pulled himself together long enough to add, "I was just in love

with that man." 81

William Redington Hewlett died in his sleep on January

was eighty-seven. In an

would

call his first

encounter with Dave Packard on the football

ford in 1930 "the most

momentous meeting of

HP

scribe Bill Hewlett as "the soul of the

He's

still

with

12, 2001.

He

editorial (by the author), the Wall Street Journal

us. In Silicon Valley,

the

field at

Stan-

modern world" and

de-

Way." 82

more than

liam Hewlett's legacy, you need only look out

ever, if

you want

to see Wil-

the window. 83

A second oak tree would now be planted at the Middlefield division. The memorial, held ary 20. 84

As with

at the

Stanford Church, took place on Saturday, Janu-

his old partner, the

church was

Gregg led the prayers. But in keeping with

Bill

filled to capacity,

and Dean

Hewlett's personality, the

me-

morial was kept humble and simple: there were no lavish decorations, merely a line of thin candles along the

back wall of the church. Classical organ music

DAVE

BILL &

372

echoed off the walls and out the great doors across the quad to where Fred Terman's lab had once stood.

had

first

On

In the pews,

mourners

field,

where

Bill

and Dave

Bill

moment

air.

program they would

carefully held the

their grandchildren as the last

graph of

the old football

met, the organ notes were tiny wisps, half heard in the cold

of an

era.

On

save for

cover was a photo-

its

Hewlett with the familiar amused twinkle in his eye, and inside a

quote from one of his grandchildren:

In the end, his greatest gift to future generations was not the compass he

could build with his hands, but his moral compass.

were knowledge, modesty,

and an example

One

to us

justice

Its

cardinal points

and hard work. He was true

to himself

all.

after another, friends

and family stood

to talk

about

Bill

Hewlett.

Walter Hewlett, Arjay Miller, former dean of Stanford's Business School, Herant Katchadourian, family friend Maggie Lacey Schneider (who joked that the

had married

second wife, Rosemary, beyond their

reason

Bill

terests,

was that her house had something

his

David Woodley Packard read from

Bill

common

had always wanted:

letters

in-

a garage).

and e-mails Hewlett-Packard

Co. had received from around the world following the death of

Bill

Hewlett,

his own father four years before. The most memorable had come from man who described traveling in Singapore: "I asked the cab driver to take me to HP, and he said, 'You mean the holy place?' "

and of a

Then, before they shuffled out to face a Silicon Valley without fathers, the

congregation arose as

"O God, Our Help

in

Ages

one and sung one of

Past."

O God,

our help

in ages past,

Our hope for years

to

come;

Be thou our guide while

And our eternal home.

life

shall last,

Bill's

its

founding

favorite

hymns,

Afterword:

The Last

Gift

The Cariy Fiorina era

Hewlett-Packard was a catastrophe.

at

Hewlett had been able to escape her, but the that

it

HP

of

rest

Bill

quickly discovered

could not.

Looking back, she seemed to epitomize a time and superstar

—

driven, media-sawy, addicted to the big

ing the grand gesture over the

touch.

was

It

a

power

stale in the face

CEO

play, always

as

choos-

phenomenon of the go-go

and the turn of the millennium

years of the late nineties

grew ugly and

little

a type: the

—and

that quickly

of the dot-com bust, 9/11, and the scandals of

Enron and WorldCom. had

It

all

started out so well. Fiorina, in a private

meeting with Dick Hack-

born, had argued that she would only take the job of

on

as

promised the board, but

it

Said Michael Maccoby, fore in

own

also appealed to his

private ambitions.

who had written about Hackborn twenty years be-

The Gamesman (and had apparently grown increasingly skeptical of

his business style), "Dick's very political,

the game.

want

CEO if Hackborn stayed

chairman and her mentor. 1 This was not only what Hackborn had

He probably

to do."

but without really putting his skin in

he could use Carly to do

felt

all

the things he didn't

2

own

But Fiorina proved to have a mind of her

born was openly worrying

at

board meetings about her performance. Re-

counted Business Week, "Hackborn fretted

.

Fiorina's refusal to delegate operations, her

and the exodus of trusted pany, Dick got quieter

Frankenberg,

who

—and within months, Hack-

.

.

about three

issues, say sources:

tendency to make bold promises,

execs. 'As Carly drove strong people out of the

and

quieter' in

HP

circles, says

helped Hackborn build HP's

com-

longtime colleague Bob

PC business

in the early '90s." 3

But whatever his private concerns, Hackborn publicly supported Fiorina, first

in her failed attempt at a big play

by trying

consulting firm PricewaterhouseCoopers tried to lower her $17.5 billion offer

acquire troubled 65,000-employee

—

—and then

PC

giant

to

buy the 31,000-employee

a deal that

fell

through when she

in her $19 billion tender to

Compaq.

— DAVE

BILL &

374

While other board members (and legions of HPers) worried that the

Compaq

deal

was

just a

rebound reaction by

major mergers-and-acquisitions

player,

a

CEO

bent on being seen as a

Hackborn supported Fiorina

HP

point of lobbying key investors and holding gatherings of select

Compaq board members.

and

In board meetings, he used his legendary presenta-

show how, under

tional skills to

to the

Fiorina's vision,

HP

(PCs and peripherals)

could be the third leg of a troika with Microsoft (software) and Intel (chips) to rule the electronics world. All of this despite Hackborn's professed concern

about Fiorina's

And yet

for

and despite

his

ability to all

run HP.

of his privately voiced concerns about Fiorina's leadership,

promise to the board when she was hired,

— —voluntarily stepped down

Hackborn

gamesmanship not being associated with

stancy

position,

Now

HP

as

chairman to take a regular board

and handed over the chairmanship almost nothing could stop

her.

after just a year,

either fidelity or con-

to Carly Fiorina.

Not even HP's employees, though

they came very close. If

Fiorina

made

the

boardroom of

had turned Hewlett-Packard

HP

itself into a

a place of growing concern, she

place of dread

and desperation

the nearly one hundred thousand HPers. Their one hope was that,

she would learn the

much damage

to the

company.

made

arrival, Fiorina

only had no intention of understanding the

HP

an anachronistic philosophy that was acting

ability to

compete

But not

all

of

in the it.

new century

—and

very clear that she not

it

Way, but that she considered as a

drag on the company's

that she intended to destroy

it

in television

and print

even had a replica built to use in the ads and to display

later

and Dave had

left

Carly Fiorina fixated

spectability.

it.

Latching on to the Addison garage as a powerful and

iconic marketing tool, Fiorina used

shrine. Bill

somehow,

HP culture and internalize the HP Way before she did too

But within weeks of her

it

for

Many HPers

at

advertising,

HP

as a

and

kind of

the garage without a glance back, but sixty years

upon

it

as a quick ticket to her

(and outsiders) saw

own

high-tech re-

this as a cynical ploy,

and were

furious that the Addison garage, the unofficial symbol of Hewlett-Packard,

had been reduced

to a design element.

That resentment only grew when employees began to notice to a

new marketing

appear "HP."

It

all

around the company,

seemed

as

the

to

though Fiorina, even

and Dave legend, was

down

that,

thanks

name "Hewlett-Packard" began to disbe replaced by the simple and anonymous

directive, the very

also

as she

was wrapping herself

doing her best to drop the

real

in the Bill

Hewlett and Packard

memory hole.

Sometimes the anger turned

to laughter, as

new corporate marketing message

—

Invent

when

Fiorina inaugurated a

that seemed, for such an osten-

The Last

more than a throwback to IBM's Think of 1950s. Given that Fiorina was already becoming notorious for ignoring latest research from HP Labs and focusing on competing in a nearly comCEO,

sibly progressive

the

the

375

Gift

moditized business ticularly risible

to

like

—

It

or,

little

PCs, her public promotion of innovation seemed par-

—the joke was

more

that the only thing Carly

humor was becoming

the Invent logo. Gallows

Packard

be

a

had ever invented was

way of

now

life

at

Hewlett-

HP

employ-

accurately, "HP."

only got darker from there. In June 2001, Fiorina asked

all

pay cut or additional nonpaying vacation time

ees to either voluntarily take a

company save money. It was reminiscent of one of the most celebrated moments in Hewlett-Packard history, the "Nine-Day Fortnight" of to help the

1970. In the spirit of the

HP Way

(which Fiorina failed to notice), HPers

re-

sponded: 80,000 employees signed up for the program, creating an expected savings of $130 million for the rest of that fiscal year. It

should have been an equally famous moment, the one that

mented the

month

later,

relationship between the

Fiorina

new CEO and

announced the impending

layoff of 6,000

in the

words of the Palo Alto Weekly, "some employees

a bait

and

a

just a

mass

HPers

—

leaving,

feeling they'd fallen for

switch."

This was the biggest betrayal of

was

finally ce-

her company. Instead, one

hundred employees

layoff at the

heart of the

bad. That's

company.

HP Way: why

all.

in the It

Since the days

Redwood

was part of the

HPers shared equally

when Hewlett-Packard

Building, there

in the

they had lined up to sacrifice for

had never been

social contract at the very

company's good times and its

greater financial good.

Now Carly Fiorina had destroyed all of that; she had torn up the contract. Fear and mistrust were

ment of

HP—and

now beginning

nowhere more so than

to define the daily at

work environ-

corporate headquarters in Palo

Alto.

Jo Ellen Sako,

who

called a story, told

1960s to raise

still

worked

at the

by her uncle, about

money

for the local

Middlefield division, had always re-

his stopping

by

HP headquarters in the

Boy Scout camp. Uncle Frank had simply

walked into headquarters and "started walking around asking people where to find Bill Hewlett's office.

"And, without even asking

employees gave him directions.

Once he got

who he was, or even if he worked He always was amazed by that."

to Hewlett's office

Sako was ushered right

in.

and

there,

HP

told the secretary his purpose, Frank

"Uncle Frank said that

Bill listened to

him, asked

how much he needed, and wrote out a check on the spot." Forty years

later,

Jo Ellen Sako took

some family

friends

up the

hill

to

HP

headquarters to give them a tour. Despite her badge, she was turned away

from the executive

offices. "It

was

like

an armed camp in there." A few months

BILL &

376 later, after

twenty-four years

at

Hewlett-Packard, Jo Ellen Sako took an early

had always thought

retirement. "I

DAVE

would

I

die with the company," she said

sadly 4

War

Civil

Now Fiorina began to pile on the indignities. Wrote the Palo Alto The way the

layoffs

Weekly:

were handled rankled employees and bred

according to insiders. Lower-level managers, their input in the layoff decisions,

who had been

distrust,

asked to give

were disgruntled when these recom-

mendations were disregarded.

HP

Furthermore, [said Carl Cottrell, former head of agers

had

to "be the executioner" in

preventing a department's off employees. tle

It

was

own manager from

a process

some

rhyme or reason about who got

Europe],

man-

departments other than their own, breaking the news to laid-

Employees

called "cold."

the pink

slips.

also

saw lit-

Even high-performing

employees weren't spared, leading remaining employees to speculate that Fiorina simply wanted to "She's feeling like

wants to

an employee

From 1999 through other, the

boss.

employees are stuck

She wants to put fear

rattle that.

that," said

show them who's

HP who

didn't

want

2002, as Fiorina

his

in

in their ways,

our hearts, and

name

and she

she's

done

used." 5

made one sweeping move after anlittle more than reel

employees of Hewlett-Packard Co. could do

from the blows, pray they kept

their jobs,

and write

their

resumes

in case they

didn't.

Those who didn't else to go.

Valley into

bail

out early quickly discovered that there was no place

The dot-com bubble burst its

in the spring

of 2000, throwing Silicon

worst recession in almost thirty years.

One thousand new Inter-

net companies died, and even the

most established companies

were temporarily crippled. There were no new jobs

bottom of the

bust, so

many people were

any U-Haul trucks to rent

Almost every HPer out.

I

in the

talk to,

the

in the Valley

town

—and,

at the

that there weren't even

Bay Area. Wrote ABCNews.com,

young or

That there hasn't already been

how bad

leaving

in the Valley

downturn has been

a

old,

newcomer or

rush to the exits

in Silicon Valley.

is

veteran, wants

only testimony to

But "wait until the

The Last economy comes up around here," says

HP when folks can find jobs

pens to

Unable to

HPers

felt

months up by

leave,

trapped

—and

increasingly bitter.

Bill's

It

all,

HPers to voice

hand

HP

their opinion to the people at the top,

their eyes.

way

no

for disgruntled

line of

communica-

to read their e-mails, and, given the apparently arbi-

speaking up. As time went on,

it

became

isn't

around

would be

fired for

increasingly difficult even to actually

anywhere but on television or on a

president Al Bagley, "She as comfortable

lifted

picnic, say

Way, the reason many had

Hewlett-Packard, was dying before

trary nature of the layoffs, the very real possibility that they

see Fiorina

many

were

company

at the

they had no recourse. There was no

no Dave Packard

layoff,

was not unusual during these

men and women who

or Dave's

was no longer "their" HP, that the

dedicated their careers to

tion,

elsewhere." 6

to hear second-generation HPers,

Worst of

"Watch what hap-

a local executive.

and faced with the prospect of imminent

their fathers to shake

that this

377

Gift

like

stage. Said

she ought to be.

former

HP

vice

don't think she

I

is

walking around inside [the company] and hearing what peo-

ple really think. She's got a lot to learn." 7

many

But Fiorina also had her defenders. There had been

and outside the company who had come rival, its

that not only

had

to believe,

were being treated their

this view, veteran

unfairly,

world of the Internet

in the faster

HPers were unhappy not because they

but because they were resistant to change

growing anger was proof that what Fiorina was doing was

Stanford professor Charles O'Reilly, a time

when

life-cycles

life-cycles

"HP

became shorter and

profit

margins lower.

.

.

last .

nology firm was hurting a

at this point,

more obvious

zations occurred during healthy sad,

at

decades, product

The

infrastructures

—and

built

8

Also working in Fiorina's favor was the recession

What might have been

—thus

right. Said

developed a culture for engineers

of products were longer. In the

were built for a different market. They were consensus-oriented for a different strategy."

Carly's ar-

HP grown old and slow and lost its edge, but that even

famous culture might be anachronistic

and e-commerce. In

people inside

by the time of

itself.

Every major tech-

and most were laying contrast

off thousands.

had these cuts and reorgani-

economic times now looked

like

one more

but inevitable, cutback in an industry-wide trend. Fiorina, while admitting that

HP management "did

not do a good job of

implementing those decisions," also argued that the characterizations of her as arbitrary or vindictive

were unfair

—

that she

had warned employees

the short-term pay cuts might have to be followed by actions, that

HPers hadn't been

laid off

more

that

serious long-term

merely based on job performance

— DAVE

BILL &

378

but on the

criticality

new

of their work to the company's

strategy,

and

that

she had used a world-class career outplacement firm to handle the layoffs judiciously.

Certainly

no one could

of

commitment or her

fault Fiorina's

racing from meeting to press interview to sales

activity,

ence. Perhaps the

energy. She

and during those hours was a whirlwind

often put in fifteen-hour days at HP,

most famous image of her during

confer-

call to sales

shows her under

this era

the spotlights in front of an audience of thousands, sharing the stage with

Gwen

singer

Stefani of the rock

rock star as Stefani. era

—and looking

any of

had

this

As early

many that,

to

at

it,

one

had told

as 1999, Fiorina

If

HPers did

as

as

much

CEO

the

of the

at the time,

way

it

rumors

Forbes, in a response to

HP's employees might be

HP

one-quarter of the people in

if

Doubt. Fiorina looks

wondering,

is left

or can't take the pace, that's the

the

No

what

do with Hewlett-Packard.

as 25 percent of

but

group

the perfect iconic image of the superstar

It is

laid off,

don't

want

that as

"I'm not sure about

to

make

the journey,

has to be." 9

anyone had expected her attitude

to

change

after

extended contact with

HP family, they were disappointed by her comment to the same magazine

two years

later:

"People should depart with dignity, but don't confuse that

with the departure being an inappropriate choice." 10 Forbes went on to note

HP employees had found widespread dissatisfac-

that a recent survey of 8,000 tion, citing

poor communication and

inefficient

implementation of changes

an astounding reversal of morale for a company that

had the highest employee

A

growing

It all

company where employees

planet.

—and

was

their

duty to defend the firm from

to a

head

in the

it

came

numbers on the

few years before

resentment was building within the company.

tide of

quickly becoming a believed that

satisfaction

just a

fall

its

HP

was

even managers

own CEO.

of 2001. Fiorina, chastened by the collapse

of the PricewaterhouseCoopers deal, appeared to immediately rush off in a zeal to acquire

In truth, the

—and soon

move was

HP

lieving that

was about be crushed between

Fiorina had decided that take

on Big

thereafter entered into

Blue, they

they couldn't

if

would make

a

The merger, which would make announced on September side

merger

with Compaq.

talks

neither as arbitrary nor as impetuous as

4,

2001

—

move

HP

IBM and

make an in

it

seemed: be-

Hackborn and

Dell,

acquisition in services to

computers against Compaq.

an $87 billion monster, was publicly

just a

week before the world turned up-

down.

HP-Compaq Many saw it as

Even when they heard management's reasoning for the merger, tens of thousands of HPers remained unconvinced.

one more, and the biggest bagger

CEO

yet, insult to real

—some arguing

that Fiorina

was

HP

employees by their carpet-

just

padding her resume with a

The Last mega- merger before she moved on GE, or maybe even into

to

379

Gift

an even bigger company

IBM

like

looking to a competitor to solve HP's

politics. In

problems, they believed, Fiorina was saying that HPers couldn't turn the

pany around by themselves, that they couldn't past

—innovate

their

way out of hard

Others pointed to Compaq's

or

—

HP

as

com-

always had in the

times.

own

business troubles;

it

was

even worse

in

shape competitively in the personal computer market than HP, more desperate for help,

and even more dysfunctional and demoralized than

How would the that

HP

itself.

union of two troubled companies produce a single company

was innovative and dynamic enough

to take

on

thoroughbred

a

like Dell

Computer?

HP

Moreover, in buying Compaq, Fiorina seemed to be committing future dedicated to slugging

it

out in the printer and

PC

becoming increasingly commoditized,

businesses were

to a

businesses. But both

margins

their profit

That was a game played best by Asian mass producers such as Sam-

falling.

sung, with their low domestic wages.

company of technologists and why should it?

Was

this the future

of

How could a

engineers possibly compete in that arena?

But the most immediate concern facing HPers was could possibly absorb 65,000

HP?

Compaq

employees.

And

how

even

the

if it

And

company

could,

what

company culture, of the HP Way, would ever survive? Then an astonishing thing happened: HPers, including even retired employees, discovered they had a voice and a platform on which to use it. of the

—

Bill

Hewlett and Dave Packard had given

HP

three things: the

sense of family, and ownership of the company.

It

now

was

realized

was

their

to their fellow HPers, their

most powerful weapon.

It

was

Bill

and now those HPers were going

HP Way,

this third that

and Dave's

to use

it

to try

a

HPers

last gift

and save

company*

An

acquisition as great as the

merely by

CEO

fiat. It

a half century of the

Compaq merger

could not be executed

required a proxy vote by shareholders

—and, thanks

to

company's employee stock purchase program, nearly

half of HP's outstanding shares were in the hands of private individuals. This,

HPers

realized,

and the

was

their last channel to express their views to

management

public.

They weren't the only people thinking families,

still

this way.

The Hewlett and Packard

the largest private shareholders in the

were equally disgusted by what they saw

company

(18 percent),

as Carly Fiorina's reckless dismantle-

ment of their fathers' legacy. In November 2001, Walter Hewlett and David Woodley Packard met and agreed to lead a proxy fight against Fiorina in the name of the HP Way. They quickly gathered a small army of current and former HPers willing to fight for their cause.

380

DAVE

BILL & There was no

who had

irony that the scions of the founding families, two

little

shown much

never before

working

interest in

achievements. In

com-

for their fathers'

pany, seemed to suddenly find their calling in defending

men

and Dave's

Bill

they showed an aptitude for the fight and an under-

fact,

standing of business dynamics that proved they had inherited

more than

the

family names.

The challenge seemed to catch Fiorina and her team by surprise. That perhaps

is

why she made two

What would have been

The

nearly fatal errors.

first

was

a traditional, dignified proxy fight suddenly turned

very ugly when, on January 18, 2002, Fiorina sent a characterizing Walter Hewlett as a "musician

worked

at this

to react personally.

company or been

involved in

stockholders

letter to

and academic" who had "never

its

management."

This was not only inaccurate (Walter, besides being a software developer

HP) but

and chairman of the Hewlett Foundation, was

also a director of

credibly foolhardy. Generations of HPers could

remember young Walter hang-

ing out in the labs at

HP

doing his homework; they knew he was a voice on

HP

the board of directors for the

could ever be.

And

in-

He was more HP than Carly Fiorina hominem attack against him when the

Way.

an ad

to launch

—

challenge by the Hewlett and Packard fils had to date been conducted impersonally ina

and with dignity

—was seen by HPers

and her lieutenants on the

as yet

one more

assault

by Fior-

HP Way.

But the response from the CEO's

office to this backlash

was both

clever

and unexpected:

[Fiorina] recast herself as a brave for the

woman,

dreams and aspirations of her

she was vulnerable,

alone on a podium, crusading

entire

company.

If

people thought

she was. Before her opponents fully realized

all right,

what had transpired, she had turned that appearance of vulnerability into

who

her greatest asset. In a major speech she declared, "To the skeptics it

won't work,

don't

it

know the

Then, having

stumbled into

won't

sell, it

won't succeed,

people of the

brilliantly

a second,

suggest that Walter

new HP'

it's

turned around her

this

to

Packard look as

if

say,

'You

first

mistake, Fiorina

now

real

plan for the company,

now long gone.

one coming. Despite pressure from Fiorina and

come

up with a formal alternate plan to

Hewlett demurred, assuming that ley

I

even bigger one. This time her error was to publicly

and David Woodley had no

But the sons saw

HP Way,

" 1J

only a misguided nostalgia for the good old days

low board members

not the

say

it

was

a trap to

fix

fel-

HP, Walter

make him and David Wood-

they were plotting a coup. Instead, he publicly stated

— The Last that the only alternative "plan"

ness strategy better

HP

was that

381

Gift

should execute

and not move forward with a

hastily conceived acquisi-

tion. Privately, he told friends of his fears that Fiorina

John Chambers and his "move

Cisco's

Meanwhile, sensing a bloody

historic busi-

its

fast, fix it later"

was trying

to emulate

philosophy.

new Hewlett and Packard

battle ahead, the

partnership gathered together a team of veteran Silicon Valley corporate

mergers and securities attorneys. 12 For individuals

who were

reputedly out of touch with the realities of the

business world, Walter and David Woodley's stated goals were remarkably reasonable: restore the Hewlett-Packard culture of trust, get out of tized products, focus

on high-margin goods, and

vention to innovate the

many

For

minds

HPers, the plan was a

HP

for

with as well.

company out of its

More proxy votes

HP's talent for

in-

current doldrums.

one they had

lot like the

—and what they thought

reassert

commodi-

Bill

in their

own

and Dave would have come up

rallied to the contesters' side.

Fiorina fought back with the most powerful

—

weapon she knew

Bill

and

Dave. As George Anders wrote in the magazine Fast Company:

In her

most audacious move, Fiorina began invoking the

early careers of

HP-Compaq

Hewlett and Packard as a justification for the

the late founders' heirs strongly opposed to the merger,

it

merger. With

seemed mind-

boggling that she could lay claim to the patriarchs' intentions. She latched

onto a legendary Packard quote

and made

And

it

—"To remain

static is to lose

ground"

the centerpiece of two-page newspaper ads.

not only did she appropriate the founders' language for her

cause, but she also scripted dialogue for them, using her

company

as their text. Fiorina created plausible

new ideas

for the

—but unsubstantiated

conversations from long ago, in which the founders spoke her language.

Her

David Woodley Packard, but she

tactics infuriated Packard's son,

didn't

back down. She had framed her message. 13

In the days before the vote, the

news story

HP

proxy

fight

was the biggest business

in the world. Analysts predicted that the vote

would be very

close,

with individual shareholders and the Hewlett and Packard families lining

up on one

side, institutional investors

on the

other.

Few dared

to pick the

outcome.

The

press joined in as well. At Forbes, publisher Rich Karlgaard titled his

column "Vote

Carly," writing that "Fiorina's foibles

about the merger. She and Hackborn are ported."

The Wall

Street Journal editorial

right,

do not make her wrong

and they should be sup-

page took just the opposite position.

DAVE

BILL &

382

At 6:30 a.m. on March

19,

2002, the doors opened at Flint Center on the

campus of De Anza Community College rium

that because of

historic events in high tech: the

proxy

in Cupertino

—

a well-worn audito-

unique location had managed to be the

its

of two

site

HP

Apple Macintosh introduction and the

fight.

Many shareholders had had already formed

to

arrived long before the scheduled time

file in.

What followed was one

and

a line

of the most unusual cor-

porate annual meetings Silicon Valley had ever seen. Reported CNetNews.com:

Institutional approval of the $20 billion deal has

done

little

to quiet the

ranks of upset workers, retirees and other individual shareholders

packed the

Flint

Center in Cupertino,

dreds of rows of seats

Calif., filling

—some even perching

who

hundreds upon hun-

in the balcony seats. Share-

holders flew from as far as France to attend Tuesday's meeting and speak

out against the merger

—an

and how much work could

indication of lie

ahead

if

how passionate many voters

felt

the merger goes through.

A chorus of angry investors booed Fiorina and yelled "No!" when she said

most employees were

member Walter

in favor of the merger.

Hewlett, son of

By

contrast,

board

HP co-founder William Hewlett, received

standing ovations before and after a five-minute speech reiterating his

opposition to the merger. 14

The odds seemed opposition, she

would have

But immediately rina knew,

against the Fiorina camp: with the founding families in to take 61 percent of the

after the vote, a confident

and everyone

else

would

learn a

month

was announced, was that she had taken the almost never vote against a sitting

remaining share votes.

Carly declared victory. later

when

What

the final tally

institutional shareholders

CEO) and Compaq's

Fio-

(who

individual share-

holders (who loved the idea of jumping to HP). It

was a

victory, but a Pyrrhic one.

apparent that almost no one

at

Looking

at the vote totals,

it

became

Hewlett-Packard had voted for the Fiorina

plan. After three years at the top of HP, Fiorina

had managed

to

marshal

al-

most zero support from her own employees. This was something Wall Street could not

fail

to notice.

There were also rumors of vote buying and other shenanigans on the corporate side

was leaked cer

—

stories that

to the press that

seemed even more

had

when

HP

a voice mail

CEO Fiorina saying to HP chief financial offi-

Bob Wayman, just two days before

institutional shareholders

plausible

the proxy vote, that in the case of major

Deutsche Bank and Northern Trust,

HP

"might

have to do something extraordinary for those two to bring them over the line."

The Last Based on

this

and other

383

Gift

reports, Walter Hewlett

brought

suit against

HP responded by refusing to renominate Hewlett to the HP The Hewlett and Packard era of HP was now officially ended after

Hewlett-Packard. board.

sixty-three years.

On April 30, a Delaware judge dismissed the Hewlett lawsuit. Walter Hewlett

announced

that, for the sake

of the company, he would not contest the

decision.

The

HP proxy war was over.

Ding Dong Carly Fiorina had won. But in the process the old

time and given her reputation a

The

real

fatal

HP had lashed out one final

wound.

message of the proxy vote was that Fiorina had

most important task of a CEO:

for.

that of enlisting employees into the

They had booed her

shown remarkable cohesion

in

working

at the

annual meeting.

And

they had

for her opponents.

She had won, but the business world would never look

way again. The

company's

by the thousands, HPers had repudiated every-

vision of the future. Instead,

thing she stood

failed in the single

rising corporate superstar

at

her the same

now looked faded and out of touch, And when

her vaunted energy a performance only in the service of herself.

Compaq CEO

Michael Capellas, considered one of the major assets of the

merger, quickly dove out of the newly merged company, Fiorina looked even

more

like a

sucker in the deal.

some good

In truth, there were

things to be found at

Compaq

—

a large

customer base, a strong position in memory, and the remnants of that most HP-like of companies,

—but not enough

Tandem Computer

to

warrant the

near-destruction of Hewlett-Packard, and nothing a healthy and energized

HP

couldn't have invented

said,

"Walter was

right."

itself.

As the

coffee

mugs

In the last three months, passionate, intelligent

HP

and

They have found

The question

is:

creative as ever.

They don't need Compaq; they

their

— or

this

won't be the

last

purpose again.

has Carly Fiorina learned this lesson too? Does she

appreciate that the business philosophy she considers tired

has proven to be her strongest opponent?

pany

on one Web

employees have shown themselves to be as

need to be untethered. They need to be trusted battle.

offered

Wrote ABCNews.com:

to trust her she has

Or

and obsolete

that in calling for the

embraced the very culture she

decries? 15

com-

site

— BILL &

384 Carly had to

won

the battle, but she

DAVE

had

lost the war.

And

everyone seemed

know it but her. Even the Gamesman

understood. Dick Hackborn had been on the board during the Compaq merger, but

Fiorina's biggest cheerleader

now he grew impatient with her

and management.

decisions

His reputation too had taken a drubbing in the seen not only as the

up.

few months,

as

he was

man who hired Fiorina, but also her leading supporter. As

one longtime colleague

He

last

HP

at

told Business Week, "I like Dick, but he screwed

should resign." 16

Now Hackborn

seemed resolved

to

make

Fiorina toe the line and

mess she had made of Hewlett-Packard. From

would be on borrowed time

The awful irony of and looked around

all

at

moment

this

fix

the

on, Carly Fiorina

HP.

of this was that had Fiorina dropped her prejudices

would have gotten

her, she

a magnificent lesson in the

HP Way she so despised. Despite all of her attempts to destroy the HP culture and the HP family had survived. And faced with the opportunity of the proxy fight, HP employees had mobilized almost overnight and power of the

it,

taken on the senior

management and

world's biggest corporations

Now,

in the

months ahead, while she was

two giant organizations, she would entrust

HP

ees of

of

Compaq was

including

boardroom

poli-

—

for the first time

— the employ-

with a distasteful task of their own: to assimilate tens of thousands employees,

all

of them unschooled in HP's culture and

them arrogantly assuming they were It

distracted with

and the other demands of merging

publicity tours, strategy development,

tics,

of the hired guns of one of the

all

—and almost beaten them.

a task

no employee should ever be asked

some die-hard

HP

many

of

arriving to take HPers' jobs.

supporters,

to do.

assumed

that

And many outsiders,

it

was impossible. Yet

HPers, though many grumbled privately, did the job, and in record time. In the process, they made Carly Fiorina look like a better strategic manager than she really was. That too was the

There

is

HP Way.

no record of Fiorina ever recognizing or rewarding

this

achievement. After the proxy fight, Hewlett-Packard to work. tails

The two

sides

of the merger

This

common

still

were

to settle

get

back

ahead.

had returned

partly through cost-cutting measures,

$500 million more than

its

goal

And

to profitability.

of redundant employees (18,000 of them,

now, number

down and

and there were the daunting de-

cause seemed to do wonders for the company. Within four

quarters, Hewlett-Packard layoffs

seemed

tired of fighting

HP

also

than

less

managed

— from expenses.

It

was

a

partly through

many

feared),

to cut $3 billion

$57 billion company

13 on the Fortune 500, with more than 140,000 employees. The

The Last San

Mercury-News ran

Jose

the headline

postmortem on the HP-Compaq merger with

a

"The Verdict: So

385

Gift

Far,

So Good."

But in the one measure that counted most to shareholders, stock

With the proxy

story was very different.

Carly Fiorina offs,

—and by extension,

the successful assimilation of

fight,

Wall Street had

Hewlett-Packard. The

Compaq,

down

lost its faith in

cost-cutting, the lay-

the return to profitability

of this good news resulted in more than a temporary bump pressed stock price, which was

price, the

—none

HP's deeply de-

in

33 percent one year after the merger was

announced. Wall Street wasn't being stupid or vindictive, but

realistic.

Fiorina had

absorb a major acquisition, and slash her

proven she could win a proxy

fight,

way

more. Her employees didn't believe or trust in

to productivity, but

her, her

little

board of directors (including her mentor) was turning on

company had come up with no new product breakthroughs and Dell Computer, the

target of the merger,

her, the

since her arrival,

was stronger than

ever.

HP was back, but not as back as some of the other big names in high Even Agilent, the old HP Instrument Group that had spun off down the

Sure, tech.

and nearly died when the economy collapsed even before the

street in 2001,

company

got fully under way, was

now coming back

—and doing

so with a

HP Way. HP seemed to struggle along. The employees hunkered

corporate culture based squarely on the

Throughout 2004,

down and tried not to get fired. Thanks to time, the merger, and layoffs, only a small fraction of the company now remembered what it was like even in the Lew Piatt era. A job at HP, which had once been among the most coveted in American business, was now a job just like (and maybe a little worse than) everywhere

else.

Carly Fiorina implemented one plan after another,

on everything from employees day's news, she

was

all

all

while cutting back

to the coffee cups in the lunchrooms. Yester-

but out of the public eye

now for months at a time. She

—but

remained optimistic, convinced that her strategy would soon pay off

was increasingly apparent that she was now on ter

and both the board of Everyone on the

coup

d'etat

HP

directors

and Wall

board knew that the director

quar-

her.

who would

HP

began to miss

its

lead the

financial targets

and 2004, Hackborn 'became increasingly outspoken,'

insider. 'Carly

viewed [HP's performance]

gency than the board viewed debate.'

One bad

would turn on

would be Dick Hackborn. Wrote Business Week, "Hackborn's anx-

iousness eased after the merger. But as in 2003

a razor's edge.

Street

it

says [an

HP]

as getting better, requiring less ur-

as necessary.

Dick was the key figure

in this

" 17

In the

fall

of 2004,

HP

(and former Compaq) director

Tom

Perkins,

one

BILL &

386

DAVE

of Silicon Valley's most distinguished venture

of Fiorina, abruptly retired from the board in frustration. The end was

critic

near.

was

and an outspoken

capitalists,

And when HP's numbers

fell

for the last quarter of calendar 2004, that

it.

January 2005 board meeting, director Patricia C. Dunn,

Just before the

flanked by

worth

Hackborn and

presented a

III,

director (and former

memo

management of the company. ing authority for

It

also included a

On

refused to comply. vited back

of concerns about her she shift operat-

February

7,

—and was meant

fired Carly Fiorina as

to be. Fiorina

Tom Perkins was

in a symbolic gesture,

on the board. The next day the board of

Company

Packard

list

demand that

HP out to her division heads.

was, of course, an unacceptable request

It

Reagan adviser) George Key-

to Fiorina outlining a

in-

directors of Hewlett-

chairman and chief executive

officer

of the company.

Dunn,

chairman of Barclays Global

a vice

chairman of HP, and

Fiorina was gone, but the the

HP

fight

board of

directors.

and then by the

board against

itself,

was named the new

Investors,

CFO Bob Wayman was named interim CEO. damage wasn't undone,

The

at least

internal schism, created

first

final battle over Fiorina's leadership,

not within

by the proxy

had turned the

creating an environment of mistrust, paranoia

and

cal-

culated leaks.

The subsequent of which,

Dunn

struggle to heal those

investigation that

would eventually

cross the line into

obtaining employee private phone records and the hiring of investi-

gators to pose as reporters

The

wounds and plug those leaks (most new Chairman

turned out, came from Keyworth), would lead

embark on an

to

illegally

it

from such publications

story finally broke in late

as

The New York Times.

summer, 2006. Within weeks Dunn, outside

counsel and Silicon Valley legend Larry Sonsini, and others were the subject of front page stories, hauled before a Congressional subcommittee,

case of

Chairman Dunn,

glory,

had

it

to face the

indicted. Just as

HP

was

most ignominious moment

and

in the

finally regaining its old

in

its

long history. The

long-suffering HPers were appalled, but were ultimately resigned to the reality

of

life at

new

Hewlett-Packard.

But that was

still

far in the future.

For now,

when

the news of Fiorina's

ing reached the rest of HP, spontaneous cheering erupted in

from California

to France to China.

HP

company

fir-

plants

employees around the world gave

each other high-fives and hugs. At HP's Boise plant, employees raced off to the nearest supermarket to bring back armfuls of Hostess Ding

witch

is

dead"). HP's e-mail system and

phone

lines

Dongs

("the

were jammed with happy

messages between employees and congratulatory notes from outsiders. the Internet, in the newly

emerged blogosphere, postings were

filled

On

with vitu-

The Last

387

Gift

peration and obscenities about Carly Fiorina and what she had done to the world's greatest company.

A few hours later, when the formal announcement hit the wires and it was learned that Fiorina would walk away from HP with a $28 million severance package, there was a

money was worth

it

momentary

flash of

—

anger

until people decided the

to see her gone.

After five devastating years, the Carly Fiorina era at

The question now was: what was

left

of the old

HP

was over

at last.

HP?

and Dave

Bill

On December 6, 2005, a clear and mild Tuesday morning, police cars and television

camera vans converged on a quiet Palo Alto neighborhood.

As the police put out the sawhorses crews erected their

satellite

the flow of people had

booms, the

and the camera

to close the street,

first visitors

began to

turned into a flood. Standing

arrive.

By 9

on the sidewalk

a.m.,

in front

of an elegant but unassuming old house, young people in business suits

checked the names of the arrivals on a clipboard, then pointed them not

toward the house, but

down

the alleyway beside

The visitors, some youthful with the on

others ancient and leaning

crisp

it.

walk of corporate professionals,

arm of

a cane or the

another,

through a gauntlet of reporters and cameras, past the that read "Birthplace of Silicon Valley,"

made

their

state historic

and down the driveway

to a

way

marker

humble

garage.

Before long the press of the crowd was so great that one could only flow

with

it

into the garage for a quick glimpse of a few boxes of

some machine

tools, and,

was enough: the

that tour,

on

a shelf, an

HP

tubes,

oscillator.

But

garage on Addison Avenue was not a place for a

little

but for reassurance. The younger visitors looked around in amazement:

— could the modern world—

could Silicon Valley tle

vacuum

model 200A audio

really

have started in

this lit-

room? Could those thousands of giant corporations, and millions of

reers, the

computers crawling around on the surface of Mars and the

billions

of messages racing around the earth each day on the World Wide Web, have had their light bulb,

start here in this

and spiderwebs

But the older looked as

much

dingy

box with

all

dirt floors, a single bare

in the corners?

visitors, as

they passed through

at the lovingly restored

walls as at the historic items. After it is still

little

ca-

all

but

still

like

pilgrims at a holy shrine,

worn and uninsulated plank

these years, after

here, they told themselves. Together,

we have

all

that has happened,

survived.

BILL &

388

DAVE who had

Outside, the camera crews circled a businessman the Packard

and Hewlett children and grandchildren

mony. For a famously giant corporations to

fast-talking

man

and jumpy

arrived to join

in a ribbon-cutting cere-

accustomed to managing

and thousands of employees, he seemed

a

little

disoriented

be there. "It's

kind of a humbling thing," said

Packard CEO, pointing In the

months

built. Instead

seemed went

since his hiring

Hurd had moved

Corp.,

the

new

Hewlett-

HP

by

quickly to unravel

after a quarter

much

century

at

NCR

of what Carly Fiorina had

of grabbing the spotlight, as his predecessor had done, he

shun

to

Mark Hurd,

at the garage.

to ground.

it,

turning

Moving

down most

requests for interviews. Instead, he

into Fiorina's office, he didn't change anything, say-

ing there wasn't time. Besides, he to

meet with

tirees.

was hardly ever

—and

there. Instead,

he was racing around the world

—thousands of delighted HPers, even of company's major customers — HP exec —and asked an honest

actually listen to

At the same time, he toured

re-

the

all

in

many cases, the first visit by a senior in years for how the company was serving them. He didn't like what he heard. Hired in March, Mark Hurd didn't make a major move until summer. And then he moved quickly. There was another round of layoffs; 15,000 this time, much of it last appraisal of

residues of

Compaq. Next, he

the old

them

froze pension benefits, putting

with industry standards, but disappointing

many who

in line

expected a return to

HP benevolence.

Next, concluding that HP's internal information processing network was a confused mess,

It

the man who had built Walwho was now working for rival Dell Computer.

Hurd poached Randy Mott,

Mart's famous IT network, and

was, as Fortune magazine noted, a nice "twofer"

talent

and weakening

—scoring

But Hurd's biggest move was to throw out Fiorina's notorious

a world-class

a competitor. 18

"digital, virtual,

mobile, personal," and replace

ness: building products, selling

them, and servicing them.

it

strategy, the

with

—

now-

basic busi-

"We want to

of the drama business and into the business of business," said Hurd.

get out

No more

complicated matrix management schemes. Hurd broke up the company's monolithic sales force and assigned the pieces to the three major product

groups

—

more responsive

No

and PCs

enterprise, printers,

matter

things

HP

to customers.

how you is

dress

were to demand, "What

his views, he's

at. It's

else

believed they

would be

Wrote Fortune:

up

already good

—where he

can

as if a

we do

simply trying to leverage the

new CEO

at Procter

& Gamble

here with toothpaste and diapers?"

— The Last Indeed, from the avuncular

end of

way he

389

Gift

lets his

rimless glasses perch at the

nose to his straight-talk emphasis on fundamentals, Hurd

his

evokes another tech industry turnaround maestro, Lou Gerstner, the for-

mer IBM boss who famously said, "The

last

thing

IBM

needs right

now is

a vision." 19

But

many

older HPers looked at

else:

Dave Packard. The same plain

that

it

Hurd and were reminded of someone

"profits" first before anything else

seemed new, of putting

now among HP

vanilla business philosophy, so old

business objectives.

And when

Fortune asked

replied that he

Mark Hurd about the fate of the HP Way, he it and come to his own conclusions: "When

had read about

things weren't right in the past, they were fixed," he said. "If things aren't right

now, we've got to it.

fix

them.

If that's

countercultural to the past few years, so be

We're just trying to run the fundamentals of a sound business." 20 Veteran HPers read those words and heard Dave Packard's voice.

By the time of the garage ribbon-cutting, Hurd's back-to-basics approach to pay off. HP's stock was still below its 2000 bubble high, but up

had begun

65 percent since Fiorina's departure. Meanwhile, in personal computers,

many

of the other big competitors, notably Dell, had finally begun to stumble leaving an opening for a stable, sales-oriented

By mid-2006, For

Hurd was

it

was vying with Dell

for industry

of the good business news,

all

still

a long

way from

HP

life

share.

market leadership.

inside Hewlett-Packard

under Mark

HP was now again a Much had been lost of the

the days of Bill and Dave.

driven company, but not yet a fully happy one.

company's legendary culture during the Carly Fiorina

HP Way, but had

up market

to gobble

years.

She had tried to

memories of a few survivors at the company, in the Bill and Dave stories, and among the veterans in HP's lively alumni organization. And if Mark Hurd still didn't quite get it, at least he was listening. And as long as he listened, there was hope kill

the

that he

would

at last

only managed to cripple

understand.

There was another reason for hope again.

The go-go

mania, and

as well.

The world had changed once

years at the turn of the century, of

fiscal irresponsibility,

had died

CEO

tions hip-hopping to glory

death

dictators

had

merger

fast

dead

moving corpora-

command

of media-sawy, charismatic,

(at least for

now) died an ignominious

under the

—and Carly Fiorina had been

superstars,

in a welter of ruined fortunes,

companies, and criminal indictments. The fantasy of

and quick- thinking

hid in the

it. It still

its

poster child.

Now there was a growing realization that, in a new world of virtual corporations, of

sudden market births and deaths, of employees scattered around

the world and working everywhere from traditional offices to the local

390

most powerful organizations would be those

Starbucks, the

and moral corporate culture

to

make important

by ambitious, yet

that were driven

management

top by senior

that

had

a strong

that employees could identify with wherever

empowered them

they were, that

and

DAVE

BILL &

that

on the

spot,

general, business objectives set at the

were more

down the organizational chart. And as academics, analysts, and

decisions

tightly defined as they

moved

new

corporate executives pondered this

corporate philosophy, they realized they were looking at a very old one:

HP

The

Way, rather than being an anachronistic

quieter age,

is

The

—and

company

HP Way

all,

likely to

it

it

easy,

but the

HP Way is

demands forbearance by

stunning resilience

it

the very people

did at Hewlett-Packard for decades, the

—and

hard times.

—which

HP Way resists empire building and eschews flash CEO superstars and dismissed by the press.

global organizations, independent

the

HP Way

is

HP Way

and intensely competent organization of

a genius for innovating itself out of

hated by

cles,

nearly

it.

works, as

creates a decentralized, cohesive

The

sounds

aggrandize power, and almost infinite trust from the people

least likely to give

When

better suited for today than ever before.

trust. ... It

impossible to execute because

most

slower,

not a technique, but an ethos of restraint, responsi-

is

and most of

bility,

from a

most avant-garde management model ever de-

in fact the

vised for a large

leftover

work teams, and

modern

better suited for

is

why it

is

age of

Yet, in the

lightning decision cy-

organizations than any

other. 21

Bill

Hewlett and Dave Packard had, with the help of two generations of

HPers, built the

HP Way

in a

much

different era.

But the

HP Way

vived and remained relevant precisely because they had not built time. Instead,

beings

— of

ceed and

HP

it

had been devised from

make

a contribution. Everything else

and rewrote

mained unchanged,

it

its

for their

understanding of

duty, family, responsibility, inventiveness,

regularly revisited

scandals),

a basic

had sur-

it

and the

human

desire to suc-

was secondary, which was why

Corporate Objectives. But the

would survive the bloodiest

Way

re-

attacks (and the worst of

and would be rediscovered again and again

as long as people

were

people.

More than any company or most enduring

gift to

The day before

product, this was

Bill

and Dave's

first, last,

and

everyone.

the garage dedication, a group of thirty people gathered in

a Palo Alto restaurant to

Packard during the

Bill

watch a video.

and Dave

era.

It

All

had been executives

at

Hewlett-

was a Proustian moment: the

faces

— The Last were familiar

—Dave

Kirby, John Young,

—but

and more

Bill Terry,

and ambitious men and

Most were

eighty-five.

was now

Dean Morton, Karen

in the intervening thirty years these

women had

their

Even the youngest, Steve Wozniak,

group reminisced about the

HP

compared

days,

their current health,

in the past

they were family. And,

they

like a family,

longer with them, especially

shocked them

past, told anecdotes

shook

Lew

Piatt,

were

mourned

now

all

any

their heads at

and nodded cautious approval of "the new

Fiorina,

Whatever mistakes had been made

guy."

forgiven. After

all,

who were no

of those

whose recent and sudden death

still

all.

They had been brought together by Hewlett-Packard

new

once young

grown old. Fong, the oldest, was

all

in their seventies.

ate lunch, the

mention of Carly

a

Lewis, Al Bagley,

in his mid-fifties.

As they from

391

Gift

to

be the

first

to view

corporate video, produced by an award-winning documentarian,

telling the story

of

Hewlett and Dave Packard.

Bill

HP

had ordered the

cre-

— many of whom had never even known the company during good times—the legacy they were ation of the video as a

way

Most of the assembled

knew

to teach

HPers

inheriting.

for

it

was coming: many had even been interviewed

But assembling footage, filming reenactments, and interviewing

it.

veterans had taken

months

—and by

then, having

disappointments from Hewlett-Packard, project

many

HP

become accustomed now to

of the veterans assumed the

had been abandoned.

now here it was, entitled simply "Origins." As the video played, the au-

But

dience looked on in astonishment. Building,

company

was

It

all

there: the garage, the

picnics, Packard's challenge to the

Redwood

stunned gathering of

— everything

corporate executives, Hewlett cutting off the tool bin padlock that they cherished; everything they

Hewlett-Packard Co. and the

rest

had assumed had been long forgotten by

of the world.

As they watched, they marveled

at the Bill

scrutinized closely the faces of the interviewees

Paul

Ely,

Tom

of an impossibly young

at the footage

and Dave. They laughed one more time

and Dave

who were

Perkins, Barney Oliver's successor Joel

marks of time and

toil.

came. Fearful

at first

the past, they

now

The longer the

not

Birnbaum

—

for the

film ran the louder the audience be-

of yet one more insult, one more misrepresentation of

relaxed, confident that they

tion of

what they had long been waiting

screen,

add

their

Bill

And they among them

stories.

for.

were

at last seeing the realiza-

They began

own side comments, and joke to

to talk

back to the

each other over events a half

century gone.

For those few minutes, again.

it

was

Working once more with

greatest

company in

the world.

as if Bill

time had rolled back. They were young

and Dave. And proud

to

be part of the

Appendix:

Management and Leadership Lessons from

and Dave

Bill

Source material can be found at the asterisk (*) on the designated page.

Page number

15.

The

best possible

company management

corporate greatness and destiny,

one that combines a sense of the average with empathy for and fidelity to is

—

—

employee.

Most successful people exhibit some larger-than-life characteristic (often it superhuman work habits). By the same token, most successful people seem to especially dislike other successful people who are most like them. 24. is

32.

The

lesson

from team

sports:

Given equally good players and good team-

work, the team with the strongest will to win will prevail. 34.

The

greatest success goes to the person

who

is

not afraid to

fail

in front of

even the largest audience. 42.

Older advisers are good for wisdom from the past, but cannot always be de-

pended upon 44.

for advice about the future.

Terman and Hewlett: Mentors should be chosen

for a

common personality.

44.

The

cliche

is

true: the

most

difficult

for

common

and challenging path

is

interests,

not

most

also the

rewarding. 47.

Bill

Hewlett at Stanford: Great potential in young talent can often be dis-

guised, especially in those with learning disabilities

genius.

The "slow"

learner

may in

fact

—and occasionally with

be using that time to understand the

real

much

bigger picture. 48.

Packard at GE: Those closest to the action, no matter what their

cally

understand a process (and

happy to share 53.

that

its

flaws) better than

knowledge with anyone

anyone

else

title,

typi-

—and would be

who will take the time to

ask.

Fred Terman: Great entrepreneurs typically combine almost obsessive

preparation and attention to detail with a wide-open opportunism.

— Appendix

394 Set out to build a

54.

company and make

a contribution,

not an empire and a

fortune.

Whenever

59.

The Varian

61.

much

your job to embark on a new venture. Take a door open to returning.

possible, don't quit

leave of absence instead: leave the brothers:

Never be afraid of abandoning one idea if a better one comes along.

—

—no matter how

time you've invested

65. Charlie Litton: Happiness in success

comes not with wealth, but

in the free-

dom to be yourself. The coin toss: In a good partnership, more from random events.

66. fits

68. In a start-up all

company, the founders'

neither partner worries about

skills

who

bene-

must be complementary and cover

required core competencies.

A CEO

The Packard garage:

72.

nostalgia.

What

matters

is

should look back only

strategically,

never with

what's next.

Price to customer desire. If that doesn't offer an adequate profit margin,

75.

then don't offer the product.

If

it

exceeds standard margins, use the difference to

finance future innovation.

You can't serve two masters or run two different kinds of businesses (for incustom work and mass production, or consulting and manufacturing) at the same time. 76.

stance,

80.

If

the logic of your technology

on even the

to take

The

81.

in taking

83.

It is

different jobs in a

great

far

more

manager never

Treat small vendors

85. well.

it,

don't be afraid

new start-up company.

easy to be loyal to your employer and your mentors, especially

good people. It is than you need them.

A

for

best education for an entrepreneur takes place not in a classroom, but

on the many

are

84.

and your business argue

biggest competitor.

They may become

difficult to

leaves

be loyal to people

they

anyone behind.

and new companies

future

if

who need you more

— even

potential competitors

allies.

—

—

Poor cash flow even with a full in-box of orders is one of the greatest company. Don't be afraid of debt; but fully understand the difference between short- and long-term debt. 85.

threats to a

85.

86. in a

87.

Take care of your smallest clients

The HP Way: Sometimes changed present. Diversify early.

—they may one day be your

a radical

A company with

new

idea

is

merely an old idea preserved

multiple product lines enjoys a

advantages, including greater brand recognition, greater strategic

tomer

loyalty,

and

biggest.

less vulnerability to attacks

from competitors.

number of

flexibility,

cus-

Appendix

395

Employees who are allowed to share in a company's success (through profit sharing, stock plans, etc.) are more willing to make sacrifices during the bad 89.

times. 92.

A frustrated employee is a greater threat than a merely unhappy one.

93.

An

industry can never reach

its full

potential until

upon

settles

it

stan-

dards.

Helping Litton Labs: The true

97.

not to honor

Core principles are only valid

98.

At the beginning of a

101.

seemingly inconsequential

staff,

not vice versa

Open Door

102.

top

of loyalty

is

when you have

if

—but

new era, or a new industry, every is momentous and far-reaching.

—and

Policy:

A

that begins

HP Way: A great

stress.

decision

—

is

— even the

to support his or

by being among them.

true "open door" policy goes

in return requires the

The

104.

every excuse

they are maintained in times of

Management by Walking Around: The job of a manager

101.

her

test

it.

all

of the way to the

employee to pass through every door in between.

company

entrusts all of

its

people, from top to bot-

tom, to do the work that they were assigned, to take responsibility for their actions,

and

to speak for

and represent the company

as if they are the

owners

(which they are) and the founders themselves.

The Storeroom Incident: Don't punish employees for having

105.

doesn't

if it

106.

fit

Be prepared

to forgo extra hiring

during good times, even

ing added revenues, to keep from having to mass 107.

even

fire

at the risk

of los-

employees during the bad.

Don't punish employees for having been put in a position beyond their

abilities.

111.

initiative,

standard procedures.

Relocate

Art Fong:

them

quietly

Common

and

diplomatically.

sense and decency, not legality or even tradition, are

the best hiring policies. 111.

Investing in

are the

most

new product development and expanding

difficult things to

do

in

hard times

—and

the product catalog

also

among

the

most

important. 114.

The

biggest competitive advantage

is

to

do the

right thing at the worst

times.

116.

Empowered

"families" of employees,

under enlightened managers, can

perpetually produce near-miracles of invention, quality, and adaptability. 117.

A company that focuses solely on profits ultimately betrays both itself and

society.

124. The HP Way: A great corporate culture is a fabric of rules, experiences, myths and legends, relationships, and rituals as complex as any real family and just as difficult to describe to any outsider.

—

— Appendix

396

Maintain your personal networks. Never lose track of anyone you

124.

day want to

When

125.

may one

hire.

hire

possible,

people

talented

whom you have

particularly those

who

are

also

acquaintances

seen firsthand perform well in both good and

bad times.

senior

Company picnics: Smart companies reward the families of their employees make for the company. These are also occasions for management to humanize itself by serving their subordinates.

128.

Joint projects outside of

126.

for the sacrifices that they too

work can help partners

better understand

how

each other thinks. 128. Employees are like children; when they don't get the answer they want from one person, they move on to the next. It is crucial then that, like parents, senior executives (especially partners) be in concurrence before rendering a decision.

Annual bonus: Employees want

129.

then,

is vital.

The

130. tle) to

132. their

Take the time to learn as

be seen as individuals. Personal contact, as

you

work and gather together with

No

134.

matter

how

do not pursue

appealing a

new

idea, if

it is

of customers and the company's

Going international:

139.

own

Tektronix:

away from

not within your core compe-

a betrayal

both

and humane,

takes

is

values.

A corporate culture, when

precedence over a larger culture that 142.

step

it.

Introducing products that do not yet exist ("vaporware")

135.

ti-

their fellows.

The Beer bust: Institutionalize times when employees can normal work personas, relax, and free their imaginations.

tencies

can.

time each day for employees (whatever their

coffee break: Set aside

leave their

to

many of their names

is

it is

fair

not.

Never take on an entrenched market or competitor unless you

can make a decisive contribution.

When

143.

making

entering into a

a decision.

new geographic

But once the decision

is

market, prepare carefully before

made, move quickly and

decisively.

Don't hesitate or move piecemeal.

Corporate reorganizations should be made for cultural reasons more than

145.

financial ones.

HP

146.

Objectives:

Corporate objectives are designed to empower employees

and constrain management, not the reverse. People naturally want job. The true goal of corporate objectives is to let them.

The

148. 1.

HP

to

do

a

good

Corporate Objectives (1966):

To recognize that profit is the best single measure of our contributions to society and the ultimate source of our corporate strength. We should attempt to achieve the maximum possible profit consistent with our

Profit:

other objectives.

Appendix 2.

Customers: To strive for continued improvement in the quality, usefulness,

and value of the products and 3.

397

services

we

offer

our customers.

To concentrate our efforts, continually seeking new opporgrowth but limiting our involvement to fields in which we have capability and can make a contribution.

Field of Interest: tunities for

4.

Growth: To emphasize growth as a measure of strength and a requirement for survival.

5.

Employees: To provide

employment opportunities

for

HP

people that in-

clude the opportunity to share in the company's success, which they help

make

possible.

To provide for them job security based on performance, and comes from a

to provide the opportunity for personal satisfaction that

sense of accomplishment in their work. 6.

Organization: To maintain an organizational environment that fosters individual motivation, initiative and creativity, and a wide latitude of freedom in

7.

working toward established objectives and

goals.

To meet the obligations of good citizenship by making contricommunity and to the institutions in our society which generate the environment in which we operate. Citizenship:

butions to the

In high tech especially,

149.

it is

be revolutionary, but dangerous to be

vital to

Utopian.

A company is

150.

not just a business, but a philosophy, a

of traditions and customs.

meeting

It is

of values, a series

company

in

objectives.

its

Along with humanity, realism

152.

set

these deeply held beliefs that guide a

is

the single

most important

trait in a

good

executive.

153. Always try to finance growth on profits. Long-term debt is a dangerous game. Taking on long-term debt means serving two masters customers and lenders whose interests may not be compatible.

—

—

There

154.

acquired

is

is

no

the day

it

cultural legacy with acquisitions.

The day

a

company

is

adopts the buying company's culture in toto.

Even the healthiest corporate culture will be incompatible to large numis inevitable, and a company should not compromise

156.

bers of talented people. This

that culture just to gain those individuals.

HP fork:

The

encompass a personnel compoin the ability to hide shrewd business strategy inside of benevolent employee programs, and enlightened em160.

The

best business decisions

nent and vice versa. Real management genius

lies

ployee benefits within smart business programs. 160. Employee stock purchase programs: Helping employees pany stock has multiple advantages: a. It

to

places ownership of the its

success.

company

in the

to purchase

com-

hands of those most dedicated

Appendix

398

prime source of cash without taking on debt.

b. It is a c.

It is

d. It

both a recruiting and retention

may one day save the company in

By the nature of

162.

tool.

a decisive shareholder vote.

grow them crucial understanding and empathy. beyond constant contact and regular monitor-

their careers, successful executives will inevitably

apart from their employees, costing

There

is

no easy solution

for this,

ing of employee behavior.

A company's

162.

culture

is

not a suicide pact. There are times

must intervene, violating their own company from spinning out of control. ecutives

Really listening to employees

169.

and opportunities

early,

is

rules of

when

senior ex-

engagement, to keep the

not only a way to identify both problems

but also a powerful technique for identifying emerging

talent.

175.

Over the long term, the interconnection between company products can be

as valuable as the

176.

If

standard

products themselves.

you can share your own technology standards

— even

at the cost

an automatic, and nearly 177.

Senior

to create an industry

of some short-term competitive edge

decisive,

management

—you

will enjoy

long-term competitive advantage.

hesitation should never be the reason for the delay of

an important new product or strategy that already has the support of the

rest

of

the company. 178.

The Omega

project:

No

product development project, ness model,

kill it

— even

matter

how

if it isn't

if it is at

thrilling, popular, or

complete a new

going to succeed, or doesn't

the cost of respect, key talent,

fit

the busi-

and employee

morale. 178.

If

it

doesn't impact daily operations of the company, be prepared to turn a

blind eye to side projects and skunk works. If they work, profess ignorance and give credit to the mavericks.

184. cess,

185.

Great companies look for the opportunities that might lead them to suc-

not weaknesses that might preclude them from success.

may

require atypical, but demanding,

em-

revolution at a time. If you expect customers to accept a radically

new

Eccentric, but talented, people

ployment arrangements. 187.

One

technology, don't 188.

As long

subterfuge 189.

The

is

as

demand it is

for a

that they change their behavior as well.

good cause

—and

legal

—

a certain

amount of employee

acceptable (and should be ignored).

HP

9100A: At the

preparing for the next battle.

moment

of your greatest victory, you should be

— Appendix 192.

When

196.

If a

the accomplishment exceeds the agreement, pay the accomplishment.

corporate tradition has fallen behind changes in the larger society,

abandon the

tradition.

A company

199.

399

that honors entrepreneurs, even

likely to

allies,

than one that threatens and punishes those in

202.

means

if it

losing talent,

Flex- time: Entrusting employees to set their

its

ranks.

own

schedule has a minimal

impact on operations, but an immense impact upon employee morale,

and

is

keep such people, or see them return someday, or turn them into

more

loyalty,

productivity.

204.

When possible, create industry-wide dominance by combining products in

submarkets in which you are already hold leadership. 210.

Prepare early for succession, because the need for such a plan

may come

sooner than you expect. 210.

Divide operating groups

existing culture,

the

new

when they

reach a critical mass to maintain the

and open new opportunities

for

advancement. But try to keep

unit physically close to the original to minimize disclocation, transfer of

intellectual capital,

and maintain

identity with customers.

Companies,

as they grow, vacillate

between centralization and decentral-

ization. Therefore,

even as the company

is

211.

centralization

212.

When

—and

decentralizing, prepare for the next

vice versa.

establishing a

new

of management, circumscribe its auexpand its capabilities (to keep top talent

level

thority (to constrain ambition), but

engaged). 216.

Don't confuse the apparent risk-taking of most entrepreneurs (which

in fact, risk aversion in disguise),

tionary

new

is,

with the real risk-taking of trying out revolu-

organizations and strategies

when

the

company

is still

young and

vulnerable.

219.

The

greatest career challenge facing successful entrepreneurs

is

reinventing

themselves as business professionals.

The highest level of corporate leadership moves beyond operational management to symbolic management. That is, it consciously chooses acts for their theatrical impact, and as models of behavior for others (even future generations) 221.

to emulate.

222.

In symbolic

management, the best persona manager himself.

is

the one most congruent with

the true character of the

225.

The HP-35 retirement: Nostalgia for past success can lead you to preserve

current failure. 226.

The Chuck House Defiance Medal: Recognize mavericks for their successes if they support the company's ideals. When possible, use the occasion to

but only

Appendix

400 humanize senior management only by the book.

—and

to

remind

it

of the dangers of doing things

Executive luncheons: Institutionalize regular contact between senior management and regular employees, without the presence of intermediate supervisors and managers.

227.

228.

Regularly survey employees to

information, 228.

is

being conveyed up and

make sure that understanding, down through the organization.

not just

Executive build-offs: Institutionalize games, competitions, and other ac-

keep senior executives aware of what

tivities to

it

takes to be a line worker in the

company. 229.

Hewlett's hat-wearing process: Enthusiastically cultivate

new

ideas as they

company. Only later, rigorously challenge their value. This will foster an enduring climate of innovation in the company, yet protect it from pursuing too many dead ends. surface throughout the

Hewlett on creativity: "Creativity is an area in which younger people have tremendous advantage, since they have an endearing habit of always questioning past wisdom and authority. They say to themselves that there must be a bet-

232. a

ter way.

Ninety-nine times out of a hundred, they discover that the existing,

traditional

way

progress

made."

239.

mean

is

Just

that

the best. But

is

it

is

that

one percent that counts. That

how

is

because you have built a strong and vibrant corporate culture does not it

can, or should be, transferred to the larger culture outside the

com-

pany's walls.

242.

Packard

in

Washington: Companies have a responsibility to the society(ies)

that provided the context for their success. ter

what

their

title,

owe

a larger allegiance

By the same token, employees, no matand duty to the country in which they

are citizens.

250.

The

251. the

The Nine-Day Fortnight:

company

263.

most humane decisions. And, all other managers are also the most humane managers.

best business decisions are the

talents being even, the greatest

It is

share in the pain, and

only

fair that,

during hard times, everyone in

make comparable

sacrifices.

G-time: Take advantage of slow periods to give back to employees time

that wouldn't be used

anyway

—and

let

them use

their imagination to

fill

it

productively.

269.

A

great entrepreneur, deeply attuned to a market,

may be the single new product.

best

predictor of the potential success or failure of a revolutionary

275.

When

a technology

product unexpectedly breaks out into the general con-

sumer marketplace, promote and market 276.

Dissembling to customers

smart business practice.

is

it

there as well.

dishonest; dissembling to competitors

is

Appendix

are as much defined by their surrounding commucompany. You relocate them at your own peril.

283.

Some product groups

nity as

by

290.

When

their role in the

restitution.

It

the

401

company makes a mistake, admit it immediately and make the only way to retain loyal customers.

full

may be

The inherent danger with building an organization on trust and teamwork and mass delusion. Senior management must even if it means violating the tenets be prepared to intervene at these moments 292. is

the potential for wishful thinking

—

of the corporate culture. 293. its

A company is not what it makes, but what it is. The only enduring factor is

core philosophy. Almost everything else

expendable.

is

Innovation must never be allowed to take on a

of

its

own. Rather, inno-

vation must always be disciplined by the marketplace. This

is

especially true in a

294.

company dedicated 294.

301. itself.

over,

move toward each

other in their decision-

common ground.

The first candidates for succession should always be from the company They alone can fully appreciate the nuances of the corporate culture. Moreif you don't trust your own employees with the future of the company, then

you have 309.

to innovation.

Successful partners always

making, toward a

life

failed as a

The

manager.

and techniques of the commercial world largely map over If you have been a success in the former, you have an lend your talents to the latter.

tools

onto the nonprofit world. obligation to

310.

A successful career in the high-tech world is one that begins with entrepre-

neurship and moves outward to ever larger communities and ever greater contribution. For example, entrepreneur, start-up executive,

of a public corporation, government

official,

company

global diplomat,

president,

Each jump requires a reinvention of oneself, but will only be successful it all, one remains true to one's core values. 311.

True philanthropy

instead

is

not self-promotion. Keep your

honor those who helped

to

make you

Successors to charismatic founders

336.

CEO

and philanthropy. if,

through

name off your creations;

the success you've become.

must spend more time

in personal,

physical contact with employees than did their predecessors, especially in the

months immediately after the feel alienated and abandoned. 348.

transition

when

those employees are most likely to

John Young: The chairman of the board needs to exhibit the same kind of

trust in his

CEO

as characterizes the rest of the corporation. Nevertheless, the

chairman should not be afraid to intervene quickly and decisively should the long-term health of the company appear 350.

at risk.

A true Open Door Policy extends beyond the CEO to the directors and the

chairman. ered to

An employee who

call directly

has exhausted

on the board and

all

other outlets should

receive a fair hearing.

feel

empow-

Appendix

402 354.

Talented, loyal senior executives

who

have given years of good service to

company should not be stigmatized for failure, but allowed to transfer or retire with dignity. In many cases, they still have considerable contributions to make to both the company and to society. the

The proxy fight: The most important legacy founders can give their emis ownership of the company. Employee shareholders are the last redoubt in the defense of the company and its culture. Giving them the company is the ul379.

ployees

timate statement of trust.

Acknowledgments

As every author of history or biography knows, but few readers apprewriting one of these books

ciate,

subjects

—whether you

know all too

is its

Just the opposite

not.

months

own kind

of

have experienced the

I

your

to

latter,

and

in the intimate literary presence of

an

hell.

was true working on

did almost everything right, especially

Bill

& Dave.

when

it

men

Here were two

came

to their

duty to oth-

Even when they made mistakes, they inevitably learned from them. Best

ers.

of

them or

well that spending

unpleasant subject

who

like

means devoting thousands of hours

all,

as

—

— and

wrote the book

I

shoes, running

up

I hope as you read it some problem or obstacle

against

discovering that their solution was better than mine.

Men and women

also very uplifting.

of the world, and thank heavens Unfortunately,

it

also

so

much

better,

meant, as

I

men

I

found

whom I now

now gone

forever. Cer-

But so has Silicon Valley: no one will.

Indeed, though few peo-

the business world itself feels the loss of their place as

I

once knew, and

but because their talents are

two decades, has taken

last

was humbling, but

finished the manuscript, that

has yet taken their place, and likely no one ever it,

It

in their

and almost always

.

we have them.

tainly Hewlett-Packard Co. has felt their loss.

ple realize

found myself .

of humanity and character are the hope

myself growing sad. Not just for the two

know

I

.

Bill

& Dave: who, in the

paragons of innovative and enlight-

ened business practice? For that reason, Packard. for

I'd like to

begin by thanking

Though I met both men, knowing Dave

them briefly at

the beginning of

middle-aged business veteran, that

men

—and a

their

impact on

manager

I

my own

unconsciously

Hewlett and Dave Bill,

and worked

my career, it was only in writing this book

as a

came

Bill

better than

I

life. I

fully

took the measure of the two

realize

now

set out to lead

that

by the

when

I

finally be-

HP Way

.

.

.

and

quickly learned the difference between theory and real-life application. This

gave I

me an even greater appreciation of Bill & Dave's achievement. had no shortage of source material

in writing this

book (and

help, in the

I

Acknowledgments

404 form of

Leslie

Johnson, in compiling

And

long retired, are a family.

ment

forgot, they

still

history, besides

Hewlett-Packard alumni

HP's

own

mary source

and

Web

site,

plundered

I

particularly valuable resource

—and a

A veritable book

in itself

and

to Minck's writing again

—

—

Bill

was notoriisn't

much

compared with the voluminous materials by or

especially

about Dave Packard. Happily,

this

void was

filled

by the William Hewlett

Li-

available to

me source mate-

and photographs, many of which had never been seen

in public before.

brary and rials

pri-

come

again.

ously untalkative, and besides a few interviews and speeches, there

him

enthu-

example of a

classic

A particular challenge came in telling Bill Hewlett's story. out there on

it

was John Minck's

that will be crucial for generations of historians to

found myself returning

was the

A Narrative History of Hewlett-Packard

unpublished manuscript "Inside HP:

from 1939-1990."

official

a treasure trove of historic information,

site. It is

One

book.

senior manage-

HP Way. My single most impor-

oral histories, timelines, product descriptions, etc., siastically for this

old, freshly hired or

when Hewlett-Packard

even

carried the torch of the

company

tant source for

new and

HPers,

it).

Indeed,

its

director,

Robert Boehm,

only decided to take on this project

I

graciously offered to open strings attached I

who made

also

want

— to

up the

a decision very

library to

much

when

Bill's

son, Walter Hewlett,

me, no questions asked and no

like his father

would have made.

acknowledge a fellow veteran Silicon Valley reporter, Eric

who was the only journalist clever enough to cover Bill & Dave's great return and who dug up the very rare copy of Upside magazine that carried

Nee,

—

the story. Without his work, that incredible story

would have been

lost

forever.

Writing

book

this

also gave

me

wonderful opportunity to reconnect

a

who had once been an important part of my life. Karen the HP archivist and now a senior executive at Agilent, made

with the people Lewis, formerly

many

available

factual errors.

boss,

Dave

of the photos in this book. She also read the manuscript for

So too did her old The

Kirby, HP's retired

after all these years

HPers,

though

PR

I

feel a

deep

my career

was

my

PR

took

me

HP. For me,

—who taught me

it

the

men

— Ross Snyder, I

hope

first

As with many ex-

was working

company wouldn't even

to be a real writer.

my

back together with Dave

in exactly the opposite direction of

when

never forgotten those years, nor the

Kane

writing partner, and

favorite part of this project.

loss for the old

(indeed, several years

HP Way

director. Getting

J.

this

And

for Kirby.

HP

Corporate

talk to

me)

I've

Peter Nelson, John

book honors

their

teaching. In the end, the people

whom

I

most want

ees of Hewlett-Packard, past, present,

Packard always gave them

full credit for

and

to

acknowledge are the employ-

future. Bill Hewlett

and Dave

the success of the company.

Through

Acknowledgments good times and bad (and a story to

very bad) they alone have carried in their

& Dave. From senior executives to interns, they all had

hearts the spirit of Bill tell

lately,

me about the company and its founders. Many are my neighbors

here in Silicon Valley (Jo Ellen Sako, for example,

coaching in

when ment

who

cini,

I

the

mother of

new

it"

suggested a destiny

I

acquaintances, including Robert Sherbin

me

straightened

I

met

ago

—Paul

me

or took

as a

Ely,

me

out

know I had). and Anna Man-

out on some factual errors and a few company

nervous new employee just out of

Al Bagley,

me

boy I was

didn't

now

myths. Part of the fun was hearing from the powerful men,

whom

a

was writing the book. Some are old friends (whose com-

about time you did

Others were

is

League while working on the book), others sought

Little

they heard "It's

405

Bill Terry,

my

teens thirty years

Emery Rogers, Bob Grimm

aside at the Packard garage re-opening,

retired,

—who e-mailed

and gave

me words

of

encouragement. It

was

in talking to these HPers, seeing the excitement in their eyes,

they talked about

knew I had Finally,

for

me on

&

Bill

to write this

no book

is

Dave and the golden age

book

—and

to

them

I

am

at

I

especially grateful.

ever written solo. Leslie Johnson did crucial research

the book. Jim Levine of Levine/Greenberg, convinced

worthiness of this book and shepherded

and Portfolio showed

when

Hewlett-Packard, that

it

a genius for the carrot

through

and the

its sale.

stick,

me

of the

Branda Maholtz

always staying gra-

cious even as deadlines approached (and were occasionally passed). And, of course, there

and

I

is

Adrian Zackheim, founder and publisher of Portfolio. Adrian

started out together a quarter century ago

ferent routes

we

—and now,

find ourselves working together again.

second time around.

after taking dif-

It's all

the better the

.

Notes

1

Friendship

1.

David Packard, The

2.

Ibid.

3.

Ibid, p. 14.

4.

William Aspray interview with John

HP Way (New York: HarperBusiness,

1995), p. 13

V. Granger, Sept. 20, 1993;

IEEE History

Center, www.ieee.org/web/aboutus/history-center/index.html. 5.

The HP Way,

6.

Ibid.

7.

Ibid., p. 7.

8.

Ibid.

9.

Ibid.

10.

p. 4.

Sources for this section include the William Hewlett

the William and Flora Hewlett

Web

site

official

biography on

(www.hewlett.org) and "Technology pio-

neer William R. Hewlett dead at 87," the formal obituary announcement prepared by the Stanford University News Service (http://news-service-stanford.edu/ news/200 1 /January 1 7/hewlett-a.html) 11.

Source of photograph: William Hewlett Archives, courtesy Walter Hewlett.

12.

SFGate.com, April

14,

1999: "San Francisco in the '20s" produced

by

KRON-4 TV. 13.

The HP Way,

p. 19.

14. "Memorial Resolution Albion Walter Hewlett," www.histsoc.stanford.edu/ pdfmem/HewlettA.pdf. 1 5.

Larry Gordon, " Father Figure," Stanford Magazine, March-April 200 1 http:// ;

www.stanfordalumni.org/news/magazine/2001/marapr/features/hewlett.html. 16.

Lewis M. Terman, "Recollections of Fredrick

Vintage Electrics, Vol.

3,

Issue

management-_bill_hewlett.htm

1

Emmons

Terman,"

SMECC

(1991); www.smecc.org/the_human_side_of_

408 17.

Notes Terman at Stanford (Stanford, CA: Stanford Uni-

C. Stewart Gillmor, Fred

versity Press, 2004), p. 16. 18.

Ibid., p. 22.

19.

Ibid.

20.

Ibid.

21.

Michael

22.

Ibid., p. 15.

23.

Fred Terman at Stanford,

24.

The Big Score,

25.

Fred Terman at Stanford,

S.

Malone, The Big Score (New York: Doubleday, 1985),

p. 23.

p. 20.

croft Oral History Project

and Stanford Oral History

26.

Fred Terman at Stanford,

27.

Ibid., p. 31.

28.

Carolyn

Project, published 1984.

p. 27.

Tajnai, "Fred

Computer Forum, May University News Service,

Arthur L. Norberg, Charles Suskind, and Terman, Interviews," 1975. Joint project of Ban-

p. 66;

Emmons

Roger Hahn, "Fredrick

S.

p. 14.

Terman, the Father of Silicon

Valley," Stanford

1985, from an interview by Sandra Blakeslee, Stanford

Oct.

3,

1977.

29.

Ibid., p. 58.

30.

Ibid., pp.

31.

http://www.ibiblio.org/pioneers/bush.html.

32.

The Big

33.

Fred Terman at Stanford,

34.

Ibid, p.

35.

"Recollections of Fredrick

35.

Fred Terman at Stanford

36.

Ibid., p. 66.

Source: "Fredrick

37.

Ibid., p. 65,

same

38.

Ibid.

39.

Ibid, pp.

40.

"Biography

59-60.

Score, pp. 21-22. p. 64.

65

Emmons

Terman."

p. 65.

Emmons

Terman, Interviews."

source.

66-67. revisits

Valley," Stanford Report,

Fred Terman's roles in engineering, Stanford, Silicon

Nov.

3,

2004.

41.

"Fred Terman, the Father of Silicon

42.

Ibid.

Valley."

409

Notes 43.

Ibid.

44.

Ibid.

45.

Fred Terman at Stanford,

46.

Ibid. p. 488.

2

Apprentices

1.

David Packard, The

2.

Ibid., p. 11.

3.

Ibid.

4.

Ibid.

5.

Ibid., p. 14.

6.

Ibid., p. 13.

7.

Ibid., p. 21.

8.

Ibid.

9.

Ibid., p. 17.

10.

Ibid., p. 15.

11.

Ibid.

12.

Gerhard Casper,

p. 95.

HP Way, pp. 8-10.

"Uncommon

Men," Stanford Today, Letter from the

Presi-

dent, July-Aug. 1998. 13.

The HP Way, pp. 21-22.

14.

"Hewlett-Packard, the Early Years," Southwest

Museum

of Engineering,

Communications and Computation; http://www.smecc.org/hewlett-packard,_ the_early_years.htm. 1 5.

"

16.

Ibid.

17.

The HP Way,

18.

Ibid.

19.

"Recollections of Fredrick

20.

The HP Way,

21.

Ibid.

22.

Ibid., p. 17.

23.

Ibid., p.

Fred Terman, the Father of Silicon Valley."

24

p. 23.

p. 16.

Emmons Terman."

Notes

410 Malone, The Big

24.

Michael

25.

The HP Way,

26.

Ibid., p.

27.

Ibid.

28.

Ibid.

29.

Michael

S.

Score, p.

29

p. 24.

25

McMahon

interview with William Hewlett, Nov. 27, 1984; IEEE

History Center, www.ieee.org/portal/site. 30.

Ibid.

31.

Ibid.

32.

"Recollections of Fredrick

33.

C. Stewart Gillmor, Fred

34.

Ibid., p. 123.

35.

Ibid.

36.

Ibid., p. 26.

37.

Ibid.

38.

Ibid., p. 27.

39.

The Big

40.

Ibid.

41.

The

42.

Fred Terman at Stanford,

43.

The

44.

Fred Terman at Stanford,

45.

The

46.

Quotes from Hewlett

47.

Ibid, p. 126.

48.

Ibid.

49.

"Recollections of Fredrick

50.

The Big Score,

51.

Ibid.

52.

Ibid., p. 55.

53.

The

54.

Ibid., p. 36.

Emmons Terman."

Terman at Stanford,

p. 122.

Score, p. 29.

HP Way,

p. 31. p. 123.

HP Way, p. 29. p. 124.

HP Way, p. 32. letter

p. 54.

HP Way, pp. 35-36.

from Fred Terman

Emmons Terman."

at Stanford, pp. 124-125.

Notes 55.

From "Origins," a video

411

history of Hewlett-Packard, directed by

Robby Ken-

ner, 2005.

56.

3

Ibid., p. 40.

That

Damned Garage "How

Hewlett and

Wound Up

1.

David Packard,

The

Scientist, 1986; http://www.the-scientist.com/articles/display/8678/.

2.

Michael

Bill

Malone,

S.

ABCNews.com, Dec.

8,

"Silicon

I

Insider:

in a Palo Alto Garage,"

Remembering

the

HP

Way,"

2005.

HP alumni memories, http://www.hpalumni.org/.

3.

Anonymous

4.

David Packard, The

5.

Ibid.

6.

Ibid., p. 43.

7.

C. Stewart Gillmor, Fred

8.

The

9.

Michael

source,

HP Way, p. 42.

Terman at Stanford, pp. 127-128.

HP Way, p. 45. Malone, The Big

S.

Score, p. 32.

10.

The HP

11.

Source: William Hewlett Library.

12.

Ibid., p. 46.

13.

John Minck, "Inside HP: A Narrative History of Hewlett-Packard from unpublished manuscript for the HP alumni website (www.

Way

p. 46.

With permission of the Hewlett

family.

1939-1990,

hpalumni.org),

p. 4.

14.

The HP Way,

15.

Ibid., p. 48.

p. 47.

—

Southwest Museum of Engineering, Communications and Computation, www.smecc.org/hewlett-packard_the_start 2.htm. 16.

"Hewlett-Packard The Start

17.

The HP Way,

18.

Ibid., p. 52.

19.

Michael

2,"

p. SI.

McMahon

interview with William Hewlett, Nov. 27, 1984; IEEE

History Center, www.ieee.org/web/aboutus/history_center/index.html. 20.

Ibid.

21.

Ibid.

22.

The Big Score,

p. 33.

.

Notes

412

McMahon

23.

"Michael

24.

Ibid.

25.

Ibid.

26.

The HP Way,

27.

Ibid., p. 55.

28.

"Hewlett-Packard The Start— 2."

29.

The HP Way,

30.

Ibid., p. 56.

31.

Ibid., p.

32.

"Hewlett-Packard The Start

33.

From an

35.

The Big

36.

Bill

ics

p. 55.

—

2,"

"Microwaves

—A New

e-mail received in response to author's

Remembering

HP Way,

The

p. 59.

57-58.

"Silicon Insider: 34.

interview with William Hewlett."

the

Vista."

ABCNews.com column,

HP Way." Name withheld for privacy reasons.

p. 136.

Score, p. 35.

Human

Hewlett, "The

Side of Management,"

SMECC Vintage Electron-

Vol. 3, Issue 1(1991); http://www.smecc.org.

John Minck, "Inside HP: 1939-1990" p. 35.

37.

A

Narrative History of Hewlett-Packard from

38.

"Hewlett-Packard The Start— 2."

39.

The

40.

Fred Terman at Stanford,

41.

Michael

42.

Ibid.

43.

Ibid.

44.

Packard's quotes describing the

HP Way,

p. 64.

McMahon

p.

335.

interview with William Hewlett.

CEO

gathering are from The

HP

Way,

pp. 165-166.

4 1.

The HP Way Michael

McMahon

interview with William Hewlett, Nov. 27, 1984; IEEE His-

tory Center www.ieee.org/web/aboutus/history_center/index.html. 2.

"Hewlett-Packard The Start

—

2";

www.smecc.org/hewlett-packard_the_start__

2.htm. 3.

David Packard, The

HP Way, p.

1

3

1

Notes 4.

Ibid., p. 132.

5.

Ibid., p. 68.

6.

Ibid., p.

70

7.

Michael

McMahon

8.

The

9.

John Minck, "Inside HP:

413

interview with William Hewlett.

HP Way, p. 70. A

Narrative History of Hewlett-Packard from

HP

1939-1990," unpublished manuscript for the

hpalumni.org),

p.

10.

Ibid., p. 33.

11.

This

a

is

alumni

Web

site

(www.

31

exactly

what happened

meeting with Dave Packard

to the author,

an

HP intern, while waiting for

p.

328.

in 1979.

12.

"Inside HP," p.

13.

Ibid., p. 5.

14.

"Hewlett-Packard The Start— 2."

15.

C. Stewart Gillmor, Fred

16.

Michael

17.

"Inside HP," p. 31.

18.

These numbers are estimates, interpolated from the company's growth be-

S.

6.

Terman at Stanford,

Malone, The Big Score, pp. 48-49.

tween 1951 and 1956, for which numbers are bers for 1954. Source:

available.

HP never published num-

HP Archives.

19.

"Hewlett-Packard The Start— 2."

20.

The HP Way,

21.

Michael

22.

Ibid.

23.

The HP Way,

24.

Michael

25.

"Human Resources at Hewlett-Packard,"

26.

Ibid.

27.

Michael

28.

The HP Way,

29.

Ibid., pp.

30.

Ibid., p. 85.

31.

Ibid., p. 89.

p. 78.

McMahon interview with William

Hewlett.

p. SO.

McMahon interview with William Hewlett. 1992

HP Internal Report.

McMahon interview with William Hewlett. p. 82.

141-142.

Notes

414 32.

The Big

33.

The HP Way,

The

34.

the

full

Score, p. 65.

price of the stock itself

was determined by

either the closing average for

calendar quarter, or the average closing price of the

quarter, whichever 35.

Ibid., p. 85.

36.

Ibid., p.

37.

Ibid.

5

p. 65.

was lower. Source:

last five

days of the

HP Archives.

86

Community

1.

http://www.processedworld.com/Issues/issuel4/14emp85292.htm.

2.

David Packard, The HP Way,

3.

Ibid., p. 124.

4.

http://hp9825.com/html/hp_loveland.html.

5.

Michael

McMahon

p. 122.

interview with William Hewlett, Nov. 27, 1984; IEEE His-

tory Center, www.ieee.org/web/aboutus/history_center/index.html. 6.

The HP Way, p .111.

7.

Ibid., p. 102.

8.

Michael

9.

The

McMahon

HP Way,

10.

Ibid.

11.

Ibid., p. 104.

12.

Michael

S.

interview with William Hewlett.

p. 103.

Malone, "Silicon Insider:

HP

3000, RIP,"

2003. 13.

http://hp9825.com/html/the_9100_project.html.

14.

Ibid.

15.

Ibid.

16.

Ibid.

17.

Ibid.

18.

Ibid.

19.

Ibid.

20.

Ibid.

21.

Ibid.

ABCNews.com, Nov.

5,

Notes 22.

Ibid

23.

Ibid.

24.

Ibid.

25.

Ibid.

26.

Ibid.

27.

Michael

McMahon

28.

Michael

S.

415

interview with William Hewlett.

Malone, The Big Score, pp. 39-40.

John Minck, "Inside HP: A Narrative History of Hewlett-Packard from 1939-1990" unpublished manuscript from the HP Alumni Web site (www.

29.

hpalumni.org). 30.

Ibid.

31.

Ibid.

32.

From "Origins," a video

history of Hewlett-Packard, directed

by Robby Ken-

ner, 2005.

33.

Source of historical material for cesium clock section: by John Minck,

"Inside HP." 34.

Fred Terman at Stanford, pp. 484-487.

35.

The

36.

Ibid., pp.

37.

John Minck, " Inside HP."

38.

Ibid.

39.

Ibid.

40.

William

HP Way, p.

146.

146-147.

E.

Jarvis,

"Three Generations," http://jarvisnapa.com/3Genera

tions/102.html. 41.

Ibid.

42.

Ibid.

43.

Ibid.

44.

"Legends,"

45.

The

46.

Paul Swart, "William Hewlett, 1913-2001," Electronics Times, January 22, 2001.

47.

Bill

Hewlett, "The

Vol.

3,

Issue

HP video.

HP Way, p.

Ibid.

Human

1(1991);

_bill_hewlett.htm 48.

108.

Side of Management,"

SMECC,

Vintage Electrics

http://smecc.org/the_human_side_of_management_-

.

.

Notes

416 49.

Ibid.

50.

The HP Way, pp. 100-101.

51

William Hewlett,

"Random Thoughts on

Creativity."

A good condensed ver-

sion of the speech can be found at http://www.hp.com/hpinfo/newsroom/ hewlett/creativity.htm. 52.

Ibid.

53.

The HP Way,

54.

The author has done

cluding in

Bill

p. 127.

his

own

part over the years to perpetuate this myth, in-

Hewlett's obituary in the Wall Street Journal.

55.

John Minck, "Inside HP."

56.

Larry Gordon, " Father Figure," Stanford Magazine, March-April 200 1

57.

Ibid.

58.

Author conversation with Ned Barnholt, October 2005.

59.

The

60.

Ibid.

61

HP Way, p.

168.

Ibid., p. 175.

62.

Ibid.

6

Bastion

1.

Measure, December 1973.

2.

Robert

Boehm

S.

interview with Arthur Fong, William Hewlett Archives,

2005.

"Dave

& Bill's

3.

Eric Nee,

4.

Hal Plotkin, "The End of Hewlett-Packard as

Nov 5.

Resources

at

Hewlett-Packard,"

It?"

SFGate.com,

company white

paper, circa 1993.

John Minck, "Inside HP: A Narrative History of Hewlett-Packard from manuscript for the HP alumni Web site (www.

1939-1990," unpublished hpalumni.org). 7.

Ibid.

8.

Ibid.

9.

David Packard, The

10.

We Know

19,2001.

"Human

6.

Last Adventure," Upside, June 1991, p. 68.

Ibid., p. 179.

HP Way, p.

1

76.

.

Notes

417

11.

Ibid.

12.

Charles D. Bright, "Costs: Into the Stratosphere," chapter 11 of The

Jet-

makers: The Aerospace Industry from 1945 to 1972: http://www.generalatomic.

com/jetmakers/chapterl l.html. 13.

Ibid.

14.

Marcel Size Knaack, "Military

of the C-5A," Air Force History

Airlift

and Aircraft Procurement: The Case Program (Washington, DC: 1998),

& Museums

pp. 78-79.' 15.

Ibid., p. 81.

16.

Diana Roose, "Top Dogs and Top Brass:

An

Inside

Look

at a

Government

Advisory Committee," Research Consultant, National Action/Research on the Military-Industry Complex. Reprinted from The Insurgent Sociologist, Vol. 5, No. 3 (Spring 1975), pp. 53-63. Carried on the Web site of Prof. G. William Domhoff, Sociology Dept., University of California at Santa Cruz (http://sociology.

ucsc.edu/whorulesamerica/ )

HP Way, p.

17.

The

18.

http://www.airpower.maxwell.af.mil/airchronicles/aureview/1985/sep-

185.

oct/smith.html. 19.

The HP Way,

20.

Ibid., p. 180.

21.

Ibid, p. 181.

22.

John Minck, "Inside HP."

23.

"Tom

p.m.

Osborne's Story in His

Own

Words," http://www.hp9825.com/html/

osborne_s_story.html. 24.

Ibid.

25.

Ibid.

26.

John Minck, " Inside HP."

27.

"Tom

28.

"Origins" video, quote from

29.

Jon Minck, " Inside HP."

30.

Ibid.

31.

Ibid.

32.

Ibid.

33.

Source:

34.

"Tom

Osborne's Story in His

Bill

Own Words."

Bill Terry.

Terry

Osborne's Story in His

Own Words."

Notes

418 35.

Ibid.

36.

"Origins," quote

37.

"Inside HP."

38.

"Origins" video.

39.

The HP Way, p.U2.

40.

"Inside

41.

"Tom

42.

Ibid.

43.

"Origins" video, quote from Steve Wozniak.

44.

Michael

from Steve Wozniak.

HP"

Osborne's Story in His

S.

Malone,

Infinite

Own Words."

Loop (New York: Doubleday/Currency, 1999),

p. 41.

45.

Ibid., p. 28.

John Boudreau, "Didn't Want to Change the World, Just Wanted to Work on Computers," San Jose Mercury-News interview with Steve Wozniak, March 26,

46.

2006. 47.

Infinite Loop, p. 65.

48.

The author was

49.

Bob Green, "The History of

a

member

of the HP-01 the

HP

PR team.

3000," http://www.robelle.com/library/

smugbook/classic.html. 50.

Ibid.

51.

Ibid.

52.

Katherine Lawrence, "The

all,"

http://www.pingv.com/blog/katherine/200508/the-hp-way-misunderstood-

HP Way— misunderstood. Bottom

line

trumps

bottom-line-trumps-all. 53.

"The History of the

54.

Ibid.

55.

Ibid.

56.

Ibid.

57.

Ibid.

58.

Michael

S.

HP

3000."

Malone, "Silicon Insider:

200: 59.

Ibid.

60.

The

61.

Ibid., p. 163.

HP Way,

p. 161.

HP

3000, RIP,"

ABCNews. com, Nov.

4,

Notes

7

419

Legacy

l.

David Packard, The HP Way,

2.

Ibid., pp.

3.

Ibid., p. 74.

4.

Ibid.

5.

Ibid., p. 75.

6.

Ibid.

7.

Ibid.

8.

Dan

p.

72

72-73.

Gillmor, "The Indelible Legacy of

Bill

Hewlett," Computerworld Jan. 29, y

2001. 9.

Michael

S.

Malone, "Silicon Insider: Good, Hard Work: High-Tech EntrepreMake the World a Better Place," by ABCNews.com, Nov.

neurs Are Setting Out to 19, 2003.

10.

From

the

William and Flora Hewlett Foundation

Web

page:

www.

hewlett.org. 11.

full disclosure, the Flora Foundation was a secondary unOregon Public Broadcasting) of the PBS miniseries The New Hewhich the author was co-producer.

In the interest of

derwriter (via roes, for

12.

Larry Gordon, "Father Figure," Stanford Magazine, March-April 2001;

http://www.stanfordalumni.org/news/magazine/2001/marapr/features/hewlett. html. 13.

C. Stewart Gillmor, Fred

14.

Ibid.

15.

The

Terman at Stanford,

16.

Ibid.

17.

Ibid.

18.

Marcia McNutt,

sented at the

"How One Man Made

Ibid.

20.

Ibid.

21.

Ibid.

22.

Ibid.

23.

Ibid.

Jessica Lyons,

a Difference:

symposium "Oceanography: The Making of

2000, Scripps Institution of Oceanography. 19.

491.

Monterey Aquarium comes from County Weekly, Oct. 25, 2001.

story of the

Legacy," Monterey

p.

"Big Dave's

David Packard," pre-

a Science," February 8,

420

Notes

24.

Ibid.

25.

Ibid.

26.

Ibid.

27.

Ibid.

28.

"Father Figure.

29.

Ibid.

30.

Ibid.

31.

Ibid.

32.

Ibid.

33.

Ibid.

Joseph Moriarity, "Devoted to the Heart," Minnesota Medicine, Vol. 84 (December 2001); http://www.mmaonline.net/publications/MnMed2001/December/ 34.

Moriarity.html. 35.

David

Pierpont

Gardner,

"William

Redington

Hewlett,"

http://www.

hewlett.org/AboutUs/wmHewlettBio.htm. 36.

"Father Figure."

37.

"William Redingon Hewlett."

38.

The source of

this history

of laser printing

is

"Early Laser Printer Develop-

ment," The Printer Works; http://www.printerworks.com/catalogs/cx-catalog/cxhp_laserjet. 39. Andrew Pollack, March 10, 1992.

"Hewlett's

'Consummate

Strategist' "

New

York Times,

40.

Ibid.

41.

Ibid.

42.

"Close-up on Color Printing," interview with John Meyer, April 2004.

HP

publication: http://www.hpl.hp.com/news/2004/apr-jun/color_printing.html. 43.

John Minck, "Inside HP:

A

Narrative History of Hewlett-Packard from

1939-1990," unpublished manuscript for the

HP

alumni

Web

site

(www.

hpalumni.org). 44.

"Close-up on Color Printing."

45.

Ibid.

46.

Deborah Hudson, "The

Jet Set

Turns

20,"

new.cgi?IN=referrer. 47.

"Inside HP."

48.

The

author, in the San Jose Mercury-News.

http://www.hp.com/cgi-bin/pf-

Notes "Dave and

Last Advernture," Upside, June 1991, p. 40.

49.

Eric Nee,

50.

Ibid.

51.

Ibid.

52.

Ibid.

53.

Ibid.

54.

Ibid.

55.

Anecdote from "William Hewlett," by

Bill's

421

Source for the workstation history: pp. 41-42.

Jeff Bliss,

Computer

Reseller

News,

www.crn.com/sections/special/supplement/763/763p45_hof.jhtml. 56.

Lucile Packard obituary,

57.

Michael

S.

San Jose Mercury-News,

May 31,

1987.

Malone, "The Packard Way," San Jose Mercury-News, March

31,

1996. 58.

Ibid.

59.

The quotes

are

Sadler Consulting,

from the author's correspondence with Bob

Sadler,

CEO,

May 2006.

60.

Ibid.

61.

Ibid.,

62.

Ibid.

63.

Ibid.

64.

Ibid.

65.

Ibid.

66.

Ibid.

67.

TheHPWay,pA63.

68.

"The Packard Way."

69.

"Dave and

Bill's

70.

"Hewlett's

'Consummate

71.

" The

72.

Author conversation with Robert

emphasis added.

Last Adventure." " Strategist.'

Packard Way." S.

Boehm, August

15, 2006.

The source of the quotes from the Packard memorial service is "Farewell to David Packard," Palo Alto Online, April 3, 1996. http://www.paloaltoonline.com/ weekly/morgue/news/1996_Apr_3.PACKARD.html. 73.

74.

George Anders, "The Carly Chronicles," Fast Company, Feb. 2003,

p. 66.

75.

The

should be

story, as here presented,

noted that Arjay Miller,

who was

was provided by Walter Hewlett.

It

present at the event, in telling the same anecdote

often leaves out the mild obscenity in Hewlett's quote.

.

Notes

422 76.

Author interview with Jo Ellen Sako, June

77.

Ibid.

78.

Larry Gordon, "Father Figure," Stanford Magazine.

79.

"William Reddington Hewlett."

80.

"William Hewlett," Computer Reseller News.

81.

"Father Figure."

82.

Michael

S.

Malone, "The Soul of the

HP

5,

2006.

Way," Wall Street Journal Jan.

16,

2001. 83.

Ibid.

The details of the Hewlett memorial service come from Jennifer Dietz Berry, "Remembering Bill Hewlett," Palo Alto Online, http://www.paloaltoonline.com/ weekly/morgue/news/2001 Jan_24.HEWLETT.html. 84.

The Last

Afterword: 1.

Peter

Burrows and Ben

Business Week,

March

Gift "The Surprise Player Behind the Coup

Elgin,

14, 2005. pp.

2.

Ibid.

3.

Ibid.

4.

Author interview with

5.

Jocelyn Dong,

at HP,"

36-37.

Jo Ellen Sako.

"The Rise and

Fall

of the

HP Way," Palo Alto

Weekly, April 10,

2002. 6.

Michael

com,

S.

Malone, "Silicon Insider:

Bill

and Dave's Last

Gift,"

ABCNews.

May 20, 2003.

7.

" The

8.

Ibid.

9.

Forbes,

Rise

and

Fall

December

of the

HP Way."

1999.

13,

Referenced in http://www.gale.com/bizdev/

biography.htm.

Forte, June

2001.

10.

Ibid.,

1 1

George Anders, " The Carly Chronicles."

12.

This team included Steve Neal and Keith Flaum of Cooley

11,

and Spencer Fleischer and Tully Friedman of Friedman, Fleischer 13.

" The

14.

Dawn Kawamoto and Rachel Konrad, "HP Merger to Go Away," by CNET.News.com March 19, 2002.

Seem

Godward

LLP,

& Lowe.

Carly Chronicles." Duel: Fervor Just Won't

Notes 15.

Michael

16.

Peter

17.

Ibid.

18.

Adam

S.

423

Malone, "Bill and Dave's Last

Burrows and Ben

Lashinsky,

"Can

Elgin,

Gift."

"The Surprise Player Behind the Coup

HP Win

Doing

It

the

Hurd Way?"

at

HP."

Fortune, April

3,

2006. 19.

Ibid.

20.

Ibid/

21.

Michael

2005.

S.

Malone, "Silicon Insider: The

HP Way," ABCNews.com,

Feb. 10,

ndex

* (asterisk),

used in

text, 6,

393-402

Addison Avenue garage: contract work in, 66-69

myth

vs. reality of,

Ask Computer, 370 AT&T, 28, 366 Atari,

132,277,279

71-72, 80, 83, 222, Bagley,Al, 113, 133, 151,377,391

230, 374 restoration of, 1-2, 4,

10,

1

387-88

Bank of Italy/Bank of America, 85

Adobe PageMaker, 329 Advanced Micro Devices, 158

Bardeen, John, 109

Agilent Corp., 131, 237, 365, 385

Bartz, Carol, 354

Barnholt,Ned,214,237,365

Allen, Paul, 54

Bauer, Brunton, 84

Gordon, 32 Amazon, 220 American National Standards

Baxter,

Allott,

Chuck, 313

BEA software, Institute

Beckman

310

Laboratories, 137

Behn, Sosthenes, 95

(ANSI), 176

Ampex Corporation, 65,

109, 122, 123,

200

Bell,

Bell,

Anders, George, 381

Bell

Anderson, Charles, 347

Alexander Graham, 271

John "Tinker," 80, 82, 85 Telephone Labs, 21, 124-25

Apollo Computers, 103, 119, 341-42

Belluzzo, Rick, 345

Apollo space program, 107, 203, 204,

Berg, Russ, 200, 273

248

Bezos,

Apple Computers, 54, 132, 220 advertising and PR of, 197, 200

Apple

I

prototype, 279-82, 293,

324

Bill

Jeff,

220

and Dave:

business lessons learned by, 68-69, 83,

86,141-42,328 business proposal

Apple

II,

Apple

III flaws,

179, 187,292

evolution

of,

288-89 325-26

HP as model for, 3,

148-49, 199, 277,

281-82

52. 95, 109, 115,

business values

of,

53-54

of, see

character choices

complementary

HP Way

made by,

5,

170

traits of, 36, 51, 54,

100, 128, 214, 235, 245-47, 261, 262,

269, 293-95, 339

iPod,331

Great Return

IPO

as industry leaders, 100, 114, 215-19,

of,

282

Macintosh, 282, 323, 329

Applied Materials, 199

of,

348-55, 364

237, 245

knowing when

to intervene, 162,

Arms, Dick, 84 Armstrong, Neil, 225

legacy of, 379

Army Signal

management evolution

Corps, 90, 91

179-80,298,348,355 of,

180

426 Bill

Index

and Dave,

California:

(cont.)

made by,

mistakes

81-82, 134-35, 222,

285 as

in, 76, 122, 152,

248

early radio in, 19

more equal than

others, 162

mutual trust of, 54, 146 outdoor interests shared

industrial

politics,

ranches

by, 36, 38-39,

of, 142,

151-52

migration

to,

in,

111

120-21

Canon, 264, 327, 329 308-12

of,

Capellas, Michael, 383

Carnegie, Andrew, 308

241

38-39, 127-28, 236, 253,

of,

growth

Japanese Americans interned

42,49,54,128 philanthropy

and

aerospace industry

370

Casio, 324

Casper, Gerhard, 320-21, 371

realism

of,

152-53

Cavier, Frank, 125

and retirement, 298-301, 303, 304-5, 312-13,318-19,348-55

Chambers, John, 381 Chiang Kai-shek, 306

as role models, 81, 220, 234, 237, 239,

China,

304-5,310-11,335 at Stanford, see stories,

HP

Chognard,

Stanford University

myths, and legends

of,

11-12,

in, J.

305-8, 334

C, 282

Chouinard, Jean, 151 Cisco Systems,

199,381

3,

35, 38, 73-74, 83-86, 102-3, 104-5,

Clemens,

120, 217-19, 221-25, 230, 233-37,

Cochran, Dave, 185, 186, 188, 269, 275

287,336,337,389,391 Terman's influence on, see Terman, Frederick

Emmons

of, 220-22 and Varian brothers, 62-63

transformation

see also Hewlett,

William Redington;

Packard, David

Birnbaum,

Joel,

391

Boehm, Robert,

45,

Jay,

165

cold war, 120,204,305-6

Coleman, William T., 310 Colorado Springs, HP in, 172, 193 Committee on the Present Danger, 305-6 Compaq Computer, 290, 373-74, 378-79 and merger, 384-85, 388 and proxy fight, 379-83, 384

Compton, Koral

T.,

92

computers, 173-80

362

Boeing, 365

BASIC used

Boniface, Bob, 300

Boston Consulting Group, 325

and calculators, 174-75, 271,273,276-77

Bowmar, 264, 275

changing the nature of work, 173

Bradford, Rosemary, 319

CISC (complex

BrandimAlf, 136-37

in,

280, 286 188, 264-66,

instruction set

computing), 323

Brattain, Walter, 109

client-server architecture, 323

Bright, Charles, 254

desktop, 237, 264

Brin, Sergey, 311

digital control, 62,

Brown, John, 139

ENIAC, 173,272

Built to Last (Porras), 226, 297

handheld, 325

Burlingame, David, 90

and

Nancy and Robin, 313, 346 Burroughs, and computers, 173

IEEE-488, 175

and information gathering, 173-74

Bush, Vannevar, 23-24, 27,

laptop, 364

Burnett,

1

10

HP

295

Interface Bus, 93, 175-76, 295

295

Bushnell, Nolan, 279

logic in,

Busicom, 265, 266

mainframe, 173, 187, 303 microprocessor chips

Buss, R. R., 55 Buttner, Harold, 73,

Cage, John, 49 Cahill,

F.

C, 55

84-85

in, 174,

204, 295

minicomputers, 286 Omega project, 177-80 PCs, 62, 93, 189, 264, 276, 283, 284,

291,323-24,364

427

Index PDP-11

Eastham, Melville, 74, 83

architecture, 174

precursors

of, see electronics

and printers, 291, 326-33 RISC (reduced instruction

industry

Edison, set

World War

II,

232

20,

Eitel-McCullough,41

184, 187

Eldred, Noel, 53, 84, 94, 95

and smart instruments, 173 stand-alone minis, 176-77 touch-screens, 323-24 workstations, 341-42 in

Thomas A.,

Eichler, Joseph, 121

Eisenhower, Dwight D., 260

computing), 323, 341

ROM in,

eBay, 199,277,310

and customer advocacy, 174 death of, 209-10

and

HP marketing,

1 1 1,

124, 125,

197-98, 200, 209, 213, 224, 273

108-9, 173

Copeland, Jack, 95-96

electroencephalograph, design

CORDIC,

Electronics, 53, 55

181, 184, 185, 186

HP in, 280-81,

Oregon, 282-85

Corvallis,

Cottrell, Carl,

52

electronics, coining of term, 39

electronics industry:

age of instruments (second

376

Council of Foundations, 240

generation), 25

Crosley, Al, 87

aircraft

Cupertino, California,

HP in,

177, 178,

landing system, 84

amplifiers, 20, 21

atomic clock, 204-7

277, 283, 370 Cutler, Len,

for,

audio and video recording, 65, 122,

205

123,204

Dalmo Victor,

binary numbers

65, 67

in,

181

Dassault Company, France, 258

birthplace of, 39, 72

Data General, 349

boom and bust cycles of,

Data Systems,

Inc.,

David and Lucile Packard Foundation, 309-10,312,317,346 David Packard Award for Excellence, 256, 260, 304 "Deacon's Masterpiece, The" (Holmes), 358-59 Defense, U.S. Department

of,

242, 243,

253-61

180-89,204,

265-77, 283, 284, 324-25

communications networks, competitors

in, 74, 86, 87,

175,

203-4

139-42, 152,

168, 173, 189, 230, 264-65, 275, 287,

324-25

component design and consumer market

de Gaulle, Charles, 137

testing,

203

3,

co-op education 378, 379, 385, 388,

389

in,

corporate publicity

1

284

15

in, 197,

200-201

desktop publishing, 329

Demere,Ray, 110, 143,300 Deming, W. Edwards, 169 Deming Prize, 270 Diablo printers, 327 Digital Equipment Corp. (DEC), 174, 176, 179, 218, 237, 286, 287, 292, 349 Dirksen, Everett, 259 Disney,Walt,74,219 Doolittle, Bill, 84, 95, 143,

300

Doyle, John, 251

C,

digital circuits, digital

88

computers, 62, 295

digital watches,

284-85

early radio and, 14, 21, 27-28, 36, 43

electromagnetic resonator, 60 evolution

feedback

of,

303, 325-26, 389-90

circuits,

frequency

drift,

52-53, 55, 57, 58, 72

204-5

growth of, 89, 98, 109, 111, 122, 151-53,247-48

HP Interface Bus, 93,

Doyle, Morrie, 363 Patricia

in, 27, 57, 67, 108,

120, 247, 264, 271, 273-76,

220

Dell Computer,

Dunn,

calculators, 174-75,

computers, see computers

de Forest, Lee, 19-20,21 Dell, Michael,

106-7, 108,

113,247-48

286

366, 386

175-76, 295

information processing, 108-9

428

Index business before product, 54

electronics industry, (cont.)

forward-looking, 99, 283

integrated circuits, 62, 157, 173, 191,

265

and

friendship before partnership, 54, 94

Internet, 23,

204

innovator's

dilemma

job-hopping, 198-99

iPod,331

partners

of,

klystron tube, 62-64, 67, 108

personal

traits of, 215,

lettuce thinner, 134

and

LSI logic, 265

prototypes

magnetic card reader, 276

and Valley culture, 283 and venture capital, 206

memory chips,

265, 283

microprocessor chips, 174, 204, 295

220

politics,

217

241

of, 19,

64-66, 81, 304

Europe:

microwave signal generators, 98-99 microwave transmitters, 62

high-tech industries

miniaturization, 172

postwar reconstruction

Moore's law

in,

230

of,

ion implantation, 266

HP expansion to,

172-73, 177, 206, 248,

European

in,

206 155-56

143, 152,

120

of,

Common Market,

143, 168

265

network synthesis and oscillators,

analysis, 49,

203

55-57, 58, 62, 67, 68, 72,

F&M

Scientific

Corporation, 193

Faggin, Federico, 265

73-76,99,110

Fairchild Semiconductor, 122, 157, 158,

oscilloscopes, 99, 107-8, 140-41, 152,

204

160,172,190,195,199,283 Fantasia (movie), 75

patents, 73

Farnsworth, Philo, 41, 60

photoconductor keyboard, 267 printers, 326-33

Federal Radio, 76

Reverse Polish Notation (RPN), 271,

Fernandez,

Federal Telegraph, 19-22, 24, 41, 54

272

rhumbatron, 60, 61

slide rule, 180, 188,

272

389

smart instruments, 173 standards

in, 93,

175-76, 295

layoffs by, 375,

and proxy

synthesis of, 26

timing as challenge

in,

204

E

tubes

(first

172-73

379-83, 384, 385

L.

Mosely Company, 155

Flora Foundation, 310

generation), 19, 20,

Fluke, John, 49

24-25,26,41,67,109 video games, 284

Fong, Art,

wireless telecommunications, 108

Ford, Henry, 219

Ellison, Larry,

376-78, 384

fight,

Flehr, Paul, 134

toruses, 61 transistors, 109, 152,

373-87

and Compaq, 373-74, 378-79, 383, 384 fired by board, 386-87 and HP Way, 374, 377, 379, 383, 384,

204, 247-48, 283

vacuum

277

Fiorina, Carly, 2, 365-68,

semiconductors, 157, 158, 170, 189-92,

and

Bill,

Finch, Nate, 143

1

10, 236, 245, 312, 369,

Ford, Gerald R., 311

Fort Collins, Colorado,

220

Fortune 500

Elwell,Cy, 19,22,23,27,303

list,

HP

in,

193

167

employees, rethinking of the term, 3

Foster, John, 258 Foxboro Co., Massachusetts, 168

ENIAC, 173,272

Frankel,

entrepreneurs:

Frankel, Stanley

Ely, Paul, 214, 289, 290, 292, 300, 339,

391

becoming executives, 163, 166, 215, 219-22 becoming industry leaders, 166, 214, 219,220,235

Herman, 62 P.,

181

Frankenberg, Bob, 373 Franklin, Jack, 22

FridenCorp., 183,264 Funston, Keith, 167-68

391

1

429

Index Gamesman, The (Maccoby),

343, 373

Hewlett, Albion Walter (father), 15-18,

Gardner, David Pierpont, 322

Gates,

Bill,

Genentech, 347-48 General Electric (GE):

consumer electronics, 109 Dave's work with, 42-43, 47-49, 1

50, 51,

15

Getty,

J.

HP in,

Hewlett, Louise

(sister), 16,

Mary Joan

Hewlett,

Rosemary Bradford (second

(daughter), 78

372

143, 155, 193

143, 155-56, 193, 196,

319-20, 322,

father, 235, 236,

372

1 1

birth of, 78

and proxy

fight, 346,

379-83

Hewlett, William Albion (son), 78 Hewlett, William Redington "Bill":

Paul, 308

208, 235, 299

Gillmor, C. Stewart, 136

age

Ginzton, Ed, 53, 58

awards and honors

Girdner,

78

Hewlett,

about his

General Radio, 73, 74, 75, 89, 109,

HP in,

299

Hewlett, Walter Berry (son):

General Motors (GM), 144

Geneva, Switzerland,

death

wife), 319, 322,

Microwaves division, 137

Germany, 207

of,

of,

77-80

(wife),

78-79, 93, 236

children

Hewlett, James Sterry (son), 78

in

58-59,67,101 education programs in, lack of trust in, 104-5

Lamson

Hewlett, Flora

1,356

54, 220, 31

369

33, 34,

Hewlett, Eleanor Louise (daughter), 78

Garvin, Dick, 197-98,200

Bill,

84

of,

birth

Glen, David, 369

to,

and childhood

business lessons

344-45

of,

15-18

93

of,

Green, Bob, 286-88, 289, 290

231-33 and Dave's death, 362, 363, 368 in Dave's Washington years, 242, 243, 245,246-47,261,262,263 death of, 371-72

Green, Mike, 289

fire in

Gregg, Robert, 321, 363, 371

"hat-wearing process"

Grove, Andy, 220

health problems of, 319, 345, 360

gyrator, invention of, 190

high school years

Google,

3,

199,277,311,354

Granger, John

V.,

creativity investigated by,

12

Great Depression, 33, 37, 38, 39, 41, 42,

51,54,58,85,153,216

and Hackborn, Richard, 214, 342 and Fiorina, 36567, 373-74, 378, 381, 384, 385, 386 and management succession, 340, 355, 356-57

and

printers, 327, 328-29,

331-33

Hackett, Jeremy, 367

Haeff,Andy,98 Hance, Harold, 84

as

home

371

of,

of,

229, 231

of,

33-34

his father's death, 17-18, 33

HP founder,

1;

see also Bill

and Dave

in later years, 319-23, 344-45,

367-72 mechanical genius

of,

10-1

1,

34, 56-58,

87-88,133,237,371 at MIT, 23, 26-27, 45, 49, 50 and new product development, 185-89, 230-31, 262, 264, 265-66, 268-70, 282, 293-94, 303

Hansen, William, 59, 60, 61, 62, 63, 136 harmonica tuner, 68

personal

Harvard Radio Research Lab, 110, 114 Haughton, Daniel J., 254, 255, 256 Hawkins, Bud, 75 Hawthorne effect, 228 Heintz and Kaufman, 84, 94 Helms, Richard, 258 Hendy Iron Works, 1 12 Herrold, Charles David "Doc," 19, 21

philanthropy

traits of, 36, 44,

50-51, 105,

216, 217, 222, 246, 278, 320, 321-22

Porsche

of,

programs

of,

308-9, 310-12, 322

236

to keep in touch,

radio as interest

of, 21, 34,

226-33

36

as risk- taker, 34, 216, 262, 268,

and Stanford

football, 10,

1 1,

as Stanford student, 34, 35-38,

43-45

273

34

40-41,

430

Index

Hewlett, William Redington

"Bill," (cont.)

and Terman's paper, 55-56, 58 and World War II, 90-93, 1 10, 209 Hewlett Family Library, 362

as global

company, 143, 156, 166, 193,

247 as gold standard,

Hewlett Foundation, 309, 310, 322 Hewlett-Packard Company: acquisitions of, 153-55, 193, 341-42,

379

group organizational model of, 211-12, 288 growth of, 85, 95, 98, 113, 119, 123, 134, 142-43, 144, 151-56, 167-69, 193,

Advanced Products Division, 277, 280-81,282-85 advertising and PR in, 197-201, 205-6, 222, 223, 273-76 anachronistic image of, 340-41, 377

210, 214, 237, 246-47, 252, 323, 348,

355 handshake deals headquarters

annual planning process

incorporation

144

of,

293-95

342-43,

HP Way

in, see

centralization/decentralization cycles

179, 275-76,

342, 389

continuity

299-301, 333-34, 335, 339-40,

work

125 of,

66-69, 76, 77, 98 of,

88-89,

1

14,

media focus on, 296-97, 308, 381-82 on New York Stock Exchange, 159 next-bench market research

Nine-Day Fortnight

149-50, 242 culture of, 86, 125, 138-39, 145, 146,

open

198-99, 233-34, 280, 296-97, 338

partnership

division-based structure

of,

144-45,

151-53, 162, 171-72, 192, 193, 194,

210-11

in,

in,

184

249-52, 294,

303, 375

150, 154, 156-57, 162, 192, 193,

floor layout in, 101, of, 71, 90,

138-39

113

patents of, 74, 134

postwar survival

of,

99-101, 106-7,

113

Dow Jones industrials, 364

employees

of, see

Hewlett-Packard

products

of, see

of, 80, 146, 162, 166,

193,216,

Hewlett-Packard

products

and proxy

employees family

100, 119, 124-25,

143,144-51,171,209,214 manufacturing, 76, 80

in,

corporate citizenship

in

210-13

Management by Objective, 145-51, 153 management succession in, 210, 212,

management team,

company, 192

and competition, 139-42,

contract

154

354-59, 365

212

as closed

of, 142, 143,

local decentralization of,

348-53 business philosophy

13

internal publications of, 200, 227

IPO

117 in,

1

intangible assets of, 100

building for long-term success, 109-10,

bureaucratic inertia

of, 69, 71, 74,

336-37

Instrument Group, 295-97, 324, 342

archives of, 262, 342, 360, 391

boundaries

108

80-83, 89, 100,

101, 131, 137-39, 142, 171,

HP logo of, 2

of,

of, 76, 86,

of, 66,

anniversaries of, 116, 118, 167, 245

in,

54, 114, 118, 136,

1, 3,

145, 199, 338

fight,

379-83

quality reputation of, 100, 105, 139,

169,170,176,210,324

234, 296, 365

finances of, 77, 85-86, 89, 90, 95, 100, 113, 119, 139, 142, 153-54, 160, 166,

R&D,

171-72, 175, 177, 180, 262,

330-31 298-301

220, 237, 252, 296, 323, 334, 348, 349,

retirement date

364, 384, 386

sales reps of, 76, 87, 107-8, 140, 174,

founders

of, see Bill

and Dave; Hewlett,

William Redington; Packard, David

founding

of, 1, 40,

garage origins

garage

53-54, 66, 94, 303

of, see

Addison Avenue

in,

194-96,212,213,251 shareholders

Sonoma

of,

159-63, 379, 382

retreat of, 144-51, 171,

stock price

of,

228, 385, 389

Hewlett-Packard employees:

223

1

Index bond of founders

and, 102, 126, 129,

431 analyzers, 87, 203, 237, 295-97, 326

Architecture for Color Imaging, 332

131,143,194,350 casual Fridays, 132

atomic clock, 204-7

Christmas bonuses, 89, 101, 129, 193 coffee break tradition, 129-31

calculators, 156, 180-89, 265-77, 283,

company

check processing, 263-64

picnics, 125-27, 129, 139, 193

and Compaq

324-25 computers, 156, 173-80, 189, 237, 247,

assimilation, 384

264, 281, 282, 286-92, 323-24, 329,

corporate personnel department, 194

338-39

eccentric but talented, 185, 228,

empowerment

of, 5, 148,

150

125-27, 131, 146, 166,

of, 124,

Fiorina's layoffs of, 375, 376-78, 77,

decade counters, 139 "exothermic" creation

193,228 first hires,

consumer market, 273-76, 281

Cricket calculator- watch, 281, 284-85

executive build-offs, 228-29, 231

family

364 in

384

expanding

of,

186

line of, 87, 89, 100, 111,

113-14, 119, 132-35, 139, 152, 156,

84

262, 293, 326, 334

flex-time, 201-2, 216, 293

Friday beer bust, 131-32

fetal

gap between founders and, 161-62, 241

frequency counters, 132-33, 139

G-jobs, 263-64, 279

gas chromatographs, 193

and and

HP Objectives, 147, 148, HP Way, see HP Way

149

and Nine-Day Fortnight, 249-52, 294

numbers

HP-35 pocket

calculator, 225, 252,

265-76, 277, 281, 293, 294, 303

morale of, 131, 237, 247, 251-52, 376-78 nondiscriminatory hiring

heart monitor, 207, 326

of, 1

1

of, 113, 119, 132, 139, 142,

166, 167, 193, 210, 220, 237, 296, 323,

HP-65 pocket calculator, 276-78, 281 HP 3000 computer debacle (Alpha), 286-92, 293, 294

HP 9000 desktop computer, 323, 341 HP Interface Bus (HP-IB), 93, 175-76, 264, 295, 324

industry impact

334, 342, 348, 384

personnel benefits, 100-101, 114, 126,

187-88, 189, 204,

of,

206, 234, 271-73, 276-77, 281, 326

information output devices, 155

148,216,237 polling of, 227-28

inventory control, 370

postwar, 100, 110

market

profit-sharing, 89, 101, 129, 149, 154,

mass spectrometers, 193 microwave instruments, 98-99, 111, 112,132-33,139,197,203

201 responsibilities held by, 146,

293

viability of,

294

stock purchase plan, 159-63, 201

MPE operating system, 287, 291

telecommuting, 364

nuclear weapons testing, 206

in

World War

II,

90-91, 94-95, 101,

Hewlett-Packard products:

200A

oscillator,

Omega project,

177-80, 286-87

optoelectronics, 326

105, 106

73-74, 80, 87,

oscilloscope, 1

10,

133-34,222,224,262,342

200A Time-Shared Basic Design, 286 200B oscillator, 75, 80, 87, 134 200D oscillator, 134 205A oscillator with gain control, 87-88

PCL

225-26

(printer control language), 329

pricing of, 73-74, 75, 77, 222 printers, 155, 291, 326-33,

364

pulling the plug on, 153, 177-79,

224-25, 230, 261, 286, 288, 293,

294 semiconductors, 189-92

210A square wave generator, 88 300B oscillator, 82 428A probing ammeter, 263

in space race,

amplifiers, 263

synergy among, 179, 203-4, 264, 329

spin-offs,

203-4 364-65

"suite" of, 87

432

Index

Hewlett-Packard products,

(cont.)

integrity, 107, 114, 117, 224,

and measurement instruments, 139,173,203,237,295,296

test

80,

voltmeters, 111-12, 113, 134-35, 139,

171

247, 249-52, 326, 351-52, 353

393-402

lessons of,

83-86, 96, 105-8, 123-24, 127,

loyalty,

workstations, 341-42

X-Y

202,211,251-52

Management by Walking Around,

plotters, 155

48-49,101-2,138,229,349 myths and stories in, 222-25 and Nine-Day Fortnight, 249-52

Hipps, Bob, 171

Hoar, Fred, 200 Hoeffler,Don, 158 Hoerni, Jean, 172,219

Open Door

Hoff, Ted, 265

pitfalls of,

Hogan, Lester, 190-91 Holmes, Oliver Wendell, 358

preservation

Homebrew Computer Honeywell

printers,

Jr.,

Policy, 101-2, 229,

of,

293-95, 297

148-49, 222, 224, 230, 250,

294, 389

Club, 279-80, 281

promotion from within, 211,212-13

327

the right thing to do,

5, 86, 1 14, 1 17,

216,224,289,292

20, 27, 28

Hoover Institution, 311 Hopkins Marine Station,

249

292, 295, 327, 349

profits, 97,

Hoover, Herbert, 39

Hoover, Herbert

289

layoffs avoided, 106-8, 148, 149, 216,

as social contract, 292-93, Pacific Grove,

313

375

teamwork, 116, 277, 292, 340 trust,

House, Chuck, 225-26, 231, 317

85-86, 104-5, 106, 146, 148, 149,

161, 162, 216, 222, 228, 267, 299, 326,

Hovden,Knut,313

342-43, 348, 390

HP Associates, 190-92, 224 HP Corporate Objectives, 147-50,

HP Way, 194,

The (Packard):

on corporate

objectives, 144, 150,

360-61

223, 293, 390 Citizenship, 147, 148, 149-50, 201, 242,

308-12

on employee contact, 126 on management, 11, 144, 229, 300, 354

Customers, 147, 149 Employees, 147, 148, 149

on pulling the

plug, 177

Field of Interest, 147, 148

stories told in,

96-97, 222, 223, 233,

234

Growth, 147, 149 in

HP Way,

360-61

144, 150,

writing

Profit, 147, 148, 224,

"Human

250

HP Journal, 200,227 HP Way, 116-18 anachronistic image

of,

223, 297, 359-61

Hughes, Howard, 314

Organization, 147, 149

Side of

Management, The"

(Hewlett), 227

Hurd, Mark, of,

2-3, 86, 342,

2,

388-89

hypertext, theories on, 23

377, 390

and community, 88-89, 148, 166, 196,201-2,308-12 core competence as focus, 134

194,

IBM: and calculators, 183 and competition, 218, 237, 287, 290, 378

Corporate Objectives, 147-50, 194, 201 educating

new

hires in, 193, 195

and family, 80, 124, 146, 159, 166, 193, 216,222 and Fiorina, 374, 377, 379, 383, 384, 389

and and

computers, 109, 173, 175, 178, 179, 287, 290, 292, 323, 324

reputation

of,

87

suite of products in, 87,

326

In Search of Excellence (Peters

216 Associates, 191-92

flex-time, 201-2,

HP

in

imitation of,

1, 3,

290, 315, 385

and

Waterman), 297 Institute of Electrical

and Electronics

Engineers (IEEE), 148, 195

1

433

Index Institute of

Radio Engineers (IRE), 56, 58,

Intel

and

and PR

in,

of, 54,

122,220,310

HP as model for, 3, and integrated

258, 306

Korean War, 120 Krause, Bill, 300 Krause, Ed, 339

197

Fairchild, 158

founders

Henry A.,

Knaack, Marcel, 254-55

Corporation, 174, 289, 325

advertising

Kissinger,

Kleiner, Eugene, 122

73,75,113,116,148

Kurtzig, Sandra, 370-71

199

circuit technology, 173,

Lacy, Pete, 217

265

Laird, Melvin, 240, 241-43, 253, 255, 259

International Electrotechnical

Commission

LandWatch Monterey County, 318

(IEC), 176

Lang, Ray, 220

International Survey Research

Lawrence, Katherine, 287

Corporation, 227

and Telegraph

International Telephone

(ITT), 73, 84-85, 87, 95

Lee, Ralph,

1

10, 248, 283, 289,

299-300

Lee, Russell V., 25

Leibson, Steve, 172, 184, 187

Internet, precursors of, 23

Lewis, Karen, 360, 391

Intersil,

158

Jackson,

Henry "Scoop,"

Lick Observatory, 67 305, 306

Little

competition from, 123, 168, 169, 206, Prize in, 270

Tokyo stock exchange, 334 170

total quality in, 169,

World War II, 92-93 Yokogawa HP in, 139, 167, 168-70,

death

of,

220

122,303

and HP contracts, 67 and Manhattan Project, 65-66 mergers and acquisitions, 154 Packard's job with, 63, 64-65

248, 264, 324, 327

Deming

in

as role

194,

196 Jarvis,

Basin recreation area, 126-27, 129

Litton, Charlie, 27, 56, 121,

Japan:

William, 217-18, 224

model, 54, 66, 74, 82, 83

and vacuum tubes, 24-25, and World War II, 95-96

47, 65, 67

Litton Engineering Laboratories, 24-25,

41,64,65,74,95-96

Jensen, Peter, 21 Jobs, Steve, 3, 54, 193, 220, 277, 278-80,

Litton Industries, 25, 122

281-82,331,356 Kelly, 257 Jordan, David Starr, 19

Liu, Chi-Ning, 306,

307 Lockheed Aircraft Corporation, 254-56, 258 Lockheed Missile and Space, 121, 122, 248

Johnson,

Juran, Joseph, 169

Lockheed Research Laboratories, 137

HP in,

Kaar, John, 56

Loveland, Colorado,

Kaar Engineering, 41

175,180,192,196,225,264 Lucile Packard Children's Hospital, 346-47

Kampelman, Max, 305 Kan, George, 110 Karlgaard, Rich, 381

156, 171-72,

Luerra, Rich, 369

Katchadourian, Herant,

18, 321, 370,

Kennedy, Edward "Ted," 259

372

Lukes, Tony, 183-84

Lyman, Richard, 311

Kennedy, Robert E, 208 Kennelly, Arthur, 23, 26, 27

Keyworth, George

III,

386

King, Martin Luther

Jr.,

Kingman, Rums,

1

94,

208

12

Kirby, David, 235, 391

and and

HP PR, 72, 200, 273, 274 HP Way, 223, 234, 360, 361

Maccoby, Michael, 343, 373 Madison, James, 146

Maganvox,

2

Magleby, Kay, 175

Managing on

the

Mancini, Anna,

Manhattan

Edge (Pascale), 350

1

Project, 66, 76

1

434

Index

Marihart, Leo, 134

1960s:

HP growth in, 167-69,237 HP innovation in, 202-7

Markkula, Mike, 220 Mayer, Louis

219

B.,

Mazor, Stan, 265

HP's golden age

McCracken, Ed, 300, 339, 340 McGregor, Christopher, 32 McKenna, Regis, 200 McMillan, Malcolm, 180-85

social unrest in, 165-66, 208, 238-39,

McNamara, Robert McNeely,

Scott,

S.,

in,

238, 243, 248, 301

240-41,243,292,311 1970s:

boom and bust cycle in, 247-52

HP in, 202, 245, 246-47, 292, 301

252

media focus

220

McNutt, Marcia, 314, 315, 316, 317 Measure, 200, 227, 245 Melchor, Jack, 191-92

296-97

in,

Nitze, Paul, 305

Nixon, Richard M., 242, 258, 259, 306 Noyce, Robert, 54, 122, 157, 172, 190, 220

Meyer, John, 330, 332 Microsoft Corporation, Miller, Arjay, 367,

3,

54

Oliver, Barney, 49, 52, 53, 391

372

Minck, John:

and company history, 81 on HP PR, 197-98,213 stories and legends told by, 107-8,

124-25

and calculators, 188-89,270

181, 182, 184, 185, 186,

"G-job" inventions by, 263 129,

130, 195-96, 224, 236, 249, 251, 267,

275,330-31,335

MIT,

at Bell Labs, 95,

23, 26-27, 45, 49, 50, 110

Monnier, Dick, 186

and

HP Labs,

125, 171-72, 180, 262,

330

and management succession, 299 and oscillators, 133-34 40-41, 64, 94

at Stanford,

Monterey, Cannery Row, 313, 314, 318

Oliviero, Al, 300

Monterey Bay Aquarium, 313-15, 343,

Omidyar,

310

Pierre,

Opportunities Industrial Center (OIC),

346 Research Institute (MBARI), 315-17

Moore, Gordon, 54, 122, 157, 172, 198-99,220,265,285,310 Moore's law, 172-73, 177, 206, 248, 265 Moore, Stephen, 318 Morton, Dean, 213, 300, 340, 343, 353,

259 Oracle, 154,220 O'Reilly, Charles,

377

Organization Man, The (Whyte), 127 "Origins"

(HP

video), 391

Orr, Susan Packard, 88, 346, 369

Osborne, Tom, 181-85, 194, 326

354,391

"Green Machine" of, 183-85, 186 and HP desktop/pocket calculators,

Moscrip, Jim "Monk," 10 Moseley, F.L, 155

Moseley,T.I.,67-68

186-89, 265-68, 270-71, 272, 275,

Mostek, 265, 266

276

memory rope

Motorola Corporation, 190, 326, 341 Mott, Randy, 388

Overacker, Horace, 110, 133

Napier, John, 180

Pacific Stock

NASA,

Pacific Telephone,

203, 204, 206, 248, 271

Ann

devised by, 187

Exchange, 167 28

National Bureau of Standards, 171, 205

Packard,

National Semiconductor, 158, 200

Packard, David "Dave":

Nee, Eric, 354 Neely,

age

Norm, 75-76,

Nelson,

J.

Peter,

80, 83, 87, 131, 140

225

Newcastle-upon-Tyne, England, transplant center

New York

in,

321

Stock Exchange, 159, 167-68

of,

Louise

(sister), 13

208, 235, 298-99

awards and honors

to,

birth

and childhood

book

by, see

256,

of,

343-44

12-14, 15

HP Way

business lessons

74,81,105

of, 32, 48, 51,

64-65,

1

1

435

Index in China, 305-8 and community,

core principles

and

of,

GE

HP days, 73, 74, 79, 84, 88,

125,

193,222,346

14

HP Way

of, see

"creative destruction,"

death at

in early 1

in later years,

marriage

230

and

362-64

Schenectady, 42-43, 47-49, 50,

346-47

of, 55,

58-59, 80

politics, 242,

Packard,

Nancy

256-57

[Burnett] (daughter), 88,

313,346

51,58-59,67,101,104-5 of, 31-32

high school years

Packard, Sperry (father), 12-13, 33

HP Associates, 191-92, 224 HP board chairman, 299, 348 see also Bill and as HP founder,

Packard, Susan [Orr] (daughter), 88, 346,

and

369

as

1

;

Packard Foundation, 309-10, 312, 317,

Dave

346

in later years, 312-19, 343-44, 345-48,

359-62

traits of, 36,

50-51, 72, 96,

Palo Alto National Bank, 85

Panama-Pacific International Exposition (1915),21 Pascale, Richard, 343,

362

105, 216, 218, 222, 230, 233-34,

Paull, Margaret,

Penrose, Lloyd, 13, 14

philanthropy

of,

308, 309-10, 311-12,

Perkins,

317,346 politics,

240-43, 245, 247, 252-61,

1 1

1-12, 293-94

as public speaker, 113, 117-18,

radio as interest

200

of, 14, 21, 31, 32, 36,

39-40

and

Perry, Helen, 84, 88

Joseph M., 29

Pettit,

Piatt,

as

Lew, 340, 342

chairman and CEO, 364-65, 385

death

risk, 98, 99,

of,

365, 391

and management succession, 355-59

177-78,216

model, 3

sports,

178, 213, 289-90, 385-86,

personal computers (PCs), see computers

and product design,

as role

Tom,

391

292,306,311

and

350

Patton, Gary, 318

235-36,246,261

and

346

Institute,

Page, Larry, 3 1

and Lu, see Packard, Lucile Salter and Monterey Bay projects, 313-18 odd jobs held by, 35, 50 outdoor interests of, 3 personal

Packard Humanities

retirement

51-52

of,

Stanford and social change, 240, 311

Porras, Jerry, 226

and Stanford

Porter,

football, 10, 11, 38, 40, 64,

105,218,311

and Stanford research

365

Poniatoff, Alexander, 65, 121-22, 123, 220

Noel "Ed," 34, of, 297-99

94-95

53, 67, 82,

death job, 56,

63-64

as Stanford student, 32-33, 35, 39-41,

44

and and

HP management, 248 HP manufacturing, 124,

as Palo Alto

and technology, 58 and World War II, 90, 91, 94-100, 105 Packard, David Woodley (son), 88, 346, 363, 372, 379-83 Packard, Ella Lorna Graber (mother), 12-13

125

mayor, 242

radio as interest

of, 36, 38,

43

as Stanford student, 35-36, Postrel, Virginia,

40-41, 43

362

Poulsen Wireless Telephone and Telegraph Company, 19

PricewaterhouseCoopers, 373, 378

Packard, Julie (daughter), 88, 313, 318,

346

Pridham,E.S.,21 Proxmire, William, 255

Packard, Lucile Salter (wife), 307, 363 in Addison Avenue house, 66 and children, 88

dating, 49-50, 53

death

of,

347

radar, invention of, 62-63, 108

radio, signal frequencies of, 133-34,

204-5 Radio Engineering (Terman), 28-29

436

Index

Radio Engineers Club, 76 Radio Law (1913), 21

culture of, 156-59, 277, 281, 283, 285,

RCA,

and dot-com bubble

burst, 376

entrepreneurs

entrepreneurs;

288-89, 290

24, 25, 115

Reagan, Ronald, 349 Rice, Condoleezza, 363,

names ham radio in, 20-21

369

specific

Rice, Paul, 171 Ricketts,

Doc, 317

job-hopping

Rock, Arthur, 122 Rockefeller,

John

layoffs in,

D., 222,

name

308

Roosevelt, Franklin D., 39, 90, J.,

of,

in,

198-99

251 158

and Page Mill Road, 80-81,

Rogers, Peter, 343

Ryan, Harris

in, see

1

10,

303

22-23, 25, 27

101,

137-38, 156

philanthropy

in, 88,

308-12 121-23

as Santa Clara Valley, 76,

Sadler, Bob, 350-52,

and Stanford

355

Sako, Jo Ellen, 368, 375-76

Industrial Park, 135-39,

156,238,337

boom

Samsung, 379 Sanborn Company, 193

start-up

Santa Clara Valley, 86, 151

venture capital

orchard era

of,

22 to,

121-23

as Silicon Valley, 76, 121, 122, 156; see

Skoll, Jeff,

206

310

slide rule, 180,

Sloan, Alfred

also Silicon Valley

160, 162

in, 122, 192,

56-57

Sink, Bob, 45,

postwar migration

199

in,

and stock ownership,

188,272

P.,

144

Sanyo electronics, 264

Smith, Al, 185

Sarnoff, David, 219

Smithsonian Institution, 272, 276

Sasaoka, Kenzo, 169-70

Snowcroft, Brent, 305

Saunders, Marc, 236

Solis,

Donna, 368

Sonsini, Larry, 386

83

Schiller, Ernie,

Schlesinger, James, 258

Spears, Al, 83

Schmidt, Eric, 354

Sperry Gyroscope, 63

Schneider, Maggie Lacey, 372

Sputnik, 120, 151

SCM

Stanford, Leland and Jane, 319

(Smith-Corona Marchant), 181-82, 183-84

Stanford Industrial Park, 115, 135-39,

152,156,238,297,337

35

Seitz, Fredrick,

Selby, Stan, 171

Stanford Shopping Center, 297

Sharp Corporation, 264, 265, 327

Stanford University:

Sharpe, Edward, 125 Shillito, Barry,

258

Shima, Masatoshi, 265 Shockley, William, 21, 41, 109, 121, 122,

36-37, 39, 59, 63

124,190,219 Shockley Semiconductors, 137, 157

Shockley Transistor, 121, 122 Shrock,

Norm, 98

at,

321

electrical engineering/electronics

departments,

Shultz, George, 363 1

10, 27, 37, 43, 53,

312

football team, 9-11, 34, 38, 40, 64, 105,

19

218

Silicon Valley:

building a foundation

for,

41,81, 121,

industry

ties of, 28, 62,

63

Linear Accelerator, 62

122,311

community

co-op education model in, 115, 136 development of, 237-38 earthquake

Shugart,Al, 214-15

Silicon Graphics, 3,

Board of Trustees, 148, 240, 243 and charitable foundations, 309, 311, 319-20,369 Communications/Radio Lab, 28, 33,

service in, 260

corporate espionage

in,

206, 275

radio aficionados

in, 19,

38,39-41,43,94

20-21, 28, 36,

437

Index and

social change, 239, 292, 311

John C, 255

Stennis,

Texas Instruments (TI), 264-65, 275,

324-25, 326

Steinbeck, John, 317

"Three Generations"

Sterling, Wallace "Wally,"

1

14-15

Tinker

183-84, 266, 267

Stoft, Paul, 175, 181,

Bell's Fix-It

Sun Microsystems,

3,

19, 199,

1

Rome, 143

Treybig, James, 213, 289-90

259

Sullivan, Rev. Leon,

217

Titanic, sinking of, 21

Treaty of

Stuart, "Cap," 94

(Jarvis),

Shop, 80, 88

220

Trippe, Juan, 240

Turing, Alan, 173

Tandem Computer,

3, 199,

213, 290,

Tuttle,

Myron, 280

383 technology, see electronics industry

Unidynamics, 266-67, 268

Tektronix, 99, 107-8, 140-41, 148, 151,

Univac, 173 Upside, 246

194,204,218

U.S. Naval Observatory, 205, 206

television:

modern

as central to

invention

of,

life,

U.S. Naval Research Laboratory,

204

,

Terman, Frederick

Emmons "Fred":

aging

of,

208-9, 299, 311-12, 369.

book

by,

28-29, 46-47

childhood death

and

of,

98-99

4 1 60, 67

of,

vacuum

tubes:

as first-generation electronics, 41, 109

invention

18-19

Litton as

312

electronics research, 53, 55-56,

of,

19,20

maker

of,

24-25, 47, 65, 67

and radio, 21,26 and rhumbatron, 60-61

57-58, 72, 208

van Bronkhorst, Ed, 151, 213, 300

as

HP director, 209, 299, 312

Varian, Russell, 58, 59-63, 64, 67, 72, 83,

as

mentor, 40-41, 42, 43-45, 50-51, 52,

at

53,83,114,127 MIT, 23-24

networks

Varian Associates, 135, 137, 152

of, 41, 47,

50-51, 52-53, 56,

63, 67, 73, 74, 86,

1

10,

1

15-16, 125,

136,137,148,319 personal

of,

recruitment efforts

of,

of,

107, 204, 208, 238, 240, 248,

Vollum, Howard, 99, 140, 141

39-41, 43, 53,

245

in Stanford administration, 114-15,

Walt Disney Co., 74-75, 142, Waltham, Massachusetts, HP Wang, An, 174, 188-89

Wang

136,239

on Stanford

Vietnam War,

Voider, Jack, 180-81, 183, 184

53

20-21, 26, 27, 41

59,110,115 reminiscences

Varian Technology Corp., 122-23 254, 256, 260

traits of, 29, 44,

radio as interest

108, 135

Varian, Sigurd, 59-63

faculty, 27, 31, 33,

36-37,

115,

S.

"Pop," 9-10

Watkins- Johnson, 137 Watts, Dick, 356

Wayman, Bob,

TB

Webster, Daniel, 61-62, 63

18,22,25-26,27 tributes to, 311-12 wife

of,

Terman, Lewis M.

(father), 18,

Terman, Sybil Walcutt

Weindorf, Dave, 269 22-23, 37

(wife), 29-30,

208-9, 299 Terry, Bill, 67, 261-62, 268, 273, 300, 340,

342,365,391

382, 386

Webster, Steve, 313, 314

29-30, 208-9, 299

213

Laboratories, 119, 174, 180, 188,

as Stanford student, 22 of,

in, 193,

349 Warner, Glenn

40,43

and Stanford Industrial Park, 135-37,336-37

152, 222

Wells Fargo Bank, 85-86

Western

Electric,

28

Westinghouse Corporation, 25, 112 White Sands Proving Ground, 272 Whitney, Tom, 266, 268, 269-70

1

438

Index and Homebrew Computer Club, 279-80

Wholey, Bruce, 110, 133, 213, 300 Whyte, William, 127 Wiener, Norbert, 23, 27

at

Wilbur, Ray Lyman, 22, 25

HP, 231, 264, 272, 277-82, 284, 326

Wriston, Walter, 253, 256

William and Flora Hewlett Foundation,

Xerox Corporation, 326-27

309,310,322

Woods Hole Oceanographic

Institute,

177

Woodstock Nation, 238

Yagi, Hidetsugu,

Workman, Ted, 290 World War II, 89-100, 262 Army-Navy "E" Award, 100, 105

Yahoo!, 199

computers

in,

Yewell, Tiny, 195

Ye Zhen-hua, 307

Yokogawa Electric Works, 168 Yokogawa Hewlett-Packard, Japan,

108-9, 173

defense contracts

in,

94-95, 96-99,

139,

167, 168-70, 194, 196

101

defense technology

in,

"Leopard" project

in,

Yoshizumi, Mollie, 319

110

Japanese American internment

in,

98-99, 140

postwar baby boom, 108, 120 postwar recession, 106-7

procurement system product demand

in,

257-58

in, 88, 90, 91, 95,

108-9 radar used

1 1

Young, John, 102,391 career path of, 213-14, 300, 334-35 as

CEO/president, 301, 305, 333-34,

336-39, 342-43, 348, 354

and management succession, 333, 339-40 retirement

in, 62,

of,

353, 354

99

Renegotiation Board

Wozniak,

92-93

in,

96-97

Steve, 54, 193, 285, 391

and Apple I, 279-81, 293, 324 and Atari, 279

Zieber, Glenn, 84 Zieber, Harvey, 77, 81 Ziedler,

Howard,

Zilog, 158

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(CONTINUED FROM FRONT FLAP)

objectives, trust in

and ruthless

employees

self-appraisal.

It

make the right choices,

to

created a ferociously

com-

petitive

and adaptive company— arguably the worlds

greatest

company

Some of the problems that Bill and Dave faced, such as

convincing customers of the value of electronics, will

never again be faced by modern executives. Others, such

between short-term

as the conflict

term market

share, will never go

away Malone

not on what Bill and Dave actually decided in their careers, but

and long-

profits

at

focuses

each point

on how they came to those

decisions.

And in most cases, it all came down to character. Their ultimate question, in the face of ambiguous data and conflicting pressures

from

investors, employees,

customers, was to ask, "What Bill

&Dave,

them and by

the right thing to do?"

is

character study of two

at its heart, is a

amazing men— as

told

and

by the people who worked

the legacy they

left

for

behind. Hewlett and

how they strucmen and women they hired,

Packard revealed their character in tured their business, in the

and, most of the lowliest cal

all,

in the

power they entrusted

to

even

HP employee. And whatever philosophi-

argument one can muster against

this anachronistic

approach, the simple and indisputable truth

worked brilliantly Their story

is

for Bill

is

that

it

and Dave.

something of a miracle— one from

which we can never

stop learning.

MICHAELS. MALONE, ley native,

is

a Silicon

\al

one of Americas most

distinguished technology journalists.

The former

editor of Forbes

and currently

a popular

ASAP

Web colum-

ABC, he has written for The The New York Times, Wired, and Fast Company magazines. Among his books are The Big Score, The Virtual Corporation, Infinite Loop, and Intelnist for

Wall Street Journal,

lectual Capital.

He

lives in

Sunnyvale, California.

A member of Penguin Group (USA) Inc. 375 Hudson Street. New York. N.Y. 10014 portfolio

www.penguin.com

PRAISE FOR MICHAELS. MALONE'S

The Valley of Hearts Delight "I

can't think of a

more acute observer

of the wild Silicon Valley

saga than Mike Malone. He has seen

it

all

from up close."

— Tom Wolfe, author of A Man in Full and The Bonfire o/ the Vanities "Mike Malone

to Silicon Valley

is

what George Orwell was

to the Spanish Civil War."

— Paul A. Gigot, editorial page editor, The Wall Street Journal "One hundred years from now, when people Valley, they will

talk

about

Silicon

be using Mike Malone's words."

— Tom Siebel, chairman and CEO, Siebel Systems "Malone has done past,

we can

it

again! By compiling these

revisit his

the

powerful insights for the future.

Thank you, Mike Malone, this

gems from

legend we

for helping to

call 'the

shape

Valley'"

— Eric Schmidt, chairman and CEO, Google, Inc. "In

an area that has had too

much

hype, Mike Malone consistently

provides the provocative, penetrating analyses and insights that brilliantly withstand the test of time.

He

is

an

impeccable source of enlightenment."

— Steve Forbes, president and editor in chief, Forbes, Inc. SBN O/g-1-59184

II

III

II

III III I

Mill