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Tracking the relationship of the government and Silicon Valley

In this photo from April 19, 2001, a digital billboard advertises to traffic going north on Highway 101 out of Silicon Valley to San Fransisco.

It seems like almost everyday we hear about the ways in which our government is using Silicon Valley companies like Google, Facebook, Apple and Yahoo to -- potentially -- spy on us. But Valley historians say it shouldn't be a complete surprise considering the Valley’s long history with the defense industry.

The history of Silicon Valley dates back to the 1930s. Back then, it was known as the “Valley of the Hearts Delight” and agriculture was still its main business.

There were no venture capitalists to fund start-ups. No tech billionaires. But the nascent tech industry did have the Department of Defense,  said Martin Kenney,  a professor at UC Davis.

He says the military has been described as “the greatest venture capitalist of them all.”

Kenney says a lot of the technology we use today was funded by the government. There’s the Internet.

“Parts of cell phones, satellites, and global positioning systems also had their research origins in universities that were funded by the Department of Defense,” said Kenney.

Steve Blank, a tech entrepreneur and history buff, says the story of Silicon Valley and the federal government goes all the way back to World War II. He says the Defense Department was convinced, "that the best way to build weapons to win the war was to keep scientists as civilians and keep them in their own universities. And the government would fund the universities,” Blank said.

Then came the Cold War came. And the DOD poured money into developing technologies at America’s elite engineering schools.

“By the mid 1960s, three-quarters of all the graduate thesis in the engineering department were classified at Stanford,” Blank said.

Stanford wasn’t the only university to receive military funding. But it was the only one to use that money to fund research and ultimately business ventures that created  Silicon Valley.  In large part due, that’s due to Fred Terman, an engineering professor who became the University’s provost. He told his students and professors to take their technology and start companies

“No other university in the 1950s even thought that was possible,” Blank said.

 In those days, there wasn't a consumer market for tech. But the military was buying,  said

Stephen Adams is a business historian at Salisbury University

The semi-conductor industry was a defense industry,” said Stephen Adams.

That gave birth to Fairchild, Intel, Advanced Micro Devices and other companies that made the “silicon chips” that  put “Silicon Valley” on the map. Today that technology powers every computing device you have.

But back then, silicon chips were used to make satellites that spied on our enemies.  Steve Blank, the entrepreneur, says the government is still buying in Silicon Valley. Only today, that technology is also being used to keep track of us.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.

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