Tuesday, September 29, 2015
When Hewlett met Packard
In a one-car garage behind 367 Addison Avenue in Palo Alto, California, on January 1, 1939, two friends flipped a coin. They had an invention -- an automatic foul-line indicator for bowling alleys -- $538 in their pockets, and a dream. William Hewlett won the toss and Hewlett-Packard was born.
Hewlett and David Packard had met while undergraduate students at Stanford. They both loved the outdoors and electrical engineering. Hewlett went on to MIT for his doctorate, while Packard went to work in research for General Electric in Schenectady, New York. But in 1938, they both returned to Stanford, where Professor Frederick Terman encouraged them to go into the electronic business, as a previous student, Vannevar Bush, had done in 1922 when he co-founded Raytheon. Bush did that in Cambridge, Massachusetts. Terman wanted to make the Palo Alto area a hub of the electronics industry.
The foul-line invention went nowhere for Hewlett and Packard, but they had success with a sound oscillator. They dubbed it HP200A so that people would not think it was their sole product. Walt Disney bought eight of them and used them to create "Fantasia." The young men were on to something. They built on that small success.
"We figured that if people needed the HP200A as a source of sound, they would also need something to measure it," Hewlett told Electronic News decades later. "So we brought out a voltmeter to measure what happened."
Theirs was a mail order business. The military need electronic gear to win World War II. They cranked out products and sales hit $1 million in 1943. They produced components for radio, sonar, radar, nautical, and aviation devices.
As they hired people, Bill and Dave -- as employees called them -- developed the H-P Way, which treated employees as partners. They encouraged creativity, offered catastrophic health insurance, and were generous with other benefits. They offered flexible hours and held coffee talks. The company focused on long-term growth, not profits. Theirs was a company built to last, not just make money.
"Dave and I set up this philosophy of management by objective. We felt that fundamentally, people wanted to do a good job, but they needed guidelines. So we set up corporate objectives," Hewlett said.
The electronics industry underwent a revolution when Bell Labs developed the transistor in 1946 to replace the unreliable vacuum tube. John Bardeen, William Shockley, and Walter Brattain shared a Nobel Prize for this discovery.
Shockley had an idea to use silicon instead of germanium. He started his own research company in Palo Alto and thus began the Silicon Valley. Except, of course, H-P already was there.
William Redington Hewlett was born on May 20, 1913, in Ann Arbor, Michigan, where his father taught at the University of Michigan Medical School. In 1916, the family moved to San Francisco, where his father held a similar position at Stanford Medical School. Hewlett's father died of a brain tumor in 1925.
David Packard was born in Pueblo, Colorado, on September 7, 1912. His father was a lawyer, his mother was a schoolteacher, and his sister was his match-maker as she introduced her brother to Lucile Salter, who he married in 1937. They remained married until her death 50 years later.
Packard became involved in the community as well as his business, serving as chairman of the Palo Alto school board from 1948 until 1956. Nixon appointed him deputy Secretary of Defense, where he cleaned up the procurement process and enabled the United States to turn over the Vietnam War to the Vietnamese. For this he took a pay cut from the more than $1 million a year to $30,000. Also, to avoid a conflict of interest as H-P was a major defense contractor, Packard agreed to forgo his profits, which cost him $22 million. Basically the job cost him more than $6 million a year.
In 1964, he and his wife established a foundation which has given millions to charitable and worthy causes. They donated $40 million to build a children's hospital at Stanford,
Hewlett donated $37 million to their alma mater as well. That too, is just a tip of his iceberg of philanthropy.
Upon Packard's death at 83 on March 26, 1996, John Ford, vice president for development for Stanford, said, "Dave Packard, along with his wife, Lucile, and his partner, Bill Hewlett, have shaped and nurtured this university in ways that can only be compared to the founders, Jane and Leland Stanford. In the process of caring for Stanford, and investing in so many other important philanthropic endeavors, Dave Packard has set a philanthropic standard for generations to come. It has been a rare privilege to work with Dave on Stanford's behalf."
Hewlett died at age 86 on January 12, 2001.
But besides the great products they built, the company they built, the employees they helped, and the charities they helped, Hewlett and Packard did one other thing. They listened. In the summer of 1967, Hewlett received a phone call at home from an inquisitive 12-year-old. Struck by the kid's gumption, Hewlett hired him.
Nine years later that kid started his own company in the garage of his parents on Crist Drive in Los Altos, California.That kid was Steve Robert Jobs and his company was Apple. It too was built to last, not just make money, clearly a case of Apple not falling far from the H-P.
I am publishing the best of these tales, in Kindle and on Amazon. Volume I covering American history from the 16th through the 20th century is here. And Volume II on The Capitalists is available here.
Suggestions are welcome. Email me at DonSurber@GMail.com.