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>>: Good afternoon, everyone. I'm Turner Wittet [phonetic]. I'm here to introduce Jon Gertner, who is participating in Microsoft Research's Visiting
Speaker Series today.
Jon is a Cornell graduate who has been working as a writer for the last several years. He's worked for New York Times magazine. He's worked for Money magazine and several others. His articles -- and I recommend you read them -- his articles talk about industry, society, technology. But altogether he mixes all this together in a way that geeks like us can read it, understand it, believe it and see things that you don't get from just one point of view. Very interesting reading, and I recommend it highly.
Today Jon is here to discuss a new book called The Idea Factory. It's a history of Bell Labs. Jon, I have not read the book. I have lived it, though.
And there are a few of us here who, alumni from this organization, who are very much looking forward to hearing what Jon has to say about Bell Labs and what a wonderful place it was.
I'm sure that we'll hear expected names of Shannon and Schockley, et cetera, et cetera. But we'll also hear names like Pinsius and Baker and Lucky. And that makes it intensely personal, so if I start getting teary eyed in the middle of this, please forgive me. Please welcome Jon Gertner.
[applause]
Jon Gertner: Thanks, everybody, very much for coming. I appreciate it. I have a few slides that hopefully will work fine. As was described, I'm a journalist. I'm not an engineer. So I'm sure you'll be able to stump me during the question period, but I will be happy to get back to you with any technical questions.
But it's true in many ways the book I wrote which I worked on for five and a half years is not a technological history, although it's part that. It's not a social history, although it's part that.
And in some ways it's partly a business history, too. It's biography in many ways.
It's about some of the people who work there.
It's true, I think, to some extent that there are other books to be written about Bell
Labs than what I wrote. My very wise publisher put the word "definitive history" on the cover of mine. I think there are a few definitive histories to be written about Bell Labs. There's a definitive history to be written about its computer labs and Unix C team and all the other great people who are doing that.
That's not the book I wrote. Although that is mentioned in there. There's a great book to be written about the military history. Bell Labs was deeply intertwined with intelligence efforts as well as military hardware.

That, too, is not the book I wrote. Although, there is a fair amount about how some of the characters in my book worked with military endeavors and how a large percentage, probably about 20 percent of the people of Bell Labs were working on military matters during its heyday of the 50s and 60s.
So today I think I'll talk a little bit first about what was Bell Labs just for some people who need maybe a little refresher course since it's a different organization now than it was than the one I wrote about.
I think I'll talk a little bit about two innovations out of the many that came out of this place. It's very difficult. And I thought rather than go broad, I'd try to go a little deeper and I'll talk a little bit about the innovative process that ended up with the transistor, as well as the solar cell. Particularly because I think they're interrelated in many ways, both with the people who are working on those and even in the fact that they came out of the same exact laboratories on the fourth floor of the Murray hill building. And then I'll just talk a little bit about why innovation matters and then I'm happy to take some questions.
So let's go back to before Google and before Microsoft and what Bell Labs was, was the R&D wing of the then monopolistic phone company which was AT&T.
This is a little small. It's an info graphic somebody at the New York Times made for me. But before I hit on that, AT&T was a true monopoly. It was a vertically integrated company. At the bottom was the R&D arm being Bell Labs. During the 1940s, at the end of the 1940s, about 9,000 people worked there.
By the 1960s, the late 1960s, there were about 15,000 people. By the time the
Bell system was broken up there were about 25,000 people working at Bell Labs of which 3,300 were Ph.Ds. So it was truly an enormous shop, that would have been around 1982. AT&T also had one of the largest manufacturing companies in the world being Western Electric. The idea being vertical again that the ideas developed at Bell Labs would move up the chain towards Western Electric, which would then implement them into the larger phone system being AT&T long lines.
But AT&T also either owned part or whole of 23 operating companies around the country. And these were Pacific Bell, New York Telephone, all around the countries.
So in addition to this vertical integration, it had a kind of horizontal integration which ultimately proved much more problematic and was its undoing when the federal government decided that was not acceptable anymore.
What came out of Bell Labs. This is again just a snapshot of some of the things, but, again, you wouldn't go to the store and buy a Bell Labs innovation. It was deep inside other things. It was platform innovations. It was the things, devices were built on. And it was integral to the communications infrastructure of the day.

Really Bell Labs began in 1925 as a stand-alone entity. AT&T had its own engineering department and Western Electric Manufacturing Company had its own engineering department.
There was a little bit of tension and overlap between the two. As you can imagine. And the grand solution was let's create a stand-alone lab and in fact let's create a research department as well within the lab.
In the early days it was in Manhattan. It was on West Street in lower Manhattan in Grenich Village. The building still stands but like a lot of things it's been carved into apartments.
Its heyday began right during and after World War II. That was when they moved to New Jersey. They started at their first site called Murray Hill, and the transistor came along in 1947. But after that there was a pretty rapid and almost unparalleled, I think, series of inventions and innovations, the silicon solar cell,
Claude Shannon worked on communications theory.
Those early principles of digital communications came out of there. The theory for the laser. Some of the earliest prototypes of some of those room temperature semiconductor lasers came out of there.
Fiberoptic systems -- not the actual fiber optic itself, which came out of Corning.
Communications satellites were created and developed at Bell Labs. Cellular telephones were developed in Bell Labs in the 1940s, more so in the '60s, and finally implemented in the late 1970s.
So the CCD chip, there were just a phenomenal number of things they, as time moved on, as you can see I think that's the idea there, they sort of coalesced and formed what we have today, platforms again, the stuff inside the stuff we use all the time.
So at Murray Hill, if we went back to way back when, people who may have been to Bell Labs remember it probably as more of a very different looking complex.
But this was the first building. And this is circa 1948. So this building is probably around six or seven years old at that time. And it was the idea being that they will get away from the noise and the dirt of the city and the vibrations from the subway and this will be a kind of utopia to do experimentation without the interruptions of urban life.
And the guy who really was the great driver here for this laboratory was this guy,
Mervyn Kelly. He grew up in a poor family in Missouri. He came to Western
Electric via University of Chicago in 1917.
He was trained by Robert Milkin a great physicist of his day and a great impresario of talent who would direct people to Bell Labs. I sometimes think this picture is a good example of why you shouldn't smoke cigarettes. Kelly was a heavy smoker at the beginning of his life and there he is at his retirement in
1958. He aged quite a bit.

But by 1925 Kelly was rising through the ranks at Bell Labs, and he was running the vacuum tube shop. So he was responsible for what was the greatest electronic invention of his day. Bell Labs was really one of the preeminent companies that was developing tubes. They needed them as repeater tubes.
They needed them as amplifiers to get their phone calls across the country.
Every 50 to 70 to 100 miles. There were these repeater stations with these vacuum tubes that were made under Kelly's watch at western electric and then at
Bell Labs that were, that literally the cross-country phone system would not have worked without them.
Kelly was really good at making vacuum tubes. He was good at running a kind of shop that sort of specialized I guess in incremental innovation.
He over the course of a number of years increased the life of these vacuum tubes from something like a thousand hours to 80,000 hours, therefore decreasing costs dramatically.
And yet he would complain to his wife that he hated these things, that they broke all the time. The other problem with vacuum tubes, of course, was they gave off tremendous amounts of heat. They were balk unpredictable. They had to warm up to work and soaked up tremendous amounts of electricity, and he was always hoping as he said to his wife that something else would come along and what that was stayed in his mind.
By the mid-20s this was the 101-D, the great repeater bulb he was working on.
In fact, he wrote even a long article I read that was amazing how complicated these were to make; perhaps in retrospect if you read about how semiconducting chips are made today, it doesn't seem so outrageous, but just really so many different processes and such great complexity for something that was often at least in his day unreliable.
Kelly had a best friend at Bell Labs. Somebody he met when he first started there, Clinton Davisson, whose name might ring a bell, he won a Nobel Prize in
1937. And in the early days these guys were the original odd couple. Kelly was robust and antique. He had tremendous amounts of energy.
He would run up and down staircases. He was always in a rush. Davisson was almost the exact opposite, speak slowly, sometimes wouldn't speak at all. He weighed like 110 pounds. He would just sometimes not come in at all and stay home sick and Kelly would go visit him in his house and he'd be wearing his stocking cap and a nightgown writing equations in his notebook on his knee.
But Davisson made an incredible impression on Kelly. Kelly held Davisson in awe after a few years. The reason when people at Bell Labs had a problem with, for instance, a vacuum tube device they were making, when nobody else could answer the question, they would go to Davisson, and Davisson could answer it.
And Davisson would not, as Kelly noted, not tell them how to make it better or how to fix it, what he would do is give them a deeper understanding of what was going on inside. And what Kelly would watch happen was that people who took

Davisson's advice or explanation in hand could improve the things they were working on, not just by an order of one or two or three, but by entire magnitude.
And very clearly to Kelly at least he understood that understanding that knowledge is power, that in many ways Davisson would become a kind of model for him of what the later researcher would be or someone who would be essential in the laboratory, not somebody who would assume a position of management, but somebody who would assume a kind of elder statesman status, somebody who could answer the questions nobody else could, someone who trafficked in knowledge but never gave orders, just gave explanations and gave people that power to understand.
So it's 1937. And one day Kelly's walking down the hall. Probably I think to
Davisson's office. Davisson shares an office with Schockley at the bottom. Bill
Schockley. Who has joined Bell Labs the year before Kelly actually hired him personally, thought he was brilliant, as many people may know here in this room
Schockley got a Ph.D. in physics from MIT.
He was, as Phil Anderson, a Nobel Prize winner told me, the quickest mind he had ever known. I thought for a Nobel Prize winner to say that, that's pretty quick. He could answer problems almost instantly, finding ways sometimes that other people just could not see.
In the hallway that day, in 1937, Kelly gives Schockley a speech. And he's not talking about the problem in vacuum tubes that day. He's talking about the problem with switches. And these were these relay switches that clicked opened and closed. They were the backbone of the switching circuits in the old Bell system. They were problematic, too. They would wear out fairly frequently.
They were slow, because they would click open and closed. And they were a huge expense, because the Bell system used millions of them.
And he told Schockley if there was some way to just have a solid switch, something with electrical pulses rather than these movable relays, it would just be an enormous boon to the Bell system. And even to the end of his life, this speech by Kelly sticks in Shockley's mind. So we had these two elements to the phone system, two crucial elements to the phone system. The switches and the vacuum tubes, both of which are problematic. Schockley in 1938 begins working on an amplifier, solid state amplifier.
And he starts pursuing this idea, the war intervenes. Everything stops.
Everybody goes to work on war-related endeavors. And then they regroup back in 1945. Kelly is now the head of research but also vice president of Bell Labs.
And he is something very interesting in 1945. He creates what later became known as the solid state group or the transistor group. He makes Schockley one of the leaders of this.
And he creates it officially in June of 1945 and for me at least it's interesting for two reasons: The first, and what might sound obvious today but was not at all at the time, is that this group is very interdisciplinary. Kelly has come to the belief that it's not good just to have a bunch of physicists in a room together. You have to have experimentalists and theorists. You should have chemists and

metallurgists. Should have electrical engineers and circuity experts, and the best technical assistants you can; that that interface of ideas sometimes, the tension between differing ideas, complementary talents, were the way to solve this very big problem, meaning what is the nature at the time of semiconductors and what knowledge can the Bell system get from this that we can use to apply to improving the phone system.
The second thing I think that is really interesting about this group is if it succeeds, it will in effect make everything in Kelly's previous career somewhat irrelevant.
So it's sort of an innovator's dilemma sort of getting around that somehow he's saying go ahead, guys, just do it and then everything I've ever done in vacuum tubes, which has pretty much defined my scientific career, will become irrelevant.
Two and a half years go by with this team under Schockley working on semiconductors. And as we know in November and early December they come up with this ugly thing, if anybody's ever seen it it's actually quite small. It's in the lobby and Murray Hill is probably the bottom digit of my pinkie. And that's a germanium slab underneath the arrowhead and there's gold points coming down the side of it.
This is not Shockley's work. As you know also, this is John Virdean and Walter
Bratton who worked under Schockley who came up with this, which in fact pushed Schockley either out of envy or competitiveness towards probably a greater or certainly a more useful transistor called the junction transistor which followed the next year, although it took a little while for them to figure out how to make it.
But why is this matter to the Bell System. As you know the power requirements for this thing are tiny compared to the vacuum tubes. It really begins that age of miniaturization and allows for the beginning of the solid state era.
And then you would think or at least I had gone to think that they would come up with this and the world would change. But, of course, it doesn't. These things are incredibly difficult to make. They soon discover. In the archives, as I'm digging, you read all these stories of the guys at Bell Labs who would bring in a military general or CEO of some competing electronics company but the transistor wasn't working that day. It was a very humid day. A door would slam nearby and it would stop working or somebody would be just like tinkering with it the last second to make sure it was working if it was.
So there are all sorts of incredibly complicated development problems. They have to make it reliable. They have to make it manufacturable. And it takes years to actually work out the kinks.
By about the early to mid 1950s they have a factory running up in Allentown,
Pennsylvania and they're moving forward in a way that they have reproducibility as they used to call it at that time.
Now, right about that exact time these guys are actually working in the same lab that Vardean and Bratton are working in. This is Gerald Pearson on the far left.

Far right is a guy named Cal Fuller, who is a chemist. I'll get to the guy in the middle in a second.
Pearson is a physicist who shares the lab with Bratton. He was actually there in that famous day when the transistor is demonstrated in Simon Shockley's notebook. But Pearson and Fuller are working on something called a silicon power rectifier in 1953, '54. It's something for the phone system.
What Fuller is giving Pearson specially treated pieces of silicon that have a diffusion layer on top of them. A slightly doped, although they didn't use that word at the time, end layer or P layer silicon.
Pearson is tinkering with these pieces of silicon that Fuller is giving him and realizes they're incredibly photo sensitive. In fact, by his own measurements he finds that they're more photo sensitive than anything he's ever encountered in the scientific literature.
Now, as it happens, Pearson has a friend from college, Darryl Chapin, who works in another building. Actually, all three of these guys work in different buildings.
And Chapin works on supplying power to remote repeater stations. He's got this problem he's trying to solve, which is in places that are far from the grid where these repeater tubes have to be installed to amplify the phone signal; they use either dry cell batteries or diesel generators to power them, which don't work well, in particular, down south because the humidity; the battery that is. Pearson and
Chapin in conversation wonder if the silicon that Fuller is preparing can actually be useful for that. And the three men go to work and rather quickly come out with something called the silicon solar battery or the silicon solar cell. It's really the first practical solar device, and really the precursor of all the solar panels we have today.
The first test of this is in 1955 in Americas Georgia, to power a remote repeater station. They have these panels on the phone poles near where I live in New
Jersey now and the big difference is the thickness, but it's ironic, essentially the same.
They work really well. Actually, they work tremendously well. But there's a problem, which I'll get to in a second, which has to do with cost.
So the transistor and the solar cell are sort of I think interrelated. And at least for me it sort of spells out a couple of points of lessons maybe of what you can gain from this point in time and Bell Labs work at this moment.
And I think first that innovation at least at Bell Labs was a response to needs and to problems. It wasn't necessarily an unprovoked idea, that being attached to a company that had real problems was incredibly vital for sparking solutions and working through them.

Again, the transistor was that response to at least on Shockley's part for tubes and switches. Some kind of solid replacement. And here it was how do we remotely power these repeater stations where batteries were failing.
Second, I think, we're not very good at perceiving breakthroughs when they happen. When the transistor comes out, the New York Times puts it on page 46, and they bury it at the very bottom of this column called the News of Radio. They don't really understand the value, which a lot of people did not. At Bell Labs actually they really did understand the value, which I'll get to in a second.
But the media can't really perceive it. On the other hand, they seem to get the
Bell solar cell kind of wrong, because by all accounts we've reached a pivotal juncture in 1955 where mankind has tapped the power of the sun and we've sort of harnessed an inexhaustible resource of energy, and things from there on will be very, very different. Which relates I think to the third point which is that invention can be quick but innovating can be long, painful and complicated.
Again, the transistor took years and years to develop into a usable device. It was incredibly expensive in its early days. It didn't compete well on any economic level vacuum tubes. It was really kept alive by military contractors.
The great value for them was to use it in airplanes and submarines with low power requirements made it viable and cost was really no object and they could keep the industry alive, therefore.
The bell solar cell was so expensive that I think two years after it was invented
Darryl Chapin calculated that it would cost him $1.5 billion to get enough Bell solar cells to actually run his home.
So I mean the cost curve obviously is coming down, thankfully, but it was a completely impractical device at the time for general use. It wasn't really until communication satellites came along that they found an ideal problem, device where no other power source could actually do and cost again was not a problem.
I think fourth -- some of this shows that there's no real way at least at Bell Labs in that moment, there's no set way of making breakthroughs. There wasn't a formula, but there was a structure. The transistor team was a mid-sized team that was carefully orchestrated and directed by Mervyn Kelly. The solar cell was the sort of the opposite, it was three people who knew each other but who were in close proximity and I think almost serendipitously it happened. When I say structure, there was kind of an atmosphere of autonomy. And there was an ecosystem that made things like that possible. I think also there was sort of a
Web of human connections.
I didn't really go into the connections within the transistor team. But these were people who very much trusted each other, and I know we talk a lot about innovation. We think in terms of technological prowess. But to some extent I think these were human endeavors, too, and they depended upon the

relationships and the relationships of trust between the men who would sometimes just tap the expertise of someone they indeed trusted.
And I think it worked out extremely well. Not just in these two instances, but in my book where I talk about different kinds of complementary processes whereby mid-sized or even large teams work together really well by sort of atmosphere of trust as well as an ecosystem that used autonomy in a very good way.
Finally I think we see that even when we understand the value of breakthroughs, maybe we don't. It's true, I think, that the transistor was -- the transistor was seen as a replacement for the vacuum tube or switches. And it was that, eventually. But really its great value I think is certainly in computers and chips.
If you go back, as I did, to the archives, and you sort of dig through these letters that arrived at Bell Labs, right after the transistor was unveiled in 1947, you get the feeling every major electronics company in the world is writing to these guys, to Schockley, Ralph Bound, head of research, to Vardean and Bratton and saying will you please send us a transistor.
There's one guy at MIT, Jay Forester, writes to Ralph Bound and he says, he's the only guy as far as I've ever uncovered, yellowing letter that is crumbling and he says will you send me some because I think they have a real purpose in computers that I'm building now.
And the Bell Labs guys did not answer all the letters or did not give transistors away that quickly at that time. But Ralph Bound immediately writes back to
Forester and says we'll get them to you immediately, let us know what kind of modifications we can make and whether the application in computers was apparent to the Bell Labs scientist or the solid state team was at least unclear to me clearly with the Forester letter to Bound it's very apparent there that that is going to be a tremendously vital sort of avenue of research at the time.
And I think, too, that something else we're seeing in that respect I get asked lately what is the greatest innovation that came out of Bell Labs, and I say I think the transistor is certainly sort of the building block of all digital products and contemporary life.
But I also wonder if that answers a matter of time if in 20 years maybe as solar power changes and the cost structure changes if that, too, will be seen as just as important breakthrough.
What I'm pretty sure about, too, is that it wasn't the picture phone. It did not go very far. As you may know, it was a huge disaster, a huge flop. This was a model one. It was introduced at the New York World's Fair in 1964. They actually refined it after then to a much sleeker model, too, in 1968 when it debuted. But really it was hundreds of millions of dollars down the drain.
And it was really interesting for me interviewing people who worked on this project and saying what went wrong, did you ever think it was going to fail. And in fact one fellow said nobody on the team ever thought it was going to fail.

And some of the guys would make the case to me saying with Skype and with chats through Gmail, you can see we had the right idea but obviously being wrong and being early to an innovator can be sort of the same thing.
As just a quick aside for the picture phone, Bell Labs had this huge group of researchers that would really dig into every aspect of any new technology. And some guys who were working under Jon Pierce, another character in the book that I wrote about found out it's actually easier to lie to somebody when you're having a video conference with them than if you're just having a regular telephone call, which means I guess if you want to lie to someone, call them on
Skype.
So I think that I'll just wrap up quickly. I think it is seem like ancient history in some ways. But I do think it's worth studying and thinking about these things in some ways.
To me at least the larger picture is that a small group of engineers and scientists working together can, with a long view and time to work through some difficult problems, can make breakthroughs that change the world, create industries, that create thousands, hundreds of thousands, millions of jobs.
And also but maybe I get some people ask me well you're just in favor of big companies. But I sometimes think the big versus small construct, the big company versus small start-up, there's kind of a false construct. These were small teams working within a larger environment of expertise. And I think that's often overlooked when we talk about it was just this huge colossus that was lumbering forward and had time and money and resources, but I don't think if you look at how they made projects. It's true that the picture phone, for instance, was hundreds of people working on it.
And cellular telephones to some extent was also, but a lot of them were not.
They were just a few people working in a larger environment and they could tap different kinds of expertise when they needed to, which proved vital, but really it was a few people who ended up getting that ball rolling.
I think too to that extent what was vital at Bell Labs and we focus on invention and it could stick with these ideas, it could develop them for years through years of frustration, of being attached to a phone monopoly, gave it incredible advantages, incredible financial advantages, incredible noncompetitive advantages that they could stick with these things. But still that bottom line that the taking the long view really can pay off, is pay off, doesn't pay off obviously quickly.
Maybe it never pays off in this case. But at the same time that it's important and it's worth thinking about. Thank you very much. Appreciate it. [applause].
>>: Let me point out a couple of things before we start asking questions. I should point you to the back corner here where our copy of Jon's book is available. And

for those who now really want to read it, and then for the rest let's just open this up for questions.
>>: Back when I worked there, one of the things that always impressed me was the quality of person Bell Labs could get. The top scientist, the guy invented C++ where we wouldn't be in this room without him said I wanted to work for Bell
Labs, because of the international cache that it had. Will we ever see that again?
>>: That's a good question.
>>: I wish I could tell the future. I hope we do see it again. I think in writing this book, I certainly didn't write it to sort of say we need to build another Bell Labs, that we could build another. I'm very much a believer we live in a different world right now.
I don't want to be sentimental or nostalgic, I think it's important to understand what it was. I don't know. I think that -- I don't think we'd see it in National
Laboratories, universities have their own cache, but it's different.
Microsoft has its own cache. Google has its own cache. So I think it's not maybe as monumental. It doesn't cross over from pure science to applied science, to engineering, to manufacturing in the way it did Bell Labs. I think the models for innovation are much more distributed now between how research is funded, how it's conducted, how it's actualized, especially in the valley or up here. So if I had to make a bet, I would say we might not see it again. But I'd still say I hope we do.
>>: You made a point earlier on that AT&T was this vertically -- that AT&T was this vertically integrated which had its finger in pretty much every part of the pie,
[inaudible] and it made end user equipment as well.
How much of that had an influence on the innovation which came out of Bell
Labs? Because looks like they had problems to solve in every part of the value chain. And that has had out size effect on the innovation of Bell Labs.
Jon Gertner: I think it had a significant effect. I think in my conversations and interviews, you did hear that the theoretical physicist kept themselves insulated from the real world problems of the phone company. But I think even folks at research that there was this notion that their work would have some real applications could certainly move over to development depending on its success.
So Steven Chu once said and I quote him in my book, and he was at Homedale working in this atmosphere of applied technology, it doesn't compromise you, it sharpens your mind. And I thought that was probably appropriate. That was very much in line with at least what I learned from my research. So, yes, definitely, just simply yes.
>>: I worked there in the '90s, too, and we worked on a newer version of the picture phone that we were also stunned.

Jon Gertner: I'm sorry.
>>: But you make a good point that a lot of these innovations were driven sort of by business needs, sort of the main business. However, do you find like looking over the history of AT&T they were unable to sort of capitalize on sort of greater business opportunities they might have had. One of the things that struck me, for example, is the Allentown plant semiconductor plant was way behind what Intel had at the time. And Bell Labs tried or AT&T tried to make microprocessors and computers and all these things, but they were never able to capitalize on a lot of these innovations, at least that's the way I sort of remember it.
Do you find that that's true?
Jon Gertner: Yeah, I did. I'm going to give a two-part answer. One is that they had this going back before the phone company was broken up there was a consent decree that was signed in 1956 where they effectively either gave all the patents way or licensed them.
So all their technology was effectively dispersed and the monopoly at the time was still functioning. So they had dominion over telephone and anything they could use any of their own technology for telecommunications or for military work, but they're forbidden for being in the computer industries or the like.
So the idea of them competing, for instance, with Intel and making chips which was a much later thing, I think, too, that Bell Labs, Western Electric, AT&T, they were building things, it was a company that existed to make things that lasted 30 or 40 years.
And very quickly I'd say definitely within the '80s and certainly by the '90s it had shifted decisively to a place where the business cycle was much, much faster. I think in the book I said it went from 30 to 40 to three to four, and my conclusion at least was that it had a very, very hard time adapting to that.
It was completely foreign to them and they just could not get up to speed quick enough.
>>: As part of that consent decree there was this little thing called the license fee.
Jon Gertner: Right.
>>: Would that ever work -- you can explain what it is. But would that ever work outside of the monopoly?
Jon Gertner: That you were allowed to license, for instance, the transistor for whatever it might be?
>>: Couple bucks, whatever.
Jon Gertner: Yeah, exactly. I don't know. I mean, it's a great question. It's also the question that's also asked of me is somewhat different but similar would

funding basic research in the same way they funded basic research ever work outside of a monopoly. And I lean towards being doubtful of that. So I think it was a very unique situation. So that at least was my conclusion, yeah.
Sure, back there.
>>: The reputation of Bell Labs is sort of strong and positive now. Was there any
.40, 50, 60 years ago where it was controversial or were there critics of Bell Labs or the university researchers look at it differently or has it always been relatively strong?
Jon Gertner: I mean, I think it was stronger. I think some people felt it was arrogant. But I guess a lot of people I ask that question to said we were arrogant because we should have been arrogant. That they felt they were better and maybe they were better.
They had the best people in the world working there. But western electric and
AT&T, for instance, got an awful lot of criticism. A lot of it deserved. And Bell
Labs was like this kind of in some ways untouchable sort of national treasure.
And I think in a lot of ways it sort of was a part from the kind of criticisms of either arrogance or incompetence that were directed more towards Western Electric and AT&T and the academics there were very close with the academic community at MIT or any of the great universities. So the difference being that they didn't have to teach classes and they didn't have to apply for grants.
So it was almost more academic than academia was, and in that regard, yeah, they were held in incredibly high esteem.
>>: So since studying innovation, I'm assuming you're familiar with Ray Kurzweil.
Jon Gertner: Ray Kurzweil, yes.
>>: What do you think about his theory of development. He thinks it's exponential, it's going to hit a single [inaudible].
Jon Gertner: You know, I haven't read his book on singularity. You know, there's I guess Peter Demandis[phonetic] , who is also teaching, has this book
Abundance which sort of picks up on some of these ideas of exponential growth in innovation.
This coming Sunday I review the book Abundance for the New York Times
Sunday Book Review and that might give you a sense of what I think -- what's that? The preview is? I think they make a very interesting case. I mean, I think it's worth, very much worth listening to and debating.
You can read the review and let me know what you think.
>>: Could you compare and contrast or if you even have the data to do this, the innovation culture at Bell Labs versus Xerox Park.

Jon Gertner: I have read the book on Xerox Park. I mean, to me, at least -- and again, this was a while back that I read that book -- I think the research cultures may have been similar and were similar in some respects in autonomy, but Bell
Labs also had that huge development facet to it.
And also something I didn't talk about at all they had manufacturing people that were doing technology of the manufacturing plants I'm not saying it was a better level expertise but it was a different dynamic with that kind of weight.
And really at Bell Labs there were only like 10 to 15% working in basic and applied research. So of that 25,000 in 1982, think about how many of those were actually in development or there was that military component, too, and there was some exchange of ideas, too, between people working on military projects and people just working on telecom development.
So it was a different, I think -- a different kind of idea sharing in some ways. And probably would more of a kind of practical and diverse body of knowledge, because it wasn't so focused on computing, which is to take nothing way from
Xerox Park at all.
>>: I think you mentioned that they had a structure process around innovation.
Could you elaborate on what that looked like?
Jon Gertner: I go into it a lot in the book. I won't go too deep into it. But I think there were different aspects of it. Part of it was the way they set up their research and development wings of the labs.
Part of it was even architectural I think in the way they designed Murray Hill. Part of it was the way they managed and giving certain people autonomy. Not complete autonomy, but autonomy to be curious.
Sometimes -- and I tried to make this point, too -- I certainly didn't write the book because Bell Labs was perfect and in fact the picture phone and other things, it was like any large institution, it had its flaws and its problems.
Sometimes very brilliant people would supervisors would try and dissuade them from their ideas and they would say hell with you I'm going to do it anyway and they would have real successes too and be tolerated which I think is part of the culture too that you can tolerate dissent to some extent.
So it was a bunch of things. But I do go into it fairly deeply in the book.
>>: Question online, what was the compensation system at Bell Labs like; did they do anything special to reward innovation?
Jon Gertner: They did. The compensation scale was low. Although, you know, when they hired some of the people who really formed the core of my book, it was actually quite high compared to academia. And to explain in some ways how they got great people, part of it was the culture. Part of it was the reputation.

Part of it was the ability to work on research without teaching classes. But part of it was in, at least coming out of the depression they had money and could hire really good people at a time when very few companies could.
And certainly academia was paying fairly low. As things went on, the compensation scale was modest. Some stars were rewarded. In fact Schockley spent a long time looking at the compensation structure of researchers at Bell
Labs.
Schockley would get deep into these sort of side projects and he found out that
Claude Shannon was actually underpaid and so he made sure. And Shannon sometimes didn't cash his checks. So I don't even think Shannon gave a crap about what he was making.
But eventually -- and the final part of my answer would be certainly by the '80s it was -- the compensation scale compared to what you could make, for instance, out in the West Coast as an entrepreneur was clearly being fast, fast outpaced.
>>: In the spirit of that, you said we live in a very different world now. And in duplicating this, how much does the behavior economics of people being risk averse and staying in larger companies versus nowadays if you're creative or not risk averse, you'll jump out into a start-up. So you no longer have that great mix of eccentric people, risk seeking people, highly curious people and the stability that comes from a company. Now certain people for behavioral reasons jump out to startups and rob more of that radical creative Gestalt pattern matching out of large companies. Is that one of the quote issues why it's so hard to produce this stuff?
Jon Gertner: I think it's a great question. Schockley was like the original start-up guy. He left Bell Labs to go create Schockley semiconductor in 1955 in Palo
Alto. I think, yeah, one of the great challenges for large companies as you get bigger is preserving some kind of culture of creativity, of helping people sort of feel connected but still free.
There was no start-up culture when a lot of these guys were doing their work.
There was no temptation to make a million dollars. It never even occurred to them. Bob Lucky, one of the guys in my book said, you know, it wasn't even conceivable. That world did not exist. Just like the Internet did not exist. It was not something that they would think of it. They were in it really for the adventure, for the curiosity. So I think, yeah, it's true. I still think that companies can and do preserve cultures of innovation, they're vibrant. I think not everybody wants to work for a start-up, people do and then come back to the fold, too.
But it's a great point.
>>: [inaudible] Bell Labs you keep referring to Bell Labs.
Jon Gertner: I do. There were. And in fact they began -- I'd say they opened their ranks first broadly in the mathematics department and especially during
World War II when women came in in good numbers. But even in the late 40s,

you know, this was a white Anglo-Saxon Waspy non-Jewish I talk about in the book, there was a strain of anti Semitism that ran through AT&T that Bell Labs really bucked really by the late 1940s to its credit under Kelly and hired Jews.
But I remember coming across -- I was at Palo Alto digging through William
Shockley's papers and Schockley kept a photo album from a dinner party from
1947 and it was like 100 Bell Labs researchers and it's beautifully photographed, and everybody ate oysters and martinis and smoked cigars. There was no women there. It was all guys in ties. It was a boys club, really not until the 1950s did it really change, and then mostly in the 1960s.
>>: There's a theme that goes through your discussion that makes me think that maybe innovation too early has negative effects. Did you see that in any of this?
Jon Gertner: I did. Negative effects for the company for the people who worked on it. I think so. I think partly it also relates to -- I mean at least in Bell Labs' case, there was more coming out of their laboratory than they could possibly implement into the system.
So it was almost, I think, there's some part in my book where there's like this raging river and the trickle that would come out of AT&T of technology and what do you do with these people who are thinking far far ahead to a world that could be and yet you still have these parts of the phone system that are built 30, 40 years, how do you implement them.
I think, yes, one theme, too, I think is that, yes, you can be too early and Bell
Labs being too early meant a lot of times your stuff would be shelved.
But I think also that being, that time and again these guys I wrote about,
Shannon and pierce were so far ahead of their time, in their thinking, it's just so striking. Pierce was in the 50s envisioning at a time really nobody else would that we would walk around with hand-held phones and Shannon was into robots that was in a way so incredibly prescient you could read the book and get more of a flavor for that. But it was quite remarkable that way.
>>: Another question from online. How is Bell Labs compare to research labs of today such as [inaudible] and IBM Research.
Jon Gertner: I'm waiting for someone to invite me to come visit your research labs and get the grand tour. Part of my answer is going to be that I don't -- although I know some about IBM and Microsoft's research efforts. I don't know nearly about them as I do about Bell Labs.
I will say that when I talked about how the world is different, I mean, I really do believe it's very difficult for corporations to capture the value of the science experiments that at least in the Bell Labs days this kind of high risk, very uncertain reward kind of work. And to do it on that kind of scale is very difficult, and it's why we have such a different system today. And I just think I'm realistic about that. I'm not nostalgic about it. I think that's just sort of how the world has changed, which is not to say it's worse. It's just different.

>>: You also mentioned in your book there was a lot of investment in Bell Labs and things completely unrelated to AT&T's business, there were psychologists, sociologists, economists, mathematicians.
Jon Gertner: Biologists.
>>: Biologists inventing stuff for stuff's sake. As it got closer to divestiture that all went away. I think that's one of the big losses that they could afford to pay the guy invent the double blind experimental techniques that are so fundamental in society now. The guy invented it worked for Bell Labs. Had nothing to do with phones.
Jon Gertner: Right. I didn't go into too much of their psychological research, their biological research in the book. And again I think it's a great point to make that I mean I had other people make sort of the opposing argument like they had no business doing that. They were wasting phone subscribers' money and I think ultimately some of that work was done away because they felt like they couldn't really justify it.
I mean, even in the early days, like Jon pierce who is again a character in my book, was arguing we should do computer music simulation experimentation.
And that would get a skeptical eye from AT&T and they'd have to go before the board and justify these cases that they were making. And then they would say it's important for speech synthesis. And it was, sort of, kind of.
And they would convince them that. But, yeah, I think it went farther in that direction where probably arguably it became harder to justify.
>>: Thank you very much.
Jon Gertner: Thanks everybody. Appreciate it.
[applause]