Hewlett And Packard: The Humble Garage Startup That Birthed Silicon Valley
The Hewlett-Packard Company, commonly known as HP, is a multi-billion consumer electronics company and one of the first few names that pop up in your head when you think of computer manufacturers.
However, HP is much more than that - it's a company that revolutionized corporate management and management style and changed the face of technology.
Its birthplace was 367 Addison Avenue Palo Alto, California, in a rented single-car garage where in 1938, the founders Bill and Dave started manufacturing audio oscillators, now marked with a bronze plaque designating it the 'Birthplace of Silicon Valley'.
Bill and Dave's story served as an inspiration to great minds such as Steve Jobs, Jerry Yang, and many others because it's proof that anything is possible if you're determined enough to put some work into it!
The Vision For 'Silicon Valley' Was Born
Even when they were kids, it wasn't hard to notice that Bill and Dave were determined to make something of themselves.
Dave was born in 1912 in Pueblo, Colorado, from a young age he showed strong leadership characteristics and an interest in engineering, science. He earned a bachelor's degree from Stanford University in 1934, the place where he met two of the most important people in his life: his future-wife Lucile Dave and future business-partner Bill. Although he worked at General Electric Company in New York for a short time, in 1938 he returned to Stanford to earn his master's degree in Electrical Engineering.
His future partner Bill was born in 1913 in Ann Arbor, Michigan and the son of Albion Walter Hewlett, a professor at the University of Michigan. In 1916, Bill's father accepted a similar job at Stanford University and his family moved to San Francisco. Sadly, the one event that changed Bill's life course was the death of his father in 1925. As a favor for his late father, Bill was accepted at Stanford, but he didn't take that chance for granted. He was a dedicated student who earned his bachelor's degree in 1934, followed by a Master of Science degree in Electrical Engineering from MIT in 1936 and a master's degree in Electrical Engineering from Stanford in 1939.
Stanford had been the birth-place of geniuses such as Professor Frederick Terman, one of the most prominent engineering professors and the visionary of what we know as the 'Silicon Valley' today. Terman had the idea that America needed a knowledge-based region, and he envisioned Stanford as a great base for that. He presented the idea and tried to convey the spirit to many of his students during the 1920s and 1930s, but he had his eyes set on two brilliant students: Dave Packard and Bill Hewlett.
Bill and Dave had talked about doing business together in 1937, so professor Terman suggested they start up a workshop and construct products based on what he had taught them.
Two Nearly-Broke Electrical Engineers, One Big Idea
The year was 1938, the Great Depression was underway, but the two college pals were determined to put their ideas into perspective. They managed to put together $538 as start-up capital and rented a humble garage on 367 Addison Avenue in Palo Alto, California.
The partnership name was chosen by a toss of a coin. The heads was Hewlett-Packard and the company was officially launched on January 1, 1939. Just a few months after they'd set up the shop in the garage, they managed to land their first big contract: they sold eight audio oscillators to Disney for the soundtrack of Fantasia.
Here's what made Hewlett-Packard's products stand out from the competition: price and stability. While most audio oscillators were sold for $200, HP sold their HP-200A oscillators for $50 and that confused the competition and questioned the authenticity of HP's products.
As orders for the oscillators grew, Bill and Dave started employing workers and moved from the garage to a rented building in Palo Alto. The company was growing at a rapid rate, so in 1942, the duo invested in constructing their own building.
Dave Invents The HP Way
As World War II roared on, America needed help from big companies, and HP was eager to help. While Bill served in the US Army, Dave attended a conference on wartime production in 1942. His vision on management within companies, though, opposed to the giant industrialists at the time. He believed that management has a responsibility to its employees, customers, and the community - a statement that has stood the test of time and is still valid.
The company began building equipment for the US government and kept growing at the same time to reach $1 million in annual sales by the end of the war.
HP became famous for its unique management practices, especially at a time of military-style management. Dave wanted his employees to feel a sense of teamwork, equality, and informality, and the company established the first company-wide health-insurance plan in the US.
Simultaneously, HP also pioneered the first purposely-built open offices and provided productivity-related bonuses to every worker. All these innovations during a time of war represent the HP Way, the golden standard of managing companies developed by Dave himself.
With the company's incorporation in 1947, Dave was chosen to be the first president, while Bill was selected as vice-president and they were both headed for the top!
HP's Breakthrough In The Digital World
HP was moving in one direction: upwards!
As the company's revenue grew to $28 million in 1957, the duo decided to make HP public. By 1959, they opened offices in Switzerland and Germany.
In the early 1960s, they formed a partnership with Japanese tech giant Sony. However, the deal turned out to be a bad move, and HP continued to trace the path through the Asian market by themselves.
HP was already huge in the consumer electronics market, and the founders had their eyes set on the computer market. Their plan was to take over the Digital Electronics Corporation and their PDP-8 microcomputer, but DEC's co-founder Ken Olsen rejected the deal, so they had to come up with a different solution.
Bill and Dave knew that the computer market was the future, so in 1966, they opened HP's Dymec division to create the company's first microcomputer. Two years later, HP released the first-ever desktop calculator that had the ability to store programs on a magnetic-card storage - at a price tag of $5,000!
Dave's Stint In Politics
Although they remained friends and co-workers for their entire lives, Bill and Dave were very different, and their characters reflected the company.
Bill was an 'engineer's engineer' who enjoyed talking to his team of experts. Meanwhile, Dave was a born leader. His talent was recognized by President Richard M. Nixon and in 1969, he appointed Dave to become the US Deputy Secretary of Defense. In order to perform his newly assigned duties, Dave resigned from his CEO position in HP and granted it to Bill. When he returned in 1971, he was re-elected Chairman of the Board, while Bill held the CEO position until 1978.
During his time as the CEO of HP, Bill received a phone call from a 12-year-old boy named Steve Jobs.
Yes, Steve mustered the courage to call Bill - at the age of 12!
He asked for any available parts for a computer he was building, and Bill was so impressed by the youngster that he invited him for a summer job at HP. Once he became a founder himself, Jobs had stated that he considered HP as one of the companies he admired, as he believed it was made to last, not just to make money.
Another one of Apple's founders worked in HP, Steve Wozniak. Steve was an engineer and used HP parts to build his first computers. He and Jobs offered to sell Apple I to Bill five times, but Bill politely declined the offer.
The '80s were just around the corner and that meant only one thing for the duo - new markets to conquer!
HP Dominates The Computer and Printer Markets For Decades
During the 1980s, HP was rubbing shoulders with competitors in the computer market but they had another card up their sleeve: the printing market. The first HP ThinkJet and LaserJet printers were unveiled in 1984, and HP had no competition when it came to selling printers.
Bill and Dave had another 'unfair' advantage: they were experts on visualizing potential market needs. They recognized the Internet to be the next-big-thing, so they registered the domain hp.com in 1986 - as the 9th registered domain in the world!
Prior to the Internet boom, HP's products were mainly used by businesses. However, as most households started to look for affordable and practical personal computers, HP started shifting its production to suit the individual rather than the business, allowing them to grab an even bigger part of the market.
HP After Bill and Dave
At the beginning of the '90s, HP was all in for the expansion of its computer product line. In 1992, Lewis E. Platt was elected to be the CEO of the company, and he succeeded Dave as a chairman of the board, after co-founders Bill and Dave decided to step down from the company in 1993.
Sadly, HP's original founders died just a few years apart: Dave died in 1996 at age 83, and Bill in 2001, aged 87. Although they weren't with HP anymore, they left the company on good terms, proud of what they had built.
Following the death of the two founders, big changes had to be made in the company. In 2001, the company made a $25 billion merger agreement with Compaq, its biggest competitor at the time, and although analysts predicted a disastrous integration, the merger was a surprising success.
HP's glory days were during the mid-2000s and early 2010s when the world was heavily into personal computers. With the rise of popularity of smartphones during the mid-2010s, they experienced a decline in sales, which reflected the company's market share value.
Nevertheless, HP still has a powerful position in the PC market. Today, the company holds a market value of $26 billion, and a rich history of more than 80 years.
HP has truly stood the test of time and proved that the only way to succeed in Silicon Valley is the HP way - adapt, improvise, overcome!