The HP Story: Part One

A screaming comes across the sky. Wow, thank you. That's significant. Yes, uh, not for what we're talking about, really, but I like the quote. Yes. Today we are doing part one of a multi part series on a company that has had a massive influence on the world of technology, Hewlett Packard, and massive influence on American business as well. I mean, really, there without HP, there's not really a silicon valley. No. HP was kind of the the kernel that would grow

into the glorious crop that is silicon value. And my metaphors are terrible today, thanks, but anyway, yeah, HP is kind of it's one of those companies that really is the foundation for what we think of a silicon valley, even though you might not necessarily think of HP as an innovator, like the people who created the integrated circuit or you know, it's not like it's Bell Labs or

Texas Instruments even, but they were very good. It's a company that's very good at creating technologies that were priced lower, more efficient than other companies, and so really kind of propelled the electronics industry into the mainstream. Yeah. And in a lot of ways, their innovations came from UM products that used those devices, transistors and a lot of the other uh devices that we've talked about for other companies

that have have been innovators and technology. UM. But it's funny because this is a this is a company where two guys met on a camping trip and ended up building a company based on negative feedback. Yeah, that's funny. Funny you should say it that way. Yeah, So, um, let's let's say that. Well, let's set the scene a little bit. So, So in nineteen twenty nine, there was a little event where some stocks took a little dip and plunge the world into poverty and economic chaos. Yeah,

it was. It was a depression that was so incredible. It was great, the Great Depression. I the people who lived through it wasn't so great for them. But yeah, the Great Depression hits nineteen nine, and really the world is in recovery all through the nineteen thirties. You know, it's it's not something that the world just bounces back from. But in the mid thirties, two Stanford University students met, as you said, on a camping trip, but which I

think it's fascinating. Yeah, but these guys were both attending Stanford University and the pursuing degrees in electrical engineering, and it was William Bill, Reddington Hewlett and Dave Packard. Yeah, keeping in mind too, we're we're talking about the late nineteen twenties and early nineteen thirties. UM. Regular listeners of tech stuff will remember our conversations about a C versus d C back UM in in you know, within that

we're talking within fifty years of places getting wired. So these guys are really kind of still on the cutting edge of electricity. This is the point where people are studying electrical engineering. So they're you know, they're they're getting in on the beginnings of UM a brand new type of industry for the for the United States and in the world. And so they both graduate in nine with

undergraduate degrees, but Hewlett was suing his work. He was actually pursuing a master's degree in electrical engineering, and as part of his thesis, he began to work on a prototype of a device called an audio oscillator. And here's where negative feedback comes in. Yeah, because one of one of his mentors was very interested in this work and was kind of taking a shine. Actually he kind of took a shine to both of these lads back in

the day. But yeah, So the oscillator, in case you're wondering what it's supposed to do, it actually creates a steady specific tone and you can choose various tones depending upon the oscillator. It's not like if it's not like if it's not a machine that only goes deep. No, but it allows you to create a steady specific tone. And it's really used as a measurement devices to help try and test other devices. And for a long time that's what he Hewlett Packard the company was known for producing.

It wasn't known for produce saying devices that the average person would find useful. It was producing devices that industries were using to test their own equipment so that their equipment was you know, properly running. Yeah, HP, I would I would argue that HP was a business to business company, not completely, but for the most part up until the

late twentieth century. Yeah. Yeah, So this oscillator, Uh, this prototype that that Hewlett creates ends up being a pretty useful design, and it forms the basis of what would

become HP's first product. Now it didn't HP did not exist as a company yet, but when Hewlett had created this prototype, which later would become the Model two hundred A. And by the way, the reason why it was called the Model two A was to sort of give companies the idea that Hewlett Packard had been around as its own entity for a while, sort of like when you start a new checking account and they ask you if you want your checks to be numbered at a different

number so it looks like your accounts older than it actually is. Or when you form a band and your first album is called Greatest Hits. Yes, yes, that would be the idea. Uh, don't you know, I know that there are bands who have done that. I was gonna say, don't steal that, but technically I guess I stole it.

So anyway, so Hewlett creates this prototype and during this process before there's actually a company, Um, a Disney engineer saw the prototype the two what what would become the two hundred day and the Disney engineer was working on a little movie called Fantasia. Yes, we've talked about that too, about the cents around system. Yeah, it was definitely a

big player in changing the way movie theaters are designed. Really, I mean, to to truly show Fantasia in the way that it was meant to be shown, theaters were going to have to spend thousands of dollars renovating and changing out their systems. In fact, very few theaters in the grand scheme of things actually followed through on this, but

it did help push through the whole surround sound era. Anyway, the engineer saw potential uses for this oscillator, but not exactly in the form factor that it was in uh in eight, So he made some suggestions to to Hewlett about how to change that, and so Hewlett then went to work on that and would sell in nineteen nine eight model two hundred B oscillators for the princely sum of seventy one dollar and fifty cents each. There was a lot of money back down. Yeah, that that totaled

out to be five and seventy two dollars. Well, that's important because in nineteen nine, did you have something else? Well, I I have a couple of bits that actually go back before that. Oh well, then we're gonna have to backtrack. Well just just just a tad um to nine ten o five actually, because this is sort of relevant, but it's not. I think this is one of the fascinating things about HP because the thing I'm going to talk

about is sort of legendary and HP lore. It's a house built at three sixties seven Addison Avenue in Palo Alto, California. Um The residents there are Dr John Spencer and his wife and two adult daughters. As a matter of fact, he was the first mayor of Palo Alto. But um actually divided the house in eighteen into two apartments. And uh, if you look at the Sandborn Insurance maps in nineteen twenty four, there's a twelve by eighteen foot garage that

appears on the property. The garage is what I would call a shock Ye look at a picture of it. It looks like a little bitty shack. Yes, yes, so in ms love shack in thirty five, Dave Packard moved to Schenectady, New York to work at ge UM see

again one of the early electrical aniers UM. And Bill finished his graduate work at at Stanford UM and then went to m I T returned to Palo Alto, and then that's where they you know that, that's where they ended up living, was in that house because they had their first business meeting uh in seven he uh Dave was still working at ge at the time, and uh Bill convinced him, hey, let's make a go for this.

And Fred Turman, who was the professor at Stanford, who had sort of taken a shine to them, was the one who made a suggestion that maybe just maybe they should uh use this create this device, the oscillatory you were talking about to detect negative feedback. UM. So yeah, in thirty nine, that's when on January one, as a matter of fact, that's when they formalized their partnership. They decided they were going to go and make a company. And I love the way they decided to choose a name,

Heads or Tails. Now we're not kidding, that's really how they decided who's aime was going to be first. It was a coin Flip and Packard one, and yet he chose Hewlett Packard as the name. Well I'm glad he did because HP we know of as HP. But if it had ended up being pH wonder which one of them was more acidic, or that's a very base company, or maybe people would talk about their stock and say, yeah, it's neutral. Yeah, there's a lot of jokes that we could make. Yeah, HP is an iconic now, yes, and

then I think they accidentally chose wisely. So they formed this company January one, nine and they the company is is essentially operating out of that little garage. Well that's actually where Bill had been living, except in nine he married Flora, his wife, and then moved out. Yeah, which which was good because they needed a business office. Now do you know how much money they spent to form this company? Well, I know, I know how much money

they had. Well I know the asset, Yes, the assets to the company that was in cash, five hundred thirty eight dollars in cash and a used drill press, used Craftsman drill press, by the way, interesting that somebody had documented if you're wondering what that is in today's dollars, eight thousand three hundred fifty four dollars, not exactly princely Some to found what would become a multinational, multibillion dollar company. You know, for those of you keeping score on the

Tech Stuff scorecard. That is the second time he's used the term Princely Some in this podcast. Yeah. Well, the five hundred and seventy two dollars that they had made from Disney was more than what their starting capital was. So they're doing pretty well. Yeah, they're they were profitable early on anyway. Um so, yeah, so nine thirty nine

they formed this company. They've flipped the kay and they figured out what they're calling themselves, and they officially start to market the Model two hundred a oscillator, which was based on that prototype that Hewlett had built in his master's thesis. They had. They did pretty well pretty quickly because they were able to move out of the garage. Yeah. Yeah, by the by the time nine ends, their revenue is five thousand, three d sixty nine dollars and they have

two employees. Hey, but then in nineteen forty they move into a least building. They don't own the building, they're still leasing space, but they're able to expand outside of the garage, and in nineteen forty they do something spectacular. Are you talking about the the this is the business leadership party bonuses Christmas bonus to their employees, which that that was the princely sum drink of five dollars. But again five dollars wasn't that wasn't small at that point.

And they also adopted production bonuses too. They didn't have too many employees. It wasn't it wasn't a huge investment, but it was. It does show an early example of what the founders thought was important when they were forming a company. They really this was an era. It's it's easy to forget today, right, but this was an era where the idea of company loyalty was a big deal, especially because you're talking about after the Great Depression, where

things were so uncertain for so long. It was very important for companies to establish themselves as being reliable, as being stable, and as being it was a two way street. You know, employees would contribute their work and their efforts for the success of the company, and the company in turn would look after the employees and so not to make to say that everything every company did back then was good, but it was a different world. Than it

is today. Today, you might see someone with an engineering degree hop around quite a bit from company to company as they find the best the best deal for themselves personally. Well, this was a different era where you know, you you you got hired by a company and you tended to stay there. Yeah, well you were kind of expected to stay there, you know. Well, Plus, you know, thinking again about the times economic times, this was fresh after the

Great Depression. The company was still uh it was hot on the heels of the recovery period or in the recovery period really, so you were kind of lucky to have a job. So they didn't have to do this, but they did anyway. And they also offered the company's first charitable donation, which was again the princely sum of five dollars four times uh so. Yeah, And and the way that they were able to be so successful so

early on lay in Hewlett's design of these oscillators. Now, the oscillators that were on the market already before HP had formed were often sold for between two hundred and six hundred dollars uh, and Hewlett was able to create more efficient ways of of building these devices using cheaper materials and uh and even make them more reliable. So they weren't just less expensive to create, but they were better oscillators than a lot of the ones that were

on the market already. His two a oscillator was sold for fifty four dollars and forty cents, which was a price apparently chosen because they liked the slogan fifty four forty or fight that's true, which is you know, this tells you something about the founders of HP, where they settle on the price for their for their products based upon popular slogans from the nineteenth century. That's okay with me.

I always like the quirky companies. Yeah, you know, I gotta say that this whole oscillator thing I keep going back and forth on. So let's analyze some waves, shall we. Well there was an interesting wave um. Of course. One was the year that the United States entered World War Two after the bombing of Pearl Harbor um and as a matter of fact, Bill decided to leave the company for a while. He served as an army officer until

nineteen seven. So Dave took over and said, all right, well, I'll leave the company until you come back, right, And he did, and that in ninety one was also when HP began the production of the three hundred A, which was a wave analyzer sound it's was made for UM measuring amplifiers. And then there was also a a volt

meter that Packard designed in nineteen forty one. In ninety two that would start that would be sold as the four hundred A. So again these one thing I would I would uh scream out to to the the time Vortex would be for Hewlett and Packard to name their products something other than numbers and then a letter because it's very confusing to me. But yes, the three d A is a wave analyzer, the four hunt A is a voultmeter. And then in n HP does another jump

in in the way of a company looking after its employees. Yes, it introduces health insurance for employees. It's not the only company to do this, but it's one of the earliest ones. Yeah. Yeah. As a matter of fact, they started building the first HP owned building. So we're looking now at just a couple of years after the company got on its feet. Um, it's able to construct its own building, and they decided they wanted the floor pant plan to be wide open. Um.

You know, it was supposed to be versatile. That's that's kind of a practicality part of it. But as it turns out, it was also and also made it easier for the company employees to share ideas and come up with with new new kinds of concepts and new new products. Yea, so this is a moving away from the old. Everyone has their own office model and at this point everyone is eight employees. Well, you know, it's still kind of tiny.

It is kind of tiny. Okay. So in three h HP got into microwaves, and we're not talking about cooking, we're talking about again making products for other businesses that use microwaves. So they were getting into signal generators. So, which is not something that you are I typically use as part of our day to day stuff, but not typically No once you know, once in a blue moon, Well only when you need to generate signals. I'm pretty good at generating signals. Yeah, we can't stop the signal.

So anyway, so in the the owner of the house, um was who which with bead dead. Let's turn this over. The owner of the house with the garage left Palo Alto um and when when she did, uh, the subsequent owners of the house continue to lease it out as apartments and even the garage to um. But we'll come back to this, believe it or not, because the uh, the house in the garage will factor into the history

of Palo Alto pretty significantly. Yeah. So August eighteen, n HP incorporates and Packard becomes the president of the company and Hewlett is the vice president of the company. And in that year the company generates eight hundred fifty one thousand, two hundred seven dollars in revenue and has one hundred eleven employees. So that's a pretty big jump. You know, this is still it's not even a decade old yet and uh, and it's doing quite well. Um. The the

electronics industry is blossoming right now. This is still early days for electronics, keep in mind. Yeah, and so Hewlett Packards really on the cutting edge when it comes to creating electronic devices, specifically for other companies to help test their own equipment. Yep, yep, it's funny. I have a quote from Bill Hewlett that I got from the Hewlett Packard UH company timeline. Um. He said, quote, we just happened to be on the top of the rocket when

it took off. We were here with electronic products. When electronics became a big thing, we went up with it. We don't deserve one damn bit of credit for the success of Hewlett Packard and quote right, um So, his point being that it was the right place at the right time, and anyone who had done that would have been successful. Although I think that's definitely a lot of

modesty on his part. I think so too. Um. I think both of these guys obviously show a lot of um courage and willing to take a risk on a fairly new uh market. I think they also show a lot of creativity and leadership. Yeah. The fact that you know, you've got to remember both of them were both of them were engineers. Yes, so they came at this, they created this company from the perspective of engineers. They were not like business you know, students who let's come up

with a company, what will it be about? Right exactly. These were guys who were problem solvers and then they built a company around that. And not that doesn't always work because the skill set to run a company and the skill set to be an engineer don't always overlap completely. Uh So, the fact that they were able to create this and make it work. That says a lot to their abilities. I think I think again that he was

being quite modest with that that quote. I agree, So I just think it's funny that it shows this that you know their pluck and their their attitude behind the company right right, And you know what is important for us to focus on what their philosophy, you know, how how they felt about things, because that's gonna play an important role when we talk about HP the company as it is today, because there are a lot of things that you can point to where you know, you're like,

how did the company that was this become the company that is this? It's not always positive or negative, but there are some significant differences. So in ninety HP produced the four B voltmeter. So still not anything that consumers would necessarily ever see. But um, the next thing I have is in nineteen fifty one, do you have anything before? Um? No, but just a general note from again from HPS. Overall timeline that uh, Palo Alto and and the time that

they started this company was still fairly small. Of course, you know, Stanford is a very big university at least now, but I mean physically, um, but Palo Alto was was kind of a small ish town. And uh, this is right about the time in the nineteen fifties that Hewlett Packard, the company says that the city really started to boom in size. A lot of people started moving there, and a lot of people became interested in these fields electronics

and well early computing technology, business machines. I would say at this point, um, and so it became a place to be. And I would argue again that this is partly due to the success of Hewlett Packard, because I'm sure people were watching. Yeah, and uh, I went in on that how do I get to be a famous engineer? Will you need to be in one of these companies like Hewlett Packard, because these guys are cutting edge? Yeah, and uh. In nineteen fifty one, they invent the company

invents the high speed frequency counter, which counts frequencies. It's you say that like it's a bad thing. The model is five to four A. Yeah, and actually it reduced the amount of time needed to measure very high frequencies. So it was again a useful device for other companies. UM. And two, it introduced the two hundred A B and

two hundred C D audio oscillators. Now, these oscillators replaced older oscillators in the the HP line, like the two and the two hundred B that we talked about, the ones that were introduced back in nineteen nine and nineteen Uh, those have been discontinued. They were they were outdated, and so the two and two c D were meant to too solve the same problems as the two, but they were both more versatile than the earlier models and more sophisticated. So it kind of shows that HP was sticking with

its its roots. It hadn't really started to branch out into other kinds of electronics yet. Now the next thing I have is nineteen fifty six, are talking about the acilloscopes. Uh,

well we have them. HP produced its first the selloscopes in But I was talking about a spinoff company that HP created, Yes, Yes, originally called Dinak and then later it was changed to Di mak U. Now in nineteen fifty six, HP created the spinoff company called Dinak originally, and it was um meant to create special purpose systems that used building blocks that HP created, so almost like modular systems in a way. You would think like a company would need a particular company would need a very

specific set of hardware in order to accomplish particular tasks. Well, the purpose of Dinak later Dimack was to build these systems using mainly components designed by HP. So HP built the basic building blocks in DIMEK would assemble the systems. Now, do you know where they got how they came up with the name Dinak, or at least the the first two letters. I was gonna say, I'm sure it has

to go with dynamic. Well it might be, but but really the right way they selled on d Y Okay, So hps logo lower lower case H, lower case P. You turn that upside down, it looks like a D and a Y. The H turns H turns into a LI, and the P turns into a D. So you turn it upside down, you got d Y. That's where I'm serious. That's really coin flips and turning logos upside down. That's how That's how HP roll rolled back in the day.

It reminds me of that soda that seven Up created and flipped the letters upside down so it would be dn L. Yeah, so that's true though, that's so it was a spinoff company. Now later on we'll and we'll get to it. But later on the company will merge back with HP and become a division within HP. But I'll talk about that when it happens, but it weren't

division yet. In ninetift there was also a monumental creation within the company h the Documentation of the HP Way, which had UH six and then later seven UH parts to it, and I actually have them written down, do you yes? I do so. Number one recognize that profit is the best measure of a company's country abution to society, and the ultimate source of corporate strength. Number two. Continually improve the value of the products and services offered to customers.

Number three seek new opportunities for growth, but focus efforts on fields in which the company can make contribution. Number four provide employment opportunities that include the chance to share in the company's success. Number five. Maintain an organizational environment that fosters individual motivation, initiative, and creativity. Number six. Demonstrate good citizenship by making contributions to the community. Number seven emphasize growth as a requirement for survival. So this was

sort of the foundation for HPS philosophy. And you can see in that a lot of a lot of interesting points. I mean obviously the emphasizing profitability, as say, this shows whether a corporation is doing is good or not, which you know, you can argue sometimes the most profitable is

not always the best thing. But there are other elements within the HP way talking about contributing to the community and being a good corporate citizen that sort of helps balance out that first point so that you don't, you know, obviously, if it would come into conflict with being a good corporate citis and you would really have to question whether

or not that's the best course of action. Uh. And this was a big deal the HP way, and in fact would become the title of a of a novel later on, or book really not a novel, it's not novel, it's a book. Uh yeah, but becomes the title of a book later on. It was, however, a novel idea it was, in fact, so that was a very important

part of HP sort of corporate identity laying that out. Yes, and so I have n seven and I want to recommend to all of our listeners, if you have a time machine, go back to seven and get in, you know, maybe around November five or so, because on November six, Hewlett Packard had its first initial public offering of stock with and and each share was selling for the princely sum of sixteen dollars um. But there were two reasons behind it, what you're kind of funny. One of them

was again a HP way. They wanted to help their UH employees to share, to have a share of the company, to have a share of its success. And they also wanted to plan out the estates for the founders. And well, I can't blame them. And by the way, if you do have that time machine and you go back to nineteen fifty seven to buy HP stocks at sixteen dollars, I highly recommend that you your second stop B and

you sell that stock. And we'll explain why when we get into the later episodes of the HP story, because well we'll get there. Well, heck, I wish that I had the time machine so that I could go back to when I was going should I buy Apple stock for fifteen dollars? Yeah, I wish I could go dummy. I wish I could go back to when I was deciding whether or not to have the breakfast muffin or the breakfast quests on this morning, because I made the

wrong choice. Okay, So anyway. So oh, also, um it UH started work in the Stanford Industrial Park in Palo Alto. Um and again they were build a new building yep, and they were working toward making it comfortable for their employees and more productive and run around. This time is when Palo Alto is actually becoming what we call Silicon

Valley today. Yes, so yeah, that little tiny sleepy town is starting to become the center of an entire industry, one that's probably one of the most influential industries in the twenty centuries so far anyway. But they it's also because these guys were influential in convincing other people that they could start their own tech come and ease and make it big. So then in u n HP begins

to create a division structure within the company. So in this case, HPS again trying to define its corporate structure. And they're bigger now and they have different kinds of stuff that they're doing and not just making measuring instruments anymore. But then again, you know, Packard and Hewlett were both engineers, and so they felt that a collaborative working environment was much more important than some sort of hierarchical, top down

management system. So each division within HP was responsible for developing, producing, and marketing its own products. So you had all these different divisions within the company, but each one was almost its own autonomous unit, and it was under the umbrella of HP. But you know, the idea was that they didn't want to interfere or muddle with one division's work

based upon you know, so arbitrary decision. Now, both Packard and Hewlett like to walk around and visit various employees and talk with them about their work and discuss what's going on and kind of share ideas, which was their walking around management style. Yeah, that that actually became its name. But they were famous for doing that and uh, which is probably also the genesis of the term the bosses

coming look busy. But it actually they from what I've read, UH and in doing my research for the podcast, they didn't really have that problem because HP inspired, um, those early employees to work very hard because they felt their work was valued. Yep. And in nineteen HP acquired the F. L. Moseley Company, which produced graphic recorders, that being they would record things graphically. Not that you know that the recordings were graphic. Yes, I'm thinking that the description on the

HP website. Probably uh, it would be better just to say this is where they started getting into printing. Yes, very early printing, and this was graphic recording the very first HP acquisition and finally for ninet for me anyway, you might have extra stuff. But Dave, Dave Packard typed up eleven simple rules, so this was part uh, he was doing this as part of the company had a management convention they would hold every year and and it

was discovered later on in his correspondence file. But these were the eleven simple rules that Packard believed one should follow. Number one, think first of the other fellow. Number two. Build up the other person's sense of importance. Number three, Respect the other man's personality rights. Number four, give sincere appreciation, appreciation, appreciation, I'm having my little British moment again. Appreciate number five. Eliminate the negative number six. Avoid openly trying to reform

people number seven. Try to understand the other person number eight, check first impressions number nine, take care of the little details number ten, develop genuine interest in people. Number eleven. Keep it up. So this was sort of his rules about just interacting with other people. And it's interesting again you know, kind of an engineer's way of looking at how do I interact with this person who is not me? Uh?

And uh. I like that. It really puts a lot of emphasis on respecting the other person then getting to know that other person. And also you know, yes, you will get a first impression when you when you first meet someone, but keep in mind that a first impression may not be an accurate representation of who that person is. I mean, most people when they meet me think I'm really awesome, but you know, spend five minutes with me, and the whole whole jerk thing comes around. It's really

not generally. Um, Okay, some first impression are accurate. But anyway, Yeah, this was this was sort of his um his philosophy on dealing with other people, and this became sort of a kind of a again, a philosophy of management style within HP. Yes, now I say that we conclude this podcast in nineteen fifty eight and we pick up again for part two in nineteen fifty nine. Okay, we can do that. Excellent. So this is part one of the

HP story. We will continue with at least one more and probably two more parts because this is a very complex company that's done a lot of things, and it's in it's his storied history. So let's conclude here. If you guys have any suggestions that you would like us to cover in future episodes, let us know on Facebook or Twitter. Are handled. There is tech stuff h SW and Chris and I will talk to you again really soon. Be sure to check out our new video podcast, Stuff

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