[Music] there's a story of two people in a garage on addison and they were tinkering on the weekend and their engineers and they built this billion dollar company bill and dave encouraged people to be brave enough to take the risks and think as large as possible these guys build a process that invited accepted and rewarded innovation there were multiple people in every department of the company doing innovative things the essence of the hp way top management sets the overall objective and then gets out of the way and lets the people do it hp set the
standard for the rest of us they became in my mind the icon of what business ought to be [Music] at some point we decided that we were going to try and form a company and go ahead and we wanted to find a house and the garage that we use for a shop the story is that dave and lucille lived in the bottom half of the house and bill had a little shack on the back i brought the drill press and some other tools and the chicken so back to the car and we set up the
shop there they started the company on about 500 and a good idea and it believed me it showed we started out of course baking our panels in lou's oven and then we decided we want our own oven so we bought an old refrigerator unit yeah because it had good insulation well it got so hot it caught fire and fire department came and put it out otherwise we would have lost the whole world [Music] what got hewlett packard really going was the first big order and that came from walt disney for the movie fantasia they needed
really good sound and the audio oscillator which was the first hp prime was the best device in the world for that and simply produces a a variable tone you hear what it sounds like and that's just part part of the range we put together a set of specifications and little sales bits that blue typed out for us remember how we priced it we didn't have any idea about pricing in those days and i guess we started out with 54.50 wasn't it 440 or 54 or 40 or 5. the genius was not that they had all
of the perfect tools but that they had a drive and an energy and an entrepreneurship creativity [Music] two people in a garage with very little resources can create the next big thing so hp was really the inspiration i think for the entire valley it's no question [Music] the company was formed in a different way for most modern companies it was formed out of friendship these are two guys that just got along well together and decided to build a company and then they'd figure out what they built after they got it going our primary interest was
to bring some money in the door we tried all kinds of things we tried building shocking machines to make people lose weight a device of tune harmonicas hewlett had an idea about an electric urinal flusher in fact when i go into a modern man's urinal these days i kind of think of bill they did an automatic lettuce picker for the fields they built a bowling alley foul line indicator we invented we set the floors we kept the books we've done every job in the place so to speak they were roll up your sleeves guys they
were can-do people dave packard was a lot more outspoken uh dave was a big guy he was six foot three or four he had a finger that would get longer and longer as he waggled it at you so he was a pretty forceful personality now hewlett was more likely to be deeply involved in the technical issues and the technical side of the company and packard was more likely to be involved in the financial sides of the company but you couldn't depend on that because you never knew who was going to pop up they'd have done
terrific things i think by themselves but together they were extraordinary [Music] there's this wonderful moment in the company's history i think it was 1948 and he was at a meeting of business leaders [Music] there were a whole bunch of ceos from companies there and the question that was raised who is the company responsible to and they're all talking about the most important thing is you have to actually focus on returning dollars to your shareholder and maximizing profits that's a business model in which the human being is a replaceable part in the manufacturing assembly process david
packard stands up and says actually i respectfully disagree with all of my elders you also have an obligation to your customers and to your employees into the community in which you operate a purpose of a company is not to make money it makes money in order to be able to do what it's really all about and in our case that's to make a contribution they laughed at him we're here to create things that if we didn't create them the world would be worse off and if you don't understand that you don't understand the hp way
the thing that i fell in love with was there was an immense pressure to make a contribution that was the key phrase you had to make a contribution that you didn't just bring out a product because you thought you could make money on it you brought out a product because you thought there was some dimension in which it was significantly better what this really means in this sense is not to be a me too but to not go into some area unless you feel that you have something really to contribute because if we just try
and follow someone you're always going to be at the tail end dave and bill expected good performance and everybody pulled an ore to make a contribution everybody was proud of the company and the fact that we were really doing something worthwhile the best measure of whether we do or do not make a contribution is whether we can we can market that product at a profit in other words whether it's worth more to the customer than it costs us to make he realized that if the company didn't make a profit they wouldn't be able to make
a contribution in science and technology they wouldn't be able to take care of their employees they wouldn't be able to give back to the community in terms of philanthropy hp was a business and these men were dedicated to increasing revenues and increasing profits after that all the good things followed but their first job was to build a great company and they fought hard to do it [Music] we had all kinds of social things growing all the time we had our annual picnics david bill would join right in just being real human beings bill and dave
would be flipping the stakes and then the head of finance and the head of marketing and the head of personnel they'd be serving the salads even when there were thousands of employees it would be unlikely that dave wouldn't know somebody in a particular work group how's your child your father recover there was a very close relationship it's part of the informal atmosphere that made us much more effective than a rigid hierarchy would have would have permitted more like part of a family it was a company that cared enormously about its employees and how can you
beat that you weren't just building a product you were building a company of people lots of our employees were good friends in fact i remember making the comment that most of the best friends i had were working here in the [Music] company the first time i met dave packard was in 1952 i hadn't been with the company very long he showed up in the lab at about six o'clock or so and now still taking measurements and we were having trouble with a particular device an attenuator and i became aware of this big man sitting next
to me on the stool he got behind me and said hey art he said you you take the readings and i'll write it down on your notebook i moved over and he tested some of these things and he said you know you're right they're not passing so we worked past midnight taking data we were working more like companions and boss the most important thing about these guys is you never felt that they were separating themselves from the employees we'd built up this feeling of a small company in which you had personal knowledge of really everything
was going on what we've tried to engender is this attitude that it's it's everybody's business to do a good job hopefully we'll all benefit if we do so [Music] it was just something magic designing the products laying them out doing the software we're all part of the same thing and working together and you know as long as we're working we take care of each other and boy that sure influenced my thinking [Music] one day the phone rang and hewlett says t we've got this calculator going on hp labs so i went up and talked to
bill he gave me the market research report that suggested that we shouldn't do it at the time state of the art was a slide rule and so to go from slide rule to calculator was a quantum leap in functionality the bottom line was well bill we're sorry we don't think there's a market for this product it's very complicated and it's going to cost 350 20 times more than a slide rule and bill said i want one of these things bill challenged his engineers to build this thing and and make it the size of his shirt
pocket that was kind of oh my god i don't think we can possibly do that but they made a big pretense of making sure that whatever they built would fit into his shirt pocket we came up with four pages of names for this thing captain billy's whiz-bang machine was one of the names the math marvel we had a whole bunch of names and there was not a winner in here and we said well it's got 35 keys on it so we'll call it the hp 35. [Music] when i was in college the hp 35 calculator
came out and oh i just drooled seeing that thing it was you know like the sky's part i remember waiting in line to get one of these things people were selling their cars we spent the next 18 months up to here with orders and trying to keep up with the demand for the darn thing but bill was bill was only to take a risk and boy was he right [Music] we went from a specific fairly small type of company and laid the groundwork to expand into a larger domain i think dave and bill saw very
clearly that you know you really had to be an international business the market for electronics was a worldwide market why compliant hewlett insisted that we ought to have not only overseas sales but factories overseas we are really serving a worldwide need it's just the simplest way to express it dave and bill in looking at the international market saw it as a place to go out and get more of the best minds in the world so they always view it as a source of talent and the hp way makes each of those branches feel as though
they're amongst the best in their part of the world if you went into a facility in germany the environment would be very similar to what you'd find in in palo alto to learn how to call the boss by the first name was very difficult for the germans to accept because formalism in germany was tough but they all learned how to do that [Music] matter [Music] foreign no matter what culture you were in could be in asia it could be in europe could be in the united states that was a universal feeling on the part of
the employees that they were honored and that they were respected i believe it's very important that people have some part in making the decisions that they're going to be involved with they're going to be much more effective in implementing those decisions the essence of the hp way plain and simple top management sets the overall objective and then gets out of the way and lets the people do it they had a slogan decisions should be made at the lowest possible level dave used to say that a rank doesn't matter titles don't matter which degree you have
and from which school doesn't matter it's are you part of this team and what can you contribute to it and are you doing your job they encouraged people to be brave enough to take the risks and think as large as possible trust the people give them the tools hire the best people get stuff done this was what hp did it trusted people to do the job and you stepped up you really stepped up it scared the hell out of you made you into a better person [Music] i build a large screen oscilloscope that could be
used as a computer display my bosses weren't all that wild about it but they let me show it to dave and bill and dave told my boss you know when i come back next year i don't want to see this in the lab when he came back a year later the project was in production he was incensed and said you know i thought i said to kill this thing i said no sir what you said was you didn't want to see it in the lab it's not it's in production the market forecast was for 31
of these things over time we sold 17 000 of them most importantly it was used for you to see neil armstrong's foot hit the moon the thing was successful and dave had the humility to say and the self-confidence to say i was wrong so i have here a medal of defiance in recognition of extraordinary contempt and defiance beyond the normal call of engineering duty [Music] dave wanted to make a statement that maverickness is expected in a way so these guys build a process that invited accepted and rewarded innovation [Music] so dave and bill were people
who just loved and benefited from change it didn't matter how big hp got to them change was something that they always looked at and said where is the opportunity this company in 60 years morphed itself five times it was a volt meter company and then a microwave company and then a handheld calculator company then a computer company and then an ink company the hp way could accommodate so many different business models over decades and decades of time but they were flexible enough to know that you apply those principles in different ways as conditions require you
can continuously change as long as your heart's intact as long as your core values are there and if you've got the right values then out of that will constantly emanate that innovation and that's always been the power of hewlett packard it's no exaggeration to say that bill hewlett and dave packard created silicon valley uh big time and they respected and appreciated other entrepreneurs everything i learned about entrepreneurship was taught to me by dave packard there were many bright people who left hp and founded their own companies and they carried away the fundamentals of the hp
way there was an ad run in 1962 that said you want to be an entrepreneur come here first and learn how and it's like that's a weird ad you know you're encouraging people to go elsewhere but bill and dave's attitude was that's great and they seeded this valley with some of the greatest talent you can imagine i even turned down starting apple once i refused to go to atari because hewlett-packard was my company for life the morale was so high i never saw anything like that just the happiness of everyone working with each other a
lot of people say that the hp weight is anachronistic it fit in a different world a simpler world but in fact it may be more relevant today and that's because when your employees are scattered all over the planet people are working independently you have to trust your employees more than ever before and that's what bill and dave did they set the model for it so you asked what kind of people were they they were giants they really were they're just amazing people [Music] it's hard to find anyone in the history of business who's been able
to create more both in terms of business success and in terms of the culture and the type of company that's respected all over the world that in and of itself is a pretty amazing story we hope that the people that'll follow us will have the same ideas now that you know they're not going to be exactly the same but i don't think that they a lot of these fundamental positions going to change very much they're too ingrained in the organization we have a great many very capable people and i think basically agree with this philosophy
and i think this in itself is going to provide some assurance of continuity it's very easy to fall back on celebrating bill and dave but the story of hp is the story of hp people bill and dave wisely created the environment for this efflorescence of human talent but it's the hp people who spread that trust around and live the hp way that made this company a great company listen you know there's a story of two people in a garage on addison and they were engineers and they built this billion dollar company so i sort of
think that a company no matter how much you want to say that it's dynamic and reacts to market forces and all that the dna is set by the founders and that dna you couldn't kill it if you tried i don't think it's useful to spend much time looking at the past i think we ought to spend most of our time looking at the future because that's where we're all going to be [Music] [Music] you
