2003: A Man Who Would Transform Prune Farms Into Silicon Valley Dies

On November 20, 2003, pioneering high-tech engineer and venture capitalist Eugene Kleiner died, at the age of 80. As one of the founders of Fairchild Semiconductor, in 1957, and later, as the co-founder of one of the first venture capital investment firms, Kleiner truly was one of the people who turned America’s prune capital, Santa Clara County, into Silicon Valley.

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Eugene Kleiner was born in Vienna, Austria, on May 12, 1923. His father, Leon Kleiner, was a shoe manufacturer, and his mother, the former Anna Wallach, ran a retail shoe business. Eugene was the youngest of their three children.

Within days of the Anschluss, the German occupation of Austria in March 1938, Jewish children were told to stop coming to school. Soon after that, Leon had his factories expropriated by the new Nazi government.

Finally, in November 1938, soldiers appeared at the Kleiner home, confiscated the family’s valuables and arrested Leon.

Flight to Belgium

After his release from jail, Leon, who had for some time been sending money out of the country for a time it might be needed, realized that that time had come. The Kleiners left for Belgium, beginning an exodus that ended three years later in New York, in May 1941.

During a stay of more than a year in Brussels, the son Eugene studied tool-and-die making at a vocational school set up by the Jewish community there. This served him in good stead once he was in the U.S., where he took work making parts for airplane landing gears before enlisting himself in the army, where his German-language skills were to put use in guarding German POWs.

Post-war, Eugene studied engineering at what is now the Polytechnic University of New York, where an astute dean admitted him, even though Kleiner had never finished high school. Later, armed with both bachelor’s and master’s degrees, Kleiner went to work for Western Electric, where he built telephone relay equipment.

In 1947, he married Rose Wassertheil, a social worker who also was a refugee from the Holocaust.

When, in 1956, Kleiner was approached by William Shockley to join a small team he was organizing to mass-produce the semiconductors he had helped invent, he accepted with alacrity and moved the family to Palo Alto, California.

Working for Shockley, though, was a disaster, and it didn’t matter that the boss was joint winner of the Nobel Prize for Physics that same year. (Decades later, the same Shockley became notorious for his racialized views on human intelligence, and his embrace of eugenics.) Within a year, Kleiner and Shockley’s seven other initial engineering hires decided as a collective to leave his employ and set up their own shop.

Enter the Space Race

Fairchild Semiconductor, based on an initial investment of $1.5 million from entrepreneur Sherman Fairchild and another $3,500 scraped together by Kleiner and his colleagues, opened in October 1957, the same month that the USSR launched its Sputnik satellite, and the space race started in earnest.

Overnight, there was a market for transistors, and it was Kleiner who developed the protocols and built the equipment for producing them.

Within a year, Fairchild Semiconductor was in the black, with clients like IBM and the Pentagon. After three years Sherman Fairchild exercised an option to buy the firm in full for $3 million.

When Kleiner and his partners each inevitably went out on their own, they went on to found companies like Intel, National Semiconductor and Advanced Micro Devices.

As Kleiner came to realize that he loved setting up new companies in new fields, he moved into venture capital work. A 1972 breakfast meeting led to a partnership with Hewlett Packard veteran Tom Perkins, and within a decade, Kleiner Perkins (today Kleiner Perkins Caufield & Byers) had turned an initial pool of $8 million into holdings worth $400 million, and included part-ownership of companies like Genentech and Tandem.

For the frugal Kleiner, it wasn’t about the money. He continued to scour newspaper ads to learn when local drugstores would be selling Crest toothpaste at a discount. Rather, he loved the challenge of starting new businesses, particularly in fields, such as biotech, where the entrepreneurs were doing work never before attempted.