Technology powerhouse Tektronix seeded Silicon Forest

PORTLAND — Tektronix is a shadow of its former self. Yet its imprint is everywhere.

Tektronix is to the Portland area what Microsoft is to Seattle — the catalyst that helped transform a state's economy from one heavily dependent on natural-resource extraction to one with a foot firmly planted in information-based industries.

Founded in the back of a Portland electronics store in 1946 by World War II veterans Howard Vollum and Jack Murdock, "Tek" rode the postwar boom in the electronics industry to become a technology powerhouse that once employed 24,000 worldwide.

The company announced a week ago that Washington, D.C.-based Danaher would purchase it in a deal valued at close to $2.8 billion.

Tek's culture of innovation, its nonhierarchical structure and its whopping profit margins made it a magnet for a generation of talented engineers. Its labs and alumni spawned many of Oregon's largest tech companies.

The company, experts say, also served as a surrogate technical university for a state that didn't have one.

"It was just an amazing place," said Bill Walker, former president, chief operating officer and longtime board member. "In my mind, at that time, Tektronix was a Camelot. Camelots don't last forever. They have their natural life spans. But we should remember that it existed."

Tek was established in 1946 when Vollum and Murdock came together with Miles Tippery and Glenn McDowell to form a company to build electronic measurement equipment.

Original vision

Their idea, according to an official company history, was to build an outfit that would remain small, where all employees would be on a first-name basis, and one that would provide its employees with a decent, but not an extravagant, living.

It didn't exactly work out that way.

Vollum, a 1936 graduate of Reed College with a degree in physics, worked in the Signal Corps during the war, where much of his work involved the use — and improvement — of an instrument known as the oscilloscope. Oscilloscopes measure and display voltage swings in electronic circuits, functioning as an engineer's eyes to "see" electrons as they rush around a circuit board.

Tektronix's first production model, the "511," was a runaway success, selling far more than the company's founders thought possible. Over the next decade, Tektronix became the industry leader, turning out a string of innovative instruments that garnered the lion's share of the market.

Between 1950 and 1980, Tek mushroomed in size and employment. Also, like many large manufacturing companies of the day, it manufactured most major components it needed in-house.

When Tek needed new circuit boards, for instance, it established a business unit to make them. Likewise, when it needed integrated circuits, transformers or cathode ray tubes, it made those, too.

Innovation came with few financial constraints. Until the early '80s, the profit margins that came with market dominance meant that departments didn't even operate on budgets. Tek had its own continuing-education program, its own labs separate from manufacturing. Employees from that era say it sometimes felt more like a research campus than a company.

"Howard Vollum was really instrumental in setting up an environment where technical people were both comfortable and challenged to try something new," said Gerry Perkel, a 20-year Tektronix alumnus who went on to lead the company's color-printing business after it was sold to Xerox in 1999 and now runs Planar Systems. "That allowed people to take some risks and really develop some interesting ideas."

Tek's freewheeling culture created a technology pipeline so prolific that many innovations were lost in the shuffle on their way to market.

Some executives, like those who formed Mentor Graphics in 1981, left in frustration to pursue their own dreams. But Tek also recognized the problem, and it became active in spinning off businesses on its own, taking an equity stake, helping arrange financing and providing technical help.

Spinoffs spawned

Heike Mayer, a professor of urban studies at Virginia Tech who wrote her dissertation on the history of the Silicon Forest while a student at Portland State University, determined that former employees have founded 66 Oregon tech companies and alumni from those spinoffs have started another 38, further expanding Tek's family tree.

In 1986, Vollum died, leaving behind a company with bloated overhead, an unfocused strategy and far more competition in its core markets. The following decade was one of rapid downsizing for the company and a renewed focus on its core oscilloscope market.

In many ways, Tek was a victim of its own success. For years, the company fed off its dominant position in the oscilloscope market while failing to capitalize on many technologies developed in-house.

Few alumni said they were shocked by the buyout. If anything, with a merger drive in the tech business, and Tek's slow and steady performance under the leadership of Rick Wills, it may be more surprising that a purchase didn't happen earlier.

"Since 1990, in some senses it's been in the process of being sold," Walker said. "Rather than growing the company, they sought to monetize it."