The Idea Road

On road maps, the new superhighway that curls through the pleasant woodlands surrounding Boston is known routinely as Route 128. But to U.S. industry, it is known more romantically as the Space Highway. Amid the landscaped woods of the industrial parks along commuter-clogged 128 are tucked scores of low, angular buildings bearing science-fiction names: Trans-Sonics, Tracerlab, Microwave, Dynametrics. These plants add up to the biggest and fastest-growing science-based complex* in the U.S., and provide the nation's most impressive proof of the vast new industrial potential of the electronics and space age. Beyond that, they are a dramatic demonstration of the fact that behind current new industrial development lies one key factor: new ideas.

For Wall Street, Highway 128, the road of ideas, has become a road of enchanting mystery, glamour--and the source of quick profits. Many a Wall Street analyst periodically tours the highway, on the hunt for hot new companies. Few investors can understand what many of the companies make. But their eager bidding to get in on the ground floor has sent the prices of some stocks soaring a hundredfold--and more--in the last few years.

Along the highway, giant manufacturers such as Raytheon, RCA, Avco and Sylvania are hard at work on missile and space systems. Smaller firms make components and instruments--some of them so tiny that a week's production fits into the rear of a station wagon. Many of them are so sophisticated that even company brass are hard-put to explain how they operate. From 128's small companies come devices that can read print optically, or probe space to guide a missile.

Out of the Lofts. Highway 128 was built to be just a Boston bypass. But in the eight years since it opened, the roadway has lured 17 industrial parks and $137 million worth of new buildings. Into them have moved 227 companies employing 28,000 people.

Most of the companies started in small lofts, warehouses or garages in the commercial districts of Boston or Cambridge, looked very much like the radio-repair shops and jobbers that surrounded them. To finance samples of new products, the founders dug into personal savings or tapped friends. Cash came from such risk-minded organizations as American Research & Development Corp., which sponsored many science companies (High Voltage, Tracerlab), and from individual investor groups such as those of Laurance Rockefeller, who now is sponsoring one of 128's newest, Geophysics Corp. of America. As the prototype models succeeded, the young companies outgrew their quarters and moved "out to the highway."

The 128 boom burst upon an economically depressed area that has scant natural resources for industry, a limited power supply and an uninviting tax structure. But it has two overwhelming advantages: a climate for ideas that has been carefully fostered during its 250 years as a U.S. intellectual headquarters, and the opportunity for pleasant living. The Atlantic Ocean is a few miles away. The mountains are only a short drive. Near by are many science-strong schools: Harvard, Massachusetts Institute of Technology, Tufts, Northeastern and Boston University. Says M.I.T.'s Engineering Dean Gordon Brown: "To have a place where research-based companies can grow up, you must have a special climate where people are interested in ideas, where they meet to discuss them. These companies are started by people with an intellectual, venturesome spirit."

Off the Blackboard. Most 128 companies stress their academic bent. Their competitive advantage is sheer brainpower--a blackboard, chalk and talent snatched from all across the U.S. They attract many corporation scientists who want to do advance research at local universities--and then they jealously guard these recruits. Said one 128 president: "We don't let our chief scientist out of town without a duenna." At the same time, Route 128 companies draw as part-time consultants the fulltime professors and graduate students who want to put their ideas into action in industry (and to reap its rewards).

One of the first companies to utilize the area's resident brainpower is now big, well-known and a darling of Wall Street: Polaroid. Edwin Herbert Land, 50, the founder-president who left Harvard to work on his first polarized light project in 1926 and later invented the Polaroid Land camera, actively cultivates an academic atmosphere in the plants. Every year he hires a few Smith or Wellesley girls for laboratory work, considers them a prime source of fresh ideas. Several have made notable contributions to Polaroid's quick photography. "Everyone," says Land, "whether he is a worker on the assembly line or a scientist in the lab, has some real urge and need for creative participation in industrial activity."

Weaning Process. Another firm that leans heavily on the universities is Raytheon, the major missilemaker (Sparrow, Hawk), which was co-founded by M.I.T. Scientist Vannevar Bush and is now bossed by Harvard-bred Banker Charles Francis Adams (TIME, June 23, 1958). Raytheon keeps 30 to 40 university consultants on tap for problems, pays them $75 to $100 a day. Some 128 consultants get up to $10,000 a year ("More than they earn by teaching," says one Raytheon executive).

Faculty boards have become reconciled to the fact that consulting jobs keep many valuable men and women at the university, while they otherwise might be tempted into industry. M.I.T.. which stars in both pure and applied research (Dr. Bush developed the first electronic computers there in the 1930s), goes even farther: it feels a responsibility to pioneer techniques for industry. "We get a thing dry behind the ears and wean it." says M.I.T.'s Dean Brown. "Weaning means kicking it off the campus."

Among the companies weaned by M.I.T. and the other schools:

EWEX KNIGHT CORP. grew out of the Harvard doctoral thesis of Harold Ewen. Working with Harvard's Nobel-Prizewinning Physicist Edward Purcell (in '52, for nuclear magnetic measurement), Ewen developed and built equipment to locate and trace hydrogen clouds several hundred thousand light years distant from earth. This resulted in no less than a remapping of the solar system. With a fellow scientist's $1,000 and his own theories, Ewen started his company in 1952. turned out radiometers (receiving systems for radio telescopes), radio sextants, microwave components. Last year Ewen Knight chalked up $2,000,000 in sales, expects $3,500,000 this year.

HIGH VOLTAGE ENGINEERING CORP. sprang from wartime research by M.I.T. Physicist Robert Van de Graaff. M.I.T. Engineer John Trump and British Engineer Denis M. Robinson. They started manufacturing Buck Rogers gear in a dreary Cambridge garage, moved to Route 128 in 1956. High Voltage now builds giant (three stories high) particle accelerators that can sterilize materials by firing a stream of electrons through them. The accelerators are also used for high-energy physics studies and for breaking down chromosomes to study their properties, may soon be used commercially to irradiate food so that it will keep for years without refrigeration. High Voltage is also working with B. F. Goodrich Co. on ion-propulsion engines for spaceships. Its expected sales this year: $7,000,000.

ITEK CORP. started when its president, a wartime aerial-reconnaissance expert named Richard Leghorn (M.I.T. '39), borrowed $142,000 from Laurance Rockefeller to buy two science-heavy organizations after the defense-spending cutback hit research in 1957. With these two--Physical Research Laboratories of Boston University and cash-shy Vectron. Inc. (electronics )--Itek began with a well-shaped organization (more than 100 scientists) that would have taken years to build. Though most of its work is classified, and identified only as "graphic retrieval,'' its stock soared from about $1.60 to $60 in a year, counting splits. Among other things, Itek (for "information technology") makes information-processing systems, works in photochemistry, electromechanics. Current sales: $30 million a year.

FARRINGTON MANUFACTURING Co..a56-year-old maker of display cases, is one of the older companies that changed course to catch the electronics boom, moved to 128. In 1929 Farrington devised the department stores' Charga-Plate, which gave it entry to two of the 1950s' hottest business areas--credit cards and automatic accounting systems. Four years ago Farrington moved into one of the highway's larg-<< est plants (354,000 sq. ft.), there prints credit cards (for Hilton, 35 oil companies, all the airlines), manufactures printed circuits. It also produces a remarkable machine: an electronic scanner that reads, then transmits the information it has read onto cards or tapes that can be used by IBM machines and other automated systems. Expected sales this year: $12 million.

MICROWAVE ASSOCIATES. INC. is one of that majority of Route 128 companies that ring up the bulk of sales from products conceived just yesterday. Of Micro-wave's 400 electronic devices, 80% are less than two years old. To get some of them, energetic President Dana Atchley Jr., 41, played a favorite 128 game: capture the scientist. Last year Atchley heard that Bell Laboratories had developed a type of semiconductor called the varactor, which amplifies microwave frequency signals and does it with exceptionally low background noise. Atchley wooed one of the key developers of the varactor. Dr. Arthur Uhlir, with stock options and Route 128 living, built a scientific team around him, boosted sales to $6,500,000 a year. The varactor has accomplished some of the most advanced feats in space-age communications, and scientists are working toward using it as an oscillator that could speed up computers 1,000 times.

Lure of the Option. It is common for scientists to leave giant companies or great universities to join one of 128's spunky newcomers. The stock option holds a particular attraction, as does the chance to participate in some bold, new project at a decision-making level. "Smaller companies can offer participation which the big ones give only to top executives," says Microwave's Atchley.

Generous options and explosive growth have provided many a scientist with a chance to become independently wealthy for the first time in his life, have made millionaires out of some Route 128 scientists. Itek's President Leghorn, together with three other Itek executives, acquired 81,040 shares of the company for $136,880 during the past two years; now these shares are worth more than $3,200,000. Shares of other companies on 128 have also scooted up. Compared with their 1957 lows, Raytheon moved from 16| to 575 last week, Polaroid from 30 to 150 1/2, High Voltage Engineering from 17 to 60. In 1959 alone, Microwave has zipped from 5 to 22, Farrington Manufacturing from about 12 to 74.

Remarkable Offspring. These orbiting prices also smooth the road to merger. With the price of each share so high, a 128 firm can acquire another company by swapping only a comparatively small number of shares. Thus it can expand without great dilution of its stock. Merger partners are not scarce because many companies want a toe hold on 128. "When you are in Boston," says one 128 executive, "your stock sells for around ten times earnings. As soon as you move to the highway, these bankers cruising up and down discover you, and you're selling at 40 times earnings. That's almost enough to make you move right there."

Corporate marriages are not always happy, but they often produce remarkable offspring. One of the highway's first companies was Bomac Laboratories, Inc., which grew out of an engineering group at Sylvania and produced microwave tubes and devices (1958 sales: $10 million). When Bomac merged with Varian Associates this year, six key employees were piqued because they got less than 1% of the swapped stock; in April they stalked off with four others to form Metco (Microwave Electronic Tube Co.) and compete with their former employer. Within nine days they had a plant in Salem, Mass., financing, firm contracts and a production schedule calling for June deliveries of microwave tubes. "Within a year," predicts Founder Richard Broderick, former Bomac treasurer, "we'll have 100 employees. And in three years, we'll be back on the highway."

Buying the Future. How long can 128's whiz kids keep up their phenomenal growth? The companies are heavily dependent on Government contracts, which can be cut back or canceled overnight. Their products often can be copied by competitors. Their financing can fall through if the stratospheric stock market ever tumbles or credit tightens. Their space-age industries can run into rugged shake-outs--just as most other industries have in the past. This means that only those with the wisest managers, the sharpest scientists and the biggest bankrolls will come through. Even for those, the prices of the stocks are so high that investors are, in effect, paying on the basis of what a company will earn years hence.

Despite these potholes in the road, the bold adventurers on 128 say that the period of biggest growth is ahead. So many research-based companies were being formed around Boston last week that plans were afoot to build another highway, swinging out beyond 128, to accommodate them. The believers in the Space Highway hold that when the climate produces ideas, growth is sure to follow.

* Another: the San Francisco peninsula around Stanford University at Palo Alto.

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