Ben Gilbert and David Rosenthal host an episode of “Acquired” focusing on Lockheed Martin, the largest U.S. defense contractor. They note the inherent moral conflict in discussing a company that produces "killing machines," critical for national defense but responsible for immense destructive power. They emphasize that the use of these weapons rests with the President of the United States.
The episode zeroes in on two key interwoven periods in Lockheed’s history: the era of the “Skunk Works” and a second, initially unnamed era, which would end up as directly tied to the birth of Silicon Valley. The story begins with Alan Lockheed (originally Loughead), who founded the initial Lockheed company, followed by his brother Malcolm who would later invent the hydraulic brake system for cars, before becoming Robert Gross bought the bankrupt Lockheed division for $40,000 which would become the foundation of the modern Lockheed.
Then the Skunk Works portion of the show begins. Skunk Works was an ultra-secret Lockheed division during World War II led by Clarence "Kelly" Johnson, a brilliant and notoriously tough engineer. Tasked with creating a U.S. jet fighter to counter new German technology, Johnson assembled a small, elite team in a circus tent next to a plastics factory. They delivered the prototype, the P-80 Shooting Star, in 143 days which becomes the US military's first jet fighter. Skunk Works' success hinged on rapid product delivery, minimal bureaucracy, a skilled and highly motivated team, and the autocratic leadership of Kelly Johnson. Key tenets included limiting team size, delegating control to the project manager, and rewarding performance over supervisory roles.
Johnson continues to build the Skunk Works division. The Cold War provides a new mission: intelligence gathering. Skunk Works creates the U-2 spy plane, designed to fly at 70,000 feet, beyond the reach of Soviet defenses. Working with Polaroid's Edwin Land, they develop advanced cameras for aerial reconnaissance. The U-2 is tested at Groom Lake, Nevada, now known as Area 51, leading to UFO rumors.
After the U-2 is shot down in 1960, ending flights over the Soviet Union, another secret Lockheed division steps in. This brings the story to Silicon Valley. Stanford professor Frederick Terman, after working at Harvard’s radio lab during WWII, returns to Stanford and transforms the university into an engineering powerhouse. He recruits top talent, revolutionizes tech transfer policies, and establishes the Stanford Industrial Park (now Research Park). This new park would have the most important role in bringing Lockheed there.
In 1955, Lockheed establishes its Missile Systems Division in the Park, later renamed Lockheed Missile and Space Company (LMSC). By the mid-1960s, LMSC employs 30,000 people in Silicon Valley, eclipsing even Hewlett-Packard. LMSC develops intercontinental ballistic missiles (ICBMs) and undersea-launched nuclear weapons. Also they build Corona, the first reconnaissance satellite to take photos in space and has to physically get the film to the government by dropping a canister and having a plan fly and catch it with a hook midair. Corona's success leads to advanced satellite programs, including real-time surveillance capabilities (KENEN), a project so secret only recently declassified. LMSC also builds the Hubble Space Telescope. LMSC operated with skunk works management principles.
The program is incredibly costly. As a result The end of the Cold War and changing priorities bring consolidation to the defense industry. In 1995, Lockheed merges with Martin Marietta, forming Lockheed Martin. However this had come too late. By the time of the merger the team, the government and the mentality had all moved on and the Skunk Works division became a very different thing than what was described at the start.
Gilbert and Rosenthal analyze Lockheed Martin using Hamilton Helmer’s “Seven Powers” framework, concluding that the company possesses limited “power” due to its unique relationship with a single customer. The framework is therefore not useful and they instead analyze some of the problems with how the United States is dealing with military manufacturing. They discuss the implications of the military-industrial complex and changing nature of warfare, and the role of threats in spurring innovation. They emphasize that a strong American way of life is due to the strong military and innovation spurred by past threats. Ultimately, this history is meant to be a way to understand the motivation for American engineering and culture.