Control Data and a lesson in the history of innovation

The name Control Data Corp. is gone, but it should not be forgotten, because its history is legendary — perhaps like the Great Northern railroad, Pillsbury mills or Dayton's department stores — with an impact far beyond its own life.

Sixty years ago this month — in July 1957 — the initial employee group began to raise money by calling on friends, relatives and strangers in presentations over lunch, at house parties and in any other possible way. By September 1957, they had received commitments for $1.2 million, double the amount anticipated in the prospectus. The state securities commissioner was dumbfounded. As he said, there was no product, no plant, no customers, no money and almost no employees. When the subscription was completed, he received calls from around the country asking: "Is this true?" It was, he told them, as he had approved the new company's offering document, only eight pages long, and found no legal objection.

The company's name was chosen from two columns of words by matching combinations that sounded appropriate. No one was much satisfied with the final selection, but they accepted it with resignation, not knowing, of course, that it would quickly electrify the Twin Cities local stock market and within six years be listed on the New York Stock Exchange. From its initial price of $1 per share in 1957, the stock in 1961 traded at $100 a share. Two years later, the New York Times published an article titled "Control Data Stock Continues to Soar" and commented on its "250-fold increase" in a six-year run. Such spectacular results emboldened others to start their own companies, and in 1961 there were 96 new listings in the Twin Cities newspapers. Medtronic would not have received the public financing it received in 1960 had it not been for the success of Control Data, according to one of the principals involved. The success of Medtronic then led to the formation of Cardiac Pacemakers in 1972 and St. Jude Medical in 1976, the three companies ultimately becoming the core of a medical device industry still thriving in the Twin Cities today, even though the latter two have been acquired by larger companies. Millions of lives have been improved and deaths indefinitely delayed by the industry's product innovation. Such unanticipated success is the meandering result of entrepreneurship fed by readily available financing.

Computers were curiosities when Control Data was formed. Local media personality Cedric Adams wrote a column in the Minneapolis Tribune on May 29, 1960, describing his visit to the Control Data offices at 501 Park Avenue and seeing what he called a "room size" machine. He asked his escort, company president William Norris, "What the heck goes on inside that contraption?"

"It's really pretty stupid," Norris replied. "All it can do is add. But it must be remembered that all arithmetic processes can be reduced to addition." Adams went on to write that the computer's decisions were a thousand times faster than those of a human being.

The initial machine had been designed and built by company engineer Seymour Cray and a small group of colleagues. It sold for $1 million. After designing three successive models, each much faster than its predecessor and each highly successful in the marketplace, Cray left Control Data in 1972 to form his own company, Cray Research. There he designed two more machines that also set world standards for speed and computational power. It was his life's work. Late in his career, industry experts compared him to Alexander Graham Bell and Thomas Edison, citing his record of five major computer designs. Businessweek had him on the cover of its April 30, 1990, issue, calling him "The Genius" and suggesting that he had guaranteed himself a place in history. For his near-superhuman accomplishments, Cray should become a legend to us also, no less so than Paul Bunyan, the giant lumberjack whose reputation has been memorialized in books and statues. But Cray was real. He died in 1996 at age 71, working on a new computer design that he said would be "smaller than a human brain."

And what do we make of this? Only that the future is mysterious and exciting. We should embrace it as a society, let it develop in its own way and expect an occasional surprise. We should educate our people so they will be leaders in these movements. It would help to study the past and look for hints. It would help to identify our heroes. Meanwhile, we still have the Seagate disk operation, Ceridian Corp. and other remaining pieces of Control Data Corp., the enduring direct result of its early success.

Donald M. Hall, of Minneapolis, is the author of "Generation of Wealth: The rise of Control Data and how it inspired an era of innovation and investment in the Upper Midwest."