After winning the Nobel Prize, Shockley left Bell Labs to pursue his own entrepreneurial ambitions in the burgeoning field of semiconductors.

Shockley founded Shockley Semiconductor Laboratory as a division of Beckman Instruments in Mountain View, California. His goal was to develop and produce silicon transistors.

Shockley assembled a team of highly skilled and ambitious young scientists and engineers, including Gordon Moore, Robert Noyce, and Eugene Kleiner. These individuals would later become pivotal figures in Silicon Valley's development.

Shockley's leadership style proved to be highly problematic. His increasingly erratic behavior, authoritarian management, and obsession with developing a four-layer diode led to growing dissatisfaction among his staff. He imposed polygraph tests and was generally paranoid.

Frustrated by Shockley's management and research direction, eight key employees – Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce, and Sheldon Roberts – resigned from Shockley Semiconductor Laboratory. This event is considered a critical moment in the birth of Silicon Valley.

The 'Traitorous Eight,' with funding from Fairchild Camera and Instrument, formed Fairchild Semiconductor. This company went on to become a major force in the semiconductor industry and a breeding ground for numerous other Silicon Valley startups.

Shockley Semiconductor Laboratory never recovered from the departure of the 'Traitorous Eight.' The company struggled to compete with Fairchild Semiconductor and other emerging semiconductor firms. It was eventually sold and ceased to be a significant player in the industry.