Instructions
Visit Viridian Forest and capture a Pikachu, if you don't already have one. As with all Pokemon, the chance of seeing a Pikachu in Viridian Forest is random, but walk around in the grass enough, and you'll happen upon one.
Capture a Ditto. Run along the grassy area on Route 34, just south of Goldenrod City. You'll eventually see a Ditto. Capture him in a Pokeball and visit the daycare, also on Route 34.
Place Ditto and Pikachu in the daycare. The two will breed to produce a new Pokemon, Pichu.
Go to Bill's house located at the end of Route 25, just north of Cerulean City. It's the only house in the area. Go inside the house and talk to the older-looking man with gray hair. He'll ask to see a Pokemon. Show him Pichu, and after he talks with you, he will present you with a thunderstone.