In the Company of Giants
Page 19
I’ve always rejected the term “entrepreneur” because it implies that you’re an entrepreneur first and a software creator second. I didn’t say, “Oh, I’ll start a company. What will it be? Cookies?
Bread? Software?” No. I’m a software engineer and I decided to gather a team together. The team grew over time, built more and more software products, and did whatever was needed to drive that forward. Entrepreneurship to me is an abstract notion. I don’t think that most people who are really into their entrepreneurship aren’t going very far. Seriously. Maybe I could be wrong. I wonder if the
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people in this book think of themselves as entrepreneurs. I don’t think they do.
Those who have been in the business for a long time seem to dislike the term.
Yes. There may be some reason for that. If “entrepreneur” means people who love businesses, this group fits. But if it means people who said, “I’m going to be excited every day because I’m going to be like one of these big businesses,” it just doesn’t work. You’ve got to enjoy what you do each day for itself and for its excellence. Sure, you can take a long-term perspective to how you manage technology, employees, and customers and if your vision is sound, those long-term approaches will pay off. You’ll achieve the appropriate size, whatever your vision is. Many people take a modest-sized vision and try to turn it into something larger than it can naturally be. That’s very difficult. Or, they read books about how it’s all about winning and they think about how tough they are going to be. But it’s nice to just ship good products. I don’t care how tough you are, it’s kind of meaningless. Articles love to play on toughness or competitiveness, or slogans, or things like that. Software is about millions of details.
You’ve got to have people that love dealing with those kinds of details and then taking feedback. That’s what makes it a fun business.
What aspect of the computer industry would you recommend starting in today? It’s hard to start a company today that develops PC operating systems.
There are people who have done it. Netscape’s basic view is to take a browser and turn it into an operating system. There are many people going after that. It’s a swinging-for-the-fences kind of approach. At any one time there are a finite number of operating systems that are very successful. Some people will accomplish it and many people will take a more content-oriented or a vertical industry type of approach.
If you really want to write great software, the best thing is to go work with a group of people who are very good and work on a variety of different products. If you really want to be a great software developer, you need a lot of seasoning. Thinking that you will be one of the world’s greatest software developers without working alongside someone with seniority...I doubt that’s a very craft-oriented view.
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So if you were starting out today you would take a scatter-shot approach to developing products?
The notion of what to do at a different point of time is hard to say. I almost decided to go into mathematics. I thought I was going to go into physiological psychology. Economics? They haven’t figured out much there, that would be cool. And yet my whole life I’ve played around with software. In math, I realized “Hey, this is not a field with a lot of virgin territory—a field with great psychic rewards for the progress you make,” whereas with software it’s “Wait a minute, we can do ten times better than the stuff that’s been done.” The opportunity and the vision that grew up around personal computing and being able to hire friends all came together. If you want to be a great software developer, go where the great software developers are. I had done a lot of work after the age of 13 studying microsoftware and I became a fantastic developer, but I kept asking great developers to look at my code and show me where it could be better, how it could be different. I’d move to a new level. When Microsoft started, there was a lot of camaraderie of challenging each other: “Can you tighten up this code? Can you make this better?” It was an era of great craftsmanship. It was a different world.
There were a lot of paths I could have taken and been pretty darn happy with.
11
ANDY GROVE
Intel
AN IMMIGRANT IN THE
TRENCHES
On Tuesday morning at 8 A.M., roughly 120 glazed eyes were focused with laserlike concentration on a Stanford business school professor as he entered our classroom. It was the beginning of my second year in business school, and, in this particular class, our professor was Andy Grove, the Chairman and CEO of Intel, a multi-billion-dollar organization and one of the largest companies in the world. The B-school rumormill diligently had spread gossip about Grove—
about his tenacity, distaste for tardiness, his spartan discipline—and many of us were both excited and intimidated by the prospect of being taught by him.
While I must admit that I am still slightly daunted by him—perhaps because of his remarkable achievements—Andy Grove is really a down-to-earth person and very approachable.
He and Bill Hewlett were indeed this book’s “bell cows”—once other CEOs knew that Grove and Hewlett were participating in Giants, it suddenly became surprisingly easy to land interviews with them.
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The immigrant son of a Hungarian dairyman, Andras Grof was born in Budapest, Hungary, in 1936. In school he dabbled in opera and journalism. After the 1956 Soviet invasion of Hungary and subsequent “nationalization” of his father’s business, Grove escaped on a boat filled with refugees, and landed in New York with only $20 in his pocket. Three years after landing on U.S. soil, Grove graduated first in his class from the City College of New York with a degree in chemical engineering, paying his way through college by being a waiter.
Three years later, he obtained a Ph.D. from UC Berkeley and used his writing skills to craft Physics and Technology of Semiconductor Devices—considered even today to be the seminal introduction to semiconductor engineering for students.
Grove left Berkeley to work for Gordon Moore and Robert Noyce, founders of one of the world’s first semiconductor companies—Fairchild Camera and Instrument, later named Fairchild Semiconductor. After being dissatisfied with Fairchild’s progress, Noyce and Moore went on to found Intel (INTegrated ELectronics) and brought Grove with them to head the R&D department. After a stint in R&D at Intel, Grove became COO in 1976. In 1979, he launched Operation Crush, a campaign to capture 2,000 new customers away from Motorola within one year. Intel beat that goal by 500
customers, one of which was IBM.
In 1982, IBM approached Intel to provide its 8088 microprocessor chip as the brain of IBM’s entry into the microcomputer industry—the IBM PC. Ironically, Intel had already developed and patented the microprocessor in 1971, but did not expect significant demand for it.
However, in 1985 personal computers weren’t shipping in enough volume. Intel had defined itself as “the memory company,” yet its memory business evaporated. The Japanese chip-makers had driven prices so low that they crushed their U.S.
rivals in the huge market Intel had invented. Intel, the industry leader, lost money for six straight quarters from the wither-ing attack of Japanese firms, and many in the industry doubted Intel’s ability to survive. Over the objection of several
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executives, Grove axed the DRAM business and thousands of employees. Unwilling to let the company come to such a pass again, Grove focused Intel on microprocessors with a paranoia and manic competitiveness that set the culture for the company today. Indeed, Intel’s overarching theme of “Only the Paranoid Survive” (also the title of one of Grove’s books) epit-omizes the current Intel culture.
Intel’s revenues grew as the personal computer industry mushroomed. Its microprocessor design quickly became the de facto industry standard fo
r the bevy of new computer and software developers just starting up. Nowadays, the words
“Intel Inside” are the words by which many Americans judge the quality of the computers they buy, resulting in about a whopping 80 percent market share for Intel.
Yet, despite the fact that the company’s stranglehold on the microprocessor market shows no sign of loosening, Grove has not rested on his laurels. Intel spends a significant amount of its revenue on R&D, and consistent with his paranoia, Grove still considers the industry and his competitors to be brutal.
Intel and its competitors—most notably Advanced Micro Devices, or AMD—often take their battles to court using hardball legal tactics. Grove has referred to AMD as “the Milli Vanilli of semiconductors. Their last original idea was to copy Intel. Since they can’t win in the marketplace, they try to defeat us in the courts and press.” Yet, polemics aside, Intel has managed to keep its smaller competitors from undercut-ting the company’s business. AMD has always hovered around 10 percent of the microprocessor market.
Despite the furious competition, Grove manages to teach high-tech strategic management at Stanford’s business school, and also is a prolific writer. He is the author of three management books: High Output Management, One-on-One with Andy Grove, and Only the Paranoid Survive.
We had breakfast with Andy Grove at Hobee’s, a popular restaurant in Mountain View, California.
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“The important things of tomorrow are probably
going to be things that are overlooked today.”
What do you think your talents are as an entrepreneur and as a manager of a large company?
One thing is important for me to correct: I never looked at myself as an entrepreneur, and even today I don’t look at myself as an entrepreneur. In Intel’s case, the entrepreneurs were Bob Noyce and Gordon Moore. Gordon himself is a little uncomfortable with the word
“entrepreneur.” In speeches he’d describe himself as the accidental entrepreneur.
Now, that’s not the case for Bob. Bob’s really more of an entrepreneur. But, I just tagged along for the ride. That changed later.
Much later. But in the early stages my expectations were that I’d be head of R&D for this new company. R&D is what I did at Fairchild. I never pictured myself doing anything substantially different. But, I rapidly veered away from that ambition when I became the operations guy inside Intel. That’s what I did for almost twenty years. I helped make Intel’s transition from an entrepreneurial outfit, none of which was my doing, to the manager of a medium-sized company, which was actually a very difficult transition to make.
Why was it difficult?
Well, everybody can start a startup and come out with one product—
you see that all over. But, making the company into something of a self-sustaining institution, with its own methods and mores and organization—that’s tough. Transitioning people from a completely task-oriented mentality to more of a process-oriented mentality, particularly since those people were attracted to a startup, was very hard.
So, I wasn’t comfortable with the role of the entrepreneur as you define it—somebody who starts a business and sees a business opportunity. I was not even qualified for that. I was a researcher. But once I began to see the architecture for the company as an organization, I became more of a participant.
So if Robert Noyce hadn’t left Fairchild then you wouldn’t have gone?
The person I followed was Gordon. I worked with Gordon at Fairchild and actually, I wasn’t that enamored by Bob [Noyce] at Fairchild. I knew him, he was two levels above me. I got to know him
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better later, but at Fairchild I saw his weakness. Fairchild was a troubled organization and Bob was not comfortable running a controversial, troubled company, so he became passive as the company was spinning out of control. So I didn’t have high regard for him at that time. As Gordon was leaving, I immediately volunteered to go with him. Then, I found out that Bob was leaving, and I had momentary second thoughts. That’s not the conventional wisdom because Bob was very highly regarded.
You’ve mentioned that Intel was a collection of strangers working together, and that made things difficult in the beginning. In retrospect, do you think there were pitfalls there that you could have avoided in that respect?
No. There are pitfalls there, but I don’t know how you can avoid them. First of all, the fallout didn’t depend on whether we were or weren’t strangers. That attitude went away after a while. What made it difficult was not that we didn’t know each other—what made it difficult was that we didn’t have any rules. Nobody quite knew what to do. Then, a lot of the people—including quite possibly myself—started developing a pecking order. Influencing and elbowing gets so illog-ical, and so inappropriate for a group of people who are trying to get something going. In fact, I think that there was more politicing and game playing at Intel in its first year—at least in senior management—than since its history afterwards. It’s not what you would think.
How, then, does one turn political shenanigans into cohesiveness? Is it something that just happens as a matter of course or do you try to mold the culture?
[ Long pause] It’s hard to answer that without getting awfully personal. I don’t have a big theoretical model or some five-forces diagram here. What I can say is that in the fortunate companies, certain operating methods emerge. And, at Intel, some methods of influence emerged.
For example, I didn’t have an easy time with our first marketing manager and I couldn’t spend a lot of energy marketing. I was the operations guy at Intel. And so, what happened was that we were second guessing each other and fighting, and then we got a new marketing manager three years later. That was a major breakthrough because we got along right from the get-go. I’d have to say that there
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was a personality conflict that did not exist with the second guy. But, who knows? Maybe by the time the second guy came in, some shape and order to the place had emerged. Had he been there from the beginning, we still might have been ridden with conflicts. I don’t know.
The problem with a lot of these stories is that they are very personal and very self-centered. I’m telling you the story from my perspective and, on top of it all, filtered through 25 years of memories.
Those stories make what I did seem wonderful and what other people did, less wonderful. But all our histories are like that, I suppose.
Anyway, that particular interpersonal conflict was the most important to me, but by no means the only one. We had productive people flip out or go through a kind of burnout process. When you’re 30 years old and encounter that... It’s not an ideal startup situation.
What was the first critical juncture at Intel—the fork in the road that could have made you or broken you? Was it when IBM decided to use your products?
The first critical juncture was the introduction of our first successful product, the 1103—the first DRAM. It was enormously difficult to get it into production. DRAMs were so difficult to make and test. We were learning totally new things—a new process, a new product, new testing, new customers. And, customers were seriously relying on these things for mainframe memory. We weren’t playing with calcula-tors here. We were playing with big time memory, a very difficult period.
So, that’s probably what I’d put my finger on—this process and these events when we became a company. Up until then we were a new startup just coming out with our first products, none of which were that successful. Then we made the 1103 and it became very successful. That’s when Intel’s systems as we know them today emerged. Had we blown that [product] we probably would have followed a completely different trajectory. We might have survived, but with the introduction of the 1103 into market, the real Intel was born.
From the get-go, did you think that the 1103 was the way to go? Was it part of a master plan at Intel?
No. We found that the 110
3 was going to be a sexy product. And, in the last year of production, we had to systematize it. It was the end
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result that dictated the style. There was no master plan whatsoever.
We were running out of money and licensed the products and technology to another Canadian company. Things were much simpler and much more haphazard in the early ’70s than they are today. In the midst of this the microprocessor was born. That was not a big event, though. It was an interesting thought and nobody paid a whole lot of attention to it.
It [the microprocessor] was done in response to a customer request, right?
Yes. We obviously didn’t realize how important it was.
Do you think that’s true of many important technologies—that you don’t realize their importance?
Probably. The important things of tomorrow are probably going to be things that are overlooked today.
The important thing to realize is that a lot of major business decisions, such as Intel’s shift to microprocessors, are not that obvious. In retrospect, they might be, but not when you’re looking forward. If you read the newspapers about Apple, what they are going through is very similar. Nothing is obvious about Apple—other than the fact that they are in trouble. That’s very obvious, but what to do about it is not obvious. If you lined up three or four of the people in your book and gave them a blank sheet of paper that said, “If I were CEO of Apple I would...,” each would have a different answer.
It was like that at Intel in 1985. You could have asked five people where the company should go and you probably would have gotten five different answers. In retrospect, we know what happened with the 386, but up until the 386, the microprocessor was really not that big. Our new product was very complex. When we threw ourselves into the microprocessor business, we didn’t know if we could make it.