A further measure of the semiconductor industry’s influence in the nation’s capital was the outcome of the proposed Fujitsu purchase of Fairchild. When news of the pending sale broke in 1987, Defense Secretary Caspar Weinberger, Commerce Secretary Malcolm Baldridge, and several congressmen voiced their opposition, citing security concerns. The president of Fairchild’s parent company Schlumberger charged his American competitors—Noyce in particular—with orchestrating the government’s objections, but while Noyce publicly called the purchase a “lousy deal,” he insisted that he never directly passed on his opinion to the Pentagon or the Department of Commerce. When Fujitsu rescinded its offer, citing “political controversy,” Charlie Sporck acquired the company as part of a move to expand operations at his Silicon Valley-headquartered National Semiconductor. The world, it seemed, was once again turned right-side-up.50
By August 1987, many American semiconductor firms had returned to profitability, selling more chips at comparatively healthier prices than ever before. One year later, Gordon Moore declared it “a great time at Intel.” But it is unclear how much credit for this improvement should go to the trade agreement and sanctions (the remaining antidumping sanctions were lifted in November 1987) for which Noyce and the SIA worked so hard. The decision to cede the memory market to Japan, while agonizing when it was made, seemed prescient by the early 1990s. American companies’ focus on more design-intensive products such as microprocessors coincided with strong growth in the personal computer and other logic-driven industries. At the same time, countries such as South Korea entered the commodity memory business and intensified price wars and cost cutting in that market. The rise of Japanese memory manufacturers thus forced American firms out of a business dependent on slim margins and manufacturing muscle and into much more profitable work building research-intensive products for which demand was growing exponentially.
Time was another important factor behind the American industry’s recovery. After all, in the decades before the mid-1980s recession, the industry had emerged from several two- or three-year downturns without trade agreements to help it on its way. Or perhaps the weaker dollar—which made Japanese products more expensive for United States consumers—was the most important source of the industry’s rosy balance sheets. In any case, in 1987, even Noyce said that he could not attribute the “general pickup in business” to “the trade agreement or anything else,” conceding only that “the cessation of dumping has helped our profitability.”51
WHILE HE WAS LOBBYING on behalf of the SIA, Noyce could not stop himself from thinking beyond his particular industry. His field of vision had been expanding ever since he left the lab bench with its technical problems visible only under a microscope. He had moved on to think about organizing a laboratory, then a division of a company, then a company in its entirety, and next an industry that encompassed many different companies. Now he pushed his thoughts to include the entire high-technology base of the American economy. “Economics and societies are the laboratories that define the problems thinkers solve and on which entrepreneurs capitalize,” he explained. “The role of the individual as thinker or prophet, as scientist or engineer, as entrepreneur or advocate, is not be minimized. Yet these roles can thrive only in conducive social and insutrial environments.”52
In 1985, Noyce wrote to Grant Gale, “I am spending more time trying to figure out the causes for the economic malaise we are experiencing in the U.S. There must be something I’m missing, for I am beginning to think that I do understand the cause.” America had allowed its K–12 schools to decline, its college-level science and engineering classes to dwindle, and its immigration laws to force foreign students to leave the country after graduation, thereby depriving the nation of a valuable workforce. He thought that America’s “emphasis on consuming, not saving” had led to disaster: “our national savings rate is the worst in the industrial world, our corporations are starved for capital, our trade deficit is enormous, and our trading partners are buying our national assets,” Noyce claimed.53
“We have [already] taken the politically easy road” to try to improve things, Noyce told Gale, “and the wise road seems impossible politically. Things like cutting consumption and saving for tomorrow.” Politically impossible or not, Noyce wanted to try to build momentum for the measures he believed would “cure” the American economy. He thought the capital gains tax should be dropped entirely to encourage investment. He believed R&D tax credits should be expanded. At one point he seemed to flirt with the notion of a consumption-based tax to replace income taxes. He said, “Microelectronics is giving us the opportunity to ask ourselves what we want for our society—five cars in every garage, [or] a stimulating intellectual environment, better medical care?” He thought that most Americans, with their abysmal savings rates and their laissez-faire attitudes towards the federal deficit, were consistently answering this question irresponsibly. He was willing to risk sounding “old fashioned,” he said, to encourage the United States to return to the “first principles” responsible for his own success: “Work hard, save your money, get an education, try to get ahead.”54
Noyce promoted these ideas as a member of President Reagan’s competitiveness commission and in speeches before the National Governor’s Association and Congress. He also sought to act on his beliefs, particularly when it came to improving the educational system. In 1982, he became a regent of the University of California. He endowed the Donald Sterling Noyce Prize for Excellence in Undergraduate Teaching (in honor of his brother) to recognize outstanding science instruction at the flagship Berkeley campus. He led the fundraising drive for the Grant O. Gale Observatory at Grinnell College.
Noyce averred, “The collective individualism of Americans will continue to provide opportunity for investment, profit, and individual accomplishment.” His work with young entrepreneurs, which only increased in the 1980s, can be understood as an effort to reinforce these bonds of “collective individualism” that had supported him as a young man. In 1982, he joined the board of a company that planned to build a magnetic recording technology that could offer a potential order of magnitude improvement in density while working faster and costing less than any competitive product. The company, called Censtor, did not prove successful. Noyce also began investing with Arthur Rock after the Callanish Fund (Noyce’s private investment partnership with Paul Hwoschinsky) was amicably dissolved in 1979. Noyce and Rock did not have a formal investment partnership, but as Rock puts it, “We’d rope each other in.”55
The two men together funded several small companies: General Signal, Mohawk Data Sciences, and, at the urging of Mike Markkula, Volant, a manufacturer of a novel steel ski that Noyce, who tried a prototype, was convinced instantly improved his skiing. It was never clear to Volant’s founders, Bucky Kashiwa and his brother Hank, that Noyce particularly cared about making money from the company. His primary concern was to get this fantastic new ski on the market—or at the very least, onto his own boot.56
Noyce and Rock also invested in Diasonics, a company that developed and built medical imaging systems, such as digital X-rays and computer-driven ultrasound equipment. The intersection of technology and medicine had long interested Noyce, and he had made a few small investments in the area in the past. But the nearly $800,000 that Noyce invested in Diasonics was by far the largest he had directed into any single business. In exchange, Noyce received 3.3 million shares of stock. (Rock, who chaired the board and invested slightly more than Noyce, held 3.9 million shares.) When Diasonics went public in 1983, it raised $123 million, more money than any company since the Adolph Coors Co. offering in 1975. Within weeks, Noyce’s stake was worth almost $100 million. But Diasonics misjudged the market and less than a year after the IPO, the company was barely breaking even. The stock, which traded at almost $30 a share shortly after the IPO, was down to 7½ by 1985. Soon the SEC was investigating a Diasonics executive for alleged insider trading, and a group of shareholders filed suit, alleging the company misled inv
estors about its prospects. By 1988, Rock’s and Noyce’s holdings were worth only $2.80 a share, less than what they had paid for them.57
NOYCE CONTINUED TO TRAIN most of his entrepreneurial attention on Caere, the barcode-scanner company for which he had written the blank check several years before. In 1985, Bob Teresi, Caere’s longtime CFO who had recently been named the company’s president, proposed that the firm take its small profits, repay its investors, and close up shop. Caere was clearly never going to make it big in the barcode-reader business.
Noyce thought the solution was to change the business model. “Bob had the idea [that a person should be able to] stick a magazine page in a scanner that would be able to recognize it and convert it into a format that could be edited,” recalls Teresi. “I thought Bob’s idea was just not reasonable—it would take a supercomputer to be able to process something as complex as what he was proposing.
“But Bob knew what was coming down the pipe in so many ways,” Teresi continues. A few days after Noyce offered his rather outrageous suggestion for Caere’s next product, Teresi met a pair of young men—a pianist and a computer programmer—who gave him a business plan proposing something very similar to Noyce’s vision. Noyce thought their approach seemed plausible. Caere gave the pair and two other engineers a contract to develop the product and, in Teresi’s words, “set them up in a space over a garage in Berkeley with a stipend and espresso machine.”
In the names of these four employees—Vijayakumar Rangarajan, William W. Allen, James Chen, and Tong Chen—one can discern evidence of the wave of highly educated immigrants from India and China who helped to double the size of the foreign-born population of Santa Clara County between 1975 and 1990. By 1990, one-quarter of the engineers and scientists employed in California high-technology companies were born outside the United States. The young engineers’ names now came from around the world, but the spirit of the quest was familiar to Noyce.58
Roughly once a month, Noyce and Teresi would drive across the Bay Bridge to Berkeley so Noyce could review the technical progress at the “skunk works.” Within a year, the garage team had created a usable product, named OmniPage, that could scan text and convert it to a format that could be edited. At a board meeting shortly after OmniPage was developed, Teresi told Noyce that he planned to hardwire the product into a scanner that would sell for between $20,000 and $30,000. Teresi expected Caere would sell two of these scanners every month.
Noyce did not think this was the best way to go, but he never explicitly said as much to Teresi. Instead, he told Teresi that he would introduce him to Mike Markkula, now chairman of Apple Computer, who might have some other ideas for OmniPage. This redirection is vintage Noyce. “Even if he was blasting you,” recalls Kenneth Oshman, CEO and founder of ROLM, the business communications and military computer systems firm on whose board Noyce served for two years, “you just felt good about it.” The people on the receiving end of this “blasting” rarely believed that Noyce thought their work was inadequate or their ideas poorly considered. Instead, he seemed to be telling them that their already-excellent work could be taken even farther. One of his favorite lines was “Your ideas have made me wonder if …” Bob Teresi, for example, did not translate Noyce’s suggestion to talk to Markkula to mean that his plan to build hardware was ill conceived. He read it as a compliment: this OmniPage product is so exciting that it deserves the attention of many people, Noyce seemed to be saying. So don’t stop thinking yet.59
When Mike Markkula met with Teresi, he suggested that OmniPage should be sold as software, not hardware. He also thought that Apple might want to license the software for use in a scanner the company planned to introduce soon. In the end, Apple promoted OmniPage so heavily—President John Sculley personally introduced it at MacWorld 1988—that Caere had to do very little publicity itself. “The Apple endorsement gave the product immediate credibility and put a rocket under [Caere],” explained one computer sales executive. Sales of OmniPage were $10 million in the year following MacWorld 1988.60
The successful launch of OmniPage enabled Caere to go public in June 1989, with an offering that was one of the most successful of the year. By December, Noyce’s nearly 400,000 shares were worth almost $9 million. The returns went a long way towards silencing the friends who for years had teased Noyce about his devotion to his “teenage startup.”61
In his work with educational institutions and startup companies, in his speeches before Congress and industry groups about the importance of saving and learning, Noyce was doing his part, as he put it, to ensure American remained “the land of opportunity for all of those who will be the achievers of the future.”62
ALL IN ALL, NOYCE WAS CONTENT. He enjoyed the SIA work. His children were grown and for the most part doing well. He and Ann Bowers were happy together. They remodeled the house on Loyola Drive. From the street it appeared as unassuming as ever, but inside, it “became a resort,” as one friend put it, “something you would see on a house tour, and definitely a happening.” In the backyard, Noyce and Bowers installed a large pond, a sauna, and a free-form pool with waterfalls and artificial rocks to hide the controls. Noyces’ brothers privately called the remodeled property “Disneyland North.”
Over the course of just a few years, Noyce and Bowers traveled with friends to Australia, Bora Bora, the Carribbean, Tahiti, the Great Barrier Reef, Bali, the Virgin Islands, Mexico, New Guinea, Korea, and Japan. They also spent several weeks each year in Aspen, where they had bought a home.63
In 1984, Noyce and Bowers joined an Intel delegation visiting China, where Noyce met with Chinese premier Zhao Ziyang—who asked his opinions on developing microcomputers and semiconductors in China—and was named “Honourable Professor” by the Beijing Institute of Aeronautics and Astronautics. The Intel representatives met with members of a “microcomputers users group” and spoke on trends in manufacturing and technology direction. By the trip’s end, the Intel contingent was so tired of elaborate formal meals that for one night’s dinner they decided to pool their private stashes from their suitcases. The stale potato chips and airplane-issued mini bottles of scotch they shared that night on the floor of Noyce and Bowers’s hotel room tasted better than anything they could have imagined.64
Noyce discovered scuba diving and after a bit of practice in his Disneyland pool, he was certified to dive. He enjoyed taking photos deep beneath the surface and spent hours in his basement warming and shaping large pieces of plastic to work as waterproof casings for his cameras. He could have bought a waterproof camera, of course, but he always wanted the latest accessories, and they were rarely water resistant. During the many diving vacations he and Bowers took together, his cameras intermittently worked, leaked, and floated.
Every once in a while, Noyce would be struck with an idea—usually for an improvement to a camera—and he would jot down his thoughts on the nearest available sheet of paper: a random legal pad, hotel stationery, tiny memo sheets, the backs of computer printouts, the reverse side of a price list for photovoltaic modules. His “doodles,” as he called them, are filled with graphs, equations, drawings, and electrical diagrams covering everything from focal length calculations, to strobe connector troubleshooting, to unidentified calculations that continue for the length of the page. Noyce clearly adored this sort of thinking. His doodles are punctuated with exclamation points and underlines that bring his excitement off the page.65
By the middle of the 1980s, Noyce had managed to design a nearly ideal jam-packed version of retirement for himself. He had time to travel and tinker and mentor young entrepreneurs, but at the same time, the SIA’s efforts provided him meaningful work that returned him to the stage he had found so hard to leave.
When he wanted to escape his lobbying and investment work completely, Noyce could find peace in two places—at the 6,500-acre ranch in Carmel Valley that he and Bowers purchased in 1982, and in the air. The ranch was two hours from Silicon Valley, in an isolated spot that only people who had been tol
d how to get there could have found. Away from the demands of the valley and Washington, Noyce and Bowers could ride horses and occasionally even read a cheap paperback together in a most unusual fashion. When Bowers finished a section, she would rip it out of the binding and hand it to Noyce to read.66
His planes offered even more release. Noyce liked to fly for practical reasons, of course. It saved him time. He estimated that he flew roughly 100 hours per year, 40 of those on business. He regularly flew himself to Washington and to business meetings until Bowers, worried he might fly himself home exhausted, asked him to hire a pilot. He also liked the physical challenge of controlling a plane—he once barreled right through a baby thunderhead cloud just to see if he could do it—and he resorted to cliché when he told a television reporter that what he enjoyed about flying was that “it’s man over nature,” with “technology allow[ing] man to do something that he could not earlier do.” (As an aside, Noyce mentioned that the personal computer was similar to the airplane in this way: the PC was a technical advance that enabled people “to explore intellectual activities” that might otherwise have been beyond their grasp.)67
But people who flew with Noyce felt that he also took to the skies to escape his life on the ground. Jim Lafferty, Noyce’s friend and sometime flight instructor, said, “He liked the aloneness. He loved to be disconnected, up there, by himself. You can do whatever you want to do, go wherever you want to go.” Lafferty recalls flying with Noyce for an hour or more in complete silence. But it was not unusual for Noyce to want to “talk about space, about infinity, or eternity.” One night in particular stands out: “I remember him talking about Boyle’s Law. [Seventeenth-century scientist Robert Boyle’s equation describing the relationship between the pressure and volume of a confined gas is an important part of the physics behind aircraft engines.] It was a dissertation, really. Bob took off into equations and calculations out of his head that were so far beyond what I could comprehend. … There he was at 39,000, 41,000 feet, with the airplane on auto pilot, the lights all turned down, and he’s taking off on his own. I might as well have switched off and gone to the back of the airplane and let him talk to himself.”68
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