I Am John Galt

by Donald Luskin

  What it turned out to be—with Rodgers’s face on the cover in extreme close-up, seeming to glower at the reader—was what Rodgers calls a “hit piece on nasty prick bosses . . . and I got real pissed off,” he remembers at first. “Then I read it again and the quotes were right, and then I forgot about it. . . . I have this little byline that’s in my head: ‘Fortune magazine—yesterday’s news tomorrow.’ It’s like who gives a shit about Fortune magazine? Who cares?”

  Silicon Always Tells the Truth

  Business philosophy is one thing—and Rodgers is one hell of a philosopher. But remember, Francisco d’Anconia was a double major in philosophy and physics. And Rodgers is every bit the master of the physics of the business about which he philosophizes so brilliantly.

  Listening to T.J. talk about silicon chips, it’s easy to be dumbfounded by the breadth and depth of his knowledge. Like a kindly college professor tutoring a couple of school kids, he whipped out a pen and a manila file folder, then illustrated for us the underlying physics of transistors and how they link together to form the ultrafast memory chips his company is famous for. Terms like P-N junction, tetrahedral bonding, and inversion layer conduction as a quantum-mechanical phenomenon rolled off his tongue like an ordinary Joe’s barber shop banter on baseball statistics.

  Rodgers’s latest generation of technology, known as a programmable system on a chip (PSoC), is a world’s first. The design consists of configurable analog and digital peripheral functions, memory, and a microcontroller—essentially an entire computer—on a single chip. Engineers no longer have to hunt down, configure, physically connect, and test individual components to drive electronic products. Using PSoC, they simply drag and drop various modules on a computer-based graphical user interface, hit “go,” and the chip configures and programs itself to the designer’s specifications. Currently Rodgers’s PSoC technology is being used in products as diverse as computer printers, high-definition televisions (HDTVs), touch-screen cell phones, ad even washing machines and coffee makers.

  “The big chip we’re just now starting to ramp up, it’s the size of my little fingernail, and I had 300 engineers working on it for three years,” he reveals proudly about his latest project. “When we slice the chip in half to look at a cross section, to look at the transistor profiles and see if the thing’s being done right, we literally can see atoms,” he said in amazement, laying out a couple of images labeled “High Resolution TEM SiO2.” And sure enough, the individual atoms were clearly visible stacked neatly in an organized matrix, “like a rack of pool balls.”

  All that said, on another level brilliant physics and brilliant philosophy are two sides of the same enterprise. Physics taught T.J. what Aristotle taught Ayn Rand: that A is A, that existence exists, and any philosophy that says it doesn’t is a pack of lies. As T.J. puts it, “Silicon always tells the truth.”

  How did T. J. Rodgers come to such confidently held beliefs, such strong bedrock principles? Was there a primary influence? An Objectivist mentor in college? A libertarian guru leading him through his formative years?

  “The fact is there was no one person,” he responds thoughtfully. “I really believe it’s genetic; I really do. Part of it is the fact that I’m scientist and an engineer and, in that business, Maxwell’s equations don’t give a shit if you’re Republican or Democrat.”

  He explains, “There are laws of physics and chemistry that allow you to understand and make respectively that chip and then electrical engineering, which allow you to assemble millions of things together and have them work right. And they are what they are. To say, you know, ‘It’s his fault,’ or ‘I didn’t get enough resources,’ or ‘If we only had a subsidy.’ All that stuff is just crap; it’s an excuse. Silicon always tells the truth.”

  “Man can rearrange the materials that exist in reality, but he cannot violate their identity; he cannot escape the laws of nature,”15 wrote Leonard Peikoff, Ayn Rand’s designated intellectual heir. The political corollary, as Rand herself wrote, is that “To deal with men by force is as impractical as to deal with nature by persuasion.”16

  In the Cypress boardroom hangs a reproduction of Raphael’s masterpiece, The School of Athens. Rodgers uses it as a metaphor for the concrete reality he so loves and admires. In the picture, Plato and Aristotle walk together in the center of the canvas under a marble archway surrounded by ancient scholars, including Pythagoras, Euclid, Socrates, and Ptolemy. An aged and wise-looking Plato points to the sky with one finger, symbolizing his Theory of Forms, which concludes that abstract ideas, not the material world, are the highest form of reality. Meanwhile a considerably younger-looking and robust Aristotle holds his right hand out facing down as if palming an invisible basketball, silently referencing his philosophy of empiricism, or truth through the study of objective reality.

  “We talk about it all the time,” Rodgers says of the painting and underlying message. “We just deal with the laws of physics, and there is no interpretation; there are no politics; no crap. We have our own Aristotle built in, and he tells us if we’ve been competent or not and he always tells the truth; he’s perfect. One of our core values in the company is that silicon always tells the truth; we are Aristotle, real simple.”

  Ayn Rand would be proud. She credited Aristotle, who laid out the rules of logic and reason, as the only philosopher from whom she ever learned anything. She considered Plato to be patient zero in a centuries-long epidemic of mysticism and collectivism.

  What frustrates Rodgers is that when he takes even a tiny step back from the clean room of science, he starts to see the crazy illogic running unchecked through our social discourse today. “You hear that somehow by taxing ourselves with a carbon tax, we’re going to create green jobs . . . that global warming causes snowstorms . . . and how government spending creates wealth. It’s just absolute bullshit.”

  It seems as though Rodgers vents his feelings so frequently to keep from blowing a boiler. His wife has become well practiced at talking him down after a particularly idiotic encounter outside of his corporate safe room. According to Rodgers, “She’ll say, ‘Remember, T.J., you don’t live in the real world. You live in a very special place. It’s very different from the real world.’ And I really do,” he concludes happily. “I really love my job.”

  Money Is Not Evil

  Rodgers supports philanthropy—as long as it’s by choice, not by force. “When good works cease to be voluntary and become compulsory, charity becomes confiscation and freedom becomes servitude,” he wrote in a New York Times response to Bill Clinton’s 1997 President’s Summit in Philadelphia (a gathering he termed the “wrecking crew”), concluding with what he says is his favorite quote: “Philanthropy is a byproduct of wealth, and wealth is best created in free markets whose workings embody a fundamental and true moral principle long forgotten in Washington. Let’s not let the crowd in Philadelphia con us into giving it more than the 40 percent of the economy it already controls.”17

  In early 2010, Cypress and its sister company, SunPower, donated $1.1 million to the Second Harvest Food Bank to install a 322-kilowatt solar power system that is expected to save the nonprofit organization nearly $3 million in electricity costs. Because he’s still free to evaluate charities on their own merits, Rodgers gives based on free-market principles of who does the most good with the hard-earned money he donates. “Second Harvest Food Bank is one of the most efficient nonprofit organizations in the country, giving $0.95 out of every dollar it receives back to the community,” he said about his choice to fund the group. “Cypress is pleased to help reduce the organization’s operating expenses so that it can focus on what it does best—feeding the community.”

  T.J. also goes on the speaking circuit, when invited, to help the younger generation of aspiring businesspeople. One of his favorite openers is to make the statement “Money can’t buy happiness” and then ask the students to react to it as true or false. “Who thinks that is true?” he asks, and 90 percent of the hands go up. Then
he says, “Let me speak for a few minutes on variants of the question I just asked you. . . . Money can’t buy happiness. Money can never buy happiness for anybody. Money always buys happiness under every circumstance. In some occasions, money can buy happiness for some people. Money always buys happiness for everybody. Then I pause. Crank and wait and see.”

  Then he does the poll again and the numbers go to 70 percent true. “Why did you change your vote?” Rodgers then asks of one of the switchers. Once they go through the logical permutations, reports Rodgers, they often reply, “It’s clear that at some time money can buy happiness for somebody. Therefore this categorical statement ‘money can’t buy happiness’ is not always true, and therefore, if it’s not always true, it’s not true.” Simple Boolean logic.

  Then, to hammer home the point even deeper, T.J. tells a personal story and then repolls the class. “In 1996, my father was diagnosed with Alzheimer’s disease, and in 1997, he was so messed up, he couldn’t stay in the house anymore,” Rodgers begins. “My mother couldn’t take care of him. So I flew from California to my home in Wisconsin. I went to the various homes that could take care of him. Some of them were awful. I found a very nice one. It was more expensive than the other ones. I put my dad in it and I just wrote the check to pay for the first quarter. And it was expensive, but I own a company in Silicon Valley and I had enough money that I could just write the check, and being able to take care of my family made me happier. Fact. True story. So now, let me ask you again. Money can’t buy happiness. True or false?”

  Astonishingly, 15 percent or so of the students still stick to their guns, even when confronted with direct evidence and the fallacy of their illogical conclusion. “So now you have got the real hardcore communists,” T.J. chuckles. “Then you get into the real bullshit answers. I mean, it’s just insane. ‘I don’t really understand what happiness is.’ The professors hate it—absolutely hate it, because I am pointing out that money is not evil.”

  T.J. admits, “After my third or fourth appearance at the Stanford Business School, I was never invited back to lecture again.” However, he’s done his little exercise all over the world. At the University of Hong Kong only two students raised their hands on the very first round. “Okay, well, I guess this drill is not going to work around here,” Rodgers said to himself. He reports, “At Santa Clara University—the Jesuit school—they were very good. Stanford Business School is one of the worst. You know, one time I was particularly rankled in this interaction with them and I said, ‘If you hate money so much, why are you going to business school?’”

  Having never read Atlas Shrugged, T.J. may not know that this lecture on the nobility of money is a modern classroom version of a famous epic monologue by Francisco d’Anconia on the same subject, delivered at a cocktail party full of wealthy, guilt-ridden socialites. After one particularly obnoxious heiress declares that “money is the root of all evil,” d’Anconia begins, “Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. . . . Money is made possible only by the men who produce. Is this what you consider evil?”

  As T.J. might have put it in the same circumstances, “If you hate money so much, why are you going to cocktail parties with all these rich people?”

  A Hero on Strike

  In 2001 Rodgers helped out Stanford Business School buddy Richard Swanson with a $750,000 investment in his struggling solar cell company, SunPower. It may have seemed like an ironic choice for the financially scrupulous Rodgers: a chummy favor for a friend with a so-called green company in an industry unlikely to exist at all if not for government subsidies.

  But the investment actually made quite a bit of sense. Rodgers believes that the market for alternative energy technology will grow in the coming decades, driven by the increasing market price of fossil fuel—government meddling or not. SunPower had technology that was one of the most efficient ways to generate electricity from sunlight on the planet.18 And the underlying science of photovoltaic cells isn’t all that different from memory chips. They both consist of silicon crystals manufactured with similar technology. In the case of solar cells, photons strike the silicon surface, displacing electrons and generating an electrical current under the same physical laws as other semiconductors.

  By May 2002, Rodgers had convinced his Cypress board to buy a 44 percent stake in SunPower for $8.8 million.19 Eventually they invested $168 million in plant and equipment. SunPower went public in November 2005 at a price of $18 per share—for a total market capitalization of $1.5 billion.20 Rodgers was named chairman of the board. By the fall of 2010, SunPower earned nearly $2 billion in revenue.21

  Then along came California Proposition 23, which, if passed, would block a proposed tax on carbon dioxide emissions—a law known as AB32. Carbon taxes would actually be a boon to companies like SunPower. With increased taxes on carbon emissions would come a greater financial incentive for businesses to buy solar panels—sort of a financial shock therapy to encourage clean energy alternatives. Proponents of the tax also talked high-handedly about green job creation.

  It did not matter to Rodgers, who would personally stand to benefit from this government manipulation of the private markets. It was just plain wrong—for a number of reasons.

  According to Rodgers, “The basic premise of AB32 fails a grade school math test.” By using numbers from the Environmental Protection Agency (EPA) and the California Business Roundtable, he discovered that reducing California’s tiny contribution to national carbon emissions would barely move the needle from 5.98 gigatons to 5.94 gigatons. For that relatively tiny reduction, 1.1 million Californians would lose their jobs due to the higher tax. “In other words, for almost an unmeasurable change, we’re showing ‘leadership,’” cracks Rodgers. “California, the ‘Green State.’ You know, the only thing we’ve got leadership on is unemployment. It just doesn’t work out for all this self-immolation.”

  So he wrote an op-ed piece in support of Proposition 23 for the Wall Street Journal that was published on October 29, 2010, just before the vote.21 “I got a load of shit from SunPower. . . . They were writing me e-mails; it was clearly a lobbying effort by all but one of the directors—one was a capitalist—writing me these ‘What the hell are you doing?’ kind of things. And it’s real simple. I make shit and pay taxes. I don’t take other people’s taxes and declare it’s good because it’s good.”

  At first Rodgers could tolerate a certain amount of government stimulus into the renewable energy sector to help burgeoning technologies get developed. He figured he could grit his teeth and get through the formative years of the industry, “especially if the company’s stated plan is to get through the period and get off the government teat.” But then SunPower continued deeper and deeper into becoming what he calls a “ward of the state.”

  “They started supporting the laws that are clearly bad for where they live, clearly bad for the state that allowed them to have the free market to create their success, and they criticize the chairman of the company because all their little chicken-shit laws are getting passed to get their little chicken-shit subsidies,” Rodgers recalls, getting visibly riled and pausing for composure. “I went through a period of intense anger, which I never expressed, and then I just came in the next morning and said, ‘I’m out of here.’ I resigned. I resigned from the board of SunPower. So even companies that I am a significant contributor to their success, and I pick people that are good people, even then, when it comes to government pork—for me, today, versus saying what’s truthful and right—they’re whores.”

  The Laboratory Vineyard

  These days, Rodgers is just as likely to deploy his considerable talent, energy, and brainpower to making unique, stunning, and innovative contributions to another of his many interests: winemaking. “You know, I like making things,” Rodgers explains. “I have to make things
, and when my job became sitting in a chair and talking to people I got vicarious enjoyment, because we are making things here and I was close to it, but I wasn’t making anything myself anymore. So now we make wine.”

  He currently owns three small vineyards in the Santa Cruz Mountains that he uses like his own personal laboratory for the scientific exploration of viniculture. His methods are an extension of the style of his own mind—researching the core sciences developed over hundreds of years of trial and error in the old-world tradition, then melding that with new technology and empirical testing to yield astounding new results.

  “Our winery business did 500,000 bucks last year, and within a couple of years we’ll cross the million-dollar mark,” he reports proudly. “We make a world-class pinot noir.” He named his winery Clos de la Tech.

  On a 160-acre parcel he named Domaine Lois Louise, after his mother, Rodgers dug three giant caves tiered into the slope under the vineyard. “It turns out that in France in the old days pinot noir was made with a gravity flow process, meaning that they didn’t have pumps, and whenever you wanted to move wine from a place to another you had to use a siphon,” he explains. The caves are structured so the top of the third cave is lower than the floor of the middle cave. Wine flows by gravity through the process of fermentation, barrel aging, and finally bottling to be trucked off to market four years after harvest.