The Innovators

  When he had sought a home for the traitorous eight in 1957, he pulled out a single piece of legal-pad paper, wrote a numbered list of names, and methodically phoned each one, crossing off names as he went down the list. Now, eleven years later, he took another sheet of paper and listed people who would be invited to invest and how many of the 500,000 sharesII available at $5 apiece he would offer to each. This time around, he would cross out only one name. (“Johnson at Fidelity”III didn’t come in.) Rock needed a second sheet to revise the allocations because most people wanted to invest more than he offered them. It took him less than two days to raise the money. The lucky investors included Rock himself, Noyce, Moore, Grinnell College (Noyce wanted to make it rich, and he did), Laurence Rockefeller, Rock’s Harvard classmate Fayez Sarofim, Max Palevsky of Scientific Data Systems, and Rock’s old investment firm, Hayden, Stone. Most notably, the other six members of the traitorous eight, many of them now working at firms that would have to compete with this new one, were given a chance to invest. All did.

  Just in case someone desired a prospectus, Rock himself typed up a three-and-a-half-page sketch of the proposed company. It opened by describing Noyce and Moore and then gave a perfunctory three-sentence overview of the “transistor technologies” the company would develop. “Lawyers later screwed up venture investing by forcing us to write prospectus books that were so long and complex and carefully vetted that it’s a joke,” Rock complained later, pulling the pages out of his file cabinet. “All I had to tell people was that it was Noyce and Moore. They didn’t need to know much else.”32

  The first name that Noyce and Moore chose for their new company was NM Electronics, their initials. That was not very exciting. After many clunky suggestions—Electronic Solid State Computer Technology Corp. was one—they finally decided on Integrated Electronics Corp. That wasn’t very thrilling, either, but it had the virtue that it could be abridged—as Intel. That had a nice ring to it. It was smart and knowing, in many different ways.

  THE INTEL WAY

  Innovations come in a variety of guises. Most of those featured in this book are physical devices, such as the computer and the transistor, and related processes, such as programming, software, and networking. Also important are the innovations that produce new services, such as venture capital, and those that create organizational structures for research and development, such as Bell Labs. But this section is about a different type of creation. There arose at Intel an innovation that had almost as much of an impact on the digital age as any of these. It was the invention of a corporate culture and management style that was the antithesis of the hierarchical organization of East Coast companies.

  The roots of this style, like much of what happened in Silicon Valley, were at Hewlett-Packard. During World War II, while Bill Hewlett was in the military, Dave Packard slept on a cot at the office many nights and managed three shifts of workers, many of them women. He realized, partly out of necessity, that it helped to give his workers flexible hours and plenty of leeway in determining how to accomplish their objectives. The management hierarchy was flattened. During the 1950s this approach merged with the casual lifestyle of California to create a culture that included Friday beer bashes, flexible hours, and stock options.33

  Robert Noyce took this culture to the next level. To understand him as a manager, it’s useful to recall that he was born and bred a Congregationalist. His father and both grandfathers were ministers of the dissenting denomination that had as its core creed the rejection of hierarchy and all of its trappings. The Puritans had purified the church of all pomp and levels of authority, even going as far as eliminating elevated pulpits, and those who spread this Nonconformist doctrine to the Great Plains, including the Congregationalists, were just as averse to hierarchical distinctions.

  It also helps to remember that, from his early days as a student, Noyce loved madrigal singing. Every Wednesday evening he attended rehearsals of his twelve-voice group. Madrigals don’t rely on lead singers and soloists; the polyphonic songs weave multiple voices and melodies together, none of them dominant. “Your part depends on [the others’ and] it always supports the others,” Noyce once explained.34

  Gordon Moore was similarly unpretentious, nonauthoritarian, averse to confrontation, and uninterested in the trappings of power. They complemented each other well. Noyce was Mr. Outside; he could dazzle a client with the halo effect that had followed him since childhood. Moore, always temperate and thoughtful, liked being in the lab, and he knew how to lead engineers with subtle questions or (the sharpest arrow in his quiver) a studied silence. Noyce was great at strategic vision and seeing the big picture; Moore understood the details, particularly of the technology and engineering.

  So they were perfect partners, except in one way: with their shared aversion to hierarchy and unwillingness to be bossy, neither was a decisive manager. Because of their desire to be liked, they were reluctant to be tough. They guided people but didn’t drive them. If there was a problem or, heaven forbid, a disagreement, they did not like to confront it. So they wouldn’t.

  That’s where Andy Grove came in.

  Grove, born András Gróf in Budapest, did not come from a madrigal-singing Congregationalist background. He grew up Jewish in Central Europe as fascism was rising, learning brutal lessons about authority and power. When he was eight, the Nazis took over Hungary; his father was sent to a concentration camp, and András and his mother were forced to move into a special cramped apartment for Jews. When he went outside, he had to wear a yellow Star of David. One day when he got sick, his mother was able to convince a non-Jewish friend to bring some ingredients for soup, which led to the arrest of both his mother and the friend. After she was released, she and András assumed false identities while friends sheltered them. The family was reunited after the war, but then the communists took over. Grove decided, at age twenty, to flee across the border to Austria. As he wrote in his memoir, Swimming Across, “By the time I was twenty, I had lived through a Hungarian Fascist dictatorship, German military occupation, the Nazis’ Final Solution, the siege of Budapest by the Soviet Red Army, a period of chaotic democracy in the years immediately after the war, a variety of repressive Communist regimes, and a popular uprising that was put down at gunpoint.”35 It wasn’t like mowing lawns and singing in a small-town Iowa choir, and it did not instill genial mellowness.

  Grove arrived in the United States a year later and, as he taught himself English, was able to graduate first in his class at City College of New York and then earn a PhD in chemical engineering from Berkeley. He joined Fairchild in 1963 right out of Berkeley, and in his spare time wrote a college textbook titled Physics and Technology of Semiconductor Devices.

  When Moore told him of his plans to leave Fairchild, Grove volunteered to come along. In fact, he almost forced himself on Moore. “I really respected him and wanted to go wherever he went,” Grove declared. He became the third person at Intel, serving as the director of engineering.

  Grove had deep admiration for Moore’s technical skills but not his management style. That was understandable, given Moore’s aversion to confrontation and almost any aspect of management beyond proffering gentle advice. If there was a conflict, he would watch quietly from afar. “He is either constitutionally unable or simply unwilling to do what a manager has to do,” Grove said of Moore.36 The feisty Grove, by contrast, felt that honest confrontation was not only a managerial duty but one of life’s invigorating spices, which as a hardened Hungarian he relished.

  Grove was even more appalled by the management style of Noyce. At Fairchild he had simmered with fury when Noyce ignored the incompetence of one of his division heads, who showed up late and drunk at meetings. Thus he groaned when Moore said that his new venture would be in partnership with Noyce. “I told him that Bob was a better leader than Andy gave him credit for,” Moore said. “They just had different styles.”37

  Noyce and Grove got along socially better than they did professionally. They went wi
th their families to Aspen, where Noyce helped Grove learn to ski and even buckled his boots for him. Nevertheless, Grove detected a detachment in Noyce that could be disconcerting: “He was the only person I can think of who was both aloof and charming.”38 In addition, despite their weekend friendship, Grove found himself irritated and sometimes appalled by Noyce at the office. “I had nothing but unpleasant, discouraging dealings with him as I watched Bob manage a troubled company,” he recalled. “If two people argued and we all looked to him for a decision, he would put a pained look on his face and said something like, ‘Maybe you should work that out.’ More often he didn’t say that, he just changed the subject.”39

  What Grove did not realize at the time, but came to understand later, was that effective management need not always come from having one strong leader. It can come from having the right combination of different talents at the top. Like a metallic alloy, if you get the right mix of elements the result can be strong. Years later, after Grove had learned to appreciate this, he read Peter Drucker’s The Practice of Management, which described the ideal chief executive as an outside person, an inside person, and a person of action. Grove realized that instead of being embodied in one person, such traits could exist in a leadership team. That was the case at Intel, Grove said, and he made copies of the chapter for Noyce and Moore. Noyce was the outside guy, Moore the inside, and Grove was the man of action.40

  Arthur Rock, who put together the funding for the trio and initially served as their board chair, understood the virtue of creating an executive team whose members complemented each other. He also noted a corollary: it was important that the trifecta become CEO in the order that they did. Noyce he described as “a visionary who knew how to inspire people and sell the company to others when it was getting off the ground.” Once that was done, Intel needed to be led by someone who could make it a pioneer in each new wave of technology, “and Gordon was such a brilliant scientist he knew how to drive the technology.” Then, when there were dozens of other companies competing, “we needed a hard-charging, no-nonsense manager who could focus on driving us as a business.” That was Grove.41

  The Intel culture, which would permeate the culture of Silicon Valley, was a product of all three men. As might be expected in a congregation where Noyce was the minister, it was devoid of the trappings of hierarchy. There were no reserved parking places. Everyone, including Noyce and Moore, worked in similar cubicles. Michael Malone, a reporter, described visiting Intel to do an interview: “I couldn’t find Noyce. A secretary had to come out and lead me to his cubicle, because his cubicle was almost indistinguishable from all the other cubicles in this vast prairie dog town of cubicles.”42

  When one early employee wanted to see the company’s organization chart, Noyce made an X in the center of a page and then drew a bunch of other Xs around it, with lines leading to each. The employee was at the center, and the others were people he would be dealing with.43 Noyce noticed that at East Coast companies the clerks and secretaries got little metal desks while those of top executives were expansive ones made of mahogany. So Noyce decided that he would work at a small gray aluminum desk, even as newly hired support staffers were given bigger wooden ones. His dented and scratched desk was near the center of the room, in open view, for everyone to see. It prevented anyone else from demanding some vestment of power. “There were no privileges anywhere,” recalled Ann Bowers, who was the personnel director and later married Noyce.IV “We started a form of company culture that was completely different than anything had been before. It was a culture of meritocracy.”44

  It was also a culture of innovation. Noyce had a theory that he developed after bridling under the rigid hierarchy at Philco. The more open and unstructured a workplace, he believed, the faster new ideas would be sparked, disseminated, refined, and applied. “The idea is people should not have to go up through a chain of command,” said one of Intel’s engineers, Ted Hoff. “If you need to talk to a particular manager you go talk to him.”45 As Tom Wolfe put it in his profile, “Noyce realized how much he detested the eastern corporate system of class and status with its endless gradations, topped off by the CEOs and vice-presidents who conducted their daily lives as if they were a corporate court and aristocracy.”

  By avoiding a chain of command, both at Fairchild Semiconductor and then at Intel, Noyce empowered employees and forced them to be entrepreneurial. Even though Grove cringed when disputes went unresolved at meetings, Noyce was comfortable letting junior employees resolve problems rather than bucking them up to a higher layer of management that would tell them what to do. Responsibility was thrust on young engineers, who found themselves having to be innovators. Every now and then, a staffer might be unnerved by a tough problem. “He would go to Noyce and hyperventilate and ask him what to do,” Wolfe reported. “And Noyce would lower his head, turn on his 100 ampere eyes, listen, and say: ‘Look, here are your guidelines. You’ve got to consider A, you’ve got to consider B, and you’ve got to consider C.’ Then he would turn on the Gary Cooper smile: ‘But if you think I’m going to make your decision for you, you’re mistaken. Hey . . . it’s your ass.’ ”

  Instead of proposing plans to top management, Intel’s business units were entrusted to act as if they were their own little and agile company. Whenever there was a decision that required buy-in from other units, such as a new marketing plan or a change in a product strategy, the issue would not be bucked up to bosses for a decision. Instead an impromptu meeting would be convened to hash it out, or try to. Noyce liked meetings, and there were rooms set aside for whenever anyone felt the need to call one. At these meetings everyone was treated as an equal and could challenge the prevailing wisdom. Noyce was there not as a boss but as a pastor guiding them to make their own decisions. “This wasn’t a corporation,” Wolfe concluded. “It was a congregation.”46

  Noyce was a great leader because he was inspiring and smart, but he was not a great manager. “Bob operated on the principle that if you suggested to people what the right thing to do would be, they would be smart enough to pick it up and do it,” said Moore. “You didn’t have to worry about following up.”47 Moore admitted that he was not much better: “I was never very eager to exert authority or be the boss either, which might mean we were too much alike.”48

  Such a management style needed someone to impose discipline. Early on at Intel, well before it was his turn in the lineup to become CEO, Grove helped institute some management techniques. He created a place where people were held accountable for sloppiness. Failures had consequences. “Andy would fire his own mother if she got in the way,” said one engineer. Another colleague explained that this was necessary in an organization headed by Noyce: “Bob really has to be a nice guy. It’s important for him to be liked. So somebody has to kick ass and take names. And Andy happens to be very good at that.”49

  Grove began to study and absorb the art of management as if it were the science of circuitry. He would later become a best-selling author of books with titles such as Only the Paranoid Survive and High Output Management. He did not try to impose a hierarchal command on what Noyce had wrought. Instead he helped to instill a culture that was driven, focused, and detail-aware, traits that would not naturally have arisen from Noyce’s laid-back, nonconfrontational style. His meetings were crisp and decisive, unlike those run by Noyce, where people tended to hang around as long as possible knowing that he was likely to tacitly assent to the last person who had his ear.

  What saved Grove from seeming like a tyrant was that he was so irrepressible, which made him hard not to like. When he smiled, his eyes lit up. He had a pixielike charisma. With his Hungarian accent and goofy grin, he was by far the most colorful engineer in the valley. He succumbed to the dubious fashions of the early 1970s by attempting, in an immigrant geek manner worthy of a Saturday Night Live skit, to be groovy. He grew his sideburns long and his mustache droopy and wore open shirts with gold chains dangling over his chest hair. None of which hid the fact tha
t he was a real engineer, one who had been a pioneer of the metal-oxide semiconductor transistor that became the workhorse of modern microchips.

  Grove nurtured Noyce’s egalitarian approach—he worked in an exposed cubicle his entire career, and loved it—but he added an overlay of what he called “constructive confrontation.” He never put on airs, but he never let down his guard. In contrast to Noyce’s sweet gentility, Grove had a blunt, no-bullshit style. It was the same approach Steve Jobs would later use: brutal honesty, clear focus, and a demanding drive for excellence. “Andy was the guy who made sure the trains all ran on time,” recalled Ann Bowers. “He was a taskmaster. He had very strong views about what you should do and what you shouldn’t do and he was very direct about that.”50

  Despite their different styles, there was one thing that Noyce and Moore and Grove shared: an unwavering goal of making sure that innovation, experimentation, and entrepreneurship flourished at Intel. Grove’s mantra was “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” Noyce and Moore may not have been paranoid, but they were never complacent.

  THE MICROPROCESSOR

  Inventions sometimes occur when people are confronted with a problem and scramble to solve it. At other times, they happen when people embrace a visionary goal. The tale of how Ted Hoff and his team at Intel invented the microprocessor is a case of both.

  Hoff, who had been a young teacher at Stanford, became the twelfth employee at Intel, where he was assigned to work on chip design. He realized that it was wasteful and inelegant to design many types of microchips that each had a different function, which Intel was doing. A company would come in and ask it to build a microchip designed to do a specific task. Hoff envisioned, as did Noyce and others, an alternative approach: creating a general-purpose chip that could be instructed, or programmed, to do a variety of different applications as desired. In other words, a general-purpose computer on a chip.51