You will find part I here and part II there. If the 60s were the early days which ended with the oil crisis in 73, the maturity came in the 80s with a second crisis coming from Japanese competition.

There was still a lot of uncertainty as the authors show in the chapters dedicated to Cypress, IDT, Micron. For example:

Another example about the uncertainty around which technology was superior for memory products at the time is that in 1986, when I was a founder of a semiconductor startup company with a business plan predicated on making bipolar RAM products. This was Synergy Semiconductor. We were funded by two premier Sand Hill Road venture capital firms, Sequoia Capital and Mayfield Funds. Even these supposedly smart VC partners couldn’t predict the superiority of the MOS technology in the memory chip business. Rodgers and Cypress made the correct bet on CMOS. It is also interesting that Sequoia Capital invested in Synergy with bipolar technology and Cypress with CMOS technology, thereby covering their bets. (Synergy never went public, struggled for 10 years and was eventually bought by Micrel.)

Intel didn’t believe that they needed CMOS for their memory or processor products for years. They knew that CMOS was a more complex process, and therefore more expensive, and they were not yet dealing with the high-power limitations of their process. Intel did not switch to CMOS for memory products until 1986. [Page 260]

Entrepreneurship is the ability to face these uncertainties and also to act by taking risks:

I already knew that [Rodgers] was a special guy, very smart, in great shape, from running every day and probably a risk taker, but this was nuts [diving in a dangerous place in Hawaii]. What if the timing was wrong and he gets sucked into the tube? How will I get help, it is a 15-minute walk over lava. But he did it. And then he jumped it. He did it twice! This event defines Rodgers. He is self-assured, even egotistical, but able to back up his decisions with actions and willing to take risks even if the parameters are not totally known. Shortly after the lava leaping escapade, he quit AMD and started Cypress Semiconductors. [Page 252]

While he was still at AMD, [Rodgers] got a call from a venture capitalist who was doing reference checks on an executive and inventor while at Fairchild and who also trying to raise money to start a new business. This got Rodgers thinking: “If this guy can raise money and start a new business, why can’t I do it?” And he began exploring the possibility of doing just that. [Page 253]

This reminds one of my favorite quotes ever, from Tom Perkins the famous P in KPCB (Kleiner, Perkins, Caufield and Byers): The difference is in psychology: everybody in Silicon Valley knows somebody that is doing very well in high-tech small companies, start-ups; so they say to themselves “I am smarter than Joe. If he could make millions, I can make a billion”. So they do and they think they will succeed and by thinking they can succeed, they have a good shot at succeeding. That psychology does not exist so much elsewhere.

If you missed Part I, it’s here. All the culture of Silicon Valley was born in these early years. Here are a few examples.

In the early days of the semiconductor, it was mainly about high-quality research: With an absentee boss, Sherman Fairchild, on the East Coast, the group could focus mainly on doing pure research, with no boss to bug them. Their main direction came from intense competition between each other. No VC or corporation would finance anything like this now! [Page 14] The authors are right. Only Google maybe is doing it with or without VC or boss approval and peer pressure is similar.

They finally make and ship their first product in 1958, 100 transistors to IBM. [Page 17]

Jack Kilby was awarded the Nobel prize in physics in 2000 for the invention of the integrated circuit. Unfortunately Bob Noyce had died 10 years earlier and Jean Hoerni passed away 3 years earlier. The Nobel prize is never awarded posthumously. The scientific community informally agreed that both Kilby and Noyce had invented the chip and that they both deserved credit. [Page 21]

Chapter 2 is about a non-startup, Hughes Research Labs, based in Los Angeles.

We did not have stock options; few of us even knew what they were. [Page 48]

Having dynamic leaders who gave free rein to ambitious young engineers and scientists meant that the engineers and researchers were stimulated by competition among themselves rather than by management layers above, which helped create an explosion of papers and patents. However, in both cases [at Fairchild and Hughes RL], the transfer of technologies from R&D to production was not easy. Although they were distinctly different organizations, both were very large corporate structures. But in the case of HRL, having R&D and production in the same physical location meant that discussions between the two groups were quite frequent.

Another difficulty was the lack of stock option program at HRL. This definitely caused significant personal turnover, especially among the non-attached young scientists who were hearing about the new utopic world, and its lucrative stock option packages, up in Silicon Valley. [Page 67]

Chapter 3: Intersil, a lost opportunity.

Another genealogy of Silicon Valley and extracted, the impact of Jean Hoerni.

Intersil was founded by Jean Hoerni, one of the eight traitors. The early days are best described as a mix of genius and chaos. The two most versatile personalities were Jean Hoerni and Don Rodgers, the VP Sales and also ex-Fairchild. Hoerni with 2 PhDs in physics was a shy genius quite the introvert but given to unpredictable mood swings. Rodgers was an extrovert. He came from the rough and tumble, hard-drinking, hard-living Fairchild sales team of the 1960s. One of the early frustrations was the ineffectiveness of the marketing department. [Page 71]

Hoerni’s contentious and rebellious personality often appealed to the young managers and engineers who were also looking for the next opportunity and also rejected conformism and authority, in part to the traumatism of the Vietnam war.

When I [Luc Bauer] started working with Hoerni, he strongly advised me not to be blindly loyal to any company, but only to my own ambition and goals. He said that if your employer doesn’t help you reach them, then you better change companies or start your own because life is too short. [Page 74]

But Bauer talks about a missed opportunity and the reason follows: just have a look at the revenue growth of Intersil (founded in 67, IPO 72) and Intel (founded in 68, IPO 71):

Joe Rizzi, one of Intersil founders summarized his seven years at Intersil with two words: Lost opportunity. He said that all, or most of the seven product categories could have become sizeable businesses on their own, given enough care and focus to nurture their growth.
At the time, uncertainty in the market pushed to diversity of products. Intel’s narrow product focus was a risky gamble. [Page 102]. Intersil had $572M in sales in 2014 and was acquired by Renesas in 2017. Intel is now a $71.9B business…

I felt a but of nostalgia when I received the following email : “The idea of doing a book on semiconductor startup had been teasing me for a while, I finally found a longtime buddy who has been okay with doing this book over the past 2 years. We were greatly assisted in this mission by the Computer History Museum (CHM) in Mountain View, CA. The book focuses on the period from the late 1950s to the late 1990s, about the development history of MOS and CMOS industrial processes mainly but not only from the point of view of managers, but also workers in fab and fab managers that we were at the time. We describe the development of 9 companies that we knew well and that had developed original technologies: Fairchild, Hughes, Intersil, Eurosil, Intel, AMD, IDT, Cypress, and Micron. The title is The Microchip Revolution – A Brief History.” [1]

I met Luc Bauer in the early 2000s when investing in a startup he was a business angel in and a mentor. I remember how he lectured me saying that Kleiner Perkins was much more professional than we were! Luc is a gentleman which does not mean he cannot be tough when he is frustrated; when people have been working hard in Silicon valley like he did, they can be really tough! But we stayed in touch and I was so happy to begin reading his book a few days ago.

This is a poster about the Silicon Valley Genealogy of semiconductor startups from the mid 50s to the mid 80s. This is what Luc is writing about through 9 companies which I am pretty sure are on this poster. By the way, Luc is there too.

His book begins with Fairchild and the Traitorous Eight and it makes sense as it is at the beginning of the genealogy. By the way the book is dedicated to one of the eight traitors, Jean Hoerni, A Swiss national and one of the rare people I have heard about with 2 PhDs. Luc has the same double culture and double education (BS, EPFL Lausanne and MS, PhD Caltech)

So here are a few excerpts: “A good part of our motivation [for writing the book] was to relive the intensity in our lives when we started in this industry: the endless and stressful hours of looking for yield crash factors, the great excitement and shouts of joy when you see a brand new integrated circuit product coming alive and functioning perfectly when the “hot out of the furnace” processed wafer is put for the first time on the electrical test prober. Another great motivator for us was to propagate an important story to younger generations, that working in high technology fields is hard and exhausting, but also a source of joy and pride as it is easy to see the impact of your hard work on the company you work for and possibly on the workd you live in.”

Let me put this again below, in bold this time:

Another great motivator for us was to propagate an important story to younger generations, that working in high technology fields is hard and exhausting, but also a source of joy and pride as it is easy to see the impact of your hard work on the company you work for and possibly on the workd you live in.

More to come I am sure!

[1] The real email was in French: “L’idée de faire un livre sur le démarrage des semi-conducteurs me taquinait depuis un moment, j’ai finalement trouvé un copain de longue date qui a été d’accord de faire ce livre avec mois ces 2 dernières années. On été beaucoup aidé dans cette mission par le Computer History Museum (CHM) de Mountain View, CA. Le livre se concentre sur la période entre la fin des années 50 jusqu’à la fin des années 90, sur l’histoire de développement des processus industriels MOS et CMOS principalement mais pas seulement du point de vue des chefs, mais aussi des travailleurs de fab et managers de fab que nous étions à ce moment. On décrit le développement de 9 compagnies que nous connaissions bien et qui avaient développé des technologies originales: Fairchild, Hughes, Intersil, Eurosil, Intel, AMD, IDT, Cypress, et Micron. Le titre est The Microchip Revolution – A Brief History.”