Inside Intel. Tim Jackson
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to the local hospital, where he was rushed into the emergency room and read the last rites.
With his rearranged profile, Sanders realized he would have to give up his ambition to be a matinée idol. Instead, he resolved to put his electrical engineering training to practical use, and joined the Douglas Aircraft Company as a designer of air-conditioning systems. It took him only a few years to discover that if he wanted a company car, a good salary and an expense account, he was in the wrong job. In the electronics industry salesmen made better money than engineers.
Sanders made the switch, and rose swiftly through the ranks. He made a spectacular success of running Fairchild Semiconductor’s regional office in Los Angeles, and then landed the company’s top marketing slot back in Silicon Valley. With a large house in the Hollywood hills, an attractive young wife, a black Cadillac, and a taste for Dom Pérignon champagne, he looked more like a movie mogul than an electronics guy. Yet Sanders knew the electronics industry inside out – and behind the glitz and ostentation was a determined and hard worker.
Sanders was always something of a favourite with Bob Noyce – perhaps because he reminded the older man of the showmanship and extroversion that was part of his own character. The young marketing star was much less kindly looked on by the more conservative Gordon Moore. Moore had a full dose of the disdain that many engineers have for salesmen. He viewed them as a necessary evil, but no better than that. Moore knew that the old saying, ‘Build a better mousetrap, and the world will beat a path to your door,’ wasn’t true. But he wished it were. Perhaps this was why Bob Graham got the new sales and marketing job at Intel, while Jerry Sanders was left at Fairchild Semiconductor.
Whether this was the reason or not, Sanders knew his position at Fairchild was precarious. He felt like a courtier left over from a discredited regime after the arrival of a new king. Within a matter of weeks the agony ended. Hogan called Sanders into his office and told him point-blank that he was surplus to requirements. The only consolation was that while many other Fairchild loyalists had been fired after years of loyal service with no more than a couple of weeks’ notice, Sanders was able to extract a year’s salary in compensation – allowing him to rent a beach-house in Malibu where he could sit in the sun and ponder his next move.
Six weeks later, early in 1969, Sanders called an old pal – Ed Turney, one of Fairchild’s best salesmen. Sanders had given Turney the job of running Fairchild’s Los Angeles region, and the two men had become friends. By this time Turney had been fired too, and was snowed up in a cabin in a nearby ski resort.
‘How’d you like to start a company?’ Sanders asked.
‘What, making records?’ Turney still believed that Sanders had secret showbiz ambitions.
‘No, making semiconductors.’
Sanders explained that he had received an approach from a group of four other Fairchild employees who were looking for someone of presidential calibre to help them to raise finance. Sanders had agreed to lead them, on two conditions. He thought the future was in digital circuits like Intel was making, not the old-fashioned analog circuits they had set their heart on. So he wanted the new company to make both classes of product. Also, he wanted to nominate some of his own people. If Turney was ready to join the startup, Sanders promised, a seat would be kept warm for him.
Within a few weeks Sanders had assembled an eight-man team. To the four members of the analog group, he added himself and another former Fairchild colleague, John Carey, plus Turney, who was offered the sales and marketing job but also wanted to control purchasing. The top engineering job for the digital operation went to Sven Simonsen, a Danish-born engineer who was still on the Fairchild payroll.
Three weeks later Jerry Sanders was ready to talk to potential investors about his plans. Capital Group Companies, a leading investment firm in Los Angeles, agreed to arrange introductions – and its chairman wrote a personal cheque for $50,000 to pay the living expenses of the team members who had lost their jobs but been less successful than Sanders in securing a payoff.
Sanders’s first port of call was Arthur Rock, the man who had raised $2.3m for Bob Noyce and Gordon Moore in a single afternoon.
The diminutive venture capitalist looked up from the seventy-page document before him, and sighed. Bristling with technical terms, process details and price curves, the plan set forth a powerful case for the view that demand for integrated circuits would explode in the 1970s. It detailed which products the company would build and how, estimated the prices these products would sell for, outlined the backgrounds of all eight founders, and predicted profitability after seven quarters and positive cash flow after ten. But Rock didn’t like it.
‘It’s too late,’ he said.
Sanders began to expostulate.
Rock was polite, but firm. His belief, he said, was that with dozens of other companies already in the market, it was now too late to start up a broad-based semiconductor company. Before the master salesman could begin to put his wiles to work, Rock added a second point for good measure. Of all the financial investments he had ever made, said the venture capitalist as he looked Sanders coldly in the eye, the only ones that ever lost money had been run by marketing men.
The meeting was an omen. As Sanders continued on his roadshow, he found that potential investors fell into two categories: those who knew so little about the industry that they plagued him with ill-informed questions; and those who knew enough about it to doubt seriously whether, with all the new companies that had been set up over recent years, the semiconductor industry was still young enough for another entrant. Neither category yielded any investors.
As the weeks turned into months, Sanders found himself as far as ever from the $1.75m target that had been set for the company’s initial funding, and facing the first rumblings of discontent from his impatient team. One or two of the five members who were still on the Fairchild payroll began to wonder whether it might be wise to stay put for the moment. Meanwhile, Turney and Carey began to chafe at the idea of working full-time on the project unpaid while others were still sitting on the sidelines, hedging their bets by hanging on to their day jobs.
Sanders realized that it was time to take charge. He called a meeting of the team members at his house, and presented those who were still at Fairchild with draft resignation letters for them to submit so that they would be ready for work on 1 May 1969. He arranged to have the company formally incorporated – in Delaware, he said, so as to give investors on the East Coast a warm feeling that proper attention was being paid to minimize directors’ liabilities – on the same date. And he committed himself to raising the money they would need by the end of July.
When one member of the team asked him whether this was realistic, Sanders’s reply was immediate and confident: ‘We’re absolutely going to get the money. We’re absolutely going to get the money’. It was a mantra that he would find himself repeating again and again over the coming weeks.
Some weeks later Bob Noyce received an unexpected visitor at Intel. The man who walked into his office was Tom Skornia, a young lawyer who had recently started out in private practice.
‘I’m here to represent Jerry Sanders,’ said Skornia as he sat down.
‘I’m glad to hear it,’ replied Noyce. Sanders had asked him for advice in finding a good lawyer to serve as general counsel for his new business. On Noyce’s recommendation, Sanders and his colleagues had interviewed three different law firms, but had settled on Skornia’s in the belief that a sole practitioner who was just starting out would be likely to give them higher priority than a bigger firm with dozens of associates to delegate work to. One other point had been in Skornia’s favour: he was the only lawyer they met who could talk as fast as Ed Turney.
‘And I’m here to ask for money,’ continued Skornia.
He handed Noyce the Sanders business plan, and explained that the company, initially known as Sanders Associates, had now been incorporated in Delaware under the name of Advanced Micro Devices. Like Noyce and Moore, Sanders and his colleagues had run through a long list of possible names before they found one that was still free in the state registry.
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