Inside Intel. Tim Jackson
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that neither he nor anyone else could explain, the one avenue of enquiry that he chose would often be the one that yielded the best results.
Moore was legendary for sitting down at the lunch table in the company cafeteria with a group of engineers who had been battling with a problem for several months, and suggesting, very quietly, that they might like to take a look at this or try that. More often than you would expect, they would go away and take his advice – and discover that fifteen minutes of Gordon Moore had brought them closer to a solution than months of unaided work. Moore was also a gifted listener and judge of character. Slow to anger, he would hear everyone out. Only in the presence of people who went on for too long, repeating an unnecessary point far beyond the point of boredom among others, would Moore’s self-control finally slip and his anger become visible.
When a local paper asked Moore in 1968 why he and Noyce had decided to set up a new company, his answer was that they wanted to experience once again the thrill of working in a small, fast-growing company. Not for the first time, he might have added. Noyce and he had been involved in startups twice already. In 1956 they had helped William Shockley, the leader of the team at Bell Laboratories that developed the transistor, to set up his own laboratory. A year later the pair had been among a group of eight who walked out on Shockley to start their own transistor company under the banner of Fairchild.
The mass defection from Shockley Laboratories had been provoked by the old man’s irascibility and paranoia, and his insistence on ignoring their advice in a technical dispute over which area of research they should concentrate on. To raise funding for the new company, the ‘Traitorous Eight’ struck a deal with Sherman Fairchild, an inventor on the East Coast whose father had been one of IBM’s earliest investors. Fairchild had advanced $1.5m to them in 1957, on the understanding that they would create a subsidiary of his Fairchild Camera and Instrument Corporation specializing in the manufacture of semiconductors. If the venture failed, Fairchild would pick up the tab. If it was a success, the company would have the right to buy them out for $300,000 apiece.
It was a success. Two years later Fairchild’s company exercised its option, and made them all rich men. The eight founders were left in place at Fairchild Semiconductor – but they no longer had any real control over the business, nor any great stake in its success. Noyce was promoted from general manager to group vice-president of the parent company, and was held in the highest respect by its owner; but everyone knew that the big decisions were always made by the accountants back in Syosset, New York.
For a while the problems remained invisible. As the 1960s wore on, however, members of the original team became bored and drifted out of the company to set up on their own. Fairchild Semiconductor became the electronics industry’s equivalent of a sycamore tree with its winged seeds: every season, seeds from Fairchild would spin away gently in the wind, land somewhere nearby and burst into growth as new saplings. Meanwhile, as Fairchild’s growth began to slow, the money men from New York began to come up with strange compensation schemes, in which the general manager of each part of the division was paid a bonus linked to the current profits of the business he was responsible for. This turned cooperation into rivalry, and made the managers reluctant to put into effect the technologies developed by Moore and his team. New technologies might make money in the long term, but not in the short – and in the fast-moving environment of Silicon Valley, who could tell where you’d be working by the time the payoff came?
The bell tolled for Fairchild Semiconductor in 1967, when Charlie Sporck, the company’s famed manufacturing genius, set up in competition at National Semiconductor, and hired away busloads of his former colleagues. It required no great insight to tell that Fairchild was irreparably injured, and that the best Noyce and Moore could do would be to slow, rather than staunch, the flow of blood. A year later the two men were the last of the eight founders left.
The decisive moment was a conversation between the two men on a sunny weekend afternoon, while Noyce was mowing his front lawn. Once the partnership was established, the next step was clear. Moore, as head of Fairchild Semiconductor’s research and development (R&D) department, would start work on the products the new business would develop. Noyce, who eleven years earlier had led the negotiations with Sherman Fairchild that created the company they were now planning to leave, would raise the money.
It took Noyce just one phone call. The deal with Fairchild a decade earlier had been brokered by an investment banker from New York called Arthur Rock. Rock had come out to California to see the Traitorous Eight; he had helped them to draw up a list of potential backers, and he had shopped their idea to thirty-five different companies before getting a yes from Sherman Fairchild. Since then, Rock’s life had become intertwined with the Fairchild founders. He had moved to California and set up a new investment bank of his own in San Francisco, specializing in the financing of new companies. (Today, this business is known as ‘venture capital’; the phrase was invented by Rock himself.) Rock felt bound by loyalty to Fairchild to avoid taking any active steps that would hasten the break-up of Fairchild Semiconductor. But he had already helped two of the founders of the business to set up on their own, and Bob Noyce was his best friend among the remaining six. The two men used to take hiking and camping holidays together.
‘Bob just called me on the phone,’ said Rock afterwards. ‘We’d been friends for a long time … Documents? There was practically nothing. Noyce’s reputation was good enough. We put out a page-and-a-half little circular, but I’d raised the money even before people saw it. If you tried to do it today, it would probably be a two-inch stack of papers. The lawyers wouldn’t let you raise money without telling people what the risks are.’
Rock made fifteen phone calls that afternoon, and received fifteen acceptances. His goal was not simply to raise the money for Noyce and Moore: with their track record and his contacts, that would be a snap. Instead, Rock wanted to find investors who could offer some expertise that would be useful to the new business. Partly out of a wish to prevent any single shareholder from becoming too powerful, he decided to scale back the contributions offered by his fifteen contacts. One of the new company’s founding shareholders was Grinnel College of Iowa, Robert Noyce’s Alma Mater. By now, the pig incident had long been forgotten. With Noyce now chairman of the college’s board of trustees, the success of Fairchild made it seem only natural to sell his old college a $300,000 slice of the new venture. The board was happy with the idea; its resident investment guru, Warren Buffett of Omaha, Nebraska, had no objection, and so the investment went ahead. Noyce and Moore had already each put up $250,000; Rock himself came in for $300,000. The backers’ investment in Noyce and Moore would be the best deal they ever made.
It took only a few weeks to choose a business name. The pair started out calling themselves ‘NM Electronics’, but it was agreed on all sides that this sounded kind of old-fashioned. After discarding more than a dozen other ideas, Moore finally came up with ‘Integrated Electronics’. Noyce admitted that it captured just what the new business was about, but suggested that they should contract the name to a single word: Intel. Arthur Rock, whose work in raising the company’s startup capital had earned him the job of Intel’s first chairman, had no objection. The pair discovered too late, shortly after the incorporation papers were drawn up on 16 July 1968, that there was already a company in existence called Intelco. By then, the word was already out about their new venture, and the easiest way to head off any lawsuits was to pay $15,000 for the right to use the Intel name.
Two weeks later, in August 1968, the local Palo Alto Times got wind of the story, and called up Gordon Moore for an interview. The resulting story, which ran across the top of an entire page of the paper, helpfully included both men’s home addresses. Within days, they began to receive résumés, calls and letters of application from talented engineers all over the industry who knew of Noyce’s work on the integrated circuit or of Moore’s achievements at Fairchild. Finding good employees willing to join a startup – usually one of the hardest tasks facing most entrepreneurs – was clearly not going to be a problem.
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