Bill's Bookshelf by Bill Rosenblatt

The secrets of Intel

Tim Jackson unearths a gold mine of interesting facts and stories about one of the Valley's most secretive companies in Inside Intel

March  1998
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You get two reviews for the price of one this month, about two very interesting companies: Apple and Intel. Both companies are Silicon Valley icons, though they embody different aspects of the Valley's culture: Intel is a case study in high-tech management and marketing while Apple wrote the book on turning a great idea into a multibillion-dollar company. Tim Jackson does a brilliant job at getting, as his title says, Inside Intel, and telling the fascinating stories behind Intel's success. On the flipside, a decent story is what Jim Carlton's Apple: The Inside Story sadly lacks. (2,400 words)

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The story of Intel is brilliantly told in Tim Jackson's Inside Intel: Andy Grove and the Rise of the World's Most Powerful Chip Company. Jackson, a journalist whose credits include The Economist and the Financial Times, knows how to write a book. Inside Intel is a superbly crafted piece of business storytelling, and everything about it suggests a quality job.

Given the company's notorious reputation for paranoia and secrecy, the amount of information that Jackson was able to gather (not to mention the fact that, to my knowledge, he hasn't yet been sued) is a marvel. The book's organization and pacing hew to a chronological story line, yet deal with major topical themes in a coherent fashion. Jackson also throws in an occasional sidebar chapter about amusing or revealing incidents. The result is an account that is both balanced and crystal-clear.

To those who know Intel by its dominance of the PC platform, this book may come as a surprise. Very little of it is about PCs; the book is really about the rise of the prototypical hyper-successful Silicon Valley company -- one that happens to make integrated circuits. Several of the major steps in Intel's rise to power are now seen as benchmarks for the success of every technology startup.


The prototypical Silicon Valley company
The first of these steps was Intel's initial funding by venture capital. Whereas Microsoft's Bill Gates and Paul Allen got themselves catapulted to prominence mainly by virtue of a lucky deal with IBM, Intel was turbocharged from the start, due to the reputations of its co-founders, Robert Noyce and Gordon Moore.

Noyce and Moore were the opposite of nerdy college dropouts: they were highly-regarded veterans of the electronics field from Fairchild Semiconductor. Noyce, in fact, was the co-inventor of the integrated circuit. As such, their ability to attract venture capital was roughly equivalent to that of Kim Polese, the original marketing manager of Java who left Sun to start Marimba. It's not much of an exaggeration to suggest that their initial business plan for Intel was nothing more than a single sheet of paper with their names written on it.

Once Intel got its venture capital, its progress to IPO status quickly became the stuff Silicon Valley stereotypes are made of. Early success was achieved more through sheer innovation than operational excellence. It was the ideas of Noyce, Moore, and key early hires like the brilliant circuit designer Frederico Faggin (who went on to co-found Zilog) -- not some fast-talking sales manager or product marketing wonk -- that created a viable industry for integrated circuits in the computer business.

Noyce and Moore's ability
to attract venture capital
was roughly equivalent to
that of Kim Polese

Early technological innovations overshadowed the operational genius of Andy Grove. Despite what many people think, Grove was not one of the original founders of the company. He was an engineering professor at U.C. Berkeley whom Noyce and Moore recruited early on to be director of operations. While Bob Noyce supplied the visionary salesmanship and Gordon Moore provided quiet R&D brilliance, Grove imposed strict order and discipline on the manufacturing process. Such skills became more important as the company grew to billion-dollar size and could no longer sustain growth based on product innovation alone.

Grove's eventual ascendancy to the top job in the company may or may not have been planned, but it made perfect sense. He filled the role of the silver fox, the seasoned executive who is brought in to impose order when a venture becomes too large for its founders to manage. (Incidentally, this book teaches us where the phrase "silver fox" came from: it was the nickname of Jerry Sanders, the smooth-talking, well-dressed CEO of Intel's competitor, Advanced Micro Devices.)

Intel's aggressive corporate culture also became the model for high-tech companies. It's a style they call "constructive confrontation." (Grove, in his book Only the Paranoid Survive, calls it "debate.") The culture of constructive confrontation demands that everyone eschew politeness and restraint when expressing opinions. People who are shy or who can't take the heat (like, say, IBM middle-management veterans) could never survive. Inside Intel tells stories of many meetings among top management devolving into shouting matches that verged on physical violence.

Another prototypical quality has been Intel's ability to change business priorities and product lines quickly. The best example of this occurred in the early 1980s, when Intel's mainstream business was still memory chips: Grove decided to divert resources to a small, experimental part of the company that made something called microprocessors. In retrospect, this was a longer and more painful process than necessary, but it established an important precedent. And today Intel has figured out how to create product lines only to obsolete them quickly -- a business strategy that most other industries would find inconceivable, but which happens to be a way of life in Silicon Valley.

Boot camp
At the same time, Intel has qualities that most Silicon Valley businesses do not share. The stereotypical Valley company maintains a convivial atmosphere and encourages wild and wacky behavior, all in the service of "team building." Programmers are over-accommodated, and top engineers float into work whenever they feel like it, then hack away late into the night.

At Intel, however, workers are in at 8:00 a.m., sharp. In addition to the humiliation of the Late List, performance reviews include demerits for sloppy desk maintenance. Of course, Intel makes hardware products, which require extreme precision in manufacturing, not software products, which require mostly sheer brain power, so discipline is much more important at Intel.

As Inside Intel reveals, the company does treat its top-producing employees well -- until they try to leave the company. The book is full of tales of superstars who tried to leave to form their own businesses and ended up with Intel's legal hell hounds on their trail.

The strategic lawsuit -- designed to distract and slow down a competitor rather than to seek reparation for any violation of the law -- is another high-tech business concept that Intel appears to have invented. The book reveals that Grove actually required Intel's general counsel to bring two lawsuits per quarter in order to meet his objectives. (Recently, of course, Intel became the victim of its own ideas when Digital Equipment launched a bet-the-business lawsuit against it, claiming that Intel's Pentium infringed on Digital's patent for the Alpha processor; Intel's out-of-court settlement came in at over a billion dollars.)

Duopoly division
Perhaps the most surprising thing about Intel is its relationship with Microsoft. The two companies' current duopoly of the PC business makes them seem almost like two divisions of the same company. But as Jackson tells it, Intel disliked Microsoft intensely for many years. To Intel, Microsoft's language compilers for the x86 chips were inferior, its software was sloppy, and in general, its top personnel (especially strategy chief Nathan Myhrvold) were annoying and didn't know what they were talking about. Amazingly, the companies' mutual dislike lasted well into the Wintel duopoly era, and even now their current facade of cordial cooperation hides some deep rifts. For example, Microsoft would prefer to be the only supplier of operating systems for Intel processors, while Intel allows development of other systems (including Solaris).

Corporate intrigue
The overall impression one gets from Inside Intel is that the company is a voracious, super-aggressive juggernaut, designed to trust no one and stop at nothing to get ahead. The book is full of tales of the seamier side of the high-tech industry, such as industrial espionage, insurance fraud, and bomb threats at factories, in addition to plenty of lawsuits.

Andy Grove, who came by his ruthless paranoia honestly, as a World War II survivor and anti-communist protester in Hungary, has put his indelible imprint on the company.

Perhaps the best macro-scale illustration of Intel's attitude is the story of its long-running competition with Jerry Sanders' Advanced Micro Devices (AMD). Intel let AMD exist in the first place -- indeed, was one of its initial sources of funding -- because of a common practice in the semiconductor industry called second sourcing. A second source is a backup supplier for a given part. A computer maker (or other company), who buys a large number of parts that have to be delivered on time to meet the demands of a manufacturing process, wants to ensure that they have a backup source for those parts in case the primary source can't deliver.

If this book is biased
in any direction, it is
that it makes working
at Intel look like a
deal with the devil

In its early days, Intel let AMD exist as a second source. But later on, once Intel had solidified its hold on the market, it seems that AMD had outlived its purpose. Intel began to revoke AMD's access to its circuit designs and, through lawsuits and other means, hobble the smaller company into submission.

If this book is biased in any direction, it's that it makes working at Intel look like a deal with the devil. Top talent is attracted to Intel by its reputation for innovation and growth; employees exist in a regimented, authoritarian atmosphere rife with security guards, surveillance cameras, and rules of conduct; top performers are chained to their posts by potentially lucrative stock options and the fear of what might happen to them if they leave.

This bias is easy to understand, however: Because of Intel's insistence on secrecy, Jackson got much of his material from former employees, many of whom are disgruntled for a variety of reasons. Nevertheless, Inside Intel is the closest anyone is likely to get to a full account of the rise of this remarkable company. It may leave a bitter taste in your mouth about the darker side of Silicon Valley business practices, but you'll still enjoy reading this exceedingly well-written book.

Rotten Apple

A recent European trip fraught with solitary nights in hotel rooms, airport departure lounges, and so on, made me a captive audience to Jim Carlton's Apple: The Inside Story of Intrigue, Egomania, and Business Blunders. I read about 250 pages of this book, which is about 200 more than I would have read if I were back home.

Anyone who knows anything about computers is familiar with the ignominious decline of this industry leader. Though many of us would surely like to understand why Apple has come down from its lofty heights of innovation and product excellence, Carlton's book provides us with no clues.

Jim Carlton is a journalist who covers Silicon Valley for the Wall Street Journal. This, his first book, is a 300 page story that reads like a 450 page newspaper article.

Carlton wastes trees by belaboring mindless details, such as who said exactly what to whom and when. It goes like this:

Michael Spindler said, "Really? Do you think so?" to which John Sculley replied, to everyone's amazement, "Yes. I really do think so." Then Jean-Louis Gassee captured the sense of the meeting that night at Il Fornaio in Palo Alto, as he took another bite of fried calamari, by saying, "I think John's right."

He also uses a strange combination of newspaper catch phrases like "An unnamed source close to the talks," and "According to a former executive who refused to be identified," along with turgid cliches on the order of, "Those would prove to be fateful words indeed," and "Little did he realize just how wrong he was," to keep things moving from chapter to chapter.

Boy, Apple sure has gotten into trouble
The chapters of this book are organized around themes like engineering projects that failed, the Mac licensing debacle, and the ill-fated alliance with IBM. They offer little in the way of an overall timeline of events, let alone any sense of the momentum that's carried Apple from its glory days to its present, seemingly doomed, state. And Carlton doesn't seem able to explain why Apple's mistakes differ from those routinely made by technology companies, including more successful ones.

The book is almost a foul-ups, bleeps and blunders applied to a computer company. In addition to over-reporting various details, it spends far too much ink on the personal quirks of Apple's various executives. There's very little sense of the big picture -- from which we could derive lessons about the industry to apply to our own businesses. Rather than applying structure and insight to information, Carlton throws out tons of facts, factlets, and factoids, and simply attempts to fill in whatever gaps there may be with hand-waving.

To use some apple-related cliches: This book is not a well-proportioned tree filled with firm, ripe fruit; rather, it's the ground underneath the tree, onto which the overripe fruit has fallen. The book is meticulously researched, to be sure -- Carlton is an experienced and highly respected technology reporter. But he was obviously unable to overcome the journalistic impulse to use every fact at his disposal, just as he was unable to draw any interesting conclusions beyond, "Boy, Apple sure has gotten into trouble." In other words, Carlton is not a book writer. Just as Apple is not finished, its story really has yet to be told.

[ Books]
Title: Apple: The Inside Story of Intrigue, Egomania, and Business Blunders
Author: Jim Carlton
Publisher: Times Books
ISBN: 0812928512
List price: $27.50

Title: Inside Intel: Andy Grove and the Rise of the World's Most Powerful Chip Company
Author: Tim Jackson
Publisher: E.P. Dutton
List price: $25.00


About the author
[Bill Rosenblatt's photo] Bill Rosenblatt is market development manager for media and publishing industries at Sun Microsystems Inc. Reach Bill at

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