The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolutio - Isaacson Walter. Страница 50

Fairchild Camera and Instrument decided, not surprisingly, to exercise its right to buy out Fairchild Semiconductor in 1959. That made the eight founders rich but sowed seeds of discord. The corporation’s East Coast executives refused to give Noyce the right to hand out stock options to new and valued engineers, and they sucked up the semiconductor division profits to fund less successful investments in more mundane realms, such as home movie cameras and stamp machines.

There were also internal problems in Palo Alto. Engineers began defecting, thus seeding the valley with what became known as Fairchildren: companies that sprouted from spores emanating from Fairchild. The most notable came in 1961, when Jean Hoerni and three of the other eight defectors from Shockley left Fairchild to join a startup, funded by Arthur Rock, that became Teledyne. Others followed, and by 1968 Noyce himself was ready to leave. He had been passed over for the top corporate job at Fairchild, which ticked him off, but he also realized that he did not really want it. Fairchild, the corporation as a whole and even the semiconductor division in Palo Alto, had become too big and bureaucratic. Noyce yearned to shed some managerial duties and return to being close to the lab.

“How about starting a new company?” he asked Moore one day.

“I like it here,” Moore replied.²⁵ They had helped to create the culture of the California tech world, in which people left established companies to form new ones. But now, as they were both hitting forty, Moore no longer had the urge to jump off the roof in a hang glider. Noyce kept pressing. Finally, as the summer of 1968 approached, he simply told Moore he was leaving. “He had a way of making you want to take a leap with him,” Moore said many years later, laughing. “So finally I said, ‘Okay, let’s go.’?”²⁶

“As [the company] has grown larger and larger, I have enjoyed my daily work less and less,” Noyce wrote in his letter of resignation to Sherman Fairchild. “Perhaps this is partly because I grew up in a small town, enjoying all the personal relationships of a small town. Now we employ twice the total population of my largest ‘home town.’?” His desire, he said, was to “get close to advanced technology again.”²⁷

When Noyce called Arthur Rock, who had put together the financing deal that launched Fairchild Semiconductor, Rock immediately asked, “What took you so long?”²⁸

ARTHUR ROCK AND VENTURE CAPITAL

In the eleven years since he had assembled the deal for the traitorous eight to form Fairchild Semiconductor, Arthur Rock had helped to build something that was destined to be almost as important to the digital age as the microchip: venture capital.

For much of the twentieth century, venture capital and private equity investing in new companies had been mainly the purview of a few wealthy families, such as the Vanderbilts, Rockefellers, Whitneys, Phippses, and Warburgs. After World War II, many of these clans set up firms to institutionalize the business. John Hay “Jock” Whitney, an heir to multiple family fortunes, hired Benno Schmidt Sr. to form J. H. Whitney & Co., which specialized in what they originally called “adventure capital” to fund entrepreneurs with interesting ideas who could not get bank loans. The six sons and one daughter of John D. Rockefeller Jr., led by Laurence Rockefeller, started a similar firm, which eventually became Venrock Associates. That same year, 1946, also saw the birth of the most influential entry, one that was based on business acumen rather than family wealth: the American Research and Development Corporation (ARDC). It was founded by Georges Doriot, a former dean of the Harvard Business School, in partnership with a former MIT president, Karl Compton. ARDC scored big by doing a startup investment in Digital Equipment Corporation in 1957, which was worth five hundred times as much when the company went public eleven years later.²⁹

Arthur Rock took this concept west, ushering in the silicon age of venture capital. When he put together Noyce’s traitorous eight with Fairchild Camera, Rock and his company took a stake in the deal. After that, he realized that he could raise a fund of money and do similar deals without relying on one corporate patron. He had a background in business research, a love of technology, an intuitive feel for business leadership, and a lot of East Coast investors he had made happy. “The money was on the East Coast but the exciting companies were in California, so I decided to move west knowing that I could connect the two,” he said.³⁰

Rock grew up the son of Russian Jewish immigrants in Rochester, New York, where he worked as a soda jerk in his father’s candy store and developed a good feel for personalities. One of his key investment maxims was to bet primarily on the people rather than the idea. In addition to going over business plans, he conducted incisive personal interviews with those who sought funding. “I believe so strongly in people that I think talking to the individual is much more important than finding out too much about what they want to do,” he explained. On the surface, he wore the cloak of the curmudgeon, with a gruff and taciturn style. But those who looked at his face closely enough could tell from the light in his eyes and the hints of a smile that he enjoyed people and had a warm sense of humor.

When he got to San Francisco, he was introduced to Tommy Davis, a talkative deal maker who was investing the money of the Kern County Land Co., a cattle and oil empire flush with cash. They went into business together as Davis and Rock, raised $5 million from Rock’s East Coast investors (as well as some of the Fairchild founders), and started funding new companies in return for a chunk of the equity. Stanford’s provost Fred Terman, still seeking to build his university’s ties to the growing tech boom, encouraged his engineering professors to spend time advising Rock, who took a night course in electronics at the university. Two of his first bets were on Teledyne and Scientific Data Systems, which both paid off handsomely. By the time Noyce called him about finding an exit strategy from Fairchild in 1968, Rock’s partnership with Davis had amiably dissolved (their investments had shot up thirtyfold in seven years) and he was on his own.

“If I wanted to start a company,” Noyce asked, “could you find me the money?” Rock assured him it would be easy. What could better fit his theory that you place your money on the jockeys—that you invest based on your assessment of the people running the company—than an enterprise that would be led by Robert Noyce and Gordon Moore? He barely asked what they were going to make, and at first he didn’t even think they needed to do a business plan or description. “It was the only investment that I’ve ever made that I was 100 percent sure would succeed,” he later claimed.³¹

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 shares^II 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.