Oct 16, 2013

Not the "Animals of Silicon Valley"

For years I had heard that National Semiconductor were the “Animals of Silicon Valley”.  It was a badge of honor.  Like Animal House.  I always assumed it was a direct lineage from Bob Widlar and the sheep on National’s lawn.  And I assume it was dominated by analog characters who followed in the footsteps.  I knew the moniker “Animals of Silicon Valley” was created by an article.  So I tracked it down.

January 12, 1981.  Fortune Magazine.  “National Semiconductor’s beastly ways have paid off…”

It started off great: “In the cutthroat semiconductor industry, no company has a more fearsome reputation than National Semiconductor Corp.  Known as the streetfighter of Silicon Valley, it has made a fetish of forcing down production costs for its broad line of microelectronic components, and it moves with lethal speed to slash prices, gobble up market share, and drive competitors from the field.  ‘They’re animals,’ marvels one of the company’s largest stockholders.”

But then, for me – an analog guy – the article takes an ominous turn.  It starts discussing the 16K RAM chips.  And then how Wall Street might like them better if they didn’t keep trying to “integrate forward”, meaning watches, calculators (see photo of mine), mini computers and automated checkout systems for supermarkets.  “Their product strategy is a zigzag, the result of somebody’s having come up with a bright idea at the last minute.”

The article failed to live up to its title.  Yes, it continued to portray National as having a hard-nosed, frugal style.  Of being “the sweatshop of our industry – a pipe-rack, low-cost, survival-oriented company.”  But it echoed what I knew of its culture, that those who survive develop great esprit de corps based on hard work.  One of the finance guys said, “I was terrified.”  “There was so much table-pounding and yelling at meetings that I thought the company was falling apart.”  But he learned that it worked for them, “It highlights problems quickly.  Wide-open communications and rapid strategic planning are the nature of the beast at National.”

With the benefit of 20/20 hindsight, it’s easy to laugh at many points in the article.  Of course, in 1981, Charlie Sporck was predicting great things for the systems business and could point to the early trends to support it.  The article references an advertisement with Charlie – cigar in hand – “National Semiconductor is crossing the Rubicon.  We are entering the computer market with a range of sophisticated, system-level products.”  Yeah, not completely.  The die was not cast and they came back to their roots by the time I worked there.

By the end of the article even, it hints at getting back to basics… “Semiconductors are the most glamorous part of our business” said Charlie.  And of all people, Pierre Lamond said, “The best opportunities are in chips, not outside.  Anybody who stresses forward integration isn’t looking in his own backyard.”

And so ended the article titled “The Animals of Silicon Valley” which is really a snapshot of a time when National took their eye off the ball, in my analog-centric opinion.  There are dozens of stories of companies that spun-out of situations like this to become pure-play analog IC companies.  And I plan to recount those stories here in Analog Footsteps.  The other strategies work, too, but that’s not my blog.

As long as we are stuck in January, 1981, let’s flip through the rest of the magazine.  Page 15: General Electric chairman Reginald H. Jones steps down and is succeeded by John F. Welch, Jr. (yes, that Jack Welch… we’ll talk about him and Jack Gifford later).  Page 16: Colonel Harland Sanders dies; founder of Kentucky Fried Chicken.  Page 66: An article about Hambrecht & Quist who did the IPO for Apple Computer, making 25 year old Steve Jobs and 29 year old Steve Wozniak millionaires ($165M and $88M, respectively – Woz had spread his shares among his parents and siblings; “the Steves” were just kids).  Oh, by the way, Mike Markkula ($154M as chairman of Apple Computur) had worked at Fairchild.  Then president, Mike Scott? Also from Fairchild.  Page 97: an advertisement from Moore Business Forms touting their green-bar report paper that is easier for executives to read and saves 37% on storage space and shipping costs and also eliminates carbon paper handling and disposal.  Back cover: an advertisement for Glenlivet, 12-year-old Scotch.  I can picture executives in their wide ties, reading green-bar reports and drinking Scotch.

Where were you in 1981?

"The Animals of Silicon Valley", Fortune magazine, January 12, 1981.  Bro Uttal.
(I can send you a poorly scanned PDF copy.)

1 comment:

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