Something Ventured Page #2

out onto the street corner for a while.

Give us 10 minutes, and we would make

up our mind as to whether we wanted...

to invest in his company or not.

I don't remember that.

We didn't do that.

We were too classy to do that.

That's a little bit quick, I think.

If the guy's a real nut'

why, you'd say good-bye to him...

without asking him

to go get a cup of coffee.

Two members of the group

wanted to do even more...

than gather around

a lunch table every six weeks.

In 1962,

Pitch Johnson and Bill Draper...

put up all their personal savings,

quit their day jobs...

to form a partnership,

and hit the streets.

Pitch and I each got a Pontiac leased,

and went around

and knocked on doors.

And if it sounded

like ABC Electronics,

then we'd go in, ask the president to

sit down and tell us, "What do you do?"

You know.

"Well, what do you do?"

"Well, venture capital."

"What's that?"

My kids would go to school.

"What does your dad do?"

"My dad's a policeman."

"My dad's a fireman." "My dad's a banker."

"And what does your dad do?"

"Oh, he's a venture capitalist."

"Dad, what do you do actually?"

You know?

We were just stumbling around,

trying to figure out what to do.

But we just knew that if we got involved

with good people and good markets,

we could probably

build a company.

Growing companies.

Create companies.

You're helping to create something

where nothing existed before.

And quite a large community

gets sustenance...

that wouldn't have existed unless you had

gotten together with this entrepreneur...

and his team

and helped him along the way.

The Lunch Group had established

a good formula.

Everyone was sharing in the profits and

success at these fledgling companies.

But over at Fairchild

it was a different story.

Fairchild was an imperfect vehicle.

I joined Fairchild

at the end of the '50s.

I was not part of the Traitorous Eight.

Fairchild was owned

by a corporation.

An eastern corporation,

and the sense of

division of equity...

was both unknown to them

and repugnant to them.

All of the East Coast companies

had this hierarchy.

And they didn't understand...

about giving options

to all the employees...

the way West Coast start-ups

saw fit to do.

So none of the people

in Fairchild, including me,

had any kind of significant

ownership position.

So, in the early '60s,

people began leaving Fairchild

to set up start-ups...

and to begin to participate

in what people correctly realized...

was going to be

something special.

Meanwhile,

back at his desk in New York-

Well, I had wanted to do more

of these venture capital type deals,

but the money was all in the east.

And the scientists who had moved

from the east to the west...

had all the ideas.

So I saw a great opportunity

in bringing the East Coast money out...

backing these people

on the West Coast.

"Go West, young man."

In 1961, Arthur Rock raised five million

dollars from East Coast investors...

and moved to San Francisco to start

his own venture capital firm.

He found a partner in Tommy Davis,

who had been managing investments

for a California oil company.

Davis and Rock quickly became

the biggest venture players in town,

funding a series of hugely

successful technology companies.

And in the close-knit Silicon

Valley community of the 1960s,

it was only a matter of time

before Arthur Rock...

would once again cross paths

with the Traitorous Eight.

Throughout the 1960s,

Fairchild was bleeding talent.

The lure of stock options

and independence...

inspired many of

the brilliant young engineers...

to peel off

and start their own companies.

But Gordon Moore and Bob Noyce,

its two most important founders,

remained loyal to their company-

until May of1968,

when Fairchild's East Coast

management made a fatal mistake.

Noyce was the logical internal

candidate to be the next C.E.O.

But they decided they were gonna

look on the outside.

That changed the whole ball game.

Noyce said, "I'm gonna leave.

Are you interested?"

So I said, "Okay. Let's do it."

They needed financing,

and they called me...

to see whether I'd be interested.

They came to me

with no business plan,

other than what they verbally

said they wanted to do.

Arthur said he needed something

to talk to potential investors with.

Just to give people something.

We wrote a business plan,

and it was one page-

Double-spaced,

and that was it.

It just says we were going

to make things out of silicon,

and some interesting

electronic devices.

Oh, I said in general terms

we were going to make memories.

It has lots of typos in it.

I think Bob typed it himself.

It's not a very profound document,

but it's really kind of cute.

I said, "How much money

do you need?"

And they said,

"Two and a half million dollars."

And I said, "Okay."

"What percentage of the company do

you think you'd be happy giving up...

for two and a half

million dollars?"

And they thought and said,

"Well, how about half?"

And I said, "That's fine."

And within a day and a half,

I had raised two and a half

million dollars.

Intel opened its doors in July of'68,

and Arthur Rock's partnership with

its founders was only just beginning.

Arthur was our chairman

of the board in those days.

I spent a lot of time there.

Venture capitalists

do write the check,

but that isn't all we do.

Writing a check is easy.

Yeah, it doesn't take much ink.

I attended staff meetings.

Arthur asked good questions.

I was on the phone to them a lot.

Was an excellent board member.

Offer advice.

Planning.

Setting up an audit committee.

Customer relations.

Interviewed a lot of people.

Built all the pieces

of an enterprise.

I just brought what I consider

common sense to the table.

He even met his wife there.

He gave us guidance on when not to go

public as well as when to go public.

I was very involved in that.

This was all new to Intel,

but wasn't new to me.

We went public the same day

that Playboy Enterprises went public.

At the same price.

And a few years later

one of the analysts says,

"The market has spoken.

It's memories over mammaries, 10-to-1."

And the home of the

Brave

You know there's lots of things

that I'd like to do

Yeah, child,

I want to do them with you

And that takes money

Hey, look at those power men

Yeah, lots of money, child

Shortly after Arthur Rock

went out on his own,

Forbes profiled him

in an article that caught the eye...

of a young investment manager

in Boston.

When they said,

"Well, now that you and Mr. Davis...

are doing separate things,

what are you going to do?"

He said, "Well, I'm gonna find a younger

partner and do it all over again."

And I said, "You know, gee."

I had never even-

I mean, it was a light bulb.

And I sat down and I wrote him

a longhand letter.

And I never had ever done

anything like this before.

The following Monday

I got a telephone call.

"Mr. Rock's on the line."

I said, "Really?"

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