Irwin the Brave (Forbes)
By Eric Nee
San Diego is one of the last places in America you'd expect to find a company like Qualcomm or a man like Jacobs. I know. I grew up there. For years San Diego was dominated by the Navy, defense contractors, retirees, and twentysomethings looking for a good time. It was said that you could never build a successful technology company in San Diego; the beach is just too enticing. No one is really surprised that while San Diego is the sixth-largest city in the U.S., it boasts only a handful of major businesses (Birmingham, Ala., has more companies on the FORTUNE 500) or, for that matter, that when the San Diego Padres made it to the World Series in 1998, the New York Yankees crushed them. The Padres, it was said, lacked the will to win.
Well, Jacobs is proving San Diego's critics wrong, and here I was, sitting opposite him in his seventh-floor office above the sprawling neighborhood of wireless startups Qualcomm has helped spawn. As we talked, F/A-18 Hornet jetfighters roared past, one after another. The planes take off with clockwork regularity from the nearby Marine Corps air base. Even though they were a few miles away, they sounded as if they were right outside.
Jacobs ignored the thunderous noise. Why shouldn't he? He's been listening to jets roar ever since he left his teaching post at MIT and moved to La Jolla 34 years ago. The military has been good to Jacobs. Defense contracts provided much of the early revenues for his first startup, Linkabit, and a sizable portion for his second, Qualcomm. Ex-defense industry engineers made up much of both companies' starting work force. And CDMA is based on technology developed for battlefield radio communications. You might even say the military created Qualcomm, except that would be ignoring Jacobs' leadership.
Over the past 15 years, Jacobs has done what few would even have tried: He took on the giants of telecom, and he won. In early 1989, when he first approached wireless carriers to pitch CDMA, no Las Vegas bookie would have given Qualcomm any odds of success. AT&T, Motorola, and others had already opted for the so-called TDMA (time division multiple access) digital standard. "TDMA had won," says Jacobs, "and we came along and said, 'Perhaps there's a better way.' "
The one thing Jacobs had going for him was CDMA's technical appeal. CDMA systems could carry up to three times as many phone calls as TDMA systems, and many more than existing analog systems. They do this by dividing a phone conversation into packets, tagging each packet with a unique ID, jamming lots of packets through the airways, and reassembling them at the other end--a highly efficient scheme that works much like the Internet. A technology edge alone, however, would not suffice. There are plenty of cases in which superior technology has been marginalized in the market, such as Sony's Betamax or Apple's Macintosh. And Qualcomm did not even have Apple's or Sony's brand recognition.
Fortunately for Qualcomm, deregulation was changing the game. In the U.S., the federal government auctioned off new bands of radio spectrum for cellular use, enabling competitors to challenge entrenched operators. Big, well-financed newcomers liked the edge CDMA offered. PacTel Cellular, later to become AirTouch, was among the first to sign on, in 1993. Sprint and others followed.
Much the same thing happened in nations just beginning to build wireless networks. The first commercial system to deliver CDMA was not in the U.S., but in Hong Kong, in 1995. CDMA grew quickly to become the world's third-most-widely-used wireless technology, behind GSM (global system for mobile communications, the dominant European standard) and TDMA (the dominant U.S. one); it has an estimated 60 million subscribers, or 13% of the world market. More important, it is the fastest-growing of the three, with subscribers up 118% in 1999.
The standards war forced Jacobs to become a public advocate for CDMA, a role that didn't come naturally. "In college, the one course I did poorly in was public speaking," he says. "But if I know what I'm talking about, I'm okay." As he won followers for CDMA, critics accused the ex-professor of combativeness, of exaggerating the technology's virtues, of being unwilling to compromise--all charges he denies. Says Jacobs: "People have referred to it as a religious war. I always tried to keep it rational."
Jacobs hardly seems the kind of guy who can strong-arm opponents and roil an industry as big as telecom. He was born and raised in New Bedford, Mass., a seaside community grittier than San Diego by far. It was once one of America's wealthiest cities, flush with money from its whaling fleet. But the emergence of petroleum in the late 1800s eliminated the demand for whale oil. New Bedford fell into decline and has never recovered.
Jacobs, 66, grew up in a lower-middle-class family during the Depression and World War II. His father held a series of jobs: electrician's apprentice, taxicab driver, insurance salesman, restaurant owner. "We never missed a meal, but never had much else," remembers Jacobs. "I got my first bicycle when my cousin unfortunately died at an early age." He had an affinity for math and science, but when considering college was steered into hotel management by a guidance counselor who reasoned that since Irwin's father was in the restaurant business, Irwin should join him. After 18 months, Jacobs made perhaps the biggest move of his career by switching to electrical engineering. He graduated from Cornell in 1956 and earned a Ph.D. at MIT in three short years.
MIT offered Jacobs what seemed a dream job, stay-ing on to teach electrical engineering. He did so for seven years, earning $5,500 a year, before he felt the call of the West Coast. In 1966 he took a position at the University of California at San Diego, then just six years old; he and Joan packed up their four young boys in a Ford van and headed west. "It was a bit of a risk, but it was exciting because it was a brand-new school that had a very good reputation even at that time," says Jacobs. Then there was La Jolla, just north of San Diego and one of the prettiest spots on any coast. "We decided that if we were going to come out anytime before retirement, the sooner the better, because land prices would only go up." The one-acre lot overlooking La Jolla and the Pacific Ocean that Jacobs bought in 1968 for $37,000, where he still lives, is now worth many millions of dollars.
Jacobs and two pals from UCLA, Andrew Viterbi and Leonard Kleinrock, soon formed a part-time consulting company called Linkabit. Viterbi later helped found Qualcomm; Kleinrock won fame as one of the fathers of the Internet. As it happens, one of the first jobs Linkabit got was a contract with DARPA, the federal research agency that funded the Internet's early development. The assignment was to get some European universities, government agencies, or phone companies to tie in to ARPAnet, the precursor to the Internet. Jacobs recalls: "Bob Kahn [then head of DARPA] and I went wandering through Europe trying to convince people that packet communications was the right thing to do. There was zero interest." Linkabit, however, kept growing, and in 1972 Jacobs left UCSD to head it full-time. He sold Linkabit to a larger firm in 1980, staying on until 1985, when he decided to try his hand once again at a startup--Qualcomm. |
