Notes from the Intel Capital CEO Summit
Tuesday, August 19, 2003
David S. Isenberg
For Intel, venture cap is a survival strategy.
I attend many professional events. The recent Intel Capital CEO Summit stood a head higher than the rest. Intel's CEO Summit is founded on a practical realization that the semiconductor business is more than a mix of technology, manufacturing, finance, marketing, policy, innovation, customer service and a dozen other functions. It is a conscious attempt to shape and nurture culture, to create an emergent aesthetic experience identified with Intel. I arrived skeptical, but I was drinking the Kool Aid before I left.
Intel Capital is the largest venture capital organization in the world. It needs to be. The semiconductor business is in perpetual oversupply, not only because of (Intel founder Gordon) Moore's Law, but because Intel ran out of mainframe apps to import into chip space at least a decade ago.
Intel needs to grow if it is to exist at all, because every new device is followed by aggressive commoditization. Intel reminds me of a cartoon polar bear, jumping to solid ice just as the floe that it is standing on breaks up. Then the bear's jump causes the next floe to break off, and the bear jumps again, and so on. Intel must keep moving to avoid an icy bath.
Ideally, Intel Capital is the bear's hind legs, the propulsive force behind each new jump. It ventures capital in start-up companies that promise to open channels for newer faster semiconductors and for different kinds of semiconductors. It also invests in companies that promise strategic pieces of new business ecologies that Intel semiconductors can fuel.
The CEO Summit vigorously stirred about 100 CEOs of Intel Capital investee companies with about 100 key Intel executives and 100 other miscellaneous industry executives. There were speeches, panels, breakout sessions, meals, and mingling. There was a unique matchmaking event, where Intel investee CEOs met one-on-one with algorithmically matched industry executives to explain what they were doing, get a reading on product plans and strategy from potential customers, and otherwise make connections. Partners changed every 15 minutes.
The climax of the event was an evening discussion between Andy Grove and Les Vadasz, facilitated by author James Fallows, about the early days of Intel. Grove and Vadasz were Intel employees #4 and #3. They told stories about how they, as engineers, learned that marketing mattered, about how their wrestling with knotty problems led to great breakthroughs, about how a corporation's culture can be cultivated, and about how there is never a good time to be comfortable with success.
Grove pointed out that when market conditions are good, most companies talk about their own success. They only talk about market conditions when the market turns bad -- heaven forbid that a company would talk about its own shortcomings. At Intel, company performance is explicitly dissociated from market conditions. This makes for an eyes-wide-open assessment when external conditions are good, and it is the reason they're fully invested in R&D (which, in large part, is spelled, "Intel Capital") when times are tough.
Fallows asked whether there were common misconceptions about Intel's past. Grove replied that Intel's success today, in retrospect, has an illusion of predetermination. That illusion, Grove said, is a misconception. In fact, Grove said, Intel's leaders were often uncertain and anxious. They worried about the consequences of their actions. They didn't know if they were making good decisions or bad ones. Looking up at us, Grove clenched his teeth and said that the future of Intel is still uncertain today. I waited uncomfortably for him to smile or joke to break the tension. He didn't. He looked worried.
Suddenly, Only the Paranoid Survive has risen to the top of my reading list. I have gained new respect for these Intel folks. Sure they've created much of the key technology of the information age and established a dominant market position. Most companies would relax (consciously or not) at this point and eventually collapse inward. But at Intel, they're working diligently to ensure that their corporate culture faces outward, towards the future.
This commentary appeared as part of SMART Letter #89, August 18, 2003. Copyright 2003 by David S. Isenberg |
