Gordon Moore

Moore was a brilliant and clever engineer, but he's probably best-know in the computer community for the so-called "Moore's Law" he postulated 33 years ago: that the number of transistors on a chip would double every 18 months to two years. So far, the law has held true, and its implications have reverberated throughout the fields of computers, communications, and consumer electronics.

Business Week spoke to Moore in a conference room adjoining his cubicle. The courtly Intel co-founder wore a shirt and tie -- unlike his mostly open-collared colleagues -- and leaned back often in his chair as he recalled the early days of the chip industry.

BW: If we could start with the broadest possible view, which is the question of what unique factors you think have contributed to the success of Silicon Valley. As I've put it to some people, what is the secret sauce that's made this place so successful?

MOORE: This is all hard to put your finger on, but in my view, it was a peculiar mixture of technically trained people, some examples of successful startups, of young people who were successful at what they were doing... Then mix that with the venture capital community out here, and it just developed a whole culture where startups were the norm, failure wasn't a problem -- you were just more valuable because of the experience after having gone through one.

So from that point of view, there was very little risk, and it's really a cultural thing that developed.

But I have a non-Stanford-centric view of what formed Silicon Valley. You know, there's the theory that Fred Terman got things going. There's no question he worked with people at Hewlett-Packard and the Varian Brothers, starting a couple of companies. But those were the kind of companies like any other place around the country. I think the real difference is the semiconductor industry, and in particular the group of us that spun off to start Fairchild. We got a particular vein of technology going that had all sorts of opportunities -- a couple of new companies spun off at the same time.

I think that was kind of where the momentum got established, with the idea that you start a new company with every new idea that comes along.

Fairchild was just a group of us working for Shockley, but we had to go for another job because we couldn't get our problems straightened out internally. And we, by accident, caught up with an investment banking firm, and they convinced us we ought to set up our own company. It was not an idea we even had before that.

BW: Okay. So it's certainly been widely written about, that Shockley was a difficult character to work for and that had some role in the decision to go off. Can you confirm that? Is that true?

MOORE: Oh, yeah. Shockley had peculiar ideas about motivating people. And we tried to straighten out the problem by going around him to Arnold Beckman, the source of the funds for the operation. And we had a couple of meetings and we looked like we were making a lot of progress.

And then, I don't quite know what happened. But for some reason or other, Beckman came back to us and sort of said, "Shockley's the boss, if you don't like it, that's tough." Not quite in those words, but it was clear that what we were trying to do, nothing had happened and we had burnt our bridges so badly by then -- we kind of had to leave.

BW: Why was Fairchild, in turn, such an environment for the spinning off of what became, ultimately, hundreds of companies?

MOORE: I think one of the reasons was that we had a technology that just opened up a lot more opportunities than we could possibly exploit. And it probably was a bit of the culture we set up inside the company. That we were all almost a bunch of kids when we started out, and then in essence, "The heck, if they can do, so can I."

And also, that was the time when venture capital first became available to support these kinds of things. And in '60 or '61, Arthur Rock and his partner set up the first venture capital partnership out here. And it was followed by several others. And that was just the time the spin offs from Fairchild became quite so prolific.

In fact, our first spin off with Fairchild was the guy we hired to be our boss. The eight of us recognized we didn't have any business experience, we needed someone with more experience to run the company. So the first thing we did was try to hire a general manager to be our boss.

We brought in a guy from Hughes Aircraft, which was actually a big semiconductor company in those days. And he was there for a year or so, and then one day he came to work and we found out he was taking several of the people he had attracted to the company and running off and setting up Rheem Semiconductor down the street.

BW: The thing that I'm curious about though. People have been leaving companies forever and going off sometimes with some of their favorite colleagues or the people they admire and setting up shop somewhere. What was the factor that made it so -- that made it different here? What was it?

MOORE: Well, it was finally a matter of degree rather than anything else. It may be that the technology just allowed the opportunities to grow fairly large companies.

I think most of the other places where you may have seen people going off to set up a new company, they weren't setting up a new automotive company, for example, or setting up a restaurant or dry cleaners of something that was inherently limited in size. We were at the beginning of a very important new technology -- in the semiconductor industry anyhow.

And then, even then, this was an area with a very high concentration of educated people. And then, you certainly have to recognize the contribution of the universities, and a lot of the other companies around here too. So -- but it began relatively small, and just kind of exploded.

BW: Aside from the precedent-setting example of Fairchild and education, and HP, can you identify other factors that you think have come into play to help this region become more the center of information technology, than say, Route 128? Or Austin?

MOORE: I read a book recently that a professor at Berkeley wrote, I guess --

BW: Regional Advantage?

MOORE: Yes. And the view she had was that the area developed a horizontal industry structure, rather than vertical. Before that, companies tended to do everything themselves, and at least from the beginning of the Silicon Valley that I knew there was a lot of emphasis on growing, essentially, a supply structure. I guess even an earlier spin off from Fairchild, now that I think about it, was my technician who spun off to set up Electroglas Company.

We had him nights and weekends building the little glass calibrators for us, that we needed in our semi operation. I taught him how to do that, and he started doing that nights and weekends, and when our demand exceeded his ability to do it then, we kind of encouraged him to set up a company and supply these things. And he became, ultimately, the first semiconductor equipment manufacturer and really focused on making equipment for the industry.

BW: That's interesting. Were you aware at the time of the notion of value-added and of wanting to concentrate on what you could do best and leave things to other people?

MOORE: Not explicitly aware of it. We were just trying to focus on the things we thought we had to do as much as we could. But we did that, and then we tried to make our own equipment for a while. In the beginning there was no equipment supply industry. And we discovered, for example on diffusion furnaces, that a couple of years down the road our new competitors had better furnaces than we did.

Again, at Electroglas, my technician had also helped me make the first furnaces, but they had improved them and we hadn't. So we decided very early, that making your own equipment was not necessarily a good idea. So a huge industry now has developed that supplies equipment to us. Similarly, we started out running our own silicon and as soon as somebody could supply that commercially, we happily got out of the business.

You know, her whole point in that book is this is completely different from what companies had done previously, where the idea was from the iron mine to finished automobile. She really gives tremendous credit to the development out here of this trend to the this industry. I never looked at it that way before, but I think it's a very valuable insight.

BW: The only thing about it that strikes me, and again, I think she's gotten a lot of admiration for that, but there are some examples that contradict it. For instance Seagate comes to mind. That's a company that ultimately has been very successful. In their industry, the vertical integration has really served them well. They're very unusual. They make their own heads, and they make their own test equipment and things like that.

MOORE: But I think those of us who have gone to the horizontal organization have really created a lot of new companies and that's really helped the whole industry fairly rapidly. Like anything else, I don't think we're going to be able to find one cause that we can hang it on, but I think several of these things ended up contributing.

BW: Do you think there's too much emphasis today in the Valley on money and on the pursuit of the big win, the big success story? And I'm not trying to put words in your mouth, it's just something that other people have expressed.

MOORE: Well, I think what keeps a lot of us going in this business is the opportunity to compete. You know, to gain. You don't have to be in good physical shape. So it's exciting. It really gets people's juices flowing.

I don't think that it's possible today to have significantly less emphasis on winning. The stakes are so high it's -- looking at the industries that I was familiar with anyhow, the markets are typically worldwide. So you're competing with people and companies all around the world.

We've gone through periods, the mid '80s, for example, when we thought the Japanese were going to drive us out of business the way things were going. And, I think, it's not a situation that lets people relax. I think it kind of drives the survival instincts, if nothing else.

So I think it's more of the nature of the industry than it is anything particularly related to Silicon Valley that requires the drive.

BW: Okay. In you years that you've been at Intel, what do you think is the thing that surprised you the most?

MOORE: Well the whole scope of the operation as they have developed. When we started Intel, getting by the survival point was really the depth of our business plan. We recognized that there were existing semiconductor companies that would probably come into our area if we were successful, and we wanted to get big enough before they got turned around, to make it so they couldn't put us out of business.

We moved from that point to the point where we have a major influence on, really, the electronics industry worldwide, particularly everything associated with computing. And that is far beyond anything we could have imagined when we set up the company.

BW: Any regrets?

MOORE: No, not really. It's been exciting. Any regrets? Small things that we could have done better, I guess. But my view of this sort of a thing is that when everything you do works, you're probably not trying big enough steps. It's a business where you have a lot of opportunities to try new things, and if you're too cautious, people go whizzing by you.

BW: That's an interesting point, because, you know, this is a company that is known for having a pretty tough corporate personality -- it's a place where people are confrontational, where there's a really aggressive environment.

I'm wondering, was it something that was almost necessary because of the nature of the industry? How much is a reflection of the personality of the founders? And if so, who?

MOORE: Well, first of all, I think our image is slightly distorted, partially because of a poor choice of words on constructive confrontation, one of Andy's concepts.

The idea of that was to confront things directly. You know, not play games, have people say what they think so that we could resolve questions effectively. And I suppose in some instances, that becomes confrontation in the classic sense. But that wasn't the intent. And it certainly isn't the way the -- Intel's top management is practiced -- I don't think.

We do expect people to perform. You know, we try to hire good people and they work pretty hard. One of our executives once said we were like the Marine Corp. -- got the best people we could and expected them to produce.

And we regimented them a bit. We had -- Intel had -- a sign-in sheet at one time. I was lamenting the fact that we couldn't start a meeting before 8:30 because people weren't here, and Andy came up with the solution. If you came after eight, you signed in. Nobody ever did anything with the list, you just had to sign your name that you came late.

And it was amazing how -- they even got me running through the parking lot to be sure I wasn't late.

But you know, little things like that. We had flexible hours, as long as you were here between eight and five, you could come whenever you wanted and leave whenever you wanted.

BW: I wonder if you could tell me a little bit more about the sense of opportunity that you experienced in the early days. Some of the people have talked about the Valley's having been influenced by the '60s, say. That there was this sort of a rebel impulse or an information 'power to the people' and so on. And it may well have been a driver, for instance, in the development of Apple.

But I think the Fairchild period clearly pre-dated that. You know, the men of Fairchild were not products of the '60s. They were products of an entirely different era. What was the value that you brought at that time? What the sense of your aspiration or of your conviction?

MOORE: Not very much. Fairchild was formed because several of us found it more convenient to set up our own company than to run out and look for jobs someplace else. We thought we had an area to work in that could bring the business. We had a completely naive idea of how big a business it might be with no appreciation at all that we were on the front end of a really revolutionary technology. We liked the technical challenges to do new things, and were more surprised when people bought our first products.

But there were some values in there. I remember the Chairman of Fairchild came out to visit us from Syossett, Long Island. And he had a limousine that brought him down to the Fairchild plant, and the driver sat around there all day waiting to take him back. We were talking with Bob Noyce about the tremendous waste of manpower with this guy sitting around doing nothing all day. It was so foreign to anything we might do.

BW: Do you think that sense you had of that was more a matter of, for instance, being an engineer and not understanding it from a rational perspective, or was it a western as opposed to and eastern thing?

MOORE: I don't know where it came from exactly, but it was just contrary to anything we had ever been involved in. People didn't have a job where they'd sit around all day. And similarly, we were a group of eight that started out as equals. We set up everything in a egalitarian way and back then there were no parking places. I put a note on Noyce's car asking him to please park it in the back, in the future -- it was giving the place a bad name. He had real old beat-up '47 Ford.

And yes, we were a group that kind of worked together. There was virtually no hierarchy. And we've kind of carried on that tradition, I think. I don't know if Fairchild was a contributor to getting it established or not, but I think it has been a -- one of the important things in the Valley.

BW: Yes. It strikes me though, that this something which is more reminiscent of the environment in a lab or in a research group, that's sort of a community of scientists whose are judged on the basis of their work, than a traditional kind of buttoned-down culture.

MOORE: Yes, that's right. And we were scientists. I wasn't trained as an engineer, I was trained as a chemist and physicist. In fact, we were all Ph.D science backgrounds. There were two people who were the engineers, one an industrial engineer. But I think Greenwich was a Ph.D, E.E. But the rest of us were typically chemistry and physics.

BW: Given that it was post-war, I think there was still a lot of faith that science could create a, for lack of a better expression, a brave new world. I mean, there was a sense of the hopefulness.

MOORE: That had a tremendous impact on the support of research in universities, which has been a huge asset for the country. But we had already gotten through that.

BW: I'm also curious because it does seem to me that in certain key ways, the engineering mentality, particularly the love of technology for its own sake, has continued to this day. And there's an aspect to the Valley that is a little bit insular, or self-absorbed -- a fascination with gadgets. You know, top executives who just love nothing better than getting in there and writing some code. Do you think that's true?

MOORE: Yes I think it is. You know, we're -- a lot us have a technical background. I never really gotten over my Ph.D, Andy has. There's a difference.

BW: What's that mean? I don't understand.

MOORE: Well, I still return to the technical things and enjoy understanding what's going on. Andy got very interested in how organizations work and that sort of thing. Very early in the Intel days, actually. But in most of these companies, after the first generation of management, it's taken over by the professional managers, so the people at the top no longer understand the depths of the business. I don't think they could. I think we'll see the companies change quite a bit.

BW: Of course, that's going to happen here at some point.

MOORE: It probably will. If you look at our next couple of layers of management, they're still very heavily sprinkled with people with strong technical background.

You know, it's a little bit peculiar in that I don't understand the technology at all of the stuff we do now. I don't understand how they design these products or build them anymore. But I have the feeling if I wanted to, I could do it again. And I'm comfortable with the kind of arguments those people make.

Nobody comes in and argues with a new product, based on a bunch of financial models or anything. You have to get very deeply into the technical aspects of what the product does to get anybody's enthusiastic support.

BW: So it's still a bit of a technocracy?

MOORE: There's a lot of that, yeah. Our industries have been principally technologically driven. You know, we haven't typically gone out and asked our customers, "What would you like to have?," and go out and design a product that had that.

We've much more often said, "Here's a product we can make -- wouldn't you like to have it?" And that's unusual, particularly for an industry as large and as ours now, to have it still so strongly technically driven.

BW: But obviously, I think, that is changing in some parts of the industry. In fact, even at Intel.

MOORE: Yes, something like our various generations of micro products, we take all the input we can get on those, from more sophisticated customers. And try to come up with a good compromise.

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