February 7, 2010

Entrepreneur Kurzweil Brought Sunshine to Stevie Wonder's Life

(p. 265) On the snowy morning of January 13, 1976, . . . , there was unusual traffic on Rogers Street. Outside the gray one-story buildings with their clouded tilt-out windows, vans from various television channels maneuvered to park. A man from the National Federation of the Blind struggled over a snow bank onto the sidewalk and began tapping earnestly to get his bearings. A dark-haired young man set out on a three-block trek to the nearest vendor of coffee and donuts for the gathering media. In the room at number 68, two engineers poked at a gray box that looked like a mimeograph machine sprouting wires to a Digital Equipment Corporation computer. Several intense young men in their early twenties debated when to begin a demonstration of the device. The short, curly-haired leader of the group, twenty-seven-year-old Raymond Kurzweil, refused to start until the arrival of a reporter from The New York Times.

The event was a press conference announcing the first breakthrough product in the field of artificial intelligence: a reader for the blind. Described as an "omnifont character recognition device" linked to a synthetic voice, the machine could read nearly any kind of book or document laid face down on its glass lens. With a learning faculty that improved the device's performance as it proceeded through blurred, faded, or otherwise illegible print, the machine solved problems of pattern recognition and synthesis that had long confounded IBM, Xerox, and the Japanese conglomerates, as well as thousands of university researchers.

. . .

(p. 266) Stevie Wonder, the great blind musician, called. He had heard about the device after its appearance on the "Today Show" and it seemed a lifelong dream come true. He headed up to Cambridge to meet with Kurzweil.

. . .

As Kurzweil remembers, "He was very excited about it and wanted (p. 267) one right away, so we actually turned the factory upside down and produced a unit that day. We showed him how to hook it up himself. He left with it practically under his arm. I understand he took it straight to his hotel room, set it up. and read all night." As Wonder said, the technology has been "a brother and a friend . . . . without question, another sunshine of my life." Wonder stayed in touch with Kurzweil over the years and would play a key role in conceiving and launching a second major Kurzweil product.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: italics in original; all ellipses added except the ellipsis internal to the last paragraph, which was in the original.)

February 3, 2010

Self-Financing was Key to Chips & Technology's Survival

At a key juncture, Gordon Campbell's self-financing was essential to the survival of his Chips & Technology firm. Chips & Technology produced the chip technology that was the foundation of the clones of the IBM AT (286) PCs. And Chips & Technology turned out to be profitable after one year.

(p. 228) Campbell remembered the words of Nolan Bushnell: "You are not a real entrepreneur until you've got to meet a payroll from your own bank account." There was truth in those words. There was a sense in which Gordon Campbell was still real a real entrepreneur.

If you are a real entrepreneurial hero, you do not get your start by rolling out of bed one morning in rumpled pajamas to answer the telephone at Oakmead Plaza and find that it's the man from Kleiner-Perkins announcing you've won the lottery (for spinning out of Intel with Dr. Salsbury and the rest). Real entrepreneurs do not usually become paper millionaires and Ferrari corsairs in a public offering without ever experiencing the warm sensation of a profitable year. Raphael Klein had put up his house to save Xicor; he was an entrepreneur. In the desperate silicon panic of the summer of 1985, Gordy Campbell too was going to join the club.

The venture capitalists were all waiting for Campbell to fail. He had no chance of money from them. But other sources would also be difficult. Campbell had been careful to buy no real assets and channel all his money into intellectual capital. Morris Jones's Amdahl 470--a powerful mainframe that ran the company's CAE programs---was a second-hand machine, leased by the month. The rest of their CAD and CAE equipment was either designed by Jones and his team. including two defectors from Silicon Compilers, or it consisted of various IBM workstations. The company's most valuable asset, beyond its ideas, was a compaction algorithm that Jones had developed from a Bell Labs model. It allowed the scaling down of CMOS technology into difficult non-linear volt warps near 1-micron geometries. Couldn't mortgage that at a bank.

Campbell could scarcely believe what was happening to him. There was nothing to do but use his own personal money to keep the company afloat. But if the truth be known, his personal funds were running a bit low. It was out of the question, of course, to sell the Ferrari. He could hardly putter forth onto Route 280 and down toward Sand Hill Road like a beggar with some tin cup from Toyota. Campbell's other wealth, though, was mostly in SEEQ stock that was then selling at $2 per share and going down.

Campbell would have to sell at the very bottom of the market and use his own last personal wealth to finance a company with no revenues and a burn rate of some $4,000 a day. He gasped and did it. He went through a couple of cliff-hanging months, with shortened fin-(p. 229)gernails. But the act of personal sacrifice was catalytic. Within a few weeks, several of the employees and other friends also put up some money, including $200,000 from his financial officer, Gary Martin. Before the year was our he had raised another indispensable $1.5 million from a number of companies in Japan, including Kyocera, Mitsui, Yamaha, and Ascii, Kay Nishi's PC software firm that represented Chips in Asia. By July, the IBM graphics enhancement chip set was finished and Chips & Technologies was a company almost fully owned and controlled by its employees.

By July 1986, when the chip set for the IBM AT computer was finished, most of the world had decided that the AT would be the next major personal computer standard. In the United States, Tandy, PC's Limited (now Dell), and several other then unknown manufacturers bought the Chips & Technologies set. Tandy became the leading AT compatible producer, assembling the computers in a factory in Fort Worth manned by immigrants from twenty countries led by an immigrant from Japan. Among the purchasers of the Chips set in Europe were Olivetti, Apricot, Siemens, and Bull. Nishi signed up NEC, Sony, Epson, and Mitsubishi in Japan; Goldstar, Samsung, Daewoo, and Hyundai in Korea; a number of companies in Taiwan; and the Great Wall Computer Company of China. Most of these firms --plus Compaq and a slew of producers of IBM add-in graphics gear--also were buying the graphics enhancement chip set.

At the outset. Campbell had boldly predicted profitability in a year and a half: In fact, the firm was profitable by the last quarter of the first year.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

January 30, 2010

50 Venture Capital Firms Turned Down Campbell's Chips & Technology

(p. 224) Campbell's idea for a company was to use a silicon compiler to put those boards into custom silicon and to provide a means by which scores of companies could produce AT clones faster, cheaper, better, and more reliable than IBM's.

Campbell drew up his business plan and brought it to some fifty venture capitalists. A moneyed yawn issued from Sand Hill Road, echoed down the canyons of San Francisco's financial district, and reechoed through downtown Manhattan. A jaded group that had funded some forty very hard disk projects and some fifty rather floppy computer firms within the previous two years, venture capitalists eyed Campbell's boyish manner and lightweight look and they contemplated his business plan (a personal computer chip project during a PC and semiconductor depression), and they identified the heart of his overall strategy (compete with IBM). They rolled the firm's proposed name over their tongues: Chips & Technologies. Wouldn't Microtech be better? Then they laughed nervously. Not this time, Gordy.

Finally, Campbell found a friend: Bill Marocco, who had built the SEEQ headquarters, and had once offered to support a future project. Marocco put up $1 million, and Chips & Technologies was off the ground.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

January 26, 2010

Entrepreneur Gordon Campbell Was an Uncredentialed "Complex Man"

(p. 222) Among the entrepreneurs of the microcosm, none were nimbler than Gordon Campbell, the former founder and president of SEEQ. Taking Phillip Salsbury and other non-volatile memory stars out of (p. 223) Intel in 1981, Campbell had begun meteorically. But after a few years, SEEQ's E-square technology had slipped against Xicor and the industry went into its mid-eighties slump. While many experts bogged down in the problems of transition, however, Campbell seized the opportunities. In a new firm, he would demonstrate beyond cavil the new balance of power in electronics.

He left SEEQ in 1984 and at once steered his Ferrari back into the semiconductor fray. But few observers favored his prospects. If the truth be known, many semiconductor people thought they had already seen plenty of Gordon Campbell, company president.

Campbell is a complex man, with a rich fund of ego and a boyish look that belies his shrewd sense of strategy and technology. To a strong-minded venture capitalist such as Frank Caulfield of Kleiner, Perkins, Caulfield, & Byers--or even to a smooth operator such as John Doerr---Campbell appeared to be a pushover. A man with no money, no social ivy, no advanced professional degrees, no obvious scientific mastery, he was a disposable tool: some kid who had snuck into the E-square huddle at Intel and popped our into the end zone just in time to make a miracle catch of several million dollars in venture capital.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

January 22, 2010

Bert Sutherland Was the "Hero of Xerox PARC"

The failure of Xerox to take advantage of the innovations developed at Xerox PARC, is a legendary example of management failure. A couple of books have been written on the subject that I hope to read sometime.

(p. 194) Beyond his efforts in VLSI design, Bert Sutherland had supported the work at Xerox PARC that led to the "windows" and the "mouse" on nearly every workstation and many personal computers, from Apple and Atari to Apollo and Sun. He formed the research department that made Ethernet the dominant small computer network and that conceived the "notebook" lap computer. Xerox's lead in IC design gave the company the tools--if the firm had only understood them--to lend new special features to every copier and printer and even to create the kind of electronic "personal copiers" later pioneered by Canon.

Bert Sutherland was the hero of Xerox PARC: that is history. But that was not life. In real life, Xerox fired him in 1979. While he worked day and night on the novel projects in Palo Alto that were to give Xerox an indelible role in the history of computer technology, jealous rivals conspired against him at headquarters. They said that his research, which would fuel the industry for a decade, was irrelevant to the needs of the company. In corning years, the research leadership that replaced him would make the company nearly irrelevant to the needs of the world.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

January 14, 2010

For 30 Years "Poincaré's Elegant Math Prevailed Over Boltzmann's Practical Findings"

(p. 182) . . . , Poincaré's elegant math prevailed over Boltzrnann's practical findings. For some thirty years, Boltzmann struggled to get his ideas across. But he failed. He had the word, but he could not find a way to gain its acceptance in the world. For long decades, the establishment held firm.

So in the year 1906, Poincaré became president of the French (p. 183) Académie des Sciences and Boltzmann committed suicide. As Mead debatably puts it, "Boltzmann died because of Poincaré." At least, as Boltzmann's friends attest, this pioneer of the modem era killed himself in an apparent fit of despair, deepened by the widespread official resistance to his views.

He died, however, at the very historic moment when all over Europe physicists were preparing to vindicate the Boltzmann vision. He died just before the findings of Max Planck, largely derived from Boltzmann's probability concepts, finally gained widespread acceptance. He died several months after an obscure twenty-one-year-old student in Geneva named Albert Einstein used his theories in proving the existence of the atom and demonstrating the particle nature of light. In retrospect, Boltzmann can be seen as a near-tragic protagonist in the greatest intellectual drama of the twentieth century: the overthrow of matter.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: ellipsis added.)

January 6, 2010

Replication Easier than "Sweat and Anguish" of First Discovery

(p. 137) No one will deny that Japan's triumph in semiconductors depended on American inventions. But many analysts rush on to a further theory that the Japanese remained far behind the United States until the mid- 1970s and caught up only through a massive government program of industrial targeting of American inventions by MITI.

Perhaps the leading expert on the subject is Makoto Kikuchi, a twenty-six-year veteran of MITI laboratories, now director of the Sony Research Center. The creator of the first transistor made in Japan, he readily acknowledges the key role of American successes in fueling the advances in his own country: "Replicating someone else's experiment, no matter how much painful effort it might take, is nothing compared with the sweat and anguish of the men who first made the discovery."

Kikuchi explains: "No matter how many failures I had, I knew that somewhere in the world people had already succeeded in making a transistor. The first discoverers . . . had to continue their work, their long succession of failures, face-to-face with the despairing possibility that in the end they might never succeed. . . . As I fought my own battle with the transistor, I felt this lesson in my very bones." Working at MITI's labs, Kikuchi was deeply grateful for the technological targets offered by American inventors.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: ellipses in original.)

January 2, 2010

Entrepreneurial Innovation Comes from Diverse Outsiders Rather than Establishments

(p. 113) Firms that win by the curve of mind often abandon it when they establish themselves in the world of matter. They fight to preserve the value of their material investments in plant and equipment that embody the ideas and experience of their early years of success. They begin to exalt expertise and old knowledge, rights and reputation, over the constant learning and experience of innovative capitalism. They get fat.

A fat cat drifting off the curve, however, is a sitting duck for new nations and companies getting on it. The curve of mind thus tends to favor outsiders over establishments of all kinds. At the capitalist ball, the blood is seldom blue or the money rarely seasoned. Microcosmic technologies are no exception. Capitalism's most lavish display, the microcosm, is no respecter of persons.

The United States did not enter the microcosm through the portals of the Ivy League, with Brooks Brothers suits, gentleman Cs, and warbling society wives. Few people who think they are in already can summon the energies to break in. From immigrants and outcasts, street toughs and science wonks, nerds and boffins, the bearded and the beer-bellied, the tacky and uptight, and sometimes weird, the born again and born yesterday, with Adam's apples bobbing, psyches (p. 114) throbbing, and acne galore, the fraternity of the pizza breakfast, the Ferrari dream, the silicon truth, the midnight modem, and the seventy-hour week, from dirt farms and redneck shanties, trailer parks and Levittowns, in a rainbow parade of all colors and wavelengths, of the hyperneat and the sty high, the crewcut and khaki, the pony-tailed and punk, accented from Britain and Madras, from Israel and Malaya, from Paris and Parris Island, from Iowa and Havana, from Brooklyn and Boise and Belgrade and Vienna and Vietnam, from the coarse fanaticism and desperation, ambition and hunger, genius and sweat of the outsider, the downtrodden, the banished, and the bullied come most of the progress in the world and in Silicon Valley.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

December 29, 2009

Intel's Computer-on-a-Chip "Was Achieved Largely by Immigrants from Hungary, Italy, Israel, and Japan"

(p. 111) By launching the computer-on-a-chip, Intel gave America an enduring advantage in this key product in information technology--an edge no less significant because it was achieved largely by immigrants from Hungary, Italy, Israel, and Japan. Intel's three innovations of 1971--plus the silicon gate process that made them the smallest, fastest, and best-selling devices in the industry--nearly twenty years later remain in newer versions the most powerful force in electronics.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

December 25, 2009

After Lab Accident, Chip Innovator Shima Was Resilient

The incident recounted below is from the story of the development of the 4004 microprocessor (which was the first commercially available microprocessor). Hoff and Shima played important roles in the development of the chip.

I am not sure that the main "lesson" from the incident is about the importance of details. (After all, many entrepreneurs, including Simplot, embark on big projects without a clear idea of how to accomplish the details.) A bigger and sounder lesson may be the usefulness of resilience for successful inventors and entrepreneurs.

(p. 104) Hoff's counterpart at Busicom was a young Japanese named Masatoshi Shima who also had been thinking about problems of computer architecture. An equally formidable intellect, Shima came to the project through a series of accidents, beginning with a misbegotten effort to launch a small rocket using gunpowder he made by hand in his high school chemistry laboratory. As he carefully followed the formula, he claims to have had the mixture exactly right, except for some details that he overlooked. The mixture exploded, and as he pulled away his right hand, it seemed a bloody stump. At the local hospital (p. 105) a doctor with wide experience treating combat wounds felt lucky to save the boy's thumb alone,

This ordeal taught the teen-aged Shima that "details are very important." In the future he should "pay attention to all the details." But the loss of his fingers convinced his parents--and later several key Japanese companies--that the boy should not become a chemical engineer, even though he had won his degree in chemical engineering. Thus Shima ended up at Busicom chiefly because it was run by a friend of one of his professors.


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

December 21, 2009

Did Fairchild Fail Due to Bad Management or Disruptive Technology?

Clayton Christensen has shown how good management, following respected practices, can fail in the face of disruptive technologies. It would be interesting to investigate whether Fairchild was an example of what Christensen is talking about, or whether it just did not have good management.

(p. 89) Andrew Grove . . . had played a central role in bringing Fairchild to the threshold of a new era. But Fairchild would not enjoy the fruits of his work. Following the path of venture capital pioneer Peter Sprague were scores of other venture capitalists seeking to exploit the new opportunities he had shown them. Collectively, they accelerated the pace of entrepreneurial change--splits and spinoffs, startups and staff shifts--to a level that might be termed California Business Time ("What do you mean, I left Motorola quickly?" asked Gordon Campbell with sincere indignation. "I was there eight months!").

The venture capitalist focused on Fairchild: that extraordinary pool of electronic talent assembled by Noyce and Moore, but left essentially unattended, undervalued, and little understood by the executives of the company back in Syosset, New York. Fairchild leaders John Carter and Sherman Fairchild commanded the microcosm: the most important technology in the history of the human race. Noyce, Moore, Hoerni, Grove, Sporck, design genius Robert Widlar, and marketeer Jerry Sanders represented possibly the most potent management and technical team ever assembled in the history of world business. But, hey, you guys, don't forget to report back to Syosset. Don't forget who's boss. Don't give out any bonuses without clearing them through the folks at Camera and Instrument. You might upset some light-meter manager in Philadelphia.

They even made Charles Sporck, the manufacturing titan, feel like "a little kid pissing in his pants." Good work, Sherman, don't let the big lug put on airs, don't let him feel important. He only controls 80 percent of the company's growth. Widlar is leaving? Great, he never fit in with the corporate culture anyway. Sporck has gone off with Peter Sprague? There are plenty more where he came from.

"It was weird," said Grove, "they had no idea about what the company or the industry was like, nor did they seem to care. . . . Fairchild was just crumbling. If you wish, the semiconductor division management consisted of twenty significant players: eight went to National, eight went into Intel, and four of them went to Alcoholics Anonymous or something." Actually there were more than twenty and they went into startups all over the Valley; some twenty-six new semiconductor firms sprouted up between 1967 and 1970. "It got to the point," recalled one man quoted in Dirk Hanson's The New Alchemists, "where people were practically driving trucks over to Fairchild and loading up with employees."


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: the first ellipsis was added; the others were in the original. The italics were also in the original.)

December 17, 2009

"Every Physicist Wants Two Things: Glory and Money"

(p. 54) . . . in 1950, Shockley published his book Electrons and Holes in Semiconductors, which stood for many years as the definitive work in the field and confirmed his credentials for the Nobel Prize that he shared with Brattain and Bardeen in 1956. The fact was that for his theory of the field effect transistor that later dominated the industry and for the junction transistor that was dominating it at the time, Shockley deserved the prize alone. He had at last made his point.

Yet Shockley was not satisfied. "Every physicist," he said at the time, "wants two things: glory and money. I have won the glory. Now I want the money."


Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: ellipsis added.)


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