Podcast: How Giants Rise and Fade in Silicon Valley, With Avram Miller

November 1, 2021

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Silicon Valley obviously has a rich history of technological innovations that have transformed technology and the world as we know it. But with increased competition and stringent policies coming from Washington, its landscape has shifted. Rob and Jackie sat down with Avram Miller, co-founder of Intel Capital and author of The Flight of a Wild Duck to discuss how the decisions made by Intel and other tech giants have impacted Silicon Valley and how policymakers can better support the IT industry.





Rob Atkinson: Welcome to Innovation Files. I’m Rob Atkinson, founder and president of the Information Technology and Innovation Foundation. We’re a DC based think tank that works on technology policy.

Jackie Whisman: And I’m Jackie Whisman. I handle outreach at ITIF, which I’m proud to say is the world’s top ranked think tank for science and technology policy.

Rob Atkinson: And this podcast is about the kinds of issues we cover at ITIF, from the broad economics of innovation to specific policy and regulatory questions about new technologies. Today we’re talking about the history of Silicon Valley and the decisions that ended up creating and sinking some of its giants.

Jackie Whisman: Our guest is Avram Miller, who is best known for co-founding Intel Capital, the most successful corporate venture group in the computer industry. He served as vice president of corporate development while at Intel. He was one of the driving forces in the development of residential broadband, which is a key factor in creating today’s internet. Prior to his career in tech, Miller had a successful career in medical science. In his new book, Flight of a Wild Duck, he describes how luck, intuition, imagination, humor, and risk taking enabled him to become one of Silicon Valley’s visionaries and a leading venture capitalist.

Welcome, we’re happy to have you. Your bio, which I paraphrase, but your bio is really a history of Silicon Valley computing. And it’s a really fascinating story, especially to learn about the ins and outs of a computer company’s decision making. Can you give maybe a little longer summary of how you got started and how you got to where you are? I don’t know if we have enough time.

Avram Miller: You don’t have enough time for that.

Rob Atkinson: Or you can read the book.

Jackie Whisman: That’s true.

Avram Miller: As a child, I was interested in electronics and physics. I didn’t go to university. I actually became a merchant seaman when I was 18 years old and sailed to Asia. And then I was one of the original hippies and involved in the anti-war movement and civil rights movement. When I needed to get a job because I was running out of money, I found an opportunity to develop some equipment at the University of California medical school to do biofeedback for brainwaves. And this was like 1966.

From there, I learned computers. We got a computer and I learned how computers work. I learned how to build them and I learned how to program them. Then I went on to become a founder of medical institution in Rotterdam, Holland called the Thorax Center, which was for cardiovascular and pulmonary medicine. I ran the computer department there and became an assistant professor. And then moved to Israel for a while where I became a social professor in medicine and started a company.

And then I decided what I really wanted to do was to design computers. So I went to the United States in 1979 and joined Digital Equipment Corporation, the second largest computer company. I ran about half of the hardware engineering for that company. I was there for a while, and I’m skipping ahead.

Eventually I ended up at Intel in 1984. I was a strategic hire, meaning that they didn’t know what they wanted me to do, but they just wanted me. Partly because my boss, Les Vadasz, who was badge number three, had joined in the first group, felt that the company had become too insular and they needed to bring some new people from outside the company into Intel. So I was the first and last strategic hire. They never did it again. In 1998, on the annual report of Intel, there were 28 corporate officers, and I was the last one to have joined, which was 14 years earlier.

So anyway, there I am. I was with Intel before Intel was a microprocessor company. Before it was microprocessor company, it was a memory company and it sold memory. I said, “It sold it by the ton.” It discovered a van of gold and the van of gold was the microprocessor.

Rob Atkinson: Yeah, that’s really interesting. Again, I encourage your listeners to read the book. One of the things that was so interesting about the book... I’ve read a lot of books about Silicon Valley and computers and history, so I know a fair amount. But there was really a lot of really interesting insights in this book, particularly how you were involved in some of the management decisions or bad decisions.

One of the things that struck me was how companies, and you see this all the time, for example, business people, business scholars have written about this, that companies don’t really oftentimes look and see disruption before it happens. And a lot of these companies, many companies talking about clearly digital, Deck was a clear one. I remember I was up in Rhode Island working for the governor in the late, mid, early 90s. And even then, Deck was still a powerhouse. People didn’t see what was about to come off the cliff. In other words, Deck was great in mid-level, mid-range computing, but didn’t see and resisted seeing the PC revolution. What’s the story there? How come?

Avram Miller: I like to say if you were a strategist at any company and you came to the CEO and you said, “I have two plans. There’s two plans here. One plan is we’re going to continue like we’re doing, we’re going to keep growing and we’re going to make money, and then we’re going to fall for cliff because the world’s going to change. And the other plan is we’re going to take action now that’s going to hurt us right now in the short term, but we will be able to survive and grow after that. What do you want to do?” And the CEO will always say, “Plan C.” What is “Plan C?” We’re going to do “Plan A” and then we’re going to figure it out.

So it’s very hard when you are really successful, and digital was really successful. Intel was really successful. It’s very hard then to look forward and say, “I’m going to take action now that’s going to harm me in the short term.” So for instance, when the internet was starting to happen, and some of us, I for one, really knew that it was going to have a big impact on our business, you could get people to imagine that, but they wouldn’t take the actions. What would the action be? To put your best people on the new thing. But instead you say, “No, I have to keep my best people on this thing because this thing is making so much money.”

Now I try describe that in the book, in the conundrum that people have. In writing my book, I was pretty critical of some of the decisions Intel took towards the end of my time there, or I should say decisions they did not take. But as I wrote my book, I became more sympathetic because I put myself in the same situation. As I was criticizing Andy Grove, which most people would be horrified to imagine that anybody would criticize him. But anyway, I was critical of some of his actions and decisions. I tried to put myself in his shoes and ask myself, “What would I have done?” What would I really have done if I was advocating if I was in charge. I don’t know that I would.

So there are all these changes, but it was very interesting because Andy wrote a great book called Only the Paranoid Survive. And he talked about inflection points and this situation, but he wasn’t able to respond to one himself. It’s kind of interesting. Does anybody? Who does that? It’s very hard. We’ll see this pattern repeated and repeated and repeated.

Rob Atkinson: Yeah. That’s real interesting. It reminds me of Clay Christensen, who unfortunately has passed away. I was on one of the better panels, probably a panel I will never surpass in my life was a panel I shared with Jeff Bezos, Clay Christensen, and Paul Jacobs from Qualcomm. What Clay Christensen has always talked about is this great line, “If you don’t disrupt your company, now someone will do it for you later.” And yet, I’m struck by some of the decisions. I don’t mean to be critical of companies. It’s hard. I mean, I could never do it. But at the same time, you noted, for example, that IBM’s decision not to use their own chips was what really saved Intel. You noted that Intel’s failure to sell chips to Apple was a really strategic mistake that ended up moving ARM into the leadership there. I get your point, but I’m wondering, going a little deeper on that, it’s not as if these people can’t read Clay Christensen or they don’t-

Avram Miller: Of course. Clay Christensen was one of our teachers. We had him come in and teach the management of Intel.

Rob Atkinson: Yeah. So it’s not like, “Oh gosh, I hadn’t thought about this before.” Do you think it’s just because of maybe short-term stock market pressures that forces CEOs to toe the line? Do you think it’s really hard to overcome that I don’t want to look bad now, even though it might make my successor look good? Is it just, I don’t know, hard to confront reality? What is it?

Avram Miller: Well, first of all, I don’t think you can generalize totally. I mean, it’s a lot easier for a company like Amazon. Talk about Jeff Bezos, who I think is one of the better CEOs, but he could start new businesses that didn’t cannibalize the current business he had. So that’s a lot better situation. There’s an architecture to every business and some businesses are granted flexibility that other businesses don’t have.

And one of the problems that I had with Intel was that I felt Intel was becoming narrower and narrower. We used to joke, and Andy joked, about Microsoft. He says, “Microsoft is an inch deep and a mile wide.” But we were an inch wide and a mile deep. Maybe it’s easier to have flexibility when you’re an inch deep and a mile wide than when you’re an inch wide and a mile deep.

I talk about it in the book because I kept saying, “Okay, we found this vein of gold, the microprocessor. But when we extract all the gold, where are we going to be? We’re going to be in a big hole.” And I really felt that, but I was not able to affect the change. Maybe it was me, I don’t know.

If you go back to the decision that Paul Otellini, who was... After Andy there was Craig Barrett, and then after Craig Barrett there was Paul Otellini. Paul Otellini was the one who turned down Apple when Apple asked them to manufacture the chip for the iPhone. And that was probably the most important decision that the company ever took. And why? Because he knew, Paul knew there was no way that Intel could extract the same kind of margins doing that. But what he failed to understand is that if somebody else did it and that market was successful, they would build up the infrastructure that could eventually challenge Intel.

Microsoft was better at that because Microsoft, I always said, “If it moved, Gates would pounce on it.” If it was software, he wanted it. He didn’t care what it was. If somebody was doing something and he didn’t even understand what they were doing, he was going to do it. So it was a very different behavior.

Intel was a semiconductor company. That’s what it was. It was very lucky. It given an opportunity it didn’t really deserve with the PC, and it took full advantage of it. It was brilliant as the way it took advantage of that opportunity. It couldn’t come to terms of the fact that the future was not going to look like the past, and it was no way to have those crazy margins in the future. We had to behave like a semiconductor company.

Rob Atkinson: Yeah, no, that’s really fascinating. The other thing that makes me, when I think about that, is Intel did make a big choice early on. They went from memory, as you said, to processors. Then also you think about Apple. Apple’s, I think, a little bit different case. They certainly weren’t very strong when Steve Jobs started to really change the company into touch display devices with the iPad, the iPod and phone. So in that sense, Steve Jobs wasn’t giving up anything, he was trying to save the company. Good point with Amazon. They’re just going into brand new areas. At some point Amazon might have to cannibalize itself. Can you do that?

I also noted in a similar note though, that I always thought... I spoke once at an Intel Capital conference back in San Francisco, I think in the year 2000. Right at the peak of the craziness. But I was impressed with Intel Capital because it seemed like there was a strategy there to build up an ecosystem that complimented and expanded the overall market and ecosystem for semiconductors. But then you note in there that has changed somewhat. A great quote, “Intel went from paranoia to greed,” and Intel Capital sort of became a “normal” venture capitalist. Is that part of the whole dynamic as well?

Avram Miller: Well, I don’t think this is you unique to Intel. Can you imagine? You’re in a company, you’re working in a company and all of a sudden your stock is going up like crazy. And all of a sudden you’re rich and everybody around you is rich. You didn’t plan to be rich. I never planned to be rich. I made a few dollars on them, but it wasn’t part of the plan. But all of a sudden you have this and it becomes, I think, almost an overarching drive. And how do you manage that with the expectations of the employees? Because at some point, you have to ask why? And this where Bezos is great because he doesn’t care. When your employees care, they’re the ones who care because you’re not selling stock. It’s your employees, in a sense. And you become very focused on that. I think that’s part of the problem.

And then it’s also this kind of, well, give me one more year. Just give you one more year.

Jackie Whisman: We loved your Dan Quayle story and how that led you to sell all your stocks right before the dot-com collapse. Can you tell the listeners about it?

Avram Miller: Yeah. I’m not quite exaggerating, but I was looking at the stock market in 1999 for tech. I left Intel in April of 99. I actually also said to myself, just give me one more year, and one more year from my own account. I was looking at all the stocks and I looked at supply and demand. I understood what was going on probably better than most people because I had made hundreds of investments in startups that were public and all that. And I knew that what was driving the price was that it was a greater demand than there was a supply because most of the stocks, when companies went public, they were locked up. So most of the stock was in trading. Just a little bit of the stock was trading, and then companies were buying companies. And when they bought the companies that were locked up and there were all these...

So I was looking at the supply side of this thing and I said, “Wait a second. It’s going to catch up.” And so I decided in March of 2000 to sell all my stock in high tech companies. I actually shorted Cisco because I couldn’t sell some of the private ones, and I got out. I didn’t really realize it was going to collapse. I just said, “There’s no upside. Why would I take this risk? I’m just going to take my chips off the table,” which I did. I’m sorry. I kind of forget how I got here. What was the question?

Rob Atkinson: The Dan Quayle motivation.

Avram Miller: Oh, yes, with Dan. Okay, so I was already kind of there. Then, it was absolutely did happen, there was a Morgan Stanley conference and I’m standing there and one of my friends who I’ve known for a long time says, “Oh, I want to introduce you to my buddy, Dan.” It was Dan Quayle. And I said, “Oh, hi.” I said, “What are you doing here? What are you up to?” And he says, “I’m a venture capitalist.” And I thought, “Okay, Dan Quayle’s a venture capitalist, it’s really time to sell.” I don’t know how long he was a venture capitalist, but anyway, we all know the market started tanking in March of 2000. It was pretty brutal.

I had to build a matrix. A two-by-two matrix, which is those who could and did, meaning they could sell their stock and they did, those who could and didn’t, those who couldn’t but did, which meant that they actually sold stuff that they didn’t... They shorted... I mean, sorry, they sold options. They did all kinds of things. And then those who didn’t and the couldn’t and didn’t, who didn’t have any stock and didn’t sell anything. And there were only two groups in there that were happy. There were those who could and sold and those that didn’t have anything and didn’t sell because they could see all these other people in pain. If I had to meet people after the first quarter in 2000, I always had to try to decide which quadrant they were in.

Rob Atkinson: That reminds me, I don’t know if it’s an apocryphal story or not, but supposedly Joe Kennedy, President Kennedy’s father, was big in stock market before he became chairman of the SEC under FDR. And he was getting his shoes shined one day and the shoeshine goes, “Oh, you’re Mr. Kennedy. You’re in the stock market. Let me tell you about a stock tip I have.” And then Kennedy realized that if the shoeshine guy is doing, it’s time. And so he sold all the stock right before the crash.

I want to switch gears a little bit because I thought it was very interesting in terms of how you described Intel and their decision making. And you described it as an analytical engineering culture that made it to be suspect of instinct, which you’d say, and given talking to you and reading the book that you’re strong on that. You have instinct, you have insight, you have intuition.

Avram Miller: Intuition, intuition.

Rob Atkinson: Yeah. Intuition, which is very powerful. I highly respect intuition. I think it’s a very valid way. I mentioned this panel I was on with Bezos. One of the things that stuck with me that whole time is Bezos said, “Look, when we’re opening up a fulfillment center, my people come with me with a spreadsheet with 10,000 cells, 8.23% profit.” But he says, “When I want to do something like the Kindle or something like that, I don’t have any spreadsheets. I rely on my intuition because I’m taking a big risk.” It’s the only way you can do it. So I’m just curious what your thoughts are about that and how do companies balance those two?

Avram Miller: My thoughts with that go all the way back to education, because I think our educational system is a big filter. We push out people that are creative and intuitive and so on, and then we put them through this filter. Then they go to university and there’s another filter. And then they get hired by corporations and there’s another filter. At the end, people say, “How could you do what you did at Intel? You’re a guy, you don’t have an engineering degree. You don’t have any kind of degree. You’re a former hippie. How was this possible?” And the answer to that is that companies like Intel, and all the companies, they need people like that because they’re devoid of it. But you need it. If you don’t have that kind of capability in the upper management of the company, you lose all of your flexibility, your ability to change.

That was recognized at Intel. And the reason that I called my book The Flight of the Wild Duck is because Andy called me Intel’s wild duck. he didn’t listen to me very much, but he wanted, he liked the idea of having a wild duck. One day we had a meeting with the chairman of Sony and the chairman of Sony said to me, “What’s your job at Intel?” And I said, “My job is to make Intel do things that doesn’t want to do.” And that’s what I thought what my job was.

So intuition’s really important. But if you come from a concrete, sequential engineering background, you want to have facts, you want to have analysis. I mean, I used to have to make up facts because otherwise people... If I just said, “I think this is true,” but how do you know the future? It’s really hard. And I think you get it a lot from your curiosity. Why did I think that we needed residential broadband? Because I saw people staying at their offices after work to use their computers so they get a higher speed connections to AOL.

So anyway, I think intuition, creativity, I think are really important. And how do you organize a corporation around that? How do you create that kind of environment? I think it it’s really important to have research organizations, people allowed to do stuff without having a particular agenda. Maybe not to the extreme that Google went to, but still, I think it’s important.

I would say, I have to give credit Intel and to Andy. He let us create Intel Capital. That was really radical. He made me a corporate officer. I mean, that was unheard of in a company where corporate officers were guys who managed huge PNLs. And I say guys, because they were all guys and they all managed PNLs. Real men had PNLs. It was pretty good that they did that.

Rob Atkinson: Yeah, no. I agree. Not many companies seem to do that or find somebody in the company who can play that role. It was striking. As much as you noted some things Andy did wrong, at the time Andy was a topnotch CEO. No question about it.

Jackie Whisman: What does your intuition tell you about the future of Intel? I mean, there’s obviously a lot of competition now. We talked about ARM, Nvidia, there’s also TSMC, Samsung.

Avram Miller: First of all, I hope for the best. Pat Gelsinger is probably the best person they could hire for that job. I worked with Pat and don’t have a lot of contact with him anymore, but he understands all the things he needs to understand. So the previous CEOs after Andy, we just went downhill. Intel went downhill, downhill, downhill, and they didn’t rehab a grasp, and the board didn’t rehab a grasp of the business. So Pat definitely understands it. So if anybody can get Intel righted, it would be Pat.

Is it possible? I can’t predict that. First of all, there’s a lot of factors. Government policy may play a role here. Pat, if you’re listening, my view about this is that there has to be a five-year plan and a 10-year plan. The five-year plan is figuring out what do you do with what we know today? And the 10-year plan is figuring out what do we need to know going out?

I see all the people that Pat is hiring, and so far they’re all the people that, for the next five years, are important. And maybe that’s the first thing you work on. And I have no idea what he’s doing. He’s not talking to me about it. The world will change radically. I mean, the world five and 10 years from now is nothing like today.

Here’s the challenge of every corporation, every business and every entity, including government. How do you live in this world of accelerating exponential change? I advised the Cleveland Clinic, which is one of the great medical institutions. And one of the things I talked to them about is how do you deal with planning in an exponential world? It’s very, very difficult. Where do you pick your point? Where are you trying to intersect the things that you’re changing? For instance, artificial intelligence is going to totally change medicine in the next 10 years. How do you deal with that? I’m glad not to be the CEO of Intel. I’m the CEO of my own life and I have trouble managing that sometimes.

Rob Atkinson: Maybe you need somebody in your life who has a high level of intuition about your own life.

Avram Miller: I do. I do.

Rob Atkinson: That’s your wife.

Avram Miller: My wife does.

Rob Atkinson: Yeah, so Avram, we need to close here. This is just been tremendous. But you mentioned Intel, the future and the role of public policy. As much as I really enjoyed your book, fascinating read and very informative read, you didn’t really touch too much on public policy. It really wasn’t the purpose of the book. But I’m just wondering, just a few thoughts here as a lot of our audience are policymakers. Congress now is proposing a big initiative called the CHIPS Act, over $50 billion to support companies like Intel with both putting fabs here and advanced R&D. That’s clearly a really important step. But just thoughts about US tech policy towards the IT industry.

Avram Miller: Well, first of all, I tried not to think about it. So I live in Israel. I don’t know if your listeners realize this, but I’m talking to you right now from Tel Aviv. I’m really fascinated by how the Israeli government deals with policy, tech policy, and how they implement it because they do have a strategic vision. They have a strategy for how to do it. And the strategy for how to do it is the secret sauce of the innovation of Israel is the Israeli defense force. Can you imagine? The army. It’s the secret sauce because they’re able to implement policy by how they create units and get people will work together. And they scout people starting at the age of 12. They’re following people like people scout football players in the United States.

So I think it’s important for governments to have a long term strategy about everything, but I don’t understand when it becomes so political. So somehow this is not politicized in Israel. Just the way it is, okay? It’s just the way it is. Because we have our own, to use a Yiddish word, mishigas, about political world. I don’t know. I mean, you are the expert on this and you follow this, and I don’t know.

I think the us government is like corporations, except corporations are now driven on the quarterly report and governments are on a two-year basis, I guess when this Congress goes out or whatever. I don’t know. Also, do people that really could help, are they really involved? One of the disappointments I had of Barack Obama, which I supported Barack Obama, was that he didn’t ask any of us for help. People would’ve dropped their jobs and gone to Washington to help. Nobody asked. I would’ve. Nobody asked me. The best minds are not in the government. But people, I think, will want to help. I think enough people want to help, but if you don’t want to ask them, they don’t know how to interface.

Rob Atkinson: Yeah, no, that’s a really good point. I think everybody, if you studied your history, we remember the dollar a year men. At the time it was only men, or largely men, in the World War II. These were leading corporate executives who came to Washington to help with the war effort, and they were paid $1 a year. So maybe we need something like that.

By the way, Avram, your point about Israel. A colleague of ours, Mark Zachary Taylor at Georgia Tech, wrote a book called the Politics of Innovation, which we featured a discussion event with him. He highlights Israel. Core thesis of the book is countries that do well on innovation are countries that are under some kind of challenge. Nothing focuses the mind like an imminent hanging. If you’re big and soft and doing well, like the US has for so long, it’s easy to be complacent. Although I think now that complacency’s declining a bit, which is that good in the US? We’re finally realizing we can’t be complacent. But I think that seems like a lot of the Israel success.

Avram Miller: One more thing because I think this is really important.

Rob Atkinson: Yeah.

Avram Miller: I talk about this a lot in my book about risk taking. So you need to take risk, and the compliment to risk is tenacity. Because if you take risk, you’re going to fail. Most of the time you’re going to fail. And you pick yourself up again and you do it again, and again, and again until succeed. So you have to have acceptance, a failure. Failure is part of the process. It should be part of the culture. It was part of the Intel culture for a long time. You could fail, but if it’s an honest failure, you’ve got another chance. I don’t know. I think there are a lot of cultural issues that need to be dealt with.

Rob Atkinson: Well, we could go on for a lot longer, but we can’t because of our time. This has been a fantastic conversation. For everybody’s listening, I really encourage you to get the book and read it. Really an eye opener and a page turner. It’s really a fun book. You kind of want to keep reading to see what happens. So Avram, thank you so much for being here with us.

Avram Miller: My pleasure, my pleasure. Thank you very much. And I look forward to hearing this when it goes out. I don’t know when.

Jackie Whisman: Well that is it for this week. If you liked it, please be sure to rate us and subscribe. Feel free to email show ideas or questions to [email protected]. You can find the show notes and sign up for our weekly email newsletter on our website, itif.org. Follow us on Twitter, Facebook and LinkedIn @itifdc.

Rob Atkinson: We have more episodes and great guests lined up. New episodes drop every other Monday, so we’ll hope you’ll continue to tune in.

Jackie Whisman: Talk to you soon.

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Podcast: How Giants Rise and Fade in Silicon Valley, With Avram Miller