Profile: Andy Grove, Intel

The Washington Post
8 September 1996

Financial
Intel's Blunt Edge; At 60, Andy Grove Is Still Learning, Looking Ahead and Speaking His Mind
Elizabeth Corcoran
Washington Post Staff Writer
2934 words


Copyright 1996, The Washington Post Co. All Rights Reserved

SANTA CLARA, Calif. -- In the wonderland of high technology, people often glorify youth for its own sake. Multimillionaire executives in their twenties boast that they have yet to buy their first suit. High-tech companies throw parties that resemble frat house binges -- with kegs of beer, rock bands and volleyball games. Fortieth or 50th birthdays seem barely a step away from retirement.
Yet the wiliest manager of all in Silicon Valley is a much older hand: 60-year-old Andy Grove.
Grove is a Hungarian immigrant who earned the equivalent of about $250 a week during his first job in the industry, 36 years ago. Now he runs Intel Corp., a company that sold more than $16 billion worth of products last year and is among the most profitable and durable companies in America's high-tech capital.
Over the course of Intel's 28-year history, its "Intel Inside" microprocessors have become the brains of about 85 percent of the world's personal computers. Even more significantly, each new generation of its chips becomes the pacesetter for the rest of the high-tech world.
And inside Intel is Grove, the company's first official employee and its chief executive since 1987.
Better than any other executive in the high-tech world, Grove has hung on through the bronco ride of industry changes. He and Intel have had their share of spills and near disasters. Even with the scars, though, Intel and Grove have thrived.
"Andy is the only person I know who grows younger every year," observed an Intel senior vice president, Albert Yu, who met Grove in the late 1960s. When he was in his thirties, Grove's heavy Hungarian accent and thick glasses made him seem much older, Yu recalled. These days, Grove wears contact lenses and a regular regime of biking and other exercises has made him lean.
Grove has spent far more of his time, however, sharpening his business instincts. In a newly published book, he sums up his attitude with a snappy title: "Only the Paranoid Survive."
Looking for Trouble
Grove may indeed be the Valley's most paranoid executive. Casually mentioning a recent joint venture between two long-time Intel competitors sends him scrambling for a pencil to make a note. "Andy is always looking for the black cloud in the silver lining," said Brian Halla, recently appointed chairman of National Semiconductor Corp., who worked at Intel from 1975 to 1988.
But paranoia, like many of Grove's one-line quips, is too slick an explanation for why he and Intel have emerged as high technology's standard-bearers. Instead, much of Grove's success reflects his willingness to do the grunt work that younger CEOs extol but often skip -- to learn and relearn how the world outside his company is changing.
Every executive can recite, like grade-school catechism, the importance of learning. But few do it. Managers who have had some success typically conceive every new problem as a version of one they have conquered in the past.
Grove had an early start as a cultural changeling. He fled Hungary in 1957 at age 20, speaking no English and arriving in New York with just $20. Although he had once toyed with the idea of becoming a journalist, within three days of landing in the United States, Grove had enrolled in City College's chemical engineering program and ended up with a PhD in the field in 1963 from the University of California at Berkeley.
Finding the Fast Track
Even as he was finishing his chemistry degree, Grove realized he wasn't on the fast track. As he and fellow graduate Ron Whittier, now an Intel senior vice president, worked during their summer breaks in a chemical company, they had endless discussions about why electrical engineers made more money than chemists. "We both decided that the growth was in the semiconductor industry," Whittier recalled. So much for chemistry.
Grove headed straight for semiconductors and for Fairchild Semiconductor Corp., the company founded by renegade students of William Shockley, the man who launched the electronics revolution by co-inventing the transistor. Grove became assistant director in Fairchild's research lab and wrote what became one of the classic texts on semiconductor physics.
When Grove's boss, Gordon Moore, and another Fairchild colleague, Robert Noyce, co-inventor of the integrated circuit, quit to form a start-up business that would make memory chips, Grove clamored to join them. There wasn't much to the new company at the time -- just a vague one-page business plan, recalled Arthur Rock, a venture capital pioneer. But Rock promised $2.5 million in funds.
Grove signed on as Intel's first official employee -- somehow nosing out both Noyce and Moore as the first name on Intel's payroll, recalled Moore with a chuckle.
At first, Moore and Noyce figured that Grove would continue running research, much as he had done at Fairchild. But Grove became fascinated by manufacturing. Treating it as a scientific problem, Grove began reducing the production process into simple classic concepts, Moore said. So the scientist transformed himself into a line manager, the guy who worried about how fast and how much the company could produce.
Grove's instincts proved on target again. The crux of making memory chips, those integrated circuits that store information, was this: How do you churn out the most high-quality chips in the shortest time and with the least waste?
Manufacturing also suited Grove's temperament, which often seemed as brutally direct and unrelenting as one of Newton's laws of physics.
Craig Barrett, who became Intel's chief operating officer in 1993, has crisp memories of some of his early encounters with Grove in the early 1970s after he left a teaching job at Stanford University to join Intel.
A Crisis Strikes
Barrett was still adjusting to life in industry when a manufacturing crisis occurred. Intel was having trouble switching to a new material to package its chips. Because of his knowledge of materials science, Barrett recalled that he was "ripped out of my job and put in charge of this" task force asked to solve the problem.
Grove spared no time on niceties. Instead, he "used to incessantly corner me in the hallway and tell me I was wasting $24,000 an hour while I was dillydallying," Barrett recalled. Barrett's team soon fixed the problem.
Grove also became a master of clever phrases and one-liners that succinctly carried his message. Among those still in vogue at Intel is "constructive confrontation." In essence, it meant: Cut out the pleasantries and grapple with statistically valid data and facts.
Confrontational Manager
Constructive confrontation can be an effective, albeit brutal technique. "Occasionally, we . . . suggest [to Grove] there may be an alternative to grabbing someone and slamming them over the head with a sledgehammer," Barrett said.
For some people, such continual confrontation exacts a price. Former Intel executives are plentiful in Silicon Valley, some because they had had enough of the Intel way.
Grove's basset hound face droops at the suggestion that he's too tough a manager.
"I don't think I'm any tougher than anyone else," Grove protested.
"I mean okay, yes, every once in a while, I get excited about something and lose my temper. It's very rare. It's just that I can say something in an extremely low voice, in an ordinary voice, but it is to the point and unapologetic. . . . Some people have a hard time with that, and they think I'm shouting and I'm not shouting."
For all his intensity, those who like Grove say he's one of the best people managers they know. Of Intel's 13 top executive officers, 11 have been with Intel and Grove for more than 20 years. The newcomers have logged a mere 15 years.
Intel Vice President Yu met Grove in the 1960s, when he interviewed for a job at Fairchild. A specialist in optics, Yu was keen to try a new area of technology. Unfortunately, most of the people who interviewed him were only interested in the knowledge he already possessed. Not Grove.
"Andy was the only one who asked me good questions," Yu recalled. "He was interested in me as an individual . . . not just in my knowledge." Several years later, Grove invited Yu to join Intel to work in manufacturing. "Manufacturing? I'd never done that," Yu said. "But he had confidence that I could figure it out."
John Doerr, a leading venture capitalist with Kleiner Perkins Caufield & Byers in California, also was touched by Grove's personal skills during his six-year stint as an engineer at Intel. When in 1980 Doerr announced he was leaving for Kleiner Perkins, Grove tried to tempt him to stay by offering to put him in charge of Intel's fledgling software group. "He reaches inside of you and pulls your heart out and puts it in front of you," Doerr said.
The DRAM Dilemma
All of Grove's skills were tested when Intel confronted a true identity crisis in the mid-1980s. Intel was fast losing share in its cornerstone product -- the dynamic random access memory chip -- to Japan's electronics giants. Around 1985, Japan's share of the world market for such chips surged past that of U.S. companies. Equally bitter: U.S. companies had to concede that the Japanese chips were higher quality products.
In his book, Grove describes a discussion with Moore in mid-1985. "I turned back to Gordon and I said, `If we got kicked out and the board brought in a new CEO, what do you think he would do?' Gordon answered without hesitation, `He would get us out of memories.' I stared at him, numb, then said, `Why shouldn't you and I walk out the door, come back and do it ourselves?' "
And Grove did just that. Painfully at first, Intel began moving into microprocessors -- the logic chips that have proved far more profitable than memory chips.
Reinventing Intel in this way was audacious. Memory chips were the rock on which Intel was founded. Executives believed such chips were technology "drivers" -- products that sharpen their manufacturing techniques so they could later make more profitable products such as microprocessors. In retrospect, Grove said, those tightly held beliefs were a "trap."
"At the time we were making those statements it was no longer a true and an objective observation of our own reality," Grove said. The experience helped teach him the faint line between relying on what one knows and getting entangled in emotions.
Finding a Balance
"There is a spectrum of balance," Grove said. On the one end is completely rational, numbers-oriented decision making; on the other, instinct-based emotional responses. "Particularly when you're dealing with a new trend, numbers will not show the power of a new idea. This is where your accumulated experience and your openness to peripheral events" are crucial, he said.
Still, that schooling didn't prevent Grove from stumbling when consumers began complaining about flaws in their new Pentium microprocessors in November 1994.
"I was thickheaded. I don't know how to say that differently," Grove said ruefully.
At the time, Intel recently had launched its "Intel Inside" campaign to shore up the company's brand name with consumers. Yet Grove and others still thought of their customers as the same technically savvy people as in the past, people who expected a few glitches in new chip designs. Intel didn't see itself as a consumer company -- one that had to worry when customers complained that the Pentium chip made occasional arithmetic mistakes.
"We thought of ourselves as an engineering company," Grove said. "That was our past . . . and how our instincts were shaped."
After about three weeks of shrill public criticism and long internal meetings, Intel relented and offered every unhappy customer a chance to trade in their old Pentiums for new ones.
"You had a bunch of engineers interfacing with a bunch of consumers . . . and the engineers got a lesson," Barrett concluded.
In 1993, Grove turned over running Intel's day-to-day operations to Barrett and turned his attention solely to devising Intel's future strategy. His biggest worry, he said, is "stagnation," or to put it more bluntly, the chance that consumers won't see a compelling reason to buy an ever more powerful personal computer.
For years, Grove himself didn't use a PC much. "I was not a daily user. What would I use it for? I don't do spreadsheets," he said. Apart from typing out a weekly newspaper column with management advice, Grove's desktop PC was unused.
Discovering E-Mail
That changed around 1989, when Grove "discovered" electronic mail. Since then, he has been convinced that the future of the PC is as a communications device. Grove became Intel's main cheerleader for a battery of PC communications technologies, including video conferencing and voice communication via the Internet.
Grove's enthusiasm for video conferencing, which still outstrips consumers' interest, has attracted criticism from some longtime industry analysts. Venture capitalist Stewart Alsop, for example, argues that Grove's backing of video conferencing stifled Intel's own objective assessment of the technology. Even so, a growing number of computer makers are now packaging such technologies with their products.
And like every other company in the industry, Intel and Grove are wrestling with what the Internet and low-cost Internet "appliances" might mean for their business. In his book, Grove argues that the Internet appliances will not profoundly change how Intel carries out its business.
Yet, he worries. "My whole thesis is that . . . a company that has a vested interest in `A' will always pooh-pooh `B,' " Grove said.
So at least for now, Intel has two groups doing development projects on Internet appliances and the future of communications on the Internet.
Looking Down the Road
Grove keeps devouring new information on the Internet, the industry and the competition.
A few years ago, he pledged to retire at age 55. Instead, he has broadened his job at Intel to spend most of his time thinking about its future. And each time he has headed off to learn a new field, he has washed many of the details of the past from his mind.
Much hasn't changed for Grove. He still has the same tiny office, just slightly larger than his secretary's, with chip mementos aligned on a desk blotter with the precision of transistors in a circuit design. He still likes to grouse about the trouble he has finding a parking spot in Intel's free-for-all lot.
During a bout with prostate cancer more than a year ago, he sharpened his data analysis techniques to figure out what treatment would offer him the best odds.
"I'm -- knock on wood -- doing very well," he said. "There's always a chance of it recurring," but he added: "Actually, my chance of getting a recurrence are mathematically smaller than the average person getting it in the first place."
Just don't suggest to Grove that he's mellowed.
"I don't like either the tough description or the mellowing description," he said. "I want to be kind of nice, middle ground. I have been trying to set the record straight for 15 years, and nobody believes me."
SPEAKING OUT
EXCERPTS FROM ANDREW GROVE'S BOOK
On paranoia
"I'm often credited with the motto `Only the paranoid survive.' I have no idea when I first said this, but the fact remains that when it comes to business I believe in the value of paranoia."
On the Pentium crisis
"I was the last one to understand the implications of the Pentium crisis. It took a barrage of relentless criticism to make me realize that something had changed -- and that we need to adapt to a new environment."
On managing
"Business people are not just managers; they are also human. They have emotions, and a lot of their emotions are tied up in the identity and well-being of their business."
ANDREW GROVE IN PROFILE
A LOOK AT THE MAN INSIDE INTEL
Birth name: Andras Grof
Age: 60
Born: Budapest, Hungary
Came to the United States: 1957
Joined Intel: 1968; became president in 1979 and chief executive in 1987.
Number of e-mails answered per day: 50
Company he admires the most: "Being a diplomatic sort, I'll stay away from our industry. Beyond it, Wal-Mart and FedEx both come to mind . . . doing something in an extraordinary way; both stayed focused on their task for a long time, both use technology superbly, both impacted their customers' lives in a big way."
The techiest gadget he owns: "A big screen projection TV ... that makes my PC stand for user friendliness by comparison."
Change he'd most like to see the federal government enact: "That's easy. Honest to goodness pay for performance."
Longest time it has taken him to find a parking place at Intel, which doesn't have reserved parking: "Five to 10 minutes looking and 15 minutes walking from the damn spot to my office."
Favorite sport: "Biking, kayaking, running, swimming . . . a variety so it doesn't get to be a drudgery."
Least favorite sport: "Fly fishing; it's boring."
One-time hobby: Opera singing
Family: Married for 38 years, 2 daughters.
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