Column: Andy Grove's Re-entrance

Letter From Silicon Valley

12.18.06, 6:00 AM ET
Burlingame, Calif. --Andy Grove understands how to make a re-entrance like no one else.

Not the pop-star flounce onto a stage, heralded with flashing lights and throbbing background music. But the kind of entrance that matters--the ability to look at a growing problem that surrounds him, step away--then come back in with a fresh solution.

I was reminded of this skill recently when the retired Intel chairman joined Harvard Business School professor Richard S. Tedlow onstage recently here in Silicon Valley to discuss Tedlow’s newly published biography, Andy Grove: The Life and Times of an American.

At 70, Grove is still wiry and hip enough to sport a black leather bomber jacket, even though his hands tremble slightly due to Parkinson’s disease. He smirked as Tedlow described how Grove originally told him that the idea of someone writing his biography was the “stupidest idea” he had ever heard. But Grove quickly relented and gave Tedlow his full cooperation.

What comes through in the biography and in the discussion onstage with Tedlow is how Grove made his biggest decisions: by stepping outside himself and viewing the situation coolly, at a distance.

Case in point: a fateful decision in 1985. At the time, Intel was reeling from losses in its memory chip business due to sharp competition from Japanese manufacturers. Grove had spent months wrestling with the problem, including petitioning the U.S. government to take action. Frustrated, he asked Intel co-founder Gordon Moore, "If we got kicked out and the board brought in a new CEO, what do you think he would do?" Moore’s answer: quit making memory chips. "Why shouldn’t you and I walk out the door, come back and do it ourselves?" Grove responded. So they did.

Intel faced an similarly crucial juncture in the early 1990s when Grove had to bet the company on a single chip design direction: Should Intel continue making its x86 class chips or should it follow a more technologically elegant approach called “reduce instruction set computing” or RISC? Intel’s engineers split into warring camps; RISC was the hipper choice, the one that seemed to prove that Intel’s engineers were the best. Grove even took part in a jocular in-house Intel video in which he wore dark sunglasses and rapped about the virtues of RISC chips.

Still, Grove listened when colleagues approached him with a nonengineering-based argument: Abandoning the x86 architecture, they said, would leave Intel’s huge base of existing customers stranded. None of the software written for x86 chips would work smoothly on the newer design. “They saw through all the technical mumbo jumbo,” Grove recalls, “and focused on the most important, basic factors.” Grove stepped away from his own inclination to pick a more technologically sweet solution and stuck with the x86 design. Intel’s value soared.

Grove was slower to step outside his own beliefs when customers discovered a subtle flaw in the ability of Intel’s Pentium processor to carry out certain types of arithmetic functions. Grove dragged his feet on apologizing to customers until the howling both inside and outside of the company was deafening. In his book, Tedlow describes the Pentium gaffe as Grove’s biggest mistake.

Onstage with Tedlow, Grove was impatient with that choice. Yes, a mistake. But his biggest? Grove says he agonizes every day that he didn’t leave Intel with a clearer road map for the future. Intel’s most recent track record has been mixed. Its high-end chip, Itanium, which took root during the end of Grove’s tenure, proved too ambitious and left the company vulnerable to competitor Advanced Micro Devices. Intel is also still seeking a clear path in a world where countless little handheld electronic devices are emerging as the next new thing.

Tedlow countered that Grove was asking too much of himself. “Every generation has to solve the problems it faces,” he told Grove and the audience. “It’s hard to solve the problems that will happen 10 or twenty years out.”

“That attitude brings an anti-investment, pro-short-term perspective,” Grove snapped back. “Some problems take longer than the tenure of a CEO,” he added.

These days, Grove has taken on a couple of other big problems, ones that will certainly take more than a few years to right: improving the U.S. health care system and preserving America’s separation of church and state.

Once again, Grove is trying to step outside his personal concerns to see the problems in a clear light. Almost a third of all Americans lack adequate health care and increasingly turn to hospital emergency rooms for simple medical care--a disaster in the making, worries Grove.

Existing technology can help, he believes. Grove is a fan, for instance, of walk-in medical clinics at drugstores instead of emergency rooms for many procedures. He advocates keeping people’s medical records in PDF files on the Internet to cut costly mistakes and unnecessary procedures. Wireless sensors that kept elderly or infirmed patients in close contact with medical providers could help them stay in their own homes instead of heading to nursing facilities. “We’re using technology to achieve extraordinary care for a few people. What intrigues and motivates me is the idea of using mass technology to help many more,” he says.

Just as important, Grove believes, is protecting the U.S. from the kind of sectarian strife that has ravaged so many other countries, including his native Hungary, where he saw relatives suffer first at the hands of the Nazis and later under the Communists. A clear separation of church and state--as set forth in the U.S. Bill of Rights--is essential for creating an environment in which people can believe what they choose and tolerate differences among their neighbors. Grove is supporting an online petition drive calling for the renewed separation of church and state.

Stepping outside your own concerns and pride, finding a new solution and then reentering is tough for any of us. It’s far easier to pontificate on other people’s problems than to see our own clearly. But as Grove has shown, true self-awareness can be our most valuable asset.

http://www.forbes.com/2006/12/16/intel-andy-grove-tech-cz_ec_1218valleyletter_print.html

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Column: 'I Will Not Cheat!'

Letter From Silicon Valley

12.08.06, 6:00 AM ET

A chunk of the Hewlett-Packard spy scandal ended yesterday not with a bang but a snivel.

A snivel, because the $14.5 million penalty the government has levied on HP amounts to a “tsk, tsk,” for a company with a $109 billion market capitalization.

A snivel because the money will go into a kitty that the California attorney general’s office can use to investigate other companies. During the heat of the revelations, HP executives asserted that other companies have employed the same pretexting techniques--in some cases, even the same investigators. The California attorney general’s office apparently spent $350,000 investigating the charges against HP.

With the $13.5 million that HP is now contributing to the “Privacy and Piracy Fund” for investigating other allegations about lapses in consumer privacy or intellectual property piracy, the government could, in theory, chase down another half dozen or more companies that have been spying on people they don’t trust--whether those people happen to be board members, employees or journalists. Then it can scold them too--and move on.

Like a grumpy parent, the government frequently slaps down extra regulations when companies have gotten out of line. Yet it’s not clear that those regulations benefit anyone but the lawyers who get paid to enforce them. The U.S. government spent more than a decade pursuing antitrust actions against Microsoft, to the delight of its competitors. During the height of that action, Microsoft chairman Bill Gates repeatedly said that he was more worried about some unknown upstart snatching Microsoft’s business than he was about government action. Like it or not, Gates was essentially right--and Google is proving his point.

Threatening to chase after companies that abuse privacy rights--particularly when the penalties are tiny--won’t change behavior. Adding more regulation to HP’s internal operations will not change those practices, either.

I’m more of a fan of public service as a penalty for transgressions. HP should be required to show the world the value of ethical behavior. How exactly should it do this? Perhaps it should be required to give printer cartridges to California schools with wrappers that say “Don’t cheat!” Maybe its executives should be required to write “I promise not to spy on people!” a hundred times and then post the papers on billboards on Highway 101.

I asked some school kids how they would punish someone who snuck a look in a private notebook: they said that they should have the right to look in the other guy’s notebook. That’s not a bad idea--maybe HP should award major news organizations an all-day pass allowing journalists to poke into filing cabinets and e-mail queues.

If you’ve got a great suggestion, let me know--maybe we’ll post a list and HP will voluntarily do the right thing.

Public opinion can be the strongest medicine of all. We need to demand that companies do the right thing--and praise the ones who do it and shun those who don’t.

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Column: A Walk on the Virtual Side

Letter From Silicon Valley
12.04.06, 6:00 AM ET

BURLINGAME, CALIF.--As a reporter, I try to follow the story wherever it leads, editors and expense accounts permitting. In February, I hopped on a plane and headed to Bangalore, India. Last week I thrilled my editors with a more parsimonious proposal to visit Second Life, a booming virtual world.

Second Life, created by San Francisco-based Linden Lab, is both easy and difficult to explain: Science fiction fans will recognize it as an attempt to create the visions of cyberspace described in novels by authors like William Gibson and Neal Stephenson. Another explanation: It’s a video game, like World of Warcraft or Grand Theft Auto, that lets players wander around doing whatever they’d like. Except it’s not a game--there’s no goal to accomplish and no one to beat.

It is easier to describe Second Life’s growth: Very fast. Second Life went live in June 2003. Last December, it had 92,000 users, and about 4,200 typically played at one time. Now the site has topped a million unique customers and on Sunday crossed the threshold of 18,000 users at a single time. Half are from outside the U.S.; almost 44% are women.

Those numbers are still tiny compared to Google's YouTube or News Corp.’s MySpace, to name the two most prominent growth stories of the second tech boom. But the buzz about Second Life is growing even faster than its user base.

Part of that growth stems from Second Life’s virtual economy, which theoretically lets users make money by buying and selling items and land in cyberspace; last week, a user claimed to have become a real-life millionaire based on her Second Life exploits.

Although in practice it might be hard for a single person to walk away with that big a check, users are steadily turning their Linden dollars into real ones. In October, for instance, Linden Lab paid a total of 917,000 real dollars to users in exchange for their virtual ones. Since October 2005, the company has paid out 6.8 million real dollars.

Marketers love Second Life, or at least the idea of Second Life, as well. About 40 real-world companies have established beachheads, more for pumping up the “cool” factor of their brands than for moving real products. Sony BMG, the music label jointly owned by Sony Corp. and Bertelsmann AG, has a spot where musicians perform. In November, IBM and Dell opened big sites; the president of Nintendo of America has been making the rounds as well. Time for me to go, too.

Or at least try to go. My aging home computer could help me buy a round-trip ticket to India, but it balked at taking me to Second Life. On my first attempt, my PC lacked the graphics horsepower to render clothing for Second Life’s “avatars," the animated characters that represent the users in cyberspace. It made the virtual world look like a mall filled with naked mannequins--not exactly a cozy experience. So I borrowed a machine with a fresher graphics card and plunged in again.

Landing in Second Life is a bit like getting plunked down in an unfamiliar city where most of the people speak your language and it doesn’t hurt when you accidentally walk into a wall. That’s important because if you’re over the age of 32--the average age of Second Life denizens--it may take a while to get comfortable with the combination of keystokes and mouse clicks that lets you move through the world.

I wandered through a piazza environment, eying other avatars. It felt a bit like being backstage at a fashion show: Everyone has the same youthful appearance and drop-dead physique. You can make a fat avatar--and they probably exist--but I didn’t happen to spot any. As one denizen confided, “You can always look fabulous in Second Life!”

Indeed, many did. Nymph-like women and butch men strolled around wearing form-fitting jeans, blouses with flowing sleeves and chest-exposing vests. Someone floated by with some marvelous white wings. I tried chatting him--I think it was a him--up. “Nice wings,” I typed. “Where did you get them?” “Don’t remember,” he answered and drifted away. “Anybody from Spain here?” typed another character. “Donde?”

If you sign up for a free account, Second Life gives your character L$250 in virtual pocket money--each Linden dollar is worth about four-tenths of a real-world penny. You can get by here on that--but it would be nice to have a bigger spending account to snap up, say, a hovercraft or some Christmas decorations. To plump my account, I could buy more Linden dollars using my real ones. If I had some software skills, I could render up some cool representations of stuff and sell it for Linden dollars. I could sell a service--and anything from virtual sex to journalistic stories about life in Second Life is fair game.

I contacted a fellow journalist, Marvel Ousley, an editor for SL News Network, for a few pointers. Ousley “transported” me to her office. (To get around Second Life you put in the name or coordinates of the location you want to go, click the “transport” button and whoosh, you’ve arrived.) It looked like any of the thousands of fine offices I’ve visited from San Francisco to Bangalore: Large chairs and a sofa, potted office plants, a big screen TV. Ousley’s avatar sports a fedora and a sweater with her magazine’s name. And, like the denizen of any other Silicon Valley office, she promptly offered me a logo shirt.

When my avatar asked her questions, my virtual fingers moved as if typing on a keyboard. But I wasn’t ready for a fully virtual conversation, so I cheated by tracking down her real-world phone number and chatting with her on a real phone as our avatars sat on her office sofa.

When Ousley first joined in April, she got caught up in the world and started working on a couple of publications. Now she tries to keep the habit under control--an hour or two a day--so that it doesn’t cut into her real-world work. In the real world, Ousley is Susie Davis, a freelance journalist who is working on documentaries.

“I wasn’t a gamer,” she says. “But here you meet people--maybe you join a book club or some other activity. You discover you share a lot with people that you might not get to know in the real world.” Ousley promised to take me sky diving on my next visit.

There is sex in Second Life as well, though Linden Labs doesn’t play that up much in its marketing materials. It’s there if you want it--but most of it happens away from the most commonly trafficked areas, says Catherine Smith, director of marketing for Second Life (aka “Catherine Linden” in SL).

Catherine shows off her virtual apartment, a graciously appointed flat with a view of the water and a few glittering Christmas trees. “What I love is there is so much beneath the layers in Second Life,” she says..

Overall, visiting Second Life is a kinder, gentler experience than, say, playing the even more popular World of Warcraft online multiplayer game, which boasts 7.5 million users. There’s no question it’s great fun to custom-design myself. (Shall I be a redhead? How about a guy?) But it’s a place that demands commitment, much like moving to another country means learning a new language and customs, I’d have to spend a lot more time in Second Life before I becoming fluent in how to move, live and act in this world. It might be fun to spend that time. But now real life is calling.

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