Sunday, Jul 6, 2008
Silicon Valley's power cults: At Intel, Oracle and Apple, you can't escape the grip of a Fearless Leader -- or a paranoid one. Scott Rosenberg reviews three new computer-business books.
Dec 18, 1997 | In one of the most legendary scenes from the annals of Silicon Valley, Apple founder Steve Jobs lured Pepsi president John Sculley to join his young company with the challenge: "Do you want to spend the rest of your life selling sugar water, or do you want a chance to change the world?"
A computer company change the world? In 1983, maybe, you could say that with a straight face. But too many bad quarters since then have eroded Apple's revolutionary pretensions, and no one -- not even Jobs -- could get away with expressing them so rapturously today.
If such aspirations still beat anywhere within the battered heart of the cult of Macintosh, they're definitely out of vogue elsewhere in the merciless high-tech marketplace of the '90s. Real businesses don't try to change the world, Apple's successful competitors sneer -- at Microsoft and Intel and Oracle, the idea has always been to put change in shareholders' pockets.
If a company makes (or loses) billions of dollars, eventually someone will write a book about it, whether the world was changed or not. We're currently awash in a raft of technology-business chronicles -- tomes that profess to take you inside boardrooms to witness the smart deals and dumb blunders that may not have changed the world but definitely made (or lost) vast fortunes. Microsoft books already fill a small shelf; in this season's new batch, reporters take on Intel, Oracle and Apple.
But boardrooms are mostly dull places -- the best business writing goes beyond executive infighting to open windows onto a company's psyche. As you take in these chronicles of bonanzas and blunders, turnarounds and takeovers, you start noticing a pattern: Apple isn't the only cult in this industry. Each of these companies has its own version of the True Faith, with a powerful leader shaping its beliefs and behavior. We've already read about how young executives at Microsoft embrace their boss's lingo (using "random" as a put-down, for instance) and adopt his habit of rocking back and forth in chairs. But at the center of every successful technology company, it seems, there's some Bill Gates-like founder-figureweaving a spell, bending others to his will.
Not every cult is idealistic. The corporation portrayed by Tim Jackson's engrossing "Inside Intel" is the kind of cult that runs its members' lives through small, controlling rituals -- like a notorious "Late List" that forces all workers reporting to work after 8 a.m. to sign their names. Timeliness is the cardinal virtue at Intel, and tidiness is rigorously enforced inside its cubicles. (In fact, Intel was the first company to put all its executives and employees in cubicles, according to Jackson.)
It would be convenient to attribute this kind of micromanagement to the nature of Intel's business, the design and manufacture of microchips. But as Jackson describes the company, the real source of the control-freak stance is chairman Andy Grove -- the Hungarian-born engineer who was Intel's hands-on boss through most of its existence. Here's Grove, a scientific manager known for delivering fierce browbeatings to lowly underlings and top execs alike, in mid-tirade:
Andy Grove was sitting there, holding a stave of wood the size of a baseball bat. At the end of the stave was a hand shape, encased in a protective glove of the kind used inside Intel's fabs [chip factories], with the middle finger extended in an obscene gesture. Grove had just slammed the wood onto the surface of the meeting-room table -- and was now shouting at the top of his lungs: "I DON'T EVER, EVER WANT TO BE IN A MEETING WITH THIS GROUP THAT DOESN'T START AND END WHEN IT'S SCHEDULED."
Even as the book chronicles Grove's stringent management techniques -- like a "Scrooge memo" reminding workers that they were expected to work a full day on Christmas Eve -- Jackson gives Grove credit for much of Intel's phenomenal success in conquering the microprocessor field and adapting to constant change. Intel was not the kind of cult that clung to dogmas that had outlived their usefulness. Though it invented the DRAM (memory chip) business in the 1970s, it gave up on it in the '80s once Asian competitors drove down profit margins in that market. And though it preferred dealing directly with other companies and their engineers rather than the public, the highly publicized Pentium long-division bug incident of 1994 forced it to accept, reluctantly, that individual PC owners were its customers, too. A company that once proudly eschewed mass marketing and resolutely gave its products numbers rather than names woke up in the '90s and decided to turn itself into a brand name, making its "Intel Inside" slogan as ubiquitous as the McDonald's arch.
Whatever his faults, Grove never seems to have confused precision with rigidity. In Jackson's portrait, he emerges as too smart and too observant to be the classic Angry Boss; his management-by-fear comes off as more a kind of calculated sadism. Earlier this year, Grove published a management primer titled "Only the Paranoid Survive." His paranoia evidently extended to Jackson, who never got an in-depth interview with Grove himself -- and found that the company ordered employees, partners and customers not to talk to him.
It's thus no small feat that "Inside Intel" is as good, and evenhanded, as it is. When engineers need to reproduce a competitor's chip, they "reverse-engineer" it, taking apart the finished product to work backward toward its design. Jackson in effect had to reverse-engineer his history of Intel, working largely from legal documents and interviews with former employees to assemble a complete picture.
It's in these legal dossiers that Intel looks most thoroughly and appallingly like a classic paranoid cult, as it sends in-house lawyers and even security-patrol goons after whistle-blowers or employees suspected of stealing secrets. As with cults everywhere, severe penalties are reserved for traitors who leave the fold.
The lesson of "Inside Intel" is that, for all the company's innovations and its "standard virtues of hard work, good technical support, good record keeping, promptness and market knowledge," its success has been more a matter of marketing prowess than technical excellence. The chip that made Intel what it is today, the 8088 processor, achieved market dominance by accident: Designed as a stopgap to fill a hole in the product line, it wound up as the heart of IBM's first PC in 1981 by sheer happenstance. Despite its limitations, its architecture became the foundation for Intel's most advanced chips today -- while the company's more ambitious efforts to push the limits of processor technology at that time (like the 8800 chip) fell by the wayside.
There were few such accidents on Intel's marketing front. The company was always on guard. Upstart rivals would be hounded by harassing lawsuits, and serious challenges in the market were met by massive company-wide mobilizations -- like Operation Crush, launched in 1978 against a competing Motorola chip that Intel's leaders knew was superior to their own product. "We have to kill Motorola, that's the name of the game. We have to crush the fucking bastards," an exec thundered at the Intel troops. In an exercise straight out of David Mamet's "Glengarry Glen Ross," salespeople competed to rack up "design wins," accounts where they'd convinced clients to build products around Intel's chip instead of Motorola's. The guy with the most design wins got a trip to Tahiti.
Crush succeeded; the Tahiti prize outweighed the Motorola chip's edge. As so often happens in the technology industry, maniacally aggressive marketing trumped sheer technical superiority. A trade-show promoter quoted in Mike Wilson's "The Difference Between God and Larry Ellison" declares: "Average technology and good marketing beat good technology and average marketing every day."
That, certainly, is how Wilson presents the saga of Ellison and Oracle. Oracle started its business in the '70s by grabbing some ideas about the structuring of relational databases from IBM and hurrying them to market. While the lumbering Big Blue labored to build database software that worked reliably, Oracle rushed out a buggy product, seized a big chunk of the market and never let go. Later on it defeated competitors like Ingres who often had superior software but lacked Oracle's go-for-the-kill sales instincts.
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