Oral-History:Leslie Vadasz

About Leslie Vadasz

Leslie Vadasz was born in Budapest in 1936, and survived the Second World War in the Budapest Jewish ghetto. He left Hungary during the 1956 uprising, after his first year of university, and arrived in Canada as a refugee. After completing his undergraduate degree in engineering physics at McGill University, Vadasz took a job at Transitron. In 1964 he left for Fairchild Semiconductor, where he developed MOS technology and learned about silicon gate. In 1968 he left Fairchild to found Intel with former colleagues Robert Noyce, Gordon Moore, and Andrew Grove. There, he pioneered silicon gate MOS technology, which would lead to the creation of the first microprocessor. After a long career in research and development, Vadasz assumed the role of president of Intel Capital, where he was instrumental in investing in projects that would transform the personal computer into a communications device. He retired from Intel in 2003 and now focuses his energies on philanthropic work in education.

In the first part of the interview, Vadasz discusses his retirement from Intel and current philanthropic efforts. He describes his childhood in Budapest and memories of the war, and his journey from Hungary to Canada. He briefly discusses his education and early career at Transitron. Vadasz shares his recollections of Fairchild Semiconductor, and goes into detail about research and development of MOS technology, the introduction of the silicon gate, and structural problems within the company. He talks about his decision to leave Fairchild and help found the fledgling Intel Corporation. In the second part of the interview, he discusses the vision and strategy behind Intel Capital and his role as president. Going back to his early days with Intel, Vadasz explains the company’s model of integrating research and development with manufacturing, and describes some of their early innovations in the field of semiconductor memory. He narrates Intel’s transition to developing and manufacturing microprocessors, and shares their evolving business strategies.

About the Interview

LESLIE VADASZ: An Interview Conducted by John Vardalas, IEEE History Center, 10 May, 2010 and 1 November, 2010.

Interview #545 for the IEEE History Center, The Institute of Electrical and Electronics Engineers Inc.

Copyright Statement

This manuscript is being made available for research purposes only. All literary rights in the manuscript, including the right to publish, are reserved to the IEEE History Center. No part of the manuscript may be quoted for publication without the written permission of the Director of IEEE History Center.

Request for permission to quote for publication should be addressed to the IEEE History Center Oral History Program, IEEE History Center, 445 Hoes Lane, Piscataway, NJ 08854 USA or ieee-history@ieee.org. It should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user.

It is recommended that this oral history be cited as follows:

Leslie Vadasz, an oral history conducted in 2010 by John Vardalas, IEEE History Center, Piscataway, NJ, USA.

Interview

INTERVIEWEE:

Leslie Vadasz

INTERVIEWER:

John Vardalas

DATE:

10 May 2010 and 1 November 2010.

PLACE:

Los Altos, CA

Retirement from Intel Capital

Vardalas:

It is Monday, May 10th; I'm in the home of Leslie or Les?

Vadasz:

Les.

Vardalas:

That's right, and is it Va —

Vadasz:

Yes Vadasz.

Vardalas:

Vadasz. Is that the proper pronunciation — ?

Vadasz:

Uh, well, proper for around here. In Hungary they would say Vor-Das.

Vardalas:

Vor-das [phonetic], huh. Yeah.

Vadasz:

Here it is Vadasz.

Vardalas:

Vadasz. OK if you feel comfortable with that. Thank you so much for the interview.

Vadasz:

It's my pleasure.

Vardalas:

You’ve had a stellar career as an engineer, R&D manager and corporate executive. And you've played a lot of important roles in technology development, especially in those areas that affected most people around the world. What you've done has had a large impact on people's lives. And you were part of the team that built Intel from a small company into a large giant which is actually an icon for innovation. In 2003 you retired.

Vadasz:

Correct.

Vardalas:

So, was it easy to walk away from it? In particular can you share with us any of the intellectual or emotional discussions you had with yourself: “should I do it, when should I do it, how should I do it?”

Vadasz:

Well actually it was much easier to walk away from it than I expected it, way before I actually retired. I did not quite know what to expect over time. I was self-confident enough to say, “oh I won't be bored. It will be all right.” But I didn't know what to expect. But somehow by the time 2003 came about, I was ready. I was really trying to do other things. I was getting more interested in other things. What really held me back was trying to make sure that I put Intel Capital, the activity that I was heading up, into good hands. Would continuity be properly maintained and evolve, if you will —

Vardalas:

So you wanted to ensure adequate succession.

Vadasz:

That's right. And so for the last couple of years I worked very hard on the succession.

Vardalas:

Well if it took you that long in preparation to —

Vadasz:

We had one of the Intel executives come in as the second in command of Intel Capital. And I worked very hard on pulling back and letting him more and more be in front. And —

Vardalas:

Was it hard to let go?

Vadasz:

Oh, not really.

Vardalas:

No?

Vadasz:

Not really. By that time of my career I don’t think that I was that… how should I say it… somewhere along the line you learn that if you want to get the most out of your people you have to give them room to operate. I had a much harder time at the beginning of my career with that. Toward the end of my career I had really no problem with that. I really had no problem with that. In fact when it came to this transition I was very conscious of pushing my second in command into the frontline more and more. I was sort of there more as a mentor.

Vardalas:

As part of your retirement, did you see yourself making a clean break from everything that was Intel and go onto a new life, or did you want to maintain some kind of meaningful relationship with Intel after retirement?

Vadasz:

Well I really wanted to make a clean break. And that's really what I was very conscious about. I didn't want the situation that my people or the people whom I left behind feel that I'm hovering over them. And at the same time I didn't want to have the frustration of I see what they do, I may disagree with them, and I advise them which way to go and they go their own way. I just want to have them just being frustrated with my ghost being there and me being frustrated that they don't follow the direction I think they ought to follow. And I thought the best thing to do was to cut the umbilical cord. Having said that, I was always available and I am still available whenever the occasion arises to talk to anybody on any subject if they need my advice. It's worth probably as much as they pay for it which is nothing. But they can have it.

I have a number of times talked to a number of people. As occasions arise, I will continue to do so. A number of times the suggestion came up that I come and sit in on some of their meetings. I absolutely refused. Absolutely refused. I really don't want to do that.

Current Projects

Vardalas:

I see, from what I've read about you, that you're a person who has a lot of energy, drive, ambition and likes to learn new things. So how do you channel that energy into retirement, what have you been doing?

Vadasz:

Well I'm involved in a few, very few small companies with technologies which are pretty risky. As you probably noted, I like to be sort of in this cross-section of new business and new technology. And so I'm involved in a few, to be specific four small companies. And they are trying to solve some very hard problems. And my role is an advisor. I tell them and myself that I'm a consigliere. [Laughing]

I work with the CEO. I help them in anything, whether it is strategy, hiring people, or building the organization. Sometimes the most mundane things that need to be done to go from point A to point B in building a company. And I also can use my technical experience to judge the viability or potential viability of what they do. I work with them.

Vardalas:

Can you tell me about what the companies do in general? And what attracted you to them?

Vadasz:

Well. What attracted me was that they were trying to do hard things.

Vardalas:

Can you elaborate — ?

Vadasz:

Well one of them is trying to do something in the RFID area that makes it a far more viable technological direction than any of the previous paths. It's something that had never been done before. And I don't particularly want to talk about the details.

Another one is in the solar space that is again trying to do something very innovative on the technology side. Something that has not been done before and there's no point of solving problems that are easy. Everybody will do that. If you solve the hard problem, you may have some good competitive advantage. So these are the kind of things that I try to do. And they are generally people who are entrepreneurs on their first company. And for them, building a new company is a pretty challenging task.

Vardalas:

These all involve areas of technology with which you have some familiarity. They are not orthogonal to what you have done. You are not following a new direction.

Vadasz:

Well they all have similar roots. Silicon is the starting point. And that's really where my instincts are. Over the years I developed a feel for what's possible. What would be potentially work.

Vardalas:

So you are not into biomedical —

Vadasz:

That's right. I think that we tend to overestimate the relevance of our experience in other fields. I shy away from that.

Philanthropy

Vadasz:

We, as a family, have a number of philanthropic interests. My interest is primarily in the education area. And in that I focus primarily on two things. One is the community where we spend most of our time in. And that is Sonoma. And the other one is my alma mater at McGill. I looked back at my career and really everything that happened was because of my fortunate situation that I did get an education. So I'd like to see that others have that opportunity as well.

Vardalas:

So you are focusing mostly on university level?

Vadasz:

Well that's one side. The other side is the K through 12 education system. We have a very difficult K through 12 situation in Sonoma. It's a small community and the unified school district has less than 5,000 students.

And somehow if it cannot make a difference with 5,000 students, [then] I mean we have a bigger problem. And I want to see things change. Economically Sonoma Valley School District is not that well off. Increasingly the student population is of Hispanic origin. The high school is, I think, 20% Hispanic but the elementary school is more like 40%. So you know the things to come. And my activities are really twofold. One is what's happening inside that school and the other is what's happening in the community. I really believe that the school will not have all the resources it needs in the future to do its job properly. So if the community doesn’t pitch in, in certain ways, we're going to have an even bigger problem. I'm involved in a variety of activities which depend on community pitching in, either financially or in kind. With their own effort. Now many retired people in the community with great careers behind them who can help in very meaningful ways.

And that's one of my efforts. The other one is really what happens within the school system. And there our primary effort is really help the teachers to be more successful. We have sponsored technology programs to make the teacher better use the technology in the classroom. That's part of the syllabus. In other words, don't worry about the technology for the sake of technology. Worry about how you use the technology in the classroom. Not only that you will have more relevant activity from the kid's point of view, who are sometimes more familiar with technology than the teacher. But also I think that you'll find new challenges and more, already challenging more successful education process by using the technology. These are the kind of things that I like to do. Our most recent program brings together some of the science capability of the Exploratorium with teaching science in elementary schools. I'm very excited about that program because it really got off to a very good start.

Vardalas:

How were you drawn into this? Do you recall?

Vadasz:

Well I'm familiar with what's happening in the school and unfortunately, for example, science education is not doing very well in schools, particularly in elementary school. It's really problematic; neither are the teachers trained well nor is the material right on many issues. I'm also familiar with the Exploratorium. I was asked to be on the Advisory Board of the Exploratorium and so I learned everything about that capability. So I brought that two together.

Vardalas:

I meant at the general level. How did you get drawn into this aspect of philanthropic work with the community?

Vadasz:

Well we set up a family foundation along the way and through the family foundation we really started to learn more about the activities that we were interested in. Education has been the primary one. And so all you have to do is learn. Just walk around and see what's happening.

Vardalas:

There are some individuals who feel it's important to give back to the community and feel a sense of responsibility. There are others who would just take their wealth and go off to Fiji. Have you felt this philanthropic need for a long time or was it something that emerged after you retired?

Vadasz:

Well I felt strongly about education. Our foundation was established significantly before I retired; six, eight years before. So obviously there was an interest in giving back. But the amount of time I was able to spend on it personally was very limited. Each of our family members did spend some time on some aspect of it.

I really started to spend increasingly more time as I had more time available. And I also felt that really, I should be spending it in my own backyard. Because what's happening in your own backyard is a microcosm of what's happening in the country.

Vardalas:

So after coming from the environment that you did, have you formed any opinions as to what needs to be done to K through 12 to make it work better for the students?

Vadasz:

Oh I don't think that there is a single bullet. All I'm trying to do is kind of point in the right direction. And teacher development, to me, is extremely important. Community participation is extremely important because there's not enough resource without it. And so these are to me very important. Now I'd like to see the education system more, [chuckling] how shall we say, in the mold of private enterprise from the point of view of meritocracy, to reward accomplishment and positive outcome. We have a way to go in that direction. So it's not necessarily the climb this mountain first. We'll get there. The important thing right now is to focus on making teachers more successful; to get the community contributing more. This is the right direction. I wish I could have a blueprint, but I don’t.

Vardalas:

Other than the university interest and the K through 12 interest, have you had any other philanthropic interests?

Vadasz:

That's pretty well it, although our family does also support some medical research, some arts programs. My wife is more interested in the arts area. We support organizations like Council on Aging that helps with some of the social issues. So those things are happening but my personal involvement very much on the kids' side

Thoughts on Aging

Vardalas:

Other than being older, what would be the important differences between the Vadasz of today and the Vadasz of 30 years ago? If you'd look back, how have you changed your outlook?

Vadasz:

Oh I'm probably more tolerant. I probably would be more apt to work with people if things don't go in the right direction then just try to tell them what to do.

Vardalas:

So patience is something you…

Vadasz:

Patience, well patience has two elements. I think that the environment I work in is more conducive for some more patience. When you are in a corporate environment, you are in a meeting from 9:00 to 10:00 and then from 10:00 to 10:30 and from maybe 11:00 to 12:00. And so your day is very much chopped up into very structured activity. And there's only so much time you have to discuss an issue. You have to come to a conclusion and move on. So impatience is almost built in. And I think that now I don't have that kind of … Although I have to say that sometimes when I sit in a board meeting and I don't feel comfortable with what I hear, I'm ready to scratch the window but I kind of take a deep breath and tell myself “OK I'll handle this with the CEO later on” [chuckling].

Vardalas:

Was it always in your character from the beginning?

Vadasz:

Yeah, well which one?

Vardalas:

The impatience.

Vadasz:

Yes. I was very impatient from the beginning. I think that patience wasn't something that I was born with. [chuckling] I think that patience was more of a learned skill.

Vardalas:

And yet in one interview you speak about the importance of nurturing new technology, which requires a bit of patience, doesn’t it?

Vadasz:

Oh, I have infinite patience for nurturing technology. I don't have an infinite patience for discussing an issue over and over and over and over again and not coming to a conclusion or listening to BS which doesn't make sense to me and saying to myself, “Gee there's another half an hour of this that I have to listen to.”

Career Successes

Vardalas:

I want to take you back to your earlier years. But before I do I want to ask: do you find yourself reflecting back on your career, and are there moments when you sit back and reflect on what you did and accomplished? Have you ever thought about the accomplishments that have given you the greatest satisfaction over your career at Intel and Intel Capital? Of your accomplishments, which were you very proud of?

Vadasz:

Well. First of all, I'm not very good at looking back, even today. Probably these days there are times when I reflect more but I'm always kind of “oh that's done; let's move on to the next.” And the other thing I never was very good at is having a sense of history. When I worked on certain things I never got too enamored with the importance. It was just in a day's work. I was more preoccupied by the challenge of making it work than worrying about “Gee how important is the work that we are doing?”

Vardalas:

Well let me rephrase the question. Which of those challenges that you got to work on gave you the most satisfaction?

Vadasz:

In retrospect, there were two. The first was the silicon gate. Because, you know, a huge multi-hundred-billion dollar industry is now based on it. That is very satisfying to see. The second is flash memory which started with the EPROM. It happened way back. It was invented by one of the engineers who was working in my group, Dov Frohman. Inventions of that magnitude generally take a decade or more to go from invention to commercial product. We did it two years or less. And it had a major impact.

Vardalas:

It's ubiquitous.

Vadasz:

It's ubiquitous today. And it’s very satisfying that we did that. I mean Dov did that.

Vardalas:

But you were a part of that whole effort…

Vadasz:

Yes, my group. And when I look at what we created, it was very, very impressive.

Early Life and Education

Vardalas:

I'd like to take you way to your beginnings.

Vadasz:

I was born.

Vardalas:

Yes.

Vadasz:

[Laughing]

Vardalas:

I know from other interviews which you have done that you either don't feel your memory is good or you're reticent to kind of talk about what your events were as a child; but let me see if I understand so far what it is we know. You were born in Budapest.

Vadasz:

Yes.

Vardalas:

In Hungary, September 12th, 1936.

Vadasz:

Correct.

Vardalas:

And as I understand it, during the war years your parents were forced to move into what was the Jewish ghetto, is that correct?

Vadasz:

Correct.

Vardalas:

And you say you don't remember much of that.

Vadasz:

Well, you know, I was 8 years old —

Vardalas:

What do you recall from the time, let's say from the time you went to the ghetto to the time you came back to your apartment. You did come back to your apartment after the war, is that correct?

Vadasz:

Yeah. Yeah.

Vardalas:

What was life like? Would a child notice a difference?

Vadasz:

Well there was a time — first of all, I remember that we spent most of the time in the bunker. Because increasingly there were bombing raids by the advancing Russian Army. And so we had to be in the bunker, plus there were rumors of all kind of activities by our friendly Hungarian Nazis, who went on various rampages in the ghetto. And so we spent most of the time down in a common area. All the people in that house were down there.

I remember some mundane things like there were two sacks: one was dried beans, the other one was dried peas. And so one day we had beans; the next day we had peas. The next day we had beans. That was our staple. I remember that there was an inner courtyard and at one time there was a bomb that fell into the snow banks and didn't explode. And I remember my father picking it up and taking it out, not throwing it, but taking it out to the street and depositing it into the street side.

Vardalas:

Do you remember as a child, was there such a thing as fear or was it something that you didn't notice as a child?

Vadasz:

Your fear is more the reflection of the fear of the adults. And certainly the adults, my parents and other adults in that house were not particularly smiling and happy. There were times when everybody had to be that silent. Down and under the house in the bunker. I also remember when we were coming out of there, they were pushing a little push cart with whatever little stuff we had and on the opposite side of the street there was sort of an iron fence into a garden and there were probably I don't know, about a ten foot high mountain of bodies. And some covered with snow, some exposed. And my mother kept telling me don't look, don't look. The last thing that [chuckling] you say to a kid is “don't look” because he's going to look.

Vardalas:

How did children occupy themselves during the day? Did you make toys? Did you play?

Vadasz:

Those memories are very vague. It's really amazing to me how little I remember of that play stuff.

Vardalas:

Were there children around?

Vadasz:

There were some other children. But not many.

Vardalas:

What are your memories then of when you went back, when the war ended? Do you recall, as a child, knowing the war had ended?

Vadasz:

Well they were fighting — well I mean you still saw dead bodies, burned bodies, you had huge holes in buildings, demolished buildings. I don't think you had a feeling that things totally ended. You see those things. You play with bullets and you pick up hard bullets. You find this and you find that. It becomes sort of part of your environment. Except you're not hearing shootings.

Vardalas:

Do you recall going back to the family apartment?

Vadasz:

Yes I remember that —

Vardalas:

What was that like?

Vadasz:

You know, I don't know. I know that we did not have any real furniture and we just started acquiring some furniture. And I know that some people were working in the place to build some or repair some furniture. I think we bought only some used pieces because it's all we could afford.

Vardalas:

Right. And did you start to go to school then?

Vadasz:

We started — school year started next fall —

Vardalas:

I'm assuming there was no school while you were in the ghettos —

Vadasz:

No there was no school there.

Vardalas:

And so it only started after the war ended.

Vadasz:

Yes.

Vardalas:

Was the apartment in a Jewish neighborhood too …

Vadasz:

It was a lower middle class neighborhood, which was fairly heavily Jewish but some three streets down from there was more of a gypsy neighborhood. In our house it was kind of mixed. We were living in apartment houses. And I can't even say that it was predominantly Jewish. It was fairly mixed but it was a lower middle class.

Vardalas:

Do you recall going to school?

Vadasz:

I recall two things. One is I loved the chocolate that we got from these packages from Switzerland. Oval Mountain? I don't know.

Vardalas:

[Chuckling]

Vardalas:

And how was that tied to school?

Vadasz:

Every day we got that chocolate drink in school. The other thing was that we were supposed to get some tetanus shots. And I chickened out and I never [chuckling] went to the line where they gave the tetanus shot. Because I saw one line going in and another line coming out and they looked very pained. And so I kind of short circuited the line and I never [laughing] got the tetanus shot.

Vardalas:

So I gather your earliest memories you have of your education, the strongest, would be high school then, right?

Vadasz:

Well middle school and high school. Although I have one memory of elementary school which is pretty memorable and I think I talked about that. It had to do with the time that I started to really understand numbers.

Vardalas:

Tell me about that —

Vadasz:

I had a hard time with “you have two apples and five oranges, how many fruits do you have” kind of thing. And suddenly it clicked. And I always remember the circumstances. It was in class. And it was almost like from one moment to the next, things got easy. Just like that. And it’s very bizarre but I remember that transition.

Vardalas:

And so, can you say that at that point you got better at arithmetic and math, that you got to like it more?

Vadasz:

Oh yes. And that was always a comfort zone for me.

Vardalas:

What do you recall of your middle education? What did you excel in and what did you like? Obviously you must have started to like science and math.

Vadasz:

Uh, I liked math. Generally, I liked the physical sciences. Although in chemistry I was never very good. I don't like memorizing things. I was always better at the cognitive element.

Vardalas:

Was there ever any point in middle school and high school where you said, “I want to do this”?

Vadasz:

Somehow I don't know why in our family, even though my parents did not have a lot of education, there was an aura that you appreciated the professions. You know? They talked about the doctor, the lawyer. And somewhere, since I liked to do things with my hands, engineering appealed to me.

Vardalas:

Oh so it did appeal to you then —

Vadasz:

Yes, and somehow it became an assumption. By me and everybody else [chuckling] in the family. “Oh yes, he's going to be an engineer.” It was “I'm going to be an engineer,” and that was it. Except at that time, it was a mechanical engineer.

Vardalas:

Did anyone have a great impact on you during high school? A teacher who helped you, or got you motivated?

Vadasz:

You know, this is a weird thing but many people remember “The Teacher,” I don't. I think that I got some good experiences. I liked machine shop experiences —

Vardalas:

Wasn’t it also part of the university, the first year in Hungary, right? You were at the Polytechnical?

Vadasz:

Well actually I started out in a gymnasium. And I really was very bored.

Vardalas:

Why is that? A gymnasium.

Vadasz:

I didn't like all the literature stuff. I wanted to transfer to a technical high school. So during the summer between first and second year I did. And the one thing I had to do was take an extra class in machine shop. So my real exposure to a real world machine shop was when I was between first and second year of my high school. And then I transferred to this technical high school and from then on I —

Vardalas:

Did they have a shop there too?

Vadasz:

Oh yes.

Vardalas:

Were there any debates in your family about leaving gymnasium and going to …?

Vadasz:

None. In that respect my parents were very accommodating. They really felt that as long as I wanted to have an education, then I could do what I felt like doing.

Vardalas:

So. So the technical high school that you went to had a lot of hands-on shop, things to do with machines?

Vadasz:

Yes.

Vardalas:

And I gather later in your career you had a lot to do with manufacturing. You had a certain understanding of it or interest in it. Do you think this early experience of having to know how machines work had any influence later on in your life about how you approached engineering?

Vadasz:

Oh absolutely. Absolutely. Things are much less abstract when you have to [chuckling] make something with your hands. And whether it's a circuit board, making a circuit work or whether it's a lathe or a milling machine, working with metal or wood that's all very relevant. Because you really understand how things work when you make them.

Vardalas:

Shop classes are very hard to find now in schools today.

Vadasz:

I really am a strong believer in shop.

Vardalas:

Tell me about the technical high school, what was it preparing you for exactly?

Vadasz:

It prepared you well for two things. One is if you wanted to be a machine operator with a good foundation, theoretical foundation working as a professional machine operator or a —

Vardalas:

A highly skilled operator —

Vadasz:

— a highly skilled machine operator. Or if you want to go into an engineering school.

Vadasz:

You probably would have had a hard time being an experienced scholar but that wasn't my interest —

Vardalas:

Yes, but this technical high school was seen as a step forward to the technical university.

Vadasz:

That's right.

Vardalas:

Before I go to the technical university, I'd like to ask you your memories of your parents. How did he make a living? What was his trade?

Vadasz:

My father's learned profession was carpentry. But he didn't practice that because his left hand was kind of atrophying over time. He was in the First World War and he caught a bullet in the hand. So he didn't have a very strong left arm. Instead, he became a house painter. My mother did odds and ends, sewing jobs. They were also the superintendents of the [apartment building] that we lived in, which gave us some money. These were the sources of monies.

Vardalas:

What kind of man was he? What are your memories of him?

Vadasz:

Well he was really, with me, very flexible, and he never really was demanding. I would say very lenient about what I wanted to do. He was kind of sympathetic towards a socialist regime. He had a strong feeling of social justice.

Vardalas:

Were there political discussions at the table?

Vadasz:

He certainly was more positive toward the Russians who basically freed us. But there were not really any heavy political discussions in our house. He wasn't actually involved in politics. He certainly appreciated an orderly system. He would probably not have been a very good entrepreneur. I don't think that was calling. My mother [on the other hand] would have been. She could find opportunities in a lot of things; making a little money here and making a little money there. But generally it all involved picking up a new skill. Like once there was suddenly some money to be made in weaving plastic baskets. She learned how to weave baskets, brought the material home, and was weaving baskets.

Vardalas:

It sounds like she had a real influence on you.

Vadasz:

Yes, I think on that side she was probably more influential.

Vardalas:

What was the technical university in Budapest called?

Vadasz:

Yes, it was an agricultural machinery —

Vardalas:

Before we get to that, did you have high school friends?

Vadasz:

Yes. Well I had a number of memories there [chuckling]. I had a friend, actually he and I came out together. He and I lived in the same house. And he ended up in Australia and I ended up here.

Vardalas:

You said that when you came out, you left Budapest together?

Vadasz:

And another friend from high school who is also in Australia: one is in Sydney the other in Melbourne. I have a friend who stayed back and became an engineer there and had his engineering career there. I had a friend who just recently found me. He ended up in Toronto. I had two friends who were musicians. They were gypsies and very good musicians. One of them passed away, the other is still back there playing music.

Vardalas:

Was that frowned upon, having friends as gypsies in Hungary?

Vadasz:

I don't know. When you go through the experiences that we did together, I was more worried about how people looked at me than how people look at my friends [chuckling].

Vardalas:

What do you mean look at you?

Vadasz:

Well we didn't advertise our Jewishness. I mean it's not something that you wave a flag about when you almost get killed over it. And it's not that you hide it but it's not something you advertise.

Vardalas:

But you weren't a very religious family.

Vadasz:

Although there were practices in our home because of my grandmother who was a much more religious person.

Vardalas:

Have you lost contact with all these friends?

Vadasz:

Well sometimes I have email exchanges with them. And in fact my friend from Sydney visited me about a year ago. I visited with the musician friend in 2004 when I went back in Hungary. But you know, time and distance, lack of common interests… only common history. It's hard. Plus my Hungarian is atrocious these days [laughing].

Vardalas:

But can you ever lose it?

Vadasz:

Well, I don't practice. I would probably regain it but it takes a lot of practice and I don't practice it.

Vardalas:

How was the education that you received in high school?

Vadasz:

I can only relate it to an experience I had in Montreal.

Vardalas:

OK.

Vadasz:

I was looking for a job.

Vardalas:

Yes?

Vadasz:

Uh, after six weeks —

Vardalas:

This was shortly after your arrival.

Vadasz:

Yes, shortly, arrival that was in the summer of '57. And I had a job in a photo development shop. I was basically sweeping the floor making $1 an hour. It wasn't very stimulating so I was looking for another job. And there was this job called “template maker” for heavy sheet metal. I applied for it. They gave me a set of drawings to see what I would do with it. And I looked, I looked. I suddenly recognized them. This is geometry that I had learned in high school. At that point I got really, really impressed with my high school education. I got the job and almost doubled my salary. It was great.

Vardalas:

So was the university you went to your first choice?

Vadasz:

McGill?

Vardalas:

No, no, not McGill —

Vadasz:

No that was my second choice —

Vardalas:

Oh really.

Vadasz:

There were two universities [in Hungary] One was Müszaki University. It didn't, they didn't take me for some reason. So I went to the second one.

Vardalas:

And you only spent one year there, right?

Vadasz:

Yes.

Vardalas:

And do any recollections stand out in terms of the nature of the education or the courses you took? You were preparing for mechanical engineering at that time —

Vadasz:

That's right. I found it very difficult sitting in a classroom with 200 other or 100 other students. It was very hard to follow. But I managed OK. But you're coming from a high school environment in which you are maybe 20, 30 in the class. And suddenly you are in a hall with 200 other people and the board is way, way, way far away. No big screens. It was hard.

Emigration from Hungary

Vardalas:

You left after your first year. What prompted you to leave? Was it the uprising?

Vadasz:

The Hungarian uprising. And once the uprising happened, university shut down. Many other things shut down, and so there was an opportunity to leave.

Vardalas:

Was it something that was obvious to you? It was quite an adventure, quite the leap to go somewhere you don't know anything about.

Vadasz:

Well yes. You have to look at two things. There's a bit of you’re running from and there's a bit of running to. You're running from a very recent past of persecution where the environment is very uncertain. You don't know what's going to happen. A very limiting environment even if it doesn't happen, to a place where in your mind's eye there is hope. There are people who made their life. People made — their careers and you don't necessarily know how but your image — it's a very superficial image and it is a very positive one. And your fear of your past is a very real one. And so that's an environment in which it's very easy to come to a decision —

Vardalas:

How was this worked out within the family?

Vadasz:

My parents wanted me to go. The reason why they wouldn't come at that time was because my grandmother was still living with us and she was in her 80s. And you don't take an 80-year old woman for an excursion like this.

Vardalas:

So once you decided to leave how did you plan your exit?

Vadasz:

My aunt and uncle were leaving and I just hitched a ride.

Vardalas:

That's it.

Vadasz:

That's it. That's it.

Vardalas:

And hitched a ride to?

Vadasz:

Austria.

Vardalas:

Austria. In what towns were you in?

Vadasz:

I stayed in Vienna and in Linz.

Vardalas:

How did you find that environment? On one occasion you referred to other people, refugees like yourself, but who have been forgotten. How do you recall that time?

Vadasz:

Yes.

Vardalas:

— what is your recollection of all of your stay in Vienna, personally?

Vadasz:

Well as you know, you are 20 years old. You are in a city you've never been before. You're just kind of gawking a lot, but certainly you are in an unsettled situation and you don't quite know what's going to happen but certainly the fear is kind of gone. And it’s more of anticipation.

Vardalas:

OK, alright. So how did you make your next move? I mean, you’re in Linz, you’re in Vienna, how did you get to Canada? Or how did you find Canada? How did Canada find you?

Vadasz:

Canada found me. I wanted to go to Australia.

Vardalas:

With your other high school friend.

Vadasz:

That’s right, and I missed the quota I guess, and I couldn’t get there. So the first opportunity that came up … they were advertising for college students in Canada. Well they weren’t advertising. There was available space and I signed up.

Vardalas:

Was it understood you’d be going to McGill when you signed up or were you just to go to Canada?

Vadasz:

No, I was going to Canada. And I frankly didn’t know about McGill, and ended up in a little town outside of Montreal and then McGill housed us.

Vardalas:

Tell me about your first weeks there, because I saw something about a jailhouse.

Vadasz:

Yes, we were in a jailhouse, housed there, very great hospitality; they gave us some winter jackets and boots.

Vardalas:

You were there right in the middle of winter, right?

Vadasz:

Oh yes, it was February, and I cannot say anything really but good about the hospitality at the end of reception we had. Then we went up to Montreal, we were there just temporarily.

Vardalas:

So you get there, you hardly speak any English.

Vadasz:

I didn’t speak English.

Vardalas:

And they didn’t speak much either. They spoke French. So how did this work out? Hands up and down?

Vadasz:

I guess. Somehow people can communicate if they have to [laughter].

Vardalas:

I gather you spent the rest of the time learning English?

Vadasz:

Six weeks course.

Vardalas:

And some Canadian agency supported you and paid for this?

Vadasz:

It might have been McGill and some Canadian agency.

Vardalas:

Oh, McGill, McGill sent you to this.

Vadasz:

Yes, that’s right. McGill provided us with housing - room and board. On McTavish Street there was a home. A British lady who came in and taught us English for six weeks. Then we were basically asked to leave and find our own place and work.

Vardalas:

This is when you found that job at the photo shop.

Vadasz:

Yes, that’s right.

McGill University

Vardalas:

Did you have any intention of going to the university when you got here? When did you say to yourself “I’m going to the university”?

Vadasz:

I’ll tell you at what point. When I was working at the template making company. We were working in heavy sheet metal. The boss of the place who was in charge of this little shop was an English man. All the workers were French, and there was me sort of in between the boss and the workers. And I have to say I didn’t feel particularly comfortable.

Vardalas:

Because neither side really had appreciation for you?

Vadasz:

No, the British guy was OK. But I was not very comfortable with the—I couldn’t fit in. And I’m sure they didn’t like that here was this foreigner whose first job is to learn English in a French speaking country. And you know, in a way, they had a point, but the fact of the matter is I didn’t feel very comfortable. I increasingly felt that if I wanted to make something out of this—my life, my pretty face was not going to get me too far, and so I had better learn something [laughter]. And so I applied to McGill. The good news was that McGill knew that us Hungarian refugees were not going to pass any kind of English entrance exam, and so they only gave us a math entrance exam which was no issue for me. I got accepted.

Vardalas:

You didn’t go into mechanical engineering. I don’t even know if they offered it. You went into engineering physics.

Vadasz:

Yes.

Vardalas:

Why this choice made?

Vadasz:

I got increasingly fascinated with electronics. Frankly solid state physics started to the very early —

Vardalas:

And you were aware of it even then?

Vadasz:

I was beginning to be aware, and the more aware I read, especially engineering physics to me was more of a directional thing that I can specialize later in whatever I want to, but as I got into engineering physics I really got more and more interested in solid state physics and solid state —

Vardalas:

But there was never any intention at the beginning to do mechanical engineering.

Vadasz:

No, never any desire to do mechanical engineering, because I felt that electronics was really the coming field. Now, truth be told, even today there’s increasingly more need for mechanical engineers and civil engineers and-

Vardalas:

Yes, a lot of people that I know in the disk-drive business are mechanical engineers. Why didn’t you switch to physics?

Vadasz:

I wanted to be in engineering.

Vardalas:

What were the courses like? Thinking back, were they a good cross-section of what was known in engineering then? Were they hands-on kinds of courses? Because engineering physics sounds very theoretical to me.

Vadasz:

There were lab courses. In fact I was employed in the summer by the physics department to deal with some of the laboratory equipment. During the year I also earned some extra money as a lab assistant. So there was enough hands-on, plus we even had to go take a course in surveying during the summer. No, actually I think it was during May, we went to a place for several weeks to do a surveying project.

Vardalas:

I think all engineers had to do a surveying project.

Vadasz:

Yes. It was good. It was good.

Vardalas:

During this time, were you communicating with your family back in Hungary?

Vadasz:

My family came out to Montreal in ’58.

Vardalas:

Oh so you got them out in ’58, and from then on they were with you. When you moved to the US did they come with you?

Vadasz:

No, they stayed in Montreal.

Vardalas:

It wasn’t that long after you left that your grandma had passed away?

Vadasz:

Yes.

Vardalas:

So you weren’t totally alone? You had family support after a certain number of years in Montreal. How did you find yourself integrating with the other students in Montreal, at McGill?

Vadasz:

I didn’t have a very robust social life. I can’t say that. It was OK, I think the natives found communication a little trying with us foreigners but it was alright.

Vardalas:

In your last year, before graduation, you were looking for a job. You’ve stated that you had a lot of frustration finding one in Canada.

Vadasz:

Yes.

Vardalas:

Did you approach the RCAs and the Sperrys of Canada?

Vadasz:

Well I applied.

Vardalas:

How did you go about finding a job?

Vadasz:

Companies came to the university. There was an interview schedule that you signed up to. Then you either got invited or not invited to any kind of follow-up. Mostly I was not invited. I was invited to Northern Electric, which is the parent firm of Nortel, and I was actually offered a sales engineer job. And I think that I would have been a disaster as a sales engineer. Aside from your interest, the other thing is that a sales engineer really had to have much better command of English language than I had.

Early Career at Transitron

Vardalas:

Transitron was the other successful job interview at McGill. Do you recall the interview process? Was it straight forward?

Vadasz:

Yes. It was straight forward. Then they invited us, some of us down for a second part - for another interview. That was my first trip to the US. It was an interesting experience. They offered me a job. So then I had the job, but I did not have the permit to come to the US. It was taking time, taking time—finally in the fall I go, it must have been around September by then already. Until then I was just dangling about in Montreal.

Vardalas:

What was Transitron like? What were your first projects in Transitron, what were you put to do when you got there? Obviously you were in semiconductors.

Vadasz:

Yes, semiconductor. Initially, it was more closely related to the materials side of things than to the device or circuit side. And so it allowed me to again learn about processing of material, measuring properties of material, working on projects that basically were some government contracts. We were looking at characteristics of material and devices in terms of the process that you used.

Vardalas:

How did you find that?

Vadasz:

It was very good. It was great learning; it was a great learning, because again you understood behavior based on fundamentals. It was sort of like building on top of the other.

Vardalas:

Did the McGill education prepare you for this kind of work?

Vadasz:

Oh yes.

Vardalas:

You felt totally confident when you walked in there?

Vadasz:

No problem, no problem whatsoever.

Fairchild and the Idea of Silicon Gate

Vardalas:

I’m led to believe that you may have published a paper on MOS technology. How did you get to MOS?

Vadasz:

Well don’t forget that by the time I left in ’64 there was a lot of activity in MOS and my boss at that time, before I left, a fellow by the name of Dave Root, got very interested in some aspects of MOS. So I got very interested and I was allowed to work on it.

Vardalas:

Do you remember what the paper was about?

Vadasz:

I could find it somewhere. I probably have a copy of it, but not here—it’s in Sonoma.

Vardalas:

I’d like to make a copy of it, I find it very interesting. Is this when you first got convinced that MOS was the way to go?

Vadasz:

Oh, it came bit by bit. It was just an interesting thing at that time. But by the time I went to Fairchild in ’64 I was really convinced that MOS was the way to go.

Vardalas:

Can you articulate why you thought it was the way to go? Based on the bipolar technology of the day, it wasn’t necessarily the obvious winner.

Vadasz:

Again, if you restrict your view to transistors for integrated circuit, which have to faster, and faster, and faster, and faster, you obviously come to the conclusion that MOS is the wrong choice. But if you take a higher level view--“what’s the function I’m trying to do?” And potentially with this MOS I can integrate all of that into one chip so I don’t have to worry about the slow interfaces between components …

Vardalas:

And that kind of perception came to you as a young engineer?

Vadasz:

Oh yes.

Vardalas:

How did the opportunity at Fairchild come to you?

Vadasz:

I started interviewing in early ’64 for another job because it was time to leave, Transitron was going nowhere, and I felt that I was not going to learn enough. I really had this thing at the beginning of my career that I had to accumulate as much knowledge as I could.

Vardalas:

That seems to be something in your whole career.

Vadasz:

It seems like it. And because time is running out, I’m not learning enough, I’ve been here long enough and I’m not learning enough, have to move to where I have better opportunity to learn. The holy grail was Fairchild R&D. I interviewed Sprague, IBM, Fiscal[?], Westinghouse in Baltimore, and Fairchild R&D, and I got job offers in all cases. Which obviously made my head swell, probably, and I obviously wanted to go to Fairchild, and that’s what I did.

Vardalas:

When you went there, what was your expectation? Did you have your mind set on MOS work or just any solid state work?

Vadasz:

Any solid state work I was willing to do, but initially I was in a bipolar group.

Vardalas:

They put you in a - -TCL logic according to what this says.

Vadasz:

Yes, CTL logic.

Vardalas:

Was this the first kind of experience you had in circuit design?

Vadasz:

Basically the first kind of experience in circuit design.

Vardalas:

Was this a big learning—another big learning step for you or--?

Vadasz:

Yes it was. Obviously from every experience you learn but this was pretty simple stuff compared to what we did later.

Vardalas:

I’m trying to understand your transition within Fairchild. How, starting in a bipolar project, you find your way over to MOS within that same firm.

Vadasz:

Well, I don’t recall the exact details. I was in this bipolar group, then there was some reorganization within the R&D. Now you are really going way down there, I have way down in my cranium to try to remember. And we became part of a big group within the R&D of digital integrated circuits, or digital integrated systems or something of that sort. And very soon after that there was an opportunity to split up into more logical groupings. One group was the MOS engineering section. And I had the opportunity to head that.

Vardalas:

Did you ask for it? Was it given to you? Do you remember any of that?

Vadasz:

I think I asked for it, if I remember, I think I asked for it.

Vardalas:

Now you were in what you wanted to do. You were put in charge of a group, how big was this group?

Vadasz:

I mean, probably something less than a dozen. But we had our own little pilot line.

Vardalas:

What did you understand MOS to mean within Fairchild’s - - commercial strategies, did you have a sense of what MOS meant to Fairchild? Was it seen as a pivotal technology at Fairchild? How did you envision MOS within Fairchild at this point?

Vadasz:

By that time it had a checkered history because Fairchild did some good R&D work, and one of its key people left to form a company. So Fairchild had continued to do a lot of R&D work, particularly in the physics area, but in the manufacturing organization Fairchild had no product based on MOS. When our work started we didn’t quite know. We felt that it was an important R&D work. But we had no clear idea how we were going to transfer anything into manufacturing. Somewhere along the line the manufacturing organization felt that they needed an MOS technology, and they started to work on it on their own —

Vardalas:

On their own?

Vadasz:

On their own.

Vardalas:

So did you two link up at all?

Vadasz:

Well eventually something happened, there was some coordination activity, but it was kind of like two porcupines mating. It was not a very easy relationship. Fairchild R&D had a chronic problem of transferring technology to Fairchild manufacturing. That was a major weakness I think of the organization. And so I remember distinctly having various coordinating meetings between the two.

Vardalas:

Did you see this problem at the time?

Vadasz:

Oh yes. It hit you in the face very soon after you landed.

Vardalas:

Did you try to have a solution to it, or you felt that it was too much bigger than you were?

Vadasz:

At that time I felt that problem was much bigger than I could handle. I was one of the four or five participants in the group, which included Gordon Moore, two people from the manufacturing side, and myself, and maybe a couple of others.

Vardalas:

OK.

Vadasz:

To try to coordinate and…

Vardalas:

Right, and that was the total coordinating group? And how did that go?

Vadasz:

Well, you know basically they were working on the current day MOS technology. I think around the time when we left they got something on the market, but by that time I was really focusing on silicon gate technology. They were happy that they didn’t have to worry about us because we were out there in silicon gate land and we were kind of happy that they were doing something at least in MOS.

Vardalas:

When did you first hear, come upon the silicon gate? From Bell Labs?

Vadasz:

Yes, it was one of the procedures of the R&D lab that when you go to a conference, you come back and debrief the rest of the people, and one of the scientists from the physics department, Ed Snow —

Vardalas:

Ed Snow, you said?

Vadasz:

Yes. He came back reporting about what he heard, and he talked about silicon gate, but I don’t know if he heard these Bell scientists talk about it. He also found out at this conference that Bell Lab kind of dropped the project. They had no interest in pursuing it.

Vardalas:

So first of all, before you go on, what attracted you to this concept of silicon gate, I gather you latched onto it.

Vadasz:

Oh, I mean, to me it was like a light bulb going off, that hey, this is obvious, this is the way to get over the problems of MOS manufacturing. You see with all of the potential of MOS, its Achilles heel was the need for very easily controlled manufacturing environment, because reliability issues were very difficult to control. As a secondary element, you really lost a lot of the circuit capability by having the gate and the metal alignment as a separate mask. You know, you do your source of drain, and your gate had to be aligned over the source and drain, and then you had a very high capacitive coupling between the source or the drain and the gate. And so, what we tried to do was a self-aligned gate, which means that you put down the gate material, and use that as a diffusion edge for source and drain to precisely define it. We were experimenting with molybdenum, because molybdenum supposedly is a metal that you’re able to process at high temperatures. Maybe we could do that. It was a disaster, it didn’t work, and then I hear about this silicon gate, and now I hear “huh, there is a piece of silicon as the gate,” which is the same material as we have everywhere and we buried the whole thing, then we solved many of the reliability issues, it was an obvious “ah-ha!”

Vardalas:

I gather with the metal gate the problem was the diffusion of ions?

Vadasz:

Yes, the metal ions were all over the surface, and then you’re creating a sort of a fringing field that created unstable voltage —

Vardalas:

So Bell dropped it because they found it too difficult? Why did you think that you could see something that Bell couldn’t —

Vadasz:

I couldn’t figure out, and even today, I’m not sure why on earth they did drop it.

Vardalas:

A rather interesting question.

Vadasz:

Yes, that’s an interesting question. I heard that there was some talk about that well, you’re using silicon as the gate, and as time goes on the resistivity of the silicon is going to be a problem. Well that is such far out in the future if that was the problem, I don’t understand. We all made bad decisions, but in the list of top ten bad decisions ever, that had to be one of them.

Vardalas:

So the silicon gate grabbed you, just like that. It was an epiphany. It was obvious.

Vadasz:

Yes.

Vardalas:

That solved all your problems.

Vadasz:

Yep.

Vardalas:

And for the record, the silicon gate is really the seed, the core that made everything work after that. In other words, the development of all of those MOS technologies really starts with the silicon gate.

Vadasz:

The silicon gate became the predominant manufacturing method for most of the business or almost all of the business in MOS.

Vardalas:

Am I correct in saying that you launched the silicon gate? What was your strategy? How did you get the team going in this direction? Do you recall that?

Vadasz:

Well basically, the first I convinced Gordon and Andy.

Vardalas:

Was that easy to do?

Vadasz:

Quite easy. I think they saw the logic and they let me do it.

Vardalas:

Why do you think Bell dropped it?

Vadasz:

Oh that puzzled us. We couldn't figure it out.

Vardalas:

Did you use your same team now to do this?

Vadasz:

Yes. I hired a fellow, Frederico Faggin, to spearhead the project. Tom Cline and Frederico Faggin, those were the two key people.

Vardalas:

Was it with Faggin that you had the first proof of concept? Was there anything manufacturable yet?

Vadasz:

Well, we made some devices. I don't remember exactly how far we got before I left Fairchild. I mean we did have some proof of concept and there's no question. How far we had gone, I really don't remember. That was '68.

Vardalas:

Which is just before you left for Intel wasn't it?

Vadasz:

Yes, that's right. I left in July '68. I got excited about the silicon gate in the latter part of '67, I think. So the project probably started late '67, early '68. We were six, seven months [into it when I left]. I think we were trying to use a multiplexer as a test vehicle; basically a number of transistors in parallel, multiplexing the signal from different paths into an amplifier. But for the life of me, I don't know exactly how far we were.

Vardalas:

Did you feel that enough progress was being made while you were there?

Vadasz:

I feel that there was enough progress made that when Intel started, I wanted to do it with silicon gate. It was not ready for manufacturing but I felt that it was the technology that was going to be the winning technology. And so I wanted us to do it. And Andy and Gordon, again, agreed to that. Now as it turns out, it was much more difficult to get the last little details ironed out than any of us expected.

Vardalas:

Why couldn't Fairchild do it? They weren't committed enough to it—?

Vadasz:

No. I'm convinced, without knowing, that the difficulties of transitioning ideas from R&D into manufacturing was a major cause. Because the environment [for that transition] was very difficult at Fairchild.

Vardalas:

In an interview that I did with Faggin, he makes reference to the fact that he was frustrated after you left, telling his Fairchild people that “Intel's onto us already. We've got to move, we've got to move.” And they kept telling him “don't worry about it.”

Vadasz:

I'm not surprised. I'm not surprised but that's probably the same issue from a different angle.

Vardalas:

And I will get to it later, but the silicon gate concept was at one point easy to grasp, but to finish it off as a manufacturing thing, that was really hard —

Vadasz:

The devil is always in the details. And there were lots of details that we had to work through. But we had a major advantage. We were doing our development in a manufacturing line. We basically had one line. That line was going to be used for developing a process and then ramped up.

Vardalas:

So you didn't repeat the mistake that Fairchild did —

Vadasz:

That's right. When we started Intel we really tried to think through some of the issues of technology transfer that were difficult at Fairchild and which we wanted to avoid. And we tried to do whatever we could think of organizationally to avoid the difficulty of technology transfer.

Vardalas:

On that note we will end this interview session and continue in the next session. Thank you.

Part 2 of Oral History with Leslie Vadasz

November 1, 2010

In Los Altos, CA

Conducted by John Vardalas, IEEE History Center Interview #545-A

Intel Capital

Vardalas:

It is Monday, November 1st, 2010. I’m in the home of Les Vadasz. This is the second interview we’re doing on his life. Thank you again for agreeing. In your career, I notice that a good portion of your energies were spent in a part of Intel called Intel Capital. What was Intel Capital about? And what did it attempt to achieve?

Vadasz:

Basically, Intel Capital was a business development function for the company. In fact, in the early phase, we even called it “corporate business development.” After several years of developing it, it was more logical to give it a name that people were able to understand that, yes, we did make significant investments. As a business development function, Intel Capital really had to link into the operating strategies of the company. So in effect what we did was invest in the directions that served the current and future business interests of the company. On top of that, we also … let me just back up just a little bit.

Initially, when we created this investment function, we had a relatively modest goal in mind: to create some consistency between the various divisions’ ability to acquire products and technologies. As time went on, we realized that we could do much more. We could influence how new market opportunities were created for the company and in a number of notable cases, Intel Capital was at the core of new market segments. Cable modem is one example. Intel Capital was also heavily involved in the proliferation of Wi-Fi in the marketplace. More generally, Intel Capital was very heavily involved in the whole area of making the personal computer also into a communication device.

Vardalas:

What was it about Intel Capital that allowed it to do these things?

Vadasz:

Intel Capital was not unique in a sense that it made investments. There were many companies who made strategic investments. Many times when companies decide to do strategic investments, they look to their finance organization to make these investments. The problem is that, many times, the strategic business link gets broken between the business units and the investment arm.

At Intel we had the other problem where each of the business units made small investments in the narrow interest of their business. If you take half a dozen or so business units and they each invest, to the best of their knowledge, you may end up with a bit of an inconsistent picture of just how to do investments, and sometimes, even do things that may not be the wisest thing for Intel to do in regards to a small company in which it is investing. So one has to be careful. Initially, we tried to just make sure that what we did was effectively and consistently protecting our business interest as well as the company’s overall interest, while also giving to the companies in which we invest the opportunity to deal with us, and be more successful in the market.

Now, once you develop this capability and you see how you’re able to work with companies in the market, you extend beyond that. But initially, it was really that modest goal of creating a consistent investment methodology across the company.

Vardalas:

How was Intel Capital structured?

Vadasz:

What was unique about the Intel Capital structure was the heavy reliance on matrix structures. In other words, we did not create a stand-alone investment arm. We created an investment arm where many of the people didn’t report directly into Intel Capital. Instead, they were part of an existing operating unit, legal organization or the finance organization within Intel. It didn’t matter where their salary came from; the review process included both their business development role or whatever other role they may have had. The important thing was that they felt an integral part of a local business strategy while, at the same time, they reported into a business development function which was centralized.

And so, the legal, financial, and the strategic consistency were always there. For every deal, we asked ourselves, “why do we do this? What is the measure of success?”

Vardalas:

And did you have a separate measure of success for each deal?

Vadasz:

For each deal we had a separate measure of success, and we evaluated each deal over time against the reasoning that we set at the beginning. Whether they were successful or not. Some deals may have been financially successful, but strategically did not accomplish the purpose. Some deals had both. Other deals may have been only strategically successful which is sometimes very hard to do, because a company that doesn’t succeed in the market is not going to have a great deal of ability to help you in the long run. You may end up with a piece of technology and then that technology has a life of its own. But, it’s hard.

Vardalas:

Did this process then encourage the various participants who were part of Intel Capital to picture their particular needs within a more global perspective? Was that part of the logic: to make sure that the investment fit into an overall strategy as opposed to a particular business unit’s strategy?

Vadasz:

Well, let me answer this way. A business unit had a strategy which had to fit the corporate strategy. So, as long as they worked on the business unit strategy, almost by definition, they worked on the corporate strategy.

Vardalas:

OK. You use the words “strategic investment.” I gather you’re differentiating that from investments for pure financial return.

Vadasz:

Yes. In a venture capital world, it’s a hard job. The venture capital community’s job is to make a financial return on the money invested. So it’s cash on cash, in effect. When you make an investment in a corporate setting, a strategic investment in a corporate setting, you have to look at how the investment fits with the company’s business strategy. That has to be one of the vectors. You also have to look at the potential financial success of the company in which you invest because again, as I mentioned before, if a company doesn’t succeed financially on its own, it’s very hard to see that they’re going to be very important for our business. You look at financial success and business relevance and then really try to select in this overlap area.

Vardalas:

What was the difference between investing in companies because they had some piece of technology that Intel felt important to understand or to have and outright acquisition of that company? How often was it more than just a small investment? Was it to help them with their R&D? Was it to tie up equity ownership in the firm?

Vadasz:

Well, let me give you an example: Smart Technologies. It was using a PC as a driver to display data on a big screen. And then interact with the big screen through some electronic marker and feed that interaction back into the computer. That piece of technology was interesting to us because we wanted to use the personal computer as a communication device. But it really was just part of the total business that Smart Technologies was doing. It was a piece of technology that had relevance to our strategic interest. They needed it, but their business was somewhere else. And so it would have made no sense to acquire them. It made a lot of sense to invest in them, to help them develop that technology further. As part of the deal that we made, we had access to that piece of technology for the area where we needed it.

Vardalas:

So the extent of the strategic investment depended on the extent to which this piece of technology occupied the company’s overall business, and how important it was to your clients.

Vadasz:

That’s right.

Vardalas:

Oh, I see, I see.

Vadasz:

Do you want to develop the capability on your own or accelerate your ability to go to market by acquiring a company? Acquisitions are not easy because of the problem of integration. But if your ability to accelerate your entry into the market is increased, despite the problem of integration, then you go ahead.

Vardalas:

I gather then that Intel Capital also served as a corporate service to help units. Is that right?

Vadasz:

Yes. I want to make it clear that business units were always responsible for setting their strategic direction. As a result, when the company decided to acquire something, it is the business unit’s job to lead the acquisition, to integrate the capability into the direction of their future business. On the other hand, we had a very competitive, very competent investment arm. With all the legal and financial savvy that you would expect from virtually any firm. There was absolutely no reason for most acquisitions to go outside for those services. Instead it could basically utilize the operational and strategic capability of the Intel Capital unit.

Vardalas:

It was an in-house competence.

Vadasz:

That’s right, that’s right. So over time we were making some very effective business deals to acquire.

Vardalas:

By the time you left Intel, what were the kinds of budgets Intel Capital was playing with?

Vadasz:

We had set our goals into the multi-hundred million dollars up to, I believe, the highest goal we ever set—about a billion dollars. So it was a very large investment budget and it was also pretty successful on the return—

Vardalas:

It was.

Vadasz:

—cash on cash return basis.

Vardalas:

To whom did Intel Capital and you report? To the board directly?

Vadasz:

Well, first of all, I reported to the CEO. And like most of the other business activities in the company, we reviewed our activities periodically to the board. When we set the guidelines on the kind of investment level that we wanted in the coming year, we discussed it with the board. There’s only a certain capacity that you have to make reasonable investments. So, you know, we had this discussion, could we do more or should we do less. There were back and forth discussions and the board was involved.

Vardalas:

I gather Intel was one of the few doing this concept. Was it was rather unique? What would you say?

Vadasz:

I think the way we did it was pretty unique. I think probably that the integration with a company’s business activity is being done more frequently today than it was done in the past. So, instead of a separate function, it’s really an integrated role with the business unit. I think that is what we really brought to the party. The element of looking at future business and having a reasonable impact on it, I think, was pretty unique.

Vardalas:

What stands out in your mind about getting this thing set up and running? What do you remember about getting buy-in from everybody?

Vadasz:

It helped that I was there from the beginning and I understood how the company worked. I understood how to make things work within a complex organization. I think that it helped a great deal. And if you don’t have that experience and don’t have the right reporting level— if it’s just in the bowels of the organization somewhere, a function like this, I don’t think it could have been made to work. I think that it helped having it built around a senior person in the company and having used the kind of thought processes that we did to understanding what was needed to do to make it work, and having aligned the business units to this kind of thing.

Vardalas:

So, the fact that Les Vadasz was put in charge of this already was a key to its success.

Vadasz:

I think it was important.

Vardalas:

Because of your experience in the firm, your understanding of the firm, and your senior status in the firm.

Vadasz:

I think so. That’s right. I think that was very important.

Vardalas:

So, isn’t that a message, you think?

Vadasz:

Since I retired, people ask me about how could they build an Intel Capital activity. I keep telling them: “number one, make sure that it reports to the CEO, not in the bowels of the organization; number two, build it around a seasoned executive inside the company who knows how the company works.”

Vardalas:

Don’t bring an outsider in.

Vadasz:

Don’t bring it around an outsider. Eventually you can bring in an outsider and have that person growing to that role by learning the company, but if you bring in an outsider who doesn’t even know where the bathroom is, it’s not going to work. Because you have to have the relations with the various people to make them feel comfortable, and feel that it is to their benefit. By and large it was to their benefit

Computer as Communications Device

Vardalas:

Did Intel Capital ever think of itself as making internal investments?

Vadasz:

Over time we did do some internal investments. It was really a minor element of the total. Again, it was all about “what did you need to do to make things work?” And let me give you one of the early examples in the communication space, which I think was very, very important to the role of cable modems in internet communication, which is probably well known today. But what’s probably not well known is our role.

Vardalas:

Role?

Vadasz:

One of the elements of my career is that I had an opportunity to work with some really, really smart people. One of those really smart people is Avram Miller.

Vardalas:

Avram Miller?

Vadasz:

Yes, and it was his early baby. He basically discovered a little company that was making a modem where he was able to take high speed, I think, microwave, communication and convert it into data access for computers. And from there, the step to a modem that uses the cable infrastructure for data transmission, internet access, is a relatively small one. So we started to work with the company and, before you know it, we had a little box that was able to connect the personal computer to the internet infrastructure.

Vardalas:

Before you continue your story, but do you remember approximately what time period this was?

Vadasz:

Have to be early nineties.

Vardalas:

Early nineties. OK.

Vadasz:

Yes. Although I could probably check the date and give you a better—

Vardalas:

So how did you move this forward?

Vadasz:

Well, some of the people from the cable industry, who initially looked at it, and I’m not going to name names, but they kind of—

Vardalas:

Feel free to name names if you want to.

Vadasz:

No, I don’t want to, they kind of laughed at it. They just couldn’t believe it. What the heck is a PC doing in a cable environment?

Vardalas:

Did you show them publicly or privately?

Vadasz:

In fact we went to Anaheim one day to the cable show. In the middle of this hall, where all the hoopla was about cable TV and all its elements, there was this PC with internet access. Most people were kind of looking and asking “what the heck is the PC doing here?” But as we talked more and more, some of the technical people, eventually some of the executives in the cable industry started to really recognize that there may be something there. And that was also around the time when the cable industry started to make a large investment into the digital cable infrastructure. Actually there was one area where we did fund some internal work. We worked with the cable lab, with the cable industry’s research lab and we worked with a number of other companies. A cable modem slowly but surely started to emerge as a viable communication element for PCs to internet access.

Vardalas:

So, was this the first concrete manifestation of Intel’s strategy of looking at the computer as a communications device?

Vadasz:

It was one of the first, whether it was the first—

Vardalas:

It’s early on.

Vadasz:

Very early, very early on. And we really wanted to do whatever we could, as we saw the internet emerging, to make sure that the personal computer was an integral element to that new ecosystem. This new infrastructure they were developing was one of the ways to do that.

Vardalas:

And this is early on in, in the life of Intel Capital?

Vadasz:

That’s right.

Vardalas:

It was one of its first big projects—

Vadasz:

That’s right. I think that my only regret is in the direct business side of really selling what was inside these cable modems and the various component technologies. Intel really didn’t participate. It really became the business of many others, like Broadcom and others. The whole concept of having a cable modem, the whole concept of using the cable infrastructure as an internet access, really was heavily influenced by the work that Avram Miller and what his people did as part of Intel Capital.

Vardalas:

So, in other words, Intel Capital didn’t get a return investment on selling parts for a modem. What counted was the fact that the modem was a useful device that interfaced to a computer.

Vadasz:

That’s right. Now, we made investments in the various other companies that eventually became participants in this whole system. I can’t recall what the return on investment of capital was, but I think we did alright. But it didn’t become a direct business for Intel.

Vardalas:

Did you find the relationship, through Intel Capital, that Intel was having with the cable companies go easier and faster than it was with the telephone companies?

Vadasz:

Easier. The cable industry was in a far less regulated environment than the telephone company. So, I think that the cable industry was, at that time, and probably even today, a far more entrepreneurial environment. They saw the business opportunity fairly early because it’s so dovetailed with their digital cable strategy because in the case of digital cable you basically have the slots of bandwidths allocated to different channels. And internet was just a couple of more channels. So, it fit into that strategy. And it gave them a lot of bandwidth right away. They look at it and said, “Gee, that’s an extra revenue source.” And so they were much more aggressive at it than the telephone companies who were really bogged down with their dealings with the FCC.

Vardalas:

How did you get involved with Intel Capital? How were you put in there? Did you know about it and request it?

Vadasz:

I would prefer not to talk about some of this. Let’s put it this way, I generally like to be where I’m needed. I always believed that you focus on what’s needed to be done, that’s important somewhere along the line for your career as well. Intel Capital in a way was able to use all the learning that I had accumulated over a career of several decades.

Vardalas:

It seems to be a culmination and - -

Vadasz:

That’s right. That’s right.

Vardalas:

That put your engineering and your business experiences into one package.

Vadasz:

That’s right. Yes. It turned out to be one of the more enjoyable parts of my career because it did use all the elements: trying to understand how very different businesses work, trying to understand the various technologies, what could they be, how could they fit in and how to make organization, complex organizations work.

Vardalas:

Thinking back, did you learn something in the process?

Vadasz:

I think I learned a lot about the communication industry that I really didn’t know because that became such an important part of the total. I learned about the differences between working in a regulated environment versus in a free market environment like the computer business was. Dramatic difference.

Vardalas:

Well, that’s a nice segue. The Centrino product line and Wi-Fi were all wrapped up together as part of a bigger business strategy and Intel Capital was in the middle of that, too--am I correct in saying that?

Vadasz:

Yes, that’s correct.

Vardalas:

How did the Wi-Fi initiative first emerge?

Vadasz:

OK. Again, to follow the theme of the PC communication device, if you have a desktop, it may be logical to have a cable modem or a DSL or a hard line going into your wall, but when you have a laptop, you would like to really fully utilize the mobility associated with a laptop. You want to be able to open it up anywhere and just get on the internet like what we do today.

Vardalas:

Right.

Vadasz:

Now, back in the early 2000s, it wasn’t that obvious how one was going to do that. There were no standard data networks, if you will, wireless data networks. So, it was kind of hard. That’s when some people started to experiment with what was called Wi-Fi 802.11, IEEE spec. But even within the 802.11 there were a number of subtle variations. One device did not necessarily work with another device. And so, basically, we got behind it. We said if we are going to have a laptop operate on the internet through a wireless network, we need a standard network. What are we going to do to make it work?

So, we had our product development teams doing the CPU, the peripheral chips and the communication chips. We had some of our communication technologists working in standards bodies, with other companies, to come up with a version of the standard that everybody would use. We basically used Intel Capital investment capability to focus the industry’s interest in one direction.

We announced $100,000,000 funds for companies that pursued Wi-Fi and that was in many ways. It may have been a company that installed Wi-Fi in hotel rooms or in coffee shops or it may have been a company that developed some of the technology elements of Wi-Fi. By making that fairly large sum announcement, people suddenly said, “hmm, there is something to this. Let’s start lining up in one direction because that’s going to be a win-win for all the participants.”

Vardalas:

Right.

Vadasz:

And the venture community started investing alongside us. Companies started to work with us partly because of the direction we set, partly because of the financial investment we made in them, and today it’s kind of obvious. Today, you open up your laptop or you take your iPad and you connect to the internet.

Vardalas:

Now, this was all part of one strategy - -

Vadasz:

That’s right. That’s right.

Vardalas:

Was the Centrino on the course of being developed when the $100,000,000 announcement was made?

Vadasz:

Oh yes. It was an integral part. All that happened in parallel, and again, to me, this is the strength of being able to work in an effective complex organization like Intel. We had meetings where the various parts of Intel came together and we were just synchronizing each other’s activities into one direction and this was one activity. Intel Capital didn’t do anything different than your technologists who were working with IEEE. We were all part of the same overall activity.

Vardalas:

You make it sound so natural. Was this something that most high-tech companies were doing? Did Intel culture make this work a lot easier?

Vadasz:

I really don’t know. If you want to pursue a strategy which involves so many different parts of a corporation, you better have a way of working your structure internally so that the total is more than the sum of the parts. I look at Intel as the master of complex organizations. Making it work. And that, I think, is one of the accomplishments of Intel. It knew how to make a complex organization work.

Vardalas:

Couldn’t you say that it’s easy, when an organization gets as big as Intel got, after a certain point, that silos get developed and communications between groups becomes increasingly difficult? Intel didn’t have that problem, even as it grew? Did it maintain this effective communication between all the parts?

Vadasz:

Intel was in basically one business. And even though we had different divisions, in a way, you could argue that that was a strength and perhaps the weakness of the company. We were one business. Our manufacturing, even though it was a separate unit, really was part of the business of the CPUs or communication products.

Vardalas:

So, the Wi-Fi and Centrino must have been quite satisfying to you, in terms of the role that Intel Capital played.

Vadasz:

Oh, yes. Oh, yes. It was fun, too.

Vardalas:

It was fun.

Vadasz:

Very, very fun.

Vardalas:

Well, tell me about some of the fun. Is this when you got to experience the communication side and the regulators?

Vadasz:

Yes.

Vardalas:

I gather an important part of your role was to interface with the regulators.

Vadasz:

Yes.

Vardalas:

What was that experience like?

Vadasz:

Well, it started almost like an out-of-body experience. “I’m going to talk to the regulators!” The last thing you want to do is talk to regulators. Over time, however, you learn that they really are hardworking people, trying to do the right thing in a very difficult situation. In my time in dealing with the FCC and others, I learned a lot. The difficulty was that here was this computer industry which was more and more needing communication technology and a communication infrastructure to move forward. But the FCC, the Federal Communication Commission, was basically still working on the TV silo and telephone silo and a bunch of other stuff. Different silos. Internet was not something that they were involved in. Maybe that was good. They dealt with the cable companies or the wireless, the TV suppliers or the telephone companies. They didn’t deal with the computer companies. They didn’t know our needs. They didn’t know the directions. So a lot of it was really basically educating each other. I would have thought that it was going to be obvious for the telephone company to want to go into internet access. It turned out that, initially, they thought they were really taking care of the need of the computer industry by having more telephone lines where you could hang a modem on a telephone line, simple 20, 30, 50K bit modems. They said, “We’ve increased the number of telephone line capability by X percent, what else do you want?” “Well, how about DSL?”, we asked. Then we ran into a mindset which said, “Why should I invest in DSL? It’s an investment to me and I’m going to have to deal with it in the same way [as] my old lines. They are regulated. There’s no return on investment because I have to sell it to others at a very low rate. There’s no business in it to me.” The regulatory environment wasn’t conducive to encourage a business. The cable companies didn’t have that.

Vardalas:

So, did you feel that part of your task in interacting with the FCC was to get them to produce an environment that would facilitate the telephone companies doing more in this area?

Vadasz:

I think the FCC eventually, by talking to us and others, understood that it was a nascent technology, that information services, that should not be under the same regulatory regime as the old telephone lines that have been in the ground for decades. The telephone lines were under what they called Title II but information services were not and that was a very important development.

Vardalas:

How long did it take you? This obviously didn’t happen overnight.

Vadasz:

Oh yes. It was learning what each of us did. And I have to say there was very strong outreach by the FCC people to try to understand our needs and try to direct their regulatory activities in a more positive direction. Obviously, when you talk about regulation, everybody pushes and pulls in lots of directions but I hope they found our interaction with them to be as effective as I found them to really try to do the right thing.

Vardalas:

Earlier on you said putting more telephones--you were referring to the telephone companies putting in more lines, and putting up more modems. But you, i.e. Intel, were interested in broadband.

Vadasz:

We were interested in higher speed.

Vardalas:

Higher speed.

Vadasz:

Broadband. That’s right, because just the same way as you need higher speed, in regards to computing capability, when the computer is on the network, you also need higher speed communication capability to be effectively using the network.

Vardalas:

Going back to Wi-Fi standards, did Intel play a role in setting the standards for the Wi-Fi? Obviously it played a role, but was it a strong role?

Vadasz:

Oh, yes. Oh, yes. Oh, yes. Intel was a, and I assume it’s even true today, strong participant in setting communications standards - going all the way back to Ethernet.

Vardalas:

Is that right?

Vadasz:

Oh, yes. Going all the way back to Ethernet. That’s right. We worked with the Xerox PARC people and Digital Equipment Corporation. The three of us really worked on some of the first Ethernet chips.

Vardalas:

This was back into the ’80s?

Vadasz:

Yes that’s right.

Vardalas:

Oh, I see. I didn’t realize that. In regards to Wi-Fi standards, was there one dominant standard or were there competing standards? Were there competing interests in this or was it a question of getting everybody to find a common one?

Vadasz:

Well, you know, there is always a race to get your product to market. If you are ahead of your competition with your own variant of a standard, you really want to see your variant of a standard prevail over somebody else’s. If you are the somebody else, you may want to slow things down. The people are running ahead and want to make sure that whatever develops is more consistent with their time scale, et cetera, et cetera. So, the competitive element you can never remove when it comes to standards. Frankly, what was really the most important thing is that when you got to a hotel, no matter where that hotel was, you were able to open up your laptop and get on the network. It doesn’t have one of ten different variants of the network where you just don’t know what you get. So when it comes to ubiquity of a network, standardization is extremely important.

Vardalas:

But I gather that in terms of this competitive element in standards, Intel is very effective at doing this.

Vadasz:

Well, you know, when you are a significant vendor on the marketplace, you have a strong voice.

Vardalas:

Before leaving the topic of Intel Capital, have we expressed to your satisfaction the key ideas that made Intel Capital work and its accomplishments?

Vadasz:

Yes, I think the fact that it was a business development role with the financial savvy of venture capital and technology savvy of a company like Intel. And the flexibility to deal successfully with regulatory agencies on one hand, to arcane technical issues on the other.

Vardalas:

Let me ask you one thing more about your ecosystem idea. I understand that Intel Capital, and Intel as a whole, tried to influence this market ecosystem so that its business strategies nicely coupled to the environment out there. Was there ever a time when Intel Capital said, “The ecosystem is going this way and we have to adjust, readjust our internal strategies”? In other words, reshaping the internal to match the external ecosystem.

Vadasz:

Well, Intel Capital was in an enviable position that it saw a lot of things happening on the outside. All around the world, in Europe, China, Korea, US, everywhere, in universities and so on, our people were out looking at things that many times the people working in the lab on projects did not necessarily see. I think over time, you know, our ability to bring our people from the labs into some exciting new developments was very useful, very useful. When mobile devices, like smartphones, started to appear, obviously they were not built around PC technology. We made sure that our people in the lab understood that there is a trend here that we need to learn and we need to understand. We need to factor into our strategies the sort of indirect role of having people, our tentacles, if you will, in the technical community.

Vardalas:

What kind of relationship did Intel Capital promote with universities?

Vadasz:

I oversaw the function which invested into university research activities projects. It was pretty important to Intel Capital. David Tannenhouse, you probably know him, used to manage that activity. We basically funded university projects, PhD projects. We had some of our people, from our own labs, be liaisons with those projects.

Vardalas:

And did you enter the ROI the same way as you—

Vadasz:

No, no. That was basically just funding university projects, contributing to the education of people, establishing links with the faculty and the students. The number one ROI was being able, at the end of the road, perhaps to hire some of the smart people that came from the universities. We paid a lot of attention to good university relations. We looked at universities really as the central lab of the future, if you will.

Vardalas:

Was that directly part of Intel Capital or did a separate unit of Intel do this?

Vadasz:

Well, it reported to me.

Transition from Fairchild to Intel

Vardalas:

I’d like to take you back to when you first joined Intel, when you first became aware of the transition from Fairchild to Intel, which we talked about in the first interview. What are your recollections of Moore, Noyce and Groves’ decision to leave Fairchild, to create this new company, and your reaction to their request to join them? First of all, prior to you being asked to join, did you suspect at all that they were thinking of leaving and starting a new company? Did anyone suspect? Was it really out of the blue?

Vadasz:

Well, in a way, when it happened, it was out of the blue. I did not feel that Fairchild was a happy environment because I understood Gordon and Andy’s frustration. I didn’t know Bob that much. But, I think it’s been written a number of times that there was an East Coast company, Fairchild Camera and Instrument, running Fairchild Semiconductor, but it really didn’t understand the business very well. That was one element of the structure. Also, even within that company, I think that we talked about it maybe in another forum, Fairchild R&D on the one hand and the rest of Fairchild on the other. The business and manufacturing operations were like two separate worlds. And if you worked in R&D, you had the feeling that it was easier to transfer the result of your work to a brand new company than to an effective business activity of your company.

Vardalas:

And do you think that this wall between the two groups went back to the very structure of the company, the way it had been set up, or was this something that was this systemic to any organization that had a centralized R& D?

Vadasz:

Well, over time I came to believe that centralized R&D was not a very effective organizational structure. Certainly my Fairchild experience had a lot to do with that view. But if I look at it more globally, in the semiconductor scene, I think that generally is true. Central labs were, if you will, the trophy--some brilliant technologists work in various central labs. You take Bell Labs, RCA, IBM, and Xerox. Fairchild R&D, in a semiconductor business, was to me the pinnacle of knowledge. And when you look at their overall effectiveness in bringing their companies to success, you know, it’s not very good. I think it’s an organizational issue where many times you put some great technologists in charge of a lab and then you have business people running the business operations and they don’t speak each other’s language. The business people don’t perceive that these labs solve the problems that they have in their business. The technology people don’t necessarily appreciate what it takes to create a new product, a new business.

Vardalas:

So, there is this wall, this separation—

Vadasz:

That separation is almost built in. They are just different philosophies. And one of the very first decisions we made at Intel was not to have a central lab.

Vardalas:

It was almost as if your structure at Intel was based on what you knew not to do.

Vadasz:

That’s right.

Vardalas:

On the other hand, do you feel that, from the macro point of view, that these labs produced a great benefit to American society? But others took up the ideas and not the companies themselves. So in a sense, at the macro level, it was an incredible benefit for the US. With the Bells and the RCAs a lot was commercialized elsewhere. So the companies lost out, but society gained--but that’s not a business issue.

Vadasz:

Well, you’re right, there was a big gain for society overall. So if you recognize the problem that I’m in the business of running a business. And here is this central research activity that I’m not benefiting from in my business. Is there a better way to accomplish that capability? We became very strong believers, but also practitioners, of supporting university research as the central lab of the future.

Vardalas:

Interesting.

Vadasz:

You know, there’s no question. A tremendous amount of knowledge exists within the university environment. There’s no question that there is an eager, capable learning environment that is an integral part of universities, so—

Vardalas:

So, what you kept at Intel was the development part that was tied to the business unit—

Vadasz:

That’s right.

Vardalas:

—and the research was done at a university.

Vadasz:

That’s right. As we looked at it, research should be done at universities and current development done at Intel, or other companies, and there is a gray area where there has to be more interaction where the transition is made. And the world is full of gray areas, you know.

Vardalas:

Do you remember the circumstances when you first learned the news of Intel’s creation?

Vadasz:

Oh, it was in a relatively difficult circumstance. I was just coming back from Montreal, from the funeral of my father. And my wife, who was waiting for me at the airport, told me the news that they left Fairchild and that they would like to talk to me about joining the company.

Vardalas:

So, was there any hesitation on your part?

Vadasz:

Well, it’s very hard to hesitate when you have an opportunity to join a really world-class team. You are confident enough that you do not think, “Gee, what if it doesn’t work? Am I not going to be able to get a job?” I mean, that’s crazy. So I didn’t see or appreciate the risk. I really was very much excited about the opportunity.

Vardalas:

When you met with them, did they explain their project to you? Did they try to get you on board or did they just ask you to join them without an explanation?

Vadasz:

Well, no, it was a very simple concept. Semiconductor technology advanced to the level where we could make an effective business out of semiconductor memories, memories made out of semiconductors. There was a very high-volume need and the initial development could be amortized over a very high volume on a very complex, multi-thousand, multi-ten-thousand and on transistor chip. And that was the concept. And obviously, the highest density promise was in MOS. Obviously, my advocacy was that we should use silicon gate MOS. That was really the direction that we chose. We were going to try to make silicon gate work. We were going to try to make memories and create a memory business.

Vardalas:

So, that explains why they asked you to join them.

Vadasz:

That’s right.

Early Innovations at Intel

Vardalas:

I’d like to pursue how you made silicon gate work at Intel. The idea had been proposed already. You had been part of the process in Fairchild.

Vadasz:

Yes.

Vardalas:

The silicon gate idea had arisen as a possible idea, but it wasn’t going anywhere, or it wasn’t going fast enough.

Vadasz:

Well, no, that is not quite true. The first time silicon gate idea that I heard of was in roughly the fall of ’67 where one of our scientists came back from a conference where Bell Labs people were speaking about the silicon gate structure. Bell Labs developed the structure. I also remember that, through private conversations with the presenter, Ed Snow, one of our scientists at Fairchild understood that Bell Labs had no intention of continuing on with that project. So, it basically was in the garbage can. I got very excited about it. It seemed like it was going to solve a lot of problems and we started working on it. Work really started to accelerate in the early ’68 period and that’s when Frederico Faggin joined our group. My purpose for him was to work on the silicon gate. And we started to work on it when the Intel opportunity came around in July ’68. So, it was all happening in a very short period of time. From the fall of ’67--work on silicon gate started to accelerate in late ’67. Frederico joining us in early ’68 and leaving in mid-’68. So I cannot really say that it, it did not move fast. I can say that they did not put it into production.

Vardalas:

If Intel hadn’t been around, would a commercial silicon gate product have come out of Fairchild?

Vadasz:

Well, if history is an example, it probably would have not. But you never know.

Vardalas:

In an interview with Frederico, he told me that he was screaming at the Fairchild people: “Intel’s doing this. Why aren’t you doing it?” and he just got frustrated--

Vadasz:

Oh, I can very much sympathize with that. Again, sometimes a small company has really the advantage because you have to make it work. You don’t have a choice. You don’t make it work, you won’t be around. I remember talking, in the early ’68 period, to some of the operation guys at Fairchild, proposing this silicon gate and proposing a transfer vehicle that we should use … that we will develop in R&D, and then move the product into manufacturing. Probably, legitimately so, Marketing asked me: “Well, how many millions are we going to sell of this?” And I had no idea. I was looking at it as a transfer vehicle. Marketing was looking at it as a product and so we were like two ships passing in the dark. So, at Intel we had an integrated strategy. We had a little lab that worked on the development side. We had a little pilot line which worked on the development/early production side. We all worked together.

Vardalas:

So, the first silicon gate product was a 256-bit memory, is that correct?

Vadasz:

Yes.

Vardalas:

Was it the first product in which you intended to use the silicon gate?

Vadasz:

Yes.

Vardalas:

Is it obvious that a 256-bit memory would be chosen? Was that the obvious thing to do at the time?

Vadasz:

Obvious, no, it was really like building a spec house; you didn’t have a customer necessarily, but you thought that, “Well, I can build a spec house and I’ll find a customer.” We felt that it was about the right complexity. The economics looked like it was within the ballpark, that we could sell it for a certain price and there should be a market at that price. You may talk to some people and get some ideas. Would they use it? Yes, they could. No, they couldn’t. And, so, you do your best, and in a way you try to put your foot in the door and go from there.

Vardalas:

So, I gather that a 128-bit might have not been complex enough to work in the end.

Vadasz:

That’s right.

Vardalas:

And 512 would have been too difficult to do.

Vadasz:

Too expensive because they didn’t expect the kind of yields needed.

Vardalas:

How did you put together the team?

Vadasz:

Well, it was very heuristic. If I look at it from the overall company point of view, you hire some people for each of the main functions. You hire a manufacturing type, you hire an engineering type, a finance type, a sales marketing type and then you start building around them. I was on the engineering side, OK? And so I started to interview.

Vardalas:

Did you know who you were after? Did you know?

Vadasz:

No, no, no, no, there wasn’t an abundance of memory people, semiconductor memory people, because semiconductor memory was a zero billion dollar business. So, you hire engineers that you feel confident can move into that direction. You want some people with some MOS circuit design experience, people who have done it before at other companies, not necessarily memory technology, but MOS.

Vardalas:

Were there many around at that time?

Vadasz:

A few. I remember we hired Joel Carp. He had MOS experience and he was really the first memory design engineer that we had. And then we hired some people even from college very early. We hired some technicians to worry about the test equipment portion of it. Most of the test equipment we had to build on our own at the beginning because there was no memory testing capability in standard equipment and it was really heuristic.

Vardalas:

Were you getting a few from Fairchild applying? Did word get out?

Vadasz:

We had some, but we were very paranoid because quite a few of us came from Fairchild. Out of the first six, five came from Fairchild. So we were very paranoid that we shouldn’t really do much hiring from Fairchild.

Vardalas:

Probably a legal issue, too.

Vadasz:

Yes, you worry about it. You don’t know how it’s going to work out and the last thing you want to do is get yourself into legal entanglements.

Vardalas:

Did you feel the company was adequately financed? Did you have enough money to get this project properly going?

Vadasz:

I had no idea about the financial part of business at that time. That was a later learning for me. Really, I expected that we had money and that—

Vardalas:

You had what you wanted.

Vadasz:

That’s right. I had what I wanted. I didn’t want any more and I was very happy that Gordon and Bob took care of the finance side.

Vardalas:

You mentioned that the challenge of moving from the idea of making a memory based on silicon gate proved a lot longer to accomplish than initially thought and that--you tell me, and please elaborate--that it was a lot of small engineering parts that had to be done. Were these mostly manufacturing problems that had to be solved or some theoretical issues that had to be solved along the way, too?

Vadasz:

It was mainly about manufacturability. Making sure that the metal internal connection, contacts between the metal and silicon, were where you needed it and all kinds of little details--but the devil is in the detail. In order to succeed, you have to go through all these steps to finally make it manufacturable. And that was the interesting thing about MOS. The concept of MOS was very easy. But the silicon gate, in my mind, provided some really solid manufacturability where reliability was not an issue and you could just turn it out, turn the crank and turn it out in volume. You know, it turned out it was much harder to get there. But at the end of the day, all of that was true: that once you got there, it was a very reliable, very solid, a very manufacturable technology. I think it gave Intel probably years of technology leadership at that time, which they still maintain, in my opinion.

Vardalas:

You had to fight for every step along the way, many small steps and each one was not trivial. Did it prove frustrating for you at any point along the way?

Vadasz:

Oh, yes. Oh, yes--to the point that there were some thoughts going around that well, maybe we didn’t choose the right direction. Maybe silicon gate is not going to work. We cannot make it work. And I certainly wasn’t advocating that, but our confidence at the time—

Vardalas:

Did it bother you - -?

Vadasz:

Absolutely. It bothered me because I was beginning to doubt that maybe that’s not going to work. There was always one problem after the other. And the frustration was probably amplified when the opportunity came to put together a bipolar product, by another team. It was bang, bang, bang. We, Intel, turned out bipolar technology with a simple bipolar design, and in fact that became our first for-dollar shipment.

Vardalas:

It was the 3101, right? Or something like that. That’s your first commercial product.

Vadasz:

Yes, that’s right. Our first commercial product was a bipolar. Speaking of ego.

Vardalas:

At that point, for you, was it not devastating? It must have been a crushing blow to you.

Vadasz:

It was very uncomfortable. I didn’t like it. There were some statements attributed to Intel that we didn’t care which technology wins, but I did. I didn’t go to Intel to do bipolar 32-bit memory chips. I went to Intel to make MOS work. And when it didn’t work, it was frustrating

Vardalas:

And team morale?

Vadasz:

You know, when you’re in a startup, the morale ebbs and flows. The day when something works, everybody is jumping to the ceiling. When things don’t work you—

Vardalas:

I guess then at some point there was some rivalry between the two groups, in a sense that now they have a commercial product, and you’re trying to get this thing going so you can prove that silicon gate MOS is the way to go. Was there friendly rivalry or was there—

Vadasz:

I don’t know if rivalry is the right term.

Vardalas:

You just told me you didn’t go there to do bipolar work.

Vadasz:

Yes. I didn’t think there was a huge business opportunity in that and so I was not interested. But, in my career, I’ve done bipolar work. I understood the technology. I, on the other hand, I understood it’s limitations as well. I don’t think today we would have the personal computer as we know it or all the communication devices like smartphones as we know it without MOS.

Vardalas:

At that time, it wasn’t clear.

Vadasz:

It wasn’t clear but what you knew was that the bipolar direction had a very serious limitation. And I don’t know whether it was a competition. Even the smartest, most foresighted bipolar advocates, I think, recognized that bipolar had the limitation and for them MOS was somewhere in the future - not ready for prime time. I thought we were ready for prime time.

Pioneering Semiconductor Memory

Vardalas:

OK. I’d like to continue with the work that went on from ’68 to ’72 or in this area. I want to pursue your recollections of EPROM and flash memory. Chronologically it’s EPROM first and then flash memory—

Vadasz:

Well, the flash memory is an evolution from the early EPROM.

Vardalas:

OK.

Vadasz:

And it’s all based on the same physical phenomena. And this is one of those serendipities that happened in technology. Here I’m probably going to get a bit arcane in my description. As part of our development of the silicon gate process, when you develop a product you have to test it on the wafer. As we stress tested the device, meaning apply large voltage on it to make sure that it could withstand large voltage without shorting out, one after the other, after the other, after the other started shorting out. Though the device seemed to be OK functionally, as soon as you applied stress to the device, a higher voltage, it died. So, what was going on? And that’s when my lab started to work on it and I had one of the fellows, Dov Frohman--

Vardalas:

Frohman?

Vadasz:

Frohman. F-R-O-H-M-A-N. D-O-V. He was assigned the project of figuring out what was this manufacturing/reliability issue. And we figured it out. Basically, it was that we had the underlying silicon here, source and drain and channel, and then we had a gate over that and the gate had no physical connection to it, it was floating. And so when you applied the high voltage to one of the source or drain under it, you tunneled electrons, hot electrons into the gate. And you charged it up. And you turn the device on. So, so basically, you created a short between source and drain, as if the device was on.

Vardalas:

OK, so it just got flipped on.

Vadasz:

Yes, you flipped it on. And since you had no connection to the gate, you didn’t discharge it. You didn’t take the charge off. It was floating, buried in oxide structure. And not only that--Dov came up with an explanation as well. We had to make a connection between the metal and the gate which was a manufacturing process related problem. But also we said, “Gee, why don’t we use it as a device that we can purposefully create a structure where you charge the gate and turn on the device and then it’s permanently on.”

Vardalas:

I see.

Vadasz:

And then you have to figure out, OK, how am I going to turn it off? Well, initially, we did not have an electrical means of turning it on, off, so we used ultraviolet light to create an environment inside the silicon to dissipate all the charge. So, initially, we used ultraviolet to erase.

Vardalas:

Oh. The first generation of these …

Vadasz:

The first generation used ultraviolet to erase and electrical pulses to charge and ultraviolet light to erase. So, the first devices have a little window on top, a quartz window, so that you can really shine ultraviolet light through them.

Vardalas:

Before we continue this story, which is fascinating, the application for these devices was going to be where? Who’s going to have the ultraviolet to do the—

Vadasz:

Well, we initially thought that it’s going to be just a bread boarding capability for somebody who wants to use ROMs, read-only memories—

Vardalas:

Right.

Vadasz:

—which are really done in the manufacturing process, customized in the manufacturing process, but those are permanent.

Vardalas:

Oh, OK.

Vadasz:

They are a permanent on off, on off, on off devices and so, it was sort of prototyping capability. And obviously the cost structure wasn’t there to be able to replace read-only memories with these because this was a more expensive manufacturing process. But it could handle low-volume applications. So after a lot of discussion, we decided to make a device out of it and there are two elements to me which are fascinating. One is that in less than two years, we went from invention to product. That could not have happened in an organizational structure which had a central R&D. Just a fantastic achievement in my mind. And the second element is that by positioning it on the market as a prototyping device, we were able to charge a very high price for it and it became a fantastic money profit-maker for us.

Vardalas:

Oh, oh, I see. Where did the word EPROM come from, because there’s programming in that, too. When did that come into the—

Vadasz:

Electrically programmable read-only memory.

Vardalas:

Alright, alright. So these were programmable in the sense that you would charge the necessary parts of it to store the information as you wanted.

Vadasz:

That’s right. And so everything else that you use today, the flash in our cameras, or in our cell phones, is really the evolutionary product from that early device where you just…

Vardalas:

So, because of this tunneling effect. When we turn it on, it just stays on because there’s no way to dissipate it.

Vadasz:

Yes.

Vardalas:

Oh, I see. And there’s no leakage of charge over the long term?

Vadasz:

For a very long time. We are talking about years.

Vardalas:

Years. Now, what about the interfaces? Now, did this lead to development in terms of interfaces to program this?

Vadasz:

Oh, yes. You had to start looking at how other people were going to program the device. So, we needed a little programming capability. How were the people to erase this? You need a little box to erase it.

Vardalas:

How did you solve the erasing thing at the end without the ultraviolet?

Vadasz:

Well, there are some electrical ways of discharging and we figured it out.

Vardalas:

So, now you have a product line and you have additional things that go with this product line.

Vadasz:

That’s right. And again, this kind of thinking of the ecosystem. What will it take to make a product successful in the market? What are all the elements that are needed? Really, it was part of our thinking right from the beginning.

Vardalas:

Were there any other things that flash, in the early days of Intel, that provide any interesting products, putting aside microprocessors for a second? What about watches—did you Intel get involved in chips for watches?

Vadasz:

Yes, we did get involved in watches. Intel bought a little company called Microma. In fact I look at our Microma adventure, if you can call it that, as really the genesis of our CMOS technology development. We felt that the lowest power watches, watch electronics, was going to come from using complementary MOS technology, P-channel, N-channel integrated together. And so, our watch business set out to develop the technology. Before that we only had started with P-channel, moved to N-channel, and then with the watch business, we moved to CMOS.

Vardalas:

I gather that your involvement with Microma didn’t work. Intel didn’t continue producing components for watches and—

Vadasz:

We thought that our technology, what we brought to the party, was going to be a very important part of the business. I think we misjudged it. It was much more of a fashion business than a semiconductor business and we were, I think, pretty naïve in our business understanding of what the watch business is all about.

Vardalas:

Ah, I see.

Vadasz:

And certainly over time there was nothing really unique that we could provide that others couldn’t do as well or better.

Vardalas:

Where was all this taking place within your group? Was it a difficult challenge to bring to conclusion?

Vadasz:

CMOS was not a difficult project based on the fact that we had P-channel and N-channel. To me, when we moved to N-channel, it was a very satisfying step because we could make products that used the same 5 volt power supplies that were the mainstay of bipolar. Only 5 volt. You didn’t need that crazy 8, 10, 12, 15, 20 volt kind of circuitry that was needed for P-channel technology

Vardalas:

With the N-channel.

Vadasz:

N-channel, yes. If not one of the first, it was the first. I don’t remember if there were other products, but the 1024-bit static memory, 2102, was a very, very nice memory device. That was really the follow-up to the 1101. The 2102. And that was using N-channel MOS technology.

Vardalas:

Where did your testing know-how come from?

Vadasz:

Well, the semiconductor industry many, many times used its own homebrewed test equipment. The tester industry was sort of a parallel developing industry and many times it wasn’t ready with products to do the most leading edge semiconductor devices. So it was always kind of looking at what the market had versus what you had to do on your own. Certainly, you don’t want to do test equipment if you don’t have to.

Vardalas:

Oh, I see, you didn’t want to build this in-house.

Vadasz:

No, but many times you had to. When we developed the 1103, the first dynamic RAM, in volume, for the market, we had to develop our own tester because nothing was available to test it. They were very difficult devices to test and even to apply but if you could buy it, buy it.

Vardalas:

OK. Alright. Because I remember interviewing once the head of the R&D for ICL in England. He commented that for high-performance mainframes, they were insisting on tests they felt the suppliers weren’t giving them in terms of reliability and the performance of these things.

Vadasz:

Mm-hmm.

Vardalas:

Was there a tension between adequately testing these things the way they should be and —

Vadasz:

Well, I look at the other way. I think that if a customer wants you to test a certain way, you first want to understand what the reason for it is. Many times you find that there’s some legitimate reason to modify your test because it will be a better test.

Vardalas:

Right.

Vadasz:

There’s absolutely no benefit of not doing the best test you can. Many times it’s just duplicating what you already do slightly differently and then you argue with the customer, “well, let’s look at what we do. Let’s figure out why it’s not adequate for you.” But, you learn from the customer’s application many times.

Vardalas:

EPROM and flash memory were a very important part of Intel’s development, right?

Vadasz:

Yes.

Vardalas:

You would say that was one of the milestones.

Vadasz:

That’s right.

Vardalas:

And that was also an important technology business-wise. A lot of the revenue came from these innovations.

Vadasz:

Well, obviously today Intel’s business is the microprocessor. So over time it became Intel’s business. Initially, it started out as a custom project for a calculator company.

Vardalas:

But I’m speaking of EPROM and flash memories. EPROM and flash memories themselves. They became important revenue sources for Intel.

Vadasz:

Oh, yes. That’s right, EPROM particularly. But by the time it became flash, it became less and less important in the overall scheme of things.

Making the Microprocessor

Vardalas:

Did EPROM and flash know-how find its way into the microprocessor or were they just independent?

Vadasz:

Well, you know, there is a bit of a serendipity to all this. We developed some static RAMs. We developed some dynamic RAMs. Then, totally orthogonal to that, the EPROM technology happened. Then using the know-how acquired in the preceding developments, we developed the microprocessor and set of chips for Busicom. And then when we decided to make the Busicom microprocessor available to the open market as a general purpose computer, obviously EPROM could be used as part of the bread boarding to develop your microcomputer using our chips. So, all of a sudden, everything fits. And, you know, if you look back, what a brilliant strategy. Well, yes, but they were independent strategies that fit together. We had to figure out, “How do you make it all work together reinforcing each other?” I think that the company succeeded in doing that.

Vardalas:

They coalesced at the right time.

Vadasz:

They coalesced, plus we recognized that we needed to develop some tools that the customer could use to create his application using all these pieces. So, one of the early businesses of Intel was the Development Systems business.

Vardalas:

For the microprocessor?

Vadasz:

For all the collection of chips, to make it into an application. Because you had to even customize the CPU’s software. The interface was standard, but the program was different for each application. And you needed this little computer development system to do your development. And it became a pretty significant business on its own.

Vardalas:

So, could one rename the history of Intel “the importance of genius and serendipity”?

Vadasz:

Well, there is a Professor Burgleman at Stanford business school who has this thesis about the importance of strategic recognition. Not strategic, but recognizing what you have and how to build on it. I think we excelled at that. I think from the time when we realized that, “Gee, this defect in the manufacturing process is really a memory device opportunity” to the time when we realized that this set of general purpose chips, with the collection of all these capabilities, is a general purpose computer, and on and on

Vardalas:

With regards to the microprocessor story, how did it first come to your attention? I gather you were the person who hired the right people to get this done. Is that correct?

Vadasz:

Well, yes. Ted Hoff was working parallel to my activities. I was doing product development and he was heading application research to basically look at the systems side of things: how to apply the technology that we were developing. When Bob Noyce brought the Busicom people in, Ted Hoff and I were kind of listening to what they wanted to do and it turns out that there were just too many chips. Too many chips for my little department to be able to handle. Something like 16 different chips for 5 different calculators. From scientific calculators to business calculator and on and on and on. And I couldn’t do that. I had a tiny little organization. One day Ted came to me proposing that “Well, why don’t we do a set of general purpose chips.”

He understood computer technology very well. He understood how to partition the machine, a programmable machine if you will, so that we could reduce the number of chips to four or five, and that became very exciting. The next step was to try to convince the Busicom people that instead of developing 16 chips, we ought to follow Ted’s idea. They agreed and that’s when I hired Frederico, whom I knew from my time at Fairchild. I had a very high appreciation for his engineering talent to spearhead that project. And so, we built a team around that project and he worked very closely with Ted and Stan Mazor and we got the Busicom people in our factory. So it was all a team.

Vardalas:

At that time, though, did bells go off in your head “this has great potential for all other things?” Did you see that bigger picture or did it take you time to see—

Vadasz:

I think it took us time. It took us time—

Vardalas:

Was there any clear moment? Do you remember when you thought that it was a lot more than the just the Busiom thing?

Vadasz:

You know, I think probably the chips were already working or close to working when we realized. Various people started to talk. I have no idea who said it first.

Was it even anybody who said it first or did it emerge as a logical conclusion that, “Gee, there is more to this than calculators. It’s has more general purpose capability.” See, you did not need a development system for the calculators because that was an in-house development. You knew the program, et cetera, et cetera. It was the hurdle of going to market. A general purpose market forced us to develop some of these collateral capabilities.

Vardalas:

That led to a more structure being created within the company, once you decided to go microprocessor is our big business —

Vadasz:

Well, it’s not that way.

Vardalas:

Oh.

Business Strategies

Vadasz:

I remember that happened in the early mid-seventies, when it was beginning to be clear. I’m sorry, what was beginning to be clear was that just the complexity of our product line was increasing. And at some point we started to think about how could we have a more effective way of organizing ourselves as the complexity of the product line increased. That’s when the business unit concept started occurring in the mid-seventies, when Bill Daveda came in. Initially he was handling the marketing organization.

He was a strong advocate of development tools to help the microprocessor acceptance in the general purpose marketplace and we created a number of divisions. One of them was the microcomputer division which included all the components within the microcomputing and the systems side. And then we had the separate memory division. That was really the beginning of creating divisions within the company.

Vardalas:

Was it without turmoil or was it a smooth thing to rejigger things and—

Vadasz:

Oh, in retrospect, it looks very simple. I’m sure when we were in the middle of it, it looked very daunting. And that’s when I got a new role in being the assistant general manager of the microcomputer

Vardalas:

You just expanded your functions.

Vadasz:

That’s right.

Vardalas:

But this role as Assistant Manager of Microcomputer Division, you were vice president before, you don’t see it as a step down from a title of VP to going to a title of Assistant General Manager?

Vadasz:

I was still a VP. But instead of running engineering, I became Assistant General Manager of the Microcomputer

Vardalas:

So this was a much more engineering based assignment then.

Vadasz:

That’s right. Well, no, when we were a functional organization, engineering, manufacturing, marketing, I ran engineering.

Vardalas:

Alright.

Vadasz:

When we started to group ourselves into business units, engineering was part of it. And so, in regards to the division between Bill Daveda and myself, he was more on the business side, I was more on the operations side. So, the way I looked at it, I reduced my role in some of the engineering development because I didn’t have all the chip development just portions of it, but I expanded my role into areas like the system and software, plus the system manufacturing side.

Vardalas:

OK. So, there were two parts to this organization; microcomputer systems and microcomputer components?

Vadasz:

Initially, it was combined. Then, later on, it was split into divisions.

Vardalas:

Did this happen when Intel started calling itself a microprocessor company? When did it stop calling itself a memory company and start calling itself a microprocessor company?

Vadasz:

Oh, I don’t know, it was the mid-eighties where we really got out of memory, that is the dynamic RAM business. So, between then, the mid-seventies and the mid-eighties, our microcomputer business was growing. We found it increasingly difficult to compete in the dynamic RAM business.

Vardalas:

You say microcomputers and components, do you mean all the various parts that make up what they call the computer?

Vadasz:

That’s right.

Vardalas:

How big was the division then? It must have been a fairly big.

Vadasz:

Well, you know, it had software engineering. We did some language and operating system work. It had a hardware engineering which did probably the forerunner of the personal computer. And it had marketing.

Vardalas:

In terms of manpower, it was a fairly sizeable operation.

Vadasz:

Fairly sizeable, yes. I don’t recall the numbers.

Vardalas:

When you stepped in as assistant general manager, why didn’t you become general manager at the split? After the split, you became general manager of the—

Vadasz:

Component side.

Vardalas:

Component side, right.

Vadasz:

Yes.

Vardalas:

In the beginning, you were assistant general manager of the whole thing—

Vadasz:

Yes.

Vardalas:

—and now in the split, Daveda took one part—

Vadasz:

Yes.

Vardalas:

—and you took the other part, right?

Vadasz:

Correct.

Vardalas:

When you became the general manager or even when you were the assistant GM, did you have an idea ththe microprocessor had to be Intel’s product. Did you see a need to develop a strategy? Was there one in place? What did you see your role?

Vadasz:

Well, at that point, frankly the big challenge for me was learning the elements of a business. Looking at the world as an engineering development organization or looking at the world as running a business—

Vardalas:

So the new thing was learning the business.

Vadasz:

Yes.

Vardalas:

Please elaborate about that.

Vadasz:

Well, maybe I should take you back to a little bit earlier period. I frankly didn’t realize initially, and that was naivety on my part, some of the difficulties that our customers may have had in using our products, our memory products, I really learned that when I started to visit some customers. And learned that there were problems here, there were legitimate issues. You know, we created this product. We thought it was a great product, but then when I looked at it from the customer’s point of view, it was a different world. That was really a learning process. And when the business unit was created, microcomputer division, I was part of that. I really started to learn another part of the business, which is, you have to get commitment. You have to make deliveries. There are other nuts and bolts elements of making, creating a business. And in retrospect, I kind of took it for granted that all those things happened without any significant issues. Well, I learned the issues and it was a useful period. Very useful.

Vardalas:

So how did that alter the way you felt things had to be organized or felt about product development?

Vadasz:

Well, it did not change my opinion. When you are in a leading-edge technology business, you cannot rely on market surveys. You have to really lead with the idea. But I appreciated much more the interaction of the application with the customer.

Vardalas:

Did this lead to changes in the way things were done? Did you institute some things that made sure this happened?

Vadasz:

I certainly instituted a much closer interaction with some of the customers and I really wanted to have our people, our engineers talk to customers far more over time, increasingly more.

Vardalas:

Did you find that , in general, engineers like talking to customers or do they sometimes feel that they know better than the customer?

Vadasz:

Oh, you really got to gamble. Some people, some engineers are very impatient. Some engineers really thrive on it. You get the whole spectrum

Vardalas:

So you were in that position for number of years. What products during your tenure came out of that components division?

Vadasz:

Well, the microprocessor line was expanding, going from the one end it was the 4004 family, then the microcontroller line the 84 E8 8051 line was being developed and then the more general purpose, the 80, 8008, 8080—

Vardalas:

Was that all part of the microcomponents division?

Vadasz:

Yes that’s right. The 8080, 8085, all those in development, 8086, was—

Vardalas:

At this time, was memory still being made?

Vadasz:

Oh, yes. Memory was the major business.

Vardalas:

But your group was becoming the heart of what the company was going to become.

Vadasz:

That’s right, yes. All the foundation technologies were really developed at that time.

Vardalas:

And then you became senior vice president, right? 1979-1991, and that was the end of the microcomputer components division? You were senior VP. Was that a more corporate role?

Vadasz:

Well, I don’t know whether I was senior VP, whether it’s corporate strategic staff, or—

Vardalas:

Talk about your developing a strategic planning process.

Vadasz:

OK, when I got out of that business unit I became more interested in the question of how does a company with so many different business and product lines plan for the future. How do you, sort of, divisionalize the thinking of strategic plans for your future. There were some concepts that we developed which were very important, but there were some concepts which really did not stand the test of time and we needed to modify them over time. That’s when we started to get more structured in our planning processes.

Vardalas:

Now, you suggested at one point that some of this created more overhead for people than it was worth and a lot of it was dropped. You said that one point you had an epiphany.

Vadasz:

Well, my original notion was that a business unit really should be the closest to its technology and market. And as a result, what it does, it ought to be able to plan it just the same way as when we started the company. We kind of planned our own. And so, I was under the impression that well, if we give this task to the business unit, that will work better because they are the closest to the business. It didn’t because it became more of a bureaucratic process that the general manager delegated it down to the marketing and engineering guy who generated the foils and the general manager stood up and gave a presentation and we did not get the best out of the organization. But I thought that the process of involving the doers and business people together for planning was the right one.

Even in your technology planning, the process of involving the most senior and the most junior technologists was the right one, and that’s when you could have somebody of that experience like a Gordon Moore together with a new PhD in the room discuss a certain subject, almost like equals because they were discussing technologies and both of their knowledge base was used. So, that was good, but still the structure did not work because I don’t think that the management of the business unit really put enough of the effort into the plans. And so, when I started to advocate what we have done at some seminars at Harvard Business School, I was very much picked apart for all the bad things out of it and they were right. And they were right. And it didn’t work very well and so that’s when we made some changes that we really had more of a top down and bottom up process.

Direction from the top, setting expectation from the top, forcing the involvement of top management at the group level as well as the top management at the corporate level and still things started to work better.

Vardalas:

I have one additional question of a general nature. You’ve had a long and pretty successful career at Intel. Why do you think you succeeded?

Vadasz:

Number one is probably curiosity, wanting to learn, whether it’s about organizational behavior or whether it’s a technology. It’s sort of a combination of trying to find out how things work and how to make things work. And that’s probably the main element of it.

Vardalas:

It was a fascinating interview. Thank you so much.