RW: Jack Balletto, a rare fourth generation San Franciscan, is a veteran of the semiconductor industry. He was at Fairchild during the 1960s, a Golden Era when the first generation of gate arrays, standard cells, computer-aided design, programmable chip sets and computer controlled testers were all conceived and introduced to the world. He was later a founder of Synertech, which eventually was purchased by Honeywell in 1978. Then, he was a founder and the first President of VLSI Technology which had its IPO in 1983. He is presently a venture capitalist and lives in Los Gatos, California with his wife of 47 years. They have three grown daughters who all live in California.
RW: Jack Balletto! So, tell me about growing up as a kid.
JB: Sure, yeah. I’m fourth generation San Franciscan. Folks go way back. One side’s all Irish, Italian, German and the other side is Irish and Scot. So it’s a real hodgepodge of nationalities out there. They were all firemen and cops. So, I fought the good fight. My dad was a heavy equipment operator. As a matter of fact, if you leave an SFO heading into San Francisco, if you look out on the right toward Candlestick Point, there’s a huge crane. Well, he was the first guy to run that. Yeah, I remember that because it could pick four ships completely out of the water, put them into dry dock in half an hour, instead of taking eight hours to do it. But that was pretty impressive. My mom was head bookkeeper for California Teachers Association and so she was pretty much a math whiz. So, we all grew up in San Francisco.
RW: Well, you must have been there for the Great Fire. Or, the family was.
JB: Well, that was 1906, and my aunt was born in 1908, and my mom in 1913, but their uncle owned four corners of Broadway and Jones, I think it was.
RW: Oh my God.
JB: Yeah, he was on the outs with the mayor. I don’t know if you read any books about that?
JB: But the fire was way downtown by the Palace Hotel…
JB: He had a few enemies in town, so he went up and took them out on the grounds that there had to be firebreak, even though they couldn’t even see the fire. So our guy was politically on the wrong side of that mirror. People like Flash Ackard, they were on the good side so they got the Zoo, and there was a lot of books on all that. But, yeah, they were around. They were immigrants, came out to, I’m sure was - roughly the Gold Rush or maybe just after the Gold Rush days. And, we’re actually seven different nationalities. I can’t remember a few any more. But, mainly, I think I’m half - Irish and a quarter German and 1/8 Spanish, 1/16 Italian and those four I remember.
RW: So, where’d you go to school?
JB: Well, in San Francisco at first and then we moved down to San Bruno, went to high school there, and then, after high school at Kemp Junior High School and then went to Santa Clara University for college. Went down there in 1958 and got a BSEE Degree in ’62, and then I did the Lockheed Early Morning Master’s Degree Program, where you’d take one or two classes before work. That took five years. But, I finally got a Master’s Degree in Circuit Design in I think it was ’67 with a few years where I didn’t take any classes at all because I was - turned out I was off traveling for Lockheed as a 21-year-old hotshot out of college. It was amazing! At Lockheed Aerospace at that time, it was mainly World War II vets and mechanical engineers, civil engineers, heat transfer engineers, very few recent EEs. And, when I picked that job – I’m kind of jumping ahead, but they offered travel. So Lockheed was the prime contractor to fix up the Polaris Missile System because they had decided the bomb - the Russians could blow this thing up at pretty much any time. So we had to put countermeasures underneath the nose cone. And I was in the Electronic Countermeasure Group, the ECM Group, [clears throat] which was two of us. And my boss would get - it was a great learning experience because he would get these gigantic budgets from Washington by describing the entire ECM situation, radar and all that, in plumbing terms. The guys (?) big pipes, small pipes, you know they’d go - sprinklers everywhere. And, he’d come [laughter] back with yet another $5,000,000.00.
RW: Well, Lockheed, at that time was the biggest employer here in the Valley.
JB: There was so much talent there. I mean, so much talent. I’d keep thinking some VC should have just set up camp and picked off every single person. The stuff we did, that we all did, they’d already been doing that years before.
RW: Yeah. Well, there was H.P.
RW: And Lockheed.
RW: And Inferion.
JB: Yeah, Philco Ford had some things and Verian and Farinon Electric and all kind of microwavey stuff. But, yeah, well hey, you know, it took a long time but people our age remember, but, it was touch and go who was going to run the planet. You know, I mean, the Russians had Sputnik up. They just about had antiballistic missiles in Cuba. That was close. And I was one of those around here who picked my mom up in the car. We headed north. We just got out of Dodge. I thought for sure that they were going to, you know, Khrushchev wasn’t going blink. Lucky for all of us, he did. And, luckily we had Kennedy there, because I’m not sure anybody else, one of the old-timers - well, anyway, John, JFK did the good job. Yeah, they were just loaded with talent. Really, really smart guys that – yeah, and some technologies came out of there. Jumping ahead again - but, at one point, way out in ’72, after Fairchild and things like that, I was - I hate to jump around - but I was working for Ricoh Electronics at the time for a one year stretch. They were having trouble getting Silicon, so they hired me to help them figure out how to get on the priority list anywhere. They were too small. Nobody wanted to take care of them. And, I went to a meeting at company called Daycom. Yeah, Daycom had fax, facsimile technology, and they’re basically selling it to Ricoh, the Japanese. Ricoh took that and just kicked Xerox upside down and sideways, and it was all courtesy of the blue cube. You know, the satellite guys. And, once they got a wind of me there, it’s like “We can’t have that guy at any more meetings,” [laughter] the Lockheed guys are like “What are you doing here?” So, Lockheed’s got a good spot in my heart. I mean, those guys were - they were older than us, so they kind of - had they been our age, they’d have run just as well as we did, if not better.
RW: Well, I don’t think people appreciate how much of the funding came from the government here.
JB: Uh, huh.
RW: Certainly military at Fairchild was a big portion of the business.
RW: And we all built Mil-Spec integrated circuits and, you know, everybody did.
JB: Oh, without that funding it would have been decades, you know, if ever, you know.
RW: Well, the first ICs were funded at Fairchild.
RW: RTL, and that was for I believe, Polaris or no, Minute Man.
JB: Oh, the Minute Man Program, yeah.
RW: So, most people forget this is the land of, you know, entrepreneurs and so on, and it didn’t start out that way.
JB: No, no, no, we needed some central funding. I went to - I did three years at Lockheed in that ECM project and then I realized I wasn’t using any of these engineering classes I took, so I actually quit. I took a pay cut and went to a company called Western Microwave Labs as a one of a two-man band. We were the solid state design group for Western Micro whose basic skill was ferrite switches, so they had contracts which actually went up where they supplied the communications system. So, my boss and I had the solid state group. So, we were using 709, 711 Op Amps from Fairchild and designing these things, and the kick was that we were both taking our Masters Degree at the time. We needed the classes we were taking. The boss went out and booked this big contract, which we never would have said “Yeah, we can do it.” Comes back from Washington, “Okay, we got the next level up, it’s all integrated, you know, you guys, you solid state guys, you’re going to have to - you have to step up.” [laughter] So, we’re reading our books to figure out how to get this thing done, and talk about learning. It was a hoot. The thing worked and they sent it into outer space and - but then I noticed that all these guys, everything I was doing that year, the next data sheet that came out, everything I was doing was on the new, improved 709A, or whatever they called it and so, you’re pretty clear where the engineering content was going. It was going on the chip, and probably the first signs were the analog world. And, of course, later on everything went on the chip, all the digital stuff basically got sucked into a chip. So, when I got a phone call to join GME, I was a pretty easy target, because I could – I just “Hey, I got go see what these guys are doing. This is interesting.” That was in ’66. So, I went over to GME in ’66.
RW: But they weren’t doing any analog, were they?
JB: No, no, no. No they weren’t. But I just wanted to get into the chip business.
RW: But it was the first of the large-scale integration.
JB: Yeah, they had a contract to do the Singer/Friden comptometer. The first round of guys at GME had already left and started AMI. So, the gang that was left, I don’t know if they ever made a good die the whole time I was there to tell you the truth, I mean, because it was pretty brutal. We were there about two years. So, yeah, that calculator, the comptometer, took 28 chips and 8 memories and 20 logic. They could never get all 28 to work, so that fizzled pretty good. But, and then right in the middle of that - when I was interviewing, it was GME. And so I quit Western Micro, went over there. I show up. I’m now an employee of Philco Ford. They hadn’t told me they were selling it to Philco Ford, [laughter] as we were speaking. So, I was part of Philco Ford Microelectronics which reported to the Tractor Division of Ford.
JB: The Tractor Division, or group, or subsidiary. And, sure enough, one time this little old guy from the tractor group came out for a sales meeting. What a scream. I mean, this is the whole Midwest, East Coast vs. California. Very proper chap, and sold [clears throat] electronics, I guess, to the tractor guys. And, of course, at the sales meeting everybody put their expense accounts on his room. Oh, he went ballistic. Came out, this is never -what is this? So, they shut the whole thing down and they figured probably ten or twenty key people would move out to Bluebell or LAN sale, and of course, nobody went, not a single person went. [Laughter]. Just like, didn’t quite get it. Again, a lot of the team, when I worked at Fairchild, Bill McKinley went to work at Fairchild. He was a designer there for awhile. I stayed for another year and then I got a call from Fairchild from Harry Neil. Gene Carter had just quit and gone to National Semi, so they had an opening for anybody who knew anything about MOS, and I’d been actually doing MOS since ’66, so about two and a half years.
RW: Yeah, well, they were the first, right?
JB: Yeah, GME was the first.
RW: Yeah, so.
JB: Well, Rob, when I was getting hired, they said “Well, look, you’re a design guy, why don’t you go in that design group?” And I said, “Yeah, okay, well what else do you do?” And, they had a big opening. They couldn’t make anything. I said “Where’s the action?” pretty much. He said “Well, product engineering, if you could ever figure out - help us get the yields up.” I said “Oh, well fine, let’s start out there.” So I spent a year in wafer fab, and testing wafers, and shift registers were the easy ones to test, trying to figure that out. Did some - published some - did some characterization of the OS process, published a little report internally. And, it wasn’t very scientific. I just took a bunch of shift registers, which were easy to calculate area and things like that and published graphs on leakage and capacitates and all that. So, the designers came stomping in, claiming I had copied a book - Groeb’s book because the curves were pretty much the same. I said, “Well, who’s Groeb?” [Laughter] I don’t think I copied it!
RW: Actually, I wonder why the curves are similar. Well, it was Silicon, right?
JB: Yeah, exactly.
RW: It was the same stuff.
JB: Yeah, same stuff! They didn’t have any, at that time, at GME, nobody had basic data. They all had their own version of how they were going to make rectangles and shift registers and so on. So, yeah, but I’m glad I did it, because I mean, it was a tough year and their yields were horrible. I was an instant hero because they had barrels full of reject shift registers with slow rise times on the output, and the specs at that time were all 10 picaferit load, 10 pF Load, and so these things are slower than molasses. I just went around and measured some of the test jigs and they were all like 80 pF or 400 pF and just spruced them up, you know, got them back to - they all worked. So, it was like, “Wow, it’s lucky we hired that guy from the microwave world. You know, those guys are, wow.” [Laughter]
RW: Yeah, it’s very hard to build a test jig with only 10 pF.
JB: Yeah, I had to put an intermediate stage between the jig and the output.
RW: This was really hard to do.
JB: Yeah. And then some of the curves were picoamps, and these same guys came around and said “What are you talking about picoamps, you can’t measure in picoamps. You’ve got nano amps stuff.” And I said, “Well, I don’t know, it came from Lockheed and from Western Microwave. We do picoamps all the time.” You know, and so, the - also, which is why some of those Lockheed people had been sucked into the chip as the early days, they really could have - well, who knows, they might have been bored stiff.
RW: But in those days, we never thought of starting our own company. I mean, you just wanted a good job with somebody that would fund you and do interesting work. But the idea of “Well, let’s start a company.” I mean, that’s crazy.
JB: Well, most of us got run out of our company, you know, I mean it was - look at Jerry, I mean, Sanders and you know, most of the guys left because things weren’t shaping up with the new management, which was always on the horizon. When you and I were at Fairchild, I got to Fairchild in ’69. I remember there was a period - and I left in ’72, so - where we had a new fab manager every 13 weeks. [laughter] At least I got time for one run. Okay, yeah, you’re right here.
RW: I mean the eWLLs were terrible.
JB: It was terrible.
RW: And, they would bring in a new Vice President.
RW: And, “I’m going to turn this around. We’re going to run it like a business.” And, he would last, and then he’d be thrown out, and then another guy would come stumbling in. And it was pathetic because they never had a chance to stay long enough. And, then Bob Seeds pushed for P Channel.
Int I mean, that was his deal. And so we couldn’t be competitive on speed with P Channel.
RW: And, the only things that really we could be competitive on were custom circuits. Micromosaic because, we only took the jobs where we were fast enough. And, and so…
JB: Oh, we were the ultimate prototype factory, I mean you guys were cranking them out. You know, the hit rate was huge. And then we had to walk to walk them 50 feet down the floor and build them and there was nothing there. I mean, there’s no yields. I remember three years of - I don’t remember shipping any of them. I’m sure we did, but to my memory, it’s like - it was horrible. Just couldn’t do it. If we had - well, who knows? You know, we probably never would have started LSI and VLSI for one thing.
JB: We would be getting our retirement plan about now. But, yeah, I think I mentioned to you before, when I got to Fairchild, everything was done. You know, the first cut on everything - testing, CAD, EDA, whatever you want to call it, standard cells, megablocks, tester, test equipment. It was all done.
RW: Yeah we -
JB: It got better later, but -
RW: We invented the gate array and the standard cell.
JB: Yeah, that was all done.
RW: And the computer controlled VLSI type tester.
RW: Which started out as the 8000A and then the 8000B and then they moved that to Santa Clara where it became the Sentry.
JB: Yeah, Sentry, yeah, test operation.
RW: So, again, the first.
JB: Yeah. Well, you even had the first programmable chip set. I hired my classmate from Santa Clara who had become a top programmer at Data General at that time. I think he was the smartest guy in our class. And, came in, and - I can’t remember the details of why he worked for me, because I was running Marketing at the time but he was a programmer. So, we had him take, I think it was called the PPS6, or something like that, and we had an application with Burroughs France. And, I’ll never forget it, because these two guys came over, didn’t speak English, my guy, John McCrory, didn’t speak French. Gave them a conference room and about two weeks later, they had a whole system done with about 8 ROMS. And still didn’t know how to say more than “Hello, Goodbye.” It was all done. If we knew how to produce, we could have been in production.
JB: That was frustrating. That’s a shame. They handed the market to, I mean, without much of a fight, actually, to - Intel would have won anyway.
RW: We did a similar thing in bipolar. The 7400 series had just come out. And, that had been funded by the military. And, but they were just terrible designs. I mean, from logically, they didn’t use all the pins, for example. On a 16-pin package. And so, we came up with really good designs for shift registers, the 9300 Series. And, TI just gave them 7400s numbers and started to produce them. And they got all the business.
JB: Oh, geez.
RW: And there was no intellectual protection for functions. There was for process
RW: But, not - you come up with this neat function, the shift register, that can do all this stuff.
JB: Like a FIFO or something like that, or, yeah.
RW: Yeah. No, nothing. So -
JB: Well, boy the times have changed on that front. All the advise used to be “Don’t worry about the patent, you gotta outrun ‘em. Don’t worry about the patent.” “Okay.” [laughter] Geez.
RW: Okay. So, after Fairchild?
JB: Yeah, then Fairchild - well, I got fired by Roy Pollack, I’m happy to say. I got nominated at the Wagon Wheel one night after barrels of beer, which was pretty common, and got all fired up, and went in and told him I thought he ought to quit. And he said “No, I don’t think this - I think you ought to go.” So, I got run out of the place. Didn’t bother me at all. He was just killing all of us.
RW: What a clown.
JB: Not a clown. Put all our careers on hold or backwards, and I think he was there when they cut- I’m not sure about this - no, I don’t think he was there, as a matter of fact. Anyway, so I quit and joined Ricoh. Did the year with Ricoh. And in that year, Shriner, Bob Shriner, who had been my boss for a while, was starting Synertech. He had gone to a bipolar memory company.
RW: Oh yes.
JB: CM, Computer Memory, something like that.
RW: I forget the name.
JB: Which kind of flamed out and so Bob - they sold it or something, or shut it down. So he was trying to do an MOS company and wanted four investors at 250,000 each, one of four corporations, and here I was at Ricoh, just dying because they couldn’t get delivery of MOS. I said “Well, Bob.” So, I brought the fella that hired me, brought him over, and he was at Ricoh, but he was just as Hogan’s Heroes left Motorola, came to Fairchild, well he was - Yomashdo’s Heroes had left. He was the youngest guy ever appointed to Mitsubishi’s Board of Directors. And, he was - he ran the MOS, the semiconductor group. So he had, unheard of in Japan, had left, brought seven or eight guys with him to Ricoh and was going to fix up this delivery problem with semis and I forget how we got - I don’t remember how we got connected. So I went to work as his right-hand man, and he had been told he was going to inherit the whole company, you know, in five or six or seven years. Well, so, we did, in fact, put up a company down in Orange County to build calculators for Commodore. And, Mel Bowman, one of my pals from Fairchild, we got Mel hired just to run that assembly company. And then, at the grand opening of that company in Orange County - and they’ve got doves flying around and priests, Shinto priests, you know, and arches and the mayor - just a big love fest. Everybody leaves and they go - the Japanese bosses - “Oh, Yo Masta Son, you got a minute?” Bring him into his office and just cut his nuts off pretty much, excuse the language. But, demote him. He’s not going to run that, he’s not going to do anything. The oringi had met and he had not gotten approval to do anything, especially with Synertech. So, he gets trounced and goes back to Japan, and isn’t heard of until quite a while later. They had him mothballed. And he surfaces again when we were doing VLSI, by the way, but that was our foundry for the first two years. Finally, he got some momentum and got rid of some people, probably, and got the money to build a fab area in Osaka. So, that’s jumping way ahead, but in ’79, when we were raising money for VLSI, we went ahead and built a foundry right there in Osaka for Ricoh, which were the first customer then for the first two years. Nobody in Japan - nobody wanted to be first. So, we give an order for twenty million bucks our first year and thirty million our second year. So, it was off to a real fast start. But that was for a year, and then so there I am left kind of like the Bluebell situation. What do I do now? I’m not going to stay with this Japanese company. And, so I get a hold of Bob, and he said “Well, come on over.” You know, “Join me in the startup.” So, [clears throat] Bob had two corporations that had agreed to put in 250 each, and one was Victor Comptometer and the other was American Telecommunications. And, within six months, we landed the third, let’s see, oh, General Automation, yeah, GA, it was a mini computer company. So, we launched the company with 750,000 bucks. [laughter]
RW: Which was a company with a full fab.
JB: Oh, yeah. Then we borrowed three million for a fab. Yeah, that was a separate thing, as far as cash for paychecks.
RW: They’re now several billion.
JB: Yeah, four or five billion. Yeah.
JB: Yeah, I think we paid each other 19,000 a year for six – for, yeah, six years, from ’74, the middle of ’73 to the middle of ’79. So, financially, well it was not a really good deal. [laughter]. But we got a lot of prestige and, luckily, we - the team that Bob - that had approached Bob - well, actually, that’s not how it happened, it was the AMI team that got a hold of Bob. Said “Hey, we’re fed up over here with these - Howard Bob and the guys who were running AMI,” at the time, and had read about Shriner’s company tanking, so they called Bob and so they stayed there until Bob and I and Sentous got the funding, then they all quit. If those guys would have been at Fairchild, this whole valley would be a whole different story. These guys were spectacular fab guys. I mean, the story, the history of Synertech is all built on pretty much on fab. We had silicon gate, we had ion implanted silicon gate before Intel did, before MOS-TECH did, and that of course, led to spectacular products, high-speed products. And it turned out, along the way - so, we were doing okay, we were getting orders from the usual guys, Burroughs and Olivetti and IBM, you know, that probably going to be okay. And, along the way, came Atari. And I brought this, one of the original Pong, consumer Pong games, sold by Sears, and the Atari guys came knocking. They had tried everybody in the Valley. They had hired a consultant to design - to take the pizza parlor arcade Pong game, put that board on a chip. So they hired some guy cheap, up in the mountains, I know his name, but I won’t say it. Lucky for us, he wasn’t very good because, they took that tooling - nobody could build it - and they kept trying and trying. Well, we were still small. And, our fab guys, Gunnar Wetlesen and Dan Floyd and by then we had Ken Eguro as our COO - we all fell in love with the game because, you know, it was just, well, I think this thing is going to sell a lot. So they tweaked the process. You know, the last thing you want to do, I mean, you can never expect Intel or anybody big to do that.
RW: No. No.
JB: So our guys. Oh, and the guy used to work at AMI, so that’s why we probably had a leg up, it was because our fab guys were at AMI, so they could easily guess what he probably - we made the Pong. It worked, and we were the only ones to supply it for about two years. And, I think Atari sold - or Sears, this was the Sears model - I think it sold six or seven hundred thousand their first year, and like two million the second year. And, what it did, a couple things, seriously, one was the process. So it took advantage of our process and then that led us in to be the chosen micro for the VCS game, the 6502. They knew we could build stuff [clears throat] that benchmarked – they benchmarked everybody and it turned out the guys that architected the 6502 specialized in video type applications, and it was just perfect for the VCS, you know the home cartridge game. So, they picked our, well, MOS technology architect did it, we got it through a license and they got our memory. So we both had a full line of microprocessors and memories. And, so we got it designed into Atari, and then nobody at the plant wanted to make the ROMs because you recall what a disaster ROMs historically were. It was a mess. Took thirteen weeks, fourteen weeks. IBM would give you maybe sixteen ROM codes, halfway through, they’d change three of them, everything goes on hold, they’re not going to pay for the crap. It just a mess. Nobody wanted to do it. And, so, on the other hand, here, I did a model, just a wild-ass guesstimate, which turned out to be pretty good, that there would be ten ROMS sold for every console.
JB: I just sat in a room and said “What would I do?” I think I’ll probably buy two for Christmas and, maybe around - if they get bored around March, maybe I’ll buy - so kind of like that, and did this exponential thing. And, so nobody wanted to do them. So, how could we give up the, you know, 150 bucks worth of ROMs and just sell the fifteen bucks worth of - so, we had a little shootout there. And the engineering guys went away, came back and said “Well, we can do it, but you got to double the price of the ROMs.” So, they came up with a last mask programming instead of first mask. So we could inventory ROMs, pull them out, strip the metal so all the programming is done with metal, and chip was twice as big, but we could ship ROMs in two weeks flat. And this was before EPROMs were, you know, that easy or that - so we had both. And Atari, they never knew which game was going to be successful, said they’d do them all first, and the last mask ROM, the two-week ROM, and then when the results came back from the customers, then they say “Okay, good, this one’s a runner, so get that cheap one. The first mask ROM.” And they paid double. They paid double for the quick turn. So, that was kind of the history of Synertech. Yeah, it was going good. And, one thing I’ll never - and then, well, yeah then - about six years into it, you know, in ’78, you still couldn’t raise venture money. I mean, here we were, we were riding the coattails of Atari, and just going like hotcakes, and Apple, because Steve Jobs had worked for Al Alcorn, who was the founder of Atari - Alan (Nolan) Bushnell and had quit in about ’76, I think it was. And so he knew all about this and he knew the 6502 and all that. So, he went over and did the Apple II with the 6502 also. So, here we’re riding in these two rocket ships and had revenue with Burroughs and all the usual guys and we couldn’t raise any money. Couldn’t raise any money. We had to do a 16-bitter to stay in the race, had to, you know, build a better fabber. And, you know, Bob Shriner and I, we were spending, especially him, but I think I was even, it felt like half our time just pitching, you know, people, instead of talking about products and customers. And so, Honeywell came knocking at the door, and we had the four corporations who had put up 1.25 million. Well, they converted that into about roughly 10x and they’re going like “Well, Bolo Watch never used our fab area anyway, Victor Contometer never used our fab area, General Automation was good to take all the fab we could possibly build for two years and why do you have this guy Balletto anyway. I’m going to take every 1103 you can make to none. You know, in the time it took us to build a fab area until (laughing) built. So, those guys never took advantage and got creamed by the Japanese as a result. Yeah, so Honeywell came along and the investors are looking, “Well, look at this, we can cash out,” like that and company was sold in the blink of an eye. Six years, six years at 19,000 a year, Rob. [Laughter] And holding our own with all the big guys, you know, with 1.25 million, I mean, that’s a -
RW: Did you get anything out of the buyout? Did you have any stock?
JB: Yeah, yeah, yeah, the employee side, yeah, we had - what’d we have. I think we -what’d we split up - let’s see - probably, we probably had about 20%. I think we split up about 20% total. So, you know, as far as startups goes, it was fun having a group that could build stuff, especially state-of-the art stuff. And hanging around with Atari and those guys, and then, Steve, in the early - when he quit, he was in my office twenty minutes after he quit and Alcorn says “Hey, there’s a guy coming. I want to suggest you talk to him, you know, because he’s really smart. We wouldn’t give him the budget, so he just quit.” I said “Well, sure we’ll talk to him. You don’t have to call me for that.” He said “Well, I think you might want to think the secretaries to [Laughter] don’t worry about some unkempt chap, you know, with a little B.O. and a little long hair, and the saffron robes and all that. He just got back. But, yeah we have some - well, some interesting little early day Steve stories someday. But, yeah, so that was a good run. You know, what’s amazing is Synertech, you know, we sold for one-time sales, after all that. [clears throat] Sales were 25, we sold her for roughly 25 million, we sold her for 25 million. Under Honeywell, I think it coasted way over 100, something like 200, just because of Atari and Apple. And, it’s interesting, Atari, who invented the video game world, they sold that for 28 million. You know, the similar - there’s no venture, no sizeable venture at that time, to finish the race. So, in their case, I mean, basically Nintendo came stomping in and reverse engineered the VCS, not this thing, the VCS, and pretty much copied the Atari game plan and when Warners was in the process of botching it, Nintendo had a free (?), based it on the 6502 again. So, that micro had a lot of - I know you interviewed Bill Mensch, and that’s the right guy, because he had a lot to do with that architecture, for sure. Yeah, so, Synertech, that was Synertech. Then we were - our guy - we didn’t have any money, so all the circuits were designed on timeshare with the phone lines.
RW: Hard to believe.
JB: It’s unbelievable. And, so we’re thinking like, well, at least now that we’re owned by Honeywell, we’ll have money to buy a mini. [Laughter] And, Bob and I - Shriner and I, went back- I stayed six - I stayed a year, actually. But the six month point, we went back to the Honeywell budget meeting back in Minneapolis. And, instead of having us report to the computer group, they had us under the Thermostat group - what’d they call it - Control Systems or something like that. And, so, when we wanted to get - it turned out Prime Computer would have been the best at that point, the best mini. [clears throat] “Now, I can’t have that, because that’s a spinout from Honeywell.” Well, how about - “No, we don’t like that.” As a matter of fact, we have one and you have to use that one. Oh, well, okay, better than nothing. “When can we get delivery?” “Well, it’s not going to be done for about a year.” [laughter]
JB: I’m not kidding, and Bob and I were like, “What?” So, that did it for me. My cofounders at Synertech had already quit and they were saying “What are you staying there for?” Said “I well, you know, I got to give it a go, and we owe them a little bit here, gee whiz.” And that took care of how much - what do we owe them? They wouldn’t even support the gang they had. So I came back, and pretty much quit pretty quick after that and started VLSI. So, yeah it was a good run. Yeah, Synertech was a good run, no doubt.
RW: Now, what- at VLSI, what was the advantage of being custom? I mean, why did you go the custom route to build custom, what we call now today, ASICS?
JB: Yeah. Yeah. Well, when we started VLSI, it was the same problem with venture money. I mean, nobody - we couldn’t get the time of day. And, so I started - it took a year and a half to get the money, and what was kind of dovetails back is I got a call from Yomashda. He said “Jack San. It’s been six years, I haven’t talked to you!” So, now he is a big shot at Ricoh, and he got the budget, so Dan and Gunnar, who were the first three cofounders of VLSI were fab guys. And he says “Can I give you a contract to come to Osaka and build a fab?” I said “Yeah.” These guys are going nuts. You know, all they could hear is me on the phone. So, it kept them busy for a year and a half. And, couldn’t get any venture money, so I just started calling all the corporations, just a takeoff on Synertech, same ideals, and by then we knew something. And, they’re all going, “Absolutely. You’re dead on the money. We want a foundry. We want just somebody just to build our stuff, we don’t want to tell you what the secrets are. We just want to do it ourselves.” And, at that time, as I recall anyway, ICE, Integrated Circuit Engineering was the only consulting design group and it wasn’t very good for what we were talking about. And so, first of all, they all agreed that, yeah, we would like to do our own and we’d like to buy wafers, or packaged devices. Yeah, but somebody’s got to teach us how to do it. And, as a matter of fact, that’s when Doug, about then, Doug Fairbairn came by with the guys from Xerox PARC, asking if they can interview us as a startup that’s called Lambda Magazine. It’s the very first issue, and Doug was working at Xerox PARC with Carver Mead and Lynn Conway at Xerox PARC. And they were convinced that things were going to change and that a bunch of systems people like them and others, [clears throat] someday, with the right tools, would be able to do their own designs, to the extent that maybe - which happened but it took a long time. It took ten more years, at least where you could just take that tooling to a foundry and we know there was a lot had happened in the meantime. But, the theory was right. And so we brought Doug in as a founder, and that’s what tipped the tide, because we never would have gotten funded. I mean, all the customers said, “Yeah, you’re right! Okay, I’d like to buy them.” Okay, what’s next? We only had this one part of the puzzle.
RW: So, you went from a manufacturing company to a design and manufacturing company.
JB: Yeah, yeah, both. Yeah, we were going to do tools. Well, at first kind of - with Doug’s group, we were just thinking we would just sell tools and let customers do all their own design. We’d get involved, things like memories, we would do, you know, we would get input/output circuits, things like that, so we never were going to cut it loose completely. But we also brought along our ROM group, because the contention, you know, to keep a fab up to snuff, the thing that’s always pushed fabs is things like high-speed memories. And so, we brought along the memory guys from Synertech. It turns out they were all Chinese chaps and they were really good guys. And one of the funny stories, I think, I got a phone call on a Thanksgiving Day, where all the Caucasians are carving turkey, and the police department down in Santa Clara announcing a bunch of Chinese guys broke into some building we were subleasing at the time and they claim they work for you and they say they’re working. So we went down, and sure enough, these guys, they were all skeptical about how quickly the foundry and all that could pay the bills. So they were in there designing ROMs. Yeah, pretty much the same ROMs we had pioneered with Atari and, of course, video games are going like hotcakes back then. And, lucky for us they did, because any revenue from the Fairbairn caliber foundry and all that really took about probably four or five years for anything meaningful. And, in the meantime, we filled the gap. First year of sales was 22 million. And it was 20 million worth of ROMs and two million worth of tools. So that - and the second year was 40 million. So, basically, we skipped - the first two years of Intel, AMD, all those guys was five million, the second year was ten, twenty, forty. And that’s just as quick as you could do. Synertech was the same. It was too hard to hire people, you know, the mistakes and doubling every year is a nightmare. So, we just skipped the five and the ten, and went twenty, forty - I forget – twenty, forty, seventy, I think. Courtesy of our memory designers and the fact that we kind of cut our teeth on Atari and Apple. And with that consumer laconic crowd, that’s different from selling to DEC, and Burroughs and IBM.
JB: I mean, everything is lickety-split and quick turnaround times and quick QtABD. And just to bore you with the story, we didn’t get that order up until - it was 1982. We got the order in March of ’82. We had never built these ROMs yet [clears throat] at this company, and it was our tooling. Brand new tooling. And then we had to ship them all by the end of November or the end of October, let’s say November. And, we got - the fab area that Dan and Gunnar had designed in Osaka had never done anything in production. And, the sales guys snagged this order out of Mattel and, so, it’s 20 million bucks. Sales order number one was 20 million bucks. Number one at Synertech was ten thousand dollars. We had a big party on that one. And, Mattel couldn’t take the slot. The standard size that Atari had was too big - was smaller. So, we had to invent a way to recess the die down into the package and then put polyimide on top and hope that worked. So, all that uncertainty, so all the 20 million was shipped and hand-carried on 747s between Osaka, Korea, up where AmCorp was, you know final tests back here, and then down to L.A. It would make a great movie. They had to really con customs people that these are just samples. The paperwork barely caught up with us. So that bought us time and saved about, generated about, four million in cash flow. Time for Doug and the guys to, you know, get beat up a little bit and figure out what the real world was like, instead of, you know, PARC. And, yeah, so it all worked out. It all came together.
RW: Well, did any of the silicon compiler designs, the Carver-Mead silicon compiler, did any ever go into production?
JB: Oh yeah. Oh yeah. Yeah, well, the first one, which caused the biggest stir was Silicon Graphics. You know, the kind of people that would gravitate to the compilers were not the EEs that we grew up with. I mean, they’d - we’d talk - most of those guys you’d tell them things, that they’d just glass over like “What are you talking about? I want to just do TTL or MSI or gate arrays or something like that I’d studied and I could kind of understand.” But, like Silicon Graphics, you know, Jim Clark worked the summer at University of Utah, so he worked at Evans & Sutherland Computer Corp. And Evans and Sutherland are the guys that sponsored, convinced Bill Hambrecht to bankroll VLSI. We were still getting nowhere for a year, even after Doug joined us, it took another year. And if Carver hadn’t convinced Ivan Sutherland, who was a founder of Evans & Sutherland and still on the board, that what we were talking about made sense, so Ivan went back to the board, convinced Dave Evans. Hambrecht was on the board. He goes “What is that thing you guys are talking about?” Dave said, “We want to do our own designs here at E & S. We don’t want to give all these secrets - graphics.” And Ivan had a lot of basic patents on computer graphics. “That’s the family jewels, and we don’t want to contract with a custom house, like anybody, and then tell them, okay here’s what I want you to do on the chip.” So, yeah, if there is a way to pull it off, we’d like to have people that give tools that our guys, like Jim Clark, computer science guys and architects, can do themselves. So, that was really not the mass volume that LSI had, but that got us funded. And then later, not too far after that, Jim Clark - I can’t remember the timing - anyway, he came by and he worked with Dave Evans on a summer job, I think. And so, it seemed like people that came through that graphics-oriented path kind of gravitated more towards the compilers.
RW: Well, John Hennessey told me that they had actually started with the Carver-Mead design for what ended up as MIPS, their processor.
JB: Oh sure.
RW: And they got some that almost worked and they were close.
RW: And then they hired some people out of Intel.
RW: Who just went through it and made it - got it ready for production.
RW: So, I’m just not sure that the simplistic rules that the silicon compilers had were good for production.
JB: Oh, I don’t think the whole Mead-Conway package. Yeah, I mean, you know, it morphed within inside of VSLI. I mean, you know, we had people like Bill Smithson, you know, an old veteran custom logic guy. Yeah, so there was a lot of – well they got what? - ten or twelve years out LSI and VLSI software looked pretty much the same anyway, right?
JB: It just kind of came at different paths.
RW: Well, how did you see LSI logic?
JB: Well, you know - and don’t forget I left in ’83. But in talking to the sales guys later, because I didn’t lose touch with them, they really said, you know, everybody would find out about our order at XYZ company, everybody would go in. And, they really said, you know, the application almost always dictated the right place. It either should go with LSI, or you guys probably turn half them down and then that would be VLSI. So, that’s the take I got from the sales guys.
RW: Well, we could do much lower volume because of the gate arrays. We only had to customize the metal. So -
JB: Yeah, and probably it was so esoteric at the time, I imagine there was, you know, how many Jim Clarks are out there in the world? I mean, it probably took a while. And the compiler that - I know Carver had a rudimentary one but we had a couple of guys under Doug’s domain, Jim Raussen and Jim Althoff, I’d think he would give the credit to working with - now they’re working our silicon guys, not just a bunch of Xerox PARC or CalTech guys. So, I think they spruced it up and at least made it, you know, for quite a few applications enough to carry the freight. But the Silicon Graphics, that was big. That put the stamp of approval on. You know, Arnold’s making this movie, I forget what it’s called, with their workstation and our chips, you know, so.
RW: Yes, I’m trying to think of it.
JB: The Asta la Vista, whatever, with the…
RW: “Baby, I’ll be back!”
JB: Yeah, “I’ll be back!”
RW: Well, so what did you do after VLSI? Did you go into venture capital?
JB: Yeah. Yeah. Well, the people that backed us in ’80 was Hambrecht, Kleiner Perkins, Venrock, ATV, where Ivan was a partner by then or was a limited - special partner, something like that. And, you know, having lived through this six year thing at Synertech, we just said we’re not going to - we’d rather not even do one unless we don’t have to – we’re going to raise money, and that’s it. [Laughter] So, we’re going to raise ten million or we’re not going to do it. You know, it was just too hard. Plus, we had the debt. I mean, nobody, nineteen thousand a year, you didn’t make a lot of money. So, we just insisted on the ten. So, Hambrecht, they said “Well, you’ve never run anything very big, you know what I mean, you’ve been a design guy at a couple of companies for two or three people, then at, what - Fairchild for three, four, five people, something like that? Synertech, same thing.” And so, “We’ll give you the money, but you have to agree to be trained to be a CEO. You’ve got to find a chairman that will do that.” So, that’s fine with us. Didn’t fight that at all. That’d be great. So, we talked to Valentine - this was about November - he was busy. I wonder what he was doing. He couldn’t do it. [Laughter] Funny the - we were - we had you on our hit list, not knowing - because we interviewed in September of about ’80. You were doing an article for some magazine I think. So you were visiting a lot of the startups that hadn’t been funded yet. And I remember we all went – I think Max Tea Room, if I remember right, but when we left, Doug had never met you. So, “Man, he’s a sharp guy.” So, I said, “No, if we ever get funded, we need some chip guys, we got to keep Rob in mind.” You know, and not knowing Corrigan [Laughter] and the guys felt the same way. But - I forget where was I – was I babbling about something there. Oh yeah, yeah.
RW: How you got into the venture capital.
JB: Oh yeah, so it was, you know, ten years of back-to-back startups. And, so a lot of things. I got a hold of Hambrecht guys, I said I got to - we have a family - a daughter situation that I thought was just going to be growing up. Well, it was more than that and still is. So I wanted to take a lot of time to go figure that out, and you know, and just a lot of things. And Bill said, “Well, hey, we’re - don’t quit!” He said “Just come and join me in the venture.” They were expanding into international venture capital and they had already teamed up with Barings Bank and they had the start of a venture thing in London and they had one in Japan, one in Australia and “Come on, do this. You can do international venture capital.” I said, “Whoa, that’d be pretty snazzy.” So I, you know, slid right over to Hambrecht & Quist. Never did move up there. I stayed down here. And did that for a while. That was a kick. The one in Japan, I’ll never forget, we’d go back for reports about every quarter, and their returns would be quarterly returns, 12.5%. Next quarter, 12.5% because they read a book that said you have to do 50% a year. [laughter] So they would make all these investments and just lend them money so that they always had [Laughter] say well, that’s not quite the idea. But anyway, yeah, I did that with Bill. It never fails, like a lot of these, I’ve heard a lot of stories like this. The first phone call I got when I was still - I think I’d been there about two months - was from Jim Barnett and Ross Raymond. And they were working at Zylog, but they wanted to start a company and knew that I had left, and wanted to know what did I do, how did I do it, all that. And, of course, that was Xilinx. And it turned out they were designing the stuff on the weekends, with the Zylog computers, I’m like “What? Stop!” [Laughter] Sent them up with Larry right away, because Exxon was suing, Exxon owned Zylog and they were suing everybody. They were so mad that they lost so much money in high-tech. And turned out that was the saving move, because Larry fixed them up. You know, when Exxon eventually did sue, they dismissed that right away. So, yeah, so that was the first deal that I ever brought into H & Q was Xilinx. And it took them - Barnett might be a good interview - it took them - what did it take them - three or four months to convince Bernie that you could make more than a million dollars at a startup. He was convinced a million bucks, that’s all you can make, “Why should I do this?” So, yeah, did that for a while. And that group grew to like 25 people. It’s just like, wow. When I got there, it was four, and then somehow they hired people in Boston, Miami and all - Dallas. There were guys I never met and, theoretically, you’d all vote on a deal, these venture partnerships, you know, like who’s saying ‘no’? I don’t even know you! [laughter] And, so it wobbled along. [clears throat]. And then somewhere around ’86, I guess - so I went there in ’83 and by ’86, Bill just got rid of everybody, kept one guy, young guy, Stan O’Grady, who now does Granite Ventures. And Stan was like 25 or 6. But, what a deal, go to work for Bill Hambrecht, you know, one of the leading guys on the planet, and buying airlines and you know, I mean, Bill’s a pretty amazing guy. Yeah, he called at VLSI when I was still there, we had a board meeting in August of ’82, and by then, we had the 10 million from the venture guys, we had Bendix, who stepped up as a corporation to fund, I think, about 20 million for a fab area. We had Olivetti, who put up a couple of million to help us do design centers, and we did the first one in La Brea. And then GE Capital wanted to add - so we were rolling in dough, and we’re doing this twenty million dollar a year anyway. And, Hambrecht come - one topic was should we take the GE money or not? And Bill says, “I don’t think we should take it. I think we ought to get ready to go public.” And we’re like, go public? The Dow Jones was 800 or maybe 810, going south. Apple’s IPO, Apple’s stock was way below the IPO price and he wants to go public. So, well this guy’s a pretty smart guy, guess we ought to go public. So that’s what this is. This is their kind of the thing they ran around. Hambrecht and Quist, VLSI, August of ’82, with kind of an S-1 type start. So if you look back at - these days, there’s all kinds of charts that go back that far that try to figure out what happened in ’08-’09. August of ’82. That’s when this Dow, I swear to God, look at any - it’s all over the place. That’s when that bull market started and just went straight up through, you know, whatever, 2000, something like that. So I don’t know if you can make that happen, you know, guys like that have so much power, or just - [Laughter]
RW: Yeah, well we went - we used your example at LSI Logic and so we went out a year after.
JB: No, no. No, we went out in February of ’83. This is when we did the first stock. No, we were the first ones on the blip. February of ’83. And then you guys were May?
RW: We were in April.
JB: April. Okay, about two months later.
JB: Oh, it built to a frenzy. We should have waited. You guys really sucked it dry.
RW: My wife, at the time, came home one day and she said “You got to buy stock. We’ve just hit the bottom.” And I said “Well, you know, how’d you figure that out?” And she says, “Well, I went to this Mexican restaurant.” I forget the name of it “and it was completely full.” And she said “I think everything’s changed.” And so, I laughed it off and, it was, in fact, the bottom.
JB: Oh, ’82? August of ’82?
RW: She – yeah, she called it.
JB: Yeah, for a while you could look in the San Jose Mercury want ad section on Sunday and just count the pages and say “Oh, it’s over. It’s just going back up again.” But I wasn’t brave enough to do that. But yeah, there were people that, if you didn’t get - there was one guy that I used to have a little argument with all the time. He turned down going public. He says “If we can’t get more than that guy Balletto got, I’d rather not go public.” So, they didn’t go public, the bubble ended right in June.
JB: And, if you weren’t, if you didn’t get that money, you didn’t win the ASIC battle or the EDA battle. Sure enough, they frittered away. So, yeah, so it’s been on the investor side since the middle of ’83. Yeah. Keeps you busy. Did something called Sunrise Capital, which is C-Level type funds, small funds money from individuals, no pension funds. And let’s see, the first one of those was in 1995. That one’s still alive. One thing about these LLCs, you know -
JB: Until the last company is -
RW: They live on.
JB: They live on. So, I am now the worst IT guy ever, because I do all that paperwork and filing is not the best. And that was fun. We had a good - had the first Internet dating site Rob, got away from Adams for a while, called Matchmaker.com.
RW: Oh, man.
JB: And we had it before Match.com. Yeah, so that’s a whole other story. We made money, we sold it way too early.
RW: Well, you know, so many of these things start here in the Bay Area, startups and going public kind of thing. Why is that? I mean, what is the attraction that makes this the place to go to innovate and do startups?
JB: Well, I think it’s – there’s such a - unlike when we got started - and when I first worked with Larry Sonsini to do VSLI - when did we do that - that was ’79, so we did the legal stuff in ’79. There were 13 lawyers at Wilson Sonsini. That was it. Now, they’ve got five hundred, six hundred now? So, I think, one way or the other, between the engineering, certainly the prime movers are Stanford and Berkeley and, to a much lesser extent, but to some extent, Santa Clara. But, the whole engineering creation around here is amazing and then, it seems to me, in startups, the last - you want to make is as easy as possible for creative people to fulfill their vision. And, if they have to spend any time on lawyers and accountants and all this paperwork stuff which somebody has to. It just slows you down. And, almost everything we’re doing has competition, and so there’s still a lot of merit around here that you can do things so fast. You could go from a startup to public. VSLI, our startup was 26 months. We got the money in December of ’80 and we were public in February of ’83. Now that’s not totally, you know, it took a bubble to let that happen, but you wouldn’t see that kind of performance, certainly not anywhere outside the U.S.A., maybe Boston. But, I think it’s just the whole, it’s a team deal. It’s the ultimate team sport.
RW: Everything is here.
JB: It’s all here.
RW: I remember we called up. We got some funding and we called up the real estate lady and said “Well, we’re going to need a plant. We’re going to need maybe 50,000 square feet.” And she said, “Ebb OS or bipolar?”
RW: That’s when you know you’re in Silicon Valley.
JB: Oh for crying – yeah.
RW: Yeah. No, we went to Sonsini as well. And it was all set up here. Fill out this form and, okay, and, you know, it was done.
JB: Well, it’s like we’re building a skyscraper and each level, like the semis and all that, maybe we built the first 50 layer, you know, and then maybe the computer rocket techs came in, they take it the next level. But they’re all intertwined. None of them is separable. You can’t just say, “Okay, listen, we’ll get the” - obviously, Facebook and Zynga and all those guys. I mean, most of the people from Zynga, many of them worked at Atari, and then went to electronic arts, so they’ve refined. They grew up, kind of like machine language programming, almost. I mean, they - in some of those worlds, every little tenth of a percent matters. And, so, here you’ve got a bunch of people that have got, you know, a lot of veterans that can help the young kids not hiccup, not make a mistake.
JB: Yeah, it’s the whole - it’s like a football team in my mind.
RW: Well, it really works, and it still works after all this time. It’s not silicon any more, it’s software.
JB: Well, down below, somewhere in the cloud, if you peel it back, get behind the servers and pull out a rack, there’s going to be a chip. That’s for sure.
RW: Yeah, yeah. Well, that’s great. Well, thank you, Jack.
JB: Pleasure. So, we’ll do it thirty years from now, huh?
[End of Interview with Jack Balletto – 2012]