RB: Hello, I’m Robert Blair for Silicon Genesis at Stanford University Libraries. E. Floyd Kvamme was born in San Francisco to Norwegian parents in 1938. He grew up in the Bay Area in the forties before Silicon Valley actually became Silicon Valley. He attended U. C. Berkeley and received a bachelor of science degree in electrical engineering and then went on to receive a master of science in semiconductor materials from Syracuse University in New York. After an initial post-graduate employment period, he joined National Semiconductor, being hired by the famous Charlie Sporck. In 1982, he joined the fledgling Apple Computer Company in a marketing role in Cupertino. Two years later, he joined the famed venture capital group Kleiner Perkins Caufield & Byers, where he was a partner focusing on semiconductor and systems investments. In 2001, Floyd was invited to join the Bush Administration in Washington as co-chair of the President’s Council of Advisors on Science and Technology. He was also chairman of Empower America, a board member of the National Venture Capital Association and was chair of the California State Elections Committee. Floyd is a highly respected entrepreneur and executive in Silicon Valley. Let’s now hear his Silicon Valley story for the Silicon Genesis files. Floyd, welcome to Silicon Genesis and thank you very much for inviting us to your home here in Saratoga, California. So this is an informal discussion, Floyd. So begin, if you would, by telling us about your early days. Your parents are from Norway and immigrated to America.
FK: That’s correct. Yes.
RB: How did that happen and why California?
FK: Well my dad and mom like you said were both born and raised in Norway. And they - when my dad was 19, he wanted to come to the states. His brothers were already here. He was a carpenter and he decided that he’d like to see America. America was the great - streets are paved with gold kind of place. My mother was 17 when she came across and she had a sister that lived in San Francisco. So that’s what drew her to San Francisco. The depression happened and her sister and her husband went back to Norway. So my mother was kind of stranded her but she met my dad in the early thirties at church. We were very involved in church as young - as a young person. And I was born in San Francisco then in 1937.
RB: And you grew up here in the Bay Area?
FK: We grew up in San Francisco in the sunset. Like I said, my dad was a carpenter and I went to school in the public schools of San Francisco, Lawton Elementary School and then a very large development happened just south of the city in a place called Westlake in Daly City. My dad was a foundation foreman there and so every opportunity, starting with my high school years, I worked as a carpenter to work my way through school. Before that though, my brother and I got our first trip into entrepreneurialism as newspaper boys. We carried as many as 600 papers a morning as that development there in Daly City there developed and learned a little bit about business, about how you sell papers and how you collect your funds and the receivables problems of those slow paying customers. But yeah, I grew up there. Went to Jefferson Union High School in Daly City. The most famous graduate of Jefferson Union High School was a year ahead of me, John Madden. He once almost killed me on the football field but he probably doesn’t remember that. I remember it well. And then loved mathematics. And so I was going to be a math teacher. I thought it would be a lot of fun. And actually an English teacher took a real interest in me because no one in my family had ever gone to college. That was not something that was done. And he approached me one day and I don’t remember what started the conversation but he said, Floyd what are you going to do? I said I’d like to be a math teacher. He said you know what an engineer is? And I said no. What is an eng - he said that’s applied mathematics, using mathematics to build things. And I said boy that really sounds interesting. And so I decided I was going to go to college and that meant - from the time I was about 14, by the way, I actually helped my folks with their income tax because they weren’t real proficient in English. And so I knew there was no money to send me to school. I knew I was going to have to do it on my own. And so I wanted to go to college and, in those days, the two big colleges around here were Stanford and Cal. I looked at the numbers at Stanford and there was no way I was going to afford Stanford. I was not aware of things like scholarships. I just didn’t know about them. And, in those days, Berkeley was very, very inexpensive. The fees were small and there were houses you could live over there in what were called co-ops, which still exist. And so I figured out that I could go to Berkeley. And so I applied and went to Berkeley.
RB: Now in these early days, Floyd, did you get back to Norway at all or -
FK: No, no, I didn’t. Matter of fact, my folks didn’t go back to Norway until sometime after I had left home. It was expensive. And, like I say, money was - and travel was much more expensive in those days. As a matter of fact, I remember very vividly as a young boy people coming by the house and after World War II and telling stories of our family in Norway because their facilities had been taken over by the German occupation and we sent care packages frequently back to both families. My mother’s family was the larger of the two and so a lot of food stuffs and clothing were - she would save up and send care packages back some. So no, there was no travel though.
RB: Okay. So now you’re at Berkeley and Double E is the target.
FK: Well the reason Double E was - I talked to the people over there. I said well I love mathematics, which engineering has the hardest math? So I didn’t know what an electrical engineer did, to tell you the truth. But I knew the math was supposedly hard and I figured if I can’t do that math, I’ll step down because I was told that it kind of goes down, the math in mechanical’s a little less and the math in civil’s a little less, etc., etc., etc. So I’m at Berkeley and enjoying it, enjoying the math and starting to get a feel for what an engineer did. But at Berkeley in those days, you could have mixed the engineering course with a physics course and not noted the difference because physics - it was very, very technical. And I’ve always been happy that that was the case. But while I was there, I was there ’55 to ’59 - while I was there, I would go to seminars that were being held on new things going on. And I was fascinated by this new thing called a transistor. There was no formal course in transistors. And so I would listen in on these things. And I said, you know, my first job, I’m going to get involved with transistors as a design engineer. And so - and I thought about going on to a master’s program at that time but I said what if I don’t like engineering. That wouldn’t be very good. So as we - when I graduated from Berkeley, I - ten days later, I married my wife, Jean, who had gone to the same church I went to in San Francisco. And so - and she, like me, had no money whatsoever. So we interviewed and there was a huge demand for transistor engineers at that time, design engineers. So I was very fortunate in the timing and got offers from I think 30 different companies. And we -
RB: So you really hit the sweet spot?
FK: Very much so.
RB: - with your graduation date and the invention of the transistor and the whole Fairchild thing and - so which company did you join after graduating?
FK: I joined a little company called Electronic Systems Development Corporation in Ventura, California. And the reason I went there was it was very small. And so I figured I could see lots of aspects of what went on in a company. It was founded by two Operation Paperclip German scientists, Otto Schwede and Theodore Sturm. I still remember these two guys. They were -
RB: Good German names.
FK: With very German names and one of them used to tell a story about actually having met Hitler. He didn’t like him, of course, and - but he told of technical developments during World War II because he had been part of them actually. But they were con – they came over with Werner von Braun, if you remember when Operation Paperclip, those German Scientists were attracted to United States and they got involved in the space program. And what this company did was it built systems, tracking systems for the space program out of Point Mugu, California, if you know where that is, just near Oxnard, because there were missile launches even at that day – in those days from along the coast here. And so that’s what we worked on. Satellite kinds of applications, tracking systems and those kinds of things.
RB: So did you turn down any offers from the bigger companies in order to go there?
FK: Oh yeah, because I, like I said, I had about 30 offers. And I actually remember Jean and I actually traveled back because a very attractive offer came from RCA in Camden, New Jersey. And since I’d never lived – I should say that one time my brother and I went – between our junior and senior year of high school, we, with our newspaper money, traveled to Norway and enjoyed it immensely. Met the family, learned the language a little bit because my folks wanted to be Americans. They did not speak the language at – Norwegian language at home except to keep secrets from the kids. [laughs] But so there was a certain travel intrigue in my blood I guess. And I carefully considered the RCA offer but it was an enormous organization. The engineers sat in a huge bullpen and I just got the feeling that you could get lost in this situation. I remember other – virtually every aerospace company in Southern California had given me an offer because there was a lot of activity at that time. The timing was very, very good.
RB: So you initially developed a startup culture for yourself by liking the environment of the small company?
FK: Yeah, you might say that. Now, again, the reasons that I did that were to get a full feel for how the business all worked. I can’t say I really knew I was doing that but it just seemed like the right thing to do at the time. Now my goal was to see if I liked engineering at all. And I really enjoyed it but what I really liked was these transistors and we were starting to use a few integrated circuits. They were very, very simple in 1960. But so I said ah-ha, now I know what I want to get a master’s degree in. I want to get a master’s degree associated with silicon with transistors, etc. And I wrote to some 25 or 28, I can’t remember the exact number, colleges in America asking if they had a master’s program featuring semiconductors. Only two came back with a positive answer.
FK: And most people would not guess who the two were but they were Syracuse backed by GE Semiconductor which was in town, and Purdue in Indiana. And the reason for Purdue is most people don’t know that the transistor effect was found at Crane Naval Air Development Center three weeks after Shockley. And it’s the tragedy of being second. But they had a transistor program. Well by this time, I was married, of course, and so it worked out that I could go to work for GE Semiconductor in Syracuse and work during the days and go to school at night. And so that’s what we did for the next two years, ’61 into ’62.
RB: Then so with your master’s now and you’re at GE, what came after that?
FK: Well at GE, I got my first taste of marketing because there was a book that we wrote there every year that was very, very popular. It was called the GE Transistor Manual. And, in fact, my master’s thesis is in the last issue of the ma – I wrote about six chapters of that because I was placed into a section that interfaced with the users in the application side because if you think about it, in those days particularly, the chemists built the semiconductors. The electronics guys designed them into things because they really weren’t – I mean, the making of a semiconductor has nothing to do with electronics. It has to do with the fusion processes and all those kinds of things. So there was that translation necessary from how does this amount of boron or whatever develop certain amount of capacitance in the device etc., etc. So by that time I was traveling quite a bit giving lectures on how to use semiconductors, wearing my GE applications engineer hat. And they had a computer facility in those days which later was sold to Honeywell in Phoenix. I went there quite often, talking about our latest high speed switching transistor and how you could determine how fast it was going to switch by the drive currents. That was my – the subject of my master’s thesis. And so got enamored with the whole notion of not only designing with them but had a feel for marketing.
RB: So what got you back to the west coast?
FK: Well actually what happened was I tried to get into a formal marketing position at GE. And they wouldn’t allow it because I didn’t have the proper academic credentials for marketing. I was an engineer. And I wasn’t very happy with that and so I decided well, I want to get back to the west coast then. I mean, Syracuse was neat but the winters were ugly. And so I, again, not knowing that many other semiconductor companies, even though I actually met Bob Noyce while I was at Syracuse because he was a good friend of the general manager of GE Semiconductor, a guy named Len Meyer. And well there’s a funny story there, by the way, I had a very fortunate circumstance. We were selling to IBM in the southern plain of New York, I forget what it’s called, down near Cornell. And we were having a terrible time meeting and switching speeds of the – these were alloy transistors – Germanium, this was before the silicon age. And we were having a terrible time. While I was doing my master’s thesis and was reading or studying about recombination, slowing a transistor down, etc., etc., and the – this was a huge order in those days’ terms. And I don’t remember exactly how it happened but a group of us were sitting there saying what are we going to do? How are we going to figure out and we were thinking about how to drive a transistor harder. I said well if there were more recombination sites in this transistor, we – it would go faster. And so we agreed and I think it was my idea but I don’t remember. It was certainly a group idea – to sandblast the wafers before we put them in the processing. I mean, that sounds like a crazy idea. It worked like a charm because all those recombination sites on the surface suddenly were collecting the base carriers and our switching speeds plummeted. That’s what brought me to the attention of Len Meyer and that’s actually how I ended up meeting Bob Noyce.
RB: You increased the surface area -
FK: Effectively we increased the surface area with the sandblasting and it just worked wonders. And it didn’t affect the gain of the transistor that much because that was the – in an alloy, that wasn’t that big a deal.
RB: Overnight hero.
FK: I was a hero. And, matter of fact, it was Christmas Eve when we actually saw it work in 1961 or maybe it was 1960 actually. And that was – it was a lot of fun. And it attracted me to the fun in discovery. Discovery is fun, particularly if something works.
RB: So when you headed back to the west coast then, who did you come back to join Floyd?
FK: Well, of course, the space program was a very big thing and, you know, that whole thing had come on now and Kennedy had made his let’s go to the moon thing. So I wrote to a number of people in that area because they were using a lot of semiconductors. And I thought I’d get into that. And I joined Space Technology Labs in Redondo Beach, California as a design engineer because they had a big con – they’d just won a very large contract for a space vehicle. And so we packed and we had our first child in Syracuse. So we packed up and drove across the states, took about two weeks to do it and drove through the national parks and the rest of the stuff, moving back to California. I arrive at the plant, check in for work and the guy says we really want you to come to work for us but the contract that we hired you for, we just lost it on a political basis. There was a con – they had been offered the contract. They had won it technically but it was something to do with some region and the congress got involved and the congressman from Milwaukee, Wisconsin at AC – AC had an operation there – ended up stealing the contract for them. So I was put in another section doing a program called the Orbiting Geophysical Observatory, OGO. And it was dull. It wasn’t space. It wasn’t at all. And I, of course, was then looking for sources for various transistors and various things. And the Fairchild salesman, a guy named Chaz Haba, was calling on us. And Chaz is quite a character. And one day he said, you know Floyd, you ought to come to work for us. He brought by experts, a few funny stories from the early days there. I remember him bringing by a guy one time, he claimed to be the diode expert. And I had done a lot of study in forward recovery of diodes, again, part of my master’s thesis. And it was very clear this guy didn’t know anything about diodes. Well the guy’s name was Marshall Cox. And Marshall was about as technical as a tack. But he’d been put off to see if he could join this thing. And so they – Chaz had said that he was an expert, thinking that Chaz could interrupt with all the right an – because Chaz was pretty good technically. But it was very, very funny. Of course, Marshall went on to have a wonderful career in the semiconductor industry, Marshall Cox. But that was one of the funnier things that happened. But anyway, I was attracted then to Fairchild.
RB: So you did join Fairchild?
FK: I joined Fairchild.
RB: And that year was?
FK: April of ’63, yes.
RB: And what was your first job there?
FK: My job was in product marketing, working for Mel Phelps who ran product marketing and I was the integrated circuits product marketing guy. And integrated circuits, like I said, were in their infancy at that time. And the thing that really sticks in my mind is they gave me an office with Murray Siegel who was employee number nine, I believe, of the Fairchild eight. He was the first outside guy. I think that’s true. And I sat in my desk. It was this co – two man office and the first thing, the very first day I was there, they had a little meeting around Murray’s desk and I was sitting there trying to figure out what I was supposed to be doing. And Murray handled standard microcircuits and I was to handle the custom ones because they were starting to get inquiries from computer companies mostly about how to build special ones that companies wanted built. And they were having a meeting and they came to the – we were allocating the parts. Fairchild, by this time, had introduced the family of logic called RTL, Resistor Transistor Logic. And they had a backlog for the S element which was the most complex element at that time. It was a half of one bit, a half shift register if you can imagine that. They had a backlog of about 2,000 parts. That week’s production was thirteen pieces. And they were trying to figure out who to give the thirteen that they had built to. And a company on Long Island had the biggest order with them. So they decided to give them two of them. I mean, the yields were terrible. They got one good chip per five wafers started that week. I still remember these numbers because I said to myself, holy mackerel, this isn’t as clear as I had thought. Is this – I mean, can we really build anything? And – but they waged on. And, of course, very shortly thereafter, epitaxy was discovered as the way to isolate things. Don’t do the back side diffusions which were the early days of those early wafers. And it changed the world. I mean, suddenly the wafers – the yields on that S element went from one per five wafers to five per one wafer and higher. And the whole thing changed. But that program that I was involved in then and involved interfacing with the mostly computer companies who wanted to build their own customized ICs for use in their computers. And so that involved my working also with the folks at Fairchild R&D which is up in Palo Alto. My office was in Mountain View. And working with Fairchild R&D meant working with Gordon Moore because he ran it. And so I would come over there - every Friday morning, we had a meeting going over the progress of the various projects that we were working on, the various custom projects. And, as a matter of fact, probably the most memorable morning was one morning we’re sitting there and Bob Graham who has passed on but sticks his head in the door and says President Kennedy’s just been shot. I was sitting at Gordon Moore’s desk when I learned that news.
RB: Everybody remembers where they were when that news hit.
FK: Everybody remembers where they were. Well that’s where I was at Fairchild R&D in those days.
RB: His office?
FK: Yeah, in his office. And that allowed me to have some exposure to not only the business side but the R&D side because we were stretching ourselves in a number of those custom projects. And we had custom projects with a number of different companies, one of which was actually with Xerox Data Systems, what became Xerox Data Systems. Scientific Data Systems in southern California run by a guy named, what was it, Max something or other, Polefski. Yeah, Max Polefski. And we went down to close that piece of business and I had the pleasure of flying down with Bob Noyce. And I think that’s the first time Bob met Max Polefski was in that conference room when we closed that piece of business. That was probably 1963 or 4. It was pretty early on – maybe it was a little later than that though. But it was pretty early on.
RB: So how long did you stay at Fairchild?
FK: Well then Fairchild had a policy that you couldn’t grow in marketing unless you had field sales experience. So I said okay, I want to go to the field because I – by this time, I really enjoyed the marketing, product marketing kind of function. And somebody once told me and I wouldn’t doubt it’s true. I don’t know that it’s absolutely true but that the semiconductor industry in this valley invented the concept of product marketing because marketing was always about advertising and those kinds of things, whereas the actual design of – and it was necessary because, again, as I mentioned earlier, the building of semiconductors was a chemist. And they thought in terms of that had nothing to do with electrons. They thought in terms of doping densities and those kinds of things. So there had to be that transition to define what was necessary for the users, which were electronics engineers.
RB: I agree with you. I think the term product marketing hails from the semiconductor industry. It’s a bridging function. Turned out to be an extremely necessary function.
FK: And now, of course, it’s very, very common that people think in terms of those kinds of things. But anyway, so I said okay, where in the field should I go and I – Don Valentine was running sales at that time. And a guy named Jim Martin handled the East Coast at that time. And Jim had had me out for a few – giving a few seminars because, in those days, I went to the field a lot to give seminars on how transistors worked. And they decided that the best place for me would be in Boston because Apollo Computer was being designed there at MIT. And I would call on MIT and all of the companies associated with building the Apollo computer, which was primarily Raytheon and other companies of that nature. So I said fine. I’ll go to Boston. And we moved out there. The funny part about that story was – which I didn’t know at the time – is that the guy I would directly report to, a guy named Bob O’Hare, hadn’t agreed to have me on his team. And so the first days were a little sketchy because I would be placed there and you shall have this employ – because I didn’t interview with him. That wasn’t part of it. Now it turned out that we became very good friends. And Bob had me running all over the region giving seminars besides my accounts. But working on Apollo was fun because there were lots of issues. I don’t know if you remember purple plague, you know, the gold eutectic problem with aluminum. Well we had it in Apollo parts in spades. And one night I was sitting writing because I used to do reports back on what was going on because it was such an important program. And everybody wanted to be on it, not only for the commercial realities, but to be on the moon project was a big deal. And I wrote a memo back to the home office and I lived with this line for many years. My summary line was “Remember, on Apollo, the customer is asking for the moon.” And that got a lot of smiles back here. But that’s actually how I really met Charlie Sporck because they were having trouble. The way that Apollo computer was made, it was made in two halves. They were called half marriages and they were – it was put together. Well they had real weld splash issues; there were lots of shorts in your manufacturing process. So I called back to the guys in Mountain View and said I need our best manufacturing guy to come out and visit Raytheon and see if he can offer any help because the can that the IC went in – because these were mostly dual three input NOR gates that were used and a sense amplifier. And any weld splash would cause the pin to short to the can. And the can was hot to the circuit. So that wasn’t good. And so Charlie Sporck came out. And on a cold, wintery, snowy day in Waltham, Mass, I took Charlie out there and then had to get him back to the airport. I wasn’t a particularly good driver in snow. I had Charlie scared silly, skidding around the roads. But we had a good visit and the folks at Raytheon really appreciated it.
RB: You were impressed with Charlie already?
FK: Already. I mean, he obviously knew manufacturing and he was very helpful to these people that day. They talked about it for weeks thereafter. But, I mean, a lot of things happen when you’re in the field. I – let me tell you two stories. First of all, I took over from a guy who also called on Digital Equipment Corporation at that time but I didn’t get that account. That was given to somebody else. But we visited that account together with this fellow and because he wanted – DEC wanted some specific transistors and they were converting from germanium to silicon and silicon PNPs weren’t real – they were mostly NPN transistors at that time, whereas germanium was all PNPs. Well we had carefully data logged a group of PNP transistors for this guy that was going to qualify them to see if we could get into Digital Equipment, which was starting to become a very, very large transistor customer. Well we had a package, a low cost package with a piece of ceramic that had a blob top that was just poured on and it solidified on the top. Well unfortunately, the tops could flip off. And some people called them flip top cans if you remember those in that day. Well here we bring in this package, this group of data log transistors and as I recall, there were 50 or so. But they each had a label on them, what number they were and all the data sheets and all this other kind of stuff. And this is at the old mill, at Digital Equipment there in – it’s in Marlboro right? No not Marlboro, whatever the name of that town was. The guy takes the transistors out back, pours them on his desk. Now mind you, all the data’s there. Takes off his shoe and starts beating on them to see if the tops would come off. And a few of the tops came off. And he scooped them into his hand and he had a window over the mill pond and threw them out the window. And I said holy mackerel, is that how sales are done? [laughs] I mean, he had all this data collected but he had one spec in mind. It was mechanical. Can they withstand shock and that was his test and he didn’t care about the rest of the data, which for a techie like me was a real thing in experience. Another experience I had was that just after I got on the account, I had Raytheon in Waltham; they also built the Polaris missile. And we had a very big order for parts for the Polaris Missile System. And I’m on the account for about four or five weeks and we’re starting to miss deliveries. So I got called into a general management meeting. Here I’m whatever I was at the time, 20 something years old, and this guy just reads me up one side and down the other. And I learned an important lesson. One of the benefits of getting in trouble is you meet the important people, which I didn’t like necessarily because it was an ugly meeting. And I figured out with the buying and the components people how to loosen the spec in certain areas so we can meet their spec and not affect their function which was a technical answer to the whole thing. So that worked very, very well. And they were very pleased at that so we got ourselves back on order and we were able to supply the transistors more readily, etc. About oh maybe six months go by and I am calling on the account. I’m going up and in those days, the purchasing department, components department, purchasing department was on the third floor of this building at Raytheon in Waltham. And I step on the elevator after signing in and the gentlem – and I’m going up to get this order. And that same general manager, I still remember his name – Jack Pascarello – steps on the elevator and we ride up the two floors and we talk about the weather. And I step off the elevator and I said to myself, what a huge mistake I’ve just made. I had the dude cornered for two floors and I didn’t even tell him what I was here to do because he was going to ultimately have to sign off on that purchase order. And that’s where I came up with the concept of an elevator pitch. And then talked about it in sales meetings about you got to have an elevator pitch. You got to have something that you can tell people about what you’re doing that fits into a two floors of an elevator ride and started to give speeches that included the notion of an elevator pitch. But that -
RB: So you claim to be the originator of the elevator pitch?
FK: I think so.
FK: I think so, yeah. And now I am not the propagator of it because there was a guy at Regis McKenna when Regis went out on his own and had his own firm that picked up and wrote books on marketing concepts. And he really broadcast it a lot. But it didn’t become common here in the valley until the early eighties actually. But the original was based on a mistake because I realized I had screwed up when I stepped off that elevator. And I realized it immediately. That was a huge mistake. I mean, why am I talking about the weather to this guy when I’m going in for the biggest order I was going to ever get in the field which was a million something order, which was a very big order in those days.
RB: So how long did Fairchild keep you out there on the east coast?
FK: It was actually very short because then they wanted to – they went through a slight reorganization. They brought in these regional managers, the Jim Martin, Bernie Marren, Marshall Cox, Jerry Sanders, to run sections of the business. And Jerry was responsible for MilAero which was a big percentage of the business at that time. And he wanted me to come back and work in his department for IC product marketing again. And because he also had been the product marketing function. But they went to a markets oriented thing. Bernie had consumer, Marshall had computer and Jim Martin had industrial.
RB: So it was back to the west coast again?
FK: Back to the west coast. So that was 19 – so it was only – I was, like I say, I was only out there for probably – I think it was actually less than one year, maybe ten months when that happened and that reorganization happened within the company.
RB: So your wife was well pleased with all this backwards and forwards?
FK: Jean is a wonderful lady. She did the unusual. We moved something like eight times in the first seven years of our marriage. We were all over the place. And -
RB: That is unusual.
FK: And she was just terrific about it and excited about it. I mean, we were not wealthy people by any str – and came up in – well we weren’t poor but we were certainly lower middle class. But her dad was a welder, heavily – his company built a lot of gas stations. And a great guy. But money was not in the equation at that time.
RB: So now you’re back working for Jerry Sanders which, of course, is the beginning of a very interesting period I’m sure.
FK: Yes, yes, yeah. No, Jerry was a fascinating boss. And we got on quite famously. Matter of fact, our offices were adjacent to one another. And in the new building at that time on Fairchild Drive, which of course, is all gone now. But and that’s when we also started to work on some – in some respects, I went back to doing what I was doing before I went to the field but now I was the manager, the marketing manager for that group of things. Hired guys in that – many of whom became CEOs of companies. Mike Markkula, for example, joined my team there and a number of early guys in those early days. And, like I say, Jerry was a great guy to work for because many people don’t realize how good technically Jerry was. I remember one trip with Jerry. Now this is actually before I went to the field where we were calling on some folks back in New Jersey. I can’t remember the name of the company but it was for – it was a Vietnam War project as I remember but I don’t remember the details there. But a guy walks into the room and Jerry immediately recognizes him and he recognizes Jerry immediately because this guy had graduated number one in engineering at University of Illinois and Jerry had graduated number two. I mean, he was number two in his class in engineering from University of Illinois.
RB: From a good school.
FK: From a very good school. I mean, Illinois was very, very well known at that time and I think still is a very, very good school but Jerry was technically a very smart guy and knew what he was talking about on the technical front.
RB: So how long were you on Jerry’s team?
FK: So let’s see. We came back in – sometime in ’64 – no I’m sorry, in ’65 so I was on his team for probably a little more than a year. And maybe you don’t know this story. You might find this interesting. In the summer of ’66 or late in ’66, I get this call from Charlie Sporck. I’m sorry, it wasn’t fall. It was Christmas time. And he said I’m seriously thinking about leaving National. We have an offer to…
RB: Leaving Fairchild you mean?
FK: Leaving Fairchild, I’m sorry, leaving Fairchild. We have an offer and it’s from Plessey in the UK. And we’ll move to England and start a semiconductor operation over there and then move it back to Silicon Valley. And so he said are you interested and I went over to his house. I believe it was Christmas Eve. And the whole idea was we were all going to resign. And the plant was shut – Fairchild was shut down from Christmas to New Year. So we all were going to leave Fairchild on the first day of January and things bubbled along. And on New Year’s Day evening, we all went up to a restaurant in Palo Alto. And Charlie went across the street to meet with Sr. John and Michael Clark if you know those names.
RB: I’ve met -
FK: Yeah, because they were the guys that were going to hire us on. And he went across the street to the – to Ricky’s to have a final meeting to talk about some of the details. And we sat across the street and we sat there and we sat there and we sat there and then we sat there. And hours went by. And finally Charlie comes out because we’re going to resign the next day, right? [laughs] And finally Charlie comes back and says the deal’s off. We all work for Fairchild
Semiconductor. It’s all over. This never happened. Okay. I never did know exactly what blew up but something on the compensation level obviously. There had been a misunderstanding and they couldn’t iron it out and it was all over. But by that time, I’d actually thought I was going to be moving to England. Swindon was it?
RB: Swindon, yeah.
FK: Swindon, yeah.
RB: Charlie actually talks about that a little bit in the – in his -
FK: In his interview. Oh that’s interesting. (talking at same time) Does he cover why it fell apart?
RB: I have to go over it again. I’m not sure but -
FK: I don’t think he ever told me anyway. I just drove home that night and the next morning I went to work.
RB: The Plessey experience was an interesting one for him.
FK: Yeah. Well six weeks later on a Sunday night, I get a call and said Floyd, you still ready to leave? He says we’ve made a deal with the guys at National Semiconductor because National was an existing company, headquartered in Danbury, Connecticut. And Peter was the chairman. But a guy named Tom – Don Lucas who, of course, is very well known here in the valley, was a major member of the board and he had arranged to bring over two very important guys the previous summer, Bob Widlar and Dave Talbert to start an analog circuits division. And Bob is a genius, of course, you know, and really invented analog integrated circuits. And Dave was a great process guy. And so they had an operation here and they wanted to build on it and bring over Charlie as a CEO and a marketing team, etc. And so the next day he resigned to Noyce and then I sat there for a whole week wondering every time Jerry walked into his office whether he knew or not because I never resigned to Jerry. Okay. And one day about Thursday of that week, Jerry walks by and he looks in my office and goes – and I said he knows. [laughs] And maybe this is wrong but they really, really tried to turn me around. They wanted to turn one member of the team and I was the kid on the team. I was the youngest guy clearly. And so Tom Bay took me out. Jerry tried to convince me into leaving or into changing my mind and staying there. And I don’t remember who else. I know Noyce was not one of them but Tom Bay definitely, who was the head of marketing sales at that time, wonderful, wonderful guy. But I said no, no, no, I’m going to do this. And so -
RB: So you made the move to National?
FK: Went to – made the move to National and, like I say, it was not a startup as such. They were doing about five million in revenue. But most of the operations were in Danbury, Connecticut and I was to run marketing.
RB: And Peter Sprague invested to essentially save the company as I (?).
FK: That’s correct. Previous to that Peter had invested I think a quarter million bucks because I don’t know if Peter or Charlie told this story but National was the first company to ever have been sued for misappropriation of trade secrets and lost. So they were driven into bankruptcy and Peter came along with $250,000. And what had happened was the founders of it had left Sprague Electric which Peter’s family was involved in but not Peter. And they had started building some transistors of various types and then a hybrid circuit group. But they did not leave pleasantly. And it turned out in Connecticut law what nailed them was they agreed that they had left with a vengeance. And that’s against the law in Connecticut. Okay. So they got shut down and one of the fellows who was there for many years and has just recently passed away, Don Beadle, was an employee there and he tells a story about being on a plant tour with a customer when the sheriff shows up on the loud speaker, vacates the plant. He says what do you tell a customer during those circumstances. But anyway, that’s when National started and that meant trips back and forth to Danbury.
RB: So what was your first role at National, Floyd?
FK: I ran all of marketing, both product and the advertising and all those kinds of things. And we had a sales manager but almost immediately Charlie wanted to make a change there. And in our minds, it came down to Don Valentine and Jerry Sanders. And Jerry, when Corrigan showed up at Fairchild, got the role that both Don and Jerry wanted. And so Don came and joined us. So Don was with us. Now he ended up going into the investment business very shortly thereafter. I would say he was only there for a year, year and a half, something like that. And then when he left, I took over marketing and sales.
RB: Okay. But you were to follow in his footsteps in the investment business eventually?
FK: Eventually. Eventually. Yeah, that’s a few steps down the line though.
RB: So at National, how long were you at National then?
FK: Joined National in 1967, became General Manager in about ’71 or 2, something like that. And in those days, the semiconductor guys were realizing how that we’re more and more important to the systems manufacturers and were becoming a bigger part of the cost of goods of systems manufacturers. So National, like I think every other semiconductor manufacturer or most of them, got tempted to get into the systems business, mostly because we really didn’t understand what the systems business really meant. Okay. And we got into the data checker business. We got into consumer products division business, which a guy named Fred Bialek ran. Did an outstanding job for what we were doing. But we were also tempted to go into the mainframe computer business. And that really came out of the fact that by this time memory density on silicon chips was growing in complexity. And we were selling – we were building 1K D RAMS and both dynamic and static. And they were slowly starting to replace core memory in systems. And a company had started a business of just building add-on memory to existing IBM computers. And so a fellow named Dave Martin approached us and said you ought to get into that business. I mean, it’s a matter of taking a bunch of your memory chips – and the good news is you can use rejects, ones that have a few bad bits; you can program around those in a system, if you have a system. And so you can make these things and just pile them together in systems, add on memory to IBM computers and it seemed like a pretty logical thing to do. Intel was doing it. What became Intersil was doing it. I believe that’s true. And so we did it. And we were selling to various marketing companies, one of which was ITEL because they were in the computer leasing business. And it was going quite nicely. And it was true you could use almost anything that had most of its bits good could be used in these systems. Well then in about 1977, ITEL came to us and said we’ve decided to back a project down in San Diego which was going to build an IBM compatible computer. Amdahl had already started at this time and they looked like they were doing pretty well. And we looked at the numbers and our conclusion was that 370-158 class computer which was selling at that time at just over two million dollars was costing IBM 90,000 to build. Ninety-five percent margin machine. And we said sopping wet, we should be able to make this thing for $150,000. So we’d have an enormous margin in this and we could sell it in the marketplace for – we concluded that we could – for about twenty percent less than IBM in performance and cost – cost performance, we could get the orders. And that was an input from ITEL also. So we started this skunk works project. We backed it I should say, because it was already sort of going. We put a man down there named Bob Spencer. And Bob brought it to market and the first year, the numbers worked out. We did 103 million in revenue the first year out of the box in our fiscal year and put, I think it was 45 million on the bottom line. It was enormously successful. And then a thing called the 4300 series happened at IBM because IBM wasn’t going to let this go on forever. And so they really changed the dynamics. And ITEL had way overextended themselves. And so we were owed about – as I recall the numbers, we were owed about 80 million dollars. And an 80 million dollar write-off for machines we had shipped to ITEL which we thought they were getting placed. Well it turns out they weren’t getting placed. And the financing of these machines was getting to be very much more difficult because people – it had become a much more competitive business. And so I went up to try to figure out how to – how do I get this receivable collected because an 80 million dollar write-off was going to be really, really bad for National, maybe drive us out of business. I mean, it was not a good situation at all. And I went up to collect the receivable and, to make a long story short, we ended up collecting the company. So we “bought” the computer division of ITEL with all of its service organization, all this kind of stuff. And I went back to Charlie and said we can get that – oh before I went up, by the way, I asked Charlie, I said can I go up and talk about buying it? He says you can buy the company as long as it doesn’t cost you any money. A very typical semiconductor answer to a question. So they basically gave us the company. And then we had to figure out how to go market those computers to get revenue from those computers and rationalize our manufacturing in Southern California and down in San Diego. But the tough part was their line at that time included not only our computers but the higher end of the market line that was built by Hitachi. Well let me take you back a couple of years. I was on a thing called a WEMA board, Western Electric Manufacturer’s Association Board at the time SIA formed, Semiconductor Industry Association. And WEMA didn’t like the fact that SIA was being formed but SIA wanted to make a big splash. And we were having kind of a rollout – not a rollout dinner – it was one of our annual dinners and we wanted to make it a very big dinner. And I was the speaker for the night. I had my remarks prepared and I don’t remember exactly what my focus was but it was a story about how semiconductors were doing very, very well. This is now 1977 probably and Bob Noyce and Charlie Sporck pulled me aside and said Floyd, we don’t know what you plan on talking about but we got to take on the Japanese. They’re killing us. They’re doing it unfairly. The yen is wrongly priced, etc., etc. You have got to talk about that in this speech. And so I took out my notes and sat with them and inserted some things about this black cloud that was on this very bright horizon. [laughs] And, you know, mind you I got to say in all fairness, I didn’t know what I was talking about in some parts of those lines because they were inserted minutes before the meeting was starting. And so I called for a boycott of Japanese products, etc., etc. Well there was a table of Japanese guys sitting right in front of the dais – there was a couple hundred people in the audience. They get up and walk out. I’d never had that happen before and I haven’t had it happen since. So my name and Charlie’s name, as far as Japanese, is not good. Now I’m going over to ask Hitachi to sell their computers, their crème de la crème products through National Semiconductor. This was not an easy sell. [laughs] As a matter of fact, the first time I went over, I sat in a hotel in Japan, in Tokyo, for a week and didn’t see anybody. They wouldn’t receive me. And yet, they had a problem. They didn’t have a marketing arm. So they had the same problem I had really. And they were trying to figure out what to do about it. And so I came back to the states and I said to a guy named Tommy Tan who was the top guy at ITEL for their computer products at that time, I believe that was his name. And Tommy said well you didn’t do it the Asian way. He was either Chinese or Korean. I really don’t remember. He was not Japanese. And he said let me make you a formal introduction to Hitachi because you have not been formally introduced to them. So he did that and I got on an airplane again and flew back to Japan, which I’d been to many times because Japan was a big market in the seventies for the semiconductor guys and we, in fact, sold a lot of parts to Hitachi. We sold a lot of parts to Fujitsu which was associated with Amdahl at that time. So it was not as though we, you know, I didn’t know the Japanese scheme of things and hadn’t done a lot of business but this one was awkward because of that speech and a number of other things. And they finally agreed to agree if we thought we could sell 30 systems and their systems were about four million bucks apiece. And I said I think we can. I really didn’t know if we could. But it turned out we sold 31 that first year. And we were heroes. And, of course, the rest of that story is, some years later, Hitachi buys that operation and that is Hitachi Data Systems today, which was National Advanced Systems but it’s their computer operation here in the valley and all. And made some really good friends in that management team there and really had a very good experience, an experience that laughingly returned to me when I got involved with government because I used to walk around saying in the late seventies, early eighties, that if I had a job in the world I’d love to do it would be to be U.S. Ambassador to Japan because I really got to know the Japanese culture very, very well, I thought. I’m sure I didn’t know a lot of it but I went to Japan probably 60 or 70 times in that 10 year timeframe or 12, 15 year time frame, something like that. And so I felt at home. I knew some of the language and had worked with them. And, let’s face it, like I said, they were very important customers. That all went away in the nineties. I mean, people don’t now look at Japan as the market it was and the tough time they’ve had the last two decades. But they were a powerhouse at that time in the late seventies and through the eighties.
RB: So what brought your end of term at National?
FK: So from ’79 to ’82, I was running National Advanced Systems, building it up into a company that we could be proud of and was making some money and running the computer business. The computer business is intensely dull at the mainframe area. Every computer room looks the same. It doesn’t matter whether you’re a retail – we sold the systems to retailers, to – a lot to data processing companies. And, matter of fact, one of our largest customers – not one of our largest customers – our largest customer was EDS. And that’s how I met Ross Perot. Fascinating guy. You know, sat in those rocking chairs in his office the first time I met him and he wanted me to explain how a semiconductor worked and asked very penetrating questions. And I missed my flight to New York that night but you don’t get up and walk out on Ross Perot. And they bought a lot of machines from us. And but one computer room looked like the next. And it was just boring from my point of view because the semiconductor industry is an exciting business. I mean, in the morning you’re talking to a consumer products guy, you’re talking to a military guy over lunch. In the afternoon, you’re solving some industrial problem and then you got a mainframe computer guy for dinner. I mean, and watches, calculators. We had a slogan at National that anything that used springs, levers, stepping motors or gears was performing logic and it was better done in silicon. And we just looked for applications. That’s how we got involved with watches and clocks because they use springs, levers, stepping motors and gears. And so I was bored. Now we had installs in something like forty or fifty countries. And so it was a lot of travel also. And I wasn’t signaling that to anybody but I got a call from Mike Markkula who I’d hired into the valley. I knew Mike quite well obviously. And he said we’re looking for somebody at Apple to run marketing and sales. And obviously by that time, everybody had heard of Apple. They hadn’t introduced – they’d introduced the Apple II but not the IIe at that time. And so I went over and talked to Mike, talked to Steve. And Mike said we’re also looking for a CEO. Don’t know who that’s going to be. So there was some risk in taking the job that would report to the CEO. But it looked exciting to me. And it had that variety again. You’re selling things into lots of different markets because the people buying personal computers at that time were of every ilk. All of the early adopters were there. And so I decided I’d do it. And so in ’82, I went to Apple. They were about ready to introduce the Lisa. Mac was being worked on. And the IIe was coming out which was going to be a greatly improved II. And they had just gone public so they were on their way to a billion dollar year. Matter of fact, I just recently found a billion dollar set of glasses, wine glasses, that were given out when – we had stored them downstairs and we were looking for something else and I found that set of wine glasses.
RB: So what was your first impression of Steve Jobs? I mean, that was the beginning of an era.
FK: Yeah, you know, Steve was just so particular and so meticulous. It was refreshing because oddly, he reminded me of a guy I haven’t mentioned who was in a very different way but many things similar, Bob Widlar. The inventor of analog who I only mentioned being at Apple. But he – at National in the early days. But Bob was a genius. And he was meticulous and he was picky and if it wasn’t perfect, he wouldn’t put it in the marketplace. Steve was identically the same in that personality trait. Now Steve didn’t have Bob’s problems of being, let’s face it, an alcoholic. And I never put Steve to bed. I put Bob to bed a couple of times. [laughs] But I really saw that here was a very, very smart guy who was very particular and working on a very exciting project. The Mac was an exciting project that really looked like it could basically change computing. It was going to be easy – and by the time, I’d been – I’d see what 3270s were like. Front ends of mainframe computer things. And they were hard to use. And so I met Steve and he was chairman at that time. Mike was CEO. And my staff – three of the members of my staff had worked for me at National. So I knew the guys that I was going to run. I guess they had – I guess – I know that they had something to do with my being hired because they – when Mike said he was looking for somebody, they were asked for names, he asked the guys for names.
RB: So Mike was interested in standing down from CEO at that point?
FK: He was. Mike never liked being in the operations side. And so they were actively – frankly, so I joined and almost right away, we were out in New York showing the IIe and talking about the Lisa. We weren’t talking about the Mac yet. And we had dinner that night that Steve had arranged and he invited John Sculley to dinner. Now I did not know he was the candidate. But some months later then, John was brought in as CEO. But it was exciting. I mean, the sales meeting was exciting. There was a gung-go, go-go kind of thing. And it was great.
RB: Did you mesh will with John or was that -
FK: No, I didn’t.
RB: Not a good move for you?
FK: Well, he was hired because there was the thinking that this was going to become a consumer product. Well, clearly it wasn’t a consumer product at that point in time. And John – he had a number of practices that were a little strange. I mean, for example, whenever you walked into his office, you’d see a different organization chart. And sometimes your name was on the chart and sometimes it wasn’t because he felt his important role was arraying the troops kind of thing. Strange practice. But I – the valley is a products valley and he was a marketing guy that was into advertising and that kind of stuff. And if you – we always believed that if you had a better mousetrap, you could actually – people would beat a path to your door. I mean, we talked earlier about product marketing. What was the key to product marketing? To make sure you were ahead. And so the products were very, very important. I mean, during my time at Apple, I remember one time we were introducing the Lisa and because of my background in the mainframe computer business, I knew a lot of people in that thing and I said, you know, to get this thing accepted as an input device in a mainframe room, we got to have a deal with somebody that understands mainframes. Well at that time, there was a company called Cullinane Data Management Systems. They were competing with IBM for the data management system. And a guy named John Cullinane ran it and it later became Cullinet Software et al. Well I called John and said hey, we’d like to make a deal with you, you know, talking about the Lisa as a front end to your products. It won’t be an economic deal but a marketing deal where you can kind of introduce us to your customers because they were doing quite well. And so we went up to American President Lines and shot some footage with John and Steve and myself on a computer floor. Well it was the first time Steve Jobs had ever stepped on a computer floor, ever. And so I took him over to a machine. I said you ever seen an inside of a mainframe? And he said no. So I opened the skins and if you ever looked inside of a mainframe, it’s a rat’s nest of wires. If you ever looked inside a Macintosh, it isn’t a rat’s nest of wires. The inside was as important to him as the outside. And the cameras are rolling and I’ll never forget it, they obviously would never use it but Steve says what is all this shit? I mean, and you know it had an incredible impact on him because he walked away from that meeting saying IBM doesn’t care about products. We can beat those guys because they were coming up fast in the marketplace at that time with the PC. So anyway, we opened the skin of this thing. He looks at it and he just had an opinion about IBM products that I think was kind of born that day. We can beat these guys because he just didn’t think the product was designed properly and it got back that whole product thing that is so much a part of the valley and that he was so good at. And so we interfaced on those things. We interfaced obviously on the Lisa intro which was an incredible introduction. Many people don’t remember the Lisa intro but that’s what introduced mouse computing. It wasn’t the Mac. Mac was later. And you see, the Mac was supposed to be introduced the same day as the Lisa. So we had a line and we had trouble with the Twiggy drive. And Steve decided not to use the drive. And without a drive, you don’t have a computer, in those days particularly. And so the Mac gets delayed till the next year, till 1984 and we’re sitting in June of 1983 and the Lisa was it. Here’s this point product at $10,000 or whatever it was, $999.95 I guess it was. And sales didn’t exactly take off the charts with that product. And so we had a problem. And we’re getting close to the end of the year and the sales meeting comes up in October. And we were really trying to figure out how do we find a place for the Lisa but we’re getting ready for Mac intro. And Mac intro looks like it’s going to happen January 1st. And so we showed the sales force in Hawaii, the famous Mac ad which had been conjured up in July. And our big concern and why we were anxious to run it on January 1st was that 1984, there’s got to be tons of ads that are going to come out on that year concept because let’s face it, people had talked about 1984 and the book for years.
RB: Right. Yeah, exactly, yeah.
FK: And so it was going to be a big deal. But if we run across all the bowl games, because you remember in those days, all the bowl games all ran on January 1st. They didn’t spread them all over two weeks or whatever. The sales force came out of their chairs with that ad. They went nuts. It was a huge hit. Well December comes along, Lisa isn’t selling. The Apple IIe is doing okay but not sensationally. And we don’t have the money to run across the board and besides the Mac intro has slipped to the 23rd of January. So there’s this fear that a 1984 themed ad running on January 23rd is going to be really old news by January 23rd. But we had the sales force that had been so excited about the ad. Well, by this time, I’d hired a guy to run marketing named Bill Campbell. I don’t know if you know Bill in the valley here. Okay. So Bill and I are really trying to figure out what are we going to do about this? And so there’s – the December board meeting happens. Ridley Scott had made both the Mac ad and an ad which we called “Alone Again” on the Lisa, which was featuring the fact that we were alone again from a technological point of view. But the Lisa had not been selling and they were both black and white commercials. And it hadn’t worked that well and thus the board comes to the conclusion we got to sell the ad time. Not going to run that 1984 ad. Kill it because even in – at the Super Bowl – it was going to cost, I still remember the numbers – 910 thousand dollars a minute for that one minute ad and we had two minutes. So I get directed about the middle of December or shortly thereafter to sell the time. Well Bill and I did not want to sell the time because the sales force was so looking forward to this. And so Jane Richardson, a lady who ran advertising in Bill’s department, we said go find out what you can find for the time. And I frankly don’t remember how this all happened but she ended up selling – because I remember us having two minutes and not a minute and a half, which is said in some of the books. But she sells the 30 and she has a place to sell the other 30 – 30 seconds – but a minute is not selling. The Friday before the Super Bowl, because in those days, you had to send the tape out to all the stations, she comes into our office, I’m sitting with Bill and it’s coming up to 3:00 hour where we had to say yes or no to the stations. And she says I have an offer for 700 thousand dollars. That was going to cost 910; we were going to recover 700 thousand. And Bill and I looked at one another and one of us said, neither of us remember to this day who said this, “Did she say anything?” So we ignored it. We never told anybody about it. We just ran the ad. And it was dynamite. It just exploded. And everybody was thrilled after this. Sculley had been in favor of some Apple IIe ads which were what were called lifestyle ads. They weren’t – and they didn’t go anywhere frankly. I think John will even admit that today that even though he was on the board and was one of the people – Steve, I guess opposed selling the time but the board overruled him as I understand the story. I don’t know that story well. But it was unbelievable. We had stations calling us saying is it okay if we run the ad again? You don’t have to pay for it. So we had quite an intro on the Mac. And the Mac really then got mouse computing going and we had a deal with the universities to sell them special prices, a thousand dollars on a $2495 machine.
RB: Yeah, that was an important period for Apple and –
FK: It was huge. It was huge.
RB: That ad and the mouse and that whole thing.
FK: And the whole thing. And Steve was the guy that saw that. And so I mean, he was an unusual guy and then, you know, I left Apple in April of that year and joined Kleiner Perkins. But I –
RB: That was a major change for you moving from the product sales marketing role for all of your career into venture. What caused you to not go to another product company? What caused you to go into venture? I mean, that was a very big decision.
FK: Well this variety thing was also there. And, by that time, I had had – I once counted something like 25 guys that had worked for me that had become CEOs of companies and spinoffs and various companies. And so I had the false impression, I will say, the false impression that working with these guys from a board position can be very similar to working with them from a management point of view. That turned out to be very wrong because there’s a difference between being on a board and being in a top management slot. And – but I did it. And I started to invest in a number of situations and I wasn’t very good at it at all. I really wondered whether I should even be doing this and thought about doing what you’re talking about, going back into the other thing because it was so different. Once you’d written the checks, your role – if you didn’t have the right people running the company and they were the boss, they didn’t work for you – you were essentially an advisor to them. And so it took a while for me to get into the groove of it. And to this day I will tell you I think I’m a much better operational manager than I am an investor. I just think I am. But I enjoy the people I work with the KP people, it was a wonderful team of people and met a lot of very exciting people to back as entrepreneurs. And once I kind of got in the groove of how that’s supposed to work –
RB: With Tom Perkins’ background in the computer area, was it Tom that brought you over essentially?
FK: No, it was actually John Doerr.
RB: Oh it was John, okay.
FK: Yeah, because John was very involved in the personal computer field. And he saw what I’d done at Apple and thought that background would be very valuable because a lot of things were happening. I mean, software is starting to become a business. Many people don’t know – I mentioned Cullinet Software before. They were the first software company only to ever go public. And that was 1979. Software wasn’t a business for a long – it was just something that went along with the computer. You got it for free. And to make it a business was different. And all these little startups were starting and they wanted to ride on the Apple. And so I, in fact, got involved with a couple of them. And, at that time also, we had been backers of – when I say we of Kleiner Perkins – of Lotus Development.Well as Lotus is becoming more important at IBM, they didn’t want Ben on the board because he was chairman of Compaq. That was a competitor of their PC. So I took that chair and sat on the Lotus board for a while and hopefully was helpful there. I don’t know how helpful I was but –
RB: So now you have this check writing authority in this new world you’ve moved into. Can you share a couple of the most successful checks you wrote and maybe a couple of the least successful?
FK: Well I did a software thing initially that was just a disaster, actually backed by this guy Chaz Haba that had gotten me into Fairchild originally. And he had a software company and it turned out the product just wasn’t good enough for the market. And I hadn’t seen that. So that was certainly an early failure. But in the early days, also, I was put on some boards that I wasn’t the backer of, some of which turned out – I mean, Lotus was a very good investment. I was also put on the board of Xilinx, a very, very successful company. John had actually made that deal but then they asked me to be the cover guy for it and had the pleasure of being the speaker at their first sales meeting and got to know Bernie very, very well. But like I say, it wasn’t my investment. It was John’s but I – so I helped out on a number of situations where they were similarity to my background and things they did in semiconductors. On the things that turned out pretty well, I think Harmonic turned out pretty well. It’s still a very successful company in the data compression and are big customers with – in the area of compression for cable companies, for satellite transmission and those kinds of things. A company called Power Integrations which is still a very successful company. Basically does – is the best company in power conversation that you can imagine. And the software area of BRIO Technology was ultimately sold to Oracle but was a lot of fun working with. In the capital goods area, the firm had an activity before I joined in the semi (?) capital equipment field. And I was asked to be involved in a couple of those, again, deals that I had not originated and those did not turn out well. It turned out that the capital equipment thing was starting more and more to be run by the big guys, the Applied Materials’ and the KLA-Tencors and all but we had some competing companies in that area.
RB: Well obviously not all investments turn out, Floyd, but without doubt, Kleiner Perkins has a stellar track record over the period and is one of the fantastic venture companies in Silicon Valley. And you were, of course, a major part of that. I know time is moving along here. After your venture period, which was extensive and I think a lot of fun and met your variation criteria. Maybe just in summary, you could encapsulate you’re invited to join the Bush Administration for a period.
FK: As you know, the Valley was not involved in the political scene at all. As a matter of fact, both political parties, when they came to San Francisco, figured they’d visited this area. And the Valley and San Francisco might as well be earth and Mars. I mean, they were so very different in their culture, particularly in those days. San Francisco now has a very vibrant technology sector as part of it. But that wasn’t true back in the seventies, eighties and early nineties. In 1992, Bill Clinton comes to the Valley and proves the old law of physics, that nature abhors a vacuum. He became very, very popular. And I – because nobody had come here before and a lot of guys got very excited about all that. Well in ’96, as he’s re-running for president, I didn’t like a number of the policies that he was in favor of. And so we were also running against a bill that had to do with charter schools because we – education has always been a big deal in the valley. And so we were pouring a lot of money into the thing to increase the number of charter schools in California, well, which was not happening in ’96. It happened in ’98 but I’ll come back to that in a minute because it was very important – the thing as it turns out. So in ’96, I decided that I would see how many guys were on the other side of the aisle from Clinton and put together a group of guys to back the Dole/Kemp thing. Now I won’t go into the details but I’d gotten to know Jack Kemp pretty well through another set of circumstances, through Tom Weisel actually, an investment banker in the valley. And so we did that and then the charter schools things is important. The valley’s starting to get recognized as an important place by ’96. John Doerr who was a very big backer of Clinton comes in my office one day and says do you think we could put your republican group together with our D group and form a thing called “Technology Network” which I should say became called the TechNet. It didn’t have a name in 96. Said I don’t know. I’ll find out. And it was a bipartisan group that would represent the technology companies because there was not a lot of satisfaction at that time with the American Electronics Association. They weren’t really techies as such and some of the bigger companies here, while they were members, they weren’t active members at all. So I said yes, let’s go do that. Talked to a number of the people that had come on board in that thing. And so we formed the Technology Network, started to host people from both sides of the political aisle to events here to get their input. Now, of course, they were interested in raising money. And we realized that as we started the thing so we knew that was going to be a factor. And started to meet with congressional leaders, etc., etc. So as 1998 is coming along when that bill was run, we had a huge effort to defeat that – or to pass that bill on charter schools and that was a big deal. And the whole thing about lawsuits, these class action suits against tech companies every time your stock moved or it was another big thing that we were against. So those were our two featured items. Well as 1998 goes by, or as 1998 starts to happen, George W. Bush comes out. He’s running for governor of Texas but there’s a lot of talk and chatter that he might run for president. So we featured a thing for him, which was very well attended and it fell – my duty on the R side to brief the R candidates on what the valley’s issues were. And, by that time, we had a set of issues but education and this uniform national standards legal thing were the two biggies. And I was briefing Bush and he took the briefing. He says is there anything else? I said well sir, you know this thing about the presidency’s going to come up. And he says yeah. He said I really don’t know what I’m going to do about that because I know what this does to a family. I mean, he was so convincing to me, I bet John Chambers a case of very expensive wine that he wouldn’t run. And, of course, I lost that bet. And I bet another lady a bottle of wine that he wouldn’t run. So in ’99 as time goes by, he then is starting to gather some things and he – Bush didn’t have any committees that were Greeks for Bush or Lawyers for Bush – he said I want Americans for Bush. The only exception to that was technology was having a huge impact on the economy. And he’d gotten to know Michael Dell in Austin. And Michael had convinced him that this computing thing was going to have a dramatic impact on the country’s economy and was having that impact. And he bought it hook, line and sinker. So the only thing he wanted to have was a technology advisory board. And because he had met me, he asked me and Michael to co-sponsor it. And we had meetings out here. We had a meeting in Austin where we brought guys in from around – I think we brought something like 400 tech leaders that were going to brief him. And he, unlike many politicians, he actually listened for almost the better part of the day as to what was going to make us a winner again in technology because we were clearly now – we had beaten the Japanese. There were other things but America was the story in the late nineties in technology. So much stuff was happening. And so the thing comes up. The election obviously was not decided for a long time. But I finally got the phone call about if I want to participate. Now Jean had been very clear. We’d moved a lot and she didn’t want to be ambassador to anywhere. So she said to me, Floyd, if you want to be ambassador some place, why don’t you suggest ambassador to Silicon Valley, which was a joke? Well, son of a gun, if they don’t come up with the – it turns out there’s a technology office in the White House, Office of Technology Policy and - Office of Science and Technology Policy, which had always been headed by a physicist because it really started after World War II because of nuclear bombs. And so it always had that science. But Bush said I want a strong “T” part of that, strong technology part of that and Bush had by this time, again, swallowed the word entrepreneur. He loved it and so he wanted to have an entrepreneur and so they said hey, why not Floyd for that post? And all the talk that was in the press that he named me secretary of commerce and all, that was all nonsense. That was never going to happen and it never – there was never even a discussion of that. So I went back, met with some guys, understood what was supposed to be happening and said well who did it for Clinton? Well it was John Young, CEO of HP. I knew John. So I met with John and said should I do this? What do you do? And his advice, I’ll never forget it, was only do it if you think they care. I said well what does that mean? He said Floyd, the president makes over 7,000 appointments. He can’t care about all those. He just has to do them by law. If he’s really interested in this one, do it because I think this is right. John told me he never, ever once met with Clinton while he – he did that for eight years. He did meet with Gore. So he was a little – not that turned on by what he had done. I may be speaking out of turn here. Maybe he’s looked at it different. But that’s the impression I got from him. So I went back and actually Karl Rove was part of building this function. I spoke to Karl who I’d gotten to know in the campaign quite well. And he says oh Floyd, we care because it’s so clear that the economy – because, by this time, of course, the bubble has burst and the – NASDAQ is in free fall. I mean, many people don’t remember. When Clinton left the White House, the NASDAQ was already down to 1500 from 5000 and was still falling. And so he said he thinks technology’s the answer but – so he’s going to care a lot. In the subsequent eight years, I met with him very often. And even in spite of 9/11 – I was in Washington on 9/11, by the way, another story. But we don’t have time for that. I, in fact, had a meeting scheduled with the president on 9/12. That meeting obviously never happened. But we tried to do what we could do and, of course, the energy thing came out of that and a lot of other things that the valley got involved came out of that. And meetings from the National Venture Capital Association in the White House came out of that. We had a number of meetings in the White House with – I remember that’s one of the last times I saw Jerry Sanders, was in a meeting that he was invited to, that he came to in the White House. And Gordon Moore was nice enough to join my council. Gil Amelio – not Gil Amelio – guy who ran SIA.
RB: George Scalise.
FK: George Scalise was nice enough to join the council. A lady who had run Tech Net here who was in charge of domestic relations in the White House was a lady named Lezlee Westine. She knew everybody in tech and did a tremendous job. She only stayed for the first term but we got the valley connected I think with Washington, not only with the White House but with the departments. So a lot of – personalized medicine which became a big deal here in the late nineties and also got the secretary, Mike Levitt from Utah who ran HHS, got connected with the valley, had him out here a number of times. So I really felt good about that eight years. I really felt what I did was important. I think it exposed the country to what this valley can really contribute from not only an economic but in a broader sense because the technology of computing and data management and all has now impacted every industry. You can’t name an industry we haven’t had a major impact on. And that’s the valley. And I really feel good about what happened there. Again, I enjoyed my – my very active years at KP were the sixteen years from ’84 to 2000 because I didn’t join any funds after that because, frankly, the government job was pretty full, even though I stayed in the firm that time. And I’m very proud of the companies I did. I’m very proud of the companies we did because everybody had to vote on every investment we made. I still remember the guy, Bezos, coming in with Amazon and how we looked at it and those kinds of things. We didn’t tell those stories. And I still remember having a lot of fun with developers who we didn’t back. I mean, Steve brought me – Steve Jobs brought me on his – one of his first visits the Pixar. Going through Golden Gate Park when they were in Marin County, suddenly a policeman’s behind us. I say Steve, what’s he stopping us for? And Steve says I don’t believe in license plates. And Steve talked the guy out of a ticket. But as he formed NeXT, I was able to be on his kitchen cabinet, even though we didn’t back it. And that was a lot of fun. Actually I got to know Steve almost better after Apple then before Apple as he was doing Pixar, as he was doing NeXT and those kinds of things. And as things were changing for him. Anyway –
RB: Well Floyd, you’re semi-retired now, let me say. It’s been a fantastic story from a transistor to the White House. And you’ve had a fantastic career, very high profile and you’ve done extremely well and you’re a Silicon Valley guy from beginning to end. So –
FK: Only 50 years.
RB: Want to thank you for your time. It’s a pleasure to be here and we could talk all day but we don’t quite have time at the moment. Maybe we can do this again. Maybe we can do a phase II. Let’s see. So thank you very much indeed.
FK: You’re very welcome Robert.