Interview with Bob Swanson
March 11, 2006
Saratoga, California

RW: - He's the founder of Linear Technology, a leader in the field of analog integrated circuits. He's a veteran of Transitron, Fairchild & National before founding Linear in 1981. In this 2006 interview, Bob describes the profitability of analog ICs, the advantages of Silicon Valley as a place to start a technology company and the importance of retaining the best engineers.

RW: Well Bob tell us about your growing up and your family.

BS: Okay. Well I grew up in the Boston area, a little town north of Boston , working class family. My father was a cabinet maker and a furniture finisher and a very good one. As you and I talked earlier, I was the first one in my family to go to college. And how I actually got the motivation to go to college was because I wanted to be a military pilot. And back in the fifties, you needed to have as a minimum, a two year college education and so forth and so on. So that was the first thing that got me involved or got me motivated to take the right courses in high school. But just as I got out of high school and got into college in engineering school, it was the Sputnik crisis and everybody including my doctor and dentist who had no use for me up till then were encouraging me to stick it out and be an engineer because the country was counting on us. And so it was those two things. As it turns out, when I graduated from college, I still had this intent to go into military. I actually took some tests. By this time, it was the Navy because they came to Boston with their fancy uniforms on, always in February when the snow was up to our ankles and showed us these pictures of airplanes banking out of puffy clouds over the Mediterranean and I said that's what I want to do. And so I actually made an examination. They said okay that's fine but we don't have any openings until December of the year I graduated. Well I just had bought a car and so I needed to make payments on it. And so I said well look, between September or June and December, I'm going to go get myself a job. And as I told you earlier, I went knocking on doors and got a job offer at Polaroid. But for some reason which I can't remember after all these years, the job wasn't available for two more weeks. So I stopped at this company called Transitron. I didn't know what they made. It turns out they made semiconductors and because I had a one semester class in transistor circuits and physics, I knew what a transistor was. And it's a long, convoluted story but they actually hired me because I knew a fair amount about statistics. And they had just won a Polaris missile program from Lockheed and we had these brilliant engineers at Transitron but none of them knew what a chi-square test was. And that's like Ohms law. It's pretty basic to statistics and so they literally hired me on the spot and convinced me if I didn't like the job, in two weeks I could go to work for Polaroid. I've been in the business for forty-four years.

RW: Now when was this that you -

BS: This - this was 1960 or you know, late, late December of ‘59, ‘60. And Transitron, a lot of young people probably don't even know who this company is, but at sixty million dollars a year in sales in 1960, they were the second biggest chip company in the world, second only to Texas Instruments. And most people considered them in 1960 to be the engineering leaders.

RW: Yeah, great at diodes.

BS: Yeah. As a matter of fact, my first project was working on a PNP indium dot alloy structured transistor which my guys today would laugh at. And - but that's what was an important device going into the Polaris missile program. And this was in the days where statistical process control was just at its infancy. And so you couldn't win a contract unless you could convince the military folks or subcontractors such as the Lockheeds and North American Aviation that you understood statistical process control. And so that was actually how I got involved, not because I knew much about semiconductor engineering. And, of course, I worked with some pretty interesting people that - that you know including Corrigan who was part of this really elite group, Pierre Lamond, another name I'm sure you know. It was - it was - it was quite a - quite a group of engineers at the very beginning of a new industry and I remember my boss encouraging me to take notes in my notebook and I hardly knew anything. And he said everything that you're writing there is all new. It's like skiing, you know, new powder. It was like anything almost anybody did was new knowledge and it was exciting.

RW: So you didn't go in the military then?

BS: Yeah. So that's another long story. So I got so fascinated by what was going on that when December came along, I decided well listen, I think I was twenty-one years old, twenty-two years old, I got plenty of time. I - twenty-six was the cut off. I said I'll do it next year. Well next year came and I still didn't go in and two or three years later, I got married, had children and then the Vietnam War happened and - and the military didn't want me. But I'm still fascinated by aviation and every chance I get, I get a ride in a jet, I do it. I've flown aboard the Nimitz. So I am an honorary tail hooker so I mean, I'm still fascinated. And it's still a life that - that I think that - this is the life I was supposed to live.

RW: That's great. So how long did you last at Transitron?

BS: I lasted at Transitron for almost four years. And it - it's a funny story how I got to Fairchild. Fairchild, of course, was now a bright star on the West Coast. And I remember into my fourth year at Transitron, I was working on a PNP mesa structure transistor. And this was the hot stuff then and - and it was trying to second source a Fairchild product. I forget the number now and I can remember like yesterday, it was winter day in Boston and we finally got the yields to be something decent and a friend of mine gave me an article of, I don't know it was Electronic News or whatever one of the rags were then - the trade rags - that Fairchild had announced this thing called the planar process. It was like we're dead. Okay. As luck would have it, two or three months later, Fairchild recruited me and by then I was sold on Fairchild so I actually went to work in the diode plant. Actually turns out I was getting married and I'd finally come to the same conclusion people like Corrigan and Lamond had years before, Transitron is a place to get out of. And I was going to go to work for - I had offers from Raytheon, I had offers from Sylvania and companies like that and I was almost going to go work in Somerville , New Jersey . And my wife and I are both East Coast people, both parochial New Englanders. I'd never been further west than Chicago once in my life and I'm twenty-five years old. And a guy named Fred Bialek called me one Thursday night and said, “Hey listen, we've got a job out here. You ought to come out and interview. A lot of your - your colleagues are already out here. And they say that you're a good guy so why don't you come out?” I said, “Listen, I've been stalling Raytheon and Sylvania for about three months now and I got to take this offer.” And he said, “Well if you've been stalling them for three months, why can't you stall them for another weekend?” I mean, this is the beginning of these aggressive people from Fairchild who could turn no into a yes, you know, in a short period of time. And I said to Fred, “Look, you know, I'm finishing up a class at Northeastern on Friday nights. I don't know how I can do it.” And he pulled out his planner and he said, “Hey there's a,” he went to MIT so he knew, he said, “there's a – there's a plane at 10:30. You can be here at 2:00 in the morning.” And he said what have you got to lose? You've never seen San Francisco . It was like there's no, no to this question. So that's what happened. I went out and interviewed and I was excited about the Bay Area. It was almost like a new country to me. I remember driving over the Golden Gate Bridge at two in the morning. I thought I was in Japan or some place like that. Didn't even seem like America to me. And so we had great interviews and we went to Chinatown that night for dinner, another exciting place. The next day they took me to Sam's, that was to close, on a beautiful, you know, Sunday morning. And so I got home and my wife, my future wife picked me up and she had my car and she said well what are we going to do? I said well I guess were going to Somerville . She says well is that the best job? I said no, no, no. The best job is in California but I – we're not going to go to California are we? And she said why not? And I went, you'd go to California ? And the rest is history. So my wife, of course, takes a lot of credit for what's happened to my career.

RW: So you were you in San Rafael ?

BS: I went to San Rafael and stayed there for the better part of four years. And that's when I, of course, I knew Lamond but he was in the operation in Mountain View . Fred was this young guy who'd just taken over the diode plant and as the story goes, convinced Sherman Fairchild that he could do better than five percent return which the rumor was that Sherman Fairchild said, you know, I can put my money in a bank and make five percent. And Fred said I can do this and he was a twenty-nine year old guy as I recall. And he took this thing over and by the time I got there, they were already kicking butt. And by the time he left with the group that took over National, they were the number one diode producer in the world. And so yeah, that's where I worked for the better part of four years. And about a year after the Sporck crew went to National, Freddie had been talking to me off and on and I was like why ain't you making me an offer of, you know, we used to go San Francisco, he'd call me because he was in Danbury, Connecticut and he'd come out here and we'd go have Indian food which I didn't even like. And it was like, you know, Fred, am I just your dinner mate or you going to make me a job offer? And I finally figured out that they made some kind of a deal with Fairchild that for a year they - they weren't going to hire too many people or whatever. So when the year was up, as luck would have it, Fred hired me. I joined National after, you know, after about a year after they started. I was the manufacturing guy. So the only really job for me was in Danbury , Connecticut which is where - that was the only thing creating income. I stayed there for about a year, worked hard so I could get back to California . I left Tiburon , California to go work in Danbury , Connecticut . Now Danbury , Connecticut people think its pretty nice place and it is but it's no Tiburon, California . So I worked real hard. I think I did a good job and they sent me to Scotland instead of California . But it was my first big chance at being a plant manager. I was thirty-one and - and I did that for literally another four years. And so, when I came back to headquarters, even though I'd been with the company for five years, I felt like a new hire because all the action now was in Santa Clara .

RW: And so that was National out here -

BS: That was National - that was National out here, you know. So in 1967, ‘68 when Charlie Sporck and Lamond and Bialek and - and these other senior people called me and were establishing Santa Clara's headquarters and getting into the integrated circuit business, getting into T2L, integrated circuits, getting into linear integrated circuits, I hardly knew what they were, amplifiers and voltage regulators. So that was the future but the cash cow that was funding all this was the Danbury , Connecticut transistor group that Fred had turned a loss to a quite nice profit. And so - and by the time I moved back to - to California from Europe , the company was, I think a two hundred million dollar a year company which is big in those days. Yeah.

RW: So what did you do at National out here?

BS: Well when I came out here, you know, after being in Europe and living out of suitcases, part of the story was that a guy named Jim Diller who - who was running the Common Market plant for National and I was running EFTA. You know, back in 1969 and ‘70, Europe was two trading blocks and they had twenty percent duty on semiconductors. So National at thirty-eight million dollars were pretty aggressive. They said look, we've got to set up some operations in EFTA and the UK was part of EFTA and - and the common market. And, of course, Germany was the heart of the common market. And so I went to Scotland . Jim Diller went to Germany to set up a warehousing test and finish operation that would blunt this onerous twenty percent duty so we could be more competitive. And then about two years into this, Jim got called back to run the flagship line of National which is analog. And so I was asked to run both of them. And, I mean, I was traveling so much my family life was actually in jeopardy, living out of suitcases. Finding a house in both Germany and Scotland was an arduous event. I mean, it took months. We lived in hotels literally for sixteen weeks. Everybody knew my kids who were little by their first name, knew their birthdays. I just wanted to get home. And so I get home and the long-winded way to answer your question is that sort of a job they parked me in was running the high-rel business. And I was just happy to be back. I didn't care what the job was. But about three or four months into this job, Pierre Lamond came to me and said I got a new job for you. I want you to run our analog business. And I knew that analog was their flagship business and I hardly knew the difference between an amplifier and a voltage regulator and I said, Pierre , are you sure this is - you know, I have the right qualifications for this job? He said sure you'll do fine. And I knew from being the rel guy that this was the flagship line of the company but, you know, in one week they could yield, well, 108s, and the next week they had no yield. So I didn't know what I was getting myself into. And I remember distinctly that - that same day that Pierre told me that this is your new job and I was sort of flattered but also very intimidated. I was sitting down having a sandwich by myself in the cafeteria and Charlie Sporck sat down next to me and he said I heard the news. Like I'm sure I'm sure it was old news to him and he – I'm sure he was proud of me. And he said I don't know whether to wish you congratulations or condolences. And I went uh-oh, I must be in for a ride. But as it turned out, it was an exciting eight years running that analog business. And during this period, not only could Charlie brag about being the best in analog, but we had overtaken Motorola as the biggest in terms of analog sales. So it's pretty heady times, you know.

RW: Now was this before the Fairchild acquisition?

BS: Way before. Yeah this was - this was - this was way before, I believe. Yeah. I think the Fairchild acquisition came after I left to start Linear Technology.

RW: Okay.

BS: Yeah, no, so this - this was a - this was a period where the company - I forget how big National was when I left in 1981. But the analog business was running at a quarter of a billion dollar a year run rate saying it was clearly the most profitable. And, you know, people ask, well, why did you leave? Well, its sort of the story you've heard a million times in Silicon Valley , a lot of frustration finally overcame a lot of loyalty. And by this time, Id discovered long before that what was really unique about analog was that analog was a business where we could put out products that had pricing power. So the price that we charge wasn't set by what the next dumbest competitor was willing to charge for his products. We were making unique products. And even though I was the manufacturing guy, I was bored to tears going to meetings where I'm listening to some of my colleagues figure out how to chop fractions of penny out of the manufacturing cost so that they could hang in there. When I'd go back to my staff meetings and guys would tell me how we were going to add two dollars in sales value to a piece of silicon that costs the same as something we were selling for two dollars less and it was like this is the way to do - run a business, not killing yourself trying to figure out how to be the lowest cost guy which is sort of what - what I was taught for the first, you know, fifteen years to twenty years in the business. So the analog thing opened my eyes to there's another way to run a business. Yeah.

RW: Well was Bob Widlar there then?

BS: Well Bob Widlar actually, you know, had retired, went to Puerto Vallarta, was doing his thing but he got bored or whatever and while I was still a really - a relatively young director of National's analog business, I don't know whether Pierre told me or Charlie told me that Bob Widlar was willing to come back on a consulting basis. And I remember saying oh God, I don't want to deal with this guy. And I remember Sporck saying ah you're a young guy, you can do it. You know, you - you got enough energy to do it. So basically he worked for the analog group. Sort of he - he worked with Bob Dobkin which who was his original prot ? . And on a consulting basis, he turned out, you know, some, you know, very nice chips for National. But he was a consultant. He wasn't an employee.

RW: Okay. So you got the idea that you wanted to start your own company.

BS: Yeah, I - in really at this point, I mean, I was in the semiconductor business my whole life and I knew analog and - and I just knew that two things were happening. One, in 1981 was the beginning of the digital revolution where all problems electronic were going to be solved digitally. And I think even maybe National bought into this because National's whole strategy at the time was you have to be big to survive and to be big, you have to be all things to all people. And so they were trying to take on Intel and microprocessors. I didn't like their chances. They were trying to take the Japanese on in memories. I didn't like their chances. They were making watches and calculators and computers on a board and duking it out in T2L. And I said, you know, they really ought to just stick to analog but, of course, that wasn't going to happen. So I decided to go off and try to get funding for a company that would - that would work on analog. And we would do - create new products and because we really believed that this digital revolution was in fact going to create end products that were practical for the first time because of digital, but every one of them was going to need analog. And we even bet that the analog would be a different set of products than was in National's catalogs at the time. And, you know, frankly, I was the technical flyweight in the group so I'd go to Dobkin almost every day and say Bob, this isn't true, Digital isn't going to put us out of business is it? He'd say Bob it's not true. So I'd go on like that almost once a week. And as it turns out, we were more right than we could have believed. The analog business was a two billion dollar worldwide market in 1981. Digital actually created a boom for us. And in the year 2000, it got to be thirty billion before the market fell apart. And this year, 2006, it's supposed to be thirty-four billion. So, I mean, it - so now everybody knows. Nobody's asking on Wall Street, nobody's asking, you know, in the other - in or any customers is analog dead? They all know that not only is analog not dead but its become enabling technology for so many of - of these new hand held digital consumer products. Without analog, they don't exist. You know, the convergence of computing in and communications was more about analog than it was about digital. And its still a business where one company can differentiate its products from the other fifty people that make up the pack. And I'm not even sure that's possible anymore in digital.

RW: Well how did you get your funding?

BS: Ah, that was a good story. You know, I left National with three or four pretty well known people so we had a power base in terms of reputation. I wasn't as well known as some of the engineers but the venture capitalists were able to confirm quickly that yeah I was the guy that ran this very successful business. They had some concerns about the digital revolution but they were willing to basically buy into our story that no, no, no, this digital revolutions actually going to be good for us. I remember one day reading in the paper that there was something like five billion dollars alone up in Sand Hill Road just looking to be invested. And we just needed a tiny share of that. So we actually I went to see a lawyer at Wilson Sonsini that I'd met at some cocktail social function and he told me that he knew about VCs. So I called this guy Art Schneiderman who's still a partner at Wilson Sonsini. I said Art, I'm thinking about starting a company. And he said okay, now you're coming to me about something I know about, not this litigation thing that I was asking him to help me with before. And so he introduced me to Mayfield and to Hambrecht and Quist. And I remember I called Hambrecht and Quist and the line was busy and I called Mayfield and a guy named Glen Mueller picked the phone up and I told him my story. And he said okay, come on down here. And by the time I go to see Glen Mueller at Mayfield, Hambrecht and Quist called me back and so I had visits with both of them. And we talked to these people literally for three or four months trying to muster up the courage to actually leave National. And I knew Charlie was not going to be happy with us. And at this time, the venture capital people were a little bit sensitive because Intel had just sued Kleiner Perkins and said that they had raided Intel when this company SEEQ started. And so the venture capitalists basically were saying look, we love your team, we love your story. The venture - the lawyers were saying you can't write a business plan, you can't put anything down on paper. And the venture capitalists were saying we can't make any commitments to you until you leave sort of like, you know, we don't know if when we jump off the bridge its going to be warm water or, you know, concrete. And so finally one night, one afternoon and one night in this house downstairs, there were four or five of us, we were getting together, we'd drink beer and play pool and finally one of the guys said look, are we going to drink beer and shoot pool or are we going to start a company? And it was like that sort of shook me and I said were going to start a company. Let's do it. And so we hand our resignations in and just as we suspected, National was not very happy. We then went to the venture capitalists and they said okay, write a business plan and they gave us the money, some upfront money to keep us going. And we wrote a business plan and by this time, Kleiner Perkins was in - Don Valentine was in, Sutter Hill in, Technology Venture invested - they all wanted in because this was the days when a good story was shared. And - and so we - we finally had a closing dinner at some fancy French restaurant in Los Altos, I think, and at the end of the dinner, we gave the six venture capitalists a copy of our business plan. And so I remember Don Valentine getting up and saying this is the first time I've ever wrote a check, bought dinner for a bunch of guys and then they gave me the business plan. And so I thought we had maybe we - that was sort of a first but it turns out that the story of Intel was similar. They got money and then told the venture capitalists what they were going to do. But it was touchy times. The digital revolution, venture capitalists worried about being sued themselves but we raised some money and we were talking about starting a chip company with full wafer fab because analog was a lot about bipolar then. In fact, it still is. A lot of people don't realize that. Nobody had bipolar capability except our competitors and they weren't about to help us. So we put together a plan for fifteen million dollars. We thought we could get a company started, get a staff, get a fab, get products and get some income and break even at fifteen million dollars in cash flow which was a lot of money then. People today can't believe we did it. And so I remember the first - when we first got to the point about talking about how much of the company were going to have, for fifteen million dollars, they were going to give us thirty percent of the company. You know, none of us had money like Corrigan, you know, who had already had some money. We couldn't invest side by side. We brought our one month away from bankruptcy finances in and whatever we knew to the venture capitalists. So we went home that night and we talked about it. You know, in fact, Don Valentine put this idea in my head about stage financing. He said you don't have to take the whole fifteen million. You could take five and - and then, you know, put a team together and put up a building. I went and what happens then? He said well then the second round will be at a higher price. Just for doing that, I said, you know, because we – that's what we were doing. And he said then, you know, then maybe the third round you have some products to sell and you can get a third round even more, at a higher price. And so I said wow, because my instinct was to get it all up front. But I went back the next day and we said to the venture capitalists which is basically Hambrecht and Quist and Mayfield, they were the leads, and said we've been working the numbers and if we only take five million, can we have seventy percent of the company? And I remember Glen Mueller laughed. He was amused by it, laughed. And I remember the guy Larry Moore Mohr from H&Q was angry because he wanted seventy percent of the company. And I remember Glen Mueller saying come on Larry; we want to back smart people don't we? This is a good thing for them. Let's do it. And the rest is history. So the whole financing thing was – that's another whole story in itself. How we were able to build a factory, there was a semiconductor factory across the street from LSI, put a team together, get a lease line on ten million dollars worth of equipment, get a builder to build us a building that was way beyond a real estate deal and break even at fifteen million dollars in cash.

RW: Amazing.

BS: Yeah.

RW: Oh - well now your initial products, were they second source products?

BS: They were second source products. They were - well they were enhanced second source products. And I remember Tom Perkins was very concerned about this. Remember these guys had just been sued by Intel. And he said now you just - look, you guys are good. If you're as good as you say you are, just go and do a whole bunch of proprietary products but we knew from our experience, the proprietary products had - they took longer to design, there was a design-in period - we were going to have to raise a lot more money and now were tuned into this thirty-seventy percent split. And so we - I remember we - I go no, no, look, were going to come up with products that are second source. There's no patent positions on them. There's no trade secret stuff. You know, they're perfectly legal to do. Five or six other people already make these products. Were going to be six or seventh. We're going to have some performance advantages that might just get people motivated to buy some from us. And that's the only way we can get revenue, you know, in our second and a half, third year. Or, you know - well their attitude was fine, you'll need more money. But that meant they get a bigger share of the company. We didn't want to do that. So we started out with enhanced versions of second source products and that probably got us - that probably accounted for all of our sales for the first two years in the business which was taking up - us up to about year five. And then some of our proprietary products started to really kick in. And today ninety-five percent of our sales come from unique products produced first by Linear Technology.

RW: But that was very much the AMD strategy that they did in TTL.

BS: That's - yeah that's right. As a matter of fact, it wasn't that we had this brilliant idea. We were aware of what AMD did. We were aware of look, you start out with second source products that maybe are enhanced so that there's a reason to buy yours instead of the pack but then you have to move into products that are unique where you have pricing power because that's the thing I learned running Nationals business is that you can try to be the lowest cost guy or you can try to deliver a product that has the functional value that allows you to sell it for many multiples of costs.

RW: So you were primarily bipolar. Now did you go to MOS at all?

BS: We did. And we went to MOS actually immediately. Our first wafer fab, I think we were the first ones to have a single line that could run both CMOS and bipolar. And bipolar, by the way, wasn't a bipolar. It was many iterations of bipolar. And we had a silicon gate process that was a P channel and an N channel, some basic CMOS and because one of our strategies was to quickly have a product portfolio that was even wider than National and wider than analog devices which was kind of a big thing to bite off. And at the end of like eight or nine years, we wanted to have a broader product portfolio, maybe not more products in numbers but a broader product portfolio. And so for things like data converters, CMOS was an appropriate process and so we basically right out of the chute, could build both CMOS and a whole variety of bipolar in the same fab. We couldn't afford two fabs. We had to figure out how to have controls that would allow us to do both. And we did.

RW: That's fabulous. Now compare an analog fab to what's required in digital now.

BS: Well, you know, I'm not sure I'm an expert at it but I hear that I remember hearing that Intel said that, you know, maybe ten years ago, it took a billion dollars to build a fab and it could probably generate revenue of 1 to two billion. I was investing twenty-five million dollars in a fab. And twenty-five million dollars in a fab could support two hundred and fifty million in sales. So the economics were powerfully positive for analog. You know, we didn't need fine line widths. We didn't need - we were buying equipment literally that was second hand, that were the throwaways from the digital people which actually, in some cases, were more than we even needed for todays, you know, best analog circuits. So we had that advantage, you know. Now today, there are a lot of analog ICs that require fine line. I mean, voltages are no longer a plus or minus fifteen volts - well they are but, you know, as the microprocessors and come down to five volts, 2 volts, 1.2 volts, all of a sudden, being able to stand off, you know, hundreds of volts, is not an application across the board. And so to make analog circuits that can power digital circuits at 1.2 volts and 0.8 volts, now allows us to take advantage of some of these fine line processes also to get a lot more complexity or a lot more function in a given area. But Linear, as a company, can never make a case to go build a billion dollar fab or a two billion dollar fab to service what might be fifteen to twenty percent of our business. Today it's not even that but it could be fifteen percent. The foundries will be just fine for us. But today, we're about 1.1 billion and half of that number is a combination of very unique bipolar processes that are the right process for the function. They're less expensive than some of these exotic CMOS processes and they're harder to copy. There's more black art or more IT IP in it than I think, you know, doing an Intel fab. You know, people say we got to have a couple billion dollars to do that. Well there's all kinds of places where you can get a couple billion today. So I believe that the bipolar stuff that we do is easier to protect than some of this fine line stuff that the digital folks totally depended on.

RW: Yeah. Well now have you stepped back from the day-to-day now?

BS: I have. In January of last year, I decided I didn't want to retire completely but it was time for me to step down from the CEO. I'd been CEO for twenty-four years. And, you know, it was almost like the crew deserves a change. But to be honest, I have a lot of energy but it's a hard business as you know and I just felt that I didn't have the energy anymore that was required to keep us at the cutting edge. And we're at the cutting edge. We are the most profitable chip company that's ever been and we've done it not for one year or two years but we've done it for the last fifteen years consistently. Its execution and its passion and its pressure and; I felt I didn't have that as much as required anymore. And so I'd been kind of grooming people for at least five years and in January of 2005, it was - you know, the time had come and I convinced the board that I wasn't going anywhere but it was time for me to step back and let some younger blood, you know, forty-five year old guys, okay, to come in and keep the momentum, keep the, you know, keep the level of activity going.

RW: Well when you recruit people, what do you look for?

BS: We, well in the analog business, you know, were recruiting a lot of engineering people so were looking for people who've decided probably in their childhood that analog is what they love, okay, or they thought - they listened to Gordon Moore twenty years ago and said you got to get into digital and maybe they did but maybe they got exposure to analog and said, you know, I really like this better. And so we look for people who - who basically are linear or analog aficionados. You know, they've decided this is what they love to do.

RW: What - but what qualities do you look for - intelligence, drive -

BS: Yeah, it's more than intelligence. Its kind of a passion to – it's a passion to work for a company that is doing analog and its a passion for working for a company that's at the top of its game. It's a passion for wanting to be a winner.

RW: Yeah. Now you - you have design facilities in various locations.

BS: We do.

RW: Right? Why is that?

BS: Well, you know, there's – there's an old saying, I don't know who invented it in the analog business that he who has the most analog designers wins the game. There's a basic supply-demand problem right now. And the problem is actually in our favor. The need for analog know-how is growing. The supply of analog know-how is not growing as fast. And so we decided ten years ago that we couldn't go from, you know, five designers the company started with to two hundred and fifty by the time we got to a billion in Silicon Valley because, believe it or not, a lot of people don't want to live in Silicon Valley . A lot more people can't afford to live here even if they want to live here. So we basically decided to set up design centers and our first design center was in Singapore but that was - that was for a different motivation. Our first really remote design center was in Boston . We had a really talented guy who worked for us who was actually a product engineer and his wife was also a product engineer working for the competition. They grew up in New England, actually she grew up in New England and it was time for her to go back to her roots. And so we were going to lose this really good guy. And I said I didn't want to lose this guy because its sort of like, you know, when one or two really good people start leaving, its sort of like a leak inside a rubber boat. And I learned that when I left National. I didn't believe the group dynamics issue that five lousy people leaving were going to create. And so I said I'm not going to let that happen at Linear. And so I remember talking to Dobkin about this fellow who was going back to Boston who wanted to work for us but, you know, his wife wanted to raise their children in the Boston area. And I remember asking Dobkin, do you think Sam could run a design center. And he said yeah, I think he can. He's a really bright guy. So we took a chance on this guy his name is Sam Nork and he said fine, Id love to stay. I'll set up a Design Center , or whatever the hell that means, and this is now our second biggest design center outside of Milpitas . And it's not only become a design center with sixty or seventy people but there's test development and the whole works. But it's become a center of excellence for us because in our business, its not marketing people who tell us what the product is. Its senior design people who visit customers, figure out what they want even without telling us what they want, next year. And in a its a special nose for scoping out what circuit are we going to have to be available to sell this time fifteen months from now that's going to be exactly what the customer needs because sometimes they're not even articulating it. And that takes a special kind of senior design guy with a skill to do discovery. And that Boston Design Center has not only churned out circuits that are responsible for a hundred million dollars worth of sales but they have developed a skill to go out and figure out what to design. And, you know, for a long time, that was just Milpitas based. We have another big design center in New Hampshire . We have one in Burlington , Vermont . So, you know, were in this kind of a hub of analog for us. We have our second biggest design center is in Colorado Springs . We have one in Phoenix . We have one in Raleigh , North Carolina . We'll basically set up a design center any place there's a group of ten analog guys that are good who are willing to come to work for us, we'll set up a design center for us and hopefully it goes beyond ten. But because of that, now I think more than fifty percent of our total design staff, circuit designers, reside outside of Silicon Valley .

RW: Where they can afford to buy a house.

BS: They can afford to buy a house. They have personal issues. They want to raise their family, oh we have one in Grass Valley too, by the way - some people want to live in Grass Valley . Some people want to live in Colorado Springs . I mean, as I've said jokingly, well - well put one on the moon if that's where analog guys want to live.

RW: Well, you know, you - you – you've been talking about Silicon Valley starting a company. What is it do you think that makes this such a fertile area for - for technology?

BS: You know, I've been asked that question a lot of times and maybe the number one thing is what's happened in Silicon Valley has created a culture just like companies create a culture. And I was telling you earlier that if I had started Linear Technology in Boston , everybody would have been cautioning me to are you sure you know what you're doing? You've got this nice job at National. Are you sure you want to do this? Here in Silicon Valley , I mean, I lived in this house when I started the company. My mailman read about me and congratulated me. You know, the guy who delivers my water read about me, congratulated me. This is a place where taking a risk and being an entrepreneur - your neighbors love it. They think you're a hero for doing it. They don't think you're nuts. And I think this culture, it, you know, certainly the infrastructure makes it possible but its more than that. Its a culture here that allows people to have an idea, find the money, find the support infrastructure to make your dream possible.

RW: And you may fail?

BS: You may fail and, by the way, failing in Silicon Valley is not a black mark. Yeah.

RW: That's great. Well thanks very much.

BS: My pleasure.

RW: Okay. Would you like to show us around?

BS: You can see this is - this is the remodel of a room that was essentially this way twenty-five years ago.

RW: It's lovely. Now you have fabulous views out there.

BS: Yes, in fact, a lot of people don't appreciate this view. We have - look at - look at the snow today. It looks like were in the Alps . I don't know if you can see that.

RW: Might we go outside.

BS: Yeah, we can do that if you want. But I mean, this - this is amazing to - to see - see snow like that on the hills.

RW: That's great.

BS: Ill have to - let me put these lights on because the lighting is interesting here. Kitchen, of course. As you can see, we have a lot of deck, quite a lot of deck. And we have a - a new barbecue that is about eighty percent complete because we enjoy California weather.

RW: Want me to follow you out that way?

BS: Sure. Dining room. And you've probably seen this nice water feature that when you come up the stairs, kind of difficult and when they were remodeling a house that is split level, you know, you - you come in and you're supposed to go downstairs, you're supposed to go upstairs and so I think this piece of water sculpture was - was perfect for the entrance. Guest bathroom. We - we have five thousand square feet here. We have two bedrooms. This messy room is my office. Nice and dark so you cant see the mess. This was about getting huge closets. So have, I mean, she doesn't know were doing this but that's her closet, not our closet. And this is the bedroom wing was always here but again, what used to be our closet is my closet and sauna tub. But you know, pretty nice views from all over. Oh I also have a downstairs. The only people that are allowed to come in here with their wet feet are our cats. We have two cats. Small wine cellar.

I have red wine here that's probably going bad because I don't drink it fast enough. This is a - a workout room that my wife and I actually do use quite a bit. Another guest bathroom. Also is going to have a pretty nice view when the barbecue is finished. Some lights on. And this is sort of entertainment level. Small little theatre area, a bar, pool table which nobody uses anymore. But again, the - the layout of the house is essentially the same. Some things have been changed but the remodel didn't add a single square inch of space, just - just brought it up to speed.

RW: Well this is really gorgeous.

BS: I think it's nice. I'm quite happy with it yeah. Yeah.

RW: Well Bob, it's been great.

BS: Thank you.