Every company has a story. Learn the playbooks that built the world’s greatest companies — and how you can apply them as a founder, operator, or investor.

Adapting Episode 3: Intel

Adapting Episode 3: Intel

Tue, 12 May 2020 01:00

When you think of Intel today, you probably think of the microprocessor company. Maybe you also think about about 'Intel Inside' and their famous jingle. You might even think "big, stable, boring public company". But for the first two decades of Intel's life, absolutely none of those things were true. Today we tell the incredible story of how the company that started it all in Silicon Valley clawed back from a crisis that brought them to the brink of death, and of one man who rose as the ultimate survivor to become their leader and a legend even in his own time: the late, great Andy Grove.

Note: This episode originally aired as part of Podapalooza, a podcast festival organized by our friends at Glow to benefit COVID relief. Find out more and support the cause at


Listen to Episode

Copyright © Copyright 2022 ACQ, LLC

Read Episode Transcript

I don't think so. I mean we said on adapting we weren't doing any grading. I don't know. I don't know what we would I mean it's the decision to pivot Let's see Welcome to this pata pollusa special we are in episode three of our adapting mini series where we tell the stories of great companies and leaders who are adapting to a world that's changing in real time For those keeping track at home welcome to season six episode six of acquired. I'm Ben Gilbert I'm David Rosentho and we are your hosts today. We tell a historical story of a company in crisis a Different and more industry specific crisis than the one we are all going through right now But a crisis nonetheless. This is the story of a business whose amazing and differentiated core product line It became a pure commodity overnight and the realization action and bravery that followed thereafter Today we cover Intel and their incredible bet the company move on their newly emerging Micro processor business in 1985 this was an astounding part of the research for me was a full 17 years after their founding Yep, they weren't the micro processor company when they started But we'll get into all that to all of you listening out there for the very first time as part of Pata pollusa welcome to acquired and adapting on this podcast We tell the stories of great companies mostly we focus on technology companies and we center our story mostly in normal times around a culminating event that we grade for the company who typically an acquisition or an IPO hence the name acquired Ben and I though are Not journalists. We are industry practitioners and so our perspective here is telling these stories From the perspective of people inside the industry where entrepreneurs and venture capitalists and We've been trying over the past hundred or so episodes here on acquired to better understand how to build great companies And learn in public how to do that ourselves and with all of you Well a few announcements before we get to it if you love acquired and you want to go deeper on company building topics into the nitty-gritty You can become unacquired limited partner you'll get access to the LP show Which has recent guests like venture capitalists Charles Hudson and mystery co-founders Shane Kavalski and Vince Coppola with Charles We discuss the inside baseball of precede investing and portfolio construction and with Shane and Vince They're insane pivot and real time where they took their seed stage experience hospitality company Which is a tough spot right now into the world of in-home Kind of morphing their offering during the coronavirus pandemic and and figuring it out in real-time and Growing their business. I know it's crazy just crazy So you'll get access to that you'll get the LP calls where we hop on zoom and spend a couple hours with all of you once a month or so and you can get access by clicking the link in the show notes or going to glow Dot FM slash acquired and all subscriptions come with a seven-day free trial. So feel free to check it out Our presenting sponsor for this episode is not a sponsor but another Podcast that we love and want to recommend called the founders podcast We have seen dozens of tweets that say something like my favorite podcast is acquired and founders So we knew there's a natural fit. We know the host of founders well David Senra. Hi David. Hey, Ben. Hey David Thank you for joining us. Thank you for having me I like how they group us together and then they say it's like the best curriculum for founders and executives It really is we use your show for research a lot I listen to your episode of the story of akyo marita before we did our Sony episodes this incredible primer You know, he's actually a good example of why people listen to founders until acquired because all of history's greatest entrepreneurs and investors They had deep historical knowledge about the work that came before them. So like the founder of Sony Who did he influence Steve Jobs talked about him over and over again if you do the research to him But I think this is one of the reasons why people love both of our shows and there's such good Complements is on acquired we focus on company histories you tell the histories of the individual people You're the people version of acquired and where the company version of founders Listeners the other fun thing to note is David will hit a topic from a bunch of different angles So I just listened to an episode on Edwin Land from a biography that David did David It was the third fourth time you've done Polaroid. I've read five Biographies of Edwin Land and I think I've made eight episodes of them because in my opinion the greatest such a printer to ever do it My favorite entrepreneur personally is Steve Jobs and if you go back and listen to like a 20-year-old Steve Jobs He's talking about Edwin lands my hero So the reason I did that is because I want to find out like I have my heroes who were their heroes and the beauty of this is The people may die, but the ideas never do and so Edwin Land had passed away way before The apex of Apple, but Steve was still able to use those ideas and now he's gone and we can use those ideas And so I think what requires doing what a founder trying to do as well is find the best ideas in history and push them down the generations Make sure they're not lost history. I love that Well listeners go check out the founders podcast after this episode you can search for it in any podcast player Lots of companies that David covers that we have yet to dive into here on acquired so for more indulgence on companies and founders go check it out David I think we are ready to dive into the story of Intel Let's do it So the story of Intel we are gonna start here in the first act with the founding of Intel Some of this is gonna sound familiar to listeners who have listened to Part one of our series on Sequoia capital because Sequoia capital and Intel share much of the same heritage and roots Although Sequoia was not an investor in Intel because it wasn't founded yet So bear with us, but we're gonna go in more detail and talk about Really the beginning of Silicon Valley itself. So we start a story in 1956 with a man named William Shockley who has just moved from New Jersey Wonderful New Jersey spent lots of time there growing up and in college to Mountain View, California Where he starts a company called Shockley semiconductor and that today from our modern perspective does not sound shocking But it was shocking at the time and it was curious for a couple reasons one because there were no semiconductor companies either in California or anywhere else at the time Nor were there startups in general the whole concept just didn't exist mountain view was like A views of mountains and a bunch of Apple and P tortures the other reason it was surprising and interesting was that Shockley Wasn't just some like dude off the street He was living in New Jersey because he worked at Bell Labs where he had just Co-invented the transistor in fact in that same year in 1956 He won the Nobel Prize for doing so. He also had a pretty interesting background he had very deep military connections because doing World War II While he was working at Bell Labs. He had been tapped as a senior military advisor on actually on radar and Anti-submarine war techniques and Had kind of become so important to the US's war effort that he had authored the report He was asked to author the report that estimated the difference in potential casualties between dropping the atomic bombs on Japan at the end of the war and Invading Island I was him Shockley does crazy Especially as we'll find out more about Shockley in a minute What he ultimately turns into but why did he move back to mountain view California? I say back because he was originally from Palo Alto and His mother was getting older at this point time. I think his father passed away Wasn't doing well and so he had just won the Nobel Prize invented the co-invented the transistor I think he was probably thinking about starting this company and he decided to move home to do that So kind of with that Silicon Valley was born in California and not in New Jersey and David so co-invented the transistor But we don't have a semiconductor industry yet. Do you have any sense of like why he would win a Nobel Prize for Inventing the transistor like what did we think the transistor was gonna be used for? That's a good question Well, I think you know he had these deep military connections and as we talked about Oregon talked about less here but in part one of the Sequoia capital series the first and primary customer for the Silicon industry Was the government and the defense industry? Well, I don't recall exactly But I think the defense industry was sponsoring a lot of this for sure research I think within Bell Labs although I'm not entirely sure how that worked So there was kind of a race and computers have been used during the war any act and all that It was super clear that the transistor and semiconductors were gonna enable a whole step change function in the power and Utility of computers. So I guess it was known This is the part where I probably should have done work research in this area But the ways that we were Storing information before were just much bigger We just you know transistors made it much more efficient much smaller But as you say, you know the notion of a computer had existed before just not vacuum tubes. Yes exactly not not etched into a into Silicon. Well, it's interesting you say information was stored For a long time even after this information was still stored not in transistors Well, get to that one sec so back to Shockley though I mean he's brilliant. He's like literally one of the fathers of Computing undoubtedly Nobel laureate, but he had a pretty significant dark side he was a total ego maniac and When you have that in your personality becoming at the same time both a CEO and a Nobel laureate tend to magnify those Personality traits when he started the company He demanded absolute Adherence to all of his whims. He started instituting a lie detector test at the office because he didn't trust any of his employees And generally he was kind of like the world's worst boss later in life much later after After Shockley a semiconductor he would go on to become a professor at Stanford He literally went off the deep end. He became a white supremacist. He became obsessed with eugenics Pretty ironic given his role on the side of the Allies during World War two Then he ended up dying alone and completely estranged from his family like it's crazy He went totally off the deep end, but back to the 50s In 1956 though when he started this firm This was you can't back to your question. I like everybody in the technology industry knew This was where it was at and so he had just started this company in Mountain View, California But everybody who was working in the industry all around the country wanted to come out and work with him And so the best and brightest from all corners of the country started coming out and joining Shockley Semian conductor and I think that also had a big part to do with why you know, obviously there was the influence of Stanford and Cal and all the great universities in the Bay Area. Yeah, Stanford Sort of beating Harvard to get the grant from the federal government to do more I think it was DARPA research Yeah, I'm a DARPA research. Yeah, but this was also a big part of it This this company that popped up and started recruiting people from all over the country It's a kind of a year into this when Shockley's acting crazy a group of eight employees who are really talented They're kind of fed up with his antics. They decide to do something pretty radical They all resign on mass on the same day. They leave Shockley They walk out the door and they start a competing company becoming known in the process as the quote-unquote Traderous eight which folks might have heard of and two of these Traderous eight gentlemen are people by the names of Bob Nois and Gordon Moore these traders these These pirates if you will they also aren't just any kind of people off the street So Bob Nois and remember Shockley had invented the transistor noise invented the modern integrated circuit which became you know how transistors were were implemented in Silicon and Moore Gordon Moore of course observed and coined Moore's law that we still talk about and is holds even to this day Which was the observation that roughly the density of integrated circuits on the chip Computing power would double every one to two years and that has happened for the past 50 plus years sort of So I remember I think we're gonna go back Eight ten years, but there was a period of time where it basically petered off where we stopped seeing doubling in terms of pure Moore's law which was the density of I see's on a single core But then we saw the advent of multi-core computing and of course now you have eight core 16 core 30 to like shipping in laptops Processing power keeps increasing. Yes corrected itself in terms of the the amount of processing power You can sort of get on a single I guess CPU are there multiple CPUs on a what I guess what is the unified Body called of the several cores that ship together now. I don't even know anymore once again. It's a commodity But we'll get back to that so all these talented people left Shockley had you know Proving you can create a company, but it ended up being super difficult to get this venture financed like they needed money Because they had to set up literally manufacturing plants to make the semiconductor What year was this? This was 1957. Yeah, so like that There is no money that exists to to fund non-governmental sort of like tech businesses Yeah, venture capital was like you were going on an adventure in some capital somewhere like nobody knew what that meant So they ate of them they get in touch with a man named Arthur rock who was an investment banker from the East Coast And he agrees to help them out. He kind of scours the technology universe at the time looking for somebody willing to fund these guys and He ends up connecting them with a guy named Sherman Fairchild back in Long Island New York who is the owner of Fairchild camera and instrument corporation Now Sherman also happens to be the largest shareholder in IBM Which is why he's sort of interested in this so he agrees to loan these eight plucky pirates One and a half million dollars in exchange for the right to buy the whole company for three million dollars Which he does venture capital terms have come a long way since then It's a heck of a deal. Well, hey, you know, I mean this environment the power is back on the investor side I would say yeah, well, I don't think anybody would take that deal. It's actually interesting think about that deal for a second So you're alone one and a half million and they have the right to buy it for three Let's say it happens over the six months. I don't know how long it actually took like They wouldn't have taken any equity, right? It was truly alone. It was alone. Yeah So the end of the day it wasn't a company. It was it was a subsidiary of Fairchild like that and it becomes the problem like Fairchild semiconductor the newly established division of Fairchild camera and instrument Does take over the torch from Shockley and becomes the premier the premier semiconductor company and not just in Silicon Valley But in the world they have a great 10 year run down Valentine famously becomes the head of sales there and just crushes it Selling to the military and other customers, but 10 years goodbye and like nobody's getting that rich there You know, they've created all these, you know millions hundreds of millions of dollars in sales, but there's no equity Right, it's all going back to camera and instrument back in Fairchild's back in New York, yeah, exactly so The two of these folks in no noise and more they've already been traders once so you know What's what's another time they also start to see that we're now in 1968? They start to see that like hey, you know silicon has revolutionized Computing which has revolutionized so many industries at this point, but The memory aspect of computers still isn't done with chips It's like it's done with magnetic cores like literally, you know magnetic disks and it's way slower and it's way smaller What if we use the same semiconductor and silicon technology that we're using to make these other chips to turn the memory into chips I think we can do that that sounds like a good idea. Let's start a company around that Let me tease this apart to make sure I understand here So when you say make these other chips like what what types of chips were being made with silicon and semiconductors before memory before RAM Well, we talked about this a little bit on this quay episode. I think they were like specialized computing chips for The productions and the applications that they were selling them to so like they were selling to the military for like radar or missile guidance systems I think they were customized like the compute that was needed for the application was baked into the chips and then the storage was done in these you know storage of the data was done in these Magnetic cores right and there's no notion, you know for for folks that know how the inside of the computer works You know these days the CPUs the brain RAM is basically like short-term memory and then your hard disk or your SSD is like the long-term memory So that long-term memory was living on tapes or or magnetic disks There was no notion of short-term memory like that this this like Ram that would exist to hold your programs while they were running But not actually run them like that whole that whole piece didn't exist at all like that was the Intel innovation here I'm sorry that was the the more a noise innovation more a noise innovation the NM innovation Yeah, but it's great the other point to on that is like you know the CPU didn't exist yet until what you know invented You said that as the brain there were no brains like the chips that like what you said that were being produced They were like hard-coded like the computing the software was baked into the hardware Yeah, yeah, I remember sitting in my Electrical engineering lab in undergrad and I remember like specifically the 555 chip It was this time or chip and it existed to do one thing and it was basically keep track of time and sort of like Tick up as time went on so that you could keep track of it and I imagine like that was just the case for all these chips It was special purpose, you know Everybody can imagine them if they played with them as a kid or if they've ever ripped apart a computer It's just you got 8 10 12 15 pins you use a breadboard to hook them together and yeah, they do a thing So nice and more leave they have this vision of like we can create this short-term memory Product in Silicon they go find Arthur Rock again like oh well. He helped us start fair child Let's talk to him again this time Arthur has gotten smarter. He says you know Well, I saw Sherman get pretty rich at fair child rather than hooking you up with somebody who can like you know Set this up as a division What if you like start the company and I'll invest in the company and that they do he organizes a $2.5 million dollar funding round of venture capital from a syndicate that he leads They raise that in July they hire a few folks over from fair child and they're off to the races and let's talk about that So $2.5 million sounds like a great seed round for anybody that knows sort of funding these days inflation adjusted and that's $15 18 million dollars. So you know You're probably not going to a guy like Arthur Rock for him just to be able to write that check individually now Know again at this time we we covered Don Valentine's prolific sort of pseudo invention of the asset class of venture capital on on this equae episodes, but There wasn't this notion of like well, I'll manage other people's money in a way that we can deploy into startups and understand How like who gets a cut of what so indeed it wasn't until four years later the downward starts Right, and so what Arthur did I think he put in something like a hundred K of his own money and then basically got convertible debt For the rest of the to point whatever million yeah, and it was basically a Convertible debt in straw. So it wasn't a straight equity investment. Correct Interesting Well, nonetheless they do well quick diversion on the name so until this point all the names of these companies had been added the founders name or the name of the owner in the case of Fairchild so naturally though the name for this company should have been more noise So my favorite trivia on the research So they're like More noise and my son more noise and my semiconductor The it only took saying that out loud to realize that was that was not a good idea. Yes, you do not want more noise and Electronic system no So they They're like oh yeah, no worries. We'll just use our initials NM So they actually incorporated the company as NM electronics, but then I wasn't able to find were you able to find who Said like yeah, that doesn't The the time no I didn't find that no I couldn't find it either but within a month of incorporating it They changed the name from NM electronics to maybe NM sounded a little bit like Intel They change it to Intel because they wanted it to be integrated electronics But that was taken and so they use the word they invent the word Intel or I guess they borrow Intel from those intelligence and they actually did have to To go and buy the name. I think there was somebody else that there was a hotel chain called in Tokyo Yeah, I need to go buy the trademark. Yeah, yeah, apparently for $15,000 which was a lot of money in those days But they had two and a half million so you know they were swimming in it Three years later that two and a half million proofs to be quite a good investment on behalf of Arthur Rock and his associates Intel goes public with a market cap of $58 million Everybody makes a lot of money Don who fast IPO were like way before stay private longer. Yeah Don who we reference done Valentine he's over at national semiconductor by this point He sees this and he's like okay, this is Let's go venture capital. It's a thing and then of course he leaves and starts Sequoia capital and we all know the history there Or if you don't you can go listen to our two-part episode okay? So that's a nice little story Intel founded making memories Literally making memories making people rich three years to IPO You know $58 million market cap is you know Wonderful record setting at the time. That's a nice little story But there's certainly nothing adapting about that Honestly, if it weren't for what happens after that Intel would just I think I ended up being like a part of ancient history Just like exactly and very child. Yeah, and to really drive home for everyone because everyone thinks of Intel Yes, you know Intel inside or maybe it triggers in your mind Duh-duh-duh-duh-duh-duh-duh-duh-duh-duh or maybe you know You think about a cool rendering of a CPU on a motherboard To quote directly from the Andy Grove book only the paranoid survive You know, he says Intel equaled memory in all of our minds like it was their core identity is we are memories that it was the business plan It was founded on yep Totally so what was the problem that would have killed the company? It was that you know Ben. I think you mentioned this It turns out that memory and really all of the silicon that was being made at this time Was a commodity they just didn't realize it because they were first market like memory chips didn't exist before So Intel gets started they start you know turning out these chips people start using them But then other people start making the chips and there's nothing special about the chips They're just like memory is memory in some ways, you know Intel You know, they were the most innovative company like they truly Were able to stay six 12 months ahead and always be sort of better than their competitors a lot of their They were making denser memories more storage. Yep. They believed that R&D and you know technology That's really at the core of who we are they invested really heavily in it and so for you know 15 years I think that the first 10 years they handle ebid all competitors maybe the next five years They sort of would trade back and forth with Texas Instruments and other early memory companies for Who would have the best model this time around and they'll wait for next year to see who has the best model for next time around so Commodity in a sense of like Everybody has to really push the envelope to run forward But not enormous barriers to entry and like new competitors kind of keep popping up in the words of Hamilton Helmer from her great LP episode and his Books seven powers. There's no power in the business like it's just hard to do But there's nothing fundamentally about like once you are doing it or you're a leader that you're gonna stay the leader and so by the mid 1980s Again, as you say, you know 12 15 years after Founding which was a great run for the company had and go public They are under siege Japanese electronics companies had decided to enter the market with all of the power That they had at that point and all of these companies were big Koretsu companies that were in just like Fairchild kind of divisions Of much larger companies so they had access to a ton of capital ton of resources and here we are in 1981 to four call it where this is really the The boom of Japanese companies having operational excellence like that is the thing that they're just out Operating US companies Exactly and on top of that there are there you know companies like Sony like that There are these electronics companies that are just way better than the electronics being Manufactured in the United States the country was really rallying behind this as an identity The Japanese companies were able to build Enormous factories to build out these memories so there their economies of scale on building them They could get so cheap and their access to capital with whatever was going on in Japan at the time was just Enormous they kept being able to get the private or public funding and Pour them into these companies where they could produce way more memories they could do it way cheaper and the talent that they had there from all these emerging Fantastic Japanese electronics companies like they were just as innovative if not more innovative than Intel Yes, they're eating Intel's lunch so Intel's market share of memories Goes from above 80% at the beginning of the decade too by 1984 I think it's in 1984 they dropped out 1.3% of the market global market just like brutal Which we should say is still a huge business because memories at this point You know were for anyone who sort of gets this error the Macintosh was released in 1984 like Personal computing is on the verge of becoming a thing but you think about mainframes You think about all the computing that was sort of going on just before that the demand for memories and all sorts of applications Is huge and so it's still a really big business with factories all over the country with different you know eight different projects going on for eight different models Like Intel is a big freaking company just with that market share. Yeah, well big by revenue But their profits are getting eroded down to zero or really below zero because of the pricing power of these Japanese companies so at this point Intel needs a miracle and they are just lucky enough That somebody on the team in fact Intel's by at this point president and their very first employee Happens to be a miracle worker and we're gonna tell the story here of Andres Grouff Better known in the US as Andy Grove the legend of Silicon Valley and this story is just incredible adapting Personally adapting in terms of the world and adapting in terms of the company What's rewind for a little bit? so Andres is to von Grouff was born in 1936 in Budapest, Hungary to Jewish parents in a Jewish family and When he was born in 1936 Hungary was already a fascist Dictatorship that had aligned with Nazi Germany, but despite that Andres's parents and family were doing okay His dad ran a dairy co-op his mom was actually educated and had finished high school Which was super rare for any women in Hungary at that time And especially super rare for a Jewish woman and then of course in 1941 when Andres's five Hitler invades the Soviet Union Hungary enters the war and Becomes for all intensive purposes in Nazi state his dad is shipped off to a labor camp disappears for four years Amazingly survives, but at the beginning of the war there were 650,000 Jews living in Hungary by the end of the war There are 150,000 so half a million people exterminated in the Holocaust totally totally awful words can't even express Andres and his family though they are the lucky ones So Andres and his mother go into hiding they assume new identities remember he's like a kid at this time He's you know this is between the ages of like five and ten He's been years in hiding pretending to be not Jewish They're eventually liberated by the Soviets when the Soviets drive the Nazis out of Hungary in in 1945 And his dad survived some returns, but it's kind of like maybe like Not out of the frying pan into the fire more like out of the fire and into the frying pan because now Hungary is a Soviet state right and like you know his family his dad had been an entrepreneur Before the war had started this dairy co-op and no one this dairy co-op and anybody who had employed people was considered an alien a class alien by the Soviet state and was persecuted so like because they were communists and if you're running a business that makes you a capitalist That makes you a capitalist and that's that's evil so you're a counter revolutionary and so His father and his family had to renounce everything Pretend that they you know for what they had done before was evil and you know, and it's also not like anti-Semitism died with Hitler You know either at this time. So it was it was pretty rough the Andy Grove story the intel story that I knew before this was There was a guy called Andy Grove He wasn't the original founder of intel But he was the one that you know saved it and like when you dig into full stop really his background is like Imagine during your formative years of five to fifteen having both of those experiences like totally no My it just it just makes you realize how freaking comfortable and Uncomparable most of our own lives are to they're just incredible and an awful sort of Persecution that people like like Andy went through well, I think it's good perspective for this time too like This is a crazy time that we are living through like unprecedented and nuts with Coronavirus and you know terrible and there's terrible human suffering But like this really puts in a perspective, you know I was reading Andy wrote several great books, but one of them he wrote a memoir at the end of his life called swimming across about these years And it just really puts things things in perspective like I've said things like man this feels like a war like we have an experience Anything like this since World War II as a nation and a world and it's like no, this is nowhere near Wood World War II was like really good perspective But anyway Like we said his family were the lucky ones and then a pretty moment his event happens And this is also just like such an amazing American story So in 1956 the same year that Bill Shockley moved to California wins the Nobel Prize and starts Shockley some a conductor student protests and he's in In university in Budapest at this time studying chemistry student protests erupt in Budapest and they turn into a full-blown Revolution and this becomes the Hungarian revolution of 1956 against the Soviets The Soviets roll tanks into the city and like brutally suppress the revolution But in the chaos a whole lot of people are able to escape across the border to Austria and make it to the west And Andy is one of those people he literally walks out of Budapest He gets a train out of Budapest and then he walks across the border to Austria From there he's able to get to the US. He has a refugee. He comes to New York City 20 years old with $20 in his pocket and nothing else And just shows up and when he gets there he he's taken him by some extended family in New York City He changes his name to Andy Grobes so that like people can pronounce Andres Graf is not not easy to pronounce by his professors He gets a scholarship and works his way through City College of New York as a chemical engineer He ends up graduating top of his class in the New York Times writes an article. Did you find this Ben? No That was just so cool the New York Times actually wrote writes an article when he graduates in What would this been 59 maybe 59 or 60 He graduates at the top of his class in city college in New York and the headline is refugee heading engineers class in New York times Super cool. Yeah On the back of that he goes out to California. He goes out to Berkeley He gets his PhD in chemical engineering at UC Berkeley Graduates in 1963 and joins of course the best company technology company in the world at that time fair child Fairchild semi conductor and that's where he meets noise and more And so then legend has it. I think this is probably a pocketful But even if it is a pocketful like it's I feel like half the stories we tell are a pocketful Reinvented in some way that's true. That's true But if it's not true it the spirit would have been true when noise and more Go to Arthur Rack when they're starting intel in 1968 to get funding the legend is that Arthur Rack told them That he was going to refuse to finance the company unless they recruited Andy Out of fairchild to come join them as the first employee So Arthur who's in and he organized the initial investment and fairchild, but then Had nothing to do with it other than that I think I mean he must have stayed close with with the people had to but like that speaks to Like how special Andy was if someone like Arthur Rack is getting visibility into what he's doing inside the company so much so to lobby for him Yeah, I mean this is a kid that he's now five years out of his PhD program and he had art like of course he was developed a great reputation within fairchild but like Ha pretty cool that like Bob noise and Gordon Moore make you their first employee when they're starting intel and Arthur You know does all value So he joined he was employee number one when the company was started in 1968 by 1979 he had been promoted many times he became president So Gordon Moore was the CEO of the company. I think Arthur Rack was the chairman on the board and or maybe maybe noise was the chairman And maybe noise and rock swapped off noise might have been the first CEO and then they swapped in Gordon became the CEO Yeah, it feels like it's like a Google or a Twitter type situation. Yeah, I think that's I don't think it was a Twitter. I think they were all friends But Andy got promoted to be president in 1979 So we're now back in the mid 1980s Intel is underseys from these uh, Japanese memory manufacturers that are flutting the market with highly superior products superior cheaper and in much greater quantities like in much greater quantities there is there is no answer for if you're in to Alfred what to do yeah, it's like it's 1984 And Andy thankfully isn't living under a communist oppressive regime But he's still having brutal nightmares here Uh, and so he actually then writes the book then that you mentioned which is so great and it's just like classic of Silicon Valley Only the paranoid survive all about this The quote that actually starts only the paranoid survive Then Andy starts the book with is sooner or later something fundamental in your business world will change and So apt apt for right now and apt for Intel at this moment Yeah, and what's crazy to think about is like this is a dramatic story about Intel Well Mostly because of what a successful company they became but that dramatic thing that happened for their industry was just one industry And just one change and what we're seeing now is a massive dislocation in every industry And so like suddenly this story Becomes very relevant for anyone doing business in anything which is a kind of a crazy crazy moment Well hopefully sales of uh Oh the book only the paranoid survive will Will will spike though they'll benefit from from this moment So what changed for Intel right like obviously it was that these Superior in every dimension Japanese producers entered the market But Intel itself was caught so off guard because their relationship to the competition up into this point like we said They didn't understand that they were in a commodity business until this point It was so crazy that you know Ben as as we talked about Intel usually had the best technology the best chips. They were six to 12 months ahead of the competition But because these are physical chips that have to be created and Intel didn't have enough production resources to meet demand They Did this thing that sounds crazy right now, but was just totally normal in the industry back then They did second sourcing and so some people might know what this means This is completely gone by the wayside. It's a byproduct of military contracts Where the military they needed to ensure that they would be able to get enough of what they wanted to buy And so they would award the contract to a you know primary manufacturer that was gonna make what they were buying But then they would encourage that manufacturer to go to their competition Give them their designs for making the product and let the competition's factories Make the product to ensure that the customers had enough demand so Intel did this whenever they would win contracts They would bring in their competitors Chief among them AMD which people are gonna know interestingly AMD itself came out of fair child a couple months after So crazy that both Intel and AMD did I know and so they would kind of compete against each other for bringing Primary source on the contracts that they were bidding for But then to kind of no matter who won they would bring the other one in and just give them the reference design and fill it out And so Intel was doing this with their competition and they actually part of how the Japanese got up the learning curves so fast was they Came in as second source for Intel during the late 70s on a bunch of these contracts Yeah, so here's the quote from only the paranoid survive which I highlighted this when I was reading on a Kindle cuz I was like you know He's gonna be kidding me so he said The Japanese memory producers appeared on the scene actually they had first shown up in the late 70s to fill the production shortages We had created whenever session pulled back our investments in production capacity The Japanese were helpful then they took the pressure off of us But in the early 80s they appeared in force in overwhelming force Yeah, what is this overwhelming force that they're now appearing with so At one point Andy and his team and the sales team gets a hold of a sales memo from one of these Japanese companies He doesn't say which one and here's the quote of how of the battle card against Intel It says win with the 10% rule find AMD and Intel sockets I assume sockets being like where they were selling into quote 10% below their price if they re-quote go 10% again Don't quit until you win So they were literally willing to go to the bottom to win every contract And they have two advantages there one their actual cost of production is dramatically cheaper because of the dramatically larger scale They were producing at and to their access to capital was much better So they had a cheaper cost of capital so they really could Without you know turning their business upside down or having negative gross margins They really could just keep going lower and lower lower Yeah, and this is what we were talking about earlier so you know Intel like you're saying their market share Totally knows that but because the market is growing their revenue doesn't actually drop that much But they're no they're losing money on every chip they're selling at this point because the profits have just been completely eroded It's like it's like Uber and Lyft you know bashing each other over the head and away all the margin Yeah, there's no profit anymore And so this creates what in a grove calls in the book a strategic inflection point Which is you know he defines it as the time in the life of a business when its fundamentals are about to change And he says these changes come about whenever there's a sudden Huge kind of tenix change in one of the five you know fundamental porters five forces of the business in this case competition Competition comes in it's tenix stronger like You're you're up a creek here. Yeah, and relaying that to current times Competition is unlikely up, but demand is likely way way down And so it's likely that the buyer power has has you know evaporated in many many industries where consumers spend is down or travel or hospitality or People with with you know freezes to whatever corporate spend they had I mean, it is just like again just trying to to to bring it home to relevance here a different crisis, but very You know, there's a tenix change in your in your customer behavior inside of Intel It's chaos and grower rights about this that like there's tons of infighting Everybody has a conflicting opinion. We are the memory company like that's the only thing we can possibly do And so people are yelling at each other. It's like you know the engineers are like the sales team needs a work harder and the sales teams like We need you know the engineers need to make better technology for us to sell and some people like well We should just like vastly increase our you know our fab production to have more capacity and compute directly with the Japanese and other people Just like this is totally unfair and there's some people that are on sort of the right path But still like everything looks like a nail because they've got a hammer. They're saying oh we need to do like value added memory Like we need to we need to add additional features to the memory that make it not appear commodity then we can make margin from selling these extra features in the memory to the customers and so they're like Getting this notion that we can't compete head on we have to flank them in some way, but they're not flanking far enough Like they just are like running at them with different guns, you know, it's very Then when you're when you're making the decision to buy you know the next I found upgrade cycle or not like are you making your decision based on the whether the memory has more features in it than the previous year I'm not no So this leads to this moment of clarity and I just like this is one of my favorite favorite moments in like all of business history of one famous day in early 1985 where more and Grove are talking about this situation I think I think Andy says it was in his office at Intel and There they're standing there. They're talking to each other and Grove says to Andy says to to Gordon You know, I mean things are like bad So like you know if the board kicked us out and brought in a new CEO What do you think the new CEO would do to like in response to this situation? And more looks at him and he says just point blank. He's like well, they just get us out of the memory business And knowing it knowing it actually like like Ben like he's like people are kind of dancing around there But nobody would be willing to bring that up a place This is like this is like Uber saying we're gonna get out of the ride sharing business like which Right right Listeners can't see Ben's shrug there Um And so Grove uh writes in the book he says you know way as soon as more said that he just He says I stared at him numb and then Grove responds well What if you and I fire ourselves Walk out of the door to this office rehire ourselves Turn around come back in and do just that and so that's what they do They actually physically walk out of the office. They ceremonially fire themselves Rehire themselves and walk back in and then that's like a logically like gives them The clarity of like no, this is what we need to do We need to get out of this business It's a it's a cinematic moment imagining that the Sort of khutspa that it takes then to go and actually pull this off people in the company correctly have laundry lists of reasons why You can't possibly do this and and there's a different than the emotional ones that I was talking about We are the memory company. We can't possibly change like even if you just take that stuff away And you look at the other businesses that they're in the the main the obvious one that they should go focus on is CPU They have some other stuff, but CPUs are kind of the thing. It's super immature. There's not necessarily their a team on it They have no production capacity that they've only been doing it for a very short period of time There's not necessarily customer pull yet like the We're talking about 1985 the Mac has just come out and remember the Mac didn't use Intel chips They use Motorola chips. So like the PC was not a thing yet You know, I mean it was a thing but it wasn't like the PC was like VR today Right and the things the sales guys are complaining about is that it was a complete breakthrough and we I think they invented the CPU or at least sort of Yeah, get credit for that and maybe that it was a 4.004 was the the the big first one They created this amazing thing. You know, they're working on the 386 in the corner of a building And 31 who knows sort of the x86 processor like that's the first you know, so No, the x86 is just about the 386. We're gonna get to it in sec. All right. It was magical So the the product that's happening, but the sales team would correctly object Uh, this is not a complete product line like we we can't possibly go and sell With like one or two Product like these sort of like point solutions like we need a whole product line in memories We have a whole product line so we can be effective with customers like not to mention their quotas right in their livelihood Yeah, like the whole companies freaking set up to hawk memory and so Everybody correctly has lots of reasons why they cannot shut down the memories business and whole heart switch to To intel. I'm sorry to switch to see it's so so so Switch to see be you so yeah, so more and In Grove walk out of the office for the second time and Andy starts going around like Giving speeches about how they're gonna get out of the memory business and uh and like all hell breaks loose So Andy tells the head of the memory division to come up with a plan to get out of the business And he'd like revolts he doesn't do it and so Andy's like Andy removes him and puts somebody else in charge of the memory business That guy doesn't do it either. It's like the Saturday night massacre He's like yeah, yeah, no, I know you brought me in to get us out of the memory business Cool, I'm gonna do that and then he takes like six months and then comes back and says okay cool I'm gonna make it so that we after After the current R&D that we're doing and then we produce all of those We're not gonna do any additional R&D on on new ones after that and Andy's like are you kidding me? So finally it just takes like basically all of 1985 where they're just trying to like I mean this is and this says so much about organizations right here. You've got the founder co-founder and CEO of the company and the president of the company who was the first employee Who are literally telling the company to stop doing something and the company cannot stop doing it? It gets the point where Andy is personally going to factories and just laying everyone off on the spot and saying hey Like we really need to get serious about this. We just need to shut this factory down It's it's an old factory anyway. It's too small to do like it We really shouldn't be operating in any way, but I'm doing this in part because we have to shut this you know This thing down, but it's also a statement to the company of like I'm closing the memory factories And we're gonna turn some into CPU factories But like this one isn't it and everybody needs to see that I'm freaking serious about this Andy at least from the book seems like a really sort of like empathetic and warm person and understood how to do that with sort of As much grace as you possibly can And sort of be with those people in a hard time, but like it was crazy the amount of uh, dramatic measures that he had to take even as the president to influence Yeah, well it's like a team front war like they're fighting the competition outside the building But then they're also fighting you know the culture internally So they finally do it by the end of 1985 they're out of the memory business and of course The obvious thing that they go into of their remaining business lines that they put their focus behind is the microprocessor business That turns out to be super smart because you know the PC wave is coming and obviously this is gonna grow hugely So you could say that that's sort of what happened and what's this there's the story But the but what's really interesting and what was brilliant about what Really Andy did and and how they led the company was if they had just done that Then the same cycle would have played out over the next 10 to 15 years like until was in the lead They basically invented the microprocessor They were the x86 architecture was how the standard IBM PC and IBM PC clones were based on And they would have been the leading chip producer But anybody else could have come along and produced chips too and in fact So there was the 4004 which is for a how it goes actually for a Japanese calculator Busy Corp. I think that they created it And then but then the first x86 architecture was the 80 They made the 80 86 but then it was the 8088 that was in the first IBM PC and then there was then they had the 80 80 which was the all terror Yeah, that's right and then there was the 80 186 and then the 82 86 right and so that's where we were at this point in time And they were second sourcing just like they did with all of their product lines No way also yeah, they were second sourcing and AMD was the second source on the 186 and the 286 And I think maybe before that too But they had a major contract in place with AMD to do to be the second source for For the 286 now like you said they were working on the 386 and they knew and Andy knew that the The 386 was going to be something special While the only other iterations on the 86 processor had been increased speed and more you know More transistor density the 386 processor was going to be the first 32 bit processor. Oh everything before that was 16 bit So this was going to be like major major step change in the power and functionality of the brains of the personal computer And so they're getting out of memory business They have this huge lake strategic decision to make about what to focus on And he knows he's got this special product And they come up with what ends up being the brilliant strategic decision obvious and hindsight to say no We're not going to second source this we are going to be the primary and sole source You want a 386 processor you got to buy you want a 32 bit 86 x86 compatible architecture processor There's only one place in the world to get those and that is directly from Intel It's kind of amazing what happens. I mean you even look to how this translates all the way to today So I want to like just pause for a moment and David like come back to it's crazy what happens But you think about today there's basically two types of chip companies There's fabulous and there's companies that have their own fabs like Intel and when I say like Intel I pretty much mean intel and so You've got like the TSMCs of the world the Samsung Samsung who's who's designing At this time all these arm-based chips that are designed by these fabulous companies and then Built in a separate chip fab in a commodity way that are decoupled You know, you have the separate designer from the manufacturer and Intel to this day still manufacturers 100% of their designs themselves Yep, so this is what happens So remember they had this they had this agreement with AMD to be the second source And I believe that agreement technically was supposed to continue into the 386 processor Intel Brakes and says nope nobody else is gonna gonna do this you want the 32 bit x86 processor you got to come to us AMD sees them intel countersuse and I didn't know this Yes, and it ends up it drags out in core I forget who actually wins but at the end of the day The judgment is that AMD is going to be able to market x86 architecture chips But Intel's not gonna be forced to give them the designs so AMD has to in a clean room reverse engineer No way yeah, so that takes them another couple years to do that it ends up being That's like the Atari s story it is really a story story the yes. Yeah the esports say good genesis story So it ends up taking six years for AMD from its night the end of 1985 when Intel ships the 386 out the door I believe compact computer is the first customer for the 386 and as Then that's like the beginning of compacts rise And Intel rises with them and then everybody all the PC manufacturers use use intel 386 processors It takes until 1991 before AMD can get a competitive product out there So during the whole first six years of the PC wave Intel is the only Player providing CPUs the most important component of the computer and then What happens in 1991 when AMD finally Gets their competing product out there that's when Intel launches the Intel inside campaign And uh, which is just like so brilliant on two levels one It's like one of the best pieces of marketing of all time They really invented the ingredient brand exactly was them in like neutral suite Were like the only ingredient brand successful ingredient brands of all time But they do something super super smart that prevents AMD from countering with any kind of similar Tactic which is the way I didn't realize this still doing the research the way the Intel inside marketing campaign worked Was Intel of course spent a bunch of money advertising marketing it directly Right, so then of course the the customers would then demand from the manufacturer like oh, I'm only buying this Dell or compact if it has an Intel inside which is so that's what I thought but here's the more powerful piece Of course, that's true But they went until went to all of the PC manufacturers to compact to Dell to gateway to everybody's IBM And they said you know all the marketing costs that you guys are spending to market your own PCs competing against one another We will pay 50% of your marketing costs if you include in your marketing collateral that you have Intel inside Oh, that is so smart Isn't that just like killer and so that's like the the amount of marketing expenditure associated with that is enormous There's no way that AMD who's been out of the game now for five six years Can do anything even close to matching that level of spend and so Intel just like it's like a tsunami that just like washes over the whole market Wow That's like the Bobby Axelrod billions quote When you know you have an advantage press it Yeah Yeah, they are and I think that you know Andy doesn't talk really at all in the book about that But I think that was another decision kind of on the level of maybe not quite as big as soul sourcing the 386 but like You know having lived through the crazy all near death experience of competition and becoming a commodity of memories They were so paranoid about ever Like losing their Our advantage in CPUs that they were gonna be willing to do anything to maintain it Wow so Andy Becomes CEO of the whole company Gordon retirees in 1987 Once this is this whole wave is underway Andy serves as CEO of the company from 1987 to 1998 revenues rise from 1.9 87 and 98 so 11.0 yes, yeah, 87 to 98 and then he retires and becomes chairman The company revenues rise from 1.9 billion in 87 when he becomes CEO after they'd already selling started selling the 386 to over 26 billion when he retires in 1998 and in 1997 right before he retires Famously time magazine names Andy there man of the year or does this league like this story is so incredible like you've got this Kid born this Jewish kid born in 1936 in Hungary who by like All statistical probability should never have even survived and like here he is Leading and turning around like the pre-eminence Silicon Valley Company in this new industry and becoming time magazine man of the year like it's incredible It's totally crazy it also really underscores like I don't know what the original deal looked like for Intel to land the the contract with the IBM PC and the sort of PC IBM PC clones or copycats what would people call well? I think it was that it was it was 1981 When Intel landed the contract to be the CPU provider for the IBM PC and then I think all the clones Because of that the clones had to use the same architecture as the IBM PC and they used the X86 architecture thus you needed an x86 compatible chip for all PCs I don't know that they really realized the value that they they had when the IBM PC sort of chose Intel to be the supplier for that one but like I assume they knew it was some amount of a big deal and it speaks to how much Even though we can sort of rip on Intel for dragging their feet for so long and taking forever to get out of the memories business like They they did have the beginnings of a backup plan and like they had started working on this new emerging market Because they had r&d at their core and believe they needed to be on the cutting edge believe they needed to be investing in technology New plans and and shipped and got it out there and got it to be the you know critical path part of Major major new product in the market. Yeah, I was gonna save this for a playbook But but Andy talks about this and only the paranoid survive like The time to innovate is not when you find yourself in a strategic conflection point It is well before then like you constantly should be Looking for new product lines looking for diversification You know, I was like uber has done a great job of this right like Where would uber be if not for uber eats and uber freight and like so uber Eats in the u.s. The last week or two weeks ago. It clips Ride sharing in revenue for the very first time and like when you look at these graphs It's ridiculous because it's uber eats going up slowly and then uber You know ride sharing obviously falling off a cliff But it's insane to see like right now in time because of the investments done over the last three four years uber has revenue like yeah, well and compare that to lift right who doesn't have you know I think they're now launching a delivery type product, but Strategic conflection point is not the time to be launching new products Yeah, yeah, well, I'll catch us up to intel today the number and I think David quoted something like this earlier When Andy came in annual revenues at intel were 1.9 billion dollars nothing too bad When he left in 97 it was 26 billion dollars So not only did he sort of save the company, but really like created the the behemoth that we know today You know, what is that uh 13x on the revenue for that revenue we don't have the We couldn't find the profit margin stats on those but like they were bleeding money on the 1.9 And well before maybe not the 1.9 in 1987, but whatever hundreds of millions of revenue they had in 1984 They were losing both loads of money and then they were immensely profitable by When Andy left well to give you and I give you a picture of the economic profile this company today So it increased then from 26 billion when Andy left us 72 billion in 2019 There are hardware company and their net income is 21 billion dollars on that 71 billion So that's what 25% net income market is pretty it's pretty damn good right right And this is a company that like there's lots to talk about in the moderate era of the way they've dropped the ball And they haven't effectively created low power processors and they miss the mobile wave and lots to criticize but like Pretty behemoth of a it makes a 260 billion dollar market cap business even in this Crazy stock market environment that we're in right now Yeah Well, it's funny too. I mean uh listen or should go listen if you haven't already to our arm episode You know in much the same way that Intel was able to Change the way that the market operated in business was done to generate a lot of power in their CPU business They were then you know partially disrupted by arm who came along It's said we're gonna do a completely different Take a completely different approach to entering the business in a way that Intel is not gonna be able to respond to Yep Yeah, the disruptor becomes the disrupt D at some point and You can stay vigilant and you can stay paranoid, but you have any wasn't there anymore Yeah, you have to have leader after leader after leader that that truly truly believes that so I want to tell you one Crazy thing David. I don't know if you caught this an announcement made in July of 2015 from Intel Don't pick it did so they announced that they were going to be shipping a new product Called obtained memory in addition to their CPU business which we all know very well Uh, they were shipping a new type of memory That's back in the biz The main value prop was to make computers that had hard drives spending discs as speedy as SSDs And so it was indeed a value added memory. They're not just shipping a DDR2 DRAM here we are with with Intel making a bet on memory and to underscore this So I just read the annual report from Intel last year. They have three operating segments They have a data centric one and a PC centric one and those are both responsible for about half of their Revenue the PC centric one is everything that you know of the core i5 i7 i9 the I think that's that's the core of it the data centric business is a lot of the server stuff So the zians and then they sort of lump in all these like mobile i is up there and a lot of the acquisitions They've made and they have these big bets and from the big bets update They have a sentence that includes they literally call it big bets to do like steal that from out of it Dude everyone does it this one. Come on. That's ridiculous currently And there's three of them, but I'm just gonna end after the first currently our big bets are memory Andy Grove would be turning over in his grave. I know just just amazing. So um, I don't think it's a bad idea I think it makes sense given the current environment, but it is amazing how History doesn't repeat itself, but it does rhyme indeed indeed. I don't know. It's part of why we do this show. Yep All right, so David what would have happened if Andy Grove had not realized this and been successful and executed this pivot Yeah, I mean, I think it's pretty clear right like intel would be Like we said up front just like shockley and fairchild and National I think national still around in one form or another pedalink, you know names lost to history. Yep Absolutely. I've literally nothing more to add to that Yeah Well, that was quick section. We move on to playbook. Yeah So there's one thing that we didn't discuss from the history and I think it It really belongs here in in the playbook and and for new listeners that are listening as part of potapolews are otherwise This is the time when we sort of talk about themes that we pull out from the story That is the playbook that that intel ran that we can try and run in our businesses Or that we might look out for in in history rhyming The one in this story that really jumped out to me is the power of middle management So yeah, I think like brought this up didn't totally touch on was when Andy's going around You know, and and he's talking to his like mid-level executives and he's saying we're gonna get out of the the memories business And the head of sales is like adamant and and pissed and he's you know thrown a tantrum and his you know His number next to his name and everybody under him is about cell memory And so then you know then he goes to the factory and their whole livelihood is based on this So the head of the factory saying there's no way like think about you know There's no way we can retool this whole thing and meanwhile The people who are actually really close to the customer the people that are really close to the product not not the executives But like the middle-level management who is actually working with the day-to-day individual contributors and working with customers They see the writing on the wall and so by the time the change is sort of trickle down to them The middle management's like oh, yeah, no, no, no, we definitely need to be doing way more in CPUs And we sort of have a plan for that because like well There's all this politicking and infighting at the top like yeah, we had a plan No, it wasn't coordinated it wasn't cohesive, but everybody sort of had assembled the resources that they needed to to make this happen and operationalize whatever came down when it came down Well, this is Andy writes a bunch about this in the book like That he was shocked by it like that this Group of people like he said that are not not high enough of the company that they're removed from customers and caught up in all this political Infighting but they they're actually close to the actual operations and customers They were already doing this they had already like just organically started Reallocating resources away from memories and into CPUs Yeah, that's wild Let's see, I've got a couple on here. We've touched on a lot already one One of the biggest ones that I wanted to talk about we already have which is like the time to start experimenting and and figuring out You know your next your response to the next strategic inflection point is well well before that happens But a couple others I want to underscore again this like What it means to To be a commodity or not be a commodity in the market like You are not going to build a great And by great, I mean long-term sustainable enduring business if you are selling a commodity Like it's just not going to happen you you can start by selling a commodity and participating in a commodity marketplace But you need to have a plan and a path to either shift the commoditization to another layer of the stack Which Intel and Microsoft did incredibly well in the PC Wave of the that was the manufacturers themselves that got commoditized or to introduce something about What you're doing and your product that allows you to have power over your competitors like Amazon has done this in e-commerce Like there are lots of e-commerce retailers out there that you know compete with Amazon But Amazon has so many features and so many You know whether that's prime delivery or selection or just what that like they have they have a power advantage So I think that's that's one and then the last two these are Smaller ones, but I think appropriate also for adapting that I wanted to cover That Andy talks about You know one he says this quote and you know Sequoia said this in the black swan memo I think real offset it in our in our interview with him Andy says looking back over my own career I have never made a tough change whether it involved resource shifts or personnel moves That I haven't wished I had made a year or so earlier I think the Sequoia version of this that they say in the black swan memo is nobody ever regrets Acting swiftly or something like that. This is just a good thing to to keep in mind and really did to that you know when Andy And and Gordon fired themselves and ceremonially fired themselves and rehired themselves like Doing something like that is so important because like Without some performative action like that like It can be so hard to make the decisions you know you need to make yeah, I was giving themselves permission Yeah, yeah, and Andy Andy mentions that and only the paranoid survive too that that a lot of times when companies bring in external New CEOs They may be just as smart as the current CEOs But they have one distinct advantage and that is they don't have the baggage of the way that everything has been thought about internally And so they actually can act and do the things that need to be done without being weighed down Yeah And that brings me to the the last point last one I wanted to highlight which is just like learning being a learning machine and that's something Andy did So well throughout his whole life I mean even going all the way back to being a kid and hungry He writes don't bemoan the way things were they will never be that way again Poor your energy every bit of it into adapting to your new world into learning the skills you need to prosper in it And into shaping it around you Whereas the old land presented limited opportunity or none at all the new land enables you to have a future whose rewards are worth All the risks It's like Boy, I know what a good one right now Well, we are living in a new land right now So don't bemoan the past learn how to shape the future The thing that's been occurring to me the most over the last few weeks is that we will never go back to normal Lots of things will go back to very close to normal But there are also lots of things that will never be the same way that they were again Don't bemoan the past There's a lot that I think we can all take take to heart there Yeah, I mean especially again coming from someone like Andy who like This when he says that you know, this is someone who lived through like Most of his extended family dying, you know, like that's a that's just a level that Fortunately, you know, I think most many of us hopefully very few of us listening to this have ever been through yep So All right, anything else you got in playbook? Nope, that's it Carvots Carvots let's see what you want to go first. Yeah, so I've been on a Michael Lewis tear recently during the Staying at home time that we're in and I most recently read the fifth risk That was one that launched with a lot less fanfare than you know, Michael writing Muddy ball or Liars poker or Flash boys last boys. Yeah, and I felt like this one was definitely a little bit less sort of glorified, but it's an amazing collection of stories that are basically the handbook of how to run the federal government and I wouldn't call it like the complete handbook on how to run the federal government, but it was basically when the Trump transition team Basically didn't happen and all the sort of former I'd call him the Obama administration, but really it's the public servants that had been in government for a long time We're sort of getting everything ready to hand over to the next group of people coming in saying whatever your politics are I don't care, but like you got to know how to operate the levers here and like what all these different departments do and what budgets are for and And nobody kind of showed up to take that from them and say cool like we would love to take what you did and learn from it and build on it We're gonna go do something very different of course nobody showed up to learn like how to operate this crazy machine And so there's this unbelievable fodder for a book and Michael Lewis realizes this and he starts going around to all the people who helped sort of assemble transition materials and he said we'll tell me about it and I'll write a book And it's all these crazy cool stories that really do make you understand How the government sort of got this brand for Stodginess and how the US government became a thing that you didn't want to go do whereas in the 50s 60s You know there was like Reference for it your government employee like you're you're going and you know your public servant or you're doing something innovative Or you're you know on the cutting edge and now it's kind of this like They often don't attract the best talent like shockley you know like As problematic as he Was and became later in his life like he was one of the most brilliant people in America In the 40s and like the highest invest calling that he did was he stopped all of his commercial activity And he went to work for the war department Yeah Yeah, and so I found this book to be sort of three things one kind of crazy to read in this moment that we're in in right now To a really good explanation of how Working for the government got the sort of brand that it has right now Despite I don't think that really being true. I think like public servants and especially people that aren't elected But sort of go into public service just to work at on hard Problems that exist in government to serve everyone like the brilliant Thoughtful driven people that are totally sort of mismarket it or misbranded and then the third piece of it is really understanding like What a lot of the pieces of the federal government are for of course I'm this a very u.s. Centric view that I just never really understood before It's by no means comprehensive, but it's an interesting Sort of several slices of instructions on how to run the government. I sort of never have had more Service level understanding but reverence for why infrastructure and an organization like that sort of needs to exist Yeah, totally. I need to go read it. I remember what it came out and just like you said like I Was like oh my new Michael Lewis book love Michael Lewis books, but hey, you know like I don't know I just missed that one so Yeah, I have to go back and read it lots of people should too. All right mine is notion Uh, so the hot buzzy productivity company that just raised $50 million at the $2 billion valuation And famous what was it they raised like an angel round of I think $10 million at an $800 million dollar valuation before that Yeah, I think it was one VC firm and so you can call it eventually round okay, okay But it was led by like other CEOs and angels right yeah, well that was pretty the world we're in now So I tried it around that time when I first started hearing about it and I was like well, I don't get this thing It is like way too complicated. I don't understand what's going on I got inspired to try it again And I totally get it now and I've become like a huge convert I've moved most of my productivity over to it and what I think is cool about it I don't know if they think about it this way or I haven't heard anybody else talk about it But to me it really reflects the the whole no code movement and like we've explored no code a bunch on on the LP show here We're just gonna keep doing more and more on a card like I think we both think it is like such a Huge powerful movement in technology right now But what I thought was so cool about notion is it's like this is the first time I'd seen That same kind of principle of like you don't have to be a developer to Create things and to shape your Software that you're using in an actual consumer application So like what I mean by that is What's hard and confusing about notion at first is it's not like a If you use like wonder list back in the day, which I used to love like wonder list like the UI designers and the developers at wonder list and like the team there They decided how it worked They were the product designers You used their vision and it was great What's cool about notion is that like you have the power To shape the software as you want it to your purposes. So like I've built in notion a task management system That I've completely designed all the UI for all the logic of how it works all the database And like it's tailored to me and like yes That's like harder to do than just downloading and using wonder list for example, but uh like whoa that's so powerful so Big fan That's cool. It's like moving the accessible abstraction layer up one notch. Yeah totally and it makes it makes you feel like Super powerful That's cool Yeah, all right Well listeners Thank you for joining us on this journey if you are not currently subscribed To get more required episodes and you want to you should you can do that on our website at or in Literally anywhere where you can listen to podcasts Um, we appreciate you both listening to this one and given other episodes of shot too If you want to become a limited partner that thing that I mentioned at the top of the show Subscribing gives you access to our bonus show where we dive into nitty gritty topics of building companies in real time And he are here from other practitioners in the ecosystem. So we've had Glad to see you of webflow on and wait the CEO zap you're on talking about no code stuff. Yeah, speak it of no code Yeah, lots of other great great founders on the show. Yep Uh, so to listen you can click the link in the show notes or go to slash acquired All new listeners get a seven day free trial If you want to discuss this episode and you thought this was interesting you should join our slack And and frankly there's a lots going on that is completely unrelated to our episodes people finding jobs People posting jobs people meeting each other and starting companies like yeah We've had founders meet in the slack. It's really cool people find investors So if you're looking for sort of a community to talk about everything in the world right now with sort of like mind it Anyone who listen to the show there's about four thousand or something people hanging out that slash Slack so you can join join there or anywhere on our website So with that we will talk to you next time