Feeds

How a Rock started the venture capital biz in the Valley

Money monopoly

Build a business case: developing custom apps

Arthur Rock once savored a monopoly over the minds and money flowing through Silicon Valley.

One struggles these days to imagine anything less than a steel cage, death match as myriad venture capital firms rush to fund the latest and greatest start-ups. Investors fall all over each other, hoping to strike it rich in a flash. This is the Tipping Point mentality promoted by author Malcolm Gladwell and worshipped by lottery aficionados.

Rock and his partner Tommy Davis worked in simpler, murkier times. They started to define the Silicon Valley venture capital culture back in 1961, using Rock's past investment in Fairchild Semiconductor and $5m as proof of their credentials. Back then, $5m bought you plenty of attention.

"We were the only game in town, so they all came to us," Rock said last night, during an event here at the Computer History Museum. "We didn't have to go looking."

On one level, Rock is best known for that Fairchild deal.

While working for an investment bank in New York, he learned of seven unhappy researchers at the Shockley Semiconductor Lab in Mountain View. The workers wanted to leave en masse and find a company willing to employ the entire group. (Fairchild and Intel co-founder Robert Noyce later joined the seven, forming the so-called "Traitorous Eight".)

In 1957, it proved tough to find a company willing to adopt the Shockley workers. Rock pitched 35 businesses, and they all declined.

"These companies all had order and form and none of them could see how they could set up a separate division and give people operating that division a larger profit than their own employees were getting," Rock recalled. "It just wasn't in their mindset. Options were practically unknown in those days."

Eventually, Sherman Fairchild grasped the opportunity at hand, slotting in the eight workers at Fairchild Camera and Instrument. Each of the researchers took 10 per cent of the new operation, while Rock took 20 per cent.

"That is where the famous 80/20 came from," Rock said. "All the venture capitalists in the room can thank me for your 20 per cent."

Fairchild charged the transistor market and thrived off Noyce's integrated circuit discovery. Eventually, however, management failed to keep up with the entrepreneurial spirit of its workers, opening the door for Noyce and Moore to start another venture.

With Rock by their side, Noyce and Moore fired up Intel in 1968, using a two-and-a- half page (double spaced) business plan "designed to say nothing" and $2.5m. Rock remained a director at Intel for three decades.

Boost IT visibility and business value

More from The Register

next story
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.