– and its chairman wrote a personal cheque for $50,000 to pay the living expenses of the team members who had lost their jobs but been less successful than Sanders in securing a payoff.
Sanders’s first port of call was Arthur Rock, the man who had raised $2.3m for Bob Noyce and Gordon Moore in a single afternoon.
The diminutive venture capitalist looked up from the seventy-page document before him, and sighed. Bristling with technical terms, process details and price curves, the plan set forth a powerful case for the view that demand for integrated circuits would explode in the 1970s. It detailed which products the company would build and how, estimated the prices these products would sell for, outlined the backgrounds of all eight founders, and predicted profitability after seven quarters and positive cash flow after ten. But Rock didn’t like it.
‘It’s too late,’ he said.
Sanders began to expostulate.
Rock was polite, but firm. His belief, he said, was that with dozens of other companies already in the market, it was now too late to start up a broad-based semiconductor company. Before the master salesman could begin to put his wiles to work, Rock added a second point for good measure. Of all the financial investments he had ever made, said the venture capitalist as he looked Sanders coldly in the eye, the only ones that ever lost money had been run by marketing men.
The meeting was an omen. As Sanders continued on his roadshow, he found that potential investors fell into two categories: those who knew so little about the industry that they plagued him with ill-informed questions; and those who knew enough about it to doubt seriously whether, with all the new companies that had been set up over recent years, the semiconductor industry was still young enough for another entrant. Neither category yielded any investors.
As the weeks turned into months, Sanders found himself as far as ever from the $1.75m target that had been set for the company’s initial funding, and facing the first rumblings of discontent from his impatient team. One or two of the five members who were still on the Fairchild payroll began to wonder whether it might be wise to stay put for the moment. Meanwhile, Turney and Carey began to chafe at the idea of working full-time on the project unpaid while others were still sitting on the sidelines, hedging their bets by hanging on to their day jobs.
Sanders realized that it was time to take charge. He called a meeting of the team members at his house, and presented those who were still at Fairchild with draft resignation letters for them to submit so that they would be ready for work on 1 May 1969. He arranged to have the company formally incorporated – in Delaware, he said, so as to give investors on the East Coast a warm feeling that proper attention was being paid to minimize directors’ liabilities – on the same date. And he committed himself to raising the money they would need by the end of July.
When one member of the team asked him whether this was realistic, Sanders’s reply was immediate and confident: ‘We’re absolutely going to get the money. We’re absolutely going to get the money’. It was a mantra that he would find himself repeating again and again over the coming weeks.
Some weeks later Bob Noyce received an unexpected visitor at Intel. The man who walked into his office was Tom Skornia, a young lawyer who had recently started out in private practice.
‘I’m here to represent Jerry Sanders,’ said Skornia as he sat down.
‘I’m glad to hear it,’ replied Noyce. Sanders had asked him for advice in finding a good lawyer to serve as general counsel for his new business. On Noyce’s recommendation, Sanders and his colleagues had interviewed three different law firms, but had settled on Skornia’s in the belief that a sole practitioner who was just starting out would be likely to give them higher priority than a bigger firm with dozens of associates to delegate work to. One other point had been in Skornia’s favour: he was the only lawyer they met who could talk as fast as Ed Turney.
‘And I’m here to ask for money,’ continued Skornia.
He handed Noyce the Sanders business plan, and explained that the company, initially known as Sanders Associates, had now been incorporated in Delaware under the name of Advanced Micro Devices. Like Noyce and Moore, Sanders and his colleagues had run through a long list of possible names before they found one that was still free in the state registry.
As Noyce flipped through the business plan, a bemused expression began to play across his face. He knew the industry inside out. He knew the products that Sanders was proposing to build. Reading between the lines of the limited biographical details that the plan included, he could even identify all the people involved. If anyone could see that the proposed company was stronger in marketing and sales than in the core discipline of inventing and building new products, it was Noyce.
‘You mean they’re actually going to make the stuff?’ he asked.
The two men looked at each other and burst into laughter. Skornia knew that the ice was broken. There was no point trying to gloss over the shortcomings of the proposed business with Noyce. But equally, there was no need to explain Sanders’s qualities. Noyce had always recognized the steel inside his brash young marketing manager, and he was willing to back it. Yes, AMD could soon be in direct competition with his own company. Yes, its top management was drawn from people Noyce himself had turned down for Intel. But Bob Noyce would become one of AMD’s founding investors all the same. Why not? It was a gamble, but then Noyce loved taking risks.
The decision of Intel’s founder to back Sanders was a strong psychological boost in the struggle to raise funding for AMD as Sanders, Turney and Skornia flew down to the Capital Group’s Los Angeles offices to tally the cheques and wire transfers that had come in from investors in the new company. It was 20 June 1969, and their plan was to confirm that AMD’s investors had contributed the minimum agreed sum of $1.55m, and then fly straight back to Silicon Valley to start work. But their timing was unlucky. The New York stock market had fallen sharply that morning and the institutions were playing it safe. Instead of celebrating the successful funding of the project, the founders were forced to hang around, imprisoned in the office by the sultry summer heat, waiting for more money to come in and canvassing every potential investor they could think of in an attempt to reach the threshold before the 5 p.m. deadline.
By 4.30 p.m. the total stood at $1,480,000, and no number of recounts could make it any higher. For the next twenty minutes the three men and their two Capital Group advisers sat in sickened silence, staring at each other. At 4.55 p.m. a messenger arrived with an envelope. Inside was a cheque for $25,000 from a private investor in Bucks County, Pennsylvania. With five minutes and $5,000 to spare, AMD was in business.
WHILE INTEL WAS DEVELOPING its first memory chips, great things were happening in the world outside. The company’s founders relaxed an early rule forbidding radios in the lab so Intel engineers could listen while they worked to Neil Armstrong’s live broadcast from the surface of the moon in July 1969. But neither Noyce, Moore nor Grove had much time for the Beatles, hippies and marijuana, or any of the other enthusiasms that had gripped so many young Americans. For student activism or demonstrations against the war in Vietnam they had still less time. Interviewed by Fortune in 1973, Moore said: ‘We are really the revolutionaries in the world today – not the kids with the long hair and beards who were wrecking the schools a few years ago’.
But political radicalism was not dead inside Intel. Its leading exponent was a gifted young circuit designer by the name of Joel Karp. With bell-bottoms and long hair, Karp was willing
