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At a key juncture, Gordon Campbell’s self-financing was essential to the survival of his Chips & Technology firm. Chips & Technology produced the chip technology that was the foundation of the clones of the IBM AT (286) PCs. And Chips & Technology turned out to be profitable after one year.

(p. 228) Campbell remembered the words of Nolan Bushnell: “You are not a real entrepreneur until you’ve got to meet a payroll from your own bank account.” There was truth in those words. There was a sense in which Gordon Campbell was still real a real entrepreneur.

If you are a real entrepreneurial hero, you do not get your start by rolling out of bed one morning in rumpled pajamas to answer the telephone at Oakmead Plaza and find that it’s the man from Kleiner-Perkins announcing you’ve won the lottery (for spinning out of Intel with Dr. Salsbury and the rest). Real entrepreneurs do not usually become paper millionaires and Ferrari corsairs in a public offering without ever experiencing the warm sensation of a profitable year. Raphael Klein had put up his house to save Xicor; he was an entrepreneur. In the desperate silicon panic of the summer of 1985, Gordy Campbell too was going to join the club.

The venture capitalists were all waiting for Campbell to fail. He had no chance of money from them. But other sources would also be difficult. Campbell had been careful to buy no real assets and channel all his money into intellectual capital. Morris Jones’s Amdahl 470–a powerful mainframe that ran the company’s CAE programs—was a second-hand machine, leased by the month. The rest of their CAD and CAE equipment was either designed by Jones and his team. including two defectors from Silicon Compilers, or it consisted of various IBM workstations. The company’s most valuable asset, beyond its ideas, was a compaction algorithm that Jones had developed from a Bell Labs model. It allowed the scaling down of CMOS technology into difficult non-linear volt warps near 1-micron geometries. Couldn’t mortgage that at a bank.

Campbell could scarcely believe what was happening to him. There was nothing to do but use his own personal money to keep the company afloat. But if the truth be known, his personal funds were running a bit low. It was out of the question, of course, to sell the Ferrari. He could hardly putter forth onto Route 280 and down toward Sand Hill Road like a beggar with some tin cup from Toyota. Campbell’s other wealth, though, was mostly in SEEQ stock that was then selling at $2 per share and going down.

Campbell would have to sell at the very bottom of the market and use his own last personal wealth to finance a company with no revenues and a burn rate of some $4,000 a day. He gasped and did it. He went through a couple of cliff-hanging months, with shortened fin-(p. 229)gernails. But the act of personal sacrifice was catalytic. Within a few weeks, several of the employees and other friends also put up some money, including $200,000 from his financial officer, Gary Martin. Before the year was our he had raised another indispensable $1.5 million from a number of companies in Japan, including Kyocera, Mitsui, Yamaha, and Ascii, Kay Nishi’s PC software firm that represented Chips in Asia. By July, the IBM graphics enhancement chip set was finished and Chips & Technologies was a company almost fully owned and controlled by its employees.

By July 1986, when the chip set for the IBM AT computer was finished, most of the world had decided that the AT would be the next major personal computer standard. In the United States, Tandy, PC’s Limited (now Dell), and several other then unknown manufacturers bought the Chips & Technologies set. Tandy became the leading AT compatible producer, assembling the computers in a factory in Fort Worth manned by immigrants from twenty countries led by an immigrant from Japan. Among the purchasers of the Chips set in Europe were Olivetti, Apricot, Siemens, and Bull. Nishi signed up NEC, Sony, Epson, and Mitsubishi in Japan; Goldstar, Samsung, Daewoo, and Hyundai in Korea; a number of companies in Taiwan; and the Great Wall Computer Company of China. Most of these firms –plus Compaq and a slew of producers of IBM add-in graphics gear–also were buying the graphics enhancement chip set.

At the outset. Campbell had boldly predicted profitability in a year and a half: In fact, the firm was profitable by the last quarter of the first year.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(p. 224) Campbell’s idea for a company was to use a silicon compiler to put those boards into custom silicon and to provide a means by which scores of companies could produce AT clones faster, cheaper, better, and more reliable than IBM’s.

Campbell drew up his business plan and brought it to some fifty venture capitalists. A moneyed yawn issued from Sand Hill Road, echoed down the canyons of San Francisco’s financial district, and reechoed through downtown Manhattan. A jaded group that had funded some forty very hard disk projects and some fifty rather floppy computer firms within the previous two years, venture capitalists eyed Campbell’s boyish manner and lightweight look and they contemplated his business plan (a personal computer chip project during a PC and semiconductor depression), and they identified the heart of his overall strategy (compete with IBM). They rolled the firm’s proposed name over their tongues: Chips & Technologies. Wouldn’t Microtech be better? Then they laughed nervously. Not this time, Gordy.
Finally, Campbell found a friend: Bill Marocco, who had built the SEEQ headquarters, and had once offered to support a future project. Marocco put up $1 million, and Chips & Technologies was off the ground.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(p. 222) Among the entrepreneurs of the microcosm, none were nimbler than Gordon Campbell, the former founder and president of SEEQ. Taking Phillip Salsbury and other non-volatile memory stars out of (p. 223) Intel in 1981, Campbell had begun meteorically. But after a few years, SEEQ’s E-square technology had slipped against Xicor and the industry went into its mid-eighties slump. While many experts bogged down in the problems of transition, however, Campbell seized the opportunities. In a new firm, he would demonstrate beyond cavil the new balance of power in electronics.

He left SEEQ in 1984 and at once steered his Ferrari back into the semiconductor fray. But few observers favored his prospects. If the truth be known, many semiconductor people thought they had already seen plenty of Gordon Campbell, company president.
Campbell is a complex man, with a rich fund of ego and a boyish look that belies his shrewd sense of strategy and technology. To a strong-minded venture capitalist such as Frank Caulfield of Kleiner, Perkins, Caulfield, & Byers–or even to a smooth operator such as John Doerr—Campbell appeared to be a pushover. A man with no money, no social ivy, no advanced professional degrees, no obvious scientific mastery, he was a disposable tool: some kid who had snuck into the E-square huddle at Intel and popped our into the end zone just in time to make a miracle catch of several million dollars in venture capital.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.