I have personally served on dozen of boards. Five of these companies were public, Maxis, King World, CMGI, PCCW, and World Online. I have not served on a public company board since 2002. The majority of the boards were private companies. I resigned my last board position at the end of 2018. I don’t plan to join any more boards.
I also served on several nonprofit boards such as Plugged In, Equal Access and CalArts. I like to say that the difference between serving on a for-profit board and a nonprofit board is that the for-profit company pays you a lot of money to ignore your advice and you pay the nonprofit a lot of money to disregard your advice.
Serving on a board can be very frustrating. The board is supposed to represent the shareholders and make sure they are treated fairly by the company. Its main task, in my opinion, is to make sure the company has the right CEO. In this regard, I believe that the Intel board has been a failure, but it is not that unusual that a board fails in its primary task.
Intel’s first board was established in 1971. It had six members at that time. Bob Noyce was the CEO at the age of 44 years old. Gordon Moore was 42 years old. Intel was the third company that Bob and Gordon started. Art Rock was the board chair and the key investor in the company. He was just 44 years old. It is thought that Art was the person that came up with the term Venture Capital. He also funded Apple.
It is hard to imagine how young everyone was. Max Palesvsky was 47. He invested in Scientific Data Systems with Art Rock had also financed. He sold that company to Xerox in 1969 and became very wealthy. Jim Guzy who was just 33 years old in 1971. Jim started his career in the disk industry working at Memorex. He was a serial entrepreneur and angel investor. He actually turned out to be the longest serving board member and left at the age of 70 in 2008. I knew all of them but not until I joined Intel in 1984. I don’t think I interacted with the Intel board until 1988. When Andy was CEO. Andy was only 33 years old when Intel was formed as was Les Vadasz. There was also a board member named Charles Smith who was 61 years old and represented an investment by the Rockefeller family. The average age was a director was 45.2 years old. I really liked Max and would visit him sometimes at his Los Angeles home. He had a fantastic collection of art.
Three years later, in 1974, the board doubled to ten members. This included two additional insiders, Andy Grove, and Ed Gelbach. The average age of the board was now 46.2 years.
Most of the board stayed on so by 1988, the average age was over 60 years old. It pretty much stayed that way from that time on. The number of inside board members dropped until it was under 25%. Interestingly, many of the early board members were Jewish. This included Art Rock, Andy Grove, Sandy Kaplan, and Max Palesvky. At one time 40% of the board was Jewish. That was the case when I joined Intel in 1984. Now, there is not a single Jew on the board. By the way, there are only two women out of the ten board members. Most of the board consists of white males. I would be generous if I said that two or three of the board members had any real technology experience.
So Noyce was 42 when he became CEO and 47 when Moore took that Job at the age of 46. Moore was 57 when Grove took over at the age of 51. Grove was 61 when Barrett took over, and he turned 65 when Otellini became CEO at 55 years. Barrett resigned at the age of 62 and was followed by Krzanich at the age 53. Kranich was pushed out at the age of 57 and followed by the current CEO Swan who was 58.
The average years on the board went up to more than 16 years and had pretty much stayed there until recently when there has been a drop. It seems like the average age of S&P board members is also around 60. Here is an excellent link to the average age of board members. https://corpgov.law.harvard.edu/2017/04/06/age-diversity-within-boards-of-directors-of-the-sp-500-companies/
But the nature of the board has changed a great deal. In the beginning, it was comprised of the two founders and the initial investors. The board was young. Over time, new board members had less knowledge of technology and the technology markets. Many of them had never worked in a small company. There were a few like David Yoffie, a Harvard Professor of Business, who were strategic.
As boards begin to age, they get kind of cozy. Board members often help out other board members. There are rarely conflicts on boards. The compensation can also play a significant role. Board members can make a lot of money by being board members. A substantial part of my net worth came from my own role as a board member. Sometimes board members sit on several boards together.
For a long time, Intel Executives did not serve on the boards of other companies but that slowly changed. When Paul Otellini was the CEO of Intel not only did he sit on the Intel board but he was also on the Google board. While Paul made a lot of money from his position as CEO of Intel, he may have made significantly more from serving on the Google board.
The most critical role that a board has is to make sure that the company has the right CEO. This is where boards fail so often. It is difficult to remove a CEO unless there is some obvious and compelling reason. Usually, the CEO was very involved in bringing the board member onto the board.
In this regard, the Intel board has failed at its primary responsibility. Since Andy Grove, resigned as CEO, each CEO has been pretty much a failure in my opinion. Barrett was an operation guy that did not have a strategic bone in his body. Otellini was a finance guy turned sales guy who also did not have any strategic abilities. Brian Kzanich was the first really political CEO. He did a terrible job especially concerning staying competitive in manufacturing, and he came from Manufacturing. He was fired for having a relationship with an employee, but that was just a cover for being fired for incompetence. There is a new guy, Bob Swan who was a CFO his whole career. Appointing a finance guy as CEO is a typical move by a board that has no understanding of the company but does understand finance.
There have been 40 different members of the Intel board including the current ten.
Sigh. That certainly helps explain why Intel, which I used to admire tremendously, has been such an investment disappointment over the years.
If you are using some sort of voice to text system, it would explain the following:
” Gordon more was 42 years old.”
It would also explain things like:
” There were a few like David Yoffie, a Harvard Professor of Business. that were strategic.”
Thanks for all your insight into the tech world.
Thanks for your comments. I fid not dictate this post. But maybe this errors were the result of the spell checker. I try to find my errors but I am not great at it. I don’t actually see the individual letters. My brain reads whole words and sentences. Sorry.
I know you mentioned something about trying dictation software in the post about your book, so I wondered if you were giving it a test drive on your blog.
Fascinating. Thank you for this post Avram Miller.