Les Vadasz and I co-founded Intel Capital in 1991. Les had hired me in 1984, and he was the only person I reported to during my 15 years at Intel. He was among the original 12 people who started Intel, appearing as employee #3. Sadly, he is the only one of that group who is still alive. Les and I met a few weeks ago when I was in California visiting friends and family. He was my mentor, partner, and remains my friend.

Initially, Intel Capital was named Corporate Business Development (CBD). It wasn’t renamed to Intel Capital until after I left in 1999. In fact, I started the precursor to CBD in 1988, reporting to Les. I had a small group focused on minority investments and M&A. At the time, my focus was more on M&A, as I wanted to expand Intel’s business into areas like communications, networking, and graphics.

After several attempts to acquire networking companies—Cisco was deemed too expensive, and 3Com was “too screwed up,” according to Andy Grove—I came to the conclusion that we couldn’t afford the companies we liked, and we didn’t like the ones we could afford. Watching what happened to the few companies we did acquire also taught me a valuable lesson: Intel’s culture was so strong and insular that it would reject acquisitions like “antibodies attacking a foreign object.” This led me to shift the focus toward early-stage companies.

By 1991, both Andy Grove (then CEO) and Les concluded there was significant benefit in taking minority investments, not just in early-stage companies but also in more mature ones. Andy asked Les to take overall responsibility for these activities (Les was one of the most senior executives at Intel) and probably added something like, “And keep Avram under control.”

Les and I worked together to define the role of CBD/Intel Capital. We settled on three major objectives:

1. Investments that would grow Intel’s current business: A great example was my leadership in developing residential broadband, which played a major role in driving the home computer market for PCs.

2. Gaining strategic insights to guide Intel’s future business plans: Unfortunately, we had limited success here—not because we didn’t gain insights, but because we couldn’t exert enough influence within Intel to act on them.

3. Achieving reasonable financial returns: We knew we had to be profitable quickly, or Intel’s “bean counters” would make our lives miserable. On this front, we exceeded all expectations. We made buckets of money. By the time I left, Intel Capital had $9 billion in assets (mostly from gains) and had already taken about $3 billion off the table.

We didn’t operate like a traditional venture capital group. No one had carry-interest. Compensation was the same as for the best of Intel’s employees: salary, bonuses, and stock options. Les and I were well-compensated, though we could have made more as partners in a VC firm. However, making money wasn’t our primary driver; we believed deeply in Intel. Those who worked for us didn’t fare as well financially, as they didn’t benefit as much from stock options. Still, many learned the trade and eventually moved on, which we were okay with. Recruiting and training excellent people from within Intel was a core part of what we did.

Over time, Les expanded his team, and I expanded mine. My efforts were recognized when I was named one of Intel’s 33 corporate officers, a milestone I achieved thanks to Les and Andy’s support.

After Les retired in 2003, Arvind Sodhani, Intel’s former Treasurer, took over Intel Capital. From what I understand, Arvind focused more on returns on investment than on the broader strategic impact of the group. However, I can’t say for sure—I wasn’t there.

I firmly believe corporate venture capital is a strategic function and shouldn’t be driven primarily by financial returns.

Intel is going through tough times now, and it’s unclear if the company can survive. This is the result of a series of bad decisions, particularly in the selection of CEOs, starting with Craig Barrett in my opinion. Intel’s board has been one of the worst I’ve ever observed, and this decline started when Andy Grove became chairman.

Spinning out Intel Capital is likely the right decision given Intel’s current situation. Nevertheless, it makes me sad.