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.<\/p>\n\n\n\n
Initially, Intel Capital was named Corporate Business Development (CBD). It wasn\u2019t 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\u2019s business into areas like communications, networking, and graphics.<\/p>\n\n\n\n
After several attempts to acquire networking companies\u2014Cisco was deemed too expensive, and 3Com was \u201ctoo screwed up,\u201d according to Andy Grove\u2014I came to the conclusion that we couldn\u2019t afford the companies we liked, and we didn\u2019t like the ones we could afford. Watching what happened to the few companies we did acquire also taught me a valuable lesson: Intel\u2019s culture was so strong and insular that it would reject acquisitions like \u201cantibodies attacking a foreign object.\u201d This led me to shift the focus toward early-stage companies.<\/p>\n\n\n\n
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, \u201cAnd keep Avram under control.\u201d<\/p>\n\n\n\n
Les and I worked together to define the role of CBD\/Intel Capital. We settled on three major objectives:<\/p>\n\n\n\n
1. Investments that would grow Intel\u2019s 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.<\/p>\n\n\n\n
2. Gaining strategic insights to guide Intel\u2019s future business plans: Unfortunately, we had limited success here\u2014not because we didn\u2019t gain insights, but because we couldn\u2019t exert enough influence within Intel to act on them.<\/p>\n\n\n\n
3. Achieving reasonable financial returns: We knew we had to be profitable quickly, or Intel\u2019s \u201cbean counters\u201d 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.<\/p>\n\n\n\n
We didn\u2019t operate like a traditional venture capital group. No one had carry-interest. Compensation was the same as for the best of Intel\u2019s 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\u2019t our primary driver; we believed deeply in Intel. Those who worked for us didn\u2019t fare as well financially, as they didn\u2019t 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.<\/p>\n\n\n\n
Over time, Les expanded his team, and I expanded mine. My efforts were recognized when I was named one of Intel\u2019s 33 corporate officers, a milestone I achieved thanks to Les and Andy\u2019s support.<\/p>\n\n\n\n
After Les retired in 2003, Arvind Sodhani, Intel\u2019s 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\u2019t say for sure\u2014I wasn\u2019t there.<\/p>\n\n\n\n
I firmly believe corporate venture capital is a strategic function and shouldn\u2019t be driven primarily by financial returns.<\/p>\n\n\n\n
Intel is going through tough times now, and it\u2019s 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\u2019s board has been one of the worst I\u2019ve ever observed, and this decline started when Andy Grove became chairman.<\/p>\n\n\n\n
Spinning out Intel Capital is likely the right decision given Intel\u2019s current situation. Nevertheless, it makes me sad.<\/p>","protected":false},"excerpt":{"rendered":"
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 […]<\/p>\n","protected":false},"author":607219,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_seo_schema_type":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_hide_featured_image":false,"_jetpack_featured_image_duplicate_dismissed":0,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[12068],"tags":[179,777501183,791020640,598164,791020626,176308],"class_list":["post-3439","post","type-post","status-publish","format-standard","hentry","category-intel","tag-business","tag-corp-venture","tag-intel","tag-intel-capital","tag-technology","tag-venture"],"jetpack_publicize_connections":[],"jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2v2x-Tt","jetpack-related-posts":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/posts\/3439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/users\/607219"}],"replies":[{"embeddable":true,"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/comments?post=3439"}],"version-history":[{"count":2,"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/posts\/3439\/revisions"}],"predecessor-version":[{"id":3441,"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/posts\/3439\/revisions\/3441"}],"wp:attachment":[{"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/media?parent=3439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/categories?post=3439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/twothirdsdone.com\/it\/wp-json\/wp\/v2\/tags?post=3439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}