I recently visited with the 2015 UBM ACE Awards Lifetime Achievement Award recipients, Linear Technology’s Bob Swanson, chairman of the board, and Bob Dobkin, CTO. These men are an important part of the early days of electronics in Silicon Valley and have seen the transition from Germanium transistor designs in electronic circuits, on through to the early days of the Integrated Circuit (IC) and finally, culminating in the co-founding of Linear Technology, deemed one of the most profitable and successful companies in Silicon Valley today.
During my interview I was very intrigued as to how these two different personalities with two different skill sets would seamlessly complement one another’s answers to my questions in an alternating manner that painted a picture of who they are and how they have grown up in Silicon Valley acquiring skills and insights into how to start a company and bring it to such a prominent position in the electronics industry.
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| Bob Swanson, chairman of the board (left) and Bob Dobkin, CTO (right) have been in the electronics industry since the early days of Germanium transistor technology. |
The talents and experiences of these two leaders, in my estimation, has brought about a corporate culture unlike most of the companies in the electronics business today. This culture encourages innovation and strongly values and recognizes the company’s engineering talent so that when a good idea emerges, management recognizes it and “gets out of the way” to allow the engineer to bring it to fruition.
Read on and prepare to witness unique insights into early Silicon Valley, a tutorial in how to start a company and create a successful corporate culture that lasts for decades, and a lesson regarding management-level cooperation and success.
EDN: I am so impressed with Linear Technology’s longevity, but in particular the fact that the same two men who started this company 34 years ago still guide the company and have created such an employee-friendly environment from day one in which to thrive and especially value their engineering talent. That philosophy is still in effect at your company and you guys are still influencing this company both in business and technical advances.
During my 42 years as an engineer, I had some experiences at some of the companies at which I was employed where engineers were really undervalued and under-appreciated. At one company, the engineering department was told by a manager there that, “You are all overhead.”
Swanson: About three or four years ago we invited all the sales people to come in to headquarters for a sales meeting. The area sales managers come in every six months, but it was some time since all the sales folks were out here. So I was asked to give a talk to the guys and tell them about the beginning of the company. And they wanted it to be motivational. So I was thinking about ‘What is it about Linear 30 years later that enabled us to avoid mistakes that other companies that I worked for made?’
So I told the story about three other companies that I worked for that weren’t just other companies; I worked for them when they were at the zenith of their success – but it didn’t last. One was Transitron; and what happened to Transitron? During the first recession their sales went from $60M to $38M, but the one thing they weren’t worried about was engineers. Engineers were a commodity; they could get in a plane and go to London; they could go to Holland; they can go to France and get all the engineers they wanted and by the way, pay them half the wages that US engineers make. So that was my first appreciation for my thinking that when you run a high-tech company, you had better appreciate your engineers – especially the exceptionally good ones. They are not overhead, but a special, special asset.
Then I went to Fairchild Semiconductor during the “glory days” with Bob Noyce and all those guys when Andy Grove’s business card said that he was a Device Engineer. So this was really the ‘glory days.' They innovated everything – this was magic and I was a young guy there. And then that thing fell apart in a little over 10 years. I was too junior to really know what was going on but the rumors were that Sherman Fairchild, who was a great entrepreneur in his own right, didn’t understand the chip business, didn’t understand the investment, just didn’t understand how fast-moving it was and how you had to fund it. The whole thing imploded.
So I went with the guys that went to National at the same time that Andy Grove and company started Intel. What was the lesson there? The lesson was that top management had better understand that this is a fast moving business and there are investments to be made. And if you don’t make them – you’re history. But you can’t overspend either, so there’s a balance.
So then I went to National and that’s when I first met Bob Dobkin. It was just like being in the Marine Corps, as people said it would be – it was so ‘gung ho’ there, everything was great and when it came to analog we were clearly the leader. Then, about two years before we left, they went to matrix management and all of a sudden there was all kinds of bureaucracy and politics and people like Bob and I got demotivated. It was way more than the fact that they didn’t know where analog was going as a future. So when we started Linear, we said that we were not going to make those same mistakes.
Dobkin: And analog is unlike digital systems. When you make an analog product it takes 6 months to get it out to the customers, another 6 months for them to design it in, and another year for their product to get out. So you really don’t see any business for 2 years or maybe three years on a new product. You have to understand that in this business and be able to handle that. You have to think a couple of years ahead and have them ready when they are needed. Management has to understand that these products are not going to sell in 3 months.
Swanson: Especially hard when the design cycles become 18 months or more.
Secrets to success
EDN: Both of you have been in the electronics industry since the early days of Germanium transistor technology and have grown and excelled personally over the last 50+ years as successful engineers as well as founding Linear Technology and bringing that company to a very profitable and influential position in the analog semiconductor community in so many ways. To what do you attribute this successful longevity? I can’t think of many, if any, electronics companies that have achieved such a long and successful run with the same leadership and engineering-oriented corporate culture in this tough industry of ours.
Swanson: When I was at National and ran their analog group, there were three design groups: the advanced linear group that Bob Dobkin ran, standard linear ICs that Jim Solomon ran, and a third one that was consumer linear integrated circuits (CLIC) headed by Tim Isbell. A bunch of us were getting frustrated near 1981 and I decided I was going to leave. I was thinking “How do we get this thing started? How can we possibly succeed? Especially in an analog business where a lot of people think it’s last year’s technology. So I said ‘What can we do better than everybody else?’ and ‘Is there anything we can do better?’ Because if we can’t answer that question yet, we might as well stay at National.
The choices I had involved Bob (Dobkin), who was running the advanced analog group, but he was making really ‘slick’ general-purpose things like voltage regulators and amplifiers, and so forth. The other groups were working on things like speech recognition and speech synthesis and a lot of way far out in time projects. So, if we were going to get this company off the ground, we couldn’t have projects that took five years to get any sales. His (Dobkin’s) products went to market quickly and saw sales after a year and a half. OK so that’s three years and not 5, 6, 7, or 8 years. So I said let’s start this company. Bob (Dobkin) is the guy that I want to start it with!
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| Bob Dobkin pointing to his 43 patents on Linear Technology’s Patent Honor Roll. |
Dobkin: It’s important that when you’re coming up with products for a new company, you have to give the customer a benefit. Right from the start we tried to give the customer a benefit in performance, we provided support, and when complications came up, we were there to help the customer. And it’s Bob’s (Swanson’s) fault that we have efficient manufacturing, good delivery, and we never gave the customer anything to complain about regarding the products.
EDN: As a circuit design engineer I used Linear’s products in the 1980s and I was mostly amazed at the really great technical applications force you had. They were always around when I ran into trouble and needed help. We used to call them the 'ninja' applications engineers because they would appear out of nowhere.
Swanson: There are so many answers as to how we did this (i.e., started the company) and one of the answers is a recognition that everyone believed that analog was kind of dead and had no growth and digital was the ‘wave of the future.’ That showed up in a lot of ways like in colleges when kids were deciding which discipline to take and it also showed up at customers. Everybody was analog-challenged, the world in general was analog-challenged, customers were analog-challenged. We said – look, we have this disproportionate share of analog know-how; the world has this great demand so we have to be able to supply that. It was an advantage that we had. We’re going to make ICs and we’re going to sell them to customers who are analog-challenged. The more we can hand-hold them and show them how easy it is with our help, the more we can get a premium for what we do. We would tell customers that they were not paying for the silicon but the engineering expertise we just gave to you. And that worked.
Dobkin: We were careful when we hired our field applications engineers. They were all experienced design engineers. They weren’t salesmen. They didn’t have permission to give prices.
Swanson: If you were an Analog Aficionado, Linear Technology looked like a bunch of great technical guys just doing analog and they wanted to be a part of that. After 34 years we are still the same. We can hire as many good people as we can afford to hire. So again, the great thing we have going for us is that we have a disproportionate share of really innovative people. We leverage that because the world needs innovative analog solutions.
Dobkin: We have a culture here which is not empire-building. We are very careful that people do not have their own empires. Everybody who works for Linear is working for Linear. And it is important for everybody to realize that. Then the cooperation is great, the interchange of ideas is great; we are all marching to the same tune. It helps the company and the customer.
Swanson: If you don’t have that, the company gets destroyed and it comes back to creating a culture where as you get bigger you do get some bureaucracy. As things get computerized, you have systems like approved product lists that determine which products you can build in the company’s factories. But we can live with that if we keep it to a minimum and make it easy for the engineers. We have to keep politics to zero. If we can do that then we can have the right culture indefinitely. But when those two things get out of hand, people get frustrated; innovators get frustrated.
Dobkin: One of the things we do is to hire engineers who want to innovate and build products. And then we don’t get in their way. So they build products, they like what they are doing, and that works well within Linear.
Swanson: So regarding your previous question as to how we got started – there are so many potential answers, but as I said, I thought about this in the last 3 or 4 years with people asking similar questions on our 30th anniversary. And back in 1981 when we said ‘Hey, we’re out of here!’ I was in my early forties, had kids in high school getting ready to go to college. I was looking to start a company that had some longevity. I was looking for a job for the next 20 years. So when we said ‘Can we do something better than anybody else?,’ the answer was ‘Yes! – there are several things we can do better than anybody else.' The strategy really was to ‘be better before we were bigger.’ Just be as big as you can as long as you are better than anybody else. And the other thing was, ‘How many customers really want something better?’ We weren’t quite sure. But we said let’s do things that will enhance our longevity. We wanted to be around for 20 years ---well we made it to 30+.
Dobkin: If you do some products right, they will sell for over 30 years. If we do some products as good as they can be done – you never have to do them again.
Swanson: We had to be careful not to wander into areas that were going to require a lot of resources and we couldn’t be sure whether we could do this better than anybody else. Are the results going to be so compelling that it will be worth this big investment? So we were careful in the early days how we spent our resources. We couldn’t afford early on a lot of mistakes, a lot of ‘dud’ product ideas. Our batting average had to be really good in the early days. So that played a role in not doing super-risky projects requiring lots of people.
Dobkin: Also, we couldn’t get into price wars. We weren’t that big. And getting into a price war, being able to sell things cheap – nobody at Linear ever thought that was one of the advantages that we would have.
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| Linear Technology has even managed to have some of their components aboard a 2014 SpaceX launch. Here is a commemorative plaque along with some of Linear's EDN Innovation Awards. |
Swanson: Well you know there are companies that choose to be innovators and then there are those who choose to whittle away at cost. As a strategy, if you can be really efficient, that might be a barrier to entry – but it’s always temporary. Because somebody else always comes along and figures out how to be equally efficient. Like the story I was reading about Compaq Computer. But if you continue to innovate – that’s a barrier to entry that can last for decades.
