William S. Anderson, who interviewed Dr. Amdahl in January, 2007 in Palo Alto, CA, is the retired Chairman of the National Cash Register Company.  He was primarily interested in how a start-up company could successfully compete with IBM when giant companies like General Electric and RCA were unable to do so, even after investing on the order of five billion dollars in their ventures.

(Q)   What was your background, including education?

(A) I was born on Nov. 16, 1922, in eastern South Dakota, and raised on a farm.  I attended a one-room country school for my first eight grades, then a small high school of about 150 students, graduating in 1940 (we got electricity when I was a freshman).  I spent one year at home, doing farm work, before entering South Dakota State College (now a University).  My father had wanted me to attend a liberal-arts college, for he didn’t want me to go to college to learn how to make a living, but rather how to get the most out of life!  My interests were in engineering at the time, so therefore my choice.  Since this was the fall of 1941, Pearl Harbor was bombed early in my freshman year.  I continued in college for the next year and a half, working as a janitor in the hospital for room and board and helping with farm work during the summer.  I wasn’t drafted due to such a shortage in farm labor.  I was requested to teach Physics Laboratory that fall at SDSC, because they had more than one hundred soldiers coming in for the Army Specialized Training Program and not enough people who could teach them.  This was more satisfying in terms of contributing to the war effort.  During that time I took the Navy’s Eddy Test, qualifying for and entering Naval electronics training, and teaching after that.  When I was discharged in June of 1946 I immediately married my fiancée, Marian Quissell, who grew up on a farm four miles from my home.  This marriage was a major catalyst in my life, giving it stability, purpose and satisfaction!  We have now been married over 60 years.  We’ve raised three children, Carl, Delaine, and Andrea.  I consider my family the crowning glory of my life!  After getting married I decided to return to SDSU.  There was no housing available in Brookings so I decided to build a small house in sections and erect it on an empty lot. Unfortunately there were no fittings for connecting to municipal water, though I explored all sources within two hundred miles!  I finally decided to approach McComb’s cabin court on the edge of the city.  Mr. McComb agreed to let me erect my house there and connect to his water and power.  He was a most gracious and fair landlord.  When I was due to graduate in June 1948, I applied to several graduate schools to study Theoretical Physics.  I was accepted at the University of Wisconsin at Madison.  At the University of Wisconsin I received a Wisconsin Alumni Research Foundation assistantship plus the last of my GI bill.  I completed my courses, took my final exams, including my orals, and submitted my thesis.  Near graduation time in February 1952 our first child, Carl, was born.

(Q) How did you get into computers so early?

(A) While studying for my doctorate, two other graduate students and I were assigned the task of determining whether or not a proposed intra-nuclear force could describe the three-body nucleus, Tritium (Hydrogen 3).  We worked for a month using a desk calculator and a slide rule to map the energy of this nucleus, but there was no stable state.  I felt there ought to be a better way to do these computations, so I began inventing a computer, which I defined in the fall of 1950.  The head of Electrical Engineering, Dr. Peterson, heard of my plans and invited me to give a lecture on my design.  After hearing it he requested my major professor, Dr. Sachs, to change my thesis subject from physics to the recording of my computer design, so that graduate engineers could build it and be trained in this new field.  I was then given a research associate position on the engineering staff to start the project and write my thesis on the WISC (Wisconsin Integrally Synchronized Computer).  This set of events changed my future from physics to computer design and entrepreneurial activities.  The WISC is on display at the Computer History Museum in Mountain View (CA).

(Q) What was your first computer design work at IBM?

(A) IBM’s first scientific computer, the 701, had been sold to 18 customers and its market apparently saturated, so the decision to make a follow-on product was made.  I was given the assignment of designing it.  It was to be called the 704.  The 701 had only fixed point and a rather small memory.  I elected to use the new larger magnetic core memory, and to introduce floating-point arithmetic.  I designed index registers, which specified how much the addresses would change in each iteration, and installed three in such a way that the indexing took no additional time. 

(Q) Did you do any more design work there?

(A) The initial market success was so positive that I was immediately given the task of designing the follow-up machine, the 709, as well as the task of designing a super-computer to be called STRETCH, for the technology was to be the new semiconductor transistors.  I was also to try to get an atomic energy lab to contract for it.  I quickly defined the changes to the 704 to make it into the 709; the biggest change was the invention of the I/O channel, which allowed the I/O to go on independently and concurrently with computing, just as I had done in the WISC.  The STRETCH project required that I first learn the capabilities of the transistor technology, then to improve the speed by looking ahead in the program for branch instructions to prepare for any branch required.  This look-ahead technique and technology produced excellent results, so, armed with this, I approached Livermore Lab, only to learn they had just committed to a development with a competitor.  I then visited Los Alamos Lab and got them interested enough to commit.

(Q) After you left IBM in December, 1955, what did you do at Ramo-Woolridge?

(A) At Ramo-Woolridge I was immediately put to work determining how to solve military requirements. Upon writing up a proposal I was sent to Washington that night on the “Red-Eye.” After shaving and changing my shirt in the Washington air terminal I visited three different military groups who each had new needs to meet, [and] then off to catch the late flight back to LA and to bed by midnight.  The next morning I was back at work determining how to solve these needs.  When we got some of the contracts I expected I would have the chance to do some of the development, but management liked the way I produced my solutions so they considered me to be their “utility outfielder,” whereas I considered myself to be “out in left field”.

(Q) Why and where did you go from there?

(A) I then began to seriously listen to my college and grad school friend, Dr. Harold Hall, who was in a new start-up company called Aeronutronics, and which had just been acquired by the Ford Motor Company.  This company appeared to have adequate capital and highly respected scientists in nuclear physics, rocket technology, and electronics.  They also had quite a good stock option plan!  I decided to pursue it. 

(Q) What did you do at Aeronutronics?

(A) My initial work at Aeronutronics was quite similar to that at Ramo-Woolridge, but here I had the opportunity to do a much more structured solution.  A significant one was the design of a flight data entry machine, which allowed a pilot to type into blanks on a cathode ray tube screen, then press a button and have the plan automatically telegraphed to the FAA center; we called it FLIDEN.  We won the contract, but again I didn’t initially get the development project.  Fairly shortly thereafter the company moved from the San Fernando Valley to Newport Beach.  We had just moved down when I was asked to rescue the FLIDEN project.  I commuted for a month, working more than two shifts.  I found there were over a hundred wiring errors and instabilities in some of the circuitry.  I was so beat by this schedule that one late night as I was commuting home I crossed over the highway to LA airport, then looked up to see a water tower in a town which was 5 miles father south.  I had no memory of anything in between!  I decided that I had to stay in a motel until I finished the project, which took about two more weeks.  The project was a success, and the FAA used it for a test facility, but funding for their plan never materialized.  I proposed developing a computer for the Ford Motor Company.  When I had a chance to meet with them they explained that if they went with us and something went wrong it would be their fault, whereas if they went with IBM and something went wrong they would be in the clear, for they had gone with the best!

(Q) Why did you leave Aeronutronics?

(A) The work in electronics began to be very much the same as it had been in Ramo-Woolridge, but we surely loved living in Newport Beach!  My mother had been ailing, and I wanted to visit her in South Dakota, but there never seemed to be a time when I could be spared, so I just resigned.  When we got there it became clear that my mother had an untreatable cancer and that it was terminal; she died two months later, and we returned for her funeral.  It had been a mixed up 1960 so far, and I still had to decide what I would do next.

(Q) When you returned to work at IBM that year, what research did you do there?

(A) When I evaluated the projects in my division, I found two that I considered to have no useful future – one which a computer design which kept being altered, but never completed to the point where it could be evaluated.  The other was a government-funded project to develop a computer using superconductor switches as logic gates; unfortunately there was no way to provide any amplification of diminishing signal levels.  After getting those dropped I had mostly software technique development and the assignment of responsibility for defining a new supercomputer, but with insignificant funding.

(Q) After developing the System 360 at IBM, how did you end up in California again?

(A) I was quite tired of the time and politicking demands and remembered vividly that I had agreed to go east for a minimum of 4 months and a maximum of 7 months.  I also knew that Dr. Piore’s intent was for me to go to the Silicon Valley area when returned to California.  I then structured my plan by calling Stanford’s Engineering School to see if they would invite me to be a visiting professor for a couple of quarters.  They did, so I informed management that I was returning to California as a visiting professor and that I would go on my own or as an IBM employee, it was up to them.  They elected the latter, and I moved in the fall of 1964. 


(Q) Was your Stanford experience satisfying?

(A) In January [1965] I taught computer design at Stanford; this was quite interesting, for I experienced quite a large range in the ease that the students had in their grasp of the material.  I never determined the reason, for I had no knowledge of their previous experiences.  The second quarter I taught was concentrated on the analysis and explanations for the performance of a cache memory in enhancing the speed of the computer.  It was not too well organized, for I was trying to increase my own understanding.  Concurrently I was working on a number of my pet problems at the IBM lab in Los Gatos, with remarkable success.

(Q) Was IBM still planning ways to use your design talent?

(A) In late January, while teaching at Stanford, I received a telephone call from the east coast just before dinner.  The call was to inform me that I was named an IBM Fellow, which entitled me to work on any project of my choosing, with a small budget to support it.  While hearing this news my knees got weak, and I had to hold on to a cabinet for support; then I heard some chimney falling and realized it was an earthquake rather than an overly large reaction to the good news!  A few months later I was asked to consider attaching my Fellow activities to a new lab IBM was starting called Advanced Computer Systems, ACS, which would be designing a super computer, hopefully to serve the Livermore and Los Alamos labs.  The project would be developing a computer proposed by a group from IBM research.  I knew quite a bit about it and liked much, but not all, of the plan.  I agreed to do it, but being a Fellow, I did not report to their management.  For a few weeks I tried to make some changes in areas I didn’t like, but to no avail.  I recognized that with the requirement to develop the computer design, the technology and the total software support, that there was no way they could possibly find a big enough market to meet IBM’s antitrust requirements of profitability.  I didn’t want to be associated with a loss-leading project, like had happened to STRETCH in the 1960s, so I thought about the problem and came up with a different approach - design the computer to be System 360 compatible and at the highest speed we could achieve.  This would eliminate all of the software development cost.  To make it profitable we could design one or two smaller machines with the performance spacing of the existing 360 product line, thus sharing the technology development costs over a much larger market and maybe meeting the profitability requirements.

(Q) How did you fare in the design challenge and the consequences?

(A) I presented my alternative to the project managers only to have it rejected out of hand, for they were wedded to the architecture they had developed.  I was pondering how to separate myself from the impending loss leader when their top logic designer got into some trouble.  The managers considered him unmanageable, but couldn’t fire him so they found the solution, transfer him to me!  I was delighted for he was responsible for the design of the most performance determining part of their computer.  I knew that if he did the design of that part of the 360 alternative, there could be no charges of faulty design.  It took a bit over two weeks to describe enough of my performance approaches before he recognized that it was really feasible to compete with the other design.  He then went into it wholeheartedly and actually was able to achieve a slightly higher performance and a somewhat smaller cost.  Bob Evans came out to ACS with about five technical people and they held a shoot-out.  We won and I was made the lab manager.  The first thing I did was have the two smaller computers costed.  I then submitted the three system plan to corporate pricing.  The single highest speed computer was a loss leader.  The second smaller computer added made a break-even program.  Adding the third even smaller computer came out with normal profit!  IBM management decided not to do it, for it would advance the computing capability too fast for the company to control the growth of the computer marketplace, thus reducing their profit potential.  I then recommended that the ACS lab be closed, and it was.

(Q) What happened after the ACS lab was closed?

(A) Just after the shoot-out, about two thirds of the employees left IBM, most of them forming a start-up venture in designing a time-sharing computer; they got about 18 months worth of capital investment.  A small group started a semiconductor company to develop field effect transistor memory chips for add-on memory for IBM computers and also an ECL memory chip for cache memories.  I stayed on at IBM analyzing the performance of computing systems as a function of memory size and disk and tape storage units in the environment of multi-programming.  While I was doing this, IBM management learned that a company called Compat had announced a minicomputer.  They had granted me permission to be on the board of my brother’s consulting company, Compata, and immediately assumed it was Compat.  Their discussions went on for two or three months without ever asking me before they recognized that it wasn’t Compata; however emotions had reached such a fever pitch that they sent me a letter demanding that I resign from Compata’s board, for it didn’t look good that an IBM employee was on the board of another company in the computer field.  I felt that my name had value to him, and as well I was “hot under the collar” about IBM’s handling of the ACS project, so in September 1970 I wrote a letter explaining my position and was resigning from IBM rather than my brother’s board.  I also informed them that I intended to start my own large computer company!  The president of my division tried to talk me out of it, for there was no money to be made in large computers!

(Q) Why and how did you decide to start Amdahl Corporation?

(A) Ray Williams, the ACS financial man, was aware of my anger and disgust and came to me with the information that he had some contacts in the venture capital world.  He proposed that we immediately develop a business plan, and he’d arrange meetings with the VCs.  We took about three weeks to do an analysis of the formidable task of competing head on with IBM, for we intended to be compatible with IBM and, in fact, use their operating system (we knew IBM had decided to lease it independently of the mainframe to reduce their antitrust risk).  The reason for compatibility was that the mainframe market was almost exclusively IBM, and that producing a better product than IBM seemed simpler than changing the market place.  We wrote up our business plan in as open and clear a manner as we could, outlining the difficulties and defining our strategies to counter them.  We estimated our capital requirements at about $45 million.

(Q) How did you get your first start-up money?

(A) I then traveled to Japan, invited by Fujitsu, to give several lectures on computers to their engineers and to their board of directors.  I had known several of their top people for three or four years and had great respect for them.  When I returned Ray had arranged a meeting with Ned Heiser, founder of a new venture firm in Chicago.  We presented our business plan and requested an investment of $5 million.  They considered this for several days and came back with an offer of $1 million.  We refused on the basis that we’d have nothing accomplished that we could show for raising more money.  They then asked us to determine the least that we would need, so Ray and I pondered this carefully, and decided we could do it with $2 million, if we were careful.  Heiser agreed, and we received his investment in December 1970, two days after receiving an overdrawn notice from our bank!

(Q) Did you have problems staffing and designing a competitive computer?

(A) We were asked by the ACS start-up people to agree not to make employment offers until they had given up hope of getting more capital; we agreed, and in early January 22 of their people listened to our plan and joined, so we were up and running.  My plan to use a larger chip size for easier interconnection was improved upon by Fred Buelow, who learned there was a discarded, easily routed approach called a gate-array, which wasn’t economical enough for chip manufacturers, but we could get a 100 gate chip, Large-Scale-Integration (LSI).  This was phenomenal, for the ACS technology only provided about 35 gates, Medium-Scale-Integration (MSI), and took three or four months for a gifted man to route!  With a package redesigned to provide much better heat conduction we could use air cooling instead of chilled water.  We tried to get the big semiconductor companies to make our chips for us, but none of them would.  Texas Instruments listened to our presentation, but after 20 minutes their vice president called me aside and said that it wouldn’t work, and if it did it was the wrong level of integration, and if we kept on we would spend all our money and go belly-up with nothing to show for it! Quite disconcerting!

(Q) How did you finance such a demanding undertaking?

(A) During these early days Fujitsu friends would drop by from time to time.  They never asked much about our progress but they must have sensed our growing confidence, for in late spring they asked if we would consider an investment from them; they felt it would need about 5 days of presentation to evaluate us thoroughly, and they would sign an agreement to protect our technology.  We agreed and presented for three days.  On the fourth day they stopped us saying they fully believed.  They invested $5 million and sent 20 engineers to assist in the development.  Shortly after the presentation our LSI chips came back, and they performed just as predicted!  We went on trying to raise more capital, but no venture capital firm believed we could compete with IBM.  It was difficult to argue the case since RCA, General Electric, Xerox, and Philco were all getting out of computers; RCA and General Electric had each spent about $5 billion and were giving up!  A surprise visit by Heinz Nixdorf from Germany was exciting, for after a few hours he agreed to put in $5 million.  This also excited Fujitsu, for they decided to invest an additional $5 million!  These events stirred the venture capital people to invest $7.8 million!

(Q) How did you avoid encroaching on other IBM patents and other technical property?

(A) When we started the design of our computer I reminded everybody that we were all bound by our agreements with IBM not to use any of their intellectual property, but that if we used only the descriptions in the IBM’s publicly provided user’s manual to do our designs, it would be free of conflict.  Fortunately none of the designers had ever designed a 360 computer, so that manual was necessary and there was no carryover of 360 logic detail.  I had a friend in IBM’s legal staff who later informed me that IBM had made two in-depth investigations of our product to determine if there was any misappropriation of IBM property, but decided we were clean as a hound’s tooth, however clean that is.  We also had to test the availability of the IBM operating system licensed to our computer.  We ordered it, and it took IBM almost two months to decide they had to do it, but they did!  In short, we didn’t do anything quite like IBM’s patent coverage, and we took advantage of their dropping their tie-in software policy as well as their well-defined market place!

(Q) How could you develop a product so much faster than IBM’s?

(A) The technology in our computer was much more advanced than IBM’s, for we had opted for the LSI chip with 100 gates rather than the MSI (medium scale integration) with only 35 gates.  This meant we could avoid nearly two thirds of the chip crossings, which would cost significant time delays in the logic paths involved.  This also reduced the size of the machine, and each foot of wire cost 1 nanosecond.  We also designed a simpler machine, by a more orderly, but not slower, instruction execution sequence like I used in the WISC.  There was also another factor, based on IBM’s market management approach, where they avoided too great an advance in technology upgrades, for users could drop down one member of the 360 family if the smaller member was fast enough.  Amdahl’s offering was a bit more than three times faster than IBM’s large member, and we priced it most competitively, for we had to overcome customer’s management that IBM was the only safe decision.

(Q) Why did you think you could compete with IBM when RCA and GE couldn’t?

(A) IBM’s earlier competitors developed their offerings while IBM was “bundling” its software with its hardware, therefore the competitor had to develop its own software.  RCA designed a machine nearly compatible with IBM’s and software that was also quite similar; however, the deviations from IBM’s hardware were carefully designed to appear easy to move to, but not appear too difficult to return to IBM if they didn’t like it.  RCA, however, had made it quite difficult to return, for they considered it to be the “barb” on their fishhook!  Being later and IBM insiders, we had the advantage to plan on IBM having to maintain its unbundling; however, the Venture Capital world was unable to readjust its thinking when the new strategy was presented by an aspiring startup!  Some even thought we couldn’t design an IBM compatible computer since RCA couldn’t!  The cost of developing our own operating system and other supporting software would have well more than doubled our capital requirements!

(Q) Why could you plan on using the IBM operating system?

(A) When IBM decided that they were in serious risk of an antitrust action for offering their hardware complete with all of the software, thus virtually keeping any other supplier from being able to make an economically attractive offer in this marketplace, they decided the separation of their software package from the hardware would not be too costly, as long as the software package was kept bundled (this is my guess, for I was not involved in any decision-making).  The pricing of the software bundle was also economical enough to discourage competition.  IBM also did not make too big a public announcement as far as my recollection of the event, for the VCs didn’t seem aware of it.  IBM also took quite a bit of time to decide they had to honor our order for their software package to be licensed to an Amdahl computer, but I was convinced they had to or the antitrust threat would immediately materialize!

(Q) How did Amdahl’s marketing results progress?

(A) The initial market penetration by Amdahl was its first sale to the NASA space computing center in New York, where we were allowed to being installation on Friday night, with the expectation that it would take about a week and a half, like IBM required, but were astonished when they were informed on Sunday noon that the computer was ready for use!  The next sales were primarily to Universities, where student users appreciated the opportunity to mix in some of their own system software, rather than being restricted to only IBM’s.  We also sold one to a computing job-shop, but we were still not able to get a commitment from a commercial account until Massachusetts Mutual Insurance Company, who was very unhappy with IBM, decided to buy from us instead.  The installation was very successful, and it was recognized that the Amdahl computer was viable!  That broke the log jam, and most of our computers were sold to commercial entities!  Within the next 18 months, we had sold enough so that our net profit, which was 30%, just like IBM’s, had paid off all of our corporate development cost, which had reached some $60 million!  So we had a perfect balance sheet.  Our first full year of shipments had been $96 million, our second year had been $196 million, and our third year had been $320 million!  IBM had, of course, been effectively reducing its prices by buying customer software packages of little value to them and had sold many more machines than we had, but they realized they had to reduce the customer’s cost of computing to preserve their market place.

(Q) How did IBM respond to your success?

(A) The next move by IBM was the announcement of a new 360 improved family, the first to be the 3030 (I’m sure you hunters can recognize the significance of that choice of number).  This machine was to be equal in speed to Amdahl’s and was to be priced 30% lower than ours!  Immediately we analyzed what we had to do to respond.  We came up with an improvement of our own, including a smaller version to expand the market we addressed.  We also had to negotiate with Fujitsu to get lower prices on their manufactured parts (their manufacturing had been very profitable, and with a smaller version, they could reduce their prices and still fare as well).  With this plan, we were able to maintain our 30% pretax profit in spite of IBM’s attempt to “mow our grass to ground level”.  Over time our competition reduced the cost of computing for the mainframe customers by over an order of magnitude!  IBM retaliated in Japan by calling on the government to limit the use of their architecture and software there, or they would reduce the prices in Japan to kill off the Japanese computer companies, or so the government informed Fujitsu of this.

(Q) How did you expand your market into Europe?

(A) Nixdorf had not been a significant player, for their marketing people had only had experience selling small machines, and they decided not to try to make a chance as drastic as would be required, so they sold their stock for a very significant profit.  Amdahl entered the European market, first in Germany upon receiving an inquiry and visit from the Max Planck Institute in Munich and from the European Space Agency in Ober Pfaffen Hofen (with Nixdorf’s blessing and assistance), then in Norway where I was questioned about my recollections of my Norwegian roots and coerced into singing a song written by the immigrants (this was publicized in Fortune Magazine under the title “A Frog Sings in Norway”).  Italy came to us in the person of the former IBM country manager who now had responsibility for all central government computing, and who couldn’t get a deal from IBM.  In France I struck a deal where we would get import licenses for any sale we could make if we could have anything made for our computer in a factory in Toulouse.  Being an inveterate punster I informed my VP of engineering that to get the proper picture he should make “la trek Toulouse”.  We were quoted a price for memory which was slightly less than it cost us to make it!  Britain was easy to enter, but later.

(Q) Your relationship with Fujitsu was so strong; did you ever consider tempering it?

(A) I was concerned that our dependence on Fujitsu was in danger of making us effectively a subsidiary, and I felt that the only way we could be independent would be to find an alternative supplier of new and much denser chips for our new advanced computer offerings.  I was unable to get support from the engineering staff, for they felt they were not capable of dealing with some of the problems that might come up.  In the meantime Fujitsu heard of this and began to try to make me stop agitating, accept their new planned chips.  It got bad enough that the president came to Sunnyvale [California] and verbally chewed me out.  I had wanted a reduced dependence on Fujitsu, not a separation from them, for I was very much mindful that without them Amdahl would never have survived!  I also had quite a number of very close Japanese friends, and I still have them today.  I must also say that Fujitsu treated the company very fairly for the rest of its existence.

(Q) Did your efforts affect your health?

(A) The stress of this struggle was so severe that my back went into spasm.  Some twelve years earlier I had ruptured a disc, and it had healed, but it had still remained very sensitive.  I realized that this spasm was so severe that I couldn’t go back to work for quite a long time, so I decided it was best to resign rather than continue struggling.

(Q) What did you think you could do as a follow-on to Amdahl Corporation?

(A) My back took about eight months to get back to near normality.  During that time I pondered what I should do when healed.  Carl and I brainstormed an interesting approach to very large scale integration, which we felt could make a wafer-size chip!  I mentioned it to Clifford Madden, Amdahl’s VP of Finance.  He got so excited that he insisted that the three of us should start a new company!

(Q) If incurring so many problems in building a semi-conductor facility, how could you have done it differently?

(A) I was chairman of the board, for I still had to protect my back, Clifford was president, and Carl was head of engineering.  We named the company Trilogy, for the technique employed to make the wafer-scale integration with high yield was to use triplet gates, where it was possible to test each gate and be able to remove one, or even two, of the gates if they were faulty, thus assuring an effectively working gate unless all three were faulty. 

The financial planning community became wildly excited, and we managed to acquire over $100 million.  Carl and I had planned to have a semiconductor company process the chips, but some of the things we would have to do weren’t standard, so the president decided we’d have to build our own facilities.  The building of the super clean semiconductor facility was delayed during construction by unusually heavy and extended rains, so the costs mounted more rapidly than planned.  The complexity of the routing program software, depositing enough metal for high power distribution and good bonding of the chip to the chip carrier were solved, but took extra time.  The only problem we hadn’t completely solved was the leakage of etching fluids through layers of interconnection, (the universal problem for all semiconductor companies).  We estimated that two more passes of making the chip, testing for leakage faults, determining how to modify the masks to fix it and making the new masks would take about 24 months.  The costs of the delays had reduced our capital so much that only about 24 months of run rate were left!  We had proven to our satisfaction that we could do the wafer sized chip, for we had made three-quarters of the wafer successfully, but by the time we could successfully produce our full chip repeatedly, we would have no money left to exploit it, and we felt certain we could not raise more money!  Carl suggested we could successfully produce ¼ size chips and design a small product using them.  I felt that the level of revenue we could achieve with that approach could hardly keep us afloat, so I contacted some of our principal investors and asked what they would recommend.  They asked us to acquire a company with a computer product that would benefit from our remaining funds, so we did that.  The negative publicity from this was as large as the positive publicity when we started!

(Q) What was it about a start-up company that made it so attractive to you?

(A) If I had the chance to do it all over again I would first offer enough money to a semiconductor company to compensate for solving the nonstandard processes.  If that wouldn’t work, I would take Carl’s suggestion and see if we could sell the product design and chip availability to stay in business.  These might not have worked, but if they did we could have made a significant success! I strongly enjoyed the atmosphere of cooperative enthusiasm in the start-up adventure!