TECH LEGEND BELIEVES SILICON VALLEY IS “SACRED SPACE”
When Ray Zinn set off to start his own semiconductor company in 1978, he did the obvious thing: Met with VCs on Sand Hill Road.
It wasn’t a fit. “It was clear that VCs had a different view of how to run a company,” Zinn recalled recently. “I wanted a more employee-centric company, and I wanted to maintain ownership.”
He eventually walked into the offices of a small bank on Santa Clara Street in downtown San Jose. “They said, We fund peanut butter companies and car dealerships. We don’t know what to do with tech.”
It’s a testament to Zinn’s powers of persuasion that the bank – now known as Bank of the West — ended up funding a business loan for Zinn. He went on to found Micrel – a semiconductor leader for nearly 40 years until its sale in 2015 to Microchip Technology.
Zinn’s recounting came during a fireside chat at the latest installment of the Silicon Valley Manufacturing Roundtable, held March 31 at NextFlex.
It was the keynote for a packed program that included presentations from NextFlex, the silicon valley organization (formerly San Jose Silicon Valley Chamber of Commerce) and the Reshoring Institute. The Roundtable is a production of the cities of San Jose, Fremont, Morgan Hill, Milpitas and Santa Clara, and last month’s event brought together more than 150 attendees including more than 30 manufacturers.
The whole idea? Gather manufacturing-industry employers, stakeholders and public-sector partners to discuss key issues facing the sector and to share knowledge and experiences. The conversation with Zinn brought today’s manufacturers face to face with one of the Valley’s technology and manufacturing pioneers. At its peak, Micrel employed roughly 1,000 employees, and until recently its fab in San Jose was one of the last remaining sites where chips still rolled off assembly lines in Silicon Valley.
In his sit-down conversation with Donovan Lazaro, a business development officer with San Jose’s Office of Economic Development, Zinn detailed the early days of Micrel and key learnings from the experience. (Zinn founded the company after he conceived of the basic operation of the wafer stepper – a revolutionary piece of semiconductor manufacturing equipment that made Zinn a legend – while he was with another company.) The chat came after Zinn received a proclamation from the office of San Jose Mayor Sam Liccardo noting his accomplishments and contributions to the local economy.
Among the takeaways from Zinn’s remarks:
Profitability was key. Zinn said the decision to seek funding froma bank instead of venture firms meant he had to adjust the model three times to meet the bank’s expectations. “The requirements were to be profitable,” he said. “I had to come up with a strategy to run a profitable company. That changed everything. But that’s what I did.” The focus on profits stuck, as Micrel only had one unprofitable year in its nearly four-decade run.
Get people on board for the tough stuff. Micrel needed to expand into a new facility in San Jose, but Zinn wanted to keep the old one in Sunnyvale going. “They said it’s not going to be possible, but I said it’s like changing a flat tire on a car and still going sixty miles an hour — and we can do this,” Zinn said.” Why not do the impossible?” Not only did Micrel move the fab, but the company converted it to six-inch wafers, from four, on the fly. “But I had to get my people on board, I had to get them convinced,” Zinn said. “When you get people fired up, they will do it.” The experience ties into the title of his recent book, “Tough Things First.”
Concentrate on people first, too. “What I told people who joined is ‘I’m not here to make you rich’,” Zinn told Lazaro. “I’m here to make you a better person. Once they hear that, it rings a bell. I had never intended to be wealthy. It never was a goal.”
Know your impact as a business leader. Zinn said he never lost sight of the importance that his company played in the local economy – something that feeds a sense of responsibility to the community. “You have the responsibility, as a human being living here and taking advantage of the infrastructure, to support it,” Zinn said. “If you don’t, it’s going to collapse. This is a very sacred place. We are the most admired place on earth.” He continued, “For every person you hire, you influence seven people: the hairdresser, the stores, the schools — they’re all impacted. And so think of it.”
Local manufacturing can thrive – with the right support. When Lazaro asked Zinn about the future of manufacturing in Silicon Valley, Zinn responded optimistically. “There is a future, but we need local support to keep it here. I think you’ve done that. I’m very pleased with this group meeting today and the enthusiasm I feel here.”
Zinn wasn’t the only draw. At the morning event, Malcolm Thompson, NextFlex’s executive director, provided an update on the institute’s efforts. NextFlex supports research into flexible hybrid electronics (FHE), such as ultra-thin integrated circuits in textiles that could, for instance, be used as “smart wound dressing.” NextFlex’s Brynt Parmeter showed off the latest efforts in the institute’s workforce development – an initiative that has reached nearly 200 participating local students.
Kelly Peaton, director of education and workforce development at the silicon valley organization, drummed up interest in Strive San Jose, an internship program that aims to connect employers to young talent. She encouraged companies to get involved through the Strive San website.
Rosemary Coates, founder of the Reshoring Institute, held attendees spellbound with a presentation that leaned heavily on her personal history working in outsourcing consulting. She showed photos of depressed downtown main streets that she said reflected her own work of helping companies move manufacturing overseas. She’s since switched to helping bring work back stateside.
“Most Americans are willing to pay 12 to 15 percent more for products made in USA,” she said. “We try to get costs within 12-15 percent (compared to overseas-made products), because we know Americans will pay a little more.”
Coates highlighted success stories – but also some failures, such as an Otis elevator factory that was built in South Carolina, to bring production back from Mexico. The plant struggled because “there were no workers,” she said. “The workers were either not skilled, not willing to travel to the plant, or didn’t want to come to work at Otis.”
Otis’ experience shows the importance of workforce development and being strategic in what kind of work is brought back to the U.S.
“What we want to come back is advanced manufacturing,” she said. “Not all jobs are coming back.”
If you’re a Silicon Valley manufacturer, we’d love to connect with you at the next Roundtable. For more information, email Donovan Lazaro at firstname.lastname@example.org