Intel Defectors' New Company

Intel Defectors' New Company

By Michael S. Malone
The New York Times

January 26, 1983

Last Saturday night in Portland, Ore., a week-old company with just 18 employees held a ''name the company'' party in their new offices. The company not only lacked a name, but also a product and even a business plan.

Nonetheless, nearly 100 of Portland's leading citizens attended: bankers, real estate figures, computer manufacturers, representatives from two of the Big Eight accounting firms and insurance brokers. The guests contributed liquor and hors d'oeuvres as well as suggestions for a company name. A local disk jockey served as master of ceremonies.

Indeed, in little more than a week this anonymous company has drawn attention from across the country because the founders are the latest defectors in the electronics industry, a breed that has built some of its most prominent and profitable concerns. The group, 16 employees of the Portland division of the Intel Corporation, a semiconductor giant, and one employee from the company's Santa Clara headquarters, turned in their resignations on Jan 17. (The 18th founder is a private consultant.) ''We had no advance warning,'' a spokesman for Intel said. ''They did a super job of coordinating this thing.''

1960's Spinoffs

To find a precedent for such a major departure from a hightechnology company one has to look back to the 1960's, a tumultuous period for the industry when Intel itself was spun off from Fairchild, a decade after Fairchild had been spun off from Schockley Semiconductor Laboratories.

The three leaders in the resignation, all from Portland - Casey Powell, manager of a special marketing program and formerly manager of microprocessors; Scott Gibson, general manager of memory components, and Larry Wade, a manager of systems research and development - ran operations that represented about 20 percent of Intel's revenues and more than 20 percent of the company's research and development budget.

''We're sorry to see them go; they're good people,'' said James W. Jarrett, Intel's manager of corporate communications. ''They came from a number of different operations, with a variety of capabilities, all they way down to secretaries and technical writers. So it's not as if we lost 17 Casey Powells or Scott Gibsons. As for whether or not there will be a suit, we don't really know what they're doing so we don't know yet.''

Suit Against Seeq

Intel and other electronics companies have filed suits against similar companies in the past, one being Intel's action against Seeq Inc. two years ago, which has since been settled. Seeq had to pay an undisclosed amount, and the court assigned a monitor to the company to insure that it did not use any proprietary Intel information.

In light of this, the new Portland company stepped very carefully. ''It was done with great discipline,'' Mr. Powell said, adding that all discussions were conducted off company time in homes and restaurants.

Mr. Powell said that salaries were never discussed, nor was stock distribution. In fact, he said, a product itself was never discussed beyond a vague goal of a technical midsized computer to be sold to other manufacturers as a component.

''The people understood the legal problems,'' Mr. Powell said. ''If you want to get around litigation, you learn the rules. We followed a very meticulous legal process, adhering absolutely to the letter of the law. We wanted to do the right thing.''

Concerned About Retaliation

One of the right things, the group concluded, was not even to prepare a business plan until after the resignations. Nevertheless, Mr. Powell acknowledged that he remains concerned about retaliation by Intel.

These worries, and the lack of a name, product and business plan, do not seem to have scared away investors. Mr. Powell said some of the world's leading venture capitalists had called him to arrange meetings.

In the week since he resigned, Mr. Powell said, he has spent the entire time answering calls from prospective investors, people looking for jobs, and the press.

David Gold, a consultant to the venture capital industry. said, ''The venture capitalists are flocking to them like bees to honey.'' But he cautioned that ''this might yet be another example in which investors are too willing to provide a lot of money too easily to the entrepreneurs before asking a lot of necessary questions about the new company.''

Community Help Sought

If there was one thing the founders agreed upon, it was that all would have to forgo salaries for six months. In fact, the company's goal is to operate in that critical period with a minimum of expenses. For that reason the community has been asked for help.

''The response has been nothing short of remarkable,'' Mr. Powell said. ''We have rallied the whole Portland business community.'' The company already has free rent for the first six months as well as the donation of office furniture.

It is talking with a major computer concern about the six-month loan of a large mainframe computer, and it is also talking with accounting firms, the telephone company, insurance agents and others for support. ''They understand that by helping us now they're getting a chance to grow with us as well as helping the local business community,'' Mr. Powell said.

At the party Saturday night, 50 names were suggested for the new company, including Tempo and Quest. A decision has not yet been made. And a fortune cookie the size of a bowling ball was opened to find the fortune: ''Old Chinese saying: When 17 people leave company on 17th day of month they are destined for fame, fortune, success, and, with patience, even a paycheck.''