At the end of the day, a company is a machine to turn employee labor into revenue. Intel has clearly been a sinking ship for years now. What kind of people work at a failing company? What kind of people serve on its board? Is this portrait of the board not a portrait of any other failing business?
I went to lunch the other day with a friend. We had both worked at Intel during our early careers, and we still know people who are there over 20 years later.
Of course the topic arose of our old workplace. We had a great time there it should be said. But neither of us stayed on, and it was vibes.
Even at that time, as a young guy in university, I thought something was wrong. I couldn't tell what, since I was a young guy who barely knew anything about the business. But I knew that I felt uncomfortable about potentially spending decades at a place where everyone was so relaxed. There was no urgency. People would come in, find a colleague to have coffee with, and that was their day. I checked with the other interns as well, it was really chill.
I was working on my thesis, and my team was working on rolling out what would later be called WiFi. Amazingly, part of the strategy was to slow down certain standards, because we were behind in some of the fabs. That didn't seem like what you would do as a cutting-edge technology company. People at the all-hands would ask things like "should we keep AMD around just for show? So that we aren't a monopoly?". Well, that problem has been solved now.
I got offered a permanent role but never even considered it.
https://medium.com/geekculture/the-dead-sea-effect-d71df1372...
The people who “succeeded” were those who could sell that story to the finance org (who essentially made all the product decisions), and who could move onward and upward before the fairy tale collapsed.
The disconnect between the aspirational culture (risk taking, tech-forward, customer-focused) and the real culture (risk averse, finance-forward, planning-focused) was extreme. The whole place was like a filter designed to retain only those who had no interest or capability to fix the systemic issues.
The critical difference is most large companies don’t need to innovate. United doesn’t design aircraft, airports, etc they compete with other huge companies in an extremely capital intensive industry and execution is what matters.
FedEx, Walmart, Bank of America, etc all need to keep up with their competitors but there’s no need to make risky bets when slow and steady brings in billions of revenue and nothing external is going to drive them out of business quickly.
Intel essentially forgot just how ruthless their industry was and got crushed.
Much like banks the boards of airlines are incentivized to have high levels of debt supported dividends / buybacks because it’s a highly volatile industry. Money isn’t clawed back from investors, but cash reserves disappear in a downturn.
Really any high risk industry where profits can be extracted in good times faces the same issues. The possibility for concessions from governments or people they owe money to like retires and bond holders etc, then repeat the cycle while maintaining control incentives high risk strategies because they are leveraging other people’s money.
Ultimately, this is what MBA-style corporations do. They want unfettered predictability and massive revenues from every initiative. They even set up corporate structures to penalize failures.
As a result, layers and layers of managers, and managers and engineers are all risk averse. They will be penalized for being wrong, their jobs and livelihoods are put on stake.
What does one expect in such an environment? Innovation/risk-taking or politics of self-preservation/blaming/backstabbing?
The MBA-style is a failure for innovation and Intel should be a case study in every MBA school.
An MBA-style corporation is one that is lost in a vast trove of metrics. They focus too much on the birds-eye view dashboard style of work - ultimately forgetting that it is less important to meet metrics and more important to keep innovating.
The metric-driven production is well suited for warehouses and factories where every unit is the same as the other. Because every unit is the same your business can focus on eeking optimizations visible via metrics.
But technology is not like that at all. Every unit of production is so different from one another. You cannot have a top heavy company that is just focusing on metrics. You need the top to be intelligently engaged with market, customers, systems, and employees.
Put in another words, if your company's primary focus is margin management, shareholder return, and squeezing production (MBA-school style), your company will have a very very hard time innovating.
Case in point - Intel - which has haemorrhaged itself with years of focus on buybacks and dividends and unit production - but not studying the market, studying modern tech, and innovation.
And it was before Intel failed, but we had case studies on IBM, Enron, and General Motors and how misaligned incentives led to incompetence, corruption, and failure.
You may have had bad experiences with some individual MBAs (they run the gamut, just like everyone else), or you may have absorbed some stereotypes, but that's really not at all what is taught.
It’s really another aspect of the innovator’s dilemma - interesting $-wise and margin-wise is so limited that they end up never doing anything interesting.
It is a problem really specific to high margin companies.
You actually don’t see this behavior at low margin businesses because the spectrum of things that can be done which aren’t immediately labeled a margin drag is a lot wider.
The company I work for now put all the up front effort into a new product line which would lilekk pk y have easily gotten to a billion or two a year within 3y with the right customer wins, but out normal margin is very high and the new line of business would have been very profitable objectively but would have been a margin drag. Every dollar would have lowered the gross and net margin.
No pay rises for over 20years now. Layoffs on a routine basis. They asked everyone to take a pay cut last year. All of this in an extremely competitive labour market.
It’s pretty obvious to anyone that a job at intel is temporary. You take the job and do the bare minimum (because hey you’re paid bare minimum) and keep looking. There isn’t going to be a single employee outside the board at intel who isn’t browsing for a new job given the wage disparity. Everyone knows this. If you have a brilliant improvement for process keep it to yourself and take it to the next job. A low level position at a startup pays more than a senior role at intel at this point. It’s a laughing stock and the most recent statement at the last earnings was more layoffs and wage freezes to give more shareholder value.
They already have 0 serious talent and nobody gives a fuck there, reasonably so. “You’re going to lay me off from by far the lowest paying company in tech if I don’t give 100%?” “Ok!”.
It’s such a joke of a company and has been for 20 years now and the investors have made it clear they want another 20 years of this.
https://www.indeed.com/cmp/Intel-Corporation/job-titles/Inte...
https://www.glassdoor.com/Salary/NVIDIA-Signal-Integrity-Eng...
It’s not an engineering run company like the successful big tech companies. Everyone working at intel is there temporarily and there’s no reason to build a long term career there. You jump asap.
I don’t see the shareholders voting for a reasonable tripling (quadrupling?) of engineer salaries anytime soon given the short term thinking track record. Which means I think the only way out is for an entirely new engineer run company to appear.
Intel have run on momentum to this point. They actually have 10nm foundries operational due to some level of talent continuing to persist over the past 20 years. They can’t seem to get much further past that (smaller nodes than that have reported terrible yields). They have more or less competitive cpus for sale (although they clearly hit a wall in that aspect to the point the latest CPUs bench exactly the same or worse than their own previous generations).
I think the momentum has definitely run out and the talent is gone at this point. The momentum is now in the other direction. Morale is dire, no one working there gives anymore of a fuck about their job than the kid pushing trolleys at the grocery store. Their CPUs are not advancing with each generation at all anymore and they cannot get reasonable yields on newer fab nodes.
Intel's innovate or die culture died years ago
Inertia has taken its time but the company itself is catching up
There are many comeback stories, Apple being a particularly great one.
It's silly to frame it this way, but even though the US and allies pay gobs for planes like the F-35, it's also what continues to allow the stream of taxable money to continue.
I view Intel in a similar light. Even if they stay inefficient, there will still be money for a long time because the West needs a way to be self-sufficient. The cost of not having a backup is too high (tens of trillions of dollars when I last looked into it).
It's a weird market that doesn't obey a lot of the conventional rules of capitalism. Yes, it would be better if Intel were able to compete without government subsidies, and maybe they will. But even if they don't it's very unlikely they'll totally crater because of how central this "power" is, and TSMC will never cede full control of their latest tech until the UN recognizes Taiwan as a distinct entity from China (imo).
It is cheaper per unit then some 4th generation aircraft now.
That's much cheaper than, say, Pat Gelsinger whose total comp was $86,000 per hour in 2021.
Intel needs to change its internal culture to get back on a path towards success. I don't know if any CEO is capable of fighting and winning that battle within the span of a few years, and time is running out.
Part of what impresses me about TSMC are some of the anecdotes that have trickled out about how they approach process R&D. TSMC runs experiments 24/7 with each team building on the results of the previous shift. This allows it to iterate much faster than many competitors. It is that kind of dedication and drive that Intel needs to push its leading edge manufacturing capabilities back into world class status, but that isn't the kind of change that can be achieved purely by throwing money at the problem.
Steve Jobs was particularly good at playing The Long Game; something American CEOs generally suck at.
At its core, Intel (like TSMC) is more of a manufacturing company than a tech company.
I worked for a Japanese corporation, and most of their initiatives had decade-long timelines.
US companies tend to have 3-month-long timelines (I have no idea why /s).
I don’t understand this platitude because the largest and most profitable businesses in the world, US tech and pharma companies, have very long timelines.
Amazon took 20+ years to literally build infrastructure, the early investors of Facebook were not looking for a 3 month payday, they invested billions for the 10+ year payday.
See the HN threads for when Zuckerberg paid for Instagram and WhatsApp, with so many wondering how he would recoup the enormous investment.
Apple probably plowed billions into watches AirPods and M processors for years before it saw a return, going so far as to lend money to TSMC for many years with no guarantee of TSMC being able to make the product they wanted.
Tesla, Alphabet’s Waymo bet, Uber, Nvidia, so many publicly listed businesses have a years long timelines
Same for US pharma, it takes decades to get a product to market, with a high chance it never does.
Steve Jobs had a lot of failures. It's just that his successes were so successful, that people forget about the duds.
These visionaries don't just have plans, they have fiendish plots, that would make a Grand Vizier hang his head in shame.
But they move on, and that's when the "quarter-miners" inevitably move in.
I don’t think “US” is a useful qualifier, publicly listed businesses all over the world have the same short-termism without the right ingredients.
The company I worked for, is a pretty "old-fashioned" one, so may no longer be representative of the standard, but it didn't matter who was in charge. All planning was done in 10/5/3/1 year process; with the goals getting "sharper," as you approached zero.
It was not particularly conducive to software development, but worked fairly well, for most of the stuff they made.
Cook became CEO in 2011. Apple Watch started development after Jobs’ death. It was announced in 2014. AirPods were 2015. M-Series chips shipped in November 2020.
But I also never considered Tim Cook a "quarter-miner." In fact, I think that he's known for standing up to them.
https://www.tomshardware.com/tech-industry/intel-might-be-to...