Copyright 2009 Investor’s Business Daily Inc.

INVESTOR'S BUSINESS DAILY WEDNESDAY, APRIL 22, 2009 A 3

B Y R E I N H A R D T K R A U S EINVESTOR'S BUSINESS DAILY

Arthur Rock had his own way totakethemeasureof aman.When money-seeking startups

knocked on his door, Rock lookedfor “intellectual honesty” inwanna-be entrepreneurs, not just promis-ingbusinessplans.Rock’s money smarts and guiding

hand turned feisty Silicon Valleystartups into some of the nation’sbiggest technologycompanies.Theventure capitalistplayedakey

role in launchingFairchildSemicon-ductor, one of the first chipmakers;techconglomerateTeledyne;andin-dustrygiants Intel andApple.Aninvestmentbankerbefore turn-

ing venture capitalist, Rock didn’thave an engineering resume thatmight’ve sparked his tech startups.He graduated from Harvard Busi-ness School in 1951, then joined thecorporate finance department ofbanking firm Hayden, Stone & Co.inNewYorkCity.

Chipping AwayRock,now82,hadaknackfor find-

inggems in thebusinessrough.“I invest inpeople,not in technolo-

gy,” Rock said in “Done Deals,” abook from the Harvard BusinessSchoolPress. “Iwasalways interest-ed in investing in people. So I spentalotoftimewithwould-beentrepre-neurs to seewhether theyweremo-tivatedandwhether theywereintel-lectuallyhonest.”Among the scientists and engi-

neersRockbelievedhad fire in theirbelly: Fairchild co-founders Gor-donMoore and Robert Noyce, bothofwhomlaunchedIntel in1968;andApple co-founders Steve Jobs andSteveWozniak.Ina2007interviewat theComput-

er History Museum, Rock sharedhis startup evaluation: “I’m notenough of a technologist to be able

tounderstandwhatmostoftheseen-trepreneurs are about technically.The way I went about it was tospenda lotof timewiththesewould-be entrepreneurs. Themain thing isare they honest? By honest I don’tmean taking money out of yourpocket,but intellectuallyhonest.Dothey see things theway they are andnot thewaytheywant themtobe?”Rock’s roledidn’tendwithprovid-

ing capital, advising on strategy andrecruitingmanagement.As an early-stage boardmember at

a few firms, he showed startupshow to build a business and aim forindustry leadership. With Intel, heserved as its first board chairmanand was a director for 30 years, allthewhileattendingstaffmeetings.“Art consistently tried to build

great companies and did,” PitchJohnson, co-founder of venturefirmDraper & Johnson Investmentand founder of Asset Management,told IBD. “Great venture capitalists,and Art is among those, know howto share a commitment to success.It’s a sports coaching type of skill,motivating and building a desire to

competeandwin.“Artcouldprovidecapitalandpro-

vide advice and guidance. But healso had a third role, by showingcommitment — devoting yourselffor success, disciplining yourself forsuccess, tomake the right decisionsto be successful. That helped himbuildgreat companies.”Silicon Valley, where Rock landed

in the early 1960s, was 3,000 milesfrom Rochester, N.Y., where hegrew up. Born in 1926, he was anonlychild.His father,Hyman,aRus-sian immigrant, operated a candystore, where the boy worked as asales clerk and stocked shelves. Healsopeddledmagazines in town.After graduating fromhighschool,

Rock served in the Army for a yearas World War II wound down. Heattended Syracuse University ontheGIBill, graduatingwithabache-lor’s degree in business administra-tionbeforeearninghisMBA.In 1957,Rock stillworked forHay-

denwhenhe tried to raisemoney tostart Fairchild Semiconductor.Eight scientists left Shockley Semi-conductor to start thenewoutfit.Rock persuaded Sherman Fair-

child, founder of Fairchild Camera& Instrument, to bankroll the start-up. The scientists were called theTraitorous Eight after leavingShockley, and helping unhappycampers start anew was brazen,says Spencer Ante, author of “Cre-ative Capital: Georges Doriot andtheBirthofVentureCapital.”“Inthe late1950s, therewasacom-

pletely different business culture,”Ante said. “Back then if you left acompany (to forma startup) itwas asin. ArthurRockwas the first finan-cier to appreciate the importance oftechnology,andnowleavingcompa-nies to innovate is viewed as a posi-tive thing.”In 1961, Rock left Hayden and

moved to California to form a newoutfit, a venture capital partnershipwithTommyDavis, a vicepresidentat Kern County Land Co. in chargeof its investmentdiversificationpro-gram. Over the next seven years,Davis & Rock invested $5 millionand returned $100 million to their15 or so investors. Venture capital-ists make money when startups gopublicorareacquired.Davis & Rock invested in about 15

firms, including ScientificData Sys-tems, acquiredbyXerox in1969.Rock built trust with key Silicon

Valley people. When Moore andNoyce grew tired of Fairchild, Rockwroteupabusinessplan forIntel.“I raised themoney (for Intel) just

on the telephone in something liketwodays,”hesaid.

Apple In His EyeHe founded San Francisco-based

Arthur Rock & Co. in 1969, and in afew years faced competition fromtech-savvyventurecapitalists.Rock had one big deal left in him.

MikeMarkkula, a formermarketingVP at Intel, asked Rock to hook upwithApple’sJobsandWozniak.At first, Rock was put off by the

twocomputer geeks.But a 1977 visitto the Homebrew Computer Showin San Jose convinced Rock thatJobsandWozniakwere for real.“In this big auditorium, all these

companies were there showing offtheir gear,” Rock said. “Everybodyat the show was around the Applebooth. I could not even get close toseethem.At thatpoint, Iknew,well,maybewehadsomething.”

3 TAKE ACTION:Goals are nothingwithout action. Don’t be afraid toget started. Just do it.

3Many news stories featurelayoffsanddismalunemploy-ment numbers. But morethan 90% of Americans arestill employed. These folks

aredealingwiththe lossof theircol-leagues and the burden of extra re-sponsibilities fornoadditionalpay.Right now, a manager’s toughest

job is energizing his staff, keepingworkers as productive as possible,says Steve Zaffron, CEO of globalconsulting firm Vanto Group. In“The Three Laws of Performance,”which he recently co-authored, heshowshowtoachieve thatgoal.Zaffron has advised 300 firms in

20countriesonthis topic. SanFran-cisco-based Vanto’s clients includeApple, GlaxoSmithKline andHeinzNorthern Europe. He and ClotaireRapaille, a medical anthropologistandpsychologist, share tips.00 Clear it up. “Share informationwith people with whom you don’tnormally share,” Zaffron said.Speak to employees directly andmake sure you address what’s ontheir minds. Otherwise, they’ll be-lieve therumors theyhear.00 Consider perceptions. Whenwe do something, it usually makescomplete sense tous.Butwhenoth-ersmake choices that puzzle us, wemight ask, “Why are they doingthat? Itdoesn’tmakeanysense.”Understand that situations appear

differently to each of us. Put your-self in employees’ shoes. Then theirresponses or actions will makemoresense.Zaffronsuggests askingyourself: “What processes, dia-logues and meetings can I arrangeso that people can feel like co-au-thorsof anewfuture, notmerely re-cipientsofothers’decisions?”00 Pay attention. Listen for oppor-

tunities fromstakeholders at all lev-els and functions, inside and out-side the firm, Zaffron says. He onceworked with Reebok when it facedfallingmarket share.Headvised theCEO to sit down with departmentsto listen to their ideas. Those ideasled to expansion outside of shoes,intonewfitnessareas.00 All for one. Teach employeesthat by doing their jobswell, they’rehelping lift the firm. “Remember,leadership isn’t a function of posi-tion,”Zaffron said. “Leadership canbeprovidedbyanyone.”At the Ritz-Carlton hotel chain,

former President Horst Schulzetreated each employee’s job as keyto achieving the goal — pleasing thecustomer, Rapaille told IBD.Whenthe Ritz opened a new hotel,Schulze would work as doormanforpart of theday, thenwashdishesand clean rooms alongside employ-ees. He’d talk to them about howtheir job performance directly im-proved customer satisfaction andthe entire hotel chain’s success. Hetaught themthateachwasa leader.00 Commit to integrity. Do whatyou say. It sounds easy, but manycompaniesdon’t, saysRapaille,whowrote“TheCultureCode.”Years ago,Rapaille consultedwith

AT&T, where the motto was “rightontime.”But itsmanagers frequent-ly startedmeetings 20minutes late.“Do you really care about ‘right ontime’ornot?”heasked.“The airlines are a bad example of

this,” Rapaille said. “They saythey’re concerned with security,but then someone tests their systemby easily walking on board with agun. So customers know they’re notreallyconcernedaboutsecurity.”Gloria Lau

IBD’S 10 SECRETS TO SUCCESSInvestor’s Business Daily has spent years analyzing leaders and suc-cessful people in all walks of life. Most have 10 traits that, when com-bined, can turn dreams into reality. Each day, we highlight one.

LEADERS & SUCCESS

Energize The Employed

A Gem Among Venture CapitalistsGet Out Front: Arthur Rock saw early that Intel and Apple were winners

Rock,atCalifornia’sComputerHisto-ryMuseum in 2007, spotted Apple’swizardryat a computer show in1977andknew“wehad something.”

Rock’s KeysWhat:Helped land themoneyto start chipmakers FairchildSemiconductor and Intel.How: “Art understoodwhatsemiconductors couldmeanback in the late ’50s,” said PitchJohnson, venture capitalist.

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