Donald Luskin

by I Am John Galt

  So the real-life Mr. Mouch wants wider powers? The voters have said, “You’ve done quite enough already, Mr. Mouch.”

  Chapter 7

  The Capitalist Champion

  T. J. Rodgers as Francisco d’Anconia, the modern Renaissance man and agent provocateur for capitalism

  Francisco could do anything he undertook, he could do it better than anyone else, and he did it without effort. There was no boasting in his manner and consciousness, no thought of comparison. His attitude was not: “I can do it better than you,” but simply: “I can do it.” What he meant by doing was doing superlatively.

  —Atlas Shrugged

  Who is Francisco d’Anconia?

  In Atlas Shrugged, Francisco d’Anconia is one of John Galt’s inner circle in organizing the “mind on strike”—persuading men of ability to walk away from an immoral collectivist economic and political system, thus hastening its collapse.

  D’Anconia is one of the world’s wealthiest men, heir to a South American copper-mining business. From childhood he shows extraordinary ability in everything he undertakes, from athletics to academics to business. His ambition is to be worthy of his inheritance by expanding the already enormous d’Anconia Copper empire.

  But when Galt persuades d’Anconia to help him with his strike, d’Anconia acts as an intellectual provocateur—brilliantly skewering collectivist politicians and businessmen, and inspiring beleaguered industrialists. In attempting to recruit the nation’s leading steel executive for Galt’s strike, d’Anconia delivers at a cocktail party an impromptu treatise on the meaning and morality of money that is Rand’s most sparklingly compelling writing on the virtues of capitalism.

  “Is this the headquarters of a major chip maker in Silicon Valley or the Football Hall of Fame in Canton, Ohio?” we wondered to ourselves as we stood amid a shrine of Green Bay Packers memorabilia in the second-floor Lombardi Conference room on Champion Court in San Jose, California. In front of us, a 15-foot expanse of wall paid tribute to Packers greats through the ages, every inch covered with autographed 8 × 10 framed photos arranged neatly in alphabetical order with an engineer’s precision. Behind us, a plaque commemorating Bart Starr’s 35–10 victory over the Kansas City Chiefs in Super Bowl I hung next to an engraved homage to the famed 1967 NFL Championship “Ice Bowl” game played against the Dallas Cowboys on rock-hard Lambeau Field during an arctic blast that had stadium thermometers registering 15 below zero. Toward the far window, a Packers lava lamp stood at one end of a vast conference table like a kitschy Buddha overlooking his reverent temple of green and gold.

  Suddenly out of nowhere appeared a sandy-haired, compactly athletic figure dressed in a navy blue Dartmouth College jogging suit over a bright yellow T-shirt. He could have been the head coach coming in fresh off the practice field to do a pregame interview with ESPN. “Hi, I’m T. J. Rodgers,” he announced. “Let’s go to my office.”1

  Dr. Thurman John Rodgers2—known universally as T.J.—commands a small but fertile plot of Silicon Valley’s vast technology landscape. The company he founded in 1982, Cypress Semiconductor, generates $268 million in cash flow on $850 million in revenues with 3,600 employees worldwide. While its $3.4 billion market cap seems small beside next-door giants like $115 billion Intel, Cypress is world leader in universal serial bus (USB) controllers and maintains a position at the vanguard of technological innovation with the world’s only programmable analog and digital embedded design platform, having sold nearly a billion units.

  As if on cue, a muffled bark from the reception area prompted a quick explanation from T.J. “It’s my dog,” he said matter-of-factly. “His name is Dollar. He’s a Jack Russell.” Why the name? We free-associated to the fact that Ayn Rand wore a golden dollar sign pin on her lapel for decades, and that a golden dollar sign hung high above Galt’s Gulch, the hideaway portrayed in Atlas Shrugged as the safe haven for the country’s greatest industrialists, on strike against collectivism. That dollar sign in Galt’s Gulch was a gift of Francisco d’Anconia, the key character in Atlas Shrugged of whom T. J. Rodgers is a living embodiment.

  D’Anconia was a superb industrialist—as is Rodgers, the founder and longtime CEO of a leading semiconductor manufacturer. D’Anconia was superb at everything he undertook, in a wide variety of fields—as is Rodgers, the double major in chemistry and physics who owns vineyards and makes sublime wine. And d’Anconia was a flamboyant and articulate agent provocateur for capitalism and liberty—as is Rodgers, a fearless and controversial critic of government regulation, corporate welfare, protectionism, and political correctness.

  These attributes come together in Rodgers, as they do in d’Anconia, as an integrated whole. He runs his highly successful business in accordance with his philosophy, and his philosophy in turn is informed by the realities of his business, which itself is informed by the realities of the physics of silicon.

  This integration is central to all of Rand’s greatest heroes. In Atlas Shrugged, d’Anconia and his two best friends, John Galt and Ragnar Danneskjöld, went to college together, where they all double-majored in physics and philosophy. As their teacher observed, “It is not a combination of interests one encounters nowadays.” But it made sense to d’Anconia. Planning a career in the copper business, he declared, “I’ll study electrical engineering, because power companies are the biggest customers of d’Anconia Copper.” For similarly practical career reasons, Rodgers would study the same thing; in fact, he earned a PhD in it. Francisco continued, “I’m going to study philosophy because I’ll need it to protect d’Anconia Copper.” For similarly practical reasons, Rodgers studies the philosophical underpinnings of capitalism, and devotes enormous energies to defending them and evangelizing for them.

  This integration can be seen in the short list of Cypress Core Values on display in the headquarters building where Rodgers makes his office. They are an embodiment of Rodgers’s personal code.

  We thrive on competing against the world’s best.

  We do not tolerate losing.

  We are smart, tough, and work hard.

  We tell the truth and don’t make excuses.

  We value knowledge, logic, and reason.

  We admit to solve problems quickly.

  We deplore politicians.

  We choose “Cypress wins” over “looking good.”

  Rodgers’s basic logical premise is the concept that, in his own words, “Freedom is good, period. End of discussion.” He doesn’t need economic arguments to accept freedom as a fundamental moral good, but he also recognizes that freedom and wealth go hand in hand. He cites empirical studies from the Fraser Institute showing a clear, direct, and universal correlation between objective measures of freedom and economic prosperity among the nations of the world. The freer you are, the wealthier you are as a society. Both are good things, and you can’t have the latter without the former. Many of his battles in the arena of public opinion have centered around the misguided notion that somehow money is inherently bad, money corrupts, and money is the root of all evil.

  Wearing his signature wire-rimmed owl-round glasses, Rodgers slips easily into his chair—and the conversation. He weaves a complex verbal tapestry from threads of amusing anecdotes and hard facts peppered with mild profanities, including his catchphrase—“bullshit.” The experience is as entertaining as it is informative. Assertive but not bullying, persuasive without coming off as salesy, T. J. Rodgers glows with the gravitas found in those who are truly at ease in their own skin. When listening to Rodgers, you get the feeling he’s not trying to convince you of anything; he’s just calmly reciting the truth for those who choose to hear.

  The Bad Boy of Silicon Valley

  “If you look at second row up, second one from the right—‘The Bad Boy of Silicon Valley,’” begins Rodgers, pointing to an office wall with over a dozen framed magazine covers featuring him, “I got my picture on the cover of BusinessWeek for being the bad boy where I said we were losing to the Japanese because we had crap
py quality and didn’t manage our companies as well, and it had nothing to do with government subsidies, and government subsidies will only make it worse.”

  Subsidies, or what T.J. refers to as “corporate welfare,” are a hot-button annoyance for the 62-year-old CEO. He has testified before Congress against government protectionism and pork-barrel spending. He even wrote and published a “Declaration of Independence” from corporate welfare, decrying a government tax burden totaling 35 percent of gross domestic product (GDP) and supporting major budget cuts, “even if it meant funding cuts for my own company.” The proclamation was signed by nearly 100 CEOs, including Jerry Sanders of Advanced Micro Devices (AMD), Wilf Corrigan of LSI Logic, and legendary venture capitalist John Doerr of Kleiner Perkins Caufield & Byers.3

  “You listen to the CEOs of the really big companies talk blather about free markets and you think okay, I’m CEO, they’re CEO, we’re brothers, we face the same challenges: government intervention, socialism, in addition to real competitors, and so we ought to be kindred spirits,” explains Rodgers. “And yet when you interact on certain things with those CEOs, you see horrible things happening. They’re trying to lock Honda out of the United States for chrissake, because they can’t make cars well enough. They’re going to Washington to get their fair share of the pork.”

  Over the years Rodgers realized that the vast majority of his fellow CEOs traveled a distinctly different arc to achieve their positions of power. He has very little in common with them. Rodgers built his business through entrepreneurial effort, using his considerable mental power to dissect the very substance of nature down to the atomic structure of silicon itself and then used that knowledge to bring new value into physical creation.

  Most other CEOs rose through the ranks of giant bureaucracies by playing politics, currying favor, building a power base, and not rocking the boat. “The statist businessman wins by using the state to gain competitive advantage,” Rodgers once wrote. “His perks—corporate jets, limos, lavish expense-account dinners—are the rewards for climbing the ladder.”4 Their primary focus is on holding on to the power and perks of office even at the expense of their own companies.

  By contrast, Rodgers flies coach. He has no time for corporate power struggles. He’s focused on creating competitive products in the fast-changing world of high technology against a constantly changing field of hungry start-ups and international competitors. “They aren’t your buddies and they aren’t your kindred spirits,” Rodgers finally concluded about many of his fellow CEOs. “They have the same title as you and that’s it. And over the years, you find out that there are only a few real free-market capitalists who happen to be CEOs, very few.”

  Perhaps the sharpest example for T.J., and the one that seems to rankle him the most, was the spawning of a consortium called SEMATECH (Semiconductor Manufacturing Technology). Billed as a “bold experiment in industry-government cooperation,”5 the very description sounds like socialist propaganda to Rodgers’s ears—pure anathema to his core beliefs in free-market competition.

  In 1987, the U.S. semiconductor industry was facing tough competition from Japanese chip makers who, according to Rodgers, operated well-run companies in a benign corporate environment with a good tax policy. Instead of upping their game to compete head-on, 14 U.S. technology companies, including big names like Intel, Hewlett-Packard, Motorola, and Texas Instruments, formed SEMATECH and went crying to Washington for help against the supposedly unfair Japanese threat. After the heavyweight consortium played the national security card by claiming that our military would be detrimentally impacted if the U.S. semiconductor industry were harmed, the government eagerly ponied up $100 million a year in subsidies for the group.6

  It was more than double Cypress Semiconductor’s revenues that year. Rodgers wanted nothing to do with it. He likened the group to “General Motors trying to become more efficient by having a centralized fin-design department.”7 His public denouncement and refusal to play along with industry leaders in their conspiracy to sucker the American people earned him an outsider’s reputation. Or as he puts it with an air of subdued pride, “Well, ‘bad boy’ of course is walking away from free government money.”

  From the Gridiron to Silicon Valley

  It’s hard to imagine a more genuine American success story. T.J.’s father was literally the son of a sharecropper who farmed cotton in Alabama during the Great Depression. He was in ninth grade before he got his first pair of shoes. He never graduated from high school. The day after Pearl Harbor he left the drudgery of the farm and signed up for World War II and was gone for five consecutive Christmases.

  The Army saw fit to make T.J.’s dad a mechanic, and he fought under General Douglas MacArthur in the Pacific. He developed a lifelong hatred of the Japanese, which makes T.J.’s own opposition to government subsidies to fight Japanese competition all the more remarkable. “I remember my dad waking up with nightmares about World War II, as late as the 1960s,” recalls Rodgers. “John Kennedy was already president and my dad was still having bad dreams about World War II.”

  T.J.’s mother graduated from the teaching program at the University of Wisconsin at Oshkosh and began her career in 1940. She and four other single teachers shared a room in a hotel in Sheboygan, Wisconsin. “My mother comes into the hotel and there’s this ‘cute lieutenant’ in the lobby who’s recruiting for World War II,” relates Rodgers. “So my mother starts flirting with the guy, and talks to him and fills out paperwork and stuff, so she has more face time with him. Then she gets a letter: ‘Thank you very much for enlisting. You will report to Truax Air Force base in Madison, Wisconsin.’”

  The military tested her and found she had strong intellectual aptitude. With her college degree and teaching background, she was sent to St. Louis University to learn about electronics—the new technology of wireless communications and radar. She spent the rest of the war teaching radio electronics to military technicians.

  T.J.’s parents met fortuitously at Camp McCoy in northern Wisconsin when they were both being processed out of the army after World War II. They settled back in Oshkosh, where T.J. grew up in the 1950s and 1960s surrounded by a culture of football—and the Packers were the only game in town.

  It was T.J.’s mother who sparked his interest and passion for electronics. “When I was in third grade,” remembers Rodgers, “she brought out her books on vacuum tube oscillators and detectors, circuits, and other radios and got me interested in electronics, and that’s what I always wanted to do.”

  He also credits his mother with instilling in him a logical temperament, although as a sort of antimodel. “My mother was smart—excellent verbal skills—and illogical,” recounts Rodgers. “If I argued, I’d either get an emotional, screaming response or I’d get some bullshit argument that was ridiculous, so my hackles go up with that kind of treatment.”

  This is one Silicon Valley titan who was never a geek. T.J. was a high school football star who played in two championship games and was recruited to the Dartmouth gridiron for college. “In football, there’s none of the touchy-feely shit,” Rodgers explains about his passion for the game, smiling. “You’re down on your face in the mud. You know the guy you’re supposed to block for has been tackled. The guy who tackled him is laughing at you, and the coach says, ‘Pretty shitty job.’ . . . You know, I don’t know if you can start if you can’t turn that around.”

  Despite a punishing athletic training schedule, he breezed through his chemistry courses, earning a major by his junior year. Then for good measure he tacked on a second major in physics because he was “bored with chemistry.” His last term, on what he calls a “lark,” he took an electrical engineering course.

  “I got a physics degree. I got a chemistry degree. And this electrical engineering stuff has got to be bullshit,” he thought. “It wasn’t; it was hard,” he realized, which is just the kind of challenge that inspires a guy like Rodgers. “It was extremely interesting and it was a course using chips from Silicon
Valley to make circuit boards that actually did stuff.” After building a light organ for his class project that flashed colored Christmas lights based on the various sound frequencies from his home hi-fi, he was hooked.

  Graduating second in his class, “back in the days before everybody got A’s to make ’em feel good,” he was accepted in the graduate physics program at Stanford University prior to rediscovering his true passion for electronics. Switching majors at Stanford, as he would soon find out, was no small feat. At one point T.J. recalls being told by someone in the administration that “they were Stanford and I wasn’t, and you didn’t just move from one division to another. You’re accepted in physics and that was it.”

  After a persistent networking effort and letter-writing campaign, luck would shine on the budding silicon scientist. The electrical engineering department had just purchased an expensive piece of chip-making equipment to grow semiconductor wafers using exotic gases. The problem was nobody in the double-E department knew anything about the sophisticated chemistry needed to operate the machine. Enter Rodgers, with not only a chemistry degree but a physics undergrad degree to boot. They hired him on the spot. He was in. “I paid my way through college running that machine for that laboratory,” he recalls fondly.

  Rodgers earned his doctorate among the founding greats of twentieth-century technology. He took courses from William Shockley, co-inventor of the transistor, the device that replaced bulky vacuum tubes of his mother’s era and ushered in the microchip and computer revolution. He also studied under J. D. Meindl, who later won the 2006 Institute of Electrical and Electronics Engineers (IEEE) Medal of Honor for pioneering contributions to microelectronics.

  It was a heady time to be in Silicon Valley pushing the bleeding edge of technology. The significance wasn’t lost on Rodgers. “We knew exactly what was happening,” he said about the emergence of microchip technology and integrated circuits. “We knew we were going to conquer the world; we knew it was the revolution.”