Known as the ‘Father of the Pentium’, Vinod Dham spent 16 years at Intel, managing multi-billion dollar projects including the 386, i486 and Pentium processors. He turned venture-investor when he sold his chip design start-up, Silicon Spice in 2000 for $1.2 billion. As the founding managing director of IndoUS Venture Partners, an early-stage venture capital fund, focused on investing in India and advisor to funds and entrepreneurs, Dham talks about his experience of working with Andy Grove at Intel, the entrepreneurial ecosystem in India and the paradigm shift that artificial intelligence will bring about in our lives.
>> You have closely worked with stalwarts like Gordon Moore and Andy Grove early in your career. What were the things that you learnt from those legends?
Gordon was a visionary in the true sense of the term. Back then, Intel had a programme called Strategic Long Range Planning (SLRP), under which the company would set the direction it wanted to move in, every year. At one of the SLRP meetings, there was a suggestion to develop a 256-bit chip, but the-then CFO felt that Intel could do without such a chip as it had already got 8-bit, 32-bit, 64-bit chips and, at the most, it would probably need to double up to 128-bit. At that point Gordon said, “We should continue to develop this project because somebody will figure out how to use it.” It was amazing foresight from Gordon and he didn’t need spreadsheets to tell him that he was right. Look at where we are today. The world is talking of 256-gigabit doubling to 512-gigabit! Similarly, in 1965, in an Electronics magazine article, Gordon had predicted the invention of personal computers, cell phones, and self-driving cars. That’s a true visionary and only last year we celebrated the 50th anniversary of Moore’s Law.
Coming to Andy, his role was best captured in an interview that Gordon gave to Fortune magazine, more than 15 years back. Gordon was asked if Andy was a very tough person to get along with at work. The reply pretty much summarised what Andy was all about. Gordon said, “Without Andy, we would have been a gentler and a kinder company, but with Andy we are a very, very big company.” (During Grove’s tenure, Intel grew its annual revenues from $1.9 billion to more than $26 billion)
Andy Grove was all about focus and execution. Intel had a programme called `Objective and key results’. The idea was to reflect upon on what the company wants to accomplish during that quarter and each person had a certain task to support that final accomplishment. Each individual would be rated in the end. During one such assessment, I accomplished a success rate of 80% and expected kudos to come my way. Instead, I got a terse note from Andy asking me to explain why I couldn’t have done better. “Are you questioning me that I got 80% done?,” I asked Andy at the meeting. His reply was, “No. What I am questioning is how much sandbagging did you do?” I replied, “What do you mean?” Andy explained that anyone who got 80% was too loose with his own expectations. “Now, are you saying I should have failed?,” I asked him. His response was, if an employee got a rating of 50 , it means he is clearly not doing his job, 65 meant that he was pushing himself but falling short and 80 meant the person was not pushing himself too hard. Such was Andy’s level of intensity to get the right results. Today, lot of start-ups and companies fail not because they lack a good idea, but because of the inability of its people to execute. Andy was good at focusing on what the objectives were and monitored achievements in a quantifiable way to ensure that Intel was making progress.
>> You left Intel in 1995 after 16 years, and went on to become an entrepreneur. Was the transition easy?
One of the best decisions I have ever made was to join Intel and the next-best decision was to leave Intel. After quitting Intel, I joined NexGen, which was taken over by AMD. I didn’t like the culture at AMD and when I got a chance to move away, I did. Though, I was curious about venture capital, by then I had realised that to have the moral authority to guide others was to go through the process oneself. That’s how Silicon Spice came about. In 2000, Broadcom bought the company and that gave me an opportunity to look at how I could partake in the IT story that was unfolding in India.
>> What kind of opportunities did you decide to look at?
I made a trip to India in 2001 when I met quite a few business leaders including Azim Premji of Wipro. Premji, whose company used to supply software to Silicon, told me not to foray into software, and focus on making chips instead. That’s how New Path Ventures came into being. The fund operated like an incubator by funding a couple of ideas in the hardware design space with development teams based out of India and sales and marketing teams in the US. The fund invested in companies such as Telsima (WiMAX chips for broadband), Montalvo Systems (low-power chips) and InSilica (chips for multimedia and digital printing processors). But the fund didn’t really do that well. That led to the idea of a cross-border India-focused fund, IUVP, in 2006 to back start-ups in India, catering to the needs of India’s growing consumer class. I thought if I could create millionaires in India like we created in Silicon Valley, it will create a wave of its own. And I am really delighted to tell you that, that’s what has happened in India. The country, in my opinion, needs innovation, start-ups, entrepreneurship, and venture capital, because we have more than 50% of the population below the age of 35. We need to create jobs for them, we need to create economic growth and it is not going to come from just looking at a few big companies. It is going to come from a lot of small companies that will become big one day. But even if some of them fail and do not make it big, it is still a good thing. Because that effort itself will make India great, and that is what has made the United States of America great.
>> But do Indian venture capitalists take the same level of risk like their peers in Silicon Valley?
Venture capitalists in India have shown a lot of appetite for throwing a lot of money into some companies. I don’t think that they are holding back. If they are holding back, it’s largely because entrepreneurs are yet to come up with some audacious ideas. Take the case of Hyperloop. It is hard for me to comprehend sitting here how is it going to get me from SF to LA in 30 minutes, right? These are amazingly big ideas, though I don’t think our Indian entrepreneurs are yet at that stage of evolution to think that big.
>> But just about every other idea is getting funded by VCs. So, is innovation getting loosely defined?
No, I believe multiple things have happened. One, Moore’s Law is reaching maturity and is creating a huge inflection point in the entire industry. You see what is happening to HP, Dell EMC, IBM, and even Intel. This is where hundreds of thousands of employees used to work. Now, the new tech giants like Facebook and Google are not employing as many people as the old ones used to, it is roughly about half. The remaining half is being picked up by start-ups which are growing at a much faster pace. The amount of money invested in Silicon Valley today is multiples of what it was at the peak of the dotcom boom. More money is being invested in start-ups today and this is good, because they are able to absorb many people as the new tech giants don’t need as many of them.
>> Does that have a larger implication?
Look at the US. Why is Donald Trump being given this position of power? Who are these people who are doing that? These are the people who feel disenfranchised. They are blaming trade and immigration. But the fact is that they also have been impacted by the loss of jobs due to technology in a very big way and nobody is talking about that. In fact, they are about to lose many more jobs than ever before in the history of mankind, because we have reached this confluence point in computing, that has moved on to cloud computing and data, that comes in zillions of bytes every day. Billions are plugging into their computers and asking just about every other question and that is what is making Alexa smart, the so called Artificial Intelligence (AI).
I am not worried about drones and robots while walking on the street because that is not going to happen for a while. Even self-driving cars are some time away. I am not worried about any of that, but AI is definitely coming, which comprises of all these machine learning, deep learning, data analytics, and big data. If they start replacing jobs, which they will, then forget about trade, immigration or globalisation; even if you put walls around people, we will still have mass unemployment because there are no jobs for them. Because there is so much of efficiency and productivity in what we are going to do. So, we have a very big challenge in creating a society, which will thoughtfully accommodate a certain number of people who are going to be unemployed at any given point of time.
>> Is that the dangerous world that you keep talking about?
Absolutely. It is a dangerous world because we don’t know how to deal with it. Elon Musk and Stephen Hawkins have declared that it is dangerous for human kind because they are afraid that, at some point, machine intelligence will supersede human intelligence. Though we are far away from that, still, in my opinion, a bigger worry is how will the societies operate in environments where such efficiency exists, whereby a large section of the population will be unemployed for no fault of theirs. Not to mention the disparity. Already data scientists, who are just three years out of college, are drawing annual salaries of $250,000 to a million dollars. If this phenomenon continues over the next 30 years across the globe, you don’t know what kind of a future we will be staring at.
>> So, how does one cope?
Think of this world as connected through the internet. Knowledge, information and goods will flow from one country to the other wherever they are the cheapest. By erecting walls or creating trade barriers, we cannot stop innovation. These are the laws of physics, you can’t go against them. We have to learn to live in this new world where such a situation is going to be a reality.
>> Going back to the earlier question, how would you then define innovation and is it different in the Indian context?
Innovation doesn’t necessarily mean you build something new. Innovation is meeting a certain need that is not being met at a given point of time by building upon what already exists. And that’s where I will answer the second question, how is India doing compared to SV. India can start from the same place that America is starting, that is, you are building upon what exists. As long as you can offer something better, faster, cheaper, more user-friendly, and more efficient, to me, that’s innovation. And I think India doesn’t need to think that we are behind. We are catching up fast and will probably be pretty contemporary with America. But what India doesn’t have and SV has are two things: one is the infrastructure and second is the ecosystem. When I am talking of an ecosystem, it’s not deep-pocketed venture capitalists. What I mean by an ecosystem is, for example, Cisco, in its first 10 or 12 years of existence, it acquired 84 start-ups. Pursuing R&D in a big company is tough, as big companies tend to focus more on quarterly performance, and even if it has a group of people working on something new, they are the unsung heroes, who are equally bright, but get frustrated saying, “I am not being looked after” or their egos are not getting massaged. So, there is this inherently built-in resistance for innovation in a big company.
>> Why does India lack the ecosystem? Is it because the big corporates are complacent or are CEOs ignorant about how technology is going to impact them?
I would say there is an understanding issue because, you have a mindset only when you have understood something. For example, brick and mortar companies may feel threatened by e-commerce in India. In the US, they try to do both. Take the case of Amazon, which is now opening physical bookstores. They have realised that these stores can double up as a shipment place, and also a place where potential customers can look and have a feel of the products that they have to offer. So this kind of thinking is yet to happen in India.
>> Will Indian innovation be very different from that in Silicon Valley?
If you want to create something sustainable, you need to have continuous improvement. Look at what Americans do. Take any product, even a bicycle, they will take it to the farthest extreme that you can imagine. They will make thicker tyres, thinner tyres, bigger tyres, lighter tyres, aircraft material and what not. They will put every conceivable technology and thought process to create multiple categories. There is a constant focus on improving things. But I believe India has a young crop of entrepreneurs who are not taking to jugaad and instead, are looking at creating something sustainable. India resides at this intersection of digitisation that has happened with rapid computerisation and progress on the health and life sciences front.
I mean, the most precious thing we have is real-time. I don’t want to know what the weather is going to be at a particular point of time, but I want to know if there would be an avalanche in about 12 hours. I need a little bit of advanced information so that I can prepare for it. And unlike Fab, you don’t need $5 billion to start-off. Given that in India, they don’t risk capital, such technologies will work well. It perfectly fits within India’s ecosystem: with low risk, less capex and great knowledge source, you can still create new technologies. Unlike in the US, where doing research sometime becomes very hard with the FDA, you can do a lot of research in India and create life-saving technologies. So, what is currently happening in India is what the country needs now. But 10 years hence, you will see some totally new areas where data sciences and cloud computing will play a big role. Sure, you can’t do innovation like Silicon Valley does, but you will see innovation in India that goes beyond just focusing on the consumer.