Avram Miller, a well regarded Silicon Valley luminary, has recently published a memoir which chronicles his journey in the world of technology. It is called, The Flight of a Wild Duck, which is how Intel’s CEO, Andy Grove referred to him because Miller would always chart his own course. This included founding Intel Capital, which became the most successful corporate venture group, and playing a leading role in the creation of residential broadband. The book is full of interesting stories of key figures in the tech world and well as important lessons.
“There were a number of reasons why I wrote this book. I was in the room when many important things were decided and I had a lot of stories. But I also felt that my life story might be an inspiration. Having worked as a merchant seaman, and without any university background, I ended up as an Associate Professor in Medicine at the age of 29. Having transitioned to work in the computer industry, I was responsible for a large engineering group at Digital Equipment Corporation and then later joined Intel where I was one of 28 corporate officers. My book explains the role that risk taking, creativity and institution played in my success. I hope my book will encourage others to break from more traditional approaches.”
Miller was deeply rooted in industry change, witnessing the shift from minicomputer to the PC to the internet. “I thought of myself as somebody who was strategic and visionary,” he says. “But I understood that execution was paramount — I saw Intel was an execution machine which is why I joined that company in 1984. My success there resulted from the combination of both my and Intel’s capabilities.”
But Miller’s impact at Intel wasn’t just on the computer front. In 1991, he cofounded Intel Capital, the company’s corporate venture arm that invests in early stage technology companies— some examples are Verisign, Broadcom, Geocities, CMGI, which played important roles in creating today’s internet.
“I felt like Intel was too focused on microprocessors for personal computers and wanted to expand Intel’s business in a variety of ways — acquisitions, strategic alliances, joint ventures, early stage, minority investments,” he says.
After some trial and error, Miller and his team decided to focus on early-stage investments. Soon they had created a process with parameters around capital, looping in finance and legal to sign off on all investments, and fleshing out a robust team that covered everything from e-commerce to media.
Through these experiences, Miller recognized four essential ingredients for a successful venture: opportunity, strategy, execution, and reward. “Whenever I would go to startups and they would pitch me, I would make them do this. If I liked the opportunity, I wanted to believe in the strategy. And I would always ask, ‘What other strategies did you consider?’ Because if they didn’t consider any others, I wasn’t interested. A lot of people in investment decision companies like to talk about the team. That’s important, but you can change the team. I’d rather have a bad house in a good neighborhood than a great house in a bad neighborhood. I can fix the house.”
Here, Miller breaks down the four elements he looked for when investing in companies:
As Miller explains, you can’t create opportunities — you have to recognize them. “A lot of things happen between industries,” he says. “The big opportunities are where different things converge. That’s where I played a big role because I was willing to go out and understand and orchestrate.”
When I invested in early stage companies, the most important thing was believing in the potential opportunity. If I did not believe in the opportunity, I stopped the meeting.
There is usually more than one way to pursue an opportunity. When a company explains their strategy to me, I always asked them to tell me about the other strategies they considered. It is very important to consider the various approaches that can be taken. One piece of advice I give entrepreneurs just starting out is to think more and do less. This is very important at the beginning of building a company. Once you start down a path, it is difficult to change.
You can have a wonderful opportunity and a great strategy but if you can execute it well, it does not matter. This is where things like having a strong team matter.
If you have a great opportunity, an excellent strategy and perfect execution you expect a great reward, but that is not always the case. The reward will be a function of how much investment was needed and what the terms of the investment were.
Creating Residential Broadband
The introduction of residential cable isn’t just one of Miller’s most notable contributions — it’s a lesson in seeing an opportunity before it knocks.
“I realized in 1992 that we would really need to have high speed networks at homes. I watched people stay after work to use the high speed networks of their offices to get on AOL. Instead of work at home, it was home at work.”
Figuring out the puzzle of getting broadband at home meant Miller had to learn about the cable system, and not just the business angle. As a self-proclaimed “pretty geeky guy,” Miller delved into the bits and bytes to understand how it would be possible to do a high speed network using cable.
“I have this flash of insight, and I can see it all. But if it was just me, nothing would have happened. I was able to first convince my boss, Les Vadász and then Andy [Grove]. Once I got their support, I was able to get organizations in Intel devoted to this objective.”
“It wasn’t so easy to convince these cable guys that they weren’t in the television business, but when I finally convinced them that people might want to have their PC connected to the network, they said, ‘Great, but we’re going to supply the box they use to connect to the network and just charge them every month.’”
Miller had to convince John Malone and other industry heavyweights that it would be smarter to go with retail computer companies who could sell their product as well. “When people talk about broadband as the cable modems and DOCSIS — which was the standard developed after we started — they don’t have any clue about all that had to happen.”
“I believe that corporate venture is a strategic, not financial, function of a corporation. If you’re just looking to make return on your capital, you’re probably better off investing in venture funds.”
For Miller and Intel Capital, corporate venture is a tool for understanding and implementing strategy. It’s the arm that fuels corporations to figure out new industries and adjacencies that would not otherwise have been discovered. He says when you start prioritizing the money and thinking like a regular venture fund or thinking like any financial investor, indifferent to industry, you lose the strategy behind supporting the needs and goals of the corporation to continually refresh its new offerings.
“It’s a really good tool for some companies who are more acquisitive, like Cisco. You’re working with the company, you know the management, you know the business. Even though you might be paying more than you might have paid earlier — risk adjusted —you’re paying a lot less. When you start compensating people, like you would compensate venture people, you’re not being strategic.”
That’s why, Miller says, early-stage corporate companies are so vital. For Miller, that flexibility is the beauty of corporate venture capital.
“Having 10,000 people working in X, and now I want to move those 10,000 people to work on Y? That’s really hard to do. But when it’s venture, you can flip very quickly. You can decide, ‘I’ve been investing in X, but now I want to invest in Y. Let me try doing that.’ And that’s why I favor really early-stage. You’re doing this to get insight and maybe affect some things in the market — help some companies that will really help your business get ahead.”
“Companies have a hard time with the notion that things are going to fail so they keep going after it. But in early-stage corporate companies, people are out there trying things, and most of the things are going to fail. I see them as the research labs of industry. There’s not just one strategy, there are many.”