Ray Zinn, the longest serving CEO in Silicon Valley, discusses the history of silicon as only he can, having watched it from Shockley to Facebook.
In Part XI, Ray, Goldman Sachs analyst Peter Marchetti, and Silicon Valley vet Guy Smith, cover the how integration of gadgets, internet and wireless put Silicon valley on a new path.
Peter Marchetti has spent the past 20 years as an advisor to some of the most significant families and foundations in the country. He joined the Goldman Sachs team in 2000 after receiving his MBA from the Haas School of Business at the University of California, Berkeley.
Ray Zinn: Hello, everyone. Welcome back to another in our series of podcasts regarding the history of Silicon Valley. This has been an exciting set of podcasts that we’ve done, because I’ve been able to sit here and reminisce all about the history of the industry, or the Valley, starting all the way back to 1957.
So, here we are. We’re in the two thousands, in the 21st century. And with me today, I have Peter Marchetti, who’s a financial advisor and a good friend of mine, as well as Guy Smith, who’s my director of marketing at Tough Things First. So, hello to both of you.
Guy Smith: Hidey, ho.
Peter Marchetti: Hey, Ray, good morning.
Ray Zinn: Well guys, here we are. We’re really into the 21st century. I think last time we talked about kind of where was the industry headed or where is Silicon Valley headed and just give kind of an idea of the landscape.
We’d just exited the 20th century. We had the Y2K issue. We had the .com implosion where all these companies that were heavily funded finally had run out of money and closed up shop and weren’t able to pivot very well. Where’s the next 20 or 30 years going to take the industry?
Peter Marchetti: Well, I think one thing we talked about in the last call, Ray, you started getting into the cell phone market and how that was pushing things forward in a lot of other technologies. And come around the middle of the two thousands, we had the introduction of the iPhone, which took the cell phone market in a completely different direction, with the smartphone introduction to everyday life.
And I guess I’m wondering, how did you see that changing the semi space and pushing technologies forward? And what companies can kind of directly benefited from that?
Ray Zinn: Well, we had really… There’s three parts to what we call the smartphone. There’s the cell phone portion, which is something that came in, back when I was a kid, actually. My father had a telephone that had like a nine or 10 foot antenna on it and had a telephone handset and we could make mobile calls.
And of course, it was very expensive and he didn’t want me using it very much. I just used it to impress the girls usually. But it was quite an interesting device that took up half the trunk space of the car.
This was back in the fifties. But then it’s kind of migrated now. The cell phone became smaller and smaller and smaller. And then they came out with a PDA, which is the personal assistant and that kind of took on a life of its own.
And a lot of people had their cell phone. They had their PDA and they also had a separate device called a camera. And of course, cameras have been around forever, for a couple of 100 years, maybe.
So, Apple decided they’re going to combine it all. They’re going to combine the cell phone, the mobile phone, as you would, with the PDA and with a camera. And I thought that was a dumb idea, because when I use a phone, I just want to call somebody.
But they said, “Well, look it, people like personal digital assistants. And they also would like to be able to take a picture whenever they want. None of us really carry our camera with us.” And so they said, “Well, it’d be nice to be able to take these snapshots of things and if you had a camera built in to your phone, that’d be really cool.”
So, it’s interesting how one thing leads to another thing leads to another thing. And so, the PDA kind of led into the combining it with the cell phone and then the camera being integrated into the cell phone.
Honestly, because I’m not a big picture taker, I thought it was a pretty dumb idea. But well, look, what’s happened now. The camera in the phone has become very, very good. And it has allowed us to take pictures at will. And then basically, the camera business… The people who make cameras are basically having to pivot to something else.
Guy Smith: What’s interesting was Apple, took it one step further. You had the basic PDA functions, which kind of made it a very, very low powered computing [inaudible 00:05:32] app for them. And they said, “Why not think of the cell phone as the new really, truly personal computer?”
And they had to think of new human interface aspects to it, but when you get right down to it, what we carry in our pockets today are very, very powerful computers, compared to the original personal computers of the 1980 era.
Ray Zinn: Absolutely. I mean, we’ve got these watches now, these smart watches, that are as powerful as a big mainframe computer back in the sixties. And it’s just amazing because of the way the technology has advanced, to allow us to do so much more with technology than any of us could ever have perceived of, in the beginning.
I remember as a kid, we had this cartoon called Dick Tracy. Every Sunday you used to get your cartoons that you could watch. And Dick Tracy had this watch that he talked into, and it had this long antenna wire that would go up his sleeve.
And I thought, “Well, that’s just way out there. I mean, that’s out in the [inaudible 00:06:48] as you would. But here we are. And we have that capability now, virtually. We have a speaking watch, because you can now take phone calls and messages on your wrist.
Guy Smith: I think this is really an intrinsic part to your semiconductor industry, because if it wasn’t constantly pushing the boundaries, we could never achieve things like watches that we talk into.
Couple of years back, I had to give a talk to some gear heads. And since I started my career at Kennedy Space Center… They launched the fourth space shuttle, the first day I was on the job there… I compared the onboard flight computers that were on the shuttle with the cell phone in my pocket as a graphic demonstration of just how insanely more powerful computing platforms are.
And I think, because Silicon Valley and the chip industry is constantly pushing these boundaries, we’re able to do more things in less real estate than ever before. And people have to keep becoming incredibly inventive to find new ways of exploiting all that power.
Peter Marchetti: Isn’t that also kind of like why the Apple’s iPhone was so incredible? Because like the camera had been… I mean, I remember having a Samsung flip phone back in 2000 that took pictures. The pictures looked like something that my six year old would have drawn. They weren’t very clear. They weren’t very useful.
And I was kind of like you Ray, where I was like, “Why even have this thing on here?” But then, the iPhone came out with all those capabilities and the quality was just so far better from what I remember anything else being. And it really pushed everybody else to have to step up their game. And do a much better job and deliver a much better product.
Ray Zinn: We talk about this technology, that we refer to as the internet of things, because the internet has really opened up Pandora’s box, allowing us to do so much more electronically. The digital home. Being able to turn your refrigerator on or off, your lights on and off or being able to have an electronic doorbell to let you know, even if you’re not at home, that somebody is approaching your door.
These security cameras. I remember back in the day, a security camera would cost you five or $10,000. Now, you can get a security camera for less than $200. And I mean, we’re doing so much more because of the power of semiconductors than were ever thought possible.
We refer to generically, artificial intelligence, AI. It’s because of the smartness and the power now, that we have in our semiconductor technology that has really allowed electronic vehicles to come into being.
The charging and just the storage capability of these batteries. Lithium ion batteries and then even some of the newer batteries that are coming out, allowing us to store tremendous amounts of energy in a very small footprint.
And the same thing with semiconductors. They’ll be able to have so much computing power in such a tiny, tiny footprint. So, you’re just seeing the tip of the iceberg. I mean, we’ve only begun to scratch the surface of what semiconductor technology is going to allow us to do.
And I’m excited about it, because you can have your medical capability right on your wrist or around your body somehow, to measure your blood pressure, your heartbeat, your oxygen content.
I mean, we’re going to get to the point where we’re going to be able to monitor many of our body functions on a real-time basis and it’ll make decisions very practical. Know when to call your doctor, when not to call your doctor.
I mean, I know of a company that started up where you don’t have to go see the doctor anymore. You just go into a drug store and sit down on some equipment. Of course, I can see that progressing and you don’t even have to go to the drug store anymore. You just do it at home. But they have the equipment there to do all the diagnostics that you would have when you normally go to the doctor.
For example, when you go to the doctor the first 10 or 15 minutes, other than waiting for a doctor to show up, is they’re taking all these measurements. Well, I mean, we’re going to be able to take these real time and there won’t be any need to sit in a doctor’s office.
It’ll be just telecommuted to his office and then he’ll have all the information and you won’t even have to go see your doctor physically, unless there’s something urgent that he needs to have you there, so he can take some other type of measurement.
Guy Smith: You’re right. We’re right around the corner from having a Star Trek tri quarter, where they just scan it past your body and they know everything about your medical condition and history.
Ray Zinn: And also, I just think this is the tip of the iceberg. I mean, granted, we’ve come a long way. When I was a kid from Dick Tracy’s watch that he wore, talked into, to where we are today, where we all have that capability and not just Dick Tracy. So, these are exciting times.
Guy Smith: You bumped up to the topic of sensors. And I’d like to dive into that because we’re seeing something very visible. I mean, you talked about the internet of things, but a lot of the sensors that are on inanimate objects around us are not very visible to the average person.
But then you have autonomous vehicles which are loaded with sensors, from stem to stern. So, I don’t know enough about the sensor part of the semiconductor market to know where they’re exploring the new frontiers and how much of an opportunity that is for people, both investing and also looking for new careers.
Ray Zinn: Well, when you think of the person driving a car, he is in effect, the sensor. His eyes, his ears, his feel and all of the senses that we have, feeling, smell, hearing, optical. All those go into driving our vehicles. If you smell like something’s burning or like oil or something’s leaking or rubber burning or something, you smell it, you say, “Oh, I got to pull over.”
Or you hear something, you hear a noise in a transmission or hear the engine knocking or something, and you can pull over. Or if you see something, smoke coming up from the hood of your car or whatever, you can see that. Or, as you drive down the road, you see the landscape. “I got to turn here or stop here.” But all that now can be incorporated and integrated into a smart device.
And that’s why cars now are becoming predominantly electronic. There’s really no need for human intervention except to get in the car and it knows you’re there. And then you either speak to it or it even maybe would know where you want to go.
I mean, you could have it pre-programmed like, again is something that I think is out there in the future, but it can literally… You just get in something and it immediately senses you’re there and it just knows because it’s pre-programmed. It knows what you want to do and it just takes off. And then it goes to where you want to be and you get out and then do whatever you’re going to do and then hop back in. And it knows exactly what it wants to do.
We have that with airplanes today. We can program airplanes to go from point A to point B without any intervention with the pilot whatsoever. And so, some of these airplane crashes that we’ve had, resulted from malfunctions in the electronics.
So, we’re so dependent now on electronics, to the point where we’re just going to be a passenger as you would, in a vehicle, whether it be boat, plane, car, or whatever. So, we’re just seeing the tip of the iceberg.
Well, that’s a good place to end this podcast. And it’s been a fun discussion. What we’ll do is we’ll conclude. We’ll say goodbye to everyone until next time.
This is Ray Zinn and I’m the head of Tough Things First. I have a new book coming out called Zen and Zinn. And you can get my first book, Tough Things First, still. You can acquire it on Amazon or any of your retail bookstores.
So, thanks again, Guy and Pete for being with me today. And we’re looking forward to talking with you folks next time.