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March 28, 2021

Arthur Rock: Silicon Valley's Unmoved Mover

The life and lessons of a legendary venture investor.

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Where does anything begin?

A sheet of newspaper dances across an empty sidewalk. What caused its motion?

The wind, we might say. The wind swept it forward and made it move. 

But what caused the wind? 

Well, the car, we might respond. By speeding past, it created the wind, which swept the paper. 

And what moved the car? 

The engine, we answer. The engine propelled the car, which made the wind, which sent the newspaper sailing over the stone. 

We could play this game indefinitely, jumping from engine to driver, driver to body, body to muscles, muscles to atoms, digressing in any number of directions until we arrived at an inevitable conclusion: someone or something plays billiards with the universe; Saturn to side pocket, Mars kissed off the cushion, Earth banked into the far corner. 

The Greek philosopher Aristotle referred to that first catalyst as the Unmoved Mover, the solitary galvanizer that depends on nothing and upon which all other actions rely. This being or force holds the cue in hand and plays the opening break shot that, billions of years later, sends a sheet of newspaper across your path. 

If Silicon Valley has an Unmoved Mover, it is Arthur Rock. The man who began his career as an investment banker in New York provided the impetus for the tech industry to flourish in San Francisco Bay. As one of the first venture capitalists — he may be the author of the very term "venture capital" — Rock financed and guided some of the most impactful and influential technology businesses of the last century, including Intel, Scientific Data Systems, and Apple.

In doing so, he not only achieved remarkable returns but came to define a style of patient founder-focused investing. 

In today's briefing, we'll discuss: 

  1. The "Traitorous Eight" and the makings of Silicon Valley
  2. Davis & Rock, a historic venture firm
  3. Recognizing genius at Intel
  4. Mentoring Steve Jobs
  5. Lessons from a legend

In the process, we'll uncover how contemporary founders and investors might apply the genius of venture capital's catalyst. 

The Traitorous Eight

No one at Hayden, Stone & Company (HSC) was sure what to do with the letter. 

It had arrived on the desk of one of the bank's managers, written by a client's son. Over a few pages, Eugene Kleiner, a scientist at Shockley Semiconductor, asked for help from his father's financiers. He made an unorthodox request: 

This prospectus is to introduce a group of senior scientists and engineers that have been working together at Shockley Semiconductor Laboratory...A group feeling arose that rather than leave one by one, we believe we are much more valuable to an employer as a group. 

Kleiner hoped that with HSC's help, he might secure a new place of employment for himself and his six colleagues.

Shockley Labs was a prestigious place to work in 1957, even if it was in the comparative research backwater of Palo Alto. A year earlier, Dr. Shockley had been awarded the Nobel Prize in Physics for his work on transistors. But while Shockley was widely regarded as a genius, he was far from an ideal boss, prone to erratic outbursts and fits of paranoia. Once, in a cloud of suspicion, the Nobel laureate tried to convince the entire office to undergo a lie detector test. Eugene Kleiner and his peers had had enough; one way or another, they were going to leave Shockley. Either HSC would find an employer to take them aboard, or they would go their separate ways. 

Born in Rochester, New York, Arthur Rock had arrived at HSC after studying at Syracuse and Harvard Business School. As a young man, he'd worked in his parents' candy store upstate and sold magazines door-to-door. That salesmanship still hadn't made him much of a talker, though: with sharp, narrow features and a pointed style of speech, Rock cut an unusually stern figure, especially for someone just thirty years old. 

He'd developed a reputation at HSC as an astute picker of technology stocks. In particular, he'd worked on General Transistor, a manufacturer of equipment used in hearing aids. Whereas other investors worried about the limitations of the technology, Rock saw enormous potential. 

Where does anything begin?

A sheet of newspaper dances across an empty sidewalk. What caused its motion?

The wind, we might say. The wind swept it forward and made it move. 

But what caused the wind? 

Well, the car, we might respond. By speeding past, it created the wind, which swept the paper. 

And what moved the car? 

The engine, we answer. The engine propelled the car, which made the wind, which sent the newspaper sailing over the stone. 

We could play this game indefinitely, jumping from engine to driver, driver to body, body to muscles, muscles to atoms, digressing in any number of directions until we arrived at an inevitable conclusion: someone or something plays billiards with the universe; Saturn to side pocket, Mars kissed off the cushion, Earth banked into the far corner. 

The Greek philosopher Aristotle referred to that first catalyst as the Unmoved Mover, the solitary galvanizer that depends on nothing and upon which all other actions rely. This being or force holds the cue in hand and plays the opening break shot that, billions of years later, sends a sheet of newspaper across your path. 

If Silicon Valley has an Unmoved Mover, it is Arthur Rock. The man who began his career as an investment banker in New York provided the impetus for the tech industry to flourish in San Francisco Bay. As one of the first venture capitalists — he may be the author of the very term "venture capital" — Rock financed and guided some of the most impactful and influential technology businesses of the last century, including Intel, Scientific Data Systems, and Apple.

In doing so, he not only achieved remarkable returns but came to define a style of patient founder-focused investing. 

In today's briefing, we'll discuss: 

  1. The "Traitorous Eight" and the makings of Silicon Valley
  2. Davis & Rock, a historic venture firm
  3. Recognizing genius at Intel
  4. Mentoring Steve Jobs
  5. Lessons from a legend

In the process, we'll uncover how contemporary founders and investors might apply the genius of venture capital's catalyst. 

The Traitorous Eight

No one at Hayden, Stone & Company (HSC) was sure what to do with the letter. 

It had arrived on the desk of one of the bank's managers, written by a client's son. Over a few pages, Eugene Kleiner, a scientist at Shockley Semiconductor, asked for help from his father's financiers. He made an unorthodox request: 

This prospectus is to introduce a group of senior scientists and engineers that have been working together at Shockley Semiconductor Laboratory...A group feeling arose that rather than leave one by one, we believe we are much more valuable to an employer as a group. 

Kleiner hoped that with HSC's help, he might secure a new place of employment for himself and his six colleagues.

Shockley Labs was a prestigious place to work in 1957, even if it was in the comparative research backwater of Palo Alto. A year earlier, Dr. Shockley had been awarded the Nobel Prize in Physics for his work on transistors. But while Shockley was widely regarded as a genius, he was far from an ideal boss, prone to erratic outbursts and fits of paranoia. Once, in a cloud of suspicion, the Nobel laureate tried to convince the entire office to undergo a lie detector test. Eugene Kleiner and his peers had had enough; one way or another, they were going to leave Shockley. Either HSC would find an employer to take them aboard, or they would go their separate ways. 

Born in Rochester, New York, Arthur Rock had arrived at HSC after studying at Syracuse and Harvard Business School. As a young man, he'd worked in his parents' candy store upstate and sold magazines door-to-door. That salesmanship still hadn't made him much of a talker, though: with sharp, narrow features and a pointed style of speech, Rock cut an unusually stern figure, especially for someone just thirty years old. 

He'd developed a reputation at HSC as an astute picker of technology stocks. In particular, he'd worked on General Transistor, a manufacturer of equipment used in hearing aids. Whereas other investors worried about the limitations of the technology, Rock saw enormous potential. 

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