What I've been reading (March 2021)
Semiconductors and the Aztec Empire
Disclaimer: I am a professional investor and may have positions in companies discussed.
The Intel Trinity, written in 2014, declares Intel the world’s most important company. While true at the time, it no longer is.
As a bit of context:
What is Intel? Intel designs and manufactures computer chips known as CPUs, which are the brains of modern computer systems.
Why was Intel the most important company in the world? Intel invented the CPU, which enabled modern computers. It also “invented” Moore’s Law, or the idea that semiconductors double in power every month. And for decades, its chips were the most powerful, enabling computers to become more powerful and advanced.
Why is Moore’s Law Important? Moore’s Law powers much of the technological innovation in our modern world. Our electronics are only as powerful as the chips within them. Due to Moore’s law, we can make chips more and more powerful (as well as smaller). This allows us to have:
iPhones that get better and better every couple of years
More powerful kind of AI / machine learning (requires significant computing power provided by modern chips)
Faster laptops (like the new Macbook Pro with 20 hours of battery life)
Moore’s law is really, really hard. You are putting billions of “things” - transistors - onto a chip the size of a postage stamp. This requires $20b+ factories that use the power of a small city, hyper-clean rooms, and $250m laser machines that require 3 747 jets to be transported to customer. It’s gotten harder over time as these chips have gotten more and more dense. Moore’s law is less a law and more a pact among the technology industry: that chipmakers will continue innovating and and hardware designers (Apple, etc.) will continuously design products for more advanced future chips.
Why is Intel no longer the world’s most important company?
Historically, Intel was the clear leader, boldly releasing the most advanced chips. But as mentioned above, this all changed after the book was released. In coming out with the “10 nanometer” generation of chips, Intel was overly ambitious with improvements and couldn’t properly manufacture the chips. This took years to fix. In the meanwhile, a Taiwan-based company called TSMC caught up to and surpassed Intel, and is now the clear leader in the industry (and arguably the most important company in the world). Whether or not Intel can catch-up is a debate many investors and industry observers are having.
Back to the book:
Book is fairly interesting overall - compared to some other “History of Silicon Valley” type books, I appreciated that it focused on one company with a few characters. You had Robert Noyce, Intel’s first CEO, who had incredible vision and salesmanship. There was Gordon Moore, of course, the technical genius, behind Moore’s Law. And finally, Andy Grove, who later became CEO where he instilled operating discipline while being an absolute hardass (as Intel’s current CEO puts it, being mentored by Andy Grove was “going to the dentist and not getting novocaine.”)
Some other takeaways:
“People join companies and leave bosses”: the first semiconductor was Shockley Semiconductor, led by William Shockley, a Nobel prize winner and father of the field. While he was able to assemble a strong team, they - “the traitorous eight” - all left due to his terrible management style
Andy Grove’s story in particular was amazing. Born Andras Grof to a Jewish family in Hungary, he escaped to Austria when he was 20 (leaving his family behind) and eventually found his way to the US, where he attended college and eventually made his way out west
The “Trinity” didn’t even get along - Andy Grove hated Robert Noyce (due to his perceived lack of seriousness, desire to be a people-pleaser, etc.). This was like being in a family where your father and older brother were perpetually at war. We hear stories about the necessity of chemistry, but Intel managed to succeed wildly despite this tension.
More broadly, Intel didn’t seem like a “fun” place to work. Grove was a difficult boss, at one point mandating everyone work 2 hours more a day without pay for 6 months to push through a difficult time. But still managed to attract top talent. Doing something truly meaningful (and being excellent at it) can make up for many things in a job. But if your company is not the most important one in the world, how do you convince people to come along for the ride? One underrated management skill is the ability to get people excited about their work. Slightly different from motivating them - motivation can be done through fear, money, etc. In my experience, an excited employee is more valuable than a motivated employee and are often willing to put in more at work.
Conquistador: Hernan Cortes, King Montezuma, and The Last Stand of the Aztecs, by Buddy Levy
“I and my companions suffer from a disease of the heart which can be cured only with gold,” - Hernan Cortes
Fascinating book about Spain’s conquest of the Aztecs in what is now Mexico. A chapter of history I didn’t know much about. Highly recommended.
In short, Cortes and his men land on Mexico and proceed to conquer the mighty Aztec empire, despite being outnumbered thousand to one at some point. He was able to do this through superior technology (horses, which didn’t exist in the new world, and guns), political cunning (forming alliances with other peoples in the region) and factors beyond his control (largely smallpox, which killed 90% of the native people in the region).
I also enjoyed reading about the Aztecs. Their capital city, Tenochtitlan, was one of the largest cities in the world. They had a public school system and highly advanced irrigation. They also practiced human sacrifice, which they believed was necessary for the sun to rise daily (keep in mind this was contemporaneous with the Spanish Inquisition, which wasn’t so pleasant either). The story of the Aztecs, I thought, had a few points of sad irony:
Their ruler Montezuma heard about Cortes’ arrival from his messengers. To convince Cortes to not travel onwards and to leave, Montezuma sent him lavish gifts of gold, in order to convey his power. Unfortunately, this simply made Cortes even more determined to venture onwards to find more treasure
In one battle, they grabbed ahold of Cortes and likely could’ve killed him. But they tried taking him alive in order to sacrifice him and some other Spanish soldiers eventually were able to set him free. Killing him on the spot would’ve been disastrous for the Spanish
Cortes also took advantage of the neighboring peoples’ enmity toward the Aztecs. As rulers, the Aztecs constantly demanded tribute, including a continuous supply of human sacrifices. As a result, Cortes found many willing allies in his fight, without whom a victory would’ve been impossible