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Posted by on Sep 14, 2012 in Technology |

History of Technology: Arthur Rock

History of Technology: Arthur Rock

Throughout various notes about the History of Technology have dedicated a few minutes to release data on the foundation of ( Gordon Moore and Robert Noyce ), how was (thanks to the “group of eight traitors”) or how developed the first microprocessor in history, the Intel 4004 . All these stories of the early years of Silicon Valley have in common was a key figure, and still is, to launch the big companies because, despite not having a technical background, vision for identify opportunities and talent enabled him to invest and enable companies such as Fairchild, Intel or Apple snatched away their business. Today we will take a few minutes to meet Arthur Rock , a venture capital investor with a talent for identifying opportunities for success.

Arthur Rock, inventor of the concept of venture capital and investor in Silicon Valley , was born on August 19, 1926 in Rochester, in the State of New York, and graduated in Business Administration from Syracuse University in 1948. After graduating he entered Harvard University and earned a master’s degree at the prestigious Harvard Business School, where he obtained his diploma in 1951. After completing his studies at Harvard, Rock returned to New York to work as an analyst in New York, within the department of Hayden, Stone & Co. , a Wall Street firm.

In 1956, in California, a group of engineers worked with William Shockley (inventor of the transistor) in the laboratory that he had founded but the disagreements of young doctors with the authoritarian Shockley led to consider starting his own company. These 8 entrepreneurs, known as the 8 traitors ( Julius Blank , Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Sheldon Roberts, Robert Noyce and Gordon Moore, the latter later would found Intel), decided to embark on the adventure of founding his own company focused on the design and manufacture of electronic circuits. Logically, build a business is not an easy task and one of the basic points is seeking funding with which to start the project.

The father of one of these 8 entrepreneurs had an account at Hayden, Stone & Co and used this fact to his father was to the offices of the firm to discuss your child’s project and its partners with a view to facilitating access and formally present the business idea. Soon after, Alfred “Bud” Coyle and himself would travel to California to meet the 8 traitors, know your idea and after the meetings, agreed to seek financing for the project.

He knew something about semiconductors from the point of view of business and appreciated its possibilities

Rock and Coyle led the investment portfolio of a New York company called Fairchild Camera and Instrument that was dedicated to research in the field of photography and cameras and persuaded the owner Sherman Fairchild, to inject $1.5 million in this new company dedicated to semiconductors (an area that could have synergies with cameras) and, if successful, Fairchild could have the option to buy the company for $ 3 million. With this move, the Silicon Valley saw the birth of Fairchild Semiconductor, a pioneering company that continues to operate today.

After the success of Fairchild Semiconductor, Arthur Rock, by Hayden Stone, also intervene in the financing of another major U.S. technology companies, Teledyne Technologies , which got him a capital injection of $ 450,000 in 1960. In addition to facilitating the implementation of the company, Rock paid into the company’s executive committee.

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Following this transaction, A rthur Rock concluded that all major businesses and operations related to the world of technology taking place in the Bay Area of San Francisco, is, in the Silicon Valley, so I decided to move there in 1961 and founded his own investment company. He teamed up with Thomas J. Davis Jr founded the company and venture capital funds Davis & Rock where Rock himself contributed $ 3.5 million through 25 partners-investors (including Henry E. Singleton, founder of Teledyne). The company will be active from 1961 to 1968 and became the first venture capital firm in history.

In these seven years of operation, the company funded 15 companies including Scientific Data Systems was in the $ 257,000 to rentabilizaron injected until 60 million return. With these figures of vertigo (the company grew from $1 million in sales to 100 million), Arthur Rock became one of the most reputable in the technology sector, with an incredible nose for opportunities where invest despite not having a technical background. For SDS, Rock has always said he was confident the company founder, the mathematician Max Palevsky , and knew that he could make money with your idea.

What interests me is to invest in people

Palevsky, who would also become an investor, always raved about Rock and his business acumen:

Arthur has an amazing intuition. His nose never ceases to amaze

In 1968, Robert Noyce and Gordon Moore decided to start their own business venture and decided to leave Fairchild Semiconductor to found a company that would become one of the largest in the sector: Intel. Noyce, that during the stage of seeking funding for Fairchild had become a close friend of Arthur Rock and used to go camping and hiking, called him to tell his idea on Intel:

Bob phoned me. We were friends for a long time … I filed papers? Virtually none. Noyce’s reputation was enough. We write about a page and a half but I was able to get the money even before the dossier were read

Arthur Rock made in one afternoon about 15 phone calls and got $ 2.5 million to fund the creation of Intel, a “collection” of vertigo which served to further convert a legend to Rock and its ability to finance companies. For Intel, Rock sought more than funding sources and investors wanted also feel part of the company and contribute their expertise and value to it, in fact, Rock invested $ 300,000 of his pocket and acted as first president of the company.

People come with business plans and know that not everything that is said in them will be fulfilled but we need to have something that support us and guide us

Another major milestone in the life of Rock was his meeting with Steve Jobs and Steve Wozniak and his investment in Apple . In 1978, Mike Markulla (Apple investor and CEO from 1981 to 1983), arranged a meeting between Rock, Jobs and Wozniak to increase capital of the company. Arthur Rock believed in the project and bought 640,000 shares of Apple to 9 cents a share (capital $ 57,000), an investment rentabilizaría more than three years later when Apple went public on the stock exchange. How much did Rock with this investment? For if we consider that the $ 57,000 became invested $ 14 million, the ROI was 23,000%, a figure of vertigo.

Steve wore goatees and mustaches, wearing no shoes, was dressed in a horrible way for that time, with jeans (the same outfit that has been provided), had long hair and looked as though it had a haircut in 20 years.

Mike was very interested in it should receive, in fact had bought a third of the company, so I decided to invest in the company and proved to be a very good investment.

Steve Jobs was very rhetorical and had the vision that everyone would use, before long, a personal computer. I never thought the market was going to be as big as the end became but I saw people spending 2,000 or $ 3,000 to buy his own equipment

In the late 1970s, Arthur Rock began operating under the name of Arthur Rock & Co. but, really, only were he and his secretary. Under this designation, Rock contributed to the start of operations Diasonics, a company manufacturing medical instruments and also invested in Elxsi International and Rational Machines.

Arthur Rock, who is still in active school has made in the field of investments because, in addition to injecting capital, maintained a close relationship with its portfolio of investee companies, direct tracking, assisting or participating in boards .

Rock currently devotes her time to sponsor educational programs in schools and universities. However, the technology sector has changed a lot since he began his business in the early ’60s, few changes he commented in an interview with the Wall Street Journal :

Companies today seem to make you a favor by taking your money. When we started, companies became very happy to see us. Today there are many companies operating venture capital and called on all the doors, a situation very different from the time when we started

Arthur Rock is a legend in Silicon Valley whose smell made it possible for companies like Fairchild Semiconductor and Intel to become the referents are today.

Images: Jag Wire , Kate Mitchell , Stanford University and NHPR

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