If there were ever a pair of outliers in the hallowed portals of Silicon Valley, the legendary Ray Zinn, and the story of Micrel would be it.
In an industry teeming with twenty-something CEOs, Raymond D. Zinn has the unique distinction of being Silicon Valley’s longest serving CEO, after 37 years as captain of the highly successful semiconductor enterprise, Micrel, Inc. In the ruthless tech startup environment, where ‘Fail Fast, Fail Often’ is the all too often heard refrain, he has maintained Micrel successful and profitable for 36 of the 37 years he has been its CEO, successfully steering the company through eight major downturns. In an atmosphere where approaching venture capitalists to fund a product company is the norm, Ray Zinn bootstrapped his company, brick-by-brick, with a mutually-drafted bank loan. In the Silicon Valley work culture that is characterized by intense burnout and job changes, Micrel enjoyed the lowest employee turnover in Silicon Valley history. In the times of chasing the big bucks, Micrel consistently and successfully lured top-notch talent by promising to make them better human beings! Whichever way you choose to look at it, the conclusion remains the same – there is no company like Micrel … and no leader like Ray Zinn!
All his life, Ray Zinn has swum against the current to do things differently. We, at AnuPartha, were fascinated by his unique and inspiring story, so we asked the veteran leader about his beginnings as an entrepreneur, about his style of leadership, how he attracted and retained good people in a high-growth industry; and most importantly, how he steadfastly adhered to his guiding principles and values to leave behind a legacy that others can only strive to emulate.
There was a time when Ray Zinn wasn’t an entrepreneur. After holding several management positions at Electronic Arrays, Teledyne, Fairchild Semiconductor Corporation and Nortek, he was appointed as a Regional sales manager at the relatively unknown Electromask in 1973. He recalls an incident where his boss insisted that he get industry-heavyweight Texas Instruments as a customer. In a way that only someone like Ray Zinn could, he actually conceptualized a new product, the wafer stepper, (which would go on to become a standard piece of equipment in every chip manufacturing facility around the world) as a way to gain a foot into TI’s door, winning a $3.2 million deal for a product that didn’t even exist. In 1974 though, it was an idea that the world wasn’t ready for yet. His boss later received a letter from the Head of research at IBM at the time (IBM were working with TI), saying “it is the stupidest idea anybody has ever had”, and decided to scrap the product, much against Ray’s advice.
A hurt, and disappointed, Ray Zinn then vowed he would never work for anybody else ever again. With no product, no funding and no infrastructure, he decided that he wanted to build a company that would be different, that would foster innovation and care for people. Micrel Semiconductors was born in 1976, and there has been no looking back till he retired 37 years later in 2015.
Ray Zinn’s vision for his company was, quite simply, to build a company! It stemmed from his belief that people are an organisation’s most valuable, and truly differentiating resource, and so it was only natural that he built his company around the life of the people. “I wasn’t building a product; products have a finite life. I wanted to get good people together, who would come up with good ideas. If you have the right organisation, the product will come.” This was the foundation upon which his first, and only, company was built. His idea was radical and contradictory to standard practice but was almost second nature to him.
Armed with the confidence of a first time entrepreneur, Ray approached a bank for starting capital, which was flatly refused since it was unheard of for a bank to support a startup venture those days. He couldn’t go to a VC because a VC needed him to have a product first. Nothing if not determined, Ray cajoled and negotiated with his bank to lend him the initial capital of $300,000, with a key covenant, though, that he be profitable every quarter! It was a bold move to accept that covenant – one that would go on to make Micrel the consistently profitable enterprise it became reputed for. The Bank’s covenant meant that Ray had no choice but to be profitable because failure wasn’t an option. They did initially have to make some compromises: “We didn’t have a product, we had to offer a service, so we could start billing instantly”. It took 10 years for Micrel to have enough operating capital to start designing products of their own. When competitors like Linear Tech and Maxim started with $20 million, ten times more than what Ray Zinn got to start Micrel, it didn’t deter him. In fact, it brought him and his team closer. It was a testament to his leadership skills that he chose to communicate this to his team. They too knew that failure wasn’t an option. It made sure that the right value system was ingrained into people’s psyche – it built loyalty to him, and loyalty to each other, since they were all forced to pull through together.
A throwback to Ray Zinn’s early years and modest upbringing might hold the key to why he was successful in his early days as an entrepreneur. The oldest of 11 children, he lived with his family in a small home, where they had to take care of each other. He learnt tough lessons early, and his survival depended upon learning to love the difficult things. Perhaps knowingly, or unknowingly, he ended up recreating the ‘no failure as an option’ environment and turned his biggest weakness into his greatest strength.
For an organisation whose core principles were to create a culture that fostered innovation and genuinely cared for its people, it was as important to hire and retain the right talent as it was to get the right profit margins. When good people are being tempted by hefty pay checks from VC funded companies, Ray says that he always told employees that he would help them become better people. In today’s mad rush for “growth” at the exclusion of everything, it is almost quaint to know that people, culture and organizations mattered more to the CEO. And that his people responded to his message.
Over the years, thousands of people have worked with Micrel, and the company today enjoys the distinction of having the highest ‘boomerang rate’ in the industry, of people who left and came back.
Ray Zinn saw his company as an extension of his family and therefore placed an extremely high value on creating a positive, secure, work environment to help employees become better people. This meant they had to embody the values of honesty and integrity. “We didn’t allow any swearing or condescending language in the company”. He added that a critical part of making these values work was to create an ecosystem where people carried home the culture and behavior to their families.
Being a company with the lowest employee turnover in Silicon Valley history (7% vs an industry average of 15%), how did Ray Zinn guard against complacency of his employees, and how did he maintain his commitment to quality and entrepreneurial thinking? “Just because people haven’t been fired, it didn’t mean we compromised on quality”, says Ray. “It all boils down to wanting to do better. When all you focus on is making more money, you are not going to enjoy your job.” Ray feels that by nurturing people, they find it in themselves not to be complacent and do better for the company. They don’t take their position for granted, because they are constantly striving to be entrepreneurial, and do better. Incidentally, this focus on quality didn’t go unnoticed by customers. They remarked that people from Micrel had a better attitude, and always delivered a top class product.
Values are the bedrock of a company. Hiring people young has its advantages, as it is easier to infuse them with values that are dear to you. But he hired a lot of people laterally too. While hiring from other companies for experienced people, Ray looked for people whose values match that of his own company. A good way to do that was to see if they’d held the same values in their previous company too, through references and interviews. For example, he would ask a person, “How did you like your other company?” If they bad mouthed their company, he didn’t want them. But if they said they loved the boss, the company and the environment, then he’d be more inclined to hire them.
Ray Zinn’s style of leadership is a natural flow from his philosophy and his values, and his guiding mission. And he chose to encode his values in the company by remaining its CEO and Chairman of the Board till the end. “You have to make sure that your values stay intact. You have to be able to continually just foster that kind of environment.”
With offshore manufacturing & outsourcing becoming part of everyday lexicon, if he were to start his company today, would he still have all his people here in Silicon Valley? Ray Zinn strongly believes that he will.
Ray believes there are still lots of big advantages to operating in the Silicon Valley. Without taking anything away from outsourcing hubs like India or China or the Philippines, he says the Valley still has the best entrepreneurial ecosystem – there are better schools, better technology; and much better people. He counters,
In the exciting world where Micrel and Ray Zinn have thrived, he says his experiences have changed him by making him a more caring person. It’s an almost spiritual approach to doing business, where his overriding desire has been, first and foremost, to help people.
As another step in that direction, Ray has distilled his life’s experiences into a book to guide young entrepreneurs and leaders to lead a better life. Called ‘Tough Things First’, it talks about how choosing to do the difficult things first makes you more efficient and helps you run your life with far more success, and far less stress.
As with everything about Ray Zinn, this book has a specific purpose: “I’m trying to see if the concepts in my book can be validated by other companies who agree to follow the same principles. I want to know if Micrel’s success was just a happy accident or can it be replicated?”
The Book is a refreshing take on Leadership. In a time and place where ‘growth at any cost’ seems to be the common mantra, here is a CEO who cares more about people and culture. That it worked over the long term, and made a positive impact on the employees, makes you sit up and question the current Silicon Valley wisdom. The best part about it is that you can take it home and use the same principles to build a happy family life too!
When Ray Zinn was a young man, on the threshold of his entrepreneurial journey, he recalls a former boss had told him that he shouldn’t work for another company, he should just work for himself. “You don’t fit in,” he had told him, and Ray remembers being taken aback, because he was never trying to fit in. He wanted to change things. As he looks back today on a fulfilling career with pride and humility, his most enduring legacy would undoubtedly be that he didn’t fit in. He stood out. In his desire to be genuine, and in his steadfast belief that he wanted to help people and enrich their lives. And how extraordinarily has he proved his younger self right!
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