Skip Granger at One Financial Center
I have never really understood technology nor biotech very well, and I don’t know a lot about finance. I am not an especially fast reader, but I can read people. That was a factor when I founded Menlo Capital Corporation a very long time ago and headed off to the races in Silicon Valley.
For 32 years, we lived in Kentfield, CA, which is over the Golden Gate Bridge an hour north of San Jose. This location allowed me to spend two days each week in the heart of U.S. technology. My philosophy has always been to bet on the jockey and not the horse, and that has worked well for me. Believe it or not, my family has had a psychic streak that dates way back to the 1800’s in Kentucky, and that didn’t hurt either.
No one could believe that a newcomer enterprise like me would have no financial defaults in his first seven years in Silly Valley. Impossible! And my Juris Doctor did not hurt either. Although I did not practice law for these folks, I heard it said more than once that ”He’s a Kansas country lawyer who can’t lie or he would get warts on his tongue.” It’s amazing how important honesty is in a business full of thieves!
For example, early on in my career, in fact my first big client, was Evotek, and when I went to present my proposal, the CFO, Gordon Steel, pointed to a stack of proposals spread back and forth on his desk, but said that he had to go talk with his CEO for about 10 minutes, leaving me alone in his office. When he returned, he seemed surprised. He had put the proposals so that one would cross a certain word on another; thus he would know if they had been disturbed. Unlike my competitors, I had passed the test and would work with Gordon for many years at various start-up companies, Honesty works – and word spreads!
Conversely, I received Business Plan #3 from Oracle when it first began. Oracle was such a hot opportunity that I did not wait for my usual Tuesday trip, but drove right down to meet Larry Ellison, the CEO. When I returned home, Mary Ann asked if I thought that I could win his business, and I told her that if I did, I would be dead in two years!
Later, I was invited to see the New Zealand boats when they competed
for the America’s cup on San Francisco Bay. As a tenured member of the American Society of Wine and Food, I was there to eat and drink delicious food and wine from Down Under with my wife, but three of the sailors took me into the boathouse and said, ”We know that you as a Yank are for Oracle.” When I related my story, they smiled and asked, ”Do you know what ORACLE means? Old Rich Asshhole Called Larry Ellison.” Thus I had my story for that summer.
The services of Menlo Capital included arranging financing for start-up technology companies. Entrepreneurs have the ideas, but no resources. Someone had to get the money to turn their ideas into reality. I presented their business plans to big corporations like GE Capital, a firm with which I worked well for many years.
My greatest point of pride and also my most lucrative client relationship was with Intel, the world’s largest semiconductor chip manufacturer by revenue, whose semiconductor vendors I financed for over 14 years. Processors are manufactured in semiconductor fabrication plants (“fabs”) and are then sent to assembly and testing sites before delivery to customers. Approximately 75% of Intel’s semiconductor fabrication is performed in the USA. When I visited the manufacturing plants, I had to wear a “bunny suit,” since the facilities had to be immaculately clean.
In order to make enough semiconductor processors to adequately serve the market, Intel had to rely on other companies to process the silicon, and it was most profitable if those companies were startups with no credit of their own. We devised a formula wherein we would make money available to such companies without requiring the guarantee of Intel. The dollars were huge, especially for those times. A fabrication unit cost many millions of dollars then and is up to billions now. For example, an Epitaxial Reactor cost $1,800,000 then, and each fabrication unit would need many of those! And that was only the beginning of what they needed.
The revenue was enough to change our lifestyle, put our two kids through top colleges and provide for summers in Europe. However, on one of those trips, I made an error.
My contact at Intel was a man whose family were royalty in the Caribbean Island where Intel built a fabrication plant. He did not report to Intel Chairman Gordon Moore [of the famous Moore’s Law] or CEO Andy Grove, but rather to the primary board member. My contact became a personal friend. At one point when the investment tax credit law was changing, and I suggested so amending our documentation, he said, ”the law will change many times before we end this relationship.” And so it was.
My friend Al had to remain close to Stanford Research Hospital so that his wife could be treated for an acute kidney condition. I had donated a classic car to the Kidney Foundation in my father’s name since he had only one kidney, and I made a similar donation in Al’s wife’s name. She got a new kidney, and they moved to Hillsboro, Oregon, where Intel was building a new fabrication plant. And me? After 14 years of financing Intel, I got the boot! In Al’s absence, Intel Finance was born. Too soon we get old; too late we get smart!
Another interesting lesson I learned at Vitesse Semiconductor. I financed their fabrication plants for many years. The desk plaque at left commemorates a sizeable deal arranged by Menlo Capital with GE Finance. After each large funding, we hosted a dinner party at Tuscany in Westlake Village, a favorite restaurant of the finance team. The food and wines were always extraordinary, as was the bill! For example, six of us spent $5,800 on one of those dinners, and only $800 of that was for the food! On one holiday occasion, Gene Hovanic grabbed the check, and I said, ”Gene, if you don’t let me pay that, we will never do your financing again.” He gave me the check, which I paid. Twenty minutes later, he gave me an envelope, which I assumed was a holiday card, and I put in my coat pocket. When we left to go across the street to our hotel, my partner Bruce suggested that we go into the bar and have a drink — the last thing that we needed. Once there, Bruce asked about the envelope, and when we opened it, it was a check for $20,000.00, the largest tip that I have ever received. If I had let Gene pay the check, we would never have seen the envelope!
I could go on with stories for hours about my 50 years of fun during the early days of Silicon Valley, but I will save that for our reunion over a glass or seven of wine!
