The Importance Of Asparagus
John East worked at Fairchild and AMD before becoming CEO of Actel - a job he held for 22 years.
After 11 years at Fairchild, East reckoned he had figured out the magic ingredient for semiconductor success – asparagus.
“We had rotating general managers – Carey, Blanchette, Husher, Sussenberger, Collier, Deardorf, Reagan, Longo. All seemed like really good guys to me. Yet … they just kept disappearing (Fired)”, remembers East, “what’s the chance of hiring that many guys in a row and have each one turn out to be bad? Pretty close to zero!”
“What was really going on? TI was eating eating our lunch. Once they get the lead in a commodity business, it’s impossible to catch up without losing big amounts of money which American companies weren’t prepared to do (Still aren’t).”
“A good big guy can beat a good little guy any day,” says East, “that was when I first started forming my theories of how to win in the semiconductor business. They’re pretty simple, really:
1. If you’re the big guy, pound the little guy with prices and service.
2. If you’re the little guy, you have to be different!
“I went to AMD in early 1979. There was a big party the first week I was there (I think it was the celebration of the 10th anniversary of AMD. I got to the party. It was lavish. It cost a fortune.
Jerry Sanders didn’t do things half-way. They were passing out asparagus lapel buttons. At every table there were asparagus bouquets.”
“In addition to top quality, expensive food there were huge amounts of asparagus stalks everywhere. A lot of the main dishes featured asparagus.”
“I asked someone: ‘What’s this obsession with asparagus?’”
“Jerry Sanders’ analogy was: If you decide to be a farmer, when you start farming you must plant a crop that you can harvest that year. Else you’ll run out of cash. It’s tough, though, because those quick crops typically have low prices since they’re easy to grow and attract lots of competition.”
“Asparagus has less competition and therefore is more profitable, but it takes two years to grow. The ambition of a good businessman farmer should be to get far enough ahead to be able to plant asparagus, wait the two years, but then make some real money.”
“Jerry thought that the analogy to ICs was a good one. When he started AMD he had very little cash. He had to make commodity products because they had markets which were already established. But, because they were commodities it was hard to make any money with them. But, by 1979 AMD had made enough progress that they were able to cease doing commodity products They were planting asparagus.”