An Interview with Bob

Gemperlein :   What was, perhaps, the biggest mistake you made in your life or a life experience that you've related to your children to help them in their lives in business?
Lam :   Well, one of the biggest mistakes, perhaps one kind of sticks in my mind. This is going to be a bit embarrassing to say because, if my son happened to hear this, he would probably kind of find it (that way) . I don't think I have told him exactly.

This was the 9th grade. My son had just joined the speech and debate team. He wanted to do a good speech; he wrote up his entire speech, the very first one. And he showed it to me. And I used to participate in speech, too, in high school. I looked at it and I said, "Gosh, how could you write some junk like that?" And I must have said something extremely critical and very discouraging. And I said, "You've got to rewrite this and that." He went back to his room and kind of closed the door. So I followed in with him and sat next to his bed, and he was crying. So I said, "What's the matter?" He said, "I thought you would be proud of me."

And right around that time, I realized I made some terrible mistakes. Because by being a good parent, I was overly critical. Actually, the speech was not too bad for someone who wrote it for the first time. So I felt very, very embarrassed, so I helped him to kind of rewrite some part of it.

And, for the next 3 years, he never showed me any of his speeches again. What I didn't know; I later on found out. He had moved up in speech all the way to the very top and became the school's top speech performer. And only when he was getting to grade 12, I sat down with him one day. I said: "I have to resolve this. This has been 3 years too long." Everything else was fine, except speech. He just won't want to show it to me, didn't want to listen to any more comments from me, which I thought was very bad on my part.

So I said, "You know, way back when you were in 9th grade" and I recounted the incident. I said, "You know one thing. We became parents overnight; doesn't mean that we are very good at it. Just because we had a child doesn't mean that we have learned all of the things. And, not only that, as you grow up, the needs are different. The way we deal with you are very different, and I remember I made some terrible mistakes a few years ago when you were in 9th grade."

And I said, "I hope that you don't hold any grudge against me." He said, "Oh, no, no, no." And I know he just said that. But that's good enough. He said he remembered the incident, but it's OK now. Two weeks later, he came by my little study. He said, "Dad, would you like to take a look at this?" So I know that I closed that chapter. He went on to do very well later on. So I guess that will be the biggest mistake that I made.

Gemperlein :   Is it important to make mistakes -- in business and in life?
Lam :   Yeah, absolutely. I think one of the interesting things in the culture, in the Asian culture, as we were brought up, parents tend to be a little bit too strict in not allowing kids to make mistakes. I find that learning is a lifelong experience. You don't stop when you finish high school; you don't stop when you finish college; you don't even stop when you finish a Ph.D. You just learn a different environment for different things.

When you are learning, if you stop and think about how a little child learns to walk, he stumbles many times, hitting himself, hurting himself, before he really learns how to walk. And you can apply the same metaphor to life.

And if we don't allow ourselves to make mistakes at all, we wouldn't be able to venture out and learn new things and do new things. So one of the wonderful things that happened in Silicon Valleyis that, in business, people accept those who had made mistakes in their lives.

I found in life it's important to manage to handle success, and also important to be able to handle failure. A lot of times, we do mistakes and we have some failures of one kind or another. The important thing is to be able to get up on your feet, dust off, and move on again. And don't let it drag you down, so that you wouldn't be able to move ahead beyond that.

Ledbetter :   Did you ever have an idol? Someone you looked up to?
Lam :   Probably in the environment that I grew up, my parents. My father was still my idol. They had eight kids. Which is not atypical. It's very typical. He passed away a long time ago, when I was still in college. And so I didn't really have the pleasure of working with him in my adult life at work.

My second idol, perhaps, after that. Sort of a replacement, I guess, looking back. My professor at M.I.T. And he became a very close friend, as a professor . He was my thesis advisor, both at the master's level and the doctoral level. And he gave me a lot of advice through my career and was one of the directors, one of the members on the board of directors at my first company, Lam Research. He has since been a great help in many ways.

Gemperlein :   Could you describe in very basic terms Lam Research and the founding of it and what exactly the company does?
Lam :   Lam Research was, still is, a company that launched a. . . Well, let me back up a little bit. Lam Research makes semiconductor equipment, equipment used by companies such as Intel, National, and AMD and Toshiba and Hitachi, to make chips. Semiconductor chips. And, at the time when, around late 1979, when I was getting ready to launch the company, I had observed that the technology which is known as plasma etching, had been around for nearly 10 years. But mostly used by researchers; they do some experiment; they write some papers and get published; and they would be happy ever after. But they never thought about how they'd use it in real life , in a production environment to make these chips that you can ship and plug into computer to use. Because the technology was relatively new.

Starting a company is easy, and making it go is a different thing.

But in 1979, around that time, things started to happen, and I began to see a tremendous potential of using this technology in production. And so that was the purpose of Lam Research. There were already at least 6 or 7 companies in that field. But most of them were focused on research and development. And there's a big jump from R&D to production. And that's where I saw the market opportunities, why I started Lam. It is the capital equipment maker, specifically focused on semiconductor manufacturing, using the new technology known as plasma etching.

But starting a company is easy, and making it go is a different thing. I remember that after I put together a business plan, a friend of mine introduced me to people who may have some investment money, R&D partnership. Since I didn't need a lot of money at that time, I thought, I was very happy to work with them and explain to them what I'm trying to do and all that. This is early 1980.

Then the interest rate began to take off, as you recall. Those were the first of the 3-year recession, 80, 81, and 82. One of the longest recessions in the U.S. history since the second World War. And, all of a sudden, despite a tremendous interest we had been talking about, they didn't return my phone calls. And it was clear that the deal was off. That was the first time I tasted rejection. And I said what am I going to do now?

My mother was the first investor. She doesn't even read English. I gave her my business plan; she said, "What is this?"

I finally realized I had to rewrite the plan and go out to raise money from the venture capital sources, which is more typical. And that's what I did.

My mother was the first investor. She doesn't even read English. I gave her my business plan; she said, "What is this?" So that gave me a little bit of encouragement. And a couple of my brothers had some savings, and they all chipped in a little bit. . . (it was) moral support. The big chunk of money came from professional investors who are venture capitalists. . . . And, you know, if I were to open a flower shop, I probably wouldn't need the venture capitalists. I probably would have found the family support would be good enough to launch a small business. But high tech business takes an awful lot of money. Very few families, unless they are very rich, will be able to take care of the whole thing.

Ledbetter :   Were there times when you were frustrated and discouraged with what you were trying to do and, if so, how did you get past that?
Lam :   Yes. In fact. . .the first year, even the first 2 years of Lam Research, were relatively-- I wouldn't say easy -- but more predictable. Because it involved technical things like designing the equipment, producing the prototype and testing, and making it a shippable product in the first couple of years.

We got the first order a year and a half into the beginning of Lam Research, and I was very happy. We literally popped a champagne bottle, you know, for the first order.

The tough things, however, came in the follow-on orders. Because once we got out in the marketplace, our competitor knew about it. So, now they put all their guns aiming at me, and I was still struggling to get up, you know, get the company going. And they were so experienced in many different ways, particularly in sales.

I have seen a lot of people who came out of top colleges. They thought they were so great because these colleges have great reputations and name. And they thought they had learned all there is to learn. Literally. They stopped learning.

So I was having a hard time. Plus, during the recession years, 80, 81, and 82, most companies were holding up buying capital equipment. Capital equipment was always the first one to be shut off whenever they see a downturn in the economy. They would use whatever they've already got. And to try to extend it.

Only when the chip manufacturers see a lot of orders coming in, then they will resume the buying of equipment. That has always been the case. It certainly was like that in the early 1980s when I was getting Lam Research going.

The thing that helped the company was that I was introduced to someone who was much stronger, much more experienced in sales. So between Roger Emerick, who now is the Chairman and CEO of Lam, and myself, who complemented him in technology, in marketing, in certain aspects of customer supports and field service, the two of us really got the company going, particularly in 1983, and then we took the company public in 1984. And, of course, Lam Research now is a world-recognized leader, and with over $1 billion in sales.

Ledbetter :   What advice do you have about college for young people?
Lam :   Well, to some extent, I think, depending on the field that you choose to go in. For example, if you're interested in engineering, there are probably 10, 20, 30 good colleges, colleges which are particularly good in engineering. If you happen to like, say, chemistry, there are also a lot of schools which are good in that. In general, I think that perhaps not as critical as long as there are 2 things in my thinking.

One, of course, you want to get into as good a college as you want. But you are really more important than the college to decide on your future. I have seen a lot of people who came out of top colleges. They thought they were so great because these colleges have great reputations and name. And they thought they had learned all there is to learn. Literally. They stopped learning. After they got the advanced degree. And there was the most unfortunate thing. So, really, you make what you areqrather than the college itself.

Having said that, if you can move into a better college to give you a little more rigorous training and higher quality of education, perhaps is always helpful. Now, in my case, when I first finished high school, as I mentioned, I wasn't at the top of my class. So I got into a smaller college. And by that time, I had woken up that I better get my act together if I wanted to make something out of myself. So I began to work very, very hard and transferred myself out of that college after 1 year to a better college. And then I decided at that time that I wanted to go to graduate, so I had to work towards that while I was an undergrad. Finally, I got accepted into one of the better colleges in my graduate studies.