« Previous Article Next Article »

Ray Zinn, author of Tough Things First

| 01.25.2016 |

Last year, Ray Zinn retired as CEO of the microchip comany Micrel after 37 years on the job. Zinn recalls his career in his new book Tough Things First: Leadership Lessons from Silicon Valley's Longest Serving CEO.


Q: How would you define the state of entrepreneurial endeavors in today’s America?


Ray Zinn: According to some not-too-distant surveys, approximately 12 % of the U.S. is involved in entrepreneurial activities. In recent years this has shrunk to 8%. Even this may be optimistic. In the survey, “entrepreneurs” were defined as any individual who is in business for himself. This could include people doing services or out doing contract work. This could be someone driving for Uber or Lyft. The definition of entrepreneur has evolved to include subcontractors, and yet the numbers fall.


Other studies monitored people’s saving accounts, which very closely mirror the results on the study on entrepreneurs. In the past 12% of the US population had a savings account and this now has dwindled to 8%. The reasons given for the dwindling savings rate are that with unemployment having been very high during the Great Recession, and with the economy still suffering as it is, people’s savings accounts have dwindled.


The cost of living has been virtually flat over the past nine years and many businesses usually gage their salary increases to cost of living increases. People, therefore, have received little or no merit increases for the past several years. Without savings or hope for more income, few are willing to risk true entrepreneurial risk and investment.


My hope is not depleted. My visits to the various universities over the past few months revealed that they all have entrepreneurial programs. These universities report that the entrepreneurial spirit has never been higher, which is a reflection of the Millennial Generation. They see what Silicon Valley has done to change the world and how to create wealth by doing so, and they are interested. So, overall, I would say that there are more entrepreneurial wannabe’s, however their ability to start their own businesses is less, especially given some contraction in the Silicon Valley venture market.


Q: What do you see as the growth industries in today’s high tech world?


Ray Zinn: There is no doubt that software dominates, at least here in Silicon Valley. Indeed, some now call this region Software Valley.


The term "Silicon Valley" was minted in the late 70’s with the advent of Intel’s foray into microprocessors and the evolution of the PC industry. Nearly half of those PC-focused semiconductor companies were in Silicon Valley. And those semiconductor companies had their own manufacturing capability in Silicon Valley. Today, that has all that has but ceased to exist. The Valley is no longer a Silicon manufacturing region, though software and Internet services companies are growing wildly.


The good news is that the same inventiveness, drive and entrepreneurial spirit than made Silicon Valley what it was, makes Software Valley what it is. The Bay Area is still the hot bed for technology, though the emphasis has shifted from chips to bits. Today, when we think of a Silicon Valley high-tech company, we don’t think of Intel and Fairchild, we think of Apple and Google.


Consumer technology is still at the helm of the high-tech economy. Those consumer products are the focus of nearly everyone here. Mobile devices and applications are the hot items currently for the high-tech industry, and the Internet of Things (IoT) is the next great passion.


Q: Do you believe U.S. schools – both high school and colleges – do an adequate job in encouraging  entrepreneurial endeavors?


Ray Zinn: I don’t have statistics to support this, but business schools are growing tremendously in all support of entrepreneurial programs. I believe this is a reaction to the decline in American manufacturing and to the insane success many have had in Silicon Valley. They recognize that minting MBAs who manage but who cannot lead or form companies is limiting. With people like Steve Jobs, Mark Zuckerberg, Brin and Page as household names, with their world-changing success and new wealth, there is also a demand from students to be taught entrepreneurialism.


High schools – in general – do not have an entrepreneurial bent to their programs. This is a shame because high schools should offer a broad understanding to how the world works, which includes the economy and business, which includes entrepreneurialism.


I think the term “entrepreneurial” is what is attracting students in to the business schools. As I have reviewed the curriculum in these universities for their entrepreneurial programs, and I see them improving. In my 37 years as CEO running a Silicon Valley semiconductor company, I have come to believe that there are four basic courses that need to be emphasized at business schools: 1) financial and managerial accounting, 2) business law, 3) basic accounting, and 4) economics. Many people starting companies in Silicon Valley do not have a handle on these core concepts.


Q: What can the federal government and the state and local governments do to encourage more business start-ups?


Ray Zinn: Over the past several years, the economy has not been at the forefront of our government’s focus, despite the staggeringly slow return to full employment and lackluster GPD growth.


I recently talked with one of our senators, and it is clear that 90% of a legislator’s time is spent on social issues with only 10 % on others. As a result, the GDP growth rate has stagnated at one to two percent over the past several years. Some of our foreign competitors are eating our lunch.


The federal government is inattentive to the economy. Local and state agencies rarely have an economic view, and it is only for their states. The allocation of resources tells us what the issues are. I don’t need to state the obvious – politicians, whether local, state, or federal, are at a complete stalemate. Until the media brings their attention to the economic woes of this country, our politicians will still squander their time on non-economic issues.


Ray Zinn is online at ToughThingsFirst.com.