The man who connects

Henry Samueli  picture: Yonatan Bloom

Broadcom ("Connecting Everything") founder Henry Samueli combines business success with philanthropy, alternative medicine, and special ties to Israel.

Chip giant Broadcom’s slogan “connecting everything” is a fairly accurate description of the company’s founder, Henry Samueli. The R&D man, who has 75 registered patents to his name, is also a big believer in alternative medicine who takes a Chinese herb whenever he has a headache. He maintains a balanced rationalism, but when his hockey team, the Anaheim Ducks, is in the playoffs, he will grow his beard like any other die-hard fan, to bring them good luck. He has enough money to join Bill Gates and Warren Buffett’s “Giving Pledge,” to donate half of his wealth to charity in his lifetime (“A lot of this comes from Jewish culture, and the idea of tzedakah, charity,” he says), and yet he still gets up every morning, and has for 24 years, and goes to his CTO office, with the same enthusiasm and sparkle in his eye.

Samueli humbly says that he is less in control of development and serves as more of a mentor and guide, but, according to those who know him, he knows the serial numbers of each of the company’s hundreds of different chips. And despite the fact that his personal wealth is estimated at more than $3 billion, and that he places prominently on the “most-wealthy” lists each year, and the lists of “self-made millionaires,” and many other similar lists, he avoids hyperbole, considers his words carefully, and sometimes appears self-conscious and even a bit shy.

“Broadcom’s vision has not changed since we founded the company,” Samueli says in an exclusive interview with “Globes - G Magazine.” “‘Connecting everything,’ that was company’s mantra and slogan from day one. In the world today, people are talking about the Internet of Things, from machines to digital homes, from lightbulbs, to fire-detection systems. To me, it’s just another way of saying ‘connecting everything.’ From the beginning, we felt that communication is the key to the success of governments and people, and a way to improve people’s lives.”

You still sound very enthusiastic about all this

“Yes. And my favorite slide in the company presentation is the one that says: More than 99% of all Internet traffic goes through at least one Broadcom chip. Whether it’s your mobile phone, or your TV, or your GPS, you will always, somehow, pass through one of our chips. We sell seven million chips a day.”

You have been in charge of the company’s R&D for 24 years. How do you keep things fresh?

“At this point in my career, I am more on the management side of things. I am not the one who invents the technology; we have tens of thousands of workers at the company, more than 800 of whom have PhDs. They are the ones who do the inventing, and I serve as more of a mentor to them, overseeing things, and providing advice and guidance when needed. I took a step back from the situation I was in before, when I was a man whose hands were in the heart of the action, years ago. But I enjoy this as well - the mentoring. It’s very rewarding for me.”

Everyone has mornings sometimes when they say to themselves, “I don’t feel like going to work today,” or, “Why should I put up with this?” Usually, the answer is, “Because I need the money.” What do you tell yourself?

“It just does not happen to me. I guess it’s just not in my nature. I am very committed, and determined, and I do not give up easily. A person who gives up easily can’t build a company like this one, I guess. There are ups and downs, but I just work with them.”

The timing was great

Samueli, 60, comes to Israel quite frequently. Of the more than 60 acquisitions that Broadcom has made over the years, 11 were in Israel (for a total of roughly $2 billion), and when he comes here, he always makes sure to visit his cousin, daughter of the aunt who moved to Israel after the Holocaust. But this time, he had a special reason to visit: A day before we met, Samueli received a prize form the Israeli government for his global contribution to innovation, and his contribution to innovation in Israel, at the Innovex conference for innovation in technology.

Though his storied rival, Qualcomm founder Irwin Jacobs (“We don’t use the word rival, we say ‘competitor,’” he says with a smile) received the prize from Minister of the Economy Naftali Bennett himself last year, this year, due to the upcoming elections, the prize was awarded by Head of the National Economic Council Eugene Kandel instead. But this does not dampen Samueli’s joy and excitement. Though he has received many innovation prizes in the past, he always finds the relationship with Israel touching.

Samueli was born in Buffalo, New York, to Holocaust survivors from Krakow, Poland. When he was ten years old, his family moved to California, and he grew up in Los Angeles and studied electrical engineering at UCLA. After completing his PhD, he went on to work in the defense industry, at a company by the name of TRW. TRW produced broadband military communications systems, and it was there that he met the man who was to become his partner in founding Broadcom, Henry Nicholas. After five years at TRW, Samueli was offered a position as a professor of electrical engineering at UCLA. Because of Samueli, Nicholas too decided to return to UCLA, as a PhD student, “and he became my first doctoral student,” says Sameuli.

At UCLA, on the basis of what he had learned during his years in industry, Samueli led a ten-year research program for broadband communications chips, with Nicholas at his side. “Through this research, we developed very interesting technology, on the basis of which we founded Broadcom in 1991.”

The two of you are very different

“There is no doubt that we have very different, but very complementary personalities. Opposites attract in marriage, and I guess also in business. He is a very aggressive and extroverted person, and I am more calm, and passive.”

Whose idea was it to leave academia and found a company?

“Both of ours. We felt that we had very promising technology in our hands, and the timing was also great, because the world needed a solution for broadband communications at that time. Internet connections then were made using dial-up modems, which were very slow, and we came with cable modem technology, at the right time, and the company took off.”

People say that at that time you turned down many generous acquisition offers.

“Yes, we had quite a few of those. Among them were offers from Intel and CQ (a company that no longer exists), but we felt that we had something in our hands that was too good to give up.”

In 1998, the company went public, right at the peak of the Internet boom, and grew quickly to sales totaling a billion dollars. The burst of the Internet bubble at the start of the millennium did hurt the company, but Samueli says it suffered a relatively minor setback, of about 10% of its revenue, and then recovered relatively quickly, and continued to grow. The company’s product portfolio grew dramatically, much of it through acquisitions, mostly of start-ups. Eleven of the start-ups Broadcom acquired were Israeli, making Israel Broadcom’s second largest site outside of the US, with 800 employees (the largest is India, with 1,500 employees).

Broadcom VP Dr. Shlomo Markel, who runs the company’s Israel operations, likes to tell the story of how he joined the company: At a business dinner in Las Vegas, he met Samueli and Nicholas. The chemistry at the table was very strong, and at the end of the evening he received an offer to join the then-young company. He said, “But I have a son in the Israeli Navy, I have to stay in Israel,” and the two said, “No problem, so we will have a vice president who lives in Israel.”

Broadcom is currently building a development center in Nazareth, which will employ Jews and Arabs. Markel says that perhaps this will solve some of the employment problems for Arab engineers, because, as he sees it, the Arab population likes families to live near each other, and does not want to commute to the Yakum industrial zone every day.

A very difficult period

Though Samueli is one of the world’s richest Jews, he is no stranger to hard times, both on a corporate level, and on a personal one. On the corporate side of things, Broadcom was recently forced to withdraw from a major acquisition, and to lay off more than 2,000 workers. In October 2013, Nokia’s modem group, which was at the time owned by Japan’s Renesas, was put up for sale at the bargain price of $160 million, including all the patents. Broadcom saw before it an opportunity to improve its position in the 4G mobile modem market, but less than a year later, in the summer of 2014, it decided to shut down the business.

What happened? Did you make a mistake?

“We were one of the last players to enter the mobile market, and we had to establish our position versus the competition - Qualcomm is, of course, one of the biggest competitors. It became clear that we needed make vast investments in this field, and we never managed to overcome the hurdle of making this business profitable. We continued to develop good products, but the investments were so extensive that we didn’t manage to cover our development costs, and in the end we decided that we needed to get out, and invest in more profitable areas.”

It wasn’t something you could have predicted? The competition already existed.

“It’s difficult to predict such things. We knew that we were good, and that we could develop and manufacture good chips. The part that we didn’t foresee was how much the competition in the market would increase. On the one hand, the veteran players, like Intel and others, entered the market, and on the other hand, new Chinese players entered the market, and prices continued to drop further and further, and the profits evaporated. There was no profit there.

“We had to make a decision. If you can’t profit from a business, you have to get out of it. Cut your losses, get out, and move forward. It was a very difficult decision, because we laid off more than two thousand people, and it’s pretty painful to admit a mistake and fire people. But otherwise the company would be damaged, and our situation would be much worse. So we chose the less bad of the two bad options. But I’m convinced that we made the right decision, because now we have more money to invest in areas that we are good at, and to strengthen our core businesses.”

On the personal front, Samueli’s difficult period came a bit earlier, in the mid-2000s. At that time, Samueli and Nicholas were charged with options backdating at Broadcom. Samueli was forced to step down as chairman and VP technology. This sort of attention was foreign to him. Exhausted, and just wanting to get back as much as possible to his old life, he agreed to sign a plea bargain in 2008.

The judge, however, refused to accept the plea bargain, and insisted on continuing the trial to sentencing. A year and a half later, in 2009, the judge cleared him of wrongdoing, and sharply criticized the prosecution, whom he accused of threats and suborning witnesses. Nicholas, who leads a much more colorful life, also “enjoyed” accusations of drug parties that he allegedly held. Nicholas was also eventually acquitted of all charges, and the judge criticized the prosecution sharply in his case as well.

All’s well that ends well, but how do you get through such a period?

“It was a very difficult five-year period. Even when you know you are right, you still need to go through the process. I think that that’s the beauty of the justice system in the US - that in the end, you can prove your point.”

That’s easy to say in retrospect, but in the middle of the process, you don’t know how it will end.

“True, you don’t know, and it is personally difficult for you and for your family. I had to believe in myself, and to believe that in the end the truth would come to light.”

The judge said they didn’t behave fairly in your case. Didn’t that upset you?

“Of course it was upsetting. But you have no choice but to see the process through.”

Did you learn any lessons from this process?

“No. When you have a high-public and financial profile, and are at the head of a successful company, you are a target. It goes with the position. It’s unfortunate, but you have to know how to deal with crisis just like you have to know how to deal with success. When a person succeeds, there are good things that happen, and bad things that happen, and they say that what doesn’t kill you makes you stronger, so I’m stronger now,” he laughs.

I don’t know anything”

Samueli has for many years invested in alternative and integrative medicine, from acupuncture, to oils, to dancing in the moonlight. He established, among other things, the Susan Samueli Center for Integrative Medicine, whose director previously worked at the NIH, and “changed his mind” over the years.

How does a professor who deals in exact fields such as computers and chips get caught up in healing “mumbo jumbo,” and the like?

“It came from my wife. She became very interested in alternative medicine when our daughters were born. She didn’t want to give them antibiotics every time they had an earache or a cough, so, inspired by friends who knew about these things, she gave them homeopathic medicines and herbs. The kids were so healthy that they went to the doctor only for vaccines.

“There have been many studies that have proven beyond doubt that acupuncture, herbs, and other treatments work. There is proof of their efficacy. Scientists understand why some of the treatments work, and in other cases they don't. The US Army has conducted many studies with soldiers in the field who were treated after injury with acupuncture, and their pain eased, and they don’t know why. They only know that it worked.”

As a scientist, isn’t it strange and embarrassing to know that something works and not know why?

“Not at all. I know I don’t know anything. When I think about what I know compared with the infinite knowledge that exists in the world, I feel like the dumbest man in the universe.”

Published by Globes [online], Israel business news - - on February 26, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Henry Samueli  picture: Yonatan Bloom
Henry Samueli picture: Yonatan Bloom
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