I Am John Galt (30 page)

Profits versus Political Correctness

Rodgers's years of slugging it out against domestic and international competition alike also gave him a disdain for noneconomic standards of business success like artificially imposed diversity quotas or so-called social responsibility. In his view, these collectivist benchmarks are based on a faulty moral premise that ultimately does more harm than good for our society and the economy as a whole. “If you go out of college to some big corporation and the first lecture you get from the human resources group is why your company is good because they believe in corporate social responsibility,” Rodgers explains, “then all of sudden, you know, you never get put through the test of really making it on your own.”

His staunch defense of his business methods—finding the best talent regardless of appearance or background, competing to win rather than maneuvering to look good—has resulted in some now-legendary battles played out on the op-ed pages of our nation's newspapers. Perhaps the most famous was his widely circulated 1996 response letter to a Franciscan nun, Sister Doris Gormley, who criticized Rodgers for the lack of racial and gender diversity on the Cypress board of directors.

Rodgers replied in his letter, which was picked up and reported in a page 1 article by the
Wall Street Journal
:

Choosing a Board of Directors based on race and gender is a lousy way to run a company. Cypress will never do it. Furthermore, we will never be pressured into it, because bowing to well-meaning, special-interest groups is an immoral way to run a company, given all the people it would hurt. We simply cannot allow arbitrary rules to be forced on us by organizations that lack business expertise. I would rather be labeled as a person who is unkind to religious groups than as a coward who harms his employees and investors by mindlessly following high-sounding but false standards of right and wrong.
11

The resulting flood of responses was overwhelmingly positive. Ninety-six percent of Cypress shareholders wrote Rodgers in support. John Allison of BB&T got a similarly positive reaction when his bank announced it would not make loans to develop property acquired under eminent domain. “It seems the liberal-dominated media continue to push us further and further towards the society of Ayn Rand's
Atlas Shrugged
, and your position stands out as one of the few against the downward slide,” wrote one individual investor from New Mexico.
12

A U.S. Congressman from Washington State wrote, “Our educational system is failing in part because it avoids the need to educate young people that capitalism, profits, hard work, and achievement are not bad things.” Of the 27 lay Catholics who wrote in supported Rodgers's position, one said, “The Sister Gormleys of the world are neglecting God's work for dilettante socialism.”

More than half of all responses argued the philosophical point that capitalism is morally good. Even Nobel Prize-winning economist Milton Friedman sent Rodgers a note along with a copy of a
New York Times
piece he had written in 1970 titled “The Social Responsibility of Business Is to Increase Its Profits.” “He made every point I'd made, but 26 years earlier,” T.J. quipped. Milton Friedman has inspired many advocates of free markets; we'll meet him again in Chapter 9, “The Economist of Liberty.”

The few negative responses were typically emotional—and anonymous—rants. One called Rodgers a “money-grubbing, narrow-minded elitist . . . desperately holding onto [his] white-male bastion of power.” One Washington resident wrote, “There are a number of educationally and professionally qualified women and minorities who can excel as board members of Cypress and other male/Anglo-Saxon-dominated companies.” The writer didn't provide the names of those qualified women and minorities, nor did she seem to realize that only two of the five Cypress board members were, in fact, Anglo males.

The executive director of the Council of Institutional Investors wondered whether “CEOs who insist on board clones failed to play high school sports or other security-enhancing activities.” Apparently Rodgers's two high school football championships and a college career playing for Dartmouth didn't count. The most succinct feedback was submitted to the Cypress web site suggesting simply that T.J. should “pull his head out of his ass.”

The Conscience of the Nation

In 1999, one of T.J.'s directors called him to let him know that Jesse Jackson was coming to town. “He's been to New York and called the stock brokerage and the investment banking industry racist,” remembers Rodgers. “Then he went to Detroit and called the car industry racist. So he is going to come here and call Silicon Valley racist . . . probably.”

“You're not going to say anything, are you?” asked the director. “You understand this guy does this stuff for a living. He's a low-life, but he is going to rip your ass and you're going to embarrass the company, so why don't you just keep your mouth shut?”

“Okay,” Rodgers replied. But in the end he just couldn't hold himself back. After the nun incident, news outlets from the
New York Times
to the local television stations knew Rodgers was a reliable source for attention-grabbing sound bites on controversial issues. As Jackson ramped up his rhetoric in Silicon Valley, reporters began beating harder on T.J.'s door. He finally relented.

“Do you have a comment on Jesse Jackson?” asked a reporter from Fox News.

“I said, ‘Jesse Jackson reminds me of a seagull,'” Rodgers recounts. “‘He flies in, craps all over everything, and then flies out.' And then the guy's looking at me like his jaw drops and he goes, ‘Do you really want to say that?' And I go ‘Yeah.' He said, ‘Well, okay.' Then he didn't ask me another question and he's gone.”

After his Fox News television appearance, the
San Jose Mercury News
invited Rodgers to expand on his thoughts in a more reasoned article, which it published on March 14, 1999. The arguments read like one of Francisco d'Anconia's expositions on the virtues of a free-market capitalist meritocracy.

My company, Cypress Semiconductor, has 35% minority employees—every one a shareholder. And at the top, four of our nine executive vice presidents, or 44 percent, are minorities. Cypress' overall employment statistics are typical for Silicon Valley. I invite the Reverend Jackson to send me the resumes of those disenfranchised people who've received training from “the best universities.” With 115 open positions we could use them. We hire 500 people per year and still never fully meet our needs—just like other Silicon Valley companies.

. . . But why should Silicon Valley companies be forced to deal with Jackson? He is an economic train wreck who recently wrote, according to his Web site: “Deregulated capital markets, free trade, floating currencies—these are simply mechanisms, not measures of virtue.” And when the markets aren't free anymore, who will determine what is virtuous—Jackson?

Compare the moral impact of the CEO who says or implies, “Many of you are here because of quotas,” to that of a CEO who says, “You are here because you are the best. Period.” We should not tolerate any degradation in one basic value that drives Silicon Valley meritocracy—despite Jackson's criticism of it as “an oozing ideology that needs to be addressed.”
13

“We only hire based on merit, period. And right now our company is 64 percent minority,” Rodgers reports dismissively—letting the oxymoron “64 percent minority” speak for itself. He's also proud of standing up to Jackson and not cowering in fear from the deliberately charged words “minority” or “prejudice” that Jackson wields to slice his opponents. “Every other CEO just crawls under his desk and waits for it to go away,” says Rodgers of the typical corporate reaction when Jesse comes to town to spout off about racism.

Rather than take Rodgers up on his challenge to meet for an open debate, Jackson's camp replied: “We can now officially describe Cypress Semiconductor as a white-supremacist hate group.”
14
All we can say about that is that when we visited T.J. on Champion Court, we didn't see any crosses burning outside Cypress's headquarters.

Rodger's in-your-face defense of his moral ground and living a life that simply honors the truth hasn't been without consequences. “These are my lawsuits,” Rodgers says pointing to the opposite wall covered with over a dozen black-and-white documents. “I always frame them.” And he refuses to settle or be blackmailed into compromising his principles—no matter how drawn-out or expensive the ordeal.

Does he ever end up spending more to fight than to give in to the demands of his extortionists? “It happens all the time,” Rodgers says matter-of-factly. “The idea that that decision is a decision about return on investment is bullshit. . . . They're calling you a scumbag and a crook, right? So how much money do you have to save to acknowledge that? Then of course it's ‘without admitting guilt'? Bullshit. You gave them a check.”

The criticism doesn't seem to faze him much. Not that Rodgers is an unfeeling automaton—in fact, he is an intensely emotional man. But he has a remarkable ability to take a step back from the initial gut reaction to view the situation, and himself, in an objective context.
Fortune
called him up a few years ago for a piece it was running on the world's toughest boss. “Two or three years before, they had issued America's toughest bosses and two of the people that I remember on the list were Jack Welch and Andy Grove,” recollects Rodgers. “They were basically good guys who ran great companies that were tough. . . . So I figured it would be the same thing.”

What it turned out to be—with Rodgers's face on the cover in extreme close-up, seeming to glower at the reader—was what Rodgers calls a “hit piece on nasty prick bosses . . . and I got real pissed off,” he remembers at first. “Then I read it again and the quotes were right, and then I forgot about it. . . . I have this little byline that's in my head: ‘
Fortune
magazine—yesterday's news tomorrow.' It's like who gives a shit about
Fortune
magazine? Who cares?”

Silicon Always Tells the Truth

Business philosophy is one thing—and Rodgers is one hell of a philosopher. But remember, Francisco d'Anconia was a double major in philosophy
and
physics. And Rodgers is every bit the master of the physics of the business about which he philosophizes so brilliantly.

Listening to T.J. talk about silicon chips, it's easy to be dumbfounded by the breadth and depth of his knowledge. Like a kindly college professor tutoring a couple of school kids, he whipped out a pen and a manila file folder, then illustrated for us the underlying physics of transistors and how they link together to form the ultrafast memory chips his company is famous for. Terms like P-N junction, tetrahedral bonding, and inversion layer conduction as a quantum-mechanical phenomenon rolled off his tongue like an ordinary Joe's barber shop banter on baseball statistics.

Rodgers's latest generation of technology, known as a programmable system on a chip (PSoC), is a world's first. The design consists of configurable analog and digital peripheral functions, memory, and a microcontroller—essentially an entire computer—on a single chip. Engineers no longer have to hunt down, configure, physically connect, and test individual components to drive electronic products. Using PSoC, they simply drag and drop various modules on a computer-based graphical user interface, hit “go,” and the chip configures and programs itself to the designer's specifications. Currently Rodgers's PSoC technology is being used in products as diverse as computer printers, high-definition televisions (HDTVs), touch-screen cell phones, ad even washing machines and coffee makers.

“The big chip we're just now starting to ramp up, it's the size of my little fingernail, and I had 300 engineers working on it for three years,” he reveals proudly about his latest project. “When we slice the chip in half to look at a cross section, to look at the transistor profiles and see if the thing's being done right, we literally can see atoms,” he said in amazement, laying out a couple of images labeled “High Resolution TEM SiO2.” And sure enough, the individual atoms were clearly visible stacked neatly in an organized matrix, “like a rack of pool balls.”

All that said, on another level brilliant physics and brilliant philosophy are two sides of the same enterprise. Physics taught T.J. what Aristotle taught Ayn Rand: that A is A, that existence exists, and any philosophy that says it doesn't is a pack of lies. As T.J. puts it, “Silicon always tells the truth.”

How did T. J. Rodgers come to such confidently held beliefs, such strong bedrock principles? Was there a primary influence? An Objectivist mentor in college? A libertarian guru leading him through his formative years?

“The fact is there was no one person,” he responds thoughtfully. “I really believe it's genetic; I really do. Part of it is the fact that I'm scientist and an engineer and, in that business, Maxwell's equations don't give a shit if you're Republican or Democrat.”

He explains, “There are laws of physics and chemistry that allow you to understand and make respectively that chip and then electrical engineering, which allow you to assemble millions of things together and have them work right. And they are what they are. To say, you know, ‘It's his fault,' or ‘I didn't get enough resources,' or ‘If we only had a subsidy.' All that stuff is just crap; it's an excuse. Silicon always tells the truth.”

“Man can rearrange the materials that exist in reality, but he cannot violate their identity; he cannot escape the laws of nature,”
15
wrote Leonard Peikoff, Ayn Rand's designated intellectual heir. The political corollary, as Rand herself wrote, is that “To deal with men by force is as impractical as to deal with nature by persuasion.”
16