q&a SAN JOSE, Calif.--T.J. Rodgers is an unapologetic capitalist who happens to be the chief executive of San Jose's Cypress Semiconductor. The two roles, as you'll soon see, are deeply intertwined.
Cypress's product catalog includes things like programmable logic devices, USB controllers, and SRAM chips--the basic building blocks of modern gadgets and computers.
Today in Silicon Valley, though, Rodgers is just as well known for his role in buying and building up SunPower, which sells rooftop solar systems that provide power at prices competitive with utility rates. SunPower's market capitalization is more than $5 billion, which isn't bad for a company that Rodgers kept alive with his own money until his board came around.
In the political world, Rodgers is famous for his plain-spoken approach and verbal skewering of his opponents, who have included everyone from Jesse Jackson (complaining about the so-called digital divide) to a nun from the Sisters of St. Francis on Philadelphia. Sister Doris Gormley wanted racial and gender quotas for Cypress' board; Rodgers responded in detail, saying her advice was "immoral" and "we pursue talent--and we don't care in what package that talent comes."
Rodgers recently married Valeta Massey in a ceremony at the Fairmont hotel in San Jose. In a choreographed ceremony, he had a faux IRS agent stand up and object to the nuptials on grounds that the U.S. treasury would lose money. Silicon Valley uber-lawyer Larry Sonsini provided some on-the-spot legal advice, and bagpipers provided a counterpoint.
This buccaneering, free-market spirit makes Rodgers an interesting fellow to interview, so I did. Here's a lightly edited (I abbreviated some of my questions and some of his answers) transcript of our conversation from last month. Part two will follow Friday.
Q: Why get married now, after you and your bride have lived together for 22 years?
If you're not married when you die, half of your property goes to the state. That's not going to happen to me. The way we've lived together hasn't changed. She's been with me since 1985.
When you asked your lawyers to come up and read the contract during the ceremony, did they know about it in advance?
The lawyers knew in advance what I was doing. The legal blurb that I read was revision No. 4 of a document that I worked on creating. Our corporate counsel wrote it and I edited it.
Switching to politics, who will you vote for in the 2008 presidential race?
In terms of president, Ron Paul is a non-nut and I voted for him. It won't happen in my lifetime that a third party is going to become important. Ross Perot--I didn't support him--showed that when both parties get out of touch and arrogantly refuse to listen, a third party can rise up temporarily.
Who am I going to vote for? You have to know what the choices are, which are not yet known. In my value system where the good guys are libertarians and the bad guys are totalitarian, there are two bad guys--McCain and Hillary. I would vote against them for anybody else. For example, I'd vote for Obama.
Why the antipathy toward McCain?
There's an article in Reason magazine about McCain. He's anti-free speech. He's a war guy. Those are about as bad as you can get from a libertarian perspective.
I got turned off by him in a personal meeting. I made a presentation to him that the government is wasting hundreds of millions of dollars in (technology-related) pork barrel spending. I showed that the pork barrel spending is not only fundamentally bad, but also harmful to the people getting the money, the semiconductor industry. When I got done with the presentation, he labeled the pork barrel spending "peanuts." He poked his finger in my chest and said that he's "going to get rid of your big fat stock options."
He's in favor of stifling free speech. He's in favor of the war. He doesn't truly care about lean government. You'd have difficulty picking between him and George W. Bush.
Democrats in Congress
Those companies that broke the law knowingly should be prosecuted. Invading people's privacy to me is a lot worse of a crime than a lot of these so-called white-collar, stock-based crimes that Washington loves to scream about.
Does this mean the Democrats have now developed a spine?
The question implies that their reaction finally might be one of principle. I ascribe no principle to any action that goes on in Washington, D.C. Basically the wild dog pack of Democrats detect that the wild dog Republican is on his back and has his belly exposed, and they're going for him.
You're making libertarian points. Why aren't there more libertarians, or at least out-of-the-closet libertarians, in Silicon Valley?
First of all, I think Silicon Valley people, if you gave them the world's smallest quiz, my belief is you'd find that people in Silicon Valley are highly libertarian but they don't even know what that phrase means. It's not part of their vernacular. Silicon Valley people are highly apolitical. They're worried about their businesses, they're worried about growth, they're worried about technology. Sometimes they get involved in politics. They get involved on both sides of the fence...
If you would look at the people in Silicon Valley who identify themselves as Republicans, you'll find that they're free-market Republicans. What I think you'd find is that Silicon Valley Democrats have an economic free market base to them, and therefore look a lot like libertarians. Silicon Valley Republicans... aren't restrictive on social issues. You're not going to find any anti-gay, redneck Republicans in Silicon Valley.
Because they don't care that much about politics, they don't get beyond the nuances. But if you took the next layer of detail, you'll find that regardless of how they identified themselves, both sides are libertarian-ish in their leanings.
When you were elected to the board of your alma mater, Dartmouth College, a few years ago, you said about being assimilated by other board members: "One thing that I will say is that I'm a fairly indigestible person." Did you ever think you'd be involved in a lawsuit?
No. When I was elected, one thing I knew was that I wasn't going to do was go on the board and be a good ol' boy and fit in. That was my quote about being indigestible. If you polled the board and asked them if the quote was true, you'd get a 100 percent vote that it was true.
The thing that separates Silicon Valley from the east coast is that in Silicon Valley, you think almost nothing about politics. That means not only national and state politics but also politics inside organizations. Companies in Silicon Valley are transparent and non-hierarchical--if they're not this way they get snuffed. They prize above all else succeeding in the marketplace.
If you go to the east coast and compare Fortune 100 companies, compare institutions at universities for example, there's a much bigger component of politics. Who has power; who doesn't? Who controls whom? Then there is here. I knew it was going to be that way going in. So I decided that I would deliberately reduce my cross-section to criticism going in. Therefore in writing and in deed and actually what I've done for four years I've only focused on two things. No. 1, making Dartmouth a better undergraduate college. It's real simple: more teachers, better courses. Nothing controversial. I've assiduously avoided any left-right value judgment arguments...
I assumed that even though I wouldn't be anybody's buddy, I didn't think I'd get involved in public controversy. But I didn't think my efforts, including talking to you or publishing in the Wall Street Journal, would be met with (attempts to limit independently elected trustees in speaking their mind).
Should the New Hampshire state government get involved in the Dartmouth College administration vs. alumni dispute?
That question puts me between a rock and a hard place...If you think about World War II, my enemies' enemies are not my friends. I would prefer that Dartmouth is independent. Having said that, Dartmouth is trying to get away with some awfully anti-democratic behavior. The administration is trying to pack the board of Dartmouth College with insiders, illegally, I believe. Sometimes you need intervention from the state, in this case the court system...
How much of your future revenue growth is going to come from solar cells and panels from SunPower vs. your traditional product line?
In the last couple years, all of our growth has been SunPower. In our semiconductor business, we've divested something like six businesses to (focus on SunPower). We'd be over a billion dollars this year if we had not divested businesses. We'll still be over $800 million this year because we grew while we divested business.
Overwhelmingly (SunPower) has been our growth. Overwhelmingly it's been the focus of our attention. We've earned it. People talk about SunPower as if it was an independent entity that's not connected to Cypress. That's really not true.
What do you think of the supposed progress in CIGS (copper indium gallium selenide) as an alternative to silicon?
CIGS is a loser. I've been saying it's a loser consistently for a year and a half. I don't think it's going to make it. I don't think any of them are going to make it. The reason is low efficiency.
Even though it offers lower costs?
Not really. I'll tell you why in a minute...We just installed the largest American solar installation ever outside of Nellis Air Force Base in Las Vegas--14 million watts on approximately 140 acres.
You see giant concrete buttresses holding the panels against desert winds. You see tracking motors moving large panels left and right to follow the desert sun. You see conduits. You see switching centers where the power comes together. If that thing were made out of CIGS, it would be 420 acres. If would have three times as many trackers, and they're expensive.
The mistake that CIGS people have made is that they look at cost per watt of a solar cell and assume if they have some sort of advantage, they'll win.
SunPower's Web site lists some case studies showing there's near-parity with electrical utility pricing, at least in California.
For a system on your house, let's say the full retail price prior to subsidy is $10 per watt. Of the $10, $3 is the solar cell and $7 is everything else--the frames, the panels, the modules. So somebody comes along and says my product's half the cost, so take your panels, empty them out, and I'll give you solar cells at half the efficiency but half the price. Your $3 per watt goes to $1.50. Your $10 per watt total goes to $8.50. Oh, and your 10 panel system went from 2,500 watts to 1,200 watts. It got cut in half.
Having said that, there is one thin-film technology that is viable and it's cadmium telluride, not CIGS. It works because the way it's made is the substrate is a piece of glass. You put a piece of glass in a machine... It's less than half as efficient as the best silicon cells, the one we make. It's also cheaper for real because they get rid of the panel; the module becomes an inherent part of the framework.
A 5-acre warehouse with a flat roof in Los Angeles, it makes sense to go for the lowest cost for watt. (Cadmium telluride ) is going to make it. CIGS is not. Silicon will continue to dominate in the future.
What do you think of Suntech, the Chinese solar company, that's making international inroads?
Every company does something they do well. They've got a country behind them and they do super low cost manufacturing. They're good. They make medium efficiency cells, say 15 percent. But they make stuff real cheap. And it's real panels like this that you can walk on and have long-time environmental life.
Editors' note: The second part of this two-part interview will be published on Friday.