How This Entrepreneur Rose From the Ashes to Challenge Silicon Valley
After getting his PhD in applied physics at Stanford, Alex Lidow spent 30 years at International Rectifier (IR), a publicly traded chip company founded by his father Eric Lidow back in the 1940s.
Alex pioneered IR’s power management technology, co-authored the core-patents on which its business was built, became co-CEO with his brother, Derek, in 1995, and ran the company solo after Derek left to found market research firm iSupply in 1999.
Alex grew the company to over $1 billion in sales until 2007, when he was ousted in a board coup, along with most of his management team. To make matters worse, the board had frozen all his stock and he was going through a divorce.
With his finances tied up and his reputation turned toxic, Alex knew no one would hire him or fund his ideas, so he had no choice but to figure out how to thread that impossibly narrow needle.
Against all odds, Lidow somehow managed to bootstrap a new semiconductor company, Efficient Power Conversion (EPC), based on a new technology, Gallium Nitride (GaN), that Lidow believed could compete with and someday surpass silicon as the basis for electronic devices.
Today, EPC’s GaN technology can be found in a laundry list of hot new applications: 4G LTE base-stations, self-driving cars, augmented reality headsets, high intensity LED lights, tablet computers, wireless power charging, and even an XRAY pill you can simply swallow instead of going through the agony of a colonoscopy.
The company counts Apple, Google and Microsoft among its more than 700 customers around the world. And EPC has achieved the Holy Grail of the chip industry by making GaN technology both higher performance and lower cost than traditional silicon transistors.
How did Lidow, now 61, pull off this miracle? In a wide-ranging interview, he told me that “having no money forces you to make good decisions.”
Personally, I think he’s selling himself short. Lidow struck me as being almost naively optimistic and extraordinarily creative at finding novel solutions to seemingly impossible problems. That, to me, is a pretty killer entrepreneurial one-two punch. Alex also offered plenty of savvy advice for bootstrapping and scaling a startup:
Make the supply chain as frictionless as possible.
The key is to plug into existing infrastructure so you can scale with minimal capital, development and training. Besides saving a lot of cash, there are also fewer distractions. EPC’s GaN technology uses existing, under-utilized silicon factories that require virtually no new capital, processes or trained people. That’s huge.
Take advantage of a virtual workforce.
Most of EPC’s employees work from home at least some of the time. Since top high-tech talent is spread all over the world, it’s easier to allow employees to work from home than to try to convince them to move to L.A. Interesting that a practice denounced by Yahoo’s Marissa Mayer has been such a positive factor for EPC.
Make “lean” part of your company DNA.
In a day and age of high-flying, high-spending, high-tech unicorns, EPC has managed to maintain a lean mentality. Its offices are humble and its executive team, including Lidow, flies coach. And virtual offices have lower overhead costs, as well.
Hire slowly, and only top people.
Startups are all about growth, these days. Everyone’s trying to grow quickly, and with that comes the temptation to hire quickly. In reality, nothing runs a startup into the ground faster than making bad hiring decisions. EPC has taken its time in hiring only the best people, even when that meant being short-handed for a while.
Indeed, industry-leading companies like Apple and Google place an extremely high priority on hiring the best talent that fit their unique culture. On the flipside, Parker Conrad, founding CEO of health insurance startup Zenefits, was forced to resign last month because he prioritized growth over compliance procedures and internal controls.
By any measure, Lidow has had a pretty rough time of it and somehow managed to come out on top. But as I often say, adversity builds great leaders. I wouldn’t be the least bit surprised to see Lidow realize his dream of “crushing silicon with GaN.” If he does, it wouldn’t be in spite of the hardships he’s endured, but because of them.
Steve Tobak is a management consultant, columnist, former senior executive, and author of Real Leaders Don’t Follow: Being Extraordinary in the Age of the Entrepreneur (Entrepreneur Press, October 2015). Tobak runs Silicon Valley-based Invisor Consulting and blogs at stevetobak.com, where you can contact him and learn more.