Q What are the challenges you see in the next few years?

Kirk Pond (CEO, Fairchild Semiconductor): One thing that we're all facing is that there are a tremendous number of opportunities that we have over the next few years. And not only are there application opportunities there, but also business opportunities in terms of restructuring the industry, and consolidations that are taking place, and focusing the various companies are doing.

So, you have not only internal growth opportunities, but you have acquisition opportunities. And it's a challenge at all times to figure out where to put your resources to take advantage of this. In this type of environment, you can grow as quickly as you can resource. So the question is, what do you resource? How much is too much? And how far do we grow and how fast do we go, because all of us that have been in this industry know that the cycles are there, and the next one is somewhere out there, just as long as we don't drive ourselves of a cliff. So, I think the choice we all have now is just lots of opportunities, and which ones do we choose?

Steve Kaufman (CEO, Arrow Electronics): Challenges today are sometimes an issue of resources. In my view, the scarcest resource today is managerial resource, leadership resource. Not just bodies, not just software. A committed, competent manager at the top or near the top of that project. To me, that's the biggest nightmare I have. We have many more projects and opportunities than we have seasoned management to lead. We've got plenty of capital, and there's lots more capital out there. These days, any good idea will attract capital. That's not a problem anymore.

Is there a committed manager or a manager who will make a commitment to lead a project or new effort or new initiative? Really take it, clutch it to their chest, and drive with it? Or do I have to go begging or cajoling someone? If it's that, I back away. If you don't see someone putting their hand up and saying, "I'm ready for that one," and we have the feeling that the individual, he or she, can really lead it, if we don't see that, we stop. Even if it's exciting. And the great frustration I have is that I have a list of eight or 10 [projects], and we can only probably find leaders for three or four of them that we feel comfortable with.

Tom Beaver (CEO, Wyle Electronics): The question is, how do you figure out what's hot and what's not? What segments do you pursue? If it's geography, if it's technology, or if it's a new market segment? I use another criteria, and that's the consumer. We look at the consumer and how we work and play--or at least how we work, which dominates certainly the people at this table....We're not going to have this velcro vest where we're going to have a pocket pager, cell phone, pocket organizer, Internet access device, and all these different things.

James Truchard (CEO, National Instruments): I think there's a key question that all of us are concerned about. How will the Internet play? And we as businesses need to understand and learn how, as the Internet evolves, our relationship to communications and to our customers changes. And I don't think we're at the bottom line or anywhere near the bottom line on that yet.

As consumers, selling bits is great, but it's only a very small part of the whole. I over the years have worked on some rather radical ideas about how things could change. And, I don't see any of those on the table yet, but I believe we will see some major reorganization of the way we live. For example, I know a lot of folks that have a real challenge getting a Fed Ex package at home. I mean, does the guy leave it? Do you get a little card saying come back tomorrow? I'll be back tomorrow. What? So, we don't really have all these things worked out.

How are we going to operate in a meaningful way to get all these services? Very few services are included now. I believe when it's all said and done, there will be a lot of services that are furnished by Internet communications.

"In my view, the most scarce resource today is managerial resource, leadership resource." --Steve Kaufman, CEO Arrow Electronics

Whether it be a phone where you can call up and say, "I need my laundry today, I'm going on a trip," or whatever. I think there will be a lot of new things to come, and I don't think we've seen--either for business-to-business or business-to-consumer--the bottom line on the way things will work. I know this is one of our big concerns in this time frame. [We have to] make sure some other Internet model doesn't freeze out the business model that we're working with. So, I see that as a major challenge in this time frame, for us to make certain that we will be wherever the Internet is when it's all said and done.

Q Dr Truchard raises a good point. How do you see the Internet playing into your business model over the next few years?

"As consumers, selling bits is great, but it's only a very small part of the whole.  I over the years have worked on some rather radical ideas about how things could change." --James Truchard, CEO, National Instruments

Robert Swanson (CEO, Linear Technology): Well, not only do we use it to basically allow people to source our products--I don't mean to buy them, but to replace the catalogs that are literally nine feet tall now. But we're in the widget business, and we have no Internet without service, switches and routers. And fortunately, those things are loaded with the kinds of ICs that we make. So, our business in the last three years has gone from 12 percent communications to 37 percent. So, it is vitally important to us, from handsets to base stations to the products that actually connect us when we get our email.

Ray Zinn (CEO, Micrel Semiconductor):

Well, as Bob said, you know, it's vital to our industry, the widget business that we're in.... But our customers are also wanting access through our Web to place orders and to actually communicate the status of their orders. So, the whole infrastructure that's needed now for our industry keeps growing and growing and growing. The information-service departments that we now have in our companies are quite extensive. So the world is changing, as Bob pointed out, with regard to the demand of our customers for more and more access to us. And not only to our customers, but also our investors. For those of us who are public [companies], they also make connections that way. News releases regarding the company's performance. It's one of the basic modes of communication that we have.

Jim Morgan (CEO, Applied Materials): At Applied we look at the Internet more in terms of the whole supply chain, and we call it "Integrated Supply Chain Management." ...We're really trying to move all of our suppliers to an integrated information system, in which they are directly connected into our system for the key suppliers, and then Web-based for a lot of the others. That seems to be working for us.

George Chamillard, (CEO, Teradyne): I think the obvious ones are b-to-b in all of the applications that we're talking about. Inventory-management, pipeline advantages. Some viable selling and quoting. But the real opportunity seems to me--for the businesses we're in, for example, we've got thousands of testers scattered around the world. Many different countries and many different customers.

And the Internet offers the chance to improve the whole service level, because now you can go beyond remote monitoring from the testers. You have two-way communications where you can help troubleshoot on site. You can help program on site and so on.

And I think the real opportunity to be exploited is to figure out how to not just do the things we've been doing fairly well now,...but to do some other things very differently. That's some of the fundamental problems we all have.

QBut do the customers actually want to be able to buy over the Internet? And if that's the case, how do the manufacturers maintain their relationships with the distribution channel?

Steve Kaufman, (CEO, Arrow Electronics): Let me ask you that in a different way and sort of ask the question, "What is Internet b-to-b commerce? What constitutes an Internet sale?" If an engineer does a technology search on an analog part, comes to the Arrow site or the Linear Tech site, gets some information, makes a call, and then either we, or Linear, or both of us send an engineer in to work with that design engineer? And they design a Linear Tech part into a board, and then they place the order for that board?

[Or], maybe it's Qualcomm as an example, where we haven't got a long relationship, and we have two or three months of long hard discussions where we develop a supply-chain engagement, and we're going to provide 150 different parts. And we go hammer and tong on the pricing, is that b2b e-commerce, or as that same old commerce we've always had and instead of the fax or telephone call, send me a thousand board kits next month? It came over the Internet. I don't know what that is.

Q You bring up a good point. Has anyone really defined Internet commerce?

Steve Kaufman, (CEO, Arrow Electronics): If you're Intel or Cisco and you want to make the point that the whole world is Internet, then we'll call that Internet commerce. And we'll say that 89.5 percent of all Arrow sales are Internet-based via e-commerce. If you're Franklin, take a different view and look at the end other end and say, "A sales producer doesn't pick up the releases once a week. First it was a fax, then it was an email, then it was a phone call, and now it's the Internet." So, I'm at a loss to really define what b-to-b Internet commerce is.

	"At Applied we look at the Internet more in terms of the whole supply chain, and we call it Integrated Supply Chain Management."      --Jim Morgan, CEO, Applied Materials

Kirk Pond (CEO Fairchild Semiconductor): There are some fundamental things that are taking place. If you're looking at the whole design-in process, we would like to get 4 to 5 million design-ins a year, which are just impossible to get with people running around doing that, in spite of a very broad distributor and manufacturer network. And I do think the Internet allows that to be facilitated, and with the simulation programs and virtual design workbenches that are being put in place, that allows that to happen now over the Internet.

But the other thing that I think is changing is the virtual inventory around the world. The worldwide pricing, the worldwide inventory availability, so there's not pockets of inventory every place that don't get highly utilized.

Dwight Decker (CEO, Conexant Systems): One of things that we find in the semiconductor business is a sort of disintegration of the different, vertically integrated semiconductor company into one that uses other parts of the industry to supply [various] pieces. So, you're a wafer foundry, and you have an assembly and test partner. So, your supply chain gets all--it used to be all captive, and now a big part of it is desegregated. [With the Web,] you can have a virtual supply chain that looks like it's your factory, or it could be doing assembly someplace else. I think that allows the different parts of the industry to specialize in that portion. They become more effective, more competitive, and very integrated. A supplier can do it, but if you're still going to deliver the service to our customers...we have to be connected and have that all be visible. So, that's not customer fixing, it's supplier fixing. ...I think it's a pretty significant productivity enhancer for our business.

Q Everyone's flocking to the Internet. How are the distribution companies going to work with or compete against some of the online distribution companies such as PartMiner or the other ones that are out there? I know some agreements have been formed, but are you looking to form agreements with all of them? Will you eventually maybe even have consolidation there at some point?

Roy Vallee, (CEO, Avnet): I can take a shot at that from Avnet's point of view. First of all, I think the Internet is going to effect all of our business models, not just distribution. We don't believe for a moment that the Internet disintermediates distribution in the electronic supply chain. There still are a lot of physical components that need to get physically valued-added and delivered to customers so they can build physical products. However, we do think the Internet has the tendency to disaggregate historical value propositions. And if you think about it and step back, the Internet above all else is the perfect communication device. And so business models that were predicated on information distribution are really being reengineered. And in many cases, that information also created opportunities for market making.

And if your business is based upon the fact that you had information that others didn't, that model is gone because that information is now ubiquitous.

I also buy the comment that we don't yet know where the Internet is taking us. So, if I wrap all that together in terms of Avnet's strategy, we've got the business models that we take to the marketplace today, which I suppose would be popularly termed bricks-and-mortar business models. It's defined by a million and a half square feet of warehouse with a couple of billion dollars worth of inventory, a couple of billion dollars worth of receivables. We need to migrate those assets into a quick-solutions or bricks-and-clicks environment as rapidly as we possibly can to leverage the power of the Internet for our existing business models.

"I think the way to keep your company on top is to pay as close to no attention as possible to yesterday, and focus all of your energy on tomorrow."      --Roy Vallee, CEO, Avnet

But along the way, we realize that there are some new models that emerged as a result of the technology. This is brand new turf. And as those models emerge, we look at them and first ask the question, "Is this something that Avnet should own or could own?" And if the answer is, "No, we can't," or, "It would be better off if it were not owned or controlled by a bricks-and-mortar company," then we recognize that that's a model that needs to operate outside of our four walls. And there we look for a best of breed. We look for a partner. We try to create a strategic alliance with that partner. And in the cases where we bring significant value to that new business model, we'd like to take an equity position that secures the strategic alliance and hopefully delivers some shareholder value along the way.

So for us another mental picture is, we've always operated in this linear supply chain between our supplier partners and our customers. And our goals were to constantly try to expand the space that we're allowed to occupy in that linear supply chain. I don't think that goes away. I think it's going to stay, but it's going to be complicated now with this supply Web notion, where there's lots of ways in which information, goods, and money can change hands. And we are trying to identify the right strategic alliance partners. Solidifying those alliances. Taking equity positions.

QBut what about the startups? How do they get into the act?

Bill Schroeder (CEO, Cyber IQ): Well, most of the discussion has been on large companies and how they adapt to the Internet. I'm on my fourth or fifth startup here. And what I've been just bowled over by in the last month or two is the fact that always, in the past, I've had to beg for capital.... And now it's flipped the other way. Capital is banging on the door trying to get in, and I'm going out and selling the company to the PR company. Selling the company to the law firm. Selling the company to the accountant. Selling the company to the advertising agency and spending all my time recruiting.

And when I read the paper and it says, "We're in a low-inflation environment," and I see us, what we're having to do to get lawyers to work with us. "You want what percent of the company?" ...I would like inputs from people in different parts of the country, but in Silicon Valley right now, inflation is not dead. And the thing that I see as a major challenge for us is just getting the resources marshaled to continue to grow in this business. Because right now, there's an absolute frenzy of trying to figure out how to get through bottlenecks in order to be able to deploy a new business.

Q So here we are with the big question: How do you find and retain good qualified employees?

Jim Morgan (CEO, Applied Materials): We for years have done an organization capability review or an annual review. We lock the top management in a room for a week going through that. And it's kind of painful.

As a result of that, we have been able to identify a lot of the younger people who have high potential. And we've worked hard to move them up in the management or technical opportunities earlier than we might have done in the normal course of things....I think they're the future. It's key, I think, that they get opportunities. That kind of program is pretty critical.

Plus, your selection process must be good. If you're going to hire people who want your job on the first day, you know they're probably not going to stay. They're probably going to go for a different job. So, you'd better figure out which people have high potential and have a long-term perspective. And if you're trying to build a great global corporation over the next couple of decades, you need people who are committed to that goal. And if they're only committed to kind of a short-term personal gain, they're probably not going to fit that model. So, the selection process gets to be very critical.

"I suspect the most important thing you can do is try to figure out how to hold your people, because that is the value of your company."      --Irwin Jacbos, CEO, Qualcomm

Irwin Jacobs (CEO, Qualcomm): I suspect the most important thing you can do is try to figure out how to hold your people, because that is the value of your company. Plus, it's very expensive to bring people in and get them trained, get them knowing their job well, contributing. And then if you suddenly lose them, it's a very, very high expense. So, the stock option is something that we all focus on.... But there are other things that are also very, very important. You just have to have a very good work environment, and by that, I mean one where they can easily communicate. Then the Net comes in, but the email part of that is an important part. And so with email, you can flatten the organization quite a bit. People know if they have some thoughts, ideas, or problems, they can circulate that. They can get that to the attention of most senior management and get some results back. And having that feeling--that in fact the company is open to whomever, that everyone has that ability to communicate--I think is very satisfying.

And of course the other item is making sure they're doing exciting things. That you do have new programs ongoing. That it's not just the same thing over and over again. And maybe some things that do go on a long time. Then you probably want to rotate people out and have them go off and do something new and exciting so they stay pretty much alive. You want to keep bringing them ideas from the outside, having people give lectures. Different kinds of companies do this differently, but try to provide some stimulation for your employees. And finally, just on the straightforward compensation side, we've from the beginning had twice-a-year reviews. And it takes a lot of energy and effort to do that, but it's very valuable in the sense that first of all, you keep track of everybody quite well. You force managers to think about the people working for them and what they're accomplishing on a frequent basis.

Ray Zinn (CEO, Micrel Semiconductor):
I think the key to retaining the people is getting them to truly believe that you want them. They truly have to accept the fact that you care about them. You know, you can offer them pay raises four times a year. You can offer them 10 weeks of vacation. All these other things are just spoils. That may hold them temporarily.... [But] in our industry it's extremely important that we retain these people over a long period of time, especially since we have our own fab operations. We just can't afford to lose these very talented engineers, nor operators for that matter.

So we go to great lengths to convince our people that we really care about them. We actually talk about the culture of our company. Honesty, integrity, dignity of every individual. We really promote that. We talk about dignity with every individual. Not just in a passive way, very actively. We care about every single one of you. And we care about your families, your spouses, your children. And we communicate that regularly to our people. We write letters to our employees. I personally send letters to our people. Whenever we hire an individual, we send a letter welcoming them. It comes directly from me. I welcome them to the company, and to the degree that I can, I brief the employees, the new ones--we're growing pretty fast so it's not as easy for me--but we go to great lengths to show that we really care about them as individuals.

"Capital is banging on the door trying to get in, and I'm going out and selling the company to the PR company."      --Bill Schroeder, CEO, Cyber IQ

We have a great stock currency, and that's helped. There's no question about that.... And the company has done well so it's been able to retain a few because they see the value of remaining with the company. But bottom line, day in and day out, is the feeling that you give to your people, that you really care about them and their families, and they're not just a number or an individual that shows up to work each day.

Koichi Nishimura (CEO, Solectron): Well, we've got business to keep people. Irwin [Jacobs] hit it on the nose, you've got to give them opportunities. How many of you said that you talk about "maybe he's not the right guy." And sometimes on the way home, "Who the hell am I to judge the other guy? Give him a chance." Hey, somebody gave me a chance!

Daniel Nissanoff (CEO, PartMiner): I think that values are very important. And at the end of the day, people aren't going to work for a company they're not happy at. One of our mottoes is to ensure that our people are in the best place financially and the best place professionally from a rewards perspective. And it has to be an environment where they're going to grow professionally and have fun doing it.

"I think the key to retaining the people is getting them to truly believe that you want them."      --Ray Zinn, CEO, Micrel Semiconductor

But as much as you place emphasis on value, as an Internet startup, I can tell you that the lure of money, the lure of the currency of pre-IPO options, is extremely compelling and can breech any notion of loyalty in a company. I see it every day. We're a revolving door for executives across the board, both in our vertical and outside of our vertical.

For those of you that are public companies, one of the areas that people are focusing on today and that we see as an innovative way to retain employees is to create spin-off subsidiaries or create subsidiaries that can potentially participate in this Internet craze. And offer those employees that are part of your organization that are important to you the ability to participate in that. Companies like Ernst and Young that are legacy organizations have spun off divisions of their companies, and created option pools for their existing employees in unrelated businesses to create competitive environments and retain their employees.

"But as much as you place emphasis on value, as an internet startup, I can tell you that the lure of money, the lure of the currency of pre-IPO options is extremely compelling and can breech any notion of loyalty in a company."      --Dan Nissanoff, CEO, PartMiner

Roy Vallee (CEO, Avnet): Let me throw one thing out. It's sort of the other end of this whole sword. One of the best ways to keep people is to make sure you get rid of the wrong ones. Managers have an awful lot to do with the people who stay and the people who go. And if we don't get around to cleaning up the wrong person in the wrong job for whatever reason--maybe times have changed, maybe it was a mistake, whatever--when those people stick around, they'll drive others out of the business.

Irwin Jacobs (CEO, Qualcomm): You have to make sure that you're being fair to all of the people, and it's a very, very difficult [issue] to cope with. I don't think there's any single good answer to it, but it's something that we end up worrying about quite a bit. We are investing in many companies at this point. We're causing companies to start for ourselves working in various types of spin-offs. We've done some. And making sure that employees feel that they're being fairly treated is something that we have to continue to focus on.

[As] some of you know, we ran into a different type of problem when we sold a division to Ericsson last year. Employees that had options that didn't vest then were going over to another company and felt they really didn't want to leave. And it ended up being very difficult to find the right kind of formula...to make them comfortable and make yourself comfortable that you've treated them fairly. So, there's a whole set of these compensation issues that are rather different than they used to be, but you have to continue to face them.

QWe invited you and your companies here tonight because we felt you were movers and shakers in your industries. One of the things that I'd like to know is, how do you expect to remain a leader? How do you expect to stay on top?

Tom Beaver (CEO, Wyle): Well, without naming names, but their initials are Avnet and Arrow, I have very formidable competitors that are huge relative to the size of the company that I run. And so I think it would be naïve of me to think that the business model that they're so successful at executing... Understand, I've been in this job about a month and a half, and I came from a company that partnered with them and I have known these gentlemen for 20 years and I admire them. What they do for a living, for me to continue or try to emulate that, is not a good business strategy. So, moving forward, this whole idea of demand creation, the solution sell, lots of engineering resources in place. A huge part of the P&L statement is in engineering resources, to add value to this total equation for that customer set that our suppliers want us to cover, which they are not going to cover directly themselves. So hopefully it will be a very big niche, but a niche in this whole demand-creation model--that's what I'm hoping for.

Dwight Decker (CEO, Conexant Systems): Well, I guess one thing that we think about from the Conexant perspective is it's fortunate to be 100 percent focused in communications. And that's just about the best place in the world to be focused at.

Q Yes, good choice.

Dwight Decker (CEO, Conexant Systems): It was a choice. It was a choice of a very focused activity over the last five years to diversify into a lot of the communications efforts we're in now. I think the first thing from our perspective is...to try to focus our efforts and energies in the hottest--in the strongest growth markets. And try to position ourselves with what's next in communications technology.

"Who the hell am I to judge the other guy? Give him a chance.   Hey, somebody gave me a chance."      --Koichi Nishimura, CEO, Solectron

We've thought about wireless communications, broadband, DSL, cable, Internet infrastructure. So, we play in the spaces that we have something to add. Then within that, at least from our perspective, we think that execution is the differentiator. We have to focus as a company. We try to make one part of our culture very strongly focused on execution--on setting very clear targets for the market deliverables, and rewarding ourselves whenever we succeed and really questioning pretty hard when we don't. So, the strong and performance-oriented culture centered around execution.

I think that's on the internal side, and hopefully that execution will deliver performance, which will deliver a good currency, because I wouldn't agree with the comment that the venture-capital industry is our competition too. And for any established company, the capital flowing in the market enables good people to work in an environment where they're not faced with poor earning expectations of Wall Street.

So, you have to then have a strategy that is this very focused execution on the care and feeding of your currency, because acquisitions must be an integral part of the strategy for success. There aren't very many companies that differentiate themselves on the ability to select, acquire, and integrate in a successful way. But that's going to be the name of the game. And that's something we're aspiring to try and do. It's a tremendously complicated and risky process, but I think if you can't do that successfully, then some of the higher opportunities are going to pass you by, because they can be funded and focused on more successfully through your talent...[which will] move to startups that are funded lavishly.... So, execution, currency, and strategy of successful acquisitions and integration--that's our view of the future.

Steve Kaufman (CEO, Arrow Electronics): I would say it's always good to pick a good pond to fish in if you want to catch fish. So, be in market segments where there's lots going on. We happen to be in one collectively--electronics--and most of us are in it globally. And I think those are two platforms on which to build a leadership position anywhere.

I absolutely agree with what Dwight [Decker] said that execution in my mind is more critical than strategy, and I'm a guy who made his living in a prior life as a strategy consultant. And the thing I learned was that you're better off having a 50 percent strategy that's executed 90 percent effectively than a 90 percent strategy that's executed 50 percent effectively.

And to me, execution depends upon getting the right people in the right slots. Getting the good people, and getting them in the slots where they can leverage. To me, that's recruiting, nourishing people. Motivating them. Educating them continually. Rewarding them. And then, as a lot of people commented on, getting the hell out of their way and not limiting them with artificial constructs and strictures.

"I guess one thing that we think about from the Conexant prespective is it's fortunate to be 100 percent focused in communications."      --Dwight Decker, CEO, Conexant Systems

The last thing I'd say--slightly kind of to cheat, but slightly more than 50 percent serious--is, within that context of finding a good pond to fish in, focusing on execution, and getting and nourishing the people, [you need to] figure out which way the crowd is going, and then go in a slightly different direction. Don't follow the crowd. Don't just try and pick your best competitor and then emulate her or him. But be very willing, in fact, I would say cultivate an environment inside, an environment or culture that embraces change. It goes out of its way to do things differently. If everyone is going this way, to consciously go slightly different. It's hard to just outdo somebody else that's already been doing it for a while. So, you've got to go a different direction. I think most of the successful companies, some of the ones that I know and have worked with around here, have gone and picked out which way the crowd is going and then gone a different direction. And that's where we're at.

Roy Vallee (CEO, Avnet): As Steve [Kaufman] said, I guess that one thought going through my head is Andy Grove's comment that "only the paranoid survive." I think that's a tad extreme. It's well stated, but a tad extreme. I think that functionality migrates to the highest value provider. I think that's happening at a greater and greater rate as a result of the Internet and the technology around us. So, I think the way to keep your company on top is to pay as close to no attention as possible to yesterday, and focus all of your energy on tomorrow. How is the environment that you're operating in changing? How can we leverage the core competencies that exist in our company to create the highest value provider?

And I agree with Steve. Chasing somebody else--taking an existing identified business model and chasing a leader--is not a real profitable proposition these days. Jack Welch said many years ago, "Be number one or number two." I think in today's environment it's, "Be number one or get the hell out." And the best way to be number one is to actually redefine or invent the segment that you're going to go out and try to lead.

So...don't read your press clippings. Don't pay attention to where you sit in the industry status today. Think about the future, and leverage your core competencies to create the highest value model in a given segment of the industry.

"We focused on the areas where people had typically treated these products as cash cows and pulled the cash out of them and really didn't invest in them."      --Kirk Pond, CEO, Fairchild Semiconductor

Kirk Pond (CEO, Fairchild Semiconductor): Well, I'm the small body of water that Steve was talking about. We founded our company on a sort of contrarian approach, which, it's sort of snidely proclaimed, we were not a system-on-a-chip company. And we focused on the areas where people had typically treated these products as cash cows and pulled the cash out of them and really didn't invest in them. So, we choose the segment that we call the multimarket segment, which is analog, discreet, standard logic, and opto. And we're investing very heavily in new products. Investing very heavily in new capacity, and investing very heavily in systems to provide good service.

We've made a billion and a half dollars worth of acquisitions. We'll do that again in the next couple of years. And we're growing internally with our internally developed products, about 40 percent a year. So, a good strong flow of new products. Investing in capacity. We shipped 10 billion semiconductors last year. We ship about 500 tons of product every month, and we're very good at it. And that's our part of the business. That's our strategy, and we expect to be about 10 percent of the market--of about a $50 billion market--in the next couple of years.

Robert Swanson (CEO, Linear Technology): Well a lot of things I heard you say, could also be said for Linear. Linear is a chip company, as you all know. We're a chip company that focuses in the high performance area of analog.

Our strategy today is really not any different than when we started the company. We wanted to be a specialist. We had to be a specialist, and what that means is that we have to put out a steady stream of new products every year now--better than what the other 52 guys put out. And that's a hard road to hoe, but that's the way you turn in the kind of financial performance that we do.

So, the pressure is to keep the company that has the technical talent, the IP, the knowledge, whatever it is that allows us to put out these products and a steady stream of them. The size of the opportunity has never been a problem for Linear Technology. This digital revolution that everybody talks about, the irony is that there's no end to these explosives ideas, and all of these ideas require some analog. And not only some analog, but there's an opportunity for us to focus on doing what Irwin says--to do things that we can do better than everybody else.

And the things that everybody can do, we shy away from them. We have this saying in our company, "We don't ride off at the sound of the guns, we look for someplace else to go." And, you know, if you don't want to be the biggest company in the world, then you can do that. We don't want to be the biggest company. We just want to be the most profitable.

"How are you going to build a company that lasts? And it's not just lasting a year or a two, it's how you're going to make it go on for a long time."      --George Chamillard, CEO, Teradyne

George Chamillard (CEO, Teradyne): Teradyne is celebrating its 40th anniversary this year. I've only been there 31 years, so I'm getting to know the business. But I think that gets to the point that others made earlier about being old-fashioned. How are you going to build a company that lasts? And it's not just lasting a year or a two, it's how you're going to make it go on for a long time. I mean, I don't want to screw it up on my watch. Let someone else do it.

So, I see it as two problems. One problem is, how do you keep your leadership position relatively close, and then how do you develop a leadership position long term? Close end, it's all the ideas you've talked about. Dwight [Decker] said it. If you could only compete by being superior in innovation, customer intimacy, or operational excellence. You have to be good in two of the three. We think we're pretty good on product innovation and operational excellency. And we've picked out the segments to be in...and it's paid off well for us.

The longer term one, it seems to me that you can't go about guessing where the industry is going to go, what the technology will be, and what the products will be 10 years from now. You've got to build a culture in the company that takes risks, lets people make mistakes--not life threatening ones, but makes mistakes. You need to be impatient, but management has to be paranoid. Maybe it doesn't have to be quite as paranoid as Andy wanted us all to be. It's better to be on the side of impatient and worrisome and a bit paranoid. And the only role the management has--the only role the senior management has--is to bring change in the company. That's the only thing you have to do. I mean, everything else, the owners can shift. Systems get installed. Customers get selected. That goes on. What you've got to focus on is the changes you need in your company that are going to keep it alive for the next 40 years. That's what I worry about.

"The question is, how do you figure out what's hot and what's not?   What segments do you pursue?  If it's geography?  If it's technology?   Or if it's a new market segment?  But I use another criteria, and that's the consumer."      --Tom Beaver, CEO, Wyle Electronics

Q What amazes me is how you all juggle the responsibilities of being CEOs with your personal life and everything else, how do you do it?

Tom Beaver (CEO, Wyle): The management of time is critical. I attempt to maximize exposure to customers, suppliers, and my people by aggregating locations, schedules, etc. I also attempt to have very early dinners--almost impossible in the cultures of Europe and Asia--so as to not stay out too late.

Ray Zinn, (CEO, Micrel Semiconductor): The way I balance my personal life against that of my business life is by understanding my priorities. My first priority is to my family, and then to the business. You cannot focus the proper attention needed to run a fast-growing business if the environment at home is not proper. Additionally, I make sure that I work on things that have lasting importance, which is my relationship and service to others, minimizing the amount of time I spend on frivolous things, things which benefit me only, that have little lasting importance. We all have a finite amount of time to spend in mortality, and if we are to leave a meaningful legacy we have to jettison as much junk in our lives as possible in order to focus on what really counts.

Steve Kaufman (CEO, Arrow Electronics): Badly. My wife would like me to study the answers from the other CEOs.

"We had to be a specialist, and what that means is that we have to put out a steady stream of new products every year now--better than what the other 52 guys put out."      --Robert Swanson, CEO, Linear Technology