Job hunters always have to parse the trade-offs between betting on a startup or picking the safe harbor of a conglomerate, and the debate doesn't go away even for CEOs. But Dave House, the man credited with creating the "Intel Inside" concept during more than two decades at the microprocessor giant, took the reins at communications startup Allegro Networks in January without a second thought.
"I always go where I think the action is," said House.
That might sound like a recipe for disaster in an economy where one of the few certainties seems to be that Web-related companies are taking a beating. But the new chairman, president and chief executive officer at Allegro (San Jose, Calif.) doesn't see it that way.
"The changes in the IT industry are always driven by choke points," House said. "The microprocessor addressed the processing choke point and moved it to the network, so I moved to networking" namely, Bay Networks and Nortel, where he worked in the mid to late '90s. "Today the choke point is broadband services and access to the optical Internet. Allegro Networks is addressing that choke point."
Though he isn't predicting that Allegro will become the next Intel, House believes the moment is auspicious for Allegro's router technology.
"Just as the timing was right for the microprocessor, the timing is right for this," House said. "Nothing in our lifetime will rival the microprocessor, but this [technology] has the potential for huge growth."
Allegro was founded last year to develop a router platform that will be used in what's called the Wholesale Router System. It blends hardware and software to let broadband service providers expand their existing physical infrastructure using a service provided by Allegro. The scheme offers backbone providers and other service mavens a way to add capability without investing in new hardware.
That puts Allegro in quite a different market from the one pursued by the dot-coms that have borne the brunt of the financial market's assault on technology stocks. While the current slump has hurt many startups, House believes that Allegro's concept of providing services instead of relying solely on hardware and software sales will attract companies that want to expand but can't justify the expense of more routers.
"In a weird way, things like that [the downturn] are working for us," said the 57-year-old House. "[Internet service providers] can get new revenue streams that in the past were too costly to pursue. They don't have to buy hardware, they buy a service. If the capital market had stayed like it was, there wouldn't be as much of a need for our services."
Given the iffy economic climate, "If a company wants to go into a new geographical area, they might not be able to afford the capital costs until they get a certain number of customers," House said. "With our service, they can offer the service without buying all the equipment."
The shift to optical communications is a central aspect of Allegro's plans. Fiber provides more capacity, and companies are eager to move data down these fatter pipes.
"The advantage of optical networks goes beyond what could be accomplished given the limits of Moore's Law," House said. "Optical technology is doubling the number of bits the pipeline can carry every eight months. Carriers are looking at the trunk lines and saying, we have all this fiber around, let's look at the new services we can offer."
Allegro currently has about 125 employees working on both hardware and software, as well as strategies for expanding that technology into a service for communications providers. House downplays the idea that he's making a huge leap to go to a startup after his years at Intel and then the $2 billion company he most recently directed, Bay Networks, where he served as chief executive officer.
Intel was only a $68 million company when he joined it in 1974, House recalled. But during the 13 years that House ran the processor group, the Intel Inside slogan he helped develop and market became as well-known to the public as "We bring good things to life" or "Coke is it." Later in his tenure at Intel, House moved into servers, spending 11 years learning the skills needed in the communications field. In 1996, after 22 years at the chip giant, he opted to move to Bay Networks in order to run a large company that wasn't faring well.
"When I went to Bay Networks, it was a ship adrift toward a rocky shore a good ship with good engineering that was floundering with a failed merger [between SynOptics and Wellfleet Communications]," House said. "There was warfare within the company; they needed adult supervision."
House helped negotiate Bay's 1998 merger with Nortel and became president of Nortel Networks upon its completion. But he left the company late that year, choosing to take some time off while scanning the horizon for a new venture. His desire to run the show made the decision to head to a small company fairly straightforward.
"I wasn't interested in running a division at Cisco or Lucent," House said. "If they're going to put a new CEO in at a big company, it's going to be a turnaround. I did that at Bay. I don't want to become a turnaround guy."
At Allegro, the contacts he made at Bay and Nortel will be important. In a few months, Allegro will begin shipping beta-test versions of its router, with revenue shipments expected to begin early next year. Shifting from development to production required someone with a different skill set and reputation than the founding team.
"We've got a lot of good startup people, but one thing Allegro clearly needed was someone with a broader business perspective," House said. "When we're selling to carriers, it's nice to have someone whose name is known. I know most of those people."
One of the activities House pursued during his two-year sabbatical between Nortel and Allegro was the Computer History Museum. House is vice chairman of this fledgling institution, which is temporarily housed in a hangar at Moffett Air Force Base in Mountain View, Calif. The museum board is now preparing to solicit funds for a permanent home, and House is hoping interest in the industry's historical saga will grow.
"This industry discards its history, so we're in danger of losing it," said House. "The technical revolution is the biggest change since the industrial revolution. We're trying to preserve the products and the stories."
Fortunately, "the industry is young and a lot of the pioneers are still around," he said, pointing to Intel founder Gordon Moore, father of the chip-industry "law" that bears his name. Others have died, but some like supercomputer pioneer Seymour Cray left taped interviews behind. "Luckily, we have some good video of him," House said.