Ray Zinn on Bootstrapping Micrel Through 8 Chip Cycles

About This Episode

Ray Zinn built Micrel Inc. into a profitable semiconductor company over 37 years — without a single dollar of venture capital. In this episode of Startuprad.io, he shares how he bootstrapped through eight industry downturns, why he believes culture beats capital, and what European founders can learn from his disciplined approach to building companies that last.

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Introduction

The semiconductor industry is one of the most capital-intensive sectors in technology. Building a chip company typically requires hundreds of millions in venture funding, yet Ray Zinn proved it could be done differently. As the founder and CEO of Micrel Inc., Zinn bootstrapped his company from a $300,000 personal investment into a publicly traded semiconductor firm that he led for 37 consecutive years — the longest tenure of any CEO in Silicon Valley history.

What makes Zinn's story particularly relevant for today's founders navigating the startup scaling journey is his contrarian philosophy: profitability from day one, no outside investors, and a people-first culture that he credits for surviving every downturn from the 1980s oil crisis to the 2008 financial collapse.

In this conversation with Startuprad.io, Zinn reflects on growing up as the eldest of eleven children in a German-American family, his transition from engineering to entrepreneurship, and why he believes the current obsession with venture capital is fundamentally misguided.

Executive Summary

Ray Zinn founded Micrel Inc. in 1978 with $300,000 of his own money and grew it into a publicly traded semiconductor company generating over $170 million in annual revenue. He led the company for 37 years without taking venture capital, proving that disciplined bootstrapping can work even in hardware. Zinn survived eight major industry downturns by prioritizing culture, treating employees as family, and maintaining profitability every single year. His philosophy — "running a company is like running a family" — offers a powerful counterpoint to the growth-at-all-costs mentality dominating Silicon Valley today.

Key Takeaways

• Bootstrapping works in capital-intensive industries: Zinn built a semiconductor company from $300,000 without venture capital by starting with design services to fund product development.

• Culture is the ultimate competitive moat: Micrel maintained profitability through eight downturns because Zinn invested in employee loyalty, achieving turnover rates far below industry average.

• Profitability from day one is non-negotiable: Unlike VC-backed competitors burning cash for growth, Micrel was profitable every year of its 37-year history.

• Discipline over disruption: Zinn attributes his longevity to consistency and operational discipline rather than chasing trends or pivoting constantly.

• Family values scale: Growing up as the eldest of eleven children taught Zinn the management principles — responsibility, frugality, and caring for people — that he applied at Micrel.

From Dresden to Silicon Valley

Ray Zinn's path to Silicon Valley began in an unlikely place. Born to a family of German heritage, he grew up as the eldest of eleven children in a household where discipline, responsibility, and frugality were not optional — they were survival skills. That early training in leadership and resource management would become the foundation of his management philosophy at Micrel.

After studying electrical engineering, Zinn spent years at major semiconductor firms before deciding to strike out on his own. The timing was deliberate: he waited until he had both the technical expertise and the industry relationships needed to bootstrap a company without outside capital. In 1978, he founded Micrel with $300,000 — a significant personal risk, but one that gave him complete control over the company's direction and culture from day one.

Bootstrapping in a Capital-Intensive Industry

The semiconductor industry is perhaps the last place you would expect a bootstrapped company to thrive. Fabrication facilities cost billions, product cycles are measured in years, and the competition includes some of the best-funded companies on earth. Zinn's solution was elegant: instead of building a fab from scratch, he started Micrel as a design services company. Revenue from design contracts funded the development of proprietary products, which in turn funded growth — a virtuous cycle that never required dilution.

This services-first approach is remarkably similar to the strategy many successful European founders use today: generate revenue early, reinvest profits, and grow at a pace the business can sustain. Zinn was practicing what the DACH startup ecosystem now calls "capital-efficient scaling" decades before the term existed. By the time Micrel went public, it was already profitable — a stark contrast to the IPO playbook of burning cash to capture market share.

Surviving Eight Industry Downturns

Perhaps the most remarkable aspect of Zinn's tenure is that Micrel remained profitable through every single downturn it faced — eight in total, spanning oil crises, dot-com busts, and the 2008 financial collapse. While competitors laid off workers and shuttered divisions, Zinn took a different approach: he invested in his people during downturns, believing that the loyalty earned in hard times would pay dividends during recoveries.

His philosophy of "happy employees make happy customers" was not just a slogan. Micrel's employee turnover was consistently among the lowest in the semiconductor industry. Zinn ran the company like a family — not in the superficial Silicon Valley sense of ping-pong tables and free snacks, but in the deeper sense of genuine mutual obligation. When times were tough, the company tightened its belt collectively rather than sacrificing individuals. That cultural resilience is what allowed Micrel to emerge from each downturn stronger than it entered.

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Frequently Asked Questions

How did Ray Zinn bootstrap a semiconductor company without venture capital?

Zinn started Micrel as a design services firm, using revenue from client contracts to fund the development of proprietary semiconductor products. This services-first model generated cash flow from day one and eliminated the need for outside investment. He invested $300,000 of his own money and maintained profitability every year.

How long did Ray Zinn lead Micrel Inc.?

Zinn served as CEO of Micrel for 37 consecutive years, from its founding in 1978 until Microchip Technology acquired the company in 2015. This made him one of the longest-serving CEOs in Silicon Valley history.

What is Ray Zinn's management philosophy?

Zinn believes in running a company like a family. He prioritizes employee wellbeing, maintains low turnover through genuine care for his team, and focuses on long-term profitability over short-term growth metrics. He credits this people-first culture for Micrel's ability to survive eight major industry downturns.

What can European founders learn from Ray Zinn's approach?

Zinn's capital-efficient, profitability-first model aligns well with the European startup philosophy of sustainable growth. His success demonstrates that even in capital-intensive industries, disciplined bootstrapping and strong culture can outperform venture-backed competitors over the long term.

Joern "Joe" Menninger is the founder of Startuprad.io, Europe's leading English-language startup media platform covering the DACH region. With 740+ podcast episodes and over 1 million annual streams, Startuprad.io connects founders, investors, and corporate innovators across Germany, Austria, and Switzerland. Connect on LinkedIn

Transcript

If you're a founder, investor, or corporate strategist, here's a challenge: most startup leaders burn out in a few years, and so do their companies. Our guest today led a bootstrapped semiconductor company in Silicon Valley for 37 years, stayed profitable in 36 of those, and did it all without venture capital. Ray Sim, the longest-serving CEO in Silicon Valley and the author of Tough Things First and The Essential Leader built a people-first culture in one of the hardest industries in the world. Today we'll break down 10 essential leadership fundamentals that investors can use to evaluate CEOs and founders can use to build companies that actually endure. Welcome to startuprad.io, your podcast and YouTube blog covering covering the German startup scene with news, interviews, and live events. My guest today is someone who quietly did what most founders

only dream about. Ray Synn is the co-founder and longtime CEO of Micrel Semiconductor, a Silicon Valley chip company he led for 37 years, making him the longest-serving CEO in Silicon Valley. History. He bootstrapped in 1978— actually, that's before I was born— with bank loans instead of venture capital, kept it profitable in 36 out of 37 years, and eventually delivered more than $800 million in equity value when Micro was acquired by Microchip Technology. Along the way, Ray invented the wafer stepper a key tool in chip manufacturing used around the world, and holds over 20 patents in RF communications and power regulations. He did all this while facing a personal curveball after a retinal vein occlusion left him legally blind around Miracell's IPO. He continued leading the company for another

two decades. Ray is also the author of Tough Things First, his leadership classic on discipline and endurance, and most recently The Essential Leader: 10 Skills, Attributes, and Fundamentals That Make Up the Essential Leader, a roadmap for people-centric servant leadership geared towards building happy, productive, and loyal teams. His family roots go back to Dresden and Darmstadt here in Germany. He runs the Tough Things First podcast, and he's spent decades mentoring founders on how to build companies that last, not just companies that exist. Ray It's a real pleasure to have you on Startup Radio, and sorry for the long introduction, but we have to say it all. Yeah, no problem. Kein Problem. Kein Problem. Very good. Um, let's talk a little bit about your family roots. They go back to Dresden and Darmstadt here in

Germany, and you grew up as the eldest of 11 children on a cattle ranch before ever becoming Silicon Valley's longest-serving CEO. When you look back, which parts of that early story, family, ranch life, German heritage, shaped your leader you essentially became? Well, it's interesting. When you're the oldest of 11, a lot of responsibility falls on your shoulders. There were no twins in our family, so each child came about one by one. And my parents were very loving, very focused on family values. And so I grew up with strong culture, very, very strong culture. The importance of honesty and integrity were instilled in me as a very young person. So my father was also an entrepreneur. He was the owner of this, called Zinn Brothers was the name of the company. But he was the founder and he

also ran it very successfully as an entrepreneur. We grew, raised cattle as you would for beef. And that was the project or the business plan was to take cattle at a very, young age, 200 pounds, and raise them up ready for slaughter, as you would. So that's the kind of environment that I was raised in. My mother was a schoolteacher. And so, you know, education was extremely important in our family. Also learning music. I learned to play the piano at the age of 5. And so very disciplined home. My grandfather was aus Dresden. That's where he was from. And so he was very, very disciplined. He even chewed his milk. I mean, he was so disciplined that he was, he was viel Deutsch, as they say. And so very, very disciplined. And that

helped as I grew up because my mother took on the kind of the German kind of culture and was very adamant about everything happening at a specific time, eat breakfast at a certain time, lunch at a certain time, dinner at a certain time, going to bed at a certain time and getting up early and then exercising and doing all those things that are what we call viel Deutsch. And so that's kind of the environment that I was raised in. When you've been speaking about being the oldest of 11 children, my brain was going, How big are your family gatherings then? Huge, you know. I lost my father at the age of 52 from an illness. And so I had to take on the responsibility of helping my mother raise 9 children. And

so that was another, you had to be very disciplined and very willing to help my poor mother who was, you know, still raising so many children and financially as well as helping her physically raise those children. And even though I didn't live that close, 'cause I lived in Silicon Valley and she lived down in the Imperial Valley, which is just near the Mexican border in California, that it was difficult 'cause we didn't have Zoom in those days to be able to, to be able to help her raise those children at such a, I was very young, I was only 26 when my father passed away. And so, you know, there were a lot of challenges, you know, 'cause I felt my responsibility as the head of the family now, as you would, to help my mother.

And I was married at the same time and I had just had a young daughter, I had a baby. So my father passed away like 3 months after my first child was born. So anyway, very difficult times, but difficulty doesn't mean you're not happy and not joyful and not able to do things. You know, you just have to look at the positive side when you're faced with challenges. And that's what we did. So the Flatt family grew closer together as my father passed away. 'cause we had to resolve the business issues. And my mother had to go back to teaching school full-time. And so, you know, I've always been around challenges. You know, nothing was ever smooth, as they say. It was always a challenge that I had to face in one form or another.

Hmm, hmm, I see. You built Microl in one of the hardest environments possible, in semiconductors. Every day, chip companies live with brutal cycles, pricing pressure, and massive capital expenses, CapEx. From your point of view, what was the normal way most semiconductor CEOs approached leadership and culture when you started, and what did you see that you fundamentally disagreed with? Sure. Well, you mentioned earlier how challenging semiconductors are. So it's a very challenging industry. And the reason is because it's so important. So go semiconductors, so goes electronics in the world. And so, When I track the economics of semiconductors, I can almost predict the GDP around the world and how it's going to go. And because it's so important, that's why we have these challenges in semiconductors is because every country around

the world needs them. You know, every country. And so the, The differences between what I saw, well, let's first of all talk about a normal semiconductor company and not Micrel. So a normal semiconductor company would seek venture capital. If you remember, Bob Noyce and Gordon Moore and that team from Fairchild left in 1960, '68, I think it was, '67, maybe '67, to form Intel. And Intel was formed by Arthur Rock, a venture capitalist. And so that was the first major foray, as you would, for semiconductors was when that group from Fairchild started Intel. And so venture capital, there's a road actually actually, it's called Sand Hill Road in Palo Alto where all the venture capital folks were. And that was just kind of the norm was to go

to Sand Hill Road and meet with a venture capitalist to start your company. And the average startup cost is around $50 million. It does take a lot of money to start a semiconductor company, by the way. So as I said, the average is around 50 million and in the timeframe of the '70s, okay, we're talking about this. 'Cause that's when most of them, you know, Jerry Sanders and AMD and many others that started on their own actually did so in the '70s. That was the big foray, as you would, in Silicon Valley began in that timeframe, say between, oh, '67 and '78, '80, '78 to '80. So, you know, not much time, 10 to 15 years. And that's how it garnered its name, Silicon Valley, because there were so many

startups coming out of that area, out of that valley, which is near San Jose. California. And so I think that was almost like a major event in the industry was the startup of so many semiconductor companies. I mean, 10, 15, 20 at a time. And they were all raising, you know, $50, $100 million. So in 1976, I had just been, you know, working on the wafer stepper. And my company that I was working for didn't appreciate the technology. For one thing, they didn't have the money. They didn't have the funding to be able to develop it. And so we got into a lot of arguments about how really viable that technology was because it really, Didn't become a major factor until 10 years later, about 1986, 1987 is when it really took off.

The primary reason was is that, you know what, I'm a kind of, I'm an inventor and I could see the size of the wafers growing rapidly. A wafer is that, cylindrical piece of silicon, not cylindrical, but like a disc shape, a piece of silicon we refer to as a wafer. And it was, you know, maybe a few thousandths thick and 2 inches in diameter. And let me back up a little bit. So when I started in '63 in semiconductors at Fairchild, the wafers were 3/4 of an inch in diameter, 3/4 of an inch. So that's like a size of a quarter. And, but then we, I could see them, the size of that silicon growing. And at some point, the current method of imaging the circuitry on that wafer was gonna run out

of capability because not only were the wafers getting bigger, but the geometries were getting smaller. And so that's when I came up with the idea of the wafer stepper, which would then not be limited by the size of the wafer because it was stepping along to image the circuit as opposed to doing it in one fell swoop. You know, we call it contact printing or projection printing. And so the wafer stepper was not limited by wafer size. And then also it wasn't limited by feature size because we kept improving the lenses, the light sources, and the other capability of this equipment to be able to create these very, very tiny circuits. And but the company I worked for, they just couldn't see that. They couldn't see the geometries coming down.

They're working with IBM in East Fishkill on what we call E-beam technology, electron beam. And that's the, IBM at the time was the big, big dog as you would in technology because they were the world's largest computer company. And so they were more, they thought the technology should be E-beam and not wafer stepping. And so the money and the emphasis at the company I worked for was to fund E-beam and not wafer stepping. And so as a result, we agreed to disagree and I left the company in '76, June of '76. And then I tried to decide what am I gonna do? You know, now that I no longer employed as you would, what was I going to do with my future? I love semiconductors, I love the technology. So I

decided, excuse me, in 1978 to start a semiconductor company. But I, again, I'm a different kind of a guy. Remember the wafer stepper, they thought that was a dumb idea. And for me to start a semiconductor company with no venture funding, they also thought that was a dumb idea. So I always did things that other people didn't think could be done. And so that's what prompted me to start my Krell without venture money was because I wanted to own the company. I didn't want to have that shared with the venture capital people because I wanted to do it my way. I see, I got burned out because of the company I was working for. You know, I had no say, you know, I mean, if they didn't want to do the wafer stepper, then that was the end.

So I was tired of people not having that vision that I could see. And so that's what prompted me to start my own company without venture funding in 1978. I had to change the business plan from making products to doing services because the bank loan I had required me to be profitable from day one. And semi-conductor companies don't become profitable until at least 5 to 7 years. And I couldn't do that. I had to be profitable from the very beginning. And so that's what prompted me to start my company without venture funding. And so, It wasn't, it was 7 years later before I could start doing my own products because I had garnered enough money, the company was profitable enough, we had enough revenue so that I could start designing my own

semiconductor products. So that, and that happened in about '75. And then, and we did pretty well. See, most semiconductor companies back in my time went public after about 5 years or 6 years because that's what the venture guys wanted. They wanted to get out. So 5 to 7 years was kind of the average of these semiconductor companies going public. Whether they were successful or not didn't matter. These venture guys just wanted to get out. It wasn't capable at that point to go public. But by 1994, which was like, you know, some 16 years later, we were able to take the company public. And that, I didn't necessarily have to go public. I wanted to go public, but I didn't have to. We were profitable. We were able to create enough

revenue and income to be able to fund the development of the company. I did it because I wanted to prove that a non-venture-funded company could go public. And so I proved that point by going public very successfully in 1994. I see. For everybody who's not familiar with inches, 3/4 of an inch are 19, around 19 millimeters. And when you were talking about your former employer Fairchild, I was wondering, Did they ever regret their decision? No, it wasn't Fairchild. Fairchild, that's a different story altogether. Ah, okay. No, the company that I worked for is called Electromask. They were the first ones to actually produce the wafer stepper. But because of the fact that it took 'em so long and they weren't, that wasn't a priority of theirs, I left them

in 1976 and then formed Micrel a couple years later. So yes, I'm sure they regretted the decision because they went out of business in 1981. So the most successful wafer stepper company is called ASML. I think that's a European company and they're doing very well. But they're the primary producers of the wafer stepper now is ASML. Are you familiar with them? Yes, yes. They're very important. They build those very, very big machines that have special light that kind of burn the chip circuits into the material, right? No, they image it. Image it. I'm sorry. Yeah. Yeah, but that's the product that I developed, is the product that ASML now produces. Just for the audience to understand that what I did in 1974, when I developed the stepper, that is what ASML produces today.

I see. Yeah, that's extremely important for my understanding. Yes. Oh, no, it's probably the most important piece of equipment in making semiconductor companies today. But it was my idea. It was my concept that ultimately now is being done by ASML. And they're one of the most important manufacturers of equipment for semiconductors in the world today. My understanding is you need the ASML equipment to produce advanced chips. Yes, but that's what I developed back in 1974. Oh, that's some time back. Um, another question: can you take us back to the moment when you decided, I'm going to find micro bootstrapped and do it my way? What pushed you kind of over the edge from being a semiconductor executive to becoming a founder? Because, um, you had a disagreement on the, on the technology. Um, but I was wondering

Was it control over values, over culture? Was it also a big driver for you? I think more over culture. I don't know how much your audience knows about the early days of semiconductors, but Andy Grove, who ran Fairchild under Gordon Moore, it was kind of a, hard person to work for. It's kind of like, is it his way or the highway kind of personality. So the culture, they thought, because Fairchild, I mean, excuse me, because Intel was so important and doing so well, most of these companies tried to emulate Fairchild's culture. I mean, not Fairchild, what am I saying? Intel's culture. They tried to emulate that. And so it was kind of like, you know, not a very good company to work for because it was more of a pressure environment

and more antagonistic, meaning, you know, they tended to invite antagonism and disruption, being very disruptive in your thinking. And so the culture that I wanted at my Cruel was be more of a loving culture, more of an inviting culture. We had, as I said, the parameters, the cultures we had was honesty, integrity, dignity of every individual, no swearing allowed. Intel, you could swear your head off, you know, but in my company, we didn't allow any swearing and no vulgar language was allowed. And we respected everyone, no matter if you were a janitor or if you were an executive, that you were treated equally. And then the last one was, if you make a mistake, correct it. In other words, do whatever it takes, no excuses, and have no regrets.

Solve your problem. You know, you be the man, you stand up. If you make a mistake, you fix it. And so that was the culture that we had at Micrel, which was unusual for any other semiconductor company, I think, in the world. We were so unique in that respect. But as a result, we had very little turnover. We had the lowest in the industry. And half of our employees that left the company came back. And so, we treated our employees as the most valuable resource that we had. That's definitely, at the time, it was a new approach, but it has been learned by the company since, I do believe, especially for the ones who are heavily based on knowledge that this is important. We already talked about leadership here. I was— I want to ask

something in the area of leadership versus burnout. The most founders we see today burn out in 3 to 5 years, some much, much earlier. Um, you led Microl for 37 years in a far harsher industry. How do so many CEOs burn out, and what are the 2, maybe 3 leadership habits or disciplines that allowed you to stay effective over nearly 4 decades? That's a good question. So if you look at why people burn out, okay, is because they don't enjoy what they're doing. They hate to go to work. They hate to, you know, they maybe have lost their divorce or they lost their relationship with people with infighting. Which is kind of endemic in Semicon, there's a lot of infighting. Do you know what infighting is? You know, where

you fight, you develop these silos and you tend to protect, it's kind of like the battle between the, you know, the good guys and the bad guys kind of thing. You know, that infighting is the thing that causes animosity. And animosity is the thing that causes you to burn out. You're tired of fighting, okay? And as you know, nothing good comes from war. And so if you're a top executive, you're not only fighting with your employees, you're fighting with your board of directors or with your investors. And so I think it's mainly you get tired of fighting. And so that's what causes burnout. If you enjoy what you're doing, if you see a happy future, you're not gonna burn out, you're not gonna lose your way, you're gonna stay engaged. And my employees love to

get together. We love to have activities together. And we met together every Friday at 1 o'clock. We met for an hour and a half and we talked about, this is now the executives or the team leaders, at the company met on a weekly basis on Friday at 1 o'clock and we spent an hour and a half just going over how things are going. We talk things out. We like working together. We didn't have these silos. We didn't have these barriers. And so there was a lot more of a friendly, let's work together attitude as opposed to let's fight among each other. And so, I think it's that infighting is what causes burnout because you're fighting your investors, you're fighting your board, you're fighting your employees, and you just get tired of fighting.

Yeah, fighting is so energy-draining. And the politics that come with it, it's no fun. You've been talking about, you've been writing The Essential Leader. And I was wondering, in The Essential Leader, you argue that the number one reason employees quit is fear-based leadership, which is currently still the modus operandi in a lot of investment banks, for example. Leaders who rely on power, intimidation, and ego. For founders listening right now, what are some early warning signs that they are slipping into fear-based leadership even if they don't mean to? Because they feel they're losing control. If you look at some of the battles and the wars around the world, it's the same thing. It's a matter of fear-based leadership. They want control. They want to be able to dominate and hold their position. They don't

want to feel inclusive. And so, you know, I don't want to get into the world politics, but for your audience that understands the wars that are currently around the world, they are fear-based. You know, antagonistic. You know, it's my way or the highway. I have to dominate. I have to be the one that says how to do it and when to do it. But that's not the way teams are. Team leadership is different than fear-based leadership. We want to work together and not fight, as you would. We wanted people to want to come to work, they want to help as opposed to they're fearful. They only do it because they don't wanna lose their job or they don't wanna lose their position in the company. And so they use fear as a way to intimidate and get what they

want as opposed to people doing it because they love it and they want to do it as a happiness, a factor as opposed to an unhappiness factor. You've been talking already about unhappy workers, um, in your essays and podcast. Unhappy workers, it's not them, it's you. Interesting take. You say job satisfaction is primarily about loving your boss and loving what you do. How can investors or board members diagnose a culture problem quickly, and what questions Should they ask to see if the CEO is truly people-centric or just paying simply lip service? Okay. So, I'll start out by telling a story. Okay. The story is told about this couple, a husband and wife that had to move because of their job. They had to move to this particular town. Where they were going to live. And so they went to the

mayor and they asked the mayor, who's the best one to talk to about how the town is, what kind of a place it is to live? So the mayor said, well, there's this old man that's been here for 50 years and he's probably the best one to talk to. So the couple went and visited with the old man And the couple said, well, what kind of a town is this? And the old man said, well, what was the town like where you used to live? Oh, it's no good. You know, the people are bad, you know, and, you know, they really didn't like that town that they had lived in. So the old man said, well, this town's the same way. You'll find that it's just as bad as the town you lived in.

So the couple went away unhappy. So then another couple came into town and same thing, they wanted to know how the town was. And so the mayor said, go visit the old man. So as they visit with the old man, he asked them, well, how was the town where you came from? Oh, we loved it. How were the people? Oh, they were fantastic. Well, how did you like your job? Oh, I loved it. And he says, well, we have the same thing in our town. It's a loving, very happy, town. So the first clue is when you interview somebody is ask them how they like their previous job. How'd you like your previous boss? How did you like your previous company? And if they say, oh, I didn't like it, I didn't like my boss, I would not hire them. Okay,

if they said, oh, I love my boss, I love the company, I love where I work, I love my job, that's the kind of people you want to hire. So the clue is, is when you interview your CEO or interview an employee, you know, find out how happy they are. You know, find out what makes them want to get up in the morning and go to work. And if they're happy, then you got it, you have a long-lasting employee or business. If they're unhappy, they're going to burn out. They're not going to last long. Yeah. And what I learned from another interview, somebody who's specializing on burnouts, it's always toughest people that burn out. So, yeah. So, the happiness is the key. If you have a happy company, you've got a happy investor or happy employees. So,

if your employees are happy, then the investors are going to be happy. And so that's the way you actually qualify a good company is their happiness quotient, if you know what I mean by happiness quotient. You find out how happy the employees are that work for the company, whether it be the lowest employee or the top executive, is to find out how happy they are. Because it's caused unhappiness, causes burnout. Totally. Um, I, I was wondering, you, you also talked about tough things. Um, your core philosophy is tough things first. Do the hard, painful, necessary things before the easy ones. And can you walk us through a concrete, a specific situation at Mackerel, uh, where you had to make an extremely unpopular or painful decision, maybe around layoffs, capital allocation, or strategic focus,

and how that tough things first mindset guided you in this action? So in 2002, we had the dot-com implosion. I don't know if your audience remembers that, but, you know, the dot-com era began in 1998 and accelerated. That was, you know, when Al Gore said he invented the internet. And, you know, so there's a big rush to become a dot-com company. And I could see by 1999, I could see that that was going to implode. In other words, that technology, that concept of getting rich quick and making a ton of money was just not practical. In 2002, when the industry imploded, I lost half my customers because some of them just went bankrupt. You know, it was really a difficult time. I mean, extremely difficult time. More companies went out of business in our industry

in that time period than any other time in the history of the industry. So the dot-com implosion was the most difficult time for us. And losing half your customers, you know, that puts a real strain on revenue. And they have to decide, what do I do with my employees? It's not their fault, you know, I mean, it's more of an industry issue. And so rather than doing a big layoff, we just cut back hours. In other words, we worked fewer hours. And that was the first time in the history of our company that we lost money. We lost out of the hundreds of millions of dollars that we had in revenue, we only lost $50,000. I didn't wanna lose money because I had not lost money in a single year up until 2002 when we had the

dot-com implosion. And so I didn't wanna lose money, so I had to figure out how can I, make my, help my employees with their job and not, and still not lose a lot, a lot of money. So we just did, instead of doing a big cutback, we just did work shorter hours and took more time off. And that really served us well because our employees knew that we loved them and we were caring about them and their families. Sure, they had to, tighten their belt, you know, because they had fewer hours they were working and so less pay. But we told them how important it was for us to be together as opposed to strangle the company by laying off a lot of people. And as a consequence, we retained a lot of our

employees and we came out stronger in 2003 by, just buckling it down and making sure that we took care of our people. I took the biggest pay cut of anybody. I made sure that my pay cut was 3 times that of anybody's. And so I virtually had no, took no money for a couple years. And that really impressed our people. So that was a difficult time. But again, if you think about your people as opposed to yourself, that's what they like. They like to see that you are looking out for them and not out for yourself. Hmm. There's usually a decision going on here, bootstrapping versus venture capital. In Germany especially, I think there are way more bootstrap companies than venture capital funded. I think mostly for the reason that there's not enough venture capital around,

but that's a little bit different story. And we've been talking about the dot-com bubble burst here. I had some déjà vu. I was old enough to have bought and sold a few internet stocks. AMTV, Pixelpark came to mind. They've been very, very big at the time, and they completely burned up during the dot-com bubble. But let us get into bootstrapping versus venture capital. You built a bootstrap semiconductor company in an area and region obsessed with VC money. Um, from the vantage point of 2026, what did you gain by avoiding VC money, and what, if anything, did you sacrifice that founders should be aware of when they choose this path? So, um, the reason there are fewer venture capital is because there's less demand for it. If you look at the purpose of venture capital, it's to make a return

of something like 3 to 10 times for your investors. That's how you get investors to want to invest in your fund is by promising them a 3 to 10 times return. It's hard to find an industry that will give you that kind of return in a short period of time. And so the venture capital companies are finding it difficult to find startup companies that can offer that kind of growth. I think the dot-com implosion kind of soured them on these high-flying startups, as we call them. And so the safest way, if you're going to invest in a startup with venture money, is to really be very, very selective because 9 out of 10 startups fail within the first 3 years. That means that's a 10% chance of winning versus a 90%

chance of failing. And so you don't want to, it's hard to find a startup where you have a 90% chance of winning as opposed to a 10% chance of winning. And so there are angel investors that are willing to, you know, lend money, but they can't get 3 to 10 times their return, they gotta look at less, like maybe, you know, a 20% or 25% return as opposed to, you know, 3 times or 10 times. And so if you're gonna start your own company, you look for ways to bootstrap it, either through angels or your family or your friends or your own resources. And that's, that's the more favored way of doing it nowadays because you're more likely to stick it out as opposed to being burned out if you're

the one that's on the, you know, on the hot seat as you would to make the company successful. So I get approached a lot by startups wanting to see if I'll help them. And I, of course, I haven't done much. I've done a little, but because it's difficult to be an investor without trying to get involved in the company. And, you know, I'm retired and I write books and I help at universities and I don't know if I wanna spend my time helping a company solve their problems. I want them to solve their own problems and not me come in and have to help them. And so that's been kind of my experience so far. For our audience, if you're listening and you've experienced either a great or terrible CEO, send

us a voice message, a comment, or a direct message on LinkedIn. What was the one behavior that made the biggest difference? Will feature some, of course, anonymized of your stories in future episodes. One thing that was very distinctive from how you've been working, Ray, is Micrel was profitable in 36 out of 37 years and survived 8 major semiconductor downturns. If you had to distill that into something like a downturn survival framework, for today's founders and investors? What are something like the 3, 4 principles they should tattoo on their wall during the next macro shock or maybe even on their forehead? Well, you know, if you think of in 37 years have 8 downturns, you can do the math on that. That's like every 3 or 4 years you're gonna have a

downturn. You have to prepare for a downturn. It's like, you know, you gotta prepare to catch a cold. You gotta prepare. To get sick, you know, you gotta know that, you know, bad things are gonna happen and you have to prepare for it. And so it's kind of like, you know, how do you stay healthy? You eat right, you sleep right, you exercise. That's the way you take care of your body. It's the same way you take care of your company. You make sure you're prepared for a downturn, prepare. And that's kind of what we did in the 37 years I ran the company. We, when there was an upturn, we immediately began to prepare for a downturn. And that's the key, preparing for it, getting ready for it. That means you have to have the financial resources to hold you over. That

means you have to have the right employees in place. You know, you have to be prepared to not get sick. So that's what happens in a downturn is the company gets sick like you do physically. You know, you know you're going to catch a cold, you know you're going to get sick and you have to prepare for it. So if you want to minimize it, you have to eat right, you have to sleep right, you have to exercise. And that's the same way when you run a company. You know, you have to eat right. You know, you have to have the financial resources to hold you over. And so, that's the key to surviving a downturn is you just know it's going to happen and you prepare for it. I was wondering when you talked about having the capital and having the employees,

how lean should you go? Because there's an upturn and you're already preparing for the downturn. But you have to be able to run the company in both environments? How lean should you be? Should you have like the absolute minimum or like a buffer of 10-50% of the headcount? That's about right. You know, you just, you have to make sure your headcount is held to a minimum. So that because you know what's going to happen, you're going to have a downturn. And so your employees know it. You know, you prepare them. And so, you know, you don't get carried away with growing too quickly. Okay, that's the problem that venture capitalists, they want you to grow quickly, but to do that means you have to hire an inordinate number of people to do that. And that's dangerous

because when the downturn comes, then you're going to have a lot of unhappy employees when they get laid off. So, you know, You can't, don't grow too fast. It's like don't eat too much food, don't exercise too much, don't, you know, you have to be moderate, moderation in all things. You have to be careful that you don't get ahead of yourself. Get, as they say, getting over your skis. You know, you don't want to do that. And so you want to keep the headcount to a minimum. Do not grow too fast. Even though, that's by the way why one of the reasons I didn't want venture capital, 'cause I didn't want them to tell me to grow faster. 'Cause I know what happens when I do. If I grow too fast, I'm gonna go down too fast.

Because a downturn is going to happen. I see. You've said in your new book that it can be used by investors as a checklist for assessing CEOs. If I'm a VC, I'm a corporate venture unit or family office looking at a founder, how do I practically apply your 10 essential skills and attributes during due diligence? Well, we've been talking about that for the last half hour or so. You know, you just have to realize how important your customers and your employees are. You know, customers are number one, but employees are also number one. So you gotta treat your employees as well as you do your customers. And so the key here is to not get over your skis. The key is to keep your customers happy and you keep your employees happy.

Happy employees mean happy customers. Happy customers mean you have happy employees. So you, you, you have to, to be moderate in the way you manage your, your, your resources in your company. We made sure that we had enough capital to, to ensure profitability for at least 6 to 9 months. So we, we couldn't grow too fast. We couldn't buy too many pieces of equipment because we had to make sure that we could survive, we could last. You wanna build a company that will last, not a company that will just hang in there. You know, you want a survival company, not just one that's just blowing the barn doors off. And take a company like Nvidia, you know, Jensen Yang. You know, he's done well, but I tell you, he's big. It's a big

company, one of the largest in the country. But he runs into a, he runs a risk that when, if AI doesn't take off well, if it doesn't continue, it could be a dot-com implosion. And when it does, I guarantee you Broadcom and Qualcomm and, and Intel and AMD and those companies, NVIDIA, they're gonna see that they're gonna rue the day. I mean, they will not survive. And so, you know, trees don't grow all the way to the sky. I mean, at some point there's gonna be a reckoning. And I think that AI has grown so fast that, And there's so many competitors that they can't sustain this forever. Mm-hmm. I totally understand. Originally this was planned as one episode, but we are recording now for around 50 minutes now, uh, for half of the questions. So,

um, I would just, um, say thank you for this part right in the second half. Episode, we'll get into how Ray led as legally blind CEO, why he banned swearing inside a Silicon Valley chip company, and the specific culture rules that kept Micrel turnover among the lowest in the industry. Ray, it was a pleasure to have you, and we'll be back for you and me in a few seconds, and for everybody else, um, at the next publication of startupray.io. That's all, folks. Find more news, streams, events, and interviews at www.startuprad.io. Remember, sharing is caring.