Book Review: Only the Paranoid Survive (by Andy Grove, former Intel CEO)

Key ideas in the book are:

  1. Sometimes there are inflection points in an industry that changes everything, e.g. containerization of the shipping industry and the rise of the personal computer.  The trick is to (A) correctly identify what things are and aren’t inflection points and (B) re-invent the business if you are on the wrong end of an inflection point.
  2. It is difficult for CEOs to make decisions that may be obvious to outsiders and to a company’s customers.

Spotting inflection points

Andy Grove correctly made the insight that X-ray lithography and RISC computing wouldn’t be inflection points that would kill Intel.  Under his leadership, Intel exited the RISC CPU business and focused on its core non-RISC/x86 business.  In hindsight, X-ray lithography was mostly ahead of its time as chip manufacturers now are only moving into EUV (extreme ultraviolet) lithography by making investments in ASML.  As far as RISC computing goes, x86 processors from Intel and AMD are rapidly taking market share.

Grove thought that Intel would become a household brand and that it was important to uphold Intel’s reputation.  In hindsight, I’m not so sure about this.  Intel’s advertising campaigns may have been a waste of money.  For the most part, there does not seem to be a brand preference for Intel or its competitors.

Re-inventing a business

Grove gives many examples of companies that were on the wrong end of an inflection point.  Wang Labs was on the wrong end of the shift towards the open platform of the x86/Windows PC.  Back then many computer companies both designed and built all their software and hardware.  There has been a huge shift towards companies that specialize in and dominate their horizontal markets (e.g. Microsoft in operating systems, Intel in CPUs, etc.).

The book’s title Only the Paranoid Survive refers to companies being able to correctly spot imminent inflection points and re-invent their business accordingly.  Grove uses Intel as an example as Grove shifted Intel out of the unprofitable memory business and into the microprocessor (and into microcomputers).  Back then, Japanese memory companies were outcompeting American memory companies.  Grove notes that it was very hard to shift Intel out of memory as there was fierce internal resistance (memory is ingrained into Intel’s identity as originally Intel was a memory company) as well as foot-dragging on his part.

Is the book worth reading?

In my opinion, yes.  It’s short and very easy to read (there is very little technical detail).  It’s worth reading to understand the history of the computer industry, what people thought at the time, how the industry works and how it used to work.

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