Tips From The Top: One On One With Ray Zinn

I spoke to the longest serving CEO of a publicly traded company in Silicon Valley, Micrel founder and former CEO Ray Zinn, about his journey and best advice

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Adam: Thanks again for taking the time to share your thoughts on leadership. First things first, though, I am sure readers would love to learn more about you. What is something about you that would surprise people? 

Ray: Probably that I am legally blind which happened during Micrel’s IPO. However, I have not let it slow me down nor did it keep me from running Micrel for 37 years. 

Adam: Why do you believe you hold the distinction of the longest serving CEO of a Silicon Valley company?

Ray: From day one, I was in it for the long haul. Many CEOs are what I call serial entrepreneurs, going from startup to startup, selling each when they can and moving on to the next shiny new toy. That was never who I was as an entrepreneur or leader, I wanted to build an enduring business. 

Adam: How did you get here? What failures, setbacks or challenges have been most instrumental to your growth? 

Ray: Back to losing my sight, during my company’s IPO roadshow none-the-less. It was a defining moment in my life; both as a CEO and as a human being. I had to rethink everything, from how I interacted with people to how I was going to run the day-to-day business. Even ordinary logistics had to be rethought. I could no longer drive a car much less pilot my own private airplane! So, continuing to run Micrel required that I retool nearly every aspect of my daily life. It was a challenge, but in the end, it helped me be a better listener and that made me a better leader. 

Adam: You decided to go against the grain and bootstrap Micrel. What advice do you have for those thinking about whether, when and how to raise money? 

Ray: Don’t be afraid to think outside of the box and choose a non-traditional path of funding. I knew if I went the VC route, I’d forever be beholden to people outside of the company for everything from product development to financial management. That was not what I wanted for my own company, so I went to a bank. Even though it was unconventional, they gave me a loan. The biggest stipulation on the loan was that the company had to be profitable from the get-go, something that was also very unusual for any startups much less a startup in the highly competitive semiconductor industry. I personally guaranteed the loans of the company to the tune of $4.5M, which was more than my total net worth.  So, I was all in, so to speak. This commitment meant that I drove profits from day one and ran a company based on rational frugality as such, Micrel thrived. 

Adam: What were the keys to leading Micrel to profitability in year one and in 36 of the 37 years you were in charge? 

Ray: For 37 years, I made sure cash was king at Micrel and it worked. We survived the downtimes and thrived during upcycles. The semiconductor industry is dominated by huge product cycles, and many companies die or sell themselves off during down cycles. We succeeded when others failed because profits and cash were woven into our culture. I had built a company based on rational frugality and making do. In addition, we never spent more than we had so the cash to do.  We always had at least six months of working capital in the bank.

Adam: When building the corporate culture that came to define Micrel, what were your main considerations? What advice do you have for other leaders on how to build a winning organizational culture? And how do you believe leaders can best foster innovation and creativity? 

Ray: Believe it or not, it is not about money. People want to be paid well, certainly, but there is far more to building a corporate culture than paying top dollar. At Micrel, we fostered a culture of servant leadership and helpfulness, it was a cornerstone to our culture, helping others and being respectful. We didn’t allow things like swearing which is unusual in Silicon Valley. This helped foster respect for everyone in Micrel. My advice to others seeking to build a winning organization is to remember what people need. Young entrepreneurs in particular, fail to express appreciation— to praise their people, to praise the organization even when it is doing poorly. It is easy to praise people, departments, divisions, and even entire companies when they do well, but that is when people are already motivated. When things are tough and times are hard, that is the time employees need your most sincere appreciation. Management studies have shown that employees appreciate praise more than anything else. Give employees a bonus check and they will be grateful, but the memory of that money lasts only a short while. Give them a plaque and 40 years from now they will know exactly where it is even if it is tucked away in a box in the basement and they will tell the story of how they came to earn that recognition. 

Adam: In your experience, what are the defining qualities of an effective leader? How can leaders and aspiring leaders take their leadership skills to the next level? 

Ray: An effective leader is someone who magnifies their people, exposes employee contributions, appreciates their intelligence and is completely and totally transparent. Employees respond better to the truth even if it hurts.  Be up front and honest with your people, even the news is bad. This creates a culture in which he or she is not the center of attention, and where people trust their leadership. This leader increases the individual happiness of each employee and thus increases the company’s gross happiness. In addition, leaders can take their skills to the next level by focusing on servant leadership where helping people, servant leadership, altruism, and compassion drive the company; great employees are driven by their happiness, not by unmetered greed.  If during bad times we had to reduce heads counts and reduce salaries, I made sure that I took double or triple the hit i.e. salary reduction or time off without pay. I also made sure that my income was no more than 10x the lowest paid employee.

Adam: Who are the greatest leaders you have been around and what did you learn from them?

Ray: Eisenhower, Reagan, Churchill. I learned from them the degree to which honesty and integrity can go.

Adam: What other Silicon Valley companies do you admire most and what can we learn from them? 

Ray: LLTC, Linear Technology. They had such great margins and technology. The two were related, but it was a well-run organization.

Adam: What is the best advice you have on building, managing and leading teams?

Ray: When it comes to building, managing and leading teams, the process of communication is crucial —it is the bulk of an entrepreneurial CEO’s job—and understanding how change should be communicated to the team. If goals are properly set and the culture is reasonably well crafted, most daily work and even significant organizational transitions will go off without a hitch. 

Adam: What are your thoughts on Hock Tan’s plan to roll up the semiconductor industry? 

Ray: Hock is a very shrewd businessman. He is one of the best in integrating companies because he can cut to the bone.

Adam: What are your three best tips applicable to entrepreneurs, executives and civic leaders? 

Ray: Focus, frugality and drive. Focus: distractions are antithetic to entrepreneurs. They know in their hearts and minds what they want to create, and they find a way to create it. Frugality: Excesses of the dot-com era aside, great entrepreneurs build frugal organizations. Cash is king, and spending their own cash is less expensive than using investor money or bank loans. “Making do” is an entrepreneur’s creed. Finally, never give up because being the best doing their personal best for leaders of all kinds is a natural mode of operation, and they encourage everyone in the organization to live for the same standard of quality. 

Adam: What is one thing anyone can do to become a better leader tomorrow? 

Ray: Do the Tough Things First. No matter what that is – reviewing budgets or tackling inventing a new technology – doing the Tough Thing First always moves the biggest boulders. It sets the tone for the day and empowers a leader while fostering discipline. 

Adam: What is one thing anyone can do to become a better entrepreneur tomorrow? 

Ray: At the risk of repeating myself, learn to do the Tough Things First. Entrepreneurs need laser focus in order to succeed. Doing the Tough Things First builds a foundation of discipline and focus, both key to becoming a better entrepreneur. Also, learn to love the thing you hate – this avoids procrastination.

Adam: What is one thing everyone should be doing to pay it forward?

Ray: We see stories on the news from time to time that illustrate how the power of looking out for others—paying it forward—works miracles. Somebody will pull into a KFC or Starbucks drive-through and when placing an order will tell the cashier that he or she is paying for the person in the next car. It has a ripple effect. So, showing appreciation, whether at a Starbucks drive-through or between an entrepreneur and the employees, snowballs. If you are truly appreciative for what someone else has done, that person will show the same appreciation to others. Similarly, you become more likely to show appreciation to the next person you encounter. Honest gratitude is a human trait that helps employees thrive. 

Adam: What is the single best piece of advice you have ever received? 

Ray: Start your own company, especially if you are an out of the box type person. That is how I became an entrepreneur and CEO. I was so busy thinking beyond the limits of the company I worked for, I had to start my own.

Adam: Is there anything else you would like to share? 

Ray: Believe in yourself. I established a program in a few colleges around the country called ZinnStarter. It gives mentoring and a little cash to college entrepreneurs. It gives them that next little lift. The feedback I receive, especially from our partnership with West Virginia University – a school system that serves some economically desperate regions – is that the students obtain a “yes I can” attitude. People with that attitude are unstoppable.

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