McCranie was livid upon receipt of an internal Xerox memo that discussed eliminating Seeq chips from Xerox products. He felt betrayed. He flew to Xerox and confronted management -- to no avail. After a similar Hewlett-Packard memo surfaced, McCranie fired off a letter to company president John Young, earning him an audience with HP's top engineers and a reprieve. McCranie had spent years cultivating these people, soliciting their loyalty, and now they were ducking him.
One of his best customers, Howard Charney, a vice-president of 3Com Corp., a computer networking systems company, saw McCranie's books every month. He was worried Seeq was going under and wanted to be the first to know. Charney saw the Valley as littered with victims -- people unable to guide their fates -- but McCranie was never among them. "No matter how bad things got, Dan always had a plan. 'OK, here's where we stand today on this. Here's what we're going to do about it.' '
What appeared to Charney as coherent action was McCranie's "dither theory" at work, by which McCranie proposed as many credible plans as entered his head. These ranged from selling more chips to new customers this quarter to selling the company. "It was manic depressive," he recalls about the summer of '86. "I'd have a victory and couldn't stand how happy it made me feel. Then something would go wrong and I'd wonder, why am I doing this? At one of these places I gave my pitch, and in the middle of it one of these guys was giving me a funny look. I said, 'What's wrong?' and he replied, 'To tell you the truth, Dan, we're not interested in buying your company. We never have been. We just wanted to see how you were holding up.''
* * *
Dan McCranie's bias all along had been to preserve Seeq's customer base at any cost; keep moving EPROMs. If he abandoned them, then there was no honor. Floyd Kvamme believed Seeq's EPROM customers couldn't have cared less about the company. To them, Seeq was no better than their number-four supplier of a commodity chip. What Seeq did have that was unique was its E2 technology. For this, people would pay.
At a key meeting back in mid-1985, Kvamme had said they weren't going to cut R&D; they were going to focus on getting out the 256K CMOS E2 chip. There were easier targets -- another type of technology or a lower-density chip. But Seeq needed a talisman that would signal revival.
In 1985, McCranie, then still just one-third of Seeq's interim "office of the president," hadn't seen what Kvamme was getting at. After all, one investor had come in, put his feet up on the conference table, and said that the only way to save the company was to cut R&D. But a year later, CEO McCranie shared Kvamme's vision. The 256K E2 was almost done. It looked like a winner. Close on its heels came a new family of breakthrough chips, the 128K and 512K Flash E2. These were single-transistor E2 chips, costing one-quarter of what the full-featured E2 cost.
But just when it looked as though the technology was coming around, the company was running out of money. Before the July Fourth weekend, after only three months at the helm, McCranie gave "another fire-and-brimstone speech on how to lower expenses and raise revenue" to his executive staff. But this time, like some candidate on the stump too long, he only "half believed" the words coming out of his mouth. McCranie thought Seeq was through. The vultures would descend and rip the ripening technology from the body.
As McCranie walked out of that meeting, his controller, Ralph Harms, followed him. Harms was a shy man, but now he spoke boldly. I don't think we've done enough, Dan. We have to do something really tough. What do we make money on? What don't we make money on? We have to think of this company with half as many people as before, he said. McCranie went home for the weekend and heeded this other quiet but insistent voice.
At its peak, Seeq had employed 700 people. By mid-1986 that number was down to 400 -- rock bottom, according to company dogma. The dogma also had it that Seeq could sell itself out of the EPROM disaster. But McCranie came back from the holiday and said the company would lay off another 130 people and get out of EPROMs. He told his managers how many people to cut and told them to do so this afternoon, not next week.
In the first couple of months after the layoffs, meetings were held to analyze why Seeq had screwed up so badly. Some turned tearful, others turned into shouting matches. When people said they had done their best, McCranie replied I know that, but that's not what I want to hear. I want to know how we can stem these losses.
In time, his people turned on him, accusing him of poor sales turns and being a lousy market forecaster. He protested. Then he realized he was reacting as defensively as everyone else in the room.
The rap on Campbell had been that he wasn't tough enough, and there was resistance on the board to giving McCranie the job for the same reason. He was a salesman, after all -- a glad hand for everyone. McCranie knew he had to expunge that perception; he had to atone for the sins of another's past. Besides, he was convinced Seeq needed the "hard negative feedback" it had never received; it needed to stop being a place where "people were afraid to criticize." That era began the day an operations supervisor stopped McCranie in the hall and said, "Boy, I never realized what an asshole you could be.'
McCranie thought, that makes two of us.
* * *
McCranie's commitment to being tough was connected to something more than Seeq's needs -- it was connected to his ego. When the money men snubbed him, he was hurt. He wanted to show them that though they didn't care about his company, he did. He would do whatever it took to avoid the mark of Cain he would carry through the Valley should Seeq fail. There goes Dan McCranie, the guy whose company died under him.
Restructuring the company also turned into a game that appealed to his tactician's instinct. Before him he saw a succession of wins and losses. How would he artfully play them off one another so as to ride a middle course? The July layoffs had cut Seeq's weekly payroll from $310,000 to less than $200,000. McCranie was able to keep his best people. That was nice. But morale took a hit. Experienced research-and-development technicians were relegated to rote work in wafer fabrication. As a result, productivity jumped. McCranie told these employees their sacrifice meant that the company would survive.
