How did Intel do so badly?

+ Key Skills of APMs & Advice from Buffett

How did Intel manage to do so badly in an industry with so many tailwinds?

There was a time Intel was worth more than Nvidia, AMD and TSMC combined. Now each of those upstarts is worth multiples of Intel. It’s a great lesson in strategy gone wrong.

Intel 10 year returns are pathetic compared to Semiconductor peers.

1. Losing the technical lead

For years, Intel had a lead in lithography and made the technically leading chips. But since 2018 when Intel was beat to market in 7nm chips, it has stayed behind. It went from two years ahead to two years behind.

In the latest earnings call, Intel CEO Pat Gelsinger had an, “embarrassing thing to say.” Intel’s data center technology hadn’t improved in five years. In market-leading semiconductor companies, innovation is critical.

Moore’s law states that the number of transistors in a microchip doubles every two years. It was on that belief he founded Intel. But Intel has fallen far behind that pace in recent years. Moore’s law is dead. At least at Intel.

2. Ceding the mobile & AI markets

Early smartphone chips were low margin and not leading edge. Intel ceded this market to Qualcomm, who worked with TSMC & Samsung to dominate the space. This made Intel miss an entire wave of industry growth & have to focus on high-end PC CPUs.

And Intel has also fallen behind in the next wave as well: AI, which is led by Nvidia. For years, Intel stuck to integrated graphics - long after it was clear most AI jobs were going to GPUs. Wave after wave of additional demand for chips has come, but Intel has missed them.

3. Getting hamstrung by doing it all

Unlike AMD, Nvidia, and Qualcomm - who focus on chip design - Intel did design and manufacturing. This caused the product strategy to be conservative. Intel fell behind AMD in chip design and TSMC in manufacturing.

News has only gotten worse with Apple announcing its own silicon. It’s moved off of Intel. Whereas TSMC can just shift to the next best design, Intel’s manufacturing is reliant on its own designs. Apple’s entry demonstrates how TSMC enables other players to eat Intel’s lunch.

Things aren’t looking up for Intel. It is predicting a net loss next quarter. The once highly profitable company has had a tremendous fall. While its competition continues to see revenue grow, it does not.

Intel is a cautionary tale for product & business leaders:

1. Never stop innovating
2. Don’t discount new waves of demand
3. Pick your battles

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The top 10 skills of a great Associate Product Manager (APM)

APM is one of the hardest roles to demonstrate qualifications for. By definition, APMs don’t have PM experience! (That’s what’s used to evaluate more senior PMs.) Nevertheless, there ARE discrete skills that matter to becoming an APM:

1. Writing

APMs have to be able to write numerous concise, stellar docs. The best APMs write product requirement docs (PRDs) that are the stuff off A+ final papers. Organization, clarity, data, insightfulness, and thoroughness are all important.

2. Analytical Sense

APMs should understand:

• randomization & other conditions required for statistical inference

• peeking

• confidence intervals

• generalizability

They should also be able to generate hypotheses and identify north star/ guardrail metrics for experiments.

3. Teamwork

Building great relationships with engineering, design, legal, and analytics is the heart of APM. APMs must be able to work well with different types of people. It’s important to be able to adapt.

4. Product Sense

APMs should be observers of the product world. They should notice what makes the software they use engaging and monetize. They should be able to identify what types of features generate business value.

5. Strategy

APMs must have excellent sense of business strategy. They should not just understand the profit equation, but the drivers behind it. Concepts like having a moat, monopoly, and jobs to be done are crucial.

6. Verbal Communication

APMs must be able to contribute to meetings where:

• They are running the meeting

• They are the most junior person in the meeting

• There are senior executives

Bringing confidence and concision with oomph is critical.

7. Technical Fluency

An APM must be able to work well with engineers. They’re talking to them all the time. They should understand what engineers are saying at standups. And get in the details to unblock them and regularly.

8. High Horsepower

APMs have a myriad responsibilities. They need to be the type who can handle lots of classes and extra-curriculars. There’s no shortage of work. So it’s crucial to have the horsepower to do it all.

9. Detail Orientation

Despite APMs doing alot of things, they must also do so with detail. APMs are expected to go DEEP on their features. This means understanding every user state, the analytical tracking, and the location of every key CTA.

10. Bend Reality

APMs need to be practiced in getting people to change their minds about things they feel strongly about. Influence is crucial. An APM needs to have their own charisma that creates a force field to bend reality.

APM programs are one of the best ways to break into product. These are the skills they look for. Cultivate and demonstrate them.

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Lessons from Buffett’s 2022 Shareholder Letter

One of my favorite reads every year is Warren Buffet’s investor letter. This year’s finally came out.

In it, he revealed 1 dollar invested in Berkshire Hathaway when he took over in 1964 would be worth $3,787,464 dollars today! That’s a type of result worth dissecting.

So, here are 7 takeaways worth knowing from Warren’s 2022 shareholder letter:

1. Efficient market hypothesis is dead:

“Efficient markets exist only in textbooks."

The prices of stocks and bonds are often "truly foolish." There are times when Mr. Market comes knocking that are great opportunities to buy or sell.

2. Make & stick to a few great decisions:

"Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years"

It's more powerful to make a few truly good decisions and stick to them than make many okay decisions.

3. Own some of the truly great blue chips:
Of the S&P 500, Berkshire is,

"the largest owner of eight of these giants: American Express, Bank of America, Chevron, Coca-Cola, HP Inc., Moody’s, Occidental Petroleum and Paramount Global."

Great companies generate long-term returns.

4. Maintain a cushion:

"Berkshire will always hold a boatload of cash and U.S. Treasury bills"

Berkshire has leverage from its insurance float, but it also has phenomenal diversification into stocks, bonds, and cash.

5. Berkshire has been made by America:

"We count on the American Tailwind"

Berkshire tends to invest in primarily American located companies, because of the dynamism, rule of law, and prospects for the future.

6. But there is reason to fear US treasuries:

"During the decade ending in 2021, the United States Treasury received about $32.3 trillion in taxes while it spent $43.9 trillion"

It's hard to predict what will happen, but the bill for 10 years of money printing will come due.

7. Find a great partner:

"Find a very smart high-grade partner – preferably slightly older than you – and then listen very carefully to what he says"

An easy way to make better decisions is to have a partner to make them with.