Qualcomm, every mention
211 scenes (2022), the whole family · ← back to Qualcomm
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Verbatim, from the transcripts: the passages where Qualcomm comes up
Holiday Special 2022 · Acquired
- ▶ 2:05:47 Ben Gilbert Like, I did a ton of Qualcomm research on The Verge, because they've done so much reporting on Qualcomm over the years.
- ▶ 2:07:59 Ben Gilbert It was painful for me to read the whole Qualcomm book, but the only way to get it was a paperback book.
Enron · Acquired
- ▶ 23:17 Ben Gilbert I was gonna say, I remember reading this and looking it up and being like, okay good, woof, it's not our Qualcomm Erwin.
- ▶ 23:21 David Rosenthal I first heard about this other bizarro Erwin Jacobs when doing the research for the Qualcomm episode, because every time I type it into Google, I would occasionally get
- ▶ 44:58 Ben Gilbert Think about our Qualcomm episode.
- ▶ 3:24:22 David Rosenthal We had some lined up for, uh, the Qualcomm episode, but we literally got yanked offstage.
Qualcomm · Acquired
- ▶ 2:09 Ben Gilbert Is Qualcomm.
- ▶ 2:11 Ben Gilbert And today, we will dive into their entire history and strategy, unpacking their products, which, to the outside observer, is really best described as a layered series of magic tricks.
- ▶ 2:53 Ben Gilbert He was kind enough to invite us and, uh, and really fun to do it there, especially given Solana's tie to Qualcomm with Anatoly having worked there for over 10 years.
- ▶ 6:05 David Rosenthal Which is not well known, but is the definitive history of Qualcomm and ranks right up there with among the best business books that business histories that we've used as a source on Acquired throughout the whole history of the show.
- ▶ 6:46 David Rosenthal How Qualcomm came to rule the wireless industry.
- ▶ 7:50 David Rosenthal So with act one of the Qualcomm story, we start in Austria, here in Europe,
- ▶ 8:14 David Rosenthal Uh, and we start, you might think, if you know anything about Qualcomm history, you think in mid-thirties, you're like,
- ▶ 8:20 David Rosenthal oh, I didn't know Erwin Jacobs, co-founder and CEO of Qualcomm, was born in Europe.
- ▶ 8:49 Ben Gilbert I remember we reached out to the NZS Capital folks and said, hey, you know, do you have any great resources on, on Qualcomm?
- ▶ 12:15 David Rosenthal So Hetty teams up with her new Hollywood neighbor, a composer, a music composer, named George Antheal, bear with us here, I promise this is getting to Qualcomm, uh, who is a film music composer, and they, with her ideas and his musical…
- ▶ 13:12 David Rosenthal So if you're familiar at all with like the wireless world or Qualcomm or anything, you hear spread spectrum and you're like, oh, that sounds familiar.
- ▶ 20:54 David Rosenthal Um, the, so where this all comes together in act three of our story here, which is going to be a little longer cause we're going to get into Qualcomm as part of this.
- ▶ 23:14 David Rosenthal He would credit that year and a half with really helping him start first link of it, his first company, and then Qualcomm get out of academia and become an entrepreneur because he actually learned about like business
- ▶ 25:11 David Rosenthal Without what's gonna come later in Hedy Lamarr, that he would start Qualcomm.
- ▶ 29:40 David Rosenthal He missed out on founding Qualcomm.
- ▶ 29:43 David Rosenthal Well, he actually ended up okay because instead of founding Qualcomm, he founded the internet.
- ▶ 39:09 Ben Gilbert They wouldn't have had Qualcomm if they didn't sell the company.
- ▶ 43:30 David Rosenthal In July of 1985, with seven, seven in total, Andy, Erwin, and five other of the best Linkabit engineers, they meet at Erwin's house, and they decided to start this new company, and they name it Qualcomm.
- ▶ 43:46 Ben Gilbert Quality Communications.
- ▶ 43:47 David Rosenthal Which is short for Quality Communications, which I had no freaking idea when we did the research, but then you're like, oh, duh.
- ▶ 46:13 David Rosenthal The business history of Qualcomm, just like Bill Gurley said on the blurb of this book,
- ▶ 46:52 David Rosenthal And yet here we are talking about Qualcomm.
- ▶ 52:41 Ben Gilbert Over to Qualcomm, so they're, they're thinking about doing this, this satellite communication thing, and remember, Erwin studied with Claude Shannon, so he's always thinking about what is the most efficient way to use all the way up to the…
- ▶ 56:41 David Rosenthal In 1986, well before, years before Qualcomm gets actually directly involved in the cellular industry at all, they patent the method and technique for code division multiple access applied to terrestrial
- ▶ 57:10 David Rosenthal Like literally they played such a long game and they threaded needle after needle after needle, and that was just the first.
- ▶ 58:10 David Rosenthal Okay, so, Qualcomm founded in 1985.
- ▶ 58:25 David Rosenthal Uh, Qualcomm doesn't enter the wireless industry until 1989.
- ▶ 58:39 David Rosenthal Uh, so they get approached to bid on another contract, fledgling Qualcomm does, from a company called OmniNet.
- ▶ 58:48 David Rosenthal Which has this idea that they think the Qualcomm folks are going to be perfect to implement.
- ▶ 59:18 David Rosenthal Qualcomm and Erwin are like, great, we're gonna bid on this contract.
- ▶ 1:00:27 David Rosenthal Qualcomm and OmniNet merge in 1988.
- ▶ 1:00:40 David Rosenthal It was part of Qualcomm for a long time before I believe it ended up getting spun out to private equity.
- ▶ 1:02:22 Ben Gilbert This is Qualcomm saying, we need money so badly to fund the development of Omnitracks for this, this customer, OmniNet, that the most attractive option for us is to sell half the equity in our company.
- ▶ 1:05:21 David Rosenthal But the Qualcomm guys, they know about Moore's law, which like most people didn't know about at that time.
- ▶ 1:09:15 David Rosenthal Um, the Qualcomm folks, of course, they eagerly anticipate the release of the spec and they look at it and they're like,
- ▶ 1:10:10 David Rosenthal So the spec that the CTIA publishes, the Qualcomm guys, it just must have just been, like, beaming ear to ear, uh,
- ▶ 1:14:21 David Rosenthal Qualcomm immediately, like, goes to Washington, like, Erwin and Andy, they go, they go to, they go to DC, and they're like, hey, just to make sure, we just want to, like, be crystal clear, can you confirm to us that even though this other…
- ▶ 1:15:34 David Rosenthal And, uh, you know, it was literally only the Qualcomm folks who thought it would work.
- ▶ 1:18:55 Ben Gilbert Chips, powerful power management, um, and you've got Qualcomm pitching the industry that they're gonna do this, and people are like, wait, but you have to turn down the gain on anybody really close to the towers and turn up the gain on…
- ▶ 1:19:42 Ben Gilbert Modify a signal based on what you're currently hearing from that signal, and then Qualcomm comes in way over the top and says, oh, also, there's this new thing called GPS that is coming out, and we're gonna start- Which they knew about…
- ▶ 1:21:05 David Rosenthal Qualcomm, for the rest of the year, works on this.
- ▶ 1:21:21 David Rosenthal They've got vans driving around the city, and then, like, a base station back at Qualcomm HQ, and they're gonna make it all work.
- ▶ 1:22:41 David Rosenthal And, uh, Qualcomm's like, okay, how about New York?
- ▶ 1:22:46 David Rosenthal So in February of 1990, they do a successful demo in
- ▶ 1:22:52 David Rosenthal On the back of that, they sign, uh, Ninex, Ninex Mobile, which is one of the largest New York carriers.
- ▶ 1:22:59 David Rosenthal Um, and then in August, they sign Ameritech, which is one of the largest- Chicago, I think.
- ▶ 1:23:05 David Rosenthal Um, uh, and then, like another brilliant move, they start going international.
- ▶ 1:23:18 David Rosenthal They're like, what if we go out to countries
- ▶ 1:23:19 David Rosenthal Where it's just tabula rasa, like clean slate, and we pitch this as, like, the obvious best technology, and famously, South Korea, back to the, like, government-mandated standards, the South Korean government is like, yep, this is clearly…
- ▶ 1:23:46 David Rosenthal Uh, time was, I think, close to 40% of Qualcomm's revenues, because the whole country, like, and it was one of the, you know, most advanced mobile countries, um, all just using Qualcomm.
- ▶ 1:24:06 David Rosenthal Um, in, uh, December of 1991, on the back of all this, they go public.
- ▶ 1:24:42 David Rosenthal At that point, Qualcomm does a secondary offering.
- ▶ 1:25:54 David Rosenthal Qualcomm, they're like this, you know, still relatively small San Diego, you know,
- ▶ 1:26:24 David Rosenthal You know, Qualcomm's got that for sure.
- ▶ 1:26:59 David Rosenthal Qualcomm's for sure got number one covered.
- ▶ 1:27:03 David Rosenthal Qualcomm's like, you know, they start signing partners, but they're like, you know, we really need to spur adoption.
- ▶ 1:27:20 Ben Gilbert Which is quite interesting, because despite, I mean, none of us are buying Qualcomm phones today.
- ▶ 1:27:26 Ben Gilbert Like, no, Qualcomm branded phones.
- ▶ 1:27:28 David Rosenthal Today, spoiler alert, Qualcomm today is the largest fabulous semiconductor company in the world.
- ▶ 1:27:46 Ben Gilbert Qualcomm is the biggest.
- ▶ 1:28:10 David Rosenthal I know the handset one, but I believe both were 51% owned by Qualcomm, 49% owned by the partner.
- ▶ 1:28:54 David Rosenthal I, I actually had a Qualcomm handset back in the day.
- ▶ 1:29:05 David Rosenthal Um, it was a Qualcomm phone.
- ▶ 1:29:08 David Rosenthal That was a Sony phone, um, with Qualcomm branding.
- ▶ 1:29:11 Ben Gilbert But they're doing all this to sit, to be able to answer a yes, when a carrier's coming to them and saying, well, great, we'll be CDMA, but question mark, question mark, question mark, Qualmars, Qualcomm's like,
- ▶ 1:29:34 Ben Gilbert And to be clear on the silicon, people know the Snapdragon brand today.
- ▶ 1:29:37 Ben Gilbert This is not Snapdragon.
- ▶ 1:30:17 David Rosenthal This is the final just brilliant masterstroke in this long series of brilliant masterstrokes that Erwin and, and Qualcomm, you know, did at this time.
- ▶ 1:30:57 David Rosenthal On the semiconductor side, and maybe, you know, they could have had some value capture from the Qualcomm IP, but they would have had to partner to make this stuff.
- ▶ 1:31:50 David Rosenthal Qualcomm would have been a great company if they had just captured the first.
- ▶ 1:31:56 David Rosenthal They got all of the value, like all of the value, and it's just, and, and, and like we talked about on the NVIDIA episodes, it was equally crazy and like future seeing to know that Fabulous was a thing, that foundries were a thing, to be…
- ▶ 1:32:15 Ben Gilbert It's like, how many times is this company going to be in the right place at the right time?
- ▶ 1:32:24 David Rosenthal And the, um, you know, we're going to talk more about silicon and Qualcomm as, as we go here, um, but, you know, just to, to, you know, paint the punchline here, uh, today, Qualcomm's total revenue is what, close to forty billion annually,…
- ▶ 1:32:49 David Rosenthal So, but for this strategic decision, 85% of today's Qualcomm revenue would not exist.
- ▶ 1:33:52 David Rosenthal Qualcomm does, uh, three hundred and eighty-three million dollars in revenue in 1985.
- ▶ 1:34:23 David Rosenthal The manufacturing operations and the JVs require so much capital and they're tying up all the profits of the company.
- ▶ 1:34:42 Ben Gilbert One, uh, Qualcomm starts to realize it's a pretty serious drag on our business to have this super capital intensive
- ▶ 1:35:01 Ben Gilbert So in March of 99, they sell their infrastructure business, the base stations to Ericsson, which was formerly one of their competitors.
- ▶ 1:35:34 Ben Gilbert So, uh, a thousand of the 9500 Qualcomm employees become Ericsson employees.
- ▶ 1:35:51 David Rosenthal The, um, the employees that got transferred as part of that were so freaking pissed that they lost their Qualcomm stock options and they got Ericsson.
- ▶ 1:36:03 David Rosenthal Uh, they actually filed a class action lawsuit against Qualcomm to, like, get their stock options back.
- ▶ 1:36:15 Ben Gilbert December of 1999, Kyocera buys Qualcomm's mobile phone business, so they now officially just sell chips that they call QTC, the Qualcomm CDMA Technologies Group, and then they've got a second group, QTL, which is called Qualcomm Technology…
- ▶ 1:37:08 Ben Gilbert And Qualcomm says, yep, you'll still pay us five percent of that.
- ▶ 1:37:26 Ben Gilbert And Qualcomm goes, where else are you going to go?
- ▶ 1:38:32 David Rosenthal The single best performing stock for the entire year 2000 is Qualcomm.
- ▶ 1:38:41 David Rosenthal It appreciates, the Qualcomm stock appreciates, 2621% for the 366 days of the year, 2000?
- ▶ 1:39:36 David Rosenthal So, you know, that's, that's like the core, just crazy business story of Qualcomm, to take it from there to today.
- ▶ 1:40:08 David Rosenthal GSM switched to CDMA anyway, so like all, basically all of three G was CDMA.
- ▶ 1:40:55 David Rosenthal I believe in also as, as, as chairman, um, of Qualcomm and interestingly his son, one of his four sons, uh, Paul Jacobs takes over and becomes the company's CEO.
- ▶ 1:41:08 David Rosenthal Um, spent his whole career at Qualcomm, rose through the ranks, um, becomes the CEO.
- ▶ 1:41:24 Ben Gilbert Also in 2005, Qualcomm buys Flareon technologies for six hundred million dollars.
- ▶ 1:41:39 Ben Gilbert So when we talked to some industry analysts about this, one view was, and I quote, it was to refill the pot of missiles that Qualcomm promises not to fire at their customers.
- ▶ 1:42:26 Ben Gilbert So, but what we do see here now is after the Flarean acquisition, Qualcomm is able to continue their same exact business model because all of the patents that would be required for for G and LTE and all that going forward, they own a lot…
- ▶ 1:42:39 David Rosenthal Yeah, it's interesting, you know, um, so the Paul, uh, the Paul Jacobs era of Qualcomm from 2005 to 2000, uh, 13, I think, 13, 14.
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