Gemperlein: Is it important to make mistakes - in business and in life?

Lam: Yeah, absolutely. I think one of the interesting things in the Asian culture, as we were brought up, parents tend to be a little bit too strict in not allowing kids to make mistakes. I find that learning is a lifelong experience. You don't stop when you finish high school; you don't stop when you finish college; you don't even stop when you finish a Ph.D. You just learn a different environment for different things.

When you are learning, if you stop and think about how a little child learns to walk, he stumbles many times, hitting himself, hurting himself, before he really learns how to walk. And you can apply the same metaphor to life.

And if we don't allow ourselves to make mistakes at all, we wouldn't be able to venture out and learn new things and do new things. So one of the wonderful things that happened in Silicon Valley is that, in business, people accept those who had made mistakes in their lives.

Ledbetter: Did you ever have an idol? Someone you looked up to?

Lam: Probably in the environment that I grew up, my parents. My father was still my idol. They had eight kids, which is not atypical. . . . He passed away a long time ago, when I was still in college. And so I didn't really have the pleasure of working with him in my adult life.

My second idol . . . sort of a replacement, I guess, looking back . . . was my professor at MIT And he became a very close friend. He was my thesis adviser, both at the master's level and the doctoral level. And he gave me a lot of advice through my career and was one of the members on the board of directors at my first company, Lam Research. He has since been a great help in many ways.

Gemperlein: Could you describe in very basic terms Lam Research and the founding of it and what exactly the company does?

Lam: Lam Research makes semiconductor equipment, equipment used by companies such as Intel, National, and AMD and Toshiba and Hitachi, to make chips. Semiconductor chips. And, at the time when, around late 1979, when I was getting ready to launch the company, I had observed that the technology which is known as plasma etching, had been around for nearly 10 years. But mostly used by researchers; they do some experiments, they write some papers and get published, and they would be happy ever after. But they never thought about how

  they'd use it in real life, in a production environment to make these chips that you can ship and plug into computers to use. Because the technology was relatively new.

But in 1979, around that time, things started to happen, and I began to see a tremendous potential of using this technology in production. And so that was the purpose of Lam Research. There were already at least six or seven companies in that field. But most of them were focused on research and development. And there's a big jump from R&D to production. And that's where I saw the market opportunities, why I started Lam. It is the capital equipment maker, specifically focused on semiconductor manufacturing, using the new technology known as plasma etching.

But starting a company is easy, and making it go is a different thing. I remember that after I put together a business plan, a friend of mine introduced me to people who may have some investment money, R&D partnership. Since I didn't need a lot of money at that time, I thought, I was very happy to work with them and explain to them what I'm trying to do and all that. This is early 1980.

Then the interest rates began to take off, as you recall. Those were the first of the three-year recession, '80, '81 and '82. One of the longest recessions in the U.S. history since the second World War.

And, all of a sudden, despite a tremendous interest we had been talking about, they didn't return my phone calls. And it was clear that the deal was off. That was the first time I tasted rejection. And I said what am I going to do now?

I finally realized I had to rewrite the plan and go out to raise money from the venture capital sources, which is more typical. And that's what I did.

My mother was the first investor. She doesn't even read English. I gave her my business plan; she said, 'What is this?' So that gave me a little bit of encouragement. And a couple of my brothers had some savings, and they all chipped in a little bit . . . (it was) moral support. The big chunk of money came from professional investors who are venture capitalists. . . .

And, you know, if I were to open a flower shop, I probably wouldn't need the venture capitalists. I probably would have found the family support would be good enough to launch a small business. But high-tech business takes an awful lot of money. Very few families, unless they are very rich, will be able to take care of the whole thing.