Ex-Cray Chief Thinking Big With Small Firm : Technology: John Rollwagen becomes chairman of Plasma & Materials, a firm whose machines etch computer chips.
It’s a long way from heading supercomputer giant Cray Research, but for John Rollwagen, working with a small company often confused with a blood bank is like deja vu .
“I absolutely fell in love with it,” he said of Plasma & Materials Technologies Inc., based in Chatsworth. “It reminded me so much of Cray in the middle ‘70s, I could hardly stand it.”
Although the local Yellow Pages mistakenly lists it as a blood-products center, Plasma & Materials Technologies is actually a manufacturer of million-dollar machines used to etch materials on the surface of computer chips. Last month, it scored an apparent coup, naming Rollwagen as its chairman.
Rollwagen, 53, is best known as the former chief executive of Cray. For 12 years, he presided over the growth of a start-up into an $800-million-a-year supercomputing powerhouse. Last year he quit Cray and was tapped by the Clinton Administration as deputy secretary of the Commerce Department, but he resigned as acting deputy secretary before confirmation.
He believes that PMT, like the young Cray Research, has a unique technology and is poised to make a breakthrough. In Greg Campbell, 34, one of PMT’s co-founders, the company has a boyish chief executive the same age as Rollwagen when he started at Cray. “This is the year for PMT,” Rollwagen said.
Some industry analysts are dubious. Can Rollwagen, who will continue to live in Minnesota while maintaining only a part-time position at PMT, give the company a credibility boost in a tough market? Can the Cray magic work in a different environment?
A year ago, Rollwagen was on a completely different track. After a long stint at Minneapolis-based Cray, he left for Washington in January, 1993, nominated for the No. 2 job at Commerce. It was, he thought, “an opportunity to make a broader contribution and pay something back for what I had received myself at Cray.”
But disillusionment quickly set in.
He figured Secretary Ron Brown “could take care of the politics and I could take care of the business, so to speak, of the Commerce Department,” he recalled. “Well, that was naive. I wasn’t as much a politician as he. I have nothing against politicians, but I’m not one.”
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When he resigned in May, Rollwagen considered seeking a top position at a company of Cray’s stature. But he decided to pursue a different kind of challenge and lend his expertise to smaller firms.
Rollwagen started working as an adviser to St. Paul Venture Capital, a financial group that has invested in PMT. St. Paul publicized his arrival in its newsletter--and that made interesting reading for an ambitious, young executive in Chatsworth.
Greg Campbell, a Ph.D. in plasma physics from UCLA, founded PMT in 1990 with his professor, Robert Conn. They developed a high-powered technology for producing gaseous plasmas--ionized gases that when stripped of their electrons are highly reactive.
PMT’s technology makes a plasma out of chlorine gas; ionizing chlorine is a highly efficient way of creating a chemical reaction with film on top of a silicon wafer.
Semiconductor manufacturers use plasma to engrave the patterns of electrical circuits onto the surface of their chips. The complex process requires huge plasma machines that commonly cost around $1 million each. With those kinds of numbers, as Campbell said, “if you make it in this industry, you make it big.”
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It’s also a tough market to get into. About 60% of it is shared by five large companies, said G. Dan Hutcheson, president of VLSI Research in San Jose. A spokesman for one of the five, Applied Materials Inc. in Santa Clara, said the company took in about $300 million in etching sales last year. The worldwide market for plasma-etch machines amounts to about $1 billion. At the moment, PMT is a pipsqueak, with about 1% of the market.
Hutcheson said credibility is a key issue for any company trying to break into the plasma-etch market. “People want to know if they order 100 of these machines, can the company build them? Will they go out of business?”
PMT, which employs 60 people and sells machines under the names Pinnacle and Apex, predicts revenues of $11 million for the year ending Feb. 28, and Campbell says the company is profitable. In the coming year, it expects to reach up to $25 million in sales and do well enough to mount a public stock offering.
Backed by $12 million in private financing, which helped PMT develop a prototype and make further refinements, the company has made some progress. It has contracts with Canon and NEC in Japan. Sematech, the U.S. government-backed consortium of computer chip manufacturers, awarded it a contract to develop an advanced etching machine.
Campbell has ambitions well beyond that. “I think we can really explode the thing,” he said. “Applied Materials will laugh at us, but that’s where I see us. There’s room.”
PMT is betting that it has a technical edge in its product, which enables it to produce more ions, which can process more silicon chips per hour.
To help fuel sales potential, Campbell felt he needed a mentor, someone with credibility and expertise who “had been through the ride before.”
Then he read St. Paul’s newsletter. He had been looking for a new chairman since Conn accepted the job of dean of engineering at UC San Diego, and he had been a fan of Rollwagen’s since reading a Harvard Business School case study on Cray. He called St. Paul and requested a meeting with him.
In October, Rollwagen visited the company in Chatsworth, fell in love and agreed to become chairman “on the spot.”
Still based in Minneapolis, Rollwagen devotes about 25% of his time to PMT. The rest is divided among other companies he advises in North Carolina, New Jersey and the Czech Republic. At each company, he has settled for an equity stake rather than a high salary.
“On that basis, if things work out, everybody’s going to be very happy, myself included,” he said. “If they don’t work out, they won’t have wasted a lot of money on me.”
Campbell has no doubts about the arrangement. “John will really help us in terms of giving the company credibility,” he said.
But some analysts demur. Plasma etching is more about chemistry than electronics, Hutcheson noted. “People from Cray don’t have much credibility in this industry. It’s kind of like if someone came in from Ford. They’re so far apart.
“They (PMT) just need to sell something,” he added. “It’s a matter of can they get people to buy it?”
Brad Jones, general partner of Brentwood Associates, a West Los Angeles venture capital investor in PMT, counters by pointing out that Rollwagen dealt regularly with semiconductor companies when he was at Cray. Campbell said: “We’ve only just started wheeling him out.”
By using those contacts, Rollwagen can open sales doors for PMT. Campbell has also used Rollwagen to help recruit new staff.
“In this coming year, if we even sell two machines that wouldn’t have sold otherwise, that’s a huge difference,” Jones said.
For his part, Rollwagen believes he can make a contribution just by playing the mentor role and helping to keep PMT’s entrepreneurial drive going. “I’ve been down the road from zero to almost a billion dollars,” he said, referring to his experience at Cray. “I think PMT is on that same road and there are some lessons to be learned from having done it once.”
He only wishes a John Rollwagen had been around when he started out. “It would have saved me some trouble. I could have anticipated certain things and done things differently from the way I did. Not hugely differently, but it would have been helpful.”
