A multimillionaire, an entrepreneurial pioneer of the personal computer industry and barely 30 years old, Apple Computer Co. co-founder Steven P. Jobs was the youngest chairman of the board of a Fortune 500 company. He was the living incarnation of Silicon Valley success: rich, famous, young and brash.
But Jobs' resignation as Apple's chairman, announced this week in a bitter break with the company, symbolizes another central part of Silicon Valley's unique culture: the painful defection of entrepreneurs who leave their companies to form new ventures.
The quarrel between Jobs and Apple was triggered by Jobs' decision to quit Apple and start a new computer company with five of Apple's best and brightest managers.
"With five other people, I want to go start a company and make a product for the university market," Jobs told the San Francisco Examiner. "If [corporate spinoffs] hadn't happened before, how could there ever have been a Silicon Valley?"
Indeed, Silicon Valley is a swirl of spinoffs of spinoffs of spinoffs. When Nobel Laureate William Shockley left Bell Laboratories in the 1950s to launch Shockley Electronics in the San Francisco Bay area, he set the stage for a series of high-technology corporate spinoffs that spawned everything from Intel Corp.'s silicon chips to Apple's own personal computers.
Some of Shockley's engineers soon left his venture to take charge of Fairchild Camera & Instrument, which was trying to pioneer new electronics technology. The engineers were publicly described as "The Traitorous Eight," and it was years before Shockley forgave any of them.
Some of these "Fairchildren," including Robert Noyce, the co-inventor of integrated circuits, then broke away and formed Intel Corp. in 1968, which became one of Silicon Valley's leading semiconductor firms.
What separates Jobs' departure from the valley's historic pattern is his position as chairman and co-founder. The exact circumstances surrounding Jobs' decision to leave Apple are disputed. But at the heart of the conflict is a fundamental disagreement over his role at the company that had been brewing for several years.
Jobs, a controversial, abrasive but ingenious manager, was stripped of his operating responsibilities in May as part of a corporate reorganization -- a blow that separated him from his cherished Macintosh computer team, which he had headed.
In his letter of resignation submitted Tuesday, Jobs complained that " . . . the company's recent reorganization left me with no work to do and no access to even regular management reports. I am but 30 and want still to contribute and achieve."
Many in Silicon Valley were asking, however, whether an individualistic entrepreneur like Jobs could satisfy his own goals and those of a company as large as Apple had become.
"The evidence is strong that, in general, people with start-up skills will not have the skills necessary to run a fast-growing enterprise," said Steven C. Brandt, a corporate consultant and management professor at Stanford University.
"Founders usually have three choices: they can adapt, get out of the way or fail. You can see all of those in the Apple situation: Jobs trying to adapt; his hiring of new people and an effort to redefine his role, and his failure to stay with the company."
"When founders begin things, they take such an incredible amount of dedication and commitment that they become integral to one way of doing things," said Jon Katzenbach, a director at McKinsey & Co. "When the business changes, it's hard for them to change."
Consequently, it's extremely difficult for entrepreneurs to grow their management skills as their companies grow. Entrepreneurs like Nolan Bushnell at Atari were forced out of the companies they founded because the shareholders felt they lacked the ability to run a large business. Bushnell eventually left Atari to found other ventures.
What makes a founding entrepreneur's situation so difficult in Silicon Valley, though, is that the technology and markets change so rapidly.
"The up-and-out syndrome occurs more dramatically here than in low-growth areas where more organic transitions can occur," said Stanford's Brandt. "Everything tends to get accelerated; timetables are tight."
Management challenges grow more complex as the companies seek to serve new markets to fuel a rapid growth rate.
"For the Silicon Valley companies that have stayed technical, the fallout of founding entrepreneurs has stayed low," asserts Floyd Kvamme, a venture capitalist at Kleiner, Perkins, Caufield & Byers. "The more consumer markets the company seeks -- the broader market it tries to carve out -- the greater the shakeout."
Consequently, there is an intimate link, say Valley participants, between the spinoff phenomenon and the entrepreneurial handicap in running large organizations.
"One of the values of the Valley is starting something new rather than managing something that exists," said Richard Cavanagh, a McKinsey & Co. partner who has studied small, high-growth companies.
Jobs' hopes for a new venture now are complicated by his old position as Apple's chairman. Said one Apple source: "As chairman of the board, there is a fiduciary responsibility to be doing things in the company's interest: Recruiting people while you're still chairman is not. People leave and form new companies all the time -- but not when they're chairman of the board."
In a formal statement, Apple has expressed its concern that Jobs might expropriate the company's technical knowledge for his new venture. Jobs has denied that intent.
Regardless, the company and its former chairman seem prepared to do battle over Steve Jobs' right to be an entrepreneur one more time.