Connecting the Dot.Coms

A Big Risk

Once in Silicon Valley, the Rice graduates stayed in touch. Many of them worked together, of course, but they also formed close social bonds, gathering frequently for poker games and other alumni functions. Those connections proved invaluable for four young engineers.

Bob Maxfield

By the late 1960s, both Oshman, who was at GTE, and Maxfield, who was finishing his PhD at Stanford, were looking for new challenges. No problem, right? Isn’t Silicon Valley where new business ideas bob tantalizingly in front of people’s faces like ripe oranges on a tree? Not quite. The garage or dorm-room start-up turned IPO was still an oddity in the ’60s; Silicon Valley was more the domain of the “Company Man.” There were entrepreneurs, to be sure, but a job with a big company was prized. “It was a little odd that someone would leave a good job to start a funny little company,” says McMurtry. “That started to change in the 1980s, and by the 1990s it had totally changed. By then, if you were a young professional and hadn’t started your first company, there was something odd about you.”

Oshman and Maxfield—along with Rice engineering graduates Walter Loewenstern Jr. ’58 and Gene Richeson ’62—were well ahead of their time. Rather than stay with comfortable and secure, if restricted, careers, the four launched ROLM Corp. (the name is an acronym derived from the first letters of the founders’ last names). Although ROLM would eventually become a Fortune 500 company with thousands of employees and hundreds of millions of dollars in sales, its beginnings were uncertain.

At first, they couldn’t even decide on what the company should do. When they settled on a business plan—making computers for the military—investors were hardly lining up to back them. One venture capitalist (VC) they approached explained his reluctance. “He told me he wasn’t going to invest because I was going to be CEO, and I had never managed anything,” recounts Oshman. “Maxfield was developing the computer, and he had never developed a computer. Loewenstern had been in the microwave business, not computers, and Gene Richeson was the head of marketing and sales, and he had never been a salesman.”

Finally, one investor, a maverick venture capitalist named Jack Melchor, acted on a gut instinct that those novices were smart enough and determined enough to make things work. He loaned them about $100,000, which—along with the $15,000 they each scraped together—allowed ROLM to become a reality. They had one big problem: they still had to make the computer they were hoping to sell. Maxfield took on the daunting task. “It was sheer terror,” he says, “because once we decided on this idea, it was all on my shoulders, and I knew how little I knew.”

Long days and nights full of anxiety and apprehension about the company’s prospects followed. “We were in business for four years before I thought this thing could actually survive,” Maxfield confesses. As with most small start-ups that break out and make it big, a fortuitous combination of savvy, luck, and opportunity converged for ROLM. For one thing, the market they targeted—military computers—was ripe for innovation. In the 1960s, the military paid large companies like IBM millions of dollars to custom make its computers. ROLM decided to produce off-the-shelf military computers that were far cheaper both to develop and to sell. “We changed the ground rules dramatically,” explains Maxfield.