Arthur Rock: "The Best Long-Ball Hitter Around"

By Michael Moritz

When the San Francisco Giants play in windy Candlestick Park, a man with owlish spectacles, tight lips, an aquiline nose and a stern gaze usually sits in a front-row seat, 70 ft. from home plate. Arthur Rock, 57, has been a Giants fan for 25 years, watching batters try to sort curve balls from sliders and change-ups from screwballs. Since the late 1950s. Rock has been carefully scrutinizing pitches of another kind--start-up bids by young technology companies--and when he goes for one of these, he rarely misses. Says San Francisco Venture Capitalist Thomas Perkins: "Arthur Rock is the best long-ball hitter around."

And what a string of hits. In 1957 Rock assisted in arranging the financing for Fairchild Semiconductor, one of the first companies to make the silicon chips that are the building blocks for modern computers. In 1960 Rock helped finance Teledyne, a California conglomerate that makes a range of products that include Water Piks and jet engines. Last year it had sales of $3 billion. In 1961, the year he co-founded the Davis & Rock venture capital firm, Rock put up $280,000 to help start Scientific Data Systems, a computer maker; in 1969 the company was sold for some $950 million. In 1968 Rock was one of the three founders of Intel, the first company to make a computer on a chip. Last February IBM paid $250 million for a 12% interest in the firm, and has since increased its holding to 17.5%. In 1978 Rock invested $57,400 in a fledgling personal-computer company with a whimsical name: Apple. Six years ago, he helped launch Diasonics, a manufacturer of medical instruments; when it went public last year, it was valued at more than $1 billion.

Through these and other deals, Rock has amassed a personal fortune estimated to be at least $200 million. Rock does not talk about his wealth, saying only, "I don't like people to count my money. That isn't what turns me on."

Rock shuns publicity and is so secretive that he amounts to a sort of mysterious force in the financial world. Doing business simply under the name of Arthur Rock & Co., he works out of a modest office in San Francisco's financial district with only a secretary for a staff. Rock's closest friend is Egyptian-born Financier Fayez Sarofim, who is based in Houston.

Unlike other venture capitalists. Rock has few private investors as clients and hence is under little outside pressure. Rock invests slices of his own fortune and the money of a few close friends, limiting himself to three or four deals a year. He makes sure that the companies he finances are close to his office so that he does not have to travel much. Rock looks for ideas, people and products that together can form the keystones for major new industries. He is almost always one step ahead of fashion and never expects a quick payoff. He makes up his mind swiftly, acts decisively, moves quietly and seems to have an impeccable sense for where technology and markets will meet. Says California Financier Max Palevsky, who made a fortune as a founder of Scientific Data Systems, a mainframe computer maker that Xerox acquired in 1969 for $950 million: "Arthur has an incredible intuition. His nose never ceases to amaze me."

Once Rock invests in a company, he remains active in its management. He is a director of Intel and Apple, for example, and vice chairman of Diasonics. He stays in close touch with his managers, most of whom recognize that his advice is worth far more than his money. He maintains a delicate balance between guiding them and letting them find their own way. Last year, when Diasonics announced that it would lose $5 million to $7 million in the third quarter. Rock spent hours huddled with senior managers, helping them pinpoint weaknesses and reorganize the company. Says Joseph Rizzi, founder of ELXSi International, a Rock-financed computer company in Sunnyvale, Calif: "Arthur has the uncanny ability to say one or two things that can get you pointed in the right direction." Concurs Paul Levy, 28, president of Rational Machines, a 33-month-old computer company launched under Rock's wing: "I wouldn't think of hiring a senior executive without having Arthur interview that person."

Rock will stand by investments that do not become bonanzas. He helped nurse Qantel, a business-computer company, for several years until it reached sales of $49 million. It was finally sold in 1980 for $34 million. Notes his friend Sarofim: "The investors still came out ahead, but we were spoiled. We didn't make as much money as we usually do."

Rock's professional manner is detached and clinical. He refuses to let his companies waste money and conveys a harsh sense of urgency. He says little at board meetings, and will sometimes squelch woolly ideas by abruptly asking, "What good will it do?" Says his onetime partner Thomas Davis, a California venture capitalist: "He only wants the right answer." Behind Rock's understated exterior lurks a remorseless will. Notes Palevsky: "Arthur makes it clear you had better win and you had better work your ass off all the time."

Rock's quiet manner often intimidates strangers and can daunt even close friends. Says one associate: "I was scared to death of him for the first ten years I knew him." Nevertheless, Rock has a thoughtful paternal side, which he shows particularly to favored proteges. He includes them in attractive deals and cautions them against squandering their fortunes by selling their stock too early. In December 1982, he treated Apple Chairman Steven Jobs, 28, to his first opera, Tosca.

The son of a Rochester, N.Y., candy-store owner, Rock graduated from Harvard Business School before beginning his career on Wall Street. Childless, he lives in San Francisco with his second wife, Attorney Toni Rembe, in a home overlooking the bay. He frequently attends and contributes heavily to San Francisco's opera and ballet companies and the city's Museum of Modern Art. His private art collection includes works by the modernists Robert Motherwell and Hans Hofmann. Rock likes to entertain at dinner parties, which attract an eclectic mixture of guests such as Opera Impresario Kurt Herbert Adler and Rolling Stone magazine Editor and Publisher Jann Wenner. Rock suffered from polio as a child, but shows no ill effects from the disease. He exercises for an hour every morning when at home and spends much of each winter skiing in Aspen, Colo., where he conducts business from a three-story, $450,000 condominium.

For a man who puts his faith in youngsters and dreams. Rock is not a runaway optimist. In conversation with friends, he will occasionally argue that there are not as many creative people around today as there were a couple of decades ago. He predicts few dramatic technological breakthroughs in the next several years, but expects that recent inventions will enable dozens of companies to push electronics into every aspect of life. Arthur Rock will undoubtedly be part of many of those ventures.

--By Michael Moritz