By Stephen Roskoff, Photographs by Andrew Sacks
November/December 1989, Ó 1989 The Alumni Association of The University of Michigan

When U-M junior Anthony Fadell, 20, approached his relatives for venture capital, he cautioned them to invest only money they were willing to "throw away". His uncle loaned him $5000 on that basis. In return, Fadell offered him 10 percent of gross profits and a promise to graduate. He still has three semesters to complete, but sometime sooner that that he will likely make his uncle an even richer man.

Fadell is vice-president and half owner of ASIC Enterprises, Inc. (Application Specific Integrated Circuits). With his partner, William C. Hayes, Fadell designed and built a microprocessor chip. The chip already existed but only had eight megahertz capacity, not fast enough for one computer engineering company that supplies components for the Apple II gs. This company, which had built a new add-in board, was looking for someone to make a chip with a 20 megahertz capacity, said Fadell. "No one wanted to touch the project," not even the chip’s original designer. Fadell figured that if he and Hayes could build it, "there would be a ‘for sure’ market."

Fadell met Hayes this past summer, while working an internship with a computer engineering company in California. Fadell, who had designed software for the Apple II, knew the product thoroughly. Hayes knew a little about the Apple market, but has successfully designed and built a computer chip. One chip led to another.

Fadell, a self-described "computer hacker" since age 10, bought his first computer two years later. He earned the money caddying at a nearby golf course and with better-than-matching-funds from his grandfather, he purchased an Apple. At 16, he went to work as the only employee – a shipping clerk – of a computer mail-order firm; within two years the company’s revenues reached $200,000 per month and Fadell was developing software. He worked 80 hours a week between his job and school. When he left the company for the U-M engineering program, he only earned $8 an hour and had no financial stake in the company. He knows he got a bad deal, but there’s a positive, too – experience and exposure. Summers, he traveled to trade shows where he met Apple representatives and software designers. ‘People got to know me personally and professionally." So when Fadell – even though he only had software experience – wanted an internship with an industrial electronics firm, he needed only to ask. Dave Hewitson, vice-president of Ronan Engineering in Woodland Hills, CA, answered with a summer offer. " I didn’t even need to show him a resume."

Fadell wanted to go to Ronan in order to learn how to build a computer. He did – and much more. ‘I learned exponentially," he says. Designing a single-board computer and software for the DELMARVA (Delaware, Maryland, Virginia) Nuclear Power Plant, was Fadell’s biggest project of the summer, at least for Ronan. The idea for the microprocessor developed after talking to Hayes one night after work. In no time they were incorporated.

They spent the first four weeks of their joint venture preparing the design work on paper. Over the following six weekends, from 5 p.m. Friday to 8 a.m. Monday, they lived in a computer design center, slept on the floor (but only for four hours a night), brought their meals (occasionally ran to a nearby donut shop), and worked feverishly on two supercomputers that they rented at $30 dollars an hour (Hayes had connections that allowed for this discounted arrangement, otherwise their access time on the computer would have been prohibitively expensive). Even so, they worried that their funds would run out before they fully tested their design on the computer. They completed the prototype with $1,000 remaining and even videotaped the project.

Once they had the design prototype, a computer manufacturing representative took over. He found a chip manufacturer willing to fabricate the chip at a low cost and guaranteed that the chip design would work.

In September, within weeks of starting classes and moving into his fraternity house, Fadell flew to Dallas to sign a contract with the add-in board manufacturer. (The contract stipulates that Fadell cannot release the terms of the contract nor reveal the name of the company until the chip is in production.) In return for a two-year exclusive in the Apple market, the manufacturer signed a large purchase order and agreed to pay for a two-year exclusive. By January 1990, if all goes well, Fadell and Hayes’ chip should be thoroughly tested and "ramped up" for production. In the meantime, Fadell’s fraternity brothers in the Psi Upsilon house don’t turn off the noise until 2 a.m., and he’s carrying 14 credit hours, freelancing for Ronan, and working on a number of "top secret" design products with Hayes (they have another business: HTH, which stands for Hi-Tech Hobbies. ASIC also plans to design other chips for different markets and bid for contracts). While his classmates in EECS 370 (Electrical Engineering Computer Software) – a required course in which students must design software and computers ("I’ve been doing that for years") worry about earning "A’s", Fadell worries about his microprocessor. "My name us mud," he says, "if this turns out to be vaporware."

At turns he’s philosophical, hopeful, confident. "What I’ve invested is mostly my time, losing $5,000 won’t ruin my life." He estimates he’s worked the equivalent of a year in the last four months. "That chip is my resume if it works." And if it fails, well, he’s had a tremendous time negotiating some pretty big contracts. But on the while, he says with a big grin, "I’m confident it’s going to work."