Dialogue with Inphi CEO: How to make changes

Inphi CEO Ford Tamer experienced the brutal war in Lebanon in the 1970s. His family lost their house and business, but this did not stop them from loving and pursuing life.

Ford Tamer, CEO of Inphi

"I remember that night vividly," Tamer told Investor's Business Daily. "My mother, father, sister and I got in the car, put our bags in the trunk, and went about our lives."

Tamer was never afraid. He saw "perseverance and overcoming adversity" as something that would spur him on instead of bringing him down. He earned his bachelor's degree from the American University of Beirut. Then he came to the United States, where he earned a master's degree and a doctorate from MIT in 1983.

Valuable lessons from his family's struggles taught him strength. A strong work ethic and "grit" translated into a passion for building a business, he said.

“I started from scratch when I came to the United States,” Tamer said. “My philosophy is to work hard, never give up, and learn to overcome the obstacles that people encounter in their development.”

Find Your Place Like Inphi CEO

It didn’t take Tamer long to make his first million. After arriving in the U.S., he co-founded the artificial intelligence company MegaKnowledge with two partners in the late 1980s. He sold the company for about $10 million. “I started my business at 28 and had my first successful exit before I was 30,” says Tamer, now 59.

Tamer has started various businesses throughout his career over the past 30 years and has sold a number of them.

Inphi is his masterpiece so far. Tamer took over as president and CEO of Inphi in 2012. Since then, Inphi revenue has increased 761% to $683 million, and adjusted earnings per share have increased 1,248%. In eight and a half years, the stock price has risen 1,082%. The S&P 500 has risen only 200%.

Now, Inphi, the leader in high-speed data movement, is about to usher in a new era.

Inphi agreed last October to merge with chipmaker Marvel Technology Group (MRVL) in a cash-and-stock deal valued at about $10 billion. Tamer will join Marvel's board of directors. The merger would create a powerful U.S. semiconductor company with an enterprise value of about $40 billion.

Huge growth

How did Tamer do it? He joined Inphi as CEO in 2012 when the company was fresh off its IPO. When he joined Inphi, the company consisted of two semiconductor businesses: the memory interface business and the communications/networking business. The company needed to choose an area to focus on.

As a result, Inphi sold its memory business in 2016. With more resources, Tamer grew the communications business' revenue from $35 million in 2012 to more than $700 million today. Now, Inphi is a leader in chip technology that enables data to be quickly transmitted around the world.

In recent years, the amount of data has grown tremendously due to video streaming, social media, cloud-based services, e-commerce and wireless infrastructure. As a result, the demand for Inphi speed has surged.

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Loi Nguyen, co-founder of Inphi and leader of the optical interconnect division, is proud of Inphi's own transformation. When Tamer joined the company, Inphi's stock price was less than $8. And the company was at a low point. Tamer correctly "refocused" the company to the cloud.

“The biggest thing he brought to Inphi was a focus on the right markets and the right customers,” Nguyen told Investor’s Business Daily. “He quickly realized that Inphi had more opportunities to go back to its roots and build the fastest chips at a pace that was ahead of anyone else.”

Nguyen said Tamer brought experience in digital signal processing, a technology that can deliver higher-performance products at higher speeds than older analog chips. Nguyen said that under Tamer's leadership, Inphi "shifted a lot of investment to digital technology."

“Transitioning a company from analog to digital signal processing and optics is a very important step,” Nguyen said.

Follow the strategy playbook

It’s easy to go astray when restructuring a company. But Tamer stayed focused on his strategic playbook and stuck to it.

Job number one: "Find an unmet need," Tamer said. That's the digitization of data. Tamer knew there was an unmet need to provide a cost-effective, low-power solution to move large amounts of data. He sees Inphi as the "FedEx (FDX) of data" now, moving data at high speeds with determinism and reliability.

Entering a large market has put the troubled company back on the map. Tamer said the industry spent only a few hundred million dollars on data transmission in 2012. He expects that figure to grow to $3 billion by 2023.

Service disruptors

Many CEOs talk about being disruptors. But Tamer’s playbook suggests that meeting the needs of disruptors is often just as fruitful.

“Focus on the right ‘teaching’ customers,” Tamer said. “Cloud service providers such as Amazon.com, Alphabet, Microsoft, Facebook, Alibaba and others are all driving digitalization. Serving them puts Inphi in a good position.”

Tamer and his team decided to focus on cloud customers because they are the fastest adopters of these "disruptive technologies."

Involve everyone in decision making

Tamer's resume is long. But he approaches problems with a fresh mindset and he drives his team to be involved in all decision making.

The most important decisions, including acquisitions, are made as the "voice of the team." The process involves gathering facts and data. The team then discusses strategy with stakeholders: employees, customers, partners, and sometimes even investors. It's "respectful debate," Tamer says. Discussions discuss real issues around the business or product.

The next step, Tamer said, is to “reach agreement without necessarily reaching consensus.” Key decisions are often made by majority vote, not 100 percent consensus.

"Once a decision is made, it is committed, planned and executed," he said. It is final. No further debate is allowed unless the data changes significantly.

Showing Toughness

Tamer's tenacity stems largely from his upbringing, and he has proven capable of leading Inphi.

Tamer's move to digital technology and optical networking equipment is risky. "There have been times when we failed the first time and succeeded the second time," Inphi's Nguyen said.

Tamer learned to take risks at an early age. “Success is not permanent,” he said. “You enjoy success but you need to stay humble. You also know that failure is part of success.”

That situation has played out at Inphi, which has seen strong returns on some projects. But other projects faltered and had to be shut down. “It teaches you to take risks, and that it’s OK to fail if you can recover from it,” Tamer said.

keep learning

Tamer’s ability to take risks has helped him build and grow technology companies. After selling MegaKnowledge, he held leadership positions at a series of companies. Each one helped him grow.

These included Broadcom (AVGO), where he grew the networking business by 500% during his tenure as senior vice president in 2005 and laid the foundation for Broadcom's networking business.

With Inphi set to merge with Marvel, what's next for Tamer? "It's happening pretty quickly," Tamer told Investor's Business Daily. The two companies' first discussions were on Sept. 17, and the deal was announced on Oct. 29.

One thing he won’t do is go on vacation. The deal could take up to 16 months. “We are very focused on the success of the Inphi business, and I will continue to deliver and execute,” Tamer said.

Key takeaways from Inphi CEO Ford Tamer

In 2012, he took over as President and CEO of Inphi, transforming its business model and making it a leader in high-speed data movement.

Overcome: The risk of transforming Inphi from a purely analog company to a leader in digital signal processing and optical products.

Insights: “I started from scratch when I came to the United States. My philosophy is to work hard, never give up, and learn to overcome the obstacles people will encounter on their journey.”