Company Builder

The most critical lesson that Raza had learned during his tenure at AMD was to manage without dictating, to give the leaders of AMD's business units the freedom to lead. It was a tough lesson: By his own admission, his tendency is to micromanage.

"But I learned that the only way to scale from a small company to a large company is to create a dynamic process that allows people to form their own domains -- and that allows me to keep each of those domains coordinated," he says. "We could succeed only through our unity, but our unity depended on our respecting the ownership of each of the leaders within AMD's organizations."

And therein lay his answer: He would build a model that would enable him not only to take a stake in companies but also to form partnerships with them. And he would approach each of these partner companies as if it were a discrete business unit at AMD. He would give each company the tools, the contacts, the expertise, and the support structure to succeed. And then he'd get out of the way, offering assistance but leaving the decision making to the individual companies.

"If I were to make myself CEO of these companies, I'd be robbing them of their most important symbolic leadership decision -- which is exactly what incubators do," says Raza. "They rob entrepreneurs of their control over their own companies. And when that happens, the locomotive that's going to drive the company to success isn't the entrepreneur -- it's you.

"So my biggest challenge is to work with the nominated leaders without intruding on their sense of ownership," Raza continues. "If there is a disagreement between RFI and the leader, the leader is right. We are never right. We will express our opinion. We will give advice. But the leader of the company is the one who makes the call."

Raza lined up a second meeting with Dunlevie. While the two men had allocated an hour for the meeting, they needed just 20 minutes: They already had arrived at the same solution, independent of each other. Two days later, the Benchmark partnership voted to invest in Raza's model. Soon after, RFI was born.

Looking ahead, Raza anticipates that his company will grow to 50 employees by year's end. In the next 12 months, he aims to double the firm's partner-company base, bringing it from 10 to 20. Those partner companies will work out of a six-story building that RFI is leasing in north San Jose. Other RFI locations are slated to open in Boston, Europe, the Far East, India, and Israel. It's a wonder that Raza, who's already running in overdrive, can keep pace with such torrid growth. But at least for the moment, he has cracked the code. He has made himself scalable.

Bill Breen (bbreen@fastcompany.com) is a Fast Company senior editor. Learn more about Raza Foundries Inc. on the Web (www.razafoundries.com).

Sidebar: Leadership Lessons

Raza Foundries Inc. is more than a grooming shop for broadband startups. It is also a post-graduate school of sorts for newly minted CEOs -- the people who are leading the companies that RFI invests in. Here are three lessons that Kay Yun, president and CEO of YuniNetworks Inc., and Alok Sharma, president and CTO of Pacific Broadband Communications Inc., have gleaned from the master, Atiq Raza.

Never take a dollar at face value. "Atiq showed me that in investing, it matters very much where that dollar comes from," says Sharma. "If I accept a dollar from you, I have to figure out what that dollar buys me. Does it buy me just a dollar's worth of goods or does it buy me credibility? It might sound weird, but the money is really secondary. It's the relationships that help you build a great enterprise."

Deal with the customers who count. "We spent a lot of time strategizing about how we were going to approach customers," says Yun. "You don't have to spend your time visiting everybody. Just see the customers who will give you good feedback."

Focus on the deliverable. "Atiq's meetings are very decisive and very short," says Sharma. "He's not interested in how many lines of code you've written. The whole conversation revolves around hitting the key milestones and how we're delivering value to the customer. His lesson: When you see a problem, make a decision right then and there."

Contact Alok Sharma (alok@pacband.com) or Kay Yun (kayyun@amcc.com) by email.