Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Transcripts may also be modified slightly for the sake of clarity. You can listen to the entire episode here or on any podcast streaming platform. Please note that Innovators on Tap owns the copyright to all content and transcripts of the Innovators on Tap Podcast, with all rights reserved. Please reach out through our contact form if you wish to use any material.
Chuck: First of all, Neil, welcome and thank you for being an innovators on tap. It's pleasure to have you here today.
Neal: Thank you, Chuck.
Chuck: I thought we would start with the first time we met and I came to a meeting at Hewlett Packard and you and John ed, what were they were trying to sell me LEDs and, well one, it was amazing. It's the first blue led I'd ever seen. I do remember we had to turn off all the lights correct. In a room with no windows to be able to call the dark emitting diode. Right. And then after he said, what do you think? I think I said something, the effect of, Hmm, really interesting, but it would have to be about 20 times brighter and one 10th the cost or something to that effect before we could sell it. And I thought that was the end of our conversation. But uh, apparently you heard something that day that interests you because within the next month or two I got a call from a recruiter. So what were you thinking that day when I gave you that feedback?
Neal: You were, uh, I think you came by kind of led just to look and see what's going on. And so very shortly you took over the meeting and that's what I noticed. So I noticed your energy, your knowledge base. I mean you were all over the place, you know, of course you tried to do the HP thing and crushes in terms of dollars and fucking brightness and that sort of thing. But that's pretty typical for the industry. I call it a spark in the eye. You know, when I look at someone that, that really has the energy, cause I can take someone and tell them slow down, push them back. Whoa boy. But I can't take someone and pull them with me. If you're innovating and trying to build a company and you've got 10 people strapped your back, it's a tough road.
Chuck: Before I ended up coming, there was one more story I wanted to bring up cause I remember I was sitting there and we were trying to work out if I was going to come join Cree and I was at the time for some reason thinking I might go to business school and you made a pitch to me. He said, you know Chuck, come to Korea, I'll get you a Cree MBA. And I'm sure most people have never heard that term. But what was the point you were trying to make that?
Neal: Well I went through the same process so when I was 25 and we were looking at, it was kind of like I was going to go to MBA school. I did three years of real world work and I was looking at doing that in kind of upgrading my career where I was gonna go next and kind of this whole crazy thing came up and I ended up doing the crazy thing and I learned more in the first month probably than most people do an MBA school when you were growing up with your brothers up. And there's something about what I found in talking to most people about innovation, how they grew up, those experiences shaped kind of who they are and how they think and give them, you know, some of the tools that later make them successful.
Chuck: Can you give me some insights about how you grew up that maybe gave you a perspective that later or helps you be successful? I don't know, four or five times over now with different companies, you don't realize that Chuck and the when you're, when you're living it. But when I'm, when I look back at growing up, I was given a lot of freedom and my mom hates to hear this always. But, um, she, you know, she wouldn't get home. She was a, my father passed away when I was very young. Okay. So I had two brothers and we kind of did things after school and over the neighbors and things like that. And we were leaders in our own ways, but we would do all sorts of things to raise money. And so you had that freedom and maybe it was a freedom up until dinner. Um, and then a lot of encouragement to get, make sure you excelled at school and those things together just kept doors open and then, then it became a natural thing. So risk taking was natural to me.
Chuck: Yeah. So, um, you used to trade commodities between classes in colleges. There's something, I have that story right now. It was a stock options, so tried and stock options.
Neal:: When I was a junior and senior in college, I would go to the library and look at something called value line, which was something that I got to later participating on when Cree was in. That was really cool. But um, we would look up companies and their balance sheets and all, all about them in the backgrounds. Just got to know a lot about business in general and people call it gambling and all these good things. You know, back then you, if you did research and you took a longer vision and you could really leverage your money and things might work out.
Chuck: I think the story I want people to hear about is the F is a lot about the many businesses you've been in. So let's just start quickly with the Cree story. So you and your brother decide to start a company start creep. What's the original idea?
Neal: Original idea is I'm doing all electronic controls, wiring. We had two ideas. One that I was involved in personally working for Johnson controls and the other one was what my brother was involved in at NC state and that was working on Silicon carbide as a semiconductor material. And so we wrote a business plan that actually combined those two things, which were just crazy. It's like definitely oil and water. Um, we went out and shopped at and had a couple of meetings and people look tall. You know, there were cross out on that stuff and said, look back at us and said, you know, we think you should probably pick one and you ought to pick the one that has the $150 million market in five years instead of the one that has 50,000. And so we reconverted our business plan to Silicon carbide, but we, you know, I got a second mortgage and there were credit card leveraging involved as well. And I think we raised about 28,000 between us and I quit my job, come and jumped off the end of the pier and the rest is history.
Chuck: I think the idea that you guys leveraged your personal resources and you kind of jumped in, there was no backup plan. My sense is, is that when I look at stories of other people that have been successful, there's something to that, right? If there's a backup plan, it, you're not motivated as much to make it work. Do you think if you would have been better funded or other things it would have turned out the same way?
Neal: No. If we had had pure funding from someone, we would have done things differently. You always do things differently. The more funding generally the worst, generally depending on what you're doing. But you know, that struggle, um, you learned so much from that struggle.
Chuck: You then at some point built Cree up, make it very, very successful. Uh, the valuation, I believe it was somewhere in the like 7 billion at one point. Um, and then you decide I don't want to be the CEO anymore. And you're think you're in, you're at that point, uh, probably in your late thirties, Neil, somewhere right around that late thirties, early forties. Yeah. 37 38 I don't think most people can ever imagine kind of at the top of the mountain, right? You've got that CEO job and you decide, Hey, I don't want to do this anymore.
Neal:I think it's, you know, it's, look at athletes. Some of them retire at the top of their careers. Others are forced out when their bodies don't work anymore with, look at me. That was not, was a health decision really who came low stressed. I'd been through so much that I didn't realize I would, I didn't mind being on the board or in being chairman. That was fine, but 13 years into it I'd probably worked on it. You know, you talked about 60 hour weeks, 50 hour weeks. People that say they worked 80 hour weeks, that's kind of bogus. You know, when it's, when he talked about 168 hours, whatever there is in a week, it's how much you think about it. You can be looking at someone at dinner and a two hour conversation and they'll look at you and say, where are you? And you realize that you're thinking about what's the next thing we need to do? What's yields that we're going to face? Just everything about the business.
Chuck: Few people have the success you had at Cree once, but you've done something multiple times and I want, I think it's so important to understand how you did the soap.I'm going to kind of go through quick links. Then I want to get to, what do you think makes you unique to be able to do this, but let's start with culvert farms. So you're still at Cree at the time and you decide, Hey, I know I'm running a tech company and I'm really pushing hard, but I'm going to become a developer. Walk us through that.
Neal: The real reason in the first place was, you know, I'm CEO, I want to live out in the country. Okay, I want to start a family at some point, you know, a kind of trip back muscle fin to bind 600 acres. That wasn't going to be my house lot, but, um, I kept accumulating land and kind of a peninsula area that was very close to a large mall in the, uh, research triangle area. And again, people laughed at me. They said, the paid too much, you know, all these things you go through, you know, you're not a developer, you haven't done this before. It's the same stuff. And at that point I just hadn't, I'm not self guessing anymore. I'm not, I'm sitting there and I'm wondering if I can do this. You just got to go figure it out. And so I got my cousin involved who was a builder. He showed me that, Hey, when you take down 10 acres of trees, it's going to look like this or that. I mean, you got to, you have to learn those things. But it's really fun. I mean, to me it's, it's the addictive, the fun that comes with being successful in business. You can look at numbers. That's great. Okay. No doubt. It's good to be, to have wealth generated, but it is, it's like an endorphin flow, you know, you can call it a drug, you can call it whatever, but there's nothing like it. There's, I mean, at Cree in 2000 I raised $300 million approximately in 13 days or actually raised it in four and a half days. So we went out in a road show, we priced our deal Thursday night. We started on Monday. That closed, that money was in our bank account. The following Monday we were the first deal. We the first S three filed in Y two K so you're in the year 2000 because our multiples were out of whack. And you know, I'm a closet economist, so you know, we had a 350 PE, so that was just crazy. All the, all the tech companies were blown up at that point. So, um, luckily we were one of the ones that did the right thing for shareholders and put away a lot of capital at that time because two years after that. So, so at that point, our stock traded up to 200, two years after that it was trading for around $9. So you roll forward to real estate. It's fun. It's something to learn. You, you master this stuff, you see roads built. I mean, it's a smaller, it's the only thing I've done where it has a boundary around it. Most, most of my ideas and companies that I get involved in are boundless.
Chuck: So you built Cree, you become a successful developer. And then, uh, somewhere along the way you were taught, you walk away from CRE and you're gonna take a break and you decide to partner up with a couple guys and start LLS. How does this come about?
Neal:So in 2005, spring of 2005, uh, retired told myself I was never going to go back into tech. And 90 days later got contacted by a couple of guys that had worked for Koreans in the past. These guys are really sharp. One on the concept of lighting in general and then Jerry neglige probably one of the smartest guys I've ever met in terms of just science, really felt like I wanted to get involved with these guys. They were looking at kind of bootstrapping something and doing billboard lauding because what they found was if you could make lighting the right color, then your eye perceives it as being brighter. If you did billboards something at night, we needed lower light for illumination and made perfect colors, then you could actually get an effective doubling of brightness. So we took an industry that was 15 years probably waiting. If you looked at the department of energy in their future projections and things that they were funding, they were looking at probably 2020 when the led fixtures would actually come in. And that's probably why Cree never really got into it cause it got outside their box at that time. And of course everyone again told us there was, everything had already been invented. I told the guys, I said, look how I'm interested in get involved in this. If we go after general illumination, those guys go back and think about it, um, and say, okay, we can start in the billboard business and maybe then roll into something four months after I started this, we started this on September 15th, roughly of 2005, we sold the company to CRE 26, 28 months later for $100 million roughly. We followed probably a hundred patents during that time. And that's just one of the formulas and I'm getting involved in the company. That's one of the parts of the formulas I'll look at. Boundless market, great intellectual opportunity, you know, just opportunity to lay down a lot of intellectual property and technology that no one else has
Chuck: So then you come back and you're working at Cree again. So, uh, now the roles are reverse and technically you supposedly report to me and I always joke around the said, yeah, that's not really how that works. I mean, not a piece of paper and you'll report it to me, but you were basically still my mentor and coaching me along and providing that constructive feedback. When I think most organizations, I really, I think most organizations, most CEOs are afraid of getting constructive feedback. And because of our relationship, it kept happening. And I, I tell people for for many years, I probably don't last in that job as long if IRA's not someone who can walk into my office and just say, I just disagree with you or you're missing this or you need to go do this. And, uh, it was a really interesting dynamic.
Neal: Now you did a great job, Chuck, and I've told you this before, no CEOs are going to let you know, former CEOs come in and sit around the management team table and actually still provide commentary as we call constructive conflict. That was something that you were able to do. And I think it helped a lot at the time. And it helped me transition back into the company, uh, do a lot of things. And it also kept me current, what Cree was doing and to be able to provide ongoing and innovation ideas, just, you know, network everything.
Chuck: So you guys go off, make the [inaudible] bulb, changed the bulb business completely. And again, another home run, another success. And then you go off and you switch industries again and you go start building no van. So tell us about no van. Uh, there was an opportunity that came across my desk for a company working in the area of nitric oxide. And that's been, that's something your body creates naturally. It's been around for a long time as far as the knowledge of that. It's been around, it had been around at 20 years. But if you put an Audrey oxide in the right scaffold and the right chemical formula and the right formulation, you can make, um, lotions that can go on and kill acne and Meloxicam and all of these different things. You can put it inside the body and make a nebulized formula. They can go in and art case. Right now we're working on something that would eliminate infection for cystic fibrosis. Um, it can, it essentially can impact every major disease on the, on the billboard today. So it's, it's an amazing technology. And I, I looked at that and I remember our original notes said this could replace antibiotics.
Chuck: You get no van started. And you get no van to a certain point where it's ready to go public and it's really focused on dermatology and then no van spins out, no bio and you decide to go with the future reaching technology. Is that right?
Neal: That's all right. So we had gone to the point where no van had a view on going public. And so at that point I'm like, all right. Um, I usually work better and I don't necessarily have been in public or private companies, but I'm going to work better than the emerging company. And it's more interesting to me because frankly, what we did was spin out, um, no bio from the Novion company, but that was only because we, we, um, had to structure that way. It really was. Um, no bio was really the company and if we would just have an LLC or an inc on one off them or LLC on one of them, it would have been a true spin out of no van. And so, you know, we have roughly 10 different indications that we're going after and no bio and those are like cancer and cardio and respiratory infections. Um, and on and on. So rejuvenation of, of the way that you look Costhetics, you know, rejuvenation of the way that your brain works possibly. Um, uh, what's your memory can do it just all, all the major, again, the major indications that we are fighting and as people every day.
Chuck: you know, you've done this. So Cree, Colvard farms, LLS coming back to Cree and running the bulb business, building that into something, no van, no bio. I mean, that's five or six successes. Most people are lucky to, if they ever get close to one.
Neal: I'm very risk tolerant. I don't even think about it. I mean today you can look at my, how I'm exposed financially, where I'm invested and you'd say, Oh my gosh, I would never be there at 57, whatever. I mean, I came here, I was, I wore hand me down clothes. People don't even know what those are. I shared a room with my brother. People don't know how to do that anymore. So those things really, those, those statements are foreign to a lot of people. But those, that was the way I grew up. And so if I had to go back there, I could do that. And I think that's a huge advantage when you're trying to build a team to do this again.
Chuck: It other things that you look for in people that give you a clue. I think these people can do it or not. I mean, you're early on, you mentioned that you need people that you have to pull back, not push forward. Uh, but is there other things, you know, so you know, there's people out there trying to figure out how do I do this on their own? How could I build this? What, is there something you look for when you say, I think this person's going to be able to help me getthere.
Neal: Oh, I'm looking for high energy people because you can take a high energy person who, you know, has a good heart when I'm in that they're empathetic to some degree. Um, I'm not in ruthless. People generally don't make it. Um, don't make it for a while. Maybe in real estate and there's, there's dads out that are, that are what you call ruthless business people. But um, you know, you got to think, you have to have team members that are concerned about the dire employee base about where you're headed. And that's what they're really focused on continually. And if they've got the energy that spark in their OD and you can, you can take that to so many different places in the company cause you gotta realize you're looking for people also the can can and will do many things in any day. I mean we used to take, we used to offload equipment at CRE, we sweep floors if we need to, we do whatever it takes. And we even do that today. You know, if someone's coming in, we need to clean the place up. We're going to do that together as a company. And it just, we did that at Cree. We did that so many other companies. And I think that's, that's just a trait that you need to have.
Chuck: You've had far more success than almost anyone. I know you've done it multiple times. You're not done. You've got no bio now bio is now has three different businesses that are going in different directions. What is it that keeps that, that motivates you to keep going?
Neal: For for years people would say, what's your hobby? And I'd go on and figure this out. I like, you know, doing this or that. I don't know. Finally about four years ago I stopped apologizing and I said, I'll love business. I love anything associated with business, everything, starting businesses, helping people with business, anything associated with it. I'll help people solve the things. I'll help them with their contracts. You know, brother-in-law, we talk about it 20 years ago I helped him write a contract for his business and he still uses that today and it's helped him tremendously. It's you're called upon continuously and that can wear you out. No debt and it does for me, I have to get recharged about every five years it seems like so, but it's that constant go, go, go charging the Hill. There are things or attributes that take away, you know, no doubt your family sacrifices are there. Your, your health sacrifices are there either because the business is so interesting to me when you have the right business and we got the right business right now, you want to move faster, you want to do things right. It's just, it is addictive is you look out, are there characteristics that you think define successful innovators or entrepreneurs that are kind of common confidence and it's not hubris. It's confidence without ego. I mean you have to have the ego, but you know what I mean? It's not, it's not someone that just blow through everything because they're going to be the big guy. The one number number one. I think that that's, that's a big thing is, and then of course, um, being risk averse or not being risk averse, you know, where you can have a real appetite for risk. That's, that's huge. But you don't really, it's hard to measure until you get in there and do it. Making sure your family is on your team. Huge deal. Actually positive people. But again, not positive to a fault. You've got to understand what you're getting into. So it's some of that, you know, some of that's just experience.
Chuck: I think those are great characteristics. I think the one that I would observe in you that I think you kind of talk about, but I would call it out as I, I think you have. And I think other great innovators and entrepreneurs, they have the ability, especially if you're going to build a business, they have a sense for people. I remember those early days at Cree, every time I felt like, okay, I'm, I'm getting close to just, it's enough your ability to read those situations and not just with me, with others, you had a sense of people have the ability to get them to a place they wouldn't naturally go themselves and keep them there just long enough before they broke and then reel us back.
Neal: And uh, you know, one thing to the along that line that I like to say is if you try to give someone a raise the day they tell you they're leaving for money, then you've got a problem.And so you need to be able to look at your, your staff, your people. Because what I have said is, um, your people are everything you need to be. You know, just the real example is making sure people, and again, I go back to the money thing, but if their compensation isn't right and that's including their ownership in the company, then they're going to seek, I mean, that's not the top thing I think is number four. If you look at measurements, how people like their jobs, but you want to create an environment that's the fun that they want to go, they have that ability to be empowered and go do their thing and then they're going to be rewarded.
Chuck: Yeah. The, uh, I think the, the ownership mentality where your employees are all owners at whatever level it changes the dynamic. When everyone around that table has a stake in the company and you're talking to them not just simply as, but as owners, you get a totally different dynamic.That level of responsibility and people's willingness to try things, take risks, but also balance that risk when necessary. It's totally different when they're owners versus they're showing up and collecting a paycheck. I want to switch gears a little bit. Neil, you've been very generous with your philanthropy over the years. I know you've done a lot of stuff for NC state, you've done things for UNC, especially the medical school work with the V foundation and recently you were a incredibly important part of helping us get the Durham community food pantry open. Do you think entrepreneur is successful people in your role? Is it an application? Is it something you just like to do? What's your perspective on that?
Neal: When I've created wealth for myself or other people on courage, them to give to whatever their choice is, uh, you know, I have a very different opinion about corporate giving. I've always said another one. I think at Cree we didn't do a lot of corporate giving because I said, look, let the individuals give, you know, not, not coming if they want to, but to the things they want to and support because we're creating a lot of value here. But I really, if I'm going to just give to the community now there is something to say about community relations, that sort of thing. But do I need to go back to the shareholders and getting permission for that? Do I need to get the board and get it from per impression for that? Depending if it's going to be a pretty big line on. And it really doesn't matter. It's not mod capital spend except on the things that we have told the shareholders that we're going to do. And so that's kind of where that, that bright line got drawn and people definitely have different feelings about that. But I guarantee you the community came out a lot better from the way that our executives gave of themselves and their money.
Chuck: You know, I think that philosophy obviously, uh, you know, you started it and I carried it along while I was CEO. It's a, I think if you look at what the Cree employees and executives gave back in terms of dollars and, and energy and things, we help get done. I don't have any doubt. We gave a ton back. And I think by not making it CRE, I think we did something different. I think we made it more personal. And honestly, I think when it's the company doing it, it almost lets the employees, and off the hooks the wrong word. But you know, our point was, look, we created value. If it's important to you, please do it and we'd encourage you to do it. But it's your choice. And I think the net result is we actually ended up doing more that way than if we would have let it sit back behind the scene that said, the company will just take care of it. Because I think when it's personal, it matters more.
Neal: There's no doubt. I mean, I'm here to give, I'm an [inaudible]. I'll look at, wow, whether I put on the earth to innovate, to create wealth, to use that wealth to give, that's not a sappy sounding thing or a y'all thing. It's just what it is. And that's, um, something that, you know, why do I keep doing this? It's to be in that position again to do that. And that's, that's myself. And my family.
Chuck: Last thing I want to switch to is if someone was just starting out, let's say they either they're getting out of college, they're relatively young, they think they got an, there are a couple of years into their career like you were, Hey, I think I want to go out and be an innovator. Or they could be working at one of these big companies and the other been there 10 15 years and they feel kind of stuck. What's your advice to them?
Neal: Couple of things. What do you want to do? You know, what are you trying to accomplish? Are you trying to make money quickly? You know, do you think you're going to make something happen immediately? You know, what's your goal? You have a great idea. Is it driven by an idea or a desire? There's many different things. There is those sorts. There's one is desired state. The other is, I've got a great idea if those can collage, that's, that's okay, but better to have a great idea and a way to do that and better to have a bright idea and want to create something. Um, second thing I'll say, it is never too late. I know a gentleman who worked for IBM til he was 50 50 something and then his whole division was getting shut down and he, he knew some people put some, build a deal together to buy that from IBM and then crank that up from where it was to about 10 X between the time he was 50 and 70 there's so many ways to do this and there's never a time that you can, if there's not, there's no certain way to do it. Yeah. When you're younger you got more energy. Maybe sometimes you do. Sometimes you want to do so many things, so many different things. I'm so focused on creating business and making my businesses more efficient that I do that to a fault. I don't know what the, I don't know what the right answer is generally, but again, on there is a big difference between an idea and an end state.
Chuck: Is there an innovation or an innovator that when you just think about, Hey, you want to look back? This is the one that stands out in my mind. The one that blows my mind the most. Is there something out there that really catches your mind?
Neal: Steve jobs taking Apple back from, I mean from demise to $1 trillion. Really. You could argue that he put base in the foundation, they would take him back to trillion. Tim cook doing that. Um, that's amazing. So it was a 10 billion market cap I think at one time back in the 2003 2004 range and 10 years later it was $500 billion company. That's that. That is so hard to do, to take a large company already. Large company, $10 billion companies are big and then take them all the way up. Is amazing. Make that company the most valuable company in the world.
Chuck: I mean it feels to me like Steve jobs was the innovator of Tim cook has done a great job of taking that business model and making more money from it. But my sense is I don't see the types of innovations, whether it be the different business ideas and not only products, but the whole, you know, in Steve jobs is not only that whole product portfolio but the whole iTunes store and all those pieces that he built running me build a services business around a product company. Um, Tim cooks on a great job of creating shareholder wealth, but I'm not sure it's through innovation. I think it's through frankly running the company probably less innovatively. Like I think they try less crazy ideas since he got there. At least that's my perspective as I look from the outside.
Neal: You probably true. I think he that he is. Um, but he's also who ended own right. Been very successful. I mean there's no, to keep that running, to keep that brand is to keep the brand, the people that use that, those products as almost say psychotic as they are. But as, as you know, as brand oriented as they are, it's amazing. Well, I'll know he's really successful when we get you an iPhone. That's exactly right. All right.
Chuck: And you'll last thing at any of the, any industry out there that, uh, uh, you're not working on today that you think is ripe for innovation.
Neal: There's so much to do in the electric transportation area. And I'll tell you one, I can share one with you. I've been a alpha often. I've been hating this industry for years because it's been so slow and that's transportation of people. We have not made any great gains in the way we transport ourselves. And forever did. Jet airplane was designed in the forties. I mean, um, Germany came out in the light in world war two with jet aircraft. All we've done is make those more efficient. And the only ones that were really fast, we took off the market SST, they were designed in the 50s you know, so now we're talking about hypersonic planes and they're more space plane programs out there. But we need to be getting to Tokyo in two hours. There's, there's no excuse for that. We have made, we've made it more efficient. We get hit, we get places 10 minutes earlier, maybe 20 minutes earlier, but we're going through airports still. That's insane. That's got to change. That's a huge area change.
Chuck: And I remember the first time we had that conversation, Neil, and I think it's going, I bet you said at least 20 years ago, you and I were sitting on the Northwest airlines plane somewhere go. And I think either on our way to Japan or back on, there's gotta be a faster way to get here and it's not any different than it was 20 years ago. Yeah. If a private company can build a rocket to go to the moon and you've got, um, Branson that's starting to do his, his, you know, his inner galactic, whatever he's doing with his inner galactic company, the technology's there. It's just someone has to decide to do it. It's very interesting that maybe that's your next business idea.
Neal: It's a big one. There's no doubt that's probably going to be post. Um, uh, I'll, I'll put that out for next, probably start that next three or four years. But it's definitely ripe for the taking because we've got the technology that goes really fast. We just don't know how to control it.
Chuck: Well Neil. It's been a pleasure as a, as I've told many people, I've had very few mentors in my career. You were one of them and still are in a, it's been a riot. I still am so happy that day that you convinced me to come get that Cree MBA because uh, I, it opened my eyes to a world I just don't think I would have ever seen and so thank you for that and thanks for being on the podcast and look forward to talking to you soon.
Neal: All right, we'll do it.