At Stanford University, Bechtolsheim had devised a powerful computer (which he called a workstation) with built in networking running a non-proprietary operating system called Unix. He developed the workstation because he was sick of waiting for computer time at the central University system.
Khosla approached him, wanting to build a business around selling the workstation. He also approached McNealy who was then studying an MBA at the Stanford Business School.
After leaving Sun, he founded Granite Systems in 1995 to develop network switches. In 1996, Cisco acquired the firm for $220 million, with Bechtolsheim owning 65%. Being Vice President and general manager, Gigabit Systems Business Unit at last, he left Cisco in December 2003 in order to lead Kealia Inc, which was founded 3 months before.
With one of his former partners in Granite Systems, Bechtolsheim was one of the first investors in Google, investing $100,000 in 1998, writing the cheque to "Google" prior to the company even being founded.
As a result of shrewd investments like these, increasingly Bechtolsheim is being seen as a savvy investor, particularly in areas such as EDA, or electronic design automation, which refers to the software used by those designing computer chips. He has made a number of successful investments in the EDA space. He argues that changes in the chips themselves are outpacing the development of EDA tools, creating what he sees as an opportunity. It was his interest in these design tools while at Stanford which prompted his frustration when waiting for access to mainframes which led to his development of the first workstation.
One such EDA company, NASDAQ listed Magma Design Automation Inc. has been tremendously profitable for Bechtolsheim, with his stake in the company being valued around $60 million.
Bechtolsheim is a founding member of Carnegie-Mellon University's West Coast Campus in California.