If Jim Treybig has his way, his computer company will get bigger without losing its enterpreneurial style.
Jim Treybig only knots his tie tightly when he meets bankers, representatives of the financial community, and customers. Usually his tie is loose and his sleeves are rolled up, and most employees at Tandem Computers call him Jimmy.
Today, though, the knot is right up to his shirt collar. His jacket is on, and his manner is formal. Tandem's 40-year-old president is talking to a group of European airline executives about a $500,000 sale that in two or three years could grow into $8 million worth of business.
Salespeople in the field have already convinced the three visitors that the young company's fail-safe computer system can satisfy their technical requirements. What these potential customers have come thousands of miles to Tandem's Cupertino, Calif., headquarters to assess is whether the relatively small, fast-growing company will meet the needs of the future -- servicing, expanding, updating, staying at the forefront of new technology -- or whether it will succumb to the problems of fast growth that tripped up other high fliers in the past.
The visitor who speaks first is older than Treybig and nervous.His hands shake as he says, slowly and carefully, that the large company he represents is seeking more than a system that will satisfy its needs today. Like most potential first-time buyers, it has used IBM equipment almost exclusively for all of its data processing in the past. Although Tandem's system offers clear price performance advantages for users that demand fail-safe systems -- dual processors that will work together, or in the event of component failure, take over the job on their own -- the sale won't be made until the potential customer is convinced that he has found a partner who will be almost equally fail-safe.
Treybig is well prepared to argue that Tandem will. With fiscal 1980 sales nearly $109 million and pretax profits of $21 million, it is easier for the Houstonborn entrepreneur to be convincing than it was seven years ago. Then, all he had to sell were the resumes of Tandem's founders, a product concept, and a vision of an untapped (and untested) market. Tandem aims to be a billion-dollar company by 1985, and Treybig and his team have come within a million dollars of all but the first year's annual revenue projections in the original five-year plan.
At the prospect's request, Treybig discusses Tandem's technological preparations for the future. He mentions satellite communication link replacing telephone land lines, large-scale integration ("In 10 years, a computer the size of ours will be on one chip"), the emergence of video in data processing, and electronic mail. He says that trends in computer design toward redundancy and modularity favor Tandem's kind of system. He adds that the changes Tandem is working on are both the evolutionary kind that are compatible with the existing Tandem system and have been going on all along and the revolutionary kind that are more like starting over. He sums up by saying that technology changes so rapidly that no one can predict specific developments farther out than a couple of years, but that Tandem plans to be at the forefront of whatever comes up. Expenditures in 1980 for research and development were up 89% over 1979, he adds. Tandem grew 95%.
"Revenues grew by 95%?" asks the leader, raising his eyebrows.
"Yes," Treybig says and pauses. "Earnings grew 117%."
The potential customers sit back a little and smile.In his flat Texas drawl Treybig reels off the kind of numbers that most business people only dream of. A quarter-by-quarter increase in sales and income since the first profitable quarter that ended June 30, 1977. A growth rate that even without acquisitions ranks it fourth on the 1981 INC. 100.Pretax profitability of 19.3%, almost twice the American Electronics Association surveyed median. Almost no debt. A 68% increase in the number of employees over the last year, from 828 to 1,387. (By the end of March 1981, the number was up to 1,890.)
The growth, Treybig points out, is impressive but not unique. Data General, Digital Equipment, and Prime Computer, the minicomputer stars of the '60s and early '70s, grew just as quickly -- in fact, their growth curves provided the model for Tandem's. But Tandem plans to be more than just another fast-growing, highly profitable computer company. It aims to be a billion-dollar company that stays entrepreneurial and a fun place to work.
"There's no fundamental reason a company can't be good at a billion," insists Treybig. "You can keep that small company feeling for longer than anyone thinks, but for sure you won't keep it if you think you can't keep it past a certain size. When you say you can't, you never pioneer. You never find out the limit."
It's more than a personal preference for working in an informal and unstructured environment that makes Treybig and the other managers want to keep the excitement alive. They's convinced that maintaining the sense of purpose, challenge, and excitement typically thought characteristic of a start-up or a small company is one of the most important, and usually overlooked, keys to a fast-growing company's continued vitality, creativity, and success.
There's nothing magical about this idea, insists Treybig. "It's hard work, and as the company grows larger, it gets harder. You have to demand and reward creativity. You have to preach it, you have to stress it. If every manager you have doesn't believe in it, you won't have it."
The other thing you have to do, he points out, is make sure that everyone understands the direction the company is moving in, and the goals. "Why do we talk about the billion dollars?" says Treybig. "It doesn't really matter whether Tandem is a billion-dollar company in 1985 or 1986. But we want everyone to understand the challenges."
Treybig knew he wanted to start a company in 1973 when he left his job as a marketing manager in the computer and peripheral equipment division at Hewlett-Packard to join the San Francisco venture capital firm of Kleiner & Perkins. Since his background included a degree in electrical engineering from Rice University, a couple of years of selling at Texas Instruments, an M.B.A. from Stanford, and five years at H-P, computers were an obvious choice. But at the time it seemed as if most of the significant niches in the computer industry had been filled.
Over a year or so, Treybig considered several high-technology ideas. The one that seemed most likely to support the kind of company he had in mind was computer-related. He figured if a company could produce a system that wouldn't fail or destroy data and that didn't cost more than existing alternatives, then it could sell "a whole lot." He started collecting notes on companies he'd heard about that were hooking computers together to produce a custom-designed fail-safe system. He identified a possible multi-industry market for fail-safe equipment of about $200 million -- and more importantly, it seemed to be growing fast.
