Tandem Has A Fail-safe Plan For Growth

 

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.

In 1974, the stock market was low, capital gains taxes were high, and venture capital money was very scarce. Seed money was even scarcer. But Thomas Perkins and Eugene Kleiner were an unusual pair of venture capitalists. Both helped found companies of their own (University Labs, which later merged with Spectra-Physics, and Fairchild Semiconductor, respectively), and they encouraged Treybig to keep working. Two of the first people he talked to were old Hewlett-Packard associates, Michael Green and James Katzman. Green had designed the minicomputer industry's first time-sharing system for the H-P 2000 in 1968, and Katzman had designed the H-P 3000.

Green and Katzman liked the sound of the technical challenge and the idea of a new business adventure. Katzman had already left Hewlett-Packard to work at Amdahl Corp., and Green was tired of reorganizations and canceled projects at Hewlett-Packard. Though Treybig's concept of the system was a little sketchy, "something you could draw on the blackboard in about 10 seconds," says Green, he was attracted by Treybig's enthusiasm and the sense that he seemed to know what he was talking about.

At the same time Perkins was working at University Labs, he was also the general manager of the computer division and the director of corporate development at Hewlett-Packard. There he'd had the chance to observe Treybig, Green, and Katzman at work. He liked what he had seen enough to decide in mid-1974 to put up $50,000 to recruit Green and Katzman to start working on the definition of a system that could fit the market application that Treybig perceived.

Over three or four months, Treybig, Green, Katzman, Perkins, and another Kleiner & Perkins partner, John Loustanou, had an opportunity fairly rare in start-ups -- to think out the company's development in detail before starting."We worked out all aspects in advance -- people, finance, manufacturing, everything," says Treybig. "We could afford to do it because we weren't starving to death. One reason we have been able to grow so fast and not have problems was that we thought through most potential problems before we started."

They worked together exceedingly well. "We didn't have to discover each other," says Perkins. "We had all worked together. There were no problems about who was boss, no politicking, no three vice-presidents who wanted to be president. Many of the troubles that can plague a new venture weren't there."

 PREV  1 | 2 | 3 | 4  NEXT