Tandem Has A Fail-safe Plan For Growth

 

Treybig takes this opportunity to point out that one of the keys to Tandem's information system has been its own product -- an on-line data processing system that ties together the company's 63 locations with a network of computers around the world.Information on inventory, orders, costs, hiring, and payroll is entered into the system and can be monitored by management the same day. "We know immediately if there's a problem," says Treybig. "And we pick up the phone. You can afford to make a lot of mistakes if you know about them the minute you make them. The problem is when you make a mistake and don't know about it for a long time."

Another major factor is a flat management structure. Treybig walks to the blackboard and draws three little circles in a line. "This is me," he says, pointing the chalk at the little circle in the middle. "And these are Robert Marshall and Michael Green, our senior vice-presidents." And then he draws 13 little circles in a row underneath them. Tandem's vice-presidents. "A hundred-million-dollar company doesn't need 13 vice-presidents," he says. "But a billion-dollar company does. By the time Tandem reaches a billion, these people will be too busy to get to know each other. But they're working together now, building an understanding for the future. So when they's scattered all over, they'll have the cohesiveness to make decisions quickly." He tosses the chalk into the tray and sits down.

"What about competitors?" the potential customer wants to know. Though none of the established computer companies has announced definite plans to enter a market long perceived as a narrow, specialized niche, several start-ups aim to produce fail-safe systems. One of those companies, August Systems of Salem, Oreg., sees its prospective market -- industrial process control applications for power stations and oil refineries -- as outside of Tandem's interests, but the other two, Stratus Computer of Natick, Mass., and Synapse Computer of Menlo Park, Calif., probably will compete more directly. August delivered its first system this April, Stratus expects to have a product by the beginning of 1982, and Synapse is planning its first delivery for sometime in the next two years. Treybig claims he doesn't even know their names.

"Our concern is within ourselves," he says. "To keep working hard, to keep earning, to keep wanting a better product. We have a seven-year head start. The challenge is not to worry about other people, but to worry about yourself."

"What makes a company good?" Treybig asks. "It's having the right product and market, the right direction, the right business strategy. If you have the right business strategy you can make a lot more mistakes than if you have the wrong one. Another thing that makes a company good is having frantastic people. If you have the right business plan, you can attract better people. The other thing you need is money. Without money, eventually you lose good people. Those three things were right at Tandem. We had the right business product/market concept. We started with outstanding people, which allowed us to hire more. Then we were able to do what we said we'd do, and that let us get more money and better people and keep growing in the right direction."

Tandem Corp.: 18,659% growth without acquisitions

1976 1977 1978 1979 1980

Revenues ($000) 581 7,692 24,305 55,974 108,989

Net income (loss) per common share (2.17) **.03 **.30 .59 1.06

R & D expenses ($000) 979 1,094 2,169 4,654 8,786

Current assets ($000) 2,616 4,665 19,500 39,328 81,663

Current liabilities ($000) 388 2,319 5,798 12,232 20,431

Working capital ($000) 2,228 2,346 13,702 27,096 61,232

Current ratio 6.7 2.0 3.4 3.2 4.0

Long-term debt * ($000) 313 316 715 1,144 1,651

Return on equity (%) N/A ** 6.2 ** 23.6 20.9 21.0

Number of employees 71 137 446 828 1,387

Number of processors shipped 12 81 257 646 1,299

* capitalized lease obligations

** before extraordinary credits

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