When Domingo Arochena opened up the floor for questions, he wasn'texpecting the merciless grilling he got: Why do you spend so much onadvertising? What is the exact percentage of sales that belong tosupermarkets? How much is the research-and-development budget? "Fromthe tone, they were all very serious about our business," saysArochena, chairman and president of Indas, SA, based just outsideMadrid. "That was good to hear."
No, Arochena was not trying to attract outsiders to invest in his$63-million company, which makes such hygiene-related products asdiapers and sanitary napkins. Quite the opposite: this was a meeting-- one of three held last year -- with his own family. The questions,which followed his presentation about Indas, came from the fourmembers of the next generation who are over 18. "My personal opinionis that they have an interest in doing this," says the 53-year-old,who bought the company from his uncle in 1970. "It's important toknow that someone will follow you."
Like their American counterparts, Europe's family businesses havetrouble surviving into the third generation because "the young aretoo busy spending our money," as Arochena puts it. And there's anadditional pressure: multinationals that want to enter the Europeanmarket are trolling the continent for vulnerable businesses. Lastyear alone Arochena received six offers. Procter & Gamble Co., inparticular, has been swallowing European competitors, he says. "Ithink they are waiting for me to weaken," he says. "But if I were tosell, I would not know what to do the next day."
Not that Arochena always knew what he wanted to do. After earninghis M.B.A., he worked outside the business for seven years beforegetting word that his childless uncle wanted to sell the 20-year-oldcompany, then generating about $250,000 a year. Arochena bought hisuncle's 60% share and later bought out his partners, among them hisown father. "The previous generation never trusts you quite 100%, butI think they saw I was the best person," reflects Arochena. "Thatcontinuity was very important to them -- as it is to me." -- J.H.
FORGET PARIS: HIRING THE BEST
Eric Hautemont
CEO, Ray Dream Inc.
Age: 30
Company location: Mountain View, Calif.
Founded: 1989
Business: 3-D graphics software
1994 revenues: $5.3 million
Revenue growth, 1990ö1994: 715%
Number of employees: 45
While visiting Silicon Valley in 1988, entrepreneur EricHautemont called up several friends back home in France andissued them a stern directive: drop your croissants and getover here.
Hautemont, who had spent two years developing a 3-D graphicsprogram, was not particularly taken with California cuisine. But assomeone starting a business, he was hungry for the kind ofhospitality he saw being extended to start-ups, as displayedin the availability of venture capital and a risk-taking talent pool."Everything is here," Hautemont recalls telling his colleagues. "We'dbe crazy to start up a company in France." Within a few months of histransatlantic call, he and his four compatriots -- all under the ageof 26 -- had reassembled in Mountain View and launched Ray DreamInc.
The rest is, as they say, histoire ancienne. Withthe help of a few bottles of French wine, Hautemont persuadedJean-Louis Gassée, fellow expatriate and then president of theproducts division of Apple Computer Inc., to invest in Ray Dream andjoin its board. Thanks to Gassée's reputation, the companysecured $300,000 from Sofinnova, one of four French-owned venturefirms in the Valley. The following year, in 1991, the company landedanother $2 million from Venrock Associates. "We would have foundmoney in France but on a much smaller scale," claims Hautemont."Instead of looking to do $15 million in sales this year, we'd belooking at doing $1 million or $2 million."
Hautemont was amazed when top talent at such Silicon Valley giantsas Adobe Systems were willing to take pay cuts as big as 25% to joinRay Dream. "If you are in your early forties in France and you have aVP-level position in a large company, there's no way you aregoing to tell your wife and kids that you are going to a start-up,"says Hautemont, who is 30. Even those few inclined to do so,he adds, would not work for a much-younger boss. "That'sunthinkable," he notes.
Such obstacles help explain why 20% of Europe's top 50 softwarecompanies have moved their headquarters to these shores. Ray Dream'srevenues have doubled every year since its founding. "You succeed andfail and make mistakes about five times faster here than you would inFrance," he says. "In the first 3 years, I felt like I aged 10 or 15years. You could see the strain on everyone's face. But we would havegotten bored in France." -- J. U.
EUROPE'S 500 AT A GLANCE
Facts and figures behind Europe's fast-growing companies
Recruiting Employees
Just over 53% of all Europe's 500 experience problems recruitingqualified staff members. These are the kinds of workers they hadtrouble finding and the percentage of respondents that had difficultyin each category:
Skilled workers 48.2%
Technicians 32.5%
Salespeople 31%
Managers 31%
Unskilled workers 12.7%
Young workers 4.6%
Other 14.7%
Here are the reasons CEOs had trouble hiring among those groups,by the percentage of CEOs that cited them:
Candidates lacked the necessary skills 62.6%
Candidates lacked the appropriate levelof experience 52%
Candidates just weren't available 46.9%
Candidates wanted too much money 19%
Other 12.3%
Public versus private
Do you intend to go public in the coming three years?
We're already public 9%
Yes, we have definite plans 6%
Yes, but we have no definite plans 11%
We're investigating it 15%
No 59%
Number of companies by country
Portugal 16
Spain 44
France 66
Italy 32
Greece 17
Austria 14
Germany 61
Luxembourg 2
Belgium 24
