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HOW TO INCORPORATE

Party of Five

44.8% of Inc. 500 companies were started by partners. Here's one.
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The FoundersPercentage of Inc. 500 companies started by partners: 44.8%

Nobody's surprised that part-nerships often buckle under the stress of al-most any start-up: the endless scrambling for customers, the constant pressure to stretch every cent, the nagging neck crick that comes from sleeping wedged against the bottom drawer of a file cabinet every night.

True, not every start-up starves its partners to the point at which they have to live in the office. And while that dramatic hardship--brought on by a lawsuit--sorely tried the cofounders of Equipe Technologies Inc. (#9), it's hardly the most impressive challenge they've confronted.

What is? Well, just the thought of having five chiefs sounds un-wieldy. But CEO James Cameron argues that it makes sense for the Sunnyvale, Calif., company, which designs and builds robots for the semiconductor industry. Building a robot requires integrating three engineering domains: electrical, mechanical, and software. Three of the founders--Frank Pavlik, Lubo Skrobak, and Steven The-- are engineers who handle those respective areas. Paul Rogan, president, chief financial officer, and a former Big Six certified public accountant, manages the finance side. Cameron suits up for sales and marketing.

Not that there aren't occasional turf tussles. "In the last year, I've gotten into screaming matches with all four of my partners, but within a day that's over, and we've moved on," says Cameron. "We recognize that we're all in this for the long haul, and frankly, it's quite lucrative for us to stay together."

It wasn't at first. A few months after the five left a common employer to set up shop, in August 1990, they were sued by their former boss. For 18 months the partners had to sustain themselves on very little cash. "Fortunately, we had a few small customers, but any money that came in went into the legal battle," says Cameron. After a six-week trial in federal court, the jury awarded $75,000 to the former employer, on grounds of breach of fiduciary duty and "misappropriation" of trade secrets.

By that time Equipe was so broke that Rogan and Skrobak had relocated their bedrooms to the office. "I'd come in for an early meeting, and I'd have to rouse those guys out of bed and jam their stuff into a closet before the customer arrived," Cameron recalls. For a kitchen, he adds, they harbored a hibachi out back. The others also made sacrifices. After crashing his car, Pavlik resorted to riding his bike to work, an eight-mile trek. Cameron moved into a communal home.

The founders' decision to stick together ultimately paid off. The company reported sales of more than $28 million in 1995.

"In a more conventional ap-proach, Paul and I would have raised more money and hired the three engineers," says Cameron, "but I'm glad we didn't. We'd have had to pay them somewhere near market wages, and with the lawsuit that would have been unachievable."

Last updated: Oct 15, 1996




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