Entrepreneurs of the Year

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Linksys slowly expanded from printer-to-PC connectors to PC-to-PC Ethernet hubs, cards, and cords, gear that let small businesses and nerdy households connect computers so that they could share data. It was a niche market, and with 1994 revenue of $6.5 million the company was far from a behemoth. But slow growth was the only way the Tsaos could expand without taking on debt or investors. While Victor managed operations and finances as CEO, Janie handled sales in her job as vice president of business development. As Mike Wagner, the company's director of marketing, puts it, "Janie brings the money in, Victor keeps everyone from spending it."

Frugality and a focus on the future were obvious in the Tsaos early on. While taking M.B.A. classes at Pepperdine in the mid-'80s, Victor met Bob Klein, who recalls Victor telling him that someday he would move to Newport Coast, far tonier than Irvine. The Tsaos made that dream a reality in 1997. Klein and Victor's first business lunch occurred at the Japanese fast-food chain Yoshinoya--and they meet at comparable places to this day (though, Klein says, Victor has taken to picking up the check). Indeed, on the night the Cisco purchase was announced, there was no celebration. Instead, Victor ate a $5 dinner box at his desk. "It wasn't good at all," he admits.

With the birth of Linksys, Victor took to working 100 hours a week, with occasional naps on the office floor. He involved himself in every part of the business, dealing with U.S. operations during the day and Taiwanese manufacturers at night, and his employees still know him for his 3 a.m. e-mails. He drew no salary until the mid-'90s--he refers to the preceding years as the "Linksys Peace Corp" era--while the couple and their two boys got by on Janie's salary of $2,000 a month. Linksys operated with comparable leanness. Calvin Liu, a designer who Victor calls "Mr. Linksys Look and Feel," first worked for the company as a freelancer in 1991. As it still does, Linksys produced its own graphics. Liu would photograph the products, scan the photos, send them to the printer, and later glue the labels to the product boxes.

Linksys caught a crucial break in 1995. Until that point, tying computers together with Linksys gear required installing software. But when Microsoft moved from Windows 3.1 to Windows 95, it built in networking functions. Suddenly it was simple for small offices and homes to operate networks. Instantly Linksys' potential market expanded.

Janie attacked sales with tenacity. She went to the opening of a Fry's Electronics store and watched in fascination as customers with full shopping carts queued up a dozen deep at the cashiers. "That really opened my eyes to the potential of retail," she says. By 1995, Linksys was in Fry's and revenue almost doubled, to $10.7 million. Still, if catalogs like Black Box and regional chains like Fry's were good, national retailers were better. They promised the big score. The problem was that they were nearly impossible for a tiny company to crack. Janie wanted to get Linksys into Best Buy, but she called for months to no avail.

Then, in April 1996, she attended RetailVision, a trade show intended to introduce manufacturers to retail buyers. Janie set her sights on Best Buy, and when she wasn't able to make contact with Best Buy's buyer--Wayne Inouye, now CEO of eMachines--at the scheduled sessions, she and a sales associate tracked him right to his hotel room door. They presented to Inouye right in his room and, amazingly, he ordered just under $2 million of gear. Janie kept cool until she made her way from Best Buy's offices to her rented car. Then, in a move that is difficult to imagine for this sensible, focused woman, she started to scream.

NO SECRETS, NO GENIUS

Revenue doubled to $21.5 million in 1996, then leapt to $32.1 million in 1997 and $65.6 million in 1998. Linksys moved its headquarters to a 20,000-square-foot office. But success did not lead to extravagance. To this day, Victor and Janie file vacation forms like anyone else and all new employees--even executives--must endure a 90-day waiting period for benefits. No one is allowed to work from home, with the exception of a small mobile sales force.

"Victor and Janie are willing to let good talent walk away if they're not the right fit," says the company's human resources head, Niki Lee. "We could get the best VP of marketing out there and if Victor and Janie realize that he's not hands-on, he wants an admin [administrative assistant], and he only wants to give orders and not be in the trenches, then they just won't deal with it."

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