Turn Around Series: Jerry Rawls, Finisar (Part 5)

Monday, March 12, 2007 | 4 comments

Among the many amazing feats Jerry has accomplished with Finisar, one of the most impressive is how the company was able to grow and develop without the assistance of outside funding.

SM: All of this you were still doing without outside money; it was still a bootstrapped company? JR: Still a bootstrapped company.

SM: Wow, that is incredible. JR: We went public in 1999.

SM: With no outside money? JR: Well, not exactly. In the summer of 1998 we actually sold 20% of the company to TA Associates and Summit Partners, private equity firms. We sold it because we were doing really well; we had been profitable every year since we were in business, and that was because we had to be profitable. In the summer of 1998 the IPO market shut down, and there were no IPO’s. It wasn’t clear when it was going to open up again. The Private Equity guys came to us and worked a deal, said they were willing to buy a piece of the company at relatively high evaluation.

This would put some money in our bank accounts because we had been in a mode of personal sacrifice now since 1988 trying to run this company. There were long periods of time when Frank and I did not pay ourselves any salary because we had to pay our employees.

I can remember only a few years ago somebody said “wow, you must be very proud that you built this company that has hundreds of millions of dollars of sales and thousands of employees around the world”! I said “You know, the interesting thing is the point I am most proud of is that we have never missed a payroll”.

In those days it was not always so easy to make all payrolls because you had to have enough money in the bank to cover the checks you would issue. I can remember many weeks where I was out calling our customers trying to get them to pay our bills on time, or to get us a check, so we can make sure the payroll checks don’t bounce.

So, having been through this period we took Summit and TA on their offer and sold 20% of the company in anticipation of an IPO, but it was an insurance policy which said that Frank and I could have some money in the bank, buy a new car, and we would have a payday for all the effort we put into this.

SM: What was the valuation that TA and Summit gave you at the time? This is the height of the bubble, right? JR: The bubble was still rising.

SM: Yeah, 1999 was the height of the bubble. JR: So that was pretty neat deal, we took money from them and we kept going. A guy from TA, Mike Child, joined our board of directors, and we worked toward an IPO. Our sales were still growing.

This segment is part 5 in a 14 part series Segment 6 →
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