By Frank Levinson, Guest Author
[Frank Levinson shares his experience bootstrapping Finisar, which became a public company later. Last year, we spoke with Jerry Rawls about Finisar’s Turnaround story, also a worthwhile read.]
I founded Finisar Corporation 20 years ago on February 22, 1988. We had revenue of $6K in March of that same year. And always had revenue from that point forward.
The short telling of Finisar is that we started without a plan or product focus and did engineering for other companies for 2-3 years. Over that time we were able to build up a reasonable (and paid for) set of test equipment as well as sufficient skills among our few employees that we began to sell our own products. We sold not so good products for 2-3 years; but as the saying goes – hind sight is 20/20. Finally, at the start of the 3rd product generation, we achieved reasonable success and from that point on generally sold “good products”. With one nearly fatal exception.
Those first 10 years we had overall company revenue of –
Can we just do products?
Test Eq Sales
Rev C Modules
CATV Ret Path
CD Laser Disaster
The company had major life threatening crises every couple of years. The largest one was when we had started our product ramp using CD Lasers from Rohm in Japan, the world’s largest supplier at that time of CD lasers and yet we received product unacceptable for communications purposes. That year NEC and Newbridge both shipped us back nearly 1/3 of all product we had shipped to them for refund.
We were eventually able to save this key business by being the first adopter of VCSEL lasers and now we are the largest maker and supplier of communications grade VCSEL devices in the world!
The other crisis occurred as we were preparing to go public. Around 1993 we had engaged with Methode Electronics to be our second source so that we could gain greater acceptance with large customers. But later we had a very substantial legal fight with them over intellectual property.
We had product crises nearly every year though. For example in 1995, our second best product line was in cable TV return path transmitters, which accounted for probably 25% of sales. One year later this went to zero because of an industry downturn and our customer taking this product in house.
Overall this time was one of interesting choices as well. Taking Jerry Rawls in as a partner and having him take on the public face of the company was certainly the best one. But using our own capital, not having VC funding and then transition to bank debt financing were also key.
The investment capital decisions turned out to be so very important because they allowed us to be market and technology patient. You see, we had our key products in production by early 1995. But there were looming 2 large problems. One was that we used CD lasers that would ultimately prove unreliable and impossible to deploy on a large scale and the other was that the Fibre Channel market growth did not start in earnest until 1997. Had we taken VC money in 1994 and tried to grow the company on a venture schedule we would have put out lots of bad product (we put out quite a bit anyway!!) and we would not have been able to accelerate Fibre Channel adoption.
By remaining privately funded we were able to wait on the big market until it was ready to run. And when we shipped bad product we were able to reason with one of the companies we hurt to the point where they worked with us through the transformation and we were able to survive the returns and even law suit that the other major customer put us through.
Around the time of Finisar’s IPO, someone asked me what as the company’s most memorable day in my recollection. I answered immediately that it was the day our bank no longer required Jerry’s and my personal guarantees on the company bank debt. That was the day that Finisar became “real”.
I retired from day-to-day work at Finisar in early 2006 but remain active on the board of directors. Today I spend substantial time working with small companies and try to share as many of the lessons of that time with them. The lessons of less money is better, always have customers and sales – even very early in a new business, find 1 or 2 good partners – are points so important to me.