THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : THE BOTTOM LINE : Saplings, Not Mighty Oaks : Adrenaline of a Fresh Start, Unique Sense of Possibilities Are Driving Forces in State’s Economy
Here, ranked by profits, sales, market value, growth and productivity, are the top companies in California. But keep in mind that what you see here is not a monument graven in stone. Rather it’s a snapshot at a moment in time of dynamic businesses, and a scorecard for how they’re doing at present in a competitive world.
It’s a benefit, of course, that they’re headquartered in California, the state with an economy totaling $600 billion in goods and services that ranks it with the world’s largest nations. But the benefit is more Marine boot camp than Easy Street: Because it’s so big, attractive, competitive and precarious, California is good training for the rigors of the world market. Which is fortunate, because one way or another all the companies listed here are exposed to global competition.
Take Tandem Computers, which has fallen off The Times 100 this year after ranking 70th on last year’s list. Tandem is a typical California entrepreneurial company, founded 15 years ago by James Treybig, an escapee from big company ranks at Burroughs (now Unisys), on the basis of a new idea: a built-in backup computer to prevent bank and airline data systems from crashing.
The idea was and is a great success. And that sooner or later attracts big competitors. Last year, IBM and Digital Equipment announced that they were bringing out Tandem-like computers. So Tandem’s business pauses while customers appraise the competitors’ offerings, and the company’s profit ratios slip just enough to drop it from The Times 100.
Still Tandem can come back . It has been around long enough to have size--$1.3 billion in sales--and some stability. It is among the bigger, more stable companies on the Sales 100 list and the Market Value 100 list, where dramatic movement in position from year to year is rare. BankAmerica, in the midst of a big comeback, moved up dramatically on the market value list, while Genentech, with troubles over a new drug, moved down.
By contrast, many of The Times 100 are shooting stars, new companies with spectacular returns that probably won’t last. In years to come, they’ll either settle down to a more sustainable level of growth or drop off the list altogether--unless they’re truly unique like Sol Price’s Price Club. Price Co., the wonder retailer from San Diego, manages at $4 billion in sales and more than 12 years after its founding to still appear on all the lists: fastest growth, market value, top sales and top profit (Times 100) and, of course, most productive employees in retailing.
Price founded the company in 1976, after being forced out of Fed-Mart, which he also founded. And that’s another characteristic of business in California, traditionally a place where people come for a fresh start. The place has a sense of possibilities. That’s why The Times 100 is dominated by saplings rather than mighty oaks.
What gives it that spirit? Perhaps it began with Chaplin and Lasky, Goldwyn and Griffith in the movies, or with aviation pioneers like Allan Haines Lockheed and Donald Douglas who founded the state’s aerospace industry.
The modern era here can be traced to the so-called traitorous eight who founded what has become known as Silicon Valley. Characteristically, it was a rowdy beginning; it couldn’t have been planned. William Shockley, co-inventor of the transistor at Bell Labs, came back to Palo Alto where he had lived as a child, to found his own company Shockley Semiconductor Laboratories. But he and the bright engineers he hired didn’t get along, reports Dirk Hanson’s book “The New Alchemists.” So eight of them, including Robert Noyce, did something unthinkable. They left in a group, thereafter to be called the “traitorous eight,” to take their talents to the newly forming Fairchild Semiconductor, and still later some left Fairchild to found Intel.
That set a pattern, and gave people ideas. You could get financial backing to leave your employer and set up on your own, with equity in your own company. The pattern became a fever, so much so that in 1980 the same Intel that had been founded by corporate breakaways, sued one of its engineers for leaving and founding Seeq Technology. The suit was dropped but the engineer, Gordon A. Campbell, went on to found Chips & Technologies, this year’s top company on The Times 100 list--after being forced out of Seeq by his own venture capital backers.
Is it a joy being an entrepreneur? No it’s a rite of passage, says a veteran of many start-ups. “Before a company goes public, it thinks of product development and customers. But after, it can only think of making the quarterly figures. Typically, there will be no orders at the start of a quarter and customers will wait to bargain for better price at the close of a quarter, knowing you need the business. Stop gaining for a quarter, and Wall Street sells your stock. So it goes from quarter to quarter until a company gets to the size where it can be a little comfortable.”
Which is probably about the time its key people, inspired by the California possibilities, or competitors attracted by its success, will puncture its balloon.
EDITOR: Nicholas Cuccia
NEWS EDITOR: Jon D. Markman
ART DIRECTOR: David Puckett
ILLUSTRATIONS: Sparky LeBold
