Start. Succeed (or Not). Repeat.
Mid-sized and rounded by his successes, Kamran Elahian comes across as jolly, even cherubic. And Elahian has much to be happy about, despite the lingering high-tech doldrums that have complicated his life as a Silicon Valley entrepreneur. He has launched or co-founded 10 companies and a capital investment firm, and they’ve made him a multimillionaire. He owns two Ferraris--a splurge to mark the successful stock offerings of two of his companies--and he carries around a handful of flashy tech toys, such as the credit-card-sized digital camera he picked up in Japan last year.
Elahian seems a typically ambitious Silicon Valley player, with all the style and trappings of fast money. And, like most operators in this sector, he has certainly had his share of highs and lows: The first two companies he formed, in the ‘80s, quickly hit the jackpot for investors, but the third flopped so badly that Elahian was fired ignominiously by his own hand-picked board of directors. No matter. Elahian picked up and went on to his next venture. Such is the life for serial entrepreneurs, who live for the novelty of establishing a company and bringing a new service to market, not for the challenge of keeping a business growing year after year.
For the record:
12:00 a.m. April 6, 2003 For The Record
Los Angeles Times Tuesday March 11, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 29 words Type of Material: Correction
Photographer’s name -- In a photo credit for the Special Silicon Valley issue of Sunday’s Los Angeles Times Magazine, the name of photographer Caroline Schiff was misspelled as Carolyn.
For The Record
Los Angeles Times Sunday April 06, 2003 Home Edition Los Angeles Times Magazine Part I Page 4 Lat Magazine Desk 0 inches; 21 words Type of Material: Correction
In a photo credit for the Special Silicon Valley Issue (March 9), the name of Caroline Schiff was misspelled as Carolyn.
But along the way, Elahian, a 48-year-old Iranian immigrant, turned into a different kind of entrepreneur, one with a mission that blends profit with social progress. Schools Online, the foundation Elahian started in 1996, has helped provide computers and establish Internet connections in more than 6,500 schools in 35 countries, he says. And his Global Catalyst Foundation, begun in 2000, is building schools in Afghanistan, community Internet centers in Tanzanian refugee camps, and information-technology training programs in Guatemala, among other projects.
Sitting in a sparely furnished conference room at Actelis Networks, a Fremont telecommunications start-up whose board Elahian chairs, he talks with obvious excitement about another new Silicon Valley company that he chairs, UltraDots. The company is developing materials whose physical and chemical properties can be manipulated electronically, a few hundred molecules at a time. One potential use, he says, is a treated exterior paint that can turn a house into “one big solar panel.”
“Many of the poorest countries in the world have the most sunshine,” Elahian says. “If you want to bring them a digital equalizer, the first element is electricity. The second element is bandwidth. They have the brains.”
Elahian found the inspiration for this kind of work in the wake of the meltdown of his third company. Spending almost a year licking his wounds and traveling the globe, he gained a new perspective. “It started to dawn on me that maybe, maybe that should be my mission in life,” he recollects, “to find a way to get people to see each other as human beings and have compassion for each other and have tolerance or celebrate their diversity, rather than beating the hell out of each other. And that became kind of my religion.”
Elahian was a 27-year-old computer programmer at Hewlett-Packard Co. in Palo Alto when the epiphany came that transformed him from code scribbler into company builder. After developing a program in 1981 to help electrical engineers design microchips, Elahian grew curious about the chips themselves. One day he heard about new courses at nearby Stanford University that supposedly could turn any software engineer into a chip maker.
For several weeks he split his time between HP and Stanford, working during the day and taking classes at night. Before long he’d designed a chip, sent it to a fabricating plant, and received the first model. It didn’t work. Distressed, Elahian went back to his professor and said, “You told me any software or system engineer can become a chip engineer. How come my chip doesn’t work?” And the professor replied, “I meant any good software or system engineer. You are a lousy engineer.”
Maybe so, but Elahian was very good at recognizing an opportunity. And he’d learned an essential lesson: chip designers needed software that gave them feedback about their creations before they left the drawing board. That insight led him to leave HP, with four other engineers in tow, and start CAE Systems Inc. in Santa Clara.
That sort of leap into the unknown is commonplace in Silicon Valley, where innovative corporations and prestigious universities provide a fertile breeding ground for entrepreneurs. Since William R. Hewlett and David Packard raised $538 in 1939 to launch what is now the world’s leading manufacturer of computers and printers, an elaborate support system for start-ups has emerged in Silicon Valley. There are lenders, venture-capital firms and individual “angel investors” who bankroll fledgling companies, as well as landlords and leasing companies that provide the space and equipment.
“All these people understand start-ups, and the community is very supportive,” says Irwin Federman, a general partner at U.S. Venture Partners in Menlo Park. “There is a life cycle here with a complete infrastructure. Replicating that entire system anywhere else is going to take roughly the same amount of time it took to do it here. The system begets entrepreneurs, and entrepreneurs perpetuate the system. It’s just a good cycle.”
Many new ventures never raise the money needed to get to market, and most of the ones that do eventually land with a thud. But Silicon Valley has an unusual tolerance for crash landings, stemming from the widespread belief that failure is a fabulous teacher.
As it happens, Elahian’s first effort paid off handsomely for investors. Tektronix Inc. gobbled up CAE Systems less than three years after it was launched, paying investors $75 million. Before the Tektronix deal was sealed, however, Elahian had already moved on to his second start-up, Cirrus Logic Inc., taking another stab at remaking the chip industry. The pattern would be repeated over and over again, until he was starting companies faster than he could leave them. “I went from serial entrepreneurship to parallel entrepreneurship,” he says, chuckling.
Some of these companies were clear successes. Most are still works in progress, surviving but buffeted by the lingering slump in the high-tech industry. The exception is Momenta, which was then one of the biggest flops in Silicon Valley history.
While some entrepreneurs are empire builders who devote the bulk of their careers to running the company they founded, many others are “early stage” operators like Elahian, seemingly flitting from one venture to another. It’s not that Elahian is fickle or flighty--the man’s been married to the same woman, Zohre Elahian, for 26 years, and has lived in the same four-bedroom home for two decades. But he has the restlessness that comes with great ambition, and he chafes at the thought of being restrained. That’s why he emigrated from Iran when he was 17.
“I always admired that the United States was billed as a country where you could move up and be free and speak your thoughts. The main reason I left Iran was that I could not speak my thoughts. Every time I would, I would get in trouble.” It also helped that several U.S. universities offered him admission. Three years after he arrived in the U.S. in 1972, Elahian had two bachelor of science degrees from the University of Utah, in computer science and math.
Hamid Nakhai, who has known Elahian since college, says the twin degrees typify his friend’s aggressive approach. “He wasn’t afraid of taking new challenges. And he wasn’t afraid to be overwhelmed by a lot of things,” says Nakhai, now an investment specialist for Wells Fargo in Salt Lake City. “He always looked at the big picture. He wasn’t a detail type of person, he was a visionary.” These qualities, Nakhai adds, are hallmarks of a successful entrepreneur.
“He doesn’t take optimism at face value, he doesn’t take pessimism at face value,” says Tuvia Barlev, who co-founded the telecommunications equipment firm Actelis Networks with Elahian and another partner. Elahian’s experience in weathering corporate troubles helped carry Actelis through two painful shifts in management and strategy, Barlev says, adding, “I doubt we would have reached this point without him.”
Actelis is one of nine companies and two nonprofit organizations for which Elahian serves as chairman of the board. Many of those companies are backed by a venture fund, Global Catalyst Partners, that Elahian co-founded in 1999, taking advantage of the multiple millions he made when three of his earlier companies--chip-makers Cirrus Logic, NeoMagic Corp. and Centillium Communications Inc.--first sold their stock to the public.
Cirrus helped pioneer the practice of contracting out its manufacturing. After it successfully went public in 1989, Elahian tried for his third winner in a row with Momenta, a computer maker that used a pen instead of a mouse to enter data. But the third go-around can be a dangerous one, cautions Lip-Bu Tan, chairman of Walden International, a venture capital firm in San Francisco. “A lot of entrepreneurs fail. They think they can walk on water.” And that’s what Elahian was thinking at Momenta, says Tan, who was on its board of directors. The company spent too much money too early and brought out a product before it was ready. On April 1, 1992, Elahian walked into the Momenta office in Mountain View to find the board holding an unscheduled meeting without him. “I thought this was an April Fools’ Day joke,” he says, still sounding incredulous. “They told me, ‘No, you are fired.’ This was a big shock to me. It is really tough to see your baby being taken away from you.” Within six months, Momenta was bankrupt and on its way to liquidation. And Elahian was loitering in early retirement, sidelined by an uncharacteristic bout of apathy. “I was really looking for a vision,” he recalls, “for something meaningful.”
In Elahian’s view, entrepreneurs are typically driven by one of three motivating forces: an idea for a product that could have a profound impact, the desire to become wealthy, or an urge for recognition and credit. But he wasn’t feeling any of that--there was no product he was dying to launch, he didn’t need money, and being famous had lost its appeal.
Elahian traveled, studying a variety of cultures, languages and religions. “Every country I went to, I found out people all believed they are the best. And every religion says that they are the best,” he relates, his voice rising in pitch to underline the perceived hubris. “And, you know, all of these are kind of mutually exclusive. The more exposure I got to these things, I found out that I had a tough time attaching a label to myself and calling myself a person of this country or that country or whatever. And the more languages I learned, the more things I learned, I saw more and more similarities. It was difficult for me to see myself as anything but a human being.”
This led Elahian to wonder how much better the world would be if more people had the chance to share what he had experienced. With that in mind, Elahian set three governing principles for his life. Instead of haphazardly starting companies, he’d focus on creating ventures with technologies that allow people to communicate better and be more productive while mobile, encouraging them to travel more. His companies would be global, developing products that could be used in different countries. And he would devote part of his fortune to improving education, reducing poverty and promoting tolerance around the world.
This strategy has helped Elahian avoid some of the investment fads that swept through Silicon Valley, although the tech-industry doldrums have slashed the values of his publicly traded companies and delayed returns in his privately held ones. His post-Momenta ventures have focused on building technology that supports mobile computing, high-speed Internet services, Internet-enabled entertainment devices and collaboration in far-flung work forces. More important, the new approach has renewed Elahian’s drive to make a difference through his foundations and his start-ups.
Late last year Elahian received an e-mail that illustrates the impact of Global Catalyst’s work. “I’m not able to tell you how we are happy to get connection to the Internet!” Leon Ntiramdekura, a Burundi refugee, wrote from the Mtabila camp in Tanzania. “Before I was connected to the Internet I felt lost. But now that I am connected, I feel saved. The world will not forget us now, because we, the refugees, can speak to the outside.”
The point of these efforts, in addition to improving education and health, is to spread some of the entrepreneurial skills that Elahian developed in Silicon Valley. “We always push them to come up with ways to be self-sustainable,” he says of the foundations’ recipients. For example, three of the schools in India that have received money for computers and Internet connections have been using the machines after hours to generate revenue, which they use to buy more computers.
“We shouldn’t get them to be there waiting for us to go and give them money every year,” Elahian says. “That’s horrible. We should look at them as people who need tools, and give them the tools so they can move up.”