Sunday, December 7, 2003

Lessons from a pioneer



By Rhonda Abrams
Gannett News Service

In 1986, when I got my very first client, a small sportswear company in need of a business plan, I asked my friend Eugene Kleiner for advice. Eugene took me to his office, sifted through stacks of business plans and selected about a dozen: "Go home and study these." A couple of weeks later, he sat down with me and told me what made a good business plan - and a good business.

Even then, of course, I knew what an extraordinary education I was getting. After all, before Eugene Kleiner, there was no silicon in Silicon Valley. Eugene and his seven colleagues comprised the "traitorous eight" - eight young men who broke away from Nobel Prize-winner William Shockley to form the first silicon semiconductor company, Fairchild Electronics, in 1957.

But as pioneering as their product, Eugene's group was radically changing the business world by creating a new kind of company. They had difficulty raising their start-up funds because the engineers themselves, not the investors, would get majority ownership. This was a radical departure from the way companies were funded on the East Coast.

Learning from the best

Over the years, much of Eugene's business wisdom became widely known as "Kleiner's Laws." I was fortunate to learn many lessons from him one-on-one.

Some of my favorites:

• Make sure the dog wants to eat the dog food. No matter how groundbreaking a new technology, how large a potential market, make certain customers actually want it.

• Build one business at a time. Most business plans are overly ambitious. Concentrate on one endeavor first.

• The time to take the tarts is when they're being passed. If an environment is right for funding, go for it.

• The problem with most companies is they don't know what business they're in.

• Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good.

• It's easier to get a piece of an existing market than to create a new one.

• It's difficult to see the picture when you're inside the frame.

• After learning some of the tricks of the trade, some people think they know the trade. He recognized that many venture capitalists thought they were experts when they had just a bit of knowledge.

Last regret

In November, Eugene Kleiner died at the age of 80. In the last weeks of his life, I asked Eugene if he had any regrets - any investments he wished he'd made, places he wished he'd visited, anything he'd missed. His answer surprised me: "I know I was lucky to get out (of Austria) myself, and I was young, but I wish I could have brought some of my friends too. I know it's not realistic, but I wished I could have saved them."

With all that Eugene had done, he never forgot the value of a single human life.

Rhonda Abrams is president of The Planning Shop, publishers of books and other tools for business plans. Register for Rhonda's free business planning newsletter at www.PlanningShop.com.



CFO in spotlight, off hot seat
LaSalle bets on rebound
Look Who's Talking: MARVIN LEWIS
Queen City rewind
Ex-CEO's mansion imperiled
Shutting down a business is tricky
Lessons from a pioneer
Buying wine here is a social occasion
Vineyard owners develop taste for business despite hardships
Business meetings
Tristate business notes