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

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