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 Success at the speed of light
Faster than a billion bits per second.
Able to leap the competition in a single bound.
It's fast, it's fun, it's Finisar - and CEO Jerry Rawls

By Nancy Evans

A key component of the Krannert at the Frontier campaign is a $37 million addition to the School's landscape. Rawls Hall will feature an open, airy look with plenty of breakout space for students and high technology classrooms.

You can hear it in his speech. You can see it in his resume. You can measure it in the performance of Finisar Corp. (NASDAQ: FNSR), the fiber optics communications company he co-founded in 1988. Jerry Rawls, MSIA ‘68, is a man in a hurry.

But his need for speed never supersedes the need for quality, reliability, a healthy bottom line, and work that’s enjoyable. That philosophy has paid off handsomely. Last November, Finisar’s initial public offering raised $149.3 million when the price of $19 per share shot to $86.88 by the close.

That success enabled Rawls, president, CEO, and director of Finisar, to provide a gift of $10 million to Krannert, the largest single gift in the school’s history. In recognition, Dean Richard A. Cosier recommended, and the Board of Trustees concurred, that the new management building be named Jerry S. Rawls Hall.

Broadened Horizons

A native of Houston, Rawls came to Krannert as a mechanical engineering graduate of Texas Tech. Summer jobs with Exxon, U.S. Steel, IBM, and Shell Oil made him question whether he wanted to be a design engineer. “People said business school could diversify your interests and opportunities, so it sounded like a logical move.” The need for speed played a role. “I wanted to complete my master’s in a year,” he explains, “before I became eligible to be drafted for Vietnam. Krannert was the best business school with a one-year program. I went there sight unseen, and everything since has proven I made the right choice.”  

Rawls recalls his Krannert experience: “That year broadened my horizons, changed my expectations and my outlook. It made me much more knowledgeable in the ways of business. After five years solving differential equations, suddenly I had to think about why a marketing plan or a product succeeds or fails or what kind of margins you have to generate to support a company. Krannert not only gave me information but a way to approach these problems. I had wonderful professors: Charlie Tritschler, Dan Schendel, Bill Lewellen, Bob Johnson, Dave Ewert, Phil Scaletta - I know I’m forgetting some. They challenged me, made me think, and helped give me the tools to compete in a fast-changing, competitive world.”

Rawls launched his career at Raychem in 1968 because it was “the smallest company that recruited me and I was intrigued by being able to accomplish a lot in a hurry. They were a rapidly growing materials science and engineering company selling to the electrical world,” he says.

As Raychem grew and prospered, so did Rawls - for 20 years. “I never thought about going someplace else because I kept getting promotions, raises, and stock options. It felt good and it was fun.” Then growth slowed, fun ended, and Rawls grew restless. “I was general manager of the Interconnections Systems Division with 500 people working for me. We were the fastest-growing, most-profitable division in the company, but I was forced to lay off people because the company had to pare back operations. It was just not pleasant.” That was the genesis of Finisar. Rawls had hired Frank Levinson, a brilliant physicist formerly with Bell Laboratories, as manager of the optical engineering group at Raychem. “Frank and I began to brainstorm and eventually said ‘we can do better on our own.’ “ And they have.

One Billion Bits Per Second

Rawls and Levinson started Finisar with their own money in 1988 and quickly staked out a niche in high-speed fiber optic data communications. “Our focus was developing fiber optic subsystems: unique combinations of fiber optics and software. We delivered our first major commercial products in the early ‘90s: the world’s first low-cost gigabit optic links. These links transmitted information at a gigabit (a billion bits) per second over multimode fiber for local area networks (LANs). Before we came along, those links cost a few thousand dollars per link. We lowered that cost to a few hundred dollars per link. Before we came along, the communication world thought the links we proposed were impossible to build. Yet our products became the basis for today’s Fibre Channel and Gigabit Ethernet standards for computer communication.”

Doing the impossible was just the first step. “Then you have to find uses for the technology and establish yourselves with some huge companies that can use the technology even though you’re a tiny little company. It’s one step at a time,” Rawls says. And when it’s your own money, you step carefully.

“With no outside investment, cash is a scarce resource, so you just don’t do lots of things,” Rawls explains. “You don’t commit to projects in advance of success. You have to balance revenue and expenditure. If you expand too fast, the ‘burn rate’ (the rate at which expenses exceed resources) can put you out of business.” Maintaining this delicate balance made Finisar profitable from the beginning, unlike many Silicon Valley startups, and transformed the company into a major player in fiber optic communications.

With his need for speed, it’s not surprising that Rawls saw the future in fiber optics - a field that redefines the word “fast.” “Everything we do is at a gigabit per second and faster,” he says. “Data communication is computers talking to switches, talking to servers, extracting information from servers, talking to local networks, connecting switches to local networks. Only a few years ago, data was transmitted on copper wire at 19.2 kilobits (1,000 bits per second). But as data speeds increased to megabits and gigabits, only fiber could transmit fast enough without losing the signal over distance.”

Best Products, Sustainable Growth

Finisar is based in Sunnyvale, Calif. “We do some special manufacturing operations here,” Rawls explains, “and a lot of testing, but much of the manufacturing is outsourced. One reason we are successful is that we build the best products in our industry. We compete against some very big companies, but we win over and over in competitive situations because our products perform measurably better. Our customers are selling enterprise-class computer systems that need to run continuously for stock markets, hospitals, banks, and e-commerce sites. Reliability is a big deal, so we torture-test our products before we ship them to customers.”

For the past six years, Finisar’s revenues have grown at a compound rate just over 90 percent a year. Rawls says that’s fast enough. “We’ve limited our growth to what we thought was manageable. Some people have said, ’You can grow faster if you spend more money, do more advertising, hire more salespeople . . .,’ but I say if you grow too fast, you’ll explode. Nearly doubling in size every year is stressful enough. Growing faster might be unpleasant. And we want to make this pleasant. If we’re not having fun, we’re doing the wrong thing.”

A Matter of Principle

Finisar Corp. is committed to   conducting its business according to the following principles

  1. Providing quality products that offer exceptional value to our customers.

  2. Supporting our customers to make sure that our products deliver the value and performance they expect.

  3. Maintaining the highest standards of ethical conduct and integrity in all areas of our business our company's activities.

  4. Treating all employees and co-workers with respect and dignity

  5. Managing our business for growth and profitability.

  6. Continually striving to improve every aspect of our company.
People First

Keeping the work enjoyable means recruiting bright, competent people with good interpersonal skills - 285 at last count and increasing every week. Treating co-workers with respect and dignity is an absolute at Finisar, one of the corporation’s guiding principles (see sidebar). Rawls has selfish reasons for this: “First, I believe you’re only as good as the people you surround yourself with. Second, I want to enjoy working here. Third, I want our employees to enjoy working here.”

Rawls holds monthly employee briefings to introduce new hires, report on results, and recommend ways to improve results. “At the very top are our customers and how we treat them and support them and deliver products that have value to them. We operate this business to grow and to be profitable because growth is part of the fun and profit is part of the health. We try to improve every facet of our operation.”

Where will Finisar be in five years? “We’ll continue to grow very fast,” Rawls predicts. “I think in five years we'll have more than $1 billion in revenue. We’ll probably have 5,000 to 10,000 employees in multiple operations around the U.S. and maybe overseas. Product lines will be different: we’ll sell a lot of the same kinds of fiber optic products we do today, but they will run faster and there will be more of them.”  

A tall order, but nothing new for this tall Texan, now 56 years old. He thinks big, stays focused, and works hard. “I don’t take a lot of time off, but when I do, I enjoy golf. I’m not a great golfer but I enjoy the sport.” Rawls has a son and a daughter. His son Steven, 22, just finished his sophomore year as an economics major at the University of Arizona, where daughter Amanda, 23, graduated this past spring with a major in speech and hearing.

Rawls, a Krannert Dean’s Advisory Council member, is matter-of-fact about his landmark gift to Krannert. “The School exceeded my expectations and I’m grateful for my experience there,” he says. "Krannert is at a critical juncture and needs help to maintain its world-class stature. Supporting Krannert is important because educating people well is a major part of what we need to do in this country, and they do it well. I’m pleased to be able to help.”

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