than a billion bits per second.
to leap the competition in a single bound.
fast, it's fun, it's Finisar - and CEO Jerry Rawls
By Nancy Evans
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.
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.
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.
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.
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.”
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.”
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
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.
Billion Bits Per Second
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
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.
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.”
Products, Sustainable Growth
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.”
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.”
Matter of Principle
Corp. is committed to conducting
its business according to the following principles
quality products that offer exceptional value
to our customers.
our customers to make sure that our products
deliver the value and performance they expect.
the highest standards of ethical conduct
and integrity in all areas of our business
our company's activities.
all employees and co-workers with respect
our business for growth and profitability.
striving to improve every aspect of our company.
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.”
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.”
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.”
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.
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.”