Belkin Components chief constantly looks to future – The 100 Fastest Growing Private Companies – Chet Pipkin – Company Profile
Heading to his next impromptu meeting, Chet Pipkin passes through a downstairs hallway, where a photograph of his parents’ garage hangs prominently on the wall. The garage is a standard beige stucco box, with a battered basketball hoop affixed to it. The photograph is one in a series of images that show. in succession, the various offices that Belkin Components has occupied over the years.
“We don’t care about that picture,” said Pipkin, pointing to the garage shot. “It’s not what’s important to us. We’re interested in the future.” He gestures toward the empty wall space extending beyond the photo of Belkin’s current facilities. “We’re interested in what’s over there.”
As president of one of L.A.’s fastest growing private companies, Belkin recognizes his charge – to keep growing and not get sidetracked by the effects of growth. To many L.A. entrepreneurs, it probably sounds all too familiar: always look ahead, watch out for expansion opportunities and move quickly to facilitate that expansion.
“No matter how successful we are, we immediately discount it. We are intensely focused on the next minute, day, month, year,” he said. “We’re paranoid about the changes taking place in the marketplace. We’re always intensely focused on the future.”
Belkin’s success is pretty well established. For four consecutive years, it’s been on the Business Journal’s list of 100 fastest growing private companies – a feat unmatched by any other company. Revenues have grown from $42.8 million in 1995 to $100.8 million in 1997, providing a growth rate of 136 percent and placing it 28th on this year’s list.
Revenues for 1998 are expected to run about $180 million – and Pipkin sees no end to the growth.
“By the end of 1999, we’re expecting gross sales of around $250 million,” he said. “We’re on track to be a billion-dollar company in the next six or seven years.”
He pulls out a legal pad, and begins sketching plans to make his $180 million business nearly double in size by the end of fiscal 1999.
Cable assemblies, the thick computer connective wiring sold by such retailers as CompUSA and Office Depot, represent about half of all sales and still provide the greatest dollar growth per year. But sales of Belkin’s other products lines, such as surge protectors, switchboxes and cellular phone accessories, are growing at a faster rate in percentage terms.
Pipkin’s jottings provide a blueprint for a planning meeting later in the day. “We’re doubling in size every two years. That creates enormous pressure on the organizational structure,” he said. “We need to figure out what we need to do to achieve that, and how to get a structure in place to handle it.”
Pipkin’s daily routine is all about planning for growth – how to create it and how to accommodate it. Taking a reporter through part of the process, Pipkin, a tall 38-year-old man with thinning red hair, wandered Belkin’s 250,000-square-foot Compton headquarters and warehouse, spending time with virtually every department.
His first stop was to the office of Eric Tong, director of marketing, for an update on preparations for Comdex, a major computer wade show being held in Las Vegas this week.
The company recently launched a line of products for the iMac computer, including a blue translucent surge protector, and connector cables that make old printers compatible with the new computers. These lines will be featured prominently in Belkin’s booth.
“If you asked five people what our objectives are for Comdex, would they give the same answer?” Pipkin quizzed Tong. “We want to reinforce that we are the biggest player in the market, that we are the dominant player.”
Belkin’s prime directive is to be the best supplier of product lines in the marketplace, and the most dominant. The strategy is to enter markets where there is a clear need, and where Belkin can be the main supplier to the industry. “We focus on niche markets, around $100 million or less, (in annual sales), that are small enough so that we’ll be the dominant supplier,” Pipkin said.
Belkin controls 51 percent of the U.S. aftermarket for desktop computer cables, according to a 1996 study by Venture Development, a Massachusetts-based market research firm. The entire market generates $81 million in annual sales.
In switchboxes – only a $21 million market – Belkin has a 40 percent shale, according to the 1996 study. That share has since grown to 60 percent.
Pipkin’s strategy of looking for needy niche markets was hatched in the early ’80s, when he was in college at UCLA and working part-time at a Hawthorne company that made standard connector parts for military electronics.
Pipkin viewed the company as ineptly run, and this perception led to something of an epiphany. “I always had thought of business as something you couldn’t just go do,” he said. “You needed years of experience and years of business school, You couldn’t just stumble into it.”
He quickly realized there was nothing particularly complicated about the business. “The organization was doing things very wrong, and doing well, making money nonetheless,” he said. “My concept changed. Think how successful you could be if you did things right!”
Meanwhile, Pipkin had been scouting around for a business to start. The nascent personal computer market seemed like the perfect arena.
Not that he cared much about computers. “I didn’t before, and I don’t really care about them now,” he said. “They’re a useful tool, but they don’t do anything for me. I could just as easily be selling any other product on the face of the earth.”
Pipkin followed his business instincts. He started going to computer dealers and asking what they used cable assemblies for and whether they were happy with the source of their supply. As it turned out, some stores were so unhappy with the available product that they built the necessary cables themselves. Other dealers complained of high prices and long lead times.
“College was biting it right about then,” recalled Pipkin, who eventually dropped out of UCLA and never bothered to finish his degree program.
Pipkin started building cables on his parents’ dining room table in Hawthorne, and then in their garage, with the help of his younger brother and his friends. A young woman he was dating flew down from San Francisco on weekends and helped out. She eventually became his wife, and they now have seven children – six boys and an adopted girl.
In 1982, Pipkin rented office space. He officially founded the business the following year, generating revenues of $178,000 that first year.
The same precepts that led him to create the business in college continue to drive his expansion strategy. Pipkin is still looking for areas where there is a strong demand and poor supply, and where his product could dominate the market.
Now, Pipkin spends much of his day keeping ahead of his fast-moving company.
While taking a reporter through his rounds, Pipkin headed over to the order fulfillment division. Orders were not being filled as quickly as he wanted, and Pipkin was interested in finding out why. The answer, as it turned out, was that the blister packaging line (the machines that automatically package the cables) needed to be upgraded to handle a larger capacity.
Why hadn’t Pipkin been informed of this need earlier? Because the workers there had concluded the increase in demand would only be temporary.
While some companies may be reluctant to make such investments in capital equipment, Pipkin says he insists on them.
“Whereas at a lot of companies, people at the department level spend a lot of unproductive time convincing management that they need to buy something, here, the executive management team is pushing to invest in the future,” he said.
COPYRIGHT 1998 CBJ, L.P.
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