Bruce Fenton speaks with the Telegram and Gazette about EMC
Copyright New York Times Company Aug 1, 2004
HOPKINTON - In the spring of 1986, Richard J. Egan visited seven cities in 14 days to tell analysts and potential investors why shares of his company, EMC Corp., would be a good buy at its initial public offering.
His first stop was New York. A Wall Street analyst whom Mr. Egan declined to name asked a pointed question. "What is it that will cause EMC's demise?" the analyst asked, Mr. Egan recalled.
For the first and perhaps last time, Mr. Egan was at a loss for words about the company he'd founded with a Northeastern University classmate in 1979.
Now, 25 years later, he has an answer for that skeptical analyst, the one who doubted a company that saw its shares rise 32,000 percent during the 1990s.
"I never really thought about it," Mr. Egan said of a world without EMC. "And standing here today, I can't see that I ever will."
EMC turns 25 this month. In the worlds of manufacturing, insurance or law, the company would be an adolescent, just hitting its stride with a bright future ahead.
In the world of high technology, however, 25 years is a rare achievement, outpaced only by a few legendary companies, such as Microsoft Corp., Intel Corp. and the granddaddy of the tech world, IBM Corp.
When Mr. Egan founded EMC with Roger Marino, Jimmy Carter was president, the nuclear power plant accident at Three Mile Island, Pa., dominated the headlines, and the movie "Kramer vs. Kramer" had ignited a national debate about divorce and child custody.
E-mail was familiar to the engineers at nearby Digital Equipment Corp., but wouldn't find ubiquitous use for another 15 years or so. The phrase "dot-com" meant nothing, and mail-order catalogues were the only option for shoppers who didn't want to leave their homes.
Today, EMC ranks as one of the 10 most valuable information technology companies in the world, and the largest tech company headquartered in Massachusetts - whether ranked by employees, annual revenue or market capitalization. Ninety-percent of the world's Fortune 500 companies use EMC's software and equipment to store information digitally. The company is on pace to once again top $8 billion in annual sales. It employs more than 21,000 in every corner of the globe.
"We would characterize EMC as one of the real gazelle companies in the high-technology community and in Massachusetts," said Patrick J. Larkin, deputy director of the Massachusetts Technology Collaborative in Westboro.
During its 25 years, the company has weathered recessions, increased competition and downturns in spending on computer equipment, always emerging stronger, he said.
"To be at the top of their game for as long as they have, well, in economic development circles we spend our whole careers trying to find and nurture one company like EMC," said Mr. Larkin. "They are just a giant, not only in their commercial pursuits but as corporate citizens, as well."
The company's origins initially had little to do with technology. Mr. Egan and Mr. Marino started the business as a seller of office furniture and IT products made by other companies.
Later, the company shifted to selling memory upgrades for mini- computers. It wasn't until the late 1980s that EMC began to exclusively focus on making and selling advanced storage systems for minicomputers and mainframe computers. "EMC is a company that was founded on a mediocre business plan executed violently," said Steve Duplessie, senior analyst with the Enterprise Storage Group of Milford and an EMC employee from 1986 to 1988. "The idea was, `Let's sell somebody else's equipment, but with brilliant, violent execution.'"
EMC has long been known for hiring the best and the brightest salespeople, Mr. Duplessie said. That has been the key to its success.
"They are a machine," he said. "Sales run EMC, always have and always will. There have been plenty of innovative companies that didn't know how to sell - like Digital. But a great salesperson can always sell something."
Mr. Duplessie was part of EMC's sales team, but decided to leave when the company hit a rocky patch in the late '80s, he said.
"I knew they'd never make it, so I left," he said. "It was a brilliant move on my part. That year was the first time the company hit any kind of trouble, and all the `smart' people left, and the dummies stayed and got rich."
Today, Mr. Duplessie is a widely quoted storage equipment analyst who makes his living commenting and writing on the progress of his former employer and its competitors. He's an example of one of EMC's biggest contributions to the high-tech landscape in Massachusetts: former employees who have gone off to start or contribute to other technology companies.
Robert M. Dutkowsky, former president of EMC's Data General division, is now chief executive officer of Egenera Inc. in Marlboro. Michael S. Worhach, a former EMC vice president, is chief executive of Sepaton Inc. of Southboro. Michael A. Ruffolo, another former EMC vice president, later became chief operating officer of publicly-traded Akamai Technologies Inc. of Cambridge.
Mr. Marino has invested some of his EMC earnings in companies such as Adlex Inc. of Marlboro and CentrePath Inc. of Waltham.
Richard Egan's son, John R. Egan, left EMC in 1998 to create Egan Managed Capital, a venture capital firm that has invested millions in more than 25 technology companies, including Top Layer Networks of Westboro and HighGround Systems Inc. of Marlboro, which was acquired in 2001 by Sun Microsystems Inc. for $400 million in stock.
Stephen M. Rosa of Providence is one of those former EMC employees who got the entrepreneurial bug after leaving the company. He worked at EMC from 1987 to 1990 in the company's in-house advertising department. He left to start his own agency in Boston, which today is headquartered in Providence as Advertising Ventures Inc.
The company has spawned a large network of young, hard-charging businesspeople who keep in touch and have the financial resources to support each other's businesses, he said.
"We were a bunch of 22- and 23-year-olds out slaying giants," he said. "That gave you a lot of confidence, to get out in front of CEOs and compete with IBM. It was pretty intoxicating. EMC places great responsibility on you, and if you handle that well, you feel like you can do anything."
Products and people - those have been the foundations of EMC's growth, Richard Egan said. He has long lived by two mottos, he said: "Just do it," which he admits to borrowing from Nike, and, "It's the products, stupid."
At the same time, however, he said, "I've always known that it's about the people. We based our company on serving customers. We've never forgot they were the customers."
Of course, plenty of companies live by similar mantras, but EMC's employees seem to have embraced those ideas to an unusual degree.
At a recent meeting of more than 4,000 employees at the company's Westboro warehouse, the employees applauded like converts at an old- fashioned revival meeting as Mr. Egan and Chairman Michael C. Ruettgers walked down a center aisle toward an awaiting stage.
When Mr. Egan completed his comments by saying, "I love this company, and I love you all," people again burst into wild applause.
The company has not escaped the usual growing pains or the realities of modern business. In October 2001, after reporting a $945 million quarterly loss, its first loss since 1989, the company laid off 4,000 of its 23,000 employees worldwide, including about 1,300 in Massachusetts.
In March 2001, the company was on track for $12 billion in annual sales and Mr. Ruettgers was talking about hiring 10,000 new employees. A severe slowdown in technology spending that summer derailed those plans, and the company ended 2001 with $8.9 billion in sales. In 2002, sales fell to $5.44 billion, and only this year are they poised to return to the $8 billion level.
EMC's shares have followed those fortunes, reaching an all-time high of $100.98 on Sept. 20, 2000. More recently, those same shares have traded below $15.
"The company created great wealth for a lot of individuals," said Bruce A. Fenton, founder and president of Atlantic Financial Inc. of Westboro, a wealth-management company for individuals with assets over $100,000. "I would guess that EMC is probably the most-watched local stock. Many people have done very well with EMC - and unfortunately, many have not."
Despite those ups and downs, Mr. Egan's tenets permeate EMC today, just as they did more than 20 years ago, said Thomas P. Heiser, an EMC senior vice president.
Mr. Heiser joined the company as its 45th employee 20 years ago. At the time, EMC had just done $17 million in annual sales (versus more than $8 billion anticipated this year). He is one of only eight employees who have remained with EMC more than 20 years.
"The company is completely different, but the culture is the same," he said. "Dick always said hire good people and hold them accountable. EMC has changed its business model multiple times, but those ideas still hold true."
Business Reporter Jim Bodor can be reached at email@example.com.