Lessons for CleanTech Entrepreneurs: Raychem CEO Paul Cook (Part 1)
Check other articles in the series...Paul Cook is a legend. I had the great honor to spend some time with Paul over the last few weeks, understanding the story of how he built Raychem from scratch.
Today, Silicon Valley has embarked on yet another evolution in its history, and has been consistently committing huge chunks of capital on a genre of technology companies and entrepreneurs that have popularly come to be known as Cleantech, and encompasses clean energy, water, and other such segments.
My core thesis is that Raychem was a company that succeeded in building an Industrial powerhouse based on innovative technology, and can be a great example for these Cleantech companies and their investors to learn from.
I did an earlier story on ERI, a water desalination company, which took 21 years to build, and the company made numerous mistakes, almost went out of business several times, and was essentially built by people who had no experience building an Industrial business. I spoke with VCs who acknowledge that the traditional model of a venture fund doesn’t allow investing in businesses that take 21 years to build. Or even 15 years for that matter!
With this backdrop, let us travel down the memory lane with Paul Cook, the cofounder and CEO of Raychem, who can tell us a few things about how to build an innovation-driven Industrial company.
This segment is part 1 in a 12 part series Segment 2 →
Jump to part: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12
While working @ Raychem from the early ’70’s until the TYCO’s acquisition in 1999 I was very lucky to work for Paul in a variety of capacities. Paul’s comments accurately reflect the unique strategy & corporate culture that he, and his close advisers created.
Several things that have always struck me about the unique success of Raychem are:
1) The dedication to REALLY understanding what the customer needed (often before they knew) and knowing what it is worth to the customer.
The large sales expenses (direct salesmen/women at key accounts that were both technically & business trained) was/is unprecedented.
Pricing the products to their value allowed Raychem to both fund the necessary R&D & Sales/Mktg and only work on projects that had true value to the customer.
2) Hiring (& training) only the best people.
Smart people could
disagree “agreeably†and the end result was a better thought through solution
Integrity in actions allowed people to trust the word & support of others
Hiring mistakes were (almost always) corrected immediately (The slogan was: “Hire slowly, fire (once you recognized the mistake) quicklyâ€)
In the end the success of any organization is all about the people!
3) Proprietary/Differentiated Products:
We could have often grown sales faster by selling products with little or no proprietary protection.
We all were tempted to sell a quick fix that could be easily copied (& sometimes we did “fall to the dark side!â€)
However, it was soon clear that the extra effort to make our solution hard to copy created sustainable sales & allowed us to search for new opportunities without the distraction of worrying too much about keeping previous sales. Obviously this is all relative, but we did have a “sustainable†annuity of “spec’d in†sales that provided a good basis going forward. The fact that TYCO has slashed R&D & Sales/Mkt’g and still grows @ ~ 10% is a real tribute to the earlier foundation.
However, we shouldn’t lose sight of the fact that Raychem’s success was in the industrial & NOT the consumer marketplace. These rules are not as applicable there (some are & some aren’t).
All in all, those of us that had the good fortune to work at Raychem owe Paul a great debt for both our economic gain and the incredible education that we received!
Thanks again Paul!
[...] the field of Material Science and Industrial innovation. I did an interview with Paul called “Lessons for Cleantech Entrepreneurs” last year, which is worthwhile reading if you want to understand the journey that ERI has [...]