Putting It All Together and Getting Financed
Case In Point: Sun Microsystems Launches
No established company rode higher on the Information Technology Wave than Santa Clara, CA-based Sun Microsystems, whose sales nearly doubled, to $18.3 billion, in the three fiscal years that ended in June 2001. Stanford University graduates Scott McNealy, Bill Joy, Andy Bechtolsheim, and Vinod Khosla got together in 1982 to start SUN (Stanford University Network) Microsystems.
Designed to be networked from the beginning, based on the fast growing Ethernet, and running on the UNIX operating system, the SUN workstation began as a solution to the bottlenecks in the Stanford computer science department. It was perfect for the growing networking demands of engineers, researchers, and scientists around the world. By 1983 Kleiner Perkins was an investor and the firm’s partner, John Doerr, recruited Eric Schmidt to head up software operations. Later that year they launched operations in Europe.
Khosla, the founding Chief Executive Officer, describes how he persuaded McNealy to join the start-up: “We used to say we own a great rocket ship but it doesn’t matter how high it goes if it doesn’t reach orbital velocity. If we’re going to fail, we’ll be a big splash. We’ll go high and shoot for the moon and be the biggest belly flop ever, but our goal is truly to get in orbit.”
Along the way to orbital velocity and an IPO in 1986, Sun did $8.9 million the first year, $39 million the second year, $115 million the third year, $210 million the fourth year and a “billion-something” the sixth year.
In just over 10 years, Sun reached an incredible milestone. They shipped one million systems and made their debut on the Fortune 500. They were the second-fastest computer company to ever reach $1 billion in annual sales and had the fastest growth rate ever for a computer company with a direct sales force.