Loyal sovereigns Featured

7:00pm EDT March 23, 2006
Ask someone how they built their billion-dollar company, and you will get answers including hard work, perseverance, good timing and innovative thinking.

Rarely does the list include “painful memories.” But for John Tu, CEO of Kingston Technology, it does.

Those memories are pretty high up on the list, and they’ve gone a long way toward making the multibillion-dollar computer hardware manufacturer one of the best companies in the country to work for.

“The reason is because we suffered a tragic, financial disaster,” says Tu.

They called it Black Monday — the stock market crash of 1987. Tu and Kingston co-founder David Sun lost nearly $6 million that day — all the money from the sale of a previous business.

But out of those dark days, Kingston was born, along with a heightened appreciation for the human spirit.

“All the people in the beginning that we recruited, we were just so appreciative that they came and worked for us,” says Tu. “We knew that maybe we’d be OK, but maybe we’d be on the street. So we really appreciated the little things.

“The (corporate) culture is influenced from (Black Monday) because our lives were so painful and hopeless. You think you’ll never recover from that.”

Kingston’s company values include terms such as “respect,” “loyalty,” and “fairness.” Also on the list is “Having fun ... working in the company of friends.”

That seems to be what really fuels Kingston — there is a driving range behind the headquarters, a company band that Tu participates in and the eye-popping $100 million in employee bonuses awarded back in 1996.

The company also has a “Superstar” program that recognizes employees for exemplary work. Nominated by their peers, winners have their biographies and photos posted throughout the company and have lunch with Tu and Sun.

“We just wanted to make sure that the people are being heard and respected,” says Tu. “We always want to think about decisions we’re making and how they may cause pain for other people.”

So far, the decisions have been good ones — in 2004, the company broke $2 billion in revenue. But that success hasn’t kept Tu and Sun bottled up in ivory towers. They don’t just have an open-door policy — they have a no-door policy, opting to work in cubicles among their employees and department heads.

“It’s a very open environment,” says Tu. “We all sit outside in the open and have these cubicles. David has his, and maybe 20 feet away, I have mine. We are very visible. The cubicles are not high, maybe 3 feet tall.”

Sun made the move before Tu, who had to be coaxed out of his fishbowl by his partner.

“One day I just moved my desk out there,” says Tu. “I was a little bit skeptical, but after a month, I never wanted to work in offices anymore.

“When you sit next to people, you break the barriers. There are no titles. The advantage is communication. You don’t have to go out of your office or call someone on the phone from your office. That’s horrible.”

Tu says that many of the things that create an enjoyable working environment at Kingston revolve around common sense. The driving range behind the company headquarters is a good example.

“In the beginning, we had maybe 10 or 15 people working,” says Tu. “And then, we usually were there until 8 or 9 in the evening. We didn’t go to lunch, we’d just eat in the office. So it was one of those things where you had to do something to have some fun.

“David [Sun] is a golfer. A golf nut. It was his idea. Whenever we were tired or wanted to stretch, we’d just go back there, drive the ball and feel totally relaxed before we went back to work. People have a lot of flexibility, and I think they like it. If you make life more flexible, people have more excitement.”

There need to be boundaries, but being too rigid a leader can backfire. There will always be someone who abuses a privilege but, says Tu, those people are few.

“Which one is more important — to have a good, comfortable working environment that is fun and lets people know it is their place, or to worry about a few and then have a very rigid culture?” Tu says. “The majority of people are good and conscientious and willing to put their best foot forward.”

While Tu and Sun do their share to make Kingston a good place to work, Tu says that employees create most of the environment through their loyalty.

“Loyalty is the culture,” says Tu. “I always go back to that. Some say money is the culture, but money is secondary. Loyalty is what you have when you feel the company is fair. You can trust the company. You can depend on the company when it’s a critical time or harsh time.

“Money is always a short-term thing. You can go to some other jobs and other places that will pay you more and more, but there will always be other things you are looking for.”

Tu says he’s not an expect at conducting interviews, but he has learned a few things about finding the right people to fit in, be productive and contribute to the culture at Kingston.

“The questions you ask aren’t important,” he says. “You should just sit down and talk. It doesn’t have to be about trick questions.”

Tu says he talks to candidates about life, family, even last night’s baseball game.

“The most important thing is having common sense,” says Tu. “That’s what you look for. You have to have it. Whether you’re a team player or very smart or a hard worker, it’s all a risk. You don’t know. You’ll find out, but if this person has very good common sense, then you most likely have a successful hire.”

By 1995, Kingston had made enough successful hires to reach $1.3 billion in sales. That prompted Tu and Sun to take out advertisements in the Wall Street Journal and Los Angeles Times saying, “Thanks A Billion!” and listing each employee name. They ran similar ads thanking their suppliers and distributors.

“That was not some well-planned marketing thing,” says Tu. “We figured we have to say something about it. And then maybe the best way to do this is ‘Thanks A Billion!’ in publications all over the world.”

The next year, after 80 percent of Kingston was acquired by Softbank Corp. of Japan for $1.5 billion, Tu and Sun allocated $100 million in employee bonuses.

Not surprisingly, two years later, Kingston began a run of five straight years as one of Fortune magazine’s 100 Best Companies to Work For.

Kingston has won similar recognition for its work environment from other publications, but Tu shies away from the publicity.

“I don’t want to discredit being listed,” says Tu. “But I think if we start becoming conscious of it — we have to be listed every year — maybe we are doing something that has less substance, and that’s not good.

“Just let it happen. If you do the right things, it will keep the value. The most important thing is that we feel we are doing things the right way.”

That thinking continues to work for Tu and Kingston Technology.

“We are all born equal,” says Tu. “We all have the same desires and pain and happiness. It’s all about coming to work together. Hopefully, what we have done means something to ourselves and other people. Hopefully, we have made some difference in some people’s lives. That’s the success.”

HOW TO REACH: Kingston Technology, www.kingston.com