|This article is from the Sunday, September 3, 2000 edition of the Eau Claire Leader-Telegram newspaper, in Eau Claire, Wisconsin.|
Cashing in the chips
A Chippewa Valley company is enjoying Silicon Valley-style success by keeping its employees and clients happy.
By Michael Klein
One room at Silicon Logic Engineering's Eau Claire building is packed with computer equipment, which is used by SLE employers to design some of the world's most advanced computer chips.
The room next door contains only a Ping-Pong table, used by SLE employees to goof around.
The two rooms illustrate the formula successfully used by SLE's six partners when they founded the company four years ago: Develop a top-notch engineering team and make it fun for them to come to work.
"I'd put this team against anyone's anywhere in the world," said Jeff West, one of the founding partners. "What's sitting here in Eau Claire is a rare thing these days."
In a time of rapid employee turnover among high-technology companies, no one hired at SLE has left the firm.
"I tell that to vice presidents of engineering companies in Silicon Valley, and they can't believe it," West said.
SLE has grown rapidly since it was founded in 1996, with 45 employees in Eau Claire and a new branch in Cedar Rapids, Iowa, that should have a dozen employees by year's end.
Last summer SLE moved into a 12,000-square-foot section of the new Riverview Plaza on the Eau Claire River, with plans to expand into another 5,000-square-foot section this fall, West said. The company already has started looking at options to expand in Eau Claire beyond that.
"We expected to grow to this size, but not quite this soon," said Dan Hendrickson, a partner in SLE.
SLE was founded by six former Cray Research employees -- West, Hendrickson, Bob Solberg, John Schomburg, Steve Phillips and Mike Berry.
Before launching the company, West found that none of the 200 chip design centers in the United States could design chips the size and speed of those made at Cray, a leading supercomputer maker. SLE targeted that market, aiming to make itself the "Mercedes" of the industry, West said.
SLE also anticipated the explosive growth in outsourcing, in which companies hire specialty firms to perform tasks outside their expertise, West said.
SLE clients, which include IBM, Motorola, Hughes Aerospace, SGI and Cray, hire the company to design a chip to their specifications; a foundry then builds the chip.
A majority of SLE's customers make networking computers, which are in demand because of the Internet's growth. Such computers require large bandwidth and powerful chips, West said, and big chips are SLE's specialty -- it's designing one with 100 million transistors.
Early on, SLE had to beg for contracts from companies that never had heard of it, and it took some unattractive jobs, West said. Now that companies have come to know SLE and its capabilities, the company is being offered more work than it can handle and has turned down some projects, West said.
Three separate customers have offered SLE contracts that would take the work of all its employees, but SLE doesn't want to put all its eggs in one basket, West said.
Bristol, England, computer maker Infineon Technologies hired SLE to perform some work when it didn't have enough resources for the job and was so impressed that it made SLE its first choice when seeking outside help, said Glenn Farrall of Infineon.
"Often times you have to make do with 'good enough' with contractors or subcontractors," Farrall said. "Their work was as good as we would have liked to produce ourselves, and because of their experience in the field, delivered in less time than we would have taken ourselves."
SLE has yet to miss a deadline or have a "respin," or remake because of a design flaw, West said.
The company even won a quarter-million-dollar bonus from one customer for finishing a project quickly. The money was split among employees, with each getting almost $10,000.
Many of SLE's employees got a head start in designing complex computer chips at Cray, a long-time leading supercomputer maker. There they learned to be disciplined in their methodology because Cray's computers were so advanced, West said. Now that other computers have grown in complexity, the former Cray designers find their expertise to be invaluable.
Because SLE values its employees' expertise, the company offers perks that may be the rule in the Silicon Valley but are unusual in the Chippewa Valley. They include:
n The atmosphere. SLE's building was designed so every employee has a window office, with the interior space used for conference rooms and break rooms. In addition to the Ping-Pong table room, SLE also has a large break room with comfortable couches, a refrigerator and the ambience of a basement rec room.
n The fun. The company buys lunch for all employees each Friday, and they eat together in the conference room. In addition, the company takes employees and their families on an outing once a year -- this year it's for a ride on a riverboat in La Crosse.
n The money. The company offers a profit-sharing plan, with each employee usually getting about an annual bonus of $10,000 to $12,000, and intends to start an employee stock option plan.
While most early SLE employees came from Cray and other local companies, the last 12 to 15 were recruited from other regions of the country, West said. Most were former Midwesterners hoping to return.
But the company's recruiting has run into a wall in Eau Claire, partly because there's no electrical engineering school nearby, so it's opening the branch in Cedar Rapids, West said.
"We can't grow fast enough in Eau Claire -- we spent a lot of money trying to recruit," he said.
SLE hopes to open a third branch in another Midwestern city, and in five years it hopes to have 100 employees in each of the three locations, West said.
"We're getting to the point where we have a chance to be one of the real players in the industry," West said.
To that end, SLE recently hired a controller, a public relations expert and a vice president to arrange strategic alliances. It's also switching from a partnership to a corporation Jan. 1, 2001.
Farrall, of Infineon Technologies, said SLE has a strong future.
"In the current industry environment, even poor-quality contractors are getting re-employed, but the reputation gets around," he said. "SLE is probably in the luxury position of being able to pick and choose the work that makes the most sense for their business ambitions and will execute well on it."
SLE has avoided debt so far, but a portion of the company may be sold to an investor next year to raise cash for growth, West said. Company executives also are considering selling stock in an initial public offering in two or three years.
But SLE plans to remain in Eau Claire, with branches in the Midwest, because of the steadfast workforce, West said.
"People live here because they like to live here," West said. "There isn't anyone (at SLE) who couldn't leave here and go to the Silicon Valley with a 20 to 40 percent pay raise."
The number of high-technology companies in the Chippewa Valley employing engineers has grown, he said, citing Cray, SGI and W.L. Gore.
"The Chippewa Valley has a lot more options for engineers than just four years ago," he said. "That's good news for us as a whole."
Klein can be reached at 833-9204, (800) 236-7077 or email@example.com.