Dr. Henry Samueli, co-founder of the Irvine-based Broadcom Corporation, discussed the reasons behind the company’s success Thursday, Feb. 26 at McDonnell Douglas Engineering Auditorium.
As part of the Entrepreneurship Seminar Series, the event was hosted by the Henry Samueli School of Engineering.
Founded by Samueli and Dr. Henry T. Nicholas III in the early 1990s, Broadcom Corporation is headquartered in University Research Park near the UC Irvine campus.
According to its Web site, Broadcom began its initial public offering (IPO) in 1998 since its founding in 1991 to become a full-fledged company in the NASDAQ listing (BRCM). A global leader in wired and wireless communication, mainly in the form of chips, the company made revenue of $4.66 billion in 2008.
According to Samueli, the military, which was Broadcom’s major client during the company’s startup days, provided an advantage and paved the way for later success.
“We ended up with a good two-year lead over the competition, and that’s what launched us into being a major, successful company,” Samueli said.
In the field of broadband communications technology, a key element of initial success for Samueli’s Broadcom was contracts with major companies, such as Intel.
Gradual expansion into different fields is another element of Broadcom, which began with digital television, followed by enterprise networking and wireless communications for the broadband communications market.
According to Samueli, a successful entrepreneur has to have good technology.
Another crucial element to success is timing in regards to market conditions.
“If you’re too early to a market, it can be very dangerous,” Samueli said. “If you’re too late, you’ll know real quick and you’ll be out of business very quickly.”
During the question and answer session, an audience member asked if Congress’ stimulus act regarding expansion of broadband networks is a positive thing.
“Broadband stimulus is not only good for companies like Broadcom, [but also] good for the economy,” Samueli said.
“We never ever dreamed it would become what it is today,” Samueli continued. “[However] you [need] at least a reasonable vision that you are headed in the right direction.”
Business partnerships are key to entrepreneurial success for some companies, especially during start-up phases, in which manufacturing incurs high expenses.
An audience member asked if both luck and risk were necessary components of Broadcom’s growth.
Samueli replied, “[Willingness] to take risk and fail is the minimum necessary to start a company. To be successful, it takes a lot of luck. [There are] things that are totally out of your control.”
However, by spending money wisely and maintaining rigidity, Broadcom never faced major start-up risks. For example, the company never exceeded spending laid out in the terms of contracts. Samueli also hired many of his UCLA graduate students as part-time employees, some who became full-time staff after graduation, to ensure slow, careful, relatively low risk growth.
Regardless, being small is always the biggest obstacle when competing against larger, well-established companies.
“The biggest challenge that a start-up has is credibility that can really deliver the product [that’s] reliable and [can be manufactured],” Samueli said.
The company has held up relatively strong through the current economic crisis as well.
“It affected us to a lesser extent than our peers in the [semi-conductor] industry. We have slowed down just like everybody else,” Samueli said. “[However], we have no debt.”
The company’s location also contributes to its progress, which Samueli addressed.
“[Orange County] was a growing community, close to UCLA and UCI, the traffic was much better … in retrospect, it was the best decision we ever made,” Samueli said.
Josue Alfaro, a fourth-year physics major, said, “I was actually very surprised by how basic the process was and how much it depends on common sense.”
As Broadcom has shown Samueli’s entrepreneurial growth and spirit, his philanthropy and outside interests have garnered equivalent success. Dr. Henry and Susan Samueli support non-profit organizations. Their philanthropy, which helps education, health, Jewish culture and values, youth services, and human security, left a mark at UCI and UCLA’s engineering schools.
Since 2005, they have also owned the National Hockey League team Anaheim Ducks, sold by the Walt Disney Company at $70 million. The team won the 2007 Stanley Cup, and according to Forbes’ 2008 NHL team valuation report, the Anaheim Ducks are in 16th place with a team value of $202 million.
Despite Samueli’s entrepreneurship at Broadcom, he has been suspended indefinitely by the NHL in regards to the Ducks’ operations, now helmed by Michael Schulman. This is due to his lawsuit dealing with illegal backdating of stock options last year. Additionally he stepped down from his board position at Broadcom.