From rags to riches and back again

From rags to riches and back again

From rags to riches and back again

Ask Kingston Technology's CEO, John Tu, what the pivotal moment in his company's history was and he'll tell you it was the day it went bankrupt. From this financial disaster, the company rose to become a multibillion dollar computer hardware manufacturer.

Through tragedy and loss, Tu claims he has developed a keen sense of survival. And his story goes beyond company borders. His charitable works include funding the kids of Freedom Writers, an innovative teaching foundation which became the subject of a motion picture starring Hillary Swank. Tu's support of local inner city kids in Brazil, which saw him meet up with George W. Bush, also highlights his zest for social responsibility.

What was your first job?
John Tu (JT): I worked in a shipbuilding factory while doing my practical training in Germany. I was about 19 years old. I went to Germany to study engineering at college.

How did you make the leap into IT?
JT: I was really a bad engineer. I basically didn't like studying, but I had to do it because of family expectations. When I finished, I didn't want anything to do with technical things. So I tried everything along the way: the real estate business, the import/export business. In 1979/1980, I met my business partner, David Sun, through a mutual friend. We had a discussion about getting into business together. We decided he would design the hardware product for computers, and I would sell it.

What were the early days like?
JT: The market was very small and we had no experience. We started in my garage. I had absolutely no idea what I was selling or talking about. David had a daytime job, but I didn't. I had limited knowledge to sell this technology so David supported and helped me. He would give me a few buzzwords and pointers. In addition to selling, I did the secretarial work: I was the technical person and the receptionist. I would put on different voices as I transferred calls.

How has the company evolved?
JT: Gradually, we built a business and people started putting confidence in our product. The timing was right, and the technology we offered was ahead of its time. David quit his daytime job, and the business took off. We were small - the annual sell was $5 million - but we couldn't be more excited because we were just a garage operation which turned into a real business making profit. In 1985/1986, AST Research came knocking on our door and offered to buy us out. That was another shock for us: we never dreamed we'd receive a $6 million offer. We decided to sell, but were obligated to stay with them for a year.

What was the pivotal moment for the company?
JT: On October 17 1987, Black Monday, the stock market crashed. We lost approximately $6 million in 24 hours. We couldn't believe we could lose all that money in hours. We had trusted a stockbroker friend who had promised big returns. You can never predict something like this will happen.

How did you move on from this event and rebuild?
JT: We had no capital and didn't know how to rebuild the business. After about a week of indecision, we decided to start over again. We somehow had a few thousand dollars left, and we borrowed a few thousand from family - and that was the beginning of Kingston. We believe the misfortune brought us to where we are today: out of desperation, we had to do something big to survive. Then again, timing was everything: it was the right time for us to get into the PC business.

The memory add-on business was ready for take-off. The industry needed this kind of PC value-add. People were subject to the original manufacturer, which in those days was IBM and Compaq. They were the dominant players and there wasn't much choice in the market. We found out there was room for a small guy to come in and offer flexibility, service and a better price.

What's the next big thing for the memory market?
JT: On the desktop and server front, it's about new memory hungry applications, consumer demand for the simultaneous download of video, music and imagery, and gamer requirements for higher performance. This will be met with the latest installment of RAM - DDR3 memory. We need to prepare for the digital lifestyle. As long as you go digital, small and compact and need faster speeds, Flash is the only answer. Mobile convergence is set to evolve over the next year.

What's the main objective for Kingston this year?
JT: We will focus on what we do best: producing memory and Flash, working with our partners and distributors, and offering service.

How strong is local business?
JT: We've been in Australia for 20 years. Today [business] is not as good as we hoped. But one thing is clear: we are there through and through. We are looked at as a foreign company and are disadvantaged. Our local support is good, so we have overcome that issue. I'm proud of the fact we've been in Australia since the beginning, we're still there, and we're putting more localised services in place.

What do you do outside of work?
JT: Drumming. I play in a band called JT and the California Dreamin' Band. We play every Tuesday night for the Kingston community at company headquarters. We donate our time and talent to the charity cause - playing for schools and hospitals.

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