Winning with engineering

National Instruments' cofounder James Truchard talks about working with engineers, how to form a successful technology company, Steve Jobs and Apple, and how to do for the embedded computing space what the PC did for the desktop.
By Petr Pohorský November 18, 2011

Dr. James Truchard, the CEO, president and cofounder of National Instruments.National Instruments celebrated the 10-year anniversary of the opening of its manufacturing facility in Hungary, on Friday, Oct. 7. Petr Pohorský, editor-in-chief for Control Engineering Česko, interviewed Dr. James Truchard, president, CEO, and cofounder of National Instruments.

I have been told that NI wants to hire new engineers…

The fact that we have continued hiring, while many other companies have not , is always a good sign. We’re taking a longer term view than most and because of this we’ve been able to invest heavily in R&D, so we have great opportunity in the marketplace, both in the test and measurement space and in the industrial embedded space. Our focus with industrial embedded is to offer an integrated platform that helps solve the more complex applications that normally would have used a custom design, like a DSP chip or a real-time DSP design. You can use NI LabVIEW system design software in NI CompactRIO hardware to build a system with a field programmable gate array (FPGA) that would have previously requireda custom design, and we’ve been very successful with this platform.

Some companies are just not hiring because they are implementing new economic efficiency measures. Do you believe hiring will happen?

We have made significant investments in hiring engineers throughout 2011, specifically in R&D and sales. We believe these investments serve a strategic long term strategy for our business. By serving scientists and engineers broadly, we can go where the new business is including smart mobile devices, wind turbines, and electric vehicles. We work with hardware-in-the-loop testing of electric systems, controllers, solar, and other alternative energy forms. These are all opportunities that countries are holistically investing in and we’re nimble enough to move where the investment is – that’s a key part of our success.. Additionally, we’re capitalizing on other opportunities such raw materials and natural gas, which are important for growth in China and emerging countries. It’ll be years before the supply catches up with the demand, all the way down to iron ore, which has risen substantially in cost. Guess who helps make the mining companies more efficient by adding efficiency to the designs of big cranes, shovels, and related machines. All these challenges in the general economy are opportunities for National Instruments. So, by being flexible enough to go to these technical applications, we can be much more diversified than others in this industry.

A couple of managers of automation companies in the Czech Republic told me they were fighting the economic depression by hiring new salespeople.  Is this true for you as well?

Well, of course, because our growth is often limited by our ability to serve the customer and provide information and sometimes computation examples. Hiring the appropriate sales people is an investment we have made that we believe gives us more capacity for realizing visions so that we’re nimble enough to find the businesses that are actually investing. Regardless of the recession, engineers are going to be out there working every day, and our job is to make them more efficient.

The Czech companies that got rid of engineers during the economic crisis find it difficult to keep up now that the economy is growing again. Did National Instruments avoid these problems? Did you downsize during the economic crisis?

Yes, we were able to avoid those challenges. No, we continued to grow the company from an employee base point of view, so we added a partner in R&D and in co-sales and as of September 2011 we have 6,130 employees worldwide. Here in Debrecen we performed a vast majority of our production, and we didn’t lay off any floor personnel because we believe in our long-term 100 year plan. There is still much work to get done. Though it may not have immediately returned revenue, we really focused on optimizing costs in the ’09 recession. As a result, we focused a greater proportion of our employees’ engineering performance in manufacturing towards optimization as opposed to volume. When we came out of the recession, this strategy enabled us to see a reduction in overall production costs and better close margins.

Ultimately, there’s plenty of productive work that can be done during an economic downturn and control is the key to successfully handling a recession. In the end, you need to stay profitable and ensure enough cash resources are available so that you don’t depend on an empty purse.

One of the economic trends in the last few years is that many companies have been hesitant to hire more people, so they focus on productivity instead. And productivity in the U.S. and Europe has been rising quite significantly through this time because most companies are just trying to get additional output with the same number of people. And this works to our favor because that’s what we do in the industrial embedded space. We help make operations more productive. It’s just like being productive on the PC. Productivity took a while, but ultimately it dramatically changed the number of systems people needed and the bookkeeping required as these processes were greatly improved through the productivity of the PC. We’re bringing a similar transition to the industrial embedded and control space as we increase the productivity. We have case studies where our customers, like the National Ignition Facility at Lawrence Livermore Lab, have benchmark traditional approaches with built-in systems and while using our technologies it takes them one-third of the labor compared to alternative tools. There is tremendous productivity improvement in the development phase and in running the machine to produce the customers’ products.

When you worked for U.T. Applied Research Laboratories, how did you get the idea to establish a new company?

Dr. James Truchard, the CEO, president and cofounder of National Instruments.

Well, I had been working at the research lab and I’d probably gone as high in the bureaucracy as I wanted to. I liked what I was doing, a great deal of autonomy, and had been thinking of ideas for products. Also, I had received my masters and PhD while working full-time, so I guess I was kind of a workaholic too. Starting a company gave me something to do in addition to the regular workday, which I really liked. It was frustrating to prepare a research report and make sure five people understood what it was about. I wanted to see more use from the technology that I was working with. Now supporting hundreds of thousands of customers, we can always find applications that we’re really excited about. For example, we’re involved in several big physics applications, including those seeking efficient fusion power generation. I visited one customer just this week. It’s very rewarding to me – seeing so many people use our technology. Also, it’s really satisfying to create tools that make it possible for people to be more productive

How did you find the right name for the company—National Instruments?

OK, well, it was a random process. We started by taking perturbations of our initials, and then we had some other ideas, such as Longhorn Digital. All of those got turned down. Then we made another list, and voted on these names, so in the end it was pretty random. We liked the name, but only at first, being just a general purpose interface bus (GPIB) supplier, the name seemed a little big. Over time, we grew into it and now it fits very well.

How important were your cofounders Jeff Kodosky and Bill Nowlin, with whom you started working?

My background was primarily in analog designs, though I learned digital design on the job. Jeff was the software programmer. Like me, he had been in physics and gravitated toward software and computer science. Bill Nowlin was an electrical engineer, trained for digital designs, and we were working at the research lab together. Jeff was the guy who could always figure out very difficult problems, which was important to help start the company. When we set out to create LabVIEW, I worked very closely with him to figure it out and it took us 2 years to complete. Over the years, Jeff has continued to innovate with LabVIEW, adding to what we’re ultimately trying to accomplish – equipping engineers and scientists with tools that accelerate productivity, innovation and discovery. Bill Nowlin and I designed some of our early digital boards. At the time we were starting the company, Bill was also working on his master’s thesis, moonlighting by conducting university research. He went on to supervise engineering and retired basically when we went public. That’s a little history on the three gentlemen involved.

What memories do you have from those days?

Dr. James Truchard, the CEO, president and cofounder of National Instruments.

Well, it’s all been good. We’ve been fortunate to work with some of the best customers doing very exciting things. I actually met Steve Jobs in 1986. I spent a day and a half with him when he was trying to talk us into putting LabVIEW on his NeXT computer. Certainly he was a great hero of mine as Apple was an inspiration to us. Because we were on the Macintosh for 6 years, we learned a lot about using the company’s vision to drive the company forward. We spent quite a bit of time with them in sales and marketing because they were trying to make the Mac successful and had a very exciting product that showed the Mac’s best graphical features. As a result, we were highlighted in all of their introductions. When the Mac II came out, we were at the introduction, regularly went to their training centers, and performed training. We had a very close relationship with them during that time frame. We needed their help to be successful because the Mac wasn’t exactly the industrial computer everybody was using. They were all using the PC, and so we had to work closely with Apple to be successful on the Macintosh.

So, actually, what advice would you give to beginners, if someone wanted to start a company?

It’s tricky, because I’ve tried many times, people say “Okay, yeah, I’m starting a company, tell me something.” Currently, my brother-in-law is starting a company, so I’ve been advising him, and he’s coming closer to taking my advice than anybody I’ve worked with. You know, a lot of companies were venture-financed and that’s a whole different approach because you have to progress very fast. You can’t learn on the job, and so it takes a lot more resources and dollars—money—early on. Fortunately, we had time to learn and grow simultaneously. We claimed most of the ownership of the company collectively, whereas normally a venture-financed contact will end up with maybe 4% of the company. Most people need a salary while they’re working, which creates another problem and we were able to develop a start-up while I worked at the university by doing a lot of work at night. I never missed a paycheck. We had enough revenue by the time we started full-time that we could pay ourselves and that was important. In terms of advice, I have some sayings like “start from where you are.” You first have to understand where you are and what conditions you have: technology, market position, and so forth. Many companies start with assumptions that aren’t correct. Inaccurate assumptions are probably the biggest reason for failure, so it’s important to understand the assumptions you’re making about the business you’re going into. Also, it’s key to understand your options: if this doesn’t work, or if the economy is bad, we can take a 15%-20% downturn, etc. In hindsight, we started the company at the worst possible time. In the early 1980s, interest rates were 21%, and prime was 21%. I actually had some money I inherited, which I was saving for a rainy day, I had 15% tax-free insured bonds, and the Dow had just been down. All this meant was the economy was really bad.

When you started your company, did you imagine having more than 6,000 employees one day?

My goal was to create a thriving company. If you don’t grow, you don’t create career paths. So for us, growth was very important.

Your company has been named as one of the Fortune "100 Best Companies to Work For" for 12 consecutive years (2000-2011), so how important is your employment policy?

Right, well, first off, I’d like to point out that there have only been four high-tech companies on that list for 10 years: NI, Cisco, Microsoft, and Qualcomm.

At a high level, it’s important to have a relatively good business plan because if your sales are unpredictable it makes it very difficult to make this list. First, you need to focus on culture. In the early 1990s, I spent quite a bit of time reading hundreds of books. I read about a dozen books on the quality of a working environment. It’s important for employees to understand why companies exist because there’s a tremendous amount of negative press on capitalism and companies. Yet nobody has found a better way to create wealth for everybody. That serves as a framework to explain why we operate the way we do. Second, create a working environment using the company’s vision. Visions are very effective at providing leadership without telling everybody exactly what to do. As a result, you can stimulate conversations about the future, what you should be doing and the technology that is needed. Being vision-driven provides a very good framework. With a culture of innovation, not everything you try is going to work. Given this, you have to support failure as well, specifically fast failure. Thomas Edison tried 50,000 experiments for the battery before he developed a battery design that was used. You also have to support continuous improvement. Here at Debrecen we’ve done an incredible job with continuous improvement. Quality systems are really about motivating people in a positive way, right? and the combination of these factors helps create a good environment where sophisticated work takes place.

I have been told that more than 80% of your employees are engineering graduates. Is part of your employment policy to let people know they can grow up in the company?

Exactly. Hiring experienced people in areas you’re not familiar with is one of the challenges that venture-financed companies face. At National Instruments in Austin, it starts with a recruiting pitch that I give. It’s similar to some applied sociology today, talking about a culture and a philosophy where one operates, so perhaps some of it is self-selection. We get folks that agree with our point of view, a group of people who really grow up in the culture, straight out of school. They put up their school flag above their cube and so we retain some of that spirit and build it into the culture of the company and then use that vision.

At work you don’t have your own assigned parking space, you have your own cube between the other workers, and you wear jeans. Is this part of your employment policy as well, to be just like everybody else?

Well, a big part is just because I like to be comfortable, and I will wear a suit, but not as often as I used to. I guess I didn’t get the memo for the dress code, or I might have been more casual and brought an extra NI shirt along. But yes, and that’s always a challenge, because it’s very tempting to take perks, but then you’re different than everybody else, which is especially important in the engineering environment. Because engineers don’t like to see the differentiation between themselves and bosses who don’t tune in and understand their technology. For me, that’s all part of creating a good culture, making it work in a way that doesn’t create a stiff hierarchy.

I heard that you began work on the CompactRIO by drawing a picture on a tissue. Is that true?

NI Compact RIOIt started out when we were at a trade show called MESCOM in Wiesbaden, Germany. There were all these little boxes inside every stand. Every booth seemed to have one of these, and we would come with our plug-in boards. I got to thinking about what we could do to make a platform that would serve a rugged, high-temperature environment. Meaning it could be stored and started up somewhere in Canada or up in northern Sweden and still work. Soon after this idea, we held a sales conference in Austria, and I interviewed about half of our salesmen, asking about features and their general thoughts. Then we had a project that was kind of going awry and not working well – we were trying to take multiple asynchronous measurements at the same time and at different rates. All the while, in the back room, no, back cube, we had three engineers who had been working for three or four years on this technology for programming FPGAs with LabVIEW. I saw that, and said, “Gee, that’s a much better way to solve this problem.” As a result, we added the FPGA board to the CompactRIO processor to make a very customizable solution. On the mechanical side, I worked with the mechanical engineers as I did with LabVIEW programmers, where each day I’d visit and give them another few ideas to try. After about 6 months, we finally closed on the mechanical design, and the real inspiration for it comes from these batteries used in little electric tools, like a drill and small saw. The CompactRIO modules have a similar concept as they’re very modular, yet extremely rugged. Now I know what engineers will do, they’ll look up in the table, and they’ll see I want it 50-g, so they’ll do 50.01-g or something, and I didn’t want that. I wanted something really rugged. So I said, “I want to be able to throw it off our 8-story building, and I want it to survive.” And so that got the engineers thinking, and sure enough, we threw it out the 8-story building, it hit the ground at 230g, and it survived. Also, I wanted it to survice when Ron Wolf ran it over with his Hummer vehicle, and it did. So those were two of the input requirements for design, and it has been extremely successful. It’s just amazing the things people are doing with this technology. We now have an alternative with a single board also. Because we can program the FPGA, domain experts including medical doctors, environmental engineers, biologists, and life-science experts can build devices with it. We’ve been able to solve some incredible challenges with this technology as it’s really versatile and helped us realize our vision for the embedded space: to do for embedded what the PC did for the desktop.

You have four grown children and one of them, Michael, works in the IT department at National Instruments. Did you try to persuade your other children to work for NI?

Well, we believed in letting them be very independent in what they did, and so each one has ideas of what they’ll do. Michael is actually now working as part of the LabVIEW team on features that make LabVIEW work in an IT environment. Each one of them at some point did some work as a student, they come in and do summer work at National Instruments. I believed in giving them autonomy to do what they like to do, and they’re all successful in what they’ve chosen.

And do you think Michael could be a future CEO of National Instruments?

We certainly haven’t given any special preference to him, so I don’t think so. I wouldn’t say no, if it made sense….

– Petr Pohorský, editor-in-chief, Control Engineering Česko,

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