The founders of Kingston Technology Co., one of Orange County’s biggest private companies, treat their 800 Fountain Valley workers like a big, raucous family.
“I don’t think John Tu and David Sun’s management style has changed at all over 20 years,” said Mark Leathem, Kingston’s director of business development and marketing for flash memory. “We are a patriarchy with the dynamics of a family. Everybody has a voice and everybody has the ability to influence. And we have two guys at the top of the company who make sure we all behave and play nice.”
Kingston is the largest maker of memory products that go into computers, networking gear and consumer gadgets with sales of $3.7 billion last year. It sells to computer makers, Fortune 500 companies and consumers.
But size is deceiving when it comes to Kingston’s corporate culture.
“Kingston is probably the biggest module manufacturer in the world,” said Rick Webb, vice president of consumer products. “But you would never know it from the managers. Everyone is very humble. We don’t go to our customers and say, ‘Hey, we are No. 1.'”
Chief Operating Officer Sun, and Tu, who’s president, set the tone. They’re known for humility and generosity.
“I’m not intimidated by them and I feel as if I can talk to them any time,” said Cindi Kipers, customer service manager. “They are just average Joes, like me.”
Kingston isn’t big on org charts. Some executives and managers have to stop and think when asked what their titles are.
And there isn’t a clear No. 2 to the Sun-Tu team.
“There is always a (succession) plan, because the guys at the top are very smart,” Leathem said. “I’ve never heard the plan articulated, but there is a plan.”
The company has a number of rising leaders who get mentoring from more senior executives.
Mentoring “is becoming routine,” said Vimal “Al” Soni, senior vice president of strategic alliances. “It’s a part of our culture. These young folks are now closest to the market and to the problems, much more so than John, David and myself. They have a much closer view of the issues and needs. We have to encourage them to make decisions. It’s a natural process that is happening now at Kingston.”
But there’s no sense of urgency, according to Soni.
“John and David have not set any timeline,” he said. “Right now they are both enjoying the work and the people and where the company is.”
Sun and Tu give their workers room and let them do things their own way, according to Webb.
“It’s not the typical business setting where there is so much pressure to perform,” he said. “The culture is, ‘Hey, do your best.’ I want to perform well for them because they trust me in that role.”
“There’s not much oversight,” said John Holland, vice president of U.S. sales. “People feel that they are trusted by the company. John and David don’t have auditors sniffing around your mistakes. Trust is a big thing here. I look up to them as father figures.”
Tu, who is from China, and Sun, who’s Taiwanese, bring their backgrounds to Kingston.
“I learned something my first year here, 14 years ago,” Kipers said. “I felt like I was stepping on people’s toes and being aggressive. They pulled me aside and said, in Asian culture, saving face is as high up there as telling the truth. I learned never to walk into a meeting or up to another person and say, ‘You did this wrong.'”
Kingston doesn’t obsess on worker performance and productivity statistics.
“The fact that I’m allowed to do my job is very important to me,” said Kerstin Andreano, director of customer service. “Some tech support environments are very concerned about numbers, like how many calls each technician takes. That’s not what we think about on a daily basis. We worry about taking care of the customer and doing what’s right.”
It’s a luxury Kingston can afford.
The company has about 20% of the market for memory boards that go into computers, the biggest part of the market. It has a healthy lead over U.S. and Taiwanese rivals.
But the company’s accepting, generous culture is part of what made it what it is today. Suppliers are well-treated. Bills are paid on time, if not early. And Sun and Tu won’t turn away shipments of chips if the market price falls below prearranged contract prices.
“David has set a precedent here of making sure his employees, vendors and customers are taken care of,” Webb said. “It’s a simple concept. If you take care of the vendors, you can take care of your customers.”
Holland, who helped Kingston expand into the Middle East and Europe, took the philosophy abroad when he set up offices in Britain and Germany.
“We tried to encourage people to roll up their sleeves, act as entrepreneurs with responsibility and act without permission,” he said.
“Family” comes up a lot at Kingston.
“John and David have found this really unique way of treating us as individuals, but also as though we are their family members,” Kipers said.
The duo made global headlines in 1996 when they handed out $100 million in bonuses to workers after selling 80% of Kingston to Japan’s Softbank Corp. (They bought the company back in 1999 for a fraction of what Softbank paid.)
The bonuses didn’t go out all at once. Some money was put aside for charitable works and the rest was paid out to workers over several years.
“That is always something that I will never forget,” Andreano said. “That was a life-changing event for me. It allowed me to buy a house here.”
This year, Kingston expects sales of $4 billion. About $1 billion is from sales of flash memory for digital cameras and other consumer electronics.
The company has been a late comer to flash memory, in part because some at Kingston were skeptical about the market.
“The culture is if the employee has an idea, they are generally willing to let the employee try it,” Holland said. “If it doesn’t work, they don’t point fingers or criticize.”
Executives make “a ton of mistakes,” Leathem said.
“If we are not making mistakes we are not doing anything,” he said. “The ability to recognize that you need to make a change and the ability to execute that change is what makes the company successful.”
A few years ago, Kingston released the K-PEX 100, a flash memory device that played digital music and videos. It bombed with U.S. customers.
“There was no hand-wringing, no six-month investigations afterward,” Leathem said. “It happens. We got on with the next project.”
Sun and Tu have been right more often than not.
“What makes Kingston successful is the two people at the top have a fantastic instinct for when and what to do,” Leathem said. “Their track record is difficult to argue with. They’d be great baseball players with good batting averages.”
Kingston’s executives are adept at the company’s biggest task,buying enormous amounts of memory chips, the building blocks of memory boards and flash cards, from chipmakers in Asia.
Company buyers must make constant bets on shifting prices. There’s the potential to make big profits or sink them within a single transaction.
“The prices can fluctuate very fast depending on supply and demand, so it is a thing where you can’t take your eyes off of the market,” Soni said. “Wrong choices can be very painful.”
Buying memory is a series of “calculated risks,” he said.
Behaving Small
But being nimble,a Kingston trait,is key.
“By no means are we small, but we still act and behave much like a small company,” Soni said. “Our thinking is fast and flexible. We study the situation as carefully as possible. But that doesn’t mean we get it right all the time.”
If there’s an executive culture to speak of at Kingston, it’s the lack of a formal one.
“That makes a statement,” Holland said. “This company doesn’t have the traditional status symbols that other companies have. It’s a very humble, straight-forward business.”
There are no special parking spots, corner offices or glitzy conference rooms.
Sun and Tu sit at desks overflowing with clutter in the middle of a room full of salespeople. They don’t have assistants.
Meeting rooms have modular, Ikea-inspired furniture. As a concession to the graphic designers who do Kingston’s packaging, the walls are painted purple, red and mint green.
The company’s headquarters, with the exception of its manufacturing plant, looks like it’s run on a shoestring.
“We are a cheap company,” said Darwin Chen, director of global flash operations. “We keep everything very lean and mean as a commodity organization.”
Sun and Tu stick to their roots and keep the atmosphere light.
The company hosts a big golf tournament for workers one weekend a year in Las Vegas. There’s a big company picnic in the summer, holiday parties and dinners for workers who have been there for more than a decade.
Tu, a drummer, has a band that practices in the mail room.
Kingston’s longtime workers have an extreme love of the founders.
“If John and David walked up to me and handed me toothbrush and said, ‘Can you go clean the toilets?’ I would do it without question,” Kipers joked.
Loyalty runs deep at Kingston. Many workers have been there for more than 10 years.
“I think we have done a really good job evolving over the years,” Kipers said. “It’s hard for a company this large to hold on to their culture. Kingston has been able to do that.”
THE TEAM
– John Tu: 66, cofounder, president, heads global sales, marketing. Started Camintonn with David Sun in early 1980s, sold to AST Research. Started Kingston in 1987, after losing millions in stock market crash. Plays drums in own band, JT and California Dreamin’.
– David Sun: 56, cofounder, chief operating officer, heads U.S. operations, including sales, marketing, engineering, manufacturing, logistics, shipping, human resources, procurement. Avid golfer. Hosts annual golf tournament for workers in Las Vegas.
– John Holland: 43, vice president, U.S. sales. Heads team of 50 that sells to Fortune 500 companies through resellers and distributors (reports to Tu). Helped set up offices in Britain, Germany. Fifteen years at Kingston. Enjoys skiing.
– Vimal “Al” Soni: 56, senior vice president, strategic alliances. Heads buying, logistics for purchasing of memory chips from chipmakers around the world (reports to Sun). Eleven years at Kingston. Plays golf.
– Kerstin Andreano: 38, director of customer service. Heads group of 30 that does tech support and manages warranties, replacements (reports to Sun). Fifteen years at Kingston. Enjoys horseback riding.
– Rick Webb: 40, vice president, consumer products group. Manages team of 14 in charge of relationships with stores and online retailers (reports to Soni). Three years at Kingston. Coaches soccer, baseball.
– Darwin Chen: 34, director of global flash operations. Pioneered Kingston’s flash business five years ago. Heads research, marketing, product development, customer relations for consumer flash (reports to Sun and Tu). Seven years at Kingston. Enjoys cooking, wine, cigars.
– Mark Leathem: 40, director of business development, marketing for flash. Develops new markets (reports to Chen). Started at Kingston 15 years ago in London. Plays golf, coaches soccer.
– Cindi Kipers: 46, customer service manager. Heads group that takes all U.S. calls and e-mails for customer support, manages rebate programs (reports to Sun). Fourteen years at Kingston. Enjoys hiking, volunteering. Working on a nonprofit Web site to help rebuild New Orleans.
