Selling the Firm

Riding the Rails

Corrections or additions?

These articles by David Salowitz and Barbara Fox were prepared for

August 23, 2000 edition of U.S. 1 Newspaper. All rights reserved.

Greg Olsen Sells Sensors Unlimited

Gregory Olsen believes America is the land of

"second

chances." Before he achieved success in the white hot field of

fiber optics, his future was almost derailed during his rebellious

teen-age years. Later, he rolled the dice again by launching not one,

but two high tech companies.

"I probably couldn’t have happened in Europe because my fate would

have been sealed at age 15," Olsen says. In this country, "if

you screw up in high school you have that chance to bounce back."

Last week Olsen sold his second company, Sensors Unlimited, for more

than $600 million. His remarkable rise from working class roots to

the entrepreneurial aerie will be detailed when he speaks on "A

Tale of Two Start-ups" at the Princeton Chamber of Commerce’s

expo luncheon on Thursday, August 31, at 11:30 a.m. at the Doral

Forrestal.

Cost: $28. Call 609-520-1776.

"I have a variant of the talk: it’s called the good, the bad and

the ugly," Olsen says, with a chuckle. "It’s about all the

trials and tribulations of starting up."

Olsen’s previous start-up was Epitaxx, a fiber optics company sold

to Nippon Sheet Glass for $12 million in 1990. Nippon sold the company

last year, for $400 million, to JDS Uniphase, a telecommunications

giant (www.epitaxx.com).

The Internet boom is propelling Olsen’s current company, located at

Princeton Service Center on Route 1 North. Sensors Unlimited’s

revenues

have doubled each of the past three years, with the "highly

profitable"

business expected to do between $25 and $30 million this year, he

says.

A manufacturing and research company, Sensors Unlimited has such

products

as photodetector chips used to help send and receive messages in fiber

optic networks and high-performance cameras that capture images of

infrared laser beams.

The surge in revenues began in 1997 when telecommunication businesses

realized that they could use Sensors Unlimited’s photo detector chips

to monitor the Internet, which is made up of fiber optic light signals

that must be maintained at the right wavelength and power level. The

technique was developed by Olsen, Marshall Cohen (Sensors’ vice

president)

and Stephen Forrest, a Princeton University electrical engineering

professor who also helped develop technology for Universal Display

Corporation on Phillips Boulevard.

"It was slow, steady growth but when the Internet came along then

things really took off," says Olsen. "I think what we’re

really

getting known for is as a company that speeds up the Internet."

Olsen’s personal journey had a few detours. "If

you’ve seen the movie "Grease," that’s kind of how I grew up.

I was probably one of the ne’er-do-wells in high school. I barely

got out of school and I had to take summer classes to get into

college.

Luckily, academically I bloomed in college."

Born in 1945 in Brooklyn, he was raised in a blue collar family. The

Olsens moved to the tiny town of Rowland in the Pocono Mountains

before

finally settling in Ridgefield Park in Bergen County when he was 10.

His father was an electrician and his mother a school teacher. Thanks

to her, when Olsen started kindergarten he could read, write, and

do basic arithmetic. He later skipped fourth grade. His parents did

not encourage him to pursue any particular vocation.

"I’m a kid of the ’50s and in those days the parents put you out

in the street and you made your own fun and your own way in life.

I sort of wanted to pattern myself after my father and that probably

got me into technical areas. I went from wanting to be an electrician

to wanting to be a TV repairman. After the Soviet satellite Sputnik

came out, I wanted to be an electrical engineer, and then a physicist,

and somehow I wound up in semiconductor electronics."

Olsen put himself through Fairleigh Dickinson, where he studied

electrical

engineering, with summer jobs provided by his father’s electrical

union, Local 3 of the International Brotherhood of Electrical Workers

in New York. A special program provided work to the college-attending

children of union members.

"A lot of those big shiny buildings in New York I worked in during

the ’60s," he says.

Olsen sees differences between his generation and today’s youth.

"I’m just representative of millions of people my age whose

parents

came from hard times. My parents knew the Depression, they knew World

War II, they knew about basic existence being threatened. Our kids

just had plenty, we grew up and busted our tails to give our kids

plenty."

"I think my generation in general was much more focused. When

I finished high school I had three choices: I could go into my

father’s

union, I could go to college, or I could join the army. Today you

see a lot of kids 25 or 28 who are still not sure what they want to

do."

Olsen is divorced with two grown daughters, Krista, 26, who is a

pharmaceutical

representative and is pregnant with his first grandchild, and

Kimberly,

30, "a language maven" who teaches five languages. He lives

in Montgomery Township.

Although he had no interest in history while in college, he is now

a self-labeled "Jefferson freak" and is also fascinated by

the Civil War, President Lincoln, and General George Custer. His

hobbies

include golf and country dancing.

Armed with dual bachelor degrees in electrical engineering and physics

(Class of 1966), he also earned his master’s degree in physics at

Fairleigh Dickinson. He received his Ph.D in material science from

the University of Virginia, where he studied the atomic structure

and physics of metals and crystals. He did post-doctoral work in South

Africa in the physics department of the University of Port Elizabeth.

From 1972 to 1983 he worked at RCA Laboratories, now the Sarnoff

Corporation.

There he learned about semiconductor electronics from such scientists

as Henry Kressel and Chuck Nuese. "It was a great research lab

and still is," says Olsen about the incubator of color television,

advanced satellites, high-definition television, and a score of

thriving

spin-off companies. "I like to say I graduated from one of the

great universities in the world and that’s RCA Labs. I’ve been very

lucky because I’ve had a great assortment of mentors in my life."

In the 1970s optoelectronics, lasers, and photo detectors "were

just laboratory curiosities. Nobody made any money from it," he

says. "It was just applied physics research. Now optoelectronics

is just booming."

While at RCA he developed a photo detector which, like a solar cell,

converts light into electricity and is used in fiber optics. When

his first product was transferred to a factory at RCA, he began to

"think I could do this myself."

The desire to spin off his own business "just hit me like a bolt

of lightning. I had no background in business, my family isn’t

business

oriented."

Although he says he loved it at RCA and was treated well, he left

for what he thought was a much bigger opportunity. In early 1984,

with Vladimir S. Ban (who now has a company called Photo Diode/Laser

Diode Inc. at Research Park) he started Epitaxx, locating the offices

and production facilities at the Princeton Service Center at 3490

Route 1 North.

During the early years, Olsen and his staff worked long hours and

had to deal with slow sales, quality control problems, and bare-bone

budgets. Olsen credits then octogenarian Ted Potts, who died in 1992,

with helping him cope with his career sea change. Potts owned the

Princeton Service Center and other valuable Mercer County properties.

Olsen says Potts "got me going in business, gave me the confidence

because I knew nothing about it. Mr. Potts taught me how to make the

most out of what you have, that you don’t have to have mahogany desks

and 500 square feet of space per person."

Financed with $1.5 million in venture capital from Warburg-Pincus

of N.Y. and DSV Partners of Princeton, Epitaxx became profitable by

1989 and had some 55 employees. After its sale to Nippon, Olsen

remained

as president for another year and then in 1992 he started Sensors

Unlimited.

When Epitaxx moved out and bought a new building near

the Mercer County airport, Potts invited Olsen to locate his new

business

at the same Princeton Service Center address, offering one year’s

free rent. Olsen started the company with a bank loan and grants from

the federal Small Business Innovation Research program.

He launched the new company with Marshall Cohen, and they developed

cameras based on the same detector material, indium gallium arsenide,

used in fiber optic light detectors. The cameras can be used for night

vision, sensing light in the near-infrared part of the light spectrum,

spotting ice on aircraft, and finding hot spots on power lines.

Another application of this technology is to use laser devices to

monitor pollution.

"You can tell something about the quality of the air and the

quantity

of pollution by the light that is reflected," Olsen says.

"Hand

held radar-style devices are under development in several laboratories

which could allow police to check for auto and truck pollution on

the highways."

Sensors Unlimited’s clients include telecommunication companies such

as AT&T, Lucent, Sprint, computer-maker Hewlett Packard and NASA’s

Jet Propulsion Laboratory.

At this point in his career, Olsen is more involved with the business

side of his company, though he still loves the technology, boasting

of a new, powerful four-inch wafer that will help the company meet

the demand for optical components.

"My expertise at this stage is in running the business as opposed

to the technology. We have a great staff of 85 people, a great

selection

of young PhDs. People work very hard here and we plan to keep

expanding."

He also credits his company’s continuing research and business

relationships

with both Sarnoff and Princeton University with helping Sensors

Unlimited

succeed. "The most important lesson I learned is that you’re

always

going to make mistakes," says Olsen, reflecting on his career.

While his second company made more missteps than his first, "the

difference is I dealt with them sooner."

"When situations don’t work out, I’m quick to confront it. What

I try not to do is let it sit and fester. And even if requires letting

someone go, you’re doing both people a favor if the situation isn’t

working out. You’re not doing a person any service by letting them

stay in an environment where they are unhappy."

"As I tell my daughters and anyone else I have an opportunity

to advise, always give 150 percent and if it doesn’t work out, move

on. Don’t look to blame, just give it your best shot, and then go

on."

His competition is Bridgewater-based Hamamatsu and EG&G of Canada,

both billion dollar companies compared to his smaller, "mean and

lean" operation, he says. "One of the things I regret that’s

happened over the past 20 years is the demise of the corporate

laboratory,"

Olsen says. Sarnoff and Bell Labs, which is gradually downsizing,

don’t do as much basic research as they did in the past, he says.

"I had all these giants I could learn from. I was the kid and

they were the masters. It was like an apprentice situation. Now you

have people go right from graduate school to start-up companies and

they don’t have that time to really learn the field the way we

did."

"Everything is happening faster in the high-tech world and that

is both good and bad. People, when they’re 26 years old, don’t want

to wait till they are 65 for the payoff time, they want it when

they’re

30 — and some of them are getting it."

— David Salowitz

Top Of Page
Selling the Firm

For his employees to get an early payoff is just what Sensors

Unlimited

founder Greg Olsen had hoped for. "People have worked very hard

for eight years and they are entitled to a reward, just as I am,"

says Olsen. "It is the best way to keep employees. We have a great

environment and all employees have stock options. We will create

several

dozen millionaires out of this deal."

Unlike some entrepreneurs, Olsen has never had a dream of going public

and welcomed a buyout. To go public would have been a huge

distraction,

he says. "This way, I can get back to what I love doing, which

is building companies. It gives us the capital resources to do the

things we wanted to do, only five times faster. In two years we will

spend $50 million on equipment, furnishings, and expansions; without

it, probably $10 million." He has about 100 workers in 200,000

square feet and has already leased expansion space in two more

buildings

for 100 more, to be added over the next year.

On the hiring list: engineers and research scientists in the fields

of semiconductors, electrical engineering, packaging engineering;

production personnel to operate the new clean room manufacturing

facility,

and sales and marketing staff with expertise in telecommunications

and optical networking.

Olsen says he knew a payoff was imminent when companies interested

in advanced telecommunications technology, companies like Cisco, began

to knock on his door at Princeton Service Center. "We talked to

over 13 companies in the last year," he says.

The buyer, Finisar Corporation, provides gigabyte fiber optic

solutions

for high speed data networks. Located in Sunnyvale, California, it

trades as FNSR on Nasdaq (www.finisar.com). Based on a closing price

of $32 per share on the day the deal was announced, the buy is worth

more than $600 million. Stockholders of Sensors Unlimited may choose

to receive cash payments in lieu of up to 10 percent of the shares

they own.

Olsen will stay as president and CEO, and operate Sensors Unlimited

as a subsidiary. He will also be on the board of Finisar and have

the title of executive vice president. The deal is supposed to be

completed by the end of this year. "Epitaxx happened the way I

thought it would," says Olsen, "but here I am in it for the

long haul.

Olsen resonates to the culture of Finisar, which he describes as

"a

flat managed company with extremely competent people. They are doers,

straightforward and honest, they make rapid decisions, and are growth

oriented. People say the founder, Jerry Rawls, and I are a lot alike,

even though he is a better golfer than I."

Olsen will use his space at the U.S. 1 Technology Showcase for

recruiting,

which is now his biggest challenge. All new employees, he points out,

begin with an option for 2,000 shares. "Four years ago, that was

worth $1,000, but now it is on the order of $30,000. The hope is that

that will grow to $100,000" says Olsen.

"I think we have a great culture here. Free breakfast and lunch

for everybody, happy hour every Friday, paintball, softball, and

dinner

cruises. We’re big customers at the Princetonian Diner."

— Barbara Fox

Sensors Unlimited, 3490 Route 1, Building 12,

Princeton

08540. Gregory H. Olsen, president. 609-520-0610; fax, 609-520-0638.

Home page: www.sensorsinc.com.

Top Of Page
Riding the Rails

Of Fiberoptics

If fiberoptic pathways in this century turn out to be

as profitable as the asphalt turnpikes of the last century, Barry

Zhang will do very well indeed. His company is inventing and

manufacturing

components for the telecommunications revolution and it has grown

by 50 percent in the last several months.

Founded by Zhang in 1993 as Princeton Optics, the company was sold

two years ago to ADC (Audio Development Company), a leading global

supplier of transmission and networking systems based in Minnetonka,

Minnesota. As part of the fiber division within ADC’s Broadband

Connectivity

Group (BCG), it helps ADC offer a single source for high-quality

optical

components (www.adc.com).

One half of Zhang’s building at 250 Phillips Boulevard belongs to

the makers, and the other half to the designers. Zhang’s latest

product

is a circulator, a fiberoptic routing device introduced in June.

"It

replaces a bulky design; this is more compact and integrated,"

says Zhang. The circulator sells in the neighborhood of $1,000 to

$2,000. DWDM products (dense wavelength division multiplex) are also

in the pipeline.

Joe Latore is manufacturing manager of ADC Telecommunications.

"Here

we make isolaters, collimators, polarizers, and circulators, costing

from $50 to $2,000," he says, for the Nortels and Lucents of the

world, who need to boost systems capacities. ADC is just one of many

firms — including JDS Uniphase — that make these components.

Latore was a ceramic engineer from Rutgers, Class of 1967, and he

worked for American Standard, Litton, and Deltronic Isowave in Dover,

New Jersey, before joining ADC last fall. The manufacturing facility

has hired 15 people in the last three months for a total of 42.

Zhang, 36, has a masters in physics from Tsinghua University in

Beijing and received his PhD at Princeton in mechanical and aerospace

engineering. His wife, Bonnie Liao, is a computational scientist at

Merrill Lynch. Most of Zhang’s family lives in Beijing, where his

brother is vice president of a fiberoptics company.

ADC began in 1935 with the invention of an audiometer, to test

hearing,

and flourished in the 1980s when the regional Bell companies were

empowered to shop for their equipment in the general marketplace.

It pioneered in the shift from analog to digital and became the

industry

leader in digital signal cross-connect devices.

"ADC has 16,000 people, and we have only 42 people here, but the

product line represents a new area for ADC, a higher margin product

and a higher level," says Zhang. "Overall, the fiberoptic

industry is growing, with new competition and acquisition. It is a

very dynamic industry."

ADC Telecommunications Inc. (ADCT), 250 Phillips

Boulevard, Suite 255, Ewing. Barry Zhang, director, optical components

development. 609-771-4370; fax, 609-771-9790. Joe Latore,

manufacturing

manager. 609-671-2714; fax, 609-771-4371. Www.adc.com.


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