O.C. Firms on the Fast Track : Simple Technology Leads Surge in Computer Memory Market

SANTA ANA — Masoud and Manoush Moshayedi’s brother kept telling his two older siblings that they should get into the computer business because that’s where the future was.

It took a couple years of nagging by Mark Moshayedi, a UC Irvine-trained electronics engineer, but his brothers finally listened. In 1990, with $100,000 of savings, they started a little computer memory products company, Simple Technology Inc., in Santa Ana.

It was not a bad move.

This month the company made its debut on Inc. magazine’s annual list of the 500 fastest-growing privately held businesses in the United States. Simple Technology placed 13th overall and topped all other computer industry companies in sales growth over the five years from 1990 through 1994.

Spurred by the presence of UC Irvine, with its strong computer and electronic engineering departments, Orange County has become a national center for developing and producing both memory products and computer software.

Simple Technology is one of many in the county benefiting from an explosion of demand for memory products stemming from a flood of new computer hardware programs and operating systems such as Windows 95. The worldwide market for memory products is expected to double in the next five years.

Another memory maker, Kingston Technologies, of Irvine, was Number One on the Inc. 500 three years ago, as sales soared from $120,000 in 1987 to $140.7 million in 1991--a staggering 117,122% increase. It doesn’t make the list anymore because it is simply too big now, at more than $1 billion in annual sales, to continue posting four-digit growth rates.

The second-ranked Orange County company on Inc.’s fast-growth list this year is Optical Laser Inc., a Huntington Beach distributor of optical data storage products. The company’s sales jumped 3,007% to $10.9 million in 1994 from $352,000 in 1990, making it the 40th fastest growing firm on the list.

Simple Technology made Inc.’s list based on its 7,794% growth between 1990 and 1994, when revenue jumped to $98.7 million from $1.3 million. The company expects revenue to hit $210 million this year.

The company started in the office on 17th Street in Santa Ana where Masoud Moshayedi--who goes by Mike--had conducted business as a consulting engineer. It has outgrown several facilities since then. The brothers now are looking for a 100,000-square-foot office and manufacturing building to replace the 25,000-square-foot building they bought just two years ago. They are determined to stay in central Orange County.

“We decided we needed the business to be halfway between us,” said Mike Moshayedi, who lives with his wife and two sons in Peralta Hills, near Anaheim Hills. Brother Mark and his wife reside in nearby Orange Park Acres, while Manoush and his wife and three children--two daughters and a son--live in Newport Beach.

“Besides, Santa Ana has been good to us . . . and a lot of our employees live in the central area,” Mike Moshayedi said.

When it started six years ago, Simple Technology, one of 13 Orange County companies on this year’s Inc. 500 list, had two employees, its founders. Now it has 200.

Mark Moshayedi, 34, kept his day job as a salesman for Samsung Semiconductors at first, designing circuit boards for his brothers’ company at night and on weekends before becoming a full-time partner three years ago. He is responsible for engineering and manufacturing, while Manoush, 37, a former home builder, oversees finance and purchasing. Mike, 40, is company president and the sales and marketing specialist.

The business didn’t get its first outside line of credit until 1993, and that was a mere $500,000. Now it has a $30-million credit line for financing inventory and accounts receivable.

Last month, it added 50 employees and about $70 million in annual revenue when it acquired rival Kelly Micro Systems. On Monday, Simple Technology will announce the formation of a Canadian subsidiary, Simple Technologies Canada, to do the same up there that the parent company has done down here.

“We think we’ll do $400 million in sales in 1996,” Mike Moshayedi said.

A major customer has always been the so-called value-added retailer: computer sellers who market machines with custom hardware and software. Talks also are underway with the computer superstore chains to place Simple’s memory modules on the retailers’ shelves for computer owners who prefer to do their own memory expansion installations.

Simple also designs and makes memory modules for the computer makers, stamping the manufacturer’s name on the product and shipping it back to the factory to be plugged into the computers before they are shipped out to the stores.

The company’s name isn’t a comment on the memory module business, but rather a reflection of the business philosophy to which the brothers try to adhere, Mike Moshayedi said: “We want to be simple to do business with. No problems.”

To that end, the brothers promise customers that their products are completely compatible with each brand of computer they are sold for; they also provide lifetime warranties.

He said that the company’s overriding strength, however, is its relationship with chip makers. In a market beset with shortages and rationing, Simple gets 85% of its chips directly from the manufacturers, thus avoiding the extra costs and delays of dealing with brokers in the resale market.

Simple started by designing memory expansion boards for personal computers. The brothers still tear into every new computer that is about to hit the market to trace its circuitry and come up with a memory module. Thus, Simple’s memory boards often are available at the same time a new computer model hits retailers’ shelves.

In 1993, the company expanded into the PC Card line, making credit card-size bundles of chips and circuitry that plug into access slots on laptop computers. These cards provide additional memory, facsimile transmission capability, external hard-drive storage and a link with CD-ROM drives and multimedia components.

The brothers say the Inc. magazine ranking is a nice reward and gives Simple a little more credibility in a highly competitive market.

“It is recognition that we are growing and succeeding,” Mike Moshayedi said. “The people on the other end of the phone when we are calling to make sales often don’t know who we are. This can help.”

The Inc. 500

Thirteen Orange County companies are listed in Inc. magazine’s 1995 list of the fastest-growing private companies in America (dollar amounts in millions):

Rank: 13.

Company: Simple Technologies

Product: Computer memory products

Location: Santa Ana

Founded: 1990

1990 Sales: $1.3

1994 Sales: $98.7

% Increase: 7,794%

Employees 1990: 2

Employees 1994: 130

*

Rank: 40.

Company: Optical Laser

Product: Optical technology

Location: Huntington Beach

Founded: 1988

1990 Sales: $.352

1994 Sales: $10.9

% Increase: 3,007%

Employees 1990: 3

Employees 1994: 14

*

Rank: 75.

Company: Lantronix

Product: Computer network peripherals

Location: Irvine

Founded: 1989

1990 Sales: $1.2

1994 Sales: $27.5

% Increase: 2,234%

Employees 1990: 5

Employees 1994: 60

*

Rank: 125.

Company: First Source Int.

Product: Computer products

Location: Aliso Viejo

Founded: 1990

1990 Sales: $2.7

1994 Sales: $43.9

% Increase: %1,527

Employees 1990: 4

Employees 1994: 60

*

Rank: 213.

Company: Viking Components

Product: Computer memory products

Location: Laguna Hills

Founded: 1988

1990 Sales: $15.3

1994 Sales: $177.3

% Increase: 1,058%

Employees 1990: 25

Employees 1994: 115

*

Rank: 216.

Company: Milcom International

Product: Wireless communications amplifiers

Location: Irvine

Founded: 1985

1990 Sales: $2.0

1994 Sales: $22.8

% Increase: 1,048%

Employees 1990: 25

Employees 1994: 120

*

Rank: 225.

Company: Dynamic Cooking Systems

Product: Residential and commercial cooking ranges

Location: Los Alamitos

Founded: 1987

1990 Sales: $1.7

1994 Sales: $19.1

% Increase: 1,023%

Employees 1990: 25

Employees 1994: 204

*

Rank: 339.

Company: Tectrix Fitness Equipment

Product: Computer-controlled exercise equipment

Location: Irvine

Founded: 1988

1990 Sales: $2.9

1994 Sales: $23.2

% Increase: 700%

Employees 1990: 10

Employees 1994: 65

*

Rank: 375.

Company: CMD Technology

Product: Computer storage solutions

Location: Irvine

Founded: 1986

1990 Sales: $4.7

1994 Sales: $35.0

% Increase: 650%

Employees 1990: 21

Employees 1994: 146

*

Rank: 406.

Company: Westar Systems

Product: Software and electronic security

Location: Santa Ana

Founded: 1989

1990 Sales: $.255

1994 Sales: $1.8

% Increase: 608%

Employees 1990: 3

Employees 1994: 19

*

Rank: 420.

Company: Wyland Studios

Product: Sells art and books

Location: Laguna Beach

Founded: 1978

1990 Sales: $1.7

1994 Sales: $11.7

% Increase: 588%

Employees 1990: 20

Employees 1994: 80

*

Rank: 435.

Company: Continuus Software

Product: Computer client-server and configuration services

Location: Irvine

Founded: 1987

1990 Sales: $.956

1994 Sales: $6.4

% Increase: 566%

Employees 1990: 10

Employees 1994: 90

*

Rank: 491.

Company: PLA Merchandising

Product: Merchandising services

Location: Irvine

Founded: 1943

1990 Sales: $12.9

1994 Sales: $80.4

% Increase: 524%

Employees 1990: 300

Employees 1994: 1,186

Source: Inc. magazine