is not unusual that profitability and
return on investment are more attractive as one moves up the value chain,
but is the magnitude of the imbalance
unique to the photonics industry? Do
you see this trend amplifying?
JM: It is not so much an issue of what ap-
plication a photonics company is focusing
on; it is the value they add to the process.
Our discussion here focuses on the photonics components industry, and it is unfortunate that components will only get
you so far, which is probably no different
from any other industry. I can count the
number of photonics components compa-
nies that go through the $10-million sales
level on the fingers of one hand. One of
the usual ways to go “upscale” in a prod-
uct line is to intensify business connec-
tions with OEM customers by supplying
them more added-value products, which
is beneficial not only for increasing sales,
but also for making it more difficult for
competitors to compete effectively.
LS: Often guilty of this myself, I find
small business owners have a tough
time making time to work “on” the
business versus to work “in” the business. How did you keep your eye on
the big picture, plan with discipline,
and stay out of the lab and the coating chamber?
JM: The scene you present is indeed how
things often work out in the real world.
It is also one of the prime reasons why
too many small companies stay small.
Most of the time photonics companies
are started by an engineer or scientist trying to realize their own company on the
basis of technical knowledge from previous studies or work. Where things go
wrong is when the founder continues to
spend most of their time in the lab and
does not pay enough attention to the busi-
ness aspects of the company.
The founder’s job needs to include two
things. First, the founder needs to give
employees a clear view of upcoming goals
and expectations to meet them. I always
presented this in writing to all my em-
ployees on a single sheet of paper. And
second, they need to realize that without
creating an effective team that allows
them to delegate operational responsibil-
ities, they will become ineffective and an
obstacle in growing the business.
LS: I appreciate having learned best
practices from my large corporate
employers, but having had to work
outside my comfort zone and learn
real-time from my mistakes at a fami-ly-owned optics business and at startups was invaluable. I learned that as
a result of an entrepreneurial culture,
individuals behave purposefully and
can build more value, more quickly. An entrepreneurial culture can go
a long way to compensate for lack of
funds, brand, and human resources. How can the entrepreneurial culture that got these small optics companies where they are today help launch
them off the $10-million plateau?
JM: It all depends on the aspirations, am-
bitions, and management skills of the
owner. Some owners are perfectly happy
to maintain a status quo for a long time,
preferring a more comfortable lifestyle
but likely not realizing that no compa-
ny can survive in the long term by sticking to such a philosophy. For those en-
trepreneurs that have the ambition to
grow as much as they can manage, they
must realize that no such objective can
be achieved without creating an effective
team, delegating responsibilities, and inspiring and rewarding the employees.
Jan Melles is the president of Photonics
Investments and was the co-founder and
later chairman of Melles-Griot. He is currently on the board of numerous public and private companies, and invests
in and brokers the mergers and acquisitions of photonics companies. e-mail:
Linda Smith has 25 years of experience
in mergers & acquisitions, strategic marketing, product management, and sales in the
photonics industry. In 2006, she founded
CERES Technology Advisors, an M&A advisory firm, to serve technology businesses that
are largely unserved or under-served by existing investment banks and business brokerages. e-mail: firstname.lastname@example.org; www.