with current customers. What are
the upsides and downsides of these
options for a photonics compo-
nents company?
JM: I think that extending the product
line and entering new geographic markets
are obvious objectives under any circumstance. However, adding more value by
getting into the subassembly or systems
business may indeed have serious conse-
quences for the relationship any company
may face with its current OEM customer base, assuming there is overlap. This
is an age-old dilemma that requires in-
tensive analysis weighing the benefits of
more revenue by selling more added-value
products versus the risk of losing business.
Over the years, I have tended to be
more conservative and in favor of not
stepping on our OEM customers’ toes.
It takes lot of hard work to gain that
kind of business and, at the same time,
in most of the companies I have been
involved with, OEM sales represented
about 50% of total sales. So there really must be strong arguments to risk it—
which of course illustrates exactly why
it is so tough to go upscale with the value-added principle.
LS: Do you think that the optics in-
dustry is too insular? If so, how does
this affect careers and the develop-
ment of talent?
JM: The photonics components industry
distinguishes itself from other tech indus-
tries through the loyalty to this market by
the people working in it. Walk the trade
shows like Photonics West or LASER
World of Photonics and you will find people who have been in this industry for a
long time—more so than in other fields.
This may be a consequence of the
fact that on a global scale photonics is
a niche industry. Yet there is also a con-
stant influx of young technical talent
from the universities who are attract-
ed by the perception that photonics is
a clean technology serving a wide vari-
ety of technical and scientific applica-
tions. So it may be that photonics tech-
nology by itself does not attract all the
young talent, but using photonics is a
pathway to other fields or industries.
LS: Would you say that most small
optics businesses struggle to build a
global distribution network?
JM: That certainly had been the case earlier on, but these days when most com-
panies have their own websites providing
global access, it is not so difficult. Having
said that, the Web is no alternative to hav-
ing a representative organization selling
your products in global markets. For those
companies already using reps, they should
consider setting up their own facilities in
key markets if they reach a plateau on sales
volume, market share, or both.
LS: Many small optics businesses do
not have access to growth capital and
are limited to the owners’ personal
wealth. Taking on outside investment
and/or merging with a larger competitor or partner could alleviate these
growing pains. Is this a good option?
JM: This is as much an emotional issue as
a rational one. Yes, it would make sense
to consider these options, but indepen-
dence and control over your business is
too strong a motive for most small company owners to surrender. Personally, I
have been able to overcome those problems by either bank financing or entering
into investing partnerships with people I
trust to help run and grow the business.
For any of the foreign subsidiaries we
established, operations were almost al-
ways financed locally or with startup
capital coming from the parent company.
The managers and key employees of these
foreign subsidiaries were given stock in
the companies to better align the com-
panies’ interests with their personal interests. Furthermore, when I sold such a
company, these managers benefited from
the same multiples as I did.
LS: Photonics companies are the key
enablers to a wide breadth of vertical
markets, from life sciences and manufacturing, to information technology and energy. These vertical markets
attract almost 10 times the investment
of the photonics companies. I know it
