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September 4, 1999
The Rise of a Silicon Valley Role Model
With a salary and stock options worth $ 3.9 million, Lata Krishnan last year became the highest-compensated woman executive among the largest publicly traded companies in Silicon Valley.
Known for her reticent nature, Krishnan makes some time for interviews these days, mainly because she feels the story of her success could be a model to young women.
Krishnan, 38, vice-president and cofounder of SMART Modular Technologies, began her journey to success in flight from Africa.
She was born in Kerala, moved to Kenya, came back to Jamshedpur briefly, and lived in London before finally settling down in California.
"In a sense I have lived a fairly nomadic life. And if I had to point to one aspect of my life that has given it direction, focus and independence, it is the upbringing that my parents have given us. They encouraged us to try new things, gave us choices and challenged us," she said.
Krishnan's father Gopal, now a retired bank official living in India with his wife Geeta, gave his daughter and son a very well-rounded education, as they were transferred all over the world.
While in London, in the early 1980s, Krishnan earned a bachelor's degree in economics from the London School of Economics. She worked for five years as an accountant with the London-based firms of Arthur Anderson and Hill Vellacott.
In 1986, with her father's encouragement, she set out "to explore the United States." Soon, a headhunter's outfit got her a job with Montgomery Securities. Fate intervened when Krishnan ran into Ajay Shah, an engineer who was working at that time with Advanced Micro Devices. Shah and Krishnan had met earlier in London, when he went to visit his family there.
They dated and in a few months they were married. The enterprising couple were never at a loss for business plans. Krishnan began to form a small semi-conductor export business, which never took off the ground because she liked her husband's idea better.
Shah, a mechanical engineer, was working on memory modules which his company Samsung Semiconductors did not seem too interested in.
However, the couple saw potential in the product. More importantly, they believed in each other and strongly trusted their instinct. They wrote up a business plan. But most venture capitalists turned them away.
"A business plan about memory modules wasn't sexy enough. And we were only looking for $ 500,000. That didn't seem like too much money to them." Krishnan said.
So the couple found their family friend Mukesh Patel eager to join and the determined trio raised about $ 100,000 mostly from their friends; they put in some of their savings, too.
And the rest, as they say is history. SMART, an acronym for Surface Mount and Reflow Technology, was created a decade ago. The company turned the seemingly unexciting, low-margin business of making memory modules, cards for computers and other devices into a dazzling profitable venture.
The company builds its memory modules and cards by mounting standard memory chips on miniaturized circuit boards. It does the design, manufacturing and testing. Among the highest compensated three executives of the biggest publicly traded companies in the valley, the partners now count among their clients Compaq, Apple, IBM, Hewlett-Packard, Cisco Systems and 3Com.
"We became profitable in the second month of operation. Our profits have grown steadily ever since," Krishnan said.
The company's headquarters is based in Fremont. They have also opened a design center in Bangalore and have manufacturing centers in Puerto Rico, Scotland and Malaysia.
At SMART, Shah, Krishnan and Patel have divided the responsibilities and duties. Shah focuses on sales and marketing. Patel takes care of the technical and Krishnan tends to the financial, administrative and human resources aspects of the business.
Krishnan, a chartered accountant by training, is a tough chief financial officer. She makes sure they watch their expenses. As an example they always buy used furniture for the company.
The stringent control has paid off. From a shoestring budget, the company has grown into a multi-million dollar publicly traded outfit ranked by Fortune magazine as one of the 50 fastest growing technology companies in Silicon Valley.
Analysts say because the company does not even own the actual chip, it is less exposed to swings in the chip market than some of its competitors. Fueling the rapid growth of SMART Modular Technologies is an enormous increase in demand for memory as computers and other electronic equipment has become speedier and more sophisticated.
In a tough market, the company managed to post increases in both sales and profits. Net sales in fiscal 1998 reached $ 714.65 million, up from $ 163.8 million in fiscal 1994. Net income grew from $ 6.2 million to $ 51.48 during the same period.
"Indian entrepreneurs have been very successful here and it should be an important part of the strategy to give back to the community. There are so many ways of doing that," Krishnan said.
The company contributes to schools in all its locations. In Fremont, it has donated a computer lab to the Irvington high school. Shah and Krishnan also have provided scholarships for college students. Krishnan is on the board of the San Jose Tech Museum of Innovation and the Children's Discovery Museum. She is a fellow of the Silicon Valley Chapter of the American Leadership Forum, and on the advisory board of Narika, a Berkeley-based support group for battered women.
"Our company has been profitable," she says, brushing aside discussions of her remuneration. "That is meaningless if your company doesn't operate well. We have integrity, we are innovative, creative, and that counts."
Krishnan, the angel investor, is already a mentor to many. It is a role she enjoys. "I think women are talented, versatile, resourceful and can offer a lot to business. I want to see more women entrepreneurs and I hope I inspire people." she said.
"I used to keep a low profile. I wanted no visibility, but I changed my mind because I thought if hearing about me can inspire young people and make them create new paths in the mainstream, all the better," she said.
Krishnan, who retains her maiden name, is an example for many career women. Her professional achievements have won her many accolades. A South Bay-based support network, the Indian Business and Professional Women, has invited her several times as a featured speaker and she actively participates as an advisor, mentor and as a trustee.
"She has always been there for us," said Monica Kumar, IBPW's president. "She is a role model for our members."
Away from the fast track, Krishnan's greatest joy are her children, who she wants to keep out of the press. She faces the same struggle of juggling schedules like millions of 1990s mothers. "It is difficult to manage a career and children. I try every day to balance them both. But my first priority are my children. If there is a conflict between a meeting and an event that I have to go to with my children I will always pick them first," she said.
Krishnan loves to work with children too. She won the Citizen of the Year award from the Rotary Club of Warm Springs for her charitable work. "Children can be molded into good, caring people. They lose their way for a variety of reasons, broken homes, financial instability, etc. If I can help one child have a better future, it is meaningful." she said.
"This is what I want to be remembered for. These are more notable than the sales and stock figures."
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