Naprotek: Building a Successful EMS in Silicon Valley with a Woman's Touch

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Warner: So you're moving towards that full integration model then. It's nice for your customers that you have those relationships with the tier 1s so they can seamlessly ramp. That's an interesting model.

Brown: A lot of the tier 1 OEMs have products that they're building that don't make sense to go offshore, and we fill that gap as well. You even ask the tier 1 CMs, they would rather have us do it here locally because it's just not worth the effort to do it offshore.

Warner: What would you say would disqualify a project from going offshore, other than maybe lack of a technology set? What keeps them from taking a certain project there?

Brown: It could be the continuous change in the design and the parts. It also depends on the number of boards needed. Most engineers want to have direct input in the production to the point of coming to supervise the production on what is “their” board. We can do the low-volume production. On the front end of that board, we can also quick-turn build it, or do repairs and warranty work. It is very common to find engineers who want to switch parts out in the middle of the process, and we can do it right here faster than anyone else.

Warner: Do you see Naprotek as largely a regional company then? Liz and Mike, maybe you want to talk about your sales model?

Davidson: We have a lot of local customers, but we also have customers throughout the U.S. We're not specific to the West Coast.

Warner: What's your sales model then? Do you have reps? Do you have direct sales people?

Davidson: We have always followed the direct model. We have direct sales people and it's worked well for us over the years. Mike, you can speak about the rep portion, and how it works in the industry.

Brown: Using reps is a very long sales cycle and it takes too long for them to be paid, disqualifying a lot of them. I have the utmost respect for reps, but the majority of them are component reps with a shorter sales cycle and very few calls, as opposed to EMS.

Warner: Najat, do you have any concerns in regards to having available capital to scale as you go into box build and add lines?

Badriyeh: We have been in business for 20 years. Some of the equipment we bought in year one became old and perhaps obsolete. Remember that you are talking more than 15 years and that technology changes and evolves at a very fast pace. You must keep up-to-date with your equipment and your work.

Our equipment can handle down to .0105 very successfully. In our business, we deal with R&D, different technology, different components, and the latest developments. With our team Naprotek can do what nobody else can.

Regarding the new equipment cost and the financial issue, it has been my policy as CEO to maintain a cash reserve for the company over the years. It is essential for the support and the growth of business. In addition, considering our excellent financial situation, we have lines of credit that we can use if necessary.

Warner: To any of you, what keeps you in this business?

Davidson: It’s in our blood.

Brown: It’s exciting. Like Liz says, it gets in your blood. You get used to the excitement. You learn to love your customers, and it's fun and exciting because you're working on new products with new companies. There’s professionalism and the people that we work with are really smart people.

I'd say what's different about Naprotek than any other EMS that I've ever worked at is that Najat has done a great job at creating a really nice culture here. When I come in to work in the morning, I'm excited because I like where I work. Najat has a great management style and a very nice long-term vision, too.

Warner: Let's hear it for women-owned businesses!

Davidson: I would like to reiterate what Mike said: Our success relies on the expertise, seniority, and loyalty of our workforce. A main key for the success of Naprotek is employee retention.

It is part of the culture that we developed. We do not need additional time to train new people. Once they join us, they know their jobs, they work with the highest quality in mind, and they know multiple tasks within the process. Most importantly, we know that we can depend on them.

Brown: We are unbelievably multi-crossed as far as training goes. I've worked in places where there's one person who does this one job, and when they're gone it just stops. But here I think there's a lot of cross-training.

Warner: I've done a couple interviews lately with some pretty exceptional companies in which they said they view their employees as their greatest assets—far more so than the very best equipment available. What say you? Do you agree with that?

Brown: Anyone can buy equipment, but if you put in the right culture, where the people are invested and can deliver quality work on time, that shows up in how they are really treated and that it is real.

Badriyeh: We take our time when we interview people, trying to get people who fit with the group and who are really qualified to work with Naprotek team. I am very happy with the way we choose our employees and those who work with us.

Warner: Which is so refreshing, because sometimes when you get into a large corporate environment it doesn't often feel like that, does it? Looking forward to the next year or two, what do you see as industry drivers, trends, interests, or challenges?

Brown: I do see a consolidation coming because a lot of the smaller ones are undercapitalized. What you'll find too, is that many of the medium-sized EMS providers are really dependent on a few customers, so they're not very diversified. That is one of the significant advantages here—we are very diversified. The top 20 customers make up 80% of our revenue.

Warner: That makes sense. Any other trends you notice?

Davidson: There is a lot of discussion within our industry about automation and big data driving the business. Naprotek must continue to stay abreast of new trends.

Badriyeh: I have one major concern as we move forward in the future: Will the Valley have enough direct and talented labor? I worry immensely that the new generation does not want to go into manufacturing. Working as an assembler does not perk a youngster’s interest. We need workers who are willing to take on these jobs in order to maintain our industry.

Brown: It's too much work (laughs).

Warner: In fact, I talked to someone yesterday that said there are so many hot, alluring jobs with Google and software companies in the Valley that it fuels a lack of interest on the hardware side.

Brown: Absolutely. The glamour's in software.

Davidson: The glamour's not in manufacturing.



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