BENJAMIN MARK COLE
COMPTON Chet Pipkin: Just a college dropout from Hawthorne, who liked to tinker with auto engines, radios and televisions and such.
Who would have guessed that the company Pipkin started in his parents’ garage would today be generating almost $90 million in annual sales and that year-to-date sales in 1997 are 70 percent ahead of the like period last year?
At the heart of the Pipkin empire are cables.
The world’s appetite for personal computing equipment keeps growing and nearly every PC needs to be plugged into the wall, and then cable-connected to screens, printers, fax machines, modems or other peripherals, or to mainframes and networks.
With his Compton-based Belkin Components Inc., Pipkin supplies computer cable and plugs to national retailers such as Computer City and Fry’s Electronics and international distributors, including the industry giants, Ingram Micro Inc. in Santa Ana and Merisel Inc. in El Segundo.
There was a time when the demand for cable nearly strangled Pipkin. That was back in the early 1980s when PCs were less ubiquitous and he ventured into the corollary market of making cables that connect computers to everything else.
“I always liked fiddling with things. I don’t have a formal education in engineering, but I always liked knowing how things worked,” said Pipkin, who quit UCLA after one quarter.
He had done a brief stint at another cable company and wanted to start his own enterprise.
With his dad, a machinist, and friend Steve Bellow, Pipkin began small-batch manufacturing of computer cable in his parents’ garage.
The name “Belkin” was chosen as a contraction of the last names of Bellow and Pipkin.
Pipkin’s father was informally drafted to design and handcraft some of the early machines for making cable products. “Otherwise, they would have cost $10,000 each, and we didn’t have that kind of money,” said Pipkin.
Local computer shops in those days, largely independent were his first customers.
First-year sales were a respectable $178,000. “We have never not made money,” said Pipkin. “But we have had cash-flow problems fortunately, early in the history of the company.”
Pipkin learned first-hand the lesson of many other manufacturers: Payroll comes every two weeks. Rent and utilities must be paid. Many vendors demand immediate payment.
But retailers want terms 30 days, 90 days. And if a retailer is late on payment, do you demand payment and alienate an account?
In addition, customer orders must be filled, or the account lost and the Belkin reputation damaged.
“In those days, I was 23 years old, with no credit history. No bank would lend me money,” he said. “Uncontrolled growth can kill a company. You can have all your money tied up in inventory and receivables, and all of a sudden you discover you can’t make payroll.”
After a few close calls, and as business continually expanded, Pipkin began to better anticipate cash-flow problems.
Pipkin’s partner Bellows said: “Sometimes we had to ask a major vendor to wait an extra month before we could pay them. We learned how to negotiate.”
A big day was in 1985, when Ingram Micro added Belkin’s products to its catalog. “That was the big leagues,” said Pipkin.
In the 1990s, Belkin began adding other lines, such as surge protectors, peripheral sharing devices and other computer accessories, like keyboard pads.
A new line added this year is cable and accessories for cellular phones. But even yet, cable connectors make up two-thirds of the company’s business.
Despite success in cables, Pipkin said he is warily eyeing other methods for computers to transmit data to printers, or other devices. The Belkin catalog is replete with products that transmit computer-generated data by radio frequency or infrared light. One product allows a printer to respond to radio signals from a computer as far away as across a street, thus obviating the need for cables.
“We actually like it when the technology changes, because we are first out of the box with our new line,” said Pipkin. “For a while, we researched fiber-optic cable, when it looked like that might replace (copper) cable. It never did, but if it does, we will be ready because of all the research we did.”
The Belkin operation in Compton employs 350 workers, in a modern, 240,000-square-foot factory. Some product is manufactured on site, some is bought elsewhere and assembled or packaged at the Compton facility.
As large as Belkin has become, it is still just scratching the market, said Pipkin.
“Right now, exports are 5 percent of sales. We’ve just opened an office in Great Britian, to penetrate Europe. After that we’ll go after Latin America, and then the Far East,” he said.
To date, Belkin has concentrated on the retail market, but it is now planning to sell directly to PC makers called the original equipment manufacturer or “OEM” market.
“The same firms we chased out of the retail market are making money in the OEM market,” said Pipkin, leaving the thought unfinished.
But Belkin controls more than 50 percent of the retail market for PC cables, and he hints that similar successes can be had in the wholesale side of the fence another potentially huge market.
Now that Belkin has reached what Pipkin calls “critical mass,” its growth rate is accelerating. “We have so many more resources than we had when we started. Marketing. We have research and development. We can go overseas,” said Pipkin. “Our target is to become a billion-dollar company. That’s our long-term goal.”