Candle Corp. founder Aubrey Chernick, No. 41 on the list of L.A.’s wealthiest people, grants a rare interview on his history, business and philanthropy
Aubrey Chernick has studiously avoided newspaper reporters for years, shunning all media attention while building up one of the biggest fortunes in Los Angeles he is No. 35 on the Business Journal’s list of L.A.’s wealthiest people.
With someone so shadowy, it’s hard to know what to expect. Yet the chairman, CEO and founder of software giant Candle Corp. isn’t scary, or awkward, or terse, or even tense. He exudes a small-town charm and self-deprecating manner no doubt learned from his Canadian farm-town upbringing, as well as the rare ability to explain complicated software issues in layman’s terms.
By developing software that finds and sometimes fixes glitches in massive computer networks, the 51-year-old Chernick built Candle into one of the largest software companies in the world. Unlike its competitors, Candle has remained privately held since its inception.
Candle posted revenues of $382 million in 1999, up from $361 million in 1998. While the company’s growth has been steady, it is still recovering from a slowing of demand in the mid-1990s for mainframe network software. New efforts to accelerate growth include focusing on software that can help improve the speed of Internet processes.
The company moved its headquarters to El Segundo from Santa Monica last year, accommodating the office’s growing staff of 700 and cutting down on pricey rent. In all, Candle employs 1,800 workers in 55 offices worldwide. Not bad for a kid from a rural town in Manitoba, Canada population 900 during Chernick’s day.
Question: You grew up in a small farming town. What sparked your interest in computers?
Answer: I was working in Canada, in Manitoba, doing environmental analysis. I was working in an environmental lab, because I had a background in chemistry, and there were computers there. There was another fellow working there, and neither of us knew very much about computers, so we learned to program by teaching ourselves Basic. Until then, I thought I might go into medicine. I wasn’t sure what I was going to do.
Q: How did you come to found your own software company?
A: I’d been working (as a software programmer) in the province of Ontario in Canada, learning new technologies and thinking about starting a new business. After awhile, it just depended on a gut feeling. Intuition is pretty important. I’d studied the marketplace, and talked to a number of different business people. Then I got this fortune cookie: “Your wishes are going to come true in the new year.” So I founded Candle Services Corp.
Q: What did your company offer?
A: You know (PC diagnostic software) Norton Utilities? We wanted to be the Norton Utilities for a mainframe. When you’re running mission-critical systems ATMs, claims processing when you have tellers online at workstations, it’s important that those machines are kept up and running. Mainframes would be crashing and running slowly. If they crashed, they were in the dark. Our product helped them identify how to fix their problems.
Q: Why did you move the company to Los Angeles?
A: I moved to L.A. about six months later because the major marketplace was down here. This was 1977. There were a number of prospects and incredible Fortune 500 companies. Soon our clients included So. Cal. Edison, Warner Bros., Northrop, McDonnell Douglas, TRW Aerospace in Redondo Beach all blue-chip companies.
Q: What were the early days like?
A: You want a war story? I had just come down here and was working out of an apartment in Marina del Rey, and I got a call from someone at Hughes. It was kind of a strange call. They asked, “How do you sell your product?” I said, “You get a 30-day trial.” They asked, “What’s involved in the trial?” and I said, “You get the software and a tape with instructions.”
“How involved is the paperwork?” “It’s not a big deal, just one page.”
“And the cost?” “$100.”
“Hmm. (Pause.) If someone came over to get that tape right now, would it be available?”
It was obvious they had some computer problem with their system. When you’re a small company, and your office is in an apartment in Marina del Rey, and you have Hughes knocking on your door, it’s kind of funny.
Q: Why have you kept your company privately held?
A: It allows for a longer-term investment. We’re often working on things for several years. With public companies, there’s so much focus every quarter on earnings, and you end up taking a short-term approach. We take a multi-year view, and our customers appreciate it. We’ve been working on things for the previous three years that our clients will be experiencing three years from now.
Q: Have you gotten much pressure to go public?
A: I’ve gotten calls once a week for 25 years. There’s just too many factors. The company could be doing well, but the segment is not doing well, so that impacts the company. Or the segment is doing well, so the company does well as a result. Of course, in that case, (people who run public companies always take credit by saying) the company is the reason (the segment is) doing well, right? (Laughs.)
Q: What about venture capital investments?
A: We’re self-funded. I’ve never had any venture capital money since the beginning. It’s part of the bootstrap environment. I’d take what I made from the first couple of sales, and put it back into the company, and hire more people. Then, once I’d delivered 80 or 90 percent of the project, I’d get an advance, and that helped me carry on.
Q: Candle started out identifying glitches in computer networks, and has recently moved into developing software to identify Internet-related problems. What are some of those problems?
A: Imagine you walk up to the door of a store. You know what you want to buy, and you can see in the window and see other people are shopping, but you can’t get the door open. You’re pulling at the door, and the management of that store doesn’t even know you’re waiting. With the Internet, when you’re waiting, no one knows it. This is a real issue. At Christmas, I went to this Web site to buy toys, and I had to wait a minute and a half just to open a shopping cart. I almost bailed out.
Q: What current projects are underway at Candle?
A: Right now, one of our initiatives is to address an area, business integration, which will improve response time. With business integration, we can integrate systems within a company and across companies. When you have two computers trying to talk to each other, that’s a complex problem to solve. Imagine having two companies’ computers trying to talk to each other.
Q: Can you talk about the charity you founded?
A: I set up, maybe 15 or 20 years ago, the Candle Foundation. Since its inception, we’ve donated $1.5 million to a number of charities. (Money is allocated) to 15 or 20 different organizations each year. We’ve supported a variety of charities (involving) various diseases, AIDS, social issues, education, innovative research, a whole variety of things. It’s our small way to give back to the community.
Q: You were born in Los Angeles, raised in Canada, and have lived here for about 25 years. Do you consider yourself American or Canadian?
A: Now American, because I’m a U.S. citizen as of last summer. Or maybe a little before that. It’s always warm here, so I get mixed up on seasons.
Q: What was it like going through the citizenship process?
A: I went through the test, they asked me all the questions, and then there was the swearing-in ceremony. The thing that was interesting, there was a problem because immigration had backed up so far. It had to do with fingerprints. You have to be processed within a certain time of getting fingerprinted, I think it’s a few years, but it was backlogged to the point where applicants were going to need to get fingerprinted again.
So they gave a crash course. It was held in this massive room, with hundreds of people, and then you’re passed onto another room with rows and rows of individual cubicles. In each cubicle, there was an examiner from INS, with a list of names to go through. There must have been thousands of cubicles. You’re being processed.
Q: Why do you rarely grant interviews?
A: I’m not looking for personal publicity. I will help out my company. It’s a responsibility I have. But I like my privacy.