Instrument for success

Two decades ago, a couple of engineers and a physicist at the University of Texas-Austin decided to start a business. After brainstorming some possible product ideas, they settled on developing a way to connect scientific instruments to a Digital PDP-11 minicomputer.

"It was dumb luck," says Dr. Jim Truchard, co-founder, chairman, and president, of the choice. "The intersection of computing and instrumentation: What better place to be to revolutionize science and engineering?"

That venture became National Instruments, a $200-million-dollar-a-year business employing more than 1,200 people worldwide.

In the notoriously competitive computer industry, where even the bluest of blue chips usually suffer the occasional downturn, National Instruments has posted solid 27-percent-a-year growth throughout the '90s. And Wall Street seems impressed so far: After going public in 1995 at $14.50 per share, NI stock closed two years later at more than $32 per share.

This, from a company founded without a dollar of venture-capital money--or any formal management education by its top executive. "I learned it all by reading," Truchard says.

'The software is the instrument.' NI has staked out its success by bringing computer productivity to the world of test and measurement. By 1984, says Jeff Kodosky, co-founder and vice president of R&D, NI executives were "intrigued" with the Macintosh's graphical user interface and came up with the idea of using graphical programming to develop instrument-panel user interfaces.

Two years later, the company brought out its most important product to date: LabView software for the Mac, which--with appropriate data-acquisition hardware--can turn an Apple computer into any number of programmable laboratory instruments. "What the spreadsheet had done for financial users, LabView did for technical users," Truchard says. "It would be foolish to program a spreadsheet or word processor yourself. It would be just as foolish to program instrumentation applications yourself."

In 1992, with the growing popularity of Windows 3.1, NI executives decided it was time to move LabView into the PC market. "It took the PC market by surprise, because it was already a mature product," Kodosky says. LabView for Windows made 57 magazine covers worldwide at its launch, and "let us march into the data-acquisition market in PCs." The recent Version 4.1 upgrade added DAQ Wizards, a feature that streamlines data-acquisition development through automatic point-and-click program generation.

LabView has been used to help design everything from the Boeing 777 to Nike tennis shoes; it also helped send experimental data from the Space Shuttle to NASA scientists on Earth. "Non-programmers really latched onto LabView," Kodosky says of the 1986 product launch. Customers soon began cropping up in areas National Instruments hadn't expected: medicine, process control, large-scale test programs.

In one instance, a company used LabView to test an artificial heart valve, monitoring such parameters as strain on valve inlet and outlet struts, valve occluder position, pump piston position, left ventricular pressure, and ventricular acoustic signal. Officials at Structural Acoustics, Raleigh, NC, say the software made things like coding for more channels or filtering data to remove noise "much more manageable tasks."

"LabView has saved everybody a lot of time," agrees William Oncay at Dayton Technologies, Medway, MA, which develops custom software for manufacturers. Dayton recently used LabView to create a graphical interface that controls semiconductor wafer-testing equipment.

More than 450 companies and consultants belong to NI's Alliance Program, to be registered for developing or reselling applications that follow certain guidelines for using NI tools.

Another recent software offering, BioBench(TM), can automatically configure and acquire data from many physiological instruments and from sensors. Laboratory users and academic researchers can get BioBench up and running on Windows 95/NT PCs with no programming.

The company produces more than software, however. There are also data-acquisition boards, controllers, and PCMCIA products, which now allow a laptop computer to double as many different pieces of laboratory equipment--even something as specialized as a gas chromatograph. "The laptop is becoming the instrument of choice," according to Kodosky.

Today, there is almost a cult-like following of "virtual instrument" devotees, one industry observer says. Many gather at the company's annual "NIWeek" in Austin, which features seminars, discussions, and contests for best applications. This year more than 700 people attended.

'Bootstrapping.' National Instruments was born, Truchard says, because he didn't see a job he wanted in Austin, yet didn't want to leave the area. "So I created a job that matched what I wanted to do," he says.

He and two of his students, Kodosky and Bill Nowlin, pooled their resources and came up with 10 possible product ideas. They then voted on which to pursue. The instrument/PDP-11 interface won out, as the would-be entrepreneurs reasoned that instruments collected a lot of data while the computer had the power to process that information. "It was the ideal position for us later to do LabView and our virtual instrumentation because we already had a base of customers working with instrumentation," Kodosky says now.

The company name they sought--a permutation of the founders' initials--was already taken. So were things like "Texas Instruments." So, they settled on National Instruments--a presumptuous name at first, Truchard admits, for a company with 300 square feet as its first office, and $300,000 in sales by 1979. But the name actually helped the young company, since some customers thought the firm was bigger than it was. Later, he adds, they grew into the name.

National Instruments' major contribution to product development has been "bringing off-the-shelf computing to the instrumentation world," Truchard says. "The typical engineer without a lot of computer skills could configure a complex instrumentation system."

Managing growth. It's one thing to lead a start-up; it's another to lead a mature, multi-million-dollar corporation. Many a high-tech entrepreneur has been sidelined as companies grew and markets changed. National Instruments, however, remains successful with its founders still at the helm.

"We grew as fast as I learned how to run the company," Truchard says. While Truchard has never taken a course on management, he says he's read some one hundred books on business. One of his favorites: Built to Last, by James Collins and Jerry Porras, which discusses why some companies have been more successful in their markets than others. The book talks about one thing Truchard considers key to a well-run business: implementing proper systems that create a corporate culture for innovation and success.

That includes "giving each scientist and engineer permission to be successful," he says. "Usually it's the 'no's' that stifle innovation. People have to have the ability to fail and go onto other things."

Employees throughout the company also have "reading groups" where they go over management books and discuss issues and philosophies that can make the company successful.

Going public has allowed the company to offer stock incentives to its employees--a positive motivational tool, Truchard says. But he admits that a stock-exchange listing has also forced National Instruments to pay a little more attention to short-term financial results than in the past. For balance, Truchard says, he's got a "hundred-year roadmap" for implementing proper systems to encourage a successful corporate culture long after he's gone.

"We were able to develop this world-class technology that has made a difference on virtually anything that is built-- environment, basic research, all the way from AIDS to cancer--to manufacturing to superconducting research and automotive development," he says. "We are impacting almost every aspect of science and engineering."