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Gadi Cohen Lets His Chips Do All the Talking
Listen to this articleDate: March 30, 1994
Location: Moonachie
Title: Gadi Cohen Lets His Chips Do All the Talking
Author: Terri Petronico
Subject: Although he has a lot to brag about, the CEO of PNY Electronics keeps a low profile
One of New Jersey”s most successful entrepreneurs is also one of its least well known. Gadi Cohen, 34, is the founder and president of Moonachie”s PNY Electronics, a privately held company that manufactures computer memory chips. Its sales more than doubled from $86 million in 1992 to $200 million in 1993, and this year will probably reach $300 million.
That kind of growth normally lands the CEO on the cover of national business publications, and it would for PNY if Cohen would only agree to have stories written about him. But Cohen is a man who likes to keep his private life very private. When Inc. mag-azine named him its High-Tech New Jersey Entrepreneur of the Year in 1992, Cohen refused to be photographed for the article. A recent issue of Fortune magazine features stories on 40 of America”s smartest young entrepreneurs. Cohen was included, but wouldn”t sit for an interview or allow Fortune to photograph him.
A former captain in the Israeli army, Cohen has the look and demeanor of a military man. Cohen”s employees speculate that his heritage is one of the reasons he shies away from publicity. Says one: “English is his third language, and he”s sensitive about how he comes across.” According to his employees, Cohen likes to let his company”s success speak for itself.
That it does in the field of computer memory chips. Brian Greer, the company”s marketing director, says that PNY”s 4,600-sq.-ft. lab churns out more than 50,000 chips per day. It is the quality of the product that attracts customers, according to Greer, but what keeps them coming back for more is the turnaround. “If a purchase order comes in before 8:00 p.m., the order is shipped out that day no matter how large,” he says proudly.
Cohen is another example of the benefits the U.S. enjoys that come from being a haven for the world”s young and restless and ambitous. While in his early 20s, the entrepreneur-in-training was serving as a captain in the tank division of the Israeli army. Deciding he”d had enough of army life, he was honorably discharged and moved on to Paris, where he briefly went to work for an uncle who was a broker in computer memory chips. His work in France provided him with the international perspective that would later become one of the keys to his success in the competitive American marketplace.
The move to the U.S. was the logical next step. In 1985, with only a modest knowledge of English, Cohen left his uncle”s employ and set out for America, ending up in Brooklyn. It was here that Paris and New York Electronics (later shortened to PNY) was born.
Like so many start-ups, the company”s early years were a struggle. Running the business out of the attic of his Brooklyn home, Cohen continued buying and reselling memory chips to computer companies. To make ends meet, he also drove a cab at night. But his uncle”s American connections and his hunger for success paid off. In its first year, the business had sales of close to $1 million.
After five years in the chip-broker business, Cohen decided the real money was to be made in manufacturing. Like his own move to America, the company”s next move was just a logical step. “Manufacturing the memory chips rather than simply reselling them was an opportunity for the company,” says Greer. “It provided Gadi with the ability to have final say over the quality of memory chips, as well as opening many new marketing channels that were previously unavailable to us.”
Cohen decided to set up the manufacturing operations in Moonachie. To get the facility on-line, he lured away experts in the field of computer-memory manufacturing from Quad Systems in Horsham, Pa., which constructs the machinery used in manufacturing memory chips.
That did not sour relations between the two companies, though, because PNY began using Quad machinery. Gary Burroughs, vice president of North American sales at Quad, says the relationship began when PNY lured away Quad”s vice president of manufacturing, John Hughes, to head up its manufacturing operations. “It”s natural that the two companies would form a bond,” says Burroughs, “because Hughes was extremely familiar with our machines.” PNY”s Greer says the relationship has enabled the company to buy the latest state-of-the-art machinery, while assisting PNY in training its own personnel. Greer explains: “Gadi knew the memory market but was not a trained engineer. All our new technicians now undergo two weeks of training at Quad.”
With help from Quad Systems, PNY built its manufacturing facilities swiftly and began expanding sales to its primary clients, Compaq and IBM. But it was to take a catastrophe on the other side of the world to make PNY”s computer chips the hottest product on the market. In September 1992, Japan”s Sumitomo, the world”s leading producer of D-RAM semiconductors–the main component in RAM computer memory modules–suffered a crippling explosion in its main factory, which effectively shut down the chip manufacturing industry and drove the cost of computer memory sky high.
Cohen capitalized on his business relationships to expand the company”s markets. “When the crunch came, Gadi had already formed solid relationships with a number of smaller D-RAM vendors, many more than his competitors,” he says. “Since Sumi-tomo wasn”t the company”s sole source of D-RAM, we were continuing to ship at 98% capacity when all our competitors were backordering.” That gave PNY instant visibility.
“Prior to the explosion, we had been having trouble introducing our products to one of the country”s lar-gest value-added resellers, CompuComp, because it had a very strong relationship with Kingston, our main competitor,” Greer says. “We got in the door simply because of our availability and remain because our products are more competitively priced.
Burroughs of Quad Systems says the company”s innovative manufacturing techniques are another reason for its success. “Improvements on the designs are happening all over the world, and it”s tough to compete in that arena,” he says. “But PNY has made advancements in the manufacturing processes that allow it to make chips better and faster.”
Computer-technology experts say that those improvements will make or break a manufacturer. Daniel Burrus, president of the high-technology research firm Burrus Research Associates in Milwaukee, Wis., and author of Technotrends, says American manufacturing companies simply cannot compete with Japan”s highly skilled labor market. “U.S. companies like PNY need to focus on innovations in the manufacturing processes that will allow them to make more for less,” he explains.
PNY is now also expanding into the retail market. Open any computer direct-mail catalogue, and chances are the memory chip you”ll be purchasing to upgrade your personal computer will be from PNY. The company”s products are also sold in such major retail stores in the tri-state area as Wal-Mart, Tops Appliance City and Egghead Software. “By selling directly to the end user, we can create even higher visibility in the market,” says Greer. Higher visibility means recently hiring a design firm to make the product”s drab packaging more attractive. Greer say Cohen insisted the product needed to look “more MTV.”
Despite the growth in the U.S. market, Cohen will soon again turn his attention to France, when the company opens a new manufacturing facility in Bordeaux in late April. According to Greer, the decision to return to France was not sparked by nostalgia but by commerce. “IBM France invited us to open up facilities there to support its memory requirements,” he says.
With projections that revenues this year will increase about 50%, Cohen doesn”t have to worry about getting good press coverage. He”s got good business. u
