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James Truchard is retiring after four decades at the helm of National Instruments.

October 28th, 2016

When James Truchard started his tenure as CEO of National Instruments in 1976, many of today's tech industry giants were still in their infancy. Apple Computers was in its first year. Microsoft was a year old. And Michael Dell was 11 years old, eight years away from building his first personal computer. 

Truchard, though, was 33, and National Instruments was on the road to becoming one of Austin's most robust publicly traded tech companies. In January, Truchard is retiring from the one job he's held for 40 years, making him perhaps the longest-serving CEO in the history of all public tech companies in the world.

It's unusual for any industry to have a CEO stick around for four decades, although founder CEOs do tend to stay longer. According to the Conference Board, the average CEO tenure in 2013 was 9.7 years

Under Truchard's watch, National Instruments has quietly blossomed into one of Austin's most prosperous public companies, with $1.2 billion in annual sales, offices in 60 countries and 7,600 employees worldwide. 

Its headquarters in Austin is where most of its research and development activity takes place and where 2,500 employees work. 

National Instruments makes testing and measurement equipment and software that is used by scientists and engineers. The company sells to other businesses, universities and governments. 

"More people around the world know more about National Instruments than we know here in Austin," said Angelos Angelou, an economic development consultant based in Austin. 

The average Austinite probably hasn't used any of NI's equipment - but we've all likely benefited from various discoveries that NI technology has enabled, such as helping biotech startups detect diseases to advancing cellular wireless network data capacity and the development of self-driving cars. 

"They are focused on their own business and weren't focused on trying to be a flash-in-the-pan by any means, and they have been incredibly successful doing that," said Bob Smith with Austin's Bridgepoint Consulting. "They haven't had a lot of management turnover and haven't any PR issues, they've just taken care of their people and customers and their shareholders all these years."

From Cat Spring to​ Austin

Truchard, 73, was raised in Cat Spring, an East Texas town so small it doesn't have a single stoplight. His family ran a farm and grew fruits and vegetables and raised cattle. 

He was one of seven children, and attended a one-teacher school with 15 students in eight grades. 

Courtesy of James TruchardNational Instruments CEO Jim Truchard at top right with siblings. 

"We didn't have electricity growing up," Truchard said during a recent interview with the American-Statesman at NI's headquarters in Austin. They used kerosene lanterns to read at night. Truchard said they made a "crystal radio," taking the tin roof of their house and putting a wire on to it to listen to radio stations from Houston. 

"That was kind of my first interest in electronics," he said.

Truchard went to the University of Texas for college and eventually got his doctorate in electrical engineering. Afterward he worked at the University of Texas Applied Research Labs.

It was there he met his NI co-founders, Jeff Kodosky and William Nowlin. "I shared an office with Bill and Jim was our supervisor," recalled Kodosky. 

They got the idea in 1976 to develop a company around "computer-based instrumentation." They designed a device that helped connect test and measurement equipment with mini-computers.

It was natural for Truchard to become the CEO because he had been their supervisor, Kodosky said. 

"We all kind of gravitated to what we were interested in," he said, and though Truchard was an engineer, he was also keenly interested in understanding how to run a business and make it grow. 

Using only $3,000 and a $10,000 bank loan to get the company off the ground, the three men continued working at the lab while moonlighting at National Instruments. Their first office was 300 square feet on Burnet Road, Truchard said. Their first client was actually the government -- Kelly Air Force Base in San Antonio.

"The thought process when we started our business wasn't to become rich," Kodosky said. "It was to create a place that we could have a career doing something meaningful, calling our own shots about what we wanted to work on."

By 1979 the company had finally made enough money - about $300,000 in sales - for all the co-founders to quit their day jobs and focus on building National Instruments. 

Truchard and Kodosky said they had big ambitions of becoming a large corporation even at the beginning. 

"There was the hope and dream that we would get there eventually, but it seemed like we were focused in the present and what would come next," Kodosky said, taking it one day at a time.  

Courtesy of James TruchardNational Instruments CEO Jim Truchard, standing, at offices on Technology Blvd. in mid-80s.

Going public 

The 1980s brought a few milestones for the company. They developed an interface with personal computers, which was adopted by IBM, a "turning point" for the company according to Truchard. 

"Those were the years they would set the standards for what worked on PCs," Truchard said. 

Another major turning point came in 1986, when the company released LabView, software that helps its customers interpret data. It still is used today and Truchard says its importance to the company is similar to how vital Apple's iOS operating system is to their phones and tablets. 

"We still to this day depend heavily on it for success," Truchard said. By 1988, according to an American-Statesman article, the company had $24.5 million in annual revenue, up from $1 million in the early 1980s. 

For a tech startup, National Instruments managed to survive a long time before going public. But by 1995, National Instruments could no longer stall going public. 

Truchard said the primary driver behind becoming publicly traded was to find money to pay for all the stock awards that employees had accrued. By 1995 they had 300 shareholders, who were predominantly employees. "For liquidity's sake, we had to have an option for folks to realize the value of their stocks," he said. They went public in March of 1995. That stock offering certainly made the founders and some early employees instantly rich. 

Truchard recalled one early employee who had received $300 worth of shares and when they went public she became a millionaire. But National Instruments didn't create millionaires on the scale of Dell, which famously created thousands of "Dellionaires" in Austin when it went public in 1988.

"They've been a steady influence on the community," White said. "It's certainly helped build an ecosystem of developing great talent."

RALPH BARRERA/AMERICAN-STATESMAN STAFFJames Truchard, left, is retiring from National Instruments after a 40-year tenure as its CEO. He offices out of a cubicle in the middle of the eighth floor as he talks with Eric Starkloff, Executive Vice President, Global Sales and Marketing, center, and Francis Griffith, Senior Vice President, Regional Sales and Marketing, right, as they talk sales strategy.   

Managing by book​ 

Truchard is part of a fairly exclusive club of tech company founders that managed to learn enough about running a business that they stay on as CEOs. Think of people like Bill Gates of Microsoft, who was CEO for 25 years, and Mark Zuckerberg at Facebook who has remained CEO since starting the company in 2004. 

So how did this engineer teach himself how to be a CEO? Reading. 

"I read lots of books - several hundred books all told," Truchard said. "On whatever subject I was worried about at the time, I would find a book." 

Indeed, a 1989 American-Statesman profile of the company starts out by describing a dog-eared copy of "Thriving in Chaos," a best-selling book about managing a company during turbulent times. 

He's even written his own book over the years - but not about business. He put together a 300-page coffee table book about Hill Country gardens, featuring photos taken from his own garden. 

Executives who worked closely with him over the years say he excels at delegating important tasks so he can focus on the company's bigger picture. 

"His style, management-wise, was never to be coercive," Kodosky said. "I've never seen anybody stay so calm under whatever the pressure was and be able to think rationally and have the long-term perspective."

He acted like a mentor, Kodosky said, giving advice and asking questions but wasn't issuing orders. Alex Davern, the company's chief financial officer and chief operating officer, said Truchard perfected "sneaker management," which means walking around and stopping at cubicles to talk to people. 

"We have a very open dialogue between the employees and management," Davern said.

Taylor Johnson/AMERICAN-STATESMAN STAFFThe sign on the National Instruments building in Northwest Austin. 

 

'I always wanted to create a job I like'​

One of Truchard's biggest influences on the company was his long-term vision for National Instruments. 

Truchard said when he first met with Wall Street investors in 1995 he put up a slide called the "100-year Plan," that illustrated just how far-thinking the company was. "We've spent a lot of effort encouraging long-term thinking."

That 100-year plan really just underscores the company's values and culture, though Truchard notes they also have 10-year, five-year and one-year plans that spell out more specific, measurable goals. 

The idea is to avoid the short-term focus that plagues a lot of public companies when they have to report quarterly results and are worried about pleasing investors for fear of a drop in stock price. 

But Truchard said you have to "practice what you preach" in order for investors to really buy into it. For example, he said during two economic downturns, they didn't cut spending the way other companies did. 

"We let profitability drop somewhat and continued to invest," Truchard said. "Generally you can hire the best people in a tight economy. We actually used it as an opportunity to pick up some talented people."

His strategies have largely paid off. If you look at its stock price over the past five years, it hasn't budged much. But Since its IPO over 20 years ago, the stock has risen from $3.56 to $27.77, when adjusted for dividends and splits.  

Another Truchard legacy is his emphasis on recruiting and retaining top talent - especially recent college graduates. "I always wanted to create a job I like so that was a key goal in starting a company," Truchard said.

"We are a career company," said Cate Prescott, vice president of global human resources for National Instruments. "We want people to come and stay and feel engaged with the work they are doing."

At National Instruments, the average tenure for its employees is seven-and-a-half years and the average tenure of its Austin workforce is eight-and-a-half. That's significantly more than than companies such as Microsoft, Oracle or Texas Instruments, according to Payscale

The company structures their "stock unit awards" in such a way that it rewards longevity with the company, and is tied to company performance.

"The reputation they've had over the years is they've always hired new talent from universities," Angelou said. Walking through the maze of cubicles at NI's headquarters, you can see college flags attached to different cubicles, evidence of that semester's crop of interns or recent hires. 

Davern said Truchard has never forgotten the importance of recruiting and that he spends 8 a.m. of every Friday speaking to college students who are at National Instruments for interviews. "The person who does the introduction to NI and talks about our mission and vision for the company is Dr. Truchard," Davern said. "It's a really formidable commitment to recruiting at a personal level."

Ralph Barrera/AMERICAN-STATESMAN STAFFTruchard talks with an employee at the National Instruments offices in 2010.

What's next?

Truchard isn't disappearing on Jan. 1. He'll still be chairman of the National Instruments board of directors. But the day-to-day CEO role will turn over to Davern. 

I asked Truchard what he's going to do with all that time on his hands. He said he'll turn his focus on philanthropy, though he declined to provide specifics other than that he is trying to find "areas that are ripe for change or exciting areas that you see an opportunity to make a difference."

One area might be education. Truchard gave $10 million to the University of Texas Cockrell School of Engineering in 2013 to help develop an engineering education and research center. 

Truchard isn't particularly motivated by money. In 2010 he reduced his salary to $1 a year, though he of course is a major shareholder of the company, and has stock holdings worth millions. 

"It does send a message to the organization that you're making a company that has a certain culture to it," Truchard said about being paid $1 a year.  "It seemed to work well in terms of perception of culture and being open - and everybody can share in the value I create." 

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