Henry Nicholas, CEO, Broadcom

In 1997, when Broadcom (Irvine, CA) made Forbes Magazine's list of the '200 Best Small Companies,' CEO Henry Nicholas made a prediction. 'At the rate we're growing,' he said, 'we're going to be on your big-companies list by the year 2000.' At that time, Broadcom's revenues were around $40 million and the company was privately owned.

Today Nicholas appears to be making good on his promise. Broadcom went public in 1998 and last year's revenues reached $518.2 million. Now Nicholas proudly proclaims, 'We are the fastest growing semiconductor company of all time.'

Nicholas founded Broadcom in 1991 along with his UCLA Ph.D. advisor, Henry Samueli. Broadcom, which designs chips for cable modems, high-speed networks, direct broadcast satellites, high-definition television reception, DSL (digital subscriber line) equipment, and cable set-top boxes, is on a roll.

Rather than sinking cash into manufacturing facilities, Broadcom farms out its fab work. The added liquidity may contribute to the company's amazing performance on Wall Street, with its stock trading far beyond 500 times earnings.

The company has also been on a buying spree, acquiring eight companies in just over a year. 'We found that you cannot organically grow everything,' Nicholas says. Three of those acquisitions were made this past March: BlueSteel Networks (Internet security processors), Digital Furnace Corporation (communications algorithms and software), and Stellar Semiconductor (3D graphics technology).

If Broadcom's performance appears to be jet-propelled, Nicholas operates on full afterburners. Allotting only three hours for sleep and fuelled by energy bars, he's into weightlifting, extreme sports, and his Lamborghini Roadster. Renovations have turned his home into a networked fantasyland, where even the lights know what the telephone and stereo are up to, and a mobile phone can cue the whirlpool bath.

Not that Nicholas has much time to soak. When he isn't acquiring companies, he's busy courting employees for his expanding empire. And only the best and the brightest will suffice. 'We have some of the best talent on the planet,' he asserts.

Nicholas has even been known to search the far corners of the globe (and the cubicles of competitors) to recruit the crème de la crème. Recently, Intel sued Broadcom for luring away three key employees, alleging theft of proprietary knowledge regarding its Ethernet products.

Of course, all that brain power is necessary to maintain the proliferation of chip designs that power this rising broadband juggernaut. Broadcom's customer list includes the biggest players in the industry, including 3Com, Cisco Systems, General Instrument, Hewlett-Packard, and Motorola. These discerning customers favor Broadcom's product line because the company's engineers have a knack for reducing systems into single chips and boosting overall performance. For example, the BCM3400 CMOS digital cable tuner replaces as many as 200 discrete components while elevating signal-to-noise ratio beyond an 'excellent' picture grade.

However, Nicholas' vision isn't always so faultless. When Broadcom first entered the fast-Ethernet market, the founders backed a technology that didn't win out in the marketplace. But even his mistakes have a way of sorting themselves out. The company quickly switched to the reigning 100BaseTX standard and rapidly captured the lion's share of that market.

By focusing on the major players in each of its markets and delivering cutting-edge designs at rock-bottom prices, Broadcom has consistently managed to outmaneuver larger competitors like Intel and Texas Instruments. Even without its own fabrication facilities (or, perhaps, because of that lack), the company's army of world-class manufacturing engineers has been able to generate yields and economies that have translated into a non-stop series of success stories.

Not enough

But Nicholas has his eye on transforming the future, not just dominating the present. He's convinced that convergence is the next wave in technology. His totally wired home is simply a forecast of tomorrow's typical dwelling, in which cable, telephone, and Internet services all blend seamlessly. And Broadcom has been busy developing a 'home gateway' device to make that futuristic vision a common reality. In fact, that very goal was a driving impetus behind the company's 1999 round of acquisitions.

Nicholas is also extending his company's horizons by expanding into interactive content. Right now, it's a classic chicken-and-egg scenario: consumers won't embrace high-speed communication until content providers can supply them with broadband interactive media--which, obviously, can't be delivered without high-speed channels.

To help break the impasse, Broadcom has partnered with an extreme-sports media company called Gotcha International. The resulting offshoot is a sports-oriented content company dubbed Broadband Interactive Group (BIG) that will offer Internet, television, print and live-event coverage for extreme sports, with a future move into mainstream sports.

Broadcom's future prospects seem as limitless as Nicholas' energy. When asked whether he has any plans to slow down, he cheerfully replies, 'Hell, no!' So as you fall asleep tonight, rest assured that he's probably hard at work transforming science fiction fantasies into the next communication trend.