One step ahead

One step ahead

by Liz Wolf   THIS KAY KUBA KNOWS: You can’t be afraid to reinvent your company if you want to stay profitable and grow.

“You have to change, because the industry is continuously changing,” says Kuba, president and CEO of Shoreview-based GCI Systems Technology Solutions Inc., a $35 million computer support services company. She’s operated in the information technology business for almost two decades.

“Technology is continuously changing. Competition is changing. Processes are changing. The way you buy is changing. You always have to look at your business and see the writing on the wall and ask, ‘Where do I go?’

“The marketplace that you’re in today may not be the marketplace for you tomorrow.”

Kuba reinvented her company several times since its inception in 1988.

“There were many sleepless nights,” she says. “Am I changing in the right direction? What happens to my existing employees? Am I hiring the right people moving forward? As a leader, you have no place to hide.

“There were big-time struggles, but I never gave up and had to keep moving,” she says.

Businesses can’t stay stagnant, she insists. “Not for one day; not at all.”

When Kay Kuba hit her mid-40s, she came to a crossroads in her career. As a trained biochemist, she enjoyed a successful, 18-year stint as a research scientist at the University of Minnesota. Still, something was missing. She wanted to create something on her own.

“I’ve always used the terminology ‘middle-age madness,' ” says Kuba with a laugh. She’s now 64. “You get to middle age, your kids are growing up, they’re going off to college. You come to an intersection and start thinking, ‘what do you want to do for the next 25, 30 years?’ The concept of doing something for myself came out of that.”

Although Kuba had no formal business training, she decided to take a stab at running a company and requested a six-month sabbatical.

“Going out there got me excited,” she says. “I thought I’d take a chance.”

Kuba decided on a business targeting customers purchasing their first personal computers and learned the business by reading computer magazines. So in 1988 with $35,000 in savings, Kuba launched Global Computronics Inc., the predecessor to GCI Systems, which today provides computer equipment, networking and technical services.

The company started primarily as a mail-order business helping customers, confused by the abundance of products on the market, design their own computer systems.

Kuba signed a six-month retail lease in Columbia Heights, which coordinated with her sabbatical “in case things didn’t work out,” she says. “So I was very careful.”

Two months into it she walked away from the university and extended her lease. Despite a whole new career path, she felt confident and recognized similarities between chemistry and computers.

“The technology of building computers seemed to me to be synonymous with organic chemistry,” she says. "You take a product, you heat it. You add another product, you freeze it. A derivative is formed, and finally you’ve got whatever product you’re looking for. So this was how you get a system going. You add a video card, add some memory and plug everything together and you have a working computer.”

Kuba received some help in running her business from the Metropolitan Economic Development Association (MEDA), a Minneapolis-based nonprofit offering programs to help minority-owned businesses. Kuba immigrated to the United States in 1963 from Bombay, India, with her husband, who came to study dentistry.

Kuba launched Global Computronics with just one part-time employee and operated both the mail-order and retail businesses. She realized early on that there would be challenges.

“I was a woman in a man’s field,” she says. “It was tough. You’re talking about 1988. PCs had just come out. The hard drives were rock solid and as big as this [office] telephone – the 10 megabytes. How does a woman know all of these things?

“I’d have a high school student working for me, who was a little bit taller, a little bit bigger and male, and the attention would directly go to him. He would tell customers, ‘You need to ask Kay about this. I don’t know the answer.’ That was the biggest challenge I had.”

Kuba worked to gain customers’ respect and learned to speak computerese. As the company grew, Kuba’s three children each worked for her. Kuba’s two daughters have since married and moved to California to start families.

Her son, Sanjay Kuba,  is the company’s CTO and executive vice president. He started working part time at the company at age 25, after earning an electrical engineering degree. He joined full time in 1990, and recently earned an MBA.

Global Computronics performed well, reporting $1 million in sales in 1989. “We started getting local companies that would come in and want to touch and see what a motherboard looked like because this was all unique at that time,” Kay Kuba says.

Sanjay Kuba adds: “A lot of engineers at Medtronic, Unisys and Honeywell were computer enthusiasts and buying computers for home and components at work, and they’d come in and refer their colleagues, so we starting picking up business.”

However, the mail-order part of the business became less profitable.

“We got burned because of mail-order fraud and bad checks,” Kay Kuba says. Also, she says mail order is a very price-fixed business with little or no repeat customers.

“So on the one hand, you’re feeling really good about the things you’re doing for the retail customers, and then you get a mail-order customer on the phone, who’s just beating you up about price, and then you have the fraud element on top of it,” Sanjay Kuba says. “Eventually, we just said, ‘You know what? Mail-order isn’t fun.’ ”

In 1991, Kay Kuba closed the mail order to focus solely on retail.

“We did very well in the retail business,” she says. “Business grew substantially. We started doing more bidding and got into government business.” Being a minority-owned company, she says, helped get their foot in the door.

Within a couple of years, however, Kay Kuba realized she needed to reinvent the company again, because giant retailers like CompUSA and Computer City were coming to town, and Best Buy and Circuit City would later enter the computer business.

“We were very, very small and knew we couldn’t compete on pricing,” she says.

What was important, her son points out, was they didn’t wait for the big retailers to take business from them.

“We knew who these retailers were because they were in Dallas and cities in California. We knew they were coming to the Twin Cities. We made a conscious decision to change our focus and not compete with them.

“Kay is a great steward of battening down the hatches when it’s time to batten down the hatches,” he continues. “The storm’s coming and you don’t wait until you’re being swept away and say, ‘OK, I have to do something.’

“You have to recognize early on that there’s a problem, and her focus has always been on profitability because if you’re not profitable, you don’t get to stay in business, and if you don’t get to stay in business, then nobody benefits.” He says his mother was willing to reposition her company and capitalize on new opportunities.

That attitude is crucial, says Kate Rubin, president of the Minnesota High Tech Association.

“Companies need to be flexible and adapt to changes in all areas in order to stay competitive and profitable,” Rubin says. “Those that are fast followers and adapt quickly to a new innovation often have a limited time when their offering is unique, unless it’s priced better, offers better service or delivery, or has some other distinguishing capability. Those that are innovative by changing the rules and changing market demand can experience huge growth.”

By 1995, GCI made a complete break from retail, shutting down the showroom and concentrating exclusively on midsized to large Twin Cities business customers. Also, since many businesses wanted name-brand computers, GCI sought dealer authorization from large manufacturers such as Hewlett-Packard, Apple, IBM and Toshiba.

The Kubas began focusing more on value add-ons. To accompany these changes, they relocated and changed their company’s name.

“We moved from Columbia Heights to New Brighton,” Kay Kuba says, “and started doing business as GCI Systems. We had gotten out of mail order. We got out of retail. Now we’re focusing solely on corporations, business-to-business. So change of name, change of place and complete change of business.”

She admits that there were many sleepless nights where she questioned if she was heading in the right directions.

“I never, ever thought that the industry would change so rapidly,” she says, “but I never gave up and had to keep moving.”

In 1995, GCI received authorization from the large computer manufacturers, and business increased. GCI hit $10 million in sales that year.

“You only have so much attention you can give,” Sanjay Kuba says. “Once we shut down the showroom, moved our business and focused 100 percent on corporate business clients, we started getting business from companies which we’d been chasing for years.” One was General Mills Inc.

“Their vendor left town and they didn’t want to do business with the new vendor,” he says, adding that GCI’s work to stay in front of General Mills paid off. “We’d been chasing them for six or seven years. They gave us a $10 million contract that literally doubled our business overnight. They took a chance with us.”

The contract, signed in 1997, called for providing all of General Mills’ computer hardware and on-site service. General Mills has been a client ever since.

“They have great commitment to service,” says Terry Brown, General Mills’ vice president, information systems. “They’ll go the extra mile. If we need something, they’re quick to respond.

“They’re also working with us on continually improving and finding better ways to deploy our systems, including lowering our costs and getting better productivity from our desktop area.”

Brown is impressed with GCI’s staff. “Many small-business owners are very good at what they do, but as you move down the chain of employees, they may not have the resources to pass that knowledge on. They’ve made a commitment upfront to do that.”

With General Mills as a client, GCI landed other Fortune 500 and 1000 companies, including Ecolab, Land O’ Lakes and Medtronic. By 1998, GCI’s sales hit $35 million. In 1999, the company purchased a building and relocated to Shoreview.

The family-owned company continued to grow without any outside funding or outside investors. In 1999 and 2000, revenue skyrocketed to $60 million, and GCI employed 100. However, Sanjay Kuba says those two years were anomalies.

“Companies were not only programming, but buying new equipment around Y2K,” he says. “It had to be supported, installed and deployed out in the field.” Many of GCI’s employees were contracted out to companies.

After Y2K, business slowed down. After the Sept. 11 attacks, some projects started dying off and the economy took a tumble.

Something else happened around 2000. Big PC manufacturers started selling direct. “Dell came up with the model, which eliminated the middleman, and other manufacturers like Compaq and Apple followed,” Kay Kuba says. “We lost millions of dollars in revenue. That was my lowest point.”

However, she persisted, and GCI was able to retain a customer base. “We lost some customers, but many companies saw us as a loyal partner and had confidence in me. They liked the ease of doing business with me. I was reliable. Delivery was consistent. That kept me going.”

GCI began downsizing and today employs 32. Annual revenue in 2005 was $35 million. Kay Kuba anticipates similar revenue in 2006. Despite market challenges, GCI boasted 69 consecutive quarters of profitability while cutting the number of employees.

“You do that by being flexible, listening to customers, developing relationships and adding value,” Kay Kuba says.

Troy Bauer, IT operations team leader for Black Box Network Services in Minnetonka, is a satisfied customer.

“It’s nice to work with a company that you feel genuinely cares about your company,” Bauer says. “They’re good at problem-solving and offering solutions. They’re not always just trying to make an extra buck. It’s more like, ‘we’ll get you up and running and figure out how much you owe us later.’ They’re not trying to squeeze you. They’ve got some integrity built in and that resonates throughout the company.”

GCI concentrates much of its efforts today on consulting and servicing, but also continues to sell hardware and peripherals made by Apple, IBM, Hewlett-Packard, Toshiba and Dell. The Kubas believe small IT companies won’t survive today unless they specialize.

“Businesses are buying your expertise and you can’t be a jack-of-all-trades and a master of none anymore,” Sanjay Kuba says. “Customers are really pinpointing what they need, and there are a dozen providers that want that piece of business. The only way you can differentiate yourself is to have expertise and experience in that area. So you have to focus.

“Also, a lot is at stake when you hire an employee. You can’t afford to bring on the wrong person, because you have nothing to fall back on.”

As GCI started working with bigger clients with more complex needs, finding the right employees proved extremely challenging.

“We made so many mistakes,” Kay Kuba says. At one point when GCI was growing so quickly, they would hire just about anyone who understood the technology part of the business. “I think we’re making fewer mistakes now in hiring,” she says. “We’re trying to hire people smarter than us. We’re trying to coach them, train them and empower them and then move out of their way.”

Mahendra Nath, president and CEO of Nath Cos., a Bloomington-based franchisee of fast-food and hotel concepts, is a personal friend of Kay Kuba’s, and respects her leadership style.

“She has great common sense, and with her pleasing personality and great attitude, she’s successful in harnessing energy from the people around her,” Nath says. “She realizes that you’re not successful without making your employees successful.”

GCI continues to tweak the company. This year, it launched an online procurement system for purchasing technology systems, called the GCI Direct e-store. It allows clients to research, check availability, purchase and track orders on-line.

In 2004, GCI formed a joint venture called GNet Group with a software services provider based in India. The company’s focus is on marketing software services around the Microsoft.net technology.

“The joint venture will probably be a $1 million company this year,” Sanjay Kuba says. “We think there’s probably $10- or $12 million worth of opportunity for us. When we get to $3- or $4 million here, we’ll go out to different cities and establish a presence.”

To help with GCI’s expansions and new strategies throughout the years, Kay Kuba often turned to MEDA.

“MEDA has always been my backbone,” she says.

MEDA helped GCI, for example, develop a marketing strategy to separate its products side from its service side and also helped develop marketing for the GCI Direct e-store.

MEDA officials are impressed with the Kubas’ resiliency.

“Their strength is the ability to understand the market and the competition they face,” says Kathleen Riopelle, a MEDA business consultant. “Their competition has been changing, and they’re savvy and sharp enough to stay on top of that. They’re open-minded, flexible and creative in their thinking. They have a 360-degree view of the world around them.”

Yvonne Cheung Ho, MEDA president and CEO, credits GCI’s success to Kay Kuba’s vision, leadership and ability to build relationships.

“Kay loves people and builds relationships very well. She’s honest and genuine and people are attracted to that,” Cheung Ho says. “Kay also manages the financials very well. She’s conservative and has discipline to put profits back in to grow the business.”

GCI has gained much attention. The Minnesota Minority Supplier Development Council named GCI Supplier of the Year twice, and MEDA named the company Entrepreneur of the Year. Most recently, GCI was honored as the family/minority-owned business of the year by the Saint Paul Chamber of Commerce.

“The company is highly regarded in the marketplace,” says Larry Dowell, chamber president. “They’ve found ways to remain competitive in a remarkably competitive business. They’ve been able to stay contemporary and move forward.”

As for the future, Sanjay Kuba eventually will take the reins when Kay Kuba retires. “It will be some time in the next decade, but I don’t know how or when,” she says, adding that she’s still very passionate about the business and not in a big hurry to step down.

“The change in the business motivates me,” she says. “Everything’s so dynamic and moving.

“Today, you come in and see a large company buying a small company that was your competitor, so now your competitor has become larger. Now what? How do I compete? What do I need to change? So you’re continuously thinking. It’s very exciting. That’s what drives me.”

[contact] Troy Bauer, Black Box Network Services: 952.352.5820;  tr********@*********vs.com; www.blackbox.com. Terry Brown, General Mills Inc.: 763.293.2874;  te*********@******ls.com; www.generalmills.com. Yvonne Cheung Ho, Metropolitan Economic Development Association: 612.259.6568;  yc*******@***ca.net; www.meda.net. Larry Dowell, St. Paul Chamber of Commerce: 651.265.2770;  la***@**************er.com; www.saintpaulchamber.com. Kay Kuba, GCI Systems Technology Solutions Inc.: 651.604.5721;   ka******@********ms.com; www.gcisystems.com. Sanjay Kuba, GCI Systems Technology Solutions Inc.: 651.604.5736; sa*********@********ms.com; www.gcisystems.com. Mahendra Nath, Nath Cos.: 952.853.1400; na******@***********es.com; www.nathcompanies.com. Kathleen Riopelle, Metropolitan Economic Development Association: 612.259.6570; kr*******@**da.net; www.meda.net. Kate Rubin, Minnesota High Tech Association: 952.230.4562; kr****@**ta.org; www.mhta.org.