Rethinking Risks

March 2, 2008 by Abby Cohn

James Lau, cofounder of Network Appliance and recipient of the Berkeley Engineering Innovation Award for lifetime achievement. Photo credit: Bart Nagel James Lau, cofounder of Network Appliance and recipient of the Berkeley Engineering Innovation Award for lifetime achievement. (Photo by Bart Nagel.)Early in his career, Network Appliance cofounder James Lau ventured out in hopes of developing one of the first handheld personal computers. His PDA would have used a stylus to enter notes, appointments and other data, but after six months of work in 1991, he scrapped the project. “Handwriting technology wasn’t as good as people thought,” recalls Lau (B.A.’81 Applied Mathematics, CS).

Though he gave up the relative security of a management job in software development to work on his PDA, Lau never regretted his unsuccessful quest. When it comes to innovation, “there’s no guarantee,” he says. “That’s part of the exploration. You just need to move on.”

Move on, he did. Convinced that the corporate world faced a growing need to store large quantities of digital data, Lau and two partners began developing a specialized file server intended to improve and simplify existing computer storage systems. In 1992, they launched Network Appliance. Today, the Sunnyvale-based company has Fortune 1000 status, more than 7,000 employees and a spot for six years running on Fortune magazine’s list of best places to work.

“I never imagined this would become such a large company,” says Lau, a recipient of the 2007 Berkeley Engineering Innovation Award for lifetime achievement.

For Lau, chasing new concepts is all about exciting possibilities rather than potential land mines. “You get the satisfaction at the end of an interesting, creative idea that actually solves a real problem,” says Lau, the company’s executive vice president and chief strategy officer.

Fellow NetApp founder Dave Hitz observes that his longtime business partner has “always had a good sense of the future and future trends.” What’s more, “he’s pretty unflappable.”

It’s been a remarkable journey for the Hong Kong–born engineer. The son of a chauffeur, Lau was 13 and spoke little English when he arrived with his family in San Francisco in 1972. His parents had been unable to get much formal education growing up during the Sino-Japanese war and wanted better opportunities for their children. Lau delivered newspapers, worked as a waiter and held work-study jobs to pay his way through school. After earning his Cal degree, he got a master’s in computer engineering from Stanford.

The field of data storage was emerging when Lau and partners Hitz and Michael Malcolm began designing their software system. “It wasn’t anything concrete,” says Lau of their initial concept. And at first, investors were cool to the product. “We were constantly trying to raise new money,” recalls Lau. Ultimately, he and his partners went into production with a handful of workers and a modest $1.3 million in backing.

Despite limited resources, Lau demonstrated a knack for outside-the-box thinking. Hitz recalls how his partner once crafted a makeshift heat chamber out of PVC pipe and plastic sheeting to test the durability of a prototype. The test, unfortunately, turned into a near-disaster when a small heat gun tipped over and started burning the carpet. “Thank God we got back from lunch in time,” Hitz says.

Fast-forwarding to today, Lau faces a far different set of challenges as he focuses on NetApp’s continuing growth and success. Though the company is 16 years old, “We still feel we’re the small fish in the big pond,” he says.