23 Aug 2011

Digi-Key CEO Mark Larson Talks

Our Editor, Ian Poole talks to Digi-Key Corporation’s CEO, Mark Larson in an interview about the phenomenal growth experienced by Digi-Key in recent years.

Digi-Key is a name that is known to every electronics engineer around the globe today.

As a distributor, Digi-Key’s presence can be seen in numerous electronics publications, and many people have purchased items through the global electronic component distributor. Over the past few years, Digi-Key’s presence in the electronics engineering scene has steadily increased, as is evidenced by its ranking as #1 Most Preferred Distributor (UBM/EE Times Electronics Distributor Customer Evaluation Study/June 2011).

The 55 741 square metre Digi-Key facility is based in Thief River Falls, Minnesota, USA. The company’s presence in its community has grown along with its presence in the electronics scene.

To find out more about Digi-Key – what makes the company successful, how did Digi-Key get to its current position and what are Digi-Key’s plans for the future – our editor, Ian Poole, spoke to Digi-Key COO Mark Larson.

Mark, you have obviously been very successful heading up Digi-Key, but how did you actually get to this position of responsibility – have you always worked for Digi-Key, or have you worked elsewhere and what is your background?

After graduating from the University of Minnesota with a Bachelor of Science degree in Business, my first real job was selling for multinational pharmaceutical manufacturer Abbott Laboratories. Several years later I accepted a position with what is now Wells Fargo Bank. My ultimate goal, however, was to manage my own business and I eventually returned to my home town, Thief River Falls, and started a business selling security systems, and intercommunication and public address systems.

Mark Larson

Mark Larson, CEO Digi-Key

By chance, several years later, Ron Stordahl, a childhood friend, also returned to Thief River Falls. Although he had a PhD in electrical engineering, he returned to help run his family’s trucking business until it was sold. In his spare time, Ron decided to sell electronic components to hobbyists and named the business “Digi-Key Corporation.” This business started very small, with sales the first year of less than £100,000. Within several years, it had grown some and he told me it was taking too much of his time. Although the business was still very small, I believed it had great potential and told him that I would enjoy managing the business for him. That was in 1976. Sales were £500,000 and we had 14 employees.

Today our sales our more than £1,000,000,000 and we have 2,550 employees. All of Digi-Key’s sales growth was organic–no growth has come from acquisitions. Today our customer base is almost exclusively electronic design engineers and professional purchasers.

Can you tell us a little of how Digi-Key started?

The real beginning of Digi-Key was about 1969. Ron Stordahl was a Ham Radio enthusiast and, while a graduate student at the university, developed an electronic keying device for sending Morse code which utilized integrated circuits and other electronic components. He decided to sell this device in the form of a kit to other Ham Radio hobbyists. The kit included the components and an etched circuit board on which one could solder the components. He advertised this kit as the “Digi-Keyer.” Although he sold a reasonable number of kits, he sold far less “Digi-Keyers” than he had planned. He decided to stop selling this kit, but was committed for many components for kits that were never sold. In an effort to recover his cost for these excess parts, he decided that he would try to sell them by advertising in magazines. This marked the beginning of Digi-Key Corporation in 1972 as a distributor of electronic components. With a modest inventory, Stordahl expanded his marketing plan to supplement magazine advertising with Digi-Key’s one-page, typewritten, and mimeographed “catalogue.”

It is about six or seven years ago that Digi-Key started to become a major force in electronics component distribution. How did this happen?

I believe that Digi-Key’s success in electronic component distribution is the result of the fact that we are totally focused on electronic components. We do not sell safety supplies, computer accessories, or electrical supplies. We sell electronic components. We offer the engineer and professional purchaser the world’s broadest range of electronic components for off-the-shelf delivery–more than 600,000 electronic components are in stock and available for immediate shipment.

Digi-Key sign

We support this broad product offering with immediate shipping, competitive pricing, free shipping on orders over £50, typically two day delivery for UK customers, and fast and fair resolution of any problems. This is how Digi-Key has grown its business faster than the competition and why we continue to rapidly gain customers, not just in the UK, but also Europe, the Middle East, Africa, Asia Pacific, and North and South America.

What is the ethos of Digi-Key – they seem to me like a very helpful organisation.

We know that design engineers and professional purchasers have many choices when it comes to purchasing electronic components. This means that if we are to win a customer’s business, we must perform for them in a way that meets or exceeds their expectations. Customer service and satisfaction is at the heart of the Digi-Key business model. Our loyal customer base has been the impetus spurring our exponential growth in recent years, and we continue to strive to provide even better service to our customers. We want new customers to feel as if they have been doing business with us for years, receiving the same excellent service as those who have been with us since the beginning.

Nothing is ever as easy as it seems in business. What difficulties have there been along the way and how have you overcome them?

Probably the biggest challenges Digi-Key has faced over the years are those resulting from rapid sales growth. These challenges include hiring talented people and giving them the training they need to perform for our customers, almost continuous expansion of our Product Distribution Centre, and implementation of a plan of continuous review of our processes to insure maximum speed, efficiency and accuracy.Last year, 2010, was an excellent test of our ability to grow rapidly without sacrificing service or quality–in spite of the fact that our sales grew by 64 percent. It validated the strength of our systems and methodology.

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About the author

Ian Poole is the editor of Radio-Electronics.com. Having studied at University College London to gain his degree he went on to undertake a career in electronic development working for companies including Racal. He became the hardware development manager at Racal Instruments where he was in charge of the hardware development activities within the company. Later moving in to freelance work as a consultant he also developed Radio-Electronics.com to become one of the leading publications for professional electronics engineers. He is also a Fellow of the Institution of Engineering and Technology and is the author of over 20 books.

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