As the saying goes, ‘Time flies when you are having fun.’ Since Managing Director and CEO, Kenny McGee, founded Component Sense in 2001, the years have certainly gone fast.
From humble beginnings to redistributing excess and obsolete (E&O) component stock worldwide, 22 years of operation has brought challenges and unprecedented successes. We sat down with Kenny to ask him what his key learnings have been since originally being astounded by the high volume of electronic waste all those years ago.
1. Good things take time
Like the city of Rome, Component Sense certainly was not built in a day. 90% of startups fail, and you can often see why when you dig down into the challenges a new business faces. Kenny learned that no matter your intentions, growing a business that lasts takes time.
Looking back, Kenny remembered, “It was two years at least before Component Sense even broke even. Everyone wanted a piece, including lawyers, landlords, accountants, and advertisers.”
2. Employ fixes, not workarounds
Long before Component Sense, Kenny worked in military electronics engineering. Back then, he assessed production processes to ensure maximum efficiency. Kenny found that many of the skills he learned during this time were also applicable to Component Sense. A core competency from his prior role was to fix issues instead of looking for workarounds.
Consistency in processes is also vital for scaling a business's operations. In the case of Component Sense, systems needed to be easily taught to people and simple to implement in warehouses on every continent.
3. Progress, not perfection
Running a business is not always sunshine and rainbows. There are always external and internal challenges to face. The Component Sense CEO admits that 2023 has undoubtedly had difficulties as the electronics industry flattened after years of high demand. While you should strive to improve, no business can be perfect. This has been difficult for Kenny, as perfectionism is in his nature.
4. Automate where possible
The age of automation has seen forward-thinking companies make leaps and bounds in front of their competitors. Regarding Component Sense, Kenny saw automating processes and reducing waste as vital to preventing human error and ensuring faster results for our customers. Component Sense can uplift E&O stock from our customer's warehouse within 48 hours anywhere in the world.
5. Size builds trust
One of the challenges of starting a business is building trust. Nowadays, many of Component Sense’s customers are global electronic manufacturers. However, as Kenny learned, attracting these large customers is difficult when starting out. Potential customers would then ask for Component Sense’s turnover and team size to gauge expertise. Luckily, these days, this is not an issue. Below is our company logo from the time.
6. A little kindness goes a long way
“Everyone has their own things going on. So, you need to be empathetic and support people through all of that.” This quote from Kenny typifies Component Sense’s approach to supporting team members.
During 22 years in business, it became clear to the Component Sense CEO that supporting your people is non-negotiable. This understanding led to the creation of one of the businesses’ EPIC values: positivity. For us, mental health support, like therapy, and creating an environment where colleagues look out for each other are essential to success.
7. Quality is the aim of the game
Component Sense's investment of time and resources into quality control was vital as it grew. When discussing the need for quality in the electronics industry, Kenny said, “Bad parts would kill our reputation, so there is no room for error.”
From the beginning, Kenny learned that quality had to always be the top priority for Component Sense. Over time, the business implemented its market-leading inspection process, invested heavily in inspection technology, and ensured extensive training for warehouse staff.
8. Stay flexible
Over the years of operation at Component Sense, Kenny discovered nothing is ever set in stone. In the business's early years, a lot of time was spent sourcing components for customers. Although we always want to help our customers, these days, the business focuses on being the best in the world regarding redistribution.
9. Heed the warning of Murphy's Law
Murphy’s Law indicates that anything that can go wrong will go wrong. During 22 years of business, Kenny has seen it all, including losing 75% of business overnight due to the COVID-19 pandemic.
Over the years, the importance of preparedness became evidently clear. Kenny learned that scenario and contingency plans are vital to avoid being caught out by the unexpected. Yes, automated Material requirements planning (MRP) systems brought out after the 2001 electronic shortage were meant to futureproof forecasting to prevent shortages. However, a global pandemic and natural disasters like Japan's 2011 earthquake and tsunami proved that a large investment of time and resources needs to go into scenario planning.
10. Never stop learning
No matter what you do, there are always new things to learn. The Component Sense CEO discovered how quickly the electronics industry evolves. As the years went by, the business prioritised lifelong learning to keep our team ahead of the game. Prior to Component Sense, Kenny studied a Master of Business Administration (MBA) and still implements learnings to this day.
11. Resourcefulness is often learned the hard way
As mentioned, getting the business off the ground in the first few years was difficult. Back in 2001, the backbone of operations was a large computer in a small room in Kenny’s house.
Especially during the early years, Kenny learned the importance of resourcefulness. The original business goal was to make $65 per day to survive. Tight margins meant keeping overheads down at the start was pivotal to success. Ultimately, the early days set Component Sense up with the determination to never give up during the 2007-09 financial crisis.
12. Pay it forward
Although Component Sense is an international business that prevented 2,402,654 electronic components from being dumped in landfills during 2023, it used to be classed as a small Scottish business. As such, Kenny experienced first-hand how difficult starting out can be. He often speaks at events to support small businesses and works with them when he can.
The Component Sense CEO said, “It’s good to give back and support small businesses, as you know how tough it is.”
13. Read the fine print
During the financial crises of 2007-09, many companies faced financial pressure. Component Sense was no different. In fact, during this time, a bank that loaned our business money faced its own financial crisis. From this instance, Kenny learned always to read the fine print and sweat the small stuff. You never know how important the finer details of a contract or agreement may be.
14. Good processes are essential for scaling
Kenny discovered the importance of solid processes and a concrete plan when scaling a business. Reaching the first million dollars in turnover was difficult and highlighted the importance of getting your ducks in a row.
Kenny explained, “You need to build a business around processes and documentation in case someone is taken out.” Processes must be simple so that new team members can get up to speed quickly when the business grows.
15. Teamwork makes the dream work
It may be a cliche that there is no ‘I’ in team, but Kenny learned first-hand in the early days of Component Sense that he could not do everything on his own. As the business grew, it became evident that he needed people he could trust to act swiftly as operations expanded.
16. Never forget your original mission
The inception of Component Sense came after Kenny saw the amount of E&O components that ended up being thrown out. Unfortunately, environmentalism was not as common in the early 2000s as today. Kenny said, “Back then, a green business model was a hard sell and didn’t work. In fact, people used to give me stick about environmentalism.”
In the early years, Kenny quickly learned how difficult it was to motivate electronic manufacturers to change their ways. Component Sense needed a clear plan, not just a vague environmental goal. Only then can the business put its money where its mouth is to set an example for huge electronic manufacturers.
“The power of influence is remarkable. We inspire huge companies, who then inspire politicians,” said the Component Sense CEO.
17. Stay ahead of the technology curve
Despite already understanding how fast technology evolved, Kenny saw this speed first-hand after starting Component Sense in 2001. If you do not keep up, you could be left behind. Kenny learned that philosophies like the Total Quality Management (TQM) system, continuous improvement, and automation helped gain operating efficiencies.
Kenny explained, “Components are getting smaller and smaller. A chip that used to be 20mm is now 2mm and serves the same purpose. Microscopes are essential now.”
18. Ask for help
There is never any shame in asking for help. The same can be said when it comes to starting a business. Operating in Scotland, Kenny was lucky to learn there were many forms of support and assistance available. This help is not only in the form of financial support, but also general advice.
19. Counterfeiters are crafty
Back when the business started, counterfeit components were not really around. It was not until about 2005 that suspicious microprocessors began to pop up within the industry. As soon as the Component Sense CEO and team learned of these dodgy parts, the business ramped up its inspection process.
Kenny worked closely with top universities to discover ways to detect counterfeits. We are proud to say that our inspection process is much better than our competitors, which means we can provide customers with a 100% Anti-Counterfeit Guarantee.
The Component Sense CEO explained, “Counterfeits used to be crude. Nowadays, counterfeiters are far more crafty. The COVID-19 pandemic also created a new wave of counterfeits.”
20. Hire based on culture fit
At Component Sense, our EPIC values are the foundation of everything we do, including hiring. After attending an event in 2010 led by business strategist Tony Robbins, Kenny had the opportunity to meet then-Zappos CEO and author of ‘Delivering Happiness,’ Tony Hsieh. During this time, the importance of culture for a business was emphasised.
You can teach someone a warehouse system, but you can not teach a good attitude. Defining company culture and making culture fit key to recruitment will often lead to better output and lower staff turnover.
21. Flexibility is key
Kenny is pretty chuffed that Component Sense trialled and implemented a work-from-home policy long before the COVID-19 pandemic. The reason for this early adoption is partially down to learning the importance of flexibility for team members.
“I always wanted to be able to work from anywhere. I had pictures on the walls of yachts and sandy beaches for motivation,” Kenny said.
When Component Sense began trialling remote working, some people did feel isolated. So, the business introduced a daily 11 o’clock meeting for colleagues worldwide to connect casually.
22. Follow your animal instinct
As the Component Sense team expanded, it was obvious that each individual had a unique way of working and communicating. Kenny saw the need to understand people’s personality types to ensure team members collaborated and were productive.
Component Sense implements the learnings from ‘It’s a Zoo Around Here: The New Rules for Better Communication’ by Nigel Risner. The book explores the variety of communication styles there are by likening them to animals in a zoo. By understanding what animal each team member is, people can collaborate more efficiently.
Kenny explained, “I learned that you can’t change someone's personality a great deal, but you can change your behaviours to be better.”
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