I guess the rest of the world has their business-creation methods, and who’s to say what’s best? I do know that in America if you have an idea that is anywhere near solid — meaning other people see a way that they can make good money from it — then you can probably enter into the Greatest American Adventure…the small start-up business. There are many reasons people find to strike out on their own…more reward from your efforts, more control of your destiny, ability to shape your work environment. My reason was to be able to make more and different realistic simulators, such as my CPR simulator for the American Heart Association. I did not see anyone else doing this, and I knew in my heart that it was needed, and I knew I could do it well. Ah, youth.
For about a year, I talked to various people about providing money for me and others who would be working with me. It was no coincidence that I was giving talks around the country to medical, training, and computer conferences, all of whose participants were highly interested in CPR Learning System I was making, all for their different reasons. The Medical people saw it as a way to transfer physical skills across the medical world, and this actually became the most rewarding avenue. The Training people saw my simulators as a way to change behaviors in a predictable way, in processes that could be easily evaluated. The Computer people saw my interfaces with computers as leading-edge use of their nascent (1983) “distributed computing” industry, with software and hardware which were easily understandable by non-technical people – a real problem for them then, and even now.
So this was an ideal situation for me to explore starting a new business for two reasons:
- As I mentioned, I was quite visible with a lot of speeches and articles. The New York Times and Training Magazine and Byte Magazine did print stories because it was an interesting idea in print. CBS, among others, did news stories on the CPR simulator because it was a visual one on television. One television “clip” was when I did Congressional Testimony in Washington, D.C. with the story on Diane Sawyer’s evening news. American Airlines also picked this up for their in-air magazine. I remember getting late-night calls from friends who flew from New York to Los Angeles and ( probably with a few drinks to make them jolly) were delirious at seeing one of their own so exalted.
- The American Heart Association wanted to get a return on their investment by having some company license and distribute the CPR learning system. My many talks were critical to that goal of theirs, and so when the trips were paid for by the conference sponsors, I was allowed quite enough travel to also meet people who might be interested in funding my business. I had been National Training Manager and the AHA gave me the title of Director of Advanced Technology Development. (Titles by the way, are sometimes just cheap rewards.)
If it sounds like a sweetheart situation instead of a sweat hard beginning, I have to admit I was naïve and somewhat stupid in feeling the direction should be so obvious. In the first place, though people liked the idea in almost every encounter, it was an abstract (, shall we say intellectual,) interest. I should have learned with the Texas Instruments programmable calculators – which took years to catch on – that any idea that does not create a high-perceived need in people is not a potent idea for a business. In the case of the TI’s programmable calculators, the market had to be educated to desire that capability. Many companies die trying to educate a market (, and mine almost did as well).
To make my stupidity even more clear, I will give you two personal instances where there was a high-perceived need that a real entrepreneur would have grabbed up and run with. The first was in 1976 when fairly stable geopositional (look it up) communications satellites started licensing block units of “transponder time” to hundreds of small entities which would then break these into smaller time slots and rent them to news, sports and other groups for real-time communications relayed through bouncing off these transponders. There was always the risk, in outer space, of the sun burning out a satellite which flew too close or an asteroid playing the cue ball to knock the satellite into a dark hole. Or more likely, of the satellite merely getting lost. However, to me this parcel sharing looked like real estate leasing. I mentioned to one investor that someone ought to make a large scale Transponder Investment Trust on the model of Real Estate Investment Trust (REIT). He got the idea immediately and in a flash, reached for his checkbook to get some money down. That was high-perceived need in action…But I was young and naïve and dissuaded him, saying that I did not have the full business available for investment. Ah yes.
A second example was recently when my son Liam and I were looking to make a write-off business with our money consuming sailboat. Since 57% of funerals in the state of Washington involve cremation, and since we lived beside a body of water which would allow human ashes, my son made the pitch to funeral directors that we could do “burials at sea” for the funeral homes, taking the ashes out into Puget Sound with some ceremony (– imagine night time torches, etc). The directors he began talking with immediately saw this as an added-value product with high-perceived need for some of the bereaved and wanted to put us on the program for regional funeral directors. (This was not an attractive idea to another important family member, so it fizzled). I wonder how many earthshaking endeavors went dark in this way before they started.
So anyway, I did not start my first and only company with such key proposition, a product with high-perceived need that was instantly understood by someone with money. It had a cool factor that got everyone’s attention, but it did not have a reach-for-your-wallet impact that indeed makes a business.
I finally procured a small dribble of investment money from an “angel” in New York City who was dabbling in small software companies. I had a chance to start the business in Boston which would have been wise, or in Seattle, which was a universe away from a lot of East Coast business ( and money). The advantage of Boston would have been a welcoming community of software people. I had already given a number of talks at MIT and Harvard. It would also have been a much shorter distance from New York and Washington, D.C. from which new-project moneys most easily flow. Seattle, on the other hand, had a fairly sparse software pool in 1983. Microsoft was still owned and run by a 27 year old Bill Gates (whose small company had just released Word for MS-DOS for the new IBM-PC,) with a few others, at the time nothing to compare in size or income with Silicon Valley companies.
Distance for us was the killer: the Pacific Northwest was too far for potential clients to fly in a day, and was of course the same distance for me to visit most potential clients. Someone in Boston could air-shuttle down to New York or Washington, and make it back to one’s own bed that night. Had I been in Boston I would probably have had 7-10 times the potential clients at hand. I also might have gotten my first heart attack, because clients who were even slightly interested expected a 20-page proposal the next week. Some tough entrepreneurs I knew in similar businesses spent 100+ hours a week doing fruitless proposal after fruitless proposal before one hit. Some were successful. Some died young.
My mode of operation (and survival) was to go to a meeting with an interested party. Most of them had the decency not to invite me to visit from across the country unless they were more than mildly interested. Then I would follow up with a note about our visit, suggesting the best first step would be a feasibility study rather than a full-blown proposal. This would be a 20-page discussion of ways our potential product could be down, with costs and time frames for each of at least 2 directions. Often I included a video demo showing what the product would look like. I did not do a high volume business from Seattle, but I would say I got the business with a very high percentage of these feasibility studies, with some money coming in immediately.
When you start a small business, it seems to me that ( ,unless you are rich — which has its own problems,) you come from one of two directions: you either move from a position of stability and comfort to one of constant insecurity, or else you have been placed in that position, such as being let go from your day job. One apparent option is to start your own business, but that is scary to most people. The odds and the prospects for dismal failure are so strong that, after seeing only one or two cars stop at their lemonade stand as a kid, few people will start small businesses just for fun. That said, I believe everyone needs to be involved with a small startup business at least once. Things you thought you knew about teamwork and product viability and actual survival require the most shocking redefinition almost daily. The “wolf” of bankruptcy and shame and unpaid workers and dissatisfied investors and creditors taking your house is always down the street, and too often that wolf is howling at your door. The concept of “aged-payables” (prioritizing who of your vendors and suppliers gets paid) is core to bookkeeping in a small business. In a gallows-humor sort of way, that kind of cliff hanging makes the experience, and of course any temporary bullet-dodging success, at least absorbing if not actually fun. The key is whether the little company can hang on through months, and even years, of despair.
Back in the early 1980’s a group of successful entrepreneurs participated in a study where they were asked to rank-order several phrases describing key abilities a small business founder must have. Knowledge of markets, team leadership abilities, objective decision making, cash flow management… these and many others were offered to the group of seven successful entrepreneurs, some of whom you may know by name. 5 of the 7 entrepreneurs on the panel instantly selected this one ability: to work through despair. At some point we all have the opportunity to learn — or to fail — this most important lesson of any lifetime, to continue to work through despair. Though I will relate here various interesting successes in my business, I will not talk further of those frequent months of despair – God knows it is like the mariner standing out on the windless foredeck, straining his eyes out across a pitiless, calm sea for any slight bump of land on the horizon. Though I’m considered an optimist, I swear this utter despair often lasted for months without a snippet of good news, draining every personal penny I could find, exhausting every good idea, watching good people leave me from lack of faith, and yet there would remain still more weeks of sheer despair with no schedule for its ending. Unless I am not as smart as most, it seems to me that despair must also be part of our Great American Adventure…
It did help that most of my previous employers had allowed me to creatively add value, and to develop directions that were new and unusual to the basic training jobs I held. The formula is that you do the prescribed job in spades and then add immensely greater value with spinoffs and targets of opportunity. Of course, that is about what you do in your own business, without the safety net. And without having to negotiate leases. And without having to meet a payroll monthly. And without having to understand medical and 401(K) plans. And without having to hold the hands of temperamental technical types. But most differently, in your own business you get up every morning hoping you can kill enough to eat.
Company names at the time favored the Greeks. We wanted a company name that somehow suggested videodiscs. There was a god named Ixion who for his sins was strapped to a revolving wheel in Hades, so of course we called the company Ixion. (Later, searching for trademarks, I discovered the Ixion tire company in El Paso.) Under that shingle, I was able to bring Jane, plus two others to Seattle to work with me, basically trying to drum up initial business and hopefully interest little more investment. This, of course, necessitated that the partner to the Great American Adventure had to be the Great American Business Plan. My contention is that anyone who can write a novel can knock off a Great American Business Plan in a few weekends. Numerous examples – mostly failures where there is no vital info – will show you the structure and the blanks to fill in. Speculation and facts can be artfully mixed by any second rate novelist. Patents also help, but they take a better grade of novelist.
On the other hand, we did have something real to offer. Jane and I were by that time extremely knowledgeable on videodiscs, with our early start on the CPR simulator. That first year we scraped together training videodiscs with A T & T, GTE Directories, and for IBM a now long-buried set of point-of -view flight games for interactive videotape (with which we had actually done some pioneering work in 1979 with the first CPR prototype-demo). We also made our own traveling demo disc, run by a TRS-80 100, Radio Shack’s little portable computer the size of a book. On that disc we created an interactive scenarios dramatizing answers from a salesman to a difficult Client, and in the 3 wrong answers, cut to Close up of the Boss glaring into the camera saying “You did what?!!!”It was always funny and repetition made it funnier. It was always instructive because the narrator told the viewer why each answer was wrong and finally, why the 4th correct answer was the right one.
More importantly, we had interactive action demos. In “Stop the Shoplifter,” you saw a 15-second pan across several people in aisles of a clothing store handling merchandise as they looked it over. You stopped the action when you saw the shoplifter and the screen numbered the potential shoplifters for you to select one. Then the wrong answers continued their actions to show that that they were not the shoplifters. (This one went over particularly well in China, for some reason. Crime may be the universal language.) We also had a very popular demo for my Las Vegas talks at the Consumer Electronics Show and National Association of Broadcasters show. It was a simple shell game, shot in real time three times with three different outcomes. The software programming was called drop down random wherein each time the selection was made (A B or C on the screen) the program rescrambled the 3 shells with peas and 3 empty ones, deposited them in a hierarchy of variables, and dropped down the bottom variable from the box. I did that for a crowd of 2000 in Las Vegas once and had them saying “Power to the People.” Fun as these were, the most important one was a welding simulator, where you actually adjusted the flame on a welding torch to more and less intense by holding down on one of two keys. You could “feel” the variations as you held down a key, and it was not a lot different from turning a dial. This latter demo translated eventually into a welding simulator for the Academy of Aeronautics at La Guardia in New York, later quite a bit of medical instrument business.
So that first year was just staying alive with a couple of videodisc programs, and a feasibility project on an arthroscopy simulator, jointly (so to speak) with M.I.T’s Architecture Machine Group — which was later to become the Media Lab. Our second year was staying alive with couple of those feasibility studies and finally a project from Merck, who wanted to simulate Upper G.I. endoscopies to attract physicians to their booths at shows. I volunteered my body to take internal pictures which we could insert into a demo for the feasibility study. Having some background making good but cheap video was a distinct advantage. Whatever it costs you, when you are basically selling ideas, a five-minute videotape imitating a future reality can do wonders for getting support for the final, much larger projects which have a whole lot more money attached. It is equally effective in carrying your large project through those yearly budget reviews and company reorganizations (, where projects that are hard to understand – and operations with few results to show — are unceremoniously dropped from the future. Contracts be damned, these companies have more lawyers than you could ever afford.)
With that first Merck Upper G.I Endoscopy Simulator, we had attained some stability and some respectability. It appeared that we were started, and somehow I continued 14 years as President and CEO of IXION without missing a payroll. Truth be told, despite having a Great American Business Plan worthy of any fictional novel, even our mild success was a surprise. Having started a company which still had no apparent source of revenue, I had absolutely no idea which direction to go from there, but only to let the lucky winds blow and hope we had enough tattered sail left to capture them, and enough ballast to keep from capsizing.