Sei sulla pagina 1di 11

THE NATION’S NEWSPAPER

Collegiate
Case
Study www.usatodaycollege.com

Simple pillow evolved into


multimillion-dollar baby Entrepreneurship:
By Sharon Silke Carty
.................................................................................3-4 Finding a Need and a Solution
Everything from high tech home devices to products that enhance our ability
Believe it or not, you really to communicate started out as concepts. How are innovative ideas for a new
can find out identities of top business generated? This case study provides examples of how ideas and
visions are transformed into successful products and companies. Perhaps these
patent holders
stories will inspire your ambition to pursue one of your ideas or dreams.
By Kevin Maney
..................................................................................5-6

Tech guru dials into social He hopes flush of embarrassment


side of gaming
By Kevin Maney leads to flush of success
..................................................................................7-8
By Kevin Maney Except Samuel wasn't seated. He was
Flood spawned IBM, so maybe USA TODAY still standing, fully dressed, facing the
Katrina will plant similar seed toilet and gawking. The spray soaked the
Businesses are sometimes born of front of his pants. He launched into a
By Kevin Maney adversity. frenzy of trying to dry himself before
........................................................................................9-10 rejoining his father and a bunch of
Such was the case with Brondell, the Japanese businessmen, ultimately slinking
electronic toilet start-up. back to the table and throwing a napkin
over his lap.
Discussion questions In 1990, after Dave Samuel graduated
............................................................................................11 from high school, his father took him You'd think this might've scarred
along on a business trip to Tokyo. One Samuel for life — that he'd run screaming
night, the two went to a business dinner from any toilet that looked as if it had
at a restaurant. Samuel excused himself to Intel inside.
go to the bathroom and found himself
USA TODAY Snapshots® staring at a toilet seat studded with Instead, he became intrigued by the
How Americans feel buttons and electronic controls. little toilet that embarrassed him. He
about work went to the Massachusetts Institute of
"I'd never seen this," Samuel recalls. "It Technology and became an engineer. In
Call themselves 22% had Japanese characters, so I couldn't 1996, he and pal Josh Felser started an
“workaholics”
read what the buttons meant. But, of Internet radio company called Spinner,
Only in current job 27%
for the money
course, I had to press the buttons to see selling it to AOL in 1999 — at about the
what they'd do." peak of the dot-com bubble — for $320
Want to start their
own business
37% million.
He pressed one that extended a wand
If they won the lottery, they 41%
would not work again inside the bowl. The wand then sprayed "This afforded me the ability to take a
51% warm water upward to wash whatever little time off and explore my options,"
It’s important that their family
thinks they are doing well areas a seated person might need to have Samuel says. He was in his 20s.
washed.
Source: Simmons Market Research Fall 2004 National Consumer Study;
sample size of about 24,000 adults.
In 2002, he went back to Japan and
By Shannon Reilly and Dave Merrill, USA TODAY

© Copyright 2006 USA TODAY, a division of Gannett Co., Inc. All rights reser ved.
AS SEEN IN USA TODAY’S MONEY SECTION, WEDNESDAY, NOVEMBER 23, 2005

stayed at a Hyatt. Every bathroom had an Doug and Julie on Days of Our Lives for
electronic toilet. He did some research the past 30 years.
and found that in Japan, most business
hotels, many public restrooms and just Maybe Samuel is right and it really is
about every high-income household had the right time for electronic toilets in the
an electronic toilet. USA. It seems that Americans who try
electronic toilets absolutely love them.
"I believed it was time to introduce this
to America," Samuel says. "I thought it was a joke when I
installed it," says James Hong, founder of
So he started a company, naming it website Hot or Not. "I had no idea I
after J.F. Brondel, who — according to the would like it so much. When I travel, I
Sulabh International Museum of Toilets, often think in the hotel bathroom how
which I swear I did not make up — much I wish I had the Brondell there."
invented the valve-type flush toilet in
1738. Samuel added a second "l" to make Then there is the ultimate
the company name Brondell. "It was a endorsement: Google has electronic
stronger name," Samuel says. toilets — though not Brondell's — in the
restrooms at its headquarters.
Samuel is an ambitious guy, to say the
least. Around this same time, Felser came Businesses will do anything to get a
back from Burning Man, an arts festival little piece of that Google magic. I can
in the desert that attracts a lot of techies see management consultants coming
who run around naked there. Felser had Brondell into companies and saying, "What's with
taken tons of digital photos, and his this toilet paper in the restrooms? Get
friends really wanted to see them. Who Brondell founder: Dave Samuel with the Swash rid of it. Get electronic toilets. Google
wouldn't? electronic toilet. doesn't use toilet paper. From now on,
you don't use toilet paper."
Felser figured out an interesting way to Now, here's the problem: Americans
do this: create the equivalent of a virtual have so far failed to buy into the idea of Could ignite a craze, as when managers
private network among a group of having their private parts go through the star ted firing the bottom 5% of
friends over the Internet, so they could equivalent of a mini car wash. A performers because Jack Welch did it at
easily see each other's large files such as competing company, Toto, has been General Electric.
photos, music or video. selling an electronic toilet for a while
now with only modest results. "I liken it to TiVo," Samuel says,
Felser and Samuel thought other drawing a parallel between electronic
people would buy the technology. It Marketing is a challenge. There aren't a toilets and a video machine that ignites
became the basis for Grouper, a company lot of good options for getting people to viewer passion. "Once you experience
Samuel and Felser started that has so far try it. Do you set up a demo unit at Home pausing television, there's no going back.
had moderate success. In December, Depot? Once you experience sitting on a warm
Grouper will launch a major push into toilet and having a warm water wash,
video sharing — kind of a video Flickr. Ads have to walk a thin line. Maybe the there's no going back."
company needs to hire a spokesman like
Samuel is busy as both president of Bob Dole and come up with a Samuel looks at the opportunity like a
Grouper and chairman of Brondell. euphemism as sterile as "erectile technologist. He notes that toilets have
(Felser is not part of Brondell.) dysfunction." Brondell made a three- not changed in the 250 years since
minute infomercial that's full of normal- Brondell's invention. "It's one of the few
Brondell started selling its toilets in looking people earnestly saying things areas that has seen little technological
January. The high-end model, the Swash like, "We're perfectly satisfied and improvement," he says. "We're excited
600, costs about $500. It has a heated perfectly clean all day long." about changing that."
seat, computer-chip smarts, touch-pad
controls and — yes — a wand that sprays By the way, the older couple in the It's early yet, but it will be interesting to
you clean. Just make sure you're sitting. A infomercial is Samuel's grandparents, Bill see if he can
little dryer follows with warm air. Hayes and Susan Seaforth Hayes — aka

Reprinted with permission. All rights reser ved. Page 2


AS SEEN IN USA TODAY’S MONEY SECTION, MONDAY, JANUARY 9, 2006

Simple pillow evolved into


multimillion-dollar baby
Boppy’s creator played it smart from the start
By Sharon Silke Carty feeding, a job that can be taxing on
USA TODAY exhausted new moms' backs, arms and About Susan Brown
other areas.
GOLDEN, Colo — If you've given birth Title: CEO of Boppy Co.
or adopted in the past 10 years, chances "Now it's almost embarrassing to
are you know what a Boppy is. And more admit, but when people started using it Age: 51.
important, how to use it. for breast-feeding, I was like, 'Oh, yeah. Of
course,'" Brown, 51, says.
If you haven't, well, read on. Because Family: Husband, Roger; children
this is the story of a woman who came Brown, who lives in Golden, a suburb Austin and Alistair; stepchildren
up with one of those "Why didn't I think of Denver, had dreamed of opening her Abi, Molly and Max.
of that?" ideas -- a simple pillow stuffed own business since she was a child. She
with foam -- and turned it into a would write up mini-business plans, only Hobbies: Hiking, singing show
multimillion-dollar business. She now to talk herself out of the idea by proving tunes, gardening.
has the No.1 baby product in the country, how the business would not work or was
according to American Baby magazine. overly ambitious. She began a career in Favorite movies: Dumb and
advertising sales but still daydreamed
Dumber, Days of Heaven.
Susan Brown had already decided she about opening her own business. Then,
was going to quit her day job when she while on maternity leave with her
invented the Boppy, almost accidentally. second child, she found out that she had Favorite book: The Woman in
Her daughter's day care center asked been passed up for a promotion. She White by Wilkie Collins.
parents to bring in pillows to prop up decided it was time to go but stuck
infants who couldn't sit up on their own. around until she was fully vested in the First job out of college: Freelance
Brown came up with a C-shaped pillow company's profit-sharing plan. writer for the Children's Television
in one night. Workshop writing Spidey Super
With $25,000 from the profit-sharing Stories.
Seventeen years later, the basic design and $7,000 from an investor, Brown took
hasn't changed. Boppy to a children's clothing trade show
in New York in 1991 and sold it to about Ceyl Prinster, executive director of the
"It's just the perfect pillow for just 50 children's stores. Within the first year, fund, remembers being struck by how
about ever ything," says Judy Nolte, she finagled a spot in One Step Ahead, a down-to-earth Brown is. Prinster says
editor of American Baby, whose readers catalog that has launched many baby she trusted that Brown's ability to think
have named Boppy the most invaluable products into the mainstream. both creatively and analytically would
product for new moms four consecutive help propel Boppy to greater heights. "A
years. "I think that mothers are very wise But money quickly ran out. So Brown lot of entrepreneurs are very idealistic
to select it as their favorite product. It fills applied for and got a loan from the non- and think they can keep going on vision
a need that nobody realized was there." profit Colorado Enterprise Fund. She says alone," Prinster says. "She had a good
she needed money to take Boppy to the idea of what it would take to get this
In fact, Boppy's fans love it because it International Juvenile Products Show in product to the next level."
does a job it never was intended for: It Dallas. Without the loan, the company
helps suppor t babies while breast- would have failed. Now, the privately held Boppy Co.,

Reprinted with permission. All rights reser ved. Page 3


AS SEEN IN USA TODAY’S MONEY SECTION, MONDAY, JANUARY 9, 2006

known until recently as Camp Kazoo, has annual sales of $15 Brown also is dabbling in the advice business herself. She's
million to $25 million through such retailers as Babies R Us, self-published a book, Start Your Own Baby Products Business,
Pottery Barn Kids and Burlington Coat Factory. Brown says Wal- in which she advises prospective entrepreneurs to focus and
Mart has approached her about selling the product in its stores, resist the urge to underprice. The book is dotted with pictures
but she wants to keep a more upscale feel to it and is trying to of happy moms, dads and babies with their Boppies.
resist selling the $25 to $35 pillows at bargain prices.
Pat Edson, a consultant who sits on the Boppy board, says
Prinster says one of Brown's strengths is "being able to know Brown "has zero ego, and that is just a beautiful thing to see in
where her weaknesses are, and shoring that up with other today's world. That gives her a competitive advantage. ... Her
people." lack of ego allows her to surround herself with really strong
thinkers and makes sure she gets the best information."
She also has solicited advice from people who have been
through the business-development process. "The most Brown says one of her weaknesses is picking fabrics: "It
common piece of advice you get is to diversify," Brown says. seems like every one I like sells poorly." So Brown listens to her
"That advice isn't always good." creative director, advisers and customers. The company's
newest materials include soft pastel velvet, gingham and
To diversify, the company started selling TransferMations, an vintage alphabet patterns.
iron-on stencil that would allow parents to paint murals on
nursery walls by simply coloring between the lines. Parents While Brown has developed a loyal following for her product,
liked it, but it became a logistical mess. The company was she's also developed a loyal following among her employees. At
suddenly dealing with an entirely new distribution chain, Boppy, 20 of 23 employees are women, and more than half are
selling to craft stores rather than to baby-product retailers. And moms. Brown gives them flexibility to work when their
customers began asking if the company was going to start children are in school, skipping lunch to make the day shorter. A
selling paint to go along with the patterns, which would have room in the colorful office space is set aside for mothers to
posed a new set of problems. nurse or pump breast milk during their day.

"When I look back, that energy may have been much better "The people who work with her and around her are brutally
spent on the core product," Brown says. "You have to analyze loyal," Edson says. "That helps her retain talent and helps her
the advice you get." attract high talent as well."

Boppy now has expanded its product line by making other Creating an office that people love to come to was one of
kinds of pillows, ones that have toys attached that babies can Brown's goals.
play with and others that help pregnant moms sleep and sit
more comfortably. "No matter how hard I am working, I can still go to soccer,"
Brown says. "That made my life so much more livable. I've
The company is in the early stages of licensing the Boppy gotten so much outside validation that this is the kind of place
brand name to other products, such as baby clothes or toys. people want to be."

Reprinted with permission. All rights reser ved. Page 4


AS SEEN IN USA TODAY’S MONEY SECTION, WEDNESDAY, DECEMBER 14, 2005

Believe it or not, you really can find


out identities of top patent holders
Ah, patents. The topic has pretty much taken seems like a throwback to the likes of Dick Van
charge of my life since last week's column revealing Dyke's Caractacus Potts in Chitty Chitty Bang
the lack of any way to identify the top 10 living U.S. Bang. Spector churns out all sorts of oddities, such
patent holders. as the Porto Auto Oil Easy Drain and a motorized
pot-washing tool. Back in 1979, Spector
Apparently half the Ear th's population has apparently caused quite a stir by patenting a
something to say about patents, and most of them board game with the title "puck projecting game."
are e-mailing me. My inbox has been blowing up Some people thought he'd patented hockey.
like Anna Nicole Smith between diets.
5. Gurtej Sandhu, Boise, 576.
But the deluge has its upsides. The column
prompted a few patent database companies to take 6. Warren Farnworth, Boise, 547.
a whack at the question. Two — ipIQ of Chicago and
1790 Analytics of New Jersey — came up with By Kevin Maney 7. Salman Akram, Boise, 527.
answers.
All three work for Micron Technology in that great mecca of
So here, for the first time, is a list of the 10 most-prolific American invention, Idaho. "It is rather incredible," says Tony
inventors. This is from ipIQ: Breitzman of 1790 Analytics. "As a rule, other than Akram and
Farnworth (who have a lot of co-patents), there is not much
1. Shunpei Yamazaki, Japan, 1,432 patents. Yes, it seems to be duplication."
true: The top individual holder of U.S. patents is based at Tokyo
tech research firm Semiconductor Energy Laboratory. For Micron is the last surviving U.S. maker of DRAM chips, which
decades, the popular assumption has been that Thomas Edison are important in just about every electronic device.
is the all-time patent king with 1,093 patents. Yamazaki blows
away Edison, and he is still inventing and getting patents. But why Micron, with its $600 million annual R&D budget?
IBM and Microsoft spend 10 times that on research. Micron
2. Donald Weder, Highland, Ill., 1,322. This is the guy who has CEO Steve Appleton brought up a couple of reasons. One is that
invented dozens of ways to make flower pots, dozens of ways in its hypercompetitive industry, Micron has to have the
to bundle flowers, and a whole lot of other things that have to protection of lots of patents to survive, so "The culture of the
do with florists. When ipIQ sent me its results, Weder showed company recognizes and rewards innovation," he says. But a lot
1,321 patents — but he got another one Tuesday. The title: of tech companies could say that.
"Apparatus for forming and securing a decorative pleated cover
about a flower pot." So maybe it helps that at Micron, the patent attorneys' offices
are right in the labs so they can work with the researchers to
3. Kia Silverbrook, Sydney, 801. When Australia's patent nail down patents right out of the box.
agency marked its centenary in 2004, it celebrated great
Australian inventions — such as vegemite. The country isn't 8. Mark Gardner, Cedar Creek, Texas, 512. Gardner works for
much known for invention. On the U.S. Patent and Trademark AMD, Intel's peskiest competitor. You can find his patents deep
Office's 1997 list, no Australian appeared in the top 100. The inside AMD's microprocessors. His most recent patent, in June,
secretive Silverbrook, though, runs Silverbrook Research, and was titled, "Ultrathin high-K gate dielectric with favorable
he has zoomed to No. 3 with inventions such as a tiny ink-jet interface properties for improved semiconductor device
printer that can fit in a mobile phone. performance." I think I'm going to ask for one for Christmas.

4. George Spector, New York, 723. Hey, here's a guy who 9. Heinze Focke, Verden, Germany, 508. Focke's patents
really did invent a better mousetrap! It's patent No. 5,528,853, mostly center on packaging — both on types of packages and
"Magnetic computerized mouse trap," issued in 1996. Spector processes for packaging assembly lines.

Reprinted with permission. All rights reser ved. Page 5


AS SEEN IN USA TODAY’S MONEY SECTION, WEDNESDAY, DECEMBER 14, 2005

10. Joseph Straeter, Highland, Ill., 477. Once again, we're back around the USPTO's database, it seems likely that she is indeed
to flowers. Like a hockey player lucky enough to skate on the most-prolific female inventor.
Wayne Gretzky's line, you can pick up a lot of points just by
being there. Straeter works for No. 2 patent holder Weder, and And then there's one other oddity, pointed out by reader
most of Straeter's patents are shared with Weder. Michael Ravnitzky. This would be the Invention Secrecy Act of
1951.
Now, 1790 Analytics came up with basically the same list, but
it also ran a different version that separated out utility patents It's possible that any patent list results are skewed because
from design patents. The latter are more about changing the various government agencies have the ability to classify any
appearance of an existing invention. If you do that, the names patent as secret and make it invisible to the public.
on the list stay the same, except Straeter drops off — replaced,
remarkably, by yet another Micron researcher, Leonard Forbes. The USPTO even keeps a chart of "invention secrecy activity."
It shows that so far in 2005, there have been 106 "new secrecy
What else have I gleaned from the patent e-mail onslaught? orders imposed." There are 4,915 "total secrecy orders in
effect."
Well, I got an e-mail from Esther Takeuchi, who works on
battery research for Greatbatch, a maker of power sources for a So if among all those florist patents Weder and Straeter
lot of medical devices. She says that she's been told she has invented the quantum computing secret decoder ring, we'd
more patents — 126 — than any other living woman and never know about it.
wonders if it's true. From the lists I've seen and from poking

Reprinted with permission. All rights reser ved. Page 6


AS SEEN IN USA TODAY’S MONEY SECTION, MONDAY, DECEMBER 12, 2005

the market. 3DO hung around as a game maker but never took

Tech guru dials off, eventually filing for Chapter 11 bankruptcy protection in
2003.

into social side of


Hawkins started to feel that something about video games
was lacking. Madden Football might be astoundingly realistic,
yet it's played by only about 5% of the people who watch the
Super Bowl, Hawkins says. Participants in fantasy leagues -- a

gaming
very low-fidelity activity based on statistics from real football
games -- outnumber video game football players 3 to 1.

Hawkins' friends describe him as philosophical yet


pragmatic. "He'll build an idea of how technology will affect the
Digital Chocolate world and try to get out front of the wave before it forms," says
Dave Evans, a tech consultant who's known Hawkins for more
than 25 years.
founder also created So, Hawkins spent time thinking about what people need,
not just want. As we become more mobile, "There's a
Electronic Arts loneliness we feel in our society," Hawkins says. "We want to
grab onto what we've lost."

And that's connection and community. People want to go to


By Kevin Maney Super Bowl parties or interact while playing fantasy football,
USA TODAY Hawkins concludes. Fidelity is important to an elite segment of
the market, but social connection is important to just about
About a year ago, Trip Hawkins had an epiphany — and not everyone.
the kind you'd expect from a legendar y Silicon Valley
entrepreneur. "I took the wrong branch," he says. "I thought it was all about
fidelity, but what people want is the social aspect."
"I realized I had been doing the wrong thing for 30 years," he
says in his office, eyes twinkling behind rimless glasses, his That's Hawkins' epiphany: If you're going to make games,
tanned skin and swept-back gray hair making make them social and mobile.
him look like a displaced movie star.
"Eventually the indus- It's about desire
That is why Hawkins is sure he's doing the
right thing now with his 2-year-old company, try will have to go more Hawkins keeps the lights off in his
cellphone-game-maker Digital Chocolate. modest corner office and lets the
in (Hawkins’) direction. sunlight stream through the
Hawkins had spent those previous years It’s the best future for windows. On a ledge are chocolate
chasing what he calls fidelity, or realism. In bars with labels that say Digital
1982, he started one of Silicon Valley's all-time mobile gaming. Chocolate. Hawkins came up with
great successes: Electronic Arts, the world's the name because he wants to create
biggest video game company. At EA, Hawkins the same desire for his games that
is best known for creating Madden NFL — Carrie Couskos, people have for chocolate.
Football. His goal inside EA was to use editor for GameSpot
technology to make the most realistic games On his desk is a PC, an old-style
possible. He was out to push the fidelity hard briefcase and a photo of his four
envelope, thinking that's what consumers kids on a couch playing video games.
craved.
He pulls out a cellphone to show off the company's latest
In 1991, Hawkins left EA because he saw the digital CD games. One is called MLSN Sports Picks (MLSN stands for
opening a path to yet higher fidelity. He started 3DO and built Mobile League Sports Network). It's something of an online
technology that was a forefather of Sony's PlayStation. But game show about sports. You create a league with a group of
Hawkins was too far ahead with 3DO. The game box fizzled on friends, who all can play at different times on their cellphones

For more educational resources,


Reprinted with visit http://education.usatoday.com
permission. All rights reser ved. Page 7
AS SEEN IN USA TODAY’S MONEY SECTION, MONDAY, DECEMBER 12, 2005

anywhere in the world. You answer The mobile games industr y has
questions to predict outcomes in About Trip Hawkins momentum. Mobile gaming will grow
upcoming sports events. The system sixfold from 2004 to $8 billion in 2008,
keeps score and ranks you against your Born: Dec. 28, 1953. says research firm Strategy Analytics. In
friends. 2006, nearly 1 billion cellphones will be
sold, almost all with gaming capability,
Age: 51.
Another new game, AvaFlirting, lets say analysts. Meanwhile, venture capital
users create characters who go out on is flowing into mobile game companies,
the network and try to date characters Education: Harvard, designed his which now number more than 200. In
created by other people. Depending on own major in strategy and applied November, Microsoft said it plans a
their success, characters climb popularity game theory; MBA, Stanford. major push into mobile games in 2006.
rankings.
First major position: Director of In this nascent segment, Digital
Neither game tries to use all of a strategy and marketing, Apple Chocolate ranks in the top 10
cellphone's processing power. The Computer, early 1980s. gamemakers, according to research firm
graphics are minimal. The allure is in the M:Metrics. The company has sold about
social connection, Hawkins says, not the 8 million of its early games. Prices vary,
on-screen experience. Companies founded: Electronic Arts, but subscription games can cost $2.99 a
1982; 3DO, 1991; Digital Chocolate, month.
Though few reviews are out yet for the 2003.
newer games, Digital Chocolate is Yet Hawkins' big bet is on the low-fi
generally winning raves. Awards: Inducted this year into the social games, and that's just beginning.
Academy of Interactive Arts & MLSN only launched on Cingular and
"They're doing a ver y good job of Sciences Hall of Fame. Sprint Nextel subsidiary Boost Mobile
working within the confines of the this fall. This month, MLSN will launch on
platform," says Carrie Gouskos, an editor Verizon and Sprint. AvaFlirting and a
Family: Wife, Lisa; four children.
at respected gaming website GameSpot. sibling game, AvaCars, won't come out
She notes that some of Digital until 2006.
Chocolate's earlier games have gotten instance, Nokia in November said it was
some of GameSpot's highest ratings ever giving up on its N-Gage phone, which Clearly, Hawkins isn't out to run a
for mobile games. tried to be a combination phone and middling mobile games company. He's
high-fidelity video game machine. Few out to change the industry and create
Digital Chocolate already sells dozens were sold. games with Super-Bowl-size audiences -
of games, from WordKing Poker to Sumo - and prove he's right where for years
Smash. Some are graphics-rich, single- Still, conventional wisdom puts he'd been wrong.
player games. But since Hawkins' Hawkins in the minority, fighting
epiphany, he has pushed Digital upstream — just like the early days of "Trip is a ver y opinionated, ver y
Chocolate to make MLSN-type social 3DO. teachable guy," says pal Evans. "He's
games. totally about the better idea. The way
A big, early bet he's going with Digital Chocolate is a
Just about every other mobile game good example of his teachability."
company is trying to re-create video Hawkins launched Digital Chocolate in
game titles such as Tiger Woods PGA 2003 with his own money and one other "Eventually, the industry will have to go
Tour or Harry Potter games so they look investor: Bob Pittman, founder of MTV more in (Hawkins') direction," says
and play much like a PlayStation or Xbox and later an executive at AOL. In 2004, GameSpot's Gouskos. "It's the best future
game. the company raised an additional $13 for mobile gaming."
million, largely from four venture-capital
Some wireless industry developments firms. The next few years will show whether
suggest those attempts are mistaken. For Hawkins' epiphany pays off.

Reprinted with permission. All rights reser ved. Page 8


AS SEEN IN USA TODAY’S MONEY SECTION, WEDNESDAY, SEPTEMBER 14, 2005

Flood spawned IBM, so maybe


Katrina will plant similar seed
By Kevin Maney
USA TODAY

Hard to imagine that a flood like the one in New Orleans


could possibly result in anything good.

Yet in one of those odd twists of history, a 1913 flood that


devastated Dayton, Ohio, had a huge impact on the technology
industry. If not for that flood — still among the worst in the USA
— there would have been no IBM.

Which would have meant no System/360 in the 1960s, no


"THINK," no legendary salesmen in white shirts, no IBM PC.
And if there had been no IBM PC, then Microsoft might today
be a quaint little specialized software company and Intel a
struggling maker of memory chips. Michael Dell might be a
salesman for Unisys.
Photo courtesy of National Oceanic and Atmospheric Administration
All because the Dayton flood kept Thomas Watson Sr., who
built IBM, from going to jail. 1913: Men pull a boat after Dayton, Ohio, flooded. IBM founder Thomas
Watson Sr. and his mentor, John Patterson, emerged as heroes.
The story starts with National Cash Register, which had its
headquarters on high ground in Dayton. NCR was run by short, jail, pending appeal.
wily, ornery John Patterson, whose monopolistic practices
might make Bill Gates cringe. Patterson trained salesmen to About a month later, all-day rain soaked Ohio. On March25,
break a competitor's cash register when a shopkeeper wasn't the rivers that converge at Dayton started swelling. At 6:45
looking, then explain that NCR's machines were more reliable. a.m., Patterson gathered a group of executives — minus Watson
— on NCR's roof, where they could see that a flood looked
Watson started as an NCR salesman in the 1890s, working his inevitable. Patterson told the executives to start collecting food,
way up to become chief marketing officer and Patterson's water, blankets and medicine and ordered the woodworking
protege. (This is all from research I did for my book about department to drop everything and make flat-bottomed boats.
Watson, The Maverick and His Machine.)
Believing NCR would stay dry on its hill, Patterson decided to
At the turn of the century, NCR controlled the market for cash turn his campus into the equivalent of the Superdome. He
registers, which were the hottest business management opened it to anyone who needed shelter.
technology of the day.
At 8:30 a.m., one of the city's levees broke. Waves of water
But by 1912, the Taft administration was on an antitrust tear. raced through town, sucking in horses and wagons and
It had gone after Standard Oil. Then the administration took furniture. Like in New Orleans, the water reached rooftops.
aim at NCR, indicting Patterson, Watson and 28 other NCR Unlike in New Orleans, there was no sewer system, so the flood
executives under a rarely used statute for criminal antitrust. carried away every outhouse and its contents.

NCR got creamed in court. A guilty verdict was reached on Residents scampered to safety at NCR, where a couple
Feb. 13, 1913, and each NCR official faced up to three years in thousand took refuge. In the boats they made, NCR employees

Reprinted with permission. All rights reser ved. Page 9


AS SEEN IN USA TODAY’S MONEY SECTION, WEDNESDAY, SEPTEMBER 14, 2005

plucked others from trees and roofs. But this worked out pretty well for Watson Sr. In May 1914,
he took a job running a wheezing little agglomeration of assets
Watson was in New York on business. In NCR's archives are a called Computing-Tabulating-Recording Co., or C-T-R. Almost a
series of telegrams between Watson and Patterson as Watson year later, an appeals court set aside NCR's antitrust verdict and
swung into action to send help to Dayton. "Am arranging for granted a new trial. Unwilling to retry the flood heroes,
relief train. Wire what you need most," Watson wrote in one. In Woodrow Wilson's administration dropped the case.
two days, Watson pulled together donations and sent two
trains packed with food, water, tents — and newspaper Over the next decade, Watson focused C-T-R on information
reporters. processing and in 1924 renamed it the ambitious-sounding
International Business Machines. During the boom of the late
The reporters were key. While NCR's acts were sincere, 1920s, IBM was essentially like Cisco Systems during the dot-
Patterson also sensed an opportunity. The Dayton flood made com bubble — a young company with a sizzling stock and
worldwide headlines. So, too, did NCR's heroics. The Chicago important new technology that hardly anyone understood.
Evening Post wrote: "Patterson was revered by Dayton people
before the catastrophe but is now an idol for whom thousands IBM — entirely built in Watson's image — grew like crazy
would lay down their lives." through the Depression. Watson became as famous as Gates or
Steve Jobs today. And IBM just kept growing.
It was one of the great public relations turnarounds of all
time — from convicted business demon to media darling. And The Dayton flood made that possible, though of course no
you thought only Martha Stewart could do that. one could've seen that at the time.

Then, in the fall of 1913, Patterson bizarrely pushed almost So it's fascinating to wonder if some seed is being planted
every convicted executive out of NCR, including Watson. amid Katrina's mess. It's not much consolation for the lives and
Imagine how Watson must have felt: He was 40, was driven homes lost, but maybe a career is being shaped or an idea
away by his mentor, had a jail term hanging over his head — formed that wouldn't have been possible had the disaster not
and his wife was pregnant with their first child, who would happened. And maybe that person or concept will later emerge
become IBM's other famous CEO, Thomas Watson Jr. to create something great. It's a small flicker of solace.

Reprinted with permission. All rights reser ved. Page 10


DISCUSSION QUESTIONS ADDITIONAL RESOURCES

1. What factors make the difference between a creative idea Ewing Marion Kauffman Foundation
that becomes a successful company and an idea that never
moves forward?
www.emkf.org

2. What determines if an entrepreneurial venture stays in business Sole Proprietor Magazine


or is sold for a profit, or starts but never becomes successful?
www.soleproprietormagazine.com
3. Who or what inspires a new entrepreneur most (e.g., family role
model, access to investment dollars, a curious and creative mind, Small Business Administration
knowing the right people)? Explain your reasoning.
www.sba.gov
4. What state laws or procedures do you need to adhere to when
starting a new business in the state where you currently live? US Department of Labor
What are the differences among a sole proprietorship, a limited
partnership and a corporation? What laws and requirements apply
www.dol.gov
to each type of business organization? Compare and contrast the
benefits and drawbacks of each type of business. Which would you
choose? Why?

FUTURE IMPLICATIONS

1. Read several features in USA TODAY’s Money section about new entrepreneurs and successful business leaders. What can
you learn from their experiences that would enhance your ability to start your own business? How did they learn from the
successes and failures?

2. What state and federal laws and funding sources encourage entrepreneurs to develop and launch new businesses? How
could the laws be changed to encourage new entrepreneurs even more so?

3. Which of your strengths and abilities would make you a successful entrepreneur? What knowledge or skills do you lack that
you need to develop?

Notes:

© Copyright 2006 USA TODAY, a division of Gannett Co. Inc. All rights reser ved. Page 11

Potrebbero piacerti anche