Eric Zeanah – American Associates International

April 30, 2010

American Associates International is a company that specializes in coordinating outsourcing between international manufacturers and major domestic labels.   The company was founded by an industrial engineer in the 1960’s with Mr. Zeanah inheriting the business in the 1990’s.  The company provides large companies with design solutions to their product needs, with coordination provided to the foreign manufacturers.  They employ 11 industrial engineers to facilitate product design and manufacturability, yet they own no production facilities of their own, instead relying on a large network of suppliers to create each needed component.  These components can run into quantities of the hundreds of thousands, depending on the client.  They take this approach so that they can keep up with changing labor markets and standards in manufacturing practice.

Mr. Zeanah began at UTK as an industrial engineering student and took an internship with the company.  He later began working full time for them, and headed up a successful portion of the company for a time.  When the company began to experience financial trouble, he was asked to become the CEO of the company.  In exchange for his acceptance of the CEO position, the current owners had to agree to leave the company, making him the sole proprietor.  The owners accepted, and he quickly returned the company to profitability by changing the focus of the company to a certain few topics that they were naturally good at, such as coordinating between companies and designing solutions. In this respect, he is not a typical entrepreneur as we have experienced in the past.  He did not create the company, but instead inherited the company and returned it to profitability, no small task in and of itself.

From his experience, he had some words of wisdom to convey to us.  In any business, we should seek to align ourselves with our customers.  We should attempt to build friendships with customers, not just turn them into clients.  A good friendship can result in a very good business.  Another important lesson was to listen.  A niche in the market may be identified by simply listening to the complaints of corporate executives, so take every opportunity to listen to those above you, because we just might learn something.

This concludes the series on local Knoxville entrepreneurs and their stories.  I have found this project very informative should I ever seek to create my own business, but they are not only useful for entrepreneurial success, these words of wisdom are valid for any profession in any field.  I aim to apply them in my future jobs to the fullest extent possible.

Tony Buhl – EnergX

April 25, 2010

Mr. Buhl’s presentation was a bit different from the other presentations we have had.  He did not dwell on his path to entrepreneurial success, but instead tried to provide us with some wisdom for our own small business if we decide to create them.  His insights are quite good, and were things that I had not considered before.

Before discussing the insights, I must cover a little bit of background about him.  Mr. Buhl began his life as part of a poor family in Appalachia, and was the first of his family to graduate high school.  He attended college and then joined the US Army, emerging as a captain.  He continued his public service in the civilian side of the DoE and DoD, where he worked on decommissioning nuclear facilities.  After so many years though, he began to itch to create his own companies, so he decided to create three different companies, one of which was EnergX, in 1997.  His company focuses on reclaiming old nuclear facilities or chemically contaminated production facilities.  He also trains over 16,000 students per year in how to do reclamation and decommissioning.

Now, on to his points of wisdom that we should consider before/during the small business process.

Be at peace with yourself

Communicate well with others

Listen

Embrace change

Forgive and don’t hold grudges

Create exciting three year vision

Set realistic goals

Make others feel important

Admit mistakes

Hear new ideas

Take reasonable risks and say ‘thank you’ often

Now some personal aspects that we should consider:

Focus on yourself as much as you do your product

Starting a business is like getting married

Entrepreneurship is hard on a family

You are in sales whether you know it or not!

Build relationships, not just clients

Entrepreneurship is unpredictable at times

Find the most knowledgeable people you can afford

Networking is key

Get customer validation early on in the design process

The small business process is a rollercoaster

There are too many things for me to comment on individually, but suffice to say, he is correct on a great many of these.  His insights are invaluable for future business leaders, and I thank him for taking the time to speak with us.

John Morris -Tech 2020

April 19, 2010

Having met John previously, his store is no less interesting.  He came from a small town in the middle of Tennessee, and was pushed to higher education by forces at home.  Originally, his goal was to be a high school band director, however this plan did not last the first year of college.  After redefining his goals, and changing schools, he decided on electrical engineering.  After school, he achieved what he thought would be his permanent job at TVA, however he realized that TVA was going through a period of turmoil and the chances that he would be laid off were high, so he decided to try his hand a entrepreneurship with some friends he had made over the years.  Thus his first companies were born with SBIR money from the government.  Net Learning was the product of his first few years in small business, and the result of his passion for learning.  He got his ideas from working with the medical industry after hearing that training for the numerous people at hospitals was very expensive.  The old method of training was to send every employee to a conference and get the training that way.  Net Learning pioneered the method of learning over the internet to save money.  After only a few years, he had acquired a large share of the market in hospitals for training, and was continuously expanding into new regions.

Staying consistent with entrepreneurs of the past, Mr. Morris described himself as hard working and determined, and he has demonstrated these qualities over the course of his career.  He described the challenge of finding the correct replacement for him at the helm of Net Learning.  He went through dozens of candidates looking for the right fit, and when the right person was found, he ended up not being such a good choice.  Eventually, however, the company was acquired by a larger company.  With his new found gains, Mr. Morris decided to give back to the entrepreneurial community that had helped him, so he went to work at Tech 2020, a small business resource.  Tech 2020 sponsors competitions to find good business plans and help them find funding, exactly what Mr. Morris wanted to do.  The rest of the local business community thanks him for his dedication to the local economy, and the local workforce appreciates his work as well, (he helped bring in $250 million in economic improvement) and I thank him for his continued dedication to the cause.

John Platillero – EventBooking.com

April 12, 2010

Mr. Platillero is one of the people who has managed to turn a hobby into a career.  He began his career as an electrical engineer for Alcoa Aluminum Company, and worked there for 9 years before he decided to change paths.  In his free time, he did some small time promotions for local concerts and played guitar, but during a tumultuous time at Alcoa when layoffs seemed inevitable, he decided to start his own company centered around the new technology of the internet as well as helping large stadiums book events in a logical manner.  Due to his interest in music, he had seen over the years that the booking system that was in place was very difficult to manage.  Cell phones had not been widely introduced yet, and it was difficult to get in touch with the event planners at each major arena or stadium.   Thus his idea was to create a web based software program that would allow event hosts and bands on tour to look at an online calendar and schedule their events without contacting the venue before hand.  This would help increase the time that the stadiums or arenas are used and thus increase the revenue of the arenas.  So, with this overarching idea in place, he set about creating a company with some savings he had and some angel investors to help him out.  He hired his first employees and set about making the program.  In a few months, they had come up with a working prototype and began to market it to the arenas and to the touring bands/events.  Numerous clients purchased the program, and he was successful for a few months, then sales plummeted.   He began to realize that simply having the software is no guarantee that it will be used.  It turned out that the bands/events were not using the software, so the big arenas had stopped using it as well.  While this could have been the death of the company, John persevered and got in touch with every client he had and began to listen to what they liked, didn’t like, and wished the software program would do.  With that feedback in mind, he proceeded to redesign the software program.  Along with this, he decided to focus only on the venues (arenas and stadiums), not the individual bands.  He decided he would only focus on the large venues as well,of which, there are roughly 450 in the US.  With the re-launch of the program, his company has had great success, and now is the industry leader.  He has an 80+% market share and is in the process of branching out to other markets, including convention centers.

On the road to his current success, there were many roadblocks, not the least of which was the setback I described earlier.  One of the more humorous (at least to us today) was the response to his initial sales pitch to potential clients back in the mid -1990’s, which was generally something along the lines of “What is the internet?”  This response says quite a lot about where his company has come from and to where it is going.  In his comments, there were a few things that he has guided his company by and with.  The most important of which is “Listen to your customers!”  This simple lesson helped him emerge from the worst time in the companies existence.  Additionally, a policy of honesty and forthrightness has helped him immensely.  Being trustworthy helps assure clients and creditors alike.  Another point he wanted to stress was that the price is not fixed for a product.  Every customer has a different capacity to pay, and should be treated differently every time.  As he put it, “one price does not fit all.”

We are beginning to see a pattern develop in the thing that are important in entrepreneurship across all the individuals we have spoken with thus far.  Those things include trustworthiness, honesty, pricing, and labor relationships.  These area all things that have been identified as critical for success in small business, but I think these things are probably important for any sort of professional career anyone seeks to pursue.  So, in closing, I wish to thank John for his time, and wish him many more profitable years ahead.

Dr.Barry Goss – Pro2Serve

March 31, 2010

Barry Goss began his career is corporate America, beginning his career at TVA, them moving to Battelle Memorial Institute, and later becoming a vice president for SAIC.  He has more than 30 years of corporate experience.  While at SAIC, he was given the authority to create an environmental division from nothing, and brought the segment of the company from nothing to $500 million in revenue in a short span of time.  After bringing this division to fruition, he decided to try his hand at starting a company from nothing without the corporate oversight and assistance, so thus Pro2Serve was born.

Pro2Serve was created out of his desire to create a company based on his ideals, not corporate ideals, and towards that goal, he cemented that 10% of profits would go back towards the community in the corporate bylaws.  This would later prove unpopular, but principled.  From his SAIC experience, Pro2Serve was created as an engineering services company, spanning to range from environmental problems to nuclear solutions, with physical sensor and security solution in the middle.  The company was funded via private loans, angel investors, as well as via venture capital firms.  His aforementioned policy on 10% return to the community did not set well with the equity companies, so he repaid them when they began to question its reason for being there.  He is one of the few people to even be in a position to do such an act.  The primary goal that Barry has set for his company is to be a half step in front of the market, so he can plan for what is next and have a solution ready to go when the customer needs it.  This has led him to be very profitable and his quality of work has yielded him numerous government contracts.

A guiding book that he recommends reading is called “Built to Last,” as it chronicles the business principles that need to be cemented in the ground before the company can be successful for the long haul.  He ensures his company is well positioned for the next market swing, and ensures his employees are busy but content with their work.  Many of his projects involve nuclear materials or security, so keeping employees happy is of considerable concern for him.

His initial success came quickly, for 6 months after starting the company, he received a $3 million contract from the government, however, he was unable to pay himself for the first year of work.  For his market, he is ‘only as good as his last deliverable,” and with this reality well established, he made sure that his quality of work was always exceptional.  Indeed, only once has a rebid government contract not been awarded to Pro2Serve.  Even through all his success, he still manages to give 10% of the profits back to the community and has retained over 50% of the common stock in the company so that this generosity will continue.

Terry Douglas – Provision Foundation

March 31, 2010

Terry Douglas began his entrepreneurial career founding CTI Molecular Imaging with a group of like minded individuals who had the goal of bringing PET (positron emission tomography) to the forefront of medical science through a comprehensive service company.  They began their company in 1988 with nothing but a medically unapproved process, so their first task was to get FDA approval for the process.  Unfortunately, the FDA has been known to be a very slow regulatory authority, for perhaps good reason, and was very slow at approving radio isotopes for medical use.  PET functions by injecting a radioactive fluorine 18 sugar into the body and monitoring where it is metabolized fastest to detect cancerous growths.  They had various contacts in the government, one of which was Howard Baker, the senator from Tennessee.  He convinced them that if the FDA wasn’t working fast enough, they needed to go the legislative route to get Medicare to approve the treatment.  They managed to get a piece of legislation pushed through the government that approved PET scans as a medically approved treatment, opening the door for them to begin marketing and selling their products.

CTI, however, was not only focused on the PET scanner, they wanted to be a full service scan company, capable of providing every aspect of the treatment, from manufacturing the F-18 to, to assisting with PET scanner maintenance, to filling out the insurance paperwork for approval, so to accomplish this, they set out to build up every part of the company from the ground up.  For the first decade, they saw tremendous growth, and entered talks with Siemens to acquire the company, however, Siemens offered what the founders though was too small a sum of money, so the founders decided to take the company public.  With the company now public, and worth considerably more than what Siemens had initially offered, Siemens contacted them again and doubled their initial offer.  With that offer, CTI was acquired by Siemens in 2004.

After CTI, Terry Douglas went on to found Provision Foundation, with one part of the company being a philanthropic organization and another being a medical supply company.  With the private company side of Provision, he has sought to bring advanced cancer screening and treatment centers to East Tennessee through a large development out in West Knoxville.  This is full of like minded entrepreneurs who are seeking a location to start up their companies, as well as some established names in healthcare.  On the non-profit side, Provision Foundation is an active member of the community, focused on faith based initiatives to improve infrastructure and quality of life in the area and across the globe. Currently they are focused on disaster relief following the earthquake in Haiti, but their efforts span the globe.  His efforts around the globe help people achieve a better life, and we all thank him for his efforts.

Vig Sherrill – Aldis

March 11, 2010

Aldis is a company that specializes in controlling traffic at intersections.  This is not Vig’s first company however, and is actually a culmination of past history and technological know how, though it most likely will not be his last endeavor.  Vig got his start with a company that was later sold to Flex Electronics.  Aldis got its start when he was sitting at a stop light that didn’t change for a long time.  He thought “I can do this better” and he was right.  Currently, intersections are managed by sensors buried in the road.  The only problem is that these sensors wear out quickly under normal environmental condition.  As a substitute, Vig came up with a computer controlled process that relied on camera images instead of large underground sensors.  The camera would not have the same environmental problems that the sensors had, and be much easier to install and maintain.  Thus the idea and innovation for Aldis was born.

He had built up some secrets to success with previous ventures.  He believes in building on a platform someone else uses, like a PC.  That way any performance gains that come as a result of PC improvements can be passed on to the customer.  This requires his product to be software based.  He also believes in the concept of simplicity.  Everything he makes is made with simplicity in mind for the end user.  He demonstrated his software, and anyone would be able to use it in less than an hour for just about any intersection.  Quite an accomplishment, and one that has enabled his company to grow, even among entrenched competitors.

There have been a few guiding principles and notions that have helped him over the years, one of which is that he does what he does because he liked doing it.   He believes someone shouldn’t start a company for the money, because that may or may not come. They should start a company because they love doing what they do.  Another thing he has stumbled upon is the economic gap between partners.  He believes it is better if all the founding members of a company are in the same financial situation so that everyone faces the same consequences if something doesn’t get done.  Having one member not need the money can create some interesting problems with work ethic.  He does, however, believe that everyone who starts a business needs a partner (as much as the previous statement might indicate no partner is the best solution) because having a partner gives an outlet for frustrations and questions.  A solo entrepreneur has a tougher time because there is no one to discuss business matters with on an equal playing field.

Jeff Bohanan – Protomet

February 24, 2010

Jeff Bohanan – Protomet

Jeff’s company specializes in low volume aluminum and steel CNC milling, with more emphasis being placed on product development and accuracy now in the tougher economy.  Jeff began his career as a mechanical engineer at the Y-12 nuclear facility working on nuclear weapons.  The quantities of manufacturing were generally in the low single digits, and this is where he developed a knack for small volume parts.  This knack later expanded to parts that run in the low thousands to tens of thousands, and he received his largest order of over 1 million parts as one of his first jobs.  His progress towards his established goals by writing them out on a periodic basis and by creating a pyramid to lay out overall goals and progress markers for his company as it grew.  He was amazed to see his company meet and exceed each goal he had originally written down for the company, and he has manged to thrive in a depressed economy with the skills he has learned to make his company grow.
Early in his career, Jeff was beset with some troubles.  His first big contract was canceled just after he invested all the money in building a machine shop from the ground up.  He was able to convince the company to allow his firm to make a few thousand of the parts, but ironically, he ended up manufacturing the entire order for them because of manufacturing errors.  Later on, another of his customers went out of business due to some poor manufacturing decisions on their part, which was a blow to Jeff because of their size.  Then, more recently, he was hit by the economic slowdown, specifically in the recreational boating industry.  The recreational boating industry is one of the major clients he has, and when sales fell to practically zero, he was forced to lay off some employees, much to his displeasure.  But through all the tribulations, Protomet has continued to progress towards the goals Jeff laid out 12 years ago. Currently, his major clients are homeland security and the boating industry.
Jeff has taken note of the major changes that have been slowly infiltrating the US market.  He feels that now his company is able to compete on cost and quality with any other manufacturing firm in the world, not just the US, and he is much more aware of how globalized competition has become recently.  He believes his advantage is the creative application of specialized knowledge, from designer to manufacturer.  Additionally, his business has functioned much like a ‘step function’ in that there have been times when not much changes for awhile, then all the sudden, rapid changes occur with little or no effort.  He has made it his business to capitalize on these events and ensure that they never slow him down.
There were a few take away lessons that he wanted to impart to the class, the first of which read something like this:
“Never let anyone tell you differently, people are your biggest challenge, not machines.  Employee loyalty is the biggest things when trying to develop talent, so make sure you do things to keep your employees happy.”  He also mentioned the need to keep his temper in check.  It was rather difficult for him to be rational with someone who just cost him ten thousand dollars, and he needed to take a break sometimes to ensure he didn’t go too far.  Jeff succeeded when so many had failed by persistence, a cool head, and a an excellent work ethic, and a little bit of luck, as has been shown to generally happen to most of the entrepreneurs.  Thank you for having us, Jeff.

Mark Medley CTI

February 17, 2010

CTI manufactures process control devices for large plants and factories across the world, and they have managed to find a niche that there are relatively few players in, except for the large rival Siemens.  Mr. Medley began as an engineer fresh from UTK by going into business with six friends from college.  They formed a few companies with the intention of picking the most promising ones to pursue full time.  Computer Concepts was choice for him.  After his partner decided to sell the company, Mr. Medley was offered the chance to purchase the rest of the company, and he took advantage of his position.  He then went on to produce industrial components that are used by a sizable portion of industry, particularly in the food processing segment.  The company specializes in small quantity high customization components as well as a few larger produced components.

CTI is a bit unusual in its formation in that the startup capital for the business came from local banks and personal friends, but is virtually unheard of today.  This involved neither the typical SBIR/STTR proposal writing, nor the venture capital losses in equity.  He chose this unusual method because of his dream to not repeat the regrets his father had with respect to investment. Mr. Medley felt his father regretted not investing in some very good opportunities because of financial and family constraints, so he wanted to get in at the bottom floor of a potentially successful business.

The secrets to Mr. Medley’s success have been many.  He has explicit trust in his employees and business partners.  He has vetted them well, and has staked his reputation on them.  He believes that the length of financing needs to be matched with the scale of the need so that a short term need is not financed for an exorbitant length of time and vice versa.  This has helped keep his business afloat in the past and will continue to do so.  Additionally, he has always been forthright with his creditors, expecting and giving honest truthful answer to the tough questions a financial expert may ask or he may ask.  He has shied away from venture capital as a way to grow the company because some of the firms have less than desirable ways of doing business that do not agree with his values.  This brings up his biggest asset: His values and credibility.  Mr. Medley stated that the only way he got where he is today is because he always did exactly as he said he would every time.  He built up credibility, and this helped him on the finance side as well as the marketing side.

He provided us with a few good business tactics.

1)      Govern with policies, not rules

2)      Profit is NOT an independent variable

3)      Find a balance between work and life

4)      Manage your time wisely

Micro Types – Joe Matteo

February 11, 2010

Our second week meeting was with Joe Matteo and his wife at their home in Walland TN.  He has an interesting story, which is much different than Chuck’s.  He began his career as a young engineer at a large defense firm making missile systems.  He used his experience in larger corporations to learn the trade (and things other than engineering) to help further his entrepreneurial ambitions.  He continued his corporate learning at CTI Molecular Imaging, where he learned to manage R&D, Facilities, contracts, and sales/marketing.  These were all divisions he would not have learned had he not been an executive before he began his small business career.

He helped his future careers by networking and making good friendships in the industry, and he surrounded himself with qualified experts who could provide good advice and product development assistance when needed.  He began his small businesses with SBIR grants, and continued on the for a few years.  He spent 15 years preparing for a new company, and he built the company up with help from nearly a dozen sponsors into a company that was purchased only four short years after it was created.  While this was not an easy task and failure was just one poor decision away, he mentioned his wife’s ability to manage the finances as well as continue to earn a paycheck as the endeavor was in the making as a key reason he stuck with it.

Mr. Matteo was different in that fund raising was not as critical a component in his business plan because he had already built up a substantial network of support.  This helped him weather poor times and helped him capitalize on good opportunities.  He enjoyed the rapid pace of progress that a smaller firm could offer, and he pursued this desire in to the field of microfluidics, or the interactions of liquids at the micro liter scale.  In a short period of time, he was creating a useful, innovative, patented, profitable business that could sustain them for the foreseeable future.

There were a few rules that he suggested we abide by in our entrepreneurial pursuits.

1).  License technology from others if it helps you meet your goals

2).  Continue on SBIR/STTR grants for as LONG as possible.

3).  Keep the triad of cost, schedule, and scope in perspective

Thank you Mr. Matteo, and I wish you luck on future companies.


Follow

Get every new post delivered to your Inbox.