Protomet Corporation is located in Oak Ridge, TN. They specialize in precision manufacturing of parts. Jeff Bohanan, the President of Protomet, was kind enough to speak with us about his start and success in the industry.
Early in his career, he and a partner left their corporate jobs and to start an engineering consulting business. After working in consulting for a while, their plan was to begin work in manufacturing. They wrote a business plan, as Jeff is a firm believer in written goals. He says that he typically rewrites his goals once a month, and that it's nice to see them progress over the years.
Protomet began work in manufacturing making a part for Mercedes. Mercedes needed a part that no one made, and they wanted one million of them made for $4 each. Protomet analyzed the part and bid to make the part with a combination of stamping and machining. They recognized the magnitude of this opportunity, but it was very intimidating. Mercedes accepted their bid to make the part, and Protomet ordered a $100,000 machine to begin the process. The day before the machine arrived, Mercedes told them that they would no longer require their services. Howwever, Jeff continued communication with them, and they agreed to let Protomet make the first 50,000 of 1 million parts. They soon received news that Mercedes wanted them to make all million parts.
They originally worked on making military parts, but the business was not sufficiently consistent. There were few parts, they were difficult to make, and they were few and far between. Protomet learned that high tech is not necessarily the key to high profit, but it may be how you get your foot in the door.
They began making lots of marine and aerospace parts. Now they work mostly with homeland security and wake board/boat manufacturing.
Many times, they create a single part out of a block of material. This may not be the cheapest method of making a part in the long run, but it does allow the client to make changes to the part and create new features. As the engineers change designs, Protomet can change the manufacturing to fit the part. Their reasoning behind this method was that they wanted to use the "cure" approach rather than the "band-aid" approach.
The recession was tough on them, but they are coming out of it slowly but surely.
Currently they have 18 CNC machines. One employee is typically in charge of 3-5 machines at a time; the competition in manufacturing business is tough and it is necessary to be very efficient.
They customized their extruded aluminum to save money. This seems counter-intuitive, but the distributers mark up the material price on standard sized parts, but the the mill can give cheaper parts for customized dies.
Jeff spends approximately 65 hours a week working at Protomet. His desire is to build a company that doesn't need him to continue. He advises to work ON your business, not just IN it. You must teach the process and not just do it yourself.
Some quotes Jeff likes are the following:
"We dent to overestimate what can be accomplished in one year. We tend to underestimate what can be accomplished in five years."
" The formula for innovation is a step function...output is not proportional to the input...though steady input is required to get to the next step."
"People are your biggest challenge [not technology]. You have to have integrity. You have to be honest."
I was pleased to meet Jeff on Monday night. He really cared for his business and cared about us coming there. I wish him the best.
Sunday, February 28, 2010
Wednesday, February 17, 2010
Mark Medley
This week we went to CTI (Control Technology, Inc.) and heard from Mark Medley. CTI makes instruments helpful in automating machines and plants. The idea behind CTI is to help people do what people are good at, and machines do what machines are good at. At plants Mark had previously visited, automation was implemented to improve quality and productivity, not to reduce labor costs.
We went on a tour of his facilities, where he shared with us many of the ins and outs of his manufacturing business. There were separate machines that placed soldering paste on the boards, placed parts on the boards, checked for defects, heated the boards to solidify the solder, and to wash the boards. One thing I noticed was the prevalence of checks and balances in the facilities. The boards are run through several tests and are checked several times in order to ensure that they function properly. Because of this, the company has very few unsatisfied customers.
Mark felt a desire to start his own business from watching his dad. He claimed that his father was a good engineer, but was afraid to gamble his success. Though he never regretted his decisions to have a steady job, there was always a sense of "what if" that seemed to bug him. Mark decided that he wouldn't accept living with thoughts of "what if," and at age 27, he decided to jump into business. He thought this age was appropriate because if he failed, he would still have a chance to start over. He advised us that if we wanted to start our own businesses, we should start within the first five years after we leave school, because it would get much harder after that. Mark and five of his good friends started CTI.
CTI is unique among the businesses we had visited so far in that it did not get its start with SBIR grants. They borrowed all the money they could from friends and family, and got bank financing to help them along. While six founding members of a company seems like a lot, it worked well for CTI. All six trusted and covered for each other. Mark also stressed that it was very important to be selective about who you go into business with.
The original idea for CTI was to supplement TI and other big names in the industry by finding holes or weaknesses in their products and developing a solution to improve them. In this way, they weren't competing directly with them, but did good business for a small company. Eventually, though, they began competing with big companies instead of complimenting them. This happened mostly because they were approached by big-name clients who desired a self-developed and processed PLC from CTI.
Soon though, Siemens sued the company, claiming that they had stolen Siemens designs. After attending federal court in Nashville and battling over intellectual property claims, the courts ruled in their favor. This gave them the ability to develop and manufacture their PLCs knowing that their ideas were original.
Mark offered some advice to young engineers/entrepreneurs at the end of his presentation. Below are some of his wise words.
-When starting a company, it's very important that you do what you say you'll do. You need to keep people informed, and they will be more likely to trust you and work with you.
-Don't govern your business with rules, if possible. Govern with general policies. Don't punish everyone for the mistakes of one or two employees.
-Profit is not an independent variable. It depends on whether or not you can compete in all areas you're competing in.
-Time management is key, both time & business and time & life.
-It is very important as you go through your life to try to find balance. When you start your business, you're way out of whack. That's okay for a little while, but not very long.
I like that Mark stressed the importance of life outside of business. If you business consumes your life, you won't be fulfilled.
Mark seemed like he was happy with his journey. He knew what he wanted in life and knew what he didn't want. He took risks, but they paid off. I can only hope that one day I'll be just as successful as Mark.
We went on a tour of his facilities, where he shared with us many of the ins and outs of his manufacturing business. There were separate machines that placed soldering paste on the boards, placed parts on the boards, checked for defects, heated the boards to solidify the solder, and to wash the boards. One thing I noticed was the prevalence of checks and balances in the facilities. The boards are run through several tests and are checked several times in order to ensure that they function properly. Because of this, the company has very few unsatisfied customers.
Mark felt a desire to start his own business from watching his dad. He claimed that his father was a good engineer, but was afraid to gamble his success. Though he never regretted his decisions to have a steady job, there was always a sense of "what if" that seemed to bug him. Mark decided that he wouldn't accept living with thoughts of "what if," and at age 27, he decided to jump into business. He thought this age was appropriate because if he failed, he would still have a chance to start over. He advised us that if we wanted to start our own businesses, we should start within the first five years after we leave school, because it would get much harder after that. Mark and five of his good friends started CTI.
CTI is unique among the businesses we had visited so far in that it did not get its start with SBIR grants. They borrowed all the money they could from friends and family, and got bank financing to help them along. While six founding members of a company seems like a lot, it worked well for CTI. All six trusted and covered for each other. Mark also stressed that it was very important to be selective about who you go into business with.
The original idea for CTI was to supplement TI and other big names in the industry by finding holes or weaknesses in their products and developing a solution to improve them. In this way, they weren't competing directly with them, but did good business for a small company. Eventually, though, they began competing with big companies instead of complimenting them. This happened mostly because they were approached by big-name clients who desired a self-developed and processed PLC from CTI.
Soon though, Siemens sued the company, claiming that they had stolen Siemens designs. After attending federal court in Nashville and battling over intellectual property claims, the courts ruled in their favor. This gave them the ability to develop and manufacture their PLCs knowing that their ideas were original.
Mark offered some advice to young engineers/entrepreneurs at the end of his presentation. Below are some of his wise words.
-When starting a company, it's very important that you do what you say you'll do. You need to keep people informed, and they will be more likely to trust you and work with you.
-Don't govern your business with rules, if possible. Govern with general policies. Don't punish everyone for the mistakes of one or two employees.
-Profit is not an independent variable. It depends on whether or not you can compete in all areas you're competing in.
-Time management is key, both time & business and time & life.
-It is very important as you go through your life to try to find balance. When you start your business, you're way out of whack. That's okay for a little while, but not very long.
I like that Mark stressed the importance of life outside of business. If you business consumes your life, you won't be fulfilled.
Mark seemed like he was happy with his journey. He knew what he wanted in life and knew what he didn't want. He took risks, but they paid off. I can only hope that one day I'll be just as successful as Mark.
Tuesday, February 9, 2010
Joe Matteo
Last night we made the journey to Walland, TN, to meet Joe Matteo and his home and office. After a hearty dinner of Buddy's barbecue, Joe began a presentation on his career.
Joe's early career focused on Defense Robotics. During that time, he said there were many ideas were planted in his head and seeds sown that led him to where he is today. He began to develop an inventor vision and a desire to become an entrepreneur. He spent a while in CTI product development, where the environment was quite conducive to entrepreneurship. They valued imagination and new ideas as well as collaboration and support. These two qualities make a great combination in a working environment.
Joe first decided to venture into entrepreneurship in 1994, when he began to create Matteo Automation and Robotics. He feels that he was very lucky to have had such fantastic support from those around him. He received two SBIR grants, got two patents, and CTI still allowed him to work 24 hours per week. He began to make rapid prototypes with a good machinist friend of his. However, he was soon offered a promotion at CTI. Accepting the job would mean postponing his entrepreneurship dream. However, after much deliberation, Joe decided to accept the job and put his small business on hold.
In retrospect, he is confident that the decision was the correct one to make. The job at CTI provided an excellent opportunity to build and expand his skill set to include R&D management, manufacturing, facilities management, contracts, sales, marketing, business development, and customer service.
Soon, though, another opportunity came along for Joe to start his small business. He claims that "Everybody's got great opportunities; the question is whether you know enough and are willing to take them." Joe knew that at this point, he was ready to take the risk and start his own business. He worked with microfluidics and health care. Using technology he helped develop, they were able to take a process and scale it down to manageable size and time.
Working in microchemistry, Joe became aware of the common desire to work with glass over plastic. He proposed his idea to develop the process to his colleagues, who promptly encouraged him to take the leap and start working towards that goal.
Joe took the advice, and in October 2004, NanoTek, LLC was born. The company focused on glass-based microchemistry, which had a pharmaceutical precedent but was not yet widespread. One of the biggest advantages Joe had in dealing with clients was small business speed. The company began strong, and had good collaborative partners like UT, Siemens Medical, and GSK. The company also had a strong team of advisers throughout its existence. They were awarded one patent, and had three pending. They had strong staying power, which was helpful in maintaining the company through ups and downs. Joe stressed the importance of this, and told of how he had several corporate sponsors who each donated small sums of money that added up to a powerful amount.
Another thing his advisers stressed was the importance of developing a strong image. They set up a long-term vision for the company, hired quality personnel, and remodeled and decorated their facilities to appeal to clients. Customer service was the most important thing, however. They wanted the clients to feel like they were well cared for.
The company had rapid success with lots of validation and a fairly regular cash flow. Their master plan was to develop a strategy to form a network of people for a distribution channel and move into clinical work. The wanted to provide continuous improvement of their product and market it to clients. In August, 2008, just four years after it formed, NanoTek was acquired by Advion BioSciences. Unfortunately, Joe felt that after being acquired, the innovative atmosphere of NanoTek was lost. He stayed with the company for about 18 months before leaving to pursue other work options.
He thought much about his dreams and desires, and decided that he had a passion for innovation and rapid prototyping. He developed the idea for an umbrella structure for a company, including proprietary product development, development services, and partnerships. Soon, he created Microtypes. Their mission was rapid product development. They wanted to help clients impact the productivity triad (scope, schedule, and cost) by choosing to improve all three. With rapid prototypes, there can be rapid development and improvements in other areas.
Joe also has a strong desire to continue learning. He enjoys starting projects he doesn't completely understand and broadening his knowledge on the subject. His personal business strategy is to expand his tool set, acquire tools, and leverage staying power.
A few words of advice from Joe were quite encouraging. He advised to find something you love to do and to do it. People can tell if you love what you do, and it makes them want to do it with you. You must assess your strengths and weaknesses and build your skills to recognize and capture opportunities. Get a financial planner, and surround yourself with role models and mentors. Become a role model and mentor to other people - one of the best ways to learn something is to teach it. Maximize strong staying power, but balance the level of risk involved. Build a proprietary advantage. If you're willing to work, you will find a place to work. Don't give up looking. And most importantly, don't fear failure, and don't allow it. If at first you don't succeed, try, try again.
All in all, I was very pleased with our visit to Walland. Joe was very personable, and he had a magnificent attitude toward life.
Joe's early career focused on Defense Robotics. During that time, he said there were many ideas were planted in his head and seeds sown that led him to where he is today. He began to develop an inventor vision and a desire to become an entrepreneur. He spent a while in CTI product development, where the environment was quite conducive to entrepreneurship. They valued imagination and new ideas as well as collaboration and support. These two qualities make a great combination in a working environment.
Joe first decided to venture into entrepreneurship in 1994, when he began to create Matteo Automation and Robotics. He feels that he was very lucky to have had such fantastic support from those around him. He received two SBIR grants, got two patents, and CTI still allowed him to work 24 hours per week. He began to make rapid prototypes with a good machinist friend of his. However, he was soon offered a promotion at CTI. Accepting the job would mean postponing his entrepreneurship dream. However, after much deliberation, Joe decided to accept the job and put his small business on hold.
In retrospect, he is confident that the decision was the correct one to make. The job at CTI provided an excellent opportunity to build and expand his skill set to include R&D management, manufacturing, facilities management, contracts, sales, marketing, business development, and customer service.
Soon, though, another opportunity came along for Joe to start his small business. He claims that "Everybody's got great opportunities; the question is whether you know enough and are willing to take them." Joe knew that at this point, he was ready to take the risk and start his own business. He worked with microfluidics and health care. Using technology he helped develop, they were able to take a process and scale it down to manageable size and time.
Working in microchemistry, Joe became aware of the common desire to work with glass over plastic. He proposed his idea to develop the process to his colleagues, who promptly encouraged him to take the leap and start working towards that goal.
Joe took the advice, and in October 2004, NanoTek, LLC was born. The company focused on glass-based microchemistry, which had a pharmaceutical precedent but was not yet widespread. One of the biggest advantages Joe had in dealing with clients was small business speed. The company began strong, and had good collaborative partners like UT, Siemens Medical, and GSK. The company also had a strong team of advisers throughout its existence. They were awarded one patent, and had three pending. They had strong staying power, which was helpful in maintaining the company through ups and downs. Joe stressed the importance of this, and told of how he had several corporate sponsors who each donated small sums of money that added up to a powerful amount.
Another thing his advisers stressed was the importance of developing a strong image. They set up a long-term vision for the company, hired quality personnel, and remodeled and decorated their facilities to appeal to clients. Customer service was the most important thing, however. They wanted the clients to feel like they were well cared for.
The company had rapid success with lots of validation and a fairly regular cash flow. Their master plan was to develop a strategy to form a network of people for a distribution channel and move into clinical work. The wanted to provide continuous improvement of their product and market it to clients. In August, 2008, just four years after it formed, NanoTek was acquired by Advion BioSciences. Unfortunately, Joe felt that after being acquired, the innovative atmosphere of NanoTek was lost. He stayed with the company for about 18 months before leaving to pursue other work options.
He thought much about his dreams and desires, and decided that he had a passion for innovation and rapid prototyping. He developed the idea for an umbrella structure for a company, including proprietary product development, development services, and partnerships. Soon, he created Microtypes. Their mission was rapid product development. They wanted to help clients impact the productivity triad (scope, schedule, and cost) by choosing to improve all three. With rapid prototypes, there can be rapid development and improvements in other areas.
Joe also has a strong desire to continue learning. He enjoys starting projects he doesn't completely understand and broadening his knowledge on the subject. His personal business strategy is to expand his tool set, acquire tools, and leverage staying power.
A few words of advice from Joe were quite encouraging. He advised to find something you love to do and to do it. People can tell if you love what you do, and it makes them want to do it with you. You must assess your strengths and weaknesses and build your skills to recognize and capture opportunities. Get a financial planner, and surround yourself with role models and mentors. Become a role model and mentor to other people - one of the best ways to learn something is to teach it. Maximize strong staying power, but balance the level of risk involved. Build a proprietary advantage. If you're willing to work, you will find a place to work. Don't give up looking. And most importantly, don't fear failure, and don't allow it. If at first you don't succeed, try, try again.
All in all, I was very pleased with our visit to Walland. Joe was very personable, and he had a magnificent attitude toward life.
Monday, February 1, 2010
Protein Discovery
Tonight we visited Chuck Witkowski of Protein Discovery in downtown Knoxville. While Chuck was in graduate school getting him MBA, he spent some time working for Motorola. During this time, he discovered his own desire to start a business, though he didn't know quite how to go about it. Around this time he met Lee Martin, who guided him in the art of entrepreneurship, encouraging him to pursue his dream. Chuck heard about the SBIR program, which he considered free money. He realized that this was an excellent way to take the first step toward starting his own business.
Chuck wrote 25 proposals in a six-month period. Two were funded. This number may be low, but it was enough for Chuck. He accepted the funds and decided to pursue the technology he described in his proposals. Unfortunately, Chuck never considered himself a scientist, though much of his life was spent around them. To overcome this problem, he found a research technician that was willing to work for him. The two began researching and developing their technology with full force. Early on, Chuck said that he was forced to learn much about licensing technology. He had to research what existed, and what he was allowed to do himself, as well as accepting the technical risks involved. There is much research and paperwork to be done, but it is a worthwhile and necessary use of time. He developed a relationship with ORNL, and was able to agree to a license which gave him the exclusive right to develop and sell their technology, though he had to pay the patent expenses. In return, ORNL received royalties and a small equity.
With the SBIR money, Chuck was able to lease an office space and begin work. After working on one technology for a while, he realized that that wasn't the best one to pursue. He wrote four more SBIR proposals and received funding for three of them, after which he continued research and technology development.
After a bit of time, they decided that they were ready to pursue getting outside funding. In retrospect though, Chuck says, they should have continued with SBIR funding for as long as possible. They obtained venture capital, but his partner quit the company almost immediately afterward. However, they kept the capital and continued development. Unfortunately, six months later, they discovered that the technology on which they were spending most of their time and effort was not worth pursuing. Again, though, they were able to keep funding and continue research and development.
They decided to hire a VP in R&D that moved from California to work with them. They got an idea for their next product and began to build it. They soon discovered that they could not continue without additional funding, which they soon received. They moved to a building in downtown Knoxville and developed their Passport system. The system consists of an instrument with disposable cartridges (they knew they wanted a razor/razor-blade-type business). They were able to acquire more funding with this product and were then able to market and sell the system. The first release of the system did not produce great results in the marketplace, though, and they were forced to continue R&D. A few years later, they developed a new system that was cheaper and better than the previous one. Now, their target market consists of approximately 50,000-60,000 customers, and their company is doing well.
In recent news, Protein Discovery has been communicating with a larger company who is interested in their product. The larger company may want to help Protein Discovery distribute their product worldwide, or may just want to purchase them. Either way, Protein Discovery has had a good run.
Chuck wrote 25 proposals in a six-month period. Two were funded. This number may be low, but it was enough for Chuck. He accepted the funds and decided to pursue the technology he described in his proposals. Unfortunately, Chuck never considered himself a scientist, though much of his life was spent around them. To overcome this problem, he found a research technician that was willing to work for him. The two began researching and developing their technology with full force. Early on, Chuck said that he was forced to learn much about licensing technology. He had to research what existed, and what he was allowed to do himself, as well as accepting the technical risks involved. There is much research and paperwork to be done, but it is a worthwhile and necessary use of time. He developed a relationship with ORNL, and was able to agree to a license which gave him the exclusive right to develop and sell their technology, though he had to pay the patent expenses. In return, ORNL received royalties and a small equity.
With the SBIR money, Chuck was able to lease an office space and begin work. After working on one technology for a while, he realized that that wasn't the best one to pursue. He wrote four more SBIR proposals and received funding for three of them, after which he continued research and technology development.
After a bit of time, they decided that they were ready to pursue getting outside funding. In retrospect though, Chuck says, they should have continued with SBIR funding for as long as possible. They obtained venture capital, but his partner quit the company almost immediately afterward. However, they kept the capital and continued development. Unfortunately, six months later, they discovered that the technology on which they were spending most of their time and effort was not worth pursuing. Again, though, they were able to keep funding and continue research and development.
They decided to hire a VP in R&D that moved from California to work with them. They got an idea for their next product and began to build it. They soon discovered that they could not continue without additional funding, which they soon received. They moved to a building in downtown Knoxville and developed their Passport system. The system consists of an instrument with disposable cartridges (they knew they wanted a razor/razor-blade-type business). They were able to acquire more funding with this product and were then able to market and sell the system. The first release of the system did not produce great results in the marketplace, though, and they were forced to continue R&D. A few years later, they developed a new system that was cheaper and better than the previous one. Now, their target market consists of approximately 50,000-60,000 customers, and their company is doing well.
In recent news, Protein Discovery has been communicating with a larger company who is interested in their product. The larger company may want to help Protein Discovery distribute their product worldwide, or may just want to purchase them. Either way, Protein Discovery has had a good run.
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