It’s called The Public Bath, and a lot of people have grown pretty fond of it over the years.
The first issue, published in the fall of 1982 and distributed to 300-400 existing and potential clients of the business-to-business advertising agency Media II, was pretty basic, perhaps reflecting the recession then raging throughout the Rust Belt.
The pencil sketch art was rough and the copy cried out for a sharp-eyed editor. The newsletter’s name, Harry explained in that inaugural edition, came from antiquity, when “the public baths were places that men of learning and curiosity gathered to exchange ideas ... This is not first-thing-on-Monday-morning reading. This is more like fifteen-minutes-till-lunch-on-Friday reading.”
The original purpose, Harry admits today, was nothing so lofty as image building for the agency. Rather, his industrial clients at the time were badly in need of periodic primers on the basics of marketing, including basic conundrums such as black-and-white vs. color ads.
“Most of those people are sales managers or in similar fields, with no background in marketing-communications. So we wanted to provide some education on topics such as printing and graphic design.”
As for the low-pressure approach the newsletter has taken throughout its history, he says, “In our field, we don’t think we can do a real hard sell.”
For years, the newsletter was admired by many in the local advertising and related creative communities who saw it as a soft-sell approach to promoting marketing-communications services. In recent years, it has grown to an oversized four-pager, published quarterly. Brimming with well-packaged tips on marketing and related topics, it’s handsomely designed and edited with a light touch and a restrained sense of humor. It includes recipes, contests and trivia.
So informative are the how-tos on such topics as constructing news releases and responding to declining trade magazine inquiries that the agency at times seems to run the risk of giving away its expertise rather than luring in potential clients.
A favorite feature is an analysis of the effectiveness of a particular ad. If it occasionally relies too heavily on suggestions derived from the halls of Penton Publishing, the large Cleveland-based trade publisher, that comes off as more misdemeanor than felony.
Over its history, the newsletter, which in recent years has grown to a circulation of about 1,300, produced a handful of new business leads.
“But not as many as I would have liked,” says Harry.
And it was becoming pretty costly to pull off, if not in money, at least in time. Agency staff member Lori Valyko Weber, who edits it, puts considerable time and effort into the project. Harry has never really stopped to tally the real financial or opportunity cost of producing it in-house, he says, which is probably for the best.
“I’m afraid that if I did, I probably wouldn’t continue to do it,” he says.
Harry began the agency 27 years ago to service his initial client, Reliance Electric, a Cleveland-based Fortune 500 company. Over the years, the partnership progressed spectacularly for the small agency. The flip side?
“We fell into the trap where Reliance was 40 percent of our business. And we were working hard every day to fill their needs, and weren’t out calling on other people.”
Naturally, disaster eventually struck.
As with many a large Cleveland company before it, a couple of years ago, Reliance decided to move much of its local operations south, to Greenville, S.C. And its ad business was going with it.
Fortunately, the client gave Media II sufficient notice to pick up the pace on attracting new clients. Which is where the newsletter came in.
“We went in and talked to people, and they said, ‘Oh, you’re the folks who do the Public Bath!”
While Media II is hardly the household name in Cleveland larger agencies such as Wyse and Meldrum & Fewsmith are, its newsletter has become much better known than the agency behind it.
“It’s given us instant credibility” in helping to land new clients, says Harry. He expects the agency will get back to around $1 million in business this year, possibly more.
In the end, the agency’s founder sounds as if he thinks he dodged a bullet. Says Harry: “This was a wake-up call.”
Chances are, The Public Bath is safe for a while longer.
How to reach: Media II, (216) 481-1866 or www.mediaii.com
John Ettorre (firstname.lastname@example.org) is a contributing editor at SBN.
The 1890s will be remembered in Cleveland, as in so many other northern industrial cities in America, as the Gilded Age.
Electricity, petroleum, telegraphs, railroads, mass-produced steel and other building blocks of the Industrial Age, newly introduced into the economy, were beginning to yield previously unimaginable wealth. Everywhere, it was being converted into grand commercial buildings, stylish homes to rival the best of the Old World and museums and other baubles of success.
Throughout history, great wealth has often prompted cycles of edifice complex, a vague yearning among the rich and influential to build something that might outlast their mortal shells. And 1890s Cleveland was clotted with such showy bids for eternity.
Along upper Euclid Avenue, palatial Millionaire’s Row then near the peak of its storied career as perhaps the world’s leading boulevard stretched for blocks. Along lower Euclid, the grand fortress of the Old Arcade went up in 1890. And on the east side, along the streetcar lines, baseball fans had a new pleasure palace, League Park.
On Public Square, the city’s first “skyscraper,” the 10-story Society for Savings Building, was erected in 1890 (it still stands, right next to its 20th-century successor, Key Tower). And Jeptha Wade, heir to a telegraph fortune, donated the land at University Circle that 25 years later would house the grand Cleveland Museum of Art.
In short, the Cleveland of the 1890s was booming like few other places on Earth. Still landlocked (as it would be until the opening of the St. Lawrence Seaway in 1959), it nevertheless led the nation in shipbuilding, easily besting its oceanfront rivals Philadelphia and Bath, Maine.
While John D. Rockefeller had moved the headquarters of his Standard Oil to New York in 1885, the city didn’t lose most of the subsidiary benefits accruing from the unprecedented concentration of capital, professionals and related infrastructure that had formed to service his petroempire.
The chemical industry, which first relocated here to serve Standard, arrived first. That, in turn, led to a huge, locally based paint and varnish industry (Sherwin-Williams and Glidden were both established in the 1890s). East Ohio Gas grew up as a subsidiary of Standard Oil, its main product being a once-useless but now-valuable byproduct of drilling for oil.
Even the future home of the Cleveland Orchestra, Severance Hall, can be traced to Standard Oil wealth, since its major benefactor, John L. Severance, made his fortune as a Standard executive.
Yes, 1890s Cleveland was in many regards a rough, even uncouth, frontier town, scarred by predatory capitalism. Hogs and cattle still wandered downtown streets and dozens of people at a time died from typhoid fever traced to bad well water. So dense were its saloons that the infamous Women’s Christian Temperance Union got its start here, and so teeming with ‘uncouth’ immigrants from southern Europe was the city that a local chapter of the WASPy Daughters of the American Revolution was formed in 1892 to “Americanize” the brutes.
But the seeds were being sown for an even larger, more refined local economy in the coming century. Cleveland Trust was established in 1894 with just a half-million dollars in capital. Before long, it became the repository for unimaginable gobs of money that would build the town’s economic and social infrastructure for years. And law firms such as Squires, Sanders & Dempsey, first established in the decade, would form the other part of the underpinnings for a major regional economy.
As one eyewitness recorded in 1899, surveying the town from a bluff overlooking the Cuyahoga River: “The old pasture grounds of the cows of 1850 are now completely occupied by oil refineries and manufacturing establishments; and the river, which but a generation ago flowed peaceful and placid through green fields, is now almost choked with barges, tugs and immense rafts ... There are copper smelting, iron rolling, and iron mills, breweries, flour mills, nail works, pork-packing establishments and the multitudinous industries of a great manufacturing city.”
Indeed, as the 19th century came to a close, Cleveland was on its way to becoming the sixth-largest city in the United States, having grown from a population of 261,000 in 1890 to 382,000 just 10 years later. The unspoken assumption was that it might not stop until it got to No. 2, behind only New York.
To glimpse the scale of the town’s ambitions as late as the 1920s, one has only to reflect on the astonishing size of the Huntington Building at East 9th Street and Euclid Avenue. A building of such grandiose heft is still rarely seen in this country outside of New York and Chicago.
And yet, in another regard, there are striking similarities between the economy of Cleveland then and now.
As in so many periods of financial success, the 1890s gave rise to perhaps the first great merger wave. The giant American Rolling Mills in the Flats was bought and soon merged into Andrew Carnegie’s massive U.S. Steel. Inventor Charles Brush’s innovative electrical works was swallowed up by the newly formed General Electric.
In the 1890s, wrote one historian, “hundreds of locally owned proprietorships and partnerships disappeared into the gaping, insatiable maw of Wall Street merger artists and investment bankers.” (Sound familiar?) All of that activity led to the landmark Sherman Antitrust Act of 1890, whose main sponsor was Ohio Senator John Sherman.
Merger trends are cyclical. After World War II, thousands of returning veterans began small companies, which by late in this century had grown to sizable enterprises, many swallowed by larger out-of-town entities. McDonald & Co.’s mergers and acquisitions chief recently called the current environment the best M&A era of the century. If he’d been around a century earlier, he’d likely have dubbed the 1890s the same for its century.
But as you survey the two Gilded Age decades a century apart, you’re left with a tremendous sense of missed opportunity, a failure to bridge the gap between the two eras. It’s not just Cleveland’s sporting failures that leave locals with a wistful sense of might-have-been. The town’s economic fortunes, too, can leave you muttering about how we coulda been a contender.
With just a few breaks like, say, the availability of a strong figure such as Henry Ford to hammer the promising pieces into a cohesive industry Cleveland might well have snatched the crown of Motor City from Detroit. The first gas-powered American passenger car was built in Cleveland by Alexander Winton in the 1890s, and 15 years, later the city was still vying with Detroit for the top spot.
Even more damaging to the city’s ability to use the proceeds of one golden era to invest in its ability to spark later booms, a less-well-known near-miss happened in higher education and philanthropy. By some readings of history, the golden opportunity was missed simply because of a nasty case of municipal snobbery.
The two greatest figures of late 19th century Cleveland business were John D. Rockefeller and Samuel Mather. They were as different as two men can be. The aristocratic Mather, an iron ore titan, was descended from Puritan figure Cotton Mather, while Rockefeller was the son of an itinerant con man from upstate New York. Mather had an impeccable business reputation, while Rockefeller, as early as the 1880s, was being savaged by muckrakers for his ruthless competitive tactics. For all his wealth and success, Rockefeller never really was accepted into the inner circle of Cleveland’s establishment.
By one account, the oil man made overtures about donating millions of dollars to the then fledgling Case Institute of Technology. But he was told in no uncertain terms by trustees at a time when Mather served as chairman of the board that “Cleveland will take care of its own.” Thus scorned, the world’s richest man went on to sink $35 million into the new University of Chicago.
At a time when every thriving economic region from Boston to Austin to Silicon Valley is powered by a world-class, well-endowed research university, one wonders how much of a difference that foundational $35 million, worth hundreds of millions in today’s dollars, might have meant to this community in spin-off benefits? How much additional brainpower, how many new companies and inventions and processes might it have leveraged?
We’ll never know, of course. Like Red Right 88, John Elway’s Drive and Michael Jordan’s daggers in the heart at the buzzer, we’re simply left to ponder what might have been if Cleveland had just once caught a break. John Ettorre (email@example.com) is a contributing editor at SBN.
It was just a decade ago that a Cleveland-area investor paid Alan Groedel, at the time a 30-year-old former buyer for Victorias Secret, to write a business plan for him.
The investor had only one nonnegotiable demand: that the business be focused somewhere in the geriatric sector.
I probably spent half of the two months [allotted] fumbling. Then I wrote the plan, Groedel recalls.
That company became Provide-a-Ride, one of Clevelands biggest entrepreneurial success stories of the 90s. A three-time member of the Weatherhead 100 list of fastest-growing area companies, by the end of the last decade, it had grown to about $3.2 million in revenues, led by its owner, the man who wrote the plan (Groedel bought out the investors interest soon after the company was launched).
Its success was especially noteworthy, given how tough this industry sector has become. Groedels company provides nonemergency medical transport through the use of specialized vehicles such as step vans.
He occupies a tiny niche of the medical industry, which has been rocked by declining federal reimbursement for coverage. Plus, hes in a highly capital-intensive and labor-intensive field, which could easily be a recipe for failure.
For all those reasons, he says, I had always been positioning it for a sale.
And yet for a decade, he never got an offer.
Its not hard to figure out why. His was an especially tough niche in which to make a profit: alternative medical transport, or AMT. While the glamour and profits were in the ambulance business, the opportunities there were winnowing for smaller companies.
During the 1990s, two national consolidators began buying up many local ambulance companies, including such players as Sue Olsens Metro Ambulance.
Margins in the homelier AMT sector of the business, meanwhile, werent quite at anemic grocery-industry levels, but neither were they very healthy, he says.
It isnt a highly valued business, because the margins arent high and the risks are significant, he says.
The challenges lately have included an acute shortage of semi-skilled full- and part-time labor to drive the equipment and a near-catastrophic cut in Medicare reimbursement levels by the federal government, which has led to the undoing of such certifiable industry success stories as Geric Home Health Care, which went out of business last year.
Watching this landscape unfold around him, Groedel tried to prepare. He had been talking to Rural Metro Ambulance, a publicly held, Arizona-based national player, pitching it on turning over to him its alternative transport services in this market. The bigger company was clearly interested in some sort of arrangement, since it was losing money on those operations, even though its customers demanded it continue to offer them.
But Rural Metro was also listening to similar overtures from Baltimore-based Yellow Transport Inc., a multimodal provider of specialized transport services. And in the end, the courtee got the two courters together.
They [Metro] introduced me to Yellow, and all of a sudden, someone [Yellow] was at my door, saying, We want to buy you.
Yet, even while he was about to sell his company, Groedel never considered walking away with his cash. First, there was the fact that he wouldnt make enough from the sale (which he declined to identify) to retire. At just 41, he has two small children, and says, Ive grown accustomed to a nice lifestyle.
He also was sure his specialized knowledge would be essential to making the new joint venture work.
I knew that the business was still at a state that it required the owners involvement. You need a fairly established, mature business in order to be able to walk away from it, in a mature industry. Our industry is still a new one, he says, and his stand-alone company had neither the maturity nor sufficient management infrastructure to allow him to walk away cold.
Perhaps most important, he was excited by the new owners vision. It essentially boiled down to using Provide-a-Ride as the first local model for integrating alternative transport services into the ambulance business around the country, under a joint venture called HealthRide (the local operation has about 140 employees, about 60 more than before Groedel sold it).
The new owners tantalizing pitch to Groedel, as he puts it, was, We plan on growing your business five-fold, and Rural Metro wants to duplicate it across the country, and youre [still] involved. So I was anxious to be tied up with these guys.
Only one problem: That would change the sale negotiations markedly. Rather than simply seeking the highest price for his company, Groedel now had to be careful to structure the deal more as one between two future partners, even if one was, in truth, working for the other.
Its amazing how quickly a sale like this changes the nature of the conversation, Groedel says. Youre not merely trying to get the most for your business, but youre also trying to strike the proper tone for a continuing relationship. So the parties have to watch how they treat each other at the negotiation table. It was all the more important that everything was exactly as you said it was.
It was here that he had the luck of the family draw: a lawyer brother with a background in securities transactions. Howard Groedel, of the law firm of Ulmer & Berne, was once a securities attorney in the enforcement division of the Securities and Exchange Commission in Washington, chasing down bad guys, as he puts it.
Now, his practice focuses on mergers and acquisitions in the middle-market, closely held field for Ulmer, among Clevelands most-elite business law firms. Hes been intimately involved in helping advise his brother with the business almost from the start.
The most important thing he warned me is that youre sitting across the table from your future partners, so I had to be careful of the representations I make about the company, Alan recalls.
In a traditional negotiation of a business sale, the buyer is often interested in tying the former owners interests to the business for a period after the sale, in order to effect a smooth turnover and provide a bridge to customers and suppliers. Thats typically accomplished through financial incentives written into the sale agreement.
The difference here, though, was that if you sell a company and (eventually) walk away, and later theres a dispute, you give back some money or go to court to settle it. But here, you dont want to go to court against your employer.
Alans next hurdle: Convincing his wife it was the right decision.
Its hard to bring a spouse up to speed with the details of a business when he or she doesnt work in it every day, he says. Its difficult, because when you start up a business and youre successful, change is difficult [for the family]. Her concerns were loss of control and uncertainty. But what I had to sell to her was that running a small business in my field was very uncertain all the time.
So I spent a great deal of time making my wife comfortable with the decision to sell.
Again, he received help from his brother/attorney.
When youre an attorney, youre always trying to do your best, says Howard. But when its kin, theres a little extra pressure. I would say the deal was the subject of a lot of dinner-table discussion in the extended family. He also talked to Alans wife, addressing any concerns his sister-in-law might have had.
It wasnt my job to convince her. It was to put this deal in context with other, similar, deals, says Howard.
In the end, Alan seems at peace with his decision. As he talks about the sale, which closed around the middle of last year, at his home in Pepper Pike just before the end-of-year holidays, he takes evident pleasure in watching his toddler son come home and burst into the dining room for a hug from dad.
Even after the sale of his company, he says, returning to the conversation, I kind of missed the feeling of being an employee, because I didnt walk into a place with a system, I walked into an entrepreneurial environment that was fresh and unstructured. It wasnt so much do this A and B, but, How can we help you do this better?
It wasnt a terrible adjustment, he says, but it was an adjustment. Ive got a boss, even though hes out of town, and I have to give him some numbers and some idea of the direction Im taking.
Thankfully, he says, it hasnt been too long since hes had to answer to someone, back in the late 80s, when he worked at that beacon of adolescent male fantasy, Victorias Secret.
It was only 10 years ago that I was part of a team, and I remember what that was like.
John Ettorre (firstname.lastname@example.org) is a contributing editor at SBN.
Fussy Cleaners, a 20-location chain of dry cleaners based in Akron, has a well-deserved reputation for laboring mightily to stand out in a crowded business segment. President John Baraona, for instance, once decided to launch a costly image-advertising campaign on local public television.
But he knows that when customers can just be rude, his companys success also depends on ensuring that his employees display positive attitudes. Thus, for years hes had a set of customer-service principles, which he calls Our 10 Commandments of Good Business. They follow:
- A customer is the most important person in any business.
- A customer is not dependent on us; we are dependent on him.
- A customer is not an interruption of our work; he is the purpose of it.
- A customer does us a favor when he buys; we are not doing him a favor by serving him.
- A customer is a part of our business, not an outsider.
- A customer is not someone to argue or match wits with.
- A customer is a person who brings us his needs. It is our job to fill these needs.
- A customer is deserving of the most courteous and attentive treatment we can give him.
- A customer is the fellow that makes it possible to pay your salary. Treat him well.
- A customer is the lifeblood of this and every other business.
Introducing a new corporate or brand identity is no casual matter, says corporate design consultant Gerhard Ade.
Formerly director of corporate identity for TRW and later a Cleveland-based marketing consultant known for designing eye-catching annual reports for such companies as Royal Appliance Manufacturing Co., Ade suggests that before a company considers changing its corporate identity or even introducing a new brand, it should ask its internal and external audiences a series of questions. They include:
- Do we understand our needs and motivations for change?
- What makes a logo a 'good' logo?
- How much testing of possible brand names is enough?
- How do we plan for implementation?
- Do we understand the cost of implementation?
- How can we save time and money in the long run?
- What should our implementation priorities be?
- What impact does new media have on brand and identity?
- Have we adequately considered the reactions of our customers?
- How and when will we tell our dealers' employees?
- Can we count on support from across the company?
- How will a change affect our international operations and markets?
- Is our staff ready to take on the additional workload?
- What are the legal consequences of changing the company name?
- What's our CEOs favorite color?
The answers to these questions are crucial, Ade observes, because creating a new brand or changing a company's overall identity offers a "once-in-a-lifetime chance to get it right the first time."
The venue was a little cool: a beige-green auditorium at KeyCorp headquarters. But the emotions quickly grew as overheated as a midday trek across the Sahara in a rubber suit.
The occasion, held Aug. 10, was a regulatory fairness board hearing in which a few dozen small-businesspeople came from Ohio, Indiana and Kentucky to tell their tales of woe to a panel of small businesspeople designated by Congress to look into their complaints. As they travel around the country, these fairness boards-established under the 1996 Small Business Regulatory Enforcement Fairness Act to monitor federal agency enforcement activities as they relate to small businesses-have had a handful of successes in winning relief for aggrieved individual business owners. But their overall goal is far loftier.
"We want to change the structure of these federal agencies" as they relate to small business, the national ombudsman, Peter Barca, said grandly of the process, which in some ways is the successor of the White House Conferences on Small Business.
Some of the testimony, unfortunately, failed to live up to such lofty standards. For instance, a pool-maintenance contractor from Canton complained about unfair fines from the Environmental Protection Agency. Conceding that he had received pages of regulations from the agency, he said, "I don't have time to read all that, and if I did, I wouldn't understand it." Had he ever thought to hire a lawyer or a specialist to help?
Others tried humor. Jim Steckel, a third-generation pest-control man from Columbus, drew admirers with his engaging, homespun style-"small bidness," he called it. As he came upon a passage in his remarks mentioning the "EPA's methodology," he stopped, looked up and grinned. "It's probably mythology," he said, prompting laughter even from the stern chairperson, the owner of a marketing business in Chicago.
Akron's Russell Vernon took a different tack-blistering indignation. The bow-tied owner of West Point Market used the hearing as his latest opportunity to publicly protest what he considers the Equal Employment Opportunity Commission's 30-month vendetta against his company for his alleged failure to hire a representative proportion of minority employees. "We were caught in the ultimate bureaucratic gotcha" by an arrogant agency that's really a "government within a government," he said, his concentrated fury momentarily lowering the room temperature.
But a former business owner from Cincinnati probably came away with the prize for the most harrowing tale. He told his side of a 10-year battle with the Labor Department's Wage and Hours Division over what he called technical violations of his flextime policy. Because of an original $3,100 discrepancy (out of a $1.5 million payroll), he charged, he had been forced out of business, his personal credit ruined, and his family now reduced to living in an unfinished basement of his mother's home. As he sat down to stunned silence after delivering the fusillade, SBA regional director Gil Goldberg turned to an acquaintance and gravely shook his head: "Sounds awful," he said.
By 6 p.m., five hours after the hearing had convened, the entire board and a half-dozen spectators were still on hand. An owner of a telecommunications company complained of the sneaky practice of third-party "slamming"-tricking telephone customers into "authorizing" a change in their long-distance provider-which the FCC has thus far been unable to stamp out. Nobody was looking at their watches, but instead used his presentation as a springboard to get some free consulting from him about their own phone-service problems.
We took that as our signal to scram.
We asked Miriamne Ingalls to identify some common mistakes that she sees companies make in their Net arrangements. In addition to teaching a computer class at Cleveland State University and organizing user-group meetings, her solo Internet consulting practice has catered to small graphic-design shops as well as clients such as the billion-dollar Cleveland Foundation.
Faster isn't always better
Many companies are upgrading to faster modems. Unfortunately, few coordinate the upgrade with their Internet service provider. "If you decide to upgrade to a 56K modem, ask your service provider if they have any particular standard or model," Ingalls recommends.
Until recently, modems had no universal standard. Now that they do, there are some translation problems. "What we're finding is that the older modems don't work as well with the new standards," she says, resulting in systems that maddeningly hang up constantly and have to redial or connect at slower speed.
Failing to consider the travel staff's needs
Companies with all their offices in a single city often choose a local service provider, with little problem. But when employees travel and try to use the Net, long-distance charges can quickly get prohibitive without access to a national provider with local dial-ups in all major cities. For Internet access from overseas, she adds, Compuserve is still perhaps the only service that works smoothly.
Choosing the wrong e-mail package
"If I was to be strident about it, I would say most companies' e-mail package should be Eudora, because it handles attachments well," says Ingalls. Companies that transfer a lot of large files over the Net should consider an additional step-renting dedicated FTP, or file transfer protocol, space from the service provider, which will make those transfers run more smoothly.
Wasting server space by failing to compress files
Ingalls recommends investing in so-called decompression utilities. For those in a Windows environment, she recommends Winzip, and for those using Mac, a product called Stuffit.
Failing to add important Web-browsing enhancements
"The more you surf the Net, the more you will need an Adobe Acrobat Reader (for help in downloading large text files) and Real Audio (to hear audio clips)," Ingalls says. "People will try to convince you that you need a lot of other stuff, but you probably won't. Either the other browser enhancements won't work or you won't use them enough to justify it." Cost isn't a factor: Both products are freeware.
The Women's Organization for Mentoring, Entrepreneurship & Networking, headquartered in the Akron Industrial Incubator at Canal Place, is almost finished gathering a second round of funding for its microloan program.
The last of the first round of money, $150,000 loaned by the U.S. Small Business Administration, was loaned out last year by the organization to entrepreneurs. The new round of money for microloans consists of $400,000 from various sources.
While the latest round of funding is nearly in place, says acting director Carrie Herman, "We're probably a couple months away from fielding loan applications," since the organization is hunting for a new leader.
The group was formerly known as the Womens Entrepreneurial Growth Organization of Northeast Ohio.
When you're in the market for a new home or a good oil painting or a thousand shares of Microsoft stock, you'd probably consult a broker to help search or execute the transaction. So why can't a business looking for a new piece of technology to improve its market position do the same?
If the vision of the area's corporate behemoths comes to pass, smaller companies will soon have that very option. A company could put the challenge to a technology broker: Find me a piece of technology that helps solve my technical puzzle and get to market faster, and in return you'll get a slice of the licensing royalties.
In fact, for the last 15 months, Ken Zinda, a naval veteran and former Westinghouse engineer, has been tackling dozens of these searches as part of a feasibility study of "corporate mining" for Cleveland Tomorrow, the group of leaders from the area's largest institutions, including its largest companies. Already his mining expeditions have taken him to companies in Idaho and universities in Tennessee, looking for just the right piece of technology for his clients.
When people think of technology, Zinda argues, they tend to picture flashy, cutting-edge systems such as those developed for the space program. But the reality is generally more prosaic. "Technology has a lot of different forms: There's fundamental research, applied research, product development. There's a whole stratification of where that technology can be found." Often, it's a simple off-the-shelf component sitting largely unused on a back shelf of a large company that might unlock a rich new marketplace for another company that licenses its use. And finding that strategic missing piece is where the technology broker comes in.
Zinda concedes that corporate mining has thus far been driven not by the demand side but by the suppliers, Fortune 500 companies eager to wring additional revenues from R&D spending. Cleveland Tomorrow is on record in its intention to leverage more activity and value from the estimated $2 billion in annual R&D spending in this region. Nationally, about $1 trillion is tied up in corporate patent portfolios, and much of that remains underutilized and even untapped. "There is a tremendous amount of wealth there, but most of those portfolios are not well-managed. It has not been perceived as a source of recurring revenues to this point," Zinda says.
But he maintains that a number of trends are converging to make the licensing of these technologies just as attractive a financial proposition to the smaller companies buying them as to the larger ones selling. Rather than invest in the expensive engineering talent and waiting for the long lead time of R&D projects, more smaller companies, pressed by the relentless demands to get to the market faster, are increasingly buying technology already developed by others. In the increasingly faster economy, "time-to-market constraints are incredible," Zinda says. "It's the same story I hear everywhere: They just can't handle the time and money it takes to do these things [develop technologies], and they want to buy it, invest in it, rather than manage the whole process and take the risks." And a company that can find a component shortly after it's developed often has a tremendous competitive weapon.
At the same time, as companies experience diminishing savings from such fading fads as just-in-time manufacturing, they're being pressed to look elsewhere to boost efficiency. "You're not going to be able to squeeze much more blood out of that stone [just-in-time], but you can go a long way with new technology to improve productivity," says Zinda.
Thus far, with his position being underwritten by two charitable foundations, Zinda's brokering services have been free to clients. But in the year that remains of his feasibility study, he hopes to demonstrate the business case for technology brokering, or corporate mining, as an activity that can stand on its own as a revenue-generating activity. He says some investors, whom he declines to name, have even expressed an interest in technology brokering as a method for investing in new technologies and bringing them to market.
There are plenty of practical hurdles to be ironed out first, though. "Obviously, there are a lot of methodological problems: How do you separate people out who are just trying to acquire competitive intelligence, how do you guard against people who are trying to get your knowledge and not pay for it, how do you separate people who are just sifting the water vs. people who are seriously buying. And then how do you get them to pay once you've found it?"
For him, the biggest challenge in pulling off technology brokering is to think cross-industrially, to bring potential technical solutions to clients from outside their own industries. "You have to be able to work cross-disciplinary and at high levels of abstraction" to see potential technology application fits, he says. "I think the cross-industrial matches are where the real power is going to come in technology brokering. A lot of people know what's going on in their industries, so there are very few stones you can turn up that they don't know about. So you have to find things in other industries."
There's no getting around the fact, too, that technology brokering requires sorting out winners and losers from among potential clients. "I can spend a lot of time looking for a technology that will only net a $1,000 licensing agreement because the market [for the product produced with it] isn't that big. But if I want to make this a good business, I have to find technology needs that could lead to $100-million licensing agreements. We never divorce the technology side from the business side."
Though chambers of commerce, government agencies and university outreach programs all are in the business these days of helping companies find operating solutions, he insists that his less parochial mandate provides greater flexibility to find the best answers, regardless of their origin. "We're not constrained in the same way that other organizations are. I don't care where I get the technologies from. What Cleveland Tomorrow is looking at is how can we improve Cleveland's technology-based economy, so as long as I'm bringing it here to the Cleveland area, that works for us."
How to reach: Ken L. Zinda (216) 574-6276 or email@example.com
It's become something of a science, this phenomena of trying to distinguish oneself from the crowd at a bustling trade show. Some companies try to lure prospects by giving away trinkets, others by inviting participation in interactive activities such as putting contests. Many, of course, still do it the old-fashioned way, by positioning impossibly attractive young women in front of their booths to prompt traffic jams of neck-craning males.
Then, there's QualNet.
The Cleveland-based Internet service provider likes to distinguish itself from the pack of competitors by suggesting it's closer to the Net's backbone. But how to stand out on a trade show floor? At a recent trade show at the IX Center, the company outfitted its reps in lab coats. When teased about this subtle but effective gimmick, one rep was heard to say, "Yeah, we'll check your blood pressure if you sign up for Internet service."