usa today collegiate case study: entrepreneurship: finding a need and a solution

8/9/2019 USA TODAY Collegiate Case Study: Entrepreneurship: Finding a Need and a Solution

1/11

Collegiate

Case

Study

THE NATIONS NEWSPAPER

Simple pillow evolved intomultimillion-dollar babyBy Sharon Silke Carty

.................................................................................3-4

Believe it or not, you reallycan find out identities of toppatent holders

By Kevin Maney..................................................................................5-6

Tech guru dials into socialside of gamingBy Kevin Maney

..................................................................................7-8

Flood spawned IBM, so maybeKatrina will plant similar seedBy Kevin Maney

........................................................................................9-10

Discussion questions............................................................................................11

www.usatodaycollege.com

By Kevin ManeyUSA TODAY

Businesses are sometimes born ofadversity.

Such was the case with Brondell, theelectronic toilet start-up.

In 1990, after Dave Samuel graduatedfrom high school, his father took himalong on a business trip to Tokyo. Onenight, the two went to a business dinnerat a restaurant. Samuel excused himself togo to the bathroom and found himselfstaring at a toilet seat studded withbuttons and electronic controls.

"I'd never seen this," Samuel recalls. "It

had Japanese characters, so I couldn'tread what the buttons meant. But, ofcourse, I had to press the buttons to seewhat they'd do."

He pressed one that extended a wandinside the bowl. The wand then sprayedwarm water upward to wash whateverareas a seated person might need to havewashed.

Except Samuel wasn't seated. He wasstill standing, fully dressed, facing thetoilet and gawking. The spray soaked thefront of his pants. He launched into afrenzy of trying to dry himself before

rejoining his father and a bunch ofJapanese businessmen, ultimately slinkingback to the table and throwing a napkinover his lap.

You'd think this might've scarredSamuel for life that he'd run screamingfrom any toilet that looked as if it hadIntel inside.

Instead, he became intrigued by thelittle toilet that embarrassed him. Hewent to the Massachusetts Institute ofTechnology and became an engineer. In

1996, he and pal Josh Felser started anInternet radio company called Spinner,selling it to AOL in 1999 at about thepeak of the dot-com bubble for $320million.

"This afforded me the ability to take alittle time off and explore my options,"Samuel says. He was in his 20s.

In 2002, he went back to Japan and

Copyright 2006 USA TODAY, a division of Gannett Co., Inc. All rights reserved.

How Americans feelabout work

Only in current jobfor the money

USA TODAY Snapshots

Source: Simmons Market Research Fall 2004 National Consumer Study;sample size of about 24,000 adults.

By Shannon Reilly and Dave Merrill, USA TODAY

27%

Call themselvesworkaholics 22%

Want to start theirown business

37%

Its important that their familythinks they are doing well

51%

If they won the lottery, theywould not work again

41%

Everything from high tech home devices to products that enhance our abilityto communicate started out as concepts. How are innovative ideas for a newbusiness generated? This case study provides examples of how ideas andvisions are transformed into successful products and companies. Perhaps thesestories will inspire your ambition to pursue one of your ideas or dreams.

Entrepreneurship:Finding a Need and a Solution

He hopes flush of embarrassmentleads to flush of success


2/11

AS SEEN IN USA TODAYS MONEY SECTION, WEDNESDAY, NOVEMBER 23, 2005

Reprinted with permission. All rights reserved. Page 2

stayed at a Hyatt. Every bathroom had anelectronic toilet. He did some research

and found that in Japan, most businesshotels, many public restrooms and justabout every high-income household hadan electronic toilet.

"I believed it was time to introduce thisto America," Samuel says.

So he started a company, naming itafter J.F. Brondel, who according to theSulabh International Museum of Toilets,which I swear I did not make up invented the valve-type flush toilet in1738. Samuel added a second "l" to makethe company name Brondell. "It was astronger name," Samuel says.

Samuel is an ambitious guy, to say theleast. Around this same time, Felser cameback from Burning Man, an arts festivalin the desert that attracts a lot of techieswho run around naked there. Felser hadtaken tons of digital photos, and hisfriends really wanted to see them. Whowouldn't?

Felser figured out an interesting way todo this: create the equivalent of a virtualprivate network among a group offriends over the Internet, so they couldeasily see each other's large files such asphotos, music or video.

Felser and Samuel thought otherpeople would buy the technology. Itbecame the basis for Grouper, a companySamuel and Felser started that has so farhad moderate success. In December,Grouper will launch a major push intovideo sharing kind of a video Flickr.

Samuel is busy as both president ofGrouper and chairman of Brondell.

(Felser is not part of Brondell.)

Brondell started selling its toilets inJanuary. The high-end model, the Swash600, costs about $500. It has a heatedseat, computer-chip smarts, touch-padcontrols and yes a wand that spraysyou clean. Just make sure you're sitting. Alittle dryer follows with warm air.

Now, here's the problem: Americanshave so far failed to buy into the idea of

having their private parts go through theequivalent of a mini car wash. Acompeting company, Toto, has beenselling an electronic toilet for a whilenow with only modest results.

Marketing is a challenge. There aren't alot of good options for getting people totry it. Do you set up a demo unit at HomeDepot?

Ads have to walk a thin line. Maybe thecompany needs to hire a spokesman likeBob Dole and come up with a

euphemism as sterile as "erectiledysfunction." Brondell made a three-minute infomercial that's full of normal-looking people earnestly saying thingslike, "We're perfectly satisfied andperfectly clean all day long."

By the way, the older couple in theinfomercial is Samuel's grandparents, BillHayes and Susan Seaforth Hayes aka

Doug and Julie on Days of Our Livesforthe past 30 years.

Maybe Samuel is right and it really isthe right time for electronic toilets in theUSA. It seems that Americans who tryelectronic toilets absolutely love them.

"I thought it was a joke when Iinstalled it," says James Hong, founder ofwebsite Hot or Not. "I had no idea Iwould like it so much. When I travel, Ioften think in the hotel bathroom howmuch I wish I had the Brondell there."

Then there is the ultimateendorsement: Google has electronictoilets though not Brondell's in therestrooms at its headquarters.

Businesses will do anything to get alittle piece of that Google magic. I cansee management consultants cominginto companies and saying, "What's withthis toilet paper in the restrooms? Getrid of it. Get electronic toilets. Googledoesn't use toilet paper. From now onyou don't use toilet paper."

Could ignite a craze, as when managersstarted firing the bottom 5% ofperformers because Jack Welch did it atGeneral Electric.

"I liken it to TiVo," Samuel saysdrawing a parallel between electronictoilets and a video machine that ignitesviewer passion. "Once you experiencepausing television, there's no going backOnce you experience sitting on a warmtoilet and having a warm water wash,there's no going back."

Samuel looks at the opportunity like atechnologist. He notes that toilets have

not changed in the 250 years sinceBrondell's invention. "It's one of the fewareas that has seen little technologicalimprovement," he says. "We're excitedabout changing that."

It's early yet, but it will be interesting tosee if he can

Brondell founder: Dave Samuel with the Swashelectronic toilet.

Brondell


3/11

Page 3

AS SEEN IN USA TODAYS MONEY SECTION, MONDAY, JANUARY 9, 2006

Reprinted with permission. All rights reserved.

Boppys creator played it smart from the start

Simple pillow evolved intomultimillion-dollar baby

By Sharon Silke CartyUSA TODAY

GOLDEN, Colo If you've given birthor adopted in the past 10 years, chancesare you know what a Boppy is. And moreimportant, how to use it.

If you haven't, well, read on. Becausethis is the story of a woman who cameup with one of those "Why didn't I thinkof that?" ideas -- a simple pillow stuffedwith foam -- and turned it into amultimillion-dollar business. She nowhas the No.1 baby product in the country,according to American Baby magazine.

Susan Brown had already decided shewas going to quit her day job when sheinvented the Boppy, almost accidentally.Her daughter's day care center askedparents to bring in pillows to prop upinfants who couldn't sit up on their own.Brown came up with a C-shaped pillowin one night.

Seventeen years later, the basic designhasn't changed.

"It's just the perfect pillow for just

about every thing," says Judy Nolte,editor of American Baby, whose readershave named Boppy the most invaluableproduct for new moms four consecutiveyears. "I think that mothers are very wiseto select it as their favorite product. It fillsa need that nobody realized was there."

In fact, Boppy's fans love it because itdoes a job it never was intended for: Ithelps support babies while breast-

feeding, a job that can be taxing onexhausted new moms' backs, arms andother areas.

"Now it's almost embarrassing toadmit, but when people started using itfor breast-feeding, I was like, 'Oh, yeah. Ofcourse,'" Brown, 51, says.

Brown, who lives in Golden, a suburbof Denver, had dreamed of opening herown business since she was a child. Shewould write up mini-business plans, onlyto talk herself out of the idea by provinghow the business would not work or wasoverly ambitious. She began a career in

advertising sales but still daydreamedabout opening her own business. Then,while on maternity leave with hersecond child, she found out that she hadbeen passed up for a promotion. Shedecided it was time to go but stuckaround until she was fully vested in thecompany's profit-sharing plan.

With $25,000 from the profit-sharingand $7,000 from an investor, Brown tookBoppy to a children's clothing trade showin New York in 1991 and sold it to about50 children's stores. Within the first year,

she finagled a spot in One Step Ahead, acatalog that has launched many babyproducts into the mainstream.

But money quickly ran out. So Brownapplied for and got a loan from the non-profit Colorado Enterprise Fund. She saysshe needed money to take Boppy to theInternational Juvenile Products Show inDallas. Without the loan, the companywould have failed.

Ceyl Prinster, executive director of thefund, remembers being struck by how

down-to-earth Brown is. Prinster saysshe trusted that Brown's ability to thinkboth creatively and analytically wouldhelp propel Boppy to greater heights. "Alot of entrepreneurs are very idealisticand think they can keep going on visionalone," Prinster says. "She had a goodidea of what it would take to get thisproduct to the next level."

Now, the privately held Boppy Co.

About Susan Brown

Title: CEO of Boppy Co.

Age: 51.

Family: Husband, Roger; childrenAustin and Alistair; stepchildrenAbi, Molly and Max.

Hobbies: Hiking, singing showtunes, gardening.

Favorite movies: Dumb andDumber, Days of Heaven.

Favorite book: The Woman inWhiteby Wilkie Collins.

First job out of college: Freelancewriter for the Children's TelevisionWorkshop writing Spidey SuperStories.


4/11

Page 4

AS SEEN IN USA TODAYS MONEY SECTION, MONDAY, JANUARY 9, 2006


known until recently as Camp Kazoo, has annual sales of $15million to $25 million through such retailers as Babies R Us,

Pottery Barn Kids and Burlington Coat Factory. Brown says Wal-Mart has approached her about selling the product in its stores,but she wants to keep a more upscale feel to it and is trying toresist selling the $25 to $35 pillows at bargain prices.

Prinster says one of Brown's strengths is "being able to knowwhere her weaknesses are, and shoring that up with otherpeople."

She also has solicited advice from people who have beenthrough the business-development process. "The mostcommon piece of advice you get is to diversify," Brown says."That advice isn't always good."

To diversify, the company started selling TransferMations, aniron-on stencil that would allow parents to paint murals onnursery walls by simply coloring between the lines. Parentsliked it, but it became a logistical mess. The company wassuddenly dealing with an entirely new distribution chain,selling to craft stores rather than to baby-product retailers. Andcustomers began asking if the company was going to startselling paint to go along with the patterns, which would haveposed a new set of problems.

"When I look back, that energy may have been much betterspent on the core product," Brown says. "You have to analyzethe advice you get."

Boppy now has expanded its product line by making otherkinds of pillows, ones that have toys attached that babies canplay with and others that help pregnant moms sleep and sitmore comfortably.

The company is in the early stages of licensing the Boppybrand name to other products, such as baby clothes or toys.

Brown also is dabbling in the advice business herself. She'sself-published a book, Start Your Own Baby Products Business,

in which she advises prospective entrepreneurs to focus andresist the urge to underprice. The book is dotted with picturesof happy moms, dads and babies with their Boppies.

Pat Edson, a consultant who sits on the Boppy board, saysBrown "has zero ego, and that is just a beautiful thing to see intoday's world. That gives her a competitive advantage. ... Herlack of ego allows her to surround herself with really strongthinkers and makes sure she gets the best information."

Brown says one of her weaknesses is picking fabrics: "Itseems like every one I like sells poorly." So Brown listens to hercreative director, advisers and customers. The company'snewest materials include soft pastel velvet, gingham and

vintage alphabet patterns.While Brown has developed a loyal following for her product,

she's also developed a loyal following among her employees. AtBoppy, 20 of 23 employees are women, and more than half aremoms. Brown gives them flexibility to work when theirchildren are in school, skipping lunch to make the day shorter. Aroom in the colorful office space is set aside for mothers tonurse or pump breast milk during their day.

"The people who work with her and around her are brutallyloyal," Edson says. "That helps her retain talent and helps herattract high talent as well."

Creating an office that people love to come to was one ofBrown's goals.

"No matter how hard I am working, I can still go to soccer,"Brown says. "That made my life so much more livable. I'vegotten so much outside validation that this is the kind of placepeople want to be."


5/11

Page 5

AS SEEN IN USA TODAYS MONEY SECTION, WEDNESDAY, DECEMBER 14, 2005


Believe it or not, you really can findout identities of top patent holdersAh, patents. The topic has pretty much taken

charge of my life since last week's column revealingthe lack of any way to identify the top 10 living U.S.patent holders.

Apparently half the Earth's population hassomething to say about patents, and most of themare e-mailing me. My inbox has been blowing uplike Anna Nicole Smith between diets.

But the deluge has its upsides. The columnprompted a few patent database companies to takea whack at the question. Two ipIQ of Chicago and1790 Analytics of New Jersey came up withanswers.

So here, for the first time, is a list of the 10 most-prolificinventors. This is from ipIQ:

1. Shunpei Yamazaki, Japan, 1,432 patents. Yes, it seems to betrue: The top individual holder of U.S. patents is based at Tokyotech research firm Semiconductor Energy Laboratory. Fordecades, the popular assumption has been that Thomas Edisonis the all-time patent king with 1,093 patents. Yamazaki blowsaway Edison, and he is still inventing and getting patents.

2. Donald Weder, Highland, Ill., 1,322. This is the guy who hasinvented dozens of ways to make flower pots, dozens of waysto bundle flowers, and a whole lot of other things that have todo with florists. When ipIQ sent me its results, Weder showed1,321 patents but he got another one Tuesday. The title:"Apparatus for forming and securing a decorative pleated coverabout a flower pot."

3. Kia Silverbrook, Sydney, 801. When Australia's patentagency marked its centenary in 2004, it celebrated great

Australian inventions such as vegemite. The country isn'tmuch known for invention. On the U.S. Patent and TrademarkOffice's 1997 list, no Australian appeared in the top 100. Thesecretive Silverbrook, though, runs Silverbrook Research, andhe has zoomed to No. 3 with inventions such as a tiny ink-jetprinter that can fit in a mobile phone.

4. George Spector, New York, 723. Hey, here's a guy whoreally did invent a better mousetrap! It's patent No. 5,528,853,"Magnetic computerized mouse trap," issued in 1996. Spector

seems like a throwback to the likes of Dick VanDyke's Caractacus Potts in Chitty Chitty BangBang. Spector churns out all sorts of oddities, suchas the Porto Auto Oil Easy Drain and a motorizedpot-washing tool. Back in 1979, Spectorapparently caused quite a stir by patenting aboard game with the title "puck projecting game."Some people thought he'd patented hockey.

5. Gurtej Sandhu, Boise, 576.

6. Warren Farnworth, Boise, 547.

7. Salman Akram, Boise, 527.

All three work for Micron Technology in that great mecca ofAmerican invention, Idaho. "It is rather incredible," says TonyBreitzman of 1790 Analytics. "As a rule, other than Akram andFarnworth (who have a lot of co-patents), there is not muchduplication."

Micron is the last surviving U.S. maker of DRAM chips, whichare important in just about every electronic device.

But why Micron, with its $600 million annual R&D budget?IBM and Microsoft spend 10 times that on research. MicronCEO Steve Appleton brought up a couple of reasons. One is thatin its hypercompetitive industry, Micron has to have theprotection of lots of patents to survive, so "The culture of thecompany recognizes and rewards innovation," he says. But a lotof tech companies could say that.

So maybe it helps that at Micron, the patent attorneys' officesare right in the labs so they can work with the researchers tonail down patents right out of the box.

8. Mark Gardner, Cedar Creek, Texas, 512. Gardner works forAMD, Intel's peskiest competitor. You can find his patents deepinside AMD's microprocessors. His most recent patent, in Junewas titled, "Ultrathin high-K gate dielectric with favorableinterface properties for improved semiconductor deviceperformance." I think I'm going to ask for one for Christmas.

9. Heinze Focke, Verden, Germany, 508. Focke's patentsmostly center on packaging both on types of packages andprocesses for packaging assembly lines.

By Kevin Maney


6/11

10. Joseph Straeter, Highland, Ill., 477. Once again, we're backto flowers. Like a hockey player lucky enough to skate on

Wayne Gretzky's line, you can pick up a lot of points just bybeing there. Straeter works for No. 2 patent holder Weder, andmost of Straeter's patents are shared with Weder.

Now, 1790 Analytics came up with basically the same list, butit also ran a different version that separated out utility patentsfrom design patents. The latter are more about changing theappearance of an existing invention. If you do that, the nameson the list stay the same, except Straeter drops off replaced,remarkably, by yet another Micron researcher, Leonard Forbes.

What else have I gleaned from the patent e-mail onslaught?

Well, I got an e-mail from Esther Takeuchi, who works on

battery research for Greatbatch, a maker of power sources for alot of medical devices. She says that she's been told she hasmore patents 126 than any other living woman andwonders if it's true. From the lists I've seen and from poking

around the USPTO's database, it seems likely that she is indeedthe most-prolific female inventor.

And then there's one other oddity, pointed out by readerMichael Ravnitzky. This would be the Invention Secrecy Act of1951.

It's possible that any patent list results are skewed becausevarious government agencies have the ability to classify anypatent as secret and make it invisible to the public.

The USPTO even keeps a chart of "invention secrecy activity."It shows that so far in 2005, there have been 106 "new secrecyorders imposed." There are 4,915 "total secrecy orders ineffect."

So if among all those florist patents Weder and Straeterinvented the quantum computing secret decoder ring, we'dnever know about it.

Page 6Reprinted with permission. All rights reserved.

AS SEEN IN USA TODAYS MONEY SECTION, WEDNESDAY, DECEMBER 14, 2005


7/11

Page 7For more educational resources, visit http://education.usatoday.com Page 7Reprinted with permission. All rights reserved.

AS SEEN IN USA TODAYS MONEY SECTION, MONDAY, DECEMBER 12, 2005

By Kevin ManeyUSA TODAY

About a year ago, Trip Hawkins had an epiphany and notthe kind you'd expect from a legendary Silicon Valleyentrepreneur.

"I realized I had been doing the wrong thing for 30 years," hesays in his office, eyes twinkling behind rimless glasses, histanned skin and swept-back gray hair makinghim look like a displaced movie star.

That is why Hawkins is sure he's doing theright thing now with his 2-year-old company,cellphone-game-maker Digital Chocolate.

Hawkins had spent those previous yearschasing what he calls fidelity, or realism. In1982, he started one of Silicon Valley's all-timegreat successes: Electronic Arts, the world'sbiggest video game company. At EA, Hawkins

is best known for creating Madden NFLFootball. His goal inside EA was to usetechnology to make the most realistic gamespossible. He was out to push the fidelityenvelope, thinking that's what consumerscraved.

In 1991, Hawkins left EA because he saw the digital CDopening a path to yet higher fidelity. He started 3DO and builttechnology that was a forefather of Sony's PlayStation. ButHawkins was too far ahead with 3DO. The game box fizzled on

the market. 3DO hung around as a game maker but never tookoff, eventually filing for Chapter 11 bankruptcy protection in

2003.

Hawkins started to feel that something about video gameswas lacking. Madden Football might be astoundingly realisticyet it's played by only about 5% of the people who watch theSuper Bowl, Hawkins says. Participants in fantasy leagues -- avery low-fidelity activity based on statistics from real footballgames -- outnumber video game football players 3 to 1.

Hawkins' friends describe him as philosophical yetpragmatic. "He'll build an idea of how technology will affect theworld and try to get out front of the wave before it forms," saysDave Evans, a tech consultant who's known Hawkins for morethan 25 years.

So, Hawkins spent time thinking about what people neednot just want. As we become more mobile, "There's aloneliness we feel in our society," Hawkins says. "We want tograb onto what we've lost."

And that's connection and community. People want to go toSuper Bowl parties or interact while playing fantasy football,Hawkins concludes. Fidelity is important to an elite segment ofthe market, but social connection is important to just abouteveryone.

"I took the wrong branch," he says. "I thought it was all aboutfidelity, but what people want is the social aspect."

That's Hawkins' epiphany: If you're going to make games,make them social and mobile.

It's about desire

Hawkins keeps the lights off in hismodest corner office and lets thesunlight stream through thewindows. On a ledge are chocolatebars with labels that say DigitalChocolate. Hawkins came up withthe name because he wants to createthe same desire for his games that

people have for chocolate.

On his desk is a PC, an old-stylehard briefcase and a photo of his fourkids on a couch playing video games.

He pulls out a cellphone to show off the company's latestgames. One is called MLSN Sports Picks (MLSN stands forMobile League Sports Network). It's something of an onlinegame show about sports. You create a league with a group offriends, who all can play at different times on their cellphones

"Eventually the indus-try will have to go morein (Hawkins) direction.Its the best future formobile gaming.

Carrie Couskos,editor for GameSpot

Digital Chocolate

founder also createdElectronic Arts

Tech guru dialsinto social side ofgaming


8/11


AS SEEN IN USA TODAYS MONEY SECTION, MONDAY, DECEMBER 12, 2005

anywhere in the world. You answerquestions to predict outcomes inupcoming sports events. The systemkeeps score and ranks you against yourfriends.

Another new game, AvaFlirting, letsusers create characters who go out onthe network and try to date characterscreated by other people. Depending ontheir success, characters climb popularityrankings.

Neither game tries to use all of acellphone's processing power. Thegraphics are minimal. The allure is in thesocial connection, Hawkins says, not the

on-screen experience.

Though few reviews are out yet for thenewer games, Digital Chocolate isgenerally winning raves.

"They're doing a very good job ofworking within the confines of theplatform," says Carrie Gouskos, an editorat respected gaming website GameSpot.She notes that some of DigitalChocolate's earlier games have gottensome of GameSpot's highest ratings everfor mobile games.

Digital Chocolate already sells dozensof games, from WordKing Poker to SumoSmash. Some are graphics-rich, single-player games. But since Hawkins'epiphany, he has pushed DigitalChocolate to make MLSN-type socialgames.

Just about every other mobile gamecompany is trying to re-create videogame titles such as Tiger Woods PGATour or Harry Potter games so they lookand play much like a PlayStation or Xbox

game.

Some wireless industry developmentssuggest those attempts are mistaken. For

instance, Nokia in November said it wasgiving up on its N-Gage phone, whichtried to be a combination phone and

high-fidelity video game machine. Fewwere sold.

Still, conventional wisdom putsHawkins in the minority, fightingupstream just like the early days of3DO.

A big, early bet

Hawkins launched Digital Chocolate in2003 with his own money and one otherinvestor: Bob Pittman, founder of MTVand later an executive at AOL. In 2004,

the company raised an additional $13million, largely from four venture-capitalfirms.

The mobile games industry hasmomentum. Mobile gaming will growsixfold from 2004 to $8 billion in 2008,says research firm Strategy Analytics. In2006, nearly 1 billion cellphones will besold, almost all with gaming capability,say analysts. Meanwhile, venture capitalis flowing into mobile game companieswhich now number more than 200. InNovember, Microsoft said it plans amajor push into mobile games in 2006.

In this nascent segment, DigitalChocolate ranks in the top 10gamemakers, according to research firmM:Metrics. The company has sold about8 million of its early games. Prices vary

but subscription games can cost $2.99 amonth.

Yet Hawkins' big bet is on the low-fisocial games, and that's just beginningMLSN only launched on Cingular andSprint Nextel subsidiary Boost Mobilethis fall. This month, MLSN will launch onVerizon and Sprint. AvaFlirting and asibling game, AvaCars, won't come outuntil 2006.

Clearly, Hawkins isn't out to run amiddling mobile games company. He's

out to change the industry and creategames with Super-Bowl-size audiences -- and prove he's right where for yearshe'd been wrong.

"Trip is a very opinionated, veryteachable guy," says pal Evans. "He'stotally about the better idea. The wayhe's going with Digital Chocolate is agood example of his teachability."

"Eventually, the industry will have to gomore in (Hawkins') direction," saysGameSpot's Gouskos. "It's the best future

for mobile gaming."

The next few years will show whetherHawkins' epiphany pays off.

About Trip Hawkins

Born: Dec. 28, 1953.

Age: 51.

Education: Harvard, designed hisown major in strategy and appliedgame theory; MBA, Stanford.

First major position: Director ofstrategy and marketing, AppleComputer, early 1980s.

Companies founded: Electronic Arts,1982; 3DO, 1991; Digital Chocolate,2003.

Awards: Inducted this year into theAcademy of Interactive Arts &Sciences Hall of Fame.

Family: Wife, Lisa; four children.


9/11


AS SEEN IN USA TODAYS MONEY SECTION, WEDNESDAY, SEPTEMBER 14, 2005

Flood spawned IBM, so maybeKatrina will plant similar seedBy Kevin ManeyUSA TODAY

Hard to imagine that a flood like the one in New Orleanscould possibly result in anything good.

Yet in one of those odd twists of history, a 1913 flood thatdevastated Dayton, Ohio, had a huge impact on the technologyindustry. If not for that flood still among the worst in the USA there would have been no IBM.

Which would have meant no System/360 in the 1960s, no"THINK," no legendary salesmen in white shirts, no IBM PC.And if there had been no IBM PC, then Microsoft might todaybe a quaint little specialized software company and Intel astruggling maker of memory chips. Michael Dell might be asalesman for Unisys.

All because the Dayton flood kept Thomas Watson Sr., whobuilt IBM, from going to jail.

The story starts with National Cash Register, which had itsheadquarters on high ground in Dayton. NCR was run by short,wily, ornery John Patterson, whose monopolistic practicesmight make Bill Gates cringe. Patterson trained salesmen tobreak a competitor's cash register when a shopkeeper wasn'tlooking, then explain that NCR's machines were more reliable.

Watson started as an NCR salesman in the 1890s, working hisway up to become chief marketing officer and Patterson'sprotege. (This is all from research I did for my book aboutWatson, The Maverick and His Machine.)

At the turn of the century, NCR controlled the market for cash

registers, which were the hottest business managementtechnology of the day.

But by 1912, the Taft administration was on an antitrust tear.It had gone after Standard Oil. Then the administration tookaim at NCR, indicting Patterson, Watson and 28 other NCRexecutives under a rarely used statute for criminal antitrust.

NCR got creamed in court. A guilty verdict was reached onFeb. 13, 1913, and each NCR official faced up to three years in

jail, pending appeal.

About a month later, all-day rain soaked Ohio. On March25,the rivers that converge at Dayton started swelling. At 6:45a.m., Patterson gathered a group of executives minus Watson on NCR's roof, where they could see that a flood lookedinevitable. Patterson told the executives to start collecting foodwater, blankets and medicine and ordered the woodworkingdepartment to drop everything and make flat-bottomed boats.

Believing NCR would stay dry on its hill, Patterson decided toturn his campus into the equivalent of the Superdome. He

opened it to anyone who needed shelter.

At 8:30 a.m., one of the city's levees broke. Waves of waterraced through town, sucking in horses and wagons andfurniture. Like in New Orleans, the water reached rooftops.Unlike in New Orleans, there was no sewer system, so the floodcarried away every outhouse and its contents.

Residents scampered to safety at NCR, where a couplethousand took refuge. In the boats they made, NCR employees

Photo courtesy of National Oceanic and Atmospheric Administration

1913: Men pull a boat after Dayton, Ohio, flooded. IBM founder Thomas

Watson Sr. and his mentor, John Patterson, emerged as heroes.


10/11


AS SEEN IN USA TODAYS MONEY SECTION, WEDNESDAY, SEPTEMBER 14, 2005

plucked others from trees and roofs.

Watson was in New York on business. In NCR's archives are aseries of telegrams between Watson and Patterson as Watsonswung into action to send help to Dayton. "Am arranging forrelief train. Wire what you need most," Watson wrote in one. Intwo days, Watson pulled together donations and sent twotrains packed with food, water, tents and newspaperreporters.

The reporters were key. While NCR's acts were sincere,Patterson also sensed an opportunity. The Dayton flood madeworldwide headlines. So, too, did NCR's heroics. The ChicagoEvening Post wrote: "Patterson was revered by Dayton peoplebefore the catastrophe but is now an idol for whom thousandswould lay down their lives."

It was one of the great public relations turnarounds of alltime from convicted business demon to media darling. Andyou thought only Martha Stewart could do that.

Then, in the fall of 1913, Patterson bizarrely pushed almostevery convicted executive out of NCR, including Watson.Imagine how Watson must have felt: He was 40, was drivenaway by his mentor, had a jail term hanging over his head and his wife was pregnant with their first child, who wouldbecome IBM's other famous CEO, Thomas Watson Jr.

But this worked out pretty well for Watson Sr. In May 1914,he took a job running a wheezing little agglomeration of assets

called Computing-Tabulating-Recording Co., or C-T-R. Almost ayear later, an appeals court set aside NCR's antitrust verdict andgranted a new trial. Unwilling to retry the flood heroesWoodrow Wilson's administration dropped the case.

Over the next decade, Watson focused C-T-R on informationprocessing and in 1924 renamed it the ambitious-soundingInternational Business Machines. During the boom of the late1920s, IBM was essentially like Cisco Systems during the dot-com bubble a young company with a sizzling stock andimportant new technology that hardly anyone understood.

IBM entirely built in Watson's image grew like crazythrough the Depression. Watson became as famous as Gates orSteve Jobs today. And IBM just kept growing.

The Dayton flood made that possible, though of course noone could've seen that at the time.

So it's fascinating to wonder if some seed is being plantedamid Katrina's mess. It's not much consolation for the lives andhomes lost, but maybe a career is being shaped or an ideaformed that wouldn't have been possible had the disaster nothappened. And maybe that person or concept will later emergeto create something great. It's a small flicker of solace.


11/11

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

Ewing Marion Kauffman Foundation

www.emkf.org

Sole Proprietor Magazine

www.soleproprietormagazine.com

Small Business Administration

www.sba.gov

US Department of Laborwww.dol.gov

1. What factors make the difference between a creative ideathat becomes a successful company and an idea that nevermoves forward?

2. What determines if an entrepreneurial venture stays in businessor is sold for a profit, or starts but never becomes successful?

3. Who or what inspires a new entrepreneur most (e.g., family rolemodel, access to investment dollars, a curious and creative mind,knowing the right people)? Explain your reasoning.

4. What state laws or procedures do you need to adhere to when

starting a new business in the state where you currently live?What are the differences among a sole proprietorship, a limitedpartnership and a corporation? What laws and requirements applyto each type of business organization? Compare and contrast thebenefits and drawbacks of each type of business. Which would youchoose? Why?

DISCUSSION QUESTIONS ADDITIONAL RESOURCES

FUTURE IMPLICATIONS

1. Read several features in USA TODAYs Money section about new entrepreneurs and successful business leaders. What canyou learn from their experiences that would enhance your ability to start your own business? How did they learn from thesuccesses and failures?

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

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

Notes:

usa today collegiate case study: entrepreneurship: finding a need and a solution

Documents