THE NATION’S NEWSPAPER
Collegiate
Case
Study
www.usatodaycollege.com
Simple pillow evolved into
multimillion-dollar baby
By Sharon Silke Carty
.................................................................................3-4
Believe it or not, you really
can find out identities of top
patent holders
By Kevin Maney
Entrepreneurship:
Finding a Need and a Solution
Everything from high tech home devices to products that enhance our ability
to communicate started out as concepts. How are innovative ideas for a new
business generated? This case study provides examples of how ideas and
visions are transformed into successful products and companies. Perhaps these
stories will inspire your ambition to pursue one of your ideas or dreams.
..................................................................................5-6
Tech guru dials into social
side of gaming
By Kevin Maney
He hopes flush of embarrassment
leads to flush of success
..................................................................................7-8
Flood spawned IBM, so maybe
Katrina will plant similar seed
By Kevin Maney
........................................................................................9-10
Discussion questions
............................................................................................11
USA TODAY Snapshots®
How Americans feel
about work
Call themselves
“workaholics”
27%
Want to start their
own business
Businesses are sometimes born of
adversity.
Such was the case with Brondell, the
electronic toilet start-up.
In 1990, after Dave Samuel graduated
from high school, his father took him
along on a business trip to Tokyo. One
night, the two went to a business dinner
at a restaurant. Samuel excused himself to
go to the bathroom and found himself
staring at a toilet seat studded with
buttons and electronic controls.
"I'd never seen this," Samuel recalls. "It
had Japanese characters, so I couldn't
read what the buttons meant. But, of
course, I had to press the buttons to see
what they'd do."
22%
Only in current job
for the money
By Kevin Maney
USA TODAY
37%
If they won the lottery, they
would not work again
It’s important that their family
thinks they are doing well
41%
51%
Source: Simmons Market Research Fall 2004 National Consumer Study;
sample size of about 24,000 adults.
He pressed one that extended a wand
inside the bowl. The wand then sprayed
warm water upward to wash whatever
areas a seated person might need to have
washed.
Except Samuel wasn't seated. He was
still standing, fully dressed, facing the
toilet and gawking. The spray soaked the
front of his pants. He launched into a
frenzy of trying to dry himself before
rejoining his father and a bunch of
Japanese businessmen, ultimately slinking
back to the table and throwing a napkin
over his lap.
You'd think this might've scarred
Samuel for life — that he'd run screaming
from any toilet that looked as if it had
Intel inside.
Instead, he became intrigued by the
little toilet that embarrassed him. He
went to the Massachusetts Institute of
Technology and became an engineer. In
1996, he and pal Josh Felser started an
Internet radio company called Spinner,
selling it to AOL in 1999 — at about the
peak of the dot-com bubble — for $320
million.
"This afforded me the ability to take a
little time off and explore my options,"
Samuel says. He was in his 20s.
In 2002, he went back to Japan and
By Shannon Reilly and Dave Merrill, USA TODAY
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Doug and Julie on Days of Our Lives for
the past 30 years.
stayed at a Hyatt. Every bathroom had an
electronic toilet. He did some research
and found that in Japan, most business
hotels, many public restrooms and just
about every high-income household had
an electronic toilet.
Maybe Samuel is right and it really is
the right time for electronic toilets in the
USA. It seems that Americans who try
electronic toilets absolutely love them.
"I believed it was time to introduce this
to America," Samuel says.
"I thought it was a joke when I
installed it," says James Hong, founder of
website Hot or Not. "I had no idea I
would like it so much. When I travel, I
often think in the hotel bathroom how
much I wish I had the Brondell there."
So he started a company, naming it
after J.F. Brondel, who — according to the
Sulabh International Museum of Toilets,
which I swear I did not make up —
invented the valve-type flush toilet in
1738. Samuel added a second "l" to make
the company name Brondell. "It was a
stronger name," Samuel says.
Samuel is an ambitious guy, to say the
least. Around this same time, Felser came
back from Burning Man, an arts festival
in the desert that attracts a lot of techies
who run around naked there. Felser had
taken tons of digital photos, and his
friends really wanted to see them. Who
wouldn't?
Felser figured out an interesting way to
do this: create the equivalent of a virtual
private network among a group of
friends over the Internet, so they could
easily see each other's large files such as
photos, music or video.
Felser and Samuel thought other
people would buy the technology. It
became the basis for Grouper, a company
Samuel and Felser started that has so far
had moderate success. In December,
Grouper will launch a major push into
video sharing — kind of a video Flickr.
Samuel is busy as both president of
Grouper and chairman of Brondell.
(Felser is not part of Brondell.)
Brondell started selling its toilets in
January. The high-end model, the Swash
600, costs about $500. It has a heated
seat, computer-chip smarts, touch-pad
controls and — yes — a wand that sprays
you clean. Just make sure you're sitting. A
little dryer follows with warm air.
Then there is the ultimate
endorsement: Google has electronic
toilets — though not Brondell's — in the
restrooms at its headquarters.
Brondell
Brondell founder: Dave Samuel with the Swash
electronic toilet.
Now, here's the problem: Americans
have so far failed to buy into the idea of
having their private parts go through the
equivalent of a mini car wash. A
competing company, Toto, has been
selling an electronic toilet for a while
now with only modest results.
Marketing is a challenge. There aren't a
lot of good options for getting people to
try it. Do you set up a demo unit at Home
Depot?
Ads have to walk a thin line. Maybe the
company needs to hire a spokesman like
Bob Dole and come up with a
euphemism as sterile as "erectile
dysfunction." Brondell made a threeminute infomercial that's full of normallooking people earnestly saying things
like, "We're perfectly satisfied and
perfectly clean all day long."
By the way, the older couple in the
infomercial is Samuel's grandparents, Bill
Hayes and Susan Seaforth Hayes — aka
Businesses will do anything to get a
little piece of that Google magic. I can
see management consultants coming
into companies and saying, "What's with
this toilet paper in the restrooms? Get
rid of it. Get electronic toilets. Google
doesn't use toilet paper. From now on,
you don't use toilet paper."
Could ignite a craze, as when managers
star ted firing the bottom 5% of
performers because Jack Welch did it at
General Electric.
"I liken it to TiVo," Samuel says,
drawing a parallel between electronic
toilets and a video machine that ignites
viewer passion. "Once you experience
pausing television, there's no going back.
Once you experience sitting on a warm
toilet and having a warm water wash,
there's no going back."
Samuel looks at the opportunity like a
technologist. He notes that toilets have
not changed in the 250 years since
Brondell's invention. "It's one of the few
areas that has seen little technological
improvement," he says. "We're excited
about changing that."
It's early yet, but it will be interesting to
see if he can
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Simple pillow evolved into
multimillion-dollar baby
Boppy’s creator played it smart from the start
feeding, a job that can be taxing on
exhausted new moms' backs, arms and
other areas.
By Sharon Silke Carty
USA TODAY
GOLDEN, Colo — If you've given birth
or adopted in the past 10 years, chances
are you know what a Boppy is. And more
important, how to use it.
If you haven't, well, read on. Because
this is the story of a woman who came
up with one of those "Why didn't I think
of that?" ideas -- a simple pillow stuffed
with foam -- and turned it into a
multimillion-dollar business. She now
has the No.1 baby product in the country,
according to American Baby magazine.
Susan Brown had already decided she
was going to quit her day job when she
invented the Boppy, almost accidentally.
Her daughter's day care center asked
parents to bring in pillows to prop up
infants who couldn't sit up on their own.
Brown came up with a C-shaped pillow
in one night.
Seventeen years later, the basic design
hasn't changed.
"It's just the perfect pillow for just
about ever ything," says Judy Nolte,
editor of American Baby, whose readers
have named Boppy the most invaluable
product for new moms four consecutive
years. "I think that mothers are very wise
to select it as their favorite product. It fills
a need that nobody realized was there."
In fact, Boppy's fans love it because it
does a job it never was intended for: It
helps suppor t babies while breast-
"Now it's almost embarrassing to
admit, but when people started using it
for breast-feeding, I was like, 'Oh, yeah. Of
course,'" Brown, 51, says.
Brown, who lives in Golden, a suburb
of Denver, had dreamed of opening her
own business since she was a child. She
would write up mini-business plans, only
to talk herself out of the idea by proving
how the business would not work or was
overly ambitious. She began a career in
advertising sales but still daydreamed
about opening her own business. Then,
while on maternity leave with her
second child, she found out that she had
been passed up for a promotion. She
decided it was time to go but stuck
around until she was fully vested in the
company's profit-sharing plan.
With $25,000 from the profit-sharing
and $7,000 from an investor, Brown took
Boppy to a children's clothing trade show
in New York in 1991 and sold it to about
50 children's stores. Within the first year,
she finagled a spot in One Step Ahead, a
catalog that has launched many baby
products into the mainstream.
But money quickly ran out. So Brown
applied for and got a loan from the nonprofit Colorado Enterprise Fund. She says
she needed money to take Boppy to the
International Juvenile Products Show in
Dallas. Without the loan, the company
would have failed.
About Susan Brown
Title: CEO of Boppy Co.
Age: 51.
Family: Husband, Roger; children
Austin and Alistair; stepchildren
Abi, Molly and Max.
Hobbies: Hiking, singing show
tunes, gardening.
Favorite movies: Dumb and
Dumber, Days of Heaven.
Favorite book: The Woman in
White by Wilkie Collins.
First job out of college: Freelance
writer for the Children's Television
Workshop writing Spidey Super
Stories.
Ceyl Prinster, executive director of the
fund, remembers being struck by how
down-to-earth Brown is. Prinster says
she trusted that Brown's ability to think
both creatively and analytically would
help propel Boppy to greater heights. "A
lot of entrepreneurs are very idealistic
and think they can keep going on vision
alone," Prinster says. "She had a good
idea of what it would take to get this
product to the next level."
Now, the privately held Boppy Co.,
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known until recently as Camp Kazoo, has annual sales of $15
million to $25 million through such retailers as Babies R Us,
Pottery Barn Kids and Burlington Coat Factory. Brown says WalMart has approached her about selling the product in its stores,
but she wants to keep a more upscale feel to it and is trying to
resist selling the $25 to $35 pillows at bargain prices.
Prinster says one of Brown's strengths is "being able to know
where her weaknesses are, and shoring that up with other
people."
She also has solicited advice from people who have been
through the business-development process. "The most
common piece of advice you get is to diversify," Brown says.
"That advice isn't always good."
To diversify, the company started selling TransferMations, an
iron-on stencil that would allow parents to paint murals on
nursery walls by simply coloring between the lines. Parents
liked it, but it became a logistical mess. The company was
suddenly dealing with an entirely new distribution chain,
selling to craft stores rather than to baby-product retailers. And
customers began asking if the company was going to start
selling paint to go along with the patterns, which would have
posed a new set of problems.
Brown also is dabbling in the advice business herself. She's
self-published a book, Start Your Own Baby Products Business,
in which she advises prospective entrepreneurs to focus and
resist the urge to underprice. The book is dotted with pictures
of happy moms, dads and babies with their Boppies.
Pat Edson, a consultant who sits on the Boppy board, says
Brown "has zero ego, and that is just a beautiful thing to see in
today's world. That gives her a competitive advantage. ... Her
lack of ego allows her to surround herself with really strong
thinkers and makes sure she gets the best information."
Brown says one of her weaknesses is picking fabrics: "It
seems like every one I like sells poorly." So Brown listens to her
creative director, advisers and customers. The company's
newest 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. At
Boppy, 20 of 23 employees are women, and more than half are
moms. Brown gives them flexibility to work when their
children are in school, skipping lunch to make the day shorter. A
room in the colorful office space is set aside for mothers to
nurse or pump breast milk during their day.
"When I look back, that energy may have been much better
spent on the core product," Brown says. "You have to analyze
the advice you get."
"The people who work with her and around her are brutally
loyal," Edson says. "That helps her retain talent and helps her
attract high talent as well."
Boppy now has expanded its product line by making other
kinds of pillows, ones that have toys attached that babies can
play with and others that help pregnant moms sleep and sit
more comfortably.
Creating an office that people love to come to was one of
Brown's goals.
The company is in the early stages of licensing the Boppy
brand name to other products, such as baby clothes or toys.
"No matter how hard I am working, I can still go to soccer,"
Brown says. "That made my life so much more livable. I've
gotten so much outside validation that this is the kind of place
people want to be."
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Believe it or not, you really can find
out identities of top patent holders
Ah, patents. The topic has pretty much taken
charge of my life since last week's column revealing
the lack of any way to identify the top 10 living U.S.
patent holders.
Apparently half the Ear th's population has
something to say about patents, and most of them
are e-mailing me. My inbox has been blowing up
like Anna Nicole Smith between diets.
seems like a throwback to the likes of Dick Van
Dyke's Caractacus Potts in Chitty Chitty Bang
Bang. Spector churns out all sorts of oddities, such
as the Porto Auto Oil Easy Drain and a motorized
pot-washing tool. Back in 1979, Spector
apparently caused quite a stir by patenting a
board game with the title "puck projecting game."
Some people thought he'd patented hockey.
5. Gurtej Sandhu, Boise, 576.
But the deluge has its upsides. The column
6. Warren Farnworth, Boise, 547.
prompted a few patent database companies to take
a whack at the question. Two — ipIQ of Chicago and
7. Salman Akram, Boise, 527.
1790 Analytics of New Jersey — came up with By Kevin Maney
answers.
All three work for Micron Technology in that great mecca of
So here, for the first time, is a list of the 10 most-prolific American invention, Idaho. "It is rather incredible," says Tony
Breitzman of 1790 Analytics. "As a rule, other than Akram and
inventors. This is from ipIQ:
Farnworth (who have a lot of co-patents), there is not much
1. Shunpei Yamazaki, Japan, 1,432 patents. Yes, it seems to be duplication."
true: The top individual holder of U.S. patents is based at Tokyo
Micron is the last surviving U.S. maker of DRAM chips, which
tech research firm Semiconductor Energy Laboratory. For
decades, the popular assumption has been that Thomas Edison are important in just about every electronic device.
is the all-time patent king with 1,093 patents. Yamazaki blows
But why Micron, with its $600 million annual R&D budget?
away Edison, and he is still inventing and getting patents.
IBM and Microsoft spend 10 times that on research. Micron
2. Donald Weder, Highland, Ill., 1,322. This is the guy who has CEO Steve Appleton brought up a couple of reasons. One is that
invented dozens of ways to make flower pots, dozens of ways in its hypercompetitive industry, Micron has to have the
to bundle flowers, and a whole lot of other things that have to protection of lots of patents to survive, so "The culture of the
do with florists. When ipIQ sent me its results, Weder showed company recognizes and rewards innovation," he says. But a lot
1,321 patents — but he got another one Tuesday. The title: of tech companies could say that.
"Apparatus for forming and securing a decorative pleated cover
So maybe it helps that at Micron, the patent attorneys' offices
about a flower pot."
are right in the labs so they can work with the researchers to
3. Kia Silverbrook, Sydney, 801. When Australia's patent nail down patents right out of the box.
agency marked its centenary in 2004, it celebrated great
8. Mark Gardner, Cedar Creek, Texas, 512. Gardner works for
Australian inventions — such as vegemite. The country isn't
much known for invention. On the U.S. Patent and Trademark AMD, Intel's peskiest competitor. You can find his patents deep
Office's 1997 list, no Australian appeared in the top 100. The inside AMD's microprocessors. His most recent patent, in June,
secretive Silverbrook, though, runs Silverbrook Research, and was titled, "Ultrathin high-K gate dielectric with favorable
he has zoomed to No. 3 with inventions such as a tiny ink-jet interface properties for improved semiconductor device
performance." I think I'm going to ask for one for Christmas.
printer that can fit in a mobile phone.
4. George Spector, New York, 723. Hey, here's a guy who
really did invent a better mousetrap! It's patent No. 5,528,853,
"Magnetic computerized mouse trap," issued in 1996. Spector
9. Heinze Focke, Verden, Germany, 508. Focke's patents
mostly center on packaging — both on types of packages and
processes for packaging assembly lines.
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10. Joseph Straeter, Highland, Ill., 477. Once again, we're back
to flowers. Like a hockey player lucky enough to skate on
Wayne Gretzky's line, you can pick up a lot of points just by
being there. Straeter works for No. 2 patent holder Weder, and
most of Straeter's patents are shared with Weder.
Now, 1790 Analytics came up with basically the same list, but
it also ran a different version that separated out utility patents
from design patents. The latter are more about changing the
appearance of an existing invention. If you do that, the names
on 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 a
lot of medical devices. She says that she's been told she has
more patents — 126 — than any other living woman and
wonders if it's true. From the lists I've seen and from poking
around the USPTO's database, it seems likely that she is indeed
the most-prolific female inventor.
And then there's one other oddity, pointed out by reader
Michael Ravnitzky. This would be the Invention Secrecy Act of
1951.
It's possible that any patent list results are skewed because
various government agencies have the ability to classify any
patent 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 secrecy
orders imposed." There are 4,915 "total secrecy orders in
effect."
So if among all those florist patents Weder and Straeter
invented the quantum computing secret decoder ring, we'd
never know about it.
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AS SEEN IN USA TODAY’S MONEY SECTION, MONDAY, DECEMBER 12, 2005
Tech guru dials
into social side of
gaming
Digital Chocolate
founder also created
Electronic Arts
By Kevin Maney
USA TODAY
About a year ago, Trip Hawkins had an epiphany — and not
the kind you'd expect from a legendar y Silicon Valley
entrepreneur.
"I realized I had been doing the wrong thing for 30 years," he
says in his office, eyes twinkling behind rimless glasses, his
tanned skin and swept-back gray hair making
him look like a displaced movie star.
That is why Hawkins is sure he's doing the
right thing now with his 2-year-old company,
cellphone-game-maker Digital Chocolate.
Hawkins had spent those previous years
chasing what he calls fidelity, or realism. In
1982, he started one of Silicon Valley's all-time
great successes: Electronic Arts, the world's
biggest video game company. At EA, Hawkins
is best known for creating Madden NFL
Football. His goal inside EA was to use
technology to make the most realistic games
possible. He was out to push the fidelity
envelope, thinking that's what consumers
craved.
the market. 3DO hung around as a game maker but never took
off, eventually filing for Chapter 11 bankruptcy protection in
2003.
Hawkins started to feel that something about video games
was lacking. Madden Football might be astoundingly realistic,
yet it's played by only about 5% of the people who watch the
Super Bowl, Hawkins says. Participants in fantasy leagues -- a
very low-fidelity activity based on statistics from real football
games -- outnumber video game football players 3 to 1.
Hawkins' friends describe him as philosophical yet
pragmatic. "He'll build an idea of how technology will affect the
world and try to get out front of the wave before it forms," says
Dave Evans, a tech consultant who's known Hawkins for more
than 25 years.
So, Hawkins spent time thinking about what people need,
not just want. As we become more mobile, "There's a
loneliness we feel in our society," Hawkins says. "We want to
grab onto what we've lost."
And that's connection and community. People want to go to
Super Bowl parties or interact while playing fantasy football,
Hawkins concludes. Fidelity is important to an elite segment of
the market, but social connection is important to just about
everyone.
"I took the wrong branch," he says. "I thought it was all about
fidelity, but what people want is the social aspect."
That's Hawkins' epiphany: If you're going to make games,
make them social and mobile.
"Eventually the industry will have to go more
in (Hawkins’) direction.
It’s the best future for
mobile gaming.
— Carrie Couskos,
editor for GameSpot
In 1991, Hawkins left EA because he saw the digital CD
opening a path to yet higher fidelity. He started 3DO and built
technology that was a forefather of Sony's PlayStation. But
Hawkins was too far ahead with 3DO. The game box fizzled on
It's about desire
Hawkins keeps the lights off in his
modest corner office and lets the
sunlight stream through the
windows. On a ledge are chocolate
bars with labels that say Digital
Chocolate. Hawkins came up with
the name because he wants to create
the same desire for his games that
people have for chocolate.
On his desk is a PC, an old-style
hard briefcase and a photo of his four
kids on a couch playing video games.
He pulls out a cellphone to show off the company's latest
games. One is called MLSN Sports Picks (MLSN stands for
Mobile League Sports Network). It's something of an online
game show about sports. You create a league with a group of
friends, who all can play at different times on their cellphones
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resources,
visit http://education.usatoday.com
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anywhere in the world. You answer
questions to predict outcomes in
upcoming sports events. The system
keeps score and ranks you against your
friends.
Another new game, AvaFlirting, lets
users create characters who go out on
the network and try to date characters
created by other people. Depending on
their success, characters climb popularity
rankings.
Neither game tries to use all of a
cellphone's processing power. The
graphics are minimal. The allure is in the
social connection, Hawkins says, not the
on-screen experience.
Though few reviews are out yet for the
newer games, Digital Chocolate is
generally winning raves.
"They're doing a ver y good job of
working within the confines of the
platform," says Carrie Gouskos, an editor
at respected gaming website GameSpot.
She notes that some of Digital
Chocolate's earlier games have gotten
some of GameSpot's highest ratings ever
for mobile games.
Digital Chocolate already sells dozens
of games, from WordKing Poker to Sumo
Smash. Some are graphics-rich, singleplayer games. But since Hawkins'
epiphany, he has pushed Digital
Chocolate to make MLSN-type social
games.
Just about every other mobile game
company is trying to re-create video
game titles such as Tiger Woods PGA
Tour or Harry Potter games so they look
and play much like a PlayStation or Xbox
game.
Some wireless industry developments
suggest those attempts are mistaken. For
About Trip Hawkins
Born: Dec. 28, 1953.
Age: 51.
Education: Harvard, designed his
own major in strategy and applied
game theory; MBA, Stanford.
First major position: Director of
strategy and marketing, Apple
Computer, early 1980s.
Companies founded: Electronic Arts,
1982; 3DO, 1991; Digital Chocolate,
2003.
Awards: Inducted this year into the
Academy of Interactive Arts &
Sciences Hall of Fame.
Family: Wife, Lisa; four children.
instance, Nokia in November said it was
giving up on its N-Gage phone, which
tried to be a combination phone and
high-fidelity video game machine. Few
were sold.
Still, conventional wisdom puts
Hawkins in the minority, fighting
upstream — just like the early days of
3DO.
A big, early bet
Hawkins launched Digital Chocolate in
2003 with his own money and one other
investor: Bob Pittman, founder of MTV
and later an executive at AOL. In 2004,
the company raised an additional $13
million, largely from four venture-capital
firms.
The mobile games industr y has
momentum. Mobile gaming will grow
sixfold from 2004 to $8 billion in 2008,
says research firm Strategy Analytics. In
2006, nearly 1 billion cellphones will be
sold, almost all with gaming capability,
say analysts. Meanwhile, venture capital
is flowing into mobile game companies,
which now number more than 200. In
November, Microsoft said it plans a
major push into mobile games in 2006.
In this nascent segment, Digital
Chocolate ranks in the top 10
gamemakers, according to research firm
M:Metrics. The company has sold about
8 million of its early games. Prices vary,
but subscription games can cost $2.99 a
month.
Yet Hawkins' big bet is on the low-fi
social games, and that's just beginning.
MLSN only launched on Cingular and
Sprint Nextel subsidiary Boost Mobile
this fall. This month, MLSN will launch on
Verizon and Sprint. AvaFlirting and a
sibling game, AvaCars, won't come out
until 2006.
Clearly, Hawkins isn't out to run a
middling mobile games company. He's
out to change the industry and create
games with Super-Bowl-size audiences - and prove he's right where for years
he'd been wrong.
"Trip is a ver y opinionated, ver y
teachable guy," says pal Evans. "He's
totally about the better idea. The way
he's going with Digital Chocolate is a
good example of his teachability."
"Eventually, the industry will have to go
more in (Hawkins') direction," says
GameSpot's Gouskos. "It's the best future
for mobile gaming."
The next few years will show whether
Hawkins' epiphany pays off.
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Flood spawned IBM, so maybe
Katrina will plant similar seed
By Kevin Maney
USA TODAY
Hard to imagine that a flood like the one in New Orleans
could possibly result in anything good.
Yet in one of those odd twists of history, a 1913 flood that
devastated Dayton, Ohio, had a huge impact on the technology
industry. If not for that flood — still among the worst in the USA
— there would have been no IBM.
Which would have meant no System/360 in the 1960s, no
"THINK," no legendary salesmen in white shirts, no IBM PC.
And if there had been no IBM PC, then Microsoft might today
be a quaint little specialized software company and Intel a
struggling maker of memory chips. Michael Dell might be a
salesman for Unisys.
All because the Dayton flood kept Thomas Watson Sr., who
built IBM, from going to jail.
The story starts with National Cash Register, which had its
headquarters on high ground in Dayton. NCR was run by short,
wily, ornery John Patterson, whose monopolistic practices
might make Bill Gates cringe. Patterson trained salesmen to
break a competitor's cash register when a shopkeeper wasn't
looking, then explain that NCR's machines were more reliable.
Watson started as an NCR salesman in the 1890s, working his
way up to become chief marketing officer and Patterson's
protege. (This is all from research I did for my book about
Watson, The Maverick and His Machine.)
At the turn of the century, NCR controlled the market for cash
registers, which were the hottest business management
technology of the day.
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.
jail, pending appeal.
About a month later, all-day rain soaked Ohio. On March25,
the rivers that converge at Dayton started swelling. At 6:45
a.m., Patterson gathered a group of executives — minus Watson
— on NCR's roof, where they could see that a flood looked
inevitable. Patterson told the executives to start collecting food,
water, blankets and medicine and ordered the woodworking
department to drop everything and make flat-bottomed boats.
Believing NCR would stay dry on its hill, Patterson decided to
turn his campus into the equivalent of the Superdome. He
opened it to anyone who needed shelter.
But by 1912, the Taft administration was on an antitrust tear.
It had gone after Standard Oil. Then the administration took
aim at NCR, indicting Patterson, Watson and 28 other NCR
executives under a rarely used statute for criminal antitrust.
At 8:30 a.m., one of the city's levees broke. Waves of water
raced through town, sucking in horses and wagons and
furniture. Like in New Orleans, the water reached rooftops.
Unlike in New Orleans, there was no sewer system, so the flood
carried away every outhouse and its contents.
NCR got creamed in court. A guilty verdict was reached on
Feb. 13, 1913, and each NCR official faced up to three years in
Residents scampered to safety at NCR, where a couple
thousand took refuge. In the boats they made, NCR employees
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AS SEEN IN USA TODAY’S MONEY SECTION, WEDNESDAY, SEPTEMBER 14, 2005
plucked others from trees and roofs.
Watson was in New York on business. In NCR's archives are a
series of telegrams between Watson and Patterson as Watson
swung into action to send help to Dayton. "Am arranging for
relief train. Wire what you need most," Watson wrote in one. In
two days, Watson pulled together donations and sent two
trains packed with food, water, tents — and newspaper
reporters.
The reporters were key. While NCR's acts were sincere,
Patterson also sensed an opportunity. The Dayton flood made
worldwide headlines. So, too, did NCR's heroics. The Chicago
Evening Post wrote: "Patterson was revered by Dayton people
before the catastrophe but is now an idol for whom thousands
would lay down their lives."
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 a
year later, an appeals court set aside NCR's antitrust verdict and
granted a new trial. Unwilling to retry the flood heroes,
Woodrow Wilson's administration dropped the case.
Over the next decade, Watson focused C-T-R on information
processing and in 1924 renamed it the ambitious-sounding
International Business Machines. During the boom of the late
1920s, IBM was essentially like Cisco Systems during the dotcom bubble — a young company with a sizzling stock and
important new technology that hardly anyone understood.
IBM — entirely built in Watson's image — grew like crazy
through the Depression. Watson became as famous as Gates or
Steve Jobs today. And IBM just kept growing.
It was one of the great public relations turnarounds of all
time — from convicted business demon to media darling. And
you thought only Martha Stewart could do that.
The Dayton flood made that possible, though of course no
one could've seen that at the time.
Then, in the fall of 1913, Patterson bizarrely pushed almost
every convicted executive out of NCR, including Watson.
Imagine how Watson must have felt: He was 40, was driven
away by his mentor, had a jail term hanging over his head —
and his wife was pregnant with their first child, who would
become IBM's other famous CEO, Thomas Watson Jr.
So it's fascinating to wonder if some seed is being planted
amid Katrina's mess. It's not much consolation for the lives and
homes lost, but maybe a career is being shaped or an idea
formed that wouldn't have been possible had the disaster not
happened. And maybe that person or concept will later emerge
to create something great. It's a small flicker of solace.
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Page 10
DISCUSSION QUESTIONS
ADDITIONAL RESOURCES
1. What factors make the difference between a creative idea
that becomes a successful company and an idea that never
moves forward?
Ewing Marion Kauffman Foundation
www.emkf.org
2. What determines if an entrepreneurial venture stays in business
or is sold for a profit, or starts but never becomes successful?
Sole Proprietor Magazine
www.soleproprietormagazine.com
3. Who or what inspires a new entrepreneur most (e.g., family role
model, access to investment dollars, a curious and creative mind,
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 limited
partnership and a corporation? What laws and requirements apply
to each type of business organization? Compare and contrast the
benefits and drawbacks of each type of business. Which would you
choose? Why?
Small Business Administration
www.sba.gov
US Department of Labor
www.dol.gov
FUTURE IMPLICATIONS
1. Read several features in USA TODAY’s Money section about new entrepreneurs and successful business leaders. What can
you learn from their experiences that would enhance your ability to start your own business? How did they learn from the
successes and failures?
2. What state and federal laws and funding sources encourage entrepreneurs to develop and launch new businesses? How
could the laws be changed to encourage new entrepreneurs even more so?
3. Which of your strengths and abilities would make you a successful entrepreneur? What knowledge or skills do you lack that
you need to develop?
Notes:
© Copyright 2006 USA TODAY, a division of Gannett Co. Inc. All rights reser ved.
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