Roanoke's top
entrepreneur has a new idea and this one someday may even surpass his
earlier accomplishments.
By Dan Smith
While Virginia's
economic development community is in a constant scramble to catch the
"big buffalo," Ron Blum would much rather harvest the "big tomato."
You know, home grown.
Blum, the guy who
brought you Drs. Blum, Newman, Blackstock and Associates, Innotech,
and a gadget to keep your kids' shoes tied, among other things, has
launched a new venture - The Egg Factory - which promises to make all
that has gone before it look like preparation.
Blum helped make
Drs. Blum, Newman, Blackstock and Associates, which he founded, one
of the largest optometric practices in the southeast, then bailed out
so he could found Innotech, a manufacturer of contact lens machines
(which he invented). Innotech was then sold to Johnson & Johnson for
$135 million. J & J is in the process of expanding it to create 1,100
jobs in Roanoke Valley.
Blum stayed on for
two years after the Innotech sale to help with the transition, all the
while working on the model for The Egg Factory, a virtual company with
plans to sell ideas worth at least half a billion bucks within three
years.
Blum believes The
Egg Factory to be the only business of its kind in the U.S. "Specifically,"
says The Egg Factory's literature, "we focus on creating and managing
transformational technologies, products and business models from ideas
through market entry. Our end goal is to see these opportunities commercialized
primarily by selling or licensing them to global companies, and when
necessary, commercializing them ourselves."
Egg Factory Director
of Market Analysis and Licensing Sunder H. Malkani, a former VP of marketing
at Innotech explains further that the company is not interested in mature
companies, only those "which are in the embryonic or early stages."
And those companies - or these ideas, which have yet to be companies
- must pass four rigid criteria:
1. The technology
involved must have the potential to generate $500 million to $1 billion
in sales within five years of its commercial launch;
2. It must be possible
to develop the commercial aspects within three years (eliminating much
biological technology);
3. It must be intellectual
property which can be protected with patents, copyrights or other proprietary
means;
4. It must be of
benefit to society.
There's no fudging
on any of that.
Blum says the company
was recently brought a crackerjack of am idea that met the first tree
criteria handily, but failed on the fourth. It was powdered liquor,
which he says could have a thunderous audience, but liquor is of no
special benefit to society; in fact it could be argued that its effects
are the opposite of beneficial. The idea was rejected.
The Egg Factory,
says Blum, wants "to be recognized by the business community as an innovative
supply house. We want to be involved in areas where there is a need
and where we can match that need with a solution…We think of innovation
as our inventory."
Big companies, says
one of the Roanoke Valley's hottest entrepreneurs, " often are not good
at creating transformational innovation. By their very nature, they
are cautious and conservative and they take smaller steps…Companies
most often grow by merging or acquiring innovation. They grab on and
buy small companies" which have created the innovative product, service
or method of doing things.
"We are not an incubator
and we are not a venture capitalist. We are an innovative company, primarily
interested in transformational innovation."
Blum explains that
there are three stages of innovation: "Incremental, which makes things
a little better, and where we don't want to play; substantial innovation,
where we still play; and transformational innovation, where we are most
interested in playing."
With transformational
innovation, "we recognize the fact that it has the highest risk, where
you absolutely live on the edge. No risk is higher. Ours is an embryonic
concept in the transformational world. And it is where the highest reward
- monetarily and personally - is found. The impact of technology here
can help people throughout the world."
The Egg Factory
will paint with a big brush, delving as it will - for now - into vision
care (where Blum is the expert), agri-technology, consumer products,
hearing health care, Internet applications, telecommunications, consumer
electronics, and optical display technology.
"Our strength is
in our diversity," Blum says. "We have been criticized because we don't
appear to have any focus. Our greatest strength is our lack of focus.
Innovation travels from one industry to another. Often you find a solution
for one area while looking in another. When you focus, you often lose
creativity and the ability to innovate and that is a problem the largest
companies have.
"I think [industries]
hurt themselves by being too focused. That could be a major reason why
corporations don't have much transformational innovation: they are averse
to risk and they are focused on what they do."
At Innotech, Blum
took a good idea - the optometrist's office contact lens manufacturing
machine - and sold it and the company that created the "transformational"
technology to one of those Fortune 500 companies. "At Innotech," says
Malkani, "we put together the infrastructure and went to market with
it." The purpose of The Egg Factory is "similar, without the infrastructure."
Knowledge will be the capital. A team will conceptualize the idea or
technology and strategic partners will take it to the market."
The Egg Factory
has been an idea for about two years and a company since April. In those
very few months, it has already applied for 16 patents (Blum had in
excess of 20 himself), almost exclusively from in-house sources. "We
thought that we'd end up with about 10 percent of our patents coming
from inside and 90 percent externally. "What we're getting, though,
is about 90 to 95 percent from the inside.
They're coming from
a crackerjack team of academics and entrepreneurs - four on the management
teams, six on the board of managers, 11 on the scientific advisory board
- who have been pulled to what Malkani describes as " a business model
that doesn't exist" elsewhere.
Ted Rappaport, Virginia
Tech's superstar wireless innovator (he is a founder of the university's
Mobile Portable Radio Group and of his second business - the first sold
three years ago - Wireless Valley), says he's involved on the Scientific
Advisory Board because of Blum. "He's a remarkable man," says Rappaport,
about whom the very same phrase has been used often. "I've known him
for the last few years and we've kicked around some ideas about wireless.
When he told me his vision for The Egg Factory, I was excited. It presents
a great opportunity to put this region on the map with new products
and new jobs…I've seen it take shape over the last year and I'm certainly
cheering for it and for him."
Rappaport believes
that Tech can be an "anchor institute" in just about any technology
coming out of The Egg Factory "and that would be of significant benefit
in exposure."
Rappaport says that
one of the primary benefits of The Egg Factory could be "getting high-powered
people doing big things here, something that is not so much part of
[this region's] culture. The Egg Factory gives us the opportunity to
bring that [kind of synergy] here.
"It can ripple through
the economy and affect the way the region views itself. Twenty years
ago, Northern Virginia had a completely different [technology] environment
than it does today, but it put the right ideas and actions in place
to create what it is now.
"It is hard to change
a culture and to change the way a region views itself, but I think Ron
is one of the few people capable of affecting that kind of change here.
I think he's figured out the formula."
Phil Sparks, head
of Roanoke's economic development efforts and a man who has worked closely
with Blum, says, "His great strength is in assembling a team and in
seeing vision in others. He is a motivator and I think he wants to see
this region prosper."
The business can
also present the opportunity for people who live in the region now to
do what Blum has done: create jobs for their children. His son Brad
is The Egg Factory's business analyst.
Blum believes The
Egg Factory can help provide two "missing links" for this region's business
community: good management and access to capital.
Management, says
Blum, "has been brought in, but not in abundance. We simply haven't
seen many people take a startup approach to an IPO. I've found those
managers can be recruited."
The "critical piece,"
he says, is "money, access to capital. It is the number one major roadblock.
"I believe that
it is far better and far healthier for this region to grow its industry
than to recruit large corporations. We need to put a major governmental
emphasis on technological startups and we must figure out how to get
the money to do that.
"I think it would
be phenomenal for Virginia to have incentive packages of low interest
loans or some type of convertible loan instrument for technology startups
that could qualify if they achieve a certain size and other criteria.
If they reach those, the loans would be forgiven."
It would, he says,
"create a situation where Virginia was in the business of growing business,
of planting seeds. In 10 to 20 years, they would bloom" and those blooms
would be much larger and more pervasive than the "big buffalos" that
the economic developers land on occasion.
"All we need is
to plant the seeds and we will grow the companies - providing, of course,
that we water the seeds - giving them access to capital. The seeds are
there."
Blum has already
gone on a recruiting tear across the country, starting with a Wall Street
Journal as asking, "Do You Miss Playing the Game?" of targeted executives
and going on to say his company "is seeking former and current company
founders, CEO's, presidents and executive VPs who have successfully
sold their businesses for in excess of $50 million…We're looking for
individuals who would be interested in being involved in early stage
innovative growth technologies…"
Practically, The
Egg Factory will "work through strategic relationships," says Blum.
"We will outsource the research and development to people who are the
best in the world at their disciplines. We will tend to work with strategic
partners who will develop our technology. We will be grabbing a lot
of turf because we won't be successful with everything we try. We're
working on hitting two out of six, which would be great. But in this
business, it will be hitting a home run or striking out. I don't think
there will be much middle ground."
Blum is already
beginning to mark his territory by filing for patents on ideas which
may be great, or which may be totally useless. "That's where inventors
often fail," he says. "They wait until the technology is proven before
they file. They write papers and test their theories in the open, leaving
them in the public domain [to be taken by others]."
But Ron Blum would
never do that. He's too eager to get on with slicing that big, juicy
homegrown tomato.
(Reprinted with
the permission of the Blue Ridge Journal)
