SMALL BUSINESS SUCCESS STORY(Michael D. Warner) PART ONE

SMALL BUSINESS SUCCESS STORY ...a primer on how you yourself might succeed.

by Michael D. Warner Copyright 2012 by Michael D. Warner ...all rights reserved.

STATIC PROTECTION SERVICE How a 1950’s high school drop-out created and managed a successful business including invention of the product, its development, manufacture, sales, pricing, bookkeeping/accounting, maintenance and service.

Epoch: Dawning of the personal-computer era (circa 1983).

Historically, computers were available only to very large organizations like the military, General Motors, some research labs and etc. As solid state technology progressed, mass production of the central processor unit and its supporting chips made possible the dissemination of smaller, cheaper computers.

Soon, individuals and small businesses had as much computing power as larger institutions. The rest is history: I.E. the smart-phone one routinely uses contains more computing power than a million of the older machines all working together. Yet, an advance in technology always entails advanced problems. This story is about how I encountered one such problem, tackled it, solved it, then made a good living from the entire confrontation.

It is my hope that by describing this process I will motivate others to search out problems, put on their thinking caps, and attempt solutions. If you follow my journey, you will give yourself an excellent chance not only to succeed but to excel. Therefore, I encourage you to pay close attention:

Problem: Lightning strikes often zapped sensitive electronic equipment, particularly devices used for communication via wire cabling connecting remote corresponding devices, such as modems, line printers, computer communication boards, security gate controllers, credit card readers and etc.

I was very much aware of the problem as I was one of the guys making service calls to repair such damaged equipment. Naturally, customers complained that the systems they had bought were prone to the ravages of thunderstorms.

Solution: I began to study all that was known about lightning strikes and of attempts electrical engineers had made in trying to establish component protection. I visited The National Center For Atmospheric Research (NCAR) in Boulder, Colorado. I examined the work done at the University of Florida in Gainesville where they elicited lightning strikes by shooting copper wire into mature cumulus clouds from a cannon. I probed the minds of the National Severe Storms Laboratory (NSSL) scientist, Dave Rusk, and his cohorts at the University of Oklahoma in Norman. I read everything I could get my eager hands on struggling to understand exactly what happened when a several-million volt strike occurred. The hit might be more than a quarter mile distant, yet somehow still was able to blow out sensitive components.

Information can appear from many sources. I urge you not to discount good facts because of the status of the messenger. To wit: A young boy mentioned to me the fact that he knew water itself carried electricity. “How about under the ground?” he asked me. Yes! A brilliant question and a stunning observation from such a young fellow. That huge nugget from such an unlikely source aided in my solution, particularly helpful in identifying in advance which sites were more likely to suffer lightning damage.

Here, I must explain that I was not an electrical engineer. My electronic training had been only the basics in the USAF of the simple direct current electrical circuitry necessary to fire machine guns, cannons, rockets and, missiles and to release bombs or other munitions. Basically, it was similar to simple automotive low voltage stuff. But, I could read and write. I could buy electronic components and I could experiment. My books were Radio Shack primers mostly by Mr. Forrest M. Mims III. (Thank you, Sir, as you helped me make a whole lot of money!)

What an incredible eye-opener his material was to me. Prior to obtaining his inexpensive little handbooks of solid state circuitry with easy to construct example projects, I had shunned electronics, believing that even the math would prove too complex for a simple person such as myself.

I had saved up $2300 by carrying my lunch to work five days a week for two years. Going out to eat with my co-workers usually ran about $5 per lunch. I.E. Driving there and back, and leaving a tip. I love peanut butter anyway. The coffee to wash it down with was on the company. Besides, I got a lot more programming done and my boss loved it.

(If you’re not into understanding all the technical stuff, skip down to “Okay, enough of all the technical stuff”)

After comparing device components damaged by strikes occurring at different locations, I found similarities in equipment damage, then began to notice similarities in site typology, similarities in physical wiring and in the general layout of power line wiring.
I began to understand what it was about a lightning strike that “blew” electronic components. A diligent search eventually turned up a book describing the change in ground potential between two or more geographically separated sites. Written by an English physicist (circa 1956) regarding problems of communicating via copper wire over ever increasing distances, the book opened my eyes in an unusual manner. It was as if I could “see” the changes happening at each end of the line as they were occurring!

I realized the author had provided me an amazing insight into how I might possibly be able to prevent damage from electrical events occurring as a consequence of the strike. It seemed he had determined that the “ground potential” for electronic signals traveling along copper wires between two or more locations existed at quite different values when measured at either end of a communications circuit. This means that after traveling a certain distance the negative voltage required to produce a binary bit “one” that had originated at the transmitter at a 12 volt level referenced the ground plane at the transmission site, had decayed down to a mere 1.6 volts at the receiving end.

That’s bad because the receiving end cannot identify the less-than-three-volt signal as a binary “one”. Communications failed because of the change in ground potential. The author of that book found this to be the case, wrote about it and offered solutions to the problem, many of which were eventually implemented.

This is where my thinking was helped by luck. It became suddenly clear that when a lightning strike occurs nearby, the ground potential in that vicinity becomes warped, destroyed, maybe even totally reversed in potential. Thus, a normally negative Earth potential might suddenly become a positive potential, offering absolutely zero attraction to current normally flowing through the power supply and to its ground (earth) connection.

This signal current’s local ground potential (power company’s neutral that is to be explained later) has been destroyed. So, the current aggressively seeks its ground, asking: “Where is it?” and “How do I get to it?”

The answer: At the instant of the nearby strike the attached communications line suddenly offers a wonderfully attractive ground potential appearing at the remote location. But where would that be if not the local “ground” connection? Hey, it turns out to be the cable, which is connected to a different geographic location where the ground potential remains negative, suddenly fulfills that immediate need.

Simple, one would think? Well, electrical engineers seemed to have overlooked this fact in designing lightning protection devices. Absolutely none of their devices worked. I am talking about big companies with expensive research facilities, universities even. No one saw it. Except, I found one device employing my solution but on a totally inadequate scale. It was the opti-coupler. A tiny six-pinchip which blew out on a regular basis and through which the damaging lightning-caused spike passed unhampered to take out the customer’s expensive boards/etc.

I took great pleasure in collecting (and museuming) the various so-called “lightning arrestors”, “lightning protectors”, “surge protectors”, “surge arrestors” and etc from jobs suffering prior damage. Some were made by Square D, some by General Electric, some by Westinghouse, and other well-known firms. None of these devices had ever solved the problem, otherwise I’d never have had a business. I retain them in boxes to this date, mostly as curios, really.

The solution eventually became obvious to me: Isolate the copper wire connecting the distant units. I would use infra red light beams. Two light emitting diodes and two photo-transistors in each box. One pair to carry the transmitted signal the other to carry the received signal.

I purchased a Tandy Model 200 portable computer, then used its comm port output to power a simple 79-cent infra-red LED. To its receiver port I hooked up a 99-cent phototransistor. I found that the primitive arrangement carried ones and zeros of data as I typed which echoed back to my screen. Success! It worked marvelously.

But, I knew there was much more to do in designing a salable “system”. I had already determined the wire in the communications cable itself could act as an antenna from the electromagnetic pulse of the nearby strike. I decided to isolate the units at each end of the line. So, that’s what I did. I would cut their cable at each end of the line and shoot their data over light beams inside my little box. Thereby removing any copper-wire connection between the two units. Yes, it worked!

Even after a customer had his cabling buried underground, the “antenna effect” on a conducting cable remained. Upon rare occasions because of “antenna effect” the center-section components of my boxes would get blown, but they always protected the customer’s equipment. Receiving the distress call, I would go down, saw open the boxes and replace maybe two LED’s and maybe one or two photo-transistors, then reseal my boxes. (I never was able to totally protect my little components, but hell, they did their jobs magnificently and they would cost about $4 max.) I would shake hands with my customer, smile and leave. They were happy!

The guys who really loved my stuff were the poor fellas who got called out during a thunderstorm at two a.m. on a Sunday morning to manually pump gas into a patrol car or such other vehicle and record all the data on a form, like odometer readings, employee numbers, vehicle numbers, gallons pumped and etc. Then they had to sign for it. Big hassle! Once my stuff was in, they rarely had to get out of bed in the middle of the night because of a lightning hit.

Okay, enough of the technical stuff.

Now, back to how I started my business. Note: Beware of so-called inventor’s assistance companies who entice you to show them your invention! All are complete rip-offs. Invention Submission Corp is just one of many I know of. Just check them out at any Better Business Bureau and you will discover this for yourself.

Think about it. What are the two perils facing any invention? One, you can give it away. Two, you can have it stolen. The crooks advertising on TV claiming they are there to “help” inventors are just angling to catch anybody dumb enough to reveal their invention. Dumber yet, they expect the inventor to pay THEM up front. Lucky for me, a buddy of mine had warned me about them. I wandered into the Inventor’s Club of America, a group of run-of-the-mill inventors working together. Most held down day jobs. Just ordinary people with extraordinary ideas. My own device was electronic, but I needed help with plastics, particularly how to “seal” my boxes so that it would require “destructive” disassembly for anyone to open one ..and sneak a look at my secret method. One member who was expert in plastics willingly provided my solution, a liquid chemical called Tenax. I use it to this day!

Other inventors had amazing electronic ideas but no skills with which to develop them. Well, I sort of swapped out, my own expertise for their expertise. Many nights I would help other members, let them use my shop, twisting and soldering wires, helping them test circuit outputs with my oscilloscope and etc. Doing so, I became privy to some of the greatest ideas and inventions to come down the pike.

We met monthly, usually inviting a guest speaker to address our thirty or so aspiring members. On one such occasion, Randy X, inventor of “Goof Off” and “Oops!” gave a short talk about how he’d gotten started. A hush fell over the room as he began to speak. We all knew of his great success, a young man making millions of dollars annually, and making it from being persistent in his diligent search for essentially what was a safe paint remover. Ace Hardware, K-Mart, Wal-Mart, NAPA Auto Parts, and other national accounts carried his products.

After high school, Randy had been paying his way through college working part-time contracting the cleaning and painting of apartment units after a tenant vacated. He had a small crew and found that no matter how careful they were in spreading drop cloths about, drops of paint always seemed to find a way onto the carpet, or maybe onto tiled flooring, cabinet tops or etc. So, he searched DuPont, 3-M and other commercial/domestic chemical companies looking for a product with which he could safely clean up unavoidable messes. No luck!

We smiled knowingly as Randy continued, admitting to being a kid who experimented with the household chemicals his mom kept under the kitchen sink ..that is when “Mom” wasn’t around. He made the point he had come to make with our group which was: You don’t have to be a chemist nor a chemical engineer to come up with a chemical product. His major was English or something much less technical than chemistry.

After much experimentation and testing of various combinations of chemicals, Randy succeeded in creating a product which safely removes paint and other unwanted drippings from virtually any surface. He would have received a standing ovation at that point except that almost all the inventors present were holding something secret in their laps, perhaps a box containing a working model of a dream, or maybe a sheaf of papers with drawings of their precious conception.

How well I know that feeling. Paranoia would be the best description. One absolutely cannot let his secret get out. Not yet!

While working as an electronic tech/p.c. programmer for a local company, I had many occasions upon which to observe lightning strike damage. One customer allowed me to install my experimental protection devices on his equipment, feeling he had absolutely nothing to lose. His system was hit almost on a weekly basis and he had spent much money in having his equipment repaired and endured much aggravation when his drivers could not obtain fuel using the fuel card system.

The first indication that my creation had succeeded was when he phoned me after a particularly violent night of severe thunderstorms.

“My fuel system is still running,” he told me. “It’s a first. Your boxes must be working.”

I was somewhat relieved yet remained cautious, not wanting to raise my hopes foolishly. I finalized our deal, planning to charge him only for my actual parts cost which wasn’t very much. Actually, I bumped it up somewhat as I didn’t want him to feel like my stuff was too cheap. Believe it or don’t, Folks: We have a hard time divorcing “value” from “price”. Think about it. There has never been a law stating that the two are directly related.

My plan was to “guarantee” to the customer the communications components connected to and protected by my devices. But how could I expect them to buy that? I wondered. These people knew me to be a good electronics tech/programmer but also knew I wouldn’t have the resources to replace their expensive equipment should mine fail to protect theirs. Hell, I arrived at their jobs in a five-year old small car and lived a middle class life as most of their employees did. What to do? Hmmm? I couldn’t get a company like Southeast Underwriters to bond my stuff, as they would require me explain how it worked to an electronic engineer which I damned well wasn’t about to do. I had to keep my secret, you know. But still, all the people who knew me as their electronics tech/programmer would also know that there was no way I could replace their $6000 plus damaged system should something blow. I fretted. What to do?

Inspiration struck me right between the eyes as I was driving down I-75 on the way to offer my first “real” sales pitch to a large county in the metro Atlanta area. Yes, I slammed my fist against the dashboard. I’ll offer him a “free” trial. Nobody could turn that one down. No warranty during the trial. My personal assets would never come into question. And, no tire-kicking, I promised myself. Once the thirty days was up, it was proven and it became a done-deal. Reversing course, I drove an hour back to the shop and typed out a proposal which would ripen into a contract after the 30-day free trial period. This offer would take place now, right in the middle of a violent thunderstorm Summer season in Georgia.

PAUSE

It took less than a minute for the grizzled purchasing agent to make up his mind. “Free trial?” he mused, scanning the document. “Go ahead and put it in,” he growled.

After installing my boxes, I went back a couple times to double-check everything, crossing my fingers daily that my system would actually work at which was one of the worst lightning damage sites I had ever serviced. Yes, many times I awoke in a cold sweat at the sound of thunder in the middle of the night.

About one week had passed when my phone rang. It was the county purchasing agent. His voice was gruff, being the eldest county employee still working there. “Are you gonna send me an invoice, or are we supposed to pay for your system off this proposal?” he demanded.

I nearly fell off my stool. He wants to buy it! I gasped to myself.

“Er ..no Sir,” I stammered. “I’ll get that invoice out right away.”

Invoice? Geeze, I’d have to create one. Oh no! I didn’t even have a company name! What to do? I grabbed the telephone book, scanned through the business listings and from out of nowhere invented my company’s name: Static Protection Service. Well, at least no one in the Atlanta area was using it.

I sent out my first bill. I opened a business checking account using my trade name, then my brother, an attorney, registered that name with the Secretary of State’s office. Hey, suddenly I was in business!

My first sale grossed $1995 from a total parts cost of less than $50. How did I price it? Well, what I wanted to get was one-half of what the county had spent on lightning damage repairs to their sensitive electronic equipment. No way. I knew they had spent nearly $32,000 in the past year alone because I had access to their statements at the company I had worked for. It’s funny how everyone has some idea of “value”. Like, what’s it really worth to us?

But, I was really happy to get the $1995. and smiled all the way to the bank ..as the saying goes. My next sale was easier. The comm line between the units was much longer. I added $300 for the extra distance and sold that system for around $2300. From there, it was even easier. All my future customers had the same type fueling system with the same type problems with lightning. I decided not to advertise in the Oilmen’s slick trade magazines, with the added benefit of not having to bother wasting time fielding phone calls from people having lightning problems I wasn’t interested in solving.

These people knew each other from mutual memberships in county managers/planners/etc organizations. All I needed to do was hand them a list of my customers and they would call to check me out. I always got high marks and because of these word-of-mouth references, never paid exorbitant advertising fees.

Inspiration again. The following idea produced yet another method of getting customers: How simple! Electronic techs who maintained fueling equipment knew which of their jobs had lightning problems. They were out in the field daily. So, I offered a $100 finder’s fee to anyone providing me with a customer who would buy my system. Boy, did that ever work! When you think about it, if your trusted electronic tech recommends a protection system to you, that recommendation is worth thousands of dollars of print advertising. Sort of like when your family doctor recommends an over-the-counter remedy for something. You just go out there and buy it. I just added the $100 to the quote for the job.

Never forget this: In ANY business customers pay ALL of its expenses, hopefully with a profit to go along with it. Think of the Exxon-Mobil oil spills. Who do you think pays for all that clean up and the damages? Right! You and I do, every time we buy a gallon of their gasoline/diesel products. They just coast along, never batting an eye. Business as usual.

Side note: I had listed my company in the White Pages of the Telephone Co. One morning, my female helper who refused to be called ‘secretary’ (she preferred ‘lovely and talented’ assistant) reached for the ringing telephone. She listened a moment.

“Mike,”she hollered from the other room, “You’d better take this one.”

I punched the line button. “How may I help you?” I asked.

The voice sounded a bit polished. “Tell me,” it ordered softly, “just how many men and how many cars do you use?”

How many men? Cars? I puzzled. “What do you mean, Sir?”

I want my daughter escorted (to a college nighttime event somewhere) and I need to know how safe she will be if I choose your services.”

Oho! Now I get it: Static PROTECTION Service listed in the phone book. This had drawn him in. Of course, I explained what we actually did. He hung up. Later in my business life, I would regret not asking him: “Just how many men and which vehicles do you prefer, Sir?” And, I would have somehow escorted his daughter to that shindig and would have made money on it, too. I had four sons large in stature who would have looked good in suits having adequate bulges under their arms, suggestion of a weapon. And, geeze, I could have rented any kind of vehicles and just passed it all on to my customer. Well, everyone knows just how valuable hindsight can be, don’t we?

“Hindsight ain’t worth a warm bucket of spit!” as quoted from one of our former U.S. presidents.

That was opportunity knocking ..and I had missed it!

By now you have noticed how often I have used the term “luck”. A quick thought about that: I am convinced by experience that we make our own “luck”. If you will just keep thinking, beating the bushes, wondering, talking, questioning, listening... You will be lucky also. Opportunity rarely “knocks”, rather you must go out into the street and “trip” it.

This next occurrence may only be described as “windfall money”. I made thousands more dollars from one simple premise. The luck involved here was when I (for once) kept my big mouth shut and just listened to the question being posed to me. It was my fifth sale. After several trips into Alabama to get everything running “just right”, the county engineer who had okayed that purchase asked me:

“Okay, so we’re warranted for a year. What about the next year?”

Fortunately, I paused to reflect. “Mr. X,” I finally answered, “We’re working on a formula and we’ll notify you thirty days before your warranty runs out with a renewal offer.”

Driving for three hours back to the shop all I could think was, “Wow. They have purchased my system and they own it outright, and they have seen that it works, and now they want to pay me each year to keep their warranty up?”

Money had begun rolling in. My pricing was basically set by whatever the market would bear because I had zero competition. But, most people working in manufacturing believe pricing is just a simple percentage mark-up of costs of production/etc. Not so. The hardest chore I ever faced was in establishing a reasonable price. I never did achieve getting even close to one-half of their one year’s lightning damage costs. Just too much to expect. Also, my costs had gone up a bit due to hiring an assembler, using fancier boxes and adding a few electrical components to make it more difficult for possible prying eyes to figure out my secret method, but only up to a total cost of maybe $70-$75 per system.

The mark-up to $2300 from $75 is: roughly 30 times cost! Where could one find anything that good to manufacture and sell? Of course, its value was in its performance, keeping fleet fueling systems functioning so that the counties and cities and states and the federal government (all eventual customers of my systems) could accurately account for fuel dispensed at their self-service automatic stations.

The next episode will cover the patent process and what happened to my patent. Coming soon.

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