With the passing of Earl Bakken last week at age 94 (front page, Oct. 22), Minnesota has lost one of its most illustrious sons and a giant in the world of technology, medicine and business. He was a pioneer of the modern medical-electronics industry and one of the key reasons Minnesota enjoys its current global leadership and high standard of living.
It was my honor to meet Bakken as a student at what would become the University of Minnesota’s Carlson School of Management when he came to speak to the class taught by another Minnesota giant, Wheelock Whitney. What struck me about Bakken was his humility. He had none of the arrogance I was expecting from such a successful entrepreneur and none of the swagger displayed by other speakers whose accomplishments paled in comparison.
I then had the good fortune to interview Bakken online when I wrote my last book, “Bootstrap to Billions,” which was a tribute to Minnesota’s billion-dollar entrepreneurs and hundred-million-dollar entrepreneurs. He was in Hawaii, but was very gracious with his time and his memories. This salute is excerpted from my minibiography of him in “Bootstrap to Billions.”
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Starting from a young age, Bakken was fascinated with all things electrical, including the wiring, equipment and porcelain insulators in his home. As a youth, he rigged up numerous electrical devices, such as a phone system to his friend’s house, a method to set off Fourth of July fireworks from his attic, and a knife-wielding, cigarette-smoking robot that scared a neighbor’s child.
In high school, Bakken maintained the school’s electrical equipment, such as the public-address system, projectors and electric scoreboards.
One of the commonalities among billion-dollar entrepreneurs is that many of them found their passion early. Bill Gates and Paul Allen became friends at their high school over their joint love of computers. Steve Jobs got to know the founders of Hewlett-Packard through his love of personal computers and electronics.
Key lesson for entrepreneurs: Finding your passion early in life (and becoming successful at it) is one of the “lucky” traits of billion-dollar entrepreneurs.
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After World War II, as an electrical engineering student at the University of Minnesota’s Institute of Technology, Bakken would stop by the medical department to visit friends. He would repair their equipment on-site and came to realize that here was a business opportunity.
So, in 1949, he and his brother-in-law, Palmer Hermundslie, started Medtronic to repair medical equipment on-site. But the early days were agonizing and arduous. The venture’s highest annual net income in the first decade was $10,400. To grow, they worked with physicians to develop custom-designed equipment for specific treatments.
Key lesson for entrepreneurs: You have to be in the arena (and start your venture) if you want to be an entrepreneur. You cannot do it by participating in pitch contests.
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Dr. C. Walton Lillehei, a physician at the University of Minnesota hospitals and one of the doctors working with Bakken, was using cardiac devices that stopped during power interruptions, thereby risking patients’ lives. In one instance, power was lost for three hours, and a child died. So Lillehei asked Bakken to develop a device that would work through power failures. Bakken was eager to take on the challenge.
Key lesson for entrepreneurs: You never know when the right opportunity will knock. Be prepared. Destiny may call.
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Bakken did not “innovate” or “ideate” with the hyped techniques our present-day consultants recommend and professors at our business schools exhort. He sought an answer in the most practical of ways, which is preferred by entrepreneurs seeking a fast, working solution, especially for a problem with life-or-death implications. He imitated, adapted and improved.
Bakken experimented with various options and, in four weeks, came up with a solution based on a circuit for an electronic metronome in Popular Electronics.
It is amazing that the modern medical-electronics industry was developed in four weeks by one person working in a lab by himself, and with no research funding.
Key lesson for entrepreneurs: Some of history’s greatest entrepreneurs, including Gates, Jobs, Walton and Zuckerberg, did not sit in ideation sessions to develop new technologies (or apps, in today’s world) for needs that may or may not exist. They imitated, adapted, and improved — and they did it as the industry was emerging.
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Bakken’s pacemaker was attached to a child’s heart the next day, heralding the dawn of the modern-day electronic medical-device industry. The year was 1957. Initially, as sales grew, so did losses. In 1962, sales were $518,000 and losses grew to $144,000. But the next year sales nearly doubled and profits reached $73,000. Today, Medtronic is a global giant, has spawned dozens of great companies, has enriched millions of lives and has created a lasting legacy.
But success did not come in a straight line. The company overexpanded and nearly failed. To get out of its predicament, Medtronic considered a sale of the company to Mallory, which was a large manufacturer of batteries and the supplier for Medtronic’s pacemakers. Since Medtronic had recently sold debt that was convertible to common stock at $1.50 per share, Mallory offered to buy Medtronic shares for $3 per share, subject to its due diligence.
While Medtronic was evaluating the offer, Mallory was studying the potential size of the pacemaker industry and concluded that the maximum global market for pacemakers would be 10,000 units. Mallory considered this to be a very small market and withdrew its offer. For Medtronic, sales of 10,000 units would be a bonanza. The company hung in there, and the rest is history. Today, well more than 1 million pacemakers are sold each year.
Key lesson for entrepreneurs: Bureaucrats want facts. Entrepreneurs need faith. It is impossible to accurately predict the potential market for truly revolutionary technologies and products. Many large, risk-averse corporations and consulting firms have tried to guess such things and failed. It takes the faith and passion of an entrepreneur to prove potential.
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Rest in peace, Earl Bakken. Thank you.
Dileep Rao (firstname.lastname@example.org), of Golden Valley, teaches high-performance entrepreneurship and finance at Florida International University, the University of Minnesota, Stanford University, Harvard University, and INCAE (Costa Rica). In his first career, he was a venture financier.