Flexible and Inventive, Entrepreneurs Feed Big, Hungry Companies
If a single word sums up this amazing economy. this: entrepreneurs. They are our major innovators -the first to adapt to fickle customers. to seize tricky global markets, to create efficient new tools and pmcesses. Exceptions abound, of course. But as big companies desperately try to maintain stratospheric stock multiples, they are paying top dollar to absorb smaller firms whose innovations drive earnings growth. This golden cycle of economic expansion is turning faster than ever. Entrepreneurs create, cash in-then use their winnings to create again. Thal. in any case. is my overwhelming impression after checking back with many of my previous Front Lines subjects. Here is an update on just three who have cashed out but haven’t dropped out since I wrote about them. Ken Lang was a 29-year-old Ph.D. dropout when I caught up with him in Pittsburgh two years ago. He had left his studies to launch a company called Empirical Media (later WiseWire Corp.) with a powerful new program for sorting through electronic infomation. Licensing lees from corporate users provided nevenue while Mr. Lang pursued his dream of making Wisewire a leading Internetportal. Then. a few months ago. an Internet giant called Lycos Inc. came ing. Under Wall Street pressure to soun up ils search engine, Lycos offered nearlyI $40 million for Wisewire. of which Mr. Lang owned 30%.. Though dashing his dreams to create a major brand name on the Net, it was an offer he and his ers refuse. “It wasnt a grand slam," he says. “but it was a home run. Maybe a triple.” Instead of planning a pina colada lifestyle. he became chief technology officer at Lycos. “I like to create. I like to build. I can do that now with all the resources of a big company,” he says. be interested to see how Mr. Lang fits into a oompany beholden to Wall Street expectations. But if it doesn’t work out, he lack for opportunities. Much wiser from mistakes in his first venture. he is nonr mentoring a half-dozen start-ups in Pittsburgh. On top of that, he says, "l’ve got about 16 company ideas love to start. " N 1995. Richard Ost was operating one ol the tiniest drug stores you ever saw amid the rubble ol inner-city Philadelphia. Just as challenging, his Philadelphia Pharmacy was surrounded by huge drugstores. But Mr. Ost succeeded by weaving himself into the fabric of the munity. He hired from the neighborhood and provided health benefits. creating a stable work force of mostly single mothers. He also his computer system to print dosage labels in Spanish and Vietnamese, causing business to explode. Winning over individual customers. was one thing. the onslaught of managed care another. Fearing he might get locked out of the market, Flexible and Inventive, which paid a premium to take him out of the neighborhood. Roughly $250,000 of the proceeds went straight lo his employees as bonuses and profilshar1'ng, many of whom won advancement opportunities from Rite-Aid. At age 37, Mr. Ost was neither temperamentally nor financially ready to relire. He consulted for managed-care plans and dnlg com» panìes, bul grew maddened by bureaucracy and indecision. One drug maker hired him to produce a contín uingeducation program for pharmacists. He created a script and audiotape on schedule. only to see the pro gram bog down in marketing minutiae. “The corporate world moves so slowly in so many ways." he says glumly. “lt's been an awakening experience." S0 Mr. Ost is plotting a new move back into small business, with a concept that unites the web and drug retailing. “I can beat the system by moving faster than the system." he says. “Sometime in September. I'lI be ready lo start." ECADES BEFORE Viagra was a glint in eye1 a sexually impotent tire dealer in Augusta. Ga., designed a vacuum pump to conquer his condition. Through years of work, the inventor. Geddings Osbon, and his son Julian built Osbon Medical Systems into a $25 franchise. selling their FDA-appmved impotence remedy by pre scription. Success came less from their technology, which was easily (if poorly) imitated, than from their highly personal service. including product demonstrations in doctors' offices and sensitive, roundthe-clock phone support. A short time after my column. bon Medical sold itself to a oompany called lmagyn Medical Technologies for $45 million in Imagyn stock. Julian joined the board of the parent company but came to loggerheads with top management over the vacbusiness. Mr. Osbon resigned imm the board and sold his Imagyn stock at S8 to $10 a watched it sink to less than S1. Since cashing out. Julian, 58 years old. has become a veritable venturecapital fund, launching a local hospitalse|vices company and a new community bank. His most exciting venture is a company called Pharmacogenetics, which creates computer images of indìvidual molecules for help in designing high-tech drugs. foods and farm products. a high»risk venture. bul no more so. one supposes. than a penile vacuum pump. “If this one hits.” he Says, “it’ll be bigger than the company we sold." Who driws econonzic growth, enor big companies? Send