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Radio Design on cutting edge of high-tech expansion

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Jim Hendershot likes to play with radios, which to techie troglodytes seems as about as economically purposeful as say, Kodak film developer. But Hendershot’s childhood love of radios, as it turned out, perfectly coalesced into Radio Design Group, a Southern Oregon-based tech consulting and manufacturing firm.

“Look around,” Hendershot says with a sweep of his arm around his corner office. “If it’s wireless and doesn’t use Morse code, it’s a radio. See this phone? It’s a radio. See that computer? It’s a radio. If there are no cables and no laser beams, it’s a radio. It’s all over the place. It just is.”

Which more than anything else explains how a small consulting business in Grants Pass, Oregon could become a significant player in the high-tech electronic space that services any number of companies, including the United States government.

slideshow2-techBased in rural Rogue River, Oregon—situated between Grants Pass and Medford with a population of just over 2,000 people— Radio Design Group, Inc. started out as Hendershot’s solo consulting business in the 1990s. It expanded until the peak of the Great Recession when high-debt and expensive innovation conspired against the business.

Just last year Hendershot sought Chapter 11 bankruptcy protection to reorganize the company’s debt, which included a new $5 million, 22,000-square foot facility on the banks of the Rogue River.

“Our commitment to a very forward looking technology took longer to develop than anticipated,” Hendershot said, “coupled with our commitment to the customer to make it happen, even though it put us in a very difficult cash-flow position.”

The company created a wireless intercom system that took its toll on cash flow, according to published reports. Hendershot said the company had to seek Chapter 11 bankruptcy protection so it could reorganize its debt and level out the cash flow.

“The product has been immensely successful,” Hendershot said. “So its rollout, coupled with our other business opportunities, has resulted in a better than expected timeline (to come out of bankruptcy protection).”

“Ultimately, I have to give credit to the people who work here,” Hendershot said. “All the way from top to bottom, our staff stood behind us, stuck with it, and made it all happen. Without their substantial efforts, this could have easily been a business failure, rather than a success story.”

Lobby01Radio Design Group employs about 25 with good wage jobs that attract people with highly specialized skills from all over the country. The new facility offers badly needed room and facilities to increase revenue.

Despite the most recent struggles, Hendershot is optimistic.

“We took on a bunch of debt, but it is definitely worth it,” he said. “We have stumbled into a market that’s just huge.”

Again, just look around you to see all the products using radio frequency technology that Radio Design excels in, to grasp just how huge the market is.

Radio aficionado

Jim Hendershot’s professional career starts and ends with his basic childhood love of radios, which is the one thing that makes this otherwise sparsely decorated, modern facility with state-of-the-art equipment unique. Hendershot has old radios in his office and a few more are in the halls. His obvious connection to the basic foundation of his business can be seen in his 1950s German-built radio and a 1939 Zenith.

slideshow2.4In various offices throughout the building, workbenches that look like a child’s erector set or a musician’s sound board show evidence of perpetual tinkering. Hendershot points to various objects that are completely unique to his field, some his company created.

None of this was the plan, according to Hendershot, who simply hoped he could make a living doing what he does best as an engineer who likes to play with radios. After moving from California to Rogue River, Hendershot figured he’d do what a lot of out-of-work engineers would do: start a consulting radio frequency consulting business.

“I thought ‘I gotta do something’,” he said. “I figured there’s not a lot of guys doing RF design, so I hung my shingle out.”

Even then it seemed like an odd twist on the economic shift to high tech. Like many markets excised by the changing of the times, radios were headed toward museums before Hendershot started his business.

“Radio frequency was a disaster for many years,” he says. “That all changed with the cell phone.”

Cellphones, once bulky and hardly mobile (“a brick,” Hendershot says), changed everything about modern communication largely because of radio frequency technology. No matter how sophisticated they become—with new terms like NFC, GPS and Bluetooth to describe them—they rely on the same old receiver and transmitter technology that brought us AM and FM radio dials.

The science reaches back into history, where men like John Forbes Nash, captured in the movie A Beautiful Mind,  developed mathematical theories that developed transmitter technology. Then in 1973, Motorola Vice President Martin Cooper made the first cell phone call in 1973 on the phone he invented. His first call went to Bell Labs, a company also trying to invent the first cell phone.

“Cooper’s call did more than untether people from their fixed phone lines; it opened the door to true mobility and continues to affect virtually every aspect of our lives,” Roger Cheng wrote for CNET.

“As soon as cellphones happened, wireless took off.” Hendershot said. He took off with it and hasn’t slowed down since.

Communication solutions

The business is different from many because it thrives on the temporary nature of a problem. Radio Design Group helps engineer solutions, fix existing problems with technology and/or design products other companies need.

“That was our original market niche. We’ll design your product. You’re going to make it,” Henderson said.

But demand to build the products grew so the company expanded into manufacturing.

The focus is always on the function despite potential higher costs, which is a common problem in high-tech. Hendershot sounds like Apple Founder Steve Jobs with a similar relentless pursuit of exceptional quality with an eye on price, but not the other way around.

“I think Jobs was able to strike a good balance. I try to do that. But there’s a certain part of that which makes me a high-priced option. We’re the higher end, but our products work very, very well,” he said.

He believes that pays off over time, much as it has for Apple, with overall cost-effectiveness and a higher level of performance.

“Systems for the U.S. Navy that are hundreds of thousands of dollars each can be very complicated. But we are very capable,” he said.products-image

Rogue River

Hendershot realizes a rural map dot along Interstate Five, nearly four hours from a major city, is not the most likely venue for a niche-driven tech firm, much less a manufacturing plant. But he says the location isn’t the problem people would think.

“If I was in the Bay Area, I’d still be looking in Boston and Los Angeles for people. You never know where they come from,” he says.

The bigger problem has been a certain level of anti-tech bias from local governments that have had bad experiences with tech companies failing. Hendershot believes all governments, from the local city to the federal government, try to pick economic winners and losers. Their track record, he says while citing notable busts like Solyndra, leaves a little to be desired. He doesn’t hide a libertarian streak, especially when it comes to government meddling.

“If you own a business and have to pay taxes you tend to become a conservative,” he said.

But his commitment to the town of Rogue River remains firm and the company’s future weighs on his mind, especially as it emerges from its biggest threat to date.

He knows the potential is significant, both in terms of revenue and potential suitors. He is mindful of it, but relishes that he doesn’t have to focus on running a business and solely making those decisions.

“The ugly truth is I don’t run this business,” Hendershot says. “I’m an engineer. I have hired good people and let them do their jobs. I set the tone and direction. I will occasionally weigh in on management decisions and I do some inevitable customer relationships because I’m ‘the boss,’ but mostly I’m still an RF engineer.”

He knows his children have no interest in making this a “family business.” He is aware of the need for an exit plan, though it’s not top of mind.

“I love my job,” he says. Though he admits, “I frequently explore offers. Nothing completely satisfactory has presented itself yet.”

Hendershot says the exit plan focus can be a trap for many entrepreneurs who are focused on the profits more than the work. This gives him an edge. He’s in no hurry to do anything with the business other than keep working to make it the best it can be. He still gets to do exactly what he does best.

“My wife says ‘you play all day and they pay you for it,’” Hendershot says. “The sad truth is it’s true. I played with radios as a kid and I still play with radios now.”

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For more information visit www.radiodesign.com.

Building a blog in Bend

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When people think of startup hubs, cities like San Francisco and New York immediately jump to mind, as do smaller startup communities like Seattle, Austin, and Boulder. But it’s rare for any Oregon towns to even register.

That, however, may be changing. Thanks to growing momentum in Bend, Oregon. And thanks to the BendTECH blog chronicling the stories of the startups who are putting Bend on the map.

“We wanted to create a way for people inside and outside of Bend to learn more about what’s happening in our tech and startup communities,” BendTECH blog cofounder and editor Kelly Kearsley said. “This was spring 2014. I think a lot of people felt like there’s definitely more than meets the eye here in terms of startup/tech activity, and to have one place where you could find that information would be valuable — both for people already here and looking for resources and connections, as well as people interested in moving themselves and/or their companies to town.”

A unique community

“We just had a guest blogger — an intern at one of the tech startups here — write a post. And she called out a small fact that I think actually really makes a big difference: People who are here really want to be here. By and large, the entrepreneurs here have lived and worked and started other companies in bigger places. They’ve chosen to be here. They want to succeed in Bend and they want others to succeed here too.”

And that commitment to growing in Bend creates strong collaborative tendencies among those residents and businesses.2674982280_7974b6bf08_b

“A lot of entrepreneurs here comment on that collaborative nature, they say it’s noticeable relative to other places they’ve lived and worked. I just heard an anecdote of one tech company sending resumes it received to another. People are giving of their time and interested in more than just their own success.”

“It’s cliche, but we’re at a point where rising tides lift all the ships — the more successful companies we have, the more talent we can attract, the more companies can be successful. People understand that. In terms of challenges, I think mature and startup companies here need more tech talent. And though funding has increased, more capital certainly helps accelerate growth.”

Chronicling the journey

While momentum and collaboration are important, communication is often the most critical—and oft overlooked—component of community development. That’s why Kelly and James Gentes founded the blog in 2014, to help provide a foundation for that communication to occur.

“Well the blog is just about a year old, so I wouldn’t say there’s been drastic change since its inception. But what there has been over the past few years is steady growth of the number of new companies here and more local funding available through groups such as Cascade Angels — though I think many would tell you there could always be more capital. Central Oregon startups raised nearly $16 million in mostly seed funding in the past year, and I think the assumption is that we’ll exceed that number in the next year.

“The people doing the heavy lifting in terms of building the startup community are the startup founders. They are the ones taking the risk to transform their ideas into businesses and doing it in a place that they love,” Kelly said. “I like to think that the blog has helped bring attention to what’s happening here and provide support to our growing tech and startup communities.”

Talking tech

Thanks in part to the efforts of the blog, the perception of Bend as a startup community is starting to change. And residents of more formidable and well-known hubs are beginning to take notice.

“What is rapidly changing is the idea that you can start or move especially a tech company here and have it thrive. We have some legacy tech companies that have been here awhile, but now we’re seeing Bay-area companies interested in moving staff to Bend or opening new offices. It’s not just doable, but for a few early adopters — like Kollective — it’s become preferable. There’s still challenges — finding technical talent can be tough. But I think that companies here are starting to make the case that you can be in Bend, have a high quality of life, pay less overhead and still be short distance away from major cities.”

Outside interests

“People might be surprised, but I would estimate that more than half of the blog’s readers are from outside of Bend. They’re people who are keenly interested in whether startups can succeed here and often it’s their dream to be here as well. I’d like to think that the blog shows people what’s possible when you start to think out of the box in terms of where you have to live and work.

And part of the reason for that is that — despite it’s name — the BendTECH blog isn’t just tech.

Screen Shot 2015-08-19 at 10.23.05 AM“We haven’t had any push back on BendTECH,” Kelly said. “We do primarily focus on tech companies, and I would say tech-related news easily comprises more than half our coverage. We’re mostly interested in startups that are looking for rapid growth, usually product companies, so we’re not really covering all new businesses in all new verticals. We don’t cover restaurants or a lot of service business. Bend has startups in outdoor gear, biotech and food manufacturing. Also if you have a startup and you’re hoping to scale, then there’s a lot of crossover in terms of resources and information that you’re interested in. Finally, we see lots of companies — think Cairn — that may not be software companies, but have a tech component.”

Nurturing a spark

“In terms of becoming a catalyst, I’ve been really heartened by the number of jobs posted on our job board and excited when I hear that companies have filled positions from people who heard about the jobs via the blog. That’s full circle stuff and it’s really gratifying. I get choked up! Going forward, I think we’ll continue to create content, raise awareness and start conversations about entrepreneurship in Central Oregon. We want to grow our readership and we also have ideas for events around our #50startups and other blog features.”

The concept for #50startups is part of an ongoing effort to highlight companies in the area.

“#50startups has been really fun,” Kelly said. “I thought of it shortly after we launched as a way to regularly introduce our readers to the various startups here. James and I made a list of startups we knew and felt pretty confident we would have 50 companies to profile, though they aren’t all tech-related. We’re currently in the 30s. They are always some of our best-read posts: the format makes it easy for readers to learn about a new endeavor and the entrepreneurs enjoy telling their stories.”

Finding a voice

“I think that blogging is a constant exercise in experimentation, refining your focus and learning what your audience wants and needs. You try new content and see what garners people’s attention and what really engages them. Sometimes it’s not always what you think.”

“For example, I thought readers would be more interested in advice and service type pieces around creating successful startups. But they’re far more interested in finding info on our blog they can’t find anywhere else — the daily happenings of Bend’s tech and startup communities. So we focus most of our resources on talking about companies, what they’re doing, who is hiring, who has raised money, etc.”

Screen Shot 2015-08-19 at 10.25.52 AMLike many blogs, BendTECH blog makes sure it doesn’t take itself too seriously. They have their quirky side as well. One of their more popular features in recent history has proved to be something that the Internet does exceptionally well: fawn over pets.

“As for the dogs, that was way to insert some fun into the blog and feature the furry friends that keep startup founders and tech workers company. It’s Bend. People love their dogs — in fact, few offices don’t have dogs. So those have been well-read too.”

Only the beginning

“After one year, we have 800 weekly newsletter subscribers and that grows about 10% each month at a higher than 50% open rate,” Kelly said. “There’s definitely an appetite for what we’re providing. We want to keep people interested and answer their questions about tech and startups in Bend. I think we’ll also explore building our revenue through ads and the job board. We just want to keep telling the Central Oregon tech and startup story — and there’s lots more to say.”

For more information, visit the BendTECH blog or follow BendTECH on Twitter.

Building a world-class MEMS foundry in the Rogue Valley

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Building technology, as it turns out, might actually be easier than inventing it.

“Easier” is not the word Rogue Valley Microdevices cofounders Jessica Gomez and Patrick Kayatta would choose. But when the husband-and-wife team wanted to launch a business in their field of expertise, it came down to making other’s inventions or trying to launch one of their own.

They opted to make stuff—really complex, precise, high-tech stuff—in contrast to the high-dollar, high-wire investment common in micro-processing. In so doing, they launched a one-of-a-kind business that has solidified its niche.412791_379795092046535_1218187416_o

“Our business model isn’t the typical startup business model based on emerging tech or a new product launch, which a lot of times comes from working on technology in the university,” Gomez says. “Eventually patents are filed and they’ll do some proof-of-concept work and start raising money. If they are lucky and tenacious they’ll get funded eventually. Then the clock starts ticking. They have five years maybe to get that product to market. It’s very difficult. Our model is different.”

The decision likely meant more work, longer hours, and a gut-wrenching level of risk, but it has paid off how they both hoped, with steady work in a place they wanted to raise a family.

Gomez, 37, Rogue Valley Microdevices CEO says, their company is the only microelectronics manufacturing facility in Southern Oregon.

“We build other entities’ projects,” Gomez says. Customers include universities, hi-tech companies, even startups. “Really anyone who is lacking the ability to manufacture the chip that they have designed or need.”

Asked where the competition is, Gomez says, “Taiwan.”

415767_379781772047867_2048210312_o“This is becoming more difficult to do in the U.S., but there is a strong market for it. It’s the story of the U.S. with all these companies building this disruptive technology. But once it becomes a commodity it goes offshore.”

Global competition is fierce. But relative proximity to American companies and universities has its advantages as well. In some ways, this Southern Oregon company is the best local alternative.

From New York to Ashland

Gomez and Kayatta first met during the late 1980s when both worked at Standard Microsystems Corporation in Long Island, N.Y.

Gomez started as a minimum-wage lab operator on an assembly line. Boredom motivated her to educate herself in other aspects of the business like manufacturing, processes and software configuration.

Kayatta was recruited to a startup in Los Angeles. Gomez followed. They saw first-hand the perils of the startup culture when the business eventually shut down. The couple then decided to go into business of their own.

The big decision was where.

“We thought about staying but the cost of operating a facility there it didn’t look financially doable,” Gomez says.

They thought about going back to Long Island, which also was cost prohibitive. Florida? Wasn’t a good fit, they thought. Finally, Gomez started thinking about Southern Oregon for its proximity to the Bay Area and Portland and its relative cost of living. It didn’t hurt that she had lived there for a while as teen and still had family there. She hadn’t loved it back then, but now with a family and a business in their plans, it grew on her.

The favorable business culture, especially assistance from Southern Oregon Regional Economic Development Inc. (SOREDI), sealed the deal.

SOREDI is a non-profit organization tasked with developing business prosperity in Jackson and Josephine Counties. It offers services including assistance in site selection, permit applications and access to capital. For Gomez and Kayatta who were making repeated trips up Interstate 5, the help from SOREDI was enough to leap in and make the move.

The couple invested everything they had. SOREDI took a second position on the bank financing, which mitigated the bank’s risk and helped secure the loan.

“That’s the only way we could fund the company with the start-up costs,” she says.336818_508217062537670_2104100553_o

They set up their first clean rooms and got to work.

“We started really basic. We did two types of films. We had maybe 500 to 1,000 square feet of clean rooms and started making money,” Gomez recalls.

She estimates that the monthly budget demanded about $14,000 in revenue just to survive and keep up the lines of credits they took. Credit card debt grew as well. So did their work hours.

“It’s sort of out necessity right?” she says. “Because we don’t have the ability to have this big multimillion dollar exit. It’s not attractive for an investor to put a bunch of money into this company, so we just kept putting it in ourselves. We wanted something that was going to be around for many years.”

They succeeded. The business has enjoyed steady growth and earned a reputation for quality and attention to detail that is critical in microdevice manufacturing.

“We didn’t have the option to fail. We took everything we had, our income, our house, our credit into this company. We lived off Pat’s 401K working 18 hours a day,” Gomez says. “The first five years were really tough. We’d basically sleep here.”

But perhaps the biggest accomplishment is they survived with their marriage intact.

“We had no idea what we were getting ourselves into,” Gomez says. “I was 25 when we started this company. It was two of us. We didn’t have a team of engineers.”

That common sense focus still guides the company, she says. They continue to focus on what they do very well. They don’t worry about the mega deals that happen in other companies, like the recently announced billion dollar super merger between Spansion and Cypress. That’s not their business model and it’s never been their goal, she says.

“That big giant pay-off for us is not as important as steady jobs,” she says.409281_379774998715211_1537131771_n

Often it’s inevitable when a company scales up its technology and begins mass production for it to take the work offshore. Prior to that expansion is a niche where Rogue Valley Microdevices excels.

“We are supporting a lot of this cutting edge stuff that we don’t want to introduce to a foreign environment especially in those beginning,” Gomez says.

Building Southern Oregon tech

With the business more secure and a team of roughly 20 employees, the work hours remain long but the survival stress has abated. Gomez has begun to connect with others to offer what help she can. She also wants to help generate funding for other startups, which will help the nascent tech corridor in the Rogue Valley grow, recruit a strong workforce and improve the community’s economy.

339083_379797188712992_793926256_oThe region’s tech culture doesn’t have a lot of depth, but it does have “one of everything,” Gomez says. The diversity of tech interests and culture isn’t common in a rural area.

“We are all very unique so we have to do it in a unique way,” she says.

Part of that is continued work with SOREDI and other public and private agencies seeking to boost the innovation economy. She helped start the Sustainable Valley Technology group to help develop resources for entrepreneurs. Jackson County came aboard as an initial funder with an investment of $50,000 to help attract and assist high-tech, clean energy businesses.

“We thought this was the best and brightest idea we’ve heard in a long time,” Commissioner C.W. Smith said.

The focus of the group is to help provide office space, support services and venture capital for emerging businesses, a Jackson County press release stated.

“I’ve been working a long time to develop resources for startup companies. I believe that’s critical for our local economy,” Gomez says.

She also serves on the state workforce board. She’s well aware of the obstacles for the region.

“It’s hard to find really good well qualified employees to hire in any of these companies. I thought we were unique but I hear stories and I don’t think we are.”

Next steps

Plans for the future look very much like the present. Hard work, excellent quality products delivered to innovative companies that need that specialized care Rogue Valley Microsystems provides.

Expansion is coming, but not in the form of a massive multi-million dollar merger or investment partner. It looks more like a larger building and putting into use more clean room space that is critical to increase production.

“We are pretty packed,” Gomez says. They recently purchased a $10,000-foot clean room that was decommissioned by Intel, she says, but they don’t have anywhere to put. That will have to change soon.

It’s all part of the original plan, the so-called easier way to launch a high-tech company in a rural outpost.

“We still want jobs and to provide for ourselves and make a decent living,” she says, for herself, her husband and their growing number of employees. Just like they started, it’s pretty basic, but in the fundamentals have come the success and perhaps a model for others coming to the region to follow.335885_379785108714200_1590338315_o

For more information, visit www.roguevalleymicrodevices.com, like them on facebook, or follow them on twitter and LinkedIn

Fueled by local connections

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Fueling a vehicle with natural gas is not currently convenient or cost effective. But Onboard Dynamics is hoping to change all of that. And that could be a billion-dollar idea that changes the future of transportation fuel.

“The idea is natural gas compression onboard vehicles,” said Rita Hansen, CEO of Bend-based Onboard Dynamics, Inc.

“We are only four months into really launching the company, working through our milestones, doing the technology development, and making sure that we come up with a commercially viable product in 18 months.”

The spark

Chris Hagen, an assistant professor at Oregon State University-Cascades and the chief technical officer of Onboard Dynamics, has developed a natural-gas refueling system for vehicles. An internal combustion engine is modified so one of the cylinders is dual purpose: It can power the vehicle and also compress natural gas coming from a low-pressure supply line at a home or business and send it to the fuel tank to be stored for later use.

Hagen, who previously lived in Colorado, developed his idea as a response to a funding announcement from the U.S. Department of Energy/Advanced Research Projects Agency-Energy (ARPA-E). ARPA-E was looking for technology that would move the needle on transportation fuel, reducing the dependency on gasoline and diesel. He submitted his idea and received $700,000 in funding, which ultimately grew to $1 million, to build a proof of concept to show natural gas compression onboard a vehicle could work.

About a month later, OSU-Cascades hired Hagen.

Finding a natural fit

Natural gas, a clean-burning alternative fuel made predominantly from methane, has a number of advantages as a transportation fuel including its domestic availability, widespread distribution infrastructure and low cost, the U.S. Department of Energy’s website states.

Only about one-tenth of one percent of natural gas is used for transportation fuel, according to data from the U.S. Department of Energy. Roughly 150,000 vehicles are powered by natural gas in the United States and there are just over 800 public natural gas refueling stations.

The issue was not Hagen’s technology. It was the ability to commercialize that technology.

“Hagen was hitting the ball out of the park on the technology side, but he needed help commercializing it,” Hansen said. “ARPA-E does not want to fund science projects. They actually want to see if there’s a way to get it into the marketplace.”

Because Hagen was new to Bend, Deschutes County Commissioner Tony DeBone suggested Hagen reach out to Economic Development for Central Oregon for help. Jim Coonan, the EDCO venture catalyst manager at the time, gave Hagen a list of names from his stable of experts in energy and engineering and Hagen started making calls.

Hansen and Jeff Witwer met with Hagen to help bring his concept to life.

“Our number one goal in the beginning was to help Chris get back on track in the commercialization effort,” she said. “At the time we weren’t thinking about starting a company.”

Gaining momentum

In June 2013, Hansen, Witwer and Hagen gathered with a number of experts in the industry to hold a business strategy planning session. Using the lean startup model, they brainstormed to determine the right business model, who the target market would be, how to launch the technology, and what resources they would need.

Onboard DynamicsIt was after that meeting Hansen and Witwer fully realized the potential of Hagen’s idea. In August they formed a team, named the company Onboard Dynamics, and applied to the Bend Venture Conference – which is now one of the largest angel-investment conferences in the Pacific Northwest.

The ARPA-E program director met with the team the day before Thanksgiving 2013, outlining a path to more potential funding to help take Onboard Dynamics to the next level.

“I thought he was talking like hundreds of thousands of dollars and he was talking millions of dollars,” she said.

Pouring fuel in the tank

At that point, Hansen said Onboard Dynamics realized it had potential access to significant funds through the ARPA-E program to really launch the company based on the success of Hagen’s work. The funds would allow Onboard Dynamics to create a commercially viable product.

“What they realized is that we were still not fundable. We couldn’t go out and raise traditional capital because there were still so many risks. All we had was a proof of concept,” she said. “We weren’t looking for seed money, we were looking for significant funds for continued technology development. Traditional capital funding sources are conservative and don’t typically fund at that stage.”

Over the next five months, Onboard Dynamics/OSU worked on the next generation of the technology and the presentation pitch for the additional funding from ARPA-E. And on April 8, the company received a phone call from ARPA-E announcing Onboard Dynamics had been selected for a new award of $3.6 million total.

ARPA-E agreed to put in 80 percent, $2.88 million, but Onboard Dynamics had to come up with the other 20 percent of the award.

“At this point … I knew I needed to go out and find $720,000,” she said. “And that’s where Oregon comes in.”

Weathering the storm

Hansen said she had been discouraged every day by rejections because the company wasn’t developed enough. But she knew in order to fully launch Onboard Dynamics and its technology, she needed more capital.

“We’d already been pitching and had gotten no’s, no’s, no’s from other private sources,” she said. “I don’t know how many rejections I’ve gotten … too many to count.”

RefuelingHansen kept going with $3.6 million on the line. She reached out to Oregon BEST, which has a gap funding program up to $150,000, and Oregon Nanoscience and Microtechnologies Institute (ONAMI), which has a $250,000 gap funding program.

“I was being very selfish, thinking I could go after both of those; and I did,” she said. “It was the first time that they actually came together at the exact same time to invest in a company.”

But Hansen had to go through a few hoops to be able to accept both investments. The rules, established by the Oregon Innovation Council, prevented ONAMI and Oregon BEST from collaborating on their funding. Hansen called up Senator Betsy Johnson. Senator Johnson listened to Hansen’s story and the obstacles Onboard Dynamics was facing and revised the way the rules were written in 48 hours so Onboard could receive funds from both organizations.

“If these two programs didn’t exist I would have never been able to execute on the ARPA-E award,” Hansen said.

Continuing the journey

In the history of ARPA-E, she said this is the second largest award given to the state of Oregon.

“I needed to feel like Oregon wanted this. It would have been easy to walk away,” she said. “I guess I was driven by a sense of accomplishment and having this legacy to say we got this $3.6 million dollar award for the state of Oregon, in Central Oregon no less.”

Hansen said her formula to success has been her tenacity, her ability to pivot, and her network of support throughout the state.

“I always use mountaineering analogies because I’m a climber. You don’t lose sight of the summit, but you may have to change your route when you come up against an obstacle,” she said. “You may have to figure out other ways to get around or overcome those obstacles, but [you can’t] lose sight of what the end goal is and you [have to] stay clear about that and stay focused.”

Tapping every resource

Hansen said her summit was to execute on the ARPA-E award, but she couldn’t have reached that summit without team work.

“I’m a 50-something-year-old entrepreneur, but I still needed help. You have to not be afraid to ask for help and leverage your network and leverage your rolodex,” she said. “Obviously I am very, very proud to have made this happen, but there’s no way I could say I did this alone. I have to credit our entire team for complementing my weaknesses.”

Onboard Dynamics is projected to become a $25 million company in five years, Hansen said. But there are still challenges the startup company is facing.

On the roadLike most startups, Onboard Dynamics is still fundraising and will continue to be as the company progresses. But a bigger hurdle is the company’s loss of its vice president of engineering, Witwer. Due to health reasons he is no longer able to be a full-time member of the team.

“I’m trying to recruit somebody to be his replacement, which is a huge challenge,” she said. “Jeff was in this boat with us for the last 18 months. I talked to this person every day, multiple times a day, and to now not have that person in the boat is a little scary.”

Over the next few years Onboard Dynamics anticipates being able to double its workforce. To date, there are 14 paid employees, contractors, postdoctoral scholars and students working on the Onboard project.

Consistent improvement

Part of Hansen’s goal is to help develop an energy cluster in Central Oregon with Onboard Dynamics serving as one of the anchor companies.

“We have a whole energy engineering department that’s teaching students to do this work,” she said, referring to a program at OSU-Cascades, of which Hagen is an integral part. “Right now [students] have to leave the area after they graduate to go find jobs. That’s not what we want. We want to create an industry here.”

As the region develops its energy engineering industry, she said it will attract more funding and other companies. This will in turn fuel the sector’s growth and place Bend, as well as Oregon, on the map.

“We already have this reputation with the [U.S. Department of Energy] for getting stuff done; coming up with innovation and new ideas and actually seeing them through,” she said. “I was at the right place at the right time for this opportunity. It is a success story. The story is not done yet, but this whole community came together to make this happen.”

For more information, visit http://www.onboarddynamics.com/.

Navigating a confluence of technology and sustainability

point-97-fisherman-crop

Charles Steinback still remembers the day a San Diego fishermen read him the forty-five minute riot act.

It was over breakfast. And the conversation was a heavy one: Regulators were mapping the fishing grounds off the coast of California. And while the end-goal was to carve out habitat protections that would make areas off-limits to fishing, it fell to Steinback to assure they did the least amount of damage to fishing towns.

At the time, Steinback was relatively new to Ecotrust, the Portland-based nonprofit focused on ecosystem and civic resiliency. Fresh-faced and fresh out of college, he had hoped his efforts would be welcomed. Instead, what he got was a proverbial finger in his face. And a nearly hour-long lecture about the meaning of community—from a man who questioned whether Steinbeck even knew what the word meant.

“I took that to heart. It was years ago, but I remember literally walking away from that conversation, going back to my hotel room, and sitting there for three hours writing a ten-page email to Pete about community and what it is, and here’s what it means to me, and here’s why I want to work with you, and why I need you to work with me.”

The email earned the critic’s respect and buy-in. It was a moment that showcased what Steinback would bring to the business of ocean conservation: deep roots in a fishing community, a collaborative approach, and a strong belief that information-sharing can make ocean management—often a divisive, heart-wrenching business—better than it otherwise is.

Combining disparate disciplines

Flash forward, and Steinback is now managing director and cofounder at Point 97. (Pronounced Point Nine Seven, a nod to the percent of the earth’s water in the ocean). The for-profit company, launched as an Ecotrust subsidiary in August 2013, is Steinback’s next career iteration of fresh-faced optimism. It still has him doggedly focused on bettering ocean management.

In its rebirth as a startup, however, Point 97 has taken the former ocean planning division at Ecotrust and made it into something more likely found in the Silicon Valley.

It’s a three-way marriage, if you will, among techies, data geeks, and conservationists.

Stacy Fogel, marketing director at Point 97, puts it this way: “We create technology solutions for ocean management, because these tools enable these communities that depend on the ocean to take care of it.”

Finding the right person

Steinback was the obvious choice to take the reins. “Charles is a smart guy. He’s a really good listener. He’s low-key. But he understands the big picture,” said Ed Backus, Ecotrust’s former vice president of fisheries. When people in fishing towns work with him, they don’t feel like they’re being pushed to acquire something they don’t need. They feel like they’re learning the things they need to pay attention to.

Charles Steinback

Charles Steinback, cofounder and managing director, Point 97

In that way, Steinback hasn’t come so far from his roots. Raised in Astoria, he isn’t from a fishing family. In fact, both of his parents are teachers. But he grew up in an era of mill closures and constrained fishing, and was eyes-wide on the fact that most of his friends’ fathers were unemployed during his middle school years. For him, that competing pressures on natural resources could make a whole town ache wasn’t something he ever had to learn. He knew it. And when he brought that perspective to ocean conservation, he brought something the movement had often lacked.

Though he was in tune enough with his own constitution to know he wasn’t a fisherman, wasn’t going to be a lumberjack, he said always knew he wanted to lend a hand to communities like Astoria. He arrived on the doorstep of Ecotrust in 2001 having just earned a degree at UMass Amherst.

“I literally just walked in, handed them my résumé and said I would do anything,” said Steinback.

Ecotrust embodies something uniquely Oregonian

Why Oregon? The simple answer is Ecotrust, a leader in sustainable fisheries management, which has provided the vision and resources to support Point97.

At a time when much of the regulatory environment—and nonprofits with ocean missions, really—were focused on the idea of “overfishing” as the root of all evil (90s and 00s, mostly), Ecotrust was really successful at plugging into fishermen as a resource and getting at deeper truths about our oceans. Yeah, we’ve overfished. But there are fewer fish for other reasons. Migratory changes related to ocean acidification and rising temperatures have also produced the troubles we see. And Ecotrust was among the first to approach fishermen and fishing communities in an inclusive and collaborative manner to solve problems around these issues.

When states first began to look at carving out ocean areas for marine conservation and renewable energy, for example, Ecotrust was deploying guys like Steinback to figure out how to keep those new rules from just gutting fishing towns and family fishing operations. And Ecotrust was also among the first to recognize that some systems designed to prevent overfishing, however environmentally sustainable, are so capitalistic that they have the effect of locking a lot of people out, including whole cultures, while funneling money to people who don’t actually fish.

Ecotrust’s approach is sadly far from typical. There are a great many nonprofits and a whole lot of government regulators too, who until recently viewed fishermen as pests to be gotten rid of, and those fishermen are such a small constituency that they were easily rolled. Now, as conservationists come around to the idea that fishermen have deep knowledge about our oceans, and, oops, wait a minute, we actually also need these people to eat, Ecotrust is way ahead of the game.

Ed Backus, Ecotrust's former vice president of fisheries

Ed Backus, former vice president of Ecotrust fisheries

Now, if other groups want to get any meaningful conservation work done – work that isn’t just knee-jerk simplistic and actually includes preservation of fishing culture and communities – they need a Point 97. What that brand is selling, more than anything, is trust. It was hard earned and carefully built through years of closely listening to real people affected by change. That would not have happened without the respect and expertise guys like Steinback and Backus, both of whom really know fishing towns and fishing people, offered fishing people. They learned that in Oregon. You can think of Backus as the godfather of this stuff, and of Steinback his successor, nonprofit or none. And now Point 97 has the secret sauce: they truly believe that American culture is better off if we preserve the culture of fishing people, even if we’ve got problems to solve, and fishermen know they are allies.

Mapping the future

Over more than a decade, he has helped Oregonians map the territorial sea, carving out space for energy development. He’s assisted fishermen like Pete from San Diego in protecting their communities when marine protections came about. But it was his hand in designing an online planning application as part of that California-effort that ended up branding him someone who could use technology to facilitate conservation. That his planning tools paired community needs with habitat protections, and helped achieve more nuanced goals than push pins on a map, got attention. The money seemed to follow.

Now at the helm of Point 97, he says what’s flowed from the company’s launch fifteen months ago is a “lot of interesting growing pains.”

“Growing up in a nonprofit doesn’t necessarily prepare you for running a company,” said Steinback. In that way, he went from a structure that was always chasing money, and stretching its own capabilities, to learning that what works in business is the opposite of that: a model with a tight focus and careful, managed stewardship of limited products.

“We’re full of good ideas. But good ideas that people pay for? And that can support a business? That’s what you have to figure out,” he said.

Point 97 on the job

Though he’s struggled to find examples of for-profit companies that sprung successfully from nonprofit parents, and combat similar issues, he says he’s getting good guidance from the Portland startup community, where its not at all odd to pair funding and development goals with social impact missions. In that sense, being in Portland is giving Point 97 the support it needs to grow from within a model that might make it an outlier elsewhere. And that assistance is unlocking potential.

“I can go meet with a CEO of another startup that’s maybe four or five years along,” for advice and mentorship not available in the conservation community, he said. “I don’t think I would be experiencing those things if we were still operating from within the ENGO.”

Next on the menu?

Software and data portals. Tools for data collection, analysis, and synthesis. And a healthy dose of people-products like civic engagement and advisory services.

The outcome is that Point 97 has turned rugged, no-nonsense fishermen of Oregon’s Dungeness Crab into iPad-toting data junkies, now testing, with the Oregon Department of Fish and Wildlife, the viability of real-time harvest reports on crab. It’s a platform that also aims to offer the fishermen business tools. Other projects have been deployed in the Mid Atlantic, where surfers are mapping recreational use of the ocean as wind turbines stake out space, and in the Solomon Islands, where a new mobile app is tracking fish as they head to market.

Whether mapping boater activity in the Northeast, or building a monster database to underpin planning in the U.S. Virgin Islands, the thirteen employees at Point 97, six of them developers, are busy. They were already a revenue positive division before becoming a company. Now, they’re looking for growth.

“When you’re out there providing tools to help people make decisions, to do that on a global scale, you’ve got to get to scale,” said Backus.

That’s why Ecotrust turned its ocean division loose as a for-profit. It was an effort designed to address the fact that, to really have impact on ocean issues, those impacts had to be wide-ranging.

“It carves out a section of space where people have different performance standards, the pace is different, there’s more decision-making power given to the CEO, and things can happen in a much more rapid-fire pace, and that’s what’s needed,” he said.

Continuing to refine

For Steinbeck, his Sisyphean contest still lays ahead. Likely, 2015 will see Point 97 continuing to refine its focus. Though he’s aware the company is doing too much—something he called an “old habit” from the nonprofit days—Steinback said its test is how to tweak a for-profit model in a way that still resonates with longtime partners while attracting customers for the company.

The solution will come from the entire team, one he describes as a group that wins together, loses together, and sometimes wants to rip each others hair out, but always comes back the next day committed to solutions and moving forward.

Steinback says they are realizing that the company may have to limit its direct work in communities in the future. Though working with people is a practice that, in the past, allowed the ocean planning division to gather ideas, solve problems, and measure direct results at Ecotrust, Steinback says its also a practice that’s been expensive and time consuming for Point 97, and is unlikely to scatter the company’s social impact as intended.

“There’s this tension or struggle between working in communities with people and trying to make a profitable company. That’s our biggest challenge. It’s trying to figure out what that transaction will look like,” he said.

When they answer that question, Point 97’s team will be bringing the most successful of the tools they’ve built in their backyard to the world.

“We’ve just barely tapped into that,” Steinback says. And when he talks about really plugging into that success, the characteristic zeal turns on. It’s easy to hear that fresh-faced kid from Astoria.

And it’s easy to understand why he’s still got work to do.

For more information, visit http://pointnineseven.com, follow Point 97 on Twitter, or like Point 97 on Facebook.