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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 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