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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.