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Today I have the great pleasure of speaking with Ron Klein who is also known as the grandfather of possibilities. You probably already know Ron’s work and use it every day. He invented magnetic credit card strip and other things effecting millions if not billions of people in the world. Today Ron continues to work on new innovations for the blind and consultants budding entrepreneurs.
Keypoint Takeaways: The early years
Ron grew up in Philadelphia during the Depression and didn’t come from a wealthy family. His Dad was a postal worker and his Mom was a department store sales clerk. Ron describes them as regular people who were supportive of him.
Ron grew up during the war years and entertained himself making toys from cardboard and masking tape. Ron was inspired by his maternal grandfather, a famous inventor, who worked on the first steam propulsion ship and a torpedo detector for World War I submarines. He also invented pressing machines for tailors and rabbit ears for TV.
Ron also taught himself the guitar and he even played in local parades and in bands. He even landed a spot on the famed Paul Whiteman talent show when he was 16 and won a refrigerator for his Mom.
Turning tragedy into opportunity
When Ron was 16, he mysteriously contracted a hepatitis infection and after three months in the hospital, convalesced at home for a year and a half. He couldn’t go to school or do much of anything, so he decided it was an opportunity and a challenge. In a year and a half he read 18 volumes of the Encyclopedia of Britannica, cover to cover.
Ron also suffered an injury from the service and car accidents that left him with a serious spine condition. Today he still can’t stand or walk far. At nearly 80-years-old, neurosurgeons don’t’ want to take the risk of operating on him and would need a wheel chair for life.
To Ron, this was just another challenge. He knew he didn’t have discs in the lumbar area of his spine and decided if he could spread out the lumbar vertebrae the nerves wouldn’t pinch. He started by reading Grey’s Anatomy cover to cover and decided to hop on a racing bicycle to stay bent over and help open up the facet joints where his nerves were pinching. He still bikes 30-miles every day to help control the pain and find relief.
Eventually he started riding in triathlons and won gold medals with his team. He eyed the Olympics and was recognized as Athlete of the Year in Florida while in his 60s. He ended up winning the gold in the Senior Olympics.
The simplest challenge of his life
Ron says the magnetic credit card strip was one of the simplest challenges of his life. He looks at what he’s working with, the goal he’s looking for and, “everything else in between is just the minutia of the journey, the hurdles, and so on and so forth. You have to really pay attention to; what is it that you’re working with, and what is the challenge.”
A department store client came to Ron to help solve a problem. Back in the 1960s, credit card companies provided a long list of negative account numbers sold to merchants. This gave the merchants and idea of who posed a credit risk, but they had to refer to a huge book to figure out if the customer’s number was listed there.
Ron developed a way to simplify the process and took all those negative account numbers every month and put it into a memory system. At that time it was big magnetic drums with no Internet and no PCs.
Ron took inspiration from newly released reel-to-reel tape recorders and figured out how to record the information merchants needed on it. As long as they put it in slowly and pulled it out rapidly, it would mimic a tape recorder. It didn’t take long for word to spread from Ron’s big department store client to the rest of the country before American Express picked it up in 1970.
The path to success
Drafted into the Korean War at age 18, Ron leveraged the GI Bill to go to college and further developed his technical skills before landing a job with a big company as a development engineer. He went on to become the chief engineer of another large company when it dawned on him he was really an entrepreneur and a liaison between the technical staff and the consumer, the customer or the merchant.
Word started to spread about his talent, and Ron realized his problem solving skills could be the foundation for his own company that kept growing. Before long he had 125 people and was soon taking it public. He helped developed multiple listing service (MLS) for real estate, voice response for the banking industry and even how to quickly mature chickens for sale.
Failed retirement
Ron says he failed at retirement three different times. “If you don’t do anything with your life after you’ve gone through and gained all this wisdom, then in my mind I really think you’re a has been because it was The first time he tried to retire he was 34, but realized fishing and relaxing while watching everyone else go to work just wasn’t for him. So he went back out and launched a new opportunity for himself.
Create your own luck
Despite being a successful entrepreneur in an age where information wasn’t readily available, Ron has always figured it out. He’s either read about it or gone out and found people with the knowledge he needs. But he warns that you don’t want people’s opinions because they’re not qualified or credible. Instead, you want advice and learn from them.
Listening to Ron makes it sound like he stumbled into different ventures through luck. But that’s not exactly true. He’s always listening, always looking for opportunity and always looking for a challenge. That lead him to bidding on telecommunication machines and refurbishing them, scrapping gold from its parts, reselling to Wall Street and servicing them. Each business started from a challenge where Ron identified a goal and simplified the process.
Ron says despite always wanting to learn and grow, he’s still gone through growing pains. In his early days of running a company, he was trying to manage 125 people instead of hiring subordinates to do it for him.
Ron’s newest invention
Today Ron is working on a new device to help the visually impaired after lunch with a close friend who is blind. He told Rom he’d like to be able to identify the everyday things that he comes in contact with. Ron realized that’s possible with sophisticated electronics, although not economically feasible.
Ron spent a few weeks thinking it over and then realized he could design sophisticated coding labels to interact with your smartphone. A blind person could buy 1oo of the labels for less than $20 and put them on everything from their medicine to peanut butter. The end result is being able to point their smartphone at it to hear what it is.
Still going at almost 80-years-old
Today Ron is also a consultant and has done over 200 provisional patents for people and works with 10 to 15 clients at a time. He frequently explains, “You don’t sell your ideas till you sell the benefit. If your concept and your idea develops a benefit and it has quality to it, and there is some form of intellectual property, not necessarily patentable, but something that has benefit and can provide usefulness to others, this is what I’m helping them with.”
“Understand that knowledge is power and always be aware of everything that’s happening around you because if you learn and you can share from what you’re learning, you’re really making your contribution in the world. Just don’t breathe the air. Make some kind of contribution. We’re here for a very short period of time. Do something with your life and offer a contribution. Help others.”
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[spoiler title=’Transcript’ collapse_link=’true’]Eric: Hi everyone. Welcome to this week’s edition of Growth Everywhere where we interview entrepreneurs and bring you business and personal growth tips. Today we have Ron Klein who is also known as the grandfather of possibilities. Ron is the guy that invented things such as the magnetic credit card strip and a few other inventions that have affected hundreds of millions if not billions of people in the world. Ron, how are you today?
Ron: Fine and I’m delighted to be on your show Eric.
Eric: Thanks for being on the show. Ron, a very broad question first, why don’t you tell us about yourself?
Ron: Well, myself, I grew up in Philadelphia during the Depression years. I didn’t come from a very wealthy family. My dad was a postal worker. My mom was a sales clerk in a department store. They were just regular people, very supportive of me and growing up during the war years during the Second World War I learned to entertain myself and make my own toys out of cardboard and masking tape. I could make anything. However, I was very inspired and mentored by my mom’s father, who was my grandfather of course, he was a famous inventor.
He invented the first steam propulsion ship and invented the torpedo detector during the First World War for submarines, invented the pressing machine for tailors, and when T.V. first came out he invented the rabbit ears for T.V. And I was very inspired by him. I always hung around him and he even taught me how to sew. So, I’m a good seamstress, or seamer, I should say.
I’m also a musician. Growing up in Philadelphia I learned how to play the guitar at a very young age, and in Philadelphia they have a New Year’s Parade every New Year’s which is, they call it the Mummer’s Parade, and I played as a string band mummer for many years, playing the banjo and the guitar. As I grew up I was even on the Paul Whiteman talent show when I was age 16 and won first prize which was a refrigerator for my mom. That got me off to New York to be on his T.V. show. I don’t know if many of your listeners remember Paul Whiteman, but he had a talent show in those years. So, that’s my childhood.
Eric: Great. Why don’t we dive into—and before I do, it’s really interesting because you’re grandfather made all these crazy inventions and then you came up with all these great things. Have your grandchildren invented a lot of crazy things as well?
Ron: I have one grandchild that’s very inventive. She’s a very young gal, 19 years old. She’s studying at FSU College in Tallahassee. She’s studying to be a designer and she’s very talented. I was very artistic growing up and in fact my avocation then, I thought, was going to be commercial art and developing advertising and drawing. When I was drafted in the service I came back and went in for engineering. But she seems to have those talents. My other children? No, they’re not entrepreneurial and they’re not talented from the standpoint of inventiveness. My grandchildren—I have one grandson that’s very creative. So, hopefully he’ll turn out to be something great.
Eric: Got it. So, it sounds like there’s only one or two inventive—for each generation there’s one or two inventors that come out of the family.
Ron: Exactly.
Eric: Is there anything special that you guys do to try to translate these learnings down?
Ron: No. Just pay attention and learn something new every day. That’s what I preach to my children and that’s what I reach to my grandchildren. Be aware of everything that’s around you because knowledge is power and you never know when you’re going to use that little bit of tidbit of information that you’ve picked up from someone else and then researched it because that’s the answer. Be knowledgeable and a full idea of everything that’s going on around you.
Eric: All right. I love it. Let’s talk about inventions here. The magnetic credit card strip. What can you tell us about it?
Ron: That was probably one of the simplest challenges I’ve ever had in my life. It sounds foolish, but that is Eric. I look at problems as challenges. I turn every problem into a challenge and I simplify it. I establish in the challenge: what is it I’m working with, what’s the goal I’m looking for, and everything else in between is just the minutia of the journey, the hurdles, and so on and so forth. You have to really pay attention to; what is it that you’re working with, and what is the challenge. I had a client who came to me from a very large department store, a director, and it was a simple challenge because in those days, in the early ‘60s credit card companies provided a long list of negative account numbers sold to merchants.
In other words, they knew who the credit risks were, and they would take those account numbers, provide them to the merchants, and the merchants should not sell to those people. Every time somebody would come into make a credit purchase, or a charge purchase the merchant would have to open up that monthly book that he would get from the credit card companies, look down the long list that was in chronological order to see if that person’s number was on there. If it wasn’t they were good to go.
Using my technology—well, the issue is, what’s the given? The given is there’s a long list produced every month by credit card companies of negative account numbers. What’s the solution? We want the merchant not to be selling to those people. We’ve got to give the merchant some kind of tool that’s a little bit faster and a little bit easier that doesn’t provide the delays of people queuing up for sales. I took all those negative account numbers every month and put it into a memory system.
At that time it was big magnetic drums. No internet, no PCs in those times in the 60s. And then I gave the merchant a little keypad to connect it to the memory system. He would key in the account number and that was it. So that was really the first point of sale device. Very simple solution. However, I figured we’d have to put some smarts in that little piece of plastic because that would really speed up the operation and would take any possible error away from the merchant of keying in an incorrect number. My first thought was to punch holes, the Hollerieth code, into the credit card, knock off a little edge of the corner to make it look like a punch card and punch holes in it, but that was not economically feasible. Right around that time reel to reel tape recorders came out. If figured—this is a perfect example as to why we need to pay attention.
I learned about reel to reel tape recorders, very simple process. You record on the magnetic tape music or voice and it had motors that governed the speed so it didn’t sound funny when it passed the little reed head and it was current speed. I figured, geez, if I use something that’s familiar to me, just take a little piece of that tape, cut it off, record the account number on that little piece of tape, paste it on the back of the credit card and make the human the motor. As long as they would put it in slow and pull it out rapidly, because I put what was called, start and stop synchronization pulses on the tape. As long as they pulled it out rapidly it looked like the mimic tape recorder. That was a long answer to a very simple problem. And that’s how the magnetic strip on the tape became an invention.
Eric: How did you get the word out for this invention?
Ron: It wasn’t really that difficult because, think of what the largest department store in America is and there is a director that came to say, solve my problems, speed this situation up, and I said, here it is. So, installing that in New York in this largest department store all throughout their system, that got the word out big time. Then it went viral all over the country and then in 1970 American Express picked up that whole concept to use it in the credit industry, and then, of course, it was just billions of people after that.
Eric: Got it. Backtracking a little bit, let’s hear about the story where you said a director of a large department reached out to you. How did you get to that point where people started reaching out to you for inventions?
Ron: My expertise was—I was drafted for the service during the Korean War at age 18. That was when I thought I still wanted to be involved with graphic arts and commercial art, but I really loved engineering and the technical aspect of things, because I was making a lot of my own toys and did a lot of reading. I was drafted at age 18, went off to Korea.
When I came back, fortunately I had the GI Bill and I was able to go to college under the GI Bill. During that time I realized that I had a little bit of a different talent. It wasn’t just the technical talent that I was developing. I got a job with a large company at the time as a development engineer after I graduated. Then I worked my way up to another position with another large company as chief engineer and then realized I was and entrepreneur and a liaison between the technical staff and the consumer, the customer or the merchant, because I tried to convey to them the message that they understood, in a manner and in a way that the technical people would understand.
Then I realized that I truly was an entrepreneur. That word got out that I was the person that could solve problems and understood, and could take the customer or the consumer to the engineers and form a liaison where they would understand each other.
After I did that, and I was working for a very large company I realized I was a problem solver and I could come solve challenges and find that gift behind the challenge and I formed my own little company, and that company just started growing. And it grew, and grew, and I had a staff of 125 people and had a few private placements to fund it and it was involved with a lot of very interesting projects then. And then the time came to take it public and that’s when I learned all about IPOs and what you have to do to take a company through a public offering.
It was very successful and the company grew further, then after that, sold it off and started forming other companies and going forward with my career. During that time I had the public company we developed other things such as MLS, multiple listing service for real estate, voice response for the banking industry, came up with the formula that [inaudible 00:11:24] and how to grow chickens to full maturity in eight weeks, and healthier chickens other than the low maturity, and then got involved, very interestingly, with the New York Stock Exchange. That’s the whole story in itself.
Eric: All these inventions, each of them requires a certain focus and a certain level of expertise. Did you hire a lot of smart people around you to figure these problems out or was it you kind of spearheading each one? I’m just trying to figure out how all these different problems are solved because these are all big problems that were solved.
Ron: They were big problems but, to answer your question I spearheaded them all myself and surrounded myself with good engineers, drafting people, of course in those days software wasn’t even a word. Everything was solved with hardware. I had a real good staff of drafting people, engineers, manufacturing people, and good managers. We worked together and I listened to what was needed in the field, and came up with solutions on how to solve those problems. But I always simplified things in a way where I could understand them, and once I could understand them I could spearhead and actually take them through the results. As clients would come to me with their problems I was able to reduce it to a simple challenge and come up with a solution. That’s the way I approached everything.
Eric: Can you share, and you might have alluded to the framework, but can we crystallize what the framework looks like so people understand how Ron Klein solves problems?
Ron: Well, the framework is, I never had a strategic plan. What I’ve had is always an organized way of simplifying and recognizing an opportunity. The challenge was there and I always reduced it to a simple challenge. Let me see if I can explain it a little better. I always look for opportunity and I never really thought about—I was able to recognize opportunity when it came right in front of me. As people would come to me and explain to me either their ideas or concept, or their challenge, I would just step back, simplify it and say, here’s my answer to the solution to this problem and this is the way we’re going to approach it, and be very flexible.
And all along, not being stubborn but having speakability [ph 00:13:52] I would be very flexible in saying, if we have to change direction, we’ll change direction. I was never concerned with anything failing because to me failure is a mistake that you’re learning from and you just change direction and follow that direction. Anytime I got involved with any project I would consider it as opening a door to a task, and before I would close that door behind me I would look around in that environment and make sure there was a back door, worst casing it, in order to get out.
So, psychologically always felt that, what’s the worst thing that can happen? I would say, as long as there’s a way out and if I worse case it, and it’s just a matter of starting over again, I’ll come in and close the front door behind me. That was always my exit strategy, and it worked. In most cases you do have to change direction or do some rethinking because you learn along the way. That was my solution to having success and understanding what we’re looking for and how to solve it. It’s almost what we learned in grade school when you were given those word problems with superfluous information, you’ve got to filter all that out and just look at what it is that you’re working with and what the given opportunity is than look for the solution.
Eric: The key word is simplify?
Ron: Simplify. Absolutely. If you simplify, everybody understands, we’re all on the same page, and I always represented each task graphically because there’s so much that can be lost in the narrative portion of transmitting or in communications. That’s fine after you’re able graphically to represent what it is you want to do. It’s the old simple approach of flow charts. Anything, any task you take on, even if you wanted to make a home movie, if you put that in a flow chart, what do you need? You need a camera, you need a subject, you need a location, you need film in the old cameras, and so on and so forth.
If you put that down as an element and then strategically connect the dots and connect the arrows, saying; I need this first before I do this, so on and so forth, and then when you stare at that yourself you start realizing, “Wait a minute. What if’s? What did I miss? Do I really have everything represented here?” And once you have that it’s so easy to offer that to the other person and they get it. Then you can define it in a narrative way. But you must graphically represent something first so that everybody’s on the same page, and it simplifies it.
Eric: Got it. That’s interesting because you hear about people growing companies. When you get to a certain size it makes sense to document all these processes. So, you’re saying not only document the processes, but have graphical representations where it’s easier to understand verses having pages and pages of documentation. Is that right?
Ron: That’s right. And I always found that taking a company from startup to the first million dollars is pretty much the entrepreneur who really understands what is needed to launch and all of the processes that he has to learn in order to get that far. There’s a lot of technical things you have to learn. Again, paying attention, listening to good advisors, and surrounding yourself with very helpful people that know what you don’t know, then you can take that to the point of operation and grow the company to the first million dollars.
Now the challenge is getting from one to ten. That is a very interesting process because it’s a whole different thinking process. Once you do that, taking it from ten to a hundred, usually is not the same person because now what you have to do is surround yourself with good systems people, operational people that know how to grow it to the next level.
Eric: Got it. At the Entrepreneurial Organization Conference you talked about reading, I think it was the Encyclopedia cover to cover, or was it something else?
Ron: Yes it was. My first challenge was—in the service I had—well first, before I even got to the service, at age 4 I had a very serious disease and I was hospitalized for three months. It was an infectious disease, scarlet fever. I came out and started reading a lot and studying a lot and learning about everything that was around me because I was very inquisitive, because I had the three months in the hospital to think about what’s happening, what’s going on. Then at age 16, I don’t know how or why, I became very ill with infectious hepatitis and that was the time the infectious disease controls had very little knowledge about where it even came from or how I contracted it.
I was hospitalized for three months again, I was jaundiced, my liver was turning cirrhosis, I was very, very ill, and after they finally dismissed me from the hospital for contagious diseases I had to convalesce at home for a year and a half. I wasn’t permitted to go to school. I figured, what in the world am I going to do and thought, “Well, this is an opportunity. It’s a challenge.” And we had a full volume set of all 18 volumes of the Encyclopedia of Britannica at home. I figured, this is great, I’m going to start reading. In a year and a half I read 18 volumes of the Encyclopedia of Britannica, cover to cover and what a wealth of information.
From that, that gave me the insight, the thought process of paying attention to everything around you because you never know when you’re going to need this knowledge and knowledge is power. That was the time that I read all of the encyclopedias.
Eric: Do you think that experience changed your life?
Ron: Yes. It made me thankful for every day that I had. Today we have to look at life as quality and quantity. If you have both, what a gift that is.
At this point I look at myself, I’m going on 80 years old, what an opportunity to have quantity and quality. I think when I realized I had the opportunity to qualify my life and bring more information into my life; that really changed my thinking process. Then when I came back from the service of course, then I truly became adult—like I was an adult that really wanted to accomplish.
Eric: Wow! It’s really interesting because, we had someone else on our show who convinced his parents to let him drop out of school at 12 and his dad had him read four or five biographies each and every single day and he said that totally blew his mind up. Being able to—you’re bed ridden and being kind of forced to take on this information, I think it just goes to show that maybe it’s time to train our kids to read a lot more than they should be reading, or things that they’re reading right now.
Ron: Read and pay attention to what’s going—there’s so many tools that we have today that we didn’t have in my days. There’s so much advantages that these young people can take advantage of and so many opportunities and you absolutely do have to read more. When I came back from the service I had an injury and then had even further injuries through some unfortunate automobile accidents and I had a very serious spine conditions. To this day I can’t stand or walk too far. I can walk maybe 100 yards and stand for 5 minutes and I have this inoperable spine condition. I figured, it has to be able to be fixed.
The neuro-surgeons won’t operate on me because it’s too risky and I would have to be confined to a chair for the rest of my life and be inactive. I figured, how do you fix that? I fixed other problems, maybe I can fix this. Understanding it, I have no discs in my spine in the lumbar. I figured, “Okay, if I can spread those lumbar vertebrae out so there’s no pinching of the nerves, I’ll get some relief.” I figured what’s the best way to do it? I went and got the Grey’s Anatomy book because I figured I want to learn all about the human body and I read that cover to cover.
There was so much in Grey’s Anatomy over and above the spine, but to fix the spine, about 30 years ago, I started riding a bicycle in the street, but it was a racing bicycle, where you’re bent over and your hands are over the drops [ph 00:22:39] and I discovered that after I was on the bike for about five minutes it opened up all the facet joints in my spine where the disc should be and stopped pinching the nerves, and I was totally pain free. No more sciatic pain for the two hours while I was riding. That, psychologically changed my brain to say, you can get rid of the pain, you can really have relief if you follow this process. I started telling and teaching a lot of the senior citizens that same process, who have spinal conditions. To this day I’m still riding a bike. I ride it every day, every morning.
Eric: How many miles is that every day?
Ron: I ride 30 miles every day. As I was riding somebody was telling me about triathlons and I said, “What’s a triathlon?” You swim, you bike, and you run.” I couldn’t swim. It was injurious to my spine. I couldn’t run, but I could certainly bike. I became part of a relay team and after a while I was entering into these triathlons and we were winning bronze and we started winning silver, and we won gold, and I figured, this is wonderful.
Then someone told me about senior Olympics. And I said, “What is that?” That’s where you race time trials against yourself. I started going out at the county level winning medals. Then I started going out at the state level, and in 2003 I was so efficient at riding and so good at it, and this was well up into my high 60’s at that time, I became athlete of the year in the state of Florida in my county. I won the gold medal. Today I’m still doing it and here I am, going on 80 years old, still riding the bike and feeling great.
Eric: You’re incredibly sharp right now. When I met you, you’re fit as well. It’s clearly helped you a lot. What else kind of helps you keep such a sharp mind?
Ron: Thinking about quantity—well realizing that I’ve been given such a gift to be able to share my wisdom. What’s important to me is that anyone who has great experiences and have earned great wisdom during their life and growing up I think that’s wonderful providing you do some with it. So many people reach an age and then they think they have to retire. I failed at retirement three times. I tried it. It doesn’t work.
If you don’t do anything with your life after you’ve gone through and gained all this wisdom, then in my mind I really think you’re a has been because it was before. Now, using all that knowledge and wisdom, and now applying it to new ventures and still creating, now I think you’re a very special person because you have credibility of past wisdom and all those years of experience and mistakes that you’ve made and now still showing people how you can create and do things, which I’ve already done. And I’ve got an invention underway now. My answer to life is; don’t stand still. If you stand still they’ll throw dirt on you. That’s one thing I found out. Never stop because when you stop, you’ve given up. You don’t stop until you’re empty and that’s the day when the [inaudible 00:26:03] comes.
Eric: Don’t stand still. I asked someone what they’d like me to ask you, before the show, and one of their questions was what’s you’re secret to having a happy life? Do you think ‘you don’t stand still’ is that secret, or is there another piece to it?
Ron: The secret is; learn how to listen, listen to other people. Everybody has a story to tell and everybody has wisdom to offer. I don’t see any difference in any level of any people. We’re all created equally and we all have wisdom in our own way. Some are a little more highly educated, some are not, some are a little more creative, but I can learn from anyone and I learn something new every day. Because of that it keeps me going and it keeps me happy. I’m happy with myself and happy being able to help others and give them direction. I think that’s the answer to a successful life.
Eric: Just to let the audience know, Ron’s been married for over 55 years. That’s an incredible feat in itself.
Ron: She’s my best friend. I keep telling her, maybe now we’ll start living together now [laughter].
Eric: Great.
Ron: She’s my soul-mate and she’s—I learn so much from her. And it’s wonderful, it really is. I hope to have another 55 years if they’re healthy.
Eric: I hope you do too. I think there’s a lot we can learn from you. Speaking of learning even more. Let’s talk about learning how to IPO. What secrets can you share about that?
Ron: At the time I formed my company, because this is when I left the large company and I said, “I’m an entrepreneur. I can really solve people’s problems. I’m going to form my own company.” I started and had a few little wonderful contracts that was funding it, but as we were growing I needed more people and I needed funds to grow. I checked with a few funding angels and venture capitalists and they said you’re going to need a confidential memorandum and do a private placement. I learned about that just by listening to good financial people and had a very successful private placement. Now this was in the 60’s. In the early 60’s I raised three quarters of a million dollars. That was a lot of money then.
I started growing and we were growing rapidly. We were doing so well coming up with so many great inventive ideas and products these entrepreneurs came back to me, these financial people, and said, “Now’s the time to do an IPO.” and I said, “What’s and IPO? I have no idea the difference between a IPO and a manhole cover. What is that?” “That’s an initial public offering.” “Okay. What do you mean go public?” and then they started explaining it to me. They said, “You’ve got to go through this securities act thing.” and I said, “Okay, fine.” I went to the library, took out a volume of the 1934 Securities Act and read it cover to cover and became an expert on S1 and S2 registrations.
With that I had a very successful public offering. At that time we raised a million and a half dollars, over and above what I had, and the company was growing rapidly. I became very knowledgeable about Wall Street public offerings, stock market, as well as running a company, and I had 125 people and it worked well. Of course there was another little story that went along with that about growing.
Eric: Let’s hear it.
Ron: The company was doing so well, and I always felt that I was a giving type of a person, so I paid my employee’s well, my production people well, all my technical staff, and gave them lots of benefits, lots of health care. One day I heard some rumbling in the production area that they wanted to unionize. I figured, why in the world would these people want to unionize?
I’m giving them ten times more than they could ever expect. I heard there were just a few people in there instigating and I had some people coming in and infiltrating for the union and I figured, well, I’m a problem solver, how do I solve this problem? I picked one early morning, it was a nice sunny day, I went to the production area. There was 125 people back there. I stood on the highest work table and I said, “Listen folks. I’ve got a story to tell you.” I said, “We just went public. The company’s got a lot of money. I’m really in a comfortable position.
I’m very happy, but I hear that you want to unionize which doesn’t make sense to me. This is your company. It’s your benefits. I’ve got everything I want so I’ve decided that I don’t need these headaches, so as of 10:00 this morning I’m shutting the company down. You’re all out of work. Pack whatever you have. Go home. Thank you very much for all your services. I don’t need the company anymore and obviously you don’t need the company anymore, so it’s shut down at 10:00.”
Eric: Wow.
Ron: Terrible. And I said, “Oh, and by the way. At 2:00 this afternoon my HR department gave me some great ideas and I think I want to start another company just like I had. Anybody that’s interested in interviewing for that stop by the front door again at 2:00 and we’ll be interviewing for those people that really want to come in and offer their services under our original opportunities.”
And everybody stood up and clapped and said, “We’re so sorry Ron. We’re so sorry. We’ll never think about unionizing again.” And it worked. They never had after that. It was a risky thing to do, but again, how do you solve the problem? It’s either take everyone by the shoulders and shake them and say, “What are you doing and why?” and they realize that it was a foolish move.
Eric: So you [inaudible 00:31:59]?
Ron: It worked. After that we kept producing and I sold the company through a very large insurance company. The first time I thought I wanted to retire I was 34 years old. After about six months I realized I didn’t want to retire. It was in summer, I was on my boat at my summer home, and after about six months of fishing and doing nothing and watching everyone else go to work I thought, this is ridiculous. It’s not my way. I went back to the company I sold it to and I said, “I want to relinquish all my options, all my shares, and I want you to let me off the contract, and go.” I kept the money they all paid me, of course. That was my next operation that I went into.
Eric: All right, let’s talk about the next operation.
Ron: That was an interesting [inaudible 00:32:51] because I had no idea as yet to what I wanted to do so I formed a company called General Associations, because I figured that was a brilliant enough name and I had a lot of contacts and I was going to be a rep and sell communication products. I was very sharp in telecommunications because that was part of the operation I got involved in. I was really a dedicated communications expert. I started selling other people’s communication products. One day I called on a very large client of mine, it was Associated Press, and while I was talking to him about some multiplexing equipment I saw a [inaudible 00:33:27] salesman, I saw something on his desk and I was reading it upside down and it was a bid sheet from the Western Union company.
I asked him, “What is this?” and he said, “This is great. We do a lot of telecommunications, we use teletypes for telegrams, and so and so forth. Of course this was in the days of the 60’s and he said “They come up with bid sheets every week because they refurbish thousands teletypes and they take a lot of parts and recycle them and they ask us to bid on the surplice.” And I said, “That’s great. Would I be interested in this?” and he said, “Go ahead and take it. We know we need the equipment. Go ahead and do it.”
So, I started bidding on teletypes and right around that time, this was in the mid—early 70’s, PCs came out and they were using electric typewriters for IO devices. There were no video terminals yet. Then they were using TWX and telex machines, teletypes for the IO for PCs, the clones. I figured what a great thing, and I started bidding for TWX and telex machines. I started bidding on them at Western Union with some of their other equipment and I was winning it for pennies on the dollar because what happened was, they would refurbish them every week and some of them were good, some good parts, some old parts, and just take the machines, and whatever case they were in and refurbish them.
I was taking this stuff, picking it up, I hired somebody to go through it, and we were selling teletype parts for 50 cents on the $1.00 and anything that was good I’d refurbish and sell as IO devices. I was in the teletype business. Recognized an opportunity and I was selling IO devices for people that wanted PCs. I started a little operation in the basement of my home. I took mineral spirits and a compressor to drive them, and clean them, and sell them out of my garage. One day, and this is the big story—one day Western Union decided to totally divest themselves of the TWX and telex business and go into satellite. They put all 12,000 machines up for bid. These were old machines that were used on battleships, heavy in weight and size, steel cabinets, and they had communication devices in the bottom of them.
I bid on them. Bid pennies on the dollar and nobody else bid on them which was surprising to me and I won all 12,000 machines. Problem was 4000 were close to my little shop at home within 60 miles, the other 8000 were all over the country. Now I had a major problem. How do you solve problems? Because I was supposed to take possession of them in 30 days. They weighed 100s of pounds. I called the scrap dealer. Scrap dealer says, “Let’s take a look and see what’s in the bottom of these machines.” and they were very rich in printed circuit cards. These were the days where everything was hardware. The printed circuit cards were all gold traces because back in the ‘50s gold had great conductivity, it was very inexpensive, and they would melt the transistor, resistors, and the capacitors on these cards.
The cards had gold fingers. These folks said, “Let’s take these cards, cut the gold fingers off, put them in a cyanide bath, the cyanide will eat the gold away, bring up the gold salts to the surface, we’ll skim it off, will assay that, and we’ll split the profits 50/50. We made so much money because at that time in the mid-70’s at that time gold went from $25 [ph 00:37:07] an ounce to $800 an ounce. Now I owned all these machines for nothing, but now I also had 8000 pieces of junk because all the electronics was out and it was just old printers and scrape cabinets.
I called another junk dealer. You know, what do you do? How do you solve a problem? This junk dealer said they were working with Toyota at the time and in the mid-70s Toyota was having a rust problem with their cars. They didn’t have enough chromium in the steel. When they looked at these cabinets, these were cabinets that were used on the battle ships so they wouldn’t rust, they literally loaded with chromium. They went and called Toyota and said, “We have tremendous amount of steel cabinets with chromium, can you use them?” I gave them away for nothing I was home free. Now I had 4000 machines and I can be in the teletype business to refurbish and sell them to telecommunication companies. That started the story with the New York stock exchange.
Eric: Nice going. I love that story. I think that’s a great segue into that.
Ron: This is how you recognize opportunity, make your mistakes, what’s the worst that can happen? The worst thing that could happen is that I would just go back to Western Union and say, “I can’t take delivery. I’ll give everything back. It’s yours.” Whatever. I could worse case the situation and get out of it. But I turned a challenge into an opportunity and that opportunity was the rest of my career for the next over a quarter of a century because in that batch of 4000 machines that I was refurbishing for orders to sell to companies like RCA and ITT, there were over 2000 special teletypes in there that were very strange.
I got a call in the mid-70s from the New York Stock Exchange saying that they had called Western Union because they were doing a trading floor expansion and Western Union had over 200 special teletypes that they used for their inquiry stations on the trading floor. Western Union said, “We sold them to this little company called General Associates.” They called me and said, “You have machines that we need. We no longer want to rent them from AT&T. Are you willing to sell them?” I said, “Let me come up to the exchange and talk?” I gave them a full pay out lease over two years. They were elated.
They were happy and I said, as long as you give me a maintenance contract to maintain these things on the trading floor for as long as they’re here.” and they said, “Wonderful”. I hired a man and I would go to the New York Stock Exchange every day. We drove around the trading floor. As the machines would fail we put in a replacement. I’d bring it back to my little shop, repair it. So, now I was in the service business, had a great cash cow there. I was getting maintenance every month and the cost of the machine full payout lease.
That opportunity was wonderful because here I am at the New York Stock Exchange which was antiquated at that time. They had piles and piles of paper on the floor because they used to use mark sense cards. They had no automation at all. What an opportunity. So I developed program trading and many other things. I added a couple software people and we came up with all kinds of great ideas to automate the Exchange, get them through some processes real quick and save them a lot of money.
In 1983 was the big break. That’s when I recognized that they had never automated the corporate listed bonds trading floor. It was still an auction floor. They had their equities automated but they never had the corporate listed bonds automated. I automated that, became a vendor of corporate listed bonds, developed a whole system from Wall Street and built myself a great rental business and service business of providing for automation for corporate listed bonds from the New York Stock Exchange. That an operation for over a quarter of a century. There’s lots of other little stories in there and amongst that, but it’s just recognizing opportunity and it all came about from reading upside down on a client’s desk, a bid sheet from Western Union. Isn’t that interesting?
Eric: It’s amazing. What’s really amazing to me is that back then, information wasn’t as readily available as it is today. How did you go about—you followed all these opportunities, but for you to follow and understand how IPO worked, how your spine works, all these different things, takes a lot of work? How did you go about collecting all this information and figuring out how to separate signal from noise?
Ron: Asking some questions of, evaluating the capability and the credibility of those that would answer my questions and if they couldn’t answer it, read about it. But mostly there’s enough people out there that know a lot about things that we don’t know about and that we should know about and you gain that knowledge and you check the credibility to find out when you have advisors. There’s two different things. There’s advice and there’s opinion. You don’t want people’s opinions because they’re not qualified, they’re not credible. But you want their advice, and their advice is valuable if they’ve experienced some of these things and you learn from them, and then further dig into it to expand on it. That’s the way we learned in those days when we didn’t have the internet and Google and all these things we can go through and find out just by searching. That was the [inaudible 00:42:48] I followed.
Eric: We had a conversation at that conference and you talked about, for entrepreneurs, it’s all about building an initial cash cow first, then after you have that set, you go on to things that are even more interesting to you. Can you kind of talk about that?
Ron: Yes because the experience I gained, after I left the large corporation and formed my own company and went through the growth cycle of one employee, myself, up to 125 employees, with building three buildings at the same time as I was expanding, I learned that I wasn’t able to be as creative as I wanted to be as an entrepreneur because I was too busy managing people. During the growth cycle I learned that I was managing 125 people when a manager or CEO should only really be managing five efficiently. And those five can manage five more efficiently. You have to establish the corporate tree with the levels of subordinates to run the company.
I painfully went through a lot of growth learning how to manage125 people and finally hiring subordinates who could manage for me. All through that growth process I was building a company, but I wasn’t exercising totally all my entrepreneurial talents and discovered that what I really wanted was to build something that I had total control over myself and learn from my own opportunities and surround myself with a few people that can help me. So, after I sold that company I said to myself, I never want a company that’s labor intensified again. I never want a company that big.
And if it does grow to that point it’ll be to where I can have subordinates really taking over and I just want to be on for myself. That’s why I decided I wanted to build a company. My first thought at that time was, the next time I go into business I want to sell once and build myself a cash cow. Whatever the benefit was that I was going to offer, if I only sold it once and built just myself a repetitive business where there was something I could collect on every month, a service or a product, or expendables, which would work. And that’s when it turned out to be.
Eric: Beautiful. Love it. Wrapping it up here, final few questions from my side. First thing I want to ask you is, this new product that you’re coming up with, this new invention, can you talk about it?
Ron: Sure. Very simply it’s a device to help the visually impaired, the blind. In this country we have over 21 million visually impaired people. In the world we have 300 million visually impaired people. So, you’ve got a billion. It came about I wanted to help a friend and one day I was having lunch with him and he was—I was having breakfast, I’m sorry—and he was blinded at age 16 in high school, lost the use of one hand, and totally blind. However, he has a wonderful career, grew tremendously, was an executive VP for a company, and now is an executive director for a Seeing Eye Dog school. I asked him one day, I said, “What’s on your wish list?” because he’s a close friend, and he said, “We’d like to be able to identify the everyday things that I come in contact with.
I know that’s very possible with a lot of sophisticated electronics. It’s just how we put people on the moon, but that’s not really feasible and not economically feasible either.” And I said, “Let me think about it for a couple of weeks.” I went home and a week later I came up with an idea of something that utilizes specially, highly, sophisticated coded labels, on an app on a PC, not a PC, sorry, on a cell phone. What you’re able to do is you can acquire—any blind person can buy a group of 100 of these labels for less than $20, we would sell them for less than $20 so there’s no investment on their part, and they can take any label and paste it on anything that they want; one of the drugs in their medicine chest, some of their things in their cupboard, their peanut butter, their jelly, their clothing, whatever they want, and they’ll walk in the room with this app on their cell phone and walk within four feet of any one of these labels that are only specially read by this device and then they’ll say, describe what it is that you’re marking.
They would put it on the device, point it at the device, and then state in there what the item was that any other time they would walk in with that phone with the app and point it at something with that device, it would tell them on a loud speaker in their ear what the device is. It went so well I thought I was going to start another company and go into manufacturing and after a while I figured, now’s the time to really develop this, patent it, create it, and look for a company that I can license to really build the app and B&B the whole process and I would just market it. And we’re just about ready to release that. I have a company in Portugal that’s doing it for me. They did a magnificent job and we’re going to be announcing it probably within the next 30 days and it will go into service the first quarter of next year. So, anybody, any visually impaired person, macular degeneration, or totally blind, can just pick up 100 of these labels, paste it on anything they want, describe what it is, and anytime they point the phone at it anything, it tells them what it is.
Eric: Wow! That’s amazing.
Ron: It has unlimited capabilities, but it’s so simple it doesn’t infringe on any other thing that you need to just have this service.
Eric: Awesome
Ron: It works great.
Eric: You said earlier don’t stop, don’t ever stop, and you’re not stopping right now. Definitely can appreciate everything you’re doing right now, everything you’ve done so far.
Ron: A lot of other people now too. I’m doing a lot of consulting for other people with ideas and explaining that you don’t sell your ideas till you sell the benefit. That’s important. If your concept and your idea develops a benefit and it has quality to it, and there is some form of intellectual property, not necessarily patentable, but something that has benefit and can provide usefulness to others, this is what I’m helping them with.
Eric: Absolutely. That’s what it’s all about. I guess for the audience, for people that have interesting ideas, how many people are you working with right now?
Ron: Over the last few years I think I’ve done over 200 provisional patents for people and opened about, I would say I usually have anywhere from 10 – 15 clients at a time.
Eric: Wow! Amazing! You’re a machine Ron. You’re a machine. Final question. What’s one piece of advice you would give to your 25 year old self?
Ron: Understand that knowledge is power and always be aware of everything that’s happening around you because if you learn and you can share from what you’re learning, you’re really making your contribution in the world. Just don’t breathe the air. Make some kind of contribution. We’re here for a very short period of time. Do something with your life and offer a contribution. Help others.
Eric: Amazing! Ron, thanks so much for being on the show. Everyone this is Ron, this is the guy that will teach you how to IPO, this is guy that will teach you about patents, the guy who has done everything, now that I think about it, probably helped billions of people. Ron, I appreciate your wisdom. I appreciate everything you’ve done. Thanks for being on the show. Hope to have you again sometime soon.
Ron: Thank you so much for having me Eric. It was a pleasure.
Eric: Bye Bye. Take care.
Ron: Bye Bye.
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Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.
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