Earl Bakken: Medtronic, Inc.
Starting from a young age, Earl Bakken was fascinated with all things electrical, including the wiring, equipment and the porcelain insulators in his home. As a youth, he rigged up numerous electrical devices, such as a phone system to his friend’s house, a method to set off Fourth of July fireworks from his attic, and a knife-wielding, cigarette-smoking robot that scared a neighbor’s child.
In high school, Bakken maintained the school’s electrical equipment, such as the public-address system, projectors, and electric scoreboards. After World War II, as an electrical engineering student at the University of Minnesota’s Institute of Technology, Bakken would stop by the medical department to visit friends. He would repair their equipment on-site and realized that here was a business opportunity.
So, in 1949, he and his brother-in-law started Medtronic to repair medical equipment on-site. But the early days were agonizing and arduous. The venture’s highest annual net income in the first decade was $10,400. To grow, they worked with physicians to develop custom-designed equipment for specific treatments.
One of them, Dr. C. Walton Lillehei, was working on medical devices for the heart, but these devices stopped during power interruptions and risked patients’ lives. So Lillehei asked Bakken if he could develop a device that would work through power failures.
Bakken experimented with various options and, in four weeks, came up with a solution based on a circuit in Popular Electronics for an electronic metronome. This pacemaker was attached to a child’s heart the next day, heralding the dawn of the modern-day electronic medical device industry.
The year was 1957. Initially, as sales grew, so did losses. In 1962, sales were $518,000 and losses grew to $144,000. But the next year sales nearly doubled and profits reached $73,000.
The company never looked back. Today, Medtronic is a $14.6 billion (sales) global giant with a $32 billion market valuation (on March 16, 2009). Medtronic has spawned dozens of great companies, created a lasting legacy and enriched millions of lives.
This is how Bakken did it.
This introduction is excerpted from Bootstrap to Billions: Proven Rules from Entrepreneurs who Built Great Companies from Scratch by Dr. Dileep Rao. Copying or reproduction in any format or medium without the prior express, written consent of the author is strictly prohibited.