Listen to Fruchterman Interview, Part 2
Tony Candela: Did you complete the PhD?
Jim Fruchterman: No, I took a leave; I never went back. My roommate, who took a leave to found Silicon Graphics (he was the chief technology officer there and all that), actually went back after 20 years of being away and just completed his PhD about two months ago. I've often toyed with whether I wanted to go back and finish my PhD. But I think as time went on, it became clear that I had found what I was supposed to be doing and it was not being a university professor. It was being an entrepreneur who did things and had the ability to get things done that maybe other people weren't as oriented towards.
Tony Candela: Who was the science fiction author and who was your favorite character?
Jim Fruchterman: [Chuckles.] The science fiction author was Poul Anderson. He wrote a whole bunch of series and my favorite character was sort of the dashing hero, Ensign Flandry, who was trying to save the universe from decadence and the enemies of the human race.
My boss's favorite character was actually a guy named Nicholas van Rijn, who was sort of the prototypical libertarian businessman. It was interesting. It turned out to be not a bad way to pick people, though I thought it was a little weird at the time.
Tony Candela: Some people administer all kinds of personality profiles. A lot of people ask who their favorite author is. We're all sizing each other up, aren't we?
Jim Fruchterman: In the case of this market project, you wanted people who had the true "humankind has to go into space" religion. And I would say that becoming an astronaut was one of my own aspirations, in college. So for me, this is the career I chose instead of trying to become an astronaut.
Tony Candela: Did you read a lot of science fiction as a boy?
Jim Fruchterman: Tons. I'd say that when I was in high school I was often reading science fiction books at the pace of one a day.
Tony Candela: You're a fast reader.
Jim Fruchterman: A fast reader and quite a nerd.
Tony Candela: That is A space NERD. I'm going to guess that you were an excellent student.
Jim Fruchterman: I was a pretty good student. I was one of those students who probably didn't study quite as hard or I was smart enough to get away with all sorts of stuff. But what I fell in love with in high school was programming. So I spent an awful lot of time between reading science fiction books and writing software programs on a PD4. Of course that's what really pulled me along in my career was programming.
Tony Candela: You were born in 1969?
Jim Fruchterman: 1959.
Tony Candela: I'm not good in mathematics. So when you were in high school the PC hadn't really hit the market yet.
Tony Candela: When I was in high school (I graduated in '76), what you did is you had either a small DEC mini-computer, like the PD4, or you could go to community college and use an IBM 360. I did both.
Then when I got to Caltech, they had time sharing systems, so that's where I got a lot of my experience. By the time I was graduating from college, the PC was not out, but the microprocessor was out. And one of my projects was designing microprocessor-based systems. I was an electrical engineer and that's what a lot of electrical engineers did back then.
When I started my very first company, we used the Heathkit. And the PC came out within the first year of starting my first company which would have been '81 or '82.
Tony Candela: You grew up in Chicago?
Jim Fruchterman: Yeah, outside of Chicago, near the airport.
Tony Candela: Were your parents college-educated people?
Jim Fruchterman: They both were. My father was an attorney. I actually come from a family of attorneys. Both my grandfathers were attorneys. I had three or four uncles who were attorneys. My father was an attorney.
I had three brothers and all four of us became engineers. I told my dad that was because they told us not to become attorneys. He said, "I never said that." But my dad loved technology, and we all got that and that was the direction we all took.
Tony Candela: How about your mom?
Jim Fruchterman: My mom was college-educated. But she was from a generation that was more oriented towards homemaking. So once she got married and started having kids, she stopped working, and didn't go back to work.
I had a couple of smart parents and smart siblings and a lot of expectations in the educational area.
Tony Candela: You're currently married?
Jim Fruchterman: Yes.
Tony Candela: How many children?
Jim Fruchterman: I have three teenagers. And my oldest is going to college this fall.
Tony Candela: Congratulations. Number one, out of the nest.
Jim Fruchterman: That's right, yeah.
Tony Candela: When did you meet your wife?
Jim Fruchterman: I met her while I was working on the rocket project. Or maybe right after the rocket blew up, actually. It was in the Stanford Savoyards, a Gilbert and Sullivan amateur theater group here in the area. I was in one show and then she was in the next show and so we got to meet that way.
Tony Candela: What's her name?
Jim Fruchterman: Virginia. She is a musician.
Tony Candela: Right after the rocket blew up. Were you feeling distraught about the rocket blowing up?
Jim Fruchterman: Disappointed but not surprised. This was my exposure to a somewhat dysfunctional company. And I and Dave Ross and a few others said, "If they can do this, we can start a company."
And so what we tried to do is we tried to start our own rocket company. So we came back here and tried to raise $300 million. And for some odd reason, no one gave it to us.
After trying that for six or nine months, my partner Dave said, "I have this buddy, Eric, who works for HP labs and he has an idea for making chips (he was a chip designer) do different things."
So we got together with Eric Hannah and Eric said, "I thought about some things. I think we should make a chip that rather than being a general purpose microprocessor or memory (which is what a lot of people were working on) [chip], it does something really well. And I think the thing that it needs to do well is recognize characters."
My one good idea at college was making a reading machine for the blind. And so I said, at our first meeting, "Yeah, not only would you help insurance companies and lawyers, but you'd also help blind people read with that." And that was my first successful sort of company, as opposed to five that weren't successful.
Tony Candela: And when you were in college, I guess that would be about the time that Ray Kurzweil was designing his first reading machine and slowly putting it out on the market. Had you heard about that by the time you heard about the HP chip maker?
Jim Fruchterman: No. Matter of fact the first time I heard of Ray Kurzweil was when we were doing the market research for that company, which would have been in '81, '82.
When I was in college I didn't know that a reading machine existed. I went to Caltech and it's one of the top technical schools. There's always Nobel Prize winners walking around and relatively speaking you feel like pond scum. "How am I ever going to come up with an original idea? How am I ever going to do research? These guys are so brilliant and I'm just a dummy." Of course, you forget that among your peers there are other people who are going to be the generation in another ten or twenty years who are going to do amazing things. You don't think that way. You're just worried. Totally worried.
I was in an optics class, where we were learning about optical processing. Computers were still pretty primitive in those days. We were learning about optical pattern recognition. So how could you make a system that would recognize a pattern? And this being the late '70s, How can we use this to build a smart bomb? was the example that was being used in the class.
I remember the specific example was, you have a reconnaissance plane take a picture of an airfield, and then what you do is you take that picture and you process it and you put a camera in the nose of the bomb. Then the bomb is sort of looking out, after it's been dropped, until it finds the airfield through pattern recognition and it zooms in and blows up the runway.
So that class we had to come up with a project. And I'm sitting there going, "Gosh, there's got to be another application other than bombs." I had this idea, "You can make a reading machine for the blind with this. If you could actually recognize the characters and then get the words, then you could have a voice synthesizer speak it."
So I got really excited and I tore down to my professor. Because this was the only idea I had come up with and like, "Here it is. You can do this. You can do that." And he's like, "Some people worked on that technology...like the intelligence community—with pattern recognition and documents—and it's actually quite challenging. It's probably not practical to build a reading machine right at this point, but a good idea."
So I was a bit deflated. But then a few years later I had this meeting with these two guys, and we were talking about a chip. It had a little glass lid on the top of the chip, a light [from the page] fell on the chip and characters came out sort of on one of those leads off of the chip. A complete system. It was going to be this complete system.
We said a reading machine for the blind is an application of that. And then we started a commercial character recognition company, which later led to us building the reading machine.
Tony Candela: What was the name of that company?
Jim Fruchterman: It went through a couple of names. It started out as the Palantir Corporation. A palantir is a spherical gem from The Lord of the Rings. And, of course, the Arkenstone is a spherical gem from The Hobbit, by the same author. So there's a pattern there. But it turned out someone else had the name Palantir. It was a word-processor company. As time went on we got closer and closer to getting into their market. And they had gotten the name first. So we changed the name to Calera.
And Calera ended up becoming the number one Windows character-recognition software company. Was bought by Caere, which is a public company, which merged with Recognita which merged with Scansoft and now it's all Scansoft, which is the number one OCR company in the retail space. It still supplies OCR to Kurzweil and others.
Tony Candela: I recall the Calera boards needing to be purchased in the 1980s for OCR systems. So that was your company at that point, Calera?
Jim Fruchterman: Yeah, that was the company I co-founded.
Tony Candela: And you were building boards and selling boards?
Jim Fruchterman: We went through several cycles. Our dream for a single chip turned into a $40,000 scanning machine with four different boards. It was a very expensive product.
We built a prototype reading machine for the blind, based on that $40,000 scanner. And this is about the time that the Kurzweil product was probably $50,000 or $60,000 or $100,000. It was still very early on.
Of course, Kurzweil was our major competitor in the commercial OCR market. And I became the VP of Marketing about the time we decided to do the board product. It was already pretty clear that it was going to go from a $40,000 machine to a $6,000 card to a software program. It was just a question of time.
Because the processing power needed to do the character recognition was going from having the very heavy duty system to being a single card to being something eventually a PC was able to do on its own.
Tony Candela: I have a question. This might take some introspection so feel free to think about it.
When you were hearing about the smart bomb application for optical pattern recognition and jumped, in your mind, to something other than a bomb ("there's got to be something other than a bomb"), did you have an awareness of your own predilection toward peace, and peaceful applications? Did you have a recognition of it? It strikes me as quite evident. There must have been a predilection toward this. How do you size yourself up in this regard?
Jim Fruchterman: Well, I think I've changed a lot over the years and I would say that I was not a liberal as a student. I came from a staunchly Republican family.
So I think that it wasn't that I was anti-war. I thought that technology in the military was kind of cool. But probably, if I had my druthers, I would have done something more creative. I think it was about what success was in the community that I was in. Success was coming up with a great idea. It was inventing new science. It was figuring something out. It was getting a Nobel Prize. It was inventing the telephone, being an Edison.
So I think that my motivational structure and my background comes from that. I want to build important things. I want to solve important problems. I want to make an important contribution to society, not in a necessarily progressive case. That's what you do. You work on something important.
I'm going to go ahead and cover this issue because it comes out in almost every interview. Were there blind people that you were inspired by, that you wanted to help? And my answer is: No. I didn't know any blind people. I didn't know anything about blindness other than that it existed. I was probably vaguely aware of the Helen Keller story but probably never read any of the books on it. It was just part of cultural knowledge.
The light bulb went on. I have no idea why.
As time has gone on, I think that it has become clearer to me what my contribution should be. When I was in college I thought my contribution was going to be that I was going to become an astronaut or a professor. I was going to do science. I was going to go into space. Then, when I came to grad school and found this start-up rocket company that played to my strength in space, I jumped at it. When that fell apart, I kind of looked at it and said, "Gee, maybe the entrepreneurial life is for me because I'm actually quite good at getting things done." So I started a company. I liked that environment.
So I started this company. I was first the Finance Officer and then the VP of Marketing, for eight years. So I did the classic solitary entrepreneurial thing. And when I started Arkenstone as a non-profit to make reading machines for the blind, I went into it with the expectation that I would do it for a year and then I would hire an Executive Director, who would run my charity, and I would go back to work in high tech.
I actually did start another high tech company, right before I started Arkenstone. And I'm still an executive in that company, but as time went on, after spending five years there, I stepped down from being President, because I decided that the non-profit side was what I really wanted to do and the financial trade-off was acceptable to my family and my wife supported that and I decided I would focus more on the non-profit side.
Tony Candela: What is the name of the other company?
Jim Fruchterman: It's called RAF Technology: Ross and Fructerman, the two founders. And it's the leading high-end OCR company. So, for example, our OCR routes the mail for the U.S. Postal Service. We supply all the leading OEMs, except for one, that make mail sorting machines. We do their character recognition. We do check reading. We work for the U.S. Treasury. It's a successful 35-person company, now based in Washington state, because that's where Dave Ross wanted to move for family reasons. I said, "I'd rather do the non-profit." But I'm still involved there and trying to move toward being less [involved] and spend more time on the non-profit side.
Tony Candela: When you were in high school, the Vietnam War was rolling to a close. Did it affect you?
Jim Fruchterman: I'd say that I was in the post-Vietnam War generation. In other words, whereas the previous generation thought they might be drafted and all that...when I became 18 I didn't have to register for the Selective Service. And there was a two- or three-year period where they completely shut off the draft. So I always consider myself post-Vietnam. My high school had moved past drugs and back to beer. It was just a different environment. So I didn't have as much of that background.
Tony Candela: Were there any burning social issues that you think might have sensitized you to the need for working with less-advantaged groups or in the case of your human rights efforts working towards information dissemination so that wrongs would cease to be as prevalent?
Jim Fruchterman: It didn't come from an activist background or a social issue background. When I was a small kid, when I was nine, 1968, in Chicago, I was reading the newspaper and Time magazine and knowing how screwed up the U.S. was around the Vietnam War and civil rights issues and all those things. But they didn't touch me, cause I was in this white middle class, suburban neighborhood, where I didn't get to see people with disabilities or people who were minorities or people who were Jewish, or any of that kind of stuff.
I went to public schools through junior high and then I went to a Catholic high school. I was raised Irish Catholic. And I'd say that these values and interests were part of my family's legacy to me and part of what I got from the brothers who ran this particular [Catholic] school. For example, the head of the math department had the Caltech Beaver cheer on the wall of the Math Department. I'd never heard of Caltech. And so I memorized that chant. Cosign, Tangent, Hyperbolic Sign, 3.14159..."
So I thought I would apply to Caltech but I was seeing guys who were math and science people, who were actually quite bright. The guy who was the head of the Math Department was writing books on business decision-making theory, the new programming. And I was programming to support his books in high school.
I think one of the more interesting meetings that I had was sitting around a table with six or seven of the leaders of high-tech companies for the blind, and finding that we were all either Catholic or Jewish. And that we all felt like somewhere in our upbringing, the message had been given to us that if you have the opportunity to do something of service, you should. And I think that's where this has come from.
Tony Candela: That must have been an interesting meeting. When was that?
Jim Fruchterman: It wasn't actually that uncommon for us to get together in different settings. I don't remember which particular meeting it was. It was before we had the Industry Association meeting. It was before ATIA. I remember that Deane Blazie and Jim Halliday would organize wine tastings with Jackie from TSI back then, Jackie Wheeler.
So I got drawn into that orbit. But, Larry Israel and Deane and I (Jim Halliday was raised Mormon, but I think it's the same kind of service orientation), I think we all contributed. Sometimes you'd all end up in a bar, Closing the Gap or CSUN and the talk would turn to, "Why are you here?" It's a good thing to talk about at midnight, after the show. I always found that kind of an interesting tidbit.
Tony Candela: What was the first programming language that you learned?
Jim Fruchterman: BASIC.
Tony Candela: That's what everybody says. [Laughter.]
Jim Fruchterman: Well, if you were a high school kid and you were trying to learn to program... I remember trying to learn Assembler language. But no one would teach me. Assembler language is so arcane, especially back then, that unless you had a practitioner, you couldn't really get what you were doing. There weren't really good text books. But BASIC was the kind of thing where you could write games, you could write short business programs. Then I learned FORTRAN, and I've forgotten more languages than I know now.
Tony Candela: Many of the people who I've interviewed for this series, whose backgrounds are in engineering, have gone through the transition that you describe of becoming an entrepreneur. It seems a pattern in the last 40 or 50 years, probably if you're in the United States, if you're an engineer and you're developing a product or technology, you end up in business, somehow or other. It seemed for some to be a tough transition, for others it flowed more easily—but it was a transition for everybody.
Jim Fruchterman: It is. And engineers aren't trained to be managers. So that's a difficult transition, that doesn't always work. There are engineers who are pretty, either constitutionally or from an interest standpoint, are just not into being business people. Letting go of the technology is always a challenge and that's something that I try not to completely do.
It's probably been a couple of years since I've written some software. But as time goes on, it's more and more in the interest of my engineering team to keep me from writing software and having me work more on raising money and doing things the general manager is supposed to do.
Tony Candela: Picking up the latest new idea.
Jim Fruchterman: Which is the most fun thing to do.
Tony Candela: Probably drives them crazy because they're still working on the last three ideas and you're coming in with the forth one.
Jim Fruchterman: I think the ratio is even bigger than that one. A lot of what my staff [does] is act as a filter and a damper. After six months, if the filters and the dampers haven't suppressed the idea, it probably deserves to live.
Tony Candela: Let's talk about Arkenstone. I do have an appreciation for J.R.R. Tolkien, as do you. Arkenstone. Would you say it was unique as a company, the way you set it up?
Jim Fruchterman: At the time, I thought it was unique. And especially after selling Arkenstone and doing a lot more outreach, actually throughout the entire world, I had the opportunity to meet social leaders, entrepreneurs, technology people, I realize that there are other people who are on parallel tracks but we weren't aware of each other.
What was particularly unusual was that Arkenstone was a social venture with a strong technology component. So about the same time I was starting Arkenstone there were people running social service organizations that were both business oriented and having a social mission. But the technology made Arkenstone unique.
Tony Candela: Who were some of these other organizations?
Jim Fruchterman: Oh, in '99 I met a guy named Jed Emerson in San Francisco, who had a charity that was helping the homeless. First it was like the Roberts Homeless Development Fund, then it became the Enterprise Development Fund.
Essentially what they do is they invest in non-profits that are running businesses that employ homeless people. And so they run Ben & Jerry shops in the city. They run concessions at the ball park. They run silk screening shops. They run maintenance services for people with developmental disabilities or people who have just gotten out of prison. It's that whole spectrum.
They, as an agency, decided that rather than giving money for soup kitchens and beds, they would give money to organizations that would develop jobs for these people who are employable, and turn them into employable people so that they can become lower middle class people, two or three years down the road. They were quite successful. When I met them, I told them how weird I felt in Silicon Valley being a non-profit oriented, high-tech company guy. They said, "There are people in the social services sector who have been running businesses."
Of course, people in the disability field are very familiar with sheltered workshops, right? Which were social enterprises but had much less of a consumer empowerment orientation. I think that what made us unusual was that we were running a business. Blind people were our customers. If we did a great job, they would buy more and tell their friends about us. If we did a lousy job, they wouldn't. So basically our customer was in charge. I think that's one of the reasons why Arkenstone caught fire. There's a number of reasons why we caught fire, but we did almost from the start. And one of them was we appealed directly to the blind consumer, rather than selling over their heads, which was the habit of almost all the other organizations that were regular businesses at the time.
Plus, we would hire blind people. We would appoint them as field sales people. Some of the other firms, in the field, were refusing to hire blind people in field services jobs. Talk about mixed message. "We want to give you tools to empower you, but you're not actually qualified to help us." Wrong!
Tony Candela: What year would you say Arkenstone or what became Arkenstone, had its beginning?
Jim Fruchterman: Well, the idea for a reading machine for the blind happened in the late '70s; starting the OCR company with the idea that the blind might benefit from it happened in 1981, '82; building a prototype reading machine for the blind happened in '86 or '87, which at the time would have cost about $50,000 bucks. It was an early PC, a Votrax synthesizer, and our $40,000 reading scanner. Bill Schweggler, who was our VP of Engineering at Arkenstone for many years, was a Product Manager for me on the card product. And Bill had built a reading machine for the blind out of our scanner. We talked to our investors about it and they had said, "How big is the market?" And we said, "Well we think Xerox is selling about a million dollars a year." Something like that. And they said, "Well we have invested $25 million dollars here and we're not sure we see the connection between our $25 million investment and a one million dollar market. And that was the defining moment. I couldn't get mad at them (and this is my capitalistic conservative pattern). These are venture capitalists. People investing pension fund moneys and university endowments, and their job is to take risks and deliver good returns. Other than that, by investing in the businesses they're probably creating jobs. It has social value that way. But they're not a social program. So they could not justify going after a project that had such a small market. That was the beginning of the Arkenstone concept, which is: how do we address the problem that many great social applications of technology are not great business opportunities?
So Bill Schweggler and Dave Ross and I kind of talked about this problem. We called it the Good Technology Problem. How do you deliver good technology? And, of course, the link between goodtTechnology and Benetech, which stands for beneficial technology—not a great leap to make. So we kind of nicknamed it "good-tech". We kind of put our heads down and said, look, a $50,000 machine is not that practical. But a $6,000 card, which is our next generation product, should be more practical for a reading machine.
Dave was the head of engineering, I did the marketing, and Bill was one of the main product managers, and we agreed that we would look for essentially dual-use technologies. Instead of the traditional dual-use which is commercial and military, we were going to use dual -use in terms of commercial and blind. How could the same feature serve our audience?
So a classic example, which I remember from this, is our scanner systems didn't do column analysis. So you would scan a page and if it was multiple columns, the first line of the first column and the first line of the second column would be on the same line. And that made it not very usable for a reading machine where you wanted to read in logical reading sequence. So we said, we've got to have a de-columnization feature. We built in to the Calera card product features we thought would make a better reading machine for the blind. And since we had the two founders who were running marketing and engineering, which kind of made the decisions, we had staff who were all sympathetic to this. The Calera TrueScan card, which the product was call—TrueScan was made knowing that a reading machine for the blind was one of the applications that we were going to design it for.
So when the TrueScan was started, these are details, in essence, about the time TrueScan came out, we changed CEOs. And we hired the guy who had been the CEO or the General Manager of the Xerox division. He came on board and I said, "You know, I want to do something new. One of the things that I want to do is a reading machine for the blind." He said, "I really like that project, but I understand that the investors here aren't going to really want to do it. But if you can go off and do it independently, that might be fine."
Since I had this conversation as I was quitting, he was very scared that I might compete against him. He'd only been CEO for a couple of months. So in exchange for a non-compete [I made] an agreement not to hire a lot of people. I had an exception for Dave Ross. I had to wait a year and then I hired Bill Schweggler. But [I] basically said, "I won't compete with you. I won't hire all these people. You'll pay me some severance and I'll start a non-profit that will make reading machines based on your product."
Because they decided not to go into the market they agreed to give us a really, really deep discount. I also went to HP, which made the scanner and they gave me a deep discount. I eventually went to DEC which made DECtalk, and they gave me the ability to make that card under license to them, without paying a lot of money. And that's what made the Arkenstone Reader practical as a business.
Maybe I will just go back for a second. When we were kicking around doing a reading machine for the blind, we were hearing from different people who were interested in this. And the one who I remember meeting was Joachim Frank, who is a blind adaptive technology business guy from Germany, who had invented quite a number of interesting products.
And Joachim showed up and talked to our sales staff. At this time I probably wasn't interacting with customers like this, but I remember Joachim coming and talking about this. The sort of thing that was in the back of our minds was that there was this need. And when I decided to quit, I negotiated my severance deal. They gave me, I think, six months of pay, so I had some window to do stuff.
And so what I did was I mentioned I negotiated a deal with HP to get their scanners for less. And what was really critical is that both HP and my own company, Calera, gave us credit. Because we didn't have any money, so what we did is we said, "We'll pay you guys in 60 days and we'll tell people we can't offer them credit." And that's what made it possible to grow Arkenstone from zero to $5,000,000 a year in three years, without having any investors or capital. It was essentially Calera and HP lent us the money in the form of not having to pay our bills for two months. And it worked.
Also the fact that I had this severance deal with Calera meant that I didn't have to be the first hire. I was the third hire of Arkenstone, because I was working for free, because I had the severance deal that I could stretch. And I hired a couple of other people.
So what I did was to initiate the deal with Calera, and then I went out to talk to more blind people. My original idea was that we were probably going to find volunteer engineers around the country who were going to help us supply reading machines. I wasn't 100% sure that the reading machine was really needed and so I went around and I ended up talking to a lot of leaders in the field. And probably the first person I ended up talking to is a guy named Mickey Quenzer. Mickey was working for HP. He was blind. Pretty technically oriented and lived in this area.
I went to Mickey and gave him a demonstration of what we could do and he became our first user, and basically gave me the feedback: "Yes, this is useful. Yes, I can use this." And pretty quickly, Mickey was either our first or our second employee. He knew the field. He knew the people.
And he introduced me to Noel Runyan, who had been a pioneer on the VersaBraille. And Noel ended up writing a different software program for the Arkenstone reader called EasyScan. And within a year, we had done a deal with Noel for licensing EasyScan with all Arkenstone products. Because it was clearly the sort of thing where you would hit a spacebar and it would scan the page and read aloud. It was a really easy, as it was named, interface and it was really what people were demanding.
I had source code to the Calera product, but I essentially adapted their standard menu-based system and it was kind of cumbersome. So Noel had come up with that solution.
I also talked to people about my idea about was this needed? And the feedback I got, loud and clear, was yes, it's needed. In essence, this was when the Kurzweil Reading Edge had just been announced and it was $10-12,000 bucks. So almost no one could afford it. Everyone wanted it. And I was coming in and saying, "Thanks to these discounts I have gotten, I can bring a scanner and an OCR card to you for less than $5,000.
The difference between under $5,000 and over $10,000 is amazing. It was amazing at the time. It was instead of a capital item for a company's budget, it was often within the ability of a manager to sign for $5,000 or less. Families that wouldn't, couldn't spend that kind of money, suddenly it was more like a car. Would we invest in something like this for one of our family members?
Plus, I think our key breakthrough was that we built the reading machine based on the personal computer. We hitched our wagon to that and that was a successful move, in the sense that all we had to do was stand back and things would get cheaper and cheaper, year after year. We looked like heroes but we were just riding on the back of the tech industry's ability to drive costs down.
So the feedback came, "Yes, we want reading machines. Reading machines are really important." And the second thing was, people talked to us about how to do the distribution. They came back and said, "Instead of doing volunteers you should sign up dealers—just don't sign up any dealer. There are a lot of visually impaired people around who could be great dealers for you, who aren't getting the kind of opportunities they should, because certain firms in the field won't hire blind people in the field. Why don't you make them independent dealers and have them help you build your business."
That's one of the reasons why I think we caught fire is that the majority of our dealers, and this was probably true the entire time, but it was really especially true in the beginning, were firms where the principle was a blind person, or it was a couple where one of the people was blind, or something like that.
And the Telesensory-VTEK merger had just happened. One of the things that they did is they cut about half of their dealers. So you had these people who had been selling either Optacons or CCTVs who were at loose ends. They didn't know how they were going to build their business. So they latched on to our product and quite a number of them built very successful businesses that were basically anchored by selling PCs with screen readers and our cards.
Tony Candela: Who were some of the dealers that you brought on back in those days?
Jim Fruchterman: There were a whole bunch of them. I know I'll [omit some], but ones who are in my mind are people like Noel Runyan, Desi Page in Ohio, Jim Meisner in Colorado, Greg Meis in Kansas City, Peter Duran in Boston—who's a real character—and Ted Henter became one of our early dealers, before he decided to focus solely on screen readers. I don't know. I'm leaving out half of them. It was just this entrepreneurial upsurge that we helped fuel with a product that everyone wanted, that was more affordable and that Kurzweil had to match.
The other thing was that our distribution strategy was fundamentally different. And people said, "You guys were so smart to know that it was time to go to a dealer model." The fact is that the computer industry had made that move a couple of years earlier and I could just see that when a product goes from costing over $10,000, or even over $5,000, you can actually afford to sell it door to door or by going to people. But once you start pushing the price below $5,000—and you're going to push the price down every single year—you can't pay salaried people to go out and call on individuals. You need dealers who are actually going to do that for you. And we have developed that independent dealer channel.
The other thing is we went international really quickly. The moment I made a reading machine in English, there were blind people in 25 countries, easily, who wanted one. So one of the greatest experiences of starting Arkenstone was being able to go to different countries and not be treated like an American, which sometimes is controversial.
