Listen to Fruchterman Interview, Part 4

Jim Fruchterman (continued): Richard Chandler was still around, trying to make a deal and he came up to me and he said, "Tell me what you really want to do."

That's a good enough opening for me. I'll tell anyone what I really want to do. I said, "I have all these ideas for the projects I could be doing. This Bookshare concept, I think by this time was circulating. I want to do a lot of human rights work. I think there's a lot more projects in the disability field that we could be doing.

So he said, "Can we structure this so that you can go off and do these new things and I can buy Arkenstone, which I want to basically add to Blazie and Henter and make a stronger company?"

And so I said, "Yeah, but I don't want to come work for you. You're the founder." You get acquired but Deane and ted had to sign some part of their life away, these guys.

And so he agreed to let me and my engineering team stay in the non-profit. That we would essentially rent back our technical team for awhile, Cause this was during the peak of the dot com bubble, so it was hard to find engineers. So he wanted some time to be able to develop an engineering team.

And that I and the Engineering team would stay with the non-profit and they would take over the reading machine business. And that they would give us a few million dollars. And they would pay us royalties and give us some stock. We didn't take much of the stock, which is a good thing cause obviously the bubble popped and the stock was less than it was then.

So I talked to my board about it and we talked about, since we're non-profit we have to engage the Attorney General's office in a charitable asset sale like this.

But the story was, where you have one Arkenstone that's been a stable place, you'll have a new company that will have more resources, that will have ten sales people instead of one and a half, so they'll sell more of the systems. Prices will stay the same or go down. And with the money that we get from the sale of this, we'll create two or three new Arkenstones.

So the Attorney General's Office approved it. We did the sale and then we plowed the money mainly into Bookshare but also looking at the human rights issues and started raising money. We spent most of the first year doing this transitional engineering and then as the dot com bubble eased, they were able to find their own engineers to take over that.

So we probably did one more version of each of their major three products. We still consult with them now but it's at a much, much lower level. There's something breaking and something no one here had ever written or fiddled with. Can we get the guy who wrote it to fix this bug or tell us what's going on?

Plus, we also do some of their very high-end tech support, where their tech support people can't solve a problem. Especially in the learning disability field. Cause Freedom Scientific's tech support group is mainly visually impaired so they're not on top of it, so we do a little bit of backup tech support when they can't fix a problem.

Tony Candela: Did any of Arkenstone remain behind, in any form?

Jim Fruchterman: Yeah. It kind of split into several pieces. The engineering team and I stayed with the non-profit. And that's now Benetech. We changed the name to Benetech, cause Freedom wanted to buy the Arkenstone name as well and they wouldn't do the deal without buying the name.

That's one of the reasons why our projects had separate names than our organizations, so that if we ever hit this again, we won't have to sell our organization name.

They offered jobs to everybody, but I'd say a significant slice of our company, especially the manufacturing team, wasn't interested in moving to Florida. So they all took the severance package that was sweetened.

Then another chunk, the sales and marketing people, who were also invited to Florida, said that they wouldn't move and what they ended up doing was staying here, in the Bay area, and becoming the dyslexia group for Freedom Scientific. And they have been quite successful and actually we sublet space to them so we're still located in the same office space. And these are a lot of former Arkenstone employees.

In the last four years, probably half those people have turned over or new jobs created. Our old Chief Operating Officer, our old Product Manager...Rene Clark, a long history in Telesensory, still working away on WYNN.

Tony Candela: Officially, they're Freedom Scientific employees but they're still part of the big family, as it were.

Jim Fruchterman: That's right. So when we had a burrito day, earlier this week, yesterday, actually, we all had burritos together and that sort of thing.

But, as far as business operations, as time has gone on they've become quite separate. There are things that I wish we could get them to do with Bookshare, beyond what they're doing. But I don't have the lever. They'll do what makes sense to them.

But it's still a good relationship and has kept us linked to Freedom Scientific, even when they've gone through some difficulties in their relationship with us. The fact that we're housing Freedom Scientific's team has kept us on pretty good terms.

Tony Candela: Well Deane Blazie eventually had to sever connections completely and now he's watched Freedom Scientific effectively discontinue his product line. And Ted Henter went away and came back as part of their board and his product line lives on.

Do you watch your old product line and what they're doing with it, with any degree of either trepidation or nostalgia or happiness?

Jim Fruchterman: Well, I'm not sure that Deane's product lines went away. They got replaced by newer generations of those products, and so.

Tony Candela: I'll just say for the tape that I may be mistakenly thinking that the Braille 'n Speak and Braille Lite series is getting phased out.

Jim Fruchterman: Oh it is getting phased out but it's being replaced by a next generation of those products which Deane had to develop, if he had stayed independent, anyway.

It was time to refresh them.

But I think for someone who's spent 10+ years running a certain enterprise, it's not always easy to let go of it. There's probably always that abiding feeling that, "I could be doing better than they are." It may be mistaken. But you have that proprietary feeling, even though, in my case, I obviously wasn't an owner of Arkenstone, in the classic sense. Cause I ran a non-profit so I don't have that ownership interest. But I certainly felt like an owner in every other way.

But for me, after 10+ years, I really felt like it was time for me to do something different. In terms of the "how successful has Freedom Scientific been with the products?"

Prices haven't gone up and they sell a lot more than I did. For all the reasons that we expected.

So, has the product line developed in directions that are as good as I might have hoped? I don't know. I actually after a reasonably short period of time stopped worrying about it and realizing that, you know, it's part of letting go. And I had made a decision that I wanted to go through this transition. And I think it's worked well, in terms of the big picture.

I'm working on new ways of solving these problems and I actually think that that's a better thing for me to be working on. Coming up with new solutions than trying to grow a stable product line. Which is what the reading machine's product lines have become. It's hard to come up with a breakthrough.

And Bookshare is a way of solving the same problem, but differently, using the Internet and networking to deliver books and scanned materials more effectively. There's plenty of room to improve that.

Tony Candela: Other than the blown up rocket and the Strider product, do you have any disappointments, things that you really wanted to get off the drawing board that just never got off the drawing board?

Jim Fruchterman: Absolutely. People say, "How can you have started two successful for-profit companies and a successful non-profit?" My answer is, "I actually tried to start seven for-profit companies."

That's one of the great things about Silicon Valley is the fact that my first rocket startup didn't get off the ground is something that no one holds against me. I tried starting that. I tried starting a voice recognition company, at one point. I tried starting something in the Nanotechnology field.

Tony Candela: What did you have in mind?

Jim Fruchterman: It was micro pneumatics, which was how you could control fluid and gases and very small things. So it had military applications, it had medical applications, like precision dosing. And we didn't know of it. It was a long time ago and we didn't know it was nanotechnology, when we tried to start it. But it's now what is called nanotech.

And there's still other projects that I tried to start. I think a lot of being a good entrepreneur is knowing when to abandon certain things. And sometimes they're not abandoned forever. I mean, the GPS project is a project that I was completely in love with and had to actually put on the back burner because it was going to kill Arkenstone and it wasn't going to deliver the benefits that I wanted it to deliver to the audience.

And I had actually hopped Strider over WYNN. WYNN was a product we were developing for the LD audience. And WYNN is really a successful product. There are ten times as many LD people as blind people. And WYNN is a very successful product and is helping make, helping keep that product line very successful. So it was the wrong choice, but they happen to be choices that weren't so wrong that we couldn't recover from. Hopefully we learn as we go along.

Tony Candela: You are 45 years old and you sound like you're going strong still. Do you have a 10-year plan?

Jim Fruchterman: Yeah. My 10-year plan is to revolutionize what the technology community does for global society. I want to see technical solutions in the hands of the poorest of the poor, the most disadvantaged. I want to see Information Access as a human right, rather than an accident of what chooses to be bestowed upon people or for people who have enough money, what they can afford.

And I think the timing is really good. We got up from the dot com bust. There are many people who are still very wealthy in the technology community. Either people were ridiculously wealthy and are merely wealthy now or people who have actually maintained their wealth relative to this period. And their social awareness is growing.

It's not something where I can say, "Oh yeah. Next month one of these people is going to give me $100,000,000 to go off and execute my ten-year plan. But the idea that over ten years that I might find that kind of level of resources and change the world for millions of people, is seeming more real today than it ever has.

Tony Candela: And you're raising a family. You mentioned your first is heading off to college. What are your children's names?

Jim Fruchterman: Jimmy, Andy and Kate.

Tony Candela: And how long have you and Virginia been married?

Jim Fruchterman: Twenty years this next month.

Tony Candela: Oh, congratulations.

Jim Fruchterman: And you know, the choice to do Arkenstone, I look back, with kids who are 15 years younger, small children. My youngest was about 14 years old, going to my wife and saying, "I'm going to leave high tech. I'm going to start a charity. We're never going to get rich off of it. If it's okay, it sort of boggles my mind that she said, "Yes."

I get a lot of support from my wife, and my kids, for making that choice. What's really important is not becoming a billionaire. I've done well enough to send my kids to college. Then I'll be able to retire. I'm not going to be able to buy a yacht or an airplane, but in the overall scheme of things, I get to travel the world, I get to meet leaders of countries and corporations and the major non-profit agencies. Because what I've chosen to do, no one else happens to be doing right now, or very few people are doing. And everyone now realizes the world needs it.

And so my job is to catalyze a hundred Arkenstones or Benetechs. And that was actually one of the most seminal discussions I had was with my first philanthropist.

See Arkenstone never raised any money. We had one supporter that gave us cash, and that was IBM. IBM did two or three things. IBM helped fund WYNN. IBM helped fund the translation of our reading machine products into Spanish and Portuguese. But almost everything else we did was either In-kind support, like chips and scanners from Intel or concessionary license terms from Sony or whatever. HP, all those guys.

But I went to this philanthropist and said, "I'm selling Arkenstone. I'm going to raise a million dollars and I'm going to start a second Arkenstone." And his answer to me was, "If you start a second Arkenstone, I'll consider you a failure."

And I was taken aback. I said, "Wait just a second. Arkenstone's really great and if I could do it again, that would be really great." "No, no, no. Your job is different, Jim. You did Arkenstone for ten years. What your job now is not to do a second Arkenstone, but to see that five or ten or twenty of them get started. And that means your role has to shift from being the General Manager of Arkastone as a social enterprise to where you are finding the money and finding the people to do what you did ten years ago."

And it's not been an easy transition for me to take a step back from running Bookshare or running Mardis or running the Land Mine Detector project. But, as time has gone on, what that philanthropist has said to me has become really clear. That what my job is, is I'm a cheerleader, a recruiter, a leader, but probably less of a hands on manager, less of a developer. There's a new generation of developers that can program in JAVA and C++. My skills petered out a little bit after C.

So it's time to move to a different level and because of the success of Arkenstone, because of the credibility that it gave me, I've gotten just this rash of honors, the last few years. Honors I didn't need when we were running Arkenstone. Our audience knew who we were. We didn't need to raise money. I think we had a great reputation in our field. And we were able to be successful without pounding our drum in the wider stage.

But if I'm going to change the way somebody thinks about the globe, about applications of technology, other than the ones that make someone $50 or $100 million a year, I have to have more attention and so, building on the base that we've had, been able to get to where I go to World Economic Forums and get to hang out with world leaders, and all that sort of stuff. Where I get to meet the heads of high tech companies on a regular basis.

Because, I'm what's it in the [benevolent] applications of technology and people are acknowledging that that's important now.

Tony Candela: This is the point where you are allowed to name drop, if you want. Who are some of the people who you've been most thrilled to meet?

Jim Fruchterman: Oh, wow. Well the first time I went to the World Economic Forum, the coolest thing I got to do was spend an hour, pretty much one on one, with the President of Caltech, David Baltimore, whose a Nobel Prize winner. Of course, Caltech is my alma mater.

And to talk to someone that brilliant about how I want to change the world and get fed back, all the things that he knows about what is going on. Of course, he's in a similar role to the role that I'm taking on. The president of a major research university as a fundraiser. So for us, this was the most fun that we can have. That's one of the reasons why instead of just saying "Hi," and talking for ten minutes, we actually got into it and had a great conversation.

But you know, I got to meet Carly Fiorina, the head of Hewlett Packard. She was very impressive. The head of Phillips Electronics. I got to meet the Google guys. I could go on name dropping indefinitely, but I got to meet some incredible people in the social sector. So I get to meet the head of Human Right Watch. Or I get to meet other world-renowned human rights activists.

And when I go into these situations, it's like I'm wearing the halo of Silicon Valley over my head. "Someone from Silicon Valley actually cares? I want to talk to them." I got to meet the Archbishop of South Africa and talk about HIV/AIDS things. I get to meet the leaders, the social entrepreneurs that are changing the way we're dealing with all these different kinds of social needs.

So I basically get to spend this time with these leaders, talking about what I can do and more and more I'm becoming a connection machine. Someone says, "The world really needs this." And I can say, "Oh I know the person who does that, or I know a few people," and so some of these people are so impressive. There's a guy who revolutionized cataract operations in India, by making a non-profit maker of the inter-ocular implants that you put in when you remove someone's cataract.

Here's a guy who moved the price of that plastic lens from $200 bucks to $5. And that meant that hundreds of thousands of people in the world would get cataract operations and have their sight restored. Well he's now building hearing aids. And it turns out that a hearing aid costs $2,000 bucks in the U.S., more or less. They cost $40,00 to make, so he's making them for $40 bucks in India and he'll sell them in India for somewhere between $10 bucks and $100 bucks, depending on your ability to pay. They'll sell in the U.S. for $400 bucks, and a lot more people are going to get that.

There's another person who started a non-profit pharma company, the exact equivalent of what Benetech does in information technology. But she's taking drugs that are dropped by Western pharma companies because they don't make enough money. And taking them through and creating them and the fact that they have saved a few thousand lives in Europe, but they happen to be the poorest of the poor. So they're a bad market isn't a bar to them.

So I'm actually pretty inspired by that. I see a lot of interest in this from political leaders, corporate leaders, entrepreneurs, innovators, the social sector and I can't imagine anything more fun.

Tony Candela: One final question for you. You've touched on it actually, with what you just finished saying. Your overall opinion of the technology industry, we've heard in the last couple of years about what happens when businesses go bad, when people start thinking more about making money than anything else.

The blindness technology industry, do you have an opinion about how it's going in general?

Jim Fruchterman: I come to the blindness technology business as an engineer and a financial officer for many years. And I have a pretty good appreciation of the difficulty of running a successful business in a sector that's not the biggest market that you can imagine.

So I have a lot of sympathy for the challenge that leaders of companies that are trying to grow in our field have, making the kind of growth case that investors would really love to see. The E-Bay, Google kind of growth case.

And it's not going to happen in the vision impairment field. What has happened, over the last 20 years, is we've gone from a handful of let's call them "mom and pop-ish" kind of businesses. Businesses that are characterized by a single entrepreneur, usually with a strong connection to visual impairment, either by being disabled themselves or having someone they care about, but basically been driven by people and personalities in early industry.

Where the industry is now run more by business people. Business people who are interested in the social aspect of this, who feel good about the industry that they've chosen to work on, who have to somewhere in their heart of hearts, acknowledge that they could be making a lot more money somewhere else. But they try to grow and they've taken loans and they've taken venture capital and so they have an obligation to their investors and to their customers that they're trying to simultaneously satisfy. And it's not easy.

And so it would be so simple for me to say, "Oh, those companies have lost their way and they don't know what they're doing." And the fact is that there are a lot of great people doing a lot of great things, solving important technical problems and making a huge difference in the lives of people with visual impairment.

I know that there is going to be revolutions in that field. I've identified one that I want to help along, which is the cell phone as the unit of adaptive technology rather than the PC. The role that I think that I and Benetech can play is trying to look a little further out, trying to take a somewhat bigger risk, trying to go after things that other people can't do. Because as a non-profit, our goal is not to replicate what other people are able to do. It's to change the equation in some fundamental way.

And so, people ask me, "Jim, why don't you write a screen reader and compete with Henter-Joyce?' which I am able to do. I'm not prevented from doing that. And so far, my answer has been, "Well, what if I built a screen reader, which will cost me a couple of million dollars to build, and it was 10% better than JAWS? Was that a good way to use a couple of years and a couple of million dollars? I don't think so."

So if I can find a way to bring out a screen reader that costs $25.00 and quadruples the number of blind people who are using PCs, now that gets exciting. If I can take a standard cell phone that costs $10 bucks, and add a piece of software that I'll charge $5.00 to the really poor, and if they copy it illegally, well it breaks my heart, that's something that Benetech could be doing.

So that's my vision, is that I prize good relationships with the other firms in this field. I try to influence them to go in directions that I think are good for the consumers, that I think are good for the projects that I'm working on. And right now, clearly, the thing I need to be doing with Bookshare is working with just about everybody in our field. To lower the barrier to accessing books, and now magazines and newspapers.

Tony Candela: Well I think the head of Benetech is a bon homme and I want to thank you very much for this interview and for reinvigorating hope in many of us that you can do good things in business, make a decent living and not take it out of the hides of the average person that actually gives back to them. Thank you very much.

Jim Fruchterman: Delighted to do this, Tony. Thanks for making the effort.