Tag Archives: Tennessee

Airbnb Raises $112 Million in Series B Funding

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Airbnb, a website that helps users find short-term accommodations in the living rooms and recreation rooms of cities around the world, announced today that it has raised $112 million in second round funding from Andreessen Horowitz, DST Global, and General Catalyst on a valuation of $1 billion. The company’s previous round of funding totaled $7.8 million. READ MORE »

Amazon Shutters CA Affiliate Program in Response to New Tax Laws

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On Wednesday, California governor Jerry Brown signed a law that requires online retailers to collect sales tax from CA residents even if the companies have no brick-and-mortar presence in the state.  It’s another example of the so-called “Amazon Tax,” which circumvents the brick-and-mortar statute of federal law by declaring CA-based affiliates–say, a personal blog linking out to Amazon or Drugstore.com products for a small slice of any sale action–as a physical presence. READ MORE »

Private Jets: The Party Bus of the Sky

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As the prices for commercial flights rise higher and higher and the leg room and baggage space of airlines seem to get smaller and smaller, traveling has become an increasing headache for professional or pleasure travelers alike. Unless you are a billionaire or a perhaps a nine-figure millionaire, using a private jet has probably never been a realistic alternative to the crowds, congestion and crying babies. But thanks to new online service Social Flights, it is now. READ MORE »

Five Ways Pocket Video Betters Business

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Southern California-based Aquatic Fitness Concepts often finds potential customers scratching their heads and wondering just how the company fits its 16-foot by 8-foot swim spas into backyards. “It’s surprisingly easy using a crane, but everyone is terrified of and fascinated by the process,’ explains Paul Roberts of West Coast Marketing, whose company handles marketing for Aquatic Fitness Concepts. “So, John Trzcinka, the owner, has started using his Flip camera to film these crane installations. It’s quite something to see.” The video is posted on Aquatic Fitness Concepts’ website, and potential clients are reassured — all for the cost of an inexpensive, hand-held video camcorder. Small businesses are leveraging video The proliferation of video across the Internet includes a multitude of business applications. Nimble, pocket-sized video cameras such as the Flip and the Kodak Zi line, coupled with consumer expectations about online video quality, are changing the ability of small businesses to compete with far larger companies, says author and analyst Scott Steinberg, who publishes the gadget/tech website DigitalTrends.com. “This is a potential game-changer,’ says Steinberg. “It used to be that you had to have thousands of dollars in video equipment to shoot something that looked semi-professional. All you need now is a good idea, a strong opinion and some inexpensive hardware.” Users say these factors explain the pocket video cameras’ appeal: • cost• portability• ease of use• ease of uploading and editing video Since the cameras are easier to use, business owners are more likely to exercise a little creativity and shoot video more often. The drawbacks are relatively minor and include lighting, occasional sound quality issues (the Flip lacks a jack for an external microphone) and the lack of a professional producer’s eye. The tradeoffs are well worth it in the age of online video says Andon Carling of PilmerPR, a Utah firm that specializes in public relations for small- to medium-sized businesses. “Some experts have calculated that TV-quality video can cost $2,000 a minute. The same minute with a Flip camera would cost a small fraction of the price,’ Carling says. “Furthermore, online viewers may not trust a high-quality, production-studio film as much as they would a grass-roots ‘man on the street’ production. From a public relations standpoint, a shaky picture adds a level of sincerity.” Five ways pocket video improves business Here are five easy ways you can put a pocket-sized video camera and that man-on-the-street sincerity to work: 1. Use video to raise your profile. Use a Flip to create simple instructional videos or to establish your expertise in your field, advises Steinberg. Video also raises your SEO profile. For less than $300 a month, Fliqz’ SearchSuccess offers a platform to manage video on your site and a suite of tools for submission to search engines, then tracking. Jason McAninch, who owns J-TEK, a small computer consulting firm in a Kansas City, Kan., suburb, says his videos are enabling him to brand his business. He has begun posting computer tips and tricks in a series of videos he calls TEK Talk. “I’ve had some clients call and say that it looks like a professional TV series,’ he says. “I can see this definitely being a powerful business tool for anyone.” 2. Create authentic testimonials. Mikey Moran, founder and CEO of Thai food brand Curry Simple, uses his Flip to ask customers what they think of his products, which include sauces made in Thailand and sold in the United States in stores such as Whole Foods. “The Flip works great for testimonials because of its small size,’ he says. “The smaller video cameras seem to be less intimidating for customers. People tend to freeze up with larger cameras but not with the cute, hand-sized Flip.” Moran has abandoned his two “prosumer” video cameras that cost $2,000 each. His Flip Mino HD was $200. 3. Provide quick feedback. Video can offer you feedback on how a client is using a product or a problem a client has in the field. It also allows you a way to demonstrate a point to a client. Maine-based pet behavior consultant George Quinlan uses his Flip Mino to record the behavior of both dogs and their owners. 4. Go behind the scenes. Create more interest in your business by telling your story. Show how a product is made or document the progress of a project. Don’t feel comfortable producing the video from start to finish? Companies such as Pixability will send you a Flip, then take your video and edit and package it with music, titles and logo. 5. Enhance news releases. It’s better to show than tell when it comes to new products, events or developments. Pyxl, a Knoxville, Tenn., marketing firm, mails Flip cameras to its clients when they have news to share. The clients shoot brief videos, return the cameras and Pyxl handles the videos, embedding them in online versions of news releases and social media releases. “You don’t need a production studio, you don’t need a crew, you don’t need a catering tray,’ says Steinberg. “The inexpensive budget digital cameras are a godsend when it comes to grassroots and viral marketing.”

Five Ways Pocket Video Betters Business

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Southern California-based Aquatic Fitness Concepts often finds potential customers scratching their heads and wondering just how the company fits its 16-foot by 8-foot swim spas into backyards. “It’s surprisingly easy using a crane, but everyone is terrified of and fascinated by the process,’ explains Paul Roberts of West Coast Marketing, whose company handles marketing for Aquatic Fitness Concepts. “So, John Trzcinka, the owner, has started using his Flip camera to film these crane installations. It’s quite something to see.” The video is posted on Aquatic Fitness Concepts’ website, and potential clients are reassured — all for the cost of an inexpensive, hand-held video camcorder. Small businesses are leveraging video The proliferation of video across the Internet includes a multitude of business applications. Nimble, pocket-sized video cameras such as the Flip and the Kodak Zi line, coupled with consumer expectations about online video quality, are changing the ability of small businesses to compete with far larger companies, says author and analyst Scott Steinberg, who publishes the gadget/tech website DigitalTrends.com. “This is a potential game-changer,’ says Steinberg. “It used to be that you had to have thousands of dollars in video equipment to shoot something that looked semi-professional. All you need now is a good idea, a strong opinion and some inexpensive hardware.” Users say these factors explain the pocket video cameras’ appeal: • cost• portability• ease of use• ease of uploading and editing video Since the cameras are easier to use, business owners are more likely to exercise a little creativity and shoot video more often. The drawbacks are relatively minor and include lighting, occasional sound quality issues (the Flip lacks a jack for an external microphone) and the lack of a professional producer’s eye. The tradeoffs are well worth it in the age of online video says Andon Carling of PilmerPR, a Utah firm that specializes in public relations for small- to medium-sized businesses. “Some experts have calculated that TV-quality video can cost $2,000 a minute. The same minute with a Flip camera would cost a small fraction of the price,’ Carling says. “Furthermore, online viewers may not trust a high-quality, production-studio film as much as they would a grass-roots ‘man on the street’ production. From a public relations standpoint, a shaky picture adds a level of sincerity.” Five ways pocket video improves business Here are five easy ways you can put a pocket-sized video camera and that man-on-the-street sincerity to work: 1. Use video to raise your profile. Use a Flip to create simple instructional videos or to establish your expertise in your field, advises Steinberg. Video also raises your SEO profile. For less than $300 a month, Fliqz’ SearchSuccess offers a platform to manage video on your site and a suite of tools for submission to search engines, then tracking. Jason McAninch, who owns J-TEK, a small computer consulting firm in a Kansas City, Kan., suburb, says his videos are enabling him to brand his business. He has begun posting computer tips and tricks in a series of videos he calls TEK Talk. “I’ve had some clients call and say that it looks like a professional TV series,’ he says. “I can see this definitely being a powerful business tool for anyone.” 2. Create authentic testimonials. Mikey Moran, founder and CEO of Thai food brand Curry Simple, uses his Flip to ask customers what they think of his products, which include sauces made in Thailand and sold in the United States in stores such as Whole Foods. “The Flip works great for testimonials because of its small size,’ he says. “The smaller video cameras seem to be less intimidating for customers. People tend to freeze up with larger cameras but not with the cute, hand-sized Flip.” Moran has abandoned his two “prosumer” video cameras that cost $2,000 each. His Flip Mino HD was $200. 3. Provide quick feedback. Video can offer you feedback on how a client is using a product or a problem a client has in the field. It also allows you a way to demonstrate a point to a client. Maine-based pet behavior consultant George Quinlan uses his Flip Mino to record the behavior of both dogs and their owners. 4. Go behind the scenes. Create more interest in your business by telling your story. Show how a product is made or document the progress of a project. Don’t feel comfortable producing the video from start to finish? Companies such as Pixability will send you a Flip, then take your video and edit and package it with music, titles and logo. 5. Enhance news releases. It’s better to show than tell when it comes to new products, events or developments. Pyxl, a Knoxville, Tenn., marketing firm, mails Flip cameras to its clients when they have news to share. The clients shoot brief videos, return the cameras and Pyxl handles the videos, embedding them in online versions of news releases and social media releases. “You don’t need a production studio, you don’t need a crew, you don’t need a catering tray,’ says Steinberg. “The inexpensive budget digital cameras are a godsend when it comes to grassroots and viral marketing.”

Microsoft Office Moves to the Web

Microsoft Office, the backbone of many a small business, is getting an Internet makeover. Starting with the next upgrade, Office, the popular office productivity suite including Outlook, Excel, PowerPoint, and OneNote will be available as individual Web-based applications that can be accessed using several types of browsers and just about any kind of computing devices that can log onto the Internet. The upgrade is called Office Web Applications. Microsoft unveiled it at a developers’ conference in October and was expected to begin offering limited private technology previews before the end of 2008 before a beta release sometime in 2009. The company has not disclosed when the programs will be widely available. The apps will be “lite” versions of standard Office programs that will be heavy on the features people want when they’re working on the Internet, such as the ability to share documents, says Chris Bryant, Microsoft’s Office group product manager. The apps will let people create, edit and collaborate on documents through the browser. Apps will work with Internet Explorer, Firefox, and Safari browsers. Microsoft is still testing the programs’ ability to work with Chrome, the new browser from Google, Bryant says. Good news for small business The changes come as Microsoft makes more of its business software available on the Internet, or “in the cloud” as it’s coming to be called. It’s about time, says Scott Kozicki, a contract CIO and long-time IT professional who lives in Nashville, Tenn. “Our lives have been completely transformed” by the Internet, Kozicki says. “Whether it’s cell phones, digital video recorders, or laptops, it’s everywhere. A lot of the thinking about storing data on a machine is rooted in the 70s version of the PC and we’re so far beyond that. I think this is Microsoft waking up to that concept.” When it comes to Web-based apps, Microsoft is following competitors like Google, which acquired or created its own office productivity programs like Gmail and Google Docs as Web apps from the get go and has gained a wide following as a result. But Microsoft still owns the bulk of the office productivity software market. By the company’s own reckoning, between 500 million and 600 million people worldwide use Office, making it the most popular office productivity tool anywhere. According to a September poll by ReadWriteWeb, the technology news blog, 49 percent of 2,600 respondents use Microsoft Word as their main writing program compared with 16 percent who use OpenOffice, an open source word processing program, and 15 percent who use Google Docs. Playing catch up with Google Although Google has a head start in the Web apps department, the programs leave enough to be desired that Microsoft can catch up, says Ralph Barbagallo, a Valencia, Calif., game designer and Microsoft software user. “If Microsoft can release a good Web version of Office while it’s still the gold standard they have a shot,” Bargagallo says. “Of course, finding a way to make money from them is the challenge.” Microsoft’s move to Web apps is significant for small businesses, especially companies that are too small to maintain much of an IT staff, says Bryant, the Office group product manager. “Microsoft’s software plus services strategy can help those people who are self-managing their IT because it’s partly off loading some of that burden to us,” he said. Web apps can also help small businesses by putting them on the same technological footing as bigger business partners. “You don’t necessarily have to know what version the person on the other end of the line is using” to collaborate, he says. According to Bryant, the Office group product manager, business customers will buy Office Web apps through the same type of licensing agreements they use to purchase other Microsoft software. Individual consumers and solo entrepreneurs will be able to choose from some advertising-sponsored free apps and some subscription-based services, both of which will be offered through Microsoft’s Office Live portal. Businesses that want to participate in the Office Web private technology preview can sign up at the Office Live Workspace.

Software to Help Immigration Compliance

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Workers at M & N Foods’ fast-food restaurants are great at flipping burgers and making French fries, but not at filling out the federal forms new employees need in order to prove they are in the country legally and eligible to work. So managers at the company, which owns 25 Carl’s Jr. franchises in California’s northern San Diego County, called in another kind of expert. They hired a software firm that helps clients by taking over filling out and storing the required forms, and doing it online. M & N Foods’ experience has become more common since the U.S. Citizenship and Immigration Services revised its Employment Eligibility Verification Form I-9 in late 2007 and put it on the Web. By making I-9s available electronically, the federal agency wanted to make them easier to process, something businesses are required to do within the first three days of hiring a new employee. But as companies such as M & N Foods have discovered, it’s still a lot of work, especially for small businesses that don’t have a big HR staff or a lot of IT resources. Even so, the incentives for correctly handling the forms are huge. Under the Bush administration, the USCIS is cracking down on companies that hire illegal workers. Fines for companies that fail the agency’s I-9 audits are steep, up to $1,000 a form. Third-party vendors can help As a result, more companies are hiring third-party specialists to take over their I-9 paperwork. The demand has created a mini-boom of software vendors specializing in I-9 work, including a handful of start ups as well as a number of existing companies that do background checks or provide other HR services. For small businesses, I-9 vendors provide Web-based software that customers can license for $5 to $10 per employee, with volume discounts for more workers, according to software company officials. In many cases, vendors’ I-9 software can be integrated into a company’s existing payroll or other HR software. Vendors store customers’ I-9 forms on computer servers at their own data centers and use encryption and other security measures so the information can’t be lost, hacked into or stolen, according to Barry Nadell, senior vice president with the background screening division of Kroll, a professional services firm. Storage is critical, because under USCIS regulations, companies are required to keep records for three years after someone is hired or a year after they leave, whatever’s longer. Using an outside party to process I-9 is especially helpful for companies like M & N Foods that have a lot of branch offices, says Chas Patterson, vice president of sales and systems support at Form I-9 Compliance LLC, a Newport Beach, California, I-9 software firm. “People in a store, their job is retail not HR or IT, they’re not experts,” Patterson says. “This makes it so they don’t have to be experts. It removes a lot of worry on the corporate level.” The ripple effect of compliance Another reason that small businesses outsource I-9 administration: states such as Arizona and Tennessee have passed laws requiring companies to participate in the federal government’s E-Verify program. Using E-Verify, companies electronically submit new employees’ right-to-work documentation to Social Security Administration and Department of Homeland Security databases to instantly confirm that the person is cleared to start the job. Many I-9 software vendors offer an E-Verify service for an additional fee. M & N Foods initially hired Form I-9 Compliance to audit existing paper I-9 forms. When the software vendor discovered things that could have led to problems, M & N Foods president Michael Borchard retained them to take over all I-9 work. M & N Foods has 500 to 600 employees, and because turnover in fast-food restaurants is high, the company is continually hiring or rehiring workers, which meant managers were constantly filling out forms. Now all that work is done through Form I-9 Compliance and is directly tied into M & N Foods’ payroll program. “Nobody gets a check unless they go on the website and make sure an I-9 is filled out, Borchard says. Though Borchard declined to say how much the company spends on the service, it’s worth the extra expense “given the pitfalls in this area,” he says. “We don’t manage a huge HR staff that has a lot of time to spend on this. (Form I-9) is a little outsourced piece of the HR process.” SIDEBAR: Vendors that Provide Compliance Software Some other companies that provide I-9 compliance software and services include: Accurate Background First Advantage i9Advantage Verified Person Verify I-9

CRM: Software as a Customer Service

Every business needs some form of customer relationship management (CRM) system, argues Brian Donaghy, vice president of product strategy with Smart Online Inc., a provider of software-as-a-service (SaaS) applications for businesses in Durham, N.C. That’s true even if the system is an amalgamation of Post-It notes, spreadsheets, and the like. Of course, this is not always effective. That’s where software comes in. “A CRM application is a better way to manage so that you can be more organized and do more with less,” Donaghy says. An effective CRM application provides an organized, comprehensive view of a company’s customers and prospects, and employees’ interactions with them. Once a large-business luxury, CRM software packages have come down in price and scale as they have migrated to hosted applications or SaaS solutions, making CRM available to a growing number of small and mid-size businesses. Spending on SaaS will climb by 25 percent annually through 2010, according to a May 2007 report by Saugatuck Technology Inc., of Westport, Conn., “Three Waves of Change: SaaS Beyond the Tipping Point.” Hosted versus licensed CRM SaaS solutions for CRM usually require a lower upfront investment, as no software needs to be purchased and installed. Upgrades can be done over the Internet, rather than by loading disks onto each computer. And, employees can access the program with just an Internet connection. Gerry Czarnecki, chair and chief executive officer with The Deltennium Group, Inc., a consulting firm based in Boca Raton, Fla., tried out a half dozen different applications, checking how easy it was to enter and access data and create reports, before zeroing in an SaaS solution from Infusion Software, an on-demand CRM provider from Gilbert, Ariz. Czarnecki’s goals in implementing a CRM solution were to better manage relationships and leads, and automate the company’s marketing efforts. While the system has only been in place for several months, “I have no doubt that I’ll be able to do more with less,” Czarnecki says. “I can use my staff to focus on expanding.” While security often is mentioned as a concern with hosted solutions, most providers continually invest in updated security features, 24/7 monitoring, and multiple backups and redundancies. As a result, their security often trumps the protection a small business owner can afford. However, it’s not unheard of for the server hosting an application to go down. Until that server is back up, the data in the system is inaccessible, says Doc Pratt, president of Pratt Computing Technologies, Inc., of Knoxville, Tenn. And the costs of hosted solutions can add up. Some providers charge a set-up fee of several thousand dollars or more. Ongoing monthly fees can range from $20 to $150 per user. In addition, the provider may charge more for additional services, such as delivering a tape backup. SaaS also can be more difficult to customize. Licensed solutions typically start at several hundred dollars per user license, and go up from there. Some also charge a maintenance fee of about 20 percent of the initial cost. According to Ted Harding, general manager of Legrand Software, a San Franciso-based CRM provider, some of the benefits of licensed CRM include that the application runs on your computers, and data is stored in your file server. It’s also not off-site, and you’re not dependent on an Internet connection to access the programs. Interfacing the application to third-party applications tends to go faster and has fewer constraints. Finally, the user interface may be richer. Lisa and Michael Lujan, co-founders of Mentoring Minds LP, a Tyler, Texas-based provider of educational products to schools, opted for a licensed CRM product that to track and follow up on prospects and sales calls. In early 2006, the Lujans implemented a CRM solution from LeGrand. Now, they electronically tag different mailings. When an order arrives, the Lujans can easily match the order with the materials that were sent to that school or district. And, salespeople can enter information on the schools they’ve visited, enabling the Lujans to quickly see which visits are leading to sales. “We can track and see what was successful. Before, it was hit or miss,” Lisa Lujan says. Features to look for in CRM Whether hosted or licensed, these are some common features you’ll want to look for in a CRM solution for your business: Application Programming Interface (API): This allows the CRM solution to link with other systems, eliminating the need to enter information multiple times, says Clate Mask, president and chief executive officer with Infusion Software. Multiple contact information: Users should be able to organize and access information by a person’s name, as well as his or her company, says Harding. That makes it possible to view all the interactions that have occurred with a particular person, as well as with multiple individuals within a single company. Dashboards: The system should provide a summary view of the sales opportunities underway across a company’s customer base and the employees working on them. With this, promising opportunities are less likely to fall through the cracks, says Harding. Delegation: Employees should be able to use the system to electronically delegate tasks to their colleagues. Information entry and access: Employees also should be able to enter and access information from anywhere within the system, says Donaghy of SmartOnline. For example, if they’ve talked with a client on the phone, they should be able to enter details of the call under the person’s name. Once in the system, that information should be accessible through both the individual’s and the company’s name.

Inc. 500 Interview: Video Gaming Technologies

Video Gaming Technologies manufactures gaming machines for lease to casinos in emerging U.S. markets. The company, founded in 1991, makes the popular Vegas Blackjack and Treasure Quest series, using 3-D graphics, CD quality sound and hit ratios that keep players playing. VGT, with offices in Tennessee, Oklahoma and Virginia, was the fastest-growing company on the Inc. 500 in 2005. Inc. Technology spoke with founder, president and chairman Jon Yarbrough talks about using technology to motivate workers. Inc. Technology: Can the average business – from an ice cream parlor to a bio-tech startup -use video gaming technologies? Yarbrough: With such new technologies as voice recognition, image analysis and artificial intelligence, video gaming technology could be used to offer an effective low-cost way to train and test employees in a self-paced, interactive and entertaining medium. Imagine an addictive video game that teaches employees to excel. Inc. Technology: What can entrepreneurs learn from how technology has changed the video gaming and casino industries? Yarbrough: Bally Gaming used to be the world’s leading manufacturer of gaming machines. When video game technology first emerged at around the time of the introduction of Atari’s Pong game, International Game Technology [IGT] (at the time a startup) embraced the idea while Bally eschewed it. At $13 billion, IGT now has a market cap some 15 times that of Bally. New technologies offer new ways to achieve a competitive advantage. If you don’t embrace it, your competitor will. Inc. Technology: Can you share some advice for entrepreneurs? Yarbrough: You have to differentiate yourself from everyone else. For us, aside from the leasing model, what is most unique about us is our games and the way we pay out the prizes – the frequency, size of the wins, timing, and so on. Having a unique offering in an emerging market, where the demand exceeds the supply, is where you can really grow fast. Inc. Technology: So, what makes a casino video game more “fun” than others? Yarbrough: We’ve been successful at making customers want to play games for a while because we introduce new elements – just like a good movie has depth and you want to watch it over and over. Sure, it adds to the development time but we found some creative ways to do this by being more creative in the math and the way the wins are divided up and awarded to the player. One of our games, Mr. Money Bags, has a crowd-pleasing contest, where players qualify to play in a kind of game show. If you get a certain outcome you go up and choose a money bag out of a big pile and it’s done at certain times of the evening after several people have qualified. The prize can be as high as a $50,000. Inc. Technology: How do you motivate employees? Yarbrough: We’re a virtual company. I live in Tennessee, where gambling isn’t even legal. I’ve got some support staff here but it’s less than 10 out of our 200 employees. Others are in Oklahoma, where are machines are sold, and Virginia, too. It’s extremely de-centralized, so there’s no possible way for me to be involved in day-to-day decision making and it forces me to think strategically, focus on growth and new markets. It forces me to hire people who make good decisions. That’s why they’re motivated. They see themselves as they’re own boss. I hire people who are passionate about their own ideas, people who do well on their own. And they’re compensated well, too. We recognize that every human being is creative to a degree. We know that they already have ideas and would just love the opportunity to express them, so we simply ask them for their ideas. Inc. Technology: Can you give us an example of a self-motivated employee at VGT? Yarbrough: The Mr. Money Bags idea was from an employee. He came up with it himself.

He Took On the Whole Power-Tool Industry

In February 2001, Stephen Gass strode to the podium in a conference room at Caesars Palace in Las Vegas and began the video presentation for SawStop, his new invention. The 75 attendees watched the screen closely as a woodworker fed a sheet of plywood into a power-saw blade spinning at 4,000 rpm. Then a hot dog was placed in the path of the blade. Miraculously, the instant the blade made contact with the wiener, the saw shut down and the blade retracted. The dog escaped with only a small nick — substitute a finger and it’s the difference between a cut and an amputation. Gass had given the same dog-and-pony show a dozen times, mostly for woodworkers, contractors, and a few industry executives. But this audience was different. It consisted of lawyers for the Defense Research Industry, a trade group for attorneys representing the power-tool industry. SawStop could help prevent thousands of serious injuries caused by power tools each year, Gass believed — if the industry would license it. He returned to his seat thinking he had made his case. Then Dan Lanier, national coordinating counsel for Black & Decker, stepped to the podium. His topic: “Evidentiary Issues Relating to SawStop Technology for Power Saws.” Lanier spent the next 30 minutes discussing a hypothetical lawsuit — in which a plaintiff suing a power-saw manufacturer contended the saw was defective because it did not incorporate SawStop’s technology — and suggesting ways defense counsel might respond. Lanier recalls it as a rather dry exploration of legal issues. Gass heard something different. To his ears, Lanier’s message was this: If we all stick together and don’t license this product, the industry can argue that everybody rejected it so it obviously wasn’t viable, thereby limiting any legal liability the industry might face as a result of the new technology. (Lanier denies this was his point.) Gass was stunned. His tiny start-up, run by three guys out of a barn in Wilsonville, Oreg., had captured the attention of the entire power-tool industry. For months, he had been negotiating with major players such as Ryobi, Delta, Black & Decker, Emerson, and Craftsman about licensing his invention. Instead, they seemed intent on trying to make him and his product go away. Some 32,000 Americans are rushed to emergency rooms with table-saw-related injuries each year, according to the Consumer Product Safety Commission; more than 3,000 of those visits result in amputations, usually of fingers or hands. The medical bill to reattach a severed finger runs from about $10,000 for a clean wound to more than $25,000 if there’s nerve damage, infection, or other complications, according to James W. Greer, president of the Association of Property and Casualty Claims Professionals, a trade group in Tampa. Factor in rehabilitation and lost time at work, and the cost per injury can easily reach six figures. Indeed, in 2002, the CPSC estimated the annual economic cost of table-saw injuries to be $2 billion. That’s more than 10 times the size of the entire $175 million table-saw market. Clearly, this is an industry that could use a better mousetrap. That’s what Gass figured he had in the summer of 2000, when SawStop’s technology made its debut. A year later, the Consumer Products Safety Commission awarded the device its Chairman’s Commendation for product safety. Popular Science magazine named it one of 100 Best New Innovations. Tool industry bigwigs seemed impressed too. “It is probably one of the most major developments in the area of product safety applicable for table saws,” said Peter Domeny, director of product safety for S-B Power Tool, which makes Skil and Bosch tools. So, four years later, why isn’t SawStop on every table saw on the market? That’s the funny thing about better mousetraps. Build one, and the other mousetrap makers will probably hate your guts. They might even try to squeeze you out of the mousetrap business altogether. Just ask the inventors of air bags, safer cigarette lighters, and automatic shutoffs for electrical appliances — all of which encountered resistance from the status quo. Ultimately they prevailed and their innovations became standard. Gass still has a long way to go. Gass didn’t set out to take on the power-tool industry. Nor did he ever see himself as an entrepreneur. The amateur woodworker was standing in his workshop one day in 1999, staring at his idle table saw. “The idea came to me that it might be possible to stop the blade quickly enough to avoid serious injury,” he says. A patent attorney who also holds a doctorate in physics, Gass loves nothing more than solving complex technical problems. He got out pencil, paper, and calculator and got to work. Stopping the blade, he figured, would require a two-part process. First, he needed a brake that would work quickly enough when it came into contact with a woodworker’s hand. Next, he had to design a triggering system that could differentiate between finger and wood. Given the speed of the blade, it would have to stop in about 1/100 of a second — or at about an eighth of an inch of rotation after making contact. Any further, and the cut would be so deep that the device would be useless. To stop the blade this quickly would require about 1,000 pounds of force to decelerate the blade in 10 milliseconds. That calculation took Gass about 30 minutes. The trigger problem was a little more complicated, but Gass came up with the idea of running a small electrical charge through the blade. The system would sense when the blade hit flesh because the body would absorb some of the charge. The resulting drop in voltage would be enough to trigger the brake and stop the blade almost instantly. Gass spent two weeks designing the technology and, using a $200 secondhand table saw, an additional week building a prototype. Then he began to experiment. With the blade whirring, he touched his hand to its smooth side. It stopped immediately. The same thing happened when he ran a hot dog into the blade’s teeth. Gass repeated the experiment dozens of times — and each time the blade stopped immediately. Convinced his invention would be embraced by the industry, he videotaped a demonstration, registered the patent, and set out to convince manufacturers to license the technology, which he had dubbed SawStop. He sent a video demo to Delta Machinery in Jackson, Tenn., one of the largest table-saw manufacturers, and waited. Gass was pleased with his results, but he also knew there was something else to be done: He had to test SawStop on a real finger. “There’s not a lot of demand for a saw that’s safe for hot dogs,” he says with a laugh. And so, on a spring afternoon in 2000, Gass stood in his workshop and tried to summon the moxie to stick his left ring finger into the teeth of a whirring saw blade. He had rubbed the digit with Novocain cream, hoping to dull the pain of the cut. On the first try, his heart beating furiously, he eased in close but recoiled before making contact. A few minutes later, he tried again. This time, he rolled his finger close enough to get a faint red mark, but panicked and pulled back before the brake triggered. By now, his forearm was cramping from the tension. It was difficult to keep his hand steady. Still, on his third attempt, he kept his nerve — and the blade stopped, just as he knew it would. “It hurt like the dickens and bled a lot,” he says. But the finger remained intact. Several months later, Gass finally heard back from Delta. “No, thanks. Safety doesn’t sell,” he says he was told over the phone. (Delta, now known as Delta Porter Cable, is now owned by Black & Decker. A Delta spokesperson who asked not to be identified denies that a Delta employee made the comment.) Gass could not believe his ears. “Everybody in woodworking knows somebody who’s lost a finger or had an accident,” he says. How could a major manufacturer not be interested? “These guys would walk up to us and say, ‘I wanna shake your hand.’ A lot of them were shaking with two or three fingers missing.” Gass refused to give up. Working with three other lawyers from his Portland law firm, David Fanning, David Fulmer, and David D’asenzo, he raised $150,000, built a more sophisticated prototype, and signed up for the International Woodworking Fair in August 2000 in Atlanta. The reaction there was phenomenal. SawStop’s booth was packed with spectators who stood riveted as Gass and his partners fed wiener after wiener into the table saw. “Afterward, these guys would walk up to us and say, ‘I wanna shake your hand for doing this,” recalls Fanning. “A lot of them were shaking with two or three fingers missing.” It was all the validation the four men needed. A month later, Gass and Fanning walked away from law partnerships to pursue SawStop full-time. Fulmer, an associate at the firm, followed a few months later. D’asenzo invested in the venture but kept his day job. The fall of 2000 was hardly an auspicious time to launch a start-up. The Internet boom had just gone bust, the Nasdaq was in free fall, and investors were gun-shy. Yet SawStop was so practical and easy to understand, the trio had little trouble raising $1.2 million in angel funding from several different investors. They invested in more R&D, better prototypes, and small salaries for the three principals. “It was a no-brainer,” says Grant Simmons, a New Orleans urologist who invested an undisclosed amount in SawStop after reading about the company and seeing a video demonstration in 2004. It was Simmons’s first experience as an angel investor, and his interest was more than just financial: His father was a lifelong woodworker who had lost a finger in a table-saw accident. “This is revolutionary,” Simmons says. “They are applying basic physics in a practical way to address a very important issue that people in the industry have totally ignored — safety.” Gass, Fanning, and Fulmer, meanwhile, filed more than 50 patent applications to protect their invention. The only thing they lacked was industry cooperation — but that seemed inevitable. After all, they believed, common sense and consumer demand ultimately would win out. What’s more, the technology had implications far beyond table saws. It could potentially boost the safety of all power saws, including band saws and circular saws, as well as nail guns, lawn mowers, and other products. For the next two years, the partners engaged in what seemed to be promising talks with high-level executives at Emerson, Black & Decker, and Ryobi. In January 2002, they appeared to have turned the corner when Ryobi agreed to license SawStop’s technology. Under the terms of the deal, there would be no up-front fee; Ryobi would pay a 3% royalty based on the wholesale price of all saws sold with SawStop’s technology. The number would increase to 8% if the majority of the industry also licensed the technology. It was not a get-rich-quick deal, but Gass believed it was a vital first step. When the contract arrived, Gass noticed a typo and called Ryobi’s attorney, Bob Bugos, to make the correction. Gass says Bugos apologized and promised to take care of it right away. (Ryobi representatives declined to comment for this story.) When a week passed and the revised contract still had not arrived, Gass called back. He says Bugos was very apologetic and assured him the contract was on its way. Again, it didn’t come. Gass says he called every two weeks and each time Bugos made the same promise. After about six months of going back and forth, it finally dawned on Gass that the Ryobi deal, like all the others, was going nowhere. Indeed, the major power-tool manufacturers have professed to be somewhat less than impressed with SawStop. “The device has not been field-tested for results, durability, and reliability,” said a representative from Delta Porter Cable. “It’s an experimental system, not yet field-proven.” According to Dan Lanier, the Defense Research Industry attorney, all of the manufacturers approached by Gass independently tested and evaluated the technology. And each one, Lanier said in an e-mail, encountered “sign injury even when it works, Gass asks the following question: Isn’t it better to walk away with a cut, even a deep one, than to lose a finger or a hand? “I think they were looking for reasons not to implement it,” he says. Gass sees the objections as a smoke screen for the industry’s real concern: the increased risk of product-liability litigation. In most cases, when people sue power-tool manufacturers because they’ve lost a finger or hand in an accident, they’re unsuccessful — because it’s tough to prove that the manufacturer did anything wrong. Add SawStop to the mix, however, and the picture changes. Suddenly, the industry is promising an injury-proof saw. What if someone got hurt? “The manufacturer would be at a deeper risk and more vulnerable because it had made a promise of what the technology could do,” says Jim O’Reilley, a product-liability expert at the University of Cincinnati. “Companies are going to be reluctant to expose themselves to that higher risk.” Indeed, precisely who would assume that risk turned out to be a major sticking point in SawStop’s licensing negotiations. The manufacturers believed Gass should indemnify them against any lawsuit if SawStop malfunctioned. Gass, however, says that he could not possibly make such a guarantee since he would not actually be manufacturing the saws. And there is another facet to the liability issue. If SawStop did come to market and was proved effective in preventing accidents, it might be easier for plaintiffs to win lawsuits against manufacturers of traditional saws, because juries might be more likely to return a verdict against a manufacturer that chose not to implement SawStop. That’s the main reason, Gass believes, that the big tool makers are refusing to deal with him. They want his product to go away. After the deal with Ryobi fell apart in mid-2002, Gass, Fanning, and Fulmer faced a tough choice: Abandon the company and return to practicing law or build the saws themselves. None of the men had ever run a company, but they all understood that it’s one thing to be an inventor and another to be an entrepreneur. They would be responsible for designing, manufacturing, marketing, and sales along with the day-to-day operations of a business. It was a tough prospect — but not a tough decision. All three agreed that if they didn’t act, their technology would never see the light of day. “It seemed like the right thing to do,” says Fanning. “There aren’t very many opportunities to make money and do something good.” With wives and kids to support, Gass and his partners have found that the decision has not always been easy to stand by. Gass fondly recalls the six-figure salary he earned as a patent lawyer. At one point, he was so close to returning to his legal career that he got quotes for renewing the legal-malpractice insurance policy he dropped when he devoted himself to SawStop. “I never doubted my invention or wanted to give up, but I’ve wondered if we would be able to keep going,” he says. “It’s been touch-and-go several times with money, and we always manage to pull through at the last minute.” SawStop now operates with eight people out of a two-story barn Gass built himself. Filled with electronics, high-tech machinery, and every tool imaginable, the first floor is a handyman’s paradise. In the corner is a large stack of woodworking timber left untouched since Gass launched his venture. Gass logs 12- to 14-hour days running the business upstairs. Desks, computers, and filing cabinets fill the second-floor office space. A map of the United States hangs above the conference table. It’s dotted with colored pushpins, each one representing a city where someone has purchased a SawStop table saw. The first one rolled off the assembly line of a Taiwanese manufacturing plant in November 2004. SawStop has since sold about 600 and has 300 more on back order. A basic contractor saw retails for $799; the professional-level cabinet saw goes for $2,500. The company relies on trade shows, news stories, word of mouth, and ads in woodworking magazines for marketing. Selling online and direct-to-consumer is an acceptable way to get started, but Gass knows that to reach the larger market he will need to get into home improvement stores, where competition for shelf space is fierce. He’s had discussions with Home Depot and Lowe’s, but neither has committed to carrying the product. “Accidents are usually caused by human error, but this saw grants you forgiveness,” says one contractor. So for now, Gass is banking on people like Sharon and Don Biers, owners of Collins Custom Cabinets. After one of the employees at their Lowell, Ark., shop lost a finger in a power-saw accident in February, the Biers bought a $2,500 SawStop cabinet saw and have since ordered two more. It didn’t take long for the purchase to pay off. Within two weeks, another employee, John Stroud, inadvertently shifted his hand into the path of the blade and the saw shut down when it hit his fingernail. “We made the calculation that it’s worth it for the safety of our guys,” says Sharon Biers. “The accidents are usually caused by human error, but this saw grants you forgiveness.” And not just for professionals. In May, Gass received an e-mail from a high school shop teacher in Princeton, Wis. “I have a sophomore who still has two thumbs thanks to your saw,” the man wrote. The company knows of at least five other amputations that have been averted. With the big tool companies declining to participate, SawStop is seeking other ways to make sure its technology is adopted. In April 2003, the company filed a petition with the Consumer Product Safety Commission to make SawStop-like technology standard on all table saws. Six months later, the Power Tool Institute, a consortium of 17 power-tool makers, filed an opposing brief in which it argued that SawStop is a “speculative and untested technology. In addition, the cost to consumers and manufacturers of granting the petition would far outweigh any benefits that may be realized.” The industry also claims to be developing its own safety systems. The CPSC is expected to release its findings this summer. If it states, as Gass hopes and expects, that the technology is effective, it will be the first step in a long process of making SawStop — or a similar injury-prevention system — mandatory. Meanwhile, the industry’s product-liability fears appear to be coming to life. In 2003, a construction worker walked into the Wellesley, Mass., office of attorney Richard J. Sullivan. He was looking for someone to represent him in a case against Chicago-based S-B Power Tool. The worker had lost his thumb and four fingers while using a table saw. Doctors were able to reattach them, but even after six surgeries and $150,000 in medical bills, he still had no real functionality in the hand. Living on workers’ comp, he fell behind financially and was forced to sell his home. Sullivan turned the case down twice because he didn’t see a way to hold the manufacturer accountable. Then a colleague told him about SawStop. “His injury occurred on a saw manufactured in April 2003 and sold in May 2003,” Sullivan says. “The industry has known about this technology since 2001. That gave the manufacturer plenty of time to react.” The lawsuit, filed in Massachusetts state court in the summer of 2004, alleges that the manufacturer was negligent for not implementing the technology and seeks compensation for lost wages, future lost wages, and pain and suffering. (Attorneys for S-B Power Tool responded in January, denying all claims.) “If Gass can figure this out by tinkering around in his backyard, what has this industry been doing for the past 20 years?” asks Sullivan, who has since taken on five similar cases. “They’re like the auto industry, which had to be dragged kicking and screaming to install air bags.” Gass believes that Sullivan’s cases are only the tip of the iceberg. “The legal standard says you have to make a product as safe as you reasonably can, and if you fail to do that, you’re going to be responsible,” he says. While Gass wants SawStop to be successful financially, he also admits that what began as an interesting physics problem in his workshop has become something of a crusade. “This is important to society and that responsibility weighs on me,” he says. “It would have been so much easier if the manufacturers had just licensed this. Then, having SawStop would be just like having a stereo with Dolby or running shorts with Gore-Tex.” Indeed, Gass still dreams of getting out of manufacturing altogether. He really doesn’t want to make the power tools we buy. He just wants to make the power tools we buy better. Melba Newsome is a freelance writer in Charlotte, N.C.