MR. HERMAN: I would like people to gather so we can start the afternoon. Please come in and be seated. Ladies and gentlemen, we want to start this afternoon's session.
My name is Larry Herman, and I have the privilege of presiding this afternoon and introducing our speaker. Those of you who are old hands at the Institute conferences and those that may be new this year, I think will appreciate not only the depth of the issues that we examine, but the quality of the presenters.
The Institute takes pride in seeking out and obtaining for those who attend the best people in the business and the best people we can find, people who will give presentations of quality, and today' s speaker is no exception.
In fact, Mal Mixon is a person of extreme qualifications to speak on what it means to be an entrepreneur. And we have handed out biographies. They are in the material, and I don't mean to read in detail Mal's biography, his background, and experience, but let me tell you, if you look at the first paragraph in his biography, it tells the whole story.
As you know, he is the chairman and CEO of Invacare Corporation, a leading manufacturer and distributor of healthcare products in the healthcare industry. (1) But when he began with them 27 years ago, the annual sales were $19 million, and today those sales have reached $1.5 billion. (2)
So that tells you a lot about his ability to speak of entrepreneurship. He holds both his B.A. and M.B.A. from Harvard. (3) He is a director of a number of listed companies on the New York Stock Exchange and is someone who can lead us through the discussion this afternoon and tell us about what it means to be an entrepreneur. (4)
So without further ado, I will turn it over to Mal.
Malachi Mixon, III *
MR. MIXON: Thank you very much, and it is a pleasure to be here this afternoon. Hopefully, I won't put you to sleep after your lunch. But, I want to start out by telling a little vignette about a father who had two sons, and both his sons turned out to be quite successful.
One turned out to be one of the world's great lawyers, and the other one turned out to be one of the world's great entrepreneurs. The lawyer was a pessimistic son. Every time the father gave the son a present that son would analyze it in such detail that he would find something wrong with the gift.
So this particular Christmas the father decided that he was going to try to help. Well, first, the other son was so optimistic he was unrealistic about the world, so the father decided on two special gifts to get these children to be a little more even keel in looking at life.
For the one that became the lawyer, he bought the most incredible, expensive home computer for his Christmas present. The son took the present, and about an hour later came back and said, "Dad, I like the present, but there are so many things this computer should be doing, that it is not doing, and here are some defects in the software."
For the other son, the father went down to Thistledown and got horse manure and put it in a box and wrapped it up and put a ribbon on the box. That son got his present out from under the Christmas tree and opened the box, jumped up with excitement, ran out the back door, and disappeared for about a half hour.
Finally the son came in and jumped up and gave his dad a big hug and said, "Dad, I can't thank you enough for my Christmas present."
And he said, "Son, I don't quite understand."
He said, "Daddy, I know there has to be a horse around here somewhere."
So I wanted to just lead into the subject of what is entrepreneurship, and I thought a lot about this. It is a word that gets thrown around loosely, but in my mind, an entrepreneur is a creator, a builder, not an administrator of business and most certainly, he is an optimist. We can give any of you a corporation to oversee, and you can probably take it to the next level. Don't mess around with it a lot and keep the good people you have, and it will probably do pretty well on its own. And occasionally, we have some people who take over big companies doing quite well, and they go the other way because they don't listen to their good people.
And to my mind, the entrepreneur can take something that someone else doesn't see value in and create something. Entrepreneurs almost always have their total net worth at risk or a good part of their net worth at risk. (5) So when they go home at night, it is not about salary, wage--it is about losing everything or winning quite a bit. (6)
I think entrepreneurs understand capital creation, and that's something a lot of people don't understand. You know, they think that if I can make another hundred thousand dollars, that's going to put me in this particular economic class or vision I have of myself. Once you learn how to do it, it is a lot of fun.
And you obviously don't want to go back to the idea of wages or salary. I think an entrepreneur frequently can visualize value when others cannot. Frequently, it is a business that everybody else has given up on, that went bankrupt, et cetera. There are all types of entrepreneurs, but they are, as I say, creators or builders of a business. I think they tend to think outside the box and don't generally accept the conventional view.
Secondly, I want to talk about what causes an entrepreneur to succeed; I don't think anyone knows the answer to that question. But in my mind, it is really a collection of life' s experiences. Many of the successful entrepreneurs I know started down the conventional path of working for someone else, working for another company. I always advise young people, and I say, "Make your mistakes on somebody else's money, and then learn, and then when you have your opportunity, you will have the skill-set to go along with your desire to be an entrepreneur."
And when I look back over my life--and I don't know how many of you remember this about your own education in grade school and high school--but I never once in my life ever had a teacher say to me, "Mal, are you going to own something?" They always said, "Mal, who are you going to work for and what do you want to be when you grow up?"
In my mind, I never thought about owning a company or having a company all to myself. Most teachers don't understand capitalism, so there is no way that they can teach the subject.
So part of the reason we don't have more entrepreneurs is that teachers don't teach children what they can be, even without money. Certainly, as I tell my story, I had no money, and I will tell you in greater detail about that. I think their risk profile is different.
You know, a lot of people see me as a risk taker. I don't see myself as a risk taker. The things in which I get involved, I have a high confidence level that it will succeed. I launched my entrepreneurial career in 1979 after I had worked eleven years in industry; I didn't have any net worth. So I didn't have anything to lose really except maybe a job, and I knew I could get a job somewhere else.
I want to tell you about my background because I think it is relevant to the issue of why I am an entrepreneur and how you can become one. I grew up in Oklahoma in a small town--1,100 people--real cow country. My grandfather was a country doctor and came to this town in the 1890s.
I was born in the same house as my father, delivered by my grandfather. My dad was away in World War II, and so I was around my grandfather a lot. Neither of my parents went to college. Fortunately, they were smart and well read, and we had a lot of intellectual conversations that I would come to appreciate later in life, but certainly, academically, I was not challenged in grades one to twelve in the little country school.
So because of that, I was able to do a lot of different things like play sports and ride in the rodeos. I was a good musician. But I rarely had to take a book home and was not really challenged until I got to college. Unbeknownst to me, my father submitted the application for me to attend Harvard. We went out to the superintendent of schools because Harvard said I had to take college boards. He had never heard of the college boards.
No one knew of them, and I was the first student ever to take the college boards from my high school. I learned by this time everybody took them as a junior, but I was already a senior. So somehow I got into Harvard. I always dreamed of going to the Naval Academy, since I had grown up in a very patriotic family. And I did get admitted to the Naval Academy my sophomore year at Harvard.
I decided to stay at Harvard, and that's another story in itself, but I was given a full scholarship by the Navy. I remember probably one of my proudest moments was my mom pinning on my second lieutenant bars as a United States Marine, and that has been a good part of my life as far as developing me as a leader and man.
I served in Vietnam for a year, and then on to Harvard Business School. I was 28 when I started to work for a Cleveland company. I came to Cleveland because I married a girl from Ohio. If I took you to this little dirt town I came from, you would understand why I wanted to be in Cleveland, although I had a lot of fun growing up in the country.
And in my case, I worked for eleven years for Cleveland companies. During the last year, I was working out in Solon, Ohio for a company called Technicare. We were heavily into diagnostic imaging products, digital X-ray, magnetic resonance, nuclear medicine, and computed tomography, and Invacare was a little appendage that Technicare didn't keep. (7)
Actually, Johnson & Johnson bought Technicare and didn't want it either. (8) It had been for sale for three years--an orphan no one wanted. (9) It had a minor position in the wheelchair industry. (10) I had been thinking about having my own business, and unfortunately, at age 37, I had testicular cancer.
I survived that, but at the time I thought I was going to die when I heard the word 'cancer,'...