Minneapolis--California's Silicon Valley and Route 128 outside Boston are famous as hotbeds of invention and incubators of new companies. But during the 1970s and 1980s, new technology-based companies kept popping up in Minneapolis and St. Paul like baby bunnies in springtime. The Twin Cities then were a place where someone with vision and the willingness to run risks could put together a company and make it work.
| Technical niche Empi manufactures non-invasive biomedical devices and accessories that employ electrotherapy technology to treat medical conditions. Products include: TENS devices; Neuromuscular Stimulation systems; a system for treating incontinence; dynamic splint systems; and a non-invasive drug delivery system.
In 1977, Don Maurer had been Director, Neurological Research and Engineering at Medtronic, the largest medical electronics firm in the country, for three years. His salary was in the range from $55,000 to $60,000--at the time quite a comfortable range. "He was a very inquisitive person," says Earl Bakken, who founded Medtronic in 1949. "He was eager, honest, professional, very anxious to learn. He's determined to succeed, a hard worker, good with people." When the company founder holds these views of you, your position is fairly solid. At 41, Maurer seemed well-established in a satisfying career with a fine company.
So he quit! Maurer wasn't satisfied at Medtronic, he decided to start his own business. "If you're too thoughtful, and you're too introspective, you're liable to decide to stay where you're at. But I always like to challenge myself. In a way, I tend to put myself in a bind where I have to follow through. And that's what I did when I started my own company," says Maurer.
Some people who knew and liked Maurer had their doubts about his decision to break away from Medtronic, though they wished him well. Dwayne Murray, a Medtronic engineer for 20 years, remembers when Maurer made the leap.
"Well, I was skeptical, but not because he lacked ability. To me, at that time, Don seemed more like an engineer than a businessman. But he was able to go from being an excellent engineer to being a person who could develop and grow a business."
Breaking away. Maurer based his company, Empi Inc., on one core technology: Transcutaneous Electrical Nerve Stimulation (TENS). TENS grew out of Maurer's work at Medtronic, where he helped start the company's Nortech Division (purchased by Empi in 1992).
While at Medtronic, he helped design an implantable device that suppresses pain in terminal cancer patients. It generated electrical pulses that either block pain or release endorphins, the body's own pain suppressants. Unfortunately, the surgically implanted unit didn't always relieve the patient's pain. To pre-screen patients, and help decide if surgery would benefit them, Maurer invented a portable device that used elastomeric electrodes to deliver electrical impulses through the skin (i.e. transcutaneously). Many patients found that the portable unit--the original TENS device--controlled their pain, and preferred it to surgery.
To an outsider, pain control may seem a good basis for a company. But Earl Bakken, who has more than 40 years of experience in medical electronics, disagrees. "It's a difficult area. There's no such thing as a pain meter, and it's not obvious that pain is being relieved. Pain relief is so dependent on the way the device is used. "
TENS remains controversial in many quarters, because the mechanism by which it works isn't well understood. (Of course, it's true that the mechanism by which aspirin works isn't well understood.) But Don Maurer regarded TENS as the first of a family of products capable of improving the quality of life of patients. He saw pain relief without drugs as a major opportunity. To a degree, Dwayne Murray concurs. "He developed a product for which there was a medical need. But developing a market for that product was not easy."
So although Maurer started Empi by basing it on a new, groundbreaking technology, innovation wasn't enough. "You gather a few friends or associates around you to fill in the gaps in your own knowledge, and develop a business plan, and look at ways of financing the business. I cashed in all of my life savings, and anything that I had in the retirement fund at Medtronic. And while I was starting the company, I supported myself on a $19,000 a year job (at the Courage Center, a Minneapolis rehabilitation organization). So there were risks," says Maurer.
Mistakes? There were a few. "I grossly underestimated the difficulty of putting together a good sales and marketing organization," he recalls ruefully. "People with a technical background sort of assume that someone from sales and marketing, or management, understands how to organize such things. That wasn't the case. You have to stay very close to it. You have to educate yourself. You must know what's going on in sales and marketing and distribution."
Starting quite literally from zero in 1977 with one product, TENS, Empi's sales now run at an annual rate of approximately $65 million. And the trend is definitely upward. Empi now produces a complete line of non-implantable medical devices for quality of life improvement. The company makes products for neuromuscular stimulation, iontophoresis (a method of transcutaneous drug delivery), a system for treating incontinence based upon neuromuscular stimulation, a dynamic splint for preventing contractures, TENS systems, and a line of related accessory items.
The company spends between 5% and 7% of net revenues on R&D, and has a hatful of new products in the works. "Our motivation is not merely to sustain life, but to improve the quality of a patient's life. And our objective is to produce cost-effective health-care solutions," says Maurer.
How big can Empi get? Well, the firm presently employs 500 people. More will be added in manufacturing and sales over the next five years. The markets served by Empi are growing. To take just one as an example, treating incontinence could become a billion-dollar market. And devices for rehabilitation could easily grow into a $500 million to $1 billion market. Says Maurer: "By the year 2010 or 2025, Empi certainly could have sales ranging from $1 billion to $3 billion."
What enabled Maurer to punch through the problems faced by every startup? Perhaps Dwayne Murray has the answer: "Besides being a good engineer, Don doesn't give up. His dedication to doing what he wanted to do, and sticking with it, probably got him to where he is today."
Maurer, who holds 25 patents, remains his company's chairman, but no longer serves as CEO. He has moved into the role of chief scientific officer, though he remains very much in touch with operations. "I've always been the technical driving force behind my company," Maurer says, "and that's where I really want to focus all of my energies."