The founder of 26-year-old gadgetmaker C. Crane talks about how he develops new products, the latest of which aims to save energy
It's almost becoming a clich? to predict that entrepreneurs will lead the U.S. out of recession and into a new clean-energy economy. But what compels those smallest of companies to invent and innovate, given the odds against success? For Bob Crane, the 58-year-old president and founder of C. Crane in Fortuna, Calif., the driving factors are independence, altruism, and ambition. He spoke recently to Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.
President Obama is pushing new federal efforts to promote energy efficiency in the U.S. How much of the emphasis on the alternative energy economy affects your company, which is pursuing breakthroughs in new lighting technology?
We don't really pay a lot of attention to the outside stuff. We stay in our garage, where a lot of the techniques come alive to make things like this. In fact, I think the American garage is a very powerful place to innovate products, a source of ideas, and the foundation for America. And small businesses are the right size to produce innovations, because they are highly motivated and not insulated from the market.
How did you get started in business?
My wife and I started C. Crane at the kitchen table in 1983 with $300. I had owned a contracting firm in the Bay Area, but we moved out to the country??ortuna is about 250 miles away from Portland, Ore.??nd couldn't get our favorite radio stations. So we developed an antenna for a radio and started a business selling them as a sideline.
How big is your company now?
We have 50 employees. We use technology and contractors to keep it at that size, since if you stay under 50 in California you're exempt from a lot of state regulations. Even as we grow, I'll keep 50 as a core group and expand by doing things like outsourcing to call centers.
Your radios, antennas, batteries, and other specialty products have become popular with niche customers looking for something beyond what they can get in a drugstore or hardware store. But now you're innovating again, this time in the energy-efficiency arena. What are you doing and why?
We started a new division a year ago called GeoBulb, and we're in the process of separating that out so it becomes its own corporation. We're specializing in developing LED [light-emitting diode] bulbs that are highly energy-efficient and long-lasting.
The goal is to save the U.S.??nd hopefully, the world??nergy. There's a tight-knit group of engineers going after that goal, about 3,000 companies worldwide. We have a VP who's doing an excellent job and two other engineers working full-time on the project.
Like all business owners, you have to be in it to make a profit. How much of your motivation is monetary and how much is altruistic?
We truly have a vision to save the world energy. We have a sense of loyalty to this country and to humans in general, so we feel this is something we must do. Of course, we wouldn't be fulfilling our mission if we didn't make it commercially available. So, I guess it's 100% altruistic, and we hope that we'll get paid in time. We've done business this way for 25 years, and we're fine. I don't have a Ferrari, but even if I had the money I wouldn't buy one. I have no need for it.
What kinds of breakthroughs are you making with the LED bulbs?
Our product, the GeoBulb, will eventually replace compact fluorescents. It's a direct-replacement bulb that uses 7.5 watts of power to produce as much light as a 60-watt incandescent bulb and lasts for 30,000 hours or up to 10 years of daily use. That's half the energy of a compact fluorescent and it contains no hazardous mercury or lead.
We're working on making it better all the time. In about two weeks, we'll be releasing a new, high-intensity LED bulb for applications like jewelry stores and museums. It'll cost about $50 but it will last a minimum of four years, so the buyer will have clear ROI within two or three years. We're considering offering a five-year warranty for continuous use, which we believe will be the longest guarantee ever for a light bulb.
It's expensive to do the research and development needed to refine and commercialize your technology. Do you have government backing?
We've done a couple jobs for the government, but in general we don't like to take handouts. The truth is, half of our profit goes to R&D because there are difficult electronic problems to solve using the longest-lasting parts, which is what we're committed to doing. So, we have patents pending. We've mortgaged our house. We will tap outside investors, but probably only when we get to the point where we need to build inventory.
Your GeoBulb currently costs $99.95. That's a lot more than most people expect to pay for light bulbs. Who are your customers?
Our customers now are early adopters. They are under 40, they're heavy environmentalists, and they recycle every scrap of cardboard. The others are commercial users in places where they have to pay someone to change a bulb. When you add in the security clearances and labor costs at places like government installations or large hotels, it's cost-efficient for them to use our bulbs.
As you bring down the cost with research and innovation, how do you broaden the appeal of your products and market them to a wider customer base?
As an entrepreneur, I know we have to make ROI the most important selling point. If you can see your energy bill go down, that's what customers are looking for. In terms of marketing, timing is everything. Right now we're biding our time until we get our production up and price down. Because of the contacts we have in the radio industry and over the Web, we'll be able to reach a huge audience when we're ready.