Birck doesn't remember celebrating the big day at home, although he does recall signing for a second mortgage on his house. Mostly, however, he remembers developing a business plan and starting to show it around. One of the people he showed it to was a guy he played softball with at Tek, Rick Cordray, a program manager who was also experimenting with instrumentation and Apple computers.
The idea, Birck explained to Cordray, was to design and build a new and more efficient kind of instrument. Birck said he was going to literally match the capabilities of instruments that sold for anywhere from $500 to $30,000 with computer modules that would plug into a personal computer, perform the same functions, and sell for $1,000 to $10,000. The first product would be two cards in a metal case that would perform the functions of a basic oscilloscope. He wanted Cordray to design and build it.
Birck was blunt about money. He planned to bootstrap the company on his savings and the cash he had gotten from remortgaging his house until he had a prototype to show potential investors. Not only was there not enough for salaries, but Cordray would have to keep his job at Tek for a while so he would have some cash to contribute. If they were successful, Cordray would share the wealth and be the young company's vice-president for engineering.
For Cordray, a dark and unassuming PhD from Rice University who had spent most of his life in school and in research labs, the appeal lay mainly in the chance to learn something about business. He had no long-standing ambition to start a company, though. "Northwest happened to be an opportunity that came up when I was ready," he says. "It was not the dream of my life."
Working nights and weekends, Cordray took charge of the engineering side of things, and Birck did "everything else," which included figuring out where to buy the stuff Cordray needed, figuring out how to pay for it, and continuing to work on the business plan. Birck knew they were going to need more help eventually -- in marketing, for example, about which they knew little or nothing -- but he and Cordray couldn't afford more bodies as yet.
Sometimes the two men talked like revolutionaries, speculating that they might completely change the way people made and used instruments. A big part of the thrill lay in how they were doing it -- not in years with squadrons of people on the campus of one of the industry leaders, but in a few months with a couple of guys in a 200-square-foot space where the desks and the bench were in the same room. It was a back-room engineer's dream -- no meetings, no conflicting priorities, no bureaucracy telling them that what they were building wasn't what the market or the company needed. They were going to build something, put it out there, and see what the world said.
A phone call to California
The business press is full of stories about entrepreneurs being outgrown by their companies. But "outgrown," as it is often used by the press and by venture capitalists, is a catchword. The outcome can be as much a question of direction as speed. And a company's direction can change imperceptibly, one step at a time.
In the months after Northwest's birth, Brick found that he had underestimated the costs of just about everything -- people, equipment, materials, space. By November, the money was nearly gone. He arranged a small financing with a local investment company and received promises of more. Birck and Cordray added a secretary-administrator, a second engineer, and more space.
That month they also got their first response to an ad they had placed in Byte magazine -- an order from the University of South Florida, which said it wanted to use Northwest's oscilloscope to measure the impact of boats running into piers. In December, they boxed one up, then shared some wine. "It was exciting," Cordray says. "We were only four employees, and we shipped a product. It was the first selling I'd ever done."
Pretty soon they were shipping 5 to 10 oscilloscopes a month. The sales were encouraging, but by spring, Birck was beginning to wonder about the company's rate of growth. His heroes at Hewlett-Packard Co. and Tektronix had built their companies slowly on savings and revenues from early products. Yet, while revenues were coming in as Birck had planned, costs continued to be much higher than expected.
By February, when the local company still hadn't produced the promised second infusion of cash, it was clear that Northwest would have to look elsewhere for money. Cordray had gone to school with the wife of a partner in one of the more well-respected venture capital firms in northern California -- Kleiner Perkins Caufield & Byers -- and Birck decided to give them a call. Jim Lally, the Kleiner Perkins general partner who eventually urged the firm to invest, told him to stop by next time he was in the Bay Area.
Lally, like most venture capitalists, prefers to invest in an entrepreneur who has started a company before -- or at least one who previously led a fast-growing division. But his second choice is an entrepreneur who recognizes what he doesn't know, and Birck seemed to fall into this category. Lally said he thought Northwest needed a general manager, and suggested someone he had worked with at Intel Corp., Mike Maerz. Birck agreed to call Maerz, and Lally promised to start lining up some money.
Mike Maerz had the kind of bottomline business experience that Birck and Cordray both lacked. He had earned degress in electrical engineering, worked for IBM Corp. as a design engineer, done a stint in the Navy, worked at Intel for six years in marketing and as a product manager, and gone on to run the microcomputer division at Tektronix.
