All the machines would be interconnected to the local utility's power lines. Installation could be handled easily by electricians for $500 or so. With routine maintenance, Burnett believed, the machines would last 20 years. By arranging the various components in a specific way and adding some proprietary features and design work, Burnett filed for a number of patents, which are pending.
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The opportunity was there all right -- Burnett was sure of that. As for starting a company, well, he'd faced bigger risks before. As a Navy SEAL team commander in Vietnam, for instance, he had taken part in commando raids to rescue POWs. Never doubting that Goldfire would perform, he and his wife, Mary, moved in spring 1990 to Bradenton, Fla., where they had honeymooned. "We could build this company anywhere," Burnett says. "Why not do it someplace we liked?"
All he needed was capital. Having spent $40,000 on designing the machine, and lacking funds to go further, he went to work for an engineering concern while he looked for seed money. A few venture capital firms seemed interested but nothing materialized. The fund-raising task ultimately fell to a man named Sunny Decker.
Decker, a local industrial-equipment salesman, quickly grasped Goldfire's promise. "Every business has two fixed-overhead items each month -- the electric bill and the trash bill," he says. "With a device that could eliminate both, you had a gold mine. So I volunteered to raise the money Keith said he needed."
At age 60, Decker has a huge number of contacts. Between October and January he raised $140,000, selling limited partnership shares at $4,000 each and taking a small equity stake himself. By the end of the year the Burnetts had moved into a 3,500-square-foot space in an industrial park, with part-time mechanic Decker supplying hand tools to build the units. Thus was born Waste Energy Inc.
Burnett knew he was undercapitalized, but he'd planned for that. His own operation is 25% fabrication and 75% assembly of parts from the likes of Westinghouse and Honeywell, supplied on a just-in-time basis. The steel cabinets for the Goldfire are built by a local metalworking shop. "By outsourcing, we cut our initial capital requirements by better than half," Burnett says. He got the company up and running for about $25,000.
Not that there weren't snags, like the time he lit up the first test unit and filled his little factory with smoke. "You couldn't see the back door from 50 feet away," he says. "It was a minor miscalculation, and we got it fixed." By last February Burnett and his tiny but talented crew were ready to unveil the first full-size Goldfire prototype. The local media and potential buyers were invited to take a look.
Iley Conley, president of a Bradenton Buick dealership, was so intrigued by the machine that he ordered a $41,500, 50-kilowatt model. "The concept is terrific for small companies like ours," Conley says. "Our trash bill is more than $1,000 a month, and we pay dearly to get rid of used oil and other things. I particularly want to avoid any liability for the waste we generate -- one of those Superfund sites has cost us thousands of dollars. If the machine can burn this stuff and create electricity to help run the business, it's a win-win deal for us."
The reaction was much the same in March, when Burnett hauled the machine to a Las Vegas trade show for owners of quick-change lubrication centers. He came home with contracts and commitments totaling $5.1 million, including some machines for a California man who wanted to help market them in Asia.
That wasn't too shabby for a company still doing research and development. Burnett had to move quickly into production mode, and to manage his accelerating operations he brought in Ed Hargaden, who had been general manager of Donzi Yachts by Roscioli International Inc.'s luxury sport-fishing line, also in Bradenton. But just as the company was scaling up to meet demand, the machine developed serious trouble -- hot spots in the combustion chamber. Burnett had to fall back on Plan B.
That was both good and bad. The Plan A machine was fairly sophisticated -- a combustion chamber hooked up to a turbocharger, which drove a generator through a transmission. The Plan B machine is much simpler; its heart is a Ford industrial internal-combustion engine (not unlike an auto engine) which turns a General Electric generator. The exhaust heat from the engine itself, reaching 1,150 degrees Fahrenheit, boils oil in a pressurized tank to produce the vapor that runs the engine. It is economically viable only if the fuel is pretty much worthless, which it is. A study done for the Environmental Protection Agency found that the salvage value of used oil had fallen from 20¢ a gallon in 1983 to minus 20¢ in 1988, as haulers in certain parts of the country charged to take it away.
The disadvantage of Plan B is that it takes 15% more vapor than Plan A to produce a given amount of electricity. On the up side, however, the Plan B machine is much easier to assemble. "We haven't abandoned Plan A," Hargaden says, "but it's way down in priority with me right now because we have something that works and will be much more reliable."
* * *
Hargaden's biggest challenge, he admits, will be controlling materials costs to achieve the goal of a 25% pretax operating profit. "So far we've had good luck with our vendors," he says. "We're getting original-equipment pricing from just about everybody, and we're getting good credit. But once we start cranking out more machines, I'll have to work on refining our costs."
The company can produce three Goldfires a day from the Bradenton site, and perhaps 20 a day from a much larger, nearby facility it's considering. As business builds, Burnett foresees a network of 10 satellite plants, together turning out 200 machines a day.
"We'll put them wherever it makes sense based on sales patterns," he explains. "It would take a total investment of less than $1 million, because I can open a plant for $50,000. All we need are some benches, some hand tools, a loading dock, and a few desks. And there's not a lot of work-force training to do. We can grow our people as we proceed, and pick the best of them to run these new locations."
