Company Profile: Crash Course

In 1990 Radar Control Systems was an obscure and productless R&D company -- and all but dead. Then a professional entrepreneur took the wheel and built a robust business that's outpacing the likes of General Motors, Ford, Rockwell, and TRW

Don't get so caught up in business details that you can't sustain your vision, and don't get so drawn into the vision that you can't make a business of it. If you insist on vision only, the risk is, you never escape being a small company trying to do it all."

-- Paul J. Bouchard

It was no accident that Paul Bouchard accepted the position of chief executive officer of Radar Control Systems (RCS) in 1990. He was in a Lincoln Towncar hurtling along Interstate 5 in San Diego when the vehicle in front of him slammed on its brakes and nose-dived to a sudden stop. "I felt this chattering," Bouchard recalls. "I was sure it was my teeth saying good-bye." The sensation actually was the Lincoln's antilock brakes saying hello: the Towncar had slammed on its brakes, too.

Outfitted with the latest in automotive collision-avoidance technology, the Lincoln was responding to an RCS-developed radar transmitter-receiver in its grillwork, which had scanned traffic conditions down the road and sent real-time data to a computer processor. Intricate software had identified the car ahead, calculated the rate the Lincoln was closing with it, concluded that both vehicles would be accordioned into scrap unless something was done, and fired off a signal that automatically applied the Towncar's brakes -- all before the swiftest of human feet could have begun to stir.

Bouchard's 42-year past may not have flashed before his eyes, but his future did: let's see, if every car in the world were equipped with this device, there would be no accidents. . . . 8.5 million new cars are sold each year. . . . RCS could sell its invention to automakers for maybe $500 each. . . . Bouchard sponged his forehead and announced to his fellow riders, "OK, I'll take the job."

His companions, a pair of executives from Allstate Insurance Co.'s Product Development investment arm, mopped their brows as well. The job in question involved Bouchard's taking over the administration of RCS, an obscure research-and-development company vying for a place in the emerging market for intelligent-vehicle highway systems (IVHS) -- a market that was also likely to garner its share of federal funds. The San Diego-based company was going up against the R&D labs of huge corporations -- Ford, General Motors, TRW, and Rockwell among them. As the major backer of RCS for the past two years, Allstate was about to throw in the towel when, after two decades of tinkering, RCS's founder had yet to come up with a commercial product. As a last try at establishing a beachhead in the soon-to-emerge multibillion-dollar market, the Sears-owned company hoped to lure entrepreneur Bouchard from Boston, where he had just founded his own traffic-advisory-service company.

In October 1990 Bouchard crossed the Great Divide. On the other side awaited what he deemed "an inventor culture -- technology plus opportunity -- that no one had pieced together. To the extent that the IVHS industry had developed, I knew as much about it as anyone, because there wasn't yet that much to it. The founder had invented and engineered the product; I'd invent and engineer the company."

Not so fast there, Bouchard. Here are the components he inherited:

Cash $177,453

Inventory $16,944

Prepaid expenses and other current assets $76,155

Total current assets $270,552
Accounts payable $47,286

Accrued payroll $259,732

Other accrued liabilities $32,692

Current portion of long-term debt $46,307

Total current liabilities $386,017
Long-term debt $1,949,022

Revenues (fiscal year ending 10/31/90) $180,000

Expected value of market within 20 years $200,000,000,000

Number of customers 0

As if those numbers weren't discouraging enough, the radar sensor's housing was too big to fit into a passenger-car bumper, its parts were too fragile for the rigors of winter, and its protuberant parabolic surface curiously inspired passersby to test-kick it as if it were a tire. But RCS's product worked, which was more than any competitor could claim. "There's nothing like being first," Bouchard exulted -- for the cashless moment.

"Perception is reality. When you're a pioneer playing with established big guys and you create momentum in the perceived leadership role, be nervy enough to fling open your doors and let them see in. Then be capable enough to keep them open. If you claim you're doing a certain thing and then have to duck down and hide, no one will believe you from that time forward."

-- P.J.B.

Among the new CEO's first steps was to dismiss the company's local auditor and install Big Six accountant Ernst & Young. Not because the local firm had been the bearer of bad news, but because a Big Six firm will cut deals for small companies, reducing bills and deferring costs in the expectation that the acorns will grow and buy services at normal rates. Such arrangements are venture capital of a sort, Bouchard holds, and when he went after real capital, investors would feel more comfortable with a Big Six firm behind the numbers.

Among the accounting firm's first steps, in turn, was officially warning stockholders that "the Company has a net capital deficiency [of $1,808,942] at December 31, 1990. This condition raises substantial doubt about the Company's ability to continue as a going concern." The caveat contradicted inventor-founder John W. Davis, who in a business plan composed just a few months before had asserted that with the product "priced at $500 per unit, revenues from sales and installations could easily increase to one billion dollars within ten years." In a perfect world, where original equipment manufacturers reach decisions in a week, competitors are compassionate, and lawyers sue only with great reluctance, Davis would have been right; but shown that in reality his company was way behind, with meager prospects of catching up, he amicably departed.