Entrepreneur of the Year

For decades Allen Breed pushed air bags -- which his only potential customers, the giant automakers, first tried to muscle out of existence and then tried to buy from someone else. Breed won

EOY: WINNER
FOUNDER: Allen Breed, engineer and lifelong inventor, now 68

MARKET ENTERED: Air bags. Market nonexistent at the time (1967). Product's only potential buyers -- the big automakers -- violently opposed it

STRATEGY: Pioneer product. Push for its acceptance. Vertically integrate to manufacture it

RESULT: Pretax profits of $110 million on sales of $401 million in 1995. Created industry

In a winter day in 1973 Allen Breed barreled in from a swing of sales calls, as fired up as ever, bearing the usual news: he'd been shot down again.

The perpetrator, this time, was General Motors. Word of it shocked no one. Nearly everybody else in Detroit had shown Breed, the tireless champion of air bags, the door. "We lost track of how many times we heard 'No," says Breed.

Dejection not being an option, however, on his internal dash, Breed met the bad news of that particular day with his usual fervor and chin-up cheer. "Allen is a guy who doesn't have a bad day," says Johnnie Cordell Breed, his partner in business and in marriage. "He has a good day or a better day."

Calling a huddle on the tiny company's shop floor, Breed told his remnant of engineers, "We're going to swing 'em, boys." They'd heard it before. It was his personal anthem.

"They don't like the moving parts," he explained. "OK, they're gone. We'll redesign the thing, simplify it. Maybe use a magnet. It's cheap. Probably take 30% out of the cost."

"He sketched it right there on the back of an envelope," recalls Harald Husby, then an engineer and now vice-president of the company.

A month later Breed was back on a plane bound for Detroit with a new prototype in his pocket. It was an even simpler version of his ball-in-tube sensor, a device that could detect a collision and activate an airbag within 25 milliseconds. It was a design that cost a third less to build. It would win half a dozen patents. And GM nixed it.

Over the next 10 years Breed would hear -- but somehow never register -- every objection imaginable: It won't work. It costs too much. Babies will die. And who wants a balloon shooting out of the steering wheel, anyway? He would assemble a collector's set of rejections from automakers around the world.

Not that the indefatigable entrepreneur ever stopped dogging those automakers. It may have taken a decade and a half, but in the end, he did "swing 'em." Today, as chairman and CEO of Breed Technologies Inc., based in Lakeland, Fla., he calls 21 of the world's car companies, including the Big Three, his customers. His air-bag sensors can be found under the hoods of more than 30 million vehicles. In fiscal 1995 alone, Breed sold 23 million of them, posting $401 million in revenues and netting $110 million -- an eye-popping 27% -- pretax.

The company's growth over the last eight years has been blistering -- from a scant $2.4 million in profitless revenues in 1987 to $89 million in sales five years later. In 1993 sales reached $153 million, before more than doubling to $324 million in 1994. Despite constant price pressure, gross margins have marched a steady slope upward, making Breed one of the most profitable suppliers in the automotive industry. And several thousand lives have been spared every year, thanks to the air-bag systems that Breed's trusty sensors have triggered in time.

As stubborn about holding onto equity as he was about selling air bags, Breed (along with his wife) holds 60% of the company's publicly traded stock, placing him among the wealthiest men in America, worth an estimated half a billion dollars last year. The battered Citroen he drove in the 1970s has been traded in for a chauffeured stretch. And a Lincoln Town Car. And a Mercedes. Not to mention the rest of a fleet that, including the red Ferrari, matches his customer list. His Florida estate sits on its own island.

All because he turned a deaf ear to customers. And refused to follow competitors. And ignored the warning, written in red, all over his bottom line.

Thirty years. That's how long it took for Breed's overnight success. Breed Technologies, with its more than 5,000 employees and branches in eight countries, went from zero to nearly half a billion dollars in sales, it's true, in less than a decade. But only after Breed had spent 20 years going almost nowhere.

Hardly his firstborn business, this company is more like the 68-year-old founder's great-grandson, the successor to two previous companies -- Breed Corp., founded in 1961 to design timing devices for the military, and Breed Automotive, spun out in 1987 to supply air-bag components to automakers. Breed Technologies, as the public company was rechristened in 1992, is about as far from whence it sprung -- a small contract- engineering shop in New Jersey -- as Sputnik was from Earth.

A guy who likes to get in on the ground floor -- and spend an awful lot of time there -- Breed, as a young engineer, spied opportunity in the rising military-industrial complex of the 1950s and 1960s and set out with Breed Corp. to design sensors for missiles and other armaments. While other military contractors rode the war demand of the '60s to the top, Breed Corp. never made it past the mezzanine -- in part because its founder got preoccupied with some futuristic devices that relied on the same sensing technology he had applied to weapon detonators. They were called air bags.

He made his first car-company pitch -- to Chrysler -- in 1967. That's when the fantasy started -- about how every car on the road would have air bags and how Breed's runt of an enterprise would squeeze out multibillion-dollar competitors to become a world-class manufacturer of air-bag products.

No one at the time would have bet more heavily -- or indeed worked more tirelessly -- against him than his would-be customers did. Not only did the automakers want no part of Breed the aspiring supplier, they wanted no part of air bags, period.