Duniway Park, Portland, Ore., August 6, 1984 -- At 6:35 a.m. the sun is breaking over the tops of the trees, and the air is cool and clear, although a bit hazy over Mt. Hood. Yesterday Vice-President Bush and his Secret Service men ran here, and the regular runners at this downtown track couldn't figure out why three men in suits were sitting in a car blocking the entrance to the parking lot. but today the lot is open, and Jon Birck has parked his Honda and is stretching. He wears red shorts and a black T-shirt with "The Seventh Annual Cascade Run-Off" in purple letters across the front.

"I'll be back in about 42 1/2 minutes," he says. His lips hint at a smile, but Birck, a slight man with pale skin and freckles, isn't kidding. He means he is going to run this 5.5-mile cross-country route in that amount of time, give or take 30 seconds. He pushes in the stopwatch button of his watch and takes off, half a lap around the track and then up a path through the trees, in a slow, springy stride.

A few months earlier, as chief executive officer of a small but fast-growing company, Birck had trouble finding the time to run. Northwest Instrument Systems Inc. was then three years old and poised to scale up development, production, and sales of a radically new kind of electronic instrument for electrical engineers. The fledgling enterprise had obtained the backing of world-respected venture capitalists, recruited top people from two of the area's most prestigious high-technology companies, developed an instrument it expected to become the core of its first product line, and moved to a new building. And, as Northwest's founder and president, Birck had become part of a new Portland-area elite -- people who had risked all to start their own companies.

To an ambitious electrical engineer from the Midwest who had no formal training or experience running anything like the company his dream had become, it was both scary and exciting. At dawn, Birck would slip out of bed while his wife slept, grab a bowl of Cheerios, and race off to the plant -- 13,000 square feet of glass and cement in an up-and-coming industrial park west of Portland. He kept a shirt and shorts and a pair of Nikes at the office, but often as not he skipped running, settling right down at his desk or walking around to talk with the 60 or so people who were building and selling Northwest's instruments. Although by this time he was no longer working until 11 or 12 at night, as he had during the company's earliest days, he still practically lived at the plant, and most nights he took work home. Not that he minded for a minute. Starting Northwest was one of the most exhilarating things he had ever done.

Then, suddenly, Birck was out. In May of 1984, after three years of working harder than he ever had in his life, he was asked to leave by his venture capitalists, who told him they needed a more experienced CEO to protect their investment. Now, cocooned in a swank, borrowed office on the 23d floor of a Portland bank building, he was driving ahead on plans for a new company -- and sorting through the pieces of the old.

If he had been born a generation earlier, Jon Birck might have spent his career managing a research group for a large company. But he came of age in an era when people with bright ideas started companies in garages and sometimes made millions and appeared on the cover of Time magazine. Maybe his company had outgrown him, as his financial backers claimed, although Birck didn't think the problem was that simple. But the real question he had to answer was: How could he make sure, when he started his next company, that he wouldn't get divorced from it so soon?

A team player from Indiana

At first, Birck couldn't even think about Northwest without his stomach acting up. The first week at home he cleaned out the closets, reorganized the kitchen, and went hiking in the mountains for a few days by himself. He didn't know what the founding ex-president of a company was supposed to do. Get another job? Wait for his stock to make him rich? He couldn't imagine spending the rest of his life out of the action.

The fourth of five children, the son of a mailman and a woman who stayed home with her kids, Jon Birck spent his first 18 years in rural Clinton, Ind., where he grew up mowing the grass, helping with the dishes, and working at the local Dog 'n' Suds. His father encouraged self-reliance. When Birck senior was asked by one of the three sons how something worked, he would tell him to take it apart. "It didn't grow together," he sometimes added. All three eventually became electrical engineers.

Clinton gave Birck a sense of steadiness and order that led him to believe that most of life's problems had one right answer -- an attitude that his Purdue University education reinforced. In the late 1960s, when Birck went to college, much of the country was in tumult over the war in Vietnam, but at Purdue's engineering school, the chairs were still in rows, and Birck and his classmates were in them. It was with his college friends that he first talked about starting a company. But "we didn't know what the world needed," Birck says, and after graduating, they scattered.

Like a lot of young electrical engineers in those days, Birck went to California to be "where things were happening." In June of 1970, he got married and moved to Santa Clara to work for an aggressive young company called National Semiconductor Corp. He found a lot to like -- and not to like -- in Silicon Valley.

At first, he found it tremendously exciting to work for a company on the cutting edge of an important new technology. Charlie Sporck, National's president, would get up at quarterly meetings and talk about doubling the company's size in the next year and putting up three more buildings."We all thought it was a big joke," Birck says, "but the company grew from $20 million to $200 million a few years later."

There was another side to the semiconductor industry, however, that made Birck uncomfortable. He saw engineers hired away from competitors, then "sucked dry and given nothing jobs" until they went to work for someone else. One engineer hired away from Texas Instruments Inc. went back to TI after a week when his new company tried to pump him about proprietary processes. It wasn't unheard of for an engineer who wanted a promotion to purposely obstruct the projects of other people in line for it.

"I grew up on team sports," Birck says. "I thought we were supposed to be working for the common good. I kept wondering: Is this necessary? Is this reasonable? Is this all there is?" Eventually he went to work at a small company called Precision Monolithics Inc., to learn about linear circuitry. Then, after a couple of years, he headed off to graduate school at Stanford University.

Tektronix Inc., the Oregon company Birck joined after Stanford, showed him that it was possible to build a business with the kind of values he had grown up with. Tek managers talked about treating employees and customers well, nurturing relationships for the long haul, and giving people enough rope to make their own decisions and mistakes. "There was this attitude that we were all in this together," Birck says. "I loved it."

The years at Tek tested his one-problem, one-answer model of the world. He went to seminars on such topics as conceptual blockbusting, heard associates in the research group talk about creative analogies, and took some classes in business at Portland State University. There, the chairs were arranged in a circle and the case studies had more than one right answer. That may not sound like much to a liberal arts major, he says, "but to an engineer from Purdue, it was a Big Aha."

All of this might have added up to nothing more than personal fulfillment had Birck not been disturbed by a sense that Tektronix had a narrow view of its future. Decisions were made not to enter the computer market and not to pursue business applications of the technology that the company had developed for engineers -- decisions that some of the young managers found hard to understand.

"Tek wasn't hitting on all eight cylinders," Birck says. Although in many ways it was the best place he had ever worked, he and his co-workers just weren't accomplishing what he thought they could. That inefficiency led him to start thinking how he could build something better: a company with the values of Tek and the energy of the semiconductor industry.

Birck never talked much about wanting to start a company, but the idea had been in the back of his mind since his days at Purdue. Being an engineer, he figured the opportunity would present itself as a technology window, so he just waited patiently for one to open up.

In 1979, the window appeared, in the form of the Apple II personal computer.

To many engineers, the first personal computers looked like sophisticated toys. Birck saw them as a "probe into the model" -- a new factor that could change the way people viewed electronic instruments. Traditional intelligent instruments relied on dedicated control computers usually built into each instrument. The intelligent instruments could then be hooked up to small computers to analyze the data. Birck speculated that if someone figured out how to work an instrument off the computing power of a personal computer, the user could avoid the duplication of intelligence that occurs when each instrument has its own, and could use the personal computer to document and manage products. He bought an Apple II and took it home to see what it could do.

His first experiments were fairly basic. He made an electronic controller for a kiln he used for stained glass work; tested a solar collector he had built; and hooked up the family security system, the lights, and the heat to a control system that would turn everything on and off. It was hobbyist stuff, but it indicated that larger things were possible.

Karen Birck was not particularly thrilled when her husband told her in June of 1981 that he wanted to quit his job to work fulltime on a business plan. As a CPA, she was capable of supporting the two of them indefinitely -- except that she was pregnant with their first child. She was concerned that Birck hadn't done anything like running a company before.

The lack of operating experience didn't bother her husband, however. Other founders he admired -- Bill Hewlett, David Packard, and Tek's Howard Vollum and Jack Murdock came to mind -- had learned on the job.He told Karen they would be better off if he got some momentum going while she was still working. Perhaps by the time the baby arrived, he would be back on a payroll.

After convincing his wife, telling his boss didn't seem particularly momentous. "There was an element of apprehension," he says. "You wonder if you're stepping off a cliff. But you take a deep breath and say, 'Here we go." Two weeks later the people in his research group gave him a cake and wished him well.

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.

Maerz also had Intel-type hard edges. He talked fast, tended to quantify things, and had integrated Intel's results-orientation and constructive-confrontation techniques into his management style. He was not a guy Birck could imagine putting his feet up with and "blue-skying" about some Utopian vision. Maerz was the kind of guy, Birck thought, who would want to know what Utopia looked like -- what kind of trees were there and how high the hills were.

But Birck wanted a manager, and he figured managers needed to think that way. Besides, he wanted the backing of Kleiner, Perkins, and he wasn't sure he would get it without Maerz. So he hired him. And by May, Kleiner Perkins -- along with Sevin Rosen Management Co., another venture capital firm -- had committed $800,000.

"Letting people follow their noses"

The second product called for in Birck's plan was the logic analyzer, the basic test tool of the digital designer, and Mike Maerz had some strong ideas about how it should be executed. Birck and Cordray had been willing to compromise some performance standards to meet price objectives, but Maerz was not. He was convinced that the people who used a logic analyzer were much more concerned about what it could do than how much it cost.

Achieving the kind of performance Maerz had in mind would require two changes in Birck's specifications: a separate instrument chassis and a slightly higher price tag. But even so, Maerz pointed out, Birck's basic goals -- that the box hook up to a personal computer and sell for significantly less than competing instruments -- would still be met.

Birck said fine. His job was to set goals. Maerz's was to exercute. Neither man saw this shift as a major strategic change.

The money from the venture capitalists -- combined with the sexiness of a world-class project -- allowed Maerz to attract a strong team to design, build, and sell the logic analyzer. And it was this team, according to Cordray, that made the biggest contribution to Northwest's evolution. "A lot of the engineers came from Tek," he says, "and at Tek, the attention was on high performance, not low cost. It was a case of letting people follow their noses into what made sense."

What made sense to the engineers was an instrument as good as the industry's best. Apparently, the venture capitalists agreed: Early in 1983, Sevin Rosen and Kleiner, Perkins put in another $1.3 million.

The week that the logic analyzer was introduced, Northwest made the covers of two electronics magazines. People at the company were euphoric. They had set high standards and met them, and customer reaction was even better than they had hoped. Soon the logic analyzer was selling better than the oscilloscope ever had.

Birck was pleased -- and ready to move on to the third step in his plan.

There are two major segments of the instrument industry: analog instruments (the traditional test and measurement tools, such as oscilloscopes, used by everyone from television repairpeople to physicists in order to measure continuous electrical currents) and digital instruments (which are used primarily by engineers designing hardware and software to measure electronic pulses in computer circuits). Birck's expertise lies in the analog area, but he had planned all along to develop both kinds of tools. Northwest's first product, the oscilloscope card, was an analog instrument; its second, the logic analyzer, was digital.

The next part of Northwest's plan called for bringing in analog people. Although Maerz and many others who had worked on the logic analyzer were eager to stay focused on digital design, Birck was not. He hired a 19-year veteran of Tektronix to develop a proposal for further analog development. But when the proposal came in a month later, it was clear that the project was larger than Birck had predicted, and would demand more resources by a factor of two to three.

"We couldn't afford to do both," Birck says -- at least not on the scale originally planned. Northwest got a third infusion of cash that September ($3.3 million, from a group led by Hambrecht & Quist and J. H. Whitney), but the young company's engineering budget was already the appropriate size for its stage of development. So Birck argued for scaling down the digital project and going ahead with a revised version of the analog program. There were strategic advantages, he was sure, to playing in both leagues.

To Maerz, vice-president for sales Jim Fischer, and Northwest's board of directors, Birck's proposal didn't make sense. The logic analyzer was a solid revenue producer. Northwest's marketing people and designers had digital backgrounds. Although the analog market was bigger, the digital market was growing faster. And analog competitors, such as Tek and HP, were more entrenched.

Birck didn't seem to be facing the reality of what his company had become: a team of people who had built a successful, high-performance digital product. He kept talking about his plan, not seeing that Northwest now had a momentum of its own.

No one had foreseen the exclusion of analog instruments from Northwest's future, but on a wave of logic-analyzer momentum, Maerz, Fischer, and the board pushed for it. And after a three-month debate, in December of 1983, Birck gave in.

"There was an opportunity in each hand," he says. "And we were set up to take advantage of the digital one."

"Companies exist not because some guru started with some great vision," says Rick Cordray, looking back on the decision, "but because some people had some ideas about what they could do, and got started, and worked hard. Sometimes there are big course corrections."

Five months after the decision to go digital, Birck flew to San Francisco with Maerz and Fischer fow what he thought was going to be a routine board meeting. It was unusual for the directors to call a meeting in the Bay Area, and on the way down Birck wondered about the effect of his battle for the analog option. His position was less clear in the new, more narrowly defined Northwest. Everyone agreed that one of his strengths was as a long-term product strategist, looking into the future to see where new markets and technologies intersected. With the company focused on a technology that wasn't part of his background, what role was he now to play?

The night before the board meeting, Birck had a meeting scheduled with two of the lead investors, Jim Lally and Dave Best (of Hambrecht & Quist), in a conference room at the airport hotel. Lally and Best gave the news to him straight: Northwest needed a strong leader who had managed a rapidly growing business already; Birck had not. To attract someone who had, they would have to offer the CEO's job, and they thought it would be best if Birck resigned. He would keep his stock and a seat on the board.

Birck says he was stunned. "Life after Northwest wasn't part of my mental set." He had dedicated three years to the company. He had left a secure job, put his marriage on the line, taken out a second mortgage on his house, given himself a below-market salary (and then, for a while, not even cashed his paychecks), exposed his dreams and naivete to bankers, lawyers, and investors, fought to keep his company committed to its original strategic direction, and given in when he couldn't convince his team that he was right. And now that the company was poised for what all of them hoped would be a period of steady growth, Lally and Best -- the investors he had recruited and trusted -- were asking him to bow out gracefully.

But he said OK. Just like that. "You know when you're beat," he says. "They had all the cards. They didn't come to that room to negotiate.

"Sure I was upset. Wouldn't you be? I could have screamed and stamped my feet, but where would that have gotten me? I had an interest in seeing Northwest continue as a prosperous company. I didn't want attention focused on the conflict."

A couple of days later, he had cleaned out his desk.

Back on the run

"People ask me what I do all day," says Birck from his new office, loaned courtesy of Wayne Kingsley, a Portland venture capitalist who didn't invest in Northwest. "They seem to think I sit here and look out my pretty window." The view is nice -- Portland bisected by the Willamette River, from 23 stories up -- but Birck has more on his mind than scenery.

After he got over the shock of his dismissal, he made the rounds of people he had worked with at Northwest -- venture capitalists, accountants, lawyers, suppliers -- and asked for help in assessing his strengths. Two pieces of advice Jim Lally had for anyone starting a new venture made a particularly strong impression: Surround yourself with the best people you can find, and make sure everyone has the same goals.

As Birck set out to define his new company -- its products, he says, will be "cousins" of Northwest's -- his top priority was recruiting. So far, he has signed up four people, all of whom are "gainfully employed" and expected to remain so until the rest of the key players are in place. The five meet one evening a week to work on a business plan. Although Birck has talked to enough potential customers to feel sure his idea is a good one -- and enough venture capitalists to think he can get the backing he needs -- he will take the idea no further until the team is complete.

In fact, if he doesn't get the kind of team he wants, he intends to drop the idea. He doesn't want to be what Jim Lally calls a "decathlon champion entrepreneur" -- a Nolan Bushnell-type who starts a company and then goes on to the next event. This time, Birck wants to build something he can stay with for the long haul.

Sometimes, he says, his wife asks why he wants to put himself through the hours and the hard work again. It is for the same reason he runs, he tells her. Other people pound themselves into the ground for the cardiovascular benefits or the epinephrine high, but Birck started running so he could participate in the 1983 Cascade Run-Off, a 15K Portland road race that attracts top runners worldwide. Although he was so slow as a boy that his high school baseball teammates called him "Possum," after watching a wave of 7,500 people running one year, Birck decided he wanted to compete.

"Joan Benoit ran here and won," he says. "There are bands along the course. People cheer you on. How many times in your life do you have a chance to participate in a world-class event? It's like Mount St. Helens. I'm glad I was in town when it blew up. I like being out there participating with everyone else."