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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Beth Ewen
September 2006

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How Lee Jones rescued Inlet Medical

Inlet Medical Inc. was out of money when Lee Jones left Medtronic Inc. to run it in 1997. She tells how she managed resources until it become profitable in 2004, then topped $1 million a month in sales, then was acquired by CooperSurgical, a billion-dollar publicly traded company. The sale will be complete this fall, when Jones will leave the company and look for her next venture.

“CooperSurgical, they actually found us. They had contacted us for informal meetings. We knew about them because they’re in the same space, products for OB/GYN surgery.

They’ve done about 26 acquisitions in the last 10 years. We would interact with their people. We’d exhibit at the same shows. Their dealmaker called me. I had a chance to meet with their executive team. This was in April and May of 2005.

We had a plan to take the company out to sell it in the fall, so we told them they had an opportunity to buy us before we went to the market. They had to make up their mind before a certain date.

I was hired originally to restart the company, grow it and sell it. We had taken it out a couple of years ago, 2003, to sell, but the market was horrible. We couldn’t get the money we wanted. So we were in no hurry. We continued to grow. We continued to be profitable, so that we could get the valuation we wanted.

I started in October of ’97. The company had two employees and no money, and an earlier version of a product. I liked the technology. I was at Medtronic for 14 years. I was interested in women’s health. I met the only active board member; he tapped on a friend to raise enough money to bring me on.

It was not a huge risk for me. I knew how to run a business. I looked at this business as, What’s the worst that could happen? If it failed, it wasn’t me. It already died.

It took much longer than I thought. Now we’re doing over a million dollars in sales a month. The Inc. 500, we made No. 410 on the list.

We’ve done a really good job, a fabulous job, of managing our resources. We raised $6 1/2 million over the years, which is not a lot.

We’ve grown sales 50 to 55 percent a year on average each year. It was steady progress, but slower than I expected. I think that’s always the case.

Until we were profitable I had to make sure the money lasted. We turned profitable in 2004. No. 1, we cut our manufacturing costs. We redesigned our product so it cost less to make. No. 2, we increased the price. No. 3, we sold more units.

When I first started, it made sense to me that there was good basic technology, but the product was wrong. This was a wound closure product for obstetrics and gynecological surgery. I changed it to a disposable product, for one-time use.

Before, it wasn’t disposable. It was pretty obvious that this doesn’t even make any sense. You sold one and it lasted for 10 years. We still see this original product out there sometimes. We finally discontinued making it, and switched over to disposable.

At Medtronic I was in the new venture area. Our budgets were little. You wouldn’t think that at a big company like Medtronic, but because we were offshoots we had to manage the money. It was the same thing at Inlet, just the source of the money was different.

I knew CooperSurgical was a good buyer, first of all because it had to be a strategic fit. There was a legacy that Inlet could add to their company. That was appealing, because of what our people had worked to build here. I’m happy to see that. I knew their company, and I knew people that had been acquired by them.

Our final buyout number is based on sales through this quarter. I’ve really had no time to delve into the sales process before, and make improvements.

For example, we have an inside sales organization that works with our outside sales force. We interviewed our outside sales people and realized they were most successful when they paired up with our inside force. So that was a no-brainer. We had three insider sales people, but now we’re up to eight. We hire interns who want experience in sales and they bring a fresh approach.

The one thing I’ve learned is to understand the terrain when you go into it. The company, with its original investors, it had failed. We ended up dragging the old investors with us, and that kept us from getting certain types of money.

I know much more about capitalization, how much it will take, whether the structure is right. Just like if you rebuilt your house and walked into another house, you could tell if the foundation was wrong. The capital structure, that’s almost more important than operating the business. I feel good that I’ve learned that.

I don’t want to be disloyal to the original investors, and they got paid now with this sale so I’m glad about that. But I wish I would have cut my losses and started over at the beginning.

There’s a small management team now at Cooper, that’s looking at the future of the company. In a way it’s been kind of fun. I say, It’s not my decision, but I couldn’t do it for a long time.

I didn’t get hired to just sit in a chair. I did have a small stake as part of my salary, but  I didn’t look at it as feathering my nest. I feel good about having these successes. I feel like I got a paid education.”

[contact]
Lee Jones, Inlet Medical Inc.:
952.942.5034, ext. 105;
lee.jones@inletmedical.com;
www.inletmedical.com

— As told to Beth Ewen