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In the Studio

HATTIE: Hi. I'm Hattie Bryant. So often we are asked: How do you decide what companies to study on SMALL BUSINESS SCHOOL?

We look at many factors. What kind of business is it? Where is it located? Does it create jobs? Is it committed to the community? But above all, we ask: Does this company represent the best of breed?

In June of 2000, we first met Ruth Ellen Miller and her partner and father, Jack, when Ruth Ellen was named Small Business Person of the Year from the State of Delaware. She caught our attention because she and her father hold more than 100 patents. They moved their company to a business-friendly state, and they have invented a product that is loved by their customers. I have never met a pair who could more clearly teach us how to turn an idea into a profitable business.

Step into our Master Class in Seaford, Delaware, with Ruth Ellen and Jack Miller.

(Voiceover) This is the new look of light, and what you see represents a technology breakthrough.

JACK MILLER: (Voiceover) It really is a quantum jump to go from lightbulbs to fiber optics. And I see fiber optics as the lighting product of the future. We got this photon approaching a lens surface at an angle.

RUTH ELLEN MILLER:

Right. HATTIE: (Voiceover) But the big vision to present and preserve the great art and treasured artifacts of the world, Ruth Ellen Miller and her father Jack are one museum at a time changing the way we see.

RUTH ELLEN: And here's this beautiful piece of artwork and because the light is dull and dingy and is out of balance, it's the artwork as well. Yeah, that's interesting. I understand the history behind it, but it doesn't really excite me. Because if I can take two things or two objects and light them side by side, your eyes work well and suddenly you go, `I see what I've been missing.' If they can see it, I've made a sale.

HATTIE: (Voiceover) Ruth Ellen and Jack Miller launched their company, NoUVIR, in 1990, and today its systems are found lighting Thomas Jefferson's handwritten draft of the Declaration of Independence, Marilyn Monroe's white subway dress from the "Seven Year Itch," Faberge eggs and great art in dozens of museums around the country. With nine employees and $1 million in sales, NoUVIR builds highly specialized lighting products specifically developed for museums. And it has succeeded at establishing a new standard for lighting. The light has no ultraviolet and no infrared energy; thus the source of the company's name, No UV and no IR.

RUTH ELLEN: Well, when you look at traditional lighting, what you discover--let's say track lights or a lightbulb, what you find out is that most of the energy, most of the light that comes out of that filament is something that you don't use to see with. It's invisible. It's either infrared or it's ultraviolet. And like 94 percent of it is infrared and about another percent of it is ultraviolet.

HATTIE: And that's manifested in heat, right?

RUTH ELLEN: Infrared is heat. That's all it is.

HATTIE: So a traditional light is putting out a whole bunch of heat, hurting the artwork and not letting me see the artwork any better.

RUTH ELLEN: Exactly.

HATTIE: So we have a lot of waste?

RUTH ELLEN: Right. And so what you do is with the fiber optics, you tune the light in the fact that you have only the visible part of it.

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HATTIE: OK, RUTH ELLEN, you're a California girl, just like me. Now what are you doing in Delaware?

RUTH ELLEN: I'm running a manufacturing business. And the reason is is that in California, it would have been really hard to keep costs down. But here in Delaware, it's a pro-business state, it's got low taxes, less regulation. And it's a better place to do business.

HATTIE: (Voiceover) The Millers live in this completely restored 1836 Victorian mansion. It sits next to the NoUVIR headquarters.

RUTH ELLEN: This house is the next step marketing wise. Come on in.

HATTIE: (Voiceover) This is a showcase for the historic preservation community to study how fiber-optic lighting can be used to create the feeling of the past and, at the same time, do no harm to fabrics and wood finishes.

RUTH ELLEN: This painting represents all my junior high, high school and my first year of college journey. It's by Peter Elenshot. It's called "Nags Head."

HATTIE: Tell me how this painting would look different if it had the old-fashioned--the kind of light that most people are using right now.

RUTH ELLEN: If you put track lighting on it, notice how white the waves are and how green the hills. That would turn duller.

HATTIE: So fiber optics is more like sunlight than traditional light.

RUTH ELLEN: Yes. It's evenly balanced. There's the same amount of blue in it, the same amount of red, the same amount of yellow. Whereas if you look at a track light, a track light will have 10 times the red in it than it has blue. It wouldn't quite be the same painting. It would still be beautiful. You wouldn't really know it until you turned on the fiber optics and could compare, and then suddenly you'd go, `Wow.'

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HATTIE: When did you decide, `I want to own my own business'?

RUTH ELLEN: When I had worked for Dad for about 10 years. I kept looking at what we were doing for clients because we were in the R&D business, and we developed new products for them. And then I heard this man talk about the problems of museums, and I talked my Dad into saying, `Let's be our own client.' And he said, `OK, but guess who gets to run the company? You do.'

HATTIE: So you convinced him to walk away from a profitable business in order to join you with your ideas.

RUTH ELLEN: Both of us walked away from a profitable business.

JACK: Years ago, I founded a consulting business which was devoted to developing proprietary products for other companies, and sometimes big ones. And in doing so, why, we managed to develop a lot of patents because we just do proprietary stuff. We don't make just incremental changes, so we invented some things. These now are inventions that are actually manufactured by our clients.

JACK: So this accumulated a bunch of patents. (Voiceover) And now I've got so many patents, the patent lawyers started hiring us as expert consultants in patent litigation.

HATTIE: There are millions of people--and hopefully they're all watching this show right now--millions of Americans who invent things every day in their garages. And they think, `I'm going to make a million dollars with this.' Why don't more people successfully bring their ideas to the marketplace?

JACK: Well, first of all, most inventors kid themselves and they think that all they need to do is create an invention, maybe with a prototype, and that somebody is going to buy it--a big company is going to buy it from them. It isn't so. They won't acquire an outside invention. What you have to do to sell an invention is you've got to make it and show a profit and then people are after you all the time. They want to give you money. They want to loan you money. They want to buy your company. We've had two options to buy our company within the last year. And we just told them flat no. We're not interested. Don't even make an offer.

HATTIE: How long did it take you to get a product out the door?

RUTH ELLEN: Well, it took us three and a half years to figure out how to make fiber optics work so that we would have a viable product.

HATTIE: What did you have to learn to create this product?

RUTH ELLEN: We had to start with what was light, because there was a whole lot of myth out there and a bunch of people teaching really old theories on how light worked. And no one had the mechanism for how people saw or why it caused damage. When we understood the mechanism, when we understood the science, we could apply it and make it practical and give birth to a product. And that's really what a high-tech product is; it's just applied science.

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JACK: In the NoUVIR product line, which comprises the projector, and it is really a system itself, and all of the different luminaries that go on the ends of the fibers. We have 16 issued US patents. And it's usually not enough for you to have one patent because an aggressive company will, with their attorneys' advice, often intentionally infringe a patent.

HATTIE: Why? Because they think they can get away with it?

JACK: Yes. They think that they've got a 50:50 chance of beating one patent by getting it declared invalid in court, or maybe the individual entrepreneur can't afford to fight them in court.

HATTIE: So this big company's attorney says, `Hey, let's just go infringe and they probably won't be able to fight us off.'

JACK: That's correct. But as soon as you have the second patent, then the lawyers got to think twice, `Do I want to give advice to my client that says I have to invalidate two patents, not one?' Now they haven't got this 50:50 chance. He's got one chance in four. And three chances and four chances--or four patents, and we've got 15 patents now--16 patents now. There's five on this projector alone. Well, the possibility that a big company could successfully infringe five patents without ending up with a multimillion dollar settlement is pretty remote, and chances are it would never go to court.

HATTIE: OK. A patent is...

JACK: A patent is a monopoly that the government grants you for a certain period of time--in this case, it's 17 years to 20 years--and what it does is it gives you only the right to sue an infringer. The government won't help you one bit.

HATTIE: But they've filed this document; therefore, if someone does come after you, you're on record as owning the idea.

JACK: That's right. But you have to warn people that it's patented, so there's patent numbers on everything that we sell. There's patent numbers in our literature, in our ads, in our catalog. And so you have to let people know that it's patented. So our primary patent now is on this part of the projector, the nose, which if you feel it, it's cold. We call it Cold Nose. And Cold Nose is our registered trademark. And it takes the heat out of the light before it gets to the fiber.

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HATTIE: Why are trademarks, copyrights and patents so important? And what's the difference in the three?

RUTH ELLEN: Patents protect your product. They keep competitors from copying you. And making exactly what you're making. The copyrights--that protects your literature. That protects what you write--your catalogs, your instruction manuals, your ads, your photographs of your products.

HATTIE: But why do we need to copyright what we write about our products if our products are patented?

RUTH ELLEN: Because people will imitate your literature, and you should protect your ideas.

HATTIE: OK. So your competitors could take your catalogs and steal your words and describe their products...

RUTH ELLEN: Exactly.

HATTIE: ...because we're talking about fiber optics, lighting, and they're doing some of that, too.

RUTH ELLEN: Sure. And then the final thing is your trademark, which is your name. And that's what your company is called. That's the thing that identifies you. Now for us, it's NoUVIR. And the first thing we did is we trademarked the words: N-O-U-V-I-R. But as you use it more and more, and the public knows you by that name, it gets stronger and stronger. And if you add a logo to it, the way it's written, the colors that you use for it, always being the same, it gets stronger yet. And that's why you'll find our name and our logo on every catalog page.

HATTIE: On every page.

RUTH ELLEN: And then to expand it, we put it on shirts, caps, the lab coats. And we give these to customers.

HATTIE: Right. So the more this is used, the more powerful it is.

RUTH ELLEN: Exactly.

HATTIE: What are the steps I have to go through to get an official trademark?

RUTH ELLEN: First thing is to be creative and get something unique. Then what you do is you start using it with your specific colors, and you just put a little T-M up there. OK. Now if it's a service, it's S-M. So if you're a travel agency or something like that...but a trademark is for products. Then what you do is you write or get on their Web site and talk to the Patent and Trademark Office and get the forms. You fill out the forms. You send them examples of you using your trademark.

HATTIE: They say on there, `Give us your mechanical drawings.' When I saw that, I went, `Mechanical drawings?' But that's just a picture or an example of what it is you're trying trademark.

RUTH ELLEN: Well, not quite. The mechanical drawing is basically your artwork so that they can reproduce it in the Gazette and say, `Hey, anybody out there got something similar to this?'

HATTIE: Right.

RUTH ELLEN: `Let us know and we'll refuse this trademark. We won't register it.'

HATTIE: So how long does the process take from when they've got my artwork and they put it in the Gazette--when will they...

RUTH ELLEN: And they've got your samples. It takes about two years. And then what'll happen is they'll register it and you'll start using an R that shows that it's registered. You go another five years, you send more paperwork through the Patent and Trademark Office and they say, `Yeah, nobody's talked to us about this for five years. Looks like you're still using it because you've sent us samples of it in usage. So we will assume that somebody can't fight it and say that you're stomping on their ideas. We'll assume that they're your ideas.' So you're fully registered then.

HATTIE: Did we just add up to seven years?

RUTH ELLEN: Seven years. But the good news about a trademark is unlike a patent that's only got a seven-year or 20-year life, a trademark lasts for as long as your company lasts as long as you keep using it. And the more you use it, the stronger it gets.

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The Lightbulb

HATTIE: (Voiceover) In his book, "The Fire of Invention," Michael Novak writes about the importance of the patent and copyright clause in the US Constitution. He says, `During most of human history, land had been the most important source of wealth; in America, intellect and know-how became the major source.' Abraham Lincoln was the only president to hold a patent and thought patents would keep the West from being dominated by wealthy land owners. More than five million patents have been issued in the United States since the first patent law of 1790. Ruth Ellen and Jack hold over 100 of these.

The system is working. It allows wealth to be accumulated by millions, while the old way of doing things kept wealth in the hands of a few. Patents protect products while copyrights and trademarks protect words and symbols, the articulation of ideas. Ruth Ellen and Jack advise us to protect our ideas and they even tell us how to do it. The government has put a system in place for us to protect and profit from our inventions and ideas. You can find all the answers to your questions at the Web site of the US Patent and Trademark Office, uspto.gov. Ruth Ellen says, `To build a business, invent a breakthrough product, then take the time to protect your invention.'

(Voiceover) At SmallBusinessSchool.org, you can go deeper and learn more about all aspects of starting and growing a business.

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Seaford is in southern Delaware, a couple of hours from both Baltimore and Philadelphia. It has turned out to be a great place to find excellent employees.

RUTH ELLEN: Usually, I hire through a temporary agency and we work the person for three or even six months and see how it happens.

HATTIE: See if they fit. Now how does that work with the agency? Is that OK with them that they know you're going to steal their people permanently?

RUTH ELLEN: They think it's great. They really do because they get three to six months and sometimes a year of income out of it because they know I'm cautious....and they know I'm a continuing customer. They will actually call me up and say, `You know, we've got somebody special that just kind of stumbled in the door. Can you interview for them?'

HATTIE: Do you ever hire people only part time?

RUTH ELLEN: Yes. A lot of times, because as a small company, you'll have special disciplines that are only part-time work. And the other thing, too, is that a lot of times, I'll start people part time because it takes time out of your schedule to train. Our biggest problem is that Dad and I sometimes talk in shorthand. So we had to slow down and say, `OK. Now there's these added people. They need to know where we're going and what we're doing. They need to catch the vision, too.' And we've got a variety--very, very different kind of people. But when you talk to them, you'll find out they all have the same vision. They've all caught the bug.

Unidentified Woman #1: We intend to go global. We are going places.

Unidentified Woman #2: I'm mailing out new literature about `50 percent brighter' performance.

HATTIE: Tell me then, what's your goal with this piece?

Unidentified Woman #2: For people to call us.

Unidentified Man #1: We've been just like on the cutting edge of technology here, really.

HATTIE: So are you having fun?

Unidentified Man #1: I'm having fun.

JACK: We have such a peculiar and attractive company here, that we have people standing in line to work for us. So we have resumes for people that would love to come to work for us. And the education, training of employees, although it takes a lot of our time, it doesn't take it for very long, and so we have people working productively usually within the first week or two.

RUTH ELLEN: Basically, we're such a small company, everybody's job is to take care of the customers. So no matter what happens--I mean, if you have to take out the garbage--it's everybody's job. But this is how I keep people from stepping on each other's territories and on their toes, and this is how I delegate.

HATTIE: At what point did you start putting things in writing for employees? When you got your first one, did you write a job description or you just sort of verbally...

RUTH ELLEN: Didn't need to. But by the time we got to about the second or third person, we had to start dividing up tasks.

HATTIE: So you don't see the people part of your business being an obstacle to growth.

JACK: Not at all. No.

HATTIE: And you don't see finance being an obstacle to growth.

JACK: Not at all. We did it out of profits.

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HATTIE: So the only thing standing between you and getting huge is educating...

JACK: Time. It takes time. We give seminars four or five times a year by invitation to a major museum or a museum association and we contribute our time. It takes time. We do a full day of teaching. It takes usually a day to get there and a day to get home. And we contribute that time free. But they'll pay our travel expenses. And they'll typically invite 50 to 100 people and charge them $50 to $100 each to attend the seminar, pay our expenses, put on a nice luncheon buffet and everybody learns something. And then there'll typically be 12 or 13 museums represented in that group, and a few months later, we start getting the increase.

HATTIE: All right. I wanted to ask about the link, the sales cycle, because a lot of small business owners get very frustrated with the link of time it takes to close a deal.

HATTIE: So how do you make it from, you know, to getting the deal? You go out there and you spend all your time and money and effort to make a sale and it doesn't come for a year.

JACK: Patience. That's about--the gestation period is about a year.

HATTIE: (Voiceover) Jayne Armstrong is the district director of the Small Business Administration.

JAYNE ARMSTRONG (Small Business Administration): Delaware's state slogan is Smaller, Quicker, Smarter, and I think NoUVIR research more than any other small business really represents that, because they moved in--relocated to Delaware from out of state, and they have certainly grown, and they are the leading manufacturer of fiber-optic lighting in the nation.

HATTIE: (Voiceover) We went to the Baseball Hall of Fame in Cooperstown, New York, to ask the curator, Ted Spencer, why he installed NoUVIR's products.

TED SPENCER (Baseball Hall of Fame): Well, for about 10 years now, we've been moving towards trying to be a much more conservation-conscious museum. I mean, these cases that you see here were like pizza ovens 20 years ago and now, you know, they're totally neutral. And it's a wonderful step forward.

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HATTIE: OK, Jack, you have a problem to solve this morning.

JACK: Yes.

HATTIE: What is it?

JACK: Well, we were specified for the lighting in the National Archives for the original signed Declaration of Independence and for the Constitution.

HATTIE: The Constitution.

JACK: The Constitution.

HATTIE: Did you all just jump up and down and get goose bumps or what?

JACK: We did indeed. We were really excited. We wanted to do that job for many years. What they have asked us to do--they've given us a specification, and the specification was there could be no light in there of a shorter wave length than 500 nanometers. Here's the color portion, the visible light portion of the whole electromagnetic spectrum that includes ultraviolet, infrared, etc.Well, we automatically get rid--just because we're NoUVIR, we get rid of the ultraviolet already and the infrared. So we're only looking at the visible spectrum, except that they don't want anything shorter than 500 nanometers.

So I had to find a filter that supplements this. So what I found then was a dichroic filter. What a dichroic filter does--I've got one here. This is the one I selected. And if you can see that in the camera, you can see it flashes blue.

HATTIE: I see the blue.

JACK: OK. And what it's doing is it's reflecting the blue light. But if you look through it...

HATTIE: It's yellow.

JACK: ...it's yellow. So it's not letting any blue light through. And what I actually did is I took then, to verify it--I took one of our optical fibers and I shined it through this filter on to this simulated old document ...and it just gave a nice, bright, warm, yellowish light on it, which is exactly what they want. So what I did then is I faxed it to the contractor who's doing the installation. So he can now tell the National Archives that, yes, the problem is solved, and this will do it, and we'll guarantee that there's no light shorter wave length than 500 nanometers.

HATTIE: So this was fun.

JACK: This is a blast. This is really fun. And it will be such fun to go see the thing.

HATTIE: Why is it that the two of you work so well together?

RUTH ELLEN: I respect him. I love him. He respects me. I mean, good grief, he allowed his kid to take over and become his boss, basically. I understand the science perspective. I've paid my dues. He understands the artist. And so it's just this beautiful blending of aesthetics and science. If it's giving up an electron...

HATTIE: (Voiceover) Breakthroughs happen when smart people who care about something put their minds to answering the question: How can this problem be solved? We've seen it through history and we're seeing it right now.

JACK: (Voiceover) No Noble Prize for you, kid. You're through right now.

HATTIE: Remember, Ruth Ellen says, `To build a business, invent a breakthrough product, then take the time to protect your invention.' We'll see you next time.