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Founder finds you can go home again

After resigning and then returning to the helm of the company he founded almost 30 years ago, John Slusser is using a fresh perspective to widen, deepen, extend and align Performance Technologies Inc.
As president and CEO for the last three years, Slusser, 56, has steered the firm in a telecommunications industry whose networks are overlapping through mergers and expanding to transmit ever-swelling volumes of information.
For telecom carriers, it requires a balancing act. They need more network capability but often must re-evaluate their needs because of the frequency of mergers and acquisitions in their industry. Infrastructure has to be both supple and reliable.
Text messaging puts even more pressure on existing telecom networks, Slusser says, and PTI is primed to help service carriers support and manage it. The key, he explains, has been investment in software and system development to catch up with PTI’s hallmark hardware capabilities.
“When I came back, we looked at the technologies we had and said, ‘Let’s take the blinders off,'” Slusser says. “At that point, we were 25 years old, and you get set in your ways.
“We had our focus and our culture, and I guess my stepping out and stepping back in maybe gave enough of an external perspective to have a different view than being in lock step.”
With 200 employees, the company had $40.5 million in revenue last year and posted net income of $1.6 million. At its core a manufacturing company, PTI ranked 50th last year on the Rochester Business Journal’s list of local manufacturers.
Slusser, who founded PTI in 1981, almost always has had some connection with the firm. After serving as president and CEO from 1986 to 1995, he shifted to other roles: chairman, director and chief strategy officer.
Immediately after leaving as CEO, Slusser pursued some telecom spinoffs that the company had generated. One was focused on domain-specific language, or DSL, designed to help telephone companies keep pace with cable operators by providing broadband Internet connections. The problem, Slusser says, was that the technology was developing too fast for a small company to track.
That company later was sold. Slusser went on to pursue interests even closer to his heart, including a 68-acre farm he purchased in Mendon and a small business he developed there.
Radio Daze LLC, now run by his son, sells dials, decals, displays and other hard-to-find components for one of Slusser’s many passions: vintage radios. In recent years, Slusser has become a guru on the subject and has compiled information on 10,000 models in a collector’s guide to antique radios, now in its seventh edition.

A love of radio

For his entire career in engineering, radio has been a constant.
“The whole reason I got into electronics and electrical engineering is because my grandfather gave me an old cathedral radio in 1965,” Slusser says. “He got it out of his attic one day and gave it to me, and I was just enamored of it.”
Slusser got his own shortwave radio and fondly recalls late nights in his bedroom, which was dark except for the light from the radio dial.
The Cold War made the experience all the more memorable. “You’d hear this static, and then a voice would say, ‘This is Radio Moscow,'” Slusser remembers.
No longer content just to listen, Slusser wanted to communicate and did so with ham radio, a hobby he continues today.
Slusser’s father wanted to encourage his son’s budding interest in electronics and began seeking out old televisions and radios that neighbors in Binghamton had left by the curb. Later Slusser and a friend took out an advertisement in the local penny-saver publication, offering to pick up people’s old electronics.
At one point, he recalls, he had 14 television sets at home, much to his mother’s chagrin.
That interest led him to pursue a pre-college course in engineering. Later his interests expanded at Rochester Institute of Technology, but radios kept calling him back.
Radio Daze was the result of a hobby that got out of control, Slusser says.
His wife, Kimberly, executive director of development at RIT, says Slusser’s intense interests tend to do that. The man sleeps little, she says, and seems to have an aversion to retirement.
“John has retired two or three times, but he’s not very good at it,” Kim jokes. Instead he prefers plowing, ham radio and leading PTI.
“John doesn’t sleep. He goes to bed at 10 (p.m.) and usually wakes up by 2 a.m. He’s lucky if he gets four to five hours a night,” she says. “He can’t stop his mind, and he’d rather spend his time doing what he loves. Most often he’s working on PTI.”

Back to PTI

Slusser returned to day-to-day operations at PTI in mid-2006 when former CEO Michael Skarzynski left abruptly after one year. Initially Slusser stepped in on an interim basis. Soon his competitive side thrust the former engineer into permanent leadership.
He refamiliarized himself with the team members, many of whom he had hired a decade or more before, and updated himself on the vastly more diverse set of technologies the company had accumulated through acquisition and internal development.
PTI had come a long way since its inception. From the 1980s, Slusser remembers modules with 500 color-coded components; now modules half the size often consist of more than 3,000 microscopic components that do infinitely more.
Integration in hardware today is so replete that it is hard to create value, Slusser explains. To provide a unique selling proposition, PTI has turned to software development, complete with its own operating system and a suite of communications protocols to give original equipment manufacturers a way to get their products to market faster.
The purpose of PTI’s embedded systems group is to provide platforms for equipment manufacturers to develop their applications. With newly integrated systems, PTI’s platforms now reduce the need for outside vendors, which often complicate and lengthen customers’ product development processes, Slusser explains.
“The metrics for the OEM customer base and communications area used to be, say, you get a product out developed in 24 to 36 months. That was a reasonable window because markets weren’t moving that fast. That is no longer the case,” Slusser says.
With the Internet and applications around it, communications markets are moving faster than manufacturers can keep up, especially during a recession that is leaving some customers’ development departments understaffed.
Complete and reliable systems that support simpler equipment development processes are essential, Slusser says. With the work his team has undertaken to combine its operating system, hardware and communication protocols, PTI’s wider offering can do that.
“If we can provide a value proposition and a platform by which our customer can put together applications in 12 months or so, that’s pretty interesting,” he says.

Financial strength

Despite the struggling economy, PTI has been holding its own, though not without some rough patches. Revenue in 2008 was up slightly from 2007, to $40.5 million from $40.3 million. PTI had net income of $1.7 million, or 14 cents a diluted share, compared with $1.8 million, or 14 cents a diluted share, in 2007.
But while its signaling and embedded products offering was strengthened, many customers in 2009 are limiting infrastructure upgrades, Slusser noted in the fourth quarter. As a result, the company made layoffs in January. To maintain the commitment to developing its technologies, Slusser eliminated 20 positions, roughly 8 percent of the work force.
Slusser’s close friend Philip Tyler, a recently retired associate professor from the E. Philip Saunders College of Business at RIT, says eliminating those positions was difficult.
“When he’s talking about his business, he deeply, deeply cares about his people, but he’s competitive. He wants to grow the business,” Tyler says.
“He went through some very painful stuff early this year when he had to downsize a bit, and he hated it-as you would expect, because it’s a family there, a 250-person family,” Tyler explained. “A lot of them are with him forever. One of his leading salespeople has been with him from the beginning.”
Slusser’s wife says it was his work family that kept bringing him back to PTI.
“The company was an expansion of his bloodline, and it was his baby. He was so excited to see the work that PTI employees were doing that he was thrilled to be back. And trust me, he talks so far above my head, but to see him come home and talk about it, he’s like a little kid in a candy store,” she says.
Returning to PTI at an operational level in 2006 indeed was a family reunion for Slusser, and seeing how people had evolved in their roles was an eye opener.
“Some people have progressed really well, some not as much, and others have gone off into completely different interest areas. So that was kind of an interesting evolution, to really get a refreshed feel for the team we have here,” Slusser says.
Despite the range and depth of his interests, Slusser’s closest friends say, people drive him most. It is the first reason his wife says she fell in love with him.
“What really got to me is when he talks to someone he is so zeroed in. By our second date, I was pretty much hooked,” she says.
His friend Tyler agrees. “He’s an imposing man, but he’s so down to earth. I knew I liked John when I heard him, getting off the phone with one of his kids, say, ‘I love you’ without minding he was in front of the rest of us. I thought, ‘My God, I really like that guy.'”
And, Tyler adds, Slusser adores his wife.
The couple, together for eight years, enjoy working on their farm, where they grow corn, pumpkins and squash, apples, peaches, pears, cherries and berries.
“He has a big John Deere tractor, and he’s out there plowing with a little Chihuahua by his side by the name of Nacho,” Kimberly says. “You don’t picture John like that because he’s such a big man, but he’s a real softie. People have always been number one to him.”
After returning and refamiliarizing himself with PTI’s people and technology, the next step, Slusser says, was to put the focus on products by collapsing disparate organizations within the firm and transitioning to a functional structure. Slusser set about creating a common sales and marketing organization and a common products and technology division.

Solving problems

Slusser’s team next looked at how to solve more problems for its embedded systems customers. It found ways mainly by integrating new software and application developments to provide a more complete and worry-free system.
For signaling, the team did the same, looking for better solutions to the problems that telecom carriers face. Principal among those, Slusser explains, is volume.
Signaling is the communication between networks that enables communications such as phone calls and text messages.
“You need a back-channel network to make the connection from the calling party to the receiver of the call,” Slusser explains. “So when you talk about signaling, we provide equipment that basically interfaces with that network and provides interconnection from telecom service providers into and out of that network.”
To that end, PTI acquired a Canadian business in 1999 that specialized in translating signals for customers.
“When I came back, we decided to take that from more of a custom business to an end-product business, and we put together a team of very senior signaling sales and marketing people, in particular from a major competitor in that space. That has been a foray for the company and in many ways broadened the product line,” Slusser says.
The difference it makes for customers is great and stems mainly from PTI’s approach, which takes the weight off the core of a carrier’s network and at the same time expands it. PTI does this by rerouting information from the center to the periphery, where there is less volume with fewer network transport costs for carriers.
“We have a (core-to-edge) strategy, where we have looked at the signaling model in almost the same way we look at the Internet,” Slusser says. “We provide units on the edge of this signaling network, and a lot of that then offloads the traffic that doesn’t have to go back to the core.”
Wireless phone calls, but especially text messaging, put even more pressure on overburdened network cores, Slusser explains. Text messaging is a major growth driver for PTI’s signaling business.
“I think it was two years ago, the number of wireless calls and the number of text messages was something like 2 to 1. Now it’s flipped. Now it’s like two text messages for every call. And everything is growing, so it’s not necessarily at the sacrifice of call volume,” he says.
“When you send a text message, I believe it’s 19 individual signaling messages. So on a network there are these itty-bitty messages that are sent back and forth, one of which is actually the content-those 160 characters that’s embedded in one of those messages. For a wireless phone call, to set it up and tear it down, I believe it’s 29 messages,” he adds.
Cheaper, faster and smaller are key words in telecom network management, but as important is reliability. When carriers’ networks go down, they face fines and other problems. To deal with that, PTI has over the course of its history created safeguards so that one failing component does not bring down the entire network. It also has added remote-control monitoring features so customers can diagnose problems before going out to fix them.
One example is provider Alltel Corp., which last year was acquired by Verizon Wireless Inc. When Alltel recently expanded its network, it implemented PTI’s edge strategy at 120 locations.
“When you have 120 systems and they’re all over the country, you need to have some capability to understand the status of each one in terms of its operating conditions -not only the statistics of the network, but do I have an element that may be failing?” Slusser says. “The concept of remote manageability is an area we’re very high on in terms of the value add.”
Slusser wants to extend that reliability and diagnostic capability to the aerospace and defense sector, which in PTI’s early years represented roughly half of its business. Slusser looks to capitalize on some of the contacts the firm developed in the 1980s and 1990s.
Thrashing in telecommunications, due to mergers and tightened spending, has led to the renewed focus on government communications, which are looking to upgrade to Internet protocol-based systems, the kind already well-deployed in the telecom area PTI serves.
“Aerospace and defense kind of has fallen behind the curve,” Slusser says. “I don’t know if it’s because of the inertia of government, but for technology adoption in communications systems, they’ve kind of been behind.”
PTI has the protocols that communicate with sensors and radar sites, which convert information and then transfer it to a central site over a private network.
As governments make the switch to such IP-based networks, they are looking for high security and reliability, which Slusser says PTI has honed during years of serving fussy telecom customers.
“A key area for us, though, is (the Federal Aviation Administration). We have a pretty broad suite of radar and sensor protocols in communications,” Slusser says. Combining that with the remote function of its systems and their reliability, PTI is poised to rein again in the field of aerospace.
“They’ll have sensors all over the country looking for downdrafts and weather conditions and those sorts of things. So they need to gather all of these widely distributed points of information and bring it back to a central location to analyze and make various determinations,” he says.
To do that even better, PTI is looking at ways to enhance communication security.
More improvements and new systems will require more integration-given the company’s depth of technologies-but juggling those is one of PTI’s strong suits. Just as it is for its CEO.
rbj@rbj.net / 585-546-8303

John Slusser
Title: President and CEO
Company: Performance Technologies Inc.
Age: 56
Education: B.S. in electrical engineering, Rochester Institute of Technology, 1975
Family: Wife Kimberly; sons Adam, 33, and Michael, 25; daughter Callie, 21
Residence: Mendon
Interests: Running a 68-acre farm and operating a ham radio
Quote: “The dynamics in communication are moving so fast, driven heavily by the Internet and the applications around it. If we can provide a value proposition and a platform by which our customer can put together his applications in 12 months or so, that’s pretty interesting.”

06/12/2009 (C) Rochester Business Journal


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