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Entrepreneur builds on tech innovations

 

Among the companies and technologies Paul Travers has launched and licensed over the last 20-plus years, a common thread stands out.

The technologies invented by Travers, president and CEO of Vuzix Corp., are just far enough ahead of their time in the consumer marketplace to make their relevance seem almost unimaginable-at the time.

When, for example, he left Eastman Kodak Co.’s research department in 1988 to launch his own company selling sound cards for the PC, it was well before the necessity of a sound card could be envisioned, let alone the ubiquity PCs eventually would achieve.

In the 1990s, when he formed Vuzix, formerly named Icuiti, it was difficult to imagine the relevance that video eyewear eventually would have.

Not only was the marketplace for the device virtually nonexistent, but so was most of the technology to support it. Fortunately, Travers has stayed at it long enough for the invention’s relevance to become clear.

"It’s one of those overnight successes that’s only taken 17 years," he says.

With some 60 employees, the Henrietta-based Vuzix consistently has added to its product line by innovation since it was formed in 1997. Originally supplying head-mounted night vision and more recently tactical displays for the U.S. military, the company since 2006 has been reaching consumers with portable eyewear displays.

Vuzix eyewear is designed to supplant the tiny video screens on mobile devices by connecting to devices to give users a high-definition video experience. Glasses can be connected to media players, portable DVD players, cell phones and laptops.

The devices are geared toward traveling executives, portable computer and smart phone users, and gamers who want large-scale media in a mobile, compact format.

But when the technology was launched, the company’s head-mounted displays looked more like football helmets than eyewear, says Travers, 48. The size and the high price were two reasons the product appealed more to the military than to individual consumers.

But by 2009, high-definition wraparound glasses dominated sales at the firm. Cultural icon and retail success maker Oprah Winfrey sported them on her show last fall.

Winfrey’s impact on sales of the consumer goods she likes is famous. One example of the "Oprah Effect" was Amazon.com’s electronic reading device, the Kindle. After it was praised on her October 2008 show, the Kindle sold out that holiday season.

The effect was similar at Vuzix.

"When Oprah put them on her show, she was wearing the glasses and she’s got her hands out in front of her, saying, ‘This is amazing!’" Travers recalls.

"During the period of time she was wearing the glasses and shortly afterwards, the traffic to our website would spike through the roof-orders of a magnitude that we never normally see," Travers says.

"It led to a significant amount of demand. But in January we sort of got caught with our pants down, because they reran the show," Travers says.

As a result, Vuzix consumer products, whose prices range from $169 to $400, have been back-ordered for a while.

"That’s not to say we have so much business that we can’t even handle it. That’s not it at all," Traver explains. "It’s we do need access to even more capital as a growing company, and there are people who really want to buy our products. I just wish I had more dollars to put to work."

Public offering

To raise more capital, Vuzix last year joined the TSX Venture Exchange, raising $6.3 million through an initial public offering completed Christmas Eve.

The company’s annual report for 2009 showed that its cash flows had been insufficient to support operations. In a March 30 report, independent auditors indicated that with the current level of funding and ongoing losses from operations, substantial doubt exists about the company’s ability to continue as a going concern.

Travers says this kind of note is not unusual for companies these days.

"I think you will find that since a couple years ago when the banks all went south, the number of companies that carry this kind of note in their financials has risen quite a bit," Travers says.

In the case of Vuzix, he adds, the note is there because Vuzix does have limited capital with which to operate. If the company is not run intelligently, there indeed is a risk of going out of business.

"Vuzix has been in business since 1997, and we have almost always had a similar situation on the financial side because we purposely pour every penny we can back into product development and research, which is why we have 72-plus patents and patents pending and also why we are the No. 1 supplier of video eyewear in the world today," Travers says. "We feel the risk of doing this far outweighs the value of being conservative at this juncture, because in the technology world innovation is critical to success."

Vuzix’s net losses were $3.2 million in 2009, $4.9 million in 2008 and close to $3.1 million in 2007, with an accumulated deficit of $18 million as of Dec. 31.

Vuzix’s balance sheet was strengthened with its IPO. As of the end of last year, the company had $2.5 million in cash versus $818,719 the year before. Vuzix ended the year with $1 million in working capital, up from a capital deficit of $1.8 million the year before.

While sales overall dipped 4.8 percent last year to $11.9 million, 2009 started a shift from military-dominated sales to consumer domination.

Overall last year, Travers says, 65 percent of revenue was on the defense side of the business. The first quarter of this year, he says, was the first time the consumer side dominated revenue, amounting to 65 percent of total sales.

"That trend will go up and down a little bit, but I do believe that there is a massive consumer space in gaming, in mobile video, in the cell phone space. It’s just unprecedented," Travers says.

Despite the company’s limited capital, consistent innovations have gotten Vuzix this far in the consumer market, and they will continue to carry the company forward, he says.

John Burtis, head of research, says Travers is not easily intimidated. His drive helps make real the vision he creates, Burtis adds.

That drive is one reason why Vuzix has kept innovating long enough for video eyewear to reach a level of quality and price that finally are in line with the marketplace.

In the late 1990s, when Vuzix was founded, the possibility of smart phones that put the Web in the palm of your hand did not exist as a reason to buy Vuzix eyewear. Its application for the smart phone alone has more potential than what Vuzix officials originally envisioned.

Vuzix is neck-deep in potential, its founder says.

"There is this collision of multiple things happening right now," Travers says. "There’s the perfect storm of business opportunity for the guys who can build the right personal display systems to be able to win big in this marketplace."

The IPO, he says, was timed so the company could take advantage of the moment it has been waiting for all these years.

"The reason we did it on the Toronto Stock Exchange is that Vuzix isn’t big enough to be on the Nasdaq yet, so it was a nice transitional step. It was a way to get access to capital that is probably under better terms than doing it with venture capital. Those guys are challenging, at best, these days, but that’s the market," Travers says.

"They call it the Toronto Stock Venture Exchange for a reason. It’s like venture capital, but it carries different terms and conditions."

With the other companies he has founded, Travers sought various means to fund his inventions and learned a thing or two along the way.

Travers often licensed his technologies to larger companies looking to extend their reach into new areas-companies with the financial wherewithal to continue developing the technology until there would be a larger market for it.

With the sound card business he launched out of his basement after leaving Kodak, he ended up licensing it to the leading supplier of joysticks at the time, Advanced Gravis Computer Technology Ltd.

Later, a universal serial bus cable technology he developed with his company E-Tek Labs was sold to cable supplier Belkin International Inc.

"With universal serial bus, cable needed to get smart," Travers recalls. "They had to have processors and software, they had to talk to the operating system, and Belkin was looking for a way to do that. So they purchased a company that I built that made all of this USB connectivity technology."

Travers sold that company, which was run in part by his wife, Marie Josee Travers, in 1992, while he was heading another technology firm devoted to video display.

Early start

From as far back as he can remember, Travers has been tinkering with gadgets. As a teenager growing up near the Thousand Islands, he shared a passion for invention with his brother Craig.

Their father was an electronics enthusiast too, Travers says. At the park his father owned, the brothers built homemade hang gliders to fly.

"I can remember scuba tanks that we tied my brother Craig to and threw him in the pool-crazy stuff," Travers recalls. "But my parents never said no to that. As far as they were concerned, if we were experimenting, learning and growing with our minds, that was a good thing to do, even if it might be a little risky."

Travers says he was a poor high school student, barely making it to graduation. It was not until pursuing engineering in college that his interests in math and science were nurtured.

His brother, meanwhile, got a degree in computer science and later joined Travers at his first business, making sound cards. He has been working with Travers ever since.

"Craig has been a partner of mine in every single one of my businesses," Travers says.

Marie Josee, he says, also has partnered with him through some of his endeavors.

With a degree in industrial distribution from Clarkson University in northern New York, Marie Josee’s responsibilities ranged from wiring circuit boards, keeping the books and negotiating contracts to managing employees and steering the company when her husband was out of town or working on another company.

Travers met his future wife in ninth grade. The Traverses now live in Honeoye Falls and have three children, Adam, Kelli and Sonya, all in their early 20s.

"Josee was the first and only girl I ever kissed," Travers says.

After he graduated in 1983 with a bachelor’s degree in electrical and computer engineering from Clarkson, Travers and his wife sought jobs working together.

They went to work for the U.S. government, making tracking systems for submarines. Travers had been there for a year and a half when Marie Josee left to raise their first child.

Travers spent the next five years at Eastman Kodak Co., developing products that never made it to market. It was frustrating, he recalls.

Around the same time, Kodak was making staff reductions. Travers volunteered to go and for that got $5,000, which he took to fund his first business.

It was the beginning of Travers’ entrepreneurial career.

"We started working from our apartment," Marie Josee recalls. "The reason we bought the house is because we couldn’t continue in the apartment. So we were able to work from the basement. We needed a house anyway; we had two kids at the time."

While the couple was running the business and raising children, Travers’ professional roles started to multiply and expand. Suddenly he was responsible for hiring employees, seeking out investors and marketing to customers.

His management and administrative roles have continued to expand with every company he has launched.

Now in a public company, those responsibilities have never been more demanding, he says.

"As an entrepreneur, you really have to have a unique personality, because you’re dealing with a lot. It’s not always a bed of roses. Dealing with the stresses of the day-to-day, a lot of people have a hard time with that, which I can understand," Travers says.

His wife says Travers has become more realistic over the course of his career. He has learned to say no, she says.

In the beginning, she says, he was more of a dreamer and she was the organizer. Over time, he has begun to develop more of her traits, she says. He is working on building the necessary infrastructure at Vuzix that will make him less indispensable and more available to pursue other interests in his life. But he says he still has some distance to go.

"From a time management perspective, I wish that I could do better at that because I have a lot of stuff that goes in my life that I could do better if I either cloned myself or did a better job of managing the job I do have," he says.

Family life

Because he spent so much time working, his wife says, it was important for him to spend quality time with the children while they were growing up. One thing he liked to do was the kind of science experiments he did with his brother when they were young.

When the children were around 10 years old, the Traverses built a hot-air balloon; once they attempted to build an airplane.

"The airplane didn’t work, but the hot-air balloon did," Marie Josee says.

"The kids helped us do it as a project at home. The hot-air balloon we built during a long weekend. The first one we sent up was my youngest daughter. She was maybe 7 at the time, and she was the lightest. We tethered it to the Jeep so it wouldn’t

go anywhere. So they got to experience a lot of different things."

In what free time he finds today, Travers says, he likes to return to northern New York and go hiking.

"When my daughter Sonya was in college she took some classes in jewelry making. We like to hike and look for gemstones in the woods," Travers says. "There are some places where you can find some wonderful garnet in northern New York, and we like doing that and escaping, because the phone does not work in many places in the North Country and the mountains."

It is difficult for Travers to disconnect from work. Even at night, when he is unable to sleep, he returns to his basement to make optics, says Vuzix’s Burtis.

"He is always, always doing something with his head," Marie Josee says.

Travers says his interest in technology is matched by his interest in people. It is probably his strongest attribute as a manager, he says.

"I like to sit down with people and make things happen. I think that’s been a plus for me. I think I have an OK personality, so for the most part, I don’t think I rub people the wrong way," he says.

Travers is a self-made individual but humble, Burtis says, and understands that his success comes from those around him.

"His goals and ambitions are shared with staff and investors, and he is driven to bring them along to ultimate achievement," he says.

Burtis also says it is a competitive drive that keeps Travers going.

Travers says that drive attracts people with similar passion. It makes for a very exciting work environment, he adds.

"I have a strong personality, and I like to win. So I think that’s driven Vuzix through, that drive.

"Everybody likes to win, and they like to be on a winning team, and I have a bunch of winners at Vuzix; they’re all driven, and that brings its own challenges because all of those kinds of personalities sometimes run into each other," Travers says. "But for the most part people work very well at Vuzix, and they’re all very driven to make it happen."

 

Paul Travers
Title: President and CEO, Vuzix Corp.
Age: 48
Education: A.S. in engineering science, SUNY at Canton, 1981; B.S. in electrical and computer engineering, Clarkson University, Potsdam, 1983
Family: Wife Marie Josee; son Adam, 26; daughters Kelli, 24, and Sonya, 21
Residence: Honeoye Falls
Hobbies: Tinkering with electronics, hiking and looking for gemstones with family
Quote: "(Vuzix is) one of those overnight successes that’s only taken 17 years."

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