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Golisano buys 50% stake in tablet maker

Thomas Golisano is once again doing business in Buffalo.

The Paychex Inc. founder and chairman has made a major investment in a Buffalo-based tablet PC manufacturer, one expected to bring jobs to the region and provide tools to help combat illiteracy in developing areas.

Bak USA LLC announced the investment last week, with company officials noting it is Golisano’s first business presence in the Buffalo area since selling the Buffalo Sabres. Golisano is buying 50 percent of the company and will also serve as a strategic adviser.

Golisano said his investment—the dollar amount of which was not disclosed—would allow the company to increase its workforce to 100 within the year and to 267 in coming years. In addition, it would let Bak USA meet what company officials called the ambitious sales goal of 80,000 tablets before the year’s end.

Golisano, whose net worth of $2.4 billion has him ranked No. 782 on the Forbes 2015 list of the world’s richest people, said he sees the investment as one not just for Bak USA but for the entire region.

“It’s nice to bring jobs to Upstate New York, especially ones that fall in the manufacturing category,” he said. “The company has some unique products and has a real opportunity to be successful, and if that’s true we should see more economic improvement and some jobs returning.”

Bak USA produces tablet PC devices that are primarily marketed in developmental countries for educational purposes. Last year, Gov. Andrew Cuomo announced the company was one of eight to partner with SUNY Buffalo in the Start-Up NY program, which stands for SUNY Tax-free Areas to Revitalize and Transform Upstate NY.

The program lets universities designate areas where new and expanding businesses can operate for 10 years without paying a number of state taxes, including corporate, income, sales and property taxes.

The company opened its world headquarters in January in Buffalo, six months after receiving the Start-Up NY designation.

Cuomo helped facilitate the meeting between Golisano and Bak’s management team. The governor recommended Bak officials to Steven Pigeon, the former chairman of the Erie County Democratic Party who also directed Golisano’s Responsible New York political committee. It was Pigeon who then helped bring the two sides together.

JP Bak, the company’s co-founder and chairman, said Golisano learned about the product’s abilities to combat illiteracy and its potential to bring jobs to the United States.

“Tom really likes the ‘Made in the United States’ idea, and he has been following closely how jobs are being exported out of this country,” JP Bak said. “This is one of the fundamental problems in the United States economy today, and one of the solutions is to bring back jobs, especially in manufacturing.”

But JP Bak said the strongest selling point may have been the tablet itself.

“We were able to actually put a product in his hand, and seeing that and feeling it and knowing just how it worked was so much more important than just talking about the concept,” he said.

Bak USA is seen as a pioneer in the tablet industry, as they are one of the first companies to produce own-branded electronic tablets outside of Asia. The company lists two models of Android-based tablets, which are priced at $189.99 and $249.99.

Bak USA has been building a presence in Africa, where it has contracts to provide tablets, and officials said they are looking to boost its presence in the United States as well.

JP Bak said the company’s strength is in its ability to customize tablets for individual customers—something other larger manufacturers are unable to do.

Golisano’s investment will boost this capacity, he said.

“His investment enables us to produce the numbers requested by our customer,” Bak said. “We can download software needed for each specific customer and do that in numbers that no one else can because all other tablet manufacturers are based on assembly lines.

“For them, if they make one small change it is a costly replacement, but we can have different tablets for different needs.”

While the company aims to help combat illiteracy among developing nations, it also has a mission for closer to home.

“We want to bring jobs back to the United States, and we use the ‘Made in the United States’ as a way to attract customers in places like Africa, where they appreciate the quality that comes from American-made products,” JP Bak said.

Ulla Bak, the company’s co-founder and president, said Bak USA’s mission to combat illiteracy is needed not just in Africa, but in struggling areas in Buffalo and Rochester as well.

“Buffalo has areas where kids are still having difficulty reading in fifth and sixth grades,” she said. ‘This can promote literacy to a degree that you haven’t seen before. We have our products in the hands of students in Kenya, kids who are 6 and 7 years old and it helps them learn to read. An instrument like this can achieve so much more for young people.”

JP Bak said the company also takes inspiration from Golisano’s own business history, saying that Paychex could be a model for Bak USA’s own growth.

“The reason we think that Tom Golisano is a perfect fit for us is because his experience is along the same line of what we’re trying to achieve,” he said. “We want to build manufacturing facilities similar to the one we have in Buffalo in strategic places across the United States, the same way in which Paychex grew from a Rochester-based company to a national icon.”

The company’s investment is also part of a greater revival in Buffalo, JP Bak noted.

“It’s extremely exciting that Tom Golisano is making this investment in us an in downtown Buffalo,” he said. “Since selling the Sabres, he has not been commercially involved in Buffalo, though he has donated a lot of funds. His comeback as a businessman in Buffalo is a good sign and shows that there really is hope here in Buffalo.

“It shows that we can attract business people who have the ability to invest anywhere, but choose Buffalo.”

Golisano said he sees the revival taking place in the city and across the region.

“There is a lot of enthusiasm in Buffalo right now,” he said.

The partnership with Golisano will propel the company toward its goals as well as enhance its stature, JP Bak added.

“This gives us a powerful and experienced partner that tells the world what we’re trying to do is important,” he said.

5/15/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected]

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