The Opening of this Show

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HATTIE: Hi. I'm Hattie Bryant and this is SMALL BUSINESS SCHOOL. As we do every week, we will take you inside a small business to meet the founder and you'll learn how business works from the inside out.

Don Wilkes sees possibilities where others say, `That's impossible.' He's a small-business owner whose customer is the federal government. Because of the federal government's Small Business Innovative Research Program, Don is building machines he only could dream just a few years ago.

(Voiceover) Let's go to Huntsville, Alabama, where the American space program started and where it still relies on entrepreneurs. 2001: The real space odyssey has already begun and small business is in the center of it. Rockets, heavy metal, power, space, the unknown--all of this looks like big government and big business, but many small-business owners have been and are still involved in every aspect of the space program and dozens of other government efforts. In Huntsville, Alabama, at the Marshall Space Flight Center, the mock International Space Station is where visitors can learn about this world-class orbiting laboratory, enabling scientific research that cannot be performed on Earth.

Astronaut Dr. LARRY DeLUCAS: All right. This has turned out to be a pretty good day.

HATTIE: (Voiceover) Former astronaut and now professor of optometry and director of X-ray crystallography at the University of Alabama-Birmingham, Dr. Larry DeLucas shows me around. OK. So what is USML? What does that say?

LARRY: United States Microgravity Lab 1. It was the first mission dedicated to commercial experiments, things that we felt like had potential if we could develop the technology to lead to small business innovation.

Unlike several other countries, the United States has realized, our Congress has realized, the importance of the commercial sector. But they also realize that fundamental research needs a jump start before companies get involved. And they know that that'll lead to jobs, it'll lead to a lot of cures in medicine. And so, therefore, they fund this research through small grants to small companies.

You know, often the small companies have the really innovative ideas.

The company writes a proposal, a Small Business Innovative Research proposal. They write that to NASA and say, `We have licensed some fundamental research from the university'--and that's what happened in our case--`and now we're going to take that research and we're going to make this product.'

DON WILKES: I guess I had a vision of the instruments that I wanted to build, that I'd wanted to build for a long time, and the only way to do it was to go out on my own to do that.

HATTIE: (Voiceover) Don Wilkes, founder of AZ Technology, is just one of many small-business owners who does work for the Marshall Flight Center. Unidentified Woman: We've also finished up the...

With 37 employees, AZ Technology works on projects such as the Space Portable Spectroreflectometer, which recently returned from the Mir Space Station...

Unidentified Cosmonaut: (Russian spoken). (Voiceover) ...remote teleoperations, aerospace coatings and materials processing, and optical properties instrumentation.

HATTIE: So what is this we're sitting in front of?

DON: This is a space simulation chamber. We can't take everything to space to test. We have to test a number of things on the ground. And so this chamber is built to test materials that will fly in space.

Unidentified Astronaut #2: Make sure after all the clamps are closed...

DON: (Voiceover) We're trying to expose them to the vacuum of space, to the solar radiation from space and to measure how these change. The space environment is a very harsh environment for the materials to operate in, and now we're talking about them being out there for 10 years and longer. And it's a very difficult problem to overcome. Coatings for use on materials in space -- a parallel of that is like your house paint. The best house paint on the ground wouldn't last a week in space without turning dark brown.

So it's a very harsh environment. The materials that are used out there have to be designed specially for use in that environment, and we have to test those. And this is an example of the extremes you have to go to, to test these materials on the ground.

For the SBIRs, the government agency like NASA will publish a list of requirements that they have, because you're really trying to match up your idea with their requirements and a commercial need. So they publish a list yearly of these topics of requirements.

(Voiceover) And they're somewhat general at times, and you look for a way to match your idea up with their needs, and that's what we did. One of the first ones we got was the Space Portable Spectroreflectometer instrument, to go measure the surfaces of spacecraft. (Voiceover) These external surfaces on spacecraft are very important. If the material changed too much, you can no longer maintain the spacecraft at a comfortable temperature for people and electronics.

Unidentified Astronaut #3: I'm just going to go up and set up the pads and...

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HATTIE: When you won that contract, you've got an "X" amount of dollars, is that when you started hiring people?

DON: Yes. We had several instruments coming along in parallel that was not just SBIRs, and we started to bring some people on board to actually build the hardware.

(Voiceover) We started very, very slowly. You never start a business on your own. You always have friends and people that you'd like have work for you that will help you on their own time to get started.

HATTIE: So you did a little bit of that. Some people donated their time and you're familiar with the science community here and you could say, `Hey, John, I need you to come do this piece and I need you to do it for free.' Did you do that?

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HATTIE: So are you are you getting this reputation for being the light guy?

DON: We're getting a reputation for the instruments that measure these properties, yes, and it's becoming the standard in this community.

DON: Well, they just volunteered. It wasn't asking them to come help do that. They wanted to see that happen, too.

HATTIE: Because they were excited about the project you were working on.

DON: They were excited about the project as well. And several of them joined the company, and some of them are still here after 10 years.

HATTIE: And is that a key to your success, that you've niched in? Because sometimes we visit with folks who are doing government kinds of projects and they'll look at all these lists and they'll say, `We can do this. We can do this. We can do this. We can do this,' and I don't understand how they can do that. In other words, there's not a nicheness. There's not a `this one thing I do.' But it sounds like to me you're saying, `We do something really well.'

DON: That's been our theme at developing pieces of technology, the instrument, and being very good at that and caring what it does. We're up to as many as eight different instruments in that line now.

HATTIE: A little bit more about your coating projects. I love those colors in there.

(Voiceover) You're working on fancy paint or space paint in there.

DON: That's one of the lines that we specialize in, that we're very well known for, is that these materials that have to operate in space, they're generally coated. (Voiceover) You take metal, which is the primary thing you use to build spacecraft--you've got to coat it with a material to control its optical properties, and those optical properties have to do with how much sunlight it absorbs, how much heat it can reject to the cold of space. So those optical properties are very important, so we have to control those. So we have to make special materials that have certain properties. For instance, on the radiators for something like space stations, they have to be very good at reflecting the sunlight and they have to be very good at emitting energy to the cold of space. (Voiceover) And they're generally white. It's generally a white paint. So we put a lot of white paint on the outside of the hardware that flies on the space station. There are times when you have optical instruments--you want black. (Voiceover) So we make a line of blacks. Now there's also a need to have signage out there, either warning signs or numbers to do things.

HATTIE: Traffic signs?

DON: (Voiceover) Traffic signs.

HATTIE: (Voiceover) ...in space.

DON: (Voiceover) You get on a space station it's going to be huge and the crewman gets outside, he needs to know where he's at. (Voiceover) So there has to be signage out there.

HATTIE: (Voiceover) OK. So before now, we just had black and white. And now that we're going to be walking around in space we have to have red and you've got yellow...

DON: Well, you'd like to have a flag. You'd like to have the NASA logos, the emblems of the countries. It's the International Space Station. The Japanese will have their logo, insignia on theirs, and this has to stay nice and pretty for 10 years. (Voiceover) And that's a very difficult problem.

Unidentified Astronaut #4: ...paint's looking good.

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DON: Putting the teams together to do these space experiments--in the past you've had to physically bring the teams to one location so they could meet and talk with each other. They could access the real-time data, you know, and be at one spot. Now with the technology that's out there and what we're developing, you can put together a virtual team and do these payload operations, these experiment operations, with a team wherever they're at in the world, and that's what's exciting about that. And so we've been putting that technology to work for remote payload operations on space station, and that's where we got involved with the voice system for the space station with Bob Bradford.

BOB BRADFORD: We'll have to set up for tests...

HATTIE: (Voiceover) Bob Bradford directs the program that hired Don and stays current by attending team meetings at AZ Technology.

Unidentified Woman: They're just thrilled about it, so...

BOB BRADFORD: Now the experimenters will have an experiment flying as a payload maybe in one of these cabinets here, and they have to get their telemetry, their data, they have to be able to talk to the cadre and the control center here at Marshall, and they have to be able to get downlink video. There's going to be video coming from the space station down to the ground. And they have to be able to get that at their remote location in their lab--actually, we kind of tongue-in-cheek say in their garage. You know, when I made a pitch of my concept to some schoolteachers who'd come here through another NASA program, there was 26 of them. When I looked at them and says, `There's my experimenters,' my management agreed to give each school who would participate a computer, and what we did was flow data from here, from Marshall, through the Internet to these 26 schools.

And, you know, the kids got to participate and then we had some `Ask an Astronauts.'

CARLOS: And, Shannon, here's the tools we typically go out with if anybody wanted to see what it looked like when it's not on our suit. Doesn't weigh much here. It's lots of fun in the water, though.

SHANNON: Hey, thanks for showing that to us, Carlos.

DON: We've done several sessions with `Ask an Astronaut' and `Ask a Scientist,' so the students can actually talk with an astronaut, listen to a lecture from an astronaut or a scientist that's carrying on space experiments, and be able to ask them questions, be able to interact with them. This is preparation for later when they can do that with a crew and the ground experimenters to do that. We'll broadcast certain video or data and stream it out on to the Net with Live On The Net. They've helped us do some of these sessions. We've also used some voice and video conferencing systems from See You-See Me Networks to be able to broadcast and have two-way communications back to the astronaut or the scientist, and the students really love this. But in parallel with that, it also gives an opportunity to do some education and public outreach with NASA. NASA has always strived to promote the things that they're doing because they do have a lot of impact on our kids and we need to be getting the kids interested in science and math, and this is an excellent way to do that.

BOB BRADFORD: Basically, when I was talking to those teachers I realized I had to have somebody help me, you know, put this all together.

HATTIE: So you found the perfect partner.

BOB BRADFORD: Oh, yeah. Right.

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HATTIE: (Voiceover) Dr. Bob Norwood, director of the Commercial Technology Division at NASA, came from Washington, DC to talk with us.

BOB NORWOOD: We have a program that operates out of the Commercial Technology Office called the SBIR program. And in that sense, small businesses are funded to bring new innovative ideas and new technology into NASA. On the other side of it, in the commercial technology part, we look to partners, to find partners in the industry which are often small businesses to take the technology that NASA has and actually turn it into a commercial product and profit from that.

HATTIE: (Voiceover) Director of the Marshall Center's Technology Transfer Program, Sally Little, is enthusiastic about the role small business can play in all government R&D efforts.

SALLY LITTLE: There is that tendency to feel like the access is for large business only, but that's not the case. We're trying to change that paradigm. Now we say, `Here are the opportunities to partner. Here are our dreams. How do they match up with your dreams, small business?' I mean, who would have thought even five years ago that we would be saying to business, `Milk our fundamental research.'

HATTIE: (Voiceover) Stanley McCall is the small business officer in the Procurement Office at Marshall Space Flight Center. So if I'm a small-business owner and I want to do business with you, I want you to hire me or use my services, how do I do that?

STANLEY McCALL: OK. There would be several ways you could go about it. First of all, you want to track the many opportunities that may be coming out of NASA, and we have a unique way of doing that. We have a NASA Internet acquisition service, which is at procurement.nasa.gov, if any small business wants to see what opportunities there are at NASA. So you could look there and find out what opportunities are. You could visit our office here at the center.

HATTIE: Come see you.

STANLEY: Come see me. And we could discuss opportunities that we would have coming up here direct with the center. Well, you should definitely more than try. You should participate, because NASA does not only want you, it needs you, because we can't achieve our mission today without the small business playing the part that they have played, and what I think is going to be an increasing and ever growing part if they do play.

LB

HATTIE: When the federal government sets out to achieve a goal outlined by the Congress or the president, a federal agency is charged with overseeing the task. When John Kennedy said, `Let's go to the moon,' NASA was given a new task. However, through trial and error, it has been discovered that federal agencies may not be as efficient as the private sector. So in many cases, jobs are outsourced to private companies.

We have pointed out here that the US federal government is the biggest customer in the world and it is required to award a certain percentage of its contracts to small companies.

Here we have studied several small businesses who have large government contracts. Don Wilkes is a special type of government contractor. He has written and won multiple federal grants which fund his groundbreaking thinking. To learn more about how to win a Small Business Innovative Research grant, click here.

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(Voiceover) Another small business in Huntsville, Live On The Net , has been broadcasting live events on the Internet since 1996, including the activities of NASA.

TIM ERWIN (Eyecentric): It's one of their satellite feeds off of NASA so it's...

HATTIE: (Voiceover) They work with Don when there is a need to broadcast AZ Tek's events live from space from their office or from a school. What is Live On The Net going to do to help kids get excited about science?

TIM: Well, what we've been able to do so far is go to experiments, take those experiments and put them out on the Internet so they can reach kids all over the country at the desktop.

By taking an experiment or a camera or any type of produced information and data from that experiment, we can literally put it out on the Internet, allow kids to come from their classroom or even from home to look at that particular experiment in real time or on demand as an archive.

Well, what we believe is happening with the Internet is the opportunity to equalize the playing field.

Small businesses everywhere can take their message, and actually serve it to those people looking for that specialized message. Look at what the Internet has made happen. The cost of media distribution has gone almost to zero. We are actually a big part of that; we are the one's who take the audio and video message, putting it out on the Internet, thus allowng businesses to share what they do worldwide, conceivably with millions for a very, very small cost.

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DON: (Voiceover) I've been a space scientist for over 30 years, working with space materials and instruments, and that doesn't teach you business. Business has its own interest.

I've enjoyed the business side of this much more than I ever thought would.

HATTIE: Really?

DON: I considered it a necessary evil in the beginning: `Well, in order to do this, I've got to do business.' Well, that's been more enjoyable than I thought it would. In my case, I know that I can only do so much, and I need good employees; I need good people that work with me. And I try to keep in mind that, yes, they work for me, but I try to play that down. They work with me. I hire people of all capabilities, from other scientists to engineers, technicians, clerical people. But we all work together, and it has to be worked as a team. And it's fun for me to see the teams grow. I like to give the ability for anybody that works here to grow something of their own, within the confines of the definition of our business, to be able to envision something of their own, like I did, and to grow that into something that they can be proud of, that they can grow something that might be in their dreams. For instance, the software that we're talking about for the education-public outreach and the space station voice system, that's grown out of Jim Chamberlain.

Jim's the leader of our software group. These were his ideas that we helped him grow, and you love to see that growth. That's good for the company, that's good for them, and it's fun to see that happen.

HATTIE: And I'll tell you one way you are rewarding him. His name is on everything. Everything that we have in our folder about that project has his name on it.

DON: That's good.

HATTIE: I couldn't find your name anywhere. And I think that's a teaching point for other folks, that there are only 32 people in this company. You're the founder. You started it, but that's Jim's project and his name's all over it.

DON: Yeah. And I'm glad to see it comes out that way. You're never sure how it's seen sometimes. But I'm glad to see that it does come out that way. Because that's the way I feel about it. He has done a great job at growing that, and we want to reward that.

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HATTIE: So you step aside and let them have the credit, let them be the face of the project.

DON: It's sort of an interesting thing. You asked about surprises. One surprise: When you start a company like this and you're the founder, you have your space experiments, you're the principal investigator on them, you're the contract head for a job, that looks fun at first, but after awhile when you're that on everything, it gets a little oppressive. When the first one went out with somebody else's name on it, you look for those small victories, and that was almost a victory, now, that someone else is getting out in the lead and being the lead in that area. That's like growing a family almost. There's a pride that I have in seeing people do that. There are several things you've got to have. You've got to have good professionals to help you. This is a difficult business, particularly when doing business with government.

HATTIE: You mean like CPAs, attorneys, that sort of thing?

DON: CPAs, attorneys, that sort of thing, bankers, that understand doing business with the government. Not all our business is with the government. There is business that we have with purely commercial firms. But a lot of the business has been with the government, and they have their own ways of doing business and their own regulations, what they call the Federal Acquisition Regulations that are very specific, and you have to understand them. So that's different than doing business with the IRS. And so you've got to understand how those interact, and you need help to do that. Most people don't have any idea, if they haven't been in business before, what it's going to require out of them. It's going to require more dedication than they think it will. It's going to require them learning new skills that they don't think they're going to have to learn.

So be prepared to learn. Now just because it's hard--it's very satisfying--don't let that stop you. But it is going to be hard, and you have to be prepared for that.

HATTIE: But it's worth it.

DON: It's worth it. It's worth it.

HATTIE: (Voiceover) Men and women like Don may own small businesses, but their dreams are as big as the sky.

HATTIE: John Wargo, our marketing adviser, says even with the Internet, we must stick to the basics. In the past, you have told us there are four P's to marketing. Now what were those again?

JOHN WARGO: Well, this is the science of marketing. It's having the right product in the right place at the right price so that you can then have the right promotion.

HATTIE: All right.

JOHN: So it's product, place, price and promotion. That's the science of marketing.

HATTIE: OK. Now that we have the Internet and most small-business owners are using the Internet because it's so cost effective, do we still have to deal with the same four P's?

JOHN: Yes. And here's what happens. The Internet really enhances two of those four P's. It enhances the place strategy, because now you have a place to do business because you can do business on the Internet. This could increase your effectiveness with your customers because you're making it convenient for them to do business with you.

HATTIE: Right.

JOHN: Second, it also provides promotion opportunities, so it offers you more channels of communication. So the Internet actually enhances the ability of small businesses to be able to reach out and do business with their potential customers and their existing customers far more effectively, far more efficiently than they were able to do it before.

HATTIE: The SBIR Program involves 10 federal agencies that annually grant more than $1 billion to small businesses. About half the grants are through the Department of Defense.

Do you have a breakthrough idea you believe could help a government agency achieve its goals? A Small Business Innovative Research grant may be a possibility for you.

We'll see you next time.

The Closing of the Show.