Len Lauer is president and CEO of Memjet, an upstart supplier of color printing technology with the promise to increase the speed and reduce the cost of printing. Lauer’s career in tech and telecom spans 30 years. Before joining Memjet, he served as chief operating officer of mobile broadband chipmaker Qualcomm. Before Qualcomm he held several executive positions at telecom carrier Sprint, helping the company win an Emmy Award for Outstanding Achievement in Engineering Development. Prior to Sprint Lauer was CEO of Bell Atlantic-New Jersey, and a manager at IBM. From Memjet headquarters in San Diego, he answers five key business questions.
Big business is considered evil. You can’t give tax breaks and it’s unfortunate. -Lauer
1. You were the No. 2 executive at silicon chipmaker Qualcomm. And though you left amid the recession, you were able to land the No. 1 gig at Memjet. Meanwhile, millions of Americans have been laid off jobs and can’t find new ones. What do you think needs to be done to fix this problem?
Lauer: There is no silver bullet. It’s not like unemployment gets to 6% or 7% in the next couple of months. That’s not going to happen. But we should be searching for a number of catalysts that can stir the recovery. One of the best things that could happen, though it probably won’t, is [relaxing] the repatriation tax. There are a lot of American companies out there that have significant amounts of cash sitting on their balance sheet because of the earnings they’ve been accumulating. And a lot of that cash is offshore cash [$1.2 trillion]. They break out that money offshore and they keep it offshore, because if they don’t they get charged very high U.S. tax rates. Corporate taxes in the U.S. are some of the highest in the world. Lately there has been talk about repatriation—letting American companies bring back cash that has been domiciled offshore at a low tax rate. But the companies would have to invest it within a certain time frame or create jobs with it. That doesn’t cost the taxpayer a dime. It would bring billions of dollars into the U.S. by well-run companies focused on investing in American companies and creating jobs.
Crockett: What is the barrier in your mind?
Lauer: Populist government. It’s not a partisan Republican or Democrat issue. Big business is considered bad and evil. You can’t give corporations big tax breaks, and it’s unfortunate. It would be the easiest, least expensive, most impactful economic recovery stimulus I think we can do. Also, there’s another thing. Federal and state can do a lot more to help out young and medium-sized companies to invest in the U.S. They can set aside funds to provide loans to companies who invest in US. In Singapore the government funds the economic development board. And that board provides low-interest loans and grants for companies that are creating jobs and investing in Singapore. I’ve been at Memjet for 14 months and I have not had one contact from a U.S. official, a state official or a county official asking, “What can I do to get you to invest more in San Diego or California or Boise, Idaho [where Memjet has operations].”I don’t have my hand out. But I didn’t have it out in Singapore either and they’re reaching out to us.
Crockett: Where would this money come from when governments are operating in the red?
Lauer: The federal government. I don’t know what the number would be: $100 billion or $200 billion or $400 billion. Whatever it is, you set that aside. Look at the amount of money we’re putting into the military and into wars. Just take 2% or 3% of that and put it into this fund for companies that invest in the United States and create jobs in the U.S. It’s a very different mindset. But the current mindset has to turn [in order to spark] job creation.
Don’t come as a me-too and assume you’ll out-execute everybody. -Lauer
2. Investment dollars—debt financing, stock, private equity—are more difficult to access in this environment. How has Memjet managed and what’s the formula for startups and other companies that need capital to grow their businesses?
Lauer: Focus on having a capability. Whatever capability it is that you bring to the marketplace, make sure that it is highly differentiated, disruptive and provides a lot of value. Don’t think of coming into the marketplace as a me-too, and assume that you are going to out execute everybody else. As a young company that’s very, very hard because of the disadvantages you have versus larger incumbents. You have to have a very disruptive, high-value proposition. Investors are there to create a return. Also make sure you’ve identified distribution paths to make sure that the product or service you’re offering can get accepted quickly. There are companies that created better mousetraps, but they couldn’t get it into the marketplace. Investors really focus on how are you going to get it into the market place, how long is it going to take and what does the adoption rate look like? If your story is that it’s going to take five or more years then they probably are not going to invest.
Consumers and businesses have to be educated about what they buy. -Lauer
3. Sustaining our environment is a critical objective among global businesses. You are in an industry in which products threaten the environment because they require paper. Does that pose any ethical conflict in your mind and how as a business do you reconcile that?
Lauer: I actually feel good about this, so it’s not an ethical conflict. The typical laser printer uses about 400 watts. That’s like having 10 light bulbs on. We are at 40 watts. So we only use 10% of the power that an average laser printer uses. I feel very good about the printer we are bringing out because it uses much less energy than most laser printers. When it comes to paper I think this is on the consumer to be smart. There’s a global organization called the FSC (Forest Stewardship Council). They certify paper and they only certify it if it is grown in a sustainable tree farm with [environmentally friendly] chemicals for processing the paper. At Staples, for example, 60% of paper they sell is FSC certified. So consumers and businesses just have to be educated about what they are buying. Consumers have to be sensitive and not buy the absolute cheapest paper, just like when they buy vegetables or use plastic reusable bags.
All people should have access to wireless broadband. -Lauer
4. The President says he wants nearly every home in the country to have wireless broadband. Why hasn’t this happened before now and is it realistic under the President’s plan?
Lauer: I haven’t studied the administration’s plan, so I don’t know the details. But I do know what they are trying to accomplish. I think it’s admirable. In an information society all people, especially all of our young people, should have access regardless of their social strata or income level. The limiter to this is probably economic. It’s expensive to have a dsl or cable modem in your house–$20 or $25 a month is expensive for a lot of low-income families. Redlining used to be an issue when broadband providers did not build out access to low-income neighborhoods. I don’t know how prevalent redlining is these days. I assume that most areas are accessible. If they don’t already, the government could easily provide incentives for broadband providers to invest in low-income areas. They should provide some kind of subsidy, even to rural areas, which are harder to reach than urban areas.
A media hub for the house…is really going to take off. -Lauer
5. First there was the Internet, then wireless, then the combination of the two. What’s the next killer technology that will revolutionize the way people live and work?
Lauer: I think it will be very much about access to and management of content. The number of mobile devices has expanded a lot in the last 18 to 24 months. You have a lot of connectivity. Whether it’s on your phone, in your home, your car, the office, you have access to content on a lot of different devices. That brings a lot of immediacy in your personal and business life. So it brings a lot more information to us, but I also think it brings tremendous challenge. How do you manage all of that information? For past 15 years people have been talking about developing the media hub for the house. Now I think it’s really going to take off. Why? We have a storage issue. If you take a few photos at your kid’s birthday party, you can quickly reach a gig right there. Where are you going to store a gig? And wherever you store it you’re going to want to have access to it. You’re going to want to see it on your smart phone, your TV, your tablet. I think storage will be a three-step process. Direct access storage on a hard drive, then you have the cloud. I think there is something in between that will take off and that is network access storage. It’s a drive that has all my devices at the home connected to it. My wife, my kids, and I can access that drive from all of our devices—our smart phones, tablets, and notebook. And we can also show that information from any TV screen in the house. To be able to pull that off in an integrated fashion, so it’s very simple to the consumer and doesn’t require a lot of time to set it up—that will be the killer opportunity.