HP and Medtronic: From the Garage to the Fortune 500

These billion-dollar companies started by IEEE members had humble beginnings

1 September 2015

This article is part of our September 2015 special report on startups, which highlights IEEE’s efforts to attract more entrepreneurial types to the organization.

Earl Bakken

It was while repairing electronic medical equipment in his Minneapolis garage for the University of Minnesota Hospital (where his wife worked) that  IEEE Life Fellow Earl Bakken  [right] got the idea to launch Medtronic. Bakken was fascinated by electricity from an early age, figuring out how the wiring in his house worked and building electrical devices, including a robot that could smoke cigarettes and wield knives.

At the time, there were no companies in the city that designed or repaired specialized medical equipment. Seeing a need, he and his brother-in-law started Medtronic in 1949, just a year after he received a bachelor’s degree in electrical engineering from the University of Minnesota. They struggled until October 1957. That’s when open-heart surgeon C. Walton Lillehei, who was familiar with Bakken through his work at the hospital, approached him about making a better pacemaker than those being used. Lillehei, a professor in the department of surgery at the University of Minnesota, had pioneered open-heart surgery.

Within four weeks, Bakken produced a small, self-contained, transistorized, battery-powered pacemaker that could be taped to a patient’s chest. Insulated electrodes sutured to the heart passed through the patient’s chest wall. When pacing was no longer needed, doctors could withdraw the wires without having to reopen the patient’s chest. The pacemaker liberated patients from their power-cord tethers and was a significant step in the evolution to fully implantable units. Bakken’s device was honored with an IEEE Milestone in 1999.

Bakken described the process in this excerpt from his autobiography, which is published on the Engineering and Technology History Wiki:

“Back at the garage, I dug out a back issue of Popular Electronics magazine, in which I recalled seeing a circuit for an electronic, transistorized metronome [a device that produces regular, metrical ticks such as beats and clicks]. The circuit transmitted clicks through a loudspeaker; the rate of the clicks could be adjusted to fit the music. I simply modified that circuit and placed it, without the loudspeaker, in a 4-inch-square, inch-thick metal box with terminals and switches on the outside. And that, as they say, was that.”

Bakken successfully used a pacemaker on a dog at the university’s animal lab. He intended that prototype to be used only experimentally on laboratory animals, but shortly afterward Lillehei implanted it in a human patient. It was produced commercially as the Medtronic 5800.

Today, Medtronic remains a leading developer of medical technology. Its products—including catheters, coronary stents, and heart valves—are used to treat nearly 40 medical conditions. Its revenue last year was $17 billion.

William Hewlett and David Packard

Most consumers are familiar with Hewlett-Packard’s printers, computers, and ink, but many don’t know that the company was formed by two engineers in a garage workshop on Addison Avenue in Palo Alto, Calif. IEEE Fellows William Hewlett and David Packard launched their business in 1939 in Packard’s one-car garage*, which is now a U.S. National Historic Landmark.

According to the ETHW, Hewlett and Packard were old friends and classmates from Stanford. Hewlett, a bachelor, was living in a back room of the house where Packard and his wife lived when the two decided to follow their dream of starting a company.

Its first product—built by Hewlett—was a resistance-capacitance audio oscillator, an instrument that generates a pure tone, or frequency. The two partners’ initial capital for their company was US $538, though by the end of 1939 they had sales of more than $5,000, with a profit of more than $1,500 (greater than $25,600 in today’s dollars). HP is now one of the world’s most valuable brands. The company earned some $109 billion in revenue last year.

HP oscillators were used to design, manufacture, and maintain telephones, radios, and audio equipment. Hewlett and Packard called their first oscillator the Model 200A to give the impression that it was the latest offering of an established company, rather than the first from a startup. Sales took off after the Walt Disney Co. paid $71.50 (equivalent to $1,214.50 today) for eight modified versions—200Bs—for its production of Fantasia. Disney engineers used the oscillators to test audio channels, recording equipment, and speaker systems in the dozen specially equipped theaters that showed the movie in 1940 and 1941.

The order of names in the original partnership was determined by a coin toss. Hewlett was a quiet, self-effacing man; Packard was more outgoing. Packard concentrated on the nuts and bolts of production, while Hewlett was more proficient in technical innovation.

The two received the 1973 IEEE Founders Medal for “leadership in the development of electronic instruments, for creative management of an industrial activity, and for their unselfish public service.”

Packard died in 1996, Hewlett in 2001.

This article originally appeared in print as “From the Garage to the Fortune 500.”

*This article has been corrected.

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