C H A P T E R T H I R T E E N
What Comes Next F or many people the iconic image of Iowans is Grant Wood’s 1930 painting American Gothic. It depicts a dour, dungaree-clad, pitchfork-toting farmer and his equally grim-looking wife standing in front of their frame house with its distinctive gothic-arch upper window. But this stereotype of the Hawkeye State as the home of hardscrabble hicks is misleading. In fact Iowa boasts a proud tradition of rural innovation and entrepreneurship. During the twentieth century it nurtured a generation of creative inventors like Gary Vermeer, Eugene Sukup, Jon Kinzenbaw, and Ray Hagie. These were tenacious, salt-of-the-earth types who could make anything. They built new kinds of farm equipment, like round balers, grain driers, planter toolbars, and self-propelled sprayers. Then they founded firms to manufacture the machines that between them helped make agriculture modern.
Jerry Handsaker’s father was unsung example of this tough, selfreliant breed. “My dad wouldn’t be satisfied with the farm equipment that came out, he would be improving it,” Handsaker told me. “People from the manufacturers would come and look at his improvements; several of them got adopted on the next version of their machines.” Equipment that went wrong would not be taken to town for repair, it would be fixed right there on the farm. Young Jerry was a chip off the old block, especially when it came to cars. “Anything from motors to transmissions, we used to tear ‘em down and put ‘em back together,” he said. But Handsaker chose not to stay on the farm. On graduation he became a lawyer. In 1998, after twenty years of legal practice, he left to manage the firm he had established a few years previously. Its name was Innovative Lighting.
Every successful startup has an origin story, a key moment when the entrepreneur-to-be is unexpectedly confronted with a problem that demands a solution. In the case of Innovative Lighting, that moment occurred on the fourth of July 1987. Handsaker was out motor-boating with friends on Saylorville Lake, a popular local recreation area. As darkness fell Handsaker became concerned because without lights, their twenty-foot craft was invisible to the other boats that were zipping back and forth. A collision seemed inevitable. To make matters worse, the boat’s owner had to root around to find a pole with a light at one end, then fix the pole to the stern, leaving the controls unmanned all the while. Later, safely back on shore, Handsaker learned that most luxury boats lacked proper lighting. He designed a motorized light on a telescopic stem that could be raised and lowered, like a car antenna, from a switch on the boat’s dashboard. Handsaker patented his idea, then teamed up with an engineer to build a prototype. He tried to interest marine manufacturers in licensing his concept. When none would, he decided to make the light himself. Handsaker founded Innovative in 1993, fortuitously the same year that Nichia announced the world’s first bright-blue light emitting diode. He based his company near where he had grown up, in Roland, a tiny town [2014 population: 1,295] just north of Des Moines in what is sometimes known as America’s Heartland.
Early versions of Innovative’s stern light used incandescent bulbs for want of a less bulky alternative. Advertisements in the trade press for “ultra-bright” LEDs were misleading: you almost had to cup your hands around the lights to see if they were on. Disappointingly, the only colors available back then were red and amber. But the tiny lights kept getting brighter. Blue and green ones came along and, shortly afterwards, white. It was obvious to Handsaker that LEDs with their frugality and ruggedness were going to take over in boats, where all power must come from batteries. By 1997 Innovative had switched to using LEDs in all of its products. In those days Handsaker had to explain to potential customers what an LED was. He demonstrated their robustness by pounding his products on a hard surface. No matter how hard he whacked them, the little lights would stay lit.
From stern lights the company added navigation lights and courtesy lights that illuminated a boat’s interior. Soon other vehicle-related markets beckoned. Innovative took on side-markers and tail lights for trucks and trailers. Here Handsaker had to compete with established companies attempting to protect their legacy business, even as they flirted with LEDs. Such firms took a brute force approach to design based on their experience with incandescents. If you needed more light, you simply screwed in a more powerful bulb. Same thing with LEDs: you just crammed in as many chips as were needed to meet the Department of Transportation’s intensity requirements. But this was wasteful and expensive, resulting in LED tail-lights that cost ten times more than conventional ones. Driven by the need to compete with incandescents on price, Innovative took a more disciplined tack based on precision optics that rounded up every last photon, then directed the light exactly where it was needed. “[Our competitors] would have like sixty or seventy LEDs inside a little tail light,” Handsaker recalled. “We got it down to ten on our first try.”
Innovative expanded rapidly, winning awards from Inc. Magazine in four consecutive years (2002~2005) for being one of the fastest-growing privately-held companies in the US. In 2004 Handsaker was named Entrepreneur of the Year by Ernst & Young. Then, in 2008 came the economic downturn, knocking out half the marine and truck and trailer markets. Reluctant to lose any of his 180 employees, Handsaker looked to leverage the firm’s hard-won optical skills elsewhere. He found an opportunity in commercial refrigeration cases, like those used in supermarkets and convenience stores. Competitors were employing simple reflectors to spread the light output by LEDs. Innovative applied sophisticated computer modelling to design lenses that shaped the illumination. “Our light was quite unique when we went into the market,” Handsaker said, “but people got it because they were familiar with flashlights and other things that had lenses on them.”
As with their tail-lights and side-markers, the lenses on Innovative’s refrigeration case lights were made out of injection-molded plastic. With characteristic midwestern self-reliance, the company insisted on doing all its own molding. As the business grew, ever-larger machines were required — 50 tons, 500 tons, 750 tons, 1,750 tons. To pay for these monsters, the canny Handsaker went out and won contracts from large corporations to make plastic parts, like drawers and pedestals for frontload washers. “If I had said I was buying those machines to experiment with a whole new way of making lighting fixtures, I might have had more pushback from the banks than if I was buying them for a contract I already had in my hand,” he recalled with a chuckle.
Making lighting more energy ef ficient was enough for most companies. But Innovative kept moving into new fields. “We are asking what comes next,” Handsaker told a reporter from the Des Moines Register in July 2014. The answer was, networked lighting systems for commercial buildings. Here, as so often, in-house needs were the mother of invention. As Innovative expanded, the company had had to add warehouse space. In its brand-new storage facility, fixtures were hung from the ceiling so that they could shed light on the aisles between the racks. But somehow the planning committee screwed up and the racking had to be reorganized. “So now I’ve got to bring back an electrician, re-bend conduit in order to keep the lights from being hung directly over some rack instead of down the middle of the aisles,” Handsaker said. A year of bumper sales later, Innovative had almost outgrown its warehouse. Instead of adding more storage capacity, the firm found a side-loading forklift that allowed it to shrink the distance between rows. But the new configuration left lights hanging over the racking again. For the third time in two years, Innovative was obliged to rejig the lighting inside the warehouse. This was more than just annoying: electricians were expensive.
It so happened that when Innovative started working with refrigeration cases the company’s designers had created an optic that allowed them to illuminate rectangular spaces instead of circular ones. This concept scaled nicely for linear fixtures that could be used to light the aisles in their warehouse. Conventional (fluorescent) fixtures are powered by high-voltage alternating current delivered over heavy-duty copper wire that needs steel pipe and conduit up in the ceiling to support it. LEDs by contrast run on
low-voltage direct current. Hooking them up via conventional mains cabling means you have to add a driver, to transform the current from AC to DC. Innovative found that solid-state lighting fixtures could be powered using lightweight standard (“Cat 5”) Ethernet cables, the - blue or yellow - wires you plug into the back of your router, with a plastic clip on the end that clicks them into place. Such cables were designed to carry data. But so long as the electrical load is below a certain wattage, they can also be used to deliver power and to communicate with fixtures, at the same time. This turns out to be very useful. “We ran lowvoltage Cat 5 cables over to the fixtures and put the drivers up to seventy feet away in UL-rated boxes spread throughout the warehouse,” Handsaker explained. “After that our maintenance people could move the lighting anywhere we wanted. If we ever change the location of the shelving again they could just un-snap a purlin clip and move the light over.”
Using familiar low-voltage cables was easy to understand for anyone used to hooking up computers and phones. “Power over Ethernet” (PoE) lighting was attractive because it made workspaces more flexible. Fixtures no longer had to be attached to a rigid pipe. “If you move your desk, instead of having to pay an electrician to come and move the light, you can just get a ladder, move it over, and click the cables into place.” Cat 5 cable was not only much cheaper than copper and steel, it took lighting out of the domain of the electrician and into that of another specialist, the low-voltage integrator. That is, the guy who instals phones, computers, security cameras, and fire alarms. This was seriously disruptive. “In my mind the low-voltage integrator is the channel that’s gonna help us move this forward,” Handsaker said. “They’re already involved in new construction. Pulling more cable and dropping in lights is just a natural for them.”
PoE was not just about making fixtures more flexible and cheaper to instal. It also made them smart. Ethernet was designed to configure networks for data transmission. Connecting fixtures via PoE meant that every light became an end-point on the network, each with its own IP address. That made it easy for facilities managers to control and monitor fixtures equipped with built-in sensors for detecting occupancy, light level, and temperature. Power over Ethernet links lights to what people had begun to call the “Internet of Things,” things meaning everyday objects like thermostats. In this scenario, the lighting network could become a hub to which other types of appliance could be easily connected, powered, and controlled. Once you had data ports up in the ceiling you could plug your heating, ventilation, and air conditioning systems into them. This not only obviated the need for separate control systems, thus reducing expense and eliminating clutter, it also made buildings easier to manage. “Instead of the occupancy sensor just shutting off the lights when people leave the office, you can also shut down the HVAC that’s going to that office,” Handsaker explained. The potential savings were huge. On top of the 50 percent savings in energy gained by simply switching to LEDs, Handsaker reckoned there was perhaps a further 35 percent to be added by making lights intelligent, then still more by integrating the HVAC.
Innovative had installed PoE networks in a utility, a lawenforcement center, and the retrofitted offices of an aerospace company. A recent visitor to Roland, lighting industry veteran Brent York, came away mightily impressed by what he had seen there. “Their whole effort in PoE — they make it so simple, they are solving things in ways that blow my mind.” Like a good aw-shucks Iowan, Handsaker was humbler in evaluating Innovative’s achievement. “It’s just common sense,” he said. In striving to develop modern commercial lighting systems, Innovative was living up to its name in other areas, too. Most notably, the company was attempting to radically simplify fixture manufacture. As we have seen, the firm had acquired huge injection-molding machines to make the plastic housings for side-marker and tail-lights, then taken on contract work, making custom moldings for large corporations to pay for them. But Handsaker’s goal had always been to apply the equipment to Innovative’s own in-house production needs. Metal has long been the material of choice for lighting fixtures, because it is easily bent, has reflective properties, and (in the case of aluminum) does not rust. In addition, highvoltage light sources need to be encased in metal boxes, to prevent sparks from electric arcs causing fires. Plastics were not suitable for fixtures because the high temperatures of bulbs meant that housings might melt or even catch fire. But LEDs were low-voltage sources; the newer mid-power LEDs gave off much less heat than their high-power predecessors. Plus, the arrival of new, fire-resistant polymers meant that the old arguments against using plastics in lighting fixtures were no longer valid.
In the of fice market by far the best-selling fixture is the troffer, a rectangular ceiling-recessed box that typically contains two or four fluorescent tubes. To learn how troffers were made Handsaker travelled to China. “I was in factories utilized by some of the biggest fixture manufacturers in the world,” he told me. Production begins with rolls of steel sheet. The rolls are uncoiled and stamped into pieces which are then welded or riveted together. The resultant housing is powder-coated (to create a harder finish than would be possible with conventional paint). In final assembly the other parts, including the light source, are attached by hand. The troffers are then boxed and packed into containers. But shipping from China is expensive and ties up precious capital. There is also the issue of timing. LEDs keep getting cheaper and more efficient: long lead times make it tricky to know when to commit to a purchase.
Innovative had had years of experience making large injectionmolded parts. Troffers were no larger than the freezer drawers they were used to cranking out. The firm’s product developers figured out what kind of functionality was required, what thermal properties a plastic (or “composite,” to use the term Handsaker prefers, “because ‘plastic’ sounds low-tech”) fixture would need. They drafted a design, then tooled up for production. The idea was to make a fixture that resembled a conventional troffer as closely as possible. “I’m not trying to create something that looks like a spaceship,” Handsaker explained, “I’m trying to blend in.”
To produce a troffer the machine first melts the resin, then shoots the hot liquid into the mold, cooling it with water. The shell pops out in one piece: no need to rivet bits together. Or, since resins come pre-colored, to paint it. The whole process takes less than a minute. A robot grabs the shell, then places it on a conveyor. An assembly worker inserts a circuit board mounting the LEDs and other components, then fixes it in place with retainer clips. A second worker adds a gasket and a lens, then slides the completed fixture into a box. By then the machine has made the next shell and the process is ready to begin again. Using composites also brought other advantages. Innovative’s troffer was much lighter than an equivalent metal fixture. You could pick it up with one hand and pop it into place. Unlike its much heavier rivals, the troffer did not have to be tethered (to prevent it falling) in order to comply with earthquake codes, in particular that of California.
Out in the corn fields of rural America Innovative had quietly taken a giant leap forward. “What Jerry has done is re-invented the whole concept of a luminaire,” an admiring Brent York commented. “He has reduced the cost of labor to the point where it is significantly less than the cost of shipping. He can build for less than it costs to build in China, by a country mile. It takes longer to stick on the compliance labels than it does to build the fixture.” Henceforth, York thought, this was likely how all lighting would be manufactured: “I don’t see how fixtures will ever be built differently,” he said.
Terry Clark’s pivotal entrepreneurial moment came as a result of the reaction - or rather, the lack of reaction - to some significant research findings. During the 1980s personal computers had proliferated in the workplace. Conventional lighting caused glare to reflect off their screens. Eyestrain became the number-one health hazard for office workers. A Silicon Valley study found that 80 percent of computer users wanted better lighting. The problem was that most offices were over-lit. People
hated the glare so much they often turned off their lights. But that just created dark shadows and gloomy workstations. Indirect lighting - where most of the light from the fixture bounces off the walls and ceiling, getting rid of shadows and eliminating glare - seemed a promising solution. But without a field test under real-world conditions a definitive answer was lacking.
In Spring 1988, with funding from Xerox, Cornell University began a study. The following year its researchers reported that office workers preferred indirect over direct lighting by a factor of seven to one. The conclusion was indisputable. But how many new fixtures had Xerox and Cornell actually gone out and purchased as a result of their study? The answer was … none! Why had the two participants not bought into their own findings about the future? That was the question which inspired Terry Clark to found Finelite, in his kitchen in Palo Alto in 1991. He realized that existing products were too expensive and lead times between order and delivery too long. “So I wrote a business plan that said, Let’s make indirect fixtures affordable and ship them in ten working days or less,” Clark told me. Fast delivery meant manufacturing had to be done onshore. Finelite’s factory was located in Union City, California, a short drive across the Dumbarton Bridge from the heart of Silicon Valley.
Born in 1947, the son of a US Navy of ficer who became an IBM executive, Clark was yet another latecomer to lighting. With a background in electronics his first job was at Teradyne, a maker of microchip testers. Clark then moved to Intel, where he spent a formative eighteen months under the tutelage of Andy Grove. After more than two decades working on strategic change in high-tech environments as a consultant at Arthur D. Little he was headhunted to join Peerless Lighting in Berkeley. There, working with Peter Ngai, Clark became intrigued by the challenge of designing fixtures that would illuminate workspaces properly. He also discovered that he enjoyed working with architects, putting on boots and a hard-hat and going out to visit job sites. “Terry’s one of these very persistent innovators,” said Michael Siminovitch, co-director of the California Lighting Technology Center, “he’s the kind of guy that starts from nothing and just keeps going.”
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