by Ping Fu
There were three companies I could approach, all of whom had prior relationships with us: Align Technology, 3D Systems, and Parametric Technology Corporation (PTC). Align seemed the most promising. It had plans to take the company, which manufactured Invisalign clear custom orthodontics devices, public in the near future. Align’s problem was that its technology relied heavily on skilled labor. In order to generate a complete set of customized aligners, lab technicians used animation software on computers to manually move each person’s teeth, in two-week increments, into a perfect smile. Each client would get approximately forty-eight aligners total: twenty-four for the top arc of teeth and twenty-four for the bottom. In order to meet the needs of its thirty thousand customers, Align had to rely on nine hundred computer operators in Pakistan working between four and eight hours per case to manually create the digital models of each person’s teeth. In other words, the company couldn’t scale. The manual process was too time consuming and cost prohibitive.
Geomagic’s technology would enable Align to automate the process of straightening each customer’s teeth. We could reduce the time it took an operator to generate a complete set of aligners for one person from over four hours to just fifteen minutes. Align wanted our technology. By implementing it, Align could scale its business successfully after going public.
I went into negotiations with Align Technology in the spring of 2001. Jon Field had already been talking to them about Geomagic software for several months prior to going to work for them, but he removed himself from the negotiations process because of a conflict of interest. It was time for me to close the deal.
I started out trying to negotiate a contract whereby Align Technology paid Geomagic two dollars for every aligner manufactured. But Align didn’t want to pay a per unit royalty. Knowing full well our desperate financial situation, they refused to cave. Instead, they offered a onetime flat-rate payment of $2 million for our technology.
I asked Align to pay us in cash within thirty days. They agreed to do so if we dropped the total fee to $1.8 million. I said yes on the spot and got their signatures before leaving the room.
It was a fantastic deal for Align and they knew it.
I was keenly aware that I had signed a bad contract, from a business perspective, due to the lack of recurring revenue. I could see clearly that we ought to have insisted upon a per unit royalty from Align, or some sort of licensing agreement on an annual basis.
However, my sole focus at that time was getting $2 million in cash into our bank accounts as quickly as possible. We didn’t have the luxury of a year or even three months to spend in business negotiations when we were running out of money by the second. I could not hold out until Geomagic and Align had come to the perfect agreement. The bottom line was that if we didn’t have the money by the end of the month, Geomagic would have to let go of its remaining employees and shut its doors forever. I was not going to take the risk of not closing this deal—for any reason.
My rational mind was telling me that I should discuss this decision with the sales team and consult with our board members and attorneys. But I chose to ignore the normal process and the fears I had about not doing the right thing. I was more concerned at that moment with the employees who might lose their jobs and the investors who might lose their money if we didn’t secure a deal than with my own credibility. My mothering instinct and determination to survive took over. I was willing to take sole responsibility for my actions and face whatever consequences my decision might bring.
PRECIOUS TREASURES: 1966
EVERY NIGHT AS I lay in bed trying to fall asleep during that stressful period when Geomagic was falling to pieces, I would be haunted by images of my grandfather hovering above me. I would see him in my eight-year-old mind’s eye as an elegant aging man at the start of the Cultural Revolution. Spring 1966.
My grandfather had a collection of traditional Chinese “scholar arts”: inkwells from dynasties past, fans hand painted by famous artists, zitan wooden brush holders, chicken-blood stamp stones, and rare books of calligraphy. For two months before I was taken away from our Shanghai home, every night before he went to sleep, my grandfather would pull these objects carefully out of their wrapping papers and examine them. He would touch them delicately, as though they were dear old friends. Then he would select one object to keep on the nightstand next to his bed. The following day, a mask of sorrow covering his usually serene face, he would go out into the streets of Shanghai and sell it for a pittance.
Mao’s Red Guard had shut down the farmers’ markets and taken control of the city’s food supply. Each family was given limited rations of rice, cooking oil, sugar, vegetables, and meat. Sometimes it wasn’t enough to feed everyone in my household. A few farmers were selling produce on the black market because they didn’t have enough money to support their families. As a merchant-class family, we had always had enough money to eat. But in those days food was increasingly hard to come by. My grandfather knew that if he wasn’t willing to part with his precious heirlooms, his family might go hungry. It was a sacrifice he was willing to make.
Each night when my grandfather took out the valuable pieces that he planned to sell the next day, he would describe to me why he loved them. One night, he showed me a fan that had been painted by a famous Chinese opera singer, Mei Lanfang. As he told me the story of how he’d gotten the fan—it had been a gift from his beloved wife, who had gone to extraordinary lengths to purchase it for his sixtieth birthday—he touched his fingers to it gently. Then he held it up to the light and fanned it out, revealing a picture of plum flowers that sparkled like fairy dust.
Another evening, my grandfather drew a small gold nugget out of his pocket and massaged it between his fingers as he spoke. Although it was a simple, rough chunk of metal, he had rubbed it so often that it had developed a fine, smooth finish.
“Once, many years ago,” my grandfather explained, “I was walking down the street when I caught notice of a blind man playing the erhu”—a traditional Chinese musical instrument. “About three hundred children were gathered around to listen, so I stopped as well. The blind man’s music was enchanting. After he finished his song, I left him a few coins, expecting to continue on my way. But the man began tugging at my robe.
“‘I want to sell you this gold nugget,’ the blind man said. ‘Won’t you buy it from me? I need the money to feed my children.’
“‘No, I don’t collect gold nuggets,’ I replied, refusing to buy this one from the blind man. I said good-bye and walked away.
“The next day, I saw the same man playing. Once again, I was enchanted by his music and stopped to listen. Once again, the blind man pulled at my robe and asked me to buy his gold nugget, but I refused.
“It went on like this day after day. Finally, on the fifth day, when the blind man begged me to buy the nugget so that he could feed his children, I caved. I probably paid far more than it was worth because I emptied out my pockets and gave the blind man all my cash. But it wasn’t about the value of the gold. I simply felt moved to help this gentle soul who made such beautiful music. I wanted him to be able to care for his family.”
My grandfather sighed heavily. “Tomorrow, I’ll sell this nugget to a pawnshop for maybe seventy yuan—about one one-thousandth what I paid for it. What makes me most sorrowful is not the money. It’s the fact that I’ll be selling my lucky charm. You see, ever since that day when I bought this gold nugget, I’ve carried it with me in my pocket and rubbed it to bring our family good luck. That’s why it has been polished to this glossy sheen.”
At that moment, my grandfather’s lips turned up into a heartbreaking smile. “Then again, it seems right, somehow. Buying this nugget was how I once helped a man save his children. Now, in selling it, I’ll be saving my own children. I guess this gold nugget has done what it was supposed to do.”
A BAD CONTRACT CAN BE A GOOD DECISION: 2001–2003
THESE MEMORIES O
F my grandfather in the final days that I would spend with him before being separated from him forever strengthened my resolve to move forward with the Align deal. A bad contract can be a good decision, I thought. For my grandfather, it was worth selling his prized collector’s items for pennies in order to feed his family. Similarly, for me, this contract was about something far more precious than money. It was about the survival of the company and the dream we all shared.
Exactly three months after resuming the CEO role at Geomagic, I called the board of directors together again. I told them that we had landed all three contracts and now had almost $3 million in the bank. Of this, $1.8 million in cash had come from Align Technology. They’d gotten the technology they needed at an attractive price, and we’d gotten the cash we needed to survive.
Paul Rizzo, of Franklin Street Partners and also a Geomagic board member, asked if I had heard of a strategy called “DROOM.” It sounded good, so I listened attentively.
“It stands for Don’t Run Out Of Money,” he said with a chuckle, and the rest of us joined in.
Later that day, we celebrated in the company kitchen with all our employees, knowing that we were safe for at least a year. The room was filled with beer, jokes, and laughter.
“Hey, Ping,” our Russian mad scientist Dmitry called out. “We actually didn’t believe a word you said about saving the company. But we were not going to let you die alone.”
“Yes, let’s toast to ‘Till death do us part!’” Mike Facello, our director of R&D added, raising his glass. This remark was met by even more laughter.
I was deeply touched. “Wow, our bond at Geomagic is as strong as marriage vows,” I said, joining Mike and the others in the toast.
—
At the end of 2002, I stood at Align Technology’s factory in Santa Clara, California, and watched my original vision for Geomagic come to life as thousands of invisible aligners sped down the assembly line. It was a true milestone of the modern era—arguably the first real-world example of mass customization, a revolutionary model for manufacturing in the new millennium. No two aligners were identical. Not only were they fully customized for each person, but also every person had a new set of top and bottom aligners for every two weeks of treatment. These custom devices would be morphing people’s teeth in a far less labor-intensive, more elegant, and less painful way than braces ever had.
I was thrilled. I couldn’t believe that the concept I had laid out during my fund-raising pitch in 1997 was in full automatic production five years later. My dream had come true! This was the personal factory in action.
Years later, when our executive team has looked back on the decisions we made in earlier years and how those influenced the path we are on today, constructive criticism has arisen about the contract I signed. Venture capitalists, in particular, will point out how much better a per unit royalty would have been for Geomagic. I feel no regret, nor do I become defensive. The general business analysis was logical, but taken out of context it can seem just the opposite. Under normal circumstances, I might have followed a more strategic approach to drive a better contract with Align Technology. But these were extraordinary circumstances. Had I focused on negotiating a good contract, Geomagic might very well not be here today.
I learned from the Align deal that decisions and contracts are not the same thing. Contracts usually follow a standard set of rules. We can plug in the numbers and terms to make a rational business case. But we can’t do that with a decision. Context always matters. We have to take into consideration not just the short-term impact, but also the long-term repercussions of our choices.
Over time, I have truly come to value the importance of quality decision making—not just for me, but for the entire organization. Jack Stack, author of the bestselling book The Great Game of Business, once said, “What separates a great company from a failed one is whether or not they have a culture that encourages and enables people to make good decisions.”
Making good decisions means being clear about what really matters—in the case of the Align contract, getting cash in the door to save the company. It also requires giving people the authority and freedom to fail. We rarely know in advance whether a decision is correct. Fortunately, decisions often are reversible; such is rarely the case with a signed contract.
On occasion, hindsight may suggest that I could have taken a different path with Align. But I have learned not to second-guess myself. Once I made the decision, I let the chips fall where they may. Mission accomplished: Geomagic had the money it needed to move forward.
—
The years 2001 and 2002 were terrible for many technology companies. NASDAQ crashed. Terrorists attacked the World Trade Center. Netscape was sold to AOL and faded out of consumers’ short-lived cultural memories. Mosaic, our NCSA creation that had started the dot-com boom, would resurface only as a credit on the “About” pull-down menu of an Internet Explorer browser.
And yet I woke up with an enormous sense of relief on New Year’s Day 2003. Geomagic had turned a profit for the first time. I no longer had to worry about making payroll and I finally had the luxury of thinking strategically. In the process of working around the clock to save the company, I had also learned new skills and gained more confidence. I could now comprehend the monthly financial statements—not as an accountant, but as an executive. The numbers no longer made me feel dizzy, because I had found relevance in and connection to them: they provided a record of our company’s operating history.
We started to teach our employees about financial literacy and how their actions could affect the company’s performance. I was amazed at the way in which knowledge empowers people. Our receptionist noticed how much paper our employees wasted because they often just hit the “Print” button without thinking, printing an entire seventy-page document instead of just the one page they needed in hard copy. She calculated how much money we spent on printer cartridges each month and published the results. People’s behavior changed immediately: everyone became more conscious of their printing habits.
I was still shy and felt in many situations that I didn’t fit in, but I made up work-arounds so that people wouldn’t notice quite as much. “What do you think of that wine?” I learned to ask the men in black suits at conferences, one of my icebreakers. I began to enjoy working in the male-dominated tech industry. Most professional men are raised to respect and to help women, and I found that they would try their best to treat me as an equal or better.
As Geomagic became more successful, I noticed other women looking up to me as a role model female executive, woman in technology, and mother. After I spoke at conferences, many of them asked, “How can I break through the glass ceiling?”
The question gave me pause. On the one hand, I care a great deal about women’s equality in the workplace. On the other hand, I don’t believe in limits and ceilings. “If you don’t believe in the glass ceiling, it does not exist,” I would say. I looked to nature for inspiration. Nature does not operate according to principles of constant growth, because infinite growth is not possible in a finite world. One tree trying to grow high enough to touch the sky does not make a forest. Rather, nature excels at constant movement. It is infinitely creative and adaptive. “Think about moving forward to make personal or social progress, rather than moving higher to gain a superior position,” I advised.
—
It wasn’t until I matured as an executive within these past couple of years that I realized how many valuable lessons I had absorbed from Jon Field’s tenure as CEO: how to think big about Geomagic’s possibilities, how to hire people with the appropriate skills and experience for the job, and how to take more risks. I also gained confidence that I could do what he had done with Geomagic and more. There were no mysterious qualities a suave American businessman possessed that I didn’t—other than being taller.
At times, I had allowed people within the company to cast blame on Jon, mak
ing him our scapegoat. After a while, I couldn’t feel good about that. How could I let someone else take the blame for what had happened? I was one of the founders of Geomagic and a member of the executive team. If the company didn’t perform well, I was equally if not more responsible.
We often forgive people for making mistakes such as burning a dinner, say, or even causing a car accident. But how much room do we allow for our own limitations, blind spots, and human selfishness? It was Jon’s first run at being a start-up CEO, and he might have acted in his self-interest when he left Geomagic. Who said when we were born that being good and selfless was the only way we were supposed to behave? Haven’t we all made choices in life that we wished we hadn’t, especially during times of extreme danger and scarcity, when faced with the tension of self-preservation versus promoting the well-being of others?
I called Jon and asked him to lunch one day. I wanted to apologize—not just for his sake, but also for my own. I didn’t want to profit from gamesmanship, and I needed to accept responsibility for my own mistakes. He seemed surprised but accepted my invitation.
Over lunch, I told Jon, “At the time you left, I was really disappointed and scared. I and the other members of the board of directors couldn’t believe that you’d abandon our sinking ship. I felt trapped because we had $6.5 million in cash and no debt when I handed you the company, and you returned it to me with $4 million in losses, no new revenue, and little cash to survive on. I blamed you for wasting the money and not helping me to build a viable company. I understand now that was not a fair point of view. You were just as inexperienced as I was, and I was just as responsible as you were. I admired you then, and I continue to admire you today. Also, it has always been clear to me that fundamentally you’re a good person. I wanted you to know.”