Success in science and business have one thing in common: luck
Published July 1, 1991 | July 1991 issue
In 1985 at the age of 54, chemist Bryan McGroarty was tired of hearing people discredit his business sense by saying, "You're a scientist."
"I'd always worked for people who wouldn't relate to the luck aspect of science," McGroarty says. "Much of science is luck and the human ability to recognize the good fall-out of failure. Finally I'd had enough," McGroarty says.
And so Paramount Tech Products was born.
It "took off like wildfire," McGroarty, president, said of his product, an industrial sealant that uses 140 million year-old bentonite and a high-density plastic. Bentonite absorbs water and produces a waterproof jelly which, when saturated, begins to repel water. McGroarty estimates that his product, which has a low permeability to water, gas, fuel oil and other solvents and is non-toxic and also non-polluting, will continue to reseal itself well into the 42nd century.
Mining bentonite has the added advantage of making unproductive land useful. When the water-repelling bentonite is removed, the ground becomes productive.
McGroarty started Paramount in a 2,000-square-foot building in Bloomington, Minn. "We were so short of funds,"McGroarty jokes, "that we had a day-to-day lease." McGroarty later moved Paramount to Spearfish, S.D., to be near bentonite reserves.
Paramount employs 45 people and grossed $6.5 million in 1990. PG Tech, a second branch of the company located across the street from Paramount, which uses the sealant to produce self-sealing liners for storing toxic waste in landfills, employs 15 and grossed $6 million last year. The two locations offer 170,000 square feet of production space.
Because of its water-repellant qualities, Paramount's sealant is often used in underground tunnels. "All subway systems except one in the United States are using our product," McGroarty says, "and that one is switching to ours." Paramount also exports to Japan and recently entered the European market by selling to a new Mercedes plant in Dusseldorf, Germany.
Funded with only $20,000 of McGroarty's own money, Paramount had a cash-flow problem in the early days. "To compensate, we sold only to people who were willing to pay more for our product than for other lower-quality products and to people who were willing to pay cash," McGroarty says. "We quickly turned $20,000 into $120,000."
Once Paramount proved itself, it was able to get money at inflated interest rates from individuals, McGroarty says. When it continued to pay off those loans, Paramount was finally able to obtain bank financing.
Paramount also imposed stiff guidelines on itself. "We didn't budget travel money, so we didn't travel," McGroarty says.
"The one item we did splurge on in the early days was an 800 number," McGroarty says. "We were one of the first companies in the United States to offer all 800 sales lines."
McGroarty attributes the success of his company and the popularity of his product to one thing: quality. "We talked quality from day one."
McGroarty said he was shocked to find that the American reaction to Japanese success in the marketplace was to lower the quality of its own products. Paramount's response was to raise its quality. "I still believe Americans want quality. In response to raising our quality, we got an even greater market share," McGroarty says. Last year our growth was 30 percent.
McGroarty recommends that potential entrepreneurs get a technical background. "A technical background gives one an awesome jump on other business people," McGroarty says. "You can't kid yourself in science. You've got to stay with the reality of the situation."