An innovative R&D start-up is fighting a classic battle that faces most brilliant youngsters: turning intellectual property into a cash-flowing business.
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Entrepreneur: Hans-Christian Joseph, Founder & Chief Inventor
Company: Global EARS Ltd
Business type: R&D for the compressed-air industry, selling and installing EARS compressed-air systems
Founded: 2005
Employees: 10
Turnover Approx. $1.5 million
Location: Melbourne, Australia; Branches: Germany, Sweden, Switzerland and Israel
Contact details: +61 3 9800 0040
The Global EARS Story
The tricky business of converting a brilliant idea into a functional business has stymied many inventors and their organisations. Transforming a smart young start-up into a mature international business takes many skills apart from technical brilliance. Global EARS, a leading innovator in the compressed-air technology sector, is navigating those transitional shoals. It has been rough passage at times.
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Key learning points:
- Business niche - What is your business? It sounds like such a simple question but asking and answering it may be the best thing you do. Are you allocating time and resources in a way that will maximise your viability and profitability long term?
- Founder or flounder? - As Michael Gerber is fond of saying in his E-Myth series, it’s more important to work on the business rather than in the business. The former approach can lead to a McDonald’s; the latter to a corner fish and chip shop.
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Global EARS is the brainchild of its founder and chief inventor, Chris Bosua. He started the business in 2005 after solving a problem that had nagged him for years. Bosua, a motor mechanic trained in pneumatics, had been frustrated by an air compressor that was too small to drive the machine he was working on. His solution was EARS — the Exhausted Air Recycling System.
Compressors are used to power air tools and working stations in many industrial applications. Bosua’s invention doubles the capacity of an ordinary air compressor. It captures the air that passes from the compressor to the air tool or working station and is then vented into the workplace. Bosua’s breakthrough EARS manifold is a closed-loop system that drives air from the tool back to the compressor.
Bosua’s EARS has many benefits including:
- It generates more air to power the tool.
- Energy consumption during continuous use drops by 40 per cent.
- Workplace noise levels are reduced for pneumatic tools such as air drills.
- Environmental hazards of dust, emissions and other debris are reduced, making for a safer workplace.
The Challenge
How to transform an R&D company with a great invention into a profitable business that could sell its technology globally.
The Solution
Global EARS’ founder Chris Bosua lead the company from its start in 2005 until the middle of this year. Then Bosua took the step that many founders find too hard to take for reasons of pride or ignorance or attachment to their “baby”. He stepped down from the CEO’s role in order to concentrate on developing new EARS products and revolutionary variations of “traditional” compressors as well as selling EARS concepts internationally.
It was a job Bosua was already doing. In 2008 he said: “I have spent 318 days out of the last 365 days on the road overseas introducing our products and technology to the international compressed air and air-tools market, signing new licensing agreements and delivering training courses”.
Bosua has replaced himself as CEO with Hans-Christian Joseph, a German-born senior manager with wide experience in the industrial sector. Joseph is hard-nosed about his vision for the business. He says: “Global EARS was set up as an R&D company; it should focus on making profits from selling licenses, patents or R&D work for third parties.”
Joseph says Global EARS tried too hard at being its own international marketer. “The company tried to sell its technology itself — and was not that successful. Unfortunately, spending so much time and effort on sales took the focus off the R&D projects, which ceased to progress. Combined with that, the sales targets were not achieved and so there were not enough funds coming from the R&D projects as well as from sales.”
Joseph wants to refocus on the basics. He says: “First, we have to find these potential license partners and then we have to transform Global EARS into an operating company capable of selling products into the market.” That will also mean being able to provide more support to its licensed partners.
As part of an effort to strip down costs, Global EARS currently outsources the manufacturing, distribution and marketing of EARS products. But Joseph says that with a bit more investment, Global EARS could promote and sell its technology in a far more professional way.
Joseph and Chris Bosua have three possible solutions to the company’s current position:
- Find an equity partner who is willing to inject capital into the business in return for a majority holding.
- Find an industrial partner. By piggy-backing on an existing sales and marketing infrastructure, Global EARS could focus on what it does best: developing new products and licensing existing ones.
- Sell one technology package. For example, by cashing in all the EARS patents to one of the global players in the industry, the company could concentrate on completing existing R&D projects and developing new ones.
Joseph says: “These solutions can be implemented stand-alone or as a combination of two or three. In the end we all have the same goal: bringing in material funds to run the company and find a partner who can support Global EARS with already existing sales and marketing structures worldwide.”
The Result
Global EARS has made great progress since the days when Chris Bosua and his EARS won on ABC Television’s The Inventors program.
The company has appeared at more than 28 international trade shows, which has lead to licensing agreements or distribution arrangements in Europe, the USA and Japan. The company earns royalties, licensing fees and profit shares from license agreements with businesses in Sweden, Germany, The Netherlands, Taiwan and the UK.
Global EARS has been recognised with various industry awards including the 2008 Small Business Award sponsored by the Department of Innovation, Industry, Science and Research.