Forbes_USA_June_13_2017

ENTREPRENEURS
Vidal later joined Tao Light, a Chinese lightmaker
that supplied bulbs to Osram Sylvania,
and began working closely with Osram’s R&D
and marketing teams. He had a front-row seat
when the industry changed direction and LED
technology became a plausible option for every
type of light. At that time, it took Osram roughly
18 months to bring a new product to market,
according to Thomas Dreier, then a manager at
the company. Vidal saw an opportunity, and he
and Zucker—the two had met through a mutual
friend—decided to start Green Creative. They
focused on the business-to-business market, supplying
bulbs for commercial real estate buildings,
hotels and retail outlets.
In the winter of 2010, Zucker moved to San
Francisco to handle sales, while Vidal stayed in
Shanghai to find a factory that could make the
lights. Thanks to his network and experience, Vidal
landed a factory that was also a major Philips supplier,
persuading it to create a small volume of
HOW TO PLAY IT
BY JON D. MARKMAN
Elon Musk promises an energy-saving future of underground
urban tunnels for car-carrying electric skates
powered by the sun. That sounds cool, but the best path
to energy efficiency now is changing your lightbulbs.
LED illumination uses 75% less energy and lasts 25 times
longer than incandescent rivals. Acuity Brands is the
leading public U.S. maker of commercial and home LED lighting systems.
The market is about to take off after years of resistance. Acuity began
investing in sensors that harvest daylight and provide wireless connectivity
long before its competitors did. It recognized LED cost savings were
a powerful selling point, but the company also made them beautiful to
attract designers. Combining LEDs and smart controls can save 90% of
energy costs. Today, the $7.9 billion company is profitable, and sales are
growing at 16%. Shares are down 36% from their 2016 high.
Jon D. Markman is president of Markman Capital Insight.
highly customized products—an unusually favorable
agreement for a startup.
Vidal designed Green Creative’s bulbs himself,
choosing from a wide range of components
to create a bulb that projected light at the right
angle, covered the right amount of surface area,
had the proper intensity and didn’t get too hot.
“We’re a little bit like a chef in the kitchen,” he
says, “except that the ingredients are getting a lot
better all the time.”
Even so, their first lights, Zucker says, were terrible—“junky-looking”
and half as bright as competing
products. For their second generation, launched
a year later, they made big leaps but struggled to
get customers to take a chance on a tiny startup
with no track record. For prospective buyers, Zucker
says, “it was pretty much name your price. We
hoped it wouldn’t kill us on margin.”
Over time, Zucker learned to focus on distributors,
which gave him access to a larger base of
users. In 2011, Green Creative reached $300,000
in sales, but the company was operating on only
the $200,000 in savings the founders had invested.
Their first office, in a refurbished San Francisco
parking garage, was infested with rats. Besides
sleeping regularly in his car, Zucker was eating
mostly peanut butter and jelly sandwiches.
His mom began sending him brochures for law
school and M.B.A. programs.
By the end of the next year, sales were more
than $2 million, but the partners hadn’t been
watching the books closely. Vidal came to the
stark realization they owed suppliers more than
$1 million and were not going to be able to pay on
time. “They weren’t real balance-sheet-based people,”
says Jerry Mix, an industry
veteran. Vidal and Zucker
set about contacting everyone
they knew to ask for money.
While few people bit, the partners
persuaded Mix and some
friends and family to invest
$250,000. Shortly after, they
landed a bank loan of $1.25
million, secured against their
inventory and receivables.
Zucker had never gotten
any formal sales training, but
after a couple of years of trial
and error, he was improving.
“He’s one of the better I’ve ever
run into, and we have 480 vendors,”
says Spencer Miles, general
manager of the distributor Pacific Lamp &
Supply. Zucker says he called one distributor 20
times over two years before landing him. Sales quadrupled
to $8 million in 2013.
The next year, Vidal and Zucker made a strategic
shift—they stopped competing on price, focusing
their pitch more on quality and service.
Sales reached $52 million last year, but Green
Creative is now trying to transfer its success in
bulbs to “fixtures,” the larger, more expensive lights
used to illuminate office buildings. The fixtures
market reminds them of where bulbs were four
years ago. “The opportunity,” Zucker says, “is just
enormous.”
FINAL THOUGHT
“Long is the way and hard, that out of hell leads up to light.” —JOHN MILTON
SMALL GIANTS
ELEVATOR
PITCH
WILLIS TOWER
FLOORS: 103
SECONDS: 60
WORDS PER MINUTE: 130
In the time it takes
to reach SkyDeck
Chicago in the Willis (né
Sears) Tower, Medical
Magnesium cofounders
Florian Coppers, 29,
and Kilian Reuss, 28,
German grad students,
explain why investors
ought to back their
medical-device startup.
“More than 7 million
Americans break bones
every year. For most,
this means getting metal
implants and having
not one but two major
surgeries: the first to
screw a metal implant
in your bone to repair
the fracture, and the
second to rip it out once
you’ve healed. Our tiny
magnesium implants
are bio-absorbable,
meaning they turn into
bone while healing
the fracture, and thus
we eliminate a second
major surgery. We’re
patent-protected, and
our technology can be
used anywhere in the
body. We’ve spent five
years and $600,000
developing the product
and getting through
animal trials, and now
we need $3.5 million to
get approval for use in
the human body.”
—Susan Adams
TOP: PETER HOEY FOR FORBES; LEFT: THOMAS KUHLENBECK FOR FORBES
60 | FORBES JUNE 13, 2017