Fred Molinari: Once an Entrepreneur, Always an Entrepreneur
By Jim Schakenbach
As a breed, entrepreneurs are nothing if not resilient. Take the case of Fred Molinari, president of Data Translation and a '63 WPI graduate with a degree in electrical engineering. Despite all the recent publicity about dot.commers, the human genome, and other hot technologies of the week, entrepreneurism has been around for a while. Molinari started his life as an entrepreneur thirty years ago, back when the transistor was a recent invention and Boolean algebra had nothing to do with search engines.
Molinari, like many entrepreneurs, came to the calling in a roundabout way. There was no epiphany. No crystalline moment of "Eureka!". No. Molinari simply realized after several bouts of employment that "I gotta do it my way" and quietly founded one of the most successful data acquisition and imaging companies in the country.
You can trace it back to the mid-60's, after Molinari graduated from WPI and was looking around for something to do. Throwing reason to the wind, he decided to move to the west coast and sign up for a six-month program with Pacific Bell. "I had lived in the Worcester area all my life and decided I wanted to get as far away as possible, which at the time for me was the west coast," said Molinari. " I had worked during the summer for a phone company, so I joined Pacific Bell and was put into a program which I didn't know at the time was a six-month trial after which you either make it into the phone company or you're out."
According to Molinari, it was a program "into which you had to fit; the phone company at that time was very regulated and, frankly, it was strangling." Not fitting in, Molinari was out. "So I got a job in real engineering," he continued, which happened to be in Nevada with EG&G, working on nuclear-powered rockets. Bucking convention there as well, Molinari soon found his way back to the east coast in '68 and a job with Analog Devices, working on new product strategy. He wasn't there long when he discovered he needed to learn more about business, so he decided to enroll in business school. Analog Devices wanted him to continue working for them and not go for a business degree, but Molinari said "no way, so I left for business school," graduating in 1970.
The unemployable entrepreneur.
During this almost decade-long period of haphazard employment, Molinari made an important discovery. "Essentially, I got fired from almost every job I had," observed Molinari. "Not fired in the sense that I wasn't competent, fired in the sense that I wanted to go one way and they always wanted to go another. That happened to me at the phone company, it happened to me at Analog, it happened to me at Analogic (a medical technology company he joined briefly after Analog Devices), so I decided, 'hey, I gotta do it my way'. So I started this business in the 70's."
"This business" is Data Translation, which at one time employed over 400 people and had billings in excess of $70 million. But in the beginning, it was much less impressive. "We started in Framingham (Massachusetts) in '74, which was a terrible recession year, with no money. But circumstances dictate everything. It was a very difficult time to start, but we knew what we wanted to do."
At that time, the microcomputer was just being introduced. Molinari spotted an opportunity to use these small computers to measure things very accurately as a part of instrumentation systems. So he and his two partners borrowed ten thousand dollars against their homes from a local bank and they were in business. "We started to put a product together and, lo and behold, as we came out with the product, we were sued by one of my former employers," said Molinari. "The long and the short of it was they were trying to put us out of business, stating we had (some of their) trade secrets, but they never identified (them)."
The case lasted two years. Struggling to conduct a legal battle with little money and no experience, the fledgling Data Translation lost the suit. "We kept the company, though. The suit was based on what we had sold, but because we hadn't made much headway, we didn't owe them much money," chuckled Molinari. After two years of legal wrangling, Data Translation essentially started over again in 1976. One partner had bowed out as soon as the legal battle began, so Molinari and his remaining partner redesigned the product to avoid any hint of patent violation and began to grow the company.
Turning a negative into a positive.
Like most entrepreneurs, Molinari was determined to learn from his mistakes. "I said, 'how can I turn this into a positive, rather than a negative?'," he commented. "There's a positive side to everything, you just have to find it. Every day in any business you have to take something that's negative and use it to your advantage. It works in everyday life, too."
Molinari uses these kinds of experiences to find the right direction. "There's no such thing as waking up with a great idea and having it change the direction of your life," Molinari observed. "I think what happens is you have some thoughts, some direction, and then you start to sell the people around you that this is the right direction. You don't really know, but you don't let other people know you don't really know. Instead, you start to expound upon it and you hope to hell you're right. Your first realization that you may be right is when you can convince somebody else."
Molinari sees opportunities in the roadblocks that get thrown up in front of entrepreneurs. "This causes you to do course corrections to succeed," he stated. Just such a stumbling block came in the mid-80's after Data Translation went public and created a digital video editing system through a subsidiary called Media 100. After three tries and $15 million, Media 100 became successful; however, it caused Molinari to take his eye off the ball and Data Translation suffered even as Media 100 succeeded. Declining sales at Data Translation alerted Molinari to the need for drastic corrective measures, so he spun off Media 100 in late 1996, undertook a bruising round of lay-offs and gradually began to grow his original company back to health and turn it back into a private company again. Data Translation today stands at about 75 employees and approximately $15 million in annual sales.
Entrepreneurs need all the help they can get.
Molinari says the secret to a successful entrepreneurial undertaking is no secret - it's money. That, and hands-on business experience. "WPI has always been oriented to entrepreneurs," he remarked. "There's a strong entrepreneurial bent to the students who go there."
A member of the WPI Board of Trustees, Molinari saw the need for an entrepreneurial program early on. "I think the program WPI has put together under the direction of Mac Banks (through the Collaborative for Entrepreneurship & Innovation) is terrific and I'd like to see it in a very prominent place," said Molinari. He credits the school's combination of business and technology as a critical advantage offered by the school. "One of the biggest things (students can gain) is knowledge about business. Colleges like WPI have the academic and technical smarts, but we are often times intimidated by the business aspect and entrepreneurs are going to run into all kinds of problems in a business sense, funding being one of the biggest ones; it could be legal issues, IP (intellectual property), any number of things." So Molinari urges all budding entrepreneurs to get comfortable with business; that does not necessarily mean earning an MBA, but to be at least competent and understand the basic aspects of running a business.
Along with grounding in business, Molinari sees funding as an equally critical part of entrepreneurship - both for the entrepreneur and the academic institution. "You have to address the funding issues, both for the college and for new enterprises. I think a program to address the funding of new business would be in the interest of both the individual and the college. I'd like to see that happen. Funding follows markets. Nothing starts unless you've got some money. Money will make power which will make programs, which will make things go."