It's a classic in the annals of corporate America: A young Steven P. Jobs, confident he has invented the world's most irresistible computer, sells his Volkswagen and uses the money to start Apple Computer Inc.
That much of the story almost everyone knows, but the second half is also illustrative: Jobs' famous, blue-jeaned management fails to keep the company on track and it plunges into the red, only to be saved in 1985 by a professional manager who ousts the founder in the process.
By actively courting high-technology and bio-tech industries, Maryland's business leaders are hoping to make the state the home of the next Apple Computer. But, while technology companies carry great potential, they are also associated with extraordinary risk of failure. For every Apple, there are scores of companies that fail to survive beyond infancy.
The reason is rooted in a paradox: such companies are usually founded by strong-willed, entrepreneurial scientists who have recognized an opportunity overlooked by others. But such leaders can inadvertently sabotage their companies if they are blind to obvious problems or fail to look beyond the technical aspects of their products.
"A lot of them succumb to the idea that if you build a better mousetrap the world will beat a path to your door. It ain't necessarily so," said John C. Weiss 3rd, a consultant and managing partner of the Maryland Venture Capital Trust, a fledgling, quasi-public venture capital firm.
The long-term success of a company depends upon a manager's ability to lead the organization beyond the start-up, "entrepreneurial stage," said Harry E. Merriken, associate professor of finance at Loyola University.
Many high-tech companies are in that phase, dominated by former professors or researchers with innovations who have headed out on their own.
The founders of such companies, he said, "tend to be very task-oriented. They are usually very single-minded and don't entertain other points of view. . . . Very often they don't foster the creativity that made them successful."
The companies are typically small and oriented around a few products or services. The flexibility of this structure serves them well in the early years, but with growth comes a need for more sophisticated employee relations, marketing savvy and an ability negotiate with bankers and stockholders for capital, Merriken said.
Loren D. Jensen was a professor at Johns Hopkins University when, in 1973, he left the school to found an environmental services company, EA Engineering, Science and Technology, with 30 employees.
Jensen said he went through a period of resisting the advice of those who recommended bringing on board more business people.
"I stumbled around and made some dumb decisions," he said. Finally, a consultant suggested an accounting firm and other changes that he adopted.
"The more technically oriented you are, the more likely you are to overlook the obvious," he said.
Last year, he and his board decided that the 750-worker company had grown sufficiently large and complex to warrant hiring a separate president, a role Jensen had been filling along with chairman. Edward V. Lower, a long-time Union Carbide Corp. executive, became president on June 1.
"Too few developing companies have an appreciation for somebody with a business background," Jensen said.
Most founders of high-technology companies are "visionaries who see something that you or I wouldn't see," said Weiss, of Maryland Venture Capital.
"You need that kind of drive and vision and spirit to get the business launched and as that entity becomes a business it needs to bring on people with a business acumen. It becomes more a business than a dream," Weiss said.
Weiss cited the J.L. Wickham Co. as an example. The Baltimore maker of computer-driven machine tools experienced rapid growth after its founding eight years ago by a former Black & Decker Corp. engineer. Jack Wickham, its founder and president, last year was named Entrepreneur of the Year by the Maryland Department of Economic and Employment Development.
But the company faced troubles early in its history, said Weiss, a one-time adviser to Wickham.
"I have the highest regard for him. He's brilliant. But in the formative years he did not delegate, kept everything to himself," Weiss said.
He said Wickham has assembled the necessary management team and now appears back on track. But some clients are not as receptive to the suggestion they bring on professional managers, Weiss said.
Wickham agreed that he has gained respect for business savvy, and the ability of managers to deal with banks, employee matters and other non-technical aspects of the company.
"It got to the point where I wasn't good enough to do all of those things," Wickham said.
But, he added, there are limits to how many tasks the founder of a start-up firm can delegate. Frequently, such firms may be unable to attract the kind of talent necessary for reliable decision-making. Also, one or two bad decisions by a subordinate can destroy a young, fragile company, he said.
For investors, the business background of a company's managers is almost as important as their knowledge of the product or science, said Andrew E. Scherer, vice president of Signet Investment Banking in Baltimore, the investment banking subsidiary of Signet Bank Maryland.
"You would almost rather see a company with a great management team and a mediocre product than a great product and mediocre management," Scherer said.