January 17, 2012

Cover Story

Gary L. Crocker

Gary L. Crocker doesn’t gripe about his days as a broke, Harvard Business Sch...Read More

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Gary L. Crocker

Disciplined for Opportunity

Candace M. Little

January 17, 2012

Gary L. Crocker doesn’t gripe about his days as a broke, Harvard Business School student, father, husband and full-time salesman. In fact, he talks about those times like they were the best thing that ever happened to him: He’s a young man, with a supportive wife and baby No. 2 (of 7) on the way. His friends are unforgettably kind—filling in for him at class while he sells tiny pieces of life-saving plastic to 22 hospitals around Boston. When he goes on sales, he carries his father’s old, beat-up World War II military bag (which, turned out, was a great sales tool, as one doctor after another took pity on the poor kid who couldn't even afford a real sales bag). He’s also carrying something else of his father’s—a belief in hard work and the importance of integrity—two things that also make pretty good sales tools. And when he goes on sales, he carries something new and something completely his own—a developing love of health care, a love of learning about the human body and its challenges of injury and disease, and a desire to add value to this new-found world. *** And add value to the world of health care Crocker did—and continues to do. There are thousands of jobs in Utah and even more throughout the country because of companies Crocker has helped start or fund, and health care patients around the world are affected and saved as a result of his contribution to the industry. Crocker founded Research Medical in 1983, a company that manufactures and markets catheters used in open heart surgery. The company generated more than a 20 percent average annual growth before Crocker sold it to Baxter International for $236 million in 1997—the largest medical device merger in Utah at the time. For Crocker, one of the greatest successes of Research Medical was the 400 jobs it created in Utah during the ‘90s. And the company continues to have a presence here. In October 2010, Edwards Laboratory (a division of Baxter) held a groundbreaking in Draper for a new 1000-employee facility for the open heart surgery catheter operations of Edwards. In addition to starting Research Medical, Crocker teamed up with some other health care masterminds, including Dinesh Patel, in 1984 and founded TheraTech—another medical device company that continues to affect the health care industry and Utah employees and families. TheraTech became a part of Watson Pharmaceuticals but is still operating at the University of Utah Research Park, supplying 800–900 high-tech research jobs. More Valuable Ventures Today Crocker and his wife, Ann, find joy in their growing family. He describes his seven children as “a group of remarkable people who are ethical, solid contributors.” Crocker loves to play squash and tennis. He’s proud to lead a fourth-generation Lake Powell houseboat family and loves to water ski. During the winter he spends at least one day a week at his Deer Valley office so he has an excuse to snow ski. He also still loves learning about the human body, enhancing its magnificence and fixing its foibles. And, as president of Crocker Ventures, he does just that. Crocker Ventures is not a conventional venture firm: it is a privately funded, independent venture firm that provides relatively long-term capital, mostly for startup companies in health care. Since most venture capitalists expect payment after two or three years, and most life science companies have at least a two- to three-year FDA cycle to comply with, Crocker Ventures fills an important niche. “We try and supply early-stage capital that is not provided by partners looking for a short-term exit,” says Crocker. “We're trying to incubate companies that have survivability because the capital base is relatively patient. We look for highly differentiated technologies with good intellectual property portfolios that are addressing a major unmet health care need.” With a big smile on his face, Crocker can hardly suppress his enthusiasm for his current projects, like Merrimack Pharmaceuticals—a company Crocker Ventures has been funding for about 10 years (and for which Crocker is currently chairman of the board). Crocker says he was drawn to this group of MIT scientists because, back in the early 2000s, when everyone was trying to crack the genetic code to find medical answers, this group of engineers was working toward creating cancer drugs in a new and radical way. The company recognized six main kinds of cancer by looking at cancer cells from a structural rather than a genetic standpoint. This is significant because the drugs produced to combat these structural differences only affect cancer cells, avoiding side effects like nausea and hair loss. Two drugs are currently in human trials nationwide, with another four to follow soon. Every company or technology Crocker talks about is his favorite and, he says, is working to solve major problems—like San Francisco-based Silver Creek Pharmaceuticals, which is working on a method for reviving dead heart muscle cells, solving a huge problem heart attack survivors face. Crocker Spinal Technologies, with the help of The Compliant Mechanism Research Team from BYU's School of Engineering, is creating a vertebrae disc that has all of the properties of a real disc. And Utah-based Nano Injection Technology makes a device that injects DNA into an embryo’s nucleus, hoping to soon replace the current manual process, increasing the success rate from 5–20 percent to 70–80 percent. Rejuvenation Labs in Salt Lake City has licensed an anti-aging molecule from BYU that rejuvenates new skin when used as a cream or creates new and healthier organs and tissues when taken in a pill form. This patented Resveratrol molecule is the first of its kind, and a cosmetic cream is expected be on the market early next year. When Opportunity Knocks, Let It In “I didn’t set out early in my career to create the world’s largest open-heart surgery catheter business,” says Crocker. “My goal was to find a niche that’s unexploited and opportunistically get into that niche and create a business. In that sense, it was a generic goal, but it was driven by opportunism.” While Crocker looked up to men like Jim Sorenson, founder of Sorenson Companies, who had an avid goal-setting approach, Crocker says to some degree life is just something that happens to us, not necessarily a process of rigorous goal-setting. “To narrow it down too early or too rigorously, I think, precludes opportunities that present themselves in life.” Crocker describes himself as a “disciplined opportunist” and says grabbing the right opportunities has been the hallmark of his career. From Harvard, Crocker accepted an offer to be an internal corporate analyst for Baxter International (one of the largest medical device companies in the world), where he was exposed to many areas of the industry. While at Baxter, Crocker identified an emerging market for open-heart surgery—a market Crocker entered with Research Medical a few years later. Another opportunity knocked from Salt Lake City when Jim Sorenson called Crocker one day asking for advice about selling his company. Soon, Sorenson had offered Crocker a job as international sales manager, which, after 18 months of living on a plane, Crocker successfully completed—Sorenson Research was sold to Abbott Laboratories for $100 million in Abbott stock. But the sale did more than make money—with Sorenson products being distributed through Abbott, thousands of hospital rooms began filling up with Sorenson’s life-saving and task-simplifying devices. Crocker assumed the role of vice president of business development and director of marketing for the Sorenson Research division of Abbott for a few years, but in 1983, with his knowledge of the emerging market for open heart surgery medical devices, and with Sorenson’s “audacious entrepreneurial spirit” as an example, Crocker took an entrepreneurial risk of his own. Risk and Reward Crocker started Research Medical knowing that open heart surgery was going to be, in his words, “a continuing long-term demographic phenomenon.” But he says there’s more to a good business than just the idea. “Implementation of the idea is about 90 percent of the work,” he says, and it's something many people tend to overlook. “Any startup is inherently linked to risk of a profound nature because of the implementation challenges—no matter how good the idea is,” he says. “Implementing—building a team, people you can trust, you can delegate to, people that will make it happen in the real world—that’s the harder part.” The first seven of Crocker’s 14 years as CEO of Research Medical were incredibly stressful and difficult. He says the only reason he got through it is because he was a relatively young man. But after about seven years, Crocker says, “We broke through as leader in the industry. We had a couple new products come out and solidified our patent positions and leadership position. And in the ‘90s we just roared—we took off.” Crocker's risk was rewarded as Research Medical became one of Utah's largest companies in the industry and was recognized for six straight years by Forbes magazine as one of "America's Best 200 Small Growth Companies. Early Lessons in Business The company growth didn't just happen naturally—one of Crocker’s biggest challenges was learning how to promote his company on Wall Street. At 31 years old, an inexperienced and visionary Crocker found himself flying to New York two or three times a week to cultivate investors, mutual funds and stock buyers, and to promote his company as a good investment. Something he learned quickly was that Wall Street was a place of integrity. “I know how counterintuitive this sounds,” he says, “but the thing that holds the place together is integrity and trust.” For Crocker, the recent issues on Wall Street and the stock market crash happened in part because people have been taking advantage of each other. “The system only works when there’s integrity and truth.” Crocker’s youth, excitement and big-vision thinking led to success, but they also led to big-vision talking, which, Crocker says, got him into some trouble at first. “I would tend to overstate [Research Medical's] short-term performance potential, in light of what my feeling was about the long-term potential of the business. I would suggest we’d do better in the next quarter or year than we’d actually do.” And Crocker found that no matter how innocently optimistic he was, Wall Street called for a greater level of integrity. “It was a brutal lesson to be tutored in by those fund managers. But it was an important challenge early and a really important thing to learn,” he says. “It tempered my entrepreneurial instincts with an implementation reality. It's an important balance you got to maintain.” Another surprising lesson Crocker learned was that, even more important than a good idea, a company has to have a good culture to survive. A persistent myth in the business world is that the most successful businesses “have a company hierarchy, and everyone marches to the tune and it gets done in an efficient manner.” Crocker adds, “Don’t view business as a political game where you try and position yourself as a winner or a loser. You’ve got to motivate people to do things because they love being there.” The company culture will determine whether or not employees are happy at work, says Crocker, and a healthy culture allows integrity, openness, fair disagreement, and most importantly, it allows mutual trust. “The biggest requirement—and the most fundamental contribution a CEO can make—is to create an environment that allows empowerment of people, an environment where they [can] make honest decisions and not be second-guessed or criticized,” he says. “It surprised me that that was more important than even the quality of the technology or the source of capital or anything else. That was the pivotal thing.” A Lasting Impression Crocker recognizes he could never have made it where he did without help from others who set the groundwork for a successful medical device company. Magna-native Dale Ballard, founder of Ballard Medical Products was a mentor in “the best sense of the word,” Crocker says. A few times a year he would take Crocker out to breakfast, where they discussed nuances of the industry and Research Medical. Then at a critical moment when Research Medical didn’t have enough capital to get into a badly needed new building, Ballard suggested that he turn over his building lease to Crocker. “That was like manna from heaven,” says Crocker. “It totally changed our ability to go to the next step from $10 million to $25 or $30 million in revenue. It was a big boost. We maybe could have done that eventually, but [Ballard] didn’t have to do that. It’s a gracious mentoring act from a great entrepreneur and I’ll be forever grateful for that.” Crocker is also grateful for many other things that set him up for success. “Go to almost any other country in the world and a fireman’s son doesn’t start up a business and become successful,” he says. “The structure is not there to allow it to happen. Any successful entrepreneur in the last 50 years basically has to thank millions of people who created a stable government, a stable environment, an infrastructure…the electricity, the roads, the fair court system.” Crocker shows his appreciation by giving back to the education and business communities. “All the businesses I’ve been involved with are fundamentally dependent upon an American culture that generates good scientists. Businesses are dependent upon whether we have a scientific structure that’s fundamentally strong. Anne and I feel very, very strongly about supporting these future scientists.” Two years ago, he and his wife opened Crocker Science house, a residential living hall for honors science students at the University of Utah, and recently they made a longer-term gift to restructure the Museum of Natural history as the Gary L. and Ann S. Crocker Science Center to help Utah educate top-notch scientists ready to work in world-class labs upon graduation—maybe even to work in the labs of companies Crocker helps create. One thing Crocker would like to see Utah do is better educate its children in the math and sciences—particularly during junior high and early high school years. While he thinks we sometimes over-rate our foreign competition, he does believe the United States and Utah are lagging a little behind. “If we did a little bit better job at the junior high level, we’d open up opportunities for lots of bright students,” he says. “We're doing a great job for a limited number of fairly bright and motivated students.” Many students become discouraged after their first year of college math and science, he says, and therefore we lose a lot of great minds who could add a lot to those fields if they came better prepared. Crocker is helping children and young adults, not in the classroom, but as chairman of the board for Utah Youth Village for 15 years. The organization is a private nonprofit that helps hundreds of troubled, neglected or abused youth each year develop essential habits that will hopefully lead them to a better life. “You don’t overcome being rejected and abused and neglected for the first 15 years of your life,” Crocker says. “It’s like open heart surgery. You’ve got to put extraordinary resources very quickly around that problem and intervene aggressively and try and restructure the problem, or the patient will die—they’re not going to recover. All of us benefit when these kids are functional, and all of us are penalized if they don’t [recover].” Crocker is involved in many other aspects of the community, serving as a member of the President's Leadership Council at Brigham Young University, on the Utah Technology Council Board of Trustees and as a member of its Executive Committee. His past involvement is just as robust. He served as president of the board for the Utah Opera Company, as a former trustee of the Deseret Foundation's Heart-Lung Research Institute, as vice-chair of the University of Utah's Board of Trustees and on the board of the University Hospital. He was a long-time director of the hospital’s Research Foundation, and he was chairman of the University's College of Science Advisory Board. Crocker says giving back is more of a way of life than a choice he makes over and over again. “We take for granted what we grew up with in the last 50 years. It’s something very special. To the degree which some of us have a bit of a surplus, it’s good to funnel it back to future generations,” he says. “Why give back? So that other people in the future will have the same incredible advantages that you had to try and become entrepreneurs themselves.” SIDEBAR Advice from a Disciplined Opportunist Crocker knows about starting a successful, lasting business in a tough economy—after all, he started Research Medical in the mid ‘80s, right as the economy was taking a dip. His advice to businesses is threefold: first, have a business plan with a clear and mission and competitive advantage; second, proceed with a sense of urgency; and third, be humble. Creating a business plan with a clear mission that is better than your competitors is tough to do, especially proving that your plan or product will outlast theirs. “They need to know not only why they’re better, but how their idea can be maintained over time to retain capital gain,” Crocker says. Having a sense of urgency has to do with constantly looking for the next round of funding and getting your employees behind your company goals. “In every startup I’ve been associated with, there’s always been a race to see if you can get your product implemented in enough time before your first round of funding runs out,” he says. “Many managers don't understand that $1 million is just enough money to really fail spectacularly. You've got to run. Every day is urgent.” As an entrepreneur, your complete focus is absolutely necessary, which means you have to have humility, says Crocker. Entrepreneurs and business owners should be careful not to lose vision of their own limitations—and humbly except what is realistically possible. “Most small companies think they can do too much. Instead of doing one thing really well, they do two to five things simultaneously and mess them all up,” he says. “Appropriate corporate humility means you focus down and do one thing well. Get cash flow and a little credibility—then branch out.” Openly talking to managers, adhering to a rigorous budget, and realistically assessing competition and resources will help endow humility to an organization, says Crocker, and will help prevent failure.
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